Principal Financial Group (PFG)

Fund seeks income through diversification; white paper examines
retirement income strategies

DES MOINES, Iowa--(BUSINESS WIRE)--
With nearly 76 million Baby Boomers nearing or beginning their retirement^*,
the need for customized and well-executed retirement income strategies
has never been greater. The Principal Global Diversified Income Fund,
with a one-year track record of strong performance since its December
2008 launch, seeks cash income through a diversified, yield-focused
investment strategy.

â??By 2014, it is projected that more money will flow out of qualified
retirement plans than into them because of retiring Baby Boomers^*,�
said Mike Finnegan, Principal Funds chief investment officer and
portfolio advisor of the Principal Global Diversified Income Fund. â??For
financial professionals and their clients the discussion is shifting
from accumulation of assets to converting their savings into a stable
income stream that is designed to last a lifetime.�

The Principal Global Diversified Income Fund is designed to complement
more traditional yield-producing investments with specialized asset
classes. The fund uses a multi-manager, multi-disciplined approach and
active rebalancing.

Asset classes and target allocations¹ in the fund include:

• 
  High-yield bonds â?? 35 percent
  


• 
  Preferred securities â?? 20 percent
  


• 
  Global real estate securities â?? 15 percent
  


• 
  Master limited partnerships (MLPs) â?? 10 percent
  


• 
  Global value equity â?? 10 percent
  


• 
  Emerging markets debt â?? 10 percent
  

For more information about the Principal Global Diversified Income Fund,
including performance numbers, visit www.principalfunds.com/PGBAX.

New white paper for financial professionals available

A new Principal Funds white paper written for financial professionals
examines diversified yield strategies and the impact of a global
diversified income portfolio in a traditional portfolio. The paper,
â??Retirement Income Strategiesâ??Why Diversification Matters,â? is available
at www.principalfunds.com/diversifiedretirementincome.

About Principal Funds

Principal Funds is a leading provider of mutual funds, with more than
$54.1 billion in assets under management.² Principal Funds
brings expertise in global investment management, asset allocation and
retirement leadership to financial professionals and investors.
Including its target-risk and target-date offerings, Principal Funds is
the fifth-largest manager of lifecycle funds in the industry.³
The companies that make up Principal Funds are members of the Principal
Financial Group^®. For more information, visit www.principalfunds.com.

About the Principal Financial Group

The Principal Financial Group^®
(The Principal^®)⁴
is a leader in offering businesses, individuals and institutional
clients a wide range of financial products and services, including
retirement and investment services, life and health insurance, and
banking through its diverse family of financial services companies. A
member of the Fortune 500, the Principal Financial Group has $280.4
billion in assets under management⁵ and serves some 18.6
million customers worldwide from offices in Asia, Australia, Europe,
Latin America and the United States. Principal Financial Group, Inc. is
traded on the New York Stock Exchange under the ticker symbol PFG. For
more information, visit www.principal.com.

Before investing, you should carefully consider a fundâ??s investment
objectives, risks, charges, and expenses. Contact your financial
professional, visit principalfunds.com,
or call 800-222-5852
to obtain a prospectus containing
this and other information. Read the prospectus carefully before
investing.

A mutual fund's share price and investment return will vary with
market conditions, and the principal value of an investment when you
sell your shares may be more or less than the original cost.

Principal Funds, Inc. is distributed by Principal Funds Distributor,
Inc., member of the Principal Financial Group^®.
Principal Funds Distributor, Principal Shareholder Services, Principal
Management Corporation and its affiliates, and Principal Funds, Inc. are
collectively referred to as Principal Funds.

Fixed-income investment options are subject to interest rate risk,
and their value will decline as interest rates rise. Lower-rated
securities are subject to additional credit and default risks. Risks
associated with preferred securities differ from risks inherent with
other investments. In particular, in the event of bankruptcy, a
companyâ??s preferred securities are senior to common stock but
subordinated to all other types of corporate debt.

International investing involves increased risks due to currency
fluctuations, political or social instability, and differences in
accounting standards, these risks are magnified in emerging markets.
REIT
securities are subject to risk factors associated with the real estate
industry and tax factors of REIT registration.

^*
Cerulli Associates, Tiburon Strategic Advisors.

¹ Allocations for high-yield bonds, preferred securities and
global real estate strategies may range +/- 10 percent; other
allocations range +/- 5 percent.

² As of September 30, 2009. Includes all share classes of the
Principal Funds, Inc and Principal Variable Contracts Fund, Inc.

³ FRC Mutual Fund Lifecycle Report 3Q09.

⁴ â??The Principal Financial Groupâ? and â??The Principalâ? are
registered service marks of Principal Financial Services, Inc., a member
of the Principal Financial Group.

⁵ As of September 30, 2009.

Source: Principal Financial Group