PRINCIPAL FUNDS, INC.
SUB-ADVISORY AGREEMENT


AGREEMENT executed as of 2nd of July, 2015, by and between
PRINCIPAL MANAGEMENT CORPORATION, an Iowa corporation
(hereinafter called "the Manager"), and FISCHER, FRANCIS,
TREES & WATTS, INC., a corporation organized under the laws of
the State of New York (hereinafter called "the Sub-Adviser").

W I T N E S S E T H:

WHEREAS, the Manager is the manager and investment adviser to
each Fund of the 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-Adviser to furnish
it with portfolio selection and related research and statistical services
in connection with the investment advisory services for each series
identified in Appendix A (hereinafter called the "Series"), which the
Manager has agreed to provide to the Fund, and the Sub-Adviser
desires to furnish such services; and

WHEREAS, The Manager has furnished the Sub-Adviser with copies
properly certified or authenticated of each of the following and will
promptly provide the Sub-Adviser 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 provided by the Sub-Adviser.

NOW, THEREFORE, in consideration of the premises and the terms
and conditions hereinafter set forth, the parties agree as follows:

1.	Appointment of Sub-Adviser

In accordance with and subject to the Management
Agreement, the Manager hereby appoints the Sub-Adviser
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-Adviser accepts such appointment and agrees to
furnish the services hereinafter set forth for the
compensation herein provided. The Sub-Adviser 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-Adviser

		The Sub-Adviser 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 economic
conditions require, a recommended investment
program for the Fund 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
reasonably 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-Adviser's
investment advisory services provided to the Series, its
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, subject to receipt
of such additional information as may be required from
the Manager and provided in accordance with Section
11(d) of this Agreement. The Sub-Adviser has no
responsibility for the maintenance of Fund records
except insofar as is directly related to the services it
provides to the Series.

(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 in 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 its
duties under this Agreement.

(i)	Open accounts with Foreign Account Tax Compliance
Act ("FATCA") compliant  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-Adviser. 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-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to other clients.
 The Manager recognizes that, in some cases, this
procedure may limit the size of the position that may be
acquired or sold for the Series.  The Sub-Adviser 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-Adviser 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-Adviser may select
brokers or dealers on the basis that they provide
brokerage, research or other services or products to
the Sub-Adviser. To the extent consistent with
applicable law, the Sub-Adviser 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-Adviser 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-Adviser 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-Adviser
in managing the Series. In addition, joint repurchase or
other accounts may not be utilized by the Series
except to the extent permitted under applicable law or
under any exemptive order obtained by the Sub-
Adviser 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 adviser
of a registered investment company pursuant to the
1940 Act and Investment Adviser's Act of 1940 (the
"Investment Adviser's 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-Adviser 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 Fund 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.

(k)	Observe and comply with Rule 17j-1 under the 1940
Act and the Sub-Adviser'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-Adviser's current Code of Ethics.
Sub-Adviser shall promptly forward to the Manager a
copy of any material amendment to the Sub-Adviser'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-Adviser 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-adviser 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. Such information includes, but is
not limited to;  the Sub-Adviser's compliance manual
and policies and procedures adopted to comply with
Rule 206(4)-7 of the Investment Advisers Act; the Sub-
adviser's most recent annual compliance report or a
detailed summary of such report; timely and complete
responses to Quarterly Compliance Questionnaires
(including the identification of any material compliance
matters and a copy  of any material changes to the
Sub-adviser's Rule 206(4)-7 compliance policies and
procedures marked to show changes along with a
written summary of the purpose of such changes),
Annual Proxy Voting Questionnaires, Annual Best
Execution and Soft Dollar Questionnaire, and other ad-
hoc compliance requests the Manager deems
necessary. Sub-adviser agrees to make available for
review, deficiency letters issued by the Securities and
Exchange Commission and the Sub-adviser's
response to such deficiency letters. Sub-Adviser will
advise Manager of any material changes in Sub-
Adviser's ownership within a reasonable time after any
such change. Manager acknowledges receipt of Sub-
Adviser's Form ADV more than 48 hours prior to the
execution of this Agreement.

(n)	In connection with Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 ("Dodd Frank") and
European Market Infrastructure Regulation ("EMIR")
compliance, the Manager consents to and agrees that
the Sub-Adviser and its affiliates or subsidiaries are
authorized to provide and disclose information
concerning the Manager and the Fund for the purposes
of the meeting applicable transaction and other
reporting requirements related to Dodd-Frank, EMIR or
other regulatory regimes as may be applicable. The
Manager represents and warrants that it will obtain a
Global Markets Entity Identifier ("GMEI") or Legal Entity
Identifier ("LEI") and provide it to the Sub-Adviser or
has requested and authorized the Sub-Adviser to
obtain a GMEI or LEI on its behalf. The Manager shall
promptly provide the Sub-Adviser with information
which may reasonably be requested by the Sub-
Adviser or regulatory authorities, to comply with Dodd-
Frank and EMIR.

