PRINCIPAL FUNDS, INC. ("PFI" or the "Fund")
Statement of Additional Information
dated March 1, 2021
This Statement of Additional Information (SAI) is not a prospectus. It contains information in addition to the information in the Fund's prospectus. The prospectus, which we may amend from time to time, contains the basic information you should know before investing in the Fund. You should read this SAI together with the Fund's prospectus dated March 1, 2021.
Incorporation by Reference: The audited financial statements, schedules of investments and auditor's report included in the Fund's Annual Report to Shareholders, for the fiscal year ended October 31, 2020, are hereby incorporated by reference into and are legally a part of this SAI.
For a free copy of the current prospectus, semiannual or annual report, call 1-800-222-5852 or write:
Principal Funds
P.O. Box 219971
Kansas City, MO 64121-9971
The prospectus may be viewed at www.principalfunds.com/prospectuses.
The ticker symbols for series and share classes begin on the next page.







Ticker Symbols by Share Class
Fund A C J Inst. R-1 R-3 R-4 R-5 R-6
California Municipal
SRCMX SRCCX PCMFX
Core Fixed Income
CMPIX CNMCX PIOJX PIOIX PIOMX PIOOX PIOPX PIOQX PICNX
Core Plus Bond
PRBDX PBMJX PMSIX PBOMX PBMMX PBMSX PBMPX
Diversified International
PRWLX PDNCX PIIJX PIIIX PDVIX PINRX PINLX PINPX
PDIFX
Equity Income
PQIAX PEUCX PEIJX PEIIX PIEMX PEIOX PEIPX PEIQX
Finisterre Emerging Markets Total Return Bond
PFUEX PFUMX
Global Diversified Income
PGBAX PGDCX PGDIX PGBLX
Global Real Estate Securities
POSAX POSCX POSIX PGRKX PGRVX PGRUX PGRSX
Government & High Quality Bond
CMPGX CCUGX PMRJX PMRIX PMGRX PRCMX PMRDX PMREX
Government Money Market
PGVXX
High Income
PYHIX
High Yield
CPHYX CCHIX PHYTX PHYFX
Inflation Protection
PIPJX PIPIX PISPX PIFPX PIFSX PBPPX
International Emerging Markets
PRIAX PMKCX PIEJX PIEIX PIXEX PEAPX PESSX PEPSX PIIMX
International I
PINIX PPISX PRPPX PUPPX PTPPX PIIDX
LargeCap Growth I
PLGAX PLGJX PLGIX PCRSX PPUMX PPUSX PPUPX PLCGX
LargeCap S&P 500 Index
PLSAX PLICX PSPJX PLFIX PLPIX PLFMX PLFSX PLFPX
LargeCap Value III
PLVJX PLVIX PESAX PPSFX PPSSX PPSRX
MidCap
PEMGX PMBCX PMBJX PCBIX PMSBX PMBMX PMBSX PMBPX PMAQX
MidCap Growth
PMGJX PGWIX PMSGX PFPPX PIPPX PHPPX
MidCap Growth III
PPQJX PPIMX PHASX PPQMX PPQSX PPQPX
MidCap S&P 400 Index
PMFJX MPSIX PMSSX PMFMX PMFSX PMFPX PMAPX
MidCap Value I
PCMVX PVEJX PVMIX PLASX PMPRX PABWX PABVX PCMSX
Money Market
PCSXX PMJXX
Overseas
PINZX PINQX PINTX PINUX PINGX
Principal Capital Appreciation
CMNWX CMNCX PWCIX PCAMX PCAOX PCAPX PCAQX
Principal LifeTime Strategic Income
PALTX PLSJX PLSIX PLAIX PLSMX PLSSX PLSPX
Principal LifeTime 2010
PENAX PTAJX PTTIX PVASX PTAMX PTASX PTAPX
Principal LifeTime 2015
LTINX LTSGX LTAPX LTSLX LTPFX
Principal LifeTime 2020
PTBAX PLFJX PLWIX PWASX PTBMX PTBSX PTBPX
Principal LifeTime 2025
LTSTX LTSNX LTVPX LTEEX LTPDX
Principal LifeTime 2030
PTCAX PLTJX PMTIX PXASX PTCMX PTCSX PTCPX
Principal LifeTime 2035
LTIUX LTANX LTAOX LTSEX LTPEX
Principal LifeTime 2040
PTDAX PTDJX PTDIX PYASX PTDMX PTDSX PTDPX
Principal LifeTime 2045
LTRIX LTRGX LTRVX LTRLX LTRDX
Principal LifeTime 2050
PPEAX PFLJX PPLIX PZASX PTERX PTESX PTEFX
Principal LifeTime 2055
LTFIX LTFGX LTFDX LTFLX LTFPX
Principal LifeTime 2060
PLTAX PLTZX PLTRX PLTCX PLTMX PLTOX
Principal LifeTime 2065
PLJIX PLJAX PLJCX PLJDX PLJEX
2


Ticker Symbols by Share Class
Fund A C J Inst. R-1 R-3 R-4 R-5 R-6
Principal LifeTime Hybrid Income
PHJFX PHTFX PLTYX
Principal LifeTime Hybrid 2015
PHJMX PHTMX PLRRX
Principal LifeTime Hybrid 2020
PHJTX PHTTX PLTTX
Principal LifeTime Hybrid 2025
PHJQX PHTQX PLFTX
Principal LifeTime Hybrid 2030
PHJNX PHTNX PLZTX
Principal LifeTime Hybrid 2035
PHJJX PHTJX PLRTX
Principal LifeTime Hybrid 2040
PHJEX PLTQX PLMTX
Principal LifeTime Hybrid 2045
PHJYX PHTYX PLNTX
Principal LifeTime Hybrid 2050
PHJUX PHTUX PLJTX
Principal LifeTime Hybrid 2055
PHJBX PLTNX PLHTX
Principal LifeTime Hybrid 2060
PHJGX PLTHX PLKTX
Principal LifeTime Hybrid 2065
PHJDX PLHHX PLHRX
Real Estate Securities
PRRAX PRCEX PREJX PIREX PRAEX PRERX PRETX PREPX PFRSX
SAM Balanced
SABPX SCBPX PSAJX PSBIX PSBGX PBAPX PSBLX PSBFX
SAM Conservative Balanced
SAIPX SCIPX PCBJX PCCIX PCSSX PCBPX PCBLX PCBFX
SAM Conservative Growth
SAGPX SCGPX PCGJX PCWIX PCGGX PCGPX PCWSX PCWPX
SAM Flexible Income
SAUPX SCUPX PFIJX PIFIX PFIGX PFIPX PFILX PFIFX
SAM Strategic Growth
SACAX SWHCX PSWJX PSWIX PSGGX PSGPX PSGLX PSGFX
Short-Term Income
SRHQX STCCX PSJIX PSHIX PSIMX PSIOX PSIPX PSIQX
SmallCap
PLLAX PSMCX PSBJX PSLIX PSABX PSBMX PSBSX PSBPX PSMLX
SmallCap Growth I
PSIJX PGRTX PNASX PPNMX PPNSX PPNPX PCSMX
SmallCap S&P 600 Index
PSSJX PSSIX PSAPX PSSMX PSSSX PSSPX PSPIX
SmallCap Value II
PSMJX PPVIX PCPTX PJARX PSTWX PLARX PSMVX
Tax-Exempt Bond
PTEAX PTBCX PITEX
3


TABLE OF CONTENTS
FUND HISTORY
MULTIPLE CLASS STRUCTURE
DESCRIPTION OF THE FUNDS’ INVESTMENTS AND RISKS
LEADERSHIP STRUCTURE AND BOARD
INVESTMENT ADVISORY AND OTHER SERVICES
INTERMEDIARY COMPENSATION
BROKERAGE ALLOCATION AND OTHER PRACTICES
PURCHASE AND REDEMPTION OF SHARES
GOVERNMENT MONEY MARKET FUND AND MONEY MARKET FUND MATERIAL EVENTS
PRICING OF FUND SHARES
TAX CONSIDERATIONS
PORTFOLIO HOLDINGS DISCLOSURE
PROXY VOTING POLICIES AND PROCEDURES
FINANCIAL STATEMENTS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
GENERAL INFORMATION
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
PORTFOLIO MANAGER DISCLOSURE
APPENDIX A – DESCRIPTION OF BOND RATINGS
APPENDIX B – PRICE MAKE UP SHEET
APPENDIX C – PROXY VOTING POLICIES

4


FUND HISTORY
Principal Funds, Inc. (“PFI” or the "Fund") was organized as Principal Special Markets Fund, Inc. on January 28, 1993 as a Maryland corporation. The Fund changed its name to Principal Investors Fund, Inc. effective September 14, 2000. The Fund changed its name to Principal Funds, Inc. effective June 13, 2008.
On January 12, 2007, the Fund acquired WM Trust I, WM Trust II, and WM Strategic Asset Management Portfolios, LLC.
Classes offered by each Fund are shown in the following table.
Share Class
Fund/Portfolio A C J Inst. R-1 R-3 R-4 R-5 R-6
California Municipal X X X
Core Fixed Income X X X X X X X X X
Core Plus Bond X X X X X X X
Diversified International X X X X X X X X X
Equity Income X X X X X X X X
Finisterre Emerging Markets Total Return Bond X X
Global Diversified Income X X X X
Global Real Estate Securities X X X X X X X
Government & High Quality Bond X X X X X X X X
Government Money Market X
High Income X
High Yield X X X X
Inflation Protection X X X X X X
International Emerging Markets X X X X X X X X X
International I X X X X X X
LargeCap Growth I X X X X X X X X
LargeCap S&P 500 Index X X X X X X X X
LargeCap Value III X X X X X X
MidCap X X X X X X X X X
MidCap Growth X X X X X X
MidCap Growth III X X X X X X
MidCap S&P 400 Index X X X X X X X
MidCap Value I X X X X X X X X
Money Market X X
Overseas X X X X X
Principal Capital Appreciation X X X X X X X
Principal LifeTime Strategic Income X X X X X X X
Principal LifeTime 2010 X X X X X X X
Principal LifeTime 2015 X X X X X
Principal LifeTime 2020 X X X X X X X
Principal LifeTime 2025 X X X X X
Principal LifeTime 2030 X X X X X X X
Principal LifeTime 2035 X X X X X
Principal LifeTime 2040 X X X X X X X
Principal LifeTime 2045 X X X X X
Principal LifeTime 2050 X X X X X X X
Principal LifeTime 2055 X X X X X
Principal LifeTime 2060 X X X X X X
Principal LifeTime 2065 X X X X X
5


Share Class
Fund/Portfolio A C J Inst. R-1 R-3 R-4 R-5 R-6
Principal LifeTime Hybrid Income X X X
Principal LifeTime Hybrid 2015 X X X
Principal LifeTime Hybrid 2020 X X X
Principal LifeTime Hybrid 2025 X X X
Principal LifeTime Hybrid 2030 X X X
Principal LifeTime Hybrid 2035 X X X
Principal LifeTime Hybrid 2040 X X X
Principal LifeTime Hybrid 2045 X X X
Principal LifeTime Hybrid 2050 X X X
Principal LifeTime Hybrid 2055 X X X
Principal LifeTime Hybrid 2060 X X X
Principal LifeTime Hybrid 2065 X X X
Real Estate Securities X X X X X X X X X
SAM Balanced X X X X X X X X
SAM Conservative Balanced X X X X X X X X
SAM Conservative Growth X X X X X X X X
SAM Flexible Income X X X X X X X X
SAM Strategic Growth X X X X X X X X
Short-Term Income X X X X X X X X
SmallCap X X X X X X X X X
SmallCap Growth I X X X X X X X
SmallCap S&P 600 Index X X X X X X X
SmallCap Value II X X X X X X X
Tax-Exempt Bond X X X
Each class has different expenses. Because of these different expenses, the investment performance of the classes will vary. For more information, including your eligibility to purchase certain classes of shares, call Principal Funds at 1-800-222-5852.
Principal Global Investors, LLC ("PGI" or the "Manager") may recommend to the Board of Directors (the "Board"), and the Board may elect, to close certain funds to new investors or close certain funds to new and existing investors. PGI may make such a recommendation when a fund approaches a size where additional investments in the fund have the potential to adversely impact fund performance and make it increasingly difficult to keep the fund fully invested in a manner consistent with its investment objective. PGI may also recommend to the Board, and the Board may elect, to close certain share classes to new or new and existing investors.
6


MULTIPLE CLASS STRUCTURE
The Board has adopted a multiple class plan (the Multiple Class Plan) pursuant to SEC Rule 18f-3. The share classes that are offered by each Fund are identified in the chart included under the heading "Fund History." The share classes offered under the plan include: Classes A, C, J, Institutional, R-1, R-3, R-4, R-5, and R-6.
Class A shares are generally sold with a sales charge that is a variable percentage based on the amount of the purchase, as described in the prospectus. Certain redemptions of Class A shares within 12 months of purchase may be subject to a contingent deferred sales charge ("CDSC"), as described in the prospectus.
Class C shares are not subject to a sales charge at the time of purchase but are subject to a 1% CDSC on shares redeemed within 12 months of purchase, as described in the prospectus.
Class J shares are sold without any front-end sales charge. A CDSC of 1% is imposed if Class J shares are redeemed within 18 months of purchase, as described in the prospectus.
Sales charge waivers and reductions may be available depending on whether shares are purchased directly from the Fund or through a financial intermediary, as described in the prospectus and Appendix B to the prospectus, titled "Intermediary-Specific Sales Charge Waivers and Reductions."
For Classes A, C, and J shares purchased from the Fund or through an intermediary not identified on Appendix B to the prospectus, the CDSC is waived on shares:
redeemed within 90 days after an account is re-registered due to a shareholder's death;
redeemed to pay surrender fees;
redeemed to pay retirement plan fees;
redeemed involuntarily from accounts with small balances;
redeemed due to the shareholder's disability (as defined by the Internal Revenue Code) provided the shares were purchased prior to the disability;
redeemed from retirement plans to satisfy minimum distribution rules under the Internal Revenue Code;
redeemed from a retirement plan to assure the plan complies with the Internal Revenue Code;
redeemed from retirement plans qualified under Section 401(a) of the Internal Revenue Code due to the plan participant's death, disability, retirement, or separation from service after attaining age 55;
redeemed from retirement plans to satisfy excess contribution rules under the Internal Revenue Code; or
redeemed using a systematic withdrawal plan (up to 1% per month (measured cumulatively with respect to non-monthly plans) of the value of the fund account at the time, and beginning on the date, the systematic withdrawal plan begins). (The free withdrawal privilege not used in a calendar year is not added to the free withdrawal privileges for any following year.)
For Class J shares purchased from the Fund or through an intermediary not identified on Appendix B to the prospectus, the CDSC also is waived on shares:
redeemed that were purchased pursuant to the Small Amount Force Out program (SAFO); or
of the Money Market Fund redeemed within 30 days of the initial purchase if the redemption proceeds are transferred to another Principal IRA, defined as either a fixed or variable annuity issued by Principal Life Insurance Company to fund an IRA, a Principal Bank IRA product, or a WRAP account IRA sponsored by Principal Securities, Inc. (PSI).
Institutional Class and Classes R-1, R-3, R-4, R-5, and R-6 shares are available without any front-end sales charge or contingent deferred sales charge. Classes R-1, R-3, R-4, and R-5 shares are available through employer-sponsored retirement plans. Such plans may impose fees in addition to those charged by the Funds. Classes R-1, R-3, R-4, and R-5 shares are subject to asset based charges (described below). Class R-6 shares are generally available through the defined contribution investment only channel.
PGI receives a fee for providing investment advisory and certain corporate administrative services under the terms of the Management Agreement. In addition to the management fee, the Fund's Classes R-1, R-3, R-4, and R-5 shares pay PGI a service fee and an administrative services fee under the terms of a Service Agreement and an Administrative Services Agreement.
Service Agreement (Classes R-1, R-3, R-4, and R-5 Shares)
The Service Agreement provides for PGI to provide certain personal services to shareholders (plan sponsors) and beneficial owners (plan members) of those classes. These personal services include:
•    responding to plan sponsor and plan member inquiries;
•    providing information regarding plan sponsor and plan member investments; and
•    providing other similar personal services or services related to the maintenance of shareholder accounts as contemplated by National Association of Securities Dealers (NASD) Rule 2830 (or any successor thereto).
7


As compensation for these services, the Fund will pay PGI service fees equal to 0.25% of the average daily net assets attributable to each of the R-1, R-3, R-4, and R-5 Classes. The service fees are calculated and accrued daily and paid monthly to PGI (or at such other intervals as the Fund and PGI may agree).
Administrative Service Agreement (Classes R-1, R-3, R-4, and R-5 Shares)
The Administrative Service Agreement provides for PGI to provide services to beneficial owners of Fund shares. Such services include:
•    receiving, aggregating, and processing purchase, exchange, and redemption requests from plan shareholders;
•    providing plan shareholders with a service that invests the assets of their accounts in shares pursuant to pre-authorized instructions submitted by plan members;
•    processing dividend payments from the Funds on behalf of plan shareholders and changing shareholder account designations;
•    acting as shareholder of record and nominee for plans;
•    maintaining account records for shareholders and/or other beneficial owners;
•    providing notification to plan shareholders of transactions affecting their accounts;
•    forwarding prospectuses, financial reports, tax information and other communications from the Fund to beneficial owners;
•    distributing, receiving, tabulating and transmitting proxy ballots of plan shareholders; and
•    other similar administrative services.
As compensation for these services, the Fund will pay PGI service fees equal to 0.28% of the average daily net assets attributable to the R-1 Class, 0.07% of the average daily net assets of the R-3 Class, 0.03% of the average daily net assets of the R-4 Class and 0.01% of the average daily net assets of the R-5 Class. The service fees are calculated and accrued daily and paid monthly to PGI (or at such other intervals as the Fund and PGI may agree).
PGI will generally, at its discretion appoint (and may at any time remove), other parties, including companies affiliated with PGI, as its agent to carry out the provisions of the Service Agreement and/or the Administrative Service Agreement. However, the appointment of an agent shall not relieve PGI of any of its responsibilities or liabilities under those Agreements. Any fees paid to agents under these Agreements shall be the sole responsibility of PGI.
Rule 12b-1 Fees / Distribution Plans and Agreements
The Distributor for the Funds is Principal Funds Distributor, Inc. (“PFD”). The address for PFD is as follows: 620 Coolidge Drive, Suite 300, Folsom, CA 95630.
In addition to the management and service fees, certain of the Fund's share classes are subject to a Rule 12b-1 Distribution Plan and Agreement (a “Plan”). The Board and initial shareholders of Classes A, C, J, R-1, R-3, and R-4 shares have approved and entered into a Plan. In adopting the Plans, the Board (including a majority of directors who are not interested persons of the Fund (as defined in the 1940 Act)) determined that there was a reasonable likelihood that the Plans would benefit the Funds and the shareholders of the affected classes. Among the possible benefits of the Plans include the potential for building and retaining Fund assets as well as the ability to offer an incentive for registered representatives to provide ongoing servicing to shareholders.
The Plans provide that each Fund makes payments to the Fund's Distributor from assets of each share class that has a Plan to compensate the Distributor and other selling dealers, various banks, broker-dealers and other financial intermediaries, for providing certain services to the Fund. Such services may include, but are not limited to:
•    formulation and implementation of marketing and promotional activities;
•    preparation, printing, and distribution of sales literature;
•    preparation, printing, and distribution of prospectuses and the Fund reports to other than existing shareholders;
•    obtaining such information with respect to marketing and promotional activities as the Distributor deems advisable;
•    making payments to dealers and others engaged in the sale of shares or who engage in shareholder support services; and
•    providing training, marketing, and support with respect to the sale of shares.
8


The Fund pays the Distributor a fee after the end of each month at an annual rate as a percentage of the daily net asset value of the assets attributable to each share class as follows:
Share Class
Maximum Annualized
12b-1 Fee
A (1)(2) (0.15% Government & High Quality Bond, LargeCap S&P 500 Index and Short-Term Income Funds)
0.25%
C (2)
1.00%
J (2)
0.15%
R-1
0.35%
R-3 0.25%
R-4 0.10%
(1) Class A shares of the Money Market Fund are not subject to Rule 12b-1 fees.
(2) The Distributor also receives the proceeds of any CDSC imposed.
Effective December 31, 2015, the Distributor has contractually agreed to limit the Distribution Fees attributable to Class J normally payable by the Money Market Fund. This waiver is in place through February 28, 2022 and will reduce the Money Market Fund’s Distribution Fees by 0.15%. It is expected that the fee waiver will continue to the period disclosed; however, Principal Funds, Inc. and the Distributor, the parties to the agreement, may agree to terminate the fee waiver prior to the end of the period.
Effective January 1, 2021, the Distributor has voluntarily agreed to limit the Distribution Fees attributable to Class J, reducing the Fund’s Distribution Fees for Class J Shares by 0.020%.* This voluntary waiver may be revised or terminated at any time without notice to shareholders.
* For the period from December 31, 2016 to December 31, 2020, the voluntary waiver was 0.030%.
The Distributor may remit on a continuous basis all of these sums to its investment representatives and other financial intermediaries as a trail fee in recognition of their services and assistance.
Currently, the Distributor makes payments to dealers on accounts for which such dealer is designated dealer of record. Payments are based on the average net asset value of the accounts invested in Classes A, C, J, R-1, R-3, or R-4 shares.
Under the Plans, the Funds have no legal obligation to pay any amount that exceeds the compensation limit. The Funds do not pay, directly or indirectly, interest, carrying charges, or other financing costs in association with these Plans. All fees paid under a Fund's Rule 12b-1 Plan are paid to the Distributor, which is entitled to retain such fees paid by the Fund without regard to the expenses which it incurs.
The Funds made the following Distribution/12b-1 payments for the year ended October 31, 2020:

Fund
Distribution/12b-1 Payments
(amounts in thousands)

Fund
Distribution/12b-1 Payments
(amounts in thousands)
California Municipal $ 1,528  Principal LifeTime 2040 $ 1,767 
Core Fixed Income 1,538  Principal LifeTime 2045 240 
Core Plus Bond 537  Principal LifeTime 2050 834 
Diversified International 903  Principal LifeTime 2055 118 
Equity Income 4,369  Principal LifeTime 2060 70 
Finisterre Emerging Markets Total Return Bond Principal LifeTime 2065
Global Diversified Income 14,402  Principal LifeTime Hybrid 2015 37 
Global Real Estate Securities 545  Principal LifeTime Hybrid 2020 94 
Government & High Quality Bond 916  Principal LifeTime Hybrid 2025 106 
Government Money Market —  Principal LifeTime Hybrid 2030 88 
High Income 13  Principal LifeTime Hybrid 2035 69 
High Yield 2,758  Principal LifeTime Hybrid 2040 59 
Inflation Protection 67  Principal LifeTime Hybrid 2045 34 
International Emerging Markets 413  Principal LifeTime Hybrid 2050 30 
International I 42  Principal LifeTime Hybrid 2055 10 
LargeCap Growth I 1,945  Principal LifeTime Hybrid 2060
LargeCap S&P 500 Index 3,038  Principal LifeTime Hybrid 2065
LargeCap Value III 133  Principal LifeTime Hybrid Income 19 
9



Fund
Distribution/12b-1 Payments
(amounts in thousands)

Fund
Distribution/12b-1 Payments
(amounts in thousands)
MidCap 7,134  Principal LifeTime Strategic Income 196 
MidCap Growth 161  Real Estate Securities 1,642 
MidCap Growth III 83  SAM Balanced 10,443 
MidCap S&P 400 Index 436  SAM Conservative Balanced 3,873 
MidCap Value I 319  SAM Conservative Growth 7,121 
Money Market 553  SAM Flexible Income 6,866 
Overseas SAM Strategic Growth 4,454 
Principal Capital Appreciation  2,868 Short-Term Income 1,335 
Principal LifeTime 2010 473  SmallCap 1,058 
Principal LifeTime 2015 119  SmallCap Growth I 166 
Principal LifeTime 2020 1,992  SmallCap S&P 600 Index 528 
Principal LifeTime 2025 440  SmallCap Value II 57 
Principal LifeTime 2030 2,653  Tax-Exempt Bond 1,324 
Principal LifeTime 2035 319 
Transfer Agency Agreement (Classes A, C, J, Institutional, R-1, R-3, R-4, R-5, and R-6 shares)
The Transfer Agency Agreement provides for Principal Shareholder Services, Inc. (“PSS”) (620 Coolidge Drive, Suite 300, Folsom, CA 95630), an affiliate of PGI, to act as transfer and shareholder servicing agent for the Classes A, C, J, Institutional, R-1, R-3, R-4, R-5, and R-6 shares.
For Classes A and C, and Institutional Class shares, the Fund pays PSS a fee for the services provided pursuant to the Transfer Agency Agreement in an amount equal to the costs incurred by PSS for providing such services.
For Class J shares, the Fund pays PSS a fee for the services provided pursuant to the Transfer Agency Agreement in an amount that includes profit.
The Fund pays PSS for the following services for Classes A, C and J, and Institutional Class shares:
•    issuance, transfer, conversion, cancellation, and registry of ownership of Fund shares, and maintenance of open account system;
•    preparation and distribution of dividend and capital gain payments to shareholders;
•    delivery, redemption and repurchase of shares, and remittances to shareholders;
•    the tabulation of proxy ballots and the preparation and distribution to shareholders of notices, proxy statements and proxies, reports, confirmation of transactions, prospectuses and tax information;
•    communication with shareholders concerning the above items; and
•    use of its best efforts to qualify the Capital Stock of the Fund for sale in states and jurisdictions as directed by the Fund.
The Fund does not pay for these services for Classes R-1, R-3, R-4, R-5, and R-6 shares. PSS will pay operating expenses attributable to Classes R-1, R-3, R-4, and R-5 shares related to (a) the cost of meetings of shareholders and (b) the costs of initial and ongoing qualification of the capital stock of the Fund for sale in states and jurisdictions.
10


DESCRIPTION OF THE FUNDS’ INVESTMENTS AND RISKS
The Fund is a registered, open-end management investment company, commonly called a mutual fund. The Fund consists of multiple investment portfolios which are referred to as "Funds." Each portfolio operates for many purposes as if it were an independent mutual fund. Each portfolio has its own investment objective, strategy, and management team. Each of the Funds is diversified, as that term is used in the Investment Company Act of 1940, as amended (the "1940 Act"), and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time, except the Finisterre Emerging Markets Total Return Bond, LargeCap Growth I and Real Estate Securities Funds, which are non-diversified.
Fund Policies
The investment objective, principal investment strategies and principal risks of each Fund are described in the Prospectus. This Statement of Additional Information contains supplemental information about those strategies and risks and the types of securities that those managing the investments of each Fund can select. Additional information is also provided about the strategies that each Fund may use to try to achieve its objective.
The composition of each Fund and the techniques and strategies that those managing the fund's investments may use in selecting securities will vary over time. A Fund is not required to use all of the investment techniques and strategies available to it in seeking its goals.
Unless otherwise indicated, with the exception of the percentage limitations on borrowing, the restrictions apply at the time transactions are entered into. Accordingly, any later increase or decrease beyond the specified limitation, resulting from market fluctuations or in a rating by a rating service, does not require elimination of any security from the portfolio.
The investment objective of each Fund and, except as described below as "Fundamental Restrictions," the investment strategies described in this Statement of Additional Information and the prospectus are not fundamental and may be changed by the Board without shareholder approval.
With the exception of the diversification test required by the Internal Revenue Code, the Funds will not consider collateral held in connection with securities lending activities when applying any of the following fundamental restrictions or any other investment restriction set forth in each Fund's prospectus or Statement of Additional Information.
Fundamental Restrictions
Except as specifically noted, each Fund has adopted the following fundamental restrictions. Each fundamental restriction is a matter of fundamental policy and may not be changed without a vote of a majority of the outstanding voting securities of the affected Fund. The 1940 Act provides that "a vote of a majority of the outstanding voting securities" of a Fund means the affirmative vote of the lesser of 1) more than 50% of the outstanding Fund shares or 2) 67% or more of the Fund shares present at a meeting if more than 50% of the outstanding Fund shares are represented at the meeting in person or by proxy. Each share has one vote, with fractional shares voting proportionately. Shares of all classes of a Fund will vote together as a single class except when otherwise required by law or as determined by the Board.
Each Fund:
1)    may not issue senior securities, except as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.
2)    has adopted a commodities policy, as follows:
(a)The California Municipal Fund may not purchase or sell commodities, except as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.
(b)The remaining Funds may not purchase or sell commodities, except as permitted by applicable law, regulation or regulatory authority having jurisdiction.
3)    may not purchase or sell real estate, which term does not include securities of companies which deal in real estate or mortgages or investments secured by real estate or interests therein, except that each Fund reserves freedom of action to hold and to sell real estate acquired as a result of the Fund’s ownership of securities.
11


4)    may not borrow money, except as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.
5)    may not make loans except as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.
6)    has adopted a policy regarding diversification, as follows:
(a)The Finisterre Emerging Markets Total Return Bond, LargeCap Growth I and Real Estate Securities Funds have elected to be non-diversified.
(b)All other Funds have elected to be treated as a “diversified” investment company, as that term is used in the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.
7)    has adopted a concentration policy, as follows:
(a)The Global Real Estate Securities and Real Estate Securities Funds will concentrate their investments in a particular industry or group of industries as described in the prospectus.
(b)The LargeCap S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P 600 Index Funds will not concentrate their investments in a particular industry or group of industries except to the extent that the related Index is also so concentrated.
(c)The remaining Funds may not concentrate, as that term is used in the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time, its investments in a particular industry or group of industries.
8)    may not act as an underwriter of securities, except to the extent that the Fund may be deemed to be an underwriter in connection with the sale of securities held in its portfolio.
Non-Fundamental Restrictions
Except as specifically noted, each Fund has also adopted the following non-fundamental restrictions. Non-fundamental restrictions are not fundamental policies and may be changed without shareholder approval. It is contrary to each Fund's present policy to:
1)    Invest more than 15% of its net assets in illiquid securities and in repurchase agreements maturing in more than seven days except to the extent permitted by applicable law or regulatory authority having jurisdiction, from time to time; however:
(a)The Government Money Market and Money Market Funds may each not invest more than 5% of its net assets in illiquid securities and in repurchase agreements maturing in more than seven days except to the extent permitted by applicable law or regulatory authority having jurisdiction, from time to time.
(b)International Fund I, the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and the Strategic Asset Management (SAM) Portfolios have not adopted this non-fundamental restriction.
2)    Pledge, mortgage, or hypothecate its assets, except to secure permitted borrowings.
(a)With respect to the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and the Strategic Asset Management (SAM) Portfolios, the deposit of underlying securities and other assets in escrow and other collateral arrangements in connection with transactions that involve any future payment obligation, as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by any regulatory authority having jurisdiction, from time to time, by the underlying funds are not deemed to be pledges, mortgages, hypothecations, or other encumbrances.
(b)For all other Funds, the deposit of underlying securities and other assets in escrow and other collateral arrangements in connection with transactions that involve any future payment obligation, as permitted under the 1940 Act, as amended, and as interpreted, modified or otherwise permitted by any regulatory authority having jurisdiction, from time to time, are not deemed to be pledges, mortgages, hypothecations, or other encumbrances.
(c)International Fund I has not adopted this non-fundamental restriction.
12


3)     Invest in companies for the purpose of exercising control or management.
(a)International Fund I has not adopted this non-fundamental restriction.
4)    Invest more than 25% of its assets in foreign securities; however:
(a)The High Yield Fund may not invest more than 35% of its assets in foreign securities;
(b)The Diversified International, Finisterre Emerging Markets Total Return Bond, Global Diversified Income, Global Real Estate Securities, International Emerging Markets, Money Market, and Overseas Funds each may invest up to 100% of its assets in foreign securities;
(c)The LargeCap S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P 600 Index Funds each may invest in foreign securities to the extent that the relevant index is so invested;
(d)The California Municipal, Government & High Quality Bond, Government Money Market and Tax-Exempt Bond Funds may not invest in foreign securities; and
(e)International Fund I, the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and the Strategic Asset Management (SAM) Portfolios have not adopted this non-fundamental restriction.
5)    Invest more than 5% of its total assets in real estate limited partnership interests.
(a) The Global Diversified Income, Global Real Estate Securities, International I, and Real Estate Securities Funds and the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and the Strategic Asset Management (SAM) Portfolios have not adopted this non-fundamental restriction.
6)    Acquire securities of other investment companies in reliance on Section 12(d)(1)(F) or (G) of the 1940 Act, invest more than 10% of its total assets in securities of other investment companies, invest more than 5% of its total assets in the securities of any one investment company, or acquire more than 3% of the outstanding voting securities of any one investment company except in connection with a merger, consolidation, or plan of reorganization and except as permitted by the 1940 Act, SEC rules adopted under the 1940 Act or exemptions granted by the SEC. The Fund may purchase securities of closed-end investment companies in the open market where no underwriter or dealer’s commission or profit, other than a customary broker’s commission, is involved.     
(a) The Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and the Strategic Asset Management (SAM) Portfolios have not adopted this non-fundamental restriction.
International Fund I has adopted additional non-fundamental restrictions as noted below. The Fund:
1)    may not purchase securities on margin, except that the Fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments in connection with futures contracts and options on futures contracts shall not constitute purchasing securities on margin.
2)    may not purchase any security if, as a result, more than 15% of its net assets would be invested in securities that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued.
Non-Fundamental Policy - Rule 35d-1 under the 1940 Act - Investment Company Names
Except as specifically noted, each Fund has also adopted the non-fundamental policy pursuant to SEC Rule 35d-1, which requires it, under normal circumstances, to invest at least 80% of its net assets, plus any borrowings for investment purposes, in the type of investments, industry or geographic region (as described in the prospectus) as suggested by the name of the Fund. This policy applies at the time of purchase. The Fund will provide 60 days’ notice to shareholders prior to implementing a change in this policy for the Fund. For purposes of this non-fundamental restriction, the Fund tests market capitalization ranges monthly.
13


For purposes of testing this requirement with respect to:
foreign currency investments, each Fund will count forward foreign currency contracts and other investments that have economic characteristics similar to foreign currency; the value of such contracts and investments will include the Fund’s investments in cash and/or cash equivalents to the extent such instruments are used to cover the Fund’s exposure under its forward foreign currency contracts and similar investments.
derivatives instruments, each Fund will typically count the mark-to-market value of such derivatives. However, the Fund may use a derivative contract’s notional value when it determines that notional value is an appropriate measure of the Fund’s exposure to investments. For example, with respect to single name equity swaps which are “fully paid” (equity swaps in which cash and/or cash equivalents are specifically segregated on the Fund’s books for the purpose of covering the full notional value of the swap), each Fund will count the value of such cash and/or cash equivalents.
investments in underlying funds (including ETFs), each Fund will count all investments in an underlying fund toward the requirement as long as 80% of the value of such underlying fund's holdings focus on the particular type of investment suggested by the Fund name.
The California Municipal, Diversified International, Global Diversified Income, High Income, Inflation Protection, International I, Principal Capital Appreciation, Short-Term Income and Tax-Exempt Bond Funds, Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and Strategic Asset Management (SAM) Portfolios have not adopted this non-fundamental policy.
The Tax-Exempt Bond Fund has also adopted a fundamental policy which requires it, under normal circumstances, to invest at least 80% of its net assets in investments, the income from which is exempt from federal income tax or so that at least 80% of the income the Fund distributes will be exempt from federal income tax.
The California Municipal Fund has adopted a fundamental policy that requires it, under normal circumstances, to invest at least 80% of its net assets in investments the income from which is exempt from federal income tax and California state personal income tax or so that at least 80% of the income the Fund distributes will be exempt from federal income tax and California state personal income tax. The Fund also has adopted a non-fundamental policy that requires it, under normal circumstances, to invest at least 80% of its net assets in municipal obligations.
Investment Strategies and Risks Related to Borrowing and Senior Securities, Commodity-Related Investments, Industry Concentration and Loans
Borrowing and Senior Securities
Under the 1940 Act, a fund that borrows money is required to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the fund’s total assets made for temporary or emergency purposes. If a Fund invests the proceeds of borrowing, borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a fund’s portfolio. If a Fund invests the proceeds of borrowing, money borrowed will be subject to interest costs that may or may not be recovered by earnings on the securities purchased. A fund also may be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.
Pursuant to SEC staff interpretations of the 1940 Act, a fund that purchases securities or makes other investments that have a leveraging effect on the fund (for example, reverse repurchase agreements) must segregate assets to render them not available for sale or other disposition in an amount equal to the amount the fund owes pursuant to the terms of the security or other investment.
14


Commodity-Related Investments
All Funds Except the Finisterre Emerging Markets Total Return Bond Fund
Pursuant to a claim for exclusion filed with the Commodity Futures Trading Commission (“CFTC”) on behalf of the Funds under Rule 4.5, the Funds are not deemed to be “commodity pools” or “commodity pool operators” under the Commodity Exchange Act (“CEA”). The Funds are therefore not subject to registration under the CEA. The CFTC recently amended Rule 4.5 “Exclusion for certain otherwise regulated persons from the definition of the term ‘commodity pool operator.’” Rule 4.5 provides that an investment company does not meet the definition of “commodity pool” or “commodity pool operator” if its use of futures contracts, options on futures contracts and swaps is sufficiently limited that the fund can fall within one of two exclusions set out in Rule 4.5. The Funds intend to limit their use of futures contracts, options on futures contracts and swaps to the degree necessary to fall within one of the two exclusions. If any of the Funds is unable to do so, it may incur expenses to comply with the CEA and rules the CFTC has adopted under it.
Finisterre Emerging Markets Total Return Bond Fund
Based on its current investment strategies, the Finisterre Unconstrained Emerging Markets Bond Fund is deemed to be a "commodity pool" under the CEA, and PGI is considered a "commodity pool operator" with respect to the Fund. PGI is therefore subject to dual regulation by the SEC and the CFTC. The CFTC or the SEC could alter the regulatory requirements governing the use of commodity futures (which include futures on broad-based securities indexes and interest rate futures and currency futures) or options on commodity futures or swaps transactions by investment companies, including this Fund.
Industry Concentration
“Concentration” means a fund invests more than 25% of its net assets in a particular industry or group of industries. To monitor compliance with the policy regarding industry concentration, the Funds may use the industry classifications provided by Bloomberg, L.P., the Morgan Stanley Capital International (MSCI)/Standard & Poor's Global Industry Classification Standard (GICS), the Directory of Companies Filing Annual Reports with the Securities and Exchange Commission or any other reasonable industry classification system.
The Funds interpret their policy with respect to concentration in a particular industry to apply only to direct investments in the securities of issuers in a particular industry. To the extent a Fund invests its assets in underlying investment companies, 25% or more of such Fund’s total assets may be indirectly exposed to a particular industry or group of related industries through its investments in one or more underlying investment companies.
For purposes of this restriction, government securities such as treasury securities or mortgage-backed securities that are issued or guaranteed by the U.S. government, its agencies or instrumentalities are not subject to the Funds' industry concentration restrictions.
The Funds view their investments in tax-exempt municipal securities as not representing interests in any particular industry or group of industries. For information about municipal securities, see the Municipal Obligations section.
Loans
A Fund may not make loans to other persons except as permitted by (i) the 1940 Act and the rules and regulations thereunder, or other successor law governing the regulation of registered investment companies, or interpretations or modifications thereof by the U.S. Securities and Exchange Commission (“SEC”), SEC staff or other authority of competent jurisdiction, or (ii) pursuant to exemptive or other relief or permission from the SEC, SEC staff or other authority of competent jurisdiction. Generally, this means the Funds are typically permitted to make loans, but must take into account potential issues such as liquidity, valuation, and avoidance of impermissible transactions. Examples of permissible loans include (a) the lending of its portfolio securities, (b) the purchase of debt securities, loan participations and/or engaging in direct corporate loans in accordance with its investment objectives and policies, (c) the entry into a repurchase agreement (to the extent such entry is deemed to be a loan), and (d) loans to affiliated investment companies to the extent permitted by the 1940 Act or any exemptions therefrom that may be granted by the SEC.
15


Other Investment Strategies and Risks
Commodity Index-Linked Notes
A commodity index-linked note is a type of structured note that is a derivative instrument. Over the long term, the returns on a fund's investments in commodity index-linked notes are expected to exhibit low or negative correlation with stocks and bonds, which means the prices of commodity-linked notes may move in a different direction than investments in traditional equity and debt securities. As an example, during periods of rising inflation, debt securities have historically tended to decrease in value and the prices of certain commodities, such as oil and metals, have historically tended to increase. The reverse may be true during "bull markets," when the value of traditional securities such as stocks and bonds is increasing. Under such economic conditions, a fund's investments in commodity index-linked notes may be expected not to perform as well as investments in traditional securities. There can be no assurance, however, that derivative instruments will perform in that manner in the future and, at certain times in the past, the price movements of commodity-linked investments have been parallel to debt and equity securities. If commodities prices move in tandem with the prices of financial assets, they may not provide overall portfolio diversification benefits.
Convertible Securities
A convertible security is a bond, debenture, note, preferred stock, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. A convertible security generally entitles the holder to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to non-convertible debt or preferred securities, as applicable. Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities entail more risk than its debt obligations. Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities.
Because of the conversion feature, the price of the convertible security will normally fluctuate in some proportion to changes in the price of the underlying asset, and as such is subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may tend to cushion the security against declines in the price of the underlying asset. However, the income component of convertible securities causes fluctuations based upon changes in interest rates and the credit quality of the issuer.
If the conversion value of a convertible security increases to a point that approximates or exceeds its investment value, the value of the security will be principally influenced by its conversion value. A convertible security will sell at a premium over its conversion value to the extent investors place value on the right to acquire the underlying common stock while holding an income-producing security.
A convertible security may be subject to redemption at the option of the issuer at a predetermined price. If a convertible security held by a fund is called for redemption, the fund would be required to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the convertible security to a third party, which may have an adverse effect on the fund’s ability to achieve its investment objective.
Synthetic Convertibles
A “synthetic” convertible security may be created by combining separate securities that possess the two principal characteristics of a traditional convertible security, i.e., an income-producing security (“income-producing component”) and the right to acquire an equity security (“convertible component”). The income-producing component is achieved by investing in non-convertible, income-producing securities such as bonds, preferred stocks and money market instruments, which may be represented by derivative instruments. The convertible component is achieved by investing in securities or instruments such as warrants or options to buy common stock at a certain exercise price, or options on a stock index. Unlike a traditional convertible security, which is a single security having a single market value, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the “market value” of a synthetic convertible security is the sum of the values of its income-producing component and its convertible component. For this reason, the values of a synthetic convertible security and a traditional convertible security may respond differently to market fluctuations.
16


More flexibility is possible in the assembly of a synthetic convertible security than in the purchase of a convertible security. Although synthetic convertible securities may be selected where the two components are issued by a single issuer, thus making the synthetic convertible security similar to the traditional convertible security, the character of a synthetic convertible security allows the combination of components representing distinct issuers, when such a combination may better achieve a fund’s investment objective. A synthetic convertible security also is a more flexible investment in that its two components may be purchased separately. For example, a fund may purchase a warrant for inclusion in a synthetic convertible security but temporarily hold short-term investments while postponing the purchase of a corresponding bond pending development of more favorable market conditions.
A holder of a synthetic convertible security faces the risk of a decline in the price of the security or the level of the index involved in the convertible component, causing a decline in the value of the security or instrument, such as a call option or warrant, purchased to create the synthetic convertible security. Should the price of the stock fall below the exercise price and remain there throughout the exercise period, the entire amount paid for the call option or warrant would be lost. Because a synthetic convertible security includes the income-producing component as well, the holder of a synthetic convertible security also faces the risk that interest rates will rise, causing a decline in the value of the income-producing instrument.
A fund also may purchase synthetic convertible securities created by other parties, including convertible structured notes. Convertible structured notes are income-producing debentures linked to equity and are typically issued by investment banks. Convertible structured notes have the attributes of a convertible security; however, the investment bank that issues the convertible note, rather than the issuer of the underlying common stock into which the note is convertible, assumes credit risk associated with the underlying investment, and the fund in turn assumes credit risk associated with the convertible note.
Corporate Reorganizations
Funds may invest in securities for which a tender or exchange offer has been made or announced and in securities of companies for which a merger, consolidation, liquidation or reorganization proposal has been announced if, in the judgment of those managing the fund's investments, there is a reasonable prospect of capital appreciation significantly greater than the brokerage and other transaction expenses involved. The primary risk of such investments is that if the contemplated transaction is abandoned, revised, delayed or becomes subject to unanticipated uncertainties, the market price of the securities may decline below the purchase price paid by a fund.
In general, securities which are the subject of such an offer or proposal sell at a premium to their historic market price immediately prior to the announcement of the offer or proposal. However, the increased market price of such securities may discount what the stated or appraised value of the security would be if the contemplated transaction were approved or consummated. Such investments may be advantageous when the discount: significantly overstates the risk of the contingencies involved; significantly undervalues the securities, assets or cash to be received by shareholders of the prospective company as a result of the contemplated transaction; or fails adequately to recognize the possibility that the offer or proposal may be replaced or superseded by an offer or proposal of greater value. The evaluation of such contingencies requires unusually broad knowledge and experience on the part of those managing the fund's investments, which must appraise not only the value of the issuer and its component businesses, but also the financial resources and business motivation of the offer or proposal as well as the dynamics of the business climate when the offer or proposal is in process.
Cyber Security Issues
The Fund and its service providers may be subject to cyber security risks. Those risks include, among others, theft, misuse or corruption of data maintained online or digitally; denial of service attacks on websites; the loss or unauthorized release of confidential and proprietary information; operational disruption; or various other forms of cyber security breaches. Cyber-attacks against or security breakdowns of a Fund or its service providers may harm the Fund and its shareholders, potentially resulting in, among other things, financial losses, the inability of Fund shareholders to transact business, inability to calculate a fund’s NAV, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance and remediation costs. Cyber security risks may also affect issuers of securities in which a fund invests, potentially causing the fund’s investment in such issuers to lose value. Despite risk management processes, there can be no guarantee that a fund will avoid losses relating to cyber security risks or other information security breaches.
17


Derivatives
Options on Securities and Securities Indices
The Funds (except the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and SAM Portfolios) may each write (sell) and purchase call and put options on securities in which it invests and on securities indices based on securities in which the Fund invests. The Funds may engage in these transactions to hedge against a decline in the value of securities owned or an increase in the price of securities which the Fund plans to purchase, or to generate additional revenue.
Exchange-Traded Options. An exchange-traded option may be closed out only on an exchange that generally provides a liquid secondary market for an option of the same series. If a liquid secondary market for an exchange-traded option does not exist, it might not be possible to effect a closing transaction with respect to a particular option, with the result that a Fund would have to exercise the option in order to consummate the transaction.
Over the Counter ("OTC") Options. OTC options differ from exchange-traded options in that they are two-party contracts, with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options. An OTC option (an option not traded on an established exchange) may be closed out only by agreement with the other party to the original option transaction. With OTC options, a Fund is at risk that the other party to the transaction will default on its obligations or will not permit the Fund to terminate the transaction before its scheduled maturity. While a Fund will seek to enter into OTC options only with dealers who agree to or are expected to be capable of entering into closing transactions with a Fund, there can be no assurance that a Fund will be able to liquidate an OTC option at a favorable price at any time prior to its expiration. OTC options are not subject to the protections afforded purchasers of listed options by the Options Clearing Corporation or other clearing organizations.
Writing Call and Put Options. When a Fund writes a call option, it gives the purchaser of the option the right to buy a specific security at a specified price at any time before the option expires. When a Fund writes a put option, it gives the purchaser of the option the right to sell to the Fund a specific security at a specified price at any time before the option expires. In both situations, the Fund receives a premium from the purchaser of the option.
The premium received by a Fund reflects, among other factors, the current market price of the underlying security, the relationship of the exercise price to the market price, the period until the expiration of the option and interest rates. The premium generates additional income for the Fund if the option expires unexercised or is closed out at a profit. By writing a call, a Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option, but it retains the risk of loss if the price of the security should decline. By writing a put, a Fund assumes the risk that it may have to purchase the underlying security at a price that may be higher than its market value at time of exercise.
The Funds usually own the underlying security covered by any outstanding call option. With respect to an outstanding put option, each Fund deposits and maintains with its custodian or segregates on the Fund's records, cash, or other liquid assets with a value at least equal to the market value of the option that was written.
Once a Fund has written an option, it may terminate its obligation before the option is exercised. The Fund executes a closing transaction by purchasing an option of the same series as the option previously written. The Fund has a gain or loss depending on whether the premium received when the option was written exceeds the closing purchase price plus related transaction costs.
Purchasing Call and Put Options. When a Fund purchases a call option, it receives, in return for the premium it pays, the right to buy from the writer of the option the underlying security at a specified price at any time before the option expires. A Fund purchases call options in anticipation of an increase in the market value of securities that it intends ultimately to buy. During the life of the call option, the Fund is able to buy the underlying security at the exercise price regardless of any increase in the market price of the underlying security. For a call option to result in a gain, the market price of the underlying security must exceed the sum of the exercise price, the premium paid, and transaction costs.
When a Fund purchases a put option, it receives, in return for the premium it pays, the right to sell to the writer of the option the underlying security at a specified price at any time before the option expires. A Fund purchases put options in anticipation of a decline in the market value of the underlying security. During the life of the put option, the Fund is able to sell the underlying security at the exercise price regardless of any decline in the market price of the underlying security. In order for a put option to result in a gain, the market price of the underlying security must decline, during the option period, below the exercise price enough to cover the premium and transaction costs.
18


Once a Fund purchases an option, it may close out its position by selling an option of the same series as the option previously purchased. The Fund has a gain or loss depending on whether the closing sale price exceeds the initial purchase price plus related transaction costs.
Options on Securities Indices. Each Fund may purchase and sell put and call options on any securities index based on securities in which the Fund may invest. Securities index options are designed to reflect price fluctuations in a group of securities or segment of the securities market rather than price fluctuations in a single security. Options on securities indices are similar to options on securities, except that the exercise of securities index options requires cash payments and does not involve the actual purchase or sale of securities. The Funds engage in transactions in put and call options on securities indices for the same purposes as they engage in transactions in options on securities. When a Fund writes call options on securities indices, it holds in its portfolio underlying securities which, in the judgment of those managing the fund's investments, correlate closely with the securities index and which have a value at least equal to the aggregate amount of the securities index options.
Index Warrants. Funds may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at a time when, in the case of a call warrant, the exercise price is more than the value of the underlying index, or in the case of a put warrant, the exercise price is less than the value of the underlying index. If a Fund were not to exercise an index warrant prior to its expiration, then a Fund would lose the amount of the purchase price paid by it for the warrant. A Fund will normally use index warrants in a manner similar to its use of options on securities indices.
Risks Associated with Option Transactions. An option position may be closed out only on an exchange that provides a secondary market for an option of the same series. The Funds generally purchase or write only those options for which there appears to be an active secondary market. However, there is no assurance that a liquid secondary market on an exchange exists for any particular option, or at any particular time. If a Fund is unable to effect closing sale transactions in options it has purchased, it has to exercise its options in order to realize any profit and may incur transaction costs upon the purchase or sale of underlying securities. If a Fund is unable to effect a closing purchase transaction for a covered option that it has written, it is not able to sell the underlying securities, or dispose of the assets held in a segregated account, until the option expires or is exercised. A Fund's ability to terminate option positions established in the over-the-counter market may be more limited than for exchange-traded options and may also involve the risk that broker-dealers participating in such transactions might fail to meet their obligations.
Futures Contracts and Options on Futures Contracts
The Funds (except the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and SAM Portfolios) may each purchase and sell futures contracts of many types, including for example, futures contracts covering indexes, financial instruments, and foreign currencies. Each Fund may purchase and sell financial futures contracts and options on those contracts. Financial futures contracts are commodities contracts based on financial instruments such as U.S. Treasury bonds or bills or on securities indices such as the S&P 500 Index. The Commodity Futures Trading Commission regulates futures contracts, options on futures contracts, and the commodity exchanges on which they are traded. Through the purchase and sale of futures contracts and related options, a Fund may seek to hedge against a decline in the value of securities owned by the Fund or an increase in the price of securities that the Fund plans to purchase. Each Fund may also purchase and sell futures contracts and related options to maintain cash reserves while simulating full investment in securities and to keep substantially all of its assets exposed to the market. Each Fund may enter into futures contracts and related options transactions both for hedging and non-hedging purposes.
19


Futures Contracts. A Fund may purchase or sell a futures contract to gain exposure to a particular market asset without directly purchasing that asset. When a Fund sells a futures contract based on a financial instrument, the Fund is obligated to deliver that kind of instrument at a specified future time for a specified price. When a Fund purchases that kind of contract, it is obligated to take delivery of the instrument at a specified time and to pay the specified price. In most instances, these contracts are closed out by entering into an offsetting transaction before the settlement date. The Fund realizes a gain or loss depending on whether the price of an offsetting purchase plus transaction costs are less or more than the price of the initial sale or on whether the price of an offsetting sale is more or less than the price of the initial purchase plus transaction costs. Although the Funds usually liquidate futures contracts on financial instruments, by entering into an offsetting transaction before the settlement date, they may make or take delivery of the underlying securities when it appears economically advantageous to do so.
A futures contract based on a securities index provides for the purchase or sale of a group of securities at a specified future time for a specified price. These contracts do not require actual delivery of securities but result in a cash settlement. The amount of the settlement is based on the difference in value of the index between the time the contract was entered into and the time it is liquidated (at its expiration or earlier if it is closed out by entering into an offsetting transaction).
When a Fund purchases or sells a futures contract, it pays a commission to the futures commission merchant through which the Fund executes the transaction. When entering into a futures transaction, the Fund does not pay the execution price, as it does when it purchases a security, or a premium, as it does when it purchases an option. Instead, the Fund deposits an amount of cash or other liquid assets (generally about 5% of the futures contract amount) with its futures commission merchant. This amount is known as "initial margin." In contrast to the use of margin account to purchase securities, the Fund's deposit of initial margin does not constitute the borrowing of money to finance the transaction in the futures contract. The initial margin represents a good faith deposit that helps assure the Fund's performance of the transaction. The futures commission merchant returns the initial margin to the Fund upon termination of the futures contract if the Fund has satisfied all its contractual obligations.
Subsequent payments to and from the futures commission merchant, known as "variation margin," are required to be made on a daily basis as the price of the futures contract fluctuates, a process known as "marking to market." The fluctuations make the long or short positions in the futures contract more or less valuable. If the position is closed out by taking an opposite position prior to the settlement date of the futures contract, a final determination of variation margin is made. Any additional cash is required to be paid to or released by the broker and the Fund realizes a loss or gain.
In using futures contracts, the Fund may seek to establish with more certainty than would otherwise be possible the effective price of or rate of return on portfolio securities or securities that the Fund proposes to acquire. A Fund, for example, sells futures contracts in anticipation of a rise in interest rates that would cause a decline in the value of its debt investments. When this kind of hedging is successful, the futures contract increases in value when the Fund's debt securities decline in value and thereby keeps the Fund's net asset value from declining as much as it otherwise would. A Fund may also sell futures contracts on securities indices in anticipation of or during a stock market decline in an endeavor to offset a decrease in the market value of its equity investments. When a Fund is not fully invested and anticipates an increase in the cost of securities it intends to purchase, it may purchase financial futures contracts.
When increases in the prices of equities are expected, a Fund may purchase futures contracts on securities indices in order to gain rapid market exposure that may partially or entirely offset increases in the cost of the equity securities it intends to purchase.
With respect to futures contracts that settle in cash, a Fund will cover (and mark-to-market on a daily basis) liquid assets that, when added to the amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract. When entering into futures contracts that do not settle in cash (physically-settled futures contracts), a Fund will maintain with its custodian (and mark-to-market on a daily basis) liquid assets that, when added to the amounts deposited with a futures commission merchant as margin, are equal to the full notional value of the contract. Physically-settled derivatives contracts (and written options on such contracts) will be treated like cash-settled contracts when a Fund has entered into a contractual arrangement with a third party futures commission merchant or other counterparty to offset the Fund’s exposure under the contract and, failing that, to assign its delivery obligation under the contract to the counterparty.
Options on Futures Contracts. The Funds may also purchase and write call and put options on futures contracts. A call option on a futures contract gives the purchaser the right, in return for the premium paid, to purchase a futures contract (assume a long position) at a specified exercise price at any time before the option expires. A put option gives the purchaser the right, in return for the premium paid, to sell a futures contract (assume a short position), for a specified exercise price, at any time before the option expires.
20


Upon the exercise of a call, the writer of the option is obligated to sell the futures contract (to deliver a long position to the option holder) at the option exercise price, which will presumably be lower than the current market price of the contract in the futures market. Upon exercise of a put, the writer of the option is obligated to purchase the futures contract (deliver a short position to the option holder) at the option exercise price, which will presumably be higher than the current market price of the contract in the futures market. However, as with the trading of futures, most options are closed out prior to their expiration by the purchase or sale of an offsetting option at a market price that reflects an increase or a decrease from the premium originally paid. Options on futures can be used to hedge substantially the same risks addressed by the direct purchase or sale of the underlying futures contracts. For example, if a Fund anticipates a rise in interest rates and a decline in the market value of the debt securities in its portfolio, it might purchase put options or write call options on futures contracts instead of selling futures contracts.
If a Fund purchases an option on a futures contract, it may obtain benefits similar to those that would result if it held the futures position itself. But in contrast to a futures transaction, the purchase of an option involves the payment of a premium in addition to transaction costs. In the event of an adverse market movement, however, the Fund is not subject to a risk of loss on the option transaction beyond the price of the premium it paid plus its transaction costs.
When a Fund writes an option on a futures contract, the premium paid by the purchaser is deposited with the Fund's custodian. The Fund must maintain with its futures commission merchant all or a portion of the initial margin requirement on the underlying futures contract. It assumes a risk of adverse movement in the price of the underlying futures contract comparable to that involved in holding a futures position. Subsequent payments to and from the futures commission merchant, similar to variation margin payments, are made as the premium and the initial margin requirements are marked to market daily. The premium may partially offset an unfavorable change in the value of portfolio securities, if the option is not exercised, or it may reduce the amount of any loss incurred by the Fund if the option is exercised.
Risks Associated with Futures Transactions. There are many risks associated with transactions in futures contracts and related options. The value of the assets that are the subject of the futures contract may not move in the anticipated direction. A Fund's successful use of futures contracts is subject to the ability of those managing the fund's investments to predict correctly the factors affecting the market values of the Fund's portfolio securities. For example, if a Fund is hedged against the possibility of an increase in interest rates which would adversely affect debt securities held by the Fund and the prices of those debt securities instead increases, the Fund loses part or all of the benefit of the increased value of its securities it hedged because it has offsetting losses in its futures positions. Other risks include imperfect correlation between price movements in the financial instrument or securities index underlying the futures contract, on the one hand, and the price movements of either the futures contract itself or the securities held by the Fund, on the other hand. If the prices do not move in the same direction or to the same extent, the transaction may result in trading losses.
Prior to exercise or expiration, a position in futures may be terminated only by entering into a closing purchase or sale transaction. This requires a secondary market on the relevant contract market. The Fund enters into a futures contract or related option only if there appears to be a liquid secondary market. There can be no assurance, however, that such a liquid secondary market exists for any particular futures contract or related option at any specific time. Thus, it may not be possible to close out a futures position once it has been established. Under such circumstances, the Fund continues to be required to make daily cash payments of variation margin in the event of adverse price movements. In such situations, if the Fund has insufficient cash, it may be required to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. In addition, the Fund may be required to perform under the terms of the futures contracts it holds. The inability to close out futures positions also could have an adverse impact on the Fund's ability effectively to hedge its portfolio.
Most United States futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. This daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses.
21


Debt-Linked and Equity-Linked Securities
The Funds may invest in debt-linked and equity-linked securities. The investment results of such instruments are intended to correspond generally to the performance of one or more specified equity or debt securities, or of a specific index or analogous “basket” of equity or debt securities. Therefore, investing in these instruments involves risks similar to the risks of investing in the underlying stocks or bonds directly. In addition, a Fund bears the risk that the issuer of an equity- or debt-linked security may default on its obligations under the instrument. Equity- and debt-linked securities are often used for many of the same purposes as, and share many of the same risks with, other derivative instruments as well as structured notes. Like many derivatives and structured notes, equity- and debt-linked securities may be considered illiquid, potentially limiting a Fund’s ability to dispose of them.
Hybrid Instruments
A hybrid instrument is a type of derivative that combines a traditional stock or bond with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some currency or securities index or another interest rate or some other economic factor (each a “benchmark”). The interest rate or (unlike most fixed income securities) the principal amount payable at maturity of a hybrid security may be increased or decreased, depending on changes in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be economically similar to a combination of a bond and a call option on oil.
Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management and increased total return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the Fund to the credit risk of the issuer of the hybrids. These risks may cause significant fluctuations in the NAV of a Fund.
Certain hybrid instruments may provide exposure to the commodities markets. These are derivative securities with one or more commodity-linked components that have payment features similar to commodity futures contracts, commodity options or similar instruments. Commodity-linked hybrid instruments may be either equity or debt securities, leveraged or unleveraged, and are considered hybrid instruments because they have both security and commodity-like characteristics. A portion of the value of these instruments may be derived from the value of a commodity, futures contract, index or other economic variable and therefore are subject to many of the same risks as investments in those underlying securities, instruments or commodities.
Certain issuers of structured products such as hybrid instruments may be deemed to be investment companies as defined in the 1940 Act. As a result, a Fund’s investments in these products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the 1940 Act.
Spread Transactions
The Funds (except the Principal LifeTime Funds, Principal LifeTime Hybrid Funds, and SAM Portfolios) may each engage in spread trades, which typically represent a simultaneous purchase and sale of two different contracts designed to capture the change in the relationship in price between the two contracts. Spread transactions are typically accompanied by lower margin requirements and lower volatility than an outright purchase. Each Fund may purchase spread options. The purchase of a covered spread option gives the Fund the right to put, or sell, a security that it owns at a fixed dollar spread or fixed yield spread in relationship to another security that the Fund does not own, but which is used as a benchmark. The risk to the Fund in purchasing covered spread options is the cost of the premium paid for the spread option and any transaction costs. In addition, there is no assurance that closing transactions will be available. The security covering the spread option is maintained in segregated accounts either with the Fund's custodian or on the Fund's records. The Funds do not consider a security covered by a spread option to be "pledged" as that term is used in the Fund's policy limiting the pledging or mortgaging of assets. The purchase of spread options can be used to protect each Fund against adverse changes in prevailing credit quality spreads, i.e., the yield spread between high quality and lower quality securities.
22


Swap Agreements and Options on Swap Agreements
Each Fund (except the Government Money Market and Money Market Funds) may engage in swap transactions, including, but not limited to, swap agreements on interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps, to the extent permitted by its investment restrictions. To the extent a Fund may invest in foreign currency-denominated securities, it may also invest in currency swap agreements and currency exchange rate swap agreements. A Fund may also enter into options on swap agreements (“swap options”).
A Fund may enter into swap transactions for any legal purpose consistent with its investment objectives and policies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets; to protect against currency fluctuations; as a duration management technique; to protect against any increase in the price of securities a Fund anticipates purchasing at a later date; to gain exposure to one or more securities, currencies, or interest rates; to take advantage of perceived mispricing in the securities markets; or to gain exposure to certain markets in the most economical way possible.
Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or "swapped" between the parties are generally calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities or commodities representing a particular index.
Interest rate swaps. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (for example, an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal). Forms of swap agreements also include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
Currency swaps. A currency swap is an agreement to exchange cash flows on a notional amount based on changes in the relative values of the specified currencies.
Index swaps. An index swap is an agreement to make or receive payments based on the different returns that would be achieved if a notional amount were invested in a specified basket of securities (such as the S&P 500 Index) or in some other investment (such as U.S. Treasury Securities).
Total return swaps. A total return swap is an agreement to make payments of the total return from a specified asset or instrument (or a basket of such instruments) during the specified period, in return for payments equal to a fixed or floating rate of interest or the total return from another specified asset or instrument. Alternatively, a total return swap can be structured so that one party will make payments to the other party if the value of the relevant asset or instrument increases, but receive payments from the other party if the value of that asset or instrument decreases.
Commodity swap agreements. Consistent with a Fund's investment objectives and general investment policies, certain of the Funds may invest in commodity swap agreements. For example, an investment in a commodity swap agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a total return commodity swap, a Fund will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, a Fund may pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is for more than one period, with interim swap payments, a Fund may pay an adjustable or floating fee. With a "floating" rate, the fee may be pegged to a base rate, such as the London Interbank Offered Rate, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, a Fund may be required to pay a higher fee at each swap reset date.
23


Credit default swap agreements. The "buyer" in a credit default contract is obligated to pay the "seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or "par value," of the reference obligation in exchange for the reference obligation. A Fund may be either the buyer or seller in a credit default swap transaction. If a Fund is a buyer and no event of default occurs, the Fund will lose its investment and recover nothing. However, if an event of default occurs, the Fund (if the buyer) will receive the full notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and five years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. In addition, collateral posting requirements are individually negotiated and there is no regulatory requirement that a counterparty post collateral to secure its obligations or a specified amount of cash, depending upon the terms of the swap, under a credit default swap. Furthermore, there is no requirement that a party be informed in advance when a credit default swap agreement is sold. Accordingly, a Fund may have difficulty identifying the party responsible for payment of its claims. The notional value of credit default swaps with respect to a particular investment is often larger than the total par value of such investment outstanding and, in event of a default, there may be difficulties in making the required deliveries of the reference investments, possibly delaying payments.
The Funds may invest in derivative instruments that provide exposure to one or more credit default swaps. For example, a Fund may invest in a derivative instrument known as the Loan-Only Credit Default Swap Index (“LCDX”), a tradable index with 100 equally-weighted underlying single-name loan-only credit default swaps (“LCDS”). Each underlying LCDS references an issuer whose loans trade in the secondary leveraged loan market. A Fund can either buy the index (take on credit exposure) or sell the index (pass credit exposure to a counterparty). While investing in these types of derivatives will increase the universe of debt securities to which a Fund is exposed, such investments entail additional risks that are not typically associated with investments in other debt securities. Credit default swaps and other derivative instruments related to loans are subject to the risks associated with loans generally, as well as the risks of derivative transactions.
Investment Pools. The Funds may invest in publicly or privately issued interests in investment pools whose underlying assets are credit default, credit-linked, interest rate, currency exchange, equity-linked or other types of swap contracts and related underlying securities or securities loan agreements. The pools’ investment results may be designed to correspond generally to the performance of a specified securities index or “basket” of securities, or sometimes a single security. These types of pools are often used to gain exposure to multiple securities with a smaller investment than would be required to invest directly in the individual securities. They also may be used to gain exposure to foreign securities markets without investing in the foreign securities themselves and/or the relevant foreign market. To the extent that a Fund invests in pools of swaps and related underlying securities or securities loan agreements whose return corresponds to the performance of a foreign securities index or one or more foreign securities, investing in such pools will involve risks similar to the risks of investing in foreign securities. In addition to the risks associated with investing in swaps generally, a Fund bears the risks and costs generally associated with investing in pooled investment vehicles, such as paying the fees and expenses of the pool and the risk that the pool or the operator of the pool may default on its obligations to the holder of interests in the pool, such as a Fund. Interests in privately offered investment pools of swaps may be considered illiquid.
Contracts for differences. “Contracts for differences” are swap arrangements in which a Fund may agree with a counterparty that its return (or loss) will be based on the relative performance of two different groups or “baskets” of securities. For example, as to one of the baskets, a Fund’s return is based on theoretical long futures positions in the securities comprising that basket, and as to the other basket, a Fund’s return is based on theoretical short futures positions in the securities comprising that other basket. The notional sizes of the baskets will not necessarily be the same, which can give rise to investment leverage. A Fund may also use actual long and short futures positions to achieve the market exposure(s) as contracts for differences. A Fund may enter into swaps and contracts for differences for investment return, hedging, risk management and for investment leverage.
24


Swaptions. A swap option (also known as “swaptions”) is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement, at some designated future time on specified terms. The buyer and seller of the swap option agree on the strike price, length of the option period, the term of the swap, notional amount, amortization and frequency of settlement. A Fund may engage in swap options for hedging purposes or in an attempt to manage and mitigate credit and interest rate risk. Each Fund (except the Government Money Market and Money Market Funds) may write (sell) and purchase put and call swap options. The use of swap options involves risks, including, among others, imperfect correlation between movements of the price of the swap options and the price of the securities, indices or other assets serving as reference instruments for the swap option, reducing the effectiveness of the instrument for hedging or investment purposes.
Obligations under Swap Agreements. The swap agreements the Funds enter into settle in cash and, therefore, provide for calculation of the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund's current obligations (or rights) under such a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). A Fund's current obligations under such a swap agreement will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the segregation of assets determined to be liquid by those managing the fund's investments in accordance with procedures established by the Board, to avoid any potential leveraging of the Fund's portfolio. In cases where a Fund is a seller of a credit default swap contract, the Fund will segregate liquid assets equal to the notional amount of the contract. Obligations under swap agreements for which the Fund segregates assets will not be construed to be “senior securities” for purposes of the Fund's investment restriction concerning senior securities.
Risks associated with Swap Agreements. Swaps can be highly volatile and may have a considerable impact on a Fund’s performance, as the potential gain or loss on any swap transaction is not subject to any fixed limit. Whether a Fund's use of swap agreements or swap options will be successful in furthering its investment objective of total return will depend on the ability of those managing the fund's investments to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Funds will enter into swap agreements only with counterparties that present minimal credit risks, as determined by those managing the fund's investments. Certain restrictions imposed on the Funds by the Internal Revenue Code may limit the Funds' ability to use swap agreements.
Depending on the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it writes a swap option than it will incur when it purchases a swap option. When a Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when a Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.
Liquidity of Swap Agreements. Some swap markets have grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, these swap markets have become relatively liquid. The liquidity of swap agreements will be determined by those managing the fund's investments based on various factors, including:
•    the frequency of trades and quotations,
•    the number of dealers and prospective purchasers in the marketplace,
•    dealer undertakings to make a market,
•    the nature of the security (including any demand or tender features), and
•    the nature of the marketplace for trades (including the ability to assign or offset a portfolio's rights and obligations relating to the investment).
Such determination will govern whether a swap will be deemed to be within each Fund's restriction on investments in illiquid securities.
25


Valuing Swap Agreements. For purposes of applying the funds’ investment policies and restrictions (as stated in the Prospectuses and this Statement of Additional Information) swap agreements are generally valued by the funds at market value. In the case of a credit default swap, however, in applying certain of the funds’ investment policies and restrictions the fund will value the credit default swap at its notional value or its full exposure value (i.e., the sum of the notional amount for the contract plus the market value), but may value the credit default swap at market value for purposes of applying certain of the funds’ other investment policies and restrictions. For example, a fund may value credit default swaps at full exposure value for purposes of the fund’s credit quality guidelines because such value reflects the fund’s actual economic exposure during the term of the credit default swap agreement. In this context, both the notional amount and the market value may be positive or negative depending on whether the fund is selling or buying protection through the credit default swap. The manner in which certain securities or other instruments are valued by the funds for purposes of applying investment policies and restrictions may differ from the manner in which those investments are valued by other types of investors.
Permissible Uses of Futures and Options on Futures Contracts
Each Fund may enter into futures contracts and related options transactions, for hedging purposes and for other appropriate risk management purposes, and to modify the Fund's exposure to various currency, commodity, equity, or fixed-income markets. Each Fund may engage in futures trading in an effort to generate returns. When using futures contracts and options on futures contracts for hedging or risk management purposes, each Fund determines that the price fluctuations in the contracts and options are substantially related to price fluctuations in securities held by the Fund or which it expects to purchase. In pursuing traditional hedging activities, each Fund may sell futures contracts or acquire puts to protect against a decline in the price of securities that the Fund owns. Each Fund may purchase futures contracts or calls on futures contracts to protect the Fund against an increase in the price of securities the Fund intends to purchase before it is in a position to do so. When a Fund purchases a futures contract, or writes a call option on a futures contract, it segregates liquid assets that, when added to the value of assets deposited with the futures commission merchant as margin, are equal to the market value of the contract.
Limitations on the Use of Futures, Options on Futures Contracts, and Swaps
All Funds except the Finisterre Emerging Markets Total Return Bond Fund. Pursuant to a claim for exclusion filed with the Commodity Futures Trading Commission (“CFTC”) on behalf of the Funds under Rule 4.5, the Funds are not deemed to be “commodity pools” or “commodity pool operators” under the Commodity Exchange Act (“CEA”). The Funds are therefore not subject to registration under the CEA. Rule 4.5 provides that an investment company does not meet the definition of “commodity pool” or “commodity pool operator” if its use of futures contracts, options on futures contracts and swaps is sufficiently limited that the fund can fall within one of two exclusions set out in Rule 4.5. The Funds intend to limit their use of futures contracts, options on futures contracts and swaps to the degree necessary to fall within one of the two exclusions.
Finisterre Emerging Markets Total Return Bond Fund. The Finisterre Emerging Markets Total Return Bond Fund is deemed to be a regulated "commodity pool" under the CEA and as a result may invest in futures contracts, options on futures contracts and swaps in excess of the limitations imposed by the CFTC under Rule 4.5.
Risk of Potential Government Regulation of Derivatives
It is possible that additional government regulation of various types of derivative instruments, including futures, options and swap agreements, may limit or prevent a fund from using such instruments as a part of its investment strategy, and could ultimately prevent a fund from being able to achieve its investment objective. It is difficult to predict the effects future legislation and regulation in this area, but the effects could be substantial and adverse. It is possible that legislative and regulatory activity could limit or restrict the ability of a fund to use certain instruments as a part of its investment strategy. For instance, in December 2015, the SEC proposed new regulations applicable to a mutual fund's use of derivatives and related instruments.
If adopted as proposed, these regulations could significantly limit or impact a fund's ability to invest in derivatives and related instruments, limit a fund's ability to employ certain strategies that use derivatives and/or adversely affect the fund's performance, efficiency in implementing strategies, and ability to pursue their investment objectives. Limits or restrictions applicable to the counterparties with which the funds engage in derivative transactions could also prevent the funds from using certain instruments.
26


Fixed-Income Securities
ETNs
Certain funds may invest in, or sell short, exchange-traded notes (“ETNs”). ETNs are typically senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market index less applicable fees and expenses. ETNs are listed on an exchange and traded in the secondary market. The fund may hold the ETN until maturity, at which time the issuer is obligated to pay a return linked to the performance of the relevant market index. ETNs do not make periodic interest payments and principal is not protected.
ETNs are subject to credit risk and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs, it will bear their proportionate share of any fees and expenses borne by the ETN. The Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary market. ETNs are also subject to tax risk. The Internal Revenue Service ("IRS") and Congress are considering proposals that would change the timing and character of income and gains from ETNs. There may also be times when an ETN share trades at a premium or discount to its market benchmark or strategy.
Funding Agreements
Funds may invest in Guaranteed Investment Contracts (“GICs”) and similar funding agreements. In connection with these investments, a Fund makes cash contributions to a deposit fund of an insurance company’s general account. The insurance company then credits to a Fund on a monthly basis guaranteed interest, which is based on an index (such as LIBOR). The funding agreements provide that this guaranteed interest will not be less than a certain minimum rate. The purchase price paid for a funding agreement becomes part of the general assets of the insurance company. GICs are considered illiquid securities and will be subject to any limitations on such investments, unless there is an active and substantial secondary market for the particular instrument and market quotations are readily available. Generally, funding agreements are not assignable or transferable without the permission of the issuing company, and an active secondary market in some funding agreements does not currently exist. Investments in GICs are subject to the risks associated with fixed-income instruments generally, and are specifically subject to the credit risk associated with an investment in the issuing insurance company.
Inflation-Indexed Bonds
The Funds may invest in inflation-indexed bonds or inflation protected debt securities, which are fixed income securities whose value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers utilize a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the Consumer Price Index accruals as part of a semi-annual coupon. Inflation-indexed securities issued by the U.S. Treasury (Treasury Inflation Protected Securities or TIPS) have maturities of approximately five, ten or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis equal to a fixed percentage of the inflation-adjusted principal amount. If the periodic adjustment rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if the rate of inflation rises at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds. While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond's inflation measure.
The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for Urban Consumers (CPI-U), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable inflation index calculated by that government. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.
27


Step-Coupon Securities
The Funds may invest in step-coupon securities. Step-coupon securities trade at a discount from their face value and pay coupon interest. The coupon rate is low for an initial period and then increases to a higher coupon rate thereafter. Market values of these types of securities generally fluctuate in response to changes in interest rates to a greater degree than conventional interest-paying securities of comparable term and quality. Under many market conditions, investments in such securities may be illiquid, making it difficult for a Fund to dispose of them or determine their current value.
"Stripped" Securities
The Funds may invest in stripped securities, which are usually structured with two or more classes that receive different proportions of the interest and principal distribution on a pool of U.S. government or foreign government securities or mortgage assets. In some cases, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). Stripped securities commonly have greater market volatility than other types of fixed-income securities. In the case of stripped mortgage securities, if the underlying mortgage assets experience greater than anticipated payments of principal, a Fund may fail to recoup fully its investments in IOs. Stripped securities may be illiquid. Stripped securities may be considered derivative securities.
Structured Notes
Funds may invest in a broad category of instruments known as “structured notes.” These instruments are debt obligations issued by industrial corporations, financial institutions or governmental or international agencies. Traditional debt obligations typically obligate the issuer to repay the principal plus a specified rate of interest. Structured notes, by contrast, obligate the issuer to pay amounts of principal or interest that are determined by reference to changes in some external factor or factors, or the principal and interest rate may vary from the stated rate because of changes in these factors. For example, the issuer’s obligations could be determined by reference to changes in the value of a foreign currency, an index of securities (such as the S&P 500 Index) or an interest rate (such as the U.S. Treasury bill rate). In some cases, the issuer’s obligations are determined by reference to changes over time in the difference (or “spread”) between two or more external factors (such as the U.S. prime lending rate and the total return of the stock market in a particular country, as measured by a stock index). In some cases, the issuer’s obligations may fluctuate inversely with changes in an external factor or factors (for example, if the U.S. prime lending rate goes up, the issuer’s interest payment obligations are reduced). In some cases, the issuer’s obligations may be determined by some multiple of the change in an external factor or factors (for example, three times the change in the U.S. Treasury bill rate). In some cases, the issuer’s obligations remain fixed (as with a traditional debt instrument) so long as an external factor or factors do not change by more than the specified amount (for example, if the value of a stock index does not exceed some specified maximum), but if the external factor or factors change by more than the specified amount, the issuer’s obligations may be sharply reduced.
Structured notes can serve many different purposes in the management of a fund. For example, they can be used to increase a fund’s exposure to changes in the value of assets that a fund would not ordinarily purchase directly (such as stocks traded in a market that is not open to U.S. investors). They also can be used to hedge the risks associated with other investments a fund holds. For example, if a structured note has an interest rate that fluctuates inversely with general changes in a country’s stock market index, the value of the structured note would generally move in the opposite direction to the value of holdings of stocks in that market, thus moderating the effect of stock market movements on the value of a fund’s portfolio as a whole. The cash flow on the underlying instruments may be apportioned among the newly issued structured notes to create securities with different investment characteristics such as varying maturities, payment priorities or interest rate provisions; the extent of the payments made with respect to structured notes is dependent on the extent of the cash flow on the underlying instruments.
28


Structured notes involve special risks. As with any debt obligation, structured notes involve the risk that the issuer will become insolvent or otherwise default on its payment obligations. This risk is in addition to the risk that the issuer’s obligations (and thus the value of a fund’s investment) will be reduced because of adverse changes in the external factor or factors to which the obligations are linked. The value of structured notes will in many cases be more volatile (that is, will change more rapidly or severely) than the value of traditional debt instruments. Volatility will be especially high if the issuer’s obligations are determined by reference to some multiple of the change in the external factor or factors. Structured notes also may be more difficult to accurately price than less complex securities and instruments or more traditional debt securities. Many structured notes have limited or no liquidity, so that a fund would be unable to dispose of the investment prior to maturity. As with all investments, successful use of structured notes depends in significant part on the accuracy of the analysis of those managing the fund's investments of the issuer’s creditworthiness and financial prospects, and of their forecast as to changes in relevant economic and financial market conditions and factors. In instances where the issuer of a structured note is a foreign entity, the usual risks associated with investments in foreign securities apply. Structured notes may be considered derivative securities.
Zero-Coupon Securities
The Funds may invest in zero-coupon securities. Zero-coupon securities have no stated interest rate and pay only the principal portion at a stated date in the future. They usually trade at a substantial discount from their face (par) value. Zero-coupon securities are subject to greater market value fluctuations in response to changing interest rates than debt obligations of comparable maturities that make distributions of interest in cash.
Foreign Currency Transactions
Options on Foreign Currencies
A Fund may buy and write options on foreign currencies in a manner similar to that in which futures or forward contracts on foreign currencies will be utilized. A Fund may use options on foreign currencies to hedge against adverse changes in foreign currency conversion rates. For example, a decline in the U.S. dollar value of a foreign currency in which portfolio securities are denominated will reduce the U.S. dollar value of such securities, even if their value in the foreign currency remains constant. In order to protect against such diminutions in the value of the portfolio securities, a Fund may buy put options on the foreign currency. If the value of the currency declines, a Fund will have the right to sell such currency for a fixed amount in U.S. dollars, thereby offsetting, in whole or in part, the adverse effect on its portfolio. Conversely, when a rise in the U.S. dollar value of a currency in which securities to be acquired are denominated is projected, thereby increasing the cost of such securities, a Fund may buy call options on the foreign currency. The purchase of such options could offset, at least partially, the effects of the adverse movements in exchange rates. As in the case of other types of options, however, the benefit to a Fund from purchases of foreign currency options will be reduced by the amount of the premium and related transaction costs. In addition, if currency exchange rates do not move in the direction or to the extent desired, a Fund could sustain losses or lesser gains on transactions in foreign currency options that would require a Fund to forgo a portion or all of the benefits of advantageous changes in those rates.
A Fund also may write options on foreign currencies. For example, to hedge against a potential decline in the U.S. dollar due to adverse fluctuations in exchange rates, a Fund could, instead of purchasing a put option, write a call option on the relevant currency. If the decline expected by a Fund occurs, the option will most likely not be exercised and the diminution in value of portfolio securities will be offset at least in part by the amount of the premium received. Similarly, instead of purchasing a call option to hedge against a potential increase in the U.S. dollar cost of securities to be acquired, a Fund could write a put option on the relevant currency which, if rates move in the manner projected by a Fund, will expire unexercised and allow a Fund to hedge the increased cost up to the amount of the premium. If exchange rates do not move in the expected direction, the option may be exercised and a Fund would be required to buy or sell the underlying currency at a loss, which may not be fully offset by the amount of the premium. Through the writing of options on foreign currencies, a Fund also may lose all or a portion of the benefits that might otherwise have been obtained from favorable movements in exchange rates.
Futures on Currency
A foreign currency future provides for the future sale by one party and purchase by another party of a specified quantity of foreign currency at a specified price and time. A public market exists in futures contracts covering a number of foreign currencies. Currency futures contracts are exchange-traded and change in value to reflect movements of a currency or a basket of currencies. Settlement must be made in a designated currency.
29


Forward Foreign Currency Exchange Contracts
The Funds may, but are not obligated to, enter into forward foreign currency exchange contracts. Currency transactions include forward currency contracts and exchange listed or over-the-counter options on currencies. A forward currency contract involves a privately negotiated obligation to purchase or sell a specific currency at a specified future date at a price set at the time of the contract.
The typical use of a forward contract is to "lock in" the price of a security in U.S. dollars or some other foreign currency which a Fund is holding in its portfolio. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, a Fund may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated in or exposed to during the period between the date on which the security is purchased or sold and the date on which payment is made or received.
Those managing the fund's investments also may from time to time utilize forward contracts for other purposes. For example, they may be used to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated in or exposed to. At times, a Fund may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated.
A Fund segregates liquid assets in an amount equal to (1) at least its daily marked-to-market (net) obligation (i.e., its daily net liability, if any) with respect to forward currency contracts that are cash settled and (2) the net notional value with respect to forward currency contracts that are not cash settled. It should be noted that the use of forward foreign currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange between the currencies that can be achieved at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit any potential gain that might result if the value of the currency increases.
Foreign Securities
Investing in foreign securities carries political and economic risks distinct from those associated with investing in the United States. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on or delays in the removal of funds or other assets of a fund, political or financial instability or diplomatic and other developments that could affect such investments. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or to convert currency into U.S. Dollars. There may be a greater possibility of default by foreign governments or foreign-government sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic or social instability, military action or unrest or adverse diplomatic developments.
Asia-Pacific Countries
In addition to the risks of foreign investing and the risks of investing in emerging markets, the developing market Asia-Pacific countries in which a Fund may invest are subject to certain additional or specific risks. In the Asia-Pacific markets, there is a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of investors and financial intermediaries. Many of these markets also may be affected by developments with respect to more established markets in the region, such as Japan and Hong Kong. Brokers in developing market Asia-Pacific countries typically are fewer in number and less well capitalized than brokers in the United States.
Many of the developing market Asia-Pacific countries may be subject to a greater degree of economic, political and social instability than is the case in the United States and Western European countries. Such instability may result from, among other things: (i) authoritarian governments or military involvement in political and economic decision- making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and/or (v) ethnic, religious and racial disaffection. In addition, the governments of many of such countries, such as Indonesia, have a heavy role in regulating and supervising the economy.
30


An additional risk common to most such countries is that the economy is heavily export-oriented and, accordingly, is dependent upon international trade. The existence of overburdened infrastructure and obsolete financial systems also present risks in certain countries, as do environmental problems. Certain economies also depend to a significant degree upon exports of primary commodities and, therefore, are vulnerable to changes in commodity prices that, in turn, may be affected by a variety of factors. The legal systems in certain developing market Asia-Pacific countries also may have an adverse impact on a Fund. The rights of investors in developing market Asia-Pacific companies may be more limited than those of shareholders of U.S. corporations. It may be difficult or impossible to obtain and/or enforce a judgment in a developing market Asia-Pacific country.
China
Investing in China involves special considerations, including: the risk of nationalization or expropriation of assets or confiscatory taxation; greater governmental involvement in and control over the economy, interest rates and currency exchange rates; controls on foreign investment and limitations on repatriation of invested capital; greater social, economic and political uncertainty; dependency on exports and the corresponding importance of international trade; and currency exchange rate fluctuations. The government of China maintains strict currency controls in support of economic, trade and political objectives and regularly intervenes in the currency market. The government's actions in this respect may not be transparent or predictable. Furthermore, it is difficult for foreign investors to directly access money market securities in China because of investment and trading restrictions. These and other factors may decrease the value and liquidity of a fund's investments.
Investments in Stock Connect and Bond Connect
Funds may invest in China A shares, which are shares of certain Chinese companies listed and traded through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs (“Stock Connect”). Stock Connect is a securities trading and clearing program established by Hong Kong Exchanges and Clearing Limited, the Shanghai Stock Exchange ("SSE"), the Shenzhen Stock Exchange ("SZSE") and China Securities Depository and Clearing Corporation Limited, which seeks to provide mutual stock market access between Mainland China and Hong Kong. Trading through Stock Connect is subject to numerous restrictions and risks that could impair the Fund’s ability to invest in or sell China A shares and adversely affect the Fund’s performance, such as the following:
China A shares generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules, regulations, and restrictions. Such securities may lose their eligibility, in which case they presumably could be sold but could no longer be purchased through Stock Connect. Market volatility and settlement difficulties in the China A share markets may result in significant fluctuations in the prices and liquidity of the securities traded on such markets. Further regulations or restrictions, such as limitations on redemptions or suspension of trading, may adversely impact the Fund.
Stock Connect is generally only available on business days when both the China and Hong Kong markets are open and when banking services are available in both markets on the corresponding settlement days. As a result, a Fund may not be able trade when it would be otherwise attractive to do so, and the Fund may not be able to dispose of its China A shares in a timely manner.
Investing in China A shares is subject to Stock Connect’s clearance and settlement procedures, which could pose risks to the Fund. Certain requirements must be completed before the market opening, or a Fund cannot sell the shares on that trading day. Stock Connect also imposes quotas that limit aggregate net purchases on an exchange on a particular day, and an investor cannot purchase and sell the same security through Stock Connect on the same trading day. Once the daily quota is reached, orders to purchase additional China A shares through Stock Connect will be rejected. Such restrictions could limit a Fund’s ability to sell its China A shares in a timely manner, or to sell them at all.
If a Fund holds 5% or more of a China A share issuer’s total shares through Stock Connect investments, the Fund must return any profits obtained from the purchase and sale of those shares if both transactions occur within a six-month period. All accounts managed by the Funds’ Advisor and/or its affiliates will be aggregated for purposes of this 5% limitation, which makes it more likely that a Fund’s profits may be subject to these limitations.
Stock Connect uses an omnibus clearing structure, and the Fund’s shares will be registered in its custodian’s name on the Central Clearing and Settlement System. This may limit the ability of the Fund’s advisor to effectively manage a Fund, and may expose the Fund to the credit risk of its custodian or to greater risk of expropriation. Investment in China A shares through Stock Connect may be available only through a single broker that is an affiliate of the Fund’s custodian, which may affect the quality of execution provided by such broker. 
31


China A shares purchased through Stock Connect will be held via a book entry omnibus account in the name of Hong Kong Securities Clearing Company Limited (“HKSCC”), Hong Kong’s clearing entity, and not the Fund’s name as the beneficial owner. Therefore, a Fund’s ability to exercise its rights as a shareholder and to pursue claims against the issuer of China A shares may be limited. While Chinese regulations and the Hong Kong Stock Exchange have issued clarifications and guidance supporting the concept of beneficial ownership through Stock Connect, the interpretation of beneficial ownership in China by regulators and courts may continue to evolve. 
The Fund’s investments in China A shares through Stock Connect are generally subject to Chinese securities regulations and listing rules, among other restrictions. The Fund will not benefit from access to Hong Kong investor compensation funds, which are set up to protect against defaults of trades, when investing through Stock Connect. Investments in China A shares may not be covered by the securities investor protection programs of the exchanges and, without the protection of such programs, will be subject to the risk of default by the broker. If the depository of the SSE and the SZSE defaulted, a Fund may not be able to recover fully its losses from the depository or may be delayed in receiving proceeds as part of any recovery process.
Fees, costs and taxes imposed on foreign investors (such as the Fund) may be higher than comparable fees, costs and taxes imposed on owners of other securities that provide similar investment exposure. Trades using Stock Connect may also be subject to various fees, taxes and market charges imposed by Chinese market participants and regulatory authorities. Uncertainties in China’s tax rules related to the taxation of income and gains from investments in China A shares could result in unexpected tax liabilities for the Fund, and the withholding tax treatment of dividends and capital gains payable to overseas investors currently is unsettled. 
Because trades of eligible China A shares on Stock Connect must be settled in Renminbi (RMB), the Chinese currency, Funds investing through Stock Connect will be exposed to RMB currency risks. The ability to hedge RMB currency risks may be limited. The RMB is subject to exchange control restrictions, and the Fund could be adversely affected by delays in converting currencies into RMB and vice versa.
Because Stock Connect is in its early stages, the effect on the market for trading China A shares with the introduction of numerous foreign investors is currently unknown. Stock Connect is relatively new and may be subject to further interpretation and guidance. There can be no assurance as to Stock Connect’s continued existence or whether future developments regarding the program may restrict or adversely affect the Fund’s investments or returns.
Funds may also invest in China Interbank bonds traded on the China Interbank Bond Market (“CIBM”) through the China - Hong Kong Bond Connect program (“Bond Connect”). In China, the Hong Kong Monetary Authority Central Money Markets Unit holds Bond Connect securities on behalf of investors (such as the Fund) in accounts maintained with maintained with a China-based custodian (either the China Central Depository & Clearing Co. or the Shanghai Clearing House). Investments using Bond Connect are subject to risks similar to those described above with respect to Stock Connect.
Europe
The economies and markets of European countries are often closely connected and interdependent, and events in one European country can have an adverse impact on other European countries. Certain funds may invest in securities of issuers that are domiciled in, or have significant operations in, member countries of the Economic and Monetary Union of the European Union (the “EU”), which requires member countries to comply with restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary controls. Decreasing imports or exports, changes in governmental or EU regulations on trade, changes in the exchange rate of the euro (the common currency of certain EU countries), the default or threat of default by an EU member country on its sovereign debt, and/or an economic recession in an EU member country may have a significant adverse effect on the economies of EU member countries and their trading partners, including some or all of the emerging markets. Although certain European countries do not use the euro, many of these countries are obliged to meet the criteria for joining the euro zone. Consequently, these countries must comply with many of the restrictions noted above. The European financial markets have experienced volatility and adverse trends in recent years due to concerns about economic downturns, rising government debt levels and the possible default of government debt in several European countries. Further defaults or restructurings by governments and other entities of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, one or more countries may abandon the euro and/or withdraw from the EU, including, with respect to the latter, the United Kingdom (the "UK"), which is a significant market in the global economy. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching and could adversely impact the value of investments in the region.
32


The UK’s departure from the EU (referred to as "Brexit") continues to cause significant uncertainty and may adversely impact the financial results and operations of various European companies and economies. The effects of Brexit will largely depend on any agreements the UK makes to retain access to EU markets. Brexit may result in legal and tax uncertainty and divergent national laws and regulations as the UK determines which EU laws to replace or replicate. The UK may be less stable than it has been in recent years and investments in the UK may be more volatile. Additionally, Brexit could lead to global economic uncertainty and result in significant volatility in the global stock markets and currency exchange rate fluctuations. Any of these effects of Brexit, and other consequences that are difficult to predict at this time, could adversely affect the value of a fund’s investments.
Japan
Japanese investments may be significantly affected by events influencing Japan’s economy and the exchange rate between the Japanese yen and the U.S. Dollar. Japan’s economy fell into a long recession in the 1990s. After a few years of mild recovery in the mid-2000s, Japan’s economy fell into another recession as a result of the recent global economic crisis. Japan is heavily dependent on exports and foreign oil. Japan is located in a seismically active area, and in 2011 experienced an earthquake of a sizable magnitude and a tsunami that significantly affected important elements of its infrastructure and resulted in a nuclear crisis. Since these events, Japan’s financial markets have fluctuated dramatically. The full extent of the impact of these events on Japan’s economy and on foreign investment in Japan is difficult to estimate. Japan’s economic prospects may be affected by the political and military situations of its near neighbors, notably North and South Korea, China, and Russia.
Latin America
Most Latin American countries have experienced, at one time or another, severe and persistent levels of inflation, including, in some cases, hyperinflation. This has, in turn, led to high interest rates, extreme measures by governments to keep inflation in check, and a generally debilitating effect on economic growth. Although inflation in many countries has lessened, there is no guarantee it will remain at lower levels. In addition, the political history of certain Latin American countries has been characterized by political uncertainty, intervention by the military in civilian and economic spheres, and political corruption. Such developments, if they were to reoccur, could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and result in significant disruption in securities markets. Certain Latin American countries may also have managed currencies which are maintained at artificial levels to the U.S. Dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. There is no significant foreign exchange market for many currencies and it would, as a result, be difficult for the Fund to engage in foreign currency transactions designed to protect the value of the Fund’s interests in securities denominated in such currencies. Finally, a number of Latin American countries are among the largest debtors of developing markets. There have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.
33


