part2.htm - Generated by SEC Publisher for SEC Filing


Letter from the President	1
Economic & Financial Market Review	2
Bond & Mortgage Securities Fund	4
California Municipal Fund	6
Disciplined LargeCap Blend Fund	8
Diversified International Fund	10
Equity Income Fund	12
Global Diversified Income Fund	14
Global Real Estate Securities Fund	16
Government & High Quality Bond Fund	18
High Yield Fund	20
Income Fund	22
Inflation Protection Fund	24
International Emerging Markets Fund	26
International Growth Fund	28
LargeCap Blend Fund II	30
LargeCap Growth Fund	32
LargeCap Growth Fund I	34
LargeCap Growth Fund II	36
LargeCap S&P 500 Index Fund	38
LargeCap Value Fund	40
LargeCap Value Fund III	42
MidCap Blend Fund	44
MidCap Growth Fund III	46
MidCap Value Fund I	48
Principal Capital Appreciation Fund	50
Real Estate Securities Fund	52
Short-Term Income Fund	54
SmallCap Blend Fund	56
SmallCap Growth Fund	58
SmallCap Growth Fund II	60
SmallCap Value Fund	62
Tax-Exempt Bond Fund	64
Glossary	66
Financial Statements	69
Notes to Financial Statements	125
Schedules of Investments	155
Financial Highlights	310
Report of Registered Independent Public Accounting Firm	342
Shareholder Expense Example	343
Supplemental Information	346

GLOBAL INVESTMENT MANAGEMENT • ASSET ALLOCATION EXPERTISE • RETIREMENT LEADERSHIP

One year ago, we were in the midst of a welcome and prolonged market rebound following the longest recession since World War II.¹In the U.S., that rally continued through the first four months of 2010 as positive economic data indicated a strengthening economy, leading stocks higher. By the end of April, though, a number of persistent global and domestic concerns caught up with the U.S. stock market, resulting in increased volatility that continued throughout the spring and summer. In particular, government debt troubles in Europe and signs of a potential slowdown in China—coupled with high unemployment and a weak housing market in the U.S.—drove worries about a possible double-dip recession. As fall arrived, however, weakening in the U.S. and China appeared to have ended, and U.S. and international stocks bounced back markedly.^{2, 3}As recovery continues, we encourage you to maintain a diversified investment program, especially in light of the heightened market volatility during recent years. While historical results do not predict what will happen in the future, domestic and international stock returns for the past year help to illustrate why diversification is important. U.S. equities delivered an 18.3% return for the one-year period ending October 31, 2010; emerging-market international stocks fared even better, returning 23.5% over the same period. However, international stocks in developed markets experienced significantly weaker performance during that timeframe, returning 8.3%.⁴To potentially reduce your risk of loss (or of missed opportunity) due to investing too heavily in any one asset class, we encourage you to work with your financial professional to ensure your portfolio is diversified across and within a range of asset classes. In doing so, we suggest you take into consideration your time horizon for each of your financial goals as well as your tolerance for investment risk.⁵

To help you achieve the financial future you envision, we offer funds covering a wide range of investment needs and levels of risk, for all stages in life — whether you are investing for goals that are years down the road, such as retirement, or seeking investments structured to potentially provide income you can use today (for example, to help meet monthly income needs if you are already retired).

Within our fund family, you also have clear choices for diversifying your portfolio. You can select a mix of our individual funds, or you can choose one of our target-risk or target-date asset allocation funds, each of which is already broadly diversified. You can rely on our asset allocation expertise, as we are the fifth-largest provider of lifecycle funds in the industry (target-risk and target-date funds combined), with one of the longest track records.⁶Whatever your goals - rebuilding your portfolio, investing for retirement, saving for a major purchase or investing for current income - we have a wide range of mutual funds to help you succeed.

On behalf of everyone at Principal Funds, I thank you for your continued support.

Our target-date funds invest in underlying Principal Funds and each is managed toward a particular target (retirement) date, or the approximate date the participant or investor starts withdrawing money. As each of our target-date funds approaches its target date, the investment mix becomes more conservative by increasing exposure to generally more conservative investment options and reducing exposure to typically more aggressive investment options. The target-date fund’s portfolio continues to be managed for approximately 15 years beyond the original target date. Our target-date funds assume the value of the investor’s account will be withdrawn gradually during retirement. Neither the principal nor the underlying assets of our target-date funds are guaranteed at any time, including the target date, and investment risk remains at all times.

The U.S. stock market rallied through the first half of the fiscal year, then lost steam in April. Mounting investor concerns on a number of fronts led to heightened risk aversion and increased market volatility that continued throughout the spring and summer. Key investor concerns included high unemployment and a weak housing market in the U.S., along with government debt issues in the euro zone and a potential slowdown in China. However, in August investors’ risk appetites were revived, thanks in part to assurance from the Federal Reserve Board that they would use all available tools to stoke the U.S. economy. The renewed rally remained in full swing as of October 31, 2010.^{1, 2}

Weak housing data and high unemployment continued to drag on the U.S. economy during the one-year period as Gross Domestic Product (GDP) showed rather modest growth:

For the 1-year period ending October 31, 2010, the broad U.S. equity market posted a return of 18.3%,⁷with mid-cap stocks beating large-caps. Growth stocks outperformed value, reflecting the relative strength of technology (the largest sector in the Russell 3000 Growth Index) as well as the relative weakness in financials (the largest sector within the Russell 3000 Value Index). Technology was helped by investor optimism that companies would continue to rely on technology for productivity improvements (particularly in light of the fact that companies generally remained reluctant to add to staff during the period). Financials struggled as investors grappled with the changing landscape of regulatory reform and how it might impact the capital structure and growth opportunities for the industry.⁸

Internationally, developed markets—with a return of 8.3% for the 1-year period—considerably lagged emerging markets, which delivered 23.5%.⁹The weak performance by developed markets reflected in part the precarious financial situation in the euro zone peripheral countries. Emerging markets’ strong performance was supported by much stronger growth within emerging economies.

In fixed income, riskier asset classes (i.e., non-U.S. Treasuries) performed best during the 1-year period. Non-Treasuries were helped by investor anticipation of a second round of quantitative easing by the Federal Reserve. Although this $600 billion program wasn’t announced until early November, Fed Chairman Ben Bernanke suggested the strategy during a speech made in August, and bonds rallied on the announcement. For the one-year period ending October 31^st, commercial mortgage-backed securities led the investment-grade universe by outpacing duration-adjusted Treasuries by 14.79%.¹⁰The asset class enjoyed strong demand due to its favorable yield amid very little net new supply. High-yield bonds also performed well, 12.55% ahead of duration-adjusted Treasuries;¹¹a favorable yield profile and improving fundamentals for many high-yield issuers propelled the asset class. Meanwhile, Treasury yields fell during the one-year period. 2-year Treasury yields dropped from 0.90% as of October 31, 2009 to 0.34% as of October 31, 2010, while 10-year Treasury yields fell from 3.39% to 2.61% over the same period.¹²

¹“On the Other Hand: Economic Insights,” 2010 First Quarter, April, August and October editions, by Bob Baur and the Principal Global Investors Economic Committee. Bob Baur is a managing director and chief global economist for Principal Global Investors, one of the sub-advisors of the Principal Funds.

²International and global investment options are subject to additional risk due to fluctuating exchange rates, foreign accounting and financial policies, and other economic and political environments.

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio outperformed the Barclays Capital Aggregate Bond Index over the 12-month period, driven primarily by positive security selection. As interest rates fell, duration- and yield curve-positioning of the portfolio also contributed positively to performance. Sector allocation added value as well, largely driven by an out-of-index allocation to below-investment-grade corporate bonds and an overweight to commercial mortgage-backed securities. An overweight to investment-grade corporate bonds and an underweight to U.S. Treasuries benefited returns as well. Derivatives were used tactically to hedge exposures and reduce volatility and contributed positively to performance by mitigating losses during periods of spread-widening. Interest rate swaps and U.S. Treasury futures were used to manage duration, benefiting the portfolio as rates fell. Though the portfolio's allocation to cash provided a liquidity cushion, it detracted from performance.

Investment results shown represent historical performance and do not guarantee future results. Your investment’s returns and principal values will 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 shown. For more information, including the most recent month-end performance, visit principalfunds.com, call your financial professional, or call 800-222-5852.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 3.75%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

* Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance of the Fund’s oldest share class, adjusted for the fees and expenses of the share class shown. Performance does not reflect the impact of federal, state, or municipal taxes. If it did, performance would be lower. Periods of less than one year are not annualized.

*** Performance shown for the benchmark is calculated from 12/31/00 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Robert J. Stryker, CFA
Robert W. Wimmel
Thomas M. Byron
Invesco Advisers, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio's overweight exposure to BBB-rated bonds and unrated bonds was a large positive contributor to returns. The allocation to the dedicated tax sector also added value. The portfolio's exposure to 15-to-20 years and 20+ years on the yield curve benefited returns as well. The portfolio's underweight exposure to state general obligation bonds detracted from returns. An underweight to A-rated bonds hurt returns as well. Additionally, a modest underweight to the utility sector, combined with slightly weaker security selection, detracted from performance.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Jeffrey A. Schwarte, CPA, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection was most effective in the energy, consumer staples and telecommunication services sectors for the period. Stocks positively affecting relative returns included Red Hat Inc., Oracle Corp. and Bank of America. Stock selection in the consumer discretionary, industrial and information technology sectors hindered performance. Stocks that negatively contributed to the portfolio's relative performance included Microsoft Corp., Gilead Sciences and SuperValue Inc.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark is calculated from 12/31/02 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Paul H. Blankenhagen, CFA
Juliet Cohn
Christopher Ibach, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio outperformed the MSCI ACWI ex US Index during the period. The financial sector contributed positively to performance, particularly overweight positions in Canadian, UK and Nordic financial stocks, which generally outperformed. Stock selection was positive in the materials sector, where the portfolio benefited from holdings in Teck Cominco Ltd. and Rio Tinto Plc, which were helped by higher commodity prices. From a country perspective, Germany, Australia and France were top performers. Attribution in developed markets was positive, with European stocks generally contributing the most. Stock selection was negative in the consumer staples sector. Overweight positions in Delhaize Group and Yakult Honsha Co. detracted from performance; both stocks suffered due to disappointing earnings results. Stock selection lagged in the health care sector as some of the portfolio's heavier-weighted positions underperformed, especially in the pharmaceuticals area. Roche Holding, Actelion and Sanofi-Aventis were the main detractors. The portfolio's underweight position in emerging markets domiciled securities detracted, as emerging markets outperformed developed markets over the year. (The portfolio's average weight in emerging markets was approximately 10% less than the index.)

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

David W. Simpson, CFA
Daniel R. Coleman
Edge Asset Management, Inc

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection within the financial sector was the largest positive contributor to performance. Bank of Nova Scotia (a Canadian and international banking company) benefited from the relative stability of its Canadian banking operations and the appeal of its international growth prospects. Also adding value was stock selection within the industrial sector. Deere & Company (a major producer of agricultural machinery) outperformed due to strong agricultural production in key emerging markets and a better outlook for North American farm profitability. Additionally, the portfolio's underweight position in the energy sector benefited performance. The largest detractor to performance was stock selection within the real estate investment trust (REIT) sector. AMB Property Corporation (an industrial REIT) underperformed as soft underlying fundamentals and weak end-market demand did not justify the company's premium valuation. Stock selection within the information technology sector also dragged on performance. Intel Corporation (a manufacturer of semiconductor devices) underperformed; weak recent earnings results and investor concerns about slowing demand for desktop computers weighed on the shares. Stock selection within the consumer discretionary sector detracted as well.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index. The Russell 1000 Value Index is now the benchmark against which the Fund measures its performance. The Manager and portfolio manager believe it better represents the universe of investment choices open to the Fund under its investment philosophy. The benchmark formerly used is also shown.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio benefited from underweights to the Global Value Equity and Preferred Securities sleeves and an overweight to the Global Real Estate sleeve. An underweight to the Master Limited Partnership sleeve detracted from performance. Excess cash also hindered returns. All asset class sleeves within the portfolio outperformed their respective benchmark indexes for the one-year period, led by the High Yield, Global Real Estate and Preferred Securities sleeves. Within the High Yield sleeve, individual security selection benefited performance the most. Within the Global Real Estate sleeve, the top contributor to relative performance was the portfolio’s underweight to real estate investment trusts in Japan; strong selection of commercial mortgage-backed securities added value as well. Within the Preferred Securities sleeve, Spectrum was able to take advantage of trading opportunities in Farm Credit Bank of Texas and Union Planter capital security hybrid paper, which led to large gains for the portfolio.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 3.75%; Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark is calculated from 12/31/08 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Simon Hedger
Chris Lepherd
Kelly D. Rush, CFA
Alistair Gillespie, CFA
Anthony Kenkel, CFA
Principal Real Estate Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

An overweight position to New York office owner SL Green was the top individual contributor to relative performance. The stock outperformed the benchmark as it benefited from a perception that the rebound in New York asset values was better than in most U.S. markets. Also, stock selection in Australia was a top contributor. Timely overweight positions in the Mirvac real estate investment trust (REIT), Goodman Group and GPT Group were the largest contributors. An overweight to Ashford Hospitality Trust also contributed, as it posted the highest return during this period. Ashford (an over-leveraged hotel REIT) was able to survive the downturn due to an interest-rate hedging strategy that allowed it to benefit in the broad-based recovery in lodging demand and capital markets. An underweight to U.S. apartment owners was the largest detractor to relative performance because they strongly outperformed the index. An underweight to Equity Residential (the largest U.S. apartment constituent) was the leading individual detractor as it was one of the strongest performers for the period. An underweight allocation to the U.S. diversified sector was another large detractor, as the sector outperformed the index. An underweight allocation to Host Hotels hurt returns as well, as it is the largest hotel constituent and strongly outperformed the index.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark is calculated from 9/30/07 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Scott J. Peterson, CFA
John R. Friedl, CFA
Ryan P. McCann, CFA
Edge Asset Management, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

An allocation to the non-agency collateralized mortgage obligation (CMO) sector benefited performance during the year; non-agency CMOs continued to see strong demand as investors looked for higher-yielding assets. The portfolio's exposure to agency CMOs also aided returns; these securities were favored due to their structure, which often results in more predictable cash flows. Finally, the portfolio's small exposure to asset-backed securities (ABS) generated a significant positive return during the period. Spreads on higher-quality ABS rallied due to support by the Federal Reserve’s TALF program, which provided cheap financing and brought investors back into the market. The largest detractor during the period was the portfolio's duration positioning. Also, the portfolio's allocation to U.S. Treasuries underperformed as liquidity returned to the market and investors demanded higher-yielding assets, such as agency mortgage-backed securities. Finally, the portfolio's small allocation to cash detracted from performance as cash returned very little over the period.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 2.25%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%); Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index. The Barclays Capital U.S. Agency Fixed Rate MBS Index is now the benchmark against which the Fund measures its performance. The Manager and portfolio manager believe it better represents the universe of investment choices open to the Fund under its investment philosophy. The benchmark formerly used is also shown.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Mark P. Denkinger, CFA
Darrin E. Smith CFA
Edge Asset Management, Inc

What contributed to or detracted from Fund performance during the fiscal year?

An overweight to the banking sector contributed positively during the period. The banking sector benefited from the passage of Basel III, which will require banks to hold additional capital. Banks also benefited from the slowly-stabilizing economy. An overweight to the insurance sector also added value; balance sheets for life insurance companies improved, business trends continued to improve and the hurricane season was very benign for property and casualty companies. Another positive contributor was the portfolio's overweight to Multiplan Inc. (a health care cost management company); BC Partners and Silver Lake announced their plans to buy Multiplan, and the outstanding debt was prepaid at a substantial premium. A significant detractor to performance was an overweight to Energy Maintenance Services (EMS), a pipeline maintenance company. EMS ran into a liquidity crisis during the first quarter of 2010 and completed several priority financings in order to fund ongoing operations. The portfolio's underweight to AIG also hurt performance. Additionally, the portfolio's holdings in higher-quality high-yield bonds and bank loans hindered performance, as over the 12-month period the lowest-quality, most distressed bonds significantly outperformed.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index. The Barclays Capital US High Yield 2% Issuer Capped Index is now the benchmark against which the Fund measures its performance. The Manager and portfolio manager believe it better represents the universe of investment choices open to the Fund under its investment philosophy. The benchmark formerly used is also shown.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Scott J. Peterson, CFA
John R. Friedl, CFA
Ryan P. McCann, CFA
Edge Asset Management, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio benefited from the extremely strong performance of below-investment-grade corporate bonds over the period. When fears of a Great Depression-like scenario abated, this sector outperformed nearly all other fixed income asset classes. Also, an overweight to the real estate investment trust (REIT) sector aided performance as liquidity returned to the market and companies were able to deleverage and extend out debt maturities. Retail and health care REITs, two areas of emphasis in the portfolio, experienced stabilization in their respective market segments. Finally, strong security selection within the banking sector aided relative results. Both Bank of America and Wells Fargo rebounded sharply after liquidity returned to the financial markets and the companies were able to raise billions of dollars in capital. Agency mortgage-backed securities detracted from relative performance as riskier assets had better returns. The mortgages held in the portfolio are primarily low-coupon agency-backed pass-through mortgages. These generally perform well during periods of economic stress but tend to underperform when the economic outlook improves. Also, security selection within the energy sector detracted from performance. Energy Maintenance Services (a pipeline services company) underperformed as the company has had serious liquidity issues stemming from a problematic contract with PEMEX (the Mexican national oil company). Finally, the portfolio's allocation to cash hindered returns as cash returned very little over the period.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index. The Barclays Capital Aggregate Bond Index is now the benchmark against which the Fund measures its performance. The Manager and portfolio manager believe it better represents the universe of investment choices open to the Fund under its investment philosophy. The benchmark formerly used is also shown.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Stuart Spodek
Brian Weinstein
BlackRock Financial Management, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

In the beginning of the fiscal year, the portfolio benefited from an overweight to U.S. breakevens and a short position in nominal duration as the nominal market sold off and U.S. Treasury Inflation-Protected Securities (TIPS) outperformed. In the first half of 2010, the portfolio's underweight to TIPS in favor of nominal Treasuries exposure benefited performance. In the latter half of the fiscal year, the portfolio's out-of-index exposure to short and intermediate nominal Treasuries and underweight to breakevens (as forward-looking inflation expectations decreased) helped performance. The portfolio's modest exposure to corporate credit, asset-backed securities and commercial mortgage-backed securities aided returns as these sectors outperformed TIPS for the one-year period. In the beginning of the fiscal year, the portfolio's underweight to TIPS with maturities shorter than five years was a main detractor as the real yield curve steepened. Throughout much of 2010, the portfolio was positioned with a modest short duration bias relative to the benchmark, which detracted from performance as rates continued to decline. Additionally, the portfolio's modest allocation to cash hurt relative performance as all segments of the TIPS market continued to generate positive returns.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark is calculated from 12/31/04 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Michael L. Reynal
Michael Ade, CFA
Mahail Dobrinov, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio performed strongly relative to the MSCI Emerging Markets Index for the period. On a country basis, though asset allocation was negative, stock selection was positive. Outperformance came from South Korea, India and Brazil. From a sector perspective, both asset allocation and stock selection were positive. Outperformance came from overweight positions in Hanwha Chemical Corp., Kia Motors Corp. and Lojas Renner during the period. From a country perspective, performance in China, Russia and Colombia contributed negatively to performance. From a sector perspective, performance lagged in the energy, financial and health care sectors. Individual stocks that detracted during the period included Samsung ElectroMechanics Co., Lukoil Holdings and Fibria Celulose.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

* Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance the Fund’s oldest share class, adjusted for the fees and expenses of the share class shown. Performance does not reflect the impact of federal, state, or municipal taxes. If it did, performance would be lower. Periods of less than one year are not annualized.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

John Pihlblad, CFA
Mark R. Nebelung, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection was most effective in the financial, telecommunication services and health care sectors, and specifically, in the commercial banks, pharmaceuticals and diversified telecommunication services industries. From a country perspective, stock selection was most effective in Germany, Denmark and Australia. The following stocks were among the top contributors to performance for the one-year period: Lloyds Banking Group (a UK-based financial services group), ProSiebenSat.1 Media (a Germany-based broadcasting company) and Novo Nordisk (a Denmark-based health care company). A majority of the portfolio's underperformance during the year was driven by stock selection within the consumer staples, utilities and industrial sectors, and more specifically, in the food and staples retailing, electric utilities, and construction and engineering industries. From a country perspective, stock selection was least effective in Japan, Canada and Hong Kong. The largest individual detractors to portfolio performance for the one-year period included Resona Holdings (a Japan-based financial services company), BP (an international oil and gas company) and Potash Corp. (a Canada-based fertilizer producer).

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

Strong stock selection in the information technology sector benefited performance; in particular, overweights to Apple Inc. and Juniper Networks added to returns. The health care sector also experienced positive stock selection, particularly in the health care equipment and supplies industry. Additionally, though the portfolio's sector weightings were similar to those of the benchmark index, the small variances in sector weightings within the portfolio aided performance. Poor stock selection in the consumer discretionary sector detracted from performance, particularly an overweight to Direct TV. In the financial sector, poor selection in commercial banks (particularly an over weight to Wells Fargo) added to the underperformance. Also, the portfolio's out-of-index holdings generally did not perform as well as the stocks held in the S&P 500 Index, detracting from performance over the one-year period.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

Thomas J. Bisighini, CFA
Anthony Rizza, CFA
Columbus Circle Investors

What contributed to or detracted from Fund performance during the fiscal year?

The three largest positive contributors over the period were Priceline, Las Vegas Sands and Apple. Global economic conditions stabilized, prompting better European hotel occupancy and pricing, and improved domestic air traffic and car rentals for Priceline. Las Vegas Sands benefited from strong gambling trends at its Macau and Singapore properties. Apple's strength was due to the launch of iPad, and upside from iPhone based on a broader geographic rollout and faster adoption. The largest detractors were Bank of America, Morgan Stanley and Sandisk. Bank of America's weakness was due to regulatory reform (specifically, aspects related to consumer fees) and the threat of future credit problems from sub-par underwriting standards at Countrywide. For Sandisk, the economic slowdown prompted some fears of demand moderation and potential oversupply into next year; however, the bigger issue was confusion around the impact to the company of irrational pricing by a competitor in the strategically-less-important retail memory card business. Morgan Stanley registered disappointing results early in the period, as trading results were below expectations and excessive expenses showed a lack of commitment to cost control. In addition, the retail brokerage joint venture with Smith Barney experienced some integration issues.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection was strong during the period, especially in the information technology sector. The largest individual contributor was an overweight to Salesforce.com Inc. Sector-positioning relative to the benchmark Russell 1000 Growth Index also helped returns, led by an average 7% underweight to the consumer staples sector, which lagged the benchmark index. Having a smaller market capitalization than the benchmark index added to returns as well, as smaller-cap stocks in the index performed better than larger-caps. Despite strong stock selection overall, weak selection in the financial sector detracted from returns, where an overweight to Charles Schwab Corp. was the largest detractor. Also, having a lower dividend yield than the index hurt returns, as investors favored stocks with higher dividend yields.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 11/12/10 for Class A and B; 2/28/11 for Class C. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

Positive stock selection in the materials and energy sectors contributed positively to returns. During the period the investment option had a slight overweight (less than 1%) to the consumer discretionary sector, which benefited returns as this sector posted very strong performance during the period. On average, stocks within the investment option exhibited less volatility than the stocks within the index, which also helped returns during the period. Stock selection was negative overall, with the worst selection occurring in the financial sector. Sector-positioning relative to the benchmark Russell 1000 Growth Index detracted from relative returns, led by an average 2% overweight to the energy sector. During the period the portfolio had a lower average beta than the index, which detracted from performance.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

Dirk Laschanzky, CFA
Scott Smith
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio seeks performance in line with the S&P 500 Index and continues to maintain exposures near the index with a goal of replicating index performance. Within the portfolio, the percentage exposure to securities is closely aligned to the stocks within the index. Future contracts are used to help minimize tracking error relative to the index. All 10 economic sectors in the index posted positive returns during the fiscal year, with the consumer discretionary and industrial sectors providing the largest positive returns. Though all 10 economic sectors in the index posted positive returns during the fiscal year, the financial and energy sectors provided the least positive returns for the period.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 1.5%; Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

Arild Holm, CPA, CFA
Jeffrey A. Schwarte, CPA, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

During the period all sectors posted positive returns, with the consumer discretionary, materials and industrial sectors performing the best. Stock selections in the health care, financial and materials sectors were the most effective for the period. Stocks positively affecting relative returns included Timken, Anadarko Petroleum and Endo Pharmaceuticals. Stock selections in the consumer discretionary, utilities and information technology sectors were less effective. Stocks that negatively contributed to the portfolio's relative performance included Wells Fargo & Co., ConocoPhillips and SuperValu Inc.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection was positive in the industrial sector during the period. Sector-positioning relative to the index also benefited returns, with the best performance resulting from an average 5% underweight to the financial sector and an average 3% overweight to the consumer discretionary sector. Additionally, having a higher price-to-book ratio than the benchmark Russell 1000 Value Index added to returns. Stock selection was negative overall, with the worst selection occurring within the financial sector. An average 3% underweight to the utilities sector detracted from returns as this sector outperformed the benchmark index. Also, having a higher market capitalization than the index detracted from relative performance, as smaller-cap stocks within the index performed better than the larger-cap stocks within the index.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

K. William Nolin, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio benefited from owning Liberty Media Corporation (Capital), a diversified media company. One of Liberty's more significant holdings was an equity interest in Sirius XM Radio; Liberty's investment in Sirius was a resounding success during the period. The portfolio also benefited from owning Valeant Pharmaceuticals International, which manufactures and distributes pharmaceuticals around the world in drug classes such as neurology, dermatology and various branded generics. Additionally, the portfolio benefited from owning O'Reilly Automotive (a leader in the auto parts aftermarket, serving both consumers and professional mechanics). O'Reilly benefited from a strong auto parts aftermarket during the period. Iron Mountain Inc. (the largest document storage company) detracted from the portfolio. Iron Mountain, which strives to satisfy the growing need of businesses to store and protect documents in either physical or digital form, was down as the company experienced slower organic growth due to the economy. Lender Processing Services Inc. (LPS) (a market leader in mortgage processing and default management services) detracted due to concerns about slowing foreclosure growth. SAIC Incorporated (which provides solutions to government agencies in the areas of national security, energy, environment and health care) was down due to expectations of a slowdown in government contracting.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

What contributed to or detracted from Fund performance during the fiscal year?

Strong stock selection contributed positively to returns, led by the information technology sector. F5 Networks Inc. was the leading individual contributor. An average 1% overweight to the information technology sector benefited returns as this sector posted strong performance during the period. Also, the portfolio's higher beta (which means the portfolio was poised to benefit more than the index in upward-trending markets) added to returns during a period of strong market returns. Although stock selection was positive overall, negative stock selection in the consumer staples sector detracted from returns. The portfolio's average 1% overweight to the financial sector detracted from performance, as this sector lagged the returns of the Russell Midcap Growth Index. On average, the portfolio held stocks that exhibited more price volatility than the index, which also detracted from returns. (Price volatility measures a portfolio's exposure to stocks exhibiting the most price volatility in the trailing 12-month period.)

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection was positive overall, with the strongest selection found within the industrial sector. An average 1% overweight to the consumer discretionary sector benefited returns, as this sector posted strong performance. During the period the investment option had a slightly higher price-to-book ratio than the benchmark Russell Midcap Value Index, which added to returns. Although stock selection was positive overall, negative selection in the financial sector detracted from returns. An average 1% overweight to the health care sector also detracted, as this sector lagged the benchmark index. On average, the investment option had a slightly lower dividend yield than the index, which hindered returns as investors favored stocks with high dividend yields.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark is calculated from 12/31/03 and assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Portfolio Managers:

Philip M. Foreman, CFA
Daniel R. Coleman
Edge Asset Management, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

The largest positive contributor to performance was the portfolio's underweight position in the financial sector, as investor concerns about the pace of the economic recovery and increased financial industry regulation weighed on the sector. Stock selection within the materials sector also benefited performance. Potash Corporation of Saskatchewan (a producer of fertilizer and animal feed products) outperformed as BHP Billiton offered to acquire the company at a substantial premium. Stock selection in the industrial and health care sectors helped performance as well. Stock selection in the information technology sector was the largest drag on performance for the period. Adobe Systems (a software company) was hurt by lower-than-expected earnings guidance and concerns about decelerating revenue growth in its creative solutions segment. The second-largest detractor to performance was stock selection in the telecommunications sector. Stock selection in the utilities sector hurt returns as well.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Kelly D. Rush, CFA
Matt Richmond
Principal Real Estate Investors, ,LLC

What contributed to or detracted from Fund performance during the fiscal year?

An overweight position to New York office owner SL Green was the top individual contributor to relative performance. The stock outperformed the benchmark as it benefited from a perception that the rebound in New York asset values was better than in most U.S. markets. An overweight in CBL Associates also contributed positively over this time period; CBL is a highly leveraged mall owner which disproportionately benefited from the recovery in credit markets. An underweight to Duke Realty Corp. (a diversified real estate investment trust) proved favorable as it significantly underperformed the index for the time period. An underweight to U.S. apartment owners was the largest detractor from relative performance, as they strongly outperformed the index. An underweight to Equity Residential (the largest U.S. apartment constituent) was the leading individual detractor as it was one of the strongest performers within the apartment sector. Poor stock selection was primarily due to underweight positions in large index constituent Host Hotels and the small, highly leveraged Strategic Hotels & Resorts. Both companies outperformed the index as a recovery in hotel fundamentals occurred over the year. Poor timing of ownership in health care owner Nationwide Health Properties was another detractor to relative performance. The company was owned while the index provided strong performance and the company lagged, then after it was sold the index performed poorly and Nationwide outperformed.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Scott J. Peterson, CFA
John R. Friedl, CFA
Ryan P. McCann, CFA
Edge Asset Management, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

The top contributor to performance was an overweight position in non-agency residential mortgage-backed securities (RMBS); RMBS continued to provide better returns than corporate bonds as housing prices and mortgage delinquencies began to stabilize. The portfolio's overweight position in the real estate investment trust sector also benefited returns. Although the office and industrial sectors continued to show some weakness, other sectors (such as multi-family and retail), which were more heavily weighted in the portfolio, saw improving trends. The portfolio's underweight position in U.S. government and foreign government bonds helped performance as well; during a period of record-low bond yields, investors favored higher-yielding, non-government securities. The top detractor to performance was the portfolio's underweight in the banking sector; financial institutions outperformed industrials and utilities during the period because of growing confidence in the profitability of banks and less concern about governmental interference. The portfolio's allocation to cash and U.S. Treasuries, though small, also hurt returns; despite the rally 2-year Treasuries experienced during the period, the miniscule yields on Treasuries and cash hindered performance.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 2.25%; Class C shares: contingent deferred sales charge of 1% on redemptions made during the first 12 months. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11; 2/28/12 for Class P. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index. The Barclays Capital Credit 1-3 Years Index is now the benchmark against which the Fund measures its performance. The Manager and portfolio manager believe it better represents the universe of investment choices open to the Fund under its investment philosophy. The benchmark formerly used is also shown.

**** The Class P Shares prospectus was dated 9/27/10. Class P Shares do not have a sales charge.

Portfolio Managers:

Thomas Morabito, CFA
Phil Nordhus, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection in the consumer discretionary, energy and consumer staples sectors contributed positively to the portfolio during the fiscal year. Consumer discretionary contributed to performance from the portfolio's restaurant holdings, as consumer spending at restaurants stabilized. In the consumer staples sector, the largest contributor was American Italian Pasta, whose shares rose on news it would be acquired by Ralcorp Holdings. In the energy sector, the largest contributor was Mariner Energy, an exploration and production company whose shares rose on news it was being acquired by Apache Corporation. Additionally, the portfolio benefited from limited exposure to oil exploration and production in the Gulf of Mexico. Stock selection in the information technology and financial sectors detracted from portfolio performance. In the information technology sector, the portfolio lagged the benchmark as it failed to hold a handful of hardware and equipment stocks with exceptionally strong performance, including several that agreed to be acquired at significant premiums by larger competitors. In the financial sector, the portfolio's holdings in brokerage firms performed poorly as trading volumes and acquisition activity remained light across that industry.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

Thomas Morabito, CFA
Phil Nordhus, CFA
Principal Global Investors, LLC

What contributed to or detracted from Fund performance during the fiscal year?

Stock selection in the consumer staples, consumer discretionary and energy sectors contributed positively to portfolio performance during the fiscal year. In the consumer staples sector, the largest contributor to performance was American Italian Pasta, a producer of private-label pastas whose shares rose sharply on news that it would be acquired by Ralcorp Holdings. In the consumer discretionary sector, the largest contributor to performance was the portfolio's restaurant holdings, which performed well as consumer spending at restaurants stabilized. Stock selection in the IT services, technology hardware and equipment, and health care services industries detracted from portfolio performance during the fiscal year. In the IT services industry, the portfolio's holdings in Global Cash Access Holdings were down sharply following news that this provider of cash-access products and services to casinos had lost its largest customer. In the technology hardware and equipment industry, the portfolio substantially lagged the benchmark index as it failed to hold a handful of stocks with exceptionally strong performance, including several that agreed to be acquired at significant premiums by larger competitors.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

The portfolio benefited from favorable security selection in the information technology sector, where overweights to Aruba Networks, Acme Packet and Power-One Inc. were rewarded. Overall, six out of the 10 top-performing stocks in the portfolio came from the information technology sector. An overweight to this top-performing sector relative to the Russell 2000 Growth Index was a further positive. Security selections within industrials and health care also were additive. Additionally, having a higher relative strength profile (an overweight to stocks exhibiting upward price movement during the trailing 12-month period) was an additional positive as this bias was rewarded in the market. Security selection within consumer discretionary moderated results. Within the consumer discretionary sector, the portfolio was hampered by overweights to NutriSystem and Wonder Auto Technology and an underweight to Sotheby's. Having a lower market-cap bias relative to the index also was a hindrance to performance.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

What contributed to or detracted from Fund performance during the fiscal year?

Security selection in health care, energy and consumer discretionary sector stocks benefited returns. Within health care, the portfolio benefited from selection in the biotechnology industry, through positions in Incyte Pharmaceuticals as well as contract research provider Parexel International. The portfolio also was generally underweight to health care providers, which seemed to be under the most pressure to reduce costs under the latest federal rules. Within energy, the portfolio had little exposure to the oil drilling rigs in the Gulf of Mexico, which were financially damaged when BP's well exploded. Mariner Energy was acquired during the year. Consumer stocks were led by specialty retailers Sally Beauty and Jo-Ann stores. Poor selection in the airlines, commercial services and distributors led to overall weakness in the industrial sector during the year. The portfolio missed out on U.S. Airways, which was a fairly large position in the index when it was acquired and thus represented about one-third of the portfolio's overall underperformance. Beacon Roofing (a distributor of aftermarket roofing materials) also disappointed. Most of the portfolio's shortfall came from stocks that were not held and that advanced. Many were underperforming companies that responded to government stimulus dollars, or general euphoria that it appeared the economy was not going to "double-dip." Performance detracted in financials, where banks that were bailed out delivered outsized returns while healthy banks were ignored, causing the stocks to languish.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

Portfolio Managers:

Robert J. Stryker, CFA
Robert W. Wimmel
Thomas M. Byron
Invesco Advisers, Inc.

What contributed to or detracted from Fund performance during the fiscal year?

Security selection in the underweight tax-supported sector was a strong positive contributor to performance. Overweights to the health care and housing sectors also added to returns. Additionally, the non-rated sector and an allocation to the long end of the yield curve (20+ years) benefited returns. Underweight exposure to the utility sector detracted from returns. Unfavorable selection in BBB-rated securities also hindered performance. Unfavorable security selection in the tobacco sector detracted as well.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses.

Expense limits apply through 2/28/11. Returns displayed are based on net total investment expense.

*** Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot invest directly in an index.

Includes all AAA-rated CMBS securities that are ERISA eligible under the underwriter’s exemption that meet certain liquidity and maturity requirements.

Composed of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements.

Includes USD-denominated debt from emerging markets in the following regions: Americas, Europe, Middle East, Africa, and Asia. Countries must have a maximum sovereign rating of Baa1/BBB+/BBB+ as determined by the middle of Moody’s, S&P, and Fitch long-term foreign currency debt ratings to qualify for country inclusion. Sovereigns, agencies, local issues, and corporate debt are permitted.

Covers the universe of fixed rate, non-investment grade debt. Eurobonds and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included.

Covers the fixed-rate mortgage-backed pass-through securities issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mae (FHLMC).

A total return performance benchmark for the long-term, investment-grade, tax-exempt bond market.

An unmanaged in ex comprised of fixed rate, non-investment grade debt securities that are dollar denominated. The index limits the maximum exposure to any one issuer to 2%.

Tracks the market for deeply subordinated fixed income Securities that qualify for treatment as regulatory capital by regulators or receive quasi-equity credit from ratings Agencies. The index is comprised of Tier 1 securities from both banks and non-bank entities (insurance companies seeking regulatory capital treatment, corporate seeking equity treatment).

Barclays Capital U.S. Treasury TIPS (Treasury Inflation Protection Securities) Index: An index of inflation-protected U.S. Treasury securities that will mature in one year or longer.

Tracks the performance of fixed-rate U.S. dollar-denominated preferred securities issued in the U.S. domestic market.

Measures the performance of bonds, including U.S. and non-U.S. corporate securities and non-U.S. sovereign and provincial securities. It includes institutionally traded U.S. Treasury, government-sponsored, mortgage, asset-backed, and investment-grade securities.

Measures the performance of bonds, including U.S. and non-U.S. corporate securities and non-U.S. sovereign and provincial securities, with maturities between one and three years.

Represents the mortgage-backed securities component of Citigroup’s Broad Investment-Grade Bond Index. It consists of 30-and 15-year agency-issued (GNMA, FNMA, and FHLMC) pass-through securities as well as FNMA and FHLMC balloon mortgages.

Measures the performance of below-investment-grade debt issued by corporations domiciled in the U.S. or Canada, with the imposition of a cap on the par amount of each issuer and delayed entry of fallen angels following their downgrade.

Designed to represent general trends in eligible real estate equities worldwide.

Composed of 35% Barclays Capital U.S. High Yield 2% Issuer Capped Index, 25% blend of 65% BofA Merrill Lynch Fixed Rate Preferred Securities Index and 35% Barclays Capital U.S. Tier I Capital Securities Index, 11% blend of 75% FTSE EPRA/NAREIT Developed Index and 25% Barclays Capital AAA CMBS Index, 12% Barclays Capital U.S. Dollar Emerging Markets Bond Index, 7% MSCI World Value Index, and 10% Tortoise Midstream MLP Index.

Morgan Stanley Capital International All Country World ex-US Index (MSCI ACWI ex-US Index): A market capitalization-weighted index designed to measure equity market performance in 47 global developed and emerging markets, excluding the U.S.

A broad-based, capitalization-weighted index of equity markets representing 21 countries in Europe, Australasia, and the Far East.

Morgan Stanley Capital International (MSCI) EMF (Emerging Markets Free) Index: Measures the stock returns of companies in 27 developing countries.

A total-return index comprised of the most actively traded real estate investment trusts and designed to be a measure of real estate equity performance.

Measures global developed market equity performance of growth securities outside of the United States. It is comprised of half the securities in the MSCI World Ex US Index, with half of the market capitalization of each country index in the Growth Index (the other half is in the Value Index).

A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets

Measures the performance of those Russell 1000® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of those Russell 1000® Index securities with lower price-to-book ratios and lower forecasted growth values.

Measures the performance of the 2,000 smallest stocks in the Russell 3000® Index.

Measures the performance of those Russell 2000® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of those Russell 2000® Index securities with lower price-to-book ratios and lower forecasted growth values.

Measures the performance of those Russell 3000® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.

Measures the performance of those Russell 3000® Index securities with lower price-to-book ratios and lower forecasted growth values.

Measures the performance of the 800 smallest stocks in the Russell 1000® Index.

Measures the performance of those Russell Midcap® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of those Russell Midcap® Index securities with lower price-to-book ratios and lower forecasted growth values.

A float-adjusted market-capitalization-weighted index comprised of stocks representing approximately half the market capitalization of the S&P 500 that have been identified as being on the value end of the growth-value spectrum.

A float-adjusted, capitalization weighted index of energy master limited partnerships comprised of the following sub sectors: Crude Oil Pipelines, Gathering & Processing, Natural Gas Pipelines, and Refined Products Pipelines.


			Disciplined
	Bond & Mortgage	California	LargeCap
Amounts in thousands, except per share amounts	Securities Fund	Municipal Fund	Blend Fund
Investment in securities--at cost	$ 2,170,900	$ 291,378	$ 756,813
Foreign currency--at cost	$ 86	$ –	$ –
Assets
Investment in securities--at value	$ 2,151,624	$ 298,806	$ 827,178
Foreign currency--at value	89	–	–
Cash	1,268	418	40
Receivables:
Dividends and interest	15,642	3,785	1,162
Expense reimbursement from Manager	–	–	1
Expense reimbursement from Underwriter	18	–	–
Foreign currency contracts	8	–	–
Fund shares sold	4,843	909	28
Investment securities sold	31,892	–	8,649
Swap premiums paid	3,736	–	–
Unrealized gain on swap agreements	135	–	–
Other assets	7	–	5
Prepaid directors' expenses	–	–	1
Total Assets	2,209,262	303,918	837,064
Liabilities
Accrued management and investment advisory fees	876	121	415
Accrued administrative service fees	11	–	1
Accrued distribution fees	145	79	58
Accrued service fees	37	–	3
Accrued transfer agent fees	165	29	184
Accrued directors' expenses	2	–	–
Accrued other expenses	71	34	107
Payables:
Dividends payable	4,303	1,056	–
Foreign currency contracts	228	–	–
Fund shares redeemed	1,956	478	684
Interest expense and fees payable	–	36	–
Investment securities purchased	222,427	–	–
Line of credit	–	–	9,160
Unrealized loss on swap agreements	2,991	–	–
Floating rate notes issued	–	19,226	–
Total Liabilities	233,212	21,059	10,612
Net Assets Applicable to Outstanding Shares	$ 1,976,050	$ 282,859	$ 826,452
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 2,158,436	$ 312,780	$ 1,286,550
Accumulated undistributed (overdistributed) net investment income (loss)	10,950	827	12,026
Accumulated undistributed (overdistributed) net realized gain (loss)	(170,990 )	(38,176)	(542,494 )
Net unrealized appreciation (depreciation) of investments	(22,132 )	7,428	70,370
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency	(214 )	–	–
Total Net Assets	$ 1,976,050	$ 282,859	$ 826,452
Capital Stock (par value: $.01 a share):
Shares authorized	720,000	300,000	905,000
Net Asset Value Per Share:
Class A: Net Assets	$ 134,686	$ 255,698	$ 202,793
Shares Issued and Outstanding	12,738	25,573	17,289
Net Asset Value per share	$ 10.57	$ 10.00	$ 11.73
Maximum Offering Price	$ 10.98	$ 10.39	$ 12.41
Class B: Net Assets	$ 10,488	$ 13,589	$ 12,914
Shares Issued and Outstanding	990	1,359	1,123
Net Asset Value per share	$ 10.60 ^(a)	$ 10.00^(a)	$ 11.50 ^(a)
Class C: Net Assets	$ 5,976	$ 13,572	$ 2,100
Shares Issued and Outstanding	565	1,356	181
Net Asset Value per share	$ 10.57 ^(a)	$ 10.01^(a)	$ 11.60 ^(a)
Class J: Net Assets	$ 209,290	N/A	N/A
Shares Issued and Outstanding	19,686
Net Asset Value per share	$ 10.63 ^(a)
Institutional: Net Assets	$ 1,438,541	N/A	$ 596,070
Shares Issued and Outstanding	136,109		50,860
Net Asset Value per share	$ 10.57		$ 11.72
R-1: Net Assets	$ 10,669	N/A	$ 1,091
Shares Issued and Outstanding	1,009		94
Net Asset Value per share	$ 10.57		$ 11.63
R-2: Net Assets	$ 28,778	N/A	$ 1,711
Shares Issued and Outstanding	2,745		148
Net Asset Value per share	$ 10.48		$ 11.56
R-3: Net Assets	$ 41,586	N/A	$ 6,703
Shares Issued and Outstanding	3,954		578
Net Asset Value per share	$ 10.52		$ 11.61
R-4: Net Assets	$ 36,175	N/A	$ 801
Shares Issued and Outstanding	3,386		69
Net Asset Value per share	$ 10.68		$ 11.66
R-5: Net Assets	$ 59,861	N/A	$ 2,269
Shares Issued and Outstanding	5,686		194
Net Asset Value per share	$ 10.53		$ 11.68


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	Diversified		Equity	Global Diversified
Amounts in thousands, except per share amounts	International Fund		Income Fund	Income Fund
Investment in securities--at cost	$ 1,508,131		$ 2,335,956	$ 1,045,146
Foreign currency--at cost	$ 7,925		$ –	$ 35
Assets
Investment in securities--at value	$ 1,784,755		$ 2,681,524	$ 1,110,391
Foreign currency--at value		7,896	–	34
Cash		31	12	34,765
Receivables:
Dividends and interest		3,454	4,833	14,219
Expense reimbursement from Manager		5	2	2
Expense reimbursement from Underwriter		15	–	–
Fund shares sold		1,022	2,758	32,291
Investment securities sold		15,874	3,864	10,221
Other assets		5	1	–
Prepaid directors' expenses		–	–	2
Total Assets	1,813,057		2,692,994	1,201,925
Liabilities
Accrued management and investment advisory fees		1,320	1,146	709
Accrued administrative service fees		11	–	–
Accrued distribution fees		178	318	350
Accrued service fees		47	2	–
Accrued transfer agent fees		347	401	53
Accrued directors' expenses		1	1	–
Accrued other expenses		308	263	34
Payables:
Dividends payable		–	–	4,550
Fund shares redeemed		759	1,445	788
Investment securities purchased		18,331	8,425	44,033
Total Liabilities		21,302	12,001	50,517
Net Assets Applicable to Outstanding Shares	$ 1,791,755		$ 2,680,993	$ 1,151,408
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 2,147,871		$ 2,983,737	$ 1,073,533
Accumulated undistributed (overdistributed) net investment income (loss)		16,018	16,368	1,014
Accumulated undistributed (overdistributed) net realized gain (loss)	(648,845 )		(664,680)	11,611
Net unrealized appreciation (depreciation) of investments		276,624	345,568	65,245
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency		87	–	5
Total Net Assets	$ 1,791,755		$ 2,680,993	$ 1,151,408
Capital Stock (par value: $.01 a share):
Shares authorized	1,010,000		930,000	475,000
Net Asset Value Per Share:
Class A: Net Assets	$ 273,385		$ 622,414	$ 630,204
Shares Issued and Outstanding		27,910	36,797	47,222
Net Asset Value per share	$ 9.80		$ 16.91	$ 13.35
Maximum Offering Price	$ 10.37		$ 17.90	$ 13.86
Class B: Net Assets	$ 18,477		$ 117,395	N/A
Shares Issued and Outstanding		1,890	7,004
Net Asset Value per share	$ 9.78 ^(a)		$ 16.76^(a)
Class C: Net Assets	$ 11,618		$ 101,915	$ 296,132
Shares Issued and Outstanding		1,188	6,143	22,259
Net Asset Value per share	$ 9.78 ^(a)		$ 16.59^(a)	$ 13.30 ^(a)
Class J: Net Assets	$ 179,226		N/A	N/A
Shares Issued and Outstanding		18,471
Net Asset Value per share	$ 9.70 ^(a)
Class P: Net Assets	$ 10		$ 10	$ 1,001
Shares Issued and Outstanding		1	1	75
Net Asset Value per share	$ 9.80		$ 16.93	$ 13.31
Institutional: Net Assets	$ 1,087,289		$ 1,828,045	$ 224,071
Shares Issued and Outstanding		111,033	107,978	16,841
Net Asset Value per share	$ 9.79		$ 16.93	$ 13.31
R-1: Net Assets	$ 9,424		$ 374	N/A
Shares Issued and Outstanding		970	22
Net Asset Value per share	$ 9.72		$ 16.89
R-2: Net Assets	$ 19,385		$ 371	N/A
Shares Issued and Outstanding		2,001	22
Net Asset Value per share	$ 9.69		$ 16.89
R-3: Net Assets	$ 67,216		$ 3,815	N/A
Shares Issued and Outstanding		6,893	226
Net Asset Value per share	$ 9.75		$ 16.89
R-4: Net Assets	$ 49,117		$ 750	N/A
Shares Issued and Outstanding		4,968	44
Net Asset Value per share	$ 9.89		$ 16.92
R-5: Net Assets	$ 76,608		$ 5,904	N/A
Shares Issued and Outstanding		7,756	349
Net Asset Value per share	$ 9.88		$ 16.93


		Government &
	Global Real Estate	High Quality
Amounts in thousands, except per share amounts	Securities Fund	Bond Fund	High Yield Fund
Investment in securities--at cost	$ 16,282	$ 1,621,654	$ 3,334,740
Investment in affiliated securities--at cost	$ –	$ –	$ 23,687
Foreign currency--at cost	$ 4,115	$ –	$ –
Assets
Investment in securities--at value	$ 17,628	$ 1,700,005	$ 3,496,880
Investment in affiliated securities--at value	–	–	30,983
Foreign currency--at value	4,114	–	–
Cash	2,688	29,133	9,675
Receivables:
Dividends and interest	22	7,362	63,568
Expense reimbursement from Manager	5	24	29
Expense reimbursement from Underwriter	–	45	–
Foreign currency contracts	12	–	–
Fund shares sold	178	7,817	35,546
Investment securities sold	–	11,766	17,514
Other assets	–	19	–
Prepaid directors' expenses	2	–	–
Total Assets	24,649	1,756,171	3,654,195
Liabilities
Accrued management and investment advisory fees	9	710	1,504
Accrued administrative service fees	–	4	–
Accrued distribution fees	4	234	887
Accrued service fees	–	12	–
Accrued transfer agent fees	7	198	562
Accrued directors' expenses	–	1	9
Accrued other expenses	51	97	459
Payables:
Dividends payable	–	5,349	23,943
Foreign currency contracts	15	–	–
Fund shares redeemed	4	927	9,972
Investment securities purchased	6,359	65,203	77,228
Total Liabilities	6,449	72,735	114,564
Net Assets Applicable to Outstanding Shares	$ 18,200	$ 1,683,436	$ 3,539,631
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 18,549	$ 1,698,477	$ 3,304,440
Accumulated undistributed (overdistributed) net investment income (loss)	(153 )	(81 )	4,331
Accumulated undistributed (overdistributed) net realized gain (loss)	(1,540 )	(93,311 )	61,392
Net unrealized appreciation (depreciation) of investments	1,346	78,351	169,436
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency	(2 )	–	32
Total Net Assets	$ 18,200	$ 1,683,436	$ 3,539,631
Capital Stock (par value: $.01 a share):
Shares authorized	300,000	955,000	800,000
Net Asset Value Per Share:
Class A: Net Assets	$ 16,738	$ 422,993	$ 2,001,283
Shares Issued and Outstanding	2,452	37,488	244,586
Net Asset Value per share	$ 6.83	$ 11.28	$ 8.18
Maximum Offering Price	$ 7.23	$ 11.54	$ 8.50
Class B: Net Assets	N/A	$ 36,773	$ 72,591
Shares Issued and Outstanding		3,263	8,829
Net Asset Value per share		$ 11.27^(a)	$ 8.22 ^(a)
Class C: Net Assets	$ 1,453	$ 75,290	$ 490,173
Shares Issued and Outstanding	216	6,680	59,525
Net Asset Value per share	$ 6.71 ^(a)	$ 11.27^(a)	$ 8.23 ^(a)
Class J: Net Assets	N/A	$ 112,730	N/A
Shares Issued and Outstanding		9,979
Net Asset Value per share		$ 11.30^(a)
Class P: Net Assets	N/A	$ 10	$ 273
Shares Issued and Outstanding		1	34
Net Asset Value per share		$ 11.28	$ 8.15
Institutional: Net Assets	$ 9	$ 980,476	$ 975,311
Shares Issued and Outstanding	1	86,862	119,610
Net Asset Value per share	$ 7.18	$ 11.29	$ 8.15
R-1: Net Assets	N/A	$ 4,485	N/A
Shares Issued and Outstanding		397
Net Asset Value per share		$ 11.29
R-2: Net Assets	N/A	$ 8,002	N/A
Shares Issued and Outstanding		709
Net Asset Value per share		$ 11.29
R-3: Net Assets	N/A	$ 20,070	N/A
Shares Issued and Outstanding		1,778
Net Asset Value per share		$ 11.29
R-4: Net Assets	N/A	$ 7,364	N/A
Shares Issued and Outstanding		652
Net Asset Value per share		$ 11.29
R-5: Net Assets	N/A	$ 15,243	N/A
Shares Issued and Outstanding		1,349
Net Asset Value per share		$ 11.30


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


				International
			Inflation	Emerging
Amounts in thousands, except per share amounts	Income Fund		Protection Fund	Markets Fund
Investment in securities--at cost	$ 1,239,549		$ 553,238	$ 1,242,427
Foreign currency--at cost	$ –		$ –	$ 34,855
Assets
Investment in securities--at value	$ 1,320,333		$ 573,363	$ 1,527,860
Foreign currency--at value		–	–	34,696
Cash		356	9,026	1,606
Receivables:
Dividends and interest		16,390	2,693	1,234
Expense reimbursement from Manager		42	4	2
Expense reimbursement from Underwriter		3	1	17
Fund shares sold		7,703	1,579	1,292
Investment securities sold		–	–	2,816
Unrealized gain on swap agreements		–	132	–
Variation margin on futures contracts		–	136	–
Prepaid directors' expenses		–	1	–
Total Assets	1,344,827		586,935	1,569,523
Liabilities
Accrued management and investment advisory fees		564	196	1,552
Accrued administrative service fees		–	1	8
Accrued distribution fees		154	10	151
Accrued service fees		–	1	29
Accrued transfer agent fees		102	12	198
Accrued other expenses		68	18	425
Payables:
Dividends payable		5,991	1,270	–
Fund shares redeemed		867	786	3,175
Investment securities purchased		–	–	7,653
Unrealized loss on swap agreements		–	87	–
Variation margin on futures contracts		–	108	–
Total Liabilities		7,746	2,489	13,191
Net Assets Applicable to Outstanding Shares	$ 1,337,081		$ 584,446	$ 1,556,332
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 1,297,667		$ 646,879	$ 1,476,898
Accumulated undistributed (overdistributed) net investment income (loss)		(8,959 )	34	6,122
Accumulated undistributed (overdistributed) net realized gain (loss)		(32,411 )	(82,809 )	(211,970 )
Net unrealized appreciation (depreciation) of investments		80,784	20,342	285,433
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency		–	–	(151 )
Total Net Assets	$ 1,337,081		$ 584,446	$ 1,556,332
Capital Stock (par value: $.01 a share):
Shares authorized		980,000	680,000	555,000
Net Asset Value Per Share:
Class A: Net Assets	$ 268,103		$ 16,234	$ 137,244
Shares Issued and Outstanding		27,770	1,958	5,342
Net Asset Value per share	$ 9.65		$ 8.29	$ 25.69
Maximum Offering Price	$ 9.88		$ 8.61	$ 27.20
Class B: Net Assets	$ 39,778		N/A	$ 16,040
Shares Issued and Outstanding		4,106		652
Net Asset Value per share	$ 9.69 ^(a)			$ 24.60 ^(a)
Class C: Net Assets	$ 59,080		$ 3,195	$ 13,166
Shares Issued and Outstanding		6,092	388	525
Net Asset Value per share	$ 9.70 ^(a)		$ 8.23^(a)	$ 25.06 ^(a)
Class J: Net Assets	$ 36,124		$ 7,613	$ 205,507
Shares Issued and Outstanding		3,735	932	8,280
Net Asset Value per share	$ 9.67 ^(a)		$ 8.17^(a)	$ 24.82 ^(a)
Class P: Net Assets	$ 30		N/A	$ 10
Shares Issued and Outstanding		3		–
Net Asset Value per share	$ 9.67			$ 25.60
Institutional: Net Assets	$ 930,550		$ 550,781	$ 1,048,491
Shares Issued and Outstanding		96,174	66,846	40,957
Net Asset Value per share	$ 9.68		$ 8.24	$ 25.60
R-1: Net Assets	$ 18		$ 660	$ 10,335
Shares Issued and Outstanding		2	81	408
Net Asset Value per share	$ 9.68		$ 8.13	$ 25.35
R-2: Net Assets	$ 172		$ 1,078	$ 13,900
Shares Issued and Outstanding		18	133	552
Net Asset Value per share	$ 9.67		$ 8.13	$ 25.20
R-3: Net Assets	$ 1,472		$ 2,759	$ 42,741
Shares Issued and Outstanding		152	338	1,689
Net Asset Value per share	$ 9.68		$ 8.16	$ 25.31
R-4: Net Assets	$ 1,361		$ 896	$ 31,507
Shares Issued and Outstanding		141	110	1,235
Net Asset Value per share	$ 9.68		$ 8.18	$ 25.52
R-5: Net Assets	$ 393		$ 1,230	$ 37,391
Shares Issued and Outstanding		41	150	1,460
Net Asset Value per share	$ 9.67		$ 8.21	$ 25.60


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	International		LargeCap	LargeCap
Amounts in thousands, except per share amounts	Growth Fund		Blend Fund II	Growth Fund
Investment in securities--at cost	$ 1,232,569		$ 657,252	$ 1,850,358
Foreign currency--at cost	$ 51		$ –	$ –
Assets
Investment in securities--at value	$ 1,405,399		$ 732,483	$ 2,377,686
Foreign currency--at value		51	–	–
Cash		5	3,272	269
Receivables:
Dividends and interest		3,044	791	1,585
Expense reimbursement from Manager		12	13	2
Expense reimbursement from Underwriter		3	9	4
Fund shares sold		117	210	1,879
Investment securities sold		–	1,791	682
Variation margin on futures contracts		–	7	–
Other assets		–	–	12
Prepaid directors' expenses		1	1	–
Total Assets	1,408,632		738,577	2,382,119
Liabilities
Accrued management and investment advisory fees		1,163	466	1,218
Accrued administrative service fees		2	5	12
Accrued distribution fees		21	57	131
Accrued service fees		6	17	52
Accrued transfer agent fees		34	90	400
Accrued directors' expenses		–	–	2
Accrued other expenses		145	52	169
Payables:
Fund shares redeemed		4,910	1,819	3,291
Investment securities purchased		–	1,493	49,215
Line of credit		3,770	130	–
Total Liabilities		10,051	4,129	54,490
Net Assets Applicable to Outstanding Shares	$ 1,398,581		$ 734,448	$ 2,327,629
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 2,041,719		$ 803,966	$ 2,289,483
Accumulated undistributed (overdistributed) net investment income (loss)		14,760	5,507	–
Accumulated undistributed (overdistributed) net realized gain (loss)	(830,835 )		(150,588)	(489,182 )
Net unrealized appreciation (depreciation) of investments		172,830	75,563	527,328
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency		107	–	–
Total Net Assets	$ 1,398,581		$ 734,448	$ 2,327,629
Capital Stock (par value: $.01 a share):
Shares authorized		590,000	490,000	1,220,000
Net Asset Value Per Share:
Class A: Net Assets	$ 6,819		$ 14,055	$ 323,663
Shares Issued and Outstanding		784	1,556	42,915
Net Asset Value per share	$ 8.70		$ 9.03	$ 7.54
Maximum Offering Price	$ 9.21		$ 9.56	$ 7.98
Class B: Net Assets		N/A	$ 3,561	$ 18,486
Shares Issued and Outstanding			402	2,574
Net Asset Value per share			$ 8.83^(a)	$ 7.18 ^(a)
Class C: Net Assets	$ 575		$ 508	$ 11,368
Shares Issued and Outstanding		66	57	1,551
Net Asset Value per share	$ 8.71 ^(a)		$ 8.92^(a)	$ 7.33 ^(a)
Class J: Net Assets	$ 38,971		$ 99,281	$ 45,092
Shares Issued and Outstanding		4,589	11,327	6,254
Net Asset Value per share	$ 8.49 ^(a)		$ 8.76^(a)	$ 7.21 ^(a)
Class P: Net Assets		N/A	N/A	$ 11
Shares Issued and Outstanding				1
Net Asset Value per share				$ 7.69
Institutional: Net Assets	$ 1,323,435		$ 538,314	$ 1,680,577
Shares Issued and Outstanding		152,157	59,644	218,469
Net Asset Value per share	$ 8.70		$ 9.03	$ 7.69
R-1: Net Assets	$ 1,216		$ 3,297	$ 17,427
Shares Issued and Outstanding		140	368	2,350
Net Asset Value per share	$ 8.69		$ 8.95	$ 7.42
R-2: Net Assets	$ 5,725		$ 14,969	$ 17,137
Shares Issued and Outstanding		677	1,682	2,296
Net Asset Value per share	$ 8.46		$ 8.90	$ 7.46
R-3: Net Assets	$ 9,605		$ 25,154	$ 52,360
Shares Issued and Outstanding		1,069	2,815	6,613
Net Asset Value per share	$ 8.99		$ 8.94	$ 7.92
R-4: Net Assets	$ 3,431		$ 13,836	$ 30,517
Shares Issued and Outstanding		399	1,537	3,895
Net Asset Value per share	$ 8.61		$ 9.00	$ 7.83
R-5: Net Assets	$ 8,804		$ 21,473	$ 130,991
Shares Issued and Outstanding		1,021	2,389	16,897
Net Asset Value per share	$ 8.63		$ 8.99	$ 7.75


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	LargeCap		LargeCap	LargeCap S&P 500
Amounts in thousands, except per share amounts	Growth Fund I		Growth Fund II	Index Fund
Investment in securities--at cost	$ 2,387,224		$ 1,147,136	$ 2,156,352
Assets
Investment in securities--at value	$ 2,859,824		$ 1,348,708	$ 2,299,404
Cash		18,397	19,843	93
Receivables:
Dividends and interest		1,360	1,148	2,496
Expense reimbursement from Manager		41	25	11
Expense reimbursement from Underwriter		4	2	27
Fund shares sold		534	71	835
Investment securities sold		6,684	17,956	–
Variation margin on futures contracts		34	11	17
Other assets		1	–	3
Prepaid directors' expenses		–	1	–
Total Assets	2,886,879		1,387,765	2,302,886
Liabilities
Accrued management and investment advisory fees		1,495	1,077	289
Accrued administrative service fees		5	2	23
Accrued distribution fees		37	16	195
Accrued service fees		24	11	100
Accrued transfer agent fees		88	18	282
Accrued directors' expenses		–	–	3
Accrued other expenses		45	25	279
Payables:
Foreign currency contracts		–	5	–
Fund shares redeemed		4,140	1,413	2,842
Investment securities purchased		3,048	12,970	224
Line of credit		–	85	–
Total Liabilities		8,882	15,622	4,237
Net Assets Applicable to Outstanding Shares	$ 2,877,997		$ 1,372,143	$ 2,298,649
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 2,568,593		$ 1,435,948	$ 2,420,736
Accumulated undistributed (overdistributed) net investment income (loss)		2,294	6,604	19,333
Accumulated undistributed (overdistributed) net realized gain (loss)	(169,660 )		(272,689)	(285,975 )
Net unrealized appreciation (depreciation) of investments		476,770	202,285	144,555
Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign
currency		–	(5 )	–
Total Net Assets	$ 2,877,997		$ 1,372,143	$ 2,298,649
Capital Stock (par value: $.01 a share):
Shares authorized		965,000	670,000	785,000
Net Asset Value Per Share:
Class A: Net Assets	$ 16,672		$ 2,005	$ 154,529
Shares Issued and Outstanding		2,006	263	18,512
Net Asset Value per share	$ 8.30		$ 7.63	$ 8.35
Maximum Offering Price	$ 8.78		$ 8.07	$ 8.48
Class B: Net Assets	$ 1,779		N/A	N/A
Shares Issued and Outstanding		226
Net Asset Value per share	$ 7.83 ^(a)
Class C: Net Assets	$ 758		$ 344	$ 5,898
Shares Issued and Outstanding		92	46	714
Net Asset Value per share	$ 8.22 ^(a)		$ 7.40^(a)	$ 8.26 ^(a)
Class J: Net Assets	$ 53,357		$ 26,662	$ 317,882
Shares Issued and Outstanding		6,806	3,739	38,449
Net Asset Value per share	$ 7.84 ^(a)		$ 7.13^(a)	$ 8.27 ^(a)
Institutional: Net Assets	$ 2,685,536		$ 1,291,759	$ 1,343,467
Shares Issued and Outstanding		310,121	164,567	160,856
Net Asset Value per share	$ 8.66		$ 7.85	$ 8.35
R-1: Net Assets	$ 2,882		$ 1,473	$ 16,843
Shares Issued and Outstanding		349	196	2,028
Net Asset Value per share	$ 8.25		$ 7.52	$ 8.31
R-2: Net Assets	$ 7,759		$ 7,359	$ 47,540
Shares Issued and Outstanding		962	1,007	5,704
Net Asset Value per share	$ 8.07		$ 7.31	$ 8.34
R-3: Net Assets	$ 31,002		$ 8,490	$ 115,162
Shares Issued and Outstanding		3,701	1,140	13,795
Net Asset Value per share	$ 8.38		$ 7.45	$ 8.35
R-4: Net Assets	$ 12,655		$ 9,396	$ 106,514
Shares Issued and Outstanding		1,510	1,235	12,714
Net Asset Value per share	$ 8.38		$ 7.61	$ 8.38
R-5: Net Assets	$ 65,597		$ 24,655	$ 190,814
Shares Issued and Outstanding		7,706	3,214	22,616
Net Asset Value per share	$ 8.51		$ 7.67	$ 8.44


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	LargeCap		LargeCap	MidCap
Amounts in thousands, except per share amounts	Value Fund		Value Fund III	Blend Fund
Investment in securities--at cost	$ 1,097,091		$ 1,625,291	$ 1,090,209
Foreign currency--at cost	$ –		$ –	$ 16
Assets
Investment in securities--at value	$ 1,178,308		$ 1,757,945	$ 1,238,589
Foreign currency--at value		–	–	17
Cash		56	8,063	26
Receivables:
Dividends and interest		1,195	2,282	600
Expense reimbursement from Manager		1	24	7
Expense reimbursement from Underwriter		4	6	15
Fund shares sold		298	26	1,854
Investment securities sold		5,115	1,920	5,518
Variation margin on futures contracts		4	14	–
Other assets		28	–	6
Prepaid directors' expenses		1	–	–
Total Assets	1,185,010		1,770,280	1,246,632
Liabilities
Accrued management and investment advisory fees		433	1,156	652
Accrued administrative service fees		1	6	3
Accrued distribution fees		58	43	233
Accrued service fees		3	17	14
Accrued transfer agent fees		157	78	425
Accrued directors' expenses		–	–	2
Accrued other expenses		56	49	137
Payables:
Fund shares redeemed		1,571	6,911	907
Investment securities purchased		8,012	386	3,658
Total Liabilities		10,291	8,646	6,031
Net Assets Applicable to Outstanding Shares	$ 1,174,719		$ 1,761,634	$ 1,240,601
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 1,292,686		$ 2,239,269	$ 1,039,520
Accumulated undistributed (overdistributed) net investment income (loss)		11,300	17,243	4,450
Accumulated undistributed (overdistributed) net realized gain (loss)	(211,254 )		(628,377)	48,251
Net unrealized appreciation (depreciation) of investments		81,987	133,499	148,380
Total Net Assets	$ 1,174,719		$ 1,761,634	$ 1,240,601
Capital Stock (par value: $.01 a share):
Shares authorized		555,000	650,000	590,000
Net Asset Value Per Share:
Class A: Net Assets	$ 159,592		$ 10,361	$ 542,687
Shares Issued and Outstanding		18,140	1,061	41,662
Net Asset Value per share	$ 8.80		$ 9.74	$ 13.03
Maximum Offering Price	$ 9.31		$ 10.31	$ 13.79
Class B: Net Assets	$ 6,025		$ 2,483	$ 37,441
Shares Issued and Outstanding		688	254	2,951
Net Asset Value per share	$ 8.76 ^(a)		$ 9.75^(a)	$ 12.69 ^(a)
Class C: Net Assets	$ 1,581		$ 343	$ 21,342
Shares Issued and Outstanding		182	35	1,692
Net Asset Value per share	$ 8.70 ^(a)		$ 9.72^(a)	$ 12.62 ^(a)
Class J: Net Assets	$ 41,563		$ 67,982	$ 174,254
Shares Issued and Outstanding		4,787	7,111	13,796
Net Asset Value per share	$ 8.68 ^(a)		$ 9.56^(a)	$ 12.63 ^(a)
Class P: Net Assets		N/A	N/A	$ 91
Shares Issued and Outstanding				7
Net Asset Value per share				$ 13.18
Institutional: Net Assets	$ 950,085		$ 1,601,614	$ 392,309
Shares Issued and Outstanding		107,890	165,078	29,766
Net Asset Value per share	$ 8.81		$ 9.70	$ 13.18
R-1: Net Assets	$ 1,300		$ 4,179	$ 2,261
Shares Issued and Outstanding		149	434	179
Net Asset Value per share	$ 8.72		$ 9.63	$ 12.65
R-2: Net Assets	$ 3,191		$ 15,933	$ 5,421
Shares Issued and Outstanding		365	1,662	427
Net Asset Value per share	$ 8.74		$ 9.59	$ 12.71
R-3: Net Assets	$ 3,466		$ 23,390	$ 18,958
Shares Issued and Outstanding		397	2,354	1,466
Net Asset Value per share	$ 8.72		$ 9.93	$ 12.93
R-4: Net Assets	$ 2,289		$ 13,028	$ 9,201
Shares Issued and Outstanding		262	1,349	697
Net Asset Value per share	$ 8.74		$ 9.66	$ 13.21
R-5: Net Assets	$ 5,627		$ 22,321	$ 36,636
Shares Issued and Outstanding		639	2,299	2,797
Net Asset Value per share	$ 8.81		$ 9.71	$ 13.09


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	MidCap		MidCap	Money Market
Amounts in thousands, except per share amounts	Growth Fund III		Value Fund I	Fund
Investment in securities--at cost	$ 1,054,400		$ 1,231,332	$ 1,325,777
Assets
Investment in securities--at value	$ 1,351,038		$ 1,446,714	$ 1,325,777
Cash		7,029	7,801	10
Receivables:
Dividends and interest		199	1,125	235
Expense reimbursement from Manager		36	35	247
Expense reimbursement from Underwriter		2	5	50
Fund shares sold		160	209	1,548
Investment securities sold		9,634	2,226	–
Variation margin on futures contracts		149	215	–
Other assets		–	–	26
Total Assets	1,368,247		1,458,330	1,327,893
Liabilities
Accrued management and investment advisory fees		1,097	1,195	442
Accrued administrative service fees		7	8	12
Accrued distribution fees		32	40	139
Accrued service fees		23	25	53
Accrued transfer agent fees		61	50	354
Accrued directors' expenses		–	–	6
Accrued other expenses		42	50	297
Payables:
Fund shares redeemed		3,111	1,901	2,509
Investment securities purchased		3,282	5,326	–
Total Liabilities		7,655	8,595	3,812
Net Assets Applicable to Outstanding Shares	$ 1,360,592		$ 1,449,735	$ 1,324,081
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 1,373,308		$ 1,562,532	$ 1,365,701
Accumulated undistributed (overdistributed) net investment income (loss)		44	12,419	–
Accumulated undistributed (overdistributed) net realized gain (loss)	(310,251 )		(343,208)	(41,620 )
Net unrealized appreciation (depreciation) of investments		297,491	217,992	–
Total Net Assets	$ 1,360,592		$ 1,449,735	$ 1,324,081
Capital Stock (par value: $.01 a share):
Shares authorized		560,000	580,000	17,575,000
Net Asset Value Per Share:
Class A: Net Assets	$ 10,150		$ 3,133	$ 505,252
Shares Issued and Outstanding		1,104	258	505,313
Net Asset Value per share	$ 9.19		$ 12.12	$ 1.00
Maximum Offering Price	$ 9.72		$ 12.83	$ 1.00
Class B: Net Assets	$ 1,772		$ 485	$ 36,068
Shares Issued and Outstanding		201	40	36,073
Net Asset Value per share	$ 8.82 ^(a)		$ 12.02^(a)	$ 1.00 ^(a)
Class C: Net Assets	$ 815		$ 742	$ 20,638
Shares Issued and Outstanding		91	62	20,640
Net Asset Value per share	$ 8.98 ^(a)		$ 12.01^(a)	$ 1.00 ^(a)
Class J: Net Assets	$ 30,949		$ 55,107	$ 310,250
Shares Issued and Outstanding		3,510	4,568	310,287
Net Asset Value per share	$ 8.82 ^(a)		$ 12.06^(a)	$ 1.00 ^(a)
Institutional: Net Assets	$ 1,206,656		$ 1,269,331	$ 202,082
Shares Issued and Outstanding		126,032	104,313	202,106
Net Asset Value per share	$ 9.57		$ 12.17	$ 1.00
R-1: Net Assets	$ 5,095		$ 7,222	$ 9,818
Shares Issued and Outstanding		562	605	9,819
Net Asset Value per share	$ 9.07		$ 11.94	$ 1.00
R-2: Net Assets	$ 11,680		$ 19,875	$ 25,705
Shares Issued and Outstanding		1,269	1,664	25,708
Net Asset Value per share	$ 9.21		$ 11.94	$ 1.00
R-3: Net Assets	$ 38,227		$ 34,752	$ 56,225
Shares Issued and Outstanding		4,012	2,886	56,232
Net Asset Value per share	$ 9.53		$ 12.04	$ 1.00
R-4: Net Assets	$ 32,907		$ 28,066	$ 22,874
Shares Issued and Outstanding		3,438	2,324	22,877
Net Asset Value per share	$ 9.57		$ 12.08	$ 1.00
R-5: Net Assets	$ 22,341		$ 31,022	$ 135,169
Shares Issued and Outstanding		2,296	2,559	135,185
Net Asset Value per share	$ 9.73		$ 12.12	$ 1.00


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	Principal Capital		Real Estate	Short-Term
Amounts in thousands, except per share amounts	Appreciation Fund		Securities Fund	Income Fund
Investment in securities--at cost	$ 750,201		$ 1,254,582	$ 930,350
Assets
Investment in securities--at value	$ 1,085,794		$ 1,710,442	$ 958,841
Cash		61	48	200
Receivables:
Dividends and interest		964	315	8,183
Expense reimbursement from Manager		1	4	12
Expense reimbursement from Underwriter		–	11	4
Fund shares sold		613	2,197	5,230
Investment securities sold		1,484	9,867	4,443
Total Assets	1,088,917		1,722,884	976,913
Liabilities
Accrued management and investment advisory fees		499	1,197	353
Accrued administrative service fees		–	8	–
Accrued distribution fees		156	109	138
Accrued service fees		3	30	1
Accrued transfer agent fees		240	173	134
Accrued directors' expenses		–	–	1
Accrued other expenses		186	69	83
Payables:
Dividends payable		–	–	1,668
Fund shares redeemed		693	2,863	767
Investment securities purchased		1,047	10,087	20,227
Variation margin on futures contracts		–	–	153
Total Liabilities		2,824	14,536	23,525
Net Assets Applicable to Outstanding Shares	$ 1,086,093		$ 1,708,348	$ 953,388
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 709,915		$ 1,709,292	$ 969,774
Accumulated undistributed (overdistributed) net investment income (loss)		14,366	606	230
Accumulated undistributed (overdistributed) net realized gain (loss)		26,219	(457,410 )	(44,244 )
Net unrealized appreciation (depreciation) of investments		335,593	455,860	27,628
Total Net Assets	$ 1,086,093		$ 1,708,348	$ 953,388
Capital Stock (par value: $.01 a share):
Shares authorized		880,000	830,000	685,000
Net Asset Value Per Share:
Class A: Net Assets	$ 409,697		$ 107,672	$ 330,516
Shares Issued and Outstanding		11,025	6,800	27,162
Net Asset Value per share	$ 37.16		$ 15.83	$ 12.17
Maximum Offering Price	$ 39.32		$ 16.75	$ 12.45
Class B: Net Assets	$ 62,508		$ 11,944	N/A
Shares Issued and Outstanding		1,981	759
Net Asset Value per share	$ 31.55 ^(a)		$ 15.72^(a)
Class C: Net Assets	$ 19,689		$ 12,850	$ 89,598
Shares Issued and Outstanding		621	817	7,357
Net Asset Value per share	$ 31.73 ^(a)		$ 15.74^(a)	$ 12.18 ^(a)
Class J: Net Assets		N/A	$ 128,423	$ 52,874
Shares Issued and Outstanding			8,278	4,346
Net Asset Value per share			$ 15.51^(a)	$ 12.17 ^(a)
Class P: Net Assets	$ 10		$ 10	$ 105
Shares Issued and Outstanding		–	1	9
Net Asset Value per share	$ 37.62		$ 15.83	$ 12.16
Institutional: Net Assets	$ 578,458		$ 1,303,556	$ 473,931
Shares Issued and Outstanding		15,373	82,302	38,963
Net Asset Value per share	$ 37.63		$ 15.84	$ 12.16
R-1: Net Assets	$ 245		$ 6,794	$ 788
Shares Issued and Outstanding		7	433	65
Net Asset Value per share	$ 37.42		$ 15.70	$ 12.17
R-2: Net Assets	$ 82		$ 14,881	$ 229
Shares Issued and Outstanding		2	972	19
Net Asset Value per share	$ 37.44		$ 15.31	$ 12.17
R-3: Net Assets	$ 1,084		$ 39,463	$ 3,302
Shares Issued and Outstanding		29	2,535	271
Net Asset Value per share	$ 37.49		$ 15.57	$ 12.17
R-4: Net Assets	$ 2,816		$ 23,587	$ 505
Shares Issued and Outstanding		75	1,526	41
Net Asset Value per share	$ 37.53		$ 15.45	$ 12.17
R-5: Net Assets	$ 11,504		$ 59,168	$ 1,540
Shares Issued and Outstanding		306	3,823	127
Net Asset Value per share	$ 37.57		$ 15.48	$ 12.17


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	SmallCap		SmallCap	SmallCap
Amounts in thousands, except per share amounts	Blend Fund		Growth Fund	Growth Fund II
Investment in securities--at cost	$ 175,278		$ 210,789	$ 212,821
Assets
Investment in securities--at value	$ 211,424		$ 252,839	$ 264,759
Cash		160	177	4,285
Receivables:
Dividends and interest		75	70	24
Expense reimbursement from Manager		3	13	17
Expense reimbursement from Underwriter		7	2	1
Fund shares sold		68	139	21
Investment securities sold		1,061	492	787
Variation margin on futures contracts		15	17	56
Other assets		1	–	–
Prepaid directors' expenses		1	2	3
Total Assets		212,815	253,751	269,953
Liabilities
Accrued management and investment advisory fees		133	158	230
Accrued administrative service fees		–	–	2
Accrued distribution fees		55	21	12
Accrued service fees		2	1	6
Accrued transfer agent fees		129	77	39
Accrued other expenses		49	52	36
Payables:
Fund shares redeemed		150	119	1,816
Investment securities purchased		1,156	711	2,125
Total Liabilities		1,674	1,139	4,266
Net Assets Applicable to Outstanding Shares	$ 211,141		$ 252,612	$ 265,687
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 243,280		$ 292,950	$ 293,142
Accumulated undistributed (overdistributed) net investment income (loss)		–	–	–
Accumulated undistributed (overdistributed) net realized gain (loss)		(68,460 )	(82,584 )	(79,501 )
Net unrealized appreciation (depreciation) of investments		36,321	42,246	52,046
Total Net Assets	$ 211,141		$ 252,612	$ 265,687
Capital Stock (par value: $.01 a share):
Shares authorized		455,000	705,000	440,000
Net Asset Value Per Share:
Class A: Net Assets	$ 73,302		$ 37,428	$ 4,415
Shares Issued and Outstanding		5,642	5,227	590
Net Asset Value per share	$ 12.99		$ 7.16	$ 7.48
Maximum Offering Price	$ 13.75		$ 7.58	$ 7.92
Class B: Net Assets	$ 5,809		$ 2,051	$ 995
Shares Issued and Outstanding		472	297	139
Net Asset Value per share	$ 12.31 ^(a)		$ 6.90^(a)	$ 7.16 ^(a)
Class C: Net Assets	$ 1,546		$ 1,991	$ 307
Shares Issued and Outstanding		122	285	42
Net Asset Value per share	$ 12.67 ^(a)		$ 7.00^(a)	$ 7.30 ^(a)
Class J: Net Assets	$ 86,986		$ 25,075	$ 17,400
Shares Issued and Outstanding		6,947	3,707	2,561
Net Asset Value per share	$ 12.52 ^(a)		$ 6.76^(a)	$ 6.79 ^(a)
Institutional: Net Assets	$ 35,729		$ 179,020	$ 215,546
Shares Issued and Outstanding		2,672	24,219	27,657
Net Asset Value per share	$ 13.37		$ 7.39	$ 7.79
R-1: Net Assets	$ 232		$ 647	$ 1,239
Shares Issued and Outstanding		18	93	168
Net Asset Value per share	$ 12.78		$ 6.99	$ 7.38
R-2: Net Assets	$ 1,195		$ 529	$ 5,723
Shares Issued and Outstanding		93	74	804
Net Asset Value per share	$ 12.78		$ 7.13	$ 7.12
R-3: Net Assets	$ 889		$ 1,814	$ 5,728
Shares Issued and Outstanding		68	250	780
Net Asset Value per share	$ 13.01		$ 7.25	$ 7.34
R-4: Net Assets	$ 2,139		$ 281	$ 4,205
Shares Issued and Outstanding		162	38	563
Net Asset Value per share	$ 13.24		$ 7.44	$ 7.47
R-5: Net Assets	$ 3,314		$ 3,776	$ 10,129
Shares Issued and Outstanding		248	502	1,335
Net Asset Value per share	$ 13.38		$ 7.52	$ 7.59


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010

	SmallCap		Tax-Exempt
Amounts in thousands, except per share amounts	Value Fund		Bond Fund
Investment in securities--at cost	$ 256,210		$ 266,726
Assets
Investment in securities--at value	$ 295,194		$ 281,362
Cash		10	272
Receivables:
Dividends and interest		167	4,232
Expense reimbursement from Manager		10	3
Expense reimbursement from Underwriter		4	–
Fund shares sold		114	711
Investment securities sold		10,471	907
Other assets		–	9
Prepaid directors' expenses		2	1
Total Assets		305,972	287,497
Liabilities
Accrued management and investment advisory fees		189	113
Accrued administrative service fees		3	–
Accrued distribution fees		28	65
Accrued service fees		8	–
Accrued transfer agent fees		56	39
Accrued other expenses		53	31
Payables:
Dividends payable		–	946
Fund shares redeemed		399	132
Interest expense and fees payable		–	44
Investment securities purchased		7,657	2,828
Floating rate notes issued		–	19,264
Total Liabilities		8,393	23,462
Net Assets Applicable to Outstanding Shares	$ 297,579		$ 264,035
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 417,491		$ 265,761
Accumulated undistributed (overdistributed) net investment income (loss)		1,940	888
Accumulated undistributed (overdistributed) net realized gain (loss)	(160,836 )		(17,250)
Net unrealized appreciation (depreciation) of investments		38,984	14,636
Total Net Assets	$ 297,579		$ 264,035
Capital Stock (par value: $.01 a share):
Shares authorized		830,000	300,000
Net Asset Value Per Share:
Class A: Net Assets	$ 15,561		$ 249,952
Shares Issued and Outstanding		1,114	34,540
Net Asset Value per share	$ 13.97		$ 7.24
Maximum Offering Price	$ 14.78		$ 7.52
Class B: Net Assets	$ 2,367		$ 5,877
Shares Issued and Outstanding		175	812
Net Asset Value per share	$ 13.53 ^(a)		$ 7.24^(a)
Class C: Net Assets	$ 2,959		$ 8,206
Shares Issued and Outstanding		215	1,132
Net Asset Value per share	$ 13.73 ^(a)		$ 7.25^(a)
Class J: Net Assets	$ 41,296		N/A
Shares Issued and Outstanding		3,057
Net Asset Value per share	$ 13.51 ^(a)
Institutional: Net Assets	$ 196,946		N/A
Shares Issued and Outstanding		14,060
Net Asset Value per share	$ 14.01
R-1: Net Assets	$ 1,863		N/A
Shares Issued and Outstanding		135
Net Asset Value per share	$ 13.77
R-2: Net Assets	$ 5,960		N/A
Shares Issued and Outstanding		432
Net Asset Value per share	$ 13.80
R-3: Net Assets	$ 10,952		N/A
Shares Issued and Outstanding		785
Net Asset Value per share	$ 13.95
R-4: Net Assets	$ 4,073		N/A
Shares Issued and Outstanding		290
Net Asset Value per share	$ 14.04
R-5: Net Assets	$ 15,602		N/A
Shares Issued and Outstanding		1,105
Net Asset Value per share	$ 14.12


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


				Disciplined
	Bond & Mortgage		California	LargeCap
Amounts in thousands	Securities Fund		Municipal Fund	Blend Fund
Net Investment Income (Loss)
Income:
Dividends	$ 114		$ –	$ 28,949
Interest		100,669	17,265	53
Total Income		100,783	17,265	29,002
Expenses:
Management and investment advisory fees		10,413	1,493	8,550
Distribution fees - Class A		326	649	509
Distribution fees - Class B		118	260	158
Distribution fees - Class C		49	128	20
Distribution fees - Class J		894	N/A	N/A
Distribution fees - R-1		37	N/A	4
Distribution fees - R-2		86	N/A	6
Distribution fees - R-3		112	N/A	17
Distribution fees - R-4		31	N/A	4
Administrative service fees - R-1		29	N/A	3
Administrative service fees - R-2		58	N/A	4
Administrative service fees - R-3		50	N/A	8
Administrative service fees - R-4		23	N/A	3
Administrative service fees - R-5		35	N/A	1
Registration fees - Class A		13	14	14
Registration fees - Class B		13	15	13
Registration fees - Class C		15	17	15
Registration fees - Class J		13	N/A	N/A
Registration fees - Institutional		–	N/A	31
Service fees - R-1		26	N/A	3
Service fees - R-2		72	N/A	5
Service fees - R-3		94	N/A	14
Service fees - R-4		62	N/A	7
Service fees - R-5		117	N/A	4
Shareholder reports - Class A		21	18	96
Shareholder reports - Class B		4	4	18
Shareholder reports - Class C		1	1	–
Shareholder reports - Class J		59	N/A	N/A
Transfer agent fees - Class A		307	100	590
Transfer agent fees - Class B		56	23	99
Transfer agent fees - Class C		14	8	9
Transfer agent fees - Class J		269	N/A	N/A
Transfer agent fees - Institutional		1	N/A	3
Custodian fees		23	3	12
Directors' expenses		23	10	10
Interest expense and fees		–	212	–
Professional fees		18	13	17
Other expenses		49	9	48
Total Gross Expenses		13,531	2,977	10,295
Less: Reimbursement from Manager - Class A		130	–	–
Less: Reimbursement from Manager - Class B		64	–	–
Less: Reimbursement from Manager - Class C		18	–	20
Less: Reimbursement from Underwriter - Class J		134	N/A	N/A
Total Net Expenses		13,185	2,977	10,275
Net Investment Income (Loss)		87,598	14,288	18,727

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		35,224	(2,937 )	224,249
Foreign currency transactions		72	–	–
Futures contracts		433	–	349
Short sales		169	–	–
Swap agreements		(32,488 )	–	–
Change in unrealized appreciation/depreciation of:
Investments		139,361	15,466	2,873
Futures contracts		(660 )	–	332
Swap agreements		18,005	–	–
Translation of assets and liabilities in foreign currencies		(214 )	–	–
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		159,902	12,529	227,803
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 247,500		$ 26,817	$ 246,530


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


	Diversified			Global Diversified
Amounts in thousands	International Fund		Equity Income Fund	Income Fund
Net Investment Income (Loss)
Income:
Dividends	$ 43,264		$ 82,817	$ 9,270
Withholding tax		(5,508 )	–	(144 )
Interest		20	369	22,769
Total Income		37,776	83,186	31,895
Expenses:
Management and investment advisory fees		13,881	11,620	3,654
Distribution fees - Class A		668	1,499	573
Distribution fees - Class B		211	1,294	N/A
Distribution fees - Class C		113	1,031	1,003
Distribution fees - Class J		761	N/A	N/A
Distribution fees - R-1		33	1	N/A
Distribution fees - R-2		60	–	N/A
Distribution fees - R-3		167	2	N/A
Distribution fees - R-4		48	–	N/A
Administrative service fees - R-1		27	–	N/A
Administrative service fees - R-2		39	–	N/A
Administrative service fees - R-3		75	1	N/A
Administrative service fees - R-4		40	–	N/A
Administrative service fees - R-5		48	–	N/A
Registration fees - Class A		16	11	45
Registration fees - Class B		14	15	N/A
Registration fees - Class C		16	15	21
Registration fees - Class J		16	N/A	N/A
Registration fees - Class P		2	2	1
Registration fees - Institutional		22	16	40
Service fees - R-1		24	1	N/A
Service fees - R-2		49	–	N/A
Service fees - R-3		139	2	N/A
Service fees - R-4		95	–	N/A
Service fees - R-5		148	1	N/A
Shareholder reports - Class A		74	184	14
Shareholder reports - Class B		14	94	N/A
Shareholder reports - Class C		4	33	7
Shareholder reports - Class J		54	N/A	N/A
Shareholder reports - Institutional		2	2	4
Transfer agent fees - Class A		877	1,151	161
Transfer agent fees - Class B		132	436	N/A
Transfer agent fees - Class C		39	167	81
Transfer agent fees - Class J		286	N/A	N/A
Transfer agent fees - Institutional		8	15	15
Custodian fees		470	4	64
Directors' expenses		26	28	15
Professional fees		50	17	21
Other expenses		38	46	5
Total Gross Expenses		18,786	17,688	5,724
Less: Reimbursement from Manager - Class C		40	–	–
Less: Reimbursement from Manager - Class P		2	2	2
Less: Reimbursement from Underwriter - Class J		113	N/A	N/A
Total Net Expenses		18,631	17,686	5,722
Net Investment Income (Loss)		19,145	65,500	26,173

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		77,641	23,684	12,210
Foreign currency transactions		(781 )	–	(6 )
Futures contracts		–	–	47
Change in unrealized appreciation/depreciation of:
Investments		120,438	318,109	56,391
Translation of assets and liabilities in foreign currencies		58	–	4
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		197,356	341,793	68,646
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 216,501		$ 407,293	$ 94,819


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


	Global Real Estate		Government & High
Amounts in thousands	Securities Fund		Quality Bond Fund	High Yield Fund
Net Investment Income (Loss)
Income:
Dividends from affiliated securities	$ –		$ –	$ 1,022
Dividends		373	1	3,168
Withholding tax		(19 )	–	(121 )
Interest		–	71,245	273,413
Total Income		354	71,246	277,482
Expenses:
Management and investment advisory fees		103	7,694	15,395
Distribution fees - Class A		21	875	4,236
Distribution fees - Class B		N/A	477	748
Distribution fees - Class C		20	470	4,002
Distribution fees - Class J		N/A	459	N/A
Distribution fees - R-1		N/A	12	N/A
Distribution fees - R-2		N/A	24	N/A
Distribution fees - R-3		N/A	39	N/A
Distribution fees - R-4		N/A	5	N/A
Administrative service fees - R-1		N/A	10	N/A
Administrative service fees - R-2		N/A	16	N/A
Administrative service fees - R-3		N/A	16	N/A
Administrative service fees - R-4		N/A	4	N/A
Administrative service fees - R-5		N/A	7	N/A
Registration fees - Class A		17	42	108
Registration fees - Class B		N/A	16	20
Registration fees - Class C		17	21	46
Registration fees - Class J		N/A	26	N/A
Registration fees - Class P		N/A	1	1
Registration fees - Institutional		20	17	63
Service fees - R-1		N/A	9	N/A
Service fees - R-2		N/A	20	N/A
Service fees - R-3		N/A	33	N/A
Service fees - R-4		N/A	11	N/A
Service fees - R-5		N/A	27	N/A
Shareholder reports - Class A		2	57	417
Shareholder reports - Class B		N/A	17	23
Shareholder reports - Class C		–	6	91
Shareholder reports - Class J		N/A	29	N/A
Shareholder reports - Institutional		–	–	79
Transfer agent fees - Class A		22	533	2,439
Transfer agent fees - Class B		N/A	121	124
Transfer agent fees - Class C		6	44	475
Transfer agent fees - Class J		N/A	189	N/A
Transfer agent fees - Institutional		1	7	326
Custodian fees		52	6	26
Directors' expenses		2	22	76
Professional fees		19	15	18
Other expenses		1	38	71
Total Gross Expenses		303	11,415	28,784
Less: Reimbursement from Manager - Class A		70	–	–
Less: Reimbursement from Manager - Class B		N/A	84	–
Less: Reimbursement from Manager - Class C		31	12	–
Less: Reimbursement from Manager - Class J		N/A	130	N/A
Less: Reimbursement from Manager - Class P		N/A	2	2
Less: Reimbursement from Manager - Institutional		27	–	144
Less: Reimbursement from Manager - R-1		N/A	3	N/A
Less: Reimbursement from Manager - R-2		N/A	8	N/A
Less: Reimbursement from Manager - R-3		N/A	15	N/A
Less: Reimbursement from Manager - R-4		N/A	5	N/A
Less: Reimbursement from Manager - R-5		N/A	13	N/A
Less: Reimbursement from Underwriter - Class A		–	350	–
Less: Reimbursement from Underwriter - Class J		N/A	69	N/A
Total Net Expenses		175	10,724	28,638
Net Investment Income (Loss)		179	60,522	248,844

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		1,098	9,800	124,931
Foreign currency transactions		22	–	(546 )
Change in unrealized appreciation/depreciation of:
Investments		1,258	48,308	94,771
Investments in affiliated securities		–	–	8,399
Translation of assets and liabilities in foreign currencies		8	–	38
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		2,386	58,108	227,593
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 2,565		$ 118,630	$ 476,437


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


				International
			Inflation	Emerging
Amounts in thousands		Income Fund	Protection Fund	Markets Fund
Net Investment Income (Loss)
Income:
Dividends	$ –		$ –	$ 34,083
Withholding tax		–	–	(3,986 )
Interest		73,796	12,490	12
Securities lending - net		–	6	–
Total Income		73,796	12,496	30,109
Expenses:
Management and investment advisory fees		5,951	2,034	16,302
Distribution fees - Class A		548	34	311
Distribution fees - Class B		481	N/A	170
Distribution fees - Class C		464	23	121
Distribution fees - Class J		85	32	861
Distribution fees - R-1		–	2	31
Distribution fees - R-2		–	2	37
Distribution fees - R-3		1	5	92
Distribution fees - R-4		–	1	28
Administrative service fees - R-1		–	1	25
Administrative service fees - R-2		–	2	25
Administrative service fees - R-3		–	2	40
Administrative service fees - R-4		–	1	22
Administrative service fees - R-5		–	–	23
Registration fees - Class A		25	16	22
Registration fees - Class B		16	N/A	16
Registration fees - Class C		22	15	17
Registration fees - Class J		33	15	32
Registration fees - Class P		2	N/A	1
Registration fees - Institutional		18	23	29
Service fees - R-1		–	1	23
Service fees - R-2		–	2	31
Service fees - R-3		1	4	78
Service fees - R-4		–	2	55
Service fees - R-5		–	2	73
Shareholder reports - Class A		43	3	38
Shareholder reports - Class B		17	N/A	9
Shareholder reports - Class C		8	1	5
Shareholder reports - Class J		3	2	45
Shareholder reports - Institutional		20	–	61
Transfer agent fees - Class A		265	28	367
Transfer agent fees - Class B		85	N/A	84
Transfer agent fees - Class C		57	8	44
Transfer agent fees - Class J		115	17	293
Transfer agent fees - Institutional		79	2	94
Custodian fees		4	1	932
Directors' expenses		14	13	20
Professional fees		19	15	24
Other expenses		22	11	47
Total Gross Expenses		8,398	2,320	20,528
Less: Reimbursement from Manager - Class A		–	14	–
Less: Reimbursement from Manager - Class B		17	N/A	–
Less: Reimbursement from Manager - Class C		1	18	–
Less: Reimbursement from Manager - Class J		109	8	–
Less: Reimbursement from Manager - Class P		2	N/A	2
Less: Reimbursement from Underwriter - Class J		15	5	127
Total Net Expenses		8,254	2,275	20,399
Net Investment Income (Loss)		65,542	10,221	9,710

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		(8,161 )	8,424	205,325
Foreign currency transactions		3	–	(3,324 )
Futures contracts		–	1,161	–
Swap agreements		–	105	–
Change in unrealized appreciation/depreciation of:
Investments		61,953	35,564	93,981
Futures contracts		–	41	–
Swap agreements		–	45	–
Translation of assets and liabilities in foreign currencies		1	–	(139 )
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		53,796	45,340	295,843
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 119,338		$ 55,561	$ 305,553


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


		International	LargeCap	LargeCap
Amounts in thousands		Growth Fund	Blend Fund II	Growth Fund
Net Investment Income (Loss)
Income:
Dividends	$ 35,436		$ 14,350	$ 15,731
Withholding tax		(4,890 )	–	–
Interest		25	18	101
Total Income		30,571	14,368	15,832
Expenses:
Management and investment advisory fees		12,867	5,576	14,469
Distribution fees - Class A		14	87	758
Distribution fees - Class B		N/A	97	208
Distribution fees - Class C		5	11	99
Distribution fees - Class J		170	443	192
Distribution fees - R-1		4	13	56
Distribution fees - R-2		18	47	52
Distribution fees - R-3		38	61	137
Distribution fees - R-4		4	13	32
Administrative service fees - R-1		3	10	45
Administrative service fees - R-2		12	31	35
Administrative service fees - R-3		18	27	61
Administrative service fees - R-4		4	11	27
Administrative service fees - R-5		8	16	74
Registration fees - Class A		19	14	18
Registration fees - Class B		N/A	15	15
Registration fees - Class C		18	15	15
Registration fees - Class J		16	13	14
Registration fees - Class P		N/A	N/A	2
Registration fees - Institutional		20	17	40
Service fees - R-1		3	9	40
Service fees - R-2		15	40	43
Service fees - R-3		30	51	114
Service fees - R-4		8	27	62
Service fees - R-5		22	49	257
Shareholder reports - Class A		3	11	163
Shareholder reports - Class B		N/A	3	19
Shareholder reports - Class C		–	–	4
Shareholder reports - Class J		14	24	14
Shareholder reports - Institutional		26	26	43
Transfer agent fees - Class A		31	145	1,202
Transfer agent fees - Class B		N/A	49	128
Transfer agent fees - Class C		6	10	25
Transfer agent fees - Class J		69	116	73
Transfer agent fees - Institutional		97	91	137
Custodian fees		200	17	3
Directors' expenses		16	24	27
Professional fees		21	15	29
Other expenses		46	23	50
Total Gross Expenses		13,845	7,247	18,782
Less: Reimbursement from Manager		–	135	–
Less: Reimbursement from Manager - Class A		34	11	–
Less: Reimbursement from Manager - Class B		N/A	3	–
Less: Reimbursement from Manager - Class C		22	21	–
Less: Reimbursement from Manager - Class P		N/A	N/A	2
Less: Reimbursement from Underwriter - Class J		25	65	28
Total Net Expenses		13,764	7,012	18,752
Net Investment Income (Loss)		16,807	7,356	(2,920 )

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		76,293	23,604	174,764
Foreign currency transactions		(24 )	–	–
Futures contracts		–	872	–
Change in unrealized appreciation/depreciation of:
Investments		76,974	68,058	287,750
Futures contracts		–	630	–
Translation of assets and liabilities in foreign currencies		76	–	–
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		153,319	93,164	462,514
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 170,126		$ 100,520	$ 459,594


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



	LargeCap		LargeCap	LargeCap
Amounts in thousands	Growth Fund I		Growth Fund II	S&P 500 Index Fund
Net Investment Income (Loss)
Income:
Dividends	$ 18,068		$ 23,032	$ 28,958
Interest		103	40	54
Total Income		18,171	23,072	29,012
Expenses:
Management and investment advisory fees		15,688	13,878	2,122
Distribution fees - Class A		94	8	125
Distribution fees - Class B		44	N/A	N/A
Distribution fees - Class C		13	6	48
Distribution fees - Class J		215	115	1,282
Distribution fees - R-1		8	6	51
Distribution fees - R-2		25	23	147
Distribution fees - R-3		55	21	301
Distribution fees - R-4		8	9	94
Administrative service fees - R-1		7	4	41
Administrative service fees - R-2		17	16	98
Administrative service fees - R-3		23	10	135
Administrative service fees - R-4		5	7	74
Administrative service fees - R-5		16	14	112
Registration fees - Class A		15	16	28
Registration fees - Class B		15	N/A	N/A
Registration fees - Class C		15	15	19
Registration fees - Class J		16	13	23
Registration fees - Institutional		32	29	24
Service fees - R-1		6	4	37
Service fees - R-2		21	19	122
Service fees - R-3		47	18	250
Service fees - R-4		17	18	190
Service fees - R-5		63	48	368
Shareholder meeting expense - Class A		–	1	–
Shareholder reports - Class A		14	1	16
Shareholder reports - Class B		3	N/A	N/A
Shareholder reports - Class J		17	8	77
Shareholder reports - Institutional		–	–	26
Transfer agent fees - Class A		196	20	295
Transfer agent fees - Class B		37	N/A	N/A
Transfer agent fees - Class C		8	6	13
Transfer agent fees - Class J		125	46	341
Transfer agent fees - Institutional		1	6	92
Custodian fees		28	24	13
Directors' expenses		30	25	31
Professional fees		18	16	21
Other expenses		38	36	40
Total Gross Expenses		16,980	14,486	6,656
Less: Reimbursement from Manager		1,092	209	–
Less: Reimbursement from Manager - Class A		10	21	11
Less: Reimbursement from Manager - Class B		4	N/A	N/A
Less: Reimbursement from Manager - Class C		17	19	26
Less: Reimbursement from Manager - Institutional		–	–	1
Less: Reimbursement from Underwriter - Class J		32	17	192
Total Net Expenses		15,825	14,220	6,426
Net Investment Income (Loss)		2,346	8,852	22,586

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		169,563	177,831	8,914
Foreign currency transactions		–	235	–
Futures contracts		2,119	2,423	(4,349 )
Change in unrealized appreciation/depreciation of:
Investments		280,563	42,148	203,408
Futures contracts		5,320	1,801	2,119
Translation of assets and liabilities in foreign currencies		–	(18 )	–
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		457,565	224,420	210,092
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 459,911		$ 233,272	$ 232,678


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



		LargeCap	LargeCap
Amounts in thousands		Value Fund	Value Fund III	MidCap Blend Fund
Net Investment Income (Loss)
Income:
Dividends	$ 20,765		$ 38,509	$ 22,246
Withholding tax		–	–	(121 )
Interest		31	60	17
Total Income		20,796	38,569	22,142
Expenses:
Management and investment advisory fees		4,524	13,845	7,355
Distribution fees - Class A		393	70	1,207
Distribution fees - Class B		70	64	413
Distribution fees - Class C		14	8	152
Distribution fees - Class J		181	306	720
Distribution fees - R-1		5	16	7
Distribution fees - R-2		10	54	14
Distribution fees - R-3		12	77	34
Distribution fees - R-4		2	16	8
Administrative service fees - R-1		4	13	6
Administrative service fees - R-2		6	36	9
Administrative service fees - R-3		6	36	14
Administrative service fees - R-4		2	13	7
Administrative service fees - R-5		3	18	12
Registration fees - Class A		18	14	13
Registration fees - Class B		15	15	9
Registration fees - Class C		15	15	9
Registration fees - Class J		14	15	20
Registration fees - Class P		N/A	N/A	1
Registration fees - Institutional		33	19	47
Service fees - R-1		4	12	5
Service fees - R-2		8	45	11
Service fees - R-3		10	64	29
Service fees - R-4		4	30	16
Service fees - R-5		10	52	45
Shareholder reports - Class A		33	11	99
Shareholder reports - Class B		3	3	21
Shareholder reports - Class C		–	–	5
Shareholder reports - Class J		14	24	46
Shareholder reports - Institutional		26	–	11
Transfer agent fees - Class A		471	145	1,128
Transfer agent fees - Class B		46	45	192
Transfer agent fees - Class C		8	7	41
Transfer agent fees - Class J		76	112	248
Transfer agent fees - Institutional		91	4	28
Custodian fees		7	23	11
Directors' expenses		11	28	28
Professional fees		15	17	16
Other expenses		17	52	28
Total Gross Expenses		6,181	15,324	12,065
Less: Reimbursement from Manager		–	214	–
Less: Reimbursement from Manager - Class A		–	136	48
Less: Reimbursement from Manager - Class B		–	56	21
Less: Reimbursement from Manager - Class C		19	22	9
Less: Reimbursement from Manager - Class P		N/A	N/A	2
Less: Reimbursement from Underwriter - Class J		27	45	107
Total Net Expenses		6,135	14,851	11,878
Net Investment Income (Loss)		14,661	23,718	10,264

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		16,335	141,087	66,368
Foreign currency transactions		–	–	(2 )
Futures contracts		(496 )	(151 )	–
Change in unrealized appreciation/depreciation of:
Investments		89,326	61,697	188,997
Futures contracts		1,136	1,726	–
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		106,301	204,359	255,363
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 120,962		$ 228,077	$ 265,627


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010

	MidCap		MidCap	Money Market
Amounts in thousands	Growth Fund III		Value Fund I	Fund^(a)
Net Investment Income (Loss)
Income:
Dividends	$ 10,601		$ 30,584	$ –
Interest		44	68	5,370
Total Income		10,645	30,652	5,370
Expenses:
Management and investment advisory fees		12,522	13,167	5,940
Distribution fees - Class A		66	16	N/A
Distribution fees - Class B		45	11	493
Distribution fees - Class C		16	12	250
Distribution fees - Class J		128	234	818
Distribution fees - Class S		N/A	N/A	158
Distribution fees - R-1		17	24	34
Distribution fees - R-2		35	55	84
Distribution fees - R-3		90	86	152
Distribution fees - R-4		31	24	23
Administrative service fees - R-1		14	19	27
Administrative service fees - R-2		24	37	56
Administrative service fees - R-3		39	38	68
Administrative service fees - R-4		24	18	19
Administrative service fees - R-5		12	20	87
Registration fees - Class A		14	15	32
Registration fees - Class B		15	14	22
Registration fees - Class C		15	14	32
Registration fees - Class J		14	17	75
Registration fees - Class S		N/A	N/A	3
Registration fees - Institutional		57	48	45
Service fees - Class S		N/A	N/A	26
Service fees - R-1		12	17	24
Service fees - R-2		29	46	70
Service fees - R-3		76	72	127
Service fees - R-4		61	49	46
Service fees - R-5		42	68	287
Shareholder reports - Class A		10	10	49
Shareholder reports - Class B		2	2	1
Shareholder reports - Class C		–	1	1
Shareholder reports - Class J		10	30	160
Shareholder reports - Class S		N/A	N/A	8
Shareholder reports - Institutional		–	20	–
Transfer agent fees - Class A		138	41	726
Transfer agent fees - Class B		34	13	89
Transfer agent fees - Class C		11	8	38
Transfer agent fees - Class J		64	104	421
Transfer agent fees - Class S		N/A	N/A	11
Transfer agent fees - Institutional		2	92	7
Custodian fees		17	21	15
Directors' expenses		32	42	34
Professional fees		25	21	33
Other expenses		33	35	63
Total Gross Expenses		13,776	14,561	10,654
Less: Reimbursement from Manager		284	268	–
Less: Reimbursement from Manager - Class A		24	59	1,062
Less: Reimbursement from Manager - Class B		28	28	505
Less: Reimbursement from Manager - Class C		17	21	83
Less: Reimbursement from Manager - Class J		–	–	1,622
Less: Reimbursement from Manager - Class S		N/A	N/A	78
Less: Reimbursement from Manager - Institutional		–	–	180
Less: Reimbursement from Manager - R-1		–	–	56
Less: Reimbursement from Manager - R-2		–	–	138
Less: Reimbursement from Manager - R-3		–	–	223
Less: Reimbursement from Manager - R-4		–	–	75
Less: Reimbursement from Manager - R-5		–	–	438
Less: Reimbursement from Underwriter - Class B		–	–	123
Less: Reimbursement from Underwriter - Class C		–	–	250
Less: Reimbursement from Underwriter - Class J		19	35	–
Less: Reimbursement from Underwriter - Class S		N/A	N/A	158
Less: Reimbursement from Underwriter - R-1		–	–	34
Less: Reimbursement from Underwriter - R-2		–	–	84
Less: Reimbursement from Underwriter - R-3		–	–	152
Less: Reimbursement from Underwriter - R-4		–	–	23
Total Net Expenses		13,404	14,150	5,370
Net Investment Income (Loss)		(2,759 )	16,502	–
Net Realized and Unrealized Gain (Loss) on Investments, Payments by Affiliates,
Futures, Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		130,729	143,053	721
Futures contracts		3,473	5,149	–
Net increase from payments by affiliates		–	–	2,915
Change in unrealized appreciation/depreciation of:
Investments		180,096	136,449	–
Futures contracts		3,362	4,581	–
Net Realized and Unrealized Gain (Loss) on Investments, Payments
by Affiliates, Futures, Swap agreements and Foreign currencies		317,660	289,232	3,636
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 314,901		$ 305,734	$ 3,636
^(a)Class S shares discontinued operations on November 23, 2009.


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



	Principal Capital		Real Estate	Short-Term
Amounts in thousands	Appreciation Fund		Securities Fund	Income Fund
Net Investment Income (Loss)
Income:
Dividends	$ 23,632		$ 49,861	$ –
Interest		40	22	24,340
Total Income		23,672	49,883	24,340
Expenses:
Management and investment advisory fees		5,418	13,814	3,112
Distribution fees - Class A		996	218	335
Distribution fees - Class B		728	124	N/A
Distribution fees - Class C		183	89	658
Distribution fees - Class J		N/A	515	60
Distribution fees - R-1		–	19	1
Distribution fees - R-2		–	42	–
Distribution fees - R-3		–	96	2
Distribution fees - R-4		–	19	–
Administrative service fees - R-1		–	16	1
Administrative service fees - R-2		–	28	–
Administrative service fees - R-3		–	42	–
Administrative service fees - R-4		–	14	–
Administrative service fees - R-5		–	33	–
Registration fees - Class A		17	15	44
Registration fees - Class B		16	14	N/A
Registration fees - Class C		17	15	27
Registration fees - Class J		N/A	15	16
Registration fees - Class P		2	2	2
Registration fees - Institutional		29	31	43
Service fees - R-1		–	14	1
Service fees - R-2		–	35	–
Service fees - R-3		–	82	2
Service fees - R-4		1	38	–
Service fees - R-5		3	112	1
Shareholder reports - Class A		146	28	30
Shareholder reports - Class B		63	7	N/A
Shareholder reports - Class C		7	2	11
Shareholder reports - Class J		N/A	46	6
Shareholder reports - Institutional		–	49	36
Transfer agent fees - Class A		710	282	273
Transfer agent fees - Class B		284	72	N/A
Transfer agent fees - Class C		48	25	79
Transfer agent fees - Class J		N/A	201	25
Transfer agent fees - Institutional		6	142	78
Custodian fees		11	3	5
Directors' expenses		17	24	17
Professional fees		17	17	25
Other expenses		31	30	11
Total Gross Expenses		8,750	16,370	4,901
Less: Reimbursement from Manager - Class A		–	56	–
Less: Reimbursement from Manager - Class B		–	52	N/A
Less: Reimbursement from Manager - Class C		–	15	–
Less: Reimbursement from Manager - Class J		N/A	–	11
Less: Reimbursement from Manager - Class P		2	2	2
Less: Reimbursement from Underwriter - Class J		N/A	78	13
Total Net Expenses		8,748	16,167	4,875
Net Investment Income (Loss)		14,924	33,716	19,465

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		40,887	144,619	2,309
Futures contracts		–	–	(2,733 )
Change in unrealized appreciation/depreciation of:
Investments		84,759	367,079	20,450
Futures contracts		–	–	(544 )
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		125,646	511,698	19,482
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 140,570		$ 545,414	$ 38,947


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



		SmallCap	SmallCap	SmallCap
Amounts in thousands		Blend Fund	Growth Fund	Growth Fund II
Net Investment Income (Loss)
Income:
Dividends	$ 2,370		$ 1,069	$ 1,097
Interest		10	11	9
Total Income		2,380	1,080	1,106
Expenses:
Management and investment advisory fees		1,501	1,812	3,268
Distribution fees - Class A		171	81	28
Distribution fees - Class B		68	23	26
Distribution fees - Class C		12	17	7
Distribution fees - Class J		376	108	74
Distribution fees - R-1		1	2	4
Distribution fees - R-2		4	2	18
Distribution fees - R-3		2	5	17
Distribution fees - R-4		2	–	6
Administrative service fees - R-1		1	2	3
Administrative service fees - R-2		2	1	12
Administrative service fees - R-3		1	3	8
Administrative service fees - R-4		1	–	5
Administrative service fees - R-5		2	1	9
Registration fees - Class A		13	17	13
Registration fees - Class B		16	17	15
Registration fees - Class C		15	15	15
Registration fees - Class J		13	13	14
Registration fees - Institutional		18	18	20
Service fees - R-1		1	2	3
Service fees - R-2		3	1	15
Service fees - R-3		2	4	14
Service fees - R-4		4	1	12
Service fees - R-5		6	5	24
Shareholder reports - Class A		21	28	6
Shareholder reports - Class B		3	3	1
Shareholder reports - Class C		–	1	–
Shareholder reports - Class J		29	10	10
Shareholder reports - Institutional		–	19	–
Transfer agent fees - Class A		301	184	78
Transfer agent fees - Class B		48	23	25
Transfer agent fees - Class C		8	10	6
Transfer agent fees - Class J		127	44	44
Transfer agent fees - Institutional		1	64	1
Custodian fees		8	11	40
Directors' expenses		8	4	12
Professional fees		14	16	16
Other expenses		6	5	17
Total Gross Expenses		2,809	2,572	3,886
Less: Reimbursement from Manager		–	–	65
Less: Reimbursement from Manager - Class A		–	8	77
Less: Reimbursement from Manager - Class B		1	24	37
Less: Reimbursement from Manager - Class C		18	18	20
Less: Reimbursement from Manager - Class J		–	–	37
Less: Reimbursement from Manager - Institutional		8	40	–
Less: Reimbursement from Underwriter - Class J		56	16	11
Total Net Expenses		2,726	2,466	3,639
Net Investment Income (Loss)		(346 )	(1,386)	(2,533 )

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		18,594	26,294	53,873
Futures contracts		251	304	903
Change in unrealized appreciation/depreciation of:
Investments		23,936	27,681	30,628
Futures contracts		244	236	559
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		43,025	54,515	85,963
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 42,679		$ 53,129	$ 83,430


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


		SmallCap	Tax-Exempt
Amounts in thousands		Value Fund	Bond Fund
Net Investment Income (Loss)
Income:
Dividends	$ 6,418		$ –
Interest		15	14,962
Total Income		6,433	14,962
Expenses:
Management and investment advisory fees		2,880	1,301
Distribution fees - Class A		36	612
Distribution fees - Class B		27	75
Distribution fees - Class C		32	76
Distribution fees - Class J		180	N/A
Distribution fees - R-1		6	N/A
Distribution fees - R-2		18	N/A
Distribution fees - R-3		32	N/A
Distribution fees - R-4		6	N/A
Administrative service fees - R-1		5	N/A
Administrative service fees - R-2		12	N/A
Administrative service fees - R-3		14	N/A
Administrative service fees - R-4		5	N/A
Administrative service fees - R-5		16	N/A
Registration fees - Class A		18	22
Registration fees - Class B		18	19
Registration fees - Class C		19	18
Registration fees - Class J		16	N/A
Registration fees - Institutional		21	N/A
Service fees - R-1		5	N/A
Service fees - R-2		15	N/A
Service fees - R-3		26	N/A
Service fees - R-4		11	N/A
Service fees - R-5		48	N/A
Shareholder reports - Class A		6	17
Shareholder reports - Class B		2	1
Shareholder reports - Class C		1	1
Shareholder reports - Class J		15	N/A
Shareholder reports - Institutional		21	N/A
Transfer agent fees - Class A		66	130
Transfer agent fees - Class B		20	13
Transfer agent fees - Class C		15	9
Transfer agent fees - Class J		71	N/A
Transfer agent fees - Institutional		64	N/A
Custodian fees		9	4
Directors' expenses		7	9
Interest expense and fees		–	175
Professional fees		15	14
Other expenses		10	8
Total Gross Expenses		3,788	2,504
Less: Reimbursement from Manager - Class A		41	25
Less: Reimbursement from Manager - Class B		26	25
Less: Reimbursement from Manager - Class C		25	20
Less: Reimbursement from Underwriter - Class J		26	N/A
Total Net Expenses		3,670	2,434
Net Investment Income (Loss)		2,763	12,528

Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies
Net realized gain (loss) from:
Investment transactions		27,891	(3,468 )
Futures contracts		278	–
Change in unrealized appreciation/depreciation of:
Investments		47,884	12,323
Net Realized and Unrealized Gain (Loss) on Investments, Futures,
Swap agreements and Foreign currencies		76,053	8,855
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 78,816		$ 21,383


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands										Bond & Mortgage Securities Fund
										Year Ended				Year Ended
										October 31, 2010				October 31, 2009
Operations
Net investment income (loss)										$ 87,598				$ 118,292
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions												3,410		(126,942 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies											156,492			367,555
		Net Increase (Decrease) in Net Assets Resulting from Operations									247,500			358,905

Dividends and Distributions to Shareholders
From net investment income											(73,060 )			(103,880 )
							Total Dividends and Distributions				(73,060)			(103,880 )

Capital Share Transactions
Net increase (decrease) in capital share transactions										(215,329 )				(702,515 )
Redemption fees - Class A												–		2
Redemption fees - Class C												–		1
Redemption fees - Class J												3		–
					Total increase (decrease) in net assets						(40,886)			(447,487 )

Net Assets
Beginning of period										2,016,936				2,464,423
End of period (including undistributed net investment income as set forth below)										$ 1,976,050				$ 2,016,936
Undistributed (overdistributed) net investment income (loss)										$ 10,950				$ 24,944

	Class A Class B		Class C		Class J Institutional			R-1	R-2	R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 19,771 $	1,143 $	2,793	$ 26,827		$ 129,306 $		3,357 $	4,831 $	8,512	$ 14,745		$ 20,581
Reinvested	4,116	319	106		6,326		56,047	304	889	1,489		998		2,082
Redeemed	(27,203 )	(4,942 )	(1,312 )		(32,721 )		(387,884)	(3,674 )	(9,159 )	(18,081)		(8,176)		(26,719 )
Net Increase (Decrease)	$ (3,316 ) $	(3,480) $	1,587	$ 432		$ (202,531) $		(13) $	(3,439) $	(8,080 ) $		7,567	$ (4,056 )
Shares:
Sold	1,966	111	278		2,650		12,933	334	481	854		1,446		2,055
Reinvested	412	32	11		630		5,606	31	90	150		98		209
Redeemed	(2,700 )	(488 )	(131 )		(3,237 )		(38,620 )	(365 )	(916 )	(1,808)		(800)		(2,683 )
Net Increase (Decrease)	(322 )	(345 )	158		43		(20,081 )	–	(345 )	(804)		744		(419 )
Year Ended October 31, 2009
Dollars:
Sold	$ 16,698 $	2,257 $	1,995	$ 14,311		$ 67,556 $		3,245 $	4,341 $	7,510	$ 5,214		$ 19,921
Reinvested	4,524	481	82		7,297		84,393	291	1,072	1,833		994		2,440
Redeemed	(25,793 )	(6,265 )	(811 )		(39,330 )		(806,211)	(1,906 )	(7,275 )	(17,594)		(6,310)		(37,475 )
Net Increase (Decrease)	$ (4,571 ) $	(3,527) $	1,266	$ (17,722) $ (654,262) $				1,630 $	(1,862) $	(8,251) $		(102) $ (15,114)
Shares:
Sold	1,900	258	226		1,625		7,833	374	496	861		597		2,280
Reinvested	526	56	10		846		9,857	34	126	215		115		285
Redeemed	(2,999 )	(721 )	(95 )		(4,571 )		(93,028 )	(221 )	(860 )	(2,068)		(721)		(4,365 )
Net Increase (Decrease)	(573 )	(407 )	141		(2,100 )		(75,338 )	187	(238 )	(992)		(9 )		(1,800 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (4,412 ) $	(329) $	(123) $		(6,374) $		(56,051) $	(305) $	(889) $	(1,491 ) $		(1,001) $		(2,085 )
From net realized gain on
investments	–	–	–		–		–	–	–	–		–		–
Total Dividends and
Distributions	$ (4,412 ) $	(329) $	(123) $		(6,374) $		(56,051) $	(305) $	(889) $	(1,491 ) $		(1,001) $		(2,085 )
Year Ended October 31, 2009
From net investment
income	$ (4,879 ) $	(499) $	(92) $		(7,367) $		(84,398) $	(295) $	(1,072) $	(1,836 ) $		(997) $		(2,445 )
From net realized gain on
investments	–	–	–		–		–	–	–	–		–		–
Total Dividends and
Distributions	$ (4,879 ) $	(499) $	(92) $		(7,367) $		(84,398) $	(295) $	(1,072) $	(1,836 ) $		(997) $		(2,445 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands				California Municipal Fund
				Year Ended	Year Ended
				October 31, 2010	October 31, 2009
Operations
Net investment income (loss)				$ 14,288	$ 15,813
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions				(2,937)	(23,311 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies				15,466	49,200
		Net Increase (Decrease) in Net Assets Resulting from Operations		26,817	41,702

Dividends and Distributions to Shareholders
From net investment income				(13,988 )	(15,533 )
			Total Dividends and Distributions	(13,988)	(15,533 )

Capital Share Transactions
Net increase (decrease) in capital share transactions				(48,987 )	(26,458 )
Redemption fees - Class A				–	1
			Total increase (decrease) in net assets	(36,158)	(288 )

Net Assets
Beginning of period				319,017	319,305
End of period (including undistributed net investment income as set forth below)				$ 282,859	$ 319,017
Undistributed (overdistributed) net investment income (loss)				$ 827	$ 703

	Class A	Class B	Class C
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 35,603 $	111 $	3,096
Reinvested	7,595	664	342
Redeemed	(65,705 )	(27,933)	(2,760 )
Net Increase (Decrease)	$ (22,507) $	(27,158) $	678
Shares:
Sold	3,649	12	316
Reinvested	779	68	35
Redeemed	(6,742 )	(2,870)	(282 )
Net Increase (Decrease)	(2,314 )	(2,790)	69
Year Ended October 31, 2009
Dollars:
Sold	$ 44,981 $	1,334 $	5,109
Reinvested	7,662	1,475	265
Redeemed	(57,316 )	(28,017)	(1,951 )
Net Increase (Decrease)	$ (4,673) $	(25,208) $	3,423
Shares:
Sold	4,986	151	562
Reinvested	856	166	30
Redeemed	(6,430 )	(3,124)	(216 )
Net Increase (Decrease)	(588 )	(2,807)	376

Distributions:
Year Ended October 31, 2010
From net investment income $ (12,459) $		(1,035) $	(494)
From net realized gain on
investments	–	–	–
Total Dividends and Distributions $ (12,459) $		(1,035) $	(494)
Year Ended October 31, 2009
From net investment income $ (12,931) $		(2,217) $	(385)
From net realized gain on
investments	–	–	–
Total Dividends and Distributions $ (12,931) $		(2,217) $	(385)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands													Disciplined LargeCap Blend Fund
													Year Ended			Year Ended
													October 31, 2010			October 31, 2009
Operations
Net investment income (loss)													$ 18,727			$ 32,692
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions														224,598		(397,981 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															3,205	506,086
		Net Increase (Decrease) in Net Assets Resulting from Operations												246,530		140,797

Dividends and Distributions to Shareholders
From net investment income														(32,161 )		(38,282 )
							Total Dividends and Distributions							(32,161)		(38,282 )

Capital Share Transactions
Net increase (decrease) in capital share transactions													(1,673,516 )			160,131
						Total increase (decrease) in net assets							(1,459,147)			262,646

Net Assets
Beginning of period													2,285,599			2,022,953
End of period (including undistributed net investment income as set forth below)													$ 826,452			$ 2,285,599
Undistributed (overdistributed) net investment income (loss)													$ 12,026			$ 25,460

	Class A	Class B		Class C Institutional				R-1		R-2		R-3	R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 13,378 $	404	$ 369		$ 62,844		$ 249		$ 319		$ 634 $		513	$ 1,120
Reinvested	1,679	–		6		30,229		8		15		63	48		19
Redeemed	(37,926 )	(7,794)		(486 )		(1,731,495)		(592 )		(720 )		(1,544 )	(4,257)		(599)
Net Increase (Decrease)	$ (22,869) $	(7,390 ) $		(111) $ (1,638,422) $				(335) $		(386) $		(847) $	(3,696) $		540
Shares:
Sold	1,202	37		34		5,669		23		29		57	48		100
Reinvested	151	–		–		2,733		1		1		6	4		2
Redeemed	(3,399 )	(705)		(44 )		(154,347)		(54 )		(66 )		(139 )	(387)		(53)
Net Increase (Decrease)	(2,046 )	(668)		(10 )		(145,945)		(30 )		(36 )		(76 )	(335)		49
Year Ended October 31, 2009
Dollars:
Sold	$ 9,606 $	1,316	$ 706		$ 359,469		$ 311		$ 371		$ 1,332 $		1,529	$ 571
Reinvested	2,307	–		14		35,625		11		18		94	44		23
Redeemed	(36,203 )	(8,417)		(405 )		(204,845)		(247 )		(278 )		(1,695 )	(601)		(525)
Net Increase (Decrease)	$ (24,290) $	(7,101 ) $		315	$ 190,249		$ 75		$ 111		$ (269) $		972	$ 69
Shares:
Sold	1,049	147		78		39,382		33		41		149	164		61
Reinvested	255	–		2		3,963		1		2		10	5		3
Redeemed	(3,975 )	(935)		(44 )		(23,900)		(27 )		(29 )		(179 )	(69)		(56)
Net Increase (Decrease)	(2,671 )	(788)		36		19,445		7		14		(20 )	100		8

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (1,773)	–	$ (6) $			(30,229 )	$ (8) $			(15) $		(63) $	(48 ) $		(19)
From net realized gain on
investments	–	–		–		–		–		–		–	–		–
Total Dividends and
Distributions	$ (1,773) $	–	$ (6) $			(30,229 )	$ (8) $			(15) $		(63) $	(48 ) $		(19)
Year Ended October 31, 2009
From net investment
income	$ (2,452) $	–	$ (15) $			(35,625 )	$ (11) $			(18) $		(94) $	(44 ) $		(23)
From net realized gain on
investments	–	–		–		–		–		–		–	–		–
Total Dividends and
Distributions	$ (2,452) $	–	$ (15) $			(35,625 )	$ (11) $			(18) $		(94) $	(44 ) $		(23)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands											Diversified International Fund
											Year Ended				Year Ended
											October 31, 2010				October 31, 2009
Operations
Net investment income (loss)											$ 19,145				$ 20,633
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions												76,860				(470,903 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies												120,496				692,313
		Net Increase (Decrease) in Net Assets Resulting from Operations										216,501				242,043

Dividends and Distributions to Shareholders
From net investment income												(22,219 )				(31,605 )
					Total Dividends and Distributions							(22,219)				(31,605 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												154,306					(8,762 )
Redemption fees - Class B													1				–
Redemption fees - Class J													2				1
				Total increase (decrease) in net assets								348,591				201,677

Net Assets
Beginning of period											1,443,164					1,241,487
End of period (including undistributed net investment income as set forth below)											$ 1,791,755				$ 1,443,164
Undistributed (overdistributed) net investment income (loss)											$ 16,018				$ 18,540

	Class A	Class B	Class C	Class J	Class P	Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 23,530 $	962 $	1,990 $	20,854 $	10	$ 312,666		$ 1,890		$ 3,191		$ 6,989		$ 5,318		$ 13,298
Reinvested	3,086	9	77	2,150	–		13,296		101		233		925		756		1,322
Redeemed	(58,295 )	(8,650 )	(3,099 )	(30,699 )	–		(87,567 )		(2,717 )		(6,706)		(17,335)		(13,732 )		(29,547 )
Net Increase (Decrease)	$ (31,679) $	(7,679) $	(1,032) $	(7,695 ) $	10	$ 238,395		$ (726) $			(3,282) $		(9,421 ) $		(7,658 ) $ (14,927)
Shares:
Sold	2,625	106	222	2,361	1		34,291		215		361		783		590		1,391
Reinvested	339	1	8	238	–		1,469		11		26		102		83		146
Redeemed	(6,553 )	(968 )	(350 )	(3,488 )	–		(9,747 )		(309 )		(755)		(1,982)		(1,529 )		(3,299 )
Net Increase (Decrease)	(3,589 )	(861 )	(120 )	(889 )	1		26,013		(83 )		(368)		(1,097)		(856 )		(1,762 )
Year Ended October 31, 2009
Dollars:
Sold	$ 23,420 $	1,659 $	1,824 $	22,429	N/A	$ 122,581		$ 2,316		$ 3,845		$ 10,335		$ 12,380		$ 18,685
Reinvested	4,778	71	95	3,049	N/A		18,934		117		318		1,184		1,035		1,605
Redeemed	(50,168 )	(8,852 )	(3,447 )	(27,465 )	N/A		(137,603)		(1,029 )		(5,053)		(9,570)		(6,891 )		(9,344 )
Net Increase (Decrease)	$ (21,970) $	(7,122) $	(1,528) $	(1,987 )	N/A	$ 3,912		$ 1,404		$ (890) $			1,949	$ 6,524		$ 10,946
Shares:
Sold	3,184	224	245	3,084	N/A		18,296		322		527		1,409		1,702		2,536
Reinvested	657	10	13	423	N/A		2,619		16		44		164		141		222
Redeemed	(6,993 )	(1,233 )	(483 )	(3,871 )	N/A		(19,381 )		(143 )		(666)		(1,297)		(939 )		(1,283 )
Net Increase (Decrease)	(3,152 )	(999 )	(225 )	(364 )	N/A		1,534		195		(95)		276		904		1,475

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (3,324) $	(10) $	(85) $	(2,151 ) $	–	$ (13,312) $			(101) $		(233) $		(925 ) $		(756 ) $		(1,322 )
From net realized gain on
investments	–	–	–	–	–		–		–		–		–		–		–
Total Dividends and Distributions $ (3,324) $		(10) $	(85) $	(2,151 ) $	–	$ (13,312) $			(101) $		(233) $		(925 ) $		(756 ) $		(1,322 )
Year Ended October 31, 2009
From net investment
income	$ (5,176) $	(74) $	(109) $	(3,051 )	N/A	$ (18,936) $			(117) $		(318) $		(1,184 ) $		(1,035 ) $		(1,605 )
From net realized gain on
investments	–	–	–	–	N/A		–		–		–		–		–		–
Total Dividends and Distributions $ (5,176) $		(74) $	(109) $	(3,051 )	N/A	$ (18,936) $			(117) $		(318) $		(1,184 ) $		(1,035 ) $		(1,605 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands										Equity Income Fund
									Year Ended			Year Ended
									October 31, 2010			October 31, 2009
Operations
Net investment income (loss)									$ 65,500			$ 58,630
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions										23,684			(401,243 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies										318,109			453,674
		Net Increase (Decrease) in Net Assets Resulting from Operations								407,293			111,061

Dividends and Distributions to Shareholders
From net investment income										(59,201 )			(61,628 )
					Total Dividends and Distributions					(59,201)			(61,628 )

Capital Share Transactions
Net increase (decrease) in capital share transactions										395,510			(268,607 )
Redemption fees - Class A											1		–
Redemption fees - Class B											–		1
Redemption fees - Class C											–		3
				Total increase (decrease) in net assets						743,603			(219,170 )

Net Assets
Beginning of period									1,937,390				2,156,560
End of period (including undistributed net investment income as set forth below)									$ 2,680,993			$ 1,937,390
Undistributed (overdistributed) net investment income (loss)									$ 16,368			$ 9,511

	Class A	Class B Class C		Class P Institutional R-1				R-2	R-3		R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 90,968 $	1,981 $	8,189 $	10	$ 592,999	$ 347 $		351 $	4,180	$ 737 $		5,939
Reinvested	12,889	1,645	1,395	–	40,865		3	2	23		1	–
Redeemed	(173,348 )	(46,492)	(30,919 )	–	(115,462)		(1 )	(11 )	(578)		(8 )	(195 )
Net Increase (Decrease)	$ (69,491) $ (42,866) $ (21,335) $			10	$ 518,402	$ 349 $		342 $	3,625	$ 730 $		5,744
Shares:
Sold	5,749	126	524	1	36,601		22	23	261		45	360
Reinvested	825	107	91	–	2,611		–	–	1		–	–
Redeemed	(11,085)	(2,993)	(2,015 )	–	(7,482 )		–	(1 )	(36)		(1 )	(11 )
Net Increase (Decrease)	(4,511)	(2,760)	(1,400 )	1	31,730		22	22	226		44	349
Year Ended October 31, 2009
Dollars:
Sold	$ 75,056 $	7,278 $	12,751	N/A	$ 25,979		N/A	N/A	N/A		N/A	N/A
Reinvested	15,918	2,701	2,096	N/A	37,328		N/A	N/A	N/A		N/A	N/A
Redeemed	(217,977 )	(50,076)	(44,291 )	N/A	(135,370)		N/A	N/A	N/A		N/A	N/A
Net Increase (Decrease)	$ (127,003) $ (40,097) $ (29,444)			N/A	$ (72,063)		N/A	N/A	N/A		N/A	N/A
Shares:
Sold	5,825	579	1,017	N/A	1,999		N/A	N/A	N/A		N/A	N/A
Reinvested	1,229	211	165	N/A	2,881		N/A	N/A	N/A		N/A	N/A
Redeemed	(17,318)	(4,024)	(3,567 )	N/A	(10,534 )		N/A	N/A	N/A		N/A	N/A
Net Increase (Decrease)	(10,264)	(3,234)	(2,385 )	N/A	(5,654 )		N/A	N/A	N/A		N/A	N/A

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (14,600) $	(1,899) $	(1,772) $	–	$ (40,901) $		(3) $	(2) $	(23) $		(1) $	–
From net realized gain on
investments	–	–	–	–	–		–	–	–		–	–
Total Dividends and
Distributions	$ (14,600) $	(1,899) $	(1,772) $	–	$ (40,901) $		(3) $	(2) $	(23) $		(1) $	–
Year Ended October 31, 2009
From net investment
income	$ (18,462) $	(3,157) $	(2,673)	N/A	$ (37,336)		N/A	N/A	N/A		N/A	N/A
From net realized gain on
investments	–	–	–	N/A	–		N/A	N/A	N/A		N/A	N/A
Total Dividends and
Distributions	$ (18,462) $	(3,157) $	(2,673)	N/A	$ (37,336)		N/A	N/A	N/A		N/A	N/A


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands							Global Diversified Income Fund
							Year Ended	Period Ended
							October 31, 2010	October 31, 2009^(a)
Operations
Net investment income (loss)							$ 26,173	$ 3,716
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions							12,251	7,306
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies							56,395	8,855
			Net Increase (Decrease) in Net Assets Resulting from Operations				94,819	19,877

Dividends and Distributions to Shareholders
From net investment income							(25,671 )	(3,752 )
From net realized gain on investments							(7,398 )	–
						Total Dividends and Distributions	(33,069)	(3,752 )

Capital Share Transactions
Net increase (decrease) in capital share transactions							1,007,381	66,146
Redemption fees - Class A							5	–
Redemption fees - Class C							1	–
						Total increase (decrease) in net assets	1,069,137	82,271

Net Assets
Beginning of period							82,271	–
End of period (including undistributed net investment income as set forth below)							$ 1,151,408	$ 82,271
Undistributed (overdistributed) net investment income (loss)							$ 1,014	$ (38)

	Class A		Class C Class P		Institutional
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 628,047 $ 283,171 $			996	$ 153,870
Reinvested	8,989		2,829	4		13,533
Redeemed	(48,950 )		(6,065)	(2 )		(29,041 )
Net Increase (Decrease)	$ 588,086 $ 279,935 $			998	$ 138,362
Shares:
Sold	49,728		22,440	75		12,367
Reinvested		712	224	–		1,105
Redeemed	(3,893 )		(484)	–		(2,346 )
Net Increase (Decrease)	46,547		22,180	75		11,126

Period Ended October 31, 2009^(a)
Dollars:
Sold	$ 8,052 $		944	N/A	$ 56,769
Reinvested		130	11	N/A		3,608
Redeemed		(271 )	(9 )	N/A		(3,088 )
Net Increase (Decrease)	$ 7,911 $		946	N/A	$ 57,289
Shares:
Sold		687	79	N/A		5,657
Reinvested		11	1	N/A		329
Redeemed		(23 )	(1 )	N/A		(271 )
Net Increase (Decrease)		675	79	N/A		5,715

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (12,717) $		(4,859 ) $	(4) $		(8,091)
From net realized gain on
investments	(1,104)		(202)	–		(6,092 )
Total Dividends and
Distributions	$ (13,821) $		(5,061 ) $	(4) $		(14,183)

Period Ended October 31, 2009^(a)
From net investment
income	$ (133 ) $		(11 )	N/A	$ (3,608)
From net realized gain on
investments		–	–	N/A		–
Total Dividends and
Distributions	$ (133 ) $		(11 )	N/A	$ (3,608)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands					Global Real Estate Securities Fund
					Year Ended	Year Ended
					October 31, 2010	October 31, 2009
Operations
Net investment income (loss)					$ 179	$ 113
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions					1,120	(1,771 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies					1,266	2,497
		Net Increase (Decrease) in Net Assets Resulting from Operations			2,565	839

Dividends and Distributions to Shareholders
From net investment income					(506 )	(252 )
				Total Dividends and Distributions	(506)	(252 )

Capital Share Transactions
Net increase (decrease) in capital share transactions					7,952	2,960
				Total increase (decrease) in net assets	10,011	3,547

Net Assets
Beginning of period					8,189	4,642
End of period (including undistributed net investment income as set forth below)					$ 18,200	$ 8,189
Undistributed (overdistributed) net investment income (loss)					$ (153)	$ (102 )

	Class A	Class C	Institutional
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 13,935 $	997	$ –
Reinvested	253	20		–
Redeemed	(4,647 )	(1,317)		(1,289 )
Net Increase (Decrease)	$ 9,541 $	(300) $		(1,289)
Shares:
Sold	2,181	168		–
Reinvested	42	3		–
Redeemed	(766 )	(210)		(199 )
Net Increase (Decrease)	1,457	(39)		(199 )
Year Ended October 31, 2009
Dollars:
Sold	$ 3,335 $	399	$ –
Reinvested	104	12		–
Redeemed	(827 )	(63)		–
Net Increase (Decrease)	$ 2,612 $	348	$ –
Shares:
Sold	605	78		–
Reinvested	22	3		–
Redeemed	(169 )	(13)		–
Net Increase (Decrease)	458	68		–

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (373) $	(83) $		(50)
From net realized gain on
investments	–	–		–
Total Dividends and
Distributions	$ (373) $	(83) $		(50)
Year Ended October 31, 2009
From net investment
income	$ (148) $	(51) $		(53)
From net realized gain on
investments	–	–		–
Total Dividends and
Distributions	$ (148) $	(51) $		(53)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



														Government & High
Amounts in thousands														Quality Bond Fund
													Year Ended				Year Ended
													October 31, 2010				October 31, 2009
Operations
Net investment income (loss)													$ 60,522				$ 54,295
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions															9,800				(135 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies														48,308					63,789
		Net Increase (Decrease) in Net Assets Resulting from Operations												118,630				117,949

Dividends and Distributions to Shareholders
From net investment income														(63,812 )				(55,422 )
						Total Dividends and Distributions								(63,812)				(55,422 )

Capital Share Transactions
Net increase (decrease) in capital share transactions														226,833				172,574
Redemption fees - Class A															–				5
Redemption fees - Class C															1				1
Redemption fees - Class J															2				–
					Total increase (decrease) in net assets									281,654				235,107

Net Assets
Beginning of period														1,401,782				1,166,675
End of period (including undistributed net investment income as set forth below)													$ 1,683,436				$ 1,401,782
Undistributed (overdistributed) net investment income (loss)													$ (81)				$ (572 )

	Class A Class B Class C				Class J		Class P	Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 181,697 $	6,306 $	55,140	$ 30,933		$ 10		$ 85,357		$ 2,299		$ 2,306 $			13,101	$ 4,237		$ 8,948
Reinvested	11,837	1,342	1,155		3,884		–		41,144		122		298		590		206		545
Redeemed	(73,537 )	(29,460)	(9,660 )		(20,046 )		–		(73,601 )		(858 )		(3,731)		(5,719)		(1,500 )		(6,512 )
Net Increase (Decrease)	$ 119,997 $ (21,812) $		46,635	$ 14,771		$ 10		$ 52,900		$ 1,563		$ (1,127) $			7,972	$ 2,943		$ 2,981
Shares:
Sold	16,392	573	4,977		2,786		1		7,733		206		209		1,184		380		807
Reinvested	1,068	121	104		351		–		3,713		11		27		53		19		49
Redeemed	(6,635 )	(2,663)	(875 )		(1,811 )		–		(6,618 )		(77 )		(338)		(519)		(136 )		(590 )
Net Increase (Decrease)	10,825	(1,969)	4,206		1,326		1		4,828		140		(102)		718		263		266
Year Ended October 31, 2009
Dollars:
Sold	$ 80,434 $	7,966 $	20,711	$ 12,232			N/A	$ 42,218		$ 749		$ 1,205 $			1,689	$ 965		$ 3,245
Issued in acquisitions	162,540	32,115	10,397		90,681		N/A		2,006		2,122		9,019		11,453		4,260		13,208
Reinvested	6,517	1,576	395		2,033		N/A		41,940		50		185		246		97		293
Redeemed	(50,482 )	(26,782)	(11,448 )		(12,358 )		N/A		(278,626)		(171 )		(1,731)		(2,042)		(1,164 )		(5,169 )
Net Increase (Decrease)	$ 199,009 $	14,875 $	20,055	$ 92,588			N/A	$ (192,462) $			2,750	$ 8,678 $			11,346	$ 4,158		$ 11,577
Shares:
Sold	7,499	748	1,940		1,140		N/A		3,916		70		111		156		90		301
Issued in acquisitions	15,207	3,006	974		8,474		N/A		187		198		843		1,071		398		1,235
Reinvested	607	147	37		188		N/A		3,924		5		17		23		9		27
Redeemed	(4,712 )	(2,501)	(1,070 )		(1,149 )		N/A		(26,271 )		(16 )		(160)		(190)		(108 )		(480 )
Net Increase (Decrease)	18,601	1,400	1,881		8,653		N/A		(18,244 )		257		811		1,060		389		1,083

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (13,946) $	(1,556) $	(1,462 ) $		(3,921 ) $		–	$ (41,160) $			(122) $		(298) $		(596 ) $		(206) $		(545)
From net realized gain on
investments	–	–	–		–		–		–		–			–	–		–		–
Total Dividends and Distributions $ (13,946) $		(1,556) $	(1,462 ) $		(3,921 ) $		–	$ (41,160) $			(122) $		(298) $		(596 ) $		(206) $		(545)
Year Ended October 31, 2009
From net investment
income	$ (8,066 ) $	(1,877) $	(605 ) $		(2,053 )		N/A	$ (41,950) $			(50) $		(185) $		(246 ) $		(97) $		(293)
From net realized gain on
investments	–	–	–		–		N/A		–		–			–	–		–		–
Total Dividends and Distributions $ (8,066) $		(1,877) $	(605 ) $		(2,053 )		N/A	$ (41,950) $			(50) $		(185) $		(246 ) $		(97) $		(293)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands									High Yield Fund
									Year Ended	Year Ended
									October 31, 2010	October 31, 2009
Operations
Net investment income (loss)									$ 248,844	$ 192,784
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions									124,385		(35,120 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies									103,208		567,301
			Net Increase (Decrease) in Net Assets Resulting from Operations						476,437		724,965

Dividends and Distributions to Shareholders
From net investment income									(252,806 )		(206,517 )
								Total Dividends and Distributions	(252,806)		(206,517 )

Capital Share Transactions
Net increase (decrease) in capital share transactions									560,527		848,392
Redemption fees - Class A									18		141
Redemption fees - Class C									2		7
						Total increase (decrease) in net assets			784,178		1,366,988

Net Assets
Beginning of period									2,755,453		1,388,465
End of period (including undistributed net investment income as set forth below)									$ 3,539,631	$ 2,755,453
Undistributed (overdistributed) net investment income (loss)									$ 4,331	$ (3,913 )

	Class A		Class B		Class C	Class P	Institutional
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 1,013,124	$ 9,317		$ 190,784 $		271	$ 375,730
Reinvested	111,817		3,215		17,533	1		70,464
Redeemed	(790,385 )		(20,307)		(84,583 )	(1 )		(336,453)
Net Increase (Decrease)	$ 334,556	$ (7,775 ) $			123,734 $	271	$ 109,741
Shares:
Sold	128,679		1,192		24,094	34		48,164
Reinvested	14,206		407		2,212	–		8,981
Redeemed	(100,977 )		(2,576)		(10,725 )	–		(43,042 )
Net Increase (Decrease)	41,908		(977)		15,581	34		14,103
Year Ended October 31, 2009
Dollars:
Sold	$ 1,224,142	$ 25,065		$ 202,187		N/A $		454,673
Reinvested	85,272		2,739		10,037	N/A		61,854
Redeemed	(819,740 )		(15,845)		(48,012 )	N/A		(333,980)
Net Increase (Decrease)	$ 489,674	$ 11,959		$ 164,212		N/A $		182,547
Shares:
Sold	186,189		3,762		29,907	N/A		71,692
Reinvested	12,642		406		1,463	N/A		9,212
Redeemed	(122,223 )		(2,407)		(7,128 )	N/A		(48,776 )
Net Increase (Decrease)	76,608		1,761		24,242	N/A		32,128

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (142,371)	$ (5,688 ) $			(30,431) $	(1) $		(74,315)
From net realized gain on
investments	–		–		–	–		–
Total Dividends and
Distributions	$ (142,371)	$ (5,688 ) $			(30,431) $	(1) $		(74,315)
Year Ended October 31, 2009
From net investment
income	$ (113,582)	$ (5,368 ) $			(18,558)	N/A $		(69,009)
From net realized gain on
investments	–		–		–	N/A		–
Total Dividends and
Distributions	$ (113,582)	$ (5,368 ) $			(18,558)	N/A $		(69,009)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																Income Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 65,542				$ 59,913
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions															(8,158)				(15,369 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															61,954				178,568
				Net Increase (Decrease) in Net Assets Resulting from Operations										119,338					223,112

Dividends and Distributions to Shareholders
From net investment income															(68,383 )				(60,851 )
								Total Dividends and Distributions							(68,383)				(60,851 )

Capital Share Transactions
Net increase (decrease) in capital share transactions														204,288						1,314
Redemption fees - Class A																1				1
Redemption fees - Class B																–				4
Redemption fees - Class C																–				5
Redemption fees - Class J																1				–
							Total increase (decrease) in net assets							255,245					163,585

Net Assets
Beginning of period														1,081,836					918,251
End of period (including undistributed net investment income as set forth below)														$ 1,337,081				$ 1,081,836
Undistributed (overdistributed) net investment income (loss)														$ (8,959)				$ (6,544 )

		Class A Class B			Class C		Class J		Class P Institutional				R-1	R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 124,124 $			6,861 $	31,188	$ 38,090		$ 30		$ 116,776		$ 17		$ 171	$ 1,508		$ 1,398		$ 432
Reinvested		9,125		1,663	1,537		951		–		50,813		–	1		10		5		4
Redeemed		(55,519 )		(24,554)	(12,099 )		(5,570 )		–		(82,528 )		–	–		(57 )		(43 )		(46 )
Net Increase (Decrease)	$ 77,730		$ (16,030) $		20,626	$ 33,471		$ 30		$ 85,061		$ 17		$ 172	$ 1,461		$ 1,360		$ 390
Shares:
Sold		13,195		731	3,303		4,049		3		12,350		2	18		157		144		45
Reinvested		968		176	162		100		–		5,385		–	–		1		1		1
Redeemed		(5,906 )		(2,601)	(1,285 )		(590 )		–		(8,769 )		–	–		(6 )		(4 )		(5 )
Net Increase (Decrease)		8,257		(1,694)	2,180		3,559		3		8,966		2	18		152		141		41
Year Ended October 31, 2009
Dollars:
Sold	$ 72,261		$ 12,866 $		25,613	$ 1,670			N/A $		94,433		N/A	N/A		N/A		N/A		N/A
Reinvested		6,298		1,914	830		3		N/A		47,073		N/A	N/A		N/A		N/A		N/A
Redeemed		(44,589 )		(20,750)	(9,068 )		(48 )		N/A		(187,192)		N/A	N/A		N/A		N/A		N/A
Net Increase (Decrease)	$ 33,970		$ (5,970) $		17,375	$ 1,625			N/A $		(45,686)		N/A	N/A		N/A		N/A		N/A
Shares:
Sold		8,385		1,509	2,970		181		N/A		11,330		N/A	N/A		N/A		N/A		N/A
Reinvested		738		225	96		–		N/A		5,529		N/A	N/A		N/A		N/A		N/A
Redeemed		(5,272 )		(2,462)	(1,078 )		(5 )		N/A		(22,609 )		N/A	N/A		N/A		N/A		N/A
Net Increase (Decrease)		3,851		(728)	1,988		176		N/A		(5,750 )		N/A	N/A		N/A		N/A		N/A

Distributions:
Year Ended October 31, 2010
From net investment income $ (12,073) $				(2,299) $	(2,171 ) $		(963 ) $		–	$ (50,857) $			–	$ (1) $		(10) $		(5) $		(4 )
From net realized gain on
investments		–		–	–		–		–		–		–	–		–		–		–
Total Dividends and Distributions $ (12,073) $				(2,299) $	(2,171 ) $		(963 ) $		–	$ (50,857) $			–	$ (1) $		(10) $		(5) $		(4 )
Year Ended October 31, 2009
From net investment income $		(8,806) $		(2,808) $	(1,180 ) $		(3 )		N/A $		(48,054)		N/A	N/A		N/A		N/A		N/A
From net realized gain on
investments		–		–	–		–		N/A		–		N/A	N/A		N/A		N/A		N/A
Total Dividends and Distributions $		(8,806) $		(2,808) $	(1,180 ) $		(3 )		N/A $		(48,054)		N/A	N/A		N/A		N/A		N/A


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands															Inflation Protection Fund
															Year Ended			Year Ended
															October 31, 2010			October 31, 2009
Operations
Net investment income (loss)															$ 10,221			$ 6,049
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																	9,690	(84,107 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																35,650		106,727
			Net Increase (Decrease) in Net Assets Resulting from Operations													55,561		28,669

Dividends and Distributions to Shareholders
From net investment income																(10,381 )		(689 )
								Total Dividends and Distributions								(10,381)		(689 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																77,244		26,179
Redemption fees - Class A																	–	3
Redemption fees - Class J																	1	–
							Total increase (decrease) in net assets									122,425		54,162

Net Assets
Beginning of period																462,021		407,859
End of period (including undistributed net investment income as set forth below)															$ 584,446			$ 462,021
Undistributed (overdistributed) net investment income (loss)															$ 34			$ 333

		Class A Class C			Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 8,815 $		1,835	$ 2,114		$ 116,273		$ 509		$ 462		$ 1,884		$ 580		$ 886
Reinvested		178	16		104		9,942		7		12		32		13		16
Redeemed		(5,548 )	(358)		(1,648 )		(57,504 )		(270 )		(204 )		(390 )		(122)		(390)
Net Increase (Decrease)	$ 3,445 $		1,493	$ 570		$ 68,711		$ 246		$ 270		$ 1,526		$ 471		$ 512
Shares:
Sold		1,120	236		276		14,864		66		60		246		76		114
Reinvested		22	2		13		1,267		1		2		4		2		2
Redeemed		(702 )	(46)		(215 )		(7,360 )		(35 )		(27 )		(51 )		(16 )		(50)
Net Increase (Decrease)		440	192		74		8,771		32		35		199		62		66
Year Ended October 31, 2009
Dollars:
Sold	$ 8,514 $		1,108	$ 1,673		$ 102,728		$ 323		$ 271		$ 799		$ 255		$ 504
Reinvested		9	1		8		664		–		1		1		–		1
Redeemed		(3,719 )	(1,490)		(3,562 )		(79,713 )		(403 )		(220 )		(732 )		(301)		(541)
Net Increase (Decrease)	$ 4,804 $		(381) $		(1,881 ) $		23,679	$ (80 ) $			52	$ 68		$ (46) $			(36)
Shares:
Sold		1,173	153		236		14,213		45		38		113		36		70
Reinvested		1	–		1		91		–		–		–		–		–
Redeemed		(519 )	(210)		(505 )		(11,168 )		(57 )		(31 )		(102 )		(42)		(77)
Net Increase (Decrease)		655	(57)		(268 )		3,136		(12 )		7		11		(6)		(7 )

Distributions:
Year Ended October 31, 2010
From net investment income $		(223) $	(26) $		(104 ) $		(9,948) $		(7 ) $		(12 ) $		(32) $		(13 ) $		(16)
From net realized gain on
investments		–	–		–		–		–		–		–		–		–
Total Dividends and Distributions $		(223) $	(26) $		(104 ) $		(9,948) $		(7 ) $		(12 ) $		(32) $		(13 ) $		(16)
Year Ended October 31, 2009
From net investment income $		(12) $	(1) $		(8 ) $		(665) $		–	$ (1 ) $			(1) $		–	$ (1)
From net realized gain on
investments		–	–		–		–		–		–		–		–		–
Total Dividends and Distributions $		(12) $	(1) $		(8 ) $		(665) $		–	$ (1 ) $			(1) $		–	$ (1)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands													International Emerging Markets Fund
													Year Ended				Year Ended
													October 31, 2010				October 31, 2009
Operations
Net investment income (loss)													$ 9,710				$ 11,635
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions														202,001				(226,425 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies														93,842				627,271
			Net Increase (Decrease) in Net Assets Resulting from Operations											305,553				412,481

Dividends and Distributions to Shareholders
From net investment income														(9,058 )					(8,139 )
							Total Dividends and Distributions							(9,058)					(8,139 )

Capital Share Transactions
Net increase (decrease) in capital share transactions														(2,822 )				154,062
Redemption fees - Class A															–				3
Redemption fees - Class J															6				5
						Total increase (decrease) in net assets								293,679				558,412

Net Assets
Beginning of period													1,262,653					704,241
End of period (including undistributed net investment income as set forth below)													$ 1,556,332				$ 1,262,653
Undistributed (overdistributed) net investment income (loss)													$ 6,122				$ 8,794

		Class A Class B			Class C	Class J	Class P	Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 33,040 $		1,963	$ 4,282		$ 38,797 $	10	$ 147,748		$ 3,505		$ 3,617		$ 16,503		$ 9,718		$ 13,783
Reinvested		288	–		–	712	–		7,299		20		32		165		169		246
Redeemed		(34,252 )	(6,841)		(4,151 )	(57,365 )	–		(136,098)		(2,478 )		(4,011)		(12,724)		(9,282 )		(17,517 )
Net Increase (Decrease)	$ (924 ) $		(4,878) $		131	$ (17,856) $	10	$ 18,949		$ 1,047		$ (362) $			3,944	$ 605		$ (3,488 )
Shares:
Sold		1,441	90		192	1,758	–		6,554		155		161		735		429		601
Reinvested		13	–		–	32	–		321		1		2		8		8		11
Redeemed		(1,514 )	(313)		(187 )	(2,653 )	–		(6,101 )		(112 )		(181)		(573)		(424 )		(788 )
Net Increase (Decrease)		(60 )	(223)		5	(863 )	–		774		44		(18)		170		13		(176 )
Year Ended October 31, 2009
Dollars:
Sold	$ 25,535 $		3,697	$ 3,474		$ 42,370	N/A	$ 194,858		$ 2,647		$ 3,572		$ 11,087		$ 9,895		$ 13,916
Reinvested		209	–		–	610	N/A		6,778		5		13		95		119		160
Redeemed		(33,454 )	(4,024)		(2,223 )	(30,033 )	N/A		(79,509 )		(922 )		(2,536)		(3,843)		(3,271 )		(5,163 )
Net Increase (Decrease)	$ (7,710 ) $		(327) $		1,251	$ 12,947	N/A	$ 122,127		$ 1,730		$ 1,049		$ 7,339		$ 6,743		$ 8,913
Shares:
Sold		1,518	216		199	2,585	N/A		13,044		162		223		660		587		837
Reinvested		15	–		–	46	N/A		500		–		1		7		9		12
Redeemed		(2,327 )	(258)		(139 )	(1,990 )	N/A		(4,970 )		(56 )		(153)		(261)		(207 )		(303 )
Net Increase (Decrease)		(794 )	(42)		60	641	N/A		8,574		106		71		406		389		546

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (297 ) $		–	$ –		$ (713) $	–	$ (7,416) $			(20) $		(32) $		(165 ) $		(169) $		(246 )
From net realized gain on
investments		–	–		–	–	–		–		–		–		–		–		–
Total Dividends and Distributions $		(297) $	–	$ –		$ (713) $	–	$ (7,416) $			(20) $		(32) $		(165 ) $		(169) $		(246 )
Year Ended October 31, 2009
From net investment
income	$ (251 ) $		–	$ –		$ (611)	N/A	$ (6,885) $			(5) $		(13) $		(95 ) $		(119) $		(160 )
From net realized gain on
investments		–	–		–	–	N/A		–		–		–		–		–		–
Total Dividends and Distributions $		(251) $	–	$ –		$ (611)	N/A	$ (6,885) $			(5) $		(13) $		(95 ) $		(119) $		(160 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands										International Growth Fund
										Year Ended			Year Ended
										October 31, 2010			October 31, 2009
Operations
Net investment income (loss)										$ 16,807			$ 19,151
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions											76,269		(560,951 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies											77,050		699,679
				Net Increase (Decrease) in Net Assets Resulting from Operations							170,126		157,879

Dividends and Distributions to Shareholders
From net investment income											(21,397 )		(31,255 )
						Total Dividends and Distributions					(21,397)		(31,255 )

Capital Share Transactions
Net increase (decrease) in capital share transactions											(35,691 )		(164,167 )
Redemption fees - Class J												–	1
						Total increase (decrease) in net assets					113,038		(37,542 )

Net Assets
Beginning of period										1,285,543			1,323,085
End of period (including undistributed net investment income as set forth below)										$ 1,398,581			$ 1,285,543
Undistributed (overdistributed) net investment income (loss)										$ 14,760			$ 18,655

		Class A Class C Class J Institutional					R-1	R-2	R-3	R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 2,870		$ 262 $		3,428 $	126,249 $	365 $	838 $	1,912 $	1,677	$ 1,851
Reinvested		65		2	388	20,407	7	62	185	80		200
Redeemed		(1,594 )		(188 )	(7,283 )	(160,255)	(549 )	(2,045 )	(11,764 )	(5,007)		(7,854)
Net Increase (Decrease)	$ 1,341		$ 76 $		(3,467) $	(13,599) $	(177) $	(1,145) $	(9,667 ) $	(3,250) $		(5,803)
Shares:
Sold		359		33	436	15,830	46	108	232	210		231
Reinvested		8		–	48	2,504	1	8	22	10		25
Redeemed		(199 )		(23 )	(934 )	(20,204 )	(69 )	(269 )	(1,479 )	(635)		(1,008)
Net Increase (Decrease)		168		10	(450 )	(1,870 )	(22 )	(153 )	(1,225 )	(415)		(752)
Year Ended October 31, 2009
Dollars:
Sold	$ 3,964		$ 267 $		4,565 $	179,435 $	380 $	958 $	2,809 $	1,186	$ 3,508
Reinvested		35		2	543	29,962	16	66	268	132		226
Redeemed		(1,293 )		(125 )	(7,415 )	(367,545)	(1,021 )	(1,701 )	(5,948 )	(4,041)		(3,400)
Net Increase (Decrease)	$ 2,706		$ 144 $		(2,307) $ (158,148) $		(625) $	(677) $	(2,871 ) $	(2,723) $		334
Shares:
Sold		547		37	696	26,855	61	143	413	181		522
Reinvested		5		–	82	4,452	2	10	38	20		34
Redeemed		(189 )		(17 )	(1,157 )	(55,351 )	(153 )	(264 )	(851 )	(607)		(502)
Net Increase (Decrease)		363		20	(379 )	(24,044 )	(90 )	(111 )	(400 )	(406)		54

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (66) $			(2) $	(388) $	(20,407) $	(7) $	(62) $	(185 ) $	(80) $		(200)
From net realized gain on
investments		–		–	–	–	–	–	–	–		–
Total Dividends and Distributions $		(66) $		(2) $	(388) $	(20,407) $	(7) $	(62) $	(185 ) $	(80) $		(200)
Year Ended October 31, 2009
From net investment
income	$ (37) $			(2) $	(544) $	(29,964) $	(16) $	(66) $	(268 ) $	(132) $		(226)
From net realized gain on
investments		–		–	–	–	–	–	–	–		–
Total Dividends and Distributions $		(37) $		(2) $	(544) $	(29,964) $	(16) $	(66) $	(268 ) $	(132) $		(226)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands												LargeCap Blend Fund II
												Year Ended		Year Ended
												October 31, 2010		October 31, 2009
Operations
Net investment income (loss)												$ 7,356		$ 8,769
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions												24,476			(122,756 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies												68,688			184,688
			Net Increase (Decrease) in Net Assets Resulting from Operations									100,520			70,701

Dividends and Distributions to Shareholders
From net investment income												(8,377 )			(9,429 )
								Total Dividends and Distributions				(8,377)			(9,429 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												(61,848 )			(8,650 )
Redemption fees - Class J													1		1
							Total increase (decrease) in net assets					30,296			52,623

Net Assets
Beginning of period												704,152			651,529
End of period (including undistributed net investment income as set forth below)												$ 734,448		$ 704,152
Undistributed (overdistributed) net investment income (loss)												$ 5,507		$ 6,528

		Class A	Class B		Class C		Class J Institutional			R-1	R-2	R-3	R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 5,472 $		323	$ 257		$ 8,377 $		65,699	$ 1,001 $		2,330 $	6,806 $	2,318 $	9,343
Reinvested		187	–		2		824	6,583		23	108	215	119	312
Redeemed		(32,762 )	(10,094 )		(955 )		(16,623 )	(78,858 )		(1,490 )	(4,820 )	(5,802)	(3,754)	(16,989 )
Net Increase (Decrease)	$ (27,103) $		(9,771 ) $		(696) $		(7,422 ) $	(6,576) $		(466) $	(2,382) $	1,219 $	(1,317) $	(7,334 )
Shares:
Sold		632	38		30		1,007	7,672		118	276	801	271	1,086
Reinvested		22	–		–		99	774		3	13	25	14	37
Redeemed		(3,850 )	(1,199 )		(113 )		(1,998 )	(9,138 )		(175 )	(571 )	(693)	(445)	(1,980 )
Net Increase (Decrease)		(3,196 )	(1,161 )		(83 )		(892 )	(692 )		(54 )	(282 )	133	(160)	(857 )
Year Ended October 31, 2009
Dollars:
Sold	$ 4,665 $		647	$ 348		$ 8,235 $		52,182	$ 1,103 $		2,539 $	3,350 $	2,800 $	6,003
Reinvested		320	–		–		953	7,419		22	82	220	138	266
Redeemed		(8,056 )	(3,673 )		(245 )		(16,107 )	(54,042 )		(675 )	(2,588 )	(5,590)	(2,099)	(6,867 )
Net Increase (Decrease)	$ (3,071) $		(3,026 ) $		103	$ (6,919 ) $		5,559	$ 450 $		33 $	(2,020) $	839 $	(598 )
Shares:
Sold		676	95		49		1,235	7,659		162	366	498	414	826
Reinvested		49	–		–		149	1,136		3	12	34	21	41
Redeemed		(1,212 )	(541 )		(38 )		(2,484 )	(8,117 )		(93 )	(378 )	(835)	(315)	(1,023 )
Net Increase (Decrease)		(487 )	(446 )		11		(1,100 )	678		72	–	(303)	120	(156 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (190) $		–	$ (2) $			(825 ) $	(6,583) $		(23) $	(108) $	(215) $	(119) $	(312 )
From net realized gain on
investments		–	–		–		–	–		–	–	–	–	–
Total Dividends and Distributions $		(190) $	–	$ (2) $			(825 ) $	(6,583) $		(23) $	(108) $	(215) $	(119) $	(312 )
Year Ended October 31, 2009
From net investment
income	$ (325) $		–	$ –		$ (954 ) $		(7,422) $		(22) $	(82) $	(220) $	(138) $	(266 )
From net realized gain on
investments		–	–		–		–	–		–	–	–	–	–
Total Dividends and Distributions $		(325) $	–	$ –		$ (954 ) $		(7,422) $		(22) $	(82) $	(220) $	(138) $	(266 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands															LargeCap Growth Fund
															Year Ended			Year Ended
															October 31, 2010			October 31, 2009
Operations
Net investment income (loss)															$ (2,920 )			$ 1,219
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																174,764			(576,058 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																287,750			654,424
				Net Increase (Decrease) in Net Assets Resulting from Operations												459,594				79,585

Dividends and Distributions to Shareholders
From net investment income																	(316 )			(1,219 )
From tax return of capital																	–			(1,510 )
										Total Dividends and Distributions							(316)			(2,729 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															(358,275 )					48,076
Redemption fees - Class C																	1			–
Redemption fees - Class J																	1			–
								Total increase (decrease) in net assets								101,005			124,932

Net Assets
Beginning of period															2,226,624				2,101,692
End of period (including undistributed net investment income as set forth below)															$ 2,327,629			$ 2,226,624
Undistributed (overdistributed) net investment income (loss)															$ –			$ –

	Class A			Class B		Class C		Class J		Class P	Institutional			R-1	R-2		R-3	R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 38,760		$ 1,005		$ 3,122		$ 5,751		$ 10		$ 214,735		$ 7,400		$ 1,814	$ 4,805		$ 4,328	$ 73,107
Reinvested		–		–		–		–		–		312		–	–		–	–		–
Redeemed	(59,856 )			(8,788)		(2,621 )		(8,411 )		–		(553,805)		(2,726 )	(4,179)		(19,391)	(16,081 )		(37,566 )
Net Increase (Decrease)	$ (21,096) $			(7,783 ) $		501	$ (2,660) $			10	$ (338,758) $			4,674	$ (2,365) $		(14,586) $ (11,753) $			35,541
Shares:
Sold		5,601		153		461		869		1		30,625		1,109	263		601	600		10,516
Reinvested		–		–		–		–		–		45		–	–		–	–		–
Redeemed	(8,657 )			(1,322)		(390 )		(1,277 )		–		(75,960 )		(401 )	(613)		(2,701)	(2,220 )		(5,263 )
Net Increase (Decrease)	(3,056 )			(1,169)		71		(408 )		1		(45,290 )		708	(350)		(2,100)	(1,620 )		5,253
Year Ended October 31, 2009
Dollars:
Sold	$ 31,898		$ 2,624		$ 4,875		$ 8,030			N/A $		304,415	$ 2,278		$ 2,967	$ 13,205		$ 17,184	$ 20,285
Reinvested		–		–		–		–		N/A		2,593		–	–		–	–		–
Redeemed	(70,804 )			(11,201)		(5,196 )		(7,940 )		N/A		(227,115)		(1,641 )	(2,848)		(8,121)	(11,714 )		(15,698 )
Net Increase (Decrease)	$ (38,906) $			(8,577 ) $		(321) $		90		N/A $		79,893	$ 637		$ 119	$ 5,084		$ 5,470	$ 4,587
Shares:
Sold		5,828		485		901		1,533		N/A		54,584		411	531		2,361	3,001		3,645
Reinvested		–		–		–		–		N/A		478		–	–		–	–		–
Redeemed	(12,689 )			(2,123)		(972 )		(1,516 )		N/A		(40,962 )		(290 )	(511)		(1,381)	(2,005 )		(2,807 )
Net Increase (Decrease)	(6,861 )			(1,638)		(71 )		17		N/A		14,100		121	20		980	996		838

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –		$ –		$ –		$ –		$ – $			(316) $		–	$ –	$ –		$ –	$ –
From net realized gain on
investments		–		–		–		–		–		–		–	–		–	–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ – $			(316) $		–	$ –	$ –		$ –	$ –
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ –			N/A $		(1,219) $		–	$ –	$ –		$ –	$ –
From net realized gain on
investments		–		–		–		–		N/A		–		–	–		–	–		–
From tax return of capital		–		–		–		–		N/A		(1,510)		–	–		–	–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –			N/A $		(2,729) $		–	$ –	$ –		$ –	$ –


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands														LargeCap Growth Fund I
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 2,346				$ 1,249
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions															171,682				(241,059 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															285,883				604,321
				Net Increase (Decrease) in Net Assets Resulting from Operations											459,911				364,511

Dividends and Distributions to Shareholders
From net investment income															(1,115 )				(185 )
									Total Dividends and Distributions						(1,115)				(185 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															771,052				89,559
Redemption fees - Class A																–			2
Redemption fees - Class J																3			2
								Total increase (decrease) in net assets						1,229,851					453,889

Net Assets
Beginning of period														1,648,146					1,194,257
End of period (including undistributed net investment income as set forth below)														$ 2,877,997				$ 1,648,146
Undistributed (overdistributed) net investment income (loss)														$ 2,294				$ 1,064

		Class A		Class B		Class C		Class J Institutional			R-1	R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 5,253		$ 305		$ 662		$ 14,854		$ 950,191	$ 1,246		$ 2,509	$ 16,111		$ 8,824		$ 50,290
Reinvested		–		–		–		–	1,115		–	–		–		–		–
Redeemed		(34,124 )		(4,541 )		(1,072 )		(13,191 )	(207,582)		(553 )	(5,674 )		(3,360)		(2,107)		(8,104 )
Net Increase (Decrease)	$ (28,871) $			(4,236) $		(410) $		1,663	$ 743,724	$ 693		$ (3,165) $		12,751	$ 6,717		$ 42,186
Shares:
Sold		702		43		88		2,087	120,632		165	348		2,156		1,171		6,320
Reinvested		–		–		–		–	145		–	–		–		–		–
Redeemed		(4,505 )		(636 )		(144 )		(1,865 )	(26,452 )		(71 )	(793 )		(445)		(279)		(1,040 )
Net Increase (Decrease)		(3,803 )		(593 )		(56 )		222	94,325		94	(445 )		1,711		892		5,280
Year Ended October 31, 2009
Dollars:
Sold	$ 8,349		$ 870		$ 612		$ 12,443		$ 245,935	$ 628		$ 2,378	$ 2,921		$ 1,271		$ 5,030
Reinvested		–		–		–		–	185		–	–		–		–		–
Redeemed		(6,981 )		(2,119 )		(167 )		(7,507 )	(157,833)		(284 )	(2,277 )		(5,937)		(1,689)		(6,269 )
Net Increase (Decrease)	$ 1,368		$ (1,249) $			445	$ 4,936		$ 88,287	$ 344		$ 101	$ (3,016) $			(418) $		(1,239)
Shares:
Sold		1,444		158		99		2,247	44,429		109	429		482		236		822
Reinvested		–		–		–		–	37		–	–		–		–		–
Redeemed		(1,296 )		(399 )		(29 )		(1,435 )	(28,644 )		(53 )	(426 )		(1,077)		(327)		(1,034 )
Net Increase (Decrease)		148		(241)		70		812	15,822		56	3		(595)		(91)		(212 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –		$ –		$ –		$ –		$ (1,115) $		–	$ –	$ –		$ –		$ –
From net realized gain on
investments		–		–		–		–	–		–	–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ (1,115) $		–	$ –	$ –		$ –		$ –
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ –		$ (185) $		–	$ –	$ –		$ –		$ –
From net realized gain on
investments		–		–		–		–	–		–	–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ (185) $		–	$ –	$ –		$ –		$ –


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands														LargeCap Growth Fund II
														Year Ended			Year Ended
														October 31, 2010			October 31, 2009
Operations
Net investment income (loss)														$ 8,852			$ 7,423
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions															180,489		(329,496 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															43,931		519,083
				Net Increase (Decrease) in Net Assets Resulting from Operations											233,272		197,010

Dividends and Distributions to Shareholders
From net investment income															(6,366 )		(8,170 )
							Total Dividends and Distributions								(6,366)		(8,170 )

Capital Share Transactions
Net increase (decrease) in capital share transactions														(423,478 )			(9,003 )
Redemption fees - Class J																1	–
							Total increase (decrease) in net assets							(196,571)			179,837

Net Assets
Beginning of period														1,568,714			1,388,877
End of period (including undistributed net investment income as set forth below)														$ 1,372,143			$ 1,568,714
Undistributed (overdistributed) net investment income (loss)														$ 6,604			$ 3,884

		Class A Class C Class J Institutional						R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 522		$ 198		$ 5,016		$ 129,902 $	500	$ 626		$ 2,032		$ 3,017		$ 9,331
Reinvested		–		–		–	6,297	–		–		–		14		55
Redeemed		(2,051 )		(438 )		(5,150 )	(560,678)	(698 )		(1,880 )		(4,045 )		(1,212)		(4,836)
Net Increase (Decrease)	$ (1,529) $			(240 ) $		(134) $ (424,479) $		(198 ) $		(1,254) $		(2,013) $		1,819	$ 4,550
Shares:
Sold		72		28		746	17,633	71		90		288		424		1,304
Reinvested		–		–		–	857	–		–		–		2		7
Redeemed		(288 )		(63 )		(772 )	(73,539 )	(99 )		(278 )		(586 )		(171)		(677)
Net Increase (Decrease)		(216 )		(35 )		(26 )	(55,049 )	(28 )		(188 )		(298 )		255		634
Year Ended October 31, 2009
Dollars:
Sold	$ 2,076		$ 292		$ 4,897		$ 116,783 $	576	$ 1,191		$ 4,591		$ 1,297		$ 5,495
Reinvested		–		–		–	8,126	–		–		–		–		44
Redeemed		(334 )		(203 )		(3,445 )	(137,193)	(150 )		(1,531 )		(2,108 )		(2,363)		(7,044)
Net Increase (Decrease)	$ 1,742		$ 89		$ 1,452		$ (12,284) $	426	$ (340) $			2,483	$ (1,066) $			(1,505)
Shares:
Sold		351		51		899	20,065	98		221		768		219		968
Reinvested		–		–		–	1,483	–		–		–		–		8
Redeemed		(61 )		(34 )		(644 )	(23,483 )	(27 )		(296 )		(357 )		(433)		(1,212)
Net Increase (Decrease)		290		17		255	(1,935 )	71		(75 )		411		(214)		(236)

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –		$ –		$ –		$ (6,297) $	–	$ –		$ –		$ (14) $			(55)
From net realized gain on
investments		–		–		–	–	–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ (6,297) $	–	$ –		$ –		$ (14) $			(55)
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ (8,126) $	–	$ –		$ –		$ –		$ (44)
From net realized gain on
investments		–		–		–	–	–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ (8,126) $	–	$ –		$ –		$ –		$ (44)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands														LargeCap S&P 500 Index Fund
														Year Ended			Year Ended
														October 31, 2010			October 31, 2009
Operations
Net investment income (loss)														$ 22,586			$ 14,440
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																4,565	(18,499 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															205,527		81,234
		Net Increase (Decrease) in Net Assets Resulting from Operations													232,678		77,175

Dividends and Distributions to Shareholders
From net investment income															(14,232 )		(16,807 )
							Total Dividends and Distributions								(14,232)		(16,807 )

Capital Share Transactions
Net increase (decrease) in capital share transactions														1,169,305			60,429
Redemption fees - Class A																–	1
Redemption fees - Class C																–	1
Redemption fees - Class J																2	4
						Total increase (decrease) in net assets								1,387,753			120,803

Net Assets
Beginning of period															910,896		790,093
End of period (including undistributed net investment income as set forth below)														$ 2,298,649			$ 910,896
Undistributed (overdistributed) net investment income (loss)														$ 19,333			$ 10,990

	Class A Class C Class J Institutional							R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 19,353 $	1,806	$ 28,352		$ 385,606		$ 4,404		$ 7,425		$ 18,555		$ 24,868		$ 36,893
Issued in acquisitions	82,849	715		31,682		835,129		987		1,620		648		1,285		3,459
Reinvested	759	41		3,639		2,616		156		623		2,000		1,324		3,049
Redeemed	(18,236 )	(1,167)		(44,948 )		(119,555 )		(3,282 )		(15,814 )		(59,755 )		(17,568)		(50,213)
Net Increase (Decrease)	$ 84,725 $	1,395	$ 18,725		$ 1,103,796		$ 2,265		$ (6,146) $ (38,552) $					9,909	$ (6,812)
Shares:
Sold	2,463	230		3,638		49,291		559		943		2,355		3,190		4,633
Issued in acquisitions	10,688	93		4,127		107,825		128		209		84		165		442
Reinvested	97	6		473		337		20		80		257		170		389
Redeemed	(2,315 )	(152)		(5,759 )		(15,277 )		(419 )		(2,022 )		(7,610 )		(2,239)		(6,369)
Net Increase (Decrease)	10,933	177		2,479		142,176		288		(790 )		(4,914 )		1,286		(905)
Year Ended October 31, 2009
Dollars:
Sold	$ 11,135 $	3,638	$ 31,222		$ 46,244		$ 4,594		$ 7,806		$ 25,055		$ 21,378		$ 45,860
Reinvested	1,001	35		4,838		3,149		118		689		2,263		1,553		3,133
Redeemed	(13,399 )	(2,440)		(38,846 )		(35,467 )		(920 )		(5,401 )		(17,464 )		(13,029)		(26,316)
Net Increase (Decrease)	$ (1,263) $	1,233	$ (2,786) $			13,926	$ 3,792		$ 3,094		$ 9,854		$ 9,902		$ 22,677
Shares:
Sold	1,768	552		5,044		7,405		718		1,185		3,897		3,398		6,912
Reinvested	162	6		792		513		19		111		367		251		504
Redeemed	(2,162 )	(378)		(6,312 )		(5,576 )		(146 )		(858 )		(2,801 )		(2,027)		(4,032)
Net Increase (Decrease)	(232 )	180		(476 )		2,342		591		438		1,463		1,622		3,384

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (777) $	(42) $		(3,645) $		(2,616)	$ (156) $			(623) $		(2,000) $		(1,324) $		(3,049)
From net realized gain on
investments	–	–		–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (777) $	(42) $		(3,645) $		(2,616)	$ (156) $			(623) $		(2,000) $		(1,324) $		(3,049)
Year Ended October 31, 2009
From net investment
income	$ (1,020) $	(37) $		(4,841) $		(3,153)	$ (118) $			(689) $		(2,263) $		(1,553) $		(3,133)
From net realized gain on
investments	–	–		–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (1,020) $	(37) $		(4,841) $		(3,153)	$ (118) $			(689) $		(2,263) $		(1,553) $		(3,133)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands													LargeCap Value Fund
												Year Ended				Year Ended
												October 31, 2010				October 31, 2009
Operations
Net investment income (loss)												$ 14,661				$ 14,990
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions													15,839				(107,879 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies													90,462				121,707
		Net Increase (Decrease) in Net Assets Resulting from Operations											120,962				28,818

Dividends and Distributions to Shareholders
From net investment income													(15,093 )				(16,197 )
						Total Dividends and Distributions							(15,093)				(16,197 )

Capital Share Transactions
Net increase (decrease) in capital share transactions													278,985				154,910
Redemption fees - Class J														–			1
					Total increase (decrease) in net assets								384,854				167,532

Net Assets
Beginning of period													789,865				622,333
End of period (including undistributed net investment income as set forth below)												$ 1,174,719				$ 789,865
Undistributed (overdistributed) net investment income (loss)												$ 11,300				$ 11,732

	Class A Class B		Class C		Class J Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 13,842 $	423 $	422	$ 6,090 $		353,673	$ 378		$ 622		$ 679		$ 609		$ 2,182
Reinvested	2,168	3	13		536	12,051		22		41		94		33		73
Redeemed	(26,986 )	(2,806)	(311 )		(6,867 )	(67,882 )		(679 )		(860 )		(3,533)		(605)		(4,440 )
Net Increase (Decrease)	$ (10,976) $	(2,380) $	124	$ (241) $		297,842	$ (279 ) $			(197) $		(2,760) $		37	$ (2,185)
Shares:
Sold	1,647	50	52		730	41,674		46		75		82		73		262
Reinvested	261	–	1		65	1,454		3		5		11		4		9
Redeemed	(3,214 )	(333)	(38 )		(830 )	(8,146 )		(82 )		(103 )		(439)		(73)		(530 )
Net Increase (Decrease)	(1,306 )	(283)	15		(35 )	34,982		(33 )		(23 )		(346)		4		(259 )
Year Ended October 31, 2009
Dollars:
Sold	$ 8,683 $	963 $	1,327	$ 6,193 $		196,844	$ 838		$ 1,560		$ 4,186		$ 1,210		$ 5,210
Reinvested	3,218	45	28		735	11,858		13		32		45		34		86
Redeemed	(27,189 )	(2,737)	(1,124 )		(7,865 )	(45,568 )		(135 )		(577 )		(855)		(719)		(1,429 )
Net Increase (Decrease)	$ (15,288) $	(1,729) $	231	$ (937) $		163,134	$ 716		$ 1,015		$ 3,376		$ 525		$ 3,867
Shares:
Sold	1,238	136	184		899	28,410		118		243		608		171		707
Reinvested	451	6	4		104	1,670		2		5		7		5		12
Redeemed	(3,922 )	(392)	(165 )		(1,141 )	(6,493 )		(20 )		(80 )		(123)		(100)		(200 )
Net Increase (Decrease)	(2,233 )	(250)	23		(138 )	23,587		100		168		492		76		519

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (2,227) $	(3) $	(13) $		(536) $	(12,051) $		(22 ) $		(41) $		(94) $		(33) $		(73)
From net realized gain on
investments	–	–	–		–	–		–		–		–		–		–
Total Dividends and Distributions $ (2,227) $		(3) $	(13) $		(536) $	(12,051) $		(22 ) $		(41) $		(94) $		(33) $		(73)
Year Ended October 31, 2009
From net investment
income	$ (3,317) $	(45) $	(31) $		(735) $	(11,859) $		(13 ) $		(32) $		(45) $		(34) $		(86)
From net realized gain on
investments	–	–	–		–	–		–		–		–		–		–
Total Dividends and Distributions $ (3,317) $		(45) $	(31) $		(735) $	(11,859) $		(13 ) $		(32) $		(45) $		(34) $		(86)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands									LargeCap Value Fund III
									Year Ended			Year Ended
									October 31, 2010			October 31, 2009
Operations
Net investment income (loss)									$ 23,718			$ 33,849
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions										140,936		(638,155 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies										63,423		688,775
		Net Increase (Decrease) in Net Assets Resulting from Operations								228,077		84,469

Dividends and Distributions to Shareholders
From net investment income										(31,437 )		(46,086 )
					Total Dividends and Distributions					(31,437)		(46,086 )

Capital Share Transactions
Net increase (decrease) in capital share transactions									(339,881 )			1,804
				Total increase (decrease) in net assets					(143,241)			40,187

Net Assets
Beginning of period									1,904,875			1,864,688
End of period (including undistributed net investment income as set forth below)									$ 1,761,634			$ 1,904,875
Undistributed (overdistributed) net investment income (loss)									$ 17,243			$ 24,972

	Class A	Class B	Class C Class J Institutional				R-1	R-2	R-3		R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 3,520 $	316 $	126 $	6,299 $	463,176	$ 961 $		1,371 $	2,428	$ 1,807 $		5,445
Reinvested	415	40	6	746	29,015		40	191	307		221	451
Redeemed	(26,499 )	(6,093 )	(721 )	(11,172 )	(754,395)		(1,815 )	(7,430 )	(17,760)		(11,002)	(19,875 )
Net Increase (Decrease)	$ (22,564) $	(5,737) $	(589) $	(4,127 ) $ (262,204) $			(814) $	(5,868) $ (15,025) $			(8,974 ) $ (13,979)
Shares:
Sold	374	33	12	688	47,437		104	149	252		194	590
Reinvested	45	4	1	82	3,161		4	21	32		24	49
Redeemed	(2,869 )	(654 )	(78 )	(1,222 )	(80,301 )		(193 )	(815 )	(1,877)		(1,220)	(2,123 )
Net Increase (Decrease)	(2,450 )	(617 )	(65 )	(452 )	(29,703 )		(85 )	(645 )	(1,593)		(1,002)	(1,484 )
Year Ended October 31, 2009
Dollars:
Sold	$ 4,702 $	534 $	178 $	7,339 $	245,245	$ 969 $		1,786 $	3,522	$ 3,877 $		7,529
Reinvested	535	35	6	1,232	41,374		72	340	1,012		493	973
Redeemed	(7,383 )	(3,112 )	(205 )	(11,501 )	(226,595)		(1,495 )	(8,051 )	(29,867)		(7,614)	(24,126 )
Net Increase (Decrease)	$ (2,146) $	(2,543) $	(21) $	(2,930 ) $	60,024	$ (454) $		(5,925) $ (25,333) $			(3,244 ) $ (15,624)
Shares:
Sold	610	70	23	975	32,401		130	232	447		516	961
Reinvested	70	5	1	163	5,416		9	45	129		64	127
Redeemed	(997 )	(407 )	(29 )	(1,558 )	(30,552 )		(196 )	(1,075 )	(3,590)		(1,019)	(2,953 )
Net Increase (Decrease)	(317 )	(332 )	(5 )	(420 )	7,265		(57 )	(798 )	(3,014)		(439)	(1,865 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (419) $	(40) $	(6) $	(747 ) $	(29,015) $		(40) $	(191) $	(307) $		(221 ) $	(451 )
From net realized gain on
investments	–	–	–	–	–		–	–	–		–	–
Total Dividends and
Distributions	$ (419) $	(40) $	(6) $	(747 ) $	(29,015) $		(40) $	(191) $	(307) $		(221 ) $	(451 )
Year Ended October 31, 2009
From net investment
income	$ (546) $	(36) $	(6) $	(1,233 ) $	(41,375) $		(72) $	(340) $	(1,012) $		(493 ) $	(973 )
From net realized gain on
investments	–	–	–	–	–		–	–	–		–	–
Total Dividends and
Distributions	$ (546) $	(36) $	(6) $	(1,233 ) $	(41,375) $		(72) $	(340) $	(1,012) $		(493 ) $	(973 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																MidCap Blend Fund
															Year Ended				Year Ended
															October 31, 2010				October 31, 2009
Operations
Net investment income (loss)															$ 10,264				$ (32 )
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																66,366				(17,853 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																188,997					93,250
				Net Increase (Decrease) in Net Assets Resulting from Operations												265,627					75,365

Dividends and Distributions to Shareholders
From net investment income																(5,794 )					–
From net realized gain on investments																	–			(32,308 )
								Total Dividends and Distributions								(5,794)				(32,308 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															(114,443 )					466,875
Redemption fees - Class A																	–				1
								Total increase (decrease) in net assets								145,390				509,933

Net Assets
Beginning of period															1,095,211					585,278
End of period (including undistributed net investment income as set forth below)															$ 1,240,601				$ 1,095,211
Undistributed (overdistributed) net investment income (loss)															$ 4,450				$ (19)

		Class A Class B				Class C		Class J	Class P	Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 94,593		$ 2,865		$ 11,596		$ 22,873 $		88	$ 52,461		$ 562		$ 2,410		$ 8,749		$ 2,941		$ 24,278
Reinvested		1,565		–		19		423	–		3,166		4		11		43		38		113
Redeemed		(95,445 )		(17,320)		(3,432 )		(27,024 )	–		(182,400)		(648 )		(2,062)		(3,780)		(3,516 )		(7,614 )
Net Increase (Decrease)	$ 713		$ (14,455) $			8,183	$ (3,728 ) $		88	$ (126,773) $			(82) $		359	$ 5,012		$ (537) $			16,777
Shares:
Sold		7,886		249		1,002		1,984	7		4,382		50		204		721		239		1,986
Reinvested		138		–		2		39	–		278		–		1		4		3		10
Redeemed		(8,080 )		(1,495)		(299 )		(2,362 )	–		(14,944 )		(56 )		(175)		(319)		(304 )		(640 )
Net Increase (Decrease)		(56 )		(1,246)		705		(339 )	7		(10,284 )		(6 )		30		406		(62 )		1,356
Year Ended October 31, 2009
Dollars:
Sold	$ 41,456		$ 3,703		$ 2,791		$ 17,690		N/A $		44,957	$ 921		$ 1,661		$ 4,193		$ 2,672		$ 5,958
Issued in acquisitions		36,812		10,845		3,912		–	N/A		368,602		–		–		–		–		–
Reinvested		19,297		1,897		201		7,197	N/A		443		55		139		420		303		629
Redeemed		(57,336 )		(10,856)		(902 )		(22,143 )	N/A		(10,891 )		(257 )		(680)		(2,376)		(810 )		(3,628 )
Net Increase (Decrease)	$ 40,229		$ 5,589		$ 6,002		$ 2,744		N/A $		403,111	$ 719		$ 1,120		$ 2,237		$ 2,165		$ 2,959
Shares:
Sold		4,579		407		310		2,021	N/A		4,760		106		182		457		293		660
Issued in acquisitions		3,375		1,014		368		–	N/A		33,427		–		–		–		–		–
Reinvested		2,345		233		25		901	N/A		53		7		17		51		36		76
Redeemed		(6,530 )		(1,237)		(104 )		(2,605 )	N/A		(1,186 )		(30 )		(75)		(255)		(88 )		(404 )
Net Increase (Decrease)		3,769		417		599		317	N/A		37,054		83		124		253		241		332

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (1,606) $			–	$ (24 ) $			(424 ) $	–	$ (3,531) $			(4) $		(11) $		(43) $		(38) $		(113 )
From net realized gain on
investments		–		–		–		–	–		–		–		–		–		–		–
Total Dividends and Distributions $		(1,606) $		–	$ (24 ) $			(424 ) $	–	$ (3,531) $			(4) $		(11) $		(43) $		(38) $		(113 )
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ –		N/A $		–	$ –		$ –		$ –		$ –		$ –
From net realized gain on
investments		(19,722)		(1,941)		(215 )		(7,204 )	N/A		(1,678 )		(55 )		(141)		(420)		(303 )		(629 )
From tax return of capital		–		–		–		–	N/A		–		–		–		–		–		–
Total Dividends and Distributions $ (19,722) $				(1,941) $		(215 ) $		(7,204 )	N/A $		(1,678) $		(55) $		(141) $		(420) $		(303) $		(629 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																MidCap Growth Fund III
																Year Ended				Year Ended
																October 31, 2010				October 31, 2009
Operations
Net investment income (loss)																$ (2,759 )				$ (2,177 )
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																	134,202				(168,592 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																	183,458				395,922
				Net Increase (Decrease) in Net Assets Resulting from Operations													314,901				225,153


Capital Share Transactions
Net increase (decrease) in capital share transactions																(103,199 )					393,917
Redemption fees - Class J																		1			1
								Total increase (decrease) in net assets									211,703				619,071

Net Assets
Beginning of period																1,148,889					529,818
End of period (including undistributed net investment income as set forth below)																$ 1,360,592				$ 1,148,889
Undistributed (overdistributed) net investment income (loss)																$ 44				$ –

		Class A		Class B		Class C		Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 5,226		$ 292		$ 530		$ 5,943		$ 68,238		$ 1,277		$ 1,565		$ 4,761		$ 5,083		$ 12,716
Redeemed		(27,176 )		(4,659 )		(1,522 )		(6,353 )		(139,561)		(1,837 )		(3,555 )		(7,188)		(7,172)		(9,807 )
Net Increase (Decrease)	$ (21,950) $			(4,367) $		(992) $		(410) $		(71,323) $		(560) $		(1,990) $		(2,427) $		(2,089) $		2,909
Shares:
Sold		631		37		65		739		7,967		155		187		560		607		1,501
Redeemed		(3,267 )		(583 )		(188 )		(809 )		(16,428 )		(226 )		(435 )		(845)		(852)		(1,160 )
Net Increase (Decrease)		(2,636 )		(546 )		(123 )		(70 )		(8,461 )		(71 )		(248 )		(285)		(245)		341
Year Ended October 31, 2009
Dollars:
Sold	$ 6,007		$ 668		$ 805		$ 5,071		$ 158,566		$ 1,040		$ 1,403		$ 3,854		$ 3,462		$ 6,010
Issued in acquisitions		1,401		–		169		–		313,277		2,352		2,652		6,653		4,937		5,701
Redeemed		(5,572 )		(1,569 )		(415 )		(3,747 )		(96,154 )		(616 )		(2,170 )		(7,849)		(2,634)		(9,385 )
Net Increase (Decrease)	$ 1,836		$ (901) $			559	$ 1,324		$ 375,689		$ 2,776		$ 1,885		$ 2,658		$ 5,765		$ 2,326
Shares:
Sold		969		111		124		825		27,173		169		228		620		539		945
Issued in acquisitions		295		–		36		–		55,882		432		510		1,157		904		942
Redeemed		(949 )		(271 )		(72 )		(644 )		(15,065 )		(94 )		(367 )		(1,199)		(427)		(1,385 )
Net Increase (Decrease)		315		(160)		88		181		67,990		507		371		578		1,016		502

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –
From net realized gain on
investments		–		–		–		–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –
From net realized gain on
investments		–		–		–		–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –		$ –


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																	MidCap Value Fund I
																Year Ended				Year Ended
																October 31, 2010				October 31, 2009
Operations
Net investment income (loss)																$ 16,502				$ 8,989
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																	148,202			(144,156 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																	141,030			306,276
				Net Increase (Decrease) in Net Assets Resulting from Operations													305,734			171,109

Dividends and Distributions to Shareholders
From net investment income																	(11,333 )			(9,947 )
										Total Dividends and Distributions							(11,333)			(9,947 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																	(11,441 )			340,554
Redemption fees - Class B																		1		–
								Total increase (decrease) in net assets									282,961			501,716

Net Assets
Beginning of period																1,166,774				665,058
End of period (including undistributed net investment income as set forth below)																$ 1,449,735				$ 1,166,774
Undistributed (overdistributed) net investment income (loss)																$ 12,419				$ 6,450

		Class A Class B				Class C		Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 2,420		$ 379		$ 475		$ 6,325		$ 104,349		$ 1,707		$ 4,323		$ 6,854		$ 9,585		$ 17,937
Reinvested		49		4		5		294		10,289		24		86		218		154		208
Redeemed		(6,495 )		(1,170 )		(1,059 )		(9,124 )		(112,676)		(1,750 )		(3,726 )		(14,205)		(5,967)		(20,954 )
Net Increase (Decrease)	$ (4,026) $			(787) $		(579) $		(2,505 ) $		1,962	$ (19) $			683	$ (7,133) $			3,772	$ (2,809 )
Shares:
Sold		215		34		43		567		9,293		156		393		616		876		1,637
Reinvested		4		–		–		28		971		2		8		21		15		19
Redeemed		(582 )		(105 )		(95 )		(829 )		(10,318 )		(155 )		(335 )		(1,312)		(547)		(1,905 )
Net Increase (Decrease)		(363 )		(71 )		(52 )		(234 )		(54 )		3		66		(675)		344		(249 )
Year Ended October 31, 2009
Dollars:
Sold	$ 576		$ 134		$ 254		$ 2,513		$ 150,730		$ 1,752		$ 2,530		$ 9,715		$ 4,470		$ 11,618
Issued in acquisitions		4,847		877		760		39,353		160,499		703		6,720		11,451		5,811		6,679
Reinvested		–		–		–		–		9,574		15		40		90		101		127
Redeemed		(429 )		(129 )		(83 )		(3,527 )		(72,007 )		(494 )		(1,580 )		(3,961)		(3,602)		(5,573 )
Net Increase (Decrease)	$ 4,994		$ 882		$ 931		$ 38,339		$ 248,796		$ 1,976		$ 7,710		$ 17,295		$ 6,780		$ 12,851
Shares:
Sold		63		15		28		281		18,984		210		309		1,169		536		1,349
Issued in acquisitions		604		110		95		4,911		19,977		88		847		1,434		726		833
Reinvested		–		–		–		–		1,231		2		5		12		13		16
Redeemed		(46 )		(14 )		(9 )		(390 )		(8,781 )		(61 )		(180 )		(470)		(400)		(676 )
Net Increase (Decrease)		621		111		114		4,802		31,411		239		981		2,145		875		1,522

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (50) $			(4) $		(5) $		(294 ) $		(10,290) $		(24) $		(86) $		(218) $		(154) $		(208 )
From net realized gain on
investments		–		–		–		–		–		–		–		–		–		–
Total Dividends and Distributions $		(50) $		(4) $		(5) $		(294 ) $		(10,290) $		(24) $		(86) $		(218) $		(154) $		(208 )
Year Ended October 31, 2009
From net investment
income	$ –		$ –		$ –		$ –		$ (9,574) $			(15) $		(40) $		(90) $		(101) $		(127 )
From net realized gain on
investments		–		–		–		–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –		$ (9,574) $			(15) $		(40) $		(90) $		(101) $		(127 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands												Money Market Fund
											Year Ended			Year Ended
											October 31, 2010			October 31, 2009
Operations
Net investment income (loss)											$ –			$ 12,272
Net realized gain (loss) on investments, payments by affiliates, futures, swap agreements and foreign
currency transactions													3,636			(54 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies													–			–
			Net Increase (Decrease) in Net Assets Resulting from Operations										3,636			12,218

Dividends and Distributions to Shareholders
From net investment income													–		(12,272 )
						Total Dividends and Distributions							–		(12,272 )

Capital Share Transactions
Net increase (decrease) in capital share transactions											(1,029,617 )				(458,474 )
					Total increase (decrease) in net assets						(1,025,981)				(458,528 )

Net Assets
Beginning of period											2,350,062				2,808,590
End of period (including undistributed net investment income as set forth below)											$ 1,324,081			$ 2,350,062
Undistributed (overdistributed) net investment income (loss)											$ –			$ –

	Class A		Class B	Class C	Class J	Class S^(a)Institutional				R-1	R-2		R-3	R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 469,628	$ 12,489 $		14,391 $ 135,851 $		6,506	$ 132,522		$ 2,839 $		8,696	$ 20,776 $		13,086	$ 56,656
Issued in acquisitions	1,527		–	526	16,294	–		109,510		10	5,323		1,061	8		650
Redeemed	(603,810 )		(43,213)	(25,057 )	(188,959)	(767,986)		(272,273)		(3,087 )	(12,364)		(34,051)	(16,516 )		(70,650 )
Net Increase (Decrease)	$ (132,655 ) $ (30,724) $			(10,140) $	(36,814) $ (761,480) $			(30,241) $		(238 ) $	1,655	$ (12,214) $		(3,422 ) $		(13,344)
Shares:
Sold	469,628		12,489	14,391	135,851	6,506		132,522		2,839	8,696		20,776	13,086		56,656
Issued in acquisitions	1,527		–	526	16,294	–		109,510		10	5,323		1,061	8		650
Redeemed	(603,810 )		(43,213)	(25,057 )	(188,959)	(767,986)		(272,273)		(3,087 )	(12,364)		(34,051)	(16,516 )		(70,650 )
Net Increase (Decrease)	(132,655 )		(30,724)	(10,140 )	(36,814 )	(761,480)		(30,241 )		(238 )	1,655		(12,214)	(3,422 )		(13,344 )
Year Ended October 31, 2009
Dollars:
Sold	$ 659,720	$ 60,716 $		50,539 $ 227,413 $ 396,802			$ 306,339		$ 18,105 $		23,928	$ 77,071 $		67,269	$ 124,297
Reinvested	3,650		115	89	1,229	4,182		1,422		23	76		250	129		662
Redeemed	(802,019 )		(81,457)	(62,845 )	(237,677)	(592,575)		(352,830)		(19,275 )	(32,080)		(94,616)	(72,005 )		(135,121)
Net Increase (Decrease)	$ (138,649 ) $ (20,626) $			(12,217) $	(9,035) $ (191,591) $			(45,069) $		(1,147 ) $	(8,076 ) $		(17,295) $	(4,607 ) $		(10,162)
Shares:
Sold	659,720		60,716	50,539	227,413	396,802		306,339		18,105	23,928		77,071	67,269		124,297
Reinvested	3,650		115	89	1,229	4,182		1,422		23	76		250	129		662
Redeemed	(802,019 )		(81,457)	(62,845 )	(237,677)	(592,575)		(352,830)		(19,275 )	(32,080)		(94,616)	(72,005 )		(135,121)
Net Increase (Decrease)	(138,649 )		(20,626)	(12,217 )	(9,035 )	(191,591)		(45,069 )		(1,147 )	(8,076)		(17,295)	(4,607 )		(10,162 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –	$ – $		– $	– $	–	$ –		$ – $		–	$ – $		–	$ –
From net realized gain
on investments	–		–	–	–	–		–		–	–		–	–		–
Total Dividends and
Distributions	$ –	$ – $		– $	– $	–	$ –		$ – $		–	$ – $		–	$ –
Year Ended October 31, 2009
From net investment
income	$ (3,828) $		(155) $	(100 ) $	(1,233) $	(4,182) $		(1,634) $		(23 ) $	(76) $		(250 ) $	(129 ) $		(662)
From net realized gain
on investments	–		–	–	–	–		–		–	–		–	–		–
Total Dividends and
Distributions	$ (3,828) $		(155) $	(100 ) $	(1,233) $	(4,182) $		(1,634) $		(23 ) $	(76) $		(250 ) $	(129 ) $		(662)


^(a)Class S shares discontinued operations on November 23, 2009.


