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2011 Capital Gains Distributions are Now Available

The following are the final capital gains distribution amounts for calendar year 2011. Capital gains distributions shown are per share amounts and are the same for each class of shares offered. Capital gains are not inclusive of ordinary income distributions and may be subject to state and federal taxation.

The capital gains were distributed to shareholders on December 19, 2011.


Fund

Short-Term Capital Gain
(per share)

Long-Term Capital Gain
(per share)

Diversified Real Asset Fund

0.0834

0.1917

Global Diversified Income Fund

0.0000

0.0413

High Yield Fund

0.0389

0.2221

High Yield Fund I (non-retail)

0.1084

0.1126

International Equity Index Fund (non-retail)

0.0065

0.0038

International Value Fund I (non-retail)

0.1938

0.2169

LargeCap Growth Fund I (non-retail)

0.0000

0.3356

LargeCap Growth Fund II (non-retail)

0.0000

0.6931

MidCap Blend Fund

0.1182

0.6916

MidCap Growth Fund (non-retail)

0.1990

0.7155

MidCap S&P 400 Index Fund (non-retail)

0.0451

0.4934

Preferred Securities Fund

0.0000

0.0336

Principal Capital Appreciation Fund

0.1390

0.3441

Principal LifeTime 2015 Fund (non-retail)

0.0000

0.1362

Principal LifeTime 2025 Fund (non-retail)

0.0021

0.0340

Principal LifeTime 2035 Fund (non-retail)

0.0000

0.0302

Principal LifeTime 2045 Fund (non-retail)

0.0009

0.0313

Principal LifeTime 2055 Fund (non-retail)

0.0064

0.0302

SAM Conservative Balanced Portfolio

0.0000

0.0518

SAM Flexible Income Portfolio

0.0000

0.0156

SmallCap Growth Fund I (non-retail)

0.0000

0.5831

For more information, please contact your financial professional or call Principal Funds Shareholder Services at 800-222-5852.

Investors should carefully consider a fund's investment objectives, risks, charges, and expenses prior to investing. A prospectus, or summary prospectus if available, containing this and other information can be obtained by contacting a financial professional, visiting principalfunds.com, or calling 800-222-5852. 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.

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To obtain a prospectus, download online or call Customer Service at 1.800.222.5852

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.

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.

This Web site was created and is maintained by Principal Funds Distributor, Inc. exclusively, and not by the Directors of the funds.

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 or NCUA/NCUSIF insured - May lose value - No bank guarantee - Not a deposit - Not insured by any federal government agency

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