485APOS 1 filingbody.htm PIF A FILING FOR THE ADDITION OF BOND MKT IND AND INTL EQTY IND FUNDS filingbody.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
  Registration No. 33-59474 
 
U.S. SECURITIES AND EXCHANGE COMMISSION   
WASHINGTON, D. C. 20549   
 
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POST-EFFECTIVE AMENDMENT NO. 72 TO   
FORM N-1A   
REGISTRATION STATEMENT   
under   
THE SECURITIES ACT OF 1933   
and   
REGISTRATION STATEMENT   
under   
THE INVESTMENT COMPANY ACT OF 1940   
 
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PRINCIPAL FUNDS, INC.   
formerly Principal Investors Fund, Inc.   
(Exact name of Registrant as specified in Charter)   
 
The Principal Financial Group   
Des Moines, Iowa 50392   
(Address of principal executive offices)   
 
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Telephone Number (515) 248-3842   

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                                                                                                                                                             Copy to: 
                                       MICHAEL D. ROUGHTON  JOHN W. BLOUCH, Esq. 
                                       The Principal Financial Group  Dykema Gossett PLLC 
                                       Des Moines, Iowa 50392  Franklin Square, Suite 300 West 
  1300 I Street, N.W. 
  Washington, DC 20005-3306 
 
(Name and address of agent for service) 
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It is proposed that this filing will become effective (check appropriate box)   
 
_____immediately upon filing pursuant to paragraph (b) of Rule 485   
_____on (date), pursuant to paragraph (b) of Rule 485   
_____60 days after filing pursuant to paragraph (a)(1) of Rule 485   
_____on (date) pursuant to paragraph (a)(1) of Rule 485   
_XX_ 75 days after filing pursuant to paragraph (a)(2) of Rule 485   
_____on (date) pursuant to paragraph (a)(2) of Rule 485   
 
If appropriate, check the following box:)   
 
_____This post-effective amendment designates a new effective date for a previously filed post-effective amendment. 
 
Explanatory Note   
 
         This post-effective amendment to the registration statement on Form N-1A for Principal Funds, Inc. (“Registrant”) 
         relates to the Bond Market Index Fund and International Equity Index Fund. This post-effective amendment is not 
         being filed to update or amend the prospectuses or statement of additional information for the Registrant’s other 
         series.;   

PRINCIPAL FUNDS, INC.
 
BOND MARKET INDEX FUND
INTERNATIONAL EQUITY INDEX FUND 
Institutional Class Shares
The date of this Prospectus is __________________, 2009. 

As with all mutual funds, neither the Securities and Exchange Commission ("SEC") nor any State Securities 
Commission has approved or disapproved of these securities or determined whether this prospectus is accurate or 
complete. It is a criminal offense to represent otherwise. 

                                                                                 TABLE OF CONTENTS 
 
Risk/Return Summary 
         Bond Market Index Fund 
         International Equity Index Fund 
The Costs of Investing 
Intermediary Compensation 
Certain Investment Strategies and Related Risks 
Management of the Funds 
Pricing of Fund Shares 
Purchase of Fund Shares 
Redemption of Fund Shares 
Exchange of Fund Shares 
Dividends and Distributions 
Tax Considerations 
Frequent Purchases and Redemptions 
Fund Account Information 
Portfolio Holdings Information 
Financial Highlights 
Appendix A - Summary of Principal Risks 
Appendix B - Description of Bond Ratings 
Additional Information 

RISK/RETURN SUMMARY   
 
Principal Funds, Inc. (the “Fund” or “PFI”) offers investment portfolios (together, the “Funds”) through this prospectus. 
The Fund’s Distributor is Principal Funds Distributor, Inc.* (the “Distributor”). Principal Management Corporation 
(“Principal”)*, the Manager of each of the Funds, seeks to provide a broad range of investment approaches through 
Principal Funds.   
 
The Sub-Advisors and the Funds each sub-advise are:   
 
   Sub-Advisor  Fund(s) 
   Mellon Capital Management Corporation  Bond Market Index Fund 
 
   Principal Global Investors, LLC*  International Equity Index Fund 
  * Principal Management Corporation, Principal Funds Distributor, Inc. (“PFD”), and Principal Global Investors, LLC, are affiliates of Principal 
  Life Insurance Company (“Principal Life”) and with it are subsidiaries of Principal Financial Group, Inc. and members of the Principal 
  Financial Group® .   
 
Institutional Class Shares   
Only eligible purchasers may buy Institutional Class shares of the Funds. At the present time, eligible purchasers 
include but are not limited to:   
•  retirement and pension plans to which Principal Life Insurance Company (“Principal Life”) provides recordkeeping 
  services;   
•  separate accounts of Principal Life;   
•  Principal Life or any of its subsidiaries or affiliates;   
•  any fund distributed by PFD if the fund seeks to achieve its investment objective by investing primarily in shares of 
  mutual funds;   
•  clients of Principal Global Investors, LLC.;   
•  sponsors, recordkeepers, or administrators of wrap account or mutual fund asset allocation programs or 
  participants in those programs;   
•  certain pension plans;   
•  certain retirement account investment vehicles administered by foreign or domestic pension plans; 
•  an investor who buys shares through an omnibus account with certain intermediaries, such as a broker-dealer, 
  bank, or other financial institution, pursuant to a written agreement; and 
•  certain institutional clients that have been approved by Principal Life for purposes of providing plan record keeping. 
 
Principal reserves the right to broaden or limit the designation of eligible purchasers. Not all of the Funds are offered in 
every state. Please check with your financial advisor or our home office for state availability. 
 
Main Strategies and Risks   
Each Fund’s investment objective is described in the summary description of each Fund. The Board of Directors may 
change a Fund’s objective or the investment strategies without a shareholder vote if it determines such a change is in 
the best interests of the Fund. If there is a material change to the Fund’s investment objective or investment strategies, 
you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that a Fund 
will meet its objective.   
 
The summary of each Fund also describes each Fund’s primary investment strategies (including the type or types of 
securities in which the Fund invests), any policy of the Fund to concentrate in securities of issuers in a particular 
industry or group of industries and the main risks associated with an investment in the Fund. A fuller discussion of 
risks appears later in the Prospectus under the caption “Certain Investment Strategies and Related Risks.” 
 
Each Fund may invest up to 100% of its assets in cash and cash equivalents for temporary defensive purposes in 
response to adverse market, economic, or political conditions as more fully described under the caption “Certain 
Investment Strategies and Related Risks — Temporary Defensive Measures.” 

Each Fund is designed to be a portion of an investor’s portfolio. None of the Funds are intended to be a complete 
investment program. Investors should consider the risks of each Fund before making an investment and be prepared 
to maintain the investment during periods of adverse market conditions. The value of your investment in a Fund 
changes with the value of the investments held by that Fund. Many factors affect that value, and it is possible that you 
may lose money by investing in the Funds. There can be no assurance that any Fund will achieve its investment 
objective. 
 
Factors that may adversely affect a particular Fund as a whole are called “principal risks.” The principal risks of 
investing in the Funds are stated as to each Fund in the Fund’s description and are more fully explained in Appendix A 
to this prospectus. Each Fund is also subject to Underlying Fund Risk to the extent that a fund of funds invests in the 
Fund. 
 
Fees and Expenses 
The annual operating expenses for each Fund are deducted from that Fund’s assets (stated as a percentage of Fund 
assets). Each Fund’s operating expenses are shown following each Fund’s description. A discussion of the fees is 
found in the section of the Prospectus titled “The Costs of Investing.” 
 
The examples following the expense tables for each Fund are intended to help investors compare the cost of investing 
in a particular Fund with the cost of investing in other mutual funds. 
 
NOTE: 
• No salesperson, dealer or other person is authorized to give information or make representations about a Fund 
       other than those contained in this Prospectus. Information or representations not contained in this prospectus may 
       not be relied upon as having been provided or made by Principal Funds, a Fund, the Manager, any Sub-Advisor, or 
       the Distributor. 

BOND MARKET INDEX FUND       
 
  Sub-Advisor(s):  Mellon Capital Management Corporation (“Mellon Capital”) 
 
  Objective:  The Fund seeks to provide current income.     
 
  Investor Profile:  The Fund may be an appropriate investment for investors interested in investing in a fixed- 
    income mutual fund and preferring a passive, rather than active, management style. 
 
Main Strategies and Risks       
Under normal circumstances, the Fund invests at least 80% of its net assets (plus any borrowings for investment 
purposes) in debt securities that are held in the Barclays Capital U.S. Aggregate Bond Index. The Barclays Capital 
U.S. Aggregate Bond Index represents securities that are domestic, taxable, and dollar denominated. The index 
covers the U.S. investment grade fixed rate bond market, with index components for government and corporate 
securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into 
more specific indices that are calculated and reported on a regular basis. The Fund considers the term "bond" to 
mean any debt security.         
 
The Fund uses an indexing strategy or passive investment approach designed to track the performance of the 
Barclays Capital U.S. Aggregate Bond Index. The Fund maintains a dollar-weighted average maturity, duration and 
yield consistent with that of the Index.       
 
Because of the difficulty and expense of executing relatively small bond trades, the Fund may not always be invested 
in the less heavily weighted Barclays Capital U.S. Aggregate Bond Index bonds. In addition, the Fund's ability to 
match the performance of the Barclays Capital U.S. Aggregate Bond Index is affected to some degree by the size and 
timing of cash flows into and out of the Fund. The Fund is managed to attempt to minimize such effects. 
 
Mellon Capital attempts to mirror the investment performance of the Barclays Capital U.S. Aggregate Bond Index by 
allocating the Fund's assets in approximately the same weightings as the Barclays U.S. Capital Aggregate Bond 
Index; however, it is unlikely that a perfect correlation of 1.00 will be achieved.     
 
Among the principal risks (defined in Appendix A) of investing in the Fund are:     
 
•  Underlying Fund Risk  •  Fixed Income Securities Risk  •  Foreign Securities Risk 
•  Portfolio Duration Risk  •  Prepayment Risk  •  Municipal Securities Risk 
    •  U.S. Government Sponsored Securities     
•  U.S. Government Securities Risk  Risk  •  Real Estate Securities Risk 
 
Mellon Capital has been the Fund’s Sub-Advisor since the Fund’s inception.     

Because the inception date of the Fund is _______, historical performance is not available. 
 
   Estimated Annual Fund Operating Expenses       
   (expenses that are deducted from Fund assets) as a Percentage of Average Daily Net Assets 
 
    Institutional 
       Estimated for the period ended August 31, 2010    Class  
         Management Fees    0.25%       
         Other Expenses    0.09         
                        Total Annual Fund Operating Expenses  0.34%        
         Expense Reimbursement(1)    0.04  
Net Expenses    0.30%           
 
 (1) Principal has contractually agreed to limit the Funds expenses attributable to Institutional Shares and, if necessary, pay expenses normally 
 payable by the Fund, excluding interest expense, through the period ending December 31, 2010. The expense limit will maintain a total level of 
 operating expenses (expressed as a percent of average net assets on an annualized basis) not to exceed 0.30%. 
 
   Example       
   This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example 
   assumes that you invest $10,000 in the Fund for the time periods indicated, regardless of whether you redeem or continue to hold the shares at 
   the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses 
   remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 
 
Number of years you own your shares 
 
  1  3   
   Institutional Class  $31  $105   

INTERNATIONAL EQUITY INDEX FUND 
 
  Sub-Advisor(s):  Principal Global Investors, LLC (“PGI”) 
 
  Objective:  The Fund seeks long-term growth of capital. 
 
  Investor Profile:  The Fund may be an appropriate investment for investors seeking long-term growth of 
    capital, willing to accept the potential for volatile fluctuations in the value of investments 
                                                    and preferring a passive, rather than active, management style.
 
Main Strategies and Risks   
Under normal circumstances, the Fund invests at least 80% of its net assets (plus any borrowings for investment 
purposes) in common stocks of companies that compose the Morgan Stanley Capital International (MSCI) EAFE 
(Europe, Australasia, and Far East) Index. The MSCI EAFE Index is a capitalization weighted equity index of 
Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the 
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The 
MSCI EAFE Index represents over 80% of the total global equity market capitalization, excluding the United States 
and Emerging Markets.     
 
The Fund uses an indexing strategy or a passive investment approach designed to track the performance of the MSCI 
EAFE Index. It does not attempt to manage market volatility, use defensive strategies or reduce the effect of any long- 
term periods of poor stock performance. 
The correlation between Fund and MSCI EAFE Index performance may be affected by the Fund's expenses, changes 
in securities markets, changes in the composition of the MSCI EAFE Index and the timing of purchases and sales of 
Fund shares. The Fund may invest in futures and options, which could carry additional risks such as losses due to 
unanticipated market price movements and could also reduce the opportunity for gain. 
 
Because of the challenges of investing in international markets, the Fund's investments may not fully replicate the 
securities in the MSCI EAFE Index. Because of the difficulty and expense of executing relatively small stock trades, 
the Fund may not always be invested in the less heavily weighted MSCI EAFE Index stocks and, at times may be 
weighted differently. In addition, the Fund's ability to match the performance of the MSCI EAFE Index is affected to 
some degree by the size and timing of cash flows into and out of the Fund. The Fund is managed to attempt to 
minimize such effects.     
PGI reserves the right to omit or remove any of the MSCI EAFE Index stocks from the Fund if it determines that the 
stock is not sufficiently liquid or if extraordinary events or financial conditions lead PGI to believe that it should not be a 
part of the Fund's assets.     
PGI attempts to mirror the investment performance of the MSCI EAFE Index by allocating the Fund's assets in 
approximately the same weightings as the MSCI EAFE Index using a stratified sampling approach. This means that 
the Fund will own a subset of constituent stocks, or other instruments with close correlation with the benchmark 
constituents to closely approximate the fundamental characteristics (growth rates, valuations, quality, beta, etc.) and 
diversification by sector, country, currency, and capitalization of the MSCI EAFE Index without owning every security 
in the MSCI EAFE Index.     
 
Among the principal risks (defined in Appendix A) of investing in the Fund are: 
 
•  Derivatives Risk                       •  Equity Securities Risk 
•  Underlying Fund Risk                       •  Foreign Securities Risk 
 
 
PGI has been the Fund’s Sub-Advisor since the Fund’s inception. 
 
Because the inception date of the Fund is _______, historical performance is not available. 

   Estimated Annual Fund Operating Expenses       
   (expenses that are deducted from Fund assets) as a Percentage of Average Daily Net Assets 
 
  Institutional    
       Estimated for the period ended August 31, 2010  Class    
         Management Fees  0.25%           
         Other Expenses  0.19           
Total Annual Fund Operating Expenses  0.44%           
         Expense Reimbursement(1)  0.09    
Net Expenses  0.35%          
(1) Principal has contractually agreed to limit the Funds expenses attributable to Institutional Shares and, if necessary, pay expenses normally 
     payable by the Fund, excluding interest expense, through the period ending December 31, 2010. The expense limit will maintain a total level of 
     operating expenses (expressed as a percent of average net assets on an annualized basis) not to exceed 0.35%. 
   Example       
   This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example 
   assumes that you invest $10,000 in the Fund for the time periods indicated, regardless of whether you redeem or continue to hold the shares at 
   the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses 
   remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 
 
  Number of years you own your shares 
 
     1  3   
   Institutional Class  $36  $131   

THE COSTS OF INVESTING 
 
Fees and Expenses of the Funds 
Fund shares are sold without a front-end sales charge and do not have a contingent deferred sales charge. There is 
no sales charge on shares of the Funds purchased with reinvested dividends or other distributions. 
 
