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                                                                    EXHIBIT 4.07

                                 TRUST AGREEMENT

                  This TRUST AGREEMENT, dated as of December 16, 2003, between
Principal Financial Group, Inc., a Delaware corporation, as "Depositor" and
Wilmington Trust Company, a Delaware banking corporation as "Trustee". The
Depositor and the Trustee hereby agree as follows:

                  1. The trust created hereby shall be known as Principal
Capital I, in which name the Trustee, or the Depositor to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.

                  2. The Depositor hereby assigns, transfers, conveys and sets
over to the Trustee the sum of $10. The Trustee hereby acknowledges receipt of
such amount in trust from the Depositor, which amount shall constitute the
initial trust estate. The Trustee hereby declares that it will hold the trust
estate in trust for the Depositor. It is the intention of the parties hereto
that the Trust created hereby constitute a statutory trust under Chapter 38 of
Title 12 of the Delaware Code, 12 Del. C. ss. 3801 et seq. (the "Statutory Trust
Act"), and that this document constitutes the governing instrument of the Trust.
The Trustee is hereby authorized and directed to execute and file a certificate
of trust with the Delaware Secretary of State in accordance with the provisions
of the Statutory Trust Act.

                  3. The Depositor and the Trustee will enter into an amended
and restated Trust Agreement, satisfactory to each such party and substantially
in the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee shall not have any duty or obligation
hereunder or with respect to the trust estate, and the Depositor shall take or
cause to be taken any action as may be required to obtain any licenses, consents
or approvals required by applicable law or otherwise. Notwithstanding the
foregoing, the Trustee may take all actions requested by the Depositor which the
Depositor deems necessary, convenient or incidental to effect the transactions
contemplated herein. Except as otherwise expressly required by Section 2 herein,
the Trustee shall not have any duty or obligation under or in connection with
this Trust Agreement or any document contemplated hereby, including, without
limitation, with respect to the administration of the Trust, and no implied
duties or obligations shall be inferred from or read into this Trust Agreement
against or with respect to the Trustee. The Trustee has no duty or obligation to
supervise or monitor the performance of, or compliance with this Trust
Agreement, by the Depositor or any other beneficiaries, any agents or
attorneys-in-fact of the Depositor, or any other trustee of the Trust. The
Trustee shall not be liable for the acts or omissions of the Depositor or any
other beneficiaries, any agents or attorneys-in-


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fact of the Depositor, or any other trustee of the Trust nor shall the Trustee
be liable for any act or omission by it in good faith in accordance with the
directions of the Depositor. The right of the Trustee to perform any
discretionary act enumerated herein shall not be construed as a duty.

                  4. The Depositor is hereby authorized, (i) to file with the
Securities and Exchange Commission (the "Commission") and execute, in each case
on behalf of the Trust, (a) the Registration Statement on Form S-3 (the "1933
Act Registration Statement"), including any pre-effective or post-effective
amendments to such 1933 Act Registration Statement (including the prospectus and
the exhibits contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the Trust and
certain other securities and (b) a Registration Statement on Form 8-A (the "1934
Act Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12(b) of the Securities Exchange Act of 1934, as
amended; (ii) to file with the New York Stock Exchange (the "Exchange") and
execute on behalf of the Trust a listing application and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause the Preferred Securities to be listed on the Exchange;
(iii) to file and execute on behalf of the Trust such applications, reports,
surety bonds, irrevocable consents, appointments of attorney for service of
process and other papers and documents as shall be necessary or desirable to
register the Preferred Securities under the securities or "Blue Sky" laws, and
to obtain any permits under the insurance laws of such jurisdictions as the
Depositor, on behalf of the Trust, may deem necessary or desirable and (iv) to
execute on behalf of the Trust one or more Underwriting Agreements with one or
more underwriters relating to the offering of the Preferred Securities. In the
event that any filing referred to in clauses (i), (ii) and (iii) above is
required by the rules and regulations of the Commission, the Exchange or state
securities or blue sky laws, to be executed on behalf of the Trust by a Trustee,
the Depositor and any Trustee appointed pursuant to Section 6 hereof are hereby
authorized to join in any such filing and to execute on behalf of the Trust any
and all of the foregoing. In connection with all of the foregoing, the Depositor
hereby constitutes and appoints Michael H. Gersie, Joyce N. Hoffman and Karen E.
Shaff, and each of them, as its true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for the Depositor or in the
Depositor's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to the 1933 Act
Registration Statement and the 1934 Act Registration Statement and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as the Depositor might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
respective substitute or substitutes, shall do or cause to be done by virtue
hereof.