High Yield Securities
Some funds invest a portion of their assets in bonds that are rated below investment grade (sometimes called “high yield bonds” or "junk bonds") which are rated at the time of purchase Ba1 or lower by Moody's and BB+ or lower by S&P Global (if the bond has been rated by only one of those agencies, that rating will determine whether the bond is below investment grade; if the bond has not been rated by either of those agencies, those managing the fund's investments will determine whether the bond is of a quality comparable to those rated below investment grade). Lower rated bonds involve a higher degree of credit risk, which is the risk that the issuer will not make interest or principal payments when due. In the event of an unanticipated default, a fund would experience a reduction in its income and could expect a decline in the market value of the bonds so affected. Issuers of high yield securities may be involved in restructurings or bankruptcy proceedings that may not be successful. If an issuer defaults, it may not be able to pay all or a portion of interest and principal owed to the fund, it may exchange the high yield securities owned by the fund for other securities, including equities, and/or the fund may incur additional expenses while seeking recovery of its investment. Some funds may also invest in unrated bonds of foreign and domestic issuers. Unrated bonds, while not necessarily of lower quality than rated bonds, may not have as broad a market. Because of the size and perceived demand of the issue, among other factors, certain municipalities may not incur the expense of obtaining a rating. Those managing the fund's investments will analyze the creditworthiness of the issuer, as well as any financial institution or other party responsible for payments on the bond, in determining whether to purchase unrated bonds. Unrated bonds will be included in the limitation each fund has with regard to high yield bonds unless those managing the fund's investments deem such securities to be the equivalent of investment grade bonds. Some of the high yield securities consist of Rule 144A securities. High yield securities may contain any type of interest rate payment or reset terms, including fixed rate, adjustable rate, zero coupon, contingent, deferred, payment-in-kind and those with auction rate features.
Initial Public Offerings ("IPOs")
An IPO is a company's first offering of stock to the public. IPO risk is that the market value of IPO shares will fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading, and limited information about the issuer. The purchase of IPO shares may involve high transaction costs. IPO shares are subject to market risk and liquidity risk. In addition, the market for IPO shares can be speculative and/or inactive for extended periods. The limited number of shares available for trading in some IPOs may make it more difficult for a fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. Investors in IPO shares can be affected by substantial dilution in the value of their shares by sales of additional shares and by concentration of control in existing management and principal shareholders.
When a fund's asset base is small, a significant portion of the fund's performance could be attributable to investments in IPOs because such investments would have a magnified impact on the fund. As the fund's assets grow, the effect of the fund's investments in IPOs on the fund's performance probably will decline, which could reduce the fund's performance. Because of the price volatility of IPO shares, a fund may choose to hold IPO shares for a very short period. This may increase the turnover of the fund's portfolio and lead to increased expenses to the fund, such as commissions and transaction costs. By selling IPO shares, the fund may realize taxable gains it will subsequently distribute to shareholders.
Interfund Lending and Borrowing
The SEC has granted an exemption permitting Principal Funds to borrow money from and lend money to each other for temporary or emergency purposes. The loans are subject to a number of conditions designed to ensure fair and equitable treatment of all participating funds, including the following: (1) no fund may borrow money through the program unless it receives a more favorable interest rate than a rate approximating the lowest interest rate at which bank loans would be available to any of the participating funds under a loan agreement; and (2) no fund may lend money through the program unless it receives a more favorable return than that available from an investment in overnight repurchase agreements. In addition, a fund may participate in the program only if and to the extent that such participation is consistent with a fund's investment objectives and policies. Interfund loans and borrowings have a maximum duration of seven days. Loans may be called on one day's notice. A fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional costs. The Board is responsible for overseeing and periodically reviewing the interfund lending program.
34


Inverse Floating Rate and Other Variable and Floating Rate Instruments
The Funds may purchase variable and floating rate instruments. These instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate. These instruments may also include leveraged inverse floating rate debt instruments, or “inverse floaters”. The interest rate of an inverse floater resets in the opposite direction from the market rate of interest on a security or interest to which it is related. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest and is subject to many of the same risks as derivatives. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. Certain of these investments may be illiquid. The absence of an active secondary market with respect to these investments could make it difficult for a Fund to dispose of a variable or floating rate note if the issuer defaulted on its payment obligation or during periods that a Fund is not entitled to exercise its demand rights, and a Fund could, for these or other reasons, suffer a loss with respect to such instruments.
Master Limited Partnerships (“MLPs”)
An MLP is an entity that is generally taxed as a partnership for federal income tax purposes and that derives each year at least 90% of its gross income from "Qualifying Income". Qualifying Income includes interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from commodities or commodity futures, and income and gain from mineral or natural resources activities that generate Qualifying Income. MLP interests (known as units) are traded on securities exchanges or over-the-counter. An MLP's organization as a partnership and compliance with the Qualifying Income rules generally eliminates federal tax at the entity level.
An MLP has one or more general partners (who may be individuals, corporations, or other partnerships) which manage the partnership, and limited partners, which provide capital to the partnership but have no role in its management. Typically, the general partner is owned by company management or another publicly traded sponsoring corporation. When an investor buys units in an MLP, the investor becomes a limited partner. Holders of MLP units have limited control and voting rights on matters affecting the partnership and are exposed to a remote possibility of liability for all of the obligations of that MLP in the event that a court determines that the rights of the holders of MLP units to vote to remove or replace the general partner of that MLP, to approve amendments to that MLP’s partnership agreement, or to take other action under the partnership agreement of that MLP would constitute “control” of the business of that MLP, or a court or governmental agency determines that the MLP is conducting business in a state without complying with the partnership statute of that state. Holders of MLP units are also exposed to the risk that they will be required to repay amounts to the MLP that are wrongfully distributed to them.
The business of certain MLPs is affected by supply and demand for energy commodities because such MLPs derive revenue and income based upon the volume of the underlying commodity produced, transported, processed, distributed, and/ or marketed. Pipeline MLPs have indirect commodity exposure to oil and gas price volatility because, although they do not own the underlying energy commodity, the general level of commodity prices may affect the volume of the commodity the MLP delivers to its customers and the cost of providing services such as distributing natural gas liquids. The costs of natural gas pipeline MLPs to perform services may exceed the negotiated rates under “negotiated rate” contracts. Processing MLPs may be directly affected by energy commodity prices. Propane MLPs own the underlying energy commodity, and therefore have direct exposure to energy commodity prices. The MLP industry in general could be hurt by market perception that MLP's performance and valuation are directly tied to commodity prices.
Pipeline MLPs are common carrier transporters of natural gas, natural gas liquids (primarily propane, ethane, butane and natural gasoline), crude oil or refined petroleum products (gasoline, diesel fuel and jet fuel). Pipeline MLPs also may operate ancillary businesses such as storage and marketing of such products. Pipeline MLPs derive revenue from capacity and transportation fees. Historically, pipeline output has been less exposed to cyclical economic forces due to its low cost structure and government-regulated nature. In addition, most pipeline MLPs have limited direct commodity price exposure because they do not own the product being shipped.
Processing MLPs are gatherers and processors of natural gas as well as providers of transportation, fractionation and storage of natural gas liquids ("NGLs"). Processing MLPs derive revenue from providing services to natural gas producers, which require treatment or processing before their natural gas commodity can be marketed to utilities and other end user markets. Revenue for the processor is fee based, although it is not uncommon to have some participation in the prices of the natural gas and NGL commodities for a portion of revenue.
35


Propane MLPs are distributors of propane to homeowners for space and water heating. Propane MLPs derive revenue from the resale of the commodity on a margin over wholesale cost. The ability to maintain margin is a key to profitability. Propane serves approximately 3% of the household energy needs in the United States, largely for homes beyond the geographic reach of natural gas distribution pipelines. Approximately 70% of annual cash flow is earned during the winter heating season (October through March). Accordingly, volumes are weather dependent, but have utility type functions similar to electricity and natural gas.
MLPs operating interstate pipelines and storage facilities are subject to substantial regulation by the Federal Energy Regulatory Commission ("FERC"), which regulates interstate transportation rates, services and other matters regarding natural gas pipelines including: the establishment of rates for service; regulation of pipeline storage and liquified natural gas facility construction; issuing certificates of need for companies intending to provide energy services or constructing and operating interstate pipeline and storage facilities; and certain other matters. FERC also regulates the interstate transportation of crude oil, including: regulation of rates and practices of oil pipeline companies; establishing equal service conditions to provide shippers with equal access to pipeline transportation; and establishment of reasonable rates for transporting petroleum and petroleum products by pipeline. Certain MLPs regulated by the FERC have the right, but are not obligated, to redeem common units held by an investor who is not subject to U.S. federal income taxation. The financial condition and results of operations of an MLP that redeems its common units could be adversely impacted.
MLPs are subject to various federal, state and local environmental laws and health and safety laws as well as laws and regulations specific to their particular activities. These laws and regulations address: health and safety standards for the operation of facilities, transportation systems and the handling of materials; air and water pollution requirements and standards; solid waste disposal requirements; land reclamation requirements; and requirements relating to the handling and disposition of hazardous materials. MLPs are subject to the costs of compliance with such laws applicable to them, and changes in such laws and regulations may adversely affect their results of operations.
MLPs may be subject to liability relating to the release of substances into the environment, including liability under federal “Superfund” and similar state laws for investigation and remediation of releases and threatened releases of hazardous materials, as well as liability for injury and property damage for accidental events, such as explosions or discharges of materials causing personal injury and damage to property. Such potential liabilities could have a material adverse effect upon the financial condition and results of operations of MLPs.
MLPs are subject to numerous business related risks, including: deterioration of business fundamentals reducing profitability due to development of alternative energy sources, consumer sentiment with respect to global warming, changing demographics in the markets served, unexpectedly prolonged and precipitous changes in commodity prices and increased competition that reduces the MLP’s market share; the lack of growth of markets requiring growth through acquisitions; disruptions in transportation systems; the dependence of certain MLPs upon the energy exploration and development activities of unrelated third parties; availability of capital for expansion and construction of needed facilities; a significant decrease in natural gas production due to depressed commodity prices or otherwise; the inability of MLPs to successfully integrate recent or future acquisitions; and the general level of the economy.
Municipal Obligations and AMT-Subject Bonds
Municipal Obligations are obligations issued by or on behalf of states, territories, and possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, including municipal utilities, or multi-state agencies or authorities. The interest on Municipal Obligations is exempt from federal income tax in the opinion of bond counsel to the issuer. Three major classifications of Municipal Obligations are: Municipal Bonds, that generally have a maturity at the time of issue of one year or more; Municipal Notes, that generally have a maturity at the time of issue of six months to three years; and Municipal Commercial Paper, that generally has a maturity at the time of issue of 30 to 270 days.
36


The term "Municipal Obligations" includes debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets, water and sewer works, and electric utilities. Other public purposes for which Municipal Obligations are issued include refunding outstanding obligations, obtaining funds for general operating expenses, and lending such funds to other public institutions and facilities. To the extent that a fund invests a significant portion of its assets in municipal obligations issued in connection with a single project, the fund likely will be affected by the economic, business or political environment of the project.
AMT-Subject Bonds are industrial development bonds issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated housing facilities, sports facilities, convention or trade show facilities, airport, mass transit, industrial, port or parking facilities, air or water pollution control facilities, and certain local facilities for water supply, gas, electricity, or sewage or solid waste disposal. They are considered to be Municipal Obligations if the interest paid thereon qualifies as exempt from federal income tax in the opinion of bond counsel to the issuer, even though the interest may be subject to the federal individual alternative minimum tax.
Municipal Bonds
Municipal Bonds may be either "general obligation" or "revenue" issues. General obligation bonds are secured by the issuer's pledge of its faith, credit, and taxing power for the payment of principal and interest. Revenue bonds are payable from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source (e.g., the user of the facilities being financed), but not from the general taxing power. Industrial development bonds and pollution control bonds in most cases are revenue bonds and generally do not carry the pledge of the credit of the issuing municipality. The payment of the principal and interest on industrial revenue bonds depends solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment. Funds may also invest in "moral obligation" bonds that are normally issued by special purpose public authorities. If an issuer of moral obligation bonds is unable to meet its obligations, the repayment of the bonds becomes a moral commitment but not a legal obligation of the state or municipality in question.
Municipal Commercial Paper
Municipal Commercial Paper refers to short-term obligations of municipalities that may be issued at a discount and may be referred to as Short-Term Discount Notes. Municipal Commercial Paper is likely to be used to meet seasonal working capital needs of a municipality or interim construction financing. Generally they are repaid from general revenues of the municipality or refinanced with long-term debt. In most cases Municipal Commercial Paper is backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or other institutions.
Municipal Notes
Municipal Notes usually are general obligations of the issuer and are sold in anticipation of a bond sale, collection of taxes, or receipt of other revenues. Payment of these notes is primarily dependent upon the issuer's receipt of the anticipated revenues. Other notes include "Construction Loan Notes" issued to provide construction financing for specific projects, and "Bank Notes" issued by local governmental bodies and agencies to commercial banks as evidence of borrowings. Some notes ("Project Notes") are issued by local agencies under a program administered by the U.S. Department of Housing and Urban Development. Project Notes are secured by the full faith and credit of the United States.
•    Bank Notes are notes issued by local governmental bodies and agencies such as those described above to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working-capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.
Bond Anticipation Notes ("BANs") are usually general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer's access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.
37


•    Construction Loan Notes are issued to provide construction financing for specific projects. Permanent financing, the proceeds of which are applied to the payment of construction loan notes, is sometimes provided by a commitment by the Government National Mortgage Association ("GNMA") to purchase the loan, accompanied by a commitment by the Federal Housing Administration to insure mortgage advances thereunder. In other instances, permanent financing is provided by commitments of banks to purchase the loan. The California Municipal and Tax-Exempt Bond Funds will only purchase construction loan notes that are subject to GNMA or bank purchase commitments.
Revenue Anticipation Notes ("RANs") are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer's ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and interest on RANs.
•    Tax Anticipation Notes ("TANs") are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer's capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delinquencies, could adversely affect the issuer's ability to meet its obligations on outstanding TANs.
Other Municipal Obligations
Other kinds of Municipal Obligations are occasionally available in the marketplace, and the fund may invest in such other kinds of obligations to the extent consistent with its investment objective and limitations. Such obligations may be issued for different purposes and with different security than those mentioned.
Stand-By Commitments
Funds may acquire stand-by commitments with respect to municipal obligations held in their respective portfolios. Under a stand-by commitment, a broker-dealer, dealer, or bank would agree to purchase, at the relevant funds' option, a specified municipal security at a specified price. Thus, a stand-by commitment may be viewed as the equivalent of a put option acquired by a fund with respect to a particular municipal security held in the fund's portfolio.
The amount payable to a fund upon its exercise of a stand-by commitment normally would be 1) the acquisition cost of the municipal security (excluding any accrued interest that the fund paid on the acquisition), less any amortized market premium or plus any amortized market or original issue discount during the period the fund owned the security, plus, 2) all interest accrued on the security since the last interest payment date during the period the security was owned by the fund. Absent unusual circumstances, the fund would value the underlying municipal security at amortized cost. As a result, the amount payable by the broker-dealer, dealer or bank during the time a stand-by commitment is exercisable would be substantially the same as the value of the underlying municipal obligation.
A fund's right to exercise a stand-by commitment would be unconditional and unqualified. Although a fund could not transfer a stand-by commitment, it could sell the underlying municipal security to a third party at any time. It is expected that stand-by commitments generally will be available to the funds without the payment of any direct or indirect consideration. The funds may, however, pay for stand-by commitments if such action is deemed necessary. In any event, the total amount paid for outstanding stand-by commitments held in a fund's portfolio would not exceed 0.50% of the value of a fund's total assets calculated immediately after each stand-by commitment is acquired.
The funds intend to enter into stand-by commitments only with broker-dealers, dealers, or banks that those managing the fund's investments believe present minimum credit risks. A fund's ability to exercise a stand-by commitment will depend upon the ability of the issuing institution to pay for the underlying securities at the time the stand-by commitment is exercised. The credit of each institution issuing a stand-by commitment to a fund will be evaluated on an ongoing basis by those managing the fund's investments.
A fund intends to acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its right thereunder for trading purposes. The acquisition of a stand-by commitment would not affect the valuation of the underlying municipal security. Each stand-by commitment will be valued at zero in determining net asset value. Should a fund pay directly or indirectly for a stand-by commitment, its costs will be reflected in realized gain or loss when the commitment is exercised or expires. The maturity of a municipal security purchased by a fund will not be considered shortened by any stand-by commitment to which the obligation is subject. Thus, stand-by commitments will not affect the dollar-weighted average maturity of a fund's portfolio.
38


Variable and Floating Rate Obligations
Certain Municipal Obligations, obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities, and debt instruments issued by domestic banks or corporations may carry variable or floating rates of interest. Such instruments bear interest at rates which are not fixed, but which vary with changes in specified market rates or indices, such as a bank prime rate or tax-exempt money market index. Variable rate notes are adjusted to current interest rate levels at certain specified times, such as every 30 days. A floating rate note adjusts automatically whenever there is a change in its base interest rate adjustor, e.g., a change in the prime lending rate or specified interest rate indices. Typically such instruments carry demand features permitting the fund to redeem at par.
The fund's right to obtain payment at par on a demand instrument upon demand could be affected by events occurring between the date the fund elects to redeem the instrument and the date redemption proceeds are due which affects the ability of the issuer to pay the instrument at par value. Those managing the fund's investments monitor on an ongoing basis the pricing, quality, and liquidity of such instruments and similarly monitor the ability of an issuer of a demand instrument, including those supported by bank letters of credit or guarantees, to pay principal and interest on demand. Although the ultimate maturity of such variable rate obligations may exceed one year, the fund treats the maturity of each variable rate demand obligation as the longer of a) the notice period required before the fund is entitled to payment of the principal amount through demand or b) the period remaining until the next interest rate adjustment. Floating rate instruments with demand features are deemed to have a maturity equal to the period remaining until the principal amount can be recovered through demand.
Funds may purchase participation interests in variable rate Municipal Obligations (such as industrial development bonds). A participation interest gives the purchaser an undivided interest in the Municipal Obligation in the proportion that its participation interest bears to the total principal amount of the Municipal Obligation. A fund has the right to demand payment on seven days' notice, for all or any part of the fund's participation interest in the Municipal Obligation, plus accrued interest. Each participation interest is backed by an irrevocable letter of credit or guarantee of a bank. Banks will retain a service and letter of credit fee and a fee for issuing repurchase commitments in an amount equal to the excess of the interest paid on the Municipal Obligations over the negotiated yield at which the instruments were purchased by the fund.
Risks of Municipal Obligations
The yields on Municipal Obligations are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions in the Municipal Obligations market, size of a particular offering, maturity of the obligation, and rating of the issue. The fund's ability to achieve its investment objective also depends on the continuing ability of the issuers of the Municipal Obligations in which it invests to meet their obligation for the payment of interest and principal when due.
Municipal Obligations are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Act. They are also subject to federal or state laws, if any, which extend the time for payment of principal or interest, or both, or impose other constraints upon enforcement of such obligations or upon municipalities to levy taxes. The power or ability of issuers to pay, when due, principal of and interest on Municipal Obligations may also be materially affected by the results of litigation or other conditions.
From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on Municipal Obligations. It may be expected that similar proposals will be introduced in the future. If such a proposal was enacted, the ability of the fund to pay "exempt interest" dividends may be adversely affected. The fund would reevaluate its investment objective and policies and consider changes in its structure.
Special Considerations Relating to California Municipal Obligations
The California Municipal Fund concentrates its investments in California municipal obligations, and therefore may be significantly impacted by political, economic, or regulatory developments that affect issuers in California and their ability to pay principal and interest on their obligations. The ability of issuers to pay interest on, and repay principal of, California municipal obligations may be affected by 1) amendments to the California Constitution and related statutes that limit the taxing and spending authority of California government entities, 2) voter initiatives, 3) a wide variety of California laws and regulations, including laws related to the operation of health care institutions and laws related to secured interests in real property, and 4) the general financial condition of the State of California and the California economy. The Tax-Exempt Bond Fund also invests in California municipal obligations.
39


Taxable Investments of the Municipal Funds
The California Municipal and Tax-Exempt Bond Funds may invest a portion of their assets, as described in the prospectus, in taxable short-term investments consisting of: Obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities, domestic bank certificates of deposit and bankers' acceptances, short-term corporate debt securities such as commercial paper, and repurchase agreements ("Taxable Investments"). These investments must have a stated maturity of one year or less at the time of purchase and must meet the following standards: banks must have assets of at least $1 billion; commercial paper must be rated at least "A" by S&P Global or "Prime" by Moody's or, if not rated, must be issued by companies having an outstanding debt issue rated at least "A" by S&P Global or Moody's; corporate bonds and debentures must be rated at least "A" by S&P Global or Moody's. Interest earned from Taxable Investments is taxable to investors. When, in the opinion of the Fund's Manager, it is advisable to maintain a temporary "defensive" posture, the California Municipal and Tax-Exempt Bond Funds may invest without limitation in Taxable Investments. At other times, the following investments will not exceed 20% of the Fund's total assets: Taxable Investments; Municipal Obligations that do not meet quality standards required for the 80% portion of the portfolio; and Municipal Obligations, the interest on which is treated as a tax preference item for purposes of the federal individual alternative minimum tax.
Insurance
The insured municipal obligations in which the California Municipal and Tax-Exempt Bond Funds may invest are insured under insurance policies that relate to the specific municipal obligation in question. This insurance is generally non-cancelable and will continue in force so long as the municipal obligations are outstanding, and the insurer remains in business.
The insured municipal obligations are generally insured as to the scheduled payment of all installments of principal and interest as they fall due. The insurance covers only credit risk and therefore does not guarantee the market value of the obligations in a Fund's investment portfolio or a Fund's NAV. The Fund's NAV will continue to fluctuate in response to fluctuations in interest rates. A Fund's investment policy requiring investment in insured municipal obligations will not affect the Fund's ability to hold its assets in cash or to invest in escrow-secured and defeased bonds or in certain short-term tax-exempt obligations, or affect its ability to invest in uninsured taxable obligations for temporary or liquidity purposes or on a defensive basis.
Pay-in-Kind Securities
The Funds may invest in pay-in-kind securities. Pay-in-kind securities pay dividends or interest in the form of additional securities of the issuer, rather than in cash. These securities are usually issued and traded at a discount from their face amounts. The amount of the discount varies depending on various factors, such as the time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. The market prices of pay-in-kind securities generally are more volatile than the market prices of securities that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than are other types of securities having similar maturities and credit quality.
Portfolio Turnover (Active Trading)
Portfolio turnover is a measure of how frequently a portfolio's securities are bought and sold. The portfolio turnover rate is generally calculated as the dollar value of the lesser of a portfolio's purchases or sales of shares of securities during a given year, divided by the monthly average value of the portfolio securities during that year (excluding securities whose maturity or expiration at the time of acquisition were less than one year). For example, a portfolio reporting a 100% portfolio turnover rate would have purchased and sold securities worth as much as the monthly average value of its portfolio securities during the year.
It is not possible to predict future turnover rates with accuracy. Many variable factors are outside the control of a portfolio manager. The investment outlook for the securities in which a portfolio may invest may change as a result of unexpected developments in securities markets, economic or monetary policies, or political relationships. High market volatility may result in a portfolio manager using a more active trading strategy than might otherwise be employed. Each portfolio manager considers the economic effects of portfolio turnover but generally does not treat the portfolio turnover rate as a limiting factor in making investment decisions.
Sale of shares by investors may require the liquidation of portfolio securities to meet cash flow needs. In addition, changes in a particular portfolio's holdings may be made whenever the portfolio manager considers that a security is no longer appropriate for the portfolio or that another security represents a relatively greater opportunity. Such changes may be made without regard to the length of time that a security has been held.
Higher portfolio turnover rates generally increase transaction costs that are expenses of the Fund. Active trading may generate short-term gains (losses) for taxable shareholders.
40


The following Funds had significant variation in portfolio turnover rates over the two most recently completed fiscal years:
Fund
2020
Turnover
2019
Turnover
Comments
Government & High Quality Bond Fund 84.3% 23.2% Turnover increased as a result of reducing exposure to out-of-benchmark positions and increasing mortgage exposure.
International Emerging Markets Fund 53.9% 148.3% Turnover decreased due to a change in the portfolio management team.
Principal LifeTime 2040 Fund 32.8% 14.6% Turnover varies from year-to-year due to the aging of the glidepath and asset allocation decisions.
Principal LifeTime Hybrid 2050 Fund 26.5% 12.6% Turnover varies from year-to-year due to the aging of the glidepath and asset allocation decisions.
Principal LifeTime Hybrid 2065 Fund 65.7% 143.3% Turnover varies from year-to-year due to the aging of the glidepath and asset allocation decisions.
SAM Flexible Income Portfolio 35.9% 11.1% Turnover increased due to increased tactical trading.
Preferred Securities
Preferred securities can include: traditional preferred securities, hybrid-preferred securities, $25 par hybrid preferred securities, baby bonds, U.S. dividend received deduction (“DRD”) preferred stock, fixed rate and floating rate adjustable preferred securities, step-up preferred securities, public and 144A $1000 par capital securities including U.S. agency subordinated debt issues, trust originated preferred securities, monthly income preferred securities, quarterly income bond securities, quarterly income debt securities, quarterly income preferred securities, corporate trust securities, public income notes, and other trust preferred securities.
Traditional Preferred Securities. Traditional preferred securities may be issued by an entity taxable as a corporation and pay fixed or floating rate dividends. However, these claims are subordinated to more senior creditors, including senior debt holders. “Preference” means that a company must pay dividends on its preferred securities before paying any dividends on its common stock, and the claims of preferred securities holders are ahead of common stockholders’ claims on assets in a corporate liquidation. Holders of preferred securities usually have no right to vote for corporate directors or on other matters. Preferred securities share many investment characteristics with both common stock and bonds.
Hybrid or Trust Preferred Securities. Hybrid-preferred securities are debt instruments that have characteristics similar to those of traditional preferred securities (characteristics of both subordinated debt and preferred stock). Hybrid preferred securities may be issued by corporations, generally in the form of interest-bearing instruments with preferred securities characteristics, or by an affiliated trust or partnership of the corporation, generally in the form of preferred interests in subordinated business trusts or similarly structured securities. The hybrid-preferred securities market consists of both fixed and adjustable coupon rate securities that are either perpetual in nature or have stated maturity dates. Hybrid preferred holders generally have claims to assets in a corporate liquidation that are senior to those of traditional preferred securities but subordinate to those of senior debt holders. Certain subordinated debt and senior debt issues that have preferred characteristics are also considered to be part of the broader preferred securities market.
Preferred securities may be issued by trusts (likely one that is wholly-owned by a financial institution or other corporate entity, typically a bank holding company) or other special purpose entities established by operating companies, and are therefore not direct obligations of operating companies. The financial institution creates the trust and owns the trust’s common securities. The trust uses the sale proceeds of its preferred securities to purchase, for example, subordinated debt issued by the financial institution. The financial institution uses the proceeds from the subordinated debt sale to increase its capital while the trust receives periodic interest payments from the financial institution for holding the subordinated debt. The trust uses the funds received to make dividend payments to the holders of the trust preferred securities. The primary advantage of this structure may be that the trust preferred securities are treated by the financial institution as debt securities for tax purposes and as equity for the calculation of capital requirements.
41


Trust preferred securities typically bear a market rate coupon comparable to interest rates available on debt of a similarly rated issuer. Typical characteristics include long-term maturities, early redemption by the issuer, periodic fixed or variable interest payments, and maturities at face value. Holders of trust preferred securities have limited voting rights to control the activities of the trust and no voting rights with respect to the financial institution. The market value of trust preferred securities may be more volatile than those of conventional debt securities. Trust preferred securities may be issued in reliance on Rule 144A under the 1933 Act and subject to restrictions on resale. There can be no assurance as to the liquidity of trust preferred securities and the ability of holders, such as a fund, to sell their holdings. The condition of the financial institution can be looked to identify the risks of trust preferred securities as the trust typically has no business operations other than to issue the trust preferred securities. If the financial institution defaults on interest payments to the trust, the trust will not be able to make dividend payments to holders of its securities, such as a fund.
Floating rate preferred securities. Floating rate preferred securities provide for a periodic adjustment in the interest rate paid on the securities. The terms of such securities provide that interest rates are adjusted periodically based upon an interest rate adjustment index. The adjustment intervals may be regular, and range from daily up to annually, or may be event-based, such as a change in the short-term interest rate. Because of the interest rate reset feature, floating rate securities provide the Fund with a certain degree of protection against rising interest rates, although the interest rates of floating rate securities will participate in any declines in interest rates as well.
If a portion of a fund’s income consists of dividends paid by U.S. corporations, a portion of the dividends paid by the fund may be eligible for the corporate dividends-received deduction for corporate shareholders. In addition, distributions reported by a fund as derived from qualified dividend income (“QDI”) will be taxed in the hands of individuals at the reduced rates applicable to net capital gains, provided certain holding period and other requirements are met by both the shareholder and the fund. Dividend income that a fund receives from REITs, if any, will generally not be treated as QDI and will not qualify for the corporate dividends-received deduction. It is unclear the extent to which distributions a fund receives from investments in certain preferred securities will be eligible for treatment as QDI or for the corporate dividends-received deduction. A fund cannot predict at this time what portion, if any, of its dividends will qualify for the corporate dividends-received deduction or be eligible for the reduced rates of taxation applicable to QDI.
Real Estate Investment Trusts (“REITs”)
REITs are pooled investment vehicles that invest in income producing real estate, real estate related loans, or other types of real estate interests. U.S. REITs are allowed to eliminate corporate level federal tax so long as they meet certain requirements of the Internal Revenue Code. Foreign REITs ("REIT-like") entities may have similar tax treatment in their respective countries. Equity real estate investment trusts own real estate properties, while mortgage real estate investment trusts make and/or invests in construction, development, and long-term mortgage loans. Their value may be affected by changes in the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, and tax and regulatory requirements, such as those relating to the environment. Both types of trusts are not diversified, are dependent upon management skill, are subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to qualify for tax-free status of income under the Internal Revenue Code and failing to maintain exemption from the 1940 Act. In addition, foreign REIT-like entities will be subject to foreign securities risks. (See "Foreign Securities").
Repurchase and Reverse Repurchase Agreements, Mortgage Dollar Rolls and Sale-Buybacks
The Funds may invest in repurchase and reverse repurchase agreements. Repurchase agreements typically involve the purchase of debt securities from a financial institution such as a bank, savings and loan association, or broker-dealer. A repurchase agreement provides that the fund sells back to the seller and that the seller repurchases the underlying securities at a specified price on a specific date. Repurchase agreements may be viewed as loans by a fund collateralized by the underlying securities. This arrangement results in a fixed rate of return that is not subject to market fluctuation while the fund holds the security. In the event of a default or bankruptcy by a selling financial institution, the affected fund bears a risk of loss. To minimize such risks, the fund enters into repurchase agreements only with parties those managing the fund's investments deem creditworthy (those that are large, well-capitalized, and well-established financial institutions). In addition, the value of the securities collateralizing the repurchase agreement is, and during the entire term of the repurchase agreement remains, at least equal to the acquisition price the Funds pay to the seller of the securities.
42


In a repurchase agreement, a Fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon price on an agreed upon date within a number of days (usually not more than seven) from the date of purchase. The resale price consists of the purchase price plus an amount that is unrelated to the coupon rate or maturity of the purchased security. A repurchase agreement involves the obligation of the seller to pay the agreed upon price, which obligation is in effect secured by the value (at least equal to the amount of the agreed upon resale price and marked-to-market daily) of the underlying security or "collateral." A risk associated with repurchase agreements is the failure of the seller to repurchase the securities as agreed, which may cause a Fund to suffer a loss if the market value of such securities declines before they can be liquidated on the open market. In the event of bankruptcy or insolvency of the seller, a Fund may encounter delays and incur costs in liquidating the underlying security. Repurchase agreements that mature in more than seven days are subject to each Fund's limit on illiquid investments. While it is not possible to eliminate all risks from these transactions, it is the policy of the Fund to limit repurchase agreements to those parties whose creditworthiness has been reviewed and found satisfactory by those managing the fund's investments.
A Fund may use reverse repurchase agreements, mortgage dollar rolls, and economically similar transactions to obtain cash to satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity of selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or notes. In a reverse repurchase agreement, a Fund sells a portfolio security to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. While a reverse repurchase agreement is outstanding, a Fund will maintain cash or appropriate liquid assets to cover its obligation under the agreement. The Fund will enter into reverse repurchase agreements only with parties that those managing the fund's investments deem creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This technique may also have a leveraging effect on the Fund, although the Fund's intent to segregate assets in the amount of the reverse repurchase obligation minimizes this effect.
A “mortgage dollar roll” is similar to a reverse repurchase agreement in certain respects. In a “dollar roll” transaction a Fund sells a mortgage-related security, such as a security issued by the Government National Mortgage Association, to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a pre-determined price. A dollar roll can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which a Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are “substantially identical.” To be considered “substantially identical,” the securities returned to a Fund generally must: 1) be collateralized by the same types of underlying mortgages; 2) be issued by the same agency and be part of the same program; 3) have a similar original stated maturity; 4) have identical net coupon rates; 5) have similar market yields (and therefore price); and 6) satisfy “good delivery” requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within 0.01% of the initial amount delivered.
A Fund's obligations under a dollar roll agreement must be covered by segregated liquid assets equal in value to the securities subject to repurchase by the Fund.
A Fund also may effect simultaneous purchase and sale transactions that are known as “sale-buybacks.” A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty who purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of the Fund's repurchase of the underlying security. A Fund's obligations under a sale-buyback typically would be segregated by liquid assets equal in value to the amount of the Fund's forward commitment to repurchase the subject security.
43


Restricted and Illiquid Securities
A Fund may experience difficulty in valuing and selling illiquid securities and, in some cases, may be unable to value or sell certain illiquid securities for an indefinite period of time. Illiquid securities may include a wide variety of investments, such as (1) repurchase agreements maturing in more than seven days (unless the agreements have demand/redemption features), (2) OTC options contracts and certain other derivatives (including certain swap agreements), (3) fixed time deposits that are not subject to prepayment or do not provide for withdrawal penalties upon prepayment (other than overnight deposits), (4) loan interests and other direct debt instruments, (5) certain municipal lease obligations, (6) commercial paper issued pursuant to Section 4(2) of the 1933 Act, (7) thinly-traded securities, and (8) securities whose resale is restricted under the federal securities laws or contractual provisions (including restricted, privately placed securities that, under the federal securities laws, generally may be resold only to qualified institutional buyers). Generally, restricted securities may be sold only in a public offering for which a registration statement has been filed and declared effective or in a transaction that is exempt from the registration requirements of the Securities Act of 1933. When registration is required, a Fund that owns restricted securities may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a restricted security. If adverse market conditions were to develop during such a period, the Fund might obtain a less favorable price than existed when it decided to sell.
Illiquid and restricted securities are priced at fair value as determined in good faith by or under the direction of the Directors. As described above, some of the Funds have adopted investment restrictions that limit investments in illiquid securities. The Directors have adopted procedures to determine the liquidity of Rule 4(2) short-term paper and of restricted securities that may be resold under Rule 144A. Securities determined to be liquid under these procedures are excluded from the preceding investment restriction.
Royalty Trusts
A royalty trust generally acquires an interest in natural resource or chemical companies and distributes the income it receives to its investors. A sustained decline in demand for natural resource and related products could adversely affect royalty trust revenues and cash flows. Such a decline could result from a recession or other adverse economic conditions, an increase in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs, or a shift in consumer demand. Rising interest rates could harm the performance and limit the capital appreciation of royalty trusts because of the increased availability of alternative investments at more competitive yields. Fund shareholders will indirectly bear their proportionate share of the royalty trusts' expenses.
Securitized Products - Mortgage- and Asset-Backed Securities
The yield characteristics of the mortgage- and asset-backed securities in which the Funds may invest differ from those of traditional debt securities. Among the major differences are that the interest and principal payments are made more frequently on mortgage- and asset-backed securities (usually monthly) and that principal may be prepaid at any time because the underlying mortgage loans or other assets generally may be prepaid at any time. As a result, if the Fund purchases those securities at a premium, a prepayment rate that is faster than expected will reduce their yield, while a prepayment rate that is slower than expected will have the opposite effect of increasing yield. If the Fund purchases these securities at a discount, faster than expected prepayments will increase their yield, while slower than expected prepayments will reduce their yield. Amounts available for reinvestment by the Fund are likely to be greater during a period of declining interest rates and, as a result, are likely to be reinvested at lower interest rates than during a period of rising interest rates.
In general, the prepayment rate for mortgage-backed securities decreases as interest rates rise and increases as interest rates fall. However, rising interest rates will tend to decrease the value of these securities. In addition, an increase in interest rates may affect the volatility of these securities by effectively changing a security that was considered a short-term security at the time of purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in interest rates than short- or medium-term securities.
The market for privately issued mortgage- and asset-backed securities is smaller and less liquid than the market for U.S. government mortgage-backed securities. A collateralized mortgage obligation (“CMO”) may be structured in a manner that provides a wide variety of investment characteristics (yield, effective maturity, and interest rate sensitivity). As market conditions change, and especially during periods of rapid market interest rate changes, the ability of a CMO to provide the anticipated investment characteristics may be greatly diminished. Increased market volatility and/or reduced liquidity may result.
44


The Funds may invest in each of collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”), other collateralized debt obligations (“CDOs”) and other similarly structured securities. CBOs, CLOs and other CDOs are types of asset-backed securities. A CBO is a trust which is often backed by a diversified pool of high risk, below investment grade fixed income securities. The collateral can be from many different types of fixed income securities such as high yield debt, residential privately issued mortgage-related securities, commercial privately issued mortgage-related securities, trust preferred securities and emerging market debt. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. Other CDOs are trusts backed by other types of assets representing obligations of various parties. CBOs, CLOs and other CDOs may charge management fees and administrative expenses.
Short Sales
A short sale involves the sale by the fund of a security that it does not own with the expectation of covering settlement by purchasing the same security at a later date at a lower price. The fund may also enter into a short position by using a derivative instrument, such as a future, forward, or swap agreement. If the price of the security or derivative increases prior to the time the fund is required to replace the borrowed security, then the fund will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to the broker. Therefore, short sales involve the risk that losses may be exaggerated, potentially losing more money than the value of the investment.
A “short sale against the box” is a technique that involves selling either a security owned by the fund, or a security equivalent in kind and amount to the security sold short that the fund has the right to obtain, at no additional cost, for delivery at a specified date in the future. A fund may enter into a short sale against the box to hedge against anticipated declines in the market price of portfolio securities. If the value of the securities sold short against the box increases prior to the scheduled delivery date, a fund will lose money.
Supranational Entities
The Funds may invest in obligations of supranational entities. A supranational entity is an entity designated or supported by national governments to promote economic reconstruction, development or trade amongst nations. Examples of supranational entities include the International Bank for Reconstruction and Development (also known as the World Bank) and the European Investment Bank. Obligations of supranational entities are subject to the risk that the governments on whose support the entity depends for its financial backing or repayment may be unable or unwilling to provide that support. Obligations of a supranational entity that are denominated in foreign currencies will also be subject to the risks associated with investments in foreign currencies.
Synthetic Securities
Incidental to other transactions in fixed income securities and/or for investment purposes, a Fund also may combine options on securities with cash, cash equivalent investments or other fixed income securities in order to create “synthetic” securities which approximate desired risk and return profiles. This may be done where a “non-synthetic” security having the desired risk/return profile either is unavailable (e.g., short-term securities of certain non-U.S. governments) or possesses undesirable characteristics (e.g., interest payments on the security would be subject to non-U.S. withholding taxes). A Fund also may purchase forward non-U.S. exchange contracts in conjunction with U.S. dollar-denominated securities in order to create a synthetic non-U.S. currency denominated security which approximates desired risk and return characteristics where the non-synthetic securities either are not available in non-U.S. markets or possess undesirable characteristics. The use of synthetic bonds and other synthetic securities may involve risks different from, or potentially greater than, risks associated with direct investments in securities and other assets. Synthetic securities may increase other Fund risks, including market risk, liquidity risk, and credit risk, and their value may or may not correlate with the value of the relevant underlying asset.
45


Temporary Defensive Measures/Money Market Instruments
The Government Money Market and Money Market Funds invest all of their available assets in money market instruments maturing in 397 days or less, with certain exceptions permitted by applicable regulations. In addition, all of the Funds may make money market investments (cash equivalents), without limit, pending other investment or settlement, for liquidity, or in adverse market conditions. Following are descriptions of the types of money market instruments that the Funds may purchase:
•    U.S. Government Securities - Securities issued or guaranteed by the U.S. government, including treasury bills, notes, and bonds.
•    U.S. Government Agency Securities - Obligations issued or guaranteed by agencies or instrumentalities of the U.S. government.
•    U.S. agency obligations include, but are not limited to, the Bank for Cooperatives, Federal Home Loan Banks, and Federal Intermediate Credit Banks.
•    U.S. instrumentality obligations include, but are not limited to, the Export-Import Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association.
Some obligations issued or guaranteed by U.S. government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury. Others, such as those issued by the Federal National Mortgage Association, are supported by discretionary authority of the U.S. government to purchase certain obligations of the agency or instrumentality. Still others, such as those issued by the Student Loan Marketing Association, are supported only by the credit of the agency or instrumentality.
•    Bank Obligations - Certificates of deposit, time deposits and bankers' acceptances of U.S. commercial banks having total assets of at least one billion dollars and overseas branches of U.S. commercial banks and foreign banks, which in the opinion of those managing the fund's investments, are of comparable quality. The Fund may acquire obligations of U.S. banks that are not members of the Federal Reserve System or of the Federal Deposit Insurance Corporation.
Certificates of deposit are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits.
Obligations of foreign banks and obligations of overseas branches of U.S. banks are subject to somewhat different regulations and risks than those of U.S. domestic banks. For example, an issuing bank may be able to maintain that the liability for an investment is solely that of the overseas branch which could expose a Fund to a greater risk of loss. In addition, obligations of foreign banks or of overseas branches of U.S. banks may be affected by governmental action in the country of domicile of the branch or parent bank. Examples of adverse foreign governmental actions include the imposition of currency controls, the imposition of withholding taxes on interest income payable on such obligations, interest limitations, seizure or nationalization of assets, or the declaration of a moratorium. Deposits in foreign banks or foreign branches of U.S. banks are not covered by the Federal Deposit Insurance Corporation and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks or the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to United States banks. Foreign banks are not generally subject to examination by any United States Government agency or instrumentality. A Fund only buys short-term instruments where the risks of adverse governmental action are believed by those managing the fund's investments to be minimal. A Fund considers these factors, along with other appropriate factors, in making an investment decision to acquire such obligations. It only acquires those which, in the opinion of management, are of an investment quality comparable to other debt securities bought by the Fund.
46


A certificate of deposit is issued against funds deposited in a bank or savings and loan association for a definite period of time, at a specified rate of return. Normally they are negotiable. However, a Fund occasionally may invest in certificates of deposit which are not negotiable. Such certificates may provide for interest penalties in the event of withdrawal prior to their maturity. A bankers' acceptance is a short-term credit instrument issued by corporations to finance the import, export, transfer, or storage of goods. They are termed "accepted" when a bank guarantees their payment at maturity and reflect the obligation of both the bank and drawer to pay the face amount of the instrument at maturity.
•    Commercial Paper - Short-term promissory notes issued by U.S. or foreign corporations.
•    Short-term Corporate Debt - Corporate notes, bonds, and debentures that at the time of purchase have 397 days or less remaining to maturity, with certain exceptions permitted by applicable regulations.
•    Repurchase Agreements - Instruments under which securities are purchased from a bank or securities dealer with an agreement by the seller to repurchase the securities at the same price plus interest at a specified rate.
•    Taxable Municipal Obligations - Short-term obligations issued or guaranteed by state and municipal issuers which generate taxable income.
Warrants and Rights
The Funds may invest in warrants and rights. A warrant is an instrument that gives the holder a right to purchase a given number of shares of a particular security at a specified price until a stated expiration date. Buying a warrant generally can provide a greater potential for profit or loss than an investment of equivalent amounts in the underlying common stock. The market value of a warrant does not necessarily move with the value of the underlying securities. If a holder does not sell the warrant, it risks the loss of its entire investment if the market price of the underlying security does not, before the expiration date, exceed the exercise price of the warrant. Investment in warrants is a speculative activity. Warrants pay no dividends and confer no rights (other than the right to purchase the underlying securities) with respect to the assets of the issuer. A right is a privilege granted to existing shareholders of a corporation to subscribe for shares of a new issue of common stock before it is issued. Rights normally have a short life, usually two to four weeks, are freely transferable and entitle the holder to buy the new common stock at a lower price than the public offering price.
When-Issued, Delayed Delivery, and Forward Commitment Transactions
Each of the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. When such purchases are outstanding, the Fund will segregate until the settlement date assets determined to be liquid by those managing the fund's investments in accordance with procedures established by the Board, in an amount sufficient to meet the purchase price. Typically, no income accrues on securities a Fund has committed to purchase prior to the time delivery of the securities is made, although a Fund may earn income on securities it has segregated.
When purchasing a security on a when-issued, delayed delivery, or forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. Because the Fund is not required to pay for the security until the delivery date, these risks are in addition to the risks associated with the Fund's other investments. If the Fund remains substantially fully invested at a time when when-issued, delayed delivery, or forward commitment purchases are outstanding, the purchases may result in a form of leverage.
When the Fund has sold a security on a when-issued, delayed delivery, or forward commitment basis, the Fund does not participate in future gains or losses with respect to the security. If the other party to a transaction fails to deliver or pay for the securities, the Fund could miss a favorable price or yield opportunity or could suffer a loss. A Fund may dispose of or renegotiate a transaction after it is entered into, and may sell when-issued, delayed delivery, or forward commitment securities before they are delivered, which may result in a capital gain or loss. There is no percentage limitation on the extent to which the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis.
47


LEADERSHIP STRUCTURE AND BOARD
PFI's Board has overall responsibility for overseeing PFI's operations in accordance with the 1940 Act, other applicable laws, and PFI's charter. Each Board Member serves on the Boards of the following investment companies sponsored by Principal Life Insurance Company: Principal Funds, Inc. ("PFI"), Principal Variable Contracts Funds, Inc. ("PVC"), Principal Exchange-Traded Funds ("PETF"), and Principal Diversified Select Real Asset Fund ("PDSRA"), which are collectively referred to in this SAI as the "Fund Complex." Each Board Member generally holds office for an indefinite term until the Board Member reaches age 72 (unless such mandatory retirement age is waived by the Board). The Board elects officers to supervise the day-to-day operations of the Fund Complex. Officers serve at the pleasure of the Board, and each officer has the same position with each investment company in the Fund Complex.
Board Members that are affiliated persons of any investment advisor, the principal distributor, or the principal underwriter of the Fund Complex are considered “interested persons” of the Fund (as defined in the 1940 Act) and are referred to in this SAI as "Interested Board Members." Board Members who are not Interested Board Members are referred to as "Independent Board Members."
The Board meets in regularly scheduled meetings eight times throughout the year. Board meetings may occur in-person, by telephone, or virtually. In addition, the Board holds special meetings or informal conference calls to discuss specific matters that may arise or require action between regular meetings. Independent Board Members also meet annually to consider renewal of advisory contracts.
The Chairman of the Board is an interested person of the Fund Complex. The Independent Board Members have appointed a lead Independent Board Member whose role is to review and approve, with the Chairman, each Board meeting's agenda and to facilitate communication between and among the Independent Board Members, management, and the full Board. The Board's leadership structure is appropriate for the Fund Complex given its characteristics and circumstances, including the number of portfolios, variety of asset classes, net assets, and distribution arrangements. The appropriateness of this structure is enhanced by the establishment and allocation of responsibilities among the following Committees, which report their activities to the Board on a regular basis.
Committee and Independent Board Members
Primary Purpose and Responsibilities Meetings Held During the Last Fiscal Year
15(c) Committee
Fritz S. Hirsch, Chair
John D. Kenney
Padel L. Lattimer
Meg VanDeWeghe
The Committee’s primary purpose is to assist the Board in performing the annual review of the Fund’s advisory and sub-advisory agreements pursuant to Section 15(c) of the 1940 Act. The Committee is responsible for requesting and reviewing related materials. 6
Audit Committee
Elizabeth A. Nickels, Chair
Leroy T. Barnes, Jr.
Victor Hymes
Meg VanDeWeghe
The Committee's primary purpose is to assist the Board by serving as an independent and objective party to monitor the Fund Complex's accounting policies, financial reporting and internal control system, as well as the work of the independent registered public accountants. The Audit Committee assists Board oversight of 1) the integrity of the Fund Complex's financial statements; 2) the Fund Complex's compliance with certain legal and regulatory requirements; 3) the independent registered public accountants' qualifications and independence; and 4) the performance of the Fund Complex's independent registered public accountants. The Audit Committee also provides an open avenue of communication among the independent registered public accountants, PGI's internal auditors, Fund Complex management, and the Board. 9
Executive Committee
Timothy M. Dunbar, Chair
Craig Damos
Patrick G. Halter
The Committee's primary purpose is to exercise certain powers of the Board when the Board is not in session. When the Board is not in session, the Committee may exercise all powers of the Board in the management of the Fund Complex's business except the power to 1) issue stock, except as permitted by law; 2) recommend to the stockholders any action which requires stockholder approval; 3) amend the bylaws; or 4) approve any merger or share exchange which does not require stockholder approval. 1
48


Committee and Independent Board Members
Primary Purpose and Responsibilities Meetings Held During the Last Fiscal Year
Nominating and Governance Committee
Elizabeth Ballantine, Chair
Leroy T. Barnes, Jr.
Craig Damos
Elizabeth A. Nickels
The Committee's primary purpose is to oversee the structure and efficiency of the Board and the committees. The Committee is responsible for evaluating Board membership and functions, committee membership and functions, insurance coverage, and legal matters. The Committee's nominating functions include selecting and nominating Independent Board Member candidates for election to the Board. Generally, the Committee requests nominee suggestions from Committee members and management. In addition, the Committee considers candidates recommended by shareholders of the Fund Complex. Recommendations should be submitted in writing to Principal Funds, Inc., 711 High Street, Des Moines, IA 50392. When evaluating a potential nominee for Independent Board Member, the Committee generally considers, among other factors: age; education; relevant business experience; geographical factors; whether the person is "independent" and otherwise qualified under applicable laws and regulations to serve as an Independent Board Member; and whether the person is willing to serve, and willing and able to commit the time necessary to attend meetings and perform the duties of an Independent Board Member. The Committee meets personally with nominees and conducts a reference check. The final decision is based on a combination of factors, including the strengths and the experience an individual may bring to the Board. The Committee believes the Board generally benefits from diversity of background, experience and views among its members, and considers these factors in evaluating the Board's composition. The Board does not regularly use the services of professional search firms to identify or evaluate potential candidates or nominees.  6
Operations Committee
Karrie McMillan, Chair
Fritz S. Hirsch
John D. Kenney
Padel L. Lattimer
The Committee's primary purpose is to review and oversee the provision of administrative and distribution services to the Fund Complex, communications with the Fund Complex's shareholders, and the Fund Complex's operations. 4
Risk oversight forms part of the Board's general oversight of the Fund Complex. The Board has appointed a Chief Compliance Officer who oversees the implementation and testing of the Fund's compliance program and reports to the Board regarding compliance matters for the Fund and its principal service providers. As part of its regular risk oversight functions, the Board, directly or through a Committee, interacts with and reviews reports from, among others: Fund Complex management, sub-advisors, the Chief Compliance Officer, independent registered public accounting firm, and internal auditors for PGI or its affiliates, as appropriate. The Board, with the assistance of Fund management and PGI, reviews investment policies and risks in connection with its review of Fund Complex performance. In addition, as part of the Board's periodic review of advisory, sub-advisory and other service provider agreements, the Board may consider risk management aspects of their operations and the functions for which they are responsible. With respect to valuation, the Board oversees a PGI valuation committee and has approved and periodically reviews valuation policies applicable to valuing Fund shares.
Each Board Member has significant prior senior management and/or board experience. Board Members are selected and retained based upon their skills, experience, judgment, analytical ability, diligence and ability to work effectively with other Board members, a commitment to the interests of shareholders and, for each Independent Board Member, a demonstrated willingness to take an independent and questioning view of management. In addition to these general qualifications, the Board seeks members who build upon the Board's diversity. Below is a brief discussion of the specific education, experience, qualifications, or skills that led to the conclusion that each person identified below should serve as a Board Member. As required by rules adopted under the 1940 Act, the Independent Board Members select and nominate all candidates for Independent Board Member positions.
Independent Board Members
Elizabeth Ballantine. Ms. Ballantine has served as an Independent Board Member of the Fund Complex since 2004. Through her professional training, experience as an attorney, and experience as a board member and investment consultant, Ms. Ballantine is experienced in financial, investment and regulatory matters.
Leroy T. Barnes, Jr. Mr. Barnes has served as an Independent Board Member of the Fund Complex since 2012. From 2001-2005, Mr. Barnes served as Vice President and Treasurer of PG&E Corporation. From 1997-2001, Mr. Barnes served as Vice President and Treasurer of Gap, Inc. Through his education, employment experience, and experience as a board member, Mr. Barnes is experienced with financial, accounting, regulatory and investment matters.
49


Craig Damos. Mr. Damos has served as an Independent Board Member of the Fund Complex since 2008. Since 2011, Mr. Damos has served as the President of The Damos Company (consulting services). Mr. Damos served as President and Chief Executive Officer of Weitz Company from 2006-2010; Vertical Growth Officer of Weitz Company from 2004-2006; and Chief Financial Officer of Weitz Company from 2000-2004. From 2005-2008, Mr. Damos served as a director of West Bank. Through his education, employment experience, and experience as a board member, Mr. Damos is experienced with financial, accounting, regulatory and investment matters.
Fritz S. Hirsch. Mr. Hirsch has served as an Independent Board Member of the Fund Complex since 2005. From 2011-2015, Mr. Hirsch served as CEO of MAM USA. He served as President and Chief Executive Officer of Sassy, Inc. from 1986-2009, and Chief Financial Officer of Sassy, Inc. from 1983-1985. Through his education, employment experience, and experience as a board member, Mr. Hirsch is experienced with financial, accounting, regulatory and investment matters.
Victor Hymes. Mr. Hymes has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Founder and Managing Member of Legato Capital Management, LLC, an investment management company. Over the past thirty years, Mr. Hymes has served in the roles of CEO, CIO, portfolio manager and other senior management positions with investment management firms. At Zurich Scudder Investments, Inc., Mr. Hymes was responsible for leading their $80 billion institutional business. Prior to this, he held positions with Goldman, Sachs & Co., and Kidder, Peabody & Co. Mr. Hymes has served on numerous boards, and has chaired four investment committees over the past two decades. Through his education, employment experience and experience as a board member, Mr. Hymes is experienced with financial, regulatory and investment matters.
John D. Kenney. Mr. Kenney has served as an Independent Board Member of the Fund Complex since 2020. From 2011 to January 2020, Mr. Kenney served in various capacities at Legg Mason Global Asset Management, including most recently as Executive Vice President, Global Head of Affiliate Strategic Initiatives. Prior to that, from 2002 to 2011, he served in various roles in the fixed income and capital markets business of Legg Mason and its related entities. Through his employment experience and experience as a board member, Mr. Kenney is experienced with financial, accounting, regulatory and investment matters.
Padelford ("Padel") L. Lattimer. Mr. Lattimer has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Managing Partner for TBA Management Consulting LLC, a financial services-focused management consulting and staffing company. For more than twenty years, Mr. Lattimer served in various capacities at financial services companies, including as a senior managing director for TIAA Cref Asset Management (2004-2010), First Vice President at Mellon Financial Corporation (2002-2004), and in product management roles at Citibank (2000-2002). Through his education, employment experience and experience as a board member, Mr. Lattimer is experienced with financial, regulatory and investment matters.
Karen ("Karrie”) McMillan. Ms. McMillan has served as an Independent Board Member of the Fund Complex since 2014. From 2007-2014, Ms. McMillan served as general counsel to the Investment Company Institute. Prior to that (from 1999-2007), she worked as an attorney in private practice, specializing in the mutual fund industry. From 1991-1999, she served in various roles as counsel at the Securities and Exchange Commission, Division of Investment Management, including as Assistant Chief Counsel. Through her professional education, experience as an attorney, and experience as a board member, Ms. McMillan is experienced in financial, investment and regulatory matters.
Elizabeth A. Nickels. Ms. Nickels has served as an Independent Board Member of the Fund Complex since 2015. Ms. Nickels currently serves as a director of SpartanNash. From 2008 to 2017, she served as a director of the not-for-profit Spectrum Health System; from 2014 to 2016, she served as a director of Charlotte Russe; from 2014 to 2015, she served as a director of Follet Corporation; and from 2013 to 2015, she served as a director of PetSmart. Ms. Nickels was formerly employed by Herman Miller, Inc. in several capacities: from 2012 to 2014, as the Executive Director of the Herman Miller Foundation; from 2007 to 2012, as President of Herman Miller Healthcare; and from 2000 to 2007, as Chief Financial Officer. Through her education, employment experience, and experience as a board member, Ms. Nickels is experienced with financial, accounting and regulatory matters.
Mary M. (“Meg”) VanDeWeghe. Ms. VanDeWeghe has served as an Independent Board Member of the Fund Complex since 2018. She is CEO and President of Forte Consulting, Inc., a management and financial consulting firm, and was previously employed as a Finance Professor at Georgetown University from 2009-2016, Senior Vice President - Finance at Lockheed Martin Corporation from 2006-2009, a Finance Professor at the University of Maryland from 1996-2006, and in various positions at J.P. Morgan from 1983-1996. Ms. VanDeWeghe served as a director of Brown Advisory from 2003-2018, B/E Aerospace from 2014-2017, WP Carey from 2014-2017, and Nalco (and its successor Ecolab) from 2009-2014. Through her education, employment experience, and experience as a board member, Ms. VanDeWeghe is experienced with financial, investment and regulatory matters.
50


Interested Board Members
Timothy M. Dunbar. Mr. Dunbar has served as Chair of the Fund Complex since 2019. From 2018 through November 2020, Mr. Dunbar served as President of Global Asset Management for Principal®, overseeing all of Principal’s asset management capabilities, including with respect to PGI, PLIC, and PFSI, among others. He also has served on numerous boards of directors of Principal® affiliates, including PGI and Post, and in various other positions since joining Principal® in 1986 through his retirement in January 2021. Through his education and employment experience, Mr. Dunbar is experienced with financial, accounting, regulatory and investment matters.
Patrick G. Halter. Mr. Halter has served as a Board Member of the Fund Complex since 2017. Mr. Halter also serves as President for Global Asset Management for Principal® and as Chief Executive Officer, President and Chair of PGI, and Chief Executive Officer, President and Chair of Principal Real Estate Investors ("Principal - REI"). He serves on numerous boards of directors of Principal® affiliates and has served in various other positions since joining Principal® in 1984. Through his education and employment experience, Mr. Halter is experienced with financial, accounting, regulatory and investment matters.
Additional Information Regarding Board Members and Officers
The following tables present additional information regarding the Board Members and Fund Complex officers, including their principal occupations which, unless specific dates are shown, are of more than five years duration. For each Board Member, the tables also include information concerning other directorships held in reporting companies under the Securities Exchange Act of 1934 or registered investment companies under the 1940 Act.
INDEPENDENT BOARD MEMBERS
Name, Address,
and Year of Birth
Board Positions Held with
Fund Complex
Principal Occupation(s)
During Past 5 Years
Number of Portfolios Overseen in Fund Complex Other Directorships
Held During
Past 5 Years
Elizabeth Ballantine
711 High Street
Des Moines, IA 50392
1948
Director, PFI and PVC (since 2004) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
Principal, EBA Associates
(consulting and investments)
123
Durango Herald, Inc.;
McClatchy Newspapers, Inc.
Leroy T. Barnes, Jr.
711 High Street
Des Moines, IA 50392
1951
Director, PFI and PVC (since 2012) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
Retired

123
McClatchy Newspapers, Inc.; Frontier Communications, Inc.; formerly, Herbalife Ltd.
Craig Damos
711 High Street
Des Moines, IA 50392
1954
Lead Independent Board Member
(since 2020)
Director, PFI and PVC (since 2008) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
President, C.P. Damos Consulting LLC 123 None
Fritz S. Hirsch
711 High Street
Des Moines, IA 50392
1951
Director, PFI and PVC (since 2005) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)

February 2020 to October 2020, Interim CEO, MAM USA (manufacturer of infant and juvenile products) 123 MAM USA
Victor Hymes
711 High Street
Des Moines, IA 50392
1957
Director, PFI and PVC (since 2020) Trustee, PETF (since 2020)
Trustee, PDSRA (since 2020)
Founder and Managing Member of Legato Capital Management, LLC
123
Formerly, Montgomery Street Income Securities Inc.
John D. Kenney
711 High Street
Des Moines, IA 50392
1965
Director, PFI and PVC (since 2020)
Trustee, PETF (since 2020)
Trustee, PDSRA (since 2020)
Formerly, Legg Mason Global Asset Management 123 Formerly: Legg Mason Investment Management Affiliates: Brandywine Global; Clarion Partners; ClearBridge Investments; Entrust Global; Legg Mason Poland; Martin Currie Investment Management; Permal Group (merged into Entrust); QS Investors; RARE Infrastructure; Royce and Associates; and Western Asset Management
51


INDEPENDENT BOARD MEMBERS
Name, Address,
and Year of Birth
Board Positions Held with
Fund Complex
Principal Occupation(s)
During Past 5 Years
Number of Portfolios Overseen in Fund Complex Other Directorships
Held During
Past 5 Years
Padelford ("Padel") L. Lattimer
711 High Street
Des Moines, IA 50392
1961
Director, PFI and PVC (since 2020) Trustee, PETF (since 2020)
Trustee, PDSRA (since 2020)
TBA Management Consulting LLC
123
None
Karen (“Karrie”) McMillan
711 High Street
Des Moines, IA 50392
1961
Director, PFI and PVC (since 2014) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
Founder/Owner, Tyche Consulting LLC
Formerly, Managing Director, Patomak Global Partners, LLC
(financial services consulting)
123 None
Elizabeth A. Nickels
711 High Street
Des Moines, IA 50392
1962
Director, PFI and PVC (since 2015) Trustee, PETF (since 2015)
Trustee, PDSRA (since 2019)
Retired 123 SpartanNash; Formerly: Charlotte Russe; Follet Corporation; PetSmart; Spectrum Health System
Mary M. (“Meg”) VanDeWeghe
711 High Street
Des Moines, IA 50392
1959
Director, PFI and PVC (since 2018) Trustee, PETF (since 2018)
Trustee, PDSRA (since 2019)
CEO and President, Forte Consulting, Inc. (financial and management consulting) 123 Helmerich & Payne;
Formerly: B/E Aerospace; Brown Advisory; Denbury Resources Inc.; Nalco (and its successor Ecolab); and WP Carey
INTERESTED BOARD MEMBERS
Name, Address,
and Year of Birth
Board Positions Held
with Fund Complex


Positions with PGI
and its affiliates;
Principal Occupation(s)
During Past 5 Years**
(unless noted otherwise)
Number of
Portfolios
Overseen
in Fund
Complex
Other Directorships Held During
Past 5 Years
Timothy M. Dunbar
711 High Street
Des Moines, IA 50392
1957
Chair (since 2019)
Director, PFI and PVC (since 2019)
Trustee, PETF (since 2019)
Trustee, PDSRA (since 2019)
President-PGAM, PGI
(since 2018)
Director, PGI (2018-2020)
Division President, PFSI and
PLIC (2020-2021)
Executive Vice President and Chief Investment Officer,
PFSI and PLIC (2014-2018)
President-PGAM, PFSI and
PLIC (2018-2020)
Director, Post (2018-2020)
Chair and Executive Vice President, RobustWealth, Inc.
(2018-2020)
123 None
Patrick G. Halter
711 High Street
Des Moines, IA 50392
1959
Director, PFI and PVC (since 2017) Trustee, PETF (since 2017)
Trustee, PDSRA (since 2019)
Chair, PGI (since 2018)
Chief Executive Officer and
   President, PGI (since 2018)
Chief Operating Officer,
   PGI (2017-2018)
Director, PGI (2003-2018)
Director, Origin (2018-2019)
President–PGAM, PFSI and
   PLIC (since 2020)
Chair, Post (2017-2020)
Director, Post (since 2017)
Chair, Principal–REI (since 2004)
President and Chief Executive Officer - PGI, Principal-REI
   (since 2018)
Chief Executive Officer,
   Principal–REI (2005-2018)
Chair, Spectrum (since 2017)
123 None

52


FUND COMPLEX OFFICERS
Name, Address
and Year of Birth
Position(s) Held
with Fund Complex
Positions with PGI and its Affiliates;
Principal Occupations During Past 5 Years**
Kamal Bhatia
711 High Street
Des Moines, IA 50392
1972
President and Chief Executive Officer
(since 2019)
Director, PGI (since 2019)
President-Principal Funds, PGI (since 2019)
Principal Executive Officer, OPC Private Capital (2017-2019)
Senior Vice President, Oppenheimer Funds (2011-2019)
Director, PFD (since 2019)
Senior Executive Director and Chief Operating Officer, PFSI and
PLIC (since 2020)
President, PFSI and PLIC (2019-2020)
Director, Post (since 2020)
Director, Principal���REI (since 2020)
Chair and Executive Vice President, PSS (since 2019)
Randy D. Bolin
711 High Street
Des Moines, IA 50392
1961
Assistant Tax Counsel (since 2020)
Vice President and Associate General Counsel, PGI (since 2016)
Vice President and Associate General Counsel, PFSI (since 2013)
Vice President and Associate General Counsel, PLIC (since 2013)
Tracy W. Bollin
711 High Street
Des Moines, IA 50392
1970
Chief Financial Officer (since 2014)


Managing Director - Fund Operations, PGI (since 2016)
Senior Vice President, PFD (since 2016)
Chief Operating Officer and Senior Vice President, PMC (2015-2017)
Director, PMC (2014-2017)
Director, PSS (since 2014)
President, PSS (since 2015)
Gina L. Graham
711 High Street
Des Moines, IA 50392
1965
Treasurer (since 2016) Vice President and Treasurer, PGI (since 2016)
Vice President and Treasurer, PFD (since 2016)
Vice President and Treasurer, PFSI (since 2016)
Vice President and Treasurer, PLIC (since 2016)
Vice President and Treasurer, Principal - REI (since 2017)
Vice President and Treasurer, PSI (since 2016)
Vice President and Treasurer, PSS (since 2016)
Vice President and Treasurer, RobustWealth, Inc. (since 2018)
Laura B. Latham
711 High Street
Des Moines, IA 50392
1986
Assistant Counsel and Assistant Secretary
(since 2018)
Counsel, PGI (since 2018)
Counsel, PLIC (since 2018)
Prior thereto, Attorney in Private Practice
Diane K. Nelson
711 High Street
Des Moines, IA 50392
1965
AML Officer (since 2016) Chief Compliance Officer/AML Officer, PSS (since 2015)
Sara L. Reece
711 High Street
Des Moines, IA 50392
1975
Vice President and Controller (since 2016) Director - Accounting, PLIC (since 2015)
Teri R. Root
711 High Street
Des Moines, IA 50392
1979
Chief Compliance Officer (since 2018)
Interim Chief Compliance Officer (2018)
Deputy Chief Compliance Officer
(2015-2018)
Chief Compliance Officer - Funds, PGI (since 2018)
Deputy Chief Compliance Officer, PGI (2017-2018)
Vice President and Chief Compliance Officer, PMC (2015-2017)
Vice President, PSS (since 2015)
Britney L. Schnathorst
711 High Street
Des Moines, IA 50392
1981
Assistant Secretary (since 2017)
Assistant Counsel (since 2014)
Counsel, PGI (since 2018)
Counsel, PLIC (since 2013)
Adam U. Shaikh
711 High Street
Des Moines, IA 50392
1972
Assistant Counsel (since 2006) Assistant General Counsel, PGI (since 2018)
Counsel, PGI (2017-2018)
Counsel, PLIC (since 2006)
Counsel, PMC (2007-2017)
John L. Sullivan
711 High Street
Des Moines, IA 50392
1970
Assistant Counsel and Assistant Secretary
(since 2019)
Counsel, PGI (since 2020)
Counsel, PLIC (since 2019)
Prior thereto, Attorney in Private Practice
Dan L. Westholm
711 High Street
Des Moines, IA 50392
1966
Assistant Treasurer (since 2006) Assistant Vice President-Treasury, PGI (since 2013)
Assistant Vice President-Treasury, PFD (since 2013)
Assistant Vice President-Treasury, PLIC (since 2014)
Assistant Vice President-Treasury, PSI (since 2013)
Assistant Vice President-Treasury, PSS (since 2013)
53


FUND COMPLEX OFFICERS
Name, Address
and Year of Birth
Position(s) Held
with Fund Complex
Positions with PGI and its Affiliates;
Principal Occupations During Past 5 Years**
Beth C. Wilson
711 High Street
Des Moines, IA 50392
1956
Vice President and Secretary (since 2007) Director and Secretary-Funds, PLIC (since 2007)
Clint L. Woods
711 High Street
Des Moines, IA 50392
1961
Vice President, Counsel and
Assistant Secretary (since 2018)
Of Counsel (2017-2018)
Vice President (2016-2017)
Counsel (2015-2017)
Vice President, Associate General Counsel and Secretary
   PGI (since 2020)
Vice President, Associate General Counsel, Governance Officer and
   Assistant Corporate Secretary, PGI (2018-2020)
Vice President, Associate General Counsel and
   Assistant Corporate Secretary, PFD (since 2019)
Vice President, Associate General Counsel, Governance Officer and
   Assistant Corporate Secretary, PFSI (since 2015)
Vice President, Associate General Counsel, Governance Officer and
   Assistant Corporate Secretary, PLIC (since 2015)
Secretary, Post (since 2020)
Vice President, Associate General Counsel, Governance Officer and
   Secretary, Principal-REI (since 2020)
Vice President, Associate General Counsel, Governance Officer and
   Assistant Corporate Secretary, Principal-REI (2020)
Vice President, Associate General Counsel and
   Assistant Corporate Secretary, PSI (since 2019)
Vice President, Associate General Counsel and
   Assistant Corporate Secretary, PSS (since 2019)
Vice President, Associate General Counsel and
   Assistant Secretary, RobustWealth, Inc. (since 2019)
Secretary, Spectrum (since 2020)
Jared A. Yepsen
711 High Street
Des Moines, IA 50392
1981
Assistant Tax Counsel (since 2017) Counsel, PGI (2017-2019)
Counsel, PLIC (since 2015)
**Abbreviations used:
Origin Asset Management LLP (Origin) Principal Life Insurance Company (PLIC)
Post Advisory Group, LLC (Post) Principal Management Corporation (PMC), now PGI
Principal Financial Services, Inc. (PFSI) Principal Real Estate Investors, LLC (Principal - REI)
Principal Funds Distributor, Inc. (PFD) Principal Securities, Inc. (PSI)
Principal Global Asset Management (PGAM) Principal Shareholder Services, Inc. (PSS)
Principal Global Investors, LLC (PGI) Spectrum Asset Management, Inc. (Spectrum)
Board Member Ownership of Securities
The following tables set forth the dollar range of the equity securities of the Funds included in this SAI, and the aggregate dollar range of equity securities in the Fund Complex, which were beneficially owned by the Board Members as of December 31, 2020. As of that date, Board Members did not own shares of Funds included in this SAI that are not listed.
For the purpose of these tables, beneficial ownership means a direct or indirect pecuniary interest. Only Interested Board Members are eligible to participate in an employee benefit program which invests in the Fund Complex. Board Members who beneficially owned shares of series of PVC did so through variable life insurance and variable annuity contracts. Please note that exact dollar amounts of securities held are not listed. Rather, ownership is listed based on the following dollar ranges:
A    $0
B    $1 up to and including $10,000
C    $10,001 up to and including $50,000
D    $50,001 up to and including $100,000
E    $100,001 or more
Independent Board Members
Fund Ballantine Barnes Damos Hirsch
Hymes(1)
Kenney(2)
Lattimer(1)
McMillan Nickels VanDeWeghe
Core Plus Bond A A E D A A A A A A
Diversified International C A A D A A A A A A
54


Independent Board Members
Fund Ballantine Barnes Damos Hirsch
Hymes(1)
Kenney(2)
Lattimer(1)
McMillan Nickels VanDeWeghe
Equity Income A A E A A A A A A A
Global Diversified Income A E A D A A A D A A
Global Real Estate Securities A A A C C A A A A A
High Income A A A A A E A A A A
High Yield A A A C A A A A A A
Inflation Protection A A A C A A A A A A
International Emerging Markets A A A C A A A A A A
LargeCap S&P 500 Index A A A D A A A A A A
MidCap A A E A A A A A E A
Principal LifeTime 2030 A A A E A A A A A A
SAM Conservative Growth A A E A A A A A A A
SmallCap C A E A A A A A A A
SmallCap Value Fund II A A A C A A A A A A
Total Fund Complex D E E E C E A E E E
(1) Director's appointment effective December 15, 2020.
(2) Director’s appointment effective September 15, 2020.
Interested Board Members
Fund Dunbar Halter
Equity Income A E
LargeCap Growth I D E
Money Market A B
Principal Capital Appreciation D A
Principal Funds, Inc. (through participation in an Employee benefit plan) Dunbar Halter
LargeCap S&P 500 Index A E
Principal LifeTime Hybrid 2015 E A
Principal LifeTime Hybrid 2020 E A
Principal LifeTime Hybrid 2030 E A
Total Fund Complex E E
Mr. Kenney was a member of the Executive Committee at Legg Mason, Inc. (“Legg Mason”) until January 1, 2020, and served on the board of each Legg Mason affiliate, including ClearBridge RARE Infrastructure (North America) Pty Limited, a sub-advisor to the Principal Fund Complex. Mr. Kenney’s compensation from Legg Mason, including securities liquidated following his employment there, exceeded $120,000. Mr. Kenney remains subject to Legg Mason (now Franklin Resources, Inc.) deferred compensation plans that are invested in mutual funds sponsored and/or advised by Legg Mason and/or Franklin Templeton.
Board Member and Officer Compensation
The Fund Complex does not pay any remuneration to its Board Members or officers who are employed by PGI or its affiliates. The Board annually considers a proposal to reimburse PGI for certain expenses, including a portion of the Chief Compliance Officer's compensation. If the proposal is adopted, these amounts are allocated across all Funds based on relative net assets of each portfolio.
Each Independent Board Member received compensation for service as a member of the Boards of all investment companies in the Fund Complex based on a schedule that takes into account an annual retainer amount, the number of meetings attended, and expenses incurred. Board Member compensation and related expenses are allocated to each of the Funds based on the net assets of each relative to combined net assets of the Fund Complex.
55


The following table provides information regarding the compensation received by the Independent Board Members from the Funds included in this SAI and from the Fund Complex during the fiscal year ended October 31, 2020. On that date, there were 4 investment companies in the Fund Complex. The Fund does not provide retirement benefits or pensions to any of the Board Members.
Board Member
Funds in this SAI
Fund Complex
Elizabeth Ballantine
$222,047 $291,533
Leroy T. Barnes, Jr. $230,400 $302,500
Craig Damos $270,729 $355,500
Fritz S. Hirsch $235,349 $309,000
Victor Hymes (1)
$0 $0
John D. Kenney (2)
$57,101 $75,667
Padelford ("Padel") L. Lattimer (1)
$0 $0
Karen ("Karrie") McMillan $233,826 $307,000
Elizabeth A. Nickels $234,969 $308,500
Mary M. (“Meg”) VanDeWeghe $221,638 $291,000
(1) Director's appointment effective December 15, 2020.
(2) Director's appointment effective September 15, 2020.

56


INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisors
Principal Global Investors, LLC (“PGI”), an indirect subsidiary of Principal Financial Group, Inc. ("Principal®"), serves as the manager for the Fund. Principal Management Corporation, previously an affiliate of PGI, served as manager to the Fund prior to its merger with and into PGI on May 1, 2017.
PGI directly makes decisions to purchase or sell securities for each Fund, except for those Funds or portions of Funds for which PGI has retained a sub-advisor to provide such services, as described below.
PGI has executed agreements with various Sub-Advisors. Under those Sub-Advisory agreements, the Sub-Advisor agrees to assume the obligations of PGI to provide investment advisory services for a specific Fund. For these services, PGI pays each Sub-Advisor a fee.
Sub-Advisor:
AllianceBernstein L.P. ("AllianceBernstein") is a Delaware limited partnership, the majority limited partnership units in which are held, directly and indirectly, by its parent company Equitable Holdings, Inc. (“EQH”), a publicly traded holding company for a diverse group of financial services companies. AllianceBernstein Corporation, an indirect wholly-owned subsidiary of EQH, is the general partner of both AllianceBernstein and AllianceBernstein Holding L.P. (“ABH”), a publicly traded partnership. As of September 30, 2020, ABH owned approximately 35.5% of the issued and outstanding AllianceBernstein Units; EQH and its subsidiaries had an approximate 63.8% economic interest in AllianceBernstein (including both the general partnership and limited partnership interests in ABH and AllianceBernstein); and unaffiliated holders 0.7%.
Fund(s):
a portion of the assets of SmallCap Growth I
Sub-Advisor:
Barrow, Hanley, Mewhinney & Strauss, LLC ("Barrow Hanley") is an indirect subsidiary of Perpetual Limited ("Perpetual") (ASX:PPT), an Australian financial services firm.
Fund(s): a portion of the assets of LargeCap Value III and a portion of the assets of Overseas
Sub-Advisor:
BlackRock Financial Management, Inc. (“BlackRock”) is an indirect wholly-owned subsidiary of BlackRock, Inc. BlackRock and its affiliates manage investment company and other portfolio assets.
Sub-Sub-Advisor: BlackRock International Limited is an indirect wholly-owned subsidiary of BlackRock, Inc.
Fund(s): Inflation Protection
Sub-Advisor:
Brown Advisory, LLC (“Brown”) is a wholly-owned subsidiary of Brown Advisory Management, LLC
Fund(s): a portion of the assets of LargeCap Growth I and a portion of the assets of SmallCap Growth I
Sub-Advisor:
Causeway Capital Management LLC (“Causeway”) is wholly-owned by Causeway Capital Holdings LLC.
Fund(s): a portion of the assets of Overseas
Sub-Advisor:
DDJ Capital Management, LLC (“DDJ”) is a privately-owned Massachusetts limited liability company. David Breazzano, DDJ’s co-founder, president and chief investment officer, is the largest equity owner and holds 100% voting control of the firm.
Fund(s): a portion of the assets of Global Diversified Income and a portion of the assets of High Income
57


Sub-Advisor:
Eagle Asset Management, Inc. is a wholly-owned subsidiary of Carillon Tower Advisers, Inc., which is a wholly-owned subsidiary of Raymond James Financial, Inc.
Fund(s): a portion of the assets of MidCap Growth III
Sub-Advisor:
Emerald Advisers, LLC (“Emerald”) is a wholly-owned subsidiary of Emerald Asset Management PA, LLC, which is 51% owned by a subsidiary of 1251 Capital Group, Inc. a financial services holding company.
Fund(s): SmallCap Growth I
Sub-Advisor:
Hotchkis and Wiley Capital Management, LLC is a limited liability company, the primary members of which are HWCap Holdings, LLC, a limited liability company whose members are current and former employees, and Stephens-H&W, LLC, a limited liability company whose primary member is SF Holding Corp., a diversified holding company.
Fund(s): a portion of the assets of SmallCap Value II
Sub-Advisor:
Los Angeles Capital Management LLC ("Los Angeles Capital") is a California limited liability company. It is owned by key employees through its parent holding companies, LACM Holdings, Inc. and LACM Equity LLC (collectively, the “Parent Company”). Thomas D. Stevens, Chairman, and Hal W. Reynolds, Chief Investment Officer, hold a controlling equity interest in the Parent Company.
Fund(s): a portion of the assets of MidCap Value I and a portion of the assets of SmallCap Value II
Sub-Advisor:
Mellon Investments Corporation (“Mellon”) is an independently operated indirect subsidiary of The Bank of New York Mellon Corporation, a banking and financial services company. Employees of Mellon own a small minority interest of the company. Mellon is a registered investment advisor and organized as a corporation in the state of Delaware.
Fund(s): a portion of the assets of High Income
Sub-Advisor:
MetLife Investment Management, LLC (“MIM”) is a wholly-owned indirect subsidiary of MetLife, Inc.
Fund(s): a portion of the assets of Global Diversified Income
Sub-Advisor:
Origin Asset Management LLP (“Origin”) is an indirect majority-owned subsidiary of Principal Financial Services, Inc., an affiliate of PGI, and a member of Principal®.
Fund(s): International Fund I
Sub-Advisor:
Post Advisory Group, LLC (“Post”) is an indirect majority-owned subsidiary of Principal Financial Group, Inc.
Fund(s): a portion of the assets of Global Diversified Income and a portion of the assets of High Income
58


Sub-Advisor:
Principal Real Estate Investors, LLC ("Principal - REI") is an indirect subsidiary of Principal Financial Group, Inc.
Fund(s): Global Real Estate Securities, Real Estate Securities, and a portion of the assets of Global Diversified Income
Sub-Advisor:
Robert W. Baird & Co. Incorporated (“Baird”) is owned directly by Baird Financial Corporation (“BFC”). BFC is, in turn, owned by Baird Financial Group, Inc. (“BFG”), which is the ultimate parent company of Baird. Employees of Baird own substantially all of the outstanding stock of BFG.
Fund(s): a portion of the assets of MidCap Growth III
Sub-Advisor:
Spectrum Asset Management, Inc. ("Spectrum") is an indirect subsidiary of Principal Financial Group, Inc.
Fund(s): a portion of the assets of Global Diversified Income
Sub-Advisor:
T. Rowe Price Associates, Inc. ("T. Rowe Price") is a wholly-owned subsidiary of T. Rowe Price Group, Inc., a financial services holding company.
Fund(s): a portion of the assets of LargeCap Growth I
Sub-Advisor:
Vaughan Nelson Investment Management, LP ("Vaughan Nelson") is a subsidiary of Natixis Investment Managers, LLC.
Fund(s): a portion of the assets of SmallCap Value II
Sub-Advisor:
Victory Capital Management Inc. (“Victory Capital”) is an indirect wholly-owned subsidiary of Victory Capital Holdings, Inc. (“VCH”), a publicly traded Delaware corporation.
Fund(s): a portion of the assets of MidCap Value I
Sub-Advisor:
W. H. Reaves & Co., Inc. (doing business as Reaves Asset Management) is employee owned and no employee owns 25% or more of the firm.
Fund(s): a portion of the assets of Global Diversified Income
Sub-Advisor:
Westwood Management Corp. ("Westwood"), a New York corporation, is a wholly-owned subsidiary of Westwood Holdings Group, Inc., a publicly held company traded on the New York Stock Exchange.
Fund(s): a portion of the assets of LargeCap Value III
Affiliated Persons of the Fund Who are Affiliated Persons of the Advisor
For information about affiliated persons of the Fund who are also affiliated persons of PGI or affiliated advisors, see the Interested Board Members and Fund Complex Officers tables in the “Leadership Structure and Board” section.
59


Codes of Ethics
The Fund, PGI, each of the Sub-Advisors, and PFD have adopted Codes of Ethics (“Codes”) under Rule 17j-1 of the 1940 Act. PGI and the Sub-Advisors have each also adopted such a Code under Rule 204A-1 of the Investment Advisers Act of 1940. These Codes are designed to prevent, among other things, persons with access to information regarding the portfolio trading activity of a Fund from using that information for their personal benefit. Except in limited circumstances, the Code for PGI and the Fund prohibits portfolio managers from personally trading securities that are held or traded in the actively managed portfolios for which they are responsible. Certain Sub-Advisors have adopted Codes that do not permit personnel subject to such Code to invest in securities that may be purchased or held by the Fund. However, other Sub-Advisors' Codes do permit, subject to conditions, personnel subject to the Code to invest in securities that may be purchased or held by the Fund. The Fund’s Board reviews reports at least annually regarding the operation of the Code of Ethics of the Fund, PGI, PFD, and each Sub-Advisor. A copy of the Fund’s Code will be provided upon request, which may be made by contacting the Fund.
Management Agreement
Under the terms of the Management Agreement for the Fund, PGI, the investment advisor, is entitled to receive a fee computed and accrued daily and payable monthly, at the following annual rates, for providing investment advisory services and specified other services. The management fee schedules for the Funds are as follows (expressed as a percentage of average net assets):

Fund
First
$500 million
Next
$500 million
Next
$500 million
Over
$1.5 billion
Finisterre Emerging Markets Total Return Bond 0.75% 0.74% 0.73% 0.72%
Government & High Quality Bond 0.49 0.47 0.45 0.44
MidCap Growth 0.65 0.63 0.61 0.60
MidCap Growth III 0.90 0.86 0.84 0.82
SmallCap 0.75 0.73 0.71 0.70
Tax-Exempt Bond 0.45 0.43 0.41 0.40
Fund
All Assets
Principal LifeTime Strategic Income 0.00%
Principal LifeTime 2010 0.00
Principal LifeTime 2015 0.00
Principal LifeTime 2020 0.00
Principal LifeTime 2025 0.00
Principal LifeTime 2030 0.00
Principal LifeTime 2035 0.00
Principal LifeTime 2040 0.00
Principal LifeTime 2045 0.00
Principal LifeTime 2050 0.00
Principal LifeTime 2055 0.00
Principal LifeTime 2060 0.00
Principal LifeTime 2065 0.00
Principal LifeTime Hybrid Income 0.00
Principal LifeTime Hybrid 2015 0.00
Principal LifeTime Hybrid 2020 0.00
Principal LifeTime Hybrid 2025 0.00
Principal LifeTime Hybrid 2030 0.00
Principal LifeTime Hybrid 2035 0.00
Principal LifeTime Hybrid 2040 0.00
Principal LifeTime Hybrid 2045 0.00
Principal LifeTime Hybrid 2050 0.00
Principal LifeTime Hybrid 2055 0.00
Principal LifeTime Hybrid 2060 0.00
Principal LifeTime Hybrid 2065 0.00
60



Fund
First
$500 million
Next
$500 million
Next
$500 million
Next
$500 million
Next
$1 billion
Over
$3 billion
Core Plus Bond 0.55% 0.53% 0.51% 0.50% 0.48% 0.45%
Global Diversified Income 0.80 0.78 0.76 0.75 0.73 0.70
Global Real Estate Securities 0.90 0.88 0.86 0.85 0.84 0.83
High Income 0.65 0.63 0.61 0.60 0.59 0.58
Inflation Protection 0.40 0.38 0.36 0.35 0.34 0.33
International I 0.75 0.73 0.71 0.70 0.69 0.68
International Emerging Markets 1.05 1.03 1.01 1.00 0.99 0.98
LargeCap Value III 0.80 0.78 0.76 0.75 0.73 0.70
MidCap Value I 0.68 0.66 0.64 0.63 0.62 0.61
Money Market 0.40 0.39 0.38 0.37 0.36 0.35
Overseas 0.97 0.95 0.93 0.92 0.91 0.90
SmallCap Growth I 0.88 0.86 0.84 0.83 0.82 0.81
SmallCap Value II 0.95 0.93 0.91 0.90 0.89 0.88
Fund First
$500 million
Next
$500 million
Next
$500 million
Next
$500 million
Next
$1 billion
Next
$9 billion
Over
$12 billion
LargeCap Growth I 0.66% 0.64% 0.62% 0.61% 0.60% 0.59% 0.58%
Fund First
$500 million
Next
$500 million
Next
$500 million
Next
$500 million
Next
$1 billion
Next
$2 billion
Over
$5 billion
Real Estate Securities 0.85% 0.83% 0.81% 0.80% 0.79% 0.78% 0.77%

Fund
First
$1 billion
Over
$1 billion
California Municipal 0.45% 0.40%
Fund First
$1 billion
Next
$4 billion
Next
$2 billion
Over
$7 billion
Core Fixed Income 0.43% 0.41% 0.40% 0.38%
Fund
First
$500 million
Next
$500 million
Next
$500 million
Next
$500 million
Next
$1 billion
Next
$7 billion
Over
$10 billion
Diversified International
0.80% 0.78% 0.76% 0.75% 0.73% 0.70% 0.69%
Fund First
$250 million
Next
$250 million
Next
$6.5 billion
Over
$7 billion
Equity Income
0.60% 0.55% 0.50% 0.49%

Fund
First
$250 million
Over
$250 million
High Yield 0.625% 0.50%
Fund First
$500 million
Next
$500 million
Next
$500 million
Next
$500 million
Next
$1 billion
Next
$9.5 billion
Next
$2.5 billion
Next
$3 billion
Over
$18 billion
MidCap 0.65% 0.63% 0.61% 0.60% 0.59% 0.58% 0.57% 0.56% 0.55%
Fund All Assets
Government Money Market 0.15%
LargeCap S&P 500 Index 0.15
MidCap S&P 400 Index 0.15
SmallCap S&P 600 Index 0.15

Fund
First
$500 million
Next
$500 million
Over
$1 billion
Principal Capital Appreciation 0.625% 0.50% 0.375%
61


Fund First
$3 billion
Next
$4 billion
Next
$4 billion
Next
$4 billion
Over
$15 billion
SAM Balanced* 0.35% 0.30% 0.25% 0.20% 0.18%
SAM Conservative Balanced* 0.35 0.30 0.25 0.20 0.18
SAM Conservative Growth* 0.35 0.30 0.25 0.20 0.18
SAM Flexible Income* 0.35 0.30 0.25 0.20 0.18
SAM Strategic Growth* 0.35 0.30 0.25 0.20 0.18
*Breakpoints are based on aggregate SAM Portfolio net assets.