In addition to the ongoing fees listed below, the Institutional Class of the Funds may pay a portion of investment 
related expenses (e.g., interest on reverse repurchase agreements) that are allocated to all classes of the Funds. 
 
Ongoing Fees 
Ongoing Fees reduce the value of each share. Because they are ongoing, they increase the cost of investing in the 
Funds. 
 
Each Fund pays ongoing fees to the Manager and others who provide services to the Fund. These fees include: 
•  Management Fee – Through the Management Agreement with the Fund, Principal has agreed to provide 
  investment advisory services and corporate administrative services to the Fund. 
•  Transfer Agent Fee – Principal Shareholder Services, Inc. (“PSS”) has entered into a Transfer Agency Agreement 
  with the Fund under which PSS provides transfer agent services to the Institutional Class shares of the Fund. 
  These services are currently provided at cost. Institutional Class shares of the Funds also pay expenses of 
  registering and qualifying shares for sale, the cost of producing and distributing reports and prospectuses to 
  Institutional Class shareholders, the cost of shareholder meetings held solely for Institutional Class shares, and 
  other operating expenses of the Fund. 
•  Other Expenses – A portion of expenses that are allocated to all classes of the Fund. 
 
The Distributor may, from time-to-time, at its expense, pay a bonus or other consideration or incentive to dealers who 
have sold or may sell significant amounts of shares. Any such bonus or incentive program will not change the price 
investors pay for the purchase of the Funds’ shares or the amount that any particular Fund receives as the proceeds 
from such sales. In addition, the Distributor or its affiliates may provide financial support to dealers that sell shares of 
the Funds. This support is based primarily on the amount of sales of fund shares and/or total assets in the Funds. The 
amount of support may be affected by total sales; net sales; levels of redemptions; the dealers’ support of, and 
participation in, the Distributor’s marketing programs and the extent of a dealer’s marketing programs relating to the 
Funds. Financial support to dealers may be made from payments from the Distributor’s resources and from its 
retention of underwriting concessions. 
 
INTERMEDIARY COMPENSATION 
 
Principal or its affiliates, on behalf of Principal Funds, may enter into agreements with intermediaries pursuant to which 
the intermediaries will receive payments for providing administrative, networking, recordkeeping, sub-transfer agency 
and/or shareholder services relating to fund shares. Intermediaries may include, among others, broker-dealers, 
registered investment advisors, banks, trust companies, pension plan consultants, retirement plan administrators, and 
insurance companies. The Fund will pay, or reimburse Principal or its affiliates for, such fees payable to 
intermediaries. Although such payments made by the Fund in any given year may vary, such payments by the Fund 
will generally not exceed 0.10% of the average net asset value of fund shares held by clients of such intermediary. In 
addition, Principal or its affiliates may pay compensation, from their own resources, to certain intermediaries that 
support the distribution or sale of shares of the Fund or provide services to Fund shareholders. For more information, 
see the Statement of Additional Information (SAI). 
 
Such payments to intermediaries may create an incentive for the intermediary or its Financial Professionals to 
recommend or sell shares of the Fund to you. If one mutual fund sponsor makes greater distribution assistance 
payments than another, your Financial Professional and his or her intermediary may have an incentive to recommend 
one fund complex over another. 

Please speak with your Financial Professional to learn more about the total amounts paid to your Financial 
Professional and his or her intermediary by Principal and its affiliates, and by sponsors of other mutual funds he or she 
may recommend to you. You should also carefully review disclosures made by your Financial Professional at the time 
of purchase. 
 
Your intermediary may charge fees and commissions, including processing fees, in addition to those described in this 
prospectus. The amount and applicability of any such fee is determined and disclosed separately by the intermediary. 
You should ask your Financial Professional for information about any fees and/or commissions that are charged. 
 
CERTAIN INVESTMENT STRATEGIES AND RELATED RISKS 
 
The SAI contains additional information about investment strategies and their related risks. 
 
Securities and Investment Practices 
Market Volatility. The value of a fund’s portfolio securities may go down in response to overall stock or bond market 
movements. Markets tend to move in cycles, with periods of rising prices and periods of falling prices. Stocks tend to 
go up and down in value more than bonds. If the fund’s investments are concentrated in certain sectors, its 
performance could be worse than the overall market. It is possible to lose money when investing in the fund. 
 
Equity securities include common stocks, preferred stocks, convertible securities, depositary receipts, rights and 
warrants. Common stocks, the most familiar type, represent an equity (ownership) interest in a corporation. The value 
of a company’s stock may fall as a result of factors directly relating to that company, such as decisions made by its 
management or lower demand for the company’s products or services. A stock’s value may also fall because of 
factors affecting not just the company, but also companies in the same industry or in a number of different industries, 
such as increases in production costs. The value of a company’s stock may also be affected by changes in financial 
markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency 
exchange rates. In addition, a company’s stock generally pays dividends only after the company invests in its own 
business and makes required payments to holders of its bonds and other debt. For this reason, the value of a 
company’s stock will usually react more strongly than its bonds and other debt to actual or perceived changes in the 
company’s financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse 
developments than those of larger companies. 
 
Fixed-income securities include bonds and other debt instruments that are used by issuers to borrow money from 
investors. The issuer generally pays the investor a fixed, variable, or floating rate of interest. The amount borrowed 
must be repaid at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are sold 
at a discount from their face values. 
 
Interest Rate Changes. Fixed-income securities are sensitive to changes in interest rates. In general, fixed-income 
security prices rise when interest rates fall and fall when interest rates rise. Longer term bonds and zero coupon bonds 
are generally more sensitive to interest rate changes. 
 
Credit Risk. Fixed-income security prices are also affected by the credit quality of the issuer. Investment grade debt 
securities are medium and high quality securities. Some bonds, such as lower grade or “junk” bonds, may have 
speculative characteristics and may be particularly sensitive to economic conditions and the financial condition of the 
issuers. 
 
Credit and Counterparty Risk. Each of the Funds is subject to the risk that the issuer or guarantor of a fixed-income 
security or other obligation, the counterparty to a derivatives contract or repurchase agreement, or the borrower of a 
portfolio’s securities will be unable or unwilling to make timely principal, interest, or settlement payments, or otherwise 
to honor its obligations. 
 
Liquidity Risk. A fund is exposed to liquidity risk when trading volume, lack of a market maker, or legal restrictions 
impair the fund’s ability to sell particular securities or close derivative positions at an advantageous price. Funds with 
principal investment strategies that involve securities of companies with smaller market capitalizations, foreign 
securities, derivatives, or securities with substantial market and/or credit risk tend to have the greatest exposure to 
liquidity risk. 

Securities Lending Risk. To earn additional income, each Fund may lend portfolio securities to approved financial 
institutions. Risks of such a practice include the possibility that a financial institution becomes insolvent, increasing the 
likelihood that the Fund will be unable to recover the loaned security or its value. Further, the cash collateral received 
by the Fund in connection with such a loan may be invested in a security that subsequently loses value. 
 
Repurchase Agreements and Loaned Securities 
Although not a principal investment strategy, each Fund may invest a portion of its assets in repurchase agreements. 
Repurchase agreements typically involve the purchase of debt securities from a financial institution such as a bank, 
savings and loan association, or broker-dealer. A repurchase agreement provides that the Fund sells back to the seller 
and that the seller repurchases the underlying securities at a specified price on a specific date. Repurchase 
agreements may be viewed as loans by a Fund collateralized by the underlying securities. This arrangement results in 
a fixed rate of return that is not subject to market fluctuation while the Fund holds the security. In the event of a default 
or bankruptcy by a selling financial institution, the affected Fund bears a risk of loss. To minimize such risks, the Fund 
enters into repurchase agreements only with parties a Sub-Advisor deems creditworthy (those that are large, well- 
capitalized and well-established financial institutions). In addition, the value of the securities collateralizing the 
repurchase agreement is, and during the entire term of the repurchase agreement remains, at least equal to the 
repurchase price, including accrued interest. 
 
Funds may lend their portfolio securities to unaffiliated broker-dealers and other unaffiliated qualified financial 
institutions. These transactions involve a risk of loss to the Fund if the counterparty should fail to return such securities 
to the Fund upon demand or if the counterparty’s collateral invested by the Fund declines in value as a result of 
investment losses. 
 
Currency Contracts 
The Funds may each enter into forward currency contracts, currency futures contracts and options, and options on 
currencies for hedging and other purposes. A forward currency contract involves a privately negotiated obligation to 
purchase or sell a specific currency at a future date at a price set in the contract. A Fund will not hedge currency 
exposure to an extent greater than the aggregate market value of the securities held or to be purchased by the Fund 
(denominated or generally quoted or currently convertible into the currency). 
 
Hedging is a technique used in an attempt to reduce risk. If a Fund’s Sub-Advisor hedges market conditions incorrectly 
or employs a strategy that does not correlate well with the Fund’s investment, these techniques could result in a loss. 
These techniques may increase the volatility of a Fund and may involve a small investment of cash relative to the 
magnitude of the risk assumed. In addition, these techniques could result in a loss if the other party to the transaction 
does not perform as promised. There is also a risk of government action through exchange controls that would restrict 
the ability of the Fund to deliver or receive currency. 
 
Forward Commitments 
Although not a principal investment strategy, each of the Funds may enter into forward commitment agreements. 
These agreements call for the Fund to purchase or sell a security on a future date at a fixed price. Each of the Funds 
may also enter into contracts to sell its investments either on demand or at a specific interval. 
 
Warrants 
Each of the Funds may invest in warrants though neither Fund uses such investments as a principal investment 
strategy. A warrant is a certificate granting its owner the right to purchase securities from the issuer at a specified 
price, normally higher than the current market price. 

Real Estate Investment Trusts 
The Funds may invest in real estate investment trust securities, herein referred to as “REITs.” REITs involve certain 
unique risks in addition to those risks associated with investing in the real estate industry in general (such as possible 
declines in the value of real estate, lack of availability of mortgage funds, or extended vacancies of property). Equity 
REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs 
may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not 
diversified, and are subject to heavy cash flow dependency, risks of default by borrowers, and self-liquidation. As an 
investor in a REIT, the Fund will be subject to the REIT’s expenses, including management fees, and will remain 
subject to the Fund’s advisory fees with respect to the assets so invested. REIT’s are also subject to the possibilities of 
failing to qualify for the special tax treatment accorded REITs under the Code, and failing to maintain their exemptions 
from registration under the 1940 Act. 
 
Investment in REITs involves risks similar to those associated with investing in small capitalization companies. REITs 
may have limited financial resources, may trade less frequently and in a limited volume, and may be subject to more 
abrupt or erratic price movements than larger company securities. 
 
Municipal Obligations and AMT-Subject Bonds 
The two principal classifications of municipal bonds are “general obligation” and “revenue” bonds. General obligation 
bonds are secured by the issuer’s pledge of its full faith and credit, with either limited or unlimited taxing power for the 
payment of principal and interest. Revenue bonds are not supported by the issuer’s full taxing authority. Generally, 
they are payable only from the revenues of a particular facility, a class of facilities, or the proceeds of another specific 
revenue source. 
 
“AMT-subject bonds” are municipal obligations issued to finance certain “private activities,” such as bonds used to 
finance airports, housing projects, student loan programs, and water and sewer projects. Interest on AMT-subject 
bonds is an item of tax preference for purposes of the federal individual alternative minimum tax (“AMT”) and will also 
give rise to corporate alternative minimum taxes. See “Tax Considerations” for a discussion of the tax consequences 
of investing in the Funds. 
 
Current federal income tax laws limit the types and volume of bonds qualifying for the federal income tax exemption of 
interest, which may have an effect upon the ability of the Fund to purchase sufficient amounts of tax-exempt securities. 
 

Derivatives 
To the extent permitted by its investment objectives and policies, each of the Funds may invest in securities that are 
commonly referred to as derivative securities. Generally, a derivative is a financial arrangement, the value of which is 
derived from, or based on, a traditional security, asset, or market index. Certain derivative securities are described 
more accurately as index/structured securities. Index/structured securities are derivative securities whose value or 
performance is linked to other equity securities (such as depositary receipts), currencies, interest rates, indices, or 
other financial indicators (reference indices). 
 
Some derivatives, such as mortgage-related and other asset-backed securities, are in many respects like any other 
investment, although they may be more volatile or less liquid than more traditional debt securities. 
 
There are many different types of derivatives and many different ways to use them. Futures and options are commonly 
used for traditional hedging purposes to attempt to protect a Fund from exposure to changing interest rates, securities 
prices, or currency exchange rates and for cash management purposes as a low-cost method of gaining exposure to a 
particular securities market without investing directly in those securities. The Funds may enter into put or call options, 
futures contracts, options on futures contracts, over-the-counter swap contracts (e.g., interest rate swaps, total return 
swaps and credit default swaps), and forward currency contracts for both hedging and non-hedging purposes. 
 
Generally, no Fund may invest in a derivative security unless the reference index or the instrument to which it relates 
is an eligible investment for the Fund or the reference currency relates to an eligible investment for the Fund. 
 
The return on a derivative security may increase or decrease, depending upon changes in the reference index or 
instrument to which it relates. The risks associated with derivative investments include: 
•  the risk that the underlying security, interest rate, market index, or other financial asset will not move in the 
  direction the Manager or Sub-Advisor anticipated; 
•  the possibility that there may be no liquid secondary market which may make it difficult or impossible to close out a 
  position when desired; 
•  the risk that adverse price movements in an instrument can result in a loss substantially greater than a Fund’s initial 
  investment; and 
•  the possibility that the counterparty may fail to perform its obligations. 
 
Exchange Traded Funds (ETFs) 
These are a type of index or actively managed fund bought and sold on a securities exchange. An ETF trades like 
common stock. Shares in an index ETF represent an interest in a fixed portfolio of securities designed to track a 
particular market index. The Funds could purchase shares issued by an ETF to temporarily gain exposure to a portion 
of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally 
reflect the risks of owning the underlying securities they are designed to track, although ETFs have management fees 
that increase their costs. 
 
Convertible Securities 
Convertible securities are fixed-income securities that a Fund has the right to exchange for equity securities at a 
specified conversion price. The option allows the Fund to realize additional returns if the market price of the equity 
securities exceeds the conversion price. For example, the Fund may hold fixed-income securities that are convertible 
into shares of common stock at a conversion price of $10 per share. If the market value of the shares of common stock 
reached $12, the Fund could realize an additional $2 per share by converting its fixed-income securities. 
 
