PRINCIPAL FUNDS, INC. AMENDED AND RESTATED DISTRIBUTION PLAN AND AGREEMENT CLASS B SHARES

PRINCIPAL FUNDS, INC.

AMENDED AND RESTATED

DISTRIBUTION PLAN AND AGREEMENT 

CLASS B SHARES

	DISTRIBUTION PLAN AND AGREEMENT made as of December 14, 2010, by and between
PRINCIPAL INVESTORS FUND, INC., a Maryland corporation (the "Fund"), and PRINCIPAL FUNDS
DISTRIBUTOR, INC., a Washington corporation (the " Distributor ").
1.	This Distribution and Service Plan (the “Plan”), when effective in accordance with its terms, shall be
	the written plan contemplated by Securities and Exchange Commission Rule 12b-1 under the
	Investment Company Act of 1940, as amended (the “Act”) for the Class B shares of each Series
	identified in Appendix A, attached hereto (the “Series”), a class of shares of Principal Funds, Inc.
	(the “Fund”).
2.	The Fund has entered into a Distribution Agreement on behalf of the Fund with the Distributor,
	under which the Distributor uses all reasonable efforts, consistent with its other business, to secure
	purchasers of shares of each Series of the Fund (the “Shares”). Such efforts may include, but
	neither are required to include nor are limited to, the following: (1) formulation and implementation
	of marketing and promotional activities, such as mail promotions and television, radio, newspaper,
	magazine and other mass media advertising; (2) preparation, printing and distribution of sales
	literature provided to the Fund’s shareholders and prospective shareholders; (3) preparation,
	printing and distribution of prospectuses and statements of additional information of the Fund and
	reports to recipients other than existing shareholders of the Fund; (4) obtaining such information,
	analyses and reports with respect to marketing and promotional activities as the Distributor may,
	from time to time, deem advisable; (5) making payment of sales commission, ongoing commissions
	and other payments to brokers, dealers, financial institutions or others who sell Shares pursuant to
	Selling Agreements; (6) paying compensation to registered representatives or other employees of
	the Distributor who engage in or support distribution of the Fund’s Shares; (7) paying compensation
	to, and expenses (including overhead and telephone expenses) of, the Distributor; (8) providing
	training, marketing and support to dealers and others with respect to the sale of Shares; (9)
	receiving and answering correspondence from prospective shareholders including distributing
	prospectuses, statements of additional information, and shareholder reports; (10) providing of
	facilities to answer questions from prospective investors about Shares; (11) complying with federal
	and state securities laws pertaining to the sale of Shares; (12) assisting investors in completing
	application forms and selecting dividend and other account options; (13) providing of other
	reasonable assistance in connection with the distribution of the Fund’s shares; (14) organizing and
	conducting of sales seminars and making payments in the form of transactional compensation or
	promotional incentives; and (15) such other distribution and services activities as the Fund
	determines may be paid for by the Fund pursuant to the terms of this Plan and in accordance with
	Rule 12b-1 of the Act.
3.	The Distribution Agreement also authorizes the Distributor to enter into Service Agreements with
	other selling dealers and with banks or other financial institutions to provide shareholder services to
	existing Class B shareholders, including without limitation, services such as furnishing information
	as to the status of shareholder accounts, responding to telephone and written inquiries of
	shareholders, and assisting Class B shareholders with tax information.
4.	(a) In consideration for the services described above, and the expenses incurred by the Distributor
	pursuant to the Distribution Agreement and Paragraphs 2 and 3 hereof, all with respect to
	Class B shares of a Series of the Fund, Class B shares of each Series shall pay to the
	Distributor a fee at the annual rate of 1.00% (or such lesser amount as the Fund Directors may,
	from time to time, determine) of the average daily net assets of Class B shares of such Series,

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of which 0.75% shall be a distribution fee and 0.25% shall be a service fee. This fee shall be 

accrued daily and paid monthly or at such other intervals, as the Fund Directors shall 

determine. The determination of daily net assets shall be made at the close of business each 

day throughout the month and computed in the manner specified in the Fund’s then current 

Prospectus for the determination of the net asset value of the Fund’s Class B shares. 

