Principal Funds received two 2011 Lipper Fund Awards for consistent multi-year performance for the Principal MidCap Blend Fund; Institutional (PCBIX). The fund was named the best multi-cap core fund for the five-year period and 10-year period. Principal Global Investors portfolio manager Bill Nolin and team run the $2.2 billion fund. The team generates in-depth, original fundamental research and uses a risk-reduction process in selecting individual stocks. “We’re long-term investors, so we’re focused on selecting high-quality companies with sustainable competitive advantages,” Nolin said. “That strategy has served us well in all types of markets.” Lipper, a leading global research firm, presented the awards at a March 8 ceremony in New York City. The Lipper Fund Awards are part of the Thomson Reuters Awards for Excellence, a global family of awards that celebrate exceptional performance throughout the professional investment community. “This is a testament to the disciplined investing by Bill and team from the very beginning,” said Nora Everett, president and CEO of Principal Funds. “Principal Funds is honored to be recognized for our long-term focused, risk-astute investment management capabilities.” A new white paper, available here, examines why investors should consider an allocation to mid-cap equities and provides insights into the investment process and philosophy of the portfolio management team. For more information about the Principal MidCap Blend Fund, visit www.principalfunds.com/lipper. About Principal FundsPrincipal Funds is a leading provider of mutual funds, with $68.9 billion in assets under management. 1 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. 2 The companies that make up Principal Funds are members of the Principal Financial Group ®. For more information, visit www.principalfunds.com. About the Principal Financial GroupThe Principal Financial Group ® (The Principal ®) 3 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 $335.0 billion in assets under management 4 and serves some 18.0 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 www.principal.com. Past performance is no guarantee of future results. Please see principal.com (Rates, Values & Performance) or call 1-800-222-5852 for current performance information.Before investing, you should carefully consider a fund’s investment objectives, risks, charges and expenses. Contact your financial professional, visit www.principalfunds.com or call 800-222-5852 to obtain a prospectus containing this and other information. 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.All small/midcap stocks may have additional risks, including greater price volatility.Not all investors may be eligible to invest in the institutional class of shares. Contact your financial professional or review the prospectus for details.The calculation periods extend over 36, 60 and 120 months. The highest Lipper Leader for Consistent Return (effective return) value within each eligible classification determines the fund classification winner over 3, 5 and 10 years. MidCap Blend Fund – 3 yrs: 24/657 funds; 5 yrs: 1/558 funds; 10 yrs: 1/287 funds. Only one share class (the one with the best Lipper Leader score) is used for each fund in determining asset class and overall awards.1 As of December 31, 2011. Includes all share classes of the Principal Funds, Inc. and Principal Variable Contracts Funds, Inc. 2 FRC Mutual Fund Lifecycle Report Q411. 3 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group. 4 As of Dec. 31, 2011.