Convertible securities have lower yields than comparable fixed-income securities. In addition, at the time a convertible 
security is issued the conversion price exceeds the market value of the underlying equity securities. Thus, convertible 
securities may provide lower returns than non-convertible fixed-income securities or equity securities depending upon 
changes in the price of the underlying equity securities. However, convertible securities permit the Fund to realize 
some of the potential appreciation of the underlying equity securities with less risk of losing its initial investment. 
 
The Funds treat convertible securities as both fixed-income and equity securities for purposes of investment policies 
and limitations because of their unique characteristics. The Funds may invest in convertible securities without regard 
to their ratings. 

Foreign Investing 
As a principal investment strategy, the International Equity Index Fund may invest Fund assets in securities of foreign 
companies. The Bond Market Index Fund may invest in securities of foreign companies but not as a principal 
investment strategy. For the purpose of this restriction, foreign companies are: 
 
•  companies with their principal place of business or principal office outside the U.S. or 
•  companies for which the principal securities trading market is outside the U.S. 
 
Foreign companies may not be subject to the same uniform accounting, auditing, and financial reporting practices as 
are required of U.S. companies. In addition, there may be less publicly available information about a foreign company 
than about a U.S. company. Securities of many foreign companies are less liquid and more volatile than securities of 
comparable U.S. companies. Commissions on foreign securities exchanges may be generally higher than those on 
U.S. exchanges. 
 
Foreign markets also have different clearance and settlement procedures than those in U.S. markets. In certain 
markets there have been times when settlements have been unable to keep pace with the volume of securities 
transactions, making it difficult to conduct these transactions. Delays in settlement could result in temporary periods 
when a portion of Fund assets is not invested and earning no return. If a Fund is unable to make intended security 
purchases due to settlement problems, the Fund may miss attractive investment opportunities. In addition, a Fund 
may incur a loss as a result of a decline in the value of its portfolio if it is unable to sell a security. 
 
With respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or 
social instability, or diplomatic developments that could affect a Fund’s investments in those countries. In addition, a 
Fund may also suffer losses due to nationalization, expropriation, or differing accounting practices and treatments. 
Investments in foreign securities are subject to laws of the foreign country that may limit the amount and types of 
foreign investments. Changes of governments or of economic or monetary policies, in the U.S. or abroad, changes in 
dealings between nations, currency convertibility or exchange rates could result in investment losses for a Fund. 
Finally, even though certain currencies may be convertible into U.S. dollars, the conversion rates may be artificial 
relative to the actual market values and may be unfavorable to Fund investors. 
 
Foreign securities are often traded with less frequency and volume, and therefore may have greater price volatility, 
than is the case with many U.S. securities. Brokerage commissions, custodial services, and other costs relating to 
investment in foreign countries are generally more expensive than in the U.S. Though the Funds intend to acquire the 
securities of foreign issuers where there are public trading markets, economic or political turmoil in a country in which 
a Fund has a significant portion of its assets or deterioration of the relationship between the U.S. and a foreign country 
may negatively impact the liquidity of a Fund’s portfolio. A Fund may have difficulty meeting a large number of 
redemption requests. Furthermore, there may be difficulties in obtaining or enforcing judgments against foreign 
issuers. 
 
A Fund may choose to invest in a foreign company by purchasing depositary receipts. Depositary receipts are 
certificates of ownership of shares in a foreign-based issuer held by a bank or other financial institution. They are 
alternatives to purchasing the underlying security but are subject to the foreign securities to which they relate. 
 
Investments in companies of developing (also called “emerging”) countries are subject to higher risks than 
investments in companies in more developed countries. These risks include: 
•  increased social, political, and economic instability; 
•  a smaller market for these securities and low or nonexistent volume of trading that results in a lack of liquidity and 
  in greater price volatility; 
•  lack of publicly available information, including reports of payments of dividends or interest on outstanding 
  securities; 
•  foreign government policies that may restrict opportunities, including restrictions on investment in issuers or 
  industries deemed sensitive to national interests; 
•  relatively new capital market structure or market-oriented economy; 
•  the possibility that recent favorable economic developments may be slowed or reversed by unanticipated political 
  or social events in these countries; 

•  restrictions that may make it difficult or impossible for the Fund to vote proxies, exercise shareholder rights, pursue 
  legal remedies, and obtain judgments in foreign courts; and 
•  possible losses through the holding of securities in domestic and foreign custodial banks and depositories. 
In addition, many developing countries have experienced substantial and, in some periods, extremely high rates of 
inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative 
effects on the economies and securities markets of those countries. 
 
Repatriation of investment income, capital, and proceeds of sales by foreign investors may require governmental 
registration and/or approval in some developing countries. A Fund could be adversely affected by delays in or a 
refusal to grant any required governmental registration or approval for repatriation. 
Further, the economies of developing countries generally are heavily dependent upon international trade and, 
accordingly, have been and may continue to be adversely affected by trade barriers, exchange controls, managed 
adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with 
which they trade. 
Small and Medium Capitalization Companies 
The Bond Market Index and International Equity Index Funds may hold securities of small and medium capitalization 
companies but not as a principal investment strategy. Market capitalization is defined as total current market value of 
a company’s outstanding common stock. Investments in companies with smaller market capitalizations may involve 
greater risks and price volatility (wide, rapid fluctuations) than investments in larger, more mature companies. Small 
companies may be less significant within their industries and may be at a competitive disadvantage relative to their 
larger competitors. While smaller companies may be subject to these additional risks, they may also realize more 
substantial growth than larger or more established companies. 
 
Smaller companies may be less mature than larger companies. At this earlier stage of development, the companies 
may have limited product lines, reduced market liquidity for their shares, limited financial resources, or less depth in 
management than larger or more established companies. Unseasoned issuers are companies with a record of less 
than three years continuous operation, including the operation of predecessors and parents. Unseasoned issuers by 
their nature have only a limited operating history that can be used for evaluating the company’s growth prospects. As 
a result, investment decisions for these securities may place a greater emphasis on current or planned product lines 
and the reputation and experience of the company’s management and less emphasis on fundamental valuation 
factors than would be the case for more mature growth companies. 
 
Temporary Defensive Measures 
From time to time, as part of its investment strategy, each Fund may invest without limit in cash and cash equivalents 
for temporary defensive purposes in response to adverse market, economic, or political conditions. To the extent that 
the Fund is in a defensive position, it may lose the benefit of upswings and limit its ability to meet its investment 
objective. For this purpose, cash equivalents include: bank notes, bank certificates of deposit, bankers’ acceptances, 
repurchase agreements, commercial paper, and commercial paper master notes which are floating rate debt 
instruments without a fixed maturity. In addition, a Fund may purchase U.S. government securities, preferred stocks, 
and debt securities, whether or not convertible into or carrying rights for common stock. 
There is no limit on the extent to which the Funds may take temporary defensive measures. In taking such measures, 
the Fund may fail to achieve its investment objective. 
Portfolio Turnover 
“Portfolio Turnover” is the term used in the industry for measuring the amount of trading that occurs in a fund’s portfolio 
during the year. For example, a 100% turnover rate means that on average every security in the portfolio has been 
replaced once during the year. 
 
Funds with high turnover rates (more than 100%) often have higher transaction costs (which are paid by the Fund) 
which may lower the Fund’s performance. 
Please consider all the factors when you compare the turnover rates of different funds. A fund with consistently higher 
total returns and higher turnover rates than another fund may actually be achieving better performance precisely 
because the managers are active traders. You should also be aware that the “total return” line in the Financial 
Highlights section reflects portfolio turnover costs. 

MANAGEMENT OF THE FUNDS     
 
The Manager     
Principal Management Corporation (“Principal”) serves as the manager for the Fund. Through the Management 
Agreement with the Fund, Principal provides investment advisory services and certain corporate administrative 
services for the Fund.     
 
Principal is an indirect subsidiary of Principal Financial Group, Inc. and has managed mutual funds since 1969. 
Principal’s address is Principal Financial Group, Des Moines, Iowa 50392.   
 
The Sub-Advisors     
Principal has signed contracts with Sub-Advisors. Under the sub-advisory agreements, the Sub-Advisor agrees to 
assume the obligations of Principal to provide investment advisory services to the portion of the assets for a specific 
Fund allocated to it by Principal. For these services, Principal pays the Sub-Advisor a fee. 
 
Principal or the Sub-Advisor provides the Directors of the Fund with a recommended investment program. The 
program must be consistent with the Fund’s investment objective and policies. Within the scope of the approved 
investment program, the Sub-Advisor advises the Fund on its investment policy and determines which securities are 
bought or sold, and in what amounts.     
 
Information regarding the Sub-Advisors and individual portfolio managers is set forth below. The Statement of 
Additional Information provides additional information about each portfolio manager’s compensation, other accounts 
managed by the portfolio manager, and the portfolio manager’s ownership of securities in the Funds. 
 
 
 
Sub-Advisor: Mellon Capital Management Corporation (“Mellon Capital”), 50 Fremont Street, Suite 3900, San 
                                   Francisco, CA 94105. Mellon Capital is a wholly owned subsidiary of Mellon Financial Corporation 
                                   (“Mellon”).     
 
The day-to-day portfolio management is shared by two portfolio managers. Zandra Zelaya is the lead portfolio 
manager.     
 
  Day-to-day   
                                   Fund  Fund Management  Since 
 
                                   Bond Market Index  David C. Kwan  2009 
  Zandra Zelaya  2009 
 
David C. Kwan, CFA. Mr. Kwan is Managing Director, Fixed Income Management and Trading. He joined Mellon 
Capital in 1990. He earned a B.S. in Electrical Engineering and Computer Science from University of California at 
Berkeley and an MBA from University of California at Berkeley. He has earned the right to use the Chartered Financial 
Analyst designation.     
 
Zandra Zelaya, CFA. Ms. Zelaya is Vice President, Portfolio Manager, Fixed-Income. She joined Mellon Capital in 
1997. She earned a Bachelors of Science at California State University Hayward in Finance. She has earned the 
right to the use the Charted Financial Analyst designation.   

Sub-Advisor: Principal Global Investors, LLC (“PGI”) is an indirect wholly owned subsidiary of Principal Life 
  Insurance Company, an affiliate of Principal, and a member of the Principal Financial Group. PGI 
  manages equity, fixed-income, and real estate investments primarily for institutional investors, including 
  Principal Life. PGI’s headquarters address is 801 Grand Avenue, Des Moines, IA 50392. Its other 
  primary asset management office is in New York, with asset management offices of affiliate advisors in 
  several non-U.S. locations including London, Sydney and Singapore. 
 
As reflected in the list below, the day-to-day portfolio management is shared by two portfolio managers. The portfolio 
managers operate as a team, sharing authority and responsibility for research and the day-to-day management of the 
portfolio with no limitation on the authority of one portfolio manager in relation to another. 
 
    Day-to-day   
                             Fund  Fund Management  Since 
                             International Equity Index  Dirk Laschanzky  2009 
    Scott Smith  2009 
 
Dirk Laschanzky, CFA. Mr. Laschanzky is a portfolio manager for PGI, responsible for portfolio implementation 
strategies, asset allocation and managing the midcap value and index portfolios. Prior to joining PGI in 1997, he was a 
portfolio manager and analyst for over seven years at AMR Investment Services. He earned an MBA and BA, both in 
Finance, from the University of Iowa. He has earned the right to use the Chartered Financial Analyst designation. 
 
Scott W. Smith. Mr. Smith is a research analyst and portfolio manager at Principal Global Investors. He is an analyst 
within the firm’s asset allocation and structured investments group. He also provides research assistance to various 
business units within Principal Global Investors. Mr. Smith joined the firm in 1999. He received a bachelor’s degree in 
finance from Iowa State University.     
 
 
 
Fees Paid to Principal     
Each Fund pays Principal a fee for its services, which includes the fee Principal pays to the Sub-Advisor. The 
management fee for the Bond Market Index and International Equity Index Funds (as a percentage of the average 
daily net assets) is 0.25% on all assets.     
 
A discussion regarding the basis for the Board of Directors approval of the management agreement with Principal and 
the sub-advisory agreements with each Sub-Advisor will be available in the semi-annual report to shareholders for the 
period ended February 28, 2010.     
 
The Fund operates as a Manager of Managers. Under an order received from the SEC, the Fund and Principal, may 
enter into and materially amend agreements with Sub-Advisors, other than those affiliated with Principal, without 
obtaining shareholder approval. For any Fund that is relying on that order, Principal may, without obtaining 
shareholder approval:     
•  hire one or more Sub-Advisors;     
•  change Sub-Advisors; and     
•  reallocate management fees between itself and Sub-Advisors.   
 
Principal has ultimate responsibility for the investment performance of each Fund that utilizes a Sub-Advisor due to its 
responsibility to oversee Sub-Advisors and recommend their hiring, termination, and replacement. No Fund will rely on 
the order until it receives approval from its shareholders or, in the case of a new Fund, the Fund’s sole initial 
shareholder before the Fund is available to the other purchasers, and the Fund states in its prospectus that it intends 
to rely on the order.     
 
The shareholders of each of the Funds have approved the Fund’s reliance on the order; however, only the Bond 
Market Index Fund intends to rely on the order.     

Distribution Agreements 
Principal may pay compensation, from its own resources, to certain financial intermediaries for the distribution, 
promotion, sale of Fund shares, and for providing services to shareholders. If one mutual fund sponsor makes greater 
distribution assistance payments than another, your financial professional or his or her financial intermediary may 
have an incentive to recommend one fund complex over another. 
 
PRICING OF FUND SHARES 
 
Each Fund’s shares are bought and sold at the current share price. The share price of each class of each Fund is 
calculated each day the New York Stock Exchange (“NYSE”) is open (share prices are not calculated on the days on 
which the NYSE is closed for trading, generally New Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday/ 
Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas). The 
share price is determined as of the close of business of the NYSE (normally 3:00 p.m. Central Time). When an order 
to buy or sell shares is received, the share price used to fill the order is the next price we calculate after we receive the 
order at our transaction processing center in Canton, Massachusetts. To process your purchase order on the day we 
receive it, we must receive the order (with complete information): 
  •  on a day that the NYSE is open and 
  •  prior to the close of trading on the NYSE (normally 3 p.m. Central Time). 
 
Orders received after the close of the NYSE or on days that the NYSE is not open will be processed on the next day 
that the NYSE is open for normal trading. 
 
If we receive an application or purchase request for a new mutual fund account or subsequent purchase into an 
existing account that is accompanied by a check and the application or purchase request does not contain complete 
information, we may hold the application (and check) for up to two business days while we attempt to obtain the 
necessary information. If we receive the necessary information within two business days, we will process the order 
using the next share price calculated. If we do not receive the information within two business days, the application 
and check will be returned to you. 
 
For these Funds the share price is calculated by: 
•  taking the current market value of the total assets of the Fund 
•  subtracting liabilities of the Fund 
•  dividing the remainder proportionately into the classes of the Fund 
•  subtracting the liability of each class 
•  dividing the remainder by the total number of shares outstanding for that class. 
 
