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Investment Type: pifretail

Principal LifeTime Strategic Income Fund (A) (PALTX)

Quick Facts Ticker: PALTX Inception Date: 06/28/2005 Extended Performance Inception Date: 03/01/2001 Morningstar Category: Retirement Income Total Net Assets (mil): $624.71	Investment Strategy    What's this? The investment seeks current income and, as a secondary objective, capital appreciation. The fund invests in underlying fixed-income funds, but also invests in underlying equity and hybrid funds according to an asset allocation strategy designed for investors seeking current income from their investment. It invests most of the assets in underlying funds which are intended primarily to give the fund broad exposure to income-producing securities through their investments in fixed-income securities, "hybrid" securities and dividend generating domestic and foreign stocks.
Morningstar Style Box™   as of 07/31/2010 What's this?	Overall Morningstar Star Rating™   as of 08/31/2010 What's this? Out of 101 Retirement Income Funds Morningstar's Star Ratings reflect risk adjusted performance and are derived from a weighted average of the performance figures associated with its three, five, and ten-year (if applicable) time periods.

Total Returns

Investment results shown represent historical performance and do not guarantee future results. Investment returns and principal values fluctuate with changes in interest rates and other market conditions so the value, when redeemed, may be worth more or less than original costs. Current performance may be lower or higher than the performance data shown. Where gross and net expense ratios differ, Principal Management Corporation has contractually agreed to limit the investment option's expenses. Differences also may be due to Principal Management Corporation's decision to pay (through the same dates) certain expenses that would normally be payable by the fund. Returns displayed are based on net total investment expense.

Month-End | Quarter-End

Average Annual Total Returns as of 08/31/2010

1 Month 3 Month YTD 1 Year 3 Year 5 Year 10 Year Since      Inception* Excluding Sales Charge % 0.10 3.06 5.35 11.38 -1.10 1.37 --- 3.10 Including Sales Charge % -3.69 -0.76 1.36 7.18 -2.35 0.60 --- 2.68 Principal LifeTime Strategic Income Blended Index % -0.06 2.67 4.88 8.29 3.82 4.66 3.87 --- Retirement Income Category % -0.22 2.31 3.40 8.46 0.96 2.57 3.41 --- Morningstar Percentile Ranking** --- --- --- 11 83 81 --- --- # of Funds in Category 175 172 166 149 101 64 8 ---

* Inception Date: 06/28/2005 ; Extended Performance Inception Date: 03/01/2001

**Morningstar percentile rankings are based on total returns.

Expenses

  as of 08/31/2010

Total Investment Expense - Gross:	1.20%
Total Investment Expense - Net:	0.99%
Waiver Date:	02/28/2011
Contractual Cap Date:	02/28/2011
Maximum Up-front Sales Charge:	3.75%
12b-1 Fee:	0.25%

Growth of $10,000

   What's this?

Represents performance for Class A shares adjusted for the maximum sales charge and assumes the reinvestment of distributions. Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance of the investment option's oldest share class, adjusted for the fees and expenses of the share class shown. Periods of less than one year are not annualized.

Investment Subadvisors

   What's this?

Principal Management Corp

Principal Global Investors

Portfolio Managers

   What's this?

Dirk Laschanzky , CFA Since 03/01/2001 B.A. , University of Iowa

Michael P. Finnegan , CFA Since 05/29/2007 M.A. , University of Iowa

James Fennessey , CFA Since 05/29/2007 B.S. , Truman State University

Randy L. Welch Since 05/29/2007 M.B.A. , Drake University

Tim Dunbar Since 03/31/2008 B.S. , Iowa State University

David Blake , CFA Since 03/31/2008 M.B.A. , Saint Louis University

© 2010 Morningstar, Inc. All Rights Reserved. Part of the mutual fund data contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The full name of this investment option is Principal LifeTime Strategic Income Fund (A). Before investing in mutual funds, investors should carefully consider the investment objectives, risks, charges and expenses of the funds. This and other information is contained in the free prospectus, which can be downloaded from our site, or by contacting us at 1.800.222.5852. Please read the prospectus carefully before investing. 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. Not FDIC Insured May Lose Value - Not a Deposit - No Bank Guarantee Not Insured by any Federal Government Agency

Principal LifeTime Strategic Income Blended Index is composed of underlying indexes that represent the target asset allocation weights of the Principal LifeTime Strategic Income portfolio. The weightings as of March 31, 2010 are 18.0% Russell 3000 Index, 6.0% MSCI EAFE Index, and 76.0% Barclays Capital Aggregate Index. These calculated returns reflect the historical performance of the oldest share class of the fund, adjusted to reflect a portion of the fees and expenses of this share class. Please see the fund's prospectus for more information on specific expenses, and the fund's most recent shareholder report for actual date of first sale. Expenses are deducted from income earned by the fund. As a result, dividends and investment results will differ for each share class. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise. Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure. Asset allocation does not guarantee a profit or protect against a loss. Investing in real estate, small-cap, international, and high-yield investment options involves additional risks. Additionally there is no guarantee this investment option will provide adequate income at or through retirement. This Principal LifeTime Fund indirectly bears its pro rata share of the management fees incurred by the underlying Principal Funds in which this fund invests. Based on the asset allocation of the Principal LifeTime Funds outlined in the prospectus dated March 1, 2010, the weighted average operating expenses of the underlying funds are: Principal LifeTime Strategic Income, 0.58%; Principal LifeTime 2010, 0.68%; Principal LifeTime 2020, 0.73%; Principal LifeTime 2030, 0.76%; Principal LifeTime 2040, 0.78%; Principal LifeTime 2050, 0.79%. While the operating expenses of the underlying mutual funds are not part of the Principal LifeTime Fund's operating expenses they are included in the Total Investment Expense. Performance results shown for the Principal LifeTime Fund reflect the application of these expenses.