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands											Principal Capital Appreciation Fund
											Year Ended		Year Ended
											October 31, 2010		October 31, 2009
Operations
Net investment income (loss)											$ 14,924		$ 6,083
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions												40,887		13,895
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies												84,759		72,730
			Net Increase (Decrease) in Net Assets Resulting from Operations									140,570		92,708

Dividends and Distributions to Shareholders
From net investment income												(5,788 )		(7,102 )
From net realized gain on investments												(6,037 )		(44,445 )
							Total Dividends and Distributions					(11,825)		(51,547 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												75,455		(63,061 )
Redemption fees - Class A												1		1
						Total increase (decrease) in net assets						204,201		(21,899 )

Net Assets
Beginning of period												881,892		903,791
End of period (including undistributed net investment income as set forth below)											$ 1,086,093		$ 881,892
Undistributed (overdistributed) net investment income (loss)											$ 14,366		$ 5,230

		Class A	Class B Class C Class P				Institutional		R-1	R-2	R-3	R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 73,922 $		2,088 $	5,942	$ 10		$ 148,548	$ 230		$ 76	$ 1,070	$ 2,715	$ 11,315
Reinvested		4,116	566	115		–	6,549		–	–	–	–	–
Redeemed		(96,011 )	(30,115)	(4,221 )		–	(51,147 )		–	–	(10)	(3 )	(300 )
Net Increase (Decrease)	$ (17,973) $ (27,461) $			1,836	$ 10		$ 103,950	$ 230		$ 76	$ 1,060	$ 2,712	$ 11,015
Shares:
Sold		2,102	69	199		–	4,189		7	2	29	75	314
Reinvested		120	20	4		–	188		–	–	–	–	–
Redeemed		(2,746 )	(1,000)	(140 )		–	(1,455 )		–	–	–	–	(8 )
Net Increase (Decrease)		(524 )	(911)	63		–	2,922		7	2	29	75	306
Year Ended October 31, 2009
Dollars:
Sold	$ 32,183 $		5,203 $	5,391		N/A	$ 9,219		N/A	N/A	N/A	N/A	N/A
Reinvested		19,140	4,632	645		N/A	24,796		N/A	N/A	N/A	N/A	N/A
Redeemed		(83,046 )	(24,170)	(3,505 )		N/A	(53,549 )		N/A	N/A	N/A	N/A	N/A
Net Increase (Decrease)	$ (31,723) $ (14,335) $			2,531		N/A	$ (19,534)		N/A	N/A	N/A	N/A	N/A
Shares:
Sold		1,124	214	209		N/A	321		N/A	N/A	N/A	N/A	N/A
Reinvested		702	198	28		N/A	899		N/A	N/A	N/A	N/A	N/A
Redeemed		(2,981 )	(1,013)	(151 )		N/A	(1,890 )		N/A	N/A	N/A	N/A	N/A
Net Increase (Decrease)		(1,155 )	(601)	86		N/A	(670 )		N/A	N/A	N/A	N/A	N/A

Distributions:
Year Ended October 31, 2010
From net investment income $		(1,961) $	– $	–	$ –		$ (3,827) $		–	$ –	$ –	$ –	$ –
From net realized gain on
investments		(2,559 )	(627)	(127 )		–	(2,724 )		–	–	–	–	–
Total Dividends and Distributions $		(4,520) $	(627) $	(127) $		–	$ (6,551) $		–	$ –	$ –	$ –	$ –
Year Ended October 31, 2009
From net investment income $		(2,125) $	– $	–		N/A	$ (4,977)		N/A	N/A	N/A	N/A	N/A
From net realized gain on
investments		(18,790 )	(5,122)	(714 )		N/A	(19,819 )		N/A	N/A	N/A	N/A	N/A
Total Dividends and Distributions $ (20,915) $			(5,122) $	(714)		N/A	$ (24,796)		N/A	N/A	N/A	N/A	N/A


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands															Real Estate Securities Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 33,716				$ 34,840
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions															144,619				(382,695 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies															367,079				426,891
				Net Increase (Decrease) in Net Assets Resulting from Operations											545,414					79,036

Dividends and Distributions to Shareholders
From net investment income															(34,411 )				(35,754 )
								Total Dividends and Distributions							(34,411)				(35,754 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															(233,711 )				204,786
Redemption fees - Class A																1				–
Redemption fees - Class J																2				2
							Total increase (decrease) in net assets								277,295				248,070

Net Assets
Beginning of period															1,431,053				1,182,983
End of period (including undistributed net investment income as set forth below)														$ 1,708,348				$ 1,431,053
Undistributed (overdistributed) net investment income (loss)														$ 606				$ 1,299

		Class A Class B			Class C		Class J	Class P	Institutional			R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 48,454		$ 1,291 $		7,536	$ 16,708 $		10	$ 275,456		$ 2,809		$ 4,349 $			12,090	$ 9,516		$ 20,962
Reinvested		1,376		108	68		1,882	–		28,095		76		219		666		353		1,116
Redeemed		(31,022 )		(4,746)	(2,388 )		(20,707 )	–		(544,719)		(1,908 )		(5,438)		(17,107)		(6,524 )		(32,292 )
Net Increase (Decrease)	$ 18,808		$ (3,347) $		5,216	$ (2,117 ) $		10	$ (241,168) $			977	$ (870) $			(4,351 ) $		3,345	$ (10,214)
Shares:
Sold		3,346		92	532		1,180	1		19,572		197		312		851		677		1,498
Reinvested		98		8	5		137	–		2,016		6		16		48		26		82
Redeemed		(2,143 )		(338)	(167 )		(1,506 )	–		(37,245 )		(135 )		(396)		(1,224)		(496 )		(2,394 )
Net Increase (Decrease)		1,301		(238)	370		(189 )	1		(15,657 )		68		(68)		(325)		207		(814 )
Year Ended October 31, 2009
Dollars:
Sold	$ 14,105		$ 1,062 $		2,070	$ 8,366		N/A	$ 301,137		$ 1,432		$ 2,090 $			9,915	$ 5,172		$ 23,757
Reinvested		1,467		218	77		2,281	N/A		28,922		74		262		739		342		1,221
Redeemed		(14,629 )		(3,516)	(1,219 )		(17,948 )	N/A		(131,354)		(416 )		(2,411)		(7,601)		(3,212 )		(17,617 )
Net Increase (Decrease)	$ 943		$ (2,236) $		928	$ (7,301 )		N/A	$ 198,705		$ 1,090		$ (59) $			3,053	$ 2,302		$ 7,361
Shares:
Sold		1,436		107	200		903	N/A		32,951		151		222		1,077		556		2,752
Reinvested		160		24	8		255	N/A		3,158		8		30		82		38		135
Redeemed		(1,572 )		(374)	(133 )		(1,968 )	N/A		(13,787 )		(45 )		(250)		(781)		(337 )		(1,788 )
Net Increase (Decrease)		24		(243)	75		(810 )	N/A		22,322		114			2	378		257		1,099

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (1,462 ) $			(113) $	(87) $		(1,885 ) $	–	$ (28,434) $			(76) $		(219) $		(666 ) $		(353) $		(1,116 )
From net realized gain on
investments		–		–	–		–	–		–		–			–	–		–		–
Total Dividends and Distributions $		(1,462) $		(113) $	(87) $		(1,885 ) $	–	$ (28,434) $			(76) $		(219) $		(666 ) $		(353) $		(1,116 )
Year Ended October 31, 2009
From net investment
income	$ (1,518 ) $			(229) $	(81) $		(2,285 )	N/A	$ (29,003) $			(74) $		(262) $		(739 ) $		(342) $		(1,221 )
From net realized gain on
investments		–		–	–		–	N/A		–		–			–	–		–		–
Total Dividends and Distributions $		(1,518) $		(229) $	(81) $		(2,285 )	N/A	$ (29,003) $			(74) $		(262) $		(739 ) $		(342) $		(1,221 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																Short-Term Income Fund
																Year Ended				Year Ended
																October 31, 2010				October 31, 2009
Operations
Net investment income (loss)																$ 19,465				$ 12,106
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																		(424)			(987 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																	19,906				19,883
				Net Increase (Decrease) in Net Assets Resulting from Operations													38,947				31,002

Dividends and Distributions to Shareholders
From net investment income																	(18,769 )				(12,041 )
									Total Dividends and Distributions								(18,769)				(12,041 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																	464,046				151,628
Redemption fees - Class A																		8			2
Redemption fees - Class C																		1			3
								Total increase (decrease) in net assets									484,233				170,594

Net Assets
Beginning of period																	469,155				298,561
End of period (including undistributed net investment income as set forth below)																$ 953,388				$ 469,155
Undistributed (overdistributed) net investment income (loss)																$ 230				$ 91

		Class A		Class C		Class J		Class P Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 213,031		$ 51,567		$ 7,370		$ 105		$ 259,097		$ 79		$ 103		$ 634		$ 228		$ 288
Issued in acquisitions		62,085		6,546		47,632		–		10,824		758		125		2,840		319		1,441
Reinvested		4,548		836		263		–		11,286		4		1		17		2		10
Redeemed		(91,127 )		(13,387)		(2,932 )		–		(109,999)		(61 )		(2 )		(220)		(49)		(216 )
Net Increase (Decrease)	$ 188,537		$ 45,562		$ 52,333		$ 105		$ 171,208		$ 780		$ 227		$ 3,271		$ 500		$ 1,523
Shares:
Sold		17,785		4,301		608		9		21,657		7		9		52		19		24
Issued in acquisitions		5,158		543		3,958		–		900		63		10		236		26		120
Reinvested		379		70		22		–		941		–		–		1		–		1
Redeemed		(7,596 )		(1,113)		(242 )		–		(9,177 )		(5 )		–		(18)		(4 )		(18 )
Net Increase (Decrease)		15,726		3,801		4,346		9		14,321		65		19		271		41		127
Year Ended October 31, 2009
Dollars:
Sold	$ 112,560		$ 39,978			N/A		N/A $		133,069		N/A		N/A		N/A		N/A		N/A
Reinvested		1,742		301		N/A		N/A		9,310		N/A		N/A		N/A		N/A		N/A
Redeemed		(19,968 )		(4,297)		N/A		N/A		(121,067)		N/A		N/A		N/A		N/A		N/A
Net Increase (Decrease)	$ 94,334		$ 35,982			N/A		N/A $		21,312		N/A		N/A		N/A		N/A		N/A
Shares:
Sold		9,736		3,465		N/A		N/A		11,526		N/A		N/A		N/A		N/A		N/A
Reinvested		151		26		N/A		N/A		816		N/A		N/A		N/A		N/A		N/A
Redeemed		(1,741 )		(373)		N/A		N/A		(10,706 )		N/A		N/A		N/A		N/A		N/A
Net Increase (Decrease)		8,146		3,118		N/A		N/A		1,636		N/A		N/A		N/A		N/A		N/A

Distributions:
Year Ended October 31, 2010
From net investment income $		(5,883) $		(1,173 ) $		(266 ) $		–	$ (11,413) $			(4) $		(1) $		(17) $		(2) $		(10)
From net realized gain on
investments		–		–		–		–		–		–		–		–		–		–
Total Dividends and Distributions $		(5,883) $		(1,173 ) $		(266 ) $		–	$ (11,413) $			(4) $		(1) $		(17) $		(2) $		(10)
Year Ended October 31, 2009
From net investment income $		(2,246) $		(433 )		N/A		N/A $		(9,362)		N/A		N/A		N/A		N/A		N/A
From net realized gain on
investments		–		–		N/A		N/A		–		N/A		N/A		N/A		N/A		N/A
Total Dividends and Distributions $		(2,246) $		(433 )		N/A		N/A $		(9,362)		N/A		N/A		N/A		N/A		N/A


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands																SmallCap Blend Fund
															Year Ended				Year Ended
															October 31, 2010				October 31, 2009
Operations
Net investment income (loss)															$ (346 )				$ 362
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																18,845				(68,962 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																24,180				69,301
				Net Increase (Decrease) in Net Assets Resulting from Operations												42,679				701

Dividends and Distributions to Shareholders
From net investment income																	(147 )			(503 )
									Total Dividends and Distributions								(147)			(503 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																(12,091 )				(12,534 )
Redemption fees - Class J																	1			–
							Total increase (decrease) in net assets									30,442				(12,336 )

Net Assets
Beginning of period																180,699				193,035
End of period (including undistributed net investment income as set forth below)															$ 211,141				$ 180,699
Undistributed (overdistributed) net investment income (loss)															$ –				$ 194

		Class A		Class B		Class C	Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 10,236		$ 393		$ 669		$ 6,451	$ 327		$ 89		$ 135		$ 222		$ 337		$ 948
Reinvested		–		–		–	–		135		–		–		–		3		9
Redeemed		(13,293 )		(3,024)		(307 )	(13,010 )		(74 )		(109 )		(285 )		(206)		(572)		(1,165 )
Net Increase (Decrease)	$ (3,057) $			(2,631 ) $		362	$ (6,559 ) $		388	$ (20 ) $			(150) $		16	$ (232) $			(208)
Shares:
Sold		846		34		56	553		27		8		11		18		28		78
Reinvested		–		–		–	–		11		–		–		–		–		1
Redeemed		(1,109 )		(263)		(26 )	(1,128 )		(6 )		(9 )		(24 )		(17 )		(46)		(96 )
Net Increase (Decrease)		(263 )		(229)		30	(575 )		32		(1 )		(13 )		1		(18)		(17 )
Year Ended October 31, 2009
Dollars:
Sold	$ 5,459		$ 424		$ 225		$ 3,937	$ 1,360		$ 67		$ 115		$ 168		$ 570		$ 1,995
Reinvested		–		–		–	309		185		–		–		–		5		4
Redeemed		(9,798 )		(3,062)		(120 )	(11,905 )		(690 )		(82 )		(336 )		(464)		(427)		(473 )
Net Increase (Decrease)	$ (4,339) $			(2,638 ) $		105	$ (7,659 ) $		855	$ (15 ) $			(221) $		(296) $		148	$ 1,526
Shares:
Sold		582		46		23	433		193		7		13		18		58		200
Reinvested		–		–		–	35		20		–		–		–		1		–
Redeemed		(1,078 )		(343)		(13 )	(1,363 )		(65 )		(9 )		(36 )		(53 )		(45)		(46 )
Net Increase (Decrease)		(496 )		(297)		10	(895 )		148		(2 )		(23 )		(35)		14		154

Distributions:
Year Ended October 31, 2010
From net investment income $		–	$ –		$ –		$ –	$ (135) $			–	$ –		$ –		$ (3) $			(9)
From net realized gain on
investments		–		–		–	–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –	$ (135) $			–	$ –		$ –		$ (3) $			(9)
Year Ended October 31, 2009
From net investment income $		–	$ –		$ –		$ (309) $		(185) $		–	$ –		$ –		$ (5) $			(4)
From net realized gain on
investments		–		–		–	–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ (309) $		(185) $		–	$ –		$ –		$ (5) $			(4)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands															SmallCap Growth Fund
															Year Ended				Year Ended
															October 31, 2010				October 31, 2009
Operations
Net investment income (loss)															$ (1,386 )				$ (783 )
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions																26,598				(86,952 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies																27,917				102,200
				Net Increase (Decrease) in Net Assets Resulting from Operations												53,129				14,465

Dividends and Distributions to Shareholders
From tax return of capital																	–			(18 )
									Total Dividends and Distributions								–			(18 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																(24,424 )				(14,317 )
Redemption fees - Class A																	–			1
Redemption fees - Class J																	–			2
							Total increase (decrease) in net assets									28,705				133

Net Assets
Beginning of period																223,907				223,774
End of period (including undistributed net investment income as set forth below)															$ 252,612				$ 223,907
Undistributed (overdistributed) net investment income (loss)															$ –				$ –

		Class A Class B				Class C Class J Institutional					R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 7,346		$ 208		$ 572		$ 2,346	$ 4,305		$ 209		$ 209		$ 263		$ 165		$ 1,993
Redeemed		(5,688 )		(970)		(364 )	(4,069 )		(28,671 )		(259 )		(219 )		(1,098)		(413)		(289 )
Net Increase (Decrease)	$ 1,658		$ (762) $			208	$ (1,723 ) $		(24,366) $		(50 ) $		(10 ) $		(835) $		(248) $		1,704
Shares:
Sold		1,115		33		91	372		644		33		32		39		23		292
Redeemed		(866 )		(152)		(57 )	(660 )		(4,257 )		(40 )		(34 )		(164)		(60)		(42 )
Net Increase (Decrease)		249		(119)		34	(288 )		(3,613 )		(7 )		(2 )		(125)		(37)		250
Year Ended October 31, 2009
Dollars:
Sold	$ 2,202		$ 361		$ 524		$ 2,469	$ 8,736		$ 290		$ 76		$ 472		$ 1,854		$ 2,044
Reinvested		–		–		–	–		18		–		–		–		–		–
Redeemed		(4,330 )		(978)		(314 )	(3,856 )		(17,503 )		(103 )		(46 )		(489)		(2,763)		(2,981 )
Net Increase (Decrease)	$ (2,128 ) $			(617) $		210	$ (1,387 ) $		(8,749) $		187	$ 30		$ (17) $			(909) $		(937)
Shares:
Sold		440		72		98	522		1,732		59		15		90		345		397
Reinvested		–		–		–	–		4		–		–		–		–		–
Redeemed		(891 )		(207)		(68 )	(828 )		(3,376 )		(18 )		(10 )		(95 )		(491)		(529 )
Net Increase (Decrease)		(451 )		(135)		30	(306 )		(1,640 )		41		5		(5)		(146)		(132 )

Distributions:
Year Ended October 31, 2010
From net investment income $		–	$ –		$ –		$ –	$ –		$ –		$ –		$ –		$ –		$ –
From net realized gain on
investments		–		–		–	–		–		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –	$ –		$ –		$ –		$ –		$ –		$ –
Year Ended October 31, 2009
From net investment income $		–	$ –		$ –		$ –	$ –		$ –		$ –		$ –		$ –		$ –
From net realized gain on
investments		–		–		–	–		–		–		–		–		–		–
From tax return of capital		–		–		–	–		(18)		–		–		–		–		–
Total Dividends and Distributions $		–	$ –		$ –		$ –	$ (18) $			–	$ –		$ –		$ –		$ –


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands										SmallCap Growth Fund II
										Year Ended			Year Ended
										October 31, 2010			October 31, 2009
Operations
Net investment income (loss)										$ (2,533 )			$ (2,420 )
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions											54,776			(97,060 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies											31,187			120,200
			Net Increase (Decrease) in Net Assets Resulting from Operations								83,430			20,720


Capital Share Transactions
Net increase (decrease) in capital share transactions										(155,475 )				(31,518 )
Redemption fees - Class C												1		–
					Total increase (decrease) in net assets						(72,044)			(10,798 )

Net Assets
Beginning of period											337,731			348,529
End of period (including undistributed net investment income as set forth below)										$ 265,687			$ 337,731
Undistributed (overdistributed) net investment income (loss)										$ –			$ –

		Class A Class B Class C Class J Institutional						R-1	R-2	R-3		R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 2,116 $		70 $	130 $	1,757 $	8,603	$ 364 $		866 $	1,403	$ 1,219 $		3,369
Redeemed		(11,657 )	(2,674 )	(711 )	(3,332 )	(132,111)		(647 )	(2,810 )	(3,924)		(4,296)	(13,210 )
Net Increase (Decrease)	$ (9,541 ) $		(2,604) $	(581 ) $	(1,575) $ (123,508) $			(283 ) $	(1,944) $	(2,521) $		(3,077) $	(9,841 )
Shares:
Sold		319	10	19	288	1,209		56	134	214		181	500
Redeemed		(1,730 )	(415 )	(110 )	(547 )	(18,532 )		(99 )	(442 )	(593)		(623)	(1,951 )
Net Increase (Decrease)		(1,411 )	(405 )	(91 )	(259 )	(17,323 )		(43 )	(308 )	(379)		(442)	(1,451 )
Year Ended October 31, 2009
Dollars:
Sold	$ 2,416 $		205 $	468 $	2,263 $	22,547	$ 402 $		873 $	1,555	$ 1,570 $		4,394
Redeemed		(1,691 )	(959 )	(77 )	(3,014 )	(47,577 )		(437 )	(1,523 )	(3,268)		(1,617)	(8,048 )
Net Increase (Decrease)	$ 725 $		(754) $	391 $	(751) $	(25,030) $		(35 ) $	(650) $	(1,713) $		(47) $	(3,654 )
Shares:
Sold		456	40	86	498	4,404		78	173	318		312	848
Redeemed		(337 )	(191 )	(16 )	(649 )	(8,766 )		(84 )	(302 )	(625)		(307)	(1,461 )
Net Increase (Decrease)		119	(151)	70	(151 )	(4,362 )		(6 )	(129 )	(307)		5	(613 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ – $		– $	– $	– $	–	$ – $		– $	–	$ – $		–
From net realized gain on
investments		–	–	–	–	–		–	–	–		–	–
Total Dividends and Distributions $		– $	– $	– $	– $	–	$ – $		– $	–	$ – $		–
Year Ended October 31, 2009
From net investment
income	$ – $		– $	– $	– $	–	$ – $		– $	–	$ – $		–
From net realized gain on
investments		–	–	–	–	–		–	–	–		–	–
Total Dividends and Distributions $		– $	– $	– $	– $	–	$ – $		– $	–	$ – $		–


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands												SmallCap Value Fund
												Year Ended		Year Ended
												October 31, 2010		October 31, 2009
Operations
Net investment income (loss)												$ 2,763		$ 3,768
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions												28,169			(123,417 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies												47,884			95,006
			Net Increase (Decrease) in Net Assets Resulting from Operations									78,816			(24,643 )

Dividends and Distributions to Shareholders
From net investment income												(3,551 )			(2,883 )
								Total Dividends and Distributions				(3,551)			(2,883 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												(190,665 )			(2,427 )
Redemption fees - Class A													–		1
Redemption fees - Class J													1		–
							Total increase (decrease) in net assets					(115,399)			(29,952 )

Net Assets
Beginning of period												412,978			442,930
End of period (including undistributed net investment income as set forth below)												$ 297,579		$ 412,978
Undistributed (overdistributed) net investment income (loss)												$ 1,940		$ 2,728

		Class A Class B			Class C		Class J Institutional		R-1	R-2		R-3	R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 4,170 $		191	$ 683		$ 4,327 $		20,269 $	447 $	1,376	$ 2,087 $		1,424 $	8,199
Reinvested		49	–		–		124	3,045	4	20		84	38	174
Redeemed		(4,635 )	(966 )		(1,332 )		(7,148 )	(186,176)	(545 )	(2,055 )		(8,882)	(4,736)	(20,901 )
Net Increase (Decrease)	$ (416) $		(775 ) $		(649) $		(2,697 ) $ (162,862) $		(94) $	(659) $		(6,711) $	(3,274 ) $ (12,528)
Shares:
Sold		314	15		53		334	1,593	34	104		159	107	626
Reinvested		4	–		–		10	244	–	2		6	3	14
Redeemed		(358 )	(77 )		(104 )		(567 )	(13,935 )	(42 )	(157 )		(685)	(366)	(1,569 )
Net Increase (Decrease)		(40 )	(62 )		(51 )		(223 )	(12,098 )	(8 )	(51 )		(520)	(256)	(929 )
Year Ended October 31, 2009
Dollars:
Sold	$ 3,339 $		850	$ 2,237		$ 3,787 $		28,290 $	715 $	1,276	$ 7,353 $		1,548 $	7,268
Reinvested		19	–		–		48	2,637	1	–		21	32	119
Redeemed		(4,029 )	(742 )		(2,393 )		(7,754 )	(34,673 )	(296 )	(1,140 )		(1,853)	(1,922)	(7,165 )
Net Increase (Decrease)	$ (671) $		108	$ (156) $			(3,919 ) $	(3,746) $	420 $	136	$ 5,521 $		(342 ) $	222
Shares:
Sold		314	77		206		366	2,646	67	118		686	143	655
Reinvested		2	–		–		4	238	–	–		2	3	11
Redeemed		(381 )	(71 )		(225 )		(751 )	(3,339 )	(28 )	(105 )		(171)	(172)	(657 )
Net Increase (Decrease)		(65 )	6		(19 )		(381 )	(455 )	39	13		517	(26)	9

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (55) $		–	$ –		$ (124 ) $		(3,048) $	(4) $	(20) $		(84) $	(38 ) $	(178 )
From net realized gain on
investments		–	–		–		–	–	–	–		–	–	–
Total Dividends and Distributions $		(55) $	–	$ –		$ (124 ) $		(3,048) $	(4) $	(20) $		(84) $	(38 ) $	(178 )
Year Ended October 31, 2009
From net investment
income	$ (21) $		–	$ –		$ (48 ) $		(2,638) $	(1) $	–	$ (21 ) $		(32 ) $	(122 )
From net realized gain on
investments		–	–		–		–	–	–	–		–	–	–
Total Dividends and Distributions $		(21) $	–	$ –		$ (48 ) $		(2,638) $	(1) $	–	$ (21 ) $		(32 ) $	(122 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands				Tax-Exempt Bond Fund
				Year Ended	Year Ended
				October 31, 2010	October 31, 2009
Operations
Net investment income (loss)				$ 12,528	$ 12,876
Net realized gain (loss) on investments, futures, swap agreements and foreign
currency transactions				(3,468)	(9,130 )
Change in unrealized appreciation/depreciation of investments, futures, swap agreements
and translation of assets and liabilities in foreign currencies				12,323	33,716
		Net Increase (Decrease) in Net Assets Resulting from Operations		21,383	37,462

Dividends and Distributions to Shareholders
From net investment income				(12,050 )	(12,653 )
			Total Dividends and Distributions	(12,050)	(12,653 )

Capital Share Transactions
Net increase (decrease) in capital share transactions				(5,885 )	(503 )
Redemption fees - Class A				–	1
			Total increase (decrease) in net assets	3,448	24,307

Net Assets
Beginning of period				260,587	236,280
End of period (including undistributed net investment income as set forth below)				$ 264,035	$ 260,587
Undistributed (overdistributed) net investment income (loss)				$ 888	$ 466

	Class A	Class B	Class C
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 27,835 $	407 $	3,856
Reinvested	7,749	229	229
Redeemed	(38,724 )	(4,587)	(2,879 )
Net Increase (Decrease)	$ (3,140) $	(3,951) $	1,206
Shares:
Sold	3,915	58	545
Reinvested	1,090	32	32
Redeemed	(5,457 )	(647)	(408 )
Net Increase (Decrease)	(452 )	(557)	169
Year Ended October 31, 2009
Dollars:
Sold	$ 25,835 $	1,886 $	3,770
Reinvested	7,917	366	160
Redeemed	(33,430 )	(5,623)	(1,384 )
Net Increase (Decrease)	$ 322 $	(3,371) $	2,546
Shares:
Sold	3,906	287	571
Reinvested	1,197	55	24
Redeemed	(5,111 )	(849)	(214 )
Net Increase (Decrease)	(8 )	(507)	381

Distributions:
Year Ended October 31, 2010
From net investment income $ (11,465) $		(295) $	(290)
From net realized gain on
investments	–	–	–
Total Dividends and Distributions $ (11,465) $		(295) $	(290)
Year Ended October 31, 2009
From net investment income $ (11,944) $		(500) $	(209)
From net realized gain on
investments	–	–	–
Total Dividends and Distributions $ (11,944) $		(500) $	(209)


STATEMENT OF CASH FLOWS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010




	California
Amounts in thousands	Municipal Fund
Cash Flows from Operating Activities:
Net increase in net assets from operations	$ 26,817
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchase of investment securities	(94,657)
Proceeds from sale of investment securities	147,714
Decrease in accrued interest receivable	1,060
Decrease in accrued fees, expenses, prepaid expenses, and expense reimbursement from Manager	(50)
Decrease in dividends payable	(162)
Decrease in interest expense and fees payable	(147)
Net accretion of bond discounts and amortization of premiums	(715)
Unrealized appreciation on securities investments	(15,466)
Net realized loss from investments	2,937
Net cash provided by operating activities	67,331

Cash Flows from Financing Activities:
Decrease in payable for floating rate notes issued	(4,950)
Proceeds from shares sold	39,410
Payment on shares redeemed	(96,123)
Dividends and distributions paid to shareholders	(5,387)
Net cash used in financing activities	(67,050)

Net increase in cash	281

Cash:
Beginning of period	$ 137
End of period	$ 418

Supplemental disclosure of cash flow information:
Reinvestment of dividends and distributions	$ 8,601
Cash paid during the year for interest expense and fees	212


STATEMENT OF CASH FLOWS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



	Tax-Exempt
Amounts in thousands	Bond Fund
Cash Flows from Operating Activities:
Net increase in net assets from operations	$ 21,383
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchase of investment securities	(79,949)
Proceeds from sale of investment securities	86,513
Decrease in accrued interest receivable	275
Increase in investment securities sold	(907)
Increase in accrued fees, expenses, prepaid expenses, and expense reimbursement from Manager	15
Decrease in dividends payable	(118)
Decrease in interest expense and fees payable	(11)
Increase in investment securities purchased	856
Net accretion of bond discounts and amortization of premiums	(373)
Unrealized appreciation on securities investments	(12,323)
Net realized loss from investments	3,468
Net cash provided by operating activities	18,829

Cash Flows from Financing Activities:
Decrease in payable for floating rate notes issued	(8)
Proceeds from shares sold	32,500
Payment on shares redeemed	(47,288)
Dividends and distributions paid to shareholders	(3,843)
Net cash used in financing activities	(18,639)

Net increase in cash	190

Cash:
Beginning of period	$ 82
End of period	$ 272

Supplemental disclosure of cash flow information:
Reinvestment of dividends and distributions	$ 8,207
Cash paid during the year for interest expense and fees	175

Principal Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company and operates as a series fund in the mutual fund industry. At October 31, 2010, the Fund consists of 64 separate funds. The financial statements for Bond & Mortgage Securities Fund, California Municipal Fund, Disciplined LargeCap Blend Fund, Diversified International Fund, Equity Income Fund, Global Diversified Income Fund, Global Real Estate Securities Fund, Government & High Quality Bond Fund, High Yield Fund, Income Fund, Inflation Protection Fund, International Emerging Markets Fund, International Growth Fund, LargeCap Blend Fund II, LargeCap Growth Fund, LargeCap Growth Fund I, LargeCap Growth Fund II, LargeCap S&P 500 Index Fund, LargeCap Value Fund, LargeCap Value Fund III, MidCap Blend Fund, MidCap Growth Fund III, MidCap Value Fund I, Money Market Fund, Principal Capital Appreciation Fund, Real Estate Securities Fund, Short-Term Income Fund, SmallCap Blend Fund, SmallCap Growth Fund, SmallCap Growth Fund II, SmallCap Value Fund and Tax-Exempt Bond Fund (known as the "Funds") are presented herein. The Funds may offer up to eleven classes of shares: Class A, Class B, Class C, Class J, Class P, Institutional, R-1, R-2, R-3, R-4 and R-5. Information presented in these financial statements pertains to the Class A, Class B, Class C, and Class P shares. Certain detailed financial information for the Class J, Institutional, R-1, R-2, R-3, R-4, and R-5 classes of shares is provided separately.

The sole shareholder of the Class S shares of the Fund redeemed all shares in November 2009. On November 23, 2009 the Class S shares ceased operations.

Effective November 21, 2008, MidCap Growth Fund III acquired all the assets and assumed all the liabilities of MidCap Growth Fund I pursuant to a plan of acquisition. The acquisition was accomplished by a tax-free exchange of shares from MidCap Growth Fund I for shares of MidCap Growth Fund III at an approximate exchange rate of 1.14, 1.13, 1.14, 1.14, 1.13, 1.10, 1.11, and 1.10 for Class A, Class C, Institutional, R-1, R-2, R-3, R-4 and R-5 classes of shares respectively. The aggregate net assets of MidCap Growth Fund I and MidCap Growth Fund III immediately prior to the acquisition were approximately $140,396,000 (including approximately $17,169,000 of accumulated realized losses and $115,257,000 of unrealized depreciation) and $427,940,000, respectively. The aggregate net assets of MidCap Growth Fund III immediately following the acquisition were $568,336,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitation.

Effective December 15, 2008, the initial purchases of $45,000 of Class A and Class C shares and $10,000 of Institutional class shares of Global Diversified Income Fund were made by Principal Management Corporation (the “Manager”).

Effective December 15, 2008 the initial purchases of $10,000 of Class J, R-1, R-2, R-3, R-4, and R-5 class shares of Mortgage Securities Fund were made by Principal Life Insurance Company.

Effective March 2, 2009, the initial purchases of $10,000 of Class A, Class B, Class C, and Class J shares of MidCap Value Fund I were made by Principal Life Insurance Company.

Effective April 9, 2009, Mortgage Securities Fund acquired all the assets and assumed all the liabilities of Government & High Quality Bond Fund pursuant to a plan of acquisition. The acquisition was accomplished by a tax-free exchange of shares from Government & High Quality Bond Fund for shares of Mortgage Securities Fund at an approximate exchange rate of .85 for Class A, Class B, Class C, Class J, Institutional Class, R-1, R-4 and R-5 shares, and an approximate exchange rate of .84 for R-2 and R-3 classes of shares. The aggregate net assets of Government & High Quality Bond Fund and Mortgage Securities Fund immediately prior to the acquisition were approximately $337,801,000 ($63,445,000 of accumulated realized losses and $9,055,000 of unrealized appreciation) and $992,148,000, respectively. The aggregate net assets of Mortgage Securities Fund immediately following the acquisition were $1,329,949,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitation.

Effective May 1, 2009, MidCap Growth Fund III acquired all the assets and assumed all the liabilities of MidCap Growth Fund II pursuant to a plan of acquisition. The acquisition was accomplished by a tax-free exchange of shares from MidCap Growth Fund II for shares of MidCap Growth Fund III at an approximate exchange rate of .95, .94, .94, .91, .92 and .91 for Institutional, R-1, R-2, R-3, R-4 and R-5 classes of shares respectively. The aggregate net assets of MidCap Growth Fund II and MidCap Growth Fund III immediately prior to the acquisition were approximately $196,746,000 ($155,439,000 of accumulated realized losses and $22,810,000 of unrealized depreciation) and $782,207,000, respectively. The aggregate net assets of MidCap Growth Fund III immediately following the acquisition were $978,953,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitation.

Effective May 1, 2009, MidCap Value Fund I acquired all the assets and assumed all the liabilities of MidCap Value Fund II pursuant to a plan of acquisition. The acquisition was accomplished by a tax-free exchange of shares from MidCap Value Fund II for shares of MidCap Value Fund I at an approximate exchange rate of .87, .87, .87, .83, .87, .88, .85, .87, .86 and .87 for Class A, Class B, Class C, Class J, Institutional, R-1, R-2, R-3, R-4 and R-5 classes of shares respectively. The aggregate net assets of MidCap Value Fund II and MidCap Value Fund I immediately prior to the acquisition were approximately $237,700,000 ($272,054,000 of accumulated realized losses and $1,956,000 of unrealized depreciation) and $714,577,000, respectively. The aggregate net assets of MidCap Value Fund I immediately following the acquisition were $952,277,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitation.

Effective June 30, 2009, West Coast Equity Fund changed its name to Principal Capital Appreciation Fund.

Effective September 30, 2009, Mortgage Securities Fund changed its name to Government & High Quality Bond Fund.

Effective September 30, 2009, the initial purchase of $10,000 of Class J shares of Income Fund was made by Principal Management Corporation.

Effective October 23, 2009, MidCap Blend Fund acquired all the assets and assumed all the liabilities of MidCap Stock Fund pursuant to a plan of acquisition. The acquisition was accomplished by a tax-free exchange of shares from MidCap Stock Fund for shares of MidCap Blend Fund at an approximate exchange rate of 1.22, 1.13, 1.14 and 1.21 for Class A, Class B, Class C, and Institutional classes of shares respectively. The aggregate net assets of MidCap Stock Fund and MidCap Blend Fund immediately prior to the acquisition were approximately $420,171,000 ($303,000 of accumulated realized losses and $17,851,000 of unrealized appreciation) and $723,874,000, respectively. The aggregate net assets of MidCap Blend Fund immediately following the acquisition were $1,144,045,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitation.

Effective December 20, 2009, Money Market Fund acquired all the assets and assumed all the liabilities of Ultra Short Bond Fund pursuant to a plan of acquisition approved by the shareholders on December 15, 2009. The purpose of the acquisition was to combine two funds managed by Principal Management Corporation with similar investment objectives, principal policies, and risks. The acquisition was accomplished by a tax-free exchange of 19,180,000 shares from Ultra Short Bond Fund for 134,909,000 shares valued at $134,909,000 of Money Market Fund at an approximate exchange rate of 7.04, 7.04, 6.99, 7.04, 6.99, 6.99, 7.01, 6.98, 7.03, for Class A, Class C, Class J, Institutional, R-1, R-2, R-3, R-4, and R-5 classes of shares, respectively. The investment securities of Ultra Short Bond Fund, with a fair value of approximately $131,525,000 and a cost of $131,913,000 at December 20, 2009 were the primary assets acquired by Money Market Fund. For financial reporting purposes, assets received and shares issued by Money Market Fund were recorded at fair value; however, the cost basis of the investments received from Ultra Short Bond Fund were carried forward to align ongoing reporting of Money Market Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. The aggregate net assets of Ultra Short Bond Fund and Money Market Fund immediately prior to the acquisition were approximately $134,909,000 (including approximately $64,643,000 of accumulated realized losses) and $1,544,659,000, respectively. The aggregate net assets of Money Market Fund immediately following the acquisition were $1,679,568,000.

Assuming the acquisition had been completed on November 1, 2009, the beginning of the fiscal year for Money Market Fund, Money Market Fund’s pro forma results of operations for the year ended October 31, 2010, would have been $33,000 of net investment income, $3,306,000 of net realized and unrealized gain on investments, and $3,339,000 of net increase in net assets resulting from operations. Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Ultra Short Bond Fund that have been included in Money Market Fund’s statement of operations since December 20, 2009.

Effective March 1, 2010, the initial purchases of $10,000 of R-1, R-2, R-3, R-4 and R-5 classes of shares of Equity Income Fund, Income Fund and Principal Capital Appreciation Fund, respectively, were made by the Manager.

Effective March 1, 2010, Class B shares of the Funds are no longer available for purchase (including investments through an automated investment plan), except through exchanges and dividend reinvestments. Class B shareholders may continue to hold such shares until they automatically convert to Class A shares. Shareholders who owned class B shares on February 26, 2010 will still receive dividend reinvestments and may continue to exchange their shares for other Fund’s Class B shares in accordance with the Funds’ current policies. All other features of Class B shares, including 12b-1 distribution and/or service fees, contingent deferred sales charge schedules, and conversion features, remain unchanged and continue in effect.

On June 14, 2010, the Board of Directors of Principal Funds, Inc. approved the liquidation of Class A, Class B and Class C shares of each of LargeCap Blend Fund II, LargeCap Growth Fund I, LargeCap Value Fund III, MidCap Growth Fund III, MidCap Value Fund I and SmallCap Growth Fund II, respectively, and Class A and Class C shares of LargeCap Growth Fund III. On November 12, 2010, Classes A, B, and C shares of the Funds liquidated and the proceeds of each liquidation were sent to the shareholders of each of Class A, Class B and Class C.

Effective July 12, 2010, the initial purchases of $10,000 of Class J, R-1, R-2, R-3, R-4 and R-5 classes of shares of Short-Term Income Fund were made by the Manager.

Effective July 23, 2010, LargeCap S&P 500 Index Fund acquired all the assets and assumed all the liabilities of LargeCap Blend Fund I pursuant to a plan of acquisition approved by shareholders on July 15, 2010. The purpose of the acquisition was to combine two accounts managed by Principal Management Corporation with similar investment objectives, principal policies, and risks. The acquisition was accomplished by a tax-free exchange of 135,291,000 shares from LargeCap Blend Fund I for 123,760,000 shares valued at $958,374,000 of LargeCap S&P 500 Index Fund at an approximate exchange rate of .92, .89, .93, .92, .91, .92, .92, .93, .92, .91, for Class A, Class B, Class C, Class J, Institutional, R-1, R-2, R-3, R-4 and R-5 classes of shares, respectively. The investment securities of LargeCap Blend Fund I, with a fair value of approximately $936,768,000 and a cost of $915,274,000 at July 23, 2010 were the primary assets acquired by LargeCap S&P 500 Index Fund. For financial reporting purposes, assets received and shares issued by LargeCap S&P 500 Index Fund were recorded at fair value; however, the cost basis of the investments received from LargeCap Blend Fund I was carried forward to align ongoing reporting of LargeCap S&P 500 Index Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. The aggregate net assets of LargeCap Blend Fund I and LargeCap S&P 500 Index Fund immediately prior to the acquisition were approximately $958,374,000 ($241,383,000 of accumulated realized losses and $21,494,000 of unrealized appreciation) and $1,199,552,000, respectively. The aggregate net assets of LargeCap S&P 500 Index Fund immediately following the acquisition were $2,157,926,000.

Assuming the acquisition had been completed on November 1, 2009, the beginning of the fiscal year for LargeCap S&P 500 Index Fund, LargeCap S&P 500 Index Fund’s pro forma results of operations for the year ended October 31, 2010, would have been $31,504,000 of net investment income, $262,587,000 of net realized and unrealized gain on investments, and $294,091,000 of net increase in net assets resulting from operations. Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of LargeCap Blend Fund I that have been included in the LargeCap S&P 500 Index Fund’s statement of operations since July 23, 2010.

Effective July 23, 2010, Short-Term Income Fund acquired all the assets and assumed all the liabilities of Short-Term Bond Fund pursuant to a plan of acquisition approved by shareholders on July 15, 2010. The purpose of the acquisition was to combine two accounts managed by Principal Management Corporation with similar investment objectives, principal policies, and risks. The acquisition was accomplished by a tax-free exchange of 15,096,000 shares from Short-Term Bond Fund for 11,015,000 shares valued at $132,570,000 of Short-Term Income Fund at an approximate exchange rate of .73 for each class of shares. The investment securities of Short-Term Bond Fund, with a fair value of approximately $129,792,000 and a cost of $127,745,000 at July 23, 2010 were the primary assets acquired by Short-Term Income Fund. For financial reporting purposes, assets received and shares issued by Short-Term Income Fund were recorded at fair value; however, the cost basis of the investments received from Short-Term Bond Fund was carried forward to align ongoing reporting of Short-Term Income Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. The aggregate net assets of Short-Term Bond Fund and Short-Term Income Fund immediately prior to the acquisition were approximately $132,570,000 ($46,600,000 of accumulated realized losses and $2,047,000 of unrealized appreciation) and $766,098,000, respectively. The aggregate net assets of Short-Term Income Fund immediately following the acquisition were $898,668,000. In accordance with Sections 381-384 of the Internal Revenue Code, a portion of accumulated realized losses may be subject to limitations.

Assuming the acquisition had been completed on November 1, 2009, the beginning of the fiscal year for Short-Term Income Fund, Short-Term Income Fund’s pro forma results of operations for the year ended October 31, 2010, would have been $21,846,000 of net investment income, $20,895,000 of net realized and unrealized gain on investments, and $42,741,000 of net increase in net assets resulting from operations. Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Short-Term Bond Fund that have been included in the Short-Term Income Fund’s statement of operations since July 23, 2010.

On September 23, 2010, the Manager made a payment to Money Market Fund to cover certain realized losses related to prior year security dispositions where the market based valuation had fallen below the value of the security under the amortized cost method. The amount of the payment is included in Money Market Fund’s statement of operations.

Effective September 27, 2010, the initial purchases of $10,000 of Class P shares of Diversified International Fund, Equity Income Fund, Global Diversified Income Fund, Government & High Quality Income Fund, High Yield Bond Fund, Income Fund, International Emerging Markets Fund, LargeCap Growth Fund, MidCap Blend Fund, Principal Capital Appreciation Fund, Real Estate Securities Fund and Short-Term Income Fund were made by the Manager.

All classes of shares for each of the Funds represent interests in the same portfolio of investments, and will vote together as a single class except where otherwise required by law or as determined by the Fund’s Board of Directors. In addition, the Board of Directors declares separate dividends on each class of shares.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Funds:

Security Valuation. The Funds (with the exception of Money Market Fund) value securities for which market quotations are readily available at market value, which is determined using the last reported sale price. If no sales are reported, as is regularly the case for some securities traded over-the-counter, securities are valued using the last reported bid price or an evaluated bid price provided by a pricing service. Pricing services use electronic modeling techniques that incorporate security characteristics, market conditions and dealer-supplied valuations to determine an evaluated bid price. When reliable market quotations are not considered to be readily available, which may be the case, for example, with respect to restricted securities, certain debt securities, preferred stocks, and foreign securities, the investments are valued at their fair value as determined in good faith by the Manager under procedures established and periodically reviewed by the Fund’s Board of Directors.

The value of foreign securities used in computing the net asset value per share is generally determined as of the close of the foreign exchange where the security is principally traded. Events that occur after the close of the applicable foreign market or exchange but prior to the calculation of the Funds’ net asset values are ordinarily not reflected in the Funds’ net asset values. If events that occur after the close of the applicable foreign market or exchange but prior to the calculation of the Funds’ net asset values are determined to materially affect the value of a foreign security, then the security is valued at its fair value as determined in good faith by the Manager under procedures established and periodically reviewed by the Fund’s Board of Directors. Many factors are reviewed in the course of making a good faith determination of a security’s fair value, including, but not limited to, price movements in ADRs, futures contracts, industry indices, general indices, and foreign currencies.

To the extent the Funds invest in foreign securities listed on foreign exchanges which trade on days on which the Funds do not determine net asset values, for example weekends and other customary national U.S. holidays, the Funds’ net asset values could be significantly affected on days when shareholders cannot purchase or redeem shares.

Certain securities issued by companies in emerging market countries may have more than one quoted valuation at any given point in time, sometimes referred to as a “local” price and a “premium” price. The premium price is often a negotiated price, which may not consistently represent a price at which a specific transaction can be effected. It is the policy of the Funds to value such securities at prices at which it is expected those shares may be sold, and the Manager or any sub-advisor is authorized to make such determinations subject to such oversight by the Fund’s Board of Directors as may occasionally be necessary.

Short-term securities purchased with less than 60 days until maturity are valued at amortized cost, which approximates market. Money Market Fund values its securities at amortized cost as permitted under Rule 2a-7 of the Investment Company Act of 1940. Under the amortized cost method, a security is valued by applying a constant yield to maturity of the difference between the principal amount due at maturity and the cost of the security to the Funds.

Currency Translation. Foreign holdings are translated to U.S. dollars using the exchange rate at the daily close of the New York Stock Exchange. The identified cost of the Funds’ holdings is translated at approximate rates prevailing when acquired. Income and expense amounts are translated at approximate rates prevailing when received or paid, with daily accruals of such amounts reported at approximate rates prevailing at the date of valuation. Since the carrying amount of the foreign securities is determined based on the exchange rate and market values at the close of the period, it is not practicable to isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities during the period.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between trade and settlement dates on security transactions, and the difference between the amount of dividends and foreign withholding taxes recorded on the books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies arise from changes in the exchange rate relating to assets and liabilities, other than investments in securities, purchased and held in non-U.S. denominated currencies.

The following funds held securities denominated in currencies that exceeded 5% of net assets of the fund:

Income and Investment Transactions. The Funds record investment transactions on a trade date basis. Trade date for senior floating rate interests purchased in the secondary market is the date on which the transaction is entered into. The identified cost basis has been used in determining the net realized gain or loss from investment transactions and unrealized appreciation or depreciation of investments. The Funds record dividend income on the ex-dividend date, except dividend income from foreign securities whereby the ex-dividend date has passed; such dividends are recorded as soon as the Funds are informed of the ex-dividend date. Interest income is recognized on an accrual basis. Discounts and premiums on securities are accreted/amortized over the lives of the respective securities. The Funds allocate daily all income and realized and unrealized gains or losses to each class of shares based upon the relative proportion of the value of shares outstanding (number of settled shares outstanding for Money Market Fund) of each class.

Expenses. Expenses directly attributed to a particular fund are charged to that fund. Other expenses not directly attributed to a particular fund are apportioned among the registered investment companies managed by the Manager.

Management fees are allocated daily to each class of shares based upon the relative proportion of the value of shares outstanding (number of settled shares outstanding for Money Market Fund) of each class. Expenses specifically attributable to a particular class are charged directly to such class and are included separately in the statements of operations.

Distributions to Shareholders. With respect to Money Market Fund, all net investment income and any realized gains from investment transactions are declared as dividends daily to settled shares of record as of that day. With respect to Bond & Mortgage Securities Fund, California Municipal Fund, Government & High Quality Bond Fund, High Yield Fund, Income Fund, Inflation Protection Fund, Short-Term Income Fund and Tax-Exempt Bond Fund, net investment income is declared as dividends daily to settled shares of record as of that day, and all distributions of realized gains from investment transactions are recorded on the ex-dividend date. Dividends and distributions to shareholders of the other Funds are recorded on the ex-dividend date. Dividends and distributions to shareholders from net investment income and net realized gain from investments and foreign currency transactions are determined in accordance with federal tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differing treatments for net operating losses, foreign currency transactions, futures contracts, certain defaulted securities, sales of Passive Foreign Investment Companies, losses deferred due to wash sales, tax straddles, mortgage-backed securities, certain preferred securities, swap agreements, and limitations imposed by Sections 381-384 of the Internal Revenue Code. Permanent book and tax basis differences are reclassified within the capital accounts based on federal tax-basis treatment; temporary differences do not require reclassification. To the extent dividends and distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as return of capital distributions.

Global Real Estate Securities Fund and Real Estate Securities Fund receive substantial distributions from holdings in Real Estate Investment Trusts (“REITs”). Distributions from REITs may be characterized as ordinary income, net capital gain, or a return of capital to the Funds. The proper characterization of REIT distributions is generally not known until after the end of each calendar year. As such, estimates must be used in reporting the character of income and distributions for financial statement purposes.

Federal Income Taxes. No provision for federal income taxes is considered necessary because each of the Funds intends to qualify as a “regulated investment company” under the Internal Revenue Code and intends to distribute each year substantially all of its net investment income and realized capital gains to shareholders.

The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether it is “more likely than not” that each tax position would be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year. During the year ended October 31, 2010, the Funds did not record any such tax benefit or expense in the accompanying financial statements. The statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2007-2010. No examinations are in progress or anticipated at this time.

Foreign Taxes. Certain of the Funds are subject to foreign income taxes imposed by certain countries in which they invest. Foreign income taxes are accrued by the Funds as a reduction of income. These amounts are shown as withholding tax on foreign dividends on the statements of operations.

Gains realized upon the disposition of Indian securities held by the Funds may be subject to capital gains tax in India, payable prior to repatriation of sale proceeds. The tax is computed on certain net realized gains. Realized losses in excess of gains may be carried forward eight years to offset future gains. In addition, the Funds accrue an estimated deferred tax liability for future gains on Indian securities. At October 31, 2010, Diversified International Fund had no foreign tax refund receivable, no deferred tax liability, and an approximate capital loss carryforward of $3,009,000 that expires in 2017, and International Emerging Markets Fund had no foreign tax refund receivable, no deferred tax liability, and an approximate capital loss carryforward of $16,646,000 that expires in 2017, relating to Indian securities.

Redemption and Exchange Fees. Each of the Funds, except Money Market Fund, imposed a redemption or exchange fee on redemptions or exchanges of $30,000 or more of Class A, Class B, or Class C shares redeemed or exchanged within 30 days after they are purchased. The fee was equal to 1.00% of the total redemption or exchange amount. The fee was paid to the Funds and was intended to offset the trading costs, market impact, and other costs associated with short-term money movements in and out of the Funds. As of September 2010, the fee is no longer charged.

Subsequent Events. Management has evaluated events or transactions that may have occurred since October 31, 2010, that would merit recognition or disclosure in the financial statements.

Floating Rate Notes Issued in Conjunction with Securities Held. California Municipal Fund and Tax-Exempt Bond Fund have entered into transactions in which a fund transfers fixed rate bonds to trusts in exchange for cash and residual interests in the trusts’ assets and cash flows, which are in the form of inverse floating rate securities. The trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties. The fund enters into shortfall and forbearance agreements with the trusts, which commit the fund to pay the trusts, in certain circumstances, the difference between the liquidation value of the fixed rate bonds held by the trusts and the liquidation value of the floating rate notes held by third parties, as well as any shortfalls in interest cash flows. The residual interests held by the fund (inverse floating rate securities) include the right of the fund (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the fixed rate bond from the trusts to the fund, thereby collapsing the trusts. The fund accounts for the transfer of bonds to the trusts as secured borrowings, with the securities transferred remaining in the fund’s investment assets, and the related floating rate notes reflected as fund liabilities under the caption “floating rate notes issued” in the “statement of assets and liabilities”. The notes issued by the trusts have interest rates that reset weekly, and the floating rate note holders have the option to tender their notes to the trusts for redemption at par at each reset date. Details of the floating rate notes are included in each Funds’ schedule of investments.

Foreign Currency Contracts. Certain of the Funds may be subject to foreign currency exchange rate risk in the normal course of pursuing such Fund’s investment objective. The Funds may use foreign currency contracts to gain exposure to, or hedge against changes in the value of foreign currencies. Certain of the Funds enter into forward contracts to purchase or sell foreign currencies at a specified future date at a fixed exchange rate. Forward foreign currency contracts are valued at the forward rate, and are marked-to-market daily. The change in market value is recorded by the Funds as an unrealized gain or loss. When the contract is closed, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

The use of forward foreign currency contracts does not eliminate the fluctuations in underlying prices of the Funds’ portfolio securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Funds could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the currency changes unfavorably to the U.S. dollar. The foreign currency contracts outstanding as of October 31, 2010 are included in the schedules of investments.

Futures Contracts. The Funds are subject to equity price risk, interest rate risk, and foreign currency exchange rate risk in the normal course of pursuing their investment objectives. The Funds (with the exception of Money Market Fund) may enter into futures contracts to hedge against changes in or to gain exposure to, change in the value of equities, interest rates and foreign currencies. Initial margin deposits are made by cash deposits or segregation of specific securities as may be required by the exchange on which the transaction was conducted. Pursuant to the contracts, a fund agrees to receive from or pay to the broker, an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the fund as a variation margin receivable or payable on futures contracts. During the period the futures contracts are open, daily changes in the value of the contracts are recognized as unrealized gains or losses. These unrealized gains or losses are included as a component of net unrealized appreciation (depreciation) of investments on the statements of assets and liabilities. When the contracts are closed, the fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the fund’s cost basis in the contract. There is minimal counterparty credit risk to the Funds because futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

Illiquid Securities. Illiquid securities generally cannot be sold or disposed of in the ordinary course of business (within seven calendar days) at approximately the value at which each of the Funds has valued the investments. This may have an adverse effect on each of the Funds’ ability to dispose of particular illiquid securities at fair market value and may limit each of the Funds’ ability to obtain accurate market quotations for purposes of valuing the securities. Information regarding illiquid securities is included with footnote designations in the schedules of investments.

Indemnification. Under the Fund’s by-laws, present and past officers, directors and employees are indemnified against certain liabilities arising out of the performance of their duties. In addition, in the normal course of business, the Fund may enter into a variety of contracts that may contain representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund.

Inflation-Indexed Bonds. Certain of the Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the statements of operations, even though the Funds would not receive the principal until maturity.

Joint Trading Account. Certain of the Funds may, pursuant to an exemptive order issued by the Securities and Exchange Commission, transfer uninvested funds into a joint trading account. The order permits the participating Funds’ cash balances to be deposited into a single joint account along with the cash of other registered investment companies managed by the Manager. These balances may be invested in one or more short-term instruments or repurchase agreements that are collateralized by U.S. government securities.

Line of Credit. The Funds participate with other registered investment companies managed by the Manager in an unsecured joint line of credit with three banks which allow the participants to borrow up to $150 million, collectively. Borrowings are made solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each participant, based on its borrowings, at a rate equal to the higher of the Fed Funds Rate or LIBOR Rate plus 1.25%. Additionally, a commitment fee is charged at an annual rate of .10% on the amount of the line of credit. During the year ended October 31, 2010, Bond & Mortgage Securities Fund, California Municipal Fund, Disciplined LargeCap Blend Fund, Diversified International Fund, Equity Income Fund, Global Diversified Income Fund, Global Real Estate Securities Fund, High Yield Fund, Inflation Protection Fund, International Emerging Markets Fund, International Growth Fund, LargeCap Blend Fund II, LargeCap Growth Fund, LargeCap Growth Fund I, LargeCap Growth Fund II, LargeCap Value Fund, LargeCap Value Fund III, MidCap Blend Fund, MidCap Growth Fund III, MidCap Value Fund I, Principal Capital Appreciation Fund, Real Estate Securities Fund, Short-Term Income Fund, SmallCap Growth Fund II, SmallCap Value Fund, and Tax-Exempt Bond Fund each borrowed against the line of credit. The interest expense associated with these borrowings is included in other expenses on the statements of operations.

Mortgage Dollar Rolls. Certain of the Funds have entered into mortgage-dollar-roll transactions, in which the Funds sell mortgage-backed securities and simultaneously agree to purchase similar securities in the future at a predetermined price. The proceeds of the securities sold in mortgage-dollar-roll transactions are invested in additional securities. The Funds forgo principal and interest paid on the securities, and are compensated by interest earned on the proceeds of the initial sale and by a lower price on the securities to be repurchased. The Funds treat mortgage-dollar-roll transactions as purchases and sales; as such, these transactions may increase the Funds’ portfolio turnover ratio. Amounts to be received or paid in connection with open mortgage-dollar-rolls are included in Investment securities sold and Investment securities purchased on the statements of assets and liabilities.

Rebates. Subject to best execution, the Funds may direct certain portfolio transactions to brokerage firms that, in turn, have agreed to rebate a portion of the related brokerage commission to the Funds in cash. Commission rebates are included as a component of realized gain from investment transactions in the statements of operations.

Reimbursement from Custodian. The Funds have entered into an arrangement with their custodian whereby interest earned on uninvested cash balances is used to offset a portion of each Funds’ expenses. These amounts are shown separately in the statements of operations.

Repurchase Agreements. The Funds may invest in repurchase agreements that are fully collateralized, typically by U.S. government or U.S. government agency securities. It is the Funds’ policy that its custodian takes possession of the underlying collateral securities. The fair value of the collateral is at all times at least equal to the total amount of the repurchase obligation. In the event of default on the obligation to repurchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event the seller of a repurchase agreement defaults, the Funds could experience delays in the realization of the collateral.

Restricted Securities. Certain of the Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included with footnote designations in the schedules of investments.

Securities Lending. To earn additional income, certain of the Funds may lend portfolio securities to approved brokerage firms. The Funds receive collateral, generally in the form of cash, against the loaned securities. During the period of the loan, the borrower must maintain collateral in an amount not less than 100% of the market value of the loaned securities. The market value of loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The cash collateral is usually invested in short-term securities and the Funds could realize a loss on such investments. Further, the Funds could experience a delay in recovering its securities and possible loss of income or value if the borrower fails to return them. As of October 31, 2010, the Funds had no securities on loan.

Senior Floating Rate Interests. The Funds may invest in senior floating rate interests (bank loans). Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the senior floating rate interest. Senior floating rate interests are rated below-investment-grade, which means they are more likely to default than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the fund and there can be no assurance that the liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated.

Senior floating rate interests pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR) or the prime rate offered by one or more major United States banks.

Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests may be substantially less than stated maturities shown in the schedules of investments.

Short Sales. Bond & Mortgage Securities Fund entered into a short sale transaction during the period. A short sale is a transaction in which a Fund sells a security it does not own in anticipation of a decline in the market price of the security. A security sold in a short sale transaction and the interest or dividend payable on the security if any, is reflected as a liability on the statement of assets and liabilities. A Fund is obligated to deliver the security at the market price at the time the short position is closed. Possible losses from short sales may be unlimited.

Swap Agreements. Bond & Mortgage Securities Fund and Inflation Protection Fund invested in swap agreements during the period. Swap agreements are privately negotiated agreements between a fund and a counterparty to exchange a series of cash flows at specified intervals based upon, or calculated by reference to, changes in specified prices or rates for a specified amount of an underlying asset. A fund may enter into credit default, interest rate, or total return swap agreements to manage its exposure to credit, interest rate, or market risk. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.

Swap agreements are valued through a pricing service or using procedures established and periodically reviewed by the Fund’s Board of Directors; changes in value are recorded as unrealized gain or loss. These unrealized gains or losses are included as a component of net unrealized appreciation (depreciation) of investments on the statements of assets and liabilities.

Upon termination of swap agreements, the Funds recognize a realized gain or loss. Net periodic payments to be received or paid are accrued daily and are recorded in the statements of operations as realized gains or losses.

Payments received or made at the beginning of the measurement period are reflected as such on the statements of assets and liabilities and represent payments made or received upon entering into the swap agreement to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, interest rates, and other relevant factors). These upfront payments are amortized daily over the term of the swap agreement as realized gains or losses on the statements of operations.

Notional principal amounts are used to express the extent of involvement in these agreements. Risks may exceed amounts shown on the statements of assets and liabilities. These risks include changes in the returns of the underlying instruments, unfavorable interest rate fluctuation, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements, and the possible lack of liquidity with respect to the swap agreements.

The Funds and any counterparty are required to maintain an agreement that requires the Funds and that counterparty to monitor the net fair value of all derivative transactions entered into pursuant to the contract between the Funds and such counterparty. If the net fair value of such derivatives transactions between the Funds and that counterparty exceeds a certain threshold (as defined in the agreement), the Funds or the counterparty are required to post cash and/or securities as collateral. Fair values of derivatives transactions presented in the financial statements are not netted with the fair values of other derivatives transactions or with any collateral amounts posted by the Funds or any counterparty.

Credit default swaps involve commitments to pay a fixed rate at a predetermined frequency in exchange for a lump sum payment if a “credit event”, as defined in the agreement, affecting a third party occurs. Credit events may include a failure to pay interest, bankruptcy, restructuring, or other event as defined in the agreement. A “buyer” of credit protection agrees to pay a counterparty to assume the credit risk of an issuer upon the occurrence of a credit event. The “seller” of the protection receives periodic payments and agrees to assume the credit risk of an issuer upon the occurrence of a credit event. As the seller of credit protection, a Fund would add leverage to its portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.

If a Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. If a Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, a Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices may include, but are not limited to, investment grade securities, high yield securities, asset backed securities, emerging markets, and/or various credit ratings within each sector. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. An index credit default swap references all the names in the index, and if there is a default, the credit event is settled based on that name’s weight in the index. The composition of the indices changes periodically, usually every six months, and for most indices, each name has an equal weight in the index.

A Fund may use credit default swaps on credit indices to hedge a portfolio of credit default swaps or bonds with a credit default swap on indices which is less expensive than it would be to buy many credit default swap to achieve a similar effect. Credit-default swap on indices are benchmarks for protecting investors owning bonds against default, and traders use them to speculate on changes in credit quality.

For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Wider credit spreads and increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

Interest rate swaps involve the commitment to pay or receive a floating rate of interest in exchange for a fixed rate of interest based on the same notional amount.

Details of swap agreements open at period end are included in the Funds' schedules of investments.

To Be Announced Securities. The Funds may trade portfolio securities on a “to-be-announced” (“TBA”) or when-issued basis. In a TBA or when-issued transaction, the Funds commit to purchase or sell securities for which all specific information is not known at the time of the trade. Securities purchased on a TBA or when-issued basis are not settled until they are delivered to the Funds, normally 15 to 30 days later. These transactions are subject to market fluctuations and their current value is determined in the same manner as for other portfolio securities. The securities purchased on a TBA or when-issued basis are identified as such in the Funds’ schedules of investments.

U.S. Government Agencies or Government-Sponsored Enterprises. Certain of the Funds may invest in U.S. Government agencies or government-sponsored enterprises. U.S. Government securities are obligations of, and in certain cases, guaranteed by, the U.S. Government or its agencies. The U.S. Government does not guarantee the net asset value of the Funds’ shares. Some U.S. Government securities such as treasury bills, notes and bonds, and securities guaranteed by the Government National Mortgage Association (“GNMA”) are supported by the full faith and credit of the U.S. Government. Other securities, such as those of the Federal Home Loan Bank are supported by the right of the issuer to borrow from the U.S. Department of the Treasury. Still other securities, such as those of the Federal National Mortgage Association (“FNMA”) are supported by the discretionary authority of the U.S. Government to purchase the agency’s obligations.

Government related guarantors (those not backed by the full faith and credit of the United States Government) include FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC”). FNMA is a government sponsored corporation the common stock of which is owned entirely by private stockholders. FNMA purchases conventional residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks, credit unions, and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to the timely payment of principal and interest by FNMA, but are not backed by the full faith and credit of the U.S. Government. FHLMC issues Participation Certificates which are pass-through securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but Participation Certificates are not backed by the full faith and credit of the U.S. Government.

During 2008, the Federal Housing Finance Agency (“FHFA”) placed FNMA and FHLMC into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers, and privileges of FNMA and FHLMC and of any stockholder of FNMA and FHLMC. The U.S. Department of the Treasury then announced three additional steps taken by it in connection with the conservatorship. First, the U.S. Department of the Treasury entered into a Senior Preferred Stock Purchase Agreement with each of FNMA and FHLMC pursuant to which the U.S. Department of the Treasury will purchase up to an aggregate of $100 billion of each of FNMA and FHLMC to maintain a positive net worth in each enterprise. This agreement contains various covenants that severely limit each enterprise’s operations. In exchange for entering into these agreements, the U.S. Department of the Treasury received $1 billion of each enterprise’s senior preferred stock and warrants to purchase 79.9% of each enterprise’s common stock. Second, the U.S. Department of the Treasury announced the creation of a new secured lending facility which is available to each of FNMA and FHLMC as a liquidity backstop. Third, the U.S. Department of the Treasury announced the creation of a temporary program to purchase mortgage-backed securities issued by each of FNMA and FHLMC. Both the liquidity backstop and the mortgage-backed securities purchase program expired in December 2009. FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations associated with its mortgage-backed securities.

Derivatives. The following tables provide information about where in the statements of assets and liabilities and statements of operations information about derivatives can be found (amounts shown in thousands):


	Asset Derivatives October 31, 2010		Liability Derivatives October 31, 2010
Derivatives not accounted for		Fair		Fair
as hedging instruments	Statement of Assets and Liabilities Location	Value	Statement of Assets and Liabilities Location	Value
Bond & Mortgage Securities Fund
Credit contracts	Receivables, Net Assets Consist of Net unrealized	$135	Payables, Net Assets Consist of Net unrealized	$2,599
	appreciation (depreciation) of investments		appreciation (depreciation) of investments
Foreign exchange contracts	Receivables	8	Payables	228
Interest rate contracts			Payables, Net Assets Consist of Net unrealized	392
			appreciation (depreciation) of investments
	Total	$143		$3,219
Disciplined LargeCap Blend Fund
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$5*
	appreciation (depreciation) of investments
Global Real Estate Securities Fund
Foreign exchange contracts	Receivables	$12	Payables	$15
Inflation Protection Fund
Interest rate contracts	Receivables, Net Assets Consist of Net unrealized	$319*	Payables, Net Assets Consist of Net unrealized	$102*
	appreciation (depreciation) of investments		appreciation (depreciation) of investments
LargeCap Blend Fund II
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$332*
	appreciation (depreciation) of investments
LargeCap Growth Fund I
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$4,170*
	appreciation (depreciation) of investments
LargeCap Growth Fund II
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$713*
	appreciation (depreciation) of investments
Foreign exchange contracts			Payables	$5
	Total	$713		$5
LargeCap S&P 500 Index Fund
Equity contracts	Receivables, Net Assets Consist of Net unrealized	1,503*
	appreciation (depreciation) of investments
LargeCap Value Fund
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$770*
	appreciation (depreciation) of investments
LargeCap Value Fund III
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$845
	appreciation (depreciation) of investments
MidCap Growth Fund III
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$853
	appreciation (depreciation) of investments
MidCap Value Fund I
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$2,610*
	appreciation (depreciation) of investments
Short-Term Income Fund
Interest rate contracts			Payables, Net Assets Consist of Net unrealized	$863*
			appreciation (depreciation) of investments
SmallCap Blend Fund
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$175*
	appreciation (depreciation) of investments
SmallCap Growth Fund
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$196*
	appreciation (depreciation) of investments
SmallCap Growth Fund II
Equity contracts	Receivables, Net Assets Consist of Net unrealized	$108*
	appreciation (depreciation) of investments

*Includes cumulative unrealized appreciation/depreciation of futures contracts as shown in the schedules of investments. Only the portion of the unrealized appreciation/depreciation not yet cash settled is shown in the statements of assets and liabilities as variation margin.


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


3. Operating Policies (Continued)

Derivatives Not		Realized Gain or (Loss)	Change in Unrealized Appreciation
Accounted for as	Location of Gain or (Loss) On Derivatives Recognized in	on Derivatives Recognized	or (depreciation) of Derivatives
Hedging Instruments	Operations	in Operations	Recognized in Operations
Bond & Mortgage Securities Fund
Credit contracts	Net realized gain (loss) from Swap agreements/Change in	$(31,169)	$17,516
	unrealized appreciation/depreciation of Swap agreements
Foreign exchange	Net realized gain (loss) from Foreign currency	99	(220)
contracts	transactions/Change in unrealized appreciation/depreciation of
	Translation of assets and liabilities in foreign currencies
Interest rate contracts	Net realized gain (loss) from Futures contracts and Swap	(886)	(171)
	agreements/Change in unrealized appreciation/depreciation of
	Futures contracts and Swap agreements
	Total	$(31,956)	$17,125
Disciplined LargeCap Blend Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$349	$332
	unrealized appreciation/depreciation of Futures contracts
Global Diversified Income Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$47	$ —
	unrealized appreciation/depreciation of Futures contracts
Global Real Estate Securities fund
Foreign exchange	Net realized gain (loss) from Foreign currency	$(5)	$7
contracts	transactions/Change in unrealized appreciation/depreciation of
	Translation of assets and liabilities in foreign currencies
Inflation Protection Fund
Interest rate contracts	Net realized gain (loss) from Futures contracts and Swap	$1,266	$86
	agreements/Change in unrealized appreciation/depreciation of
	Futures contracts and Swap agreements
LargeCap Blend Fund II
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$872	$630
	unrealized appreciation/depreciation of Futures contracts
LargeCap Growth Fund I
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$2,119	$5,320
	unrealized appreciation/depreciation of Futures contracts
LargeCap Growth Fund II
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$2,423	$1,801
	unrealized appreciation/depreciation of Futures contracts
Foreign exchange	Net realized gain (loss) from Foreign currency	230	(18)
contracts	transactions/Change in unrealized appreciation/depreciation of
	Translation of assets and liabilities in foreign currencies
	Total	$2,653	$1,783
LargeCap S&P 500 Index Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$(4,349)	$2,119
	unrealized appreciation/depreciation of Futures contracts
LargeCap Value Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$(496)	$1,136
	unrealized appreciation/depreciation of Futures contracts
LargeCap Value Fund III
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$(151)	$1,726
	unrealized appreciation/depreciation of Futures contracts
MidCap Growth Fund III
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$3,473	$3,362
	unrealized appreciation/depreciation of Futures contracts
MidCap Value Fund I
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$5,149	$4,581
	unrealized appreciation/depreciation of Futures contracts
Short-Term Income Fund
Interest rate contracts	Net realized gain (loss) from Futures contracts/Change in	$(2,733)	$(544)
	unrealized appreciation/depreciation of Futures contracts
SmallCap Blend Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$251	$244
	unrealized appreciation/depreciation of Futures contracts
SmallCap Growth Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$304	$236
	unrealized appreciation/depreciation of Futures contracts
SmallCap Growth Fund II
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$903	$559
	unrealized appreciation/depreciation of Futures contracts
SmallCap Value Fund
Equity contracts	Net realized gain (loss) from Futures contracts/Change in	$278	$ —
	unrealized appreciation/depreciation of Futures contracts

Long equity futures contracts are used to obtain market exposure for the cash balances that are maintained by the certain of the Funds and the notional values of the futures contracts will vary in accordance with changing cash balances. Long and short U.S. Treasury futures contracts are used to obtain interest rate exposure in order to manage duration of Bond & Mortgage Securities Fund, Inflation Protection Fund, and Short-Term Income Fund. The notional values of the futures contracts will vary in accordance with changing duration of these funds. The level of other derivative activity disclosed in the schedules of investments is representative of the level of derivative activity used in the Funds throughout the year ended October 31, 2010.

Fair value is defined as the price that the Funds would receive upon selling a security in a timely transaction to an independent buyer in the principal or most advantageous market of the security at the measurement date. In determining fair value, the Funds use various valuation approaches, including market, income and/or cost approaches. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Funds. Unobservable inputs are inputs that reflect the Funds own estimates about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

”Level 1 – Quoted prices are available in active markets for identical securities as of the reporting date. The type of securities included in Level 1 includes listed equities and listed derivatives.

”Level 2 – Other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments speeds, credit risk, etc.) Investments which are generally included in this category include corporate bonds, senior floating rate interests, and municipal bonds.

”Level 3 – Significant unobservable inputs (including the Funds’ assumptions in determining the fair value of investments.) Investments which are generally included in this category include certain corporate bonds and certain mortgage backed securities.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the market place, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Funds in determining fair value is greatest for instruments categorized in Level 3.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market based measure considered from the perspective of a market participant who holds the asset rather than an entity specific measure. Therefore, even when market assumptions are not readily available, the Fund’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Funds use prices and inputs that are current as of the measurement date.

Investments which are generally included in the Level 3 category are primarily valued using quoted prices from brokers and dealers participating in the market for these investments. These investments are classified as Level 3 investments due to the lack of market transparency and market corroboration to support these quoted prices. Valuation models may be used as the pricing source for other investments classified as Level 3. Valuation models rely on one or more significant unobservable inputs. Frequently, fair value of these investments is determined in good faith by the Manager under procedures established and periodically reviewed by the Fund’s Board of Directors.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those instruments. For example, short-term securities held in Money Market Fund are valued using amortized cost, as permitted under Rule 2a-7 of the Investment Company Act of 1940. Generally, amortized cost approximates the current fair value of these securities, but because the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The beginning of the period timing recognition is being adopted for the significant transfers between levels of each Fund’s assets and liabilities. Certain transfers may occur as a result of the Fund’s valuation policies for international securities which involve fair value estimates based on observable market inputs when significant events occur between the local close and the time the net asset value of the Fund is calculated. As of October 31, 2010, the following amounts were transferred from Level 2 to Level 1: $787,489,295, $3,784,823, $503,063,739, $649,367,616 in the Diversified International Fund, Global Real Estate Securities Fund, International Emerging Markets Fund, and International Growth Fund, respectively. There were no significant transfers into or out of Level 3.

The following is a summary of the inputs used as of October 31, 2010, in valuing the Funds’ securities carried at value (amounts shown in thousands):


			Level 2 - Other
		Level 1 - Quoted	Significant Observable	Level 3 - Significant
Fund		Prices	Inputs	Unobservable Inputs Totals (Level 1,2,3)
Bond & Mortgage Securities Fund
Bonds	$ —		$ 1,179,466	$ 35,492	$ 1,214,958
Common Stocks
Technology		—	—	66	66
Convertible Bonds		—	3,459	—	3,459
Convertible Preferred Stocks
Consumer, Cyclical		—	994	—	994
Municipal Bonds		—	7,732	—	7,732
Repurchase Agreements		—	59,837	—	59,837
Senior Floating Rate Interests		—	37,537	—	37,537
U.S. Government & Government Agency Obligations		—	827,041	—	827,041
Total investments in securities $		—	$ 2,116,066	$ 35,558	$ 2,151,624
Assets
Credit Contracts**
Credit Default Swaps	$ —		$ 135	$ —	$ 135
Foreign Exchange Contracts**
Foreign Currency Contracts	$ —		$ 8	$ —	$ 8
Liabilities
Credit Contracts**
Credit Default Swaps	$ —		$ (2,599)	$ —	$ (2,599 )
Foreign Exchange Contracts**
Foreign Currency Contracts	$ —		$ (228)	$ —	$ (228 )
Interest Rate Contracts**
Interest Rate Swaps	$ —		$ (392)	$ —	$ (392 )

California Municipal Fund
Municipal Bonds	$ —		$ 297,640	$ 1,166	$ 298,806
Total investments in securities $		—	$ 297,640	$ 1,166	$ 298,806

Disciplined LargeCap Blend Fund
Common Stocks*	$ 827,178		$ —	$ —	$ 827,178
Total investments in securities $		827,178	$ —	$ —	$ 827,178
Assets
Equity Contracts**
Futures	$ 5		$ —	$ —	$ 5

Diversified International Fund
Common Stocks
Basic Materials	$ 194,849		$ —	$ —	$ 194,849
Communications		155,544	750	—	156,294
Consumer, Cyclical		236,067	—	—	236,067
Consumer, Non-cyclical		279,825	—	—	279,825
Diversified		23,795	—	—	23,795
Energy		155,220	—	—	155,220
Financial		396,273	1,828	—	398,101
Industrial		180,612	—	—	180,612
Technology		64,174	—	—	64,174
Utilities		51,282	—	—	51,282
Preferred Stocks
Basic Materials		—	9,417	—	9,417
Communications		8,927	—	—	8,927
Consumer, Cyclical		329	—	—	329
Consumer, Non-cyclical		10,676	—	—	10,676
Diversified		—	2,483	—	2,483
Financial		—	7,324	—	7,324
Repurchase Agreements		—	5,380	—	5,380
Total investments in securities $		1,757,573	$ 27,182	$ —	$ 1,784,755


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Level 2 - Other
		Level 1 - Quoted	Significant Observable		Level 3 - Significant
Fund		Prices		Inputs	Unobservable Inputs Totals (Level 1,2,3)
Equity Income Fund
Bonds	$ —		$ 1,505		$ —	$ 1,505
Common Stocks
Basic Materials		54,000		—	—	54,000
Communications		177,761		—	—	177,761
Consumer, Cyclical		279,835		—	—	279,835
Consumer, Non-cyclical		529,392		—	—	529,392
Energy		313,956		—	—	313,956
Financial		601,600		—	—	601,600
Industrial		289,682		—	—	289,682
Technology		176,605		—	—	176,605
Utilities		175,114		—	—	175,114
Preferred Stocks
Financial		—		20,728	—	20,728
Repurchase Agreements		—		61,346	—	61,346
Total investments in securities $		2,597,945	$ 83,579		$ —	$ 2,681,524

Global Diversified Income Fund
Bonds	$ —		$ 651,183		$ 13,928	$ 665,111
Common Stocks
Basic Materials		4,762		—	—	4,762
Communications		7,673		—	—	7,673
Consumer, Cyclical		12,485		—	—	12,485
Consumer, Non-cyclical		11,908		—	—	11,908
Diversified		1,945		—	—	1,945
Energy		117,160		—	—	117,160
Exchange Traded Funds		539		—	—	539
Financial		110,713		—	1	110,714
Industrial		7,033		—	—	7,033
Technology		975		—	—	975
Utilities		5,910		—	—	5,910
Convertible Bonds		—		84	—	84
Convertible Preferred Stocks
Financial		2,259		2,300	—	4,559
Preferred Stocks
Communications		811		3,341	—	4,152
Energy		148		—	—	148
Financial		36,543		41,993	7,362	85,898
Government		6,876		—	—	6,876
Utilities		—		1,219	—	1,219
Repurchase Agreements		—		22,051	—	22,051
Senior Floating Rate Interests		—		39,189	—	39,189
Total investments in securities $		327,740	$ 761,360		$ 21,291	$ 1,110,391

Global Real Estate Securities Fund
Common Stocks
Consumer, Cyclical	$ 140		$ —		$ —	$ 140
Consumer, Non-cyclical		148		—	—	148
Diversified		177		—	—	177
Financial		17,163		—	—	17,163
Total investments in securities $		17,628	$ —		$ —	$ 17,628
Assets
Foreign Exchange Contracts**
Foreign Currency Contracts	$ —		$ 9		$ —	$ 9
Liabilities
Foreign Exchange Contracts**
Foreign Currency Contracts	$ —		$ (12)		$ —	$ (12 )

Government & High Quality Bond Fund
Bonds	$ —		$ 483,225		$ 58,737	$ 541,962
Repurchase Agreements		—		27,006	—	27,006
U.S. Government & Government Agency Obligations		—		1,131,037	—	1,131,037
Total investments in securities $		—	$ 1,641,268		$ 58,737	$ 1,700,005


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Level 2 - Other
		Level 1 - Quoted	Significant Observable		Level 3 - Significant
Fund		Prices		Inputs	Unobservable Inputs Totals (Level 1,2,3)
High Yield Fund
Bonds	$ —		$ 2,791,490		$ 33,814	$ 2,825,304
Common Stocks
Consumer, Cyclical		30,983		—	—	30,983
Consumer, Non-cyclical		—		—	2	2
Energy		—		—	—	—
Financial		—		—	—	—
Technology		—		—	726	726
Convertible Bonds		—		59,818	—	59,818
Convertible Preferred Stocks
Consumer, Cyclical		—		21,619	—	21,619
Preferred Stocks
Government		—		689	—	689
Repurchase Agreements		—		195,022	—	195,022
Senior Floating Rate Interests		—		393,700	—	393,700
Total investments in securities $		30,983	$ 3,462,338		$ 34,542	$ 3,527,863

Income Fund
Bonds	$ —		$ 929,259		$ 12,789	$ 942,048
Common Stocks
Energy		—		—	—	—
Financial		—		—	—	—
Convertible Bonds		—		19,168	—	19,168
Repurchase Agreements		—		52,758	—	52,758
Senior Floating Rate Interests		—		10,207	—	10,207
U.S. Government & Government Agency Obligations		—		296,152	—	296,152
Total investments in securities $		—	$ 1,307,544		$ 12,789	$ 1,320,333

Inflation Protection Fund
Bonds	$ —		$ 16,484		$ 6,520	$ 23,004
U.S. Government & Government Agency Obligations		—		550,359	—	550,359
Total investments in securities $		—	$ 566,843		$ 6,520	$ 573,363
Assets
Interest Rate Contracts**
Futures	$ 187		$ —		$ —	$ 187
Interest Rate Swaps	$ —		$ 132		$ —	$ 132
Liabilities
Interest Rate Contracts**
Futures	$ (15 )		$ —		$ —	$ (15 )
Interest Rate Swaps	$ —		$ (87)		$ —	$ (87 )

International Emerging Markets Fund
Common Stocks
Basic Materials	$ 158,508		$ —		$ —	$ 158,508
Communications		127,397		3,797	—	131,194
Consumer, Cyclical		183,157		—	—	183,157
Consumer, Non-cyclical		110,720		—	—	110,720
Diversified		42,444		—	—	42,444
Energy		194,932		8,471	—	203,403
Financial		336,507		7,549	—	344,056
Industrial		121,700		—	—	121,700
Technology		115,279		—	—	115,279
Utilities		18,047		—	—	18,047
Preferred Stocks
Basic Materials		—		48,822	—	48,822
Diversified		—		12,625	—	12,625
Financial		—		36,056	—	36,056
Repurchase Agreements		—		1,849	—	1,849
Total investments in securities $		1,408,691	$ 119,169		$ —	$ 1,527,860


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Level 2 - Other
		Level 1 - Quoted	Significant Observable		Level 3 - Significant
Fund		Prices		Inputs	Unobservable Inputs Totals (Level 1,2,3)
International Growth Fund
Common Stocks
Basic Materials	$ 239,598		$ —		$ —	$ 239,598
Communications		29,289		—	—	29,289
Consumer, Cyclical		216,792		—	—	216,792
Consumer, Non-cyclical		349,690		—	—	349,690
Diversified		7,276		—	—	7,276
Energy		88,541		—	—	88,541
Financial		173,462		—	—	173,462
Industrial		191,437		—	—	191,437
Technology		44,859		—	—	44,859
Utilities		30,057		—	—	30,057
Preferred Stocks
Communications		8,094		—	—	8,094
Consumer, Non-cyclical		9,609		—	—	9,609
Repurchase Agreements		—		16,695	—	16,695
Total investments in securities $		1,388,704	$ 16,995		$ —	$ 1,405,399

LargeCap Blend Fund II
Common Stocks*	$ 713,078		$ —		$ —	$ 713,078
Repurchase Agreements		—		19,405	—	19,405
Total investments in securities $		713,078	$ 19,405		$ —	$ 732,483
Assets
Equity Contracts**
Futures	$ 332		$ —		$ —	$ 332

LargeCap Growth Fund
Common Stocks*	$ 2,312,865		$ —		$ —	$ 2,312,865
Repurchase Agreements		—		64,821	—	64,821
Total investments in securities $		2,312,865	$ 64,821		$ —	$ 2,377,686

LargeCap Growth Fund I
Common Stocks*	$ 2,770,399		$ —		$ —	$ 2,770,399
Repurchase Agreements		—		89,425	—	89,425
Total investments in securities $		2,770,399	$ 89,425		$ —	$ 2,859,824
Assets
Equity Contracts**
Futures	$ 4,170		$ —		$ —	$ 4,170

LargeCap Growth Fund II
Common Stocks*	$ 1,327,756		$ —		$ —	$ 1,327,756
Repurchase Agreements		—		20,952	—	20,952
Total investments in securities $		1,327,756	$ 20,952		$ —	$ 1,348,708
Assets
Equity Contracts**
Futures	$ 713		$ —		$ —	$ 713
Liabilities
Foreign Exchange Contracts**
Foreign Currency Contracts	$ —		$ (5)		$ —	$ (5 )

LargeCap S&P 500 Index Fund
Common Stocks*	$ 2,250,702		$ —		$ —	$ 2,250,702
Repurchase Agreements		—		48,702	—	48,702
Total investments in securities $		2,250,702	$ 48,702		$ —	$ 2,299,404
Assets
Equity Contracts**
Futures	$ 1,503		$ —		$ —	$ 1,503

LargeCap Value Fund
Common Stocks*	$ 1,161,350		$ —		$ —	$ 1,161,350
Repurchase Agreements		—		16,958	—	16,958
Total investments in securities $		1,161,350	$ 16,958		$ —	$ 1,178,308
Assets
Equity Contracts**
Futures	$ 770		$ —		$ —	$ 770


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Level 2 - Other
		Level 1 - Quoted	Significant Observable		Level 3 - Significant
Fund		Prices		Inputs	Unobservable Inputs Totals (Level 1,2,3)
LargeCap Value Fund III
Common Stocks*	$ 1,724,051		$ —		$ —	$ 1,724,051
Repurchase Agreements		—		33,894	—	33,894
	Total investments in securities $	1,724,051	$ 33,894		$ —	$ 1,757,945
Assets
Equity Contracts**
Futures	$ 845		$ —		$ —	$ 845

MidCap Blend Fund
Common Stocks
Basic Materials	$ 64,839		$ —		$ —	$ 64,839
Communications		195,061		—	—	195,061
Consumer, Cyclical		149,221		—	—	149,221
Consumer, Non-cyclical		265,332		—	—	265,332
Diversified		20,306		—	—	20,306
Energy		138,160		—	—	138,160
Financial		229,566		2,817	—	232,383
Industrial		35,950		—	—	35,950
Technology		80,526		—	—	80,526
Utilities		45,422		—	—	45,422
Repurchase Agreements		—		11,389	—	11,389
	Total investments in securities $	1,224,383	$ 14,206		$ —	$ 1,238,589

MidCap Growth Fund III
Common Stocks*	$ 1,321,954		$ —		$ —	$ 1,321,954
Repurchase Agreements		—		29,084	—	29,084
	Total investments in securities $	1,321,954	$ 29,084		$ —	$ 1,351,038
Assets
Equity Contracts**
Futures	$ 853		$ —		$ —	$ 853

MidCap Value Fund I
Common Stocks*	$ 1,404,499		$ —		$ —	$ 1,404,499
Repurchase Agreements		—		42,215	—	42,215
	Total investments in securities $	1,404,499	$ 42,215		$ —	$ 1,446,714
Assets
Equity Contracts**
Futures	$ 2,610		$ —		$ —	$ 2,610

Money Market Fund
Bonds	$ —		$ 151,991		$ —	$ 151,991
Certificate of Deposit		—		16,000	—	16,000
Commercial Paper		—		880,988	—	880,988
Common Stocks*		43,390		—	—	43,390
Municipal Bonds		—		111,993	—	111,993
Repurchase Agreements		—		113,430	—	113,430
U.S. Government & Government Agency Obligations		—		7,985	—	7,985
	Total investments in securities $	43,390	$ 1,282,387		$ —	$ 1,325,777

Principal Capital Appreciation Fund
Common Stocks*	$ 1,061,870		$ —		$ —	$ 1,061,870
Repurchase Agreements		—		23,924	—	23,924
	Total investments in securities $	1,061,870	$ 23,924		$ —	$ 1,085,794

Real Estate Securities Fund
Common Stocks*	$ 1,671,604		$ —		$ —	$ 1,671,604
Convertible Preferred Stocks		12,746		—	—	12,746
Repurchase Agreements		—		26,092	—	26,092
	Total investments in securities $	1,684,350	$ 26,092		$ —	$ 1,710,442

Short-Term Income Fund
Bonds	$ —		$ 944,093		$ 117	$ 944,210
Repurchase Agreements		—		5,267	—	5,267
U.S. Government & Government Agency Obligations		—		9,364	—	9,364
	Total investments in securities $	—	$ 958,724		$ 117	$ 958,841
Liabilities
Interest Rate Contracts**
Futures	$ (863 )		$ —		$ —	$ (863 )


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Level 2 - Other
		Level 1 - Quoted	Significant Observable		Level 3 - Significant
Fund		Prices		Inputs	Unobservable Inputs Totals (Level 1,2,3)
SmallCap Blend Fund
Common Stocks*	$ 203,493		$ —		$ —	$ 203,493
Repurchase Agreements		—		7,931	—	7,931
	Total investments in securities $	203,493	$ 7,931		$ —	$ 211,424
Assets
Equity Contracts**
Futures	$ 175		$ —		$ —	$ 175

SmallCap Growth Fund
Common Stocks*	$ 244,222		$ —		$ —	$ 244,222
Repurchase Agreements		—		8,617	—	8,617
	Total investments in securities $	244,222	$ 8,617		$ —	$ 252,839
Assets
Equity Contracts**
Futures	$ 196		$ —		$ —	$ 196

SmallCap Growth Fund II
Common Stocks*	$ 259,267		$ —		$ —	$ 259,267
Repurchase Agreements		—		5,492	—	5,492
	Total investments in securities $	259,267	$ 5,492		$ —	$ 264,759
Assets
Equity Contracts**
Futures	$ 108		$ —		$ —	$ 108

SmallCap Value Fund
Common Stocks*	$ 286,209		$ —		$ —	$ 286,209
Repurchase Agreements		—		8,985	—	8,985
	Total investments in securities $	286,209	$ 8,985		$ —	$ 295,194

Tax-Exempt Bond Fund
Municipal Bonds	$ —		$ 279,604		$ 1,758	$ 281,362
	Total investments in securities $	—	$ 279,604		$ 1,758	$ 281,362

The changes in investments measured at fair value for which the Funds’ have used level 3 inputs to determine fair value are as follows (amounts shown in thousands):


				Accrued
				Discounts/					Net Change in Unrealized
				Premiums and					Appreciation/
	Value		Realized	Change in	Net	Transfers Transfers		Value	(Depreciation) on
	October		Gain/	Unrealized	Purchases/	into	Out of	October	Investments Held at
Fund	31, 2009		(Loss)	Gain/(Loss)	Sales	Level 3*	Level 3*	31, 2010	October 31, 2010
Bond & Mortgage Securities Fund
Bonds	$47,021		$ (5,435)	$ 6,998	$ 12,391	$ 3,974	$(29,457)	$ 35,492	$ 1,514
Common Stock
Technology		—	—	5	61	—	—	66	4
Total	$47,021		$ (5,435)	$ 7,003	$ 12,452	$ 3,974	$(29,457)	$ 35,558	$ 1,518

California Municipal Bond Fund
Municipal Bonds	$ 4,038		$ —	$ 42	$ (100)	$ —	$ (2,814)	$ 1,166	$ 42
Total	$ 4,038		$ —	$ 42	$ (100)	$ —	$ (2,814)	$ 1,166	$ 42

Global Diversified Income Fund
Bonds	$ 46		$ 3	$ 65	$ 13,073	$ 787	$ (46)	$ 13,928	$ 57
Common Stock
Financial		—	—	—	1	—	—	1	—
Preferred Stock
Financial		—	—	(32)	7,394	—	—	7,362	(32)
Total	$ 46		$ 3	$ 33	$ 20,468	$ 787	$ (46)	$ 21,291	$ 545


NOTES TO FINANCIAL STATEMENTS
PRINCIPAL FUNDS, INC.
October 31, 2010


4. Fair Valuation (Continued)

			Accrued
			Discounts/					Net Change in Unrealized
			Premiums and					Appreciation/
	Value	Realized	Change in	Net	Transfers Transfers		Value	(Depreciation) on
	October	Gain/	Unrealized	Purchases/	into Level	Out of	October	Investments Held at
Fund	31, 2009	(Loss)	Gain/(Loss)	Sales	3*	Level 3*	31, 2010	October 31, 2010
Global Real Estate Securities Fund
Common Stock
Financial	$ 31	$ —	$ (5)	$ (26)	$ —	$ —	$ —	$ —
Total	$ 31	$ —	$ (5)	$ (26)	$ —	$ —	$ —	$ —

Government & High Quality Bond Fund
Bonds	$ —	$ —	$ 525	$ 58,212	$ —	$ —	$ 58,737	$ 525
Total	$ —	$ —	$ 525	$ 58,212	$ —	$ —	$ 58,737	$ 525

High Yield Fund
Bonds	$ 136,667	$ 186	$ (1,889)	$ (43,489)	$ 600	$(58,261)	$ 33,814	$ (6,655)
Common Stock
Communications	148	(1,727)	1,714	(135)	—	—	—	—
Consumer, Cyclical	943	—	(943)	—	—	—	—	(943)
Consumer, Non-cyclical	4,612	1,567	(1,090)	(5,092)	5	—	2	(3)
Technology	1,056	(1,150)	916	(96)	—	—	726	2
Total	$ 143,426	$ (1,124)	$ (1,292)	$ (48,812)	$ 605	$(58,261)	$ 34,542	$ (7,599)

Income Fund
Bonds	$ 22,978	$ —	$ (9,189)	$ (1,000)	$ —	$ —	$ 12,789	$ (9,193)
Total	$ 22,978	$ —	$ (9,189)	$ (1,000)	$ —	$ —	$ 12,789	$ (9,193)

Inflation Protection Fund
Bonds	$ 10,158	$ (4,146)	$ 5,107	$ (3,963)	$ 2,723	$ (3,359)	$ 6,520	$ 1,175
Total	$ 10,158	$ (4,146)	$ 5,107	$ (3,963)	$ 2,723	$ (3,359)	$ 6,520	$ 1,175

International Growth Fund
Common Stock
Utilities	$ 151	$ —	$ —	$ —	$ —	$ (151)	$ —	$ —
Total	$ 151	$ —	$ —	$ —	$ —	$ (151)	$ —	$ —

Short-Term Income Fund
Bonds	$ 86	$ —	$ 31	$ —	$ —	$ —	$ 117	$ 31
Total	$ 86	$ —	$ 31	$ —	$ —	$ —	$ 117	$ 31

SmallCap Growth Fund II
Common Stock
Consumer, Non-cyclical	$ 36	$ 8	$ (9)	$ (35)	$ —	$ —	$ —	$ —
Energy	1	—	1	(2)	—	—	—	—
Total	$ 37	$ 8	$ (8)	$ (37)	$ —	$ —	$ —	$ —

Tax-Exempt Bond Fund
Municipal Bonds	$ 4,210	$ —	$ 67	$ (100)	$ 1,791	$ (4,210)	$ 1,758	$ 66
Total	$ 4,210	$ —	$ 67	$ (100)	$ 1,791	$ (4,210)	$ 1,758	$ 66

*Securities are transferred into and out of Level 3 for a variety of reasons including, but not limited to:

1. Securities where trading has been halted - transfer into Level 3 versus securities where trading resumes - transfer out of Level 3 2. Securities that have certain restrictions on trading - transfer into Level 3 versus securities where trading restrictions have expired -transfer out of Level 3 3. Instances where a security is illiquid - transfer into Level 3 versus securities that are no longer illiquid - transfer out of Level 3. 4. Instances in which a security is not priced by pricing services, transferred into Level 3 versus once security is priced by pricing service, transfer out of Level 3.

Management Services. The Funds have agreed to pay investment advisory and management fees to the Manager (wholly owned by Principal Financial Services, Inc.) computed at an annual percentage rate of each of the Funds’ average daily net assets. A portion of the management fee is paid by Principal Management Corporation to the sub-advisor of each of the Funds. The annual rates used in this calculation for the Funds are as follows:


		Net Assets of Funds (in millions)							Net Assets of Funds (in millions)
		First Next		Next	Over				First	Next	Next	Over $1.5
		$500	$500	$500	$1.5				$500	$500	$500	billion
billion

Global Real Estate Securities Fund		.90%	.88%	.86%	.85%	MidCap Value Fund I			1.00%	.98%	.96%	.95%
Inflation Protection Fund		.40	.38	.36	.35	Real Estate Securities Fund			.85	.83	.81	.80
International Emerging Markets Fund		1.20	1.18	1.16	1.15	SmallCap Blend Fund			.75	.73	.71	.70
International Growth Fund		1.00	.98	.96	.95	SmallCap Growth Fund			.75	.73	.71	.70
LargeCap Blend Fund II		.75	.73	.71	.70	SmallCap Growth Fund II			1.00	.98	.96	.95
LargeCap Value Fund		.45	.43	.41	.40	SmallCap Value Fund			.75	.73	.71	.70
MidCap Blend Fund		.65	.63	.61	.60	Tax-Exempt Bond Fund			.50	.48	.46	.45
MidCap Growth Fund III		1.00	.96	.94	.92

Net Assets of Funds (in millions)

		First	Next	Next	Over $1.5 Next $1			Over $3
		$500	$500	$500	billion		billion	billion
Disciplined LargeCap Blend Fund		.60%	.58%	.56%	.55%		.54%	.53%
LargeCap Growth Fund I		.66	.64	.62	.61		.60	.59
LargeCap Growth Fund II		.95	.93	.91	.90		.89	.88

			Net Assets of Fund								Net Assets of Funds
			First $1	Over $1						First $2		Over $2
			billion	billion						billion		billion
California Municipal Fund			.50%		.45%	Income Fund					.50%	.45%
						Government & High Quality Bond Fund					.50	.45


		Net Assets of Fund (in millions)							Net Assets of Fund (in millions)
		First	Next	Over					First		Next	Over $1
		$200	$300	$500					$500		$500	billion
Short-Term Income Fund		.50%	.45%	.40% Principal Capital Appreciation Fund .625%							.50%	.375%


	Net Assets of Fund (in millions)
	First		Over
	$250		$250
High Yield Fund	.625%		.50%

			Net Assets of Funds (in millions)
		First	Next	Next	Next	Next $1 Over $3
		$500	$500	$500	$500	billion billion
Bond & Mortgage Securities Fund		.55%	.53%	.51%	.50%	.48%		.45%
Diversified International Fund		.90	.88	.86	.85	.83		.80
Global Diversified Income Fund		.80	.78	.76	.75	.73		.70
LargeCap Value Fund III		.80	.78	.76	.75	.73		.70
Money Market Fund		.40	.39	.38	.37	.36		.35

			Net Assets of Fund (in millions)
		First	Next	Next $1 Next $1		Over $3
		$500	$500	billion	billion	billion
LargeCap Growth Fund		.68%	.65%	.62%	.58%	.55%

		Net Assets of Fund (in millions)
		First	Next	Over
		$250	$250	$500
Equity Income Fund		.60%	.55%	.50%

In addition to the management fee, R-1, R-2, R-3, R-4, and R-5 classes of shares of the Funds pay the Manager a service fee and an administrative service fee computed at an annual percentage rate of each class’s average daily net assets. The annual rates for the service fee are .25%, .25%, .25%, .25%, and .25% and the annual rates for the administrative service fee are .28%, .20%, .07%, .03%, and .01% for R-1, R-2, R-3, R-4, and R-5, respectively. Prior to May 1, 2010 the rates for the service fee were .25%, .25%, .17%, .15%, and .15% and the annual rates for the administrative service fee were .28%, .20%, .15%, .13%, and .11% for R-1, R-2, R-3, R-4, and R-5 respectively. Class A, Class C, Class J, Class P, and Institutional shares of the Funds reimburse Principal Shareholder Services, Inc. (the “Transfer Agent”) (wholly owned by the Manager) for transfer agent services.

The Manager has contractually agreed to limit the expenses (excluding interest the Funds incur in connection with investments they make) for certain classes of shares of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each class of shares on an annualized basis during the reporting period. The operating expense limits are as follows:


		Period from November 1, 2009 through October 31, 2010
	Class A	Class B	Class C	Class J	Institutional	Expiration
Bond & Mortgage Securities Fund	.94%	1.60%	1.75%	N/A	N/A	February 28, 2011
Disciplined LargeCap Blend Fund	N/A	N/A	1.82	N/A	N/A	February 28, 2011
Diversified International Fund	N/A	N/A	2.08	N/A	N/A	February 28, 2011
Global Diversified Income Fund	1.25	N/A	2.00	N/A	.90%	February 28, 2011
Global Real Estate Securities Fund	1.45	N/A	2.20	N/A	.95	February 28, 2011
Government & High Quality Bond Fund	.88	1.65	1.63	1.00%	N/A	February 28, 2011
Income Fund	.90**	1.64**	1.65**	1.10	N/A	February 28, 2011
Inflation Protection Fund	.90	N/A	1.65	1.15	N/A	February 28, 2011
International Emerging Markets Fund	N/A	N/A	2.80	N/A	N/A	February 28, 2011
International Growth Fund	1.54^	N/A	2.35	N/A	N/A	February 28, 2011
LargeCap Blend Fund II	1.42^^	2.36^^	2.182	N/A	N/A	November 12, 2010
LargeCap Growth Fund I	1.43^^	2.71^^	2.09^^^	N/A	N/A	November 12, 2010
LargeCap Growth Fund II	1.686	N/A	2.436	N/A	N/A	February 28, 2011
LargeCap S&P 500 Index Fund	.70^!!	N/A	1.30	N/A	N/A	February 28, 2011
LargeCap Value Fund	N/A	N/A	1.70	N/A	N/A	February 28, 2011
LargeCap Value Fund III	1.138	1.888	1.888	N/A	N/A	February 28, 2011
MidCap Blend Fund	N/A	N/A	1.95	N/A	N/A	February 28, 2011
MidCap Growth Fund III	1.728*	2.478	2.478	N/A	N/A	February 28, 2011
MidCap Value Fund I	1.33	2.08	2.08	1.73	N/A	February 28, 2011
Money Market Fund	N/A	N/A	1.79	N/A	N/A	February 28, 2011
Real Estate Securities Fund	1.45***	2.20***	2.20***	N/A	N/A	February 28, 2011
Short-Term Income Fund	.95	N/A	1.67	1.07^#	N/A	February 28, 2011
SmallCap Blend Fund	1.63^##	2.38^##	2.20	N/A	N/A	February 28, 2011
SmallCap Growth Fund	1.58^##	2.33^###	2.21	N/A	N/A	February 28, 2011
SmallCap Growth Fund II	1.43	2.18	2.18	1.58	N/A	February 28, 2011
SmallCap Value Fund	1.35	2.29	2.08	N/A	N/A	February 28, 2011
Tax-Exempt Bond Fund	.85^!	1.60^!	1.60^!	N/A	N/A	February 28, 2011

* The limit is voluntary and may be terminated at any time. ** Expired February 28, 2010.

*** Prior to March 1, 2010 the expense limit was 1.28%, 2.08% and 1.98% for Class A, Class B and Class C shares, respectively. ^Prior to October 1, 2010 the expense limit was 1.60% for Class A. Expiration is February 29, 2012.

^#Period from July 12, 2010 through October 31, 2010. Expiration is February 29, 2012.

^##Period from October 1, 2010 through October 31, 2010. Expiration is February 29, 2012.

^###Prior to October 1, 2010 the expense limit was 2.57% for Class B shares. Expiration is February 29, 2012.

^!Prior to March 1, 2010 the expense limit was .80%, 1.65% and 1.65% for Class A, Class B and Class C shares, respectively.

^!!Period from July 26, 2010 through October 31, 2010. Expiration is February 29, 2012.

In addition, the Manager has contractually agreed to limit certain of the Funds’ management and investment advisory fees through the period ended February 28, 2011. The expense limit will reduce the Fund’s management and investment advisory fees by the following amounts:

For the period March 1, 2010 through June 30, 2010, the Manager voluntarily agreed to limit the management and investment advisory fees for LargeCap Growth Fund I. The expense limit reduced the management and investment advisory fees by .09% (expressed as a percentage of average net assets on an annualized basis).

The Manager has also voluntarily agreed to limit Money Market Fund’s expenses to the extent necessary to maintain a 0% yield. The voluntary expense limit may be terminated at any time.

In addition, the Manager has contractually agreed to limit Class P expenses other than management and investment advisory fees and distribution fees and, if necessary, pay expenses normally payable by the Fund, excluding interest expense, through the period ending February 28, 2012. The expense limit will maintain these expenses (expressed as a percent of average net assets on an annualized basis) not to exceed .20% for Diversified International Fund, Equity Income Fund, Global Diversified Income Fund, Government & High Quality Bond Fund, High Yield Fund, Income Fund, International Emerging Markets Fund, LargeCap Growth Fund, MidCap Blend Fund, Principal Capital Appreciation Fund, Real Estate Securities Fund and Short Term Income Fund, respectively.

In addition, the Manager has voluntarily agreed to limit the expenses (excluding interest the Funds incur in connection with investments they make and acquired fund fees and expenses) attributable to the Institutional class of shares of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets on an annualized basis during the reporting period. The expense limit may be terminated at any time. The operating expense limits are as follows:

The Manager has contractually agreed to pay a portion of the expenses directly attributable to Institutional Class shares of Bond & Mortgage Securities Fund through the period ending February 28, 2011.

The Manager has contractually agreed to reduce MidCap Blend Fund’s expenses attributable to Class A shares by 0.01% and Class B Shares by 0.05% (expressed as a percentage of average net assets on a daily basis) through the period ending February 28, 2011.

In addition, the Manager has voluntarily agreed to limit expenses attributable to Institutional Class shares of Money Market Fund. The expense limit will maintain a total level of operating expenses (expressed as a percent of net assets on an annualized basis) not to exceed .43%. The expense limit may be terminated at any time.

Distribution Fees. The Class A, Class B, Class C, Class J, R-1, R-2, R-3 and R-4 shares of the Funds bear distribution fees. The fee is computed at an annual rate of the average daily net assets attributable to each class of each of the Funds. Distribution fees are paid to Principal Funds Distributor, Inc., the principal underwriter, a portion may be paid to other selling dealers for providing certain services. The annual rates are .25%, 1.00%, 1.00%, .45%, .35%, .30%, .25% and .10% for, Class A, Class B, Class C, Class J, R-1, R-2, R-3 and R-4 classes of shares, respectively, except the following classes of shares:

Principal Funds Distributor, Inc. has voluntarily agreed to limit the distribution fees attributable to Class J shares. The limit will maintain the level of distribution fees not to exceed .35% for Class J shares. Prior to July 1, 2010, the limit was .40%. The expense limit may be terminated at any time.

Principal Funds Distributor, Inc. has voluntarily agreed to limit Money Market Fund’s distribution fees attributable to Class B, Class C, R-1, R-2, R-3 and R-4 classes of shares of Money Market Fund. The limit will maintain the level of distribution fees not to exceed .75% for Class B and 0% for Class C, R-1, R-2, R-3 and R-4 shares, respectively. The expense limit may be terminated at any time.

Effective May 1, 2010, Principal Funds Distributor, Inc. has voluntarily agreed to limit the distribution fees attributable to Class A shares of Government & High Quality Bond Fund. Prior to May 1, 2010 the limit was contractual. The limit will maintain the level of distribution fees not to exceed .15% for Class A shares. The limit may be terminated at any time.

Sales Charges. Principal Funds Distributor, Inc., as principal underwriter, receives proceeds of any CDSC on certain Class A, Class B, Class C, and Class J share redemptions. The charge for Class A shares is 1.00% (.25% for the LargeCap S&P 500 Index Fund) of the lesser of current market value or the cost of shares redeemed within 12 months of purchase that were originally sold without a sales charge. The charge for Class B shares is based on declining rates which begin at 5.00% of the lesser of current market value or the cost of shares being redeemed within 24 months of purchase. After 24 months, the rate declines and is eliminated after 5 years. The charge for Class C shares is 1.00% of the lesser of current market value or the cost of shares redeemed within 12 months of purchase. The charge for Class J shares is 1.00% of the lesser of current market value or the cost of shares redeemed within 18 months of purchase. Principal Funds Distributor, Inc. also retains sales charges on sales of Class A shares based on declining rates which begin at 1.50% for LargeCap S&P 500 Index Fund, 2.25% for Income Fund, Government & High Quality Bond Fund, and Short Term Income Fund, 3.75% for Bond & Mortgage Securities Fund, California Municipal Fund, Global Diversified Income Fund, High Yield Fund, Inflation Protection Fund, and Tax-Exempt Bond Fund, and 5.50% for all other Funds (except Money Market Fund which does not carry a sales charge). The aggregate amounts of these charges retained by Principal Funds Distributor, Inc. for the year ended October 31, 2010, were as follows (in thousands):

Class B shares automatically convert into Class A shares, based on relative net asset value (without a sales charge), eight years after purchase.

At October 31, 2010, Principal Life Insurance Company (an affiliate of the Manager), the Manager, Principal Funds Distributor, Inc., Princor Financial Services Corporation, Collective Investment Trusts sponsored by Principal Trust Company, benefit plans and separate accounts sponsored on behalf of Principal Life Insurance Company, and other affiliated entities owned shares of the Funds as follows (amounts in thousands):


	Class A	Class J	Class P	Institutional	R - 1	R - 2	R - 3	R - 4	R - 5
Bond & Mortgage Securities Fund	437	—	—	15,987	—	—	—	—	—
Disciplined LargeCap Blend Fund	—	—	—	3,408	—	—	—	—	—
Diversified International Fund	—	—	1	15,190	—	—	—	—	—
Equity Income Fund	—	—	1	17,086	1	1	1	1	1
Global Diversified Income Fund	—	—	1	—	—	—	—	—	—
Global Real Estate Securities Fund	—	—	—	1	—	—	—	—	—
Government & High Quality Bond Fund	125	—	1	—	—	—	—	—	—
High Yield Fund	—	—	1	—	—	—	—	—	—
Income Fund	—	—	1	2,783	1	1	1	1	1
Inflation Protection Fund	—	—	—	44,722	—	—	—	—	—
International Emerging Markets Fund	—	—	—	1,065	—	—	—	—	—
International Growth Fund	—	—	—	40,305	—	—	—	—	—
LargeCap Blend Fund II	—	—	—	51,346	—	—	—	—	—
LargeCap Growth Fund	—	—	1	9,556	—	—	—	—	—
LargeCap Growth Fund I	—	—	—	95,326	—	—	—	—	—
LargeCap Growth Fund II	—	—	—	88,056	—	—	—	—	—
LargeCap Value Fund	—	—	—	7,489	—	—	—	—	—
LargeCap Value Fund III	—	—	—	77,798	—	—	—	—	—
MidCap Blend Fund	—	—	1	36	—	—	—	—	—
MidCap Growth Fund III	—	—	—	90,216	—	—	—	—	—
MidCap Value Fund I	—	—	—	73,650	—	—	—	—	—
Money Market Fund	13,433	—	—	21,500	—	—	—	—	—
Principal Capital Appreciation Fund	—	—	—	1,422	—	—	—	—	—
Real Estate Securities Fund	—	—	1	18,713	—	—	—	—	—
Short-Term Income Fund	1,030	1	1	648	1	1	1	1	1
SmallCap Blend Fund	—	—	—	2,672	—	—	—	—	—
SmallCap Growth Fund II	—	—	—	27,594	—	—	—	—	—
SmallCap Value Fund	—	—	—	4	—	—	—	—	—

Affiliated Brokerage Commissions. With respect to Bond & Mortgage Securities Fund and Global Diversified Income Fund, $49,000 and $85,000 of brokerage commissions were paid, respectively, to Spectrum Asset Management, Inc., a member of the Principal Financial Group. The other Funds did not pay brokerage commissions to any member of the Principal Financial Group during the year ended October 31, 2010. Brokerage commissions were paid to affiliates of sub-advisors as follows (amounts in thousands):

For the year ended October 31, 2010, the following table reflects the conversion of Class B shares into Class A shares. The amounts are also shown in the statement of changes in net assets as shares sold and dollars sold for Class A and shares redeemed and dollars redeemed for Class B (amounts in thousands).

For the year ended October 31, 2010, the cost of investment securities purchased and proceeds from investment securities sold (not including short-term investments and U.S. government securities) by the Funds were as follows (amounts shown in thousands):


	Purchases	Sales		Purchases	Sales
Bond & Mortgage Securities Fund	$ 6,920,650	$ 7,276,821	LargeCap Growth Fund II	$ 1,013,423	$ 1,415,137
California Municipal Fund	94,657	147,714	LargeCap S&P 500 Index Fund	329,727	112,544
Disciplined LargeCap Blend Fund	2,082,369	3,754,815	LargeCap Value Fund	2,213,707	1,932,235
Diversified International Fund	1,776,940	1,638,341	LargeCap Value Fund III	1,384,407	1,744,207
Equity Income Fund	880,975	480,194	MidCap Blend Fund	303,127	409,443
Global Diversified Income Fund	1,272,727	332,337	MidCap Growth Fund III	1,207,792	1,307,343
Global Real Estate Securities Fund	29,473	22,169	MidCap Value Fund I	1,073,851	1,062,309
Government & High Quality Bond Fund	909,996	720,750	Principal Capital Appreciation Fund	210,866	141,940
High Yield Fund	2,670,934	2,231,660	Real Estate Securities Fund	850,774	1,087,877
Income Fund	284,888	120,506	Short-Term Income Fund	730,742	313,627
Inflation Protection Fund	–	25,235	SmallCap Blend Fund	125,302	138,878
International Emerging Markets Fund	1,353,750	1,378,601	SmallCap Growth Fund	207,171	233,483
International Growth Fund	1,972,344	2,013,903	SmallCap Growth Fund II	253,587	414,930
LargeCap Blend Fund II	260,875	324,761	SmallCap Value Fund	286,129	472,431
LargeCap Growth Fund	1,440,610	1,740,967	Tax-Exempt Bond Fund	79,949	86,513
LargeCap Growth Fund I	1,823,318	1,096,384

For the year ended October 31, 2010, the cost of U.S. government securities purchased and proceeds from U.S. government securities sold (not including short-term investments) by the Funds were as follows (amounts shown in thousands):

Distributions to Shareholders. The federal income tax character of distributions paid for the years ended October 31, 2010 and October 31, 2009 were as follows (amounts in thousands):


					Long-Term
	Ordinary Income		Tax-Exempt Income*		Capital Gain^		Return of Capital
	2010	2009	2010	2009	2010	2009	2010	2009
Bond & Mortgage Securities Fund	$ 73,060	$ 103,880	$ – $	– $	– $	–	$ – $	–
California Municipal Fund	8	–	13,980	15,533	–	–	–	–
Disciplined LargeCap Blend Fund	32,161	38,282	–	–	–	–	–	–
Diversified International Fund	22,219	31,605	–	–	–	–	–	–
Equity Income Fund	59,201	61,628	–	–	–	–	–	–
Global Diversified Income Fund	33,024	3,752	–	–	45	–	–	–
Global Real Estate Securities Fund	506	252	–	–	–	–	–	–
Government & High Quality Bond Fund	63,812	55,422	–	–	–	–	–	–
High Yield Fund	252,806	206,517	–	–	–	–	–	–
Income Fund	68,383	60,851	–	–	–	–	–	–
Inflation Protection Fund	10,381	689	–	–	–	–	–	–
International Emerging Markets Fund	9,058	8,139	–	–	–	–	–	–
International Growth Fund	21,397	31,255	–	–	–	–	–	–
LargeCap Blend Fund II	8,377	9,429	–	–	–	–	–	–
LargeCap Growth Fund	316	1,219	–	–	–	–	–	1,510
LargeCap Growth Fund I	1,115	185	–	–	–	–	–	–
LargeCap Growth Fund II	6,366	8,170	–	–	–	–	–	–
LargeCap S&P 500 Index Fund	14,232	16,807	–	–	–	–	–	–
LargeCap Value Fund	15,093	16,197	–	–	–	–	–	–
LargeCap Value Fund III	31,437	46,086	–	–	–	–	–	–
MidCap Blend Fund	5,794	4	–	–	–	32,304	–	–
MidCap Value Fund I	11,333	9,947	–	–	–	–	–	–
Money Market Fund	–	12,272	–	–	–	–	–	–
Principal Capital Appreciation Fund	5,788	6,896	–	–	6,037	44,651	–	–
Real Estate Securities Fund	34,411	35,754	–	–	–	–	–	–
Short-Term Income Fund	18,769	12,041	–	–	–	–	–	–
SmallCap Blend Fund	147	503	–	–	–	–	–	–
SmallCap Growth Fund	–	–	–	–	–	–	–	18
SmallCap Value Fund	3,551	2,883	–	–	–	–	–	–
Tax-Exempt Bond Fund	6	55	12,044	12,598	–	–	–	–
*The funds designate these distributions as exempt interest per IRC code Sec. 852(b)(5).

^ The funds designate these distributions as long-term capital gain dividends per IRC code Sec. 852(b)(3)(C).

For U.S. federal income tax purposes, short-term capital gain distributions are considered ordinary income distributions.

Distributable Earnings. As of October 31, 2010, the components of distributable earnings on a federal tax basis were as follows (amounts in thousands):


	Undistributed	Undistributed	Undistributed
	Ordinary Income	Tax-Exempt Income	Long-Term Capital Gains
Bond & Mortgage Securities Fund	$8,268	$ –	$ –
California Municipal Fund	–	212	–
Disciplined LargeCap Blend Fund	12,026	–	–
Diversified International Fund	21,606	–	–
Equity Income Fund	6,302	–	–
Global Diversified Income Fund	10,194	–	3,726
Global Real Estate Securities Fund	595	–	133
Government & High Quality Bond Fund	1,516	–	–
High Yield Fund	22,012	–	48,460
Income Fund	1,773	–	–
Inflation Protection Fund	34	–	–
International Emerging Markets Fund	6,423	–	–
International Growth Fund	16,448	–	–
LargeCap Blend Fund II	5,508	–	–
LargeCap Growth Fund I	2,294	–	–
LargeCap Growth Fund II	6,604	–	–
LargeCap S&P 500 Index Fund	19,332	–	–
LargeCap Value Fund	11,301	–	–
LargeCap Value Fund III	17,242	–	–
MidCap Blend Fund	14,991	–	48,472
MidCap Value Fund I	12,404	–	–
Principal Capital Appreciation Fund	15,798	–	36,544
Real Estate Securities Fund	606	–	–
Short-Term Income Fund	665	–	–
SmallCap Value Fund	1,940	–	–
Tax-Exempt Bond Fund	–	223	–


* Distributable earnings reflect certain limitations imposed by Sections 381-384 of the Internal Revenue Code.

Capital Loss Carryforwards. Capital loss carryforwards are losses that can be used to offset future capital gains of the Funds. At October 31, 2010, the Funds had approximate net capital loss carryforwards as follows (amounts in thousands):


			Net Capital Loss Carryforward Expiring In:
											Annual
	2011	2012	2013	2014	2015	2016	2017	2018	Total	Limitations*
Bond & Mortgage Securities Fund	$ – $	–	$ – $	– $	–	$ 34,778	$ 135,017 $	–	$ 169,795 $		–
California Municipal Fund	–	–	–	–	1,415	10,723	21,987	3,189	37,314		–
Disciplined LargeCap Blend Fund	–	–	–	–	–	148,742	378,310	–	527,052		–
Diversified International Fund	146	–	–	–	–	162,332	469,054	–	631,532		146
Equity Income Fund	–	–	–	–	–	249,550	407,957	–	657,507		–
Global Real Estate Securities Fund	–	–	–	–	–	296	1,303	118	1,717		200
Government & High Quality Bond Fund	4,380	9,350	9,068	9,483	3,147	55,498	2,385	–	93,311		17,781
Income Fund	1,212	892	–	1,046	2,036	–	18,489	8,587	32,262		–
Inflation Protection Fund	–	–	–	–	–	4,032	78,475	–	82,507		–
International Emerging Markets Fund	–	–	–	–	–	–	196,098	–	196,098		–
International Growth Fund	–	–	–	–	–	268,078	552,396	–	820,474		–
LargeCap Blend Fund II	–	–	–	–	–	11,069	111,794	–	122,863		–
LargeCap Growth Fund	14,931	–	–	–	–	–	473,570	–	488,501		–
LargeCap Growth Fund I	–	–	–	–	–	–	141,427	–	141,427		–
LargeCap Growth Fund II	–	–	–	–	–	–	245,487	–	245,487		62,861
LargeCap S&P 500 Index Fund	–	–	–	–	73,529	152,622	18,331	–	244,482		86,533
LargeCap Value Fund	–	–	–	–	–	92,149	94,084	–	186,233		–
LargeCap Value Fund III	–	–	–	–	–	–	574,543	–	574,543		–
MidCap Growth Fund III	–	–	–	–	50,339	85,133	164,259	–	299,731		–
MidCap Value Fund I	–	–	–	–	–	178,394	134,241	–	312,635		–
Money Market Fund	–	–	–	34	3,000	35,617	2,969	–	41,620		5,612
Real Estate Securities Fund	–	–	–	–	–	73,007	308,302	–	381,309		–
Short-Term Income Fund	684	241	–	1,190	3,788	21,544	15,902	390	43,739		5,314
SmallCap Blend Fund	–	–	–	–	–	–	68,176	–	68,176		–
SmallCap Growth Fund	–	–	–	–	–	–	81,862	–	81,862		–
SmallCap Growth Fund II	–	–	–	–	–	–	77,843	–	77,843		–
SmallCap Value Fund	–	–	–	–	–	35,250	124,487	–	159,737		–
Tax-Exempt Bond Fund	–	–	–	–	1,229	3,675	8,745	3,433	17,082		–

*In accordance with Sections 381-384 of the Internal Revenue Code, a portion of certain Fund’s losses have been subjected to an annual limitation.

As of October 31, 2010, the following fund had expired capital loss carryforwards or utilized capital loss carryforwards as follows (amounts in thousands):


	Expired	Utilized		Expired	Utilized
Bond & Mortgage Securities Fund	$ —	$ 29,235	LargeCap S&P 500 Index Fund	$ —	$ 15,514
Disciplined LargeCap Blend Fund	—	156,612	LargeCap Value Fund	—	19,759
Diversified International Fund	—	72,910	LargeCap Value Fund III	—	125,359
Equity Income Fund	—	25,166	MidCap Blend Fund	—	17,810
Global Real Estate Securities Fund	—	177	MidCap Growth Fund III	—	128,684
Government & High Quality Bond Fund	—	5,424	MidCap Value Fund I	—	147,088
High Yield Fund	—	51,802	Money Market Fund	—	722
Inflation Protection Fund	—	9,525	Real Estate Securities Fund	—	109,044
International Emerging Markets Fund	—	194,415	Short-Term Income Fund	8,873	—
International Growth Fund	—	71,792	SmallCap Blend Fund	—	18,794
LargeCap Blend Fund II	—	18,274	SmallCap Growth Fund	—	27,223
LargeCap Growth Fund	2,166	163,249	SmallCap Growth Fund II	—	52,254
LargeCap Growth Fund I	—	165,995	SmallCap Value Fund	—	27,600
LargeCap Growth Fund II	—	163,068

Reclassification of Capital Accounts. The Funds may record reclassifications in their capital accounts. These reclassifications have no impact on the total net assets of the Funds. The reclassifications are a result of permanent differences between GAAP and tax accounting. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Funds’ distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. For the periods ended October 31, 2010, the Funds recorded reclassifications as follows (amounts in thousands):


	Accumulated	Accumulated Net
	Undistributed Net	Realized Gain on	Capital Shares and
	Investment Income	Investments	Paid in Capital
Bond & Mortgage Securities Fund	(28,532)	28,532	—
California Municipal Bond Fund	(176)	176	—
Diversified International Fund	552	(552)	—
Equity Income Fund	558	(62)	(496)
Global Diversified Income Fund	550	(543)	(7)
Global Real Estate Securities Fund	276	(273)	(3)
Government & High Quality Bond Fund	3,781	(3,781)	—
High Yield Fund	12,206	(10,506)	(1,700)
Income Fund	426	(428)	2
Inflation Protection Fund	(139)	139	—
International Emerging Markets Fund	(3,324)	3,324	—
International Growth Fund	695	(695)	—
LargeCap Growth Fund	3,236	2,166	(5,402)
LargeCap Growth Fund I	(1)	1	—
LargeCap Growth Fund II	234	(234)	—
LargeCap S&P 500 Index Fund	(11)	(241,115)	241,126
LargeCap Value Fund III	(10)	10	—
MidCap Blend Fund	(1)	2	(1)
MidCap Growth Fund III	2,803	(14)	(2,789)
MidCap Value Fund I	800	(800)	—
Money Market Fund	—	(41,461)	41,461
Real Estate Securities Fund	2	—	(2)
Short-Term Income Fund	(557)	(37,602)	38,159
SmallCap Blend Fund	299	78	(377)
SmallCap Growth Fund	1,386	—	(1,386)
SmallCap Growth Fund II	2,534	(1)	(2,533)
Tax-Exempt Bond Fund	(56)	56	—


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




COMMON STOCKS - 0.00%	Shares Held Value (000's)				Principal
Semiconductors - 0.00%					Amount
Tower Semiconductor Ltd - Warrants ^(a),(b),(c)	345,803 $		66	BONDS (continued)	(000's)	Value (000's)
				Automobile Asset Backed Securities (continued)
TOTAL COMMON STOCKS		$ 66		Hyundai Auto Receivables Trust
CONVERTIBLE PREFERRED STOCKS -				0.66%, 1/17/2012^(e)	$ 19	$ 19
0.05%	Shares Held Value (000's)			Volkswagen Auto Loan Enhanced Trust
Automobile Manufacturers - 0.05%				4.50%, 7/20/2012	641	646
Ford Motor Co Capital Trust II	20,000		994			$ 12,277
				Automobile Parts & Equipment - 0.12%
TOTAL CONVERTIBLE PREFERRED STOCKS		$ 994		Goodyear Tire & Rubber Co/The
	Principal			8.25%, 8/15/2020	385	410
	Amount			10.50%, 5/15/2016	1,680	1,924
BONDS - 61.49%	(000's)	Value (000's)				$ 2,334
Advertising - 0.06%				Banks - 8.45%
Interpublic Group of Cos Inc				Akbank TAS
10.00%, 7/15/2017	$ 995	$ 1,179		5.13%, 7/22/2015^(d)	155	157
				Ally Financial Inc
Aerospace & Defense - 0.42%				8.30%, 2/12/2015^(d)	1,875	2,044
BE Aerospace Inc				ANZ National International Ltd
6.88%, 10/1/2020	510		542	3.25%, 4/2/2012^(d)	460	477
Esterline Technologies Corp				Axis Bank Ltd
7.00%, 8/1/2020^(d)	290		308	4.75%, 5/2/2016^(d),(f)	390	390
GenCorp Inc				BAC Capital Trust XIII
9.50%, 8/15/2013	1,190		1,214	0.69%, 3/15/2043^(e)	3,640	2,298
L-3 Communications Corp				BAC Capital Trust XIV
4.75%, 7/15/2020	2,060		2,150	5.63%, 3/15/2043^(e)	250	177
Raytheon Co				Banco Bradesco SA/Cayman Islands
1.63%, 10/15/2015	1,220		1,215	5.90%, 1/16/2021^(d)	135	138
3.13%, 10/15/2020	2,510		2,463	Banco de Credito del Peru
Triumph Group Inc				5.38%, 9/16/2020^(d)	220	225
8.63%, 7/15/2018	460		506	Banco do Brasil SA
		$ 8,398		5.38%, 1/15/2021^(d)	260	262
Agriculture - 0.37%				Banco Internacional del Peru SAA
Altria Group Inc				5.75%, 10/7/2020^(d)	245	246
9.70%, 11/10/2018	825		1,138	Banco Votorantim SA
9.95%, 11/10/2038	1,440		2,075	7.38%, 1/21/2020^(d)	130	141
10.20%, 2/6/2039	2,050		3,014	BanColombia SA
MHP SA				6.13%, 7/26/2020	100	104
10.25%, 4/29/2015	235		243	Bangkok Bank PCL/Hong Kong
Southern States Cooperative Inc				4.80%, 10/18/2020^(d)	200	198
11.25%, 5/15/2015^(d)	815		864	Bank of America Corp
		$ 7,334		6.50%, 8/1/2016	3,300	3,680
				8.00%, 12/29/2049^(e)	1,955	1,973
Airlines - 0.16%
Continental Airlines 2007-1 Class C Pass Through				Bank of America NA
Trust				6.00%, 10/15/2036	2,000	1,911
7.34%, 4/19/2014	66		66	Barclays Bank PLC
Delta Air Lines 2002-1 Class G-1 Pass Through				5.14%, 10/14/2020	9,375	9,271
Trust				BB&T Corp
6.72%, 1/2/2023	801		820	3.95%, 4/29/2016	3,590	3,834
UAL 2000-1 Pass Through Certificate				BBVA Bancomer SA/Texas
8.03%, 7/1/2011	419		519	7.25%, 4/22/2020	242	269
UAL 2007-1 Pass Through Trust				BPCE SA
3.00%, 7/2/2014^(d),(e)	444		374	2.38%, 10/4/2013^(c),(d)	5,520	5,566
UAL 2009-1 Pass Through Trust				Capital One Financial Corp
10.40%, 11/1/2016	531		603	5.70%, 9/15/2011	1,570	1,632
UAL 2009-2A Pass Through Trust				CIT Group Inc
9.75%, 1/15/2017	676		778	7.00%, 5/1/2017	4,740	4,716
		$ 3,160		Citigroup Inc
				5.63%, 8/27/2012	5,150	5,447
Apparel - 0.08%				City National Corp/CA
Rafaella Apparel Group Inc
11.25%, 6/15/2011	2,105		1,558	5.25%, 9/15/2020	3,100	3,189
				Comerica Inc
				3.00%, 9/16/2015	1,565	1,597
Automobile Asset Backed Securities - 0.62%				Credit Suisse AG
Capital Auto Receivables Asset Trust
4.68%, 10/15/2012^(e)	4,098		4,179	5.40%, 1/14/2020	3,110	3,369
Daimler Chrysler Auto Trust				Discover Bank/Greenwood DE
4.71%, 9/10/2012	1,891		1,916	8.70%, 11/18/2019	6,385	7,727
Ford Credit Auto Owner Trust				First Union Institutional Capital I
5.30%, 6/15/2012	3,095		3,185	8.04%, 12/1/2026	1,000	1,029
5.60%, 10/15/2012	1,315		1,381	Goldman Sachs Group Inc/The
				0.60%, 2/6/2012^(e)	2,000	1,993
5.69%, 11/15/2012^(e)	905		951
				0.65%, 8/5/2011^(e)	3,500	3,501


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal				Principal
	Amount				Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)		(000's) Value (000's)
Banks (continued)			Biotechnology (continued)
Goldman Sachs Group Inc/The (continued)			Celgene Corp
6.45%, 5/1/2036	$ 1,280 $	1,300	3.95%, 10/15/2020	$ 2,015 $		2,010
Halyk Savings Bank of Kazakhstan JSC			5.70%, 10/15/2040		2,185	2,172
7.25%, 5/3/2017	305	314	Talecris Biotherapeutics Holdings Corp
HBOS Capital Funding LP			7.75%, 11/15/2016		930	1,042
6.07%, 6/29/2049^(d),(e)	1,225	1,103			$ 5,806
ICICI Bank Ltd/Bahrain			Building Materials - 0.23%
6.63%, 10/3/2012	340	364	CRH America Inc
ING Bank NV			8.13%, 7/15/2018		1,065	1,281
2.00%, 10/18/2013^(d)	3,970	3,972	Lafarge SA
JP Morgan Chase & Co			6.15%, 7/15/2011		1,597	1,652
3.40%, 6/24/2015	4,275	4,470	Masco Corp
4.40%, 7/22/2020	3,840	3,908	7.13%, 3/15/2020		1,560	1,638
Kazkommertsbank JSC					$ 4,571
8.50%, 4/16/2013	102	101	Chemicals - 0.20%
KeyBank NA			Dow Chemical Co/The
5.45%, 3/3/2016	1,010	1,100	5.90%, 2/15/2015		1,685	1,899
KeyCorp			Ineos Finance PLC
3.75%, 8/13/2015	3,505	3,609	9.00%, 5/15/2015^(d)		310	328
Lloyds TSB Bank PLC			Phibro Animal Health Corp
4.38%, 1/12/2015^(d)	4,620	4,844	9.25%, 7/1/2018^(d)		170	175
6.50%, 9/14/2020^(d)	7,730	8,064	Reichhold Industries Inc
Morgan Stanley			9.00%, 8/15/2014^(d)		1,375	1,231
3.45%, 11/2/2015^(f)	4,390	4,414	Rhodia SA
5.63%, 9/23/2019	7,265	7,629	6.88%, 9/15/2020^(d)		280	294
6.25%, 8/28/2017	4,215	4,649			$ 3,927
PNC Preferred Funding Trust III			Coal - 0.23%
8.70%, 2/28/2049^(d),(e)	3,400	3,573
			Arch Coal Inc
Rabobank Nederland NV			7.25%, 10/1/2020		175	192
11.00%, 12/29/2049^(d),(e)	1,560	2,083
			8.75%, 8/1/2016		840	943
Royal Bank of Scotland Group PLC			Bumi Investment Pte Ltd
4.70%, 7/3/2018	218	185	10.75%, 10/6/2017^(d)		560	584
5.00%, 10/1/2014	220	223	Consol Energy Inc
5.05%, 1/8/2015	1,215	1,225	8.00%, 4/1/2017^(d)		1,425	1,561
Royal Bank of Scotland PLC/The			Drummond Co Inc
3.40%, 8/23/2013	7,755	8,047	9.00%, 10/15/2014^(d)		830	888
5.63%, 8/24/2020	2,455	2,584	International Coal Group Inc
Santander US Debt SA Unipersonal			9.13%, 4/1/2018		370	403
2.99%, 10/7/2013^(d)	3,200	3,217
3.72%, 1/20/2015^(d)	13,100	13,315			$ 4,571
			Commercial Services - 0.14%
State Bank of India/London			Hertz Corp/The
4.50%, 10/23/2014	100	104	8.88%, 1/1/2014		1,025	1,053
SunTrust Preferred Capital I			Interactive Data Corp
5.85%, 12/31/2049^(e)	266	202
			10.25%, 8/1/2018^(d)		225	247
US Bank NA/Cincinnati OH			RSC Equipment Rental Inc/RSC Holdings III LLC
3.78%, 4/29/2020^(e)	7,750	8,110
			10.00%, 7/15/2017^(d)		950	1,062
VTB Bank Via VTB Capital SA			10.25%, 11/15/2019		325	354
6.25%, 6/30/2035	100	102			$ 2,716
6.88%, 5/29/2018	370	390
Wells Fargo & Co			Computers - 0.51%
7.98%, 3/29/2049^(e)	1,890	1,984	Affiliated Computer Services Inc
Wells Fargo Bank NA			5.20%, 6/1/2015		3,125	3,417
0.59%, 5/16/2016^(e)	4,615	4,256	Hewlett-Packard Co
			2.13%, 9/13/2015		4,125	4,181
	$ 167,002		Seagate HDD Cayman
Beverages - 0.85%			6.88%, 5/1/2020^(d)		2,505	2,555
Anheuser-Busch InBev Worldwide Inc					$ 10,153
4.13%, 1/15/2015	365	396
5.00%, 4/15/2020	4,265	4,729	Consumer Products - 0.15%
5.38%, 11/15/2014^(d)	4,385	4,954	Reynolds Group Issuer Inc / Reynolds Group Issuer
			LLC / Reynolds Group Issuer (Luxembourg) S.A.
Coca-Cola Enterprises Inc			7.13%, 4/15/2019^(d)		1,300	1,355
2.13%, 9/15/2015	4,120	4,155	9.00%, 4/15/2019^(d)		1,595	1,657
Dr Pepper Snapple Group Inc
2.35%, 12/21/2012	765	786			$ 3,012
PepsiCo Inc/NC			Credit Card Asset Backed Securities - 0.49%
4.88%, 11/1/2040	1,695	1,686	Cabela's Master Credit Card Trust
			4.31%, 12/16/2013^(d)		3,600	3,617
	$ 16,706
			Discover Card Master Trust
Biotechnology - 0.29%			5.65%, 3/16/2020		2,525	2,987
Amgen Inc
6.90%, 6/1/2038	470	582


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




		Principal			Principal
		Amount			Amount
BONDS (continued)		(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Credit Card Asset Backed Securities (continued)				Diversified Financial Services (continued)
GE Capital Credit Card Master Note Trust				Russian Agricultural Bank OJSC Via RSHB
0.44%, 3/15/2015^(e)	$ 3,160 $		3,123	Capital SA
		$ 9,727		6.30%, 5/15/2017	$ 265 $	279
Diversified Financial Services - 3.83%				RZD Capital Ltd
American Express Credit Corp				5.74%, 4/3/2017	245	259
2.75%, 9/15/2015		3,660	3,691	SquareTwo Financial Corp
American Honda Finance Corp				11.63%, 4/1/2017^(d)	890	818
2.50%, 9/21/2015^(d)		1,785	1,824	Textron Financial Corp
Ameriprise Financial Inc				0.45%, 2/25/2011^(e)	5,325	5,306
5.35%, 11/15/2010		2	2	TNK-BP Finance SA
Berau Capital Resources Pte Ltd				7.25%, 2/2/2020^(d)	1,090	1,194
12.50%, 7/8/2015^(d)		240	276	UCI Holdco Inc
Caisse Centrale Desjardins du Quebec				8.29%, 12/15/2013^(e)	760	759
1.70%, 9/16/2013^(d)		810	821	Ukreximbank Via Biz Finance PL
2.65%, 9/16/2015^(d)		4,650	4,724	8.38%, 4/27/2015	407	418
Cantor Fitzgerald LP				Vnesheconombank Via VEB Finance Ltd
6.38%, 6/26/2015^(d)		2,485	2,566	6.90%, 7/9/2020^(d)	167	179
Citigroup Capital XXI					$ 75,589
8.30%, 12/21/2057		1,130	1,182	Electric - 1.84%
Countrywide Financial Corp				Baltimore Gas & Electric Co
6.25%, 5/15/2016		1,595	1,701	5.90%, 10/1/2016	1,230	1,456
Credit Acceptance Corp				CMS Energy Corp
9.13%, 2/1/2017^(d)		505	530	6.55%, 7/17/2017	2,000	2,197
Crown Castle Towers LLC				Commonwealth Edison Co
3.21%, 8/15/2035^(d)		2,130	2,179	4.00%, 8/1/2020	875	912
E*Trade Financial Corp				Detroit Edison Co/The
7.38%, 9/15/2013		600	596	3.45%, 10/1/2020	2,540	2,558
12.50%, 11/30/2017		775	897	Dominion Resources Inc/VA
Financiera Independencia SAB de CV				2.25%, 9/1/2015	1,120	1,138
10.00%, 3/30/2015^(d)		204	214	Duke Energy Carolinas LLC
Ford Motor Credit Co LLC				5.30%, 2/15/2040	940	985
7.80%, 6/1/2012		1,360	1,466	Edison International
General Electric Capital Corp				3.75%, 9/15/2017	1,420	1,466
4.38%, 9/16/2020		8,020	8,090	Edison Mission Energy
6.15%, 8/7/2037		275	286	7.50%, 6/15/2013	485	473
6.75%, 3/15/2032		3,500	3,904	Elwood Energy LLC
Goldman Sachs Capital I				8.16%, 7/5/2026	1,159	1,090
6.35%, 2/15/2034		1,000	956	Energy Future Holdings Corp
Goldman Sachs Capital II				9.75%, 10/15/2019	751	759
5.79%, 12/29/2049^(e)		2,000	1,718	10.00%, 1/15/2020^(d)	185	194
HSBC Finance Capital Trust IX				Energy Future Intermediate Holding Co LLC
5.91%, 11/30/2035		650	621	9.75%, 10/15/2019	818	827
HSBC Finance Corp				Florida Power & Light Co
5.50%, 1/19/2016		1,000	1,111	5.65%, 2/1/2037	520	565
Icahn Enterprises LP / Icahn Enterprises Finance				Indiantown Cogeneration LP
Corp				9.26%, 12/15/2010	812	814
7.75%, 1/15/2016		1,210	1,243	Jersey Central Power & Light Co
ILFC E-Capital Trust II				5.63%, 5/1/2016	950	1,083
6.25%, 12/21/2065^(d),(e)		675	540	Majapahit Holding BV
International Lease Finance Corp				7.75%, 1/20/2020^(d)	370	453
5.65%, 6/1/2014		2,425	2,425	7.88%, 6/29/2037	100	125
8.63%, 9/15/2015^(d)		970	1,091	Mirant Mid Atlantic Pass Through Trust C
Janus Capital Group Inc				10.06%, 12/30/2028	2,762	3,092
6.95%, 6/15/2017^(e)		740	775	Nevada Power Co
KKR Group Finance Co				5.38%, 9/15/2040	475	473
6.38%, 9/29/2020^(d)		1,750	1,783	Nisource Finance Corp
LBG Capital No.1 PLC				5.25%, 9/15/2017	1,380	1,505
8.00%, 12/29/2049^(d),(e)		2,215	2,138	6.13%, 3/1/2022	835	950
Merrill Lynch & Co Inc				6.40%, 3/15/2018	540	623
0.52%, 6/5/2012^(e)		2,300	2,259	Northern States Power Co/MN
0.67%, 11/1/2011^(e)		4,650	4,635	5.35%, 11/1/2039	1,445	1,523
National Rural Utilities Cooperative Finance Corp				NRG Energy Inc
1.90%, 11/1/2015^(f)		2,600	2,605	7.38%, 1/15/2017	620	646
ORIX Corp				Oncor Electric Delivery Co LLC
4.71%, 4/27/2015		6,200	6,422	5.25%, 9/30/2040^(d)	950	924
Pinnacle Foods Finance LLC / Pinnacle Foods				PacifiCorp
Finance Corp				5.65%, 7/15/2018	1,100	1,306
9.25%, 4/1/2015^(d)		1,050	1,106	6.25%, 10/15/2037	225	263


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Electric (continued)			Forest Products & Paper - 0.12%
Public Service Electric & Gas Co			Bio Pappel SAB de CV
3.50%, 8/15/2020	$ 1,780 $	1,815	6.00%, 8/27/2016^(e)	$ 745 $	674
Reliant Energy Mid-Atlantic Power Holdings LLC			Domtar Corp
9.24%, 7/2/2017^(c)	2,149	2,267	10.75%, 6/1/2017	1,020	1,279
San Diego Gas & Electric Co			Sappi Papier Holding AG
5.35%, 5/15/2040	2,210	2,365	6.75%, 6/15/2012^(d)	135	137
Southern California Edison Co			Sino-Forest Corp
4.50%, 9/1/2040	480	447	6.25%, 10/21/2017^(d)	325	326
Virginia Electric & Power Co				$ 2,416
6.00%, 5/15/2037	950	1,075	Healthcare - Products - 0.45%
	$ 36,369		Angiotech Pharmaceuticals Inc
Electronics - 0.15%			4.05%, 12/1/2013^(e)	3,070	2,564
NXP BV / NXP Funding LLC			Boston Scientific Corp
9.50%, 10/15/2015	1,345	1,421	4.50%, 1/15/2015	4,070	4,276
9.75%, 8/1/2018^(d)	1,030	1,124	Covidien International Finance SA
Viasystems Inc			2.80%, 6/15/2015	1,940	2,018
12.00%, 1/15/2015^(d)	370	414		$ 8,858
	$ 2,959		Healthcare - Services - 0.67%
Energy - Alternate Sources - 0.07%			Alliance HealthCare Services Inc
Headwaters Inc			8.00%, 12/1/2016	1,320	1,251
11.38%, 11/1/2014	965	1,023	HCA Inc
Power Sector Assets & Liabilities Management			8.50%, 4/15/2019	3,320	3,735
Corp			Healthsouth Corp
7.25%, 5/27/2019	107	130	7.25%, 10/1/2018	525	547
7.39%, 12/2/2024^(d)	133	165	7.75%, 9/15/2022	530	560
	$ 1,318		IASIS Healthcare LLC / IASIS Capital Corp
Entertainment - 0.39%			8.75%, 6/15/2014	645	660
CCM Merger Inc			Multiplan Inc
8.00%, 8/1/2013^(d)	1,300	1,216	9.88%, 9/1/2018^(d)	1,150	1,231
Choctaw Resort Development Enterprise			Select Medical Corp
7.25%, 11/15/2019^(d)	858	605	7.63%, 2/1/2015	1,050	1,064
Lions Gate Entertainment Inc			Tenet Healthcare Corp
10.25%, 11/1/2016^(d)	770	793	9.25%, 2/1/2015^(e)	1,125	1,243
Peninsula Gaming LLC			UnitedHealth Group Inc
8.38%, 8/15/2015	1,600	1,696	5.70%, 10/15/2040	1,345	1,341
10.75%, 8/15/2017	760	809	US Oncology Inc
WMG Acquisition Corp			6.64%, 3/15/2012^(e)	369	360
7.38%, 4/15/2014	1,200	1,114	9.13%, 8/15/2017	755	840
9.50%, 6/15/2016	150	162	WellPoint Inc
WMG Holdings Corp			5.80%, 8/15/2040	500	501
9.50%, 12/15/2014	1,390	1,321		$ 13,333
	$ 7,716		Holding Companies - Diversified - 0.02%
Environmental Control - 0.36%			Navios Maritime Acquisition Corp/Navios
EnergySolutions Inc / EnergySolutions LLC			Acquisition Finance US Inc
10.75%, 8/15/2018^(d)	860	939	8.63%, 11/1/2017^(d)	420	424
Republic Services Inc
5.50%, 9/15/2019	3,575	4,048	Home Equity Asset Backed Securities - 0.86%
6.20%, 3/1/2040	1,080	1,178	Asset Backed Securities Corp Home Equity
Waste Management Inc			0.36%, 7/25/2036^(e)	706	688
5.00%, 3/15/2014	10	11	Bear Stearns Asset Backed Securities Trust
WCA Waste Corp			0.45%, 5/25/2037^(e)	3,200	2,130
9.25%, 6/15/2014^(a)	825	854	Countrywide Asset-Backed Certificates
	$ 7,030		5.39%, 4/25/2036	2,477	1,587
Finance - Mortgage Loan/Banker - 0.00%			5.51%, 8/25/2036	2,305	1,998
Fannie Mae			First NLC Trust
6.00%, 5/15/2011	75	77	0.56%, 9/25/2035^(e)	722	715
			0.76%, 5/25/2035^(e)	455	269
Food - 0.35%			GSAA Trust
JBS Finance II Ltd			0.40%, 4/25/2047^(a),(e)	8,765	659
8.25%, 1/29/2018^(d)	300	317	JP Morgan Mortgage Acquisition Corp
Kraft Foods Inc			0.41%, 8/25/2036^(e)	1,850	1,434
5.38%, 2/10/2020	3,280	3,675	Morgan Stanley ABS Capital I
6.50%, 2/9/2040	630	722	1.13%, 12/25/2034^(e)	367	98
7.00%, 8/11/2037	900	1,082	New Century Home Equity Loan Trust
Michael Foods Inc			0.55%, 3/25/2035^(e)	85	79
9.75%, 7/15/2018^(d)	1,000	1,090	Option One Mortgage Loan Trust
			0.71%, 3/25/2037^(a),(e)	4,325	210
	$ 6,886		1.26%, 2/25/2035^(a),(e)	153	38


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




		Principal			Principal
		Amount			Amount
BONDS (continued)		(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Home Equity Asset Backed Securities (continued)				Lodging - 0.15%
Residential Asset Securities Corp				Harrah's Operating Co Inc
0.41%, 9/25/2036^(e)	$ 7,900 $		6,623	10.00%, 12/15/2018	$ 486 $	421
Saxon Asset Securities Trust				11.25%, 6/1/2017	130	144
1.96%, 3/25/2035^(e)		356	154	MGM Resorts International
Specialty Underwriting & Residential Finance				13.00%, 11/15/2013	745	886
1.03%, 2/25/2035^(e)		375	324	Wyndham Worldwide Corp
		$ 17,006		5.75%, 2/1/2018	395	410
Insurance - 1.77%				7.38%, 3/1/2020	210	233
Aflac Inc				9.88%, 5/1/2014	725	857
3.45%, 8/15/2015		1,725	1,803		$ 2,951
6.45%, 8/15/2040		2,000	2,039	Machinery - Diversified - 0.02%
AON Corp				Manitowoc Co Inc/The
6.25%, 9/30/2040		1,445	1,455	8.50%, 11/1/2020	370	386
CNA Financial Corp
6.00%, 8/15/2011		1,875	1,939	Media - 2.76%
Crum & Forster Holdings Corp				CBS Corp
7.75%, 5/1/2017		1,295	1,361	4.30%, 2/15/2021	1,480	1,467
Endurance Specialty Holdings Ltd				5.75%, 4/15/2020	3,060	3,391
7.00%, 7/15/2034		740	727	5.90%, 10/15/2040	335	324
Genworth Financial Inc				7.88%, 7/30/2030	3,160	3,729
6.15%, 11/15/2066^(e)		2,650	2,107	8.88%, 5/15/2019	1,840	2,384
ING Groep NV				Comcast Corp
5.78%, 12/8/2049		1,565	1,444	6.45%, 3/15/2037	845	929
Ironshore Holdings US Inc				6.50%, 11/15/2035	2,425	2,655
8.50%, 5/15/2020^(d)		1,450	1,509	COX Communications Inc
Liberty Mutual Group Inc				5.45%, 12/15/2014	1,095	1,241
7.00%, 3/15/2037^(d),(e)		875	819	DIRECTV Holdings LLC
10.75%, 6/15/2058^(d),(e)		1,685	2,089	3.55%, 3/15/2015	925	971
Lincoln National Corp				DirecTV Holdings LLC / DirecTV Financing Co
5.65%, 8/27/2012		865	924	Inc
7.00%, 5/17/2066^(e)		5,125	4,997	5.88%, 10/1/2019	6,340	7,221
Mutual of Omaha Insurance Co				7.63%, 5/15/2016	2,505	2,806
6.95%, 10/15/2040^(d)		1,400	1,366	Discovery Communications LLC
Travelers Cos Inc/The				3.70%, 6/1/2015	1,900	2,032
5.35%, 11/1/2040^(f)		3,840	3,869	6.35%, 6/1/2040	850	931
6.25%, 3/15/2067^(e)		3,030	3,151	DISH DBS Corp
WR Berkley Corp				7.75%, 5/31/2015	1,160	1,263
6.25%, 2/15/2037		1,820	1,719	7.88%, 9/1/2019	725	795
XL Group PLC				Globo Comunicacao e Participacoes SA
6.50%, 12/31/2049^(e)		1,965	1,759	6.25%, 12/31/2049^(d),(e)	255	263
		$ 35,077		Kabel Deutschland GmbH
Internet - 0.27%				10.63%, 7/1/2014	2,085	2,176
Open Solutions Inc				NBC Universal Inc
9.75%, 2/1/2015^(d)		2,290	1,663	2.10%, 4/1/2014^(d)	1,095	1,108
UPC Holding BV				2.88%, 4/1/2016^(d)	5,360	5,426
9.88%, 4/15/2018^(d)		1,775	1,939	4.38%, 4/1/2021^(d)	2,700	2,758
Zayo Group LLC/Zayo Capital Inc				5.95%, 4/1/2041^(d)	970	991
10.25%, 3/15/2017^(d)		1,580	1,703	News America Inc
		$ 5,305		6.20%, 12/15/2034	3,250	3,439
Iron & Steel - 0.12%				Nielsen Finance LLC / Nielsen Finance Co
ArcelorMittal				10.00%, 8/1/2014	1,015	1,067
3.75%, 8/5/2015		1,145	1,179	Rainbow National Services LLC
China Oriental Group Co Ltd				10.38%, 9/1/2014^(d)	1,590	1,656
8.00%, 8/18/2015^(d)		395	416	Time Warner Inc
CSN Resources SA				3.15%, 7/15/2015	1,715	1,795
6.50%, 7/21/2020^(d)		300	324	7.63%, 4/15/2031	1,260	1,534
Evraz Group SA				Univision Communications Inc
9.50%, 4/24/2018		368	414	7.88%, 11/1/2020^(d)	270	284
Severstal OAO Via Steel Capital SA					$ 54,636
9.75%, 7/29/2013		100	111	Mining - 0.35%
		$ 2,444		Alcoa Inc
Leisure Products & Services - 0.06%				5.90%, 2/1/2027	665	653
Royal Caribbean Cruises Ltd				AngloGold Ashanti Holdings PLC
6.88%, 12/1/2013		765	822	5.38%, 4/15/2020	265	283
7.25%, 6/15/2016		300	327	Gold Fields Orogen Holding BVI Ltd
				4.88%, 10/7/2020^(d)	225	221
		$ 1,149
				Rio Tinto Finance USA Ltd
				1.88%, 11/2/2015^(f)	1,345	1,347
				3.50%, 11/2/2020^(f)	2,285	2,282


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




		Principal			Principal
		Amount			Amount
BONDS (continued)		(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Mining (continued)				Mortgage Backed Securities (continued)
Rio Tinto Finance USA Ltd (continued)				Countrywide Home Loan Mortgage Pass Through
5.20%, 11/2/2040^(f)	$ 725 $		729	Trust
Southern Copper Corp				0.46%, 4/25/2046^(e)	$ 5,724 $	3,265
6.75%, 4/16/2040		204	219	5.00%, 4/25/2035	3,027	3,013
Vale Overseas Ltd				Credit Suisse First Boston Mortgage Securities
4.63%, 9/15/2020		285	295	Corp
6.88%, 11/21/2036		654	745	0.28%, 1/15/2037^(d),(e)	21,956	553
Vedanta Resources PLC				0.36%, 11/15/2037^(d),(e)	19,883	399
9.50%, 7/18/2018		145	156	0.44%, 5/15/2036^(d),(e)	8,677	16
		$ 6,930		4.96%, 1/15/2037^(d)	2,675	2,375
Miscellaneous Manufacturing - 0.85%				Credit Suisse Mortgage Capital Certificates
GE Capital Trust I				0.18%, 12/15/2039	19,681	328
6.38%, 11/15/2067		550	544	0.77%, 9/15/2039^(d)	61,755	958
Textron Inc				5.38%, 11/15/2016^(d)	1,150	1,220
6.20%, 3/15/2015		1,835	2,046	5.38%, 12/15/2016^(d)	3,250	2,996
Tyco Electronics Group SA				5.42%, 2/15/2040	4,000	2,544
6.00%, 10/1/2012		1,740	1,884	5.47%, 8/16/2016^(d)	3,700	3,466
7.13%, 10/1/2037		105	124	5.66%, 5/10/2017^(d)	4,000	3,632
Tyco International Finance SA				5.70%, 7/15/2017^(d)	6,811	7,291
3.38%, 10/15/2015		5,880	6,233	5.70%, 7/15/2017^(d)	2,980	2,693
4.13%, 10/15/2014		985	1,075	5.91%, 6/15/2039^(e)	1,900	1,971
Tyco International Ltd / Tyco International Finance				6.00%, 7/15/2017^(d)	1,775	1,472
SA				Fannie Mae
7.00%, 12/15/2019		4,000	4,970	0.46%, 1/25/2023^(e)	537	537
		$ 16,876		0.51%, 11/25/2022^(e)	416	416
				0.51%, 3/25/2035^(e)	450	450
Mortgage Backed Securities - 15.89%
Adjustable Rate Mortgage Trust				0.56%, 2/25/2018^(e)	321	321
0.53%, 8/25/2036^(a),(e)		4,188	840	0.56%, 2/25/2032^(e)	627	627
0.54%, 6/25/2035^(e)		493	478	1.29%, 10/25/2011^(e)	35,654	323
0.83%, 2/25/2035^(e)		223	196	4.50%, 8/25/2019	15,186	1,520
Banc of America Commercial Mortgage Inc				5.00%, 9/25/2019	3,738	361
0.45%, 7/10/2042		189,776	907	5.89%, 11/25/2039^(e)	7,155	1,001
4.73%, 7/10/2043^(e)		3,430	3,172	6.29%, 7/25/2038	3,078	294
4.97%, 7/10/2043		1,390	497	6.29%, 7/25/2040^(e)	7,026	1,082
5.36%, 10/10/2045^(e)		2,950	3,152	6.44%, 10/25/2035^(e)	7,221	1,288
5.45%, 1/15/2049		2,970	3,134	6.48%, 4/25/2037^(e)	8,072	1,719
5.63%, 4/10/2049		2,535	2,632	6.49%, 10/25/2034^(e)	7,213	1,180
5.67%, 1/15/2049^(d),(e)		1,335	235	6.49%, 11/25/2036^(e)	7,194	1,096
5.87%, 4/10/2049^(e)		6,185	6,484	6.50%, 2/25/2047	1,585	1,773
5.89%, 7/10/2044		2,955	3,236	6.51%, 4/25/2039^(e)	1,756	1,880
6.34%, 2/10/2051^(e)		4,610	5,062	6.84%, 9/25/2031^(e)	4,654	394
Banc of America Funding Corp				6.94%, 8/25/2037^(e)	4,873	775
0.34%, 7/20/2036^(e)		162	162	7.14%, 3/25/2039^(e)	2,031	2,163
0.55%, 7/20/2036^(e)		5,220	2,230	7.39%, 10/25/2017^(e)	1,946	133
Banc of America Large Loan Inc				Fannie Mae Whole Loan
5.20%, 1/25/2017^(d)		4,647	4,932	0.46%, 5/25/2035^(e)	1,631	1,623
BCRR Trust				FDIC Structured Sale Guaranteed Notes
5.86%, 12/15/2043^(d)		1,975	1,724	3.00%, 9/30/2019^(d)	2,187	2,269
Bear Stearns Alt-A Trust				3.25%, 4/25/2038^(d)	2,639	2,684
0.54%, 7/25/2035^(e)		278	139	Freddie Mac
Bear Stearns Mortgage Funding Trust				0.56%, 6/15/2018^(e)	513	513
0.47%, 7/25/2036^(e)		6,902	3,620	0.61%, 2/15/2030^(e)	273	273
Bella Vista Mortgage Trust				0.61%, 5/15/2030^(e)	203	203
0.52%, 5/20/2045^(a),(e)		671	376	0.71%, 6/15/2023^(e)	940	941
Citigroup Commercial Mortgage Trust				0.86%, 8/15/2018^(e)	2,231	2,247
0.72%, 10/15/2049^(e)		60,401	820	4.00%, 9/15/2021	2,621	2,758
5.49%, 3/17/2051^(d),(e)		1,732	1,656	7.27%, 11/15/2033^(e)	3,996	684
6.09%, 12/10/2049^(e)		1,750	1,368	GE Capital Commercial Mortgage Corp
Commercial Mortgage Pass Through Certificates				0.38%, 5/10/2014	15,320	89
6.01%, 12/10/2049^(e)		1,105	1,196	5.61%, 4/10/2017^(e)	5,750	4,648
Countrywide Alternative Loan Trust				Ginnie Mae
0.48%, 5/25/2035^(e)		23	13	5.00%, 10/16/2022	11,865	1,134
0.54%, 6/25/2036^(a),(e)		5,142	538	6.24%, 1/16/2038^(e)	1,553	129
0.68%, 12/25/2035^(e)		3,439	903	6.43%, 6/16/2037^(e)	6,185	868
1.71%, 7/20/2035^(e)		862	482	7.26%, 10/20/2032^(e)	2,103	336
Countrywide Asset-Backed Certificates				GMAC Commercial Mortgage Securities Inc
0.53%, 1/25/2036^(e)		2,827	2,164	1.02%, 3/10/2038^(d),(e)	6,257	22
0.54%, 11/25/2035^(e)		288	275	Greenpoint Mortgage Funding Trust
				0.53%, 6/25/2045^(e)	507	133