NOTES: 
•  If market quotations are not readily available for a security owned by a Fund, its fair value is determined using a 
  policy adopted by the Directors. Fair valuation pricing is subjective and creates the possibility that the fair value 
  determined for a security may differ materially from the value that could be realized upon the sale of the security. 
•  A Fund’s securities may be traded on foreign securities markets that generally complete trading at various times 
  during the day prior to the close of the NYSE. Generally, the values of foreign securities used in computing a 
  Fund’s NAV are the market quotations as of the close of the foreign market. Foreign securities and currencies are 
  also converted to U.S. dollars using the exchange rate in effect at the close of the NYSE. Occasionally, events 
  affecting the value of foreign securities occur when the foreign market is closed and the NYSE is open. The Fund 
  has adopted policies and procedures to “fair value” some or all securities held by a Fund if significant events occur 
  after the close of the market on which the foreign securities are traded but before the Fund’s NAV is calculated. 
 
  Significant events can be specific to a single security or can include events that affect a particular foreign market or 
  markets. A significant event can also include a general market movement in the U.S. securities markets. If Principal 
  believes that the market value of any or all of the foreign securities is materially affected by such an event, the 
  securities will be valued, and the Fund’s NAV will be calculated, using the policy adopted by the Fund. These fair 
  valuation procedures are intended to discourage shareholders from investing in the Fund for the purpose of 
  engaging in market timing or arbitrage transactions. 

       The trading of foreign securities generally or in a particular country or countries may not take place on all days the 
       NYSE is open, or may trade on days the NYSE is closed. Thus, the value of the foreign securities held by the Fund 
       may change on days when shareholders are unable to purchase or redeem shares. 
 
• Certain securities issued by companies in emerging market countries may have more than one quoted valuation at 
       any point in time. These may be referred to as local price and premium price. The premium price is often a 
       negotiated price that may not consistently represent a price at which a specific transaction can be effected. The 
       Fund has a policy to value such securities at a price at which the Sub-Advisor expects the securities may be sold. 
 
PURCHASE OF FUND SHARES 
 
Shares may be purchased from the Distributor. There are no sales charges on Institutional Class shares of the Fund. 
There are no restrictions on amounts to be invested in Institutional Class shares of the Fund. 
 
Shareholder accounts for the Fund are maintained under an open account system. Under this system, an account is 
opened and maintained for each investor. Each investment is confirmed by sending the investor a statement of 
account showing the current purchase or sale and the total number of shares owned. The statement of account is 
treated by the Fund as evidence of ownership of Fund shares. Share certificates are not issued. 
 
The Fund may reject or cancel any purchase orders for any reason. For example, the Fund does not intend to permit 
market timing because short-term or other excessive trading into and out of the Funds may harm performance by 
disrupting portfolio management strategies and by increasing expenses. Accordingly, the Fund may reject any 
purchase orders from market timers or investors that, in Principal’s opinion, may be disruptive to the Fund. For these 
purposes, Principal may consider an investor’s trading history in the Fund or other Funds sponsored by Principal Life 
and accounts under common ownership or control. 
 
Payments are to be made via personal or financial institution check (for example, a bank or cashier's check). We 
reserve the right to refuse any payment that we feel presents a fraud or money laundering risk. Examples of the types 
of payments we will not accept are cash, money orders, travelers' checks, credit card checks, and foreign checks. 
 
Principal may recommend to the Board, and the Board may elect, to close certain funds to new and existing investors. 
 
REDEMPTION OF FUND SHARES 
 
You may redeem shares of the Fund upon request. There is no charge for the redemption. Shares are redeemed at 
the NAV per share next computed after the request is received by the Fund in proper and complete form. 
 
The Fund generally sends payment for shares sold the business day after the sell order is received. Under unusual 
circumstances, the Fund may suspend redemptions, or postpone payment for more than seven days, as permitted by 
federal securities law. 
 
Distributions in Kind. Payment for shares of the Funds tendered for redemption is ordinarily made by check. 
However, the Funds may determine that it would be detrimental to the remaining shareholders of a Fund to make 
payment of a redemption order wholly or partly in cash. Under certain circumstances, therefore, each of the Funds 
may pay the redemption proceeds in whole or in part by a distribution “in kind” of securities from the Fund’s portfolio in 
lieu of cash. If a Fund pays the redemption proceeds in kind, the redeeming shareholder might incur brokerage or 
other costs in selling the securities for cash. Each Fund will value securities used to pay redemptions in kind using the 
same method the Fund uses to value its portfolio securities as described in this prospectus. 
 
Redemption fees. The Fund board of directors has determined that it is not necessary to impose a fee upon the 
redemption of fund shares, because the Fund has adopted transfer restrictions as described in “Exchange of 
Fund Shares.” 

EXCHANGE OF FUND SHARES 
 
An exchange between Funds is a redemption of shares of one Fund and a concurrent purchase of shares in another 
Fund with the redemption proceeds. A shareholder, including a beneficial owner of shares held in nominee name or a 
participant in a participant-directed employee benefit plan, may exchange Fund shares under certain circumstances. 
In addition to any restrictions an intermediary or an employee benefit plan imposes, Fund shares may be exchanged, 
without charge, for shares of any other Fund of the Principal Funds, provided that: 
•  the shareholder has not exchanged shares of the Fund within 30 days preceding the exchange, 
•  the share class of such other Fund is available through the plan, and 
•  the share class of such other Fund is available in the shareholder’s state of residence. 
 
All exchanges completed on the same day are considered a single exchange for purposes of this exchange limitation. 
In addition, the Fund will reject an order to purchase shares of any Fund, if the shareholder redeemed shares from that 
Fund within the preceding 30-day period. The 30-day exchange or purchase restriction does not apply to exchanges 
or purchases made on a scheduled basis such as scheduled periodic portfolio rebalancing transactions. 
 
If Fund shares are purchased through an intermediary that is unable or unwilling to impose the 30-day exchange 
restriction described above, Fund management may waive this restriction in lieu of the exchange limitation that the 
intermediary is able to impose if, in management’s judgment, such limitation is reasonably likely to prevent excessive 
trading in Fund shares. In order to prevent excessive exchanges, and under other circumstances where the 
Fund Board of Directors or the Manager believes it is in the best interests of the Fund, the Fund reserves the right to 
revise or terminate this exchange privilege, limit the amount or further limit the number of exchanges, reject any 
exchange or close an account. 
 
DIVIDENDS AND DISTRIBUTIONS 
 
Dividends are based on estimates of income, expenses, and shareholder activity for the Fund. Actual income, 
expenses, and shareholder activity may differ from estimates; consequently, differences, if any, will be included in the 
calculation of subsequent dividends. The Funds pay their net investment income to shareholders of record on the 
business day prior to the payment date. 
 
The Bond Market Index and International Equity Index Funds pay their net investment income annually in December. 
 
For more details on the payment schedule go to www.principal.com 
 
Net realized capital gains, if any, are distributed annually in December. Payments are made to shareholders of record 
on the business day prior to the payable date. Capital gains may be taxable at different rates, depending on the length 
of time that the Fund holds its assets. 
 
Dividend and capital gains distributions will be reinvested, without a sales charge, in shares of the Fund from which 
the distribution is paid. 
 
Generally, for federal income tax purposes, Fund distributions are taxable as ordinary income, except that any 
distributions of long-term capital gains will be taxed as such regardless of how long Fund shares have been held. 
Special tax rules apply to Fund distributions to retirement plans. A tax advisor should be consulted to determine the 
suitability of the Fund as an investment by such a plan and the tax treatment of distributions by the Fund. A tax advisor 
can also provide information on the potential impact of possible foreign, state, and local taxes. A Fund’s investments in 
foreign securities may be subject to foreign withholding taxes. In that case, the Fund’s yield on those securities would 
be decreased. 
 
To the extent that distributions the Funds pay are derived from a source other than net income (such as a return of 
capital), a notice will be included in your quarterly statement pursuant to Section 19(a) of the Investment Company Act 
of 1940, as amended, and Rule 19a-1 disclosing the source of such distributions. Furthermore, such notices shall be 
posted monthly on our web site at www.principalfunds.com. You may request a copy of all such notices, free of 
charge, by telephoning 1-800-222-5852. The amounts and sources of distributions included in such notices are 
estimates only and you should not rely upon them for purposes of reporting income taxes. The Fund will send 
shareholders a Form 1099-DIV for the calendar year that will tell shareholders how to report these distributions for 
federal income tax purposes. 

TAX CONSIDERATIONS 
 
Shareholders are responsible for federal income tax (and any other taxes, including state and local income taxes, if 
applicable) on dividends and capital gains distributions whether such dividends or distributions are paid in cash or 
reinvested in additional shares. Special tax rules apply to distributions to IRAs and other retirement accounts. You 
should consult a tax advisor to determine the suitability of the Fund as an investment by such a plan and the tax 
treatment of Fund distributions. 
 
Generally, dividends paid by the Funds from interest, dividends, or net short-term capital gains will be taxed as 
ordinary income. Distributions properly designated by the Fund as deriving from net gains on securities held for more 
than one year are taxable as such (generally at a 15% tax rate), regardless of how long you have held your shares. 
For taxable years beginning before January 1, 2011, distributions of investment income properly designated by the 
Fund as derived from “qualified dividend income” will be taxed at the rates applicable to long-term capital gains. 
 
A dividend or distribution made shortly after the purchase of shares of a Fund by a shareholder, although in effect a 
return of capital to that shareholder, would be taxable to that shareholder as described above, subject to a holding 
period requirement for dividends designated as qualified dividend income. 
 
Because of tax law requirements, you must provide the Funds with an accurate and certified taxpayer identification 
number (for individuals, generally a Social Security number) to avoid “back-up” withholding, which is currently imposed 
at a rate of 28%. 
 
Early in each calendar year, each Fund will notify you of the amount and tax status of distributions paid to you for the 
preceding year. 
 
Any gain resulting from the sale, redemption, or exchange of your shares will generally also be subject to tax. You 
should consult your tax advisor for more information on your own tax situation, including possible foreign, state, and 
local taxes. 
 
Investments by a Fund in foreign securities may be subject to foreign withholding taxes. In that case, the Fund’s yield 
on those securities would be decreased. Shareholders of the Funds that invest in foreign securities may be entitled to 
claim a credit or deduction with respect to foreign taxes. In addition, the Fund’s investments in foreign securities or 
foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect the timing or 
amount of the Fund’s distributions. 
 
Investments by a Fund in certain debt instruments or derivatives may cause the Fund to recognize taxable income in 
excess of the cash generated by such instruments. As a result, the Fund could be required at times to liquidate other 
investments in order to satisfy its distribution requirements under the Internal Revenue Code. The Fund’s use of 
derivatives will also affect the amount, timing, and character of the Fund’s distributions. 

FREQUENT PURCHASES AND REDEMPTIONS 
 
The Funds are not designed for frequent trading or market timing activity. The Funds do not knowingly accommodate 
frequent purchases and redemptions of fund shares by investors. If you intend to trade frequently and/or use market 
timing investment strategies, you should not purchase these Funds. 
 
We consider frequent trading and market timing activities to be abusive trading practices because they: 
•  Disrupt the management of the Funds by 
  •  forcing the Fund to hold short-term (liquid) assets rather than investing for long term growth, which results in lost 
    investment opportunities for the Fund and 
  •  causing unplanned portfolio turnover; 
•  Hurt the portfolio performance of the Fund; and 
•  Increase expenses of the Fund due to 
  •  increased broker-dealer commissions and 
  •  increased recordkeeping and related costs. 
 
Certain Funds may be at greater risk for abusive trading practices. For example, those Funds that invest in foreign 
securities may appeal to investors attempting to take advantage of time-zone arbitrage. If we are not able to identify 
such abusive trading practices, the abuses described above will negatively impact the Fund. 
 
We have adopted policies and procedures to help us identify and prevent abusive trading practices. In addition, the 
Funds monitor trading activity to identify and take action against abuses. While our policies and procedures are 
designed to identify and protect against abusive trading practices, there can be no certainty that we will identify and 
prevent abusive trading in all instances. When we do identify abusive trading, we will apply our policies and 
procedures in a fair and uniform manner. 
 
If we, or a Fund, deem abusive trading practices to be occurring, we will take action that may include, but is not limited 
to:     
•  Rejecting exchange instructions from the shareholder or other person authorized by the shareholder to direct 
  exchanges; 
•  Restricting submission of exchange requests by, for example, allowing exchange requests to be submitted by 
  1st class U.S. mail only and disallowing requests made by facsimile, overnight courier, telephone or via the 
  internet; 
•  Limiting the number of exchanges during a year; 
•  Requiring a holding period of a minimum of 30 days before permitting exchanges among the Funds where there is 
  evidence of at least one round-trip exchange (exchange or redemption of shares that were purchased within 
  30 days of the exchange/redemption); and 
•  Taking such other action as directed by the Fund. 
 
The Funds have reserved the right to accept or reject, without prior written notice, any exchange requests. In some 
instances, an exchange may be completed prior to a determination of abusive trading. In those instances, we will 
reverse the exchange. We will give you notice in writing in this instance. 

FUND ACCOUNT INFORMATION 
 
Orders Placed by Intermediaries 
Principal Funds may have an agreement with your intermediary, such as a broker-dealer, third party administrator, or 
trust company, that permits the intermediary to accept orders on behalf of the Fund until 3 p.m. Central Time. The 
agreement may include authorization for your intermediary to designate other intermediaries (“sub-designees”) to 
accept orders on behalf of the Fund on the same terms that apply to the intermediary. In such cases, if your 
intermediary or a sub-designee receives your order in correct form by 3 p.m. Central Time, transmits it to the Fund, 
and pays for it in accordance with the agreement, the Fund will price the order at the next net asset value per share it 
computes after your intermediary or sub-designee received your order. 
 
Note: The time at which the Fund prices orders and the time until which the Fund or your intermediary or sub- 
designee will accept orders may change in the case of an emergency or if the NYSE closes at a time other than 
3 p.m. Central Time. 
 
Signature Guarantees 
Certain transactions require that your signature be guaranteed. If required, the signature(s) must be guaranteed by a 
commercial bank, trust company, credit union, savings and loan, national securities exchange member, or brokerage 
firm. A signature guaranteed by a notary public or savings bank is not acceptable. Signature guarantees are required: 
•  if you sell more than $100,000 from any one Fund; 
•  if a sales proceeds check is payable to other than the account shareholder(s); 
•  to change ownership of an account; 
•  to add telephone transaction services and/or wire privileges to an existing account if there is not a common owner 
  between the bank account and mutual fund account; 
•  to change bank account information designated under an existing telephone withdrawal plan if there is not a 
  common owner between the bank account and mutual fund account; 
•  to exchange or transfer among accounts with different ownership; and 
•  to have a sales proceeds check mailed to an address other than the address on the account or to the address on 
  the account if it has been changed within the preceding 15 days. 
 
