PRINCIPAL FUNDS, INC. SUB-ADVISORY AGREEMENT TORTOISE CAPITAL ADVISORS, LLC SUB-ADVISED FUNDS

PRINCIPAL FUNDS, INC.
SUB-ADVISORY AGREEMENT
TORTOISE CAPITAL ADVISORS, LLC SUB-ADVISED FUNDS
AGREEMENT executed as of September 23,2009. by and bet veen PRINCLPAL MANAGEMENT CORPORATION, an
Iowa corporation (hereinafter called Rthe Manager"), and TORTOISE CAPITAL ADVISORS, L.L.C., a Delaware limited
liability company (hereinafter called ·the Sub-Advisor).
WIT N E SSE T H:
WHEREAS, the Manager is the manager and invesbnent adviser to each Fund of the Principal Funds, Inc., (the "Fund"),
an open·end management investment company registered under the Investment Company Act of 1940, as amended
(the "1940 Aer'); and
WHEREAS, the Manager desires to retain the Sub-Advisor to fumish it with portfolio selection and related research and
statistical services in connection with the investment advisory selVices for each series identified in Appendix A (
hereinafter called the ·Series·), which the Manager has agreed to provide to the Fund, and the Sub-Advisor desires to
fumish such services; and
WHEREAS, The Manager has furnished the Sub-Advisor with copies properly certified or authenticated of each of the
following and will promptly provide the Sub-Advisor with copies properly certified or authenticated of any amendment or
supplement thereto:
(a) Management Agreement (the "Management Agreement") with the Fund;
(b)	The Fund's registration statement and financial statements as filed with the Securities and Exchange
	Commission;
(c)	The Fund's Articles of Incorporation and By-laws;
(d)	Policies, procedures or instructions adopted or approved by the Board of Directors of the Fund relating to
	obligations and services provided by the Sub-Advisor.
		.
NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties
agree as follows:
1.	Appointment of Sub-Advisor
	In accordance with and subject to the Management Agreement, the Manager hereby appoints the Sub-Advisor
	to perform the services described in Section 2 below for investment and reinvestment of the securities and other
	assets of the Series, subject to the control and direction of the Manager and the Fund's Board of Directors, for
	the period and on the terms hereinafter set forth. The Sub-Advisor accepts such appointment and agrees to
	furnish the services hereinafter set forth for the compensation herein provided. The Sub-Advisor shall for all
	purposes herein be deemed to be an independent contractor and shall, except as expressly provided or
	authorized, have no authority to act for or represent the Fund or the Manager in any way or otherwise be
	deemed an agent of the Fund or the Manager.
2.	Obligations of and Services to be Provided by the Sub-Advisor
	The Sub-Advisor will:
	(a)	Provide investment advisory services, including but not limited to research, advice and supervision for the
		Series.
	(b)	Furnish to the Board of Directors of the Fund for approval (or any appropriate committee of such Board),
		and revise from time to time as economic conditions require, a recommended investment program for the
		Fund consistent with the Series' investment objective and policies.

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(c)	Implement the approved investment program by placing orders for the purchase and sale of securities
	without prior consultaUon with the Manager or the Board of Directors of the Fund 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 ~ist the officers ell .the Fund, as requested by the officers, in taking such steps as are
	reasonably necessary or appropriate to cany out the decisions of its Board of Directors, and any
	appropriate committees of such Board, regarding the general conduct of the investment business of the
	Series.
(e)	Maintain, in connection with the Sub-Advisor's investment advisory services provided to the Series, its
	compliance with the 1940 Act and the regulations adopted by the Securities and Exchange Commission
	thereunder and the Series' investment strategies and restrictions as stated in the Fund's prospectus and
	statement of addiUonal information, subject to receipt of such additional information as may be required
	from the Manager and provided in accordance with Section 11(d) of this Agreement. The Sub-Advisor has
	no responsibility for the maintenance of Fund records except insofar as is directly related to the services it
	provides to the Series.
(1)	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.
(9)	Upon request, provide assistance in the determination of the fair value of certain securities when reliable
	market quotations are not readily available for purposes of calculating net asset value in accordance with
	procedures and methcxls established by the Fund's Board of Directors.
(h)	Furnish, at its own expense, (i) all necessary investment and management facilities, including salaries of
	clerical and other personnel required for it to execute its duties faithfully, and (ii) administrative facilities,
	including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of its duties
	under this Agreement
(i)	Open accounts with broker-dealers ("broker-dealers-), select broker-dealers to effect all transactions for
	the Series, place all necessary orders with broker-dealers or issuers (including affiliated broker-dealers),
	and negotiate commissions, if applicable. To the extent consistent with applicable law, purchase or sell
	orders for the Series may be aggregated with contemporaneous purchase or sell orders of other clients of
	the Sub-Advisor. In such event allocation of securities so sold or purchased, as well as the expenses
	incurred in the transaction, will be made by the Sub-Advisor in the manner the Sub-Advisor considers to be
	the most equitable and consistent with its fiduciary obligations to the Fund and to other clients. The
	Manager recognizes that, in some cases, this procedure may limit the size of the position that may be
	acquired or sold for the Series. The Sub-Advisor will report on such allocations at the request of the
	Manager, the Fund or the Fund's Board of Directors providing such information as the number of
	aggregated trades to which the Series was a party, the broker-dealers to whom such trades were directed
	and the basis for the allocation for the aggregated trades. The Sub-Advisor shall use its best efforts to
	obtain execuUon 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 prcxlucts
	to the Sub-Advisor. To the extent consistent with applicable law, the Sub-Advisor may cause the Series 10
	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 andlor services provided by such broker or
	dealer. This determination, with respect to brokerage and research products andlor 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 invesbllent
	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