Fund
First
$1 billion
Next
$4 billion
Over
$5 billion
Short-Term Income 0.42% 0.40% 0.35%
Fund Operating Expenses
Each Fund pays all of its operating expenses. Under the terms of the Management Agreement, PGI is responsible for paying the expenses associated with the organization of each Fund, including the expenses incurred in the initial registration of the Funds with the SEC, compensation of personnel, officers and directors who are also affiliated with PGI, and 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. Accounting services customarily required by investment companies are provided to each Fund by PGI, under the terms of the Management Agreement. Principal Shareholder Services, Inc., an affiliate of PGI, provides transfer agent services for Classes A, C, J, Institutional, R-1, R-3, R-4, R-5, and R-6 shares, including qualifying shares of the Fund for sale in states and other jurisdictions. PGI is also responsible for providing certain shareholder and administrative services to Classes R-1, R-3, R-4 and R-5 shares pursuant to a Service Agreement and an Administrative Services Agreement.
Contractual Limits on Total Annual Fund Operating Expenses
PGI has contractually agreed to limit the Fund's expenses (excluding interest expense, expenses related to fund investments, acquired fund fees and expenses, and other extraordinary expenses) on certain share classes of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each respective class on an annualized basis. Subject to applicable expense limits, the Funds may reimburse PGI for expenses incurred during the current fiscal year.
In addition, PGI has contractually agreed to reduce the Government Money Market Fund's management fees in an amount equal to all Acquired Fund Fees and Expenses through the period ending February 28, 2022.
The operating expense limits and the agreement terms are as follows:
Contractual Limits on Total Annual Fund Operating Expenses
Fund A C J Inst. Expiration
California Municipal
N/A
N/A
N/A
0.51% 2/28/2022
Core Plus Bond
0.84% N/A N/A 0.56% 2/28/2022
Diversified International
N/A
1.98%
N/A
0.85% 2/28/2022
Equity Income
N/A
N/A
N/A
0.52% 2/28/2022
Finisterre Emerging Markets Total Return Bond 1.20% N/A N/A 0.85% 2/28/2022
Global Diversified Income
N/A
N/A
N/A
0.68% 2/28/2022
Global Real Estate Securities
N/A
N/A
N/A
0.94% 2/28/2022
Government & High Quality Bond
N/A 1.63%
N/A
0.53% 2/28/2022
Government Money Market
N/A
N/A
N/A
0.15% 2/28/2022
High Yield
N/A N/A N/A
0.61%
2/28/2022
Inflation Protection
N/A N/A 1.15%
N/A
2/28/2022
International I
N/A N/A
N/A
0.90% 2/28/2022
International Emerging Markets
1.55% 2.51% 1.37% 1.20% 2/28/2022
LargeCap S&P 500 Index
N/A 1.30%
N/A
N/A
2/28/2022
MidCap
N/A
N/A
N/A
0.70% 2/28/2022
MidCap Growth
N/A
N/A
N/A
0.75%
2/28/2022
MidCap Value I
N/A
N/A
N/A
0.72% 2/28/2022
Money Market
0.50% N/A N/A N/A 2/28/2022
Principal LifeTime 2010 0.38%
N/A
N/A
N/A 2/28/2022
Principal LifeTime 2020
0.38%
N/A
N/A
N/A 2/28/2022
Principal LifeTime 2030
0.38%
N/A
N/A
N/A 2/28/2022
62


Contractual Limits on Total Annual Fund Operating Expenses
Fund A C J Inst. Expiration
Principal LifeTime 2040
0.38%
N/A
N/A
N/A 2/28/2022
Principal LifeTime 2050
0.38%
N/A
N/A
N/A 2/28/2022
Principal LifeTime 2060
N/A
N/A
0.38%
N/A 2/28/2022
Principal LifeTime 2065
N/A
N/A
N/A
0.08% 2/28/2022
Principal LifeTime Strategic Income
0.38%
N/A
N/A
N/A 2/28/2022
Principal LifeTime Hybrid 2015
N/A
N/A
0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid 2020
N/A
N/A
N/A 0.05% 2/28/2022
Principal LifeTime Hybrid 2025
N/A
N/A
N/A 0.05% 2/28/2022
Principal LifeTime Hybrid 2030
N/A
N/A
N/A 0.05% 2/28/2022
Principal LifeTime Hybrid 2035
N/A N/A N/A
0.05%
2/28/2022
Principal LifeTime Hybrid 2040
N/A
N/A
0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid 2045
N/A
N/A 0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid 2050
N/A
N/A 0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid 2055
N/A
N/A 0.30%
0.05%
2/28/2022
Principal LifeTime Hybrid 2060
N/A
N/A 0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid 2065
N/A
N/A
0.30% 0.05% 2/28/2022
Principal LifeTime Hybrid Income
N/A
N/A
0.30% 0.05% 2/28/2022
Real Estate Securities
N/A
N/A
N/A
0.91% 2/28/2022
Short-Term Income
N/A
N/A
N/A
0.43% 2/28/2022
SmallCap
N/A
N/A
N/A
0.85%
2/28/2022
SmallCap S&P 600 Index N/A N/A N/A 0.21% 2/28/2022
SmallCap Value II
N/A
N/A
N/A
0.96% 2/28/2022
Tax-Exempt Bond
N/A
1.60%
N/A
0.52% 2/28/2022
Contractual Limits on Total Annual Fund Operating Expenses
Fund R-1 R-3 R-4 R-5 Expiration
Government & High Quality Bond
1.29% 0.98% 0.79% 0.67% 2/28/2022
Principal LifeTime 2065
0.93% 0.62% 0.43% 0.31% 2/28/2022
Short-Term Income
N/A N/A 0.79% N/A 2/28/2022
63


Contractual Limits on Other Expenses
PGI has contractually agreed to limit the expenses identified as "Other Expenses" related to certain share classes of certain of the Funds by paying, if necessary, expenses normally payable by the Fund, (excluding interest expense, expenses related to fund investments, acquired fund fees and expenses, and other extraordinary expenses) to maintain "Other Expenses" (expressed as a percent of average net assets on an annualized basis) at or below certain limits.
The Other Expenses limits and the agreement terms are as follows:
Contractual Limits on Other Expenses
Fund R-6 Expiration
Diversified International 0.04% 2/28/2022
Global Diversified Income 0.02% 2/28/2022
Global Real Estate Securities 0.02% 2/28/2022
International I 0.04% 2/28/2022
International Emerging Markets 0.04% 2/28/2022
MidCap 0.02% 2/28/2022
MidCap S&P 400 Index 0.02% 2/28/2022
MidCap Value I 0.02% 2/28/2022
Principal LifeTime Hybrid Income 0.02% 2/28/2022
Principal LifeTime Hybrid 2015 0.02% 2/28/2022
Principal LifeTime Hybrid 2020
0.02% 2/28/2022
Principal LifeTime Hybrid 2025
0.02% 2/28/2022
Principal LifeTime Hybrid 2030
0.02% 2/28/2022
Principal LifeTime Hybrid 2035
0.02% 2/28/2022
Principal LifeTime Hybrid 2040
0.02% 2/28/2022
Principal LifeTime Hybrid 2045
0.02% 2/28/2022
Principal LifeTime Hybrid 2050
0.02% 2/28/2022
Principal LifeTime Hybrid 2055
0.02% 2/28/2022
Principal LifeTime Hybrid 2060
0.02% 2/28/2022
Principal LifeTime Hybrid 2065
0.02% 2/28/2022
SmallCap
0.02% 2/28/2022
SmallCap Growth I
0.01% 2/28/2022
SmallCap S&P 600 Index
0.02% 2/28/2022
SmallCap Value II
0.02% 2/28/2022
Contractual Management Fee Waivers
PGI has contractually agreed to limit certain of the Funds' management fees. The expense limit will reduce the Fund's management fees by the amounts listed below:
Contractual Fee Waivers
Fund Waiver Expiration
Core Plus Bond
0.060% 2/28/2022
Global Diversified Income
0.080% 2/28/2022
High Income
0.015% 2/28/2022
LargeCap Growth I
0.016% 2/28/2022
LargeCap Value III
0.065% 2/28/2022
MidCap Growth III
0.020% 2/28/2022
MidCap Value I
0.020% 2/28/2022
Overseas
0.035% 2/28/2022
SmallCap Growth I
0.020% 2/28/2022
SmallCap Value II
0.020% 2/28/2022
64


Limits on Distribution Fees and/or Service (12b-1) Fees
Effective December 31, 2015, the Distributor has contractually agreed to limit the Distribution Fees attributable to Class J normally payable by the Money Market Fund. This waiver is in place through February 28, 2022 and will reduce the Money Market Fund’s Distribution Fees by 0.15%. It is expected that the fee waiver will continue to the period disclosed; however, Principal Funds, Inc. and the Distributor, the parties to the agreement, may agree to terminate the fee waiver prior to the end of the period.
Effective January 1, 2021, Principal Funds Distributor, Inc. ("the Distributor") has voluntarily agreed to limit the Distribution Fees attributable to Class J, reducing the Fund’s Distribution Fees for Class J Shares by 0.020%.* This voluntary waiver may be revised or terminated at any time without notice to shareholders.
* For the period from December 31, 2016 to December 31, 2020, the voluntary waiver was 0.030%.
Voluntary Expense Limit
PGI has voluntarily agreed to limit the Government Money Market and Money Market Funds’ expenses to the extent necessary to maintain a 0% yield. The voluntary expense limit may be revised or terminated at any time without notice to the shareholders.
Management Fees Paid
Fees paid for investment management services (before any waivers/reimbursements from PGI) during the periods indicated were as follows:
Management Fees for Periods Ended October 31
(amounts in thousands)
Fund
2020 2019 2018
California Municipal $2,845 $2,084 $1,874
Core Fixed Income 36,919 16,042
(1)
14,879
Core Plus Bond 3,450 15,494 16,470
Diversified International 89,822 92,912 100,063
Equity Income 38,888 36,623 34,621
Finisterre Emerging Markets Total Return Bond 1,742
(2)
1,004 297
Global Diversified Income 45,991 55,947 84,958
Global Real Estate Securities 25,893 29,700 24,302
Government & High Quality Bond 8,297 7,512 7,544
Government Money Market 5,474 4,714 4,323
(3)
High Income 18,032 20,720
(4)
8,635
High Yield 14,861 14,617 16,867
Inflation Protection 6,413 6,102 5,924
International Emerging Markets 3,113 6,956 11,286
International I 2,562 3,173 4,264
LargeCap Growth I 64,062 51,967 50,789
LargeCap S&P 500 Index 8,950 8,578 8,399
LargeCap Value III 15,252 16,084 16,917
MidCap 104,065 91,161 92,492
MidCap Growth 1,109 1,144 1,205
MidCap Growth III 9,880 10,372 10,891
MidCap S&P 400 Index 1,619 1,972 2,140
MidCap Value I 14,640 12,785 9,864
Money Market 2,634 2,035 1,927
Overseas 24,669 29,657 35,777
Principal Capital Appreciation 8,454 8,447 9,307
Real Estate Securities 38,244 34,712 29,328
SAM Balanced 12,100 12,374 13,053
SAM Conservative Balanced 4,606 4,637 4,827
SAM Conservative Growth 8,045 8,245 8,746
SAM Flexible Income 7,443 7,229 7,363
SAM Strategic Growth 5,015 5,069 5,398
Short-Term Income 22,102 19,743 17,959
SmallCap 4,750 4,880 4,983
65


Management Fees for Periods Ended October 31
(amounts in thousands)
Fund
2020 2019 2018
SmallCap Growth I 17,309 19,383 18,832
SmallCap S&P 600 Index 1,671 1,926 2,036
SmallCap Value II 8,425 10,223 11,808
Tax-Exempt Bond 2,752 2,018 1,596
(1) Effective December 30, 2019, Income Fund changed its name to Core Fixed Income Fund.
(2) Effective February 1, 2021, Finisterre Unconstrained Emerging Markets Bond Fund changed its name to Finisterre Emerging Markets Total Return Bond Fund.
(3) Period from December 20, 2017, date operations commenced, through October 31, 2018.
(4) Effective July 1, 2019, High Yield Fund I changed its name to High Income Fund.
Management Fees Waived
For the following Funds, PGI waived a portion of the management fee during the periods indicated as follows:
Management Fees Waived for Periods Ended October 31
(amounts in thousands)
Fund
2020 2019 2018
Core Plus Bond $379 $1,835 $1,963
Diversified International 4,122 9,641
Finisterre Emerging Markets Total Return Bond
(1)
15
Global Diversified Income 5,056 5,249 1,189
Government Money Market 304 310 323
(2)
High Income 442 158
(3)
International Emerging Markets 162 684
International I 178 439
LargeCap Growth I 1,714 1,387 1,352
LargeCap Value III 1,285 1,348 1,365
MidCap Growth III 333 851 893
MidCap Value I 452 765 1,196
Overseas 1,035 1,814 2,198
SmallCap Growth I 620 1,664 1,611
SmallCap Value II 291 417 459
(1) Effective February 1, 2021, Finisterre Unconstrained Emerging Markets Bond Fund changed its name to Finisterre Emerging Markets Total Return Bond Fund.
(2) Period from December 20, 2017, date operations commenced, through October 31, 2018.
(3) Effective July 1, 2019, High Yield Fund I changed its name to High Income Fund.
Expense Reimbursed
For the following Funds, PGI reimbursed certain expenses during the periods indicated as follows:
Expenses Reimbursed for Periods Ended October 31
(amounts in thousands)
Fund 2020 2019 2018
California Municipal $55 $59 $46
Core Fixed Income 91
(1)
43
Core Plus Bond 263 110 81
Diversified International 24 28 19
Equity Income 1,317 709 423
Finisterre Emerging Markets Total Return Bond 195
(2)
89 75
Global Diversified Income 2,934 3,714 3,528
Global Real Estate Securities 1,550 3,410 2,582
Government & High Quality Bond 225 273 93
Government Money Market 993 177 141
(3)
High Income 32 33
(4)
27
High Yield 356 704 168
66


Expenses Reimbursed for Periods Ended October 31
(amounts in thousands)
Fund 2020 2019 2018
Inflation Protection 13 38 38
International Emerging Markets 408 561 472
International I 57 146 163
LargeCap Growth I 148
LargeCap S&P 500 Index 16 7
MidCap Growth 18 31 13
MidCap Value I 166 92
Money Market 861 247 257
Principal Capital Appreciation 288 305 204
Principal LifeTime Strategic Income 24 25 21
Principal LifeTime 2010 11 17 15
Principal LifeTime 2020 2
Principal LifeTime 2030 22 31
Principal LifeTime 2040 17 47 40
Principal LifeTime 2050 57 83 78
Principal LifeTime 2060 19 22 15
Principal LifeTime 2065 21 31 30
Principal LifeTime Hybrid Income 53 70 72
Principal LifeTime Hybrid 2015 34 54 65
Principal LifeTime Hybrid 2020 15 10 49
Principal LifeTime Hybrid 2025 17 29 49
Principal LifeTime Hybrid 2030 11 22 40
Principal LifeTime Hybrid 2035 25 49 58
Principal LifeTime Hybrid 2040 21 40 56
Principal LifeTime Hybrid 2045 37 66 66
Principal LifeTime Hybrid 2050 48 66 66
Principal LifeTime Hybrid 2055 71 83 75
Principal LifeTime Hybrid 2060 79 86 79
Principal LifeTime Hybrid 2065 83 84 79
Real Estate Securities 273 428 76
SAM Conservative Balanced 18 60
SAM Flexible Income 51 8
SAM Strategic Growth 11
Short-Term Income 177 102 24
SmallCap 33 57 52
SmallCap Growth I 46 124 65
SmallCap Value II 172 124 87
Tax-Exempt Bond 92 97 51
(1) Effective December 30, 2019, Income Fund changed its name to Core Fixed Income Fund.
(2) Effective February 1, 2021, Finisterre Unconstrained Emerging Markets Bond Fund changed its name to Finisterre Emerging Markets Total Return Bond Fund.
(3) Period from December 20, 2017, date operations commenced, through October 31, 2018.
(4) Effective July 1, 2019, High Yield Fund I changed its name to High Income Fund.
67


Sub-Advisory Agreements for the Funds
PGI (and not the Fund) pays the sub-advisors fees determined pursuant to a sub-advisory agreement with each sub-advisor, including those sub-advisors that are at least 95% owned, directly or indirectly, by PGI or its affiliates ("Wholly-Owned Sub-Advisors") and the sub-advisors for the Funds listed in the tables below. Fees paid to sub-advisors are individually negotiated between PGI and each sub-advisor and may vary.
Aggregate Fees Paid to Sub-Advisors (other than Wholly-Owned Sub-Advisors, Origin and Post)
for Fiscal Years Ended October 31 (dollar amounts in thousands)
2020 2019 2018
Fund
Dollar Amount Percent
of Average Daily Net Assets
Dollar Amount Percent
of Average Daily Net Assets
Dollar Amount Percent
of Average Daily Net Assets
Global Diversified Income $5,463 0.33% $10,249 0.34% $20,886 0.35%
High Income 4,285 0.24 8,158 0.26 3,670 0.27
Inflation Protection 1,258 0.07 1,292 0.08 1,251 0.08
LargeCap Growth I 21,933 0.23 19,166 0.25 19,055 0.26
LargeCap Value III 3,543 0.21 3,802 0.21 3,812 0.21
MidCap Growth III 3,579 0.37 3,528 0.38 3,503 0.37
MidCap Value I 5,594 0.28 4,469 0.29 2,709 0.30
Overseas 7,938 0.36 9,061 0.36 10,438 0.35
SmallCap Growth I 7,828 0.43 7,674 0.46 7,203 0.46
SmallCap Value II 3,177 0.41 3,801 0.40 4,332 0.41
Fees Paid to Origin and Post
for Fiscal Years Ended October 31 (dollar amounts in thousands)
2020 2019 2018
Fund Dollar Amount Percent
of Average Daily Net Assets
Dollar Amount Percent
of Average Daily Net Assets
Dollar Amount Percent
of Average Daily Net Assets
International I (Origin) $1,115 0.35% $1,253 0.36% $1,670 0.35%
High Income (Post) 3,283 0.28 912 0.28
Global Diversified Income (Post) 2,919 0.29 3,178 0.30 1,871 0.30
Underwriting Fees for Periods Ended October 31,
(amounts in thousands)
Fund 2020 2019 2018
California Municipal $ 197  $ 41  $ 49 
Core Fixed Income  122  67 
(1)
104 
Core Plus Bond 75  38  35 
Diversified International 87  91  147 
Equity Income 344  347  270 
Finisterre Emerging Markets Total Return Bond
(2)
— 
Global Diversified Income 266  317  679 
Global Real Estate Securities  30  41  41 
Government & High Quality Bond  95  64  84 
High Income
(3)
10 
High Yield  84  82  111 
Inflation Protection 
International Emerging Markets  50  63  111 
International I 16  41  36 
LargeCap Growth I  184  93  83 
LargeCap S&P 500 Index  260  272  268 
LargeCap Value III  — 
MidCap  285  212  236 
MidCap Growth 
MidCap Growth III 
MidCap S&P 400 Index  10 
MidCap Value I 61  32 
68


Underwriting Fees for Periods Ended October 31,
(amounts in thousands)
Fund 2020 2019 2018
Money Market  76  50  49 
Principal Capital Appreciation 159  193  236 
Principal Lifetime Strategic Income  13  19 
Principal LifeTime 2010  15  14  29 
Principal LifeTime 2020  99  166  178 
Principal LifeTime 2030  253  287  351 
Principal LifeTime 2040  240  265  284 
Principal LifeTime 2050  271  280  275 
Principal LifeTime 2060 
Principal LifeTime Hybrid Income —  — 
Principal LifeTime Hybrid 2015 — 
Principal LifeTime Hybrid 2020 26  41 
Principal LifeTime Hybrid 2025 34  28 
Principal LifeTime Hybrid 2030 23  20 
Principal LifeTime Hybrid 2035 36  14 
Principal LifeTime Hybrid 2040 31  19  — 
Principal LifeTime Hybrid 2045 21  10 
Principal LifeTime Hybrid 2050 12 
Principal LifeTime Hybrid 2055 — 
Real Estate Securities  124  135  138 
SAM Balanced  936  1,026  1,285 
SAM Conservative Balanced  434  525  521 
SAM Conservative Growth  724  903  989 
SAM Flexible Income  637  785  1,116 
SAM Strategic Growth  660  682  747 
Short-Term Income  280  185  306 
SmallCap 98  138  186 
SmallCap Growth I 
SmallCap S&P 600 Index 
SmallCap Value II 11 13 27
Tax-Exempt Bond  82 59 92
(1) Effective December 30, 2019, Income Fund changed its name to Core Fixed Income Fund.
(2) Effective February 1, 2021, Finisterre Unconstrained Emerging Markets Bond Fund changed its name to Finisterre Emerging Markets Total Return Bond Fund.
(3) Effective July 1, 2019, High Yield Fund I changed its name to High Income Fund.
Custodian
The custodian of the portfolio securities and cash assets of the Funds is The Bank of New York Mellon, One Wall Street, New York, NY 10286. The custodian performs no managerial or policy-making functions for the Funds.

69


Securities Lending Agent
The Bank of New York Mellon serves as the securities lending agent for the Funds. Information regarding securities lending during the Funds' most recently ended fiscal year is as follows:
Fund Gross income (including from cash collateral reinvestment) Fees paid to securities lending agent from a revenue split Fees paid for any cash collateral management service that are not included in revenue split Administrative fees not included in revenue split Indemnification fees not included in revenue split Net rebate paid to borrower Other fees not included in revenue split Aggregate fees/ compensation Net income from securities lending
Core Fixed Income $ 45,908  $ 4,690  $ —  $ —  $ —  $ (997) $ —  $ 3,693  $ 42,215 
Core Plus Bond 15,335  1,951  —  —  —  (4,185) —  (2,234) 17,569 
Diversified International 369,404  141,107  —  —  —  (1,041,674) —  (900,567) 1,269,972 
Equity Income 207,313  35,949  —  —  —  (152,190) —  (116,241) 323,554 
Finisterre Emerging Markets Total Return Bond 4,555  391  —  —  —  642  —  1,033  3,522 
Global Diversified Income 480,144  79,363  —  —  —  (313,617) —  (234,254) 714,397 
Global Real Estate Securities 20,896  11,805  —  —  —  (97,154) —  (85,349) 106,245 
Government & High Quality Bond 23,723  841  —  —  —  15,316  —  16,156  7,567 
High Income 49,413  20,865  —  —  —  (159,333) —  (138,458) 187,871 
High Yield 144,709  11,843  —  —  —  26,254  —  38,097  106,612 
Inflation Protection 11,804  414  —  —  —  7,659  —  8,073  3,730 
International Emerging Markets 718  142  —  —  —  (702) —  (560) 1,278 
International I 5,936  889  —  —  —  (2,957) —  (2,068) 8,004 
LargeCap
Growth I
89,600  25,369  —  —  —  (164,134) —  (138,765) 228,365 
LargeCap S&P
500 Index
15,069  9,633  —  —  —  (81,279) —  (71,645) 86,714 
LargeCap Value III 4,298  2,066  —  —  —  (16,394) —  (14,328) 18,626 
MidCap 560,960  71,752  —  —  —  (156,595) —  (84,843) 645,803 
MidCap Growth 2,519  76  —  —  —  1,760  —  1,836  683 
MidCap Growth III 35,933  4,405  —  —  —  (8,149) —  (3,745) 39,677 
MidCap S&P
400 Index
49,011  11,190  —  —  —  (62,926) —  (51,736) 100,747 
MidCap Value I 10,382  3,542  —  —  —  (25,077) —  (21,535) 31,917 
Overseas 103,945  49,225  —  —  —  (388,307) —  (339,082) 443,027 
Principal Capital Appreciation 34,453  951  —  —  —  24,937  —  25,889  8,565 
Short-Term Income 31,695  3,019  —  —  —  1,499  —  4,518  27,177 
SmallCap 95,076  45,279  —  —  —  (357,766) —  (312,487) 407,563 
SmallCap
Growth I
292,050  136,575  —  —  —  (1,074,167) —  (937,592) 1,229,642 
SmallCap S&P
600 Index
143,725  103,041  —  —  —  (886,804) —  (783,764) 927,489 
SmallCap Value II 73,255  32,237  —  —  —  (249,401) —  (217,164) 290,419 
The services provided by The Bank of New York Mellon, as securities lending agent for the Funds, include: coordinating, with the Funds, the selection of securities to be loaned; negotiating loan terms; monitoring the value of securities loaned and corresponding collateral, marking to market daily; coordinating collateral movements; monitoring dividends; and transferring, recalling, and arranging the return of loaned securities to the Funds upon loan termination.
70


INTERMEDIARY COMPENSATION
Additional Payments to Intermediaries.
Shares of the Fund are sold primarily through intermediaries, such as brokers, dealers, investment advisors, banks, trust companies, pension plan consultants, retirement plan administrators and insurance companies.
In addition to payments pursuant to 12b-1 plans, PGI or its affiliates enter into agreements with some intermediaries pursuant to which the intermediaries receive payments for providing services relating to Fund shares. Examples of such services are administrative, networking, recordkeeping, sub-transfer agency and/or shareholder services. In some situations the Fund will reimburse PGI or its affiliates for making such payments; in others the Fund makes such payments directly to intermediaries.
For Classes R-1, R-3, R-4 and R-5 shares, such compensation is generally paid out of the Service Fees and Administrative Service Fees that are disclosed in the prospectus as Other Expenses. Such compensation is generally based on the average asset value of fund shares for the relevant share class held by clients of the intermediary.
In addition, PGI or its affiliates pay, without reimbursement from the Fund, compensation from their own resources, to certain intermediaries that support the distribution of shares of the Fund or provide services to Fund shareholders. In addition, PGI or its affiliates pay, without reimbursement from the Fund, compensation from their own resources to certain large plan sponsors to help cover the cost of providing educational materials to plan participants.
The amounts paid to intermediaries vary by share class and by fund.
Principal Life Insurance Company is one such intermediary that provides services relating to Fund shares held in employee benefit plans, and it is typically paid all of the Service Fees and Administrative Service Fees pertaining to such plans.
Plan recordkeepers, who may have affiliated financial intermediaries that sell shares of the funds, may be paid additional amounts. In addition, some financial intermediaries or their affiliates receive compensation from PGI or its affiliates for maintaining retirement plan platforms that facilitate trading by affiliated and non-affiliated financial intermediaries and recordkeeping for retirement plans.
A number of factors may be considered in determining the amount of these additional payments, including each financial intermediary's Fund sales and assets, as well as the willingness and ability of the financial intermediary to give the Distributor access to its Financial Professionals for educational and marketing purposes. In some cases, intermediaries will include the Funds on a preferred list. The Distributor's goals include making the Financial Professionals who interact with current and prospective investors and shareholders more knowledgeable about the Funds so that they can provide suitable information and advice about the Funds and related investor services. The amounts paid to intermediaries vary by fund and by share class.
Additionally, in some cases the Distributor and its affiliates will provide payments or reimbursements in connection with the costs of conferences, educational seminars, training and marketing efforts related to the Funds. Such activities may be sponsored by intermediaries or the Distributor. The costs associated with such activities may include travel, lodging, entertainment, and meals. In some cases the Distributor will also provide payment or reimbursement for expenses associated with transactions ("ticket") charges and general marketing expenses. Other compensation may be paid to the extent not prohibited by applicable laws, regulations or the rules of any self-regulatory agency, such as FINRA.
The payments described in this SAI may create a conflict of interest by influencing your Financial Professional or your intermediary to recommend the Fund over another investment, or to recommend one share class of the Fund over another share class. Ask your Financial Professional or visit your intermediary's website for more information about the total amounts paid to them by PGI and its affiliates, and by sponsors of other investment companies your Financial Professional may recommend to you.
Your intermediary may charge you additional fees other than those disclosed in the prospectus. Ask your Financial Professional about any fees and commissions they charge.
Although a Fund may use brokers who sell shares of the Funds to effect portfolio transactions, the sale of shares is not considered as a factor by the Fund's Sub-Advisors when selecting brokers to effect portfolio transactions.
71


As of December 1, 2020, the Distributor anticipates that the firms that will receive additional payments as described in the Additional Payments to Intermediaries section above (other than sales charges, Rule 12b-1 fees and Expense Reimbursement) include, but are not necessarily limited to, the following:
Advisor Group FSC Securities Corporation Putnam Investors Services
Advisory Services Network, LLC Goldman Sachs & Co. Raymond James & Associates, Inc.
Alight Financial Solutions LLC Great West Life & Annuity Raymond James Financial Services, Inc.
American Century Investments GWFS Equities, Inc. RBC Capital Markets Corp.
American Enterprise Investment Services Inc. H. Beck, Inc. RBC Correspondent Services
American General Life Insurance Co. HighTower Securities, LLC Reliance Trust Company
American United Life Insurance Co. ICMA-Retirement Corp. Retirement Clearinghouse
Ameriprise Financial Services Investacorp Inc. Robert W. Baird & Co.
Ameritas Investments Corp Janney Montgomery Scott Rowling & Associates Accountancy Corporation
Ascensus John Hancock Trust Co. Royal Alliance Associates, Inc.
Ascensus College Savings Record Keeping Services, LLC Kestra Investment Services, LLC SagePoint Financial, Inc.
AXA Advisors, LLC KMS Financial Services, Inc. SBC Wealth Management
AXA Equitable Life Insurance Co. Lara May & Associates LLC Securities America, Inc.
Baird Legacy Consulting Group Securities Service Network, Inc.
Benefit Plan Administrators Lincoln Retirement Services Co. Sierra Asset Management
Benefit Solutions LLBH Private Wealth Management LLC Standard Insurance Company
Benefit Trust Company LPL Financial Corporation Standard Retirement Services
BNY Mellon NA Massachusetts Mutual Life Insurance Company Stifel Nicolaus & Company, Inc.
Broadridge Business Process Outsourcing, LLC McDonald Partners, LLC Suntrust Investment Services, Inc.
Cadaret, Grant & Company, Inc. Mercer HR Services T. Rowe Price Retirement Plan Services
Caitlin John LLC Merrill Lynch TD Ameritrade Inc.
Cambridge Investment Research Inc. MidAtlantic Capital Corporation TD Ameritrade Trust Company
Cetera Advisor Networks LLC Minnesota Life Insurance Company The Prudential Insurance Company of America
Charles Schwab Trust Company MML Investors Services Inc. Thrivent Financial for Lutherans
Citi International Financial Services LLC Morgan Stanley Smith Barney LLC TIAA-CREF
Citibank N.A. Sucursal Uruguay National Financial Services LLC Total Administrative Services Corporation
Citigroup Global Markets Inc. Newport Group Retirement Plan Services Triad Advisors, Inc.
Columbia Management Investment Advisers, LLC Next Financial Group UBS Financial Services, Inc.
Commonwealth Financial Network Northwestern Mutual Investment Services US Bancorp Investments
Concentrum Wealth Management, LLC NYLIFE Securities, LLC VALIC Retirement Services Company
Concert Wealth Management Inc. Oppenheimer & Co. Vanguard Brokerage Services
Concord Wealth Partners Pensionmark Securities LLC Vanguard Group, The
Corient Capital Partners LLC Pershing LLC Voya Financial Advisors, Inc.
CPI Qualified Consultants Plan Administrators, Inc. Voya Institutional Plan Services, LLC
David A Noyes & Co. Platinum Wealth Partners, Inc. Voya Institutional Trust Co.
Digital Retirement Solutions Plan Administrators, Inc. Wave Wealth Management, LLC
EFG Capital International Corp Principal Life Insurance Company Wells Fargo Advisors FINET, LLC
ePlan Services, Inc. Principal Securities, Inc. Wells Fargo Bank, N.A.
ETRADE Savings Bank Principal Wealth Partners LLC Wells Fargo Clearing Services LLC
Fidelity Investment Institutional Operations Co. Private Client Services, LLC Western International Securities, Inc.
Financial Data Services LLC Prudential Retirement Services Woodbury Financial Services
First Republic Securities Co., LLC Purshe Kaplan Sterling Investments
The preceding list is subject to change at any time without notice. Any additions, modifications, or deletions to the financial intermediaries identified in this list that have occurred since the date noted above are not reflected. To obtain a current list, call 1-800-222-5852.
72


BROKERAGE ALLOCATION AND OTHER PRACTICES
Brokerage on Purchases and Sales of Securities
All orders for the purchase or sale of portfolio securities are placed on behalf of a Fund by PGI, or by the Fund's Sub-Advisor pursuant to the terms of the applicable sub-advisory agreement. In distributing brokerage business arising out of the placement of orders for the purchase and sale of securities for any Fund, the objective of PGI and of each Fund's Sub-Advisor is to obtain the best overall terms. In pursuing this objective, PGI or the Sub-Advisor considers all matters it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and executing capability of the broker or dealer, confidentiality, including trade anonymity, and the reasonableness of the commission, if any (for the specific transaction and on a continuing basis). This may mean in some instances that PGI or a Sub-Advisor will pay a broker commissions that are in excess of the amount of commissions another broker might have charged for executing the same transaction when PGI or the Sub-Advisor believes that such commissions are reasonable in light of a) the size and difficulty of the transaction, b) the quality of the execution provided, and c) the level of commissions paid relative to commissions paid by other institutional investors. Such factors are viewed both in terms of that particular transaction and in terms of all transactions that broker executes for accounts over which PGI or the Sub-Advisor exercises investment discretion. The Board has also adopted a policy and procedure designed to prevent the Funds from compensating a broker/dealer for promoting or selling Fund shares by directing brokerage transactions to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling Fund shares. Therefore, PGI or the Sub-Advisor may not compensate a broker/dealer for promoting or selling Fund shares by directing brokerage transactions to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling Fund shares. PGI or a Sub-Advisor may purchase securities in the over-the-counter market, utilizing the services of principal market makers unless better terms can be obtained by purchases through brokers or dealers, and may purchase securities listed on the NYSE from non-Exchange members in transactions off the Exchange.
PGI or a Sub-Advisor may give consideration in the allocation of business to services performed by a broker (e.g., the furnishing of statistical data and research generally consisting of, but not limited to, information of the following types: analyses and reports concerning issuers, industries, economic factors and trends, portfolio strategy, performance of client accounts, and access to research analysts, corporate management personnel, and industry experts). If any such allocation is made, the primary criteria used will be to obtain the best overall terms for such transactions or terms that are reasonable in relation to the research or brokerage services provided by the broker or dealer when viewed in terms of either a particular transaction or the sub-advisor’s overall responsibilities to the accounts under its management. PGI or a Sub-Advisor generally pays additional commission amounts for such research services. Statistical data and research information received from brokers or dealers as described above may be useful in varying degrees and PGI or a Sub-Advisor may use it in servicing some or all of the accounts it manages. PGI and the Sub-Advisors allocated portfolio transactions for the Funds indicated in the following table to certain brokers for the year ended October 31, 2020 due to research services provided by such brokers. The table also indicates the commissions paid to such brokers as a result of these portfolio transactions.
Fund
Amount of
Transactions because
of Research
Services Provided
Related Commissions Paid
Diversified International $4,027,061,441 $2,397,404
Equity Income 1,586,613,542 781,646
Global Diversified Income 547,235,564 438,050
Global Real Estate Securities 1,009,678,043 634,156
International Emerging Markets 64,095,120 38,183
International I 491,750,023 152,216
LargeCap Growth I 955,835,187 238,011
LargeCap S&P 500 Index 73,893,888 16,405
LargeCap Value III 1,476,077,098 705,068
MidCap 3,512,924,956 1,204,678
MidCap Growth 89,300,512 78,404
MidCap Growth III 496,510,051 165,284
MidCap S&P 400 Index 26,330,700 18,244
MidCap Value I 2,267,950,745 910,073
Overseas 1,424,969,263 1,320,544
Principal Capital Appreciation 828,060,535 274,150
Real Estate Securities 1,785,009,118 1,176,803
73


Fund
Amount of
Transactions because
of Research
Services Provided
Related Commissions Paid
SmallCap 165,447,224 217,762
SmallCap Growth I 980,772,479 455,727
SmallCap S&P 600 Index 23,667,609 37,614
SmallCap Value II 595,124,826 1,083,496
Subject to the rules promulgated by the SEC, as well as other regulatory requirements, the Board has approved procedures whereby a Fund may purchase securities that are offered in underwritings in which an affiliate of a Sub‑Advisor, or PGI, participates. These procedures prohibit a Fund from directly or indirectly benefiting a Sub‑Advisor affiliate or a Manager affiliate in connection with such underwritings. In addition, for underwritings where a Sub-Advisor affiliate or a Manager participates as a principal underwriter, certain restrictions may apply that could, among other things, limit the amount of securities that the Fund could purchase in the underwritings. The Sub-Advisor shall determine the amounts and proportions of orders allocated to the Sub-Advisor or affiliate. The Board receives quarterly reports on these transactions.
The Board has approved procedures that permit a Fund to effect a purchase or sale transaction between the Fund and any other affiliated investment company or between the Fund and affiliated persons of the Fund under limited circumstances prescribed by SEC rules. Any such transaction must be effected without any payment other than a cash payment for the securities, for which a market quotation is readily available, at the current market price; must be consistent with the investment objective, investment strategy, and risk profile of the Fund; and no brokerage commission or fee (except for customary transfer fees), or other remuneration may be paid in connection with the transaction. The Board receives quarterly reports of all such transactions.
The Board has also approved procedures that permit a Fund's Sub-Advisor(s) to place portfolio trades with an affiliated broker under circumstances prescribed by SEC Rules 17e-1 and 17a-10. The procedures require that total commissions, fees, or other remuneration received or to be received by an affiliated broker must be reasonable and fair compared to the commissions, fees or other remuneration received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable time period. The Board receives quarterly reports of all transactions completed pursuant to the Fund's procedures.
Purchases and sales of debt securities and money market instruments usually are principal transactions; portfolio securities are normally purchased directly from the issuer or from an underwriter or marketmakers for the securities. Such transactions are usually conducted on a net basis with the Fund paying no brokerage commissions. Purchases from underwriters include a commission or concession paid by the issuer to the underwriter, and the purchases from dealers serving as marketmakers include the spread between the bid and asked prices.
The following table shows the brokerage commissions paid during the periods indicated.
Total Brokerage Commissions Paid
For Periods Ended October 31
Fund 2020 2019 2018
California Municipal Fund $ 3,290  $ 6,088  $ 1,010 
Core Fixed Income Fund —  1,378  42,976 
Core Plus Bond 16,172  28,375  2,634 
Diversified International 8,382,170  10,964,605  11,284,826 
Equity Income 1,334,450  1,684,442  856,826 
Global Diversified Income 1,492,047  2,033,406 
(1)
8,091,363 
(1)
Global Real Estate Securities 1,766,085  2,224,162  2,199,177 
High Income 1,888  2,625  11,083 
High Yield 47,036  6,208  20,467 
Inflation Protection 4,106  7,443 
(1)
4,928 
(1)
International Emerging Markets 314,253  2,748,447  3,621,567 
International I 152,478  203,032  242,427 
LargeCap Growth I 1,319,454  1,180,004  1,412,463 
LargeCap S&P 500 Index 153,014  29,646  163,213 
LargeCap Value III 881,284  741,357  767,568 
MidCap 2,183,860  3,181,548  7,772,291 
74


Total Brokerage Commissions Paid
For Periods Ended October 31
MidCap Growth 234,942  215,909  264,644 
MidCap Growth III 320,801  377,887  425,677 
MidCap S&P 400 Index 121,143  70,217  58,460 
MidCap Value I 1,126,888  815,770  566,541 
Overseas 2,280,378  1,796,336  2,227,686 
Principal Capital Appreciation 521,687  856,827  779,776 
Real Estate Securities 2,473,748  1,417,735  1,750,752 
SAM Balanced Portfolio 77,184  110,984  113,929 
SAM Conservative Balanced Portfolio 14,242  63,891  28,038 
SAM Conservative Growth Portfolio 37,530  167,250  97,284 
SAM Flexible Income Portfolio 162,488  110,368  41,608 
SAM Strategic Growth Portfolio 61,420  346,583  56,995 
Short-Term Income —  —  85,374 
SmallCap 538,900  373,121  613,034 
SmallCap Growth I 1,218,085  1,214,616  1,296,379 
SmallCap S&P 600 Index 167,498  24,974 68,788
SmallCap Value II 1,362,063  1,212,061 1,153,648
Tax-Exempt Bond 3,300  6,439 — 
(1) Previous amounts have been restated using the methodology used for reporting similar data in Form N-CEN, which results in higher amounts than previously stated.
Primary reasons for changes in brokerage commissions for those Funds with relatively greater variations for the three years were:
for the LargeCap S&P 500 Index, MidCap S&P 400 Index, MidCap Value I, Real Estate Securities, and SmallCap S&P 600 Index Funds: changes in trading volumes, with higher volumes resulting in higher commissions, and changes in the allocation and payment of research costs in response to the adoption of the Markets in Financial Instruments Directive (MiFID II); and
for the High Yield Fund and the SAM Flexible Income Portfolio: increased trading in exchange-traded funds, with such increases resulting in higher commissions.

75


Brokerage commissions from the portfolio transactions effected for the Funds were paid to brokers affiliated with PGI or such Fund's Sub-Advisors for the fiscal years ended October 31 as follows:
Fund
Sub-Advisor Employed by
the Fund Complex
Affiliated Broker
Receiving Commissions
2020 Fund's Total
Commissions
Paid


% of Fund's Total
Commissions
% of
Dollar Amount
of Fund's
Commissionable
Transactions
Global Diversified Income
Principal Financial Group SAMI Brokerage LLC 38,686  2.59  % 1.26  %
Total
$ 38,686  2.59  % 1.26  %
Fund
Sub-Advisor Employed by
the Fund Complex
Affiliated Broker
Receiving Commissions
2019 Fund's Total
Commissions
Paid


% of Fund's Total
Commissions
% of
Dollar Amount
of Fund's
Commissionable
Transactions
Global Diversified Income(1)
Principal Financial Group SAMI Brokerage LLC 5,645  0.28  % 0.18  %
Total
$ 5,645  0.28  % 0.18  %
Fund Sub-Advisor Employed by
the Fund Complex
Affiliated Broker
Receiving Commissions
2018 Fund's Total
Commissions
Paid


% of Fund's Total
Commissions
% of
Dollar Amount
of Fund's
Commissionable
Transactions
Global Diversified Income(1)
Columbus Circle Investors
Finisterre Capital LLP
Origin Asset Management LLP
Post Advisory Group, LLC
Principal Global Investors, LLC
Principal Real Estate Investors, LLC
Spectrum Asset Management, Inc.
SAMI Brokerage LLC 5,676  0.07  % 0.05  %
Total
$ 5,676  0.07  % 0.05  %
(1) Previous amounts have been restated using the methodology used for reporting similar data in Form N-CEN, which results in higher amounts than previously stated.
Material differences, if any, between the percentage of a Fund's brokerage commissions paid to a broker and the percentage of transactions effected through that broker reflect the commission rates the Sub-Advisor has negotiated with the broker. Commission rates a Sub-Advisor pays to brokers may vary and reflect such factors as the trading volume placed with a broker, the type of security, the market in which a security is traded and the trading volume of that security, the types of services provided by the broker (i.e. execution services only or additional research services) and the quality of a broker's execution.
The following table indicates the value of each Fund's aggregate holdings of the securities of its regular brokers or dealers for the fiscal year ended October 31, 2020.
Holdings of Securities of Principal Funds, Inc. Regular Brokers and Dealers

Fund

Broker or Dealer
Holdings
(in thousands)
Core Fixed Income Fund Citigroup Inc $ 103,595 
Goldman Sachs Group Inc/The 85,724
Jefferies Group LLC 46,466
JPMorgan Chase & Co 85,824
Morgan Stanley 91,093
Wells Fargo & Co 84,296
Core Plus Bond Fund Barclays PLC 1,716
Citigroup Inc 4,191
Credit Suisse Group AG 6,882
Goldman Sachs Group Inc/The 2,415
HSBC Holdings PLC 2,569
JPMorgan Chase & Co 2,571
Morgan Stanley 6,327
UBS Group AG 2,300
Wells Fargo & Co 2,497
76


Holdings of Securities of Principal Funds, Inc. Regular Brokers and Dealers

Fund

Broker or Dealer
Holdings
(in thousands)
Equity Income Fund JPMorgan Chase & Co 191,550
Morgan Stanley 90,788
Global Diversified Income Fund Barclays PLC 19,494
Citigroup Inc 12,543
Credit Suisse Group AG 22,229
Goldman Sachs Group Inc/The 21,258
HSBC Holdings PLC 2,021
JPMorgan Chase & Co 19,123
Morgan Stanley 5,563
UBS Group AG 3,308
Wells Fargo & Co 15,277
High Income Fund Morgan Stanley 319
High Yield Fund Barclays PLC 20,548
Citigroup Inc 9,943
JPMorgan Chase & Co 21,697
LargeCap Growth Fund I Goldman Sachs Group Inc/The 24,000
LargeCap S&P 500 Index Fund Citigroup Inc 18,055
Goldman Sachs Group Inc/The 13,619
JPMorgan Chase & Co 62,561
Morgan Stanley 14,407
Wells Fargo & Co 18,504
LargeCap Value Fund III Citigroup Inc 10,545
Goldman Sachs Group Inc/The 19,525
Jefferies Group LLC 85
JPMorgan Chase & Co 49,143
Morgan Stanley 1,237
Wells Fargo & Co 15,261
MidCap S&P 400 Index Fund Jefferies Group LLC 2,455
MidCap Value Fund I Jefferies Group LLC 198
Money Market Fund Barclays PLC 16,998
Citigroup Inc 8,999
HSBC Holdings PLC 3,999
Overseas Fund Barclays PLC 28,283
Credit Suisse Group AG 648
HSBC Holdings PLC 27,007
Nomura Holdings Inc 613
UBS Group AG 1,858
Principal Capital Appreciation Fund JPMorgan Chase & Co 38,206
Short-Term Income Fund Citigroup Inc 96,394
Credit Suisse Group AG 34,511
Goldman Sachs Group Inc/The 55,068
HSBC Holdings PLC 20,230
JPMorgan Chase & Co 74,904
Morgan Stanley 80,968
UBS Group AG 30,918
Wells Fargo & Co 75,510
77


Allocation of Trades
By the Manager (“PGI”). PGI has its own trading platform and personnel that perform trade-related functions. Where applicable, PGI trades on behalf of its own clients. Such transactions are executed in accordance with PGI's trading policies and procedures, including, but not limited to trade allocations and order aggregation, purchase of new issues, and directed brokerage. PGI acts as discretionary investment advisor for a variety of individual accounts, ERISA accounts, registered investment companies, insurance company separate accounts, and public employee retirement plans and places orders to trade portfolio securities for each of these accounts. Managing multiple accounts may give rise to potential conflicts of interest including, for example, conflicts among investment strategies and conflicts in the allocation of investment opportunities. PGI has adopted and implemented policies and procedures that it believes address the potential conflicts associated with managing accounts for multiple clients and are designed to ensure that all clients are treated fairly and equitably. These procedures include allocation policies and procedures and internal review processes.
If, in carrying out the investment objectives of its respective clients, occasions arise in which PGI deems it advisable to purchase or sell the same equity securities for two or more client accounts at the same or approximately the same time, PGI may submit the orders to purchase or sell to a broker/dealer for execution on an aggregate or "bunched" basis. PGI will not aggregate orders unless it believes that aggregation is consistent with (1) its duty to seek best execution and (2) the terms of its investment advisory agreements. In distributing the securities purchased or the proceeds of sale to the client accounts participating in a bunched trade, no advisory account will be favored over any other account and each account that participates in an aggregated order will participate at the average share price for all transactions of PGI relating to that aggregated order on a given business day, with all transaction costs relating to that aggregated order shared on a pro rata basis.
Because of PGI's role as investment advisor to each of the Funds and as discretionary advisor for funds of funds as well as some of the underlying funds, conflicts may arise in connection with the services PGI provides to funds of funds with respect to asset class and target weights for each asset class and investments made in underlying funds. PGI also provides advisory services to funds that have multiple investment advisors (“Multi-Managed Funds”). These services include determining the portion of a Multi-Managed Fund's portfolio to be allocated to an advisor. Conflicts may arise in connection with the services PGI provides to the funds of funds that it manages, in connection with the services PGI provides to other funds of funds and Multi-Managed Funds, for the following reasons:
PGI serves as the investment advisor to the underlying funds in which the funds of funds invest, sometimes as the discretionary advisor, and an affiliated investment advisor may serve as sub-advisor to the funds in which a fund of funds may invest. This raises a potential conflict because PGI's or an affiliated company's profit margin may vary depending upon the underlying fund in which the funds of funds invest.
PGI or an affiliated person may serve as investment advisor to a portion of a Multi-Managed Fund. In addition, PGI might recommend that an affiliated person serve as sub-advisor to a portion of a Multi-Managed Fund. This raises a potential conflict because PGI's or an affiliated investment advisor's profit margin may vary depending on the extent to which a Multi-Managed Fund's assets are managed by PGI or allocated to an affiliated advisor.
A sub-advisor may determine that the asset class PFI has hired it to manage (for example, small capitalization growth stocks) can be managed effectively only by limiting the amount of money devoted to the purchase of securities in the asset class. In such a case, a sub-advisor may impose a limit on the amount of money PFI may place with the sub-advisor for management. When a sub-advisor for two or more PFI Funds imposes such a limit, PGI and/or the sub-advisor may need to determine which Fund will be required to limit its investment in the asset class and the degree to which the Fund will be so limited. PGI and the sub-advisor may face a conflict of interest in making its determination.
78


PGI implements the following in an effort to limit the appearance of conflicts of interest and the opportunity for events that could trigger an actual conflict of interest:
PGI implements a process for selecting underlying funds that emphasizes the selection of funds within the Principal Funds complex that are determined to be consistent with the fund of fund’s objective and principal investment strategies. However, PGI will select an unaffiliated underlying fund managed by an unaffiliated sub-advisor when deemed necessary or appropriate based upon a consideration of the Fund’s objective and investment strategies and available expertise and resources within the Principal organization.
PGI uses a process to select investment advisors that emphasizes the selection of PGI or Principal-affiliated sub-advisors that are determined to be qualified under the Manager’s due diligence process. However, PGI will select an unaffiliated sub-advisor to manage all or a portion of a Fund’s portfolio when deemed necessary or appropriate based upon a consideration of the Fund’s objective and investment strategies and available expertise and resources within the Principal organization.
PGI provides ongoing oversight of the Funds' investments to monitor adherence to their investment program.
By the Sub-Advisors. The portfolio managers of each Sub-Advisor manage a number of accounts other than the Fund's portfolios, including in some instances proprietary or personal accounts. Managing multiple accounts may give rise to potential conflicts of interest including, for example, conflicts among investment strategies, allocating time and attention to account management, allocation of investment opportunities, knowledge of and timing of fund trades, selection of brokers and dealers, and compensation for the account. Each has adopted and implemented policies and procedures that it believes address the potential conflicts associated with managing accounts for multiple clients and personal accounts and are designed to ensure that all clients and client accounts are treated fairly and equitably. These procedures include allocation policies and procedures, personal trading policies and procedures, internal review processes and, in some cases, review by independent third parties.
Investments the Sub-Advisor deems appropriate for the Fund's portfolio may also be deemed appropriate by it for other accounts. Therefore, the same security may be purchased or sold at or about the same time for both the Fund's portfolio and other accounts. In such circumstances, the Sub-Advisor may determine that orders for the purchase or sale of the same security for the Fund's portfolio and one or more other accounts should be combined. In this event the transactions will be priced and allocated in a manner deemed by the Sub-Advisor to be equitable and in the best interests of the Fund’s portfolio and such other accounts. While in some instances combined orders could adversely affect the price or volume of a security, the Fund believes that its participation in such transactions on balance will produce better overall results for the Fund.
PURCHASE AND REDEMPTION OF SHARES
Purchase of Shares
Participating insurance companies and certain other designated organizations are authorized to receive purchase orders on the Funds' behalf and those organizations are authorized to designate their agents and affiliates as intermediaries to receive purchase orders. Purchase orders are deemed received by a Fund when authorized organizations, their agents or affiliates receive the order. The Funds are not responsible for the failure of any designated organization or its agents or affiliates to carry out its obligations to its customers. Class A shares of the Funds are purchased at their public offering price and other share classes of the Funds are purchased at the net asset value ("NAV") per share, as determined at the close of the regular trading session of the NYSE next occurring after a purchase order is received and accepted by an authorized agent of a Fund. In order to receive a day's price, an order must be received in good order by the close of the regular trading session of the NYSE as described below in "Pricing of Fund Shares."
All income dividends and capital gains distributions, if any, on a Fund's Institutional Class and Classes R-1, R-3, R-4, R-5, and R-6 shares are reinvested automatically in additional shares of the same class of the same Fund. Dividends and capital gains distributions, if any, on a Fund's Classes A, C, and J shares are reinvested automatically in additional shares of the same Class of shares of the same Fund unless the shareholder elects to take dividends in cash. The reinvestment will be made at the NAV determined on the first business day following the record date.
The Fund, at its discretion, may permit the purchase of shares using securities as consideration (a purchase in-kind).
79


MidCap Fund
For retail investors (i.e., non-employer sponsored retirement plan investors), effective as of the close of the New York Stock Exchange on June 14, 2013, and for employer-sponsored retirement plan investors, effective as of the close of the New York Stock Exchange on August 15, 2013, the MidCap Fund (the “Fund”) is no longer available for purchases from new investors except in limited circumstances, such as the following:
Shareholders, including those in omnibus accounts, who own shares of the Fund as of June 14, 2013 (for retail investors, i.e., non-employer sponsored retirement plan investors) or August 15, 2013, (for employer sponsored retirement plan investors), may continue to make purchases, exchanges, and dividend or capital gains reinvestment in existing accounts.
Registered Investment Advisor (RIA) and bank trust firms that have an investment allocation to the MidCap Strategy (i.e. investments in the same strategy used in collective investment trust, separately managed accounts, individually managed accounts or insurance separate accounts) in a fee-based, wrap or advisory account, may continue to add new clients, purchase shares, and exchange into the Fund. The Fund will not be available to new RIA and bank trust firms.
Shareholders through accounts at private banks may continue to purchase shares and exchange into the Fund. Private banks that have an investment allocation to the MidCap Strategy may add new clients to the Fund. The Fund will not be available to private bank or private bank platforms not already investing in the MidCap Strategy.
Shareholders in broker/dealer wrap or fee-based programs that have an investment allocation to the Fund may continue to purchase shares and exchange into the Fund. Existing broker/dealer wrap or fee-based programs may add new participants.
Shareholders in certain types of retirement plans (including 401(k)s, SEPs, SIMPLEs, 403(b)s, etc.) may continue to purchase shares and exchange into the Fund. New participants in these plans may elect to purchase shares of the Fund.
Shareholders within brokerage accounts may continue to purchase shares of the Fund; however, new brokerage accounts will not be permitted to begin investing in the Fund after June 14, 2013.
529 plans that include the Fund within their investment options may continue to purchase shares and exchange into the Fund.
Investors who have a direct investment in the MidCap Strategy may, subject to the approval of the Distributor, purchase shares in the Fund.
Shareholders that invest through accounts with Principal Securities, Inc.
At the sole discretion of the Distributor, the Fund may permit certain types of investors to open new accounts, impose further restrictions on purchases, or reject any purchase orders, all without prior notice.
Money Market Fund
Effective as of the close of the New York Stock Exchange January 18, 2018, Class C and Institutional Class Shares of the Fund are no longer available for purchases or for exchanges from other series of the Principal Funds, Inc.
Class R-1 Shares
For retirement plan investors, effective as of the close of the New York Stock Exchange on January 31, 2017, Class R-1 shares are no longer available for purchase from new retirement plans except in limited circumstances. However, if a retirement plan currently offers Class R-1, such plans will be allowed to continue to invest in that share class through Funds they currently offer in their plans or Funds they add to their plans.
Abandoned or Orphaned Accounts
In order to invest in shares of Principal Funds, a shareholder’s account must have a registered broker-dealer on file with us when the account is established. If an active account does not have a registered broker-dealer on file, we consider the account to be an “abandoned or orphaned account”. If we determine in our discretion that an account is abandoned or orphaned, we will take the following actions:
Notify the shareholder in writing as to the account’s status and request that the account(s) be moved to another registered broker-dealer;
Remove the broker/dealer from the account.  If the shareholder does not request another registered broker/dealer to be added to the account, Principal Shareholder Services, Inc. (“PSS”), the Funds’ Transfer Agent, will hold the accounts until another registered broker/dealer is added to the account.  PSS is not a broker-dealer and does not offer investment advice; and
No initial sales charge will apply to purchases of Fund shares while PSS is holding the account.
80


Sales of Shares
Payment for shares tendered for redemption is ordinarily made in cash. The Fund may determine, however, that it would be detrimental to the remaining shareholders to make payment of a redemption order wholly or partly in cash. The Fund may, therefore, pay the redemption proceeds in whole or in part by a distribution "in kind" of securities from the Fund's portfolio in lieu of cash. If the Fund pays the redemption proceeds in kind, the redeeming shareholder might incur brokerage or other costs in selling the securities for cash. The Fund will value securities used to pay redemptions in kind using the same method the Fund uses to value its portfolio securities as described below in "Pricing of Fund Shares."
The right to require the Funds to redeem their shares may be suspended, or the date of payment may be postponed, whenever: 1) trading on the NYSE is restricted, as determined by the SEC, or the NYSE is closed except for holidays and weekends; 2) the SEC permits such suspension and so orders; or 3) an emergency exists as determined by the SEC so that disposal of securities or determination of NAV is not reasonably practicable.
Certain designated organizations are authorized to receive sell orders on the Fund's behalf and those organizations are authorized to designate their agents and affiliates as intermediaries to receive redemption orders. Redemption orders are deemed received by the Fund when authorized organizations, their agents or affiliates receive the order. The Fund is not responsible for the failure of any designated organization or its agents or affiliates to carry out its obligations to its customers.
Exchanges Between Classes of Shares
Through your financial intermediary, in certain limited circumstances, you may become eligible to exchange shares of a Fund you own for shares of a different class of the same Fund, if you become eligible to purchase shares of such different class of the same Fund through your account with your financial intermediary. The following shows the permitted exchanges, subject to the conditions described herein:
Exchange From Class Exchange To Class
A Institutional
C A, Institutional
Institutional A, C, R-6
Such same Fund exchanges between share classes are permitted subject to conditions including, but not limited to, the following:
You or your retirement plan sponsor must be eligible to purchase shares of the class into which the exchange is to occur;
Your financial intermediary or the retirement plan sponsor's financial intermediary must have an agreement with the underwriter or transfer agent of Principal Funds allowing the purchase of such share class for you;
The Fund must offer shares of such class of such Fund in your state or the state of the retirement plan sponsor;
In order to exchange into Class A shares, you must be eligible to: (i) purchase Class A shares with no initial sales charge; or (ii) exchange into Class A shares through your financial intermediary with no initial sales charge;
Depending on the circumstances, for exchanges from Classes A and C shares there may be a contingent deferred sales charge in connection with the exchange;
Any such exchange must be requested by your financial intermediary or retirement plan sponsor (with approval by the Distributor) and, except as otherwise approved by the Distributor, must result from either (i) the financial intermediary seeking to have shares of the Funds on their platform held in a particular share class, (ii) the share class becoming available to your financial intermediary or financial professional through a new relationship, or (iii) your retirement plan sponsor electing to have shares of the Funds offered as part of the plan investment options held in a particular share class; and
The Government Money Market Fund does not permit exchanges.
If after purchasing Institutional Class shares you become ineligible to invest in Institutional Class shares, you may be permitted to exchange from Institutional Class shares into other share classes issued by the same Fund if your financial intermediary determines you qualify for such an exchange.
You should check with your financial intermediary to see if the exchange you wish to complete will satisfy the conditions. Your ability to exchange between share classes of the same Fund may be limited by the operational limitations of your financial intermediary. Please consult your financial professional for more information.
While such an exchange may not be considered a taxable event for income tax purposes, you should consult with your tax advisor regarding possible federal, state, local and foreign tax consequences.
81


Money Market Fund - Investor Transaction Considerations Regarding Liquidity Fees and Redemption Gates*
•     If a shareholder submits a redemption order while a redemption gate is in effect, the redemption order is invalid and a shareholder must submit a new redemption order after the gate is lifted.
•     If the Money Market Fund received, but has not yet processed, a purchase order prior to notifying investors of the imposition of liquidity fees or redemption gates, such purchase order will be considered a valid purchase and will be processed normally.
•     If a liquidity fee is imposed during the day, an intermediary that receives both purchase and redemption orders from a single underlying accountholder will not apply the liquidity fee to the net amount of redemptions made by that same accountholder, since the purchase order was received before the time the liquidity fee was implemented.
•     If a redemption request was verifiably submitted to the Money Market Fund’s agent before a liquidity fee or redemption gate is imposed but is received by the Money Market Fund after a liquidity fee or redemption gate is imposed, the fund will pay the proceeds of the redemption request despite the gate and will not impose a liquidity fee on the redemption request.
•     A checkwriting redemption request which is verifiably submitted to the Money Market Fund’s agent before a liquidity fee or redemption gate is imposed will be considered a valid redemption and will be processed normally.
*This does not apply to the Government Money Market Fund.
GOVERNMENT MONEY MARKET AND MONEY MARKET FUNDS MATERIAL EVENTS
Imposition of Liquidity Fees and Temporary Suspensions of Fund Redemptions
Since October 14, 2016, there has not been any occasion on which the Money Market Fund has: (i) invested less than ten percent, and/or (ii) invested less than thirty percent, but more than ten percent, of its total assets in weekly liquid assets.
Financial Support Provided to the Government Money Market Fund or Money Market Fund
Since October 14, 2016 (or, for the Government Money Market Fund, since inception), there has not been any occasion on which the Government Money Market Fund or Money Market Fund has: (i) been provided financial support from an affiliated person, promoter, or principal underwriter of the Fund, or an affiliated person of such a person, and/or (ii) participated in one or more mergers with another investment company.
Form N-CR
If applicable, the Fund was required to disclose additional information about this event (or these events, as appropriate) on Form N-CR and to file this form with the Securities and Exchange Commission. Any Form N-CR filing submitted by the Fund is available on the EDGAR Database on the Securities and Exchange Commission’s Internet site at www.sec.gov.
PRICING OF FUND SHARES
Each Fund's shares are bought and sold at the current net asset value ("NAV") per share. Each Fund's NAV for each class is calculated each day the New York Stock Exchange ("NYSE") is open, as of the close of business of the Exchange (normally 3:00 p.m. Central Time). The NAV of Fund shares is not determined on days the NYSE is closed (generally, New Year's Day; Martin Luther King, Jr. Day; Washington's Birthday/Presidents' Day; Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas). When an order to buy or sell shares is received, the share price used to fill the order is the next price calculated after the order is received in proper form.
The Funds will not treat an intraday unscheduled disruption in NYSE trading as a closure of the NYSE and will price its shares as of 3:00 p.m. Central Time, if the particular disruption directly affects only the NYSE.
For all Funds except the Government Money Market and Money Market Funds, the share price is calculated by:
•    taking the current market value of the total assets of the Fund
•    subtracting liabilities of the Fund
•    dividing the remainder proportionately into the classes of the Fund
•    subtracting the liability of each class
•    dividing the remainder by the total number of shares owned in that class.
In determining NAV, securities listed on an Exchange, the Nasdaq National Market and any foreign markets within the Western Hemisphere are valued at the closing prices on such markets, or if such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price.
82


Municipal securities held by the Funds are traded primarily in the over-the-counter market. Valuations of such securities are furnished by one or more pricing services employed by the Funds and are based upon appraisals obtained by a pricing service, in reliance upon information concerning market transactions and quotations from recognized municipal securities dealers.
Other securities that are traded on the over-the-counter market are valued at their closing bid prices. Each Fund will determine the market value of individual securities held by it, by using prices provided by one or more professional pricing services which may provide market prices to other funds, or, as needed, by obtaining market quotations from independent broker-dealers. Debt securities with remaining maturities of sixty days or less for which market quotations and information furnished by a third party pricing service are not readily available will be valued at amortized cost, which approximates current value. Securities for which quotations are not readily available, and other assets, are valued at fair value determined in good faith under procedures established by and under the supervision of the Board.
A Fund’s securities may be traded on foreign securities markets that close each day prior to the time the NYSE closes. In addition, foreign securities trading generally or in a particular country or countries may not take place on all business days in New York. The Fund has adopted policies and procedures to “fair value” some or all securities held by a Fund. These fair valuation procedures are intended to discourage shareholders from investing in the Fund for the purpose of engaging in market timing or arbitrage transactions. The values of foreign securities used in computing share price are determined at the time the foreign market closes. Foreign securities and currencies are converted to U.S. dollars using the exchange rate in effect at the close of the NYSE. Occasionally, events affecting the value of foreign securities occur when the foreign market is closed and the NYSE is open. The NAV of a Fund investing in foreign securities may change on days when shareholders are unable to purchase or redeem shares. If the Advisor believes that the market value is materially affected, the share price will be calculated using the policy adopted by the Fund.
Certain securities issued by companies in emerging markets may have more than one quoted valuation at any point in time, sometimes referred to as a "local" price and a "premium" price. The premium price is often a negotiated price which may not consistently represent a price at which a specific transaction can be effected. It is the policy of the Funds to value such securities at prices at which it is expected those shares may be sold, and the Advisor is authorized to make such determinations subject to the oversight of the Board as may from time to time be necessary.
Appendix B provides a specimen price-make-up sheet showing how the Fund calculates the total offering price per share.
Government Money Market and Money Market Funds (the "Money Market Funds")
The share price of each Class of shares of the Money Market Funds is determined at the same time and on the same days as the Funds described above. All securities held by the Money Market Funds are valued on an amortized cost basis. Under this method of valuation, a security is initially valued at cost; thereafter, the Money Market Funds assume a constant proportionate amortization in value until maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price that would be received upon sale of the security.
Use of the amortized cost valuation method by the Money Market Funds requires the Funds to maintain a dollar weighted average maturity of 60 days or less and to purchase only obligations that have remaining maturities of 397 days or less, with certain exceptions permitted by applicable regulations, or have a variable or floating rate of interest. In addition, the Funds invest only in obligations determined by the Directors to be of high quality with minimal credit risks.
The Board has established procedures for the Money Market Funds designed to stabilize, to the extent reasonably possible, the Funds' price per share as computed for the purpose of sales and redemptions at $1.00. Such procedures include a directive to PGI to test price the portfolio or specific securities on a weekly basis using a mark-to-market method of valuation to determine possible deviations in the net asset value from $1.00 per share. If such deviation exceeds ½ of 1%, the Board promptly considers what action, if any, will be initiated. In the event the Board determines that a deviation exists which may result in material dilution or other unfair results to shareholders, it takes such corrective action as it regards as appropriate, including: sale of portfolio instruments prior to maturity; the withholding of dividends; redemptions of shares in kind; the establishment of a net asset value per share based upon available market quotations; or splitting, combining or otherwise recapitalizing outstanding shares. The Funds may also reduce the number of shares outstanding by redeeming proportionately from shareholders, without the payment of any monetary compensation, such number of full and fractional shares as is necessary to maintain the net asset value at $1.00 per share.
83


The Board has approved policies and procedures for PGI to conduct monthly stress testing of the Money Market Funds' ability to maintain a stable net asset value per share and a weekly liquid asset level of at least 10%.
TAX CONSIDERATIONS
Qualification as a Regulated Investment Company
The Funds intend to qualify annually to be treated as regulated investment companies (RICs) under the Internal Revenue Code of 1986, as amended, (the IRC) by satisfying certain requirements prescribed by Subchapter M of the IRC. To qualify as RICs, the Funds must invest in assets which produce types of income specified in the IRC (Qualifying Income). Whether the income from derivatives, swaps, commodity-linked derivatives and other commodity/natural resource-related securities is Qualifying Income is unclear under current law. Accordingly, the Funds’ ability to invest in certain derivatives, swaps, commodity-linked derivatives and other commodity/natural resource-related securities may be restricted. Further, if the Funds invest in these types of securities and the income is not determined to be Qualifying Income, it may cause such Fund to fail to qualify as a RIC under the IRC for a given year. If a Fund fails to qualify as a regulated investment company for a particular year, it will be liable for taxes, significantly reducing its distributions to shareholders and eliminating shareholders' ability to treat distributions (as long or short-term capital gains or qualifying dividends) of the Fund in the manner they were received by the Fund.
Futures Contracts and Options
As previously discussed, some of the Funds invest in futures contracts or options thereon, index options, or options traded on qualified exchanges. For federal income tax purposes, capital gains and losses on futures contracts or options thereon, index options or options traded on qualified exchanges are generally treated as 60% long-term and 40% short-term. In addition, the Funds must recognize any unrealized gains and losses on such positions held at the end of the fiscal year. A Fund may elect out of such tax treatment, however, for a futures or options position that is part of an "identified mixed straddle" such as a put option purchased with respect to a portfolio security. Gains and losses on futures and options included in an identified mixed straddle are considered 100% short-term and unrealized gains or losses on such positions are not realized at year-end. The straddle provisions of the Code may require the deferral of realized losses to the extent that a Fund has unrealized gains in certain offsetting positions at the end of the fiscal year. The Code may also require recharacterization of all or a part of losses on certain offsetting positions from short-term to long-term, as well as adjustment of the holding periods of straddle positions.
International Funds
Some foreign securities purchased by the Funds may be subject to foreign withholding taxes that could reduce the yield on such securities. The amount of such foreign taxes is expected to be insignificant. Shareholders of the Funds that invest in foreign securities may be entitled to claim a credit or deduction with respect to foreign taxes. The Funds may from year to year make an election to pass through such taxes to shareholders. If such election is not made, any foreign taxes paid or accrued will represent an expense to each affected Fund that will reduce its investment company taxable income. Certain Funds may purchase securities of certain foreign corporations considered to be passive foreign investment companies by the Internal Revenue Service. In order to avoid taxes and interest that must be paid by the Funds if these instruments appreciate in value, the Funds may make various elections permitted by the tax laws. However, these elections could require that the Funds recognize additional taxable income, which in turn must be distributed. In addition, the Fund’s investments in foreign securities or foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect the timing or amount of the Fund’s distributions.
Under the Foreign Account Tax Compliance Act (FATCA), a Fund may be required to withhold a 30% tax on (a) dividends paid by the Fund, and (b) certain capital gain distributions and/or the proceeds arising from the sale of Fund shares paid by the Fund after December 31, 2018, to certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. The IRS recently issued proposed regulations indicating its intent to eliminate the 30% withholding tax on gross proceeds. A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA. Withholding also may be required if a foreign entity that is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.
84


Special Tax Considerations for the California Municipal and Tax-Exempt Bond Funds (collectively the “Municipal Funds” or singly the "Fund")
The Municipal Funds also intend to qualify to pay "exempt-interest dividends" to its shareholders. An exempt-interest dividend is that part of dividend distributions made by the Fund which consist of interest received by that Fund on tax-exempt municipal obligations. Shareholders incur no federal income taxes on exempt-interest dividends. However, these exempt-interest dividends may be taxable under state or local law. Exempt-interest dividends that derive from certain private activity bonds must be included by individuals as a preference item in determining whether they are subject to the alternative minimum tax. The Fund may also pay ordinary income dividends and distribute capital gains from time to time. Ordinary income dividends and distributions of capital gains, if any, are taxable for federal purposes.
If a shareholder receives an exempt-interest dividend with respect to shares of the Fund held for six months or less, then any loss on the sale or exchange of such shares, to the extent of the amount of such dividend, is disallowed. If a shareholder receives a capital gain dividend with respect to shares held for six months or less, then any loss on the sale or exchange of such shares is treated as a long term capital loss to the extent the loss exceeds any exempt-interest dividend received with respect to such shares, and is disallowed to the extent of such exempt-interest dividend.
Interest on indebtedness incurred or continued by a shareholder to purchase or carry shares of this Fund is not deductible. Furthermore, entities or persons who are "substantial users" (or related persons) under Section 147(a) of the Internal Revenue Code of facilities financed by private activity bonds should consult their tax advisors before purchasing shares of the Fund.
From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on municipal obligations. If legislation is enacted that eliminates or significantly reduces the availability of municipal obligations, it could adversely affect the ability of the Fund to continue to pursue its investment objectives and policies. In such event, the Fund would reevaluate its investment objectives and policies.
PORTFOLIO HOLDINGS DISCLOSURE
The portfolio holdings of any fund that is a fund of funds are shares of underlying mutual funds; holdings of any fund of funds may be made available upon request. In addition, the Fund may publish month-end portfolio holdings information for each Fund’s portfolio on the www.principal.com website and on the www.principalfunds.com website on the thirteenth business day of the following month. The Funds may also occasionally publish information on the websites relating to specific events, such as the impact of a natural disaster, corporate debt default or similar events on portfolio holdings. The Funds may also occasionally publish information on the websites concerning the removal, addition or change in weightings of underlying funds in which the funds of funds invest. The Government Money Market and Money Market Funds also publish on the website www.principal.com, within five business days after the end of each month, certain information required to be made publicly available by SEC rule. It is the Fund's policy to disclose only public information regarding portfolio holdings (i.e. information published on the websites or filed with the SEC), except as described below.
Non-Specific Information. Under the Portfolio Holdings Disclosure Policy, the Funds may distribute non-specific information about the Funds and/or summary information about the Funds as requested. Such information will not identify any specific portfolio holding, but may reflect, among other things, the quality, character, or sector distribution of a Fund's holdings. This information may be made available at any time (or without delay).
Policy. The Fund and PGI have adopted a policy of disclosing non-public portfolio holdings information to third parties only to the extent required by federal law, and to the following third parties, so long as such third party has agreed, or is legally obligated, to maintain the confidentiality of the information and to refrain from using such information to engage in securities transactions:
1)    Daily to the Fund's portfolio pricing services, Bloomberg LP, ICE Data Services, J.P. Morgan PricingDirect, Inc., and IHS Markit Partners, to obtain prices for portfolio securities;
2)    Upon proper request to government regulatory agencies or to self-regulatory organizations;
3)    As needed to Ernst & Young LLP, the independent registered public accounting firm, in connection with the performance of the services provided by Ernst & Young LLP to the Fund;
4)    To the sub-advisors' proxy service providers (Broadridge Financial Solutions, LLC, Glass Lewis & Co., and Institutional Shareholder Services (ISS)) to facilitate voting of proxies;
85


5)    To the Fund's custodian, The Bank of New York Mellon, in connection with the custodial services it provides to the Fund; and
6)    Kessler, Topaz, Meltzer & Check, LLP, in connection with legal services it provides to the Fund.
The Fund is also permitted to enter into arrangements to disclose portfolio holdings to other third parties in connection with the performance of a legitimate business purpose if such third party agrees in writing to maintain the confidentiality of the information prior to the information being disclosed. Any such written agreement must be approved by an officer of the Fund, PGI or the Fund's sub-advisor. Approval must be based on a reasonable belief that disclosure to such other third party is in the best interests of the Fund's shareholders. If a conflict of interest is identified in connection with disclosure to any such third party, the Fund's or PGI’s Chief Compliance Officer ("CCO") must approve such disclosure, in writing before it occurs. The Fund currently has disclosure agreements with the following:
Abacus Group LLC DTCC OASYS Merrill Corporation
Abel Noser DTI Global Moody's Analytics
Accenture Eagle Investment Systems Corp. Morgan Stanley
Adobe Electra Information Systems Morningstar, Inc.
Advent Electra-Reconciliation MSCI Inc.
Advent Custodial Data (ACD) ESG Manager (MSCI)
Nomura International
Advent Portfolio Exchange eVestment Alliance Northern Trust
Algorithmics Eze (Castle) Software Group Omgeo LLC
Ascendant Compliance Manager FactSet Portware, LLC
Ashland Partners FactSet Research Systems Inc. PricewaterhouseCoopers, LLP
Axioma Financial Recovery Technologies (FRT) Refinitiv
Barclays Financial Tracking Technologies LLC RR Donnelley and Sons
Barra FIS Global Asset Management Russell Investments Implementation Services, LLC
Black Mountain Systems FIS PTA SAP
Bloomberg AIM FTSE Fixed Income LLC SDL
Bloomberg LP FX Transparency SEI Global Services, Inc.
Bloomberg Port Global Trading Analytics SEI Manager Dashboard
Bloomberg Professional Services Goldman Sachs Serena
BNY Mellon IHS Markit LTD SmartStream Technologies
Broadridge INDATA Solvency Analytics AG
Broadridge Business Process Outsourcing Solutions, LLC Indus Valley Partners (IVP) SS&C (Evare)
Broadridge Financial Solutions, Inc. Intercontinental Exchange, Inc. SS&C Hedge Fund Services, North America, Inc.
Broadridge Systems InvestCloud Inc SS&C Technologies
Brown Brothers Harriman Investment Company Institute (ICI) SS&C Technologies Holdings
Capital Confirmation, Inc. Investor Tools, Inc. SS&C Vision FI
Charles River Iron Mountain State Street Bank & Trust
Charles River Systems, Inc. ITG State Street Corporation
Charles River Trading System JPMorgan Chase Style Research
Clearpar (Markit) JW Boarman SWIFT
Confluence Technologies KPMG Sybase Inc.
COR-FS Ltd. Lend Amend Tegra118
Corporate Communication Group LexisNexis Trade Informatics
Credit Suisse Linedata TriOptima
Deutsche Bank Lionbridge TSI (Virtus)
DG3 LiquidNet UBS
Donnelley Financial Solutions London Stock Exchange Group Veritas
DST Systems Markit WSO Services Veritext Global
DTCC Derivatives Repository Ltd. MBI Solutions, LLC WCI Consulting
86


Any agreement by which any Fund or any party acting on behalf of the Fund agrees to provide Fund portfolio information to a third party, other than a third party identified in the policy described above, must be approved prior to information being provided to the third party, unless the third party is a regulator or has a duty to maintain the confidentiality of such information and to refrain from using such information to engage in securities transactions. A written record of approval will be made by the person granting approval.
The Fund's non-public portfolio holdings information policy applies without variation to individual investors, institutional investors, intermediaries that distribute the Fund's shares, third party service providers, rating and ranking organizations, and affiliated persons of the Fund. Neither the Fund nor PGI nor any other party receives compensation in connection with the disclosure of Fund portfolio information. The Fund's CCO will periodically, but no less frequently than annually, review the Fund's portfolio holdings disclosure policy and recommend changes the CCO believes are appropriate, if any, to the Fund's Board. In addition, the Fund's Board must approve any change in the Fund's portfolio holdings disclosure policy that would expand the distribution of such information.
PROXY VOTING POLICIES AND PROCEDURES
The Board has delegated responsibility for decisions regarding proxy voting for securities held by each Fund to PGI or to that Fund's Sub-Advisor, as appropriate. PGI and each Sub-Advisor will vote such proxies in accordance with its proxy policies and procedures, which have been reviewed by the Board, and which are found in Appendix C. Any material changes to the proxy policies and procedures will be submitted to the Board for approval.
Funds that operate as funds of funds invest in shares of other Funds of PFI and PETF. PGI is authorized to vote proxies related to the underlying funds. If an underlying fund holds a shareholder meeting, in order to avoid any potential conflict of interest, PGI will vote shares of such fund on any proposal submitted to the fund's shareholders in the same proportion as the votes of other shareholders of the underlying fund.
For Funds that participate in a securities lending program, the voting rights for securities that are loaned are transferred to the borrower. Therefore, the lender (i.e. a Fund) is not entitled to vote the loaned securities, unless it recalls those securities. Those managing the Fund’s investments may recall securities for voting purposes when they reasonably believe the ability to vote such securities outweighs the additional revenue received if such securities were not recalled.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2020, is available, without charge, upon request, by calling 1-800-222-5852 or by accessing the Fund’s most recently filed Form N-PX on the SEC website at www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the Fund at October 31, 2020, are incorporated herein by reference to the Fund’s most recent Annual Report to Shareholders filed with the SEC on Form N-CSR.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP (220 South Sixth Street, Suite 1400, Minneapolis, MN 55402) is the independent registered public accounting firm for the Fund Complex.
87


GENERAL INFORMATION
MidCap S&P 400 Index Fund, LargeCap S&P 500 Index Fund, and SmallCap S&P 600 Index Fund Only. The Funds are not sponsored, endorsed, sold, or promoted by S&P Global ("S&P Global"). S&P Global makes no representation or warranty, express or implied, to Fund shareholders or any member of the public regarding the advisability of investing in securities generally or in these Funds particularly or the ability of the S&P 500 Index, S&P MidCap 400 Index, or S&P SmallCap 600 Index to track general stock market performance. S&P Global's only relationship to Principal Life Insurance Company and PGI is the licensing of certain trademarks and trade names of S&P Global and the S&P 500 Index, S&P MidCap 400 Index, and S&P SmallCap 600 Index which are determined, composed, and calculated by S&P Global without regard to Principal Life Insurance Company, PGI, or the Funds. S&P Global has no obligation to take the needs of Principal Life Insurance Company, PGI or Fund shareholders into consideration in determining, composing or calculating the S&P 500 Index, the S&P MidCap 400 Index, or the S&P SmallCap 600 Index. S&P Global is not responsible for and has not participated in the determination of the prices of the Funds or the timing of the issuance or sale of the Funds or in the determination or calculation of the equation by which the Funds are to be converted into cash. S&P Global has no obligation or liability in connection with the administration, marketing, or trading of the Funds.
S&P GLOBAL DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX, S&P MIDCAP 400 INDEX, OR S&P SMALLCAP 600 INDEX OR ANY DATA CONTAINED THEREIN AND S&P GLOBAL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P GLOBAL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY PRINCIPAL LIFE INSURANCE COMPANY, PRINCIPAL, FUND SHAREHOLDERS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX, OR THE S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN. S&P GLOBAL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX, THE S&P MIDCAP 400 INDEX OR THE S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P GLOBAL HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
88


CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following list identifies shareholders who own more than 25% of the voting securities of the Fund as of February 4, 2021. It is presumed that a person who owns more than 25% of the voting securities of a fund controls the fund. A control person could control the outcome of proposals presented to shareholders for approval. The information is listed in alphabetical order by fund.
Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
CALIFORNIA MUNICIPAL 25.76% WELLS FARGO CLEARING SERVICES LLC CALIFORNIA WELLS FARGO &
SPECIAL CUSTODY ACCT FOR THE COMPANY
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
CORE PLUS BOND 60.22% NATIONAL FINANCIAL SERVICES LLC DELAWARE
FIDELITY GLOBAL
FOR EXCLUSIVE BENEFIT OF OUR BROKERAGE GROUP,
CUSTOMERS INC. a wholly owned
499 WASHINGTON BLVD subsidiary of FMR, LLC
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CORE PLUS BOND 25.70% DELAWARE CHARTER GUAR & TRUST CO DELAWARE PRINCIPAL HOLDING
D/B/A PRINCIPAL TRUST COMPANY COMPANY, LLC (1)
EVANSTON FIRE DEPARTMENT RETIREE
FUNDED HRA TRUST
1013 CENTRE RD
WILMINGTON DE 19805-1265
DIVERSIFIED
53.13% PRINCIPAL GLOBAL INVESTORS TRUST CO DELAWARE PRINCIPAL HOLDING
INTERNATIONAL PRINCIPAL LIFETIME HYBRID COMPANY, LLC (1)
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
FINISTERRE EMERGING 36.87% NATIONAL FINANCIAL SERVICES LLC DELAWARE FIDELITY GLOBAL
MARKETS TOTAL FOR EXCLUSIVE BENEFIT OF OUR BROKERAGE GROUP,
RETURN BOND CUSTOMERS INC. a wholly owned
499 WASHINGTON BLVD subsidiary of FMR, LLC
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GOVERNMENT & HIGH QUALITY 26.30% SAM FLEXIBLE INCOME PORTFOLIO PIF MARYLAND PRINCIPAL FUNDS,
BOND ATTN MUTUAL FUND ACCOUNTING-H221 INC
711 HIGH ST
DES MOINES IA 50392-0001
89



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
HIGH INCOME 48.48% PRINCIPAL GLOBAL INVESTORS TRUST CO DELAWARE PRINCIPAL HOLDING
PRINCIPAL LIFETIME HYBRID COMPANY, LLC (1)
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
INFLATION PROTECTION 36.43% PRINCIPAL GLOBAL INVESTORS TRUST CO DELAWARE PRINCIPAL HOLDING
PRINCIPAL LIFETIME HYBRID
COMPANY, LLC (1)
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
INTERNATIONAL I 59.33% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I 42.70% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III 50.66% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I 45.76% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL 26.91% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
APPRECIATION FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
90



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
PRINCIPAL LIFETIME 65.95% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
STRATEGIC INCOME FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 51.25% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 68.73% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 28.66% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 56.73% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 69.97% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 27.86% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
91



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
PRINCIPAL LIFETIME 2030 60.06% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 70.65% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 27.22% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 60.64% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 67.43% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 31.14% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
92



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
PRINCIPAL LIFETIME 2050 65.46% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 67.96% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 29.59% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 76.40% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 73.96% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 53.13% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID INCOME FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
93



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
PRINCIPAL LIFETIME 56.74% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2015 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 58.66% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2020 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 51.51% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2025 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 54.19% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2030 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 52.45% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2035 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 56.21% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2040 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 58.18% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2045 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
94



Fund





Percent
of
Ownership
Shareholder Name and Address Jurisdiction
Under
Which Control
Person is
Organized
(when control
person is a
company)





Parent of Control
Person (when control
person is a company)
PRINCIPAL LIFETIME 61.86% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2050 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 66.40% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2055 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 61.09% DCGT AS TTEE AND/OR CUST DELAWARE PRINCIPAL HOLDING
HYBRID 2060 FBO PLIC VARIOUS RETIREMENT PLANS COMPANY, LLC (1)
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I 51.92% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II 41.02% PRINCIPAL LIFE INS. COMPANY CUST IOWA PRINCIPAL FINANCIAL
FBO PFG OMNIBUS WRAPPED SERVICES, INC. (1)
AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH ST
DES MOINES IA 50392-0001
(1) Principal Financial Group, Inc. is the parent of control for Principal Financial Services, Inc.; Principal Financial Services, Inc. is the parent of control for Principal Life Insurance Company and Principal Global Investors, LLC; Principal Life Insurance Company is the parent of control for Principal Holding Company, LLC.
The Directors and Officers of the Fund, member companies of the Principal Financial Group, and certain other persons may purchase shares of the Funds without the payment of any sales charge. The sales charge is waived on these transactions because there are either no distribution costs or only minimal distribution costs associated with the transactions. For a description of the persons entitled to a waiver of sales charge in connection with their purchase of shares of the Funds, see the discussion of the waiver of sales charges under the caption "Choosing a Share Class and the Costs of Investing" in the prospectus.
Funds that operate as funds of funds and Principal Life Insurance Company will vote in the same proportion as shares of the Funds owned by other shareholders. Therefore, neither the funds of funds nor Principal Life Insurance Company exercise voting discretion.



The By-laws of PFI set the quorum requirement (a quorum must be present at a meeting of shareholders for business to be transacted). The By-laws of PFI state that a quorum is the presence in person or by proxy of the holders of one-third of the shares of capital stock of PFI or, when the meeting relates to a certain Fund, that Fund, issued and outstanding and entitled to vote on the record date.
Certain proposals presented to shareholders for approval require the vote of a "majority of the outstanding voting securities," which is a term defined in the 1940 Act to mean, with respect to a Fund, the affirmative vote of the lesser of 1) 67% or more of the voting securities of the Fund present at the meeting of that Fund, if the holders of more than 50% of the outstanding voting securities of the Fund are present in person or by proxy, or 2) more than 50% of the outstanding voting securities of the Fund (a "Majority of the Outstanding Voting Securities").