(b) In consideration of the Distributor’s role in the distribution of the Class B shares of each Series 

of the Fund (including the Class B shares of such Series issued in connection with its 

acquisition of the assets of a fund of WM Trust I, WM Trust II or WM Strategic Asset 

Management Portfolios, LLC ( the “Washington Mutual Funds”), the Fund shall pay the 

Distributor its “Allocable Portion,” as defined below, of the maximum distribution fee 

contemplated by the Fund’s Distribution Plan and Agreement – Class B Shares for each Series 

as in effect on the date hereof (the “Plan”) that would be attributable to the Distributor under the 

principles described below for determining the Distributor’s Allocable Portion of the distribution 

fee. 

Notwithstanding anything to the contrary elsewhere in this Agreement or the Plan: 

(i) The distribution fee accrues daily at the rate of 75 basis points per annum on the average 

daily net asset value of all of the outstanding Class B shares of each Series, including 

Class B shares issued in connection with the Fund’s acquisition of assets of the 

Washington Mutual Funds, subject to the applicable rules of the NASD, and shall be paid 

monthly as promptly as possible after the last day of each month but in any event prior to 

the tenth day of the following calendar month; 

(ii) The Distributor’s Allocable Portion in respect of each Series shall be 100% until such time 

as it shall be replaced as Distributor of the Class B shares of the Series; thereafter, its 

Allocable Portion shall be the portion of the total distribution fee accruing in respect of 

outstanding Class B shares of the Series as is fairly attributable to the portion of such 

outstanding Class B shares that are outstanding when the Distributor ceases to serve in 

that capacity or are later issued as dividends or other distributions in respect of such Class 

B shares or in free exchanges for Class B shares of other Series or other funds for which 

the Distributor acts as principal distributor that are fairly attributable to the Distributor on the 

same basis; and the Allocable Portion of each subsequent distributor (a “Subsequent 

Distributor”) shall be the portion of such outstanding Class B shares that were sold by the 

Fund during the period such Subsequent Distributor served as distributor or were later 

issued as dividends or other distributions in respect of such Class B shares or in free 

exchanges for Class B shares of other Series or funds for which such Subsequent 

Distributor acts as principal distributor that are fairly attributable to such Subsequent 

Distributor on the same basis; it being understood that the Fund and the Distributor shall 

agree on procedures for making these allocations (the “Allocation Procedures”); 

(iii) The Distributor shall be deemed to have fully earned its Allocable Portion of the distribution 

fee payable in respect of Class B shares of a Series as of any point in time upon the sale of 

the outstanding commission shares (i.e., those that are initially subject to contingent 

deferred sales charges under circumstances set forth in the Prospectus for such shares 

whether or not such shares are later released from that obligation) of such Series as of 

such point in time; 

(iv) The Distributor hereby directs the Fund, and the Fund hereby agrees, to pay all of the 

Distributor’s Allocable Portion of the distribution fee, as may be more specifically directed by 

the Distributor in Irrevocable Payment Instructions, to persons which have provided funds to 

the Distributor to cover or otherwise enable the incurring of expenses associated with 

services in connection with the distribution of the Class B shares of the funds of the 

