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


AGREEMENT effective as of December 15, 2008, 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, Des Moines, Iowa 50392-0200.

(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)	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


                                               By /s/  Michael J.
Beer________________________________
Michael J. Beer, Executive Vice
President and Chief Operating
Officer


		PRINCIPAL REAL ESTATE INVESTORS, LLC


                                               By
____________________________________________


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





    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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