Principal Holders of Securities
The Fund is unaware of any persons who own beneficially (but are not shareholders of record) more than 5% of the Fund's outstanding shares. The following list identifies the shareholders of record who own 5% or more of any class of the Fund's outstanding shares as of February 4, 2021. The list is presented in alphabetical order by fund.
Fund/Class
Percent
of
Ownership
Name and Address of Owner
CALIFORNIA MUNICIPAL (A) 24.99% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
CALIFORNIA MUNICIPAL (A) 24.24% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
CALIFORNIA MUNICIPAL (A) 13.39% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CALIFORNIA MUNICIPAL (A) 8.14% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CALIFORNIA MUNICIPAL (A) 6.18% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST
BUILDING ONE, 2ND FLOOR
JACKSONVILLE FL 32246-6484
CALIFORNIA MUNICIPAL (A) 5.54% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
CALIFORNIA MUNICIPAL (C) 36.69% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
CALIFORNIA MUNICIPAL (C) 17.41% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
97



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CALIFORNIA MUNICIPAL (C) 12.97% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CALIFORNIA MUNICIPAL (C) 9.16% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
CALIFORNIA MUNICIPAL (I) 25.29% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
CALIFORNIA MUNICIPAL (I) 17.69% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 2
JACKSONVILLE FL 32246-6484
CALIFORNIA MUNICIPAL (I) 9.29% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
CALIFORNIA MUNICIPAL (I) 9.17% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
CALIFORNIA MUNICIPAL (I) 8.19% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CALIFORNIA MUNICIPAL (I) 6.15% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CALIFORNIA MUNICIPAL (I) 6.05% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CALIFORNIA MUNICIPAL (I) 5.44% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
98



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CORE FIXED INCOME (A) 27.09% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CORE FIXED INCOME (A) 8.23% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
CORE FIXED INCOME (A) 7.31% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
CORE FIXED INCOME (C) 23.57% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CORE FIXED INCOME (C) 14.40% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
CORE FIXED INCOME (C) 9.10% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
CORE FIXED INCOME (C) 5.07% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CORE FIXED INCOME (I) 50.57% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
99



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CORE FIXED INCOME (I) 9.95% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (I) 6.73% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
CORE FIXED INCOME (I) 6.58% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
CORE FIXED INCOME (I) 5.90% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
CORE FIXED INCOME (R1) 94.51% VOYA INSTITUTIONAL TRUST COMPANY
1 ORANGE WAY
WINDSOR CT 06095-4773
CORE FIXED INCOME (R3) 87.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R4) 95.72% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R5) 89.98% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R5) 6.14% T ROWE PRICE RETIREMENT PLAN SERVICES INC
FBO RETIREMENT PLAN CLIENTS
4515 PAINTERS MILL RD
OWINGS MILLS MD 21117-4903
100



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CORE FIXED INCOME (R6) 17.14% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
CORE FIXED INCOME (R6) 16.31% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R6) 12.93% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING H-221
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R6) 7.15% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R6) 6.13% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
CORE FIXED INCOME (R6) 5.35% MAC & CO A/C 135590
MUTUAL FUND OPERATIONS
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
CORE FIXED INCOME (R6) 5.09% LIFETIME 2025 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (A) 8.83% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
CORE PLUS BOND (I) 73.47% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
101



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CORE PLUS BOND (I) 13.26% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (R1) 88.39% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (R1) 9.04% MID ATLANTIC TRUST COMPANY FBO
UNITED STATES SQUASH RACQUETS 401(K
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH PA 15222-4228
CORE PLUS BOND (R3) 76.80% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (R4) 83.35% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (R4) 5.06% RANGER PIPELINES INCORPORATED
FBO RANGER PIPELINES INC NQ EXCESS PLAN
ATTN PLAN TRUSTEE
1790 YOSEMITE AVE
SAN FRANCISCO CA 94124-2622
CORE PLUS BOND (R5) 79.18% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
CORE PLUS BOND (R5) 5.86% NORTHWEST ADMINISTRATORS
FBO NQ EXCESS OF NW ADMINISTRATORS
ATTN GAYLE BUSHNELL
2323 EASTLAKE AVE E
SEATTLE WA 98102-3963
102



Fund/Class
Percent
of
Ownership
Name and Address of Owner
CORE PLUS BOND (R5) 5.74% PRINCIPAL TRUST COMPANY
FBO GRIMMWAY FARMS EXEC DEFERRED
ATTN PLAN TRUSTEE COMP
1013 CENTRE RD
WILMINGTON DE 19805-1265
DIVERSIFIED INTERNATIONAL (A) 10.23% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
DIVERSIFIED INTERNATIONAL (C) 21.30% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
DIVERSIFIED INTERNATIONAL (C) 9.26% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
DIVERSIFIED INTERNATIONAL (I) 55.23% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
DIVERSIFIED INTERNATIONAL (I) 13.23% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL (I) 5.80% ATTN MUTUAL FUND OPERATIONS
MAC & CO A/C 298116
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
DIVERSIFIED INTERNATIONAL (R1) 88.78% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL (R1) 5.16% RELIANCE TRUST CO TTEE
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
103



Fund/Class
Percent
of
Ownership
Name and Address of Owner
DIVERSIFIED INTERNATIONAL (R3) 62.65% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL (R4) 79.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL (R5) 83.05% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL (R5) 5.06% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
DIVERSIFIED INTERNATIONAL (R6) 57.54% PRINCIPAL GLOBAL INVESTORS TRUST CO
PRINCIPAL LIFETIME HYBRID
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
DIVERSIFIED INTERNATIONAL (R6) 5.30% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
EQUITY INCOME (A) 16.75% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
EQUITY INCOME (A) 11.07% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
EQUITY INCOME (A) 10.52% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
104



Fund/Class
Percent
of
Ownership
Name and Address of Owner
EQUITY INCOME (C) 25.32% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
EQUITY INCOME (C) 12.21% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
EQUITY INCOME (C) 6.04% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
EQUITY INCOME (C) 5.94% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
EQUITY INCOME (C) 5.36% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
EQUITY INCOME (I) 27.09% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
EQUITY INCOME (I) 9.00% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
EQUITY INCOME (I) 8.43% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
105



Fund/Class
Percent
of
Ownership
Name and Address of Owner
EQUITY INCOME (I) 7.13% SAM CONS GROWTH PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
EQUITY INCOME (R1) 88.96% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
EQUITY INCOME (R1) 6.44% PRINCIPAL TRUST COMPANY
FBO CONCORP CONCRETE INC DEFINED
BENEFIT PENSION PLAN
4687 E CORTLAND AVE
FRESNO CA 93726-6310
EQUITY INCOME (R3) 62.59% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
EQUITY INCOME (R4) 84.21% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
EQUITY INCOME (R5) 90.17% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
FINISTERRE EMERG MKTS TOTAL RT BD (A) 45.24% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
FINISTERRE EMERG MKTS TOTAL RT BD (A) 6.65% RBC CAPITAL MARKETS LLC
MUTUAL FUND OMNIBUS PROCESS OMNIBUS
ATTN MUTAL FUND OPS MANAGER
60 SOUTH SIXTH STREET - P08
MINNEAPOLIS MN 55402-4413
106



Fund/Class
Percent
of
Ownership
Name and Address of Owner
FINISTERRE EMERG MKTS TOTAL RT BD (A) 5.10% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
FINISTERRE EMERG MKTS TOTAL RT BD (I) 36.71% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
FINISTERRE EMERG MKTS TOTAL RT BD (I) 23.47% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
FINISTERRE EMERG MKTS TOTAL RT BD (I) 13.89% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT
FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1905
FINISTERRE EMERG MKTS TOTAL RT BD (I) 13.70% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
FINISTERRE EMERG MKTS TOTAL RT BD (I) 5.80% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
GLOBAL DIVERSIFIED INCOME (A) 14.24% MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
GLOBAL DIVERSIFIED INCOME (A) 12.81% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
GLOBAL DIVERSIFIED INCOME (A) 12.10% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
107



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL DIVERSIFIED INCOME (A) 11.13% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GLOBAL DIVERSIFIED INCOME (A) 5.63% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN STREET
SAN FRANCISCO CA 94105-1905
GLOBAL DIVERSIFIED INCOME (A) 5.35% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
GLOBAL DIVERSIFIED INCOME (C) 32.11% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
GLOBAL DIVERSIFIED INCOME (C) 9.64% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
GLOBAL DIVERSIFIED INCOME (C) 8.56% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
GLOBAL DIVERSIFIED INCOME (C) 6.85% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
108



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL DIVERSIFIED INCOME (C) 6.44% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
GLOBAL DIVERSIFIED INCOME (C) 6.01% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
GLOBAL DIVERSIFIED INCOME (C) 5.68% CHARLES SCHWAB & CO INC
FBO SPECIAL CUSTODY ACCOUNTS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1905
GLOBAL DIVERSIFIED INCOME (C) 5.32% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
GLOBAL DIVERSIFIED INCOME (I) 14.35% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
GLOBAL DIVERSIFIED INCOME (I) 13.13% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
GLOBAL DIVERSIFIED INCOME (I) 11.38% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
GLOBAL DIVERSIFIED INCOME (I) 9.80% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
109



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL DIVERSIFIED INCOME (I) 8.55% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
GLOBAL DIVERSIFIED INCOME (I) 7.30% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN STREET
SAN FRANCISCO CA 94105-1905
GLOBAL DIVERSIFIED INCOME (I) 7.18% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GLOBAL DIVERSIFIED INCOME (I) 6.70% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
GLOBAL DIVERSIFIED INCOME (I) 6.16% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
GLOBAL DIVERSIFIED INCOME (R6) 32.67% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL DIVERSIFIED INCOME (R6) 21.45% SAM CONS BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL DIVERSIFIED INCOME (R6) 12.17% ATTN MUTUAL FUND OPERATIONS
MAC & CO A/C 798042
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
110



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL DIVERSIFIED INCOME (R6) 9.47% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
GLOBAL DIVERSIFIED INCOME (R6) 6.36% ATTN MUTUAL FUNDS OPERATIONS
MAC & CO A/C 798018
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
GLOBAL REAL ESTATE SECURITIES (A) 13.88% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
GLOBAL REAL ESTATE SECURITIES (A) 13.72% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GLOBAL REAL ESTATE SECURITIES (A) 12.95% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY STREET
SAN FRANCISCO CA 94104-4151
GLOBAL REAL ESTATE SECURITIES (A) 10.86% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
GLOBAL REAL ESTATE SECURITIES (A) 7.20% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 002
CITY OF JERSEY CITY
394 CENTRAL AVENUE
2ND FLOOR
JERSEY CITY NJ 07307-2871
GLOBAL REAL ESTATE SECURITIES (C) 29.34% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
111



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL REAL ESTATE SECURITIES (C) 13.45% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GLOBAL REAL ESTATE SECURITIES (C) 12.77% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
GLOBAL REAL ESTATE SECURITIES (C) 10.50% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
GLOBAL REAL ESTATE SECURITIES (C) 5.85% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
GLOBAL REAL ESTATE SECURITIES (I) 28.35% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
GLOBAL REAL ESTATE SECURITIES (I) 13.75% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GLOBAL REAL ESTATE SECURITIES (I) 13.63% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE
BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
GLOBAL REAL ESTATE SECURITIES (I) 7.59% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
112



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL REAL ESTATE SECURITIES (I) 6.86% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
GLOBAL REAL ESTATE SECURITIES (R3) 49.52% PRINCIPAL TRUST COMPANY
FBO BLUE ROCK REFINISHING SOLUTIONS
LLC CASH BALANCE PLAN
2974 CLEVELAND AVE N
SAINT PAUL MN 55113-1101
GLOBAL REAL ESTATE SECURITIES (R3) 34.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R3) 6.71% STATE STREET BANK CUSTODIAN CUST
FBO ACCESS ADP 401(K) PLAN
1 LINCOLN STREET
BOSTON MA 02111-2901
GLOBAL REAL ESTATE SECURITIES (R3) 6.08% FIDELITY INVESTMENTS INST OPER CO INC
FBO BACON FARMER WORKMAN ENGINEERING &
TESTING INC 401K
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1999
GLOBAL REAL ESTATE SECURITIES (R4) 67.40% VOYA INSTITUTIONAL TRUST COMPANY
1 ORANGE WAY
WINDSOR CT 06095-4773
GLOBAL REAL ESTATE SECURITIES (R4) 32.59% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R5) 80.99% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
113



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GLOBAL REAL ESTATE SECURITIES (R5) 13.98% FIIOC
FBO MEYER BORGMAN & JOHNSON INC
RETIREMENT PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
GLOBAL REAL ESTATE SECURITIES (R6) 17.27% UBATCO & CO
FBO COLLEGE SAVINGS GROUP
PO BOX 82535
LINCOLN NE 68501-2535
GLOBAL REAL ESTATE SECURITIES (R6) 14.64% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R6) 8.10% SAM FLEXIBLE INCOME PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R6) 7.86% SAM CONS GROWTH PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R6) 6.94% SAM CONS BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GLOBAL REAL ESTATE SECURITIES (R6) 6.36% MAC & CO A/C 681885
ATTN MUTUAL FUND OPS
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
GLOBAL REAL ESTATE SECURITIES (R6) 5.71% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (A) 20.14% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
114



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GOVERNMENT & HIGH QUALITY BOND (A) 11.02% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
GOVERNMENT & HIGH QUALITY BOND (C) 27.32% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GOVERNMENT & HIGH QUALITY BOND (C) 13.64% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
GOVERNMENT & HIGH QUALITY BOND (C) 5.03% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
GOVERNMENT & HIGH QUALITY BOND (I) 37.18% SAM FLEXIBLE INCOME PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (I) 20.62% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (I) 12.90% SAM CONS BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (I) 10.33% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
GOVERNMENT & HIGH QUALITY BOND (I) 34.95% PRINCIPAL TRUST COMPANY
FBO MEUSER LAW OFFICE, P.A. CASH
BALANCE PLAN
10400 VIKING DR STE 250
EDEN PRAIRIE MN 55344-7267
115



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GOVERNMENT & HIGH QUALITY BOND (R1) 34.25% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (R1) 29.85% PRINCIPAL TRUST COMPANY
FBO KANE HANDEL DEFINED BENEFIT PLAN
3525 DEL MAR HEIGHTS ROAD STE 231
SAN DIEGO CA 92130-2199
GOVERNMENT & HIGH QUALITY BOND (R3) 60.68% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (R3) 10.80% USIC
FBO USIC EXEC BENEFIT PLAN
ATTN CARYN HILDRETH
9045 RIVER RD STE 300
INDIANAPOLIS IN 46240-6400
GOVERNMENT & HIGH QUALITY BOND (R3) 6.36% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
GOVERNMENT & HIGH QUALITY BOND (R4) 73.45% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (R4) 6.87% PRINCIPAL TRUST COMPANY
FBO NQ BENEFIT FOR HCES OF MIECO
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
GOVERNMENT & HIGH QUALITY BOND (R5) 60.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND (R5) 14.14% NORTHWEST ADMINISTRATORS
FBO NQ EXCESS OF NW ADMINISTRATORS
2323 EASTLAKE AVE E
SEATTLE WA 98102-3963
116



Fund/Class
Percent
of
Ownership
Name and Address of Owner
GOVERNMENT & HIGH QUALITY BOND (R5) 6.38% RELIANCE TRUST CO CUST
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
GOVERNMENT & HIGH QUALITY BOND (R5) 5.80% MATRIX TRUST COMPANY CUST
FBO RUEN DRILLING INC 401K PLAN
717 17TH ST STE 1300
DENVER CO 80202-3304
GOVERNMENT MONEY MARKET (I) 18.11% INCOME FUND
FBO PGI
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT MONEY MARKET (I) 8.68% BNY MELLON AS AGENT FOR VARIOUS
PRINCIPAL FUNDS
500 GRANT ST
PITTSBURGH PA 15219-2502
GOVERNMENT MONEY MARKET (I) 6.86% BOND MARKET INDEX ACCOUNT
FBO PGI
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT MONEY MARKET (I) 5.92% GOVERNMENT & HIGH QUALITY BOND FUND
FBO PGI
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
GOVERNMENT MONEY MARKET (I) 5.85% EQUITY INCOME FUND
FBO PGI
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001

117




Fund/Class
Percent
of
Ownership
Name and Address of Owner
HIGH INCOME (I) 48.54% PRINCIPAL GLOBAL INVESTORS TRUST CO
PRINCIPAL LIFETIME HYBRID
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
HIGH INCOME (I) 14.53% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
HIGH INCOME (I) 7.09% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
HIGH INCOME (I) 5.68% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
HIGH YIELD (A) 13.09% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
HIGH YIELD (A) 7.95% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
HIGH YIELD (A) 5.88% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE
BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
HIGH YIELD (A) 5.32% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
HIGH YIELD (C) 30.16% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
118



Fund/Class
Percent
of
Ownership
Name and Address of Owner
HIGH YIELD (C) 13.86% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
HIGH YIELD (C) 10.36% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
HIGH YIELD (C) 6.87% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
HIGH YIELD (I) 31.46% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
HIGH YIELD (I) 12.25% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
HIGH YIELD (I) 10.76% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
HIGH YIELD (I) 6.50% C/O UNION BANK ID 797
SEI PRIVATE TRUST COMPANY
ONE FREEDOM VALLEY DRIVE
OAKS PA 19456-9989
HIGH YIELD (I) 6.45% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
HIGH YIELD (R6) 49.84% WELLS FARGO BANK NA FBO
OMNIBUS CASH XXXX0
PO BOX 1533
MINNEAPOLIS MN 55480-1533
119



Fund/Class
Percent
of
Ownership
Name and Address of Owner
HIGH YIELD (R6) 10.20% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
HIGH YIELD (R6) 9.54% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
HIGH YIELD (R6) 8.24% SAM FLEXIBLE INCOME PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING -H221
711 HIGH ST
DES MOINES IA 50392-0001
HIGH YIELD (R6) 6.08% SAM CONS BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (I) 37.24% PRINCIPAL GLOBAL INVESTORS TRUST CO
PRINCIPAL LIFETIME HYBRID
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
INFLATION PROTECTION (I) 12.15% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
INFLATION PROTECTION (I) 9.82% SAM FLEXIBLE INCOME PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (I) 8.27% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (I) 7.13% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (J) 10.66% PRINCIPAL LIFE INSURANCE CO CUST
IRA DONALD A LASSUS
9615 RAVENSWORTH DR
HOUSTON TX 77031-3119
120



Fund/Class
Percent
of
Ownership
Name and Address of Owner
INFLATION PROTECTION (R1) 98.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (R3) 66.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (R3) 11.79% DSL CONSTRUCTION CORP
FBO EXEC NQ EXCESS OF DSL CONSTRUCTION
ATTN PLAN TRUSTEE
11300 W OLYMPIC BLVD STE 770
LOS ANGELES CA 90064-1644
INFLATION PROTECTION (R4) 77.52% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (R4) 8.34% GREATER MODESTO MEDICAL SURGICAL AS
FBO FIRST CHOICE PHYS PTRS DEF COMP
ATTN CHRISTINA ALCANTARA
1541 FLORIDA AVE STE 200
MODESTO CA 95350-4438
INFLATION PROTECTION (R4) 5.28% BRIDGES INC
FBO EXEC 457F OF BRIDGES INC
ATTN CHRISTY KNUTSON
3600 POWER INN RD STE C
SACRAMENTO CA 95826-3826
INFLATION PROTECTION (R5) 78.00% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INFLATION PROTECTION (R5) 13.35% COMANCHE COUNTY HOSPITAL AUTHORITY
FBO COMANCHE COUNTY HOSPITAL
AUTHORITY EMPLOYEE EXCESS PLAN
ATTN DONNA WADE
3401 W GORE BLVD
LAWTON OK 73505-6300
121



Fund/Class
Percent
of
Ownership
Name and Address of Owner
INTERNATIONAL EMERGING MARKETS (A) 16.96% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
INTERNATIONAL EMERGING MARKETS (C) 31.07% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
INTERNATIONAL EMERGING MARKETS (I) 76.48% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
INTERNATIONAL EMERGING MARKETS (I) 9.39% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R1) 89.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R3) 55.91% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R3) 5.90% SMP HEALTH SYSTEM
FBO EXEC NQ EXCESS OF SMP HEALTH
ATTN AARON ALTON
PO BOX 10007
FARGO ND 58106-0007
INTERNATIONAL EMERGING MARKETS (R3) 5.42% THE COUNCIL OF INS AGENTS & BROKERS
FBO EXEC 457B PLAN THE COUNCIL
OF INSURANCE AGENTS AND BROKERS
ATTN CE HARRISON
701 PENNSYLVANIA AVE NW STE 750
WASHINGTON DC 20004-2661
122



Fund/Class
Percent
of
Ownership
Name and Address of Owner
INTERNATIONAL EMERGING MARKETS (R4) 79.72% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R4) 8.60% PRINCIPAL TRUST COMPANY
FBO CRST INTL NQ PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
INTERNATIONAL EMERGING MARKETS (R5) 82.30% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R6) 92.73% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
INTERNATIONAL EMERGING MARKETS (R6) 6.37% PRINCIPAL TRUST COMPANY
FBO PAN-AMERICAN LIFE INSURANCE CO
ATTN PLAN TRUSTEE 6784
1013 CENTRE RD
WILMINGTON DE 19805-1265
INTERNATIONAL I (I) 53.13% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
INTERNATIONAL I (I) 31.21% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
INTERNATIONAL I (I) 7.58% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
INTERNATIONAL I (R1) 99.66% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
123



Fund/Class
Percent
of
Ownership
Name and Address of Owner
INTERNATIONAL I (R3) 79.92% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL I (R3) 5.01% DELAWARE CHARTER GUAR & TRUST CO
D/B/A PRINCIPAL TRUST COMPANY
EVANSTON FIRE DEPARTMENT RETIREE
FUNDED HRA TRUST
1013 CENTRE RD
WILMINGTON DE 19805-1265
INTERNATIONAL I (R4) 96.60% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL I (R5) 92.88% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
INTERNATIONAL I (R5) 5.21% WELLS FARGO INST TRUST SERVICES
FBO WORLD INSURANCE CO. EXECUTIVE SERP PLAN
ATTN KATE MEYER
733 MARQUETTE AVENUE
MINNEAPOLIS MN 55402-2309
INTERNATIONAL I (R6) 98.23% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001

124




Fund/Class
Percent
of
Ownership
Name and Address of Owner
LARGECAP GROWTH I (A) 13.86% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
LARGECAP GROWTH I (A) 8.25% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
LARGECAP GROWTH I (I) 72.88% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
LARGECAP GROWTH I (I) 10.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R1) 95.33% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R3) 76.19% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R4) 64.23% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R4) 15.14% GREAT-WEST TRUST COMPANY LLC FBO
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
LARGECAP GROWTH I (R4) 5.06% CHARLES SCHWAB & CO INC
FBO CHARLES SCHWAB & CO INC
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
125



Fund/Class
Percent
of
Ownership
Name and Address of Owner
LARGECAP GROWTH I (R5) 78.05% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R6) 66.87% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
LARGECAP GROWTH I (R6) 5.30% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (A) 13.90% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
LARGECAP S&P 500 INDEX (A) 7.76% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
LARGECAP S&P 500 INDEX (C) 17.37% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
LARGECAP S&P 500 INDEX (C) 15.25% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
LARGECAP S&P 500 INDEX (C) 15.18% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
LARGECAP S&P 500 INDEX (C) 7.22% STIFEL NICOLAUS & CO INC
EXCLUSIVE BENEFIT OF CUSTOMERS
501 N BROADWAY
SAINT LOUIS MO 63102-2188
126



Fund/Class
Percent
of
Ownership
Name and Address of Owner
LARGECAP S&P 500 INDEX (I) 11.63% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (I) 11.60% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (I) 9.76% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (I) 6.67% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (I) 5.34% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (R1) 71.56% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (R3) 64.12% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (R4) 54.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX (R4) 12.71% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
127



Fund/Class
Percent
of
Ownership
Name and Address of Owner
LARGECAP S&P 500 INDEX (R4) 5.28% RELIANCE TRUST CO CUST
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
LARGECAP S&P 500 INDEX (R5) 79.81% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (I) 17.68% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (I) 14.93% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (I) 12.57% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
LARGECAP VALUE III (I) 10.19% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (I) 8.14% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING H-221
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (R1) 93.17% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (R1) 6.70% RELIANCE TRUST CO TTEE
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
128



Fund/Class
Percent
of
Ownership
Name and Address of Owner
LARGECAP VALUE III (R3) 75.17% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (R4) 83.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (R4) 5.80% PRINCIPAL TRUST COMPANY
FBO CRST INTL NQ PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
LARGECAP VALUE III (R4) 5.48% NEW LONDON HOSPITAL ASSOC INC
FBO NEW LONDON HOSP ASSOC INC 457B
ATTN TINA NAIMIE
273 COUNTY RD
NEW LONDON NH 03257-7700
LARGECAP VALUE III (R5) 74.93% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
LARGECAP VALUE III (R5) 11.16% DELAWARE CHARTER GUAR & TRUST CO
FBO PRINCIPAL TRUST COMPANY
VEBA TRUST IBEW HEALTH SAVING PLAN
SOUTHWEST SCHOOL CORPORATION
1013 CENTRE RD
WILMINGTON DE 19805-1265
LARGECAP VALUE III (R5) 5.15% PRINCIPAL TRUST COMPANY
FBO NIPPON LIFE INS CO EXEC NQ
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
MIDCAP (A) 10.70% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
129



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP (A) 6.45% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
MIDCAP (A) 5.75% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCOUNT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
MIDCAP (C) 22.55% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
MIDCAP (C) 14.63% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
MIDCAP (C) 11.66% CHARLES SCHWAB & CO INC
FBO SPECIAL CUSTODY ACCOUNTS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1905
MIDCAP (C) 9.87% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
MIDCAP (C) 8.05% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
MIDCAP (C) 5.68% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
130



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP (C) 5.30% RBC CAPITAL MARKETS, LLC
MUTUAL FUND OMNIBUS PROCESS OMNIBUS
ATTN MUTAL FUND OPS MANAGER
60 SOUTH SIXTH STREET - P08
MINNEAPOLIS MN 55402-4413
MIDCAP (C) 5.02% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
MIDCAP (I) 16.68% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
MIDCAP (I) 15.67% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
MIDCAP (I) 11.08% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1932
MIDCAP (I) 9.31% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
MIDCAP (I) 7.73% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN STREET
SAN FRANCISCO CA 94105-1905
MIDCAP (I) 6.73% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
131



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP (I) 5.08% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
MIDCAP (R1) 92.62% VOYA INSTITUTIONAL TRUST COMPANY
1 ORANGE WAY
WINDSOR CT 06095-4773
MIDCAP (R3) 30.64% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
MIDCAP (R3) 18.12% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP (R3) 5.71% GREAT-WEST TRUST COMPANY LLC FBO
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
MIDCAP (R4) 26.00% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
MIDCAP (R4) 15.02% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP (R4) 13.22% LINCOLN RETIREMENT SERVICES CO
FBO UT SYSTEM ORP
PO BOX 7876
FORT WAYNE IN 46801-7876
MIDCAP (R4) 11.25% JOHN HANCOCK TRUST COMPANY LLC
690 CANTON ST STE 100
WESTWOOD MA 02090-2324
132



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP (R5) 22.03% MID ATLANTIC TRUST COMPANY FBO
MATC OMNIBUS DIV REINVEST
1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
MIDCAP (R5) 15.78% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
MIDCAP (R5) 14.45% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP (R5) 8.17% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
MIDCAP (R6) 27.81% EDWARD D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3710
MIDCAP (R6) 16.75% WELLS FARGO BANK NA FBO
OMNIBUS CASH XXXX0
PO BOX 1533
MINNEAPOLIS MN 55480-1533
MIDCAP (R6) 7.17% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
MIDCAP GROWTH (I) 16.03% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH (I) 14.89% NATIONWIDE TRUST COMPANY FSB
C/O IPO PORTFOLIO ACCOUNTING
PO BOX 182029
COLUMBUS OH 43218-2029
133



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP GROWTH (I) 9.04% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
MIDCAP GROWTH (I) 6.87% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 007
PBC MANAGEMENT LLC
2360 5TH ST
MANDEVILLE LA 70471-1861
MIDCAP GROWTH (I) 5.77% RBC CAPITAL MARKETS LLC
MUTUAL FUND OMNIBUS PROCESS OMNIBUS
ATTN MUTAL FUND OPS MANAGER
60 SOUTH SIXTH STREET - P08
MINNEAPOLIS MN 55402-4413
MIDCAP GROWTH (R1) 81.39% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH (R1) 11.89% PRINCIPAL TRUST COMPANY
FBO ETERNAL HEALTH ACUPUNCTURE
PC PENSION PLAN
1066 SARATOGA AVE #100
SAN JOSE CA 95129-3432
MIDCAP GROWTH (R3) 25.45% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH (R3) 14.52% FIIOC
FBO DEFOE CORP 401K EMPLOYEE SAVINGS PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
MIDCAP GROWTH (R3) 14.19% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 900
DEFINED CONTRIBUTION PENSION
23 MAIN STREET SUITE D1
HOLMDEL NJ 07733-2136
MIDCAP GROWTH (R3) 11.41% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 900
TAX DEFERRED ANNUITY PLAN OF
23 MAIN STREET SUITE D1
HOLMDEL NJ 07733-2136
134



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP GROWTH (R4) 90.36% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH (R5) 90.96% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (I) 54.19% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
MIDCAP GROWTH III (I) 16.89% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (I) 11.54% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (I) 5.34% LIFETIME 2035 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (R1) 87.77% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (R1) 6.71% RELIANCE TRUST CO TTEE
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
MIDCAP GROWTH III (R1) 5.51% MID ATLANTIC TRUST COMPANY
FBO GELLNER ENTERPRISES LLC 401K
PROFIT SHARING PLAN & TRUST
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH PA 15222-4228
135



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP GROWTH III (R3) 71.75% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (R3) 5.10% NORSELAND INC
FBO EXECUTIVE NQ PLAN OF NORSELAND INC
ATTN MICHAEL ALBANO
3 PARKLANDS DR STE 203
DARIEN CT 06820-3652
MIDCAP GROWTH III (R4) 89.51% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP GROWTH III (R5) 91.28% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (I) 20.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (I) 14.33% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
MIDCAP S&P 400 INDEX (I) 7.48% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
MIDCAP S&P 400 INDEX (I) 6.20% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
136



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP S&P 400 INDEX (R1) 53.13% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R3) 47.43% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R4) 48.24% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R4) 17.42% VOYA INSTITUTIONAL TRUST COMPANY
1 ORANGE WAY
WINDSOR CT 06095-4773
MIDCAP S&P 400 INDEX (R4) 5.24% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
MIDCAP S&P 400 INDEX (R5) 58.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R6) 30.56% DIVERSIFIED GROWTH ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R6) 13.82% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
MIDCAP S&P 400 INDEX (R6) 8.04% DIVERSIFIED GROWTH VOLATILITY
CONTROL ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
137



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP S&P 400 INDEX (R6) 6.44% DIVERSIFIED BALANCED ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (A) 21.44% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
MIDCAP VALUE I (A) 5.14% RBC CAPITAL MARKETS, LLC
MUTUAL FUND OMNIBUS PROCESS OMNIBUS
ATTN MUTAL FUND OPS MANAGER
60 SOUTH SIXTH STREET - P08
MINNEAPOLIS MN 55402-4413
MIDCAP VALUE I (A) 5.07% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
MIDCAP VALUE I (I) 64.69% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
MIDCAP VALUE I (I) 9.96% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R1) 94.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R3) 75.30% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R4) 57.18% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
138



Fund/Class
Percent
of
Ownership
Name and Address of Owner
MIDCAP VALUE I (R4) 9.65% VRSCO
FBO AIGFSB CUST TTEE FBO
SLIDELL MEMORIAL 457 DEF COMP PLAN
2727-A ALLEN PARKWAY 4-D1
HOUSTON TX 77019-2107
MIDCAP VALUE I (R4) 9.53% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT
FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
MIDCAP VALUE I (R4) 7.18% VRSCO
FBO AIGFSB CUST TTEE FBO
SLIDELL MEMORIAL HOSPITAL 401A
2727-A ALLEN PARKWAY 4-D1
HOUSTON TX 77019-2107
MIDCAP VALUE I (R5) 74.32% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R6) 56.79% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
MIDCAP VALUE I (R6) 10.28% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R6) 8.68% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
MIDCAP VALUE I (R6) 5.93% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
139




Fund/Class
Percent
of
Ownership
Name and Address of Owner
OVERSEAS (I) 23.10% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
OVERSEAS (I) 15.13% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (I) 13.38% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (I) 12.34% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
OVERSEAS (I) 9.11% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (I) 7.03% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (R1) 82.97% PRINCIPAL GLOBAL INVESTORS LLC
ATTN SEAN CLINES 801-9A08
801 GRAND AVE
DES MOINES IA 50309-8000
OVERSEAS (R1) 17.02% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (R3) 65.24% PRINCIPAL TRUST COMPANY
FBO DUPAGE INTERNAL MEDICINE LLC
228 OXFORD AVE
CLARENDON HLS IL 60514-2807
140



Fund/Class
Percent
of
Ownership
Name and Address of Owner
OVERSEAS (R3) 14.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (R3) 10.78% DELAWARE CHARTER GUAR & TRUST CO
D/B/A PRINCIPAL TRUST COMPANY
EVANSTON FIRE DEPARTMENT RETIREE
FUNDED HRA TRUST
1013 CENTRE RD
WILMINGTON DE 19805-1265
OVERSEAS (R3) 7.03% PRINCIPAL TRUST COMPANY
FBO PRO-CALIBRATION CASH BALANCE
PENSION PLAN
480 HARWICH RD
BREWSTER MA 02631-2539
OVERSEAS (R4) 100.00% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
OVERSEAS (R5) 89.53% FIIOC
FBO INTEGRAL AEROSPACE RETIREMENT PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
OVERSEAS (R5) 10.46% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (A) 34.31% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
PRINCIPAL CAPITAL APPRECIATION (A) 7.07% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL CAPITAL APPRECIATION (C) 19.96% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
141



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL CAPITAL APPRECIATION (C) 11.21% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
PRINCIPAL CAPITAL APPRECIATION (C) 6.90% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
PRINCIPAL CAPITAL APPRECIATION (I) 68.36% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (I) 6.73% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (R1) 90.20% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (R1) 6.51% LAKEWOOD RESOURCE & REFERRAL CENTER
FBO 457B OF LAKEWOOD RESOURCE & REFERRAL
ATTN MIRIAM MILSTEIN
1771 MADISON AVE
LAKEWOOD NJ 08701-1242
PRINCIPAL CAPITAL APPRECIATION (R3) 86.56% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (R4) 90.65% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION (R4) 5.16% PRINCIPAL TRUST COMPANY
FBO NQ BENEFIT FOR HCES OF MIECO
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
142



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL CAPITAL APPRECIATION (R5) 90.19% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 (A) 13.13% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME 2010 (A) 6.64% PRINCIPAL LIFE INSURANCE CO CUST
IRA WILLIAM J HENNESSEY
31 LOWER HUDSON AVE
GREEN ISLAND NY 12183-1014
PRINCIPAL LIFETIME 2010 (I) 88.41% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 (I) 7.23% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 (R1) 99.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 (R3) 88.65% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2010 (R3) 5.54% PRINCIPAL TRUST COMPANY
FBO G&W ELECTRIC CO DEF COMP PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
PRINCIPAL LIFETIME 2010 (R4) 72.86% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
143



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2010 (R4) 14.89% RANGER PIPELINES INCORPORATED
FBO RANGER PIPELINES INC NQ EXCESS PLAN
ATTN PLAN TRUSTEE
1790 YOSEMITE AVE
SAN FRANCISCO CA 94124-2622
PRINCIPAL LIFETIME 2010 (R5) 88.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (I) 87.46% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (I) 10.93% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (R1) 98.91% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (R3) 94.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (R4) 94.76% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2015 (R5) 90.39% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
144



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2020 (A) 11.42% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME 2020 (I) 88.72% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 (I) 8.30% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 (R1) 97.94% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 (R3) 93.32% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 (R4) 92.81% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020 (R5) 87.34% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 (I) 86.94% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
145



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2025 (I) 11.81% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 (R1) 93.28% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 (R3) 94.71% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 (R4) 90.51% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2025 (R5) 93.85% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030 (A) 15.48% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME 2030 (I) 89.72% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030 (I) 7.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
146



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2030 (R1) 95.36% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030 (R3) 91.35% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030 (R4) 88.94% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030 (R5) 87.53% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (I) 86.29% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (I) 12.13% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (R1) 99.53% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (R3) 96.81% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (R4) 92.69% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
147



Fund/Class
Percent
of
Ownership
Name and Address of Owner
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2035 (R5) 94.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (A) 11.80% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME 2040 (I) 88.62% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (I) 8.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (R1) 93.49% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (R3) 94.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (R4) 93.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
148



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2040 (R5) 90.07% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040 (R5) 5.43% PRINCIPAL TRUST COMPANY
FBO EXEC 457B OF SANFORD HEALTH
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
PRINCIPAL LIFETIME 2045 (I) 82.62% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 (I) 16.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 (R1) 97.16% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 (R3) 97.96% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 (R4) 96.00% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2045 (R5) 96.59% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
149



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2050 (A) 14.93% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME 2050 (I) 86.29% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050 (I) 10.52% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050 (R1) 96.51% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050 (R3) 97.27% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050 (R4) 93.63% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050 (R5) 92.69% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 (I) 82.90% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
150



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2055 (I) 14.78% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 (R1) 94.45% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 (R3) 97.37% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 (R4) 98.68% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2055 (R5) 95.85% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 (I) 87.86% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 (I) 8.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 (R1) 98.30% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
151



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2060 (R3) 95.52% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 (R4) 96.25% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060 (R5) 94.27% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 (I) 89.31% PRINCIPAL LIFE INS COMPANY CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 (I) 9.14% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 (R1) 100.00% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 (R3) 94.99% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2065 (R4) 95.35% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
152



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME 2065 (R5) 99.79% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001

Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2015 (I) 75.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2015 (I) 16.80% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2015 (R6) 85.39% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2015 (R6) 5.91% BANKERS TRUST COMPANY
FBO PRIN SELECT SVNG EXCESS PLAN
ATTN MARK HARRISON FOR EES
453 7TH ST PO BOX 897
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2020 (I) 55.91% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2020 (I) 31.99% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2020 (R6) 87.12% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
153



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2025 (I) 64.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2025 (I) 24.35% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2025 (I) 5.30% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2025 (R6) 83.28% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2025 (R6) 5.02% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2030 (I) 59.06% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2030 (I) 24.21% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR
CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2030 (I) 9.99% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
154



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2030 (R6) 77.29% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2030 (R6) 9.35% BANKERS TRUST COMPANY
FBO PRIN SELECT SVNG EXCESS PLAN
ATTN MARK HARRISON FOR EES
453 7TH ST PO BOX 897
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2030 (R6) 7.32% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2035 (I) 59.80% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2035 (I) 22.42% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2035 (I) 8.38% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2035 (R6) 77.18% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2035 (R6) 11.44% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
155



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2040 (I) 66.36% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2040 (I) 20.20% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2040 (I) 6.27% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2040 (R6) 74.36% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2040 (R6) 12.47% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2040 (R6) 6.04% BANKERS TRUST COMPANY
FBO PRIN SELECT SVNG EXCESS PLAN
ATTN MARK HARRISON FOR EES
453 7TH ST PO BOX 897
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2045 (I) 64.79% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2045 (I) 22.68% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
156



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2045 (I) 8.38% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2045 (R6) 78.06% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2045 (R6) 11.97% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2050 (I) 69.50% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2050 (I) 21.28% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2050 (R6) 84.27% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2050 (R6) 7.98% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2055 (I) 63.59% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
157



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2055 (I) 25.90% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2055 (I) 6.05% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2055 (R6) 90.23% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2055 (R6) 5.55% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2060 (I) 57.52% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2060 (I) 25.27% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID 2060 (I) 9.26% FIIOC
FBO BRADY TRANE SERVICE INC
401K PLAN AND TRUST
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
PRINCIPAL LIFETIME HYBRID 2060 (J) 12.52% PRINCIPAL LIFE INSURANCE CO CUST
IRA VENER PADILLA
475 WINTER CREEK WAY
MORGAN HILL CA 95037-3562
158



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2060 (R6) 82.63% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2060 (R6) 6.29% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
PRINCIPAL LIFETIME HYBRID 2065 (I) 79.78% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2065 (I) 14.01% MINNESOTA LIFE INSURANCE COMPANY
400 ROBERT ST N STE A
SAINT PAUL MN 55101-2099
PRINCIPAL LIFETIME HYBRID 2065 (J) 11.65% PRINCIPAL LIFE INSURANCE CO CUST
IRA MATHEW T DONOVAN
21420 ROUTE 187
TOWANDA PA 18848-7988
PRINCIPAL LIFETIME HYBRID 2065 (J) 9.81% PRINCIPAL LIFE INSURANCE CO CUST
IRA ERICA K CICHOWSKI
6816 RIDGEWOOD DR
PAPILLION NE 68133-2116
PRINCIPAL LIFETIME HYBRID 2065 (J) 9.60% PRINCIPAL LIFE INSURANCE CO CUST
IRA TRACEY LEWIS
157 CASABELLA DR
SONOMA CA 95476-3391
PRINCIPAL LIFETIME HYBRID 2065 (J) 7.53% PRINCIPAL LIFE INSURANCE CO CUST
IRA AUSTIN M DOUGLASS
9028 ROSEWALL CT
SPRINGFIELD VA 22152-2191
PRINCIPAL LIFETIME HYBRID 2065 (J) 7.27% PRINCIPAL LIFE INSURANCE CO CUST
IRA RODNEY D ABRAHAMSON
1606 ASH PL
WEST FARGO ND 58078-3417
159



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME HYBRID 2065 (J) 6.18% PRINCIPAL LIFE INSURANCE CO CUST
IRA HOLLY D SOMMERLAND
1009 LONERGAN CIR
SPRING HILL TN 37174-3289
PRINCIPAL LIFETIME HYBRID 2065 (R6) 88.11% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID 2065 (R6) 5.92% BANKERS TRUST COMPANY
FBO PRINCIPAL ADVISOR NETWORK DEF COMP PLAN
ATTN PLAN TRUSTEE
453 7TH ST
DES MOINES IA 50309-4110
PRINCIPAL LIFETIME HYBRID INCOME (I) 68.04% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID INCOME (I) 23.76% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
PRINCIPAL LIFETIME HYBRID INCOME (R6) 82.91% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME HYBRID INCOME (R6) 5.63% BANKERS TRUST COMPANY
FBO PRIN SELECT SVNG EXCESS PLAN
ATTN MARK HARRISON FOR EES
453 7TH ST PO BOX 897
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (A) 13.09% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
160



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME STRATEGIC INC (A) 6.31% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
PRINCIPAL LIFETIME STRATEGIC INC (I) 91.42% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (R1) 99.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (R3) 85.41% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (R4) 80.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (R4) 6.22% PRINCIPAL TRUST COMPANY
FBO CRST INTL NQ PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
PRINCIPAL LIFETIME STRATEGIC INC (R5) 74.64% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INC (R5) 6.61% PRINCIPAL TRUST COMPANY
ATTN PLAN TRUSTEE
FBO WORLEYPARSONS EXEC DEF PLAN
1013 CENTRE RD
WILMINGTON DE 19805-1265
161



Fund/Class
Percent
of
Ownership
Name and Address of Owner
PRINCIPAL LIFETIME STRATEGIC INC (R5) 5.30% BANKERS TRUST COMPANY
FBO EXEC DEF PLAN OF ALION SCIENCE & TECH
ATTN DEBBIE WILLIAMS
453 7TH ST
DES MOINES IA 50309-4110
Fund/Class
Percent
of
Ownership
Name and Address of Owner
REAL ESTATE SECURITIES (A) 26.85% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
REAL ESTATE SECURITIES (A) 11.70% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
REAL ESTATE SECURITIES (A) 6.12% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
REAL ESTATE SECURITIES (C) 29.30% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
REAL ESTATE SECURITIES (C) 16.58% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
REAL ESTATE SECURITIES (C) 7.11% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
REAL ESTATE SECURITIES (C) 5.74% CHARLES SCHWAB & CO INC
FBO SPECIAL CUSTODY ACCOUNTS
ATTN MUTUAL FUNDS
211 MAIN ST
SAN FRANCISCO CA 94105-1905
REAL ESTATE SECURITIES (I) 29.57% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
162



Fund/Class
Percent
of
Ownership
Name and Address of Owner
REAL ESTATE SECURITIES (I) 17.99% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
REAL ESTATE SECURITIES (I) 7.63% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
REAL ESTATE SECURITIES (I) 7.08% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
REAL ESTATE SECURITIES (I) 5.95% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
REAL ESTATE SECURITIES (R1) 66.46% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R1) 7.97% MG TRUST COMPANY CUST
FBO LIOKAREAS CONSTRUCTION CO
717 17TH ST STE 1300
DENVER CO 80202-3304
REAL ESTATE SECURITIES (R1) 6.92% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
REAL ESTATE SECURITIES (R3) 32.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R3) 17.05% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
163



Fund/Class
Percent
of
Ownership
Name and Address of Owner
REAL ESTATE SECURITIES (R3) 9.06% TIAA, FSB CUST/TTEE FBO:
RETIREMENT PLANS FOR WHICH
TIAA ACTS AS RECORDKEEPER
ATTN: TRUST OPERATIONS
211 N BROADWAY STE 1000
SAINT LOUIS MO 63102-2748
REAL ESTATE SECURITIES (R4) 29.59% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R4) 22.79% JOHN HANCOCK TRUST COMPANY LLC
690 CANTON ST STE 100
WESTWOOD MA 02090-2324
REAL ESTATE SECURITIES (R4) 13.57% RELIANCE TRUST COMPANY FBO
MASSMUTUAL REGISTERED PRODUCT
PO BOX 28004
ATLANTA GA 30358-0004
REAL ESTATE SECURITIES (R4) 5.16% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
REAL ESTATE SECURITIES (R4) 5.01% GREAT-WEST TRUST COMPANY LLC FBO
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
REAL ESTATE SECURITIES (R5) 43.65% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R5) 7.29% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R5) 5.94% MATRIX AS TTEE FBO SOUTHERN
SHEET METAL WORKERS 401(A) PLAN
AGGRESSIVE PORTFOLIO
PO BOX 52129
PHOENIX AZ 85072-2129
164



Fund/Class
Percent
of
Ownership
Name and Address of Owner
REAL ESTATE SECURITIES (R5) 5.30% RELIANCE TRUST COMPANY FBO
MASSMUTUAL REGISTERED PRODUCT
PO BOX 28004
ATLANTA GA 30358-0004
REAL ESTATE SECURITIES (R6) 25.41% PRINCIPAL GLOBAL INVESTORS TRUST CO
PRINCIPAL LIFETIME HYBRID
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
REAL ESTATE SECURITIES (R6) 21.12% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
REAL ESTATE SECURITIES (R6) 10.67% WELLS FARGO BANK NA FBO
OMNIBUS CASH XXXX0
PO BOX 1533
MINNEAPOLIS MN 55480-1533
SAM BALANCED PORTFOLIO (A) 18.41% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SAM BALANCED PORTFOLIO (A) 12.99% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM BALANCED PORTFOLIO (A) 5.74% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
SAM BALANCED PORTFOLIO (C) 21.84% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
165



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM BALANCED PORTFOLIO (C) 9.43% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SAM BALANCED PORTFOLIO (C) 7.43% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
SAM BALANCED PORTFOLIO (I) 83.32% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SAM BALANCED PORTFOLIO (I) 5.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM BALANCED PORTFOLIO (R1) 85.35% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM BALANCED PORTFOLIO (R1) 6.17% STIFEL NICOLAUS & CO INC
EXCLUSIVE BENEFIT OF CUSTOMERS
501 N BROADWAY
SAINT LOUIS MO 63102-2188
SAM BALANCED PORTFOLIO (R1) 6.03% MG TRUST COMPANY CUST FBO
PAULDING EXEMPTED VILLAGE SC 403 B
717 17TH ST STE 1300
DENVER CO 80202-3304
SAM BALANCED PORTFOLIO (R3) 76.89% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
166



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM BALANCED PORTFOLIO (R3) 5.41% PRINCIPAL TRUST COMPANY
ATTN PLAN TRUSTEE
FBO V K KNOWLTON DEF COMP PLAN
1013 CENTRE RD
WILMINGTON DE 19805-1265
SAM BALANCED PORTFOLIO (R4) 65.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM BALANCED PORTFOLIO (R4) 24.33% MATRIX TRUST CO AS AGENT FBO
PRO-SET INC FINANCIAL SECURITY TRUS
PO BOX 52129
PHOENIX AZ 85072-2129
SAM BALANCED PORTFOLIO (R5) 93.65% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (A) 17.23% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM CONSERVATIVE BALANCED PORT (A) 8.68% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SAM CONSERVATIVE BALANCED PORT (A) 6.95% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
SAM CONSERVATIVE BALANCED PORT (C) 17.86% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SAM CONSERVATIVE BALANCED PORT (C) 17.05% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM CONSERVATIVE BALANCED PORT (C) 5.67% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
167



Fund/Class
Percent
of
Ownership
Name and Address of Owner
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
SAM CONSERVATIVE BALANCED PORT (I) 79.33% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (I) 6.08% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (R1) 59.81% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (R1) 27.50% PRINCIPAL TRUST COMPANY
FBO DEV MEDICAL ASSOCIATES SC CASH
BALANCE PENSION PLAN
5600 W ADDISON ST STE 400
CHICAGO IL 60634-4400
SAM CONSERVATIVE BALANCED PORT (R1) 9.58% PAI TRUST COMPANY INC
PARAMOUNT CONSTRUCTION GROUP INC 40
1300 ENTERPRISE DRIVE
DE PERE WI 54115-4934
SAM CONSERVATIVE BALANCED PORT (R3) 70.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (R4) 67.61% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED PORT (R4) 26.90% PRINCIPAL TRUST COMPANY
FBO B&G AND AFFILIATES EXEC RET PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
168



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM CONSERVATIVE BALANCED PORT (R5) 94.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH PORT (A) 11.73% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SAM CONSERVATIVE GROWTH PORT (A) 11.27% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM CONSERVATIVE GROWTH PORT (A) 5.35% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
SAM CONSERVATIVE GROWTH PORT (C) 15.97% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM CONSERVATIVE GROWTH PORT (C) 8.92% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
SAM CONSERVATIVE GROWTH PORT (C) 5.61% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SAM CONSERVATIVE GROWTH PORT (I) 80.70% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH PORT (I) 8.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
169



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM CONSERVATIVE GROWTH PORT (R1) 98.20% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH PORT (R3) 82.91% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH PORT (R4) 85.63% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH PORT (R4) 7.95% KINGS DAUGHTERS HEALTH
FBO KINGS DAUGHTERS HEALTH 457B
ATTN STEVE MEACHAM
1373 E STATE RD 62
MADISON IN 47250-7328
SAM CONSERVATIVE GROWTH PORT (R5) 92.73% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME PORTFOLIO (A) 25.16% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM FLEXIBLE INCOME PORTFOLIO (A) 9.08% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SAM FLEXIBLE INCOME PORTFOLIO (C) 24.13% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM FLEXIBLE INCOME PORTFOLIO (C) 6.76% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
170



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM FLEXIBLE INCOME PORTFOLIO (C) 5.75% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
SAM FLEXIBLE INCOME PORTFOLIO (I) 66.59% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME PORTFOLIO (I) 7.92% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SAM FLEXIBLE INCOME PORTFOLIO (I) 5.88% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM FLEXIBLE INCOME PORTFOLIO (I) 5.08% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
SAM FLEXIBLE INCOME PORTFOLIO (R1) 47.44% PRINCIPAL TRUST COMPANY
FBO CONCORP CONCRETE INC DEFINED
BENEFIT PENSION PLAN
2485 ASHCROFT AVE
CLOVIS CA 93611-6001
SAM FLEXIBLE INCOME PORTFOLIO (R1) 27.15% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME PORTFOLIO (R1) 22.63% PRINCIPAL TRUST COMPANY
FBO DEV MEDICAL ASSOCIATES SC CASH
BALANCE PENSION PLAN
5600 W ADDISON ST STE 400
CHICAGO IL 60634-4400
171



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM FLEXIBLE INCOME PORTFOLIO (R3) 64.01% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME PORTFOLIO (R3) 14.30% EQUIPMENT DEVELOPMENT CO INC
ATTN PLAN TRUSTEE
FBO EDCO NQ DEF COMP PLAN
100 THOMAS JOHNSON DR
FREDERICK MD 21702-4600
SAM FLEXIBLE INCOME PORTFOLIO (R3) 8.79% MID ATLANTIC TRUST COMPANY FBO
BUFFALO ULTRASOUND INC 401 K
PROFIT SHARING PLAN & TRUST
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH PA 15222-4228
SAM FLEXIBLE INCOME PORTFOLIO (R3) 6.42% PRINCIPAL TRUST COMPANY
FBO RVVS CASH BALANCE PLAN
15900 JORDAN AVE SE
PRIOR LAKE MN 55372-2051
SAM FLEXIBLE INCOME PORTFOLIO (R4) 37.56% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME PORTFOLIO (R4) 23.69% PRINCIPAL TRUST COMPANY
FBO EXCESS PLAN OF TURTLE & HUGHES
ATTN PLAN TRUSTEE INC
1013 CENTRE RD
WILMINGTON DE 19805-1265
SAM FLEXIBLE INCOME PORTFOLIO (R4) 22.17% PRINCIPAL TRUST COMPANY
FBO SCHENECTADY PULMONARY & CRITICAL CARE
124 ROSA RD STE 382
SCHENECTADY NY 12308-2144
SAM FLEXIBLE INCOME PORTFOLIO (R4) 8.96% PRINCIPAL TRUST COMPANY
FBO BRAILSFORD & DUNLAVEY CASH BALANCE PLAN
1140 CONNECTICUT AVE NW STE 400
WASHINGTON DC 20036-4014
SAM FLEXIBLE INCOME PORTFOLIO (R5) 93.34% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
172



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM STRATEGIC GROWTH PORTFOLIO (A) 10.87% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SAM STRATEGIC GROWTH PORTFOLIO (A) 9.99% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM STRATEGIC GROWTH PORTFOLIO (C) 15.12% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SAM STRATEGIC GROWTH PORTFOLIO (I) 81.70% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH PORTFOLIO (I) 8.54% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH PORTFOLIO (R1) 86.74% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH PORTFOLIO (R1) 13.25% MG TRUST COMPANY CUST FBO
PAULDING EXEMPTED VILLAGE SC 403 B
717 17TH ST STE 1300
DENVER CO 80202-3304
SAM STRATEGIC GROWTH PORTFOLIO (R3) 84.12% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH PORTFOLIO (R3) 7.91% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
173



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SAM STRATEGIC GROWTH PORTFOLIO (R4) 7.31% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT
FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
SAM STRATEGIC GROWTH PORTFOLIO (R5) 92.23% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
Fund/Class
Percent
of
Ownership
Name and Address of Owner
SHORT-TERM INCOME (A) 26.62% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SHORT-TERM INCOME (A) 13.47% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SHORT-TERM INCOME (A) 8.38% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR EAST 3RD FL
JACKSONVILLE FL 32246-6484
SHORT-TERM INCOME (A) 6.10% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
SHORT-TERM INCOME (C) 19.16% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SHORT-TERM INCOME (C) 11.77% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
174



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SHORT-TERM INCOME (C) 5.70% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
SHORT-TERM INCOME (I) 24.98% PRINCIPAL GLOBAL INVESTORS TRUST CO
PRINCIPAL LIFETIME HYBRID
COLLECTIVE INVESTMENT FUNDS
1300 SW 5TH AVE STE 3300
PORTLAND OR 97201-5640
SHORT-TERM INCOME (I) 8.89% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SHORT-TERM INCOME (I) 6.87% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
SHORT-TERM INCOME (I) 6.77% SAM FLEXIBLE INCOME PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
SHORT-TERM INCOME (I) 5.59% SAM BALANCED PORTFOLIO PIF
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
SHORT-TERM INCOME (R1) 57.41% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SHORT-TERM INCOME (R1) 41.11% EWR, INC
FBO EXEC RETIREMENT PLAN OF EWR, INC
ATTN JOSEPH WYRICK
6055 PRIMACY PKWY STE 100
MEMPHIS TN 38119-5514
SHORT-TERM INCOME (R3) 62.37% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
175



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SHORT-TERM INCOME (R3) 5.29% PRINCIPAL TRUST COMPANY
FBO DUPAGE INTERNAL MEDICINE LLC
228 OXFORD AVE
CLARENDON HLS IL 60514-2807
SHORT-TERM INCOME (R3) 5.21% PRINCIPAL TRUST COMPANY
FBO SSP AMERICAN DEF COMP PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
SHORT-TERM INCOME (R4) 34.27% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SHORT-TERM INCOME (R4) 22.07% NOMURA HOLDING AMERICA INC
ATTN PLAN TRUSTEE
FBO NOMURA SUPP RET SAVINGS
309 W 49TH ST
NEW YORK NY 10019-9102
SHORT-TERM INCOME (R4) 11.17% BRISTOL BAY NATIVE CORPORATION
ATTN PLAN TRUSTEE
FBO BBNC NQ DEF COMP PLAN
111 W 16TH AVE
ANCHORAGE AK 99501-6299
SHORT-TERM INCOME (R4) 10.76% PRINCIPAL TRUST COMPANY
FBO NQ BENEFIT FOR HCES OF MIECO
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
SHORT-TERM INCOME (R4) 5.58% PRINCIPAL TRUST COMPANY
FBO LESLIE GABER ASSOC INC
CASH BALANCE PLAN
24 HILLCREST DR
COLTS NECK NJ 07722-2227
SHORT-TERM INCOME (R5) 23.80% WACHOVIA BANK NATIONAL ASSOCIATION
FBO DEF COMP PLAN OF CED INC (PS
ATTN SHELLEY ANDERSON DEF
ONE WEST FOURTH STREET
WINSTON-SALEM NC 27101-3818
SHORT-TERM INCOME (R5) 21.63% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
176



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SHORT-TERM INCOME (R5) 17.93% CHURCHILL MORTGAGE CORPORATION
FBO CHURCHILL MORTGAGE CORPORATION
INCENTIVE BONUS PLAN
ATTN SHEREE BARLETT
761 OLD HICKORY BLVD STE 400
BRENTWOOD TN 37027-4519
SHORT-TERM INCOME (R5) 10.64% PRINCIPAL TRUST COMPANY
FBO FAIRMONT-SCOTTSDALE NQ PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE RD
WILMINGTON DE 19805-1265
SHORT-TERM INCOME (R5) 5.87% PRINCIPAL TRUST COMPANY
FBO GUEST SERVICES EMPLOYEE SAVINGS PLAN
ATTN SUSAN SAGGIONE
1013 CENTRE ROAD
WILMINGTON DE 19805-1265
SMALLCAP (A) 13.22% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SMALLCAP (A) 6.85% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
SMALLCAP (C) 24.26% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SMALLCAP (C) 10.92% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
SMALLCAP (I) 23.54% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
177



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP (I) 12.37% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY ACCT
FBO CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
SMALLCAP (I) 11.19% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
SMALLCAP (I) 10.46% RAYMOND JAMES
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM 92500015
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1102
SMALLCAP (I) 6.92% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
SMALLCAP (I) 5.37% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP (I) 5.05% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
SMALLCAP (R1) 60.07% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP (R1) 23.50% FIIOC
FBO VRMC OF NEW YORK 401K PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
SMALLCAP (R1) 7.75% ASCENSUS TRUST COMPANY
FBO THE MOVEMENT SCIENCE CENTER
401K 2 # 2409
PO BOX 10758
FARGO ND 58106-0758
178



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP (R3) 25.52% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP (R3) 8.15% FIDELITY INVESTMENTS INST OPER CO INC
FBO U S FACILITIES INC 401K RETIREMENT PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1999
SMALLCAP (R4) 93.72% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
SMALLCAP (R5) 71.18% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
SMALLCAP (R5) 13.22% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP (R6) 37.94% NFS LLC FEBO
FIIOC AS AGENT FOR QUALIFIED EMPLOYEE BENEFIT
PLANS (401K) FINOPS-IC FUNDS
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015-1987
SMALLCAP (R6) 20.84% WELLS FARGO BANK FBO
VARIOUS RETIREMENT PLANS 9888888836
1525 WEST WT HARRIS BLVD
CHARLOTTE NC 28288-1076
SMALLCAP (R6) 12.46% MAC & CO A/C 298116
ATTN MUTUAL FUND OPERATIONS
500 GRANT STREET ROOM 151-1010
PITTSBURGH PA 15219-2502
SMALLCAP (R6) 10.14% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
SMALLCAP (R6) 6.87% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
179



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP GROWTH I (I) 30.88% CHARLES SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR THE
BENEFIT OF CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
SMALLCAP GROWTH I (I) 18.70% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SMALLCAP GROWTH I (I) 13.42% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (I) 11.91% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
SMALLCAP GROWTH I (R1) 94.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (R3) 67.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (R4) 38.94% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (R4) 16.91% JOHN HANCOCK TRUST COMPANY LLC
690 CANTON ST STE 100
WESTWOOD MA 02090-2324
SMALLCAP GROWTH I (R4) 13.49% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
180



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP GROWTH I (R4) 6.89% LINCOLN RETIREMENT SERVICES COMPANY
FBO SCHOOL BD OF RICHMOND 403B
PO BOX 7876
FORT WAYNE IN 46801-7876
SMALLCAP GROWTH I (R5) 61.38% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (R5) 6.38% RELIANCE TRUST COMPANY TRUSTEE
FBO RITE SOLUTIONS SAVINGS & INVEST
185 S BROAD ST STE 303
PAWCATUCK CT 06379-1997
SMALLCAP GROWTH I (R5) 5.71% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
SMALLCAP GROWTH I (R6) 62.98% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SMALLCAP GROWTH I (R6) 7.16% NATIONAL FINANCIAL SERVICES LLC
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-1995
SMALLCAP S&P 600 INDEX (I) 19.19% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (I) 10.52% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SMALLCAP S&P 600 INDEX (I) 7.93% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
SMALLCAP S&P 600 INDEX (I) 7.82% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
181



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP S&P 600 INDEX (I) 6.20% JOHN HANCOCK TRUST COMPANY LLC
690 CANTON ST STE 100
WESTWOOD MA 02090-2324
SMALLCAP S&P 600 INDEX (R1) 35.28% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R1) 5.06% FIIOC
FBO SKIN CANCER SPECIALISTS PC 401K PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
SMALLCAP S&P 600 INDEX (R3) 39.70% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R3) 8.83% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
SMALLCAP S&P 600 INDEX (R4) 53.56% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R4) 6.71% STATE STREET BANK AND TRUST COMPANY
TRUSTEE AND/OR CUSTODIAN
FBO ADP ACCESS PRODUCT
1 LINCOLN ST
BOSTON MA 02111-2901
SMALLCAP S&P 600 INDEX (R5) 62.12% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R6) 33.52% DIVERSIFIED GROWTH ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
182



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP S&P 600 INDEX (R6) 17.75% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
ATTN NPIO TRADE DESK OMNIBUS
711 HIGH STREET
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R6) 8.82% DIVERSIFIED GROWTH VOLATILITY
CONTROL ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP S&P 600 INDEX (R6) 7.06% DIVERSIFIED BALANCED ACCOUNT
ATTN MUTUAL FUND ACCOUNTING H221
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (I) 42.10% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
SMALLCAP VALUE II (I) 16.42% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 763
ESSILOR OF AMERICA RETIREMENT
13555 N STEMMONS FWY
DALLAS TX 75234-5765
SMALLCAP VALUE II (I) 12.32% PIMS/PRUDENTIAL RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL 767
BT U.S. RETIREMENT SAVINGS PLAN
8951 CYPRESS WATERS BLVD STE 200
DALLAS TX 75019-4763
SMALLCAP VALUE II (I) 9.08% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (I) 5.43% GREAT-WEST TRUST COMPANY LLC FBO
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
SMALLCAP VALUE II (R1) 90.62% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
183



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP VALUE II (R1) 9.33% RELIANCE TRUST CO TTEE
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
SMALLCAP VALUE II (R3) 75.67% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R3) 5.00% RELIANCE TRUST CO CUST
FBO ADP ACCESS LARGE MARKET
401(K) PLAN
201 17TH ST NW STE 1000
ATLANTA GA 30363-1195
SMALLCAP VALUE II (R4) 82.56% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R4) 10.40% GREAT-WEST TRUST COMPANY LLC FBO
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
SMALLCAP VALUE II (R5) 89.31% DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R6) 50.57% PRINCIPAL LIFE INS COMPANY CUST
FBO PFG OMNIBUS WRAPPED AND CUSTOM
ATTN PLIC PROXY COORDINATOR FUNDS
711 HIGH STREET
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R6) 11.30% LIFETIME 2030 FUND
ATTN MUTUAL FUND ACCOUNTING- H221
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R6) 9.55% LIFETIME 2040 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
184



Fund/Class
Percent
of
Ownership
Name and Address of Owner
SMALLCAP VALUE II (R6) 6.52% LIFETIME 2050 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
SMALLCAP VALUE II (R6) 5.20% LIFETIME 2020 FUND
ATTN MUTUAL FUND ACCOUNTING-H221
711 HIGH ST
DES MOINES IA 50392-0001
TAX-EXEMPT BOND (A) 23.96% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
TAX-EXEMPT BOND (A) 12.25% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
TAX-EXEMPT BOND (A) 7.56% J. P. MORGAN SECURITIES LLC
FBO EXCLUSIVE BENEFIT OF OUR CUST
4 CHASE METROTECH CTR
BROOKLYN NY 11245-0003
TAX-EXEMPT BOND (A) 5.57% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
TAX-EXEMPT BOND (A) 5.47% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
TAX-EXEMPT BOND (C) 34.81% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
TAX-EXEMPT BOND (C) 7.89% NATIONAL FINANCIAL SERVICES LLC
FOR THE EXCL BENE OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
185



Fund/Class
Percent
of
Ownership
Name and Address of Owner
TAX-EXEMPT BOND (C) 7.87% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
TAX-EXEMPT BOND (C) 7.65% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
TAX-EXEMPT BOND (C) 7.40% MORGAN STANLEY SMITH BARNEY LLC
FOR THE EXCLUSIVE BENE OF ITS CUST
1 NEW YORK PLZ FL 12
NEW YORK NY 10004-1901
TAX-EXEMPT BOND (C) 6.85% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 3
JACKSONVILLE FL 32246-6484
TAX-EXEMPT BOND (I) 21.08% NATIONAL FINANCIAL SERVICES LLC
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
499 WASHINGTON BLVD
ATTN MUTUAL FUNDS DEPT 4TH FL
JERSEY CITY NJ 07310-1995
TAX-EXEMPT BOND (I) 16.45% WELLS FARGO CLEARING SERVICES LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
TAX-EXEMPT BOND (I) 12.47% UBS WM USA
0O0 11011 6100
OMNI ACCOUNT M/F
SPEC CDY A/C EBOC UBSFSI
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
TAX-EXEMPT BOND (I) 11.52% PERSHING LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0001
TAX-EXEMPT BOND (I) 10.30% AMERICAN ENTERPRISE INVESTMENT SVC
FBO #41999970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
186



Fund/Class
Percent
of
Ownership
Name and Address of Owner
TAX-EXEMPT BOND (I) 7.12% MLPF&S FOR THE SOLE
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E FL 2
JACKSONVILLE FL 32246-6484
TAX-EXEMPT BOND (I) 6.53% LPL FINANCIAL
OMNIBUS CUSTOMER ACCOUNT
ATTN MUTUAL FUND TRADING
4707 EXECUTIVE DR
SAN DIEGO CA 92121-3091
Management Ownership
As of February 4, 2021, the Officers and Directors of the Fund as a group owned less than 1% of the outstanding shares of any Class of any of the Funds.
187



PORTFOLIO MANAGER DISCLOSURE
(as provided by the Investment Advisors)
This section contains information about portfolio managers and the other accounts they manage, their compensation, and their ownership of securities. The “Ownership of Securities” tables reflect the portfolio managers’ beneficial ownership, which means a direct or indirect pecuniary interest. For some portfolio managers, this includes beneficial ownership of fund shares through participation in an employee benefit program which invests in Principal Funds, Inc. For information about potential material conflicts of interest, see Brokerage Allocation and Other Practices - Allocation of Trades.
This section lists information about Principal Global Investors, LLC's portfolio managers first. Next, the section includes information about the sub-advisors' portfolio managers alphabetically by sub-advisor.
Information in this section is as of October 31, 2020, unless otherwise noted.

188



Advisor: Principal Global Investors, LLC (Columbus Circle Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Christopher T. Corbett: MidCap Growth Fund
Registered investment companies
3 $588.6 million 0 $0
Other pooled investment vehicles 1 $29.8 million 0 $0
Other accounts
27 $1.5 billion 0 $0
Michael Iacono: MidCap Growth Fund
Registered investment companies 3 $588.6 million 0 $0
Other pooled investment vehicles 1 $29.8 million 0 $0
Other accounts
27 $1.5 billion 0 $0
Marc R. Shapiro: MidCap Growth Fund
Registered investment companies
3 $588.6 million 0 $0
Other pooled investment vehicles 1 $29.8 million 0 $0
Other accounts 27 $1.5 billion 0 $0
Compensation
Compensation for equity investment professionals at all levels and across all strategies is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. Variable compensation takes the form of a profit share plan with funding based on operating earnings generated by the Columbus Circle Investors team. The plan is designed to provide line-of-sight to investment professionals, enabling them to share in current and future business growth while reinforcing delivery of investment performance, collaboration, regulatory compliance, client retention and client satisfaction.
The variable component is well aligned with client goals and objectives, with the largest determinant being pre-tax investment performance relative to appropriate client benchmarks and peer groups. Relative performance metrics are measured over rolling one-year, three-year and five-year periods, calculated quarterly. Weightings intentionally place a greater emphasis on three and five year results, reinforcing a longer term orientation. In addition to investment performance, other discretionary factors such as team and individual results also contribute to the quantum of incentive compensation. The structure is uniformly applied among all investment professionals, including portfolio managers, research analysts, traders and team leaders.
Payments under the variable incentive plan may be in the form of cash or a combination of cash and deferred compensation. The amount of variable compensation delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Sixty percent of total deferred compensation is required to be invested into equity funds managed by the team, via a co-investment program, with the remaining forty percent in the form of restricted stock of Principal Financial Group. All deferred compensation agreements are subject to a minimum three year vesting schedule.
The benefits of this incentive structure are threefold. First, the emphasis on investment performance as the largest driver of variable compensation allocation provides strong alignment of interests with client objectives. Second, the discretionary element is intended to balance the allocation of the funded profit pool and rewards individual and team contributions that deliver on longer term business strategies including asset retention and growth, firm wide collaboration and team development. Third, the overall measurement framework and the deferred component are well aligned with our desired focus on clients' objectives (e.g. co-investment), alignment with PFG stakeholders and talent retention.
189



Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities
Owned by the Portfolio Manager
Christopher T. Corbett MidCap Growth $50,001 - $100,000
Michael Iacono MidCap Growth $100,001 - $500,000
Marc R. Shapiro
MidCap Growth
$100,001 - $500,000
190



Advisor: Principal Global Investors, LLC (Edge Asset Management Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Daniel R. Coleman: Equity Income and Principal Capital Appreciation Funds
Registered investment companies 12 $3.6 billion 0
$0
Other pooled investment vehicles 2 $116.4 million 0 $0
Other accounts
38 $2.8 billion 0 $0
Theodore Jayne: Principal Capital Appreciation Fund
Registered investment companies 4 $1.0 billion 0 $0
Other pooled investment vehicles 0 $0 0 $0
Other accounts
9 $588.8 million 0 $0
Sarah E. Radecki (1): Equity Income Fund
Registered investment companies 2 $1.6 billion 0 $0
Other pooled investment vehicles 1 $68.3 million 0 $0
Other accounts
22 $2.4 billion 0 $0
Nedret Vidinli: Equity Income Fund
Registered investment companies 3 $757.7 million 0 $0
Other pooled investment vehicles 1 $56.7 million 0 $0
Other accounts
6 $71.7 million 0 $0
(1) Information as of November 30, 2020
Compensation
Principal Global Investors, LLC offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one year, three-year and five-year periods, calculated quarterly, reinforcing a longer term orientation.
Payments under the variable incentive plan are delivered in the form of cash or a combination of cash and deferred compensation. The amount of incentive delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team, via a co-investment program. Both payment vehicles are subject to a three year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives(e.g. co-investment), alignment with Principal stakeholders, and talent retention.
In addition to deferred compensation obtained through their compensation programming, team members have investments acquired through their participation in the PFG’s employee stock purchase plan, retirement plans and direct personal investments. It should be noted that the Company’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e. “clones”).

191



Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Daniel R. Coleman Equity Income over $1,000,000
Daniel R. Coleman Principal Capital Appreciation $100,001 - $500,000
Theodore Jayne Principal Capital Appreciation $100,001 - $500,000
Sarah E. Radecki (1)
Equity Income $500,001 - $1,000,000
Nedret Vidinli Equity Income $100,001 - $500,000
(1) Information as of December 31, 2020

192



Advisor: Principal Global Investors, LLC (Finisterre Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance Total Assets of the Accounts that base the Advisory Fee on Performance
Damien Buchet: Finisterre Emerging Markets Total Return Bond Fund
Registered Investment Companies 1 $127.7 million 0 $0
Other Pooled Investment Vehicles 0 $0 0 $0
Other accounts
3 $1.2 billion 0 $0
Arthur Duchon-Doris: Finisterre Emerging Markets Total Return Bond Fund
Registered Investment Companies 1 $127.7 million 0 $0
Other Pooled Investment Vehicles 0 $0 0 $0
Other accounts
3 $1.2 billion 0 $0
Christopher Watson: Finisterre Emerging Markets Total Return Bond Fund
Registered Investment Companies 1 $127.7 million 0 $0
Other Pooled Investment Vehicles 0 $0 0 $0
Other accounts
3 $1.2 billion 0 $0
Compensation
Principal Global Investors, LLC offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention and client satisfaction. Relative performance metrics are measured on a pre-tax basis over rolling one-year, three-year and five-year periods, calculated quarterly, reinforcing a longer term orientation.
Payments under the variable incentive plan are delivered in the form of cash or a combination of cash and deferred compensation. The amount of incentive delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into funds managed by the team via a co-investment program and is subject to a three-year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives (e.g., co-investment) and talent retention.
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities
Owned by the Portfolio Manager
Damien Buchet Finisterre Emerging Markets Total Return Bond None
Arthur Duchon-Doris Finisterre Emerging Markets Total Return Bond None
Christopher Watson Finisterre Emerging Markets Total Return Bond None
193



Advisor: Principal Global Investors, LLC (Equity Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance Total Assets of the Accounts that base the Advisory Fee on Performance
Paul H. Blankenhagen: Diversified International and International Emerging Markets Funds
Registered investment companies 4 $620.9 million 0 $0
Other pooled investment vehicles 5 $3.8 billion 0 $0
Other accounts
11 $1.4 billion 1 $252.6 million
Juliet Cohn: Diversified International Fund
Registered investment companies 3 $539.8 million 0 $0
Other pooled investment vehicles 4 $3.6 billion 0 $0
Other accounts
9 $1.2 billion 1 $252.6 million
Jeffrey Kilkenny: International Emerging Markets Fund
Registered investment companies 1 $81.2 million 0 $0
Other pooled investment vehicles 1 $275.8 million 0 $0
Other accounts
2 $264.7 million 0 $0
K. William Nolin: MidCap Fund
Registered investment companies 3 $8.7 billion 0 $0
Other pooled investment vehicles 4 $2.6 billion 0 $0
Other accounts
53 $7.7 billion 0 $0
Phil Nordhus: SmallCap Fund
Registered investment companies 7 $359.7 million 0 $0
Other pooled investment vehicles 1 $606.7 million 0 $0
Other accounts
14 $908.1 million 0 $0
Brian W. Pattinson: SmallCap Fund
Registered investment companies 9 $1.4 billion 0 $0
Other pooled investment vehicles 3 $2.8 billion 0 $0
Other accounts
31 $3.1 billion 1 $158.9 million
Tom Rozycki: MidCap Fund
Registered investment companies 3 $8.7 billion 0 $0
Other pooled investment vehicles 4 $2.6 billion 0 $0
Other accounts
53 $7.7 billion 0 $0
Jeffrey A. Schwarte: LargeCap S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P 600 Index Funds
Registered investment companies 30 $10.4 billion 0 $0
Other pooled investment vehicles 7 $35.3 billion 0 $0
Other accounts
9 $56.5 million 0 $0
Aaron J. Siebel: LargeCap S&P 500 Index, MidCap S&P 400 Index, and SmallCap S&P 600 Index Funds
Registered investment companies 27 $9.6 billion 0 $0
Other pooled investment vehicles 6 $35.3 billion 0 $0
Other accounts
6 $19.4 million 0 $0
Alan Wang: International Emerging Markets Fund
Registered investment companies 7 $3.5 billion 0 $0
Other pooled investment vehicles 1 $275.8 million 0 $0
Other accounts
9 $2.1 billion 1 $254.6 million

194



Compensation
Principal Global Investors, LLC offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention and client satisfaction. Investment performance is measured on a pretax basis against relative client benchmarks and peer groups over one year, three-year and five-year periods, calculated quarterly, reinforcing a longer term orientation.
Payments under the variable incentive plan are delivered in the form of cash or a combination of cash and deferred compensation. The amount of incentive delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team, via a co-investment program. Both payment vehicles are subject to a three year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives (e.g. co-investment), alignment with Principal stakeholders, and talent retention.
In addition to deferred compensation obtained through their compensation programming, team members have investments acquired through their participation in the PFG’s employee stock purchase plan, retirement plans and direct personal investments. It should be noted that the Company’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e. “clones”).
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities
Owned by the Portfolio Manager
Paul H. Blankenhagen Diversified International over $1,000,000
Paul H. Blankenhagen
International Emerging Markets None
Juliet Cohn Diversified International $500,001 - $1,000,000
Jeffrey Kilkenny International Emerging Markets $50,001 - $100,000
K. William Nolin MidCap over $1,000,000
Phil Nordhus SmallCap over $1,000,000
Brian Pattinson SmallCap over $1,000,000
Tom Rozycki MidCap over $1,000,000
Jeffrey A. Schwarte LargeCap S&P 500 Index $1 - $10,000
Jeffrey A. Schwarte MidCap S&P 400 Index None
Jeffrey A. Schwarte SmallCap S&P 600 Index $1 - $10,000
Aaron J. Siebel LargeCap S&P 500 Index None
Aaron J. Siebel MidCap S&P 400 Index None
Aaron J. Siebel SmallCap S&P 600 Index None
Alan Wang International Emerging Markets $100,001 - $500,000
195



Advisor: Principal Global Investors, LLC (Fixed Income Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of
Accounts
that base
the Advisory
Fee on
Performance
Total Assets
of the
Accounts
that
base the
Advisory
Fee on
Performance
William C. Armstrong: Core Plus Bond Fund
Registered investment companies 2 $612.2 million 0 $0
Other pooled investment vehicles 2 $3.5 billion 0 $0
Other accounts
6 $2.1 billion 2 $1.2 billion
Bryan C. Davis: Government & High Quality Bond Fund
Registered investment companies 17 $3.4 billion 0 $0
Other pooled investment vehicles 18 $6.6 billion 0 $0
Other accounts
30 $3.4 billion 7 $483.5 million
Mark P. Denkinger: High Yield Fund
Registered investment companies 7 $214.7 million 0 $0
Other pooled investment vehicles 8 $650.0 million 0 $0
Other accounts
41 $5.5 billion 2 $131.8 million
John R. Friedl: Core Fixed Income and Short-Term Income Funds
Registered investment companies 6 $382.6 million 0 $0
Other pooled investment vehicles 3 $285.9 million 0 $0
Other accounts
0 $0 0 $0
Zach Gassmann: Government & High Quality Bond Fund
Registered investment companies 11 $2.1 billion 0 $0
Other pooled investment vehicles 8 $1.4 billion 0 $0
Other accounts 17 $2.6 billion 4 $286.1 million
Erika Isley: Government Money Market and Money Market Funds
Registered investment companies 3 $1.8 million 0 $0
Other pooled investment vehicles 2 $1.4 billion 0 $0
Other accounts
7 $487.1 million 2 $39.6 million
James Noble: California Municipal and Tax-Exempt Bond Funds
Registered investment companies 2 $152.5 million 0 $0
Other pooled investment vehicles 4 $141.7 million 0 $0
Other accounts
7 $820.1 million 0 $0
Scott J. Peterson: Core Fixed Income and Short-Term Income Funds
Registered investment companies 6 $382.6 million 0 $0
Other pooled investment vehicles 3 $285.9 million 0 $0
Other accounts
0 $0 0 $0
Josh Rank: High Yield Fund
Registered investment companies 7 $214.7 million 0 $0
Other pooled investment vehicles 8 $650.0 million 0 $0
Other accounts
41 $5.5 billion 2 $131.8 million
Tracy Reeg: Government Money Market and Money Market Funds
Registered investment companies 0 $0  0 $0
Other pooled investment vehicles 1 $1.4 billion 0 $0
Other accounts
1 $30.0 million 0 $0
196



Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of
Accounts
that base
the Advisory
Fee on
Performance
Total Assets
of the
Accounts
that
base the
Advisory
Fee on
Performance
Darrin E. Smith: High Yield Fund
Registered investment companies 7 $214.7 million 0 $0
Other pooled investment vehicles 8 $650.0 million 0 $0
Other accounts
41 $5.5 billion 2 $131.8 million
James Welch: California Municipal and Tax-Exempt Bond Funds
Registered investment companies 2 $152.5 million 0 $0
Other pooled investment vehicles 4 $141.7 million 0 $0
Other accounts
7 $820.1 million 0 $0
Randy R. Woodbury: Core Plus Bond Fund
Registered investment companies 11 $6.9 billion 0 $0
Other pooled investment vehicles 10 $16.9 billion 0 $0
Other accounts
14 $4.2 billion 3 $1.6 billion
Compensation
Principal Global Investors offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for fixed income investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. Variable compensation takes the form of a profit share plan with funding based on a percentage of pre-tax, pre-bonus operating earnings of Principal Global Fixed Income. The plan is designed to provide line-of-sight to investment professionals, enabling them to share in current and future business growth while reinforcing delivery of investment performance, collaboration, regulatory compliance, operational excellence, client retention and client satisfaction.
The variable component is well aligned with client goals and objectives, with the largest determinant being investment performance relative to appropriate client benchmarks and peer groups. Relative performance metrics are measured over rolling one-year, three-year and five-year periods, calculated quarterly, reinforcing a longer term orientation. In addition to investment performance, other discretionary factors such as team and individual results also contribute to the quantum of incentive compensation. Discretionary compensation metrics are specifically aligned with the results of the Fixed Income group. The structure is uniformly applied among all investment professionals, including portfolio managers, research analysts, traders and team leaders.
Payments under the variable incentive plan are delivered in the form of cash or a combination of cash and deferred compensation. The amount of incentive delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team, via a co-investment program. Both payment vehicles are subject to a three year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives (e.g. co-investment), alignment with Principal stakeholders, and talent retention.
In addition to deferred compensation obtained through their compensation programming, all senior team members have substantial investments in funds managed by the group, including deferred compensation, retirement plans and direct personal investments. It should be noted that the Company’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e. “clones”).
197



Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
William C. Armstrong Core Plus Bond $100,001 - $500,000
Bryan C. Davis Government & High Quality Bond $500,001 - $1,000,000
Mark P. Denkinger High Yield over $1,000,000
John R. Friedl Core Fixed Income $100,001 - $500,000
John R. Friedl Short-Term Income $1 - $10,000
Zach Gassmann Government & High Quality Bond $50,001 - $100,000
Erika Isley Government Money Market None
Erika Isley Money Market None
James Noble California Municipal $1 - $10,000
James Noble Tax-Exempt Bond $50,001 - $100,000
Scott J. Peterson Core Fixed Income $10,001 - $50,000
Scott J. Peterson Short-Term Income over $1,000,000
Josh Rank High Yield $500,001 - $1,000,000
Tracy Reeg Government Money Market None
Tracy Reeg Money Market $1 - $10,000
Darrin E. Smith High Yield $500,001 - $1,000,000
James Welch California Municipal None
James Welch Tax-Exempt Bond $100,001 - $500,000
Randy R. Woodbury Core Plus Bond $100,001 - $500,000
198



Advisor: Principal Global Investors, LLC (Principal® Global Asset Allocation Portfolio Managers)
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Jessica S. Bush: Global Diversified Income Fund
Registered investment companies 3 $7.8 billion 0 $0
Other pooled investment vehicles 2 $2.6 billion 0 $0
Other accounts
0 $0 0 $0
Marcus W. Dummer: Global Diversified Income Fund
Registered investment companies 3 $7.8 billion 0 $0
Other pooled investment vehicles 2 $2.6 billion 0 $0
Other accounts
0 $0 0 $0
James W. Fennessey: High Income; LargeCap Growth I; LargeCap Value III; MidCap Growth III; MidCap Value I; Overseas; Principal LifeTime Strategic Income, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065; Principal LifeTime Hybrid Income, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065; SmallCap Growth I; and SmallCap Value II Funds
Registered investment companies 7 $1.7 billion 0
$0
Other pooled investment vehicles 26 $42.8 billion 0 $0
Other accounts
25 $4.3 billion 0 $0
Kelly Grossman: Global Diversified Income Fund
Registered investment companies 2 $7.6 billion 0 $0
Other pooled investment vehicles 1 $2.6 billion 0 $0
Other accounts
0 $0 0 $0
Todd A. Jablonski: SAM Balanced, SAM Conservative Balanced, SAM Conservative Growth, SAM Flexible Income and
SAM Strategic Growth Portfolios
Registered investment companies
7 $2.4 billion 0 $0
Other pooled investment vehicles 0 $0 0 $0
Other accounts
0 $0 0 $0
Benjamin E. Rotenberg: Global Diversified Income Fund
Registered investment companies 3 $7.8 billion 0 $0
Other pooled investment vehicles 2 $2.6 billion 0 $0
Other accounts
0 $0 0 $0
Scott Smith: Principal LifeTime Strategic Income, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065; and Principal LifeTime Hybrid Income, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065 Funds
Registered investment companies 14 $6.7 billion 0 $0
Other pooled investment vehicles 26 $42.8 billion 0 $0
Other accounts
28 $4.6 billion 0 $0
Gregory L. Tornga: SAM Balanced, SAM Conservative Balanced, SAM Conservative Growth, SAM Flexible Income and
SAM Strategic Growth Portfolios
Registered investment companies 7 $2.4 billion 0 $0
Other pooled investment vehicles 0 $0 0 $0
Other accounts
3 $32.5 million 0 $0
199



Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Randy L. Welch: High Income; LargeCap Growth I; LargeCap Value III; MidCap Growth III; MidCap Value I; Overseas; Principal LifeTime Strategic Income, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065; Principal LifeTime Hybrid Income, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, 2060 and 2065; SmallCap Growth I; and
SmallCap Value II Funds
Registered investment companies 8 $1.7 billion 0 $0
Other pooled investment vehicles 26 $42.8 billion 0 $0
Other accounts
25 $4.3 billion 0 $0
Compensation
Principal Global Investors, LLC ("PGI") offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for all team members is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one year, three-year and five-year periods, calculated quarterly, reinforcing a longer term orientation.
Payments under the variable incentive plan are delivered in the form of cash or a combination of cash and deferred compensation. The amount of incentive delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team, via a co-investment program. Both payment vehicles are subject to a three year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives (e.g. co-investment), alignment with Principal stakeholders, and talent retention.
In addition to deferred compensation obtained through their compensation programming, team members have investments acquired through their participation in the PFG’s employee stock purchase plan, retirement plans, and direct personal investments. It should be noted that the Company’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e. “clones”).
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Jessica S. Bush Global Diversified Income $100,001 - $500,000
Marcus W. Dummer Global Diversified Income $100,001 - $500,000
James W. Fennessey High Income None
James W. Fennessey LargeCap Growth I $50,001 - $100,000
James W. Fennessey LargeCap Value III None
James W. Fennessey MidCap Growth III None
James W. Fennessey MidCap Value I None
James W. Fennessey Overseas None
James W. Fennessey Principal LifeTime Strategic Income None
James W. Fennessey Principal LifeTime 2010 None
James W. Fennessey Principal LifeTime 2015 None
James W. Fennessey Principal LifeTime 2020 None
200



Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
James W. Fennessey Principal LifeTime 2025 None
James W. Fennessey Principal LifeTime 2030 None
James W. Fennessey Principal LifeTime 2035 None
James W. Fennessey Principal LifeTime 2040 $10,001 - $50,000
James W. Fennessey Principal LifeTime 2045 None
James W. Fennessey Principal LifeTime 2050 None
James W. Fennessey Principal LifeTime 2055 None
James W. Fennessey Principal LifeTime 2060 None
James W. Fennessey Principal LifeTime 2065 None
James W. Fennessey Principal LifeTime Hybrid Income None
James W. Fennessey Principal LifeTime Hybrid 2015 None
James W. Fennessey Principal LifeTime Hybrid 2020 None
James W. Fennessey Principal LifeTime Hybrid 2025 None
James W. Fennessey Principal LifeTime Hybrid 2030 $10,001 - $50,000
James W. Fennessey Principal LifeTime Hybrid 2035 None
James W. Fennessey Principal LifeTime Hybrid 2040 $50,001 - $100,000
James W. Fennessey Principal LifeTime Hybrid 2045 None
James W. Fennessey Principal LifeTime Hybrid 2050 None
James W. Fennessey Principal LifeTime Hybrid 2055 None
James W. Fennessey Principal LifeTime Hybrid 2060 None
James W. Fennessey Principal LifeTime Hybrid 2065 None
James W. Fennessey SmallCap Growth I $50,001 - $100,000
James W. Fennessey SmallCap Value II $50,001 - $100,000
Kelly Grossman Global Diversified Income $10,001 - $50,000
Todd A. Jablonski SAM Balanced over $1,000,000
Todd A. Jablonski SAM Conservative Balanced None
Todd A. Jablonski SAM Conservative Growth $100,001 - $500,000
Todd A. Jablonski SAM Flexible Income $10,001 - $50,000
Todd A. Jablonski SAM Strategic Growth $50,001 - $100,000
Benjamin E. Rotenberg Global Diversified Income $100,001 - $500,000
Scott Smith Principal LifeTime Strategic Income None
Scott Smith Principal LifeTime 2010 None
Scott Smith Principal LifeTime 2015 None
Scott Smith Principal LifeTime 2020 None
Scott Smith Principal LifeTime 2025 None
Scott Smith Principal LifeTime 2030 None
Scott Smith Principal LifeTime 2035 None
Scott Smith Principal LifeTime 2040 None
Scott Smith Principal LifeTime 2045 None
Scott Smith Principal LifeTime 2050 None
Scott Smith Principal LifeTime 2055 None
Scott Smith Principal LifeTime 2060 None
Scott Smith Principal LifeTime 2065 None
Scott Smith Principal LifeTime Hybrid Income None
Scott Smith Principal LifeTime Hybrid 2015 None
Scott Smith Principal LifeTime Hybrid 2020 None
Scott Smith Principal LifeTime Hybrid 2025 None
201



Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Scott Smith Principal LifeTime Hybrid 2030 $10,001 - $50,000
Scott Smith Principal LifeTime Hybrid 2035 None
Scott Smith Principal LifeTime Hybrid 2040 None
Scott Smith Principal LifeTime Hybrid 2045 None
Scott Smith Principal LifeTime Hybrid 2050 $10,001 - $50,000
Scott Smith Principal LifeTime Hybrid 2055 None
Scott Smith Principal LifeTime Hybrid 2060 None
Scott Smith Principal LifeTime Hybrid 2065 None
Gregory L. Tornga SAM Balanced $100,001 - $500,000
Gregory L. Tornga SAM Conservative Balanced None
Gregory L. Tornga SAM Conservative Growth None
Gregory L. Tornga SAM Flexible Income $10,001 - $50,000
Gregory L. Tornga SAM Strategic Growth $10,001 - $50,000
Randy L. Welch High Income None
Randy L. Welch LargeCap Growth I $100,001 - $500,000
Randy L. Welch LargeCap Value III None
Randy L. Welch MidCap Growth III None
Randy L. Welch MidCap Value I None
Randy L. Welch Overseas None
Randy L. Welch Principal LifeTime Strategic Income None
Randy L. Welch Principal LifeTime 2010 None
Randy L. Welch Principal LifeTime 2015 None
Randy L. Welch Principal LifeTime 2020 None
Randy L. Welch Principal LifeTime 2025 None
Randy L. Welch Principal LifeTime 2030 None
Randy L. Welch Principal LifeTime 2035 None
Randy L. Welch Principal LifeTime 2040 None
Randy L. Welch Principal LifeTime 2045 None
Randy L. Welch Principal LifeTime 2050 None
Randy L. Welch Principal LifeTime 2055 None
Randy L. Welch Principal LifeTime 2060 None
Randy L. Welch Principal LifeTime 2065 None
Randy L. Welch Principal LifeTime Hybrid Income None
Randy L. Welch Principal LifeTime Hybrid 2015 None
Randy L. Welch Principal LifeTime Hybrid 2020 None
Randy L. Welch Principal LifeTime Hybrid 2025 $100,001 - $500,000
Randy L. Welch Principal LifeTime Hybrid 2030 $100,001 - $500,000
Randy L. Welch Principal LifeTime Hybrid 2035 None
Randy L. Welch Principal LifeTime Hybrid 2040 None
Randy L. Welch Principal LifeTime Hybrid 2045 None
Randy L. Welch Principal LifeTime Hybrid 2050 None
Randy L. Welch Principal LifeTime Hybrid 2055 None
Randy L. Welch Principal LifeTime Hybrid 2060 None
Randy L. Welch Principal LifeTime Hybrid 2065 None
Randy L. Welch SmallCap Growth I $50,001 - $100,000
Randy L. Welch SmallCap Value II $10,001 - $50,000
202



Sub-Advisor: BlackRock Financial Management, Inc.
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Akiva Dickstein: Inflation Protection Fund
Registered investment companies 24 $26.8 billion 0 $0
Other pooled investment vehicles 28 $9.7 billion 0 $0
Other accounts
260 $101.5 billion 6 $2.2 billion
Compensation for Sub-Advisor and Sub-Sub-Advisor
Portfolio Manager Compensation Overview
BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, participation in various benefits programs and one or more of the incentive compensation programs established by BlackRock.
Base Compensation. Generally, portfolio managers receive base compensation based on their position with the firm.
Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several components: the performance of BlackRock, Inc., the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s performance and contribution to the overall performance of these portfolios and BlackRock. In most cases, these benchmarks are the same as the benchmark or benchmarks against which the performance of the Funds or other accounts managed by the portfolio managers are measured. Among other things, BlackRock’s Chief Investment Officers make a subjective determination with respect to each portfolio manager’s compensation based on the performance of the Funds and other accounts managed by each portfolio manager relative to the various benchmarks. Performance of fixed income funds is measured on a pre-tax and/or after-tax basis over various time periods including 1-, 3- and 5- year periods, as applicable. With respect to these portfolio managers, such benchmarks for the Fund and other accounts are: Varied Euro-Based Benchmarks, a combination of market-based indices (e.g. Bloomberg Barclays US Aggregate Index, Bloomberg Barclays US Universal Index and Bloomberg Barclays Intermediate Aggregate Index), certain customized indices and certain fund industry peer groups.
Distribution of Discretionary Incentive Compensation. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash, deferred BlackRock, Inc. stock awards, and/or deferred cash awards that notionally track the return of certain BlackRock investment products.
Portfolio managers receive their annual discretionary incentive compensation in the form of cash. Portfolio managers whose total compensation is above a specified threshold also receive deferred BlackRock, Inc. stock awards annually as part of their discretionary incentive compensation. Paying a portion of discretionary incentive compensation in the form of deferred BlackRock, Inc. stock puts compensation earned by a portfolio manager for a given year at risk based on BlackRock’s ability to sustain and improve its performance over future periods. In some cases, additional deferred BlackRock, Inc. stock may be granted to certain key employees as part of a long-term incentive award to aid in retention, align interests with long-term shareholders and motivate performance. Deferred BlackRock, Inc. stock awards are generally granted in the form of BlackRock, Inc. restricted stock units that vest pursuant to the terms of the applicable plan and, once vested, settle in BlackRock, Inc. common stock. The portfolio manager of this Fund has deferred BlackRock, Inc. stock awards.
For certain portfolio managers, a portion of the discretionary incentive compensation is also distributed in the form of deferred cash awards that notionally track the returns of select BlackRock investment products they manage, which provides direct alignment of portfolio manager discretionary incentive compensation with investment product results. Deferred cash awards vest ratably over a number of years and, once vested, settle in the form of cash. Only portfolio managers who manage specified products and whose total compensation is above a specified threshold are eligible to participate in the deferred cash award program.
203



Other Compensation Benefits. In addition to base salary and discretionary incentive compensation, portfolio managers may be eligible to receive or participate in one or more of the following:
Incentive Savings Plans - BlackRock, Inc. has created a variety of incentive savings plans in which BlackRock employees are eligible to participate, including a 401(k) plan, the BlackRock Retirement Savings Plan (RSP), and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution components of the RSP include a company match equal to 50% of the first 8% of eligible pay contributed to the plan capped at $5,000 per year, and a company retirement contribution equal to 3-5% of eligible compensation up to the Internal Revenue Service limit ($285,000 for 2020). The RSP offers a range of investment options, including registered investment companies and collective investment funds managed by the firm. BlackRock contributions follow the investment direction set by participants for their own contributions or, absent participant investment direction, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a dollar value of $25,000 based on its fair market value on the purchase date. Mr. Dickstein is eligible to participate in these plans.
United Kingdom-based portfolio managers are also eligible to participate in broad-based plans offered generally to BlackRock employees, including broad-based retirement, health and other employee benefit plans. For example, BlackRock has created a variety of incentive savings plans in which BlackRock employees are eligible to participate, including the BlackRock Retirement Savings Plan (RSP) and the BlackRock Employee Stock Purchase Plan (ESPP). The employer contribution to the RSP is between 10% and 15% of eligible pay capped at £160,000 per annum. The RSP offers a range of investment options, including several collective investment funds managed by the firm. BlackRock contributions follow the investment direction set by participants for their own contributions or, in the absence of an investment election being made, are invested into a target date fund that corresponds to, or is closest to, the year in which the participant attains age 65. The ESPP allows for investment in BlackRock common stock at a 5% discount on the fair market value of the stock on the purchase date. Annual participation in the ESPP is limited to the purchase of 1,000 shares of common stock or a US dollar value of $25,000 based on its fair market value on the purchase date. Mr. Allen is eligible to participate in these plans.
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Akiva Dickstein Inflation Protection None
Sub-Sub-Advisor: BlackRock International Limited
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance Total Assets of the Accounts that base the Advisory Fee on Performance
Chris Allen: Inflation Protection Fund
Registered investment companies
7 $4.9 billion 0 $0
Other pooled investment vehicles 13 $15.1 billion 0 $0
Other accounts
23 $9.5 billion 2 $775.2 million
Compensation
For compensation information, reference the Compensation for Sub-Advisor and Sub-Sub-Advisor section under Sub-Advisor: BlackRock Financial Management, Inc.
Ownership of Securities
Portfolio Manager
PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Chris Allen Inflation Protection None
204



Sub-Advisor: Origin Asset Management LLP
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Chris Carter: International Fund I
Registered investment companies 1 $1.7 billion 0 $0
Other pooled investment vehicles 4 $203.0 million 0 $0
Other accounts
8 $2.0 billion 2 $288.0 million
Nigel Dutson: International Fund I
Registered investment companies 1 $1.7 billion 0 $0
Other pooled investment vehicles 4 $203.0 million 0 $0
Other accounts
8 $2.0 billion 2 $288.0 million
Tarlock Randhawa: International Fund I
Registered investment companies 1 $1.7 billion 0 $0
Other pooled investment vehicles 4 $203.0 million 0 $0
Other accounts
8 $2.0 billion 2 $288.0 million
Compensation
Origin Asset Management LLP offers investment professionals a competitive compensation structure that is evaluated relative to other asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to align team contributions in a manner that is consistent with industry standards and business results. Compensation of Origin's portfolio managers is formed of a competitive fixed salary and a share of a bonus pool which is a function of the annual profitability of the firm. Select members of the investment team further share in the firm’s profits based on their overall partner ownership.
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Chris Carter International Fund I None
Nigel Dutson International Fund I None
Tarlock Randhawa International Fund I None
205



Sub-Advisor: Principal Real Estate Investors, LLC
Other Accounts Managed
Total
Number
of Accounts
Total Assets
in the
Accounts
Number of Accounts that base the Advisory Fee on Performance
Total Assets of the Accounts that base the Advisory Fee on Performance
Keith Bokota: Real Estate Securities Fund
Registered investment companies
3 $597.7 million 0 $0
Other pooled investment vehicles 2 $112.8 million 0 $0
Other accounts
32 $1.8 billion 0 $0
Simon Hedger: Global Real Estate Securities Fund
Registered investment companies 6 $852.2 million 0 $0
Other pooled investment vehicles 4 $1.4 billion 0 $0
Other accounts
32 $5.8 billion 5 $588.9 million
Anthony Kenkel: Global Real Estate Securities and Real Estate Securities Funds
Registered investment companies 9 $1.4 billion 0 $0
Other pooled investment vehicles 5 $1.5 billion 0 $0
Other accounts
66 $7.9 billion 5 $588.9 million
Kelly D. Rush: Global Real Estate Securities and Real Estate Securities Funds
Registered investment companies 9 $1.4 billion 0 $0
Other pooled investment vehicles 5 $1.5 billion 0 $0
Other accounts
67 $8.0 billion 5 $588.9 million
Compensation
Principal Real Estate Investors, LLC offers investment professionals a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.
Compensation for investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels.
Variable compensation takes the form of a profit share plan with funding based on a percentage of pre-tax, pre-bonus operating earnings of the boutique (e.g. REIT, CMBS). The plan is designed to provide line-of-sight to investment professionals, enabling them to share in current and future business growth while reinforcing delivery of investment performance, collaboration, regulatory compliance, operational excellence, client retention and client satisfaction. The variable component is well aligned with client goals and objectives, with the largest determinant being investment performance relative to appropriate client benchmarks and peer groups. Relative performance metrics are measured over rolling one-year and three-year periods, calculated quarterly, reinforcing a longer term orientation. In addition to investment performance, other discretionary factors such as team and individual results also contribute to the quantum of incentive compensation. Discretionary compensation metrics are specifically aligned with the results of the Real Estate group. The structure is uniformly applied among all investment professionals, including portfolio managers, research analysts, traders and team leaders.
Payments under the variable incentive plan may be in the form of cash or a combination of cash and deferred compensation. The amount of variable compensation delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested in Principal Financial Group (“PFG”) restricted stock units and funds managed by the team, via a co-investment program. Both payment vehicles are subject to a three year vesting schedule.
206



In addition to deferred compensation obtained through their compensation programming, all senior team members have substantial investments in funds managed by the group, including deferred compensation, retirement plans and direct personal investments. It should be noted that the Company’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e. “clones”).
Ownership of Securities
Portfolio Manager PFI Funds Managed by Portfolio Manager Dollar Range of Securities Owned by the Portfolio Manager
Keith Bokota Real Estate Securities $500,001 - $1,000,000
Simon Hedger Global Real Estate Securities $500,001 - $1,000,000
Anthony Kenkel Global Real Estate Securities over $1,000,000
Anthony Kenkel Real Estate Securities over $1,000,000
Kelly D. Rush Global Real Estate Securities over $1,000,000
Kelly D. Rush Real Estate Securities over $1,000,000
207



APPENDIX A – DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. Rating Definitions:
Long-Term Obligation Ratings
Ratings assigned on Moody's global long-term obligation rating scales are forward-looking opinions of the relative credit risk of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment.1
1 For certain structured finance, preferred stock and hybrid securities in which payment default events are either not defined or do not match investor’s expectations for timely payment, the ratings reflect the likelihood of impairment and the expected financial loss in the event of impairment.
Aaa:     Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa:     Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A:     Obligations rated A are considered upper-medium grade and are subject to low credit risk.
Baa:     Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.
Ba:     Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B:     Obligations rated B are considered speculative and are subject to high credit risk.
Caa:     Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca:     Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C:     Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers, 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, issuers, financial companies, and securities firms.*
* By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with that security.
SHORT-TERM NOTES: Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default. Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:
Issuers rated Prime-1 (or related supporting institutions) have a superior ability to repay short-term debt obligations.
Issuers rated Prime-2 (or related supporting institutions) have a strong ability to repay short-term debt obligations.
Issuers rated Prime-3 (or related supporting institutions) have an acceptable ability to repay short-term obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
US MUNICIPAL SHORT-TERM DEBT: The Municipal Investment Grade (MIG) scale is used to rate US municipal bonds of up to five years maturity. MIG ratings are divided into three levels - MIG 1 through MIG 3 - while speculative grade short-term obligations are designated SG.
208



MIG 1 denotes superior credit quality, afforded excellent protection from highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG 2 denotes strong credit quality with ample margins of protection, although not as large as in the preceding group.
MIG 3 notes are of acceptable credit quality. Liquidity and cash-flow protection may be narrow and market access for refinancing is likely to be less well-established.
SG denotes speculative-grade credit quality and may lack sufficient margins of protection.
Description of S&P Global Ratings' Credit Rating Definitions:
S&P Global's credit rating, both long-term and short-term, is a forward-looking opinion of the creditworthiness of an obligor with respect to a specific obligation. This assessment takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation.
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to market price or suitability for a particular investor.
The ratings are statements of opinion as of the date they are expressed furnished by the issuer or obtained by S&P Global Ratings from other sources S&P Global Ratings considers reliable. S&P Global Ratings does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
Likelihood of payment - capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation;
Nature of and provisions of the financial obligation;
Protection afforded by, and relative position of, the financial obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditor's rights.
LONG-TERM CREDIT RATINGS:
AAA:     Obligations rated ‘AAA’ have the highest rating assigned by S&P Global Ratings. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA:     Obligations rated ‘AA’ differ from the highest-rated issues only in small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A:     Obligations rated ‘A’ have a strong capacity to meet financial commitment on the obligation although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories.
BBB:     Obligations rated ‘BBB’ exhibit adequate protection parameters; however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet financial commitment on the obligation.
BB, B, CCC,     Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded, on balance, as having significant
CC, and C:    speculative characteristics. ‘BB’ indicates the lowest degree of speculation and ‘C’ the highest degree of speculation. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major risk exposures to adverse conditions.
BB:    Obligations rated ‘BB’ are less vulnerable to nonpayment than other speculative issues. However it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B:    Obligations rated ‘B’ are more vulnerable to nonpayment than ‘BB’ but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair this capacity.
CCC:    Obligations rated ‘CCC’ are currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. If adverse business, financial, or economic conditions occur, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
209



CC:    Obligations rated ‘CC’ are currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred but S&P Global Ratings expects default to be a virtual certainty, regardless of anticipated time to default.
C:     The rating ‘C’ is highly vulnerable to nonpayment, the obligation is expected to have lower relative seniority or lower ultimate recovery compared to higher rated obligations.
D:     Obligations rated ‘D’ are in default, or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The rating will also be used upon filing for bankruptcy petition or the taking of similar action and where default is a virtual certainty. If an obligation is subject to a distressed exchange offer the rating is lowered to ‘D’.
Plus (+) or Minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
NR:     Indicates that no rating has been requested, that there is insufficient information on which to base a rating or that S&P Global Ratings does not rate a particular type of obligation as a matter of policy.
SHORT-TERM CREDIT RATINGS: Ratings are graded into four categories, ranging from ‘A-1’ for the highest quality obligations to ‘D’ for the lowest.
A-1:     This is the highest category. The obligor’s capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
A-2:     Issues carrying this designation are somewhat more susceptible to the adverse effects of the changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity to meet its financial commitment on the obligation is satisfactory.
A-3:     Issues carrying this designation exhibit adequate capacity to meet their financial obligations. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet it financial commitment on the obligation.
B:     Issues rated ‘B’ are regarded as vulnerable and have significant speculative characteristics. The obligor has capacity to meet financial commitments; however, it faces major ongoing uncertainties which could lead to obligor’s inadequate capacity to meet its financial obligations.
C:     This rating is assigned to short-term debt obligations that are currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions to meet its financial commitment on the obligation.
D:     This rating indicates that the issue is either in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The rating will also be used upon filing for bankruptcy petition or the taking of similar action and where default is a virtual certainty. If an obligation is subject to a distressed exchange offer the rating is lowered to ‘D’.
MUNICIPAL SHORT-TERM NOTE RATINGS: S&P Global Ratings rates U.S. municipal notes with a maturity of less than three years as follows:
SP-1:     A strong capacity to pay principal and interest. Issues that possess a very strong capacity to pay debt service is given a "+" designation.
SP-2:     A satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the terms of the notes.
SP-3:     A speculative capacity to pay principal and interest.

