Principal Life Insurance Company

711 High Street, Des Moines, IA 50392

515 247 5111 tel

www.principal.com

July 11, 2016

Mr. Michael Beer, President

Principal Funds, Inc.

Principal Financial Group

Des Moines, IA 50392-2080

Dear Mr. Beer:

Principal Management Corporation intends to purchase the following shares (the “Shares”):

Principal Funds, Inc. -	Purchase Amount	Shares Purchased
Finisterre Unconstrained Emerging Markets Bond Fund - A	$100,000	10,000
Finisterre Unconstrained Emerging Markets Bond Fund - P	$100,000	10,000
Finisterre Unconstrained Emerging Markets Bond Fund - Institutional	$24,800,000	2,480,000

Each share of the Finisterre Unconstrained Emerging Markets Bond Fund has a par value of $.01 and a price of $10.00 per share. In connection with such purchase, Principal Financial Services, Inc. represents and warrants that it will purchase such Shares as an investment and not with a view to resell, distribute or redeem.

PRINCIPAL FINANCIAL SERVICES, INC.

BY /s/ Clint Woods            

Clint Woods

VP & Associate General Counsel