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Mortgage Backed Securities (continued)			Mortgage Backed Securities (continued)
Greenpoint Mortgage Funding Trust (continued)			Morgan Stanley Capital I (continued)
0.56%, 6/25/2045^(e)	$ 444 $	92	5.81%, 4/12/2049^(e)	$ 825 $	829
Greenwich Capital Commercial Funding Corp			Morgan Stanley Reremic Trust
5.51%, 3/10/2039	3,775	2,935	3.00%, 1/17/2013^(c),(d)	5,842	5,853
5.74%, 12/10/2049	1,485	1,567	3.25%, 12/17/2043^(d)	17,000	17,098
GS Mortgage Securities Corp II			6.00%, 8/12/2045^(d),(e)	1,545	1,686
0.86%, 11/10/2039^(d)	37,281	931	6.00%, 8/12/2045^(d),(e)	770	753
1.59%, 8/10/2020^(d)	32,417	3,041	10.24%, 12/17/2043^(c),(d),(e)	8,000	8,280
6.00%, 8/10/2045^(e)	665	704	Nomura Asset Acceptance Corp
GSR Mortgage Loan Trust			0.61%, 2/25/2035^(e)	82	68
0.52%, 8/25/2046^(a),(e)	4,254	650	RBSCF Trust
0.62%, 12/25/2035^(e)	511	422	4.66%, 4/15/2015^(d)	900	934
Impac CMB Trust			5.31%, 3/16/2012^(d)	1,070	1,074
0.51%, 5/25/2037^(e)	3,479	2,960	5.34%, 12/16/2016^(d),(e)	2,000	2,011
0.69%, 4/25/2035^(e)	302	124	6.00%, 7/17/2014^(d),(e)	400	396
1.26%, 10/25/2033^(e)	195	123	Residential Accredit Loans Inc
Indymac Index Mortgage Loan Trust			0.45%, 7/25/2037^(a),(e)	7,498	4,373
0.44%, 2/25/2037^(e)	3,744	2,403	Residential Asset Securitization Trust
0.49%, 4/25/2035^(e)	527	295	5.50%, 2/25/2035	2,249	2,253
0.50%, 6/25/2037^(a),(e)	5,559	3,336	Sequoia Mortgage Trust
0.52%, 6/25/2035^(e)	4,262	2,848	1.03%, 2/20/2034^(e)	2,144	1,539
0.56%, 8/25/2035^(e)	885	572	Structured Adjustable Rate Mortgage Loan Trust
0.86%, 4/25/2034^(e)	195	142	0.45%, 7/25/2037^(e)	5,369	3,078
JP Morgan Chase Commercial Mortgage Securities			0.96%, 8/25/2034^(a),(e)	2,636	195
Corp			Structured Asset Mortgage Investments Inc
0.70%, 2/15/2051^(e)	58,900	839	0.56%, 5/25/2045^(e)	570	159
2.16%, 9/15/2020^(d)	10,000	1,097	0.57%, 9/25/2045^(e)	663	441
4.31%, 12/5/2027^(d)	1,413	1,532	Structured Asset Securities Corp
5.07%, 11/15/2043^(d)	3,100	3,116	5.50%, 6/25/2036^(e)	4,479	1,016
5.29%, 9/12/2037^(e)	300	196	Vornado DP LLC
5.31%, 1/15/2049	250	256	5.28%, 9/13/2020^(d)	1,050	1,070
5.34%, 5/15/2047	2,326	2,447	Wachovia Bank Commercial Mortgage Trust
5.42%, 2/15/2017	750	785	0.72%, 10/15/2041^(d),(e)	29,346	189
5.44%, 5/15/2045^(e)	2,725	2,723	0.81%, 5/15/2044^(d),(e)	10,853	92
5.62%, 6/12/2041^(e)	3,205	2,528	5.60%, 12/15/2043	1,960	140
5.62%, 5/15/2045^(e)	1,350	624	5.68%, 5/15/2046^(e)	3,540	3,728
5.72%, 11/15/2017	1,830	1,929	5.80%, 7/15/2045	3,155	3,137
5.72%, 11/15/2043^(d)	725	722	5.82%, 5/15/2046^(e)	2,255	2,073
5.88%, 2/15/2051	3,500	3,741	6.10%, 2/15/2051^(e)	825	866
6.30%, 2/12/2051^(e)	2,040	1,488	WAMU Commercial Mortgage Securities Trust
6.40%, 2/12/2051^(d),(e)	2,250	773	3.83%, 1/25/2035^(d)	391	394
JP Morgan Mortgage Trust			WaMu Mortgage Pass Through Certificates
5.94%, 6/25/2036^(e)	419	401	0.48%, 8/25/2046^(a),(e)	1,517	409
LB-UBS Commercial Mortgage Trust			0.49%, 4/25/2045^(e)	291	237
0.35%, 7/15/2040^(d)	68,196	1,261	0.51%, 11/25/2045^(e)	174	172
0.51%, 2/15/2040^(e)	14,701	256	0.53%, 4/25/2045^(e)	291	219
5.42%, 1/15/2017	1,110	1,189	0.55%, 7/25/2045^(e)	657	529
5.56%, 2/15/2040^(e)	1,615	1,034	0.57%, 1/25/2045^(e)	370	307
5.86%, 7/15/2040^(e)	2,550	2,711	0.63%, 1/25/2045^(e)	699	455
6.32%, 4/15/2041^(e)	2,300	1,606	0.64%, 11/25/2045^(e)	779	770
6.32%, 4/15/2041^(e)	250	277	0.66%, 1/25/2045^(e)	6,297	4,639
6.45%, 7/17/2040^(e)	1,540	482	0.79%, 1/25/2045^(e)	1,854	146
Luminent Mortgage Trust			0.90%, 12/25/2027^(e)	3,853	3,409
0.45%, 5/25/2046^(e)	2,012	1,099	2.70%, 5/25/2035^(e)	670	662
Merrill Lynch Mortgage Investors Inc			4.07%, 12/25/2035^(e)	2,293	2,243
0.61%, 8/25/2036^(e)	276	156	Washington Mutual Alternative Mortgage Pass-
Merrill Lynch Mortgage Trust			Through Certificates
5.78%, 8/12/2016	2,750	2,734	0.44%, 1/25/2047^(e)	4,498	278
Merrill Lynch/Countrywide Commercial Mortgage			Wells Fargo Commercial Mortgage Trust
Trust			5.28%, 10/17/2057^(c),(d),(f)	1,250	1,287
0.72%, 8/12/2048^(e)	39,988	936	5.59%, 10/17/2057^(c),(d),(f)	1,500	1,510
0.82%, 12/12/2049^(e)	112,788	2,101	Wells Fargo Mortgage Backed Securities Trust
5.39%, 12/12/2049^(d),(e)	1,700	289	2.94%, 10/25/2035^(e)	1,037	921
5.49%, 3/12/2051	4,000	4,114		$ 313,945
Morgan Stanley Capital I			Office & Business Equipment - 0.39%
0.51%, 6/12/2012^(e)	9,044	8,305	Xerox Corp
4.97%, 4/14/2040	17,250	18,065	4.25%, 2/15/2015	3,160	3,403
5.23%, 12/15/2041^(d)	2,750	2,646	6.35%, 5/15/2018	1,840	2,152
5.36%, 3/15/2044^(e)	2,595	2,722


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Office & Business Equipment (continued)			Oil & Gas (continued)
Xerox Corp (continued)			Petroleos Mexicanos
6.75%, 2/1/2017	$ 1,755 $	2,082	5.50%, 1/21/2021	$ 460 $	500
	$ 7,637		Petroleum Development Corp
Oil & Gas - 3.92%			12.00%, 2/15/2018	1,825	2,044
Anadarko Petroleum Corp			Petroquest Energy Inc
5.95%, 9/15/2016	3,740	4,090	10.00%, 9/1/2017	545	559
6.38%, 9/15/2017	3,600	3,999	Pioneer Natural Resources Co
BP Capital Markets PLC			7.50%, 1/15/2020	1,165	1,312
3.13%, 10/1/2015	3,130	3,212	Pride International Inc
3.63%, 5/8/2014	620	650	6.88%, 8/15/2020	390	442
5.25%, 11/7/2013	1,730	1,868	8.50%, 6/15/2019	4,190	5,086
Canadian Natural Resources Ltd			QEP Resources Inc
5.70%, 5/15/2017	1,405	1,629	6.88%, 3/1/2021	575	625
Chaparral Energy Inc			Quicksilver Resources Inc
8.50%, 12/1/2015	660	658	11.75%, 1/1/2016	467	539
9.88%, 10/1/2020^(d)	315	332	Range Resources Corp
Chesapeake Energy Corp			6.75%, 8/1/2020	520	558
9.50%, 2/15/2015	1,915	2,221	Reliance Holdings USA Inc
ConocoPhillips			6.25%, 10/19/2040^(d)	500	495
5.75%, 2/1/2019	1,650	1,977	Rowan Cos Inc
ConocoPhillips Holding Co			5.00%, 9/1/2017	1,500	1,567
6.95%, 4/15/2029	1,130	1,412	Shell International Finance BV
Continental Resources Inc/OK			3.10%, 6/28/2015	4,155	4,406
7.13%, 4/1/2021^(d)	280	302	Suncor Energy Inc
7.38%, 10/1/2020^(d)	445	482	6.85%, 6/1/2039	850	1,005
Denbury Resources Inc			Talisman Energy Inc
8.25%, 2/15/2020	764	852	5.13%, 5/15/2015	1,040	1,162
9.75%, 3/1/2016	1,625	1,840	6.25%, 2/1/2038	430	468
Ecopetrol SA			Total Capital SA
7.63%, 7/23/2019	235	289	3.00%, 6/24/2015	1,600	1,684
Gazprom Via Gaz Capital SA			Transocean Inc
7.29%, 8/16/2037^(d)	1,664	1,806	4.95%, 11/15/2015	4,270	4,525
9.25%, 4/23/2019^(d)	720	893	6.00%, 3/15/2018	845	916
Hilcorp Energy I LP/Hilcorp Finance Co			Venoco Inc
7.63%, 4/15/2021^(d)	1,120	1,169	11.50%, 10/1/2017	865	921
8.00%, 2/15/2020^(d)	455	480	XTO Energy Inc
KazMunaiGaz Finance Sub BV			5.50%, 6/15/2018	750	892
7.00%, 5/5/2020^(d)	665	707	6.50%, 12/15/2018	1,925	2,442
11.75%, 1/23/2015	137	170	Zhaikmunai Finance BV
Linn Energy LLC			10.50%, 10/19/2015^(d)	150	148
9.88%, 7/1/2018	1,390	1,543		$ 77,389
Linn Energy LLC/Linn Energy Finance Corp			Oil & Gas Services - 0.41%
7.75%, 2/1/2021^(d)	285	294	Cameron International Corp
8.63%, 4/15/2020^(d)	360	389	6.38%, 7/15/2018	1,670	1,931
11.75%, 5/15/2017	355	412	Halliburton Co
Lukoil International Finance BV			6.15%, 9/15/2019	1,695	2,026
7.25%, 11/5/2019^(d)	474	513	Weatherford International Ltd Bermuda
Nexen Inc			5.13%, 9/15/2020	3,390	3,549
6.20%, 7/30/2019	1,130	1,338	6.75%, 9/15/2040	475	505
6.40%, 5/15/2037	1,205	1,317		$ 8,011
Noble Holding International Ltd			Other Asset Backed Securities - 2.12%
6.20%, 8/1/2040	595	654	Aircraft Certificate Owner Trust
OPTI Canada Inc			7.00%, 9/20/2022^(c),(d)	705	649
7.88%, 12/15/2014	1,980	1,485	Ameriquest Mortgage Securities Inc
Pemex Project Funding Master Trust			0.56%, 3/25/2035^(e)	242	233
6.63%, 6/15/2035	240	266	Carrington Mortgage Loan Trust
Petrobras International Finance Co			0.54%, 12/25/2035^(e)	6,172	5,679
5.75%, 1/20/2020	290	325	Chase Funding Mortgage Loan Asset-Backed
6.88%, 1/20/2040	220	255	Certificates
Petrobras International Finance Co - Pifco			0.72%, 12/25/2033^(e)	37	34
7.88%, 3/15/2019	475	600	0.86%, 7/25/2033^(e)	1,830	1,626
Petro-Canada			1.01%, 9/25/2033^(e)	664	267
6.05%, 5/15/2018	2,500	2,947	Countrywide Asset-Backed Certificates
Petrohawk Energy Corp			0.39%, 11/25/2037^(e)	5,320	4,082
7.25%, 8/15/2018^(d)	405	420	0.42%, 2/25/2037^(e)	7,775	6,656
10.50%, 8/1/2014	415	474	0.55%, 2/25/2036^(e)	1,791	1,754
Petroleos de Venezuela SA			0.78%, 6/25/2035^(e)	2,261	2,140
5.00%, 10/28/2015	636	380	1.87%, 1/25/2034^(e)	28	15
5.25%, 4/12/2017	750	443


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Other Asset Backed Securities (continued)			Pipelines (continued)
Countrywide Home Equity Loan Trust			Plains All American Pipeline LP / PAA Finance
0.49%, 12/15/2035^(e)	$ 849 $	344	Corp
First-Citizens Home Equity Loan LLC			3.95%, 9/15/2015	$ 2,645 $	2,801
0.47%, 9/15/2022^(d),(e)	799	488	5.75%, 1/15/2020	325	363
JP Morgan Mortgage Acquisition Corp			Regency Energy Partners LP/Regency Energy
0.34%, 12/25/2036^(e)	262	112	Finance Corp
0.34%, 3/25/2037^(e)	1,046	988	6.88%, 12/1/2018	840	880
0.41%, 3/25/2037^(e)	3,820	2,377	9.38%, 6/1/2016	375	420
0.43%, 4/25/2036^(e)	3,772	2,950	TransCanada PipeLines Ltd
5.45%, 11/25/2036	5,313	5,328	3.40%, 6/1/2015	465	500
Lehman XS Trust			3.80%, 10/1/2020	1,420	1,463
1.39%, 11/25/2035^(e)	2,326	1,353	6.10%, 6/1/2040	1,820	2,031
Long Beach Mortgage Loan Trust			Williams Partners LP
0.76%, 2/25/2035^(e)	1,795	1,763	3.80%, 2/15/2015	385	408
Marriott Vacation Club Owner Trust				$ 20,523
5.52%, 5/20/2029^(d),(e)	875	925	Real Estate - 0.01%
Merrill Lynch Mortgage Investors Inc			Central China Real Estate Ltd
0.49%, 7/25/2036^(e)	59	57	12.25%, 10/20/2015^(d)	100	105
MSDWCC Heloc Trust
0.45%, 7/25/2017^(e)	510	383	Regional Authority - 0.02%
Ownit Mortgage Loan Asset Backed Certificates			Provincia de Buenos Aires/Argentina
0.56%, 8/25/2036^(e)	82	81	11.75%, 10/5/2015^(d)	100	102
Popular ABS Mortgage Pass-Through Trust			Provincia de Cordoba
0.53%, 5/25/2035^(e)	1,409	1,029	12.38%, 8/17/2017^(d)	270	283
Residential Asset Mortgage Products Inc				$ 385
0.53%, 7/25/2035^(e)	351	340
			REITS - 0.78%
SACO I Inc			Brandywine Operating Partnership LP
0.40%, 9/25/2036^(e)	745	144	5.63%, 12/15/2010	1,397	1,403
	$ 41,797		CommonWealth REIT
Packaging & Containers - 0.08%			0.89%, 3/16/2011^(e)	1,336	1,334
Graham Packaging Co LP/GPC Capital Corp I			Digital Realty Trust LP
8.25%, 10/1/2018^(d)	455	471	4.50%, 7/15/2015^(d)	3,735	3,881
Plastipak Holdings Inc			DuPont Fabros Technology LP
8.50%, 12/15/2015^(d)	750	773	8.50%, 12/15/2017	615	666
10.63%, 8/15/2019^(d)	310	344	Entertainment Properties Trust
	$ 1,588		7.75%, 7/15/2020^(d)	4,290	4,451
Pharmaceuticals - 0.55%			iStar Financial Inc
AmerisourceBergen Corp			5.85%, 3/15/2017	1,105	917
5.63%, 9/15/2012	200	216	Reckson Operating Partnership LP
Mylan Inc/PA			6.00%, 3/31/2016	930	945
7.88%, 7/15/2020^(d)	940	1,048	Simon Property Group LP
NBTY Inc			5.65%, 2/1/2020	1,550	1,751
9.00%, 10/1/2018^(d)	830	882		$ 15,348
Omnicare Inc			Retail - 1.71%
6.13%, 6/1/2013	1,205	1,219	CVS Caremark Corp
7.75%, 6/1/2020	420	438	3.25%, 5/18/2015	1,105	1,162
Quintiles Transnational Corp			6.13%, 9/15/2039	2,940	3,168
9.50%, 12/30/2014^(d)	1,195	1,219	CVS Pass-Through Trust
Teva Pharmaceutical Finance II BV / Teva			7.51%, 1/10/2032^(d)	336	392
Pharmaceutical Finance III LLC			Darden Restaurants Inc
3.00%, 6/15/2015	2,350	2,467	6.80%, 10/15/2037^(e)	2,350	2,617
Watson Pharmaceuticals Inc			DineEquity Inc
5.00%, 8/15/2014	1,980	2,168	9.50%, 10/30/2018^(d)	920	980
6.13%, 8/15/2019	970	1,128	Ferrellgas LP/Ferrellgas Finance Corp
	$ 10,785		9.13%, 10/1/2017	875	967
Pipelines - 1.04%			Macy's Retail Holdings Inc
El Paso Pipeline Partners Operating Co LLC			5.75%, 7/15/2014	3,000	3,210
6.50%, 4/1/2020	740	807	5.90%, 12/1/2016	1,295	1,402
Energy Transfer Equity LP			6.90%, 4/1/2029	145	145
7.50%, 10/15/2020	565	616	Neiman Marcus Group Inc/The
Energy Transfer Partners LP			10.38%, 10/15/2015	615	649
6.70%, 7/1/2018	3,665	4,255	Nordstrom Inc
Enterprise Products Operating LLC			4.75%, 5/1/2020	600	639
6.13%, 10/15/2039	1,060	1,120	6.25%, 1/15/2018	1,480	1,728
8.38%, 8/1/2066	2,855	3,012	OSI Restaurant Partners Inc
MarkWest Energy Partners LP / MarkWest Energy			10.00%, 6/15/2015	470	488
Finance Corp			Phillips-Van Heusen Corp
6.75%, 11/1/2020^(f)	105	107	7.38%, 5/15/2020	540	585
8.75%, 4/15/2018	1,585	1,740


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Retail (continued)			Sovereign (continued)
Sonic Automotive Inc			Denmark Government Bond
8.63%, 8/15/2013	$ 134 $	136	4.00%, 11/15/2017	$ 160 $	33
Suburban Propane Partners LP/Suburban Energy			Egypt Government International Bond
Finance Corp			5.75%, 4/29/2020^(d)	260	281
7.38%, 3/15/2020	520	553	France Government Bond OAT
Toys R Us Property Co LLC			3.50%, 4/25/2020	145	213
8.50%, 12/1/2017^(d)	470	509	3.75%, 4/25/2021	90	134
Wal-Mart Stores Inc			French Treasury Note BTAN
3.25%, 10/25/2020	10,830	10,721	3.00%, 7/12/2014	23	34
5.00%, 10/25/2040	1,935	1,920	Hungary Government International Bond
Yum! Brands Inc			4.75%, 2/3/2015	180	194
6.25%, 3/15/2018	940	1,114	Indonesia Government International Bond
6.88%, 11/15/2037	560	646	5.88%, 3/13/2020^(d)	165	191
	$ 33,731		6.63%, 2/17/2037^(d)	290	353
Semiconductors - 0.38%			Italy Buoni Poliennali Del Tesoro
Advanced Micro Devices Inc			4.25%, 3/1/2020	250	359
7.75%, 8/1/2020^(d)	980	1,039	Japan Government Ten Year Bond
Broadcom Corp			1.40%, 6/20/2019	12,000	157
1.50%, 11/1/2013^(d),(f)	2,720	2,733	1.50%, 12/20/2017	50,000	664
2.38%, 11/1/2015^(d),(f)	1,650	1,668	1.70%, 3/20/2017	45,000	604
Freescale Semiconductor Inc			Japan Government Twenty Year Bond
9.25%, 4/15/2018^(d)	385	412	1.90%, 3/20/2024	18,800	249
Jazz Technologies Inc			Mexico Government International Bond
8.00%, 6/30/2015^(d)	1,471	1,261	5.63%, 1/15/2017	140	162
STATS ChipPAC Ltd			5.95%, 3/19/2019	570	676
7.50%, 8/12/2015^(d)	300	329	6.05%, 1/11/2040	456	524
	$ 7,442		6.63%, 3/3/2015	185	218
Software - 0.27%			Netherlands Government Bond
First Data Corp			2.75%, 1/15/2015	80	116
10.55%, 9/24/2015	536	453	Panama Government International Bond
Fiserv Inc			5.20%, 1/30/2020	355	403
4.63%, 10/1/2020	4,060	4,113	6.70%, 1/26/2036	155	195
Microsoft Corp			Peruvian Government International Bond
4.50%, 10/1/2040	790	755	7.13%, 3/30/2019	655	832
	$ 5,321		Philippine Government International Bond
Sovereign - 1.31%			4.00%, 1/15/2021	295	295
Argentina Bonos			6.38%, 1/15/2032	329	381
7.00%, 10/3/2015	1,575	1,506	6.38%, 10/23/2034	175	203
Argentina Government International Bond			6.50%, 1/20/2020	654	786
8.28%, 12/31/2033	2,075	1,968	Poland Government Bond
Australia Government Bond			5.50%, 4/25/2015	22	8
4.75%, 6/15/2016	65	63	5.75%, 4/25/2014	95	34
Banco Nacional de Desenvolvimento Economico e			Republic of Austria
Social			3.40%, 10/20/2014	50	74
5.50%, 7/12/2020	293	317	Russian Foreign Bond - Eurobond
			3.63%, 4/29/2015^(d)	500	511
6.50%, 6/10/2019	212	245	5.00%, 4/29/2020^(d)	900	937
Belgium Government Bond			7.50%, 3/31/2030^(d)	1,557	1,861
3.50%, 3/28/2015	150	220
4.00%, 3/28/2019	25	37	South Africa Government International Bond
Brazilian Government International Bond			5.50%, 3/9/2020	350	396
5.63%, 1/7/2041	311	345	6.50%, 6/2/2014	95	109
5.88%, 1/15/2019	815	967	6.88%, 5/27/2019	233	288
6.00%, 1/17/2017	435	514	Spain Government Bond
7.88%, 3/7/2015	120	149	3.80%, 1/31/2017	70	98
10.13%, 5/15/2027	294	484	4.10%, 7/30/2018	50	70
11.00%, 8/17/2040	110	154	Sweden Government Bond
Bundesobligation			3.75%, 8/12/2017	150	24
2.50%, 2/27/2015	25	36	Switzerland Government Bond
Bundesrepublik Deutschland			3.75%, 6/10/2015	20	23
4.25%, 7/4/2018	90	142	Turkey Government International Bond
4.75%, 7/4/2028	50	86	5.63%, 3/30/2021	385	430
Canadian Government Bond			6.88%, 3/17/2036	935	1,124
3.75%, 6/1/2019	80	85	7.00%, 6/5/2020	630	781
Colombia Government International Bond			7.25%, 3/15/2015	260	309
6.13%, 1/18/2041	278	318	United Kingdom Gilt
7.38%, 3/18/2019	295	377	4.50%, 3/7/2019	85	152
11.75%, 2/25/2020	74	119	5.00%, 3/7/2025	80	147
Croatia Government International Bond			Venezuela Government International Bond
6.63%, 7/14/2020^(d)	260	294	5.75%, 2/26/2016	443	316


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's)	Value (000's)
Sovereign (continued)			Telecommunications (continued)
Venezuela Government International Bond			Verizon Global Funding Corp
(continued)			7.75%, 12/1/2030	$ 3,625	$ 4,584
6.00%, 12/9/2020	$ 966 $	569	Vimpel Communications Via VIP Finance Ireland
7.65%, 4/21/2025	556	338	Ltd OJSC
7.75%, 10/13/2019	106	71	9.13%, 4/30/2018^(d)	830	940
8.50%, 10/8/2014	386	325	Vodafone Group PLC
9.25%, 9/15/2027	225	164	0.58%, 2/27/2012^(e)	4,000	4,007
9.38%, 1/13/2034	145	97	0.63%, 6/15/2011^(e)	1,930	1,933
	$ 25,939		West Corp
Telecommunications - 3.14%			8.63%, 10/1/2018^(d)	265	275
America Movil SAB de CV			9.50%, 10/15/2014	635	665
5.00%, 3/30/2020	231	252	Wind Acquisition Finance SA
5.63%, 11/15/2017	399	452	11.75%, 7/15/2017^(d)	1,970	2,246
6.13%, 3/30/2040	270	298	Wind Acquisition Holdings Finance SA
6.38%, 3/1/2035	236	267	12.25%, 7/15/2017^(d)	927	1,075
AT&T Inc					$ 62,124
2.50%, 8/15/2015	3,920	4,032	Transportation - 0.62%
6.15%, 9/15/2034	880	938	Asciano Finance Ltd
6.50%, 9/1/2037	895	1,005	3.13%, 9/23/2015^(d)	2,600	2,615
Clearwire Communications LLC/Clearwire			Burlington Northern Santa Fe LLC
Finance Inc			5.75%, 5/1/2040	2,020	2,142
12.00%, 12/1/2015^(d)	2,335	2,586	6.15%, 5/1/2037	750	831
Digicel Group Ltd			CSX Corp
9.13%, 1/15/2015^(d)	2,189	2,225	6.25%, 3/15/2018	3,315	3,927
Digicel Ltd			Kazakhstan Temir Zholy Finance BV
12.00%, 4/1/2014^(d)	805	943	6.38%, 10/6/2020^(d)	330	345
DigitalGlobe Inc			Navios Maritime Holdings Inc / Navios Maritime
10.50%, 5/1/2014	1,495	1,689	Finance US Inc
Global Crossing Ltd			8.88%, 11/1/2017^(d)	775	827
12.00%, 9/15/2015	980	1,120	PHI Inc
Indosat Palapa Co BV			8.63%, 10/15/2018^(d)	845	851
7.38%, 7/29/2020^(d)	400	452	United Maritime Group LLC/United Maritime
Intelsat Luxembourg SA			Group Finance Corp
11.25%, 2/4/2017	635	680	11.75%, 6/15/2015	720	719
11.50%, 2/4/2017	600	648			$ 12,257
Intelsat Subsidiary Holding Co SA			Trucking & Leasing - 0.02%
8.88%, 1/15/2015	4,175	4,321	AWAS Aviation Capital Ltd
iPCS Inc			7.00%, 10/15/2016^(d)	465	465
2.59%, 5/1/2013^(e)	560	540
Level 3 Financing Inc			TOTAL BONDS		$ 1,214,958
9.25%, 11/1/2014	585	573		Principal
10.00%, 2/1/2018	710	680		Amount
MTS International Funding Ltd			CONVERTIBLE BONDS - 0.18%	(000's)	Value (000's)
8.63%, 6/22/2020^(d)	735	854
			Aerospace & Defense - 0.02%
Nextel Communications Inc			GenCorp Inc
7.38%, 8/1/2015	2,795	2,805	4.06%, 12/31/2039^(d)	400	363
Qtel International Finance Ltd
4.75%, 2/16/2021^(d)	410	406
5.00%, 10/19/2025^(d)	200	193	Amylin Biotechnology Pharmaceuticals - 0.09% Inc
SBA Tower Trust			3.00%, 6/15/2014	1,915	1,651
4.25%, 4/15/2015^(d)	2,490	2,660
Sprint Nextel Corp			Electronics - 0.07%
8.38%, 8/15/2017	765	843	L-1 Identity Solutions Inc
Telecom Italia Capital SA			3.75%, 5/15/2027	1,445	1,445
0.95%, 2/1/2011^(e)	845	844
1.13%, 7/18/2011^(e)	2,175	2,173
			TOTAL CONVERTIBLE BONDS		$ 3,459
6.38%, 11/15/2033	910	911		Principal
Telefonica Emisiones SAU				Amount
0.77%, 2/4/2013^(e)	2,075	2,045
			MUNICIPAL BONDS - 0.39%	(000's)	Value (000's)
3.73%, 4/27/2015	1,425	1,505
4.95%, 1/15/2015	2,945	3,252	California - 0.08%
			Los Angeles Unified School District/CA
5.13%, 4/27/2020	1,510	1,655	5.75%, 7/1/2034	$ 1,435	$ 1,393
Telemar Norte Leste SA
5.50%, 10/23/2020^(d)	600	604	San Diego County Water Authority
			6.14%, 5/1/2049	190	206
Telemovil Finance Co Ltd
8.00%, 10/1/2017 (d)	350	364			$ 1,599
Verizon Communications Inc
6.25%, 4/1/2037	1,425	1,584


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
	Amount		SENIOR FLOATING RATE INTERESTS	Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	(continued)	(000's)	Value (000's)
Kansas - 0.07%			Internet - 0.02%
Kansas State Department of Transportation			Open Solutions Inc, Term Loan B
4.60%, 9/1/2035	$ 1,395	$ 1,376	2.41%, 1/23/2014^(e)	$ 561	$ 471

Nevada - 0.10%			Lodging - 0.11%
County of Clark NV			Harrah's Operating Co Inc, Term Loan B1
6.88%, 7/1/2042	1,970	2,039	3.29%, 1/28/2015^(e)	2,517		2,222

Utah - 0.06%			Machinery - Diversified - 0.03%
State of Utah			Manitowoc Company Inc, Term Loan B
3.54%, 7/1/2025	1,270	1,238	8.00%, 4/14/2014^(e)	668		671

Washington - 0.08%			Media - 0.14%
State of Washington			Univision Communications Inc, Term Loan
5.09%, 8/1/2033	1,495	1,480	4.51%, 3/29/2017^(e)	2,976		2,812

TOTAL MUNICIPAL BONDS		$ 7,732	Oil & Gas - 0.03%
	Principal		Venoco Inc, Term Loan C
SENIOR FLOATING RATE INTERESTS -	Amount		4.31%, 5/7/2014^(e)	678		641
1.90%	(000's)	Value (000's)
Automobile Manufacturers - 0.16%			Pharmaceuticals - 0.11%
Ford, Term Loan B			Grifols SA, Term Loan
3.04%, 12/16/2013^(e)	$ 3,152	$ 3,114	0.00%, 6/4/2016^(e),(g)	910		919
			NBTY Inc, Term Loan
			6.25%, 10/1/2017^(e)	1,250		1,266
Automobile Parts & Equipment - 0.03%
Hayes Lemmerz Intl, Term Loan					$ 2,185
12.00%, 12/11/2013^(e)	486	494	Retail - 0.12%
			DineEquity Inc, Bank Loan
Computers - 0.05%			6.00%, 10/7/2017^(e)	1,175		1,185
Spansion Inc, Term Loan B-Exit			Outback Steakhouse, Term Loan
7.50%, 2/9/2015^(e)	1,012	1,027	0.00%, 6/14/2013^(e),(g)	55		52
			0.00%, 6/14/2014^(e),(g)	550		517
Diversified Financial Services - 0.11%			Phillips-Van Heusen Corp, Term Loan
American General Finance Corp, Term Loan			0.00%, 3/16/2016^(e),(g)	675		679
7.25%, 4/21/2015^(e)	1,420	1,432			$ 2,433
Nuveen Investments Inc, Term Loan			Semiconductors - 0.13%
12.50%, 7/9/2015^(e)	655	710	Freescale Semiconductor Inc, Term Loan
		$ 2,142	4.51%, 12/1/2016^(e)	1,842		1,735
Electric - 0.12%			Microsemi Corp
Texas Competitive Electric Holdings LLC, Term			0.00%, 10/30/2017^(e),(g)	765		772
Loan B2					$ 2,507
3.92%, 10/29/2014^(e)	2,722	2,118	Software - 0.13%
Texas Competitive Electric Holdings LLC, Term			First Data Corp, Term Loan B1
Loan B3			3.01%, 12/24/2014^(e)	1,207		1,085
0.00%, 10/10/2014^(e),(g)	275	214	First Data Corp, Term Loan B3
		$ 2,332	3.01%, 9/24/2014^(e)	932		837
Entertainment - 0.07%			Reynolds & Reynolds Co, Term Loan
CCM Merger Inc, Term Loan B			0.00%, 4/1/2017^(e),(g)	550		552
8.50%, 7/21/2012^(e)	1,386	1,385			$ 2,474
			Telecommunications - 0.05%
Healthcare - Services - 0.38%			Intelsat Jackson Holdings Ltd, Term Loan
Aurora Diagnostics LLC, Term Loan			0.00%, 2/1/2014^(e),(g)	550		522
0.00%, 4/20/2016^(e),(g)	550	540	Level 3, Term Loan
HCA Inc, Term Loan A1			0.00%, 3/13/2014^(e),(g)	550		513
1.54%, 1/22/2012^(e)	1,822	1,787			$ 1,035
HCA Inc, Term Loan B1			TOTAL SENIOR FLOATING RATE INTERESTS		$ 37,537
2.54%, 11/18/2013^(e)	3,671	3,596		Principal
Multiplan Inc, Term Loan			U.S. GOVERNMENT & GOVERNMENT	Amount
6.50%, 7/9/2017^(e)	1,496	1,500			Value
			AGENCY OBLIGATIONS - 41.85%	(000's)		(000's)
		$ 7,423	Federal Home Loan Mortgage Corporation (FHLMC) - 11.70%
Insurance - 0.11%			2.74%, 1/1/2034^(e),(h)	$ 256	$ 268
Asurion Corp, PIK Term Loan			3.39%, 12/1/2035^(e),(h)	113		119
6.76%, 7/7/2015^(e)	21	20	3.50%, 12/1/2025^(h),(i)	7,175		7,399
Asurion Corp, Term Loan			3.57%, 5/1/2037^(e),(h)	593		621
0.00%, 3/31/2015^(e),(g)	2,190	2,149	4.00%, 8/1/2025^(h)	12,428		13,185
		$ 2,169	4.00%, 12/1/2025^(h),(i)	7,175		7,492
			4.00%, 12/1/2040^(h),(i)	5,740		5,888
			4.50%, 5/1/2040^(h)	10,937		11,573
			4.50%, 5/1/2040^(h)	5,987		6,336


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal			Principal
U.S. GOVERNMENT & GOVERNMENT	Amount		U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)	AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
Federal Home Loan Mortgage Corporation (FHLMC) (continued)			Federal National Mortgage Association (FNMA) (continued)
4.50%, 6/1/2040^(h)	$ 3,409	$ 3,608	2.35%, 3/1/2036^(e),(h)	$ 1,811	$ 1,870
4.50%, 8/1/2040^(h)	538	567	2.53%, 1/1/2033^(e),(h)	240	248
4.50%, 8/1/2040^(h)	24,861	26,183	2.59%, 3/1/2035^(e),(h)	597	625
4.50%, 9/1/2040^(h)	12,457	13,127	2.61%, 2/1/2036^(e),(h)	69	72
5.00%, 3/1/2018^(h)	2,317	2,479	2.63%, 4/1/2033^(e),(h)	358	367
5.00%, 5/1/2018^(h)	1,619	1,739	2.68%, 4/1/2036^(e),(h)	566	593
5.00%, 10/1/2018^(h)	1,087	1,168	2.72%, 7/1/2034^(e),(h)	711	746
5.00%, 1/1/2019^(h)	1,601	1,719	2.74%, 8/1/2035^(e),(h)	33	34
5.00%, 8/1/2040^(h)	16,880	18,049	2.75%, 7/1/2033^(e),(h)	2,161	2,264
5.00%, 11/1/2040^(h),(i)	20,250	21,475	2.85%, 12/1/2032^(e),(h)	248	259
5.05%, 7/1/2034^(e),(h)	154	164	2.86%, 8/1/2035^(e),(h)	411	429
5.48%, 8/1/2037^(e),(h)	829	884	2.89%, 9/1/2035^(e),(h)	277	290
5.50%, 3/1/2018^(h)	318	346	3.05%, 3/1/2035^(e),(h)	7,256	7,661
5.50%, 8/1/2023^(h)	3,919	4,283	3.50%, 11/1/2025^(h),(i)	5,000	5,174
5.50%, 6/1/2024^(h)	465	502	4.00%, 8/1/2020^(h)	8,735	9,244
5.50%, 4/1/2033^(h)	253	274	4.00%, 5/1/2024^(h)	7,328	7,685
5.50%, 5/1/2033^(h)	576	623	4.00%, 7/1/2024^(h)	2,262	2,371
5.50%, 10/1/2033^(h)	458	495	4.00%, 5/1/2025^(h)	2,548	2,675
5.50%, 12/1/2033^(h)	2,829	3,088	4.00%, 11/1/2040^(h),(i)	15,000	15,464
5.50%, 2/1/2035^(h)	3,204	3,458	4.50%, 1/1/2020^(h)	1,321	1,413
5.50%, 11/1/2036^(h)	3,220	3,477	4.50%, 4/1/2024^(h)	6,828	7,292
5.50%, 4/1/2038^(h)	2,805	3,029	4.50%, 5/1/2025^(h)	6,825	7,290
5.50%, 8/1/2038^(h)	2,311	2,533	4.50%, 7/1/2025^(h)	1,969	2,088
5.50%, 11/1/2040^(h),(i)	34,500	36,958	4.50%, 6/1/2039^(h)	2,476	2,616
5.84%, 2/1/2037^(e),(h)	842	894	4.50%, 7/1/2039^(h)	458	483
6.00%, 7/1/2017^(h)	96	104	4.50%, 8/1/2039^(h)	6,153	6,499
6.00%, 3/1/2022^(h)	298	327	4.50%, 5/1/2040^(h)	11,766	12,516
6.00%, 7/1/2023^(h)	1,124	1,235	4.50%, 5/1/2040^(h)	3,452	3,662
6.00%, 6/1/2028^(h)	19	21	4.50%, 8/1/2040^(h)	761	799
6.00%, 1/1/2029^(h)	8	8	4.50%, 8/1/2040^(h)	1,646	1,739
6.00%, 3/1/2031^(h)	45	50	4.50%, 11/1/2040^(h),(i)	24,306	25,514
6.00%, 4/1/2031^(h)	5	6	5.00%, 3/1/2018^(h)	776	835
6.00%, 12/1/2031^(h)	252	280	5.00%, 5/1/2020^(h)	692	749
6.00%, 12/1/2032^(h)	249	276	5.00%, 12/1/2039^(h)	396	426
6.00%, 2/1/2033^(h)	303	336	5.00%, 2/1/2040^(h)	852	907
6.00%, 12/1/2033^(h)	481	532	5.00%, 2/1/2040^(h)	912	971
6.00%, 10/1/2036^(e),(h)	2,425	2,649	5.00%, 4/1/2040^(h)	2,156	2,295
6.00%, 12/1/2037^(e),(h)	3,072	3,354	5.00%, 8/1/2040^(h)	1,254	1,333
6.00%, 1/1/2038^(h)	2,382	2,627	5.00%, 11/1/2040^(h),(i)	24,550	26,092
6.00%, 1/1/2038^(e),(h)	945	1,032	5.39%, 10/1/2036^(e),(h)	577	612
6.00%, 7/1/2038^(h)	11,362	12,531	5.50%, 9/1/2017^(h)	96	104
6.50%, 6/1/2017^(h)	246	269	5.50%, 10/1/2017^(h)	150	163
6.50%, 3/1/2029^(h)	33	37	5.50%, 1/1/2018^(h)	13,448	14,599
6.50%, 3/1/2029^(h)	4	5	5.50%, 3/1/2018^(h)	10,606	11,520
6.50%, 5/1/2029^(h)	50	56	5.50%, 1/1/2019^(h)	4,400	4,776
6.50%, 4/1/2031^(h)	25	29	5.50%, 3/1/2020^(h)	39,679	43,074
6.50%, 6/1/2031^(h)	2	2	5.50%, 6/1/2020^(h)	2,739	2,976
6.50%, 9/1/2031^(h)	12	14	5.50%, 9/1/2020^(h)	2,790	3,032
6.50%, 2/1/2032^(h)	24	27	5.50%, 2/1/2023^(h)	350	379
6.50%, 2/1/2032^(h)	16	19	5.50%, 6/1/2023^(h)	1,344	1,457
6.50%, 5/1/2032^(h)	61	69	5.50%, 7/1/2023^(h)	24	26
6.50%, 4/1/2035^(h)	534	594	5.50%, 7/1/2033^(h)	1,066	1,155
6.50%, 10/1/2035^(h)	274	305	5.50%, 9/1/2033^(h)	1,207	1,309
7.00%, 12/1/2029^(h)	19	22	5.50%, 8/1/2036^(h)	7,362	7,954
7.00%, 6/1/2030^(h)	27	31	5.50%, 2/1/2037^(h)	722	781
7.00%, 12/1/2030^(h)	21	24	5.50%, 12/1/2038^(h)	11,103	12,072
7.00%, 6/1/2031^(h)	1	1	5.96%, 12/1/2036^(e),(h)	2,553	2,734
7.00%, 9/1/2031^(h)	7	8	6.00%, 10/1/2021^(h)	1,839	2,012
7.50%, 9/1/2030^(h)	6	7	6.00%, 2/1/2023^(h)	115	126
7.50%, 9/1/2030^(h)	7	8	6.00%, 5/1/2032^(h)	19	22
7.50%, 12/1/2030^(h)	1	1	6.00%, 5/1/2036^(h)	790	869
7.50%, 1/1/2031^(h)	35	41	6.00%, 9/1/2037^(h)	3,321	3,612
7.50%, 3/1/2031^(h)	10	12	6.00%, 2/1/2038^(e),(h)	4,327	4,702
7.50%, 2/1/2032^(h)	20	23	6.00%, 3/1/2038^(h)	1,638	1,794
8.00%, 9/1/2030^(h)	124	143	6.00%, 5/1/2038^(h)	1,747	1,920
8.00%, 11/1/2030^(h)	1	1	6.00%, 5/1/2038^(h)	1,104	1,209
		$ 231,119	6.00%, 5/1/2038^(h)	1,043	1,142
Federal National Mortgage Association (FNMA) - 15.70%			6.00%, 8/1/2038^(h)	1,903	2,100
1.70%, 10/1/2034^(e),(h)	333	344	6.00%, 8/1/2038^(h)	3,770	4,167


Schedule of Investments
Bond & Mortgage Securities Fund
October 31, 2010




	Principal					Principal
U.S. GOVERNMENT & GOVERNMENT	Amount			U.S. GOVERNMENT & GOVERNMENT		Amount
AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)		AGENCY OBLIGATIONS (continued)		(000's)	Value (000's)
Federal National Mortgage Association (FNMA) (continued)				U.S. Treasury (continued)
6.50%, 2/1/2011^(h)	$ 6	$ 6			6.13%, 8/15/2029	$ 25	$ 34
6.50%, 3/1/2011^(h)	5		5		6.75%, 8/15/2026	3,000		4,256
6.50%, 7/1/2016^(h)	11		12				$ 207,557
6.50%, 2/1/2017^(h)	34		37	TOTAL U.S. GOVERNMENT &
6.50%, 3/1/2017^(h)	15		17	GOVERNMENT AGENCY OBLIGATIONS			$ 827,041
6.50%, 4/1/2017^(h)	9		10			Maturity
6.50%, 8/1/2017^(h)	229		252			Amount
6.50%, 5/1/2022^(h)	22		25	REPURCHASE AGREEMENTS - 3.03%		(000's)	Value (000's)
6.50%, 12/1/2031^(h)	9		10	Banks
					- 3.03%
6.50%, 2/1/2032^(h)	14		16	Investment in Joint Trading Account; Bank of		$ 17,048	$ 17,047
6.50%, 2/1/2032^(h)	30		33		America Repurchase Agreement; 0.22%
6.50%, 4/1/2032^(h)	17		19		dated 10/29/10 maturing 11/01/10
6.50%, 6/1/2032^(h)	6		7		(collateralized by Sovereign Agency Issues;
6.50%, 8/1/2032^(h)	115		130		$17,388,336; 0.00% - 5.25%; dated 05/01/13
6.50%, 7/1/2037^(h)	2,515		2,825		- 04/15/42)
6.50%, 7/1/2037^(h)	1,757		1,973	Investment in Joint Trading Account; Credit Suisse		16,458		16,458
6.50%, 12/1/2037^(h)	4,430		4,892		Repurchase Agreement; 0.21% dated
6.50%, 2/1/2038^(h)	1,688		1,879		10/29/10 maturing 11/01/10 (collateralized by
6.50%, 3/1/2038^(h)	1,383		1,540		US Treasury Note; $16,786,543; 1.13%;
7.00%, 2/1/2032^(h)	49		56		dated 01/15/12)
7.00%, 3/1/2032^(h)	117		134	Investment in Joint Trading Account; Deutsche		15,635		15,635
7.50%, 8/1/2032^(h)	47		54		Bank Repurchase Agreement; 0.21% dated
		$ 310,264			10/29/10 maturing 11/01/10 (collateralized by
Government National Mortgage Association (GNMA) - 3.95%					Sovereign Agency Issues; $15,947,221;
4.50%, 6/20/2025	20,462		21,778		0.38% - 3.75%; dated 12/06/10 - 01/29/15)
4.50%, 8/15/2040	9,954		10,632	Investment in Joint Trading Account; Morgan		10,697		10,697
5.00%, 11/15/2033	9,687		10,473		Stanley Repurchase Agreement; 0.20% dated
5.00%, 6/15/2034	212		228		10/29/10 maturing 11/01/10 (collateralized by
5.00%, 8/20/2040	20,140		21,683		Sovereign Agency Issues; $10,911,254;
5.00%, 11/1/2040⁽ⁱ⁾	4,755		5,106		1.88% - 6.13%; dated 01/09/12 - 02/21/13)
5.50%, 5/20/2035	494		537				$ 59,837
5.50%, 11/1/2040⁽ⁱ⁾	5,010		5,435	TOTAL REPURCHASE AGREEMENTS			$ 59,837
6.00%, 7/20/2028	140		155	Total Investments			$ 2,151,624
6.00%, 11/20/2028	127		141	Liabilities in Excess of Other Assets, Net - (8.89)%			$ (175,574)
6.00%, 1/20/2029	143		159	TOTAL NET ASSETS - 100.00%			$ 1,976,050
6.00%, 7/20/2029	34		38
6.00%, 8/15/2031	70		77
6.00%, 1/15/2032	18		20	(a)	Security is Illiquid
6.00%, 2/15/2032	204		226	(b)	Non-Income Producing Security
6.00%, 2/15/2033	109		120	(c)	Market value is determined in accordance with procedures established in
6.00%, 12/15/2033	145		161		good faith by the Board of Directors. At the end of the period, the value of
6.50%, 3/20/2028	26		29		these securities totaled $25,478 or 1.29% of net assets.
6.50%, 5/20/2029	22		25	(d)	Security exempt from registration under Rule 144A of the Securities Act of
6.50%, 2/20/2032	11		13		1933. These securities may be resold in transactions exempt from
6.50%, 10/15/2032	77		87		registration, normally to qualified institutional buyers. Unless otherwise
6.50%, 12/15/2032	576		650		indicated, these securities are not considered illiquid. At the end of the
7.00%, 4/15/2031	1		1		period, the value of these securities totaled $286,658 or 14.51% of net
7.00%, 6/15/2031	41		48		assets.
7.00%, 7/15/2031	8		9	(e)	Variable Rate. Rate shown is in effect at October 31, 2010.
7.00%, 6/15/2032	219		253	(f)	Security purchased on a when-issued basis.
8.00%, 1/20/2031	14		17	(g)	This Senior Floating Rate Note will settle after October 31, 2010, at which
		$ 78,101			time the interest rate will be determined.
U.S. Treasury - 10.50%				(h)	This entity was put into conservatorship by the US Government in 2008.
1.25%, 9/30/2015	2,260		2,271		See Notes to Financial Statements for additional information.
1.75%, 8/15/2012	20,000		20,510	(i)	Security was purchased in a "to-be-announced" ("TBA") transaction. See
1.88%, 8/31/2017	19,425		19,449		Notes to Financial Statements for additional information.
1.88%, 9/30/2017	1,500		1,500	(j)	Security or a portion of the security was pledged to cover margin
2.63%, 12/31/2014	450		482		requirements for swap and/or swaption contracts. At the end of the period,
2.63%, 4/30/2016	80		85		the value of these securities totaled $879 or 0.04% of net assets.
2.63%, 8/15/2020	7,640		7,647
2.75%, 2/15/2019	20,040		20,755
3.13%, 1/31/2017	30,000		32,602
3.13%, 5/15/2019	635		673
3.25%, 12/31/2016	500		547
3.63%, 8/15/2019	200		219
4.00%, 8/15/2018	27,650		31,391
4.38%, 5/15/2040^(j)	15,060		16,041
4.50%, 2/15/2036	13,500		14,783
6.00%, 2/15/2026	26,000		34,312

Schedule of Investments

Bond & Mortgage Securities Fund

October 31, 2010

Unrealized Appreciation (Depreciation)

The net federal income tax unrealized appreciation (depreciation) and federal tax

cost of investments held as of the period end were as follows:

Unrealized Appreciation

$ 84,002

Unrealized Depreciation

(104,472)

Net Unrealized Appreciation (Depreciation)

$ (20,470)

Cost for federal income tax purposes

$ 2,172,094

All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector

Percent

Mortgage Securities

47 .24%

Financial

18 .16%

Government

11 .83%

Communications

6 .44%

Energy

5 .70%

Consumer, Non-cyclical

4 .40%

Asset Backed Securities

4 .09%

Consumer, Cyclical

3 .14%

Industrial

2 .87%

Utilities

1 .96%

Technology

1 .86%

Basic Materials

0 .79%

General Obligation

0 .21%

Revenue

0 .18%

Diversified

0 .02%

Liabilities in Excess of Other Assets, Net

(8 .89)%

TOTAL NET ASSETS

100.00%

Credit Default Swaps

Unrealized/

Buy/Sell

(Pay)/Receive Expiration

Notional

Appreciation

Counterparty (Issuer)

Reference Entity

Protection Fixed Rate

Date

Amount

(Depreciation)

Barclays Bank PLC

CMBX.NA.A1

Buy

(0.35)%

10/12/2052

$ 1,750

$ 73

Barclays Bank PLC

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

4,200

(329)

Barclays Bank PLC

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

4,200

(339)

Goldman Sachs International

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

8,400

(696)

Morgan Stanley Capital Services Inc

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

4,200

(334)

Morgan Stanley Capital Services Inc

CMBX.NA.A4

Buy

(3.48)%

02/17/2051

2,250

Morgan Stanley Capital Services Inc

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

6,800

(572)

Morgan Stanley Capital Services Inc

CDX.NA.HY.14

Buy

(5.00)%

06/20/2015

4,200

(329)

All dollar amounts are shown in thousands (000's)

Foreign Currency Contracts

Foreign Currency Purchase

Net Unrealized

Contracts

Counterparty

Delivery Date Contracts to Accept In Exchange For

Value

Appreciation/(Depreciation)

Euro

JP Morgan Securities

12/20/2010

75,226 $

100

$ 105

$ 5

Japanese Yen

JP Morgan Securities

12/20/2010

4,952,839

Foreign Currency Sale

Net Unrealized

Contracts

Counterparty

Delivery Date Contracts to Deliver In Exchange For

Value

Appreciation/(Depreciation)

Australian Dollar

JP Morgan Securities

12/20/2010

70,848$

$ 69

$ (2)

British Pound

JP Morgan Securities

12/20/2010

189,730

296

304

(8)

Canadian Dollar

JP Morgan Securities

12/20/2010

108,749

106

107

(1)

Danish Kroner

JP Morgan Securities

12/20/2010

179,365

(1)

Euro

JP Morgan Securities

12/20/2010

1,247,611

1,633

1,735

(102)

Japanese Yen

JP Morgan Securities

12/20/2010

142,800,230

1,667

1,776

(109)

Polish Zloty

JP Morgan Securities

12/20/2010

125,292

(3)

Swedish Krona

JP Morgan Securities

12/20/2010

168,378

(1)

Swiss Franc

JP Morgan Securities

12/20/2010

23,162

(1)

All dollar amounts are shown in thousands (000's)

Interest Rate Swaps

(Pay)/Receive

Notional /Principal

Unrealized

Counterparty (Issuer)

Floating Rate Index

Floating Rate

Fixed Rate Expiration Date Currency

Amount

Appreciation/(Depreciation)

Morgan Stanley Capital

3 Month LIBOR

Receive

2.65% 07/14/2017

USD

$ 8,500

$ (361)

Services Inc


Schedule of Investments
California Municipal Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS - 105.64%	(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
California - 105.28%			California (continued)
Abag Finance Authority for Nonprofit Corps			California Statewide Communities Development
5.25%, 10/1/2026	$ 1,240	$ 1,254	Authority (continued)
5.70%, 11/1/2013	2,280	2,294	6.50%, 8/1/2012	$ 905	$ 947
Anaheim Public Financing Authority			7.25%, 11/15/2041	1,500	1,650
5.25%, 10/1/2034	1,000	1,065	Carson Redevelopment Agency NATL-RE
Baldwin Park Public Financing Authority			5.50%, 10/1/2016	1,000	1,125
4.63%, 8/1/2016	1,130	1,181	Chula Vista Community Facilities District
Barstow Redevelopment Agency NATL-RE			5.45%, 9/1/2036	985	820
7.00%, 9/1/2014	640	726	City of Alhambra CA NATL-RE
7.00%, 9/1/2014	330	368	6.13%, 9/2/2018	3,980	4,010
Bay Area Governments Association XLCA			City of Azusa CA
5.25%, 9/1/2029	2,000	1,884	6.00%, 9/1/2026	2,210	2,249
Bay Area Toll Authority			City of Bakersfield CA AGM
5.00%, 04/01/2031^(a)	3,000	3,200	5.00%, 9/15/2032	1,500	1,565
5.13%, 04/01/2039^(a)	3,000	3,176	City of Burbank CA AGM
Berkeley Unified School District/CA ASSURED			5.25%, 5/1/2024	3,155	3,320
GTY			City of Chula Vista CA NATL-RE
5.00%, 8/1/2031	1,250	1,308	5.00%, 8/1/2027	3,000	2,963
Beverly Hills Unified School District CA			City of Compton CA
0.00%, 8/1/2028^(b)	2,000	850	6.00%, 8/1/2039	1,250	1,318
California County Tobacco Securitization Agency			City of Hawthorne CA
0.00%, 6/1/2028^(c)	2,000	1,701	4.60%, 9/1/2021	1,000	795
California Educational Facilities Authority NATL-			5.00%, 9/1/2030	2,000	1,430
RE			City of Imperial CA NATL-RE FGIC
5.00%, 01/01/2038^(a)	3,000	3,145	5.00%, 10/15/2020	1,250	1,278
5.10%, 3/1/2014	2,000	2,004	City of Irvine CA
5.25%, 10/01/2039^(a)	6,500	7,037	5.00%, 9/2/2026	1,285	1,277
5.38%, 4/1/2034	1,000	1,040	5.00%, 9/2/2029	1,485	1,364
California Health Facilities Financing Authority			City of Los Angeles CA GNMA COLL
5.00%, 11/15/2036	1,895	1,935	5.00%, 3/1/2022	1,445	1,509
5.75%, 9/1/2039	2,000	2,093	6.25%, 9/20/2039	1,000	1,001
6.00%, 7/1/2039	2,000	2,177	City of Modesto CA
6.50%, 10/1/2038	1,000	1,152	5.15%, 9/1/2036	1,000	786
California Housing Finance Agency			City of Oceanside CA AMBAC
4.70%, 8/1/2036	3,150	2,693	5.25%, 4/1/2016	1,575	1,654
4.75%, 8/1/2042	5,400	4,623	City of Pacifica CA AMBAC
California Infrastructure & Economic Development			5.00%, 10/1/2024	1,090	1,114
Bank NATL-RE FGIC			City of Pasadena CA
5.00%, 8/15/2018	1,155	1,231	5.00%, 2/1/2033	2,000	2,080
California Municipal Finance Authority			City of Riverside CA AGM
5.50%, 7/1/2030	500	508	5.00%, 10/01/2038^(a)	3,000	3,069
5.75%, 7/1/2040	1,000	1,013	City of San Jose CA AMBAC
California Pollution Control Financing			5.00%, 3/1/2037	5,000	4,857
Authority AMBAC-TCRS			City of Torrance CA
5.00%, 1/1/2022	2,000	2,046	5.00%, 9/1/2040	1,000	989
5.00%, 7/1/2027	4,500	4,566	6.00%, 6/1/2022	1,000	1,030
5.85%, 6/1/2021	2,500	2,508	City of Turlock CA
California State Department of Water			5.13%, 10/15/2031	1,000	944
Resources AGM			5.13%, 10/15/2037	1,000	924
5.00%, 12/1/2018	1,660	1,729	5.38%, 10/15/2034	1,900	1,829
California State Enterprise Development			City of Vernon CA
Authority			5.13%, 8/1/2021	2,000	2,103
5.30%, 9/1/2047	1,200	1,201	Coachella Redevelopment Agency
California State Public Works Board			5.88%, 12/1/2028	1,945	1,809
5.00%, 4/1/2023	4,200	4,493	County of Orange CA
5.40%, 10/1/2022	3,000	3,007	5.00%, 7/1/2031	1,000	1,046
California State University AGM			County of Sacramento CA
5.00%, 11/1/2039	1,000	1,031	5.00%, 7/1/2040	2,000	2,041
5.25%, 11/1/2038	2,000	2,134	Desert Hot Springs Redevelopment Agency
California Statewide Communities Development			5.60%, 9/1/2038	2,000	1,964
Authority			Dinuba Financing Authority
4.20%, 10/15/2018	1,430	1,542	5.38%, 9/1/2038	1,000	817
5.00%, 4/1/2019	1,500	1,668	Eastern Municipal Water District
5.00%, 5/15/2020	1,000	1,043	5.20%, 9/1/2037	750	652
5.00%, 11/15/2043	2,985	2,918	El Monte Union High School District ASSURED
5.13%, 4/1/2037^(d)	1,500	1,410	GTY
5.25%, 11/1/2030	1,500	1,569	5.50%, 6/1/2034	2,000	2,162
6.25%, 8/1/2024	1,000	1,184	Fontana Redevelopment Agency NATL-RE
6.25%, 8/15/2028	2,250	2,440	5.20%, 9/1/2030	1,000	989


Schedule of Investments
California Municipal Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
California (continued)			California (continued)
Foothill-Eastern Transportation Corridor Agency			Palm Desert Financing Authority NATL-RE
0.00%, 1/15/2032^(b)	$ 10,000	$ 2,426	5.00%, 8/1/2022	$ 1,280	$ 1,286
0.00%, 1/15/2033^(b)	10,000	2,245	Palomar Pomerado Health
0.00%, 1/15/2034^(b)	10,000	2,099	6.75%, 11/1/2039	1,500	1,651
5.88%, 1/15/2026	5,000	5,111	Perris Public Financing Authority
Fresno Joint Powers Financing Authority AGM			5.30%, 10/1/2026	2,805	2,667
5.75%, 6/1/2026	2,000	2,045	Pittsburg Unified School District FSA
Golden West Schools Financing Authority NATL-			5.50%, 8/1/2031	1,000	1,096
RE			Pomona Public Financing Authority NATL-RE
5.65%, 2/1/2012	685	726	5.00%, 2/1/2021	5,000	5,008
Gonzales Redevelopment Agency			Pomona Unified School District NATL-RE
4.63%, 8/1/2011	1,000	1,001	6.15%, 8/1/2030	1,000	1,123
Hesperia Public Financing Authority XLCA			Port of Oakland NATL-RE FGIC
5.00%, 9/1/2037	1,945	1,460	5.75%, 11/1/2029	2,000	2,001
Hesperia Unified School District			Poway Redevelopment Agency AMBAC
5.00%, 9/1/2030	1,055	949	5.38%, 6/15/2019	1,000	1,023
Hi-Desert Memorial Health Care District			Richmond Joint Powers Financing Authority
5.50%, 10/1/2015	1,000	1,001	6.25%, 7/1/2024	1,000	1,110
Highland Redevelopment Agency AMBAC			Riverside County Public Financing Authority
5.00%, 12/1/2028	3,000	2,975	5.80%, 5/15/2029	2,100	1,825
Huntington Beach Union High School			Rocklin Unified School District NATL-RE FGIC
District AGM			0.00%, 8/1/2019^(b)	1,360	856
5.00%, 8/1/2029	2,000	2,113	0.00%, 8/1/2020^(b)	1,415	843
Indio Redevelopment Agency			0.00%, 8/1/2023^(b)	1,225	621
5.63%, 8/15/2035	1,855	1,858	Roseville Finance Authority
Irvine Public Facilities & Infrastructure			5.00%, 2/1/2037	1,000	1,031
Authority AMBAC			Sacramento Municipal Utility District AGM
5.00%, 9/2/2020	1,415	1,422	5.00%, 8/15/2024	1,000	1,102
5.00%, 9/2/2021	3,535	3,547	Saddleback Valley Unified School District AGM
5.00%, 9/2/2023	2,000	1,980	5.00%, 8/1/2029	2,000	2,105
La Quinta Financing Authority AMBAC			Salinas Valley Solid Waste Authority AMBAC
5.25%, 9/1/2024	1,000	1,018	5.25%, 8/1/2027	1,975	1,925
La Verne Public Financing Authority			5.25%, 8/1/2031	2,000	1,889
7.25%, 9/1/2026	1,500	1,505	San Bernardino County Redevelopment
Lake Elsinore Public Financing Authority			Agency RADIAN
5.80%, 9/2/2015	920	921	5.00%, 9/1/2018	1,565	1,603
Lancaster Redevelopment Agency			San Diego Community College District
6.88%, 8/1/2039	1,000	1,126	5.25%, 08/01/2033^(a)	3,000	3,254
Los Angeles Community College District/CA			San Diego County Regional Airport Authority
5.00%, 08/01/2033^(a)	3,000	3,157	5.00%, 7/1/2040	2,250	2,318
Los Angeles Community Redevelopment			San Diego Public Facilities Financing Authority
Agency NATL-RE			5.38%, 8/1/2034	2,000	2,174
5.40%, 7/1/2024	2,500	2,522	San Diego Redevelopment Agency
Los Angeles County Metropolitan Transportation			6.40%, 9/1/2019	1,000	1,006
Authority AMBAC			San Francisco City & County Airports
5.00%, 7/1/2035	1,500	1,558	Commission
Los Angeles Department of Airports			5.00%, 5/1/2030	4,000	4,002
5.00%, 5/15/2035	1,500	1,556	5.00%, 5/1/2040	1,000	1,014
5.13%, 5/15/2033	1,230	1,275	5.25%, 5/1/2026	4,000	4,017
Los Angeles Department of Water & Power			San Francisco City & County Redevelopment
5.38%, 7/1/2038	1,000	1,090	Agency
Los Angeles Unified School District/CA AGM			6.50%, 8/1/2039	1,000	1,089
5.00%, 7/1/2029	2,000	2,121	San Juan Unified School District NATL-RE
5.00%, 7/1/2032	1,000	1,045	5.00%, 8/1/2027	1,530	1,612
Metropolitan Water District of Southern			Semitropic Improvement District
California AGM			5.00%, 12/1/2038	2,000	2,063
5.00%, 7/1/2035	2,000	2,087	Sierra View Local Health Care District/CA
Morongo Band of Mission Indians			5.25%, 7/1/2032	1,500	1,486
5.50%, 3/1/2018^(d),(e)	1,225	1,166	South Gate Public Financing Authority XLCA
6.50%, 3/1/2028^(d)	1,825	1,737	5.00%, 9/1/2016	1,670	1,744
Needles Public Utility Authority			5.25%, 9/1/2022	2,090	2,130
6.50%, 2/1/2022	2,785	2,785	Southern California Public Power Authority
Norco Financing Authority AGM			0.22%, 7/1/2020	1,200	1,200
5.63%, 10/1/2034	1,000	1,071	5.00%, 7/1/2030	750	814
Ontario Redevelopment Financing			State of California
Authority AMBAC			0.20%, 5/1/2034	500	500
5.25%, 8/1/2016	1,060	1,087	5.25%, 7/1/2021	2,000	2,317
5.50%, 8/1/2016	1,055	1,087	5.75%, 4/1/2031	1,000	1,089


Schedule of Investments
California Municipal Fund
October 31, 2010


			Portfolio Summary (unaudited)
			Sector	Percent
	Principal		Revenue	46 .07%
	Amount		Insured	42 .44%
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	General Obligation	5 .19%
California (continued)			Revenue - Special Tax	4 .33%
Stockton East Water District NATL-RE FGIC			Tax Allocation	4 .07%
5.25%, 4/1/2022	$ 1,780	$ 1,810	Certificate Participation	3 .28%
Temecula Redevelopment Agency NATL-RE
5.25%, 8/1/2036	3,270	3,102	Prerefunded	0 .26%
			Liability for floating rate notes issued	(6.80)%
Tobacco Securitization Authority of Northern			Other Assets in Excess of Liabilities, Net	1 .16%
California
5.38%, 6/1/2038	3,000	2,503	TOTAL NET ASSETS	100.00%
5.50%, 6/1/2045	1,430	1,072
Tobacco Securitization Authority of Southern
California
5.13%, 6/1/2046	4,000	2,807
Tracy Area Public Facilities Financing
Agency NATL-RE
5.88%, 10/1/2013	295	300
Tustin Community Facilities District
5.38%, 9/1/2029	1,000	974
Twin Rivers Unified School District
0.00%, 4/1/2014^(b)	1,500	1,364
University of California
5.25%, 05/15/2039^(a)	4,500	4,897
Walnut Energy Center Authority
5.00%, 1/1/2035	2,000	2,068
Western Municipal Water District Facilities
Authority
5.00%, 10/1/2034	1,700	1,803
		$ 297,793
Virgin Islands - 0.36%
Virgin Islands Public Finance Authority
6.38%, 10/1/2019	1,000	1,013

TOTAL MUNICIPAL BONDS		$ 298,806
Total Investments		$ 298,806
Liability for Floating Rate Notes Issued in Conjunction with
Securities Held - (6.80)%
Notes with interest rates ranging from 0.28% to	$ (19,226)	$ (19,226)
0.33% at October 31, 2010 and contractual
maturity of collateral from 2015-2039.^(f)
Total Net Investments		$ 279,580
Other Assets in Excess of Liabilities, Net - 1.16%		$ 3,279
TOTAL NET ASSETS - 100.00%		$ 282,859

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Disciplined LargeCap Blend Fund
October 31, 2010




COMMON STOCKS - 100.09%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.82%			Healthcare - Services (continued)
Interpublic Group of Cos Inc ^(a)	656,738 $	6,797	Humana Inc ^(a)	106,208 $	6,191
			UnitedHealth Group Inc	455,597	16,424
Agriculture - 4.80%				$ 43,101
Altria Group Inc	577,302	14,675	Insurance - 5.33%
Archer-Daniels-Midland Co	493,224	16,434	ACE Ltd	129,252	7,680
Lorillard Inc	100,377	8,566	Assurant Inc	205,178	8,113
	$ 39,675		Berkshire Hathaway Inc - Class B ^(a)	169,086	13,452
Airlines - 1.18%			Chubb Corp	132,678	7,698
Southwest Airlines Co	185,530	2,553	Prudential Financial Inc	134,556	7,075
United Continental Holdings Inc ^(a)	247,077	7,175		$ 44,018
	$ 9,728		Machinery - Construction & Mining - 1.95%
Apparel - 1.15%			Caterpillar Inc	158,071	12,425
Nike Inc	116,771	9,510	Joy Global Inc	52,547	3,728
				$ 16,153
Banks - 3.96%			Machinery - Diversified - 0.39%
Capital One Financial Corp	209,142	7,795	AGCO Corp ^(a)	76,203	3,236
JP Morgan Chase & Co	147,239	5,541
PNC Financial Services Group Inc	244,623	13,185	Media - 3.98%
Wells Fargo & Co	239,230	6,239	CBS Corp	404,345	6,846
	$ 32,760		DIRECTV ^(a)	207,232	9,006
Biotechnology - 2.07%			McGraw-Hill Cos Inc/The	111,619	4,203
Amgen Inc ^(a)	299,289	17,116	News Corp - Class A	887,998	12,840
				$ 32,895
Chemicals - 3.67%			Metal Fabrication & Hardware - 0.50%
Ashland Inc	58,643	3,028	Timken Co	98,960	4,099
Cabot Corp	162,866	5,541
Cytec Industries Inc	92,794	4,595	Mining - 0.99%
EI du Pont de Nemours & Co	215,259	10,177	Freeport-McMoRan Copper & Gold Inc	86,377	8,178
Lubrizol Corp	68,370	7,007
	$ 30,348		Miscellaneous Manufacturing - 5.91%
Commercial Services - 0.44%			3M Co	101,181	8,521
Total System Services Inc	232,699	3,632	Crane Co	109,932	4,206
			Dover Corp	175,739	9,332
Computers - 4.42%			General Electric Co	1,670,363	26,759
Apple Inc ^(a)	78,911	23,742		$ 48,818
Dell Inc ^(a)	273,266	3,930	Office & Business Equipment - 0.36%
EMC Corp/Massachusetts ^(a)	423,156	8,890	Xerox Corp	256,710	3,004
	$ 36,562
Cosmetics & Personal Care - 0.50%			Oil & Gas - 8.28%
Procter & Gamble Co	64,896	4,126	Chevron Corp	262,458	21,682
			Devon Energy Corp	192,890	12,542
Diversified Financial Services - 3.99%			Exxon Mobil Corp	270,237	17,962
American Express Co	466,174	19,327	Holly Corp	71,228	2,331
Ameriprise Financial Inc	263,215	13,606	Marathon Oil Corp	238,071	8,468
	$ 32,933		Rowan Cos Inc ^(a)	164,278	5,405
Electric - 3.67%				$ 68,390
Ameren Corp	175,000	5,072	Oil & Gas Services - 2.27%
Integrys Energy Group Inc	77,763	4,136	Halliburton Co	281,651	8,974
Pinnacle West Capital Corp	218,885	9,009	National Oilwell Varco Inc	181,460	9,755
Progress Energy Inc	129,734	5,838		$ 18,729
Westar Energy Inc	249,471	6,312	Pharmaceuticals - 4.07%
	$ 30,367		Abbott Laboratories	39,949	2,050
Electrical Components & Equipment - 0.81%			Bristol-Myers Squibb Co	425,031	11,433
Energizer Holdings Inc ^(a)	88,953	6,652	Cephalon Inc ^(a)	110,338	7,331
			Forest Laboratories Inc ^(a)	200,031	6,611
Electronics - 0.99%			Medco Health Solutions Inc ^(a)	118,345	6,217
Thomas & Betts Corp ^(a)	188,168	8,195		$ 33,642
			Real Estate - 0.66%
Engineering & Contruction - 0.54%			Jones Lang LaSalle Inc	70,292	5,487
McDermott International Inc ^(a)	288,325	4,449
			REITS - 2.03%
Food - 2.09%			BRE Properties Inc	90,248	3,874
Corn Products International Inc	168,442	7,167	Equity Residential	35,706	1,737
Kroger Co/The	282,664	6,219	Essex Property Trust Inc	63,725	7,198
SUPERVALU Inc	361,386	3,899	Host Hotels & Resorts Inc	251,801	4,001
	$ 17,285			$ 16,810
Healthcare - Services - 5.22%			Retail - 6.14%
Aetna Inc	314,960	9,405	Big Lots Inc ^(a)	131,339	4,120
Coventry Health Care Inc ^(a)	212,776	4,983	Gap Inc/The	488,205	9,281
Health Management Associates Inc ^(a)	761,231	6,098	Starbucks Corp	338,541	9,641

Schedule of Investments
Disciplined LargeCap Blend Fund
October 31, 2010


Schedule of Investments
Diversified International Fund
October 31, 2010




COMMON STOCKS - 97.12%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.02%			Banks (continued)
Havas SA	74,825 $	393	BNP Paribas	200,337 $	14,653
			Busan Bank	92,310	1,148
Aerospace & Defense - 0.73%			Canadian Imperial Bank of Commerce ^(a)	99,500	7,632
Chemring Group PLC	9,762	469	Canadian Western Bank	22,700	564
Meggitt PLC	119,652	633	Chiba Bank Ltd/The	759,937	4,694
MTU Aero Engines Holding AG	74,407	4,493	China Construction Bank Corp	6,777,691	6,462
Saab AB	18,922	296	Credicorp Ltd	6,174	777
Safran SA	228,691	7,251	DBS Group Holdings Ltd	468,000	5,026
	$ 13,142		DnB NOR ASA	532,350	7,308
Agriculture - 0.72%			FirstRand Ltd	991,057	2,916
British American Tobacco PLC	309,796	11,814	Gunma Bank Ltd/The	77,000	387
Golden Agri-Resources Ltd - Warrants ^(a)	761,164	77	Home Capital Group Inc	9,700	457
Souza Cruz SA	20,400	1,067	HSBC Holdings PLC	2,711,744	28,205
	$ 12,958		ICICI Bank Ltd ADR	49,999	2,629
Airlines - 0.44%			Industrial and Commercial Bank of China Ltd	4,220,000	3,397
Air China Ltd ^(a)	1,776,000	2,387	Industrial Bank of Korea	112,480	1,614
Jazz Air Income Fund	67,400	378	Krung Thai Bank Public Company Ltd ^(b)	3,243,291	1,828
Singapore Airlines Ltd	412,384	5,041	Laurentian Bank of Canada	8,700	377
			Lloyds Banking Group PLC ^(a)	11,262,986	12,442
	$ 7,806
Apparel - 0.69%			Malayan Banking Bhd	1,248,900	3,612
Christian Dior SA	46,711	6,758	Mitsubishi UFJ Financial Group Inc	2,760,100	12,862
Far Eastern New Century Corp	1,297,700	1,869	National Australia Bank Ltd	180,404	4,499
Yue Yuen Industrial Holdings Ltd	1,053,500	3,778	National Bank of Canada	83,600	5,503
	$ 12,405		Nordea Bank AB	919,842	10,128
			Powszechna Kasa Oszczednosci Bank Polski SA	75,701	1,195
Automobile Manufacturers - 4.52%			Sberbank of Russia	1,393,634	4,619
Bayerische Motoren Werke AG	109,717	7,851
Daimler AG ^(a)	271,878	18,010	Societe Generale	122,555	7,339
Dongfeng Motor Group Co Ltd	1,470,698	3,188	Standard Bank Group Ltd/South Africa	24,402	360
Hino Motors Ltd	510,000	2,206	Standard Chartered PLC	585,503	16,939
			Standard Chartered PLC - Rights ^(a)	73,187	616
Honda Motor Co Ltd	134,100	4,894
Hyundai Motor Co	10,441	1,577	State Bank of India Ltd	8,721	1,204
Kia Motors Corp	60,070	2,397	Sumitomo Mitsui Financial Group Inc	244,100	7,317
Mahindra & Mahindra Ltd	160,286	2,647	Torinto Dominion Bank	182,900	13,172
Nissan Motor Co Ltd	1,133,100	9,998	Turkiye Vakiflar Bankasi Tao	406,759	1,316
			UBS AG ^(a)	592,580	10,032
Renault SA ^(a)	114,551	6,365
Scania AB	266,017	5,655	United Overseas Bank Ltd	525,000	7,561
Tata Motors Ltd	118,471	3,091		$ 257,908
Volkswagen AG - PFD	57,208	8,643	Beverages - 2.26%
Volvo AB - B Shares ^(a)	325,019	4,401	Anheuser-Busch InBev NV	153,187	9,602
	$ 80,923		Asahi Breweries Ltd	245,000	4,947
Automobile Parts & Equipment - 1.56%			Britvic PLC	62,978	487
Continental AG (a)	63,010	5,551	Carlsberg A/S	101,014	11,047
Exedy Corp	8,396	263	Cia de Bebidas das Americas ADR	35,206	4,902
FCC Co Ltd	16,300	350	Fomento Economico Mexicano SAB de CV ADR	47,257	2,595
Georg Fischer AG ^(a)	771	331	Heineken NV	136,135	6,901
Iochpe-Maxion SA	35,800	518		$ 40,481
Keihin Corp	25,369	541	Building Materials - 0.19%
Magna International Inc ^(a)	78,800	7,127	Adelaide Brighton Ltd	140,393	492
Marcopolo SA	69,400	277	China National Building Material Co Ltd	519,076	1,266
NHK Spring Co Ltd	29,999	254	Forbo Holding AG	433	233
Nissin Kogyo Co Ltd	17,600	299	Hong Leong Asia Ltd	72,000	191
Unipres Corp	22,900	397	Semen Gresik Persero Tbk PT	818,000	897
Valeo SA ^(a)	177,787	9,556	Sumitomo Osaka Cement Co Ltd	128,000	248
Yokohama Rubber Co Ltd/The	514,000	2,574		$ 3,327
	$ 28,038		Chemicals - 3.59%
			Agruim Inc ^(a)	51,800	4,582
Banks - 14.39%
Aareal Bank AG ^(a)	14,718	358	Arkema SA	10,967	709
Australia & New Zealand Banking Group Ltd	343,022	8,336	BASF SE	231,227	16,883
Axis Bank Ltd	56,615	1,876	Croda International PLC	25,203	581
Banca Generali SpA	18,494	239	Daicel Chemical Industries Ltd	758,994	5,282
Banco do Brasil SA	204,364	3,957	Formosa Chemicals & Fibre Corp	1,201,000	3,443
Banco Santander SA	235,645	3,028	Lanxess AG	110,043	7,658
Banco Santander SA - Rights ^(a)	235,645	39	LG Chem Ltd	11,177	3,447
Bangkok Bank Public Co	640,000	3,298	Linde AG	41,699	6,007
Bank Leumi Le-Israel BM ^(a)	1,065,932	4,908	Lintec Corp	8,514	191
Bank Mandiri Tbk PT	2,124,000	1,664	Nippon Shokubai Co Ltd	42,620	402
Bank of China Ltd	10,058,000	6,021	Rhodia SA	215,722	5,996
Bank of Montreal	135,000	7,972	Toagosei Co Ltd	61,000	268
Bank of Queensland Ltd	36,283	370	Yara International ASA	110,794	5,827
Bank of Yokohama Ltd/The	1,026,509	5,052	Zeon Corp	375,000	3,094
				$ 64,370


Schedule of Investments
Diversified International Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Coal - 0.28%			Electric (continued)
Banpu Public Co Ltd	75,700 $	1,969	Terna Rete Elettrica Nazionale SpA	787,761 $	3,635
Exxaro Resources Ltd	99,909	1,883		$ 21,182
Grande Cache Coal Corp ^(a)	56,300	386	Electrical Components & Equipment - 1.49%
Riversdale Mining Ltd ^(a)	34,187	359	Bekaert SA	2,300	701
Whitehaven Coal Ltd	74,161	506	Delta Electronics Inc	414,000	1,710
	$ 5,103		Fujikura Ltd	118,000	550
Commercial Services - 0.33%			Hitachi Ltd	2,824,739	12,777
Aggreko PLC	164,484	4,151	Legrand SA	8,796	340
Ashtead Group PLC	157,209	317	Mitsubishi Electric Corp	1,004,000	9,420
Atkins WS PLC	19,903	240	SMA Solar Technology AG	2,269	269
Babcock International Group PLC	49,264	458	Young Fast Optoelectronics Co Ltd	75,000	882
Bunzl PLC	24,349	288		$ 26,649
Prosegur Cia de Seguridad SA	6,985	419	Electronics - 1.96%
	$ 5,873		AAC Acoustic Technologies Holdings Inc	170,000	410
Computers - 1.38%			Alps Electric Co Ltd	372,800	3,340
CGI Group Inc ^(a)	415,800	6,397	AU Optronics Corp ^(a)	1,481,000	1,478
HTC Corp	81,250	1,834	Coretronic Corp	778,000	1,186
Infosys Technologies Ltd ADR	54,185	3,654	Electrocomponents PLC	99,039	387
Itochu Techno-Solutions Corp	7,700	263	Fujitsu General Ltd	34,000	163
Lenovo Group Ltd	2,732,000	1,769	Hon Hai Precision Industry Co Ltd	728,674	2,760
Lite-On Technology Corp	1,293,035	1,708	Japan Aviation Electronics Industry Ltd	42,000	279
Melco Holdings Inc	9,800	318	Keyence Corp	22,800	5,653
Tata Consultancy Services Ltd	144,158	3,417	Koninklijke Philips Electronics NV	271,436	8,209
TDK Corp	79,000	4,511	Minebea Co Ltd	552,000	3,032
Wistron Corp	452,000	928	Nippon Chemi-Con Corp	112,744	451
	$ 24,799		Omron Corp	163,400	3,793
Consumer Products - 0.62%			Renishaw PLC	20,367	378
Reckitt Benckiser Group PLC	190,828	10,675	Rexel SA ^(a)	12,053	227
Societe BIC SA	4,050	359	Taiyo Yuden Co Ltd	22,000	283
	$ 11,034		Tripod Technology Corp	387,000	1,485
Cosmetics & Personal Care - 0.02%			WPG Holdings Co Ltd	905,681	1,683
Fancl Corp	18,424	284		$ 35,197
			Engineering & Contruction - 0.83%
Distribution & Wholesale - 1.68%			Bilfinger Berger SE	45,281	3,321
DCC PLC	16,753	484	Bradken Ltd	48,025	385
D'ieteren SA	583	318	Carillion PLC	67,640	373
Inchcape PLC ^(a)	72,075	403	China Railway Group Ltd	1,494,000	1,205
Marubeni Corp	1,230,277	7,736	Daelim Industrial Co Ltd	36,122	2,941
Mitsubishi Corp	449,589	10,811	NCC AB	31,889	680
Ship Healthcare Holdings Inc	31,600	323	SHO-BOND Holdings Co Ltd	14,500	310
Sumitomo Corp	790,831	10,024	Tecnicas Reunidas SA	5,526	344
	$ 30,099		Vinci SA	90,640	4,842
Diversified Financial Services - 1.60%			YIT OYJ	15,959	386
Azimut Holding SpA	24,801	253		$ 14,787
Challenger Financial Services Group Ltd	105,497	475	Environmental Control - 0.02%
Chinatrust Financial Holding Co Ltd	2,355,000	1,469	IESI-BFC Ltd	15,437	361
Close Brothers Group PLC	28,823	356
Fubon Financial Holding Co Ltd	1,579,989	1,935	Food - 5.31%
GAM Holding AG	239,153	3,779	Aryzta AG	68,780	3,051
IG Group Holdings PLC	55,877	473	Associated British Foods PLC	271,262	4,551
Intermediate Capital Group PLC	588,733	3,045	Centros Comerciales Sudamericanos SA	225,050	1,753
International Personal Finance PLC	59,264	295	Cia Brasileira de Distribuicao Grupo Pao de	54,676	2,166
Kenedix Inc ^(a)	1,405	283	Acucar ADR
Mega Financial Holding Co Ltd	3,367,000	2,337	Danisco A/S	80,580	6,948
ORIX Corp	86,930	7,929	Fuji Oil Co Ltd	13,600	196
RMB Holdings Ltd	121,270	626	George Weston Ltd	33,366	2,681
Schroders PLC	134,107	3,393	Indofood Sukses Makmur Tbk PT	2,961,000	1,723
Shinhan Financial Group Co Ltd	23,110	895	Jeronimo Martins SGPS SA	361,568	5,425
Tullett Prebon PLC	66,073	419	Kesko OYJ	78,381	3,886
Woori Finance Holdings Co Ltd	57,210	720	Koninklijke Ahold NV	635,841	8,788
	$ 28,682		Marine Harvest ASA	6,458,204	6,418
Electric - 1.18%			Maruha Nichiro Holdings Inc	157,000	257
Atco Ltd	11,700	598	Metro AG	90,326	6,332
Cia Paranaense de Energia	45,000	1,043	Morinaga Milk Industry Co Ltd	62,000	253
Enel SpA	1,589,277	9,074	Nestle SA	458,661	25,122
Federal Hydrogenerating Co ADR^(a)	138,955	719	Nippon Suisan Kaisha Ltd	103,800	330
International Power PLC	864,827	5,783	Nutreco NV	72,067	5,244
Iren SpA	101,198	178	Viscofan SA	11,920	415
Okinawa Electric Power Co Inc/The	3,300	152	Woolworths Ltd	347,188	9,641
				$ 95,180


Schedule of Investments
Diversified International Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Food Service - 0.30%			Internet (continued)
Compass Group PLC	645,177 $	5,288	Rightmove PLC	37,228 $	475
			Tencent Holdings Ltd	66,000	1,511
Forest Products & Paper - 0.90%			United Internet AG	174,364	3,132
Billerud AB	44,341	357		$ 5,424
Hokuetsu Kishu Paper Co Ltd	49,500	229	Investment Companies - 0.56%
Holmen AB	13,319	423	Delek Group Ltd	11,114	3,072
M-real OYJ ^(a)	67,233	230	Infrastructure Development Finance Co Ltd	137,958	621
Stora Enso OYJ	396,580	3,941	Investor AB	269,646	5,535
Suzano Papel e Celulose SA	129,775	1,220	Kinnevik Investment AB	31,066	641
Svenska Cellulosa AB	622,706	9,658	Pargesa Holding SA	2,843	226
	$ 16,058			$ 10,095
Gas - 0.97%			Iron & Steel - 0.82%
Centrica PLC	1,408,414	7,497	Cia Siderurgica Nacional SA ADR	186,433	3,147
ENN Energy Holdings Ltd	338,000	1,016	Ferrexpo PLC	68,111	354
GAIL India Ltd	68,741	761	Kobe Steel Ltd	1,543,000	3,394
Osaka Gas Co Ltd	869,000	3,283	Labrador Iron Ore Royalty Corp	6,300	378
Tokyo Gas Co Ltd	1,005,583	4,736	Maanshan Iron & Steel	3,156,000	1,808
	$ 17,293		Mechel ADR	45,860	1,080
Hand & Machine Tools - 0.32%			Mount Gibson Iron Ltd ^(a)	269,665	534
Schindler Holding AG - PC	53,414	5,726	POSCO ADR	36,601	3,804
			Xingda International Holdings Ltd	249,000	260
Healthcare - Products - 0.53%				$ 14,759
Coloplast A/S	42,959	5,320	Leisure Products & Services - 0.19%
DiaSorin SpA	8,255	339	Round One Corp	34,400	128
Draegerwerk AG & Co KGaA	4,263	355	Sega Sammy Holdings Inc	198,000	3,233
Elekta AB	93,745	3,548		$ 3,361
	$ 9,562		Lodging - 0.17%
Healthcare - Services - 0.03%			Genting Bhd	596,500	2,001
Ramsay Health Care Ltd	36,857	565	Millennium & Copthorne Hotels PLC	32,873	287
			SJM Holdings Ltd	549,000	816
Holding Companies - Diversified - 1.33%				$ 3,104
Dah Chong Hong Holdings Ltd	260,000	306	Machinery - Construction & Mining - 0.38%
GS Holdings	33,193	1,740	Atlas Copco AB - A Shares	286,077	5,979
Haci Omer Sabanci Holding AS ADR^(a)	3	—	Danieli & C Officine Meccaniche SpA	17,124	452
Imperial Holdings Ltd	181,353	2,958	Wajax Income Fund	12,100	384
KOC Holding AS	642,310	3,067		$ 6,815
LG Corp	31,129	2,227	Machinery - Diversified - 1.29%
Swire Pacific Ltd	399,500	5,669	Daifuku Co Ltd	38,000	181
Wharf Holdings Ltd	1,192,000	7,828	Komori Corp	24,728	243
	$ 23,795		Kone OYJ	155,807	8,349
Home Builders - 0.31%			Metso OYJ	182,935	8,675
Daiwa House Industry Co Ltd	394,000	4,255	Weir Group PLC/The	224,253	5,598
MRV Engenharia e Participacoes SA	128,300	1,249		$ 23,046
	$ 5,504		Media - 0.79%
Home Furnishings - 0.18%			Metropole Television SA	13,008	318
Arcelik AS	304,447	1,687	Pearson PLC	462,223	7,069
Indesit Co SpA	23,713	293	Quebecor Inc	8,100	292
Noritz Corp	21,400	393	WPP PLC	558,539	6,498
Pioneer Corp	94,700	327		$ 14,177
SEB SA	5,075	487	Metal Fabrication & Hardware - 0.32%
	$ 3,187		Hanwa Co Ltd	73,000	289
Insurance - 3.41%			JFE Shoji Holdings Inc	70,000	271
Allianz SE	90,169	11,301	Johnson Matthey PLC	169,704	5,205
Amlin PLC	80,774	526		$ 5,765
China Life Insurance Co Ltd	168,000	736	Mining - 5.56%
Hannover Rueckversicherung AG	111,980	5,642	Alamos Gold Inc	31,600	489
Helvetia Holding AG	1,386	488	Anglo American PLC	319,656	14,895
Hyundai Marine & Fire Insurance Co Ltd	99,160	2,115	Avoca Resources Ltd ^(a)	89,233	275
Lancashire Holdings Ltd	45,529	414	BHP Billiton Ltd	402,145	16,513
Legal & General Group PLC	3,447,169	5,546	Cia de Minas Buenaventura SA ADR	30,766	1,632
Ping An Insurance Group Co of China Ltd	403,000	4,339	Grupo Mexico SAB de CV	894,600	2,947
Sampo OYJ	365,320	10,235	Hindalco Industries Ltd	603,245	2,858
Sanlam Ltd	677,805	2,541	IAMGOLD Corp	323,897	5,910
SCOR SE	16,236	399	Iluka Resources Ltd ^(a)	74,258	490
Sul America SA	2,755	33	Impala Platinum Holdings Ltd	37,924	1,072
Tokio Marine Holdings Inc	225,700	6,361	KGHM Polska Miedz SA	65,950	2,962
Zurich Financial Services	42,406	10,381	Kingsgate Consolidated Ltd	3,509	34
	$ 61,057		Medusa Mining Ltd	78,463	428
Internet - 0.30%			MMC Norilsk Nickel ADR	100,353	1,872
Atea ASA	36,200	306	Orica Ltd	209,660	5,171


Schedule of Investments
Diversified International Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Mining (continued)			Pharmaceuticals (continued)
Rio Tinto Ltd	336,753 $	27,277	Kobayashi Pharmaceutical Co Ltd	7,400 $	345
SEMAFO Inc ^(a)	66,700	800	Novartis AG	330,975	19,188
Southern Copper Corp	25,242	1,080	Novo Nordisk A/S	140,961	14,838
Tek Cominco Limited	171,500	7,668	Roche Holding AG	116,749	17,143
Umicore	112,360	5,289	Shire PLC	396,753	9,352
	$ 99,662		Stada Arzneimittel AG	12,381	382
Miscellaneous Manufacturing - 1.50%			Takeda Pharmaceutical Co Ltd	206,400	9,670
Aalberts Industries NV	21,451	392	Teva Pharmaceutical Industries Ltd ADR	176,559	9,163
Ansell Ltd	42,612	566	United Laboratories International Holdings Ltd/The	180,000	341
Cookson Group PLC ^(a)	118,140	975		$ 103,888
IMI PLC	46,442	587	Real Estate - 1.81%
Largan Precision Co Ltd	59,000	1,170	Arnest One Corp	31,770	336
Melrose PLC	71,990	325	Brookfield Asset Management Inc	354,838	10,535
Siemens AG	166,953	19,100	Daito Trust Construction Co Ltd	55,900	3,376
Wartsila OYJ	53,705	3,767	FKP Property Group	428,593	395
	$ 26,882		Gazit-Globe Ltd	28,833	350
Office & Business Equipment - 0.60%			Great Eagle Holdings Ltd	114,000	341
Canon Inc	231,000	10,679	Guangzhou R&F Properties Co Ltd	586,000	836
			Henderson Land Development Co Ltd - Warrants	141,200	55
			(a)
Oil & Gas - 6.88%
Afren PLC ^(a)	261,295	542	Hongkong Land Holdings Ltd	963,000	6,645
Alliance Oil Co Ltd ^(a)	17,354	251	Keppel Land Ltd	1,136,000	3,888
Aurora Oil and Gas Ltd ^(a)	233,522	297	PSP Swiss Property AG ^(a)	6,913	531
Bankers Petroleum Ltd ^(a)	77,500	543	Shimao Property Holdings Ltd	812,000	1,343
Baytex Energy Trust	23,700	883	Swiss Prime Site AG ^(a)	9,234	663
BG Group PLC	580,725	11,311	Tokyo Tatemono Co Ltd	696,000	2,811
BP PLC	599,421	4,090	Wihlborgs Fastigheter AB	14,748	415
Canadian Natural Resources	242,900	8,843		$ 32,520
Cenovus Energy, Inc	146,098	4,065	REITS - 0.44%
China Petroleum & Chemical Corp	4,686,000	4,419	Calloway Real Estate Investment Trust	14,100	332
CNOOC Ltd	2,486,000	5,151	CapitaMall Trust	1,776,000	2,717
Connacher Oil and Gas Ltd ^(a)	291,700	332	Dundee Real Estate Investment Trust	10,800	309
EnCana Corp	209,798	5,926	Japan Logistics Fund Inc	28	231
Galp Energia SGPS SA	219,410	4,233	Japan Retail Fund Investment Corp	256	400
Gazprom OAO ADR	186,667	4,079	Kenedix Realty Investment Corp	148	588
Gazprom OAO ADR	20,250	444	RioCan Real Estate Investment Trust	132,800	3,001
Hindustan Petroleum Corp Ltd	119,657	1,313	United Urban Investment Corp	38	261
Lukoil OAO ADR	88,397	4,937		$ 7,839
OGX Petroleo e Gas Participacoes SA ^(a)	71,800	939	Retail - 3.08%
Oil & Natural Gas Corp Ltd	29,698	872	Aeon Co Ltd	635,670	7,489
PetroChina Co Ltd	2,555,494	3,119	Amplifon SpA	74,433	401
Petroleo Brasileiro SA ADR	278,340	9,497	Cie Financiere Richemont SA	169,104	8,434
Petrominerales Ltd	16,815	431	Don Quijote Co Ltd	10,000	273
Reliance Industries Ltd ^(c)	20,469	1,019	Dufry Group ^(a)	4,179	485
Repsol YPF SA	252,141	6,992	Inditex SA	102,543	8,565
Rosneft Oil Co	108,235	754	JB Hi-Fi Ltd	25,973	506
Royal Dutch Shell PLC - A Shares	282,369	9,167	K's Holdings Corp	124,280	3,090
Royal Dutch Shell PLC - B Shares	162,150	5,193	Lojas Renner SA	62,000	2,460
Seadrill Ltd	163,318	4,947	Lotte Shopping Co Ltd	4,923	2,015
Statoil ASA	325,539	7,109	PPR	39,141	6,417
Surgutneftegas OJSC ADR	65,340	633	Swatch Group AG/The - BR	19,883	7,599
Total SA	178,188	9,683	UNY Co Ltd	27,900	233
Tupras Turkiye Petrol Rafinerileri AS	47,632	1,278	WH Smith PLC	66,357	515
	$ 123,292		Whitbread PLC	15,243	414
Oil & Gas Services - 1.50%			Woolworths Holdings Ltd/South Africa	653,861	2,562
Acergy SA	317,100	6,405	Yamada Denki Co Ltd	57,460	3,735
Calfrac Well Services Ltd	15,100	379		$ 55,193
Petrofac Ltd	266,053	6,237	Semiconductors - 0.99%
Saipem SpA	197,501	8,777	Aixtron AG	14,267	467
Subsea 7 Inc ^(a)	21,164	445	ARM Holdings PLC	778,725	4,533
Technip SA	54,511	4,582	ASM International NV ^(a)	12,623	322
	$ 26,825		Powertech Technology Inc	512,000	1,689
Packaging & Containers - 0.04%			Samsung Electronics Co Ltd	11,877	7,863
Gerresheimer AG ^(a)	9,339	369	Taiwan Semiconductor Manufacturing Co Ltd	1,428,605	2,930
Rengo Co Ltd	55,000	351		$ 17,804
	$ 720		Shipbuilding - 0.12%
Pharmaceuticals - 5.80%			Hyundai Heavy Industries Co Ltd	6,374	2,076
AstraZeneca PLC	350,616	17,582
China Shineway Pharmaceutical Group Ltd	305,304	1,040	Software - 0.61%
GlaxoSmithKline PLC	247,572	4,844	Micro Focus International PLC	1,218	7


Schedule of Investments
Diversified International Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)					Maturity
Software (continued)						Amount
SAP AG	154,525 $	8,030	REPURCHASE AGREEMENTS - 0.30%			(000's)	Value (000's)
Temenos Group AG ^(a)	85,142	2,855	Banks - 0.30%
	$ 10,892		Investment in Joint Trading Account; Bank of		$ 1,533		$ 1,533
Telecommunications - 7.61%				America Repurchase Agreement; 0.22%
ADVA AG Optical Networking ^(a)	47,956	390		dated 10/29/10 maturing 11/01/10
Advanced Info Service PCL ^(a),(b)	250,000	750		(collateralized by Sovereign Agency Issues;
America Movil SAB de CV ADR	95,607	5,474		$1,563,398; 0.00% - 5.25%; dated 05/01/13 -
Axiata Group Bhd ^(a)	758,000	1,094		04/15/42)
BT Group PLC	3,316,467	8,168	Investment in Joint Trading Account; Credit Suisse			1,480	1,479
China Mobile Ltd	511,139	5,206		Repurchase Agreement; 0.21% dated
China Telecom Corp Ltd	3,262,000	1,688		10/29/10 maturing 11/01/10 (collateralized by
Chunghwa Telecom Co Ltd ^(a)	1,058,000	2,474		US Treasury Note; $1,509,291; 1.13%; dated
D-Link Corp	876,000	884		01/15/12)
Eutelsat Communications	118,078	4,435	Investment in Joint Trading Account; Deutsche			1,406	1,406
Hitachi Kokusai Electric Inc	29,000	263		Bank Repurchase Agreement; 0.21% dated
Koninklijke KPN NV	583,140	9,739		10/29/10 maturing 11/01/10 (collateralized by
Mobile Telesystems OJSC ADR	120,299	2,604		Sovereign Agency Issues; $1,433,826; 0.38%
NTT DoCoMo Inc	6,308	10,622		- 3.75%; dated 12/06/10 - 01/29/15)
Portugal Telecom SGPS SA	556,652	8,034	Investment in Joint Trading Account; Morgan			962	962
Softbank Corp	330,300	10,631		Stanley Repurchase Agreement; 0.20% dated
Taiwan Mobile Co Ltd	588,000	1,308		10/29/10 maturing 11/01/10 (collateralized by
Tele2 AB	312,060	6,868		Sovereign Agency Issues; $981,039; 1.88% -
Telefonica SA	349,990	9,450		6.13%; dated 01/09/12 - 02/21/13)
Telenet Group Holding NV ^(a)	104,872	4,379					$ 5,380
Telenor ASA	642,200	10,357	TOTAL REPURCHASE AGREEMENTS				$ 5,380
TeliaSonera AB	742,843	6,200	Total Investments				$ 1,784,755
Vivo Participacoes SA ADR	61,958	1,774	Other Assets in Excess of Liabilities, Net - 0.39%				$ 7,000
Vodacom Group Ltd	228,521	2,195	TOTAL NET ASSETS - 100.00%				$ 1,791,755
Vodafone Group PLC	7,830,885	21,313
	$ 136,300
Textiles - 0.06%			(a)	Non-Income Producing Security
Cia Hering	18,300	901	(b)	Market value is determined in accordance with procedures established in
Toyobo Co Ltd	155,000	258		good faith by the Board of Directors. At the end of the period, the value of
	$ 1,159			these securities totaled $2,578 or 0.14% of net assets.
Transportation - 0.90%			(c)	Security exempt from registration under Rule 144A of the Securities Act of
Canadian National Railway	140,100	9,074		1933. These securities may be resold in transactions exempt from
Cargotec Oyj	8,343	380		registration, normally to qualified institutional buyers. Unless otherwise
Construcciones y Auxiliar de Ferrocarriles SA	632	356		indicated, these securities are not considered illiquid. At the end of the
Sincere Navigation	1,048,000	1,270		period, the value of these securities totaled $1,019 or 0.06% of net assets.
Stagecoach Group PLC	123,024	412
West Japan Railway Co	1,246	4,627
	$ 16,119		Unrealized Appreciation (Depreciation)
Water - 0.71%			The net federal income tax unrealized appreciation (depreciation) and federal tax
Northumbrian Water Group PLC	53,059	301	cost of investments held as of the period end were as follows:
Pennon Group PLC	337,292	3,367
Severn Trent PLC	156,812	3,505	Unrealized Appreciation				$ 278,175
United Utilities Group PLC	575,438	5,634	Unrealized Depreciation				(24,451)
	$ 12,807		Net Unrealized Appreciation (Depreciation)				$ 253,724
TOTAL COMMON STOCKS	$ 1,740,219		Cost for federal income tax purposes				$ 1,531,031
PREFERRED STOCKS - 2.19%	Shares Held Value (000's)		All dollar amounts are shown in thousands (000's)
Apparel - 0.02%
Hugo Boss AG	4,996	329

Banks - 0.41%
Banco Bradesco SA	107,124	2,195
Itau Unibanco Holding SA	212,166	5,129
	$ 7,324
Consumer Products - 0.60%
Henkel AG & Co KGaA	181,218	10,676

Holding Companies - Diversified - 0.14%
Itausa - Investimentos Itau SA	317,200	2,483

Media - 0.50%
ProSiebenSat.1 Media AG	338,099	8,927

Mining - 0.52%
Vale SA	335,309	9,417

TOTAL PREFERRED STOCKS	$ 39,156


Schedule of Investments
Equity Income Fund
October 31, 2010




COMMON STOCKS - 96.90%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 1.73%			Healthcare - Products (continued)
Lockheed Martin Corp	281,700 $	20,082	Medtronic Inc	226,400 $	7,971
Raytheon Co	572,300	26,372		$ 51,744
	$ 46,454		Insurance - 7.40%
Apparel - 1.14%			ACE Ltd	1,137,400	67,584
VF Corp	365,900	30,458	Allianz SE ADR	1,114,237	13,961
			Allstate Corp/The	889,009	27,106
Automobile Manufacturers - 0.25%			Chubb Corp	512,200	29,718
PACCAR Inc	132,642	6,799	Fidelity National Financial Inc	1,851,061	24,786
			MetLife Inc	606,000	24,440
Automobile Parts & Equipment - 0.34%			Validus Holdings Ltd	384,900	10,916
Johnson Controls Inc	256,400	9,005		$ 198,511
			Machinery - Diversified - 1.35%
Banks - 6.63%			Deere & Co	470,600	36,142
Banco Santander SA ADR	2,558,800	32,778
Bank of New York Mellon Corp/The	1,466,880	36,760	Media - 1.22%
Bank of Nova Scotia	585,609	31,336	Walt Disney Co/The	397,291	14,346
JP Morgan Chase & Co	35,000	1,317	Yellow Pages Income Fund	3,073,080	18,471
M&T Bank Corp	236,400	17,671		$ 32,817
Northern Trust Corp	654,000	32,458	Mining - 0.80%
US Bancorp	1,049,000	25,365	BHP Billiton Ltd ADR	260,300	21,498
	$ 177,685
Beverages - 0.82%			Miscellaneous Manufacturing - 3.96%
Coca-Cola Co/The	183,200	11,234	3M Co	260,500	21,939
Dr Pepper Snapple Group Inc	159,629	5,835	Honeywell International Inc	356,000	16,771
Molson Coors Brewing Co	101,300	4,784	Parker Hannifin Corp	509,000	38,964
	$ 21,853		Siemens AG ADR	249,900	28,566
Chemicals - 1.21%				$ 106,240
Air Products & Chemicals Inc	157,100	13,349	Oil & Gas - 8.96%
EI du Pont de Nemours & Co	405,100	19,153	Chevron Corp	669,100	55,274
	$ 32,502		Encana Corp	246,000	6,942
Commercial Services - 0.56%			Enerplus Resources Fund	783,760	21,491
Automatic Data Processing Inc	338,700	15,045	Exxon Mobil Corp	585,900	38,945
			Marathon Oil Corp	1,061,600	37,761
Consumer Products - 0.76%			Penn West Energy Trust	1,305,000	29,754
Clorox Co	154,500	10,282	Total SA ADR	916,278	49,919
Kimberly-Clark Corp	160,600	10,172		$ 240,086
	$ 20,454		Pharmaceuticals - 12.12%
Distribution & Wholesale - 2.06%			Abbott Laboratories	1,025,600	52,634
Genuine Parts Co	1,153,277	55,196	Bristol-Myers Squibb Co	1,345,478	36,193
			GlaxoSmithKline PLC ADR	632,790	24,704
Diversified Financial Services - 3.20%			Mead Johnson Nutrition Co	465,929	27,406
AllianceBernstein Holding LP	1,319,369	32,193	Merck & Co Inc	1,340,380	48,629
Federated Investors Inc	1,130,855	28,170	Novartis AG ADR	710,582	41,178
NYSE Euronext	825,959	25,307	Pfizer Inc	2,294,845	39,930
	$ 85,670		Roche Holding AG ADR	861,400	31,657
Electric - 4.86%			Teva Pharmaceutical Industries Ltd ADR	437,900	22,727
NextEra Energy Inc	834,200	45,914		$ 325,058
Progress Energy Inc	879,145	39,562	Pipelines - 2.76%
Wisconsin Energy Corp	94,500	5,627	Enterprise Products Partners LP	955,826	40,957
Xcel Energy Inc	1,641,800	39,173	Kinder Morgan Energy Partners LP	308,521	21,433
	$ 130,276		Spectra Energy Corp	482,979	11,480
Electrical Components & Equipment - 1.39%				$ 73,870
Emerson Electric Co	678,200	37,233	REITS - 4.07%
			Annaly Capital Management Inc	2,630,700	46,590
Entertainment - 0.59%			Chimera Investment Corp	3,854,104	15,802
OPAP SA ADR	1,677,400	15,851	HCP Inc	389,485	14,025
			Health Care REIT Inc	472,800	24,160
Food - 3.55%			Kimco Realty Corp	498,387	8,587
General Mills Inc	308,200	11,570		$ 109,164
Kellogg Co	226,500	11,384	Retail - 4.19%
Kraft Foods Inc	1,377,423	44,449	Costco Wholesale Corp	185,600	11,650
Kroger Co/The	289,700	6,373	McDonald's Corp	635,200	49,399
Sysco Corp	728,500	21,462	Wal-Mart Stores Inc	945,000	51,191
	$ 95,238			$ 112,240
Gas - 1.67%			Savings & Loans - 1.14%
Sempra Energy	838,400	44,838	Hudson City Bancorp Inc	2,624,000	30,570

Healthcare - Products - 1.93%			Semiconductors - 4.85%
Becton Dickinson and Co	77,300	5,838	Applied Materials Inc	709,100	8,764
Johnson & Johnson	595,800	37,935	Intel Corp	2,755,200	55,297


Schedule of Investments
Equity Income Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)					Maturity
Semiconductors (continued)						Amount
Maxim Integrated Products Inc	382,500 $		8,285	REPURCHASE AGREEMENTS (continued)		(000's)	Value (000's)
Microchip Technology Inc	1,006,700		32,396	Banks (continued)
Taiwan Semiconductor Manufacturing Co Ltd	2,330,107		25,421	Investment in Joint Trading Account; Morgan	$ 10,967		$ 10,967
ADR				Stanley Repurchase Agreement; 0.20% dated
		$ 130,163		10/29/10 maturing 11/01/10 (collateralized by
Software - 1.73%				Sovereign Agency Issues; $11,186,565;
Microsoft Corp	1,743,300		46,442	1.88% - 6.13%; dated 01/09/12 - 02/21/13)
							$ 61,346
Telecommunications - 5.41%				TOTAL REPURCHASE AGREEMENTS			$ 61,346
AT&T Inc	1,044,700		29,774	Total Investments			$ 2,681,524
BCE Inc	914,100		30,632	Liabilities in Excess of Other Assets, Net - (0.02)%			$ (531)
CenturyLink Inc	149,200		6,174	TOTAL NET ASSETS - 100.00%			$ 2,680,993
Qwest Communications International Inc	1,044,400		6,893
Telefonica SA ADR	130,000		10,548
Verizon Communications Inc	909,800		29,541
Vodafone Group PLC ADR	1,140,762		31,382
		$ 144,944		Unrealized Appreciation (Depreciation)
Toys, Games & Hobbies - 1.88%				The net federal income tax unrealized appreciation (depreciation) and federal tax
Mattel Inc	2,155,419		50,286	cost of investments held as of the period end were as follows:

Transportation - 2.37%				Unrealized Appreciation			$ 439,129
Norfolk Southern Corp	431,500		26,533	Unrealized Depreciation			(90,668)
Union Pacific Corp	422,900		37,080	Net Unrealized Appreciation (Depreciation)			$ 348,461
		$ 63,613		Cost for federal income tax purposes			$ 2,333,063
TOTAL COMMON STOCKS		$ 2,597,945		All dollar amounts are shown in thousands (000's)
PREFERRED STOCKS - 0.77%	Shares Held Value (000's)
Banks - 0.31%				Portfolio Summary (unaudited)
National City Capital Trust II	191,700		4,823	Sector			Percent
National City Capital Trust III	135,000		3,402	Financial			25 .50%
		$ 8,225		Consumer, Non-cyclical			19 .74%
Diversified Financial Services - 0.12%				Energy			11 .72%
National City Capital Trust IV	125,000		3,250	Industrial			10 .80%
				Consumer, Cyclical			10 .45%
REITS - 0.34%				Communications			6 .69%
Public Storage Inc 6.63%; Series M	288,000		7,232	Technology			6 .58%
Public Storage Inc 7.25%; Series K	79,700		2,021	Utilities			6 .53%
		$ 9,253		Basic Materials			2 .01%
TOTAL PREFERRED STOCKS		$ 20,728		Liabilities in Excess of Other Assets, Net			(0 .02)%
	Principal			TOTAL NET ASSETS			100.00%
	Amount
BONDS - 0.06%	(000's)	Value (000's)
Telecommunications - 0.06%
Telus Corp
8.00%, 6/1/2011	$ 1,446	$ 1,505

TOTAL BONDS		$ 1,505
	Maturity
	Amount
REPURCHASE AGREEMENTS - 2.29%	(000's)	Value (000's)
Banks - 2.29%
Investment in Joint Trading Account; Bank of	$ 17,478	$ 17,477
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$17,827,083; 0.00% - 5.25%; dated 05/01/13
- 04/15/42)
Investment in Joint Trading Account; Credit Suisse	16,873		16,873
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $17,210,101; 1.13%;
dated 01/15/12)
Investment in Joint Trading Account; Deutsche	16,029		16,029
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $16,349,595;
0.38% - 3.75%; dated 12/06/10 - 01/29/15)

Schedule of Investments
Global Diversified Income Fund
October 31, 2010


COMMON STOCKS - 24.41%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 0.02%			Distribution & Wholesale - 0.14%
United Technologies Corp	3,557 $	266	ITOCHU Corp	52,900 $	464
			Marubeni Corp	34,000	214
Agriculture - 0.13%			Mitsui & Co Ltd	34,800	547
Altria Group Inc	21,629	550	Sumitomo Corp	34,800	441
Archer-Daniels-Midland Co	13,678	456		$ 1,666
Lorillard Inc	5,767	492	Diversified Financial Services - 0.16%
	$ 1,498		AGF Management Ltd	15,700	255
Apparel - 0.02%			Ameriprise Financial Inc	10,126	523
Yue Yuen Industrial Holdings Ltd	53,500	192	BGC Partners Inc	32,492	226
			Intermediate Capital Group PLC	85,160	440
Automobile Manufacturers - 0.19%			ORIX Corp	3,770	344
Daimler AG ^(a)	9,825	651		$ 1,788
Nissan Motor Co Ltd	57,000	503	Electric - 0.37%
Toyota Motor Corp	10,700	380	Ameren Corp	15,141	439
Volkswagen AG - PFD	4,596	694	CLP Holdings Ltd	50,500	411
	$ 2,228		DTE Energy Co	6,109	286
Banks - 1.11%			Duke Energy Corp	20,739	378
Australia & New Zealand Banking Group Ltd	36,097	877	Enel SpA	123,663	706
Banco Bilbao Vizcaya Argentaria SA	16,564	218	Entergy Corp	3,961	295
Banco Santander SA	24,177	311	Integrys Energy Group Inc	5,659	301
Bank of America Corp	44,831	513	Pinnacle West Capital Corp	9,384	386
Bank of Hawaii Corp	4,437	192	Progress Energy Inc	8,854	398
Bank of Montreal	8,300	490	Public Service Enterprise Group Inc	6,706	217
Bank of Novia Scotia	7,500	402	Xcel Energy Inc	20,670	493
BNP Paribas	6,003	439		$ 4,310
Canadian Imperial Bank of Commerce ^(a)	4,800	368	Electrical Components & Equipment - 0.12%
Citigroup Inc ^(a)	161,086	672	Emerson Electric Co	4,267	234
Community Bank System Inc	8,736	204	Hitachi Ltd	100,000	452
Deutsche Bank AG	9,346	541	Schneider Electric SA	5,018	713
DnB NOR ASA	20,428	280		$ 1,399
FNB Corp/PA	41,185	350	Electronics - 0.01%
Goldman Sachs Group Inc/The	922	148	Premier Farnell PLC	27,264	119
HSBC Holdings PLC	164,409	1,710
JP Morgan Chase & Co	17,563	661	Engineering & Contruction - 0.12%
M&T Bank Corp	2,659	199	Alion Science and Technology Corp - Warrants	3,215	—
Mitsubishi UFJ Financial Group Inc	44,500	207	(a),(b),(c)
National Australia Bank Ltd	27,289	681	Bilfinger Berger SE	1,086	80
National Bank of Canada	4,000	263	Carillion PLC	43,258	239
Nordea Bank AB	22,318	246	NCC AB	17,779	379
PNC Financial Services Group Inc	7,432	401	Skanska AB	9,849	188
Svenska Handelsbanken AB	12,517	409	Vinci SA	9,179	490
Torinto Dominion Bank	9,600	691		$ 1,376
Trustmark Corp	14,664	324	Environmental Control - 0.03%
US Bancorp	13,258	321	Waste Management Inc	8,194	293
Wells Fargo & Co	25,851	674
	$ 12,792		Food - 0.07%
Beverages - 0.06%			Kraft Foods Inc	13,339	431
Carlsberg A/S	4,477	490	Nippon Suisan Kaisha Ltd	105,100	334
Coca-Cola Co/The	3,528	216		$ 765
	$ 706		Forest Products & Paper - 0.02%
Building Materials - 0.03%			Svenska Cellulosa AB	16,008	248
Adelaide Brighton Ltd	110,730	388
			Gas - 0.10%
Chemicals - 0.27%			AGL Resources Inc	6,887	270
BASF SE	12,839	937	Laclede Group Inc/The	8,656	304
Bayer AG	5,311	398	Nicor Inc	4,547	217
EI du Pont de Nemours & Co	16,729	791	NiSource Inc	23,393	405
Koninklijke DSM NV	9,365	501		$ 1,196
PPG Industries Inc	6,200	476	Healthcare - Products - 0.08%
	$ 3,103		Johnson & Johnson	15,102	962
Commercial Services - 0.02%
Corrections Corp of America ^(a)	10,900	280
			Healthcare - Services - 0.06%
			UnitedHealth Group Inc	20,038	722
Consumer Products - 0.04%
Kimberly-Clark Corp	7,950	504	Holding Companies - Diversified - 0.17%
			Compass Diversified Holdings	24,391	415
Cosmetics & Personal Care - 0.10%			Wharf Holdings Ltd	233,000	1,530
Procter & Gamble Co	18,530	1,178		$ 1,945
			Insurance - 0.56%
			ACE Ltd	5,451	324


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Insurance (continued)			Pharmaceuticals - 0.46%
Aflac Inc	6,849 $	383	AstraZeneca PLC	17,069 $	856
Allianz SE	5,679	712	Bristol-Myers Squibb Co	23,732	638
Aviva PLC	85,476	545	Daiichi Sankyo Co Ltd	20,900	443
AXA SA	33,721	614	Eli Lilly & Co	9,295	327
Baloise Holding AG	2,507	232	Kaken Pharmaceutical Co Ltd	26,000	285
Berkshire Hathaway Inc - Class B ^(a)	2,338	186	Merck & Co Inc	30,790	1,117
Chubb Corp	3,841	223	Pfizer Inc	37,647	655
Maiden Holdings Ltd	30,963	237	Sanofi-Aventis SA	10,423	728
Power Corp of Canada/Canada	11,400	318	Takeda Pharmaceutical Co Ltd	5,200	244
Protective Life Corp	11,428	274		$ 5,293
Sampo OYJ	19,882	557	Pipelines - 9.22%
Travelers Cos Inc/The	9,280	512	Buckeye Partners LP	70,400	4,457
Unitrin Inc	10,617	258	Chesapeake Midstream Partners LP	21,300	571
Unum Group	7,635	171	Copano Energy LLC	118,100	3,302
Validus Holdings Ltd	12,293	348	DCP Midstream Partners LP	31,500	1,124
Zurich Financial Services	2,352	576	Duncan Energy Partners LP	35,910	1,140
	$ 6,470		Enbridge Energy Partners LP	72,700	4,470
Internet - 0.02%			Energy Transfer Equity LP	28,420	1,112
Earthlink Inc	22,598	203	Energy Transfer Partners LP	186,800	9,527
			Enterprise Products Partners LP	211,645	9,069
Investment Companies - 0.02%			Holly Energy Partners LP ^(b)	88,100	4,427
Hercules Technology Growth Capital Inc	21,753	221	Kinder Morgan Management LLC ^(a)	157,293	9,700
			Magellan Midstream Partners LP	145,700	7,866
Iron & Steel - 0.02%			MarkWest Energy Partners LP	59,200	2,257
Labrador Iron Ore Royalty Corp	3,300	198	Niska Gas Storage Partners LLC	41,500	827
			NuStar Energy LP	107,000	6,741
Leisure Products & Services - 0.02%			ONEOK Partners LP	85,800	6,721
Daiichikosho Co Ltd	14,700	241	Plains All American Pipeline LP	104,400	6,588
			Regency Energy Partners LP	176,700	4,478
Lodging - 0.07%			Spectra Energy Corp	18,155	432
Starwood Hotels & Resorts Worldwide Inc	14,800	801	Sunoco Logistics Partners LP	69,700	5,575
			Targa Resources Partners LP	115,600	3,426
Media - 0.10%			TC Pipelines LP ^(b)	115,000	5,664
CBS Corp	26,713	452	Western Gas Partners LP	38,100	1,111
News Corp - Class A	25,486	368	Williams Partners LP	126,300	5,570
Walt Disney Co/The	9,016	326		$ 106,155
	$ 1,146		Publicly Traded Investment Fund - 0.05%
Mining - 0.11%			John Hancock Preferred Income Fund III	31,400	539
Equinox Minerals Ltd ^(a)	72,500	394
Panoramic Resources Ltd	148,185	341	Real Estate - 1.75%
Tek Cominco Limited	10,700	478	Agile Property Holdings Ltd	528,000	695
	$ 1,213		Allgreen Properties Ltd	760,000	699
Miscellaneous Manufacturing - 0.25%			Brookfield Properties Corp	46,900	810
3M Co	5,357	451	CB Richard Ellis Group Inc ^(a)	19,300	354
Eaton Corp	4,809	427	China Resources Land Ltd	218,000	430
General Electric Co	62,309	998	Citycon OYJ	140,000	627
Siemens AG	8,262	946	Deutsche Euroshop AG	10,000	381
	$ 2,822		Fabege AB	46,700	489
Office & Business Equipment - 0.04%			FKP Property Group	674,534	621
Xerox Corp	39,702	465	Gazit-Globe Ltd	36,943	449
			Global Logistic Properties Ltd ^(a)	420,753	754
Oil & Gas - 0.91%			Henderson Land Development Co Ltd	236,000	1,676
BP PLC	72,776	497	Henderson Land Development Co Ltd - Warrants	12,000	5
			(a)
Chevron Corp	17,848	1,474
ConocoPhillips	15,657	930	Hongkong Land Holdings Ltd	79,000	545
Cosmo Oil Co Ltd	87,000	235	Hysan Development Co Ltd	75,000	290
ENI SpA	34,701	782	Jones Lang LaSalle Inc	4,400	343
Exxon Mobil Corp	27,442	1,824	Mitsubishi Estate Co Ltd	35,000	613
Marathon Oil Corp	16,021	570	Mitsui Fudosan Co Ltd	21,000	397
Occidental Petroleum Corp	3,648	287	New World Development Ltd	745,000	1,471
Peyto Energy Trust	12,970	196	PSP Swiss Property AG ^(a)	13,000	999
Repsol YPF SA	17,191	477	Renhe Commercial Holdings Co Ltd	8,532,000	1,629
Royal Dutch Shell PLC - A Shares	27,277	885	Shimao Property Holdings Ltd	454,500	752
Royal Dutch Shell PLC - B Shares	24,234	776	Sponda OYJ	155,641	784
Statoil ASA	27,748	606	Sun Hung Kai Properties Ltd	250,000	4,283
Total SA	16,834	915		$ 20,096
	$ 10,454		REITS - 5.97%
Oil & Gas Services - 0.05%			Alstria Office REIT-AG	49,953	699
PAA Natural Gas Storage LP	22,900	551	Annaly Capital Management Inc	70,100	1,242
			Apartment Investment & Management Co	50,000	1,166
			Associated Estates Realty Corp	15,423	214


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
REITS (continued)			REITS (continued)
Astro Japan Property Group	2,498,003 $	844	United Urban Investment Corp	161 $	1,106
AvalonBay Communities Inc	14,400	1,531	Vornado Realty Trust	32,477	2,839
BioMed Realty Trust Inc	11,337	208	Westfield Group	290,578	3,524
Boardwalk Real Estate Investment Trust	6,400	269		$ 68,714
Boston Properties Inc	26,377	2,273	Retail - 0.61%
British Land Co PLC	215,376	1,758	Gap Inc/The	12,010	228
Cambridge Industrial Trust	1,999,000	842	Home Depot Inc	9,583	296
Cambridge Industrial Trust - Rights ^(a),(c)	79,960	1	Inergy LP	142,600	5,598
Camden Property Trust	14,668	727	PPR	2,523	414
Canadian Real Estate Investment Trust	18,400	578	Wesfarmers Ltd	15,455	502
CapitaMall Trust	164,000	251		$ 7,038
CapLease Inc	115,800	679	Savings & Loans - 0.05%
CBL & Associates Properties Inc	20,097	315	Dime Community Bancshares Inc	18,291	267
CFS Retail Property Trust	605,590	1,103	New York Community Bancorp Inc	21,623	366
Champion REIT	1,094,000	603		$ 633
Charter Hall Office REIT	274,300	704	Semiconductors - 0.04%
Colonial Properties Trust	46,857	840	Intel Corp	25,413	510
Cominar Real Estate Investment Trust	19,000	404
CommonWealth REIT	12,521	319	Telecommunications - 0.55%
Corio NV	9,300	683	AT&T Inc	27,580	786
Cypress Sharpridge Investments Inc	89,883	1,171	BCE Inc	6,200	208
Dundee Real Estate Investment Trust	42,800	1,226	BT Group PLC	105,292	259
DuPont Fabros Technology Inc	17,500	439	Deutsche Telekom AG	40,122	581
EastGroup Properties Inc	13,000	526	France Telecom SA	34,792	836
Education Realty Trust Inc	67,700	508	NTT DoCoMo Inc	255	429
Entertainment Properties Trust	38,534	1,781	Qwest Communications International Inc	38,695	256
Equity Residential	30,000	1,459	Telecom Italia SpA - RNC	272,319	334
Essex Property Trust Inc	10,600	1,197	Telefonica SA	38,489	1,039
Eurocommercial Properties NV	9,526	471	Verizon Communications Inc	9,182	298
Federal Realty Investment Trust	16,265	1,333	Vodafone Group PLC	476,963	1,298
Fonciere Des Regions	54	6		$ 6,324
Fonciere Des Regions - Warrants ^(a)	5	—
			Toys, Games & Hobbies - 0.03%
Fortune Real Estate Investment Trust	452,000	233	Mattel Inc	13,686	319
Frasers Centrepoint Trust	335,000	391
Frasers Commercial Trust	1,778,000	220
Gecina SA	6,000	728	Trucking & Leasing - 0.03%
General Growth Properties Inc	45,700	768	Aircastle Ltd	40,144	370
GEO Property Group	405,000	79
Glimcher Realty Trust	36,600	275	Water - 0.04%
Goodman Group	1,510,417	932	American Water Works Co Inc	16,923	404
Great Portland Estates PLC	176,948	980	TOTAL COMMON STOCKS	$ 281,104
HCP Inc	7,221	260
Health Care REIT Inc	25,000	1,278	CONVERTIBLE PREFERRED STOCKS -
Hersha Hospitality Trust	101,444	619	0.40%	Shares Held Value (000's)
Highwoods Properties Inc	29,200	967	Banks - 0.24%
Home Properties Inc	14,300	779	Bank of America Corp	470	445
Host Hotels & Resorts Inc	48,331	768	Wells Fargo & Co	2,300	2,300
InnVest Real Estate Investment Trust	65,000	437		$ 2,745
Japan Excellent Inc	36	202	REITS - 0.16%
Japan Logistics Fund Inc	65	536	Digital Realty Trust Inc	50,000	1,814
Japan Retail Fund Investment Corp	417	651
Klepierre	27,072	1,053	TOTAL CONVERTIBLE PREFERRED STOCKS	$ 4,559
Land Securities Group PLC	158,207	1,716	PREFERRED STOCKS - 8.54%	Shares Held Value (000's)
LTC Properties Inc	33,500	933	Banks - 1.75%
Mapletree Logistics Trust	1,800,000	1,252	Bank of America Corp 8.63%; Series MER	59,700	1,534
National Retail Properties Inc	6,940	188	Barclays Bank PLC 7.75%	68,100	1,752
Nippon Commercial Investment Corp	831	936	Barclays Bank PLC 8.13%	18,300	477
Northern Property Real Estate Investment Trust	21,800	578	BB&T Capital Trust VII	50,000	1,342
Omega Healthcare Investors Inc	36,500	840	CoBank ACB 11.00%; Series C ^(d)	6,000	329
Primary Health Properties PLC	53,000	276	CoBank ACB 11.00%; Series D ^(b)	8,400	457
ProLogis	120,000	1,638	CoBank ACB 7.00%; Series 144A ^(b),(d)	88,000	3,905
Public Storage Inc	7,800	774	Fifth Third Capital Trust V	9,100	227
Ramco-Gershenson Properties Trust	84,397	977	Fifth Third Capital Trust VI	5,864	146
RioCan Real Estate Investment Trust	25,300	572	Fifth Third Capital Trust VII	31,400	825
Simon Property Group Inc	46,720	4,486	Fleet Capital Trust VIII	1,300	32
SL Green Realty Corp	4,000	263	HSBC Holdings PLC 6.20%	21,800	533
Societe de la Tour Eiffel	5,500	458	HSBC Holdings PLC 8.00%	210,346	5,816
Stockland	220,000	812	KeyCorp Capital V	4,200	101
Sun Communities Inc	14,500	473	Keycorp Capital VI	500	12
Tishman Speyer Office Fund ^(a)	1,387,000	543	KeyCorp Capital VIII	3,600	90
Unibail-Rodamco SE	14,420	3,004	KeyCorp Capital X	24,600	629


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




PREFERRED STOCKS (continued)	Shares Held Value (000's)		PREFERRED STOCKS (continued)	Shares Held Value (000's)
Banks (continued)			Oil & Gas - 0.01%
M&T Capital Trust IV	9,600 $	261	Nexen Inc	5,900 $		148
National City Capital Trust II	3,100	78
National City Capital Trust III	1,000	25	REITS - 2.44%
Santander Finance Preferred SA Unipersonal	15,500	448	BRE Properties Inc - Series C	25,000		620
SunTrust Capital IX	6,700	173	CommonWealth REIT	111,900		2,373
VNB Capital Trust I	37,508	955	CommonWealth REIT - Series C	3,300		83
	$ 20,147		Developers Diversified Realty Corp 7.38%	16,600		397
Diversified Financial Services - 1.45%			Developers Diversified Realty Corp 7.50%	4,000		97
Ameriprise Financial Inc	48,300	1,315	Developers Diversified Realty Corp 8.00%	2,700		67
Citigroup Capital VIII	14,800	364	Duke Realty Corp 6.50%	500		12
Citigroup Capital X	1,000	23	Duke Realty Corp 6.60%	37,400		901
Citigroup Capital XII	137,225	3,619	Duke Realty Corp 6.63%	1,300		31
Citigroup Capital XIII ^(a)	105,500	2,796	Duke Realty Corp 6.95%	10,100		253
Citigroup Capital XV	4,200	100	Harris Preferred Capital Corp	15,200		387
Citigroup Capital XVII	700	16	Kimco Realty Corp	141,893		3,519
Corporate-Backed Trust Certificates 6.00%; Series	1,100	27	Kimco Realty Corp 6.65%	6,000		147
PRU			Kimco Realty Corp 7.75%	148,966		3,799
CORTS Trust for First Union Institutional Capital I	1,800	49	Prologis - Series G	8,000		192
Countrywide Financial Corp	22,600	519	PS Business Parks Inc ^(a)	80,600		1,997
Credit Suisse Guernsey Ltd	25,600	680	PS Business Parks Inc - Series M	71,981		1,799
Deutsche Bank Capital Funding Trust X	6,700	170	Public Storage Inc 6.45%; Series F	16,900		419
Deutsche Bank Contingent Capital Trust II	15,500	381	Public Storage Inc 6.45%; Series X	1,300		32
Deutsche Bank Contingent Capital Trust III	108,600	2,853	Public Storage Inc 6.60%; Series C	21,400		535
Deutsche Bank Contingent Capital Trust V	38,200	1,034	Public Storage Inc 6.63%; Series M	1,595		40
Merrill Lynch Capital Trust II	28,000	643	Public Storage Inc 6.75%; Series L	1,600		40
Morgan Stanley Capital Trust III	28,100	679	Public Storage Inc 6.88%	6,431		169
Morgan Stanley Capital Trust IV	27,700	669	Public Storage Inc 6.95%; Series H	4,900		123
Morgan Stanley Capital Trust V	3,800	89	Public Storage Inc 7.25%; Series K	123,312		3,127
National City Capital Trust IV	16,000	416	Regency Centers Corp 7.25%	5,399		135
PreferredPlus TR-CCR1 6.00%; Series GSC3	1,600	37	Regency Centers Corp 7.45%	7,274		183
PreferredPlus TR-CCR1 6.00%; Series GSG1	3,000	73	Suntrust Real Estate Investment Corp ^(a),(c),(d)	30		3,000
PreferredPlus TR-CCR1 8.05%; Series CCR1	4,300	109	UDR Inc	700		18
	$ 16,661		Vornado Realty LP	121,722		3,272
Electric - 0.10%			Vornado Realty Trust - Series F	4,000		99
Entergy Arkansas Inc ^(a)	3,000	74	Weingarten Realty Investors 6.50%	6,000		145
Entergy Texas Inc	6,400	187	Weingarten Realty Investors 6.75%	1,600		39
FPL Group Capital Inc 8.75%	5,900	172			$ 28,050
PPL Capital Funding Inc	6,200	164	Sovereign - 0.60%
SCANA Corp	21,940	622	Farm Credit Bank/Texas ^(a)	6,400		6,876
	$ 1,219
Insurance - 1.83%			Telecommunications - 0.25%
AAG Holding Co Inc	1,600	40	Telephone & Data Systems Inc 7.60%	105,100		2,647
Aegon NV 6.375%	109,200	2,502	United States Cellular Corp 7.50%	8,188		207
Aegon NV 6.50%	16,000	366			$ 2,854
Aegon NV 6.875%	3,600	85	TOTAL PREFERRED STOCKS		$ 98,293
Allianz SE	191,077	5,117		Principal
American Financial Group Inc/OH ^(a)	6,990	175		Amount
American Financial Group Inc/OH 7.13%	1,150	29	BONDS - 57.76%	(000's)	Value (000's)
Arch Capital Group Ltd 7.88%	34,100	870	Advertising - 0.45%
Arch Capital Group Ltd 8.00%	18,207	464	Affinion Group Inc
Axis Capital Holdings Ltd	40,000	3,580	10.13%, 10/15/2013	$ 1,750	$ 1,796
Delphi Financial Group Inc 7.38%	31,311	725	Lamar Media Corp
Delphi Financial Group Inc 8.00%	18,150	461	7.88%, 4/15/2018	750		801
Everest Re Capital Trust II	23,200	559	MDC Partners Inc
ING Groep NV 6.20%	1,000	22	11.00%, 11/1/2016^(d)	365		405
ING Groep NV 7.05%	95,600	2,273	11.00%, 11/1/2016^(d)	2,000		2,220
ING Groep NV 7.20%	42,560	1,030			$ 5,222
ING Groep NV 8.50%	27,900	712	Aerospace & Defense - 0.63%
Lincoln National Corp 6.75%	900	22	Kratos Defense & Security Solutions Inc
PLC Capital Trust III	33,800	858	10.00%, 6/1/2017	1,895		2,104
PLC Capital Trust V	4,800	114	Sequa Corp
RenaissanceRe Holdings Ltd - Series B	5,300	135	11.75%, 12/1/2015^(d)	4,000		4,320
RenaissanceRe Holdings Ltd - Series C	9,800	235	13.50%, 12/1/2015^(d)	500		550
RenaissanceRe Holdings Ltd - Series D	24,800	620	Triumph Group Inc
Torchmark Capital Trust III	1,800	46	8.00%, 11/15/2017	250		258
	$ 21,040				$ 7,232
Media - 0.11%			Agriculture - 0.12%
CBS Corp 6.75%	32,100	811	MHP SA
Viacom Inc	19,100	487	10.25%, 4/29/2015	545		563
	$ 1,298


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Agriculture (continued)			Banks (continued)
Vector Group Ltd			Claudius Ltd for Credit Suisse
11.00%, 8/15/2015	$ 750 $	778	7.88%, 12/12/2049	$ 11,160 $	11,606
	$ 1,341		8.25%, 6/27/2049	1,000	1,073
Airlines - 0.86%			Credit Agricole SA
Continental Airlines 2007-1 Class C Pass Through			8.38%, 10/13/2049^(d),(e)	1,700	1,857
Trust			9.75%, 6/29/2049	2,600	2,856
7.34%, 4/19/2014	3,625	3,680	First Hawaiian Capital I
Delta Air Lines 2002-1 Class G-1 Pass Through			8.34%, 7/1/2027	1,000	1,010
Trust			First Union Capital I
6.72%, 1/2/2023	309	316	7.94%, 1/15/2027	1,982	2,019
Delta Air Lines Inc			First Union Institutional Capital I
12.25%, 3/15/2015^(d)	1,400	1,594	8.04%, 12/1/2026	1,550	1,595
Global Aviation Holdings Inc			First Union Institutional Capital II
14.00%, 8/15/2013^(d)	2,500	2,700	7.85%, 1/1/2027	1,400	1,414
UAL 2009-1 Pass Through Trust			Halyk Savings Bank of Kazakhstan JSC
10.40%, 11/1/2016	210	238	7.25%, 5/3/2017	520	536
UAL 2009-2A Pass Through Trust			HBOS Capital Funding LP
9.75%, 1/15/2017	238	274	6.07%, 6/29/2049^(d),(e)	3,050	2,745
United Air Lines Inc			HSBC USA Capital Trust I
9.88%, 8/1/2013^(d)	970	1,067	7.81%, 12/15/2026^(d)	300	307
	$ 9,869		ICICI Bank Ltd/Bahrain
Automobile Parts & Equipment - 0.75%			6.63%, 10/3/2012	830	889
Exide Technologies			JP Morgan Chase & Co
10.50%, 3/15/2013	5,675	5,796	7.90%, 4/29/2049^(e)	3,900	4,157
Stanadyne Corp			Kazkommertsbank JSC
10.00%, 8/15/2014	2,900	2,871	8.50%, 4/16/2013	215	213
	$ 8,667		KeyCorp Capital III
Banks - 7.36%			7.75%, 7/15/2029	395	405
Abbey National Capital Trust I			National Australia Bank/New York
8.96%, 12/29/2049	2,300	2,503	8.00%, 9/29/2049	800	870
ABN Amro North American Holding Preferred			Natixis
Capital Repackage Trust I			9.00%, 4/29/2049	3,312	3,343
6.52%, 12/29/2049^(d),(e)	2,700	2,349	NB Capital Trust II
Akbank TAS			7.83%, 12/15/2026	1,150	1,149
5.13%, 7/22/2015^(d)	190	193	NB Capital Trust IV
Axis Bank Ltd			8.25%, 4/15/2027	455	464
4.75%, 5/2/2016^(d),(f)	315	315	PNC Preferred Funding Trust I
			6.52%, 12/31/2049^(d),(e)	4,000	3,110
Banco Bradesco SA/Cayman Islands
5.90%, 1/16/2021^(d)	390	399	Societe Generale
Banco Cruzeiro do Sul SA/Brazil			8.75%, 4/7/2049	9,770	10,429
8.88%, 9/22/2020^(d)	715	749	Standard Chartered PLC
			7.01%, 7/29/2049^(d)	100	99
Banco de Credito del Peru
5.38%, 9/16/2020^(d)	735	752	State Bank of India/London
Banco do Brasil SA			4.50%, 10/23/2014	200	208
5.38%, 1/15/2021^(d)	750	757	SunTrust Capital VIII
Banco Internacional del Peru SAA			6.10%, 12/15/2036	3,800	3,553
5.75%, 10/7/2020^(d)	515	518	Susquehanna Capital II
Banco Votorantim SA			11.00%, 3/23/2040	750	825
7.38%, 1/21/2020^(d)	325	353	VTB Bank Via VTB Capital SA
BanColombia SA			6.25%, 6/30/2035	231	236
			6.25%, 7/2/2035^(d)	400	413
6.13%, 7/26/2020	251	261
Bangkok Bank PCL/Hong Kong			6.88%, 5/29/2018	772	814
4.80%, 10/18/2020^(d)	500	494	Wachovia Capital Trust V
			7.97%, 6/1/2027^(d)	2,000	2,034
BankAmerica Institutional Capital A
8.07%, 12/31/2026^(d)	121	122		$ 84,771
Barclays Bank PLC			Beverages - 0.48%
6.28%, 12/31/2049	300	272	Beverages & More Inc
6.86%, 9/29/2049^(d),(e)	1,830	1,784	9.63%, 10/1/2014^(d)	5,500	5,541
7.43%, 9/29/2049^(d),(e)	2,250	2,284
BB&T Capital Trust IV			Chemicals - 0.40%
6.82%, 6/12/2057^(e)	500	499	CPG International I Inc
BBVA International Preferred SA Unipersonal			7.50%, 7/1/2012^(e)	550	550
5.92%, 12/30/2049^(e)	4,500	3,976	10.50%, 7/1/2013	2,911	2,984
BNP Paribas			Ferro Corp
7.20%, 6/29/2049^(d)	900	907	7.88%, 8/15/2018	1,025	1,090
BPCE SA				$ 4,624
12.50%, 9/30/2049^(d)	500	572	Coal - 0.23%
CIT Group Inc			Bumi Investment Pte Ltd
7.00%, 5/1/2016	4,500	4,483	10.75%, 10/6/2017^(d)	1,435	1,497


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




		Principal			Principal
		Amount			Amount
BONDS (continued)		(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Coal (continued)				Diversified Financial Services (continued)
Consol Energy Inc				E*Trade Financial Corp
8.25%, 4/1/2020^(d)	$ 1,000 $		1,115	7.38%, 9/15/2013	$ 5,650 $	5,615
		$ 2,612		Financiera Independencia SAB de CV
Commercial Services - 2.44%				10.00%, 3/30/2015^(d)	507	532
Aramark Corp				Glen Meadow Pass-Through Trust
8.50%, 2/1/2015		1,015	1,066	6.51%, 2/12/2067^(d),(e)	6,100	5,093
Bankrate Inc				Icahn Enterprises LP / Icahn Enterprises Finance
11.75%, 7/15/2015^(d)		2,000	2,185	Corp
Catalent Pharma Solutions Inc				7.75%, 1/15/2016	2,750	2,826
9.50%, 4/15/2015		5,403	5,483	International Lease Finance Corp
DynCorp International Inc				6.38%, 3/25/2013	1,500	1,545
10.38%, 7/1/2017^(d)		4,755	4,862	6.75%, 9/1/2016^(d)	1,000	1,090
Knowledge Learning Corp				7.13%, 9/1/2018^(d)	1,000	1,100
7.75%, 2/1/2015^(d)		1,575	1,583	8.63%, 9/15/2015^(d)	2,260	2,542
Laureate Education Inc				LBG Capital No 1 PLC
10.00%, 8/15/2015^(d)		2,800	2,870	7.88%, 11/1/2020	1,000	946
Live Nation Entertainment Inc				MBNA Capital A
8.13%, 5/15/2018^(d)		1,160	1,195	8.28%, 12/1/2026	1,000	1,020
NCO Group Inc				Nuveen Investments Inc
11.88%, 11/15/2014		1,650	1,402	10.50%, 11/15/2015	5,800	6,061
PharmaNet Development Group Inc				Old Mutual Capital Funding
10.88%, 4/15/2017^(d)		5,750	5,980	8.00%, 5/29/2049	4,230	4,158
Wyle Services Corp				Pinnacle Foods Finance LLC / Pinnacle Foods
10.50%, 4/1/2018^(d)		1,500	1,489	Finance Corp
		$ 28,115		8.25%, 9/1/2017^(d)	2,125	2,221
Computers - 0.67%				Russian Agricultural Bank OJSC Via RSHB
Compucom Systems Inc				Capital SA
12.50%, 10/1/2015^(d)		4,700	5,099	6.30%, 5/15/2017	955	1,006
Stratus Technologies Inc				RZD Capital Ltd
12.00%, 3/29/2015^(d)		3,000	2,520	5.74%, 4/3/2017	545	575
SunGard Data Systems Inc				Swiss Re Capital I LP
10.25%, 8/15/2015		140	148	6.85%, 5/29/2049^(d),(e)	4,400	4,368

		$ 7,767		TNK-BP Finance SA
Consumer Products - 1.12%				7.25%, 2/2/2020 (d)	3,115	3,411
American Achievement Corp				Ukreximbank Via Biz Finance PL
8.25%, 4/1/2012^(d)		465	465	8.38%, 4/27/2015	633	650
10.88%, 4/15/2016^(d),(f)		4,540	4,665	Vnesheconombank Via VEB Finance Ltd
				6.90%, 7/9/2020^(d)	458	490
Prestige Brands Inc
8.25%, 4/1/2018		500	521	ZFS Finance USA Trust II
8.25%, 4/1/2018^(d),(f)		1,000	1,042	6.45%, 12/15/2065^(d),(e)	6,000	5,760
Reynolds Group Issuer Inc / Reynolds Group Issuer					$ 67,114
LLC / Reynolds Group Issuer (Luxembourg) S.A.				Electric - 0.83%
7.13%, 4/15/2019^(d)		2,700	2,815	Dominion Resources Inc/VA
Spectrum Brands Holdings Inc				7.50%, 6/30/2066	700	730
9.50%, 6/15/2018^(d)		3,000	3,332	Elwood Energy LLC
		$ 12,840		8.16%, 7/5/2026	209	197
Distribution & Wholesale - 0.48%				FPL Group Capital Inc
				7.30%, 9/1/2067^(e)	200	206
Intcomex Inc
13.25%, 12/15/2014^(d)		5,000	5,294	Indiantown Cogeneration LP
VWR Funding Inc				9.26%, 12/15/2010	50	50
10.25%, 7/15/2015		264	279	Integrys Energy Group Inc
				6.11%, 12/1/2066^(e)	2,800	2,621
		$ 5,573
				Majapahit Holding BV
Diversified Financial Services - 5.83%				7.75%, 1/20/2020^(d)	1,025	1,256
Ageas Hybrid Financing SA
8.25%, 2/28/2049		5,136	5,162	7.88%, 6/29/2037	100	125
Alfa Bank OJSC Via Alfa Bond Issuance PLC				Midwest Generation LLC
				8.56%, 1/2/2016^(c)	312	313
7.88%, 9/25/2017^(d)		300	303
Berau Capital Resources Pte Ltd				NRG Energy Inc
				8.25%, 9/1/2020^(d)	2,150	2,279
12.50%, 7/8/2015^(d)		610	702
Capital One Capital III				PPL Capital Funding Inc
				6.70%, 3/30/2067^(e)	1,500	1,440
7.69%, 8/15/2036		1,300	1,319

Capital One Capital VI				Reliant Energy Mid-Atlantic Power Holdings LLC
8.88%, 5/15/2040		6,140	6,478	9.24%,7/2/2017 (c)	356	375
CEVA Group PLC					$ 9,592
11.50%, 4/1/2018^(d)		550	586	Electrical Components & Equipment - 0.15%
11.63%, 10/1/2016^(d)		1,050	1,137	Coleman Cable Inc
Citigroup Capital XXI				9.00%, 2/15/2018	1,600	1,674
8.30%, 12/21/2057		400	418


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Electronics - 0.10%			Insurance (continued)
Stoneridge Inc			Delphi Financial Group Inc
9.50%, 10/15/2017^(d)	$ 1,105 $	1,182	7.88%, 1/31/2020	$ 800 $	890
			Everest Reinsurance Holdings Inc
Energy - Alternate Sources - 0.07%			6.60%, 5/15/2037^(e)	3,100	2,961
Power Sector Assets & Liabilities Management			Ironshore Holdings US Inc
Corp			8.50%, 5/15/2020^(d)	5,170	5,382
7.25%, 5/27/2019	304	371	Liberty Mutual Group Inc
7.39%, 12/2/2024^(d)	327	405	7.00%, 3/15/2037^(d),(e)	300	281
	$ 776		7.80%, 3/15/2037^(d)	4,801	4,801
Engineering & Contruction - 0.31%			10.75%, 6/15/2058^(d),(e)	210	260
Alion Science and Technology Corp			Lincoln National Corp
12.00%, 11/1/2014	3,503	3,560	7.00%, 5/17/2066^(e)	4,375	4,265
			MetLife Capital Trust IV
Entertainment - 1.13%			7.88%, 12/15/2037^(d)	2,200	2,376
Chukchansi Economic Development Authority			MetLife Capital Trust X
4.12%, 11/15/2012^(d),(e)	2,000	1,270	9.25%, 4/8/2038^(d)	3,000	3,615
Lions Gate Entertainment Inc			Nationwide Financial Services
10.25%, 11/1/2016^(d)	2,500	2,575	6.75%, 5/15/2037	6,980	6,573
Regal Entertainment Group			Oil Insurance Ltd
9.13%, 8/15/2018	1,010	1,074	7.56%, 12/29/2049^(d),(e)	2,700	2,426
River Rock Entertainment Authority/The			Progressive Corp/The
9.75%, 11/1/2011	4,275	3,698	6.70%, 6/15/2037	300	307
Snoqualmie Entertainment Authority			Prudential Financial Inc
4.43%, 2/1/2014^(d),(e)	750	615	8.88%, 6/15/2038^(e)	300	345
9.13%, 2/1/2015^(d)	4,150	3,756	Prudential PLC
	$ 12,988		11.75%, 12/29/2049^(e)	4,500	5,356
Food - 0.14%			Reinsurance Group of America Inc
B&G Foods Inc			6.75%, 12/15/2065^(e)	1,700	1,520
7.63%, 1/15/2018	170	181	Unitrin Inc
C&S Group Enterprises LLC			6.00%, 5/15/2017	150	155
8.38%, 5/1/2017^(d)	750	750	USI Holdings Corp
JBS Finance II Ltd			9.75%, 5/15/2015^(d)	4,973	4,985
8.25%, 1/29/2018^(d)	695	735	XL Group PLC
			6.50%, 12/31/2049^(e)	5,000	4,475
	$ 1,666
Forest Products & Paper - 0.37%				$ 61,830
Bio Pappel SAB de CV			Internet - 0.77%
6.00%, 8/27/2016^(e)	1,213	1,098	GXS Worldwide Inc
Clearwater Paper Corp			9.75%, 6/15/2015	6,975	7,202
7.13%, 11/1/2018^(d)	1,000	1,045	Open Solutions Inc
Exopack Holding Corp			9.75%, 2/1/2015^(d)	2,250	1,634
11.25%, 2/1/2014^(d)	1,300	1,352		$ 8,836
Sino-Forest Corp			Investment Companies - 1.28%
6.25%, 10/21/2017^(d)	820	823	American Capital Ltd
	$ 4,318		8.96%, 12/31/2013^(d),(e)	4,501	4,543
Healthcare - Products - 0.33%			Man Group PLC
Biomet Inc			5.00%, 8/9/2017	2,100	1,848
11.63%, 10/15/2017	2,400	2,703	11.00%, 5/7/2049	2,357	2,512
DJO Finance LLC / DJO Finance Corp			Offshore Group Investments Ltd
9.75%, 10/15/2017^(d)	1,110	1,154	11.50%, 8/1/2015^(d)	5,500	5,830
	$ 3,857			$ 14,733
Healthcare - Services - 0.33%			Iron & Steel - 0.64%
Apria Healthcare Group Inc			China Oriental Group Co Ltd
12.38%, 11/1/2014	1,350	1,510	8.00%, 8/18/2015^(d)	965	1,017
Community Health Systems Inc			CSN Resources SA
8.88%, 7/15/2015	2,100	2,247	6.50%, 7/21/2020^(d)	613	663
	$ 3,757		Evraz Group SA
Holding Companies - Diversified - 0.26%			9.50%, 4/24/2018	820	921
Noble Group Ltd			Severstal OAO Via Steel Capital SA
6.63%, 8/5/2020^(d)	400	428	9.75%, 7/29/2013	305	338
Susser Holdings LLC / Susser Finance Corp			Standard Steel LLC/Standard Steel Finance Corp
			12.00%, 5/1/2015^(c),(d)	4,500	4,461
8.50%, 5/15/2016	2,410	2,570
	$ 2,998			$ 7,400
Insurance - 5.37%			Leisure Products & Services - 0.89%
AXA SA			Easton-Bell Sports Inc
6.38%, 12/29/2049^(d),(e)	5,700	5,358	9.75%, 12/1/2016	1,910	2,091
Catlin Insurance Co Ltd			Sabre Holdings Corp
7.25%, 12/31/2049^(d)	6,450	5,499	8.35%, 3/15/2016^(e)	3,500	3,675
			Travelport LLC
			11.88%, 9/1/2016	1,700	1,836


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




	Principal				Principal
	Amount				Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)		(000's) Value (000's)
Leisure Products & Services (continued)			Mortgage Backed Securities (continued)
Travelport LLC/Travelport Inc			Bear Stearns Commercial Mortgage Securities
9.00%, 3/1/2016^(d)	$ 2,650 $	2,690	8.21%, 2/15/2032^(e)	$ 79 $		80
	$ 10,292		Citigroup Commercial Mortgage Trust
Lodging - 1.39%			5.32%, 12/17/2049^(d)		746	720
Boyd Gaming Corp			6.29%, 12/10/2049^(e)		300	332
6.75%, 4/15/2014	3,200	3,096	Citigroup/Deutsche Bank Commercial Mortgage
Harrah's Operating Co Inc			Trust
10.00%, 12/15/2018	5,100	4,425	0.35%, 11/15/2044^(d)		68,328	500
12.75%, 4/15/2018^(d)	1,000	990	5.89%, 11/15/2044		2,493	2,693
MGM Resorts International			Commercial Mortgage Loan Trust
11.38%, 3/1/2018	2,000	2,075	6.21%, 9/10/2017^(e)		705	753
Wyndham Worldwide Corp			Credit Suisse First Boston Mortgage Securities
7.38%, 3/1/2020	350	388	Corp
Wynn Las Vegas LLC / Wynn Las Vegas Capital			0.28%, 1/15/2037^(d),(e)		29,275	738
Corp			4.96%, 1/15/2037^(d)		2,000	1,775
7.75%, 8/15/2020^(d)	4,600	4,991	Credit Suisse Mortgage Capital Certificates
	$ 15,965		0.13%, 9/15/2040^(d)		79,334	522
			5.38%, 11/15/2016^(d)		400	418
Machinery - Diversified - 0.18%
Case New Holland Inc			5.73%, 2/15/2039^(e)		2,815	2,515
7.88%, 12/1/2017^(d)	1,760	1,967	5.85%, 3/15/2039^(e)		200	217
CPM Holdings Inc			5.91%, 6/15/2039^(e)		375	389
10.63%, 9/1/2014^(d)	100	108	GMAC Commercial Mortgage Securities Inc
	$ 2,075		7.84%, 8/16/2033		12	12
Media - 1.29%			Greenwich Capital Commercial Funding Corp
			5.44%, 3/10/2039^(e)		3,000	3,207
Cablevision Systems Corp
8.00%, 4/15/2020	2,100	2,323	GS Mortgage Securities Corp II
			5.37%, 8/17/2016^(d)		400	403
CCO Holdings LLC / CCO Holdings Capital Corp
8.13%, 4/30/2020^(d)	2,000	2,160	JP Morgan Chase Commercial Mortgage Securities
DCP LLC/DCP Corp			Corp
10.75%, 8/15/2015^(d)	3,960	4,009	0.70%, 2/15/2051^(e)		207,201	2,952
Globo Comunicacao e Participacoes SA			4.99%, 9/12/2037		200	184
6.25%, 12/31/2049^(d),(e)	320	330	5.31%, 1/15/2049		803	822
			5.93%, 2/12/2049^(e)		300	319
Nielsen Finance LLC / Nielsen Finance Co
0.00%, 8/1/2016^(e)	4,900	4,992	LB-UBS Commercial Mortgage Trust
7.75%, 10/15/2018^(d)	1,000	1,036	0.36%, 9/15/2037^(d),(e)		51,763	579
	$ 14,850		0.73%, 2/17/2040		22,186	322
			5.41%, 9/15/2039^(e)		1,490	1,502
Mining - 0.41%			5.86%, 7/15/2040^(e)		1,445	1,536
AngloGold Ashanti Holdings PLC			6.08%, 6/15/2038^(e)		400	440
5.38%, 4/15/2020	430	459
Gold Fields Orogen Holding BVI Ltd			7.70%, 7/15/2032		350	350
4.88%, 10/7/2020^(d)	480	471	Merrill Lynch/Countrywide Commercial Mortgage
Southern Copper Corp			Trust
			0.67%, 9/12/2049^(e)		32,160	591
6.75%, 4/16/2040	493	530
Vale Overseas Ltd			5.42%, 8/12/2048		345	253
4.63%, 9/15/2020	714	739	5.64%, 11/12/2016		250	275
5.63%, 9/15/2019	975	1,091	Morgan Stanley Capital I
			5.45%, 10/28/2033^(d)		132	126
6.88%, 11/21/2036	809	922
Vedanta Resources PLC			5.63%, 6/12/2012		782	792
9.50%, 7/18/2018	510	548	Morgan Stanley Reremic Trust
			4.97%, 4/15/2040^(d)		850	760
	$ 4,760		10.24%, 12/17/2043^(c),(d),(e)		1,500	1,552
Miscellaneous Manufacturing - 0.79%			Prudential Mortgage Capital Funding LLC
Amsted Industries Inc			7.50%, 5/10/2034^(d),(e)		800	809
8.13%, 3/15/2018^(d)	2,000	2,110
			RBSCF Trust
Eastman Kodak Co			4.66%, 4/15/2015^(d)		150	156
7.25%, 11/15/2013	3,070	2,974	5.31%, 3/16/2012^(d)		1,000	1,004
9.75%, 3/1/2018^(d)	1,930	1,913
			6.00%, 7/17/2014^(d),(e)		150	149
RBS Global Inc / Rexnord LLC			Wachovia Bank Commercial Mortgage Trust
8.50%, 5/1/2018	2,050	2,153	0.62%, 6/15/2035^(d)		24,545	659
	$ 9,150		5.34%, 11/15/2048		1,158	1,120
Mortgage Backed Securities - 3.36%			5.37%, 11/15/2048		200	166
Banc of America Commercial Mortgage Inc					$ 38,657
4.73%, 7/10/2043^(e)	1,500	1,387
			Office & Business Equipment - 0.09%
5.17%, 9/10/2047	26	26	Xerox Capital Trust I
5.63%, 4/10/2049	1,000	1,038	8.00%, 2/1/2027		1,000	1,026
5.89%, 7/10/2044	400	438
5.93%, 2/10/2051^(e)	1,240	1,330

BCRR Trust			Oil & Gas - 2.34%
5.86%, 12/15/2043^(d)	2,000	1,746	Berry Petroleum Co
			6.75%, 11/1/2020^(f)		1,100	1,136


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




	Principal				Principal
	Amount				Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)		(000's) Value (000's)
Oil & Gas (continued)			Regional Authority - 0.04%
Carrizo Oil & Gas Inc			Provincia de Buenos Aires/Argentina
8.63%, 10/15/2018^(d),(f)	$ 1,140 $	1,154	11.75%, 10/5/2015^(d)	$ 150 $		153
Continental Resources Inc/OK			Provincia de Cordoba
7.38%, 10/1/2020^(d)	1,500	1,624	12.38%, 8/17/2017^(d)		260	272
Denbury Resources Inc					$ 425
8.25%, 2/15/2020	590	658	REITS - 0.05%
Ecopetrol SA			DuPont Fabros Technology LP
7.63%, 7/23/2019	600	738	8.50%, 12/15/2017		550	595
Gazprom Via Gaz Capital SA
7.29%, 8/16/2037^(d)	2,525	2,740	Retail - 1.54%
9.25%, 4/23/2019^(d)	1,865	2,313	CKE Restaurants Inc
KazMunaiGaz Finance Sub BV			11.38%, 7/15/2018^(d)		4,825	5,205
7.00%, 5/5/2020^(d)	2,110	2,243	DineEquity Inc
11.75%, 1/23/2015	200	248	9.50%, 10/30/2018^(d)		1,350	1,438
Lukoil International Finance BV			El Pollo Loco Inc
7.25%, 11/5/2019^(d)	1,050	1,137	11.75%, 12/1/2012		250	255
NAK Naftogaz Ukraine			Games Merger Corp
9.50%, 9/30/2014	300	324	11.00%, 6/1/2018^(d)		2,825	3,136
Pemex Project Funding Master Trust			Landry's Restaurants Inc
6.63%, 6/15/2035	415	460	11.63%, 12/1/2015		2,250	2,413
Petrobras International Finance Co			Rite Aid Corp
5.75%, 1/20/2020	1,465	1,639	9.50%, 6/15/2017		6,250	5,312
6.88%, 1/20/2040	402	465			$ 17,759
Petrobras International Finance Co - Pifco			Savings & Loans - 0.16%
7.88%, 3/15/2019	420	531	Sovereign Capital Trust VI
Petroleos de Venezuela SA			7.91%, 6/13/2036		1,900	1,857
5.00%, 10/28/2015	533	318
5.25%, 4/12/2017	1,905	1,124	Semiconductors - 0.23%
Petroleos Mexicanos			Freescale Semiconductor Inc
5.50%, 1/21/2021	1,165	1,267	9.25%, 4/15/2018^(d)		2,000	2,140
8.00%, 5/3/2019	692	889	STATS ChipPAC Ltd
Reliance Holdings USA Inc			7.50%, 8/12/2015^(d)		455	499
6.25%, 10/19/2040^(d)	750	743			$ 2,639
SandRidge Energy Inc			Software - 0.87%
8.63%, 4/1/2015	3,929	4,017	Aspect Software Inc
8.75%, 1/15/2020^(d)	775	806	10.63%, 5/15/2017^(d)		5,000	5,294
Zhaikmunai Finance BV			First Data Corp
10.50%, 10/19/2015^(d)	340	335
			9.88%, 9/24/2015		300	253
	$ 26,909		10.55%, 9/24/2015		4,800	4,056
Oil & Gas Services - 0.37%			JDA Software Group Inc
Aquilex Holdings LLC/Aquilex Finance Corp			8.00%, 12/15/2014^(d)		400	428
11.13%, 12/15/2016	1,840	1,753			$ 10,031
Thermon Industries Inc			Sovereign - 5.26%
9.50%, 5/1/2017^(d)	2,350	2,485
			Argentina Bonos
	$ 4,238		7.00%, 10/3/2015		4,065	3,886
Packaging & Containers - 0.07%			Argentina Government International Bond
Graphic Packaging International Inc			8.28%, 12/31/2033		5,287	5,015
7.88%, 10/1/2018	725	767	Banco Nacional de Desenvolvimento Economico e
			Social
Pharmaceuticals - 0.66%			5.50%, 7/12/2020		620	671
BioScrip Inc			6.50%, 6/10/2019		617	713
10.25%, 10/1/2015	4,000	4,230	Brazilian Government International Bond
Elan Finance PLC/Elan Finance Corp			5.63%, 1/7/2041		1,022	1,134
8.88%, 12/1/2013	2,000	2,070	5.88%, 1/15/2019		1,990	2,362
Omnicare Inc			6.00%, 1/17/2017		500	590
6.13%, 6/1/2013	1,000	1,011	7.88%, 3/7/2015		1,070	1,329
7.75%, 6/1/2020	250	261	8.25%, 1/20/2034		400	585
	$ 7,572		10.13%, 5/15/2027		606	998
Pipelines - 0.37%			Colombia Government International Bond
Energy Transfer Equity LP			6.13%, 1/18/2041		554	633
7.50%, 10/15/2020	3,000	3,270	7.38%, 3/18/2019		1,340	1,712
TransCanada PipeLines Ltd			11.75%, 2/25/2020		101	162
6.35%, 5/15/2067^(e)	1,000	958	Croatia Government International Bond
	$ 4,228		6.63%, 7/14/2020^(d)		650	736
Real Estate - 0.02%			Egypt Government International Bond
Central China Real Estate Ltd			5.75%, 4/29/2020^(d)		610	658
12.25%, 10/20/2015^(d)	245	257	Hungary Government International Bond
			4.75%, 2/3/2015		430	462
			6.25%, 1/29/2020		480	528


Schedule of Investments
Global Diversified Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's)	Value (000's)
Sovereign (continued)			Telecommunications (continued)
Indonesia Government International Bond			Qtel International Finance Ltd
5.88%, 3/13/2020^(d)	$ 370 $	429	4.75%, 2/16/2021^(d)	$ 515	$ 510
6.63%, 2/17/2037^(d)	505	614	5.00%, 10/19/2025^(d)	445	430
6.75%, 3/10/2014	695	789	Sprint Nextel Corp
11.63%, 3/4/2019^(d)	750	1,163	6.00%, 12/1/2016	250	250
Mexico Government International Bond			8.38%, 8/15/2017	200	220
5.63%, 1/15/2017	200	231	Telcordia Technologies Inc
5.95%, 3/19/2019	2,601	3,083	11.00%, 5/1/2018^(d)	5,950	5,861
6.05%, 1/11/2040	758	872	Telemar Norte Leste SA
6.63%, 3/3/2015	235	277	5.50%, 10/23/2020^(d)	1,499	1,508
Panama Government International Bond			Telemovil Finance Co Ltd
5.20%, 1/30/2020	1,050	1,192	8.00%, 10/1/2017^(d)	535	556
6.70%, 1/26/2036	339	426	Vimpel Communications Via VIP Finance Ireland
Peruvian Government International Bond			Ltd OJSC
7.13%, 3/30/2019	1,895	2,407	8.38%, 4/30/2013^(d)	100	108
8.75%, 11/21/2033	431	659	9.13%, 4/30/2018^(d)	2,010	2,276
Philippine Government International Bond			West Corp
4.00%, 1/15/2021	1,869	1,866	8.63%, 10/1/2018^(d)	1,150	1,193
6.38%, 1/15/2032	329	381	9.50%, 10/15/2014	767	803
6.38%, 10/23/2034	702	813	11.00%, 10/15/2016	2,575	2,781
6.50%, 1/20/2020	1,045	1,255			$ 33,267
Russian Foreign Bond - Eurobond			Transportation - 0.59%
3.63%, 4/29/2015^(d)	1,200	1,227	BNSF Funding Trust I
5.00%, 4/29/2020^(d)	2,240	2,332	6.61%, 12/15/2055^(e)	1,000	1,025
7.50%, 3/31/2030^(d)	4,072	4,866	Kazakhstan Temir Zholy Finance BV
South Africa Government International Bond			6.38%, 10/6/2020^(d)	745	778
5.50%, 3/9/2020	735	832	United Maritime Group LLC/United Maritime
6.50%, 6/2/2014	239	275	Group Finance Corp
6.88%, 5/27/2019	500	618	11.75%, 6/15/2015	5,000	4,994
Turkey Government International Bond					$ 6,797
5.63%, 3/30/2021	985	1,101	TOTAL BONDS		$ 665,111
6.88%, 3/17/2036	1,793	2,156		Principal
7.00%, 6/5/2020	1,670	2,071		Amount
7.25%, 3/15/2015	1,200	1,425	CONVERTIBLE BONDS - 0.01%	(000's)	Value (000's)
Venezuela Government International Bond			Agriculture - 0.01%
5.75%, 2/26/2016	874	623	Vector Group Ltd
6.00%, 12/9/2020	885	521	5.75%, 6/15/2026	70	84
7.75%, 10/13/2019	2,090	1,406
8.50%, 10/8/2014	1,037	874	TOTAL CONVERTIBLE BONDS		$ 84
9.25%, 9/15/2027	1,893	1,382
9.38%, 1/13/2034	300	200		Principal
			SENIOR FLOATING RATE INTERESTS -	Amount
	$ 60,540		3.40%	(000's)	Value (000's)
Telecommunications - 2.89%			Automobile Parts & Equipment - 0.11%
America Movil SAB de CV			Federal Mogul Corp, Term Loan C-EXIT
5.00%, 3/30/2020	1,025	1,120	0.00%, 12/27/2015^(e),(g)	$ 507	$ 449
5.00%, 3/30/2020	425	465	Federal Mogul Corp, Term Loan EXIT
5.63%, 11/15/2017	858	973	0.00%, 12/27/2013^(e),(g)	993	880
6.13%, 3/30/2040	500	553			$ 1,329
6.38%, 3/1/2035	285	322
			Commercial Services - 0.51%
Clearwire Communications LLC/Clearwire			Interactive Data Corporation, Term Loan
Finance Inc			6.75%, 1/29/2017^(e)	2,195	2,232
12.00%, 12/1/2015^(d)	3,600	3,996
12.00%, 12/1/2015^(d)	1,400	1,550	NCO Group Inc, Term Loan
			7.41%, 11/12/2013^(e)	1,749	1,687
Cleveland Unlimited Inc
11.50%, 12/15/2010^(d),(e)	250	248	Wyle Services Corp, Term Loan B
			7.89%, 3/28/2016^(e)	1,995	1,993
Digicel Group Ltd
9.13%, 1/15/2015^(d)	1,025	1,042			$ 5,912
10.50%, 4/15/2018^(d)	399	439	Diversified Financial Services - 0.20%
Indosat Palapa Co BV			American General Finance Corp, Term Loan
			7.25%, 4/21/2015^(e)	2,250	2,268
7.38%, 7/29/2020^(d)	565	639
Intelsat Luxembourg SA
11.25%, 2/4/2017	1,220	1,307	Electric - 0.03%
Level 3 Financing Inc			Texas Competitive Electric Holdings LLC, Term
9.25%, 11/1/2014	210	206	Loan B3
			3.76%, 10/10/2014^(e)	490	381
10.00%, 2/1/2018	1,500	1,436
MTS International Funding Ltd
8.63%, 6/22/2020^(d)	1,915	2,224
Nextel Communications Inc
7.38%, 8/1/2015	250	251


	Principal				Maturity
SENIOR FLOATING RATE INTERESTS	Amount				Amount
(continued)	(000's)	Value (000's)	REPURCHASE AGREEMENTS (continued)		(000's) Value (000's)
Food - 0.31%			Banks (continued)
BI-LO LLC, Term Loan			Investment in Joint Trading Account; Deutsche $		5,762 $	5,761
9.50%, 5/12/2015^(e)	$ 3,559	$ 3,612		Bank Repurchase Agreement; 0.21% dated
				10/29/10 maturing 11/01/10 (collateralized by
Forest Products & Paper - 0.00%				Sovereign Agency Issues; $5,876,789; 0.38%
Reynolds Group Holdings Inc, Term Loan				- 3.75%; dated 12/06/10 - 01/29/15)
2.38%, 8/5/2015^(e)	2,800	21	Investment in Joint Trading Account; Morgan		3,942	3,942
				Stanley Repurchase Agreement; 0.20% dated
Lodging - 0.27%				10/29/10 maturing 11/01/10 (collateralized by
Harrah's Operating Co Inc, Term Increment Loan				Sovereign Agency Issues; $4,020,961; 1.88%
B4				- 6.13%; dated 01/09/12 - 02/21/13)
9.50%, 10/31/2016^(e)	496	516			$ 22,051
MGM Mirage			TOTAL REPURCHASE AGREEMENTS		$ 22,051
0.00%, 2/21/2014^(e),(g)	1,350	1,275	Total Investments		$ 1,110,391
0.00%, 2/14/2021^(e),(g)	1,350	1,275	Other Assets in Excess of Liabilities, Net - 3.56%		$ 41,017
		$ 3,066	TOTAL NET ASSETS - 100.00%		$ 1,151,408
Miscellaneous Manufacturing - 0.35%
Clopay Ames True Temper, Term Loan
7.75%, 9/30/2016^(e)	1,910	1,922	(a)	Non-Income Producing Security
Tomkins PLC, Term Loan B-New 1L			(b)	Security is Illiquid
6.66%, 9/21/2016^(e)	2,100	2,122	(c)	Market value is determined in accordance with procedures established in
		$ 4,044		good faith by the Board of Directors. At the end of the period, the value of
Pharmaceuticals - 0.31%				these securities totaled $9,702 or 0.84% of net assets.
NBTY Inc, Term Loan			(d)	Security exempt from registration under Rule 144A of the Securities Act of
6.25%, 10/1/2017^(e)	1,050	1,063		1933. These securities may be resold in transactions exempt from
Valeant Pharmaceuticals, Term Loan				registration, normally to qualified institutional buyers. Unless otherwise
0.00%, 9/21/2016^(e),(g)	610	6		indicated, these securities are not considered illiquid. At the end of the
4.55%, 9/21/2016^(e)	2,440	2,464		period, the value of these securities totaled $304,019 or 26.40% of net
		$ 3,533		assets.
Retail - 0.37%			(e)	Variable Rate. Rate shown is in effect at October 31, 2010.
Guitar Center Inc, Term Loan			(f)	Security purchased on a when-issued basis.
3.76%, 10/9/2014^(e)	3,000	2,704	(g)	This Senior Floating Rate Note will settle after October 31, 2010, at which
Toys R Us Inc, Term Loan				time the interest rate will be determined.
6.00%, 8/17/2016^(e)	1,500	1,506
		$ 4,210
Software - 0.57%			Unrealized Appreciation (Depreciation)
Merrill Corp, Term Loan			The net federal income tax unrealized appreciation (depreciation) and federal tax
8.50%, 12/24/2012^(e)	1,541	1,477	cost of investments held as of the period end were as follows:
Sophos Inc, Term Loan B
7.75%, 6/15/2016^(e)	2,978	2,977	Unrealized Appreciation		$ 68,844
Vertafore Inc, Term Loan			Unrealized Depreciation			(4,894)
6.75%, 7/29/2016^(e)	2,095	2,107	Net Unrealized Appreciation (Depreciation)		$ 63,950
		$ 6,561	Cost for federal income tax purposes		$ 1,046,441
Telecommunications - 0.17%			All dollar amounts are shown in thousands (000's)
Telx Group Inc, Term Loan B
8.00%, 6/17/2015^(e)	1,995	1,945

Trucking & Leasing - 0.20%
AWAS Aviation Holdings LLC, Term Loan
7.75%, 6/10/2016^(e)	2,260	2,307

TOTAL SENIOR FLOATING RATE INTERESTS		$ 39,189
	Maturity
	Amount
REPURCHASE AGREEMENTS - 1.92%	(000's)	Value (000's)
Banks - 1.92%
Investment in Joint Trading Account; Bank of	$ 6,282	$ 6,283
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$6,407,867; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse	6,065	6,065
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $6,186,095; 1.13%; dated
01/15/12)


Schedule of Investments
Global Real Estate Securities Fund
October 31, 2010




COMMON STOCKS - 96.86%	Shares Held Value (000's)		COMMON STOCKS (continued)		Shares Held Value (000's)
Commercial Services - 0.81%			REITS (continued)
Corrections Corp of America ^(a)	5,776 $	148	Fortune Real Estate Investment Trust			237,000 $	122
			Frasers Commercial Trust			904,000	112
Holding Companies - Diversified - 0.97%			Gecina SA			975	119
Wharf Holdings Ltd	27,000	177	General Growth Properties Inc			8,902	150
			Goodman Group			281,665	174
Lodging - 0.77%			Great Portland Estates PLC			30,924	171
Starwood Hotels & Resorts Worldwide Inc	2,575	140	Hammerson PLC			28,710	193
			Hersha Hospitality Trust			19,577	119
Real Estate - 31.20%			Highwoods Properties Inc			3,150	104
Agile Property Holdings Ltd	100,000	131	Host Hotels & Resorts Inc			11,152	177
Allgreen Properties Ltd	156,000	143	Japan Logistics Fund Inc			12	99
Atrium European Real Estate Ltd	10,006	59	Klepierre			4,582	178
Brookfield Properties Corp	12,200	211	Land Securities Group PLC			28,253	306
Capital & Counties Properties PLC	30,433	73	LaSalle Hotel Properties			3,426	81
CapitaLand Ltd	104,868	315	Link REIT/The			23,000	71
CapitaMalls Asia Ltd	93,000	154	LTC Properties Inc			4,500	125
CB Richard Ellis Group Inc ^(a)	5,328	98	Mapletree Logistics Trust			176,539	123
China Overseas Land & Investment Ltd	50,000	105	Mid-America Apartment Communities Inc			2,051	125
China Resources Land Ltd	101,000	199	Northern Property Real Estate Investment Trust			3,425	91
Citycon OYJ	24,459	109	ProLogis			18,200	248
Deutsche Euroshop AG	3,918	149	PS Business Parks Inc			1,447	86
Fabege AB	8,672	91	Public Storage Inc			1,204	119
FKP Property Group	122,314	113	Ramco-Gershenson Properties Trust			5,914	69
Global Logistic Properties Ltd ^(a)	94,076	169	RioCan Real Estate Investment Trust			2,000	45
Great Eagle Holdings Ltd	42,000	126	Saul Centers Inc			2,500	107
Hang Lung Properties Ltd	22,000	108	Shaftesbury PLC			14,295	102
Henderson Land Development Co Ltd	40,200	286	Simon Property Group Inc			7,418	712
Henderson Land Development Co Ltd - Warrants	2,240	1	SL Green Realty Corp			4,846	318
(a)			Societe de la Tour Eiffel			1,147	96
Hongkong Land Holdings Ltd	22,000	152	Stockland			31,882	118
Hufvudstaden AB	5,829	65	Tanger Factory Outlet Centers			4,082	196
Jones Lang LaSalle Inc	1,437	112	Tishman Speyer Office Fund ^(a)			307,578	121
Mitsubishi Estate Co Ltd	29,877	524	Unibail-Rodamco SE			2,375	495
Mitsui Fudosan Co Ltd	25,193	476	United Urban Investment Corp			39	268
New World Development Ltd	128,700	254	Ventas Inc			4,346	233
PSP Swiss Property AG ^(a)	2,292	176	Vornado Realty Trust			2,964	259
Renhe Commercial Holdings Co Ltd	468,000	89	Westfield Group			48,156	584
Shimao Property Holdings Ltd	85,500	141	Workspace Group PLC			108,492	41
Sponda OYJ	30,704	155				$ 11,485
Sumitomo Realty & Development Co Ltd	7,947	173	TOTAL COMMON STOCKS			$ 17,628
Sun Hung Kai Properties Ltd	42,087	721	Total Investments			$ 17,628
	$ 5,678		Other Assets in Excess of Liabilities, Net - 3.14%			$ 572
REITS - 63.11%			TOTAL NET ASSETS - 100.00%			$ 18,200
Apartment Investment & Management Co	10,700	249
AvalonBay Communities Inc	2,912	310
Boardwalk Real Estate Investment Trust	2,600	109	(a)	Non-Income Producing Security
Boston Properties Inc	5,344	461	(b)	Market value is determined in accordance with procedures established in
British Land Co PLC	13,159	108		good faith by the Board of Directors. At the end of the period, the value of
Cambridge Industrial Trust	410,000	173		these securities totaled $0 or 0.00% of net assets.
Cambridge Industrial Trust - Rights ^(a),(b)	10,520	—
Canadian Real Estate Investment Trust	3,600	113
CapitaMall Trust	21,000	32
CapitaMalls Malaysia Trust ^(a)	259,519	90	Unrealized Appreciation (Depreciation)
			The net federal income tax unrealized appreciation (depreciation) and federal tax
CapLease Inc	19,845	116	cost of investments held as of the period end were as follows:
CFS Retail Property Trust	94,749	173
Champion REIT	211,000	116	Unrealized Appreciation			$ 721
Charter Hall Office REIT	48,590	125	Unrealized Depreciation				(80)
Colonial Properties Trust	4,694	84	Net Unrealized Appreciation (Depreciation)			$ 641
Corio NV	1,464	108	Cost for federal income tax purposes			$ 16,987
Digital Realty Trust Inc	3,665	219	All dollar amounts are shown in thousands (000's)
Douglas Emmett Inc	6,634	119
Dundee Real Estate Investment Trust	7,200	206
DuPont Fabros Technology Inc	5,341	134
Education Realty Trust Inc	15,035	113
Entertainment Properties Trust	4,700	217
Equity Lifestyle Properties Inc	4,203	239
Equity Residential	9,686	471
Essex Property Trust Inc	1,920	217
Eurocommercial Properties NV	1,631	80
Federal Realty Investment Trust	3,003	246
Fonciere Des Regions - Warrants ^(a)	5	—


Schedule of Investments
Global Real Estate Securities Fund
October 31, 2010


Portfolio Summary (unaudited)
Country		Percent
United States		38 .04%
Hong Kong		12 .72%
Japan		8 .45%
Australia		7 .73%
Singapore		7 .39%
United Kingdom		5 .46%
France		4 .87%
Canada		4 .26%
China		1 .99%
Finland		1 .45%
Netherlands		1 .03%
Switzerland		0 .97%
Sweden		0 .86%
Germany		0 .82%
Malaysia		0 .50%
Jersey, Channel Islands		0 .32%
Other Assets in Excess of Liabilities, Net		3 .14%
TOTAL NET ASSETS		100.00%