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		order are complied with.
	U)	Maintain all accounts, books and records with respect to the Series as are required of an investment
		advisor of a registered investment company pursuant to the 1940 Act and Investment Advisor's Act of
		1940 (the -Investment Advisor's Acr), 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 31 a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records
		that it maintains for the Series are the property of the Fund, agrees to preserve for the periods described
		by Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and that are required to be
		maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Fund any
		records that it maintains for the Series upon request by the Fund or the Manager.
	(k)	Observe and comply with Rule 17j·1 under the 1940 Act and the Sub-Advisor's Code of Ethics adopted
		pursuant to that Rule as the same may be amended from time to time. The Manager acknowledges
		receipt of a copy of Sub-Advisor's current Code of Ethics. Sub-Advisor shall promptly forward to the
		Manager a copy of any material amendment to the Sub-Advisor's Code of Ethics.
	(I)	From time to time as the Manager or the Fund may request, furnish the requesting party reports on
		portfolio transactions and reports on investments held by the Series, all in such detail as the Manager or
		the Fund may reasonably request The Sub-Advisor will make available its officers and employees to meet
		with the Fund's Board of Directors at the Fund's principal place of business on due notice to review the
		investments of the Series.
	(m)	Provide such information as is customarily provided by a sub-advisor and may be required for the Fund or
		the Manager to comply with their respective obligations under applicable laws, including, without limitation,
		the Internal Revenue Code of 1986, as amended (the -Code-), the 1940 Act, the Investment Advisers Act,
		the Securities Act of 1933, as amended (the ·Securities Acf), and any state securities laws, and any rule
		or regulation thereunder. Sub-Advisor will advise Manager of any changes in Sub-Advisor's managing
		directors within a reasonable time after any such change. Manager acknowledges receipt of Sub-Advisor's
		Form ADV more than 48 hours prior to the execution of this Agreement.
	(n)	Perform quarterly and annual tax compliance tests to monitor the Series' compliance with Subchapter M of
		the Code and Section 817(h) of the Code, subject to receipt of such additional information as may be
		required from the Manager and provided in accordance with Section 11 (d) of this Agreement The
		Sub-Advisor shall notify the Manager immediately upon having a reasonable basis for believing that the
		Series has ceased to be in compliance or that it might not be in compliance in the future. lfit 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.
	(0)	Have the responsibility and authority to vote proxies solicited by, orwith respect to, the issuers of securities
		held in the Series. The Manager shall cause to be forwarded to Sub-Advisor all proxy solicitation materials
		that it receives and shall assist Sub-Advisor in its efforts to conduct the proxy voting process.
3.	Prohibited Conduct
	In providing the services described in this agreement, the Sub-Advisor will not consult with any other investment
	advisory firm that provides investment advisory services to any investment company sJX)nsored by Principal Ufe
	Insurance Company regarding transactions for the Fund in securities or other assets.
4.	Compensation
	As full compensation for all services rendered and obligations assumed by the Sub-Advisor hereunder with
	respect to the Fund, the Manager shall pay the compensation specified in Appendix A to this Agreement

