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


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


AGREEMENT effective as of December 31, 2009, by and between PRINCIPAL MANAGEMENT
CORPORATION (hereinafter called "the Manager"), and PRINCIPAL GLOBAL 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 each Series of the
Fund identified in Appendix A hereto (hereinafter called “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 each 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 each Series.

PGI-1


(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 each Series consistent with each 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 registration statement, Articles of Incorporation
	and Bylaws and 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 each 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 each 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 each Series.

(i)	Open accounts with broker-dealers and futures commission merchants (“broker-dealers”), select
	broker-dealers to effect all transactions for each 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 each 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 each 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 each 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

PGI-2


		and its affiliates have with respect to each 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 each 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 each 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 a 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 a 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 along with certification that the Sub-Advisor has implemented procedures for
		administering 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 a 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 a 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)	Vote proxies received on behalf of the Series in a manner consistent with Sub-Advisor's proxy
		voting policies and procedures and provide a record of votes cast containing all of the voting
		information required by Form N-PX in an electronic format to enable the Series to file Form N-PX
		as required by SEC rule.

	(o)	Respond to tender offers, rights offerings and other voluntary corporate action requests affecting
		securities held by the Fund and complete and file notices of claims in connection with class
		action lawsuits concerning securities owned by the Fund.

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 each Series, the Manager shall pay the compensation specified in Appendix A to this
	Agreement.

PGI-3


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

	This Agreement may be terminated at any time without the payment of any penalty by the Board of
	Directors of the Fund or by the Sub-Advisor, the Manager or by vote of a majority of the outstanding
	voting securities of the Series on sixty days written notice. This Agreement shall automatically
	terminate in the event of its assignment. In interpreting the provisions of this Section 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

PGI-4


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 the Sub-Advisor for this purpose shall be Principal Financial Group, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
	▇▇▇▇▇-▇▇▇▇.

(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 a 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 a Series, cash
	requirements and cash available for investment in a 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.

PRINCIPAL MANAGEMENT CORPORATION

/s/ ▇▇▇▇▇▇▇ ▇. Beer

▇▇▇▇▇▇▇ ▇. Beer, Executive Vice President and

Chief Operating Officer

PRINCIPAL GLOBAL INVESTORS, LLC

/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇

Chief Compliance Officer – North America

/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant General Counsel

PGI-5

APPENDIX A

PGI shall serve as investment sub-advisor for each Fund identified below. The Manager will pay PGI, as full

compensation for all services provided under this Agreement, a fee, computed and paid monthly, at an annual

rate as shown below of the Fund’s net assets as of the first day of each month allocated to PGI’s

management.

In calculating the fee for a fund included in Table A, assets of all other funds included in Table A as well as

assets of any unregistered separate account of Principal Life Insurance Company and any investment

company sponsored by Principal Life Insurance Company to which PGI provides investment advisory services

and which invests primarily in fixed-income securities (except money market separate accounts or investment

companies, and excluding assets of all such separate accounts or investment companies for which advisory

services are provided directly or indirectly by employees of Post Advisory Group, LLC), as well as the assets of

the Balanced Account of Principal Variable Contracts Fund, will be combined with the assets of the fund to

arrive at net assets.

In calculating the fee for a fund included in Table B and Table D, assets of any unregistered separate account

of Principal Life Insurance Company and any investment company sponsored by Principal Life Insurance

Company to which PGI provides investment advisory services and which have the same investment mandate

(e.g. MidCap Value) as the fund for which the fee is calculated, will be combined with the assets of the fund 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.


Table A
Net Asset Value of Fund
Fund	First $5B	Next $1B	Next $4B	Over $10B
Bond & Mortgage Securities Fund, High Quality
Intermediate-Term Bond Fund, and Short-	0.1126%	0.0979%	0.0930%	0.0881%
Term Bond Fund


TABLE B
Net Asset Value of Fund
Fund	First $50M	Next $50M	Next $100M	Next $200M	Next $350M	Next $750M	Over $1.5B
Disciplined LargeCap Blend
Fund and LargeCap Value Fund	0.2643%	0.2448%	0.2154%	0.1762%	0.1273%	0.0881%	0.0587%
Diversified International
Fund, and International Growth Fund	0.3427%	0.2741%	0.1958%	0.1566%	0.1175%	0.0979%	0.0783%
MidCap Blend Fund, and MidCap Value Fund III	0.3916%	0.3133%	0.2643%	0.2252%	0.1762%	0.1273%	0.0783%
SmallCap Blend Fund,
SmallCap Growth Fund, and SmallCap Value Fund	0.4699%	0.3524%	0.2643%	0.2448%	0.2154%	0.1762%	0.1175%

PGI-6


Table C
		Sub-Advisor Percentage Fee as a
Fund		Percentage of Net Assets
International Emerging Markets Fund		0.4895%
LargeCap S&P 500 Index Fund		0.0147%
Principal LifeTime 2010 Fund		0.0300%
Principal LifeTime 2015 Fund		0.0300%
Principal LifeTime 2020 Fund		0.0300%
Principal LifeTime 2025 Fund		0.0300%
Principal LifeTime 2030 Fund		0.0300%
Principal LifeTime 2035 Fund		0.0300%
Principal LifeTime 2040 Fund		0.0300%
Principal LifeTime 2045 Fund		0.0300%
Principal LifeTime 2050 Fund		0.0300%
Principal LifeTime 2055 Fund		0.0300%
Principal LifeTime Strategic Income Fund		0.0300%
MidCap S&P 400 Index Fund		0.0147%
SmallCap S&P 600 Index Fund		0.0147%
Money Market Fund		0.0734%


Table D

Global Diversified Income Fund
	Net Asset Value of Underlying Portfolio
	First	Next	Over
Underlying Portfolio	$500 Million	$500 Million	$ 1 Billion
Global Value Equity	0.34%	0.27%	0.20%


	Sub-Advisor Percentage Fee
	as a Percentage of Net Assets
Emerging Market Debt	0.50%


Table E
Fund	Sub-Advisor Percentage Fee as a Percentage of Net Assets
International Equity Index Fund	First	Assets over
	$500 Million	$500 Million
	0.05%	0.03%

PGI-7

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

Document Metadata

Document Metadata

Table of Contents