Foreign Currency Contracts

Foreign Currency Purchase						Net Unrealized
Contracts	Counterparty	Delivery Date Contracts to Accept In Exchange For			Value	Appreciation/(Depreciation)
Australian Dollar	State Street Financial Global	11/15/2010	1,081,713 $	1,065	$ 1,058	$ (7)
	Markets
British Pound	State Street Financial Global	11/15/2010	15,267	24	24	—
	Markets
Canadian Dollar	State Street Financial Global	11/15/2010	16,079	16	16	—
	Markets
Euro	State Street Financial Global	11/15/2010	46,585	65	65	—
	Markets
Hong Kong Dollar	State Street Financial Global	11/15/2010	1,704,873	220	220	—
	Markets
Japanese Yen	State Street Financial Global	11/15/2010	12,945,173	159	161	2
	Markets
New Israeli Sheqel	State Street Financial Global	11/15/2010	54,681	15	15	—
	Markets
New Zealand Dollar	State Street Financial Global	11/15/2010	13,015	10	10	—
	Markets
Norwegian Krone	State Street Financial Global	11/15/2010	87,940	15	15	—
	Markets
Singapore Dollar	State Street Financial Global	11/15/2010	691,881	532	534	2
	Markets
Swedish Krona	State Street Financial Global	11/15/2010	265,460	40	40	—
	Markets
Swiss Franc	State Street Financial Global	11/15/2010	6,550	7	7	—
	Markets

Foreign Currency Sale						Net Unrealized
Contracts	Counterparty	Delivery Date Contracts to Deliver In Exchange For			Value	Appreciation/(Depreciation)
Australian Dollar	State Street Financial Global	11/15/2010	1,087,631 $	1,069	$ 1,064	$ 5
	Markets
British Pound	State Street Financial Global	11/15/2010	25,084	39	40	(1)
	Markets
Euro	State Street Financial Global	11/15/2010	80,529	112	112	—
	Markets
Hong Kong Dollar	State Street Financial Global	11/15/2010	1,965,305	253	254	(1)
	Markets
Japanese Yen	State Street Financial Global	11/15/2010	928,511	11	11	—
	Markets
Malaysian Ringgit	State Street Financial Global	11/15/2010	174,440	56	56	—
	Markets
New Zealand Dollar	State Street Financial Global	11/15/2010	184	—	—	—
	Markets
Philippine Peso	State Street Financial Global	11/15/2010	45,515	1	1	—
	Markets
Singapore Dollar	State Street Financial Global	11/15/2010	906,351	697	700	(3)
	Markets


Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS - 32.19%	(000's)	Value (000's)	BONDS (continued)	(000's)	Value (000's)
Banks - 0.16%			Mortgage Backed Securities (continued)
Goldman Sachs Group Inc/The			Ginnie Mae
3.25%, 6/15/2012	$ 2,600	$ 2,720	3.00%, 9/16/2039	$ 10,010	$ 10,412
			3.89%, 7/16/2026	1,259		1,301
Finance - Mortgage Loan/Banker - 1.70%			4.00%, 11/16/2038	7,383		7,992
Fannie Mae			4.50%, 4/16/2040	10,000		10,850
5.00%, 5/11/2017	3,000	3,550	5.08%, 1/16/2030^(a)	1,080		1,141
6.21%, 8/6/2038	1,250	1,609	JP Morgan Chase Commercial Mortgage Securities
6.63%, 11/15/2030	17,500	23,411	Corp
		$ 28,570	5.27%, 2/12/2012	6,233		6,330
Home Equity Asset Backed Securities - 0.19%			LF Rothschild Mortgage Trust
Asset Backed Securities Corp Home Equity			9.95%, 9/1/2017	23		27
0.36%, 7/25/2036^(a)	893	870	MASTR Alternative Loans Trust
Morgan Stanley Home Equity Loan Trust			5.50%, 1/25/2020	12,896		13,329
0.43%, 2/25/2036^(a)	2,460	2,335	Morgan Stanley Reremic Trust
		$ 3,205	5.50%, 10/26/2035^(b)	7,016		7,372
Mortgage Backed Securities - 29.97%			RBSSP Resecuritization Trust
Banc of America Commercial Mortgage Inc			6.00%, 7/26/2037^(b),(c)	9,992		10,217
4.59%, 7/10/2043	6,885	7,201	Structured Asset Securities Corp
BCAP LLC Trust			5.50%, 12/25/2033	3,191		3,189
5.25%, 3/26/2037^(a),(b)	5,773	5,921	6.00%, 4/25/2033	19,766		20,763
Chase Mortgage Finance Corp			Wachovia Bank Commercial Mortgage Trust
6.00%, 5/25/2035	20,042	18,776	4.70%, 5/15/2044	8,000		8,648
Citigroup Mortgage Loan Trust Inc			5.12%, 7/15/2042	13,920		15,336
4.25%, 1/25/2036^(b),(c)	9,340	9,399	Wells Fargo Mortgage Backed Securities Trust
4.34%, 11/25/2035^(b),(c)	6,967	6,914	5.50%, 11/25/2035	6,456		6,290
4.75%, 5/25/2035^(b)	10,493	10,794	5.50%, 11/25/2035	10,027		10,468
5.25%, 8/25/2036^(b),(c)	11,432	11,775	6.00%, 4/25/2037	21,000		18,315
6.13%, 7/25/2036^(b),(c)	7,500	7,500	6.00%, 12/28/2037^(a)	17,664		18,325
Countrywide Home Loan Mortgage Pass Through					$ 504,567
Trust			Other Asset Backed Securities - 0.17%
5.25%, 5/25/2034	8,821	8,689	Saxon Asset Securities Trust
Credit Suisse First Boston Mortgage Securities			0.42%, 3/25/2036^(a)	3,017		2,817
Corp
5.75%, 4/25/2033	4,078	4,177	Student Loan Asset Backed Securities - 0.00%
6.00%, 12/25/2033	5,522	5,806	SLM Student Loan Trust
Credit Suisse Mortgage Capital Certificates			0.48%, 9/17/2018^(a)	83		83
4.00%, 3/25/2037^(c)	12,956	12,932
Fannie Mae			TOTAL BONDS		$ 541,962
0.88%, 4/25/2027^(a)	45	45		Principal
4.50%, 10/25/2036	15,000	16,307	U.S. GOVERNMENT & GOVERNMENT	Amount
4.50%, 7/25/2040	11,558	12,552	AGENCY OBLIGATIONS - 67.19%	(000's)	Value (000's)
4.50%, 8/25/2040	14,000	15,196	Federal Home Loan Mortgage Corporation (FHLMC) - 27.89%
5.00%, 8/25/2026	560	563	3.25%, 9/1/2033^(a),(d)	$ 6	$ 6
5.00%, 2/25/2027	195	—	3.35%, 10/1/2032^(a),(d)	6		6
5.00%, 12/25/2039	4,536	4,974	3.50%, 11/1/2025^(d),(e)	13,500		13,964
5.00%, 4/25/2040	14,972	16,373	4.00%, 6/1/2024^(d)	8,524		8,926
5.00%, 4/25/2040	11,757	12,891	4.00%, 3/1/2025^(d)	4,758		4,991
5.00%, 4/25/2040	5,262	5,743	4.00%, 8/1/2039^(d)	9,714		10,008
5.00%, 5/25/2040	10,000	10,957	4.00%, 11/1/2040^(d),(e)	8,000		8,234
5.50%, 12/25/2035^(a)	21,990	24,340	4.50%, 4/1/2018^(d)	3,383		3,606
6.50%, 2/25/2047	1,996	2,232	4.50%, 7/1/2019^(d)	8,627		9,191
7.00%, 4/25/2032	4,664	5,351	4.50%, 8/1/2033^(d)	3,129		3,308
9.00%, 5/25/2020	51	63	4.50%, 8/1/2033^(d)	2,748		2,905
Fannie Mae Interest Strip			4.50%, 5/1/2039^(d)	14,017		14,763
7.00%, 4/1/2024	210	41	4.50%, 6/1/2039^(d)	19,036		20,108
Federal Home Loan Banks			4.50%, 9/1/2039^(d)	18,870		19,780
5.46%, 11/27/2015	1,918	2,091	4.50%, 11/1/2039^(d)	13,616		14,272
Freddie Mac			4.50%, 12/1/2039^(d)	18,570		19,465
1.21%, 2/15/2021^(a)	26	26	4.50%, 8/1/2040^(d)	15,437		16,181
4.50%, 3/15/2038	19,117	20,319	5.00%, 1/1/2019^(d)	826		887
4.50%, 3/15/2040	10,000	10,879	5.00%, 10/1/2025^(d)	669		711
4.50%, 5/15/2040	5,000	5,388	5.00%, 12/1/2032^(d)	613		656
5.00%, 9/15/2027	3,386	17	5.00%, 2/1/2033^(d)	5,029		5,384
5.00%, 3/15/2040	10,393	11,442	5.00%, 6/1/2033^(d)	4,918		5,265
5.50%, 9/15/2031^(a)	1,375	1,437	5.00%, 8/1/2033^(d)	8,267		8,851
5.50%, 1/15/2033	5,216	5,763	5.00%, 8/1/2033^(d)	8,532		9,121
5.50%, 4/15/2033^(a)	15,000	16,215	5.00%, 1/1/2034^(d)	4,526		4,838
5.50%, 12/15/2033	21,000	22,890	5.00%, 5/1/2034^(d)	8,104		8,663
6.50%, 8/15/2027	248	283	5.00%, 5/1/2034^(d)	969		1,035


Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010




	Principal			Principal
U.S. GOVERNMENT & GOVERNMENT	Amount		U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)	AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
Federal Home Loan Mortgage Corporation (FHLMC) (continued)			Federal Home Loan Mortgage Corporation (FHLMC) (continued)
5.00%, 12/1/2034^(d)	$ 298	$ 319	6.50%, 4/1/2011^(d)	$ 1	$ 1
5.00%, 5/1/2035^(d)	818	873	6.50%, 4/1/2011^(d)	3		3
5.00%, 7/1/2035^(d)	13,457	14,364	6.50%, 11/1/2016^(d)	332		364
5.00%, 7/1/2035^(d)	445	477	6.50%, 6/1/2017^(d)	122		134
5.00%, 7/1/2035^(d)	39	42	6.50%, 12/1/2021^(d)	1,249		1,392
5.00%, 10/1/2035^(d)	82	87	6.50%, 4/1/2022^(d)	1,270		1,416
5.00%, 11/1/2035^(d)	3,537	3,786	6.50%, 5/1/2022^(d)	695		774
5.00%, 10/1/2038^(d)	13,381	14,141	6.50%, 8/1/2022^(d)	221		247
5.00%, 6/1/2039^(d)	15,055	16,098	6.50%, 5/1/2023^(d)	131		145
5.00%, 9/1/2039^(d)	17,591	18,832	6.50%, 7/1/2023^(d)	12		13
5.00%, 1/1/2040^(d)	18,493	19,624	6.50%, 1/1/2024^(d)	29		32
5.50%, 4/1/2018^(d)	360	389	6.50%, 7/1/2025^(d)	3		4
5.50%, 11/1/2018^(d)	3,800	4,131	6.50%, 7/1/2025^(d)	3		3
5.50%, 1/1/2029^(d)	12	13	6.50%, 9/1/2025^(d)	1		1
5.50%, 3/1/2029^(d)	10	11	6.50%, 9/1/2025^(d)	4		4
5.50%, 11/1/2032^(d)	2,859	3,097	6.50%, 10/1/2025^(d)	12		13
5.50%, 5/1/2033^(d)	203	219	6.50%, 10/1/2025^(d)	12		13
5.50%, 8/1/2033^(d)	5,321	5,774	6.50%, 4/1/2027^(d)	5		6
5.50%, 10/1/2033^(d)	109	118	6.50%, 2/1/2028^(d)	1		1
5.50%, 12/1/2033^(d)	7,542	8,164	6.50%, 3/1/2029^(d)	30		34
5.50%, 12/1/2033^(d)	2,988	3,234	6.50%, 3/1/2029^(d)	232		262
5.50%, 1/1/2034^(d)	6,986	7,553	6.50%, 4/1/2029^(d)	2,562		2,874
5.50%, 9/1/2035^(d)	12,773	13,786	6.50%, 4/1/2031^(d)	1,043		1,174
5.50%, 10/1/2035^(d)	14,371	15,519	6.50%, 6/1/2031^(d)	2		2
5.50%, 6/1/2037^(a),(d)	949	1,012	6.50%, 10/1/2031^(d)	333		375
5.50%, 7/1/2037^(d)	378	406	6.50%, 1/1/2032^(d)	2,625		2,960
5.50%, 4/1/2038^(d)	327	353	6.50%, 2/1/2032^(d)	10		12
5.50%, 5/1/2038^(d)	713	769	6.50%, 2/1/2032^(d)	59		67
5.59%, 6/1/2037^(a),(d)	580	617	6.50%, 4/1/2032^(d)	48		54
5.78%, 11/1/2036^(a),(d)	157	166	6.50%, 8/1/2032^(d)	149		167
5.92%, 3/1/2036^(a),(d)	254	263	6.50%, 8/1/2032^(d)	64		72
6.00%, 4/1/2017^(d)	777	840	6.50%, 4/1/2035^(d)	39		44
6.00%, 4/1/2017^(d)	633	689	6.50%, 2/1/2037^(d)	149		165
6.00%, 5/1/2017^(d)	829	897	6.50%, 12/1/2037^(d)	583		648
6.00%, 7/1/2017^(d)	48	53	7.00%, 7/1/2024^(d)	14		16
6.00%, 1/1/2021^(d)	207	227	7.00%, 1/1/2028^(d)	1,300		1,480
6.00%, 6/1/2028^(d)	49	55	7.00%, 6/1/2029^(d)	529		600
6.00%, 5/1/2031^(d)	525	584	7.00%, 1/1/2031^(d)	7		8
6.00%, 10/1/2031^(d)	22	25	7.00%, 3/1/2031^(d)	184		209
6.00%, 2/1/2032^(d)	60	67	7.00%, 4/1/2031^(d)	320		363
6.00%, 9/1/2032^(d)	918	1,018	7.00%, 6/1/2031^(d)	76		86
6.00%, 11/1/2033^(d)	2,764	3,076	7.00%, 10/1/2031^(d)	221		252
6.00%, 11/1/2033^(d)	3,527	3,922	7.00%, 4/1/2032^(d)	766		866
6.00%, 12/1/2033^(d)	2,600	2,884	7.00%, 7/1/2036^(d)	6,400		7,142
6.00%, 5/1/2034^(d)	6,633	7,303	7.00%, 1/1/2037^(d)	1,358		1,516
6.00%, 5/1/2034^(d)	5,775	6,264	7.50%, 3/1/2013^(d)	192		193
6.00%, 9/1/2034^(d)	553	608	7.50%, 12/1/2030^(d)	9		10
6.00%, 1/1/2035^(d)	7,596	8,229	7.50%, 2/1/2031^(d)	9		10
6.00%, 2/1/2035^(d)	5,201	5,726	7.50%, 2/1/2031^(d)	135		154
6.00%, 2/1/2035^(d)	399	440	7.50%, 4/1/2032^(d)	141		161
6.00%, 8/1/2036^(d)	1,761	1,924	8.00%, 8/1/2030^(d)	2		3
6.00%, 10/1/2036^(a),(d)	484	529	8.00%, 11/1/2030^(d)	2		3
6.00%, 3/1/2037^(d)	1,007	1,104	8.00%, 12/1/2030^(d)	43		49
6.00%, 3/1/2037^(d)	10,053	10,958	8.50%, 4/1/2019^(d)	11		12
6.00%, 4/1/2037^(d)	2,695	2,973	8.50%, 7/1/2029^(d)	208		242
6.00%, 5/1/2037^(d)	878	972	9.00%, 9/1/2016^(d)	3		3
6.00%, 1/1/2038^(d)	2,371	2,610	9.00%, 5/1/2017^(d)	1		1
6.00%, 1/1/2038^(a),(d)	306	334	9.00%, 5/1/2021^(d)	3		3
6.00%, 3/1/2038^(d)	480	521	9.00%, 9/1/2021^(d)	2		3
6.00%, 4/1/2038^(d)	1,116	1,219	9.00%, 1/1/2022^(d)	3		4
6.00%, 6/1/2038^(d)	1,657	1,827	9.00%, 8/1/2022^(d)	1		1
6.00%, 7/1/2038^(d)	2,626	2,857	9.50%, 4/1/2017^(d)	12		12
6.00%, 10/1/2038^(d)	1,605	1,751			$ 469,432
6.41%, 7/1/2036^(a),(d)	645	682	Federal National Mortgage Association (FNMA) - 28.39%
6.50%, 2/1/2011^(d)	1	1	2.46%, 7/1/2035^(a),(d)	454		476
6.50%, 3/1/2011^(d)	4	4	2.72%, 3/1/2028^(a),(d)	19		20
6.50%, 3/1/2011^(d)	6	6	3.00%, 11/1/2033^(a),(d)	13		13
6.50%, 3/1/2011^(d)	1	1	3.50%, 11/1/2025^(d),(e)	10,200		10,555
6.50%, 3/1/2011^(d)	11	12	4.00%, 5/1/2025^(d)	12,535		13,163


Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010




	Principal			Principal
U.S. GOVERNMENT & GOVERNMENT	Amount		U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)	AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
Federal National Mortgage Association (FNMA) (continued)			Federal National Mortgage Association (FNMA) (continued)
4.00%, 5/1/2039^(d)	$ 13,320	$ 13,745	5.50%, 9/1/2038^(d)	$ 2,025	$ 2,192
4.00%, 8/1/2039^(d)	15,399	15,891	5.50%, 11/1/2038^(d)	1,498	1,609
4.00%, 9/1/2040^(d)	9,980	10,299	5.78%, 5/1/2037^(a),(d)	1,470	1,565
4.50%, 12/1/2019^(d)	362	387	5.97%, 10/1/2036^(a),(d)	2,352	2,514
4.50%, 1/1/2020^(d)	1,228	1,313	6.00%, 12/1/2016^(d)	722	785
4.50%, 7/1/2039^(d)	14,279	15,083	6.00%, 1/1/2017^(d)	37	40
4.50%, 7/1/2039^(d)	6,607	6,979	6.00%, 4/1/2017^(d)	71	78
4.50%, 3/1/2040^(d)	14,787	15,416	6.00%, 8/1/2017^(d)	1,718	1,869
4.50%, 5/1/2040^(d)	22,603	23,749	6.00%, 8/1/2018^(d)	789	855
4.50%, 8/1/2040^(d)	14,817	15,568	6.00%, 12/1/2022^(d)	107	116
4.50%, 9/1/2040^(d)	14,886	15,640	6.00%, 3/1/2029^(d)	291	324
5.00%, 1/1/2018^(d)	316	340	6.00%, 8/1/2031^(d)	1,557	1,732
5.00%, 6/1/2018^(d)	7,704	8,271	6.00%, 12/1/2031^(d)	20	22
5.00%, 11/1/2018^(d)	1,253	1,347	6.00%, 12/1/2031^(d)	37	41
5.00%, 4/1/2019^(d)	295	317	6.00%, 1/1/2032^(d)	971	1,073
5.00%, 6/1/2025^(d)	13,436	14,326	6.00%, 11/1/2032^(d)	71	79
5.00%, 1/1/2026^(d)	894	957	6.00%, 4/1/2033^(d)	540	602
5.00%, 6/1/2034^(d)	8,535	9,124	6.00%, 1/1/2034^(d)	4,252	4,715
5.00%, 4/1/2035^(d)	792	855	6.00%, 2/1/2034^(d)	546	604
5.00%, 5/1/2035^(d)	889	950	6.00%, 3/1/2034^(d)	2,268	2,499
5.00%, 7/1/2035^(d)	310	331	6.00%, 9/1/2034^(d)	5,767	6,258
5.00%, 7/1/2035^(d)	2,322	2,481	6.00%, 9/1/2036^(d)	816	896
5.00%, 8/1/2035^(d)	398	425	6.00%, 4/1/2037^(d)	11,847	13,020
5.00%, 6/1/2037^(d)	5,688	6,063	6.00%, 7/1/2037^(d)	5,810	6,318
5.00%, 4/1/2039^(d)	16,103	17,256	6.00%, 11/1/2037^(d)	1,474	1,614
5.00%, 1/1/2040^(d)	11,332	12,064	6.00%, 2/1/2038^(d)	897	982
5.00%, 4/1/2040^(d)	14,152	15,050	6.00%, 2/1/2038^(a),(d)	1,023	1,120
5.00%, 6/1/2040^(d)	5,850	6,221	6.00%, 3/1/2038^(d)	328	360
5.00%, 6/1/2040^(d)	7,225	7,683	6.00%, 4/1/2038^(d)	1,075	1,168
5.04%, 12/1/2033^(a),(d)	417	443	6.00%, 5/1/2038^(d)	14,705	16,101
5.46%, 11/1/2035^(a),(d)	348	371	6.00%, 7/1/2038^(d)	1,772	1,958
5.50%, 9/1/2017^(d)	224	244	6.00%, 8/1/2038^(d)	5,978	6,545
5.50%, 9/1/2017^(d)	57	62	6.50%, 6/1/2016^(d)	17	19
5.50%, 12/1/2017^(d)	2,203	2,393	6.50%, 9/1/2024^(d)	1,010	1,119
5.50%, 3/1/2018^(d)	253	275	6.50%, 8/1/2028^(d)	182	206
5.50%, 5/1/2018^(d)	4,407	4,799	6.50%, 9/1/2028^(d)	61	70
5.50%, 6/1/2019^(d)	45	49	6.50%, 11/1/2028^(d)	126	143
5.50%, 6/1/2019^(d)	73	79	6.50%, 12/1/2028^(d)	102	116
5.50%, 7/1/2019^(d)	57	62	6.50%, 1/1/2029^(d)	48	55
5.50%, 7/1/2019^(d)	34	37	6.50%, 2/1/2029^(d)	66	75
5.50%, 7/1/2019^(d)	107	116	6.50%, 3/1/2029^(d)	164	186
5.50%, 7/1/2019^(d)	186	202	6.50%, 4/1/2029^(d)	372	420
5.50%, 7/1/2019^(d)	136	148	6.50%, 6/1/2031^(d)	83	94
5.50%, 8/1/2019^(d)	43	47	6.50%, 6/1/2031^(d)	198	224
5.50%, 8/1/2019^(d)	285	310	6.50%, 6/1/2031^(d)	558	614
5.50%, 9/1/2019^(d)	262	285	6.50%, 9/1/2031^(d)	26	30
5.50%, 6/1/2026^(d)	766	826	6.50%, 12/1/2031^(d)	7	7
5.50%, 2/1/2033^(d)	4,877	5,310	6.50%, 1/1/2032^(d)	287	325
5.50%, 3/1/2033^(d)	3,564	3,865	6.50%, 3/1/2032^(d)	390	441
5.50%, 5/1/2033^(d)	424	460	6.50%, 3/1/2032^(d)	888	1,002
5.50%, 5/1/2033^(d)	5,194	5,644	6.50%, 4/1/2032^(d)	49	55
5.50%, 5/1/2033^(d)	3,279	3,562	6.50%, 4/1/2032^(d)	1,167	1,317
5.50%, 7/1/2033^(d)	3,195	3,464	6.50%, 8/1/2032^(d)	533	602
5.50%, 9/1/2033^(d)	1,946	2,110	6.50%, 11/1/2032^(d)	446	505
5.50%, 2/1/2034^(d)	3,374	3,668	6.50%, 11/1/2032^(d)	740	837
5.50%, 2/1/2034^(d)	14,447	15,531	6.50%, 11/1/2032^(d)	176	199
5.50%, 3/1/2034^(d)	3,319	3,598	6.50%, 12/1/2032^(d)	1,127	1,272
5.50%, 4/1/2034^(d)	2,959	3,202	6.50%, 2/1/2033^(d)	810	914
5.50%, 9/1/2034^(d)	2,758	2,985	6.50%, 7/1/2034^(d)	1,307	1,473
5.50%, 1/1/2035^(d)	8,318	9,002	6.50%, 7/1/2034^(d)	2,069	2,331
5.50%, 2/1/2035^(d)	9,414	10,188	6.50%, 2/1/2036^(d)	6,740	7,429
5.50%, 7/1/2035^(d)	2,454	2,651	6.50%, 4/1/2036^(d)	69	77
5.50%, 9/1/2035^(d)	1,245	1,354	6.50%, 5/1/2036^(d)	8,585	9,588
5.50%, 2/1/2037^(d)	78	84	6.50%, 8/1/2036^(d)	1,039	1,156
5.50%, 6/1/2037^(d)	1,362	1,474	6.50%, 8/1/2036^(d)	436	487
5.50%, 3/1/2038^(d)	1,507	1,647	6.50%, 10/1/2036^(d)	280	314
5.50%, 3/1/2038^(d)	3,172	3,433	6.50%, 11/1/2036^(d)	301	338
5.50%, 5/1/2038^(d)	1,470	1,599	6.50%, 7/1/2037^(d)	130	146
5.50%, 6/1/2038^(d)	766	828	6.50%, 7/1/2037^(d)	184	207


Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010




	Principal				Principal
U.S. GOVERNMENT & GOVERNMENT	Amount			U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)		AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
Federal National Mortgage Association (FNMA) (continued)				Government National Mortgage Association (GNMA) (continued)
6.50%, 8/1/2037^(d)	$ 487	$ 538		6.00%, 5/20/2032^(a)	$ 1,128	$ 1,249
6.50%, 10/1/2037^(d)	580		641	6.00%, 8/15/2032	203	225
6.50%, 1/1/2038^(d)	66		73	6.00%, 9/15/2032	351	389
6.50%, 2/1/2038^(d)	122		136	6.00%, 2/15/2033	62	68
6.50%, 3/1/2038^(d)	100		112	6.00%, 7/20/2033	3,745	4,158
6.50%, 5/1/2038^(d)	61		68	6.00%, 8/15/2034	5,742	6,352
7.00%, 5/1/2011^(d)	1		2	6.00%, 8/15/2038	1,261	1,404
7.00%, 3/1/2012^(d)	1		1	6.50%, 9/15/2023	61	69
7.00%, 5/1/2022^(d)	60		69	6.50%, 9/15/2023	53	60
7.00%, 8/1/2028^(d)	210		243	6.50%, 9/15/2023	27	30
7.00%, 12/1/2028^(d)	177		205	6.50%, 9/15/2023	35	40
7.00%, 4/1/2029^(d)	99		113	6.50%, 10/15/2023	48	54
7.00%, 7/1/2029^(d)	190		220	6.50%, 11/15/2023	11	12
7.00%, 11/1/2031^(d)	1,181		1,354	6.50%, 12/15/2023	101	114
7.00%, 7/1/2032^(d)	362		414	6.50%, 12/15/2023	74	83
7.50%, 12/1/2024^(d)	342		397	6.50%, 12/15/2023	49	55
7.50%, 7/1/2029^(d)	146		167	6.50%, 12/15/2023	26	29
7.50%, 2/1/2030^(d)	114		131	6.50%, 1/15/2024	39	45
7.50%, 1/1/2031^(d)	6		7	6.50%, 1/15/2024	26	30
7.50%, 5/1/2031^(d)	7		8	6.50%, 1/15/2024	71	80
7.50%, 8/1/2032^(d)	63		72	6.50%, 1/15/2024	22	25
8.00%, 5/1/2022^(d)	15		17	6.50%, 1/15/2024	49	55
8.00%, 9/1/2024^(d)	1		1	6.50%, 1/15/2024	22	25
8.00%, 1/1/2025^(d)	1		1	6.50%, 1/15/2024	17	19
8.00%, 1/1/2025^(d)	2		2	6.50%, 1/15/2024	55	62
8.50%, 2/1/2023^(d)	5		5	6.50%, 3/15/2024	109	124
8.50%, 9/1/2025^(d)	3		4	6.50%, 3/15/2024	15	17
9.00%, 3/1/2017^(d)	1		1	6.50%, 4/15/2024	44	50
9.00%, 9/1/2030^(d)	59		69	6.50%, 4/20/2024	32	36
		$ 477,883		6.50%, 7/15/2024	138	155
Government National Mortgage Association (GNMA) - 7.09%				6.50%, 1/15/2026	26	29
4.00%, 11/1/2040^(e)	10,000		10,394	6.50%, 3/15/2026	37	42
4.50%, 9/20/2039	15,849		16,868	6.50%, 7/20/2026	15	16
4.50%, 10/15/2039	11,171		11,931	6.50%, 2/15/2028	22	25
4.50%, 3/20/2040	17,471		18,595	6.50%, 10/20/2028	29	32
5.00%, 2/15/2034	759		821	6.50%, 3/20/2031	245	277
5.00%, 10/15/2039	9,499		10,327	6.50%, 4/20/2031	196	221
5.50%, 12/15/2013	5		5	6.50%, 7/15/2031	6	7
5.50%, 1/15/2014	56		61	6.50%, 10/15/2031	44	50
5.50%, 1/15/2014	18		19	6.50%, 7/15/2032	548	619
5.50%, 2/15/2014	25		27	6.50%, 7/15/2032	40	45
5.50%, 3/15/2014	60		65	6.50%, 4/20/2034	1,458	1,633
5.50%, 7/20/2033	5,932		6,461	6.50%, 5/20/2034	1,124	1,259
5.50%, 2/20/2034	6,322		6,876	6.80%, 4/20/2025	71	80
5.50%, 3/20/2034	5,934		6,455	7.00%, 11/15/2022	17	19
5.50%, 5/20/2035	790		859	7.00%, 11/15/2022	10	11
5.50%, 1/15/2039	2,093		2,293	7.00%, 11/15/2022	57	65
5.50%, 1/15/2039	746		821	7.00%, 12/15/2022	97	111
6.00%, 10/15/2023	288		317	7.00%, 12/15/2022	13	15
6.00%, 11/15/2023	93		102	7.00%, 1/15/2023	43	49
6.00%, 11/15/2023	128		141	7.00%, 1/15/2023	17	19
6.00%, 12/15/2023	3		3	7.00%, 1/15/2023	14	16
6.00%, 12/15/2023	69		76	7.00%, 2/15/2023	124	143
6.00%, 12/15/2023	63		70	7.00%, 3/15/2023	23	26
6.00%, 1/15/2024	43		47	7.00%, 7/15/2023	22	25
6.00%, 1/20/2024	26		29	7.00%, 7/15/2023	67	77
6.00%, 2/15/2024	86		95	7.00%, 7/15/2023	27	31
6.00%, 2/15/2024	58		64	7.00%, 8/15/2023	25	29
6.00%, 2/15/2024	52		57	7.00%, 10/15/2023	37	42
6.00%, 3/15/2024	28		31	7.00%, 12/15/2023	30	35
6.00%, 4/20/2024	62		68	7.00%, 12/15/2023	49	57
6.00%, 5/20/2024	31		34	7.00%, 1/15/2026	39	46
6.00%, 5/20/2024	42		47	7.00%, 5/15/2026	9	10
6.00%, 10/20/2024	52		57	7.00%, 1/15/2027	66	76
6.00%, 9/20/2025	30		33	7.00%, 3/15/2027	37	43
6.00%, 11/20/2025	14		15	7.00%, 10/15/2027	3	3
6.00%, 4/20/2026	214		236	7.00%, 10/15/2027	3	4
6.00%, 10/20/2028	30		33	7.00%, 10/15/2027	16	19
6.00%, 2/20/2029	314		348	7.00%, 11/15/2027	6	6


Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010




	Principal			Principal
U.S. GOVERNMENT & GOVERNMENT	Amount		U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS (continued)	(000's) Value (000's)		AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
Government National Mortgage Association (GNMA) (continued)			Government National Mortgage Association (GNMA) (continued)
7.00%, 11/15/2027	$ 59 $	68	8.00%, 5/15/2017	$ 10	$ 11
7.00%, 12/15/2027	52	60	8.00%, 6/15/2017	10		11
7.00%, 12/15/2027	4	4	8.00%, 6/15/2017	12		12
7.00%, 2/15/2028	1	1	8.00%, 7/15/2017	8		8
7.00%, 2/15/2028	2	2	8.00%, 2/15/2022	50		59
7.00%, 4/15/2028	77	89	8.00%, 4/15/2022	51		61
7.00%, 4/15/2028	3	4	8.00%, 12/15/2030	14		17
7.00%, 5/15/2028	1	1	9.00%, 11/15/2021	172		199
7.00%, 6/15/2028	181	210	9.50%, 4/15/2016	4		5
7.00%, 12/15/2028	147	171	9.50%, 9/15/2016	2		2
7.00%, 1/15/2029	111	129	9.50%, 11/15/2016	15		15
7.00%, 3/15/2029	121	140	9.50%, 7/15/2017	30		34
7.00%, 4/15/2029	102	118	9.50%, 7/15/2017	18		21
7.00%, 4/15/2029	225	261	9.50%, 10/15/2017	11		12
7.00%, 5/15/2031	24	28	9.50%, 11/15/2017	21		24
7.00%, 6/20/2031	152	173	9.50%, 9/20/2018	65		76
7.00%, 7/15/2031	1	1	9.50%, 9/15/2020	12		14
7.00%, 7/15/2031	6	7	9.50%, 12/20/2020	25		29
7.00%, 9/15/2031	7	8	9.50%, 1/20/2021	4		5
7.25%, 9/15/2025	47	54	9.50%, 2/20/2021	2		3
7.50%, 4/15/2017	45	50	9.50%, 3/20/2021	2		3
7.50%, 4/15/2017	26	29	9.50%, 8/15/2021	172		202
7.50%, 4/15/2017	5	5	13.50%, 12/15/2014	3		3
7.50%, 5/15/2017	3	3			$ 119,427
7.50%, 7/15/2018	18	20	U.S. Treasury - 3.29%
7.50%, 12/15/2021	35	41	1.88%, 2/28/2014	6,478		6,745
7.50%, 12/15/2021	18	18	4.13%, 5/15/2015	8,750		9,956
7.50%, 2/15/2022	19	22	4.50%, 2/15/2036	13,600		14,892
7.50%, 3/15/2022	7	8	6.00%, 2/15/2026	18,000		23,754
7.50%, 3/15/2022	30	35			$ 55,347
7.50%, 3/15/2022	5	5	U.S. Treasury Strip - 0.53%
7.50%, 4/15/2022	17	17	0.00%, 11/15/2015^(f)	4,000		3,755
7.50%, 4/15/2022	16	18	0.00%, 5/15/2020^(f)	6,800		5,193
7.50%, 4/15/2022	36	41			$ 8,948
7.50%, 4/15/2022	12	14	TOTAL U.S. GOVERNMENT &
7.50%, 5/15/2022	34	39	GOVERNMENT AGENCY OBLIGATIONS		$ 1,131,037
7.50%, 7/15/2022	53	61		Maturity
7.50%, 8/15/2022	66	76		Amount
7.50%, 8/15/2022	3	3	REPURCHASE AGREEMENTS - 1.60%	(000's)	Value (000's)
7.50%, 8/15/2022	1	1
7.50%, 8/15/2022	5	5	Banks - 1.60%
			Investment in Joint Trading Account; Bank of	$ 7,694	$ 7,694
7.50%, 8/15/2022	22	25	America Repurchase Agreement; 0.22%
7.50%, 8/15/2022	14	17	dated 10/29/10 maturing 11/01/10
7.50%, 8/15/2022	22	26	(collateralized by Sovereign Agency Issues;
7.50%, 2/15/2023	5	6	$7,847,741; 0.00% - 5.25%; dated 05/01/13 -
7.50%, 2/15/2023	19	22	04/15/42)
7.50%, 5/15/2023	6	7	Investment in Joint Trading Account; Credit Suisse	7,428		7,428
7.50%, 5/15/2023	75	87	Repurchase Agreement; 0.21% dated
7.50%, 5/15/2023	19	22	10/29/10 maturing 11/01/10 (collateralized by
7.50%, 6/15/2023	21	24	US Treasury Note; $7,576,137; 1.13%; dated
7.50%, 10/15/2023	8	9	01/15/12)
7.50%, 11/15/2023	33	38	Investment in Joint Trading Account; Deutsche	7,056		7,056
7.50%, 3/15/2024	52	61	Bank Repurchase Agreement; 0.21% dated
7.50%, 8/15/2024	4	4	10/29/10 maturing 11/01/10 (collateralized by
7.50%, 4/15/2027	5	6	Sovereign Agency Issues; $7,197,330; 0.38%
7.50%, 5/15/2027	20	24	- 3.75%; dated 12/06/10 - 01/29/15)
7.50%, 5/15/2027	8	10	Investment in Joint Trading Account; Morgan	4,828		4,828
7.50%, 6/15/2027	37	43	Stanley Repurchase Agreement; 0.20% dated
7.50%, 8/15/2029	223	259	10/29/10 maturing 11/01/10 (collateralized by
7.50%, 9/15/2029	66	76	Sovereign Agency Issues; $4,924,489; 1.88%
7.50%, 9/15/2029	93	108	- 6.13%; dated 01/09/12 - 02/21/13)
7.50%, 10/15/2029	102	119			$ 27,006
7.50%, 11/15/2029	95	110
7.50%, 11/15/2029	116	134	TOTAL REPURCHASE AGREEMENTS		$ 27,006
8.00%, 8/15/2016	57	64	Total Investments		$ 1,700,005
8.00%, 12/15/2016	11	12	Liabilities in Excess of Other Assets, Net - (0.98)%		$ (16,569)
8.00%, 4/15/2017	9	10	TOTAL NET ASSETS - 100.00%		$ 1,683,436
8.00%, 4/15/2017	12	13
8.00%, 4/15/2017	16	18	(a) Variable Rate. Rate shown is in effect at October 31, 2010.

Schedule of Investments
Government & High Quality Bond Fund
October 31, 2010

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
High Yield Fund
October 31, 2010




COMMON STOCKS - 0.90%	Shares Held Value (000's)				Principal
Automobile Manufacturers - 0.88%					Amount
New Flyer Industries Inc ^(a)	2,733,500 $		30,983	BONDS (continued)	(000's)	Value (000's)
				Automobile Manufacturers - 0.37%
Biotechnology - 0.00%				New Flyer Industries Canada ULC
Neuro-Hitech Inc ^(b),(c)	250,000		2	14.00%, 8/19/2020^(b),(d),(e)	$ 13,600	$ 13,201
Neuro-Hitech Inc - Warrants ^(b),(c),(d)	125,000		—
		$ 2		Automobile Parts & Equipment - 1.21%
Diversified Financial Services - 0.00%				Goodyear Tire & Rubber Co/The
Neoview Holdings Inc - Warrants ^(b),(c),(d)	120,000		—	8.25%, 8/15/2020	8,700	9,265
				10.50%, 5/15/2016	29,405	33,669
Food Service - 0.00%						$ 42,934
FU JI Food and Catering Services Holdings Ltd	962,000		—	Banks - 4.54%
(c),(d)				Ally Financial Inc
				8.00%, 3/15/2020^(e)	11,625	12,846
Pipelines - 0.00%				8.30%, 2/12/2015^(e)	2,020	2,202
Energy Maintenance Services Group LLC -	354		—	Bank of America Corp
Warrants ^(b),(c),(d)				8.00%, 12/29/2049^(f)	33,830	34,140
				CIT Group Inc
Semiconductors - 0.02%				7.00%, 5/1/2017	71,991	71,631
Tower Semiconductor Ltd - Warrants ^(b),(c),(d)	3,821,912		726	HBOS Capital Funding LP
				6.07%, 6/29/2049^(e),(f)	18,495	16,646
TOTAL COMMON STOCKS		$ 31,711		Wells Fargo & Co
CONVERTIBLE PREFERRED STOCKS -				7.98%, 3/29/2049^(f)	21,985	23,084
0.61%	Shares Held Value (000's)					$ 160,549
Automobile Manufacturers - 0.61%				Biotechnology - 0.58%
Ford Motor Co Capital Trust II	435,000		21,619	Talecris Biotherapeutics Holdings Corp
				7.75%, 11/15/2016	18,425	20,636
TOTAL CONVERTIBLE PREFERRED STOCKS		$ 21,619
PREFERRED STOCKS - 0.02%	Shares Held Value (000's)			Building Materials - 0.48%
Finance - Mortgage Loan/Banker - 0.02%				Masco Corp
Freddie Mac - Series Z ^(c)	1,300,000		689	7.13%, 3/15/2020	16,165	16,968

TOTAL PREFERRED STOCKS		$ 689		Chemicals - 0.54%
	Principal			Ineos Finance PLC
				9.00%, 5/15/2015^(e)	3,420	3,625
	Amount
BONDS - 79.82%	(000's)	Value (000's)		Phibro Animal Health Corp
				9.25%, 7/1/2018^(e)	1,505	1,550
Aerospace & Defense - 1.13%
BE Aerospace Inc				Reichhold Industries Inc
				9.00%, 8/15/2014^(e)	3,950	3,535
6.88%, 10/1/2020	$ 7,155	$ 7,602
Esterline Technologies Corp				Rhodia SA
				6.88%, 9/15/2020^(e)	3,975	4,179
7.00%, 8/1/2020^(e)	3,945		4,192
GenCorp Inc				Vertellus Specialties Inc
				9.38%, 10/1/2015^(e)	5,900	6,350
9.50%, 8/15/2013	4,240		4,325
L-3 Communications Corp						$ 19,239
6.38%, 10/15/2015	9,500		9,785	Coal - 1.15%
Triumph Group Inc				Arch Coal Inc
8.63%, 7/15/2018	12,850		14,135	7.25%, 10/1/2020	2,370	2,595
		$ 40,039		8.75%, 8/1/2016	9,425	10,580
Agriculture - 0.29%				Consol Energy Inc
				8.00%, 4/1/2017^(e)	18,805	20,592
Southern States Cooperative Inc
11.25%, 5/15/2015^(e)	9,770		10,356	Drummond Co Inc
				9.00%, 10/15/2014^(e)	2,600	2,782
Airlines - 0.89%				International Coal Group Inc
Continental Airlines 2007-1 Class C Pass Through				9.13%, 4/1/2018	3,715	4,049
Trust						$ 40,598
7.34%, 4/19/2014	1,905		1,934	Commercial Services - 0.79%
Delta Air Lines 2002-1 Class G-1 Pass Through				Hertz Corp/The
Trust				8.88%, 1/1/2014	16,465	16,918
6.72%, 1/2/2023	820		839	Interactive Data Corp
				10.25%, 8/1/2018^(e)	4,130	4,541
UAL 2000-1 Pass Through Certificate
8.03%, 7/1/2011	4,257		5,278	RSC Equipment Rental Inc/RSC Holdings III LLC
UAL 2007-1 Pass Through Trust				10.25%, 11/15/2019	5,850	6,362
3.00%, 7/2/2014^(e),(f)	11,342		9,570			$ 27,821
UAL 2009-1 Pass Through Trust				Computers - 1.21%
10.40%, 11/1/2016	4,590		5,210	Seagate HDD Cayman
UAL 2009-2A Pass Through Trust				6.88%, 5/1/2020^(e)	41,845	42,682
9.75%, 1/15/2017	6,824		7,855
US Airways 1999-1A Pass Through Trust				Consumer Products - 1.34%
8.36%, 1/20/2019	801		813	Reynolds Group Issuer Inc / Reynolds Group Issuer
		$ 31,499		LLC / Reynolds Group Issuer (Luxembourg) S.A.
				7.13%, 4/15/2019^(e)	19,995	20,845


		Principal			Principal
		Amount			Amount
BONDS (continued)		(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Consumer Products (continued)				Electronics (continued)
Reynolds Group Issuer Inc / Reynolds Group Issuer				Viasystems Inc
LLC / Reynolds Group Issuer (Luxembourg) S.A.				12.00%, 1/15/2015^(e)	$ 3,720 $	4,162
(continued)					$ 39,635
9.00%, 4/15/2019^(e)	$ 25,625 $		26,618	Energy - Alternate Sources - 0.33%
		$ 47,463		Headwaters Inc
Diversified Financial Services - 6.84%				11.38%, 11/1/2014	11,100	11,766
Citigroup Capital XXI
8.30%, 12/21/2057		15,785	16,515	Entertainment - 2.76%
Credit Acceptance Corp				CCM Merger Inc
9.13%, 2/1/2017^(e)		14,980	15,729	8.00%, 8/1/2013^(e)	38,500	35,998
DVI Inc				Lions Gate Entertainment Inc
0.00%, 2/1/2004^(b),(c),(d)		8,575	869	10.25%, 11/1/2016^(e)	7,550	7,777
0.00%, 2/1/2004^(b),(c),(d)		6,850	623	Peninsula Gaming LLC
E*Trade Financial Corp				8.38%, 8/15/2015	18,055	19,138
7.38%, 9/15/2013		14,795	14,703	10.75%, 8/15/2017	6,910	7,359
12.50%, 11/30/2017		8,043	9,310	WMG Acquisition Corp
Ford Motor Credit Co LLC				9.50%, 6/15/2016	7,810	8,415
7.80%, 6/1/2012		14,125	15,224	WMG Holdings Corp
Icahn Enterprises LP / Icahn Enterprises Finance				9.50%, 12/15/2014	19,860	18,867
Corp					$ 97,554
7.75%, 1/15/2016		14,740	15,145	Environmental Control - 0.36%
ILFC E-Capital Trust II				EnergySolutions Inc / EnergySolutions LLC
6.25%, 12/21/2065^(e),(f)		22,595	18,076	10.75%, 8/15/2018^(e)	11,790	12,881
International Lease Finance Corp
5.65%, 6/1/2014		28,115	28,115	Food - 0.26%
8.63%, 9/15/2015^(e)		9,690	10,901	Michael Foods Inc
Janus Capital Group Inc				9.75%, 7/15/2018^(e)	8,505	9,270
6.95%, 6/15/2017^(f)		7,495	7,849
LBG Capital No.1 PLC				Food Service - 0.29%
8.00%, 12/29/2049^(e),(f)		37,245	35,942	FU JI Food and Catering Services Holdings Ltd
Pinnacle Foods Finance LLC / Pinnacle Foods				0.00%, 10/18/2010^(c),(d)	245,000	9,182
Finance Corp				0.00%, 11/9/2049^(c)	46,500	1,230
9.25%, 4/1/2015^(e)		8,620	9,083		$ 10,412
10.63%, 4/1/2017		4,470	4,861	Forest Products & Paper - 0.58%
SquareTwo Financial Corp				Domtar Corp
11.63%, 4/1/2017^(e)		13,685	12,573	10.75%, 6/1/2017	15,160	19,007
TRAINS HY-1-2006				Sappi Papier Holding AG
0.00%, 5/1/2016^(c),(e)		13,530	13,561	6.75%, 6/15/2012^(e)	1,332	1,348
UCI Holdco Inc					$ 20,355
8.29%, 12/15/2013^(f)		11,725	11,696
				Healthcare - Products - 0.64%
UPCB Finance Ltd				Angiotech Pharmaceuticals Inc
7.63%, 1/15/2020^(e)		900	1,309	4.05%, 12/1/2013^(f)	22,510	18,796
		$ 242,084		7.75%, 4/1/2014	10,000	3,900
Electric - 3.39%					$ 22,696
Edison Mission Energy				Healthcare - Services - 5.56%
7.50%, 6/15/2013		8,720	8,502	Alliance HealthCare Services Inc
Elwood Energy LLC				8.00%, 12/1/2016	13,345	12,644
8.16%, 7/5/2026		3,536	3,324	HCA Inc
Energy Future Holdings Corp				7.50%, 11/6/2033	11,000	10,120
9.75%, 10/15/2019		11,416	11,541	8.50%, 4/15/2019	41,365	46,536
10.00%, 1/15/2020^(e)		7,780	8,149
				9.25%, 11/15/2016	25,340	27,431
Energy Future Intermediate Holding Co LLC				Healthsouth Corp
9.75%, 10/15/2019		4,089	4,134	7.25%, 10/1/2018	7,995	8,335
Mirant Americas Generation LLC				7.75%, 9/15/2022	8,000	8,450
8.50%, 10/1/2021		14,790	14,494	10.75%, 6/15/2016	18,445	20,220
Mirant Mid Atlantic Pass Through Trust C				IASIS Healthcare LLC / IASIS Capital Corp
10.06%, 12/30/2028		27,424	30,697	8.75%, 6/15/2014	9,480	9,705
NRG Energy Inc				Multiplan Inc
7.38%, 1/15/2017		18,855	19,656	9.88%, 9/1/2018^(e)	16,460	17,612
NV Energy Inc				Select Medical Corp
6.75%, 8/15/2017		18,600	19,361	7.63%, 2/1/2015	12,175	12,342
		$ 119,858		Tenet Healthcare Corp
Electronics - 1.12%				9.25%, 2/1/2015^(f)	17,000	18,785
NXP BV / NXP Funding LLC				US Oncology Inc
7.88%, 10/15/2014		5,000	5,187	9.13%, 8/15/2017	4,000	4,450
9.50%, 10/15/2015		14,230	15,030		$ 196,630
9.75%, 8/1/2018^(e)		13,980	15,256


	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Holding Companies - Diversified - 0.24%			Oil & Gas - 8.90%
Navios Maritime Acquisition Corp/Navios			Anadarko Petroleum Corp
Acquisition Finance US Inc			6.38%, 9/15/2017	$ 34,035 $	37,810
8.63%, 11/1/2017^(e)	$ 8,400 $	8,484	Chaparral Energy Inc
			8.50%, 12/1/2015	11,555	11,526
Insurance - 3.58%			9.88%, 10/1/2020^(e)	4,520	4,757
Crum & Forster Holdings Corp			Chesapeake Energy Corp
7.75%, 5/1/2017	12,635	13,283	6.50%, 8/15/2017	3,500	3,649
Liberty Mutual Group Inc			9.50%, 2/15/2015	13,030	15,115
7.00%, 3/15/2037^(e),(f)	13,160	12,325	Continental Resources Inc/OK
10.75%, 6/15/2058^(e),(f)	23,095	28,638	7.13%, 4/1/2021^(e)	3,975	4,293
Lincoln National Corp			7.38%, 10/1/2020^(e)	6,315	6,836
7.00%, 5/17/2066^(f)	46,830	45,659	8.25%, 10/1/2019	1,000	1,113
XL Group PLC			Denbury Resources Inc
6.50%, 12/31/2049^(f)	29,807	26,677	8.25%, 2/15/2020	14,494	16,161
	$ 126,582		9.75%, 3/1/2016	9,735	11,025
Internet - 1.49%			Hilcorp Energy I LP/Hilcorp Finance Co
Open Solutions Inc			7.63%, 4/15/2021^(e)	6,090	6,356
9.75%, 2/1/2015^(e)	23,770	17,263	8.00%, 2/15/2020^(e)	24,225	25,557
UPC Holding BV			Linn Energy LLC
9.88%, 4/15/2018^(e)	8,250	9,013	9.88%, 7/1/2018	34,000	37,740
Zayo Group LLC/Zayo Capital Inc			Linn Energy LLC/Linn Energy Finance Corp
10.25%, 3/15/2017^(e)	24,720	26,636	7.75%, 2/1/2021^(e)	2,030	2,096
	$ 52,912		8.63%, 4/15/2020^(e)	7,975	8,613
Leisure Products & Services - 0.55%			OPTI Canada Inc
Royal Caribbean Cruises Ltd			7.88%, 12/15/2014	24,600	18,450
7.25%, 6/15/2016	2,960	3,226	9.00%, 12/15/2012^(e)	2,215	2,259
7.25%, 3/15/2018	15,000	16,313	Petrohawk Energy Corp
			7.25%, 8/15/2018^(e)	5,565	5,774
	$ 19,539
Lodging - 1.67%			Petroleum Development Corp
Harrah's Operating Co Inc			12.00%, 2/15/2018	18,010	20,171
10.00%, 12/15/2018	13,440	11,659	Petroquest Energy Inc
MGM Resorts International			10.00%, 9/1/2017	7,765	7,959
13.00%, 11/15/2013	16,125	19,169	Pioneer Natural Resources Co
Wyndham Worldwide Corp			7.50%, 1/15/2020	21,120	23,787
5.75%, 2/1/2018	5,570	5,788	Pride International Inc
7.38%, 3/1/2020	2,075	2,301	6.88%, 8/15/2020	5,515	6,246
9.88%, 5/1/2014	17,160	20,280	QEP Resources Inc
	$ 59,197		6.88%, 3/1/2021	7,910	8,602
			Quicksilver Resources Inc
Machinery - Diversified - 0.16%			11.75%, 1/1/2016	7,043	8,135
Manitowoc Co Inc/The
8.50%, 11/1/2020	5,580	5,824	Range Resources Corp
			6.75%, 8/1/2020	7,875	8,446
			Venoco Inc
Media - 2.11%			11.50%, 10/1/2017	11,905	12,679
DISH DBS Corp
7.75%, 5/31/2015	5,530	6,021		$ 315,155
7.88%, 9/1/2019	22,035	24,156	Oil & Gas Services - 0.33%
Frontiervision			Cie Generale de Geophysique-Veritas
0.00%, 10/15/2006^(c),(d)	7,250	—	9.50%, 5/15/2016	10,610	11,724
0.00%, 9/15/2008^(c),(d)	9,250	278
Kabel Deutschland GmbH			Other Asset Backed Securities - 0.19%
10.63%, 7/1/2014	16,205	16,914	Aircraft Certificate Owner Trust
			7.00%, 9/20/2022^(d),(e)	7,160	6,587
Nielsen Finance LLC / Nielsen Finance Co
10.00%, 8/1/2014	22,000	23,127
Univision Communications Inc			Packaging & Containers - 1.08%
7.88%, 11/1/2020^(e)	3,985	4,184	Crown Americas LLC / Crown Americas Capital
	$ 74,680		Corp
			7.75%, 11/15/2015	12,000	12,480
Miscellaneous Manufacturing - 0.16%			Crown Cork & Seal Co Inc
GE Capital Trust I
6.38%, 11/15/2067	5,760	5,695	7.38%, 12/15/2026	10,500	10,566
			Graham Packaging Co LP/GPC Capital Corp I
			8.25%, 10/1/2018^(e)	6,375	6,598
Mortgage Backed Securities - 0.31%

BCRR Trust			Plastipak Holdings Inc
5.86%, 12/15/2043^(e)	4,452	3,886	8.50%,12/15/2015 (e)	5,000	5,150
			10.63%, 8/15/2019^(e)	2,955	3,280
RBSCF Trust
6.00%, 7/17/2014^(e),(f)	7,000	6,932		$ 38,074
	$ 10,818		Pharmaceuticals - 1.38%
			Mylan Inc/PA
			7.88%, 7/15/2020^(e)	13,275	14,802


Schedule of Investments
High Yield Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Pharmaceuticals (continued)			Semiconductors (continued)
NBTY Inc			Freescale Semiconductor Inc
9.00%, 10/1/2018^(e)	$ 11,930 $	12,676	9.25%, 4/15/2018^(e)	$ 5,210 $	5,575
Omnicare Inc			Jazz Technologies Inc
6.13%, 6/1/2013	12,560	12,701	8.00%, 6/30/2015^(e)	15,828	13,572
7.75%, 6/1/2020	8,240	8,600		$ 35,036
	$ 48,779		Software - 0.43%
Pipelines - 2.88%			First Data Corp
El Paso Pipeline Partners Operating Co LLC			10.55%, 9/24/2015	5,102	4,311
6.50%, 4/1/2020	7,385	8,055	SS&C Technologies Inc
Energy Maintenance Services Group LLC			11.75%, 12/1/2013	10,432	10,823
0.00%, 3/1/2014^(b),(c),(d)	12,298	1,845		$ 15,134
Energy Transfer Equity LP			Sovereign - 1.40%
7.50%, 10/15/2020	12,195	13,293	Argentina Bonos
Enterprise Products Operating LLC			7.00%, 10/3/2015	6,800	6,501
8.38%, 8/1/2066	42,425	44,758	Brazilian Government International Bond
MarkWest Energy Partners LP / MarkWest Energy			12.50%, 1/5/2016	45,600	31,070
Finance Corp			Mexican Bonos
6.75%, 11/1/2020^(g)	1,565	1,600	8.00%, 12/19/2013	138,474	12,157
8.75%, 4/15/2018	8,515	9,345		$ 49,728
Regency Energy Partners LP/Regency Energy			Telecommunications - 9.83%
Finance Corp			Clearwire Communications LLC/Clearwire
6.88%, 12/1/2018	10,560	11,062	Finance Inc
9.38%, 6/1/2016	10,810	12,107	12.00%, 12/1/2015^(e)	39,620	43,879
	$ 102,065		Digicel Group Ltd
REITS - 1.08%			9.13%, 1/15/2015^(e)	12,280	12,480
DuPont Fabros Technology LP			10.50%, 4/15/2018^(e)	9,250	10,187
8.50%, 12/15/2017	8,275	8,958	Digicel Ltd
Host Hotels & Resorts LP			12.00%, 4/1/2014^(e)	10,800	12,649
7.13%, 11/1/2013	424	430	DigitalGlobe Inc
iStar Financial Inc			10.50%, 5/1/2014	15,675	17,713
5.88%, 3/15/2016	7,000	5,792	Global Crossing Ltd
Reckson Operating Partnership LP			12.00%, 9/15/2015	15,200	17,366
6.00%, 3/31/2016	22,700	23,062	Intelsat Jackson Holdings SA
	$ 38,242		7.25%, 10/15/2020^(e)	13,000	13,292
Retail - 2.64%			Intelsat Luxembourg SA
Asbury Automotive Group Inc			11.25%, 2/4/2017	43,920	47,049
7.63%, 3/15/2017	4,800	4,704	11.50%, 2/4/2017	21,090	22,804
DineEquity Inc			Level 3 Financing Inc
9.50%, 10/30/2018^(e)	13,920	14,825	9.25%, 11/1/2014	8,645	8,472
Ferrellgas LP/Ferrellgas Finance Corp			10.00%, 2/1/2018	12,280	11,758
9.13%, 10/1/2017	13,510	14,928	Nextel Communications Inc
Ltd Brands Inc			7.38%, 8/1/2015	45,400	45,570
7.00%, 5/1/2020	9,795	10,774	Sprint Nextel Corp
Macy's Retail Holdings Inc			8.38%, 8/15/2017	8,745	9,641
5.90%, 12/1/2016	7,880	8,530	Telemovil Finance Co Ltd
Neiman Marcus Group Inc/The			8.00%, 10/1/2017^(e)	4,620	4,800
10.38%, 10/15/2015	9,174	9,679	West Corp
OSI Restaurant Partners Inc			8.63%, 10/1/2018^(e)	4,000	4,150
10.00%, 6/15/2015	5,390	5,599	9.50%, 10/15/2014	15,785	16,535
Phillips-Van Heusen Corp			Wind Acquisition Finance SA
7.38%, 5/15/2020	6,575	7,126	11.75%, 7/15/2017^(e)	32,580	37,141
Sonic Automotive Inc			Wind Acquisition Holdings Finance SA
8.63%, 8/15/2013	1,774	1,803	12.25%, 7/15/2017^(e)	10,715	12,429
Suburban Propane Partners LP/Suburban Energy				$ 347,915
Finance Corp			Transportation - 1.54%
7.38%, 3/15/2020	7,405	7,877	Kansas City Southern de Mexico SA de CV
Toys R Us Property Co LLC			7.63%, 12/1/2013	3,130	3,247
8.50%, 12/1/2017^(e)	7,030	7,610	Navios Maritime Holdings Inc / Navios Maritime
	$ 93,455		Finance US Inc
Savings & Loans - 0.00%			8.88%, 11/1/2017^(e)	7,915	8,449
Washington Mutual Bank / Henderson NV			PHI Inc
0.00%, 6/15/2011^(c)	3,500	7	8.63%, 10/15/2018^(e)	11,945	12,035
0.00%, 1/15/2013^(c)	3,000	6	syncreon Global Ireland Ltd / syncreon Global
0.00%, 1/15/2015^(c),(f)	2,000	4	Finance US Inc
	$ 17		9.50%, 5/1/2018^(e)	4,905	5,077
Semiconductors - 0.99%			Trailer Bridge Inc
Advanced Micro Devices Inc			9.25%, 11/15/2011	18,000	17,843
7.75%, 8/1/2020^(e)	14,990	15,889


	Principal			Principal
	Amount		SENIOR FLOATING RATE INTERESTS	Amount
BONDS (continued)	(000's)	Value (000's)	(continued)	(000's) Value (000's)
Transportation (continued)			Diversified Financial Services (continued)
United Maritime Group LLC/United Maritime			Nuveen Investments Inc, Term Loan
Group Finance Corp			12.50%, 7/9/2015^(f)	$ 6,080 $	6,592
11.75%, 6/15/2015	$ 7,910	$ 7,900		$ 21,452
		$ 54,551	Electric - 0.75%
Trucking & Leasing - 0.23%			Texas Competitive Electric Holdings LLC, Term
AWAS Aviation Capital Ltd			Loan B2
7.00%, 10/15/2016^(e)	7,985	7,985	3.92%, 10/29/2014^(f)	33,915	26,395

TOTAL BONDS		$ 2,825,304	Electronics - 0.24%
	Principal		L-1 Identity Solutions Operating Co, Term Loan
	Amount		B1
CONVERTIBLE BONDS - 1.69%	(000's)	Value (000's)	7.15%, 8/5/2013^(f)	8,408	8,360
Aerospace & Defense - 0.10%
GenCorp Inc			Entertainment - 0.39%
4.06%, 12/31/2039^(e)	3,765	3,417	CCM Merger Inc, Term Loan B
			8.50%, 7/21/2012^(f)	13,868	13,855
Biotechnology - 0.72%
Amylin Pharmaceuticals Inc			Healthcare - Services - 0.96%
3.00%, 6/15/2014	29,675	25,595	Aurora Diagnostics LLC, Term Loan
			6.25%, 4/20/2016^(f)	5,985	5,880
Electronics - 0.52%			HCA Inc, Term Loan A1
L-1 Identity Solutions Inc			1.54%, 1/22/2012^(f)	4,490	4,406
3.75%, 5/15/2027	7,395	7,395	HCA Inc, Term Loan B1
TTM Technologies Inc			2.54%, 11/18/2013^(f)	10,000	9,795
3.25%, 5/15/2015	11,150	11,150	Multiplan Inc, Term Loan
		$ 18,545	6.50%, 7/9/2017^(f)	13,808	13,839
Pharmaceuticals - 0.00%				$ 33,920
Vion Pharmaceuticals Inc			Insurance - 0.80%
0.00%, 2/15/2012^(c)	4,500	11	Asurion Corp, PIK Term Loan
			6.76%, 7/7/2015^(f)	9,722	9,060
Retail - 0.35%			Asurion Corp, Term Loan
Asbury Automotive Group Inc			0.00%, 3/31/2015^(f),(h)	19,690	19,321
3.00%, 9/15/2012	12,500	12,250		$ 28,381
			Internet - 0.36%
TOTAL CONVERTIBLE BONDS		$ 59,818	Open Solutions Inc, Term Loan B
			2.41%, 1/23/2014^(f)	15,359	12,914
	Principal
SENIOR FLOATING RATE INTERESTS -	Amount
11.12%	(000's)	Value (000's)	Lodging - 0.65%
Automobile Manufacturers - 0.97%			Harrah's Operating Co Inc, Term Increment Loan
Ford, Term Loan B			B4
3.04%, 12/16/2013^(f)	$ 34,911	$ 34,490	9.50%, 10/31/2016^(f)	18,217	18,933
			Harrah's Operating Co Inc, Term Loan B1
			3.29%, 1/28/2015^(f)	4,609	4,069
Automobile Parts & Equipment - 0.11%
Hayes Lemmerz Intl, Term Loan				$ 23,002
12.00%, 12/11/2013^(f)	3,682	3,742	Machinery - Diversified - 0.03%
			Manitowoc Company Inc, Term Loan B
Chemicals - 0.17%			8.00%, 4/14/2014^(f)	1,208	1,212
Ineos US Finance LLC, Term Loan B2
0.00%, 12/16/2013^(f),(h)	2,932	2,987	Media - 1.07%
Ineos US Finance LLC, Term Loan C2			Univision Communications Inc, Term Loan
0.00%, 12/16/2014^(f),(h)	3,143	3,219	4.51%, 3/29/2017^(f)	40,066	37,863
		$ 6,206
Commercial Services - 0.54%			Oil & Gas - 0.31%
Interactive Data Corporation, Term Loan			Big West Oil LLC, Term Loan
6.75%, 1/29/2017^(f)	1,646	1,674	12.00%, 4/30/2015^(f)	4,228	4,302
Rental Services Corp, Term Loan			Venoco Inc, Term Loan C
3.80%, 11/30/2013^(f)	9,853	9,636	4.31%, 5/7/2014^(f)	6,931	6,548
Skype Technologies, 1st Lien Term Loan				$ 10,850
7.00%, 2/23/2015^(f)	7,837	7,863	Pharmaceuticals - 1.12%
		$ 19,173	Grifols SA, Term Loan
			0.00%, 6/4/2016^(f),(h)	5,850	5,910
Computers - 0.28%
Spansion Inc, Term Loan B-Exit			NBTY Inc, Term Loan
7.50%, 2/9/2015^(f)	9,813	9,956	6.25%, 10/1/2017^(f)	8,480	8,586
			Quintiles Transnational, Term Loan
			4.29%, 3/31/2014^(f)	7,500	7,388
Diversified Financial Services - 0.61%
American General Finance Corp, Term Loan			Quintiles Transnational, Term Loan B
7.25%, 4/21/2015^(f)	14,740	14,860	2.29%, 3/31/2013^(f)	18,135	17,908
				$ 39,792


				(e)	Security exempt from registration under Rule 144A of the Securities Act of
					1933. These securities may be resold in transactions exempt from
		Principal			registration, normally to qualified institutional buyers. Unless otherwise
SENIOR FLOATING RATE INTERESTS		Amount			indicated, these securities are not considered illiquid. At the end of the
(continued)		(000's)	Value (000's)		period, the value of these securities totaled $914,375 or 25.83% of net
Retail - 0.35%					assets.
DineEquity Inc, Bank Loan				(f)	Variable Rate. Rate shown is in effect at October 31, 2010.
6.00%, 10/7/2017^(f)	$ 9,665		$ 9,745
				(g)	Security purchased on a when-issued basis.
Outback Steakhouse, Term Loan				(h)	This Senior Floating Rate Note will settle after October 31, 2010, at which
1.60%, 6/14/2013^(f)		254	239
2.63%, 6/14/2014^(f)		2,758	2,593		time the interest rate will be determined.
			$ 12,577
Semiconductors - 0.41%
Freescale Semiconductor Inc, Term Loan				Unrealized Appreciation (Depreciation)
4.51%, 12/1/2016^(f)		11,751	11,062	The net federal income tax unrealized appreciation (depreciation) and federal tax
Microsemi Corp				cost of investments held as of the period end were as follows:
0.00%, 10/30/2017^(f),(h)		3,325	3,357
			$ 14,419	Unrealized Appreciation		$ 285,774
Software - 0.58%				Unrealized Depreciation		(118,179)
First Data Corp, Term Loan B1				Net Unrealized Appreciation (Depreciation)		$ 167,595
3.01%, 12/24/2014^(f)		15,138	13,613	Cost for federal income tax purposes		$ 3,360,268
First Data Corp, Term Loan B3				All dollar amounts are shown in thousands (000's)
3.01%, 9/24/2014^(f)		7,587	6,816
			$ 20,429		Portfolio Summary (unaudited)
Telecommunications - 0.42%				Sector		Percent
Intelsat Jackson Holdings Ltd, Term Loan				Financial		23 .35%
3.29%, 2/1/2014^(f)		15,500	14,712	Communications		15 .28%
				Consumer, Cyclical		14 .30%
TOTAL SENIOR FLOATING RATE INTERESTS			$ 393,700	Consumer, Non-cyclical		14 .18%
		Maturity		Energy		13 .90%
		Amount		Industrial		7 .15%
REPURCHASE AGREEMENTS - 5.51%		(000's)	Value (000's)	Utilities		4 .14%
				Technology		3 .92%
Banks - 5.51%				Government		1 .42%
Investment in Joint Trading Account; Bank of	$ 55,563		$ 55,561
America Repurchase Agreement; 0.22%				Basic Materials		1 .29%
dated 10/29/10 maturing 11/01/10				Mortgage Securities		0 .31%
(collateralized by Sovereign Agency Issues;				Diversified		0 .24%
$56,672,757; 0.00% - 5.25%; dated 05/01/13				Asset Backed Securities		0 .19%
- 04/15/42)				Other Assets in Excess of Liabilities, Net		0 .33%
Investment in Joint Trading Account; Credit Suisse		53,640	53,639	TOTAL NET ASSETS		100.00%
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $54,711,355; 1.13%;
dated 01/15/12)
Investment in Joint Trading Account; Deutsche		50,958	50,957
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $51,975,786;
0.38% - 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		34,866	34,865
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $35,562,381;
1.88% - 6.13%; dated 01/09/12 - 02/21/13)
			$ 195,022
TOTAL REPURCHASE AGREEMENTS			$ 195,022
Total Investments			$ 3,527,863
Other Assets in Excess of Liabilities, Net - 0.33%			$ 11,768
TOTAL NET ASSETS - 100.00%			$ 3,539,631


COMMON STOCKS - 0.00%	Shares Held Value (000's)			Principal
Diversified Financial Services - 0.00%				Amount
Adelphia Recovery Trust ^(a),(b)	658,740 $	—	BONDS (continued)	(000's)	Value (000's)
			Diversified Financial Services (continued)
Pipelines - 0.00%			ERAC USA Finance LLC
Energy Maintenance Services Group LLC -	383	—	6.38%, 10/15/2017^(d)	$ 4,000	$ 4,679
Warrants ^(a),(b),(c)			7.00%, 10/15/2037^(d)	4,000	4,428
			International Lease Finance Corp
TOTAL COMMON STOCKS	$ —		8.75%, 3/15/2017^(d)	11,000	12,513
	Principal		Jefferies Group Inc
	Amount		6.25%, 1/15/2036	9,000	8,255
BONDS - 70.46%	(000's) Value (000's)		7.75%, 3/15/2012	7,500	8,067
Aerospace & Defense - 1.04%			Merrill Lynch & Co Inc
Lockheed Martin Corp			5.00%, 1/15/2015	3,000	3,151
5.50%, 11/15/2039	$ 8,000 $	8,419	6.50%, 7/15/2018	2,000	2,177
5.72%, 6/1/2040^(d)	3,795	4,061	6.75%, 6/1/2028	2,000	2,062
Lockheed Martin Tactical Systems Inc			QHP Royalty Sub LLC
7.63%, 6/15/2025	1,000	1,367	10.25%, 3/15/2015^(c),(d)	3,001	3,065
	$ 13,847				$ 49,256
Automobile Manufacturers - 0.51%			Electric - 9.53%
New Flyer Industries Canada ULC			Arizona Public Service Co
14.00%, 8/19/2020^(b),(c),(d)	7,000	6,795	6.50%, 3/1/2012	5,000	5,335
			Dominion Resources Inc/VA
Automobile Parts & Equipment - 0.55%			5.00%, 3/15/2013	10,000	10,920
Accuride Corp			Exelon Generation Co LLC
9.50%, 8/1/2018^(d)	6,750	7,358	6.20%, 10/1/2017	9,000	10,477
			6.25%, 10/1/2039	3,000	3,125
Banks - 8.76%			Metropolitan Edison Co
Bank of America Corp			4.95%, 3/15/2013	7,000	7,416
5.42%, 3/15/2017	5,000	5,078	Mirant Americas Generation LLC
6.80%, 3/15/2028	670	676	8.50%, 10/1/2021	15,000	14,700
8.00%, 12/29/2049^(e)	4,000	4,037	Nisource Finance Corp
8.13%, 12/29/2049^(e)	7,000	7,064	5.25%, 9/15/2017	2,000	2,182
Citigroup Inc			5.40%, 7/15/2014	5,000	5,598
5.85%, 8/2/2016	12,000	13,170	6.15%, 3/1/2013	5,000	5,534
FleetBoston Financial Corp			Ohio Edison Co
6.88%, 1/15/2028	995	1,012	5.45%, 5/1/2015	5,000	5,612
Goldman Sachs Group Inc/The			Oncor Electric Delivery Co LLC
5.35%, 1/15/2016	2,000	2,203	7.00%, 9/1/2022	12,000	14,986
6.60%, 1/15/2012	10,000	10,641	Pacific Gas & Electric Co
JP Morgan Chase & Co			4.20%, 3/1/2011	10,250	10,375
5.13%, 9/15/2014	12,000	13,160	6.05%, 3/1/2034	2,000	2,243
7.90%, 4/29/2049^(e)	5,000	5,330	PacifiCorp
Morgan Stanley			4.95%, 8/15/2014	5,000	5,632
4.75%, 4/1/2014	5,000	5,220	5.25%, 6/15/2035	5,000	5,106
6.25%, 8/9/2026	7,000	7,233	6.25%, 10/15/2037	2,000	2,336
US Bank NA/Cincinnati OH			PPL Energy Supply LLC
4.95%, 10/30/2014	6,000	6,739	6.40%, 11/1/2011	5,000	5,267
6.38%, 8/1/2011	5,000	5,218	6.50%, 5/1/2018	3,000	3,431
Wells Fargo & Co			Southwestern Electric Power Co
4.63%, 4/15/2014	11,000	11,781	5.38%, 4/15/2015	6,500	7,166
7.98%, 3/29/2049^(e)	15,000	15,750			$ 127,441
Wells Fargo Capital XV			Entertainment - 1.72%
9.75%, 12/29/2049^(e)	2,500	2,808	CCM Merger Inc
	$ 117,120		8.00%, 8/1/2013^(d)	11,000	10,285
Beverages - 0.97%			Peninsula Gaming LLC
Anheuser-Busch InBev Worldwide Inc			10.75%, 8/15/2017	12,000	12,780
7.75%, 1/15/2019^(d)	10,000	12,932			$ 23,065
			Environmental Control - 0.98%
Chemicals - 0.90%			Republic Services Inc
Airgas Inc			5.00%, 3/1/2020	12,000	13,059
4.50%, 9/15/2014	5,000	5,370
7.13%, 10/1/2018^(d)	6,000	6,645	Food - 0.39%
	$ 12,015		Corn Products International Inc
Commercial Services - 0.73%			4.63%, 11/1/2020	5,000	5,180
Ceridian Corp
11.25%, 11/15/2015^(e)	10,000	9,725	Gas - 0.99%
			Sempra Energy
Diversified Financial Services - 3.68%			6.00%, 2/1/2013	9,000	9,911
DVI Inc			6.00%, 10/15/2039	3,000	3,286
0.00%, 2/1/2004^(a),(b),(c)	8,125	823			$ 13,197
0.00%, 2/1/2004^(a),(b),(c)	400	36


Schedule of Investments
Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Healthcare - Services - 3.68%			Oil & Gas (continued)
Alliance HealthCare Services Inc			Petro-Canada
8.00%, 12/1/2016	$ 8,000 $	7,580	4.00%, 7/15/2013	$ 3,000 $	3,197
HCA Inc			6.80%, 5/15/2038	5,000	5,879
7.50%, 11/6/2033	1,700	1,564	9.25%, 10/15/2021	8,500	11,902
9.25%, 11/15/2016	6,000	6,495	Rowan Cos Inc
Healthsouth Corp			5.00%, 9/1/2017	12,000	12,539
7.75%, 9/15/2022	4,000	4,225	XTO Energy Inc
10.75%, 6/15/2016	8,500	9,318	6.75%, 8/1/2037	5,000	6,542
Multiplan Inc				$ 73,577
9.88%, 9/1/2018^(d)	6,000	6,420	Oil & Gas Services - 1.02%
Tenet Healthcare Corp			Weatherford International Ltd Bermuda
9.00%, 5/1/2015	6,000	6,600	5.13%, 9/15/2020	13,000	13,609
10.00%, 5/1/2018	6,000	6,960
	$ 49,162		Packaging & Containers - 0.89%
Insurance - 2.57%			Sealed Air Corp
Aspen Insurance Holdings Ltd			5.63%, 7/15/2013^(d)	4,000	4,279
6.00%, 8/15/2014	2,500	2,712	7.88%, 6/15/2017	7,000	7,687
Farmers Insurance Exchange				$ 11,966
6.00%, 8/1/2014^(d)	6,000	6,385	Pharmaceuticals - 0.87%
Fidelity National Financial Inc			Elan Finance PLC / Elan Finance Corp
6.60%, 5/15/2017	12,000	12,376	8.75%, 10/15/2016	3,000	3,053
Prudential Financial Inc			8.75%, 10/15/2016^(d)	5,000	5,062
5.38%, 6/21/2020	1,000	1,087	Omnicare Inc
7.38%, 6/15/2019	4,000	4,848	6.13%, 6/1/2013	3,500	3,539
8.88%, 6/15/2038^(e)	6,000	6,900		$ 11,654
	$ 34,308		Pipelines - 3.41%
Leisure Products & Services - 0.95%			El Paso Natural Gas Co
Royal Caribbean Cruises Ltd			7.50%, 11/15/2026	10,000	11,042
6.88%, 12/1/2013	6,000	6,450	Energy Maintenance Services Group LLC
7.25%, 3/15/2018	2,000	2,175	0.00%, 3/1/2014^(a),(b),(c)	13,299	1,995
8.75%, 2/2/2011	4,000	4,060	Enterprise Products Operating LLC
	$ 12,685		6.38%, 2/1/2013	2,500	2,763
Lodging - 0.97%			Express Pipeline LP
MGM Resorts International			7.39%, 12/31/2017^(d)	7,556	8,411
11.13%, 11/15/2017	1,000	1,150	Southern Natural Gas Co
13.00%, 11/15/2013	10,000	11,887	8.00%, 3/1/2032	4,000	4,612
	$ 13,037		Tennessee Gas Pipeline Co
Media - 4.42%			8.38%, 6/15/2032	2,000	2,367
Comcast Corp			TransCanada PipeLines Ltd
6.45%, 3/15/2037	7,000	7,694	6.10%, 6/1/2040	5,000	5,580
6.95%, 8/15/2037	3,000	3,490	7.25%, 8/15/2038	7,000	8,879
COX Communications Inc				$ 45,649
6.45%, 12/1/2036^(d)	4,000	4,347	Real Estate - 1.06%
6.75%, 3/15/2011	8,000	8,178	WEA Finance LLC / WT Finance Aust Pty Ltd
Frontiervision			6.75%, 9/2/2019^(d)	12,000	14,136
0.00%, 9/15/2008^(a),(b)	2,500	75
Historic TW Inc			REITS - 8.94%
9.15%, 2/1/2023	5,260	7,156	Arden Realty LP
News America Inc			5.20%, 9/1/2011	3,000	3,106
6.40%, 12/15/2035	8,000	8,676	5.25%, 3/1/2015	8,000	8,653
Reed Elsevier Capital Inc			BioMed Realty LP
6.75%, 8/1/2011	10,000	10,445	6.13%, 4/15/2020^(d)	5,500	5,979
Time Warner Cable Inc			Duke Realty LP
6.55%, 5/1/2037	6,000	6,687	8.25%, 8/15/2019	12,000	14,437
7.30%, 7/1/2038	2,000	2,411	HCP Inc
	$ 59,159		6.00%, 3/1/2015	1,750	1,920
Mining - 1.00%			6.45%, 6/25/2012	3,000	3,189
Xstrata Canada Corp			7.07%, 6/8/2015	2,250	2,552
6.00%, 10/15/2015	12,000	13,438	Health Care REIT Inc
			6.00%, 11/15/2013	8,000	8,807
Oil & Gas - 5.50%			6.13%, 4/15/2020	2,000	2,175
BP Capital Markets PLC			6.20%, 6/1/2016	3,000	3,430
4.75%, 3/10/2019	12,000	12,755	Healthcare Realty Trust Inc
Nabors Industries Inc			5.13%, 4/1/2014	2,000	2,133
5.00%, 9/15/2020^(d)	13,000	13,263	6.50%, 1/17/2017	5,000	5,491
OPTI Canada Inc			8.13%, 5/1/2011	7,500	7,754
7.88%, 12/15/2014	10,000	7,500	Kimco Realty Corp
			6.88%, 10/1/2019	12,000	13,923


	Principal				Principal
	Amount			U.S. GOVERNMENT & GOVERNMENT	Amount
BONDS (continued)	(000's)	Value (000's)		AGENCY OBLIGATIONS (continued)	(000's)	Value (000's)
REITS (continued)				Federal Home Loan Mortgage Corporation (FHLMC) (continued)
Nationwide Health Properties Inc				4.50%, 6/1/2039^(f)	$ 8,080	$ 8,535
6.00%, 5/20/2015	$ 12,000	$ 13,414		4.50%, 7/1/2039^(f)	19,083		20,110
Shurgard Storage Centers LLC				5.00%, 8/1/2035^(f)	5,091		5,445
5.88%, 3/15/2013	9,000		9,795	5.00%, 11/1/2035^(f)	10,327		11,023
Simon Property Group LP				5.00%, 10/1/2038^(f)	16,516		17,454
10.35%, 4/1/2019	9,000		12,722	5.50%, 11/1/2017^(f)	2,132		2,310
		$ 119,480		5.50%, 1/1/2018^(f)	672		728
Retail - 1.80%				5.50%, 5/1/2031^(f)	887		960
Asbury Automotive Group Inc				5.50%, 6/1/2035^(f)	10,278		11,093
8.00%, 3/15/2014	5,000		5,075	5.50%, 1/1/2036^(f)	11,559		12,541
Neiman Marcus Group Inc/The				5.50%, 4/1/2036^(f)	10,129		11,040
10.38%, 10/15/2015	13,000		13,715	6.00%, 3/1/2031^(f)	230		255
Sonic Automotive Inc				6.00%, 5/1/2032^(f)	931		1,033
9.00%, 3/15/2018	5,000		5,244	6.00%, 6/1/2038^(f)	4,058		4,434
		$ 24,034		6.50%, 1/1/2029^(f)	235		266
				6.50%, 5/1/2029^(f)	397		448
Telecommunications - 1.66%
Corning Inc				6.50%, 6/1/2029^(f)	573		647
4.25%, 8/15/2020	8,000		8,351	6.50%, 6/1/2029^(f)	204		230
5.90%, 3/15/2014	1,367		1,533	6.50%, 8/1/2029^(f)	219		248
Qwest Corp				7.00%, 1/1/2032^(f)	214		243
8.88%, 3/15/2012^(e)	8,000		8,780			$ 193,829
Telus Corp				Federal National Mortgage Association (FNMA) - 5.00%
8.00%, 6/1/2011	3,431		3,572	4.00%, 3/1/2039^(f)	16,305		16,826
		$ 22,236		4.50%, 8/1/2039^(f)	8,037		8,509
				5.00%, 1/1/2018^(f)	1,827		1,966
Toys, Games & Hobbies - 0.08%
Mattel Inc				5.00%, 10/1/2032^(f)	2,184		2,342
7.30%, 6/13/2011	1,000		1,033	5.00%, 8/1/2035^(f)	17,462		18,657
				5.50%, 3/1/2033^(f)	2,720		2,948
				5.50%, 2/1/2035^(f)	11,767		12,735
Transportation - 0.89%
Trailer Bridge Inc				6.00%, 4/1/2032^(f)	609		677
9.25%, 11/15/2011	12,000		11,895	6.50%, 9/1/2028^(f)	86		98
				6.50%, 11/1/2028^(f)	69		78
				6.50%, 5/1/2031^(f)	151		170
TOTAL BONDS		$ 942,048		6.50%, 4/1/2032^(f)	783		884
	Principal			6.50%, 5/1/2032^(f)	780		881
	Amount			7.00%, 1/1/2030^(f)	16		19
CONVERTIBLE BONDS - 1.43%	(000's)	Value (000's)		7.45%, 6/1/2016^(f)	45		47
Healthcare - Products - 0.90%
China Medical Technologies Inc						$ 66,837
4.00%, 8/15/2013	15,000		12,038	Government National Mortgage Association (GNMA) - 0.14%
				6.00%, 5/20/2032^(e)	1,504		1,666
Pharmaceuticals - 0.53%				7.00%, 6/20/2031	203		231
Omnicare Inc						$ 1,897
3.25%, 12/15/2035	8,000		7,130	U.S. Treasury - 2.51%
				3.63%, 2/15/2020	12,000		13,102
TOTAL CONVERTIBLE BONDS		$ 19,168		4.25%, 5/15/2039	4,000		4,175
	Principal			4.50%, 8/15/2039	15,000		16,312
SENIOR FLOATING RATE INTERESTS -	Amount					$ 33,589
0.76%	(000's)	Value (000's)		TOTAL U.S. GOVERNMENT &
Entertainment - 0.58%				GOVERNMENT AGENCY OBLIGATIONS		$ 296,152
CCM Merger Inc, Term Loan B					Maturity
8.50%, 7/21/2012^(e)	$ 7,752	$ 7,745			Amount
				REPURCHASE AGREEMENTS - 3.95%	(000's)	Value (000's)
Pharmaceuticals - 0.18%				Banks - 3.95%
Quintiles Transnational, Term Loan				Investment in Joint Trading Account; Bank of	$ 15,031	$ 15,031
4.29%, 3/31/2014^(e)	2,500		2,462	America Repurchase Agreement; 0.22%
				dated 10/29/10 maturing 11/01/10
TOTAL SENIOR FLOATING RATE INTERESTS		$ 10,207		(collateralized by Sovereign Agency Issues;
	Principal			$15,331,444; 0.00% - 5.25%; dated 05/01/13
U.S. GOVERNMENT & GOVERNMENT	Amount			- 04/15/42)
AGENCY OBLIGATIONS - 22.15%	(000's)	Value (000's)		Investment in Joint Trading Account; Credit Suisse	14,511		14,510
Federal Home Loan Mortgage Corporation (FHLMC) - 14.50%				Repurchase Agreement; 0.21% dated
4.00%, 4/1/2039^(f)	$ 15,913	$ 16,514		10/29/10 maturing 11/01/10 (collateralized by
4.00%, 4/1/2039^(f)	13,803		14,220	US Treasury Note; $14,800,833; 1.13%;
4.00%, 9/1/2040^(f)	10,985		11,345	dated 01/15/12)
4.50%, 8/1/2033^(f)	10,497		11,098
4.50%, 8/1/2033^(f)	7,581		8,015
4.50%, 8/1/2033^(f)	6,265		6,623
4.50%, 5/1/2039^(f)	16,191		16,971

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Inflation Protection Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS - 3.93%	(000's)	Value (000's)	BONDS (continued)	(000's)	Value (000's)
Automobile Asset Backed Securities - 0.00%			Mortgage Backed Securities (continued)
Hyundai Auto Receivables Trust			G-Force LLC
0.66%, 1/17/2012^(a)	$ 19	$ 18	0.56%, 12/25/2039^(a),(b)	$ 1,000	$ 375
			Ginnie Mae
Banks - 0.02%			0.62%, 10/20/2031^(a)	100	101
HSBC USA Capital Trust I			0.81%, 3/16/2047^(a),(d)	5,135	238
7.81%, 12/15/2026^(b)	100	102	1.26%, 10/16/2012^(a)	2,267	42
			4.51%, 10/16/2028^(a)	535	554
Diversified Financial Services - 0.76%			Greenwich Capital Commercial Funding Corp
Bear Stearns Cos LLC/The			0.51%, 3/10/2039^(a),(b)	53,232	732
0.49%, 11/28/2011^(a)	1,500	1,503	GSC Capital Corp Mortgage Trust
Sirens BV			0.52%, 2/25/2036^(a),(d)	478	52
2.48%, 4/13/2012^(a),(b),(c)	2,000	1,948	GSR Mortgage Loan Trust
SLM Corp			0.52%, 8/25/2046^(a),(d)	213	32
0.49%, 3/15/2011^(a)	1,000	992	Homebanc Mortgage Trust
		$ 4,443	0.60%, 1/25/2036^(a),(d)	790	470
Home Equity Asset Backed Securities - 0.14%			Impac CMB Trust
Asset Backed Securities Corp Home Equity			0.51%, 5/25/2037^(a)	1,221	1,039
0.36%, 7/25/2036^(a)	496	483	0.77%, 8/25/2035^(a)	48	12
First NLC Trust			0.88%, 4/25/2035^(a),(d)	221	76
0.56%, 9/25/2035^(a)	216	215	1.24%, 10/25/2034^(a)	36	24
New Century Home Equity Loan Trust			1.81%, 10/25/2034^(a),(d)	76	25
0.55%, 3/25/2035^(a)	55	51	Impac Secured Assets CMN Owner Trust
Option One Mortgage Loan Trust			0.43%, 9/25/2036^(a)	1,440	831
0.71%, 3/25/2037^(a),(d)	2,000	97	Indymac Index Mortgage Loan Trust
1.26%, 2/25/2035^(a),(d)	25	6	0.44%, 2/25/2037^(a)	1,460	937
		$ 852	JP Morgan Alternative Loan Trust
			0.41%, 3/25/2037^(a)	1,450	689
Mortgage Backed Securities - 2.67%
Banc of America Commercial Mortgage Inc			LB-UBS Commercial Mortgage Trust
6.85%, 4/15/2036	300	305	5.59%, 6/15/2031	390	413
Bear Stearns Alt-A Trust			Merrill Lynch / Countrywide Commercial
0.43%, 4/25/2037^(a)	990	405	Mortgage Trust
Bear Stearns Commercial Mortgage Securities			0.17%, 7/12/2046^(a),(b)	16,367	211
7.00%, 5/20/2030	276	289	Merrill Lynch Alternative Note Asset Trust
Chase Mortgage Finance Corp			0.47%, 4/25/2037^(a),(d)	4,278	2,104
2.90%, 7/25/2037^(a)	318	315	Morgan Stanley Capital I
Citigroup/Deutsche Bank Commercial Mortgage			0.87%, 12/20/2046^(a),(b),(d)	200	2
Trust			WaMu Mortgage Pass Through Certificates
0.56%, 12/11/2049^(a),(b)	8,073	128	0.48%, 8/25/2046^(a),(d)	607	163
0.62%, 10/15/2048^(a)	29,278	408	0.63%, 1/25/2045^(a)	143	93
Countrywide Alternative Loan Trust			0.64%, 11/25/2045^(a)	134	132
0.47%, 5/25/2047^(a)	3,424	1,093	Washington Mutual Alternative Mortgage Pass-
0.52%, 7/25/2046^(a)	1,962	979	Through Certificates
0.54%, 6/25/2036^(a),(d)	857	90	0.44%, 1/25/2047^(a)	2,879	178
0.68%, 12/25/2035^(a)	382	100	0.54%, 6/25/2046^(a)	424	33
Countrywide Asset-Backed Certificates					$ 15,621
0.53%, 1/25/2036^(a)	118	90	Other Asset Backed Securities - 0.33%
Fannie Mae			Ameriquest Mortgage Securities Inc
0.46%, 1/25/2023^(a)	43	43	0.57%, 4/25/2034^(a),(d)	327	269
0.51%, 11/25/2022^(a)	43	43	Argent Securities Inc
0.51%, 3/25/2035^(a)	120	120	0.38%, 4/25/2036^(a)	40	19
0.56%, 2/25/2018^(a)	33	33	Carrington Mortgage Loan Trust
0.56%, 3/25/2018^(a)	216	216	0.49%, 12/25/2035^(a)	91	90
0.56%, 2/25/2032^(a)	35	35	Countrywide Asset-Backed Certificates
0.66%, 2/25/2028^(a)	58	58	0.51%, 3/25/2036^(a),(d)	1,093	705
Fannie Mae Grantor Trust			0.63%, 2/25/2036^(a),(d)	100	91
0.61%, 5/25/2035^(a)	54	51	0.76%, 2/25/2037^(a),(d)	3,000	60
Fannie Mae Whole Loan			1.39%, 12/25/2032^(a),(d)	59	43
0.41%, 5/25/2035^(a),(d)	48	47	Fannie Mae Grantor Trust
0.46%, 5/25/2035^(a)	75	74	0.40%, 4/25/2035^(a)	106	105
0.71%, 2/25/2047^(a)	68	69	Fannie Mae Whole Loan
Freddie Mac			0.56%, 11/25/2033^(a)	5	5
0.51%, 3/15/2023^(a)	119	118	First-Citizens Home Equity Loan LLC
0.56%, 5/15/2017^(a)	131	131	0.47%, 9/15/2022^(a),(b)	576	352
0.56%, 2/15/2018^(a)	221	221	Long Beach Mortgage Loan Trust
0.56%, 6/15/2018^(a)	233	233	0.79%, 6/25/2034^(a)	225	188
0.61%, 2/15/2030^(a)	14	14			$ 1,927
0.61%, 5/15/2030^(a)	29	29
0.66%, 9/15/2033^(a)	250	251
0.71%, 6/15/2023^(a)	75	75


				Unrealized Appreciation (Depreciation)
				The net federal income tax unrealized appreciation (depreciation) and federal tax
		Principal		cost of investments held as of the period end were as follows:
		Amount
BONDS (continued)		(000's) Value (000's)		Unrealized Appreciation	$ 41,628
Student Loan Asset Backed Securities - 0.01%				Unrealized Depreciation	(21,632)
SLM Student Loan Trust				Net Unrealized Appreciation (Depreciation)	$ 19,996
0.35%, 3/15/2017^(a)	$ 41		$ 41
				Cost for federal income tax purposes	$ 553,367
				All dollar amounts are shown in thousands (000's)
TOTAL BONDS			$ 23,004
		Principal		Portfolio Summary (unaudited)
U.S. GOVERNMENT & GOVERNMENT		Amount		Sector	Percent
AGENCY OBLIGATIONS - 94.17%		(000's)	Value (000's)	Government	94 .17%
U.S. Treasury - 1.66%				Mortgage Securities	2 .69%
2.63%, 8/15/2020	$ 2,948		$ 2,951	Financial	0 .78%
3.88%, 8/15/2040		5,415	5,300	Asset Backed Securities	0 .46%
4.38%, 5/15/2040		1,330	1,417	Other Assets in Excess of Liabilities, Net	1 .90%
			$ 9,668	TOTAL NET ASSETS	100.00%
U.S. Treasury Inflation-Indexed Obligations - 92.51%
0.50%, 4/15/2015		35,283	36,706
0.63%, 4/15/2013		227	235
1.25%, 4/15/2014		6,891	7,316
1.25%, 7/15/2020		123	132
1.38%, 7/15/2018		12,199	13,299
1.38%, 1/15/2020		29,301	31,817
1.63%, 1/15/2015		2,258	2,445
1.63%, 1/15/2018		6,638	7,333
1.75%, 1/15/2028		21,686	23,992
1.88%, 7/15/2013		13,509	14,449
1.88%, 7/15/2015		16,667	18,387
1.88%, 7/15/2019		8,207	9,279
2.00%, 4/15/2012		18,214	18,876
2.00%, 1/15/2014^(e)		27,364	29,608
2.00%, 7/15/2014		38,000	41,535
2.00%, 1/15/2016		6,308	7,025
2.00%, 1/15/2026		15,652	17,891
2.13%, 1/15/2019		5,351	6,137
2.13%, 2/15/2040		27,810	32,568
2.38%, 1/15/2017		13,363	15,313
2.38%, 1/15/2025		19,042	22,707
2.38%, 1/15/2027		17,754	21,314
2.50%, 7/15/2016		17,529	20,178
2.50%, 1/15/2029		35,538	43,720
2.63%, 7/15/2017		18,502	21,705
3.00%, 7/15/2012		37,782	40,173
3.38%, 1/15/2012		4,051	4,241
3.38%, 4/15/2032		1,194	1,686
3.63%, 4/15/2028		3,800	5,282
3.88%, 4/15/2029		17,503	25,342
			$ 540,691
TOTAL U.S. GOVERNMENT &
GOVERNMENT AGENCY OBLIGATIONS			$ 550,359
Total Investments			$ 573,363
Other Assets in Excess of Liabilities, Net - 1.90%			$ 11,083
TOTAL NET ASSETS - 100.00%			$ 584,446


Schedule of Investments
Inflation Protection Fund
October 31, 2010



Futures Contracts

									Unrealized
Type	Long/Short		Contracts		Notional Value		Current Market Value		Appreciation/(Depreciation)
US 10 Year Note; December 2010		Long		299	$ 37,686		$ 37,758		$ 72
US 2 Year Note; December 2010		Long		70		15,377		15,399	22
US Long Bond; December 2010		Long		1		130		131	1
US 5 Year Note; December 2010		Short		322		39,133		39,148	(15)
US Ultra Bond; December 2010		Short		16		2,250		2,158	92
									$ 172

All dollar amounts are shown in thousands (000's)


Interest Rate Swaps

		(Pay)/Receive						Notional /Principal	Unrealized
Counterparty (Issuer)	Floating Rate Index	Floating Rate		Fixed Rate Expiration Date			Currency	Amount	Appreciation/(Depreciation)
Barclays Bank PLC	3 Month LIBOR		Pay	2.73%		10/28/2020	USD	$ 7,000	$ (20)
Barclays Bank PLC	3 Month LIBOR	Receive		2.61%		10/25/2020	USD	17,200	132
Barclays Bank PLC	US CPI Urban Consumers		Pay	2.48%		10/25/2020	USD	8,000	(13)
	NAS(CPURNSA)
Barclays Bank PLC	US CPI Urban Consumers	Receive		1.86%		10/25/2015	USD	15,000	(54)
	NAS(CPURNSA)

All dollar amounts are shown in thousands (000's)

Schedule of Investments International Emerging Markets Fund October 31, 2010


COMMON STOCKS - 91.79%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.21%			Coal (continued)
Focus Media Holding Ltd ADR^(a)	131,477 $	3,254	Yanzhou Coal Mining Co Ltd	2,450,000 $	7,048
				$ 22,866
Agriculture - 0.65%			Computers - 2.99%
KT&G Corp	75,985	4,666	Infosys Technologies Ltd ADR	230,325	15,533
Souza Cruz SA	104,500	5,467	Lenovo Group Ltd	8,808,000	5,704
	$ 10,133		Lite-On Technology Corp	3,351,261	4,427
Airlines - 0.62%			Tata Consultancy Services Ltd	729,265	17,284
Air China Ltd ^(a)	7,172,000	9,641	Wistron Corp	1,738,000	3,570
				$ 46,518
Apparel - 0.48%			Distribution & Wholesale - 0.32%
Far Eastern New Century Corp	5,216,860	7,513	LG International Corp	156,520	4,959

Automobile Manufacturers - 3.78%			Diversified Financial Services - 2.79%
Dongfeng Motor Group Co Ltd	5,534,000	11,994	Chinatrust Financial Holding Co Ltd	11,924,616	7,438
Ford Otomotiv Sanayi AS	454,540	4,025	E.Sun Financial Holding Co Ltd	5,740,570	2,953
Hyundai Motor Co	53,733	8,118	Fubon Financial Holding Co Ltd	6,036,141	7,392
Kia Motors Corp	280,750	11,202	KGI Securities Co Ltd ^(c)	313,659	2,952
Mahindra & Mahindra Ltd	612,614	10,118	Mega Financial Holding Co Ltd	9,146,000	6,347
Tata Motors Ltd	509,752	13,299	RMB Holdings Ltd	615,190	3,174
	$ 58,756		Rural Electrification Corp Ltd	549,644	4,586
Automobile Parts & Equipment - 0.80%			Shinhan Financial Group Co Ltd	77,939	3,016
Hyundai Mobis	22,653	5,637	Woori Finance Holdings Co Ltd	438,200	5,510
Iochpe-Maxion SA	181,400	2,625		$ 43,368
Marcopolo SA	351,400	1,405	Electric - 0.58%
Randon Participacoes SA	334,936	2,803	Cia Paranaense de Energia	229,900	5,329
	$ 12,470		Federal Hydrogenerating Co ADR^(a)	711,294	3,681
Banks - 15.45%				$ 9,010
AMMB Holdings Bhd	2,325,500	4,724	Electrical Components & Equipment - 0.66%
Axis Bank Ltd	263,481	8,732	Delta Electronics Inc	1,873,000	7,738
Banco de Chile	30,769,454	4,410	Young Fast Optoelectronics Co Ltd	220,000	2,586
Banco do Brasil SA	970,190	18,784		$ 10,324
Banco do Estado do Rio Grande do Sul	390,900	4,276	Electronics - 3.11%
Banco Santander Chile SA ADR	48,422	4,486	AU Optronics Corp ^(a)	7,505,000	7,487
Bangkok Bank Public Co	2,389,600	12,315	Chroma Ate Inc	148	—
Bank Mandiri Tbk PT	8,372,000	6,557	Coretronic Corp	3,082,000	4,700
Bank of China Ltd	36,544,000	21,876	Hon Hai Precision Industry Co Ltd	3,724,988	14,111
Busan Bank	467,710	5,819	Kingboard Laminates Holdings Ltd	7,563,000	7,289
China Construction Bank Corp	29,527,778	28,152	Tripod Technology Corp	2,206,000	8,465
Commercial International Bank Egypt SAE	693,142	5,207	WPG Holdings Co Ltd	3,431,211	6,376
Credicorp Ltd	31,262	3,935		$ 48,428
FirstRand Ltd	4,118,464	12,117	Engineering & Contruction - 1.32%
ICICI Bank Ltd ADR	187,518	9,860	China Railway Group Ltd	7,577,000	6,109
Industrial and Commercial Bank of China Ltd	21,963,000	17,681	Daelim Industrial Co Ltd	176,879	14,399
Industrial Bank of Korea	571,420	8,201		$ 20,508
Krung Thai Bank Public Company Ltd ^(b)	13,391,826	7,549
			Food - 2.79%
Malayan Banking Bhd	4,696,500	13,585	Centros Comerciales Sudamericanos SA	1,135,752	8,849
Metropolitan Bank & Trust	2,110,600	3,844	Cia Brasileira de Distribuicao Grupo Pao de	253,138	10,027
Powszechna Kasa Oszczednosci Bank Polski SA	383,157	6,049	Acucar ADR
Sberbank of Russia	5,388,070	17,856	Cosan SA Industria e Comercio	421,600	6,697
Standard Bank Group Ltd/South Africa	115,172	1,698	Indofood Sukses Makmur Tbk PT	9,223,000	5,366
State Bank of India Ltd	44,278	6,110	Uni-President Enterprises Corp	5,108,888	6,640
Turkiye Vakiflar Bankasi Tao	2,067,554	6,688	X5 Retail Group NV ^(a)	139,865	5,860
	$ 240,511			$ 43,439
Beverages - 2.42%
Cia Cervecerias Unidas SA	431,051	4,820	Forest Products & Paper - 0.27%
Cia de Bebidas das Americas ADR	156,687	21,817	Suzano Papel e Celulose SA	452,100	4,252
Fomento Economico Mexicano SAB de CV ADR	199,456	10,952	Gas - 0.58%
	$ 37,589		ENN Energy Holdings Ltd	1,720,000	5,170
Building Materials - 1.01%			GAIL India Ltd	349,453	3,867
China National Building Material Co Ltd	2,631,063	6,415		$ 9,037
Semen Gresik Persero Tbk PT	4,143,000	4,543
Taiwan Cement Corp	4,405,000	4,690	Holding Companies - Diversified - 2.73%
			Alfa SAB de CV	457,600	3,818
	$ 15,648		GS Holdings	183,674	9,630
Chemicals - 1.90%			Imperial Holdings Ltd	546,335	8,911
Formosa Chemicals & Fibre Corp	4,258,000	12,209	KOC Holding AS	1,646,671	7,864
LG Chem Ltd	56,535	17,434	LG Corp	170,832	12,221
	$ 29,643			$ 42,444
Coal - 1.47%			Home Builders - 0.29%
Banpu Public Co Ltd	304,050	7,911	MRV Engenharia e Participacoes SA	470,000	4,575
Exxaro Resources Ltd	419,595	7,907

Schedule of Investments International Emerging Markets Fund October 31, 2010


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Home Furnishings - 0.44%			Pharmaceuticals (continued)
Arcelik AS	1,240,734 $	6,877	Pharmstandard ^(a)	157,240 $	4,088
			Richter Gedeon Nyrt	20,580	4,903
Insurance - 2.85%			United Laboratories International Holdings Ltd/The	1,840,000	3,490
China Life Insurance Co Ltd	850,000	3,723		$ 19,559
Hyundai Marine & Fire Insurance Co Ltd	366,400	7,815	Real Estate - 0.82%
Odontoprev SA ^(a)	123,872	1,821	Guangzhou R&F Properties Co Ltd	2,967,600	4,234
Ping An Insurance Group Co of China Ltd	1,548,500	16,671	Huaku Development Co Ltd	1,367,965	3,793
Sanlam Ltd	3,460,483	12,973	Shimao Property Holdings Ltd	2,843,000	4,702
Sul America SA	110,419	1,298		$ 12,729
	$ 44,301		Retail - 3.88%
Internet - 0.37%			Clicks Group Ltd	824,223	5,377
Daum Communications Corp ^(a)	6,421	448	Grupo Comercial Chedraui SA de CV ^(a)	1,172,960	3,795
Tencent Holdings Ltd	234,100	5,361	Intime Department Store Group Co Ltd	2,712,000	4,157
	$ 5,809		Lojas Renner SA	356,700	14,152
Investment Companies - 0.20%			Lotte Shopping Co Ltd	24,957	10,213
Infrastructure Development Finance Co Ltd	698,910	3,147	Mr Price Group Ltd	925,583	8,411
			President Chain Store Corp	1,126,952	4,472
Iron & Steel - 3.01%			Woolworths Holdings Ltd/South Africa	2,519,750	9,874
Cia Siderurgica Nacional SA ADR	867,246	14,639		$ 60,451
Maanshan Iron & Steel	7,142,000	4,091	Semiconductors - 4.42%
Mechel ADR	174,405	4,107	ASM Pacific Technology Ltd	580,500	5,235
POSCO ADR	160,293	16,661	Chipbond Technology Corp ^(a)	3,704,000	5,758
Shougang Concord International Enterprises Co	43,576,000	7,309	Powertech Technology Inc	2,618,000	8,635
Ltd ^(a)			Samsung Electronics Co Ltd	54,630	36,169
	$ 46,807		Taiwan Semiconductor Manufacturing Co Ltd	6,321,491	12,964
Leisure Products & Services - 0.29%				$ 68,761
Bajaj Auto Ltd	133,100	4,527	Shipbuilding - 0.62%
			Hyundai Heavy Industries Co Ltd	29,728	9,683
Lodging - 0.57%
Genting Bhd	2,622,100	8,798	Telecommunications - 7.54%
			Advanced Info Service PCL ^(a),(b)	1,264,900	3,797
Media - 0.31%			America Movil SAB de CV ADR	291,473	16,690
Grupo Televisa SA ADR	213,891	4,802	Axiata Group Bhd ^(a)	3,845,200	5,549
			China Mobile Ltd	2,228,593	22,699
Mining - 5.00%			China Telecom Corp Ltd	13,862,000	7,171
Anglo American PLC	136,484	6,360	Chunghwa Telecom Co Ltd ^(a)	4,521,000	10,571
Cia de Minas Buenaventura SA ADR	113,444	6,017	Comba Telecom Systems Holdings Ltd	2,650,200	3,009
Grupo Mexico SAB de CV	4,131,100	13,606	D-Link Corp	4,439,000	4,479
Hindalco Industries Ltd	1,843,236	8,734	Mobile Telesystems OJSC ADR	608,934	13,183
Impala Platinum Holdings Ltd	195,930	5,538	Philippine Long Distance Telephone Co	24,880	1,549
Industrias Penoles SAB de CV	259,630	7,358	Taiwan Mobile Co Ltd	2,976,000	6,618
KGHM Polska Miedz SA	298,936	13,425	Turk Telekomunikasyon AS	1,725,436	8,060
MMC Norilsk Nickel ADR	605,209	11,287	Vivo Participacoes SA ADR	167,664	4,802
Southern Copper Corp	128,056	5,481	Vodacom Group Ltd	952,560	9,152
	$ 77,806			$ 117,329
Miscellaneous Manufacturing - 0.43%			Textiles - 0.29%
Largan Precision Co Ltd	338,000	6,700	Cia Hering	93,200	4,590

Oil & Gas - 11.20%			Transportation - 0.67%
China Petroleum & Chemical Corp	15,382,000	14,506	Pacific Basin Shipping Ltd	6,676,000	4,858
CNOOC Ltd	11,217,000	23,241	Sincere Navigation	4,582,000	5,551
Gazprom OAO ADR	738,210	16,130		$ 10,409
Hindustan Petroleum Corp Ltd	576,659	6,325	TOTAL COMMON STOCKS	$ 1,428,508
Lukoil OAO ADR	322,218	17,996	PREFERRED STOCKS - 6.26%	Shares Held Value (000's)
OGX Petroleo e Gas Participacoes SA ^(a)	531,500	6,949
			Banks - 2.31%
Oil & Natural Gas Corp Ltd	150,653	4,422	Banco Bradesco SA	389,227	7,976
PetroChina Co Ltd	8,414,293	10,269	Itau Unibanco Holding SA	1,161,679	28,080
Petroleo Brasileiro SA ADR	1,241,508	42,360		$ 36,056
PTT Public Company Limited ^(b)	838,100	8,471
			Holding Companies - Diversified - 0.81%
Reliance Industries Ltd	80,147	1,978	Itausa - Investimentos Itau SA	1,612,800	12,625
Rosneft Oil Co	914,567	6,375
Surgutneftegas OJSC ADR	331,462	3,212
Tatneft ADR	179,097	5,650	Mining - 3.14%
Tupras Turkiye Petrol Rafinerileri AS	242,114	6,499	Vale SA	1,738,460	48,822
	$ 174,383		TOTAL PREFERRED STOCKS	$ 97,503
Oil & Gas Services - 0.40%
China Oilfield Services Ltd	3,792,000	6,154

Pharmaceuticals - 1.26%
Dr Reddy's Laboratories Ltd	189,479	7,078

Schedule of Investments International Emerging Markets Fund October 31, 2010


				Portfolio Summary (unaudited)
				Country	Percent
		Maturity		Brazil	17 .72%
		Amount		China	13 .12%
REPURCHASE AGREEMENTS - 0.12%		(000's)	Value (000's)	Korea, Republic Of	12 .31%
Banks - 0.12%				Taiwan, Province Of China	12 .03%
Investment in Joint Trading Account; Bank of	$ 527		$ 527	India	8 .08%
America Repurchase Agreement; 0.22%				Russian Federation	7 .05%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;				South Africa	5 .47%
$537,400; 0.00% - 5.25%; dated 05/01/13 -				Hong Kong	4 .95%
				Mexico	3 .92%
04/15/42)				Turkey	2 .58%
Investment in Joint Trading Account; Credit Suisse		509	509
Repurchase Agreement; 0.21% dated				Thailand	2 .57%
				Malaysia	2 .10%
10/29/10 maturing 11/01/10 (collateralized by				Chile	1 .45%
US Treasury Note; $518,801; 1.13%; dated
01/15/12)				Poland	1 .25%
				Indonesia	1 .05%
Investment in Joint Trading Account; Deutsche		483	483	Peru	0 .64%
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by				United States	0 .47%
				United Kingdom	0 .41%
Sovereign Agency Issues; $492,861; 0.38% -				Philippines	0 .35%
3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		331	330	Egypt	0 .33%
				Hungary	0 .32%
Stanley Repurchase Agreement; 0.20% dated				Other Assets in Excess of Liabilities, Net	1 .83%
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $337,220; 1.88% -				TOTAL NET ASSETS	100.00%
6.13%; dated 01/09/12 - 02/21/13)
			$ 1,849
TOTAL REPURCHASE AGREEMENTS			$ 1,849
Total Investments			$ 1,527,860
Other Assets in Excess of Liabilities, Net - 1.83%			$ 28,472
TOTAL NET ASSETS - 100.00%			$ 1,556,332

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


COMMON STOCKS - 98.03%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 1.09%			Computers - 0.83%
BAE Systems PLC	2,050,247 $	11,324	CGI Group Inc ^(a)	354,192 $	5,449
Safran SA	121,503	3,852	Fujitsu Ltd	908,000	6,206
	$ 15,176			$ 11,655
Agriculture - 1.85%			Consumer Products - 1.27%
British American Tobacco PLC	584,218	22,280	Reckitt Benckiser Group PLC	317,971	17,787
Golden Agri-Resources Ltd - Warrants ^(a)	895,502	90
Imperial Tobacco Group PLC	107,778	3,452	Cosmetics & Personal Care - 1.06%
	$ 25,822		L'Oreal SA	126,759	14,883
Airlines - 0.29%
Cathay Pacific Airways Ltd	1,492,000	4,013	Distribution & Wholesale - 0.84%
			Marubeni Corp	1,037,000	6,521
Apparel - 2.22%			Sumitomo Corp	413,600	5,242
Adidas AG	210,123	13,741		$ 11,763
Burberry Group PLC	470,378	7,680	Diversified Financial Services - 0.59%
Christian Dior SA	66,867	9,674	ORIX Corp	90,650	8,269
	$ 31,095
Automobile Manufacturers - 4.24%			Electric - 0.42%
Daimler AG ^(a)	287,041	19,015	Tokyo Electric Power Co Inc/The	242,900	5,811
Honda Motor Co Ltd	107,800	3,935
Nissan Motor Co Ltd	727,500	6,419	Electrical Components & Equipment - 1.76%
Renault SA ^(a)	210,578	11,701	Bekaert SA	12,381	3,773
Scania AB	269,369	5,726	Hitachi Ltd	2,053,000	9,287
Suzuki Motor Corp	513,000	12,514	Mitsubishi Electric Corp	1,237,000	11,606
	$ 59,310			$ 24,666
Automobile Parts & Equipment - 2.48%			Electronics - 3.22%
Continental AG ^(a)	94,034	8,284	Alps Electric Co Ltd	348,500	3,123
Denso Corp	212,200	6,606	Hamamatsu Photonics KK	210,100	6,794
Faurecia ^(a)	83,987	2,263	Keyence Corp	47,600	11,801
Sumitomo Electric Industries Ltd	858,300	10,954	Koninklijke Philips Electronics NV	326,814	9,884
Valeo SA ^(a)	123,678	6,648	Kyocera Corp	64,100	6,396
	$ 34,755		Omron Corp	302,600	7,024
Banks - 7.02%				$ 45,022
Australia & New Zealand Banking Group Ltd	411,751	10,007	Engineering & Contruction - 0.56%
Bank of Montreal	107,096	6,325	ABB Ltd ^(a)	381,307	7,897
Barclays PLC	902,291	3,970
BNP Paribas	44,208	3,233	Food - 7.87%
Canadian Imperial Bank of Commerce ^(a)	74,417	5,708	Aryzta AG	133,046	5,902
Chuo Mitsui Trust Holdings Inc	719,000	2,600	Danisco A/S	63,414	5,468
Lloyds Banking Group PLC ^(a)	3,885,497	4,292	George Weston Ltd	42,200	3,391
Mitsubishi UFJ Financial Group Inc	520,800	2,427	J Sainsbury PLC	1,709,012	10,661
Nordea Bank AB	804,882	8,863	Kesko OYJ	59,279	2,939
Resona Holdings Inc	1,011,700	8,071	Nestle SA	744,493	40,779
Societe Generale	58,085	3,478	Nippon Suisan Kaisha Ltd	1,122,200	3,570
Standard Chartered PLC	637,282	18,437	Nutreco NV	52,424	3,814
Standard Chartered PLC - Rights ^(a)	79,660	671	Saputo Inc	78,081	2,984
Torinto Dominion Bank	99,865	7,192	Tesco PLC	835,585	5,715
UBS AG ^(a)	424,691	7,190	Unilever NV	210,641	6,246
Westpac Banking Corp	260,258	5,787	Unilever PLC	303,693	8,754
	$ 98,251		Woolworths Ltd	352,687	9,794
Beverages - 2.43%				$ 110,017
Anheuser-Busch InBev NV	232,277	14,559	Food Service - 0.81%
Asahi Breweries Ltd	175,100	3,536	Compass Group PLC	1,373,944	11,261
Carlsberg A/S	80,977	8,856
Diageo PLC	194,784	3,596	Forest Products & Paper - 1.19%
Heineken NV	68,217	3,458	Stora Enso OYJ	806,055	8,010
	$ 34,005		Svenska Cellulosa AB	271,962	4,218
Chemicals - 4.62%			UPM-Kymmene OYJ	265,282	4,412
Agruim Inc ^(a)	122,569	10,843		$ 16,640
BASF SE	157,658	11,511	Gas - 1.12%
Croda International PLC	282,446	6,508	Centrica PLC	2,938,847	15,644
Daicel Chemical Industries Ltd	876,000	6,096
Koninklijke DSM NV	113,197	6,053	Hand & Machine Tools - 0.32%
Rhodia SA	191,247	5,316	Schindler Holding AG - PC	41,641	4,464
Tosoh Corp	3,154,000	8,427
Yara International ASA	186,467	9,806	Healthcare - Products - 1.41%
	$ 64,560		Cochlear Ltd	150,092	10,442
Commercial Services - 0.96%			Coloplast A/S	39,604	4,904
Atkins WS PLC	288,827	3,485	Elekta AB	115,360	4,366
Babcock International Group PLC	1,072,787	9,970		$ 19,712
	$ 13,455


Schedule of Investments
International Growth Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Healthcare - Services - 0.57%			Pharmaceuticals - 7.58%
Ramsay Health Care Ltd	523,976 $	8,033	AstraZeneca PLC	84,706 $	4,248
			GlaxoSmithKline PLC	762,148	14,911
Holding Companies - Diversified - 0.52%			Novartis AG	313,796	18,192
Wharf Holdings Ltd	1,108,000	7,276	Novo Nordisk A/S	190,145	20,015
			Roche Holding AG	110,549	16,233
Home Furnishings - 0.92%			Shire PLC	454,070	10,703
Indesit Co SpA	424,876	5,254	Takeda Pharmaceutical Co Ltd	196,400	9,201
Sony Corp	229,600	7,675	Teva Pharmaceutical Industries Ltd	239,540	12,473
	$ 12,929			$ 105,976
Insurance - 1.71%			Pipelines - 0.79%
AIA Group Ltd ^(a)	1,473,600	4,382	Enbridge Inc	200,929	11,113
Sampo OYJ	292,017	8,181
Sony Financial Holdings Inc	1,407	4,896	Real Estate - 1.99%
Zurich Financial Services	26,419	6,468	Brookfield Asset Management Inc	428,885	12,733
	$ 23,927		Brookfield Properties Corp	354,875	6,131
Investment Companies - 0.85%			Fraser and Neave Ltd	575,000	2,772
Delek Group Ltd	20,300	5,612	Henderson Land Development Co Ltd - Warrants	121,200	47
Investor AB	304,747	6,255	(a)
	$ 11,867		Mitsubishi Estate Co Ltd	348,000	6,098
Leisure Products & Services - 0.54%				$ 27,781
Sega Sammy Holdings Inc	460,300	7,516	REITS - 0.24%
			RioCan Real Estate Investment Trust	149,000	3,367
Machinery - Construction & Mining - 1.04%
Atlas Copco AB - A Shares	692,797	14,479	Retail - 3.16%
			Aeon Co Ltd	615,800	7,255
Machinery - Diversified - 0.50%			Cie Financiere Richemont SA	232,708	11,606
Kone OYJ	131,523	7,048	Inditex SA	131,797	11,008
			Swatch Group AG/The - BR	24,568	9,390
Media - 0.45%			Whitbread PLC	180,190	4,891
Mediaset SpA	844,253	6,228		$ 44,150
			Semiconductors - 0.79%
Mining - 11.33%			ARM Holdings PLC	1,901,111	11,067
Agnico-Eagle Mines	124,245	9,636
Anglo American PLC	97,152	4,527	Shipbuilding - 0.32%
BHP Billiton Ltd	758,790	31,158	Yangzijiang Shipbuilding Holdings Ltd	3,146,000	4,545
BHP Billiton PLC	492,947	17,484
Eldorado Gold Corp	645,468	10,930	Software - 1.31%
Iluka Resources Ltd ^(a)	675,123	4,451	SAP AG	353,147	18,351
Inmet Mining Corp	54,861	3,280
Kinross Gold Corp ^(a)	707,093	12,722	Telecommunications - 1.65%
Newcrest Mining Ltd	413,872	16,200	Koninklijke KPN NV	737,506	12,317
Rio Tinto Ltd	158,415	12,831	Softbank Corp	333,800	10,744
Rio Tinto PLC	351,109	22,706		$ 23,061
Umicore	264,983	12,473	Transportation - 2.49%
	$ 158,398		Canadian National Railway	254,503	16,485
Miscellaneous Manufacturing - 2.38%			Central Japan Railway Co	1,269	9,604
IMI PLC	329,321	4,166	Orient Overseas International Ltd	251,000	2,200
Siemens AG	216,241	24,739	West Japan Railway Co	1,778	6,602
Wartsila OYJ	61,921	4,344		$ 34,891
	$ 33,249		Water - 0.62%
Office & Business Equipment - 0.27%			Pennon Group PLC	861,655	8,602
Canon Inc	81,900	3,786
			TOTAL COMMON STOCKS	$ 1,371,001
Oil & Gas - 2.65%			PREFERRED STOCKS - 1.27%	Shares Held Value (000's)
BG Group PLC	397,371	7,739	Consumer Products - 0.69%
Japan Drilling Co Ltd	123,200	3,753	Henkel AG & Co KGaA	163,095	9,609
Seadrill Ltd	237,235	7,186
Statoil ASA	395,318	8,633	Media - 0.58%
Suncor Energy Inc	98,824	3,167	ProSiebenSat.1 Media AG	306,577	8,094
Total SA	120,093	6,526
	$ 37,004		TOTAL PREFERRED STOCKS	$ 17,703
Oil & Gas Services - 2.89%
Acergy SA	226,961	4,584
Amec PLC	263,231	4,581
Calfrac Well Services Ltd	143,805	3,615
Petrofac Ltd	188,494	4,419
Saipem SpA	254,456	11,308
Subsea 7 Inc ^(a)	345,092	7,254
Trican Well Service Ltd	269,020	4,663
	$ 40,424


			Schedule of Investments
			International Growth Fund
			October 31, 2010



		Maturity
		Amount
REPURCHASE AGREEMENTS - 1.19%		(000's)	Value (000's)
Banks - 1.19%
Investment in Joint Trading Account; Bank of	$ 4,756		$ 4,756
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$4,851,505; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse		4,592	4,592
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $4,683,598; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche		4,362	4,362
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $4,449,417; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		2,985	2,985
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $3,044,339; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 16,695
TOTAL REPURCHASE AGREEMENTS			$ 16,695
Total Investments			$ 1,405,399
Liabilities in Excess of Other Assets, Net - (0.49)%			$ (6,818)
TOTAL NET ASSETS - 100.00%			$ 1,398,581


(a) Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
LargeCap Blend Fund II
October 31, 2010




COMMON STOCKS - 97.09%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.15%			Biotechnology - 1.56%
Interpublic Group of Cos Inc ^(a)	16,762 $	173	Amgen Inc ^(a)	45,197 $	2,585
Lamar Advertising Co ^(a)	2,900	99	Biogen Idec Inc ^(a)	10,642	667
Omnicom Group Inc	19,334	850	Celgene Corp ^(a)	95,325	5,917
	$ 1,122		Genzyme Corp ^(a)	5,301	383
Aerospace & Defense - 2.24%			Gilead Sciences Inc ^(a)	35,573	1,411
Boeing Co/The	71,385	5,043	Life Technologies Corp ^(a)	9,806	492
General Dynamics Corp	14,104	961		$ 11,455
Goodrich Corp	4,739	389	Building Materials - 0.56%
L-3 Communications Holdings Inc	3,810	275	Masco Corp	388,010	4,136
Lockheed Martin Corp	12,666	903
Northrop Grumman Corp	12,385	783	Chemicals - 1.76%
Orbital Sciences Corp ^(a)	235,390	3,823	Air Products & Chemicals Inc	52,161	4,432
Raytheon Co	11,204	516	Airgas Inc	2,507	178
Rockwell Collins Inc	5,182	314	Dow Chemical Co/The	39,998	1,233
United Technologies Corp	45,793	3,423	Eastman Chemical Co	7,505	590
	$ 16,430		Ecolab Inc	7,787	384
Agriculture - 1.88%			EI du Pont de Nemours & Co	29,742	1,406
Altria Group Inc	69,177	1,758	FMC Corp	2,491	182
Archer-Daniels-Midland Co	23,050	768	International Flavors & Fragrances Inc	2,722	137
Lorillard Inc	5,103	435	Monsanto Co	26,122	1,552
Philip Morris International Inc	186,024	10,883	Mosaic Co/The	1,100	80
	$ 13,844		Potash Corp of Saskatchewan Inc	1,100	160
Airlines - 0.09%			PPG Industries Inc	5,468	419
Southwest Airlines Co	47,499	654	Praxair Inc	14,132	1,291
			Sherwin-Williams Co/The	8,334	608
Apparel - 0.41%			Sigma-Aldrich Corp	4,194	266
Coach Inc	25,333	1,266		$ 12,918
Nike Inc	15,692	1,278	Coal - 0.11%
Polo Ralph Lauren Corp	1,979	192	Alpha Natural Resources Inc ^(a)	1,500	68
VF Corp	2,916	243	Consol Energy Inc	4,600	169
	$ 2,979		Peabody Energy Corp	10,500	555
Automobile Manufacturers - 0.35%				$ 792
Ford Motor Co ^(a)	120,998	1,710	Commercial Services - 1.67%
PACCAR Inc	17,319	887	Apollo Group Inc ^(a)	10,537	395
	$ 2,597		Automatic Data Processing Inc	21,671	962
Automobile Parts & Equipment - 0.74%			DeVry Inc	5,330	255
Goodyear Tire & Rubber Co/The ^(a)	14,840	152	Equifax Inc	4,360	144
Johnson Controls Inc	150,425	5,283	H&R Block Inc	28,660	338
	$ 5,435		Iron Mountain Inc	5,753	125
Banks - 7.51%			Mastercard Inc	4,355	1,045
Bank of America Corp	701,142	8,021	Moody's Corp	165,576	4,481
			Quanta Services Inc ^(a)	3,400	67
Bank of New York Mellon Corp/The	41,912	1,050
BB&T Corp	23,880	559	Robert Half International Inc	2,600	71
Capital One Financial Corp	10,923	407	RR Donnelley & Sons Co	7,076	131
CIT Group Inc ^(a)	2,600	113	Total System Services Inc	6,799	106
Citigroup Inc ^(a)	966,728	4,031	Visa Inc	43,087	3,369
Comerica Inc	64,920	2,323	Western Union Co/The	42,506	748
Fifth Third Bancorp	57,006	716		$ 12,237
Goldman Sachs Group Inc/The	23,653	3,807	Computers - 5.72%
JP Morgan Chase & Co	313,128	11,784	Accenture PLC - Class A	5,800	259
KeyCorp	27,763	227	Apple Inc ^(a)	68,391	20,576
M&T Bank Corp	2,849	213	Cognizant Technology Solutions Corp ^(a)	6,677	435
Marshall & Ilsley Corp	28,298	167	Computer Sciences Corp	5,200	255
Morgan Stanley	61,581	1,531	Dell Inc ^(a)	83,085	1,195
Northern Trust Corp	8,200	407	EMC Corp/Massachusetts ^(a)	91,123	1,915
PNC Financial Services Group Inc	22,906	1,235	Hewlett-Packard Co	107,560	4,524
Regions Financial Corp	43,700	275	IBM Corp	78,746	11,308
State Street Corp	28,929	1,208	Lexmark International Inc ^(a)	2,690	102
SunTrust Banks Inc	23,300	583	NetApp Inc ^(a)	6,905	368
US Bancorp	98,552	2,383	SanDisk Corp ^(a)	16,912	636
Wells Fargo & Co	532,555	13,889	Teradata Corp ^(a)	5,306	209
Zions Bancorporation	12,100	250	Western Digital Corp ^(a)	7,771	249
	$ 55,179			$ 42,031
Beverages - 2.46%			Consumer Products - 0.44%
Coca-Cola Co/The	102,566	6,289	Avery Dennison Corp	3,694	134
Constellation Brands Inc ^(a)	6,584	130	Clorox Co	14,310	953
Dr Pepper Snapple Group Inc	8,377	306	Fortune Brands Inc	8,700	470
Molson Coors Brewing Co	5,420	256	Kimberly-Clark Corp	26,948	1,707
PepsiCo Inc	169,793	11,088		$ 3,264
	$ 18,069


Schedule of Investments
LargeCap Blend Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Cosmetics & Personal Care - 2.10%			Energy - Alternate Sources - 0.43%
Avon Products Inc	21,300 $	649	First Solar Inc ^(a)	22,890 $	3,151
Colgate-Palmolive Co	14,627	1,128
Estee Lauder Cos Inc/The	3,895	277	Engineering & Contruction - 0.10%
Procter & Gamble Co	209,957	13,347	Fluor Corp	6,100	294
	$ 15,401		Foster Wheeler AG ^(a)	2,500	58
Distribution & Wholesale - 0.13%			Jacobs Engineering Group Inc ^(a)	4,288	166
Fastenal Co	6,400	329	McDermott International Inc ^(a)	15,300	236
Genuine Parts Co	7,332	351		$ 754
WW Grainger Inc	2,029	252	Entertainment - 0.02%
	$ 932		International Game Technology	7,200	112
Diversified Financial Services - 1.71%
American Express Co	99,207	4,113	Environmental Control - 0.16%
Ameriprise Financial Inc	8,422	435	Republic Services Inc	27,517	820
Charles Schwab Corp/The	222,995	3,434	Waste Management Inc	9,676	346
CME Group Inc	3,373	977		$ 1,166
Discover Financial Services	26,717	471	Food - 2.59%
Federated Investors Inc	3,136	78	Campbell Soup Co	14,710	533
Franklin Resources Inc	7,269	833	ConAgra Foods Inc	14,380	324
IntercontinentalExchange Inc ^(a)	3,934	452	Dean Foods Co ^(a)	5,975	62
Invesco Ltd	18,600	428	General Mills Inc	34,221	1,285
Legg Mason Inc	7,300	227	HJ Heinz Co	7,905	388
NASDAQ OMX Group Inc/The ^(a)	5,093	107	Hormel Foods Corp	2,236	103
NYSE Euronext	10,300	316	JM Smucker Co/The	3,924	252
SLM Corp ^(a)	18,700	223	Kellogg Co	131,258	6,597
T Rowe Price Group Inc	8,196	453	Kraft Foods Inc	69,708	2,250
	$ 12,547		Kroger Co/The	34,322	755
Electric - 2.28%			McCormick & Co Inc/MD	111,532	4,932
AES Corp/The ^(a)	67,300	804	Safeway Inc	12,358	283
Allegheny Energy Inc	23,100	536	Sysco Corp	27,754	817
Ameren Corp	8,169	237	Tyson Foods Inc	9,642	150
American Electric Power Co Inc	14,235	533	Whole Foods Market Inc	7,000	278
Calpine Corp ^(a)	20,100	251		$ 19,009
CMS Energy Corp	7,916	145	Forest Products & Paper - 0.67%
Consolidated Edison Inc	6,507	324	International Paper Co	154,975	3,918
Constellation Energy Group Inc	19,427	587	MeadWestvaco Corp	5,899	152
Dominion Resources Inc/VA	13,477	586	Plum Creek Timber Co Inc	5,613	207
DTE Energy Co	5,438	254	Weyerhaeuser Co	37,885	614
Duke Energy Corp	29,402	535		$ 4,891
Edison International	10,740	396	Gas - 0.63%
Entergy Corp	12,749	951	CenterPoint Energy Inc	65,960	1,092
Exelon Corp	118,599	4,841	Nicor Inc	1,610	77
FirstEnergy Corp	7,100	258	NiSource Inc	15,407	267
Integrys Energy Group Inc	2,633	140	Sempra Energy	60,091	3,213
NextEra Energy Inc	13,747	756		$ 4,649
Northeast Utilities	5,766	180	Hand & Machine Tools - 0.02%
NRG Energy Inc ^(a)	8,631	172	Stanley Black & Decker Inc	2,800	174
Pepco Holdings Inc	12,298	237
PG&E Corp	8,340	399	Healthcare - Products - 2.98%
Pinnacle West Capital Corp	3,723	153	Baxter International Inc	24,033	1,224
PPL Corp	28,187	758	Becton Dickinson and Co	4,672	353
Progress Energy Inc	11,753	529	Boston Scientific Corp ^(a)	26,700	170
Public Service Enterprise Group Inc	16,062	520	CareFusion Corp ^(a)	3,950	95
Southern Co	16,715	633	Covidien PLC	5,525	220
TECO Energy Inc	22,926	404	CR Bard Inc	6,769	563
Wisconsin Energy Corp	3,937	234	DENTSPLY International Inc	11,052	347
Xcel Energy Inc	15,479	369	Edwards Lifesciences Corp ^(a)	49,120	3,139
	$ 16,722		Hospira Inc ^(a)	8,501	505
Electrical Components & Equipment - 0.36%			Intuitive Surgical Inc ^(a)	2,164	569
Emerson Electric Co	48,486	2,662	Johnson & Johnson	171,397	10,913
			Medtronic Inc	37,428	1,318
Electronics - 0.71%			Patterson Cos Inc	3,066	85
Agilent Technologies Inc ^(a)	8,500	296	St Jude Medical Inc ^(a)	9,300	356
Dolby Laboratories Inc ^(a)	43,400	2,677	Stryker Corp	21,189	1,049
FLIR Systems Inc ^(a)	5,323	148	Varian Medical Systems Inc ^(a)	3,987	252
Jabil Circuit Inc	6,363	98	Zimmer Holdings Inc ^(a)	15,450	733
PerkinElmer Inc	3,970	93		$ 21,891
Thermo Fisher Scientific Inc ^(a)	17,272	888
			Healthcare - Services - 0.78%
Tyco Electronics Ltd	16,225	514	Aetna Inc	13,417	401
Waters Corp ^(a)	6,400	474	CIGNA Corp	18,466	650
	$ 5,188		Coventry Health Care Inc ^(a)	5,101	120


Schedule of Investments
LargeCap Blend Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Healthcare - Services (continued)			Lodging (continued)
DaVita Inc ^(a)	8,304 $	596	Wynn Resorts Ltd	1,300 $	139
Humana Inc ^(a)	6,511	379		$ 1,653
Laboratory Corp of America Holdings ^(a)	4,606	375	Machinery - Construction & Mining - 0.23%
Quest Diagnostics Inc	4,953	243	Caterpillar Inc	18,565	1,459
Tenet Healthcare Corp ^(a)	27,840	121	Joy Global Inc	3,200	227
UnitedHealth Group Inc	51,397	1,853		$ 1,686
WellPoint Inc ^(a)	18,909	1,027
			Machinery - Diversified - 0.64%
	$ 5,765		Babcock & Wilcox Co ^(a)	2,400	55
Home Builders - 0.55%			Cummins Inc	38,199	3,365
DR Horton Inc	12,900	135	Deere & Co	8,511	654
Lennar Corp	6,300	91	Rockwell Automation Inc	10,100	630
Toll Brothers Inc ^(a)	213,780	3,835		$ 4,704
	$ 4,061		Media - 3.03%
Home Furnishings - 0.06%			Cablevision Systems Corp	11,400	305
Harman International Industries Inc ^(a)	8,400	282	CBS Corp	22,316	378
Whirlpool Corp	2,466	187	Comcast Corp - Class A	109,293	2,249
	$ 469		DIRECTV ^(a)	30,415	1,322
Housewares - 0.50%			Discovery Communications Inc - C Shares ^(a)	11,050	429
Newell Rubbermaid Inc	209,635	3,700	Gannett Co Inc	8,145	96
			McGraw-Hill Cos Inc/The	18,505	697
Insurance - 2.68%			New York Times Co/The ^(a)	4,116	32
ACE Ltd	8,052	478	News Corp - Class A	50,815	735
Aflac Inc	16,136	902	News Corp - Class B	318,010	5,114
Allstate Corp/The	34,635	1,056	Scripps Networks Interactive	3,083	157
Aon Corp	25,395	1,010	Time Warner Cable Inc	22,090	1,278
Assurant Inc	4,025	159	Time Warner Inc	57,965	1,884
Berkshire Hathaway Inc - Class A ^(a)	26	3,102	Viacom Inc	13,700	529
Berkshire Hathaway Inc - Class B ^(a)	66,749	5,310	Walt Disney Co/The	193,168	6,975
Chubb Corp	18,818	1,092	Washington Post Co/The	201	81
Cincinnati Financial Corp	5,609	165		$ 22,261
Hartford Financial Services Group Inc	6,400	153	Metal Fabrication & Hardware - 0.16%
Lincoln National Corp	4,600	113	Precision Castparts Corp	8,446	1,154
Loews Corp	19,305	763
Marsh & McLennan Cos Inc	35,170	878	Mining - 1.45%
MetLife Inc	44,919	1,812	Agnico-Eagle Mines Ltd	4,400	342
Progressive Corp/The	13,432	284	Barrick Gold Corp	6,300	303
Prudential Financial Inc	15,852	833	Freeport-McMoRan Copper & Gold Inc	50,341	4,766
Torchmark Corp	2,854	163	Newmont Mining Corp	79,698	4,851
Travelers Cos Inc/The	21,125	1,166	Titanium Metals Corp ^(a)	3,011	59
Unum Group	10,956	246	Vulcan Materials Co	8,800	321
	$ 19,685			$ 10,642
Internet - 3.06%			Miscellaneous Manufacturing - 4.02%
Akamai Technologies Inc ^(a)	10,873	562	3M Co	67,994	5,726
Amazon.com Inc ^(a)	18,969	3,133	Cooper Industries PLC	9,700	508
eBay Inc ^(a)	34,560	1,031	Danaher Corp	33,150	1,437
Expedia Inc	7,267	210	Dover Corp	6,140	326
Google Inc ^(a)	23,751	14,559	Eaton Corp	36,310	3,225
Liberty Media Corp - Interactive ^(a)	24,400	360	General Electric Co	697,561	11,175
McAfee Inc ^(a)	14,300	677	Honeywell International Inc	100,612	4,740
Priceline.com Inc ^(a)	2,289	862	Illinois Tool Works Inc	11,553	528
Symantec Corp ^(a)	26,574	430	Ingersoll-Rand PLC	8,400	330
VeriSign Inc ^(a)	5,762	200	ITT Corp	6,029	285
Yahoo! Inc ^(a)	27,146	448	Parker Hannifin Corp	5,300	406
	$ 22,472		Textron Inc	19,100	398
Iron & Steel - 0.18%			Tyco International Ltd	11,983	459
Allegheny Technologies Inc	3,180	168		$ 29,543
Cliffs Natural Resources Inc	8,315	542	Office & Business Equipment - 0.10%
Nucor Corp	8,500	325	Pitney Bowes Inc	7,141	157
United States Steel Corp	7,200	308	Xerox Corp	47,667	557
	$ 1,343			$ 714
Leisure Products & Services - 0.20%			Oil & Gas - 8.49%
Carnival Corp	19,175	828	Anadarko Petroleum Corp	12,659	779
Harley-Davidson Inc	20,731	636	Apache Corp	50,212	5,073
	$ 1,464		Cabot Oil & Gas Corp	3,281	95
Lodging - 0.23%			Chesapeake Energy Corp	13,165	286
Las Vegas Sands Corp ^(a)	4,800	220	Chevron Corp	93,020	7,684
Marriott International Inc/DE	23,839	884	ConocoPhillips	56,566	3,360
Starwood Hotels & Resorts Worldwide Inc	4,300	233	Denbury Resources Inc ^(a)	12,886	219
Wyndham Worldwide Corp	6,157	177	Devon Energy Corp	16,270	1,058
			Diamond Offshore Drilling Inc	40,930	2,708


Schedule of Investments
LargeCap Blend Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Oil & Gas (continued)			REITS (continued)
EOG Resources Inc	12,610 $	1,207	Kimco Realty Corp	21,200 $	365
EQT Corp	3,500	131	ProLogis	12,900	176
Exxon Mobil Corp	312,114	20,746	Public Storage Inc	7,108	705
Helmerich & Payne Inc	3,636	156	Simon Property Group Inc	15,577	1,496
Hess Corp	15,002	946	Ventas Inc	5,165	277
Marathon Oil Corp	16,675	593	Vornado Realty Trust	9,120	797
Murphy Oil Corp	18,999	1,238		$ 5,923
Nabors Industries Ltd ^(a)	9,766	204	Retail - 5.32%
Newfield Exploration Co ^(a)	74,000	4,412	AutoZone Inc ^(a)	3,580	851
Noble Energy Inc	5,750	469	Bed Bath & Beyond Inc ^(a)	26,336	1,156
Occidental Petroleum Corp	34,140	2,684	Best Buy Co Inc	7,790	335
Petroleo Brasileiro SA ADR	71,220	2,430	Big Lots Inc ^(a)	2,846	89
Pioneer Natural Resources Co	3,687	257	CarMax Inc ^(a)	1,500	46
QEP Resources Inc	5,567	184	Costco Wholesale Corp	8,759	550
Range Resources Corp	8,000	299	CVS Caremark Corp	57,829	1,741
Rowan Cos Inc ^(a)	3,920	129	Darden Restaurants Inc	4,813	220
Southwestern Energy Co ^(a)	15,100	511	Family Dollar Stores Inc	4,784	221
Suncor Energy Inc	12,600	403	GameStop Corp ^(a)	5,037	99
Total SA ADR	64,550	3,517	Gap Inc/The	44,676	849
Valero Energy Corp	33,981	610	Home Depot Inc	71,727	2,215
	$ 62,388		Kohl's Corp ^(a)	26,219	1,342
Oil & Gas Services - 2.09%			Lowe's Cos Inc	88,533	1,889
Baker Hughes Inc	27,792	1,287	Ltd Brands Inc	8,816	259
Cameron International Corp ^(a)	8,156	357	Macy's Inc	43,576	1,030
FMC Technologies Inc ^(a)	9,600	692	McDonald's Corp	46,357	3,605
Halliburton Co	100,526	3,203	Nordstrom Inc	5,448	210
National Oilwell Varco Inc	97,505	5,242	RadioShack Corp	4,316	87
Schlumberger Ltd	65,464	4,575	Ross Stores Inc	11,783	695
	$ 15,356		Staples Inc	270,369	5,534
Packaging & Containers - 0.10%			Starbucks Corp	44,166	1,258
Ball Corp	3,244	209	Target Corp	16,838	875
Bemis Co Inc	3,727	118	Tiffany & Co	4,290	227
Owens-Illinois Inc ^(a)	5,809	163	TJX Cos Inc	9,469	435
Pactiv Corp ^(a)	4,587	152	Urban Outfitters Inc ^(a)	4,469	138
Sealed Air Corp	5,478	127	Walgreen Co	41,156	1,395
	$ 769		Wal-Mart Stores Inc	180,655	9,786
Pharmaceuticals - 5.67%			Yum! Brands Inc	38,980	1,932
Abbott Laboratories	123,374	6,332		$ 39,069
Allergan Inc/United States	13,356	967	Savings & Loans - 0.05%
AmerisourceBergen Corp	196,387	6,445	Hudson City Bancorp Inc	16,301	190
Bristol-Myers Squibb Co	229,385	6,170	People's United Financial Inc	12,907	159
Cardinal Health Inc	18,014	625		$ 349
Cephalon Inc ^(a)	5,027	334	Semiconductors - 2.74%
Eli Lilly & Co	42,290	1,488	Advanced Micro Devices Inc ^(a)	101,266	742
Express Scripts Inc ^(a)	28,811	1,398	Analog Devices Inc	9,410	317
Forest Laboratories Inc ^(a)	14,268	471	Applied Materials Inc	125,505	1,551
McKesson Corp	15,864	1,047	ASML Holding NV	164,250	5,451
Medco Health Solutions Inc ^(a)	18,362	965	Broadcom Corp	8,554	348
Merck & Co Inc	126,223	4,580	Intel Corp	158,514	3,182
Novartis AG ADR	85,940	4,980	Linear Technology Corp	7,559	244
Pfizer Inc	324,053	5,639	LSI Corp ^(a)	21,638	113
Watson Pharmaceuticals Inc ^(a)	3,617	169	Marvell Technology Group Ltd ^(a)	5,900	114
	$ 41,610		MEMC Electronic Materials Inc ^(a)	4,100	52
Pipelines - 0.38%			Micron Technology Inc ^(a)	169,539	1,402
El Paso Corp	50,077	664	National Semiconductor Corp	77,717	1,065
Oneok Inc	3,584	179	Novellus Systems Inc ^(a)	3,099	90
Spectra Energy Corp	42,035	999	NVIDIA Corp ^(a)	32,300	389
Williams Cos Inc	42,835	922	QLogic Corp ^(a)	4,078	72
	$ 2,764		Teradyne Inc ^(a)	5,842	66
Real Estate - 0.02%			Texas Instruments Inc	137,645	4,070
CB Richard Ellis Group Inc ^(a)	8,910	163	Xilinx Inc	31,813	853
				$ 20,121
REITS - 0.81%			Software - 3.72%
Apartment Investment & Management Co	4,165	97	Adobe Systems Inc ^(a)	38,048	1,071
AvalonBay Communities Inc	3,689	392	Autodesk Inc ^(a)	141,307	5,112
Boston Properties Inc	4,580	395	BMC Software Inc ^(a)	6,020	274
Equity Residential	6,248	304	CA Inc	58,727	1,363
HCP Inc	9,685	349	Check Point Software Technologies Ltd ^(a)	2,000	86
Health Care REIT Inc	4,467	228	Citrix Systems Inc ^(a)	3,761	241
Host Hotels & Resorts Inc	21,530	342	Dun & Bradstreet Corp	1,790	133
			Electronic Arts Inc ^(a)	8,900	141


COMMON STOCKS (continued)	Shares Held Value (000's)					Maturity
Software (continued)						Amount
Fidelity National Information Services Inc	6,100 $		165	REPURCHASE AGREEMENTS (continued)		(000's)	Value (000's)
Fiserv Inc ^(a)	9,659		527	Banks (continued)
Intuit Inc ^(a)	9,521		457	Investment in Joint Trading Account; Morgan	$ 3,469		$ 3,469
Microsoft Corp	513,671		13,685	Stanley Repurchase Agreement; 0.20% dated
Oracle Corp	117,022		3,440	10/29/10 maturing 11/01/10 (collateralized by
Red Hat Inc ^(a)	9,000		380	Sovereign Agency Issues; $3,538,450; 1.88%
Salesforce.com Inc ^(a)	2,266		263	- 6.13%; dated 01/09/12 - 02/21/13)
		$ 27,338					$ 19,405
Telecommunications - 5.08%				TOTAL REPURCHASE AGREEMENTS			$ 19,405
American Tower Corp ^(a)	69,602		3,592	Total Investments			$ 732,483
AT&T Inc	280,876		8,005	Other Assets in Excess of Liabilities, Net - 0.27%			$ 1,965
CenturyLink Inc	9,695		401	TOTAL NET ASSETS - 100.00%			$ 734,448
Cisco Systems Inc ^(a)	254,064		5,800
Corning Inc	54,566		997
Crown Castle International Corp ^(a)	11,700		505	(a) Non-Income Producing Security
Frontier Communications Corp	31,980		281
Harris Corp	4,312		195
JDS Uniphase Corp ^(a)	32,248		339
Juniper Networks Inc ^(a)	157,564		5,103	Unrealized Appreciation (Depreciation)
Motorola Inc ^(a)	52,994		432	The net federal income tax unrealized appreciation (depreciation) and federal tax
NII Holdings Inc ^(a)	3,400		142	cost of investments held as of the period end were as follows:
Qualcomm Inc	69,416		3,133	Unrealized Appreciation			$ 81,720
Qwest Communications International Inc	58,585		387	Unrealized Depreciation			(33,883)
Sprint Nextel Corp ^(a)	133,600		550
				Net Unrealized Appreciation (Depreciation)			$ 47,837
Tellabs Inc	13,314		91	Cost for federal income tax purposes			$ 684,646
Verizon Communications Inc	220,173		7,149	All dollar amounts are shown in thousands (000's)
Windstream Corp	15,061		191
		$ 37,293		Portfolio Summary (unaudited)
Textiles - 0.04%				Sector			Percent
Cintas Corp	11,332		311	Consumer, Non-cyclical			22 .13%
				Financial			15 .42%
Toys, Games & Hobbies - 0.12%				Technology			12 .28%
Hasbro Inc	4,034		186	Energy			11 .50%
Mattel Inc	28,787		672	Industrial			11 .35%
		$ 858		Communications			11 .32%
Transportation - 2.05%				Consumer, Cyclical			8 .76%
CH Robinson Worldwide Inc	4,000		282	Basic Materials			4 .06%
CSX Corp	21,891		1,345	Utilities			2 .91%
Expeditors International of Washington Inc	4,700		232	Other Assets in Excess of Liabilities, Net			0 .27%
FedEx Corp	11,506		1,009	TOTAL NET ASSETS			100.00%
Norfolk Southern Corp	76,089		4,679
Ryder System Inc	4,700		205
Union Pacific Corp	25,016		2,193
United Parcel Service Inc	75,930		5,114
		$ 15,059
TOTAL COMMON STOCKS		$ 713,078
	Maturity
	Amount
REPURCHASE AGREEMENTS - 2.64%	(000's)	Value (000's)
Banks - 2.64%
Investment in Joint Trading Account; Bank of	$ 5,528	$ 5,528
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$5,638,926; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse	5,337		5,338
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $5,443,769; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche	5,070		5,070
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $5,171,579; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)


COMMON STOCKS - 99.37%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 1.60%			Mining - 1.80%
Boeing Co/The	527,000 $	37,227	Newmont Mining Corp	690,000 $		42,000

Automobile Manufacturers - 3.08%			Miscellaneous Manufacturing - 1.73%
Ford Motor Co ^(a)	5,068,988	71,625	General Electric Co	2,508,000		40,178

Banks - 5.56%			Oil & Gas Services - 1.04%
Fifth Third Bancorp	2,384,000	29,943	National Oilwell Varco Inc	450,000		24,192
Goldman Sachs Group Inc/The	310,328	49,947
Wells Fargo & Co	1,900,000	49,552	Pharmaceuticals - 3.21%
	$ 129,442		Allergan Inc/United States	329,000		23,823
Beverages - 4.33%			Bristol-Myers Squibb Co	1,036,000		27,868
Coca-Cola Co/The	930,000	57,028	Merck & Co Inc	633,000		22,965
PepsiCo Inc	671,000	43,816			$ 74,656
	$ 100,844		Retail - 9.90%
Biotechnology - 5.32%			Bed Bath & Beyond Inc ^(a)	1,151,000		50,529
Amgen Inc ^(a)	680,900	38,941	Best Buy Co Inc	1,026,000		44,098
Celgene Corp ^(a)	936,000	58,097	Home Depot Inc	1,555,000		48,018
Illumina Inc ^(a)	494,601	26,862	Kohl's Corp ^(a)	820,000		41,984
	$ 123,900		Starbucks Corp	1,611,000		45,881
Chemicals - 1.49%					$ 230,510
Potash Corp of Saskatchewan Inc	239,000	34,676	Semiconductors - 3.88%
			Broadcom Corp	2,215,000		90,239
Commercial Services - 4.04%
Mastercard Inc	206,481	49,568	Software - 4.26%
Visa Inc	569,532	44,520	Citrix Systems Inc ^(a)	188,500		12,077
	$ 94,088		Intuit Inc ^(a)	496,000		23,808
Computers - 10.19%			Oracle Corp	1,207,000		35,486
Apple Inc ^(a)	342,807	103,140	Red Hat Inc ^(a)	656,000		27,723
Cognizant Technology Solutions Corp ^(a)	707,035	46,092			$ 99,094
NetApp Inc ^(a)	1,155,388	61,524	Telecommunications - 2.44%
SanDisk Corp ^(a)	700,000	26,306	Juniper Networks Inc ^(a)	716,000		23,191
	$ 237,062		Qualcomm Inc	743,000		33,532
Cosmetics & Personal Care - 4.37%					$ 56,723
Estee Lauder Cos Inc/The	631,891	44,972	Transportation - 1.61%
Procter & Gamble Co	894,000	56,831	FedEx Corp	428,000		37,544
	$ 101,803
Diversified Financial Services - 2.20%			TOTAL COMMON STOCKS		$ 2,312,865
American Express Co	1,234,000	51,162		Maturity
				Amount
Electronics - 2.07%			REPURCHASE AGREEMENTS - 2.78%	(000's)	Value (000's)
Agilent Technologies Inc ^(a)	681,000	23,699	Banks - 2.78%
Thermo Fisher Scientific Inc ^(a)	475,491	24,450	Investment in Joint Trading Account; Bank of	$ 18,468	$ 18,468
	$ 48,149		America Repurchase Agreement; 0.22%
Food - 1.94%			dated 10/29/10 maturing 11/01/10
Whole Foods Market Inc	1,137,000	45,196	(collateralized by Sovereign Agency Issues;
			$18,836,667; 0.00% - 5.25%; dated 05/01/13
Healthcare - Products - 1.28%			- 04/15/42)
Intuitive Surgical Inc ^(a)	113,271	29,785	Investment in Joint Trading Account; Credit Suisse	17,828		17,828
			Repurchase Agreement; 0.21% dated
Internet - 11.13%			10/29/10 maturing 11/01/10 (collateralized by
Amazon.com Inc ^(a)	393,600	64,999	US Treasury Note; $18,184,744; 1.13%;
F5 Networks Inc ^(a)	440,000	51,788	dated 01/15/12)
Google Inc ^(a)	110,390	67,668	Investment in Joint Trading Account; Deutsche	16,937		16,937
Priceline.com Inc ^(a)	198,000	74,608	Bank Repurchase Agreement; 0.21% dated
	$ 259,063		10/29/10 maturing 11/01/10 (collateralized by
Iron & Steel - 1.02%			Sovereign Agency Issues; $17,275,506;
Allegheny Technologies Inc	451,000	23,763	0.38% - 3.75%; dated 12/06/10 - 01/29/15)
			Investment in Joint Trading Account; Morgan	11,589		11,588
Lodging - 4.66%			Stanley Repurchase Agreement; 0.20% dated
Las Vegas Sands Corp ^(a)	1,821,821	83,585	10/29/10 maturing 11/01/10 (collateralized by
Starwood Hotels & Resorts Worldwide Inc	461,000	24,959	Sovereign Agency Issues; $11,820,083;
	$ 108,544		1.88% - 6.13%; dated 01/09/12 - 02/21/13)
Machinery - Construction & Mining - 2.73%					$ 64,821
Caterpillar Inc	808,000	63,509	TOTAL REPURCHASE AGREEMENTS		$ 64,821
			Total Investments		$ 2,377,686
Machinery - Diversified - 2.49%			Liabilities in Excess of Other Assets, Net - (2.15)%		$ (50,057)
Deere & Co	753,784	57,891	TOTAL NET ASSETS - 100.00%		$ 2,327,629

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
LargeCap Growth Fund I
October 31, 2010




COMMON STOCKS - 96.26%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.05%			Chemicals (continued)
Interpublic Group of Cos Inc ^(a)	60,892 $	630	Albemarle Corp	11,446 $	574
Omnicom Group Inc	21,061	926	Ashland Inc	755	39
	$ 1,556		Celanese Corp	20,194	720
Aerospace & Defense - 0.40%			CF Industries Holdings Inc	6,410	785
Alliant Techsystems Inc ^(a)	3,732	285	Eastman Chemical Co	1,831	144
Boeing Co/The	45,157	3,190	Ecolab Inc	17,690	872
Goodrich Corp	4,579	376	EI du Pont de Nemours & Co	26,430	1,250
Lockheed Martin Corp	20,603	1,469	FMC Corp	5,952	435
Rockwell Collins Inc	10,073	609	International Flavors & Fragrances Inc	9,581	481
United Technologies Corp	74,041	5,536	Lubrizol Corp	5,715	586
	$ 11,465		Monsanto Co	40,826	2,426
Agriculture - 0.35%			Mosaic Co/The	111,837	8,182
Altria Group Inc	89,177	2,267	PPG Industries Inc	3,204	246
Philip Morris International Inc	134,947	7,894	Praxair Inc	329,250	30,073
	$ 10,161		RPM International Inc	8,731	181
Airlines - 0.08%			Sherwin-Williams Co/The	6,868	501
Copa Holdings SA	2,290	116	Sigma-Aldrich Corp	13,736	871
Delta Air Lines Inc ^(a)	66,386	922		$ 50,443
Southwest Airlines Co	12,362	170	Coal - 0.57%
United Continental Holdings Inc ^(a)	34,263	995	Alpha Natural Resources Inc ^(a)	1,832	83
	$ 2,203		Arch Coal Inc	14,193	349
Apparel - 1.58%			Peabody Energy Corp	294,900	15,600
Coach Inc	838,963	41,948	Walter Energy Inc	5,037	443
Hanesbrands Inc ^(a)	12,216	303		$ 16,475
Nike Inc	30,218	2,461	Commercial Services - 3.88%
Polo Ralph Lauren Corp	6,685	648	Apollo Group Inc ^(a)	16,024	601
	$ 45,360		Automatic Data Processing Inc	36,942	1,641
			Career Education Corp ^(a)	8,241	145
Automobile Manufacturers - 0.21%
Ford Motor Co ^(a)	281,571	3,979	DeVry Inc	8,025	384
Navistar International Corp ^(a)	8,698	419	Emergency Medical Services Corp ^(a)	3,662	199
Oshkosh Corp ^(a)	10,988	324	FTI Consulting Inc ^(a)	4,579	162
			Gartner Inc ^(a)	9,282	294
PACCAR Inc	25,131	1,288	Genpact Ltd ^(a)	1,759,112	27,970
	$ 6,010
			Global Payments Inc	10,366	404
Automobile Parts & Equipment - 0.10%			H&R Block Inc	16,941	200
Autoliv Inc	3,662	261
Johnson Controls Inc	53,567	1,881	Hillenbrand Inc	7,783	167
Lear Corp ^(a)	1,701	150	Iron Mountain Inc	22,271	485
			ITT Educational Services Inc ^(a)	4,572	295
TRW Automotive Holdings Corp ^(a)	6,409	293
			KAR Auction Services Inc ^(a)	2,247	29
WABCO Holdings Inc ^(a)	7,314	340
	$ 2,925		Lender Processing Services Inc	12,323	355
			Mastercard Inc	241,028	57,861
Banks - 2.41%			Moody's Corp	24,197	655
Bank of Hawaii Corp	1,903	82	Paychex Inc	24,101	668
Bank of New York Mellon Corp/The	1,063,019	26,639	Pharmaceutical Product Development Inc	12,854	332
JP Morgan Chase & Co	658,963	24,797	RR Donnelley & Sons Co	1,374	25
Morgan Stanley	36,756	914	SEI Investments Co	15,618	346
Wells Fargo & Co	652,876	17,027	Strayer Education Inc	1,697	237
	$ 69,459		Verisk Analytics Inc ^(a)	13,122	391
Beverages - 1.27%			Visa Inc	211,896	16,564
Coca-Cola Co/The	135,990	8,339	Weight Watchers International Inc	4,120	138
Dr Pepper Snapple Group Inc	9,156	334	Western Union Co/The	59,578	1,049
PepsiCo Inc	425,633	27,794		$ 111,597
	$ 36,467		Computers - 11.51%
Biotechnology - 1.35%			Accenture PLC - Class A	1,333,148	59,605
Celgene Corp ^(a)	372,308	23,110	Apple Inc ^(a)	483,610	145,504
Genzyme Corp ^(a)	15,109	1,090	Cognizant Technology Solutions Corp ^(a)	579,637	37,787
Gilead Sciences Inc ^(a)	70,333	2,790	Dell Inc ^(a)	151,263	2,175
Human Genome Sciences Inc ^(a)	167,300	4,497
Illumina Inc ^(a)	14,841	806	Diebold Inc	1,832	56
			DST Systems Inc	4,320	187
Life Technologies Corp (a)	15,963	801	EMC Corp/Massachusetts ^(a)	892,594	18,753
Myriad Genetics Inc ^(a)	12,418	247
Vertex Pharmaceuticals Inc ^(a)	146,739	5,624	Hewlett-Packard Co	212,649	8,944
			IBM Corp	111,172	15,964
	$ 38,965		IHS Inc ^(a)	6,151	444
Building Materials - 0.02%			MICROS Systems Inc ^(a)	9,917	450
Lennox International Inc	5,966	245	NCR Corp ^(a)	20,457	281
Masco Corp	13,666	146	NetApp Inc ^(a)	725,182	38,616
Owens Corning Inc ^(a)	7,783	210	SanDisk Corp ^(a)	30,302	1,139
	$ 601		Seagate Technology PLC ^(a)	39,042	572
Chemicals - 1.75%			Teradata Corp ^(a)	18,155	715
Air Products & Chemicals Inc	15,592	1,325	Western Digital Corp ^(a)	6,410	205
Airgas Inc	10,603	752		$ 331,397


Schedule of Investments
LargeCap Growth Fund I
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Consumer Products - 0.13%			Entertainment - 0.01%
Avery Dennison Corp	916 $	33	Bally Technologies Inc ^(a)	7,015 $	253
Church & Dwight Co Inc	8,635	569
Clorox Co	11,446	762	Environmental Control - 1.29%
Kimberly-Clark Corp	28,377	1,797	Nalco Holding Co	17,818	502
Scotts Miracle-Gro Co/The	5,759	307	Republic Services Inc	12,341	368
Tupperware Brands Corp	7,783	349	Stericycle Inc ^(a)	506,772	36,356
	$ 3,817			$ 37,226
Cosmetics & Personal Care - 0.44%			Food - 0.20%
Avon Products Inc	31,938	973	Campbell Soup Co	13,735	498
Colgate-Palmolive Co	30,153	2,325	ConAgra Foods Inc	5,494	123
Estee Lauder Cos Inc/The	13,433	956	General Mills Inc	29,144	1,094
Procter & Gamble Co	132,503	8,423	Hershey Co/The	11,409	565
	$ 12,677		HJ Heinz Co	16,010	786
Distribution & Wholesale - 0.45%			Kellogg Co	21,506	1,081
Fastenal Co	220,900	11,372	McCormick & Co Inc/MD	8,163	361
Fossil Inc ^(a)	6,409	378	Sysco Corp	44,131	1,300
LKQ Corp ^(a)	17,402	378		$ 5,808
WESCO International Inc ^(a)	2,868	123	Forest Products & Paper - 0.04%
WW Grainger Inc	5,037	625	International Paper Co	29,301	741
	$ 12,876		Plum Creek Timber Co Inc	7,495	276
Diversified Financial Services - 2.88%			Rayonier Inc	2,903	151
American Express Co	244,081	10,120		$ 1,168
Ameriprise Financial Inc	6,409	331	Hand & Machine Tools - 0.01%
BlackRock Inc	1,438	246	Regal-Beloit Corp	4,120	238
Charles Schwab Corp/The	2,101,715	32,367
Eaton Vance Corp	15,034	432	Healthcare - Products - 3.16%
Federated Investors Inc	7,326	182	Alcon Inc	5,951	998
Franklin Resources Inc	240,911	27,633	Baxter International Inc	36,484	1,857
IntercontinentalExchange Inc ^(a)	81,309	9,340	Becton Dickinson and Co	20,047	1,514
Invesco Ltd	16,109	370	CareFusion Corp ^(a)	5,036	122
NASDAQ OMX Group Inc/The ^(a)	1,832	38	Covidien PLC	41,663	1,661
NYSE Euronext	7,160	219	CR Bard Inc	7,784	647
T Rowe Price Group Inc	22,500	1,244	DENTSPLY International Inc	19,157	601
Waddell & Reed Financial Inc	11,100	323	Edwards Lifesciences Corp ^(a)	23,622	1,510
	$ 82,845		Gen-Probe Inc ^(a)	6,124	297
Electric - 0.02%			Hill-Rom Holdings Inc	6,409	248
Calpine Corp ^(a)	20,144	252	Hospira Inc ^(a)	13,555	806
ITC Holdings Corp	5,495	344	IDEXX Laboratories Inc ^(a)	482,028	28,902
	$ 596		Intuitive Surgical Inc ^(a)	117,305	30,846
Electrical Components & Equipment - 0.85%			Johnson & Johnson	34,339	2,186
AMETEK Inc	12,960	700	Kinetic Concepts Inc ^(a)	458	17
Emerson Electric Co	428,788	23,541	Medtronic Inc	70,966	2,499
Hubbell Inc	3,204	173	Patterson Cos Inc	12,961	358
	$ 24,414		ResMed Inc ^(a)	19,260	614
			St Jude Medical Inc ^(a)	23,997	919
Electronics - 2.04%
Agilent Technologies Inc ^(a)	25,657	893	Stryker Corp	270,961	13,410
			Thoratec Corp ^(a)	7,325	239
Amphenol Corp	721,523	36,170	Varian Medical Systems Inc ^(a)	10,531	666
AVX Corp	1,356	19
FLIR Systems Inc ^(a)	19,477	542		$ 90,917
Garmin Ltd	916	30	Healthcare - Services - 2.75%
Gentex Corp	17,700	354	Community Health Systems Inc ^(a)	5,989	180
Mettler-Toledo International Inc ^(a)	4,100	535	Covance Inc ^(a)	889,564	41,800
PerkinElmer Inc	3,263	76	DaVita Inc ^(a)	485,601	34,843
Thomas & Betts Corp ^(a)	916	40	Health Management Associates Inc ^(a)	31,809	255
Trimble Navigation Ltd ^(a)	534,812	19,168	Laboratory Corp of America Holdings ^(a)	9,149	744
Waters Corp ^(a)	11,477	851	Lincare Holdings Inc	10,764	282
	$ 58,678		Quest Diagnostics Inc	15,931	783
			Tenet Healthcare Corp ^(a)	42,027	183
Energy - Alternate Sources - 0.23%
First Solar Inc ^(a)	47,159	6,493		$ 79,070
			Home Builders - 0.02%
			NVR Inc ^(a)	742	466
Engineering & Contruction - 2.37%
ABB Ltd ADR^(a)	1,739,233	35,985
Aecom Technology Corp ^(a)	3,663	97	Home Furnishings - 0.02%
Chicago Bridge & Iron Co NV ^(a)	5,036	127	Tempur-Pedic International Inc ^(a)	9,156	316
Jacobs Engineering Group Inc ^(a)	818,792	31,613	Whirlpool Corp	4,120	312
McDermott International Inc ^(a)	22,893	353		$ 628
Shaw Group Inc/The ^(a)	6,170	189	Housewares - 0.01%
	$ 68,364		Toro Co	4,316	245


Schedule of Investments
LargeCap Growth Fund I
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Insurance - 0.19%			Metal Fabrication & Hardware - 0.78%
ACE Ltd	6,409 $	381	Precision Castparts Corp	162,084 $	22,138
Aflac Inc	37,543	2,098	Timken Co	7,783	322
Aon Corp	7,520	299		$ 22,460
Arthur J Gallagher & Co	3,205	90	Mining - 0.54%
Axis Capital Holdings Ltd	4,815	164	Freeport-McMoRan Copper & Gold Inc	136,966	12,968
Brown & Brown Inc	7,326	163	Newmont Mining Corp	39,859	2,426
Endurance Specialty Holdings Ltd	458	19	Titanium Metals Corp ^(a)	10,530	207
Erie Indemnity Co	2,657	152		$ 15,601
Marsh & McLennan Cos Inc	41,198	1,029	Miscellaneous Manufacturing - 3.42%
MetLife Inc	16,851	680	3M Co	224,705	18,925
Travelers Cos Inc/The	7,325	404	Carlisle Cos Inc	458	16
Validus Holdings Ltd	1,748	50	Cooper Industries PLC	14,193	744
	$ 5,529		Danaher Corp	1,547,943	67,118
Internet - 8.44%			Donaldson Co Inc	9,394	458
Akamai Technologies Inc ^(a)	158,629	8,196	Dover Corp	14,651	778
Amazon.com Inc ^(a)	329,458	54,407	Eaton Corp	5,494	488
Baidu Inc/China ADR^(a)	100,000	11,001	General Electric Co	215,036	3,445
Ctrip.com International Ltd ADR^(a)	95,900	4,993	Honeywell International Inc	65,311	3,077
eBay Inc ^(a)	37,507	1,118	Illinois Tool Works Inc	37,085	1,695
Expedia Inc	10,531	305	Pall Corp	15,164	647
F5 Networks Inc ^(a)	5,885	693	Parker Hannifin Corp	5,494	421
Google Inc ^(a)	218,451	133,908	Pentair Inc	6,249	204
Liberty Media Corp - Interactive ^(a)	788,300	11,635	Tyco International Ltd	9,156	350
McAfee Inc ^(a)	11,460	542		$ 98,366
NetFlix Inc ^(a)	5,157	895
			Office & Business Equipment - 0.01%
Priceline.com Inc ^(a)	35,984	13,559	Pitney Bowes Inc	18,313	402
Symantec Corp ^(a)	9,157	148
VeriSign Inc ^(a)	22,893	796
			Oil & Gas - 4.35%
Yahoo! Inc ^(a)	43,037	711	Atlas Energy Inc ^(a)	6,977	203
	$ 242,907		Atwood Oceanics Inc ^(a)	1,374	45
Iron & Steel - 0.03%			Canadian Natural Resources Ltd	992,622	36,201
Cliffs Natural Resources Inc	11,446	746	Chevron Corp	9,156	756
			Cimarex Energy Co	10,530	808
Leisure Products & Services - 0.62%			Concho Resources Inc/Midland TX ^(a)	11,153	766
Carnival Corp	393,000	16,966	ConocoPhillips	48,073	2,856
Harley-Davidson Inc	28,687	880	EOG Resources Inc	315,944	30,242
	$ 17,846		EQT Corp	18,550	694
Lodging - 1.64%			Exxon Mobil Corp	387,858	25,781
Las Vegas Sands Corp ^(a)	279,549	12,826	Holly Corp	3,830	125
Marriott International Inc/DE	635,421	23,542	Marathon Oil Corp	23,349	831
Starwood Hotels & Resorts Worldwide Inc	202,616	10,970	Murphy Oil Corp	2,747	179
	$ 47,338		Nabors Industries Ltd ^(a)	14,193	297
Machinery - Construction & Mining - 0.17%			Occidental Petroleum Corp	13,735	1,080
Bucyrus International Inc	9,156	624	Pride International Inc ^(a)	10,453	317
Caterpillar Inc	46,241	3,634	Range Resources Corp	203,500	7,609
Joy Global Inc	8,890	631	Rowan Cos Inc ^(a)	2,566	84
	$ 4,889		SM Energy Co	5,494	229
			Southwestern Energy Co ^(a)	25,552	865
Machinery - Diversified - 1.70%
Babcock & Wilcox Co ^(a)	11,593	265	Suncor Energy Inc	472,543	15,126
Cummins Inc	17,411	1,534		$ 125,094
Deere & Co	33,880	2,602	Oil & Gas Services - 4.39%
Gardner Denver Inc	5,951	344	Baker Hughes Inc	14,324	664
IDEX Corp	6,141	222	Cameron International Corp ^(a)	18,670	817
Rockwell Automation Inc	126,220	7,872	Dresser-Rand Group Inc ^(a)	9,078	311
Roper Industries Inc	521,693	36,221	FMC Technologies Inc ^(a)	511,730	36,895
	$ 49,060		Halliburton Co	76,459	2,436
Media - 0.87%			Schlumberger Ltd	1,208,727	84,478
CBS Corp	10,072	171	Weatherford International Ltd ^(a)	37,085	623
DIRECTV ^(a)	75,085	3,263		$ 126,224
Discovery Communications Inc - A Shares ^(a)	15,108	674	Packaging & Containers - 0.03%
Factset Research Systems Inc	5,951	522	Ball Corp	2,290	147
John Wiley & Sons Inc	5,333	230	Crown Holdings Inc ^(a)	20,632	664
McGraw-Hill Cos Inc/The	18,371	692	Owens-Illinois Inc ^(a)	6,410	180
News Corp - Class A	59,519	861		$ 991
Scripps Networks Interactive	10,988	559	Pharmaceuticals - 3.91%
Time Warner Inc	17,397	566	Abbott Laboratories	116,765	5,992
Viacom Inc	14,650	565	Allergan Inc/United States	784,179	56,783
Walt Disney Co/The	467,606	16,885	AmerisourceBergen Corp	24,271	797
	$ 24,988		Cardinal Health Inc	15,566	540
			Eli Lilly & Co	19,688	693


Schedule of Investments
LargeCap Growth Fund I
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Pharmaceuticals (continued)			Savings & Loans - 0.00%
Express Scripts Inc ^(a)	371,560 $	18,028	Hudson City Bancorp Inc	5,037 $	59
Herbalife Ltd	7,940	507
McKesson Corp	387,778	25,585	Semiconductors - 3.10%
Medco Health Solutions Inc ^(a)	38,001	1,996	Advanced Micro Devices Inc ^(a)	28,387	208
Omnicare Inc	1,374	33	Altera Corp	21,977	686
Perrigo Co	10,282	677	Analog Devices Inc	25,679	865
SXC Health Solutions Corp ^(a)	7,777	303	Applied Materials Inc	1,692,038	20,913
VCA Antech Inc ^(a)	10,616	220	ASML Holding NV	306,451	10,171
Warner Chilcott PLC	11,433	275	Atmel Corp ^(a)	51,278	454
	$ 112,429		Avago Technologies Ltd	13,482	333
Pipelines - 0.03%			Broadcom Corp	287,953	11,731
El Paso Corp	15,775	209	Cree Inc ^(a)	101,200	5,191
Williams Cos Inc	29,759	641	Intel Corp	345,639	6,937
	$ 850		Lam Research Corp ^(a)	15,416	706
Real Estate - 0.04%			Linear Technology Corp	16,482	531
CB Richard Ellis Group Inc ^(a)	34,735	638	Marvell Technology Group Ltd ^(a)	929,476	17,948
Jones Lang LaSalle Inc	5,036	393	Micron Technology Inc ^(a)	962,100	7,957
	$ 1,031		National Semiconductor Corp	29,614	406
			Novellus Systems Inc ^(a)	10,381	303
REITS - 0.16%			ON Semiconductor Corp ^(a)	54,216	416
Apartment Investment & Management Co	7,325	171	QLogic Corp ^(a)	15,326	269
Digital Realty Trust Inc	9,815	586	Rambus Inc ^(a)	12,819	253
Equity Residential	2,289	111	Skyworks Solutions Inc ^(a)	21,976	504
Essex Property Trust Inc	1,373	155	Teradyne Inc ^(a)	22,325	251
Federal Realty Investment Trust	4,578	375
Public Storage Inc	10,989	1,091	Texas Instruments Inc	48,989	1,449
Simon Property Group Inc	16,940	1,627	Xilinx Inc	24,220	649
Ventas Inc	5,494	294		$ 89,131
Vornado Realty Trust	1,831	160	Software - 3.92%
	$ 4,570		Activision Blizzard Inc	17,126	197
			Adobe Systems Inc ^(a)	39,189	1,103
Retail - 6.47%			Allscripts Healthcare Solutions Inc ^(a)	16,332	312
Advance Auto Parts Inc	11,329	736	ANSYS Inc ^(a)	412,362	18,659
Aeropostale Inc (a)	12,130	296	Autodesk Inc ^(a)	19,875	719
AutoZone Inc ^(a)	3,391	806	BMC Software Inc ^(a)	15,708	714
Bed Bath & Beyond Inc ^(a)	286,863	12,593	Broadridge Financial Solutions Inc	11,235	247
Best Buy Co Inc	28,997	1,246	CA Inc	39,126	908
Big Lots Inc ^(a)	10,072	316	Cerner Corp ^(a)	8,698	764
Brinker International Inc	13,173	244	Citrix Systems Inc ^(a)	527,057	33,769
Chipotle Mexican Grill Inc ^(a)	28,809	6,056	Compuware Corp ^(a)	15,566	156
Copart Inc ^(a)	9,175	311	Dun & Bradstreet Corp	6,506	484
Costco Wholesale Corp	642,567	40,334	Emdeon Inc ^(a)	2,669	36
Darden Restaurants Inc	17,359	793	Intuit Inc ^(a)	24,170	1,160
Dick's Sporting Goods Inc^(a)	11,078	319	Microsoft Corp	444,252	11,835
Dollar Tree Inc ^(a)	15,795	810	MSCI Inc ^(a)	13,991	502
Family Dollar Stores Inc	18,087	835
Gap Inc/The	34,339	653	Oracle Corp	326,948	9,612
Guess? Inc	7,526	293	Red Hat Inc ^(a)	16,193	684
Home Depot Inc	142,846	4,411	Salesforce.com Inc ^(a)	261,816	30,389
J Crew Group Inc ^(a)	6,867	220	VMware Inc ^(a)	9,156	700
Kohl's Corp ^(a)	19,230	985		$ 112,950
Lowe's Cos Inc	793,080	16,917	Telecommunications - 7.24%
Ltd Brands Inc	22,671	666	Amdocs Ltd ^(a)	7,325	225
Macy's Inc	5,036	119	American Tower Corp ^(a)	257,284	13,278
McDonald's Corp	89,232	6,940	Atheros Communications Inc ^(a)	8,521	264
Nordstrom Inc	21,275	819	Cisco Systems Inc ^(a)	2,029,190	46,326
O'Reilly Automotive Inc ^(a)	187,625	10,976	Corning Inc	612,666	11,200
Panera Bread Co ^(a)	3,547	318	Crown Castle International Corp ^(a)	404,254	17,432
PetSmart Inc	14,651	548	Frontier Communications Corp	46,760	411
Ross Stores Inc	14,911	880	Harris Corp	16,024	724
Staples Inc	61,768	1,264	JDS Uniphase Corp ^(a)	26,292	276
Starbucks Corp	797,420	22,711	Juniper Networks Inc ^(a)	996,162	32,266
Target Corp	62,267	3,234	MetroPCS Communications Inc ^(a)	15,108	157
Tiffany & Co	14,638	776	NeuStar Inc ^(a)	9,320	240
TJX Cos Inc	34,339	1,576	NII Holdings Inc ^(a)	16,482	689
Tractor Supply Co	9,156	363	Qualcomm Inc	1,854,415	83,690
Urban Outfitters Inc ^(a)	1,137,897	35,013	SBA Communications Corp ^(a)	15,021	590
Walgreen Co	77,142	2,614	tw telecom inc ^(a)	19,229	354
Wal-Mart Stores Inc	106,671	5,778	Windstream Corp	26,148	331
Williams-Sonoma Inc	11,903	385		$ 208,453
Yum! Brands Inc	38,771	1,921	Toys, Games & Hobbies - 0.05%
	$ 186,075		Hasbro Inc	16,024	741


Schedule of Investments
LargeCap Growth Fund I
October 31, 2010


				Portfolio Summary (unaudited)
				Sector			Percent
COMMON STOCKS (continued)	Shares Held Value (000's)			Technology			18 .54%
Toys, Games & Hobbies (continued)
Mattel Inc	26,097 $		609	Consumer, Non-cyclical			17 .44%
				Communications			16 .60%
		$ 1,350		Industrial			14 .79%
Transportation - 1.71%				Consumer, Cyclical			11 .26%
CH Robinson Worldwide Inc	12,678		894	Energy			9 .57%
Expeditors International of Washington Inc	485,496		23,964	Financial			8 .79%
FedEx Corp	14,857		1,303	Basic Materials			2 .36%
Frontline Ltd/Bermuda	5,494		158	Utilities			0 .02%
JB Hunt Transport Services Inc	11,578		416	Other Assets in Excess of Liabilities, Net			0 .63%
Union Pacific Corp	8,034		705	TOTAL NET ASSETS			100.00%
United Parcel Service Inc	320,086		21,555
UTI Worldwide Inc	10,530		202
		$ 49,197
TOTAL COMMON STOCKS		$ 2,770,399
	Maturity
	Amount
REPURCHASE AGREEMENTS - 3.11%	(000's)	Value (000's)
Banks - 3.11%
Investment in Joint Trading Account; Bank of	$ 25,478	$ 25,477
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$25,986,777; 0.00% - 5.25%; dated 05/01/13
- 04/15/42)
Investment in Joint Trading Account; Credit Suisse	24,596		24,596
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $25,087,394; 1.13%;
dated 01/15/12)
Investment in Joint Trading Account; Deutsche	23,366		23,365
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $23,833,023;
0.38% - 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan	15,987		15,987
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $16,306,805;
1.88% - 6.13%; dated 01/09/12 - 02/21/13)
		$ 89,425
TOTAL REPURCHASE AGREEMENTS		$ 89,425
Total Investments		$ 2,859,824
Other Assets in Excess of Liabilities, Net - 0.63%		$ 18,173
TOTAL NET ASSETS - 100.00%		$ 2,877,997


(a) Non-Income Producing Security



Unrealized Appreciation (Depreciation)
The net federal income tax unrealized appreciation (depreciation) and federal tax
cost of investments held as of the period end were as follows:

Unrealized Appreciation		$ 504,338
Unrealized Depreciation			(55,801)
Net Unrealized Appreciation (Depreciation)		$ 448,537
Cost for federal income tax purposes		$ 2,411,287
All dollar amounts are shown in thousands (000's)


Futures Contracts

							Unrealized
Type	Long/Short		Contracts	Notional Value	Current Market Value	Appreciation/(Depreciation)
S&P 500 eMini; December 2010	Long		1,835	$ 104,067 $	108,237	$ 4,170
						$ 4,170