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                  5. The Trustee is authorized to take such action or refrain
from taking such action under this Trust Agreement as it may be directed in
writing by the Depositor from time to time; provided, however, that the Trustee
shall not be required to take or refrain from taking any such action if it shall
have determined, or shall have been advised by counsel, that such performance is
likely to involve the Trustee in personal liability or is contrary to the terms
of this Trust Agreement or of any document contemplated hereby to which the
Trust or the Trustee is a party or is otherwise contrary to law. If at any time
the Trustee determines that it requires or desires guidance regarding the
application of any provision of this Trust Agreement or any other document, or
regarding compliance with any direction it received hereunder, then the Trustee
may deliver a notice to the Depositor requesting written instructions as to the
course of action desired by the Depositor, and such instructions by or on behalf
of the Depositor shall constitute full and complete authorization and protection
for actions taken and other performance by the Trustee in reliance thereon.
Until the Trustee has received such instructions after delivering such notice,
it may refrain from taking any action with respect to the matters described in
such notice.

                  6. The Depositor hereby agrees to (i) reimburse the Trustee
for all reasonable expenses (including reasonable fees and expenses of counsel
and other experts), (ii) indemnify, defend and hold harmless the Trustee and the
officers, directors, employees and agents of the Trustee (collectively,
including the Trustee in its individual capacity, the "Indemnified Persons")
from and against any and all losses, damages, liabilities, claims, actions,
suits, costs, expenses, disbursements (including the reasonable fees and
expenses of counsel), taxes and penalties of any kind and nature whatsoever
(collectively, "Expenses"), to the extent that such Expenses arise out of or are
imposed upon or asserted at any time against such Indemnified Persons with
respect to the performance of this Trust Agreement, the creation, operation,
administration or termination of the Trust, or the transactions contemplated
hereby; provided, however, that the Depositor shall not be required to indemnify
an Indemnified Person for Expenses to the extent such Expenses result from the
willful misconduct, bad faith or gross negligence of such Indemnified Person,
and (iii) advance to each such Indemnified Person Expenses (including reasonable
fees and expenses of counsel) incurred by such Indemnified Person, in defending
any claim, demand, action, suit or proceeding prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Depositor of
an undertaking, by or on behalf of such Indemnified Person, to repay such amount
if it shall be determined that such Indemnified Person is not entitled to be
indemnified therefor under this Section 6. The obligations of the Depositor
under this Section 6 shall survive the resignation or removal of any Trustee,
shall survive the termination of this Trust Agreement, except by amendment and
restatement of this Trust Agreement, and shall survive the transfer by the
Depositor of any or all of its interest in the Trust.

                  7. This Trust Agreement may be executed in one or more
counterparts.


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                  8. The number of Trustees initially shall be one (1) and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Depositor which may increase
or decrease the number of Trustees; provided, however, that to the extent
required by the Statutory Trust Act, one Trustee shall either be a natural
person who is a resident of the State of Delaware or, if not a natural person,
an entity which has its principal place of business in the State of Delaware and
otherwise meets the requirements of applicable Delaware law. Subject to the
foregoing, the Depositor is entitled to appoint or remove without cause any
Trustee at any time. The Trustee may resign upon thirty days' prior notice to
the Depositor.

                  9. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws of principles).



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                  IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.



                                   PRINCIPAL FINANCIAL GROUP, INC.,
                                   as Depositor


                                   By: /s/ Joyce N. Hoffman
                                       -----------------------------------------
                                       Name:  Joyce N. Hoffman
                                       Title: Senior Vice President and
                                              Corporate Secretary


                                   WILMINGTON TRUST COMPANY,
                                   as Trustee

                                   By: /s/ Joann A. Rozell
                                       -----------------------------------------
                                   Name:  Joann A. Rozell
                                   Title: Financial Services Officer