210



APPENDIX B – PRICE MAKE UP SHEET
Class A
Maximum Offering Price Calculation
(as of October 31, 2020)
NAV =
Maximum Offering Price
(1-Sales Charge Percentage)
Fund
California Municipal Fund $10.85 = $11.27
(1-.0375)
Core Fixed Income Fund $10.17 = $10.40
(1-.0225)
Core Plus Bond Fund $11.57 = $12.02
(1-.0375)
Diversified International Fund $12.74 = $13.48
(1-.0550)
Equity Income Fund $30.66 = $32.44
(1-.0550)
Finisterre Emerging Markets Total Return Bond $10.20 = $10.60
Fund (1-.0375)
Global Diversified Income Fund $12.57 = $13.06
(1-.0375)
Global Real Estate Securities Fund $7.98 = $8.44
(1-.0550)
Government & High Quality Bond Fund $10.59 = $10.83
(1-.0225)
High Yield Fund $7.01 = $7.28
(1-.0375)
International Emerging Markets Fund $26.98 = $28.55
(1-.0550)
LargeCap Growth Fund I $18.39 = $19.46
(1-.0550)
LargeCap S&P 500 Index Fund $20.14 = $20.45
(1-.0150)
MidCap Fund $30.19 = $31.95
(1-.0550)
211



Class A
Maximum Offering Price Calculation
(as of October 31, 2020)
NAV =
Maximum Offering Price
(1-Sales Charge Percentage)
Fund
MidCap Value Fund I $12.76 = $13.50
(1-.0550)
Money Market Fund $1.00 = $1.00
(1-.0000)
Principal Capital Appreciation Fund $51.31 = $54.30
(1-.0550)
Principal LifeTime 2010 Fund $13.36 = $13.88
(1-.0375)
Principal LifeTime 2020 Fund $14.07 = $14.89
(1-.0550)
Principal LifeTime 2030 Fund $14.76 = $15.62
(1-.0550)
Principal LifeTime 2040 Fund $15.20 = $16.08
(1-.0550)
Principal LifeTime 2050 Fund $15.63 = $16.54
(1-.0550)
Principal LifeTime Strategic Income Fund $12.51 = $13.00
(1-.0375)
Real Estate Securities Fund $23.53 = $24.90
(1-.0550)
SAM Balanced Portfolio $15.64 = $16.55
(1-.0550)
SAM Conservative Balanced Portfolio $12.17 = $12.88
(1-.0550)
SAM Conservative Growth Portfolio $17.41 = $18.42
(1-.0550)
SAM Flexible Income Portfolio $12.38 = $12.86
(1-.0375)
212



Class A
Maximum Offering Price Calculation
(as of October 31, 2020)
NAV =
Maximum Offering Price
(1-Sales Charge Percentage)
Fund
SAM Strategic Growth Portfolio $18.57 = $19.65
(1-.0550)
Short-Term Income Fund $12.54 = $12.83
(1-.0225)
SmallCap Fund $20.37 = $21.56
(1-.0550)
Tax-Exempt Bond Fund $7.40 = $7.69
(1-.0375)
213



APPENDIX C – PROXY VOTING POLICIES
The proxy voting policies applicable to each Fund appear in the following order:
The Fund's proxy voting policy is first, followed by PGI’s proxy voting policy, and followed by the Sub-Advisors, alphabetically.
214






Proxy Voting Policies and Procedures For
Principal Funds, Inc.
Principal Variable Contracts Funds, Inc.
Principal Exchange-Traded Funds
Principal Diversified Select Real Asset Fund (and other Principal interval funds)
(each a “Fund” and together “the Funds”)

(March 9, 2015)
Revised June 11, 2019

It is each Fund's policy to delegate authority to its advisor or sub-advisor, as appropriate, to vote proxy ballots relating to the Fund's portfolio securities in accordance with the adviser's or sub-adviser's voting policies and procedures.

The adviser or sub-adviser must provide, on a quarterly basis:

1.Written affirmation that all proxies voted during the preceding calendar quarter, other than those specifically identified by the adviser or sub-adviser, were voted in a manner consistent with the adviser's or sub-adviser's voting policies and procedures. In order to monitor the potential effect of conflicts of interest of an adviser or sub-adviser, the adviser or sub-adviser will identify any proxies the adviser or sub-adviser voted in a manner inconsistent with its policies and procedures. The adviser or sub-adviser shall list each vote, explain why the adviser or sub-adviser voted in a manner contrary to its policies and procedures, state whether the adviser or sub-adviser’s vote was consistent with the recommendation to the adviser or sub-adviser of a third-party and, if so, identify the third-party; and

2.Written notification of any material changes to the adviser's or sub-adviser's proxy voting policies and procedures made during the preceding calendar quarter.


The adviser or sub-adviser must provide, no later than July 31 of each year, the following information regarding each proxy vote cast during the 12-month period ended June 30 for each Fund portfolio or portion of Fund portfolio for which it serves as investment adviser, in a format acceptable to Fund management:

1.Identification of the issuer of the security;
2.Exchange ticker symbol of the security;
3.CUSIP number of the security;
4.The date of the shareholder meeting;
5.A brief description of the subject of the vote;
6.Whether the proposal was put forward by the issuer or a shareholder;
7.Whether and how the vote was cast; and
8.Whether the vote was cast for or against management of the issuer.






Principal Global Investors - PGI Global Compliance Manual
Proxy Voting and Class Action Monitoring
Rule 206(4)-6
Background
Rule 206(4)-6 under the Advisers Act requires every investment adviser who exercises voting authority with respect to client securities to adopt and implement written policies and procedures, reasonably designed to ensure that the adviser votes proxies in the best interest of its clients. The procedures must address material conflicts that may arise in connection with proxy voting. The Rule further requires the adviser to provide a concise summary of the adviser’s proxy voting process and offer to provide copies of the complete proxy voting policy and procedures to clients upon request. Lastly, the Rule requires that the adviser disclose to clients how they may obtain information on how the adviser voted their proxies.
Policy
The Advisers believe that proxy voting and the analysis of corporate governance issues, in general, are important elements of the portfolio management services provided to advisory clients. The Advisers’ guiding principles in performing proxy voting are to make decisions that (i) favor proposals that tend to maximize a company's shareholder value and (ii) are not influenced by conflicts of interest. These principles reflect the Advisers’ belief that sound corporate governance creates a framework within which a company can be managed in the interests of its shareholders.
In addition, as a fiduciary, the Advisers also monitor certain Clients’ ability to participate in class action events through the regular portfolio management process. Accordingly, the Advisers have adopted the policies and procedures set out below, which are designed to ensure that the Advisers comply with legal, fiduciary, and contractual obligations with respect to proxy voting and class actions.
Proxy Voting Procedures
The Advisers have implemented these procedures with the premise that portfolio management personnel base their determinations of whether to invest in a particular company on a variety of factors, and while corporate governance is one such factor, it may not be the primary consideration. As such, the principles and positions reflected in the procedures are designed to guide in the voting of proxies, and not necessarily in making investment decisions.
The Investment Accounting Department has assigned a Proxy Voting Team to manage the proxy voting process. The Investment Accounting Department has delegated the handling of class action activities to a Senior Investment Accounting Leader.
Institutional Shareholder Services
Based on the Advisers’ investment philosophy and approach to portfolio construction, and given the complexity of the issues that may be raised in connection with proxy votes, the Advisers have retained the services of Institutional Shareholder Services (“ISS”). ISS is a leading global provider of investment decision support tools. ISS offers proxy voting solutions to institutional clients globally. The services provided to the Advisers include in-depth research, voting recommendations, vote execution, recordkeeping, and reporting.



Principal Global Investors - PGI Global Compliance Manual
The Advisers have elected to follow the ISS Standard Proxy Voting Guidelines (the “Guidelines”), which embody the positions and factors that the Advisers’ Portfolio Management Teams (“PM Teams”) generally consider important in casting proxy votes.1 The Guidelines address a wide variety of individual topics, including, among other matters, shareholder voting rights, anti-takeover defenses, board structures, the election of directors, executive and director compensation, reorganizations, mergers, and various shareholder proposals. In connection with each proxy vote, ISS prepares a written analysis and recommendation (“ISS Recommendation”) that reflects ISS’s application of the Guidelines to the particular proxy issues. ISS Proxy Voting Guidelines Summaries are accessible to all PM Teams on the ISS system. They are also available from the Proxy Voting Team.
Voting Against ISS Recommendations
On any particular proxy vote, Portfolio Managers may decide to diverge from the Guidelines. Where the Guidelines do not direct a particular response and instead list relevant factors, the ISS Recommendation will reflect ISS’s own evaluation of the factors.
If the Portfolio Manager’s judgment differs from that of ISS, a written record is created reflecting the process (See Appendix titled “Report for Proxy Vote(s) Against the ISS Recommendation(s)”), including:
1.    The requesting PM Team’s reasons for the decision;
2.    The approval of the lead Portfolio Manager for the requesting PM Team;
3.    Notification to the Proxy Voting Team and other appropriate personnel (including other Advisers Portfolio Managers who may own the particular security);
4.    A determination that the decision is not influenced by any conflict of interest; and review and
approval by the Compliance Department.
(In certain cases, Portfolio Managers may not be allowed to vote against ISS recommendations due to a perceived conflict of interest. For example, Portfolio Managers will vote with ISS recommendations in circumstances where PGI is an adviser to the PGI CITs and those CITs invest in Principal mutual funds.)
Conflicts of Interest
The Advisers have implemented procedures designed to prevent conflicts of interest from influencing proxy voting decisions. These procedures include our use of the Guidelines and ISS Recommendations. Proxy votes cast by the Advisers in accordance with the Guidelines and ISS Recommendations are generally not viewed as being the product of any conflicts of interest because the Advisers cast such votes pursuant to a pre-determined policy based upon the recommendations of an independent third party.
Our procedures also prohibit the influence of conflicts of interest where a PM Team decides to vote against an ISS Recommendation, as described above. In exceptional circumstances, the approval process may also include consultation with the Advisers’ senior management, the Law Department, Outside Counsel, and/or the Client whose account may be affected by the conflict. The Advisers maintain records of the resolution of any proxy voting conflict of interest.
Proxy Voting Instructions and New Accounts
Institutional Accounts
As part of the new account opening process for discretionary institutional Clients that require the Adviser to vote proxies, the Advisers’ Investment Accounting Department is responsible for sending a proxy letter to the Client’s custodian. This letter instructs the custodian to send the Client’s proxy materials to ISS for voting. The custodian must complete the letter and provide it to ISS, with a copy to the Advisers’ Investment Accounting Department. This process is designed to ensure and document that the custodian is aware of its responsibility to send proxies to ISS.
The Investment Accounting Department is responsible for maintaining this proxy instruction letter in the Client’s file and for scanning it into the Advisers’ OnBase system. These steps are part of the Advisers’ Account Opening Process.

1.The Advisers have various Portfolio Manager Teams organized by asset classes and investment strategies.


Principal Global Investors - PGI Global Compliance Manual
SMA - Wrap Accounts
The Advisers’ SMA Operations Department is responsible for servicing wrap accounts, which includes providing instructions to the relevant wrap sponsor for setting up accounts with ISS.
Fixed Income and Private Investments
Voting decisions with respect to Client investments in fixed income securities and the securities of privately-held issuers will generally be made by the relevant Portfolio Managers based on their assessment of the particular transactions or other matters at issue.
Client Direction
Clients may choose to vote proxies themselves, in which case they must arrange for their custodians to send proxy materials directly to them. Clients may provide specific vote instructions for their own ballots. Upon request, the Advisers may be able to accommodate individual Clients that have developed their own guidelines. Clients may also discuss with the Advisers the possibility of receiving individualized reports or other individualized services regarding proxy voting conducted on their behalf. Such requests should be centralized through the Advisers’ Proxy Voting Team.
Securities Lending
At times, neither the Advisers nor ISS will be allowed to vote proxies on behalf of Clients when those Clients have adopted a securities lending program. Typically, Clients who have adopted securities lending programs have made a general determination that the lending program provides a greater economic benefit than retaining the ability to vote proxies. Notwithstanding this fact, in the event that a proxy voting matter has the potential to materially enhance the economic value of the Client’s position and that position is lent out, the Advisers will make reasonable efforts to inform the Client that neither the Advisers nor ISS is able to vote the proxy until the lent security is recalled.
Abstaining from Voting Certain Proxies
The Advisers shall at no time ignore or neglect their proxy voting responsibilities. However, there may be times when refraining from voting is in the Client’s best interest, such as when the Advisers’ analysis of a particular proxy issue reveals that the cost of voting the proxy may exceed the expected benefit to the Client. Such proxies may be voted on a best-efforts basis. These issues may include, but are not limited to:

Restrictions for share blocking countries;2
Casting a vote on a foreign security may require that the adviser engage a translator;
Restrictions on foreigners’ ability to exercise votes;
Requirements to vote proxies in person;
Requirements to provide local agents with power of attorney to facilitate the voting instructions;
Untimely notice of shareholder meeting;
Restrictions on the sale of securities for a period of time in proximity to the shareholder meeting.
Proxy Solicitation
Employees should inform the Advisers’ Proxy Voting Team of the receipt of any solicitation from any person related to Clients’ proxies. As a matter of practice, the Advisers do not reveal or disclose to any third party how the Advisers may have voted (or intend to vote) on a particular proxy until after such proxies have been counted at a shareholder’s meeting. However, the Proxy Voting Team may disclose that it is the Advisers’ general policy to follow the ISS Guidelines. At no time may any Employee accept any remuneration in the solicitation of proxies.


2. In certain markets where share blocking occurs, shares must be “frozen” for trading purposes at the custodian or sub- custodian in order to vote. During the time that shares are blocked, any pending trades will not settle. Depending on the market, this period can last from one day to three weeks. Any sales that must be executed will settle late and potentially be subject to interest charges or other punitive fees.


Principal Global Investors - PGI Global Compliance Manual
Handling of Information Requests Regarding Proxies
Employees may be contacted by various entities that request or provide information related to particular proxy issues. Specifically, investor relations, proxy solicitation, and corporate/financial communications firms (e.g., Ipreo, DF King, Georgeson Shareholder) may contact the Advisers to ask questions regarding total holdings of a particular stock across advisory Clients, or how the Advisers intends to vote on a particular proxy. In addition, issuers may call (or hire third parties to call) with intentions to influence the Advisers’ votes (i.e., to vote against ISS).
Employees that receive information requests related to proxy votes should forward such communications (e.g., calls, e-mails, etc.) to the Advisers’ Proxy Voting Team. The Proxy Voting Team will take steps to verify the identity of the caller and his/her firm prior to exchanging any information. In addition, the Proxy Voting Team may consult with the appropriate Portfolio Manager(s) and/or the CCO with respect to the type of information that can be disclosed. Certain information may have to be provided pursuant to foreign legal requirements (e.g., Section 793 of the UK Companies Act).
External Managers
Where Client assets are placed with managers outside of the Advisers, whether through separate accounts, funds-of-funds or other structures, such external managers are responsible for voting proxies in accordance with the managers’ own policies. The Advisers may, however, retain such responsibilities where deemed appropriate.
Proxy Voting Errors
In the event that any Employee becomes aware of an error related to proxy voting, he/she must promptly report that matter to the Advisers’ Proxy Voting Team. The Proxy Voting Team will take immediate steps to determine whether the impact of the error is material and to address the matter. The Proxy Voting Team, with the assistance of the CCO (or designee), will generally prepare a memo describing the analysis and the resolution of the matter. Supporting documentation (e.g., correspondence with ISS, Client, Portfolio Managers/ analysts, etc.) will be maintained by the Compliance Department. Depending on the severity of the issue, the Law Department, Outside Counsel, and/or affected Clients may be contacted. However, the Advisers may opt to refrain from notifying non-material de minimis errors to Clients.
Recordkeeping
The Advisers must maintain the documentation described in the following section for a period of not less than five (5) years, the first two (2) years at the principal place of business. The Proxy Voting Team, in coordination with ISS, is responsible for the following procedures and for ensuring that the required documentation is retained.
Client request to review proxy votes:
Any request, whether written (including e-mail) or oral, received by any Employee of the Advisers, must be promptly reported to the Proxy Voting Team. All written requests must be retained in the Client’s permanent file.
The Proxy Voting Team records the identity of the Client, the date of the request, and the disposition (e.g., provided a written or oral response to Client’s request, referred to third party, not a proxy voting client, other dispositions, etc.) in a suitable place.
The Proxy Voting Team furnishes the information requested to the Client within a reasonable time period (generally within 10 business days). The Advisers maintain a copy of the written record provided in response to Client’s written (including e-mail) or oral request. A copy of the written response should be attached and maintained with the Client’s written request, if applicable and maintained in the permanent file.
Clients are permitted to request the proxy voting record for the 5 year period prior to their request.



Principal Global Investors - PGI Global Compliance Manual
Proxy statements received regarding client securities:
Upon inadvertent receipt of a proxy, the Advisers forward the proxy to ISS for voting, unless the client has instructed otherwise.
Note: The Advisers are permitted to rely on proxy statements filed on the SEC’s EDGAR system instead of keeping their own copies.
Proxy voting records:
The Advisers’ proxy voting record is maintained by ISS. The Proxy Voting Team, with the assistance of the Investment Accounting and SMA Operations Departments, periodically ensures that ISS has complete, accurate, and current records of Clients who have instructed the Advisers to vote proxies on their behalf.
The Advisers maintain documentation to support the decision to vote against the ISS recommendation.
The Advisers maintain documentation or any communications received from third parties, other industry analysts, third party service providers, company’s management discussions, etc. that were material in the basis for any voting decision.
Procedures for Class Actions
In general, it is the Advisers’ policy not to file class action claims on behalf of Clients. The Advisers specifically do not act on behalf of former Clients who may have owned the affected security but subsequently terminated their relationship with the Advisers. The Advisers only file class actions on behalf of Clients if that responsibility is specifically stated in the advisory contract, as it is the Advisers’ general policy not to act as lead plaintiff in class actions.
The process of filing class action claims is carried out by the Investment Accounting Department. In the event the Advisers opt out of a class action settlement, the Advisers will maintain documentation of any cost/benefit analysis to support that decision.
The Advisers are mindful that they have a duty to avoid and detect conflicts of interest that may arise in the class action claim process. Where actual, potential or apparent conflicts are identified regarding any material matter, the Advisers manage the conflict by seeking instruction from the Law Department and/or outside counsel.
Disclosure
The Advisers ensure that Part 2A of Form ADV is updated as necessary to reflect: (i) all material changes to this policy; and (ii) regulatory requirements.
Responsibility
Various individuals and departments are responsible for carrying out the Advisers’ proxy voting and class action practices, as mentioned throughout these policies and procedures. The Investment Accounting Department has assigned a Proxy Voting Team to manage the proxy voting process. The Investment Accounting Department has delegated the handling of class action activities to a Senior Investment Accounting Leader.
In general, the Advisers’ CCO (or designee) oversees the decisions related to proxy voting, class actions, conflicts of interest, and applicable record keeping and disclosures. In addition, the Compliance Department periodically reviews the voting of proxies to ensure that all such votes - particularly those diverging from the judgment of ISS - were voted in a manner consistent with the Advisers’ fiduciary duties.



         Revised 9/2013 ♦ Supersedes 12/2012



AllianceBernstein L.P                            MAY 2018













PROXY VOTING AND GOVERNANCE POLICY


1


TABLE OF CONTENTS

1.
INTRODUCTION
2. RESEARCH UNDERPINS DECISION MAKING
3. PROXY VOTING GUIDELINES
3.1 BOARD AND DIRECTOR PROPOSALS
3.2 COMPENSATION PROPOSALS
3.3 CAPITAL CHANGES AND ANTI-TAKEOVER PROPOSALS
3.4 AUDITOR PROPOSALS 12 
3.5 SHAREHOLDER ACCESS AND VOTING PROPOSALS 13 
3.6 ENVIRONMENTAL, SOCIAL AND DISCLOSURE PROPOSALS 15 
4. CONFLICTS OF INTEREST 18 
4.1 INTRODUCTION 18 
4.2 ADHERENCE TO STATED PROXY VOTING POLICIES 18 
4.3 DISCLOSURE OF CONFLICTS 18 
4.4 POTENTIAL CONFLICTS LIST 18 
4.5 DETERMINE EXISTENCE OF CONFLICT OF INTEREST 19 
4.6 REVIEW OF THIRD PARTY RESEARCH SERVICE CONFLICTS OF INTEREST 19 
4.7 CONFIDENTIAL VOTING 19 
4.8 A NOTE REGARDING AB’S STRUCTURE 19 
5. VOTING TRANSPARENCY 20 
6. RECORDKEEPING 20 
6.1 PROXY VOTING POLICY 20 
6.2 PROXY STATEMENTS RECEIVED REGARDING CLIENT SECURITIES 20 
6.3 RECORDS OF VOTES CAST ON BEHALF OF CLIENTS 20 
6.4 RECORDS OF CLIENTS REQUESTS FOR PROXY VOTING INFORMATION 20 
6.5 DOCUMENTS PREPARED BY AB THAT ARE MATERIAL TO VOTING DECISIONS 20 
7. PROXY VOTING PROCEDURES 20 
7.1 VOTE ADMINISTRATION 20 
7.2 SHARE BLOCKING 21 
7.3 LOANED SECURITIES 21 

EXHIBITS
+ Proxy Voting and Governance Committee Members
+ Proxy Voting Guideline Summary
+ Proxy Voting Conflict of Interest Form
+ Statement of Policy Regarding Responsible Investment














2


1.    INTRODUCTION
As an investment adviser, we are shareholder advocates and have a fiduciary duty to make investment decisions that are in our clients’ best interests by maximizing the value of their shares. Proxy voting is an integral part of this process, through which we support strong corporate governance structures, shareholder rights, and transparency.

We have an obligation to vote proxies in a timely manner and we apply the principles in this policy to our proxy decisions. We believe a company’s environmental, social and governance (“ESG”) practices may have a significant effect on the value of the company, and we take these factors into consideration when voting. For additional information regarding our ESG policies and practices, please refer to our firm’s Statement of Policy Regarding Responsible Investment (“RI Policy”).

This Proxy Voting and Governance Policy (“Proxy Voting and Governance Policy” or “Policy”), which outlines our policies for proxy voting and includes a wide range of issues that often appear on proxies, applies to all of AB’s investment management subsidiaries and investment services groups investing on behalf of clients globally. It is intended for use by those involved in the proxy voting decision-making process and those responsible for the administration of proxy voting
(“Proxy Managers”), in order to ensure that our proxy voting policies and procedures are implemented consistently.

We sometimes manage accounts where proxy voting is directed by clients or newly-acquired subsidiary companies. In these cases, voting decisions may deviate from this Policy.

2.    RESEARCH UNDERPINS DECISION MAKING
As a research-driven firm, we approach our proxy voting responsibilities with the same commitment to rigorous research and engagement that we apply to all of our investment activities. The different investment philosophies utilized by our investment teams may occasionally result in different conclusions being drawn regarding certain proposals and, in turn, may result in the Proxy Manager making different voting decisions on the same proposal. Nevertheless, the Proxy Manager votes proxies with the goal of maximizing the value of the securities in client portfolios.

In addition to our firm-wide proxy voting policies, we have a Proxy Voting and Governance Committee (“Proxy Voting and Governance Committee” or “Committee”), which provides oversight and includes senior investment professionals from Equities, Legal personnel and Operations personnel. It is the responsibility of the Committee to evaluate and maintain proxy voting procedures and guidelines, to evaluate proposals and issues not covered by these guidelines, to consider changes in policy, and to review the Policy no less frequently than annually. In addition, the Committee meets at least three times a year and as necessary to address special situations.

RESEARCH SERVICES
We subscribe to the corporate governance and proxy research services of Institutional Shareholder Services Inc. (“ISS”). All our investment professionals can access these materials via the Proxy Manager and/or the Committee.

ENGAGEMENT
In evaluating proxy issues and determining our votes, we welcome and seek out the points of view of various parties. Internally, the Proxy Manager may consult the Committee, Chief Investment Officers, Portfolio Managers, and/or Research Analysts across our equities platforms, and Portfolio Managers in who’s managed accounts a stock is held. Externally, we may engage with companies in advance of their Annual General Meeting, and throughout the year. We believe engagement provides the opportunity to share our philosophy, our corporate governance values, and more importantly, affect positive change. Also, these meetings often are joint efforts between the investment professionals, who are best positioned to comment on company-specific details, and the Proxy Manager(s), who offer a more holistic view of governance practices and relevant trends. In addition, we engage with shareholder proposal proponents and other stakeholders to understand different viewpoints and objectives.

3.    PROXY VOTING GUIDELINES
Our proxy voting guidelines are both principles-based and rules-based. We adhere to a core set of principles that are described in this Policy. We assess each proxy proposal in light of these principles. Our proxy voting “litmus test” will always be what we view as most likely to maximize long-term shareholder value. We believe that authority and accountability for setting and executing corporate policies, goals and compensation generally should rest with the board of directors and senior management. In return, we support strong investor rights that allow shareholders to hold directors and management accountable if they fail to act in the best interests of shareholders.
3


With this as a backdrop, our proxy voting guidelines pertaining to specific issues are set forth below. We generally vote proposals in accordance with these guidelines but, consistent with our “principles-based” approach to proxy voting, we may deviate from the guidelines if warranted by the specific facts and circumstances of the situation (i.e., if, under the circumstances, we believe that deviating from our stated policy is necessary to help maximize long-term shareholder value). In addition, these guidelines are not intended to address all issues that may appear on all proxy ballots. We will evaluate on a case-by-case basis any proposal not specifically addressed by these guidelines, whether submitted by management or shareholders, always keeping in mind our fiduciary duty to make voting decisions that, by maximizing long-term shareholder value, are in our clients’ best interests.

    3.1    BOARD AND DIRECTOR PROPOSALS

1.Board Diversity (SHP): CASE-BY-CASE
Board diversity is increasingly an important topic. In a number of European countries, legislation requires a quota of female directors. Other European countries have a comply-or-explain policy. We believe boards should develop, as a part of their refreshment and refreshment process, a framework for identifying diverse candidates. We believe diversity is broader than gender and should also take into consideration factors such as business experience, background, ethnicity, tenure and nationality. We evaluate these proposals on a case-by-case basis while examining a board’s current diversity profile and approach, and if there are other general governance concerns.

2.Establish New Board Committees and Elect Board Members with Specific Expertise (SHP): CASE-BY-CASE We believe that establishing committees should be the prerogative of a well-functioning board of directors. However, we may support shareholder proposals to establish additional board committees to address specific shareholder issues, including ESG issues. We consider on a case-by-case basis proposals that require the addition of a board member with a specific area of expertise.

3.Changes in Board Structure and Amending the Articles of Incorporation: FOR
Companies may propose various provisions with respect to the structure of the board of directors, including changing the manner in which board vacancies are filled, directors are nominated and the number of directors. Such proposals may require amending the charter or by-laws or may otherwise require shareholder approval. When these proposals are not controversial or meant as an anti-takeover device, which is generally the case, we vote in their favor. However, if we believe a proposal is intended as an anti-takeover device and diminishes shareholder rights, we generally vote against.

We may vote against directors for amending by-laws without seeking shareholder approval and/or restricting or diminishing shareholder rights.

4.Classified Boards: AGAINST
A classified board typically is divided into three separate classes. Each class holds office for a term of two or three years. Only a portion of the board can be elected or replaced each year. Because this type of proposal has fundamental anti- takeover implications, we generally oppose the adoption of classified boards unless there is a justifiable financial reason or an adequate sunset provision exists. However, where a classified board already exists, we will not oppose directors who sit on such boards for that reason. We may also vote against directors that fail to implement shareholder approved proposals to declassify boards that we previously supported.

5.Director Liability and Indemnification: CASE-BY-CASE
Some companies argue that increased indemnification and decreased liability for directors are important to ensure the continued availability of competent directors. However, others argue that the risk of such personal liability minimizes the propensity for corruption and recklessness.

We generally support indemnification provisions that are consistent with the local jurisdiction in which the company has been formed. We vote in favor of proposals adopting indemnification for directors with respect to acts conducted in the normal course of business. We also vote in favor of proposals that expand coverage for directors and officers where, despite an unsuccessful legal defense, we believe the director or officer acted in good faith and in the best interests of the company. We oppose indemnification for gross negligence.
4



6.Disclose CEO Succession Plan (SHP): FOR
Proposals like these are often suggested by shareholders of companies with long-tenured CEOs and/or high employee turnover rates. Even though some markets might not require the disclosure of a CEO succession plan, we do think it is good business practice and will support these proposals.

7.Election of Directors: FOR
The election of directors is an important vote. We expect directors to represent shareholder interests at the company and maximize shareholder value. We generally vote in favor of the management-proposed slate of directors while considering a number of factors, including local market best practice. We believe companies should have a majority of independent directors and independent key committees. However, we will incorporate local market regulation and corporate governance codes into our decision making. We may support more progressive requirements than those implemented in a local market if we believe more progressive requirements may improve corporate governance practices. We will generally regard a director as independent if the director satisfies the criteria for independence (i) espoused by the primary exchange on which the company’s shares are traded, or (ii) set forth in the code we determine to be best practice in the country where the subject company is domiciled and may take into account affiliations, related-party transactions and prior service to the company,. We consider the election of directors who are “bundled” on a single slate to be a poor governance practice and vote on a case-by-case basis considering the amount of information available and an assessment of the group’s qualifications.


In addition:

We believe that directors have a duty to respond to shareholder actions that have received significant shareholder support. We may vote against directors (or withhold votes for directors if plurality voting applies) who fail to act on key issues. We oppose directors who fail to attend at least 75% of board meetings within a given year without a reasonable excuse.
We may consider the number of boards on which a director sits and/or their length of service on a particular board.
We may abstain or vote against (depending on a company’s history of disclosure in this regard) directors of issuers where there is insufficient information about the nominees disclosed in the proxy statement.
We may vote against directors for poor compensation, audit or governance practices including the lack of a formal key committee.
We may vote against directors for unilateral bylaw amendments that diminish shareholder rights.

We also may consider engaging company management (by phone, in writing and in person), until any issues have been satisfactorily resolved.

a.Controlled Company Exemption: CASE-BY-CASE In certain markets, a different standard for director independence may be applicable for controlled companies, which are companies where more than 50% of the voting power is held by an individual, group or another company, or as otherwise defined by local market standards. We may take these local standards into consideration when determining the appropriate level of independence required for the board and key committees.

Exchanges in certain jurisdictions do not have a controlled company exemption (or something similar). In such a jurisdiction, if a company has a majority shareholder or group of related majority shareholders with a majority economic interest, we generally will not oppose that company’s directors simply because the board does not include a majority of independent members, although we may take local standards into consideration when determining the appropriate level of independence required for the board and key committees. We will, however, consider these directors in a negative light if the company has a history of violating the rights of minority shareholders.

b.Voting for Director Nominees in a Contested Election: CASE-BY-CASE Votes in a contested election of directors are evaluated on a case-by-case basis with the goal of maximizing shareholder value.

8.Independent Lead Director (SHP): FOR
We support shareholder proposals that request a company to amend its by-laws to establish an independent lead director, if the position of chairman is non-independent. We view the existence of a strong independent lead director, whose role is robust and includes clearly defined duties and responsibilities, such as the authority to call meetings and approve
5


agendas, as a good example of the sufficient counter-balancing governance. If a company has such an independent lead director in place, we will generally oppose a proposal to require an independent board chairman, barring any additional board leadership concerns.

9.Limit Term of Directorship (SHP): CASE-BY-CASE
These proposals seek to limit the term during which a director may serve on a board to a set number of years.
Accounting for local market practice, we generally consider a number of factors, such as overall level of board independence, director qualifications, tenure, board diversity and board effectiveness in representing our interests as shareholders, in assessing whether limiting directorship terms is in shareholders’ best interests. Accordingly, we evaluate these items case-by-case.

10.Majority of Independent1 Directors (SHP): FOR
Each company’s board of directors has a duty to act in the best interest of the company’s shareholders at all times. We believe that these interests are best served by having directors who bring objectivity to the company and are free from potential conflicts of interests. Accordingly, we support proposals seeking a majority of independent directors on the board while taking into consideration local market regulation and corporate governance codes.

11.Majority of Independent Directors on Key Committees (SHP): FOR
In order to ensure that those who evaluate management’s performance, recruit directors and set management’s compensation are free from conflicts of interests, we believe that the audit2, nominating/governance, and compensation committees should be composed of a majority of independent directors while taking into consideration local market regulation, corporate governance codes, and controlled company status.

12.Majority Votes for Directors (SHP): FOR
We believe that good corporate governance requires shareholders to have a meaningful voice in the affairs of the company. This objective is strengthened if directors are elected by a majority of votes cast at an annual meeting rather than by the plurality method commonly used. With plurality voting a director could be elected by a single affirmative vote even if the rest of the votes were withheld.

We further believe that majority voting provisions will lead to greater director accountability. Therefore, we support shareholder proposals that companies amend their by-laws to provide that director nominees be elected by an affirmative vote of a majority of the votes cast, provided the proposal includes a carve-out to provide for plurality voting in contested elections where the number of nominees exceeds the number of directors to be elected.

13.Removal of Directors Without Cause (SHP): FOR
Company by-laws sometimes define cause very narrowly, including only conditions of criminal indictment, final adverse adjudication that fiduciary duties were breached or incapacitation, while also providing shareholders with the right to remove directors only upon “cause”.

We believe that the circumstances under which shareholders have the right to remove directors should not be limited to
those traditionally defined by companies as “cause”. We also believe that shareholders should have the right to conduct a vote to remove directors who fail to perform in a manner consistent with their fiduciary duties or representative of shareholders’ best interests. And, while we would prefer shareholder proposals that seek to broaden the definition of “cause” to include situations like these, we generally support proposals that would provide shareholders with the right to remove directors without cause.

14.Require Independent Board Chairman (SHP): CASE-BY-CASE
We believe there can be benefits to an executive chairman and to having the positions of chairman and CEO combined as well as split. When the chair is non-independent the company must have sufficient counter-balancing governance in place, generally through a strong independent lead director. Also, for companies with smaller market capitalizations, separate chairman and CEO positions may not be practical.


1 For purposes of this Policy, generally, we will consider a director independent if the director satisfies the independence definition set forth in the listing standards of the exchange on which the common stock is listed. However, we may deem local independence classification criteria insufficient.
2 Pursuant to the SEC rules, adopted pursuant to the Sarbanes-Oxley Act of 2002, as of October 31, 2004, each U.S. listed issuer must have a fully independent audit committee.


6


    3.2    COMPENSATION PROPOSALS

15.    Pro Rata Vesting of Equity Compensation Awards-Change in Control (SHP): CASE-BY-CASE
We examine proposals on the treatment of equity awards in the event of a change in control on a case-by-case basis. If a change in control is accompanied by termination of employment, often referred to as a double-trigger, we generally support accelerated vesting of equity awards. If, however, there is no termination agreement in connection with a change in control, often referred to as a single-trigger, we generally prefer pro rata vesting of outstanding equity awards.

16.    Adopt Policies to Prohibit any Death Benefits to Senior Executives (SHP): AGAINST
We view these bundled proposals as too restrictive and conclude that blanket restrictions on any and all such benefits, including the payment of life insurance premiums for senior executives, could put a company at a competitive disadvantage.

17.    Advisory Vote to Ratify Directors’ Compensation (SHP): FOR
Similar to advisory votes on executive compensation, shareholders may request a non-binding advisory vote to approve compensation given to board members. We generally support this item.

18.    Amend Executive Compensation Plan Tied to Performance (Bonus Banking) (SHP): AGAINST
These proposals seek to force a company to amend executive compensation plans such that compensation awards tied to performance are deferred for shareholder specified and extended periods of time. As a result, awards may be adjusted downward if performance goals achieved during the vesting period are not sustained during the added deferral period.

We believe that most companies have adequate vesting schedules and clawbacks in place. Under such circumstances, we will oppose these proposals. However, if a company does not have what we believe to be adequate vesting and/or clawback requirements, we decide these proposals on a case-by-case basis.

19.    Approve Remuneration for Directors and Auditors: CASE-BY-CASE
We will vote on a case-by-case basis where we are asked to approve remuneration for directors or auditors. We will generally oppose performance-based remuneration for non-executive directors as this may compromise independent oversight. However, where disclosure relating to the details of such remuneration is inadequate or provided without sufficient time for us to consider our vote, we may abstain or vote against, depending on the adequacy of the company’s prior disclosures in this regard and the local market practice.

20.    Approve Retirement Bonuses for Directors (Japan and South Korea): CASE-BY-CASE
Retirement bonuses are customary in Japan and South Korea. Companies seek approval to give the board authority to grant retirement bonuses for directors and/or auditors and to leave the exact amount of bonuses to the board’s discretion. We will analyze such proposals on a case-by-case basis, considering management’s commitment to maximizing long- term shareholder value. However, when the details of the retirement bonus are inadequate or undisclosed, we may abstain or vote against.

21.    Approve Special Payments to Continuing Directors and Auditors (Japan): CASE-BY-CASE
In conjunction with the abolition of a company’s retirement allowance system, we will generally support special payment allowances for continuing directors and auditors if there is no evidence of their independence becoming impaired. However, when the details of the special payments are inadequate or undisclosed, we may abstain or vote against.

22.    Disclose Executive and Director Pay (SHP): CASE-BY-CASE
The United States Securities and Exchange Commissions (“SEC”) has adopted rules requiring increased and/or enhanced compensation-related and corporate governance-related disclosure in proxy statements and Forms 10-K. Similar steps have been taken by regulators in foreign jurisdictions. We believe the rules enacted by the SEC and various foreign regulators generally ensure more complete and transparent disclosure. Therefore, while we will consider them on a case-by-case basis (analyzing whether there are any relevant disclosure concerns), we generally vote against shareholder proposals seeking additional disclosure of executive and director compensation, including proposals that seek to specify the measurement of performance-based compensation, if the company is subject to SEC rules or similar rules espoused by a regulator in a foreign jurisdiction. Similarly, we generally support proposals seeking additional disclosure of executive and director compensation if the company is not subject to any such rules.

7


23.    Executive and Employee Compensation Plans, Policies and Reports: CASE-BY-CASE
Compensation plans (“Compensation Plans”) usually are complex and are a major corporate expense, so we evaluate them carefully and on a case-by-case basis. In all cases, however, we assess each proposed Compensation Plan within the framework of four guiding principles, each of which ensures a company’s Compensation Plan helps to align the long- term interests of management with shareholders:

Valid measures of business performance tied to the firm’s strategy and shareholder value creation, which are clearly articulated and incorporate appropriate time periods, should be utilized;
Compensation costs should be managed in the same way as any other expense;
Compensation should reflect management’s handling, or failure to handle, any recent social, environmental, governance, ethical or legal issue that had a significant adverse financial or reputational effect on the company; and
In granting compensatory awards, management should exhibit a history of integrity and decision-making based on logic and well thought out processes.

We may oppose plans which include, and directors who establish, compensation plan provisions deemed to be poor practice such as automatic acceleration of equity, or single-triggered, in the event of a change in control.

Although votes on compensation plans are by nature only broad indications of shareholder views, they do lead to more compensation-related dialogue between management and shareholders and help ensure that management and shareholders meet their common objective: maximizing shareholder value.

In markets where votes on compensation plans are not required for all companies, we will support shareholder proposals asking the board to adopt such a vote on an advisory basis.

Where disclosure relating to the details of Compensation Plans is inadequate or provided without sufficient time for us to consider our vote, we may abstain or vote against, depending on the adequacy of the company’s prior disclosures in this regard. Where appropriate, we may raise the issue with the company directly or take other steps.

24.    Limit Executive Pay (SHP): CASE-BY-CASE
We believe that management and directors, within reason, should be given latitude in determining the mix and types of awards offered to executive officers. We vote against shareholder proposals seeking to limit executive pay if we deem them too restrictive. Depending on our analysis of the specific circumstances, we are generally against requiring a company to adopt a policy prohibiting tax gross up payments to senior executives.

25.    Mandatory Holding Periods (SHP): AGAINST
We generally vote against shareholder proposals asking companies to require a company’s executives to hold stock for a specified period of time after acquiring that stock by exercising company-issued stock options (i.e., precluding “cashless” option exercises), unless we believe implementing a mandatory holding period is necessary to help resolve underlying problems at a company that have hurt, and may continue to hurt, shareholder value. We are generally in favor of reasonable stock ownership guidelines for executives.

26.    Performance-Based Stock Option Plans (SHP): CASE-BY-CASE These shareholder proposals require a company to adopt a policy that all or a portion of future stock options granted to executives be performance-based. Performance-based options usually take the form of indexed options (where the option sale price is linked to the company’s stock performance versus an industry index), premium priced options (where the strike price is significantly above the market price at the time of the grant) or performance vesting options (where options vest when the company’s stock price exceeds a specific target). Proponents argue that performance-based options provide an incentive for executives to outperform the market as a whole and prevent management from being rewarded for average performance. We believe that management, within reason, should be given latitude in determining the mix and types of awards it offers. However, we recognize the benefit of linking a portion of executive compensation to certain types of performance benchmarks. While we will not support proposals that require all options to be performance-based, we will generally support proposals that require a portion of options granted to senior executives be performance-based. However, because performance-based options can also result in unfavorable tax treatment and the company may already have in place an option plan that sufficiently ties executive stock option plans to the company’s performance, we will consider such proposals on a case-by-case basis.

8


27.    Prohibit Relocation Benefits to Senior Executives (SHP): AGAINST
We do not consider such perquisites to be problematic pay practices as long as they are properly disclosed. Therefore we will vote against shareholder proposals asking to prohibit relocation benefits.

28.    Recovery of Performance-Based Compensation (SHP): FOR
We generally support shareholder proposals requiring the board to seek recovery of performance-based compensation awards to senior management and directors in the event of a fraud or other reasons that resulted in the detriment to shareholder value and/or company reputation due to gross ethical lapses. In deciding how to vote, we consider the adequacy of existing company clawback policy, if any.

29.    Submit Golden Parachutes/Severance Plans to a Shareholder Vote (SHP): FOR
Golden Parachutes assure key officers of a company lucrative compensation packages if the company is acquired and/or if the new owners terminate such officers. We recognize that offering generous compensation packages that are triggered by a change in control may help attract qualified officers. However, such compensation packages cannot be so excessive that they are unfair to shareholders or make the company unattractive to potential bidders, thereby serving as a constructive anti-takeover mechanism. Accordingly, we support proposals to submit severance plans (including supplemental retirement plans), to a shareholder vote, and we review proposals to ratify or redeem such plans retrospectively on a case-by-case basis.

30.    Submit Golden Parachutes/Severance Plans to a Shareholder Vote Prior to Their Being Negotiated by
    Management (SHP): CASE-BY-CASE
We believe that in order to attract qualified employees, companies must be free to negotiate compensation packages without shareholder interference. However, shareholders must be given an opportunity to analyze a compensation plan’s final, material terms in order to ensure it is within acceptable limits. Accordingly, we evaluate proposals that require submitting severance plans and/or employment contracts for a shareholder vote prior to being negotiated by management on a case-by-case basis.

31.    Submit Survivor Benefit Compensation Plan to Shareholder Vote (SHP): FOR
Survivor benefit compensation plans, or “golden coffins”, can require a company to make substantial payments or awards to a senior executive’s beneficiaries following the death of the senior executive. The compensation can take the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards. This compensation would not include compensation that the senior executive chooses to defer during his or her lifetime.

We recognize that offering generous compensation packages that are triggered by the passing of senior executives may help attract qualified officers. However, such compensation packages cannot be so excessive that they are unfair to shareholders or make the company unattractive to potential bidders, thereby serving as a constructive anti-takeover mechanism.

    3.3    CAPITAL CHANGES AND ANTI-TAKEOVER PROPOSALS

32.    Amend Exclusive Forum Bylaw (SHP): AGAINST
We will generally oppose proposals that ask the board to repeal the company’s exclusive forum bylaw. Such bylaws require certain legal action against the company to take place in the state of the company’s incorporation. The courts within the state of incorporation are considered best suited to interpret that state’s laws.

33.    Amend Net Operating Loss (“NOL”) Rights Plans: FOR
NOL Rights Plans are established to protect a company’s net operating loss carry forwards and tax credits, which can be used to offset future income. We believe this is a reasonable strategy for a company to employ. Accordingly, we will vote in favor of NOL Rights Plans unless we believe the terms of the NOL Rights Plan may provide for a long-term anti- takeover device.

34.    Authorize Share Repurchase: FOR
We generally support share repurchase proposals that are part of a well-articulated and well-conceived capital strategy. We assess proposals to give the board unlimited authorization to repurchase shares on a case-by-case basis.
Furthermore, we would generally support the use of derivative instruments (e.g., put options and call options) as part of a
9


share repurchase plan absent a compelling reason to the contrary. Also, absent a specific concern at the company, we will generally support a repurchase plan that could be continued during a takeover period.

35.    Blank Check Preferred Stock: AGAINST
Blank check preferred stock proposals authorize the issuance of certain preferred stock at some future point in time and allow the board to establish voting, dividend, conversion and other rights at the time of issuance. While blank check preferred stock can provide a corporation with the flexibility needed to meet changing financial conditions, it also may be used as the vehicle for implementing a “poison pill” defense or some other entrenchment device.

We are concerned that, once this stock has been authorized, shareholders have no further power to determine how or when it will be allocated. Accordingly, we generally oppose this type of proposal.

36.    Corporate Restructurings, Merger Proposals and Spin-Offs: CASE-BY-CASE
Proposals requesting shareholder approval of corporate restructurings, merger proposals and spin-offs are determined on a case-by-case basis. In evaluating these proposals and determining our votes, we are singularly focused on meeting our goal of maximizing long-term shareholder value.

37.    Elimination of Preemptive Rights: CASE-BY-CASE
Preemptive rights allow the shareholders of the company to buy newly-issued shares before they are offered to the public in order to maintain their percentage ownership. We believe that, because preemptive rights are an important shareholder right, careful scrutiny must be given to management’s attempts to eliminate them. However, because preemptive rights can be prohibitively expensive to widely-held companies, the benefit of such rights will be weighed against the economic effect of maintaining them.

38.    Expensing Stock Options (SHP): FOR
US generally-accepted accounting principles require companies to expense stock options, as do the accounting rules in many other jurisdictions (including those jurisdictions that have adopted IFRS -- international financial reporting standards). If a company is domiciled in a jurisdiction where the accounting rules do not already require the expensing of stock options, we will support shareholder proposals requiring this practice and disclosing information about it.

39.    Fair Price Provisions: CASE-BY-CASE
A fair price provision in the company's charter or by laws is designed to ensure that each shareholder's securities will be purchased at the same price if the corporation is acquired under a plan not agreed to by the board. In most instances, the provision requires that any tender offer made by a third party must be made to all shareholders at the same price.

Fair pricing provisions attempt to prevent the “two tiered front loaded offer” where the acquirer of a company initially offers a premium for a sufficient percentage of shares of the company to gain control and subsequently makes an offer for the remaining shares at a much lower price. The remaining shareholders have no choice but to accept the offer. The two tiered approach is coercive as it compels a shareholder to sell his or her shares immediately in order to receive the higher price per share. This type of tactic has caused many states to adopt fair price provision statutes to restrict this practice.

We consider fair price provisions on a case-by-case basis. We oppose any provision where there is evidence that management intends to use the provision as an anti-takeover device as well as any provision where the shareholder vote requirement is greater than a majority of disinterested shares (i.e., shares beneficially owned by individuals other than the acquiring party).

40.    Increase Authorized Common Stock: CASE-BY-CASE
In general we regard increases in authorized common stock as serving a legitimate corporate purpose when used to: implement a stock split, aid in a recapitalization or acquisition, raise needed capital for the firm, or provide for employee savings plans, stock option plans or executive compensation plans. That said, we may oppose a particular proposed increase if we consider the authorization likely to lower the share price (this would happen, for example, if the firm were proposing to use the proceeds to overpay for an acquisition, to invest in a project unlikely to earn the firm’s cost of capital, or to compensate employees well above market rates). We oppose increases in authorized common stock where there is evidence that the shares are to be used to implement a “poison pill” or another form of anti-takeover device, or if the issuance of new shares would, in our judgment, excessively dilute the value of the outstanding shares upon issuance. In addition, a satisfactory explanation of a company's intentions-going beyond the standard “general corporate purposes”- must be disclosed in the proxy statement for proposals requesting an increase of greater than 100% of the shares
10


outstanding. We view the use of derivatives, particularly warrants, as legitimate capital-raising instruments and apply these same principles to their use as we do to the authorization of common stock. Under certain circumstances where we believe it is important for shareholders to have an opportunity to maintain their proportional ownership, we may oppose proposals requesting shareholders approve the issuance of additional shares if those shares do not include preemptive rights.

In Hong Kong, it is common for companies to request board authority to issue new shares up to 20% of outstanding share capital. The authority typically lapses after one year. We may vote against plans that do not prohibit issuing shares at a discount, taking into account whether a company has a history of doing so.

41.    Issuance of Equity Without Preemptive Rights: FOR
We are generally in favor of issuances of equity without preemptive rights of up to 30% of a company’s outstanding shares unless there is concern that the issuance will be used in a manner that could hurt shareholder value (e.g., issuing the equity at a discount from the current market price or using the equity to help create a “poison pill” mechanism).

42.    Multi Class Equity Structures: CASE-BY-CASE
The one share, one vote principle - stating that voting power should be proportional to an investor’s economic ownership
- is generally preferred in order to hold the board accountable to shareholders. Multi-class structures, however, may be beneficial, for a period of time, allowing management to focus on longer-term value creation, which benefits all shareholders. In these instances, we evaluate proposals of share issuances to perpetuate the structure on a case-by-case basis and expect the company to attach provisions that will either eliminate or phase out existing multi-class vote structures when appropriate and in a cost-effective manner (often referred to as “Sunset Provisions), or require periodic shareholder reauthorization. We expect Board’s to routinely review existing multi-class vote structures and share their current view. If the above criteria is not met, we may vote against the board.

43.    Net Long Position Requirement: FOR
We support proposals that require the ownership level needed to call a special meeting to be based on the net long position of a shareholder or shareholder group. This standard ensures that a significant economic interest accompanies the voting power.

44.    Reincorporation: CASE-BY-CASE
There are many valid business reasons a corporation may choose to reincorporate in another jurisdiction. We perform a case-by-case review of such proposals, taking into consideration management’s stated reasons for the proposed move.

Careful scrutiny also will be given to proposals that seek approval to reincorporate in countries that serve as tax havens. When evaluating such proposals, we consider factors such as the location of the company’s business, the statutory protections available in the country to enforce shareholder rights and the tax consequences of the reincorporation to shareholders.

45.    Reincorporation to Another Jurisdiction to Permit Majority Voting or Other Changes in
Corporate Governance (SHP): CASE-BY-CASE
If a shareholder proposes that a company move to a jurisdiction where majority voting (among other shareholder-friendly conditions) is permitted, we will generally oppose the move notwithstanding the fact that we favor majority voting for directors. Our rationale is that the legal costs, taxes, other expenses and other factors, such as business disruption, in almost all cases would be material and outweigh the benefit of majority voting. If, however, we should find that these costs are not material and/or do not outweigh the benefit of majority voting, we may vote in favor of this kind of proposal. We will evaluate similarly proposals that would require reincorporation in another state to accomplish other changes in corporate governance.

46.    Stock Splits: FOR
Stock splits are intended to increase the liquidity of a company’s common stock by lowering the price, thereby making the stock seem more attractive to small investors. We generally vote in favor of stock split proposals.

11


47.    Submit Company’s Shareholder Rights Plan to Shareholder Vote (SHP): FOR
Most shareholder rights plans (also known as “poison pills”) permit the shareholders of a target company involved in a hostile takeover to acquire shares of the target company, the acquiring company, or both, at a substantial discount once a “triggering event” occurs. A triggering event is usually a hostile tender offer or the acquisition by an outside party of a certain percentage of the target company's stock. Because most plans exclude the hostile bidder from the purchase, the effect in most instances is to dilute the equity interest and the voting rights of the potential acquirer once the plan is triggered. A shareholder rights plan is designed to discourage potential acquirers from acquiring shares to make a bid for the issuer. We believe that measures that impede takeovers or entrench management not only infringe on the rights of shareholders but also may have a detrimental effect on the value of the company.

We support shareholder proposals that seek to require the company to submit a shareholder rights plan to a shareholder vote. We evaluate on a case-by-case basis proposals to implement or eliminate a shareholder rights plan.

48.    Transferrable Stock Options: CASE-BY-CASE
In cases where a compensation plan includes a transferable stock option program, we will consider the plan on a case-by- case basis.

These programs allow stock options to be transferred to third parties in exchange for cash or stock. In effect, management becomes insulated from the downside risk of holding a stock option, while the ordinary shareholder remains exposed to downside risk. This insulation may unacceptably remove management’s exposure to downside risk, which significantly misaligns management and shareholder interests. Accordingly, we generally vote against these programs if the transfer can be executed without shareholder approval, is available to executive officers or non-employee directors, or we consider the available disclosure relating to the mechanics and structure of the program to be insufficient to determine the costs, benefits and key terms of the program.

    3.4    AUDITOR PROPOSALS

49.    Appointment of Auditors: FOR
We believe that the company is in the best position to choose its accounting firm, and we generally support management's recommendation.

We recognize that there may be inherent conflicts when a company’s independent auditors perform substantial non-audit related services for the company. Therefore, in reviewing a proposed auditor, we will consider the amount of fees paid for non-audit related services performed compared to the total audit fees paid by the company to the auditing firm, and whether there are any other reasons for us to question the independence or performance of the firm’s auditor such as, for example, tenure. We generally will deem as excessive the non-audit fees paid by a company to its auditor if those fees account for 50% or more of total fees paid. In the UK market, which utilizes a different calculation, we adhere to a non- audit fee cap of 100% of audit fees. Under these circumstances, we generally vote against the auditor and the directors, in particular the members of the company’s audit committee. In addition, we generally vote against authorizing the audit committee to set the remuneration of such auditors. We exclude from this analysis non-audit fees related to IPOs, bankruptcy emergence, and spin-offs and other extraordinary events. We may vote against or abstain due to a lack of disclosure of the name of the auditor while taking into account local market practice.

50.    Approval of Financial Statements: FOR
In some markets, companies are required to submit their financial statements for shareholder approval. This is generally a routine item and, as such, we will vote for the approval of financial statements unless there are appropriate reasons to vote otherwise. We may vote against if the information is not available in advance of the meeting.

51.    Approval of Internal Statutory Auditors: FOR
Some markets (e.g., Japan) require the annual election of internal statutory auditors. Internal statutory auditors have a number of duties, including supervising management, ensuring compliance with the articles of association and reporting to a company’s board on certain financial issues. In most cases, the election of internal statutory auditors is a routine item and we will support management’s nominee provided that the nominee meets the regulatory requirements for serving as internal statutory auditors. However, we may vote against nominees who are designated independent statutory auditors who serve as executives of a subsidiary or affiliate of the issuer or if there are other reasons to question the independence of the nominees.

12


52.    Limitation of Liability of External Statutory Auditors (Japan): CASE-BY-CASE
In Japan, companies may limit the liability of external statutory auditors in the event of a shareholder lawsuit through any of three mechanisms: (i) submitting the proposed limits to shareholder vote; (ii) setting limits by modifying the company’s articles of incorporation; and (iii) setting limits in contracts with outside directors, outside statutory auditors and external audit firms (requires a modification to the company’s articles of incorporation). A vote by 3% or more of shareholders can nullify a limit set through the second mechanism. The third mechanism has historically been the most prevalent.

We review proposals to set limits on auditor liability on a case-by-case basis, considering whether such a provision is necessary to secure appointment and whether it helps to maximize long-term shareholder value.

53.    Separating Auditors and Consultants (SHP): CASE-BY-CASE
We believe that a company serves its shareholders’ interests by avoiding potential conflicts of interest that might interfere with an auditor’s independent judgment. SEC rules adopted as a result of the Sarbanes-Oxley Act of 2002 attempted to address these concerns by prohibiting certain services by a company’s independent auditors and requiring additional disclosure of others services.

We evaluate on a case-by-case basis proposals that go beyond the SEC rules or other local market standards by prohibiting auditors from performing other non-audit services or calling for the board to adopt a policy to ensure auditor independence.

We take into consideration the policies and procedures the company already has in place to ensure auditor independence and non-audit fees as a percentage of total fees paid to the auditor are not excessive.

    3.5    SHAREHOLDER ACCESS AND VOTING PROPOSALS

54.    A Shareholder’s Right to Call Special Meetings (SHP): FOR
Most state corporation statutes (though not Delaware, where many US issuers are domiciled) allow shareholders to call a special meeting when they want to take action on certain matters that arise between regularly-scheduled annual meetings. This right may apply only if a shareholder, or a group of shareholders, owns a specified percentage, often 10% of the outstanding shares.

We recognize the importance of the right of shareholders to remove poorly-performing directors, respond to takeover offers and take other actions without having to wait for the next annual meeting. However, we also believe it is important to protect companies and shareholders from nuisance proposals. We further believe that striking a balance between these competing interests will maximize shareholder value. We believe that encouraging active share ownership among shareholders generally is beneficial to shareholders and helps maximize shareholder value. Accordingly, we will generally support a proposal to call a special meeting if the proposing shareholder owns, or the proposing shareholders as a group own, 5% or more of the outstanding voting equity of the company.

55.    Adopt Cumulative Voting (SHP): CASE-BY-CASE
Cumulative voting is a method of electing directors that enables each shareholder to multiply the number of his or her shares by the number of directors being considered. A shareholder may then cast the total votes for any one director or a selected group of directors. For example, a holder of 10 shares normally casts 10 votes for each of 12 nominees to the board thus giving the shareholder 120 (10 × 12) votes. Under cumulative voting, the shareholder may cast all 120 votes for a single nominee, 60 for two, 40 for three, or any other combination that the shareholder may choose.

We believe that encouraging activism among shareholders generally is beneficial to shareholders and helps maximize shareholder value. Cumulative voting supports the interests of minority shareholders in contested elections by enabling them to concentrate their votes and dramatically increase their chances of electing a dissident director to a board.
Accordingly, we generally will support shareholder proposals to restore or provide for cumulative voting and we generally will oppose management proposals to eliminate cumulative voting. However, we may oppose cumulative voting if a company has in place both proxy access, which allows shareholders to nominate directors to the company’s ballot, and majority voting (with a carve-out for plurality voting in situations where there are more nominees than seats), which requires each director to receive the affirmative vote of a majority of votes cast and, we believe, leads to greater director accountability to shareholders.
13


Also, we support cumulative voting at controlled companies regardless of any other shareholder protections that may be in place.

56.    Adopt Cumulative Voting in Dual Shareholder Class Structures (SHP): FOR
In dual class structures (such as A&B shares) where the shareholders with a majority economic interest have a minority voting interest, we generally vote in favor of cumulative voting for those shareholders.

57.    Early Disclosure of Voting Results (SHP): AGAINST
These proposals seek to require a company to disclose votes sooner than is required by the local market. In the US, the SEC requires disclosure in the first periodic report filed after the company’s annual meeting which we believe is reasonable. We do not support requests that require disclosure earlier than the time required by the local regulator.

58.    Limiting a Shareholder’s Right to Call Special Meetings: AGAINST
Companies contend that limitations on shareholders’ rights to call special meetings are needed to prevent minority shareholders from taking control of the company's agenda. However, such limits also have anti-takeover implications because they prevent a shareholder or a group of shareholders who have acquired a significant stake in the company from forcing management to address urgent issues, such as the potential sale of the company. Because most states prohibit shareholders from abusing this right, we see no justifiable reason for management to eliminate this fundamental shareholder right. Accordingly, we generally will vote against such proposals.

In addition, if the board of directors, without shareholder consent, raises the ownership threshold a shareholder must reach before the shareholder can call a special meeting, we will vote against those directors.

59.    Permit a Shareholder’s Right to Act by Written Consent (SHP): FOR
Action by written consent enables a large shareholder or group of shareholders to initiate votes on corporate matters prior to the annual meeting. We believe this is a fundamental shareholder right and, accordingly, will support shareholder proposals seeking to restore this right. However, in cases where a company has a majority shareholder or group of related majority shareholders with majority economic interest, we will oppose proposals seeking to restore this right as there is a potential risk of abuse by the majority shareholder or group of majority shareholders.

60.    Proxy Access for Annual Meetings (SHP) (Management): FOR
These proposals allow “qualified shareholders” to nominate directors. We generally vote in favor of management and shareholder proposals for proxy access that employ guidelines reflecting the SEC framework for proxy access (adopted by the SEC in 2010, but vacated by the DC Circuit Court of Appeals in 2011), which would have allowed a single shareholder, or group of shareholders, who hold at least 3% of the voting power for at least three years continuously to nominate up to 25% of the current board seats, or two directors, for inclusion in the subject company’s annual proxy statement alongside management nominees.

We may vote against proposals that use requirements that are stricter than the SEC’s framework including implementation restrictions and against individual board members, or entire boards, who exclude from their ballot properly submitted shareholder proxy access proposals or compete against shareholder proxy access proposals with stricter management proposals on the same ballot We will generally vote in favor of proposals that seek to amend an existing right to more closely align with the SEC framework.

We will evaluate on a case-by-case basis proposals with less stringent requirements than the vacated SEC framework.

From time to time we may receive requests to join with other shareholders to support a shareholder action. We may, for example, receive requests to join a voting block for purposes of influencing management. If the third parties requesting our participation are not affiliated with us and have no business relationships with us, we will consider the request on a case-by-case basis. However, where the requesting party has a business relationship with us (e.g., the requesting party is a client or a significant service provider), agreeing to such a request may pose a potential conflict of interest. As a fiduciary we have an obligation to vote proxies in the best interest of our clients (without regard to our own interests in generating and maintaining business with our other clients) and given our desire to avoid even the appearance of a conflict, we will generally decline such a request.

14


61.    Reduce Meeting Notification from 21 Days to 14 Days (UK): FOR
Companies in the United Kingdom may, with shareholder approval, reduce the notice period for extraordinary general meetings from 21 days to 14 days.

A reduced notice period expedites the process of obtaining shareholder approval of additional financing needs and other important matters. Accordingly, we support these proposals.

62.    Shareholder Proponent Engagement Process (SHP): FOR
We believe that proper corporate governance requires that proposals receiving support from a majority of shareholders be considered and implemented by the company. Accordingly, we support establishing an engagement process between shareholders and management to ensure proponents of majority-supported proposals, have an established means of communicating with management.

63.    Supermajority Vote Requirements: AGAINST
A supermajority vote requirement is a charter or by-law requirement that, when implemented, raises the percentage (higher than the customary simple majority) of shareholder votes needed to approve certain proposals, such as mergers, changes of control, or proposals to amend or repeal a portion of the Articles of Incorporation.

In most instances, we oppose these proposals and support shareholder proposals that seek to reinstate the simple majority vote requirement. However we may support supermajority vote requirements at controlled companies as a protection to minority shareholders from unilateral action of the controlling shareholder.

    3.6    ENVIRONMENTAL, SOCIAL AND DISCLOSURE PROPOSALS

64.    Animal Welfare (SHP): CASE-BY-CASE
These proposals may include reporting requests or policy adoption on items such as pig gestation crates and animal welfare in the supply chain

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue.

We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

65.    Climate Change (SHP): FOR
Proposals addressing climate change concerns are plentiful and their scope varies. Climate change increasingly receives investor attention as a potentially critical and material risk to the sustainability of a wide range of business-specific activities. These proposals may include emissions standards or reduction targets, quantitative goals, and impact assessments. We generally support these proposals, while taking into account the materiality of the issue and whether the proposed information is of added benefit to shareholders.

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue.

We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

66.    Charitable Contributions (SHP) (MGMT): CASE-BY-CASE
Proposals relating to charitable contributions may be sponsored by either management or shareholders. Management proposals may ask to approve the amount for charitable contributions.
15


We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

67.    Environmental Proposals (SHP): CASE-BY-CASE
These proposals can include reporting and policy adoption requests in a wide variety of areas, including, but not limited to, (nuclear) waste, deforestation, packaging and recycling, renewable energy, toxic material, palm oil and water.

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue.

We generally support shareholder proposals calling for reports while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

68.    Genetically Altered or Engineered Food and Pesticides (SHP): CASE-BY-CASE
These proposals may include reporting requests on pesticides monitoring/use and Genetically Modified Organism (GMO) as well as GMO labeling.

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue.

We generally support shareholder proposals calling for reports while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

69.    Health Proposals (SHP): CASE-BY-CASE
These proposals may include reports on pharmaceutical pricing, antibiotic use in the meat supply, and tobacco products. We generally support shareholder proposals calling for reports while taking into account the current reporting policies of the company and whether the proposed information is of added benefit to shareholders.

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue. We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

70.    Human Rights Policies and Reports (SHP): CASE-BY-CASE
These proposals may include reporting requests on human rights risk assessment, humanitarian engagement and mediation policies, working conditions, adopting policies on supply chain worker fees and expanding existing policies in these areas. We recognize that many companies have complex supply chains which have led to increased awareness of supply chain issues as an investment risk.

For proposals requesting companies to adopt a policy, we will carefully consider existing policies and the company’s incorporation of national standards and best practices. In addition, we will evaluate the potential enactment of new regulations, as well as any investment risk related to the specific issue.

We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

71.    Include Sustainability as a Performance Measure (SHP): CASE-BY-CASE
We believe management and directors should be given latitude in determining appropriate performance measurements. While doing so, consideration should be given to how long-term sustainability issues might affect future company performance. Therefore, we will evaluate on a case-by-case basis proposals requesting companies to consider incorporating specific, measurable, practical goals consisting of sustainability principles and environmental impacts as metrics for incentive compensation and how they are linked with our objectives as long-term shareholders.

16


72.    Lobbying and Political Spending (SHP): FOR
We generally vote in favor of proposals requesting increased disclosure of political contributions and lobbying expenses, including those paid to trade organizations and political action committees, whether at the federal, state, or local level.
These proposals may increase transparency.

73.    Other Business: AGAINST
In certain jurisdictions, these proposals allow management to act on issues that shareholders may raise at the annual meeting. Because it is impossible to know what issues may be raised, we will vote against these proposals.

74.    Reimbursement of Shareholder Expenses (SHP): AGAINST
These shareholder proposals would require companies to reimburse the expenses of shareholders who submit proposals that receive a majority of votes cast or the cost of proxy contest expenses. We generally vote against these proposals, unless reimbursement occurs only in cases where management fails to implement a majority passed shareholder proposal, in which case we may vote in favor.

75.    Sustainability Report (SHP): FOR
We generally support shareholder proposals calling for reports and disclosure while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

76.    Work Place: Diversity (SHP): FOR
We generally support shareholder proposals calling for reports and disclosure surrounding workplace diversity while taking into account existing policies and procedures of the company and whether the proposed information is of added benefit to shareholders.

We generally support proposals requiring a company to amend its Equal Employment Opportunity policies to prohibit workplace discrimination based on sexual orientation and gender ID.

77.    Work Place: Gender Pay Equity(SHP): FOR
A report on pay disparity between genders typically compares the difference between male and female median earnings expressed as a percentage of male earningsand may include, statistics and rationale pertaining to changes in the size of the gap, recommended actions, and information on whether greater oversight is needed over certain aspects of the company’s compensation policies.

The SEC requires US issuers with fiscal years ending on or after January 1, 2017, to contrast CEO pay with median employee pay. This requirement, however, does not specifically address gender pay equity issues in such pay disparity reports. Accordingly, we will generally support proposals requiring gender pay metrics, taking into account the specific metrics and scope of the information requested and whether the SEC’s requirement renders the proposal unnecessary.

17


4    CONFLICTS OF INTEREST

    4.1    INTRODUCTION

As a fiduciary, we always must act in our clients’ best interests. We strive to avoid even the appearance of a conflict that may compromise the trust our clients have placed in us, and we insist on strict adherence to fiduciary standards and compliance with all applicable federal and state securities laws. We have adopted a comprehensive Code of Business Conduct and Ethics (“Code”) to help us meet these obligations. As part of this responsibility and as expressed throughout the Code, we place the interests of our clients first and attempt to avoid any perceived or actual conflicts of interest.

AllianceBernstein L.P. (“AB””) recognizes that there may be a potential material conflict of interest when we vote a proxy solicited by an issuer that sponsors a retirement plan we manage (or administer), that distributes AB-sponsored mutual funds, or with which AB or one or more of our employees have another business or personal relationship that may affect how we vote on the issuer’s proxy. Similarly, we may have a potential material conflict of interest when deciding how to vote on a proposal sponsored or supported by a shareholder group that is a client. In order to avoid any perceived or actual conflict of interest, the procedures set forth below in sections 4.2 through 4.8 have been established for use when we encounter a potential conflict to ensure that our voting decisions are based on our clients’ best interests and are not the product of a conflict.

    4.2    ADHERENCE TO STATED PROXY VOTING POLICIES
Votes generally are cast in accordance with this policy3. In situations where our policy is case-by-case, this Manual often provides criteria that will guide our decision. In situations where our policy on a particular issue is case-by-case and the vote cannot be clearly decided by an application of our stated policy, a member of the Committee or his/her designee will make the voting decision in accordance with the basic principle of our policy to vote proxies with the intention of maximizing the value of the securities in our client accounts. In these situations, the voting rationale must be documented either on the voting platform of ISS, by retaining relevant emails or another appropriate method. Where appropriate, the views of investment professionals are considered. All votes cast contrary to our stated voting policy on specific issues must be documented. On an annual basis, the Committee will receive a report of all such votes so as to confirm adherence of the policy.

    4.3    DISCLOSURE OF CONFLICTS
When considering a proxy proposal, members of the Committee or investment professionals involved in the decision- making process must disclose to the Committee any potential conflict (including personal relationships) of which they are aware and any substantive contact that they have had with any interested outside party (including the issuer or shareholder group sponsoring a proposal) regarding the proposal. Any previously unknown conflict will be recorded on the Potential Conflicts List (discussed below). If a member of the Committee has a conflict of interest, he or she must also remove himself or herself from the decision-making process.

    4.4    POTENTIAL CONFLICTS LIST
No less frequently than annually, a list of companies and organizations whose proxies may pose potential conflicts of interest is compiled by the Legal and Compliance Department (the “Potential Conflicts List”). The Potential Conflicts List includes:

Publicly-traded Clients from the Russell 3000 Index, the Morgan Stanley Capital International (“MSCI”) Europe Australia Far East Index (MSCI EAFE), the MSCI Canada Index and the MSCI Emerging Markets Index;
Publicly-traded companies that distribute AB mutual funds;
Bernstein private clients who are directors, officers or 10% shareholders of publicly traded companies;
Clients who sponsor, publicly support or have material interest in a proposal upon which we will be eligible to vote;
Publicly-traded affiliated companies;
Companies where an employee of AB or AXA Financial, Inc., a parent company of AB, has identified an interest;
Any other conflict of which a Committee member becomes aware4.

We determine our votes for all meetings of companies on the Potential Conflicts List by applying the tests described in Section 4.5 below. We document all instances when the independent compliance officer determines our vote.


3 From time to time a client may request that we vote their proxies consistent with AFL-CIO guidelines or the policy of the National Association of Pension Funds. In those situations, AB reserves the right to depart from those policies if we believe it to be in the client’s best interests.
4 The Committee must notify the Legal and Compliance Department promptly of any previously unknown conflict.



18


    4.5    DETERMINE EXISTENCE OF CONFLICT OF INTEREST
When we encounter a potential conflict of interest, we review our proposed vote using the following analysis to ensure our voting decision does not generate a conflict of interest:

If our proposed vote is consistent with our Proxy Voting Policy, no further review is necessary.
If our proposed vote is contrary to our Proxy Voting Policy and our client’s position on the proposal, no further review is necessary.
If our proposed vote is contrary to our Proxy Voting Policy or is not covered herein, is consistent with our client’s position, and is also consistent with the views of ISS, no further review is necessary.
If our proposed vote is contrary to our Proxy Voting Policy or is not covered herein, is consistent with our client’s position and is contrary to the views of ISS, the vote will be presented to an independent compliance officer (“ICO”). The ICO will determine whether the proposed vote is reasonable. If the ICO cannot determine that the proposed vote is reasonable, the ICO may instruct AB to refer the votes back to the client(s) or take other actions as the ICO deems appropriate. The ICO’s review will be documented using a Proxy Voting Conflict of Interest Form (a copy of which is attached hereto).

    4.6    REVIEW OF THIRD PARTY RESEARCH SERVICE CONFLICTS OF INTEREST
We consider the research of ISS, so the Committee takes reasonable steps to verify that ISS is, in fact, independent based on all of the relevant facts and circumstances. This includes reviewing ISS’s conflict management procedures on an annual basis. When reviewing these conflict management procedures, we will consider, among other things, whether ISS (i) has the capacity and competency to adequately analyze proxy issues; and (ii) can offer research in an impartial manner and in the best interests of our clients.

    4.7    CONFIDENTIAL VOTING
It is AB’s policy to support confidentiality before the actual vote has been cast. Employees are prohibited from revealing how we intend to vote except to (i) members of the Committee; (ii) Portfolio Managers who hold the security in their managed accounts; (iii) the Research Analyst(s) who cover(s) the security; (iv) clients, upon request, for the securities held in their portfolios; and (v) clients who do not hold the security or for whom AB does not have proxy voting authority, but who provide AB with a signed a Non-Disclosure Agreement. Once the votes have been cast, they are made public in accordance with mutual fund proxy vote disclosures required by the SEC, and we generally post all votes to our public website the quarter after the vote has been cast.

We may participate in proxy surveys conducted by shareholder groups or consultants so long as such participation does not compromise our confidential voting policy. Specifically, prior to our required SEC disclosures each year, we may respond to surveys asking about our proxy voting policies, but not any specific votes. After our mutual fund proxy vote not compromise our confidential voting policy. Specifically, prior to our required SEC disclosures each year, we may respond to surveys
asking about our proxy voting policies, but not any specific votes. After our mutual fund proxy vote disclosures required by the SEC each year have been made public and/or votes have been posted to our public website, we may respond to surveys that cover specific votes in addition to our voting policies.

On occasion, clients for whom we do not have proxy voting authority may ask us for advice on proxy votes that they cast. A member of the Committee or a Proxy Manager may offer such advice subject to an understanding with the client that the advice shall remain confidential.

Any substantive contact regarding proxy issues from the issuer, the issuer’s agent or a shareholder group sponsoring a proposal must be reported to the Committee if such contact was material to a decision to vote contrary to this Policy.
Routine administrative inquiries from proxy solicitors need not be reported.

    4.8    A NOTE REGARDING AB’S STRUCTURE
AB and AllianceBernstein Holding L.P. (“AB Holding”) are Delaware limited partnerships. As limited partnerships, neither company is required to produce an annual proxy statement or hold an annual shareholder meeting. In addition, the general partner of AB and AB Holding, AllianceBernstein Corporation is a wholly-owned subsidiary of AXA, a French holding company for an international group of insurance and related financial services companies.

As a result, most of the positions we express in this Proxy Voting Policy are inapplicable to our business. For example, although units in AB Holding are publicly traded on the New York Stock Exchange (“NYSE”), the NYSE Listed Company Manual exempts limited partnerships and controlled companies from compliance with various listing requirements, including the requirement that our board have a majority of independent directors.

19


5.    VOTING TRANSPARENCY
We publish our voting records on our website quarterly, 30 days after the end of the previous quarter. Many clients have requested that we provide them with periodic reports on how we voted their proxies. Clients may obtain information about how we voted proxies on their behalf by contacting their Advisor. Alternatively, clients may make a written request to the Chief Compliance Officer.

6.    RECORDKEEPING
All of the records referenced below will be kept in an easily accessible place for at least the length of time required by local regulation and custom, and, if such local regulation requires that records are kept for less than five years from the end of the fiscal year during which the last entry was made on such record, we will follow the US rule of five years. We maintain the vast majority of these records electronically. We will keep paper records, if any, in one of our offices for at least two years.

    6.1    PROXY VOTING AND GOVERNANCE POLICY
The Proxy Voting and Governance Policy shall be maintained in the Legal and Compliance Department and posted on our company intranet and the AB website (https://www.abglobal.com).

    6.2    PROXY STATEMENTS RECEIVED REGARDING CLIENT SECURITIES
For US Securities5, AB relies on the SEC to maintain copies of each proxy statement we receive regarding client securities. For Non-US Securities, we rely on ISS, our proxy voting agent, to retain such proxy statements.

    6.3    RECORDS OF VOTES CAST ON BEHALF OF CLIENTS
Records of votes cast by AB are retained electronically by our proxy voting agent, ISS.

    6.4    RECORDS OF CLIENTS REQUESTS FOR PROXY VOTING INFORMATION
Copies of written requests from clients for information on how AB voted their proxies shall be maintained by the Legal and Compliance Department. Responses to written and oral requests for information on how we voted clients’ proxies will be kept in the Client Group.

    6.5    DOCUMENTS PREPARED BY AB THAT ARE MATERIAL TO VOTING DECISIONS
The Committee is responsible for maintaining documents prepared by the Committee or any AB employee that were material to a voting decision. Therefore, where an investment professional’s opinion is essential to the voting decision, the recommendation from investment professionals must be made in writing to the Proxy Manager.

7.    PROXY VOTING PROCEDURES

    7.1    VOTE ADMINISTRATION
In an effort to increase the efficiency of voting proxies, AB uses ISS to act as its voting agent for our clients’ holdings globally.

Issuers initially send proxy information to the custodians of our client accounts. We instruct these custodian banks to direct proxy related materials to ISS’s offices. ISS provides us with research related to each resolution. A Proxy Manager reviews the ballots via ISS’s web platform, ProxyExchange. Using ProxyExchange, the Proxy Manager submits our voting decision. ISS then returns the proxy ballot forms to the designated returnee for tabulation. Clients may request that, when voting their proxies, we utilize an ISS recommendation or ISS’s Taft-Hartley Voting Policy.

If necessary, any paper ballots we receive will be voted online using ProxyVote or via mail or fax.


5 US securities are defined as securities of issuers required to make reports pursuant to §12 of the Securities Exchange Act of 1934, as amended. Non- US securities are defined as all other securities.

20


    7.2    SHARE BLOCKING
Proxy voting in certain countries requires “share blocking.” Shareholders wishing to vote their proxies must deposit their shares shortly before the date of the meeting (usually one week) with a designated depositary. During this blocking period, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares are returned to the clients’ custodian banks. We may determine that the value of exercising the vote is outweighed by the detriment of not being able to sell the shares during this period. In cases where we want to retain the ability to trade shares, we may abstain from voting those shares.

We seek to vote all proxies for securities held in client accounts for which we have proxy voting authority. However, in some markets administrative issues beyond our control may sometimes prevent us from voting such proxies. For example, we may receive meeting notices after the cut-off date for voting or without enough time to fully consider the proxy. Similarly, proxy materials for some issuers may not contain disclosure sufficient to arrive at a voting decision, in which cases we may abstain from voting. Some markets outside the US require periodic renewals of powers of attorney that local agents must have from our clients prior to implementing our voting instructions.

    7.3    LOANED SECURITIES
Many of our clients have entered into securities lending arrangements with agent lenders to generate additional revenue. We will not be able to vote securities that are on loan under these types of arrangements. However, under rare circumstances, for voting issues that may have a significant impact on the investment, we may request that clients or custodians recall securities that are on loan if we determine that the benefit of voting outweighs the costs and lost revenue to the client or fund and the administrative burden of retrieving the securities.





























21


EXHIBIT



PROXY VOTING AND GOVERNANCE COMMITTEE MEMBERS
The members of the Committee establish general proxy policies for AB and consider specific proxy voting matters as necessary. Members include senior investment personnel and representatives of the Legal and Compliance Department and the Operations Department. The Proxy Committee is chaired by Linda Giuliano, Senior Vice President, Chief Administrative Officer-Equities, and Head of Responsible Investment. If you have questions or desire additional information about this Policy, please contact the Proxy Team at: [email protected].

PROXY VOTING AND GOVERNANCE COMMITTEE
Vincent DuPont, SVP-Equities
Linda Giuliano, SVP-Equities
Saskia Kort-Chick, VP-Equities
Telmo Martins, VP - Compliance
Rajeev Eyunni, SVP - Equities
James MacGregor, SVP-Equities
Mark Manley, SVP-Legal
Ryan Oden, AVP-Equities
Neil Ruffell, VP-Operations












































22


EXHIBIT



PROXY VOTING GUIDELINE SUMMARY
Shareholder Proposal Board and Director Proposals For Against Case-by-Case
+ Board Diversity +
+ Establish New Board Committees and Elect Board Members with Specific Expertise +
Changes in Board Structure and Amending the Articles of Incorporation +
Classified Boards +
Director Liability and Indemnification +
+ Disclose CEO Succession Plan +
Election of Directors +
Controlled Company Exemption +
Voting for Director Nominees in a Contested Election +
+ Independent Lead Director +
+ Limit Term of Directorship +
+ Majority of Independent Directors +
+ Majority of Independent Directors on Key Committees +
+ Majority Votes for Directors +
+ Removal of Directors Without Cause +
+ Require Independent Board Chairman +
+ Require Two Candidates for Each Board Seat +
Compensation Proposals
+
Elimination of Single Trigger Change-in-Control Agreements
+
+ Pro Rata Vesting of Equity Compensation Awards-Change
of Control
+
+ Adopt Policies to Prohibit any Death Benefits to
Senior Executives
+
+ Advisory Vote to Ratify Directors’ Compensation +
+ Amend Executive Compensation Plan Tied to Performance (Bonus Banking) +
Approve Remuneration for Directors and Auditors +
Approve Remuneration Reports +
Approve Retirement Bonuses for Directors (Japan and South Korea) +
Approve Special Payments to Continuing Directors and Auditors (Japan) +
+ Disclose Executive and Director Pay +
+ Exclude Pension Income from Performance-Based Compensation +
Executive and Employee Compensation Plans +
+ Limit Dividend Payments to Executives +
+ Limit Executive Pay +
23


Shareholder Proposal For Against Case-by- Case
+ Mandatory Holding Periods +
+ Performance-Based Stock Option Plans +
+ Prohibit Relocation Benefits to Senior Executives +
+ Recovery of Performance-Based Compensation +
+ Submit Golden Parachutes/Severance Plans to a Shareholder Vote +
+ Submit Golden Parachutes/Severance Plans to a Shareholder Vote prior to their being Negotiated by Management +
+ Submit Survivor Benefit Compensation Plans to a Shareholder Vote +
Capital Changes and Anti-Take Over Proposals
+ Amend Exclusive Forum Bylaw +
Amend Net Operating Loss (“NOL”) Rights Plans +
Authorize Share Repurchase +
Blank Check Preferred Stock +
Corporate Restructurings, Merger Proposals and Spin-Offs +
Elimination of Preemptive Rights +
+ Expensing Stock Options +
Fair Price Provisions +
Increase Authorized Common Stock +
Issuance of Equity without Preemptive Rights +
Issuance of Stock with Unequal Voting Rights +
Net Long Position Requirement +
Reincorporation +
+ Reincorporation to Another jurisdiction to Permit Majority Voting or Other Changes in Corporate Governance +
Stock Splits +
+ Submit Company’s Shareholder Rights Plan to a Shareholder Vote +
Transferrable Stock Options +
Auditor Proposals
Appointment of Auditors +
Approval of Financial Statements +
Approval of Internal Statutory Auditors +
+ Limit Compensation Consultant Services +
Limitation of Liability of External Statutory Auditors (Japan) +
+ Separating Auditors and Consultants +
Shareholder Access & Voting Proposals
+ A Shareholder’s Right to Call Special Meetings +
+ Adopt Cumulative Voting +
+ Adopt Cumulative Voting in Dual Shareholder Class Structures +
24


Shareholder Proposal For Against Case-by- Case
+ Early Disclosure of Voting Results +
+ Implement Confidential Voting +
Limiting a Shareholder’s Right to Call Special Meetings +
+ Permit a Shareholder’s Right to Act by Written Consent +
+ Proxy Access for Annual Meetings +
Reduce Meeting Notification from 21 Days to 14 Days (UK) +
+ Rotation of Locale for Annual Meeting +
+ Shareholder Proponent Engagement Process +
Supermajority Vote Requirements +
Environmental & Social, Disclosure Proposals
+ Animal Welfare +
+ Climate Change +
+ Carbon Accounting +
+ Carbon Risk +
+ Charitable Contributions +
+ Environmental Proposals +
+ Genetically Altered or Engineered Food and Pesticides +
+ Health Proposals +
+ Pharmaceutical Pricing (US) +
+ Human Rights Policies and Reports +
+ Include Sustainability as a Performance Measure (SHP) +
+ Lobbying and Political Spending +
+ Other Business +
+ Reimbursement of Shareholder Expenses +
+ Sustainability Report +
+ Work Place: Diversity +
+ Work Place: Pay Disparity +


25



EXHIBIT




PROXY VOTING CONFLICT OF INTEREST FORM

Name of Security Date of Shareholder Meeting

Short Description of the conflict (client, mutual fund distributor, etc.):
1
Is our proposed vote on all issues consistent with our stated proxy voting policy?
If yes, stop here and sign below as no further review is necessary.
¨Yes
oNo
2
Is our proposed vote contrary to our client’s position?
If yes, stop here and sign below as no further review is necessary.
oYes
oNo
3
Is our proposed vote consistent with the views of Institutional Shareholder Services?
If yes, stop here and sign below as no further review is necessary.
oYes
oNo

Please attach a memo containing the following information and documentation supporting the proxy voting decision:

A list of the issue(s) where our proposed vote is contrary to our stated policy (director election, cumulative voting, compensation)
A description of any substantive contact with any interested outside party and a proxy voting committee or an AB investment professional that was material to our voting decision. Please include date, attendees, titles, organization they represent and topics discussed. If there was no such contact, please note as such.
If the Independent Compliance Officer has NOT determined that the proposed vote is reasonable, please explain and indicate what action has been, or will be taken.
AB Conflicts Officer Approval (if necessary. Email approval is acceptable.): Prepared by:
I hereby confirm that the proxy voting decision referenced on this form is reasonable.
Print Name: _________________________________
AB Conflicts Officer
Date: ______________________________________
Date: ____________________________________

Please return this completed form and all supporting documentation to the Conflicts Officer in the Legal and Compliance Department and keep a copy for your records.
26



EXHIBIT



STATEMENT OF POLICY REGARDING RESPONSIBLE INVESTMENT
PRINCIPLES FOR RESPONSIBLE INVESTMENT, ESG AND SOCIALLY RESPONSIBLE INVESTMENT
1.Introduction
AllianceBernstein L.P. (“AB” or “we”) is appointed by our clients as an investment manager with a fiduciary responsibility to help them achieve their investment objectives over the long term. Generally, our clients’ objective is to maximize the financial return of their portfolios within appropriate risk parameters. AB has long recognized that environmental, social and governance (“ESG”) issues can impact the performance of investment portfolios. Accordingly, we have sought to integrate ESG factors into our investment process to the extent that the integration of such factors is consistent with our fiduciary duty to help our clients achieve their investment objectives and protect their economic interests.

Our policy draws a distinction between how the Principles for Responsible Investment (“PRI” or “Principles”), and Socially Responsible Investing (“SRI”) incorporate ESG factors. PRI is based on the premise that, because ESG issues can affect investment performance, appropriate consideration of ESG issues and engagement regarding them is firmly within the bounds of a mainstream investment manager’s fiduciary duties to its clients. Furthermore, PRI is intended to be applied only in ways that are consistent with those mainstream fiduciary duties.

SRI, which refers to a spectrum of investment strategies that seek to integrate ethical, moral, sustainability and other non- financial factors into the investment process, generally involves exclusion and/or divestment, as well as investment guidelines that restrict investments. AB may accept such guideline restrictions upon client request.

2.Approach to ESG
Our long-standing policy has been to include ESG factors in our extensive fundamental research and consider them carefully when we believe they are material to our forecasts and investment decisions. If we determine that these aspects of an issuer’s past, current or anticipated behavior are material to its future expected returns, we address these concerns in our forecasts, research reviews, investment decisions and engagement. In addition, we have well-developed proxy voting policies that incorporate ESG issues and engagement.

3.Commitment to the PRI
In recent years, we have gained greater clarity on how the PRI initiative, based on information from PRI Advisory Council members and from other signatories, provides a framework for incorporating ESG factors into investment research and decision-making. Furthermore, our industry has become, over time, more aware of the importance of ESG factors. We acknowledge these developments and seek to refine what has been our process in this area.

After careful consideration, we determined that becoming a PRI signatory would enhance our current ESG practices and align with our fiduciary duties to our clients as a mainstream investment manager. Accordingly, we became a signatory, effective November 1, 2011.

In signing the PRI, AB as an investment manager publicly commits to adopt and implement all six Principles, where consistent with our fiduciary responsibilities, and to make progress over time on implementation of the Principles.

The six Principles are:

a.We will incorporate ESG issues into investment research and decision-making processes.

AB Examples: ESG issues are included in the research analysis process. In some cases, external service providers of ESG-related tools are utilized; we have conducted proxy voting training and will have continued and expanded training for investment professionals to incorporate ESG issues into investment analysis and decision- making processes across our firm.

b.We will be active owners and incorporate ESG issues into our ownership policies and practices.

AB Examples: We are active owners through our proxy voting process (for additional information, please refer to our Statement of Policies and Procedures for Proxy Voting Manual); we engage issuers on ESG matters in our investment research process (we define “engagement” as discussions with management about ESG issues when they are, or we believe they are reasonably likely to become, material).



27


EXHIBIT

c.We will seek appropriate disclosure on ESG issues by the entities in which we invest.

AB Examples: Generally, we support transparency regarding ESG issues when we conclude the disclosure is reasonable. Similarly, in proxy voting, we will support shareholder initiatives and resolutions promoting ESG disclosure when we conclude the disclosure is reasonable.

d.We will promote acceptance and implementation of the Principles within the investment industry.

AB Examples: By signing the PRI, we have taken an important first step in promoting acceptance and implementation of the six Principles within our industry.

e.We will work together to enhance our effectiveness in implementing the Principles.

AB Examples: We will engage with clients and participate in forums with other PRI signatories to better understand how the PRI are applied in our respective businesses. As a PRI signatory, we have access to information, tools and other signatories to help ensure that we are effective in our endeavors to implement the PRI.

f.We will report on our activities and progress towards implementing the Principles.

AB Examples: We will respond to the 2012 PRI questionnaire and disclose PRI scores from the questionnaire in response to inquiries from clients and in requests for proposals; we will provide examples as requested concerning active ownership activities (voting, engagement or policy dialogue).

4.    RI Committee

Our firm’s RI Committee provides AB stakeholders, including employees, clients, prospects, consultants and service providers alike, with a resource within our firm on which they can rely for information regarding our approach to ESG issues and how those issues are incorporated in different ways by the PRI and SRI. Additionally, the RI Committee is responsible for assisting AB personnel to further implement our firm’s RI policies and practices, and, over time, to make progress on implementing all six Principles.

The RI Committee has a diverse membership, including senior representatives from investments, distribution/sales and legal. The Committee is chaired by Linda Giuliano, Senior Vice President and Chief Administrative Officer- Equities.

If you have questions or desire additional information about this Policy, we encourage you to contact the RI Committee at
[email protected].




28

Proxy Voting Policy

Barrow Hanley has the responsibility to vote proxies for equity securities for its clients who have delegated this responsibility to us, and under Barrow Hanley’s fiduciary duty, the Firm’s policy is to vote our clients’ proxies in the best economic interests of our clients, the beneficial owners of the shares. Barrow Hanley has adopted this Proxy Voting Policy, and maintains written procedures for the handling of research, voting, and reporting of the proxy votes, and making appropriate disclosures about proxy voting on behalf of our clients. Disclosure information about the Firm’s Proxy Voting is included in Barrow Hanley’s Form ADV Part 2.
To assist in the proxy voting process, Barrow Hanley retains the services of Glass Lewis & Co. Glass Lewis provides:
Research on corporate governance, financial statements, business, legal and accounting risks;
Proxy voting recommendations, including ESG voting guidelines;
Portfolio accounting and reconciliation of shareholdings for voting purposes;
Proxy voting execution, record keeping, and reporting services.
Proxy Oversight Committee, Proxy Coordinators, and Proxy Voting Committee
Barrow Hanley’s Proxy Oversight Committee is responsible for implementing and monitoring Barrow Hanley’s proxy voting policy, procedures, disclosures and recordkeeping, including outlining our voting guidelines in our procedures. The Proxy Oversight Committee conducts periodic reviews to monitor and ensure that the Firm’s policy is observed, implemented properly, and amended or updated, as appropriate. The Proxy Oversight Committee is made up of the CCO/CRO, the Responsible Investing Committee lead, the director of investment operations, the ESG research coordinator, and an at-large portfolio manager.
Barrow Hanley’s proxy coordinators review and organize the data and recommendations provided by the proxy service. The proxy coordinators are responsible for ensuring that the proxy ballots are routed to the appropriate research analyst based on industry sector coverage. Proxy coordinators are assigned from the operations department.
Barrow Hanley’s research analysts review and evaluate proxy proposals and make written recommendations to the Proxy Voting Committee to ensure that votes are consistent with the Firm’s analysis and are in the best interest of the shareholders, our clients.
Barrow Hanley’s equity portfolio managers are members of the Proxy Voting Committee. Equity portfolio managers vote proxy proposals based on share ownership after giving consideration to Barrow Hanley’s Proxy Voting Guidelines, internal research recommendations, and the opinion of Glass Lewis. Proxy votes must be approved by the Proxy Voting Committee before submitting to the proxy service provider.
Proxies for the Diversified Small Cap Value accounts are voted in accordance with the proxy service provider’s recommendations for the following reasons:

BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC
As of December 31, 2019


Investments are based on a quantitative model. Fundamental research is not performed for the holdings.
The holding period is too short to justify the time for analysis to vote.
Conflicts of Interest
Potential conflicts may arise when:
Clients elect to participate in securities lending arrangements; in such cases, the votes follow the shares, and because Barrow Hanley has no information about clients’ shares on loan, the proxies for those shares may not be voted.
Barrow Hanley invests in equity securities of corporations who are also clients of the Firm; in such cases, Barrow Hanley seeks to mitigate potential conflicts by:
Making voting decisions for the benefit of the shareholder(s), our clients;
Uniformly voting every proxy based on Barrow Hanley’s internal research and consideration of Glass Lewis’ recommendations; and
Documenting the votes of companies who are also clients of the Firm.
If a material conflict of interest exists, members from the Proxy Voting and Oversight Committees will determine if the affected clients should have an opportunity to vote their proxies themselves, or whether Barrow Hanley will address the specific voting issue through other objective means, such as voting the proxies in a manner consistent with a predetermined voting policy or accepting the voting recommendation of Glass Lewis.
Other Policies and Procedures
Barrow Hanley sends a daily electronic transfer of equity positions to the proxy service provider.
The proxy service provider identifies accounts eligible to vote for each security and posts the proposals and research on its secure, proprietary online system.
Barrow Hanley sends a proxy report to clients at least annually (or as requested by client), listing the number of shares voted and disclosing how proxies were voted.
Voting records are retained on the network, which is backed up daily. The proxy service provider retains records for seven years.
Barrow Hanley’s Proxy Voting Guidelines are available upon request by calling: (214) 665-1900, or by e-mailing: [email protected].
The proxy coordinators retain the following proxy records for at least seven years:
These policies and procedures and any amendments;
Proxy statements received regarding our clients’ securities;
A record of each proxy voted;
Proxy voting reports that are sent to clients annually;
Any document Barrow Hanley created that was material to making a decision on how to vote proxies, or that memorializes that decision; and
Records of any client’s request for proxy voting information.
BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC
As of December 31, 2019


Voting Debt and/or Bank Loan Securities
Barrow Hanley has the responsibility to vote proxies and related interests for its clients who have delegated this responsibility to the Firm, which may include voting on proposals, amendments, consents, or resolutions solicited by or in respect to the issuers of securities, including Bank Loan debt instruments. Barrow Hanley votes proxies and related interests in the best interest of the securities’ owners, its clients.
Exceptions
Limited exceptions may be permitted based on a client’s circumstances, such as foreign regulations that create a conflict with U.S. practices, expenses to facilitate the that outweigh the benefit of proxy voting, or other circumstances.

























BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC
As of December 31, 2019

BlackRock
Investment
Stewardship

Global Corporate Governance &
Engagement Principles


January 2020


























BlackRock




 
Contents  
   
Introduction to BlackRock
Philosophy on corporate governance
Corporate governance, engagement and voting
Boards and directors
Auditors and audit-realted issues
Capital structure, mergers, asset sales and other special transactions
Compensation and benefits
Environmental and social issues
General corporate governance matters and shareholder protections
BlackRock’s oversight of our investment stewardship activities
Vote execution 10 
Conflicts management policies and procecdures 10 
Voting guidelines 11 
Reporting and vote transparency 12 








If you would like additional information, please contact
[email protected]

BlackRock                                    


Introduction to BlackRock 
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. We manage assets on behalf of institutional and individual clients, across a full spectrum of investment strategies, asset classes and regions. Our client base includes pension plans, endowments, foundations, charities, official institutions, insurers and other financial institutions, as well as individuals around the world.  
Philosophy on corporate governance 
BlackRock Investment Stewardship (“BIS”) activities are focused on maximizing long-term value for our clients. BIS does this through engagement with boards and management of investee companies and, for those clients who have given us authority, through voting at shareholder meetings.
We believe that there are certain fundamental rights attached to shareholding. Companies and their boards should be accountable to shareholders and structured with appropriate checks and balances to ensure that they operate in shareholders’ best interests. Effective voting rights are central to the rights of ownership and there should be one vote for one share. Shareholders should have the right to elect, remove and nominate directors, approve the appointment of the auditor and to amend the corporate charter or by-laws. Shareholders should be able to vote on matters that are material to the protection of their investment, including but not limited to, changes to the purpose of the business, dilution levels and pre-emptive rights, and the distribution of income and capital structure. In order to make informed decisions, we believe that shareholders have the right to sufficient and timely information.
Our primary focus is on the performance of the board of directors. As the agent of shareholders, the board should set the company’s strategic aims within a framework of prudent and effective controls, which enables risk to be assessed and managed. The board should provide direction and leadership to management and oversee management’s performance. Our starting position is to be supportive of boards in their oversight efforts on shareholders’ behalf and we would generally expect to support the items of business they put to a vote at shareholder meetings. Votes cast against or withheld from resolutions proposed by the board are a signal that we are concerned that the directors or management have either not acted in the best interests of shareholders or have not responded adequately to shareholder concerns. We assess voting matters on a case-by-case basis and in light of each company’s unique circumstances taking into consideration regional best practices and long-term value creation.
These principles set out our approach to engaging with companies, provide guidance on our position on corporate governance and outline how our views might be reflected in our voting decisions. Corporate governance practices can vary internationally, so our expectations in relation to individual companies are based on the legal and regulatory framework of each local market. However, we believe there are overarching principles of corporate governance that apply globally and provide a framework for more detailed, market-specific assessments.
We believe BlackRock has a responsibility in relation to monitoring and providing feedback to companies, sometimes known as “stewardship.” These ownership responsibilities include engaging with management or board members on corporate governance matters, voting proxies in the best long-term economic interests of our clients, and engaging with regulatory bodies to ensure a sound policy framework consistent with promoting long-term shareholder value creation. We also believe in the responsibility to our clients to have appropriate resources and oversight structures. Our approach is set out in the section below titled “BlackRock’s oversight of its investment stewardship activities” and is further detailed in a team profile on our website.
Corporate governance, engagement and voting 
We recognize that accepted standards of corporate governance differ between markets, but we believe there are sufficient common threads globally to identify an overarching set of principles. The objective of our investment stewardship activities is the protection and enhancement of the value of our clients’ investments in public corporations. Thus, these principles focus on practices and structures that we consider to be supportive of long-term value creation. We discuss below the principles under six key themes. In our regional and market-specific voting guidelines we explain how these principles inform our voting decisions in relation to specific resolutions that may appear on the agenda of a shareholder meeting in the relevant market.
BlackRock                                    


The six key themes are:
Boards and directors
Auditors and audit-related issues
Capital structure, mergers, asset sales and other special transactions
Compensation and benefits
Environmental and social issues
General corporate governance matters and shareholder protections
At a minimum, we expect companies to observe the accepted corporate governance standards in their domestic market or to explain why doing so is not in the interests of shareholders. Where company reporting and disclosure is inadequate or the approach taken is inconsistent with our view of what is in the best interests of shareholders, we will engage with the company and/or use our vote to encourage a change in practice. In making voting decisions, we perform independent research and analysis, such as reviewing relevant information published by the company and apply our voting guidelines to achieve the outcome we believe best protects our clients’ long-term economic interests. We also work closely with our active portfolio managers, and may take into account internal and external research.
BlackRock views engagement as an important activity; engagement provides us with the opportunity to improve our understanding of the challenges and opportunities that investee companies are facing and their governance structures. Engagement also allows us to share our philosophy and approach to investment and corporate governance with companies to enhance their understanding of our objectives. Our engagements often focus on providing our feedback on company disclosures, particularly where we believe they could be enhanced. There are a range of approaches we may take in engaging companies depending on the nature of the issue under consideration, the company and the market.
BlackRock’s engagements emphasize direct dialogue with corporate leadership on the governance issues identified in these principles that have a material impact on financial performance. These engagements enable us to cast informed votes aligned with clients’ long-term economic interests. We generally prefer to engage in the first instance where we have concerns and give management time to address or resolve the issue. As a long-term investor, we are patient and persistent in working with our portfolio companies to have an open dialogue and develop mutual understanding of governance matters, to promote the adoption of best practices and to assess the merits of a company’s approach to its governance. We monitor the companies in which we invest and engage with them constructively and privately where we believe doing so helps protect shareholders’ interests. We do not try to micro-manage companies, or tell management and boards what to do. We present our views as a long-term shareholder and listen to companies’ responses. The materiality and immediacy of a given issue will generally determine the level of our engagement and whom we seek to engage at the company, which could be management representatives or board directors.
 Boards and directors
The performance of the board is critical to the economic success of the company and to the protection of shareholders’ interests. Board members serve as agents of shareholders in overseeing the strategic direction and operation of the company. For this reason, BlackRock focuses on directors in many of our engagements and sees the election of directors as one of our most important responsibilities in the proxy voting context.
We expect the board of directors to promote and protect shareholder interests by:
establishing an appropriate corporate governance structure
supporting and overseeing management in setting long-term strategic goals, applicable measures of value-creation and milestones that will demonstrate progress, and steps taken if any obstacles are anticipated or incurred
ensuring the integrity of financial statements
making independent decisions regarding mergers, acquisitions and disposals
establishing appropriate executive compensation structures
addressing business issues, including environmental and social issues, when they have the potential to materially impact company reputation and performance
BlackRock                                    


There should be clear definitions of the role of the board, the committees of the board and senior management such that the responsibilities of each are well understood and accepted. Companies should report publicly the approach taken to governance (including in relation to board structure) and why this approach is in the best interest of shareholders. We will seek to engage with the appropriate directors where we have concerns about the performance of the board or the company, the broad strategy of the company, or the performance of individual board members. We believe that when a company is not effectively addressing a material issue, its directors should be held accountable.
BlackRock believes that directors should stand for re-election on a regular basis. We assess directors nominated for election or re-election in the context of the composition of the board as a whole. There should be detailed disclosure of the relevant credentials of the individual directors in order for shareholders to assess the caliber of an individual nominee. We expect there to be a sufficient number of independent directors on the board to ensure the protection of the interests of all shareholders. Common impediments to independence may include but are not limited to:
current or former employment at the company or a subsidiary within the past several years
being, or representing, a shareholder with a substantial shareholding in the company
interlocking directorships
having any other interest, business or other relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the company
BlackRock believes that the operation of the board is enhanced when there is a clearly independent, senior non-executive director to chair it or, where the chairman is also the CEO (or is otherwise not independent), an independent lead director. The role of this director is to enhance the effectiveness of the independent members of the board through shaping the agenda, ensuring adequate information is provided to the board and encouraging independent participation in board deliberations. The lead independent board director should be available to shareholders in those situations where a director is best placed to explain and justify a company’s approach.
To ensure that the board remains effective, regular reviews of board performance should be carried out and assessments made of gaps in skills or experience amongst the members. BlackRock believes it is beneficial for new directors to be brought onto the board periodically to refresh the group’s thinking and to ensure both continuity and adequate succession planning. In identifying potential candidates, boards should take into consideration the multiple dimensions of diversity, including personal factors such as gender, ethnicity, and age; as well as professional characteristics, such as a director’s industry, area of expertise, and geographic location. The board should review these dimensions of the current directors and how they might be augmented by incoming directors. We believe that directors are in the best position to assess the optimal size for the board, but we would be concerned if a board seemed too small to have an appropriate balance of directors or too large to be effective.
There are matters for which the board has responsibility that may involve a conflict of interest for executives or for affiliated directors. BlackRock believes that shareholders’ interests are best served when the board forms committees of fully independent directors to deal with such matters. In many markets, these committees of the board specialize in audit, director nominations and compensation matters. An ad hoc committee might also be formed to decide on a special transaction, particularly one with a related party or to investigate a significant adverse event. 
Auditors and audit-related issues 
Comprehensive disclosure provides investors with a sense of the company’s long-term operational risk management practices and, more broadly, the quality of the board’s oversight. In the absence of robust disclosures, we may reasonably conclude that companies are not adequately managing risk.
BlackRock recognizes the critical importance of financial statements, which should provide a true and fair picture of a company’s financial condition. We will hold the members of the audit committee or equivalent responsible for overseeing the management of the audit function. We take particular note of cases involving significant financial restatements or ad hoc notifications of material financial weakness.
BlackRock                                    


The integrity of financial statements depends on the auditor being free of any impediments to being an effective check on management. To that end, we believe it is important that auditors are, and are seen to be, independent. Where the audit firm provides services to the company in addition to the audit, the fees earned should be disclosed and explained. Audit committees should have in place a procedure for assessing annually the independence of the auditor. 
Capital structure, mergers, asset sales and other special transactions 
The capital structure of a company is critical to its owners, the shareholders, as it impacts the value of their investment and the priority of their interest in the company relative to that of other equity or debt investors. Pre-emptive rights are a key protection for shareholders against the dilution of their interests.
Effective voting rights are central to the rights of ownership and we believe strongly in one vote for one share as a guiding principle that supports good corporate governance. Shareholders, as the residual claimants, have the strongest interest in protecting company value, and voting power should match economic exposure.
We are concerned that the creation of a dual share class may result in an over-concentration of power in the hands of a few shareholders, thus disenfranchising other shareholders and amplifying the potential conflict of interest, which the one share, one vote principle is designed to mitigate. However, we recognize that in certain circumstances, companies may have a valid argument for dual-class listings, at least for a limited period of time. We believe that such companies should review these dual-class structures on a regular basis or as company circumstances change. Additionally, they should receive shareholder approval of their capital structure on a periodic basis via a management proposal in the company’s proxy. The proposal should give unaffiliated shareholders the opportunity to affirm the current structure or establish mechanisms to end or phase out controlling structures at the appropriate time, while minimizing costs to shareholders.
In assessing mergers, asset sales or other special transactions, BlackRock’s primary consideration is the long-term economic interests of shareholders. Boards proposing a transaction need to clearly explain the economic and strategic rationale behind it. We will review a proposed transaction to determine the degree to which it enhances long-term shareholder value. We would prefer that proposed transactions have the unanimous support of the board and have been negotiated at arm’s length. We may seek reassurance from the board that executives’ and/or board members’ financial interests in a given transaction have not adversely affected their ability to place shareholders’ interests before their own. Where the transaction involves related parties, we would expect the recommendation to support it to come from the independent directors and it is good practice to be approved by a separate vote of the non-conflicted shareholders.
BlackRock believes that shareholders have a right to dispose of company shares in the open market without unnecessary restriction. In our view, corporate mechanisms designed to limit shareholders’ ability to sell their shares are contrary to basic property rights. Such mechanisms can serve to protect and entrench interests other than those of the shareholders. We believe that shareholders are broadly capable of making decisions in their own best interests. We expect any so-called ‘shareholder rights plans’ proposed by a board to be subject to shareholder approval upon introduction and periodically thereafter for continuation. 
Compensation and benefits 
BlackRock expects a company’s board of directors to put in place a compensation structure that incentivizes and rewards executives appropriately and is aligned with shareholder interests, particularly generating sustainable long-term shareholder returns. We would expect the compensation committee to take into account the specific circumstances of the company and the key individuals the board is trying to incentivize. We encourage companies to ensure that their compensation plans incorporate appropriate and challenging performance conditions consistent with corporate strategy and market practice. We use third party research, in addition to our own analysis, to evaluate existing and proposed compensation structures. We hold members of the compensation committee or equivalent board members accountable for poor compensation practices or structures.
BlackRock                                    


BlackRock believes that there should be a clear link between variable pay and company performance that drives shareholder returns. We are not supportive of one-off or special bonuses unrelated to company or individual performance. We acknowledge that the use of peer group evaluation by compensation committees can help ensure competitive pay; however, we are concerned when increases in total compensation at a company are justified solely on peer benchmarking rather than outperformance. We support incentive plans that foster the sustainable achievement of results relative to competitors. The vesting timeframes associated with incentive plans should facilitate a focus on long-term value creation. We believe consideration should be given to building claw back provisions into incentive plans such that executives would be required to forgo rewards when they are not justified by actual performance. Compensation committees should guard against contractual arrangements that would entitle executives to material compensation for early termination of their contract. Finally, pension contributions and other deferred compensation arrangements should be reasonable in light of market practice.
Non-executive directors should be compensated in a manner that is commensurate with the time and effort expended in fulfilling their professional responsibilities. Additionally, these compensation arrangements should not risk compromising their independence or aligning their interests too closely with those of the management, whom they are charged with overseeing.
Environmental and social issues 
Our fiduciary duty to clients is to protect and enhance their economic interest in the companies in which we invest on their behalf. It is within this context that we undertake our corporate governance activities. We believe that well-managed companies will deal effectively with the material environmental and social (“E&S”) factors relevant to their businesses. Robust disclosure is essential for investors to effectively gauge companies’ business practices and planning related to E&S risks and opportunities.
BlackRock expects companies to issue reports aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the standards put forward by the Sustainability Accounting Standards Board (SASB). We view the SASB and TCFD frameworks as complementary in achieving the goal of disclosing more financially material information, particularly as it relates to industry-specific metrics and target setting. TCFD’s recommendations provide an overarching framework for disclosure on the business implications of climate change, and potentially other E&S factors. We find SASB’s industry-specific guidance (as identified in its materiality map) beneficial in helping companies identify and discuss their governance, risk assessments, and performance against these key performance indicators (KPIs). Any global standards adopted, peer group benchmarking undertaken, and verification processes in place should also be disclosed and discussed in this context.
BlackRock has been engaging with companies for several years on disclosure of material E&S factors. Given the increased understanding of sustainability risks and opportunities, and the need for better information to assess them, we specifically ask companies to:
1)publish a disclosure in line with industry-specific SASB guidelines by year-end, if they have not already done so, or disclose a similar set of data in a way that is relevant to their particular business; and
2)disclose climate-related risks in line with the TCFD’s recommendations, if they have not already done so. This should include the company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized, as expressed by the TCFD guidelines.
See our commentary on our approach to engagement on TCFD and SASB aligned reporting for greater detail of our expectations.
We will use these disclosures and our engagements to ascertain whether companies are properly managing and overseeing these risks within their business and adequately planning for the future. In the absence of robust disclosures, investors, including BlackRock, will increasingly conclude that companies are not adequately managing risk.
We believe that when a company is not effectively addressing a material issue, its directors should be held accountable. We will generally engage directly with the board or management of a company when we identify issues. We may vote against the election of directors where we have concerns that a company might not be dealing with E&S factors appropriately. Sometimes we may reflect such concerns by supporting a shareholder proposal on the issue, where there seems to be either a significant potential threat or realized harm to shareholders’ interests caused by poor management of material E&S factors.
BlackRock                                    


In deciding our course of action, we will assess the company’s disclosures and the nature of our engagement with the company on the issue over time, including whether:
The company has already taken sufficient steps to address the concern
The company is in the process of actively implementing a response
There is a clear and material economic disadvantage to the company in the near-term if the issue is not addressed in the manner requested by the shareholder proposal
We do not see it as our role to make social or political judgments on behalf of clients. Our consideration of these E&S factors is consistent with protecting the long-term economic interest of our clients’ assets. We expect investee companies to comply, at a minimum, with the laws and regulations of the jurisdictions in which they operate. They should explain how they manage situations where local laws or regulations that significantly impact the company’s operations are contradictory or ambiguous to global norms.
Climate risk
Within the framework laid out above, as well as our guidance on “How BlackRock Investment Stewardship engages on climate risk,” we believe that climate presents significant investment risks and opportunities that may impact the long-term financial sustainability of companies. We believe that the reporting frameworks developed by TCFD and SASB provide useful guidance to companies on identifying, managing, and reporting on climate-related risks and opportunities.
We expect companies to help their investors understand how the company may be impacted by climate risk, in the context of its ability to realize a long-term strategy and generate value over time. We expect companies to convey their governance around this issue through their corporate disclosures aligned with TCFD and SASB. For companies in sectors that are significantly exposed to climate-related risk, we expect the whole board to have demonstrable fluency in how climate risk affects the business and how management approaches assessing, adapting to, and mitigating that risk.
Where a company receives a shareholder proposal related to climate risk, in addition to the factors laid out above, our assessment will take into account the robustness of the company’s existing disclosures as well as our understanding of its management of the issues as revealed through our engagements with the company and board members over time. In certain instances, we may disagree with the details of a climate-related shareholder proposal but agree that the company in question has not made sufficient progress on climate-related disclosures. In these instances, we may not support the proposal, but may vote against the election of relevant directors. 
General corporate governance matters and shareholder protections 
BlackRock believes that shareholders have a right to timely and detailed information on the financial performance and viability of the companies in which they invest. In addition, companies should also publish information on the governance structures in place and the rights of shareholders to influence these. The reporting and disclosure provided by companies help shareholders assess whether their economic interests have been protected and the quality of the board’s oversight of management. We believe shareholders should have the right to vote on key corporate governance matters, including changes to governance mechanisms, to submit proposals to the shareholders’ meeting and to call special meetings of shareholders.
BlackRock’s oversight of our investment
stewardship activities
 Oversight 
We hold ourselves to a very high standard in our investment stewardship activities, including proxy voting. This function is executed by a team called BlackRock Investment Stewardship (“BIS”) which is comprised of BlackRock employees who do not have other responsibilities other than their roles in BIS. BIS is considered an investment function. The team does not have sales responsibilities.
BlackRock maintains three regional advisory committees (“Stewardship Advisory Committees”) for (a) the Americas; (b) Europe, the Middle East and Africa (“EMEA”); and (c) Asia-Pacific, generally consisting of senior BlackRock investment
BlackRock                                    


professionals and/or senior employees with practical boardroom experience. The regional Stewardship Advisory Committees review and advise on amendments to the proxy voting guidelines covering markets within each respective region (“Guidelines”).
In addition to the regional Stewardship Advisory Committees, the Investment Stewardship Global Oversight Committee (“Global Committee”) is a risk-focused committee, comprised of senior representatives from various BlackRock investment teams, BlackRock’s Deputy General Counsel, the Global Head of Investment Stewardship (“Global Head”), and other senior executives with relevant experience and team oversight.
The Global Head has primary oversight of the activities of BIS, including voting in accordance with the Guidelines, which require the application of professional judgment and consideration of each company’s unique circumstances. The Global Committee reviews and approves amendments to these Global Corporate Governance & Engagement Principles. The Global Committee also reviews and approves amendments to the regional Guidelines, as proposed by the regional Stewardship Advisory Committees.
In addition, the Global Committee receives and reviews periodic reports regarding the votes cast by BIS, as well as regular updates on material process issues, procedural changes and other risk oversight considerations. The Global Committee reviews these reports in an oversight capacity as informed by the BIS corporate governance engagement program and Guidelines.
BIS carries out engagement with companies, monitors and executes proxy votes, and conducts vote operations (including maintaining records of votes cast) in a manner consistent with the relevant Guidelines. BIS also conducts research on corporate governance issues and participates in industry discussions to keep abreast of important developments in the corporate governance field. BIS may utilize third parties for certain of the foregoing activities and performs oversight of those third parties. BIS may raise complicated or particularly controversial matters for internal discussion with the relevant investment teams and/or refer such matters to the appropriate regional Stewardship Advisory Committees for review, discussion and guidance prior to making a voting decision.
Vote execution
We carefully consider proxies submitted to funds and other fiduciary account(s) (“Fund” or “Funds”) for which we have voting authority. BlackRock votes (or refrains from voting) proxies for each Fund for which we have voting authority based on our evaluation of the best long-term economic interests of shareholders, in the exercise of our independent business judgment, and without regard to the relationship of the issuer of the proxy (or any shareholder proponent or dissident shareholder) to the Fund, the Fund’s affiliates (if any), BlackRock or BlackRock’s affiliates, or BlackRock employees (see “Conflicts management policies and procedures”, below).
When exercising voting rights, BlackRock will normally vote on specific proxy issues in accordance with the Guidelines for the relevant market. The Guidelines are reviewed regularly and are amended consistent with changes in the local market practice, as developments in corporate governance occur, or as otherwise deemed advisable by BlackRock’s Stewardship Advisory Committees. BIS may, in the exercise of their professional judgment, conclude that the Guidelines do not cover the specific matter upon which a proxy vote is required or that an exception to the Guidelines would be in the best long-term economic interests of BlackRock’s clients.
In the uncommon circumstance of there being a vote with respect to fixed income securities or the securities of privately held issuers, the decision generally will be made by a Fund's portfolio managers and/or BIS based on their assessment of the particular transactions or other matters at issue.
In certain markets, proxy voting involves logistical issues which can affect BlackRock’s ability to vote such proxies, as well as the desirability of voting such proxies. These issues include but are not limited to: (i) untimely notice of shareholder meetings; (ii) restrictions on a foreigner’s ability to exercise votes; (iii) requirements to vote proxies in person; (iv) “share-blocking” (requirements that investors who exercise their voting rights surrender the right to dispose of their holdings for some specified period in proximity to the shareholder meeting); (v) potential difficulties in translating the proxy; (vi) regulatory constraints; and (vii) requirements to provide local agents with unrestricted powers of attorney to facilitate voting instructions. We are not supportive of impediments to the exercise of voting rights such as shareblocking or overly burdensome administrative requirements.
BlackRock                                    


As a consequence, BlackRock votes proxies on a “best-efforts” basis. In addition, BIS may determine that it is generally in the best interests of BlackRock’s clients not to vote proxies if the costs (including but not limited to opportunity costs associated with shareblocking constraints) associated with exercising a vote are expected to outweigh the benefit the client would derive by voting on the proposal.
Portfolio managers have full discretion to vote the shares in the Funds they manage based on their analysis of the economic impact of a particular ballot item. Portfolio managers may from time to time reach differing views on how best to maximize economic value with respect to a particular investment. Therefore, portfolio managers may, and sometimes do, vote shares in the Funds under their management differently from one another. However, because BlackRock’s clients are mostly long-term investors with long-term economic goals, ballots are frequently cast in a uniform manner.  
Conflicts management policies and procedures  
BIS maintains the following policies and procedures that seek to prevent undue influence on BlackRock’s proxy voting activity. Such influence might stem from any relationship between the investee company (or any shareholder proponent or dissident shareholder) and BlackRock, BlackRock’s affiliates, a Fund or a Fund’s affiliates, or BlackRock employees. The following are examples of sources of perceived or potential conflicts of interest:
BlackRock clients who may be issuers of securities or proponents of shareholder resolutions
BlackRock business partners or third parties who may be issuers of securities or proponents of shareholder resolutions
BlackRock employees who may sit on the boards of public companies held in Funds managed by BlackRock
Significant BlackRock, Inc. investors who may be issuers of securities held in Funds managed by BlackRock
Securities of BlackRock, Inc. or BlackRock investment funds held in Funds managed by BlackRock
BlackRock, Inc. board members who serve as senior executives of public companies held in Funds managed by BlackRock
BlackRock has taken certain steps to mitigate perceived or potential conflicts including, but not limited to, the following:
Adopted the Guidelines which are designed to protect and enhance the economic value of the companies in which BlackRock invests on behalf of clients.
Established a reporting structure that separates BIS from employees with sales, vendor management or business partnership roles. In addition, BlackRock seeks to ensure that all engagements with corporate issuers, dissident shareholders or shareholder proponents are managed consistently and without regard to BlackRock’s relationship with such parties. Clients or business partners are not given special treatment or differentiated access to BIS. BIS prioritizes engagements based on factors including but not limited to our need for additional information to make a voting decision or our view on the likelihood that an engagement could lead to positive outcome(s) over time for the economic value of the company. Within the normal course of business, BIS may engage directly with BlackRock clients, business partners and/or third parties, and/or with employees with sales, vendor management or business partnership roles, in discussions regarding our approach to stewardship, general corporate governance matters, client reporting needs, and/or to otherwise ensure that proxy-related client service levels are met.
Determined to engage, in certain instances, an independent fiduciary to vote proxies as a further safeguard to avoid potential conflicts of interest, to satisfy regulatory compliance requirements, or as may be otherwise required by applicable law. In such circumstances, the independent fiduciary provides BlackRock’s proxy voting agent with instructions, in accordance with the Guidelines, as to how to vote such proxies, and BlackRock’s proxy voting agent votes the proxy in accordance with the independent fiduciary’s determination. BlackRock uses an independent fiduciary to vote proxies of (i) any company that is affiliated with BlackRock, Inc., (ii) any public company that includes BlackRock employees on its board of directors, (iii) The PNC Financial Services Group, Inc., (iv) any public company of which a BlackRock, Inc. board member serves as a senior executive, and (v) companies when legal or regulatory requirements compel BlackRock to use an independent fiduciary. In selecting an independent fiduciary, we assess several characteristics, including but not limited to: independence, an ability to analyze proxy issues and vote in the best economic interest of our clients, reputation for reliability and integrity, and operational capacity to accurately deliver the assigned votes in a timely manner. We may engage more than one independent fiduciary, in part in order to mitigate potential or perceived conflicts of interest at an independent fiduciary. The Global Committee appoints and reviews the performance of the independent fiduciar(ies), generally on an annual basis.
BlackRock                                    


When so authorized, BlackRock acts as a securities lending agent on behalf of Funds. With regard to the relationship between securities lending and proxy voting, BlackRock’s approach is driven by our clients’ economic interests. The decision whether to recall securities on loan to vote is based on a formal analysis of the revenue producing value to clients of loans, against the assessed economic value of casting votes. Generally, we expect that the likely economic value to clients of casting votes would be less than the securities lending income, either because, in our assessment, the resolutions being voted on will not have significant economic consequences or because the outcome would not be affected by BlackRock recalling loaned securities in order to vote. BlackRock also may, in our discretion, determine that the value of voting outweighs the cost of recalling shares, and thus recall shares to vote in that instance.
Periodically, BlackRock reviews our process for determining whether to recall securities on loan in order to vote and may modify it as necessary.
Voting guidelines 
The issue-specific Guidelines published for each region/country in which we vote are intended to summarize BlackRock’s general philosophy and approach to issues that may commonly arise in the proxy voting context in each market where we invest. These Guidelines are not intended to be exhaustive. BIS applies the Guidelines on a case-by-case basis, in the context of the individual circumstances of each company and the specific issue under review. As such, these Guidelines do not indicate how BIS will vote in every instance. Rather, they share our view about corporate governance issues generally, and provide insight into how we typically approach issues that commonly arise on corporate ballots. 
Reporting and vote transparency 
We inform clients about our engagement and voting policies and activities through direct communication and through disclosure on our website. Each year we publish an annual report, an annual engagement and voting statistics report, and our full voting record to our website. On a quarterly basis, we publish regional reports which provide an overview of our investment stewardship engagement and voting activities during the quarter, including market developments, speaking engagements, and engagement and voting statistics. Additionally, we make public our market-specific voting guidelines for the benefit of clients and companies with whom we engage.






This document is provided for information purposes only and must not be relied upon as a forecast, research, or investment advice. BlackRock is not making any recommendation or soliciting any action based upon the information contained herein and nothing in this document should be construed as constituting an offer to sell, or a solicitation of any offer to buy, securities in any jurisdiction to any person. This information provided herein does not constitute financial, tax, legal or accounting advice, you should consult your own advisers on such matters.
The information and opinions contained in this document are as of January 2020 unless it is stated otherwise and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Although such information is believed to be reliable for the purposes used herein, BlackRock does not assume any responsibility for the accuracy or completeness of such information. Reliance upon information in this material is at the sole discretion of the reader. Certain information contained herein represents or is based upon forward-looking statements or information. BlackRock and its affiliates believe that such statements and information are based upon reasonable estimates and assumptions. However, forward-looking statements are inherently uncertain, and factors may cause events or results to differ from those projected. Therefore, undue reliance should not be placed on such forward-looking statements and information.

Prepared by BlackRock, Inc.
©2020 BlackRock, Inc. All rights reserved.






BlackRock


B BrownADVISORY
Thoughtful Investing.

PROXY VOTING POLICY ON SECURITIES

The firm receives proxy ballots on behalf of clients and shall vote such proxies consistent with this Policy, which sets forth the firm’s standard approach to voting on common proxy questions.20 In general, this Policy is designed to ensure that the firm votes proxies in the best interest of clients, so as to promote the long-term economic value of the underlying securities.
Clients may, at any time, opt to change their proxy voting authorization. Upon notice that a client has revoked the firm’s authority to vote proxies, the firm will forward any relevant research the firm obtains to the party that will assume proxy voting authority, as identified by the client.
To facilitate the proxy voting process, the firm has engaged Institutional Shareholder Services Inc. (“ISS”), an unbiased, unaffiliated, third-party proxy voting service, to provide proxy research and voting recommendations. In addition, the firm subscribes to ISS’s proxy vote management system, which provides a means to receive and vote proxies, as well as services for record- keeping, auditing, reporting and disclosure regarding votes.
On a regular basis, the firm’s portfolio managers are supplied with a list of upcoming proxies issued for companies that are actively recommended by the firm. Except in situations identified as presenting material conflicts of interest, the portfolio manager who follows an issuer may make the final voting decision based on a variety of considerations, including their review of relevant materials, their knowledge of the company, and ISS recommendations. In circumstances where the firm’s managers do not provide a vote recommendation, proxies will be voted according to ISS recommendations, unless specific guidelines provided to ISS by the firm specify otherwise. Proxies are generally voted in accordance with ISS recommendations for all client types, as described further herein.
In keeping with its fiduciary obligations to clients, the firm considers each proxy voting proposal on its own merits and an independent determination is made based on the relevant facts and circumstances. Proxy proposals include a wide range of matters. The firm generally votes with management on routine matters and takes a more case-by-case approach regarding non-routine matters. For socially responsible investing (“SRI” or “green”) clients, the firm follows ISS guidelines that focus on enhanced environmental, social and governance practices (“ESG Guidelines”). For Taft-Hartley clients, the firm follows the ISS Taft-Hartley Guidelines. Although ISS guidelines are generally followed, the firm may depart from these guidelines when it deems such departure necessary in the best interest of the client.
____________________________
20     The firm votes proxies on behalf of separate account clients, firm-managed mutual fund shareholders, and, where applicable, employee benefit plan participants and beneficiaries.



Below is a summary of guidelines, based on the ISS approach, for voting on common proxy questions. Given the dynamic and wide-ranging nature of corporate governance issues that may arise, this summary is not intended to be exhaustive.
Management Recommendations
Since the quality and depth of management is a primary factor considered when investing in an issuer, the recommendation of the issuer’s management on any issue will be given substantial weight. Although proxies with respect to most issues are voted in line with the recommendation of the issuer’s management, the firm will not blindly vote in favor of management. The firm will not support proxy proposals or positions that compromise clients’ best interests or that the firm determines may be detrimental to the underlying value of client positions.
Routine Matters
Election of Directors.
Although proxies will typically be voted for a management-proposed slate of directors, the firm may vote against (or withhold votes for) such directors if there are compelling corporate governance reasons for doing so. Some of these reasons include where a director: attends less than 75% of board and relevant committee meetings; is the CEO of a company where a serious restatement occurred after the CEO certified the financial statements; served at a time when a poison pill was adopted without shareholder approval within the prior year; is the CFO of the company; has an interlocking directorship; has a perceived conflict of interest (or the director’s immediate family member has a perceived conflict of interest); or serves on an excessive number of boards.
The firm generally supports independent boards of directors comprised of members with diverse backgrounds, a breadth and depth of relevant experience, and a track record of positive performance. Management proposals to limit director liability consistent with state laws and director indemnification provisions will be supported because it is important for companies to be able to attract qualified candidates.
Separation of the roles of Chairman and CEO is supported, but the firm will not typically vote against a CEO who serves as chairman or director. In the absence of an independent chairman, however, the firm supports the appointment of a lead director with authority to conduct sessions outside the presence of the insider chairman.
The firm will typically vote against any inside director seeking appointment to a key committee (audit, compensation, nominating or governance), since the service of independent directors on such committees best protects and enhances the interests of shareholders. Where insufficient information is provided regarding performance metrics, or where pay is not tied to performance (e.g., where management has excessive discretion to alter performance terms or previously defined targets), the firm will typically vote against the chair of the compensation committee.



Voting
The firm generally supports proposals to require a majority vote standard for the election of directors, rather than plurality voting. Proposals seeking to allow cumulative voting will be supported where the issuer does not have majority voting for the election of directors. Annual election of directors is supported, whereas the firm will vote against efforts to created staggered or classified boards. The firm supports a simple majority voting structure, since supermajority vote requirements impede shareholder action on important ballot items.
Appointment and Rotation of Auditors
Management recommendations regarding selection of an auditor shall generally be supported, but the firm will not support the ratification of an auditor when there is a lack of independence, accounting irregularity or negligence by the auditor. Some examples include: when an auditing firm has other relationships with the company that may suggest a conflict of interest; when the auditor bears some responsibility for a restatement by the company; when a company has aggressive accounting policies or lack of transparency in financial statements; and when a company changes auditors as a result of disagreement between the company and the auditor regarding accounting principles or disclosure issues. The firm will generally support proposals for mandatory auditor rotation with reasonable frequency (usually not less than five to seven years).
Changes in State of Incorporation or Capital Structure
Management recommendations about reincorporation are generally supported unless the new jurisdiction in which the issuer is reincorporating has laws that would dilute the rights of shareholders of the issuer. The firm will generally vote against reincorporation where the financial benefits are minimal and there is a decrease in shareholder rights. Shareholder proposals to change the company’s place of incorporation will only be supported in exceptional circumstances.
Proposals to increase the number of authorized shares will be evaluated on a case-by-case basis. Because adequate capital stock is important to the operation of a company, the firm will generally support the authorization of additional shares, unless the issuer has not disclosed a detailed plan for use of the shares, or where the number of shares far exceeds those needed to accomplish a detailed plan. Additionally, if the issuance of new shares will limit shareholder rights or could excessively dilute the value of outstanding shares, then such proposals will be supported only if they are in the best interest of the client.
Non-Routine Matters
Corporate Restructurings, Mergers and Acquisitions
These proposals should be examined on a case-by-case basis because they are an extension of an investment decision.
Proposals Affecting Shareholder Rights
The firm favors proposals that are likely to promote shareholder rights and/or increase shareholder value. Proposals that seek to limit shareholder rights, such as the creation of dual classes of stock, generally will not be supported.



Anti-takeover Issues
Measures that impede takeovers or entrench management will be evaluated on a case-by-case basis, taking into account the rights of shareholders, since the financial interest of shareholders regarding buyout offers is so substantial.
Although the firm generally opposes anti-takeover measures because they tend to diminish shareholder rights and reduce management accountability, the firm supports proposals that allow shareholders to vote on whether to implement a “poison pill” plan (shareholder rights plan). In certain circumstances, the firm will support a limited poison pill to accomplish a particular objective, such as the closing of an important merger, or a pill that contains a reasonable ‘qualifying offer’ provision. The firm supports anti- greenmail proposals, which prevent companies from buying back company stock at significant premiums from a large shareholder.
Shareholder Action
The firm supports proposals that allow shareholders to call special meetings, with a minimum threshold of shareholders (e.g., 10-15%) requesting such a meeting. Proposals that allow shareholders to act by written consent are also supported, if there is a threshold of the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote were present and voting.
Executive Compensation.
Although management recommendations should be given substantial weight, proposals relating to executive compensation plans, including stock option plans and other equity-based compensation, should be examined on a case-by- case basis to ensure that the long-term interests of management and shareholders are properly aligned. Share count and voting power dilution should be limited.
The firm generally favors the grant of options to executives, since options are an important component of compensation packages that link executives’ compensation with their performance and that of the company. The firm typically opposes caps on executive stock options, since tying an executive’s compensation to the performance of the company provides incentive to maximize share value. The firm also supports equity grants to directors, which help align the interests of outside directors with those of shareholders, although such awards should not be performance-based, so that directors are not incentivized in the same manner as executives.
Proposals to reprice or exchange options are reviewed on a case-by-case basis, but are generally opposed. The firm will support a repricing only in limited circumstances, such as if the stock decline mirrors the market or industry price decline in terms of timing and magnitude and the exchange is not value destructive to shareholders.
Although matters of executive compensation should generally be left to the board’s compensation committee, proposals to limit executive compensation will be evaluated on a case-by-case basis. The firm typically opposes caps on executive stock options, since tying an executive’s compensation to the performance of the company provides incentive to maximize share value.



The firm generally supports shareholder proposals to allow shareholders an advisory vote on compensation. Absent a compelling reason, companies should submit say-on-pay votes to shareholders every year, since such votes promote valuable communication between the board and shareholders regarding compensation. Where there is an issue involving egregious or excessive bonuses, equity awards or severance payments (including golden parachutes), the firm will generally vote against a say-on-pay proposal. The firm may oppose the election of compensation committee members at companies that do not satisfactorily align executive compensation with the interests of shareholders.
Environmental, Social and Governance Issues
Shareholder proposals regarding environmental, social and governance issues are evaluated on a case-by-case basis. In general, such proposals will not be supported if they are not supported by management, unless they would have a clear and direct positive financial effect on shareholder value and would not be burdensome or impose unnecessary or excessive costs on the issuer.
Although policy decisions are typically better left to management and the board, the firm may vote in favor of a reasonable shareholder proposal if supporting the proposal will mitigate significant risk to long-term shareholder value stemming from governance practices, environmental regulation, or legal and reputational issues. Companies should disclose such risks and efforts to mitigate them. In egregious cases where a company has not adequately mitigated such risks, the firm may vote against directors. Given that the firm’s SRI clients may approach environmental, social and governance issues from a different perspective, the firm follows ISS ESG Guidelines when voting proxies for SRI clients.
Taft-Hartley Clients and Socially Responsible Investing (“SRI”) Clients For Taft-Hartley clients, the firm follows the ISS Taft-Hartley Guidelines, which entail an additional level of analysis relevant to the fiduciary responsibility of Taft-Hartley investors. These guidelines comply with the fiduciary duties imposed by the Taft Hartley Labor Act and ERISA, and the guidelines are consistent with American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”) guidelines and annual Key Vote Survey. Similarly, for SRI clients, the firm follows the ISS ESG Guidelines, which focus on disclosure and mitigation of company risk with regard to environmental, social and governance issues. Both sets of guidelines generally support proposals relating to compliance with environmental laws, health and safety regulations, nondiscrimination laws, and international labor or human rights standards, including proposals that tie executive compensation to such issues. For example, the ESG guidelines recognize that environmental, social and governance performance factors should be an important component in evaluating executive performance and compensation.
Companies’ labor practices, including compliance with Equal Employment Opportunity Commission (“EEOC”) requirements and treatment of union members, are considered when evaluating director performance for Taft- Hartley clients and determining whether to support various shareholder proposals. Increased diversity in board membership is also generally supported. For SRI clients, proposals that seek to evaluate overall director performance based on environmental and social criteria are generally supported, including evaluating directors’ commitment to establishing broad sustainable business practices with regard to reporting on and mitigating environmental, social and governance risks.



For both types of clients, International Labor Organization standards are supported and companies are encouraged to adopt such standards. Where a company has violated international human rights standards, review of director performance and oversight is warranted. Further, if directors have not provided adequate oversight to ensure that basic human rights standards are met, or if a company is subject to regulatory or legal action due to human rights violations, the firm will consider voting against certain directors on behalf of its Taft Hartley and SRI clients.
Proposed mergers or acquisitions are examined somewhat differently for Taft Hartley clients and SRI clients than for other clients. Whereas the firm generally examines whether a transaction is likely to maximize shareholder return, for Taft Hartley clients and SRI clients, the firm will support shareholder proposals seeking the company to consider effects of the transaction on the company’s stakeholders.
Further, for SRI clients and Taft Hartley clients, consideration is given to a company’s impact on the environment, so the firm will consider withholding votes from, or voting against, directors who do not exercise their fiduciary duty as it relates to environmental risk. Indeed, any proposal requesting that a company adopt a policy concerning these matters will be scrutinized to ensure it seeks enhanced environmental disclosure or practices and does not limit environmental disclosure or consideration. For SRI clients, proposals are scrutinized if they request that a company adopt a policy concerning bioengineering or nanotechnology. Further, consideration is given to a company’s impact on the environment, as well as the regulatory risk a company may face by not adopting environmentally responsible policies.
For both Taft Hartley clients and SRI clients, proposals requesting the following actions will generally be supported:
Governance & Business Ethics
increased disclosure of a company’s business ethics and code of conduct, as well as of its activities that relate to social welfare;
development of sustainable business practices, such as animal welfare policies, human rights policies, and fair lending policies; and
disclosure of a company’s lobbying practices and political and charitable spending.
Labor Standards & Human Rights
enhanced rights of workers, and consideration of the communities and broader constituents in the areas in which companies do business;
increased disclosure regarding impact on local stakeholders, workers’ rights and human rights;
adherence to codes of conduct relating to labor standards, human rights conventions and corporate responsibility; and
independent verification of a company’s contractors’ compliance with labor and human rights standards.
Environment, Health & Safety
adoption of the Equator Principles – a benchmark regarding social and environmental risk in project financing;
improved sustainability reporting and disclosure about company practices which impact the environment;
increased disclosure of environmental risk, compliance with international environmental conventions and adherence to environmental principles;



development of greenhouse gas emissions reduction goals, recycling programs, and other proactive means to mitigate a company’s environmental impact;
consideration of energy efficiency and renewable energy sources in a company’s development and business strategy;
increased disclosure regarding health and safety issues, including the labeling of the use of genetically modified organisms, the elimination or reduction of toxic emissions and use of toxic chemicals in manufacturing, and the prohibition of tobacco sales to minors;
reporting on a company’s drug re-importation guidelines, as well as on ethical responsibilities relating to drug distribution and manufacture; and
additional safety standards regarding these matters.
International Corporate Governance
For actively recommended issuers domiciled outside the United States, the firm may follow ISS’s international proxy voting guidelines, including, in certain circumstances, country-specific guidelines.
Conflicts of Interest
A “conflict of interest” means any circumstance when the firm or one of its affiliates (including officers, directors and employees), or in the case where the firm serves as investment adviser to a Brown Advisory Fund, when the Fund or the principal underwriter, or one or more of their affiliates (including officers, directors and employees), knowingly does business with, receives compensation from, or sits on the board of, a particular issuer or closely affiliated entity (including officers and directors thereof), and, therefore, may appear to have a conflict of interest between its own interests and the interests of clients or Fund shareholders in how proxies of that issuer are voted. For example, a perceived conflict of interest may exist if an employee of the firm serves as a director of an actively recommended issuer, or if the firm is aware that a client serves as an officer or director of an actively recommended issuer. Conflicts of interest will be resolved in the best interest of the client.
The firm should vote proxies relating to such issuers in accordance with the following procedures:
Routine Matters and Immaterial Conflicts
The firm may vote proxies for routine matters, and for non-routine matters that are considered immaterial conflicts of interest, consistent with this Policy. A conflict of interest will be considered material to the extent that it is determined that such conflict has the potential to influence the firm’s decision-making in voting a proxy. Materiality determinations will be made by the Chief Compliance Officer or designee, in consultation with counsel, based upon an assessment of the particular facts and circumstances.



Material Conflicts and Non-Routine Matters
If the firm believes that (a) it has a material conflict and (b) that the issue to be voted upon is non-routine or is not covered by this Policy, then to avoid any potential conflict of interest:
i)in the case of a Fund, the firm shall contact the Fund board for a review and determination;
ii)in the case of all other conflicts or potential conflicts, the firm may “echo vote” such shares, if possible, which means the firm will vote the shares in the same proportion as the vote of all other holders of the issuer’s shares; or
iii)in cases when echo voting is not possible, the firm may defer to ISS recommendations or confer with counsel to ensure that the proxy is voted in the best interest of the client.
If the aforementioned options would not ameliorate the conflict or potential conflict, then the firm may abstain from voting, as described below.
Abstention
In recognition of its fiduciary obligations, the firm generally endeavors to vote all proxies it receives. However, the firm may abstain from voting proxies in certain circumstances. For example, the firm may determine that abstaining from voting is appropriate if voting may be unduly burdensome or expensive, or otherwise not in the best economic interest of the clients, such as (by example and without limitation) when foreign proxy issuers impose unreasonable or expensive voting or holding requirements or when the costs to effect a vote would be uneconomic relative to the value of the client’s investment in the issuer.

____________________________
The information contained herein is the property of Brown Advisory and may not be disclosed in whole or part to anyone outside the firm without the prior approval of Compliance.


CAUSEWAY CAPITAL MANAGEMENT LLC
PROXY VOTING POLICIES AND PROCEDURES

Overview
As an investment adviser with fiduciary responsibilities to its clients, Causeway Capital Management LLC (“Causeway”) votes the proxies of companies owned by investment vehicles managed and sponsored by Causeway, and institutional and private clients who have granted Causeway such voting authority. Causeway has adopted these Proxy Voting Policies and Procedures to govern how it performs and documents its fiduciary duty regarding the voting of proxies.
Proxies are voted solely in what Causeway believes is the best interests of the client, a fund’s shareholders or, where employee benefit assets are involved, plan participants and beneficiaries (collectively “clients”). Causeway’s intent is to vote proxies, wherever possible to do so, in a manner consistent with its fiduciary obligations. Practicalities involved in international investing may make it impossible at times, and at other times disadvantageous, to vote proxies in every instance.
The Chief Operating Officer of Causeway supervises the proxy voting process. Proxy voting staff monitor upcoming proxy votes, review proxy research, identify potential conflicts of interest and escalate such issues to the Chief Operating Officer, receive input from portfolio managers, and ultimately submit proxy votes in accordance with these Proxy Voting Policies and Procedures. The Chief Operating Officer has final decision-making authority over case-by-case votes. To assist in fulfilling its responsibility for voting proxies, Causeway currently uses Institutional Shareholder Services Inc. (“ISS”) for proxy research, which assists the decision-making process, and for proxy voting services, which include organizing and tracking pending proxies, communicating voting decisions to custodian banks, and maintaining records. Causeway will conduct periodic due diligence on ISS and its capacity and competency to provide proxy research and the proxy voting services provided to Causeway.
Proxy Voting Guidelines
Causeway generally votes on specific matters in accordance with the proxy voting guidelines set forth below. However, Causeway reserves the right to vote proxies on behalf of clients on a case-by-case basis if the facts and circumstances so warrant.
Causeway’s proxy voting guidelines are designed to cast votes consistent with certain basic principles: (i) increasing shareholder value; (ii) maintaining or increasing shareholder influence over the board of directors and management; (iii) establishing and enhancing strong and independent boards of directors; (iv) maintaining or increasing the rights of shareholders; and (v) aligning the interests of management and employees with those of shareholders with a view toward the reasonableness of executive compensation and shareholder dilution. Causeway’s guidelines also recognize that a company’s management is charged with day-to-day operations and, therefore, Causeway generally votes on routine business matters in favor of management’s proposals or positions.
Causeway Capital Management LLC
December 31, 2019


Causeway generally votes for:
distributions of income
appointment of auditors
director compensation, unless deemed excessive
boards of directors – Causeway generally votes for management’s slate of director nominees. However, it votes against incumbent nominees with poor attendance records, or who have otherwise acted in a manner Causeway believes is not in the best interests of shareholders.
financial results/director and auditor reports
share repurchase plans
changing corporate names and other similar matters
Causeway generally votes the following matters on a case-by-case basis:
amendments to articles of association or other governing documents
changes in board or corporate governance structure
changes in authorized capital including proposals to issue shares
compensation – Causeway believes that it is important that a company’s equity-based compensation plans, including stock option or restricted stock plans, are aligned with the interests of shareholders, including Causeway’s clients. Causeway evaluates compensation plans on a case-by-case basis. Causeway generally opposes packages that it believes provide excessive awards or create excessive shareholder dilution. Causeway generally opposes proposals to reprice options because the underlying stock has fallen in value.
debt issuance requests
mergers, acquisitions and other corporate reorganizations or restructurings
changes in state or country of incorporation
related party transactions
Causeway generally votes against:
anti-takeover mechanisms – Causeway generally opposes anti-takeover mechanisms including poison pills, unequal voting rights plans, staggered boards, provisions requiring supermajority approval of a merger and other matters that are designed to limit the ability of shareholders to approve merger transactions.
Causeway Capital Management LLC
December 31, 2019


Causeway generally votes with management regarding:
social issues – Causeway believes that it is management’s responsibility to handle such issues, and generally votes with management on these types of issues, or abstains. Causeway will oppose social proposals that it believes will be a detriment to the investment performance of a portfolio company.
Conflicts of Interest
Causeway’s interests may, in certain proxy voting situations, be in conflict with the interests of clients. Causeway may have a conflict if a company that is soliciting a proxy is a client of Causeway or is a major business partner or vendor for Causeway. Causeway may also have a conflict if Causeway personnel have significant business or personal relationships with participants in proxy contests, corporate directors or director candidates.
The Chief Operating Officer determines the issuers with which Causeway may have a significant business relationship. For this purpose, a “significant business relationship” is one that: (1) represents 1.5% or more of Causeway’s prior calendar year gross revenues; (2) represents $2,000,000 or more in payments from a sponsored vehicle during the prior calendar year; or (3) may not directly involve revenue to Causeway or payments from its sponsored vehicles, but is otherwise determined by the Chief Operating Officer to be significant to Causeway or its affiliates or sponsored vehicles, such as a primary service provider of a fund or vehicle managed and sponsored by Causeway, or a significant relationship with the company that might create an incentive for Causeway to vote in favor of management.
The Chief Operating Officer will identify issuers with which Causeway’s employees who are involved in the proxy voting process may have a significant personal or family relationship. For this purpose, a “significant personal or family relationship” is one that would be reasonably likely to influence how Causeway votes proxies.
Proxy voting staff will seek to identify potential conflicts of interest in the first instance and escalate relevant information to the Chief Operating Officer. The Chief Operating Officer will reasonably investigate information relating to conflicts of interest. For purposes of identifying conflicts under this policy, the Chief Operating Officer will rely on publicly available information about Causeway and its affiliates, information about Causeway and its affiliates that is generally known by Causeway’s employees, and other information actually known by the Chief Operating Officer. Absent actual knowledge, the Chief Operating Officer is not required to investigate possible conflicts involving Causeway where the information is (i) non-public, (ii) subject to information blocking procedures, or (iii) otherwise not readily available to the Chief Operating Officer.
Proxy voting staff will maintain a list of issuers with which there may be a conflict and will monitor for potential conflicts of interest on an ongoing basis.
Proxy proposals that are “routine,” such as uncontested elections of directors or those not subject to a vote withholding campaign, meeting formalities, and approvals of annual reports/financial statements are presumed not to involve material conflicts of interest. For non-routine proposals, the Chief Operating Officer in consultation with Causeway’s General Counsel and Chief Compliance Officer decides if they involve a material conflict of interest.
Causeway Capital Management LLC
December 31, 2019


If a proposal is determined to involve a material conflict of interest, Causeway may, but is not required to, obtain instructions from the client on how to vote the proxy or obtain the client’s consent for Causeway’s vote. If Causeway does not seek the client’s instructions or consent, Causeway will vote as follows:
If a “for” or “against” or “with management” guideline applies to the proposal, Causeway will vote in accordance with that guideline.
If a “for” or “against” or “with management” guideline does not apply to the proposal, Causeway will follow the recommendation of an independent third party such as ISS. If Causeway seeks to follow the recommendation of a third party, the Chief Operating Officer will assess the third party’s capacity and competency to analyze the issue, as well as the third party’s ability to identify and address conflicts of interest it may have with respect to the recommendation.
To monitor potential conflicts of interest regarding the research and recommendations of independent third parties, such as ISS, proxy voting staff will review the third party’s disclosures of significant relationships. The Chief Operating Officer will review proxy votes involving issuers where a significant relationship has been identified by the proxy research provider.
Practical Limitations Relating to Proxy Voting
While the proxy voting process is well established in the United States and other developed markets with numerous tools and services available to assist an investment manager, voting proxies of non-US companies located in certain jurisdictions may involve a number of problems that may restrict or prevent Causeway’s ability to vote such proxies. These problems include, but are not limited to: (i) proxy statements and ballots being written in a language other than English; (ii) untimely and/or inadequate notice of shareholder meetings; (iii) restrictions on the ability of holders outside the issuer’s jurisdiction of organization to exercise votes; (iv) requirements to vote proxies in person; (v) restrictions on the sale of the securities for a period of time prior to the shareholder meeting; and (vi) requirements to provide local agents with powers of attorney (which Causeway will typically rely on clients to maintain) to facilitate Causeway’s voting instructions. As a result, Causeway will only use its best efforts to vote clients’ non-US proxies and Causeway may decide not to vote a proxy if it determines that it would be impractical or disadvantageous to do so.
In addition, regarding US and non-US companies, Causeway will not vote proxies if it does not receive adequate information from the client’s custodian in sufficient time to cast the vote.
For clients with securities lending programs, Causeway may not be able to vote proxies for securities that a client has loaned to a third party. Causeway recognizes that clients manage their own securities lending programs. Causeway may, but is not obligated to, notify a client that Causeway is being prevented from voting a proxy due to the securities being on loan. There can be no assurance that such notice will be received in time for the client, if it so chooses, to recall the security.

Causeway Capital Management LLC
December 31, 2019

DD J CAPITAL MANAGEMENT, LLC
PROXY VOTING POLICIES AND PROCEDURES Updated March 13, 2012
I.Overview

In accordance with the fiduciary duties owed to our clients and Rule 206(4)-6 promulgated by the Securities and Exchange Commission (the "SEC") under the Investment Advisers Act of 1940 (the "Advisers Act"), DDJ Capital Management, LLC ("DDI"), a registered investment adviser, has adopted and implemented these Proxy Voting Policies and Procedures (the "Policies") that we believe are reasonably designed to ensure that proxies are voted in the best interests of our clients. Because our authority to vote proxies on behalf of our clients is established by our advisory contracts with such clients, the Policies have been tailored to reflect these specific contractual obligations.1 The Policies also reflect the long-standing fiduciary standards and responsibilities for ERISA accounts set out in Department of Labor Bulletin 94-2, 29 C.F.R. 2509.94-2 (July 29, 1994).
II.Statement of Proxy Voting Policy
It is the policy of DDJ to vote all proxies in the best interests and for the benefit of its clients. We believe that this means voting in accordance with our judgment as to what voting decision is most likely to maximize total return to the client as an investor in the company whose securities are being voted, including, where applicable, returns to the client on positions held in non-voting securities of that issuer or securities of other issuers that may be materially affected by the outcome of the vote.
DDJ primarily manages investments in high-yield and distressed debt, rather than equity, securities. As a result, DDJ does not receive proxies in connection with most of our clients' investment positions. However, certain of our client accounts do hold equity securities. Many of the proxies received by DDJ with respect to securities held in client accounts relate to special situations, such as the restructuring of an issuer that is emerging or recently emerged from bankruptcy, that is in financial distress or that has significant debt obligations but improving fundamentals. DDJ believes that it is not appropriate, in most cases, to vote proxies with respect to the securities of such issuers in accordance with fixed, pre-determined guidelines. Accordingly, DDJ generally reviews and makes a voting decision on each matter presented in such proxy on an individual, case-by-case basis. DDJ generally gives similar, case-by-case treatment to proxies with respect to securities of other issuers, with the exception of routine matters noted below. Normally, voting decisions are made by the portfolio manager or research analyst responsible at the time of the vote for monitoring the corporate events of the particular







issuer of the securities to be voted. DDJ believes such individualized consideration of proxy voting decisions best serves our clients' interests. For certain more routine matters that are commonly presenting to shareholders for vote and that do not involve issuers in special situations or other circumstances requiring individual analysis, DDJ has established general voting guidelines that are set forth in Section VJJ of these Policies. However, with respect to any particular proxy, DDJ is not obligated to follow these general voting guidelines.
In certain circumstances, DDJ may elect to not vote proxies with respect to securities held in client accounts, including, but not limited to, situations where (a) the securities are no longer held in a client's account; (b) the proxy or related materials are not received in sufficient time to allow DDJ to analyze the material or cast an informed vote by the voting deadline; or (c) DDJ concludes that the costs of voting a proxy outweigh any potential benefits to its clients.
III. Proxy Voting Procedures
DDJ has designated an internal proxy administrator (the "Administrator"). The Administrator is responsible for coordinating the review and voting of client proxies. With respect to pending proxy matters, the Administrator reviews on a regular basis the information provided to us electronically by the custodians for our clients (generally, in whose name (or nominee name) the security has been registered).2 Upon concluding that a proxy has been distributed to shareholders by an issuer in which a client has a long position, the Administrator monitors incoming regular mail for paper copies of such proxies. The Administrator follows up directly with the custodian, issuer and/or Automatic Data Processing, Inc. ("ADP") in the event that the issuer (or other shareholder service) has not timely delivered such paper proxy to DDJ.
Following receipt of a proxy, the Administrator reviews the proxy and the matters to be voted therein. The Administrator also cross-checks the shareholdings information contained in the proxy with the applicable client holdings report to confirm that the ownership information on file with ADP, the custodian and/or the issuer matches our internal records; to the extent that it does not, the Administrator will attempt to reconcile the discrepancy directly with the applicable custodian. Furthermore, any material conflicts of interest identified by the Administrator are resolved as described in Section IV below. The Administrator then distributes the proxy to the applicable portfolio manager or research analyst so that s/he can review the proxy in accordance with the procedures outlined in Section II above. If the portfolio manager or research analyst is aware of any matter that may constitute a material conflict of interest, s/he will contact the Administrator such that the conflict may be addressed in accordance with the procedures described in Section IV below. Otherwise, the portfolio manager or research analyst will return the completed proxy to the Administrator. The Administrator then provides the Chief Compliance Officer (or a designee) with a copy of the completed proxy for review. If the Chief Compliance Officer is aware of any material conflict of interest, s/he will contact the Administrator such that the conflict may be addressed in accordance with the procedures described in Section IV below. Otherwise, the Administrator votes the proxy in accordance with the instructions provided by the portfolio manager or research analyst typically either









electronically (typically via www.proxyvote.com) or via paper ballot, as applicable.3 After the Administrator has voted the proxy, the Administrator keeps a copy of the proxy, together with a completed internal checklist of proxy procedures maintained by DDJ (the form of which is attached hereto as Exhibit A), for record keeping purposes.
In the event that the Administrator is out of the office, the DDJ Head Trader assumes responsibility for the timely internal distribution and voting of proxies.
IV. Conflicts of Interest
From time to time, DDJ (and/or its affiliates) may have a material conflict of interest with respect to a matter to be voted. For example, it is possible that DDJ (or one of its affiliates) may have a very significant business relationship with either the company whose stock is being voted, the person soliciting the proxy or a third party that has a material interest in the outcome of the proxy vote. If the Administrator identifies or is notified of a potential material conflict of interest, the Administrator will convene a meeting of DDJ's internal proxy committee, which has been created to address situations when such conflicts arise. The internal proxy committee, which consists of one or more members of the DDJ legal department and such other DDJ personnel as may be designated to serve on the committee from time to time, will then meet to determine whether voting on such proxy matter presents a material conflict of interest. In the event that the internal committee concludes that there is a material conflict of interest, DDJ generally will request a waiver of the conflict or voting instructions from the client, a representative of the client or an appropriate independent third party. Specifically:
for investment fund clients of DDJ that have established an independent board of advisors, DDJ will disclose the conflict to such board of advisers of the applicable investment fund, and either vote the proxy as instructed by the applicable board or obtain a waiver for DDJ to vote the proxy;
for investment fund clients of DDJ that have not established a board of advisors, DDJ will disclose the conflict (a) to such fund's independent accountants or another unaffiliated third party advisor selected by DDJ, and vote the proxy in accordance with the instructions of such proxy advisor, or (b) to the underlying investors (e.g., limited partners) of such investment fund and seek either voting instructions or a waiver of the conflict directly from a majority in interest with respect to such investors;
for any commingled vehicle established as a trust, DDJ will disclose the conflict to the trustee of such entity (provided that the trustee is unaffiliated with DDJ), and seek either voting instructions or a waiver of the conflict from such trustee;
for ERISA accounts, DDJ will disclose the conflict to the plan sponsor, trustee or other named fiduciary for the plan and seek either voting instructions or a waiver of the conflict from such fiduciary; and
for other non-ERISA separate accounts, DDJ will disclose the conflict to the underlying client and seek either voting instructions or a waiver of the conflict directly from such client.

In certain cases, depending on the voting authority provided to DDJ by the underlying client, DDJ may instruct the client's custodian to vote the proxy in accordance with DDJ's direction.






In the event that the client, client representative or other third party, as the case may be, does not desire to direct the vote of the proxy matter in question, DDJ may, as circumstances warrant, take other steps, such as consulting with its outside legal counsel or an independent third party service, which steps are designed to result in a decision that is demonstrably based on the clients' best interests and not the product of the conflict. If a material conflict cannot be resolved as described above, DDJ will not vote the proxy.
V.Maintenance of Proxy Voting Records
As required by Rule 204-2 under the Advisers Act, DDJ maintains records of proxies that it has voted on behalf of its clients. These records include:
(i)a copy of DDJ's internal policies and procedures with respect to proxy voting, as updated from time to time;
(ii)copies of proxy statements received regarding securities held in client accounts, unless the materials are available electronically through the SEC's EDGAR system;
(iii)a record of each vote cast on behalf of our clients;
(iv)a copy of any internal documents created by DDJ that were material to making the decision how to vote proxies on behalf of its clients; and
(v)each written client request for proxy voting records and DDJ's written response to any (written or oral) client request for such records.
With respect to accounts managed on behalf of any plan subject to ERISA, DDJ also maintains accurate proxy voting records to enable the named fiduciary of such accounts to determine whether DDJ is fulfilling its ERISA obligations with respect to a particular account. DDJ will maintain these proxy voting books and records for a period of six years. These records will be maintained for at least the first two years in DDJ's office.
VI.Disclosure
DDJ will provide each client a summary of these Policies. Alternatively, or upon the request of any client, DDJ will provide such client copies of its full Policies as well as information with respect to how DDJ voted proxies on behalf of such client.



VII. Proxy Voting Guidelines
The following guidelines are not exhaustive and do not include all potential voting issues. Because proxy voting issues and the circumstances of individual portfolio companies are so varied, there may be instances when DDJ will not vote in strict adherence to these guidelines. In addition, votes on matters not covered by these guidelines will be determined in accordance with the policies and procedures principles set forth above. For example, proxy votes that present company-specific issues of a non-routine nature may be more appropriately handled on a case-by-case basis, as described above. At any time, DDJ may seek voting instructions from some or all of the clients holding the securities to be voted, and, as a result, client instructions may cause DDJ to vote differently for different clients on the same matter.
I. The Board of Directors
A.Director Nominees in Uncontested Elections
Vote for director nominees, examining the following factors:
long-term corporate performance record of the company's stock relative to a market index; and
composition of board and key board committees.
In certain cases, and when information is readily available, we may also review:
corporate governance provisions and takeover activity;
board decisions regarding executive pay;
board decisions regarding majority-supported shareholder proposals in back-to-back years;
director compensation; and
number of other board seats held by nominee.
B.Majority of Independent Directors
Vote for proposals that the board be comprised of a majority of independent directors.
Vote for proposals that request that the board audit, compensation and/or nominating committees include independent directors exclusively.
C.Director and Officer Indemnification and Liability Protection
Vote on a case-by-case basis proposals concerning director and officer indemnification and liability protection.



Vote against proposals to limit or eliminate entirely director and officer liability for monetary damages for violating the duty of care.
Vote against indemnification proposals that would expand coverage beyond just legal expenses to include coverage for acts or omissions, such as gross negligence or worse, that are more serious violations of fiduciary obligations than mere carelessness.
Vote for only those proposals that provide such expanded coverage in cases when a director's or officer's legal defense was unsuccessful if: (1) the director or officer was found to have acted in good faith and in a manner that he reasonably believed was in the best interests of the company, and (2) only if the director's legal expenses would be covered.
II.Proxy Contests
A. Director Nominees in Contested Elections
Vote on a case-by-case basis when the election of directors is contested, examining some or all of the following factors:
long-term financial performance of the company relative to its industry;
management's track record;
background to the proxy contest;
qualifications of director nominees (both slates);
evaluation of what each side is offering shareholders, as well as the likelihood that the proposed objectives and goals can be met; and
stock ownership positions of director nominees.
III.Auditors Ratifying Auditors
Vote for proposals to ratify auditors, unless it appears that: an auditor has a financial interest in or association with the company that impairs the auditor's independence; or there is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company's financial position.
IV.Proxy Contest Defenses
A. Shareholder Ability to Call Special Meetings
Vote against proposals to restrict or prohibit shareholder ability to call special meetings.
Vote for proposals that remove restrictions on the right of shareholders to act independently of management.



B.Shareholder Ability to Act by Written Consent
Vote against proposals to restrict or prohibit shareholder ability to take action by written consent.
Vote for proposals to allow or make easier shareholder action by written consent.
C.Shareholder Ability to Alter the Size of the Board
Vote for proposals that seek to fix the size of the board.
Vote against proposals that give management the ability to alter the size of the board without shareholder approval.
V.Capital Structure
Common Stock Authorization
Vote on a case-by-case basis proposals to increase the number of shares of common stock authorized for issue.
B.Stock Distributions: Splits and Dividends
Vote for management proposals to increase common share authorization for a stock split, provided that the split does not result in an increase of authorized but unissued shares of more than 100% after giving effect to the shares needed for the split.
C.Reverse Stock Splits
Vote against management proposals to implement a reverse stock split.
D.Share Repurchase Programs
Vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms.
VI.Executive and Director Compensation
In general, we vote on a case-by-case basis on executive and director compensation plans, with the view that viable compensation programs reward the creation of stockholder wealth by having a high payout sensitivity to increases in shareholder value.
In evaluating a pay plan, we may consider its dilutive effect both on shareholder wealth and on voting power. We may consider equity-based compensation along with cash components of pay. Administrative features may also be factored into our vote. For example, our policy is







that the plan should generally be overseen by a committee of independent directors; insiders should not generally serve on compensation committees.
Other factors, such as repricing underwater stock options without shareholder approval, may cause us to vote against a plan. Additionally, in some cases we would vote against a plan deemed unnecessary.
A.Proposals to Limit Executive and Director Pay
Vote on a case-by-case basis all proposals that seek additional disclosure of executive and director pay information.
Vote on a case-by-case basis all other proposals that seek to limit executive and director pay.
Vote for proposals to expense options, unless the company has already publicly committed to expensing options by a specific date.
B.Employee Stock Ownership Plans (ESOPs)
Vote for proposals that request shareholder approval in order to implement an ESOP or to increase authorized shares for existing ESOPs, except in cases when the number of shares allocated to the ESOP is "excessive" (i.e., generally greater than 5% of outstanding shares).
C.401(k) Employee Benefit Plans
Vote for proposals to implement a 401(k) savings plan for employees. VII. Mergers and Corporate Restructurings
Vote on a case-by-case basis proposals related to mergers and acquisitions, taking into account some or all of the following factors:
anticipated financial and operating benefits;
offer price (cost vs. premium);
prospects of the combined companies;
how the deal was negotiated; and
changes in corporate governance and their impact on shareholder rights.





Exhibit A
Proxy Checklist
Name of Issuer:    
Date proxy required to be voted:    Record Datej    
     Cross-check proxy ownership disclosure with internal DDJ holdings report
     Deliver checklist and proxy to Responsible Analyst:    
     Receive completed proxy from Responsible Analyst
Deliver completed proxy to Legal Department
     Receive completed proxy from Legal Department
    Confirm with CFO, DDJ Head Trader, Responsible Analyst and Legal Department that no
material conflicts were identified.
If any of the addressees or copied persons believes that there may be a potential material conflict of interest with respect to a proxy matter to be voted, please notify me so that I may convene a meeting of the DDJ Internal Proxy Committee in accordance with the Policies.
Either:
     Vote proxy via         on         in accordance
with instructions provided by the Responsible Analyst.
or
     Convene DDJ Internal Proxy Committee and vote proxy accordingly
     File proxy in accordance with internal record-keeping procedures
Comments:    
Initialed:     
Chris Kaminski Administrator


Proxy Voting Guidelines

Eagle Asset Management, Inc.

May 2020




Table of Contents
Part I: POLICY AND PROCEDURES
Guiding Principles
The Proxy Voting Process
Implementation
Conflicts of Interest
Part II: EAM PROXY VOTING GUIDELINES SUMMARY
U.S. Proxy Items
Non-U.S. Proxy Items
Eagle Asset Management, Inc.
2020 Proxy Voting Guidelines


Part I: POLICY AND PROCEDURES

Eagle Asset Management, Inc.
(Collectively “EAM”)
POLICY AND PROCEDURES ON PROXY VOTING
FOR INVESTMENT ADVISORY CLIENTS
Guiding Principles
Proxy voting and the analysis of corporate governance issues in general are important elements of the portfolio management services we provide to our advisory clients who have authorized us to address these matters on their behalf. Our guiding principles in performing proxy voting are to make decisions that favor proposals, which in EAM’s view, maximize a company’s shareholder value and are not influenced by conflicts of interest. These principles reflect EAM’s belief that sound corporate governance will create a framework within which a company can be managed in the interests of its shareholders.
EAM has adopted the policies and procedures set out below regarding the voting of proxies (the “Policy”). EAM periodically reviews this Policy to ensure it continues to be consistent with our guiding principles.
The Proxy Voting Process Public Equity
Investments
To implement these guiding principles for investments in publicly traded equities for which we have voting power on any record date, we follow customized proxy voting guidelines that have been developed by EAM portfolio management (the “EAM Guidelines”). The EAM Guidelines embody the positions and factors EAM generally considers important in casting proxy votes. They address a wide variety of individual topics, including, among other matters, shareholder voting rights, anti-takeover defenses, board structures, the election of directors, executive and director compensation, reorganizations, mergers, issues of corporate social responsibility and various shareholder proposals. Recognizing the complexity and factspecific nature of many corporate governance issues, the EAM Guidelines identify factors we consider in determining how the vote should be cast. A summary of the EAM Guidelines is enclosed as Part II.
The principles and positions reflected in this Policy are designed to guide us in voting proxies, and not necessarily in making investment decisions. EAM portfolio management teams (each a “Portfolio Management Team”) base their determinations of whether to invest in a particular company on a variety of factors, and while corporate governance may be one such factor, it may not be the primary consideration.
Eagle Asset Management, Inc.
2020 Proxy Voting Guidelines


Implementation
EAM has retained a third-party proxy voting service (the “Proxy Service”) to assist in the implementation of certain proxy voting-related functions, including, without limitation, operational, recordkeeping and reporting services. The Proxy Service transmits votes for each proxy based upon the application of the EAM Guidelines to the particular proxy issues. EAM retains the responsibility for proxy voting decisions.
Clients of EAM may retain their voting rights; delegate the responsibility to EAM or to a third party of their choosing. In certain instances, EAM may still be required to transmit vote proxies for those custodians who do not have a relationship with the Proxy Service.
EAM’s Portfolio Management Teams generally cast proxy votes consistently with the EAM Guidelines. On certain proxy votes, each Portfolio Management Team may diverge from the EAM Guidelines based on new research or information but bearing in mind that the override decisions are not influenced by any conflict of interest. Because of the override process, different Portfolio Management Teams may vote differently for particular votes for the same company.
From time to time, EAM’s ability to vote proxies may be affected by regulatory requirements and compliance, legal or logistical considerations. As a result, EAM, from time to time, may determine that it is not practicable or desirable to vote proxies.
Conflicts of Interest
In instances when a Portfolio Management Team is interested in voting in a manner that diverges from the initial Recommendation based on the EAM Guidelines, EAM has implemented processes designed to prevent conflicts of interest from influencing its proxy voting decisions. These processes include information barriers, the use of the EAM Guidelines and the override review described above.

Part II: EAM PROXY VOTING GUIDELINES SUMMARY

The following is a summary of the material EAM Proxy Voting Guidelines (the “Guidelines”), which form the substantive basis of EAM’s Policy and Procedures on Proxy Voting for Investment Advisory Clients (the “Policy”). As described in the main body of the Policy, one or more EAM Portfolio Management Teams may diverge from the Guidelines and a related Recommendation on any particular proxy vote or in connection with any individual investment decision in accordance with the Policy. The following is a summary of the material EAM Proxy Voting Guidelines (the “Guidelines”), which form the substantive basis of EAM’s Policy and Procedures on Proxy Voting for Investment Advisory Clients (the “Policy”). As described in the main body of the Policy, one or more EAM Portfolio Management Teams may diverge from the Guidelines and a related Recommendation on any particular proxy vote or in connection with any individual investment decision in accordance with the Policy.

Appendix A, which details Eagle’s proxy voting guidelines for Routine and Non-Routine Shareholder proposals, intentionally omitted.
Eagle Asset Management, Inc.
2020 Proxy Voting Guidelines





Eagle Asset Management, Inc.
2020 Proxy Voting Guidelines

EMERALD ADVISERS, LLC.
EMERALD MUTUAL FUND ADVISERS TRUST
EMERALD SEPARATE ACCOUNT MANAGEMENT

PROXY VOTING POLICY

The voting policies set forth below apply to all proxies which Emerald Advisers, LLC. and subsidiaries are entitled to vote. It is Emerald’s policy to vote all such proxies. Corporate governance through the proxy process is solely concerned with the accountability and responsibility for the assets entrusted to corporations. The role of institutional investors in the governance process is the same as the responsibility due all other aspects of the fund’s management. First and foremost, the investor is a fiduciary and secondly, an owner. Fiduciaries and owners are responsible for their investments. These responsibilities include:
1)selecting proper directors
2)insuring that these directors have properly supervised management
3)resolve issues of natural conflict between shareholders and managers
a.Compensation
b.Corporate Expansion
c.Dividend Policy
d.Free Cash Flow
e.Various Restrictive Corporate Governance Issues, Control Issues, etc.
f.Preserving Integrity
In voting proxies, Emerald will consider those factors which would affect the value of the investment and vote in the manner, which in its view, will best serve the economic interest of its clients. Consistent with this objective, Emerald will exercise its vote in a activist pro-shareholder manner in accordance with the following policies.
I. BOARDS OF DIRECTORS
In theory, the board represents shareholders, in practice, all to often Board members are selected by management. Their allegiance is therefore owed to management in order to maintain their very favorable retainers and prestigious position. In some cases, corporations never had a nominating process, let alone criteria for the selection of Board members. Shareholders have begun to focus on the importance of the independence of the Board of Directors and the nominating process for electing these Board members. Independence is an important criterium to adequately protect shareholders’ ongoing financial interest and to properly conduct a board member’s oversight process. Independence though, is only the first criteria for a Board. Boards need to be responsible fiduciaries in their oversight and decision making on behalf of the owners and corporations. Too many companies are really ownerless. Boards who have failed to perform their duties, or do not act in the best interests of the shareholders should be voted out. A clear message is sent when a no confidence vote is given to a set of directors or to a full Board.



A.Election of Directors, a Board of Directors, or any number of Directors. In order to assure Boards are acting solely for the shareholders they represent, the following resolutions will provide a clear message to underperforming companies and Boards who have failed to fulfill duties assigned to them.
Votes should be cast in favor of shareholder proposals asking that boards be comprised of a majority of outside directors.
Votes should be cast in favor of shareholder proposals asking that board audit, compensation and nominating committees be comprised exclusively of outside directors.
Votes should be cast against management proposals to re-elect the board if the board has a majority of inside directors.
Votes should be withheld for directors who may have an inherent conflict of interest by virtue of receiving consulting fees from a corporation (affiliated outsiders).
Votes should be withheld, on a case by case basis, for those directors of the compensation committees responsible for particularly egregious compensation plans.
Votes should be withheld for directors who have failed to attend 75% of board or committee meetings in cases where management does not provide adequate explanation for the absences.
Votes should be withheld for incumbent directors of poor performing companies; defining poor performing companies as those companies who have below average stock performance (vs. peer group/Wilshire 5000) and below average return on assets and operating margins.
Votes should be cast in favor of proposals to create shareholder advisory committees. These committees will represent shareholders’ views, review management, and provide oversight of the board and their directors.
B.Selection of Accountants: Emerald will generally support a rotation of accountants to provide a truly independent audit. This rotation should generally occur every 4-5 years.
C.Incentive Stock Plans. Emerald will generally vote against all excessive compensation and incentive stock plans which are not performance related.
D.Corporate restructuring plans or company name changes, will generally be evaluated on a case by case basis.
E.Annual Meeting Location. This topic normally is brought forward by minority shareholders, requesting management to hold the annual meeting somewhere other than where management desires. Resolution. Emerald normally votes with management, except in those cases where management seeks a location to avoid their shareholders.
Emerald Advisers, LLC
October 1, 2018



F.Preemptive Rights. This is usually a shareholder request enabling shareholders to participate first in any new offering of common stock. Resolution: We do not feel that preemptive rights would add value to shareholders, we would vote against such shareholder proposals.
G.Mergers and/or Acquisitions. Each merger and/or acquisition has numerous ramifications for long term shareholder value. Resolution: After in-depth valuation Emerald will vote its shares on a case by case basis.
II. CORPORATE GOVERNANCE ISSUES
These issues include those areas where voting with management may not be in the best interest of the institutional investor. All proposals should be examined on a case by case basis.
A.Provisions Restricting Shareholder Rights. These provisions would hamper shareholders ability to vote on certain corporate actions, such as changes in the bylaws, greenmail, poison pills, recapitalization plans, golden parachutes, and on any item that would limit shareholders’ right to nominate, elect, or remove directors. These items can change the course of the corporation overnight and shareholders should have the right to vote on these critical issues. Resolution: Vote Against management proposals to implement such restrictions and vote For shareholder proposals to eliminate them.
B.Anti-Shareholder Measures. These are measures designed to entrench management so as to make it more difficult to effect a change in control of the corporation. They are normally not in the best interests of shareholders since they do not allow for the most productive use of corporate assets.
1. Classification of the Board of Directors:
A classified Board is one in which directors are not elected in the same year rather their terms of office are staggered. This eliminates the possibility of removing entrenched management at any one annual election of directors. Resolution: Vote Against proposals to classify the Board and support proposals (usually shareholder initiated) to implement annual election of the Board.

2. Shareholder Rights Plans (Poison Pills):
Anti-acquisition proposals of this sort come in a variety of forms. In general, issuers confer contingent benefits of some kind on their common stockholders. The most frequently used benefit is the right to buy shares at discount prices in the event of defined changes in corporate control. Resolution: Vote Against proposals to adopt Shareholder Rights Plans, and vote For Shareholder proposals eliminating such plans.

Emerald Advisers, LLC
October 1, 2018


3. Unequal Voting Rights:
A takeover defense, also known as superstock, which gives holders disproportionate voting rights. Emerald adheres to the One Share, One Vote philosophy, as all holders of common equity must be treated fairly and equally. Resolution: Vote Against proposals creating different classes of stock with unequal voting privileges.
4. Supermajority Clauses:
These are implemented by management requiring that an overly large amount of shareholders (66-95% of shareholders rather than a simple majority) approve business combinations or mergers, or other measures affecting control. This is another way for management to make changes in control of the company more difficult. Resolution: Vote Against management proposals to implement supermajority clauses and support shareholder proposals to eliminate them.
5. Fair Price Provisions:
These provisions allow management to set price requirements that a potential bidder would need to satisfy in order to consummate a merger. The pricing formulas normally used are so high that the provision makes any tender offer prohibitively expensive. Therefore, their existence can foreclose the possibility of tender offers and hence, the opportunity to secure premium prices for holdings. Resolution: Vote Against management proposals to implement fair price provisions and vote For shareholder proposals to eliminate them.
Caveat: Certain fair price provisions are legally complex and require careful analysis and advice before concluding whether or not their adoption would serve stockholder interest.
6. Increases in authorized shares and/or creation of new classes of common and preferred stock:
a.Increasing authorized shares.
Emerald will support management if they have a stated purpose for increasing the authorized number of common and preferred stock. Under normal circumstances, this would include stock splits, stock dividends, stock option plans, and for additional financing needs. However, in certain circumstances, it is apparent that management is proposing these increases as an anti-takeover measure. When used in this manner, share increases could inhibit or discourage stock acquisitions by a potential buyer, thereby negatively affecting a fair price valuation for the company.
Resolution: On a case by case basis, vote Against management if they attempt to increase the amount of shares that they are authorized to issue if their intention is to use the excess shares to discourage a beneficial business combination. One way to determine if management intends to abuse its right to issue shares is if the amount of authorized shares requested is double the present amount of authorized shares.
Emerald Advisers, LLC
October 1, 2018


b. Creation of new classes of stock.
Managements have proposed authorizing shares of new classes of stock, usually preferreds, which the Board would be able to issue at their discretion. The Board would also be granted the discretion to determine the dividend rate, voting privileges, redemption provisions, conversion rights, etc. without approval of the shareholders. These “blank check” issues are designed specifically to inhibit a takeover, merger, or accountability to its shareholders.
Resolution: Emerald would vote AGAINST management in allowing the Board the discretion to issue any type of “blank check” stock without shareholder approval.
c. Directors and Management Liability and Indemnification.
These proposals are a result of the increasing cost of insuring directors and top management against lawsuits. Generally, managements propose that the liability of directors and management be either eliminated or limited. Shareholders must have some recourse for losses that are caused by negligence on the part of directors and management. Therefore directors and management should be responsible for their fiduciary duty of care towards the company. The Duty of Care is defined as the obligation of directors and management to be diligent in considering a transaction or in taking or refusing to take a corporate action.
Resolution: On a case by case basis, Emerlad votes Against attempts by management to eliminate directors and management liability for their duty of care.
d. Compensation Plans (Incentive Plans)
Management occasionally will propose to adopt an incentive plan which will become effective in the event of a takeover or merger. These plans are commonly known as “golden parachutes” or “tin parachutes” as they are specifically designed to grossly or unduly benefit a select few in management who would most likely lose their jobs in an acquisition. Shareholders should be allowed to vote on all plans of this type.
Resolution: On a case by case basis, vote Against attempts by management to adopt proposals that are specifically designed to grossly or unduly benefit members of executive management in the event of an acquisition.
e. Greenmail
Emerald would not support management in the payment of greenmail.
Resolution: Emerald would vote FOR any shareholder resolution that would eliminate the possibility of the payment of greenmail.
Emerald Advisers, LLC
October 1, 2018


f. Cumulative Voting
Cumulative voting entitles stockholders to as many votes as equal the number of shares they own multiplied by the number of directors being elected. According to this set of rules, a shareholder can cast all votes towards a single director, or any two or more. This is a proposal usually made by a minority shareholder seeking to elect a director to the Board who sympathizes with a special interest. It also can be used by management that owns a large percentage of the company to ensure that their appointed directors are elected.
Resolution: Cumulative voting tends to serve special interests and not those of shareholders, therefore Emerald will vote Against any proposals establishing cumulative voting and For any proposal to eliminate it.
g. Proposals Designed to Discourage Mergers & Acquisitions In Advance
These provisions direct Board members to weigh socioeconomic and legal as well as financial factors when evaluating takeover bids. This catchall apparently means that the perceived interests of customers, suppliers, managers, etc., would have to be considered along with those of the shareholder. These proposals may be worded: “amendments to instruct the Board to consider certain factors when evaluating an acquisition proposal”. Directors are elected primarily to promote and protect the shareholder interests. Directors should not allow other considerations to dilute or deviate from those interests. Resolution: Emerald will vote Against proposals that would discourage the most productive use of corporate assets in advance.
h. Confidential Voting
A company that does not have a ballot provision has the ability to see the proxy votes before the annual meeting. In this way, management is able to know before the final outcome how their proposals are being accepted. If a proposal is not going their way, management has the ability to call shareholders to attempt to convince them to change their votes. Elections should take place in normal democratic process which includes the secret ballot. Elections without the secret ballot can lead to coercion of shareholders, employees, and other corporate partners. Resolution: Vote For proposals to establish secret ballot voting.
i Disclosure
Resolution: Emerald will vote Against proposals that would require any kind of unnecessary disclosure of business records. Emerald will vote For proposals that require disclosure of records concerning unfair labor practices or records dealing with the public safety.
Emerald Advisers, LLC
October 1, 2018


j. Sweeteners
Resolution: Emerald will vote Against proposals that include what are called “sweeteners” used to entice shareholders to vote for a proposal that includes other items that may not be in the shareholders best interest. For instance, including a stock split in the same proposal as a classified Board, or declaring an extraordinary dividend in the same proposal installing a shareholders rights plan (Poison Pill).
k. Changing the State of Incorporation
If management sets forth a proposal to change the State of Incorporation, the reason for change is usually to take advantage of another state’s liberal corporation laws, especially regarding mergers, takeovers, and anti-shareholder measures. Many companies view the redomestication in another jurisdiction as an opportune time to put new anti-shareholder measures on the books or to purge their charter and bylaws of inconvenient shareholder rights, written consent, cumulative voting, etc. Resolution: On a case by case basis, Emerald will vote Against proposals changing the State of Incorporation for the purpose of their anti-shareholder provisions and will support shareholder proposals calling for reincorporation into a jurisdiction more favorable to shareholder democracy.
l. Equal Access to Proxy Statements
Emerald supports stockholders right to equal access to the proxy statement, in the same manner that management has access. Stockholders are the owners of a corporation and should not be bound by timing deadlines and other obstacles that presently shareholders must abide by in sponsoring proposals in a proxy statement. The Board should not have the ability to arbitrarily prevent a shareholder proposal from appearing in the proxy statement. Resolution: Emerald will support any proposal calling for equal access to proxy statements.
m. Abstention Votes
Emerald supports changes in the method of accounting for abstention votes. Abstention votes should not be considered as shares “represented” or “cast” at an annual meeting. Only those shares cast favoring or opposing a proposal should be included in the total votes cast to determine if a majority vote has been achieved. Votes cast abstaining should not be included in total votes cast. Resolution: Emerald will support any proposal to change a company’s by-laws or articles of incorporation to reflect the proper accounting for abstention votes.
Emerald Advisers, LLC
October 1, 2018


III. Other Issues
On other major issues involving questions of community interest, moral and social concern, fiduciary trust and respect for the law such as:
A.Human Rights
B.Nuclear Issues
C.Defense Issues
D.Social Responsibility
Emerald, in general supports the position of management. Exceptions to this policy Include:
1.    South Africa
Emerald will actively encourage those corporations that have South African interests to adopt and adhere to the Statement of Principles for South Africa, formerly known as the Sullivan Principles, and to take further actions to promote responsible corporate activity.
2.    Northern Ireland
Emerald will actively encourage U.S. companies in Northern Ireland to adopt and adhere to the MacBride Principles, and to take further actions to promote responsible corporate activity.
IV. Other Potential Conflicts of Interest
Emerald may manage a variety of corporate accounts that are publically traded. Emerald will use Glass-Lewis recommendations to avoid any appearance of a conflict of interest when voting proxies of its clients that are publically traded companies.
Emerald Advisers, LLC
October 1, 2018

Appendix 5-A
Hotchkis & Wiley Capital Management
Proxy Voting Policies and Procedures

PURPOSE
The purpose of these Proxy Voting Policies and Procedures is to memorialize the procedures and policies adopted by Hotchkis and Wiley Capital Management (“H&W”) to enable the firm to comply with its accepted responsibilities and the requirements of Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (“Advisers Act”). It is H&W’s duty to vote proxies in the best interests of its clients (which may involve affirmatively deciding that voting the proxies may not be in the best interests of certain clients on certain matters).
POLICY
H&W acts as discretionary investment adviser for various clients, including clients governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Unless a client (including a “named fiduciary” under ERISA) specifically reserves the right to vote its own proxies, H&W will vote client proxies and act on all other corporate actions. A number of clients have notified H&W that they will vote the proxies for their accounts. H&W does not take any action with respect to proxy voting for these clients.
H&W’s Proxy Oversight Committee (“POC”) (consisting of the Chief Operating Officer, Chief Compliance Officer, and Managing Director of Portfolio Services) oversees H&W’s proxy voting policies and procedures by providing an administrative framework to facilitate and monitor the exercise of such proxy voting and to fulfill the obligations of reporting and recordkeeping under the federal securities laws.
Under the proxy voting guidelines, H&W generally votes on routine business matters in favor of management’s positions. To vote client proxies, H&W utilizes Institutional Shareholder Services, Inc. ("ISS"), a leading national provider of proxy voting administrative and research services.
In certain situations as permitted under the investment management agreement, H&W may consider written direction from a client on how to vote on a specific proxy proposal that would be applicable only to shares specifically owned by the respective client. In this situation, the shares voted under client direction may not be consistent with proxies voted by H&W for other clients or with the established guidelines contained in these Proxy Voting Policies and Procedures.
When voting proxies for clients, H&W’s primary concern is that all decisions be made solely in the best interest of the shareholder (and for ERISA accounts, plan beneficiaries and participants, in accordance with the letter and spirit of ERISA). H&W will act in a manner it deems prudent and diligent and which is intended to enhance the economic value of the assets of the account, including the consideration of environmental, social, and governance (“ESG”) items when economically material.
Hotchkis & Wiley Capital Management
5 - Portfolio Management Process
2018-10


GUIDELINES
Each proxy issue will be considered individually. The following guidelines are a partial list to be used in voting on proposals often contained in proxy statements, but will not be used as rigid rules. The voting policies below are subject to modification in certain circumstances and will be reexamined from time to time. With respect to matters that do not fit in the categories stated below, H&W will exercise its best judgment as a fiduciary to vote in the manner which will most enhance shareholder value.
Management Proposals
H&W recognizes that a company’s management is charged with day-to-day operations and long-term direction of the company and, therefore, generally votes on routine business matters in favor of management’s positions. Generally, in the absence of any unusual or non-routine information, the following items if recommended by management are likely to be supported:
Ratification of appointment of independent auditors
General updating/corrective amendments to charter
Increase in common share authorization for a stock split or share dividend
Stock option plans that are incentive based and not excessive
Election of directors
The following items will always require company specific and case-by-case review and analysis when submitted by management to a shareholder vote:
Directors' liability and indemnity proposals
Executive compensation plans
Mergers, acquisitions, and other restructurings submitted to a shareholder vote
Anti-takeover and related provisions
Shareholder Proposals
Under ERISA standards, it is inappropriate to use (vote) plan assets to carry out social agendas or purposes. Certain ESG proposals, however, could be economically meaningful to shareholders and we will vote in their best interest accordingly. Thus, shareholder proposals are examined closely for their relationship to the best interest of beneficiaries, and economic impact. In general, H&W will vote in accordance with the recommendation of the company’s board of directors on all shareholder proposals. However, H&W will support shareholder proposals that are consistent with H&W’s proxy voting guidelines for board-approved proposals. For example, H&W will generally support a proposal requiring a majority vote for the election of directors.
Hotchkis & Wiley Capital Management
5 - Portfolio Management Process
2018-10


Generally, shareholder proposals related to the following items are not supported:
Declassification of the board
Cumulative voting
Restrictions related to social, political, or special interest issues that impact the ability of the company to do business or be competitive and that have a significant financial or vested interest impact.
Reports which are costly to provide or expenditures which are of a non-business nature or would provide no pertinent information from the perspective of shareholders.
Conflict of Interest
Conflicts between H&W’s interests and its client’s interests may arise in the proxy decision process due to significant business or personal relationships between H&W or its managers, members, employees or affiliates and the company or its management. If a potential conflict of interest arises, it will typically involve a proxy for a company that is also H&W’s client. In the event that any proxies raise a conflict of interest, a member of the POC will review H&W’s proposed votes to ensure that they are consistent with established guidelines and not prompted by any conflict of interest.
H&W employees may own the same securities held by client accounts. The employees vote their securities independently from H&W’s proxy voting policy.
PROCEDURES
H&W’s Portfolio Services Department monitors ISS to review upcoming shareholder meetings and other corporate actions. H&W’s Portfolio Services Department is responsible for ensuring that proxies and corporate actions received by H&W are voted in a timely manner, voted in a manner consistent with the proxy voting policies and voted consistently across all portfolios. As a general matter, the Portfolio Services Department will vote client shares based on the guidelines set forth above, unless directed otherwise by the analyst.
The proxy will be routed to the analyst responsible for that holding. The analyst will review the proxy statement and, as deemed necessary, any reports from ISS or such other third-party proxy research firm engaged by H&W with respect to the company. An H&W analyst may vote against management if he/she determines that it is for the best interest of our clients, and will document reasons for such “against management votes”. In the event an analyst is proposing to vote against management’s recommendations or against its established guidelines, the proposed vote will be reviewed by a member of POC to determine that H&W’s vote is not prompted by any conflict of interests. All determinations by POC will be documented.
LIMITATIONS
If H&W is authorized to exercise proxy voting rights for a client account, H&W will vote the proxies for securities beneficially held by the custodian for the client portfolio as of the record date of the shareholder meetings (settlement date). Securities not held by the custodian as of the record date (e.g., due to an unsettled purchase or securities lending (see additional information below)) will not be voted by H&W. In addition, H&W will not vote proxies if it does not receive adequate information from a client’s custodian in sufficient time to cast the vote.
Hotchkis & Wiley Capital Management
5 - Portfolio Management Process
2018-10


H&W may determine not to vote proxies in respect of securities of any company (i) if H&W determines that it would be in the client’s overall best interest not to vote under the circumstances, such as when (a) the cost of voting exceeds the expected benefit to the client, (b) voting the client’s proxies will not have an effect on the outcome of the matter up for vote or (c) the matter up for vote will not impact the client’s economic interests, or (ii) if the security is no longer held in the clients’ portfolios by the proxy meeting date. For example, to the extent that H&W receives proxies for securities that are transferred into a client’s portfolio that were not recommended or selected by H&W and have been sold or are expected to be sold promptly in an orderly manner (“legacy securities”), H&W will generally refrain from voting such proxies. In such circumstances, since legacy securities have been sold or are expected to be sold promptly, H&W may determine that voting proxies on such securities would not further a client’s interest in maximizing the value of its investments. H&W may consider an institutional client’s special request to vote a legacy security proxy and, if agreed, would vote such proxy in accordance with H&W’s guidelines.
Proxies received after the termination date of a client account generally will not be voted. An exception will be made if the record date is for a period in which an account was under management or if a separately managed account custodian failed to remove the account’s holdings from its aggregated voting list.
Non-U.S. proxies (and particularly those in emerging markets) may involve a number of problems that restrict or prevent H&W’s ability to vote. As a result, a client account’s non-U.S. proxies will be voted on a best efforts basis only.
Fixed-income securities normally do not provide voting rights; however, special circumstances may occur that permit voting or responding to another type of corporate action.
Certain clients retain the responsibility for receiving and voting proxies for any and all securities maintained in client portfolios and receive their proxies or other solicitations directly from their custodian. H&W will not vote the proxies for these securities in this case, but may provide advice to clients regarding the clients’ voting of proxies.
Securities Lending
In order to generate incremental revenue, some clients may participate in a securities lending program. As noted above, if a client has elected to participate in the lending program then it will not have the right to vote the proxies of any securities that are on loan as of the shareholder meeting record date. A client, or a Portfolio Manager (PM), may place restrictions on loaning securities and/or recall a security on loan at any time. Such actions must be affected prior to the record date for a meeting if the purpose for the restriction or recall is to secure the vote.
PM and/or analysts who become aware of upcoming proxy issues relating to any securities in portfolios they manage, or issuers they follow, will consider the desirability of recalling the affected securities that are on loan or restricting the affected securities prior to the record date for the matter. If the proxy issue is determined to be material, and the determination is made prior to the shareholder meeting record date the PM(s) will contact the securities lending agent to recall securities on loan or restrict the loaning of any security held in any portfolio they manage, if they determine that it is in the best interest of shareholders to do so.
Hotchkis & Wiley Capital Management
5 - Portfolio Management Process
2018-10


RECORD KEEPING
H&W or ISS, on H&W’s behalf, maintains records of proxy statements received; votes cast on behalf of clients; client requests for proxy voting information; and documents prepared by H&W that were material to making a voting decision. Such records are maintained in an easily accessible place for a period of not less than 5 years in an appropriate office of H&W or ISS. In the event that ISS maintains such records, ISS will provide such records to H&W promptly upon H&W’s request.
H&W will describe in its Part 2A of Form ADV (or other brochure fulfilling the requirement of Rule 204-3) its proxy voting policies and procedures and advise clients how they may obtain information about how H&W voted their securities. Clients may obtain information about how their securities were voted or a copy of H&W’s Proxy Voting Policies and Procedures free of charge by written request addressed to H&W. For its mutual fund clients, H&W will provide information about how H&W voted each mutual fund’s securities within the appropriate time frame for the public filing of Form N-PX within 60 days of June 30th. Form N-PX for each mutual fund will be available without charge, upon request, by calling toll-free (866) 236-0050 and on the SEC’s website at www.sec.gov.


