PRINCIPAL FUNDS, INC. AMENDED AND RESTATED SUB-ADVISORY AGREEMENT PRINCIPAL REAL ESTATE INVESTORS SUB-ADVISED SERIES


PRINCIPAL FUNDS, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
PRINCIPAL REAL ESTATE INVESTORS SUB-ADVISED SERIES


AGREEMENT effective as of March 17, 2010, by and between PRINCIPAL MANAGEMENT CORPORATION
(hereinafter called "the Manager"), and PRINCIPAL REAL ESTATE INVESTORS, LLC (hereinafter called "the
Sub-Advisor").

W I T N E S S E T H:

WHEREAS, the Manager is the manager and investment adviser to each Series of Principal Funds, Inc., (the "Fund"),
an open-end management investment company registered under the Investment Company Act of 1940, as amended
(the "1940 Act"); and

WHEREAS, the Manager desires to retain the Sub-Advisor to furnish it with portfolio selection and related research and
statistical services in connection with the investment advisory services for the Real Estate Series of the Fund
(hereinafter called the “Series”), which the Manager has agreed to provide to the Fund, and the Sub-Advisor desires to
furnish such services; and

WHEREAS, The Manager has furnished the Sub-Advisor with copies properly certified or authenticated of each of the
following and will promptly provide the Sub-Advisor with copies properly certified or authenticated of any amendment or
supplement thereto:

(a)	Management Agreement (the "Management Agreement") with the Fund;

(b)	The Fund's registration statement and financial statements as filed with the Securities and Exchange
	Commission;

(c)	The Fund's Articles of Incorporation and By-laws;

(d)	Policies, procedures or instructions adopted or approved by the Board of Directors of the Fund relating to
	obligations and services to be provided by the Sub-Advisor.

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties
agree as follows:

1.	Appointment of Sub-Advisor

	In accordance with and subject to the Management Agreement, the Manager hereby appoints the Sub-Advisor
	to perform the services described in Section 2 below for investment and reinvestment of the securities and other
	assets of the Series, subject to the control and direction of the Manager and the Fund's Board of Directors, for
	the period and on the terms hereinafter set forth. The Sub-Advisor accepts such appointment and agrees to
	furnish the services hereinafter set forth for the compensation herein provided. The Sub-Advisor shall for all
	purposes herein be deemed to be an independent contractor and shall, except as expressly provided or
	authorized, have no authority to act for or represent the Fund or the Manager in any way or otherwise be
	deemed an agent of the Fund or the Manager.

2.	Obligations of and Services to be Provided by the Sub-Advisor

	The Sub-Advisor will:

	(a)	Provide investment advisory services, including but not limited to research, advice and supervision for the
		Series.
	(b)	Furnish to the Board of Directors of the Fund for approval (or any appropriate committee of such Board),
		and revise from time to time as conditions require, a recommended investment program for the Series
		consistent with the Series’ investment objective and policies.

	(c)	Implement the approved investment program by placing orders for the purchase and sale of securities
		without prior consultation with the Manager and without regard to the length of time the securities have


	been held, the resulting rate of portfolio turnover or any tax considerations, subject always to the provisions
	of the Fund's Articles of Incorporation and Bylaws, the requirements of the 1940 Act, as each of the same
	shall be from time to time in effect.

(d)	Advise and assist the officers of the Fund, as requested by the officers, in taking such steps as are
	necessary or appropriate to carry out the decisions of its Board of Directors, and any appropriate
	committees of such Board, regarding the general conduct of the investment business of the Series.

(e)	Maintain, in connection with the Sub-Advisor’s investment advisory services obligations, compliance with
	the 1940 Act and the regulations adopted by the Securities and Exchange Commission thereunder and the
	Series’ investment strategies and restrictions as stated in the Fund’s prospectus and statement of
	additional information.

(f)	Report to the Board of Directors of the Fund at such times and in such detail as the Board of Directors may
	reasonably deem appropriate in order to enable it to determine that the investment policies, procedures
	and approved investment program of the Series are being observed.

(g)	Upon request, provide assistance and recommendations for the determination of the fair value of certain
	securities when reliable market quotations are not readily available for purposes of calculating net asset
	value in accordance with procedures and methods established by the Fund's Board of Directors.

(h)	Furnish, at its own expense, (i) all necessary investment and management facilities, including salaries of
	clerical and other personnel required for it to execute its duties faithfully, and (ii) administrative facilities,
	including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the
	investment advisory affairs of the Series.