(o)	Have the responsibility and authority to vote proxies
solicited by, or with respect to, the issuers of securities
held in the Series.  The Manager shall cause to be
forwarded to Sub-Adviser all proxy solicitation
materials that it receives and shall assist Sub-Adviser
in its efforts to conduct the proxy voting process.

    3.	Prohibited Conduct

In providing the services described in this agreement, the
Sub-Adviser 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; provided, however, that Sub-
Adviser may engage an affiliate to perform investment
advisory services for the Fund (the "Sub-Advisory Affiliate")
and this prohibition shall not apply to consultations with the
Sub-Advisory Affiliate.

    4.	Compensation

As full compensation for all services rendered and
obligations assumed by the Sub-Adviser hereunder with
respect to the Fund, the Manager shall pay the
compensation specified in Appendix A to this Agreement.

    5.	Liability of Sub-Adviser

Neither the Sub-Adviser 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-Adviser's duties under this Agreement 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-Adviser or
any of its directors, officers, employees, agents (excluding
any broker-dealer selected by the Sub-Adviser), or affiliates.

	6.   Trade Errors

The Sub-Adviser will notify the Manager of any Trade
Error(s), regardless of materiality, promptly upon the
discovery such Trade Error(s) by the Sub-Adviser.
Notwithstanding Section 5, the Sub-Adviser shall be liable to
the Manager, the Fund or its shareholders for any loss
suffered by the Manager or the Fund resulting from Trade
Errors due to negligence, misfeasance, or disregard of
duties of the Sub-Adviser or any of its directors, officers,
employees, agents (excluding any broker-dealer selected by
the Sub-Adviser), or affiliates. For purposes under this
Section, Trade Errors are defined as errors due to (i)
erroneous orders by the Sub-Adviser for the Series that
result in the purchase or sale of securities that were not
intended to be purchased or sold; (ii) erroneous orders by
the Sub-Adviser that result in the purchase or sale of
securities for the Series in an unintended amount or price; or
(iii) purchases or sales of financial instruments which violate
the investment limitations or restrictions disclosed in  the
Registration Statement and/or imposed by  applicable law or
regulation (calculated at the Sub-Adviser's portfolio level),
unless otherwise agreed to in writing.

    7.	Supplemental Arrangements

The Sub-Adviser may enter into arrangements with other
persons affiliated with the Sub-Adviser or with unaffiliated
third parties to better enable the Sub-Adviser to fulfill its
obligations under this Agreement for the provision of certain
personnel and facilities to the Sub- Adviser, subject to
written notification to and approval of the Manager and,
where required by applicable law, the Board of Directors of
the Fund.

    8.	Regulation

The Sub-Adviser 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.

    9.	Duration and Termination of This Agreement

This Agreement shall become effective as of the date of its
execution and, unless otherwise terminated, shall continue
in effect for a period of two years and 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-Adviser 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-Adviser will continue
to act as Sub-Adviser with respect to the Series pending the
required approval of the Agreement or its continuance or of
any contract with the Sub-Adviser or a different manager or
Sub-Adviser or other definitive action; provided, that the
compensation received by the Sub-Adviser 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-Adviser, 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 9, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of
"interested person," "assignment" and "voting security") shall
be applied.


    10.	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-Adviser, Principal Life
Insurance Company or the Fund cast in person at a meeting
called for the purpose of voting on such approval, and such
amendment is signed by both parties.

    11.	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-Adviser shall
be Fischer, Francis, Trees & Watts, Inc., 200 Park
Avenue, 11th Floor, New York, NY  10166, Attention:
Robin Meister, Chief Legal Officer, E-mail:
robin.meister@bnpparibas. com.

(c)	The Sub-Adviser will promptly notify the Manager in
writing of the occurrence of any of the following events:

(1)	the Sub-Adviser fails to be registered as an
investment adviser under the Investment Advisers
Act or under the laws of any jurisdiction in which the
Sub-Adviser is required to be registered as an
investment adviser in order to perform its
obligations under this Agreement.

(2)	the Sub-Adviser 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 Fund.

(d)	The Manager shall provide (or cause the Series
custodian to provide) timely information to the Sub-
Adviser 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-Adviser to perform its duties and responsibilities
hereunder.

(e)	The Sub-Adviser 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-adviser further represents
that it is contrary to the Sub-adviser'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.

(f)	The Sub-Adviser agrees that neither it nor any of its
affiliates will in any way refer 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.