Reservation of Rights 
Principal Funds reserves the right to amend or terminate the special plans described in this prospectus. In addition, 
Principal Funds reserves the right to change the share class described herein. Shareholders will be notified of any 
such action to the extent required by law. 
 
Financial Statements 
Shareholders will receive annual financial statements for the Funds, audited by the Funds’ independent registered 
public accounting firm, Ernst & Young LLP. Shareholders will also receive a semiannual financial statement that is 
unaudited. 
 
PORTFOLIO HOLDINGS INFORMATION 
 
A description of the Fund's policies and procedures with respect to disclosure of the Fund's portfolio securities is 
available in the Fund's Statement of Additional Information. 

APPENDIX A 
 
SUMMARY OF PRINCIPAL RISKS 
 
The value of your investment in a Fund changes with the value of the investments held by that Fund. Many factors 
affect that value, and it is possible that you may lose money by investing in the Funds. Factors that may adversely 
affect a particular Fund as a whole are called “principal risks.” The principal risks of investing in the Funds are stated 
above as to each Fund in the Fund’s description. Each of these risks is summarized below. Additional information 
about the Funds, their investments, and the related risks is located under “Certain Investment Strategies and Related 
Risks” and in the Statement of Additional Information. 
 
Derivatives Risk 
Transactions in derivatives (such as options, futures, and swaps) may increase volatility, cause the liquidation of 
portfolio positions when not advantageous to do so and produce disproportionate losses. 
 
Equity Securities Risk 
Equity securities (common, preferred, and convertible preferred stocks and securities whose values are tied to the 
price of stocks, such as rights, warrants and convertible debt securities) could decline in value if the issuer's financial 
condition declines or in response to overall market and economic conditions. A fund's principal market segment(s), 
such as large cap, mid cap or small cap stocks, or growth or value stocks, may underperform other market segments 
or the equity markets as a whole. Investments in smaller companies and mid-size companies may involve greater risk 
and price volatility than investments in larger, more mature companies. 
 
Fixed-Income Securities Risk 
Fixed-income securities are subject to interest rate risk and credit quality risk. The market value of fixed-income 
securities generally declines when interest rates rise, and an issuer of fixed-income securities could default on its 
payment obligations. 
 
Foreign Securities Risk 
The risks of foreign securities include loss of value as a result of: political or economic instability; nationalization, 
expropriation or confiscatory taxation; changes in foreign exchange rates and foreign exchange restrictions; 
settlement delays; and limited government regulation (including less stringent reporting, accounting, and disclosure 
standards than are required of U.S. companies). 
 
Municipal Securities Risk 
Principal and interest payments on municipal securities may not be guaranteed by the issuing body and may be 
payable only from a particular source. That source may not perform as expected and payment obligations may not be 
made or made on time. 
 
Portfolio Duration Risk 
Portfolio duration is a measure of the expected life of a fixed-income security and its sensitivity to changes in interest 
rates. The longer a fund's average portfolio duration, the more sensitive the fund will be to changes in interest rates. 
 
Prepayment Risk 
Unscheduled prepayments on mortgage-backed and asset-backed securities may have to be reinvested at lower 
rates. A reduction in prepayments may increase the effective maturities of these securities, exposing them to the risk 
of decline in market value over time. 
 
Real Estate Securities Risk 
Real estate securities (including real estate investment trusts ("REITs")) are subject to the risks associated with direct 
ownership of real estate, including declines in value, adverse economic conditions, increases in expenses, regulatory 
changes and environmental problems. A REIT could fail to qualify for tax-free pass-through of income under the 
Internal Revenue Code, and Fund shareholders will indirectly bear their proportionate share of the expenses of REITs 
in which the Fund invests. 

Underlying Fund Risk 
An underlying fund to a fund of funds may experience relatively large redemptions or investments as the fund of funds 
periodically reallocates or rebalances its assets. These transactions may cause the underlying fund to sell portfolio 
securities to meet such redemptions, or to invest cash from such investments, at times it would not otherwise do so, 
and may as a result increase transaction costs and adversely affect underlying fund performance. 
 
U.S. Government Securities Risk 
Yields available from U.S. government securities are generally lower than yields from many other fixed-income 
securities. 
 
U.S. Government Sponsored Securities Risk 
Securities issued by U.S. government-sponsored or -chartered enterprises such as the Federal Home Loan Mortgage 
Corporation, the Federal National Mortgage Association, and the Federal Home Loan Banks are not issued or 
guaranteed by the U.S. Treasury. 

APPENDIX B 
Description of Bond Ratings: 
Moody’s Investors Service, Inc. Rating Definitions: 
Long-Term Obligation Ratings 
Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original 
maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. 
Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default. 
 Aaa:  Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. 
 Aa:  Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. 
 A:  Obligations rated A are considered upper-medium grade and are subject to low credit risk. 
 Baa:  Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such 
  may possess certain speculative characteristics. 
 Ba:  Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. 
 B:  Obligations rated B are considered speculative and are subject to high credit risk. 
 Caa:  Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. 
 Ca:  Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of 
  recovery of principal and interest. 
 C:  Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for 
  recovery of principal or interest. 
NOTE: Moody’s appends numerical modifiers, 1, 2, and 3 to each generic rating classification from Aa through Caa. 
The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category, the modifier 2 
indicates a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of that generate rating category. 
SHORT-TERM NOTES: The four ratings of Moody’s for short-term notes are MIG 1, MIG 2, MIG 3, and MIG 4. MIG 1 
denotes “best quality, enjoying strong protection from established cash flows.” MIG 2 denotes “high quality” with 
“ample margins of protection.” MIG 3 notes are of “favorable quality but lacking the undeniable strength of the 
preceding grades.” MIG 4 notes are of “adequate quality, carrying specific risk for having protection and not distinctly 
or predominantly speculative.” 
Description of Moody’s Commercial Paper Ratings: 
Moody’s Commercial Paper ratings are opinions of the ability to repay punctually promissory obligations not having an 
original maturity in excess of nine months. Moody’s employs the following three designations, all judged to be 
investment grade, to indicate the relative repayment capacity of rated issuers: 
Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term 
promissory obligations. 
Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term 
promissory obligations. 
Issuers rated Prime-3 (or related supporting institutions) have an acceptable capacity for repayment of short-term 
promissory obligations. 

Issuers rated Not Prime do not fall within any of the Prime rating categories. 
 
Description of Standard & Poor’s Corporation’s Debt Ratings: 
 
A Standard & Poor’s debt rating is a current assessment of the creditworthiness of an obligor with respect to a specific 
obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees. 
 
The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to 
market price or suitability for a particular investor. 
 
The ratings are based on current information furnished by the issuer or obtained by Standard & Poor’s from other 
sources Standard & Poor’s considers reliable. Standard & Poor’s does not perform an audit in connection with any 
rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or 
withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances. 
 
The ratings are based, in varying degrees, on the following considerations: 
 
 I.   Likelihood of default – capacity and willingness of the obligor as to the timely payment of interest and 
   repayment of principal in accordance with the terms of the obligation; 
 
 II.   Nature of and provisions of the obligation; 
 
 III.   Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or 
   other arrangement under the laws of bankruptcy and other laws affecting creditor’s rights. 
 
 
 AAA:   Debt rated “AAA” has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay 
   principal is extremely strong. 
 
 AA:   Debt rated “AA” has a very strong capacity to pay interest and repay principal and differs from the highest- 
   rated issues only in small degree. 
 
 A:   Debt rated “A” has a strong capacity to pay interest and repay principal although they are somewhat more 
   susceptible to the adverse effects of changes in circumstances and economic conditions than debt in 
   higher-rated categories. 
 
 BBB:   Debt rated “BBB” is regarded as having an adequate capacity to pay interest and repay principal. Whereas 
   it normally exhibits adequate protection parameters, adverse economic conditions or changing circum- 
   stances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this 
   category than for debt in higher-rated categories. 
 
BB, B, CCC, CC: Debt rated “BB,” “B,” “CCC,” and “CC” is regarded, on balance, as predominantly speculative with 
                     respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. 
                     “BB” indicates the lowest degree of speculation and “CC” the highest degree of speculation. While 
                     such debt will likely have some quality and protective characteristics, these are outweighed by large 
                     uncertainties or major risk exposures to adverse conditions. 
 
C:  The rating “C” is reserved for income bonds on which no interest is being paid. 
 
D:  Debt rated “D” is in default, and payment of interest and/or repayment of principal is in arrears. 
 
Plus (+) or Minus (-): The ratings from “AA” to “B” may be modified by the addition of a plus or minus sign to show 
relative standing within the major rating categories. 

Provisional Ratings: The letter “p” indicates that the rating is provisional. A provisional rating assumes the successful 
completion of the project being financed by the bonds being rated and indicates that payment of debt service 
requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, 
however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood 
of, or the risk of default upon failure of, such completion. The investor should exercise his own judgment with respect 
to such likelihood and risk. 
 
 NR:  Indicates that no rating has been requested, that there is insufficient information on which to base a rating or 
  that Standard & Poor’s does not rate a particular type of obligation as a matter of policy. 
 
Standard & Poor’s, Commercial Paper Ratings 
 
A Standard & Poor’s Commercial Paper Rating is a current assessment of the likelihood of timely payment of debt 
having an original maturity of no more than 365 days. Ratings are graded into four categories, ranging from “A” for the 
highest quality obligations to “D” for the lowest. Ratings are applicable to both taxable and tax-exempt commercial 
paper. The four categories are as follows: 
 
 A:   Issues assigned the highest rating are regarded as having the greatest capacity for timely payment. Issues 
   in this category are delineated with the numbers 1, 2, and 3 to indicate the relative degree of safety. 
 
 A-1:   This designation indicates that the degree of safety regarding timely payment is either overwhelming or 
   very strong. Issues that possess overwhelming safety characteristics will be given a “+” designation. 
 
 A-2:   Capacity for timely payment on issues with this designation is strong. However, the relative degree of 
   safety is not as high as for issues designated “A-1.” 
 
 A-3:   Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, some- 
   what more vulnerable to the adverse effects of changes in circumstances than obligations carrying the 
   highest designations. 
 
 B:   Issues rated “B” are regarded as having only an adequate capacity for timely payment. However, such 
   capacity may be damaged by changing conditions or short-term adversities. 
 
 C:   This rating is assigned to short-term debt obligations with a doubtful capacity for payment. 
 
 D:   This rating indicates that the issue is either in default or is expected to be in default upon maturity. 
 
The Commercial Paper Rating is not a recommendation to purchase or sell a security. The ratings are based on 
current information furnished to Standard & Poor’s by the issuer and obtained by Standard & Poor’s from other 
sources it considers reliable. The ratings may be changed, suspended, or withdrawn as a result of changes in or 
unavailability of, such information. 
 
Standard & Poor’s rates notes with a maturity of less than three years as follows: 
 
 SP-1:     A very strong, or strong, capacity to pay principal and interest. Issues that possess overwhelming safety 
     characteristics will be given a “+” designation. 
 
 SP-2:     A satisfactory capacity to pay principal and interest. 
 
 SP-3:     A speculative capacity to pay principal and interest. 

ADDITIONAL INFORMATION 
 
Additional information about the Fund (including the Fund’s policy regarding the disclosure of portfolio securities) is 
available in the Statement of Additional Information dated _________________, which is incorporated by reference 
into this prospectus. Additional information about the Funds’ investments is available in the Fund’s annual and 
semiannual reports to shareholders. In the Fund’s annual report, you will find a discussion of the market conditions 
and investment strategies that significantly affected the Funds’ performance during the last fiscal year. The Statement 
of Additional Information and the Fund’s annual and semiannual reports can be obtained free of charge by writing 
Principal Funds, P.O. Box 8024 Boston, MA 02266-8024. In addition, the Fund makes its Statement of Additional 
Information and annual and semiannual reports available, free of charge, on our website www.principal.com. To 
request this and other information about the Fund and to make shareholder inquiries, telephone 1-800-222-5852. 
 
Information about the Fund (including the Statement of Additional Information) can be reviewed and copied at the 
Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of 
the Public Reference Room may be obtained by calling the Commission at 1-202-551-8090. Reports and other 
information about the Fund are available on the EDGAR Database on the Commission’s internet site at http:// 
www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at 
the following e-mail address: publicinfo@sec.gov, or by writing the Commission’s Public Reference Section, 100 F 
Street, N.E., Washington, D.C. 20549-0102. 
 
The U.S. government does not insure or guarantee an investment in any of the Funds. 
 
Shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution, nor are 
shares of the Funds federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or 
any other agency. 
 
Principal Funds, Inc. SEC File 811-07572

PRINCIPAL FUNDS, INC.
 
BOND MARKET INDEX FUND
INTERNATIONAL EQUITY INDEX FUND 
R-1 CLASS SHARES
R-2 CLASS SHARES
R-3 CLASS SHARES
R-4 CLASS SHARES
R-5 CLASS SHARES
The date of this Prospectus is ________________, 2009. 

As with all mutual funds, neither the Securities and Exchange Commission ("SEC") nor any State Securities 
Commission has approved or disapproved of these securities or determined whether this prospectus is accurate or 
complete. It is a criminal offense to represent otherwise. 

                                                                                   TABLE OF CONTENTS 
 
Risk/Return Summary 
         Bond Market Index Fund 
         International Equity Index Fund 
The Costs of Investing 
Distribution Plans and Intermediary Compensation 
Certain Investment Strategies and Related Risks 
Management of the Funds 
Pricing of Fund Shares 
Purchase of Fund Shares 
Redemption of Fund Shares 
Exchange of Fund Shares 
Frequent Purchases and Redemptions 
Dividends and Distributions 
Tax Considerations 
Fund Account Information 
Portfolio Holdings Information 
Financial Highlights 
Appendix A - Summary of Principal Risks 
Appendix B - Description of Bond Ratings 
Additional Information 

RISK/RETURN SUMMARY   
 
Principal Funds, Inc. (“Principal Funds”) offers investment portfolios (together, the “Funds”) through this prospectus. 
Principal Funds Distributor, Inc. (“PFD”)* is the distributor (“the Distributor”) for the R-1, R-2, R-3, R-4, and R-5 Class 
shares. Principal Management Corporation* (“Principal”), the manager of each of the Funds, seeks to provide a broad 
range of investment approaches through Principal Funds.   
 
The Sub-Advisors and the Funds each sub-advise are:   
   Sub-Advisor  Fund(s) 
   Mellon Capital Management Corporation  Bond Market Index Fund 
   Principal Global Investors, LLC*  International Equity Index Fund 
* Principal Management Corporation; PFD; and Principal Global Investors, LLC, are affiliates of Principal Life Insurance Company 
       and with it are subsidiaries of Principal Financial Group, Inc. and members of the Principal Financial Group® . 
The Funds offer five classes of shares through this prospectus, each of which may be purchased through retirement 
plans, though not all plans offer each Fund. Such plans may impose fees in addition to those charged by the Funds. 
The services or share classes available to you may vary depending upon how you wish to purchase shares of the 
Fund. Each share class represents investments in the same portfolio of securities, but each class has its own expense 
structure, allowing you to choose the class that best meets your situation (not all classes are available to all plans). 
 