(i)	Open accounts with broker-dealers and futures commission merchants (“broker-dealers”), select broker-
	dealers to effect all transactions for the Series, place all necessary orders with broker-dealers or issuers
	(including affiliated broker-dealers), and negotiate commissions, if applicable. To the extent consistent with
	applicable law, purchase or sell orders for the Series may be aggregated with contemporaneous purchase
	or sell orders of other clients of the Sub-Advisor. In such event allocation of securities so sold or
	purchased, as well as the expenses incurred in the transaction, will be made by the Sub-Advisor in the
	manner the Sub-Advisor considers to be the most equitable and consistent with its fiduciary obligations to
	the Fund and to other clients. The Sub-Advisor will report on such allocations at the request of the
	Manager, the Fund or the Fund’s Board of Directors providing such information as the number of
	aggregated trades to which the Series was a party, the broker-dealers to whom such trades were directed
	and the basis for the allocation for the aggregated trades. The Sub-Advisor shall use its best efforts to
	obtain execution of transactions for the Series at prices which are advantageous to the Series and at
	commission rates that are reasonable in relation to the benefits received. However, the Sub-Advisor may
	select brokers or dealers on the basis that they provide brokerage, research or other services or products
	to the Sub-Advisor. To the extent consistent with applicable law, the Sub-Advisor may pay a broker or
	dealer an amount of commission for effecting a securities transaction in excess of the amount of
	commission or dealer spread another broker or dealer would have charged for effecting that transaction if
	the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the
	value of the brokerage and research products and/or services provided by such broker or dealer. This
	determination, with respect to brokerage and research products and/or services, may be viewed in terms
	of either that particular transaction or the overall responsibilities which the Sub-Advisor and its affiliates
	have with respect to the Series as well as to accounts over which they exercise investment discretion. Not
	all such services or products need be used by the Sub-Advisor in managing the Series. In addition, joint
	repurchase or other accounts may not be utilized by the Series except to the extent permitted under any
	exemptive order obtained by the Sub-Advisor provided that all conditions of such order are complied with.

(j)	Maintain all accounts, books and records with respect to the Series as are required of an investment
	advisor of a registered investment company pursuant to the 1940 Act and Investment Advisers Act of 1940
	(the “Investment Advisers Act”), and the rules thereunder, and furnish the Fund and the Manager with such
	periodic and special reports as the Fund or Manager may reasonably request. In compliance with the
	requirements of Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records that it
	maintains for the Series are the property of the Fund, agrees to preserve for the periods described by Rule
	31a-2 under the 1940 Act any records that it maintains for the Series and that are required to be
	maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Fund any


		records that it maintains for the Series upon request by the Fund or the Manager. The Sub-Advisor has no
		responsibility for the maintenance of Fund records except insofar as is directly related to the services the
		Sub-Advisor provides to the Series.

	(k)	Observe and comply with Rule 17j-1 under the 1940 Act and the Sub-Advisor’s Code of Ethics adopted
		pursuant to that Rule as the same may be amended from time to time. The Manager acknowledges
		receipt of a copy of Sub-Advisor’s current Code of Ethics. Sub-Advisor shall promptly forward to the
		Manager a copy of any material amendment to the Sub-Advisor’s Code of Ethics.

	(l)	From time to time as the Manager or the Fund may request, furnish the requesting party reports on
		portfolio transactions and reports on investments held by the Series, all in such detail as the Manager or
		the Fund may reasonably request. The Sub-Advisor will make available its officers and employees to meet
		with the Fund’s Board of Directors at the Fund’s principal place of business on due notice to review the
		investments of the Series.

	(m)	Provide such information as is customarily provided by a sub-advisor and may be required for the Fund or
		the Manager to comply with their respective obligations under applicable laws, including, without limitation,
		the Internal Revenue Code of 1986, as amended (the “Code”), the 1940 Act, the Investment Advisers Act,
		the Securities Act of 1933, as amended (the “Securities Act”), and any state securities laws, and any rule
		or regulation thereunder.

	(n)	Perform quarterly and annual tax compliance tests to monitor the Series’ compliance with Subchapter M of
		the Code. The Sub-Advisor shall notify the Manager immediately upon having a reasonable basis for
		believing that the Series has ceased to be in compliance or that it might not be in compliance in the future.
		If it is determined that the Series is not in compliance with the requirements noted above, the Sub-Advisor,
		in consultation with the Manager, will take prompt action to bring the Series back into compliance (to the
		extent possible) within the time permitted under the Code.