(g)	This Agreement contains the entire understanding and
agreement of the parties.

(h)	Each party represents and warrants that:

(1)	it has full legal capacity, power and authority to
enter into this Agreement and perform its
obligations hereunder;
(2)	this Agreement, when executed, will constitute its
legal, valid, binding and enforceable obligations in
accordance with its terms and conditions; and
(3)	any person signing this Agreement on its behalf has
full power and authority to do so in accordance with
applicable laws.

(i)	The Sub-Adviser is authorized to enter into such
agreements and provide other documentation as may
be necessary to enable the employment of derivatives
strategies with respect to a Series, including but not
limited to International Swaps and Derivatives
Association Master Agreements and commodity interest
client agreements and to bind the Series  to such
agreements

    12,  CFTC

The Sub-Adviser acknowledges Manager's representation
that the Diversified Real Asset Fund series does not rely on
the exclusion from the definition of "commodity pool
operator" under Section 4.5 of the General Regulations
under the Commodity Exchange Act (the CEA).

The Sub-Adviser represents that it is a commodity trading
adviser duly registered with the Commodity Futures Trading
Commission and is a member in good standing of the
National Futures Association (the NFA) or is relying on an
exemption from registration as a commodity trading adviser.
As applicable, the Sub-Adviser shall maintain such
registration and membership in good standing or continue to
qualify for an exemption from registration as a commodity
trading adviser during the term of this Agreement. Further,
the Sub-Adviser agrees to notify the Manager within a
commercially reasonable time upon (i) a statutory
disqualification of the Sub-Adviser under Sections 8a(2) or
8a(3) of the CEA, (ii) a suspension, revocation or limitation
of the Sub-Adviser's commodity trading adviser registration
or NFA membership, or (iii) the institution of an action or
proceeding that could lead to a statutory disqualification
under the CEA or an investigation by any governmental
agency or self-regulatory organization of which the Sub-
Adviser is subject or has been advised it is a target.




MANAGER SHOULD ALSO BE AWARE THAT THIS COMMODITY
TRADING ADVISOR MAY ENGAGE IN TRADING FOREIGN
FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON
MARKETS LOCATED OUTSIDE THE UNITED STATES,
INCLUDING MARKETS FORMALLY LINKED TO A UNITED
STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH
OFFER DIFFERENT OR DIMINISHED PROTECTION.  FURTHER,
UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE
TO COMPEL THE ENFORCEMENT OF THE RULES OF
REGULATORY AUTHORITIES OR MARKETS IN NON UNITED
STATES JURISDICTIONS WHERE CLIENT TRANSACTIONS MAY
BE EFFECTED.  BEFORE CLIENT TRADES, CLIENT SHOULD
INQUIRE ABOUT ANY RULES RELEVANT TO CLIENT'S
PARTICULAR CONTEMPLATED TRANSACTIONS AND ASK THE
FIRM WITH WHICH CLIENT INTENDS TO TRADE FOR DETAILS
ABOUT THE TYPES OF REDRESS AVAILABLE IN BOTH
CLIENT'S LOCAL AND OTHER RELEVANT JURISDICTIONS.

PURSUANT TO AN EXEMPTION FROM THE COMMODITY
FUTURES TRADING COMMISSION (THE "COMMISSION") IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE
PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT
REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION.  THE COMMISSION DOES NOT PASS UPON THE
MERITS OF PARTICIPATING IN A TRADING PROGRAM OR
UPON THE ADEQUACY OR ACCURACY OF COMMODITY
TRADING ADVISOR DISCLOSURE.  CONSEQUENTLY, THE
COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS
BROCHURE OR ACCOUNT DOCUMENT.

Executed:    2 July 2015

Effective Date: 8 July 2015

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,
President and Chief Executive Officer



FISCHER, FRANCIS,
TREES & WATTS, INC.


By /s/ Robin Meiester
Robin Meister
Chief Legal Officer






APPENDIX A - FEES


Fischer, Francis, Trees & Watts, Inc.
(the "Sub-Adviser") shall serve as an
investment sub-adviser for the Series
identified below. The Manager will
pay the Sub-Adviser 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
allocated to the Sub-Adviser's
management.

In calculating the fee for a series included
in the table, assets of any
unregistered separate account of Principal
Life Insurance Company, any
investment company sponsored by Principal
Life Insurance Company, and
any collective investment trust sponsored
by Delaware Charter Guarantee
& Trust Company to which the Sub-Adviser
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.






Diversified Real Asset Fund
Sub-Adviser's Fee as a Percentage of Average Daily Net Assets

First $100 million......................... 0.30%
Next $100 million..........................0.25%
Next $100 million..........................0.20%
 Assets over $300 million ................0.15%