EACH INVESTOR’S FINANCIAL CONSIDERATIONS ARE DIFFERENT. YOU SHOULD SPEAK WITH YOUR 
FINANCIAL PROFESSIONAL TO HELP YOU DECIDE WHICH SHARE CLASS IS BEST FOR YOU. 
In the description for each Fund, there is important information about the Fund’s: 
Main Strategies and Risks   
These sections describe each Fund’s investment objective and summarize how each Fund intends to achieve its 
investment objective. The Board of Directors may change a Fund’s objective or investment strategies without a 
shareholder vote if it determines such a change is in the best interests of the Fund. If there is a material change to the 
Fund’s investment objective or principal investment strategies, you should consider whether the Fund remains an 
appropriate investment for you. There is no guarantee that a Fund will meet its objective. 
 
The sections also describe each Fund’s primary investment strategies (including the type or types of securities in 
which the Fund invests), any policy of the Fund to concentrate in securities of issuers in a particular industry or group 
of industries and the main risks associated with an investment in the Fund. A fuller discussion of risks appears later in 
the Prospectus under the caption “Certain Investment Strategies and Related Risks.” 
Each Fund may invest up to 100% of its assets in cash and cash equivalents for temporary defensive purposes in 
response to adverse market, economic, or political conditions as more fully described under the caption “Certain 
Investment Strategies and Related Risks–Temporary Defensive Measures.” 
 
Each Fund is designed to be a portion of an investor’s portfolio. None of the Funds is intended to be a complete 
investment program. Investors should consider the risks of each Fund before making an investment and be prepared 
to bear investment losses during periods of adverse market conditions. The value of your investment in a Fund 
changes with the value of the investments held by that Fund. Many factors affect that value, and it is possible that you 
may lose money by investing in the Funds. Factors that may adversely affect a particular Fund as a whole are called 
“principal risks.” The principal risks of investing in the Funds are stated as to each Fund in the Fund’s description and 
are more fully explained in Appendix A to this prospectus. Each Fund is also subject to Underlying Fund Risk to the 
extent that a fund of funds invests in the Fund.   
 
Fees and Expenses   
The annual operating expenses for each Fund are deducted from that Fund’s assets (stated as a percentage of Fund 
assets). Each Fund’s operating expenses are shown following each Fund’s description. A discussion of the fees is 
found in the section of the Prospectus titled “The Costs of Investing.” 
 
The examples following the expense tables for each Fund are intended to help investors compare the cost of investing 
in a particular Fund with the cost of investing in other mutual funds. 

NOTES: 
• No salesperson, dealer or other person is authorized to give information or make representations about a Fund 
       other than those contained in this Prospectus. Information or representations not contained in this prospectus may 
       not be relied upon as having been provided or made by Principal Funds, a Fund, Principal, any Sub-Advisor, or 
       PFD. 

BOND MARKET INDEX FUND       
 
  Sub-Advisor(s):  Mellon Capital Management Corporation (“Mellon Capital”) 
 
  Objective:  The Fund seeks to provide current income.     
 
  Investor Profile:  The Fund may be an appropriate investment for investors interested in investing in a fixed- 
    income mutual fund and preferring a passive, rather than active, management style. 
 
Main Strategies and Risks       
Under normal circumstances, the Fund invests at least 80% of its net assets (plus any borrowings for investment 
purposes) in debt securities that are held in the Barclays Capital U.S. Aggregate Bond Index. The Barclays Capital 
U.S. Aggregate Bond Index represents securities that are domestic, taxable, and dollar denominated. The index 
covers the U.S. investment grade fixed rate bond market, with index components for government and corporate 
securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into 
more specific indices that are calculated and reported on a regular basis. The Fund considers the term "bond" to 
mean any debt security.         
 
The Fund uses an indexing strategy or passive investment approach designed to track the performance of Barclays 
Capital U.S. Aggregate Bond Index. The Fund maintains a dollar-weighted average maturity, duration and yield 
consistent with that of the Index.       
 
Because of the difficulty and expense of executing relatively small bond trades, the Fund may not always be invested 
in the less heavily weighted Barclays Capital U.S. Aggregate Bond Index bonds. In addition, the Fund's ability to 
match the performance of the Barclays Capital U.S. Aggregate Bond Index is affected to some degree by the size and 
timing of cash flows into and out of the Fund. The Fund is managed to attempt to minimize such effects. 
 
Mellon Capital attempts to mirror the investment performance of the Barclays Capital U.S. Aggregate Bond Index by 
allocating the Fund's assets in approximately the same weightings as the Barclays Capital U.S. Aggregate Bond 
Index; however, it is unlikely that a perfect correlation of 1.00 will be achieved.   
 
Among the principal risks (defined in Appendix A) of investing in the Fund are:   
 
•  Underlying Fund Risk  •  Fixed Income Securities Risk  •  Foreign Securities Risk 
•  Portfolio Duration Risk  •  Prepayment Risk  •  Municipal Securities Risk 
    •  U.S. Government Sponsored     
•  U.S. Government Securities Risk  Securities Risk  •  Real Estate Securities Risk 
 
Mellon Capital has been the Fund’s Sub-Advisor since the funds inception.     

Because the inception date of the Fund is _____, historical performance is not available.     
 
   Estimated Annual Fund Operating Expenses           
   (expenses that are deducted from Fund assets) as a Percentage of Average Daily Net Assets     
 
    R-1  R-2  R-3  R-4  R-5 
   Estimated for the year ended August 31, 2010  Class  Class  Class  Class  Class 
   Management Fees    0.25%  0.25%  0.25%  0.25%  0.25% 
   Distribution and/or Service (12b-1) Fees  0.35  0.30  0.25  0.10  N/A 
   Other Expenses*    0.57  0.49  0.36  0.32  0.30 
                        Total Annual Fund Operating Expenses  1.17  1.04  0.86  0.67  0.55 
Expense Reimbursement(1)             
           Net Expenses  1.17  1.04  0.86  0.67  0.55 
*Other Expenses Includes:             
                 Service Fee    0.25  0.25  0.17  0.15  0.15 
                      Administrative Service Fee  0.28  0.20  0.15  0.13  0.11 
 
 (1) Principal has contractually agreed to limit the Funds expenses attributable to Class R-1, R-2, R-3, R-4, and R-5 shares and, if necessary, pay 
 expenses normally payable by the Fund, excluding interest expense, through the period ending December 31, 2010. The expense limit will 
 maintain a total level of operating expenses (expressed as a percent of average net assets on an annualized basis) not to exceed 1.18% for Class 
 R-1, 1.05% for Class R-2, 0.87% for class R-3, 0.68% for Class R-4, and 0.56% for Class R-5.       
 
Example             
   This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example 
   assumes that you invest $10,000 in the Fund for the time periods indicated, regardless of whether you redeem or continue to hold the shares at 
   the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses 
   remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:   
 
  Number of years you own your shares     
  1  3         
R-1 Class  $119    $372         
R-2 Class  106  331         
R-3 Class  88  274         
R-4 Class  68  214         
R-5 Class  56  176         

INTERNATIONAL EQUITY INDEX FUND 
 
  Sub-Advisor(s):  Principal Global Investors, LLC (“PGI”) 
 
  Objective:  The Fund seeks long-term growth of capital. 
 
  Investor Profile:  The Fund may be an appropriate investment for investors seeking long-term growth of 
    capital, willing to accept the potential for volatile fluctuations in the value of investments 
                                                     and preferring a passive, rather than active, management style.
 
Main Strategies and Risks   
Under normal circumstances, the Fund invests at least 80% of its net assets (plus any borrowings for investment 
purposes) in common stocks of companies that compose the Morgan Stanley Capital International (MSCI) EAFE 
(Europe, Australasia, and Far East) Index. The MSCI EAFE Index is a capitalization weighted equity index of 
Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, the 
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The 
MSCI EAFE Index represents over 80% of the total global equity market capitalization, excluding the United States 
and Emerging Markets.     
 
The Fund uses an indexing strategy or a passive investment approach designed to track the performance of the MSCI 
EAFE Index. It does not attempt to manage market volatility, use defensive strategies or reduce the effect of any long- 
term periods of poor stock performance.   
The correlation between Fund and MSCI EAFE Index performance may be affected by the Fund's expenses, changes 
in securities markets, changes in the composition of the MSCI EAFE Index and the timing of purchases and sales of 
Fund shares. The Fund may invest in futures and options, which could carry additional risks such as losses due to 
unanticipated market price movements and could also reduce the opportunity for gain. 
 
Because of the challenges of investing in international markets, the Fund's investments may not fully replicate the 
securities in the MSCI EAFE Index. Because of the difficulty and expense of executing relatively small stock trades, 
the Fund may not always be invested in the less heavily weighted MSCI EAFE Index stocks and, at times may be 
weighted differently. In addition, the Fund's ability to match the performance of the MSCI EAFE Index is affected to 
some degree by the size and timing of cash flows into and out of the Fund. The Fund is managed to attempt to 
minimize such effects.     
PGI reserves the right to omit or remove any of the MSCI EAFE Index stocks from the Fund if it determines that the 
stock is not sufficiently liquid or if extraordinary events or financial conditions lead PGI to believe that it should not be a 
part of the Fund's assets.     
PGI attempts to mirror the investment performance of the MSCI EAFE Index by allocating the Fund's assets in 
approximately the same weightings as the MSCI EAFE Index using a stratified sampling approach. This means that 
the Fund will own a subset of constituent stocks, or other instruments with close correlation with the benchmark 
constituents to closely approximate the fundamental characteristics (growth rates, valuations, quality, beta, etc.) and 
diversification by sector, country, currency, and capitalization of the MSCI EAFE Index without owning every security 
in the MSCI EAFE Index.     
Among the principal risks (defined in Appendix A) of investing in the Fund are: 
 
•  Derivatives Risk                           •  Equity Securities Risk 
•  Underlying Fund Risk                           •  Foreign Securities Risk 
 
PGI has been the Funds Sub-Advisor since the Fund’s inception. 

Because the inception date of the Fund is _____, historical performance is not available.     
 
   Estimated Annual Fund Operating Expenses             
   (expenses that are deducted from Fund assets) as a Percentage of Average Daily Net Assets     
 
      R-1  R-2  R-3  R-4  R-5 
   Estimated for the year ended August 31, 2010    Class  Class  Class  Class  Class 
   Management Fees      0.25%  0.25%  0.25%  0.25%  0.25% 
   Distribution and/or Service (12b-1) Fees    0.35  0.30  0.25  0.10  N/A 
   Other Expenses*      0.64  0.56  0.43  0.39  0.37 
                                    Total Annual Fund Operating Expenses  1.24  1.11  0.93  0.74  0.62 
Expense Reimbursement(1)      0.01  0.01  0.01  0.01  0.01 
    Net Expenses  1.23  1.10  0.92  0.73  0.61 
*Other Expenses Includes:               
                 Service Fee      0.25  0.25  0.17  0.15  0.15 
                      Administrative Service Fee    0.28  0.20  0.15  0.13  0.11 
 
(1) Principal has contractually agreed to limit the Funds expenses attributable to Class R-1, R-2, R-3, R-4, and R-5 shares and, if necessary, pay 
     expenses normally payable by the Fund, excluding interest expense, through the period ending December 31, 2010. The expense limit will 
     maintain a total level of operating expenses (expressed as a percent of average net assets on an annualized basis) not to exceed 1.23% for 
     Class R-1, 1.10% for Class R-2, 0.92% for Class R-3, 0.73% for Class R-4, and 0.61% for Class R-5.       
 
Example               
   This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. the Example 
   assumes that you invest $10,000 in the Fund for the time periods indicated, regardless of whether you redeem or continue to hold the shares at 
   the end of the period. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses 
   remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:   
 
  Number of years you own your shares       
  1  3           
R-1 Class  $125   $392           
R-2 Class  112  352           
R-3 Class  94  295           
R-4 Class  75  235           
R-5 Class  62  197           

THE COSTS OF INVESTING   
 
Fees and Expenses of the Funds   
The shares of the Funds are sold without a front-end sales charge and do not have a contingent deferred sales 
charge. There is no sales charge on shares of the Funds purchased with reinvested dividends or other distributions. 
 
Ongoing Fees   
Ongoing fees reduce the value of each share. Because they are ongoing, they increase the cost of investing in the 
Funds.   
 
Each Fund pays ongoing fees to Principal and others who provide services to the Fund. These fees include: 
•  Management Fee — Through the Management Agreement with the Fund, Principal has agreed to provide 
  investment advisory services and corporate administrative services to the Funds. 
•  Distribution Fee — Each of the Funds has adopted a distribution plan under Rule 12b-1 of the Investment 
  Company Act of 1940. Under the plan, the R-2, R-1, R-3, and R-4 classes of each Fund pay a distribution fee 
  based on the average daily net asset value (NAV) of the Fund. These fees pay distribution and other expenses for 
  the sale of Fund shares and for services provided to shareholders. Over time, these fees may exceed other types 
  of sales charges.   
•  Service Fee — Principal has entered into a Service Agreement with the Fund under which Principal performs 
  personal services for shareholders.   
•  Administrative Services Fee — Principal has entered into an Administrative Services Agreement with Principal 
  Funds under which Principal provides shareholder and administrative services for retirement plans and other 
  beneficial owners of Fund shares.   
•  Other Expenses — A portion of expenses that are allocated to all classes of the Fund. 
 
DISTRIBUTION PLANS AND INTERMEDIARY COMPENSATION 
 
Distribution and/or Service (12b-1) Fees   
Principal Funds has adopted a distribution plan pursuant to Rule 12b-1 under the Investment Company Act for each of 
the Class R-1, R-2, R-3 and R-4 shares of Principal Funds. Under the 12b-1 Plans, each Fund makes payments from 
its assets attributable to the particular share class to the Fund's Distributor for distribution-related expenses and for 
providing services to shareholders of that share class. Payments under the 12b-1 plans are made by the Funds to the 
Distributor pursuant to the 12b-1 plans regardless of the expenses incurred by the Distributor. When the Distributor 
receives Rule 12b-1 fees, it may pay some or all of them to intermediaries whose customers are shareholders of the 
funds for sales support services and for providing services to shareholders of that share class. Intermediaries may 
include, among others, broker-dealers, registered investment advisors, banks, trust companies, pension plan 
consultants, retirement plan administrators, and insurance companies. Because Rule 12b-1 fees are paid out of Fund 
assets and are ongoing fees, over time they will increase the cost of your investment in the Funds and may cost you 
more than other types of sales charges.   
 