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Washington Mutual Funds in exchange for the assets of which Class B shares of the Fund
were issued; and
(v) The Fund’s obligation to pay the Distributor (or an assignee of the Distributor) its Allocable
Portion of the distribution fee as provided hereby shall be absolute and unconditional and
not subject to offset or counterclaim and shall not be terminated or modified (including
without limitation, by change in the rules applicable to the conversion of the Class B shares
into shares of another class) for any reason (including a termination of the Plan, a
termination of the Distributor as distributor of the Class B shares of the Fund or any Series
thereof or a termination of this Agreement) except:
a.	To the extent required by a change in the Investment Company Act of 1940 (the “1940
	Act”), the rules and regulations under the 1940 Act, the Conduct Rules of the National
	Association of Securities Dealers, Inc. (the “NASD”), or any judicial decisions or
	interpretive pronouncements by the Securities and Exchange Commission or its staff,
	which is either binding upon the Distributor or generally complied with by similarly
	situated distributors of mutual fund shares;
b.	on a basis which does not alter the Distributor’s Allocable Portion of the distribution fee
	computed with reference to shares of the Fund or any Series thereof or any other fund
	for which it acts as distributor that were outstanding immediately prior to such
	termination or modification or which are thereafter issued directly or indirectly as a
	result of dividends or other distributions or free exchanges of such shares; or
c.	in connection with a “Complete Termination” of the Plan by the Fund, and for this
	purpose: (1) a “Complete Termination” of the Plan for the Class B shares of a Series
	shall occur only if and only so long as the Plan is terminated for such Class B shares
	and following such termination, no distribution fees are imposed either on such Class
	B shares or on any “Similar Class” of shares of such Series; (2) a “Similar Class” is any
	class of shares of such Series that has a sales load structure substantially similar to
	that of the class for which this Plan was terminated, taking into account the total sales
	load borne directly or indirectly by holders of such class of shares including
	commission paid directly by such holders to brokers on issuance of shares of such
	class, asset based sales charges paid by the Fund/Series and allocated to shares of
	such class, contingent deferred sales charges payable by holders of shares of such
	class, installment or deferred sales charges payable by holders of shares of such
	class, and similar charges borne directly or indirectly by holders of shares of such
	class; and (3) a class of shares would not be considered substantially similar to the
	Class B shares if (I) a front end sales charge is paid by the purchaser, or (II)(A) the
	shares are purchased at net asset value, (B) any commission paid up front to any
	selling agent(s) does not exceed 1.0% of the purchase amount, (C) the period during
	which any contingent deferred sales charge applies does not exceed 12 months from
	the purchase date, and (D) there is no other sales load feature borne directly or
	indirectly by holders of such class of shares.
(vi) This Section 4(b) is not intended to, and shall not, prohibit the Fund from issuing and selling
a Similar Class (as defined in paragraph v(c)(2) above) of any Series; but is merely
intended to prohibit the Fund from treating a termination of the Plan in respect of Class B
shares of any Series as a "Complete Termination" for purposes of paragraph (v)(c)(1) of
this Section 4(b) while it continues to issue a Similar Class.
(vii)The Fund’s obligations under this Section 4(b) shall terminate upon the Fund’s payment in
full to the Distributor and each Subsequent Distributor, if any, such distributor’s Allocable
Portion in respect of each Series.