Amended: September 21, 2012
Amended: August 16, 2016
Amended: October 1, 2018
Hotchkis & Wiley Capital Management
5 - Portfolio Management Process
2018-10

LOS ANGELES CAPITAL





Proxy Policy


Rev. September 30, 2019










Los Angeles Capital Management and Equity Research, Inc.
















Table of Contents

I.    Introduction     3
II.    Proxy Policy Statement    3
A.     Limitations    4
B.    Special Considerations    4
C.    Disclosures    4
III. Responsibility and Oversight    5
IV. Proxy Procedures    5
A.    Conflicts of Interest    5
B.    Recordkeeping    5

Los Angeles Capital
September 30, 2019


I.Introduction

Los Angeles Capital Management and Equity Research, Inc. (“Los Angeles Capital” or the “Firm”) has adopted and implemented policies and procedures that are reasonably designed to ensure that proxies are voted in the best interest of clients, in accordance with U.S. Securities and Exchange Commission (“SEC”) Rule 206(4) ‐ 6 under the Investment Advisers Act of 1940 (the “Advisers Act”) and its obligations under the Employee Retirement Income Security Act of 1974 (“ERISA”). Los Angeles Capital provides investment advisory or sub-advisory services to various types of clients. These clients frequently give Los Angeles Capital the authority to vote proxies relating to the underlying securities that are held on behalf of such clients. Such authority is established by advisory contracts or comparable documents, and the proxy voting guidelines have been tailored to reflect these specific contractual obligations.

In addition to SEC requirements governing advisers, the proxy voting policies reflect the long‐standing fiduciary standards and responsibilities for ERISA accounts set out in Department of Labor Interpretive Bulletins including 2016‐01. Los Angeles Capital believes that this Proxy Policy is reasonably designed to meet its goal of ensuring that the Firm endeavors to vote (or refrain from voting) proxies in a manner consistent with the best interests of its clients, as understood by the Firm at the time of the vote.
II.Proxy Policy Statement

Los Angeles Capital has retained Glass Lewis & Co., LLC (“Glass Lewis”) an unaffiliated third‐party, to act as an independent voting agent on its behalf. Glass Lewis provides objective proxy analysis, voting recommendations, recordkeeping, and manages other operational matters of the proxy voting process. If at any time a material conflict arises it would be resolved in the best interest of the client.

Los Angeles Capital has adopted Glass Lewis’ U.S. and International Proxy Paper Guidelines for those accounts where proxy voting authority has been granted to the Firm. Although the Firm has adopted Glass Lewis’ established guidelines and has a pre‐determined voting policy, the Firm retains the right to ultimately cast each vote on a case‐by‐case basis, taking into consideration the contractual obligations under the advisory or sub-advisory agreement and all other relevant facts and circumstances at the time of the vote. In doing so, the Firm may incorporate information gathered from other sources beyond Glass Lewis. The Firm may conduct research internally and/or use the resources of an independent research consultant, or the Firm may use information from any of the following sources: legislative materials, studies of corporate governance and other proxy voting issues, and/or analyses of shareholder and management proposals by a certain sector of companies (e.g., Fortune 500 companies).

Los Angeles Capital
September 30, 2019


The Proxy Committee (the “Committee”) may also be called on to vote a proxy that its third‐party provider cannot. In these circumstances, two votes from members of the Committee or one member of the Committee and an internal counsel are required.

Los Angeles Capital recognizes that a client may issue directives regarding how particular proxy issues are to be voted for the client’s portfolio holdings. Los Angeles Capital requires that the advisory or sub‐advisory contract provides for such direction, including instructions as to how those votes will be managed, particularly where they differ from Los Angeles Capital’s policies.

It is unlikely that serious conflicts of interest will arise in the context of the Firm’s proxy voting because the Firm does not engage in managing or advising public companies, underwriting, or investment banking. Further, as a matter of policy, the employees, officers, or principals of Los Angeles Capital will not be influenced by outside sources whose interests conflict with the interests of its clients.
A.Limitations
Circumstances may arise, where subject to contractual obligations established by the client, Los Angeles Capital will take a limited role in voting proxies:

Los Angeles Capital may abstain from voting a client proxy if it concludes that the value of the portfolio holding is indeterminable or insignificant, or if the costs of voting such proxy are unjustifiable.
Los Angeles Capital abstains from voting proxies for securities that participate in a securities lending program and are out on loan. In many cases, where a client directs the securities lending, Los Angeles Capital may not be aware when the security is out on loan and thus may not be able to recall the security before the record date. Where Los Angeles Capital deems a holding materially significant or is directing the securities lending it may recall securities, if operationally feasible, so that they can be voted where the Firm determines it has a fiduciary obligation to do so.
Los Angeles Capital abstains from voting shares of securities in a country that participates in share blocking because it is disruptive to the management of the portfolio.
Los Angeles Capital may be unable to vote proxies in instances where multiple global custodian accounts roll up into one omnibus sub-custodian account. In the specific markets where this may occur the account managed by Los Angeles Capital is not registered individually. Therefore, if ballots are voted differently for the underlying accounts, the omnibus vote is considered split and is rejected.
Los Angeles Capital may abstain from voting shares of securities where in the Firm’s judgement the unjustifiable costs or disadvantages of voting the proxy would exceed the anticipated benefit of voting (e.g., certain non‐U.S. securities).
The Firm does not actively engage in shareholder activism, such as dialogue with management with respect to pending proxy voting issues.
Los Angeles Capital
September 30, 2019


The Firm is unable to vote proxies where a required Power of Attorney is not on file.

B. Special Considerations
Certain accounts may warrant specialized treatment in voting proxies. Contractual stipulations and individual client direction will dictate how voting will be done in these cases.
Mutual Funds
Proxies will be voted in accordance with the requirements of securities laws. Proxies of portfolio companies voted may be subject to investment restrictions of the fund and voted in accordance with any resolutions or other instructions approved by authorized persons of the fund.
ERISA Accounts
Responsibilities for voting ERISA accounts include: the duty of loyalty, prudence, compliance with the plan, as well as a duty to avoid prohibited transactions.

C. Disclosure
Los Angeles Capital will provide all clients with a copy of the Firm’s current policies and procedures upon request. In addition, clients may request, at any time, a copy of the Firm’s voting records for their respective account(s) by making a formal request to Los Angeles Capital. Los Angeles Capital will make this information available to a client upon its request within a reasonable time. For further information, please contact a member of Operations at Los Angeles Capital at 310‐479‐9998 or [email protected].

Los Angeles Capital generally will not disclose how it intends to vote on behalf of a client account except as required by applicable law, but may disclose such information to a client who itself may decide or may be required to make public such information. Los Angeles Capital will not disclose past votes or share amounts voted except to the respective client or as required by law.
III.Responsibility and Oversight

The Firm’s Proxy Committee (the “Committee”) was established to provide oversight to the proxy voting process. The Committee is responsible for developing, implementing, and updating the Firm’s proxy policy, reviewing and approving all proxy paper guidelines, overseeing the third‐party proxy vendor, identifying any conflicts of interest, and meeting to discuss any material issues regarding the proxy voting process. The Committee meets annually and as necessary to fulfill its obligations.

Los Angeles Capital
September 30, 2019


Los Angeles Capital’s Operations Department handles the day to day administration of the proxy voting process.
IV.Proxy Procedures

Glass Lewis provides for the timely execution of specified proxy votes on the Firm’s behalf, which includes complete account set‐up, vote execution, reporting, recordkeeping, and compliance with ERISA.

Los Angeles Capital’s responsibility for voting proxies is generally determined by the obligations set forth under each client’s Investment Management Agreement, Limited Partnership Agreement, Prospectus, or other legal documentation governing the account. Voting ERISA client proxies is a fiduciary act of plan asset management that must be performed by the adviser, unless the voting right is retained by a named fiduciary of the plan. If an advisory or sub‐advisory contract or similar document states that Los Angeles Capital does not have the authority to vote client proxies, then voting is the responsibility of some other named fiduciary.

A client may issue directives regarding how particular proxy issues are to be voted for the client’s account. Los Angeles Capital requires that the advisory or sub‐advisory contract provides for such direction, including instructions as to how those votes will be managed, particularly where they differ from the Firm’s policies. While Los Angeles Capital will accept direction from clients on specific proxy issues for their account, the Firm reserves the right to maintain its standard position on all other client accounts.

A. Conflicts of Interest
Los Angeles Capital attempts to minimize the risks of conflicts by adopting the policies of an independent third party. Los Angeles Capital reviews the Conflict of Interest Statement prepared by Glass Lewis on an annual basis.

If Glass Lewis identifies a potential conflict of interest between it and a publicly‐held company, it will disclose the relationship on the relevant research report. If an unforeseen conflict requires specialized treatment, alternate measures may be taken, up to and including having Glass Lewis refrain from writing a Proxy Paper report on the company. In this scenario the Firm may be required to vote the proxy.

If during this process the Committee identifies a potential material conflict of interest between Los Angeles Capital or an affiliated person of the Firm and that of one of its clients or prospects, the client will be notified. If no directive is issued by the client, the Committee will vote in such a way that, in the Firm’s opinion, fairly addresses the conflict in the best interest of the client.
B. Recordkeeping
Los Angeles Capital
September 30, 2019


All proxy records pursuant to Section 204‐2 of the Advisers Act are retained by either Glass Lewis or Los Angeles Capital. Glass Lewis retains (1) records of proxy statements received regarding client securities and (2) records of each vote cast. Los Angeles Capital retains (1) copies of its proxy policies, procedures, and guidelines; (2) copies of any document created by Los Angeles Capital that was material to making a decision how to vote proxies on behalf of a client or that memorializes the basis for that decision; (3) each written client request for information on how the adviser voted proxies on behalf of the client; and (4) a copy of any written response by Los Angeles Capital to any (written or oral) client request for information on how the adviser voted proxies on behalf of the requesting client.
ERISA Accounts
Los Angeles Capital maintains proxy voting records (both procedures and actions taken in individual situations) to enable the named fiduciary to determine whether Los Angeles Capital is fulfilling its obligations. Such records may be maintained via Glass Lewis’ electronic system. Retention may include: (1) issuer name and meeting; (2) issues voted on and record of the vote; (3) number of shares eligible to be voted on the record date; (4) number of shares voted; and (5) where appropriate, cost‐benefit analyses.
Duration
Proxy voting books and records will be maintained in an easily accessible place for at least five years from the end of the fiscal year during which the last entry was made on such records. For the first two years, the records will be maintained in Los Angeles Capital’s office.
Los Angeles Capital
September 30, 2019

























THIS PAGE INTENTIONALLY LEFT BLANK
Los Angeles Capital
September 30, 2019


Mellon
Category: Portfolio Management
Policy Statement
It is the policy of Mellon to fully meet its fiduciary obligations in exercising the power, discretion and responsibility to vote proxies where clients have delegated such authority.
Background
Registered Investment Advisers have a number of responsibilities regarding voting of proxies for client securities that are under its management and that are governed by the Advisers Act. Rule 206(4)-6 requires investments advisers to (a) adopt and implement written policies and procedures that are reasonably designed to ensure that the adviser votes client securities in the best interests of clients, which procedures must include how material conflicts that may arise between an adviser's interests and those of its clients are addressed; (b) disclose to clients how they may obtain information from the adviser with respect to the voting of proxies for their securities; and (c) describe to clients its proxy voting policies and procedures and, upon request, furnish a copy to its clients. Rule 204-2 further requires an investment adviser to retain certain records relating to the exercise of its proxy voting authority.
Policy
As a registered Investment Advisor, Mellon is often entrusted with the fiduciary responsibility to vote proxies for shares of corporate stock held on behalf of our clients. Proxy voting is an integral part of the management of the investment in those shares. In voting proxies, Mellon takes into account long term economic value as we evaluate issues relating to corporate governance, including structures and practices, the nature of long-term business plans, including sustainability policies and practices to address environmental and social factors that are likely to have an impact on shareholder value, and other financial and non-financial measures of corporate performance.
For clients that have delegated proxy authority, Mellon will make every reasonable effort to ensure that proxies are received and are voted in accordance with this policy and related procedures. To assist us in that process, Mellon retains Institutional Shareholder Services (“ISS”) to provide various services related to proxy voting, such as research, analysis, voting services, proxy vote tracking, recordkeeping, and reporting. In addition, Mellon also retains Glass Lewis for research services only.
Mellon seeks to avoid potential material conflicts of interest through its participation on The Bank of New York Mellon Corporation’s (“BNY Mellon”) Proxy Voting and Governance Committee (“Committee”). As such, Mellon has adopted and implemented BNY Mellon’s Proxy Voting Policy and proxy voting guidelines. The guidelines are applied to all client accounts for which Mellon has been delegated the authority to vote in a consistent manner and without consideration of any client relationship factors.
Under this policy, the Committee permits member firms (such as Mellon) to consider specific interests and issues and cast votes differently from the collective vote of the Committee where the member firm determines that a different vote is in the best interests of the affected account(s).
Mellon will furnish a copy of its Proxy Voting Policy and its proxy voting guidelines upon request to each advisory client that has delegated voting authority.
Voting BNY Mellon Stock
It is the policy of Mellon not to vote or make recommendations on how to vote shares of BNY Mellon stock, even where Mellon has the legal power to do so under the relevant governing instrument. In order to avoid any appearance of conflict relating to voting BNY Mellon stock, Mellon has contracted with an independent fiduciary (ISS) to direct all voting of BNY Mellon Stock held by any Mellon accounts on any matter in which shareholders of BNY Mellon Stock are required or permitted to vote.




Proxy Voting Disclosure
Clients who have delegated proxy voting authority to Mellon may obtain the proxy voting records for their account upon written or verbal request.
Oversight Activities
Mellon performs periodic oversight of the operational and voting processes implemented on behalf of clients to ensure that proxy ballots are voted in accordance with established guidelines. These activities may include, but are not limited to, monthly account reconciliation between the voting agent and Mellon records and forensic testing of the application of vote instruction in relation to policy vote recommendations at the ballot level. These efforts are completed as component of our Rule 206(4) -7 compliance program.
Appropriate disciplinary action will be taken for failure to comply with the requirements of this policy, which could include termination of employment.
Reference
Rules 206(4)-6 and 204-2 under The Investment Advisers Act of 1940
BNY Mellon Policy II-G-051 (“Proxy Voting and Governance Committee Voting Policy”)
BNY Mellon Policy II-G-052 (“Proxy Voting and Governance Committee”)
Policy Content Owners
Compliance
Revision History
February 2018 (Original)
BNY MELLON | INVESTMENT MANAGEMENT

PROXY VOTING POLICY AND PROCEDURES
Policy
MetLife Investment Management, LLC (“MIM”) has established these proxy voting procedures with respect to MIM client accounts (referred to as “client” in this policy) where MIM has been delegated discretionary proxy voting authority. It is MIM’s policy to vote client proxies (“proxies”) for the benefit of and in the best interests of its clients in accordance with its fiduciary duty, Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and other applicable laws (including the fiduciary standards and responsibilities for ERISA accounts set out in Department of Labor Bulletin 94-2).
This policy does not apply where MIM has not been delegated proxy voting authority by a client (i.e. the client has retained the authority or designated someone other than MIM to vote proxies on its behalf).
These proxy voting policies and procedures are available to all clients upon request, with the understanding that they are subject to change at any time without notice.
Procedures for Proxy Voting
MIM has adopted these policies and procedures based on the guiding principle that any proxy vote must be done in the best interest of the client and with the intent to maximize the economic value of a particular security. These procedures are designed to ensure that material conflicts of interest on the part of MIM or its affiliates do not affect voting decisions on behalf of clients. All MIM personnel who are involved in the voting of proxies are required to adhere to these policies and procedures.
MIM generally votes every proxy. However, MIM may abstain on any particular vote or otherwise withhold its vote on any matter if, in the judgment of MIM, the costs associated with voting a particular proxy outweigh the benefits to clients or if the circumstances make such an abstention or withholding otherwise advisable and in the best interest of clients.
Once a client has delegated its proxy voting rights to MIM, MIM does not generally accept any subsequent direction on matters presented to shareholders for vote, regardless of whether such subsequent directions are from the client itself or a third party acting on behalf of the client. MIM views the delegation of discretionary voting authority as an “all-or-nothing” choice for its clients.
MIM has adopted proxy voting guidelines (the “Guidelines”) that set forth how MIM plans to vote on specific matters presented for shareholder vote. These Guidelines are periodically reviewed and updated by MIM’s Proxy Voting Committee (the “Proxy Committee”) and maintained by the Proxy Committee. The Guidelines are intended to address most material conflicts of interest. MIM, however, reserves the right to override the Guidelines (an “Override”) with respect to a particular shareholder vote when an Override is consistent with the guiding principle of seeking the maximization of economic value to clients, taking into consideration all relevant facts and circumstances at the time of the vote. MIM’s procedures for determining an Override are set forth herein.
Absent any legal or regulatory requirement to the contrary, it is generally the policy of MIM to maintain the confidentiality of the particular votes that it casts on behalf of clients. MIM will furnish to a particular client details of how MIM has voted the securities in its account; clients can request this information by contacting MIM. MIM does not, however, generally disclose the results of voting decisions to third parties (other than those that may have participated in the voting process, as described below).
MetLife Investment Management, LLC
January 1, 2020


1.Proxy Voting Committee
Certain aspects of the administration of these proxy voting policies and procedures are governed by the Proxy Committee. The Proxy Committee may change its structure or composition from time to time, but at all times shall consist of at least three members, including at least one representative from MIM’s Index Strategies unit, MIM Legal, and MIM Compliance. A member of MIM’s Index Strategies Unit attends all meetings of the Proxy Committee and is responsible for keeping records of the Proxy Committee’s meetings.
The Proxy Committee shall hold at least two regular meetings during each calendar year, at which the Proxy Committee reviews the proxy voting record data with respect to votes taken in accordance with these policies and procedures since the previous meeting. The Proxy Committee shall also meet: whenever there is a recommendation that the Proxy Committee authorize an Override; in the event of a proxy vote where a material conflict of interest has been identified; or at such other times as the Proxy Committee may determine. Proxy Committee meetings may be held in person, via teleconference or through communication by email.
On all matters, the Proxy Committee makes its decisions by a vote of a majority of the members of the Proxy Committee present at the meeting. At any meeting of the Proxy Committee, a majority of the members of the Proxy Committee then in office constitutes a quorum.
2.Proxy Voting Service Vendor
MIM has retained Institutional Shareholder Services (“ISS”) to vote proxies on MIM’s behalf. ISS prepares analyses of most matters submitted to a shareholder vote and also provides voting services to institutions such as MIM. ISS receives a daily electronic feed of all holdings in relevant MIM client voting accounts, and monitors the client accounts and their holdings to ensure that all proxies are received. MIM has directed ISS to vote proxies in accordance with the Guidelines approved by the Proxy Committee. A member of MIM accesses ISS’ secure website on a periodic basis to monitor the matters presented for shareholder vote and track- the voting of the proxies.
The Proxy Committee shall annually review the services provided by ISS or any other proxy voting and recording service provider retained by MIM, to assess whether the proxy service provider is capable of making impartial proxy voting recommendations in the best interests of MIM’s clients.
In making such an assessment the review may consider:
The proxy service provider’s conflict management procedures and assessment of the effectiveness of the implementation of such procedures;
The proxy service provider’s Form ADV, if applicable, and other disclosure made by a proxy service provider regarding its products, services and methods of addressing conflicts of interest; and/or;
Inquiries to, and discussions with, representatives of a proxy service provider regarding its products, services and methods of addressing conflicts of interest.
No less than annually, MIM shall obtain from each proxy service provider a copy of its conflict management procedures and request that the proxy service provider provide an update of any material revision to such procedures.
MetLife Investment Management, LLC
January 1, 2020


3.Overriding the Guidelines
MIM may Override the Guidelines when such an Override is consistent with this policy and the guiding principle of seeking the maximization of economic value to clients, taking into consideration all relevant facts and circumstances at the time of the vote, as further described below.
If any MIM investment professional or a member of MIM Legal or MIM Compliance believes that MIM should vote in a manner inconsistent with the Guidelines, such person must notify MIM’s Chief Compliance Officer (“CCO”). MIM’s CCO will work with MIM Legal to make a determination as to whether the situation presents a material conflict of interest.
The term “conflict of interest” refers to a situation in which MIM or its affiliates have a financial interest in the proxy matter, other than the obligation MIM incurs as investment adviser, which may compromise MIM’s freedom of judgment and action with respect to the voting of the proxy.
A.No Material Conflict of Interest
If MIM Legal determines that there is no material conflict of interest, MIM will present the matter to the Proxy Committee for a vote. If the Proxy Committee approves the Override, the appropriate member of MIM will instruct ISS to vote accordingly prior to the voting deadline. MIM will retain records of documents material to any such determination and the voting of any such proxy.
B.Material Conflict of Interest
If, however, MIM Legal determines that there is a material conflict of interest with respect to the relevant shareholder vote, a special meeting of the Proxy Committee will be required to override the guidelines. As part of its deliberations, the Proxy Committee will consider, as applicable, the following:
a description of the proposed vote, together with copies of the relevant proxy statement and other solicitation material;
data regarding client holdings in the relevant issuer;
pertinent information related to a material conflict of interest, together with all relevant materials;
the vote indicated by the Guidelines, together with any relevant information provided by ISS; and
the rationale for the request for an Override, together with all relevant information.
After review, the Proxy Committee will arrive at a decision based on the guiding principle of seeking the maximization of the economic value of clients’ holdings. The Proxy Committee may vote to authorize an Override with respect to such a vote notwithstanding the presence of a material conflict of interest only if the Proxy Committee determines that such an Override would be in the best interests of clients. Whether or not the committee authorizes an Override, the Proxy Committee’s deliberations and decisions will be appropriately documented and such records will be maintained by the group responsible for keeping records of the Proxy Committee’s meetings.
MetLife Investment Management, LLC
January 1, 2020


4.Votes Not Governed by Guidelines
In the event that there is a matter presented for a proxy vote that is not governed by the Guidelines, the Proxy Committee will follow a process similar to that set forth in Section 3 above for overriding the Guidelines. In such a scenario, the relevant portfolio management team will make a recommendation to the Proxy Committee as to how such proxy should be voted, based on the portfolio management team’s assessment of the particular matter(s) at issue and what they believe to be in the best interest of the client, with the intent to maximize the economic value of the particular security. Unless MIM Legal determines that the situation presents a material conflict of interest, the Proxy Committee shall approve the portfolio management team’s recommendation, and a member of MIM will instruct ISS to vote in accordance with the recommendation. In the event that MIM Legal determines that there is a material conflict of interest with respect to the relevant shareholder vote, a special meeting of the Proxy Committee will be required to arrive at a voting decision, following the applicable considerations and documentation requirements set forth in the “Material Conflict of Interest” section above.
5.No Undue Influence
If at any time any MIM associate is pressured or lobbied with respect to overriding the Guidelines for a particular shareholder vote, such person should provide information regarding such activity to MIM’s CCO who will notify MIM Legal and the Proxy Committee and maintain a record of this information. The Proxy Committee will consider this information in evaluating any proposed Override with respect to such a vote.
Books and Records Retention
MIM (or ISS on behalf of MIM) maintains records of all proxies voted in accordance with Section 204-2 of the Advisers Act. As required and permitted by Rule 204-2(c) under the Advisers Act, the following records are maintained:
a copy of these policies and procedures;
proxy statements received regarding client securities are maintained by ISS;
a record of each vote cast is maintained by ISS, and such records are accessible to MIM;
a copy of any document created by MIM that was material to making a decision how to vote proxies on behalf of a client or that memorializes the basis for that decision; and
each written client request for proxy voting records and MIM’s written response to any (written or oral) client request for such records.



Adopted: 2006
Amended: July 1, 2019
Amended: January 1, 2020
MetLife Investment Management, LLC
January 1, 2020

Origin Asset Management LLP
(‘Origin’ or the ‘Firm’)
Proxy Voting Policy – December 2019
This document draws on the Advisers Act of 1940, a United States federal law, and subsequent Securities and Exchange Commission guidance IA-5325; IC-33605, 17 CFR Parts 271 and 276 (effective date 10th September 2019) and provides an outline of the policies in place to ensure Origin LLP (‘the Firm’) meets its obligation to vote on proxies in the best interest of its clients.
This document draws on the Advisers Act of 1940, a United States federal law, and subsequent Securities and Exchange Commission guidance IA-5325; IC-33605, 17 CFR Parts 271 and 276 (effective date 10th September 2019) and provides an outline of the policies in place to ensure Origin LLP (‘the Firm’) meets its obligation to vote on proxies in the best interest of its clients.
Origin reviews and documents the adequacy of its proxy voting policies at least annually.
The Firm has engaged a third party international corporate governance research and proxy voting service provider (‘third party proxy voting service provider’). The Firm’s policy is to actively vote proxies for all clients by adopting the provider’s proxy voting policy, unless a client does not wish or require us to do so. Any proxy voting arrangements shall be approved by the Investment Team and the Compliance Officer.
The Firm must;
(a)Adopt and implement written policies and procedures that are reasonably designed to ensure that the Firm votes client securities in the best interest of clients.
(b)Disclose to clients how they may obtain information from the Firm about votes with respect to securities; and
(c)Describe to clients the proxy voting policies and procedures and, upon request, provide the clients with a copy of these policies and procedures.
(d)Take steps to demonstrate that it is making voting determinations in a client’s best interests.
(e)Consider factors such as the third party proxy voting service provider’s capacity and competency when deciding whether to use a proxy advisory firm.
(f)Take steps to ensure that its voting determinations are not based on materially inaccurate or incomplete information. This can take the form of scrutinising the third party proxy service provider firm’s procedures.
The duty of care requires the Firm to monitor corporate actions and vote client proxies. This does not necessarily mean that a failure to vote every proxy would necessarily violate fiduciary obligations. Due to the nature of some of the holdings, how they are registered, and our strategies, there will be many times when refraining from voting a proxy will be in the client's best interest. This will mainly be when it is determined that the cost of voting a proxy exceeds the expected benefit to a client. It is not mandatory to vote proxies on behalf of a client where this has been covered by a prior agreement with the client.
The Firm has engaged a third party proxy voting service provider to enable the firm to vote stock on portfolios managed for its clients. The Firm believes that the third party proxy voting service provider has the necessary resources, in-depth knowledge and expertise to vote in the best interests of our clients and thus enables the firm to meet this key objective of its Proxy Voting Policy. The Firm can override the guideline proxy voting recommendation of the third party proxy voting service provider on the basis of a client request or where the Firm disagrees with the guideline proxy voting recommendation.



The Firm shall obtain from the third party proxy voting service provider a notification of all pending proxy vote opportunities. The Custodian will provide a list of all proxy voting requests relevant to the Firm’s holdings to the third party proxy voting service provider. The third party proxy voting service provider shall then issue the recommendations corresponding to this list. These are then returned to the Custodian for instruction and votes are cast via a voting platform in accordance with the third party proxy voting service recommendations. Prior to the votes being returned to the Custodian to be cast, the Firm’s operations team access the voting platform and confirm the voting decisions. This will usually be in line with the recommendations provided by the third party proxy voting service provider but the Firm does have the option to override these recommendations at this stage, should the client request this or should the Firm deem it to be in the client’s best interest
The rationale for disagreeing with a guideline proxy voting recommendation of the international governance provider must be discussed, recorded and agreed with Compliance before the override instruction is communicated to the third party proxy voting service provider. A record of all voting decisions is maintained by the Firm and the Custodian.
Conflicts of Interests in respect of voting Proxies
When the Firm has, or may have, a conflict of interest between it and its clients, or between one client and another, it must pay due regard to the interests of each customer and manage the conflict of interest fairly.
Where a conflict arises, or may arise, the Firm must not knowingly advise or deal in the exercise of discretion, in relation to that transaction unless it takes reasonable steps to ensure fair treatment for the client. The Firm’s client agreements make a formal disclosure that such conflicts could arise (i.e. non-exclusivity), and by doing so puts the customer on notice of the possibility. This keeps the Firm within the strict letter of the rules and principles, but it is an overriding policy of the Firm that all such conflicts should be brought to the attention of the Compliance Officer in order that they may be sure that the firm’s procedures are adequate.
If an investment decision is made for any client that departs from previous advice or recorded strategy for that client or which may result in an increased risk profile for the client's portfolio, the Firm must record the reasons behind the decision. If the reasons are the same for a number of clients or transactions, only one record needs to be made. These records must be made in writing and be kept in the relevant client files.
The Firm will notify clients of how they may obtain a copy of how the Firm voted free of charge and will provide a contact for that purpose.
Origin Asset Management LLP


Compliance Monitoring and Policy Review
An investment adviser that retains a third party proxy advisory service provider to provide voting recommendations or voting execution services also should consider additional steps to evaluate whether the investment adviser’s voting determinations are consistent with its voting policies and procedures and in the client’s best interest before the votes are cast. The operations and investment teams view all “pre-populated” vote recommendation by the third party proxy advisory firm before they are cast via the electronic voting platform.
The Firm’s ongoing compliance monitoring program will include;
1)An annual review of the Firm’s internal compliance monitoring procedures and policies with respect to proxy voting.
2)An annual review of the adequacy of service provided by the third party proxy voting service provider and its compliance with the SEC guidelines and federal law with respect to proxy voting.
3)A quarterly review of the ongoing communication of voting intentions to the investment team to ensure that these are visible to the investment team.
4)A quarterly sample test of pre-populated voting intentions focused on votes that are likely to impact the client, such as those for corporate events or contested elections of directors, to ensure the voting rationales and relevant background information supplied by the third party proxy voting service provider is available and of adequate quality.
5)Ad-hoc reviews of company-specific voting intentions where the Firm considers this appropriate based on the above sample testing.
The Firm is in compliance with the Financial Reporting Council’s UK Stewardship Code and Shareholders Rights Directive II regarding corporate governance and engagement. A copy of Origin’s latest disclosure response to the UK Stewardship Code and Shareholders Rights Directive II is available for download on the origin website at https://www.originam.com/library.

Origin Asset Management LLP
Post Advisory Group
Proxy and Corporate Action Voting Policy
Dated March 2020
Policy
When voting proxies or acting on corporate actions for clients, Post will decide based on the best interests of its clients. Post shall act in a prudent and diligent manner and make voting decisions Post believes enhance the value of the assets of client accounts. With respect to ERISA accounts, plan beneficiaries and participants, voting will be in accordance with ERISA and the U.S. Department of Labor (“DOL”) guidance thereunder. Unless a client specifically reserves the right to vote its own proxies or to take shareholder action in other corporate actions, Post will vote proxies or act on other actions received in sufficient time prior to their deadlines as part of its discretionary authority over the assets. Corporate actions may include, for example and without limitation, tender offers or exchanges, bankruptcy proceedings, and class actions.
Background
Post Advisory Group, LLC (“Post”) acts as discretionary investment adviser for various clients, including clients governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and registered open-ended investment companies (“mutual funds”). While Post primarily manages fixed income securities, it does occasionally hold a limited amount of voting securities or securities for which shareholder action is solicited in a client account.
Responsibility
The Chief Compliance Officer (CCO) is responsible for establishing this policy, ensuring that this policy is consistent with applicable federal securities laws and regulations, updating this policy based on changes to federal securities laws and regulations and providing effective disclosure of this policy as applicable. Additionally, the Compliance Department (Compliance) is responsible for evaluating this policy no less frequently than annually. Compliance is also responsible for restricting securities with pending corporate actions in Charles River.
Post’s Operations Department is responsible for voting proxies in a timely manner and consistently across portfolios as well as handling clients’ corporate actions.
Proxy Voting Procedures
Operations will consider each proxy issue individually and vote in a manner which Post believes enhances the value of client accounts overall. Where a proxy proposal raises a material conflict of interest between Post’s interests and the client’s, Post will disclose the conflict to the relevant clients and obtain their consent to the proposed vote prior to voting the securities. When a client does not respond to such a conflict disclosure request or denies the request, Post will abstain from voting the securities held by that client’s account.
Corporate Actions Procedures
The following procedures are following in addressing corporate actions:
Operations will receive notifications of corporate actions from State Street.
Operations will request and receive instructions from the relevant PM or Analyst covering the security.
Operations will vote consistent with the instructions in State Street’s CApTAIN system and send confirmatory documentation back to the relevant PM or Analyst.
For mandatory calls, Operations will add the positions to the cash sheet and Compliance will add those securities to a restricted list in Charles River.
State Street will automatically execute exchanges due to standing instructions from Post.
Record Retention
All records associated with this policy that require retention shall be maintained according to the record retention obligations enumerated in the attached Recordkeeping Policy.
Proxy and Corporate Action Voting Policy
March 2020


BAIRD EQUITY ASSET MANAGEMENT
BAIRD EQUITY AM’S PROXY VOTING POLICIES AND PROCEDURES
Revised Effective January 22, 2018

I. BACKGROUND
Rule 206(4)-6 under the Investment Advisers Act of 1940 (the “Advisers Act”) requires that, for an investment adviser to exercise voting authority with respect to client securities, the adviser must:
adopt and implement written policies and procedures that are reasonably designed to ensure that the adviser votes clients securities in the best interest of clients, which procedures must include how the adviser addresses material conflicts that may arise between the adviser’s interests and those of the adviser’s clients;
disclose to clients how they may obtain information from the adviser about how the adviser voted with respect to their securities; and
describe to clients the adviser’s proxy voting policies and procedures and, upon request, furnish a copy of the policies and procedures to the requesting client.
Rule 204-2 of the Advisers Act requires that registered investment advisers maintain records of its proxy voting policies and procedures; proxy statements received; votes cast on behalf of clients; client requests for proxy voting information; and documents prepared by the investment adviser that were material to making a voting decision.
II. POLICY
The Baird Equity Asset Management department (“Baird Equity AM”) of Robert W. Baird & Co. Incorporated (the “Advisor” or “Baird”) exercises voting authority with respect to securities held by advisory clients that have executed advisory agreements with Baird and that have delegated proxy voting authority to Baird. Baird owes these clients duties of care and loyalty. Baird’s duty of loyalty requires Baird to vote the proxies in a manner consistent with the best interests of advisory clients. While Baird uses its best efforts to vote proxies, there are instances when voting is not practical or is not, in Baird or the portfolio manager’s view, in the best interest of clients.
As a fiduciary, Baird will ascertain whether the independent proxy voting service has the capacity and competency to analyze proxy issues, which may include considering: the adequacy and quality of the independent proxy voting service’s staffing and personnel; the robustness of its policies and procedures regarding its ability to (i) ensure that its proxy voting recommendations are based on current and accurate information and (ii) identify and address any conflicts of interest. Further, Baird should ensure that these voting guidelines or recommendation policies are generally appropriate for the clients whose proxies are being voted.
Baird Equity Asset Management of
Robert W. Baird & Co. Incorporated
January 22, 2018


III.PROXY VOTING COMMITTEE
Baird has established a Proxy Voting Committee (the “Committee”) to oversee Baird’s proxy voting practices, including oversight of the independent proxy voting service. The Committee has established a Proxy Committee Charter to describe its responsibilities under these policies and procedures. The Committee will review, at least annually, these Proxy Voting Policies and Procedures and its Charter. Further, the Committee will appoint a Sub-Committee for Baird’s Asset Management groups to consider proxy voting challenges made by its portfolio managers.
IV.PROXY VOTING GUIDELINES
Baird utilizes an independent provider of proxy voting and corporate governance service to analyze proxy materials and votes and make independent voting recommendations (the “independent proxy voting service”). Baird’s independent proxy voting service is currently Institutional Shareholder Services Inc. (“ISS”).The independent proxy voting service provides proxy voting guidelines regarding its position on various matters presented by companies to their shareholders for consideration. Baird will typically vote shares in accordance with the recommendations made by the independent proxy voting service. However, the independent proxy voting service’s guidelines are not exhaustive, do not address all potential voting issues, and do not necessarily correspond with the opinions of the portfolio managers.
In the event the portfolio manager believes the independent proxy voting service recommendation is not in the best interest of the client, he/she will bring the issue (a “proxy challenge”) to the Sub- Committee by completing a Proxy Vote Challenge Form, which describes, among other things, the issue(s) up for vote and the portfolio manager’s rationale for voting against the voting recommendation of the independent proxy voting service. The Sub-Committee will consider what is in the best interest of clients when evaluating the proxy challenge, including an evaluation of the portfolio manager’s rationale and any potential conflicts of interest. The decision made by the Sub- Committee on the proxy challenge will apply to all advisory accounts managed by the portfolio manager (or team of portfolio managers) that submitted the Proxy Voting Challenge Form, unless the client has directed Baird to utilize specific voting guidelines (e.g., Taft-Hartley guidelines). The decision on the issue will be communicated to the portfolio manager and, if the proxy challenge is approved, the Baird’s Proxy Support team will be notified to cast the votes in accordance with the Sub-Committee’s instructions.
For those matters for which the independent proxy voting service does not provide a specific voting recommendation, the portfolio manager will be responsible for casting the vote in a manner he/she believes is in the best interest of clients.
V.PROXY VOTING EXCEPTIONS
There are instances when voting is not practical or is not, in Baird or the portfolio manager’s view, in the best interest of clients. Some examples of these types of situations are described below:
Certain Foreign Companies. Voting proxies of companies located in some jurisdictions may involve several issues that can restrict or prevent the ability to vote such proxies or entail additional costs, including, but not limited to: (i) requirements to vote proxies in person; (ii) restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting; (iii) proxy statements and ballots being written in a language other than English;
Baird Equity Asset Management of
Robert W. Baird & Co. Incorporated
January 22, 2018


(iv) untimely notice of shareholder meetings; (v) restrictions on a foreigner’s ability to exercise votes; and (vi) requirements to provide local agents with a power of attorney to facilitate voting instructions. Baird will use a best efforts basis to vote proxies in these situations after weighing the costs and benefits of voting such proxies.
Securities Lending Program. The voting rights for shares that are out on loan are transferred to the borrower and therefore the lender is not entitled to vote the lent shares at the shareholder meeting. In general, Baird believes the revenue received from the lending program outweighs the ability to vote. Therefore, when a client has into a securities lending program, Baird generally will not seek to recall the securities on loan for the purpose of voting the securities; however, Baird reserves the right to recall the shares on loan on a best efforts basis if the portfolio manager becomes aware of a proxy proposal where the proxy vote is materially important to the client’s account.
VI. CONFLICTS OF INTEREST
There may be instances where Baird’s interests conflict, or appear to conflict, with advisory client interests. For example, Baird (or a Baird affiliate) may manage a pension plan, administer employee benefit plans, or provide brokerage, underwriting, insurance or banking services to a company whose management is soliciting proxies. Or, for example, Baird (or Baird’s senior executive officers) may have business or personal relationships with corporate directors or candidates for directorship. There may be a concern that we would vote in favor of management because of our relationship with the company.
We generally believe a material conflict exists if a portfolio manager (or team of portfolio managers) (i) manages or is pursuing management of accounts that are affiliated with the company soliciting proxies, (ii) is aware of investment banking or other relationships that the Advisor has or is pursuing with the company soliciting proxies (or its senior officers) that may give Baird an incentive to vote as recommended by the company, or (iii) has been asked or directed by persons associated with the Advisor or the company soliciting proxies to vote proxies in a certain manner in order to maintain or develop a relationship between the Advisor and the company. The Sub-Committee may also determine a material conflict of interest exists for other reasons.
Baird’s duty is to vote proxies in the best interests of advisory clients. As noted above under the Proxy Voting Guidelines section, Baird will typically vote shares in accordance with the recommendations made by the independent proxy voting service, which generally mitigates conflicts. However, in situations where there is a conflict of interest and the independent proxy voting service does not provide a recommendation or there is a proxy challenge, the Sub-Committee will determine the nature and materiality of the conflict.
If the conflict is determined to not be material, the Sub-Committee will vote the proxy in a manner the Sub-Committee believes is in the best interests of the client and without consideration of any benefit to the Advisor or its affiliates.
If the conflict is determined to be material, the Sub-Committee will take one of the following steps to resolve the conflict:
Baird Equity Asset Management of
Robert W. Baird & Co. Incorporated
January 22, 2018


1.Vote the securities in accordance with the recommendations of an independent third party, such as ISS;
2.Refer the proxy to the advisory client or to a fiduciary of the advisory client for voting purposes;
3.Suggest that the advisory client engage another party to determine how the proxy should be voted;
4.If the matter is not addressed by the independent proxy voting service, vote in accordance with management’s recommendation; or
5.Abstain from voting.
VII. PROCEDURES
The portfolio managers (or portfolio manager team) are responsible for:
casting the vote in a manner he/she believes is in the best interest of clients;
being familiar with the proxy voting guidelines of the independent proxy voting services; and
completing the Proxy Voting Challenge Form and submitting on a timely basis the Proxy Voting Challenge Form to the Proxy Voting Sub-Committee when he/she believes the independent proxy voting service recommendation is not in the best interest of the client.
Baird Equity AM Operations is responsible for:
ensuring a copy of the proxy voting guidelines (and/or changes made to such guidelines) established by the independent proxy voting service are distributed, at least annually, to the portfolio managers (or portfolio management teams);
distributing periodic reports to the portfolio managers (or portfolio management teams) on upcoming shareholder meetings to assist the portfolio managers in identifying proposals that may not necessarily correspond with the opinions of the portfolio managers (e.g., recommendations against management);
coordinating with the portfolio manager (or portfolio manager team) the voting recommendation for those matters for which the independent proxy voting service does not provide a specific voting recommendation;
coordinating, with the assistance of the Compliance Department as needed, any Proxy Voting Sub-Committee meetings;
ensuring a conflicts check is performed in situations where there is a proxy challenge or the independent proxy voting service does not provide a recommendation or there is a proxy challenge;
ensuring the results of any Sub-Committee meetings are communicated to the portfolio manager (or portfolio manager teams) and, if the proxy challenge is approved by the Sub- Committee, notifying Baird’s Proxy Support team to cast the votes in accordance with the Sub-Committee’s instructions;
Baird Equity Asset Management of
Robert W. Baird & Co. Incorporated
January 22, 2018


confirming, when possible prior to the voting cut-off date, that Baird’s Proxy Support team properly recorded into the voting instructions into the proxy voting system (currently, ISS) for any approved proxy challenge or for any matters where the independent proxy voting service did not provide a recommendation; and
notifying the Proxy Support area of Baird’s Operations group when advisory client request for information on how Baird voted proxies on the advisory client’s behalf.
The Proxy Support area of Baird’s Operations group is responsible for:
sending to the Baird Equity AM Operations any proposals in which the third party proxy voting services has not provided a recommendation, and
recording or updating, based on the instructions received, the voting instructions in the proxy voting system for (i) any approved proxy voting challenges and (ii) any matters where the proxy voting service did not provide instructions.
VIII.DISCLOSURE TO CLIENTS
Baird will disclose to clients how they can obtain information from us on how client portfolio securities were voted. At the same time, we will provide a summary of these proxy voting policies and procedures to clients and, upon request, will provide them with a copy of the same. These disclosures will be made in Baird’s Form ADV Part 2A (Brochure).
IX.RECORDKEEPING
The applicable department or department unit will maintain the following records with respect to proxy voting:
a copy of the proxy voting policies and procedures is maintained by the Compliance Department;
a copy of all proxy statements received is maintained through the proxy voting system (currently, ISS), the SEC’s EDGAR system or by the Proxy Support team;
a record of each vote cast on behalf of an advisory client is maintained through the proxy voting system (currently, ISS) or by the Proxy Support team
a copy of any document prepared by Baird that was material to making a voting decision or that memorializes the basis for that decision is maintained as part of the records of the Proxy Voting Sub-Committee;
a copy of each written advisory client request for information on how Baird voted proxies on the advisory client’s behalf is maintained by Baird Equity AM Operations; and
a copy of any written response to any advisory client request (written or oral) for information on how proxies were voted on behalf of the requesting advisory client is maintained by Baird Equity AM Operations.
These books and records shall be made and maintained in accordance with the requirements and provided in Rule 204-2 of the Advisers Act.

Baird Equity Asset Management of
Robert W. Baird & Co. Incorporated
January 22, 2018
POLICY ON PROXY VOTING
SPECTRUM ASSET MANAGEMENT, INC. 
FOR INVESTMENT ADVISORY CLIENTS:
 
GENERAL POLICY
 
Spectrum, an investment adviser registered with the Securities and Exchange Commission, acts as investment advisor for various types of client accounts (e.g. employee benefit plans, governmental plans, mutual funds, insurance company separate accounts, corporate pension plans, endowments and foundations).  While Spectrum receives few proxies for the preferred shares it manages, Spectrum nonetheless will, when delegated the authority by a client, vote these shares per the following policy voting standards and processes:
 
STANDARDS:
 
Spectrum’s standards aim to ensure the following in keeping with the best interests of its clients:
 
That Spectrum act solely in the interest of its clients in providing for ultimate long-term stockholder value.
That Spectrum act without undue influence from individuals or groups who may have an economic interest in the outcome of a proxy vote.
That the custodian bank is aware of our fiduciary duty to vote proxies on behalf of others – Spectrum relies on the best efforts of the custodian bank to deliver all proxies we are entitled to vote. 
That Spectrum will exercise its right to vote all proxies on behalf of its clients (or permit clients to vote their interest, as the case(s) may be).
That Spectrum will implement a reasonable and sound basis to vote proxies.

PROCESSES:
 
A.Following ISS’ Recommendations 
Spectrum has selected Institutional Shareholder Services (ISS) to assist it with its proxy voting responsibilities.  Spectrum follows ISS Standard Proxy Voting guidelines (the “Guidelines”).  The Guidelines embody the positions and factors Spectrum generally considers important in casting proxy votes. They address a wide variety of individual topics, including, among other matters, shareholder voting rights, anti-takeover defenses, board structures, the election of directors, executive and director compensation, reorganizations, mergers, and various shareholder proposals. Recognizing the complexity and fact-specific nature of many corporate governance issues, the Guidelines often do not direct a particular voting outcome, but instead identify factors ISS considers in determining how the vote should be cast. 
In connection with each proxy vote, ISS prepares a written analysis and recommendation (an "ISS Recommendation") that reflects ISS's application of Guidelines to the particular proxy issues. Where the Guidelines do not direct a particular response and instead list relevant factors, the ISS Recommendation will reflect ISS's own evaluation of the factors. Spectrum may on any particular proxy vote decide to diverge from the Guidelines or an ISS Recommendation. In such cases, our procedures require: (i) the requesting Portfolio Manager to set forth the reasons for their decision; (ii) the approval of the Chief Investment Officer; (iii) notification to the Compliance Department and other appropriate Principal Global Investors personnel; (iv) a determination that the decision is not influenced by any conflict of interest; and (v) the creation of a written record reflecting the process. 
Spectrum generally votes proxies in accordance with ISS’ recommendations.  When Spectrum follows ISS’ recommendations, it need not follow the conflict of interest procedures in Section B, below. 
From time to time ISS may have a business relationship or affiliation with one or more issuers held in Spectrum client accounts, while also providing voting recommendations on these issuers’ securities.  Because this practice may present a conflict of interest for ISS, Spectrum’s Chief Compliance Officer will require from ISS at least annually additional information, or a certification that ISS has adopted policies and procedures to detect and mitigate such conflicts of interest in issuing voting recommendations.  Spectrum may obtain voting recommendations from two proxy voting services as an additional check on the independence of the ISS’ voting recommendations.



 
B.Disregarding ISS’ Recommendations
 
Should Spectrum determine not to follow ISS’ recommendation for a particular proxy, Spectrum will use the following procedures for identifying and resolving a material conflict of interest, and will use the Proxy Voting Guidelines (below) in determining how to vote. The Report for Proxy Vote(s) against ISS Recommendation(s), Exhibit A hereto, shall be completed in each such instance.
 
Spectrum will classify proxy vote issues into three broad categories:  Routine Administrative Items, Special Interest Issues, and Issues Having the Potential for Significant Economic Impact.  Once the Senior Portfolio Manager has analyzed and identified each issue as belonging in a particular category, and disclosed the conflict of interests to affected clients and obtained their consents prior to voting, Spectrum will cast the client’s vote(s) in accordance with the philosophy and decision guidelines developed for that category.  New and unfamiliar issues are constantly appearing in the proxy voting process.  As new issues arise, we will make every effort to classify them among the three categories below.  If we believe it would be informative to do so, we may revise this document to reflect how we evaluate such issues.
 
Due to timing delays, logistical hurdles and high costs associated with procuring and voting international proxies, Spectrum has elected to approach international proxy voting on the basis of achieving “best efforts at a reasonable cost.”
 
As a fiduciary, Spectrum owes its clients an undivided duty of loyalty.  We strive to avoid even the appearance of a conflict that may compromise the trust our clients have placed in it.  This is true with respect to proxy voting and thus Spectrum has adopted the following procedures for addressing potential or actual conflicts of interest.
 
Identifying a Conflict of Interest. There may be a material conflict of interest when Spectrum votes a proxy solicited by an issuer whose retirement plan or fund we manage or with whom Spectrum, an affiliate, or an officer or director of Spectrum or of an affiliate has any other material business or personal relationship that may affect how we vote the issuer’s proxy.  To avoid any perceived material conflict of interest, the following procedures have been established for use when Spectrum encounters a potential material conflict to ensure that voting decisions are based on a clients’ best interest and are not the product of a material conflict.
 
Monitoring for Conflicts of Interest.  All employees of Spectrum are responsible for monitoring for conflicts of interest and referring any that may be material to the CCO for resolution.  At least annually, the CCO will take reasonable steps to evaluate the nature of Spectrum’s material business relationships (and those of its affiliates) with any company whose preferred securities are held in client accounts (a “portfolio company”) to assess which, if any, could give rise to a conflict of interest.  CCO’s review will focus on the following three categories:

Business Relationships – The CCO will consider whether Spectrum (or an affiliate) has a substantial business relationship with a portfolio company or a proponent of a proxy proposal relating to the portfolio company (e.g., an employee group), such that failure to vote in favor of management (or the proponent) could harm the adviser’s relationship with the company (or proponent).  For example, if Spectrum manages money for the portfolio company or an employee group, manages pension assets, leases office space from the company, or provides other material services to the portfolio company, the CCO will review whether such relationships may give rise to a conflict of interest.
Personal Relationships – The CCO will consider whether any senior executives or portfolio managers (or similar persons at Spectrum’s affiliates) have a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships that might give rise to a conflict of interest.
Familial Relationships – The CCO will consider whether any senior executives or portfolio managers (or similar persons at Spectrum’s affiliates) have a familial relationship relating to a portfolio company (e.g., a spouse or other relative who serves as a director of a portfolio company, is a candidate for such a position, or is employed by a portfolio company in a senior position).



In monitoring for conflicts of interest, the CCO will consider all information reasonably available to it about any material business, personal, or familial relationship involving Spectrum (and its affiliates) and a portfolio company, including the following:
A list of clients that are also public companies, which is prepared and updated by the Operations Department and retained in the Compliance Department.
Publicly available information.
Information generally known within Spectrum.
Information actually known by senior executives or portfolio managers. When considering a proxy proposal, investment professionals involved in the decision-making process must disclose any potential material conflict that they are aware of to the CCO prior to any substantive discussion of a proxy matter.
Information obtained periodically from those persons whom the CCO reasonably believes could be affected by a conflict arising from a personal or familial relationship (e.g., portfolio managers, senior management).
The CCO may, at his discretion, assign day-to-day responsibility for monitoring for conflicts to a designated person.  With respect to monitoring of affiliates, the CCO in conjunction with PGI’s CCO may rely on information barriers between Spectrum and its affiliates in determining the scope of its monitoring of conflicts involving affiliates.
 
Determining Whether a Conflict of Interest is “Material” – On a regular basis, CCO will monitor conflicts of interest to determine whether any may be “material” and therefore should be referred to PGI for resolution.  The SEC has not provided any specific guidance as to what types of conflicts may be “material” for purposes of proxy voting, so therefore it would be appropriate to look to the traditional materiality analysis under the federal securities laws, i.e., that a “material” matter is one that is reasonably likely to be viewed as important by the average shareholder.
 
Whether a conflict may be material in any case will, of course, depend on the facts and circumstances. However, in considering the materiality of a conflict, Spectrum will use the following two-step approach:

1.Financial Materiality – The most likely indicator of materiality in most cases will be the dollar amount involved with the relationship in question.  For purposes of proxy voting, it will be presumed that a conflict is not material unless it involves at least 5% of Spectrum’s annual revenues or a minimum dollar amount of $1,000,000.  Different percentages or dollar amounts may be used depending on the nature and degree of the conflict (e.g., a higher number if the conflict arises through an affiliate rather than directly with Spectrum).

2.Non-Financial Materiality – A non-financial conflict of interest might be material (e.g., conflicts involving personal or familial relationships) and should be evaluated based on the facts and circumstances of each case.
 
If the CCO has any question as to whether a particular conflict is material, it should presume the conflict to be material and refer it to the PGI’s CCO for resolution.  As in the case of monitoring conflicts, the CCO may appoint a designated person or subgroup of Spectrum’s investment team to determine whether potential conflicts of interest may be material.
 
Resolving a Material Conflict of Interest – When an employee of Spectrum refers a potential material conflict of interest to the CCO, the CCO will determine whether a material conflict of interest exists based on the facts and circumstances of each particular situation.  If the CCO determines that no material conflict of interest exists, no further action is necessary and the CCO will notify management accordingly.  If the CCO determines that a material conflict exists, CCO must disclose the conflict to affected clients and obtain consent from each as to the manner in which Spectrum proposes to vote.
 
Clients may obtain information about how we voted proxies on their behalf by contacting Spectrum’s Compliance Department.
 



PROXY VOTING GUIDELINES
 
CATEGORY I:  Routine Administrative Items
 
Philosophy:  Spectrum is willing to defer to management on matters of a routine administrative nature.  We feel management is best suited to make those decisions which are essential to the ongoing operation of the company and which do not have a major economic impact on the corporation and its shareholders.  Examples of issues on which we will normally defer to management’s recommendation include:
 
1.selection of auditors
2.increasing the authorized number of common shares
3.election of unopposed directors
 
CATEGORY II:  Special Interest Issues
 
Philosophy:  While there are many social, political, environmental and other special interest issues that are worthy of public attention, we do not believe the corporate proxy process is the appropriate arena in which to achieve gains in these areas.  Our primary responsibility in voting proxies is to provide for the greatest long-term value for Spectrum’s clients.  We are opposed to proposals which involve an economic cost to the corporation, or which restrict the freedom of management to operate in the best interest of the corporation and its shareholders.  However, in general we will abstain from voting on shareholder social, political and environmental proposals because their long-term impact on share value cannot be calculated with any reasonable degree of confidence.
 
CATEGORY III:  Issues Having the Potential for Significant Economic Impact
 
Philosophy:  Spectrum is not willing to defer to management on proposals which have the potential for major economic impact on the corporation and the value of its shares.  We believe such issues should be carefully analyzed and decided by the owners of the corporation.  Presented below are examples of issues which we believe have the potential for significant economic impact on shareholder value.
 
1.Classification of Board of Directors.   Rather than electing all directors annually, these provisions stagger a board, generally into three annual classes, and call for only one-third to be elected each year.  Staggered boards may help to ensure leadership continuity, but they also serve as defensive mechanisms.  Classifying the board makes it more difficult to change control of a company through a proxy contest involving election of directors.  In general, we vote on a case by case basis on proposals for staggered boards, but generally favor annual elections of all directors.

2.Cumulative Voting of Directors.  Most corporations provide that shareholders are entitled to cast one vote for each director for each share owned - the one share, one vote standard.  The process of cumulative voting, on the other hand, permits shareholders to distribute the total number of votes they have in any manner they wish when electing directors.  Shareholders may possibly elect a minority representative to a corporate board by this process, ensuring representation for all sizes of shareholders.  Outside shareholder involvement can encourage management to maximize share value.  We generally support cumulative voting of directors.

3.Prevention of Greenmail.  These proposals seek to prevent the practice of “greenmail”, or targeted share repurchases by management of company stock from individuals or groups seeking control of the company.  Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.  By making greenmail payments, management transfers significant sums of corporate cash to one entity, most often for the primary purpose of saving their jobs.  Shareholders are left with an asset-depleted and often less competitive company.  We think that if a corporation offers to buy back its stock, the offer should be made to all shareholders, not just to a select group or individual.  We are opposed to greenmail and will support greenmail prevention proposals.




4.Supermajority Provisions.  These corporate charter amendments generally require that a very high percentage of share votes (70-81%) be cast affirmatively to approve a merger, unless the board of directors has approved it in advance.  These provisions have the potential to give management veto power over merging with another company, even though a majority of shareholders favor the merger.  In most cases we believe requiring supermajority approval of mergers places too much veto power in the hands of management and other minority shareholders, at the expense of the majority shareholders, and we oppose such provisions.

5.Defensive Strategies.  These proposals will be analyzed on a case by case basis to determine the effect on shareholder value.  Our decision will be based on whether the proposal enhances long-term economic value.

6.Business Combinations or Restructuring.  These proposals will be analyzed on a case by case basis to determine the effect on shareholder value.  Our decision will be based on whether the proposal enhances long-term economic value.

7.Executive and Director Compensation.  These proposals will be analyzed on a case by case basis to determine the effect on shareholder value.  Our decision will be based on whether the proposal enhances long-term economic value.





Exhibit A to Proxy Policy
 
Report for Proxy Vote(s) Against ISS Recommendation(s)
 
This form should be completed in instances in which Spectrum Portfolio Manager(s) decide to vote against ISS recommendations.
 
1. Security Name / Symbol:
2. Issue up for vote:
3. Summary of ISS recommendation (see attached full ISS recommendation:
4. Reasons for voting against ISS recommendation (supporting documentation may be attached):
5. Determination of potential conflicts (if any):
6. Contacted Compliance Department: Yes / No
Name of individual contacted:     
Date:
 
7. Contacted other Spectrum portfolio managers who have position in same security:
Yes / No  
Name of individual contacted:   
Date:
 
8. Portfolio Manager Signature:  
Date:  
Portfolio Manager Name:  
   
Portfolio Manager Signature*:     
Date:  
Portfolio Manager Name:  
*Note: All Portfolio Managers who manage portfolios that hold relevant security must sign.


T. ROWE PRICE ASSOCIATES, INC. AND ITS INVESTMENT ADVISER AFFILIATES
        PROXY VOTING POLICIES AND PROCEDURES
RESPONSIBILITY TO VOTE PROXIES
T. Rowe Price Associates, Inc., and its affiliated investment advisers (collectively, “T. Rowe Price”) recognize and adhere to the principle that one of the privileges of owning stock in a company is the right to vote in the election of the company’s directors and on matters affecting certain important aspects of the company’s structure and operations that are submitted to shareholder vote. The U.S.-registered investment companies which T. Rowe Price sponsors and serves as investment adviser (the “Price Funds”) as well as other investment advisory clients have delegated to T. Rowe Price certain proxy voting powers. As an investment adviser, T. Rowe Price has a fiduciary responsibility to such clients when exercising its voting authority with respect to securities held in their portfolios. T. Rowe Price reserves the right to decline to vote proxies in accordance with client-specific voting guidelines.
T. Rowe Price has adopted these Proxy Voting Policies and Procedures (“Policies and Procedures”) for the purpose of establishing formal policies and procedures for performing and documenting its fiduciary duty with regard to the voting of client proxies. This document is reviewed at least annually and updated as necessary.
Fiduciary Considerations. It is the policy of T. Rowe Price that decisions with respect to proxy issues will be made in light of the anticipated impact of the issue on the desirability of investing in the portfolio company from the viewpoint of the particular advisory client or Price Fund. Proxies are voted solely in the interests of the client, Price Fund shareholders or, where employee benefit plan assets are involved, in the interests of plan participants and beneficiaries. Our intent has always been to vote proxies, where possible to do so, in a manner consistent with our fiduciary obligations and responsibilities.
One of the primary factors T. Rowe Price considers when determining the desirability of investing in a particular company is the quality and depth of its management. We recognize that a company’s management is entrusted with the day-to-day operations of the company, as well as its long-term direction and strategic planning, subject to the oversight of the company’s board of directors. Accordingly, our proxy voting guidelines are not intended to substitute our judgment for management’s with respect to the company’s day-to-day operations. Rather, our proxy voting guidelines are designed to promote accountability of a company’s management and board of directors to its shareholders; to align the interests of management with those of shareholders; and to encourage companies to adopt best practices in terms of their corporate governance and disclosure. In addition to our proxy voting guidelines, we rely on a company’s public filings, its board recommendations, its track record, country-specific best practices codes, our research providers and – most importantly – our investment professionals’ views in making voting decisions.
T. Rowe Price seeks to vote all of its clients’ proxies. In certain circumstances, T. Rowe Price may determine that refraining from voting a proxy is in a client’s best interest, such as when the cost to the client of voting outweigh the expected benefit to the client. For example, the practicalities and costs involved with international investing may make it impossible at times, and at other times disadvantageous, to vote proxies in every instance.
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


ADMINISTRATION OF POLICIES AND PROCEDURES
Environmental, Social and Governance Committee. T. Rowe Price’s Environmental, Social and Governance Committee (“ESG Committee”) is responsible for establishing positions with respect to corporate governance and other proxy issues. Certain delegated members of the ESG Committee also review questions and respond to inquiries from clients and mutual fund shareholders pertaining to proxy issues. While the ESG Committee sets voting guidelines and serves as a resource for T. Rowe Price portfolio management, it does not have proxy voting authority for any Price Fund or advisory client. Rather, voting authority and responsibility is held by the Chairperson of the Price Fund’s Investment Advisory Committee or the advisory client’s portfolio manager. The ESG Committee is also responsible for the oversight of third-party proxy services firms that T. Rowe Price engages to facilitate the proxy voting process.
Proxy Voting Team. The Proxy Voting team is responsible for administering the proxy voting process as set forth in the Policies and Procedures.
Corporate Governance Team. Our Corporate Governance team is responsible for reviewing the proxy agendas for all upcoming meetings and making company-specific recommendations to our global industry analysts and portfolio managers with regard to the voting decisions in their portfolios.
HOW PROXIES ARE REVIEWED, PROCESSED AND VOTED

In order to facilitate the proxy voting process, T. Rowe Price has retained Institutional Shareholder Services (“ISS”) as an expert in the proxy voting and corporate governance area. ISS specializes in providing a variety of fiduciary-level proxy advisory and voting services. These services include custom vote recommendations, research, vote execution, and reporting. In order to reflect T. Rowe Price’s issue-by-issue voting guidelines as approved each year by the ESG Committee, ISS maintains and implements a custom voting policy for the Price Funds and other advisory client accounts.
Meeting Notification
T. Rowe Price utilizes ISS’ voting agent services to notify us of upcoming shareholder meetings for portfolio companies held in client accounts and to transmit votes to the various custodian banks of our clients. ISS tracks and reconciles T. Rowe Price holdings against incoming proxy ballots. If ballots do not arrive on time, ISS procures them from the appropriate custodian or proxy distribution agent. Meeting and record date information is updated daily and transmitted to T. Rowe Price through ProxyExchange, an ISS application.
Vote Determination
Each day, ISS delivers into T. Rowe Price’s customized ProxyExchange environment a comprehensive summary of upcoming meetings, proxy proposals, publications discussing key proxy voting issues, and custom vote recommendations to assist us with proxy research and processing. The final authority and responsibility for proxy voting decisions remains with T. Rowe Price. Decisions with respect to proxy matters are made primarily in light of the anticipated impact of the issue on the desirability of investing in the company from the perspective of our clients.
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


Portfolio managers execute their responsibility to vote proxies in different ways. Some have decided to vote their proxies generally in line with the guidelines as set by the ESG Committee. Others review the customized vote recommendations and approve them before the votes are cast. In all cases, portfolio managers receive current reports summarizing all proxy votes in their client accounts. Portfolio managers who vote their proxies inconsistent with T. Rowe Price guidelines are required to document the rationale for their votes. The Proxy Voting team is responsible for maintaining this documentation and assuring that it adequately reflects the basis for any vote which is contrary to our proxy voting guidelines.
T. Rowe Price Voting Policies
Specific proxy voting guidelines have been adopted by the ESG Committee for all regularly occurring categories of management and shareholder proposals. A detailed set of proxy voting guidelines is available on the T. Rowe Price website, www.troweprice.com. The following is a summary of our guidelines on the most significant proxy voting topics:
Election of Directors – For most companies, T. Rowe Price generally expects boards to maintain a majority of independent directors. T. Rowe Price may vote against outside directors who do not meet our criteria relating to their independence, particularly when they serve on key board committees, such as compensation and nominating committees, for which we believe that all directors should be independent. In certain markets where majority-independent boards are uncommon, we expect companies to adhere to the minimum independence standard established by regional corporate governance codes. At a minimum, however, we believe boards in all regions should include a blend of executive and non-executive members, and we are likely to vote against senior executives at companies with insufficient representation by independent directors. We also vote against directors who are unable to dedicate sufficient time to their board duties due to their commitments to other boards. We may vote against certain directors who have served on company boards where we believe there has been a gross failure in governance or oversight. In certain markets, a lack of diversity on the board may cause us to oppose the members of the board’s Nominating Committee. Additionally, we may vote against compensation committee members who approve excessive executive compensation or severance arrangements. We support efforts to elect all board members annually because boards with staggered terms lessen directors’ accountability to shareholders and act as deterrents to takeover proposals. To strengthen boards’ accountability, T. Rowe Price supports proposals calling for a majority vote threshold for the election of directors and we may withhold votes from an entire board if they fail to implement shareholder proposals that receive majority support.
Anti-Takeover, Capital Structure and Corporate Governance Issues – T. Rowe Price generally opposes anti-takeover measures since they adversely impact shareholder rights and limit the ability of shareholders to act on potential value-enhancing transactions. Such anti-takeover mechanisms include classified boards, supermajority voting requirements, dual share classes, and poison pills. When voting on capital structure proposals, T. Rowe Price will consider the dilutive impact to shareholders and the effect on shareholder rights.     
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


Executive Compensation Issues – T. Rowe Price’s goal is to assure that a company’s equity-based compensation plan is aligned with shareholders’ long-term interests. We evaluate plans on a case-by-case basis, using a number of factors, including dilution to shareholders, problematic plan features, burn rate, and the equity compensation mix. Plans that are constructed to effectively and fairly align executives’ and shareholders’ incentives generally earn our approval. Conversely, we oppose compensation packages that provide what we view as excessive awards to few senior executives or contain the potential for excessive dilution relative to the company’s peers. We also may oppose equity plans at any company where we deem the overall compensation practices to be problematic. We generally oppose efforts to reprice options in the event of a decline in value of the underlying stock unless such plans appropriately balance shareholder and employee interests. For companies with particularly egregious pay practices such as excessive severance packages, executives with outsized pledged/hedged stock positions, executive perks, and bonuses that are not adequately linked to performance, we may vote against members of the board’s Compensation Committee. We analyze management proposals requesting ratification of a company’s executive compensation practices (“Say-on-Pay” proposals) on a case-by-case basis, using a screen that assesses the long-term linkage between executive compensation and company performance as well as the presence of objectionable structural features in compensation plans. Finally, we may oppose Compensation Committee members or even the entire board if we have cast votes against a company’s “Say-on-Pay” vote in consecutive years.
Mergers and Acquisitions – T. Rowe Price considers takeover offers, mergers, and other extraordinary corporate transactions on a case-by-case basis to determine if they are beneficial to shareholders’ current and future earnings stream and to ensure that our Price Funds and advisory clients are receiving fair consideration for their securities. We oppose a high proportion of proposals for the ratification of executive severance packages (“Say on Golden Parachute” proposals) in conjunction with merger transactions if we conclude these arrangements reduce the alignment of executives’ incentives with shareholders’ interests.
Corporate Social Responsibility Issues – Vote recommendations for corporate responsibility issues are generated by the Corporate Governance team in consultation with our Responsible Investment team. T. Rowe Price takes into consideration a company’s existing level of disclosure on matters of a social, environmental, or corporate responsibility nature. If the proposal addresses an issue with substantial investment implications for the company’s business or operations, and those issues have not been adequately addressed by management, T. Rowe Price generally supports calls for additional disclosure.
Global Portfolio Companies – The ESG Committee has developed custom international proxy voting guidelines based on ISS’ general global policies, regional codes of corporate governance, and our own views as investors in these markets. ISS applies a two-tier approach to determining and applying global proxy voting policies. The first tier establishes baseline policy guidelines for the most fundamental issues, which span the corporate governance spectrum without regard to a company’s domicile. The second tier takes into account various idiosyncrasies of different countries, making allowances for standard market practices, as long as they do not violate the fundamental goals of good corporate governance. The goal is to enhance shareholder value through effective use of the shareholder franchise, recognizing that application of policies developed for U.S. corporate governance issues are not appropriate for all markets.
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


Fixed Income and Passively Managed Strategies – Proxy voting for our fixed income and indexed portfolios is administered by the Proxy Voting team using T. Rowe Price’s guidelines as set by the ESG Committee. Indexed strategies generally vote in line with the T. Rowe Price guidelines. Fixed income strategies generally follow the proxy vote determinations on security holdings held by our equity accounts unless the matter is specific to a particular fixed income security such as consents, restructurings, or reorganization proposals.
Shareblocking – Shareblocking is the practice in certain foreign countries of “freezing” shares for trading purposes in order to vote proxies relating to those shares. In markets where shareblocking applies, the custodian or sub-custodian automatically freezes shares prior to a shareholder meeting once a proxy has been voted. T. Rowe Price’s policy is generally to refrain from voting shares in shareblocking countries unless the matter has compelling economic consequences that outweigh the loss of liquidity in the blocked shares.
Securities on Loan – The Price Funds and our institutional clients may participate in securities lending programs to generate income for their portfolios. Generally, the voting rights pass with the securities on loan; however, lending agreements give the lender the right to terminate the loan and pull back the loaned shares provided sufficient notice is given to the custodian bank in advance of the applicable deadline. T. Rowe Price’s policy is generally not to vote securities on loan unless we determine there is a material voting event that could affect the value of the loaned securities. In this event, we have the discretion to pull back the loaned securities in order to cast a vote at an upcoming shareholder meeting. A monthly monitoring process is in place to review securities on loan and how they may affect proxy voting.
Monitoring and Resolving Conflicts of Interest
The ESG Committee is also responsible for monitoring and resolving potential material conflicts between the interests of T. Rowe Price and those of its clients with respect to proxy voting. We have adopted safeguards to ensure that our proxy voting is not influenced by interests other than those of our fund shareholders and other investment advisory clients. While membership on the ESG Committee is diverse, it does not include individuals whose primary duties relate to client relationship management, marketing, or sales. Since T. Rowe Price’s voting guidelines are predetermined by the ESG Committee, application of the guidelines by portfolio managers to vote client proxies should in most instances adequately address any potential conflicts of interest. However, consistent with the terms of the Policies and Procedures, which allow portfolio managers to vote proxies opposite our general voting guidelines, the ESG Committee regularly reviews all such proxy votes that are inconsistent with the proxy voting guidelines to determine whether the portfolio manager’s voting rationale appears reasonable. The ESG Committee also assesses whether any business or other material relationships between T. Rowe Price and a portfolio company (unrelated to the ownership of the portfolio company’s securities) could have influenced an inconsistent vote on that company’s proxy. Issues raising potential conflicts of interest are referred to designated members of the ESG Committee for immediate resolution prior to the time T. Rowe Price casts its vote.
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


With respect to personal conflicts of interest, T. Rowe Price’s Code of Ethics and Conduct requires all employees to avoid placing themselves in a “compromising position” in which their interests may conflict with those of our clients and restrict their ability to engage in certain outside business activities. Portfolio managers or ESG Committee members with a personal conflict of interest regarding a particular proxy vote must recuse themselves and not participate in the voting decisions with respect to that proxy.
Specific Conflict of Interest Situations - Voting of T. Rowe Price Group, Inc. common stock (sym: TROW) by certain T. Rowe Price Index Funds will be done in all instances in accordance with T. Rowe Price voting guidelines and votes inconsistent with the guidelines will not be permitted. In the event that there is no previously established guideline for a specific voting issue appearing on the T. Rowe Price Group proxy, the Price Funds will abstain on that voting item. In addition, T. Rowe Price has voting authority for proxies of the holdings of certain Price Funds that invest in other Price Funds. In cases where the underlying fund of an investing Price Fund, including a fund-of-funds, holds a proxy vote, T. Rowe Price will mirror vote the fund shares held by the upper-tier fund in the same proportion as the votes cast by the shareholders of the underlying funds (other than the T. Rowe Price Reserve Investment Fund).
Limitations on Voting Proxies of Banks
T. Rowe Price has obtained relief from the U.S. Federal Reserve Board (the “FRB Relief”) which permits, subject to a number of conditions, T. Rowe Price to acquire in the aggregate on behalf of its clients, 10% or more of the total voting stock of a bank, bank holding company, savings and loan holding company or savings association (each a “Bank”), not to exceed a 15% aggregate beneficial ownership maximum in such Bank. One such condition affects the manner in which T. Rowe Price will vote its clients’ shares of a Bank in excess of 10% of the Bank’s total voting stock (“Excess Shares”). The FRB Relief requires that T. Rowe Price use its best efforts to vote the Excess Shares in the same proportion as all other shares voted, a practice generally referred to as “mirror voting,” or in the event that such efforts to mirror vote are unsuccessful, Excess Shares will not be voted. With respect to a shareholder vote for a Bank of which T. Rowe Price has aggregate beneficial ownership of greater than 10% on behalf of its clients, T. Rowe Price will determine which of its clients’ shares are Excess Shares on a pro rata basis across all of its clients’ portfolios for which T. Rowe Price has the power to vote proxies.
REPORTING, RECORD RETENTION AND OVERSIGHT
The ESG Committee, and certain personnel under the direction of the ESG Committee, perform the following oversight and assurance functions, among others, over T. Rowe Price’s proxy voting: (1) periodically samples proxy votes to ensure that they were cast in compliance with T. Rowe Price’s proxy voting guidelines; (2) reviews, no less frequently than annually, the adequacy of the Policies and Procedures to make sure that they have been implemented effectively, including whether they continue to be reasonably designed to ensure that proxies are voted in the best interests of our clients; (3) performs due diligence on whether a retained proxy advisory firm has the capacity and competency to adequately analyze proxy issues, including the adequacy and quality of the proxy advisory firm’s staffing and personnel and its policies; and (4) oversees any retained proxy advisory firms and their procedures regarding their capabilities to (i) produce proxy research that is based on current and accurate
TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020


information and (ii) identify and address any conflicts of interest and any other considerations that we believe would be appropriate in considering the nature and quality of the services provided by the proxy advisory firm.
T. Rowe Price will furnish Vote Summary Reports, upon request, to its institutional clients that have delegated proxy voting authority. The report specifies the portfolio companies, meeting dates, proxy proposals, and votes which have been cast for the client during the period and the position taken with respect to each issue. Reports normally cover quarterly or annual periods and are provided to such clients upon request.
T. Rowe Price retains proxy solicitation materials, memoranda regarding votes cast in opposition to the position of a company’s management, and documentation on shares voted differently. In addition, any document which is material to a proxy voting decision such as the T. Rowe Price proxy voting guidelines, ESG Committee meeting materials, and other internal research relating to voting decisions are maintained in accordance with applicable requirements.

TRP 2020 Proxy Voting Policies and Procedures.doc
Updated: February 2020
Vaughan Nelson Investment Management, L.P.
Description of Proxy Voting Policy and Procedures
Policy
Vaughan Nelson undertakes to vote all client proxies in a manner reasonably expected to ensure the client’s best interest is upheld and in a manner that does not subrogate the client’s best interest to that of the firm’s in instances where a material conflict exists.
Approach
Vaughan Nelson has created a Proxy Voting Guideline (“Guideline”) believed to be in the best interest of clients relating to common and recurring issues found within proxy voting material. The Guideline, reviewed annually, is the work product of Vaughan Nelson’s Investment Team and it considers the nature of it’s business, the types of securities being managed and other sources of information including, but not limited to, research provided by an independent research firm Institutional Shareholder Services (ISS), internal research, published information on corporate governance and experience. The Guideline helps to ensure voting consistency on issues common amongst issuers and to serve as evidence that a vote was not the product of a conflict of interest but rather a vote in accordance with a pre-determined policy. However, in many recurring and common proxy issues a “blanket voting approach” cannot be applied. In these instances, the Guideline indicates that such issues will be addressed on a case-by-case basis in consultation with a portfolio manager to determine how to vote the issue in the client’s best interest.
Vaughan Nelson uses ISS in a limited capacity to collect proxy ballots for clients, provide a platform in which to indicate our vote, provide company research as a point of information and assist our firm in generating proxy voting reports.
Vaughan Nelson, in executing its duty to vote proxies, may encounter a material conflict of interest. Vaughan Nelson does not envision a large number of situations where a conflict of interest would exist, if any, given the nature of Vaughan Nelson’s business, client base, relationships, and the types of securities managed. Notwithstanding, if a conflict of interest arises, we will undertake to vote the proxy or proxy issue in the client’s continued best interest. This will be accomplished by either casting the vote in accordance with the Guideline, if the application of such policy to the issue at hand involves little discretion on Vaughan Nelson’s part or casting the vote as indicated by the independent third-party research firm, ISS. If a conflict involves ISS, Vaughan Nelson will take that into consideration when evaluating a proxy item that is not addressed in the firm’s recurring Proxy Voting Guideline.
Vaughan Nelson, as an indirect subsidiary of a Bank Holding Company, is restricted from voting the shares it has invested in banking entities on the fund’s behalf in instances where the aggregate ownership of all the Bank Holding Company’s investment management subsidiaries exceed 5% of the outstanding share class of a bank. Where the aggregate ownership described exceeds the 5% threshold, the firm will instruct ISS, an independent third party, to vote the proxies in line with ISS’s recommendation.
Finally, there may be circumstances or situations that may preclude or limit the manner in which a proxy is voted. These may include: 1) Mutual funds – whereby voting may be controlled by restrictions within the fund or the actions of authorized persons, 2) International Securities – whereby the perceived benefit of voting an international proxy does not outweigh the anticipated costs of doing so, 3) New Accounts – instances where security holdings assumed will be sold in the near term thereby limiting any benefit to be obtained by a vote of proxy material, 4) Small Combined Holdings / Unsupervised Securities – where the firm does not have a significant holding or basis on which to offer advice, 5) a security is out on loan (voting rights have been passed to the borrower) or 6) securities held on record date but not held on meeting date.
In summary, Vaughan Nelson’s goal is to vote proxy material in a manner that is believed to assist in maximizing the value of a portfolio.


Proxy Voting Policy
When Victory Capital Management Inc. (“Victory”) client accounts hold stock and Victory has an obligation to vote proxies for the stock, the voting authority will be exercised in accordance with:
The direction and guidance, if any, provided by the document establishing the account relationship
Principles of fiduciary law and Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended. Both require Victory to act in the best interests of the account. In voting such stock, Victory will exercise the care, skill, prudence and diligence a prudent person would use, considering the aims, objectives, and guidance provided by the documents governing the account
The guidelines listed in this policy, including the ISS Taft Hartley guidelines in Appendix A and the Victory public company guidelines in Appendix B
Victory votes client securities in the best interests of the client. In general, this entails voting client proxies with the objective of increasing the long-term economic value of client assets. In determining the best interests of the account, Victory considers, among other things, the effect of the proposal on the underlying value of the securities (including the effect on marketability of the securities and the effect of the proposal on future prospects of the issuer), the composition and effectiveness of the issuer's board of directors, the issuer’s corporate governance practices, and the quality of communications from the issuer to its shareholders.
Where Victory has an obligation to vote client proxies:
Reasonable efforts will be made to monitor and keep abreast of corporate actions
All stock, whether by proxy or in person, will be voted, provided there is sufficient time and information available
A written record of such voting will be maintained by Victory
Non-routine proposals not covered by the guidelines or involving other special circumstances will be evaluated on a case-by-case basis with input from the appropriate Victory analyst(s) or portfolio manager(s).
Victory’s Proxy Committee (the “Proxy Committee”) will supervise the voting of client securities. In all cases, the ultimate voting decision and responsibility rests with the members of the Proxy Committee.
Voting rights for securities that have been placed on loan by a client or a client’s custodian generally pass to the borrower, which interferes with Victory’s ability to vote on shareholder matters. In these circumstances Victory generally will be unable to act on specific proxy matters.
Victory will not necessarily vote all client proxies for a particular company meeting in a uniform manner. Depending on client objectives, as well as the opinions of Victory’s various investment teams, Victory will split votes when appropriate in order to help ensure that Victory is acting in the best interest of all of its clients.
Statement of Corporate Governance
The voting rights associated with stock ownership are as valuable as any other financial assets. As such, they must be managed in the same manner. Victory has established voting guidelines that seek to protect these rights while attempting to maximize the value of the underlying securities.
Proxy Voting Procedure
The Proxy Committee determines how proxies will be voted. Decisions are based exclusively with the best interest of the client in mind.