The maximum annual Rule 12b-1 fee for distribution related expenses and/or for providing services to shareholders 
under each 12b-1 plan (as a percentage of average daily net assets) is: 
 
    Maximum Annualized 
  Share Class  Rule 12b-1 Fee 
  R-1  0.35% 
  R-2  0.30% 
  R-3  0.25% 
  R-4  0.10% 
The Distributor generally uses Rule 12b-1 fees to finance any activity that is primarily intended to result in the sale of 
shares and for providing services to shareholders of the share class. In addition to shareholder services, examples of 
such distribution related expenses include compensation to salespeople and selected dealers (including financing the 
commission paid to the dealer at the time of the sale), printing of prospectuses and statements of additional 
information and reports for other than existing shareholders, and preparing and conducting sales seminars. 
Payments under the 12b-1 plans will not automatically terminate for funds that are closed to new investors or to 
additional purchases by existing shareholders. The fund Board will determine whether to terminate, modify, or leave 
unchanged the 12b-1 plan at the time the Board directs the implementation of the closure of the fund. 

Additional Payments to Intermediaries 
In addition to, rather than in lieu of, payments for distribution-related expenses and for providing services to 
shareholders pursuant to 12b-1 plans, the transfer agent or one of its affiliates may enter into agreements with 
intermediaries pursuant to which the intermediary will be paid for administrative, networking, recordkeeping, sub- 
transfer agency and shareholder services. For more information, see the Statement of Additional Information (SAI). 
Such compensation is generally paid out of the Service Fees and Administrative Service Fees that are disclosed in 
this prospectus. Such compensation is generally based on the average asset value of fund shares for the relevant 
share class held by clients of the intermediary. Principal Life Insurance Company is one such intermediary that 
provides services to retirement plans, and it is typically paid some or all of the Service Fees and Administrative 
Service Fees pertaining to such plans. 
 
In addition, Principal or its affiliates may pay compensation, from their own resources, to certain intermediaries that 
support the distribution or sale of shares of the Fund or provide services to Fund shareholders. 
 
Plan recordkeepers, who may have affiliated financial intermediaries that sell shares of the funds, may be paid 
additional amounts. In addition, financial intermediaries may be affiliates of entities that receive compensation from the 
Distributor for maintaining retirement plan "platforms" that facilitate trading by affiliated and non-affiliated financial 
intermediaries and recordkeeping for retirement plans. 
 
A number of factors may be considered in determining the amount of these additional payments, including each 
financial intermediary's Fund sales and assets, as well as the willingness and ability of the financial intermediary to 
give the Distributor access to its Financial Professionals for educational and marketing purposes. In some cases, 
intermediaries will include the Funds on a "preferred list." The Distributor's goals include making the Financial 
Professionals who interact with current and prospective investors and shareholders more knowledgeable about the 
Funds so that they can provide suitable information and advice about the Funds and related investor services. 
 
Expense Reimbursement 
Additionally, the Distributor will, in some cases, provide payments to reimburse directly or indirectly the costs incurred 
by intermediaries and their associated Financial Professionals in connection with educational seminars and training 
and marketing efforts related to the Funds for the intermediaries' employees and representatives and/or their clients 
and potential clients. The costs and expenses associated with these efforts may include travel, lodging, entertainment, 
and meals. The Distributor will also, in some cases, provide payment or reimbursement for expenses associated with 
qualifying dealers' conferences, transactions ("ticket") charges, and general marketing expenses. 
 
Additional Information 
Financial Professionals may receive some or all of the amounts paid to the intermediary with which he or she is 
associated. If one mutual fund sponsor pays more compensation than another, your Financial Professional and his or 
her intermediary may have an incentive to recommend one fund complex over another. Similarly, if your Financial 
Professional or his or her intermediary receives more compensation for one share class versus another, then they 
may have an incentive to recommend that share class. 
 
Please speak with your Financial Professional to learn more about the total amounts paid to your Financial 
Professional and his or her intermediary by the Funds, the Distributor and its affiliates, and by sponsors of other 
mutual funds he or she may recommend to you. You should also carefully review disclosures made by your Financial 
Professional at the time of purchase. 
 
Your intermediary may charge fees and commissions, including processing fees, in addition to those described in this 
prospectus. The amount and applicability of any such fee is determined and disclosed separately by the intermediary. 
You should ask your Financial Professional for information about any fees and/or commissions that are charged. 

CERTAIN INVESTMENT STRATEGIES AND RELATED RISKS 
 
The SAI contains additional information about investment strategies and their related risks. 
 
Securities and Investment Practices 
Market Volatility. The value of a fund’s portfolio securities may go down in response to overall stock or bond market 
movements. Markets tend to move in cycles, with periods of rising prices and periods of falling prices. Stocks tend to 
go up and down in value more than bonds. If the fund’s investments are concentrated in certain sectors, its 
performance could be worse than the overall market. It is possible to lose money when investing in the fund. 
 
Equity securities include common stocks, preferred stocks, convertible securities, depositary receipts, rights and 
warrants. Common stocks, the most familiar type, represent an equity (ownership) interest in a corporation. The value 
of a company’s stock may fall as a result of factors directly relating to that company, such as decisions made by its 
management or lower demand for the company’s products or services. A stock’s value may also fall because of 
factors affecting not just the company, but also companies in the same industry or in a number of different industries, 
such as increases in production costs. The value of a company’s stock may also be affected by changes in financial 
markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency 
exchange rates. In addition, a company’s stock generally pays dividends only after the company invests in its own 
business and makes required payments to holders of its bonds and other debt. For this reason, the value of a 
company’s stock will usually react more strongly than its bonds and other debt to actual or perceived changes in the 
company’s financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse 
developments than those of larger companies. 
 
Fixed-income securities include bonds and other debt instruments that are used by issuers to borrow money from 
investors. The issuer generally pays the investor a fixed, variable, or floating rate of interest. The amount borrowed 
must be repaid at maturity. Some debt securities, such as zero coupon bonds, do not pay current interest, but are sold 
at a discount from their face values. 
 
Interest Rate Changes. Fixed-income securities are sensitive to changes in interest rates. In general, fixed-income 
security prices rise when interest rates fall and fall when interest rates rise. Longer term bonds and zero coupon bonds 
are generally more sensitive to interest rate changes. 
 
Credit Risk. Fixed-income security prices are also affected by the credit quality of the issuer. Investment grade debt 
securities are medium and high quality securities. Some bonds, such as lower grade or “junk” bonds, may have 
speculative characteristics and may be particularly sensitive to economic conditions and the financial condition of the 
issuers. 
 
Credit and Counterparty Risk. Each of the Funds is subject to the risk that the issuer or guarantor of a fixed-income 
security or other obligation, the counterparty to a derivatives contract or repurchase agreement, or the borrower of a 
portfolio’s securities will be unable or unwilling to make timely principal, interest, or settlement payments, or otherwise 
to honor its obligations. 
 
Liquidity Risk. A fund is exposed to liquidity risk when trading volume, lack of a market maker, or legal restrictions 
impair the fund’s ability to sell particular securities or close derivative positions at an advantageous price. Funds with 
principal investment strategies that involve securities of companies with smaller market capitalizations, foreign 
securities, derivatives, or securities with substantial market and/or credit risk tend to have the greatest exposure to 
liquidity risk. 
 
Securities Lending Risk. To earn additional income, each Fund may lend portfolio securities to approved financial 
institutions. Risks of such a practice include the possibility that a financial institution becomes insolvent, increasing the 
likelihood that the Fund will be unable to recover the loaned security or its value. Further, the cash collateral received 
by the Fund in connection with such a loan may be invested in a security that subsequently loses value. 

Repurchase Agreements and Loaned Securities 
Although not a principal investment strategy, each Fund may invest a portion of its assets in repurchase agreements. 
Repurchase agreements typically involve the purchase of debt securities from a financial institution such as a bank, 
savings and loan association, or broker-dealer. A repurchase agreement provides that the Fund sells back to the seller 
and that the seller repurchases the underlying securities at a specified price on a specific date. Repurchase 
agreements may be viewed as loans by a Fund collateralized by the underlying securities. This arrangement results in 
a fixed rate of return that is not subject to market fluctuation while the Fund holds the security. In the event of a default 
or bankruptcy by a selling financial institution, the affected Fund bears a risk of loss. To minimize such risks, the Fund 
enters into repurchase agreements only with parties a Sub-Advisor deems creditworthy (those that are large, well- 
capitalized and well-established financial institutions). In addition, the value of the securities collateralizing the 
repurchase agreement is, and during the entire term of the repurchase agreement remains, at least equal to the 
repurchase price, including accrued interest. 
Funds may lend their portfolio securities to unaffiliated broker-dealers and other unaffiliated qualified financial 
institutions. These transactions involve a risk of loss to the Fund if the counterparty should fail to return such securities 
to the Fund upon demand or if the counterparty’s collateral invested by the Fund declines in value as a result of 
investment losses. 
Currency Contracts 
The Funds may each enter into forward currency contracts, currency futures contracts and options, and options on 
currencies for hedging and other purposes. A forward currency contract involves a privately negotiated obligation to 
purchase or sell a specific currency at a future date at a price set in the contract. A Fund will not hedge currency 
exposure to an extent greater than the aggregate market value of the securities held or to be purchased by the Fund 
(denominated or generally quoted or currently convertible into the currency). 
 
Hedging is a technique used in an attempt to reduce risk. If a Fund’s Sub-Advisor hedges market conditions incorrectly 
or employs a strategy that does not correlate well with the Fund’s investment, these techniques could result in a loss. 
These techniques may increase the volatility of a Fund and may involve a small investment of cash relative to the 
magnitude of the risk assumed. In addition, these techniques could result in a loss if the other party to the transaction 
does not perform as promised. There is also a risk of government action through exchange controls that would restrict 
the ability of the Fund to deliver or receive currency. 
Forward Commitments 
Although not a principal investment strategy, each of the Funds may enter into forward commitment agreements. 
These agreements call for the Fund to purchase or sell a security on a future date at a fixed price. Each of the Funds 
may also enter into contracts to sell its investments either on demand or at a specific interval. 
Warrants 
Each of the Funds may invest in warrants though neither Fund uses such investments as a principal investment 
strategy. A warrant is a certificate granting its owner the right to purchase securities from the issuer at a specified 
price, normally higher than the current market price. 
 
Real Estate Investment Trusts 
The Funds may invest in real estate investment trust securities, herein referred to as “REITs.” REITs involve certain 
unique risks in addition to those risks associated with investing in the real estate industry in general (such as possible 
declines in the value of real estate, lack of availability of mortgage funds, or extended vacancies of property). Equity 
REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs 
may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not 
diversified, and are subject to heavy cash flow dependency, risks of default by borrowers, and self-liquidation. As an 
investor in a REIT, the Fund will be subject to the REIT’s expenses, including management fees, and will remain 
subject to the Fund’s advisory fees with respect to the assets so invested. REIT’s are also subject to the possibilities of 
failing to qualify for the special tax treatment accorded REITs under the Code, and failing to maintain their exemptions 
from registration under the 1940 Act. 
Investment in REITs involves risks similar to those associated with investing in small capitalization companies. REITs 
may have limited financial resources, may trade less frequently and in a limited volume, and may be subject to more 
abrupt or erratic price movements than larger company securities. 

Municipal Obligations and AMT-Subject Bonds 
The two principal classifications of municipal bonds are “general obligation” and “revenue” bonds. General obligation 
bonds are secured by the issuer’s pledge of its full faith and credit, with either limited or unlimited taxing power for the 
payment of principal and interest. Revenue bonds are not supported by the issuer’s full taxing authority. Generally, 
they are payable only from the revenues of a particular facility, a class of facilities, or the proceeds of another specific 
revenue source. 
 
“AMT-subject bonds” are municipal obligations issued to finance certain “private activities,” such as bonds used to 
finance airports, housing projects, student loan programs, and water and sewer projects. Interest on AMT-subject 
bonds is an item of tax preference for purposes of the federal individual alternative minimum tax (“AMT”) and will also 
give rise to corporate alternative minimum taxes. See “Tax Considerations” for a discussion of the tax consequences 
of investing in the Funds. 
 
Current federal income tax laws limit the types and volume of bonds qualifying for the federal income tax exemption of 
interest, which may have an effect upon the ability of the Fund to purchase sufficient amounts of tax-exempt securities. 
 
Derivatives 
To the extent permitted by its investment objectives and policies, each of the Funds may invest in securities that are 
commonly referred to as derivative securities. Generally, a derivative is a financial arrangement, the value of which is 
derived from, or based on, a traditional security, asset, or market index. Certain derivative securities are described 
more accurately as index/structured securities. Index/structured securities are derivative securities whose value or 
performance is linked to other equity securities (such as depositary receipts), currencies, interest rates, indices, or 
other financial indicators (reference indices). 
 
Some derivatives, such as mortgage-related and other asset-backed securities, are in many respects like any other 
investment, although they may be more volatile or less liquid than more traditional debt securities. 
 
There are many different types of derivatives and many different ways to use them. Futures and options are commonly 
used for traditional hedging purposes to attempt to protect a Fund from exposure to changing interest rates, securities 
prices, or currency exchange rates and for cash management purposes as a low-cost method of gaining exposure to a 
particular securities market without investing directly in those securities. The Funds may enter into put or call options, 
futures contracts, options on futures contracts, over-the-counter swap contracts (e.g., interest rate swaps, total return 
swaps and credit default swaps), and forward currency contracts for both hedging and non-hedging purposes. 
 
Generally, no Fund may invest in a derivative security unless the reference index or the instrument to which it relates 
is an eligible investment for the Fund or the reference currency relates to an eligible investment for the Fund. 

The return on a derivative security may increase or decrease, depending upon changes in the reference index or 
instrument to which it relates. The risks associated with derivative investments include: 
•  the risk that the underlying security, interest rate, market index, or other financial asset will not move in the 
  direction the Manager or Sub-Advisor anticipated; 
•  the possibility that there may be no liquid secondary market which may make it difficult or impossible to close out a 
  position when desired; 
•  the risk that adverse price movements in an instrument can result in a loss substantially greater than a Fund’s initial 
  investment; and 
•  the possibility that the counterparty may fail to perform its obligations. 
 
Exchange Traded Funds (ETFs) 
These are a type of index or actively managed fund bought and sold on a securities exchange. An ETF trades like 
common stock. Shares in an index ETF represent an interest in a fixed portfolio of securities designed to track a 
particular market index. The Funds could purchase shares issued by an ETF to temporarily gain exposure to a portion 
of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally 
reflect the risks of owning the underlying securities they are designed to track, although ETFs have management fees 
that increase their costs. 
 
Convertible Securities 
Convertible securities are fixed-income securities that a Fund has the right to exchange for equity securities at a 
specified conversion price. The option allows the Fund to realize additional returns if the market price of the equity 
securities exceeds the conversion price. For example, the Fund may hold fixed-income securities that are convertible 
into shares of common stock at a conversion price of $10 per share. If the market value of the shares of common stock 
reached $12, the Fund could realize an additional $2 per share by converting its fixed-income securities. 
 