All dollar amounts are shown in thousands (000's)


Schedule of Investments
LargeCap Growth Fund II
October 31, 2010




COMMON STOCKS - 96.76%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.07%			Chemicals (continued)
Interpublic Group of Cos Inc ^(a)	38,772 $	401	Airgas Inc	6,751 $	479
Omnicom Group Inc	13,410	590	Albemarle Corp	7,288	365
	$ 991		Ashland Inc	500	26
Aerospace & Defense - 0.99%			Celanese Corp	12,862	459
Alliant Techsystems Inc ^(a)	2,376	181	CF Industries Holdings Inc	4,082	500
Boeing Co/The	28,753	2,031	Eastman Chemical Co	1,166	92
Goodrich Corp	2,916	240	Ecolab Inc	11,267	556
Lockheed Martin Corp	13,119	935	EI du Pont de Nemours & Co	133,908	6,331
Rockwell Collins Inc	110,418	6,681	FMC Corp	3,790	277
United Technologies Corp	47,145	3,525	International Flavors & Fragrances Inc	6,102	306
	$ 13,593		Lubrizol Corp	3,639	373
Agriculture - 0.47%			Monsanto Co	26,003	1,545
Altria Group Inc	56,783	1,443	Mosaic Co/The	7,517	550
Philip Morris International Inc	85,927	5,027	PPG Industries Inc	100,933	7,741
	$ 6,470		Praxair Inc	16,322	1,491
Airlines - 0.10%			RPM International Inc	5,560	115
Copa Holdings SA	1,458	74	Sherwin-Williams Co/The	4,373	319
Delta Air Lines Inc ^(a)	42,270	587	Sigma-Aldrich Corp	59,336	3,763
Southwest Airlines Co	7,872	108		$ 26,132
United Continental Holdings Inc ^(a)	21,819	634	Coal - 0.04%
	$ 1,403		Alpha Natural Resources Inc ^(a)	1,167	53
Apparel - 1.34%			Arch Coal Inc	9,037	222
Coach Inc	16,326	816	Walter Energy Inc	3,207	282
Hanesbrands Inc ^(a)	7,781	193		$ 557
Nike Inc	208,151	16,952	Commercial Services - 1.48%
Polo Ralph Lauren Corp	4,258	413	Apollo Group Inc ^(a)	10,203	382
	$ 18,374		Automatic Data Processing Inc	23,523	1,045
			Career Education Corp ^(a)	5,248	92
Automobile Manufacturers - 0.58%
Ford Motor Co ^(a)	473,072	6,684	DeVry Inc	5,111	245
Navistar International Corp ^(a)	5,538	267	Emergency Medical Services Corp ^(a)	2,332	127
Oshkosh Corp ^(a)	6,996	206	FTI Consulting Inc ^(a)	2,916	103
			Gartner Inc ^(a)	5,910	187
PACCAR Inc	16,006	821
	$ 7,978		Global Payments Inc	6,602	257
			H&R Block Inc	10,787	127
Automobile Parts & Equipment - 0.77%			Hillenbrand Inc	4,955	107
Autoliv Inc	2,332	166
BorgWarner Inc ^(a)	155,684	8,735	Iron Mountain Inc	14,181	309
			ITT Educational Services Inc ^(a)	2,911	188
Johnson Controls Inc	34,107	1,198	KAR Auction Services Inc ^(a)	1,430	18
Lear Corp ^(a)	1,083	96
TRW Automotive Holdings Corp ^(a)	4,081	187	Lender Processing Services Inc	7,849	226
WABCO Holdings Inc ^(a)	4,658	216	Mastercard Inc	31,205	7,492
	$ 10,598		Moody's Corp	15,412	417
			Paychex Inc	15,351	425
Banks - 1.22%			Pharmaceutical Product Development Inc	8,185	211
Bank of Hawaii Corp	1,212	52	RR Donnelley & Sons Co	875	16
Goldman Sachs Group Inc/The	18,435	2,967	SEI Investments Co	9,948	220
JP Morgan Chase & Co	349,604	13,156	Strayer Education Inc	1,080	151
Morgan Stanley	23,403	582	Verisk Analytics Inc ^(a)	8,355	249
	$ 16,757		Visa Inc	89,243	6,977
Beverages - 5.13%			Weight Watchers International Inc	2,623	88
Coca-Cola Co/The	683,573	41,917	Western Union Co/The	37,955	668
Dr Pepper Snapple Group Inc	5,830	213		$ 20,327
PepsiCo Inc	433,414	28,302
	$ 70,432		Computers - 8.89%
			Accenture PLC - Class A	376,473	16,832
Biotechnology - 1.03%			Apple Inc ^(a)	191,491	57,613
Alexion Pharmaceuticals Inc ^(a)	19,735	1,348	Cognizant Technology Solutions Corp ^(a)	14,003	913
Amgen Inc ^(a)	58,599	3,351	Dell Inc ^(a)	96,345	1,385
Celgene Corp ^(a)	21,661	1,344
Genzyme Corp ^(a)	9,621	694	Diebold Inc	1,167	36
(a)			DST Systems Inc	2,750	119
Gilead Sciences Inc	146,217	5,801	EMC Corp/Massachusetts ^(a)	593,783	12,476
Illumina Inc ^(a)	9,450	513
Life Technologies Corp ^(a)	10,164	510	Hewlett-Packard Co	135,397	5,695
			IBM Corp	122,398	17,577
Myriad Genetics Inc (a)	7,907	158	IHS Inc ^(a)	3,916	283
Vertex Pharmaceuticals Inc ^(a)	9,260	355	MICROS Systems Inc ^(a)	6,315	287
	$ 14,074		NCR Corp ^(a)	13,028	179
Building Materials - 0.03%			NetApp Inc ^(a)	133,374	7,102
Lennox International Inc	3,799	156	SanDisk Corp ^(a)	13,053	490
Masco Corp	8,701	93	Seagate Technology PLC ^(a)	24,868	364
Owens Corning Inc ^(a)	4,955	134	Teradata Corp ^(a)	11,563	455
	$ 383		Western Digital Corp ^(a)	4,082	131
Chemicals - 1.90%				$ 121,937
Air Products & Chemicals Inc	9,928	844


Schedule of Investments
LargeCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Consumer Products - 0.18%			Entertainment - 0.01%
Avery Dennison Corp	584 $	21	Bally Technologies Inc ^(a)	4,466 $	161
Church & Dwight Co Inc	5,498	362
Clorox Co	7,288	485	Environmental Control - 0.04%
Kimberly-Clark Corp	18,069	1,145	Nalco Holding Co	11,347	320
Scotts Miracle-Gro Co/The	3,667	196	Republic Services Inc	7,857	234
Tupperware Brands Corp	4,955	222		$ 554
	$ 2,431		Food - 2.20%
Cosmetics & Personal Care - 2.72%			Campbell Soup Co	8,745	317
Avon Products Inc	20,341	619	ConAgra Foods Inc	3,498	79
Colgate-Palmolive Co	114,325	8,817	General Mills Inc	134,486	5,049
Estee Lauder Cos Inc/The	60,041	4,273	Hershey Co/The	72,350	3,580
Procter & Gamble Co	370,885	23,577	HJ Heinz Co	10,194	501
	$ 37,286		Kellogg Co	185,334	9,315
Distribution & Wholesale - 0.07%			Kraft Foods Inc	318,300	10,271
Fossil Inc ^(a)	4,081	241	McCormick & Co Inc/MD	5,197	230
LKQ Corp ^(a)	11,081	241	Sysco Corp	28,108	828
WESCO International Inc ^(a)	1,852	79		$ 30,170
WW Grainger Inc	3,207	398	Forest Products & Paper - 0.05%
	$ 959		International Paper Co	18,657	472
Diversified Financial Services - 1.82%			Plum Creek Timber Co Inc	4,773	176
American Express Co	376,220	15,598	Rayonier Inc	1,848	96
Ameriprise Financial Inc	4,081	211		$ 744
BlackRock Inc	18,364	3,140	Hand & Machine Tools - 0.01%
Charles Schwab Corp/The	184,791	2,846	Regal-Beloit Corp	2,623	151
Eaton Vance Corp	9,576	275
Federated Investors Inc	4,665	116	Healthcare - Products - 3.45%
Franklin Resources Inc	7,871	903	Alcon Inc	3,789	635
IntercontinentalExchange Inc ^(a)	4,081	469	Baxter International Inc	23,231	1,182
Invesco Ltd	10,257	236	Becton Dickinson and Co	12,765	964
NASDAQ OMX Group Inc/The ^(a)	1,167	25	Bruker BioSciences Corp ^(a)	66,743	1,000
NYSE Euronext	4,559	140	CareFusion Corp ^(a)	3,206	77
T Rowe Price Group Inc	14,331	792	Covidien PLC	168,644	6,724
Waddell & Reed Financial Inc	7,070	205	CR Bard Inc	4,956	412
	$ 24,956		DENTSPLY International Inc	12,201	383
Electric - 0.03%			Edwards Lifesciences Corp ^(a)	34,775	2,223
Calpine Corp ^(a)	12,826	160	Gen-Probe Inc ^(a)	37,424	1,813
ITC Holdings Corp	3,499	219	Hill-Rom Holdings Inc	4,081	158
	$ 379		Hospira Inc ^(a)	8,634	514
			IDEXX Laboratories Inc ^(a)	4,664	280
Electrical Components & Equipment - 1.50%
AMETEK Inc	8,252	446	Intuitive Surgical Inc ^(a)	10,523	2,767
Emerson Electric Co	365,142	20,046	Johnson & Johnson	21,865	1,392
Hubbell Inc	2,040	110	Kinetic Concepts Inc ^(a)	292	11
	$ 20,602		Masimo Corp	43,840	1,323
Electronics - 0.60%			Medtronic Inc	45,186	1,591
Agilent Technologies Inc ^(a)	16,341	569	Patterson Cos Inc	8,256	228
			ResMed Inc ^(a)	12,263	391
Amphenol Corp	8,158	409	St Jude Medical Inc ^(a)	15,280	585
AVX Corp	897	13
FLIR Systems Inc ^(a)	12,401	345	Stryker Corp	396,017	19,599
			Thoratec Corp ^(a)	4,664	152
Garmin Ltd	584	19	Varian Medical Systems Inc ^(a)	6,705	424
Gentex Corp	11,270	225	Zimmer Holdings Inc ^(a)	51,491	2,443
Jabil Circuit Inc	207,415	3,182
Mettler-Toledo International Inc ^(a)	2,611	341		$ 47,271
PerkinElmer Inc	2,108	49	Healthcare - Services - 0.22%
Thermo Fisher Scientific Inc ^(a)	49,110	2,525	Aetna Inc	26,223	783
Thomas & Betts Corp ^(a)	584	25	Community Health Systems Inc ^(a)	3,815	115
Waters Corp ^(a)	7,307	542	Covance Inc ^(a)	5,085	239
			DaVita Inc ^(a)	5,684	408
	$ 8,244		Health Management Associates Inc ^(a)	20,259	162
Energy - Alternate Sources - 0.03%			Laboratory Corp of America Holdings ^(a)	5,827	474
First Solar Inc ^(a)	2,591	357	Lincare Holdings Inc	6,855	180
Engineering & Contruction - 1.15%			Quest Diagnostics Inc	10,143	498
Aecom Technology Corp ^(a)	2,333	62	Tenet Healthcare Corp ^(a)	26,769	117
Chicago Bridge & Iron Co NV ^(a)	3,206	81		$ 2,976
Fluor Corp	313,974	15,130	Home Builders - 0.02%
Jacobs Engineering Group Inc ^(a)	5,831	225	NVR Inc ^(a)	472	296
McDermott International Inc ^(a)	14,577	225
Shaw Group Inc/The ^(a)	3,928	120	Home Furnishings - 0.19%
			Tempur-Pedic International Inc ^(a)	5,830	201
	$ 15,843
			Whirlpool Corp	31,232	2,368
				$ 2,569


Schedule of Investments
LargeCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Housewares - 0.01%			Metal Fabrication & Hardware - 0.08%
Toro Co	2,749 $	156	Precision Castparts Corp	6,648 $	908
			Timken Co	4,955	205
Insurance - 0.92%				$ 1,113
ACE Ltd	4,081	243	Mining - 0.91%
Aflac Inc	135,866	7,594	Freeport-McMoRan Copper & Gold Inc	86,741	8,212
Aon Corp	4,788	190	Newmont Mining Corp	67,210	4,091
Arthur J Gallagher & Co	2,041	58	Titanium Metals Corp ^(a)	6,704	132
Axis Capital Holdings Ltd	3,066	104		$ 12,435
Brown & Brown Inc	4,665	104	Miscellaneous Manufacturing - 3.62%
Chubb Corp	22,549	1,308	3M Co	181,490	15,286
Endurance Specialty Holdings Ltd	292	12	Carlisle Cos Inc	292	10
Erie Indemnity Co	1,690	97	Cooper Industries PLC	9,037	474
Marsh & McLennan Cos Inc	26,232	655	Danaher Corp	26,528	1,150
MetLife Inc	10,729	433	Donaldson Co Inc	5,981	291
Travelers Cos Inc/The	33,546	1,851	Dover Corp	9,329	495
Validus Holdings Ltd	1,159	33	Eaton Corp	89,764	7,974
	$ 12,682		General Electric Co	136,922	2,194
Internet - 4.72%			Honeywell International Inc	164,360	7,743
Akamai Technologies Inc ^(a)	63,627	3,288	Illinois Tool Works Inc	180,990	8,271
Amazon.com Inc ^(a)	18,477	3,051	Pall Corp	9,658	412
eBay Inc ^(a)	23,882	712	Parker Hannifin Corp	3,498	268
Expedia Inc	6,705	194	Pentair Inc	3,979	130
F5 Networks Inc ^(a)	38,289	4,507	Textron Inc	230,569	4,800
Google Inc ^(a)	73,292	44,927	Tyco International Ltd	5,830	223
McAfee Inc ^(a)	7,297	345		$ 49,721
NetFlix Inc ^(a)	9,436	1,637
			Office & Business Equipment - 0.02%
Priceline.com Inc ^(a)	2,409	908	Pitney Bowes Inc	11,660	256
Symantec Corp ^(a)	264,022	4,272
VeriSign Inc ^(a)	14,577	507
			Oil & Gas - 5.87%
Yahoo! Inc ^(a)	27,403	452	Atlas Energy Inc ^(a)	4,443	129
	$ 64,800		Atwood Oceanics Inc ^(a)	875	28
Iron & Steel - 0.27%			Chevron Corp	5,830	482
Cliffs Natural Resources Inc	56,123	3,659	Cimarex Energy Co	40,164	3,083
			Concho Resources Inc/Midland TX ^(a)	7,101	488
Leisure Products & Services - 0.81%			ConocoPhillips	91,960	5,462
Carnival Corp	244,300	10,547	EOG Resources Inc	29,328	2,807
Harley-Davidson Inc	18,266	560	EQT Corp	11,814	442
	$ 11,107		Exxon Mobil Corp	595,695	39,596
Lodging - 0.58%			Holly Corp	2,438	80
Las Vegas Sands Corp ^(a)	14,867	682	Marathon Oil Corp	14,867	529
Marriott International Inc/DE	14,663	543	Murphy Oil Corp	1,749	114
Starwood Hotels & Resorts Worldwide Inc	123,648	6,695	Nabors Industries Ltd ^(a)	9,037	189
	$ 7,920		Occidental Petroleum Corp	311,344	24,481
Machinery - Construction & Mining - 0.66%			Pride International Inc ^(a)	6,657	202
Bucyrus International Inc	30,726	2,094	Rowan Cos Inc ^(a)	1,657	54
Caterpillar Inc	84,077	6,608	SM Energy Co	3,498	146
Joy Global Inc	5,660	402	Southwestern Energy Co ^(a)	67,876	2,298
	$ 9,104			$ 80,610
Machinery - Diversified - 1.22%			Oil & Gas Services - 3.87%
Babcock & Wilcox Co ^(a)	7,381	168	Baker Hughes Inc	9,120	423
Cummins Inc	11,086	977	Cameron International Corp ^(a)	287,442	12,575
Deere & Co	93,493	7,181	Dresser-Rand Group Inc ^(a)	5,780	198
Gardner Denver Inc	3,789	219	FMC Technologies Inc ^(a)	5,887	425
IDEX Corp	3,912	141	Halliburton Co	183,806	5,856
Rockwell Automation Inc	129,727	8,091	Schlumberger Ltd	474,639	33,172
	$ 16,777		Weatherford International Ltd ^(a)	23,613	397
Media - 1.92%				$ 53,046
CBS Corp	6,413	109	Packaging & Containers - 0.05%
DIRECTV ^(a)	47,809	2,078	Ball Corp	1,458	94
Discovery Communications Inc - A Shares ^(a)	9,620	429	Crown Holdings Inc ^(a)	13,140	423
Factset Research Systems Inc	3,789	333	Owens-Illinois Inc ^(a)	4,082	114
John Wiley & Sons Inc	3,395	147		$ 631
McGraw-Hill Cos Inc/The	11,698	440	Pharmaceuticals - 7.54%
News Corp - Class A	37,897	548	Abbott Laboratories	649,615	33,337
Scripps Networks Interactive	86,312	4,392	Allergan Inc/United States	361,150	26,150
Time Warner Inc	11,077	360	AmerisourceBergen Corp	13,430	441
Viacom Inc	9,328	360	Cardinal Health Inc	9,911	344
Walt Disney Co/The	474,951	17,150	Eli Lilly & Co	12,536	441
	$ 26,346		Express Scripts Inc ^(a)	212,596	10,316
			Herbalife Ltd	5,056	323


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Pharmaceuticals (continued)			Retail (continued)
McKesson Corp	6,122 $	404	Yum! Brands Inc	24,686 $	1,223
Mead Johnson Nutrition Co	22,554	1,327		$ 143,960
Medco Health Solutions Inc ^(a)	79,398	4,171	Savings & Loans - 0.00%
Merck & Co Inc	592,396	21,492	Hudson City Bancorp Inc	3,207	37
Novo Nordisk A/S ADR	24,895	2,609
Omnicare Inc	875	21	Semiconductors - 2.98%
Perrigo Co	23,908	1,575	Advanced Micro Devices Inc ^(a)	18,075	132
SXC Health Solutions Corp ^(a)	4,952	193	Altera Corp	13,993	437
VCA Antech Inc ^(a)	6,759	140	Analog Devices Inc	16,356	551
Warner Chilcott PLC	7,279	175	Applied Materials Inc	75,795	937
	$ 103,459		Atmel Corp ^(a)	32,650	289
Pipelines - 0.04%			Avago Technologies Ltd	8,584	212
El Paso Corp	10,045	133	Broadcom Corp	461,662	18,808
Williams Cos Inc	18,948	408	Cree Inc ^(a)	14,812	760
	$ 541		Intel Corp	220,074	4,417
Real Estate - 0.05%			Lam Research Corp ^(a)	9,816	449
CB Richard Ellis Group Inc ^(a)	22,117	406	Linear Technology Corp	203,481	6,558
Jones Lang LaSalle Inc	3,206	250	Marvell Technology Group Ltd ^(a)	30,609	591
	$ 656		Microchip Technology Inc	35,052	1,128
REITS - 0.21%			National Semiconductor Corp	18,861	258
Apartment Investment & Management Co	4,664	109	Novellus Systems Inc ^(a)	6,610	193
Digital Realty Trust Inc	6,251	373	ON Semiconductor Corp ^(a)	34,533	265
Equity Residential	1,457	71	QLogic Corp ^(a)	9,910	174
Essex Property Trust Inc	874	99	Rambus Inc ^(a)	8,162	161
Federal Realty Investment Trust	2,915	239	Skyworks Solutions Inc ^(a)	13,992	321
Public Storage Inc	6,997	694	Teradyne Inc ^(a)	14,219	160
Simon Property Group Inc	10,786	1,036	Texas Instruments Inc	122,765	3,630
Ventas Inc	3,498	187	Xilinx Inc	15,426	414
Vornado Realty Trust	1,166	102		$ 40,845
	$ 2,910		Software - 4.79%
Retail - 10.49%			Activision Blizzard Inc	10,905	125
Advance Auto Parts Inc	7,215	469	Adobe Systems Inc ^(a)	24,961	703
Aeropostale Inc ^(a)	7,726	188	Allscripts Healthcare Solutions Inc ^(a)	10,399	199
American Eagle Outfitters Inc	146,708	2,349	Autodesk Inc ^(a)	12,655	458
AutoZone Inc ^(a)	2,159	513	BMC Software Inc ^(a)	10,004	455
Bed Bath & Beyond Inc ^(a)	14,306	628	Broadridge Financial Solutions Inc	7,155	157
Best Buy Co Inc	18,469	794	CA Inc	24,921	578
Big Lots Inc ^(a)	6,413	201	Cerner Corp ^(a)	5,538	486
Brinker International Inc	8,390	156	Citrix Systems Inc ^(a)	42,576	2,728
Chipotle Mexican Grill Inc ^(a)	14,464	3,040	CommVault Systems Inc ^(a)	31,448	910
Copart Inc ^(a)	5,842	198	Compuware Corp ^(a)	9,911	99
Costco Wholesale Corp	453,169	28,445	Dun & Bradstreet Corp	4,143	308
Darden Restaurants Inc	11,053	505	Electronic Arts Inc ^(a)	208,544	3,305
Dick's Sporting Goods Inc ^(a)	7,055	203	Emdeon Inc ^(a)	1,699	23
Dollar Tree Inc ^(a)	10,058	516	Intuit Inc ^(a)	110,657	5,312
Family Dollar Stores Inc	10,787	498	Microsoft Corp	654,019	17,423
Gap Inc/The	21,865	416	MSCI Inc ^(a)	8,908	319
Guess? Inc	4,794	187	Oracle Corp	843,956	24,813
Home Depot Inc	358,116	11,059	Quest Software Inc ^(a)	62,816	1,644
J Crew Group Inc ^(a)	4,372	140	Red Hat Inc ^(a)	10,311	436
Kohl's Corp ^(a)	108,204	5,540	Salesforce.com Inc ^(a)	20,800	2,414
Lowe's Cos Inc	51,424	1,097	VMware Inc ^(a)	37,498	2,867
Ltd Brands Inc	171,793	5,049		$ 65,762
Macy's Inc	3,206	76	Telecommunications - 4.59%
McDonald's Corp	410,154	31,899	Amdocs Ltd ^(a)	4,664	143
Nordstrom Inc	13,551	522	American Tower Corp ^(a)	18,868	974
OfficeMax Inc ^(a)	126,960	2,247	Atheros Communications Inc ^(a)	5,426	168
Panera Bread Co ^(a)	2,259	202	Cisco Systems Inc ^(a)	705,509	16,107
PetSmart Inc	9,329	349	Corning Inc	15,451	283
Ross Stores Inc	9,494	560	Crown Castle International Corp ^(a)	179,308	7,731
Staples Inc	39,341	805	Frontier Communications Corp	29,773	261
Starbucks Corp	40,362	1,150	Harris Corp	10,203	461
Target Corp	174,568	9,067	JDS Uniphase Corp ^(a)	16,741	176
Tiffany & Co	9,323	494	Juniper Networks Inc ^(a)	180,239	5,838
TJX Cos Inc	334,529	15,351	MetroPCS Communications Inc ^(a)	9,620	100
Tractor Supply Co	5,830	231	NeuStar Inc ^(a)	5,936	153
Urban Outfitters Inc ^(a)	9,621	296	NII Holdings Inc ^(a)	10,494	439
Walgreen Co	49,120	1,664	Qualcomm Inc	615,172	27,763
Wal-Mart Stores Inc	229,174	12,414	SBA Communications Corp ^(a)	41,627	1,635
Williams-Sonoma Inc	99,456	3,219	Tellabs Inc	39,758	271
			tw telecom inc ^(a)	12,248	225


Schedule of Investments
LargeCap Growth Fund II
October 31, 2010


					Portfolio Summary (unaudited)
					Sector	Percent
COMMON STOCKS (continued)	Shares Held Value (000's)				Consumer, Non-cyclical	24 .42%
Telecommunications (continued)
Windstream Corp		16,885 $		214	Technology	16 .68%
					Consumer, Cyclical	15 .03%
			$ 62,942		Industrial	12 .10%
Toys, Games & Hobbies - 0.06%					Communications	11 .30%
Hasbro Inc		10,203		472	Energy	9 .85%
Mattel Inc		16,617		388	Financial	5 .75%
			$ 860		Basic Materials	3 .13%
Transportation - 2.15%					Utilities	0 .03%
CH Robinson Worldwide Inc		8,074		569	Other Assets in Excess of Liabilities, Net	1 .71%
Expeditors International of Washington Inc		10,116		499	TOTAL NET ASSETS	100.00%
FedEx Corp		9,460		830
Frontline Ltd/Bermuda		3,498		101
JB Hunt Transport Services Inc		7,372		265
Union Pacific Corp		47,423		4,158
United Parcel Service Inc		340,286		22,915
UTI Worldwide Inc		6,704		129
			$ 29,466
TOTAL COMMON STOCKS			$ 1,327,756
		Maturity
		Amount
REPURCHASE AGREEMENTS - 1.53%		(000's)	Value (000's)
Banks - 1.53%
Investment in Joint Trading Account; Bank of	$ 5,969		$ 5,969
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$6,088,543; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse		5,763		5,763
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $5,877,822; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche		5,475		5,474
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $5,583,931; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		3,746		3,746
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $3,820,584; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 20,952
TOTAL REPURCHASE AGREEMENTS			$ 20,952
Total Investments			$ 1,348,708
Other Assets in Excess of Liabilities, Net - 1.71%			$ 23,435
TOTAL NET ASSETS - 100.00%			$ 1,372,143


(a) Non-Income Producing Security

Unrealized Appreciation (Depreciation)
The net federal income tax unrealized appreciation (depreciation) and federal tax
cost of investments held as of the period end were as follows:


Schedule of Investments
LargeCap S&P 500 Index Fund
October 31, 2010




COMMON STOCKS - 97.91%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.17%			Beverages (continued)
Interpublic Group of Cos Inc ^(a)	102,503 $	1,061	PepsiCo Inc	333,610 $	21,785
Omnicom Group Inc	63,193	2,778		$ 58,603
	$ 3,839		Biotechnology - 1.46%
Aerospace & Defense - 2.12%			Amgen Inc ^(a)	200,987	11,494
Boeing Co/The	153,429	10,838	Biogen Idec Inc ^(a)	50,728	3,181
General Dynamics Corp	79,762	5,433	Celgene Corp ^(a)	98,478	6,113
Goodrich Corp	26,271	2,156	Genzyme Corp ^(a)	53,439	3,855
L-3 Communications Holdings Inc	24,004	1,733	Gilead Sciences Inc ^(a)	175,857	6,976
Lockheed Martin Corp	62,331	4,443	Life Technologies Corp ^(a)	38,442	1,929
Northrop Grumman Corp	61,696	3,900		$ 33,548
Raytheon Co	78,449	3,615	Building Materials - 0.04%
Rockwell Collins Inc	32,964	1,995	Masco Corp	75,176	801
United Technologies Corp	194,821	14,567
	$ 48,680		Chemicals - 2.05%
Agriculture - 1.87%			Air Products & Chemicals Inc	44,567	3,787
Altria Group Inc	436,997	11,109	Airgas Inc	15,614	1,108
Archer-Daniels-Midland Co	134,063	4,467	CF Industries Holdings Inc	14,906	1,826
Lorillard Inc	31,815	2,715	Dow Chemical Co/The	243,216	7,498
Philip Morris International Inc	384,343	22,484	Eastman Chemical Co	15,149	1,190
Reynolds American Inc	35,456	2,301	Ecolab Inc	48,923	2,413
	$ 43,076		EI du Pont de Nemours & Co	190,090	8,987
Airlines - 0.09%			FMC Corp	15,200	1,111
Southwest Airlines Co	156,420	2,152	International Flavors & Fragrances Inc	16,746	840
			Monsanto Co	113,329	6,734
Apparel - 0.55%			PPG Industries Inc	34,631	2,656
Coach Inc	62,364	3,118	Praxair Inc	64,180	5,862
Nike Inc	81,029	6,599	Sherwin-Williams Co/The	18,935	1,382
Polo Ralph Lauren Corp	13,670	1,325	Sigma-Aldrich Corp	25,442	1,614
VF Corp	18,120	1,508		$ 47,008
	$ 12,550		Coal - 0.24%
Automobile Manufacturers - 0.61%			Consol Energy Inc	47,348	1,740
Ford Motor Co ^(a)	721,208	10,191	Massey Energy Co	21,411	901
PACCAR Inc	76,440	3,918	Peabody Energy Corp	56,444	2,986
	$ 14,109			$ 5,627
Automobile Parts & Equipment - 0.24%			Commercial Services - 1.38%
Goodyear Tire & Rubber Co/The ^(a)	50,942	521	Apollo Group Inc ^(a)	26,606	997
Johnson Controls Inc	141,190	4,958	Automatic Data Processing Inc	103,174	4,583
	$ 5,479		DeVry Inc	13,202	632
Banks - 7.84%			Equifax Inc	26,216	868
Bank of America Corp	2,104,047	24,070	H&R Block Inc	64,693	763
Bank of New York Mellon Corp/The	254,578	6,380	Iron Mountain Inc	42,256	921
BB&T Corp	145,308	3,402	Mastercard Inc	20,305	4,874
Capital One Financial Corp	95,783	3,570	Monster Worldwide Inc ^(a)	27,222	492
Citigroup Inc ^(a)	5,338,433	22,261	Moody's Corp	42,745	1,157
Comerica Inc	36,973	1,323	Paychex Inc	67,459	1,868
Fifth Third Bancorp	166,984	2,097	Quanta Services Inc ^(a)	44,241	870
First Horizon National Corp ^(a)	48,780	492	Robert Half International Inc	30,949	839
Goldman Sachs Group Inc/The	108,122	17,402	RR Donnelley & Sons Co	43,260	798
Huntington Bancshares Inc/OH	150,322	852	SAIC Inc ^(a)	61,573	957
JP Morgan Chase & Co	831,484	31,289	Total System Services Inc	34,773	543
KeyCorp	184,591	1,512	Visa Inc	104,210	8,146
M&T Bank Corp	17,985	1,344	Western Union Co/The	138,424	2,436
Marshall & Ilsley Corp	110,639	654		$ 31,744
Morgan Stanley	292,937	7,285	Computers - 6.30%
Northern Trust Corp	50,766	2,520	Apple Inc ^(a),(b)	191,569	57,637
PNC Financial Services Group Inc	110,174	5,938	Cognizant Technology Solutions Corp ^(a)	63,095	4,113
Regions Financial Corp	263,364	1,659	Computer Sciences Corp	32,374	1,588
State Street Corp	105,237	4,395	Dell Inc ^(a)	354,781	5,102
SunTrust Banks Inc	104,833	2,623	EMC Corp/Massachusetts ^(a)	430,612	9,047
US Bancorp	402,022	9,721	Hewlett-Packard Co	475,534	20,001
Wells Fargo & Co	1,097,423	28,621	IBM Corp	264,483	37,980
Zions Bancorporation	36,349	751	Lexmark International Inc ^(a)	16,466	626
	$ 180,161		NetApp Inc ^(a)	74,878	3,987
			SanDisk Corp ^(a)	48,874	1,837
Beverages - 2.55%
Brown-Forman Corp	21,763	1,323	Teradata Corp ^(a)	35,082	1,381
Coca-Cola Co/The	484,282	29,696	Western Digital Corp ^(a)	48,087	1,540
Coca-Cola Enterprises Inc	69,559	1,670		$ 144,839
Constellation Brands Inc ^(a)	37,155	733	Consumer Products - 0.43%
Dr Pepper Snapple Group Inc	50,088	1,831	Avery Dennison Corp	23,048	838
Molson Coors Brewing Co	33,140	1,565	Clorox Co	29,134	1,939


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Consumer Products (continued)			Electronics (continued)
Fortune Brands Inc	31,949 $	1,727	FLIR Systems Inc ^(a)	33,156 $	923
Kimberly-Clark Corp	85,831	5,436	Jabil Circuit Inc	41,041	629
	$ 9,940		PerkinElmer Inc	24,725	580
Cosmetics & Personal Care - 2.18%			Thermo Fisher Scientific Inc ^(a)	85,436	4,393
Avon Products Inc	89,949	2,739	Waters Corp ^(a)	19,300	1,431
Colgate-Palmolive Co	101,912	7,859		$ 12,310
Estee Lauder Cos Inc/The	23,940	1,704	Energy - Alternate Sources - 0.07%
Procter & Gamble Co	595,213	37,838	First Solar Inc ^(a)	11,302	1,556
	$ 50,140
Distribution & Wholesale - 0.21%			Engineering & Contruction - 0.12%
Fastenal Co	30,916	1,592	Fluor Corp	37,486	1,806
Genuine Parts Co	33,051	1,582	Jacobs Engineering Group Inc ^(a)	26,365	1,018
WW Grainger Inc	12,499	1,550		$ 2,824
	$ 4,724		Entertainment - 0.04%
Diversified Financial Services - 1.64%			International Game Technology	62,510	975
American Express Co	219,507	9,101
Ameriprise Financial Inc	52,644	2,721	Environmental Control - 0.29%
Charles Schwab Corp/The	207,788	3,200	Republic Services Inc	64,250	1,916
CME Group Inc	14,095	4,083	Stericycle Inc ^(a)	17,887	1,283
Discover Financial Services	114,081	2,013	Waste Management Inc	100,116	3,576
E*Trade Financial Corp ^(a)	41,656	596		$ 6,775
Federated Investors Inc	19,234	479	Food - 1.96%
Franklin Resources Inc	30,723	3,524	Campbell Soup Co	40,583	1,471
IntercontinentalExchange Inc ^(a)	15,527	1,784	ConAgra Foods Inc	92,195	2,073
Invesco Ltd	98,164	2,258	Dean Foods Co ^(a)	38,187	397
Janus Capital Group Inc	38,511	407	General Mills Inc	134,669	5,056
Legg Mason Inc	32,391	1,005	Hershey Co/The	32,385	1,603
NASDAQ OMX Group Inc/The ^(a)	30,180	634	HJ Heinz Co	66,753	3,278
NYSE Euronext	54,641	1,674	Hormel Foods Corp	14,523	667
SLM Corp ^(a)	101,850	1,212	JM Smucker Co/The	25,060	1,611
T Rowe Price Group Inc	53,755	2,971	Kellogg Co	54,658	2,747
	$ 37,662		Kraft Foods Inc	365,720	11,802
Electric - 3.17%			Kroger Co/The	134,639	2,962
AES Corp/The ^(a)	139,860	1,670	McCormick & Co Inc/MD	27,940	1,236
Allegheny Energy Inc	35,567	825	Safeway Inc	80,019	1,832
Ameren Corp	50,164	1,454	Sara Lee Corp	138,865	1,990
American Electric Power Co Inc	100,535	3,764	SUPERVALU Inc	44,486	480
CMS Energy Corp	48,267	887	Sysco Corp	123,379	3,635
Consolidated Edison Inc	59,266	2,947	Tyson Foods Inc	62,528	972
Constellation Energy Group Inc	42,350	1,281	Whole Foods Market Inc	30,640	1,218
Dominion Resources Inc/VA	123,538	5,369		$ 45,030
DTE Energy Co	35,395	1,655	Forest Products & Paper - 0.27%
Duke Energy Corp	276,525	5,036	International Paper Co	91,642	2,317
Edison International	68,321	2,521	MeadWestvaco Corp	35,817	921
Entergy Corp	39,175	2,920	Plum Creek Timber Co Inc	33,887	1,248
Exelon Corp	138,607	5,658	Weyerhaeuser Co	112,315	1,822
FirstEnergy Corp	63,923	2,322		$ 6,308
Integrys Energy Group Inc	16,195	861	Gas - 0.25%
NextEra Energy Inc	87,200	4,799	CenterPoint Energy Inc	88,432	1,464
Northeast Utilities	36,939	1,155	Nicor Inc	9,543	455
NRG Energy Inc ^(a)	53,092	1,057	NiSource Inc	58,289	1,009
Pepco Holdings Inc	46,949	904	Sempra Energy	51,974	2,780
PG&E Corp	81,938	3,918		$ 5,708
Pinnacle West Capital Corp	22,782	938	Hand & Machine Tools - 0.12%
PPL Corp	101,224	2,723	Snap-On Inc	12,183	621
Progress Energy Inc	61,353	2,761	Stanley Black & Decker Inc	34,740	2,153
Public Service Enterprise Group Inc	106,097	3,432		$ 2,774
SCANA Corp	23,631	965	Healthcare - Products - 3.26%
Southern Co	174,194	6,597	Baxter International Inc	122,539	6,237
TECO Energy Inc	44,999	792	Becton Dickinson and Co	48,680	3,676
Wisconsin Energy Corp	24,513	1,459	Boston Scientific Corp ^(a)	318,086	2,029
Xcel Energy Inc	96,384	2,300	CareFusion Corp ^(a)	46,586	1,125
	$ 72,970		CR Bard Inc	19,637	1,632
Electrical Components & Equipment - 0.40%			DENTSPLY International Inc	29,949	940
Emerson Electric Co	157,776	8,662	Hospira Inc ^(a)	35,084	2,087
Molex Inc	28,866	586	Intuitive Surgical Inc ^(a)	8,252	2,170
	$ 9,248		Johnson & Johnson	577,593	36,775
Electronics - 0.54%			Medtronic Inc	226,446	7,973
Agilent Technologies Inc ^(a)	72,632	2,528	Patterson Cos Inc	20,280	561
Amphenol Corp	36,429	1,826	St Jude Medical Inc ^(a)	68,655	2,630


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Healthcare - Products (continued)			Iron & Steel (continued)
Stryker Corp	71,583 $	3,543	Nucor Corp	66,172 $	2,529
Varian Medical Systems Inc ^(a)	25,505	1,612	United States Steel Corp	30,105	1,288
Zimmer Holdings Inc ^(a)	42,140	1,999		$ 7,049
	$ 74,989		Leisure Products & Services - 0.24%
Healthcare - Services - 1.12%			Carnival Corp	91,149	3,935
Aetna Inc	87,526	2,613	Harley-Davidson Inc	49,383	1,515
CIGNA Corp	57,076	2,008		$ 5,450
Coventry Health Care Inc ^(a)	31,117	729	Lodging - 0.31%
DaVita Inc ^(a)	21,514	1,544	Marriott International Inc/DE	60,103	2,227
Humana Inc ^(a)	35,487	2,068	Starwood Hotels & Resorts Worldwide Inc	39,868	2,158
Laboratory Corp of America Holdings ^(a)	21,557	1,753	Wyndham Worldwide Corp	37,459	1,077
Quest Diagnostics Inc	30,843	1,516	Wynn Resorts Ltd	15,798	1,693
Tenet Healthcare Corp ^(a)	101,749	444		$ 7,155
UnitedHealth Group Inc	235,753	8,499	Machinery - Construction & Mining - 0.45%
WellPoint Inc ^(a)	83,823	4,555	Caterpillar Inc	132,207	10,391
	$ 25,729
Holding Companies - Diversified - 0.05%			Machinery - Diversified - 0.65%
Leucadia National Corp	41,328	1,051	Cummins Inc	41,685	3,673
			Deere & Co	88,881	6,826
Home Builders - 0.07%			Flowserve Corp	11,730	1,173
DR Horton Inc	58,739	613	Rockwell Automation Inc	29,747	1,855
Lennar Corp	33,352	484	Roper Industries Inc	19,749	1,371
Pulte Group Inc ^(a)	70,621	555		$ 14,898
	$ 1,652		Media - 2.97%
Home Furnishings - 0.07%			CBS Corp	142,747	2,417
Harman International Industries Inc ^(a)	14,583	489	Comcast Corp - Class A	588,524	12,112
Whirlpool Corp	15,937	1,209	DIRECTV ^(a)	181,760	7,899
	$ 1,698		Discovery Communications Inc - A Shares ^(a)	59,685	2,663
Housewares - 0.05%			Gannett Co Inc	50,027	593
Newell Rubbermaid Inc	66,211	1,169	McGraw-Hill Cos Inc/The	64,817	2,440
			Meredith Corp	7,620	259
Insurance - 3.80%			New York Times Co/The ^(a)	24,779	190
ACE Ltd	71,061	4,223	News Corp - Class A	478,200	6,915
Aflac Inc	98,728	5,518	Scripps Networks Interactive	18,830	958
Allstate Corp/The	112,830	3,440	Time Warner Cable Inc	74,504	4,311
American International Group Inc ^(a)	28,335	1,190	Time Warner Inc	235,805	7,666
Aon Corp	68,753	2,733	Viacom Inc	127,526	4,921
Assurant Inc	22,342	883	Walt Disney Co/The	401,064	14,482
Berkshire Hathaway Inc - Class B ^(a)	362,747	28,860	Washington Post Co/The	1,161	467
Chubb Corp	65,959	3,827		$ 68,293
Cincinnati Financial Corp	34,112	1,004	Metal Fabrication & Hardware - 0.18%
Genworth Financial Inc ^(a)	102,611	1,164	Precision Castparts Corp	29,828	4,074
Hartford Financial Services Group Inc	93,172	2,234
Lincoln National Corp	66,418	1,626	Mining - 0.86%
Loews Corp	66,655	2,632	Alcoa Inc	214,143	2,812
Marsh & McLennan Cos Inc	113,754	2,842	Freeport-McMoRan Copper & Gold Inc	98,648	9,340
MetLife Inc	190,128	7,668	Newmont Mining Corp	103,249	6,285
Progressive Corp/The	139,998	2,962	Titanium Metals Corp ^(a)	18,891	371
Prudential Financial Inc	97,927	5,149	Vulcan Materials Co	26,897	982
Torchmark Corp	16,949	971		$ 19,790
Travelers Cos Inc/The	98,554	5,440	Miscellaneous Manufacturing - 3.59%
Unum Group	68,524	1,536	3M Co	149,540	12,594
XL Group PLC	71,718	1,517	Danaher Corp	112,218	4,866
	$ 87,419		Dover Corp	39,142	2,079
Internet - 2.98%			Eastman Kodak Co ^(a)	56,335	265
Akamai Technologies Inc ^(a)	38,081	1,968	Eaton Corp	35,187	3,126
Amazon.com Inc ^(a)	74,185	12,251	General Electric Co	2,241,895	35,915
eBay Inc ^(a)	242,133	7,218	Honeywell International Inc	161,928	7,628
Expedia Inc	43,549	1,261	Illinois Tool Works Inc	105,584	4,825
Google Inc ^(a)	52,128	31,954	ITT Corp	38,458	1,815
McAfee Inc ^(a)	31,889	1,508	Leggett & Platt Inc	30,708	626
Priceline.com Inc ^(a)	10,146	3,823	Pall Corp	24,464	1,044
Symantec Corp ^(a)	165,521	2,678	Parker Hannifin Corp	33,798	2,587
VeriSign Inc ^(a)	36,515	1,269	Textron Inc	57,501	1,197
Yahoo! Inc ^(a)	282,727	4,668	Tyco International Ltd	104,362	3,995
	$ 68,598			$ 82,562
Iron & Steel - 0.31%			Office & Business Equipment - 0.19%
AK Steel Holding Corp	23,063	291	Pitney Bowes Inc	43,342	951
Allegheny Technologies Inc	20,670	1,089	Xerox Corp	290,018	3,393
Cliffs Natural Resources Inc	28,401	1,852		$ 4,344


Schedule of Investments
LargeCap S&P 500 Index Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Oil & Gas - 8.61%			Publicly Traded Investment Fund - 0.15%
Anadarko Petroleum Corp	103,784 $	6,390	iShares S&P 500 Index Fund/US	28,646 $	3,404
Apache Corp	76,387	7,717
Cabot Oil & Gas Corp	21,837	633	Real Estate - 0.05%
Chesapeake Energy Corp	137,209	2,977	CB Richard Ellis Group Inc ^(a)	60,728	1,114
Chevron Corp	421,611	34,829
ConocoPhillips	311,053	18,477	REITS - 1.32%
Denbury Resources Inc ^(a)	83,725	1,425	Apartment Investment & Management Co	24,542	572
Devon Energy Corp	91,217	5,931	AvalonBay Communities Inc	17,858	1,898
Diamond Offshore Drilling Inc	14,576	964	Boston Properties Inc	29,221	2,519
EOG Resources Inc	53,151	5,088	Equity Residential	59,439	2,891
EQT Corp	31,272	1,171	HCP Inc	65,019	2,341
Exxon Mobil Corp ^(b)	1,067,736	70,972	Health Care REIT Inc	27,787	1,420
Helmerich & Payne Inc	22,188	949	Host Hotels & Resorts Inc	138,053	2,194
Hess Corp	61,293	3,863	Kimco Realty Corp	85,100	1,466
Marathon Oil Corp	148,813	5,293	ProLogis	116,649	1,592
Murphy Oil Corp	40,218	2,621	Public Storage Inc	29,250	2,902
Nabors Industries Ltd ^(a)	59,819	1,250	Simon Property Group Inc	61,402	5,896
Noble Energy Inc	36,655	2,987	Ventas Inc	32,939	1,764
Occidental Petroleum Corp	170,323	13,392	Vornado Realty Trust	34,021	2,973
Pioneer Natural Resources Co	24,324	1,698		$ 30,428
QEP Resources Inc	36,726	1,213	Retail - 5.85%
Range Resources Corp	33,558	1,255	Abercrombie & Fitch Co	18,511	793
Rowan Cos Inc ^(a)	24,038	791	AutoNation Inc ^(a)	13,200	307
Southwestern Energy Co ^(a)	72,573	2,457	AutoZone Inc ^(a)	6,013	1,429
Sunoco Inc	25,284	947	Bed Bath & Beyond Inc ^(a)	55,336	2,429
Tesoro Corp	29,926	388	Best Buy Co Inc	72,565	3,119
Valero Energy Corp	118,742	2,131	Big Lots Inc ^(a)	15,843	497
	$ 197,809		CarMax Inc ^(a)	46,914	1,454
Oil & Gas Services - 1.70%			Costco Wholesale Corp	92,083	5,780
Baker Hughes Inc	90,397	4,188	CVS Caremark Corp	284,811	8,579
Cameron International Corp ^(a)	50,789	2,222	Darden Restaurants Inc	29,035	1,327
FMC Technologies Inc ^(a)	25,165	1,815	Family Dollar Stores Inc	27,814	1,284
Halliburton Co	191,001	6,085	GameStop Corp ^(a)	31,528	620
National Oilwell Varco Inc	87,879	4,724	Gap Inc/The	92,140	1,752
Schlumberger Ltd	286,518	20,025	Home Depot Inc	349,205	10,783
	$ 39,059		JC Penney Co Inc	49,581	1,546
Packaging & Containers - 0.20%			Kohl's Corp ^(a)	64,584	3,307
Ball Corp	19,203	1,236	Lowe's Cos Inc	294,260	6,277
Bemis Co Inc	22,885	727	Ltd Brands Inc	55,501	1,631
Owens-Illinois Inc ^(a)	34,296	961	Macy's Inc	88,633	2,095
Pactiv Corp ^(a)	28,560	948	McDonald's Corp	223,186	17,357
Sealed Air Corp	33,469	775	Nordstrom Inc	35,390	1,363
	$ 4,647		Office Depot Inc ^(a)	57,867	260
			O'Reilly Automotive Inc ^(a)	29,098	1,702
Pharmaceuticals - 5.14%
Abbott Laboratories	323,775	16,616	RadioShack Corp	26,294	529
Allergan Inc/United States	64,484	4,669	Ross Stores Inc	25,260	1,490
AmerisourceBergen Corp	58,471	1,919	Sears Holdings Corp ^(a)	9,285	668
Bristol-Myers Squibb Co	359,593	9,673	Staples Inc	153,101	3,134
Cardinal Health Inc	73,637	2,555	Starbucks Corp	155,194	4,420
Cephalon Inc ^(a)	15,768	1,048	Target Corp	151,284	7,858
Eli Lilly & Co	212,790	7,490	Tiffany & Co	26,478	1,403
Express Scripts Inc ^(a)	113,741	5,519	TJX Cos Inc	84,016	3,856
Forest Laboratories Inc ^(a)	59,877	1,979	Urban Outfitters Inc ^(a)	27,001	831
King Pharmaceuticals Inc ^(a)	52,353	740	Walgreen Co	204,070	6,914
McKesson Corp	54,825	3,617	Wal-Mart Stores Inc	419,411	22,719
Mead Johnson Nutrition Co	42,892	2,523	Yum! Brands Inc	97,927	4,853
Medco Health Solutions Inc ^(a)	90,934	4,777		$ 134,366
Merck & Co Inc	645,353	23,413	Savings & Loans - 0.10%
Mylan Inc/PA ^(a)	64,871	1,318	Hudson City Bancorp Inc	110,427	1,287
Pfizer Inc ^(b)	1,685,587	29,329	People's United Financial Inc	77,772	957
Watson Pharmaceuticals Inc ^(a)	22,520	1,051		$ 2,244
	$ 118,236		Semiconductors - 2.39%
Pipelines - 0.39%			Advanced Micro Devices Inc ^(a)	118,821	871
El Paso Corp	147,627	1,958	Altera Corp	64,423	2,011
Oneok Inc	22,316	1,112	Analog Devices Inc	62,508	2,105
Spectra Energy Corp	135,886	3,230	Applied Materials Inc	280,166	3,463
Williams Cos Inc	122,602	2,638	Broadcom Corp	93,967	3,828
	$ 8,938		Intel Corp	1,167,593	23,434
			KLA-Tencor Corp	35,193	1,257
			Linear Technology Corp	47,066	1,517
			LSI Corp ^(a)	134,591	705


Schedule of Investments
LargeCap S&P 500 Index Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)					Maturity
Semiconductors (continued)						Amount
MEMC Electronic Materials Inc ^(a)	47,688 $	611	REPURCHASE AGREEMENTS - 2.12%			(000's)	Value (000's)
Microchip Technology Inc	38,990	1,255	Banks - 2.12%
Micron Technology Inc ^(a)	179,286	1,483	Investment in Joint Trading Account; Bank of		$ 13,875		$ 13,875
National Semiconductor Corp	50,232	688		America Repurchase Agreement; 0.22%
Novellus Systems Inc ^(a)	19,274	563		dated 10/29/10 maturing 11/01/10
NVIDIA Corp ^(a)	120,364	1,448		(collateralized by Sovereign Agency Issues;
QLogic Corp ^(a)	22,910	402		$14,152,592; 0.00% - 5.25%; dated 05/01/13
Teradyne Inc ^(a)	38,028	427		- 04/15/42)
Texas Instruments Inc	250,626	7,411	Investment in Joint Trading Account; Credit Suisse			13,395	13,395
Xilinx Inc	54,275	1,455		Repurchase Agreement; 0.21% dated
	$ 54,934			10/29/10 maturing 11/01/10 (collateralized by
Software - 4.00%				US Treasury Note; $13,662,782; 1.13%;
Adobe Systems Inc ^(a)	110,136	3,100		dated 01/15/12)
Autodesk Inc ^(a)	47,661	1,724	Investment in Joint Trading Account; Deutsche			12,725	12,725
BMC Software Inc ^(a)	37,457	1,703		Bank Repurchase Agreement; 0.21% dated
CA Inc	81,149	1,883		10/29/10 maturing 11/01/10 (collateralized by
Cerner Corp ^(a)	14,875	1,307		Sovereign Agency Issues; $12,979,643;
Citrix Systems Inc ^(a)	39,201	2,512		0.38% - 3.75%; dated 12/06/10 - 01/29/15)
Compuware Corp ^(a)	46,815	469	Investment in Joint Trading Account; Morgan			8,707	8,707
Dun & Bradstreet Corp	10,496	781		Stanley Repurchase Agreement; 0.20% dated
Electronic Arts Inc ^(a)	69,261	1,098		10/29/10 maturing 11/01/10 (collateralized by
Fidelity National Information Services Inc	55,289	1,498		Sovereign Agency Issues; $8,880,807; 1.88%
Fiserv Inc ^(a)	31,477	1,716		- 6.13%; dated 01/09/12 - 02/21/13)
Intuit Inc ^(a)	59,282	2,846					$ 48,702
Microsoft Corp	1,596,872	42,541	TOTAL REPURCHASE AGREEMENTS				$ 48,702
Novell Inc ^(a)	73,666	437	Total Investments				$ 2,299,404
Oracle Corp	811,571	23,860	Liabilities in Excess of Other Assets, Net - (0.03)%				$ (755)
Red Hat Inc ^(a)	39,619	1,674	TOTAL NET ASSETS - 100.00%				$ 2,298,649
Salesforce.com Inc ^(a)	24,515	2,845
	$ 91,994
Telecommunications - 5.59%			(a)	Non-Income Producing Security
American Tower Corp ^(a)	84,117	4,341	(b)	Security or a portion of the security was pledged to cover margin
AT&T Inc	1,239,100	35,314		requirements for futures contracts. At the end of the period, the value of
CenturyLink Inc	63,211	2,616		these securities totaled $34,685 or 1.51% of net assets.
Cisco Systems Inc ^(a)	1,197,611	27,341
Corning Inc	327,466	5,986
Frontier Communications Corp	208,021	1,826	Unrealized Appreciation (Depreciation)
Harris Corp	27,060	1,223	The net federal income tax unrealized appreciation (depreciation) and federal tax
JDS Uniphase Corp ^(a)	46,466	488
Juniper Networks Inc ^(a)	109,024	3,531	cost of investments held as of the period end were as follows:
MetroPCS Communications Inc ^(a)	54,914	572
Motorola Inc ^(a)	489,410	3,989	Unrealized Appreciation				$ 308,567
			Unrealized Depreciation				(205,503)
Qualcomm Inc	336,601	15,191	Net Unrealized Appreciation (Depreciation)				$ 103,064
Qwest Communications International Inc	364,715	2,407	Cost for federal income tax purposes				$ 2,196,340
Sprint Nextel Corp ^(a)	625,846	2,579
			All dollar amounts are shown in thousands (000's)
Tellabs Inc	79,978	545
Verizon Communications Inc	592,754	19,247		Portfolio Summary (unaudited)
Windstream Corp	101,317	1,283	Sector				Percent
	$ 128,479		Consumer, Non-cyclical				21 .33%
Textiles - 0.03%			Financial				16 .87%
Cintas Corp	27,889	766	Technology				12 .88%
			Communications				11 .71%
Toys, Games & Hobbies - 0.14%			Energy				11 .01%
Hasbro Inc	29,321	1,356	Industrial				10 .60%
Mattel Inc	75,432	1,760	Consumer, Cyclical				8 .52%
	$ 3,116		Basic Materials				3 .49%
Transportation - 1.90%			Utilities				3 .42%
CH Robinson Worldwide Inc	34,781	2,451	Exchange Traded Funds				0 .15%
CSX Corp	79,610	4,892	Diversified				0 .05%
Expeditors International of Washington Inc	44,492	2,196	Liabilities in Excess of Other Assets, Net				(0 .03)%
FedEx Corp	65,957	5,786	TOTAL NET ASSETS				100.00%
Norfolk Southern Corp	77,296	4,753
Ryder System Inc	10,991	481
Union Pacific Corp	104,337	9,148
United Parcel Service Inc	207,744	13,990
	$ 43,697
TOTAL COMMON STOCKS	$ 2,250,702


COMMON STOCKS - 98.87%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Agriculture - 4.13%			Healthcare - Products (continued)
Archer-Daniels-Midland Co	518,204 $	17,267	Johnson & Johnson	178,953 $	11,394
Lorillard Inc	203,321	17,351		$ 20,445
Philip Morris International Inc	237,287	13,881	Healthcare - Services - 4.26%
	$ 48,499		Aetna Inc	530,887	15,852
Airlines - 0.80%			Coventry Health Care Inc ^(a)	472,318	11,062
United Continental Holdings Inc ^(a)	325,093	9,441	UnitedHealth Group Inc	642,518	23,163
				$ 50,077
Banks - 9.65%			Insurance - 7.98%
Bank of America Corp	677,615	7,752	ACE Ltd	185,568	11,026
Citigroup Inc ^(a)	2,052,136	8,557	Arch Capital Group Ltd ^(a)	118,823	10,265
City National Corp/CA	128,785	6,642	Assurant Inc	312,262	12,347
Commerce Bancshares Inc	148,240	5,461	Berkshire Hathaway Inc - Class B ^(a)	233,214	18,555
JP Morgan Chase & Co	809,153	30,448	Protective Life Corp	505,289	12,112
PNC Financial Services Group Inc	373,398	20,126	Prudential Financial Inc	262,227	13,788
US Bancorp	1,026,625	24,824	Unum Group	696,095	15,606
Wells Fargo & Co	367,793	9,592		$ 93,699
	$ 113,402		Lodging - 0.54%
Biotechnology - 1.85%			Wyndham Worldwide Corp	218,211	6,274
Amgen Inc ^(a)	379,896	21,726
			Media - 4.20%
Chemicals - 1.74%			CBS Corp	767,850	13,000
Ashland Inc	166,958	8,620	Gannett Co Inc	870,913	10,320
Lubrizol Corp	115,302	11,817	McGraw-Hill Cos Inc/The	231,981	8,734
	$ 20,437		News Corp - Class A	1,192,159	17,239
Coal - 0.75%				$ 49,293
Arch Coal Inc	360,033	8,853	Metal Fabrication & Hardware - 0.84%
			Timken Co	239,036	9,901
Computers - 0.88%
EMC Corp/Massachusetts ^(a)	491,228	10,321	Miscellaneous Manufacturing - 4.92%
			Carlisle Cos Inc	29,806	1,045
Cosmetics & Personal Care - 1.42%			Crane Co	259,272	9,920
Procter & Gamble Co	262,829	16,708	General Electric Co	2,542,479	40,731
			Ingersoll-Rand PLC	154,397	6,069
Diversified Financial Services - 4.57%				$ 57,765
American Express Co	372,616	15,448	Oil & Gas - 7.29%
Ameriprise Financial Inc	369,180	19,083	Anadarko Petroleum Corp	267,062	16,443
Discover Financial Services	834,680	14,732	Chevron Corp	549,461	45,391
Invesco Ltd	189,689	4,363	Exxon Mobil Corp	160,111	10,643
	$ 53,626		Marathon Oil Corp	369,455	13,141
Electric - 3.84%				$ 85,618
Ameren Corp	408,184	11,829	Oil & Gas Services - 3.65%
Duke Energy Corp	523,981	9,542	Halliburton Co	498,244	15,874
Integrys Energy Group Inc	222,039	11,810	National Oilwell Varco Inc	313,165	16,836
Pinnacle West Capital Corp	288,358	11,869	Oil States International Inc ^(a)	198,103	10,127
	$ 45,050			$ 42,837
Electrical Components & Equipment - 1.94%			Pharmaceuticals - 6.35%
Energizer Holdings Inc ^(a)	156,311	11,689	Bristol-Myers Squibb Co	727,155	19,561
Hubbell Inc	205,020	11,075	Cephalon Inc ^(a)	182,943	12,155
	$ 22,764		Endo Pharmaceuticals Holdings Inc ^(a)	360,882	13,259
Electronics - 0.98%			Forest Laboratories Inc ^(a)	449,150	14,844
Garmin Ltd	151,979	4,991	Merck & Co Inc	149,756	5,433
Thomas & Betts Corp ^(a)	149,971	6,531	Pfizer Inc ^(b)	537,095	9,345
	$ 11,522			$ 74,597
Food - 2.60%			Real Estate - 1.03%
Corn Products International Inc	328,982	13,998	Jones Lang LaSalle Inc	154,704	12,076
Ralcorp Holdings Inc ^(a)	104,690	6,497
SUPERVALU Inc	932,918	10,066	REITS - 1.85%
	$ 30,561		Essex Property Trust Inc	94,887	10,719
Forest Products & Paper - 1.21%			Host Hotels & Resorts Inc	695,420	11,050
International Paper Co	563,955	14,257		$ 21,769
			Retail - 3.35%
Gas - 3.54%			Big Lots Inc ^(a)	179,066	5,617
AGL Resources Inc	245,287	9,630	Gap Inc/The	492,694	9,366
NiSource Inc	556,564	9,634	Wal-Mart Stores Inc	450,045	24,379
Questar Corp	609,618	10,345		$ 39,362
UGI Corp	398,214	11,983	Savings & Loans - 1.06%
	$ 41,592		New York Community Bancorp Inc	737,332	12,483
Healthcare - Products - 1.74%
Hologic Inc ^(a)	564,960	9,051


Schedule of Investments
LargeCap Value Fund
October 31, 2010


				Portfolio Summary (unaudited)
				Sector	Percent
COMMON STOCKS (continued)	Shares Held Value (000's)			Financial	27 .58%
Semiconductors - 0.66%
Intel Corp	387,108 $		7,769	Consumer, Non-cyclical	21 .49%
				Energy	11 .69%
				Communications	11 .06%
Software - 2.39%				Industrial	8 .68%
Microsoft Corp	1,054,059		28,080	Utilities	7 .38%
				Consumer, Cyclical	5 .55%
Telecommunications - 6.86%
Amdocs Ltd ^(a)	275,677		8,458	Technology	3 .93%
				Basic Materials	2 .95%
AT&T Inc	862,344		24,577	Liabilities in Excess of Other Assets, Net	(0 .31)%
Frontier Communications Corp	1,262,983		11,089
Qwest Communications International Inc	2,239,690		14,782	TOTAL NET ASSETS	100.00%
Sprint Nextel Corp ^(a)	1,110,203		4,574
Tellabs Inc	1,686,918		11,505
Verizon Communications Inc	171,276		5,561
		$ 80,546
TOTAL COMMON STOCKS		$ 1,161,350
	Maturity
	Amount
REPURCHASE AGREEMENTS - 1.44%	(000's)	Value (000's)
Banks - 1.44%
Investment in Joint Trading Account; Bank of	$ 4,831	$ 4,831
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$4,928,007; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse	4,664		4,664
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $4,757,452; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche	4,431		4,431
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $4,519,579; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan	3,032		3,032
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $3,092,344; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
		$ 16,958
TOTAL REPURCHASE AGREEMENTS		$ 16,958
Total Investments		$ 1,178,308
Liabilities in Excess of Other Assets, Net - (0.31)%		$ (3,589)
TOTAL NET ASSETS - 100.00%		$ 1,174,719

Unrealized Appreciation (Depreciation)
The net federal income tax unrealized appreciation (depreciation) and federal tax
cost of investments held as of the period end were as follows:


Schedule of Investments
LargeCap Value Fund III
October 31, 2010




COMMON STOCKS - 97.87%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.02%			Banks (continued)
Omnicom Group Inc	7,030 $	309	TCF Financial Corp	17,829 $	235
			US Bancorp	162,162	3,921
Aerospace & Defense - 2.58%			Valley National Bancorp	19,616	262
Boeing Co/The	192,780	13,619	Wells Fargo & Co	2,061,757	53,770
General Dynamics Corp	29,995	2,043		$ 208,049
Goodrich Corp	10,310	846	Beverages - 0.86%
L-3 Communications Holdings Inc	10,429	753	Coca-Cola Co/The	52,123	3,196
Lockheed Martin Corp	7,498	535	Constellation Brands Inc ^(a)	362,757	7,157
Northrop Grumman Corp	223,745	14,143	Dr Pepper Snapple Group Inc	19,685	719
Raytheon Co	260,159	11,988	Molson Coors Brewing Co	15,154	716
Rockwell Collins Inc	8,436	510	PepsiCo Inc	51,085	3,336
Spirit Aerosystems Holdings Inc ^(a)	11,244	243		$ 15,124
United Technologies Corp	9,777	731	Biotechnology - 0.97%
	$ 45,411		Amgen Inc ^(a)	96,636	5,527
Agriculture - 2.89%			Biogen Idec Inc ^(a)	24,380	1,529
Altria Group Inc	687,586	17,478	Bio-Rad Laboratories Inc ^(a)	2,343	212
Archer-Daniels-Midland Co	203,550	6,783	Gilead Sciences Inc ^(a)	240,900	9,556
Bunge Ltd	164,860	9,903	Life Technologies Corp ^(a)	6,389	321
Lorillard Inc	14,891	1,271		$ 17,145
Philip Morris International Inc	250,457	14,652	Building Materials - 0.01%
Reynolds American Inc	12,595	817	Owens Corning Inc ^(a)	6,029	163
	$ 50,904
Airlines - 0.46%			Chemicals - 1.95%
Copa Holdings SA	1,352	68	Agrium Inc	42,900	3,797
Delta Air Lines Inc ^(a)	515,600	7,162	Ashland Inc	9,065	468
Southwest Airlines Co	56,242	774	Cabot Corp	8,220	280
United Continental Holdings Inc ^(a)	5,058	147	CF Industries Holdings Inc	63,100	7,732
	$ 8,151		Cytec Industries Inc	5,929	293
Apparel - 0.04%			Dow Chemical Co/The	96,749	2,983
VF Corp	7,968	663	Eastman Chemical Co	6,562	515
			EI du Pont de Nemours & Co	339,549	16,054
Automobile Manufacturers - 0.46%			FMC Corp	2,799	205
Ford Motor Co ^(a)	577,800	8,164	Huntsman Corp	20,381	282
			PPG Industries Inc	11,717	899
Automobile Parts & Equipment - 0.39%			RPM International Inc	7,632	158
Autoliv Inc	6,562	468	Sherwin-Williams Co/The	4,218	308
BorgWarner Inc ^(a)	1,116	63	Sigma-Aldrich Corp	1,140	72
Federal-Mogul Corp ^(a)	1,824	36	Valspar Corp	10,311	331
Johnson Controls Inc	4,219	148		$ 34,377
Lear Corp ^(a)	67,986	6,010	Coal - 0.14%
TRW Automotive Holdings Corp ^(a)	2,813	128	Alpha Natural Resources Inc ^(a)	13,102	592
	$ 6,853		Arch Coal Inc	5,625	138
Banks - 11.81%			Massey Energy Co	12,850	541
Associated Banc-Corp	21,567	273	Peabody Energy Corp	20,153	1,066
BancorpSouth Inc	10,471	138	Walter Energy Inc	1,399	123
Bank of America Corp	2,615,185	29,918		$ 2,460
Bank of Hawaii Corp	3,750	162	Commercial Services - 0.12%
Bank of New York Mellon Corp/The	90,454	2,267	Aaron's Inc	3,901	74
BB&T Corp	299,671	7,015	Education Management Corp ^(a)	1,086	13
BOK Financial Corp	3,077	142	Equifax Inc	14,528	481
Capital One Financial Corp	193,981	7,230	H&R Block Inc	22,496	265
CIT Group Inc ^(a)	14,997	650	KAR Auction Services Inc ^(a)	1,314	17
Citigroup Inc ^(a)	1,574,281	6,565	RR Donnelley & Sons Co	23,810	439
City National Corp/CA	5,413	279	Service Corp International/US	31,536	261
Comerica Inc	96,900	3,467	Total System Services Inc	19,215	300
Commerce Bancshares Inc	8,436	311	Towers Watson & Co	4,523	233
Cullen/Frost Bankers Inc	6,500	341		$ 2,083
East West Bancorp Inc	18,477	326	Computers - 3.26%
Fifth Third Bancorp	487,122	6,118	Accenture PLC - Class A	87,100	3,894
First Citizens BancShares Inc/NC	649	121	Brocade Communications Systems Inc ^(a)	54,109	342
Fulton Financial Corp	22,042	206	Computer Sciences Corp	12,930	634
Goldman Sachs Group Inc/The	77,127	12,414	Dell Inc ^(a)	1,138,200	16,367
JP Morgan Chase & Co	1,487,666	55,981	Diebold Inc	6,459	198
KeyCorp	74,768	612	EMC Corp/Massachusetts ^(a)	588,687	12,368
M&T Bank Corp	6,258	468	Hewlett-Packard Co	219,100	9,216
Morgan Stanley	343,971	8,554	IBM Corp	88,449	12,701
Northern Trust Corp	10,779	535	Lexmark International Inc ^(a)	9,814	373
PNC Financial Services Group Inc	44,525	2,400	Seagate Technology PLC ^(a)	15,466	227
Regions Financial Corp	89,504	564	Synopsys Inc ^(a)	16,403	420
State Street Corp	44,049	1,839
SunTrust Banks Inc	38,556	965
See accompanying notes			253


Schedule of Investments
LargeCap Value Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Computers (continued)			Electronics (continued)
Western Digital Corp ^(a)	20,621 $	660	Garmin Ltd	204,785 $	6,725
	$ 57,400		Jabil Circuit Inc	6,320	97
Consumer Products - 0.46%			Tech Data Corp ^(a)	6,304	271
Avery Dennison Corp	11,515	419	Thermo Fisher Scientific Inc ^(a)	41,355	2,127
Clorox Co	938	63	Thomas & Betts Corp ^(a)	4,533	197
Fortune Brands Inc	15,466	836	Tyco Electronics Ltd	252,200	7,990
Jarden Corp	11,041	354	Vishay Intertechnology Inc ^(a)	18,449	208
Kimberly-Clark Corp	101,542	6,431		$ 18,610
	$ 8,103		Energy - Alternate Sources - 0.01%
Cosmetics & Personal Care - 1.37%			Covanta Holding Corp	14,616	231
Alberto-Culver Co	8,104	302
Procter & Gamble Co	375,776	23,888	Engineering & Contruction - 0.13%
	$ 24,190		Aecom Technology Corp ^(a)	7,967	211
			Chicago Bridge & Iron Co NV ^(a)	7,030	177
Distribution & Wholesale - 0.06%
Genuine Parts Co	13,825	662	Fluor Corp	12,573	606
Ingram Micro Inc ^(a)	20,344	359	Jacobs Engineering Group Inc ^(a)	5,624	217
WESCO International Inc ^(a)	2,515	108	KBR Inc	17,341	441
	$ 1,129		McDermott International Inc ^(a)	5,624	87
			Shaw Group Inc/The ^(a)	4,284	131
Diversified Financial Services - 1.81%			URS Corp ^(a)	9,148	356
Ameriprise Financial Inc	295,067	15,252
CME Group Inc	5,773	1,672		$ 2,226
Discover Financial Services	47,744	843	Entertainment - 0.01%
Federated Investors Inc	3,458	86	International Speedway Corp	2,370	54
Franklin Resources Inc	114,094	13,087	Madison Square Garden Inc ^(a)	4,687	98
Invesco Ltd	24,484	563		$ 152
NASDAQ OMX Group Inc/The ^(a)	14,189	298	Environmental Control - 0.11%
	$ 31,801		Republic Services Inc	17,683	527
Electric - 3.86%			Waste Management Inc	40,656	1,452
AES Corp/The ^(a)	57,178	683		$ 1,979
Alliant Energy Corp	13,902	508	Food - 2.22%
Ameren Corp	29,746	862	Campbell Soup Co	7,942	288
American Electric Power Co Inc	363,494	13,609	ConAgra Foods Inc	43,229	972
CMS Energy Corp	28,505	524	Corn Products International Inc	9,370	399
Consolidated Edison Inc	23,902	1,188	Dean Foods Co ^(a)	21,090	219
Constellation Energy Group Inc	178,459	5,397	Del Monte Foods Co	24,849	356
Dominion Resources Inc/VA	309,188	13,437	General Mills Inc	26,180	983
DPL Inc	12,722	332	HJ Heinz Co	20,153	990
DTE Energy Co	15,309	716	Hormel Foods Corp	8,420	387
Duke Energy Corp	115,174	2,097	JM Smucker Co/The	12,654	813
Edison International	84,652	3,123	Kellogg Co	3,280	165
Entergy Corp	16,605	1,238	Kraft Foods Inc	156,268	5,043
Exelon Corp	55,848	2,280	Kroger Co/The	45,461	1,000
FirstEnergy Corp	26,736	971	McCormick & Co Inc/MD	8,287	367
Great Plains Energy Inc	16,920	322	Ralcorp Holdings Inc ^(a)	6,691	415
Integrys Energy Group Inc	9,386	499	Safeway Inc	467,038	10,695
NextEra Energy Inc	36,368	2,002	Sara Lee Corp	336,600	4,824
Northeast Utilities	21,449	671	Smithfield Foods Inc ^(a)	298,100	4,993
NRG Energy Inc ^(a)	29,526	588	Sysco Corp	193,900	5,712
OGE Energy Corp	12,068	533	Tyson Foods Inc	34,681	539
Pepco Holdings Inc	312,600	6,021		$ 39,160
PG&E Corp	31,476	1,505	Forest Products & Paper - 0.15%
Pinnacle West Capital Corp	13,624	561	Domtar Corp	4,686	372
PPL Corp	40,764	1,096	International Paper Co	11,249	284
Progress Energy Inc	24,277	1,092	MeadWestvaco Corp	21,498	553
Public Service Enterprise Group Inc	43,119	1,395	Plum Creek Timber Co Inc	10,780	397
SCANA Corp	13,123	536	Rayonier Inc	6,561	343
Southern Co	61,628	2,334	Weyerhaeuser Co	45,624	740
TECO Energy Inc	26,753	471		$ 2,689
Wisconsin Energy Corp	8,746	521	Gas - 1.25%
Xcel Energy Inc	39,369	939	AGL Resources Inc	9,700	381
	$ 68,051		Atmos Energy Corp	11,562	340
Electrical Components & Equipment - 0.05%			CenterPoint Energy Inc	51,268	849
Energizer Holdings Inc ^(a)	7,967	595	Energen Corp	9,010	402
General Cable Corp ^(a)	3,750	105	National Fuel Gas Co	8,812	486
Hubbell Inc	4,219	228	NiSource Inc	323,876	5,607
	$ 928		Questar Corp	20,978	356
Electronics - 1.06%			Sempra Energy	233,924	12,511
Arrow Electronics Inc ^(a)	12,654	375	Southern Union Co	13,981	351
Avnet Inc ^(a)	18,504	551	UGI Corp	13,307	400
AVX Corp	4,802	69


Schedule of Investments
LargeCap Value Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Gas (continued)			Insurance (continued)
Vectren Corp	9,895 $	271	Prudential Financial Inc	40,751 $	2,143
	$ 21,954		Reinsurance Group of America Inc	8,431	422
Hand & Machine Tools - 0.05%			RenaissanceRe Holdings Ltd	6,562	395
Stanley Black & Decker Inc	13,688	848	StanCorp Financial Group Inc	6,162	264
			Symetra Financial Corp	2,916	32
Healthcare - Products - 4.14%			Torchmark Corp	9,374	537
Beckman Coulter Inc	8,543	455	Transatlantic Holdings Inc	7,498	394
Boston Scientific Corp ^(a)	112,950	721	Travelers Cos Inc/The	449,722	24,825
Cooper Cos Inc/The	4,403	217	Unitrin Inc	5,290	129
Covidien PLC	297,417	11,858	Unum Group	29,221	655
Hill-Rom Holdings Inc	938	36	Validus Holdings Ltd	8,877	252
Johnson & Johnson	903,527	57,528	Wesco Financial Corp	164	60
Kinetic Concepts Inc ^(a)	6,950	264	WR Berkley Corp	15,187	418
Medtronic Inc	25,642	903	XL Group PLC	89,267	1,888
Zimmer Holdings Inc ^(a)	19,339	917		$ 99,111
	$ 72,899		Internet - 0.71%
Healthcare - Services - 0.59%			AOL Inc ^(a)	13,666	365
Aetna Inc	40,516	1,210	eBay Inc ^(a)	298,928	8,911
CIGNA Corp	27,879	981	Expedia Inc	14,060	407
Coventry Health Care Inc ^(a)	18,468	433	Liberty Media Corp - Interactive ^(a)	51,646	762
Health Net Inc ^(a)	13,049	351	Symantec Corp ^(a)	61,865	1,001
Humana Inc ^(a)	15,934	929	Yahoo! Inc ^(a)	67,124	1,108
LifePoint Hospitals Inc ^(a)	6,815	231		$ 12,554
Quest Diagnostics Inc	2,343	115	Investment Companies - 0.02%
UnitedHealth Group Inc	114,547	4,129	Ares Capital Corp	22,027	369
Universal Health Services Inc	9,842	406
WellPoint Inc ^(a)	29,994	1,630	Iron & Steel - 0.38%
	$ 10,415		Nucor Corp	161,292	6,164
Home Builders - 0.49%			Reliance Steel & Aluminum Co	7,906	331
DR Horton Inc	196,100	2,047	Schnitzer Steel Industries Inc	2,129	110
NVR Inc ^(a)	8,100	5,082		$ 6,605
Pulte Group Inc ^(a)	189,100	1,485	Leisure Products & Services - 0.30%
	$ 8,614		Carnival Corp	20,483	884
Home Furnishings - 0.02%			Royal Caribbean Cruises Ltd ^(a)	111,300	4,401
Whirlpool Corp	5,156	391		$ 5,285
			Lodging - 0.04%
Housewares - 0.03%			Choice Hotels International Inc	2,606	99
Newell Rubbermaid Inc	33,904	598	Wyndham Worldwide Corp	20,621	593
				$ 692
Insurance - 5.63%			Machinery - Construction & Mining - 0.40%
ACE Ltd	231,276	13,742	Caterpillar Inc	88,500	6,956
Aflac Inc	232,212	12,978
Alleghany Corp ^(a)	815	245	Machinery - Diversified - 0.41%
Allied World Assurance Co Holdings Ltd	6,221	356	AGCO Corp ^(a)	11,337	481
Allstate Corp/The	47,226	1,440	CNH Global NV ^(a)	2,591	103
American Financial Group Inc/OH	10,804	330	Deere & Co	85,400	6,559
American National Insurance Co	938	74	IDEX Corp	1,407	51
Aon Corp	23,656	940		$ 7,194
Arch Capital Group Ltd ^(a)	5,733	495
			Media - 7.16%
Arthur J Gallagher & Co	8,904	251	Cablevision Systems Corp	222,884	5,960
Aspen Insurance Holdings Ltd	10,421	296	CBS Corp	322,669	5,463
Assurant Inc	13,123	519	Comcast Corp - Class A	1,395,080	28,711
Axis Capital Holdings Ltd	10,311	351	DIRECTV ^(a)	428,300	18,614
Berkshire Hathaway Inc - Class B ^(a)	156,229	12,430	Discovery Communications Inc - A Shares ^(a)	8,904	397
Brown & Brown Inc	6,441	144	DISH Network Corp	22,965	456
Chubb Corp	28,688	1,664	Gannett Co Inc	279,908	3,317
Cincinnati Financial Corp	18,140	534	Liberty Global Inc - A Shares ^(a)	18,748	709
CNA Financial Corp ^(a)	1,816	50	Liberty Media Corp - Starz ^(a)	6,092	399
Endurance Specialty Holdings Ltd	3,893	161	McGraw-Hill Cos Inc/The	10,779	406
Erie Indemnity Co	965	55	Meredith Corp	2,344	80
Everest Re Group Ltd	7,031	593	New York Times Co/The ^(a)	12,382	95
Hanover Insurance Group Inc/The	5,597	253	News Corp - Class A	837,990	12,117
Hartford Financial Services Group Inc	30,464	731	Thomson Reuters Corp	18,747	717
HCC Insurance Holdings Inc	14,099	373	Time Warner Cable Inc	327,249	18,938
Lincoln National Corp	26,557	650	Time Warner Inc	270,614	8,797
Loews Corp	27,633	1,091	Viacom Inc	41,623	1,606
Marsh & McLennan Cos Inc	5,267	132	Walt Disney Co/The	526,945	19,028
MetLife Inc	342,055	13,795	Washington Post Co/The	723	291
PartnerRe Ltd	8,905	706		$ 126,101
Progressive Corp/The	50,111	1,060
Protective Life Corp	10,754	258
See accompanying notes			255


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Metal Fabrication & Hardware - 0.18%			Packaging & Containers (continued)
Commercial Metals Co	219,400 $	3,045	Packaging Corp of America	11,603 $	283
Timken Co	2,813	117	Pactiv Corp ^(a)	2,999	100
	$ 3,162		Sealed Air Corp	19,934	461
Mining - 0.38%			Sonoco Products Co	12,538	420
Alcoa Inc	65,145	855	Temple-Inland Inc	10,311	214
Freeport-McMoRan Copper & Gold Inc	62,100	5,880		$ 3,065
	$ 6,735		Pharmaceuticals - 6.90%
Miscellaneous Manufacturing - 3.59%			Abbott Laboratories	243,148	12,478
Aptargroup Inc	8,513	382	AstraZeneca PLC ADR	233,100	11,762
Carlisle Cos Inc	5,610	197	Bristol-Myers Squibb Co	354,648	9,540
Crane Co	6,012	230	Cardinal Health Inc	22,028	764
Dover Corp	8,373	445	Cephalon Inc ^(a)	9,165	609
Eaton Corp	10,780	957	Eli Lilly & Co	78,922	2,778
General Electric Co	1,150,975	18,439	Endo Pharmaceuticals Holdings Inc ^(a)	14,707	540
Honeywell International Inc	276,400	13,021	Forest Laboratories Inc ^(a)	27,226	900
Ingersoll-Rand PLC	356,268	14,005	King Pharmaceuticals Inc ^(a)	31,937	451
ITT Corp	139,036	6,561	McKesson Corp	14,528	958
Leggett & Platt Inc	7,066	144	Mead Johnson Nutrition Co	13,209	777
Parker Hannifin Corp	90,943	6,961	Merck & Co Inc	397,941	14,438
Pentair Inc	5,772	189	Mylan Inc/PA ^(a)	5,625	114
SPX Corp	4,900	329	Omnicare Inc	13,212	319
Tyco International Ltd	37,962	1,453	Pfizer Inc	3,071,000	53,436
	$ 63,313		Teva Pharmaceutical Industries Ltd ADR	211,900	10,998
			Watson Pharmaceuticals Inc ^(a)	13,949	651
Office & Business Equipment - 0.52%
Pitney Bowes Inc	7,031	154		$ 121,513
Xerox Corp	772,288	9,036	Pipelines - 0.17%
	$ 9,190		El Paso Corp	49,708	659
Oil & Gas - 11.26%			Spectra Energy Corp	55,852	1,328
Anadarko Petroleum Corp	259,224	15,961	Williams Cos Inc	42,888	923
Apache Corp	156,265	15,786		$ 2,910
Atwood Oceanics Inc ^(a)	5,371	174	Real Estate - 0.01%
Cabot Oil & Gas Corp	12,968	376	Forest City Enterprises Inc ^(a)	13,780	201
Chesapeake Energy Corp	56,344	1,223
Chevron Corp	384,867	31,794	REITS - 1.00%
ConocoPhillips	286,454	17,016	Alexandria Real Estate Equities Inc	5,400	397
Devon Energy Corp	203,117	13,206	Annaly Capital Management Inc	51,532	913
Ensco PLC ADR	269,900	12,507	Apartment Investment & Management Co	7,031	164
EQT Corp	355,100	13,295	AvalonBay Communities Inc	6,861	729
Exxon Mobil Corp	223,481	14,855	Boston Properties Inc	11,900	1,026
Helmerich & Payne Inc	11,469	491	Brandywine Realty Trust	16,153	193
Hess Corp	174,839	11,020	BRE Properties Inc	8,005	344
Marathon Oil Corp	400,721	14,253	Camden Property Trust	8,381	416
Murphy Oil Corp	14,622	953	Chimera Investment Corp	107,625	441
Newfield Exploration Co ^(a)	106,681	6,360	CommonWealth REIT	8,116	207
Nexen Inc	239,700	5,103	Corporate Office Properties Trust	7,212	256
Noble Energy Inc	15,053	1,226	Douglas Emmett Inc	15,241	273
Occidental Petroleum Corp	210,457	16,548	Equity Residential	22,028	1,071
Pioneer Natural Resources Co	10,036	700	Essex Property Trust Inc	2,344	265
Rowan Cos Inc ^(a)	99,508	3,274	Federal Realty Investment Trust	2,813	231
SM Energy Co	2,418	101	General Growth Properties Inc	5,484	92
Sunoco Inc	14,060	527	HCP Inc	24,442	880
Unit Corp ^(a)	5,130	201	Health Care REIT Inc	14,528	742
Valero Energy Corp	48,950	879	Hospitality Properties Trust	15,345	350
Whiting Petroleum Corp ^(a)	5,772	580	Host Hotels & Resorts Inc	56,098	891
	$ 198,409		Kimco Realty Corp	33,817	583
Oil & Gas Services - 0.70%			Liberty Property Trust	14,032	469
Baker Hughes Inc	23,371	1,083	Mack-Cali Realty Corp	9,832	330
Cameron International Corp ^(a)	12,185	533	Nationwide Health Properties Inc	14,060	574
National Oilwell Varco Inc	153,270	8,240	Piedmont Office Realty Trust Inc	5,669	107
Oceaneering International Inc ^(a)	6,883	426	Public Storage Inc	1,630	162
Oil States International Inc ^(a)	6,230	318	Realty Income Corp	13,109	449
Schlumberger Ltd	13,019	910	Regency Centers Corp	9,798	413
SEACOR Holdings Inc ^(a)	2,843	269	Senior Housing Properties Trust	15,905	380
Weatherford International Ltd ^(a)	32,807	552	Simon Property Group Inc	7,499	720
	$ 12,331		SL Green Realty Corp	9,654	634
Packaging & Containers - 0.17%			Taubman Centers Inc	6,673	310
Ball Corp	8,436	543	UDR Inc	18,907	425
Bemis Co Inc	13,570	431	Ventas Inc	13,443	720
Greif Inc	4,176	245	Vornado Realty Trust	12,186	1,065
Owens-Illinois Inc ^(a)	13,122	368	Weingarten Realty Investors	13,123	317
				$ 17,539


Schedule of Investments
LargeCap Value Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Retail - 3.57%			Transportation (continued)
Abercrombie & Fitch Co	2,596 $	111	Kirby Corp ^(a)	6,307 $		271
American Eagle Outfitters Inc	18,278	293	Norfolk Southern Corp	31,117		1,913
AutoNation Inc ^(a)	5,449	126	Tidewater Inc	6,494		300
CVS Caremark Corp	493,759	14,872	Union Pacific Corp	192,677		16,894
Foot Locker Inc	18,762	299			$ 22,156
GameStop Corp ^(a)	17,809	350	Water - 0.03%
Gap Inc/The	1,137,429	21,623	American Water Works Co Inc	21,808		521
Kohl's Corp ^(a)	179,273	9,179
Lowe's Cos Inc	30,464	650	TOTAL COMMON STOCKS		$ 1,724,051
Macy's Inc	33,745	798		Maturity
Office Depot Inc ^(a)	603,100	2,708		Amount
RadioShack Corp	13,666	275	REPURCHASE AGREEMENTS - 1.92%	(000's)	Value (000's)
Sears Holdings Corp ^(a)	5,156	371
Signet Jewelers Ltd ^(a)	10,718	377	Banks - 1.92%
			Investment in Joint Trading Account; Bank of	$ 9,656	$ 9,657
TJX Cos Inc	137,400	6,305	America Repurchase Agreement; 0.22%
Walgreen Co	9,842	333	dated 10/29/10 maturing 11/01/10
Wal-Mart Stores Inc	78,725	4,265	(collateralized by Sovereign Agency Issues;
	$ 62,935		$9,849,413; 0.00% - 5.25%; dated 05/01/13 -
Savings & Loans - 0.13%			04/15/42)
First Niagara Financial Group Inc	26,191	310	Investment in Joint Trading Account; Credit Suisse	9,322		9,322
Hudson City Bancorp Inc	50,148	584	Repurchase Agreement; 0.21% dated
New York Community Bancorp Inc	37,273	631	10/29/10 maturing 11/01/10 (collateralized by
People's United Financial Inc	43,119	531	US Treasury Note; $9,508,532; 1.13%; dated
Washington Federal Inc	13,707	206	01/15/12)
	$ 2,262		Investment in Joint Trading Account; Deutsche	8,856		8,856
Semiconductors - 0.75%			Bank Repurchase Agreement; 0.21% dated
Advanced Micro Devices Inc ^(a)	45,161	331	10/29/10 maturing 11/01/10 (collateralized by
Atmel Corp ^(a)	5,625	50	Sovereign Agency Issues; $9,033,105; 0.38%
Fairchild Semiconductor International Inc ^(a)	15,561	176	- 3.75%; dated 12/06/10 - 01/29/15)
Intel Corp	466,876	9,370	Investment in Joint Trading Account; Morgan	6,059		6,059
International Rectifier Corp ^(a)	8,820	205	Stanley Repurchase Agreement; 0.20% dated
LSI Corp ^(a)	81,541	427	10/29/10 maturing 11/01/10 (collateralized by
Micron Technology Inc ^(a)	104,275	862	Sovereign Agency Issues; $6,180,545; 1.88%
PMC - Sierra Inc ^(a)	27,953	215	- 6.13%; dated 01/09/12 - 02/21/13)
Texas Instruments Inc	55,739	1,648			$ 33,894
	$ 13,284		TOTAL REPURCHASE AGREEMENTS		$ 33,894
Software - 2.02%			Total Investments		$ 1,757,945
Activision Blizzard Inc	46,085	529	Other Assets in Excess of Liabilities, Net - 0.21%		$ 3,689
Broadridge Financial Solutions Inc	1,407	31	TOTAL NET ASSETS - 100.00%		$ 1,761,634
CA Inc	8,437	196
Fidelity National Information Services Inc	19,809	537
Fiserv Inc ^(a)	6,341	346	(a) Non-Income Producing Security
Microsoft Corp	1,001,020	26,666
Oracle Corp	246,630	7,251
	$ 35,556		Unrealized Appreciation (Depreciation)
Telecommunications - 6.33%			The net federal income tax unrealized appreciation (depreciation) and federal tax
Amdocs Ltd ^(a)	17,341	532
			cost of investments held as of the period end were as follows:
AT&T Inc	1,707,777	48,672
CenturyLink Inc	179,966	7,447	Unrealized Appreciation		$ 157,330
Cisco Systems Inc ^(a)	551,443	12,589
CommScope Inc ^(a)	11,762	372	Unrealized Depreciation			(77,666)
			Net Unrealized Appreciation (Depreciation)		$ 79,664
Corning Inc	463,250	8,468	Cost for federal income tax purposes		$ 1,678,281
EchoStar Holding Corp ^(a)	4,765	101
			All dollar amounts are shown in thousands (000's)
Frontier Communications Corp	72,692	638
Motorola Inc ^(a)	1,297,188	10,572
			Portfolio Summary (unaudited)
Qwest Communications International Inc	130,277	860	Sector			Percent
Sprint Nextel Corp ^(a)	267,415	1,102
Tellabs Inc	49,689	339	Financial			22 .33%
Verizon Communications Inc	280,089	9,095	Consumer, Non-cyclical			20 .52%
Virgin Media Inc	24,842	632	Communications			14 .22%
Vodafone Group PLC ADR	350,800	9,651	Energy			12 .28%
Windstream Corp	31,080	393	Industrial			10 .00%
			Technology			6 .55%
	$ 111,463		Consumer, Cyclical			5 .89%
Toys, Games & Hobbies - 0.02%			Utilities			5 .14%
Mattel Inc	17,809	415	Basic Materials			2 .86%
			Other Assets in Excess of Liabilities, Net			0 .21%
Transportation - 1.26%			TOTAL NET ASSETS			100.00%
CSX Corp	32,729	2,011
FedEx Corp	8,437	740
Frontline Ltd/Bermuda	938	27


COMMON STOCKS - 98.92%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.26%			Insurance (continued)
Lamar Advertising Co ^(a)	95,595 $	3,249	Aon Corp	317,990 $	12,640
			Brown & Brown Inc	612,354	13,649
Aerospace & Defense - 0.78%			Everest Re Group Ltd	252,448	21,276
Alliant Techsystems Inc ^(a)	126,320	9,631	Fairfax Financial Holdings Ltd ^(a)	3,440	1,407
			Fidelity National Financial Inc	88,436	1,184
Banks - 1.26%			First American Financial Corp	243,343	3,417
CIT Group Inc ^(a)	230,101	9,970	Loews Corp	841,858	33,237
M&T Bank Corp	75,920	5,675	Markel Corp ^(a)	73,432	24,601
	$ 15,645		Marsh & McLennan Cos Inc	384,182	9,597
Beverages - 0.13%			Mercury General Corp	12,709	540
Molson Coors Brewing Co	34,512	1,630	Progressive Corp/The	511,707	10,828
			White Mountains Insurance Group Ltd	34,389	10,977
Commercial Services - 7.15%				$ 144,215
CoreLogic Inc	228,983	4,023	Internet - 0.96%
Iron Mountain Inc	1,452,642	31,653	Liberty Media Corp - Interactive ^(a)	809,104	11,942
Lender Processing Services Inc	299,941	8,650
Moody's Corp	520,240	14,078	Investment Companies - 0.23%
SAIC Inc ^(a)	1,182,260	18,372	RHJ International ^(a),(b)	365,861	2,817
Western Union Co/The	679,871	11,966
	$ 88,742		Media - 11.80%
Consumer Products - 1.72%			Discovery Communications Inc - A Shares ^(a)	308,737	13,773
Clorox Co	321,286	21,381	Discovery Communications Inc - C Shares ^(a)	388,490	15,097
			DISH Network Corp	1,277,220	25,366
Distribution & Wholesale - 0.30%			Liberty Global Inc - A Shares ^(a)	642,225	24,270
Fastenal Co	73,143	3,765	Liberty Global Inc - B Shares ^(a)	217,965	7,888
			Liberty Media Corp - Capital Series A ^(a)	820,899	47,234
Diversified Financial Services - 2.41%			Liberty Media Corp - Starz ^(a)	111,375	7,297
Ameriprise Financial Inc	193,955	10,026	Washington Post Co/The	13,522	5,438
Onex Corp	680,268	19,923		$ 146,363
	$ 29,949		Mining - 5.23%
Electric - 2.17%			Franco-Nevada Corp	755,788	26,070
AES Corp/The ^(a)	644,118	7,691	Newmont Mining Corp	452,695	27,555
Allegheny Energy Inc	386,123	8,958	Royal Gold Inc	226,492	11,214
Brookfield Infrastructure Partners LP	80,336	1,699		$ 64,839
Calpine Corp ^(a)	683,939	8,549	Miscellaneous Manufacturing - 0.91%
	$ 26,897		Tyco International Ltd	293,945	11,252
Electronics - 1.13%
Gentex Corp	701,749	14,021	Oil & Gas - 6.08%
			Cimarex Energy Co	141,755	10,880
Energy - Alternate Sources - 1.89%			Denbury Resources Inc ^(a)	627,930	10,687
Covanta Holding Corp	1,485,038	23,434	EOG Resources Inc	199,318	19,079
			EQT Corp	433,221	16,220
Entertainment - 1.00%			Nabors Industries Ltd ^(a)	300,506	6,280
Ascent Media Corp ^(a)	77,256	2,104	Newfield Exploration Co ^(a)	74,700	4,454
International Game Technology	663,383	10,342	QEP Resources Inc	235,786	7,788
	$ 12,446			$ 75,388
Food - 2.10%			Oil & Gas Services - 0.25%
Kellogg Co	213,106	10,710	Weatherford International Ltd ^(a)	186,201	3,130
Sysco Corp	519,749	15,312
	$ 26,022		Pharmaceuticals - 2.21%
Gas - 1.49%			Mead Johnson Nutrition Co	188,890	11,110
National Fuel Gas Co	175,797	9,701	Valeant Pharmaceuticals International Inc	591,290	16,326
Questar Corp	520,000	8,824		$ 27,436
	$ 18,525		Pipelines - 2.92%
Healthcare - Products - 3.44%			Spectra Energy Corp	719,168	17,095
Becton Dickinson and Co	133,306	10,067	Williams Cos Inc	888,154	19,113
Covidien PLC	242,450	9,667		$ 36,208
DENTSPLY International Inc	406,921	12,773	Real Estate - 2.77%
St Jude Medical Inc ^(a)	266,294	10,199	Brookfield Asset Management Inc	866,012	25,738
	$ 42,706		Forest City Enterprises Inc ^(a)	589,838	8,606
Healthcare - Services - 4.63%				$ 34,344
Coventry Health Care Inc ^(a)	407,347	9,540	REITS - 0.44%
Laboratory Corp of America Holdings ^(a)	458,927	37,320	General Growth Properties Inc	322,191	5,413
Lincare Holdings Inc	402,544	10,555
	$ 57,415		Retail - 8.95%
			AutoZone Inc ^(a)	61,647	14,649
Holding Companies - Diversified - 1.64%
Leucadia National Corp	798,805	20,306	Copart Inc ^(a)	293,300	9,931
			O'Reilly Automotive Inc ^(a)	884,888	51,766
Insurance - 11.63%			TJX Cos Inc	445,130	20,427
Alleghany Corp ^(a)	2,870	862


Schedule of Investments
MidCap Blend Fund
October 31, 2010


					Unrealized Appreciation (Depreciation)
					The net federal income tax unrealized appreciation (depreciation) and federal tax
COMMON STOCKS (continued)	Shares Held Value (000's)				cost of investments held as of the period end were as follows:
Retail (continued)
Yum! Brands Inc		287,607 $		14,254	Unrealized Appreciation	$ 216,098
			$ 111,027		Unrealized Depreciation	(78,481)
Semiconductors - 0.98%					Net Unrealized Appreciation (Depreciation)	$ 137,617
Microchip Technology Inc		377,560		12,150	Cost for federal income tax purposes	$ 1,100,972
					All dollar amounts are shown in thousands (000's)
Software - 5.51%
Broadridge Financial Solutions Inc		350,650		7,715	Portfolio Summary (unaudited)
Dun & Bradstreet Corp		223,051		16,597	Sector	Percent
Fidelity National Information Services Inc		524,290		14,208	Consumer, Non-cyclical	21 .38%
Intuit Inc ^(a)		353,214		16,954
					Financial	19 .66%
Microsoft Corp		484,300		12,902	Communications	15 .72%
			$ 68,376		Consumer, Cyclical	12 .02%
Telecommunications - 2.70%					Energy	11 .14%
American Tower Corp ^(a)		228,149		11,775
EchoStar Holding Corp ^(a)		408,648		8,663	Technology	6 .49%
					Basic Materials	5 .23%
Telephone & Data Systems Inc		140,928		4,909	Utilities	3 .66%
Telephone & Data Systems Inc - Special Shares		273,558		8,160	Industrial	2 .90%
			$ 33,507		Diversified	1 .64%
Textiles - 1.77%					Other Assets in Excess of Liabilities, Net	0 .16%
Cintas Corp		528,453		14,517	TOTAL NET ASSETS	100.00%
Mohawk Industries Inc ^(a)		130,206		7,466
			$ 21,983
Transportation - 0.08%
Heartland Express Inc		70,142		1,046

TOTAL COMMON STOCKS			$ 1,227,200
		Maturity
		Amount
REPURCHASE AGREEMENTS - 0.92%		(000's)	Value (000's)
Banks - 0.92%
Investment in Joint Trading Account; Bank of	$ 3,245		$ 3,245
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$3,309,533; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse		3,132		3,132
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $3,194,993; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche		2,976		2,976
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $3,035,244; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		2,036		2,036
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $2,076,746; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 11,389
TOTAL REPURCHASE AGREEMENTS			$ 11,389
Total Investments			$ 1,238,589
Other Assets in Excess of Liabilities, Net - 0.16%			$ 2,012
TOTAL NET ASSETS - 100.00%			$ 1,240,601


COMMON STOCKS - 97.16%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.70%			Chemicals (continued)
Interpublic Group of Cos Inc ^(a)	917,159 $	9,493	Eastman Chemical Co	3,823 $	300
			Ecolab Inc	200,787	9,903
Aerospace & Defense - 1.46%			FMC Corp	9,147	669
Alliant Techsystems Inc ^(a)	30,722	2,342	International Flavors & Fragrances Inc	61,495	3,084
Goodrich Corp	145,082	11,907	Lubrizol Corp	51,477	5,277
L-3 Communications Holdings Inc	6,872	496	LyondellBasell Industries NV ^(a)	183,340	4,925
Rockwell Collins Inc	49,016	2,966	PPG Industries Inc	43,665	3,349
Spirit Aerosystems Holdings Inc ^(a)	74,792	1,618	RPM International Inc	35,250	730
TransDigm Group Inc ^(a)	7,781	516	Sherwin-Williams Co/The	10,652	777
	$ 19,845		Sigma-Aldrich Corp	25,650	1,627
Airlines - 1.44%			Valspar Corp	37,560	1,205
Alaska Air Group Inc ^(a)	17,300	913		$ 49,228
Copa Holdings SA	4,991	253	Coal - 1.53%
Delta Air Lines Inc ^(a)	160,777	2,234	Alpha Natural Resources Inc ^(a)	155,240	7,013
Southwest Airlines Co	104,681	1,441	Arch Coal Inc	21,327	524
United Continental Holdings Inc ^(a)	506,535	14,709	Consol Energy Inc	19,236	707
	$ 19,550		Walter Energy Inc	142,310	12,517
Apparel - 1.54%				$ 20,761
Coach Inc	334,600	16,730	Commercial Services - 2.64%
Hanesbrands Inc ^(a)	25,256	626	Aaron's Inc	10,723	202
Polo Ralph Lauren Corp	33,957	3,290	Alliance Data Systems Corp ^(a)	8,430	512
VF Corp	2,860	238	Apollo Group Inc ^(a)	23,699	888
Warnaco Group Inc/The ^(a)	2,300	122	Career Education Corp ^(a)	22,170	388
	$ 21,006		DeVry Inc	19,815	948
Automobile Manufacturers - 0.18%			Emergency Medical Services Corp ^(a)	58,191	3,164
Navistar International Corp ^(a)	20,323	979	FTI Consulting Inc ^(a)	9,678	343
Oshkosh Corp ^(a)	51,121	1,509	Gartner Inc ^(a)	19,316	612
	$ 2,488		Global Payments Inc	16,720	651
Automobile Parts & Equipment - 1.36%			H&R Block Inc	100,436	1,184
Autoliv Inc	29,912	2,132	Hillenbrand Inc	15,900	342
BorgWarner Inc ^(a)	190,354	10,681	Iron Mountain Inc	33,594	732
Goodyear Tire & Rubber Co/The ^(a)	232,523	2,376	ITT Educational Services Inc ^(a)	21,849	1,410
Lear Corp ^(a)	12,209	1,080	KAR Auction Services Inc ^(a)	2,010	26
TRW Automotive Holdings Corp ^(a)	31,670	1,447	Lender Processing Services Inc	44,827	1,293
WABCO Holdings Inc ^(a)	16,434	763	Manpower Inc	66,520	3,641
	$ 18,479		Moody's Corp	77,358	2,093
Banks - 0.01%			Paychex Inc	51,001	1,413
Bank of Hawaii Corp	3,937	170	Pharmaceutical Product Development Inc	19,259	497
			Robert Half International Inc	23,706	643
Beverages - 1.27%			RR Donnelley & Sons Co	46,321	855
			SAIC Inc ^(a)	48,881	760
Brown-Forman Corp	28,702	1,745
Coca-Cola Enterprises Inc	30,877	741	SEI Investments Co	70,468	1,561
Dr Pepper Snapple Group Inc	44,065	1,611	Strayer Education Inc	3,552	497
Green Mountain Coffee Roasters Inc ^(a)	197,695	6,522	SuccessFactors Inc ^(a)	233,810	6,341
Hansen Natural Corp ^(a)	129,226	6,618	Towers Watson & Co	1,716	88
			Valassis Communications Inc ^(a)	13,000	429
	$ 17,237		Verisk Analytics Inc ^(a)	58,414	1,742
Biotechnology - 2.32%
Alexion Pharmaceuticals Inc ^(a)	198,715	13,572	Weight Watchers International Inc	8,481	284
Amylin Pharmaceuticals Inc ^(a)	22,661	295	Western Union Co/The	133,393	2,348
Cubist Pharmaceuticals Inc ^(a)	38,600	899		$ 35,887
Dendreon Corp ^(a)	22,860	834	Computers - 4.34%
Human Genome Sciences Inc ^(a)	168,732	4,536	CACI International Inc ^(a)	17,900	897
Illumina Inc ^(a)	19,340	1,050	Cadence Design Systems Inc ^(a)	227,300	1,925
Life Technologies Corp ^(a)	37,606	1,887	Diebold Inc	3,621	111
Myriad Genetics Inc ^(a)	24,965	498	DST Systems Inc	13,951	604
United Therapeutics Corp ^(a)	112,622	6,757	IHS Inc ^(a)	9,087	656
Vertex Pharmaceuticals Inc ^(a)	31,959	1,225	Isilon Systems Inc ^(a)	291,210	8,291
			Lexmark International Inc ^(a)	9,500	361
	$ 31,553		MICROS Systems Inc ^(a)	83,490	3,790
Building Materials - 0.27%			NCR Corp ^(a)	105,931	1,454
Lennox International Inc	12,411	509	NetApp Inc ^(a)	356,998	19,010
Martin Marietta Materials Inc	7,178	578	SanDisk Corp ^(a)	419,270	15,756
Masco Corp	28,432	303	Seagate Technology PLC ^(a)	134,137	1,965
Owens Corning Inc ^(a)	86,513	2,339
			Synopsys Inc ^(a)	77,653	1,987
	$ 3,729		Teradata Corp ^(a)	34,198	1,346
Chemicals - 3.62%			Western Digital Corp ^(a)	26,719	855
Airgas Inc	15,355	1,089
Albemarle Corp	61,518	3,084		$ 59,008
Ashland Inc	8,782	453	Consumer Products - 0.90%
Celanese Corp	29,344	1,046	Avery Dennison Corp	42,206	1,534
CF Industries Holdings Inc	95,565	11,710	Church & Dwight Co Inc	43,427	2,860
			Clorox Co	64,714	4,307


Schedule of Investments
MidCap Growth Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Consumer Products (continued)			Engineering & Contruction - 0.71%
Scotts Miracle-Gro Co/The	21,229 $	1,133	Aecom Technology Corp ^(a)	57,382 $	1,521
Tupperware Brands Corp	53,685	2,406	Chicago Bridge & Iron Co NV ^(a)	10,447	263
	$ 12,240		Fluor Corp	35,200	1,696
Cosmetics & Personal Care - 0.53%			Jacobs Engineering Group Inc ^(a)	13,879	536
Alberto-Culver Co	4,874	182	KBR Inc	43,878	1,114
Avon Products Inc	67,696	2,061	McDermott International Inc ^(a)	171,818	2,651
Estee Lauder Cos Inc/The	70,371	5,008	Shaw Group Inc/The ^(a)	60,602	1,852
	$ 7,251			$ 9,633
Distribution & Wholesale - 1.10%			Entertainment - 0.11%
Fastenal Co	195,880	10,084	Bally Technologies Inc ^(a)	14,099	509
Fossil Inc ^(a)	9,516	562	International Game Technology	47,106	734
Ingram Micro Inc ^(a)	60,049	1,060	International Speedway Corp	12,060	276
LKQ Corp ^(a)	25,787	561		$ 1,519
WESCO International Inc ^(a)	6,611	283	Environmental Control - 0.33%
WW Grainger Inc	19,376	2,403	Nalco Holding Co	24,268	684
	$ 14,953		Republic Services Inc	74,656	2,225
Diversified Financial Services - 3.85%			Stericycle Inc ^(a)	13,374	960
Affiliated Managers Group Inc ^(a)	8,000	685	Waste Connections Inc	16,226	661
Ameriprise Financial Inc	50,916	2,632		$ 4,530
Credit Acceptance Corp ^(a)	3,700	218	Food - 1.84%
Discover Financial Services	322,500	5,693	Campbell Soup Co	21,367	774
Eaton Vance Corp	31,888	918	ConAgra Foods Inc	65,328	1,469
Federated Investors Inc	15,473	386	Flowers Foods Inc	5,300	135
IntercontinentalExchange Inc ^(a)	123,729	14,212	Hershey Co/The	164,801	8,156
Invesco Ltd	316,261	7,274	HJ Heinz Co	25,128	1,234
Lazard Ltd	14,533	536	Hormel Foods Corp	19,600	900
NASDAQ OMX Group Inc/The ^(a)	32,987	693	McCormick & Co Inc/MD	12,814	567
NYSE Euronext	72,895	2,233	Sara Lee Corp	74,503	1,068
T Rowe Price Group Inc	274,965	15,197	Tyson Foods Inc	29,700	462
TD Ameritrade Holding Corp	36,852	630	Whole Foods Market Inc	257,983	10,255
Waddell & Reed Financial Inc	35,546	1,033		$ 25,020
	$ 52,340		Forest Products & Paper - 0.21%
Electric - 0.15%			International Paper Co	76,517	1,934
Calpine Corp ^(a)	41,455	518	Plum Creek Timber Co Inc	17,682	652
Great Plains Energy Inc	14,500	276	Rayonier Inc	6,079	317
ITC Holdings Corp	6,965	436		$ 2,903
Pinnacle West Capital Corp	4,200	173	Gas - 0.38%
TECO Energy Inc	34,800	612	Questar Corp	297,640	5,051
	$ 2,015		Southern Union Co	6,300	158
Electrical Components & Equipment - 0.23%				$ 5,209
AMETEK Inc	19,550	1,056	Hand & Machine Tools - 0.16%
Energizer Holdings Inc ^(a)	2,900	217	Lincoln Electric Holdings Inc	11,251	672
General Cable Corp ^(a)	4,761	133	Regal-Beloit Corp	26,538	1,532
Hubbell Inc	33,022	1,784		$ 2,204
	$ 3,190		Healthcare - Products - 3.87%
Electronics - 1.72%			CareFusion Corp ^(a)	49,400	1,193
Agilent Technologies Inc ^(a)	129,414	4,504	Cooper Cos Inc/The	2,256	111
Amphenol Corp	32,916	1,650	CR Bard Inc	32,464	2,698
Arrow Electronics Inc ^(a)	3,409	101	DENTSPLY International Inc	26,722	839
AVX Corp	59,045	847	Edwards Lifesciences Corp ^(a)	20,689	1,322
Dolby Laboratories Inc ^(a)	8,502	524	Gen-Probe Inc ^(a)	36,166	1,751
FLIR Systems Inc ^(a)	29,083	810	Henry Schein Inc ^(a)	157,739	8,856
Garmin Ltd	22,379	735	Hill-Rom Holdings Inc	13,585	526
Gentex Corp	25,205	504	Hologic Inc ^(a)	21,300	341
Itron Inc ^(a)	33,800	2,054	Hospira Inc ^(a)	199,108	11,844
Jabil Circuit Inc	32,501	499	IDEXX Laboratories Inc ^(a)	10,527	631
Mettler-Toledo International Inc ^(a)	8,506	1,111	Intuitive Surgical Inc ^(a)	41,429	10,894
National Instruments Corp	14,900	518	Kinetic Concepts Inc ^(a)	54,945	2,090
PerkinElmer Inc	62,300	1,461	Patterson Cos Inc	84,948	2,349
Thomas & Betts Corp ^(a)	38,945	1,696	ResMed Inc ^(a)	92,560	2,950
Trimble Navigation Ltd ^(a)	19,260	690	Teleflex Inc	29,191	1,628
Vishay Intertechnology Inc ^(a)	33,100	374	Thoratec Corp ^(a)	14,638	478
Waters Corp ^(a)	66,188	4,906	Varian Medical Systems Inc ^(a)	22,557	1,426
Watts Water Technologies Inc	10,700	376	Zimmer Holdings Inc ^(a)	15,100	716
	$ 23,360			$ 52,643
Energy - Alternate Sources - 0.58%			Healthcare - Services - 2.36%
Covanta Holding Corp	1,917	30	AMERIGROUP Corp ^(a)	87,230	3,640
First Solar Inc ^(a)	57,338	7,895	Community Health Systems Inc ^(a)	72,589	2,183
	$ 7,925		Covance Inc ^(a)	11,806	555
			DaVita Inc ^(a)	105,311	7,556


Schedule of Investments
MidCap Growth Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Healthcare - Services (continued)			Machinery - Diversified - 2.29%
Health Management Associates Inc ^(a)	63,917 $	512	Babcock & Wilcox Co ^(a)	24,123 $	551
Humana Inc ^(a)	18,510	1,079	CNH Global NV ^(a)	13,518	536
Laboratory Corp of America Holdings ^(a)	35,141	2,858	Cummins Inc	203,961	17,969
Lincare Holdings Inc	25,374	665	Flowserve Corp	8,758	876
Quest Diagnostics Inc	23,559	1,158	Gardner Denver Inc	30,945	1,789
Tenet Healthcare Corp ^(a)	89,260	389	Graco Inc	15,473	533
Universal Health Services Inc	277,918	11,470	IDEX Corp	67,551	2,437
	$ 32,065		Rockwell Automation Inc	66,941	4,175
Home Builders - 0.18%			Roper Industries Inc	14,922	1,036
NVR Inc ^(a)	3,975	2,494	Zebra Technologies Corp ^(a)	36,300	1,299
				$ 31,201
Home Furnishings - 0.66%			Media - 0.86%
Harman International Industries Inc ^(a)	49,600	1,664	CBS Corp	20,661	350
Tempur-Pedic International Inc ^(a)	168,973	5,830	Discovery Communications Inc - A Shares ^(a)	32,840	1,465
Whirlpool Corp	19,293	1,463	Factset Research Systems Inc	37,856	3,323
	$ 8,957		John Wiley & Sons Inc	38,728	1,671
Housewares - 0.11%			McGraw-Hill Cos Inc/The	81,215	3,057
Toro Co	27,285	1,549	Meredith Corp	3,906	133
			Scripps Networks Interactive	16,424	836
Insurance - 0.83%			Sirius XM Radio Inc ^(a)	615,969	921
Aon Corp	13,413	533		$ 11,756
Arch Capital Group Ltd ^(a)	17,033	1,471	Metal Fabrication & Hardware - 0.29%
Arthur J Gallagher & Co	6,649	187	Timken Co	83,868	3,474
Axis Capital Holdings Ltd	61,023	2,076	Valmont Industries Inc	5,657	446
Brown & Brown Inc	15,399	343		$ 3,920
Endurance Specialty Holdings Ltd	42,364	1,754	Mining - 0.53%
Erie Indemnity Co	5,267	301	Compass Minerals International Inc	15,200	1,199
Hartford Financial Services Group Inc	51,900	1,245	Silver Wheaton Corp ^(a)	194,070	5,579
Marsh & McLennan Cos Inc	89,618	2,239	Titanium Metals Corp ^(a)	21,821	429
Reinsurance Group of America Inc	13,500	676		$ 7,207
Validus Holdings Ltd	16,773	475	Miscellaneous Manufacturing - 1.33%
	$ 11,300		Carlisle Cos Inc	1,129	40
Internet - 5.07%			Cooper Industries PLC	30,791	1,614
Akamai Technologies Inc ^(a)	138,365	7,149	Donaldson Co Inc	14,464	705
Equinix Inc ^(a)	7,151	602	Dover Corp	21,694	1,152
Expedia Inc	55,471	1,606	Eaton Corp	20,739	1,842
F5 Networks Inc ^(a)	217,644	25,617	Harsco Corp	1,541	36
GSI Commerce Inc ^(a)	218,690	5,341	ITT Corp	9,586	452
IAC/InterActiveCorp ^(a)	32,800	915	Pall Corp	18,563	792
McAfee Inc ^(a)	24,653	1,166	Parker Hannifin Corp	110,337	8,446
MercadoLibre Inc ^(a)	58,400	3,862	Pentair Inc	13,097	429
NetFlix Inc ^(a)	15,060	2,613	SPX Corp	2,470	166
Priceline.com Inc ^(a)	26,708	10,064	Textron Inc	113,750	2,368
Symantec Corp ^(a)	56,200	909		$ 18,042
VeriSign Inc ^(a)	250,783	8,715
			Office & Business Equipment - 0.04%
WebMD Health Corp ^(a)	9,427	493	Pitney Bowes Inc	27,275	598
	$ 69,052
Iron & Steel - 1.58%			Oil & Gas - 3.52%
Allegheny Technologies Inc	15,572	820	Atlas Energy Inc ^(a)	14,619	426
Carpenter Technology Corp	27,100	966	Atwood Oceanics Inc ^(a)	2,897	94
Cliffs Natural Resources Inc	139,306	9,083	Cimarex Energy Co	170,336	13,073
Reliance Steel & Aluminum Co	59,939	2,509	Concho Resources Inc/Midland TX ^(a)	151,387	10,395
United States Steel Corp	188,570	8,069	Diamond Offshore Drilling Inc	5,692	377
	$ 21,447		EQT Corp	25,665	961
Leisure Products & Services - 1.16%			Forest Oil Corp ^(a)	18,461	567
Harley-Davidson Inc	43,175	1,324	Holly Corp	47,064	1,541
Royal Caribbean Cruises Ltd ^(a)	106,190	4,199	Mariner Energy Inc ^(a)	1,975	49
WMS Industries Inc ^(a)	235,140	10,259	Murphy Oil Corp	40,483	2,638
	$ 15,782		Nabors Industries Ltd ^(a)	126,657	2,647
Lodging - 2.45%			Noble Corp	4,343	150
Choice Hotels International Inc	502	19	Petrohawk Energy Corp ^(a)	33,898	577
Marriott International Inc/DE	49,761	1,844	QEP Resources Inc	130,540	4,312
Starwood Hotels & Resorts Worldwide Inc	324,172	17,551	Quicksilver Resources Inc ^(a)	1,975	29
Wynn Resorts Ltd	129,336	13,860	Range Resources Corp	25,314	946
	$ 33,274		Rowan Cos Inc ^(a)	37,682	1,240
Machinery - Construction & Mining - 1.21%			SM Energy Co	10,902	454
Bucyrus International Inc	11,935	814	Ultra Petroleum Corp ^(a)	24,048	990
Joy Global Inc	220,080	15,614	Whiting Petroleum Corp ^(a)	64,552	6,484
	$ 16,428			$ 47,950


Schedule of Investments
MidCap Growth Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Oil & Gas Services - 1.11%			Retail (continued)
Cameron International Corp ^(a)	164,192 $	7,184	Ltd Brands Inc	136,387 $	4,009
Core Laboratories NV	8,327	648	Macy's Inc	10,670	252
Dresser-Rand Group Inc ^(a)	50,837	1,739	Nordstrom Inc	311,243	11,986
Dril-Quip Inc ^(a)	2,900	200	O'Reilly Automotive Inc ^(a)	21,826	1,277
Exterran Holdings Inc ^(a)	1,693	43	Panera Bread Co ^(a)	27,635	2,473
FMC Technologies Inc ^(a)	19,213	1,385	PetSmart Inc	82,800	3,099
Oil States International Inc ^(a)	24,205	1,237	PF Chang's China Bistro Inc	91,130	4,184
Superior Energy Services Inc ^(a)	1,442	40	Phillips-Van Heusen Corp	8,971	550
Weatherford International Ltd ^(a)	154,493	2,597	Ross Stores Inc	78,480	4,630
	$ 15,073		Tiffany & Co	38,176	2,023
Packaging & Containers - 0.16%			Tractor Supply Co	62,024	2,457
Ball Corp	4,951	319	Urban Outfitters Inc ^(a)	94,341	2,903
Crown Holdings Inc ^(a)	34,441	1,109	Wendy's/Arby's Group Inc	124,900	575
Pactiv Corp ^(a)	18,855	625	Williams-Sonoma Inc	44,852	1,451
Temple-Inland Inc	5,079	105		$ 104,534
	$ 2,158		Savings & Loans - 0.01%
Pharmaceuticals - 2.94%			Hudson City Bancorp Inc	10,131	118
AmerisourceBergen Corp	385,737	12,660
Cardinal Health Inc	6,700	232	Semiconductors - 7.23%
Cephalon Inc ^(a)	14,700	977	Advanced Micro Devices Inc ^(a)	306,038	2,244
Herbalife Ltd	30,006	1,916	Altera Corp	47,898	1,495
Mead Johnson Nutrition Co	151,310	8,900	Analog Devices Inc	55,237	1,860
Mylan Inc/PA ^(a)	96,782	1,967	ASML Holding NV	281,420	9,340
Omnicare Inc	3,103	75	Atmel Corp ^(a)	78,204	693
Onyx Pharmaceuticals Inc ^(a)	133,380	3,578	Avago Technologies Ltd	27,102	669
Perrigo Co	21,549	1,420	Broadcom Corp	236,290	9,626
SXC Health Solutions Corp ^(a)	16,181	630	Cree Inc ^(a)	16,984	871
Valeant Pharmaceuticals International Inc	239,300	6,607	Cypress Semiconductor Corp ^(a)	675,840	9,529
VCA Antech Inc ^(a)	21,948	454	Fairchild Semiconductor International Inc ^(a)	27,600	311
Warner Chilcott PLC	23,786	572	Lam Research Corp ^(a)	301,853	13,822
	$ 39,988		Linear Technology Corp	42,511	1,370
			Marvell Technology Group Ltd ^(a)	137,555	2,656
Pipelines - 0.03%
El Paso Corp	33,062	438	Maxim Integrated Products Inc	158,047	3,423
			Microchip Technology Inc	29,113	937
			Micron Technology Inc ^(a)	17,700	146
Real Estate - 0.86%
CB Richard Ellis Group Inc ^(a)	531,466	9,752	National Semiconductor Corp	112,613	1,543
Jones Lang LaSalle Inc	25,815	2,015	Netlogic Microsystems Inc ^(a)	309,108	9,292
			Novellus Systems Inc ^(a)	81,553	2,382
	$ 11,767		NVIDIA Corp ^(a)	310,367	3,734
REITS - 1.03%			ON Semiconductor Corp ^(a)	225,753	1,732
Apartment Investment & Management Co	14,707	343	PMC - Sierra Inc ^(a)	3,102	24
Digital Realty Trust Inc	153,578	9,173	QLogic Corp ^(a)	71,375	1,254
Equity Residential	4,621	225	Rambus Inc ^(a)	26,796	530
Essex Property Trust Inc	11,688	1,321	Rovi Corp ^(a)	16,126	817
Federal Realty Investment Trust	6,660	546	Silicon Laboratories Inc ^(a)	4,200	168
General Growth Properties Inc	32,106	539	Skyworks Solutions Inc ^(a)	32,716	749
Hospitality Properties Trust	34,400	785	Teradyne Inc ^(a)	210,019	2,360
UDR Inc	2,731	61
Ventas Inc	10,894	583	Varian Semiconductor Equipment Associates Inc (a)	408,776	13,354

Vornado Realty Trust	5,712	499
	$ 14,075		Xilinx Inc	51,282	1,375
Retail - 7.68%				$ 98,306

Abercrombie & Fitch Co	156,200	6,695	Software - 5.72%
Advance Auto Parts Inc	60,110	3,906	Allscripts Healthcare Solutions Inc ^(a)	35,400	676
Aeropostale Inc (a)	34,613	844	ANSYS Inc ^(a)	14,303	647
AutoZone Inc ^(a)	7,391	1,756	Autodesk Inc ^(a)	123,098	4,454
Bed Bath & Beyond Inc ^(a)	117,673	5,166	BMC Software Inc ^(a)	82,218	3,738
Big Lots Inc ^(a)	38,668	1,212	Broadridge Financial Solutions Inc	74,821	1,646
BJ's Wholesale Club Inc ^(a)	35,900	1,498	CA Inc	224,112	5,201
Brinker International Inc	22,812	423	Cerner Corp ^(a)	79,383	6,972
CarMax ^(a)Inc	35,340	1,095	Citrix Systems Inc ^(a)	78,411	5,024
Chico's FAS Inc	45,631	444	Compuware Corp ^(a)	32,463	325
Childrens Place Retail Stores Inc/The ^(a)	4,500	198	Dun & Bradstreet Corp	9,263	689
Chipotle Mexican Grill Inc ^(a)	18,268	3,840	Electronic Arts Inc ^(a)	186,150	2,950
			Emdeon Inc ^(a)	6,659	91
Darden Restaurants Inc	99,492	4,547
Dick's Sporting Goods Inc ^(a)	184,849	5,328	Fidelity National Information Services Inc	87,855	2,381
Dollar Tree Inc ^(a)	209,536	10,752	Fiserv Inc ^(a)	37,583	2,049
Family Dollar Stores Inc	66,669	3,079	Informatica Corp ^(a)	14,512	590
GameStop Corp (a)	8,000	157	Intuit Inc ^(a)	156,868	7,530
Guess? Inc	270,783	10,539	MSCI Inc ^(a)	183,212	6,568
J Crew Group Inc ^(a)	37,081	1,186	Nuance Communications Inc ^(a)	35,939	565
			Red Hat Inc ^(a)	29,952	1,266


Schedule of Investments
MidCap Growth Fund III
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)					Maturity
Software (continued)						Amount
Salesforce.com Inc ^(a)	150,221 $		17,436	REPURCHASE AGREEMENTS (continued)		(000's)	Value (000's)
Solera Holdings Inc	11,059		531	Banks (continued)
VeriFone Systems Inc ^(a)	191,910		6,493	Investment in Joint Trading Account; Morgan	$ 5,200		$ 5,200
		$ 77,822		Stanley Repurchase Agreement; 0.20% dated
Telecommunications - 5.19%				10/29/10 maturing 11/01/10 (collateralized by
Acme Packet Inc ^(a)	112,180		4,437	Sovereign Agency Issues; $5,303,450; 1.88%
Amdocs Ltd ^(a)	82,056		2,518	- 6.13%; dated 01/09/12 - 02/21/13)
Arris Group Inc ^(a)	71,300		664				$ 29,084
Aruba Networks Inc ^(a)	311,530		6,826	TOTAL REPURCHASE AGREEMENTS			$ 29,084
Atheros Communications Inc ^(a)	325,627		10,107	Total Investments			$ 1,351,038
Crown Castle International Corp ^(a)	391,752		16,892	Other Assets in Excess of Liabilities, Net - 0.70%			$ 9,554
Finisar Corp ^(a)	160,440		2,729	TOTAL NET ASSETS - 100.00%			$ 1,360,592
Frontier Communications Corp	67,761		595
Harris Corp	33,467		1,513
JDS Uniphase Corp ^(a)	40,930		430	(a) Non-Income Producing Security
Juniper Networks Inc ^(a)	162,726		5,271
LogMeIn Inc ^(a)	125,712		4,994
NeuStar Inc ^(a)	19,143		494
NII Holdings Inc ^(a)	194,569		8,135	Unrealized Appreciation (Depreciation)
Polycom Inc ^(a)	21,755		735	The net federal income tax unrealized appreciation (depreciation) and federal tax
RF Micro Devices Inc ^(a)	52,100		380	cost of investments held as of the period end were as follows:
SBA Communications Corp ^(a)	18,487		726
				Unrealized Appreciation			$ 304,240
Telephone & Data Systems Inc	9,500		331	Unrealized Depreciation			(17,224)
Tellabs Inc	95,700		653	Net Unrealized Appreciation (Depreciation)			$ 287,016
tw telecom inc ^(a)	84,848		1,560
				Cost for federal income tax purposes			$ 1,064,022
Windstream Corp	51,209		648	All dollar amounts are shown in thousands (000's)
		$ 70,638
Textiles - 0.03%				Portfolio Summary (unaudited)
Cintas Corp	13,200		363	Sector			Percent
				Consumer, Non-cyclical			18 .67%
Toys, Games & Hobbies - 0.15%				Consumer, Cyclical			18 .15%
Hasbro Inc	23,925		1,107	Technology			17 .33%
Mattel Inc	38,793		905	Communications			11 .82%
		$ 2,012		Industrial			11 .36%
Transportation - 1.17%				Financial			8 .73%
Canadian Pacific Railway Ltd	97,850		6,374	Energy			6 .77%
CH Robinson Worldwide Inc	26,212		1,847	Basic Materials			5 .94%
Expeditors International of Washington Inc	33,641		1,661	Utilities			0 .53%
Frontline Ltd/Bermuda	10,830		311	Other Assets in Excess of Liabilities, Net			0 .70%
JB Hunt Transport Services Inc	14,405		518	TOTAL NET ASSETS			100.00%
Kansas City Southern ^(a)	24,900		1,091
Kirby Corp ^(a)	895		38
Landstar System Inc	12,806		482
Ryder System Inc	39,100		1,711
UTI Worldwide Inc	95,000		1,826
		$ 15,859
Trucking & Leasing - 0.03%
Amerco Inc ^(a)	5,000		412

TOTAL COMMON STOCKS		$ 1,321,954
	Maturity
	Amount
REPURCHASE AGREEMENTS - 2.14%	(000's)	Value (000's)
Banks - 2.14%
Investment in Joint Trading Account; Bank of	$ 8,286	$ 8,286
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$8,451,660; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse	7,999		7,999
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $8,159,153; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche	7,599		7,599
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $7,751,196; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)


Schedule of Investments
MidCap Value Fund I
October 31, 2010




COMMON STOCKS - 96.88%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.19%			Beverages - 0.98%
Clear Channel Outdoor Holdings Inc ^(a)	8,256 $	98	Coca-Cola Enterprises Inc	16,257 $	390
Interpublic Group of Cos Inc ^(a)	199,600	2,066	Constellation Brands Inc ^(a)	117,481	2,318
Lamar Advertising Co ^(a)	15,100	513	Dr Pepper Snapple Group Inc	77,087	2,818
	$ 2,677		Green Mountain Coffee Roasters Inc ^(a)	23,300	769
Aerospace & Defense - 0.60%			Hansen Natural Corp ^(a)	117,078	5,995
BE Aerospace Inc ^(a)	154,059	5,663	Molson Coors Brewing Co	41,780	1,973
Goodrich Corp	11,704	961		$ 14,263
L-3 Communications Holdings Inc	15,147	1,094	Biotechnology - 0.95%
Rockwell Collins Inc	9,868	597	Alexion Pharmaceuticals Inc ^(a)	14,300	977
Spirit Aerosystems Holdings Inc ^(a)	17,434	377	Biogen Idec Inc ^(a)	185,731	11,647
	$ 8,692		Bio-Rad Laboratories Inc ^(a)	3,901	354
Agriculture - 0.85%			Life Technologies Corp ^(a)	16,250	815
Bunge Ltd	78,055	4,689		$ 13,793
Lorillard Inc	77,274	6,594	Building Materials - 0.43%
Reynolds American Inc	15,664	1,017	Armstrong World Industries Inc ^(a)	3,746	156
	$ 12,300		Eagle Materials Inc	10,804	253
Airlines - 0.39%			Masco Corp	430,188	4,586
Copa Holdings SA	2,294	116	Owens Corning Inc ^(a)	46,243	1,251
JetBlue Airways Corp ^(a)	488,359	3,409		$ 6,246
Southwest Airlines Co	136,967	1,884	Chemicals - 2.72%
United Continental Holdings Inc ^(a)	8,491	247	Airgas Inc	1,632	116
	$ 5,656		Ashland Inc	16,510	853
Apparel - 0.48%			Cabot Corp	43,003	1,463
Hanesbrands Inc ^(a)	183,567	4,553	Celanese Corp	138,890	4,951
VF Corp	28,692	2,388	CF Industries Holdings Inc	36,473	4,469
	$ 6,941		Cytec Industries Inc	54,278	2,688
Automobile Manufacturers - 0.17%			Eastman Chemical Co	27,818	2,186
Navistar International Corp ^(a)	33,978	1,637	FMC Corp	7,576	554
Oshkosh Corp ^(a)	27,600	815	Huntsman Corp	877,945	12,159
	$ 2,452		International Flavors & Fragrances Inc	14,862	745
Automobile Parts & Equipment - 1.20%			Mosaic Co/The	3,900	285
Autoliv Inc	7,344	524	PPG Industries Inc	29,410	2,256
BorgWarner Inc ^(a)	1,799	101	RPM International Inc	112,754	2,335
Federal-Mogul Corp ^(a)	3,044	60	Sherwin-Williams Co/The	36,089	2,634
Lear Corp ^(a)	118,382	10,465	Sigma-Aldrich Corp	1,832	116
TRW Automotive Holdings Corp ^(a)	136,936	6,257	Valspar Corp	51,842	1,664
	$ 17,407			$ 39,474
Banks - 4.43%			Coal - 0.79%
			Alpha Natural Resources Inc ^(a)	144,258	6,516
Associated Banc-Corp	33,892	429
BancorpSouth Inc	105,345	1,389	Arch Coal Inc	33,331	819
Bank of Hawaii Corp	48,999	2,117	Consol Energy Inc	14,141	520
BB&T Corp	18,300	428	Massey Energy Co	36,825	1,550
BOK Financial Corp	5,048	233	Peabody Energy Corp	34,924	1,847
Capital One Financial Corp	2,400	90	Walter Energy Inc	2,294	202
CIT Group Inc ^(a)	40,879	1,771		$ 11,454
City National Corp/CA	18,101	934	Commercial Services - 0.96%
Comerica Inc	229,240	8,202	Aaron's Inc	6,425	121
Commerce Bancshares Inc	28,516	1,051	Convergys Corp ^(a)	87,547	991
Cullen/Frost Bankers Inc	43,545	2,283	CoreLogic Inc	82,671	1,453
East West Bancorp Inc	43,475	767	DeVry Inc	100	5
Fifth Third Bancorp	736,919	9,256	Education Management Corp ^(a)	61,671	740
First Citizens BancShares Inc/NC	1,148	214	Equifax Inc	16,523	547
First Horizon National Corp ^(a)	394,835	3,984	FTI Consulting Inc ^(a)	1,835	65
Fulton Financial Corp	90,587	846	Genpact Ltd ^(a)	27,696	440
Huntington Bancshares Inc/OH	167,384	949	H&R Block Inc	39,324	464
KeyCorp	225,513	1,847	Hillenbrand Inc	33,731	725
M&T Bank Corp	70,852	5,296	ITT Educational Services Inc ^(a)	1,600	103
Marshall & Ilsley Corp	190,417	1,125	KAR Auction Services Inc ^(a)	4,819	62
Morgan Stanley	38,100	948	Lender Processing Services Inc	20,100	580
Northern Trust Corp	13,300	660	Manpower Inc	9,410	515
PNC Financial Services Group Inc	4,500	243	Monster Worldwide Inc ^(a)	19,000	343
Popular Inc ^(a)	134,026	366	Moody's Corp	66,500	1,800
Regions Financial Corp	380,836	2,399	Morningstar Inc	11,839	578
SunTrust Banks Inc	577,630	14,452	Pharmaceutical Product Development Inc	16,600	429
Synovus Financial Corp	74,950	162	Quanta Services Inc ^(a)	24,353	479
TCF Financial Corp	28,228	372	RR Donnelley & Sons Co	25,474	470
Valley National Bancorp	59,219	790	Service Corp International/US	105,287	871
Zions Bancorporation	30,808	636	Total System Services Inc	32,818	512
	$ 64,239		Towers Watson & Co	7,114	366


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Commercial Services (continued)			Electric (continued)
Weight Watchers International Inc	37,358 $	1,251	NRG Energy Inc ^(a)	57,117 $	1,137
	$ 13,910		NSTAR	12,314	514
Computers - 0.62%			NV Energy Inc	717,892	9,806
Brocade Communications Systems Inc ^(a)	445,249	2,813	OGE Energy Corp	44,839	1,981
Cadence Design Systems Inc ^(a)	82,600	700	Pepco Holdings Inc	25,934	499
Computer Sciences Corp	19,845	973	Pinnacle West Capital Corp	143,778	5,918
Diebold Inc	34,227	1,050	PPL Corp	414,613	11,153
DST Systems Inc	25,061	1,084	Progress Energy Inc	306,201	13,779
Lexmark International Inc ^(a)	11,005	418	SCANA Corp	268,280	10,957
NCR Corp ^(a)	24,617	338	TECO Energy Inc	103,791	1,826
Seagate Technology PLC ^(a)	27,080	397	Westar Energy Inc	141,621	3,583
Synopsys Inc ^(a)	19,277	493	Wisconsin Energy Corp	42,141	2,509
Western Digital Corp ^(a)	23,638	757	Xcel Energy Inc	667,326	15,922
	$ 9,023			$ 151,745
Consumer Products - 0.72%			Electrical Components & Equipment - 0.25%
Avery Dennison Corp	12,935	470	Energizer Holdings Inc ^(a)	9,409	704
Clorox Co	1,607	107	General Cable Corp ^(a)	13,956	390
Fortune Brands Inc	150,586	8,139	Hubbell Inc	36,398	1,966
Jarden Corp	55,166	1,769	Molex Inc	15,377	312
	$ 10,485		Sunpower Corp - Class A ^(a)	22,500	307
Cosmetics & Personal Care - 0.14%				$ 3,679
Alberto-Culver Co	13,037	486	Electronics - 1.29%
Avon Products Inc	49,589	1,510	Amphenol Corp	119,863	6,009
	$ 1,996		Arrow Electronics Inc ^(a)	14,458	428
			Avnet Inc ^(a)	19,647	585
Distribution & Wholesale - 0.28%
Fastenal Co	34,913	1,797	AVX Corp	35,769	514
Genuine Parts Co	20,655	989	Garmin Ltd	115,269	3,785
Ingram Micro Inc ^(a)	60,105	1,061	Itron Inc ^(a)	25,000	1,519
WESCO International Inc ^(a)	5,737	246	Jabil Circuit Inc	10,208	157
	$ 4,093		National Instruments Corp	10,300	358
Diversified Financial Services - 3.78%			PerkinElmer Inc	50,501	1,184
Ameriprise Financial Inc	33,993	1,757	Tech Data Corp ^(a)	52,763	2,268
BlackRock Inc	21,500	3,676	Thomas & Betts Corp ^(a)	8,720	380
Discover Financial Services	227,413	4,014	Vishay Intertechnology Inc ^(a)	124,058	1,402
E*Trade Financial Corp (a)	25,474	364	Vishay Precision Group Inc ^(a)	4,818	82
Federated Investors Inc	5,737	143		$ 18,671
IntercontinentalExchange Inc ^(a)	10,291	1,182	Energy - Alternate Sources - 0.03%
Invesco Ltd	877,681	20,187	Covanta Holding Corp	23,606	373
Janus Capital Group Inc	55,200	583
Jefferies Group Inc	58,832	1,408	Engineering & Contruction - 0.26%
Lazard Ltd	110,522	4,078	Aecom Technology Corp ^(a)	13,999	371
Legg Mason Inc	43,661	1,355	Chicago Bridge & Iron Co NV ^(a)	11,933	301
NASDAQ OMX Group Inc/The ^(a)	105,431	2,216	Fluor Corp	19,457	938
NYSE Euronext	92,041	2,821	Jacobs Engineering Group Inc ^(a)	9,868	381
Raymond James Financial Inc	21,693	612	KBR Inc	19,737	501
SLM Corp ^(a)	744,143	8,855	McDermott International Inc ^(a)	9,638	149
TD Ameritrade Holding Corp	57,900	989	Shaw Group Inc/The ^(a)	7,114	217
Waddell & Reed Financial Inc	18,573	540	URS Corp ^(a)	24,869	968
	$ 54,780			$ 3,826
Electric - 10.47%			Entertainment - 0.17%
AES Corp/The ^(a)	77,011	919	DreamWorks Animation SKG Inc ^(a)	2,400	85
Allegheny Energy Inc	54,536	1,265	International Game Technology	25,800	402
Alliant Energy Corp	162,419	5,933	International Speedway Corp	24,732	565
Ameren Corp	280,016	8,115	Madison Square Garden Inc ^(a)	11,758	244
American Electric Power Co Inc	135,668	5,079	Regal Entertainment Group	87,410	1,180
Calpine Corp ^(a)	61,900	774		$ 2,476
CMS Energy Corp	601,250	11,051	Environmental Control - 0.46%
Consolidated Edison Inc	102,655	5,104	Nalco Holding Co	14,834	418
Constellation Energy Group Inc	21,393	647	Republic Services Inc	205,006	6,111
DPL Inc	117,568	3,069	Waste Connections Inc	3,300	135
DTE Energy Co	23,758	1,111		$ 6,664
Duke Energy Corp	67,060	1,221	Food - 3.28%
Edison International	301,185	11,114	Campbell Soup Co	14,955	542
FirstEnergy Corp	106,772	3,878	ConAgra Foods Inc	466,745	10,497
Great Plains Energy Inc	149,465	2,844	Corn Products International Inc	10,846	461
Hawaiian Electric Industries Inc	45,202	1,019	Dean Foods Co ^(a)	36,031	375
Integrys Energy Group Inc	31,666	1,684	Del Monte Foods Co	410,842	5,891
ITC Holdings Corp	16,720	1,047	Flowers Foods Inc	9,687	247
MDU Resources Group Inc	21,787	434	Hershey Co/The	25,233	1,248
Northeast Utilities	187,119	5,853	HJ Heinz Co	143,357	7,040


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Food (continued)			Holding Companies - Diversified - 0.04%
Hormel Foods Corp	26,426 $	1,214	Leucadia National Corp	22,720 $	578
JM Smucker Co/The	176,400	11,340
Kellogg Co	22,003	1,106	Home Builders - 0.45%
McCormick & Co Inc/MD	31,968	1,413	DR Horton Inc	83,581	872
Ralcorp Holdings Inc ^(a)	7,245	450	KB Home	33,600	353
Safeway Inc	51,300	1,175	NVR Inc ^(a)	7,141	4,480
Sara Lee Corp	128,729	1,845	Pulte Group Inc ^(a)	37,283	293
SUPERVALU Inc	198,239	2,139	Thor Industries Inc	15,100	476
Tyson Foods Inc	40,392	628		$ 6,474
	$ 47,611		Home Furnishings - 0.07%
Forest Products & Paper - 0.93%			Harman International Industries Inc ^(a)	19,212	645
Domtar Corp	20,434	1,622	Whirlpool Corp	5,508	417
International Paper Co	19,278	487		$ 1,062
MeadWestvaco Corp	101,327	2,607	Housewares - 0.67%
Plum Creek Timber Co Inc	74,404	2,741	Newell Rubbermaid Inc	547,301	9,660
Rayonier Inc	58,694	3,064
Weyerhaeuser Co	179,163	2,906	Insurance - 9.54%
	$ 13,427		Alleghany Corp ^(a)	1,309	393
Gas - 1.43%			Allied World Assurance Co Holdings Ltd	25,089	1,435
AGL Resources Inc	19,358	760	American Financial Group Inc/OH	82,770	2,531
Atmos Energy Corp	36,532	1,076	American International Group Inc ^(a)	13,999	588
CenterPoint Energy Inc	55,079	912	American National Insurance Co	1,423	112
Energen Corp	10,154	453	Aon Corp	36,877	1,466
National Fuel Gas Co	8,492	469	Arch Capital Group Ltd ^(a)	28,192	2,436
NiSource Inc	278,536	4,822	Arthur J Gallagher & Co	25,676	723
Questar Corp	24,652	418	Aspen Insurance Holdings Ltd	96,977	2,751
Sempra Energy	134,543	7,195	Assurant Inc	43,391	1,715
Southern Union Co	125,737	3,159	Assured Guaranty Ltd	168,143	3,204
UGI Corp	47,409	1,427	Axis Capital Holdings Ltd	48,251	1,641
	$ 20,691		Brown & Brown Inc	17,456	389
Hand & Machine Tools - 0.35%			Cincinnati Financial Corp	155,846	4,588
Kennametal Inc	25,902	884	CNA Financial Corp ^(a)	29,478	817
Regal-Beloit Corp	13,147	759	Endurance Specialty Holdings Ltd	71,740	2,970
Snap-On Inc	26,563	1,355	Erie Indemnity Co	1,556	89
Stanley Black & Decker Inc	33,584	2,081	Everest Re Group Ltd	147,481	12,430
	$ 5,079		Fidelity National Financial Inc	72,285	967
			Genworth Financial Inc ^(a)	731,689	8,298
Healthcare - Products - 2.07%
Alere Inc ^(a)	81,200	2,399	Hanover Insurance Group Inc/The	21,824	988
Beckman Coulter Inc	9,388	500	Hartford Financial Services Group Inc	627,378	15,045
Boston Scientific Corp ^(a)	269,325	1,718	HCC Insurance Holdings Inc	57,516	1,523
CareFusion Corp ^(a)	19,507	471	Lincoln National Corp	205,753	5,036
Cooper Cos Inc/The	40,897	2,018	Loews Corp	14,140	558
CR Bard Inc	75,397	6,267	Markel Corp ^(a)	1,148	385
DENTSPLY International Inc	26,441	830	Marsh & McLennan Cos Inc	460,122	11,494
Hill-Rom Holdings Inc	45,746	1,773	Mercury General Corp	19,699	836
Hologic Inc ^(a)	352,155	5,642	Old Republic International Corp	123,849	1,635
IDEXX Laboratories Inc ^(a)	2,482	149	OneBeacon Insurance Group Ltd	5,811	82
Kinetic Concepts Inc ^(a)	165,911	6,310	PartnerRe Ltd	62,928	4,992
Patterson Cos Inc	26,901	744	Progressive Corp/The	300,487	6,358
Techne Corp	9,526	580	Protective Life Corp	138,546	3,321
Teleflex Inc	11,619	647	Reinsurance Group of America Inc	33,756	1,690
	$ 30,048		RenaissanceRe Holdings Ltd	17,831	1,075
Healthcare - Services - 1.20%			StanCorp Financial Group Inc	48,061	2,062
Aetna Inc	312,468	9,330	Symetra Financial Corp	4,746	52
Brookdale Senior Living Inc ^(a)	78,000	1,465	Torchmark Corp	39,604	2,268
CIGNA Corp	36,715	1,292	Transatlantic Holdings Inc	8,804	463
Community Health Systems Inc ^(a)	5,738	173	Unitrin Inc	77,357	1,879
Coventry Health Care Inc ^(a)	20,426	478	Unum Group	200,982	4,506
DaVita Inc ^(a)	969	69	Validus Holdings Ltd	27,558	782
Health Management Associates Inc ^(a)	29,284	235	Wesco Financial Corp	264	96
Health Net Inc ^(a)	13,311	358	WR Berkley Corp	390,536	10,748
Humana Inc ^(a)	22,794	1,329	XL Group PLC	514,967	10,892
LifePoint Hospitals Inc ^(a)	24,832	842		$ 138,309
Mednax Inc ^(a)	7,435	440	Internet - 1.04%
Quest Diagnostics Inc	3,901	192	AOL Inc ^(a)	13,733	366
Tenet Healthcare Corp ^(a)	27,388	119	Equinix Inc ^(a)	18,338	1,545
Universal Health Services Inc	26,007	1,074	Expedia Inc	15,685	454
			F5 Networks Inc ^(a)	11,000	1,295
	$ 17,396		Liberty Media Corp - Interactive ^(a)	666,198	9,833
			VeriSign Inc ^(a)	11,500	400


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Internet (continued)			Mining (continued)
Yahoo! Inc ^(a)	74,100 $	1,223	Vulcan Materials Co	14,918 $	545
	$ 15,116			$ 4,533
Investment Companies - 0.04%			Miscellaneous Manufacturing - 3.71%
Ares Capital Corp	35,299	591	3M Co	13,028	1,097
			Aptargroup Inc	29,155	1,309
Iron & Steel - 0.87%			Carlisle Cos Inc	34,745	1,218
AK Steel Holding Corp	83,374	1,050	Cooper Industries PLC	94,563	4,956
Allegheny Technologies Inc	5,880	310	Crane Co	30,977	1,186
Carpenter Technology Corp	14,824	529	Dover Corp	8,950	475
Cliffs Natural Resources Inc	69,890	4,557	Eaton Corp	149,045	13,240
Reliance Steel & Aluminum Co	8,636	361	Harsco Corp	18,800	436
Schnitzer Steel Industries Inc	8,325	430	Ingersoll-Rand PLC	57,211	2,249
Steel Dynamics Inc	309,673	4,496	ITT Corp	24,097	1,137
United States Steel Corp	20,566	880	Leggett & Platt Inc	106,538	2,171
	$ 12,613		Parker Hannifin Corp	126,273	9,665
Leisure Products & Services - 0.51%			Pentair Inc	238,591	7,809
Harley-Davidson Inc	164,657	5,052	SPX Corp	19,032	1,277
Royal Caribbean Cruises Ltd ^(a)	57,419	2,270	Textron Inc	203,905	4,246
	$ 7,322		Trinity Industries Inc	57,108	1,298
Lodging - 0.37%				$ 53,769
Choice Hotels International Inc	5,048	192	Office & Business Equipment - 0.27%
MGM Resorts International ^(a)	28,100	307	Pitney Bowes Inc	11,705	257
Starwood Hotels & Resorts Worldwide Inc	56,300	3,048	Xerox Corp	317,781	3,718
Wyndham Worldwide Corp	62,941	1,810		$ 3,975
	$ 5,357		Oil & Gas - 5.36%
Machinery - Construction & Mining - 0.39%			Atlas Energy Inc ^(a)	45,416	1,322
Caterpillar Inc	50,200	3,946	Atwood Oceanics Inc ^(a)	59,950	1,949
Joy Global Inc	24,500	1,738	Cabot Oil & Gas Corp	12,164	353
	$ 5,684		Comstock Resources Inc ^(a)	15,800	353
			Continental Resources Inc/OK ^(a)	14,267	678
Machinery - Diversified - 0.77%
AGCO Corp ^(a)	34,896	1,482	Denbury Resources Inc ^(a)	52,097	887
Babcock & Wilcox Co ^(a)	4,936	113	Diamond Offshore Drilling Inc	5,373	356
CNH Global NV ^(a)	4,130	164	Forest Oil Corp ^(a)	264,942	8,142
Cummins Inc	37,080	3,267	Helmerich & Payne Inc	129,245	5,529
Deere & Co	12,800	983	Holly Corp	32,226	1,055
Gardner Denver Inc	459	27	Murphy Oil Corp	56,964	3,712
Graco Inc	8,200	282	Nabors Industries Ltd ^(a)	22,491	470
IDEX Corp	2,754	99	Newfield Exploration Co ^(a)	334,730	19,957
Manitowoc Co Inc/The	84,500	941	Noble Energy Inc	42,907	3,496
Rockwell Automation Inc	55,900	3,486	Patterson-UTI Energy Inc	77,700	1,508
Wabtec Corp/DE	8,239	386	Pioneer Natural Resources Co	15,147	1,057
			Plains Exploration & Production Co ^(a)	18,204	507
	$ 11,230		Pride International Inc ^(a)	12,916	392
Media - 3.26%
Cablevision Systems Corp	219,255	5,863	QEP Resources Inc	289,173	9,552
			Quicksilver Resources Inc ^(a)	187,077	2,801
CBS Corp	772,177	13,073
Central European Media Enterprises Ltd ^(a)	10,460	241	Range Resources Corp	168,010	6,282
Discovery Communications Inc - A Shares ^(a)	9,868	440	Rowan Cos Inc ^(a)	13,103	431
Discovery Communications Inc - C Shares ^(a)	31,900	1,240	SandRidge Energy Inc ^(a)	49,700	272
DISH Network Corp	621,607	12,345	SM Energy Co	38,609	1,609
Gannett Co Inc	30,983	367	Sunoco Inc	19,289	722
John Wiley & Sons Inc	688	30	Tesoro Corp	88,384	1,145
Liberty Global Inc - A Shares ^(a)	81,245	3,070	Unit Corp ^(a)	19,661	771
Liberty Media Corp - Capital Series A ^(a)	24,011	1,382	Valero Energy Corp	99,556	1,787
Liberty Media Corp - Starz ^(a)	6,655	436	Whiting Petroleum Corp ^(a)	6,197	622
McGraw-Hill Cos Inc/The	12,163	458		$ 77,717
Meredith Corp	14,864	504	Oil & Gas Services - 1.95%
New York Times Co/The ^(a)	46,180	354	Baker Hughes Inc	46,436	2,151
News Corp - Class A	37,600	544	Cameron International Corp ^(a)	84,808	3,710
Scripps Networks Interactive	32,847	1,672	Dresser-Rand Group Inc ^(a)	1,569	54
Viacom Inc	5,780	223	Exterran Holdings Inc ^(a)	91,182	2,295
Washington Post Co/The	12,307	4,949	Helix Energy Solutions Group Inc ^(a)	70,628	896
	$ 47,191		Key Energy Services Inc ^(a)	240,557	2,370
			Oceaneering International Inc ^(a)	64,843	4,012
Metal Fabrication & Hardware - 0.20%			Oil States International Inc ^(a)	27,310	1,396
Timken Co	50,549	2,094
Valmont Industries Inc	9,400	741	Schlumberger Ltd	22,677	1,585
			SEACOR Holdings Inc ^(a)	9,437	894
	$ 2,835		Superior Energy Services Inc ^(a)	29,470	814
Mining - 0.31%			Weatherford International Ltd ^(a)	482,079	8,104
Compass Minerals International Inc	5,000	394
Royal Gold Inc	7,400	367		$ 28,281
Southern Copper Corp	75,400	3,227


Schedule of Investments
MidCap Value Fund I
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Packaging & Containers - 1.31%			Retail (continued)
Ball Corp	9,638 $	620	AutoNation Inc ^(a)	8,879 $	206
Bemis Co Inc	61,462	1,952	Barnes & Noble Inc	22,430	336
Greif Inc	40,762	2,394	Brinker International Inc	2,524	47
Owens-Illinois Inc ^(a)	164,434	4,610	Chico's FAS Inc	98,200	954
Packaging Corp of America	47,193	1,153	Foot Locker Inc	157,825	2,514
Sealed Air Corp	21,114	489	GameStop Corp ^(a)	19,966	393
Sonoco Products Co	38,938	1,304	Guess? Inc	166,761	6,491
Temple-Inland Inc	314,065	6,507	JC Penney Co Inc	65,752	2,050
	$ 19,029		Macy's Inc	57,575	1,361
Pharmaceuticals - 1.02%			Penske Automotive Group Inc ^(a)	75,290	1,013
Cephalon Inc ^(a)	10,071	669	RadioShack Corp	31,297	630
Endo Pharmaceuticals Holdings Inc ^(a)	15,428	567	Rite Aid Corp ^(a)	72,953	67
Forest Laboratories Inc ^(a)	38,242	1,264	Sears Holdings Corp ^(a)	5,967	429
Herbalife Ltd	27,660	1,766	Signet Jewelers Ltd ^(a)	23,946	843
King Pharmaceuticals Inc ^(a)	131,214	1,855	Urban Outfitters Inc ^(a)	106,189	3,267
Mead Johnson Nutrition Co	32,997	1,941	Wendy's/Arby's Group Inc	134,800	620
Mylan Inc/PA ^(a)	9,639	196	Williams-Sonoma Inc	36,300	1,175
Omnicare Inc	238,452	5,751		$ 23,080
Watson Pharmaceuticals Inc ^(a)	15,254	712	Savings & Loans - 1.21%
	$ 14,721		Capitol Federal Financial	17,184	403
Pipelines - 0.64%			First Niagara Financial Group Inc	80,232	951
El Paso Corp	75,225	997	Hudson City Bancorp Inc	58,292	679
Oneok Inc	12,222	609	New York Community Bancorp Inc	437,209	7,402
Spectra Energy Corp	306,301	7,281	People's United Financial Inc	477,665	5,880
Williams Cos Inc	20,544	442	TFS Financial Corp	31,451	275
	$ 9,329		Washington Federal Inc	134,221	2,017
REITS - 8.26%				$ 17,607
Alexandria Real Estate Equities Inc	85,088	6,252	Semiconductors - 1.26%
AMB Property Corp	67,105	1,892	Advanced Micro Devices Inc ^(a)	48,533	356
Annaly Capital Management Inc	307,979	5,454	Atmel Corp ^(a)	9,639	86
Apartment Investment & Management Co	11,610	271	Cypress Semiconductor Corp ^(a)	95,400	1,345
AvalonBay Communities Inc	25,790	2,742	Fairchild Semiconductor International Inc ^(a)	57,451	648
Boston Properties Inc	145,116	12,507	Integrated Device Technology Inc ^(a)	141,400	833
Brandywine Realty Trust	98,090	1,174	Intersil Corp	201,019	2,631
BRE Properties Inc	12,978	557	KLA-Tencor Corp	52,890	1,889
Camden Property Trust	8,950	444	LSI Corp ^(a)	91,466	479
Chimera Investment Corp	122,873	504	Micron Technology Inc ^(a)	114,060	943
CommonWealth REIT	46,981	1,195	National Semiconductor Corp	4,360	60
Corporate Office Properties Trust	11,403	405	Novellus Systems Inc ^(a)	2,126	62
Digital Realty Trust Inc	85,117	5,084	ON Semiconductor Corp ^(a)	803,153	6,160
Douglas Emmett Inc	264,757	4,750	PMC - Sierra Inc ^(a)	79,946	615
Duke Realty Corp	109,636	1,367	QLogic Corp ^(a)	59,100	1,038
Equity Residential	225,918	10,986	Rambus Inc ^(a)	29,400	581
Essex Property Trust Inc	3,622	409	Teradyne Inc ^(a)	51,700	581
Federal Realty Investment Trust	5,017	411		$ 18,307
HCP Inc	57,640	2,075	Software - 2.09%
Health Care REIT Inc	78,261	3,999	Adobe Systems Inc ^(a)	217,354	6,119
Hospitality Properties Trust	120,489	2,748	Allscripts Healthcare Solutions Inc ^(a)	78,700	1,502
Host Hotels & Resorts Inc	630,840	10,024	BMC Software Inc ^(a)	175,206	7,965
Kimco Realty Corp	115,804	1,996	Broadridge Financial Solutions Inc	16,025	353
Liberty Property Trust	60,055	2,010	CA Inc	14,459	336
Macerich Co/The	66,346	2,960	Check Point Software Technologies Ltd ^(a)	76,096	3,253
Mack-Cali Realty Corp	57,799	1,941	Compuware Corp ^(a)	19,508	195
MFA Financial Inc	739,438	5,849	Fidelity National Information Services Inc	33,964	920
Nationwide Health Properties Inc	26,708	1,090	Fiserv Inc ^(a)	6,843	373
Piedmont Office Realty Trust Inc	10,119	191	Parametric Technology Corp ^(a)	243,381	5,225
ProLogis	173,223	2,365	Quest Software Inc ^(a)	74,780	1,957
Realty Income Corp	14,120	484	Solera Holdings Inc	18,400	884
Regency Centers Corp	33,773	1,425	VeriFone Systems Inc ^(a)	35,785	1,211
Senior Housing Properties Trust	58,524	1,398		$ 30,293
SL Green Realty Corp	8,966	589	Telecommunications - 3.86%
Tanger Factory Outlet Centers	94,812	4,543	Amdocs Ltd ^(a)	20,426	627
Taubman Centers Inc	66,800	3,101	CenturyLink Inc	303,049	12,540
UDR Inc	20,426	459	Clearwire Corp ^(a)	460,611	3,266
Ventas Inc	149,805	8,024	CommScope Inc ^(a)	87,618	2,774
Vornado Realty Trust	63,776	5,574	EchoStar Holding Corp ^(a)	50,094	1,062
Weingarten Realty Investors	21,712	524	Frontier Communications Corp	752,840	6,610
	$ 119,773		JDS Uniphase Corp ^(a)	38,500	405
Retail - 1.59%			MetroPCS Communications Inc ^(a)	238,800	2,486
Abercrombie & Fitch Co	4,235	181	NII Holdings Inc ^(a)	6,885	288
American Eagle Outfitters Inc	31,441	503	Polycom Inc ^(a)	62,083	2,097
See accompanying notes			271


Schedule of Investments
MidCap Value Fund I
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)			(a) Non-Income Producing Security
Telecommunications (continued)
Qwest Communications International Inc	1,382,705 $		9,126
Sprint Nextel Corp ^(a)	1,937,087		7,981
				Unrealized Appreciation (Depreciation)
Telephone & Data Systems Inc	10,787		376	The net federal income tax unrealized appreciation (depreciation) and federal tax
Tellabs Inc	139,008		947	cost of investments held as of the period end were as follows:
US Cellular Corp ^(a)	3,033		141
Virgin Media Inc	187,573		4,769	Unrealized Appreciation	$ 218,752
Windstream Corp	36,490		462	Unrealized Depreciation	(31,319)
		$ 55,957		Net Unrealized Appreciation (Depreciation)	$ 187,433
Textiles - 0.34%				Cost for federal income tax purposes	$ 1,259,281
Cintas Corp	17,441		479	All dollar amounts are shown in thousands (000's)
Mohawk Industries Inc ^(a)	76,390		4,380
		$ 4,859		Portfolio Summary (unaudited)
Toys, Games & Hobbies - 0.13%				Sector	Percent
Hasbro Inc	21,496		994	Financial	30 .17%
Mattel Inc	37,966		886	Utilities	12 .23%
		$ 1,880		Industrial	12 .17%
Transportation - 2.12%				Consumer, Non-cyclical	12 .02%
Alexander & Baldwin Inc	12,828		441	Energy	8 .77%
CH Robinson Worldwide Inc	24,400		1,720	Communications	8 .35%
Con-way Inc	13,800		455	Consumer, Cyclical	6 .97%
CSX Corp	11,600		713	Basic Materials	4 .83%
Expeditors International of Washington Inc	2,600		128	Technology	4 .24%
Frontline Ltd/Bermuda	119,643		3,440	Diversified	0 .04%
Kansas City Southern ^(a)	149,889		6,568	Other Assets in Excess of Liabilities, Net	0 .21%
Kirby Corp ^(a)	9,901		426
				TOTAL NET ASSETS	100.00%
Norfolk Southern Corp	6,500		400
Overseas Shipholding Group Inc	59,300		1,982
Ryder System Inc	103,506		4,529
Teekay Corp	98,534		3,133
Tidewater Inc	146,665		6,766
		$ 30,701
Trucking & Leasing - 0.03%
GATX Corp	11,669		369

Water - 0.33%
American Water Works Co Inc	183,895		4,391
Aqua America Inc	15,749		339
		$ 4,730
TOTAL COMMON STOCKS		$ 1,404,499
	Maturity
	Amount
REPURCHASE AGREEMENTS - 2.91%	(000's)	Value (000's)
Banks - 2.91%
Investment in Joint Trading Account; Bank of	$ 12,027	$ 12,026
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$12,267,690; 0.00% - 5.25%; dated 05/01/13
- 04/15/42)
Investment in Joint Trading Account; Credit Suisse	11,611		11,611
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $11,843,114; 1.13%;
dated 01/15/12)
Investment in Joint Trading Account; Deutsche	11,031		11,030
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $11,250,959;
0.38% - 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan	7,547		7,548
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $7,698,024; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
		$ 42,215
TOTAL REPURCHASE AGREEMENTS		$ 42,215
Total Investments		$ 1,446,714
Other Assets in Excess of Liabilities, Net - 0.21%		$ 3,021
TOTAL NET ASSETS - 100.00%		$ 1,449,735


COMMON STOCKS - 3.28%	Shares Held Value (000's)				Principal
Publicly Traded Investment Fund - 3.28%					Amount
BlackRock Liquidity Funds TempFund Portfolio	27,980,000 $		27,980	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
DWS Money Market Series	15,410,000		15,410	California - 3.72%
		$ 43,390		California Statewide Communities Development
TOTAL COMMON STOCKS		$ 43,390		Authority FANNIE MAE
	Principal			0.27%, 8/15/2034	$ 400	$ 400
	Amount			City of Fairfield CA
BONDS - 11.48%	(000's)	Value (000's)		0.68%, 6/1/2034	2,000	2,000
Automobile Asset Backed Securities - 1.56%				0.68%, 6/1/2034	2,700	2,700
Bank of America Auto Trust				City of Santa Rosa CA
0.62%, 7/15/2011	$ 2,092	$ 2,092		0.63%, 9/1/2024	4,465	4,465
Ford Credit Auto Lease Trust				Kern Water Bank Authority
0.38%, 11/15/2011^(a)	3,200		3,200	0.28%, 7/1/2028	5,453	5,453
Hyundai Auto Receivables Trust				San Jose Redevelopment Agency
0.37%, 9/15/2011	4,523		4,523	0.28%, 8/1/2028	26,510	26,510
Nissan Auto Lease Trust				Santa Rosa Rancheria Tachi Yokut Tribe
0.56%, 6/15/2011	1,865		1,864	Enterprise
Nissan Auto Receivables Owner Trust				0.31%, 9/1/2019	7,800	7,800
0.36%, 10/17/2011	4,910		4,910			$ 49,328
Toyota Auto Receivables Owner Trust				Colorado - 0.51%
0.56%, 7/15/2011	4,136		4,139	Colorado Housing & Finance Authority
		$ 20,728		0.33%, 4/1/2029	325	325
Banks - 0.85%				County of Kit Carson CO
JP Morgan Chase & Co				0.27%, 6/1/2027	1,300	1,300
2.63%, 12/1/2010	1,200		1,201	Sheridan Redevelopment Agency
JP Morgan Chase Bank NA				0.75%, 12/1/2029	5,000	5,000
0.26%, 11/21/2010^(b)	8,000		8,000			$ 6,625
Morgan Stanley				Georgia - 0.15%
2.90%, 12/1/2010	2,000		2,003	Savannah College of Art & Design Inc
		$ 11,204		0.34%, 4/1/2024	2,000	2,000
Diversified Financial Services - 4.79%
Corporate Finance Managers Inc				Illinois - 1.52%
0.28%, 2/2/2043	13,400		13,400	City of Chicago IL
ING USA Global Funding Trust				0.64%, 12/15/2010	4,000	4,000
1.05%, 12/3/2010^(c)	15,000		15,000	Memorial Health System/IL
MetLife				0.27%, 10/1/2024	16,205	16,205
0.73%, 11/16/2010^(c)	15,000		15,000			$ 20,205
NGSP Inc				Indiana - 0.19%
0.33%, 6/1/2046	20,000		20,000	Ball State University Foundation Inc
		$ 63,400		0.29%, 9/1/2031	2,550	2,550
Healthcare - Services - 1.26%
Everett Clinic PS				Iowa - 0.16%
0.36%, 5/1/2022	5,100		5,100	Iowa Finance Authority
Portland Clinic LLP/The				0.27%, 3/1/2018	2,070	2,070
0.36%, 11/20/2027	11,560		11,560
		$ 16,660		New Mexico - 0.30%
Insurance - 2.07%				City of Las Cruces NM
Berkshire Hathaway Inc				0.28%, 12/1/2018	4,000	4,000
0.39%, 11/10/2010^(b)	11,400		11,400
New York Life Insurance Co				New York - 0.62%
0.51%, 11/1/2010^(b),(c)	16,000		16,000	New York City Housing Development Corp
		$ 27,400		0.28%, 7/1/2013	2,730	2,730
Other Asset Backed Securities - 0.95%				0.37%, 6/1/2039	5,400	5,400
CNH Equipment Trust						$ 8,130
0.35%, 4/15/2011	4,371		4,371	North Carolina - 0.13%
GE Equipment Midticket LLC				North Carolina Capital Facilities Finance Agency
0.35%, 9/14/2011^(a)	5,000		5,000	0.45%, 9/1/2018	1,755	1,755
Volvo Financial Equipment LLC
0.51%, 5/16/2011^(a),(b)	3,228		3,228	Oklahoma - 0.38%
		$ 12,599		Oklahoma University Hospital
TOTAL BONDS		$ 151,991		0.35%, 8/15/2021	5,030	5,030
	Principal
				Oregon - 0.07%
	Amount			Lake Oswego Redevelopment Agency
MUNICIPAL BONDS - 8.46%	(000's)	Value (000's)		0.33%, 6/1/2020	890	890
Arizona - 0.54%
Glendale Industrial Development Authority
0.35%, 7/1/2035	$ 7,190	$ 7,190		Washington - 0.17%
				Washington State Housing Finance
				Commission FANNIE MAE
				0.28%, 9/1/2028	790	790
				0.28%, 12/15/2037	1,055	1,055


	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	COMMERCIAL PAPER (continued)	(000's)	Value (000's)
Washington (continued)			Banks (continued)
Washington State Housing Finance			Skandinaviska Enskilda Banken AB (continued)
Commission FANNIE MAE (continued)			0.35%, 11/17/2010^(a),(d)	$ 8,900	$ 8,899
0.32%, 12/1/2028	$ 375	$ 375	Standard Chartered Bank/New York
		$ 2,220	0.30%, 12/1/2010^(a)	7,600	7,598
TOTAL MUNICIPAL BONDS		$ 111,993	0.33%, 12/21/2010^(a)	8,000	7,996
			0.45%, 3/17/2011^(a)	8,100	8,086
	Principal
			0.60%, 2/7/2011^(d)	10,000	9,984
U.S. GOVERNMENT & GOVERNMENT	Amount
AGENCY OBLIGATIONS - 0.60%	(000's)	Value (000's)	UBS Finance Delaware LLC
			0.50%, 11/23/2010^(d)	8,000	7,998
U.S. Treasury Bill - 0.60%
0.44%, 4/7/2011	$ 8,000	$ 7,985	0.53%, 7/15/2011	7,000	6,974
			5.23%, 7/19/2011	8,600	8,567
TOTAL U.S. GOVERNMENT &					$ 204,905
GOVERNMENT AGENCY OBLIGATIONS		$ 7,985	Commercial Services - 0.53%
	Maturity		Salvation Army Eastern Territory
	Amount		0.25%, 12/7/2010	7,000	7,000
REPURCHASE AGREEMENTS - 8.57%	(000's)	Value (000's)
Banks - 8.57%			Diversified Financial Services - 36.76%
Bank of America Repurchase Agreement; 0.22%	$ 57,431	$ 57,430	American Honda Finance Corp
dated 10/29/10 maturing 11/01/10			0.27%, 12/16/2010	7,000	6,998
(collateralized by US Treasury Note;			BNP Paribas Finance Inc
$58,578,600; 0.00%; dated 05/15/21)			0.25%, 12/27/2010	6,000	5,998
Deutsche Bank Repurchase Agreement; 0.21%	56,001	56,000	0.32%, 11/17/2010	8,000	7,999
dated 10/29/10 maturing 11/01/10			0.33%, 11/1/2010	6,000	6,000
(collateralized by US Treasury Note;			0.39%, 3/22/2011	4,500	4,493
$57,120,000; 4.38%; dated 05/15/40)			0.49%, 11/29/2010	8,000	7,997
		$ 113,430	CAFCO LLC
			0.28%, 1/24/2011^(a)	8,000	7,995
TOTAL REPURCHASE AGREEMENTS		$ 113,430	0.32%, 2/3/2011^(a)	3,918	3,915
	Principal		0.34%, 3/2/2011^(a)	8,000	7,991
	Amount		0.40%, 2/17/2011^(a)	6,000	5,993
COMMERCIAL PAPER - 66.53%	(000's)	Value (000's)	0.62%, 1/19/2011^(a)	6,000	5,992
Agriculture - 2.37%			Charta Corp
Cargill Inc			0.27%, 12/2/2010^(a)	8,300	8,298
0.21%, 11/3/2010^(a)	$ 7,700	$ 7,700
			0.30%, 1/19/2011^(a)	8,000	7,995
0.23%, 11/18/2010^(a)	8,000	7,999
			0.40%, 2/25/2011^(a)	9,000	8,988
0.28%, 2/8/2011^(a)	8,000	7,994
Philip Morris International Inc			0.40%, 3/4/2011	7,000	6,990
0.20%, 11/2/2010^(a)	7,700	7,700	CRC Funding LLC
			0.28%, 1/21/2011^(a)	7,000	6,995
		$ 31,393	0.29%, 1/5/2011^(a)	8,600	8,595
Banks - 15.47%			0.30%, 11/17/2010^(a)	9,000	8,999
Bank of America Corp			0.40%, 2/23/2011^(a)	7,000	6,991
0.22%, 11/9/2010	5,000	5,000	Credit Agricole North America Inc
0.22%, 11/24/2010	4,000	3,999	0.31%, 3/29/2011	7,000	6,991
Barclays US Funding Corp			0.50%, 2/22/2011	5,000	4,992
0.37%, 3/21/2011	8,000	7,988	Danske Corp
Commonwealth Bank of Australia			0.28%, 12/3/2010^(a)	9,000	8,998
0.21%, 11/5/2010^(a),(d)	8,000	8,000
0.24%, 11/30/2010^(a),(d)	7,000	6,999	Gemini Securitization Corp LLC
			0.24%, 11/23/2010^(a)	8,000	7,999
0.25%, 12/29/2010^(a),(d)	8,000	7,997
0.27%, 11/19/2010^(a),(d)	6,000	5,999	0.27%, 12/2/2010	7,900	7,898
			0.27%, 1/13/2011^(a)	8,000	7,996
Deutsche Bank Financial LLC			0.32%, 11/10/2010^(a)	1,500	1,500
0.35%, 2/28/2011	7,800	7,791	0.33%, 11/5/2010^(a)	7,000	7,000
0.50%, 6/10/2011	6,600	6,580	ING US Funding LLC
DnB NOR Bank ASA			0.40%, 4/5/2011	7,000	6,988
0.26%, 12/6/2010^(a),(d)	8,000	7,998
0.33%, 3/10/2011^(a),(d)	8,000	7,990	0.44%, 1/10/2011	7,000	6,994
0.35%, 2/11/2011^(a),(d)	6,000	5,994	Jupiter Securitization Co LLC
			0.23%, 11/3/2010^(a)	7,000	7,000
Intesa Funding LLC			0.24%, 12/14/2010^(a)	7,000	6,998
0.27%, 12/22/2010	8,000	7,997	0.25%, 11/12/2010^(a)	11,800	11,799
0.33%, 3/14/2011	7,000	6,991	0.25%, 11/18/2010^(a)	5,000	4,999
0.34%, 1/24/2011	8,000	7,994	Nordea North America Inc/DE
0.37%, 2/14/2011	9,000	8,990	0.25%, 12/1/2010	9,000	8,998
JP Morgan Chase & Co			0.25%, 12/17/2010	7,000	6,998
0.24%, 11/9/2010	7,000	7,000	0.26%, 1/10/2011	8,000	7,996
Royal Bank of Scotland Group PLC			0.37%, 2/9/2011	8,000	7,992
0.27%, 12/21/2010^(a),(d)	7,000	6,997
0.28%, 11/15/2010^(a),(d)	6,000	5,999	PACCAR Financial Corp
			0.30%, 11/22/2010	8,000	7,999
Skandinaviska Enskilda Banken AB			0.31%, 11/10/2010	8,800	8,799
0.29%, 11/3/2010^(a),(d)	4,500	4,500


	Principal				Principal
	Amount				Amount
COMMERCIAL PAPER (continued)	(000's)	Value (000's)	COMMERCIAL PAPER (continued)		(000's)	Value (000's)
Diversified Financial Services (continued)			Oil & Gas (continued)
Private Export Funding Corp			Shell International Finance BV (continued)
0.24%, 11/15/2010^(a)	$ 7,000	$ 6,999		0.73%, 7/1/2011^(a)	$ 6,900	$ 6,866
Rabobank USA Financial Corp						$ 31,318
0.43%, 11/15/2010	7,000	6,999	Supranational Bank - 1.85%
Ranger Funding Co LLC			Corp Andina de Fomento
0.22%, 11/1/2010^(a)	4,500	4,500		0.34%, 3/28/2011^(a)	8,500	8,488
0.24%, 11/22/2010^(a)	8,000	7,999		0.42%, 11/19/2010	8,000	7,998
0.24%, 12/1/2010^(a)	7,000	6,999		0.51%, 7/20/2011^(a)	8,000	7,971
River Fuel Funding Co #3						$ 24,457
0.32%, 12/15/2010	9,148	9,144	Telecommunications - 0.53%
0.35%, 1/31/2011	6,800	6,794	Telstra Corp Ltd
Sheffield Receivables Corp				0.26%, 12/20/2010^(a)	7,000	6,998
0.23%, 11/23/2010^(a)	8,000	7,999
0.27%, 1/24/2011^(a)	6,000	5,996
0.30%, 1/11/2011^(a)	8,000	7,995	TOTAL COMMERCIAL PAPER			$ 880,988
					Principal
Societe Generale North America Inc					Amount
0.26%, 12/1/2010	7,000	6,998	CERTIFICATE OF DEPOSIT - 1.21%		(000's)	Value (000's)
0.30%, 11/29/2010	6,000	5,999	Banks - 1.21%
Starbird Funding Corp			Bank of America NA
0.26%, 11/19/2010^(a)	6,400	6,399
0.27%, 1/20/2011^(a)	8,000	7,995		0.40%, 11/12/2010	8,000	8,000
0.28%, 11/30/2010^(a)	8,000	7,998		0.46%, 11/18/2010	8,000	8,000
0.32%, 11/10/2010^(a)	7,000	6,999				$ 16,000
Straight-A Funding LLC			TOTAL CERTIFICATE OF DEPOSIT			$ 16,000
0.21%, 11/8/2010^(a)	6,000	6,000	Total Investments			$ 1,325,777
0.22%, 11/8/2010^(a)	8,000	8,000	Liabilities in Excess of Other Assets, Net - (0.13)%			$ (1,696)
0.23%, 12/2/2010	5,000	4,999	TOTAL NET ASSETS - 100.00%			$ 1,324,081
0.25%, 11/22/2010	5,000	4,999
0.25%, 12/9/2010^(a)	8,000	7,998
			(a)	Security exempt from registration under Rule 144A of the Securities Act of
Thunder Bay Funding LLC				1933. These securities may be resold in transactions exempt from
0.24%, 11/4/2010^(a)	8,000	8,000
0.25%, 11/2/2010^(a)	8,000	8,000		registration, normally to qualified institutional buyers. Unless otherwise
0.25%, 11/3/2010^(a)	8,000	8,000		indicated, these securities are not considered illiquid. At the end of the
0.25%, 11/8/2010^(a)	6,000	6,000		period, the value of these securities totaled $550,048 or 41.54% of net
				assets.
Toyota Credit Canada Inc			(b)	Variable Rate. Rate shown is in effect at October 31, 2010.
0.23%, 11/26/2010	8,000	7,999	(c)	Security is Illiquid
0.27%, 1/7/2011	7,800	7,796	(d)	Security issued by foreign bank and denominated in USD.
0.44%, 12/6/2010	7,000	6,997
0.45%, 11/23/2010	6,000	5,998
		$ 486,754
Electric - 4.05%			Unrealized Appreciation (Depreciation)
GDF Suez			The net federal income tax unrealized appreciation (depreciation) and federal tax
0.35%, 11/1/2010^(a)	6,000	6,000	cost of investments held as of the period end were as follows:
0.36%, 11/5/2010^(a)	5,000	5,000
0.36%, 11/16/2010^(a)	15,000	14,998	Unrealized Appreciation			$ —
0.36%, 11/24/2010^(a)	7,000	6,998	Unrealized Depreciation			—
Oglethorpe Power Corp			Net Unrealized Appreciation (Depreciation)			$ —
0.25%, 11/8/2010^(a)	6,000	6,000	Cost for federal income tax purposes			$ 1,325,777
0.26%, 11/2/2010	6,681	6,681	All dollar amounts are shown in thousands (000's)
Southern Co Funding Corp
0.23%, 11/9/2010^(a)	8,000	7,999		Portfolio Summary (unaudited)
		$ 53,676	Sector			Percent
Insurance - 2.60%			Financial			72 .32%
New York Life Capital Corp			Revenue			7 .54%
0.24%, 11/15/2010^(a)	8,500	8,499	Consumer, Non-cyclical			4 .16%
Prudential Funding LLC			Utilities			4 .05%
0.32%, 12/22/2010	7,000	6,997	Exchange Traded Funds			3 .28%
0.35%, 12/20/2010	6,000	5,997	Asset Backed Securities			2 .51%
Prudential PLC			Government			2 .45%
0.41%, 1/5/2011^(a)	6,000	5,996	Energy			2 .37%
0.42%, 11/19/2010^(a)	7,000	6,998	Communications			0 .53%
		$ 34,487	Tax Allocation			0 .45%
Oil & Gas - 2.37%			General Obligation			0 .30%
Shell International Finance BV			Insured			0 .17%
0.40%, 5/2/2011^(a)	8,000	7,984	Liabilities in Excess of Other Assets, Net			(0 .13)%
0.55%, 2/1/2011^(a)	8,000	7,988	TOTAL NET ASSETS			100.00%
0.56%, 4/4/2011^(a)	5,500	5,487
0.57%, 4/1/2011^(a)	3,000	2,993

