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Press release from Business Wire

Principal Funds Battles Market Risk with Global Multi-Strategy Fund

<p class='bwalignc'> <b>Fund is latest in series to help combat retirement risks: income, inflation and market volatility</b> </p>

Friday, November 18, 2011

Principal Funds Battles Market Risk with Global Multi-Strategy Fund11:18 EST Friday, November 18, 2011 DES MOINES, Iowa (Business Wire) -- With ongoing volatility in the equity market – just as more and more baby boomers are entering or nearing retirement – it's no surprise that 90 percent of investors age 65 or older are afraid to take risk in their investment portfolios.1 Principal Funds has launched the Principal Global Multi-Strategy Fund (PMSAX), which invests in alternative strategies to achieve long-term capital appreciation with an emphasis on positive total returns and relatively low volatility. “Investors today face many portfolio risks, some very familiar like risk associated with market volatility,” said Mike Finnegan, portfolio advisor and chief investment officer for Principal Funds. “With the market's continuing volatility, it's clear that traditional investment strategies aren't always enough to provide desired returns while managing portfolio risk. We believe alternative strategies allow us to take advantage of market opportunities wherever and whenever they occur.” The fund, launched October 24, 2011, combines multiple alternative strategies and specialist subadvisors to offer diversification by both strategy and manager. Principal Funds collaborates with Cliffwater, Inc., a premier hedged-strategies consultant, to aid in portfolio design, strategy selection and risk management. Additional subadvisors for the fund include: AQR Capital Management; CNH Partners – multi-strategy PIMCO – multi-strategy (fixed income) Wellington Management – equity long/short (fundamental approach) Los Angeles Capital – equity long/short (quantitative approach) Loomis Sayles – credit long/short Now available, a new position paper outlines how alternative strategies may be used to address market risk. The paper takes a current and historical look at equity market volatility and addresses the role of alternative strategies within an asset allocation strategy. It also includes a set of questions for financial professionals and their clients to review when building or evaluating an investment strategy. The Principal Global Multi-Strategy Fund is the third in a series of funds designed to provide outcome-oriented solutions for financial professionals and their clients. The Principal Global Diversified Income Fund (PGBAX), launched December 15, 2008, focuses on income generation. Launched March 16, 2010, the Principal Diversified Real Asset Fund (PRDAX), seeks to help manage the impact of inflation on purchasing power. For more information on these funds, visit the Principal Funds Specialty Funds page. Asset allocation/diversification does not guarantee a profit or protect against a loss. Past performance is no guarantee of future results.About Principal FundsPrincipal Funds is a leading provider of mutual funds, with $62.9 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 About the Principal Financial GroupThe Principal Financial Group® (The Principal ®)4 is a global investment management leader including retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $320.8 billion in assets under management5 and serves some 17.8 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 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, 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.This fund utilizes alternative investment strategies such as arbitrage, leverage, derivatives, and shorting securities in addition to traditional investments. Investment risk may be magnified with the use of these alternative strategies. In addition, securities such as bonds, equities, commodities, international and emerging market securities, and currencies are used to implement the investment strategy. These investments are subject to risks associated with market and interest rate movements. The fund is considered non-diversified which may make it more susceptible to price volatility if the fund does not meet its objective. Due to the nature of the investment process, investors should not expect significant outperformance during market rallies. Additional risks are included in the fund's prospectus. It is possible to lose money when investing in the fund.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.1 Investment Company Institute 2011.2 As of September 30, 2011. Includes all share classes of the Principal Funds, Inc. and Principal Variable Contracts Funds, Inc.3 FRC Mutual Fund Lifecycle Report 2Q11.4 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.5 As of September 30, 2011. Principal Financial GroupJaime Naig, 515-247-0798naig.jaime@principal.comorTerri Hale,