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Investment Type: pifretail

Global Diversified Income Fund (A) (PGBAX)

Quick Facts Ticker: PGBAX Inception Date: 12/15/2008 Morningstar Category: World Allocation Total Net Assets (mil): $804.99	Investment Strategy    What's this? The investment seeks consistent cash income through a diversified, yield-focused investment strategy. The fund generally invests a majority of assets in fixed income asset classes, such as high yield bonds, preferred securities, and emerging market debt securities, in an effort to provide incremental yields over a portfolio of government securities. It may invest in equity securities of global companies principally engaged in the real estate industry and value equities of global companies. The fund will also invest in master limited partnerships ("MLPs") and other entities in the energy infrastructure sector.
Morningstar Style Box™   as of 07/31/2010 What's this?	Overall Morningstar Star Rating™   What's this? Out of Funds Star Rating Not Rated 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 % -0.12 6.02 8.43 19.79 --- --- --- 28.55 Including Sales Charge % -3.84 2.04 4.37 15.26 --- --- --- 25.70 Global Diversified Custom Index % --- --- --- --- --- --- --- --- World Allocation Category % -1.21 2.54 -0.62 6.48 -2.52 3.40 5.02 --- Morningstar Percentile Ranking** --- --- --- 1 --- --- --- --- # of Funds in Category 373 368 305 286 171 114 58 ---

* Inception Date: 12/15/2008

**Morningstar percentile rankings are based on total returns.

Expenses

  as of 08/31/2010

Total Investment Expense - Gross:	2.63%
Total Investment Expense - Net:	1.25%
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 Real Estate Inv

Principal Global Investors

Spectrum

Guggenheim Investment Mgmt

Tortoise Capital Advisors, LLC

Portfolio Managers

   What's this?

Chris Lepherd Since 12/15/2008 M.S. , Securities Institute of Australia

Simon Hedger Since 12/15/2008 M.B.A. , University of New England

Christopher Ibach , CFA Since 12/15/2008 M.B.A. , University of Iowa

Mustafa Sagun , CFA Since 12/15/2008 Ph.D. , South Florida University

L. Phillip Jacoby IV Since 12/15/2008 B.S. , Boston University

Kelly D. Rush , CFA Since 12/15/2008 M.B.A. , University of Iowa

Jon Taylor Since 03/20/2009 M.A. , University of Utah

Mark A. Lieb Since 07/01/2009 M.B.A. , University of Hartford

David J. Schulte , CFA Since 09/03/2009 J.D. , University of Iowa

Patrick Mitchell Since 09/16/2009 M.B.A. , Idaho State University

Richard J. Lindquist , CFA Since 09/16/2009 B.S. , Boston College

Terry C. Matlack , CFA Since 09/23/2009 J.D. , University of Kansas

Kenneth P. Malvey , CFA Since 09/23/2009 B.S. , Winona State University

Zachary A. Hamel , CFA Since 09/23/2009 M.B.A. , University of Kansas

H. Kevin Birzer , CFA Since 09/23/2009 M.B.A. , New York University

Marc Peterson Since 10/01/2009 M.B.A. , Drake 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 Global Diversified 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

Global Diversified Custom Index is composed of 35% Barclays Capital U.S. High Yield 2% Issuer Capped Index, 20% blend of 65% Merrill Lynch Fixed Rate Preferred Securities Index and 35% Barclays Capital U.S. Tier I Capital Securities Index, 15% blend of 75% FTSE EPRA/NAREIT Developed Index and 25% Barclays Capital AAA CMBS Index, 10% Barclays Capital U.S. Dollar Emerging Markets Bond Index, 10% MSCI World Value Index, and 10% Tortoise Midstream MLP Index. 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 company'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. Effective September 16, 2009, Guggenheim was added as an additional sub-advisor. Effective September 23, 2009, Tortoise Capital Advisors was added as an additional sub-advisor. Performance results displayed reflect all sub-advisors managing this portfolio during the time periods displayed.