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Investment Type: pifretail

Equity Income Fund (A) (PQIAX)

Quick Facts Ticker: PQIAX Inception Date: 05/31/1939 Morningstar Category: Large Value Total Net Assets (mil): $2,250.92	Investment Strategy    What's this? The investment seeks to provide a relatively high level of current income and long-term growth of income and capital. The fund invests primarily at least 80% of net assets (plus any borrowings for investment purposes) in dividend-paying common stocks and preferred stocks. It may invest in fixed-income securities of any maturity, including mortgage-backed securities, U.S. government securities, and asset-backed securities. The fund may also invest up to 20% of assets in below-investment-grade fixed-income securities, and up to 20% in real estate investment trust securities.
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 1124 Large Value 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 % -2.04 1.82 0.68 9.87 -7.49 0.11 5.42 8.43 Including Sales Charge % -7.42 -3.77 -4.88 3.85 -9.21 -1.02 4.82 8.34 Russell 1000 Value Index % -4.28 -3.55 -3.03 4.96 -10.61 -1.69 1.92 --- Large Value Category % -4.51 -3.32 -4.89 3.19 -9.95 -1.65 1.66 --- Morningstar Percentile Ranking** --- --- --- 5 18 18 3 --- # of Funds in Category 1318 1306 1278 1265 1124 943 488 ---

* Inception Date: 05/31/1939

**Morningstar percentile rankings are based on total returns.

Expenses

  as of 08/31/2010

Total Investment Expense - Gross:	1.00%
Total Investment Expense - Net:	1.00%
Maximum Up-front Sales Charge:	5.50%
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?

Edge Asset Management, Inc.

Portfolio Managers

   What's this?

David W. Simpson , CFA Since 03/31/2008 B.S. , University of Illinois

Daniel R. Coleman Since 05/19/2010 M.B.A. , New York 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 Equity 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

Russell 1000 Value Index is a market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values.