	(o)	Provide a copy of the Sub-Advisor's Form ADV and any amendments thereto contemporaneously with the
		filing of such documents with the Securities and Exchange Commission or other regulatory agency.

3.	Prohibited Conduct

	In providing the services described in this agreement, the Sub-Advisor will not consult with any other investment
	advisory firm that provides investment advisory services to any investment company sponsored by Principal Life
	Insurance Company regarding transactions for the Fund in securities or other assets.

4.	Compensation

	As full compensation for all services rendered and obligations assumed by the Sub-Advisor hereunder with
	respect to the Series, the Manager shall pay the compensation specified in Appendix A to this Agreement.

5.	Liability of Sub-Advisor

	Neither the Sub-Advisor nor any of its directors, officers, employees, agents or affiliates shall be liable to the
	Manager, the Fund or its shareholders for any loss suffered by the Manager or the Fund resulting from any error
	of judgment made in the good faith exercise of the Sub-Advisor's investment discretion in connection with
	selecting investments for the Series or as a result of the failure by the Manager or any of its affiliates to comply
	with the terms of this Agreement, except for losses resulting from willful misfeasance, bad faith or gross
	negligence of, or from reckless disregard of, the duties of the Sub-Advisor or any of its directors, officers,
	employees, agents, or affiliates.

6.	Supplemental Arrangements

	The Sub-Advisor may enter into arrangements with other persons affiliated with the Sub-Advisor or with
	unaffiliated third parties to better enable the Sub-Advisor to fulfill its obligations under this Agreement for the
	provision of certain personnel and facilities to the Sub-Advisor, subject to written notification to and approval of
	the Manager and, where required by applicable law, the Board of Directors of the Fund.


7.	Regulation

	The Sub-Advisor shall submit to all regulatory and administrative bodies having jurisdiction over the services
	provided pursuant to this Agreement any information, reports or other material which any such body may
	request or require pursuant to applicable laws and regulations.

8.	Duration and Termination of This Agreement

	This Agreement shall become effective on the latest of (i) the date of its execution, (ii) the date of its approval by
	a majority of the Board of Directors of the Fund, including approval by the vote of a majority of the Board of
	Directors of the Fund who are not interested persons of the Manager, the Sub-Advisor, Principal Life Insurance
	Company or the Fund cast in person at a meeting called for the purpose of voting on such approval or (iii) if
	required by the 1940 Act, the date of its approval by a majority of the outstanding voting securities of the Series.
	It shall continue in effect thereafter from year to year provided that the continuance is specifically approved at
	least annually either by the Board of Directors of the Fund or by a vote of a majority of the outstanding voting
	securities of the Series and in either event by a vote of a majority of the Board of Directors of the Fund who are
	not interested persons of the Manager, Principal Life Insurance Company, the Sub-Advisor or the Fund cast in
	person at a meeting called for the purpose of voting on such approval.

	If the shareholders of the Series fail to approve the Agreement or any continuance of the Agreement in
	accordance with the requirements of the 1940 Act, the Sub-Advisor will continue to act as Sub-Advisor with
	respect to the Series pending the required approval of the Agreement or its continuance or of any contract with
	the Sub-Advisor or a different manager or sub-advisor or other definitive action; provided, that the compensation
	received by the Sub-Advisor in respect to the Fund during such period is in compliance with Rule 15a-4 under
	the 1940 Act.

	This Agreement may be terminated at any time without the payment of any penalty by the Board of Directors of
	the Fund or by the Sub-Advisor, the Manager or by vote of a majority of the outstanding voting securities of the
	Series on sixty days written notice. This Agreement shall automatically terminate in the event of its assignment.
	In interpreting the provisions of this Section 8, the definitions contained in Section 2(a) of the 1940 Act
	(particularly the definitions of "interested person," "assignment" and "voting security") shall be applied.

9.	Amendment of this Agreement

	No material amendment of this Agreement shall be effective until approved, if required by the 1940 Act or the
	rules, regulations, interpretations or orders issued thereunder, by vote of the holders of a majority of the
	outstanding voting securities of the Series and by vote of a majority of the Board of Directors of the Fund who
	are not interested persons of the Manager, the Sub-Advisor, Principal Life Insurance Company or the Fund cast
	in person at a meeting called for the purpose of voting on such approval.

10. General Provisions

	(a)	Each party agrees to perform such further acts and execute such further documents as are necessary to
		effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and
		governed by the laws of the State of Iowa. The captions in this Agreement are included for convenience
		only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or
		effect.