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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 Managerpr the Fund resulting from any error
	of jUdgment made in the good faith exercise of the Sub-Advisors duties under this Agreement or as a result of
	the failure by the Manager or any of its affiliates to compty With the terms of this Agreement except for losses
	resulting from the Sub-Advisors willful misfeasance, bad faith or gross negligence of, or from reckless disregard
	of, the duties of the Sub-Advisor under this Agreement
6.	Indemnification
	The Manager agrees to indemnify and hold hannless the Sub-Advisor from and against any and all claims,
	losses, liabilities or damages (including reasonable attomeys' fees and other related expenses), (MLossesM )
	howsoever arising, from or in connection with this Agreement or the performance by the Sub-Advisor of its
	duties hereunder, so long as the Sub-Advisor shall, after receipt of notice ofany claim or commencement of any
	action, promptly notify the Manager in writing of the claim or commencement of such action. The Manager shall
	not be liable for any settlement of any claim or action effected without its written consent. Nothing contained
	herein shall require the Manager to indemnify the Sub-Advisor for Losses resulting from the Sub-Advisor's willful
	misfeasance, bad faith or gross negligence in the performance of its duties or from its reckless disregard of its
	obligations and duties under this Agreement
7.	Supplemental Arrangements
	The Sub-Advisor may enter into arrangements with other persons affiliated with the Sub-Advisor or with
	unaffiliated third parties to better enable the Sub-Advisor to fulfill its obligations under this Agreement for the
	provision of certain personnel and facilities to the Sub- Advisor, subject to written notification to and approval of
	the Manager and, where required by applicable law, the Board of Directors of the Fund.
8.	Regulation
	The Sub-Advisor shall submit to all regulatory and administrative bodies having jurisdiction over the services
	provided pursuant to this Agreement any information, reports or other material which any such body may
	request or require pursuant to applicable laws and regulations.
9.	Duration and Termination of This Agreement
	This Agreement shall become effective as of the date of its execution and, unless otherwise terminated, shall
	continue in effect for a period of two years and thereafter from year to year provided that the continuance is
	specifically approved at least annually either by the Board of Directors of the Fund or by a vote of a majority of
	the outstanding voting securities of the Series and in either event by a vote of a majority of the Board of
	Directors of the Fund who are not interested persons of the Manager, Principal Ufe Insurance Company, the
	Sub-Advisor or the Fund cast in person at a meeting called for the purpose of voting on such approval.
	If the shareholders of a Series fail to approve the Agreement or any continuance of the Agreement in
	accordance with the requirements of the 1940 Act, the SubvAdvisor will continue to act as Sub-Advisor with
	respect to the Series pending the required approval of the Agreement or its continuance or of any contract with
	the Sub-Advisor or a different manager or Sub-Advisor or other definitive action; provided, that the
	compensation received by the Sub-Advisor in respect to the Series duri/Jg 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 SubvAdvisor, the Manager or by vote of a majority of the outstanding voting securities of the
	Series on sixty days written notice. This Agreement shall automatically terminate in the event of its assignment
	In interpreting the provisions of this Section 9, the definitions contained in Section 2(a) of the 1940 Act
	(particularty the definitions of "interested person," Massignment" and "voting security") shall be applied.

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10. Amendment of this Agreement
No material amendment of this Agreement shall be effective until approved, if required by the 1940 Act or the
rules, regulations, interpretations or orders issued thereunder, by vote of the holders of a majority of the
outstanding voting securities of the Series and by vote of a majority of the Board of Directors of the Fund who
are not interested persons of the Manager, the Sub--Advisor, Principal Life Insurance Company or the Fund cast
in person at a meeting called for the purpose of voting on such approval, and such amendment is signed by
both parties.
11. General Provisions
(a) Each party agrees to perform such further acts and execute such further documents as are necessary to
	effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and
	governed by the laws of the State of Iowa. The captions in this Agreement are included for convenience
	only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or
	effect.
(b)	Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre-paid to
	the other party at such address as such other party may designate for the receipt of such notices. Until
	further notice to the other party, it is agreed that the address of the Manager for this purpose shall be
	Principal Financial Group, Xxx Xxxxxx, Xxxx 00000-X000, and the address of the Sub--Advisor shall be
	Tortoise Capital Advisors, L.L.C., 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxx 00000.
(c)	The Sub~Advisorwill promptly notify the Manager in writing of the occurrence of any of the following events:
	(1)	the Sub--Advisor fails to be registered as an investment adviser under the Investment Advisers Act or
		under the laws of any jurisdiction in which the Sub-Advisor is required to be registered as an investment
		advisor in order to perform its obligations under this Agreement.
	(2)	the Sub-Advisor is served or otherwise receives notice of any action, suit, proceeding, inquiry or
		investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the
		Fund.
(d)	The Manager shall provide (or cause the Series custodian to provide) timely information to the Sub-Advisor
	regarding such matters as the composition of the assets of the Series, cash requirements and cash
	available for investment in the Series, and all other reasonable information as may be necessary for the
	Sub-Advisor to perform its duties and responsibilities hereunder.
(e)	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.

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APPENDIX A 

Tortoise Capital Advisors, X.XX. (-Tortoise-) shall serve as an investment sub-advisor for the Series identified below. 

The Manager will pay Tortoise, as full compensation for all services provided under this Agreement, a fee, computed 

daily and paid monthly, at an annual rate as shown below of the Series' net assets as of the first day of each month 

allocated to Tortoise's management. 

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 Tortoise 

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, shalt be prorated according to the proportion which such period bears to the full month in which such effectiveness or 

termination occurs. 

Global Diversified Income Fund
Sub-Advisor's Fee as a Percentage of Average Daily Net Assets
First $25 million		1.00%
Next $25 mittion		0.85%
Next $25 million		0.75%
Assets of $75 million or more*		0.75%

* During any period when the Fund's Average Daily Net Assets equal or exceed $75 million, Tortoise's fee as a 

percentage of average daily net assets shall be 0.75% on all assets. 

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