Schedule of Investments Principal Capital Appreciation Fund October 31, 2010


COMMON STOCKS - 97.77%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 2.34%			Consumer Products (continued)
Boeing Co/The	239,793 $	16,939	WD-40 Co	83,813 $	3,092
Northrop Grumman Corp	71,530	4,521		$ 24,539
Teledyne Technologies Inc ^(a)	95,575	3,973	Cosmetics & Personal Care - 0.69%
	$ 25,433		Procter & Gamble Co	118,375	7,525
Agriculture - 0.56%
Archer-Daniels-Midland Co	181,550	6,049	Diversified Financial Services - 2.94%
			Charles Schwab Corp/The	1,005,587	15,486
Airlines - 0.99%			Franklin Resources Inc	143,530	16,463
Alaska Air Group Inc ^(a)	126,017	6,654		$ 31,949
Cathay Pacific Airways Ltd ADR	307,700	4,126	Electric - 1.10%
	$ 10,780		Edison International	118,225	4,363
Apparel - 1.75%			PG&E Corp	158,810	7,594
Columbia Sportswear Co	80,552	4,209		$ 11,957
Nike Inc	182,022	14,824	Electronics - 2.74%
	$ 19,033		Dionex Corp ^(a)	142,356	12,703
Automobile Manufacturers - 1.29%			Electro Scientific Industries Inc ^(a)	68,048	791
Nissan Motor Co Ltd ADR	14,154	247	FEI Co ^(a)	227,414	4,949
PACCAR Inc	248,402	12,733	FLIR Systems Inc ^(a)	48,000	1,336
Toyota Motor Corp ADR	14,641	1,037	Itron Inc ^(a)	67,925	4,128
	$ 14,017		Trimble Navigation Ltd ^(a)	95,408	3,419
Automobile Parts & Equipment - 0.68%			Waters Corp ^(a)	32,150	2,383
Johnson Controls Inc	209,760	7,367		$ 29,709
			Engineering & Contruction - 0.93%
Banks - 4.48%			Granite Construction Inc	120,664	2,918
Barclays PLC ADR	43,440	767	Jacobs Engineering Group Inc ^(a)	187,461	7,238
City National Corp/CA	61,996	3,197		$ 10,156
East West Bancorp Inc	131,348	2,316	Environmental Control - 0.67%
JP Morgan Chase & Co	268,694	10,111	Energy Recovery Inc ^(a)	157,576	561
State Street Corp	133,740	5,585	Waste Connections Inc	164,241	6,691
US Bancorp	219,500	5,308		$ 7,252
Wells Fargo & Co	692,268	18,054	Food - 2.27%
Westamerica Bancorporation	67,039	3,353	Campbell Soup Co	51,500	1,867
	$ 48,691		Dairy Farm International Holdings Ltd ADR	166,677	6,442
Beverages - 0.81%			Dean Foods Co ^(a)	66,393	691
Brown-Forman Corp	58,707	3,570	General Mills Inc	201,842	7,577
PepsiCo Inc	80,219	5,238	Kroger Co/The	145,250	3,196
	$ 8,808		Ralcorp Holdings Inc ^(a)	26,175	1,624
Biotechnology - 1.57%			Safeway Inc	142,800	3,270
Dendreon Corp ^(a)	42,226	1,541		$ 24,667
Gilead Sciences Inc ^(a)	205,919	8,169	Forest Products & Paper - 1.60%
Life Technologies Corp ^(a)	105,642	5,301	Plum Creek Timber Co Inc	110,950	4,087
Martek Biosciences Corp ^(a)	93,404	2,050	Weyerhaeuser Co	819,339	13,290
	$ 17,061			$ 17,377
Building Materials - 0.60%			Gas - 1.61%
Apogee Enterprises Inc	121,882	1,279	Energen Corp	45,960	2,052
Cemex SAB de CV ADR^(a)	109,846	963	Northwest Natural Gas Co	12,850	633
Simpson Manufacturing Co Inc	160,184	4,258	Sempra Energy	277,015	14,815
	$ 6,500			$ 17,500
Chemicals - 0.64%			Healthcare - Products - 3.17%
FMC Corp	50,040	3,658	Beckman Coulter Inc	125,062	6,658
Potash Corp of Saskatchewan Inc	4,135	600	Becton Dickinson and Co	50,058	3,780
Sigma-Aldrich Corp	42,025	2,665	Johnson & Johnson	173,746	11,062
	$ 6,923		Medtronic Inc	39,330	1,385
Commercial Services - 0.81%			ResMed Inc ^(a)	81,460	2,596
AMN Healthcare Services Inc ^(a)	98,973	525	Techne Corp	45,608	2,779
Resources Connection Inc	155,054	2,510	Varian Medical Systems Inc ^(a)	98,143	6,205
Robert Half International Inc	107,820	2,923		$ 34,465
TrueBlue Inc ^(a)	162,550	2,284	Healthcare - Services - 0.85%
Visa Inc	7,410	579	DaVita Inc ^(a)	95,175	6,829
	$ 8,821		Health Net Inc ^(a)	51,260	1,378
Computers - 3.43%			Sun Healthcare Group Inc ^(a)	103,129	981
Apple Inc ^(a)	28,832	8,675		$ 9,188
Hewlett-Packard Co	325,975	13,710	Home Builders - 0.20%
IBM Corp	93,395	13,411	KB Home	99,400	1,045
Mentor Graphics Corp ^(a)	134,961	1,458	Winnebago Industries Inc ^(a)	110,117	1,101
	$ 37,254			$ 2,146
Consumer Products - 2.26%			Insurance - 2.04%
Clorox Co	195,315	12,998	Fidelity National Financial Inc	96,725	1,295
Kimberly-Clark Corp	89,790	5,687	HCC Insurance Holdings Inc	152,925	4,050
Tupperware Brands Corp	61,637	2,762	Mercury General Corp	48,877	2,076

Schedule of Investments Principal Capital Appreciation Fund October 31, 2010


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Insurance (continued)			REITS (continued)
MetLife Inc	107,940 $	4,353	Essex Property Trust Inc	32,245 $	3,642
StanCorp Financial Group Inc	240,885	10,334	HCP Inc	247,235	8,903
	$ 22,108		Nationwide Health Properties Inc	108,213	4,418
Internet - 2.70%				$ 25,705
Amazon.com Inc ^(a)	39,115	6,460	Retail - 7.23%
Art Technology Group Inc ^(a)	530,177	2,221	Copart Inc ^(a)	158,188	5,356
eBay Inc ^(a)	141,600	4,221	Costco Wholesale Corp	314,150	19,719
Google Inc ^(a)	26,727	16,383	CVS Caremark Corp	57,150	1,721
	$ 29,285		Home Depot Inc	112,400	3,471
Iron & Steel - 1.36%			Jack in the Box Inc ^(a)	140,041	3,243
Reliance Steel & Aluminum Co	128,915	5,395	McDonald's Corp	132,925	10,338
Schnitzer Steel Industries Inc	180,893	9,351	Nordstrom Inc	254,831	9,814
	$ 14,746		Ross Stores Inc	24,850	1,466
Leisure Products & Services - 0.75%			Starbucks Corp	543,625	15,482
Ambassadors Group Inc	169,579	1,881	Wal-Mart Stores Inc	98,025	5,310
Carnival Corp	96,650	4,172	Yum! Brands Inc	52,030	2,579
Harley-Davidson Inc	69,411	2,130		$ 78,499
	$ 8,183		Savings & Loans - 1.15%
Lodging - 0.50%			Washington Federal Inc	831,609	12,499
Red Lion Hotels Corp ^(a)	693,213	5,456
			Semiconductors - 3.56%
Machinery - Diversified - 0.99%			Applied Materials Inc	565,512	6,990
Cascade Corp	89,714	3,175	Avago Technologies Ltd	107,145	2,644
Deere & Co	98,935	7,598	Intel Corp	672,825	13,504
	$ 10,773		LSI Corp ^(a)	369,051	1,934
Media - 1.53%			Microchip Technology Inc	223,938	7,206
			Novellus Systems Inc ^(a)	38,800	1,133
Walt Disney Co/The	460,160	16,616	QLogic Corp ^(a)	173,200	3,043
			Supertex Inc ^(a)	92,016	2,162
Metal Fabrication & Hardware - 0.56%
Precision Castparts Corp	44,870	6,128		$ 38,616
			Software - 5.64%
			Actuate Corp ^(a)	388,900	1,882
Mining - 0.61%
Freeport-McMoRan Copper & Gold Inc	69,640	6,594	Adobe Systems Inc ^(a)	417,780	11,760
			Autodesk Inc ^(a)	102,800	3,719
			Informatica Corp ^(a)	83,875	3,413
Miscellaneous Manufacturing - 1.40%
Aptargroup Inc	8,400	377	Microsoft Corp	1,016,547	27,081
Crane Co	101,512	3,884	Omnicell Inc ^(a)	147,375	2,059
General Electric Co	680,743	10,905	Oracle Corp	267,911	7,877
	$ 15,166		Quality Systems Inc	12,663	814
			Quest Software Inc ^(a)	103,100	2,698
Oil & Gas - 9.59%
Apache Corp	163,420	16,509		$ 61,303
Berry Petroleum Co	132,762	4,542	Telecommunications - 4.88%
Chevron Corp	384,793	31,788	AT&T Inc	600,025	17,101
CNOOC Ltd ADR	22,385	4,677	China Mobile Ltd ADR	69,400	3,565
Devon Energy Corp	129,725	8,435	Cisco Systems Inc ^(a)	677,790	15,474
Exxon Mobil Corp	165,283	10,986	Polycom Inc ^(a)	78,517	2,652
Nabors Industries Ltd ^(a)	76,676	1,602	Qualcomm Inc	64,350	2,904
Occidental Petroleum Corp	247,592	19,468	Verizon Communications Inc	346,625	11,255
Total SA ADR	112,225	6,114		$ 52,951
	$ 104,121		Toys, Games & Hobbies - 0.49%
Oil & Gas Services - 0.25%			Mattel Inc	230,285	5,373
Natural Gas Services Group Inc ^(a)	100,847	1,588
Schlumberger Ltd	16,480	1,152	Transportation - 2.44%
	$ 2,740		Con-way Inc	105,082	3,469
Pharmaceuticals - 4.97%			Expeditors International of Washington Inc	379,733	18,743
Allergan Inc/United States	226,798	16,422	Union Pacific Corp	48,915	4,289
Bristol-Myers Squibb Co	330,983	8,903		$ 26,501
Forest Laboratories Inc ^(a)	101,954	3,370	Trucking & Leasing - 0.29%
McKesson Corp	205,207	13,540	Greenbrier Cos Inc ^(a)	172,834	3,146
Medicis Pharmaceutical Corp	78,075	2,323
Obagi Medical Products Inc ^(a)	111,953	1,277	Water - 0.33%
Teva Pharmaceutical Industries Ltd ADR	28,390	1,473	California Water Service Group	95,050	3,549
VCA Antech Inc ^(a)	213,762	4,419
Watson Pharmaceuticals Inc ^(a)	49,457	2,307	TOTAL COMMON STOCKS	$ 1,061,870
	$ 54,034
Publicly Traded Investment Fund - 1.16%
iShares Russell 3000 Index Fund	179,775	12,611

REITS - 2.37%
Alexandria Real Estate Equities Inc	118,966	8,742

Schedule of Investments
Principal Capital Appreciation Fund
October 31, 2010


		Maturity
		Amount
REPURCHASE AGREEMENTS - 2.20%		(000's)	Value (000's)
Banks - 2.20%
Investment in Joint Trading Account; Bank of	$ 6,816		$ 6,816
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$6,952,351; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse		6,580	6,580
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $6,711,735; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche		6,251	6,251
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $6,376,149; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		4,277	4,277
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $4,362,627; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 23,924
TOTAL REPURCHASE AGREEMENTS			$ 23,924
Total Investments			$ 1,085,794
Other Assets in Excess of Liabilities, Net - 0.03%			$ 299
TOTAL NET ASSETS - 100.00%			$ 1,086,093


(a) Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


COMMON STOCKS - 97.85%	Shares Held Value (000's)				Maturity
Commercial Services - 1.13%					Amount
Corrections Corp of America ^(a)	752,200 $		19,309	REPURCHASE AGREEMENTS (continued)	(000's)	Value (000's)
				Banks (continued)
Lodging - 1.76%				Investment in Joint Trading Account; Credit Suisse $	7,176	$ 7,176
Marriott International Inc/DE	236,845		8,775	Repurchase Agreement; 0.21% dated
Starwood Hotels & Resorts Worldwide Inc	392,700		21,261	10/29/10 maturing 11/01/10 (collateralized by
		$ 30,036		US Treasury Note; $7,319,761; 1.13%; dated
Real Estate - 1.22%				01/15/12)
CB Richard Ellis Group Inc ^(a)	463,123		8,498	Investment in Joint Trading Account; Deutsche	6,818	6,817
Jones Lang LaSalle Inc	157,600		12,302	Bank Repurchase Agreement; 0.21% dated
		$ 20,800		10/29/10 maturing 11/01/10 (collateralized by
REITS - 93.74%				Sovereign Agency Issues; $6,953,772; 0.38%
Acadia Realty Trust	265,049		5,057	- 3.75%; dated 12/06/10 - 01/29/15)
Alexandria Real Estate Equities Inc	97,574		7,170	Investment in Joint Trading Account; Morgan	4,665	4,665
AMB Property Corp	471,870		13,302	Stanley Repurchase Agreement; 0.20% dated
American Campus Communities Inc	907,072		28,691	10/29/10 maturing 11/01/10 (collateralized by
Annaly Capital Management Inc	466,100		8,255	Sovereign Agency Issues; $4,757,845; 1.88%
Apartment Investment & Management Co	1,022,500		23,834	- 6.13%; dated 01/09/12 - 02/21/13)
AvalonBay Communities Inc	706,270		75,084			$ 26,092
Boston Properties Inc	1,202,131		103,612	TOTAL REPURCHASE AGREEMENTS		$ 26,092
CBL & Associates Properties Inc	496,350		7,783	Total Investments		$ 1,710,442
Colonial Properties Trust	1,044,295		18,724	Liabilities in Excess of Other Assets, Net - (0.12)%		$ (2,094)
Digital Realty Trust Inc	922,117		55,078	TOTAL NET ASSETS - 100.00%		$ 1,708,348
Douglas Emmett Inc	1,677,948		30,102
DuPont Fabros Technology Inc	947,935		23,793
Education Realty Trust Inc	1,074,550		8,059	(a) Non-Income Producing Security
Entertainment Properties Trust	689,600		31,880
Equity Lifestyle Properties Inc	572,647		32,595
Equity Residential	1,841,246		89,540	Unrealized Appreciation (Depreciation)
Essex Property Trust Inc	528,189		59,664	The net federal income tax unrealized appreciation (depreciation) and federal tax
Federal Realty Investment Trust	763,358		62,580	cost of investments held as of the period end were as follows:
General Growth Properties Inc	1,060,300		17,813
HCP Inc	1,080,831		38,921	Unrealized Appreciation		$ 387,068
Health Care REIT Inc	1,112,438		56,846	Unrealized Depreciation		(7,311)
Hersha Hospitality Trust	2,036,377		12,422	Net Unrealized Appreciation (Depreciation)		$ 379,757
Highwoods Properties Inc	674,000		22,330	Cost for federal income tax purposes		$ 1,330,685
Home Properties Inc	332,160		18,086	All dollar amounts are shown in thousands (000's)
Host Hotels & Resorts Inc	4,105,088		65,230
Kimco Realty Corp	1,301,905		22,432	Portfolio Summary (unaudited)
LaSalle Hotel Properties	991,149		23,480	Sector		Percent
Macerich Co/The	215,880		9,630	Financial		97 .23%
Mid-America Apartment Communities Inc	322,200		19,664	Consumer, Cyclical		1 .76%
ProLogis	2,933,184		40,038	Consumer, Non-cyclical		1 .13%
PS Business Parks Inc	206,195		12,219	Liabilities in Excess of Other Assets, Net		(0 .12)%
Public Storage Inc	906,770		89,970
Ramco-Gershenson Properties Trust	746,730		8,647	TOTAL NET ASSETS		100.00%
Simon Property Group Inc	2,116,440		203,221
SL Green Realty Corp	885,506		58,195
Tanger Factory Outlet Centers	672,090		32,206
Taubman Centers Inc	323,124		14,999
Ventas Inc	1,135,047		60,793
Vornado Realty Trust	1,024,303		89,514
		$ 1,601,459
TOTAL COMMON STOCKS		$ 1,671,604
CONVERTIBLE PREFERRED STOCKS -
0.74%	Shares Held Value (000's)
REITS - 0.74%
Digital Realty Trust Inc	351,300		12,746

TOTAL CONVERTIBLE PREFERRED STOCKS		$ 12,746
	Maturity
	Amount
REPURCHASE AGREEMENTS - 1.53%	(000's)	Value (000's)
Banks - 1.53%
Investment in Joint Trading Account; Bank of	$ 7,434	$ 7,434
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$7,582,174; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)


	Principal			Principal
	Amount			Amount
BONDS - 99.04%	(000's)	Value (000's)	BONDS (continued)	(000's)	Value (000's)
Aerospace & Defense - 0.36%			Banks (continued)
Boeing Co/The			Wachovia Corp
1.88%, 11/20/2012	$ 800	$ 819	5.35%, 3/15/2011	$ 600	$ 611
General Dynamics Corp			Wells Fargo & Co
1.80%, 7/15/2011	2,600	2,628	3.63%, 4/15/2015	5,850	6,162
		$ 3,447	4.38%, 1/31/2013	5,500	5,877
Automobile Asset Backed Securities - 0.21%			Westpac Banking Corp
Bank of America Auto Trust			2.25%, 11/19/2012	6,950	7,113
2.67%, 7/15/2013^(a)	301	305	3.00%, 8/4/2015	7,500	7,751
Ford Credit Auto Lease Trust					$ 153,798
1.04%, 3/15/2013^(a)	225	225	Beverages - 1.40%
Ford Credit Auto Owner Trust			Anheuser-Busch InBev Worldwide Inc
3.96%, 4/15/2012	182	184	2.50%, 3/26/2013	5,000	5,147
5.47%, 9/15/2012^(b)	350	361	7.20%, 1/15/2014^(a)	5,750	6,741
Nissan Auto Lease Trust			PepsiCo Inc/NC
1.39%, 1/15/2016	625	629	3.10%, 1/15/2015	1,350	1,443
Nissan Auto Receivables Owner Trust					$ 13,331
4.28%, 7/15/2013	257	263	Chemicals - 3.19%
		$ 1,967	Air Products & Chemicals Inc
Automobile Floor Plan Asset Backed Securities - 0.02%			4.15%, 2/1/2013	1,750	1,852
Nissan Master Owner Trust Receivables			Airgas Inc
1.41%, 1/15/2015^(a),(b)	230	233	3.25%, 10/1/2015	12,000	12,174
			EI du Pont de Nemours & Co
Banks - 16.13%			3.25%, 1/15/2015	3,150	3,380
American Express Bank FSB			5.00%, 7/15/2013	2,500	2,774
5.50%, 4/16/2013	4,150	4,526	PPG Industries Inc
Bank of America Corp			5.75%, 3/15/2013	7,500	8,215
4.50%, 4/1/2015	5,250	5,467	Praxair Inc
4.90%, 5/1/2013	615	649	1.75%, 11/15/2012	2,000	2,042
6.25%, 4/15/2012	2,750	2,926			$ 30,437
Bank of New York Mellon Corp/The			Commercial Services - 0.70%
2.95%, 6/18/2015	13,060	13,679	Western Union Co/The
Barclays Bank PLC			5.40%, 11/17/2011	5,000	5,235
2.50%, 1/23/2013	2,100	2,160	Yale University
Citigroup Inc			2.90%, 10/15/2014	1,330	1,419
5.50%, 8/27/2012	3,050	3,260			$ 6,654
5.50%, 4/11/2013	750	812	Computers - 3.08%
6.00%, 12/13/2013	6,750	7,466	Dell Inc
6.50%, 8/19/2013	4,000	4,463	1.40%, 9/10/2013	8,000	8,069
Commonwealth Bank of Australia			Hewlett-Packard Co
3.75%, 10/15/2014^(a)	12,500	13,350	1.25%, 9/13/2013	11,500	11,625
Goldman Sachs Group Inc/The			4.25%, 2/24/2012	4,000	4,182
3.70%, 8/1/2015	3,000	3,107	International Business Machines Corp
5.25%, 10/15/2013	5,000	5,468	2.10%, 5/6/2013	5,250	5,436
6.00%, 5/1/2014	4,000	4,494			$ 29,312
6.88%, 1/15/2011	1,050	1,064	Consumer Products - 0.59%
JP Morgan Chase & Co			Clorox Co
2.20%, 6/15/2012	5,000	5,142	3.55%, 11/1/2015	890	960
3.70%, 1/20/2015	8,400	8,883	5.00%, 3/1/2013	4,250	4,620
5.38%, 10/1/2012	5,250	5,680			$ 5,580
5.60%, 6/1/2011	600	618
Morgan Stanley			Diversified Financial Services - 12.54%
1.95%, 6/20/2012	4,500	4,614	American Express Credit Corp

2.88%, 5/14/2013 (b)	700	717	2.75%, 9/15/2015	4,000	4,034
3.45%, 11/2/2015^(c)	1,500	1,508	5.88%, 5/2/2013	7,000	7,705
			American Honda Finance Corp
4.00%, 7/24/2015	1,000	1,030	1.63%, 9/20/2013^(a)	4,500	4,549
4.20%, 11/20/2014	500	520	2.38%, 3/18/2013^(a)	800	820
5.63%, 1/9/2012	4,500	4,740	4.63%, 4/2/2013^(a)	7,500	8,087
6.00%, 4/28/2015	4,500	5,002	BlackRock Inc
PNC Funding Corp			2.25%, 12/10/2012	6,250	6,423
3.00%, 5/19/2014	500	521	Caterpillar Financial Services Corp
Regions Bank/Birmingham AL			4.85%, 12/7/2012	2,500	2,708
3.25%, 12/9/2011	3,500	3,611	Countrywide Financial Corp
Santander US Debt SA Unipersonal			5.80%, 6/7/2012	4,375	4,619
2.49%, 1/18/2013^(a)	900	901
			ERAC USA Finance LLC
US Bancorp			2.75%, 7/1/2013^(a)	6,250	6,429
1.13%, 10/30/2013^(c),(d)	1,000	999
			5.60%, 5/1/2015^(a)	3,750	4,233
1.38%, 9/13/2013	7,750	7,820	5.80%, 10/15/2012^(a)	5,250	5,672
2.00%, 6/14/2013	750	772
2.88%, 11/20/2014	300	315


Schedule of Investments
Short-Term Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Diversified Financial Services (continued)			Gas (continued)
FMR LLC			Sempra Energy
4.75%, 3/1/2013^(a)	$ 11,500 $	12,193	6.00%, 2/1/2013	$ 4,500 $	4,955
Franklin Resources Inc				$ 7,603
2.00%, 5/20/2013	7,500	7,683	Healthcare - Services - 0.48%
General Electric Capital Corp			UnitedHealth Group Inc
2.80%, 1/8/2013	3,000	3,096	4.88%, 2/15/2013	4,250	4,569
3.50%, 6/29/2015	3,500	3,705
3.75%, 11/14/2014	750	801	Home Equity Asset Backed Securities - 3.19%
4.80%, 5/1/2013	575	622	ACE Securities Corp
5.25%, 10/19/2012	750	810	0.60%, 5/25/2035^(b)	6,981	6,399
5.72%, 8/22/2011	5,000	5,052	0.71%, 4/25/2035^(b)	8,854	8,645
Jefferies Group Inc			Aegis Asset Backed Securities Trust
5.88%, 6/8/2014	5,500	6,036	0.74%, 3/25/2035^(b)	6,167	6,093
John Deere Capital Corp			Bayview Financial Acquisition Trust
4.95%, 12/17/2012	4,000	4,342	6.04%, 11/28/2036	4,043	4,159
MassMutual Global Funding II			Home Equity Asset Trust
2.30%, 9/28/2015^(a)	5,750	5,820	0.69%, 10/25/2035^(b)	4,028	4,008
PACCAR Financial Corp			Mastr Asset Backed Securities Trust
1.95%, 12/17/2012	7,250	7,398	0.32%, 11/25/2036^(b)	615	614
2.05%, 6/17/2013	5,750	5,922	New Century Home Equity Loan Trust
Toyota Motor Credit Corp			4.76%, 11/25/2033	146	143
3.20%, 6/17/2015	750	803	Residential Asset Securities Corp
	$ 119,562		4.47%, 3/25/2032	308	307
Electric - 3.65%			4.59%, 8/25/2031	82	80
Commonwealth Edison Co				$ 30,448
4.70%, 4/15/2015	1,500	1,675	Insurance - 5.47%
5.40%, 12/15/2011	4,500	4,728	Berkshire Hathaway Inc
7.50%, 7/1/2013	1,750	2,023	0.83%, 2/11/2013^(b)	1,260	1,266
Duke Energy Ohio Inc			2.13%, 2/11/2013	7,750	7,991
2.10%, 6/15/2013	2,250	2,316	3.20%, 2/11/2015	600	638
Nisource Finance Corp			Fidelity National Financial Inc
6.15%, 3/1/2013	4,250	4,704	7.30%, 8/15/2011	4,250	4,402
Oncor Electric Delivery Co LLC			MetLife Inc
5.95%, 9/1/2013	8,750	9,849	2.38%, 2/6/2014	5,500	5,606
6.38%, 5/1/2012	3,000	3,227	Metropolitan Life Global Funding I
Virginia Electric and Power Co			2.50%, 1/11/2013^(a)	850	872
5.10%, 11/30/2012	5,750	6,247	2.88%, 9/17/2012^(a)	1,500	1,547
	$ 34,769		5.13%, 6/10/2014^(a)	5,000	5,575
Electronics - 0.18%			New York Life Global Funding
Thermo Fisher Scientific Inc			2.25%, 12/14/2012^(a)	5,250	5,389
2.15%, 12/28/2012	1,720	1,755	3.00%, 5/4/2015^(a)	3,750	3,970
			4.65%, 5/9/2013^(a)	3,250	3,525
Environmental Control - 0.32%			5.25%, 10/16/2012^(a)	4,500	4,880
Allied Waste North America Inc			Prudential Financial Inc
5.75%, 2/15/2011	3,000	3,038	3.63%, 9/17/2012	4,250	4,418
			4.50%, 7/15/2013	1,000	1,068
Finance - Mortgage Loan/Banker - 5.01%			5.15%, 1/15/2013	950	1,021
Fannie Mae				$ 52,168
0.75%, 12/18/2013^(c)	8,000	8,012	Iron & Steel - 0.94%
1.63%, 7/27/2011	11,250	11,361	Nucor Corp
1.75%, 5/7/2013	2,000	2,061	5.00%, 12/1/2012	8,300	8,988
4.75%, 12/15/2010	6,000	6,036
Freddie Mac			Manufactured Housing Asset Backed Securities - 0.01%
1.13%, 7/27/2012	20,000	20,263	Green Tree Financial Corp
	$ 47,733		7.70%, 9/15/2026^(e)	120	117
Food - 1.15%
Corn Products International Inc			Media - 1.10%
3.20%, 11/1/2015	6,500	6,665	Comcast Corp
General Mills Inc			5.45%, 11/15/2010	300	301
8.02%, 2/5/2013	650	739	DirecTV Holdings LLC / DirecTV Financing Co
Kellogg Co			Inc
5.13%, 12/3/2012	1,000	1,086	6.38%, 6/15/2015	1,750	1,811
Sara Lee Corp			Time Warner Cable Inc
2.75%, 9/15/2015	2,500	2,514	5.40%, 7/2/2012	3,500	3,744
	$ 11,004		Walt Disney Co/The
Gas - 0.80%			4.70%, 12/1/2012	4,250	4,601
Florida Gas Transmission Co LLC				$ 10,457
4.00%, 7/15/2015^(a)	2,500	2,648


Schedule of Investments
Short-Term Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Mining - 1.43%			Mortgage Backed Securities (continued)
Anglo American Capital PLC			GSR Mortgage Loan Trust
2.15%, 9/27/2013^(a)	$ 6,500 $	6,610	5.00%, 8/25/2019	$ 4,330 $	4,472
Rio Tinto Finance USA Ltd			JP Morgan Mortgage Trust
1.88%, 11/2/2015^(c)	2,500	2,503	4.50%, 9/25/2034	1,206	1,228
Vulcan Materials Co			MASTR Asset Securitization Trust
5.60%, 11/30/2012	4,250	4,531	5.25%, 9/25/2033^(b)	41	41
	$ 13,644		5.25%, 12/25/2033	14,107	14,596
Miscellaneous Manufacturing - 1.11%			Morgan Stanley Dean Witter Capital I
Cargill Inc			6.54%, 2/15/2031	1	1
5.20%, 1/22/2013^(a)	7,250	7,856	Residential Accredit Loans Inc
Honeywell International Inc			5.00%, 3/25/2019	3,641	3,675
4.25%, 3/1/2013	2,500	2,705	6.00%, 11/25/2032	389	395
	$ 10,561		Structured Asset Securities Corp
Mortgage Backed Securities - 13.71%			5.50%, 12/25/2033	1,155	1,154
Banc of America Alternative Loan Trust			WaMu Mortgage Pass Through Certificates
5.00%, 12/25/2018	2,388	2,455	0.51%, 11/25/2045^(b)	17	17
Banc of America Funding Corp			Wells Fargo Mortgage Backed Securities Trust
0.34%, 7/20/2036^(b)	4,230	4,213	4.50%, 8/25/2018	1,636	1,693
5.00%, 6/25/2035^(b)	3,270	3,292	4.75%, 11/25/2018	1,351	1,402
Banc of America Mortgage Securities Inc			4.75%, 12/25/2018	1,222	1,255
4.75%, 2/25/2035	2,725	2,738	5.50%, 5/25/2035	4,797	4,956
5.00%, 2/25/2020	5,448	5,662	5.75%, 10/25/2036^(b)	1,430	1,427
5.00%, 8/25/2020	2,437	2,501		$ 130,750
5.00%, 5/25/2034	3,548	3,628	Oil & Gas - 3.48%
5.25%, 10/25/2034	2,126	2,146	Apache Corp
BCAP LLC Trust			6.25%, 4/15/2012	4,500	4,852
5.25%, 6/26/2037^(a)	2,679	2,720	BP Capital Markets PLC
Bear Stearns Alt-A Trust			3.13%, 10/1/2015	4,000	4,105
0.54%, 7/25/2035^(b)	26	13	3.63%, 5/8/2014	6,000	6,289
Bear Stearns Commercial Mortgage Securities			5.25%, 11/7/2013	7,250	7,828
7.00%, 5/20/2030	313	328	Husky Energy Inc
Chase Mortgage Finance Corp			5.90%, 6/15/2014	1,000	1,118
5.00%, 3/25/2018	1,308	1,340	Shell International Finance BV
5.50%, 5/25/2035	1,134	1,164	3.10%, 6/28/2015	4,250	4,507
6.00%, 5/25/2035	1,271	1,301	Total Capital SA
Citicorp Mortgage Securities Inc			3.00%, 6/24/2015	4,250	4,474
4.50%, 9/25/2034^(b)	4,651	4,761		$ 33,173
5.25%, 2/25/2035	3,681	3,718	Oil & Gas Services - 0.58%
Countrywide Alternative Loan Trust			Smith International Inc
6.00%, 2/25/2017	2,151	2,196	8.63%, 3/15/2014	4,500	5,489
Countrywide Asset-Backed Certificates
0.54%, 11/25/2035^(b)	53	50	Other Asset Backed Securities - 2.30%
Countrywide Home Loan Mortgage Pass Through			Carrington Mortgage Loan Trust
Trust			0.54%, 12/25/2035^(b)	475	437
4.50%, 8/25/2033	2,322	2,398	Countrywide Asset-Backed Certificates
4.75%, 1/25/2019	3,813	3,920	0.33%, 5/25/2028^(b)	3,286	3,217
4.75%, 1/25/2019	2,291	2,278	0.66%, 8/25/2034^(b)	1,704	1,673
4.75%, 8/25/2034	1,461	1,462	0.91%, 12/25/2034^(b)	6,767	6,676
5.00%, 11/25/2018	6,903	7,174	First Franklin Mortgage Loan Asset Backed
5.00%, 9/25/2019	1,936	2,020	Certificates
5.00%, 6/25/2034	4,597	4,703	0.54%, 10/25/2035^(b)	7,911	7,727
5.00%, 8/25/2034	3,942	3,990	John Deere Owner Trust
5.25%, 7/25/2033	473	472	4.18%, 6/15/2012	61	61
5.25%, 10/25/2034	1,910	1,902	Marriott Vacation Club Owner Trust
Fannie Mae			5.81%, 10/20/2029^(a)	125	132
0.51%, 3/25/2035^(b)	60	60	Merrill Lynch First Franklin Mortgage Loan Trust
0.56%, 2/25/2032^(b)	96	96	0.96%, 10/25/2037^(b)	2,062	2,041
5.00%, 11/25/2035	1,666	1,825		$ 21,964
6.00%, 2/25/2031	10,000	10,184	Pharmaceuticals - 2.12%
Freddie Mac			Abbott Laboratories
0.66%, 7/15/2023^(b)	423	423	2.70%, 5/27/2015	8,500	8,983
0.71%, 6/15/2023^(b)	184	184	Novartis Capital Corp
4.50%, 5/15/2030	823	825	1.90%, 4/24/2013	900	927
5.50%, 10/15/2027	999	1,001	2.90%, 4/24/2015	4,500	4,767
6.00%, 9/15/2029	3,800	3,867	Pfizer Inc
Ginnie Mae			4.45%, 3/15/2012	5,250	5,524
4.50%, 8/20/2032	751	792		$ 20,201
GMAC Mortgage Corp Loan Trust
5.25%, 7/25/2034	614	636


Schedule of Investments
Short-Term Income Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
BONDS (continued)	(000's) Value (000's)		BONDS (continued)	(000's) Value (000's)
Pipelines - 1.00%			Textiles - 0.53%
Enterprise Products Operating LLC			Mohawk Industries Inc
3.70%, 6/1/2015	$ 4,750 $	5,037	7.20%, 4/15/2012	$ 4,750	$ 5,023
Plains All American Pipeline LP / PAA Finance
Corp			Transportation - 0.48%
3.95%, 9/15/2015	4,250	4,501	United Parcel Service Inc
	$ 9,538		4.50%, 1/15/2013	4,250		4,598
Publicly Traded Investment Fund - 0.08%
CDP Financial Inc			TOTAL BONDS		$ 944,210
3.00%, 11/25/2014^(a)	750	785		Principal
			U.S. GOVERNMENT & GOVERNMENT	Amount
Real Estate - 1.36%			AGENCY OBLIGATIONS - 0.98%	(000's)	Value (000's)
WCI Finance LLC / WEA Finance LLC			Federal Home Loan Mortgage Corporation (FHLMC) - 0.10%
5.40%, 10/1/2012^(a)	6,000	6,399	2.68%, 9/1/2035^(b),(g)	$ 247	$ 258
WT Finance Aust Pty Ltd / Westfield Capital /			2.69%, 11/1/2021^(b),(g)	14		15
WEA Finance LLC			4.50%, 7/1/2011^(g)	50		51
5.13%, 11/15/2014^(a)	6,000	6,564	6.00%, 4/1/2017^(g)	127		138
	$ 12,963		6.00%, 5/1/2017^(g)	237		256
REITS - 6.85%			6.50%, 12/1/2015^(g)	12		14
Arden Realty LP			7.00%, 12/1/2022^(g)	144		162
5.25%, 3/1/2015	6,000	6,490	7.50%, 12/1/2029^(g)	3		3
AvalonBay Communities Inc			9.50%, 8/1/2016^(g)	7		8
5.50%, 1/15/2012	8,500	8,892			$ 905
Duke Realty LP			Federal National Mortgage Association (FNMA) - 0.25%
6.25%, 5/15/2013	6,750	7,322	2.62%, 1/1/2035^(b),(g)	81		84
ERP Operating LP			2.63%, 2/1/2037^(b),(g)	302		316
5.50%, 10/1/2012	4,000	4,288	2.67%, 11/1/2032^(b),(g)	116		120
6.63%, 3/15/2012	7,000	7,475	2.69%, 8/1/2034^(b),(g)	154		161
Health Care REIT Inc			2.71%, 7/1/2034^(b),(g)	111		116
5.88%, 5/15/2015	5,500	6,073	2.72%, 7/1/2034^(b),(g)	326		341
6.00%, 11/15/2013	8,000	8,807	2.76%, 2/1/2035^(b),(g)	52		55
Healthcare Realty Trust Inc			2.85%, 12/1/2032^(b),(g)	118		123
5.13%, 4/1/2014	3,250	3,467	2.88%, 1/1/2035^(b),(g)	269		282
Nationwide Health Properties Inc			3.05%, 11/1/2022^(b),(g)	3		3
6.25%, 2/1/2013	3,750	4,067	3.06%, 10/1/2035^(b),(g)	554		581
6.50%, 7/15/2011	5,000	5,176	4.39%, 1/1/2019^(b),(g)	6		6
8.25%, 7/1/2012	3,000	3,257	4.58%, 11/1/2035^(b),(g)	23		23
	$ 65,314		5.61%, 4/1/2019^(b),(g)	7		7
Retail - 1.01%			6.00%, 7/1/2028^(g)	70		78
Wal-Mart Stores Inc			6.50%, 1/1/2012^(g)	13		14
1.50%, 10/25/2015	4,000	3,982	6.50%, 1/1/2014^(g)	44		48
2.88%, 4/1/2015	1,750	1,858	7.50%, 10/1/2029^(g)	12		14
3.20%, 5/15/2014	3,500	3,769	8.00%, 5/1/2027^(g)	5		5
	$ 9,609		8.50%, 11/1/2017^(g)	13		15
			8.50%, 5/1/2022^(g)	28		29
Savings & Loans - 0.00%
Washington Mutual Bank / Henderson NV			10.00%, 5/1/2022^(g)	8		9
0.00%, 1/15/2013^(f)	1,200	2			$ 2,430
			Government National Mortgage Association (GNMA) - 0.01%
Software - 0.52%			8.00%, 3/15/2012	1		1
Microsoft Corp			9.00%, 4/20/2025	3		3
2.95%, 6/1/2014	2,000	2,130	10.00%, 1/15/2019	52		61
Oracle Corp			11.00%, 10/15/2015	13		15
3.75%, 7/8/2014	2,600	2,834	11.00%, 11/15/2015	3		3
	$ 4,964		11.00%, 11/15/2015	13		15
Student Loan Asset Backed Securities - 0.06%					$ 98
SLM Student Loan Trust			U.S. Treasury - 0.62%
1.60%, 10/25/2016^(b)	566	575	0.88%, 12/31/2010^(h)	850		851
			1.38%, 4/15/2012	5,000		5,080
Telecommunications - 1.90%					$ 5,931
America Movil SA de CV			TOTAL U.S. GOVERNMENT &
5.50%, 3/1/2014	2,000	2,221	GOVERNMENT AGENCY OBLIGATIONS		$ 9,364
AT&T Inc
2.50%, 8/15/2015	4,000	4,114
4.95%, 1/15/2013	4,250	4,616
Verizon New Jersey Inc
5.88%, 1/17/2012	6,750	7,136
	$ 18,087


				Portfolio Summary (unaudited)
				Sector	Percent
		Maturity		Financial	42 .98%
		Amount		Mortgage Securities	14 .07%
REPURCHASE AGREEMENTS - 0.55%		(000's)	Value (000's)	Consumer, Non-cyclical	6 .44%
Banks - 0.55%				Asset Backed Securities	5 .79%
Investment in Joint Trading Account; Bank of	$ 1,501		$ 1,500	Government	5 .63%
America Repurchase Agreement; 0.22%				Basic Materials	5 .56%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;				Energy	5 .06%
$1,530,606; 0.00% - 5.25%; dated 05/01/13 -				Utilities	4 .45%
				Technology	3 .60%
04/15/42)				Communications	3 .00%
Investment in Joint Trading Account; Credit Suisse		1,449	1,449
Repurchase Agreement; 0.21% dated				Industrial	2 .45%
				Consumer, Cyclical	1 .54%
10/29/10 maturing 11/01/10 (collateralized by				Liabilities in Excess of Other Assets, Net	(0.57)%
US Treasury Note; $1,477,632; 1.13%; dated
01/15/12)				TOTAL NET ASSETS	100.00%
Investment in Joint Trading Account; Deutsche		1,376	1,376
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $1,403,752; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		942	942
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $960,461; 1.88% -
6.13%; dated 01/09/12 - 02/21/13)
			$ 5,267
TOTAL REPURCHASE AGREEMENTS			$ 5,267
Total Investments			$ 958,841
Liabilities in Excess of Other Assets, Net - (0.57)%			$ (5,453)
TOTAL NET ASSETS - 100.00%			$ 953,388


Schedule of Investments
SmallCap Blend Fund
October 31, 2010




COMMON STOCKS - 96.37%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 2.25%			Commercial Services (continued)
Esterline Technologies Corp ^(a)	23,819 $	1,440	ICF International Inc ^(a)	23,520 $	603
HEICO Corp	21,810	1,086	Kenexa Corp ^(a)	28,697	525
Moog Inc ^(a)	16,790	631	On Assignment Inc ^(a)	43,870	248
Teledyne Technologies Inc ^(a)	19,027	791	Parexel International Corp ^(a)	63,070	1,356
Triumph Group Inc	9,720	812	Providence Service Corp/The ^(a)	18,460	303
	$ 4,760		Rent-A-Center Inc/TX	60,660	1,525
Airlines - 0.41%			SFN Group Inc ^(a)	42,050	319
Alaska Air Group Inc ^(a)	16,200	855	Sotheby's	35,180	1,542
			Steiner Leisure Ltd ^(a)	15,190	589
Apparel - 1.78%			Team Inc ^(a)	8,673	172
G-III Apparel Group Ltd ^(a)	22,546	595	TeleTech Holdings Inc ^(a)	34,750	528
Perry Ellis International Inc ^(a)	13,532	304	Valassis Communications Inc ^(a)	47,180	1,557
Steven Madden Ltd ^(a)	39,094	1,654		$ 13,024
Warnaco Group Inc/The ^(a)	22,802	1,211	Computers - 1.86%
	$ 3,764		CACI International Inc ^(a)	10,760	539
Automobile Parts & Equipment - 0.54%			Fortinet Inc ^(a)	28,860	866
Dorman Products Inc ^(a)	10,200	372	Insight Enterprises Inc ^(a)	41,730	631
Tenneco Inc ^(a)	23,600	770	Manhattan Associates Inc ^(a)	26,200	807
	$ 1,142		Rimage Corp ^(a)	14,630	217
Banks - 4.79%			Syntel Inc	17,750	867
CapitalSource Inc	40,430	247		$ 3,927
Columbia Banking System Inc	24,465	445	Consumer Products - 0.98%
Community Bank System Inc	39,490	923	Central Garden and Pet Co - A Shares ^(a)	62,500	653
Community Trust Bancorp Inc	10,910	298	Ennis Inc	20,270	366
East West Bancorp Inc	54,245	956	Helen of Troy Ltd ^(a)	15,560	399
Financial Institutions Inc	16,093	290	Tupperware Brands Corp	14,690	658
First of Long Island Corp/The	9,190	229		$ 2,076
FirstMerit Corp	60,720	1,043	Distribution & Wholesale - 0.15%
Independent Bank Corp/Rockland MA	13,568	319	Brightpoint Inc ^(a)	40,950	307
Lakeland Bancorp Inc	27,707	257
NBT Bancorp Inc	29,790	657	Diversified Financial Services - 2.03%
Signature Bank/New York NY ^(a)	37,930	1,602	Artio Global Investors Inc	18,100	282
Southwest Bancorp Inc/Stillwater OK	24,340	241	Calamos Asset Management Inc	35,970	431
Tompkins Financial Corp	8,646	334	Investment Technology Group Inc ^(a)	63,260	901
Trustmark Corp	32,870	726	KBW Inc	36,450	922
Union First Market Bankshares Corp	20,930	269	National Financial Partners Corp ^(a)	78,227	1,079
Webster Financial Corp	74,390	1,274	optionsXpress Holdings Inc ^(a)	41,370	661
	$ 10,110			$ 4,276
Biotechnology - 2.99%			Electric - 2.35%
Acorda Therapeutics Inc ^(a)	28,010	757	Avista Corp	64,550	1,410
Arqule Inc ^(a)	73,120	404	IDACORP Inc	21,140	778
Bio-Rad Laboratories Inc ^(a)	7,690	697	NorthWestern Corp	41,870	1,246
Celldex Therapeutics Inc ^(a)	54,880	244	Unisource Energy Corp	43,650	1,531
Cubist Pharmaceuticals Inc ^(a)	41,112	957		$ 4,965
Cytokinetics Inc ^(a)	96,404	254	Electrical Components & Equipment - 0.23%
Exelixis Inc ^(a)	195,920	874	EnerSys ^(a)	18,300	482
Human Genome Sciences Inc ^(a)	22,787	613
Incyte Corp ^(a)	62,600	1,043	Electronics - 3.27%
Ligand Pharmaceuticals Inc ^(a)	122,809	199	Benchmark Electronics Inc ^(a)	59,030	970
Vical Inc ^(a)	96,421	208	Brady Corp	36,570	1,125
XOMA Ltd ^(a)	27,980	65	Checkpoint Systems Inc ^(a)	27,070	596
	$ 6,315		CTS Corp	37,310	379
Chemicals - 2.66%			Daktronics Inc	21,741	237
HB Fuller Co	45,990	949	LaBarge Inc ^(a)	20,125	255
Innophos Holdings Inc	24,140	886	Multi-Fineline Electronix Inc ^(a)	21,690	531
Olin Corp	81,880	1,637	OSI Systems Inc ^(a)	13,390	482
Sensient Technologies Corp	34,730	1,122	Park Electrochemical Corp	15,500	418
Stepan Co	7,610	513	Rofin-Sinar Technologies Inc ^(a)	29,100	813
WR Grace & Co ^(a)	15,990	513	Watts Water Technologies Inc	13,420	472
	$ 5,620		Woodward Governor Co	19,990	626
Coal - 0.29%				$ 6,904
Cloud Peak Energy Inc ^(a)	35,450	616	Engineering & Contruction - 0.80%
			EMCOR Group Inc ^(a)	20,503	530
Commercial Services - 6.17%			Exponent Inc ^(a)	10,290	329
ABM Industries Inc	38,510	868	Insituform Technologies Inc ^(a)	20,710	447
Advance America Cash Advance Centers Inc	57,810	289	MasTec Inc ^(a)	31,450	384
American Public Education Inc ^(a)	9,860	276		$ 1,690
Emergency Medical Services Corp ^(a)	24,060	1,308	Entertainment - 0.22%
Grand Canyon Education Inc ^(a)	14,050	264	National CineMedia Inc	25,430	471
Healthcare Services Group Inc	31,310	752


Schedule of Investments
SmallCap Blend Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Environmental Control - 0.25%			Machinery - Diversified (continued)
Tetra Tech Inc ^(a)	25,440 $	536	Middleby Corp ^(a)	11,490 $	858
			NACCO Industries Inc	2,490	247
Food - 0.99%			Wabtec Corp/DE	17,170	804
Fresh Del Monte Produce Inc	29,180	646		$ 4,687
Seneca Foods Corp ^(a)	8,888	205	Media - 0.12%
TreeHouse Foods Inc ^(a)	26,370	1,232	Journal Communications Inc ^(a)	54,190	250
	$ 2,083
Forest Products & Paper - 0.87%			Metal Fabrication & Hardware - 0.38%
Domtar Corp	16,380	1,300	CIRCOR International Inc	11,440	401
PH Glatfelter Co	43,750	544	LB Foster Co ^(a)	12,450	411
	$ 1,844			$ 812
Gas - 0.81%			Mining - 0.82%
Southwest Gas Corp	32,450	1,128	Hecla Mining Co ^(a)	128,580	886
WGL Holdings Inc	15,360	592	Kaiser Aluminum Corp	18,580	836
	$ 1,720			$ 1,722
Hand & Machine Tools - 0.85%			Miscellaneous Manufacturing - 1.76%
Franklin Electric Co Inc	14,300	517	Actuant Corp	62,170	1,397
Regal-Beloit Corp	22,217	1,282	AO Smith Corp	18,250	1,023
	$ 1,799		ESCO Technologies Inc	17,880	613
Healthcare - Products - 1.62%			Koppers Holdings Inc	24,223	675
American Medical Systems Holdings Inc ^(a)	67,290	1,359		$ 3,708
Exactech Inc ^(a)	4,980	81	Office Furnishings - 0.16%
Integra LifeSciences Holdings Corp ^(a)	26,690	1,148	Steelcase Inc	40,560	341
Merit Medical Systems Inc ^(a)	18,000	285
Orthofix International NV ^(a)	19,460	545	Oil & Gas - 2.52%
	$ 3,418		Berry Petroleum Co	39,420	1,348
Healthcare - Services - 3.10%			Bill Barrett Corp ^(a)	26,310	993
Amedisys Inc ^(a)	22,687	577	Callon Petroleum Co ^(a)	41,990	207
AMERIGROUP Corp ^(a)	28,180	1,176	Clayton Williams Energy Inc ^(a)	4,870	291
Centene Corp ^(a)	19,010	424	Gulfport Energy Corp ^(a)	18,650	311
Ensign Group Inc/The	28,274	531	Petroquest Energy Inc ^(a)	125,020	698
Gentiva Health Services Inc ^(a)	32,032	746	Swift Energy Co ^(a)	46,045	1,466
ICON PLC ADR^(a)	31,120	602		$ 5,314
Kindred Healthcare Inc ^(a)	60,940	836	Oil & Gas Services - 1.97%
Magellan Health Services Inc ^(a)	34,640	1,663	CARBO Ceramics Inc	12,280	1,029
	$ 6,555		Dril-Quip Inc ^(a)	9,760	674
Home Furnishings - 0.73%			Lufkin Industries Inc	21,130	1,032
Tempur-Pedic International Inc ^(a)	44,900	1,549	RPC Inc	41,440	912
			T-3 Energy Services Inc ^(a)	15,210	509
Insurance - 2.74%				$ 4,156
Alterra Capital Holdings Ltd	35,340	714	Packaging & Containers - 1.08%
Aspen Insurance Holdings Ltd	39,980	1,134	Rock-Tenn Co	20,850	1,185
Delphi Financial Group Inc	36,454	987	Silgan Holdings Inc	32,470	1,096
OneBeacon Insurance Group Ltd	14,530	205		$ 2,281
Platinum Underwriters Holdings Ltd	42,330	1,822	Pharmaceuticals - 2.21%
Primerica Inc	28,540	603	Array BioPharma Inc ^(a)	83,030	269
Selective Insurance Group Inc	19,000	321	Catalyst Health Solutions Inc ^(a)	36,670	1,388
	$ 5,786		Cornerstone Therapeutics Inc ^(a)	37,066	232
Internet - 2.45%			Idenix Pharmaceuticals Inc ^(a)	60,670	263
Ancestry.com Inc ^(a)	25,606	683	Impax Laboratories Inc ^(a)	23,100	435
comScore Inc ^(a)	31,700	745	Orexigen Therapeutics Inc ^(a)	103,050	545
Constant Contact Inc ^(a)	31,380	722	Par Pharmaceutical Cos Inc ^(a)	31,590	1,027
Earthlink Inc	119,540	1,074	XenoPort Inc ^(a)	64,506	500
Liquidity Services Inc ^(a)	19,130	306		$ 4,659
TIBCO Software Inc ^(a)	85,420	1,642	Publicly Traded Investment Fund - 0.16%
	$ 5,172		THL Credit Inc	27,210	343
Investment Companies - 0.12%
PennantPark Investment Corp	23,122	257	REITS - 7.91%
			Agree Realty Corp	10,720	273
Iron & Steel - 0.21%			Ashford Hospitality Trust Inc ^(a)	83,984	852
Schnitzer Steel Industries Inc	8,750	452	BioMed Realty Trust Inc	91,840	1,685
			Chimera Investment Corp	173,009	709
Leisure Products & Services - 0.93%			DuPont Fabros Technology Inc	34,630	869
Polaris Industries Inc	27,550	1,959	Entertainment Properties Trust	29,836	1,379
			Essex Property Trust Inc	8,760	990
Machinery - Diversified - 2.22%			Getty Realty Corp	11,810	337
Altra Holdings Inc ^(a)	24,090	357	Hersha Hospitality Trust	191,233	1,167
Applied Industrial Technologies Inc	31,070	945	Highwoods Properties Inc	53,490	1,772
Briggs & Stratton Corp	34,810	613	Kilroy Realty Corp	47,010	1,606
Chart Industries Inc ^(a)	37,060	863	PS Business Parks Inc	17,970	1,065


Schedule of Investments
SmallCap Blend Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
REITS (continued)			Telecommunications (continued)
Saul Centers Inc	15,020 $	641	Consolidated Communications Holdings Inc	50,420 $		934
Starwood Property Trust Inc	33,790	683	InterDigital Inc	29,590		993
Sunstone Hotel Investors Inc ^(a)	58,940	640	LogMeIn Inc ^(a)	18,125		720
Urstadt Biddle Properties Inc	18,049	347	PAETEC Holding Corp ^(a)	134,920		569
Washington Real Estate Investment Trust	52,610	1,685	Plantronics Inc	39,810		1,428
	$ 16,700		Polycom Inc ^(a)	27,610		933
Retail - 8.25%			Premiere Global Services Inc ^(a)	59,930		409
Big 5 Sporting Goods Corp	31,780	430	RF Micro Devices Inc ^(a)	223,600		1,630
Bravo Brio Restaurant Group Inc ^(a)	37,840	681	Symmetricom Inc ^(a)	44,090		275
Cash America International Inc	26,700	941	Syniverse Holdings Inc ^(a)	28,700		875
Christopher & Banks Corp	49,200	293			$ 9,865
Coinstar Inc ^(a)	23,640	1,361	Transportation - 2.58%
Dillard's Inc	44,890	1,145	Atlas Air Worldwide Holdings Inc ^(a)	22,450		1,173
DineEquity Inc ^(a)	8,710	387	Bristow Group Inc ^(a)	26,110		1,013
Dress Barn Inc ^(a)	55,300	1,269	Celadon Group Inc ^(a)	27,020		350
DSW Inc ^(a)	6,178	206	Heartland Express Inc	76,460		1,140
Einstein Noah Restaurant Group Inc ^(a)	16,305	180	HUB Group Inc ^(a)	40,920		1,329
Finish Line Inc/The	27,840	426	Marten Transport Ltd	20,320		432
First Cash Financial Services Inc ^(a)	29,980	872			$ 5,437
Jo-Ann Stores Inc ^(a)	35,860	1,551	Trucking & Leasing - 0.32%
Men's Wearhouse Inc	31,920	780	TAL International Group Inc	24,180		678
PF Chang's China Bistro Inc	15,840	727
Pier 1 Imports Inc ^(a)	70,320	610	TOTAL COMMON STOCKS		$ 203,493
Ruby Tuesday Inc ^(a)	113,720	1,376		Maturity
Sally Beauty Holdings Inc ^(a)	74,560	907
				Amount
Stage Stores Inc	38,960	519	REPURCHASE AGREEMENTS - 3.76%	(000's)	Value (000's)
Texas Roadhouse Inc ^(a)	76,420	1,174
Tuesday Morning Corp ^(a)	61,810	296	Banks - 3.76%
Vera Bradley Inc ^(a)	13,950	382	Investment in Joint Trading Account; Bank of	$ 2,259	$ 2,260
			America Repurchase Agreement; 0.22%
World Fuel Services Corp	32,360	914	dated 10/29/10 maturing 11/01/10
	$ 17,427		(collateralized by Sovereign Agency Issues;
Savings & Loans - 1.88%			$2,304,586; 0.00% - 5.25%; dated 05/01/13 -
Danvers Bancorp Inc	18,200	273	04/15/42)
Dime Community Bancshares Inc	21,510	314	Investment in Joint Trading Account; Credit Suisse	2,181		2,181
ESSA Bancorp Inc	17,603	223	Repurchase Agreement; 0.21% dated
Investors Bancorp Inc ^(a)	49,130	589	10/29/10 maturing 11/01/10 (collateralized by
Northwest Bancshares Inc	85,920	974	US Treasury Note; $2,224,826; 1.13%; dated
OceanFirst Financial Corp	23,130	276	01/15/12)
Oritani Financial Corp	31,290	332	Investment in Joint Trading Account; Deutsche	2,072		2,072
Provident Financial Services Inc	52,500	664	Bank Repurchase Agreement; 0.21% dated
United Financial Bancorp Inc	23,320	316	10/29/10 maturing 11/01/10 (collateralized by
	$ 3,961		Sovereign Agency Issues; $2,113,584; 0.38%
Semiconductors - 3.35%			- 3.75%; dated 12/06/10 - 01/29/15)
Cabot Microelectronics Corp ^(a)	21,650	837	Investment in Joint Trading Account; Morgan	1,418		1,418
Diodes Inc ^(a)	50,240	1,104	Stanley Repurchase Agreement; 0.20% dated
Entegris Inc ^(a)	218,820	1,309	10/29/10 maturing 11/01/10 (collateralized by
Hittite Microwave Corp ^(a)	21,990	1,136	Sovereign Agency Issues; $1,446,137; 1.88%
IXYS Corp ^(a)	50,130	513	- 6.13%; dated 01/09/12 - 02/21/13)
Lattice Semiconductor Corp ^(a)	130,860	636			$ 7,931
Micrel Inc	35,150	419	TOTAL REPURCHASE AGREEMENTS		$ 7,931
Microsemi Corp ^(a)	38,660	773
			Total Investments		$ 211,424
Standard Microsystems Corp ^(a)	13,920	336
			Liabilities in Excess of Other Assets, Net - (0.13)%		$ (283)
	$ 7,063		TOTAL NET ASSETS - 100.00%		$ 211,141
Software - 4.57%
ACI Worldwide Inc ^(a)	24,640	600
Acxiom Corp ^(a)	67,640	1,187	(a) Non-Income Producing Security
Blackbaud Inc	32,930	836
CSG Systems International Inc ^(a)	28,280	550
Digi International Inc ^(a)	30,450	294
Mantech International Corp ^(a)	15,070	591	Unrealized Appreciation (Depreciation)
MicroStrategy Inc ^(a)	12,220	1,107	The net federal income tax unrealized appreciation (depreciation) and federal tax
Omnicell Inc ^(a)	27,560	385	cost of investments held as of the period end were as follows:
Quest Software Inc ^(a)	51,950	1,360
SS&C Technologies Holdings Inc ^(a)	18,070	313	Unrealized Appreciation		$ 41,691
SYNNEX Corp ^(a)	37,620	1,092	Unrealized Depreciation			(5,654)
Taleo Corp ^(a)	46,700	1,340	Net Unrealized Appreciation (Depreciation)		$ 36,037
			Cost for federal income tax purposes		$ 175,387
	$ 9,655		All dollar amounts are shown in thousands (000's)
Telecommunications - 4.67%
Anaren Inc ^(a)	18,870	316
Arris Group Inc ^(a)	84,061	783


Schedule of Investments
SmallCap Growth Fund
October 31, 2010




COMMON STOCKS - 96.68%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 2.32%			Distribution & Wholesale - 0.51%
Esterline Technologies Corp ^(a)	34,554 $	2,088	Brightpoint Inc ^(a)	170,650 $	1,278
HEICO Corp	61,300	3,052
Teledyne Technologies Inc ^(a)	17,105	711	Diversified Financial Services - 0.25%
	$ 5,851		Netspend Holdings Inc ^(a)	45,901	630
Apparel - 2.66%
Deckers Outdoor Corp ^(a)	18,000	1,046	Electronics - 5.07%
Perry Ellis International Inc ^(a)	32,197	724	Benchmark Electronics Inc ^(a)	74,900	1,231
Steven Madden Ltd ^(a)	56,920	2,408	Checkpoint Systems Inc ^(a)	89,000	1,958
Warnaco Group Inc/The ^(a)	48,057	2,552	CTS Corp	107,561	1,092
	$ 6,730		Daktronics Inc	41,040	448
			FEI Co ^(a)	28,000	609
Automobile Parts & Equipment - 0.83%
Tenneco Inc ^(a)	64,300	2,098	II-VI Inc ^(a)	59,800	2,353
			Keithley Instruments Inc	16,870	364
			Rofin-Sinar Technologies Inc ^(a)	75,529	2,109
Banks - 0.74%
Signature Bank/New York NY ^(a)	44,400	1,875	Woodward Governor Co	84,300	2,642
				$ 12,806
Biotechnology - 4.67%			Engineering & Contruction - 0.45%
Acorda Therapeutics Inc ^(a)	48,200	1,303	Exponent Inc ^(a)	35,319	1,127
Ariad Pharmaceuticals Inc ^(a)	211,300	778
Arqule Inc ^(a)	155,350	857	Entertainment - 0.47%
Bio-Rad Laboratories Inc ^(a)	11,196	1,015	National CineMedia Inc	64,000	1,185
Celldex Therapeutics Inc ^(a)	106,000	472
Cubist Pharmaceuticals Inc ^(a)	52,599	1,224	Environmental Control - 0.95%
Cytokinetics Inc ^(a)	196,322	518	Tetra Tech Inc ^(a)	114,014	2,401
Exelixis Inc ^(a)	219,520	979
Human Genome Sciences Inc ^(a)	34,636	931	Hand & Machine Tools - 0.54%
Incyte Corp ^(a)	109,163	1,819	Franklin Electric Co Inc	37,500	1,354
Ligand Pharmaceuticals Inc ^(a)	297,907	483
Momenta Pharmaceuticals Inc ^(a)	56,000	936	Healthcare - Products - 3.85%
Vical Inc ^(a)	177,743	384	American Medical Systems Holdings Inc ^(a)	46,640	942
XOMA Ltd ^(a)	45,047	104	Bruker BioSciences Corp ^(a)	82,100	1,231
	$ 11,803		Cooper Cos Inc/The	21,100	1,041
			Exactech Inc ^(a)	11,809	192
Chemicals - 2.88%
Arch Chemicals Inc	57,600	2,045	Haemonetics Corp ^(a)	28,200	1,541
NewMarket Corp	21,100	2,501	Integra LifeSciences Holdings Corp ^(a)	55,100	2,370
PolyOne Corp ^(a)	75,400	974	Merit Medical Systems Inc ^(a)	50,580	800
Stepan Co	26,000	1,754	Orthofix International NV ^(a)	57,460	1,610
	$ 7,274			$ 9,727
Commercial Services - 7.88%			Healthcare - Services - 3.18%
ABM Industries Inc	51,600	1,164	Amedisys Inc ^(a)	51,692	1,316
Advance America Cash Advance Centers Inc	209,200	1,044	AMERIGROUP Corp ^(a)	46,300	1,932
American Public Education Inc ^(a)	40,110	1,121	Gentiva Health Services Inc ^(a)	47,793	1,113
Corporate Executive Board Co	16,200	506	Healthsouth Corp ^(a)	134,995	2,442
Emergency Medical Services Corp ^(a)	33,790	1,837	ICON PLC ADR^(a)	63,260	1,224
Grand Canyon Education Inc ^(a)	45,018	847		$ 8,027
Healthcare Services Group Inc	62,330	1,498	Home Furnishings - 0.83%
ICF International Inc ^(a)	47,333	1,213	Tempur-Pedic International Inc ^(a)	60,870	2,100
Kenexa Corp ^(a)	62,633	1,146
Kforce Inc ^(a)	64,100	962	Internet - 2.99%
Providence Service Corp/The ^(a)	61,600	1,012	Ancestry.com Inc ^(a)	50,529	1,348
Sotheby's	73,000	3,200	comScore Inc ^(a)	87,400	2,055
Steiner Leisure Ltd ^(a)	31,033	1,203	Liquidity Services Inc ^(a)	44,700	715
TeleTech Holdings Inc ^(a)	49,100	745	TIBCO Software Inc ^(a)	178,900	3,438
Valassis Communications Inc ^(a)	73,300	2,419		$ 7,556
	$ 19,917		Iron & Steel - 0.21%
Computers - 3.07%			Schnitzer Steel Industries Inc	10,300	532
Fortinet Inc ^(a)	58,000	1,740
Insight Enterprises Inc ^(a)	119,000	1,799	Leisure Products & Services - 1.27%
Manhattan Associates Inc ^(a)	62,500	1,924	Polaris Industries Inc	45,300	3,220
Synaptics Inc ^(a)	16,200	436
Syntel Inc	38,000	1,857	Machinery - Diversified - 2.41%
	$ 7,756		Altra Holdings Inc ^(a)	78,400	1,160
Consumer Products - 0.67%			Applied Industrial Technologies Inc	80,470	2,447
Tupperware Brands Corp	37,600	1,685	Middleby Corp ^(a)	22,447	1,676
			NACCO Industries Inc	8,000	794
Cosmetics & Personal Care - 0.13%				$ 6,077
Inter Parfums Inc	19,300	338	Media - 0.22%
			Journal Communications Inc ^(a)	120,000	553


Schedule of Investments
SmallCap Growth Fund
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Metal Fabrication & Hardware - 0.58%			Semiconductors (continued)
RBC Bearings Inc ^(a)	44,100 $	1,469	Diodes Inc ^(a)	114,800 $		2,523
			Entegris Inc ^(a)	184,000		1,100
Mining - 0.85%			GT Solar International Inc ^(a)	58,300		480
Hecla Mining Co ^(a)	311,300	2,145	Hittite Microwave Corp ^(a)	47,840		2,472
			Lattice Semiconductor Corp ^(a)	429,000		2,085
Miscellaneous Manufacturing - 2.51%			Micrel Inc	196,000		2,334
Actuant Corp	54,500	1,225	Microsemi Corp ^(a)	64,641		1,293
AO Smith Corp	43,700	2,448	Standard Microsystems Corp ^(a)	25,467		615
Colfax Corp ^(a)	28,600	459	TriQuint Semiconductor Inc ^(a)	173,300		1,785
Koppers Holdings Inc	79,184	2,208			$ 15,703
	$ 6,340		Software - 8.27%
Oil & Gas - 1.16%			ACI Worldwide Inc ^(a)	71,420		1,740
Callon Petroleum Co ^(a)	216,900	1,069	Acxiom Corp ^(a)	146,700		2,575
Clayton Williams Energy Inc ^(a)	10,900	651	Blackbaud Inc	83,900		2,130
Gulfport Energy Corp ^(a)	43,000	717	CSG Systems International Inc ^(a)	54,100		1,052
Petroquest Energy Inc ^(a)	88,000	491	Digi International Inc ^(a)	62,000		599
	$ 2,928		Medidata Solutions Inc ^(a)	34,800		648
Oil & Gas Services - 2.38%			MicroStrategy Inc ^(a)	24,990		2,265
CARBO Ceramics Inc	14,500	1,215	Omnicell Inc ^(a)	55,000		768
Dril-Quip Inc ^(a)	23,000	1,589	Progress Software Corp ^(a)	52,000		1,943
Lufkin Industries Inc	26,900	1,314	Quest Software Inc ^(a)	100,290		2,625
RPC Inc	61,600	1,356	SS&C Technologies Holdings Inc ^(a)	50,300		870
Superior Energy Services Inc ^(a)	20,000	552	Taleo Corp ^(a)	81,100		2,327
	$ 6,026		VeriFone Systems Inc ^(a)	40,100		1,357
Packaging & Containers - 0.35%					$ 20,899
Rock-Tenn Co	15,380	874	Telecommunications - 6.20%
			Anaren Inc ^(a)	32,172		538
Pharmaceuticals - 4.81%			Arris Group Inc ^(a)	108,500		1,010
Array BioPharma Inc ^(a)	242,800	787	Consolidated Communications Holdings Inc	35,000		648
Catalyst Health Solutions Inc ^(a)	57,456	2,175	InterDigital Inc	80,510		2,703
Cornerstone Therapeutics Inc ^(a)	70,782	443	IPG Photonics Corp ^(a)	23,000		517
Herbalife Ltd	39,160	2,501	LogMeIn Inc ^(a)	36,207		1,439
Idenix Pharmaceuticals Inc ^(a)	107,000	463	PAETEC Holding Corp ^(a)	209,200		883
Impax Laboratories Inc ^(a)	58,900	1,110	Plantronics Inc	79,300		2,845
Keryx Biopharmaceuticals Inc ^(a)	141,000	727	Premiere Global Services Inc ^(a)	136,446		932
Orexigen Therapeutics Inc ^(a)	209,854	1,110	RF Micro Devices Inc ^(a)	279,000		2,034
Pharmasset Inc ^(a)	33,200	1,245	Syniverse Holdings Inc ^(a)	69,270		2,112
Targacept Inc ^(a)	34,100	844			$ 15,661
XenoPort Inc ^(a)	97,259	754	Transportation - 2.20%
	$ 12,159		Celadon Group Inc ^(a)	86,100		1,117
REITS - 2.10%			Heartland Express Inc	133,200		1,986
DuPont Fabros Technology Inc	41,000	1,029	HUB Group Inc ^(a)	75,500		2,451
PS Business Parks Inc	9,600	569			$ 5,554
Saul Centers Inc	39,100	1,669	Trucking & Leasing - 0.25%
Washington Real Estate Investment Trust	63,400	2,031	TAL International Group Inc	22,300		625
	$ 5,298
Retail - 9.44%			TOTAL COMMON STOCKS		$ 244,222
Bravo Brio Restaurant Group Inc ^(a)	81,000	1,458		Maturity
Cato Corp/The	69,800	1,846		Amount
Childrens Place Retail Stores Inc/The ^(a)	12,200	538	REPURCHASE AGREEMENTS - 3.41%	(000's)	Value (000's)
Coinstar Inc ^(a)	58,150	3,348	Banks - 3.41%
DineEquity Inc ^(a)	19,490	866	Investment in Joint Trading Account; Bank of	$ 2,455	$ 2,455
Dress Barn Inc ^(a)	63,100	1,448	America Repurchase Agreement; 0.22%
DSW Inc ^(a)	20,348	677	dated 10/29/10 maturing 11/01/10
Finish Line Inc/The	152,270	2,330	(collateralized by Sovereign Agency Issues;
First Cash Financial Services Inc ^(a)	76,700	2,230	$2,503,957; 0.00% - 5.25%; dated 05/01/13 -
Jo-Ann Stores Inc ^(a)	52,400	2,266	04/15/42)
PF Chang's China Bistro Inc	31,840	1,462	Investment in Joint Trading Account; Credit Suisse	2,370		2,370
Pier 1 Imports Inc ^(a)	80,000	694	Repurchase Agreement; 0.21% dated
Ruth's Hospitality Group Inc ^(a)	43,320	198	10/29/10 maturing 11/01/10 (collateralized by
Texas Roadhouse Inc ^(a)	151,650	2,329	US Treasury Note; $2,417,296; 1.13%; dated
Vera Bradley Inc ^(a)	32,200	881	01/15/12)
World Fuel Services Corp	45,100	1,273	Investment in Joint Trading Account; Deutsche	2,251		2,251
	$ 23,844		Bank Repurchase Agreement; 0.21% dated
Savings & Loans - 0.31%			10/29/10 maturing 11/01/10 (collateralized by
Investors Bancorp Inc ^(a)	66,400	797	Sovereign Agency Issues; $2,296,431; 0.38%
			- 3.75%; dated 12/06/10 - 01/29/15)
Semiconductors - 6.22%
Amkor Technology Inc ^(a)	49,000	353
Cabot Microelectronics Corp ^(a)	17,152	663


Schedule of Investments
SmallCap Growth Fund
October 31, 2010




		Maturity
		Amount
REPURCHASE AGREEMENTS (continued)		(000's)	Value (000's)
Banks (continued)
Investment in Joint Trading Account; Morgan	$ 1,540		$ 1,541
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $1,571,243; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 8,617
TOTAL REPURCHASE AGREEMENTS			$ 8,617
Total Investments			$ 252,839
Liabilities in Excess of Other Assets, Net - (0.09)%			$ (227)
TOTAL NET ASSETS - 100.00%			$ 252,612


(a) Non-Income Producing Security


Unrealized Appreciation (Depreciation)
The net federal income tax unrealized appreciation (depreciation) and federal tax
cost of investments held as of the period end were as follows:

Unrealized Appreciation			$ 48,238
Unrealized Depreciation			(6,713)
Net Unrealized Appreciation (Depreciation)			$ 41,525
Cost for federal income tax purposes			$ 211,314
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)
Sector			Percent
Consumer, Non-cyclical			25 .19%
Industrial			17 .63%
Technology			17 .56%
Consumer, Cyclical			16 .01%
Communications			9 .41%
Financial			6 .81%
Basic Materials			3 .94%
Energy			3 .54%
Liabilities in Excess of Other Assets, Net			(0.09)%
TOTAL NET ASSETS			100.00%



Futures Contracts

						Unrealized
Type		Long/Short	Contracts	Notional Value	Current Market Value	Appreciation/(Depreciation)
Russell 2000 Mini; December 2010		Long	37	$ 2,402	$ 2,598	$ 196
						$ 196

All dollar amounts are shown in thousands (000's)


Schedule of Investments
SmallCap Growth Fund II
October 31, 2010




COMMON STOCKS - 97.58%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Advertising - 0.02%			Banks (continued)
APAC Customer Services Inc ^(a)	3,814 $	23	Suffolk Bancorp	311 $	8
Harte-Hanks Inc	2,823	34	SY Bancorp Inc	212	5
	$ 57		Texas Capital Bancshares Inc ^(a)	95,925	1,741
Aerospace & Defense - 1.65%			Trustco Bank Corp NY	644	3
Aerovironment Inc ^(a)	1,071	25	Westamerica Bancorporation	937	47
Astronics Corp ^(a)	1,043	22		$ 5,885
Cubic Corp	809	35	Beverages - 0.04%
Esterline Technologies Corp ^(a)	34,998	2,115	Boston Beer Co Inc ^(a)	670	48
GenCorp Inc ^(a)	595	3	Coca-Cola Bottling Co Consolidated	489	26
HEICO Corp	1,909	95	Peet's Coffee & Tea Inc ^(a)	882	34
Kaman Corp	1,662	45		$ 108
National Presto Industries Inc	353	39	Biotechnology - 2.26%
Teledyne Technologies Inc ^(a)	741	31	3SBio Inc ADR^(a)	73,421	1,105
Triumph Group Inc	23,578	1,971	Acorda Therapeutics Inc ^(a)	2,870	78
	$ 4,381		Affymax Inc ^(a)	2,293	12
Agriculture - 0.02%			Alnylam Pharmaceuticals Inc ^(a)	2,687	35
Cadiz Inc ^(a)	1,550	17	AMAG Pharmaceuticals Inc ^(a)	1,557	25
Vector Group Ltd	1,890	35	Arena Pharmaceuticals Inc ^(a)	12,869	21
	$ 52		Ariad Pharmaceuticals Inc ^(a)	8,167	30
Airlines - 0.03%			Arqule Inc ^(a)	4,977	27
Alaska Air Group Inc ^(a)	239	12	BioCryst Pharmaceuticals Inc ^(a)	3,331	17
Allegiant Travel Co	1,141	54	Celera Corp ^(a)	741	4
Hawaiian Holdings Inc ^(a)	1,376	10	Chelsea Therapeutics International Ltd ^(a)	3,778	19
	$ 76		Cubist Pharmaceuticals Inc ^(a)	4,308	100
			Cytokinetics Inc ^(a)	5,126	14
Apparel - 3.37%
Carter's Inc ^(a)	4,342	108	Emergent Biosolutions Inc ^(a)	2,126	38
CROCS Inc ^(a)	104,825	1,461	Enzo Biochem Inc ^(a)	3,318	14
Deckers Outdoor Corp ^(a)	2,860	166	Enzon Pharmaceuticals Inc ^(a)	3,537	40
G-III Apparel Group Ltd ^(a)	64,117	1,693	Exact Sciences Corp ^(a)	45,231	310
Lacrosse Footwear Inc	525	8	Geron Corp ^(a)	6,214	35
Maidenform Brands Inc ^(a)	47,791	1,279	Halozyme Therapeutics Inc ^(a)	5,296	39
Oxford Industries Inc	1,655	38	Human Genome Sciences Inc ^(a)	9,639	259
RG Barry Corp	952	10	Illumina Inc ^(a)	17,086	928
Skechers U.S.A. Inc ^(a)	2,541	49	Immunogen Inc ^(a)	4,388	36
Steven Madden Ltd ^(a)	34,655	1,466	Immunomedics Inc ^(a)	7,630	30
Timberland Co/The ^(a)	2,175	46	Incyte Corp ^(a)	6,489	108
True Religion Apparel Inc ^(a)	1,873	38	InterMune Inc ^(a)	2,955	39
Under Armour Inc ^(a)	2,575	120	Medicines Co/The ^(a)	2,174	28
Volcom Inc ^(a)	2,180	37	Micromet Inc ^(a)	133,049	997
Warnaco Group Inc/The ^(a)	43,562	2,314	Momenta Pharmaceuticals Inc ^(a)	2,979	50
Weyco Group Inc	404	10	NPS Pharmaceuticals Inc ^(a)	87,350	544
Wolverine World Wide Inc	3,657	106	NuPathe Inc ^(a)	346	2
	$ 8,949		Omeros Corp ^(a)	2,246	18
Automobile Manufacturers - 0.77%			PDL BioPharma Inc	10,308	54
Wabash National Corp ^(a)	253,622	2,044	Regeneron Pharmaceuticals Inc ^(a)	31,107	811
			Seattle Genetics Inc ^(a)	5,435	89
Automobile Parts & Equipment - 2.24%			Sequenom Inc ^(a)	5,536	35
American Axle & Manufacturing Holdings Inc ^(a)	4,424	41	SuperGen Inc ^(a)	595	2
Amerigon Inc ^(a)	2,441	26	Transcept Pharmaceuticals Inc ^(a)	478	3
ArvinMeritor Inc ^(a)	6,093	101	Vical Inc ^(a)	6,482	14
Cooper Tire & Rubber Co	47,333	928		$ 6,010
Dana Holding Corp ^(a)	8,278	117	Building Materials - 0.39%
Dorman Products Inc ^(a)	1,356	49	AAON Inc	1,456	36
Exide Technologies ^(a)	160,294	944	Drew Industries Inc ^(a)	776	16
Fuel Systems Solutions Inc ^(a)	997	41	Interline Brands Inc ^(a)	330	7
Tenneco Inc ^(a)	4,404	144	LSI Industries Inc	93,214	862
Titan International Inc	88,513	1,343	Quanex Building Products Corp	882	16
Westport Innovations Inc ^(a)	63,947	1,159	Simpson Manufacturing Co Inc	2,772	74
Wonder Auto Technology Inc ^(a)	109,560	1,056	Trex Co Inc ^(a)	1,746	31
	$ 5,949			$ 1,042
Banks - 2.22%			Chemicals - 2.24%
Arrow Financial Corp	103	2	Aceto Corp	88,171	650
Bank of the Ozarks Inc	15,024	571	Arch Chemicals Inc	1,022	36
Bridge Bancorp Inc	246	6	Balchem Corp	2,092	64
Cass Information Systems Inc	1,007	35	Ferro Corp ^(a)	2,799	38
Cathay General Bancorp	5,050	69	Hawkins Inc	863	31
Columbia Banking System Inc	38,313	698	Innophos Holdings Inc	599	22
First Financial Bankshares Inc	660	31	KMG Chemicals Inc	599	8
Iberiabank Corp	16,846	877	Kraton Performance Polymers Inc ^(a)	31,479	1,022
Signature Bank/New York NY ^(a)	42,424	1,792	Minerals Technologies Inc	175	10
			NewMarket Corp	16,790	1,990


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Chemicals (continued)			Commercial Services (continued)
Olin Corp	78,042 $	1,560	National American University Holdings Inc	872 $	6
Omnova Solutions Inc ^(a)	5,351	43	National Research Corp	199	6
PolyOne Corp ^(a)	4,907	63	Navigant Consulting Inc ^(a)	1,306	12
Quaker Chemical Corp	975	36	On Assignment Inc ^(a)	14,296	81
Rockwood Holdings Inc ^(a)	2,873	98	Parexel International Corp ^(a)	95,407	2,052
Solutia Inc ^(a)	9,005	163	PDI Inc ^(a)	85,905	753
Stepan Co	578	39	Pre-Paid Legal Services Inc ^(a)	529	32
WR Grace & Co ^(a)	1,376	44	Prospect Medical Holdings Inc ^(a)	507	4
Zep Inc	1,714	31	Providence Service Corp/The ^(a)	1,550	25
	$ 5,948		Resources Connection Inc	3,046	49
Coal - 0.02%			Rollins Inc	3,222	84
Cloud Peak Energy Inc ^(a)	705	13	Rural/Metro Corp ^(a)	2,117	18
Hallador Energy Co	409	5	Sotheby's	4,907	215
James River Coal Co ^(a)	1,624	28	Standard Parking Corp ^(a)	1,858	32
L&L Energy Inc ^(a)	2,106	17	Steiner Leisure Ltd ^(a)	1,093	42
	$ 63		SuccessFactors Inc ^(a)	66,991	1,817
			Team Health Holdings Inc ^(a)	1,838	25
Commercial Services - 6.26%
ABM Industries Inc	1,686	38	Team Inc ^(a)	199	4
Accretive Health Inc ^(a)	1,337	14	TeleTech Holdings Inc ^(a)	2,132	32
Administaff Inc	1,414	37	TNS Inc ^(a)	1,977	38
Advance America Cash Advance Centers Inc	1,041	5	Transcend Services Inc ^(a)	63,242	1,102
Advisory Board Co/The ^(a)	1,005	47	TrueBlue Inc ^(a)	1,814	25
American Public Education Inc ^(a)	19,782	553	Universal Technical Institute Inc	1,544	30
American Reprographics Co ^(a)	793	6	Valassis Communications Inc ^(a)	3,636	120
AMN Healthcare Services Inc ^(a)	1,624	9	Wright Express Corp ^(a)	2,938	111
Arbitron Inc	1,962	50		$ 16,626
Avis Budget Group Inc ^(a)	6,649	77	Computers - 3.73%
Barrett Business Services Inc	638	10	3D Systems Corp ^(a)	2,180	56
Bridgepoint Education Inc ^(a)	2,335	33	CACI International Inc ^(a)	243	12
Capella Education Co ^(a)	5,395	296	Cogo Group Inc ^(a)	112,836	859
Cardtronics Inc ^(a)	67,447	1,143	Compellent Technologies Inc ^(a)	1,509	38
CBIZ Inc ^(a)	2,683	16	Computer Task Group Inc ^(a)	1,196	10
Cenveo Inc ^(a)	6,595	36	Digimarc Corp ^(a)	776	21
Chemed Corp	1,692	100	Electronics for Imaging Inc ^(a)	67,938	930
Consolidated Graphics Inc ^(a)	704	33	Fortinet Inc ^(a)	12,043	362
Corinthian Colleges Inc ^(a)	57,811	301	iGate Corp	1,729	35
Corporate Executive Board Co	2,624	82	Insight Enterprises Inc ^(a)	1,217	18
Corvel Corp ^(a)	822	37	Isilon Systems Inc ^(a)	1,762	50
CoStar Group Inc ^(a)	1,341	67	Jack Henry & Associates Inc	6,391	174
CPI Corp	592	15	LivePerson Inc ^(a)	2,953	27
Deluxe Corp	3,636	74	Magma Design Automation Inc ^(a)	7,135	31
Diamond Management & Technology Consultants	2,785	35	Manhattan Associates Inc ^(a)	1,694	52
Inc			Maxwell Technologies Inc ^(a)	1,716	28
Dollar Financial Corp ^(a)	1,792	45	Mentor Graphics Corp ^(a)	2,929	32
Dollar Thrifty Automotive Group Inc ^(a)	2,160	100	Mercury Computer Systems Inc ^(a)	431	7
ExlService Holdings Inc ^(a)	58,447	1,114	MTS Systems Corp	1,235	40
Forrester Research Inc ^(a)	1,061	35	NCI Inc ^(a)	761	14
Geo Group Inc/The ^(a)	2,155	55	Netezza Corp ^(a)	3,312	89
Global Cash Access Holdings Inc ^(a)	5,011	18	Netscout Systems Inc ^(a)	2,280	53
Grand Canyon Education Inc ^(a)	2,309	43	Quantum Corp ^(a)	15,394	52
Great Lakes Dredge & Dock Corp	2,294	14	Radiant Systems Inc ^(a)	181,938	3,549
Hackett Group Inc/The ^(a)	112,743	440	Radisys Corp ^(a)	1,942	19
Healthcare Services Group Inc	2,845	68	Riverbed Technology Inc ^(a)	36,774	2,116
Heartland Payment Systems Inc	2,401	34	SMART Modular Technologies WWH Inc ^(a)	3,494	26
Hill International Inc ^(a)	732	4	Spansion Inc ^(a)	1,446	25
HMS Holdings Corp ^(a)	2,012	121	SRA International Inc ^(a)	391	8
Huron Consulting Group Inc ^(a)	795	16	STEC Inc ^(a)	3,140	49
ICF International Inc ^(a)	671	17	Stratasys Inc ^(a)	1,365	43
K12 Inc ^(a)	1,871	52	Super Micro Computer Inc ^(a)	2,760	31
Kelly Services Inc ^(a)	318	5	SYKES Enterprises Inc ^(a)	530	9
Kendle International Inc ^(a)	242	2	Synaptics Inc ^(a)	2,612	70
Kenexa Corp ^(a)	1,468	27	Syntel Inc	1,004	49
Kforce Inc ^(a)	165,176	2,479	Unisys Corp ^(a)	1,121	26
Korn/Ferry International ^(a)	56,476	995	Xyratex Ltd ^(a)	58,628	908
Landauer Inc	695	42		$ 9,918
Learning Tree International Inc	736	7	Consumer Products - 0.03%
Lincoln Educational Services Corp	1,857	23	American Greetings Corp	276	5
MAXIMUS Inc	1,302	79	Blyth Inc	183	7
Medifast Inc ^(a)	1,617	39	Ennis Inc	599	11
Monro Muffler Brake Inc	19,277	921	Kid Brands Inc ^(a)	294	3
Multi-Color Corp	100	2	Oil-Dri Corp of America	107	2


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Consumer Products (continued)			Electronics (continued)
Summer Infant Inc ^(a)	1,206 $	10	Daktronics Inc	73,025 $	797
WD-40 Co	1,129	42	DDi Corp	1,481	15
	$ 80		Dionex Corp ^(a)	1,299	116
Cosmetics & Personal Care - 0.01%			Electro Scientific Industries Inc ^(a)	304	4
Inter Parfums Inc	1,713	30	FARO Technologies Inc ^(a)	66,083	1,595
Revlon Inc ^(a)	684	8	FEI Co ^(a)	1,165	25
	$ 38		II-VI Inc ^(a)	55,490	2,183
Distribution & Wholesale - 2.19%			Keithley Instruments Inc	1,345	29
Beacon Roofing Supply Inc ^(a)	3,523	52	LaBarge Inc ^(a)	1,189	15
BMP Sunstone Corp ^(a)	613	6	Methode Electronics Inc	2,400	22
Brightpoint Inc ^(a)	5,260	39	Multi-Fineline Electronix Inc ^(a)	1,148	28
Chindex International Inc ^(a)	651	9	Newport Corp ^(a)	65,853	957
Core-Mark Holding Co Inc ^(a)	206	7	NVE Corp ^(a)	562	27
MWI Veterinary Supply Inc ^(a)	55,924	3,199	OSI Systems Inc ^(a)	917	33
Owens & Minor Inc	3,689	105	Park Electrochemical Corp	1,525	41
Pool Corp	3,653	74	Plexus Corp ^(a)	3,112	94
School Specialty Inc ^(a)	801	11	Rofin-Sinar Technologies Inc ^(a)	1,489	42
United Stationers Inc ^(a)	1,164	65	Rogers Corp ^(a)	603	21
Watsco Inc	2,090	117	Sanmina-SCI Corp ^(a)	6,131	81
WESCO International Inc ^(a)	49,810	2,133	Spectrum Control Inc ^(a)	529	8
			SRS Labs Inc ^(a)	1,305	12
	$ 5,817
Diversified Financial Services - 0.23%			Technitrol Inc	4,589	21
			TTM Technologies Inc ^(a)	2,082	22
Artio Global Investors Inc	1,588	25	Viasystems Group Inc ^(a)	351	6
BGC Partners Inc	4,198	29
Cohen & Steers Inc	1,684	42	Watts Water Technologies Inc	316	11
Credit Acceptance Corp ^(a)	647	38	Woodward Governor Co	41,014	1,285
Encore Capital Group Inc ^(a)	1,058	21	Zagg Inc ^(a)	151,753	1,260
			Zygo Corp ^(a)	319	3
Epoch Holding Corp	1,342	18
Evercore Partners Inc - Class A	1,058	32		$ 10,382
GAMCO Investors Inc	492	21	Energy - Alternate Sources - 1.02%
KBW Inc	1,563	39	China Integrated Energy Inc ^(a)	76,425	634
MarketAxess Holdings Inc	2,034	37	Clean Energy Fuels Corp ^(a)	21,913	318
Nelnet Inc	246	5	FuelCell Energy Inc ^(a)	288,586	329
optionsXpress Holdings Inc ^(a)	3,109	50	Headwaters Inc ^(a)	99,485	338
Portfolio Recovery Associates Inc ^(a)	1,248	84	JA Solar Holdings Co Ltd ADR^(a)	132,253	1,104
Pzena Investment Management Inc	863	6		$ 2,723
Stifel Financial Corp ^(a)	2,249	107	Engineering & Contruction - 0.05%
Virtus Investment Partners Inc ^(a)	538	20	Argan Inc ^(a)	199	2
World Acceptance Corp ^(a)	976	42	Exponent Inc ^(a)	980	31
	$ 616		Insituform Technologies Inc ^(a)	2,541	55
			Michael Baker Corp ^(a)	153	5
Electric - 0.02%
Ameresco Inc ^(a)	534	7	Mistras Group Inc ^(a)	1,728	18
EnerNOC Inc ^(a)	1,235	37	Orion Marine Group Inc ^(a)	1,827	23
	$ 44		VSE Corp	254	9
Electrical Components & Equipment - 2.20%				$ 143
A123 Systems Inc ^(a)	4,589	45	Entertainment - 1.32%
Advanced Battery Technologies Inc ^(a)	4,448	17	Bluegreen Corp ^(a)	184,262	595
American Superconductor Corp ^(a)	50,583	1,702	Cinemark Holdings Inc	56,340	989
Belden Inc	3,039	85	National CineMedia Inc	3,907	73
Coleman Cable Inc ^(a)	844	6	Shuffle Master Inc ^(a)	195,366	1,838
EnerSys ^(a)	1,653	43		$ 3,495
Generac Holdings Inc ^(a)	784	11	Environmental Control - 0.13%
GrafTech International Ltd ^(a)	9,146	151	Calgon Carbon Corp ^(a)	3,565	53
Graham Corp	1,111	19	Clean Harbors Inc ^(a)	1,732	122
Littelfuse Inc	1,411	60	Darling International Inc ^(a)	4,413	44
Power-One Inc ^(a)	159,856	1,664	Mine Safety Appliances Co	1,235	35
PowerSecure International Inc ^(a)	66,287	624	Tetra Tech Inc ^(a)	4,634	98
Satcon Technology Corp ^(a)	225,572	907		$ 352
Universal Display Corp ^(a)	20,278	507	Food - 1.45%
	$ 5,841		Arden Group Inc	140	12
Electronics - 3.91%			B&G Foods Inc	3,162	39
American Science & Engineering Inc	688	57	Calavo Growers Inc	40,146	881
Analogic Corp	18,523	845	Cal-Maine Foods Inc	1,525	44
Badger Meter Inc	1,124	47	Diamond Foods Inc	54,888	2,426
Ballantyne Strong Inc ^(a)	63,053	531	J&J Snack Foods Corp	966	41
Benchmark Electronics Inc ^(a)	664	11	Lancaster Colony Corp	1,465	73
Checkpoint Systems Inc ^(a)	1,868	41	Lance Inc	1,874	43
Coherent Inc ^(a)	1,305	55	Pilgrim's Pride Corp ^(a)	2,364	14
CTS Corp	1,093	11	Ruddick Corp	1,491	52
Cymer Inc ^(a)	825	31	Sanderson Farms Inc	1,504	63


Schedule of Investments
SmallCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Food (continued)			Healthcare - Products (continued)
Tootsie Roll Industries Inc	1,581 $	42	STAAR Surgical Co ^(a)	3,883 $	20
United Natural Foods Inc ^(a)	3,210	115	Stereotaxis Inc ^(a)	3,596	14
Village Super Market Inc	337	10	STERIS Corp	4,168	143
	$ 3,855		Synovis Life Technologies Inc ^(a)	1,375	21
Forest Products & Paper - 0.76%			Thoratec Corp ^(a)	48,631	1,587
Clearwater Paper Corp ^(a)	634	51	TomoTherapy Inc ^(a)	216,068	825
Deltic Timber Corp	694	32	Vascular Solutions Inc ^(a)	1,889	20
Neenah Paper Inc	811	12	Vital Images Inc ^(a)	1,183	16
Potlatch Corp	1,514	52	Volcano Corp ^(a)	83,465	2,038
Schweitzer-Mauduit International Inc	28,818	1,850	West Pharmaceutical Services Inc	2,401	86
Xerium Technologies Inc ^(a)	732	10	Wright Medical Group Inc ^(a)	2,820	38
	$ 2,007		Young Innovations Inc	297	8
			Zoll Medical Corp ^(a)	1,553	50
Gas - 0.01%
South Jersey Industries Inc	599	30		$ 15,118
			Healthcare - Services - 2.03%
Hand & Machine Tools - 0.07%			Air Methods Corp ^(a)	18,619	761
Baldor Electric Co	3,308	139	Alliance HealthCare Services Inc ^(a)	2,932	12
Franklin Electric Co Inc	1,623	59	Allied Healthcare International Inc ^(a)	1,268	4
	$ 198		Almost Family Inc ^(a)	956	33
			Amedisys Inc ^(a)	2,032	52
Healthcare - Products - 5.69%
Abaxis Inc ^(a)	1,630	39	America Service Group Inc	999	15
Accuray Inc ^(a)	5,897	39	American Dental Partners Inc ^(a)	153	2
Affymetrix Inc ^(a)	80,815	362	AMERIGROUP Corp ^(a)	804	34
Align Technology Inc ^(a)	4,391	75	Bio-Reference Labs Inc ^(a)	108,823	2,346
American Medical Systems Holdings Inc ^(a)	5,587	113	Continucare Corp ^(a)	3,047	14
ArthroCare Corp ^(a)	1,941	53	Ensign Group Inc/The	1,534	29
Atrion Corp	175	28	Genoptix Inc ^(a)	2,099	36
BioMimetic Therapeutics Inc ^(a)	105,138	1,192	Gentiva Health Services Inc ^(a)	1,168	27
Bruker BioSciences Corp ^(a)	59,476	891	Healthsouth Corp ^(a)	32,821	594
Caliper Life Sciences Inc ^(a)	51,116	230	IPC The Hospitalist Co Inc ^(a)	1,196	38
CardioNet Inc ^(a)	942	5	LHC Group Inc ^(a)	1,159	31
Cepheid Inc ^(a)	4,383	92	Metropolitan Health Networks Inc ^(a)	4,444	19
Cerus Corp ^(a)	4,358	14	Molina Healthcare Inc ^(a)	18,798	487
Conceptus Inc ^(a)	2,289	33	Neostem Inc ^(a)	3,251	6
CryoLife Inc ^(a)	446	3	Psychiatric Solutions Inc ^(a)	3,101	104
Cutera Inc ^(a)	36,973	267	RehabCare Group Inc ^(a)	31,686	704
Cyberonics Inc ^(a)	2,050	56	Sunrise Senior Living Inc ^(a)	6,696	23
Delcath Systems Inc ^(a)	2,836	24	US Physical Therapy Inc ^(a)	1,069	20
DexCom Inc ^(a)	3,734	51		$ 5,391
Endologix Inc ^(a)	5,641	31	Holding Companies - Diversified - 0.00%
Exactech Inc ^(a)	683	11	Compass Diversified Holdings	384	6
Genomic Health Inc ^(a)	1,677	24	Primoris Services Corp	630	5
Haemonetics Corp ^(a)	1,853	101		$ 11
Hanger Orthopedic Group Inc ^(a)	1,481	28	Home Furnishings - 0.48%
HeartWare International Inc ^(a)	24,887	1,701	DTS Inc/CA ^(a)	1,126	45
ICU Medical Inc ^(a)	316	12	Select Comfort Corp ^(a)	5,565	46
Immucor Inc ^(a)	5,156	90	Tempur-Pedic International Inc ^(a)	31,592	1,090
Insulet Corp ^(a)	2,961	47	TiVo Inc ^(a)	7,426	83
Integra LifeSciences Holdings Corp ^(a)	1,550	67	Universal Electronics Inc ^(a)	564	12
Invacare Corp	176	5		$ 1,276
IRIS International Inc ^(a)	2,094	19	Insurance - 0.04%
Kensey Nash Corp ^(a)	878	24	CNO Financial Group Inc ^(a)	2,046	11
LCA-Vision Inc ^(a)	2,108	15	eHealth Inc ^(a)	2,829	38
LeMaitre Vascular Inc ^(a)	72,709	473	First American Financial Corp	704	10
Luminex Corp ^(a)	2,798	50	Life Partners Holdings Inc	857	16
MAKO Surgical Corp ^(a)	2,945	32	Tower Group Inc	1,306	32
Masimo Corp	3,829	115		$ 107
Medtox Scientific Inc ^(a)	35,066	411	Internet - 7.84%

Meridian Bioscience Inc	2,998	69	AboveNet Inc ^(a)	38,284	2,178
Merit Medical Systems Inc ^(a)	1,904	30	Ancestry.com Inc ^(a)	1,376	37
Natus Medical Inc ^(a)	2,114	28	Art Technology Group Inc ^(a)	11,712	49
NuVasive Inc ^(a)	15,855	416	Blue Coat Systems Inc ^(a)	3,243	87
NxStage Medical Inc ^(a)	57,092	1,151	Blue Nile Inc ^(a)	930	40
Orthofix International NV ^(a)	1,359	38	Cogent Communications Group Inc ^(a)	2,993	32
Palomar Medical Technologies Inc ^(a)	1,199	13	comScore Inc ^(a)	1,474	35
PSS World Medical Inc ^(a)	4,217	100	Constant Contact Inc ^(a)	2,134	49
Quidel Corp ^(a)	2,589	30	DealerTrack Holdings Inc ^(a)	2,201	43
Rochester Medical Corp ^(a)	1,213	13	Dice Holdings Inc ^(a)	1,906	17
Sirona Dental Systems Inc ^(a)	19,467	733	eResearchTechnology Inc ^(a)	3,370	26
SonoSite Inc ^(a)	25,344	790	Global Sources Ltd ^(a)	2,445	19
Spectranetics Corp ^(a)	3,742	18


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Internet (continued)			Machinery - Diversified (continued)
GSI Commerce Inc ^(a)	91,979 $	2,246	Sauer-Danfoss Inc ^(a)	1,386 $	31
HealthStream Inc ^(a)	119,374	764	Tennant Co	1,477	49
Infospace Inc ^(a)	694	6	Twin Disc Inc	133	3
Internet Brands Inc ^(a)	761	10		$ 2,113
Internet Capital Group Inc ^(a)	397	5	Media - 0.86%
IntraLinks Holdings Inc ^(a)	53,542	1,171	Acacia Research - Acacia Technologies ^(a)	56,645	1,508
j2 Global Communications Inc ^(a)	2,294	60	Belo Corp ^(a)	5,789	34
KIT Digital Inc ^(a)	64,601	890	DG FastChannel Inc ^(a)	27,193	641
Limelight Networks Inc ^(a)	86,599	587	Dolan Co/The ^(a)	1,482	16
Lionbridge Technologies Inc ^(a)	6,849	34	Entercom Communications Corp ^(a)	2,188	18
Liquidity Services Inc ^(a)	62,971	1,008	Journal Communications Inc ^(a)	668	3
Local.com Corp ^(a)	30,345	126	McClatchy Co/The ^(a)	6,636	18
LoopNet Inc ^(a)	65,622	692	Primedia Inc	600	2
Mediamind Technologies Inc ^(a)	494	7	Sinclair Broadcast Group Inc ^(a)	393	3
Network Engines Inc ^(a)	268,845	449	World Wrestling Entertainment Inc	2,522	35
NIC Inc	114,345	992		$ 2,278
NutriSystem Inc	57,070	1,091	Metal Fabrication & Hardware - 0.68%
Online Resources Corp ^(a)	1,091	6	Ampco-Pittsburgh Corp	149	4
OpenTable Inc ^(a)	1,164	71	CIRCOR International Inc	23,649	830
Perficient Inc ^(a)	73,409	775	Hawk Corp ^(a)	563	28
QuinStreet Inc ^(a)	1,204	19	Kaydon Corp	22,981	802
Rackspace Hosting Inc ^(a)	49,791	1,242	Mueller Industries Inc	563	16
Saba Software Inc ^(a)	3,224	19	Mueller Water Products Inc - Class A	9,380	28
Sapient Corp	7,555	99	RBC Bearings Inc ^(a)	1,679	56
Shutterfly Inc ^(a)	2,001	60	Worthington Industries Inc	2,697	41
Sourcefire Inc ^(a)	59,802	1,411		$ 1,805
Stamps.com Inc ^(a)	1,161	19
(a)			Mining - 1.08%
support.com Inc	138,599	786	Allied Nevada Gold Corp ^(a)	66,844	1,649
TeleCommunication Systems Inc ^(a)	2,083	11
(a)			AMCOL International Corp	1,550	43
Terremark Worldwide Inc	3,924	39	Capital Gold Corp ^(a)	7,578	33
TIBCO Software Inc ^(a)	109,461	2,104
(a)			Globe Specialty Metals Inc	4,550	71
Travelzoo Inc	671	23	Golden Star Resources Ltd ^(a)	19,133	100
United Online Inc	2,082	13	Horsehead Holding Corp ^(a)	74,749	817
ValueClick Inc ^(a)	4,660	64	Jaguar Mining Inc ^(a)	5,330	34
VASCO Data Security International Inc ^(a)	2,510	20	Noranda Aluminum Holding Corp ^(a)	1,377	14
VirnetX Holding Corp	2,670	50	Stillwater Mining Co ^(a)	3,298	59
Websense Inc ^(a)	3,224	65	United States Lime & Minerals Inc ^(a)	290	12
Zix Corp ^(a)	305,412	1,188	US Gold Corp ^(a)	6,615	35
	$ 20,834			$ 2,867
Iron & Steel - 0.16%			Miscellaneous Manufacturing - 1.43%
General Steel Holdings Inc ^(a)	138,788	412
Shiloh Industries Inc ^(a)	307	3	Actuant Corp	56,437	1,268
			Acuity Brands Inc	2,829	142
	$ 415		AO Smith Corp	1,694	95
Leisure Products & Services - 0.56%			AZZ Inc	876	33
Brunswick Corp/DE	5,755	91	Barnes Group Inc	3,247	59
Interval Leisure Group Inc ^(a)	2,893	42	Blount International Inc ^(a)	3,600	54
Life Time Fitness Inc ^(a)	2,745	99	Brink's Co/The	3,070	73
Polaris Industries Inc	17,835	1,268	CLARCOR Inc	3,565	141
	$ 1,500		Colfax Corp ^(a)	1,805	29
Lodging - 0.01%			Eastman Kodak Co ^(a)	17,139	81
Ameristar Casinos Inc	1,730	31	EnPro Industries Inc ^(a)	1,032	36
			ESCO Technologies Inc	21,275	729
Machinery - Construction & Mining - 0.41%			Fabrinet ^(a)	818	12
Bucyrus International Inc	15,844	1,080	GP Strategies Corp ^(a)	761	7
			Hexcel Corp ^(a)	5,990	106
Machinery - Diversified - 0.80%			John Bean Technologies Corp	2,117	36
Albany International Corp	563	11	Koppers Holdings Inc	1,553	43
Altra Holdings Inc ^(a)	2,012	30	LSB Industries Inc ^(a)	23,204	519
Applied Industrial Technologies Inc	3,211	98	Matthews International Corp	2,252	74
Briggs & Stratton Corp	2,364	42	Metabolix Inc ^(a)	1,821	25
Cognex Corp	2,423	65	Park-Ohio Holdings Corp ^(a)	881	14
DXP Enterprises Inc ^(a)	917	17	Polypore International Inc ^(a)	1,658	55
Intermec Inc ^(a)	3,485	41	Raven Industries Inc	1,218	50
Intevac Inc ^(a)	952	10	Standex International Corp	258	7
iRobot Corp ^(a)	1,566	33	STR Holdings Inc ^(a)	2,104	52
Kadant Inc ^(a)	373	7	Sturm Ruger & Co Inc	2,291	36
Lindsay Corp	811	47	Tredegar Corp	220	4
Middleby Corp ^(a)	1,246	93	Trimas Corp ^(a)	1,694	27
NACCO Industries Inc	387	38		$ 3,807
Nordson Corp	17,143	1,337
Presstek Inc ^(a)	87,013	161


Schedule of Investments
SmallCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Office Furnishings - 0.53%			Pharmaceuticals (continued)
Herman Miller Inc	4,326 $	83	Hi-Tech Pharmacal Co Inc ^(a)	1,081 $	23
HNI Corp	3,424	85	Impax Laboratories Inc ^(a)	4,129	78
Interface Inc	81,942	1,179	Infinity Pharmaceuticals Inc ^(a)	1,232	7
Knoll Inc	3,635	55	Inspire Pharmaceuticals Inc ^(a)	132,778	929
	$ 1,402		Isis Pharmaceuticals Inc ^(a)	47,872	438
Oil & Gas - 2.55%			Jazz Pharmaceuticals Inc ^(a)	1,588	17
Abraxas Petroleum Corp ^(a)	2,807	9	Keryx Biopharmaceuticals Inc ^(a)	6,116	32
American Oil & Gas Inc ^(a)	3,693	32	Lannett Co Inc ^(a)	782	4
Apco Oil and Gas International Inc	1,066	39	MannKind Corp ^(a)	4,324	28
Brigham Exploration Co ^(a)	86,042	1,815	Medivation Inc ^(a)	2,508	29
Callon Petroleum Co ^(a)	3,211	16	Nabi Biopharmaceuticals ^(a)	5,042	25
Carrizo Oil & Gas Inc ^(a)	2,274	54	Nature's Sunshine Products Inc ^(a)	876	8
Clayton Williams Energy Inc ^(a)	599	36	Nektar Therapeutics ^(a)	6,940	101
Contango Oil & Gas Co ^(a)	564	30	Neogen Corp ^(a)	33,260	1,112
Contango Ore Inc ^(a),(b),(c)	79	—	Neurocrine Biosciences Inc ^(a)	3,617	29
Energy XXI Bermuda Ltd ^(a)	3,764	82	NeurogesX Inc ^(a)	1,246	9
Georesources Inc ^(a)	45,805	788	Obagi Medical Products Inc ^(a)	2,017	23
GMX Resources Inc ^(a)	44,924	201	Onyx Pharmaceuticals Inc ^(a)	4,004	107
Gulfport Energy Corp ^(a)	2,012	33	Opko Health Inc ^(a)	10,217	28
Houston American Energy Corp	2,079	29	Osiris Therapeutics Inc ^(a)	1,899	14
Kodiak Oil & Gas Corp ^(a)	9,136	38	Pharmacyclics Inc ^(a)	5,202	32
McMoRan Exploration Co ^(a)	5,405	91	Pharmasset Inc ^(a)	19,179	719
Northern Oil and Gas Inc ^(a)	3,263	64	PharMerica Corp ^(a)	1,306	13
Oasis Petroleum Inc ^(a)	1,553	33	POZEN Inc ^(a)	3,169	21
Panhandle Oil and Gas Inc	853	21	Progenics Pharmaceuticals Inc ^(a)	2,420	11
Petroquest Energy Inc ^(a)	1,411	8	Questcor Pharmaceuticals Inc ^(a)	3,954	48
RAM Energy Resources Inc ^(a)	5,868	8	Rigel Pharmaceuticals Inc ^(a)	3,834	32
Rosetta Resources Inc ^(a)	2,364	57	Salix Pharmaceuticals Ltd ^(a)	59,292	2,243
Stone Energy Corp ^(a)	345	5	Santarus Inc ^(a)	6,057	19
Swift Energy Co ^(a)	30,346	966	Savient Pharmaceuticals Inc ^(a)	4,981	62
TransAtlantic Petroleum Ltd ^(a)	9,321	28	Schiff Nutrition International Inc	378	3
Vaalco Energy Inc ^(a)	624	4	Sciclone Pharmaceuticals Inc ^(a)	4,329	15
Venoco Inc ^(a)	511	8	SIGA Technologies Inc ^(a)	2,033	27
W&T Offshore Inc	347	4	Somaxon Pharmaceuticals Inc ^(a)	3,395	9
Warren Resources Inc ^(a)	1,270	5	Synta Pharmaceuticals Corp ^(a)	2,769	10
Whiting Petroleum Corp ^(a)	22,495	2,259	Targacept Inc ^(a)	1,729	43
	$ 6,763		Theravance Inc ^(a)	4,061	83
			USANA Health Sciences Inc ^(a)	730	32
Oil & Gas Services - 1.47%
CARBO Ceramics Inc	1,417	119	Vivus Inc ^(a)	5,966	46
Dril-Quip Inc ^(a)	2,524	174	Zalicus Inc ^(a)	7,343	10
ION Geophysical Corp ^(a)	8,049	39		$ 11,540
Key Energy Services Inc ^(a)	811	8	Real Estate - 0.00%
Lufkin Industries Inc	2,198	107	HFF Inc ^(a)	1,340	13
Matrix Service Co ^(a)	599	5
Newpark Resources Inc ^(a)	129,340	761	REITS - 1.27%
OYO Geospace Corp ^(a)	453	28	Acadia Realty Trust	976	19
RPC Inc	82,820	1,823	Alexander's Inc	83	31
Tesco Corp ^(a)	66,281	839	Associated Estates Realty Corp	2,083	29
Tetra Technologies Inc ^(a)	917	9	Coresite Realty Corp ^(a)	19,264	290
	$ 3,912		DiamondRock Hospitality Co	95,619	1,012
Packaging & Containers - 0.22%			DuPont Fabros Technology Inc	57,068	1,433
Graham Packaging Co Inc ^(a)	199	2	EastGroup Properties Inc	882	36
Rock-Tenn Co	8,913	507	Equity Lifestyle Properties Inc	1,270	72
Silgan Holdings Inc	1,973	67	Equity One Inc	563	11
	$ 576		Getty Realty Corp	1,063	30
Pharmaceuticals - 4.34%			Home Properties Inc	917	50
Akorn Inc ^(a)	174,325	780	LTC Properties Inc	546	15
Alkermes Inc ^(a)	1,946	22	Mid-America Apartment Communities Inc	1,479	90
Antares Pharma Inc ^(a)	7,872	11	National Health Investors Inc	740	34
Ardea Biosciences Inc ^(a)	1,594	34	Omega Healthcare Investors Inc	1,327	30
Array BioPharma Inc ^(a)	5,930	19	PS Business Parks Inc	443	26
Auxilium Pharmaceuticals Inc ^(a)	3,076	76	Saul Centers Inc	464	20
AVI BioPharma Inc ^(a)	12,735	27	Tanger Factory Outlet Centers	1,711	82
Biodel Inc ^(a)	2,217	8	Universal Health Realty Income Trust	692	26
BioScrip Inc ^(a)	393,263	2,214	Urstadt Biddle Properties Inc	304	6
Caraco Pharmaceutical Laboratories Ltd ^(a)	301	2	Washington Real Estate Investment Trust	1,093	35
Catalyst Health Solutions Inc ^(a)	31,364	1,187		$ 3,377
Clarient Inc ^(a)	6,344	32	Retail - 6.33%
Cytori Therapeutics Inc ^(a)	4,916	24	99 Cents Only Stores ^(a)	2,899	45
Depomed Inc ^(a)	114,056	557	AFC Enterprises Inc ^(a)	2,499	32
Durect Corp ^(a)	10,404	28	AnnTaylor Stores Corp ^(a)	4,306	100
See accompanying notes			298


Schedule of Investments
SmallCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Retail (continued)			Retail (continued)
Asbury Automotive Group Inc ^(a)	2,164 $	31	Zumiez Inc ^(a)	1,286 $	34
Biglari Holdings Inc ^(a)	15	5		$ 16,822
BJ's Restaurants Inc ^(a)	47,317	1,569	Savings & Loans - 0.01%
Body Central Corp ^(a)	59,518	798	Oritani Financial Corp	1,927	20
Bon-Ton Stores Inc/The ^(a)	465	5
Brown Shoe Co Inc	2,185	26	Semiconductors - 5.08%
Buckle Inc/The	1,837	53	Amkor Technology Inc ^(a)	8,093	58
Buffalo Wild Wings Inc ^(a)	5,967	281	Applied Micro Circuits Corp ^(a)	5,049	51
Build-A-Bear Workshop Inc ^(a)	89,113	626	ATMI Inc ^(a)	298	5
Caribou Coffee Co Inc ^(a)	870	9	AXT Inc ^(a)	1,446	12
Casey's General Stores Inc	1,077	45	Brooks Automation Inc ^(a)	4,401	30
Cash America International Inc	1,157	41	Cabot Microelectronics Corp ^(a)	599	23
Casual Male Retail Group Inc ^(a)	4,129	18	Cavium Networks Inc ^(a)	55,171	1,758
Cato Corp/The	2,052	54	Ceva Inc ^(a)	63,916	1,183
CEC Entertainment Inc ^(a)	1,570	52	Cirrus Logic Inc ^(a)	4,256	55
Cheesecake Factory Inc/The ^(a)	4,453	130	Cohu Inc	507	7
Childrens Place Retail Stores Inc/The ^(a)	1,865	82	Conexant Systems Inc ^(a)	9,037	14
Citi Trends Inc ^(a)	1,778	37	Diodes Inc ^(a)	2,666	59
Coinstar Inc ^(a)	2,351	135	Entegris Inc ^(a)	4,660	28
Collective Brands Inc ^(a)	3,247	50	Entropic Communications Inc ^(a)	77,862	651
Cost Plus Inc ^(a)	208,213	1,074	GSI Technology Inc ^(a)	1,517	11
Cracker Barrel Old Country Store Inc	1,623	87	GT Solar International Inc ^(a)	4,865	40
Denny's Corp ^(a)	11,651	38	Hittite Microwave Corp ^(a)	15,667	810
Destination Maternity Corp ^(a)	570	21	Integrated Device Technology Inc ^(a)	7,484	44
DineEquity Inc ^(a)	1,187	53	Integrated Silicon Solution Inc ^(a)	2,576	19
Domino's Pizza Inc ^(a)	1,517	23	IXYS Corp ^(a)	1,820	19
Dress Barn Inc ^(a)	4,094	94	Kopin Corp ^(a)	2,789	11
DSW Inc ^(a)	1,022	34	Kulicke & Soffa Industries Inc ^(a)	5,503	34
Einstein Noah Restaurant Group Inc ^(a)	535	6	Lattice Semiconductor Corp ^(a)	8,685	42
Express Inc ^(a)	1,914	26	LTX-Credence Corp ^(a)	5,648	36
Ezcorp Inc ^(a)	3,150	68	MaxLinear Inc ^(a)	846	9
Finish Line Inc/The	1,806	28	Micrel Inc	3,812	45
First Cash Financial Services Inc ^(a)	2,153	63	Microsemi Corp ^(a)	68,783	1,375
Gordmans Stores Inc ^(a)	332	3	Mindspeed Technologies Inc ^(a)	150,123	1,108
Gymboree Corp ^(a)	2,016	131	MIPS Technologies Inc ^(a)	3,623	53
Haverty Furniture Cos Inc	269	3	MKS Instruments Inc ^(a)	1,553	32
Hibbett Sports Inc ^(a)	81,148	2,187	Monolithic Power Systems Inc ^(a)	2,435	39
HSN Inc ^(a)	2,863	86	Nanometrics Inc ^(a)	2,135	29
Jack in the Box Inc ^(a)	3,316	77	Netlogic Microsystems Inc ^(a)	49,088	1,475
Jo-Ann Stores Inc ^(a)	2,012	87	Omnivision Technologies Inc ^(a)	2,545	69
JOS A Bank Clothiers Inc ^(a)	2,029	88	Pericom Semiconductor Corp ^(a)	351	3
Kirkland's Inc ^(a)	1,870	25	PLX Technology Inc ^(a)	4,129	15
Krispy Kreme Doughnuts Inc ^(a)	6,737	38	Power Integrations Inc	1,921	66
Liz Claiborne Inc ^(a)	5,966	37	Richardson Electronics Ltd/United States	85,667	927
Lumber Liquidators Holdings Inc ^(a)	29,023	699	Rovi Corp ^(a)	22,723	1,151
McCormick & Schmick's Seafood Restaurants Inc	86,059	768	Rubicon Technology Inc ^(a)	55,002	1,272
(a)			Semtech Corp ^(a)	4,037	86
Nu Skin Enterprises Inc	3,660	112	Sigma Designs Inc ^(a)	530	6
OfficeMax Inc ^(a)	1,996	35	Standard Microsystems Corp ^(a)	830	20
Pacific Sunwear of California Inc ^(a)	139,389	831	Supertex Inc ^(a)	1,175	28
Papa John's International Inc ^(a)	1,206	31	Tessera Technologies Inc ^(a)	2,188	43
PetMed Express Inc	2,755	43	TriQuint Semiconductor Inc ^(a)	12,098	125
PF Chang's China Bistro Inc	1,707	78	Ultratech Inc ^(a)	2,315	42
Pier 1 Imports Inc ^(a)	7,660	66	Veeco Instruments Inc ^(a)	10,256	429
Pricesmart Inc	1,079	32	Volterra Semiconductor Corp ^(a)	1,620	33
Retail Ventures Inc ^(a)	2,768	38	Zoran Corp ^(a)	564	4
Rue21 Inc ^(a)	1,093	29		$ 13,484
Ruth's Hospitality Group Inc ^(a)	3,591	16	Software - 7.46%

Sally Beauty Holdings Inc ^(a)	6,248	76	Accelrys Inc ^(a)	3,500	25
Shoe Carnival Inc ^(a)	196	4	ACI Worldwide Inc ^(a)	2,537	62
Sonic Automotive Inc	941	10	Actuate Corp ^(a)	5,223	25
Sonic Corp ^(a)	3,779	34	Acxiom Corp ^(a)	48,373	849
Talbots Inc ^(a)	3,883	38	Advent Software Inc ^(a)	15,867	852
Texas Roadhouse Inc ^(a)	121,102	1,860	ANSYS Inc ^(a)	24,648	1,115
Ulta Salon Cosmetics & Fragrance Inc ^(a)	86,214	2,646	Ariba Inc ^(a)	6,703	126
Vera Bradley Inc ^(a)	2,840	78	Aspen Technology Inc ^(a)	4,640	52
Vitamin Shoppe Inc ^(a)	1,022	28	athenahealth Inc ^(a)	2,115	85
Wet Seal Inc/The ^(a)	156,333	547	Blackbaud Inc	3,342	85
Winmark Corp	268	9	Blackboard Inc ^(a)	32,594	1,361
World Fuel Services Corp	2,805	79	Bottomline Technologies Inc ^(a)	2,138	38
			Callidus Software Inc ^(a)	106,974	525


Schedule of Investments
SmallCap Growth Fund II
October 31, 2010




COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Software (continued)			Telecommunications (continued)
CommVault Systems Inc ^(a)	3,219 $	93	Loral Space & Communications Inc ^(a)	699 $		39
Computer Programs & Systems Inc	722	33	Netgear Inc ^(a)	2,648		82
Concur Technologies Inc ^(a)	17,608	909	Neutral Tandem Inc ^(a)	2,566		38
Convio Inc ^(a)	706	6	Novatel Wireless Inc ^(a)	496		5
CSG Systems International Inc ^(a)	1,907	37	NTELOS Holdings Corp	2,083		38
Deltek Inc ^(a)	2,105	17	Oclaro Inc ^(a)	3,212		27
DemandTec Inc ^(a)	116,278	1,230	PAETEC Holding Corp ^(a)	6,678		28
Digi International Inc ^(a)	676	6	Plantronics Inc	3,760		135
Ebix Inc ^(a)	43,616	1,078	Powerwave Technologies Inc ^(a)	392,622		856
EPIQ Systems Inc	347	4	RF Micro Devices Inc ^(a)	20,924		153
Guidance Software Inc ^(a)	1,594	10	SAVVIS Inc ^(a)	2,427		58
Interactive Intelligence Inc ^(a)	74,845	1,849	Shenandoah Telecommunications Co	1,612		29
Lawson Software Inc ^(a)	10,203	91	ShoreTel Inc ^(a)	5,395		34
Mantech International Corp ^(a)	1,522	60	Sonus Networks Inc ^(a)	12,851		40
MedAssets Inc ^(a)	19,502	362	Syniverse Holdings Inc ^(a)	5,172		158
Medidata Solutions Inc ^(a)	43,534	811	Tekelec ^(a)	988		13
MicroStrategy Inc ^(a)	672	61	TeleNav Inc ^(a)	881		6
Monotype Imaging Holdings Inc ^(a)	2,471	24	Tessco Technologies Inc	327		5
NetSuite Inc ^(a)	1,183	24	USA Mobility Inc	1,411		24
Omnicell Inc ^(a)	2,399	33	ViaSat Inc ^(a)	36,348		1,496
Opnet Technologies Inc	1,562	31	Vonage Holdings Corp ^(a)	5,221		13
Parametric Technology Corp ^(a)	8,605	185	Westell Technologies Inc ^(a)	150,003		440
Pegasystems Inc	1,052	28			$ 16,130
Progress Software Corp ^(a)	3,158	118	Textiles - 0.00%
QAD Inc ^(a)	1,482	6	Culp Inc ^(a)	987		10
QLIK Technologies Inc ^(a)	1,225	31
Quality Systems Inc	9,981	641	Toys, Games & Hobbies - 0.00%
Quest Software Inc ^(a)	3,988	104	RC2 Corp ^(a)	203		4
RealPage Inc ^(a)	1,295	30
Renaissance Learning Inc	31,810	445	Transportation - 1.50%
RightNow Technologies Inc ^(a)	1,622	42	CAI International Inc ^(a)	440		7
Rosetta Stone Inc ^(a)	1,171	27	Dynamex Inc ^(a)	535		11
Schawk Inc	1,058	21	Forward Air Corp	2,241		60
Scientific Learning Corp ^(a)	45,609	159	Genesee & Wyoming Inc ^(a)	2,911		135
SciQuest Inc ^(a)	37,742	426	Golar LNG Ltd	347		5
Seachange International Inc ^(a)	1,581	13	Heartland Express Inc	3,862		58
SolarWinds Inc ^(a)	2,576	47	HUB Group Inc ^(a)	64,838		2,105
Synchronoss Technologies Inc ^(a)	1,540	33	Knight Transportation Inc	4,463		80
Taleo Corp ^(a)	69,157	1,984	Old Dominion Freight Line Inc ^(a)	2,889		81
Tyler Technologies Inc ^(a)	2,307	47	Pacer International Inc ^(a)	3,883		22
Ultimate Software Group Inc ^(a)	58,358	2,415	Quality Distribution Inc ^(a)	329		2
VeriFone Systems Inc ^(a)	31,333	1,060	Scorpio Tankers Inc ^(a)	1,164		14
	$ 19,831		UTI Worldwide Inc	72,141		1,386
Telecommunications - 6.07%			Werner Enterprises Inc	717		15
Acme Packet Inc ^(a)	65,143	2,576			$ 3,981
ADC Telecommunications Inc ^(a)	6,538	83	Trucking & Leasing - 0.02%
ADTRAN Inc	4,844	156	TAL International Group Inc	422		12
Alaska Communications Systems Group Inc	2,984	30	Textainer Group Holdings Ltd	1,095		28
Alliance Fiber Optic Products Inc	16,883	186			$ 40
Anaren Inc ^(a)	248	4	TOTAL COMMON STOCKS		$ 259,267
Anixter International Inc	1,058	57		Maturity
Applied Signal Technology Inc	41,173	1,382		Amount
Arris Group Inc ^(a)	2,918	27
Aruba Networks Inc ^(a)	129,266	2,832	REPURCHASE AGREEMENTS - 2.07%	(000's)	Value (000's)
			Banks - 2.07%
Atlantic Tele-Network Inc	634	27	Investment in Joint Trading Account; Bank of	$ 1,565	$ 1,565
AudioCodes Ltd ^(a)	143,867	718
Cincinnati Bell Inc ^(a)	6,433	16	America Repurchase Agreement; 0.22%
			dated 10/29/10 maturing 11/01/10
Comtech Telecommunications Corp	1,250	39	(collateralized by Sovereign Agency Issues;
Consolidated Communications Holdings Inc	2,306	43	$1,595,979; 0.00% - 5.25%; dated 05/01/13 -
CPI International Inc ^(a)	164	2
DigitalGlobe Inc ^(a)	1,791	58	04/15/42)
Extreme Networks ^(a)	2,855	9	Investment in Joint Trading Account; Credit Suisse	1,511		1,510
Finisar Corp ^(a)	4,896	83	Repurchase Agreement; 0.21% dated
GeoEye Inc ^(a)	1,434	63	10/29/10 maturing 11/01/10 (collateralized by
Hughes Communications Inc ^(a)	600	17	US Treasury Note; $1,540,744; 1.13%; dated
Infinera Corp ^(a)	5,283	43	01/15/12)
			Investment in Joint Trading Account; Deutsche	1,435		1,435
InterDigital Inc	3,391	114	Bank Repurchase Agreement; 0.21% dated
IPG Photonics Corp ^(a)	78,590	1,768
Ixia ^(a)	85,278	1,334	10/29/10 maturing 11/01/10 (collateralized by
Knology Inc ^(a)	1,806	26	Sovereign Agency Issues; $1,463,706; 0.38%
LogMeIn Inc ^(a)	18,129	720	- 3.75%; dated 12/06/10 - 01/29/15)


Schedule of Investments
SmallCap Value Fund
October 31, 2010




COMMON STOCKS - 96.18%	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Aerospace & Defense - 1.95%			Diversified Financial Services - 1.47%
Esterline Technologies Corp ^(a)	39,350 $	2,378	Encore Capital Group Inc ^(a)	70,780 $	1,438
Moog Inc ^(a)	34,610	1,301	Investment Technology Group Inc ^(a)	87,910	1,252
Triumph Group Inc	25,490	2,131	National Financial Partners Corp ^(a)	121,290	1,674
	$ 5,810			$ 4,364
Airlines - 0.62%			Electric - 3.89%
Alaska Air Group Inc ^(a)	35,230	1,860	Avista Corp	90,790	1,983
			Central Vermont Public Service Corp	75,580	1,528
Apparel - 1.37%			El Paso Electric Co ^(a)	60,900	1,498
G-III Apparel Group Ltd ^(a)	47,320	1,249	IDACORP Inc	33,840	1,245
Jones Group Inc/The	93,050	1,346	NorthWestern Corp	56,180	1,673
Perry Ellis International Inc ^(a)	65,830	1,480	UIL Holdings Corp	58,460	1,693
	$ 4,075		Unisource Energy Corp	56,010	1,964
Automobile Parts & Equipment - 1.66%				$ 11,584
Dana Holding Corp ^(a)	125,370	1,774	Electrical Components & Equipment - 0.57%
Douglas Dynamics Inc	88,730	1,280	EnerSys ^(a)	63,800	1,682
Tenneco Inc ^(a)	58,290	1,901
	$ 4,955		Electronics - 3.45%
Banks - 10.48%			Brady Corp	53,960	1,660
Bancfirst Corp	45,440	1,868	Checkpoint Systems Inc ^(a)	87,920	1,934
Columbia Banking System Inc	51,050	930	CTS Corp	147,310	1,495
Community Bank System Inc	84,500	1,975	Cymer Inc ^(a)	39,750	1,469
Community Trust Bancorp Inc	82,971	2,266	OSI Systems Inc ^(a)	49,030	1,765
East West Bancorp Inc	88,860	1,567	Watts Water Technologies Inc	55,530	1,953
Financial Institutions Inc	76,150	1,374		$ 10,276
First Commonwealth Financial Corp	264,230	1,538	Engineering & Contruction - 1.50%
First Community Bancshares Inc/VA	86,630	1,166	EMCOR Group Inc ^(a)	54,590	1,411
FirstMerit Corp	108,140	1,858	Insituform Technologies Inc ^(a)	64,550	1,394
Great Southern Bancorp Inc	76,865	1,729	MasTec Inc ^(a)	135,290	1,651
Independent Bank Corp/Rockland MA	82,951	1,948		$ 4,456
Lakeland Bancorp Inc	77,189	715	Entertainment - 0.15%
Old National Bancorp/IN	131,160	1,241	Shuffle Master Inc ^(a)	46,928	442
Prosperity Bancshares Inc	27,010	840
Republic Bancorp Inc/KY	58,970	1,205	Food - 0.80%
Signature Bank/New York NY ^(a)	35,360	1,494	Fresh Del Monte Produce Inc	56,980	1,261
Southside Bancshares Inc	54,295	1,021	TreeHouse Foods Inc ^(a)	24,010	1,121
Southwest Bancorp Inc/Stillwater OK	156,590	1,550		$ 2,382
Tompkins Financial Corp	9,574	369	Forest Products & Paper - 0.95%
Trustmark Corp	74,530	1,646	Domtar Corp	15,090	1,197
Virginia Commerce Bancorp Inc ^(a)	196,810	1,045	PH Glatfelter Co	131,240	1,633
Webster Financial Corp	108,040	1,850		$ 2,830
	$ 31,195		Gas - 2.39%
Biotechnology - 0.55%			Nicor Inc	27,920	1,330
Incyte Corp ^(a)	98,100	1,634	Northwest Natural Gas Co	36,850	1,816
			Southwest Gas Corp	63,840	2,219
Chemicals - 3.29%			WGL Holdings Inc	45,450	1,752
Arch Chemicals Inc	38,429	1,365		$ 7,117
HB Fuller Co	81,360	1,679	Hand & Machine Tools - 1.02%
Innophos Holdings Inc	47,180	1,732	Franklin Electric Co Inc	42,150	1,522
Olin Corp	97,530	1,950	Regal-Beloit Corp	26,180	1,511
Sensient Technologies Corp	61,810	1,997		$ 3,033
WR Grace & Co ^(a)	33,020	1,059
			Healthcare - Products - 1.41%
	$ 9,782		Cooper Cos Inc/The	36,000	1,776
Coal - 0.45%			Integra LifeSciences Holdings Corp ^(a)	27,980	1,204
Cloud Peak Energy Inc ^(a)	77,390	1,344	Orthofix International NV ^(a)	43,330	1,214
				$ 4,194
Commercial Services - 2.82%			Healthcare - Services - 1.88%
ABM Industries Inc	78,210	1,764	AMERIGROUP Corp ^(a)	39,780	1,660
Kenexa Corp ^(a)	75,238	1,376
			Magellan Health Services Inc ^(a)	48,350	2,321
On Assignment Inc ^(a)	226,300	1,279
			RehabCare Group Inc ^(a)	71,940	1,599
Parexel International Corp ^(a)	60,660	1,304
Rent-A-Center Inc/TX	76,150	1,914		$ 5,580
SFN Group Inc ^(a)	99,070	751	Insurance - 3.97%
			Alterra Capital Holdings Ltd	75,360	1,522
	$ 8,388		Delphi Financial Group Inc	77,390	2,095
Consumer Products - 2.20%			Flagstone Reinsurance Holdings SA	110,300	1,202
Central Garden and Pet Co - A Shares ^(a)	167,890	1,755
			Horace Mann Educators Corp	64,030	1,197
Ennis Inc	103,170	1,861	MGIC Investment Corp ^(a)	140,170	1,236
Helen of Troy Ltd ^(a)	50,720	1,301
Prestige Brands Holdings Inc ^(a)	152,480	1,639	Platinum Underwriters Holdings Ltd	55,640	2,395
			Selective Insurance Group Inc	128,940	2,182
	$ 6,556			$ 11,829


COMMON STOCKS (continued)	Shares Held Value (000's)		COMMON STOCKS (continued)	Shares Held Value (000's)
Internet - 0.63%			REITS (continued)
TIBCO Software Inc ^(a)	97,300 $	1,870	PS Business Parks Inc	43,320 $	2,567
			Saul Centers Inc	59,460	2,538
Investment Companies - 1.06%			Starwood Property Trust Inc	80,910	1,635
Apollo Investment Corp	82,950	911	Sunstone Hotel Investors Inc ^(a)	39,543	429
MCG Capital Corp	170,578	1,080	Urstadt Biddle Properties Inc	121,419	2,332
PennantPark Investment Corp	103,476	1,151	Washington Real Estate Investment Trust	52,890	1,694
	$ 3,142			$ 37,325
Iron & Steel - 1.00%			Retail - 6.47%
Schnitzer Steel Industries Inc	24,610	1,272	AnnTaylor Stores Corp ^(a)	47,180	1,099
Universal Stainless & Alloy ^(a)	59,377	1,718	Cabela's Inc ^(a)	55,340	1,026
	$ 2,990		Cash America International Inc	35,410	1,248
Leisure Products & Services - 0.19%			Christopher & Banks Corp	13,508	81
Life Time Fitness Inc ^(a)	15,610	564	Dillard's Inc	52,410	1,337
			Domino's Pizza Inc ^(a)	78,350	1,163
Machinery - Diversified - 0.38%			Dress Barn Inc ^(a)	55,540	1,274
Briggs & Stratton Corp	63,500	1,118	Finish Line Inc/The	82,850	1,268
			Jo-Ann Stores Inc ^(a)	34,410	1,488
Metal Fabrication & Hardware - 1.13%			McCormick & Schmick's Seafood Restaurants Inc	161,980	1,446
CIRCOR International Inc	54,440	1,910	(a)
LB Foster Co ^(a)	43,680	1,442	Men's Wearhouse Inc	48,660	1,189
	$ 3,352		Pier 1 Imports Inc ^(a)	179,350	1,557
			Ruby Tuesday Inc ^(a)	129,580	1,568
Mining - 1.41%
Century Aluminum Co ^(a)	70,630	955	Sally Beauty Holdings Inc ^(a)	143,670	1,748
Hecla Mining Co ^(a)	245,430	1,691	Shoe Carnival Inc ^(a)	10,176	233
Kaiser Aluminum Corp	34,330	1,544	World Fuel Services Corp	54,030	1,525
	$ 4,190			$ 19,250
Miscellaneous Manufacturing - 1.84%			Savings & Loans - 3.10%
Ameron International Corp	15,150	1,042	Danvers Bancorp Inc	67,150	1,009
AO Smith Corp	26,300	1,473	Dime Community Bancshares Inc	95,160	1,388
ESCO Technologies Inc	41,500	1,423	Investors Bancorp Inc ^(a)	126,700	1,521
Koppers Holdings Inc	54,690	1,525	Northwest Bancshares Inc	112,800	1,279
	$ 5,463		OceanFirst Financial Corp	121,106	1,446
Office Furnishings - 0.49%			Provident Financial Services Inc	109,000	1,378
Steelcase Inc	173,840	1,462	United Financial Bancorp Inc	88,430	1,197
				$ 9,218
Oil & Gas - 2.56%			Semiconductors - 2.59%
Berry Petroleum Co	56,300	1,926	Cabot Microelectronics Corp ^(a)	46,480	1,796
Bill Barrett Corp ^(a)	41,610	1,571	Cohu Inc	68,950	990
Gulfport Energy Corp ^(a)	41,342	689	Kulicke & Soffa Industries Inc ^(a)	184,930	1,150
Rosetta Resources Inc ^(a)	77,410	1,851	Lattice Semiconductor Corp ^(a)	279,820	1,360
Swift Energy Co ^(a)	49,630	1,580	MKS Instruments Inc ^(a)	54,640	1,128
			TriQuint Semiconductor Inc ^(a)	125,260	1,290
	$ 7,617
Oil & Gas Services - 1.17%				$ 7,714
Complete Production Services Inc ^(a)	94,380	2,212	Software - 3.01%
Oil States International Inc ^(a)	24,790	1,267	Actuate Corp ^(a)	264,160	1,279
			Acxiom Corp ^(a)	95,320	1,673
	$ 3,479		Digi International Inc ^(a)	127,410	1,231
Packaging & Containers - 0.60%			Progress Software Corp ^(a)	34,480	1,288
Rock-Tenn Co	31,620	1,798	Quest Software Inc ^(a)	60,220	1,576
			SYNNEX Corp ^(a)	65,750	1,909
Pharmaceuticals - 1.05%
BioScrip Inc ^(a)	202,780	1,142		$ 8,956
Par Pharmaceutical Cos Inc ^(a)	61,030	1,984	Telecommunications - 2.82%
			Anaren Inc ^(a)	90,420	1,513
	$ 3,126
REITS - 12.54%			Anixter International Inc	21,720	1,166
			Arris Group Inc ^(a)	129,530	1,206
Agree Realty Corp	57,870	1,476
American Campus Communities Inc	63,560	2,010	Consolidated Communications Holdings Inc	103,860	1,924
Ashford Hospitality Trust Inc ^(a)	225,380	2,288	Plantronics Inc	42,820	1,536
			Symmetricom Inc ^(a)	166,847	1,039
BioMed Realty Trust Inc	176,770	3,244
CBL & Associates Properties Inc	121,059	1,898		$ 8,384
DuPont Fabros Technology Inc	66,080	1,659	Toys, Games & Hobbies - 0.44%
Entertainment Properties Trust	54,633	2,526	Jakks Pacific Inc ^(a)	69,510	1,310
Extra Space Storage Inc	33,625	545
Home Properties Inc	12,384	674	Transportation - 2.86%
Kilroy Realty Corp	41,340	1,412	Atlas Air Worldwide Holdings Inc ^(a)	40,860	2,135
LTC Properties Inc	59,670	1,662	Bristow Group Inc ^(a)	47,960	1,860
Mack-Cali Realty Corp	63,370	2,128	HUB Group Inc ^(a)	49,320	1,601
MFA Financial Inc	167,280	1,323	Marten Transport Ltd	74,370	1,580
Mid-America Apartment Communities Inc	29,540	1,803	Teekay Corp	42,050	1,337
Pennsylvania Real Estate Investment Trust	18,493	264		$ 8,513
Post Properties Inc	40,010	1,218	TOTAL COMMON STOCKS	$ 286,209


			Schedule of Investments
			SmallCap Value Fund
			October 31, 2010



		Maturity
		Amount
REPURCHASE AGREEMENTS - 3.02%		(000's)	Value (000's)
Banks - 3.02%
Investment in Joint Trading Account; Bank of	$ 2,560		$ 2,560
America Repurchase Agreement; 0.22%
dated 10/29/10 maturing 11/01/10
(collateralized by Sovereign Agency Issues;
$2,611,150; 0.00% - 5.25%; dated 05/01/13 -
04/15/42)
Investment in Joint Trading Account; Credit Suisse		2,471	2,471
Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
US Treasury Note; $2,520,780; 1.13%; dated
01/15/12)
Investment in Joint Trading Account; Deutsche		2,348	2,348
Bank Repurchase Agreement; 0.21% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $2,394,742; 0.38%
- 3.75%; dated 12/06/10 - 01/29/15)
Investment in Joint Trading Account; Morgan		1,606	1,606
Stanley Repurchase Agreement; 0.20% dated
10/29/10 maturing 11/01/10 (collateralized by
Sovereign Agency Issues; $1,638,507; 1.88%
- 6.13%; dated 01/09/12 - 02/21/13)
			$ 8,985
TOTAL REPURCHASE AGREEMENTS			$ 8,985
Total Investments			$ 295,194
Other Assets in Excess of Liabilities, Net - 0.80%			$ 2,385
TOTAL NET ASSETS - 100.00%			$ 297,579


(a) Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS - 106.57%	(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
Alabama - 1.34%			California (continued)
Auburn University			Los Angeles Harbor Department
5.00%, 6/1/2038	$ 1,500	$ 1,571	5.00%, 8/1/2031	$ 1,240	$ 1,321
Courtland Industrial Development Board			Los Angeles Unified School District/CA
5.20%, 6/1/2025	1,250	1,234	5.00%, 7/1/2029	1,000	1,061
Selma Industrial Development Board			Morongo Band of Mission Indians
6.25%, 11/1/2033	700	750	6.50%, 3/1/2028^(c)	500	476
		$ 3,555	Poway Unified School District
Alaska - 3.31%			0.00%, 8/1/2023^(b)	1,250	648
Alaska International Airports System AMBAC			0.00%, 8/1/2026^(b)	1,275	549
5.25%, 10/1/2027	4,500	4,896	Richmond Joint Powers Financing Authority
Borough of Matanuska-Susitna AK ASSURED			6.25%, 7/1/2024	1,000	1,110
GTY			San Francisco City & County Airports
5.50%, 9/1/2023	1,500	1,745	Commission
City of Anchorage AK NATL-RE			5.00%, 5/1/2040	1,000	1,014
6.50%, 12/1/2013	1,235	1,427	State of California
Northern Tobacco Securitization Corp			5.25%, 7/1/2021	1,000	1,159
5.00%, 6/1/2046	1,000	699	5.25%, 11/1/2025	2,000	2,102
		$ 8,767	5.75%, 4/1/2031	675	735
Arizona - 3.23%			Tobacco Securitization Authority of Northern
Arizona State Transportation Board			California
5.00%, 07/01/2026^(a)	1,500	1,670	5.38%, 6/1/2038	1,000	834
Arizona State University AMBAC			Twin Rivers Unified School District AGM
5.25%, 9/1/2024	1,090	1,151	3.50%, 6/1/2041	500	500
Glendale Industrial Development Authority			University of California
5.00%, 5/15/2035	500	511	5.50%, 5/15/2027	1,375	1,492
5.13%, 5/15/2040	500	513	5.75%, 05/15/2023^(a)	930	1,112
Maricopa County Pollution Control Corp			5.75%, 05/15/2025^(a)	1,380	1,636
6.00%, 5/1/2029	500	539			$ 32,594
Navajo County Pollution Control Corp			Colorado - 2.72%
5.75%, 6/1/2034	1,000	1,082	City of Colorado Springs CO AGM
Phoenix Civic Improvement Corp			5.25%, 12/15/2022	3,000	3,316
5.00%, 7/1/2034	1,000	1,069	Colorado Health Facilities Authority AGM
Pima County Industrial Development Authority			5.20%, 3/1/2031	1,000	1,058
6.25%, 6/1/2026	160	146	Lincoln Park Metropolitan District
6.55%, 12/1/2037	300	301	6.20%, 12/1/2037	500	508
Salt River Project Agricultural Improvement &			Platte River Power Authority
Power District			5.00%, 6/1/2026	1,135	1,273
5.00%, 1/1/2039	1,500	1,592	Regional Transportation District
		$ 8,574	6.00%, 1/15/2041	450	474
California - 12.37%			6.50%, 1/15/2030	500	551
Bay Area Toll Authority					$ 7,180
5.00%, 04/01/2034^(a)	2,500	2,635	Connecticut - 0.55%
5.00%, 04/01/2039^(a)	1,000	1,045	State of Connecticut ACA
Beverly Hills Unified School District CA			6.60%, 7/1/2024	1,500	1,452
0.00%, 8/1/2027^(b)	3,000	1,355
California State Public Works Board			District of Columbia - 2.53%
5.00%, 4/1/2030	1,175	1,169	District of Columbia
California Statewide Communities Development			6.38%, 10/1/2034	1,000	1,087
Authority FHA INS			District of Columbia Income Tax Revenue
6.25%, 11/15/2019	500	538	5.00%, 12/01/2023^(a)	1,785	2,019
6.63%, 11/15/2024	500	544	5.00%, 12/01/2024^(a)	715	805
6.63%, 8/1/2029	1,000	1,170	District of Columbia Water & Sewer
City of Vernon CA			Authority AGM
5.13%, 8/1/2021	1,000	1,051	5.50%, 10/1/2017	500	601
Foothill-Eastern Transportation Corridor			5.50%, 10/1/2041	2,000	2,135
Agency NATL-RE					$ 6,647
0.00%, 1/15/2018^(b)	2,000	1,262	Florida - 3.97%
Golden State Tobacco Securitization Corp			Bay Laurel Center Community Development
4.50%, 6/1/2027	1,235	1,115	District
5.00%, 6/1/2045	1,000	944	5.45%, 5/1/2037	470	410
Hesperia Public Financing Authority XLCA			City of Port St Lucie FL NATL-RE
5.00%, 9/1/2031	710	555	5.00%, 7/1/2033	500	491
Jurupa Unified School District NATL-RE FGIC			County of Alachua FL
5.13%, 8/1/2022	1,700	1,736	5.88%, 11/15/2042	150	131
Lancaster Redevelopment Agency			County of Miami-Dade FL ASSURED GTY
6.50%, 8/1/2029	580	650	5.25%, 10/1/2033	2,000	2,034
Los Angeles Department of Water & Power			Escambia County Health Facilities
5.25%, 07/01/2038^(a)	1,000	1,076	Authority AMBAC
			5.95%, 7/1/2020	65	67


Schedule of Investments
Tax-Exempt Bond Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
Florida (continued)			Illinois (continued)
Florida Housing Finance Corporation AMBAC			Metropolitan Pier & Exposition Authority AGM
FHA 542 (C)			5.50%, 6/15/2050	$ 2,000	$ 2,108
6.50%, 7/1/2036	$ 900	$ 900	Village of Bartlett IL
Hillsborough County Port District NATL-RE			5.60%, 1/1/2023	300	261
5.38%, 6/1/2027	1,000	1,018	Village of Bolingbrook IL
Miami-Dade County Educational Facilities			6.25%, 1/1/2024^(d)	500	316
Authority BHAC-CR			Village of Gilberts IL
5.50%, 4/1/2038	1,000	1,055	0.00%, 3/1/2016^(b),(e)	500	260
Miami-Dade County Expressway Authority			Village of Pingree Grove IL
5.00%, 7/1/2040	1,000	1,018	5.25%, 3/1/2015	400	388
Miami-Dade County School Board ASSURED			6.00%, 3/1/2036	122	113
GTY			Volo Village Special Service Area No 3
5.25%, 5/1/2028	2,000	2,146	6.00%, 3/1/2036	250	206
Orange County Housing Finance Authority					$ 29,113
7.00%, 10/1/2025	500	511	Indiana - 2.13%
Seminole Indian Tribe of Florida			Indiana Finance Authority
5.75%, 10/1/2022^(c)	250	254	5.38%, 11/1/2032	1,000	1,059
Tolomato Community Development District			Indiana Municipal Power Agency NATL-RE
6.55%, 5/1/2027	300	222	6.00%, 1/1/2039	1,000	1,099
6.65%, 5/1/2040	160	118	6.13%, 1/1/2013	3,265	3,462
West Villages Improvement District					$ 5,620
5.50%, 5/1/2037	155	72	Iowa - 1.24%
		$ 10,447	City of Altoona IA
Georgia - 0.63%			5.75%, 6/1/2031	1,200	1,252
City of Atlanta GA			County of Pottawattamie IA
6.00%, 11/1/2027	1,000	1,123	5.75%, 5/15/2026	385	369
7.38%, 1/1/2031	500	519	Iowa Finance Authority
		$ 1,642	5.75%, 11/15/2024	400	353
Hawaii - 0.80%			State of Iowa
City & County of Honolulu HI			5.00%, 6/1/2027	1,200	1,312
6.00%, 1/1/2012	730	778			$ 3,286
6.00%, 1/1/2012	1,270	1,351	Kansas - 1.69%
		$ 2,129	City of Lenexa KS
Idaho - 1.34%			5.50%, 5/15/2039	1,000	839
Idaho Health Facilities Authority			City of Manhattan KS
6.65%, 2/15/2021	2,000	2,709	5.00%, 5/15/2024	500	453
Idaho Housing & Finance Association			County of Sedgwick KS/County of Shawnee
5.85%, 7/1/2036	765	810	KS GNMA/FNMA
		$ 3,519	5.65%, 6/1/2037	945	1,008
Illinois - 11.01%			Kansas Development Finance Authority
City of Chicago IL			5.50%, 11/15/2029	1,000	1,098
5.25%, 01/01/2025^(a)	2,000	2,175	Wyandotte County-Kansas City Unified
5.25%, 01/01/2025^(a)	2,250	2,383	Government BHAC
5.50%, 1/1/2038	1,000	1,076	5.00%, 9/1/2029	1,000	1,054
5.75%, 01/01/2020^(a)	5,230	5,564			$ 4,452
7.13%, 3/15/2022	575	582	Kentucky - 2.72%
7.46%, 2/15/2026	250	250	Kentucky Economic Development Finance
City of United City of Yorkville IL			Authority
5.75%, 3/1/2028	500	470	5.38%, 8/15/2024	1,000	1,103
6.00%, 3/1/2036	600	479	5.63%, 8/15/2027	1,000	1,109
Huntley Special Service Area No			6.00%, 12/1/2033	1,000	1,087
10/IL ASSURED GTY			6.50%, 3/1/2045	500	532
5.10%, 3/1/2029	1,000	1,037	Kentucky State Property & Building
Illinois Finance Authority			Commission ASSURED GTY
5.00%, 8/15/2026	100	85	5.25%, 2/1/2025	1,000	1,121
5.10%, 8/15/2031	505	409	Louisville/Jefferson County Metropolitan
5.38%, 8/15/2024	500	550	Government
5.50%, 8/1/2037	1,000	959	5.25%, 10/1/2036	665	660
5.75%, 8/15/2030	1,000	1,103	Paducah Electric Plant Board ASSURED GTY
5.75%, 11/15/2037	1,500	1,537	5.25%, 10/1/2035	1,500	1,592
6.00%, 5/15/2025	500	467			$ 7,204
6.00%, 3/1/2038	1,000	1,092	Louisiana - 1.02%
6.25%, 11/15/2035	1,000	1,068	Louisiana Public Facilities Authority FNMA
6.50%, 11/1/2038	1,000	1,135	0.00%, 12/1/2019^(b)	1,500	1,143
7.00%, 2/15/2018	685	821	5.00%, 6/1/2030	400	403
7.25%, 11/1/2038	1,000	1,138	New Orleans Aviation Board ASSURED GTY
Illinois State Toll Highway Authority			6.00%, 1/1/2023	1,000	1,152
5.25%, 1/1/2030	1,000	1,081			$ 2,698


Schedule of Investments
Tax-Exempt Bond Fund
October 31, 2010




	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
Maryland - 1.02%			Missouri (continued)
County of Howard MD			Missouri State Health & Educational Facilities
5.25%, 4/1/2037	$ 500	$ 387	Authority (continued)
County of Prince George's MD			5.50%, 2/1/2042	$ 375	$ 374
5.20%, 7/1/2034	100	91	St Louis County Industrial Development
Maryland Community Development			Authority
Administration			6.38%, 12/1/2030	500	447
5.05%, 9/1/2032	1,000	1,033			$ 5,482
Maryland Economic Development Corp			Nebraska - 3.23%
5.38%, 6/1/2025	390	405	Lancaster County Hospital Authority No 1
5.75%, 6/1/2035	545	568	0.29%, 6/1/2031	4,200	4,200
Maryland Health & Higher Educational Facilities			Municipal Energy Agency of Nebraska BHAC
Authority			5.13%, 4/1/2029	1,000	1,089
5.25%, 1/1/2027	250	211	Omaha Public Power District
		$ 2,695	5.50%, 2/1/2039	1,000	1,097
Massachusetts - 2.93%			6.15%, 2/1/2012	1,025	1,067
Massachusetts Bay Transportation Authority			University of Nebraska
5.25%, 7/1/2028	2,000	2,411	5.25%, 7/1/2039	1,000	1,085
Massachusetts Development Finance Agency					$ 8,538
5.75%, 11/15/2042	500	349	Nevada - 1.28%
5.75%, 12/1/2042	1,000	1,105	City of Reno NV
6.38%, 7/1/2029^(e)	700	651	5.25%, 6/1/2037	1,260	1,235
Massachusetts Health & Educational Facilities			County of Clark NV
Authority GO OF UNIV			5.13%, 7/1/2034	1,000	1,033
5.00%, 7/1/2038	1,000	1,074	State of Nevada
6.00%, 7/1/2031	200	215	5.00%, 06/01/2022^(a)	1,000	1,111
6.00%, 7/1/2031	800	816			$ 3,379
Massachusetts State College Building Authority			New Hampshire - 1.49%
5.50%, 5/1/2039	1,000	1,096	City of Manchester NH AGM
		$ 7,717	5.13%, 1/1/2030	1,000	1,035
Michigan - 2.69%			New Hampshire Business Finance Authority
City of Detroit MI AGM			7.13%, 7/1/2027^(d)	750	782
5.00%, 7/1/2026	1,000	1,026	New Hampshire Health & Education Facilities
7.00%, 7/1/2027	1,500	1,789	Authority AGM
Kent Hospital Finance Authority			5.50%, 8/1/2027	2,000	2,101
5.50%, 1/15/2047	500	574			$ 3,918
Michigan Strategic Fund			New Jersey - 2.87%
5.45%, 9/1/2029	2,000	2,010	New Jersey Economic Development Authority
5.45%, 12/15/2032	1,000	987	5.00%, 9/1/2034	1,000	1,057
Michigan Tobacco Settlement Finance Authority			5.13%, 7/1/2025	160	141
6.00%, 6/1/2048	910	724	5.75%, 4/1/2031	1,000	998
		$ 7,110	5.75%, 6/1/2031	550	575
Minnesota - 0.73%			New Jersey Health Care Facilities Financing
City of Minneapolis MN			Authority
6.50%, 11/15/2038	1,000	1,140	5.75%, 7/1/2037	1,750	1,766
6.75%, 11/15/2032	500	570	New Jersey Housing & Mortgage Finance Agency
City of North Oaks MN			6.38%, 10/1/2028	905	979
6.00%, 10/1/2027	100	101	Passaic County Improvement Authority CNTY
City of Pine City MN			GTD
6.25%, 5/1/2035	100	94	5.00%, 5/1/2042	1,250	1,307
		$ 1,905	Tobacco Settlement Financing Corp/NJ
Missouri - 2.07%			4.75%, 6/1/2034	1,000	736
Cape Girardeau County Industrial Development					$ 7,559
Authority			New Mexico - 0.58%
5.50%, 6/1/2034	1,000	1,016	New Mexico Hospital Equipment Loan Council
5.63%, 6/1/2027	160	161	5.00%, 8/1/2039	1,500	1,533
City of Carthage MO
5.88%, 4/1/2030	160	142	New York - 4.96%
6.00%, 4/1/2038	250	210	Brooklyn Arena Local Development Corp
City of Fenton MO			6.25%, 7/15/2040	480	519
7.00%, 10/1/2021	575	614	6.38%, 7/15/2043	200	217
City of Kansas City MO			East Rochester Housing Authority
5.25%, 3/1/2018	200	201	5.50%, 8/1/2033	160	140
5.40%, 6/1/2024	120	106	Metropolitan Transportation Authority
City of Maryland Heights MO			5.25%, 11/15/2030	1,500	1,641
5.50%, 9/1/2018	220	211	New York City Industrial Development Agency
Missouri State Health & Educational Facilities			6.13%, 1/1/2029	1,000	1,131
Authority			6.25%, 3/1/2015	1,000	1,008
0.25%, 7/1/2029	1,000	1,000
0.29%, 8/1/2041	1,000	1,000
See accompanying notes			307


Schedule of Investments
Tax-Exempt Bond Fund
October 31, 2010




		Principal			Principal
		Amount			Amount
MUNICIPAL BONDS (continued)		(000's)	Value (000's)	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
New York (continued)				Puerto Rico - 1.52%
New York City Transitional Finance Authority ST				Puerto Rico Sales Tax Financing Corp
AID WITHHLDG				5.00%, 8/1/2039	$ 1,000	$ 1,036
5.25%, 1/15/2039	$ 2,000		$ 2,165	5.25%, 8/1/2041	1,350	1,409
New York State Dormitory Authority ASSURED				5.38%, 8/1/2039	700	736
GTY ST AID WITHHLDG				5.50%, 8/1/2042	800	852
5.00%, 10/1/2023		2,000	2,236			$ 4,033
New York State Thruway Authority				South Carolina - 0.88%
5.00%, 03/15/2026^(a)		1,480	1,638	South Carolina Jobs-Economic Development
Port Authority of New York & New Jersey GO OF				Authority ASSURED GTY
AUTH				5.20%, 11/1/2027	1,000	1,052
5.00%, 10/01/2035^(a)		2,250	2,405	5.38%, 2/1/2029	1,000	1,072
			$ 13,100	Tobacco Settlement Revenue Management
North Dakota - 0.19%				Authority
County of McLean ND				5.00%, 6/1/2018	195	195
5.15%, 7/1/2040		500	512			$ 2,319
				Tennessee - 1.27%
Ohio - 3.24%				Chattanooga Health Educational & Housing
Buckeye Tobacco Settlement Financing Authority				Facility Board
5.38%, 6/1/2024		1,735	1,546	5.50%, 10/1/2020	445	442
County of Adams OH				Johnson City Health & Educational Facilities
6.25%, 9/1/2020^(e)		1,000	846	Board
County of Montgomery OH				7.50%, 7/1/2033	1,000	1,112
6.25%, 11/15/2033		1,310	1,392	Shelby County Health Educational & Housing
Ohio Air Quality Development Authority				Facilities Board
5.63%, 6/1/2018		1,000	1,115	5.63%, 9/1/2026	500	493
Ohio Higher Educational Facility Commission				Tennessee Housing Development Agency GO OF
6.75%, 1/15/2039		1,000	1,071	AGY
Ohio Housing Finance				4.85%, 1/1/2032	945	953
Agency GNMA/FNMA/FHLMC				5.70%, 7/1/2031	355	355
5.20%, 9/1/2029		965	1,016			$ 3,355
5.40%, 3/1/2033		280	292	Texas - 8.36%
University of Cincinnati				Capital Area Cultural Education Facilities Finance
5.00%, 6/1/2034^(f)		1,215	1,263	Corp
			$ 8,541	6.13%, 4/1/2045	1,000	1,025
Oklahoma - 0.03%				City of Houston TX FSA
Oklahoma Housing Finance Agency GNMA				5.75%, 3/1/2015	85	85
COLL				County of Harris TX
8.00%, 8/1/2018		75	77	5.00%, 08/15/2032^(a)	1,500	1,592
				Dallas County Flood Control District No 1
Oregon - 0.85%				6.75%, 4/1/2016	205	220
Oregon State Department of Administrative				Dallas-Fort Worth International Airport Facilities
Services				Improvement Corp NATL-RE
5.25%, 4/1/2026		1,500	1,708	5.50%, 11/1/2031	1,500	1,510
Warm Springs Reservation Confederated Tribe				6.00%, 11/1/2023	500	502
6.38%, 11/1/2033		500	517	El Paso County Hospital District ASSURED GTY
			$ 2,225	5.00%, 8/15/2037	1,000	1,044
Pennsylvania - 2.57%				Harris County Industrial Development Corp
Allegheny County Hospital Development				5.00%, 2/1/2023	400	419
Authority				Lower Colorado River Authority
5.00%, 11/15/2028		250	198	5.00%, 5/15/2035^(f)	1,500	1,553
Delaware River Port Authority				McLennan County Public Facility Corp
5.00%, 1/1/2040		1,500	1,564	6.63%, 6/1/2035	1,000	1,097
Franklin County Industrial Development				Metro Health Facilities Development Corp
Authority/PA				7.20%, 1/1/2021	1,100	1,112
5.38%, 7/1/2042		500	511	North Texas Health Facilities Development
Fulton County Industrial Development Authority				Corp AGM
5.90%, 7/1/2040		160	143	5.00%, 9/1/2024	1,000	1,050
Pennsylvania Economic Development Financing				5.00%, 9/1/2032	1,000	1,016
Authority				North Texas Tollway Authority
5.00%, 12/1/2042		750	789	5.63%, 1/1/2033	1,000	1,066
Pennsylvania Turnpike Commission ASSURED				5.75%, 1/1/2033	1,000	1,062
GTY				Sea Breeze Public Facility Corp
0.00%, 12/1/2028^(d)		800	638	6.50%, 1/1/2046	100	89
0.00%, 12/1/2034^(d)		500	396	Southwest Higher Education Authority
5.00%, 6/1/2039		1,500	1,533	5.00%, 10/1/2035	1,500	1,583
Philadelphia Redevelopment Authority NATL-RE				Spring Independent School District PSF-GTD
FGIC				5.00%, 8/15/2034	1,000	1,070
5.50%, 4/15/2017		1,000	1,053
			$ 6,825


Schedule of Investments
Tax-Exempt Bond Fund
October 31, 2010




	Principal					Principal
	Amount					Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	MUNICIPAL BONDS (continued)			(000's)	Value (000's)
Texas (continued)			Wisconsin (continued)
Tarrant County Cultural Education Facilities			Wisconsin Housing & Economic Development
Finance Corp			Authority GO OF AUTH
6.13%, 11/15/2029	$ 1,000	$ 1,024		4.75%, 9/1/2033	$ 500		$ 500
6.25%, 7/1/2028	1,000	1,109					$ 9,954
Texas A&M University			TOTAL MUNICIPAL BONDS				$ 281,362
5.00%, 5/15/2027	1,000	1,114	Total Investments				$ 281,362
Texas Private Activity Bond Surface			Liability for Floating Rate Notes Issued in Conjunction with
Transportation Corp			Securities Held - (7.30)%
6.88%, 12/31/2039	550	597	Notes with interest rates ranging from 0.28% to $			(19,264)	$ (19,264)
Texas State Transportation Commission			0.37% at October 31, 2010 and contractual maturity
5.00%, 4/1/2020	1,000	1,128	of collateral from 2011-2039.^(g)
		$ 22,067	Total Net Investments				$ 262,098
Utah - 1.92%			Other Assets in Excess of Liabilities, Net - 0.73%				$ 1,937
Utah Housing Corp			TOTAL NET ASSETS - 100.00%				$ 264,035
5.25%, 01/01/2039^(a)	3,935	4,059
5.75%, 7/1/2036	965	1,011
		$ 5,070	(a)	Security or portion of underlying security related to Inverse Floaters
Virgin Islands - 0.25%				entered into by the Fund. See Notes to Financial Statements for additional
Virgin Islands Public Finance Authority				information.
5.00%, 10/1/2025	650	670	(b)	Non-Income Producing Security
			(c)	Security exempt from registration under Rule 144A of the Securities Act of
Virginia - 0.74%				1933. These securities may be resold in transactions exempt from
Lexington Industrial Development Authority				registration, normally to qualified institutional buyers. Unless otherwise
5.38%, 1/1/2028	750	682		indicated, these securities are not considered illiquid. At the end of the
Washington County Industrial Development				period, the value of these securities totaled $730 or 0.28% of net assets.
Authority/VA			(d)	Variable Rate. Rate shown is in effect at October 31, 2010.
7.50%, 7/1/2029	750	865	(e)	Security is Illiquid
White Oak Village Shops Community			(f)	Security purchased on a when-issued basis.
Development Authority			(g)	Floating rate securities. The interest rate(s) shown reflect the rates in
5.30%, 3/1/2017	400	407		effect at October 31, 2010
		$ 1,954
Washington - 3.01%
FYI Properties			Unrealized Appreciation (Depreciation)
5.50%, 6/1/2039	1,000	1,068	The net federal income tax unrealized appreciation (depreciation) and federal tax
State of Washington			cost of investments held as of the period end were as follows:
6.40%, 6/1/2017	3,000	3,667
Washington Health Care Facilities Authority			Unrealized Appreciation				$ 18,780
5.50%, 8/15/2038	1,000	1,054	Unrealized Depreciation				(3,625)
7.38%, 3/1/2038	1,000	1,125	Net Unrealized Appreciation (Depreciation)				$ 15,155
Washington Higher Education Facilities Authority			Cost for federal income tax purposes				$ 246,933
5.63%, 10/1/2040	1,000	1,021	All dollar amounts are shown in thousands (000's)
		$ 7,935
West Virginia - 1.52%				Portfolio Summary (unaudited)
County of Harrison WV NATL-RE-IBC			Sector				Percent
6.88%, 4/15/2022	2,500	2,502	Revenue				56 .02%
County of Ohio WV			Insured				34.69%
5.85%, 6/1/2034	250	235	Prerefunded				7 .16%
West Virginia Hospital Finance Authority			General Obligation				5 .48%
5.50%, 6/1/2034	1,250	1,273	Revenue - Special Tax				1 .57%
		$ 4,010	Tax Allocation				1 .31%
Wisconsin - 3.77%			Certificate Participation				0 .31%
City of Superior WI GO OF CORP			Special Obligation Bonds				0 .03%
5.38%, 11/1/2021	750	789	Liability for floating rate notes issued				(7 .30)%
County of Milwaukee WI AGM			Other Assets in Excess of Liabilities, Net				0 .73%
5.25%, 12/1/2025	4,000	4,126	TOTAL NET ASSETS				100.00%
State of Wisconsin ST APPROP
5.38%, 5/1/2025	1,000	1,127
Wisconsin Health & Educational Facilities
Authority
5.00%, 10/1/2033	1,000	1,029
5.65%, 6/1/2026	485	434
6.00%, 8/15/2019	600	609
6.38%, 2/15/2029	500	549
6.63%, 2/15/2039	720	791


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,	Net	and Unrealized Total From		from Net	from	Dividends	Net Asset
	Beginning Investment Gain (Loss) on Investment Investment					Realized	and	Value, End
	of Period Income (Loss) Investments Operations				Income	Gains	Distributions of Period Total Return(b)
BOND & MORTGAGE SECURITIES FUND
Class A shares
2010	$9 .69	$0 .41(a)	$0 .81	$1 .22	($0 .34)	$–	($0 .34)	$10.57	12 .83%
2009	8.52	0.44(a)	1 .11	1 .55	( 0 .38)	–	( 0.38)	9 .69	18 .80
2008	10.50	0.50(a)	( 2 .00)	( 1 .50)	( 0 .48)	–	( 0.48)	8 .52	(14 .83)
2007	10.67	0.53(a)	( 0 .17)	0 .36	( 0 .53)	–	( 0.53)	10 .50	3 .42
2006	10.63	0.47(a)	0 .04	0 .51	( 0 .47)	–	( 0.47)	10 .67	4 .93
Class B shares
2010	9.70	0.35(a)	0 .82	1 .17	( 0 .27)	–	( 0.27)	10 .60	12 .29
2009	8.52	0.39(a)	1 .11	1 .50	( 0 .32)	–	( 0.32)	9 .70	18 .15
2008	10.50	0.43(a)	( 2 .00)	( 1 .57)	( 0 .41)	–	( 0.41)	8 .52	(15 .41)
2007	10.67	0.46(a)	( 0 .17)	0 .29	( 0 .46)	–	( 0.46)	10 .50	2 .74
2006	10.64	0.40(a)	0 .03	0 .43	( 0 .40)	–	( 0.40)	10 .67	4 .15
Class C shares
2010	9.69	0.33(a)	0 .81	1 .14	( 0 .26)	–	( 0.26)	10 .57	11 .93
2009	8.51	0.37(a)	1 .11	1 .48	( 0 .30)	–	( 0.30)	9 .69	17 .99
2008	10.50	0.41(a)	( 2 .00)	( 1 .59)	( 0 .40)	–	( 0.40)	8 .51	(15 .62)
2007(e)	10.66	0.35(a)	( 0 .15)	0 .20	( 0 .36)	–	( 0 .36)	10 .50	1 .92 (f)
CALIFORNIA MUNICIPAL FUND
Class A shares
2010	9.57	0.48(a)	0 .42	0 .90	( 0 .47)	–	( 0.47)	10 .00	9 .59
2009	8.79	0.47(a)	0 .77	1 .24	( 0 .46)	–	( 0.46)	9 .57	14 .66
2008	10.74	0.47(a)	( 1 .95)	( 1 .48)	( 0 .47)	–	( 0.47)	8 .79	(14 .26)
2007	11.32	0.47(a)	( 0 .51)	( 0 .04)	( 0 .47)	( 0 .07)	( 0.54)	10 .74	(0 .37)
2006	11.24	0.48	0 .22	0 .70	( 0 .48)	( 0 .14)	( 0.62)	11 .32	6 .45
Class B shares
2010	9.57	0.40(a)	0 .41	0 .81	( 0 .38)	–	( 0.38)	10 .00	8 .66
2009	8.79	0.40(a)	0 .77	1 .17	( 0 .39)	–	( 0.39)	9 .57	13 .76
2008	10.74	0.40(a)	( 1 .96)	( 1 .56)	( 0 .39)	–	( 0.39)	8 .79	(14 .93)
2007	11.32	0.39(a)	( 0 .51)	( 0 .12)	( 0 .39)	( 0 .07)	( 0.46)	10 .74	(1 .12)
2006	11.24	0.39	0 .22	0 .61	( 0 .39)	( 0 .14)	( 0.53)	11 .32	5 .66
Class C shares
2010	9.58	0.39(a)	0 .42	0 .81	( 0 .38)	–	( 0.38)	10 .01	8 .59
2009	8.79	0.38(a)	0 .78	1 .16	( 0 .37)	–	( 0.37)	9 .58	13 .62
2008	10.74	0.38(a)	( 1 .95)	( 1 .57)	( 0 .38)	–	( 0.38)	8 .79	(15 .01)
2007	11.32	0.39(a)	( 0 .51)	( 0 .12)	( 0 .39)	( 0 .07)	( 0.46)	10 .74	(1 .14)
2006	11.24	0.39	0 .22	0 .61	( 0 .39)	( 0 .14)	( 0.53)	11 .32	5 .65


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.