Voting may be executed through administrative screening per established guidelines with oversight by the Proxy Committee or upon vote by a quorum of the Proxy Committee.
Victory’s portfolio managers opinions concerning the management and prospects of the issuer may be taken into account in determining whether a vote for or against a proposal is in the client’s best interests. Therefore, Victory will not necessarily vote all client proxys for a particular company meeting in a uniform manner. Insufficient information, onerous requests or vague, ambiguous wording may indicate that a vote against a proposal is appropriate, even when the general principal appears to be reasonable.
The Proxy Committee is comprised of Victory employees who represent vital areas within the company and can provide a range of knowledge which enhances the committee’s decision making capabilities. Quorum exists when three voting committee members are either in attendance or participate remotely via video or teleconference. Approval is based on a majority of votes cast.
Victory has engaged ISS (Institutional Shareholder Services) to perform the administrative tasks of receiving proxies, proxy statements, and voting proxies in accordance with the Victory Proxy Policy. In no circumstances shall ISS have the authority to vote proxies except in accordance with standing or specific instructions given to it by Victory. Victory will perform annual testing of actual votes cast versus these policy guidelines to help insure that ballots are being voted per policy. ISS also performs regular proxy ballot reconciliations which compare client holdings to actual ballots received. ISS then provides Victory with periodic reports of any discrepancies identified during the reconciliation process. Victory is responsible for working with ISS and client custodians to resolve any discrepancies and insure that all client proxy ballots are voted.
Voting Guidelines
The following guidelines are intended to assist in voting proxies and are not to be considered rigid rules. The Proxy Committee is directed to apply these guidelines as appropriate. On occasion, however, a contrary vote may be warranted when such action is in the best interests of the account or if it is required under the documents governing the account.
The committee may also take into account independent third party, general industry guidance or other governance board review sources when making decisions. The committee may additionally seek guidance from other internal sources with special expertise on a given topic, where appropriate.
All Proxy Committee voting decisions will be documented.
The following is a discussion of selected proxy proposals which are considered periodically at annual meetings. Victory’s general position with regard to such proposals is also included.
International Proxy Voting
Victory will attempt to vote every proxy it receives for all international foreign proxies. However, there may be situations in which Victory may vote against, withhold a vote or cannot vote at all. For example, Victory may not receive a meeting notice in enough time to vote or Victory may not be able to obtain enough information to make a fully informed decision, in which case we will vote against.
In certain foreign jurisdictions, voting of proxies will result in the lockup of shares due to issues such as shareblocking or re-registration, impairing Victory's ability to trade those shares for several days. This could result in significant loss to the investor. Consequently, in those foreign jurisdictions which engage in this practice, Victory will generally refrain from proxy voting. Specifically, for shareblocking and re-registration, Victory will automatically Take No Action through a Do Not Vote instruction for ballots that would immobilize the shares. Victory has the option to override the automation if we become aware of a situation where we wish to vote and are not concerned with the short term inability to trade out of the position. In re-registration or shareblocking markets, where shares are not immobilized by voting instructions, ballots are voted per policy.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



In other foreign jurisdictions, the determination by the Proxy Committee to vote, or refrain from voting proxys will take into consideration any additional costs to investors which may be incurred from the research and voting process. Finally, these guidelines will be applied in foreign markets taking into account local regulatory requirements, local corporate governance codes and local market best practices.
Additional Topics
Any issue not covered within the guidelines will be evaluated by the Proxy Committee on a case-by-case basis.
Material Conflicts of Interest
In the event a material conflict of interest arises between Victory’s interests and those of a client during the course of voting client’s proxies, the Proxy Committee shall:
Vote the proxy in accordance with the Proxy Voting Guidelines unless such guidelines are judged by the Proxy Committee to be inapplicable to the proxy matter at issue
In the event that the Proxy Voting Guidelines are inapplicable, determine whether a vote for, or against, the proxy is in the best interest of the client’s account
Document the nature of the conflict and the rationale for the recommended vote
Solicit the opinions of Victory’s Chief Compliance Officer, and if necessary the Chief Legal Officer, or their designee, or consult an internal or external, independent adviser
Report to the Victory Capital Management Board any proxy votes that took place with a material conflict situation present, including the nature of the conflict and the basis or rationale for the voting decision made
If a member of the Proxy Committee has a personal conflict (e.g. family member on board of company) he/she will recuse themselves from voting.
Recordkeeping
In accordance with Rule 204-2(c)(2) under the Investment Advisers Act of 1940, as amended, Victory will retain the following records with respect to proxy voting:
Copies of all policies and procedures required by Rule 206(4)-6
A written record of votes cast on behalf of clients
Any documents prepared by Victory or the Proxy Committee germane to the voting decision
A copy of each written client request for information on how Victory voted proxies on such client’s behalf
A copy of any written response by Victory to any written or verbal client request for information on how Victory voted such client’s proxies
Routine/Miscellaneous
Adjourn Meeting
Generally vote AGAINST proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.
Vote FOR proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote AGAINST proposals if the wording is too vague or if the proposal includes "other business."
Amend Quorum Requirements
Vote AGAINST proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding unless there are compelling reasons to support the proposal.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Amend Minor Bylaws
Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or corrections).
Change Company Name
Vote FOR proposals to change the corporate name.
Change Date, Time, or Location of Annual Meeting
Vote FOR management proposals to change the date, time, and/or location of the annual meeting unless the proposed change is unreasonable.
Vote AGAINST shareholder proposals to change the date, time, and/or location of the annual meeting unless the current scheduling or location is unreasonable.
Other Business
Vote AGAINST proposals to approve other business when it appears as voting item.
Audit-Related
Auditor Indemnification and Limitation of Liability
Consider the issue of auditor indemnification and limitation of liability CASE-BY-CASE. Factors to be assessed include, but are not limited to:
The terms of the auditor agreement, the degree to which these agreements impact shareholders' rights
Motivation and rationale for establishing the agreements
Quality of disclosure
Historical practices in the audit area
WTHHOLD or vote AGAINST members of an audit committee in situations where there is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.
Auditor Ratification
Victory expects a company to have completed its due diligence on the auditors; therefore, selection is approved. However, in cases where auditors have failed to render accurate financial statements, votes are withheld. A favorable position is given to auditors who receive more compensation from their audit engagement than other services with the company.
Vote FOR the ratification of auditors.
However, vote AGAINST in cases where auditors have failed to render accurate financial statements or where non-audit fees exceed audit fees. Non-audit fees are excessive if:
Non-audit (“other”) fees >audit fees + audit-related fees + tax compliance/preparation fees
Tax compliance and preparation include the preparation of original and amended tax returns, refund claims and tax payment planning. All other services in the tax category, such as tax advice, planning or consulting should be added to “Other” fees. If the breakout of tax fees cannot be determined, add all tax fees to “Other” fees.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



In circumstances where "Other" fees include fees related to significant one-time capital structure events: initial public offerings, bankruptcy emergence, and spin-offs; and the company makes public disclosure of the amount and nature of those fees which are an exception to the standard "non-audit fee" category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive.
Receiving and/or Approving Financial Reports (This is a non-US issue)
Vote FOR approval of financial statements and director and auditor reports, unless:
There are concerns about the accounts presented or audit procedures used
The company is not responsive to shareholder questions about specific items that should be publicly disclosed
Shareholder Proposals Limiting Non-Audit Services
Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.
Shareholder Proposals on Audit Firm Rotation
Vote CASE-BY-CASE on shareholder proposals asking for audit firm rotation, taking into account:
The tenure of the audit firm
The length of rotation specified in the proposal
Any significant audit-related issues at the company
The number of Audit Committee meetings held each year
The number of financial experts serving on the committee
Whether the company has a periodic renewal process where the auditor is evaluated for both audit quality and competitive price
Board of Directors
Voting on Director Nominees in Uncontested Elections
Votes on director nominees should be determined CASE-BY-CASE.
Four fundamental principles apply when determining votes on director nominees:
1.Board Accountability: Practices that promote accountability include: transparency into a company’s governance practices; annual board elections; and providing shareholders the ability to remove problematic directors and to vote on takeover defenses or other charter/bylaw amendments. These practices help reduce the opportunity for management entrenchment.
2.Board Responsiveness: Directors should be responsive to shareholders, particularly in regard to shareholder proposals that receive a majority vote and to tender offers where a majority of shares are tendered. Furthermore, shareholders should expect directors to devote sufficient time and resources to oversight of the company.
3.Director Independence: Without independence from management, the board may be unwilling or unable to effectively set company strategy and scrutinize performance or executive compensation.
4.Director Competence: Companies should seek directors who can add value to the board through specific skills or expertise and who can devote sufficient time and commitment to serve effectively. While directors should not be constrained by arbitrary limits such as age or term limits, directors who are unable to attend board and committee meetings and/or who are overextended (i.e. serving on too many boards) raise concern on the director’s ability to effectively serve in shareholders’ best interests.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Board Accountability
VOTE WITHHOLD/AGAINST1 the entire board of directors (except new nominees2, who should be considered CASE-BY-CASE), for the following:
Problematic Takeover Defenses:
Classified board structure:
The board is classified, and a continuing director responsible for a problematic governance issue at the board/committee level that would warrant a withhold/against vote recommendation is not up for election -- any or all appropriate nominees (except new) may be held accountable.
Director Performance Evaluation:
The board lacks accountability and oversight, coupled with sustained poor performance relative to peers. Sustained poor performance is measured by one-, three- and five-year total shareholder returns in the bottom half of a company’s four-digit GICS industry group (Russell 3000 companies only). Take into consideration the company’s operational metrics and other factors as warranted.
Problematic provisions include but are not limited to:
A classified board structure
A supermajority vote requirement
Either a plurality vote standard in uncontested director elections or a majority vote standard with no plurality carve-out for contested elections
The inability of shareholders to call special meetings
The inability of shareholders to act by written consent
A dual-class capital structure
A non–shareholder-approved poison pill
Poison Pills:
The company has a poison pill that was not approved by shareholders. However, vote case-by-case on nominees if the board adopts an initial pill with a term of one year or less, depending on the disclosed rationale for the adoption, and other factors as relevant (such as a commitment to put any renewal to a shareholder vote).
The board makes a material adverse modification to an existing pill, including, but not limited to, extension, renewal, or lowering the trigger, without shareholder approval.
Restricting Binding Shareholder Proposals:
Generally vote against or withhold from the members of the governance committee if:
The company’s governing documents impose undue restrictions on shareholders’ ability to amend the bylaws. Such restrictions include but are not limited to: outright prohibition on the submission of binding shareholder proposals or share ownership requirements, subject matter restrictions, or time holding requirements in excess of SEC Rule 14a-8. Vote against or withhold on an ongoing basis.
1 In general, companies with a plurality vote standard use "Withhold" as the valid contrary vote option in director elections; companies with a majority vote standard use "Against". However, it will vary by company and the proxy must be checked to determine the valid contrary vote option for the particular company.
2 A “new nominee” is any current nominee who has not already been elected by shareholders and who joined the board after the problematic action in question transpired. If Victory cannot determine whether the nominee joined the board before or after the problematic action transpired, the nominee will be considered a “new nominee” if he or she joined the board within the 12 months prior to the upcoming shareholder meeting.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Submission of management proposals to approve or ratify requirements in excess of SEC Rule 14a-8 for the submission of binding bylaw amendments will generally be viewed as an insufficient restoration of shareholders' rights. Generally continue to vote against or withhold on an ongoing basis until shareholders are provided with an unfettered ability to amend the bylaws or a proposal providing for such unfettered right is submitted for shareholder approval.
Problematic Audit-Related Practices
Generally, vote AGAINST or WITHHOLD from the members of the Audit Committee if:
The non-audit fees paid to the auditor are excessive (see discussion under “Auditor Ratification”)
The company receives an adverse opinion on the company’s financial statements from its auditor
There is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm
Vote CASE-BY-CASE on members of the Audit Committee and/or the full board if poor accounting practices are identified that rise to a level of serious concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures. Examine the severity, breadth, chronological sequence and duration, as well as the company’s efforts at remediation or corrective actions, in determining whether WITHHOLD/AGAINST votes are warranted.
Problematic Compensation Practices
In the absence of an Advisory Vote on Executive Compensation (Say on Pay) ballot item or in egregious situations, vote against or withhold from the members of the Compensation Committee and potentially the full board if:
There is a significant misalignment between CEO pay and company performance
The company maintains significant problematic pay practices
The board exhibits a significant level of poor communication and responsiveness to shareholders
The company fails to include a Say on Pay ballot item when required under SEC provisions, or under the company’s declared frequency of say on pay or
The company fails to include a Frequency of Say on Pay ballot item when required under SEC provisions
Generally vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Unilateral Bylaw/Charter Amendments
Generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees, who should be considered case-by-case) if the board amends the company's bylaws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders, considering the following factors:
The board's rationale for adopting the bylaw/charter amendment without shareholder ratification
Disclosure by the company of any significant engagement with shareholders regarding the amendment
The level of impairment of shareholders' rights caused by the board's unilateral amendment to the bylaws/charter
The board's track record with regard to unilateral board action on bylaw/charter amendments or other entrenchment provisions
The company's ownership structure
The company's existing governance provisions
The timing of the board's amendment to the bylaws/charter in connection with a significant business development and,
Other factors, as deemed appropriate, that may be relevant to determine the impact of the amendment on shareholders
For newly public companies, generally vote against or withhold from directors individually, committee members, or the entire board (except new nominees, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board adopted the following bylaw or charter provisions that are considered to be materially adverse to shareholder rights:
Supermajority vote requirements to amend the bylaws or charter;
A classified board structure; or
Other egregious provisions.
A reasonable sunset provision will be considered a mitigating factor.
Unless the adverse provision is reversed or removed, vote case-by-case on director nominees in subsequent years.
For newly public companies, generally vote against or withhold from the entire board (except new nominees, who should be considered case-by-case) if, prior to or in connection with the company's public offering, the company or its board implemented a multi-class capital structure in which the classes have unequal voting rights without subjecting the multi-class capital structure to a reasonable time-based sunset. In assessing the reasonableness of a time-based sunset provision, consideration will be given to the company’s lifespan, its post-IPO ownership structure and the board’s disclosed rationale for the sunset period selected. No sunset period of more than seven years from the date of the IPO will be considered to be reasonable. Continue to vote against or withhold from incumbent directors in subsequent years, unless the problematic capital structure is reversed or removed.
Governance Failures
Under extraordinary circumstances, vote AGAINST or WITHHOLD from directors individually, committee members, or the entire board, due to:
Material failures of governance, stewardship, or fiduciary responsibilities at the company
Failure to replace management as appropriate or
Egregious actions related to the director(s)’ service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Management Proposals to Ratify Existing Charter or Bylaw Provisions
Vote against/withhold from individual directors, members of the governance committee, or the full board, where boards ask shareholders to ratify existing charter or bylaw provisions considering the following factors:
The presence of a shareholder proposal addressing the same issue on the same ballot;
The board's rationale for seeking ratification;
Disclosure of actions to be taken by the board should the ratification proposal fail;
Disclosure of shareholder engagement regarding the board’s ratification request;
The level of impairment to shareholders' rights caused by the existing provision;
The history of management and shareholder proposals on the provision at the company’s past meetings;
Whether the current provision was adopted in response to the shareholder proposal;
The company's ownership structure; and
Previous use of ratification proposals to exclude shareholder proposals.
Generally vote against management proposals to ratify provisions of the company’s existing charter or bylaws, unless these governance provisions align with best practice. In addition, voting against/withhold from individual directors, members of the governance committee, or the full board may be warranted, considering:
The presence of a shareholder proposal addressing the same issue on the same ballot;
The board's rationale for seeking ratification;
Disclosure of actions to be taken by the board should the ratification proposal fail;
Disclosure of shareholder engagement regarding the board’s ratification request;
The level of impairment to shareholders' rights caused by the existing provision;
The history of management and shareholder proposals on the provision at the company’s past meetings;
Whether the current provision was adopted in response to the shareholder proposal;
The company's ownership structure; and
Previous use of ratification proposals to exclude shareholder proposals.
Board Responsiveness
Vote case-by-case on individual directors, committee members, or the entire board of directors as appropriate if:
The board failed to act on a shareholder proposal that received the support of a majority of the shares cast in the previous year or failed to act on a management proposal seeking to ratify an existing charter/bylaw provision that received opposition of a majority of the shares cast in the previous year. Factors that will be considered are:
Disclosed outreach efforts by the board to shareholders in the wake of the vote
Rationale provided in the proxy statement for the level of implementation
The subject matter of the proposal
The level of support for and opposition to the resolution in past meetings
Actions taken by the board in response to the majority vote and its engagement with shareholders
The continuation of the underlying issue as a voting item on the ballot (as either shareholder or management proposals) and
Other factors as appropriate
The board failed to act on takeover offers where the majority of shares are tendered
At the previous board election, any director received more than 50 percent withhold/against votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold/against vote
Victory Capital Management Inc.
Proxy Policy / Policy H-12



The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received the majority of votes cast at the most recent shareholder meeting at which shareholders voted on the say-on-pay frequency or
The board implements an advisory vote on executive compensation on a less frequent basis than the frequency that received a plurality, but not a majority, of the votes cast at the most recent shareholder meeting at which shareholders voted on the say-on-pay frequency, taking into account
The board's rationale for selecting a frequency that is different from the frequency that received a plurality
The company's ownership structure and vote results
Analysis of whether there are compensation concerns or a history of problematic compensation practices and
The previous year's support level on the company's say-on-pay proposal
Director Independence
Vote WITHHOLD/AGAINST Inside Directors and Affiliated Outside Directors (per the current Categorization of Directors) when:
The inside or affiliated outside director serves on any of the three key committees: audit, compensation, or nominating
The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee
The company lacks a formal nominating committee, even if the board attests that the independent directors fulfill the functions of such a committee
The full board is less than majority independent
Director Competence
Attendance at Board and Committee Meetings
Generally vote AGAINST or WITHHOLD from directors (except new nominees3) who attend less than 75 percent of the aggregate of their board and committee meetings for the period for which they served, unless an acceptable reason for absences is disclosed in the proxy or another SEC filing. Acceptable reasons for director absences are generally limited to the following:
Medical issues/illness
Family emergencies
Missing only one meeting (when the total of all meetings is three or fewer)
In cases of chronic poor attendance without reasonable justification, in addition to voting against the director(s) with poor attendance, generally vote against or withhold from appropriate members of the nominating/governance committees or the full board.
If the proxy disclosure is unclear and insufficient to determine whether a director attended at least 75 percent of the aggregate of his/her board and committee meetings during his/her period of service, vote AGAINST or WITHHOLD from the director(s) in question.
3 New nominees who served for only part of the fiscal year are generally exempted from the attendance policy.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Overboarded Directors
Vote AGAINST or WITHHOLD from individual directors who:
Sit on more than five public company boards
Are CEOs of public companies who sit on the boards of more than two public companies besides their own-- withhold only at their outside boards
Other Board-Related Proposals
Age/Term Limits
Vote AGAINST management and shareholder proposals to limit the tenure of outside directors through mandatory retirement ages.
Vote AGAINST management proposals to limit the tenure of outside directors through term limits. However, scrutinize boards where the average tenure of all directors exceeds 15 years for independence from management and for sufficient turnover to ensure that new perspectives are being added to the board.
Board Size
Vote FOR proposals seeking to fix the board size or designate a range for the board size.
Vote AGAINST proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.
Classification/Declassification of the Board
Vote AGAINST proposals to classify (stagger) the board.
Vote FOR proposals to repeal classified boards and to elect all directors annually.
CEO Succession Planning
Generally vote FOR proposals seeking disclosure on a CEO succession planning policy, considering at a minimum, the following factors:
The reasonableness/scope of the request; and
The company’s existing disclosure on its current CEO succession planning process.
Cumulative Voting
Generally vote FOR proposals to eliminate cumulative voting.
Generally vote AGAINST shareholder proposals to restore or provide for cumulative voting.
Director and Officer Indemnification and Liability Protection
Vote CASE-BY-CASE on proposals on director and officer indemnification and liability protection using Delaware law as the standard.
Vote AGAINST proposals that would:
Eliminate entirely directors' and officers' liability for monetary damages for violating the duty of care
Expand coverage beyond just legal expenses to liability for acts, such as negligence, that are more serious violations of fiduciary obligation than mere carelessness
Expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for, at the discretion of the company's board (i.e., "permissive indemnification"), but that previously the company was not required to indemnify
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Vote FOR only those proposals providing such expanded coverage in cases when a director’s or officer’s legal defense was unsuccessful if both of the following apply:
If the director was found to have acted in good faith and in a manner that he reasonably believed was in the best interests of the company
If only the director’s legal expenses would be covered
Establish/Amend Nominee Qualifications
Vote CASE-BY-CASE on proposals that establish or amend director qualifications. Votes should be based on the reasonableness of the criteria and to what degree they may preclude dissident nominees from joining the board.
Vote CASE-BY-CASE on shareholder resolutions seeking a director nominee candidate who possesses a particular subject matter expertise, considering:
The company’s board committee structure, existing subject matter expertise, and board nomination provisions relative to that of its peers
The company’s existing board and management oversight mechanisms regarding the issue for which board oversight is sought
The company disclosure and performance relating to the issue for which board oversight is sought and any significant related controversies
The scope and structure of the proposal
Establish other Board Committee Proposals
Generally vote AGAINST shareholder proposals to establish a new board committee.
Filling Vacancies/Removal of Directors
Vote AGAINST proposals that provide that directors may be removed only for cause.
Vote FOR proposals to restore shareholders’ ability to remove directors with or without cause.
Vote AGAINST proposals that provide that only continuing directors may elect replacements to fill board vacancies.
Vote FOR proposals that permit shareholders to elect directors to fill board vacancies.
Independent Chair (Separate Chair/CEO)
Generally vote for shareholder proposals requiring that the board chair position be filled by an independent director, taking into consideration the following:
The scope and rationale of the proposal;
The company's current board leadership structure;
The company's governance structure and practices;
Company performance; and
Any other relevant factors that may be applicable.
The following factors will increase the likelihood of a “for” recommendation:
A majority non-independent board and/or the presence of non-independent directors on key board committees;
A weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role;
The presence of an executive or non-independent chair in addition to the CEO, a recent recombination of the role of CEO and chair, and/or departure from a structure with an independent chair;
Evidence that the board has failed to oversee and address material risks facing the company;
Victory Capital Management Inc.
Proxy Policy / Policy H-12



A material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or evidence that the board has failed to intervene when management’s interests are contrary to shareholders' interests.
Evidence that the board has failed to intervene when management’s interests are contrary to shareholders’ interests.
Majority of Independent Directors/Establishment of Independent Committees
Vote FOR shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by Victory’s definition of independent outsider.
Vote FOR shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors if they currently do not meet that standard.
Majority Vote Standard for the Election of Directors
Vote AGAINST if the company already has a Resignation Policy in place, otherwise vote with stated policy
Generally vote FOR management proposals to adopt a majority of votes cast standard for directors in uncontested elections. Vote AGAINST if no carve-out for plurality in contested elections is included.
Generally vote FOR precatory and binding shareholder resolutions requesting that the board change the company’s bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.
Companies are strongly encouraged to also adopt a post-election policy (also known as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.
Proxy Access (Open Access)
Vote CASE-BY-CASE on shareholder proposals asking for open or proxy access, taking into account:
The ownership threshold proposed in the resolution;
The proponent’s rationale for the proposal at the targeted company in terms of board and director conduct.
In the case of candidates nominated pursuant to proxy access, vote case-by-case considering any applicable factors listed below, with reference to contested director elections, or additional factors which may be relevant, including those that are specific to the company, to the nominee(s) and/or to the nature of the election (such as whether or not there are more candidates than board seats).
Long-term financial performance of the target company relative to its industry
Management’s track record
Background to the contested election
Nominee qualifications and any compensatory arrangements
Strategic plan of dissident slate and quality of critique against management
Likelihood that the proposed goals and objectives can be achieved (both slates)
Stock ownership positions
Require More Nominees than Open Seats
Vote AGAINST shareholder proposals that would require a company to nominate more candidates than the number of open board seats.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Shareholder Engagement Policy (Shareholder Advisory Committee)
Generally vote FOR shareholders proposals requesting that the board establish an internal mechanism/process, which may include a committee, in order to improve communications between directors and shareholders, unless the company has the following features, as appropriate:
Established a communication structure that goes beyond the exchange requirements to facilitate the exchange of information between shareholders and members of the board
Effectively disclosed information with respect to this structure to its shareholders
Company has not ignored majority-supported shareholder proposals or a majority withhold vote on a director nominee
The company has an independent chairman or a lead director, according to Victory’s definition This individual must be made available for periodic consultation and direct communication with major shareholders

Proxy Contests- Voting for Director Nominees in Contested Elections
Internally reviewed on a CASE-BY-CASE basis.
Vote No Campaigns
In cases where companies are targeted in connection with public “vote no” campaigns, evaluate director nominees under the existing governance policies for voting on director nominees in uncontested elections. Take into consideration the arguments submitted by shareholders and other publicly available information.
Takeover Defenses and Related Actions
Anti-takeover statutes generally increase management's potential for insulating itself and warding off hostile takeovers that may be beneficial to shareholders. While it may be true that some boards use such devices to obtain higher bids and to enhance shareholder value, it is more likely that such provisions are used to entrench management.
Advance Notice Requirements for Shareholder Proposals/Nominations
Vote CASE-BY-CASE on advance notice proposals, giving support to those proposals which allow shareholders to submit proposals/nominations as close to the meeting date as reasonably possible and within the broadest window possible, recognizing the need to allow sufficient notice for company, regulatory and shareholder review.
To be reasonable, the company’s deadline for shareholder notice of a proposal/ nominations must not be more than 60 days prior to the meeting, with a submittal window of at least 30 days prior to the deadline. The submittal window is the period under which a shareholder must file his proposal/nominations prior to the deadline.
In general, support additional efforts by companies to ensure full disclosure in regard to a proponent’s economic and voting position in the company so long as the informational requirements are reasonable and aimed at providing shareholders with the necessary information to review such proposals.
Amend Bylaws without Shareholder Consent
Vote AGAINST proposals giving the board exclusive authority to amend the bylaws.
Vote FOR proposals giving the board the ability to amend the bylaws in addition to shareholders.
Confidential Vote Tabulation/Confidential Voting
Victory Capital will evaluate shareholder proposals requesting confidential running vote tally proposals on a case-by-case basis taking into account the following factors:
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Whether the policy allows the company to monitor the number of votes cast for purposes of achieving a quorum or to conduct solicitations for other proper purposes
Whether the enhanced confidential voting requirement applies to contested elections of directors or to contested proxy solicitations, which would put the company at a disadvantage relative to dissidents
Generally, vote FOR shareholder proposals requesting that corporations adopt confidential voting, use independent vote tabulators, and use independent inspectors of election, as long as the proposal includes a provision for proxy contests as follows: In the case of a contested election, management should be permitted to request that the dissident group honor its confidential voting policy. If the dissidents agree, the policy remains in place. If the dissidents will not agree, the confidential voting policy is waived.
Vote FOR management proposals to adopt confidential voting.
Control Share Acquisition Provisions
Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.
Vote FOR proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.
Vote AGAINST proposals to amend the charter to include control share acquisition provisions.
Vote FOR proposals to restore voting rights to the control shares.
Control Share Cash-Out Provisions
Control share cash-out statutes give dissident shareholders the right to "cash-out" of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.
Vote FOR proposals to opt out of control share cash-out statutes.
Disgorgement Provisions
Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company's stock to disgorge, or pay back, to the company any profits realized from the sale of that company's stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor's gaining control status are subject to these recapture-of-profits provisions.
Vote FOR proposals to opt out of state disgorgement provisions.
Equal Access Proposals
Vote FOR proposals seeking equal access to proxies.
Fair Price Provisions
Vote CASE-BY-CASE on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.
Generally, vote AGAINST fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Freeze-Out Provisions
Vote FOR proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.
Greenmail
Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.
Vote FOR proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments.
Vote CASE-BY-CASE on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.
Litigation Rights (including Exclusive Venue and Fee-Shifting Bylaw Provisions)
Bylaw provisions impacting shareholders' ability to bring suit against the company may include exclusive venue provisions, which provide that the state of incorporation shall be the sole venue for certain types of litigation, and fee-shifting provisions that require a shareholder who sues a company unsuccessfully to pay all litigation expenses of the defendant corporation.
General Recommendation: Vote case-by-case on bylaws which impact shareholders' litigation rights, taking into account factors such as:
The company's stated rationale for adopting such a provision
Disclosure of past harm from shareholder lawsuits in which plaintiffs were unsuccessful or shareholder lawsuits outside the jurisdiction of incorporation
The breadth of application of the bylaw, including the types of lawsuits to which it would apply and the definition of key terms
Governance features such as shareholders' ability to repeal the provision at a later date (including the vote standard applied when shareholders attempt to amend the bylaws) and their ability to hold directors accountable through annual director elections and a majority vote standard in uncontested elections
Generally vote against bylaws that mandate fee-shifting whenever plaintiffs are not completely successful on the merits (i.e., in cases where the plaintiffs are partially successful).
Net Operating Loss (NOL) Protective Amendments
Vote AGAINST proposals to adopt a protective amendment for the stated purpose of protecting a company's net operating losses (“NOLs”) if the effective term of the protective amendment would exceed the shorter of three years and the exhaustion of the NOL.
Vote CASE-BY-CASE, considering the following factors, for management proposals to adopt an NOL protective amendment that would remain in effect for the shorter of three years (or less) and the exhaustion of the NOL:
The ownership threshold (NOL protective amendments generally prohibit stock ownership transfers that would result in a new 5-percent holder or increase the stock ownership percentage of an existing 5-percent holder)
The value of the NOLs
Shareholder protection mechanisms (sunset provision or commitment to cause expiration of the protective amendment upon exhaustion or expiration of the NOL)
Victory Capital Management Inc.
Proxy Policy / Policy H-12



The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns
Any other factors that may be applicable
Poison Pills (Shareholder Rights Plans)
Shareholder Proposals to Put Pill to a Vote and/or Adopt a Pill Policy
Vote FOR shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it UNLESS the company has: (1) A shareholder approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:
Shareholders have approved the adoption of the plan, or
The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e., the “fiduciary out” provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within 12 months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.
If the shareholder proposal calls for a time period of less than 12 months for shareholder ratification after adoption, vote FOR the proposal, but add the caveat that a vote within 12 months would be considered sufficient implementation.
Management Proposals to Ratify a Poison Pill
Vote CASE-BY-CASE on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:
No lower than a 20% trigger, flip-in or flip-over
A term of no more than three years
No dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future board to redeem the pill
Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill
In addition, the rationale for adopting the pill should be thoroughly explained by the company. In examining the request for the pill, take into consideration the company’s existing governance structure, including: board independence, existing takeover defenses, and any problematic governance concerns.
Management Proposals to Ratify a Pill to Preserve Net Operating Losses (NOLs)
Vote AGAINST proposals to adopt a poison pill for the stated purpose of protecting a company's net operating losses (“NOLs”) if the term of the pill would exceed the shorter of three years and the exhaustion of the NOL.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Vote CASE-BY-CASE on management proposals for poison pill ratification, considering the following factors, if the term of the pill would be the shorter of three years (or less) and the exhaustion of the NOL:
The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent)
The value of the NOLs
Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs)
The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns
Any other factors that may be applicable
Reimbursing Proxy Solicitation Expenses
Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When voting in conjunction with support of a dissident slate, vote FOR the reimbursement of all appropriate proxy solicitation expenses associated with the election.
Generally vote FOR shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:
The election of fewer than 50% of the directors to be elected is contested in the election
One or more of the dissident’s candidates is elected
Shareholders are not permitted to cumulate their votes for directors
The election occurred, and the expenses were incurred, after the adoption of this bylaw.
Reincorporation Proposals
Management or shareholder proposals to change a company's state of incorporation should be evaluated CASE-BY-CASE, giving consideration to both financial and corporate governance concerns including the following:
Reasons for reincorporation
Comparison of company's governance practices and provisions prior to and following the reincorporation
Comparison of corporation laws of original state and destination state
Vote FOR reincorporation when the economic factors outweigh any neutral or negative governance changes.
Shareholder Ability to Act by Written Consent
Generally vote AGAINST management and shareholder proposals to restrict or prohibit shareholders' ability to act by written consent.
Generally vote FOR management and shareholder proposals that provide shareholders with the ability to act by written consent, taking into account the following factors:
Shareholders' current right to act by written consent
The consent threshold
The inclusion of exclusionary or prohibitive language
Investor ownership structure
Shareholder support of, and management's response to, previous shareholder proposals
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Vote CASE-BY-CASE on shareholder proposals if, in addition to the considerations above, the company has the following governance and antitakeover provisions:
An unfettered 4right for shareholders to call special meetings at a 10 percent threshold
A majority vote standard in uncontested director elections
No non-shareholder-approved pill
An annually elected board
Shareholder Ability to Call Special Meetings
Vote AGAINST proposals restricting or eliminating shareholders' right to call special meetings.
Vote FOR proposals allowing shareholders to call special meetings unless the company currently provides the right to call special meetings at a threshold of 25 percent, upon which Victory votes AGAINST.
Stakeholder Provisions
Vote AGAINST proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.
State Antitakeover Statutes
Vote CASE-BY-CASE on proposals to opt in or out of state takeover statutes (including fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, and anti-greenmail provisions).
Supermajority Vote Requirements
Vote CASE-BY-CASE on proposals that request either the elimination/adoption of supermajority vote requirements or a decrease/increase in the supermajority threshold.
Generally, vote AGAINST proposals to require a supermajority shareholder vote.
Generally, vote FOR management or shareholder proposals to reduce supermajority vote requirements. However, for companies with shareholder(s) who have significant ownership levels, the proposal shall be further examined, taking into account:
Ownership structure
Quorum requirements
Vote requirements
CAPITAL/RESTRUCTURING
The stewardship of a corporation's capital structure involves a number of important issues, including dividend policy, taxes, types of assets, opportunities for growth, ability to finance new projects internally, and the cost of obtaining additional capital. For the most part, these decisions are best left to the board and senior management of the firm. However, while a company's value depends more on its capital investment and operations than on how it is financed, many financing decisions have a significant impact on shareholders, particularly when they involve the issuance of additional common stock, preferred stock, or the assumption of additional debt. Additional equity financing, for example, may reduce an existing shareholder's ownership interest and can dilute the value of his investment. Shareholders must also be alert to potential anti-takeover mechanisms, which are often embedded in management's chosen financing vehicles.
4 "Unfettered" means no restrictions on agenda items, no restrictions on the number of shareholders who can group together to reach the 10 percent threshold, and only reasonable limits on when a meeting can be called: no greater than 30 days after the last annual meeting and no greater than 90 prior to the next annual meeting.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Capital
Adjustments to Par Value of Common Stock
Vote FOR management proposals to reduce the par value of common stock unless the action is being taken to facilitate an anti-takeover device or some other negative corporate governance action
Vote FOR management proposals to eliminate par value.
Common Stock Authorization
Vote FOR proposals to increase the number of authorized common shares where the primary purpose of the increase is to issue shares in connection with a transaction on the same ballot that warrants support.
Vote AGAINST proposals at companies with more than one class of common stock to increase the number of authorized shares of the class of common stock that has superior voting rights.
Vote AGAINST proposals to increase the number of authorized common shares if a vote for a reverse stock split on the same ballot is warranted despite the fact that the authorized shares would not be reduced proportionally.
Vote FOR increases in authorized common stock, unless the increase is being used to thwart a takeover, upon which Victory votes AGAINST.
Vote AGAINST proposals that seek to permanently revoke or remove preemptive rights from shareholders.
Vote CASE-BY-CASE on all other proposals to increase the number of shares of common stock authorized for issuance. Take into account company-specific factors that include, at a minimum, the following:
Past Board Performance:
The company's use of authorized shares during the last three years
The Current Request:
Disclosure in the proxy statement of the specific purposes of the proposed increase
Disclosure in the proxy statement of specific and severe risks to shareholders of not approving the request
The dilutive impact of the request as determined by an allowable increase calculated by Victory (typically 100 percent of existing authorized shares) that reflects the company's need for shares and total shareholder returns
Issue Stock for Use with Rights Plan
Vote AGAINST proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder- approved shareholder rights plan (poison pill).
Authority to Issue Additional Debt (This is a non-US issue)
Vote non-convertible debt issuance requests on a CASE-BY-CASE basis, with or without preemptive rights.
Vote FOR the creation/issuance of convertible debt instruments as long as the maximum number of common shares that could be issued upon conversion is reasonable.
Vote FOR proposals to restructure existing debt arrangements unless the terms of the restructuring would adversely affect the rights of shareholders.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Preemptive Rights
Vote CASE-BY-CASE on shareholder proposals that seek preemptive rights, taking into consideration:
The size of the company
The shareholder base
The liquidity of the stock
Preferred Stock Authorization
Vote FOR proposals to increase the number of authorized preferred shares where the primary purpose of the increase is to issue shares in connection with a transaction on the same ballot that warrants support.
Vote AGAINST proposals at companies with more than one class or series of preferred stock to increase the number of authorized shares of the class or series of preferred stock that has superior voting rights.
Vote CASE-BY-CASE on all other proposals to increase the number of shares of preferred stock authorized for issuance. Take into account company-specific factors that include, at a minimum, the following:
Past Board Performance:
The company's use of authorized preferred shares during the last three years
The Current Request:
Disclosure in the proxy statement of the specific purposes for the proposed increase
Disclosure in the proxy statement of specific and severe risks to shareholders of not approving the request
In cases where the company has existing authorized preferred stock, the dilutive impact of the request as determined by an allowable increase calculated by Victory (typically 100 percent of existing authorized shares) that reflects the company's need for shares and total shareholder returns
Whether the shares requested are blank check preferred shares that can be used for antitakeover purposes
Recapitalization Plans
Vote CASE-BY-CASE on recapitalizations (reclassifications of securities), taking into account the following:
More simplified capital structure
Enhanced liquidity
Fairness of conversion terms
Impact on voting power and dividends
Reasons for the reclassification
Conflicts of interest
Other alternatives considered
Reverse Stock Splits
Vote FOR management proposals to implement a reverse stock split when the number of authorized shares will be proportionately reduced or the effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance common stock authorization guidelines
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Vote AGAINST proposals when there is not a proportionate reduction of authorized shares, unless:
A stock exchange has provided notice to the company of a potential delisting
The effective increase in authorized shares is equal to or less than the allowable increase calculated in accordance with Victory's Common Stock Authorization policy
Share Repurchase Programs
For U.S.-incorporated companies, and foreign-incorporated U.S. Domestic Issuers that are traded solely on U.S. exchanges, vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, or to grant the board authority to conduct open-market repurchases, in the absence of company-specific concerns regarding:
Greenmail,
The use of buybacks to inappropriately manipulate incentive compensation metrics,
Threats to the company's long-term viability, or
Other company-specific factors as warranted.
Vote case-by-case on proposals to repurchase shares directly from specified shareholders, balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.
Stock Distributions: Splits and Dividends
Vote FOR management proposals to increase the common share authorization for a stock split or share dividend, provided that the increase in authorized shares equal to or less than the allowable increase calculated in accordance with Victory's Common Stock Authorization policy.
Tracking Stock
Vote CASE-BY-CASE on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:
Adverse governance changes
Excessive increases in authorized capital stock
Unfair method of distribution
Diminution of voting rights
Adverse conversion features
Negative impact on stock option plans
Alternatives such as spin-off
Restructuring
Appraisal Rights
Vote FOR proposals to restore or provide shareholders with rights of appraisal.
Asset Purchases
Vote CASE-BY-CASE on asset purchase proposals, considering the following factors:
Purchase price
Fairness opinion
Financial and strategic benefits
How the deal was negotiated
Conflicts of interest
Other alternatives for the business
Non-completion risk
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Asset Sales
Vote CASE-BY-CASE on asset sales, considering the following factors:
Impact on the balance sheet/working capital
Potential elimination of diseconomies
Anticipated financial and operating benefits
Anticipated use of funds
Value received for the asset
Fairness opinion
How the deal was negotiated
Conflicts of interest
Bundled Proposals
Vote CASE-BY-CASE on bundled or “conditional” proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders’ best interests, vote AGAINST the proposals. If the combined effect is positive, support such proposals.
Conversion of Securities
Vote CASE-BY-CASE on proposals regarding conversion of securities. When evaluating these proposals the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.
Vote FOR the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.
Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans
Vote CASE-BY- CASE on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, after evaluating:
Dilution to existing shareholders' positions
Terms of the offer - discount/premium in purchase price to investor, including any fairness opinion; termination penalties; exit strategy
Financial issues - company's financial situation, degree of need for capital, use of proceeds, effect of the financing on the company's cost of capital
Management's efforts to pursue other alternatives
Control issues - change in management, change in control, guaranteed board and committee seats, standstill provisions, voting agreements, veto power over certain corporate actions
Conflict of interest - arm's length transaction, managerial incentives
Vote FOR the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.
Formation of Holding Company
Vote CASE-BY-CASE on proposals regarding the formation of a holding company, taking into consideration the following:
The reasons for the change
Any financial or tax benefits
Regulatory benefits
Increases in capital structure
Changes to the articles of incorporation or bylaws of the company
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Absent compelling financial reasons to recommend the transaction, vote AGAINST the formation of a holding company if the transaction would include either of the following:
Increases in common or preferred stock in excess of the allowable maximum (see discussion under “Capital”)
Adverse changes in shareholder rights
Going Private and Going Dark Transactions (LBOs and Minority Squeeze-outs)
Vote CASE-BY-CASE on going private transactions, taking into account the following:
Offer price/premium
Fairness opinion
How the deal was negotiated
Conflicts of interest
Other alternatives/offers considered
Non-completion risk
Vote CASE-BY-CASE on going dark transactions, determining whether the transaction enhances shareholder value by taking into consideration:
Whether the company has attained benefits from being publicly-traded (examination of trading volume, liquidity, and market research of the stock)
Balanced interests of continuing vs. cashed-out shareholders, taking into account the following:
Are all shareholders able to participate in the transaction
Will there be a liquid market for remaining shareholders following the transaction
Does the company have strong corporate governance
Will insiders reap the gains of control following the proposed transaction
Does the state of incorporation have laws requiring continued reporting that may benefit shareholders
Joint Ventures
Vote CASE-BY-CASE on proposals to form joint ventures, taking into account the following:
Percentage of assets/business contributed
Percentage ownership
Financial and strategic benefits
Governance structure
Conflicts of interest
Other alternatives
Non-completion risk
Liquidations
Vote CASE-BY-CASE on liquidations, taking into account the following:
Management’s efforts to pursue other alternatives
Appraisal value of assets
The compensation plan for executives managing the liquidation
Vote FOR the liquidation if the company will file for bankruptcy if the proposal is not approved.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Mergers and Acquisitions
Vote CASE –BY- CASE on mergers and acquisitions. Review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:
Valuation - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale.
Market reaction - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.
Strategic rationale - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.
Negotiations and process - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.
Conflicts of interest - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger.
Governance - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.
Private Placements/Warrants/Convertible Debentures
Vote CASE-BY-CASE on proposals regarding private placements, warrants, and convertible debentures taking into consideration:
Dilution to existing shareholders' position: The amount and timing of shareholder ownership dilution should be weighed against the needs and proposed shareholder benefits of the capital infusion. Although newly issued common stock, absent preemptive rights, is typically dilutive to existing shareholders, share price appreciation is often the necessary event to trigger the exercise of "out of the money" warrants and convertible debt. In these instances from a value standpoint, the negative impact of dilution is mitigated by the increase in the company's stock price that must occur to trigger the dilutive event.
Terms of the offer (discount/premium in purchase price to investor, including any fairness opinion, conversion features, termination penalties, exit strategy):
The terms of the offer should be weighed against the alternatives of the company and in light of company's financial condition. Ideally, the conversion price for convertible debt and the exercise price for warrants should be at a premium to the then prevailing stock price at the time of private placement.
When evaluating the magnitude of a private placement discount or premium, consider factors that influence the discount or premium, such as, liquidity, due diligence costs, control and monitoring costs, capital scarcity, information asymmetry and anticipation of future performance.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Financial issues:
The company's financial condition;
Degree of need for capital;
Use of proceeds;
Effect of the financing on the company's cost of capital;
Current and proposed cash burn rate;
Going concern viability and the state of the capital and credit markets.
Management's efforts to pursue alternatives and whether the company engaged in a process to evaluate alternatives: A fair, unconstrained process helps to ensure the best price for shareholders. Financing alternatives can include joint ventures, partnership, merger or sale of part or all of the company.
Control issues:
Change in management;
Change in control;
Guaranteed board and committee seats;
Standstill provisions;
Voting agreements;
Veto power over certain corporate actions; and
Minority versus majority ownership and corresponding minority discount or majority control premium
Conflicts of interest:
Conflicts of interest should be viewed from the perspective of the company and the investor.
Were the terms of the transaction negotiated at arm's length? Are managerial incentives aligned with shareholder interests?
Market reaction:
The market's response to the proposed deal. A negative market reaction is a cause for concern. Market reaction may be addressed by analyzing the one day impact on the unaffected stock price.
Vote FOR the private placement, or FOR the issuance of warrants and/or convertible debentures in a private placement, if it is expected that the company will file for bankruptcy if the transaction is not approved.
Reorganization/Restructuring Plan (Bankruptcy)
Vote CASE-BY-CASE on proposals to common shareholders on bankruptcy plans of reorganization, considering the following factors including, but not limited to:
Estimated value and financial prospects of the reorganized company;
Percentage ownership of current shareholders in the reorganized company;
Whether shareholders are adequately represented in the reorganization process (particularly through the existence of an Official Equity Committee);
Victory Capital Management Inc.
Proxy Policy / Policy H-12



The cause(s) of the bankruptcy filing, and the extent to which the plan of reorganization addresses the cause(s);
Existence of a superior alternative to the plan of reorganization; and
Governance of the reorganized company.
Special Purpose Acquisition Corporations (SPACs)
Vote CASE-BY-CASE on SPAC mergers and acquisitions taking into account the following:
Valuation – Is the value being paid by the SPAC reasonable? SPACs generally lack an independent fairness opinion and the financials on the target may be limited. Compare the conversion price with the intrinsic value of the target company provided in the fairness opinion. Also, evaluate the proportionate value of the combined entity attributable to the SPAC IPO shareholders versus the pre-merger value of SPAC. Additionally, a private company discount may be applied to the target, if it is a private entity.
Market reaction – How has the market responded to the proposed deal? A negative market reaction may be a cause for concern. Market reaction may be addressed by analyzing the one-day impact on the unaffected stock price.
Deal timing – A main driver for most transactions is that the SPAC charter typically requires the deal to be complete within 18 to 24 months, or the SPAC is to be liquidated. Evaluate the valuation, market reaction, and potential conflicts of interest for deals that are announced close to the liquidation date.
Negotiations and process – What was the process undertaken to identify potential target companies within specified industry or location specified in charter? Consider the background of the sponsors.
Conflicts of interest – How are sponsors benefiting from the transaction compared to IPO shareholders? Potential conflicts could arise if a fairness opinion is issued by the insiders to qualify the deal rather than a third party or if management is encouraged to pay a higher price for the target because of an 80% rule (the charter requires that the fair market value of the target is at least equal to 80% of net assets of the SPAC). Also, there may be sense of urgency by the management team of the SPAC to close the deal since its charter typically requires a transaction to be completed within the 18-24 month timeframe.
Voting agreements – Are the sponsors entering into enter into any voting agreements/ tender offers with shareholders who are likely to vote AGAINST the proposed merger or exercise conversion rights?
Governance – What is the impact of having the SPAC CEO or founder on key committees following the proposed merger?
Special Purpose Acquisition Corporations (SPACs) – Proposals for Extensions
Vote case-by-case on SPAC extension proposals taking into account the length of the requested extension, the status of any pending transaction(s) or progression of the acquisition process, any added incentive for non-redeeming shareholders, and any prior extension requests.
Length of request: Typically, extension requests range from two to six months, depending on the progression of the SPAC's acquistion process.
Pending transaction(s) or progression of the acquisition process: Sometimes an intial business combination was already put to a shareholder vote, but, for varying reasons, the transaction could not be consummated by the termination date and the SPAC is requesting an extension. Other times, the SPAC has entered into a definitive transaction agreement, but needs additional time to consummate or hold the shareholder meeting.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Added incentive for non-redeeming shareholders: Sometimes the SPAC sponsor (or other insiders) will contribute, typically as a loan to the company, additional funds that will be added to the redemption value of each public share as long as such shares are not redeemed in connection with the extension request. The purpose of the "equity kicker" is to incentivize shareholders to hold their shares through the end of the requested extension or until the time the transaction is put to a shareholder vote, rather than electing redeemption at the extension proposal meeting.
Prior extension requests: Some SPACs request additional time beyond the extension period sought in prior extension requests.
Spin-offs
Vote CASE-BY-CASE on spin-offs, considering:
Tax and regulatory advantages;
Planned use of the sale proceeds;
Valuation of spinoff;
Fairness opinion;
Benefits to the parent company;
Conflicts of interest;
Managerial incentives;
Corporate governance changes;
Changes in the capital structure.
Value Maximization Shareholder Proposals
Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value by:
Hiring a financial advisor to explore strategic alternatives;
Selling the company; or
Liquidating the company and distributing the proceeds to shareholders.
These proposals should be evaluated based on the following factors:
Prolonged poor performance with no turnaround in sight;
Signs of entrenched board and management (such as the adoption of takeover defenses);
Strategic plan in place for improving value;
Likelihood of receiving reasonable value in a sale or dissolution; and
The company actively exploring its strategic options, including retaining a financial advisor.
COMPENSATION
Executive Pay Evaluation
Executive pay remains a perennial hot button issue for shareholders, who want assurance that top management’s compensation is primarily performance-based, fair, and reasonable. Any evaluation of executive pay must recognize two underlying forces: an executive labor market, where executive pay packages result from negotiations in a war for talent, and an agency problem, where boards and shareholders try to align pay incentives with shareholder value creation.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Underlying all evaluations are five global principles that most investors expect corporations to adhere to in designing and administering executive and director compensation programs:
1.Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;
2.Avoid arrangements that risk “pay for failure”: This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;
3.Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed);
4.Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly;
5.Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors does not compromise their independence and ability to make appropriate judgments in overseeing managers’ pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.
Advisory Votes on Executive Compensation- Management Proposals (Management Say-on-Pay)
Evaluate executive pay and practices, as well as certain aspects of outside director compensation CASE-BY-CASE.
Vote AGAINST management say on pay (MSOP) proposals, AGAINST/WITHHOLD on compensation committee members (or, in rare cases where the full board is deemed responsible, all directors including the CEO), and/or AGAINST an equity-based incentive plan proposal if:
There is a misalignment between CEO pay and company performance (pay for performance)
The company maintains problematic pay practices
The board exhibits poor communication and responsiveness to shareholders.
Voting Alternatives
In general, the management say on pay (MSOP) ballot item is the primary focus of voting on executive pay practices-- dissatisfaction with compensation practices can be expressed by voting against MSOP rather than withholding or voting against the compensation committee. However, if there is no MSOP on the ballot, then the negative vote will apply to members of the compensation committee. In addition, in egregious cases, or if the board fails to respond to concerns raised by a prior MSOP proposal, then vote withhold or against compensation committee members (or, if the full board is deemed accountable, all directors). If the negative factors involve equity-based compensation, then vote AGAINST an equity-based plan proposal presented for shareholder approval.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Additional CASE-BY-CASE considerations for the management say on pay (MSOP) proposals:
Evaluation of performance metrics in short-term and long-term plans, as discussed and explained in the Compensation Discussion & Analysis (CD&A). Consider the measures, goals, and target awards reported by the company for executives’ short- and long-term incentive awards: disclosure, explanation of their alignment with the company’s business strategy, and whether goals appear to be sufficiently challenging in relation to resulting payouts
Evaluation of peer group benchmarking used to set target pay or award opportunities. Consider the rationale stated by the company for constituents in its pay benchmarking peer group, as well as the benchmark targets it uses to set or validate executives’ pay (e.g., median, 75th percentile, etc.,) to ascertain whether the benchmarking process is sound or may result in pay “ratcheting” due to inappropriate peer group constituents (e.g., much larger companies) or targeting (e.g., above median)
Balance of performance-based versus non-performance-based pay. Consider the ratio of performance-based (not including plain vanilla stock options) vs. non-performance-based pay elements reported for the CEO’s latest reported fiscal year compensation, especially in conjunction with concerns about other factors such as performance metrics/goals, benchmarking practices, and pay-for-performance disconnects.
Primary Evaluation Factors for Executive Pay
Pay for Performance
Evaluate the alignment of the CEO’s pay with performance over time, focusing particularly on companies that have underperformed their peers over a sustained period. From a shareholders’ perspective, performance is predominantly gauged by the company’s stock performance over time. Even when financial or operational measures are utilized in incentive awards, the achievement related to these measures should ultimately translate into superior shareholder returns in the long-term.
Focus on companies with sustained underperformance relative to peers, considering the following key factors:
Whether a company’s one-year and three-year total shareholder returns (“TSR”) are in the bottom half of its industry group (i.e., four-digit GICS – Global Industry Classification Group)
Whether the total compensation of a CEO who has served at least two consecutive fiscal years is aligned with the company’s total shareholder return over time, including both recent and long-term periods
If a company falls in the bottom half of its four-digit GICS, further analysis of the CD&A is required to better understand the various pay elements and whether they create or reinforce shareholder alignment. Also assess the CEO’s pay relative to the company’s TSR over a time horizon of at least five years. The most recent year-over-year increase or decrease in pay remains a key consideration, but there will be additional emphasis on the long term trend of CEO total compensation relative to shareholder return. Also consider the mix of performance-based compensation relative to total compensation. In general, standard stock options or time-vested restricted stock are not considered to be performance-based. If a company provides performance-based incentives to its executives, the company is highly encouraged to provide the complete disclosure of the performance measure and goals (hurdle rate) so that shareholders can assess the rigor of the performance program. The use of non-GAAP financial metrics also makes it very challenging for shareholders to ascertain the rigor of the program as shareholders often cannot tell the type of adjustments being made and if the adjustments were made consistently. Complete and transparent disclosure helps shareholders to better understand the company’s pay for performance linkage.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Problematic Pay Practices
If the company maintains problematic pay practices, generally vote:
AGAINST management "say on pay" (MSOP) proposals;
AGAINST/WITHHOLD on compensation committee members (or in rare cases where the full board is deemed responsible, all directors including the CEO):
In egregious situations;
When no MSOP item is on the ballot; or
When the board has failed to respond to concerns raised in prior MSOP evaluations; and/or
AGAINST an equity incentive plan proposal if excessive non-performance-based equity awards are the major contributors to a pay-for-performance misalignment.
The focus is on executive compensation practices that contravene the global pay principles, including:
Problematic practices related to non-performance-based compensation elements;
Incentives that may motivate excessive risk-taking; and
Options Backdating.
Problematic Pay Practices related to Non-Performance-Based Compensation Elements
Pay elements that are not directly based on performance are generally evaluated CASE-BY-CASE considering the context of a company's overall pay program and demonstrated pay-for-performance philosophy. The list below highlights the problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations:
Repricing or replacing of underwater stock options/SARS without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);
Excessive perquisites or tax gross-ups, including any gross-up related to a secular trust or restricted stock vesting;
New or extended agreements that provide for:
CIC payments exceeding 3 times base salary and average/target/most recent bonus
CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers)
CIC payments with excise tax gross-ups (including "modified" gross-ups)
Insufficient Executive Compensation Disclosure by Externally Managed Issuers (EMIs)
For externally-managed issuers (EMIs), generally vote against the say-on-pay proposal when insufficient compensation disclosure precludes a reasonable assessment of pay programs and practices applicable to the EMI's executives.
Incentives that may Motivate Excessive Risk-Taking
Assess company policies and disclosure related to compensation that could incentivize excessive risk-taking, for example:
Multi-year guaranteed bonuses
A single performance metric used for short- and long-term plans
Lucrative severance packages
High pay opportunities relative to industry peers;
Disproportionate supplemental pensions
Mega annual equity grants that provide unlimited upside with no downside risk
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Factors that potentially mitigate the impact of risky incentives include rigorous claw-back provisions and robust stock ownership/holding guidelines.
Options Backdating
Vote CASE-BY-CASE on options backdating issues. Generally, when a company has recently practiced options backdating, WITHHOLD from or vote AGAINST the compensation committee, depending on the severity of the practices and the subsequent corrective actions on the part of the board. When deciding on votes on compensation committee members who oversaw questionable options grant practices or current compensation committee members who fail to respond to the issue proactively, consider several factors, including, but not limited to, the following:
Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;
Duration of options backdating;
Size of restatement due to options backdating;
Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and
Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants in the future.
A CASE-BY-CASE analysis approach allows distinctions to be made between companies that had “sloppy” plan administration versus those that acted deliberately and/or committed fraud, as well as those companies that subsequently took corrective action. Cases where companies have committed fraud are considered most egregious.
Board Communications and Responsiveness
Consider the following factors CASE-BY-CASE when evaluating ballot items related to executive pay:
Poor disclosure practices, including:
Unclear explanation of how the CEO is involved in the pay setting process
Retrospective performance targets and methodology not discussed
Methodology for benchmarking practices and/or peer group not disclosed and explained
Board’s responsiveness to investor input and engagement on compensation issues, for example:
Failure to respond to majority-supported shareholder proposals on executive pay topics
Failure to respond to concerns raised in connection with significant opposition to MSOP proposals
Frequency of Advisory Vote on Executive Compensation ("Say When on Pay")
Vote FOR annual advisory votes on compensation, which provide the most consistent and clear communication channel for shareholder concerns about companies' executive pay programs.
Voting on Golden Parachutes in an Acquisition, Merger, Consolidation, or Proposed Sale
Vote CASE-BY-CASE on say on Golden Parachute proposals, including consideration of existing change-in-control arrangements maintained with named executive officers rather than focusing primarily on new or extended arrangements.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Features that may result in an AGAINST recommendation include one or more of the following, depending on the number, magnitude, and/or timing of issue(s):
Single- or modified-single-trigger cash severance
Single-trigger acceleration of unvested equity awards
Excessive cash severance (>3x base salary and bonus)
Excise tax gross-ups triggered and payable (as opposed to a provision to provide excise tax gross-ups)
Excessive golden parachute payments (on an absolute basis or as a percentage of transaction equity value)
Recent amendments that incorporate any problematic features (such as those above) or recent actions (such as extraordinary equity grants) that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders
The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote
Recent amendment(s) that incorporate problematic features will tend to carry more weight on the overall analysis. However, the presence of multiple legacy problematic features will also be closely scrutinized.
In cases where the golden parachute vote is incorporated into a company's advisory vote on compensation (management say-on-pay), Victory Capital will evaluate the say-on-pay proposal in accordance with these guidelines, which may give higher weight to that component of the overall evaluation.
Equity-Based and Other Incentive Plans
General Recommendation: Vote case-by-case on certain equity-based compensation plans depending on a combination of certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa, as evaluated using an "equity plan scorecard" (EPSC) approach with three pillars:
Plan Cost: The total estimated cost of the company’s equity plans relative to industry/market cap peers, measured by the company's estimated Shareholder Value Transfer (SVT) in relation to peers and considering both:
SVT based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants
SVT based only on new shares requested plus shares remaining for future grants
Plan Features:
Quality of disclosure around vesting upon a change in control (CIC)
Discretionary vesting authority
Liberal share recycling on various award types
Lack of minimum vesting period for grants made under the plan
Dividends payable prior to award vesting
Grant Practices:
The company’s three year burn rate relative to its industry/market cap peers
Vesting requirements in most recent CEO equity grants (3-year look-back)
The estimated duration of the plan (based on the sum of shares remaining available and the new shares requested, divided by the average annual shares granted in the prior three years)
The proportion of the CEO's most recent equity grants/awards subject to performance conditions
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Whether the company maintains a sufficient claw-back policy
Whether the company maintains suficient post exercise/vesting share-holding requirements
Generally vote against the plan proposal if the combination of above factors indicates that the plan is not, overall, in shareholders' interests, or if any of the following egregious factors (“overriding factors”) apply:
Awards may vest in connection with a liberal change-of-control definition
The plan would permit repricing or cash buyout of underwater options without shareholder approval (either by expressly permitting it – for NYSE and Nasdaq listed companies -- or by not prohibiting it when the company has a history of repricing – for non-listed companies)
The plan is a vehicle for problematic pay practices or a significant pay-for-performance disconnect under certain circumstances
The plan contains an evergreen (automatic share replenishment) feature, or
Any other plan features are determined to have a significant negative impact on shareholder interests
Plan Cost
General Recommendation: Generally vote against equity plans if the cost is unreasonable. For non-employee director plans, vote for the plan if certain factors are met (see Director Compensation section).
Shareholder Value Transfer (SVT)
The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders’ equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised (using two measures, in the case of plans subject to the Equity Plan Scorecard evaluation, as noted above). All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types. See discussion of specific types of awards.
Except for proposals subject to Equity Plan Scorecard evaluation, Shareholder Value Transfer is reasonable if it falls below a company-specific benchmark. The benchmark is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard: GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers’ historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company’s benchmark. 5
Grant Practices
Three-Year Burn Rate
Burn rate benchmarks (utilized in Equity Plan Scorecard evaluations) are calculated as the greater of: (1) the mean (μ) plus one standard deviation (σ) of the company's GICS group segmented by S&P 500, Russell 3000 index (less the S&P500) and non-Russell 3000 index; and (2) two percent of weighted common shares outstanding. In addition, year-over-year burn-rate benchmark changes will be limited to a maximum of two (2) percentage points plus or minus the prior year's burn-rate benchmark.
5 For plans evaluated under the Equity Plan Scorecard policy, the company's SVT benchmark is considered along with other factors.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Egregious Factors
Liberal Change in Control Definition
Generally vote against equity plans if the plan has a liberal definition of change in control and the equity awards could vest upon such liberal definition of change-in-control, even though an actual change in control may not occur. Examples of such a definition include, but are not limited to, announcement or commencement of a tender offer, provisions for acceleration upon a “potential” takeover, shareholder approval of a merger or other transactions, or similar language.
Repricing Provisions
Vote against plans that expressly permit the repricing or exchange of underwater stock options/stock appreciate rights (SARs) without prior shareholder approval. "Repricing" includes the ability to do any of the following:
Amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs
Cancel outstanding options or SARs in exchange for options or SARs with an exercise price that is less than the exercise price of the original options or SARs
Also, vote against or withhold from members of the Compensation Committee who approved and/or implemented a repricing or an option/SAR exchange program, by buying out underwater options/SARs for stock, cash or other consideration or canceling underwater options/SARs and regranting options/SARs with a lower exercise price, without prior shareholder approval, even if such repricings are allowed in their equity plan.
Vote against plans if the company has a history of repricing without shareholder approval, and the applicable listing standards would not preclude them from doing so.
Problematic Pay Practices or Significant Pay-for-Performance Disconnect
If the equity plan on the ballot is a vehicle for problematic pay practices, vote against the plan.
If a significant portion of the CEO’s misaligned pay is attributed to non-performance-based equity awards, and there is an equity plan on the ballot with the CEO as one of the participants, Victory vote against the equity plan. Considerations in voting against the equity plan may include, but are not limited to:
Magnitude of pay misalignment
Contribution of non–performance-based equity grants to overall pay
The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer level
Specific Treatment of Certain Award Types in Equity Plan Evaluations:
Dividend Equivalent Rights
Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.
Operating Partnership (OP) units in Equity Plan analysis of Real Estate Investment Trusts (REITs)
For Real Estate Investment Trusts (REITS), include the common shares issuable upon conversion of outstanding Operating Partnership (OP) units in the share count for the purposes of determining: (1) market capitalization in the Shareholder Value Transfer (SVT) analysis and (2) shares outstanding in the burn rate analysis.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Other Compensation Plans
401(k) Employee Benefit Plans
Vote FOR proposals to implement a 401(k) savings plan for employees.
Employee Stock Ownership Plans (ESOPs)
Vote FOR proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).
Employee Stock Purchase Plans-- Qualified Plans
Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee stock purchase plans where all of the following apply:
Purchase price is at least 85 percent of fair market value
Offering period is 27 months or less
The number of shares allocated to the plan is ten percent or less of the outstanding shares
Vote AGAINST qualified employee stock purchase plans where any of the following apply:
Purchase price is less than 85 percent of fair market value
Offering period is greater than 27 months
The number of shares allocated to the plan is more than ten percent of the outstanding shares
Employee Stock Purchase Plans-- Non-Qualified Plans
Vote CASE-BY-CASE on nonqualified employee stock purchase plans. Vote FOR nonqualified employee stock purchase plans with all the following features:
Broad-based participation (i.e., all employees of the company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company)
Limits on employee contribution, which may be a fixed dollar amount or expressed as a percent of base salary
Company matching contribution up to 25 percent of employee’s contribution, which is effectively a discount of 20 percent from market value
No discount on the stock price on the date of purchase since there is a company matching contribution
Vote AGAINST nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution exceeds 25 percent of employee’s contribution, evaluate the cost of the plan against its allowable cap.
Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related Compensation Proposals)
Vote FOR proposals that simply amend shareholder-approved compensation plans to include administrative features or place a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m) of the Internal Revenue Code.
Vote FOR proposals to add performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless they are clearly inappropriate.
Votes to amend existing plans to increase shares reserved and to qualify for favorable tax treatment under the provisions of Section 162(m) are considered CASE-BY-CASE.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Generally vote FOR cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase in shares is requested.
Vote AGAINST proposals if the compensation committee does not fully consist of independent outsiders, or if the plan contains excessive problematic provisions.
Option Exchange Programs/Repricing Options
Vote AGAINST proposals seeking the authority to reprice options.
Vote AGAINST proposals seeking to approve an option exchange program.
Stock Plans in Lieu of Cash
Vote CASE-BY-CASE on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.
Vote FOR non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.
Vote CASE-BY-CASE on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, Victory will not make any adjustments to carve out the in-lieu-of cash compensation.
Shareholder Ratification of Director Pay Programs
Vote case-by-case on management proposals seeking ratification of non-employee director compensation, based on the following factors:
If the equity plan under which non-employee director grants are made is on the ballot, whether or not it warrants support; and
An assessment of the following qualitative factors:
The relative magnitude of director compensation as compared to companies of a similar profile
The presence of problematic pay practices relating to director compensation
Director stock ownership guidelines and holding requirements
Equity award vesting schedules
The mix of cash and equity-based compensation
Meaningful limits on director compensation
The availability of retirement benefits or perquisites
The quality of disclosure surrounding director compensation
Transfer Stock Option (TSO) Programs
One-time Transfers: Vote AGAINST or WITHHOLD from compensation committee members if they fail to submit one-time transfers to shareholders for approval.
Vote CASE-BY-CASE on one-time transfers. Vote FOR if:
Executive officers and non-employee directors are excluded from participating
Stock options are purchased by third-party financial institutions at a discount to their fair value using option pricing models such as Black-Scholes or a Binomial Option Valuation or other appropriate financial models
There is a two-year minimum holding period for sale proceeds (cash or stock) for all participants
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Additionally, management should provide a clear explanation of why options are being transferred to a third-party institution and whether the events leading up to a decline in stock price were beyond management's control. A review of the company's historic stock price volatility should indicate if the options are likely to be back “in-the-money” over the near term.
Ongoing TSO program: Vote AGAINST equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:
Eligibility
Vesting
Bid-price
Term of options
Cost of the program and impact of the TSOs on company’s total option expense
Option repricing policy
Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.
Director Compensation
Equity Plans for Non-Employee Directors
Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the following factors:
The total estimated cost of the company’s equity plans relative to industry/market cap peers, measured by the company’s estimated Shareholder Value Transfer (SVT) based on new shares requested plus shares remaining for future grants, plus outstanding unvested/unexercised grants
The company’s three-year burn rate relative to its industry/market cap peers
The presence of any egregious plan features (such as an option repricing provision or liberal CIC vesting risk).
On occasion, director stock plans will exceed the plan cost or burn rate benchmarks when combined with employee or executive stock plans. In such cases, vote case-by-case on the plan taking into consideration the following qualitative factors:
The relative magnitude of director compensation as compared to companies of a similar profile
The presence of problematic pay practices relating to director compensation
Director stock ownership guidelines and holding requirements
Equity award vesting schedules
The mix of cash and equity-based compensation
Meaningful limits on director compensation
The availability of retirement benefits or perquisites
The quality of disclosure surrounding director compensation
Director Retirement Plans
Vote AGAINST retirement plans for non-employee directors.
Vote FOR shareholder proposals to eliminate retirement plans for non-employee directors.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Shareholder Proposals on Compensation
Advisory Vote on Executive Compensation (Say-on-Pay)
Generally, vote FOR shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.
Adopt Anti-Hedging/Pledging/Speculative Investments Policy
Generally vote FOR proposals seeking a policy that prohibits named executive officers from engaging in derivative or speculative transactions involving company stock, including hedging, holding stock in a margin account, or pledging stock as collateral for a loan. However, the company’s existing policies regarding responsible use of company stock will be considered.
Bonus Banking/Bonus Banking “Plus”
Vote CASE-BY-CASE on proposals seeking deferral of a portion of annual bonus pay, with ultimate payout linked to sustained results for the performance metrics on which the bonus was earned (whether for the named executive officers or a wider group of employees), taking into account the following factors:
The company’s past practices regarding equity and cash compensation;
Whether the company has a holding period or stock ownership requirements in place, such as a meaningful retention ratio (at least 50 percent for full tenure); and
Whether the company has a rigorous claw-back policy in place.
Compensation Consultants- Disclosure of Board or Company’s Utilization
Generally vote FOR shareholder proposals seeking disclosure regarding the Company, Board, or Compensation Committee’s use of compensation consultants, such as company name, business relationship(s) and fees paid.
Disclosure/Setting Levels or Types of Compensation for Executives and Directors
Generally, vote FOR shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders' needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.
Vote AGAINST shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation.
Vote AGAINST shareholder proposals seeking to eliminate stock options or any other equity grants to employees or directors.
Vote AGAINST shareholder proposals requiring director fees be paid in stock only.
Generally vote AGAINST shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.
Vote CASE-BY-CASE on all other shareholder proposals regarding executive and director pay, taking into account company performance, pay level versus peers, pay level versus industry, and long-term corporate outlook.
Golden Coffins/Executive Death Benefits
Generally vote FOR proposals calling companies to adopt a policy of obtaining shareholder approval for any future agreements and corporate policies that could oblige the company to make payments or awards following the death of a senior executive in the form of unearned salary or bonuses, accelerated vesting or the continuation in force of unvested equity grants, perquisites and other payments or awards made in lieu of compensation. This would not apply to any benefit programs or equity plan proposals that the broad-based employee population is eligible.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Hold Equity Past Retirement or for a Significant Period of Time
Vote CASE-BY-CASE on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain all or a significant portion of the shares acquired through compensation plans, either:
while employed and/or for two years following the termination of their employment
for a substantial period following the lapse of all other vesting requirements for the award (“lock-up period”), with ratable release of a portion of the shares annually during the lock-up period
The following factors will be taken into account:
Whether the company has any holding period, retention ratio, or officer ownership requirements in place. These should consist of:
Rigorous stock ownership guidelines
A holding period requirement coupled with a significant long-term ownership requirement
A meaningful retention ratio
Actual officer stock ownership and the degree to which it meets or exceeds the proponent’s suggested holding period/retention ratio or the company’s own stock ownership or retention requirements;
Post-termination holding requirement policies or any policies aimed at mitigating risk taking by senior executives;
Problematic pay practices, current and past, which may promote a short-term versus a long-term focus.
A rigorous stock ownership guideline should be at least 10x base salary for the CEO, with the multiple declining for other executives. A meaningful retention ratio should constitute at least 50 percent of the stock received from equity awards (on a net proceeds basis) held on a long-term basis, such as the executive’s tenure with the company or even a few years past the executive’s termination with the company.
Vote CASE-BY-CASE on shareholder proposals asking companies to adopt policies requiring Named Executive Officers to retain 75% of the shares acquired through compensation plans while employed and/or for two years following the termination of their employment, and to report to shareholders regarding this policy. The following factors will be taken into account:
Whether the company has any holding period, retention ratio, or officer ownership requirements in place. These should consist of:
Rigorous stock ownership guidelines
A holding period requirement coupled with a significant long-term ownership requirement
A meaningful retention ratio
Actual officer stock ownership and the degree to which it meets or exceeds the proponent’s suggested holding period/retention ratio or the company’s own stock ownership or retention requirements.
Problematic pay practices, current and past, which may promote a short-term versus a long-term focus.
A rigorous stock ownership guideline should be at least 10x base salary for the CEO, with the multiple declining for other executives. A meaningful retention ratio should constitute at least 50 percent of the stock received from equity awards (on a net proceeds basis) held on a long-term basis, such as the executive’s tenure with the company or even a few years past the executive’s termination with the company.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Generally vote AGAINST shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board. While Victory favors stock ownership on the part of directors, the company should determine the appropriate ownership requirement.
Non-Deductible Compensation
Generally vote FOR proposals seeking disclosure of the extent to which the company paid non-deductible compensation to senior executives due to Internal Revenue Code Section 162(m), while considering the company’s existing disclosure practices.
Pay for Performance
Performance-Based Awards
Vote CASE-BY-CASE on shareholder proposal requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:
First, vote FOR shareholder proposals advocating the use of performance-based equity awards, such as performance contingent options or restricted stock, indexed options or premium-priced options, unless the proposal is overly restrictive or if the company has demonstrated that it is using a “substantial” portion of performance-based awards for its top executives. Standard stock options and performance-accelerated awards do not meet the criteria to be considered as performance-based awards. Further, premium-priced options should have a premium of at least 25 percent and higher to be considered performance-based awards.
Second, assess the rigor of the company’s performance-based equity program. If the bar set for the performance-based program is too low based on the company’s historical or peer group comparison, generally vote FOR the proposal. Furthermore, if target performance results in an above target payout, vote FOR the shareholder proposal due to program’s poor design. If the company does not disclose the performance metric of the performance-based equity program, vote FOR the shareholder proposal regardless of the outcome of the first step to the test.
In general, vote FOR the shareholder proposal if the company does not meet both of the above two steps.
Pay for Superior Performance
Generally vote AGAINST, if a majority of pay is already linked to performance than proposal is redundant.
Pre-Arranged Trading Plans (10b5-1 Plans)
Generally vote FOR shareholder proposals calling for certain principles regarding the use of prearranged trading plans (10b5-1 plans) for executives. These principles include:
Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed within two business days in a Form 8-K
Amendment or early termination of a 10b5-1 Plan is allowed only under extraordinary circumstances, as determined by the board
Ninety days must elapse between adoption or amendment of a 10b5-1 Plan and initial trading under the plan
Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan
An executive may not trade in company stock outside the 10b5-1 Plan
Trades under a 10b5-1 Plan must be handled by a broker who does not handle other securities transactions for the executive
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Prohibit CEOs from serving on Compensation Committees
Generally vote AGAINST proposals seeking a policy to prohibit any outside CEO from serving on a company’s compensation committee, unless the company has demonstrated problematic pay practices that raise concerns about the performance and composition of the committee.
Recoup Bonuses
Vote CASE-BY-CASE on proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that the figures upon which incentive compensation is earned later turn out to have been in error. This is line with the clawback provision in the Trouble Asset Relief Program. Many companies have adopted policies that permit recoupment in cases where fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation. Victory will take into consideration:
If the company has adopted a formal recoupment bonus policy
If the company has chronic restatement history or material financial problems
If the company’s policy substantially addresses the concerns raised by the proponent
Severance Agreements for Executives/Golden Parachutes
Vote FOR shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts.
Vote CASE-BY-CASE on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:
The triggering mechanism should be beyond the control of management
The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs
Change-in-control payments should be double-triggered, i.e., (1) after a change in control has taken place, and (2) termination of the executive as a result of the change in control. Change in control is defined as a change in the company ownership structure.
Share Buyback Holding Periods
Generally vote AGAINST shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote FOR the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.
Stock Retention/Holding Period
Vote AGAINST shareholder proposals asking companies to adopt holding periods or retention ratios for their executives.
Supplemental Executive Retirement Plans (SERPs)
Generally vote FOR shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company’s executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.
Generally vote FOR shareholder proposals requesting to limit the executive benefits provided under the company’s supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive’s annual salary and excluding of all incentive or bonus pay from the plan’s definition of covered compensation used to establish such benefits.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Tax Gross-Up Proposals
Generally vote FOR proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.
Termination of Employment Prior to Severance Payment and Eliminating Accelerated Vesting of Unvested Equity
Vote CASE-BY-CASE on shareholder proposals seeking a policy requiring termination of employment prior to severance payment, and eliminating accelerated vesting of unvested equity. Change-in-control payouts without loss of job or substantial diminution of job duties (single-triggered) are consider a poor pay practice under Victory policy, and may even result in withheld votes from compensation committee members. The second component of this proposal –- related to the elimination of accelerated vesting – requires more careful consideration. The following factors will be taken into regarding this policy.
The company’s current treatment of equity in change-of-control situations (i.e. is it double triggered, does it allow for the assumption of equity by acquiring company, the treatment of performance shares.
Current employment agreements, including potential poor pay practices such as gross-ups embedded in those agreements.
Generally vote FOR proposals seeking a policy that prohibits acceleration of the vesting of equity awards to senior executives in the event of a change in control (except for pro rata vesting considering the time elapsed and attainment of any related performance goals between the award date and the change in control).
Social/Environmental Issues
Overall Approach
When evaluating social and environmental shareholder proposals, Victory considers the following factors:
Whether adoption of the proposal is likely to enhance or protect shareholder value
Whether the information requested concerns business issues that relate to a meaningful percentage of the company's business as measured by sales, assets, and earnings
The degree to which the company's stated position on the issues raised in the proposal could affect its reputation or sales, or leave it vulnerable to a boycott or selective purchasing
Whether the issues presented are more appropriately/effectively dealt with through governmental or company-specific action
Whether the company has already responded in some appropriate manner to the request embodied in the proposal
Whether the company's analysis and voting recommendation to shareholders are persuasive
What other companies have done in response to the issue addressed in the proposal
Whether the proposal itself is well framed and the cost of preparing the report is reasonable
Whether implementation of the proposal’s request would achieve the proposal’s objectives
Whether the subject of the proposal is best left to the discretion of the board
Whether the requested information is available to shareholders either from the company or from a publicly available source
Whether providing this information would reveal proprietary or confidential information that would place the company at a competitive disadvantage
Victory Capital Management Inc.
Proxy Policy / Policy H-12




Diversity
Board Diversity
Generally vote AGAINST requests for reports on the company's efforts to diversify the board, if the company has a Board & Nominating Committee that has a practice of selecting candidates based on knowledge, experience, and skills regardless of gender or race.

For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company's board. Mitigating factors include:
a.Until Feb. 1, 2021, a firm commitment, as stated in the proxy statement, to appoint at least one woman to the board within a year;
b.The presence of a woman on the board at the preceding annual meeting and a firm commitment to appoint at least one woman to the board within a year; or
c.Other relevant factors as applicable.
Equality of Opportunity
Generally vote AGAINST proposals requesting a company disclose its diversity policies or initiatives, or proposals requesting disclosure of a company’s comprehensive workforce diversity data, including requests for EEO-1 data, if the company already has a policy in place.
Political Contributions
Generally vote for proposals requesting greater disclosure of a company's political contributions and trade association spending policies and activities, considering:
The company's policies, and management and board oversight related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes
The company's disclosure regarding its support of, and participation in, trade associations or other groups that may make political contributions
Recent significant controversies, fines, or litigation related to the company's political contributions or political activities
Generally vote against proposals asking a company to affirm political nonpartisanship in the workplace, so long as:
There are no recent, significant controversies, fines, or litigation regarding the company’s political contributions or trade association spending
The company has procedures in place to ensure that employee contributions to company-sponsored political action committees (PACs) are strictly voluntary and prohibit coercion.
Vote against proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Lobbying
Vote case-by-case on proposals requesting information on a company’s lobbying (including direct, indirect, and grassroots lobbying) activities, policies, or procedures, considering:
The company’s current disclosure of relevant lobbying policies, and management and board oversight
The company’s disclosure regarding trade associations or other groups that it supports, or is a member of, that engage in lobbying activities
Recent significant controversies, fines, or litigation regarding the company’s lobbying-related activities
General Sustainability Reporting Proposals
Generally vote FOR proposals requesting the company to report on its policies, initiatives, and oversight mechanisms related to social, economic, and environmental sustainability, unless:
The company already discloses similar information through existing reports or policies such as an Environment, Health, and Safety (EHS) report; a comprehensive Code of Corporate Conduct; and/or a Diversity Report
The company has formally committed to the implementation of a reporting program based on Global Reporting Initiative (GRI) guidelines or a similar standard within a specified time frame
Climate Change/ Greenhouse Gas (GHG) Emissions
Generally vote FOR resolutions requesting that a company disclose information on the impact of climate change on the company’s operations and investments considering:
The company already provides current, publicly-available information on the impacts that climate change may have on the company as well as associated company policies and procedures to address related risks and/or opportunities
The company’s level of disclosure is at least comparable to that of industry peers
There are no significant, controversies, fines, penalties, or litigation associated with the company’s environmental performance
Generally vote FOR proposals requesting a report on greenhouse gas (GHG) emissions from company operations and/or products and operations, unless:
The company already provides current, publicly-available information on the impacts that GHG emissions may have on the company as well as associated company policies and procedures to address related risks and/or opportunities
The company's level of disclosure is comparable to that of industry peers
There are no significant, controversies, fines, penalties, or litigation associated with the company's GHG emissions
Proposals that call for the adoption of GHG reduction goals from products and operations shall be evaluated based on the long-term economic interests of the advisory clients, taking into account:
Overly prescriptive requests for the reduction in GHG emissions by specific amounts or within a specific time frame
Whether company disclosure lags behind industry peers
Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to GHG emissions
The feasibility of reduction of GHGs given the company’s product line and current technology
Whether the company already provides meaningful disclosure on GHG emissions from its products and operations
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Human Rights Risk Assessment
Vote case-by-case on proposals requesting that a company conduct an assessment of the human rights risks in its operations or in its supply chain, or report on its human rights risk assessment process, considering:
The degree to which existing relevant policies and practices are disclosed, including information on the implementation of these policies and any related oversight mechanisms
The company’s industry and whether the company or its suppliers operate in countries or areas where there is a history of human rights concerns
Recent, significant controversies, fines, or litigation regarding human rights involving the company or its suppliers, and whether the company has taken remedial steps
Whether the proposal is unduly burdensome or overly prescriptive
Gender Pay Gaps
Generally vote case-by-case on requests for reports on a company's pay data by gender, race or ethnicity or a report on a company’s policies and goals to reduce any gender, race or ethnicity pay gap, taking into account:
The company's current policies and disclosure related to both its diversity and inclusion policies and practices and its compensation philosophy and fair and equitable compensation practices
Whether the company has been the subject of recent controversy, litigation, or regulatory actions related to gender, race or ethnicity pay gap issues
Whether the company's reporting regarding gender, race or ethnicity pay gap policies or initiatives is lagging its peers
Mutual Fund Proxies
Election of Directors
Vote CASE-BY-CASE on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.
Converting Closed-end Fund to Open-end Fund
Vote CASE-BY-CASE on conversion proposals, considering the following factors:
Past performance as a closed-end fund
Market in which the fund invests
Measures taken by the board to address the discount
Past shareholder activism, board activity, and votes on related proposals
Proxy Contests
Vote CASE-BY-CASE on proxy contests, considering the following factors:
Past performance relative to its peers
Market in which fund invests
Measures taken by the board to address the issues
Past shareholder activism, board activity, and votes on related proposals
Strategy of the incumbents versus the dissidents
Independence of directors
Experience and skills of director candidates
Governance profile of the company
Evidence of management entrenchment
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Investment Advisory Agreements
Vote CASE-BY-CASE on investment advisory agreements, considering the following factors:
Proposed and current fee schedules
Fund category/investment objective
Performance benchmarks
Share price performance as compared with peers
Resulting fees relative to peers
Assignments (where the advisor undergoes a change of control)
Approving New Classes or Series of Shares
Vote FOR the establishment of new classes or series of shares.
Preferred Stock Proposals
Vote CASE-BY-CASE on the authorization for or increase in preferred shares, considering the following factors:
Stated specific financing purpose
Possible dilution for common shares
Whether the shares can be used for antitakeover purposes
1940 Act Policies
Vote CASE-BY-CASE on policies under the Investment Advisor Act of 1940, considering the following factors:
Potential competitiveness
Regulatory developments
Current and potential returns
Current and potential risk
Generally vote FOR these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.
Changing a Fundamental Restriction to a Nonfundamental Restriction
Vote CASE-BY-CASE on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:
The fund's target investments
The reasons given by the fund for the change
The projected impact of the change on the portfolio
Change Fundamental Investment Objective to Nonfundamental
Vote AGAINST proposals to change a fund’s fundamental investment objective to non-fundamental.
Name Change Proposals
Vote CASE-BY-CASE on name change proposals, considering the following factors:
Political/economic changes in the target market
Consolidation in the target market
Current asset composition
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Change in Fund's Subclassification
Vote CASE-BY-CASE on changes in a fund's sub-classification, considering the following factors:
Potential competitiveness
Current and potential returns
Risk of concentration
Consolidation in target industry
Disposition of Assets/Termination/Liquidation
Vote CASE-BY-CASE on proposals to dispose of assets, to terminate or liquidate, considering the following factors:
Strategies employed to salvage the company
The fund’s past performance
The terms of the liquidation
Changes to the Charter Document
Vote CASE-BY-CASE on changes to the charter document, considering the following factors:
The degree of change implied by the proposal
The efficiencies that could result
The state of incorporation
Regulatory standards and implications
Vote AGAINST any of the following changes:
Removal of shareholder approval requirement to reorganize or terminate the trust or any of its series
Removal of shareholder approval requirement for amendments to the new declaration of trust
Removal of shareholder approval requirement to amend the fund's management contract, allowing the contract to be modified by the investment manager and the trust management, as permitted by the 1940 Act
Allow the trustees to impose other fees in addition to sales charges on investment in a fund, such as deferred sales charges and redemption fees that may be imposed upon redemption of a fund's shares
Removal of shareholder approval requirement to engage in and terminate subadvisory arrangements
Removal of shareholder approval requirement to change the domicile of the fund
Changing the Domicile of a Fund
Vote CASE-BY-CASE on re-incorporations, considering the following factors:
Regulations of both states
Required fundamental policies of both states
The increased flexibility available
Authorizing the Board to Hire and Terminate Subadvisors Without Shareholder Approval
Vote AGAINST proposals authorizing the board to hire/terminate subadvisors without shareholder approval.
Victory Capital Management Inc.
Proxy Policy / Policy H-12



Distribution Agreements
Vote CASE-BY-CASE on distribution agreement proposals, considering the following factors:
Fees charged to comparably sized funds with similar objectives
The proposed distributor’s reputation and past performance
The competitiveness of the fund in the industry
The terms of the agreement
Master-Feeder Structure
Vote FOR the establishment of a master-feeder structure.
Mergers
Vote CASE-BY-CASE on merger proposals, considering the following factors:
Resulting fee structure
Performance of both funds
Continuity of management personnel
Changes in corporate governance and their impact on shareholder rights
Shareholder Proposals for Mutual Funds
Establish Director Ownership Requirement
Generally vote AGAINST shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.
Reimburse Shareholder for Expenses Incurred
Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote FOR the reimbursement of the proxy solicitation expenses.
Terminate the Investment Advisor
Vote CASE-BY-CASE on proposals to terminate the investment advisor, considering the following factors:
Performance of the fund’s Net Asset Value (NAV)
The fund’s history of shareholder relations
The performance of other funds under the advisor’s management
Scope
This policy applies to Victory Capital Management Inc. The entity and its employees are responsible for complying with this policy. The Legal, Compliance and Risk Department owns this policy.
Exception / Escalation Policy
All material exceptions to this policy will be reported to the Compliance Committee and Victory Capital Management Inc. board members. If needed, exceptions may also be presented to the Victory Capital Holdings Inc. board members.


Last Updated: February 1, 2019
Effective Date: February 1, 2020

Victory Capital Management Inc.
Proxy Policy / Policy H-12

W. H. Reaves & Company, Inc.

PROXY VOTING POLICIES AND PROCEDURES

1.BACKGROUND

The act of managing assets of clients may include the voting of proxies related to such managed assets. Where the power to vote in person or by proxy has been delegated, directly or indirectly, to the investment adviser, the investment adviser has the fiduciary responsibility for (a) voting in a manner that is in the best interests of the client, and (b) properly dealing with potential conflicts of interest arising from proxy proposals being voted upon.

The policies and procedures of W. H. Reaves & Company, Inc. (“WHR”) ("the Adviser") for voting proxies received for accounts managed by the Adviser are set forth below and are applicable if:

The underlying advisory agreement entered into with the client expressly provides that the Adviser shall be responsible to vote proxies received in connection with the client’s account; or
The underlying advisory agreement entered into with the client is silent as to whether or not the Adviser shall be responsible to vote proxies received in connection with the client’s account and the Adviser has discretionary authority over investment decisions for the client’s account; or
In case of an employee benefit plan, the client (or any plan trustee or other fiduciary) has not reserved the power to vote proxies in either the underlying advisory agreement entered into with the client or in the client’s plan documents.
These Proxy Voting Policies and Procedures are designed to ensure that proxies are voted in an appropriate manner and should complement the Adviser’s investment policies and procedures regarding its general responsibility to monitor the performance and/or corporate events of companies which are issuers of securities held in managed accounts. Any questions about these policies and procedures should be directed to WHR’s Compliance Department.

PROXY VOTING POLICIES

In the absence of specific voting guidelines from a client, WHR will vote proxies in a manner that is in the best interest of the client, which may result in different voting results for proxies for the same issuer. The Adviser shall consider only those factors that relate to the client's investment or dictated by the client’s written instructions, including how its vote will economically impact and affect the value of the client's investment (keeping in mind that, after conducting an appropriate cost-benefit analysis, not voting at all on a presented proposal may be in the best interest of the client). WHR believes that voting proxies in accordance with the following policies is in the best interests of its clients.




A.Specific Voting Policies

1.Routine Items:
The Adviser will generally vote for the election of directors (where no corporate governance issues are implicated).
The Adviser will generally vote for the selection of independent auditors.
The Adviser will generally vote for increases in or reclassification of common stock.
The Adviser will generally vote for management recommendations adding or amending indemnification provisions in charter or by-laws.
The Adviser will generally vote for changes in the board of directors.
The Adviser will generally vote for outside director compensation.
The Adviser will generally vote for proposals that maintain or strengthen the shared interests of shareholders and management
The Adviser will generally vote for proposals that increase shareholder value
The Adviser will generally vote for proposals that will maintain or increase shareholder influence over the issuer's board of directors and management
The Adviser will generally vote for proposals that maintain or increase the rights of shareholders
2.Non-Routine and Conflict of Interest Items:
The Adviser will generally vote for management proposals for merger or reorganization if the transaction appears to offer fair value.
The Adviser will generally vote against shareholder resolutions that consider only non-financial impacts of mergers
The Adviser will generally vote against anti-greenmail provisions.



B.General Voting Policy

If the proxy includes a Routine Item that implicates corporate governance changes, a Non-Routine Item where no specific policy applies or a Conflict of Interest Item where no specific policy applies, then the Adviser may engage an independent third party to determine how the proxies should be voted.

In voting on each and every issue, the Adviser and its employees shall vote in a prudent and timely fashion and only after a careful evaluation of the issue(s) presented on the ballot.

In exercising its voting discretion, the Adviser and its employees shall avoid any direct or indirect conflict of interest raised by such voting decision. The Adviser will provide adequate disclosure to the client if any substantive aspect or foreseeable result of the subject matter to be voted upon raises an actual or potential conflict of interest to the Adviser or:

any affiliate of the Adviser. For purposes of these Proxy Voting Policies and Procedures, an affiliate means:
(i)any person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with the Adviser;
(ii)any officer, director, principal, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of the Adviser; or
(iii)any other person for which a person described in clause (ii) acts in any such capacity;
any issuer of a security for which the Adviser (or any affiliate of the Adviser) acts as a sponsor, advisor, manager, custodian, distributor, underwriter, broker, or other similar capacity; or
any person with whom the Adviser (or any affiliate of the Adviser) has an existing, material contract or business relationship that was not entered into in the ordinary course of the Adviser’s (or its affiliate’s) business.
After informing the client of any potential conflict of interest, the Adviser will take other appropriate action as required under these Proxy Voting Policies and Procedures, as provided below.
The Adviser shall keep certain records required by applicable law in connection with its proxy voting activities for clients and shall provide proxy-voting information to clients upon their written or oral request.



3.PROXY VOTING PROCEDURES

A.The Account Representative or the Portfolio Manager the “Responsible Party”) shall be designated by the Adviser to make discretionary investment decisions for the client's account will be responsible for voting the proxies related to that account. The Responsible Party should assume that he or she has the power to vote all proxies related to the client’s account if any one of the three circumstances set forth in Section 1 above regarding proxy voting powers is applicable.
B.All proxies and ballots received by WHR will be forwarded to the Responsible Party and then logged in upon receipt in the “Receipt of Proxy Voting Material” log.
C.Prior to voting, the Responsible Party will verify whether his or her voting power is subject to any limitations or guidelines issued by the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries).
D.Prior to voting, the Responsible Party will verify whether an actual or potential conflict of interest with the Adviser or any Interested Person exists in connection with the subject proposal(s) to be voted upon. The determination regarding the presence or absence of any actual or potential conflict of interest shall be adequately documented by the Responsible Party (i.e., comparing the apparent parties affected by the proxy proposal being voted upon against the Adviser’s internal list of Interested Persons and, for any matches found, describing the process taken to determine the anticipated magnitude and possible probability of any conflict of interest being present), which shall be reviewed and signed off on by the Responsible Party’s direct supervisor (and if none, by the board of directors or a committee of the board of directors of the Adviser).
E.If an actual or potential conflict is found to exist, written notification of the conflict (the “Conflict Notice”) shall be given to the client or the client’s designee (or in the case of an employee benefit plan, the plan's trustee or other fiduciary) in sufficient detail and with sufficient time to reasonably inform the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciary) of the actual or potential conflict involved.
Specifically, the Conflict Notice should describe:
the proposal to be voted upon;
the actual or potential conflict of interest involved;
the Adviser’s vote recommendation (with a summary of material factors supporting the recommended vote); and
if applicable, the relationship between the Adviser and any Interested Person.




The Conflict Notice will either request the client’s consent to the Adviser’s vote recommendation or may request the client to vote the proxy directly or through another designee of the client. The Conflict Notice and consent thereto may be sent or received, as the case may be, by mail, fax, electronic transmission or any other reliable form of communication that may be recalled, retrieved, produced, or printed in accordance with the recordkeeping policies and procedures of the Adviser. If the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciary) is unreachable or has not affirmatively responded before the response deadline for the matter being voted upon, the Adviser may:
engage a non-Interested Party to independently review the Adviser’s vote recommendation if the vote recommendation would fall in favor of the Adviser’s interest (or the interest of an Interested Person) to confirm that the Adviser’s vote recommendation is in the best interest of the client under the circumstances;
cast its vote as recommended if the vote recommendation would fall against the Adviser’s interest (or the interest of an Interested Person) and such vote recommendation is in the best interest of the client under the circumstances; or
abstain from voting if such action is determined by the Adviser to be in the best interest of the client under the circumstances.
F.The Responsible Party will promptly vote proxies received in a manner consistent with the Proxy Voting Policies and Procedures stated above and guidelines (if any) issued by client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries if such guidelines are consistent with ERISA).
G.In accordance with SEC Rule 204-2(c)(2), as amended, the Responsible Party shall retain in the respective client’s file, the following:
A copy of the proxy statement received (unless retained by a third party for the benefit of the Adviser or the proxy statement is available from the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system);
A record of the vote cast (unless this record is retained by a third party for the benefit of the Adviser and the third party is able to promptly provide the Adviser with a copy of the voting record upon its request);



A record memorializing the basis for the vote cast;
A copy of any document created by the Adviser or its employees that was material in making the decision on how to vote the subject proxy; and,
A copy of any Conflict Notice, conflict consent or any other written communication (including emails or other electronic communications) to or from the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries) regarding the subject proxy vote cast by, or the vote recommendation of, the Adviser.
The above copies and records shall be retained in the client’s file for a period not less than five (5) years (or in the case of an employee benefit plan, no less than six (6) years), which shall be maintained at the appropriate office of the Adviser.

H.Periodically, but no less than annually, the Adviser will:
1.Verify that all annual proxies for the securities held in the client’s account have been received;
2.Verify that each proxy received has been voted in a manner consistent with the Proxy Voting Policies and Procedures and the guidelines (if any) issued by the client (or in the case of an employee benefit plan, the plan's trustee or other fiduciaries);
3.Review the files to verify that records of the voting of the proxies have been properly maintained;
4.Prepare a written report for each client regarding compliance with the Proxy Voting Policies and Procedures; and
5.Maintain an internal list of Interested Persons.


Proxies and Class Action Lawsuits

WHR will be required to take action and render advice with respect to voting of proxies solicited by or with respect to the issuers of securities in which assets of the Account may be invested from time to time. However, WHR will not take any action or render any advice with respect to any securities held in the Account, which are named in or subject to class action lawsuits. WHR may, only at the client’s request, offer clients advice regarding corporate actions



INVESTMENT ADVISER
PROXY VOTING
POLICIES & PROCEDURES



WESTWOOD HOLDINGS
GROUP, INC.




Updated March 31, 2020






27.    PROXY VOTING
27.1. Policy.
Westwood, as a matter of policy and as a fiduciary to our clients, has a responsibility for voting proxies for portfolio securities in a manner that is consistent with the best economic interests of the clients. Our Firm maintains written policies and procedures as to the handling, research, voting and reporting of proxy voting and makes appropriate disclosures about our Firm’s proxy policies and practices. Our policy and practice includes the responsibility to monitor corporate actions, receive and vote client proxies and disclose any potential conflicts of interest. In addition, our policy and practice is to make information available to clients about the voting of proxies for their portfolio securities and to maintain relevant and required records.
27.2. Firm Specific Policy.
Westwood has engaged Broadridge for assistance with the proxy voting process for our clients. Broadridge is a leading provider of full-service proxy voting services to the global financial industry. Westwood has also engaged Glass Lewis for assistance with proxy research and analysis. Glass Lewis provides complete analysis and voting recommendations on all proposals and is designed to assist investors in mitigating risk and improving long-term value. In most cases, Westwood agrees with Glass Lewis’s recommendations; however, ballots are reviewed bi-monthly by our analysts and we may choose to vote differently than Glass Lewis if we believe it to be in the client’s best interest. In addition, Westwood will implement “echo voting” (voting pro rata with all other shareholders) for investment company clients relying on Investment Company Act §12(d)(1)(F) and Rule 12d1-3 in order to allow certain purchases of other investment companies in excess of limits that would otherwise apply.
27.3. Responsibility.
Westwood’s Data Management Team has the responsibility for the implementation and monitoring of our proxy voting policy, practices, disclosures and record keeping, including outlining our voting guidelines in our procedures.
27.4. Background.
Proxy voting is an important right of shareholders, and reasonable care and diligence must be taken to ensure that such rights are properly and timely exercised.
Investment advisers who are registered with the SEC, and who exercise voting authority with respect to client securities, are required by Rule 206(4)-6 of the Advisers Act to (a) adopt and implement written policies and procedures that are reasonably designed to ensure that client securities are voted in the best interests of clients, which must include how an adviser addresses material conflicts that may arise between an adviser's interests and those of its clients, (b) disclose to clients how they may obtain information from the adviser with respect to the voting of proxies for their securities, (c) describe a summary of its proxy voting policies and procedures and, upon request, to furnish a copy to its clients, and (d) to maintain certain records relating to the adviser's proxy voting activities when the adviser does have proxy voting authority.
Westwood Holdings Group, Inc.
March 31, 2020



27.5. Procedure.
Westwood has adopted the following procedures to implement the Firm’s proxy voting policy, in addition to adopting the Glass Lewis Proxy Voting Guidelines (general guidelines attached as Exhibit H, guidelines specific to Taft Hartley are attached as Exhibit J). Westwood conducts reviews to monitor and ensure the Firm’s policy is observed, implemented properly and amended or updated, as appropriate:
27.5.1. Proxy Voting Records.
With respect to proxy record keeping, the Data Management Team maintains complete files for all clients. These files include a listing of all proxy materials sent on behalf of our clients along with individual copies of each response. Client access to these files can be arranged upon request. A voting summary will be furnished upon request.
27.5.2. Voting Procedures.
a.All employees forward proxy materials received on behalf of clients to Broadridge. Westwood has engaged Broadridge for assistance with the proxy voting process for our clients and Glass Lewis provides voting recommendations;
b.Broadridge has access to holders’ records and determines which client accounts hold the security to which the proxy relates;
c.Absent material conflicts, Broadridge, with the vote recommendations from Glass Lewis, determines how Westwood should vote the proxy in accordance with applicable voting guidelines;
d.Westwood’s analysts review the Glass Lewis proxy voting recommendations on a bi-monthly basis. The analysts may choose to vote differently than Glass Lewis if they believe it is in the best interest of the client or where a different vote is warranted in light of the respective investment strategy;
e.If Westwood chooses to vote differently than Glass Lewis, then Westwood overwrites the Glass Lewis recommendation on the ProxyEdge platform. If Westwood agrees with the Glass Lewis recommendations, no action is necessary; and,
f.Broadridge completes the proxy in a timely and appropriate manner.
g.For certain investment companies managed by Westwood and approved by the CCO (each a “Westwood 12d1F Fund”), Westwood will implement echo voting for shares of other investment companies (each an “Acquired Fund”) held by a Westwood 12d1F Fund. The Data Management Team will override any Glass Lewis proxy voting recommendations with respect to shares of an Acquired Funds held by a Westwood 12d1F Fund, and will instead, vote all such Acquired Fund shares pro rata with all other shareholders of each respective Acquired Fund. The Data Management Team will record any votes made with echo voting as overrides to the Glass Lewis recommendations.

Westwood Holdings Group, Inc.
March 31, 2020


27.5.3. Disclosure.
a.Westwood provides required disclosures in Form ADV Part 2A, which summarizes these proxy voting policies and procedures and includes information whereby clients may request information regarding how Westwood voted the client’s proxies;
b.Westwood’s disclosure summary includes a description of how clients may obtain a copy of the Firm's proxy voting policies and procedures. Westwood’s proxy voting practice is disclosed in the Firm's advisory agreements.
27.5.4. Client Requests for Information.
a.All client requests for information regarding proxy votes, or regarding policies and procedures that are received by any supervised person should be forwarded to the Data Management Team; and
b.In response to any request, the Data Management Team prepares a written response with the information requested, and as applicable, includes the name of the issuer, the proposal voted upon, and how Westwood voted the client’s proxy with respect to each proposal about which the client inquired.
27.5.5. Voting Guidelines.
a.Westwood has engaged Broadridge and Glass Lewis for assistance with the proxy voting process for our clients. The Glass Lewis Proxy Voting Guidelines are attached as Exhibit H (general) and Exhibit J (Taft Hartley); and
b.Westwood analysts review the Glass Lewis proxy voting recommendations using the following guidelines:
i.In the absence of specific voting guidelines from the client, Westwood votes proxies in the best interests of each client;
ii.Westwood’s policy is to vote all proxies from a specific issuer the same way for each client absent qualifying restrictions or other mandates from a client;
iii.Clients are permitted to place reasonable restrictions and mandates on Westwood’s voting authority in the same manner that they may place such restrictions on the actual selection of account securities;
iv.Westwood generally votes in favor of routine corporate housekeeping proposals such as the election of directors and selection of auditors absent conflicts of interest raised by an auditor’s non-audit services;
v.Westwood generally votes against proposals that cause board members to become entrenched or cause unequal voting rights; and
vi.In reviewing proposals, Westwood further considers the opinion of management, the effect on management, and the effect on shareholder value and the issuer's business practices.
Westwood Holdings Group, Inc.
March 31, 2020


27.5.6. Conflicts of Interest.
a.Westwood conducts periodic reviews to identify any conflicts that exist between the interests of the Firm and the client by (i) reviewing the relationship of Westwood with the issuer of each security, and (ii) determining if Westwood or any of its supervised persons has any financial, business or personal relationship with the issuer;
b.If a material conflict of interest exists, Westwood will determine whether it is appropriate to disclose the conflict to the affected clients, to give the clients an opportunity to vote the proxies themselves, or to address the voting issue through other objective means, such as voting in a manner consistent with a predetermined voting policy or receiving an independent third-party voting recommendation; and
c.Westwood will maintain a record of the voting resolution of any conflict of interest.
27.5.7. Recordkeeping.
The Data Management Team retains the following proxy records in accordance with the SEC’s five-year retention requirement:
a.These policies and procedures and any amendments;
b.Each proxy statement that Westwood receives;
c.A record of each vote that Westwood casts;
d.Any document Westwood created that was material to making a decision how to vote proxies, or that memorializes that decision, including periodic reports to the Data Management Team or proxy committee, if applicable;
e.A copy of each written request from a client for information on how Westwood voted such client’s proxies and a copy of any written response;
f.Copies of materials used in conduct due diligence on proxy voting service providers; and
g.Records documenting audits and other periodic reviews of proxy voting recommendations.
27.5.8. Proxy Voting Vendor Oversight
Westwood conducts initial and ongoing oversight of proxy voting vendors with participation by the Client Service, Compliance, Data Management and Investment teams.
In addition to conducting initial due diligence, Westwood monitors and reviews all third party proxy services to evaluate any conflicts of interest, consistency of voting with guidelines, fees and disclosures, and technical and operational capabilities, among other things.
At least annually, Westwood audits on a sampling basis the recommendations received from Glass Lewis to assess the consistency of its recommendations with Glass Lewis’ published guidelines.

Westwood Holdings Group, Inc.
March 31, 2020