PRINCIPAL FUNDS, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC. SUB-ADVISED SERIES

AGREEMENT executed as of August 9, 2010, by and between PRINCIPAL
MANAGEMENT CORPORATION (hereinafter called "the Manager"), and BARROW,
HANLEY, MEWHINNEY & STRAUSS, 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 render
discretionary investment advisory services with respect to assets
allocated by the Manager for management by the Sub-Advisor (the "Managed
Assets") 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 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
Managed Assets 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 Managed Assets.

(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 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 the
Series.

 (e)	Maintain, in connection with the Sub-Advisor's investment
advisory services obligations provided to the Series,
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 from the Manager, provide consultation 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.

 (h)	Furnish, at its own expense, (i) all necessary investment
and management facilities, including salaries of investment,
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 provide such information regarding such allocations as may
be reasonably requested by the Manager, the Fund or the Fund's
Board of Directors. 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.

(j)	Maintain all accounts, books and records with respect to the
Managed Assets 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 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 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 at reasonable times 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)	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 Fund 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 forward all notices received in connection with legal
actions, including class action lawsuits, concerning securities
owned by the Series, if any, to the Manager. In any event, the
Sub-Advisor shall not be responsible for filing claims in
securities litigation actions involving securities held in 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 the Fund or an
investment company registered under the 1940 Act that is under
common control with the Fund regarding transactions for the Fund in
securities or other assets allocated to the Sub-Advisor pursuant to
this Agreement.

     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 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 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 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 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 for this
purpose shall be Principal Financial Group, Des Moines, Iowa
50392-0200, and the address of the Sub-Advisor shall be Barrow,
Hanley, Mewhinney & Strauss, LLC, 2200 Ross Avenue, 31st Floor,
Dallas, Texas 75201.

 (c)	Custody, Delivery and Receipt of Securities.  The Manager
shall designate one or more custodians to hold the Managed
Assets.  The custodians, as so designated, will be responsible
for the custody, receipt and delivery of securities and other
assets of the Series including the Managed Assets, and the Sub-
Advisor shall have no authority, responsibility or obligation
with respect to the custody, receipt or delivery of securities
or other assets of the Series including the Managed Assets.  In
the event that any cash or securities of a Series are delivered
to the Sub-Advisor, it will promptly deliver the same over to
the custodian for the benefit of and in the name of the Series.

Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by
payment to or delivery by a Series of cash or securities due to
or from the Managed Assets.

Repurchase agreements, including tri-party repurchase
agreements and other trading agreements, may be entered into by
a Series acting through designated officers or agents;
custodians under tri-party repurchase agreements will act as
sub-custodians of the Series.

(d)	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.

(e)	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.

(f)	The Manager shall perform quarterly and annual tax compliance
tests to ensure that the Series is in compliance with
Subchapter M of the Internal Revenue Code ("IRC") and Section
817(h) of the IRC.  In connection with such compliance tests,
the Manager shall prepare and provide reports to the Sub-
Advisor within 10 business days of a calendar quarter end
relating to the diversification of the Series under Subchapter
M and Section 817(h).  The Sub-Advisor shall review such
reports for purposes of determining compliance with such
diversification requirements.  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 within
the time permitted under the IRC, provided that any such non-
compliance was caused by Sub-Advisor in respect of the Managed
Assets.

(g)	The Sub-Advisor agrees that neither it nor any of its
affiliates will in any way refer directly or indirectly to
its relationship with the Fund, the Series, or the Manager or
any of their respective affiliates in offering, marketing or
other promotional materials without the express written
consent of the Manager.

(h)	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.

(i)	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


           BARROW, HANLEY, MEWHINNEY & STRAUSS, LLC.

                                                           By     _______________________


APPENDIX A

Barrow, Hanley, Mewhinney & Strauss, LLC ("Barrow Hanley") shall serve
as an investment sub-advisor for the Series identified below. The
Manager will pay Barrow Hanley 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 Barrow Hanley management. Cash
and cash equivalents shall be included in the International Value Fund
I Series ("International Value I") net assets calculation up to a
maximum of 1.00% of the International Value I net assets. If the
Manager requests the Sub-Advisor to raise cash in the International
Value I portfolio in excess of 1.00% of the International Value I net
assets for the purpose of funding redemptions from International Value
I, such amount requested shall be included in the International Value
I net assets calculation.

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
Barrow Hanley 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.

MidCap Value Fund III

Average Daily Net Assets	Fee as a Percentage of
Average Daily Net Assets

First $10 million	0.80%
Next $15 million	0.60%
Next $25 million	0.50%
Next $50 million	0.40%
Over $100 million	0.35%















International Value Fund I

Average Daily Net Assets	Fee as a Percentage of
Average Daily Net Assets

First $350 million	0.45%
Assets over $350 million	0.35%








     .
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.

5