		Ratio of Expenses	Ratio of Expenses to
	Ratio of	to Average Net	Average Net Assets		Ratio of Net
Net Assets, End of	Expenses to	Assets (Excluding	(Excluding Reverse	Ratio of Gross	Investment Income
Period (in	Average Net	Interest Expense	Repurchase Agreement	Expenses to	to Average Net	Portfolio
thousands)	Assets	and Fees)	Expense)	Average Net Assets	Assets	Turnover Rate


$134,686	0.94%(c)	N/A	N/A	– %	4 .12%	357.4%
126,500	0.94 (c)	N/A	N/A	–	5 .10	365.1
116,109	0.94 (c)	N/A	N/A	–	5 .01	302.6
162,637	0.94 (c)	N/A	N/A	–	4 .98	259.1
168,767	0.94 (c)	N/A	0 .94% (d)	–	4 .42	274.5

10,488	1.60 (c)	N/A	N/A	–	3 .47	357.4
12,952	1.60 (c)	N/A	N/A	–	4 .47	365.1
14,841	1.60 (c)	N/A	N/A	–	4 .35	302.6
22,624	1.60 (c)	N/A	N/A	–	4 .32	259.1
25,384	1.60 (c)	N/A	1 .60 (d)	–	3 .76	274.5

5,976	1.75 (c)	N/A	N/A	–	3 .30	357.4
3,944	1.75 (c)	N/A	N/A	–	4 .22	365.1
2,263	1.75 (c)	N/A	N/A	–	4 .20	302.6
2,445	1.75 (c),(g)	N/A	N/A	–	4 .26 (g)	259.1 (g)


255,698	0.88	0.81 (h)	N/A	0 .88 (i)	4 .90	32.0
266,967	0.91	0.83 (h)	N/A	0 .91 (i)	5 .29	57.3
250,177	1.07	0.83 (h)	N/A	1 .08 (i)	4 .67	41.7
273,618	1.18	0.82 (h)	N/A	1 .18 (i)	4 .30	63.7
264,924	0.84	N/A	N/A	0 .84 (i)	4 .26	29.0

13,589	1.74	1.67 (h)	N/A	1 .74 (i)	4 .08	32.0
39,715	1.70	1.63 (h)	N/A	1 .70 (i)	4 .54	57.3
61,118	1.85	1.61 (h)	N/A	1 .85 (i)	3 .88	41.7
84,070	1.92	1.58 (h)	N/A	1 .92 (i)	3 .53	63.7
132,364	1.58	N/A	N/A	1 .58 (i)	3 .52	29.0

13,572	1.79	1.72 (h)	N/A	1 .79 (i)	3 .98	32.0
12,335	1.88	1.81 (h)	N/A	1 .88 (i)	4 .28	57.3
8,010	1.95	1.71 (h)	N/A	2 .07 (i)	3 .81	41.7
5,127	1.95	1.59 (h)	N/A	2 .49 (i)	3 .53	63.7
4,413	1.59	N/A	N/A	1 .59 (i)	3 .52	29.0


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning of Income		Gain (Loss) on Investment Investment			Realized	and	Value, End
	Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
DISCIPLINED LARGECAP BLEND FUND
Class A shares
2010	$10 .42	$0 .08	$1 .32	$1 .40	($0 .09)	$–	($0 .09)	$11.73	13 .52%
2009	9.93	0.11	0 .49	0 .60	( 0 .11)	–	( 0.11)	10 .42	6 .26
2008	17.85	0.14	( 6 .01)	( 5 .87)	( 0 .13)	( 1 .92)	( 2.05)	9 .93	(36 .96)
2007	16.07	0.12	2 .13	2 .25	( 0 .09)	( 0 .38)	( 0.47)	17 .85	14 .31
2006	14.35	0.11	1 .86	1 .97	( 0 .05)	( 0 .20)	( 0.25)	16 .07	13 .86
Class B shares
2010	10.26	( 0.05)	1 .29	1 .24	–	–	–	11 .50	12 .09
2009	9.77	( 0.01)	0 .50	0 .49	–	–	–	10 .26	5 .02
2008	17.62	–	( 5 .93)	( 5 .93)	–	( 1 .92)	( 1.92)	9 .77	(37 .61)
2007	15.94	( 0.05)	2 .11	2 .06	–	( 0 .38)	( 0.38)	17 .62	13 .14
2006	14.32	( 0.03)	1 .85	1 .82	–	( 0 .20)	( 0.20)	15 .94	12 .82
Class C shares
2010	10.31	0.01	1 .31	1 .32	( 0 .03)	–	( 0.03)	11 .60	12 .85
2009	9.85	0.04	0 .49	0 .53	( 0 .07)	–	( 0.07)	10 .31	5 .53
2008	17.71	0.02	( 5 .96)	( 5 .94)	–	( 1 .92)	( 1.92)	9 .85	(37 .46)
2007(e)	16.26	( 0.03)	1 .48	1 .45	–	–	–	17 .71	8 .92 (f)
DIVERSIFIED INTERNATIONAL FUND
Class A shares
2010	8.67	0.07	1 .17	1 .24	( 0 .11)	–	( 0.11)	9 .80	14 .37
2009	7.43	0.09	1 .30	1 .39	( 0 .15)	–	( 0.15)	8 .67	19 .13
2008	17.33	0.16	( 7 .97)	( 7 .81)	( 0 .12)	( 1 .97)	( 2.09)	7 .43	(50 .60)
2007	14.33	0.15	4 .26	4 .41	( 0 .14)	( 1 .27)	( 1.41)	17 .33	33 .39
2006	11.43	0.11	3 .28	3 .39	( 0 .03)	( 0 .46)	( 0.49)	14 .33	30 .57
Class B shares
2010	8.66	( 0.03)	1 .15	1 .12	–	–	–	9 .78	12 .98
2009	7.37	0.01	1 .30	1 .31	( 0 .02)	–	( 0.02)	8 .66	17 .84
2008	17.21	0.05	( 7 .92)	( 7 .87)	–	( 1 .97)	( 1.97)	7 .37	(51 .01)
2007	14.26	–	4 .25	4 .25	( 0 .03)	( 1 .27)	( 1.30)	17 .21	32 .17
2006	11.41	0.02	3 .29	3 .31	–	( 0 .46)	( 0.46)	14 .26	29 .88
Class C shares
2010	8.67	0.03	1 .15	1 .18	( 0 .07)	–	( 0.07)	9 .78	13 .61
2009	7.39	0.06	1 .29	1 .35	( 0 .07)	–	( 0.07)	8 .67	18 .50
2008	17.22	0.09	( 7 .95)	( 7 .86)	–	( 1 .97)	( 1.97)	7 .39	(50 .91)
2007(i)	13.71	0.03	3 .48	3 .51	–	–	–	17 .22	25 .60 (f)
Class P shares
2010(j)	9.35	0.01	0 .44	0 .45	–	–	–	9 .80	4 .81 (f)


	Ratio of	Ratio of Net
Net Assets, End of	Expenses to	Investment Income
Period (in	Average Net	to Average Net	Portfolio Turnover
thousands)	Assets	Assets	Rate


$202,793	1.18%	0.76%	145 .0%
201,464	1.19	1.14	129 .9
218,451	1.00 (c)	1.03	121 .7
690,007	0.89 (c)	0.74	101 .4 (d)
95,018	1.20 (c)	0.70	92 .4

12,914	2.41	(0.47)	145 .0
18,368	2.43	(0.06)	129 .9
25,190	2.04 (c)	(0.03)	121 .7
61,799	1.91 (c)	(0.27)	101 .4 (d)
13,117	2.14 (c)	(0.22)	92 .4

2,100	1.82 (c)	0.12	145 .0
1,967	1.82 (c)	0.48	129 .9
1,526	1.82 (c)	0.17	121 .7
2,480	1.82 (c),(g)	(0.21) (g)	101 .4 (d),(g)


273,385	1.53	0.84	105 .9
273,110	1.58	1.26	115 .6
257,621	1.39 (c)	1.30	101 .5
699,188	1.30 (c)	0.99	111 .3 (h)
366,675	1.41 (c)	0.84	107 .5

18,477	2.68	(0.32)	105 .9
23,810	2.69	0.17	115 .6
27,621	2.34 (c)	0.41	101 .5
74,783	2.26 (c)	0.01	111 .3 (h)
48,040	2.10 (c)	0.14	107 .5

11,618	2.08 (c)	0.29	105 .9
11,339	2.08 (c)	0.76	115 .6
11,322	2.08 (c)	0.73	101 .5
22,837	2.08 (c),(g)	0.24 (g)	111 .3 (g),(h)

10	1.08 (c),(g)	0.84 (g)	105 .9 (g)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning of Income Gain (Loss) on Investment Investment					Realized	and	Value, End
	Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
EQUITY INCOME FUND
Class A shares
2010	$14 .38	$0 .43	$2 .48	$2 .91	($0 .38)	$–	($0 .38)	$16.91	20 .49%
2009	13.81	0.39	0 .59	0 .98	( 0 .41)	–	( 0.41)	14 .38	7 .45
2008	23.81	0.39	( 7 .96)	( 7 .57)	( 0 .39)	( 2 .04)	( 2.43)	13 .81	(35 .04)
2007	22.43	0.37	2 .54	2 .91	( 0 .33)	( 1 .20)	( 1.53)	23 .81	13 .59
2006	20.07	0.33	3 .00	3 .33	( 0 .34)	( 0 .63)	( 0.97)	22 .43	17 .16
Class B shares
2010	14.25	0.28	2 .46	2 .74	( 0 .23)	–	( 0.23)	16 .76	19 .33
2009	13.68	0.27	0 .58	0 .85	( 0 .28)	–	( 0.28)	14 .25	6 .48
2008	23.62	0.23	( 7 .89)	( 7 .66)	( 0 .24)	( 2 .04)	( 2.28)	13 .68	(35 .61)
2007	22.26	0.17	2 .53	2 .70	( 0 .14)	( 1 .20)	( 1.34)	23 .62	12 .68
2006	19.93	0.15	2 .98	3 .13	( 0 .17)	( 0 .63)	( 0.80)	22 .26	16 .16
Class C shares
2010	14.11	0.31	2 .43	2 .74	( 0 .26)	–	( 0.26)	16 .59	19 .61
2009	13.55	0.29	0 .58	0 .87	( 0 .31)	–	( 0.31)	14 .11	6 .68
2008	23.42	0.25	( 7 .82)	( 7 .57)	( 0 .26)	( 2 .04)	( 2.30)	13 .55	(35 .55)
2007	22.08	0.19	2 .51	2 .70	( 0 .16)	( 1 .20)	( 1.36)	23 .42	12 .72
2006	19.79	0.16	2 .96	3 .12	( 0 .20)	( 0 .63)	( 0.83)	22 .08	16 .28
Class P shares
2010(e)	16.45	0.05	0 .54	0 .59	( 0 .11)	–	( 0 .11)	16 .93	3 .59 (f)
GLOBAL DIVERSIFIED INCOME FUND
Class A shares
2010	12.72	0.73	1 .71	2 .44	( 0 .76)	( 1 .05)	( 1.81)	13 .35	21 .38
2009(i)	10.00	0.65	2 .72	3 .37	( 0 .65)	–	( 0.65)	12 .72	35 .00 (f)
Class C shares
2010	12.68	0.63	1 .71	2 .34	( 0 .67)	( 1 .05)	( 1.72)	13 .30	20 .44
2009(i)	10.00	0.57	2 .71	3 .28	( 0 .60)	–	( 0.60)	12 .68	33 .99 (f)
Class P shares
2010(e)	13.01	0.08	0 .34	0 .42	( 0 .12)	–	( 0 .12)	13 .31	3 .21 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends	Total
	Value,	Net	and Unrealized	Total From	from Net	Dividends	Net Asset		Net Assets, End of
	Beginning Investment Gain (Loss) on Investment Investment					and	Value, End		Period (in
	of Period Income (Loss) Investments Operations				Income	Distributions of Period Total Return(b)			thousands)
GLOBAL REAL ESTATE SECURITIES FUND
Class A shares
2010	$5 .66	$0 .10(a)	$1 .35	$1 .45	($0 .28)	($0 .28)	$6 .83	26 .27%	$16,738
2009	5.04	0.11(a)	0.77	0 .88	( 0 .26)	( 0 .26)	5.66	18.84	5,635
2008	10.08	0.16(a)	( 5.02)	( 4 .86)	( 0 .18)	( 0 .18)	5.04	(48.89) (d)	2,704
2007(e)	10.00	0.01(a)	0.07	0 .08	–	–	10.08	0 .80 (f)	2,139
Class C shares
2010	5.58	0.06(a)	1.31	1 .37	( 0 .24)	( 0 .24)	6.71	25.19	1,453
2009	4.99	0.08(a)	0.75	0 .83	( 0 .24)	( 0 .24)	5.58	18.05	1,420
2008	10.07	0.10(a)	( 5.05)	( 4 .95)	( 0 .13)	( 0 .13)	4.99	(49.64)	932
2007(e)	10.00	– (a)	0 .07	0 .07	–	–	10.07	0 .70 (f)	1,546
GOVERNMENT & HIGH QUALITY BOND FUND
Class A shares
2010	10.89	0.42(a)	0.41	0 .83	( 0 .44)	( 0 .44)	11.28	7.82	422,993
2009	10.34	0.45(a)	0.57	1 .02	( 0 .47)	( 0 .47)	10.89	10.01	290,408
2008	10.54	0.46(a)	( 0.17)	0 .29	( 0 .49)	( 0 .49)	10.34	2.72	83,376
2007	10.54	0.47(a)	0.01	0 .48	( 0 .48)	( 0 .48)	10.54	4.65	90,167
2006	10.53	0.44	0.04	0 .48	( 0 .47)	( 0 .47)	10.54	4.74	98,110
Class B shares
2010	10.89	0.33(a)	0.40	0 .73	( 0 .35)	( 0 .35)	11.27	6.86	36,773
2009	10.34	0.37(a)	0.57	0 .94	( 0 .39)	( 0 .39)	10.89	9.18	56,957
2008	10.53	0.39(a)	( 0.17)	0 .22	( 0 .41)	( 0 .41)	10.34	2.06	39,613
2007	10.54	0.39(a)	–	0 .39	( 0 .40)	( 0 .40)	10 .53	3 .78	58,227
2006	10.52	0.37	0.05	0 .42	( 0 .40)	( 0 .40)	10.54	4.06	85,761
Class C shares
2010	10.88	0.33(a)	0.42	0 .75	( 0 .36)	( 0 .36)	11.27	6.97	75,290
2009	10.32	0.37(a)	0.58	0 .95	( 0 .39)	( 0 .39)	10.88	9.32	26,914
2008	10.52	0.39(a)	( 0.18)	0 .21	( 0 .41)	( 0 .41)	10.32	1.99	6,118
2007	10.53	0.39(a)	0.01	0 .40	( 0 .41)	( 0 .41)	10.52	3.92	7,273
2006	10.51	0.37	0.05	0 .42	( 0 .40)	( 0 .40)	10.53	4.00	7,964
Class P shares
2010(j)	11.24	0.04(a)	0.04	0 .08	( 0 .04)	( 0 .04)	11.28	0 .71 (f)	10


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,	Net	and Unrealized Total From		from Net	from	Dividends Net Asset
	Beginning Investment Gain (Loss) on Investment Investment					Realized	and	Value, End
	of Period Income (Loss) Investments Operations				Income	Gains	Distributions of Period Total Return(b)
HIGH YIELD FUND
Class A shares
2010	$7 .61	$0 .65(a)	$0 .58	$1 .23	($0 .66)	$–	($0 .66)	$8 .18	16 .87%
2009	6.11	0.62(a)	1 .54	2 .16	( 0 .66)	–	( 0.66)	7 .61	37 .46
2008	8.75	0.59(a)	( 2 .39)	( 1 .80)	( 0 .60)	( 0 .24)	( 0.84)	6 .11	(22 .40)
2007	8.79	0.59(a)	0 .21	0 .80	( 0 .66)	( 0 .18)	( 0.84)	8 .75	9 .63
2006	8.23	0.61	0 .55	1 .16	( 0 .60)	–	( 0.60)	8 .79	14 .63
Class B shares
2010	7.65	0.59(a)	0 .58	1 .17	( 0 .60)	–	( 0.60)	8 .22	15 .86
2009	6.15	0.57(a)	1 .54	2 .11	( 0 .61)	–	( 0.61)	7 .65	36 .15
2008	8.80	0.53(a)	( 2 .40)	( 1 .87)	( 0 .54)	( 0 .24)	( 0.78)	6 .15	(23 .06)
2007	8.83	0.52(a)	0 .22	0 .74	( 0 .59)	( 0 .18)	( 0.77)	8 .80	8 .82
2006	8.27	0.55	0 .55	1 .10	( 0 .54)	–	( 0.54)	8 .83	13 .72
Class C shares
2010	7.66	0.59(a)	0 .58	1 .17	( 0 .60)	–	( 0.60)	8 .23	15 .91
2009	6.14	0.57(a)	1 .56	2 .13	( 0 .61)	–	( 0.61)	7 .66	36 .61
2008	8.79	0.53(a)	( 2 .40)	( 1 .87)	( 0 .54)	( 0 .24)	( 0.78)	6 .14	(23 .06)
2007	8.83	0.52(a)	0 .22	0 .74	( 0 .60)	( 0 .18)	( 0.78)	8 .79	8 .76
2006	8.27	0.55	0 .55	1 .10	( 0 .54)	–	( 0.54)	8 .83	13 .74
Class P shares
2010(d)	8.00	0.06(a)	0 .15	0 .21	( 0 .06)	–	( 0.06)	8 .15	2 .67 (e)
INCOME FUND
Class A shares
2010	9.26	0.50(a)	0 .41	0 .91	( 0 .52)	–	( 0.52)	9 .65	10 .14
2009	7.83	0.52(a)	1 .44	1 .96	( 0 .53)	–	( 0.53)	9 .26	25 .80
2008	8.99	0.47(a)	( 1 .14)	( 0 .67)	( 0 .49)	–	( 0.49)	7 .83	(7 .90)
2007	9.09	0.46(a)	( 0 .06)	0 .40	( 0 .50)	–	( 0.50)	8 .99	4 .47
2006	9.05	0.48	0 .05	0 .53	( 0 .49)	–	( 0.49)	9 .09	6 .02
Class B shares
2010	9.29	0.42(a)	0 .42	0 .84	( 0 .44)	–	( 0.44)	9 .69	9 .32
2009	7.85	0.46(a)	1 .44	1 .90	( 0 .46)	–	( 0.46)	9 .29	24 .95
2008	9.02	0.41(a)	( 1 .16)	( 0 .75)	( 0 .42)	–	( 0.42)	7 .85	(8 .67)
2007	9.12	0.40(a)	( 0 .07)	0 .33	( 0 .43)	–	( 0.43)	9 .02	3 .69
2006	9.08	0.41	0 .05	0 .46	( 0 .42)	–	( 0.42)	9 .12	5 .23
Class C shares
2010	9.30	0.42(a)	0 .43	0 .85	( 0 .45)	–	( 0.45)	9 .70	9 .35
2009	7.85	0.46(a)	1 .45	1 .91	( 0 .46)	–	( 0.46)	9 .30	25 .07
2008	9.02	0.41(a)	( 1 .16)	( 0 .75)	( 0 .42)	–	( 0.42)	7 .85	(8 .68)
2007	9.12	0.40(a)	( 0 .07)	0 .33	( 0 .43)	–	( 0.43)	9 .02	3 .71
2006	9.08	0.41	0 .05	0 .46	( 0 .42)	–	( 0.42)	9 .12	5 .23
Class P shares
2010(d)	9.66	0.05(a)	0 .01	0 .06	( 0 .05)	–	( 0.05)	9 .67	0 .60 (e)


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
	Expenses to	Ratio of Gross	Investment Income
Net Assets, End of	Average Net	Expenses to Average	to Average Net	Portfolio
Period (in thousands)	Assets	Net Assets	Assets	Turnover Rate


$2,001,283	0.94%	– %	8 .25%	77 .8%
1,543,091	0.95	–	9 .18	57 .0
770,504	0.92	–	7 .48	28 .8
809,318	0.85	0.85 (c)	6 .74	47 .4
422,747	0.90	0.90 (c)	7 .31	85 .0

72,591	1.74	–	7 .48	77 .8
75,011	1.75	–	8 .44	57 .0
49,432	1.71	–	6 .64	28 .8
82,104	1.65	1.68 (c)	5 .95	47 .4
83,143	1.66	1.66 (c)	6 .55	85 .0

490,173	1.67	–	7 .52	77 .8
336,498	1.68	–	8 .34	57 .0
121,038	1.70	–	6 .69	28 .8
139,417	1.63	1.63 (c)	5 .97	47 .4
76,883	1.65	1.65 (c)	6 .56	85 .0

273	0.73 (f),(g)	–	8 .11 (f)	77 .8 (f)


268,103	0.91 (g)	–	5 .28	13 .1
180,680	0.90 (g)	–	6 .09	30 .6
122,603	0.90 (g)	–	5 .32	15 .5
145,964	0.90	0.90 (c)	5 .13	15 .2
143,590	0.89	0.89 (c)	5 .27	26 .0

39,778	1.72 (g)	–	4 .51	13 .1
53,887	1.64 (g)	–	5 .39	30 .6
51,278	1.64 (g)	–	4 .57	15 .5
77,832	1.65	1.66 (c)	4 .38	15 .2
99,751	1.65	1.65 (c)	4 .51	26 .0

59,080	1.69 (g)	–	4 .50	13 .1
36,367	1.65 (g)	–	5 .30	30 .6
15,103	1.65 (g)	–	4 .59	15 .5
12,107	1.65	1.84 (c)	4 .37	15 .2
10,412	1.64	1.64 (c)	4 .52	26 .0

30	0.71 (f),(g)	–	5.07 (f)	13.1 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions			Total
	Value,	Investment and Unrealized Total From			from Net	from	Tax Return Dividends			Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			Realized	of Capital	and	Redemption Value, End
	of Period	(Loss)(a)	Investments	Operations	Income	Gains	Distribution Distributions		Fees	of Period
INFLATION PROTECTION FUND
Class A shares
2010	$7.62	$0.12	$0.68	$0 .80	($0 .13)	$–	$–	($0 .13)	$–	$8 .29
2009	7.15	0.12	0.36	0 .48	( 0 .01)	–	–	( 0.01)	–	7.62
2008	9.53	0.49	( 2.04)	( 1 .55)	( 0 .72)	–	( 0 .12)	( 0.84)	0 .01	7 .15
2007	9.67	0.41	( 0.14)	0 .27	( 0 .41)	–	–	( 0.41)	–	9.53
2006	9.85	0.54	( 0.21)	0 .33	( 0 .50)	( 0 .01)	–	( 0.51)	–	9.67
Class C shares
2010	7.58	0.06	0.68	0 .74	( 0 .09)	–	–	( 0.09)	–	8.23
2009	7.17	–	0.42	0 .42	( 0 .01)	–	–	( 0.01)	–	7.58
2008	9.56	0.43	( 2.05)	( 1 .62)	( 0 .67)	–	( 0 .10)	( 0.77)	–	7.17
2007(e)	9.49	0.30	0.07	0 .37	( 0 .30)	–	–	( 0.30)	–	9.56
INTERNATIONAL EMERGING MARKETS FUND
Class A shares
2010	20.73	0.08	4.93	5 .01	( 0 .05)	–	–	( 0.05)	–	25 .69
2009	13.76	0.11	6.90	7 .01	( 0 .04)	–	–	( 0.04)	–	20 .73
2008	39.50	0.21	( 20.16)	( 19 .95)	( 0 .10)	( 5 .69)	–	( 5.79)	–	13 .76
2007	24.63	0.25	16.45	16 .70	( 0 .08)	( 1 .75)	–	( 1.83)	–	39 .50
2006	19.43	0.14	7.04	7 .18	( 0 .05)	( 1 .93)	–	( 1.98)	–	24 .63
Class B shares
2010	20.01	( 0.17)	4.76	4 .59	–	–	–	–	–	24 .60
2009	13.39	( 0.05)	6.67	6 .62	–	–	–	–	–	20 .01
2008	38.83	( 0.04)	( 19.71)	( 19 .75)	–	( 5 .69)	–	( 5.69)	–	13 .39
2007	24.37	–	16.21	16 .21	–	( 1 .75)	–	( 1.75)	–	38 .83
2006	19.34	( 0.04)	7.00	6 .96	–	( 1 .93)	–	( 1.93)	–	24 .37
Class C shares
2010	20.36	( 0.13)	4.83	4 .70	–	–	–	–	–	25 .06
2009	13.58	( 0.01)	6.79	6 .78	–	–	–	–	–	20 .36
2008	39.30	( 0.03)	( 20.00)	( 20 .03)	–	( 5 .69)	–	( 5.69)	–	13 .58
2007(h)	25.31	( 0.01)	13.99	13 .98	–	–	–	–	0 .01	39 .30
Class P shares
2010(i)	24.41	–	1.19	1 .19	–	–	–	–	–	25 .60


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.



			Ratio of Expenses to
		Ratio of	Average Net Assets	Ratio of Net
		Expenses to	(Excluding Reverse	Investment Income
	Net Assets, End of	Average Net	Repurchase Agreement	to Average Net	Portfolio
Total Return(b) Period (in thousands)		Assets	Expense)	Assets	Turnover Rate


10.58%	$16,234	0.90%(c)	N/A	1 .55%	85 .3%
6.71	11,568	0.90 (c)	N/A	1 .60	109 .5
(17.81)	6,167	0.90 (c)	N/A	5 .54	32 .3
2.88	4,223	0.90 (c)	N/A	4 .34	88 .2
3.38	3,851	0.95 (c)	0 .95 (d)	5 .57	51 .4

9.76	3,195	1.65 (c)	N/A	0 .79	85 .3
5.81	1,488	1.65 (c)	N/A	0 .00	109 .5
(18.45)	1,808	1.65 (c)	N/A	4 .89	32 .3
4.00 (f)	838	1.65 (c),(g)	N/A	4 .06 (g)	88 .2 (g)


24.22	137,244	1.85	N/A	0 .33	102 .1
51.11	111,976	2.00	N/A	0 .71	133 .4
(58.51)	85,229	1.81	N/A	0 .78	127 .6
72.31	225,132	1.74	N/A	0 .86	141 .6
39.48	83,566	1.98	N/A	0 .63	134 .0

22.94	16,040	2.90	N/A	(0 .76)	102 .1
49.44	17,515	3.08	N/A	(0 .34)	133 .4
(58.91)	12,272	2.72	N/A	(0 .17)	127 .6
70.81	33,457	2.62	N/A	(0 .01)	141 .6
38.41	14,597	2.81	N/A	(0 .16)	134 .0

23.08	13,166	2.79 (c)	N/A	(0 .59)	102 .1
49.93	10,583	2.80 (c)	N/A	(0 .08)	133 .4
(58.91)	6,248	2.79 (c)	N/A	(0 .12)	127 .6
55.43 (f)	10,276	2.80 (c),(g)	N/A	(0 .01) (g)	141 .6 (g)

4.88 (f)	10	1.38 (c),(g)	N/A	0 .01 (g)	102 .1 (g)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends		Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			Realized	and	Redemption Value, End
	of Period	(Loss)(a)	Investments	Operations	Income	Gains	Distributions	Fees	of Period
INTERNATIONAL GROWTH FUND
Class A shares
2010	$7.78	$0.06	$0 .96	$1 .02	($0 .10)	$–	($0 .10)	$–	$8 .70
2009	6.95	0.06	0 .89	0 .95	( 0 .12)	–	( 0.12)	–	7.78
2008	15.53	0.12	( 7 .46)	( 7 .34)	( 0 .03)	( 1 .22)	( 1.25)	0 .01	6 .95
2007(d)	15.00	( 0.01)	0 .54	0 .53	–	–	–	–	15 .53
Class C shares
2010	7.79	–	0 .96	0 .96	( 0 .04)	–	( 0.04)	–	8.71
2009	6.95	0.01	0 .88	0 .89	( 0 .05)	–	( 0.05)	–	7.79
2008	15.52	0.02	( 7 .37)	( 7 .35)	–	( 1 .22)	( 1.22)	–	6.95
2007(d)	15.00	( 0.02)	0 .54	0 .52	–	–	–	–	15 .52
LARGECAP BLEND FUND II
Class A shares
2010	7.94	0.04	1 .09	1 .13	( 0 .04)	–	( 0.04)	–	9.03
2009	7.22	0.05	0 .73	0 .78	( 0 .06)	–	( 0.06)	–	7.94
2008	12.45	0.06	( 4 .22)	( 4 .16)	( 0 .03)	( 1 .04)	( 1.07)	–	7.22
2007	11.41	0.04	1 .61	1 .65	( 0 .04)	( 0 .57)	( 0.61)	–	12 .45
2006	10.35	0.05	1 .47	1 .52	( 0 .02)	( 0 .44)	( 0.46)	–	11 .41
Class B shares
2010	7.82	( 0.04)	1 .05	1 .01	–	–	–	–	8.83
2009	7.10	–	0.72	0.72	–	–	–	–	7.82
2008	12.33	( 0.02)	( 4 .17)	( 4 .19)	–	( 1 .04)	( 1.04)	–	7.10
2007	11.33	( 0.04)	1 .61	1 .57	–	( 0 .57)	( 0.57)	–	12 .33
2006	10.32	( 0.02)	1 .47	1 .45	–	( 0 .44)	( 0.44)	–	11 .33
Class C shares
2010	7.87	( 0.02)	1 .08	1 .06	( 0 .01)	–	( 0.01)	–	8.92
2009	7.13	0.02	0 .72	0 .74	–	–	–	–	7.87
2008	12.38	( 0.02)	( 4 .19)	( 4 .21)	–	( 1 .04)	( 1.04)	–	7.13
2007(g)	11.37	( 0.06)	1 .07	1 .01	–	–	–	–	12 .38


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




		Ratio of	Ratio of Net
	Net Assets, End of	Expenses to	Investment Income
	Period (in	Average Net	to Average Net	Portfolio
Total Return(b)	thousands)	Assets	Assets	Turnover Rate


13.25%	$6,819	1.59%(c)	0 .76%	153 .8%
13.92	4,792	1.60 (c)	0 .87	137 .7
(51.07)	1,760	1.60 (c)	1 .03	125 .2
3.53 (e)	375	1.60 (c),(f)	(0 .47) (f)	129 .4 (f)

12.34	575	2.35 (c)	0 .01	153 .8
(12.86)	437	2.35 (c)	0 .12	137 .7
(51.14)	246	2.35 (c)	0 .22	125 .2
3.47 (e)	22	2.35 (c),(f)	(1 .36) (f)	129 .4 (f)


14.27	14,055	1.44 (c)	0 .50	36 .2
11.03	37,739	1.67 (c)	0 .77	79 .8
(36.29)	37,841	1.35	0 .61	60 .0
15.07	68,879	1.40	0 .32	53 .2
15.08	59,400	1.40	0 .45	52 .1

12.92	3,561	2.40 (c)	(0 .45)	36 .2
10.14	12,229	2.52 (c)	(0 .06)	79 .8
(36.82)	14,273	2.16	(0 .19)	60 .0
14.37	27,824	2.09	(0 .37)	53 .2
14.40	25,615	2.00	(0 .15)	52 .1

13.53	508	2.18 (c)	(0 .24)	36 .2
10.38	1,100	2.19 (c)	0 .24	79 .8
(36.84)	922	2.20 (c)	(0 .25)	60 .0
8.88 (e)	1,182	2.20 (c),(f)	(0 .65) (f)	53 .2 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions			Total
	Value,	Investment and Unrealized Total From from Net				from	Tax Return Dividends Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			Realized	of Capital	and	Value, End
	of Period	(Loss)(a)	Investments	Operations	Income	Gains	Distribution Distributions of Period
LARGECAP GROWTH FUND
Class A shares
2010	$6 .26	($0 .04)	$1 .32	$1 .28	$–	$–	$–	$–	$7 .54
2009	6.09	( 0.03)	0 .20	0 .17	–	–	–	–	6.26
2008	9.96	–	( 3 .70)	( 3 .70)	–	( 0 .15)	( 0.02)	( 0 .17)	6 .09
2007	7.78	( 0.01)	2 .30	2 .29	( 0 .01)	( 0 .10)	–	( 0 .11)	9 .96
2006	7.09	–	0 .69	0 .69	–	–	–	–	7.78
Class B shares
2010	6.03	( 0.11)	1 .26	1 .15	–	–	–	–	7.18
2009	5.91	( 0.07)	0 .19	0 .12	–	–	–	–	6.03
2008	9.76	( 0.08)	( 3 .60)	( 3 .68)	–	( 0 .15)	( 0.02)	( 0 .17)	5 .91
2007	7.69	( 0.09)	2 .26	2 .17	–	( 0 .10)	–	( 0 .10)	9 .76
2006	7.07	( 0.06)	0 .68	0 .62	–	–	–	–	7.69
Class C shares
2010	6.13	( 0.09)	1 .29	1 .20	–	–	–	–	7.33
2009	6.00	( 0.07)	0 .20	0 .13	–	–	–	–	6.13
2008	9.90	( 0.07)	( 3 .66)	( 3 .73)	–	( 0 .15)	( 0.02)	( 0 .17)	6 .00
2007(e)	8.15	( 0.07)	1 .82	1 .75	–	–	–	–	9.90
Class P shares
2010(h)	7.32	–	0 .37	0 .37	–	–	–	–	7.69
LARGECAP GROWTH FUND I
Class A shares
2010	6.77	( 0.05)	1 .58	1 .53	–	–	–	–	8.30
2009	5.32	( 0.06)	1 .51	1 .45	–	–	–	–	6.77
2008	9.45	( 0.06)	( 3 .67)	( 3 .73)	–	( 0 .40)	–	( 0 .40)	5 .32
2007	8.27	( 0.05)	1 .60	1 .55	–	( 0 .37)	–	( 0 .37)	9 .45
2006	8.08	( 0.02)	0 .52	0 .50	–	( 0 .31)	–	( 0 .31)	8 .27
Class B shares
2010	6.49	( 0.14)	1 .48	1 .34	–	–	–	–	7.83
2009	5.16	( 0.12)	1 .45	1 .33	–	–	–	–	6.49
2008	9.25	( 0.13)	( 3 .56)	( 3 .69)	–	( 0 .40)	–	( 0 .40)	5 .16
2007	8.18	( 0.12)	1 .56	1 .44	–	( 0 .37)	–	( 0 .37)	9 .25
2006	8.06	( 0.09)	0 .52	0 .43	–	( 0 .31)	–	( 0 .31)	8 .18
Class C shares
2010	6.76	( 0.10)	1 .56	1 .46	–	–	–	–	8.22
2009	5.32	( 0.07)	1 .51	1 .44	–	–	–	–	6.76
2008	9.50	( 0.11)	( 3 .67)	( 3 .78)	–	( 0 .40)	–	( 0 .40)	5 .32
2007(j)	8.55	( 0.10)	1 .05	0 .95	–	–	–	–	9.50


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




		Ratio of		Ratio of Net
	Net Assets, End of	Expenses to	Ratio of Gross	Investment Income
	Period (in	Average Net	Expenses to	to Average Net	Portfolio
Total Return(b)	thousands)	Assets	Average Net Assets	Assets	Turnover Rate


20.45%	$323,663	1.35%	– %	(0 .65)%	65 .5%
2 .79	287,902	1.38 (c)	–	(0 .46)	86 .5
(37.78)	321,555	1.21 (c)	–	(0 .02)	88 .8
29 .78	535,659	1.19 (c)	–	(0 .09)	113 .1 (d)
9 .73	280,969	1.13	–	0 .06	93 .5

19 .07	18,486	2.42	–	(1 .73)	65 .5
2 .03	22,560	2.30 (c)	–	(1 .34)	86 .5
(38.36)	31,802	2.13 (c)	–	(0 .91)	88 .8
28 .52	94,254	2.12 (c)	–	(1 .06)	113 .1 (d)
8 .77	28,890	2.03	–	(0 .85)	93 .5

19 .58	11,368	2.08	–	(1 .38)	65 .5
2 .17	9,067	2.13 (c)	–	(1 .21)	86 .5
(38.32)	9,311	2.02 (c)	–	(0 .89)	88 .8
21.47 (f)	8,037	2.03 (c),(g)	–	(1 .06) (g)	113.1 (d),(g)

5.05 (f)	11	0.84 (c),(g)	–	0.07 (g)	65.5 (g)


22 .60	16,672	1.48	1 .55 (i)	(0 .66)	49 .8
27 .26	39,354	1.94 (c)	–	(1 .04)	98 .9
(41.07)	30,125	1.57	–	(0 .83)	64 .5
19 .42	55,689	1.59	–	(0 .57)	47 .7
6 .12	48,815	1.56	–	(0 .30)	58 .5

20 .65	1,779	2.79	2 .93 (i)	(1 .98)	49 .8
25 .78	5,317	3.17 (c)	–	(2 .27)	98 .9
(41.54)	5,467	2.47	–	(1 .73)	64 .5
18 .25	12,656	2.50	–	(1 .46)	47 .7
5 .24	13,696	2.39	–	(1 .12)	58 .5

21 .60	758	2.16	3 .53 (i)	(1 .36)	49 .8
27 .07	998	2.19 (c)	–	(1 .30)	98 .9
(41.39)	415	2.20 (c)	–	(1 .46)	64 .5
11.11 (f)	652	2.20 (c),(g)	–	(1 .44) (g)	47 .7 (g)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From from Net				from	Dividends Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			Realized	and	Value, End
	of Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
LARGECAP GROWTH FUND II
Class A shares
2010	$6 .66	($0 .01)	$0 .98	$0 .97	$–	$–	$–	$7 .63	14 .56%
2009	5.87	( 0.02)	0 .81	0 .79	–	–	–	6 .66	13 .46
2008	9.91	( 0.04)	( 3 .07)	( 3 .11)	( 0 .93)	–	( 0.93)	5 .87	(34 .55)
2007	8.92	( 0.05)	1 .77	1 .72	( 0 .73)	–	( 0.73)	9 .91	20 .74
2006	8.15	( 0.05)	0 .91	0 .86	( 0 .09)	–	( 0.09)	8 .92	10 .61
Class C shares
2010	6.51	( 0.06)	0 .95	0 .89	–	–	–	7 .40	13 .67
2009	5.78	( 0.06)	0 .79	0 .73	–	–	–	6 .51	12 .63
2008	9.84	( 0.10)	( 3 .03)	( 3 .13)	( 0 .93)	–	( 0.93)	5 .78	(35 .04)
2007(e)	8.52	( 0.10)	1 .42	1 .32	–	–	–	9 .84	15 .49 (f)
LARGECAP S&P 500 INDEX FUND
Class A shares
2010	7.31	0.11	1 .03	1 .14	( 0 .10)	–	( 0.10)	8 .35	15 .72
2009	6.85	0.11	0 .48	0 .59	( 0 .13)	–	( 0.13)	7 .31	9 .03
2008	11.06	0.15	( 4 .10)	( 3 .95)	( 0 .14)	( 0 .12)	( 0.26)	6 .85	(36 .55)
2007	9.86	0.14	1 .21	1 .35	( 0 .12)	( 0 .03)	( 0.15)	11 .06	13 .86
2006	8.66	0.12	1 .22	1 .34	( 0 .10)	( 0 .04)	( 0.14)	9 .86	15 .54
Class C shares
2010	7.25	0.06	1 .03	1 .09	( 0 .08)	–	( 0.08)	8 .26	15 .06
2009	6.81	0.08	0 .46	0 .54	( 0 .10)	–	( 0.10)	7 .25	8 .11
2008	10.99	0.08	( 4 .07)	( 3 .99)	( 0 .07)	( 0 .12)	( 0.19)	6 .81	(36 .92)
2007(h)	10.12	0.05	0 .82	0 .87	–	–	–	10 .99	8 .60 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			Realized	and	Value, End
	of Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
LARGECAP VALUE FUND
Class A shares
2010	$7.84	$0.09	$0 .99	$1 .08	($0 .12)	$–	($0 .12)	$8 .80	13 .81%
2009	7.93	0.14	( 0 .07)	0 .07	( 0 .16)	–	( 0.16)	7 .84	1 .01
2008	13.53	0.19	( 4 .59)	( 4 .40)	( 0 .16)	( 1 .04)	( 1.20)	7 .93	(35 .48)
2007	13.11	0.19	1 .00	1 .19	( 0 .17)	( 0 .60)	( 0.77)	13 .53	9 .47
2006	11.34	0.18	1 .98	2 .16	( 0 .10)	( 0 .29)	( 0.39)	13 .11	19 .53
Class B shares
2010	7.80	( 0.02)	0 .98	0 .96	–	–	–	8 .76	12 .35
2009	7.87	0.04	( 0 .07)	( 0 .03)	( 0 .04)	–	( 0.04)	7 .80	(0 .37)
2008	13.42	0.09	( 4 .57)	( 4 .48)	( 0 .03)	( 1 .04)	( 1.07)	7 .87	(36 .08)
2007	13.00	0.04	1 .01	1 .05	( 0 .03)	( 0 .60)	( 0.63)	13 .42	8 .37
2006	11.33	0.06	1 .96	2 .02	( 0 .06)	( 0 .29)	( 0.35)	13 .00	18 .18
Class C shares
2010	7.76	0.03	0 .99	1 .02	( 0 .08)	–	( 0.08)	8 .70	13 .14
2009	7.89	0.09	( 0 .08)	0 .01	( 0 .14)	–	( 0.14)	7 .76	0 .28
2008	13.44	0.11	( 4 .55)	( 4 .44)	( 0 .07)	( 1 .04)	( 1.11)	7 .89	(35 .81)
2007(d)	12.80	0.05	0 .59	0 .64	–	–	–	13 .44	5 .00 (e)
LARGECAP VALUE FUND III
Class A shares
2010	8.71	0.10	1 .05	1 .15	( 0 .12)	–	( 0.12)	9 .74	13 .29
2009	8.47	0.13	0 .26	0 .39	( 0 .15)	–	( 0.15)	8 .71	4 .79
2008	15.88	0.22	( 6 .50)	( 6 .28)	( 0 .19)	( 0 .94)	( 1.13)	8 .47	(42 .36)
2007	15.58	0.18	0 .97	1 .15	( 0 .14)	( 0 .71)	( 0.85)	15 .88	7 .63
2006	13.51	0.16	2 .51	2 .67	( 0 .09)	( 0 .51)	( 0.60)	15 .58	20 .40
Class B shares
2010	8.72	0.03	1 .05	1 .08	( 0 .05)	–	( 0.05)	9 .75	12 .38
2009	8.42	0.08	0 .25	0 .33	( 0 .03)	–	( 0.03)	8 .72	3 .97
2008	15.81	0.11	( 6 .47)	( 6 .36)	( 0 .09)	( 0 .94)	( 1.03)	8 .42	(42 .87)
2007	15.54	0.06	0 .96	1 .02	( 0 .04)	( 0 .71)	( 0.75)	15 .81	6 .74
2006	13.47	0.07	2 .51	2 .58	–	( 0 .51)	( 0.51)	15 .54	19 .67
Class C shares
2010	8.70	0.03	1 .05	1 .08	( 0 .06)	–	( 0.06)	9 .72	12 .49
2009	8.43	0.07	0 .25	0 .32	( 0 .05)	–	( 0.05)	8 .70	3 .92
2008	15.80	0.11	( 6 .46)	( 6 .35)	( 0 .08)	( 0 .94)	( 1.02)	8 .43	(42 .78)
2007(g)	15.39	0.02	0 .39	0 .41	–	–	–	15 .80	2 .66 (e)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning of Income		Gain (Loss) on Investment Investment			Realized	and	Value, End
	Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
MIDCAP BLEND FUND
Class A shares
2010	$10 .45	$0 .09	$2 .53	$2 .62	($0 .04)	$–	($0 .04)	$13.03	25 .12%
2009	9.54	–	1.43	1.43	–	( 0 .52)	( 0.52)	10 .45	16 .52
2008	15.97	( 0.01)	( 4 .94)	( 4 .95)	–	( 1 .48)	( 1.48)	9 .54	(33 .98)
2007	14.89	0.01	2 .52	2 .53	( 0 .03)	( 1 .42)	( 1.45)	15 .97	18 .27
2006	13.78	0.04	1 .81	1 .85	( 0 .03)	( 0 .71)	( 0.74)	14 .89	13 .87
Class B shares
2010	10.24	( 0.03)	2 .48	2 .45	–	–	–	12 .69	23 .93
2009	9.46	( 0.09)	1 .39	1 .30	–	( 0 .52)	( 0.52)	10 .24	15 .21
2008	15.92	( 0.06)	( 4 .92)	( 4 .98)	–	( 1 .48)	( 1.48)	9 .46	(34 .31)
2007	14.86	( 0.04)	2 .52	2 .48	–	( 1 .42)	( 1.42)	15 .92	17 .93
2006	13.76	–	1.81	1.81	–	( 0 .71)	( 0.71)	14 .86	13 .60
Class C shares
2010	10.18	–	2 .46	2 .46	( 0 .02)	–	( 0.02)	12 .62	24 .22
2009	9.38	( 0.07)	1 .39	1 .32	–	( 0 .52)	( 0.52)	10 .18	15 .57
2008	15.86	( 0.12)	( 4 .88)	( 5 .00)	–	( 1 .48)	( 1.48)	9 .38	(34 .58)
2007(d)	14.20	( 0.12)	1 .78	1 .66	–	–	–	15 .86	11 .69 (e)
Class P shares
2010(g)	12.58	0.01	0 .59	0 .60	–	–	–	13 .18	4 .77 (e)
MIDCAP GROWTH FUND III
Class A shares
2010	7.20	( 0.07)	2 .06	1 .99	–	–	–	9 .19	27 .64
2009	6.20	( 0.06)	1 .06	1 .00	–	–	–	7 .20	16 .13
2008	11.99	( 0.10)	( 4 .92)	( 5 .02)	–	( 0 .77)	( 0.77)	6 .20	(44 .68)
2007	9.46	( 0.12)	2 .93	2 .81	–	( 0 .28)	( 0.28)	11 .99	30 .43
2006	8.77	( 0.09)	0 .85	0 .76	–	( 0 .07)	( 0.07)	9 .46	8 .64
Class B shares
2010	6.97	( 0.13)	1 .98	1 .85	–	–	–	8 .82	26 .54
2009	6.04	( 0.10)	1 .03	0 .93	–	–	–	6 .97	15 .40
2008	11.78	( 0.17)	( 4 .80)	( 4 .97)	–	( 0 .77)	( 0.77)	6 .04	(45 .07)
2007	9.36	( 0.20)	2 .90	2 .70	–	( 0 .28)	( 0.28)	11 .78	29 .55
2006	8.75	( 0.16)	0 .84	0 .68	–	( 0 .07)	( 0.07)	9 .36	7 .74
Class C shares
2010	7.08	( 0.13)	2 .03	1 .90	–	–	–	8 .98	26 .84
2009	6.15	( 0.10)	1 .03	0 .93	–	–	–	7 .08	15 .12
2008	11.99	( 0.17)	( 4 .90)	( 5 .07)	–	( 0 .77)	( 0.77)	6 .15	(45 .12)
2007(i)	9.79	( 0.17)	2 .37	2 .20	–	–	–	11 .99	22 .47 (e)


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
Net Assets, End of	Expenses to	Ratio of Gross	Investment Income
Period (in	Average Net	Expenses to	to Average Net	Portfolio
thousands)	Assets	Average Net Assets	Assets	Turnover Rate


$542,687	1.14%(c)	– %	0 .80%	26 .7%
435,797	1.23 (c)	–	0 .02	12 .9
362,130	1.06 (c)	–	(0 .05)	26 .8
596,568	1.02 (c)	–	0 .03	30 .6
549,528	1.02 (c)	–	0 .28	43 .4

37,441	2.13 (c)	–	(0 .25)	26 .7
42,993	2.27 (c)	–	(1 .01)	12 .9
35,769	1.50 (c)	–	(0 .48)	26 .8
69,393	1.32 (c)	–	(0 .26)	30 .6
68,090	1.32 (c)	–	(0 .02)	43 .4

21,342	1.95 (c)	–	0 .04	26 .7
10,048	1.95 (c)	–	(0 .73)	12 .9
3,639	1.95 (c)	–	(0 .94)	26 .8
3,914	1.95 (c),(f)	–	(0 .98) (f)	30 .6 (f)

91	0.86 (c),(f)	–	0.77 (f)	26.7 (f)


10,150	1.73	1.84 (h)	(0 .90)	98 .1
26,926	1.74	1.98 (h)	(0 .92)	126 .2
21,252	1.73 (c)	–	(1 .05)	167 .3
39,400	1.75 (c)	–	(1 .17)	144 .9
27,926	1.75 (c)	–	(0 .97)	145 .8

1,772	2.48 (c)	–	(1 .64)	98 .1
5,206	2.49 (c)	–	(1 .66)	126 .2
5,477	2.50 (c)	–	(1 .81)	167 .3
12,895	2.50 (c)	–	(1 .91)	144 .9
10,516	2.50 (c)	–	(1 .71)	145 .8

815	2.48 (c)	–	(1 .66)	98 .1
1,513	2.49 (c)	–	(1 .69)	126 .2
778	2.50 (c)	–	(1 .82)	167 .3
1,070	2.50 (c),(f)	–	(1 .94) (f)	144 .9 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends	Total
	Value,	Investment and Unrealized Total From from Net				Dividends		Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			and	Redemption Value, End
	of Period	(Loss)(a)	Investments Operations		Income	Distributions	Fees	of Period Total Return(b)
MIDCAP VALUE FUND I
Class A shares
2010	$9.66	$0.10	$2 .44	$2 .54	($0 .08)	($0 .08)	$–	$12.12	26 .42%
2009(d)	6.24	0.03	3 .39	3 .42	–	–	–	9 .66	54 .81 (e)
Class B shares
2010	9.61	0.02	2 .42	2 .44	( 0 .04)	( 0 .04)	0.01	12 .02	25 .50
2009(d)	6.24	( 0.01)	3 .38	3 .37	–	–	–	9 .61	54 .01 (e)
Class C shares
2010	9.61	0.02	2 .42	2 .44	( 0 .04)	( 0 .04)	–	12 .01	25 .49
2009(d)	6.24	( 0.01)	3 .38	3 .37	–	–	–	9 .61	54 .01 (e)
MONEY MARKET FUND
Class A shares
2010	1.00	–	–	–	–	–	–	1 .00	0 .00
2009	1.00	0.01	( 0 .01)	–	–	–	–	1 .00	0 .47
2008	1.00	0.03	–	0 .03	( 0 .03)	( 0 .03)	–	1 .00	3 .02
2007	1.00	0.05	–	0 .05	( 0 .05)	( 0 .05)	–	1 .00	5 .02
2006	1.00	0.04	–	0 .04	( 0 .04)	( 0 .04)	–	1 .00	4 .41
Class B shares
2010	1.00	–	–	–	–	–	–	1 .00	0 .00
2009	1.00	–	–	–	–	–	–	1 .00	0 .16
2008	1.00	0.02	–	0 .02	( 0 .02)	( 0 .02)	–	1 .00	2 .03
2007	1.00	0.04	–	0 .04	( 0 .04)	( 0 .04)	–	1 .00	4 .04
2006	1.00	0.03	–	0 .03	( 0 .03)	( 0 .03)	–	1 .00	2 .90
Class C shares
2010	1.00	–	–	–	–	–	–	1 .00	0 .00
2009	1.00	–	–	–	–	–	–	1 .00	0 .21
2008	1.00	0.02	–	0 .02	( 0 .02)	( 0 .02)	–	1 .00	2 .08
2007(i)	1.00	0.03	–	0 .03	( 0 .03)	( 0 .03)	–	1 .00	2 .94 (e)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,		and Unrealized Total From		from Net	from	Dividends	Net Asset
	Beginning of Net Investment Gain (Loss) on Investment				Investment	Realized	and	Value, End
	Period	Income (Loss) Investments		Operations	Income	Gains	Distributions of Period Total Return(b)
PRINCIPAL CAPITAL APPRECIATION FUND
Class A shares
2010	$32 .55	$0 .50(a)	$4 .50	$5 .00	($0 .17)	($0 .22)	($0 .39)	$37.16	15 .46%
2009	30.71	0.18(a)	3 .34	3 .52	( 0 .16)	( 1 .52)	( 1.68)	32 .55	12 .58
2008	49.35	0.23(a)	( 15 .43)	( 15 .20)	( 0 .23)	( 3 .21)	( 3.44)	30 .71	(32 .95)
2007	43.09	0.30(a)	7 .13	7 .43	( 0 .18)	( 0 .99)	( 1.17)	49 .35	17 .59
2006	38.99	0.18	5 .02	5 .20	( 0 .13)	( 0 .97)	( 1.10)	43 .09	13 .50
Class B shares
2010	27.81	0.10(a)	3 .86	3 .96	–	( 0 .22)	( 0.22)	31 .55	14 .31
2009	26.58	( 0.10)(a)	2 .85	2 .75	–	( 1 .52)	( 1.52)	27 .81	11 .42
2008	43.33	( 0.14)(a)	( 13 .40)	( 13 .54)	–	( 3 .21)	( 3.21)	26 .58	(33 .59)
2007	38.16	( 0.10)(a)	6 .26	6 .16	–	( 0 .99)	( 0.99)	43 .33	16 .46
2006	34.84	( 0.18)	4 .47	4 .29	–	( 0 .97)	( 0.97)	38 .16	12 .45
Class C shares
2010	27.94	0.16(a)	3 .85	4 .01	–	( 0 .22)	( 0.22)	31 .73	14 .42
2009	26.71	( 0.11)(a)	2 .86	2 .75	–	( 1 .52)	( 1.52)	27 .94	11 .36
2008	43.53	( 0.14)(a)	( 13 .47)	( 13 .61)	–	( 3 .21)	( 3.21)	26 .71	(33 .60)
2007	38.31	( 0.08)(a)	6 .29	6 .21	–	( 0 .99)	( 0.99)	43 .53	16 .56
2006	34.94	( 0.16)	4 .50	4 .34	–	( 0 .97)	( 0.97)	38 .31	12 .53
Class P shares
2010(d)	35.97	0.02(a)	1 .63	1 .65	–	–	–	37 .62	4 .59 (e)
REAL ESTATE SECURITIES FUND
Class A shares
2010	11.62	0.22(a)	4 .23	4 .45	( 0 .24)	–	( 0.24)	15 .83	38 .59
2009	11.83	0.28(a)	( 0 .21)	0 .07	( 0 .28)	–	( 0.28)	11 .62	1 .30
2008	24.97	0.27(a)	( 7 .39)	( 7 .12)	( 0 .29)	( 5 .73)	( 6.02)	11 .83	(36 .02)
2007	27.56	0.19(a)	( 0 .60)	( 0 .41)	( 0 .11)	( 2 .07)	( 2.18)	24 .97	(1 .92)
2006	20.43	0.14(a)	7 .80	7 .94	( 0 .19)	( 0 .62)	( 0.81)	27 .56	40 .07
Class B shares
2010	11.53	0.12(a)	4 .19	4 .31	( 0 .12)	–	( 0.12)	15 .72	37 .56
2009	11.74	0.21(a)	( 0 .22)	( 0 .01)	( 0 .20)	–	( 0.20)	11 .53	0 .46
2008	24.83	0.13(a)	( 7 .32)	( 7 .19)	( 0 .17)	( 5 .73)	( 5.90)	11 .74	(36 .50)
2007	27.56	( 0.02)(a)	( 0 .60)	( 0 .62)	( 0 .04)	( 2 .07)	( 2.11)	24 .83	(2 .74)
2006	20.44	0.02(a)	7 .80	7 .82	( 0 .08)	( 0 .62)	( 0.70)	27 .56	39 .33
Class C shares
2010	11.56	0.10(a)	4 .23	4 .33	( 0 .15)	–	( 0.15)	15 .74	37 .66
2009	11.77	0.21(a)	( 0 .20)	0 .01	( 0 .22)	–	( 0.22)	11 .56	0 .62
2008	24.89	0.15(a)	( 7 .36)	( 7 .21)	( 0 .18)	( 5 .73)	( 5.91)	11 .77	(36 .48)
2007(i)	27.41	( 0 .08)(a)	( 2 .44)	( 2 .52)	–	–	–	24 .89	(9 .19) (e)
Class P shares
2010(d)	15.38	0.02(a)	0 .49	0 .51	( 0 .06)	–	( 0.06)	15 .83	3 .34 (e)


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
	Expenses to	Ratio of Gross	Investment Income
Net Assets, End of	Average Net	Expenses to	to Average Net	Portfolio
Period (in thousands)	Assets	Average Net Assets	Assets	Turnover Rate


$409,697	1.04%	– %	1 .43%	15 .3%
375,874	1 .07	–	0 .65	23 .8
390,075	0 .93	–	0.57	9.7
956,005	0 .83	0 .83 (c)	0 .63	17 .6
880,755	0 .85	0 .85 (c)	0 .44	15 .0

62,508	2.07	–	0 .34	15 .3
80,421	2.12	–	(0 .39)	23 .8
92,828	1.88	–	(0 .41)	9 .7
185,705	1 .74	1 .74 (c)	(0 .27)	17 .6
184,340	1 .78	1 .78 (c)	(0 .49)	15 .0

19,689	1.96	–	0 .52	15 .3
15,610	2.15	–	(0 .46)	23 .8
12,632	1.87	–	(0 .40)	9 .7
22,174	1.69	1.74 (c)	(0 .23)	17 .6
21,039	1.69	1.69 (c)	(0 .40)	15 .0

10	0.75 (f),(g)	–	0.59 (f)	15.3 (f)


107,672	1 .39 (g)	–	1 .53	52 .2
63,894	1.28 (g)	–	2 .88	57 .3
64,787	1.28 (g)	–	1 .62	47 .2
124,434	1 .29 (g)	–	0 .75	77 .8 (h)
125,408	1 .43 (g)	–	0 .61	37 .8

11,944	2.16 (g)	–	0 .85	52 .2
11,502	2.08 (g)	–	2 .18	57 .3
14,551	2.08 (g)	–	0 .81	47 .2
31,026	2.07 (g)	–	(0 .06)	77 .8 (h)
29,044	1.95 (g)	–	0 .10	37 .8

12,850	2.15 (g)	–	0 .70	52 .2
5,172	1.98 (g)	–	2 .15	57 .3
4,382	1.98 (g)	–	0 .93	47 .2
7,976	1.99 (f),(g)	–	(0 .37) (f)	77 .8 (f),(h)

10	1.03 (f),(g)	–	1.37 (f)	52.2 (f)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,	Net Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning of	Income	Gain (Loss) on Investment Investment			Realized	and	Value, End
	Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
SHORT-TERM INCOME FUND(c)
Class A shares
2010	$11 .84	$0 .33(a)	$0 .33	$0 .66	($0 .33)	$–	($0 .33)	$12.17	5 .64%
2009	11.16	0.41(a)	0 .69	1 .10	(0 .42)	–	(0.42)	11 .84	10 .06
2008	11.59	0.43(a)	(0 .43)	–	(0 .43)	–	(0.43)	11 .16	(0 .06)
2007	11.60	0.29(a)	0 .11	0 .40	(0 .41)	–	(0 .41)	11 .59	4 .14
2006	11.55	0.40	0 .05	0 .45	(0 .40)	–	(0 .40)	11 .60	4 .15
Class C shares
2010	11.85	0.23(a)	0 .32	0 .55	(0 .22)	–	(0 .22)	12 .18	4 .72
2009	11.17	0.30(a)	0 .71	1 .01	(0 .33)	–	(0 .33)	11 .85	9 .18
2008	11.60	0.34(a)	(0 .42)	(0 .08)	(0 .35)	–	(0.35)	11 .17	(0 .78)
2007	11.60	0.21(a)	0 .13	0 .34	(0 .34)	–	(0 .34)	11 .60	3 .47
2006	11.55	0.35	0 .05	0 .40	(0 .35)	–	(0 .35)	11 .60	3 .39
Class P shares
2010(f)	12.13	0.03(a)	0 .03	0 .06	(0 .03)	–	(0 .03)	12 .16	0 .45 (g)
SMALLCAP BLEND FUND
Class A shares
2010	10.47	(0.04)(a)	2 .56	2 .52	–	–	–	12 .99	24 .07
2009	10.36	– (a)	0 .11	0 .11	–	–	–	10 .47	1 .06
2008	17.95	(0.02)(a)	(6 .14)	(6 .16)	–	(1 .43)	(1.43)	10 .36	(36 .97)
2007	17.30	(0.05)(a)	2 .10	2 .05	–	(1 .40)	(1.40)	17 .95	12 .48
2006	15.93	(0.02)(a)	2 .33	2 .31	–	(0 .94)	(0.94)	17 .30	14 .97
Class B shares
2010	10.04	(0.18)(a)	2 .45	2 .27	–	–	–	12 .31	22 .61
2009	10.05	(0.10)(a)	0 .09	(0 .01)	–	–	–	10 .04	(0 .10)
2008	17.60	(0.13)(a)	(5 .99)	(6 .12)	–	(1 .43)	(1.43)	10 .05	(37 .52)
2007	17.12	(0.19)(a)	2 .07	1 .88	–	(1 .40)	(1.40)	17 .60	11 .55
2006	15.89	(0.14)(a)	2 .31	2 .17	–	(0 .94)	(0.94)	17 .12	14 .09
Class C shares
2010	10.27	(0.12)(a)	2 .52	2 .40	–	–	–	12 .67	23 .37
2009	10.22	(0.05)(a)	0 .10	0 .05	–	–	–	10 .27	0 .49
2008	17.85	(0.12)(a)	(6 .08)	(6 .20)	–	(1 .43)	(1.43)	10 .22	(37 .44)
2007(j)	16.60	(0 .14)(a)	1 .39	1 .25	–	–	–	17 .85	7 .53 (g)


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
Net Assets, End of	Expenses to	Ratio of Gross	Investment Income
Period (in	Average Net	Expenses to	to Average Net	Portfolio
thousands)	Assets	Average Net Assets	Assets	Turnover Rate


$330,516	0.76%	– %	2 .75%	54 .7%(d)
135,394	0.83	–	3 .54	40 .8
36,725	0.95	–	3 .67	64 .5
36,639	0.95	0 .97 (e)	4 .11	29 .4
32,081	0.95	0 .95 (e)	3 .54	14 .0

89,598	1.64	–	1 .89	54 .7 (d)
42,128	1.67	–	2 .58	40 .8
4,892	1.67	–	2 .95	64 .5
4,952	1.68	2 .10 (e)	3 .38	29 .4
6,980	1.68	1 .68 (e)	2 .81	14 .0

105	0 .66 (h),(i)	–	2 .51 (h)	54 .7 (d),(h)


73,302	1.51 (i)	–	(0 .32)	65 .2
61,823	1.65	–	(0 .01)	89 .5
66,286	1.46	–	(0 .11)	55 .6
118,157	1.43	–	(0 .28)	60 .9
109,783	1.40	–	(0 .15)	103 .0

5,809	2.74 (i)	–	(1 .55)	65 .2
7,037	2.78	–	(1 .15)	89 .5
10,021	2.33	–	(0 .97)	55 .6
22,058	2.26	–	(1 .11)	60 .9
24,476	2.11	–	(0 .85)	103 .0

1,546	2.20 (i)	–	(1 .01)	65 .2
940	2.20 (i)	–	(0 .56)	89 .5
836	2.20 (i)	–	(0 .85)	55 .6
1,573	2 .20 (h),(i)	–	(1 .04) (h)	60 .9 (h)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends	Total
	Value,	Investment and Unrealized Total From from Net				Dividends		Net Asset
	Beginning	Income	Gain (Loss) on Investment Investment			and	Redemption Value, End
	of Period	(Loss)(a)	Investments	Operations	Income Distributions		Fees	of Period Total Return(b)
SMALLCAP GROWTH FUND
Class A shares
2010	$5 .77	($0 .08)	$1 .47	$1 .39	$–	$–	$–	$7 .16	24 .09%
2009	5.43	( 0.06)	0 .40	0 .34	–	–	–	5 .77	6 .26
2008	10.18	( 0.07)	( 4 .10)	( 4 .17)	( 0 .58)	( 0 .58)	–	5 .43	(43 .33)
2007(d)	8.87	( 0.04)	1 .35	1 .31	–	–	–	10 .18	14 .77 (e)
Class B shares
2010	5.62	( 0.13)	1 .41	1 .28	–	–	–	6 .90	22 .78
2009	5.32	( 0.09)	0 .39	0 .30	–	–	–	5 .62	5 .64
2008	10.07	( 0.15)	( 4 .02)	( 4 .17)	( 0 .58)	( 0 .58)	–	5 .32	(43 .82)
2007(d)	8.87	( 0.15)	1 .35	1 .20	–	–	–	10 .07	13 .53 (e)
Class C shares
2010	5.68	( 0.11)	1 .43	1 .32	–	–	–	7 .00	23 .24
2009	5.36	( 0.08)	0 .40	0 .32	–	–	–	5 .68	5 .97
2008	10.10	( 0.12)	( 4 .04)	( 4 .16)	( 0 .58)	( 0 .58)	–	5 .36	(43 .58)
2007(d)	8.87	( 0.12)	1 .35	1 .23	–	–	–	10 .10	13 .87 (e)
SMALLCAP GROWTH FUND II
Class A shares
2010	5.80	( 0.07)	1 .75	1 .68	–	–	–	7 .48	28 .97
2009	5.47	( 0.06)	0 .39	0 .33	–	–	–	5 .80	6 .03
2008	10.16	( 0.12)	( 4 .03)	( 4 .15)	( 0 .54)	( 0 .54)	–	5 .47	(42 .88)
2007	9.42	( 0.14)	1 .58	1 .44	( 0 .70)	( 0 .70)	–	10 .16	16 .21
2006	8.85	( 0.15)	1 .20	1 .05	( 0 .48)	( 0 .48)	–	9 .42	12 .12
Class B shares
2010	5.60	( 0.12)	1 .68	1 .56	–	–	–	7 .16	27 .86
2009	5.33	( 0.09)	0 .36	0 .27	–	–	–	5 .60	5 .07
2008	9.97	( 0.18)	( 3 .92)	( 4 .10)	( 0 .54)	( 0 .54)	–	5 .33	(43 .22)
2007	9.33	( 0.21)	1 .55	1 .34	( 0 .70)	( 0 .70)	–	9 .97	15 .24
2006	8.83	( 0.21)	1 .19	0 .98	( 0 .48)	( 0 .48)	–	9 .33	11 .31
Class C shares
2010	5.70	( 0.12)	1 .71	1 .59	–	–	0.01	7 .30	28 .07
2009	5.40	( 0.10)	0 .40	0 .30	–	–	–	5 .70	5 .56
2008	10.10	( 0.18)	( 3 .98)	( 4 .16)	( 0 .54)	( 0 .54)	–	5 .40	(43 .25)
2007(h)	9.04	( 0.17)	1 .23	1 .06	–	–	–	10 .10	11 .73 (e)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,		and Unrealized Total From		from Net	from	Dividends	Net Asset
	Beginning of Net Investment Gain (Loss) on Investment				Investment	Realized	and	Value, End
	Period	Income (Loss) Investments Operations			Income	Gains	Distributions of Period Total Return(b)
SMALLCAP VALUE FUND
Class A shares
2010	$11 .61	$0 .04(a)	$2 .37	$2 .41	($0 .05)	$–	($0 .05)	$13.97	20 .81%
2009	12.30	0.06(a)	( 0 .73)	( 0 .67)	( 0 .02)	–	( 0.02)	11 .61	(5 .46)
2008	18.82	0.05(a)	( 5 .16)	( 5 .11)	( 0 .08)	( 1 .33)	( 1.41)	12 .30	(29 .06)
2007	19.21	0.06(a)	0 .44	0 .50	–	( 0 .89)	( 0 .89)	18 .82	2 .55
2006	17.49	0.01(a)	2 .99	3 .00	–	( 1 .28)	( 1.28)	19 .21	18 .03
Class B shares
2010	11.31	( 0.08)(a)	2 .30	2 .22	–	–	–	13 .53	19 .63
2009	12.08	( 0.04)(a)	( 0 .73)	( 0 .77)	–	–	–	11 .31	(6 .37)
2008	18.59	( 0.09)(a)	( 5 .09)	( 5 .18)	–	( 1 .33)	( 1.33)	12 .08	(29 .76)
2007	19.14	( 0.11)(a)	0 .45	0 .34	–	( 0 .89)	( 0 .89)	18 .59	1 .68
2006	17.55	( 0.13)(a)	3 .00	2 .87	–	( 1 .28)	( 1.28)	19 .14	17 .18
Class C shares
2010	11.45	( 0.05)(a)	2 .33	2 .28	–	–	–	13 .73	19 .91
2009	12.21	( 0.01)(a)	( 0 .75)	( 0 .76)	–	–	–	11 .45	(6 .22)
2008	18.72	( 0.06)(a)	( 5 .12)	( 5 .18)	–	( 1 .33)	( 1.33)	12 .21	(29 .54)
2007(e)	18.93	( 0.06)(a)	( 0 .15)	( 0 .21)	–	–	–	18 .72	(1 .11) (f)
TAX-EXEMPT BOND FUND
Class A shares
2010	6.98	0.35(a)	0 .24	0 .59	( 0 .33)	–	( 0.33)	7 .24	8 .66
2009	6.31	0.35(a)	0 .66	1 .01	( 0 .34)	–	( 0.34)	6 .98	16 .51
2008	7.41	0.34(a)	( 1 .10)	( 0 .76)	( 0 .34)	–	( 0.34)	6 .31	(10 .57)
2007	7.70	0.33(a)	( 0 .25)	0 .08	( 0 .35)	( 0 .02)	( 0.37)	7 .41	0 .72
2006	7.70	0.33	0 .15	0 .48	( 0 .33)	( 0 .15)	( 0.48)	7 .70	6 .42
Class B shares
2010	6.98	0.29(a)	0 .25	0 .54	( 0 .28)	–	( 0.28)	7 .24	7 .83
2009	6.31	0.31(a)	0 .66	0 .97	( 0 .30)	–	( 0.30)	6 .98	15 .71
2008	7.41	0.32(a)	( 1 .10)	( 0 .78)	( 0 .32)	–	( 0.32)	6 .31	(10 .94)
2007	7.70	0.29(a)	( 0 .25)	0 .04	( 0 .31)	( 0 .02)	( 0.33)	7 .41	0 .24
2006	7.70	0.27	0 .15	0 .42	( 0 .27)	( 0 .15)	( 0.42)	7 .70	5 .63
Class C shares
2010	6.99	0.29(a)	0 .25	0 .54	( 0 .28)	–	( 0.28)	7 .25	7 .81
2009	6.31	0.29(a)	0 .68	0 .97	( 0 .29)	–	( 0.29)	6 .99	15 .68
2008	7.42	0.28(a)	( 1 .11)	( 0 .83)	( 0 .28)	–	( 0.28)	6 .31	(11 .52)
2007	7.70	0.26(a)	( 0 .24)	0 .02	( 0 .28)	( 0 .02)	( 0.30)	7 .42	(0 .01)
2006	7.70	0.27	0 .15	0 .42	( 0 .27)	( 0 .15)	( 0.42)	7 .70	5 .60


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of	Ratio of Expenses to		Ratio of Net
Net Assets, End of	Expenses to	Average Net Assets	Ratio of Gross	Investment Income
Period (in	Average Net	(Excluding Interest	Expenses to	to Average Net	Portfolio Turnover
thousands)	Assets	Expense and Fees) Average Net Assets		Assets	Rate


$15,561	1.35%(c)		– %	0 .33%	77 .9%
13,392	1.35 (c)		–	0 .57	97 .2
14,995	1.35 (c)		–	0 .33	101 .9
23,033	1.36 (c)		–	0 .34	112 .8 (d)
8,839	1.49 (c)		–	0 .07	97 .9

2,367	2.29 (c)		–	(0 .61)	77 .9
2,676	2.29 (c)		–	(0 .37)	97 .2
2,789	2.29 (c)		–	(0 .60)	101 .9
4,545	2.27 (c)		–	(0 .58)	112 .8 (d)
1,612	2.24 (c)		–	(0 .70)	97 .9

2,959	2.08 (c)		–	(0 .40)	77 .9
3,048	2.08 (c)		–	(0 .13)	97 .2
3,481	2.08 (c)		–	(0 .41)	101 .9
4,496	2.09 (c),(g)		–	(0 .42) (g)	112 .8 (d),(g)


249,952	0.89	0.82 (h)	0 .90 (i)	4 .86	31 .1
244,298	0.87	0.79 (h)	0 .92 (i)	5 .32	75 .8
220,771	1.00	0.76 (h)	1 .07 (i)	4 .85	65 .3
282,685	1.09	0.77 (h)	1 .15 (i)	4 .37	51 .0
165,325	1.15	N/A	1 .15 (i)	4 .32	25 .0

5,877	1.69	1.62 (h)	2 .02 (i)	4 .09	31 .1
9,561	1.55	1.47 (h)	1 .90 (i)	4 .65	75 .8
11,837	1.39	1.15 (h)	1 .96 (i)	4 .44	65 .3
19,941	1.54	1.24 (h)	1 .98 (i)	3 .90	51 .0
22,881	1.91	N/A	1 .91 (i)	3 .56	25 .0

8,206	1.69	1.62 (h)	1 .95 (i)	4 .06	31 .1
6,728	1.73	1.65 (h)	2 .17 (i)	4 .42	75 .8
3,672	1.89	1.65 (h)	2 .50 (i)	3 .99	65 .3
2,931	1.94	1.65 (h)	2 .74 (i)	3 .50	51 .0
2,547	1.93	N/A	1 .93 (i)	3 .54	25 .0

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Bond & Mortgage Securities Fund, California Municipal Fund, Disciplined LargeCap Blend Fund, Diversified International Fund, Equity Income Fund, Global Diversified Income Fund, Global Real Estate Securities Fund, Government & High Quality Bond Fund, High Yield Fund, Income Fund, Inflation Protection Fund, International Emerging Markets Fund, International Growth Fund, LargeCap Blend Fund II, LargeCap Growth Fund, LargeCap Growth Fund I, LargeCap Growth Fund II, LargeCap S&P 500 Index Fund, LargeCap Value Fund, LargeCap Value Fund III, MidCap Blend Fund, MidCap Growth Fund III, MidCap Value Fund I, Money Market Fund, Principal Capital Appreciation Fund, Real Estate Securities Fund, Short-Term Income Fund, SmallCap Blend Fund, SmallCap Growth Fund, SmallCap Growth Fund II, SmallCap Value Fund, and Tax-Exempt Bond Fund (32 of the portfolios constituting Principal Funds, Inc., (collectively the “Funds”)) as of October 31, 2010, and the related statements of operations, statements of cash flows for California Municipal Fund and Tax-Exempt Bond Fund, statements of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of California Municipal Fund, Equity Income Fund, Government & High Quality Bond Fund (formerly known as Mortgage Securities Fund), High Yield Fund, Income Fund, Principal Capital Appreciation Fund (formerly known as West Coast Equity Fund), Short-Term Income Fund, and Tax-Exempt Bond Fund for each of the periods presented through October 31, 2006, were audited by other auditors whose reports dated December 18, 2006 (California Municipal Fund, Equity Income Fund, Government & High Quality Bond Fund, High Yield Fund, Income Fund, Principal Capital Appreciation Fund, and Short-Term Income Fund) and December 29, 2006 (Tax-Exempt Bond Fund), expressed unqualified opinions on those financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010 by correspondence with the custodian, agent banks, and brokers or by other appropriate auditing procedures where replies from brokers or agent banks were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the funds listed above constituting portfolios within Principal Funds, Inc. at October 31, 2010, the results of their operations, cash flows of California Municpal Fund and Tax-Exempt Bond Fund, the changes in their net assets and their financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS, INC.
October 31, 2010 (unaudited)

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2010 to October 31, 2010), unless otherwise noted.

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. An annual fee of $15.00 or $30.00 may apply to IRA accounts and 403(b) accounts, respectively. These fees are not included in the table below. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

The second section of the table below provides information about hypothetical account values and hypothetical expenses based on each funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in Principal Funds, Inc. and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges on purchase payments, contingent deferred sales charges, redemption fees or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.


		Actual			Hypothetical
			Expenses Paid			Expenses Paid
	Beginning	Ending	During Period		Ending	During Period
	Account	Account Value	May 1, 2010 to	Beginning	Account Value	May 1, 2010 to	Annualized
	Value May 1,	October 31,	October 31,	Account Value	October 31,	October 31,	Expense
	2010	2010	2010^(a)	May 1, 2010	2010	2010^(a)	Ratio

Bond & Mortgage Securities Fund
Class A	$1,000.00	$1,059.19	$4.88	$1,000.00	$1,020.47	$4.79	0.94%
Class B	1,000.00	1,056.60	8.29	1,000.00	1,017.14	8.13	1.60
Class C	1,000.00	1,054.93	9.06	1,000.00	1,016.38	8.89	1.75
California Municipal Fund
Class A	1,000.00	1,051.80	4.55	1,000.00	1,020.77	4.48	0.88
Class B	1,000.00	1,047.36	8.93	1,000.00	1,016.48	8.79	1.73
Class C	1,000.00	1,047.03	9.18	1,000.00	1,016.23	9.05	1.78
California Municipal Fund
(Excluding Interest Expense & Fees)
Class A	1,000.00	1,051.80	4.19	1,000.00	1,021.07	4.13	0.81
Class B	1,000.00	1,047.40	8.57	1,000.00	1,016.73	8.47	1.66
Class C	1,000.00	1,047.00	8.82	1,000.00	1,016.48	8.73	1.71
Disciplined LargeCap Blend Fund
Class A	1,000.00	993.23	5.98	1,000.00	1,019.21	6.06	1.19
Class B	1,000.00	987.97	11.73	1,000.00	1,013.41	11.88	2.34
Class C	1,000.00	990.61	9.13	1,000.00	1,016.03	9.25	1.82
Diversified International Fund
Class A	1,000.00	1,079.30	7.91	1,000.00	1,017.59	7.68	1.51
Class B	1,000.00	1,072.37	13.89	1,000.00	1,011.80	13.49	2.66
Class C	1,000.00	1,075.91	10.88	1,000.00	1,014.72	10.56	2.08
Class P	1,000.00	1,048.13	1.03^(b)	1,000.00	1,019.76	5.50	1.08
Equity Income Fund
Class A	1,000.00	1,050.06	5.12	1,000.00	1,020.21	5.04	0.99
Class B	1,000.00	1,045.71	9.95	1,000.00	1,015.48	9.80	1.93
Class C	1,000.00	1,046.39	8.87	1,000.00	1,016.53	8.74	1.72
Class P	1,000.00	1,035.87	0.68^(b)	1,000.00	1,021.58	3.67	0.72


SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS, INC.
October 31, 2010 (unaudited)



		Actual			Hypothetical
			Expenses Paid			Expenses Paid
	Beginning	Ending	During Period		Ending	During Period
	Account	Account Value	May 1, 2010 to	Beginning	Account Value	May 1, 2010 to	Annualized
	Value May 1,	October 31,	October 31,	Account Value	October 31,	October 31,	Expense
	2010	2010	2010^(a)	May 1, 2010	2010	2010^(a)	Ratio


Global Diversified Income Fund
Class A	$1,000.00	$1,076.99	$6.13	$1,000.00	$1,019.31	$5.96	1.17%
Class C	1,000.00	1,072.00	10.03	1,000.00	1,015.53	9.75	1.92
Class P	1,000.00	1,032.10	0.94^(b)	1,000.00	1,020.21	5.04	0.99
Global Real Estate Securities Fund
Class A	1,000.00	1,104.87	7.69	1,000.00	1,017.90	7.38	1.45
Class C	1,000.00	1,100.47	11.65	1,000.00	1,014.12	11.17	2.20
Government & High Quality Bond Fund
Class A	1,000.00	1,047.59	4.34	1,000.00	1,020.97	4.28	0.84
Class B	1,000.00	1,043.43	8.50	1,000.00	1,016.89	8.39	1.65
Class C	1,000.00	1,043.48	8.40	1,000.00	1,016.99	8.29	1.63
Class P	1,000.00	1,007.09	0.66^(b)	1,000.00	1,021.63	3.62	0.71
High Yield Fund
Class A	1,000.00	1,061.39	5.04	1,000.00	1,020.32	4.94	0.97
Class B	1,000.00	1,056.89	9.18	1,000.00	1,016.28	9.00	1.77
Class C	1,000.00	1,057.15	8.81	1,000.00	1,016.64	8.64	1.70
Class P	1,000.00	1,026.66	0.69^(b)	1,000.00	1,021.53	3.72	0.73
Income Fund
Class A	1,000.00	1,053.78	4.71	1,000.00	1,020.62	4.63	0.91
Class B	1,000.00	1,049.17	9.09	1,000.00	1,016.33	8.94	1.76
Class C	1,000.00	1,050.42	8.89	1,000.00	1,016.53	8.74	1.72
Class P	1,000.00	1,005.99	0.66^(b)	1,000.00	1,021.63	3.62	0.71
Inflation Protection Fund
Class A	1,000.00	1,066.09	4.69	1,000.00	1,020.67	4.58	0.90
Class C	1,000.00	1,061.80	8.57	1,000.00	1,016.89	8.39	1.65
International Emerging Markets Fund
Class A	1,000.00	1,100.21	9.90	1,000.00	1,015.78	9.50	1.87
Class B	1,000.00	1,094.31	15.47	1,000.00	1,010.44	14.85	2.93
Class C	1,000.00	1,094.80	14.94	1,000.00	1,010.94	14.34	2.83
Class P	1,000.00	1,048.75	1.32^(b)	1,000.00	1,018.25	7.02	1.38
International Growth Fund
Class A	1,000.00	1,066.18	8.28	1,000.00	1,017.19	8.08	1.59
Class C	1,000.00	1,062.20	12.22	1,000.00	1,013.36	11.93	2.35
LargeCap Blend Fund II
Class A	1,000.00	990.13	7.17	1,000.00	1,018.00	7.27	1.43
Class B	1,000.00	983.30	12.00	1,000.00	1,013.11	12.18	2.40
Class C	1,000.00	986.73	10.92	1,000.00	1,014.22	11.07	2.18
LargeCap Growth Fund
Class A	1,000.00	1,017.54	6.66	1,000.00	1,018.60	6.67	1.31
Class B	1,000.00	1,012.69	11.87	1,000.00	1,013.41	11.88	2.34
Class C	1,000.00	1,015.24	10.46	1,000.00	1,014.82	10.46	2.06
Class P	1,000.00	1,050.55	0.80^(b)	1,000.00	1,020.97	4.28	0.84
LargeCap Growth Fund I
Class A	1,000.00	1,040.10	7.35	1,000.00	1,018.00	7.27	1.43
Class B	1,000.00	1,030.26	14.07	1,000.00	1,011.34	13.94	2.75
Class C	1,000.00	1,035.26	10.93	1,000.00	1,014.47	10.82	2.13
LargeCap Growth Fund II
Class A	1,000.00	1,007.93	8.55	1,000.00	1,016.69	8.59	1.69
Class C	1,000.00	1,004.07	12.33	1,000.00	1,012.91	12.38	2.44
LargeCap S&P 500 Index Fund
Class A	1,000.00	1,003.61	3.54	1,000.00	1,021.68	3.57	0.70
Class C	1,000.00	1,001.21	6.56	1,000.00	1,018.65	6.61	1.30
LargeCap Value Fund
Class A	1,000.00	978.87	4.94	1,000.00	1,020.21	5.04	0.99
Class B	1,000.00	972.25	11.73	1,000.00	1,013.31	11.98	2.36
Class C	1,000.00	975.34	8.46	1,000.00	1,016.64	8.64	1.70
LargeCap Value Fund III
Class A	1,000.00	975.95	5.68	1,000.00	1,019.46	5.80	1.14
Class B	1,000.00	971.12	9.39	1,000.00	1,015.68	9.60	1.89
Class C	1,000.00	972.00	9.39	1,000.00	1,015.68	9.60	1.89
MidCap Blend Fund
Class A	1,000.00	1,034.13	5.79	1,000.00	1,019.51	5.75	1.13
Class B	1,000.00	1,029.20	10.89	1,000.00	1,014.47	10.82	2.13
Class C	1,000.00	1,030.20	9.98	1,000.00	1,015.38	9.91	1.95
Class P	1,000.00	1,047.69	0.82^(b)	1,000.00	1,020.87	4.38	0.86


SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS, INC.
October 31, 2010 (unaudited)



		Actual			Hypothetical
			Expenses Paid			Expenses Paid
	Beginning	Ending	During Period		Ending	During Period
	Account	Account Value	May 1, 2010 to	Beginning	Account Value	May 1, 2010 to	Annualized
	Value May 1,	October 31,	October 31,	Account Value	October 31,	October 31,	Expense
	2010	2010	2010^(a)	May 1, 2010	2010	2010^(a)	Ratio


MidCap Growth Fund III
Class A	$1,000.00	$1,029.12	$8.85	$1,000.00	$1,016.48	$8.79	1.73%
Class B	1,000.00	1,024.39	12.65	1,000.00	1,012.70	12.58	2.48
Class C	1,000.00	1,026.29	12.67	1,000.00	1,012.70	12.58	2.48
MidCap Value Fund I
Class A	1,000.00	1,009.16	6.74	1,000.00	1,018.50	6.77	1.33
Class B	1,000.00	1,005.02	10.51	1,000.00	1,014.72	10.56	2.08
Class C	1,000.00	1,005.02	10.51	1,000.00	1,014.72	10.56	2.08
Money Market Fund
Class A	1,000.00	1,000.00	1.92	1,000.00	1,023.29	1.94	0.38
Class B	1,000.00	1,000.00	1.92	1,000.00	1,023.29	1.94	0.38
Class C	1,000.00	1,000.00	1.92	1,000.00	1,023.29	1.94	0.38
Principal Capital Appreciation Fund
Class A	1,000.00	991.73	5.27	1,000.00	1,019.91	5.35	1.05
Class B	1,000.00	986.86	10.32	1,000.00	1,014.82	10.46	2.06
Class C	1,000.00	986.94	9.92	1,000.00	1,015.22	10.06	1.98
Class P	1,000.00	1,045.87	0.71^(b)	1,000.00	1,021.42	3.82	0.75
Real Estate Securities Fund
Class A	1,000.00	1,045.12	7.32	1,000.00	1,018.05	7.22	1.42
Class B	1,000.00	1,040.85	11.27	1,000.00	1,014.17	11.12	2.19
Class C	1,000.00	1,041.87	11.32	1,000.00	1,014.12	11.17	2.20
Class P	1,000.00	1,033.41	0.98^(b)	1,000.00	1,020.01	5.24	1.03
Short-Term Income Fund
Class A	1,000.00	1,027.46	4.04	1,000.00	1,021.22	4.02	0.79
Class C	1,000.00	1,022.95	8.52	1,000.00	1,016.79	8.49	1.67
Class P	1,000.00	1,004.54	0.62^(b)	1,000.00	1,021.88	3.36	0.66
SmallCap Blend Fund
Class A	1,000.00	983.35	7.35	1,000.00	1,017.80	7.48	1.47
Class B	1,000.00	977.76	13.56	1,000.00	1,011.49	13.79	2.72
Class C	1,000.00	980.65	10.98	1,000.00	1,014.12	11.17	2.20
SmallCap Growth Fund
Class A	1,000.00	994.44	8.45	1,000.00	1,016.74	8.54	1.68
Class B	1,000.00	989.96	12.69	1,000.00	1,012.45	12.83	2.53
Class C	1,000.00	991.50	11.09	1,000.00	1,014.06	11.22	2.21
SmallCap Growth Fund II
Class A	1,000.00	1,026.06	7.30	1,000.00	1,018.00	7.27	1.43
Class B	1,000.00	1,021.40	11.11	1,000.00	1,014.22	11.07	2.18
Class C	1,000.00	1,020.98	11.10	1,000.00	1,014.22	11.07	2.18
SmallCap Value Fund
Class A	1,000.00	964.78	6.69	1,000.00	1,018.40	6.87	1.35
Class B	1,000.00	959.57	11.31	1,000.00	1,013.66	11.62	2.29
Class C	1,000.00	960.81	10.28	1,000.00	1,014.72	10.56	2.08
Tax-Exempt Bond Fund
Class A	1,000.00	1,042.47	4.63	1,000.00	1,020.67	4.58	0.90
Class B	1,000.00	1,038.52	8.79	1,000.00	1,016.59	8.69	1.71
Class C	1,000.00	1,038.43	8.73	1,000.00	1,016.64	8.64	1.70
Tax-Exempt Bond Fund
(Excluding Interest Expense & Fees)
Class A	1,000.00	1,042.50	4.27	1,000.00	1,020.97	4.24	0.83
Class B	1,000.00	1,038.50	8.43	1,000.00	1,016.83	8.37	1.64
Class C	1,000.00	1,038.40	8.37	1,000.00	1,016.88	8.32	1.63

^(a)Expenses are equal to a fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^(b)Expenses are equal to a fund's annualized expense ratio multiplied by the average account value over the period (September 27, 2010 to October 31, 2010), multiplied by 34/365 (to reflect the period since inception).

Under Maryland law, a Board of Directors oversees the Fund. The Directors have financial or other relevant experience and meet several times during the year to review contracts, Fund activities and the quality of services provided to the Fund. Each director also has the same position with Principal Variable Contracts Funds, Inc. which is also sponsored by Principal Life Insurance Company. Each director holds office for an indefinite term. Directors considered to be “interested persons” as defined in the Investment Company Act of 1940, as amended, as shown below are considered to be interested because of an affiliation with the Manager and Principal Life Insurance Company.

The following directors are considered not to be “interested persons” as defined in the 1940 Act


		Number of
		Portfolios in Fund
		Complex	Other
Name, Position Held with the Fund,	Principal Occupation(s)	Overseen by	Directorships
*Address, and Year of Birth**	During past 5 years	Director	Held by Director**
Elizabeth Ballantine	Principal, EBA Associates	99	Durango Herald, Inc;
Director since 2004			McClatchy
Member, Nominating and Governance			Newspapers, Inc.
Committee
1948

Kristianne Blake	President, Kristianne Gates Blake,	99	Avista Corporation;
Director since 2007	P.S.		Russell Investment
Member, Operations Committee			Company; Russell
1954			Investment Funds

Craig Damos	Formerly, CEO, The Weitz Company	99	None
Director since 2008
Member, Operations Committee
1954

Richard W. Gilbert	President, Gilbert Communications,	99	Calamos Asset
Director since 1985	Inc.		Management, Inc.
Member, Nominating and Governance
Committee
Member, Executive Committee
1940

Mark A. Grimmett	Executive Vice President and CFO,	99	None
Director since 2004	Merle Norman Cosmetics, Inc.
Member, Audit Committee
1960

Fritz S. Hirsch	Formerly, President, Sassy, Inc.	99	Focus Products Group
Director since 2005
Member, Audit Committee
1951

William C. Kimball	Partner, Kimball – Porter Investments	99	Casey’s General Stores,
Director since 1999	L.L.C.		Inc.
Member, Nominating and Governance
Committee
1947

Barbara A. Lukavsky	President and CEO, Barbican	99	None
Director since 1987	Enterprises, Inc.
Member, Nominating and Governance
Committee
1940

Daniel Pavelich	Retired.	99	Catalytic Inc.; Vaagen
Director since 2007			Bros. Lumber, Inc.
Member, Audit Committee
1944

The following directors are considered to be “interested persons” as defined in the 1940 Act, as amended, because of an affiliation with the Manager and Principal Life.


Ralph C. Eucher	Director, Principal Management Corporation (the	99	None
Director, Chairman	“Manager”), since 2008; Chairman, Principal Funds
Member, Executive Committee	Distributor, Inc. (“PFD”) and Princor, since 2008; Senior
1952	Vice President, Principal Life, and Principal Financial
	Group, since 2008; Director, Principal Shareholder Services
	(“PSS”) and Currency Management Committee – London,
	since 2008; Director CCI since 2009; Director, Spectrum,
	since 2005.

Nora M. Everett	President and Director, the Manager, since 2008; Senior	99	None
Director, President and CEO	Vice President, Retirement & Investor Services, Principal
Member, Executive Committee	Life, since 2008; Senior Vice President & Deputy General
1959	Counsel, Principal Life, 2004-2008; Director, PFD, since
	2008; CEO, Princor, since 2009; Director, Princor, PSS,
	Edge, Principal Asset Management Co. (Asia) Limited,
	since 2008; Chairman, PFA since 2010; Director, Principal
	International and Principal International Holding Company,
	LLC, since 2006.

William G. Papesh	Retired December 2007. Prior thereto, President and	99	None
Director	Director of Edge Asset Management, Inc.; President and
Member, Operations Committee	CEO of WM Group of Funds 1987-2006.
1943

*Correspondence intended for each Director who is other than an Interested Director may be sent to 711 High Street, Des Moines, IA 50392.

**Directorships of any company registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of the Securities Exchange Act or any other mutual fund.


Name, Position Held with the Fund,	Principal Occupation(s)
Address, and Year of Birth	During past 5 years
David J. Brown	Vice President, Product & Distribution Compliance, Principal Life; Senior Vice
Chief Compliance Officer	President, PFD, the Manager, and Princor since 2006. Senior Vice President,
711 High Street, Des Moines, IA 50392	PSS, since 2007.
1960

Jill R. Brown	President, PFD since 2010; Senior Vice President/Chief Financial Officer,
Senior Vice President	Princor since 2006; Senior Vice President/Chief Financial Officer, PFD, and PSS,
1100 Investment Blvd, ste 200	since 2007. Senior Vice President/Chief Financial Officer, the Manager, since
El Dorado Hills, CA 95762	2008.
1967

Cary Fuchs	Vice President, PSS, since 2008; FVO, WMSS, 2005-2007; prior thereto,
Senior Vice President of Distribution	Divisional Vice President, BFDS.
1100 Investment Blvd, ste 200
El Dorado Hills, CA 95762
1957

Steve Gallaher	Assistant General Counsel, Principal Life and PFD since 2006; Assistant General
Assistant Counsel	Counsel, PMC, PSS, and Princor since 2007; Prior thereto, self-employed writer.
711 High Street Des Moines, IA 50392
1955

Ernie H. Gillum	Chief Compliance Officer, the Manager, since 2004; Vice President, Product
Vice President, Assistant Secretary	Development, the Manager, and Princor, since 2000; Vice President, PSS, since
711 High Street Des Moines, IA 50392	2007.
1955

Patrick A. Kirchner	Counsel, Principal Life; Assistant General Counsel, the Manager, PGI, and
Assistant Counsel	Princor since 2008.
711 High Street, Des Moines, IA 50392
1960


Carolyn F. Kolks	Counsel, Principal Life, since 2003.
Assistant Tax Counsel
711 High Street, Des Moines, IA 50392
1962

Jennifer A. Mills	Attorney, Principal Life since 2008; Counsel, Princor, PSS, the Manager, and
Assistant Counsel	PFD, since 2009; Registered Product Analyst, Principal Funds, 2007-2008,
711 High Street, Des Moines, IA 50392	Registered Product Development Consultant, Princor 2006-2007; and prior
1973	thereto, Judicial Law Clerk, Iowa Supreme Court.

Layne A. Rasmussen	Vice President and Controller – Mutual Funds, the Manager.
Vice President, Controller, and CFO
711 High Street, Des Moines, IA 50392
1958

Michael D. Roughton	Vice President and Associate General Counsel, Principal Life and Principal
Counsel	Financial Group, since 2001; Counsel, PGI, since 2001; Senior Vice President
711 High Street, Des Moines, IA 50392	and Counsel, the Manager, and Princor, since 2001. Senior Vice President and
1951	Counsel, PFD, since 2007.

The Audit Committee selects the independent auditors for the Fund and oversees the activities of the independent auditors as well as the internal auditors. The committee also receives reports about accounting and financial matters affecting the Fund.

The Executive Committee is selected by the Board. It may exercise all the powers of the Board, with certain exceptions, when the Board is not in session. The Committee must report its actions to the Board.

The Nominating and Governance Committee selects and nominates all candidates who are not “interested persons” of the Fund for election to the Board. The committee also oversees the structure and efficiency of the Board of Directors and the committees the Board establishes, and the activities of the Funds’ Chief Compliance Officer.

The Operations Committee oversees the provision of administrative and distribution services to the Funds, communications with the Funds’ shareholders, and provides review and oversight of the Funds’ operations.

Additional information about the Fund is available in the Prospectuses dated March 1, 2010 and the Statements of Additional Information dated March 1, 2010. These documents may be obtained free of charge by writing or telephoning Principal Funds Distributor, Inc., P.O. Box 10423, Des Moines, IA 50306. Telephone 1-800-222-5852.

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities and the results of the proxy votes for the most recent twelve months ended June 30 may be obtained free of charge by telephoning Principal Funds Distributor, Inc., at 1-800-222-5852, at the Principal Funds website at www.principal.com, or at www.sec.gov.

The Fund files complete schedules of investments with the Securities and Exchange Commission as of January 31 and July 31 of each year on Form N-Q. The Fund’s Form N-Q can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. or on the Commission’s website at www.sec.gov. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330.

During the period covered by this report, the Board of Directors of Principal Funds, Inc. (“PFI”) approved (1) the annual review and renewal of the Management Agreement and various subadvisory agreements for all Funds; (2) an amended Subadvisory Agreement with Barrow, Hanley, Mewhinney & Strauss LLC (“Barrow Hanley”) for the International Value Fund I; (3) an amended Subadvisory Agreement with Brown Investment Advisory Incorporated (“Brown”) for the SmallCap Growth Fund I; (4) an amended Management Agreement with Principal Management Corporation (the “Manager”) related to changes in the fee schedule of the LargeCap Growth Fund I.

Annual Review and Renewal of Management Agreement and Subadvisory Agreements.

At its September 13, 2010 meeting, the Board performed its annual review and renewal process relating to the Management Agreement and the Subadvisory Agreements for all Funds.

Section 15(c) of the Investment Company Act of 1940 (the “1940 Act”) requires the Board, including a majority of the Directors who have no direct or indirect interest in the investment advisory agreements and who are not “interested persons” of PFI, as defined in the 1940 Act (the “Independent Directors”), annually to review and to consider the continuation of: (1) the Management Agreement between the Manager and PFI, on behalf of each of the sixty-four (64) series of PFI (each series is referred to as a “Fund”) (2) the Subadvisory Agreements between the Manager and each of AllianceBernstein L.P.; American Century Investment Management, Inc.; Inc.; Barrow Hanley; BlackRock Financial Management, Inc.; Brown; Causeway Capital Management LLC.; Clearbridge Advisors, LLC; Columbus Circle Investors (“Columbus Circle”); Credit Suisse Asset Management LLC; Dimensional Fund Advisors LP; Edge Asset Management Inc. (“Edge”); Emerald Advisors, Inc.; Essex Investment Management Company, LLC; Goldman Sachs Asset Management, L.P.; Guggenheim Investment Management, LLC; Invesco Advisers, Inc.; J.P. Morgan Investment Management, Inc.; Jacobs Levy Equity Management, Inc.; Jennison Associates, LLC; Los Angeles Capital Management and Equity Research, Inc.; Mellon Capital Management Corporation; Montag & Caldwell, LLC; Neuberger Berman Fixed Income LLC; Pacific Investment Management Company LLC; Principal Real Estate Investors, LLC (“PRIN”); Principal Global Investors, LLC (“PGI”); Pyramis Global Advisors, LLC; Schroder Investment Management North America Inc. (“Schroder” and including the sub-subadvisory agreement among the Manager, Schroder and Schroder Investment Management North America Limited); Spectrum Asset Management, Inc. (“Spectrum”); Tortoise Capital Advisors, LLC; T. Rowe Price Associates, Inc.; Thompson Siegel & Walmsley, LLC; Turner Investment Partners, Inc.; UBS Global Asset Management (Americas), Inc.; Vaughan Nelson Investment Management, LP; and Westwood Management Corp. (collectively, the “Subadvisors”). The Management Agreement and the Subadvisory Agreements are collectively referred to as the “Advisory Agreements.” The Board, including the Independent Directors, considered the factors and reached the conclusions described below relating to the continuation of the Advisory Agreements. In evaluating the Advisory Agreements, the Board, including Independent Directors, reviewed a broad range of information requested for this purpose by the Independent Directors, including, among other information, information regarding performance, advisory fees, total expenses, profitability from the Advisory Agreements to the Manager and information about economies of scale. The Board reviewed the materials provided and, with the assistance of independent legal counsel, concluded that it was provided all information reasonably necessary to evaluate the Advisory Agreements.

With regard to the Manager, the Board considered, among the factors, that the Manager and its affiliates have demonstrated a commitment to support the Funds, including undertakings to cap Fund expenses to provide competitive expense ratios for shareholders and the implementation of the “Core Satellite” structure for certain Funds in an effort to achieve improved and more consistent performance results. The Board considered the nature, quality and extent of services provided by the Manager under the Management Agreement, including administrative services. In addition, the Board considered the experience and skills of senior management leading fund operations, the experience and skills of the personnel performing the functions under the Management Agreement and the resources made available to such personnel, the ability of the Manager to attract and retain high-quality personnel, and the organizational depth and stability of the Manager. The Board concluded that appropriate resources were provided under the Management Agreement. The Board also considered the delegation of day-to-day portfolio management responsibility to the Subadvisors and the due diligence program developed by the Manager for identifying, recommending, monitoring and replacing Subadvisors. The Board concluded that this due diligence process was working well. The Board also considered the compliance program established by the Manager and the level of compliance attained for the Funds.

With regard to each Subadvisor, the Board considered the nature, quality and extent of services provided under each Subadvisory Agreement. The Board considered the reputation, qualifications and background of each Subadvisor, investment approach of each Subadvisor, the experience and skills of investment personnel responsible for the day-to-day management of each Fund, and the resources made available to such personnel. The Board also considered each Subadvisors’ compliance with investment policies and general legal compliance. In addition, the Board considered the analysis provided under the Manager’s due-diligence program, which resulted in the Manager recommending that each Subadvisory Agreement be continued.

The Board reviewed each Fund’s investment performance over longer-term periods (both for a blended three- and five-year period and for a three-year period), and compared those returns to various agreed-upon performance measures, including peer group data based upon a broad-based, industry category determined by Morningstar. For Funds or Subadvisors that did not have a three-year history, the Board reviewed performance for a one-year period. The Board also considered whether investment results were consistent with each Fund’s investment objective(s) and policies. For most Funds, the Board concluded that the Fund’s investment returns met or exceeded acceptable levels of investment performance. There were some Funds, or certain Subadvisors for a multi-manager Fund, that had not attained during the relevant period a level of investment performance considered satisfactory by the Board. For such Funds, the Board also considered the longer-term performance of the Funds. The Board concluded that the Manager has in place an effective due diligence process to monitor investment performance, to encourage remedial action and to make changes in the Subadvisor at the appropriate time, if necessary.

As to each Subadvisor for a Fund, the Manager had advised the Board that either the investment services provided by the Subadvisor to the Fund were reasonable or the Subadvisor’s longer-term track record justified continuing the contract with more in-depth monitoring. Based upon all relevant factors, the Board concluded that either: (i) the investment performance of each Subadvisor for a Fund either met or exceeded acceptable levels of investment performance; or (ii) although the Fund experienced underperformance from the subject Subadvisor, based upon that Fund’s particular circumstances, it was in the best interests of the Fund to continue to closely monitor performance and to renew the Subadvisory Agreements. In each case involving underperformance, the Board concluded that the Manager was providing effective monitoring.

The Board considered each Fund’s management fees. The Board received information, based on data supplied by Lipper, comparing each Fund’s contractual management fee (at current asset levels and at theoretical asset levels), actual (after fee waivers) management fee (at current asset levels), actual non-management fees (at current asset levels) and actual total expense ratio (at current asset levels for Class A shares) to advisory fees and expense ratios of mutual funds in a narrow peer group independently selected by Lipper (“Expense Group”) and a broad-based, industry category defined by Lipper (“Expense Universe”). For PFI Funds that did not offer Class A shares, the information provided was based upon Class I shares. In addition, the Board also reviewed information for Class I shares for certain Funds for which Class A shares were a small component of the Fund’s assets.

In evaluating the management fees, the Board considered a variety of factors, including the amount of the fees, breakpoints, comparison to fees of peer group funds and to other funds managed by the Manager, subadvisory fees paid, services provided, investment performance, total net expense ratios, profitability and expense caps and fee waivers. For most Funds, actual management fees and net expense ratios were within the third quartile or better when compared to their Expense Group. For some Funds, although actual management fees were higher than the third quartile, total net expense ratios were within the third quartile or better. The Board considered specific factors relevant to its review of certain Funds with both actual management fees and total net expenses higher than the third quartile as compared to their Expense Group. For the SAM Portfolios, the Board determined that the Manager’s unique active asset allocation strategy justified higher management fees than the Funds’ peer groups and that the total expense ratios (including the expenses of the underlying funds) compare favorably. The Board considered that some PFI Funds have different management fees from certain other comparable funds managed by the Manager and noted the reasons cited by the Manager for the differing fees.

The Board also considered that the Manager had previously contractually agreed to reduce the management fees for fourteen PFI Funds that have recently implemented the “Core Satellite” structure.

With respect to the Board’s review of the expense caps in place with respect to certain Funds, the Board considered the Manager’s proposals to extend the expense caps in place for most of such Funds for an additional year, to raise the expense cap levels for one Fund and to let expense caps for certain other Funds expire, based upon the individual circumstances of these Funds. The Board also considered the Manager’s proposals to either add new expense caps or to lower the expense cap levels (thereby decreasing the effective expense ratios) applicable to certain share classes of the International Growth Fund, the SmallCap Blend Fund and the SmallCap Growth Fund and to convert certain waivers into expense caps for certain classes of the MidCap Blend Fund.

Considering all factors it deemed relevant, the Board concluded that the management fee schedule for each Fund was reasonable and appropriate in light of the nature and quality of services provided by the Manager and other relevant factors.

The Board reviewed detailed information regarding revenues the Manager receives under the Management Agreement, as well as the estimated direct and indirect costs the Manager incurs in providing to each Fund the services described in the Management Agreement, for the year ended December 31, 2009. The Board also receives throughout the year information regarding revenue sharing payments made by the Manager. The Board also considered the returns on revenue generated in connection with the payment of subadvisory fees to affiliated Subadvisors (PGI, PRIN, Edge, Columbus Circle and Spectrum). The Board concluded that the management fee for each Fund was reasonable, taking into account the profitability percentages the Manager provided.

The Board considered whether there are economies of scale with respect to the management of each Fund and whether the Funds benefit from any such economies of scale through breakpoints in fees. The Board noted that as a result of a 2010 Board Breakpoint Task Force review of Fund breakpoints, additional breakpoints were added for certain Funds effective April 1, 2010. In addition, as a part of the contract review process, management offered additional breakpoints for two Funds, LargeCap Value Fund I and International Fund I. The Board then reviewed the levels at which breakpoints occur and the amount of the reductions. The Board considered whether the effective management fee rate for each Fund under the applicable Management Agreement is reasonable in relation to the asset size of such Fund. The Board concluded that the fee schedule for each Fund reflects an appropriate level of sharing of any economies of scale.

The Board noted that the management fees for the Bond Market Index Fund, International Equity Index Fund, LargeCap S&P 500 Index Fund, MidCap S&P 400 Index Fund, SmallCap S&P 600 Index Fund and the LifeTime Funds series do not include breakpoints. Although their management fee schedules do not contain breakpoints, the Board noted that each of these Funds has a relatively low basis point fee for all Fund assets.

The Board considered each Fund’s subadvisory fee, noting that the Manager compensates each Subadvisor from its own management fee. The Board also received industry data supplied by Lipper. The Board considered whether there are economies of scale with respect to the subadvisory services provided to each Fund and, if so, whether the subadvisory fees reflect such economies of scale through breakpoints in fees. In addition, in evaluating the subadvisory fees and the factor of profitability, with respect to unaffiliated Subadvisors, the Board considered that the subadvisory fee rate was negotiated at arm’s-length between the Manager and each Subadvisor. The Board considered the profitability of the affiliated Subadvisors in conjunction with their review of the profitability of the Manager.

The Board also considered the character and amount of other incidental benefits received by the Manager and its affiliates and each Subadvisor from their relationships with the Funds. The Board also considered as a part of this analysis each Subadvisor’s soft dollar practices and brokerage practices. The Board concluded that management and subadvisory fees for each Fund were reasonable in light of these benefits.

Based upon all of the information it considered and the conclusions it reached, the Board determined unanimously that the terms of each Advisory Agreement continue to be fair and reasonable and that the continuation of each Advisory Agreement, with the actions proposed by the Manager, is in the best interests of each Fund.

At its August 9, 2010 meeting, the Board considered whether to approve an amended subadvisory agreement between the Manager and Barrow Hanley for the International Value Fund I. At its September 13, 2010 meeting, the Board considered whether to approve an amended subadvisory agreement between the Manager and Brown for the SmallCap Growth Fund I. The International Value Fund I and SmallCap Growth Fund I are referred to as a “Fund” or together as the “Funds.”

The Board considered the nature, quality and extent of services expected to be provided under each subadvisory agreement. The Board considered the reputation, qualifications and background of each subadvisor, investment approach of each subadvisor, the experience and skills of each subadvisor’s investment personnel who would be responsible for the day-to-day management of the Fund, and the resources made available to such personnel. The Board noted that each subadvisor provides subadvisory services for other series of PFI. In addition, the Board considered the Manager’s program for identifying, recommending, monitoring and replacing subadvisors for the Funds and that the Manager recommended each subadvisor for the applicable Fund based upon that program.

With respect to each proposed subadvisor, the Board reviewed performance information, including the historical performance of the subadvisor’s composite portfolio with an investment strategy similar to the strategy the subadvisor had been proposed to manage for the Fund, as compared to its Morningstar peer group and relevant benchmark index. The Board concluded, based on this information, that investment performance was expected to be satisfactory.

With respect to the subadvisory fees proposed to be paid to each subadvisor, the Board considered that the subadvisory fee rate was negotiated at arm’s length between the Manager and such subadvisor. The Board also compared each proposed fee schedule to that of the existing subadvisors for each Fund. The Board also considered the fees charged by each subadvisor to its other subadvisory clients with the same investment mandate. The Board considered whether there are economies of scale with respect to the subadvisory services to be provided to the Fund under each proposed subadvisory agreement. The Board noted the breakpoint included in each fee schedule and concluded that each fee schedule reflects an appropriate recognition of economies of scale at the Fund’s current asset level. In evaluating the factor of profitability, the Board considered that the Manager will compensate each subadvisor from its own management fees and the Manager had negotiated each subadvisory agreement with each subadvisor at arm’s-length. On the basis of the information provided, the Board concluded that the proposed subadvisory fees were reasonable.

The Board also considered the character and amount of other incidental benefits to be received by the subadvisors. The Board noted the Manager’s representation that each subadvisor has a policy to use soft dollars within the Section 28(e) safe harbor.

Based upon all of the information considered and the conclusions reached, the Board determined that the terms of the subadvisory agreements were fair and reasonable and that approval of the sub-advisory agreements was in the best interests of the Funds.

On June 14, 2010, the Board considered whether to approve an amended and restated Management Agreement in connection with the proposal to reduce the management fee for LargeCap Growth Fund I (the “Fund”).

The Board considered the Manager’s representation that the reduction of the Fund’s management fee would not reduce the quality or quantity of the services provided by the Manager to the Fund and that the Manager’s obligations under the Management Agreement would remain the same in all material respects.

The Board considered that they had last approved the Management Agreement for the Fund during the annual contract renewal process that concluded at the Board’s September 2009 meeting. They noted that during the annual contract renewal process, they had considered the nature, quality and extent of services provided by the Manager under the Management Agreement and had concluded, based on the information provided, that the terms of the Management Agreement were reasonable and that approval of the Management Agreement was in the best interests of the Fund.

Special Meeting of Shareholders
Principal Funds, Inc. – LargeCap Blend Fund I
Held July 15, 2010

Special Meeting of Shareholders
Principal Funds, Inc. – Short-Term Bond Fund
Held July 15, 2010

Long Term Capital Gain Dividends. Certain of the Funds distributed long term capital gain dividends during the fiscal year ended October 31, 2010. Details of designated long term capital gain dividends for federal income tax purposes are shown in the notes to financial statements.

Dividend Received Deduction. For corporate shareholders, the percentage of ordinary income distributions (dividend income and short-term gains, if any) for the year ended October 31, 2010, that qualifies for the dividend received deduction is as follows:

Qualified Dividend Income. Certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of ordinary income distributions for the fiscal year ended October 31, 2010, taxed at a maximum rate of 15% is as follows

Foreign Taxes Paid. The following Funds elect under the Internal Revenue Code Section 853 to pass through foreign taxes paid by each Fund to its shareholders. The total amount of foreign taxes passed through to shareholders on a per share basis for the year ended October 31, 2010, are as follows:

This information is given to meet certain requirements of the Internal Revenue Code and should not be used by shareholders for preparing their income tax returns.

For tax return preparation purposes, please refer to the information supplied with the 1099-DIV form you will receive in 2011 from the Fund’s transfer agent.

GLOBAL INVESTMENT MANAGEMENT • ASSET ALLOCATION EXPERTISE • RETIREMENT LEADERSHIP

Distributed by: Principal Funds Distributor, Inc., Member FINRA, 1100 Investment Blvd., Suite 200, El Dorado Hills, CA 95762

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 annual report is published as general information for the shareholders of Principal Funds. This material is not authorized for distribution unless preceded or accompanied by a current prospectus that includes more information regarding the risk factors, expenses, policies, and objectives of the funds. Investors should read the prospectus carefully before investing.

To obtain an additional prospectus, please contact your financial professional or call 800-222-5852.

Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., 800-222-5852, 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.

GLOBAL INVESTMENT MANAGEMENT • ASSET ALLOCATION EXPERTISE • RETIREMENT LEADERSHIP

On behalf of everyone at Principal Funds, I thank you for your continued support.

¹Business Cycle Dating Committee, National Bureau of Economic Research, September 20, 2010 (www.nber.org)

²On the Other Hand: Economic Insights, 2010 First Quarter, April, August and October editions, by Bob Baur and the Principal Global Investors Economic Committee. Bob Baur is a managing director and chief global economist for Principal Global Investors, one of the sub-advisors of the Principal Funds.

³International and global investment options are subject to additional risk due to fluctuating exchange rates, foreign accounting and financial policies, and other economic and political environments.

⁴Returns: U.S. equities: Russell 3000 Index; emerging int’l markets: MSCI EM Index; developed int’l markets: MSCI EAFE Index ⁵Asset allocation/diversification does not guarantee a profit or protect against a loss. Past performance is no guarantee of future results. ⁶Source: FRC Quarterly LifeCycle Report, June 30, 2010

Weak housing data and high unemployment continued to drag on the U.S. economy during the one-year period as Gross Domestic Product (GDP) showed rather modest growth:

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

Exposure to specialty asset classes through the Preferred Securities Fund, sub-advised by Spectrum Asset Management, the High Yield Fund I, co-sub-advised by J.P. Morgan and Neuberger Berman, and the International Emerging Markets Fund, sub-advised by Principal Global Investors, contributed positively to overall returns for the Principal LifeTime portfolios, as these funds delivered strong performance for the 12-month period. Also, the fixed income component of the Principal LifeTime portfolios significantly outperformed the Barclays Capital Aggregate Bond Index as credit markets improved. In particular, the Bond & Mortgage Securities Fund, sub-advised by Principal Global Investors, rebounded substantially over the period, outpacing the Barclays Capital Aggregate Bond Index as well as its Morningstar Intermediate-Term Bond peer group median. Additionally, the LargeCap Growth Fund I, co-sub-advised by T. Rowe Price and Brown Advisory, added value as it significantly outpaced the Russell 1000 Growth Index as well as the broad Russell 3000 Index. The allocations to the LargeCap Value Fund, sub-advised by Principal Global Investors, and LargeCap Value Fund I, co-sub-advised by UBS and Thompson, Siegel, & Walmsley, detracted from relative returns as both funds underperformed the Russell 1000 Value Index as well as the broad Russell 3000 Index. Also, the Real Estate Securities Fund, sub-advised by Principal Real Estate Investors, underperformed the MSCI U.S. REIT Index for the 12-month period, detracting from the relative performance of the Principal LifeTime portfolios.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%. See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Where gross and net expenses differ, Principal Management Corporation has contractually agreed to limit the investment option’s expenses. Expense limits apply through 2/28/11. Gross and net expense ratios reflect the total annual fund operating expenses of the investment options are subject to interest rate risk, and their value will decline as interest rates rise.

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%). See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Average annual total returns* including sales charge as of 9/30/10: Class A Shares:5.47% (1-year); 0.51% (5-year); 2.84% (since inception) Class B Shares: 5.80% (1-year); 0.53% (5-year); 2.66% (since inception)

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%). See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Average annual total returns* including sales charge as of 9/30/10: Class A Shares: 5.43% (1-year); 0.23% (5-year); 2.48% (since inception) Class B Shares: 5.67% (1-year); 0.31% (5-year); 2.34% (since inception)

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%). See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Average annual total returns* including sales charge as of 9/30/10: Class A Shares: 4.98% (1-year); -0.15% (5-year); 2.33% (since inception) Class B Shares: 5.23% (1-year); -0.09% (5-year); 2.18% (since inception)

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 5.5%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%). See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Average annual total returns* including sales charge as of 9/30/10: Class A Shares: 4.72% (1-year); -0.31% (5-year); 1.73% (since inception) Class B Shares: 4.97% (1-year); -0.20% (5-year); 2.09% (since inception)

What contributed to or detracted from Fund performance during the fiscal year?

The Principal LifeTime Funds invest wholly in the Institutional class shares of the underlying funds. Any specific performance comparisons of the underlying funds correspond to that share class.

A sales charge may apply as follows: Class A shares: maximum up-front sales charge of 3.75%; Class B shares: contingent deferred sales charge of 5%, which will decline over 5 years (5-5-4-3-2-0%). See the prospectus for details. Performance listed with sales charge reflects the maximum sales charge.

Portfolio Managers:

Charlie Averill, CFA
Jill R. Cuniff
Todd Jablonski, CFA
Edge Asset Management , Inc

What contributed to or detracted from Portfolio performance during the fiscal year?

The Principal Strategic Asset Management (SAM) Portfolios invest wholly in the institutional class shares of the underlying funds.

Real estate investment trust (REIT) holdings were a positive factor for the portfolio as REITs had a very strong year, with the FTSE NAREIT Equity REIT Index returning more than 40%. Also, the portfolio's large- and mid-cap growth holdings outperformed their respective benchmarks (the Russell Top 200 Growth Index and the Russell Midcap Growth Index), contributing positively to the portfolio. High-yield bond exposure was another positive contributor, as high-yield bonds outperformed most other fixed income assets during the period. International stocks in developed markets, as reflected by the MSCI EAFE Index, underperformed domestic stocks for much of the year, causing the portfolio's international holdings to detract from overall portfolio performance. The portfolio's cash holdings also were a drag on performance, as cash underperformed other asset classes. Additionally, as mid- and small-cap stocks performed better than large-caps during the year, the portfolio's tactical overweight of large-caps detracted from performance.

Class A Shares: 5.12% (1-year); 2.33% (5-year); 2.90% (10-year); 6.41% (since inception) Class B Shares: 5.41% (1-year); 2.36% (5-year); 2.86% (10-year); 6.38% (since inception) Class C Shares: 9.43% (1-year); 2.73% (5-year); 2.72% (10-year); 6.01% (since inception)

* Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance of the Portfolio’s oldest share class, adjusted for the fees and expenses of the share class shown. Performance does not reflect the impact of federal, state, or municipal taxes. If it did, performance would be lower. The Portfolio’s performance between 1996 and 1999 benefited from agreements to limit the portfolio’s expenses. Periods of less than one year are not annualized.

Portfolio Managers:

Charlie Averill, CFA
Jill R. Cuniff
Todd Jablonski, CFA
Edge Asset Management , Inc

What contributed to or detracted from Portfolio performance during the fiscal year?

The Principal Strategic Asset Management (SAM) Portfolios invest wholly in the institutional class shares of the underlying funds.

High-yield bond exposure was a positive contributor, as high-yield bonds outperformed most other fixed income assets during the period. Also, real estate investment trust (REIT) holdings were a primary contributor for the portfolio as REITs had a very strong year, with the FTSE NAREIT Equity REIT Index returning more than 40%. Additionally, the portfolio's investment-grade mortgage- and asset-backed holdings outperformed their respective benchmarks (Barclays Capital U.S. Credit Index and Barclays Capital U.S. Mortgage Backed Securities Index), which benefited performance. The portfolio's cash holdings were a drag on performance, as cash underperformed other asset classes. Also, international stocks in developed markets, as reflected by the MSCI EAFE Index, underperformed domestic stocks for much of the year, causing the portfolio's international holdings to detract from overall portfolio performance. Additionally, as mid- and small-cap stocks performed better than large-caps during the year, the portfolio's tactical overweight of large-caps detracted from performance.

Class A Shares: 4.50% (1-year); 3.31% (5-year); 3.87% (10-year); 4.54% (since inception) Class B Shares: 4.80% (1-year); 3.33% (5-year); 3.82% (10-year); 4.52% (since inception) Class C Shares: 8.88% (1-year); 3.71% (5-year); 3.71% (10-year); 4.17% (since inception)

^ As of 8/1/00, the SAM Conservative Balanced Portfolio’s objectives and strategies changed. This information should be considered when reviewing past performance. Please see the prospectus for additional information.

* Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance of the Portfolio’s oldest share class, adjusted for the fees and expenses of the share class shown. Performance does not reflect the impact of federal, state, or municipal taxes. If it did, performance would be lower. The Portfolio’s performance between 1996 and 2003 benefited from agreements to limit the portfolio’s expenses. Periods of less than one year are not annualized.

Portfolio Managers:

Charlie Averill, CFA
Jill R. Cuniff
Todd Jablonski, CFA
Edge Asset Management , Inc

What contributed to or detracted from Portfolio performance during the fiscal year?

The Principal Strategic Asset Management (SAM) Portfolios invest wholly in the institutional class shares of the underlying funds.

Class A Shares: 5.06% (1-year); 0.87% (5-year); 1.46% (10-year); 6.10% (since inception) Class B Shares: 5.40% (1-year); 0.92% (5-year); 1.40% (10-year); 6.05% (since inception) Class C Shares: 9.39% (1-year); 1.26% (5-year); 1.27% (10-year); 5.68% (since inception)

Portfolio Managers:

Charlie Averill, CFA
Jill R. Cuniff
Todd Jablonski, CFA
Edge Asset Management , Inc

What contributed to or detracted from Portfolio performance during the fiscal year?

The Principal Strategic Asset Management (SAM) Portfolios invest wholly in the institutional class shares of the underlying funds.

High-yield bond exposure was a primary positive contributor, as high-yield bonds outperformed most other fixed income assets during the period. Also, the portfolio's investment-grade mortgage- and asset-backed holdings outperformed their respective benchmarks (Barclays Capital U.S. Credit Index and Barclays Capital U.S. Mortgage Backed Securities Index), which benefited performance. Additionally, for much of the period the portfolio held an underweight to large-cap value stocks, which contributed positively as large-cap value stocks underperformed. The portfolio's high-yield holdings underperformed the Barclays Capital U.S. Corporate High Yield Index, partially offsetting the strong gains in that sector. The portfolio's cash holdings also were a drag on performance, as cash underperformed other asset classes. Additionally, as mid-and small-cap stocks performed better than large-caps during the year, the portfolio's tactical overweight of large-caps detracted from performance.

Class A Shares: 6.42% (1-year); 4.08% (5-year); 4.48% (10-year); 5.96% (since inception) Class B Shares: 4.65% (1-year); 3.73% (5-year); 4.24% (10-year); 5.80% (since inception) Class C Shares: 8.76% (1-year); 4.10% (5-year); 4.09% (10-year); 5.41% (since inception)

Portfolio Managers:

Charlie Averill, CFA
Jill R. Cuniff
Todd Jablonski, CFA
Edge Asset Management , Inc

What contributed to or detracted from Portfolio performance during the fiscal year?

The Principal Strategic Asset Management (SAM) Portfolios invest wholly in the institutional class shares of the underlying funds.

Real estate investment trust (REIT) holdings were a positive factor for the portfolio as REITs had a very strong year, with the FTSE NAREIT Equity REIT Index returning more than 40%. Also, the portfolio's large- and mid-cap growth holdings outperformed their respective benchmarks (the Russell Top 200 Growth Index and the Russell Midcap Growth Index), contributing positively to the portfolio. Additionally, for much of the period the portfolio held an underweight to large-cap value stocks, which contributed positively as large-cap value stocks underperformed. International stocks in developed markets, as reflected by the MSCI EAFE Index, underperformed domestic stocks for much of the year, causing the portfolio's international holdings to detract from overall portfolio performance. The portfolio's cash holdings also were a drag on performance, as cash underperformed other asset classes. Additionally, as mid- and small-cap stocks performed better than large-caps during the year, the portfolio's tactical overweight of large-caps detracted from performance.

Class A Shares: 5.15% (1-year); -0.04% (5-year); 0.40% (10-year); 6.22% (since inception) Class B Shares: 5.46% (1-year); 0.01% (5-year); 0.36% (10-year); 6.19% (since inception) Class C Shares: 9.46% (1-year); 0.34% (5-year); 0.22% (10-year); 5.78% (since inception)

Includes publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered.

Covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).

A benchmark intended to represent a relevant proxy for market and Portfolio performance. It is allocated as follows: SAM Balanced Portfolio: 60% S&P 500 and 40% Barclays Capital Aggregate Bond Index; SAM Conservative Balanced Portfolio: 40% S&P 500 and 60% Barclays Capital Aggregate Bond Index; SAM Conservative Growth Portfolio: 80% S&P 500 and 20% Barclays Capital Aggregate Bond Index; and SAM Flexible Income Portfolio: 25% S&P 500 and 75% Barclays Capital Aggregate Bond Index.

Includes all tax qualified REITs with common shares traded on the New York Stock Exchange, American Stock Exchange or NASDAQ National Market List that meet specific minimum size, liquidity and free float adjustment criteria.

A broad-based, capitalization-weighted index of equity markets representing 21 countries in Europe, Australasia, and the Far East.

A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of Europe, the Middle East & Africa.

A total-return index comprised of the most actively traded real estate investment trusts and designed to be a measure of real estate equity performance.

Intermediate-term bond portfolios invest primarily in corporate and other investment-grade U.S. fixed-income issues and have durations of 3.5 to six years (or, if duration is unavailable, average effective maturities of four to 10 years). These portfolios are less sensitive to interest rates, and therefore less volatile, than portfolios that have longer durations.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime 2010 Fund. The index weightings adjust over time as the portfolio changes to become gradually more conservative.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime 2020 Fund. The index weightings adjust over time as the portfolio changes to become gradually more conservative.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime 2030 Fund.

The index weightings adjust over time as the portfolio changes to become gradually more conservative.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime 2040 Fund. The index weightings adjust over time as the portfolio changes to become gradually more conservative.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime 2050 Fund. The index weightings adjust over time as the portfolio changes to become gradually more conservative.

Composed of underlying indices that represent the target asset allocation weightings of the Principal LifeTime Strategic Income Fund.

Measures the performance of those Russell 1000® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of the highest-ranking 1,000 stocks in the Russell 3000® Index.

Measures the performance of those Russell 1000® Index securities with lower price-to-book ratios and lower forecasted growth values.

Measures the performance of those Russell 3000® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.

Measures the performance of those Russell 3000® Index securities with lower price-to-book ratios and lower forecasted growth values.

Measures the performance of those Russell Midcap® Index securities with higher price-to-book ratios and higher forecasted growth values.

Measures the performance of the 800 smallest stocks in the Russell 1000® Index.

Measures the performance of the largest 200 securities in the Russell 3000® Index.

A market-capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market.


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010



	Principal LifeTime		Principal LifeTime	Principal LifeTime
Amounts in thousands, except per share amounts	2010 Fund		2020 Fund	2030 Fund
Investment in affiliated securities--at cost	$ 1,768,181		$ 4,799,073	$ 4,303,579
Assets
Investment in affiliated securities--at value	$ 1,762,595		$ 4,776,549	$ 4,302,321
Receivables:
Dividends and interest		1,407	1,936	1,261
Expense reimbursement from Manager		5	7	8
Expense reimbursement from Underwriter		17	47	43
Fund shares sold		1,137	927	1,341
Total Assets	1,765,161		4,779,466	4,304,974
Liabilities
Accrued management and investment advisory fees		45	120	108
Accrued administrative service fees		22	54	50
Accrued distribution fees		132	346	318
Accrued service fees		82	207	191
Accrued transfer agent fees		37	98	103
Accrued directors' expenses		5	17	14
Accrued other expenses		33	55	55
Payables:
Fund shares redeemed		484	4,376	9,292
Total Liabilities		840	5,273	10,131
Net Assets Applicable to Outstanding Shares	$ 1,764,321		$ 4,774,193	$ 4,294,843
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 1,940,826		$ 5,030,841	$ 4,484,304
Accumulated undistributed (overdistributed) net investment income (loss)		16,666	25,843	14,509
Accumulated undistributed (overdistributed) net realized gain (loss)	(187,585 )		(259,967 )	(202,712 )
Net unrealized appreciation (depreciation) of investments		(5,586 )	(22,524 )	(1,258 )
Total Net Assets	$ 1,764,321		$ 4,774,193	$ 4,294,843
Capital Stock (par value: $.01 a share):
Shares authorized		585,000	785,000	885,000
Net Asset Value Per Share:
Class A: Net Assets	$ 38,183		$ 82,683	$ 62,470
Shares Issued and Outstanding		3,412	7,178	5,531
Net Asset Value per share	$ 11.19		$ 11.52	$ 11.30
Maximum Offering Price	$ 11.84		$ 12.19	$ 11.95
Class B: Net Assets		N/A	$ 8,573	$ 7,929
Shares Issued and Outstanding			745	701
Net Asset Value per share			$ 11.51 ^(a)	$ 11.32 ^(a)
Class J: Net Assets	$ 206,407		$ 552,609	$ 515,947
Shares Issued and Outstanding		18,602	48,430	45,928
Net Asset Value per share	$ 11.10 ^(a)		$ 11.41 ^(a)	$ 11.23 ^(a)
Institutional: Net Assets	$ 1,130,797		$ 3,146,852	$ 2,804,667
Shares Issued and Outstanding		101,339	274,180	248,715
Net Asset Value per share	$ 11.16		$ 11.48	$ 11.28
R-1: Net Assets	$ 24,103		$ 58,931	$ 50,109
Shares Issued and Outstanding		2,185	5,187	4,490
Net Asset Value per share	$ 11.03		$ 11.36	$ 11.16
R-2: Net Assets	$ 42,654		$ 107,791	$ 99,779
Shares Issued and Outstanding		3,871	9,512	8,936
Net Asset Value per share	$ 11.02		$ 11.33	$ 11.17
R-3: Net Assets	$ 96,491		$ 234,218	$ 222,202
Shares Issued and Outstanding		8,747	20,609	19,819
Net Asset Value per share	$ 11.03		$ 11.36	$ 11.21
R-4: Net Assets	$ 80,377		$ 216,623	$ 194,301
Shares Issued and Outstanding		7,263	19,019	16,907
Net Asset Value per share	$ 11.07		$ 11.39	$ 11.49
R-5: Net Assets	$ 145,309		$ 365,913	$ 337,439
Shares Issued and Outstanding		13,096	32,035	29,979
Net Asset Value per share	$ 11.10		$ 11.42	$ 11.26


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010



				Principal LifeTime
	Principal LifeTime		Principal LifeTime	Strategic Income
Amounts in thousands, except per share amounts	2040 Fund		2050 Fund	Fund
Investment in affiliated securities--at cost	$ 2,514,627		$ 1,052,385	$ 658,621
Assets
Investment in affiliated securities--at value	$ 2,529,421		$ 1,061,613	$ 673,813
Receivables:
Dividends and interest		508	146	885
Expense reimbursement from Manager		15	3	4
Expense reimbursement from Underwriter		20	5	5
Fund shares sold		864	617	83
Total Assets	2,530,828		1,062,384	674,790
Liabilities
Accrued management and investment advisory fees		63	27	17
Accrued administrative service fees		29	11	9
Accrued distribution fees		164	49	46
Accrued service fees		109	41	26
Accrued transfer agent fees		75	29	20
Accrued directors' expenses		7	1	–
Accrued other expenses		43	21	18
Payables:
Fund shares redeemed		9,071	3,152	1,836
Total Liabilities		9,561	3,331	1,972
Net Assets Applicable to Outstanding Shares	$ 2,521,267		$ 1,059,053	$ 672,818
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 2,590,755		$ 1,083,518	$ 709,640
Accumulated undistributed (overdistributed) net investment income (loss)		4,252	927	9,397
Accumulated undistributed (overdistributed) net realized gain (loss)		(88,534 )	(34,620 )	(61,411 )
Net unrealized appreciation (depreciation) of investments		14,794	9,228	15,192
Total Net Assets	$ 2,521,267		$ 1,059,053	$ 672,818
Capital Stock (par value: $.01 a share):
Shares authorized		600,000	500,000	500,000
Net Asset Value Per Share:
Class A: Net Assets	$ 38,484		$ 23,723	$ 25,982
Shares Issued and Outstanding		3,428	2,177	2,377
Net Asset Value per share	$ 11.23		$ 10.90	$ 10.93
Maximum Offering Price	$ 11.88		$ 11.53	$ 11.36
Class B: Net Assets	$ 5,620		$ 1,783	$ 840
Shares Issued and Outstanding		505	165	78
Net Asset Value per share	$ 11.13 ^(a)		$ 10.79 ^(a)	$ 10.81 ^(a)
Class J: Net Assets	$ 246,236		$ 54,059	$ 61,486
Shares Issued and Outstanding		21,817	5,082	5,685
Net Asset Value per share	$ 11.29 ^(a)		$ 10.64 ^(a)	$ 10.82 ^(a)
Institutional: Net Assets	$ 1,716,164		$ 788,351	$ 459,110
Shares Issued and Outstanding		150,938	72,600	42,171
Net Asset Value per share	$ 11.37		$ 10.86	$ 10.89
R-1: Net Assets	$ 32,593		$ 13,401	$ 11,735
Shares Issued and Outstanding		2,901	1,248	1,087
Net Asset Value per share	$ 11.24		$ 10.74	$ 10.80
R-2: Net Assets	$ 55,281		$ 24,165	$ 16,425
Shares Issued and Outstanding		4,918	2,250	1,522
Net Asset Value per share	$ 11.24		$ 10.74	$ 10.79
R-3: Net Assets	$ 125,392		$ 42,918	$ 31,798
Shares Issued and Outstanding		11,151	3,988	2,953
Net Asset Value per share	$ 11.24		$ 10.76	$ 10.77
R-4: Net Assets	$ 101,237		$ 39,183	$ 27,722
Shares Issued and Outstanding		8,986	3,629	2,568
Net Asset Value per share	$ 11.27		$ 10.80	$ 10.80
R-5: Net Assets	$ 200,260		$ 71,470	$ 37,720
Shares Issued and Outstanding		17,686	6,603	3,471
Net Asset Value per share	$ 11.32		$ 10.82	$ 10.87


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010



	SAM Balanced	SAM Conservative	SAM Conservative
Amounts in thousands, except per share amounts	Portfolio	Balanced Portfolio	Growth Portfolio
Investment in affiliated securities--at cost	$ 2,924,839	$ 748,538	$ 2,132,981
Assets
Investment in affiliated securities--at value	$ 3,215,953	$ 821,152	$ 2,307,106
Receivables:
Dividends and interest	4,966	1,925	1,663
Expense reimbursement from Underwriter	33	15	15
Fund shares sold	2,267	1,727	1,243
Total Assets	3,223,219	824,819	2,310,027
Liabilities
Accrued management and investment advisory fees	930	237	666
Accrued administrative service fees	3	2	3
Accrued distribution fees	1,362	348	1,010
Accrued service fees	12	5	8
Accrued transfer agent fees	799	156	709
Accrued directors' expenses	12	1	8
Accrued other expenses	171	45	140
Payables:
Fund shares redeemed	4,359	853	2,880
Total Liabilities	7,648	1,647	5,424
Net Assets Applicable to Outstanding Shares	$ 3,215,571	$ 823,172	$ 2,304,603
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 3,164,428	$ 772,369	$ 2,339,584
Accumulated undistributed (overdistributed) net investment income (loss)	2,858	1,250	10,182
Accumulated undistributed (overdistributed) net realized gain (loss)	(242,829 )	(23,061 )	(219,288 )
Net unrealized appreciation (depreciation) of investments	291,114	72,614	174,125
Total Net Assets	$ 3,215,571	$ 823,172	$ 2,304,603
Capital Stock (par value: $.01 a share):
Shares authorized	1,255,000	855,000	1,255,000
Net Asset Value Per Share:
Class A: Net Assets	$ 1,627,536	$ 313,168	$ 1,178,547
Shares Issued and Outstanding	130,695	29,941	89,788
Net Asset Value per share	$ 12.45	$ 10.46	$ 13.13
Maximum Offering Price	$ 13.17	$ 11.07	$ 13.89
Class B: Net Assets	$ 437,393	$ 77,135	$ 317,492
Shares Issued and Outstanding	35,205	7,385	25,212
Net Asset Value per share	$ 12.42 ^(a)	$ 10.44 ^(a)	$ 12.59 ^(a)
Class C: Net Assets	$ 576,580	$ 172,782	$ 493,019
Shares Issued and Outstanding	46,769	16,644	39,617
Net Asset Value per share	$ 12.33 ^(a)	$ 10.38 ^(a)	$ 12.44 ^(a)
Class J: Net Assets	$ 396,058	$ 175,583	$ 181,273
Shares Issued and Outstanding	32,562	16,944	14,147
Net Asset Value per share	$ 12.16 ^(a)	$ 10.36 ^(a)	$ 12.81 ^(a)
Institutional: Net Assets	$ 122,317	$ 60,420	$ 94,846
Shares Issued and Outstanding	9,933	5,817	7,328
Net Asset Value per share	$ 12.31	$ 10.39	$ 12.94
R-1: Net Assets	$ 4,716	$ 2,580	$ 3,766
Shares Issued and Outstanding	384	249	295
Net Asset Value per share	$ 12.29	$ 10.36	$ 12.76
R-2: Net Assets	$ 4,134	$ 4,251	$ 5,194
Shares Issued and Outstanding	337	409	407
Net Asset Value per share	$ 12.27	$ 10.39	$ 12.77
R-3: Net Assets	$ 17,127	$ 8,726	$ 10,094
Shares Issued and Outstanding	1,394	841	787
Net Asset Value per share	$ 12.29	$ 10.38	$ 12.83
R-4: Net Assets	$ 8,067	$ 4,294	$ 7,704
Shares Issued and Outstanding	655	414	597
Net Asset Value per share	$ 12.31	$ 10.38	$ 12.90
R-5: Net Assets	$ 21,643	$ 4,233	$ 12,668
Shares Issued and Outstanding	1,759	408	984
Net Asset Value per share	$ 12.31	$ 10.38	$ 12.87


STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL FUNDS, INC.
October 31, 2010


	SAM Flexible		SAM Strategic
Amounts in thousands, except per share amounts	Income Portfolio		Growth Portfolio
Investment in affiliated securities--at cost	$ 873,523		$ 1,379,400
Assets
Investment in affiliated securities--at value	$ 959,470		$ 1,465,009
Receivables:
Dividends and interest		2,850	455
Expense reimbursement from Underwriter		12	10
Fund shares sold		4,151	639
Total Assets		966,483	1,466,113
Liabilities
Accrued management and investment advisory fees		275	424
Accrued administrative service fees		1	2
Accrued distribution fees		409	648
Accrued service fees		3	4
Accrued transfer agent fees		181	588
Accrued directors' expenses		2	4
Accrued other expenses		52	116
Payables:
Dividends payable		2,502	–
Fund shares redeemed		1,477	1,634
Total Liabilities		4,902	3,420
Net Assets Applicable to Outstanding Shares	$ 961,581		$ 1,462,693
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 900,333		$ 1,537,058
Accumulated undistributed (overdistributed) net investment income (loss)		416	9,057
Accumulated undistributed (overdistributed) net realized gain (loss)		(25,115 )	(169,031 )
Net unrealized appreciation (depreciation) of investments		85,947	85,609
Total Net Assets	$ 961,581		$ 1,462,693
Capital Stock (par value: $.01 a share):
Shares authorized		955,000	1,055,000
Net Asset Value Per Share:
Class A: Net Assets	$ 461,662		$ 754,854
Shares Issued and Outstanding		40,822	53,247
Net Asset Value per share	$ 11.31		$ 14.18
Maximum Offering Price	$ 11.75		$ 15.01
Class B: Net Assets	$ 105,145		$ 216,781
Shares Issued and Outstanding		9,297	16,363
Net Asset Value per share	$ 11.31 ^(a)		$ 13.25 ^(a)
Class C: Net Assets	$ 193,584		$ 301,333
Shares Issued and Outstanding		17,242	22,703
Net Asset Value per share	$ 11.23 ^(a)		$ 13.27 ^(a)
Class J: Net Assets	$ 151,199		$ 124,141
Shares Issued and Outstanding		13,450	8,962
Net Asset Value per share	$ 11.24 ^(a)		$ 13.85 ^(a)
Institutional: Net Assets	$ 37,271		$ 46,704
Shares Issued and Outstanding		3,304	3,343
Net Asset Value per share	$ 11.28		$ 13.97
R-1: Net Assets	$ 908		$ 3,515
Shares Issued and Outstanding		81	255
Net Asset Value per share	$ 11.25		$ 13.78
R-2: Net Assets	$ 955		$ 1,449
Shares Issued and Outstanding		85	105
Net Asset Value per share	$ 11.27		$ 13.83
R-3: Net Assets	$ 5,283		$ 6,761
Shares Issued and Outstanding		469	488
Net Asset Value per share	$ 11.27		$ 13.85
R-4: Net Assets	$ 2,535		$ 2,638
Shares Issued and Outstanding		225	190
Net Asset Value per share	$ 11.27		$ 13.92
R-5: Net Assets	$ 3,039		$ 4,517
Shares Issued and Outstanding		270	325
Net Asset Value per share	$ 11.27		$ 13.89


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



	Principal LifeTime		Principal LifeTime	Principal LifeTime
Amounts in thousands	2010 Fund		2020 Fund	2030 Fund
Net Investment Income (Loss)
Income:
Dividends from affiliated securities	$ 49,229		$ 108,622	$ 89,833
Total Income		49,229	108,622	89,833
Expenses:
Management and investment advisory fees		512	1,328	1,183
Distribution fees - Class A		88	188	138
Distribution fees - Class B		N/A	86	77
Distribution fees - Class J		895	2,309	2,098
Distribution fees - R-1		83	197	166
Distribution fees - R-2		124	303	282
Distribution fees - R-3		246	565	526
Distribution fees - R-4		74	192	175
Administrative service fees - R-1		66	158	132
Administrative service fees - R-2		83	202	188
Administrative service fees - R-3		109	248	230
Administrative service fees - R-4		59	150	137
Administrative service fees - R-5		100	228	205
Registration fees - Class A		20	22	18
Registration fees - Class B		N/A	16	16
Registration fees - Class J		19	31	30
Registration fees - Institutional		26	56	53
Service fees - R-1		59	141	118
Service fees - R-2		104	252	235
Service fees - R-3		206	474	443
Service fees - R-4		149	388	352
Service fees - R-5		313	743	669
Shareholder reports - Class A		1	2	3
Shareholder reports - Class B		N/A	1	1
Shareholder reports - Class J		11	35	45
Transfer agent fees - Class A		66	135	126
Transfer agent fees - Class B		N/A	19	20
Transfer agent fees - Class J		92	281	349
Transfer agent fees - Institutional		8	17	5
Directors' expenses		51	130	115
Professional fees		14	18	17
Other expenses		39	98	88
Total Gross Expenses		3,617	9,013	8,240
Less: Reimbursement from Manager - Class A		42	66	79
Less: Reimbursement from Manager - Class B		N/A	24	26
Less: Reimbursement from Underwriter - Class J		133	345	314
Total Net Expenses		3,442	8,578	7,821
Net Investment Income (Loss)		45,787	100,044	82,012

Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investment transactions in affiliated securities		(103,247 )	(180,330 )	(154,903 )
Capital gain distribution received from affiliated securities		334	982	915
Change in unrealized appreciation/depreciation of:
Investments in affiliated securities		316,749	778,204	720,040
Net Realized and Unrealized Gain (Loss) on Investments		213,836	598,856	566,052
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 259,623		$ 698,900	$ 648,064


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



				Principal LifeTime
	Principal LifeTime		Principal LifeTime	Strategic Income
Amounts in thousands	2040 Fund		2050 Fund	Fund
Net Investment Income (Loss)
Income:
Dividends from affiliated securities	$ 46,751		$ 17,835	$ 21,192
Total Income		46,751	17,835	21,192
Expenses:
Management and investment advisory fees		683	286	182
Distribution fees - Class A		85	53	59
Distribution fees - Class B		56	18	8
Distribution fees - Class J		972	205	261
Distribution fees - R-1		105	41	39
Distribution fees - R-2		152	66	52
Distribution fees - R-3		293	101	71
Distribution fees - R-4		95	37	27
Administrative service fees - R-1		84	33	32
Administrative service fees - R-2		102	44	34
Administrative service fees - R-3		127	44	30
Administrative service fees - R-4		75	29	21
Administrative service fees - R-5		113	41	23
Registration fees - Class A		19	15	16
Registration fees - Class B		15	14	14
Registration fees - Class J		22	15	13
Registration fees - Institutional		42	29	22
Service fees - R-1		75	29	28
Service fees - R-2		127	55	43
Service fees - R-3		247	85	61
Service fees - R-4		191	74	53
Service fees - R-5		381	136	72
Shareholder reports - Class A		2	2	1
Shareholder reports - Class B		1	–	–
Shareholder reports - Class J		30	9	4
Transfer agent fees - Class A		108	72	47
Transfer agent fees - Class B		18	9	6
Transfer agent fees - Class J		253	94	32
Transfer agent fees - Institutional		2	1	2
Directors' expenses		68	30	20
Professional fees		15	12	11
Other expenses		51	21	13
Total Gross Expenses		4,609	1,700	1,297
Less: Reimbursement from Manager - Class A		88	64	35
Less: Reimbursement from Manager - Class B		26	20	19
Less: Reimbursement from Underwriter - Class J		146	31	39
Total Net Expenses		4,349	1,585	1,204
Net Investment Income (Loss)		42,402	16,250	19,988

Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investment transactions in affiliated securities		(80,054 )	(31,289 )	(31,752 )
Capital gain distribution received from affiliated securities		576	258	80
Change in unrealized appreciation/depreciation of:
Investments in affiliated securities		413,514	173,530	91,166
Net Realized and Unrealized Gain (Loss) on Investments		334,036	142,499	59,494
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 376,438		$ 158,749	$ 79,482


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010



	SAM Balanced		SAM Conservative	SAM Conservative
Amounts in thousands	Portfolio		Balanced Portfolio	Growth Portfolio
Net Investment Income (Loss)
Income:
Dividends from affiliated securities	$ 90,873		$ 27,083	$ 47,618
Total Income		90,873	27,083	47,618
Expenses:
Management and investment advisory fees		10,679	2,555	7,753
Distribution fees - Class A		3,970	729	2,853
Distribution fees - Class B		5,074	861	3,669
Distribution fees - Class C		5,778	1,677	5,007
Distribution fees - Class J		1,377	601	654
Distribution fees - R-1		14	6	11
Distribution fees - R-2		8	9	11
Distribution fees - R-3		33	18	21
Distribution fees - R-4		7	4	7
Administrative service fees - R-1		11	5	8
Administrative service fees - R-2		5	6	8
Administrative service fees - R-3		14	8	9
Administrative service fees - R-4		5	3	5
Administrative service fees - R-5		11	1	7
Registration fees - Class A		20	21	21
Registration fees - Class B		6	16	10
Registration fees - Class C		15	17	14
Registration fees - Class J		50	28	30
Registration fees - Institutional		22	20	21
Service fees - R-1		10	5	8
Service fees - R-2		7	7	9
Service fees - R-3		28	15	18
Service fees - R-4		13	8	13
Service fees - R-5		39	6	26
Shareholder reports - Class A		115	15	82
Shareholder reports - Class B		58	7	39
Shareholder reports - Class C		32	8	35
Shareholder reports - Class J		19	7	10
Transfer agent fees - Class A		1,578	266	1,311
Transfer agent fees - Class B		735	115	589
Transfer agent fees - Class C		520	141	592
Transfer agent fees - Class J		298	117	142
Transfer agent fees - Institutional		4	1	1
Directors' expenses		88	23	63
Professional fees		17	13	15
Other expenses		72	17	56
Total Gross Expenses		30,732	7,356	23,128
Less: Reimbursement from Underwriter - Class J		213	93	100
Total Net Expenses		30,519	7,263	23,028
Net Investment Income (Loss)		60,354	19,820	24,590

Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investment transactions in affiliated securities		(29,225 )	(3,943 )	(46,093 )
Capital gain distribution received from affiliated securities		903	145	930
Change in unrealized appreciation/depreciation of:
Investments in affiliated securities		416,164	78,326	372,692
Net Realized and Unrealized Gain (Loss) on Investments		387,842	74,528	327,529
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 448,196		$ 94,348	$ 352,119


STATEMENTS OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


	SAM Flexible		SAM Strategic
Amounts in thousands	Income Portfolio		Growth Portfolio
Net Investment Income (Loss)
Income:
Dividends from affiliated securities	$ 36,551		$ 24,674
Total Income		36,551	24,674
Expenses:
Management and investment advisory fees		2,941	4,916
Distribution fees - Class A		1,051	1,825
Distribution fees - Class B		1,251	2,455
Distribution fees - Class C		1,790	3,036
Distribution fees - Class J		433	467
Distribution fees - R-1		2	10
Distribution fees - R-2		2	3
Distribution fees - R-3		10	13
Distribution fees - R-4		2	3
Administrative service fees - R-1		2	8
Administrative service fees - R-2		1	2
Administrative service fees - R-3		4	6
Administrative service fees - R-4		1	2
Administrative service fees - R-5		2	2
Registration fees - Class A		25	21
Registration fees - Class B		13	10
Registration fees - Class C		18	17
Registration fees - Class J		35	26
Registration fees - Institutional		19	19
Service fees - R-1		2	8
Service fees - R-2		1	2
Service fees - R-3		9	11
Service fees - R-4		4	5
Service fees - R-5		6	8
Shareholder reports - Class A		27	68
Shareholder reports - Class B		14	30
Shareholder reports - Class C		8	28
Shareholder reports - Class J		5	10
Shareholder reports - Institutional		1	–
Transfer agent fees - Class A		379	1,137
Transfer agent fees - Class B		175	470
Transfer agent fees - Class C		147	468
Transfer agent fees - Class J		131	122
Transfer agent fees - Institutional		3	1
Directors' expenses		26	41
Professional fees		14	14
Other expenses		20	35
Total Gross Expenses		8,574	15,299
Less: Reimbursement from Manager - Institutional		8	–
Less: Reimbursement from Underwriter - Class J		70	71
Total Net Expenses		8,496	15,228
Net Investment Income (Loss)		28,055	9,446

Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) from:
Investment transactions in affiliated securities		(1,056 )	(37,286 )
Capital gain distribution received from affiliated securities		55	665
Change in unrealized appreciation/depreciation of:
Investments in affiliated securities		73,229	261,658
Net Realized and Unrealized Gain (Loss) on Investments		72,228	225,037
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 100,283		$ 234,483


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands														Principal LifeTime 2010 Fund
														Year Ended			Year Ended
														October 31, 2010			October 31, 2009
Operations
Net investment income (loss)														$ 45,787			$ 42,268
Net realized gain (loss) on investments														(102,913 )			(81,885 )
Change in unrealized appreciation/depreciation of investments															316,749		253,629
			Net Increase (Decrease) in Net Assets Resulting from Operations												259,623		214,012

Dividends and Distributions to Shareholders
From net investment income															(50,866 )		(52,124 )
From net realized gain on investments																–	(45,044 )
							Total Dividends and Distributions								(50,866 )		(97,168 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															(85,866 )		142,629
Redemption fees - Class A																–	1
Redemption fees - Class J																1	4
						Total increase (decrease) in net assets									122,892		259,478

Net Assets
Beginning of period														1,641,429			1,381,951
End of period (including undistributed net investment income as set forth below)														$ 1,764,321			$ 1,641,429
Undistributed (overdistributed) net investment income (loss)														$ 16,666			$ 21,745

	Class A Class C^(a)Class J Institutional							R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 9,024		N/A	$ 26,875 $		87,235	$ 4,361		$ 8,429		$ 21,487		$ 16,821		$ 21,198
Reinvested		934	N/A		5,405	33,177		563		999		2,653		2,073		5,050
Redeemed	(8,176 )		N/A		(40,491 )	(148,158)		(5,842 )		(13,144 )		(32,621 )		(17,907 )		(65,811 )
Net Increase (Decrease)	$ 1,782		N/A	$ (8,211) $		(27,746) $		(918) $		(3,716 ) $		(8,481 ) $		987	$ (39,563)
Shares:
Sold		864	N/A		2,604	8,426		426		813		2,108		1,637		2,056
Reinvested		92	N/A		538	3,298		56		100		266		207		503
Redeemed		(785 )	N/A		(3,919 )	(14,382 )		(563 )		(1,280 )		(3,172 )		(1,757 )		(6,420 )
Net Increase (Decrease)		171	N/A		(777 )	(2,658 )		(81 )		(367 )		(798 )		87		(3,861 )
Year Ended October 31, 2009
Dollars:
Sold	$ 9,315 $		822	$ 23,802 $		176,956	$ 6,923		$ 8,232		$ 20,990		$ 26,100		$ 31,004
Reinvested		1,800	212		11,872	61,397		1,132		2,389		5,292		3,468		9,566
Redeemed	(8,664 )		(4,745 )		(42,196 )	(134,734)		(4,622 )		(9,546 )		(15,604 )		(13,162 )		(25,370 )
Net Increase (Decrease)	$ 2,451 $		(3,711) $		(6,522) $	103,619	$ 3,433		$ 1,075		$ 10,678		$ 16,406		$ 15,200
Shares:
Sold		1,070	98		2,753	21,530		817		960		2,450		3,043		3,569
Reinvested		214	25		1,424	7,341		136		288		638		417		1,148
Redeemed	(1,012 )		(543 )		(5,060 )	(16,634 )		(537 )		(1,102 )		(1,867 )		(1,518 )		(3,060 )
Net Increase (Decrease)		272	(420 )		(883 )	12,237		416		146		1,221		1,942		1,657

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (946)		N/A	$ (5,405) $		(33,177) $		(563) $		(999 ) $		(2,653 ) $		(2,073 ) $		(5,050 )
From net realized gain on
investments		–	N/A		–	–		–		–		–		–		–
Total Dividends and
Distributions	$ (946)		N/A	$ (5,405) $		(33,177) $		(563) $		(999 ) $		(2,653 ) $		(2,073 ) $		(5,050 )
Year Ended October 31, 2009
From net investment
income	$ (945) $		(93) $		(6,026) $	(33,741) $		(558) $		(1,158 ) $		(2,684 ) $		(1,813 ) $		(5,106 )
From net realized gain on
investments		(873 )	(125 )		(5,862 )	(27,656 )		(574 )		(1,231 )		(2,608 )		(1,655 )		(4,460 )
Total Dividends and
Distributions	$ (1,818) $		(218) $ (11,888) $			(61,397) $		(1,132) $		(2,389 ) $		(5,292 ) $		(3,468 ) $		(9,566 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands														Principal LifeTime 2020 Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 100,044				$ 90,860
Net realized gain (loss) on investments														(179,348 )					(70,892 )
Change in unrealized appreciation/depreciation of investments															778,204				539,486
			Net Increase (Decrease) in Net Assets Resulting from Operations												698,900				559,454

Dividends and Distributions to Shareholders
From net investment income														(111,134 )					(94,501 )
From net realized gain on investments																–			(119,088 )
								Total Dividends and Distributions						(111,134 )					(213,589 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															135,779				673,817
Redemption fees - Class A																–			1
Redemption fees - Class B																–			1
Redemption fees - Class J																1			8
						Total increase (decrease) in net assets									723,546				1,019,692

Net Assets
Beginning of period														4,050,647					3,030,955
End of period (including undistributed net investment income as set forth below)														$ 4,774,193				$ 4,050,647
Undistributed (overdistributed) net investment income (loss)														$ 25,843				$ 36,933

	Class A Class B			Class C^(a)Class J Institutional						R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 16,005	$ 770			N/A	$ 85,721	$ 295,219		$ 10,477		$ 19,206		$ 37,475		$ 50,743		$ 52,173
Reinvested	1,707		148		N/A	11,629		75,053		1,138		2,108		5,205		4,437		9,690
Redeemed	(12,317 )		(1,494 )		N/A	(77,781 )		(237,667)		(11,062 )		(20,755 )		(50,548 )		(31,657 )		(99,844 )
Net Increase (Decrease)	$ 5,395	$ (576 )			N/A	$ 19,569	$ 132,605		$ 553		$ 559		$ (7,868) $			23,523	$ (37,981)
Shares:
Sold	1,497		73		N/A	8,089		27,780		993		1,804		3,541		4,799		4,920
Reinvested	164		14		N/A	1,123		7,231		110		204		504		430		936
Redeemed	(1,155 )		(140 )		N/A	(7,338 )		(22,564 )		(1,028 )		(1,981 )		(4,808 )		(2,998 )		(9,480 )
Net Increase (Decrease)	506		(53 )		N/A	1,874		12,447		75		27		(763 )		2,231		(3,624 )
Year Ended October 31, 2009
Dollars:
Sold	$ 18,872	$ 1,650		$ 999		$ 71,503	$ 545,651		$ 12,185		$ 17,051		$ 45,337		$ 52,026		$ 67,828
Reinvested	3,241		405		302	26,481		139,365		2,307		4,923		10,798		7,584		18,091
Redeemed	(10,404 )		(1,881 )		(6,626 )	(78,005 )		(191,155)		(3,860 )		(14,563 )		(22,218 )		(17,847 )		(26,223 )
Net Increase (Decrease)	$ 11,709	$ 174		$ (5,325) $ 19,979			$ 493,861		$ 10,632		$ 7,411		$ 33,917		$ 41,763		$ 59,696
Shares:
Sold	2,195		189		122	8,197		64,545		1,430		1,985		5,299		5,965		7,870
Reinvested	385		48		36	3,170		16,618		277		593		1,297		909		2,165
Redeemed	(1,225 )		(218 )		(758 )	(9,291 )		(23,764 )		(450 )		(1,616 )		(2,458 )		(2,002 )		(3,233 )
Net Increase (Decrease)	1,355		19		(600 )	2,076		57,399		1,257		962		4,138		4,872		6,802

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (1,722 ) $		(152 )		N/A	$ (11,629) $		(75,053) $		(1,138 ) $		(2,108 ) $		(5,205) $		(4,437 ) $		(9,690 )
From net realized gain on
investments	–		–		N/A	–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (1,722 ) $		(152 )		N/A	$ (11,629) $		(75,053) $		(1,138 ) $		(2,108 ) $		(5,205) $		(4,437 ) $		(9,690 )
Year Ended October 31, 2009
From net investment
income	$ (1,381 ) $		(136 ) $		(100) $ (10,757) $			(63,895) $		(875 ) $		(1,853 ) $		(4,404) $		(3,204 ) $		(7,896 )
From net realized gain on
investments	(1,913 )		(292 )		(205 )	(15,737 )		(75,470 )		(1,432 )		(3,070 )		(6,394 )		(4,380 )		(10,195 )
Total Dividends and
Distributions	$ (3,294 ) $		(428 ) $		(305) $ (26,494) $ (139,365) $					(2,307 ) $		(4,923 ) $ (10,798) $				(7,584 ) $ (18,091)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands														Principal LifeTime 2030 Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 82,012				$ 69,249
Net realized gain (loss) on investments														(153,988 )					(42,546 )
Change in unrealized appreciation/depreciation of investments															720,040				476,944
			Net Increase (Decrease) in Net Assets Resulting from Operations												648,064				503,647

Dividends and Distributions to Shareholders
From net investment income															(87,744 )				(68,936 )
From net realized gain on investments																–			(105,596 )
								Total Dividends and Distributions							(87,744 )				(174,532 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															140,599				664,737
Redemption fees - Class A																–			4
Redemption fees - Class J																1			3
						Total increase (decrease) in net assets									700,920				993,859

Net Assets
Beginning of period														3,593,923					2,600,064
End of period (including undistributed net investment income as set forth below)														$ 4,294,843				$ 3,593,923
Undistributed (overdistributed) net investment income (loss)														$ 14,509				$ 20,241

	Class A Class B Class C^(a)Class J Institutional									R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 14,200	$ 356		N/A	$ 92,858		$ 264,209		$ 10,782		$ 17,126		$ 38,121		$ 45,598		$ 52,272
Reinvested	1,109		113	N/A		8,970		59,784		801		1,700		4,211		3,458		7,579
Redeemed	(10,100 )		(991 )	N/A		(61,977 )		(218,912)		(9,535 )		(20,099 )		(43,096 )		(33,769 )		(84,169 )
Net Increase (Decrease)	$ 5,209	$ (522 )		N/A	$ 39,851		$ 105,081		$ 2,048		$ (1,273 ) $			(764 ) $		15,287	$ (24,318)
Shares:
Sold	1,357		34	N/A		8,917		25,371		1,044		1,635		3,657		4,284		5,005
Reinvested	108		11	N/A		879		5,856		79		167		413		331		742
Redeemed	(969 )		(94 )	N/A		(5,973 )		(21,169 )		(897 )		(1,948 )		(4,125 )		(3,136 )		(8,146 )
Net Increase (Decrease)	496		(49 )	N/A		3,823		10,058		226		(146 )		(55 )		1,479		(2,399 )
Year Ended October 31, 2009
Dollars:
Sold	$ 17,520	$ 1,308 $		880	$ 69,133		$ 425,100		$ 11,597		$ 16,852		$ 41,222		$ 46,488		$ 74,802
Reinvested	2,078		323	293		20,958		115,541		1,698		4,015		8,899		6,490		14,171
Redeemed	(7,908 )		(1,040 )	(6,714 )		(54,873 )		(83,248 )		(3,194 )		(8,027 )		(15,825 )		(17,259 )		(16,543 )
Net Increase (Decrease)	$ 11,690	$ 591 $		(5,541) $		35,218	$ 457,393		$ 10,101		$ 12,840		$ 34,296		$ 35,719		$ 72,430
Shares:
Sold	2,090		156	112		8,109		51,452		1,392		2,034		4,964		5,386		9,049
Reinvested	255		40	36		2,592		14,239		211		499		1,100		784		1,748
Redeemed	(946 )		(128 )	(777 )		(6,709 )		(10,046 )		(378 )		(921 )		(1,833 )		(1,915 )		(2,023 )
Net Increase (Decrease)	1,399		68	(629 )		3,992		55,645		1,225		1,612		4,231		4,255		8,774

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (1,125 ) $		(114 )	N/A	$ (8,972) $			(59,784) $		(801) $		(1,700 ) $		(4,211 ) $		(3,458 ) $		(7,579 )
From net realized gain on
investments	–		–	N/A		–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (1,125 ) $		(114 )	N/A	$ (8,972) $			(59,784) $		(801) $		(1,700 ) $		(4,211 ) $		(3,458 ) $		(7,579 )
Year Ended October 31, 2009
From net investment
income	$ (786 ) $		(81 ) $	(78) $		(7,366) $		(47,705) $		(555) $		(1,282 ) $		(3,152 ) $		(2,355 ) $		(5,576 )
From net realized gain on
investments	(1,331 )		(249 )	(226 )		(13,601 )		(67,836 )		(1,143 )		(2,733 )		(5,747 )		(4,135 )		(8,595 )
Total Dividends and
Distributions	$ (2,117 ) $		(330 ) $	(304) $ (20,967) $ (115,541) $						(1,698) $		(4,015 ) $		(8,899 ) $		(6,490 ) $ (14,171)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands															Principal LifeTime 2040 Fund
															Year Ended				Year Ended
															October 31, 2010				October 31, 2009
Operations
Net investment income (loss)															$ 42,402				$ 32,773
Net realized gain (loss) on investments																(79,478 )				(6,927 )
Change in unrealized appreciation/depreciation of investments																413,514				261,794
				Net Increase (Decrease) in Net Assets Resulting from Operations												376,438				287,640

Dividends and Distributions to Shareholders
From net investment income																(43,949 )				(31,654 )
From net realized gain on investments																	–			(53,692 )
									Total Dividends and Distributions							(43,949 )				(85,346 )

Capital Share Transactions
Net increase (decrease) in capital share transactions																150,652				469,910
Redemption fees - Class A																	–			1
Redemption fees - Class J																	–			1
							Total increase (decrease) in net assets									483,141				672,206

Net Assets
Beginning of period															2,038,126					1,365,920
End of period (including undistributed net investment income as set forth below)															$ 2,521,267				$ 2,038,126
Undistributed (overdistributed) net investment income (loss)															$ 4,252				$ 5,799

		Class A Class B Class C^(a)Class J Institutional									R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 8,082		$ 315		N/A	$ 52,925		$ 196,802		$ 7,216		$ 12,410		$ 25,031		$ 28,368		$ 45,475
Reinvested		602		69	N/A		3,427		31,433		428		788		1,944		1,733		3,523
Redeemed		(5,289 )		(1,030 )	N/A		(28,078 )		(126,643)		(5,177 )		(11,397 )		(22,729 )		(29,237 )		(40,339 )
Net Increase (Decrease)	$ 3,395		$ (646)		N/A	$ 28,274		$ 101,592		$ 2,467		$ 1,801		$ 4,246		$ 864		$ 8,659
Shares:
Sold		778		31	N/A		5,057		18,758		695		1,183		2,402		2,725		4,331
Reinvested		59		7	N/A		333		3,043		42		77		189		169		342
Redeemed		(510 )		(100 )	N/A		(2,687 )		(12,171 )		(489 )		(1,105 )		(2,165 )		(2,754 )		(3,914 )
Net Increase (Decrease)		327		(62 )	N/A		2,703		9,630		248		155		426		140		759
Year Ended October 31, 2009
Dollars:
Sold	$ 10,235		$ 703 $		483	$ 32,327		$ 313,558		$ 8,589		$ 10,763		$ 28,332		$ 30,918		$ 47,924
Reinvested		1,179		234	115		8,436		59,500		879		1,764		4,134		2,995		6,100
Redeemed		(4,050 )		(719 )	(2,934 )		(21,579 )		(45,988 )		(1,707 )		(2,896 )		(8,833 )		(5,954 )		(4,598 )
Net Increase (Decrease)	$ 7,364		$ 218 $		(2,336) $		19,184	$ 327,070		$ 7,761		$ 9,631		$ 23,633		$ 27,959		$ 49,426
Shares:
Sold		1,233		87	62		3,808		37,888		1,031		1,305		3,448		3,693		5,785
Reinvested		147		29	14		1,044		7,317		109		219		513		371		752
Redeemed		(496 )		(87 )	(342 )		(2,598 )		(5,190 )		(203 )		(332 )		(963 )		(660 )		(555 )
Net Increase (Decrease)		884		29	(266 )		2,254		40,015		937		1,192		2,998		3,404		5,982

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (603) $			(70)	N/A	$ (3,427 ) $			(31,433) $		(428) $		(788 ) $		(1,944 ) $		(1,733 ) $		(3,523)
From net realized gain on
investments		–		–	N/A		–		–		–		–		–		–		–
Total Dividends and Distributions $		(603) $		(70)	N/A	$ (3,427 ) $			(31,433) $		(428) $		(788 ) $		(1,944 ) $		(1,733 ) $		(3,523)
Year Ended October 31, 2009
From net investment
income	$ (404) $			(50) $	(25) $		(2,618 ) $		(23,186) $		(254) $		(502 ) $		(1,350 ) $		(1,047 ) $		(2,218)
From net realized gain on
investments		(782 )		(186 )	(91 )		(5,818 )		(36,314 )		(625 )		(1,262 )		(2,784 )		(1,948 )		(3,882 )
Total Dividends and Distributions $		(1,186) $		(236) $	(116) $		(8,436 ) $		(59,500) $		(879) $		(1,764 ) $		(4,134 ) $		(2,995 ) $		(6,100)


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands														Principal LifeTime 2050 Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 16,250				$ 12,352
Net realized gain (loss) on investments															(31,031 )				(2,336 )
Change in unrealized appreciation/depreciation of investments															173,530				107,789
			Net Increase (Decrease) in Net Assets Resulting from Operations												158,749				117,805

Dividends and Distributions to Shareholders
From net investment income															(16,581 )				(12,033 )
From net realized gain on investments																–			(23,635 )
								Total Dividends and Distributions							(16,581 )				(35,668 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															72,826				209,363
Redemption fees - Class J																1			–
						Total increase (decrease) in net assets									214,995				291,500

Net Assets
Beginning of period															844,058				552,558
End of period (including undistributed net investment income as set forth below)														$ 1,059,053				$ 844,058
Undistributed (overdistributed) net investment income (loss)														$ 927				$ 1,258

		Class A Class B Class C^(a)Class J Institutional								R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 5,027 $		101	N/A	$ 16,387		$ 97,209		$ 3,686		$ 5,314		$ 10,727		$ 11,370		$ 20,040
Reinvested		325	19	N/A		588		12,915		141		295		594		602		1,099
Redeemed		(3,421 )	(362 )	N/A		(7,142 )		(57,302 )		(2,045 )		(4,769 )		(9,474 )		(11,491 )		(17,607 )
Net Increase (Decrease)	$ 1,931 $		(242)	N/A	$ 9,833		$ 52,822		$ 1,782		$ 840		$ 1,847		$ 481		$ 3,532
Shares:
Sold		500	10	N/A		1,660		9,677		371		531		1,078		1,144		1,996
Reinvested		33	2	N/A		60		1,307		14		30		61		61		112
Redeemed		(340 )	(36 )	N/A		(723 )		(5,759 )		(203 )		(484 )		(949 )		(1,133 )		(1,793 )
Net Increase (Decrease)		193	(24 )	N/A		997		5,225		182		77		190		72		315
Year Ended October 31, 2009
Dollars:
Sold	$ 7,249 $		415 $	579	$ 7,963		$ 212,719		$ 3,715		$ 4,988		$ 11,524		$ 12,512		$ 21,494
Reinvested		729	77	67		1,715		27,390		319		787		1,378		1,190		2,008
Redeemed		(2,694 )	(371 )	(1,876 )		(5,464 )		(88,296 )		(525 )		(1,349 )		(3,475 )		(2,737 )		(2,668 )
Net Increase (Decrease)	$ 5,284 $		121 $	(1,230) $		4,214	$ 151,813		$ 3,509		$ 4,426		$ 9,427		$ 10,965		$ 20,834
Shares:
Sold		917	54	79		981		27,621		472		632		1,459		1,559		2,701
Reinvested		94	10	9		227		3,545		42		103		180		155		260
Redeemed		(333 )	(48 )	(233 )		(694 )		(11,611 )		(65 )		(172 )		(407 )		(333 )		(343 )
Net Increase (Decrease)		678	16	(145 )		514		19,555		449		563		1,232		1,381		2,618

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (326) $		(19)	N/A	$ (590 ) $			(12,915) $		(141) $		(295) $		(594 ) $		(602 ) $		(1,099 )
From net realized gain on
investments		–	–	N/A		–		–		–		–		–		–		–
Total Dividends and Distributions $		(326) $	(19)	N/A	$ (590 ) $			(12,915) $		(141) $		(295) $		(594 ) $		(602 ) $		(1,099 )
Year Ended October 31, 2009
From net investment
income	$ (226) $		(13) $	(16) $		(436 ) $		(9,650) $		(80) $		(194) $		(398 ) $		(370 ) $		(650 )
From net realized gain on
investments		(508 )	(65 )	(53 )		(1,279 )		(17,740 )		(239 )		(593 )		(980 )		(820 )		(1,358 )
Total Dividends and Distributions $		(734) $	(78) $	(69) $		(1,715 ) $		(27,390) $		(319) $		(787) $		(1,378 ) $		(1,190 ) $		(2,008 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




															Principal LifeTime
Amounts in thousands															Strategic Income Fund
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 19,988				$ 15,389
Net realized gain (loss) on investments															(31,672 )				(28,474 )
Change in unrealized appreciation/depreciation of investments															91,166				75,099
				Net Increase (Decrease) in Net Assets Resulting from Operations											79,482				62,014

Dividends and Distributions to Shareholders
From net investment income															(20,361 )				(24,425 )
From net realized gain on investments																–			(6,750 )
									Total Dividends and Distributions						(20,361 )				(31,175 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															54,704				60,055
Redemption fees - Class J																–			1
							Total increase (decrease) in net assets								113,825				90,895

Net Assets
Beginning of period															558,993				468,098
End of period (including undistributed net investment income as set forth below)														$ 672,818				$ 558,993
Undistributed (overdistributed) net investment income (loss)														$ 9,397				$ 9,770

		Class A Class B Class C^(a)Class J Institutional									R-1		R-2	R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 5,173		$ 193		N/A	$ 7,515		$ 121,840		$ 6,591		$ 8,944 $		28,131	$ 11,205		$ 14,324
Reinvested		746		24	N/A		1,834		13,752		324		571	898		830		1,364
Redeemed		(3,549 )		(181 )	N/A		(8,827 )		(81,470 )		(5,081 )		(14,047 )	(26,693 )		(10,238 )		(19,469 )
Net Increase (Decrease)	$ 2,370		$ 36		N/A	$ 522		$ 54,122		$ 1,834		$ (4,532 ) $		2,336	$ 1,797		$ (3,781 )
Shares:
Sold		503		19	N/A		738		11,979		657		890	2,786		1,118		1,381
Reinvested		75		3	N/A		187		1,399		33		58	92		85		139
Redeemed		(345 )		(18 )	N/A		(871 )		(8,048 )		(501 )		(1,402 )	(2,640 )		(1,005 )		(1,913 )
Net Increase (Decrease)		233		4	N/A		54		5,330		189		(454 )	238		198		(393 )
Year Ended October 31, 2009
Dollars:
Sold	$ 6,663		$ 174 $		663	$ 6,038		$ 96,731		$ 4,778		$ 7,995 $		11,338	$ 12,450		$ 13,967
Reinvested		1,084		34	161		3,589		19,964		358		1,052	1,502		1,237		2,138
Redeemed		(5,035 )		(329 )	(3,736 )		(16,676 )		(60,368 )		(2,814 )		(8,699 )	(12,445 )		(8,582 )		(13,177 )
Net Increase (Decrease)	$ 2,712		$ (121) $		(2,912) $		(7,049 ) $		56,327	$ 2,322		$ 348 $		395	$ 5,105		$ 2,928
Shares:
Sold		746		20	77		669		10,796		526		923	1,297		1,397		1,573
Reinvested		124		4	18		415		2,302		41		122	174		144		247
Redeemed		(580 )		(37 )	(420 )		(1,917 )		(6,893 )		(316 )		(982 )	(1,398 )		(985 )		(1,503 )
Net Increase (Decrease)		290		(13 )	(325 )		(833 )		6,205		251		63	73		556		317

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (756) $			(24)	N/A	$ (1,842 ) $			(13,752) $		(324) $		(571 ) $	(898 ) $		(830 ) $		(1,364 )
From net realized gain on
investments		–		–	N/A		–		–		–		–	–		–		–
Total Dividends and Distributions $		(756) $		(24)	N/A	$ (1,842 ) $			(13,752) $		(324) $		(571 ) $	(898 ) $		(830 ) $		(1,364 )
Year Ended October 31, 2009
From net investment
income	$ (859) $			(26) $	(130) $		(2,772 ) $		(15,786) $		(270) $		(797 ) $	(1,153 ) $		(965 ) $		(1,667 )
From net realized gain on
investments		(251 )		(9 )	(42 )		(835 )		(4,178 )		(88 )		(255 )	(349 )		(272 )		(471 )
Total Dividends and Distributions $		(1,110) $		(35) $	(172) $		(3,607 ) $		(19,964) $		(358) $		(1,052 ) $	(1,502 ) $		(1,237 ) $		(2,138 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands												SAM Balanced Portfolio
												Year Ended				Year Ended
												October 31, 2010				October 31, 2009
Operations
Net investment income (loss)											$ 60,354					$ 75,889
Net realized gain (loss) on investments													(28,322 )				(157,192 )
Change in unrealized appreciation/depreciation of investments													416,164				430,870
		Net Increase (Decrease) in Net Assets Resulting from Operations											448,196				349,567

Dividends and Distributions to Shareholders
From net investment income													(63,898 )				(74,488 )
From net realized gain on investments														–			(254,589 )
					Total Dividends and Distributions								(63,898 )				(329,077 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												(184,260 )					(168,677 )
Redemption fees - Class A														9			31
Redemption fees - Class B														–			5
Redemption fees - Class C														2			3
Redemption fees - Class J														5			10
				Total increase (decrease) in net assets									200,054				(148,138 )

Net Assets
Beginning of period												3,015,517					3,163,655
End of period (including undistributed net investment income as set forth below)											$ 3,215,571					$ 3,015,517
Undistributed (overdistributed) net investment income (loss)											$ 2,858					$ 6,393

	Class A	Class B	Class C	Class J Institutional R-1						R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 269,066 $	15,627 $	64,178 $ 180,111		$ 57,984		$ 1,544		$ 3,554		$ 9,060		$ 4,487		$ 11,813
Reinvested	33,835	7,094	8,487	6,660		2,493		71		50		279		134		480
Redeemed	(421,825 )	(221,529 )	(142,265)	(45,515 )		(15,294 )		(844 )		(644 )		(3,945 )		(3,291 )		(6,115 )
Net Increase (Decrease)	$ (118,924 ) $ (198,808 ) $ (69,600) $ 141,256				$ 45,183		$ 771		$ 2,960		$ 5,394		$ 1,330		$ 6,178
Shares:
Sold	22,892	1,345	5,529	15,732		5,010		133		306		776		391		1,016
Reinvested	2,907	612	737	585		216		6		4		24		11		42
Redeemed	(36,024)	(18,958)	(12,317 )	(3,969 )		(1,326 )		(72 )		(56 )		(343 )		(289 )		(524 )
Net Increase (Decrease)	(10,225)	(17,001)	(6,051 )	12,348		3,900		67		254		457		113		534
Year Ended October 31, 2009
Dollars:
Sold	$ 246,167 $	38,062 $	81,795 $ 157,408		$ 42,356		$ 2,380		$ 702		$ 6,514		$ 5,846		$ 13,590
Reinvested	165,189	67,856	58,772	8,977		2,990		136		22		555		277		537
Redeemed	(550,777 )	(272,914 )	(204,967)	(23,805 )		(6,036 )		(396 )		(61 )		(1,135 )		(3,012 )		(5,705 )
Net Increase (Decrease)	$ (139,421 ) $ (166,996 ) $ (64,400) $ 142,580				$ 39,310		$ 2,120		$ 663		$ 5,934		$ 3,111		$ 8,422
Shares:
Sold	24,946	3,964	8,443	16,244		4,347		242		73		663		619		1,379
Reinvested	17,317	7,159	6,237	953		313		15		2		59		29		57
Redeemed	(56,803)	(28,171)	(21,359 )	(2,469 )		(625 )		(39 )		(6 )		(123 )		(280 )		(555 )
Net Increase (Decrease)	(14,540)	(17,048)	(6,679 )	14,728		4,035		218		69		599		368		881

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (36,812) $	(7,718) $	(9,197) $	(6,662 ) $		(2,495) $		(71) $		(50) $		(279 ) $		(134 ) $		(480 )
From net realized gain on
investments	–	–	–	–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (36,812) $	(7,718) $	(9,197) $	(6,662 ) $		(2,495) $		(71) $		(50) $		(279 ) $		(134 ) $		(480 )
Year Ended October 31, 2009
From net investment
income	$ (43,726) $	(13,478) $	(12,425) $	(3,171 ) $		(1,128) $		(43) $		(9) $		(166 ) $		(118 ) $		(224 )
From net realized gain on
investments	(135,259 )	(59,823)	(50,864 )	(5,809 )		(1,867 )		(93 )		(13 )		(389 )		(159 )		(313 )
Total Dividends and
Distributions	$ (178,985 ) $	(73,301) $	(63,289) $	(8,980 ) $		(2,995) $		(136) $		(22) $		(555 ) $		(277 ) $		(537 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands										SAM Conservative Balanced Portfolio
										Year Ended			Year Ended
										October 31, 2010			October 31, 2009
Operations
Net investment income (loss)										$ 19,820			$ 19,645
Net realized gain (loss) on investments											(3,798 )			(10,112 )
Change in unrealized appreciation/depreciation of investments											78,326			79,319
			Net Increase (Decrease) in Net Assets Resulting from Operations								94,348			88,852

Dividends and Distributions to Shareholders
From net investment income											(20,480 )			(19,003 )
From net realized gain on investments												–		(23,460 )
						Total Dividends and Distributions					(20,480 )			(42,463 )

Capital Share Transactions
Net increase (decrease) in capital share transactions											78,041			71,935
Redemption fees - Class A												2		9
Redemption fees - Class B												–		4
Redemption fees - Class C												1		2
Redemption fees - Class J												3		1
					Total increase (decrease) in net assets						151,915			118,340

Net Assets
Beginning of period											671,257			552,917
End of period (including undistributed net investment income as set forth below)										$ 823,172			$ 671,257
Undistributed (overdistributed) net investment income (loss)										$ 1,250			$ 1,910

		Class A	Class B Class C		Class J Institutional			R-1	R-2	R-3		R-4	R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 83,726 $		6,636 $	33,754 $	84,990 $	28,727	$ 1,665 $		3,055 $	5,782	$ 2,191 $		2,879
Reinvested		7,950	1,667	3,489	3,853	1,616		45	70	202		118	89
Redeemed		(82,210 )	(33,689 )	(41,259 )	(20,483 )	(10,816 )		(303 )	(308 )	(2,935 )		(1,848 )	(612 )
Net Increase (Decrease)	$ 9,466 $ (25,386) $			(4,016) $	68,360 $	19,527	$ 1,407 $		2,817 $	3,049	$ 461 $		2,356
Shares:
Sold		8,396	672	3,428	8,614	2,912		170	310	587		223	289
Reinvested		804	169	356	393	164		5	7	21		12	9
Redeemed		(8,264 )	(3,391 )	(4,181 )	(2,080 )	(1,097 )		(31 )	(32 )	(300 )		(187 )	(61 )
Net Increase (Decrease)		936	(2,550 )	(397 )	6,927	1,979		144	285	308		48	237
Year Ended October 31, 2009
Dollars:
Sold	$ 88,292 $		18,762 $	51,048 $	67,244 $	16,446	$ 709 $		3,116 $	3,892	$ 2,165 $		1,788
Reinvested		17,317	6,426	10,042	3,089	1,663		30	49	130		137	89
Redeemed		(96,075 )	(44,973 )	(61,324 )	(11,113 )	(1,728 )		(113 )	(2,709 )	(512 )		(649 )	(1,303 )
Net Increase (Decrease)	$ 9,534 $ (19,785) $			(234) $	59,220 $	16,381	$ 626 $		456 $	3,510	$ 1,653 $		574
Shares:
Sold		10,359	2,247	6,097	7,900	1,927		82	366	457		263	204
Reinvested		2,067	773	1,211	366	198		3	6	15		17	10
Redeemed		(11,410 )	(5,317 )	(7,346 )	(1,308 )	(203 )		(12 )	(310 )	(60 )		(75 )	(143 )
Net Increase (Decrease)		1,016	(2,297 )	(38 )	6,958	1,922		73	62	412		205	71

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (8,775) $		(1,867) $	(3,843) $	(3,855 ) $	(1,616) $		(45 ) $	(70) $	(202) $		(118) $	(89 )
From net realized gain on
investments		–	–	–	–	–		–	–	–		–	–
Total Dividends and Distributions $		(8,775) $	(1,867) $	(3,843) $	(3,855 ) $	(1,616) $		(45 ) $	(70) $	(202) $		(118) $	(89 )
Year Ended October 31, 2009
From net investment
income	$ (8,828) $		(2,710) $	(4,451) $	(1,838 ) $	(931) $		(16 ) $	(25) $	(83) $		(77) $	(44 )
From net realized gain on
investments		(10,222 )	(4,406 )	(6,657 )	(1,253 )	(732 )		(14 )	(24 )	(47 )		(60 )	(45 )
Total Dividends and Distributions $ (19,050) $			(7,116) $	(11,108) $	(3,091 ) $	(1,663) $		(30 ) $	(49) $	(130) $		(137) $	(89 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands												SAM Conservative Growth Portfolio
												Year Ended				Year Ended
												October 31, 2010				October 31, 2009
Operations
Net investment income (loss)											$ 24,590					$ 38,038
Net realized gain (loss) on investments													(45,163 )				(145,701 )
Change in unrealized appreciation/depreciation of investments												372,692					320,936
		Net Increase (Decrease) in Net Assets Resulting from Operations										352,119					213,273

Dividends and Distributions to Shareholders
From net investment income													(30,292 )				(37,756 )
From net realized gain on investments														–			(234,949 )
					Total Dividends and Distributions								(30,292 )				(272,705 )

Capital Share Transactions
Net increase (decrease) in capital share transactions												(233,591 )					(129,261 )
Redemption fees - Class A														2			4
Redemption fees - Class B														1			4
Redemption fees - Class C														–			6
Redemption fees - Class J														2			1
				Total increase (decrease) in net assets									88,241				(188,678 )

Net Assets
Beginning of period												2,216,362					2,405,040
End of period (including undistributed net investment income as set forth below)											$ 2,304,603					$ 2,216,362
Undistributed (overdistributed) net investment income (loss)											$ 10,182					$ 15,884

	Class A	Class B	Class C	Class J Institutional R-1						R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 173,666 $	9,110 $	36,195 $	73,032	$ 36,257		$ 1,379		$ 2,830		$ 3,657		$ 3,221		$ 6,235
Reinvested	17,189	3,146	4,612	2,017		1,279		33		39		132		83		217
Redeemed	(277,672 )	(162,077 )	(127,674)	(23,117 )		(7,530 )		(264 )		(681 )		(2,191 )		(2,970 )		(3,744 )
Net Increase (Decrease)	$ (86,817) $ (149,821 ) $ (86,867) $			51,932	$ 30,006		$ 1,148		$ 2,188		$ 1,598		$ 334		$ 2,708
Shares:
Sold	14,176	781	3,112	6,120		3,031		115		238		301		269		525
Reinvested	1,431	271	403	172		108		3		4		11		7		18
Redeemed	(22,805)	(13,799)	(11,038 )	(1,940 )		(627 )		(23 )		(58 )		(181 )		(251 )		(304 )
Net Increase (Decrease)	(7,198)	(12,747)	(7,523 )	4,352		2,512		95		184		131		25		239
Year Ended October 31, 2009
Dollars:
Sold	$ 154,327 $	24,300 $	58,280 $	70,985	$ 33,814		$ 1,394		$ 1,633		$ 5,579		$ 3,533		$ 7,799
Reinvested	131,913	56,472	60,836	5,444		2,359		144		143		189		298		472
Redeemed	(357,820 )	(187,607 )	(181,474)	(12,158 )		(3,341 )		(522 )		(435 )		(618 )		(555 )		(4,645 )
Net Increase (Decrease)	$ (71,580) $ (106,835 ) $ (62,358) $			64,271	$ 32,832		$ 1,016		$ 1,341		$ 5,150		$ 3,276		$ 3,626
Shares:
Sold	15,468	2,553	6,170	7,174		3,447		141		171		570		391		802
Reinvested	13,495	6,042	6,566	568		245		15		15		20		31		49
Redeemed	(36,035)	(19,708)	(19,161 )	(1,233 )		(341 )		(51 )		(46 )		(64 )		(56 )		(431 )
Net Increase (Decrease)	(7,072)	(11,113)	(6,425 )	6,509		3,351		105		140		526		366		420

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (18,172) $	(3,325) $	(4,993) $	(2,019) $		(1,279) $		(33) $		(39) $		(132) $		(83) $		(217 )
From net realized gain on
investments	–	–	–	–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (18,172) $	(3,325) $	(4,993) $	(2,019) $		(1,279) $		(33) $		(39) $		(132) $		(83) $		(217 )
Year Ended October 31, 2009
From net investment
income	$ (23,972) $	(5,279) $	(6,672) $	(1,085) $		(495) $		(25) $		(44) $		(35) $		(55) $		(94 )
From net realized gain on
investments	(114,621 )	(54,199)	(58,909 )	(4,362 )		(1,865 )		(119 )		(99 )		(154 )		(243 )		(378 )
Total Dividends and
Distributions	$ (138,593 ) $	(59,478) $	(65,581) $	(5,447) $		(2,360) $		(144) $		(143) $		(189) $		(298) $		(472 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands														SAM Flexible Income Portfolio
														Year Ended				Year Ended
														October 31, 2010				October 31, 2009
Operations
Net investment income (loss)														$ 28,055				$ 28,103
Net realized gain (loss) on investments															(1,001 )				(11,243 )
Change in unrealized appreciation/depreciation of investments															73,229				97,758
			Net Increase (Decrease) in Net Assets Resulting from Operations												100,283				114,618

Dividends and Distributions to Shareholders
From net investment income															(30,633 )				(27,667 )
From net realized gain on investments																–			(16,978 )
							Total Dividends and Distributions								(30,633 )				(44,645 )

Capital Share Transactions
Net increase (decrease) in capital share transactions															108,949				32,082
Redemption fees - Class A																6			19
Redemption fees - Class B																1			4
Redemption fees - Class C																6			8
Redemption fees - Class J																4			1
						Total increase (decrease) in net assets									178,616				102,087

Net Assets
Beginning of period															782,965				680,878
End of period (including undistributed net investment income as set forth below)														$ 961,581				$ 782,965
Undistributed (overdistributed) net investment income (loss)														$ 416				$ 2,994

	Class A		Class B Class C			Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 146,514	$ 9,288 $		53,267	$ 103,824		$ 23,675		$ 567		$ 673		$ 2,981		$ 1,632		$ 2,418
Reinvested	14,468		3,271	4,986		3,518		1,206		22		19		152		67		121
Redeemed	(124,027 )		(60,694 )	(50,708 )		(16,660 )		(8,916 )		(114 )		(119 )		(716 )		(381 )		(1,385 )
Net Increase (Decrease)	$ 36,955	$ (48,135) $		7,545	$ 90,682		$ 15,965		$ 475		$ 573		$ 2,417		$ 1,318		$ 1,154
Shares:
Sold	13,487		862	4,961		9,595		2,201		54		62		276		152		225
Reinvested	1,336		303	464		326		111		2		2		14		6		11
Redeemed	(11,419)		(5,595 )	(4,716 )		(1,542 )		(828 )		(11 )		(11 )		(66 )		(35 )		(128 )
Net Increase (Decrease)	3,404		(4,430 )	709		8,379		1,484		45		53		224		123		108
Year Ended October 31, 2009
Dollars:
Sold	$ 140,173	$ 27,251 $		59,662	$ 44,591		$ 15,519		$ 838		$ 239		$ 2,121		$ 616		$ 1,309
Reinvested	21,029		8,281	8,202		1,262		557		11		8		71		46		53
Redeemed	(156,322 )		(80,753 )	(51,482 )		(6,140 )		(3,316 )		(607 )		(47 )		(443 )		(255 )		(392 )
Net Increase (Decrease)	$ 4,880	$ (45,221) $		16,382	$ 39,713		$ 12,760		$ 242		$ 200		$ 1,749		$ 407		$ 970
Shares:
Sold	14,958		2,923	6,411		4,586		1,577		85		24		223		66		136
Reinvested	2,249		892	885		132		58		1		1		8		5		6
Redeemed	(16,610)		(8,619 )	(5,502 )		(654 )		(335 )		(61 )		(5 )		(46 )		(25 )		(39 )
Net Increase (Decrease)	597		(4,804 )	1,794		4,064		1,300		25		20		185		46		103

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (16,269) $		(3,725) $	(5,527 ) $		(3,520 ) $		(1,211) $		(22 ) $		(19 ) $		(152) $		(67) $		(121 )
From net realized gain on
investments	–		–	–		–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (16,269) $		(3,725) $	(5,527 ) $		(3,520 ) $		(1,211) $		(22 ) $		(19 ) $		(152) $		(67) $		(121 )
Year Ended October 31, 2009
From net investment
income	$ (15,363) $		(5,265) $	(5,483 ) $		(980 ) $		(434) $		(8 ) $		(5 ) $		(57) $		(33) $		(39 )
From net realized gain on
investments	(8,774)		(4,178 )	(3,571 )		(284 )		(124 )		(3 )		(3 )		(14 )		(13 )		(14 )
Total Dividends and
Distributions	$ (24,137) $		(9,443) $	(9,054 ) $		(1,264 ) $		(558) $		(11 ) $		(8 ) $		(71) $		(46) $		(53 )


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.