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5.	The Fund presently pays, and will continue to pay, a management fee to Principal Management
	Corporation (the “Manager”) pursuant to a Management Agreement between the Fund and the
	Manager (the “Management Agreement”). It is recognized that the Manager may use its
	management fee revenue, as well as its past profits or its resources from any other source, to
	make payment to the Distributor with respect to any expenses incurred in connection with the
	distribution of Class B shares, including the activities referred to in Paragraph 2 hereof. To the
	extent that the payment of management fees by the Fund to the Manager should be deemed to be
	indirect financing of any activity primarily intended to result in the sale of Class B shares within the
	meaning of Rule 12b-1, then such payment shall be deemed to be authorized by this Plan.
6.	This Plan shall not take effect until it has been approved (a) by a vote of at least a majority (as
	defined in the Act) of the outstanding Class B shares of the Series of the Fund and (b) by votes of
	the majority of both (i) the Board of Directors of the Fund, and (ii) those Directors of the Fund who
	are not "interested persons" (as defined in the Act) of the Fund and who have no direct or indirect
	financial interest in the operation of this Plan or any agreements related to this Plan (the
	"Disinterested Directors"), cast in person at a meeting called for the purpose of voting on this Plan
	or such agreements.
7.	Unless sooner terminated pursuant to Paragraph 6, this Plan shall continue in effect for a period of
	twelve months from the date it takes effect and thereafter shall continue in effect so long as such
	continuance is specifically approved at least annually in the manner provided for approval of this
	Plan in Paragraph 6(b).
8.	A representative of the Distributor shall provide to the Board and the Board shall review at least
	quarterly a written report of the amounts so expended and the purposes for which such
	expenditures were made.
9.	This Plan may be terminated at any time by vote of a majority of the Disinterested Directors, or by
	vote of a majority (as defined in the Act) of the outstanding Class B shares of the Series of the
	Fund.
10. Any agreement of the Fund related to this Plan shall be in writing and shall provide:
	A.	That such agreement may be terminated at any time, without payment of any penalty, by vote of
		a majority of the Disinterested Directors or by a vote of a majority (as defined in the Act) of the
		outstanding Class B shares of the Series of the Fund on not more than sixty (60) days' written
		notice to any other party to the agreement); and
	B.	That such agreement shall terminate automatically in the event of its assignment.
11. While the Plan is in effect, the Fund’s board of directors shall satisfy the fund governance standard
	in Securities and Exchange Commission Rule 0-1(a)(7).
12. This Plan does not require the Manager or Distributor to perform any specific type or level of
	distribution activities or to incur any specific level of expenses for activities primarily intended to
	result in the sale of Class B shares.
13. The Fund shall preserve copies of this Plan and any related agreements and all reports made
	pursuant to Paragraph 8, for a period of not less than six years from the date of the Plan, or the
	agreements or such report, as the case may be, the first two years in an easily accessible place.
14. This Plan may not be amended to increase materially the amount of Fees provided for in Paragraph
	4 hereof unless such amendment is approved in the manner provided for initial approval in

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Paragraph 6 hereof and no other material amendment to this Plan shall be made unless approved 

in the manner provided for initial approval in Paragraph 6(b) hereof. 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Plan as of the first 

date written above. 

PRINCIPAL FUND, INC. 

BY: 

XXXX XXXXXXX, PRESIDENT AND CEO 

BY: 

XXXX X. XXXXXX, VICE PRESIDENT AND SECRETARY 

PRINCIPAL FUNDS DISTRIBUTOR, INC. 

BY: 

XXXXXXX X. BEER, EXECUTIVE VICE PRESIDENT 

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PRINCIPAL FUNDS, INC.
APPENDIX A
	Distribution	Service
Series	Fee	Fee
Bond & Mortgage Securities Fund	0.75%	0.25%
California Municipal Bond Fund	0.75%	0.25%
Disciplined LargeCap Blend Fund	0.75%	0.25%
Diversified International Fund	0.75%	0.25%
Equity Income Fund	0.75%	0.25%
Government & High Quality Bond Fund	0.75%	0.25%
High Yield Fund	0.75%	0.25%
Income Fund	0.75%	0.25%
International Emerging Markets Fund	0.75%	0.25%
LargeCap Growth Fund	0.75%	0.25%
LargeCap Value Fund	0.75%	0.25%
MidCap Blend Fund	0.75%	0.25%
Money Market Fund	0.75%	0.25%
Principal Capital Appreciation Fund	0.75%	0.25%
Principal LifeTime 2020 Fund	0.75%	0.25%
Principal LifeTime 2030 Fund	0.75%	0.25%
Principal LifeTime 2040 Fund	0.75%	0.25%
Principal LifeTime 2050 Fund	0.75%	0.25%
Principal LifeTime Strategic Income Fund	0.75%	0.25%
Real Estate Securities Fund	0.75%	0.25%
XXX – Balanced Portfolio	0.75%	0.25%
XXX – Conservative Balanced Portfolio	0.75%	0.25%
XXX – Conservative Growth Portfolio	0.75%	0.25%
XXX – Flexible Income Portfolio	0.75%	0.25%
XXX – Strategic Growth Portfolio	0.75%	0.25%
SmallCap Blend Fund	0.75%	0.25%
SmallCap Growth Fund	0.75%	0.25%
SmallCap Value Fund	0.75%	0.25%
Tax-Exempt Bond Fund	0.75%	0.25%

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