To help investors and financial professionals navigate the complexities of the municipal bond market, Principal Funds has launched the Principal Opportunistic Municipal Fund (PMOAX). The fund's strategy provides the opportunity to invest across a broad range of credit qualities, durations and geographic exposures, pursuing greater overall diversification for investors.

"The municipal bond market is one of the most challenging markets in the United States. But we believe that challenge gives rise to many opportunities," said portfolio manager Doug Gaylor of Principal Global Investors, the fund's subadvisor. "Having the flexibility to pursue relative value in multiple sectors is a tremendous opportunity, especially given that we've found very few strategies like ours in the municipal market."

The strategy allows the team to invest across the broad municipal spectrum without being tied explicitly to a benchmark or an index. "The fund's mandate helps us uncover potential in the municipal market that an individual investor might miss," Gaylor said.

An in-depth interview with the management team, available here, introduces the fund, the team's investment philosophy and thoughts on the current municipal marketplace.

With 28 years of investment experience, Gaylor has managed 18 municipal mutual funds including short-, intermediate- and long-duration funds at other firms. Principal Global Investors' four-person team currently manages more than $3.5 billion in municipal fixed-income assets.

"We believe the typical individual investor needs an experienced municipal credit team to determine which credits to buy, sell or avoid," said Nora Everett, president and CEO of Principal Funds. "We're pleased to bring to the market a flexible fund--managed by a tenured municipal bond team--that seeks to capitalize on opportunities as they arise."

Note: Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise. A portion of the Fund's income may be subject to state and/or local taxes, and it may be subject to federal alternative minimum tax (AMT) for certain investors. Lower-rated securities are subject to additional credit and default risks.

Asset allocation/diversification is no guarantee of future results.

About Principal Funds
Principal Funds is a leading provider of mutual funds, with $77.2 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 Principal Global Investors
Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®, with expertise in equities, fixed income and real estate investments, as well as specialized overlay and advisory services. Principal Global Investors manages $259.8 billion in assets3 primarily for retirement plans and other institutional clients4. For more information, visit www.principalglobal.com.

About the Principal Financial Group
The Principal Financial Group® (The Principal ®)5 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 $367.1 billion in assets under management6 and serves some 18.2 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.

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.

1 As of June 30, 2012. Includes all share classes of the Principal Funds, Inc. and Principal Variable Contracts Funds, Inc.

2 FRC Mutual Fund Lifecycle Report Q112.

3 As of June 30, 2012.

4 Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®) and includes the asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors; Edge Asset Management, Inc.; Morley Financial Services Inc.; Finisterre Capital, LLP; Origin Asset Management, LLP; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global Investors (Australia) Ltd.; Principal Global Investors (Japan) Ltd.; Principal Global Investors (Hong Kong) Ltd.; CIMB-Principal Islamic Asset Management Sdn. Bhd.; and the majority owned affiliates of Principal International, Inc. Assets under management includes assets managed by investment professionals of Principal Global Investors under dual employee arrangements with other subsidiaries of The Principal.

5 "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

6 As of June 30, 2012.

Principal Financial Group
Jaime Naig, 515-247-0798
naig.jaime@principal.com