Amounts in thousands													SAM Strategic Growth Portfolio
													Year Ended				Year Ended
													October 31, 2010				October 31, 2009
Operations
Net investment income (loss)													$ 9,446				$ 17,938
Net realized gain (loss) on investments														(36,621 )				(107,724 )
Change in unrealized appreciation/depreciation of investments														261,658				211,875
			Net Increase (Decrease) in Net Assets Resulting from Operations											234,483				122,089

Dividends and Distributions to Shareholders
From net investment income														(13,278 )				(5,245 )
From net realized gain on investments															–			(138,630 )
						Total Dividends and Distributions								(13,278 )				(143,875 )

Capital Share Transactions
Net increase (decrease) in capital share transactions													(162,286 )					(45,906 )
Redemption fees - Class A															1			12
Redemption fees - Class B															–			3
Redemption fees - Class C															–			7
Redemption fees - Class J															5			–
					Total increase (decrease) in net assets									58,925				(67,670 )

Net Assets
Beginning of period													1,403,768					1,471,438
End of period (including undistributed net investment income as set forth below)													$ 1,462,693				$ 1,403,768
Undistributed (overdistributed) net investment income (loss)													$ 9,057				$ 12,889

	Class A		Class B	Class C	Class J Institutional				R-1		R-2		R-3		R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 110,158 $		5,270 $	23,657 $	44,354	$ 18,372		$ 860		$ 999		$ 3,144		$ 1,203		$ 3,900
Reinvested		8,130	1,143	1,598	1,118		527		27		7		56		26		57
Redeemed	(181,790 )		(100,775 )	(74,658 )	(18,999 )		(5,907 )		(297 )		(219 )		(1,335 )		(1,601 )		(1,311 )
Net Increase (Decrease)	$ (63,502) $ (94,362) $ (49,403) $				26,473	$ 12,992		$ 590		$ 787		$ 1,865		$ (372) $			2,646
Shares:
Sold		8,340	429	1,903	3,451		1,439		67		78		244		94		309
Reinvested		626	93	131	88		41		2		1		4		2		4
Redeemed	(13,857 )		(8,175 )	(6,055 )	(1,479 )		(463 )		(23 )		(17 )		(104 )		(127 )		(99 )
Net Increase (Decrease)	(4,891 )		(7,653 )	(4,021 )	2,060		1,017		46		62		144		(31 )		214
Year Ended October 31, 2009
Dollars:
Sold	$ 104,729 $		17,893 $	35,960 $	43,014	$ 16,925		$ 1,302		$ 205		$ 2,862		$ 1,758		$ 1,332
Reinvested	68,546		31,385	30,321	4,471		1,019		113		29		157		127		112
Redeemed	(188,779 )		(106,851 )	(97,862 )	(10,337 )		(1,874 )		(139 )		(35 )		(300 )		(684 )		(1,305 )
Net Increase (Decrease)	$ (15,504) $ (57,573) $ (31,581) $				37,148	$ 16,070		$ 1,276		$ 199		$ 2,719		$ 1,201		$ 139
Shares:
Sold		9,952	1,829	3,701	4,120		1,661		128		19		273		174		125
Reinvested		6,689	3,276	3,158	443		101		11		3		15		12		11
Redeemed	(18,026 )		(10,821 )	(9,920 )	(1,003 )		(179 )		(12 )		(3 )		(28 )		(59 )		(114 )
Net Increase (Decrease)	(1,385 )		(5,716 )	(3,061 )	3,560		1,583		127		19		260		127		22

Distributions:
Year Ended October 31, 2010
From net investment
income	$ (8,511) $		(1,213) $	(1,736) $	(1,118) $		(527) $		(27) $		(7 ) $		(56) $		(26) $		(57)
From net realized gain on
investments		–	–	–	–		–		–		–		–		–		–
Total Dividends and
Distributions	$ (8,511) $		(1,213) $	(1,736) $	(1,118) $		(527) $		(27) $		(7 ) $		(56) $		(26) $		(57)
Year Ended October 31, 2009
From net investment
income	$ (4,709)		–	– $	(373) $		(118) $		(7) $		(2 ) $		(13) $		(11) $		(12)
From net realized gain on
investments	(67,243 )		(33,236 )	(32,657 )	(4,100 )		(901 )		(106 )		(27 )		(144 )		(116 )		(100 )
Total Dividends and
Distributions	$ (71,952) $		(33,236) $	(32,657) $	(4,473) $		(1,019) $		(113) $		(29 ) $		(157) $		(127) $		(112)

Principal Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company and operates as a series fund in the mutual fund industry. At October 31, 2010, the Fund consists of 64 separate funds. The financial statements for Principal LifeTime 2010 Fund, Principal LifeTime 2020 Fund, Principal LifeTime 2030 Fund, Principal LifeTime 2040 Fund, Principal LifeTime 2050 Fund, Principal LifeTime Strategic Income Fund (collectively, the “Principal LifeTime Funds”), SAM Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible Income Portfolio, and SAM Strategic Growth Portfolio (collectively, the “SAM Portfolios”) (known as the "Funds") are presented herein. The Funds may offer up to eleven classes of shares: Class A, Class B, Class C, Class J, Class P, Institutional, R-1, R-2, R-3, R-4, and R-5. Information presented in these financial statements pertains to the Class A, Class B, and Class C shares. Certain detailed financial information for the Class J, Class P, Institutional, R-1, R-2, R-3, R-4, and R-5 classes of shares is provided separately.

Effective June 5, 2009, Class C shares of the Principal LifeTime Funds discontinued operations and converted to Class A shares.

Security Valuation. The Funds invest in Institutional Class shares of other series of Principal Funds, Inc. (the "Underlying Funds"). Investments in the Underlying Funds are valued at the closing net asset value per share of each Underlying Fund on the day of valuation.

Income and Investment Transactions. The Funds record investment transactions on a trade date basis. The identified cost basis has been used in determining the net realized gain or loss from investment transactions and unrealized appreciation or depreciation of investments. The Funds record dividend income on the ex-dividend date. The Funds allocate daily all income and realized and unrealized gains or losses to each class of shares based upon the relative proportion of the value of shares outstanding of each class.

Expenses. Expenses directly attributed to one of the Funds are charged to that Fund. Other expenses not directly attributed to one of the Funds are apportioned among the registered investment companies managed by Principal Management Corporation.

In addition to the expenses that each of the Funds bear directly, each of the Funds indirectly bear a pro rata share of the fees and expenses of the Underlying Funds in which they invest. Because the Underlying Funds have varied expense levels and each of the Funds may own different proportions of Underlying Funds at different times, the amount of expense incurred indirectly by each of the Funds will vary. Management fees are allocated daily to each class of shares based upon the relative proportion of the value of shares outstanding of each class. Expenses specifically attributable to a particular class are charged directly to such class and are included separately in the statements of operations. Expenses included in the statements of operations of the Funds reflect the expenses of each of the Funds and do not include any expenses associated with the Underlying Funds.

Distributions to Shareholders. Dividends and distributions to shareholders of the Funds are recorded on the ex-dividend date. Dividends and distributions to shareholders from net investment income and net realized gain from investments are determined in accordance with federal tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differing treatments for losses deferred due to wash sales. Permanent book and tax basis differences are reclassified within the capital accounts based on federal tax-basis treatment; temporary differences do not require reclassification. To the extent dividends and distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as return of capital distributions.

Redemption and Exchange Fees. Each of the Funds did impose a redemption or exchange fee on redemptions or exchanges of $30,000 or more of Class A, Class B, or Class C shares redeemed or exchanged within 30 days after they are purchased. The fee was equal to 1.00% of the total redemption or exchange amount. The fee was paid to the Funds and is intended to offset the trading costs, market impact, and other costs associated with short-term money movements in and out of the Funds. As of September 2010, the fee is no longer charged.

Subsequent Events. Management has evaluated events or transactions that may have occurred since October 31, 2010, that would merit recognition or disclosure in the financial statements.

Line of Credit. The Funds participate with other registered investment companies managed by Principal Management Corporation (the “Manager”) in an unsecured joint line of credit with three banks which allow the participants to borrow up to $150 million, collectively. Borrowings are made solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each participant, based on its borrowings, at a rate equal to the higher of the Fed Funds Rate or LIBOR Rate plus 1.25%. Additionally, a commitment fee is charged at an annual rate of .10% on the amount of the line of credit. The Funds did not borrow against the line of credit during the year ended October 31, 2010.

The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

The beginning of the period timing recognition is being adopted for the significant transfers between levels of each Fund’s assets and liabilities. As of October 31, 2010 there were no significant transfers between Level 1 and Level 2.

As of October 31, 2010, 100% of each of the Funds’ investments were valued based on Level 1 inputs.

Management Services. The Funds have agreed to pay investment advisory and management fees to Principal Management Corporation (wholly owned by Principal Financial Services, Inc.). A portion of the management fee is paid by Principal Management Corporation to the sub-advisor of each of the Funds. The annual rate paid by each of the Principal LifeTime Funds is 0.03% of each of the Principal LifeTime Funds’ average net assets. The annual rate paid by the SAM Portfolios is based upon the aggregate average daily net assets (“aggregate net assets”) of the SAM Portfolios. The investment advisory and management fee schedule for the SAM Portfolios is .55% of aggregate net assets up to $500 million, .50% of the next $500 million of aggregate net assets, .45% of the next $1 billion of aggregate net assets, .40% of the next $1 billion of aggregate net assets, .35% of the next $1 billion of aggregate net assets, .30% of the next $1 billion of aggregate net assets and .25% of aggregate net assets over $5 billion.

The Manager has contractually agreed to limit the expenses (excluding interest the Funds incur in connection with investments they make) for Class A, Class B, and Class J shares of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to Class A, Class B, and Class J shares on an annualized basis during the reporting period. The operating expense limits are as follows:

The Manager has voluntarily agreed to limit the expenses (excluding interest the Funds incur in connection with investments they make) attributable to Institutional class shares of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets on an annualized basis during the reporting period. The expense limit may be terminated at anytime. The operating expense limits are as follows:

Distribution Fees. The Class A, Class B, Class C, Class J, R-1, R-2, R-3, and R-4 shares of the Funds bear distribution fees. The fee is computed at an annual rate of the average daily net assets attributable to each class of each of the Funds. Distribution fees are paid to Principal Funds Distributor, Inc., the principal underwriter, a portion may be paid to other selling dealers for providing certain services. The annual rates are .25%, 1.00%, 1.00%, .45%, .35%, .30%, .25%, and .10% for Class A, Class B, Class C, Class J, R-1, R-2, R-3 and R-4 classes of shares, respectively.

Principal Funds Distributor, Inc. has voluntarily agreed to limit the distribution fees (expressed as a percent of average net assets on an annualized basis) attributable to Class J. The limit will maintain the level of distribution fees not to exceed .35% for Class J shares. The expense limit may be terminated at any time.

Sales Charges. Principal Funds Distributor, Inc., as principal underwriter, receives proceeds of any CDSC on certain Class A, Class B, Class C, and Class J share redemptions. The charge for Class A shares is 1.00% of the lesser of current market value or the cost of shares redeemed within 12 months of purchase that were originally sold without a sales charge. The charge for Class B shares is based on declining rates which begin at 5.00% of the lesser of current market value or the cost of shares being redeemed within 24 months of purchase. After 24 months, the rate declines and is eliminated after 5 years. The charge for Class C shares is 1.00% of the lesser of current market value or the cost of shares redeemed within 12 months of purchase. The charge for Class J shares is 1.00% of the lesser of current market value or the cost of shares redeemed within 18 months of purchase. Principal Funds Distributor, Inc. also retains sales charges on sales of Class A shares based on declining rates which begin at 3.75% for Principal LifeTime Strategic Income Fund and SAM Flexible Income Portfolio and 5.50% for all other Funds. The aggregate amounts of these charges retained by Principal Funds Distributor, Inc. for the year ended October 31, 2010, were as follows (in thousands):

Class B shares automatically convert into Class A shares, based on relative net asset value (without a sales charge), eight years after purchase.

On June 5, 2009, Class C shares of the Principal LifeTime Funds discontinued operations and converted to Class A shares. The following table reflects the shares and dollars converted to Class A shares. The amounts shown are also included in the statement of changes in net assets as shares sold and dollars sold for Class A and shares redeemed and dollars redeembed for Class C (amounts in thousands).

Distributions to Shareholders. The federal income tax character of distributions paid for the years ended October 31, 2010 and October 31, 2009 were as follows (amounts in thousands):

*The funds designate these distributions as long-term capital gain dividends per IRC code Sec. 852(b)(3)(C).

For U.S. federal income tax purposes, short-term capital gain distributions are considered ordinary income distributions.

Distributable Earnings. As of October 31, 2010, the components of distributable earnings on a federal tax basis were as follows (amounts in thousands):

Capital Loss Carryforwards. Capital loss carryforwards are losses that can be used to offset future capital gain of the Funds. At October 31, 2010, the Funds had approximate net capital loss carryforwards as follows (amounts in thousands):


			Schedule of Investments
			Principal LifeTime 2010 Fund
			October 31, 2010


INVESTMENT COMPANIES - 99.90%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 99.90%
Bond & Mortgage Securities Fund ^(a)		19,600,405 $	207,176
Bond Market Index Fund ^(a),(b)		4,937,831	53,131
Core Plus Bond Fund I ^(a)		17,269,571	201,191
Diversified Real Asset Fund ^(a)		5,982,093	65,863
Global Diversified Income Fund ^(a)		5,032,664	66,985
High Yield Fund I ^(a)		5,234,050	60,924
Inflation Protection Fund ^(a)		9,451,506	77,880
International Emerging Markets Fund ^(a)		1,695,636	43,408
International Equity Index Fund ^(a),(b)		2,199,432	22,830
International Fund I ^(a)		3,709,919	41,996
International Growth Fund ^(a)		7,740,837	67,345
International Value Fund I ^(a)		5,765,582	65,958
LargeCap Growth Fund ^(a)		8,423,260	64,775
LargeCap Growth Fund I ^(a)		15,649,431	135,524
LargeCap S&P 500 Index Fund ^(a)		12,939,414	108,044
LargeCap Value Fund ^(a)		6,798,692	59,897
LargeCap Value Fund I ^(a)		11,384,325	114,640
MidCap Growth Fund III ^(a),(b)		2,807,945	26,872
MidCap Value Fund I ^(a)		2,217,973	26,993
Preferred Securities Fund ^(a)		6,208,324	62,456
Real Estate Securities Fund ^(a)		4,124,582	65,333
Short-Term Income Fund ^(a)		6,074,339	73,864
SmallCap Growth Fund I ^(a)		2,657,039	25,561
SmallCap Value Fund II ^(a)		2,762,258	23,949
		$ 1,762,595
TOTAL INVESTMENT COMPANIES		$ 1,762,595
Total Investments		$ 1,762,595
Other Assets in Excess of Liabilities, Net - 0.10%		$ 1,726
TOTAL NET ASSETS - 100.00%		$ 1,764,321

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime 2010 Fund
October 31, 2010

	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	27,634,216	$ 297,533	1,555,179 $	15,517	9,588,990	$ 95,606	19,600,405	$ 211,675
Bond Market Index Fund	—	—	5,618,274	56,938	680,443	7,055	4,937,831	49,994
Core Plus Bond Fund I	17,097,440	180,554	3,277,910	36,242	3,105,779	34,752	17,269,571	182,374
Disciplined LargeCap Blend Fund	12,973,709	187,443	351,569	3,906	13,325,278	149,462	—	—
Diversified Real Asset Fund	—	—	6,045,937	62,518	63,844	687	5,982,093	61,841
Global Diversified Income Fund	2,903,790	29,105	2,733,568	33,459	604,694	7,529	5,032,664	55,073
High Yield Fund I	5,244,939	51,450	776,993	7,998	787,882	8,375	5,234,050	51,162
Inflation Protection Fund	8,089,712	75,237	2,596,052	20,317	1,234,258	9,555	9,451,506	85,807
International Emerging Markets Fund	1,828,014	48,644	93,587	2,094	225,965	5,007	1,695,636	45,596
International Equity Index Fund	—	—	2,526,482	23,600	327,050	3,071	2,199,432	20,477
International Fund I	6,218,199	73,716	291,977	3,075	2,800,257	27,851	3,709,919	51,897
International Growth Fund	8,316,752	111,016	470,641	3,781	1,046,556	8,212	7,740,837	103,970
International Value Fund I	6,031,943	54,697	529,546	5,690	795,907	8,213	5,765,582	52,194
LargeCap Blend Fund I	10,641,872	100,652	393,714	2,807	11,035,586	103,484	—	—
LargeCap Growth Fund	9,156,078	67,402	392,945	2,728	1,125,763	7,810	8,423,260	62,322
LargeCap Growth Fund I	9,638,360	80,508	7,882,994	62,121	1,871,923	14,472	15,649,431	128,111
LargeCap S&P 500 Index Fund	—	—	14,057,711	134,305	1,118,297	8,680	12,939,414	125,606
LargeCap Value Fund	4,808,865	51,495	2,878,234	24,381	888,407	7,373	6,798,692	68,522
LargeCap Value Fund I	4,227,957	53,315	8,618,329	85,023	1,461,961	14,035	11,384,325	124,255
LargeCap Value Fund III	4,473,299	51,987	132,138	1,218	4,605,437	43,153	—	—
MidCap Growth Fund III	3,028,299	17,903	120,659	1,018	341,013	2,889	2,807,945	15,902
MidCap Value Fund I	2,366,441	19,182	115,740	1,253	264,208	2,890	2,217,973	17,459
Money Market Fund	4,161,570	4,162	51,356,191	71,583	55,517,761	55,518	—	—
Preferred Securities Fund	12,258,698	129,109	690,329	6,400	6,740,703	62,999	6,208,324	66,947
Real Estate Securities Fund	8,842,836	142,077	507,589	6,836	5,225,843	77,479	4,124,582	63,561
Short-Term Income Fund	—	—	6,527,995	77,982	453,656	5,445	6,074,339	72,553
SmallCap Growth Fund I	1,863,690	22,819	1,116,217	8,900	322,868	2,671	2,657,039	29,031
SmallCap S&P 600 Index Fund	1,261,937	22,115	32,500	405	1,294,437	16,472	—	—
SmallCap Value Fund	942,825	18,071	15,901	199	958,726	12,674	—	—
SmallCap Value Fund I	246,346	3,307	10,378	121	256,724	3,052	—	—
SmallCap Value Fund II	—	—	3,060,176	24,231	297,918	2,380	2,762,258	21,852
Ultra Short Bond Fund	7,119,381	70,500	2,706	19	7,122,087	70,385	—	—

		$ 1,963,999	$ 786,665			$ 879,236		$ 1,768,181
				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 9,120		$ (5,769)			$ —
Bond Market Index Fund		—			111			—
Core Plus Bond Fund I		7,691			330			57
Disciplined LargeCap Blend Fund		1,978			(41,887)			—
Diversified Real Asset Fund		88			10			—
Global Diversified Income Fund		6,143			38			19
High Yield Fund I		5,049			89			—
Inflation Protection Fund		1,369			(192)			—
International Emerging Markets Fund		342			(135)			—
International Equity Index Fund		—			(52)			—
International Fund I		1,011			2,957			—
International Growth Fund		1,107			(2,615)			—
International Value Fund I		2,471			20			258
LargeCap Blend Fund I		1,786			25			—
LargeCap Growth Fund		11			2			—
LargeCap Growth Fund I		49			(46)			—
LargeCap S&P 500 Index Fund		—			(19)			—
LargeCap Value Fund		786			19			—
LargeCap Value Fund I		543			(48)			—
LargeCap Value Fund III		674			(10,052)			—
MidCap Growth Fund III		—			(130)			—
MidCap Value Fund I		235			(86)			—
Money Market Fund		—			(20,227)			—
Preferred Securities Fund		5,307			(5,563)			—
Real Estate Securities Fund		2,144			(7,873)			—
Short-Term Income Fund		1,039			16			—
SmallCap Growth Fund I		1			(17)			—
SmallCap S&P 600 Index Fund		132			(6,048)			—
SmallCap Value Fund		108			(5,596)			—
SmallCap Value Fund I		30			(376)			—
SmallCap Value Fund II		—			1			—
Ultra Short Bond Fund		15			(134)			—
	$ 49,229		$ (103,247)			$ 334
All dollar amounts are shown in thousands (000's)


			Schedule of Investments
			Principal LifeTime 2020 Fund
			October 31, 2010



INVESTMENT COMPANIES - 100.05%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.05%
Bond & Mortgage Securities Fund ^(a)	46,178,187 $		488,104
Bond Market Index Fund ^(a),(b)	12,820,028		137,944
Core Plus Bond Fund I ^(a)	38,528,584		448,858
Diversified Real Asset Fund ^(a)	11,961,893		131,701
Global Diversified Income Fund ^(a)		191,819	2,553
High Yield Fund I ^(a)	22,942,010		267,045
Inflation Protection Fund ^(a)		212,515	1,751
International Emerging Markets Fund ^(a)		6,088,291	155,860
International Equity Index Fund ^(a),(b)		8,177,765	84,885
International Fund I ^(a)	13,565,297		153,559
International Growth Fund ^(a)	27,921,704		242,919
International Value Fund I ^(a)	21,140,409		241,846
LargeCap Growth Fund ^(a)	29,750,144		228,779
LargeCap Growth Fund I ^(a)	56,456,853		488,916
LargeCap S&P 500 Index Fund ^(a)	36,513,918		304,891
LargeCap Value Fund ^(a)	25,556,981		225,157
LargeCap Value Fund I ^(a)	44,428,897		447,399
MidCap Growth Fund III ^(a),(b)		9,523,301	91,138
MidCap Value Fund I ^(a)		6,992,874	85,103
Preferred Securities Fund ^(a)	15,387,124		154,795
Real Estate Securities Fund ^(a)	11,780,702		186,606
SmallCap Growth Fund I ^(a)	11,914,983		114,622
SmallCap Value Fund II ^(a)	10,624,942		92,118
		$ 4,776,549
TOTAL INVESTMENT COMPANIES		$ 4,776,549
Total Investments		$ 4,776,549
Liabilities in Excess of Other Assets, Net - (0.05)%		$ (2,356)
TOTAL NET ASSETS - 100.00%		$ 4,774,193

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime 2020 Fund
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	53,885,169	$ 576,986	4,418,465	$ 44,043	12,125,447	$ 121,895	46,178,187	$ 495,859
Bond Market Index Fund	—	—	13,607,904	138,462	787,876	8,178	12,820,028	130,342
Core Plus Bond Fund I	33,106,275	350,072	8,430,128	93,164	3,007,819	33,565	38,528,584	409,805
Disciplined LargeCap Blend Fund	39,892,865	553,354	1,304,686	14,485	41,197,551	462,412	—	—
Diversified Real Asset Fund	—	—	12,041,469	124,464	79,576	853	11,961,893	123,619
Global Diversified Income Fund	—	—	191,819	2,538	—	—	191,819	2,538
High Yield Fund I	20,887,746	206,241	3,583,029	37,101	1,528,765	16,304	22,942,010	227,106
Inflation Protection Fund	—	—	212,515	1,744	—	—	212,515	1,744
International Emerging Markets Fund	6,028,157	152,784	508,230	11,452	448,096	9,934	6,088,291	154,280
International Equity Index Fund	—	—	8,787,049	82,469	609,284	5,697	8,177,765	76,763
International Fund I	20,877,566	243,407	1,480,029	15,570	8,792,298	87,613	13,565,297	179,820
International Growth Fund	27,581,935	353,128	2,439,442	19,607	2,099,673	16,479	27,921,704	356,260
International Value Fund I	20,217,987	180,211	2,517,593	26,980	1,595,171	16,479	21,140,409	190,687
LargeCap Blend Fund I	32,338,150	289,540	1,391,043	9,932	33,729,193	299,476	—	—
LargeCap Growth Fund	29,697,315	213,775	2,366,808	16,639	2,313,979	15,954	29,750,144	214,453
LargeCap Growth Fund I	32,271,873	261,066	27,801,194	219,420	3,616,214	27,807	56,456,853	452,637
LargeCap S&P 500 Index Fund	—	—	38,540,015	359,558	2,026,097	15,645	36,513,918	343,828
LargeCap Value Fund	16,243,283	168,588	11,091,263	94,353	1,777,565	14,666	25,556,981	248,288
LargeCap Value Fund I	14,095,111	171,571	33,113,040	326,480	2,779,254	26,520	44,428,897	471,549
LargeCap Value Fund III	14,907,493	169,097	533,424	4,918	15,440,917	145,711	—	—
MidCap Growth Fund III	9,505,407	81,349	678,642	5,816	660,748	5,549	9,523,301	81,632
MidCap Value Fund I	6,912,847	79,416	591,508	6,505	511,481	5,548	6,992,874	80,378
Preferred Securities Fund	26,158,784	267,877	1,795,545	16,753	12,567,205	116,931	15,387,124	162,304
Real Estate Securities Fund	17,388,784	280,719	1,727,193	23,735	7,335,275	107,929	11,780,702	189,225
SmallCap Growth Fund I	7,797,219	89,261	4,733,838	37,877	616,074	5,056	11,914,983	122,094
SmallCap S&P 600 Index Fund	5,068,940	84,529	124,777	1,553	5,193,717	66,118	—	—
SmallCap Value Fund	4,008,799	70,678	74,454	928	4,083,253	54,080	—	—
SmallCap Value Fund I	964,790	13,246	47,235	550	1,012,025	12,034	—	—
SmallCap Value Fund II	—	—	11,151,160	88,031	526,218	4,186	10,624,942	83,862

		$ 4,856,895		$ 1,825,127		$ 1,702,619		$ 4,799,073


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 19,148		$ (3,275)			$ —
Bond Market Index Fund		—			58			—
Core Plus Bond Fund I		15,649			134			111
Disciplined LargeCap Blend Fund		6,114			(105,427)			—
Diversified Real Asset Fund		176			8			—
Global Diversified Income Fund		13			—			—
High Yield Fund I		20,235			68			—
Inflation Protection Fund		2			—			—
International Emerging Markets Fund		1,135			(22)			—
International Equity Index Fund		—			(9)			—
International Fund I		3,415			8,456			—
International Growth Fund		3,694			4			—
International Value Fund I		8,328			(25)			871
LargeCap Blend Fund I		5,472			4			—
LargeCap Growth Fund		36			(7)			—
LargeCap Growth Fund I		164			(42)			—
LargeCap S&P 500 Index Fund		—			(85)			—
LargeCap Value Fund		2,670			13			—
LargeCap Value Fund I		1,819			18			—
LargeCap Value Fund III		2,258			(28,304)			—
MidCap Growth Fund III		—			16			—
MidCap Value Fund I		690			5			—
Preferred Securities Fund		11,920			(5,395)			—
Real Estate Securities Fund		4,565			(7,300)			—
SmallCap Growth Fund I		3			12			—
SmallCap S&P 600 Index Fund		536			(19,964)			—
SmallCap Value Fund		460			(17,526)			—
SmallCap Value Fund I		120			(1,762)			—
SmallCap Value Fund II		—			17			—
	$ 108,622		$ (180,330)			$ 982
All dollar amounts are shown in thousands (000's)


			Schedule of Investments
			Principal LifeTime 2030 Fund
			October 31, 2010



INVESTMENT COMPANIES - 100.17%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.17%
Bond & Mortgage Securities Fund ^(a)	22,989,351 $		242,997
Bond Market Index Fund ^(a),(b)		8,180,890	88,026
Core Plus Bond Fund I ^(a)	19,878,728		231,587
Diversified Real Asset Fund ^(a)		7,235,241	79,660
High Yield Fund I ^(a)	20,698,976		240,936
International Emerging Markets Fund ^(a)		6,890,818	176,405
International Equity Index Fund ^(a),(b)		9,614,803	99,802
International Fund I ^(a)	14,211,830		160,878
International Growth Fund ^(a)	27,566,606		239,829
International Value Fund I ^(a)	21,021,096		240,481
LargeCap Growth Fund ^(a)	31,849,762		244,925
LargeCap Growth Fund I ^(a)	59,964,304		519,291
LargeCap S&P 500 Index Fund ^(a)	35,666,909		297,819
LargeCap Value Fund ^(a)	26,925,406		237,213
LargeCap Value Fund I ^(a)	46,641,306		469,678
MidCap Growth Fund III ^(a),(b)		9,723,532	93,054
MidCap Value Fund I ^(a)		7,655,836	93,172
Preferred Securities Fund ^(a)	13,465,681		135,465
Real Estate Securities Fund ^(a)	12,648,774		200,357
SmallCap Growth Fund I ^(a)	12,555,228		120,781
SmallCap Value Fund II ^(a)	10,376,633		89,965
		$ 4,302,321
TOTAL INVESTMENT COMPANIES		$ 4,302,321
Total Investments		$ 4,302,321
Liabilities in Excess of Other Assets, Net - (0.17)%		$ (7,478)
TOTAL NET ASSETS - 100.00%		$ 4,294,843

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime 2030 Fund
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	27,391,152	$ 293,194	2,478,882	$ 24,730	6,880,683	$ 69,519	22,989,351	$ 246,317
Bond Market Index Fund	—	—	8,568,148	87,289	387,258	4,003	8,180,890	83,301
Core Plus Bond Fund I	16,519,583	174,393	4,996,644	55,250	1,637,499	18,249	19,878,728	211,442
Disciplined LargeCap Blend Fund	40,152,466	547,280	1,331,583	14,763	41,484,049	465,410	—	—
Diversified Real Asset Fund	—	—	7,281,518	74,541	46,277	494	7,235,241	74,049
High Yield Fund I	21,502,607	210,596	3,873,963	40,428	4,677,594	49,406	20,698,976	201,842
International Emerging Markets Fund	6,758,272	164,468	583,000	13,132	450,454	10,028	6,890,818	167,575
International Equity Index Fund	—	—	10,194,159	95,629	579,356	5,462	9,614,803	90,166
International Fund I	20,435,478	243,685	1,630,595	17,131	7,854,243	79,090	14,211,830	186,963
International Growth Fund	26,967,020	344,443	2,696,502	21,605	2,096,916	16,589	27,566,606	349,462
International Value Fund I	19,859,293	177,683	2,756,359	29,490	1,594,556	16,588	21,021,096	190,548
LargeCap Blend Fund I	31,743,807	280,885	1,396,746	9,963	33,140,553	290,856	—	—
LargeCap Growth Fund	31,454,862	228,450	2,712,096	19,047	2,317,196	16,114	31,849,762	231,374
LargeCap Growth Fund I	34,704,220	275,275	28,860,863	227,329	3,600,779	27,864	59,964,304	474,734
LargeCap S&P 500 Index Fund	—	—	37,626,225	348,112	1,959,316	15,233	35,666,909	332,848
LargeCap Value Fund	17,177,872	179,383	11,510,844	97,911	1,763,310	14,667	26,925,406	262,650
LargeCap Value Fund I	14,861,690	181,012	34,513,565	340,727	2,733,949	26,345	46,641,306	495,433
LargeCap Value Fund III	15,662,319	174,343	577,273	5,315	16,239,592	153,620	—	—
MidCap Growth Fund III	9,610,461	83,546	766,925	6,569	653,854	5,542	9,723,532	84,602
MidCap Value Fund I	7,497,878	87,694	665,465	7,320	507,507	5,541	7,655,836	89,509
Preferred Securities Fund	19,801,397	198,789	1,546,937	14,486	7,882,653	73,657	13,465,681	137,469
Real Estate Securities Fund	15,104,962	225,415	1,451,529	20,069	3,907,717	56,207	12,648,774	186,918
SmallCap Growth Fund I	9,993,702	104,006	3,185,888	25,603	624,362	5,142	12,555,228	124,451
SmallCap S&P 600 Index Fund	3,029,827	47,109	77,936	965	3,107,763	39,571	—	—
SmallCap Value Fund	2,969,105	50,317	73,509	914	3,042,614	40,807	—	—
SmallCap Value Fund I	2,821,387	45,909	79,588	924	2,900,975	34,533	—	—
SmallCap Value Fund II	—	—	10,872,931	85,886	496,298	3,984	10,376,633	81,926

		$ 4,317,875		$ 1,685,128		$ 1,544,521		$ 4,303,579


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 9,658		$ (2,088)			$ —
Bond Market Index Fund		—			15			—
Core Plus Bond Fund I		8,046			48			57
Disciplined LargeCap Blend Fund		6,175			(96,633)			—
Diversified Real Asset Fund		126			2			—
High Yield Fund I		20,888			224			—
International Emerging Markets Fund		1,276			3			—
International Equity Index Fund		—			(1)			—
International Fund I		3,353			5,237			—
International Growth Fund		3,622			3			—
International Value Fund I		8,207			(37)			858
LargeCap Blend Fund I		5,383			8			—
LargeCap Growth Fund		38			(9)			—
LargeCap Growth Fund I		178			(6)			—
LargeCap S&P 500 Index Fund		—			(31)			—
LargeCap Value Fund		2,834			23			—
LargeCap Value Fund I		1,925			39			—
LargeCap Value Fund III		2,381			(26,038)			—
MidCap Growth Fund III		—			29			—
MidCap Value Fund I		751			36			—
Preferred Securities Fund		9,867			(2,149)			—
Real Estate Securities Fund		4,108			(2,359)			—
SmallCap Growth Fund I		4			(16)			—
SmallCap S&P 600 Index Fund		321			(8,503)			—
SmallCap Value Fund		341			(10,424)			—
SmallCap Value Fund I		351			(12,300)			—
SmallCap Value Fund II		—			24			—
	$ 89,833		$ (154,903)			$ 915
All dollar amounts are shown in thousands (000's)


			Schedule of Investments
			Principal LifeTime 2040 Fund
			October 31, 2010



INVESTMENT COMPANIES - 100.32%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.32%
Bond & Mortgage Securities Fund ^(a)		6,132,472 $	64,820
Bond Market Index Fund ^(a),(b)		2,374,213	25,547
Core Plus Bond Fund I ^(a)		5,467,233	63,693
Diversified Real Asset Fund ^(a)		3,531,024	38,877
High Yield Fund I ^(a)	11,867,139		138,134
International Emerging Markets Fund ^(a)		4,664,940	119,422
International Equity Index Fund ^(a)		6,255,662	64,934
International Fund I ^(a)		9,537,153	107,961
International Growth Fund ^(a)	18,331,433		159,484
International Value Fund I ^(a)	14,165,380		162,052
LargeCap Growth Fund ^(a)	21,326,184		163,998
LargeCap Growth Fund I ^(a)	38,695,735		335,105
LargeCap S&P 500 Index Fund ^(a)	25,768,546		215,167
LargeCap Value Fund ^(a)	17,586,869		154,940
LargeCap Value Fund I ^(a)	30,214,893		304,264
MidCap Growth Fund III ^(a),(b)		6,136,281	58,724
MidCap Value Fund I ^(a)		4,801,011	58,428
Preferred Securities Fund ^(a)		6,894,258	69,356
Real Estate Securities Fund ^(a)		5,598,947	88,687
SmallCap Growth Fund I ^(a)		7,899,367	75,992
SmallCap Value Fund II ^(a)		6,901,454	59,836
		$ 2,529,421
TOTAL INVESTMENT COMPANIES		$ 2,529,421
Total Investments		$ 2,529,421
Liabilities in Excess of Other Assets, Net - (0.32)%		$ (8,154)
TOTAL NET ASSETS - 100.00%		$ 2,521,267

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime 2040 Fund
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	6,708,987	$ 71,670	974,818	$ 9,763	1,551,333	$ 15,993	6,132,472	$ 65,374
Bond Market Index Fund	—	—	2,474,223	25,252	100,010	1,035	2,374,213	24,219
Core Plus Bond Fund I	5,181,372	54,391	1,307,590	14,511	1,021,729	11,631	5,467,233	57,540
Disciplined LargeCap Blend Fund	23,867,856	315,548	933,795	10,351	24,801,651	278,339	—	—
Diversified Real Asset Fund	—	—	3,550,794	36,488	19,770	211	3,531,024	36,278
High Yield Fund I	11,864,287	117,142	2,352,460	24,475	2,349,608	24,861	11,867,139	116,855
International Emerging Markets Fund	4,430,925	103,613	503,674	11,328	269,659	5,965	4,664,940	108,987
International Equity Index Fund	—	—	6,615,711	62,173	360,049	3,380	6,255,662	58,793
International Fund I	13,257,850	158,459	1,353,738	14,157	5,074,435	51,068	9,537,153	125,293
International Growth Fund	17,282,485	216,357	2,298,973	18,346	1,250,025	9,838	18,331,433	224,857
International Value Fund I	12,878,020	113,741	2,237,921	23,822	950,561	9,838	14,165,380	127,712
LargeCap Blend Fund I	19,439,650	166,864	966,133	6,899	20,405,783	173,766	—	—
LargeCap Growth Fund	20,305,621	145,764	2,405,556	16,861	1,384,993	9,590	21,326,184	153,035
LargeCap Growth Fund I	23,521,541	181,684	17,347,579	136,553	2,173,385	16,724	38,695,735	301,509
LargeCap S&P 500 Index Fund	—	—	26,971,868	238,553	1,203,322	9,305	25,768,546	229,227
LargeCap Value Fund	11,605,173	117,557	7,036,414	59,627	1,054,718	8,737	17,586,869	168,469
LargeCap Value Fund I	9,968,759	116,608	21,903,998	216,729	1,657,864	15,907	30,214,893	317,454
LargeCap Value Fund III	10,582,168	117,855	464,682	4,278	11,046,850	104,616	—	—
MidCap Growth Fund III	5,853,952	50,875	666,280	5,704	383,951	3,238	6,136,281	53,350
MidCap Value Fund I	4,538,025	52,533	563,159	6,200	300,173	3,264	4,801,011	55,476
Preferred Securities Fund	8,215,750	81,478	846,875	7,972	2,168,367	20,269	6,894,258	68,855
Real Estate Securities Fund	6,416,869	103,278	878,486	12,198	1,696,408	24,380	5,598,947	90,021
SmallCap Growth Fund I	6,111,748	62,315	2,169,372	17,490	381,753	3,125	7,899,367	76,683
SmallCap S&P 600 Index Fund	1,866,616	27,635	32,867	408	1,899,483	24,189	—	—
SmallCap Value Fund	1,937,013	31,636	36,908	459	1,973,921	26,561	—	—
SmallCap Value Fund I	1,854,396	30,385	60,923	706	1,915,319	22,800	—	—
SmallCap Value Fund II	—	—	7,209,865	57,075	308,411	2,455	6,901,454	54,640

		$ 2,437,388		$ 1,038,378		$ 881,085		$ 2,514,627


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 2,588		$ (66)			$ —
Bond Market Index Fund		—			2			—
Core Plus Bond Fund I		2,340			269			17
Disciplined LargeCap Blend Fund		3,685			(47,560)			—
Diversified Real Asset Fund		58			1			—
High Yield Fund I		11,562			99			—
International Emerging Markets Fund		841			11			—
International Equity Index Fund		—			—			—
International Fund I		2,188			3,745			—
International Growth Fund		2,336			(8)			—
International Value Fund I		5,350			(13)			559
LargeCap Blend Fund I		3,315			3			—
LargeCap Growth Fund		24			—			—
LargeCap Growth Fund I		121			(4)			—
LargeCap S&P 500 Index Fund		—			(21)			—
LargeCap Value Fund		1,924			22			—
LargeCap Value Fund I		1,298			24			—
LargeCap Value Fund III		1,617			(17,517)			—
MidCap Growth Fund III		—			9			—
MidCap Value Fund I		456			7			—
Preferred Securities Fund		4,616			(326)			—
Real Estate Securities Fund		1,779			(1,075)			—
SmallCap Growth Fund I		2			3			—
SmallCap S&P 600 Index Fund		197			(3,854)			—
SmallCap Value Fund		222			(5,534)			—
SmallCap Value Fund I		232			(8,291)			—
SmallCap Value Fund II		—			20			—
	$ 46,751		$ (80,054)			$ 576
All dollar amounts are shown in thousands (000's)


			Schedule of Investments
			Principal LifeTime 2050 Fund
			October 31, 2010



INVESTMENT COMPANIES - 100.24%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.24%
Bond & Mortgage Securities Fund ^(a)		979,381 $	10,352
Bond Market Index Fund ^(a),(b)		236,706	2,547
Core Plus Bond Fund I ^(a)		888,294	10,349
Diversified Real Asset Fund ^(a)		1,157,290	12,742
High Yield Fund I ^(a)		4,947,900	57,593
International Emerging Markets Fund ^(a)		1,971,482	50,470
International Equity Index Fund ^(a)		2,464,804	25,585
International Fund I ^(a)		4,219,895	47,769
International Growth Fund ^(a)		8,440,801	73,435
International Value Fund I ^(a)		6,515,688	74,539
LargeCap Growth Fund ^(a)		9,992,413	76,842
LargeCap Growth Fund I ^(a)	17,165,140		148,650
LargeCap S&P 500 Index Fund ^(a)	10,579,486		88,339
LargeCap Value Fund ^(a)		8,000,909	70,488
LargeCap Value Fund I ^(a)	13,225,176		133,177
MidCap Growth Fund III ^(a),(b)		2,915,734	27,903
MidCap Value Fund I ^(a)		2,203,622	26,818
Preferred Securities Fund ^(a)		2,346,997	23,611
Real Estate Securities Fund ^(a)		2,555,978	40,487
SmallCap Growth Fund I ^(a)		3,470,774	33,389
SmallCap Value Fund II ^(a)		3,059,769	26,528
		$ 1,061,613
TOTAL INVESTMENT COMPANIES		$ 1,061,613
Total Investments		$ 1,061,613
Liabilities in Excess of Other Assets, Net - (0.24)%		$ (2,560)
TOTAL NET ASSETS - 100.00%		$ 1,059,053

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime 2050 Fund
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	930,790	$ 10,026	175,538 $	1,757	126,947	$ 1,293	979,381	$ 10,475
Bond Market Index Fund	—	—	252,250	2,561	15,544	162	236,706	2,400
Core Plus Bond Fund I	907,915	9,402	292,421	3,242	312,042	3,584	888,294	9,181
Disciplined LargeCap Blend Fund	9,500,988	125,760	461,273	5,114	9,962,261	111,776	—	—
Diversified Real Asset Fund	—	—	1,164,537	11,831	7,247	78	1,157,290	11,754
High Yield Fund I	4,271,557	43,644	948,126	9,893	271,783	2,904	4,947,900	50,638
International Emerging Markets Fund	1,846,172	43,663	237,762	5,372	112,452	2,498	1,971,482	46,535
International Equity Index Fund	—	—	2,611,491	24,567	146,687	1,367	2,464,804	23,198
International Fund I	6,026,445	69,103	655,464	6,880	2,462,014	24,575	4,219,895	53,387
International Growth Fund	7,864,991	96,261	1,103,803	8,840	527,993	4,149	8,440,801	100,958
International Value Fund I	5,856,561	50,836	1,060,272	11,323	401,145	4,149	6,515,688	58,009
LargeCap Blend Fund I	7,934,997	67,885	464,985	3,325	8,399,982	71,212	—	—
LargeCap Growth Fund	9,424,775	66,460	1,166,475	8,201	598,837	4,147	9,992,413	70,513
LargeCap Growth Fund I	10,070,499	78,014	8,018,273	63,225	923,632	7,136	17,165,140	134,094
LargeCap S&P 500 Index Fund	—	—	11,075,241	97,745	495,755	3,844	10,579,486	93,879
LargeCap Value Fund	5,457,990	54,034	2,994,804	25,345	451,885	3,747	8,000,909	75,633
LargeCap Value Fund I	4,718,705	54,167	9,209,438	90,898	702,967	6,735	13,225,176	138,336
LargeCap Value Fund III	5,030,659	53,782	246,815	2,273	5,277,474	49,661	—	—
MidCap Growth Fund III	2,759,103	23,178	321,735	2,761	165,104	1,395	2,915,734	24,544
MidCap Value Fund I	2,062,481	23,460	268,950	2,969	127,809	1,395	2,203,622	25,035
Preferred Securities Fund	2,421,261	24,823	292,457	2,761	366,721	3,415	2,346,997	24,143
Real Estate Securities Fund	2,897,577	46,955	397,905	5,539	739,504	10,663	2,555,978	41,489
SmallCap Growth Fund I	2,749,798	28,042	882,911	7,142	161,935	1,333	3,470,774	33,854
SmallCap S&P 600 Index Fund	691,682	9,800	24,702	305	716,384	9,121	—	—
SmallCap Value Fund	852,029	13,785	31,248	388	883,277	11,997	—	—
SmallCap Value Fund I	892,633	14,981	34,614	401	927,247	11,037	—	—
SmallCap Value Fund II	—	—	3,187,297	25,353	127,528	1,025	3,059,769	24,330

		$ 1,008,061	$ 430,011			$ 354,398		$ 1,052,385


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 367		$ (15)			$ —
Bond Market Index Fund		—			1			—
Core Plus Bond Fund I		427			121			3
Disciplined LargeCap Blend Fund		1,473			(19,098)			—
Diversified Real Asset Fund		23			1			—
High Yield Fund I		4,182			5			—
International Emerging Markets Fund		352			(2)			—
International Equity Index Fund		—			(2)			—
International Fund I		998			1,979			—
International Growth Fund		1,066			6			—
International Value Fund I		2,440			(1)			255
LargeCap Blend Fund I		1,360			2			—
LargeCap Growth Fund		11			(1)			—
LargeCap Growth Fund I		52			(9)			—
LargeCap S&P 500 Index Fund		—			(22)			—
LargeCap Value Fund		907			1			—
LargeCap Value Fund I		616			6			—
LargeCap Value Fund III		770			(6,394)			—
MidCap Growth Fund III		—			—			—
MidCap Value Fund I		208			1			—
Preferred Securities Fund		1,487			(26)			—
Real Estate Securities Fund		810			(342)			—
SmallCap Growth Fund I		1			3			—
SmallCap S&P 600 Index Fund		74			(984)			—
SmallCap Value Fund		99			(2,176)			—
SmallCap Value Fund I		112			(4,345)			—
SmallCap Value Fund II		—			2			—
	$ 17,835		$ (31,289)			$ 258
All dollar amounts are shown in thousands (000's)


			Schedule of Investments
		Principal LifeTime Strategic Income Fund
			October 31, 2010



INVESTMENT COMPANIES - 100.15%	Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.15%
Bond & Mortgage Securities Fund ^(a)	11,210,815 $		118,498
Bond Market Index Fund ^(a),(b)		3,017,691	32,470
Core Plus Bond Fund I ^(a)	10,088,157		117,527
Diversified Real Asset Fund ^(a)		2,842,271	31,293
Global Diversified Income Fund ^(a)		3,182,389	42,358
High Yield Fund I ^(a)		1,820,567	21,191
Inflation Protection Fund ^(a)	10,273,587		84,654
International Emerging Markets Fund ^(a)		120,562	3,086
International Equity Index Fund ^(a)		313,668	3,256
International Fund I ^(a)		648,036	7,336
International Growth Fund ^(a)		1,237,422	10,766
International Value Fund I ^(a)		943,862	10,798
LargeCap Growth Fund ^(a)		1,402,360	10,784
LargeCap Growth Fund I ^(a)		2,254,517	19,524
LargeCap S&P 500 Index Fund ^(a)		1,862,646	15,553
LargeCap Value Fund ^(a)		969,420	8,541
LargeCap Value Fund I ^(a)		1,629,982	16,414
MidCap Growth Fund III ^(a),(b)		418,975	4,010
MidCap Value Fund I ^(a)		335,256	4,080
Preferred Securities Fund ^(a)		1,980,256	19,921
Real Estate Securities Fund ^(a)		484,205	7,670
Short-Term Income Fund ^(a)		6,079,622	73,928
SmallCap Growth Fund I ^(a)		547,171	5,264
SmallCap Value Fund II ^(a)		564,075	4,891
		$ 673,813
TOTAL INVESTMENT COMPANIES		$ 673,813
Total Investments		$ 673,813
Liabilities in Excess of Other Assets, Net - (0.15)%		$ (995 )
TOTAL NET ASSETS - 100.00%		$ 672,818

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
Principal LifeTime Strategic Income Fund
October 31, 2010


	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases^(a)Purchases^(a)		Sales^(a)	Sales^(a)	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Bond & Mortgage Securities Fund	13,433,544	$ 144,870	1,997,613 $	20,098	4,220,342	$ 41,738	11,210,815	$ 120,908
Bond Market Index Fund	—	—	3,475,153	35,562	457,462	4,709	3,017,691	30,859
Core Plus Bond Fund I	8,628,449	91,186	3,211,483	35,495	1,751,775	19,513	10,088,157	107,218
Disciplined LargeCap Blend Fund	1,719,818	22,933	147,489	1,647	1,867,307	20,976	—	—
Diversified Real Asset Fund	—	—	2,863,686	29,898	21,415	230	2,842,271	29,669
Global Diversified Income Fund	2,601,134	26,264	1,078,132	13,278	496,877	6,123	3,182,389	33,424
High Yield Fund I	774,373	6,312	1,334,680	14,129	288,486	3,049	1,820,567	17,401
Inflation Protection Fund	9,134,833	85,060	2,867,730	22,454	1,728,976	13,335	10,273,587	94,195
International Emerging Markets Fund	106,384	2,485	64,014	1,433	49,836	1,100	120,562	2,817
International Equity Index Fund	—	—	384,096	3,674	70,428	657	313,668	3,015
International Fund I	870,432	10,303	177,845	1,839	400,241	4,088	648,036	8,299
International Growth Fund	1,175,718	14,441	292,174	2,300	230,470	1,817	1,237,422	14,922
International Value Fund I	851,530	7,696	264,946	2,774	172,614	1,790	943,862	8,680
LargeCap Blend Fund I	1,487,824	13,703	138,766	1,001	1,626,590	14,708	—	—
LargeCap Growth Fund	1,327,105	8,970	326,587	2,270	251,332	1,748	1,402,360	9,494
LargeCap Growth Fund I	1,236,247	10,009	1,416,303	11,107	398,033	3,081	2,254,517	18,034
LargeCap S&P 500 Index Fund	—	—	2,081,450	19,308	218,804	1,699	1,862,646	17,604
LargeCap Value Fund	546,839	6,249	615,951	5,171	193,370	1,611	969,420	9,805
LargeCap Value Fund I	349,017	2,844	1,586,296	15,625	305,331	2,942	1,629,982	15,532
LargeCap Value Fund III	501,819	6,488	48,523	450	550,342	5,243	—	—
MidCap Growth Fund III	396,526	3,150	100,563	856	78,114	664	418,975	3,343
MidCap Value Fund I	314,871	3,178	80,973	887	60,588	664	335,256	3,404
Money Market Fund	6,471,759	6,472	63,697,653	87,025	70,169,412	70,169	—	—
Preferred Securities Fund	3,629,249	38,756	844,043	7,997	2,493,036	22,989	1,980,256	21,102
Real Estate Securities Fund	2,384,963	33,413	467,579	6,369	2,368,337	35,430	484,205	7,447
Short-Term Income Fund	—	—	6,649,050	79,527	569,428	6,818	6,079,622	72,711
SmallCap Growth Fund I	—	—	606,609	4,857	59,438	497	547,171	4,367
SmallCap S&P 600 Index Fund	648,159	9,541	37,901	480	686,060	8,735	—	—
SmallCap Value Fund II	—	—	622,576	4,833	58,501	469	564,075	4,371
Ultra Short Bond Fund	8,177,959	81,218	3,112	22	8,181,071	80,942	—	—

		$ 635,541	$ 432,366			$ 377,534		$ 658,621


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Bond & Mortgage Securities Fund	$ 4,426		$ (2,322)			$ —
Bond Market Index Fund		—			6			—
Core Plus Bond Fund I		3,961			50			27
Disciplined LargeCap Blend Fund		262			(3,604)			—
Diversified Real Asset Fund		34			1			—
Global Diversified Income Fund		5,125			5			17
High Yield Fund I		1,530			9			—
Inflation Protection Fund		1,519			16			—
International Emerging Markets Fund		20			(1)			—
International Equity Index Fund		—			(2)			—
International Fund I		142			245			—
International Growth Fund		157			(2)			—
International Value Fund I		349			—			36
LargeCap Blend Fund I		252			4			—
LargeCap Growth Fund		2			2			—
LargeCap Growth Fund I		6			(1)			—
LargeCap S&P 500 Index Fund		—			(5)			—
LargeCap Value Fund		89			(4)			—
LargeCap Value Fund I		44			5			—
LargeCap Value Fund III		75			(1,695)			—
MidCap Growth Fund III		—			1			—
MidCap Value Fund I		31			3			—
Money Market Fund		—			(23,328)			—
Preferred Securities Fund		1,464			(2,662)			—
Real Estate Securities Fund		559			3,095			—
Short-Term Income Fund		1,060			2			—
SmallCap Growth Fund I		—			7			—
SmallCap S&P 600 Index Fund		68			(1,286)			—
SmallCap Value Fund II		—			7			—
Ultra Short Bond Fund		17			(298)			—
	$ 21,192		$ (31,752)			$ 80
All dollar amounts are shown in thousands (000's)


				Schedule of Investments
				SAM Balanced Portfolio
				October 31, 2010



INVESTMENT COMPANIES - 100.01%		Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.01%
Disciplined LargeCap Blend Fund ^(a)		13,376,527 $		156,773
Diversified International Fund ^(a)		29,471,335		288,524
Equity Income Fund ^(a)		31,334,087		530,486
Government & High Quality Bond Fund ^(a)		36,437,335		411,377
High Yield Fund ^(a)		18,263,114		148,844
Income Fund ^(a)		38,227,933		370,046
International Emerging Markets Fund ^(a)			3,109,359	79,599
LargeCap Growth Fund ^(a)		24,015,177		184,677
LargeCap Growth Fund II ^(a)		23,290,408		182,830
LargeCap Value Fund III ^(a)		26,937,564		261,294
MidCap Blend Fund ^(a)			6,229,052	82,099
Money Market Fund ^(a)			7,639	8
Preferred Securities Fund ^(a)		12,585,559		126,611
Principal Capital Appreciation Fund ^(a)			4,243,041	159,666
Real Estate Securities Fund ^(a)			4,343,431	68,800
Short-Term Income Fund ^(a)			3,805,517	46,275
SmallCap Growth Fund ^(a),(b)			8,000,223	59,122
SmallCap Value Fund ^(a)			4,205,694	58,922
			$ 3,215,953
TOTAL INVESTMENT COMPANIES			$ 3,215,953
Total Investments			$ 3,215,953
Liabilities in Excess of Other Assets, Net - (0.01)%			$ (382)
TOTAL NET ASSETS - 100.00%			$ 3,215,571


(a)	Affiliated Security
(b)	Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
SAM Balanced Portfolio
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases	Purchases	Sales	Sales	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Disciplined LargeCap Blend Fund	14,543,003	$ 177,837	302,694 $	3,353	1,469,170	$ 16,401	13,376,527	$ 161,318
Diversified International Fund	22,556,093	230,200	8,504,018	78,794	1,588,776	14,355	29,471,335	289,075
Equity Income Fund	26,684,200	427,214	6,423,217	104,351	1,773,330	27,309	31,334,087	496,061
Government & High Quality Bond	36,817,159	388,305	2,438,161	26,882	2,817,985	31,438	36,437,335	385,064
Fund
High Yield Fund	19,842,385	146,788	1,766,371	13,776	3,345,642	26,008	18,263,114	133,814
Income Fund	37,749,939	336,666	4,152,363	39,252	3,674,369	34,609	38,227,933	341,470
International Emerging Markets Fund	3,675,100	85,759	43,353	1,009	609,094	13,475	3,109,359	69,886
LargeCap Growth Fund	42,052,181	245,550	233,818	1,617	18,270,822	135,293	24,015,177	129,990
LargeCap Growth Fund II	40,461,476	325,275	259,788	1,905	17,430,856	134,061	23,290,408	169,371
LargeCap Value Fund III	16,541,321	153,862	10,921,182	107,640	524,939	4,910	26,937,564	255,822
MidCap Blend Fund	10,138,373	97,700	97,797	1,136	4,007,118	49,052	6,229,052	53,529
Money Market Fund	147,639	148	—	—	140,000	140	7,639	8
Preferred Securities Fund	15,519,833	134,027	1,047,566	9,742	3,981,840	37,771	12,585,559	105,752
Principal Capital Appreciation Fund	4,143,692	122,534	421,002	14,638	321,653	11,340	4,243,041	125,990
Real Estate Securities Fund	6,505,796	97,884	131,260	1,824	2,293,625	33,266	4,343,431	60,327
Short-Term Income Fund	5,008,556	57,618	193,279	2,309	1,396,318	16,662	3,805,517	43,716
SmallCap Growth Fund	9,131,566	46,137	41,496	279	1,172,839	7,890	8,000,223	38,675
SmallCap Value Fund	4,370,987	68,307	100,779	1,299	266,072	3,573	4,205,694	64,971

		$ 3,141,811	$ 409,806			$ 597,553		$ 2,924,839


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Disciplined LargeCap Blend Fund	$ 2,205		$ (3,471)			$ —
Diversified International Fund		3,511			(5,564)			—
Equity Income Fund		13,242			(8,195)			—
Government & High Quality Bond Fund		17,956			1,315			—
High Yield Fund		13,107			(742)			—
Income Fund		21,309			161			—
International Emerging Markets Fund		640			(3,407)			—
LargeCap Growth Fund		50			18,116			—
LargeCap Growth Fund II		1,139			(23,748)			—
LargeCap Value Fund III		2,513			(770)			—
MidCap Blend Fund		876			3,745			—
Money Market Fund		—			—			—
Preferred Securities Fund		9,183			(246)			—
Principal Capital Appreciation Fund		1,269			158			903
Real Estate Securities Fund		1,792			(6,115)			—
Short-Term Income Fund		1,579			451			—
SmallCap Growth Fund		—			149			—
SmallCap Value Fund		502			(1,062)			—
	$ 90,873		$ (29,225)			$ 903
All dollar amounts are shown in thousands (000's)


				Schedule of Investments
			SAM Conservative Balanced Portfolio
				October 31, 2010



INVESTMENT COMPANIES - 99.75%		Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 99.75%
Disciplined LargeCap Blend Fund ^(a)			2,545,676 $	29,835
Diversified International Fund ^(a)			5,057,990	49,518
Equity Income Fund ^(a)			5,044,965	85,411
Government & High Quality Bond Fund ^(a)			15,483,759	174,812
High Yield Fund ^(a)			6,483,072	52,837
Income Fund ^(a)			15,624,829	151,248
International Emerging Markets Fund ^(a)			587,746	15,046
LargeCap Growth Fund ^(a)			4,558,838	35,058
LargeCap Growth Fund II ^(a)			4,348,369	34,135
LargeCap Value Fund III ^(a)			4,403,748	42,716
MidCap Blend Fund ^(a)			1,024,247	13,500
Money Market Fund ^(a)			8,447	8
Preferred Securities Fund ^(a)			3,115,324	31,340
Principal Capital Appreciation Fund ^(a)			991,380	37,306
Real Estate Securities Fund ^(a)			380,011	6,019
Short-Term Income Fund ^(a)			3,424,975	41,648
SmallCap Growth Fund ^(a),(b)			1,385,718	10,240
SmallCap Value Fund ^(a)			747,673	10,475
			$ 821,152
TOTAL INVESTMENT COMPANIES			$ 821,152
Total Investments			$ 821,152
Other Assets in Excess of Liabilities, Net - 0.25%			$ 2,020
TOTAL NET ASSETS - 100.00%			$ 823,172


(a)	Affiliated Security
(b)	Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
SAM Conservative Balanced Portfolio
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases	Purchases	Sales	Sales	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Disciplined LargeCap Blend Fund	2,309,238	$ 27,269	341,683 $	3,735	105,245	$ 1,173	2,545,676	$ 29,554
Diversified International Fund	3,409,604	33,060	1,749,374	15,887	100,988	921	5,057,990	47,552
Equity Income Fund	3,795,060	60,390	1,383,362	22,249	133,457	2,059	5,044,965	79,937
Government & High Quality Bond	13,486,938	143,734	2,526,757	27,856	529,936	5,874	15,483,759	165,707
Fund
High Yield Fund	5,931,332	44,126	925,586	7,222	373,846	2,922	6,483,072	48,247
Income Fund	13,005,027	117,065	3,216,069	30,377	596,267	5,612	15,624,829	141,814
International Emerging Markets Fund	609,832	12,428	48,389	1,111	70,475	1,584	587,746	11,592
LargeCap Growth Fund	6,062,424	35,097	463,942	3,156	1,967,528	14,592	4,558,838	25,406
LargeCap Growth Fund II	5,929,496	44,672	298,523	2,135	1,879,650	14,471	4,348,369	29,736
LargeCap Value Fund III	2,230,473	20,469	2,214,461	21,423	41,186	380	4,403,748	41,443
MidCap Blend Fund	1,672,254	18,635	115,052	1,341	763,059	9,407	1,024,247	10,342
Money Market Fund	2,238,447	2,238	—	—	2,230,000	2,230	8,447	8
Preferred Securities Fund	3,695,304	31,335	377,940	3,507	957,920	9,299	3,115,324	25,725
Principal Capital Appreciation Fund	652,749	19,101	364,334	12,662	25,703	909	991,380	30,745
Real Estate Securities Fund	1,073,221	14,744	36,687	490	729,897	10,840	380,011	3,678
Short-Term Income Fund	2,938,610	34,083	589,742	7,040	103,377	1,244	3,424,975	39,880
SmallCap Growth Fund	1,445,730	7,480	35,904	233	95,916	648	1,385,718	6,960
SmallCap Value Fund	687,702	9,552	79,909	1,007	19,938	263	747,673	10,212

		$ 675,478	$ 161,431			$ 84,428		$ 748,538


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Disciplined LargeCap Blend Fund	$ 360		$ (277)			$ —
Diversified International Fund		544			(474)			—
Equity Income Fund		2,013			(643)			—
Government & High Quality Bond Fund		7,067			(9)			—
High Yield Fund		4,318			(179)			—
Income Fund		7,927			(16)			—
International Emerging Markets Fund		111			(363)			—
LargeCap Growth Fund		7			1,745			—
LargeCap Growth Fund II		169			(2,600)			—
LargeCap Value Fund III		345			(69)			—
MidCap Blend Fund		148			(227)			—
Money Market Fund		—			—			—
Preferred Securities Fund		2,318			182			—
Principal Capital Appreciation Fund		204			(109)			145
Real Estate Securities Fund		287			(716)			—
Short-Term Income Fund		1,183			1			—
SmallCap Growth Fund		—			(105)			—
SmallCap Value Fund		82			(84)			—
	$ 27,083		$ (3,943)			$ 145
All dollar amounts are shown in thousands (000's)


				Schedule of Investments
			SAM Conservative Growth Portfolio
				October 31, 2010



INVESTMENT COMPANIES - 100.11%		Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.11%
Disciplined LargeCap Blend Fund ^(a)		12,004,481 $		140,693
Diversified International Fund ^(a)		26,018,362		254,720
Equity Income Fund ^(a)		28,046,699		474,831
Government & High Quality Bond Fund ^(a)		11,451,326		129,285
High Yield Fund ^(a)			8,320,991	67,816
Income Fund ^(a)		11,136,944		107,806
International Emerging Markets Fund ^(a)			2,879,813	73,723
LargeCap Growth Fund ^(a)		20,089,492		154,488
LargeCap Growth Fund II ^(a)		19,044,671		149,501
LargeCap Value Fund III ^(a)		29,250,558		283,730
MidCap Blend Fund ^(a)			7,339,768	96,738
Money Market Fund ^(a)			191,086	191
Preferred Securities Fund ^(a)			3,794,404	38,172
Principal Capital Appreciation Fund ^(a)			4,332,975	163,050
Real Estate Securities Fund ^(a)			3,574,967	56,627
Short-Term Income Fund ^(a)			1,139,247	13,853
SmallCap Growth Fund ^(a),(b)			6,828,563	50,463
SmallCap Value Fund ^(a)			3,670,163	51,419
			$ 2,307,106
TOTAL INVESTMENT COMPANIES			$ 2,307,106
Total Investments			$ 2,307,106
Liabilities in Excess of Other Assets, Net - (0.11)%			$ (2,503)
TOTAL NET ASSETS - 100.00%			$ 2,304,603


(a)	Affiliated Security
(b)	Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
SAM Conservative Growth Portfolio
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases	Purchases	Sales	Sales	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Disciplined LargeCap Blend Fund	13,183,201	$ 163,926	228,829 $	2,529	1,407,549	$ 15,659	12,004,481	$ 147,511
Diversified International Fund	23,525,484	255,896	5,149,670	47,776	2,656,792	23,875	26,018,362	269,341
Equity Income Fund	25,484,522	414,995	5,443,982	88,372	2,881,805	44,441	28,046,699	445,612
Government & High Quality Bond	12,035,406	126,487	667,551	7,359	1,251,631	13,953	11,451,326	120,285
Fund
High Yield Fund	9,214,183	66,759	780,866	6,086	1,674,058	13,044	8,320,991	59,899
Income Fund	11,001,491	96,926	1,478,818	14,037	1,343,365	12,663	11,136,944	98,474
International Emerging Markets Fund	3,344,549	84,865	31,719	720	496,455	11,074	2,879,813	71,702
LargeCap Growth Fund	39,663,028	239,185	69,848	458	19,643,384	145,201	20,089,492	112,839
LargeCap Growth Fund II	37,565,529	305,429	200,588	1,454	18,721,446	143,900	19,044,671	137,031
LargeCap Value Fund III	15,640,812	151,918	15,419,547	152,112	1,809,801	16,608	29,250,558	284,285
MidCap Blend Fund	11,622,318	115,378	95,946	1,090	4,378,496	53,385	7,339,768	64,061
Money Market Fund	12,276,629	12,277	—	—	12,085,543	12,086	191,086	191
Preferred Securities Fund	5,184,084	44,978	331,585	3,080	1,721,265	16,433	3,794,404	31,943
Principal Capital Appreciation Fund	4,281,894	129,734	516,854	17,892	465,773	16,349	4,332,975	131,555
Real Estate Securities Fund	5,728,988	90,021	127,927	1,748	2,281,948	33,436	3,574,967	52,136
Short-Term Income Fund	1,101,970	12,740	37,278	446	1	—	1,139,247	13,186
SmallCap Growth Fund	8,056,377	41,310	26,649	173	1,254,463	8,419	6,828,563	33,246
SmallCap Value Fund	4,034,684	66,309	55,750	696	420,271	5,561	3,670,163	59,684

		$ 2,419,133	$ 346,028			$ 586,087		$ 2,132,981


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Disciplined LargeCap Blend Fund	$ 1,982		$ (3,285)			$ —
Diversified International Fund		3,613			(10,456)			—
Equity Income Fund		12,275			(13,314)			—
Government & High Quality Bond Fund		5,771			392			—
High Yield Fund		6,065			98			—
Income Fund		6,156			174			—
International Emerging Markets Fund		596			(2,809)			—
LargeCap Growth Fund		47			18,397			—
LargeCap Growth Fund II		1,054			(25,952)			—
LargeCap Value Fund III		2,320			(3,137)			—
MidCap Blend Fund		1,000			978			—
Money Market Fund		—			—			—
Preferred Securities Fund		2,987			318			—
Principal Capital Appreciation Fund		1,304			278			930
Real Estate Securities Fund		1,581			(6,197)			—
Short-Term Income Fund		403			—			—
SmallCap Growth Fund		—			182			—
SmallCap Value Fund		464			(1,760)			—
	$ 47,618		$ (46,093)			$ 930
All dollar amounts are shown in thousands (000's)


				Schedule of Investments
			SAM Flexible Income Portfolio
				October 31, 2010



INVESTMENT COMPANIES - 99.78%		Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 99.78%
Disciplined LargeCap Blend Fund ^(a)			1,899,634 $	22,264
Diversified International Fund ^(a)			3,978,901	38,953
Equity Income Fund ^(a)			4,043,722	68,460
Government & High Quality Bond Fund ^(a)			21,026,091	237,385
High Yield Fund ^(a)			9,447,743	76,999
Income Fund ^(a)			22,444,813	217,266
International Emerging Markets Fund ^(a)			375,974	9,625
LargeCap Growth Fund ^(a)			2,879,800	22,146
LargeCap Growth Fund II ^(a)			2,711,017	21,282
LargeCap Value Fund III ^(a)			5,214,852	50,584
MidCap Blend Fund ^(a)			1,113,186	14,672
Money Market Fund ^(a)			9,787	10
Preferred Securities Fund ^(a)			6,143,774	61,806
Principal Capital Appreciation Fund ^(a)			270,053	10,162
Real Estate Securities Fund ^(a)			714,613	11,319
Short-Term Income Fund ^(a)			6,735,762	81,907
SmallCap Growth Fund ^(a),(b)			940,455	6,950
SmallCap Value Fund ^(a)			548,198	7,680
			$ 959,470
TOTAL INVESTMENT COMPANIES			$ 959,470
Total Investments			$ 959,470
Other Assets in Excess of Liabilities, Net - 0.22%			$ 2,111
TOTAL NET ASSETS - 100.00%			$ 961,581


(a)	Affiliated Security
(b)	Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
SAM Flexible Income Portfolio
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases	Purchases	Sales	Sales	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Disciplined LargeCap Blend Fund	1,619,134	$ 16,851	320,624 $	3,462	40,124	$ 457	1,899,634	$ 19,862
Diversified International Fund	2,560,649	32,440	1,551,619	13,838	133,367	1,217	3,978,901	44,164
Equity Income Fund	2,494,058	35,377	1,604,728	25,773	55,064	852	4,043,722	60,130
Government & High Quality Bond	17,984,158	190,693	3,607,300	39,874	565,367	6,276	21,026,091	224,454
Fund
High Yield Fund	8,318,436	59,094	1,606,177	12,559	476,870	3,713	9,447,743	67,855
Income Fund	19,395,458	173,238	3,868,025	36,389	818,670	7,705	22,444,813	201,892
International Emerging Markets Fund	382,305	9,755	31,172	691	37,503	865	375,974	9,129
LargeCap Growth Fund	4,705,941	24,843	528,575	3,613	2,354,716	17,434	2,879,800	14,829
LargeCap Growth Fund II	4,575,196	35,788	476,833	3,394	2,341,012	18,033	2,711,017	17,990
LargeCap Value Fund III	3,061,435	27,070	2,287,954	21,818	134,537	1,253	5,214,852	47,459
MidCap Blend Fund	1,726,350	16,861	106,718	1,266	719,882	8,744	1,113,186	9,857
Money Market Fund	759,787	760	—	—	750,000	750	9,787	10
Preferred Securities Fund	6,321,729	51,274	724,350	6,865	902,305	8,484	6,143,774	49,403
Principal Capital Appreciation Fund	252,309	6,162	34,238	1,194	16,494	585	270,053	6,828
Real Estate Securities Fund	777,367	10,272	19,362	276	82,116	1,166	714,613	9,204
Short-Term Income Fund	5,759,595	66,641	1,183,238	14,174	207,071	2,480	6,735,762	78,381
SmallCap Growth Fund	974,450	4,655	66,613	436	100,608	681	940,455	4,295
SmallCap Value Fund	445,866	6,563	124,165	1,598	21,833	283	548,198	7,781

		$ 768,337	$ 187,220			$ 80,978		$ 873,523


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Disciplined LargeCap Blend Fund	$ 257		$ 6			$ —
Diversified International Fund		404			(897)			—
Equity Income Fund		1,507			(168)			—
Government & High Quality Bond Fund		9,429			163			—
High Yield Fund		6,020			(85)			—
Income Fund		11,661			(30)			—
International Emerging Markets Fund		70			(452)			—
LargeCap Growth Fund		6			3,807			—
LargeCap Growth Fund II		130			(3,159)			—
LargeCap Value Fund III		460			(176)			—
MidCap Blend Fund		150			474			—
Money Market Fund		—			—			—
Preferred Securities Fund		3,857			(252)			—
Principal Capital Appreciation Fund		78			57			55
Real Estate Securities Fund		231			(178)			—
Short-Term Income Fund		2,239			46			—
SmallCap Growth Fund		—			(115)			—
SmallCap Value Fund		52			(97)			—
	$ 36,551		$ (1,056)			$ 55
All dollar amounts are shown in thousands (000's)


				Schedule of Investments
			SAM Strategic Growth Portfolio
				October 31, 2010



INVESTMENT COMPANIES - 100.16%		Shares Held Value (000's)
Principal Funds, Inc. Institutional Class - 100.16%
Disciplined LargeCap Blend Fund ^(a)		10,694,836 $		125,343
Diversified International Fund ^(a)		19,719,747		193,056
Equity Income Fund ^(a)		18,693,092		316,474
High Yield Fund ^(a)			7,616,428	62,074
International Emerging Markets Fund ^(a)			2,016,079	51,612
LargeCap Growth Fund ^(a)		13,669,369		105,117
LargeCap Growth Fund II ^(a)		12,887,836		101,170
LargeCap Value Fund III ^(a)		21,187,285		205,517
MidCap Blend Fund ^(a)			5,218,779	68,784
Money Market Fund ^(a)			23,392	23
Principal Capital Appreciation Fund ^(a)			3,128,190	117,714
Real Estate Securities Fund ^(a)			2,567,452	40,668
Short-Term Income Fund ^(a)			6,590	80
SmallCap Growth Fund ^(a),(b)			5,310,965	39,248
SmallCap Value Fund ^(a)			2,721,532	38,129
			$ 1,465,009
TOTAL INVESTMENT COMPANIES			$ 1,465,009
Total Investments			$ 1,465,009
Liabilities in Excess of Other Assets, Net - (0.16)%			$ (2,316)
TOTAL NET ASSETS - 100.00%			$ 1,462,693


(a)	Affiliated Security
(b)	Non-Income Producing Security

The net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held as of the period end were as follows:


Schedule of Investments
SAM Strategic Growth Portfolio
October 31, 2010



	October 31,	October 31,					October 31,	October 31,
Affiliated Securities	2009	2009	Purchases	Purchases	Sales	Sales	2010	2010
	Shares	Cost	Shares	Cost	Shares	Proceeds	Shares	Cost
Disciplined LargeCap Blend Fund	11,875,520	$ 157,721	238,612 $	2,639	1,419,296	$ 15,756	10,694,836	$ 139,798
Diversified International Fund	16,822,219	185,346	4,833,493	44,775	1,935,965	17,367	19,719,747	204,453
Equity Income Fund	17,070,813	286,494	3,487,404	56,536	1,865,125	28,684	18,693,092	305,244
High Yield Fund	8,909,061	66,767	789,005	6,145	2,081,638	16,328	7,616,428	56,212
International Emerging Markets Fund	2,554,633	59,663	20,392	462	558,946	12,540	2,016,079	45,506
LargeCap Growth Fund	26,782,985	164,845	126,024	848	13,239,640	97,440	13,669,369	79,029
LargeCap Growth Fund II	25,474,007	208,461	185,016	1,342	12,771,187	97,755	12,887,836	94,574
LargeCap Value Fund III	12,710,109	118,699	9,300,770	91,652	823,594	7,661	21,187,285	201,366
MidCap Blend Fund	8,205,250	79,932	93,205	1,069	3,079,676	37,526	5,218,779	46,408
Money Market Fund	4,559,288	4,559	—	—	4,535,896	4,536	23,392	23
Principal Capital Appreciation Fund	3,051,201	93,598	438,336	15,177	361,347	12,711	3,128,190	96,315
Real Estate Securities Fund	4,188,469	67,616	99,779	1,359	1,720,796	25,172	2,567,452	37,695
Short-Term Income Fund	399,276	4,610	6,815	80	399,501	4,763	6,590	73
SmallCap Growth Fund	6,319,407	35,018	32,024	202	1,040,466	6,964	5,310,965	27,976
SmallCap Value Fund	3,031,283	50,379	51,694	644	361,445	4,749	2,721,532	44,728

		$ 1,583,708	$ 222,930			$ 389,952		$ 1,379,400


				Realized Gain/Loss		Realized Gain/Loss from
		Dividends		on Investments		Other Investment Companies
Disciplined LargeCap Blend Fund	$ 1,792		$ (4,806)			$ —
Diversified International Fund		2,587			(8,301)			—
Equity Income Fund		8,181			(9,102)			—
High Yield Fund		5,797			(372)			—
International Emerging Markets Fund		448			(2,079)			—
LargeCap Growth Fund		31			10,776			—
LargeCap Growth Fund II		717			(17,474)			—
LargeCap Value Fund III		1,914			(1,324)			—
MidCap Blend Fund		707			2,933			—
Money Market Fund		—			—			—
Principal Capital Appreciation Fund		934			251			665
Real Estate Securities Fund		1,148			(6,108)			—
Short-Term Income Fund		69			146			—
SmallCap Growth Fund		—			(280)			—
SmallCap Value Fund		349			(1,546)			—
	$ 24,674		$ (37,286)			$ 665
All dollar amounts are shown in thousands (000's)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning	Income Gain (Loss) on Investment Investment				Realized	and	Value, End
	of Period (Loss)(a)		Investments Operations		Income	Gains	Distributions of Period Total Return(b)
PRINCIPAL LIFETIME 2010 FUND
Class A shares
2010	$9 .90	$0 .25	$1 .33	$1 .58	($0 .29)	$–	($0 .29)	$11.19	16 .25%
2009	9.24	0.25	1 .02	1 .27	(0 .31)	(0 .30)	(0.61)	9 .90	15 .03
2008	14.23	0.43	(4 .75)	(4 .32)	(0 .44)	(0 .23)	(0.67)	9 .24	(31 .75)
2007	13.28	0.37	1 .00	1 .37	(0 .35)	(0 .07)	(0.42)	14 .23	10 .62
2006	12.11	0.32	1 .08	1 .40	(0 .15)	(0 .08)	(0.23)	13 .28	11 .78
PRINCIPAL LIFETIME 2020 FUND
Class A shares
2010	10 .09	0 .22	1 .47	1 .69	(0 .26)	–	(0.26)	11 .52	16 .97
2009	9.35	0.23	1 .12	1 .35	(0 .25)	(0 .36)	(0.61)	10 .09	15 .75
2008	15.16	0.37	(5 .49)	(5 .12)	(0 .40)	(0 .29)	(0.69)	9 .35	(35 .25)
2007	13.75	0.31	1 .54	1 .85	(0 .35)	(0 .09)	(0.44)	15 .16	13 .75
2006	12.28	0.25	1 .48	1 .73	(0 .16)	(0 .10)	(0.26)	13 .75	14 .34
Class B shares
2010	10 .08	0 .15	1 .47	1 .62	(0 .19)	–	(0.19)	11 .51	16 .21
2009	9.33	0.17	1 .10	1 .27	(0 .16)	(0 .36)	(0.52)	10 .08	14 .74
2008	15.12	0.32	(5 .52)	(5 .20)	(0 .30)	(0 .29)	(0.59)	9 .33	(35 .71)
2007	13.72	0.21	1 .52	1 .73	(0 .24)	(0 .09)	(0.33)	15 .12	12 .80
2006	12.24	0.14	1 .50	1 .64	(0 .06)	(0 .10)	(0.16)	13 .72	13 .57
PRINCIPAL LIFETIME 2030 FUND
Class A shares
2010	9.80	0.19	1 .53	1 .72	(0 .22)	–	(0.22)	11 .30	17 .79
2009	9.08	0.19	1 .09	1 .28	(0 .20)	(0 .36)	(0.56)	9 .80	15 .44
2008	15.30	0.36	(5 .87)	(5 .51)	(0 .39)	(0 .32)	(0.71)	9 .08	(37 .66)
2007	13.64	0.26	1 .81	2 .07	(0 .31)	(0 .10)	(0.41)	15 .30	15 .55
2006	12.07	0.18	1 .66	1 .84	(0 .15)	(0 .12)	(0.27)	13 .64	15 .46
Class B shares
2010	9.83	0.12	1 .52	1 .64	(0 .15)	–	(0.15)	11 .32	16 .86
2009	9.08	0.14	1 .08	1 .22	(0 .11)	(0 .36)	(0.47)	9 .83	14 .57
2008	15.28	0.30	(5 .90)	(5 .60)	(0 .28)	(0 .32)	(0.60)	9 .08	(38 .04)
2007	13.60	0.15	1 .84	1 .99	(0 .21)	(0 .10)	(0.31)	15 .28	14 .86
2006	12.04	0.09	1 .65	1 .74	(0 .06)	(0 .12)	(0.18)	13 .60	14 .55


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From from Net				from	Dividends	Net Asset
	Beginning	Income Gain (Loss) on Investment Investment				Realized	and	Value, End
	of Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
PRINCIPAL LIFETIME 2040 FUND
Class A shares
2010	$9 .71	$0 .17	$1 .54	$1 .71	($0 .19)	$–	($0 .19)	$11.23	17 .82%
2009	8.99	0.16	1 .07	1 .23	(0 .17)	(0 .34)	(0.51)	9 .71	14 .98
2008	15.57	0.34	(6 .22)	(5 .88)	(0 .39)	(0 .31)	(0.70)	8 .99	(39 .41)
2007	13.68	0.22	2 .07	2 .29	(0 .30)	(0 .10)	(0.40)	15 .57	17 .09
2006	12.18	0.14	1 .76	1 .90	(0 .29)	(0 .11)	(0.40)	13 .68	15 .93
Class B shares
2010	9.64	0.10	1 .51	1 .61	(0 .12)	–	(0.12)	11 .13	16 .86
2009	8.91	0.11	1 .05	1 .16	(0 .09)	(0 .34)	(0.43)	9 .64	14 .11
2008	15.42	0.25	(6 .17)	(5 .92)	(0 .28)	(0 .31)	(0.59)	8 .91	(39 .79)
2007	13.55	0.12	2 .04	2 .16	(0 .19)	(0 .10)	(0.29)	15 .42	16 .22
2006	12.16	0.05	1 .74	1 .79	(0 .29)	(0 .11)	(0.40)	13 .55	15 .03
PRINCIPAL LIFETIME 2050 FUND
Class A shares
2010	9.38	0.15	1 .53	1 .68	(0 .16)	–	(0.16)	10 .90	18 .10
2009	8.72	0.13	1 .04	1 .17	(0 .15)	(0 .36)	(0.51)	9 .38	14 .66
2008	15.36	0.33	(6 .24)	(5 .91)	(0 .37)	(0 .36)	(0.73)	8 .72	(40 .22)
2007	13.41	0.19	2 .13	2 .32	(0 .26)	(0 .11)	(0.37)	15 .36	17 .71
2006	11.74	0.09	1 .80	1 .89	(0 .11)	(0 .11)	(0.22)	13 .41	16 .30
Class B shares
2010	9.30	0.08	1 .51	1 .59	(0 .10)	–	(0.10)	10 .79	17 .16
2009	8.63	0.09	1 .01	1 .10	(0 .07)	(0 .36)	(0.43)	9 .30	13 .78
2008	15.21	0.25	(6 .20)	(5 .95)	(0 .27)	(0 .36)	(0.63)	8 .63	(40 .67)
2007	13.30	0.02	2 .18	2 .20	(0 .18)	(0 .11)	(0.29)	15 .21	16 .80
2006(e)	12 .64	(0 .05)	0 .71	0 .66	–	–	–	13 .30	5 .22 (f)
PRINCIPAL LIFETIME STRATEGIC INCOME FUND
Class A shares
2010	9.95	0.32	1 .00	1 .32	(0 .34)	–	(0.34)	10 .93	13 .67
2009	9.43	0.26	0 .85	1 .11	(0 .46)	(0 .13)	(0.59)	9 .95	12 .76
2008	12.95	0.52	(3 .36)	(2 .84)	(0 .51)	(0 .17)	(0.68)	9 .43	(23 .06)
2007	12.74	0.51	0 .15	0 .66	(0 .39)	(0 .06)	(0.45)	12 .95	5 .30
2006	11.98	0.40	0 .68	1 .08	(0 .20)	(0 .12)	(0.32)	12 .74	9 .16
Class B shares
2010	9.86	0.25	0 .99	1 .24	(0 .29)	–	(0.29)	10 .81	12 .81
2009	9.32	0.20	0 .85	1 .05	(0 .38)	(0 .13)	(0.51)	9 .86	12 .08
2008	12.82	0.45	(3 .36)	(2 .91)	(0 .42)	(0 .17)	(0.59)	9 .32	(23 .73)
2007	12.63	0.40	0 .16	0 .56	(0 .31)	(0 .06)	(0.37)	12 .82	4 .51
2006(e)	12 .12	0 .23	0 .28	0 .51	–	–	–	12 .63	4 .21 (f)


		Ratio of Net
Net Assets, End of	Ratio of Expenses	Investment Income
Period (in	to Average Net	to Average Net	Portfolio
thousands)	Assets	Assets	Turnover Rate


$38,484	0 .41%(c),(d)	1.62%	31 .4%
30,106	0.46 (c),(d)	1.85	5 .8
19,918	0.50 (c),(d)	2.68	6 .0
24,434	0.50 (c),(d)	1.49	16 .5
9,356	0.64 (c),(d)	1.08	13 .1

5,620	1.16 (c),(d)	1.00	31 .4
5,463	1.22 (c),(d)	1.29	5 .8
4,794	1.25 (c),(d)	1.99	6 .0
6,161	1.25 (c),(d)	0.86	16 .5
3,090	1.40 (c),(d)	0.38	13 .1


23,723	0.41 (c),(d)	1.45	30 .1
18,611	0.46 (c),(d)	1.63	15 .2
11,391	0.50 (c),(d)	2.70	6 .8
14,930	0.50 (c),(d)	1.32	21 .2
5,685	0.64 (c),(d)	0.67	15 .9

1,783	1.16 (c),(d)	0.83	30 .1
1,762	1.22 (c),(d)	1.14	15 .2
1,496	1.25 (c),(d)	2.05	6 .8
2,106	1.25 (c),(d)	0.15	21 .2
451	1.25 (c),(d),(g)	(0.63) (g)	15 .9 (g)


25,982	0.41 (c),(d)	3.09	46 .9
21,341	0.47 (c),(d)	2.85	35 .9
17,473	0.50 (c),(d)	4.57	30 .7
15,668	0.50 (c),(d)	3.98	25 .3
6,635	0.65 (c),(d)	3.24	48 .9

840	1.16 (c),(d)	2.43	46 .9
730	1.22 (c),(d)	2.23	35 .9
816	1.25 (c),(d)	3.95	30 .7
758	1.25 (c),(d)	3.18	25 .3
114	1.25 (c),(d),(g)	3.00 (g)	48 .9 (g)


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,	Net	and Unrealized Total From from Net			from	Dividends	Net Asset
	Beginning of Investment Gain (Loss) on Investment Investment					Realized	and	Value, End
	Period	Income (Loss) Investments Operations			Income	Gains	Distributions of Period Total Return(b)
SAM BALANCED PORTFOLIO
Class A shares
2010	$11 .00	$0 .26(a)	$1 .46	$1 .72	($0 .27)	$–	($0 .27)	$12.45	15 .84%
2009	10.84	0.30(a)	1 .06	1 .36	(0 .29)	(0 .91)	(1 .20)	11 .00	14 .51
2008	16.18	0.47(a)	(4 .53)	(4 .06)	(0 .51)	(0 .77)	(1 .28)	10 .84	(27 .01)
2007	14.51	0.37(a)	1 .70	2 .07	(0 .32)	(0 .08)	(0 .40)	16 .18	14 .48
2006	13.32	0.28	1 .20	1 .48	(0 .29)	–	(0.29)	14 .51	11 .26
Class B shares
2010	10.97	0.17(a)	1 .45	1 .62	(0 .17)	–	(0.17)	12 .42	14 .88
2009	10.81	0.22(a)	1 .06	1 .28	(0 .21)	(0 .91)	(1 .12)	10 .97	13 .65
2008	16.14	0.37(a)	(4 .53)	(4 .16)	(0 .40)	(0 .77)	(1 .17)	10 .81	(27 .57)
2007	14.47	0.26(a)	1 .69	1 .95	(0 .20)	(0 .08)	(0 .28)	16 .14	13 .64
2006	13.28	0.17	1 .21	1 .38	(0 .19)	–	(0.19)	14 .47	10 .44
Class C shares
2010	10.89	0.17(a)	1 .45	1 .62	(0 .18)	–	(0.18)	12 .33	15 .03
2009	10.75	0.22(a)	1 .05	1 .27	(0 .22)	(0 .91)	(1 .13)	10 .89	13 .62
2008	16.05	0.36(a)	(4 .49)	(4 .13)	(0 .40)	(0 .77)	(1 .17)	10 .75	(27 .52)
2007	14.40	0.25(a)	1 .69	1 .94	(0 .21)	(0 .08)	(0 .29)	16 .05	13 .59
2006	13.22	0.17	1 .20	1 .37	(0 .19)	–	(0.19)	14 .40	10 .47
SAM CONSERVATIVE BALANCED PORTFOLIO
Class A shares
2010	9.47	0.29(a)	1 .00	1 .29	(0 .30)	–	(0.30)	10 .46	13 .84
2009	8.84	0.32(a)	0 .99	1 .31	(0 .31)	(0 .37)	(0 .68)	9 .47	16 .04
2008	11.93	0.41(a)	(2 .65)	(2 .24)	(0 .44)	(0 .41)	(0 .85)	8 .84	(20 .00)
2007	11.12	0.36(a)	0 .86	1 .22	(0 .33)	(0 .08)	(0 .41)	11 .93	11 .17
2006	10.49	0.31	0 .65	0 .96	(0 .31)	(0 .02)	(0.33)	11 .12	9 .31
Class B shares
2010	9.45	0.22(a)	0 .98	1 .20	(0 .21)	–	(0.21)	10 .44	12 .89
2009	8.82	0.25(a)	0 .99	1 .24	(0 .24)	(0 .37)	(0 .61)	9 .45	15 .15
2008	11.91	0.33(a)	(2 .65)	(2 .32)	(0 .36)	(0 .41)	(0 .77)	8 .82	(20 .65)
2007	11.10	0.28(a)	0 .85	1 .13	(0 .24)	(0 .08)	(0 .32)	11 .91	10 .33
2006	10.47	0.23	0 .65	0 .88	(0 .23)	(0 .02)	(0.25)	11 .10	8 .50
Class C shares
2010	9.40	0.22(a)	0 .99	1 .21	(0 .23)	–	(0.23)	10 .38	12 .99
2009	8.78	0.26(a)	0 .98	1 .24	(0 .25)	(0 .37)	(0 .62)	9 .40	15 .21
2008	11.86	0.32(a)	(2 .63)	(2 .31)	(0 .36)	(0 .41)	(0 .77)	8 .78	(20 .62)
2007	11.06	0.27(a)	0 .85	1 .12	(0 .24)	(0 .08)	(0 .32)	11 .86	(10 .31)
2006	10.43	0.23	0 .65	0 .88	(0 .23)	(0 .02)	(0.25)	11 .06	8 .57


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
	Expenses to	Ratio of Gross	Investment Income
Net Assets, End of	Average Net	Expenses to Average	to Average Net	Portfolio
Period (in thousands)	Assets	Net Assets	Assets	Turnover Rate


$1,627,536	0.71%(c)	– %	2 .21%	13 .2%
1,550,550	0.74 (c)	–	3.01	5.1
1,685,305	0.67 (c)	–	3 .39	34 .8
2,594,033	0.64 (c)	0.64 (c),(d)	2 .42	14 .6
2,389,102	0.66 (c)	0.66 (c),(d)	2 .01	10 .0

437,393	1.51 (c)	–	1 .46	13 .2
572,722	1.53 (c)	–	2.28	5.1
748,701	1.43 (c)	–	2 .71	34 .8
1,377,682	1.40 (c)	1.40 (c),(d)	1 .69	14 .6
1,414,695	1.43 (c)	1.43 (c),(d)	1 .24	10 .0

576,580	1.45 (c)	–	1 .47	13 .2
575,405	1.48 (c)	–	2.28	5.1
639,449	1.41 (c)	–	2 .65	34 .8
966,785	1.40 (c)	1.40 (c),(d)	1 .65	14 .6
883,759	1.41 (c)	1.41 (c),(d)	1 .26	10 .0


313,168	0.70 (c)	–	2 .94	11 .4
274,740	0.74 (c)	–	3.71	9.2
247,297	0.68 (c)	–	3 .83	27 .7
317,494	0.66 (c)	0.66 (c),(d)	3 .18	12 .7
309,946	0.68 (c)	0.68 (c),(d)	2 .89	13 .0

77,135	1.51 (c)	–	2 .17	11 .4
93,923	1.54 (c)	–	2.96	9.2
107,873	1.44 (c)	–	3 .12	27 .7
159,229	1.43 (c)	1.43 (c),(d)	2 .42	12 .7
166,857	1.45 (c)	1.45 (c),(d)	2 .12	13 .0

172,782	1.45 (c)	–	2 .20	11 .4
160,228	1.48 (c)	–	3.00	9.2
149,913	1.42 (c)	–	3 .07	27 .7
181,365	1.41 (c)	1.41 (c),(d)	2 .42	12 .7
170,789	1.43 (c)	1.43 (c),(d)	2 .14	13 .0


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset		Net Realized		Dividends Distributions		Total
	Value,	Net	and Unrealized Total From from Net			from	Dividends	Net Asset
	Beginning of Investment Gain (Loss) on Investment Investment					Realized	and	Value, End
	Period	Income(Loss) Investments Operations			Income	Gains	Distributions of Period Total Return(b)
SAM CONSERVATIVE GROWTH PORTFOLIO
Class A shares
2010	$11 .38	$0 .17(a)	$1 .77	$1 .94	($0 .19)	$–	($0 .19)	$13.13	17 .21%
2009	11.58	0.22(a)	0 .95	1 .17	(0 .22)	(1 .15)	(1 .37)	11 .38	12 .30
2008	19.04	0.45(a)	(6 .36)	(5 .91)	(0 .47)	(1 .08)	(1 .55)	11 .58	(33 .63)
2007	16.44	0.29(a)	2 .52	2 .81	(0 .21)	–	(0.21)	19 .04	17 .26
2006	14.67	0.18(a)	1 .73	1 .91	(0 .14)	–	(0.14)	16 .44	13 .07
Class B shares
2010	10.92	0.08(a)	1 .68	1 .76	(0 .09)	–	(0.09)	12 .59	16 .22
2009	11.13	0.14(a)	0 .90	1 .04	(0 .10)	(1 .15)	(1 .25)	10 .92	11 .41
2008	18.36	0.34(a)	(6 .15)	(5 .81)	(0 .34)	(1 .08)	(1 .42)	11 .13	(34 .12)
2007	15.86	0.16(a)	2 .42	2 .58	(0 .08)	–	(0.08)	18 .36	16 .35
2006	14.25	0.06(a)	1 .67	1 .73	(0 .12)	–	(0.12)	15 .86	12 .19
Class C shares
2010	10.80	0.07(a)	1 .68	1 .75	(0 .11)	–	(0.11)	12 .44	16 .29
2009	11.03	0.14(a)	0 .90	1 .04	(0 .12)	(1 .15)	(1 .27)	10 .80	11 .48
2008	18.22	0.32(a)	(6 .08)	(5 .76)	(0 .35)	(1 .08)	(1 .43)	11 .03	(34 .16)
2007	15.75	0.15(a)	2 .42	2 .57	(0 .10)	–	(0.10)	18 .22	16 .38
2006	14.15	0.06(a)	1 .66	1 .72	(0 .12)	–	(0.12)	15 .75	12 .21
SAM FLEXIBLE INCOME PORTFOLIO
Class A shares
2010	10.44	0.39(a)	0 .90	1 .29	(0 .42)	–	(0.42)	11 .31	12 .61
2009	9.50	0.41(a)	1 .18	1 .59	(0 .41)	(0 .24)	(0 .65)	10 .44	17 .66
2008	11.92	0.45(a)	(2 .13)	(1 .68)	(0 .47)	(0 .27)	(0 .74)	9 .50	(14 .96)
2007	11.54	0.44(a)	0 .41	0 .85	(0 .43)	(0 .04)	(0 .47)	11 .92	7 .54
2006	11.19	0.41	0 .39	0 .80	(0 .42)	(0 .03)	(0.45)	11 .54	7 .28
Class B shares
2010	10.43	0.30(a)	0 .90	1 .20	(0 .32)	–	(0.32)	11 .31	11 .69
2009	9.48	0.34(a)	1 .18	1 .52	(0 .33)	(0 .24)	(0 .57)	10 .43	16 .85
2008	11.91	0.38(a)	(2 .16)	(1 .78)	(0 .38)	(0 .27)	(0 .65)	9 .48	(15 .71)
2007	11.53	0.35(a)	0 .41	0 .76	(0 .34)	(0 .04)	(0 .38)	11 .91	6 .72
2006	11.17	0.33	0 .39	0 .72	(0 .33)	(0 .03)	(0.36)	11 .53	6 .54
Class C shares
2010	10.36	0.30(a)	0 .90	1 .20	(0 .33)	–	(0.33)	11 .23	11 .81
2009	9.43	0.34(a)	1 .17	1 .51	(0 .34)	(0 .24)	(0 .58)	10 .36	16 .87
2008	11.85	0.37(a)	(2 .14)	(1 .77)	(0 .38)	(0 .27)	(0 .65)	9 .43	(15 .69)
2007	11.47	0.35(a)	0 .41	0 .76	(0 .34)	(0 .04)	(0 .38)	11 .85	6 .76
2006	11.12	0.32	0 .39	0 .71	(0 .33)	(0 .03)	(0.36)	11 .47	6 .52


			FINANCIAL HIGHLIGHTS (Continued)
			PRINCIPAL FUNDS, INC.




	Ratio of		Ratio of Net
	Expenses to	Ratio of Gross	Investment Income
Net Assets, End of	Average Net	Expenses to Average	to Average Net	Portfolio
Period (in thousands)	Assets	Net Assets	Assets	Turnover Rate


$1,178,547	0.72%(c)	– %	1 .37%	15 .4%
1,103,246	0.77 (c)	–	2.15	4.2
1,204,478	0.68 (c)	–	2 .90	32 .4
2,002,371	0.65 (c)	0.65 (c),(d)	1 .68	16 .2
1,822,661	0.67 (c)	0.67 (c),(d)	1 .16	11 .0

317,492	1.52 (c)	–	0 .64	15 .4
414,345	1.55 (c)	–	1.43	4.2
545,926	1.44 (c)	–	2 .26	32 .4
1,089,177	1.41 (c)	1.41 (c),(d)	0 .96	16 .2
1,093,660	1.44 (c)	1.44 (c),(d)	0 .39	11 .0

493,019	1.48 (c)	–	0 .64	15 .4
509,044	1.52 (c)	–	1.42	4.2
590,888	1.43 (c)	–	2 .16	32 .4
1,000,468	1.41 (c)	1.41 (c),(d)	0 .92	16 .2
906,470	1.43 (c)	1.43 (c),(d)	0 .40	11 .0


461,662	0.70 (c)	–	3.56	9.5
390,778	0.74 (c)	–	4 .34	11 .4
349,745	0.67 (c)	– (c)	4 .09	35 .1
393,734	0.65 (c)	0.65 (c),(d)	3 .75	9 .7
401,786	0.67 (c)	0.67 (c),(d)	3 .60	8 .0

105,145	1.51 (c)	–	2.80	9.5
143,196	1.52 (c)	–	3 .61	11 .4
175,763	1.44 (c)	–	3 .39	35 .1
258,168	1.42 (c)	1.42 (c),(d)	3 .00	9 .7
317,142	1.44 (c)	1.44 (c),(d)	2 .83	8 .0

193,584	1.45 (c)	–	2.81	9.5
171,350	1.47 (c)	–	3 .59	11 .4
139,041	1.42 (c)	–	3 .35	35 .1
143,587	1.42 (c)	1.42 (c),(d)	2 .99	9 .7
148,386	1.43 (c)	1.43 (c),(d)	2 .84	8 .0


FINANCIAL HIGHLIGHTS
PRINCIPAL FUNDS, INC.


Selected data for a share of Capital Stock outstanding throughout each year ended October 31 (except as noted):


	Net Asset	Net	Net Realized		Dividends Distributions		Total
	Value,	Investment and Unrealized Total From			from Net	from	Dividends	Net Asset
	Beginning of Income		Gain (Loss) on Investment Investment			Realized	and	Value, End
	Period	(Loss)(a)	Investments Operations		Income	Gains	Distributions of Period Total Return(b)
SAM STRATEGIC GROWTH PORTFOLIO
Class A shares
2010	$12 .14	$0 .12	$2 .07	$2 .19	($0 .15)	$–	($0 .15)	$14.18	18 .15%
2009	12.26	0.18	0 .93	1 .11	( 0 .07)	( 1 .16)	( 1.23)	12 .14	10 .98
2008	21.28	0.44	( 7 .84)	( 7 .40)	( 0 .47)	( 1 .15)	( 1.62)	12 .26	(37 .46)
2007	18.13	0.25	3 .12	3 .37	( 0 .22)	–	( 0.22)	21 .28	18 .75
2006	15.99	0.13	2 .10	2 .23	( 0 .09)	–	( 0.09)	18 .13	13 .99
Class B shares
2010	11.35	0.03	1 .92	1 .95	( 0 .05)	–	( 0.05)	13 .25	17 .25
2009	11.55	0.10	0 .86	0 .96	–	( 1 .16)	( 1.16)	11 .35	10 .12
2008	20.15	0.33	( 7 .45)	( 7 .12)	( 0 .33)	( 1 .15)	( 1.48)	11 .55	(37 .94)
2007	17.18	0.12	2 .94	3 .06	( 0 .09)	–	( 0.09)	20 .15	17 .86
2006	15.25	( 0.01)	2 .01	2 .00	( 0 .07)	–	( 0.07)	17 .18	13 .16
Class C shares
2010	11.39	0.03	1 .92	1 .95	( 0 .07)	–	( 0.07)	13 .27	17 .14
2009	11.57	0.10	0 .88	0 .98	–	( 1 .16)	( 1.16)	11 .39	10 .30
2008	20.19	0.30	( 7 .43)	( 7 .13)	( 0 .34)	( 1 .15)	( 1.49)	11 .57	(37 .96)
2007	17.22	0.09	2 .98	3 .07	( 0 .10)	–	( 0.10)	20 .19	17 .90
2006	15.29	–	2 .00	2 .00	( 0 .07)	–	( 0.07)	17 .22	13 .12

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Principal LifeTime 2010 Fund, Principal LifeTime 2020 Fund, Principal LifeTime 2030 Fund, Principal LifeTime 2040 Fund, Principal LifeTime 2050 Fund, Principal LifeTime Strategic Income Fund, SAM Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible Income Portfolio, and SAM Strategic Growth Portfolio, (11 of the portfolios constituting Principal Funds, Inc., (collectively the “Funds”)) as of October 31, 2010, and the related statements of operations, statements of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of SAM Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible Income Portfolio, and SAM Strategic Growth Portfolio for each of the periods presented through October 31, 2006, were audited by other auditors whose report dated December 18, 2006 expressed an unqualified opinion on those financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010 by correspondence with the custodian and transfer agent of the affiliated funds. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the funds listed above constituting portfolios within Principal Funds, Inc. at October 31, 2010, the results of their operations, the changes in their net assets and their financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS,INC.
October 31, 2010 (unaudited)

As a shareholder of Principal Funds, Inc., you incur two types of costs: (1) transaction costs, including sales charges on purchase payments and contingent deferred sales charges; and (2) ongoing costs, including management fees; distribution fees; and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in Principal Funds, Inc. and to compare these costs with the ongoing costs of investing in other mutual funds. As a shareholder of Principal LifeTime 2010 Fund, Principal LifeTime 2020 Fund, Principal LifeTime 2030 Fund, Principal LifeTime 2040 Fund, Principal LifeTime 2050 Fund, Principal LifeTime Strategic Income Fund, SAM Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible Income Portfolio, or SAM Strategic Growth Portfolio, your fund will indirectly bear its pro rata share of the expenses incurred by the investment companies in which the fund invests. These expenses are not included in the fund’s annualized expense ratio used to calculate the expenses paid in this example. If they were, the expenses paid would be higher.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2010 to October 31, 2010), unless otherwise noted.


		Actual			Hypothetical
			Expenses Paid			Expenses Paid
	Beginning	Ending	During Period		Ending	During Period
	Account	Account Value	May 1, 2010 to	Beginning	Account Value	May 1, 2010 to	Annualized
	Value May 1,	October 31,	October 31,	Account Value	October 31,	October 31,	Expense
	2010	2010	2010^(a)	May 1, 2010	2010	2010^(a)	Ratio

Principal LifeTime 2010 Fund
Class A	$1,000.00	$1,043.84	$2.11	$1,000.00	$1,023.14	$2.09	0.41%
Principal LifeTime 2020 Fund
Class A	1,000.00	1,038.77	2.11	1,000.00	1,023.14	2.09	0.41
Class B	1,000.00	1,035.07	5.95	1,000.00	1,019.36	5.90	1.16
Principal LifeTime 2030 Fund
Class A	1,000.00	1,036.70	2.10	1,000.00	1,023.14	2.09	0.41
Class B	1,000.00	1,032.85	5.94	1,000.00	1,019.36	5.90	1.16
Principal LifeTime 2040 Fund
Class A	1,000.00	1,034.07	2.10	1,000.00	1,023.14	2.09	0.41
Class B	1,000.00	1,029.60	5.93	1,000.00	1,019.36	5.90	1.16
Principal LifeTime 2050 Fund
Class A	1,000.00	1,032.20	2.10	1,000.00	1,023.14	2.09	0.41
Class B	1,000.00	1,027.62	5.93	1,000.00	1,019.36	5.90	1.16
Principal LifeTime Strategic Income Fund
Class A	1,000.00	1,051.97	2.12	1,000.00	1,023.14	2.09	0.41
Class B	1,000.00	1,048.50	5.99	1,000.00	1,019.36	5.90	1.16
SAM Balanced Portfolio
Class A	1,000.00	1,036.11	3.54	1,000.00	1,021.73	3.52	0.69
Class B	1,000.00	1,031.59	7.58	1,000.00	1,017.74	7.53	1.48
Class C	1,000.00	1,032.42	7.38	1,000.00	1,017.95	7.32	1.44
SAM Conservative Balanced Portfolio
Class A	1,000.00	1,039.92	3.60	1,000.00	1,021.68	3.57	0.70
Class B	1,000.00	1,035.44	7.64	1,000.00	1,017.69	7.58	1.49
Class C	1,000.00	1,036.25	7.39	1,000.00	1,017.95	7.32	1.44


SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS, INC.
October 31, 2010 (unaudited)



		Actual			Hypothetical
			Expenses Paid			Expenses Paid
	Beginning	Ending	During Period		Ending	During Period
	Account	Account Value	May 1, 2010 to	Beginning	Account Value	May 1, 2010 to	Annualized
	Value May 1,	October 31,	October 31,	Account Value	October 31,	October 31,	Expense
	2010	2010	2010^(a)	May 1, 2010	2010	2010^(a)	Ratio

SAM Conservative Growth Portfolio
Class A	$1,000.00	$1,029.80	$3.63	$1,000.00	$1,021.63	$3.62	0.71%
Class B	1,000.00	1,025.24	7.66	1,000.00	1,017.64	7.63	1.50
Class C	1,000.00	1,025.56	7.45	1,000.00	1,017.85	7.43	1.46
SAM Flexible Income Portfolio
Class A	1,000.00	1,043.86	3.55	1,000.00	1,021.73	3.52	0.69
Class B	1,000.00	1,039.50	7.71	1,000.00	1,017.64	7.63	1.50
Class C	1,000.00	1,040.29	7.41	1,000.00	1,017.95	7.32	1.44
SAM Strategic Growth Portfolio
Class A	1,000.00	1,025.31	3.83	1,000.00	1,021.42	3.82	0.75
Class B	1,000.00	1,021.59	7.80	1,000.00	1,017.49	7.78	1.53
Class C	1,000.00	1,020.77	7.64	1,000.00	1,017.64	7.63	1.50

^(a)Expenses are equal to a fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

The following directors are considered not to be “interested persons” as defined in the 1940 Act


		Number of
		Portfolios in Fund
		Complex	Other
Name, Position Held with the Fund,	Principal Occupation(s)	Overseen by	Directorships
*Address, and Year of Birth**	During past 5 years	Director	Held by Director**
Elizabeth Ballantine	Principal, EBA Associates	99	Durango Herald, Inc;
Director since 2004			McClatchy
Member, Nominating and Governance			Newspapers, Inc.
Committee
1948

Kristianne Blake	President, Kristianne Gates Blake,	99	Avista Corporation;
Director since 2007	P.S.		Russell Investment
Member, Operations Committee			Company; Russell
1954			Investment Funds

Craig Damos	Formerly, CEO, The Weitz Company	99	None
Director since 2008
Member, Operations Committee
1954

Richard W. Gilbert	President, Gilbert Communications,	99	Calamos Asset
Director since 1985	Inc.		Management, Inc.
Member, Nominating and Governance
Committee
Member, Executive Committee
1940

Mark A. Grimmett	Executive Vice President and CFO,	99	None
Director since 2004	Merle Norman Cosmetics, Inc.
Member, Audit Committee
1960

Fritz S. Hirsch	Formerly, President, Sassy, Inc.	99	Focus Products Group
Director since 2005
Member, Audit Committee
1951

William C. Kimball	Partner, Kimball – Porter Investments	99	Casey’s General Stores,
Director since 1999	L.L.C.		Inc.
Member, Nominating and Governance
Committee
1947

Barbara A. Lukavsky	President and CEO, Barbican	99	None
Director since 1987	Enterprises, Inc.
Member, Nominating and Governance
Committee
1940

Daniel Pavelich	Retired.	99	Catalytic Inc.; Vaagen
Director since 2007			Bros. Lumber, Inc.
Member, Audit Committee
1944

The following directors are considered to be “interested persons” as defined in the 1940 Act, as amended, because of an affiliation with the Manager and Principal Life.


Ralph C. Eucher	Director, Principal Management Corporation (the	99	None
Director, Chairman	“Manager”), since 2008; Chairman, Principal Funds
Member, Executive Committee	Distributor, Inc. (“PFD”) and Princor, since 2008; Senior
1952	Vice President, Principal Life, and Principal Financial
	Group, since 2008; Director, Principal Shareholder Services
	(“PSS”) and Currency Management Committee – London,
	since 2008; Director CCI since 2009; Director, Spectrum,
	since 2005.

Nora M. Everett	President and Director, the Manager, since 2008; Senior	99	None
Director, President and CEO	Vice President, Retirement & Investor Services, Principal
Member, Executive Committee	Life, since 2008; Senior Vice President & Deputy General
1959	Counsel, Principal Life, 2004-2008; Director, PFD, since
	2008; CEO, Princor, since 2009; Director, Princor, PSS,
	Edge, Principal Asset Management Co. (Asia) Limited,
	since 2008; Chairman, PFA since 2010; Director, Principal
	International and Principal International Holding Company,
	LLC, since 2006.

William G. Papesh	Retired December 2007. Prior thereto, President and	99	None
Director	Director of Edge Asset Management, Inc.; President and
Member, Operations Committee	CEO of WM Group of Funds 1987-2006.
1943

*Correspondence intended for each Director who is other than an Interested Director may be sent to 711 High Street, Des Moines, IA 50392.


Name, Position Held with the Fund,	Principal Occupation(s)
Address, and Year of Birth	During past 5 years
David J. Brown	Vice President, Product & Distribution Compliance, Principal Life; Senior Vice
Chief Compliance Officer	President, PFD, the Manager, and Princor since 2006. Senior Vice President,
711 High Street, Des Moines, IA 50392	PSS, since 2007.
1960

Jill R. Brown	President, PFD since 2010; Senior Vice President/Chief Financial Officer,
Senior Vice President	Princor since 2006; Senior Vice President/Chief Financial Officer, PFD, and PSS,
1100 Investment Blvd, ste 200	since 2007. Senior Vice President/Chief Financial Officer, the Manager, since
El Dorado Hills, CA 95762	2008.
1967

Cary Fuchs	Vice President, PSS, since 2008; FVO, WMSS, 2005-2007; prior thereto,
Senior Vice President of Distribution	Divisional Vice President, BFDS.
1100 Investment Blvd, ste 200
El Dorado Hills, CA 95762
1957

Steve Gallaher	Assistant General Counsel, Principal Life and PFD since 2006; Assistant General
Assistant Counsel	Counsel, PMC, PSS, and Princor since 2007; Prior thereto, self-employed writer.
711 High Street Des Moines, IA 50392
1955

Ernie H. Gillum	Chief Compliance Officer, the Manager, since 2004; Vice President, Product
Vice President, Assistant Secretary	Development, the Manager, and Princor, since 2000; Vice President, PSS, since
711 High Street Des Moines, IA 50392	2007.
1955

Patrick A. Kirchner	Counsel, Principal Life; Assistant General Counsel, the Manager, PGI, and
Assistant Counsel	Princor since 2008.
711 High Street, Des Moines, IA 50392
1960


Carolyn F. Kolks	Counsel, Principal Life, since 2003.
Assistant Tax Counsel
711 High Street, Des Moines, IA 50392
1962

Jennifer A. Mills	Attorney, Principal Life since 2008; Counsel, Princor, PSS, the Manager, and
Assistant Counsel	PFD, since 2009; Registered Product Analyst, Principal Funds, 2007-2008,
711 High Street, Des Moines, IA 50392	Registered Product Development Consultant, Princor 2006-2007; and prior
1973	thereto, Judicial Law Clerk, Iowa Supreme Court.

Layne A. Rasmussen	Vice President and Controller – Mutual Funds, the Manager.
Vice President, Controller, and CFO
711 High Street, Des Moines, IA 50392
1958

Michael D. Roughton	Vice President and Associate General Counsel, Principal Life and Principal
Counsel	Financial Group, since 2001; Counsel, PGI, since 2001; Senior Vice President
711 High Street, Des Moines, IA 50392	and Counsel, the Manager, and Princor, since 2001. Senior Vice President and
1951	Counsel, PFD, since 2007.

Annual Review and Renewal of Management Agreement and Subadvisory Agreements.

At its September 13, 2010 meeting, the Board performed its annual review and renewal process relating to the Management Agreement and the Subadvisory Agreements for all Funds.

The Board also considered that the Manager had previously contractually agreed to reduce the management fees for fourteen PFI Funds that have recently implemented the “Core Satellite” structure.

This information is given to meet certain requirements of the Internal Revenue Code and should not be used by shareholders for preparing their income tax returns.

For tax return preparation purposes, please refer to the information supplied with the 1099-DIV form you will receive from the Fund’s transfer agent.

Principal Funds Distributor, Inc.
711 High Street
Des Moines, IA 50392-6370

Do not use this address for business correspondence.

GLOBAL INVESTMENT MANAGEMENT • ASSET ALLOCATION EXPERTISE • RETIREMENT LEADERSHIP

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.

To obtain an additional prospectus, please contact your financial professional or call 800-222-5852.


	Money Market
Amounts in thousands, except per share amounts	Fund
Investment in securities--at amortized cost which approximates fair value	$ 1,325,777
Assets
Investment in securities--at value	$ 1,325,777
Cash	10
Receivables:
Dividends and interest	235
Expense reimbursement from Manager	247
Expense reimbursement from Underwriter	50
Fund shares sold	1,548
Other assets	26
Total Assets	1,327,893
Liabilities
Accrued management and investment advisory fees	442
Accrued administrative service fees	12
Accrued distribution fees	139
Accrued service fees	53
Accrued transfer agent fees	354
Accrued directors' expenses	6
Accrued other expenses	297
Payables:
Fund shares redeemed	2,509
Total Liabilities	3,812
Net Assets Applicable to Outstanding Shares	$ 1,324,081
Net Assets Consist of:
Capital Shares and additional paid-in-capital	$ 1,365,701
Accumulated undistributed (overdistributed) net realized gain (loss)	(41,620 )
Total Net Assets	$ 1,324,081
Capital Stock (par value: $.01 a share):
Shares authorized	17,575,000
Net Asset Value Per Share:
Class A: Net Assets	$ 505,252
Shares Issued and Outstanding	505,313
Net Asset Value per share	$ 1.00
Maximum Offering Price	$ 1.00
Class B: Net Assets	$ 36,068
Shares Issued and Outstanding	36,073
Net Asset Value per share	$ 1.00 ^(a)
Class C: Net Assets	$ 20,638
Shares Issued and Outstanding	20,640
Net Asset Value per share	$ 1.00 ^(a)
Class J: Net Assets	$ 310,250
Shares Issued and Outstanding	310,287
Net Asset Value per share	$ 1.00 ^(a)
Institutional: Net Assets	$ 202,082
Shares Issued and Outstanding	202,106
Net Asset Value per share	$ 1.00
R-1: Net Assets	$ 9,818
Shares Issued and Outstanding	9,819
Net Asset Value per share	$ 1.00
R-2: Net Assets	$ 25,705
Shares Issued and Outstanding	25,708
Net Asset Value per share	$ 1.00
R-3: Net Assets	$ 56,225
Shares Issued and Outstanding	56,232
Net Asset Value per share	$ 1.00
R-4: Net Assets	$ 22,874
Shares Issued and Outstanding	22,877
Net Asset Value per share	$ 1.00
R-5: Net Assets	$ 135,169
Shares Issued and Outstanding	135,185
Net Asset Value per share	$ 1.00


STATEMENT OF OPERATIONS
PRINCIPAL FUNDS, INC.
Year Ended October 31, 2010


	Money Market
Amounts in thousands		Fund^(a)
Net Investment Income (Loss)
Income:
Interest		5,370
Total Income		5,370
Expenses:
Management and investment advisory fees		5,940
Distribution fees - Class B		493
Distribution fees - Class C		250
Distribution fees - Class J		818
Distribution fees - Class S		158
Distribution fees - R-1		34
Distribution fees - R-2		84
Distribution fees - R-3		152
Distribution fees - R-4		23
Administrative service fees - R-1		27
Administrative service fees - R-2		56
Administrative service fees - R-3		68
Administrative service fees - R-4		19
Administrative service fees - R-5		87
Registration fees - Class A		32
Registration fees - Class B		22
Registration fees - Class C		32
Registration fees - Class J		75
Registration fees - Class S		3
Registration fees - Institutional		45
Service fees - Class S		26
Service fees - R-1		24
Service fees - R-2		70
Service fees - R-3		127
Service fees - R-4		46
Service fees - R-5		287
Shareholder reports - Class A		49
Shareholder reports - Class B		1
Shareholder reports - Class C		1
Shareholder reports - Class J		160
Shareholder reports - Class S		8
Transfer agent fees - Class A		726
Transfer agent fees - Class B		89
Transfer agent fees - Class C		38
Transfer agent fees - Class J		421
Transfer agent fees - Class S		11
Transfer agent fees - Institutional		7
Custodian fees		15
Directors' expenses		34
Professional fees		33
Other expenses		63
Total Gross Expenses		10,654
Less: Reimbursement from Manager - Class A		1,062
Less: Reimbursement from Manager - Class B		505
Less: Reimbursement from Manager - Class C		83
Less: Reimbursement from Manager - Class J		1,622
Less: Reimbursement from Manager - Class S		78
Less: Reimbursement from Manager - Institutional		180
Less: Reimbursement from Manager - R-1		56
Less: Reimbursement from Manager - R-2		138
Less: Reimbursement from Manager - R-3		223
Less: Reimbursement from Manager - R-4		75
Less: Reimbursement from Manager - R-5		438
Less: Reimbursement from Underwriter - Class B		123
Less: Reimbursement from Underwriter - Class C		250
Less: Reimbursement from Underwriter - Class S		158
Less: Reimbursement from Underwriter - R-1		34
Less: Reimbursement from Underwriter - R-2		84
Less: Reimbursement from Underwriter - R-3		152
Less: Reimbursement from Underwriter - R-4		23
Total Net Expenses		5,370
Net Investment Income (Loss)		–

Net Realized and Unrealized Gain (Loss) on Investments and Payments by
Affiliates
Net realized gain from:
Investment transactions		721
Net increase from payments by affiliates		2,915
Net Realized and Unrealized Gain (Loss) on Investments		3,636
Net Increase in Net Assets Resulting from Operations	$ 3,636


^(a)Class S shares discontinued operations on November 23, 2009.


STATEMENT OF CHANGES IN NET ASSETS
PRINCIPAL FUNDS, INC.



Amounts in thousands												Money Market Fund
											Year Ended			Year Ended
											October 31, 2010			October 31, 2009
Operations
Net investment income (loss)											$ –			$ 12,272
Net realized gain on investments and payments by affiliates													3,636			(54 )
Change in unrealized appreciation/depreciation of investments													–			–
			Net Increase (Decrease) in Net Assets Resulting from Operations										3,636			12,218

Dividends and Distributions to Shareholders
From net investment income													–		(12,272 )
						Total Dividends and Distributions							–		(12,272 )

Capital Share Transactions
Net (decrease) in capital share transactions											(1,029,617)				(458,474 )
					Total increase (decrease) in net assets						(1,025,981)				(458,528 )

Net Assets
Beginning of period											2,350,062				2,808,590
End of period (including undistributed net investment income as set forth below)											$ 1,324,081			$ 2,350,062
Undistributed (overdistributed) net investment income (loss)											$ –			$ –

	Class A		Class B	Class C	Class J	Class S^(a)Institutional R-1					R-2		R-3	R-4		R-5
Capital Share Transactions:
Year Ended October 31, 2010
Dollars:
Sold	$ 469,628	$ 12,489 $		14,391 $ 135,851 $		6,506	$ 132,522		$ 2,839 $		8,696	$ 20,776 $		13,086	$ 56,656
Issued in acquisitions	1,527		–	526	16,294	–		109,510		10	5,323		1,061	8		650
Redeemed	(603,810 )		(43,213)	(25,057 )	(188,959)	(767,986)		(272,273)		(3,087 )	(12,364)		(34,051)	(16,516 )		(70,650 )
Net Increase (Decrease)	$ (132,655 ) $ (30,724) $			(10,140) $	(36,814) $ (761,480) $			(30,241) $		(238 ) $	1,655	$ (12,214) $		(3,422 ) $		(13,344)
Shares:
Sold	469,628		12,489	14,391	135,851	6,506		132,522		2,839	8,696		20,776	13,086		56,656
Issued in acquisitions	1,527		–	526	16,294	–		109,510		10	5,323		1,061	8		650
Redeemed	(603,810 )		(43,213)	(25,057 )	(188,959)	(767,986)		(272,273)		(3,087 )	(12,364)		(34,051)	(16,516 )		(70,650 )
Net Increase (Decrease)	(132,655 )		(30,724)	(10,140 )	(36,814 )	(761,480)		(30,241 )		(238 )	1,655		(12,214)	(3,422 )		(13,344 )
Year Ended October 31, 2009
Dollars:
Sold	$ 659,720	$ 60,716 $		50,539 $ 227,413 $ 396,802			$ 306,339		$ 18,105 $		23,928	$ 77,071 $		67,269	$ 124,297
Reinvested	3,650		115	89	1,229	4,182		1,422		23	76		250	129		662
Redeemed	(802,019 )		(81,457)	(62,845 )	(237,677)	(592,575)		(352,830)		(19,275 )	(32,080)		(94,616)	(72,005 )		(135,121)
Net Increase (Decrease)	$ (138,649 ) $ (20,626) $			(12,217) $	(9,035) $ (191,591) $			(45,069) $		(1,147 ) $	(8,076 ) $		(17,295) $	(4,607 ) $		(10,162)
Shares:
Sold	659,720		60,716	50,539	227,413	396,802		306,339		18,105	23,928		77,071	67,269		124,297
Reinvested	3,650		115	89	1,229	4,182		1,422		23	76		250	129		662
Redeemed	(802,019 )		(81,457)	(62,845 )	(237,677)	(592,575)		(352,830)		(19,275 )	(32,080)		(94,616)	(72,005 )		(135,121)
Net Increase (Decrease)	(138,649 )		(20,626)	(12,217 )	(9,035 )	(191,591)		(45,069 )		(1,147 )	(8,076)		(17,295)	(4,607 )		(10,162 )

Distributions:
Year Ended October 31, 2010
From net investment
income	$ –	$ – $		– $	–	–	$ –		$ – $		–	$ – $		–	$ –
From net realized gain
on investments	–		–	–	–	–		–		–	–		–	–		–
Total Dividends and
Distributions	$ –	$ – $		– $	–	–	$ –		$ – $		–	$ – $		–	$ –
Year Ended October 31, 2009
From net investment
income	$ (3,828) $		(155) $	(100 ) $	(1,233) $	(4,182) $		(1,634) $		(23 ) $	(76) $		(250 ) $	(129 ) $		(662)
From net realized gain
on investments	–		–	–	–	–		–		–	–		–	–		–
Total Dividends and
Distributions	$ (3,828) $		(155) $	(100 ) $	(1,233) $	(4,182) $		(1,634) $		(23 ) $	(76) $		(250 ) $	(129 ) $		(662)

^(a)Class S shares discontinued operations on November 23, 2009.

Principal Funds, Inc. is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company and operates in the mutual fund industry. Principal Funds, Inc. consists of Money Market Fund (the “Fund”), presented herein, and 64 other funds. Money Market Fund offers ten classes of shares: Class A, Class B, Class C, Class J, Institutional, R-1, R-2, R-3, R-4, and R-5. Information presented in these financial statements pertains to the Class J shares. Certain detailed information for the other classes of shares is provided separately.

The sole shareholder of the Class S shares of the Fund redeemed all shares in November 2009. On November 23, 2009 the Class S shares ceased operations.

Effective March 1, 2010, Class B shares of the Fund are no longer available for purchase (including investments through an automated investment plan), except through exchanges and dividend reinvestments. Class B shareholders may continue to hold such shares until they automatically convert to Class A shares. Shareholders who owned class B shares on February 26, 2010 will still receive dividend reinvestments and may continue to exchange their shares for other Fund’s Class B shares in accordance with the Funds’ current policies. All other features of Class B shares, including 12b-1 distribution and/or service fees, contingent deferred sales charge schedules, and conversion features, remain unchanged and continue in effect.

On September 23, 2010, Principal Management Corporation (the “Manager”) made a payment to Money Market Fund to cover certain realized losses related to prior year security dispositions where the market based valuation had fallen below the value of the security under the amortized cost method. The amount of the payment is included in Money Market Fund’s statement of operations.

All classes of shares represent interests in the same portfolio of investments, and will vote together as a single class except where otherwise required by law or as determined by the Board of Directors of Principal Funds, Inc. In addition, the Board of Directors declares separate dividends on each class of shares.

Security Valuation. The Fund values its securities at amortized cost, which approximates market, as permitted under Rule 2a-7 of the Investment Company Act of 1940. Under the amortized cost method, a security is valued by applying a constant yield to maturity of the difference between the principal amount due at maturity and the cost of the security to the Fund.

Income and Investment Transactions. The Fund records investment transactions on a trade date basis. The identified cost basis has been used in determining the net realized gain or loss from investment transactions. Interest income is recognized on an accrual basis. The Fund allocates daily all income and realized gains or losses to each class of shares based upon the relative proportion of the number of settled shares outstanding of each class.

The Fund’s investments are with various issuers in various industries. The schedule of investments contained herein summarizes concentration of credit risk by issuer and industry.

Expenses. Expenses directly attributed to a Fund are charged to that Fund. Other Fund expenses not directly attributed to a Fund are apportioned among the Funds managed by Principal Management Corporation.

The Fund allocates daily all expenses (other than class-specific expenses) to each class of shares based upon the relative proportion of the number of settled shares outstanding of each class. Class-specific expenses charged to each class during the year ended October 31, 2010, are included separately in the statement of operations.

Distributions to Shareholders. The Fund declares all net investment income and any net realized gains from investment transactions as dividends daily to settled shares of record as of that day. Dividends from net investment income and net realized gain from investments are determined in accordance with federal tax regulations, which may differ from U.S. generally accepted accounting principles.

Federal Income Taxes. No provision for federal income taxes is considered necessary because the Fund is qualified as a “regulated investment company” under the Internal Revenue Code and intends to distribute each year substantially all of its net investment income and realized capital gains to shareholders.

The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether it is “more likely than not” that each tax position would be sustained upon examination by a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year. During the year ended October 31, 2010, the Fund did not record any such tax benefit or expense in the accompanying financial statements. The statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal years from 2007-2010. No examinations are in progress or anticipated at this time.

Subsequent Events. Management has evaluated events or transactions that may have occurred since October 31, 2010, that would merit recognition or disclosure in the financial statements.

Indemnification. Under the Fund’s by-laws present and past officers, directors and employees are indemnified against certain liabilities arising out of the performance of their duties. In addition, in the normal course of business the Fund may enter into a variety of contracts that may contain representations and warranties which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund.

Line of Credit. The Fund participates with other registered investment companies managed by Principal Management Corporation (the “Manager”) in an unsecured joint line of credit with three banks which allow the participants to borrow up to $150 million, collectively. Borrowings are made solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each participant, based on its borrowings, at a rate equal to the higher of the Fed Funds Rate or LIBOR Rate plus 1.25%. Additionally, a commitment fee is charged at an annual rate of .10% on the amount of the line of credit. The Fund did not borrow against the line of credit during the year ended October 31, 2010.

Fair value is defined as the price that the Fund would receive upon selling a security in a timely transaction to an independent buyer in the principal or most advantageous market of the security at the measurement date. In determining fair value, the Fund uses various valuation approaches, including market, income and/or cost approaches. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Fund. Unobservable inputs are inputs that reflect the Fund’s own estimates about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

”Level 3 – Significant unobservable inputs (including the Fund’s assumptions in determining the fair value of investments.) Investments which are generally included in this category include certain corporate bonds and certain mortgage backed securities.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the market place, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for instruments categorized in Level 3.

Fair value is a market based measure considered from the perspective of a market participant who holds the asset rather than an entity specific measure. Therefore, even when market assumptions are not readily available, the Fund’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Fund uses prices and inputs that are current as of the measurement date.

The beginning of the period timing recognition is being adopted for the significant transfers between levels of each Fund’s assets and liabilities. As of October 31, 2010, there were no significant transfers between Level 1 and Level 2.

As of October 31, 2010, 100% of the Fund’s investments were valued based on Level 2 inputs, with the exception of Common Stock, which is a Level 1 input.

Management Services. The Fund has agreed to pay investment advisory and management fees to Principal Management Corporation (wholly owned by Principal Financial Services, Inc.) computed at an annual percentage rate of the Fund’s average daily net assets. A portion of the management fee is paid by Principal Management Corporation to the sub-advisor of the Fund. The annual rates used in this calculation for the Fund are as follows:

In addition to the management fee, R-1, R-2, R-3, R-4, and R-5 classes of shares of the Funds pay the Manager a service fee and an administrative service fee computed at an annual percentage rate of each class’s average daily net assets. The annual rates for the service fee are .25%, .25%, .25%, .25%, and .25% and the annual rates for the administrative service fee are .28%, .20%, .07%, .03%, and .01% for R-1, R-2, R-3, R-4, and R-5, respectively. Prior to May 1, 2010 the rates for the service fee were .25%, .25%, .17%, .15%, and .15% and the annual rates for the administrative service fee were .28%, .20%, .15%, .13%, and .11% for R-1, R-2, R-3, R-4, and R-5 respectively. Class A, Class C, Class J and Institutional shares of the Funds reimburse Principal Shareholder Services, Inc. (the “Transfer Agent”) (wholly owned by the Manager) for transfer agent services.

The Manager has contractually agreed to limit the Fund’s expenses on certain share classes of the Fund. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each respective class on an annualized basis. The operating expense limit for Class C shares is 1.79% and will expire on February 28, 2011.

The Manager has voluntarily agreed to limit the Fund’s expenses on certain share classes of the Fund. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each respective class on an annualized basis. The operating expense limit for Institutional Class shares is 0.43% and may be terminated at any time. In addition, the Manager has voluntarily agreed to limit the Fund’s expenses for all classes of shares to the extent necessary to maintain a 0% yield. The voluntary expense limit may be terminated at any time.

Distribution Fees. The Class B, Class C, Class J, R-1, R-2, R-3, and R-4 shares of the Fund bear distribution fees. The fee is computed at an annual rate of the average daily net assets attributable to each class of the Fund. Distribution fees are paid to Principal Funds Distributor, Inc., the principal underwriter, a portion may be paid to other selling dealers for providing certain services. The annual rates are 1.00%, 1.00%, .25%, .35%, .30%, .25% and .10% for Class B, Class C, Class J, R-1, R-2, R-3, and R-4 Classes of shares, respectively.

Principal Funds Distributor, Inc. has voluntarily agreed to limit the Fund’s distribution fees attributable to certain share classes of the Fund. The limit will maintain the level of distribution fees (expressed as a percent of average net assets on an annualized basis) not to exceed .75% for Class B and 0% for Class C, R-1, R-2, R-3 and R-4 shares, respectively. The limit may be terminated at any time.

Affiliated Ownership. At October 31, 2010, Principal Life Insurance Company (an affiliate of the Manager), the Manager, Principal Funds Distributor, Inc., Princor Financial Services Corporation, Collective Investment Trusts sponsored by Principal Trust Company, benefit plans and separate accounts sponsored on behalf of Principal Life Insurance Company, and other affiliated entities owned 13,433,000 and 21,500,000 shares of Class A and Institutional class shares, respectively.

Distributions to Shareholders. Federal tax distribution of ordinary income paid for the year ended October 31, 2009, was $12,272,000. Money Market Fund did not make any distributions for the fiscal year ended October 31, 2010.

Capital Loss Carryforward. Capital loss carryforwards are losses that can be used to offset future capital gains although it is unlikely the Fund will recognize future capital gains. As of October 31, 2010 the Fund had approximate net capital loss carryforwards as follows (amounts in thousands):

*In accordance with Sections 381-384 of the Internal Revenue Code, a portion of Money Market Fund’s losses have been subjected to an annual limitation.

As of October 31, 2010, Money Market Fund utilized capital loss carryforwards of $722,000.

Reclassification of Capital Accounts. Money Market Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the total net assets of the fund. The reclassifications are a result of permanent differences between GAAP and tax accounting. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the funds’ distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. For the year ended October 31, 2010, Money Market Fund recorded a reclassification of ($41,461,000) to Accumulated Net Realized Gain on Investments and $41,461,000 to Capital Shares and Paid in Capital.


COMMON STOCKS - 3.28%	Shares Held Value (000's)				Principal
Publicly Traded Investment Fund - 3.28%					Amount
BlackRock Liquidity Funds TempFund Portfolio	27,980,000 $		27,980	MUNICIPAL BONDS (continued)	(000's)	Value (000's)
DWS Money Market Series	15,410,000		15,410	California - 3.72%
		$ 43,390		California Statewide Communities Development
TOTAL COMMON STOCKS		$ 43,390		Authority FANNIE MAE
	Principal			0.27%, 8/15/2034	$ 400	$ 400
	Amount			City of Fairfield CA
BONDS - 11.48%	(000's)	Value (000's)		0.68%, 6/1/2034	2,000	2,000
Automobile Asset Backed Securities - 1.56%				0.68%, 6/1/2034	2,700	2,700
Bank of America Auto Trust				City of Santa Rosa CA
0.62%, 7/15/2011	$ 2,092	$ 2,092		0.63%, 9/1/2024	4,465	4,465
Ford Credit Auto Lease Trust				Kern Water Bank Authority
0.38%, 11/15/2011^(a)	3,200		3,200	0.28%, 7/1/2028	5,453	5,453
Hyundai Auto Receivables Trust				San Jose Redevelopment Agency
0.37%, 9/15/2011	4,523		4,523	0.28%, 8/1/2028	26,510	26,510
Nissan Auto Lease Trust				Santa Rosa Rancheria Tachi Yokut Tribe
0.56%, 6/15/2011	1,865		1,864	Enterprise
Nissan Auto Receivables Owner Trust				0.31%, 9/1/2019	7,800	7,800
0.36%, 10/17/2011	4,910		4,910			$ 49,328
Toyota Auto Receivables Owner Trust				Colorado - 0.51%
0.56%, 7/15/2011	4,136		4,139	Colorado Housing & Finance Authority
		$ 20,728		0.33%, 4/1/2029	325	325
Banks - 0.85%				County of Kit Carson CO
JP Morgan Chase & Co				0.27%, 6/1/2027	1,300	1,300
2.63%, 12/1/2010	1,200		1,201	Sheridan Redevelopment Agency
JP Morgan Chase Bank NA				0.75%, 12/1/2029	5,000	5,000
0.26%, 11/21/2010^(b)	8,000		8,000			$ 6,625
Morgan Stanley				Georgia - 0.15%
2.90%, 12/1/2010	2,000		2,003	Savannah College of Art & Design Inc
		$ 11,204		0.34%, 4/1/2024	2,000	2,000
Diversified Financial Services - 4.79%
Corporate Finance Managers Inc				Illinois - 1.52%
0.28%, 2/2/2043	13,400		13,400	City of Chicago IL
ING USA Global Funding Trust				0.64%, 12/15/2010	4,000	4,000
1.05%, 12/3/2010^(c)	15,000		15,000	Memorial Health System/IL
MetLife				0.27%, 10/1/2024	16,205	16,205
0.73%, 11/16/2010^(c)	15,000		15,000			$ 20,205
NGSP Inc				Indiana - 0.19%
0.33%, 6/1/2046	20,000		20,000	Ball State University Foundation Inc
		$ 63,400		0.29%, 9/1/2031	2,550	2,550
Healthcare - Services - 1.26%
Everett Clinic PS				Iowa - 0.16%
0.36%, 5/1/2022	5,100		5,100	Iowa Finance Authority
Portland Clinic LLP/The				0.27%, 3/1/2018	2,070	2,070
0.36%, 11/20/2027	11,560		11,560
		$ 16,660		New Mexico - 0.30%
Insurance - 2.07%				City of Las Cruces NM
Berkshire Hathaway Inc				0.28%, 12/1/2018	4,000	4,000
0.39%, 11/10/2010^(b)	11,400		11,400
New York Life Insurance Co				New York - 0.62%
0.51%, 11/1/2010^(b),(c)	16,000		16,000	New York City Housing Development Corp
		$ 27,400		0.28%, 7/1/2013	2,730	2,730
Other Asset Backed Securities - 0.95%				0.37%, 6/1/2039	5,400	5,400
CNH Equipment Trust						$ 8,130
0.35%, 4/15/2011	4,371		4,371	North Carolina - 0.13%
GE Equipment Midticket LLC				North Carolina Capital Facilities Finance Agency
0.35%, 9/14/2011^(a)	5,000		5,000	0.45%, 9/1/2018	1,755	1,755
Volvo Financial Equipment LLC
0.51%, 5/16/2011^(a),(b)	3,228		3,228	Oklahoma - 0.38%
		$ 12,599		Oklahoma University Hospital
TOTAL BONDS		$ 151,991		0.35%, 8/15/2021	5,030	5,030
	Principal
	Amount			Oregon - 0.07%
				Lake Oswego Redevelopment Agency
MUNICIPAL BONDS - 8.46%	(000's)	Value (000's)		0.33%, 6/1/2020	890	890
Arizona - 0.54%
Glendale Industrial Development Authority				Washington - 0.17%
0.35%, 7/1/2035	$ 7,190	$ 7,190		Washington State Housing Finance
				Commission FANNIE MAE
				0.28%, 9/1/2028	790	790
				0.28%, 12/15/2037	1,055	1,055


	Principal			Principal
	Amount			Amount
MUNICIPAL BONDS (continued)	(000's)	Value (000's)	COMMERCIAL PAPER (continued)	(000's)	Value (000's)
Washington (continued)			Banks (continued)
Washington State Housing Finance			Skandinaviska Enskilda Banken AB (continued)
Commission FANNIE MAE (continued)			0.35%, 11/17/2010^(a),(d)	$ 8,900	$ 8,899
0.32%, 12/1/2028	$ 375	$ 375	Standard Chartered Bank/New York
		$ 2,220	0.30%, 12/1/2010^(a)	7,600	7,598
TOTAL MUNICIPAL BONDS		$ 111,993	0.33%, 12/21/2010^(a)	8,000	7,996
	Principal		0.45%, 3/17/2011^(a)	8,100	8,086
U.S. GOVERNMENT & GOVERNMENT	Amount		0.60%, 2/7/2011^(d)	10,000	9,984
AGENCY OBLIGATIONS - 0.60%	(000's)	Value (000's)	UBS Finance Delaware LLC
U.S. Treasury Bill - 0.60%			0.50%, 11/23/2010^(d)	8,000	7,998
0.44%, 4/7/2011	$ 8,000	$ 7,985	0.53%, 7/15/2011	7,000	6,974
			5.23%, 7/19/2011	8,600	8,567
TOTAL U.S. GOVERNMENT &					$ 204,905
GOVERNMENT AGENCY OBLIGATIONS		$ 7,985	Commercial Services - 0.53%
	Maturity		Salvation Army Eastern Territory
	Amount		0.25%, 12/7/2010	7,000	7,000
REPURCHASE AGREEMENTS - 8.57%	(000's)	Value (000's)
Banks - 8.57%			Diversified Financial Services - 36.76%
Bank of America Repurchase Agreement; 0.22%	$ 57,431	$ 57,430	American Honda Finance Corp
dated 10/29/10 maturing 11/01/10			0.27%, 12/16/2010	7,000	6,998
(collateralized by US Treasury Note;			BNP Paribas Finance Inc
$58,578,600; 0.00%; dated 05/15/21)			0.25%, 12/27/2010	6,000	5,998
Deutsche Bank Repurchase Agreement; 0.21%	56,001	56,000	0.32%, 11/17/2010	8,000	7,999
dated 10/29/10 maturing 11/01/10			0.33%, 11/1/2010	6,000	6,000
(collateralized by US Treasury Note;			0.39%, 3/22/2011	4,500	4,493
$57,120,000; 4.38%; dated 05/15/40)			0.49%, 11/29/2010	8,000	7,997
		$ 113,430	CAFCO LLC
			0.28%, 1/24/2011^(a)	8,000	7,995
TOTAL REPURCHASE AGREEMENTS		$ 113,430	0.32%, 2/3/2011^(a)	3,918	3,915
	Principal		0.34%, 3/2/2011^(a)	8,000	7,991
	Amount		0.40%, 2/17/2011^(a)	6,000	5,993
COMMERCIAL PAPER - 66.53%	(000's)	Value (000's)	0.62%, 1/19/2011^(a)	6,000	5,992
Agriculture - 2.37%			Charta Corp
Cargill Inc			0.27%, 12/2/2010^(a)	8,300	8,298
0.21%, 11/3/2010^(a)	$ 7,700	$ 7,700
			0.30%, 1/19/2011^(a)	8,000	7,995
0.23%, 11/18/2010^(a)	8,000	7,999
			0.40%, 2/25/2011^(a)	9,000	8,988
0.28%, 2/8/2011^(a)	8,000	7,994
Philip Morris International Inc			0.40%, 3/4/2011	7,000	6,990
0.20%, 11/2/2010^(a)	7,700	7,700	CRC Funding LLC
			0.28%, 1/21/2011^(a)	7,000	6,995
		$ 31,393	0.29%, 1/5/2011^(a)	8,600	8,595
Banks - 15.47%			0.30%, 11/17/2010^(a)	9,000	8,999
Bank of America Corp			0.40%, 2/23/2011^(a)	7,000	6,991
0.22%, 11/9/2010	5,000	5,000	Credit Agricole North America Inc
0.22%, 11/24/2010	4,000	3,999	0.31%, 3/29/2011	7,000	6,991
Barclays US Funding Corp			0.50%, 2/22/2011	5,000	4,992
0.37%, 3/21/2011	8,000	7,988	Danske Corp
Commonwealth Bank of Australia			0.28%, 12/3/2010^(a)	9,000	8,998
0.21%, 11/5/2010^(a),(d)	8,000	8,000
0.24%, 11/30/2010^(a),(d)	7,000	6,999	Gemini Securitization Corp LLC
			0.24%, 11/23/2010^(a)	8,000	7,999
0.25%, 12/29/2010^(a),(d)	8,000	7,997
0.27%, 11/19/2010^(a),(d)	6,000	5,999	0.27%, 12/2/2010	7,900	7,898
			0.27%, 1/13/2011^(a)	8,000	7,996
Deutsche Bank Financial LLC			0.32%, 11/10/2010^(a)	1,500	1,500
0.35%, 2/28/2011	7,800	7,791	0.33%, 11/5/2010^(a)	7,000	7,000
0.50%, 6/10/2011	6,600	6,580	ING US Funding LLC
DnB NOR Bank ASA			0.40%, 4/5/2011	7,000	6,988
0.26%, 12/6/2010^(a),(d)	8,000	7,998
0.33%, 3/10/2011^(a),(d)	8,000	7,990	0.44%, 1/10/2011	7,000	6,994
0.35%, 2/11/2011^(a),(d)	6,000	5,994	Jupiter Securitization Co LLC
			0.23%, 11/3/2010^(a)	7,000	7,000
Intesa Funding LLC			0.24%, 12/14/2010^(a)	7,000	6,998
0.27%, 12/22/2010	8,000	7,997	0.25%, 11/12/2010^(a)	11,800	11,799
0.33%, 3/14/2011	7,000	6,991	0.25%, 11/18/2010^(a)	5,000	4,999
0.34%, 1/24/2011	8,000	7,994	Nordea North America Inc/DE
0.37%, 2/14/2011	9,000	8,990	0.25%, 12/1/2010	9,000	8,998
JP Morgan Chase & Co			0.25%, 12/17/2010	7,000	6,998
0.24%, 11/9/2010	7,000	7,000	0.26%, 1/10/2011	8,000	7,996
Royal Bank of Scotland Group PLC			0.37%, 2/9/2011	8,000	7,992
0.27%, 12/21/2010^(a),(d)	7,000	6,997
0.28%, 11/15/2010^(a),(d)	6,000	5,999	PACCAR Financial Corp
			0.30%, 11/22/2010	8,000	7,999
Skandinaviska Enskilda Banken AB			0.31%, 11/10/2010	8,800	8,799
0.29%, 11/3/2010^(a),(d)	4,500	4,500


	Principal				Principal
	Amount				Amount
COMMERCIAL PAPER (continued)	(000's)	Value (000's)	COMMERCIAL PAPER (continued)		(000's)	Value (000's)
Diversified Financial Services (continued)			Oil & Gas (continued)
Private Export Funding Corp			Shell International Finance BV (continued)
0.24%, 11/15/2010^(a)	$ 7,000	$ 6,999		0.73%, 7/1/2011^(a)	$ 6,900	$ 6,866
Rabobank USA Financial Corp						$ 31,318
0.43%, 11/15/2010	7,000	6,999	Supranational Bank - 1.85%
Ranger Funding Co LLC			Corp Andina de Fomento
0.22%, 11/1/2010^(a)	4,500	4,500		0.34%, 3/28/2011^(a)	8,500	8,488
0.24%, 11/22/2010^(a)	8,000	7,999		0.42%, 11/19/2010	8,000	7,998
0.24%, 12/1/2010^(a)	7,000	6,999		0.51%, 7/20/2011^(a)	8,000	7,971
River Fuel Funding Co #3						$ 24,457
0.32%, 12/15/2010	9,148	9,144	Telecommunications - 0.53%
0.35%, 1/31/2011	6,800	6,794	Telstra Corp Ltd
Sheffield Receivables Corp				0.26%, 12/20/2010^(a)	7,000	6,998
0.23%, 11/23/2010^(a)	8,000	7,999
0.27%, 1/24/2011^(a)	6,000	5,996
0.30%, 1/11/2011^(a)	8,000	7,995	TOTAL COMMERCIAL PAPER			$ 880,988
					Principal
Societe Generale North America Inc					Amount
0.26%, 12/1/2010	7,000	6,998	CERTIFICATE OF DEPOSIT - 1.21%		(000's)	Value (000's)
0.30%, 11/29/2010	6,000	5,999	Banks - 1.21%
Starbird Funding Corp			Bank of America NA
0.26%, 11/19/2010^(a)	6,400	6,399
0.27%, 1/20/2011^(a)	8,000	7,995		0.40%, 11/12/2010	8,000	8,000
0.28%, 11/30/2010^(a)	8,000	7,998		0.46%, 11/18/2010	8,000	8,000
0.32%, 11/10/2010^(a)	7,000	6,999				$ 16,000
Straight-A Funding LLC			TOTAL CERTIFICATE OF DEPOSIT			$ 16,000
0.21%, 11/8/2010^(a)	6,000	6,000	Total Investments			$ 1,325,777
0.22%, 11/8/2010^(a)	8,000	8,000	Liabilities in Excess of Other Assets, Net - (0.13)%			$ (1,696)
0.23%, 12/2/2010	5,000	4,999	TOTAL NET ASSETS - 100.00%			$ 1,324,081
0.25%, 11/22/2010	5,000	4,999
0.25%, 12/9/2010^(a)	8,000	7,998
			(a)	Security exempt from registration under Rule 144A of the Securities Act of
Thunder Bay Funding LLC				1933. These securities may be resold in transactions exempt from
0.24%, 11/4/2010^(a)	8,000	8,000
0.25%, 11/2/2010^(a)	8,000	8,000		registration, normally to qualified institutional buyers. Unless otherwise
0.25%, 11/3/2010^(a)	8,000	8,000		indicated, these securities are not considered illiquid. At the end of the
0.25%, 11/8/2010^(a)	6,000	6,000		period, the value of these securities totaled $550,048 or 41.54% of net
				assets.
Toyota Credit Canada Inc			(b)	Variable Rate. Rate shown is in effect at October 31, 2010.
0.23%, 11/26/2010	8,000	7,999	(c)	Security is Illiquid
0.27%, 1/7/2011	7,800	7,796	(d)	Security issued by foreign bank and denominated in USD.
0.44%, 12/6/2010	7,000	6,997
0.45%, 11/23/2010	6,000	5,998
		$ 486,754
Electric - 4.05%			Unrealized Appreciation (Depreciation)
GDF Suez			The net federal income tax unrealized appreciation (depreciation) and federal tax
0.35%, 11/1/2010^(a)	6,000	6,000	cost of investments held as of the period end were as follows:
0.36%, 11/5/2010^(a)	5,000	5,000
0.36%, 11/16/2010^(a)	15,000	14,998	Unrealized Appreciation			$ —
0.36%, 11/24/2010^(a)	7,000	6,998	Unrealized Depreciation			—
Oglethorpe Power Corp			Net Unrealized Appreciation (Depreciation)			$ —
0.25%, 11/8/2010^(a)	6,000	6,000	Cost for federal income tax purposes			$ 1,325,777
0.26%, 11/2/2010	6,681	6,681	All dollar amounts are shown in thousands (000's)
Southern Co Funding Corp
0.23%, 11/9/2010^(a)	8,000	7,999		Portfolio Summary (unaudited)
		$ 53,676	Sector			Percent
Insurance - 2.60%			Financial			72.32%
New York Life Capital Corp			Revenue			7.54%
0.24%, 11/15/2010^(a)	8,500	8,499	Consumer, Non-cyclical			4.16%
Prudential Funding LLC			Utilities			4.05%
0.32%, 12/22/2010	7,000	6,997	Exchange Traded Funds			3.28%
0.35%, 12/20/2010	6,000	5,997	Asset Backed Securities			2.51%
Prudential PLC			Government			2.45%
0.41%, 1/5/2011^(a)	6,000	5,996	Energy			2.37%
0.42%, 11/19/2010^(a)	7,000	6,998	Communications			0.53%
		$ 34,487	Tax Allocation			0.45%
Oil & Gas - 2.37%			General Obligation			0.30%
Shell International Finance BV			Insured			0.17%
0.40%, 5/2/2011^(a)	8,000	7,984	Liabilities in Excess of Other Assets, Net			(0.13)%
0.55%, 2/1/2011^(a)	8,000	7,988	TOTAL NET ASSETS			100.00%
0.56%, 4/4/2011^(a)	5,500	5,487
0.57%, 4/1/2011^(a)	3,000	2,993

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Money Market Fund, (1 of the portfolios constituting Principal Funds, Inc., (the “Fund”)) as of October 31, 2010, and the related statement of operations for the year then ended, statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Money Market Fund of the Principal Funds, Inc. at October 31, 2010, the results of its operations for the year then ended, the changes in its net assets for the each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

SHAREHOLDER EXPENSE EXAMPLE
PRINCIPAL FUNDS,INC.
October 31, 2010 (unaudited)

As a shareholder of the Money Market Fund of Principal Funds, Inc., you incur two types of costs: (1) transaction costs (for Class J shares only), including contingent deferred sales charges; and (2) ongoing costs, including management fees; distribution fees; and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in Principal Funds, Inc. and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2010 to October 31, 2010), unless otherwise noted.

The first section of the table below provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. An annual fee of $15.00 or $30.00 may apply to IRA and 403(b) accounts, respectively. These fees are not included in the table below. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.

The second section of the table below provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio for each share class and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in Principal Funds, Inc. and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

^(a)Expenses are equal to a fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

The following directors are considered not to be “interested persons” as defined in the 1940 Act


		Number of
		Portfolios in Fund
		Complex	Other
Name, Position Held with the Fund,	Principal Occupation(s)	Overseen by	Directorships
*Address, and Year of Birth**	During past 5 years	Director	Held by Director**
Elizabeth Ballantine	Principal, EBA Associates	99	Durango Herald, Inc;
Director since 2004			McClatchy
Member, Nominating and Governance			Newspapers, Inc.
Committee
1948

Kristianne Blake	President, Kristianne Gates Blake,	99	Avista Corporation;
Director since 2007	P.S.		Russell Investment
Member, Operations Committee			Company; Russell
1954			Investment Funds

Craig Damos	Formerly, CEO, The Weitz Company	99	None
Director since 2008
Member, Operations Committee
1954

Richard W. Gilbert	President, Gilbert Communications,	99	Calamos Asset
Director since 1985	Inc.		Management, Inc.
Member, Nominating and Governance
Committee
Member, Executive Committee
1940

Mark A. Grimmett	Executive Vice President and CFO,	99	None
Director since 2004	Merle Norman Cosmetics, Inc.
Member, Audit Committee
1960

Fritz S. Hirsch	Formerly, President, Sassy, Inc.	99	Focus Products Group
Director since 2005
Member, Audit Committee
1951

William C. Kimball	Partner, Kimball – Porter Investments	99	Casey’s General Stores,
Director since 1999	L.L.C.		Inc.
Member, Nominating and Governance
Committee
1947

Barbara A. Lukavsky	President and CEO, Barbican	99	None
Director since 1987	Enterprises, Inc.
Member, Nominating and Governance
Committee
1940

Daniel Pavelich	Retired.	99	Catalytic Inc.; Vaagen
Director since 2007			Bros. Lumber, Inc.
Member, Audit Committee
1944

The following directors are considered to be “interested persons” as defined in the 1940 Act, as amended, because of an affiliation with the Manager and Principal Life.


Ralph C. Eucher	Director, Principal Management Corporation (the	99	None
Director, Chairman	“Manager”), since 2008; Chairman, Principal Funds
Member, Executive Committee	Distributor, Inc. (“PFD”) and Princor, since 2008; Senior
1952	Vice President, Principal Life, and Principal Financial
	Group, since 2008; Director, Principal Shareholder Services
	(“PSS”) and Currency Management Committee – London,
	since 2008; Director CCI since 2009; Director, Spectrum,
	since 2005.

Nora M. Everett	President and Director, the Manager, since 2008; Senior	99	None
Director, President and CEO	Vice President, Retirement & Investor Services, Principal
Member, Executive Committee	Life, since 2008; Senior Vice President & Deputy General
1959	Counsel, Principal Life, 2004-2008; Director, PFD, since
	2008; CEO, Princor, since 2009; Director, Princor, PSS,
	Edge, Principal Asset Management Co. (Asia) Limited,
	since 2008; Chairman, PFA since 2010; Director, Principal
	International and Principal International Holding Company,
	LLC, since 2006.

William G. Papesh	Retired December 2007. Prior thereto, President and	99	None
Director	Director of Edge Asset Management, Inc.; President and
Member, Operations Committee	CEO of WM Group of Funds 1987-2006.
1943

*Correspondence intended for each Director who is other than an Interested Director may be sent to 711 High Street, Des Moines, IA 50392.


Name, Position Held with the Fund,	Principal Occupation(s)
Address, and Year of Birth	During past 5 years
David J. Brown	Vice President, Product & Distribution Compliance, Principal Life; Senior Vice
Chief Compliance Officer	President, PFD, the Manager, and Princor since 2006. Senior Vice President,
711 High Street, Des Moines, IA 50392	PSS, since 2007.
1960

Jill R. Brown	President, PFD since 2010; Senior Vice President/Chief Financial Officer,
Senior Vice President	Princor since 2006; Senior Vice President/Chief Financial Officer, PFD, and PSS,
1100 Investment Blvd, ste 200	since 2007. Senior Vice President/Chief Financial Officer, the Manager, since
El Dorado Hills, CA 95762	2008.
1967

Cary Fuchs	Vice President, PSS, since 2008; FVO, WMSS, 2005-2007; prior thereto,
Senior Vice President of Distribution	Divisional Vice President, BFDS.
1100 Investment Blvd, ste 200
El Dorado Hills, CA 95762
1957

Steve Gallaher	Assistant General Counsel, Principal Life and PFD since 2006; Assistant General
Assistant Counsel	Counsel, PMC, PSS, and Princor since 2007; Prior thereto, self-employed writer.
711 High Street Des Moines, IA 50392
1955

Ernie H. Gillum	Chief Compliance Officer, the Manager, since 2004; Vice President, Product
Vice President, Assistant Secretary	Development, the Manager, and Princor, since 2000; Vice President, PSS, since
711 High Street Des Moines, IA 50392	2007.
1955

Patrick A. Kirchner	Counsel, Principal Life; Assistant General Counsel, the Manager, PGI, and
Assistant Counsel	Princor since 2008.
711 High Street, Des Moines, IA 50392
1960


Carolyn F. Kolks	Counsel, Principal Life, since 2003.
Assistant Tax Counsel
711 High Street, Des Moines, IA 50392
1962

Jennifer A. Mills	Attorney, Principal Life since 2008; Counsel, Princor, PSS, the Manager, and
Assistant Counsel	PFD, since 2009; Registered Product Analyst, Principal Funds, 2007-2008,
711 High Street, Des Moines, IA 50392	Registered Product Development Consultant, Princor 2006-2007; and prior
1973	thereto, Judicial Law Clerk, Iowa Supreme Court.

Layne A. Rasmussen	Vice President and Controller – Mutual Funds, the Manager.
Vice President, Controller, and CFO
711 High Street, Des Moines, IA 50392
1958

Michael D. Roughton	Vice President and Associate General Counsel, Principal Life and Principal
Counsel	Financial Group, since 2001; Counsel, PGI, since 2001; Senior Vice President
711 High Street, Des Moines, IA 50392	and Counsel, the Manager, and Princor, since 2001. Senior Vice President and
1951	Counsel, PFD, since 2007.

Annual Review and Renewal of Management Agreement and Subadvisory Agreements.

At its September 13, 2010 meeting, the Board performed its annual review and renewal process relating to the Management Agreement and the Subadvisory Agreements for all Funds.

The Board also considered that the Manager had previously contractually agreed to reduce the management fees for fourteen PFI Funds that have recently implemented the “Core Satellite” structure.

Principal Funds Distributor, Inc.
711 High Street
Des Moines, IA 50392-6370

Do not use this address for business correspondence.

GLOBAL INVESTMENT MANAGEMENT • ASSET ALLOCATION EXPERTISE • RETIREMENT LEADERSHIP

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.

To obtain an additional prospectus, please contact your financial professional or call 800-222-5852.

(a) The Registrant has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

presented in Item 1 hereto. The amendment was made to list the current Principal Executive Officer.

(d) The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.

The Registrant's Board has determined that Mark Grimmett, a member of the Registrant's Audit Committee, is an "audit committee financial expert" and "independent," as such terms are defined in this Item.

(a) Audit Fees. Ernst & Young is the principal accountant for the registrant. As such, Ernst & Young has audited the financial statements of the registrant and reviewed regulatory filings that include those financial statements. During the last two fiscal years, Ernst & Young has billed the following amounts for their professional services.

(b) Audit-Related Fees. Ernst & Young provided audit-related services to the registrant during the last fiscal year that are not included in response to item 4(a). Those services related to the review of Form N-1A and Form N-14. Ernst & Young has billed the following amounts for those services.

Ernst and Young billed no fees that registrant’s audit committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(c) Tax Fees. Ernst & Young reviews the federal income tax returns and federal excise tax returns of the registrant. In connection with this review, Ernst & Young reviews the calculation of the registrant’s dividend distributions that are included as deductions on the tax returns. Ernst & Young also provides services to identify passive foreign investment companies. During the last two fiscal years, Ernst & Young has billed the following amounts for their professional tax services.

Ernst and Young billed no fees that registrant’s audit committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(d) All Other Fees. Ernst & Young has not billed the registrant for other products or services during the last two fiscal years.

Ernst and Young billed no fees that registrant’s audit committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

(e) (1) Audit Committee Pre-Approval Policy. The audit committee of the registrant has adopted the following pre-approval policy:

The purpose of this policy is to ensure the independence of the Principal Funds' primary independent auditor. This policy is established by the Audit Committee (the "Committee") of the Board of Directors of Principal Funds, Inc. and Principal Variable Contracts Funds, Inc. (the "Funds") effective for all engagements of the primary independent auditor.

Each quarter, Management will present to the Committee for pre-approval, a detailed description of each particular service, excluding tax services, for which pre-approval is sought and a range of fees for such service. The Committee may delegate pre-approval authority to one or more of its members provided such delegated member(s) shall present a report of any services approved to the full Committee at its next regularly scheduled meeting. The Committee Chairperson shall have pre-approval authority for changes to any range of fees applicable to services the Committee previously approved and for new services and the range of fees for such services that arise between regularly scheduled Committee meetings.

Similarly, the primary independent auditor will present to the Committee for pre-approval a written description of the nature and scope of all tax services not expressly prohibited, including the fee arrangements for such services, and the potential effects of such services on the audit firm’s independence.

In considering whether to pre-approve the primary independent auditor’s, provision of non-audit services, by the primary independent auditor, the Committee will consider whether the services are compatible with the maintenance of such auditor's independence. The Committee will also consider whether the primary independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Funds' business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Funds' ability to manage or control risk or improve audit quality.

(e) (2) Pre-Approval Waivers. There were no services provided to the registrant by Ernst & Young that were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Substantially all work in connection with the audit of the registrant’s financial statements was performed by full-time employees of Ernst & Young.

(g) The aggregate non-audit fees Ernst and Young billed to the registrant, the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the adviser that provides ongoing services to the registrant for each of registrant's last two fiscal years were as follows.

(h) The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.

ITEM 7 – DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

ITEM 9 – PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

There have been no material changes to the procedures by which shareholders may recommend nominees to registrant’s board of directors.

a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing).

(b) There have been no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

(a)(1) Code of Ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act are attached hereto as Exhibit 99.CERT.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act is attached hereto as Exhibit 99.906CERT.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Portfolio Managers:



William C. Armstrong, CFA		L. Phillip Jacoby IV
Timothy R. Warrick, CFA		Mark A. Lieb
Principal Global Investors, LLC		Spectrum Asset Management Inc.


Average Annual Total Returns* as of October 31, 2010
					Since	Inception	Extended Performance
		1-Year	3-Year	5-Year
					Inception	Date	Inception Date
Class A Shares	Excluding Sales Charge	12.83%	4.52%	4.38%	4.74%	6/28/05	12/6/00
	Including Sales Charge	8.58%	3.19%	3.59%	4.34%
Class B Shares	Excluding Sales Charge	12.29%	3.92%	3.73%	4.16%	6/28/05	12/6/00
	Including Sales Charge	7.29%	2.67%	3.38%	4.16%
Class C Shares	Excluding Sales Charge	11.93%	3.67%	3.56%	3.97%	1/16/07	12/6/00
	Including Sales Charge	10.93%	3.67%	3.56%	3.97%


Total Investment Expense as shown in the 3/1/10 prospectus
		Gross Expense Ratio				Net Expense Ratio
Class A Shares			1.11%				0.94%
Class B Shares			2.16%				1.60%
Class C Shares			2.57%				1.75%


Average Annual Total Returns* as of October 31, 2010
								Extended
						Since	Inception
		1-Year	3-Year	5-Year	10-Year			Performance
						Inception	Date
								Inception Date
Class A Shares	Excluding Sales Charge	9.59%	2.52%	2.70%	4.07%	5.40%	7/25/89	-
	Including Sales Charge	5.51%	1.21%	1.92%	3.67%	5.21%
Class B Shares	Excluding Sales Charge	8.66%	1.69%	1.90%	3.44%		7/1/94	-
	Including Sales Charge	3.66%	0.47%	1.57%	3.44%
Class C Shares	Excluding Sales Charge	8.59%	1.59%	1.84%	3.25%	4.67%	3/1/02	7/25/89
	Including Sales Charge	7.59%	1.59%	1.84%	3.25%	4.67%


Total Investment Expense as shown in the 3/1/10 prospectus
					Gross/Net Expense Ratio
Class A Shares						0.91%
Class B Shares						1.70%
Class C Shares						1.88%


Average Annual Total Returns* as of October 31, 2010
					Since	Inception	Extended Performance
		1-Year	3-Year	5-Year
					Inception	Date	Inception Date
Class A Shares	Excluding Sales Charge	13.52%	-8.73%	-0.21%	4.92%	6/28/05	12/30/02
	Including Sales Charge	7.24%	-10.43%	-1.34%	4.17%
Class B Shares	Excluding Sales Charge	12.09%	-9.78%	-1.29%	3.91%	6/28/05	12/30/02
	Including Sales Charge	7.09%	-10.86%	-1.63%	3.91%
Class C Shares	Excluding Sales Charge	12.85%	-9.35%	-0.92%	4.20%	1/16/07	12/30/02
	Including Sales Charge	11.85%	-9.35%	-0.92%	4.20%


Total Investment Expense as shown in the 3/1/10 prospectus
		Gross Expense Ratio				Net Expense Ratio
Class A Shares			1.19%				1.19%
Class B Shares			2.43%				2.43%
Class C Shares			3.17%				1.82%


Average Annual Total Returns* as of October 31, 2010
					Since	Inception	Extended Performance
		1-Year	3-Year	5-Year
					Inception	Date	Inception Date
Class A Shares	Excluding Sales Charge	14.37%	-12.36%	3.23%	3.15%	6/28/05	12/6/00
	Including Sales Charge	8.13%	-14.00%	2.06%	2.56%
Class B Shares	Excluding Sales Charge	12.98%	-13.28%	2.28%	2.45%	6/28/05	12/6/00
	Including Sales Charge	7.98%	-14.30%	1.97%	2.45%
Class C Shares	Excluding Sales Charge	13.61%	-12.90%	2.57%	2.50%	1/16/07	12/6/00
	Including Sales Charge	12.61%	-12.90%	2.57%	2.50%
Class P Shares	Excluding Sales Charge	14.38%	-12.34%	3.22%	3.14%	9/27/10	12/6/00


Total Investment Expense as shown in the 3/1/10 prospectus
		Gross Expense Ratio				Net Expense Ratio
Class A Shares			1.58%				1.58%
Class B Shares			2.69%				2.69%
Class C Shares			2.52%				2.08%
Class P Shares****			3.43%				1.08%

³	realtor.org/press_room/news_releases/2010/10/sept_strong
⁴	census.gov/const/newressales.pdf
⁵	“Housing Gloom Deepens,” Wall Street Journal, October 26, 2010 (wsj.com)
⁶	“GDP Grows Too Slowly to Fill Jobs Gap,” Wall Street Journal, October 30, 2010 (wsj.com)
⁷	Russell 3000 Index
⁸	Russell family of indexes
⁹	Developed international markets: MSCI EAFE Index; emerging international markets: MSCI EM Index
¹⁰	As measured by components of Barclays Capital Aggregate Bond Index
¹¹	As measured by components of Barclays Capital U.S. High Yield Index
¹²	As measured by FactSet Government Benchmark Yields


Portfolio Managers:



John Taylor	Chris Lepherd	Richard Lindquist , CFA	Mark A. Lieb	H. Kevin Birzer, CFA
Mustafa Sagun, CFA	Simon Hedger	Patrick Mitchell	L. Philip Jacoby IV	Zachary A. Hamel, CFA
Christopher Ibach, CFA	Kelly D. Rush, CFA	Guggenheim	Spectrum Asset	Kennth P. Malvey, CFA
Principal Global Investors,	Alistair Gillespie, CFA	Investment Management	Management, Inc	Terry C. Matlack, CFA
LLC	Marc Peterson	LLC		David J. Schulte, CFA
	Principal Real Estate			Tortoise Capital Advisors
	Investors, LLC			LLC


LargeCap Blend Fund II

	Portfolio Managers:
Mariateresa Monaco	Anna M. Dopkin, CFA	Scott Glasser
Principal Management Corporation	Ann M. Holcomb, CFA	Michael Kagan
	T. Rowe Price Associates, Inc.	ClearBridge Advisors


Portfolio Managers:



Mariateresa Monaco	Prescott LeGard, CFA	Ron Canakaris, CFA
Principal Management Corporation	Gregory J. Woodhams, CFA	Charles E. Markwalter, CFA
	American Century Investment Management, Inc.	Grover C. Maxwell III, CFA
		Montag & Caldwell


Portfolio Managers:



Mariateresa Monaco	John Phillips, CFA	Susan M. Byrne
Principal Management Corporation	Chris Marx	Mark R. Freeman, CFA
	David Yuen	Scott Lawson, CFA
	Joseph G. Paul	Jay Singhania, CFA
	AllianeBernstein L.P.	Kellie R. Stark, CFA
		Westwood Management Corporation


	Portfolio Managers:


Mariateresa Monaco	Kenneth G. Mertz II, CFA	Nancy B. Prial, CFA
Principal Management Corporation	Stacey L. Sears	Essex Investment Management Company, LLC
	Joseph W. Garner
	Peter J. Niedland, CFA
	Emerald Advisers, Inc.

^*	For additional detail regarding sector classifications, please see the Schedule of Investments.
^**	Futures, foreign currency contracts, and swap agreements are valued at the unrealized appreciation/(depreciation) of the instrument.


LargeCap Blend Fund II	0.018%	MidCap Growth Fund III	0.022%
LargeCap Growth Fund I	0.016	MidCap Value Fund I	0.020
LargeCap Growth Fund II	0.014	SmallCap Growth Fund II	0.020
LargeCap Value Fund III	0.012


	Expense Limit		Expense Limit
Diversified International Fund	.93%	MidCap Blend Fund	.70%
High Yield Fund	.56	Short-Term Income Fund	.54
International Emerging Markets Fund	1.34	SmallCap Blend Fund	.80
LargeCap S&P 500 Index Fund	.20	SmallCap Growth Fund	.80


LargeCap S&P 500 Index Fund	Class A	.15%
Money Market Fund	Class A	N/A
Money Market Fund	Class J	.25
Short-Term Income Fund	Class A	.15


	Shares	Dollars		Shares	Dollars
Bond & Mortgage Securities Fund	253	$ 2,551	LargeCap Value Fund III	156	$ 1,462
California Municipal Fund	2,026	19,757	MidCap Blend Fund	714	8,295
Disciplined LargeCap Blend Fund	430	4,765	MidCap Growth Fund III	145	1,157
Diversified International Fund	426	3,805	MidCap Value Fund I	7	85
Equity Income Fund	1,233	19,194	Money Market Fund	8,857	8,857
Government & High Quality Bond Fund	1,608	17,797	Principal Capital Appreciation Fund	468	14,210
High Yield Fund	763	6,032	Real Estate Securities Fund	145	2,034
Income Fund	1,379	13,040	SmallCap Blend Fund	148	1,708
International Emerging Markets Fund	72	1,561	SmallCap Growth Fund	78	498
LargeCap Blend Fund II	334	2,829	SmallCap Growth Fund II	115	733
LargeCap Growth Fund	734	4,899	SmallCap Value Fund	31	388
LargeCap Growth Fund I	141	1,004	Tax-Exempt Bond Fund	345	2,456
LargeCap Value Fund	182	1,527

7. Investment Transactions

(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. Unless otherwise indicated, these securities are not considered illiquid. At the end of the period, the value of these securities totaled $69,892 or 4.15% of net assets.
(c)	Market value is determined in accordance with procedures established in good faith by the Board of Directors. At the end of the period, the value of these securities totaled $58,737 or 3.49% of net assets.
(d)	This entity was put into conservatorship by the US Government in 2008. See Notes to Financial Statements for additional information.
(e)	Security was purchased in a "to-be-announced" ("TBA") transaction. See Notes to Financial Statements for additional information.
(f)	Security is a Principal Only Strip.


Unrealized Appreciation	$ 78,987
Unrealized Depreciation	(2,234)
Net Unrealized Appreciation (Depreciation)	$ 76,753
Cost for federal income tax purposes	$ 1,623,252
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector	Percent
Mortgage Securities	93 .34%
Government	5 .52%
Financial	1 .76%
Asset Backed Securities	0 .36%
Liabilities in Excess of Other Assets, Net	(0 .98)%
TOTAL NET ASSETS	100.00%

(a)	Affiliated Security as defined by the Investment Company Act of 1940 (the Fund controls 5.0% or more of the outstanding voting shares of the security).
(b)	Security is Illiquid
(c)	Non-Income Producing Security
(d)	Market value is determined in accordance with procedures established in good faith by the Board of Directors. At the end of the period, the value of these securities totaled $33,311 or 0.94% of net assets.


Unrealized Appreciation	$ 92,930
Unrealized Depreciation	(21,668)
Net Unrealized Appreciation (Depreciation)	$ 71,262
Cost for federal income tax purposes	$ 1,249,071
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector	Percent
Financial	29 .54%
Mortgage Securities	19 .64%
Utilities	10 .52%
Energy	9 .93%
Consumer, Non-cyclical	8 .25%
Consumer, Cyclical	6 .58%
Communications	6 .08%
Industrial	3 .80%
Government	2 .51%
Basic Materials	1 .90%
Other Assets in Excess of Liabilities, Net	1 .25%
TOTAL NET ASSETS	100.00%


Unrealized Appreciation	$ 297,055
Unrealized Depreciation	(27,795)
Net Unrealized Appreciation (Depreciation)	$ 269,260
Cost for federal income tax purposes	$ 1,258,600
All dollar amounts are shown in thousands (000's)


Unrealized Appreciation	$ 186,603
Unrealized Depreciation	(25,823)
Net Unrealized Appreciation (Depreciation)	$ 160,780
Cost for federal income tax purposes	$ 1,244,619
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Country	Percent
United Kingdom	20 .50%
Japan	17 .18%
Canada	10 .00%
Switzerland	9 .15%
Germany	8 .10%
Australia	7 .78%
France	4 .84%
Sweden	3 .14%
Netherlands	2 .99%
Denmark	2 .80%
Finland	2 .50%
Belgium	2 .20%
Italy	1 .63%
Norway	1 .32%
Israel	1 .29%
Hong Kong	1 .28%
United States	1 .19%
Spain	0 .79%
Ireland	0 .77%
Bermuda	0 .51%
China	0 .32%
Singapore	0 .21%
Liabilities in Excess of Other Assets, Net	(0 .49)%
TOTAL NET ASSETS	100.00%


Unrealized Appreciation	$ 555,675
Unrealized Depreciation	(29,028)
Net Unrealized Appreciation (Depreciation)	$ 526,647
Cost for federal income tax purposes	$ 1,851,039
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector	Percent
Consumer, Non-cyclical	24 .49%
Technology	18 .33%
Consumer, Cyclical	17 .64%
Communications	13 .57%
Industrial	12 .23%
Financial	10 .54%
Basic Materials	4 .31%
Energy	1 .04%
Liabilities in Excess of Other Assets, Net	(2 .15)%
TOTAL NET ASSETS	100.00%


Unrealized Appreciation	$ 186,210
Unrealized Depreciation	(16,626)
Net Unrealized Appreciation (Depreciation)	$ 169,584
Cost for federal income tax purposes	$ 1,179,124
All dollar amounts are shown in thousands (000's)


Unrealized Appreciation	$ 78,404
Unrealized Depreciation	(21,438)
Net Unrealized Appreciation (Depreciation)	$ 56,966
Cost for federal income tax purposes	$ 1,121,342
All dollar amounts are shown in thousands (000's)


Unrealized Appreciation	$ 352,118
Unrealized Depreciation	(28,280)
Net Unrealized Appreciation (Depreciation)	$ 323,838
Cost for federal income tax purposes	$ 761,956
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector	Percent
Consumer, Non-cyclical	17 .96%
Financial	15 .18%
Consumer, Cyclical	13 .88%
Industrial	12 .96%
Technology	12 .63%
Energy	9 .84%
Communications	9 .11%
Basic Materials	4 .21%
Utilities	3 .04%
Exchange Traded Funds	1 .16%
Other Assets in Excess of Liabilities, Net	0 .03%
TOTAL NET ASSETS	100.00%


Unrealized Appreciation	$ 46,106
Unrealized Depreciation	(8,221)
Net Unrealized Appreciation (Depreciation)	$ 37,885
Cost for federal income tax purposes	$ 257,309
All dollar amounts are shown in thousands (000's)

Portfolio Summary (unaudited)

Sector	Percent
Financial	35 .65%
Industrial	15 .30%
Consumer, Cyclical	11 .39%
Consumer, Non-cyclical	10 .70%
Basic Materials	6 .65%
Utilities	6 .28%
Technology	5 .60%
Energy	4 .18%
Communications	3 .45%
Other Assets in Excess of Liabilities, Net	0 .80%
TOTAL NET ASSETS	100.00%

(a)	Calculated based on average shares outstanding during the period.
(b)	Total return is calculated without the front-end sales charge or contingent deferred sales charge.
(c)	Reflects Manager's contractual expense limit.
(d)	Excludes interest expense paid on borrowings through reverse repurchase agreements.
(e)	Period from January 17, 2007 through October 31, 2007. Class C shares recognized $.01 of net investment income per share and incurred a net realized and unrealized loss of $.03 per share from January 10, 2007, through January 16, 2007.
(f)	Total return amounts have not been annualized.
(g)	Computed on an annualized basis.
(h)	Excludes interest expense and fees paid through inverse floater agreements. See "Operating Policies" in notes to financial statements.
(i)	Excludes expense reimbursement from Manager and/or custodian.

(a)	Calculated based on average shares outstanding during the period.
(b)	Total return is calculated without the front-end sales charge or contingent deferred sales charge.
(c)	On January 12, 2007 the fund succeeded to the operations of another fund in a shareholder-approved reorganization. As part of the reorganization, the fund issued one share of stock for each five outstanding shares of the predecessor fund, with the result that the fund's net asset value per share was increased without changing the proportionate beneficial interests of shareholders. The financial highlights have been restated to reflect the issuance of new shares.
(d)	Portfolio turnover rate excludes portfolio realignment from the acquisition of Short-Term Bond Fund.
(e)	Excludes expense reimbursement from Manager and/or custodian.
(f)	Period from September 27, 2010, date shares first offered, through October 31, 2010.
(g)	Total return amounts have not been annualized.
(h)	Computed on an annualized basis.
(i)	Reflects Manager's contractual expense limit.
(j)	Period from January 17, 2007 through October 31, 2007. Class C shares incurred a net realized and unrealized gain of $.25 per share from January 10, 2007, through January 16, 2007.


In Favor	Opposed	Abstain
105,558,706.468	8,514,094.147	10,044,841.866


	Deductible		Deductible
	Percentage		Percentage
Disciplined LargeCap Blend Fund	100%	LargeCap Value Fund	100%
Equity Income Fund	83%	LargeCap Value Fund III	100%
Global Diversified Income Fund	3%	MidCap Blend Fund	100%
LargeCap Blend Fund II	100%	MidCap Value Fund I	100%
LargeCap Growth Fund I	100%	Principal Capital Appreciation Fund	100%
LargeCap Growth Fund II	100%	SmallCap Blend Fund	52%
LargeCap S&P 500 Index Fund	100%	SmallCap Value Fund	100%


	Foreign Taxes
	Per Share
International Emerging Markets Fund	$ 0.0636
International Growth Fund	$ 0.0251
Diversified International Fund	$ 0.0257
Global Real Estate Securities Fund	$ 0.0057


Portfolio Managers:



Dirk Laschanzky, CFA		James Fennessey, CFA
David Blake, CFA		Michael P. Finnegan, CFA
Tim Dunbar		Randy L. Welch
Principal Global Investors, LLC		Principal Management Corporation

**	Net asset value is not adjusted for sales charge.
***	Performance shown for the benchmark is calculated from 2/28/01 and assumes reinvestment of all dividends and distributions. Indices are

**	Net asset value is not adjusted for sales charge.
***	Performance shown for the benchmark assumes reinvestment of all dividends and distributions. Indices are unmanaged, and individuals cannot