	(b)	Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre-paid to
		the other party at such address as such other party may designate for the receipt of such notices. Until
		further notice to the other party, it is agreed that the address of the Manager and Sub-Advisor for this
		purpose shall be Principal Financial Group, Xxx Xxxxxx, Xxxx 00000-0000.

	(c)	The Sub-Advisor will promptly notify the Manager in writing of the occurrence of any of the following events:

	(1)	the Sub-Advisor fails to be registered as an investment adviser under the Investment Advisers Act or
		under the laws of any jurisdiction in which the Sub-Advisor is required to be registered as an investment
		advisor in order to perform its obligations under this Agreement.


(2)	the Sub-Advisor is served or otherwise receives notice of any action, suit, proceeding, inquiry or
	investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the
	Series.

(d)	The Manager shall provide (or cause the Series custodian to provide) timely information to the Sub-Advisor
	regarding such matters as the composition of the assets of the Series, cash requirements and cash
	available for investment in the Series, and all other reasonable information as may be necessary for the
	Sub-Advisor to perform its duties and responsibilities hereunder.

(e)	The Sub-Advisor represents that it will not enter into any agreement, oral or written, or other understanding
	under which the Fund directs or is expected to direct portfolio securities transactions, or any remuneration,
	to a broker or dealer in consideration for the promotion or sale of Fund shares or shares issued by any
	other registered investment company. Sub-advisor further represents that it is contrary to the Sub-advisor’s
	policies to permit those who select brokers or dealers for execution of fund portfolio securities transactions
	to take into account the broker or dealer’s promotion or sale of Fund shares or shares issued by any other
	registered investment company.

(f)	This Agreement contains the entire understanding and agreement of the parties.

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written.

PRINCIPAL MANAGEMENT CORPORATION

/s/ Xxxx Xxxxxxx

By____________________________________________

Xxxx Xxxxxxx

President & Chief Executive Officer

PRINCIPAL REAL ESTATE INVESTORS, LLC

/s/ Xxxxxx X. Xxxxxxxx

By____________________________________________

Xxxxxx X. Xxxxxxxx

Assistant General Counsel

/s/ Xxxxxx X. Xxxxxxx

By____________________________________________

Xxxxxx X. Xxxxxxx

Counsel

APPENDIX A

The Sub-Advisor shall serve as investment sub-advisor for the Real Estate Securities Fund and the Global Real

Estate Fund. The Manager will pay the Sub-Advisor, as full compensation for all services provided under this

Agreement, a fee computed at an annual rate as follows (the "Sub-Advisor Percentage Fee"):


Real Estate Securities Fund
	0.4895% of the first $1 billion
	0.4405% of the next $500 million
	0.3916% of assets over $1.5 billion

Global Real Estate Fund
	0.54% of the first $1 billion
	0.48% of the next $500 million
	0.44% of assets over $1.5 billion

Global Diversified Income Fund
(Global Real Estate Portfolio)
	0.54% of the first $1 billion
	0.48% of the next $500 million
	0.44% of assets over $1.5 billion

Diversified Real Asset Fund
(REIT Portfolio)
	0.4895% of the first $1 billion
	0.4405% of the next $500 million
	0.3916% of assets over $1.5 billion

The Sub-Advisor Percentage Fee shall be accrued for each calendar day and the sum of the daily fee accruals shall

be paid monthly to the Sub-Advisor. The daily fee accruals will be computed by multiplying the fraction of one over the

number of calendar days in the year by the applicable annual rate described above and multiplying this product by the

net assets of the Series as determined in accordance with the Series’ prospectus and statement of additional information

as of the close of business on the previous business day on which the Series was open for business.

In calculating the fee for a series included in the table, assets of any unregistered separate account of Principal Life

Insurance Company and any investment company sponsored by Principal Life Insurance Company to which Principal

Real Estate Investors, LLC. provides investment advisory services and which have the same investment mandate as the

series for which the fee is calculated, will be combined with the assets of the series to arrive at net assets.

If this Agreement becomes effective or terminates before the end of any month, the fee (if any) for the period from

the effective date to the end of such month or from the beginning of such month to the date of termination, as the case

may be, shall be prorated according to the proportion which such period bears to the full month in which such

effectiveness or termination occurs.

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PRINCIPAL FUNDS, INC. AMENDED AND RESTATED SUB-ADVISORY AGREEMENT PRINCIPAL REAL ESTATE INVESTORS SUB-ADVISED SERIES

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