Convertible securities have lower yields than comparable fixed-income securities. In addition, at the time a convertible 
security is issued the conversion price exceeds the market value of the underlying equity securities. Thus, convertible 
securities may provide lower returns than non-convertible fixed-income securities or equity securities depending upon 
changes in the price of the underlying equity securities. However, convertible securities permit the Fund to realize 
some of the potential appreciation of the underlying equity securities with less risk of losing its initial investment. 
 
The Funds treat convertible securities as both fixed-income and equity securities for purposes of investment policies 
and limitations because of their unique characteristics. The Funds may invest in convertible securities without regard 
to their ratings. 
 
Foreign Investing 
As a principal investment strategy, the International Equity Index Fund may invest Fund assets in securities of foreign 
companies. The Bond Market Index Fund may invest in securities of foreign companies but not as a principal 
investment strategy. For the purpose of this restriction, foreign companies are: 
 
•  companies with their principal place of business or principal office outside the U.S. or 
•  companies for which the principal securities trading market is outside the U.S. 
 
Foreign companies may not be subject to the same uniform accounting, auditing, and financial reporting practices as 
are required of U.S. companies. In addition, there may be less publicly available information about a foreign company 
than about a U.S. company. Securities of many foreign companies are less liquid and more volatile than securities of 
comparable U.S. companies. Commissions on foreign securities exchanges may be generally higher than those on 
U.S. exchanges. 
 
Foreign markets also have different clearance and settlement procedures than those in U.S. markets. In certain 
markets there have been times when settlements have been unable to keep pace with the volume of securities 
transactions, making it difficult to conduct these transactions. Delays in settlement could result in temporary periods 
when a portion of Fund assets is not invested and earning no return. If a Fund is unable to make intended security 
purchases due to settlement problems, the Fund may miss attractive investment opportunities. In addition, a Fund 
may incur a loss as a result of a decline in the value of its portfolio if it is unable to sell a security. 

With respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or 
social instability, or diplomatic developments that could affect a Fund’s investments in those countries. In addition, a 
Fund may also suffer losses due to nationalization, expropriation, or differing accounting practices and treatments. 
Investments in foreign securities are subject to laws of the foreign country that may limit the amount and types of 
foreign investments. Changes of governments or of economic or monetary policies, in the U.S. or abroad, changes in 
dealings between nations, currency convertibility or exchange rates could result in investment losses for a Fund. 
Finally, even though certain currencies may be convertible into U.S. dollars, the conversion rates may be artificial 
relative to the actual market values and may be unfavorable to Fund investors. 
 
Foreign securities are often traded with less frequency and volume, and therefore may have greater price volatility, 
than is the case with many U.S. securities. Brokerage commissions, custodial services, and other costs relating to 
investment in foreign countries are generally more expensive than in the U.S. Though the Funds intend to acquire the 
securities of foreign issuers where there are public trading markets, economic or political turmoil in a country in which 
a Fund has a significant portion of its assets or deterioration of the relationship between the U.S. and a foreign country 
may negatively impact the liquidity of a Fund’s portfolio. A Fund may have difficulty meeting a large number of 
redemption requests. Furthermore, there may be difficulties in obtaining or enforcing judgments against foreign 
issuers. 
 
A Fund may choose to invest in a foreign company by purchasing depositary receipts. Depositary receipts are 
certificates of ownership of shares in a foreign-based issuer held by a bank or other financial institution. They are 
alternatives to purchasing the underlying security but are subject to the foreign securities to which they relate. 
 
Investments in companies of developing (also called “emerging”) countries are subject to higher risks than 
investments in companies in more developed countries. These risks include: 
•  increased social, political, and economic instability; 
•  a smaller market for these securities and low or nonexistent volume of trading that results in a lack of liquidity and 
  in greater price volatility; 
•  lack of publicly available information, including reports of payments of dividends or interest on outstanding 
  securities; 
•  foreign government policies that may restrict opportunities, including restrictions on investment in issuers or 
  industries deemed sensitive to national interests; 
•  relatively new capital market structure or market-oriented economy; 
•  the possibility that recent favorable economic developments may be slowed or reversed by unanticipated political 
  or social events in these countries; 
•  restrictions that may make it difficult or impossible for the Fund to vote proxies, exercise shareholder rights, pursue 
  legal remedies, and obtain judgments in foreign courts; and 
•  possible losses through the holding of securities in domestic and foreign custodial banks and depositories. 
 
In addition, many developing countries have experienced substantial and, in some periods, extremely high rates of 
inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative 
effects on the economies and securities markets of those countries. 
 
Repatriation of investment income, capital, and proceeds of sales by foreign investors may require governmental 
registration and/or approval in some developing countries. A Fund could be adversely affected by delays in or a 
refusal to grant any required governmental registration or approval for repatriation. 
 
Further, the economies of developing countries generally are heavily dependent upon international trade and, 
accordingly, have been and may continue to be adversely affected by trade barriers, exchange controls, managed 
adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with 
which they trade. 

Small and Medium Capitalization Companies 
The Bond Market Index and International Equity Index Funds may hold securities of small and medium capitalization 
companies but not as a principal investment strategy. Market capitalization is defined as total current market value of 
a company’s outstanding common stock. Investments in companies with smaller market capitalizations may involve 
greater risks and price volatility (wide, rapid fluctuations) than investments in larger, more mature companies. Small 
companies may be less significant within their industries and may be at a competitive disadvantage relative to their 
larger competitors. While smaller companies may be subject to these additional risks, they may also realize more 
substantial growth than larger or more established companies. 
 
Smaller companies may be less mature than larger companies. At this earlier stage of development, the companies 
may have limited product lines, reduced market liquidity for their shares, limited financial resources, or less depth in 
management than larger or more established companies. Unseasoned issuers are companies with a record of less 
than three years continuous operation, including the operation of predecessors and parents. Unseasoned issuers by 
their nature have only a limited operating history that can be used for evaluating the company’s growth prospects. As 
a result, investment decisions for these securities may place a greater emphasis on current or planned product lines 
and the reputation and experience of the company’s management and less emphasis on fundamental valuation 
factors than would be the case for more mature growth companies. 
 
Temporary Defensive Measures 
From time to time, as part of its investment strategy, each Fund may invest without limit in cash and cash equivalents 
for temporary defensive purposes in response to adverse market, economic, or political conditions. To the extent that 
the Fund is in a defensive position, it may lose the benefit of upswings and limit its ability to meet its investment 
objective. For this purpose, cash equivalents include: bank notes, bank certificates of deposit, bankers’ acceptances, 
repurchase agreements, commercial paper, and commercial paper master notes which are floating rate debt 
instruments without a fixed maturity. In addition, a Fund may purchase U.S. government securities, preferred stocks, 
and debt securities, whether or not convertible into or carrying rights for common stock. 
 
There is no limit on the extent to which the Funds may take temporary defensive measures. In taking such measures, 
the Fund may fail to achieve its investment objective. 
 
Portfolio Turnover 
“Portfolio Turnover” is the term used in the industry for measuring the amount of trading that occurs in a fund’s portfolio 
during the year. For example, a 100% turnover rate means that on average every security in the portfolio has been 
replaced once during the year. 
 
Funds with high turnover rates (more than 100%) often have higher transaction costs (which are paid by the Fund) 
which may lower the Fund’s performance. 
 
Please consider all the factors when you compare the turnover rates of different funds. A fund with consistently higher 
total returns and higher turnover rates than another fund may actually be achieving better performance precisely 
because the managers are active traders. You should also be aware that the “total return” line in the Financial 
Highlights section reflects portfolio turnover costs. 

MANAGEMENT OF THE FUNDS     
 
The Manager     
Principal Management Corporation (“Principal”) serves as the manager for the Fund. Through the Management 
Agreement with the Fund, Principal provides investment advisory services and certain corporate administrative 
services for the Fund.     
 
Principal is an indirect subsidiary of Principal Financial Group, Inc. and has managed mutual funds since 1969. 
Principal’s address is Principal Financial Group, Des Moines, Iowa 50392.   
 
The Sub-Advisors     
Principal has signed contracts with Sub-Advisors. Under the sub-advisory agreements, the Sub-Advisor agrees to 
assume the obligations of Principal to provide investment advisory services to the portion of the assets of a specific 
Fund allocated to it by Principal. For these services, Principal pays the Sub-Advisor a fee. 
 
Principal or the Sub-Advisor provides the Directors of the Fund with a recommended investment program. The 
program must be consistent with the Fund’s investment objective and policies. Within the scope of the approved 
investment program, the Sub-Advisor advises the Fund on its investment policy and determines which securities are 
bought or sold, and in what amounts.     
 
Information regarding the Sub-Advisors and individual portfolio managers is set forth below. The Statement of 
Additional Information provides additional information about each portfolio manager’s compensation, other accounts 
managed by the portfolio manager, and the portfolio manager’s ownership of securities in the Funds. 
 
 
 
Sub-Advisor: Mellon Capital Management Corporation (“Mellon Capital”), 50 Fremont Street, Suite 3900, San 
                                   Francisco, CA 94105. Mellon Capital is a wholly owned subsidiary of Mellon Financial Corporation 
                                   (“Mellon”).     
 
The day-to-day portfolio management is shared by two portfolio managers. Zandra Zelaya is the lead portfolio 
manager.     
 
  Day-to-day   
                                   Fund  Fund Management  Since 
 
                                   Bond Market Index  David C. Kwan  2009 
  Zandra Zelaya  2009 
 
David C. Kwan, CFA. Mr. Kwan is Managing Director, Fixed Income Management and Trading. He joined Mellon 
Capital in 1990. He earned a B.S. in Electrical Engineering and Computer Science from University of California at 
Berkeley and an MBA from University of California at Berkeley. He has earned the right to use the Chartered Financial 
Analyst designation.     
 
Zandra Zelaya, CFA. Ms. Zelaya is Vice President, Portfolio Manager, Fixed-Income. She joined Mellon Capital in 
1997. She earned a Bachelors of Science at California State University Hayward in Finance. She has earned the 
right to the use the Charted Financial Analyst designation.   

Sub-Advisor: Principal Global Investors, LLC (“PGI”) is an indirect wholly owned subsidiary of Principal Life 
  Insurance Company, an affiliate of Principal, and a member of the Principal Financial Group. PGI 
  manages equity, fixed-income, and real estate investments primarily for institutional investors, including 
  Principal Life. PGI’s headquarters address is 801 Grand Avenue, Des Moines, IA 50392. Its other 
  primary asset management office is in New York, with asset management offices of affiliate advisors in 
  several non-U.S. locations including London, Sydney and Singapore.   
 
As reflected in the list below, the day-to-day portfolio management is shared by two portfolio managers. The portfolio 
managers operate as a team, sharing authority and responsibility for research and the day-to-day management of the 
portfolio with no limitation on the authority of one portfolio manager in relation to another. 
 
    Day-to-day   
                             Fund  Fund Management  Since 
 
                             International Equity Index  Dirk Laschanzky  2009 
    Scott Smith  2009 
 
Dirk Laschanzky, CFA. Mr. Laschanzky is a portfolio manager for PGI, responsible for portfolio implementation 
strategies, asset allocation and managing the midcap value and index portfolios. Prior to joining PGI in 1997, he was a 
portfolio manager and analyst for over seven years at AMR Investment Services. He earned an MBA and BA, both in 
Finance, from the University of Iowa. He has earned the right to use the Chartered Financial Analyst designation. 
 
Scott W. Smith. Mr. Smith is a research analyst and portfolio manager at Principal Global Investors. He is an analyst 
within the firm’s asset allocation and structured investments group. He also provides research assistance to various 
business units within Principal Global Investors. Mr. Smith joined the firm in 1999. He received a bachelor’s degree in 
finance from Iowa State University.     
 
 
 
Fees Paid to Principal     
Each Fund pays Principal a fee for its services, which includes the fee Principal pays to the Sub-Advisor. The manage- 
ment fee for the Bond Market Index and International Equity Index Funds (as a percentage of the average daily net 
assets) is 0.25% on all assets.     
 
A discussion regarding the basis for the Board of Directors approval of the management agreement with Principal and 
the sub-advisory agreements with each Sub-Advisor will be available in the semi-annual report to shareholders for the 
period ended February 28, 2010.     
 
The Fund operates as a Manager of Managers. Under an order received from the SEC, the Fund and Principal, may 
enter into and materially amend agreements with Sub-Advisors, other than those affiliated with Principal, without 
obtaining shareholder approval. For any Fund that is relying on that order, Principal may, without obtaining 
shareholder approval:     
•  hire one or more Sub-Advisors;     
•  change Sub-Advisors; and     
•  reallocate management fees between itself and Sub-Advisors.   
Principal has ultimate responsibility for the investment performance of each Fund that utilizes a Sub-Advisor due to its 
responsibility to oversee Sub-Advisors and recommend their hiring, termination, and replacement. No Fund will rely on 
the order until it receives approval from its shareholders or, in the case of a new Fund, the Fund’s sole initial 
shareholder before the Fund is available to the other purchasers, and the Fund states in its prospectus that it intends 
to rely on the order.     
 
The shareholders of each of the Funds have approved the Fund’s reliance on the order; however, only the Bond 
Market Index Fund intends to rely on the order.     

PRICING OF FUND SHARES 
 
Each Fund’s shares are bought and sold at the current share price. The share price of each class of each Fund is 
calculated each day the New York Stock Exchange (“NYSE”) is open (share prices are not calculated on the days on 
which the NYSE is closed for trading, generally New Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday/ 
Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas). The 
share price is determined as of the close of business of the NYSE (normally 3:00 p.m. Central Time). When an order 
to buy or sell shares is received, the share price used to fill the order is the next price we calculate after we receive the 
order at our transaction processing center in Canton, Massachusetts. To process your purchase order on the day we 
receive it, we must receive the order (with complete information): 
• on a day that the NYSE is open and 
• prior to the close of trading on the NYSE (normally 3 p.m. Central Time). 
Orders received after the close of the NYSE or on days that the NYSE is not open will be processed on the next day 
that the NYSE is open for normal trading. 
 
If we receive an application or purchase request for a new mutual fund account or subsequent purchase into an 
existing account that is accompanied by a check and the application or purchase request does not contain complete 
information, we may hold the application (and check) for up to two business days while we attempt to obtain the 
necessary information. If we receive the necessary information within two business days, we will process the order 
using the next share price calculated. If we do not receive the information within two business days, the application 
and check will be returned to you. 
For these Funds, the share price is calculated by: 
•  taking the current market value of the total assets of the Fund 
•  subtracting liabilities of the Fund 
•  dividing the remainder proportionately into the classes of the Fund 
•  subtracting the liability of each class 
•  dividing the remainder by the total number of shares outstanding for that class. 
 
NOTES: 
•  If market quotations are not readily available for a security owned by a Fund, its fair value is determined using a 
  policy adopted by the Directors. Fair valuation pricing is subjective and creates the possibility that the fair value 
  determined for a security may differ materially from the value that could be realized upon the sale of the security. 
•  A Fund’s securities may be traded on foreign securities markets that generally complete trading at various times 
  during the day prior to the close of the NYSE. Generally, the values of foreign securities used in computing a 
  Fund’s NAV are the market quotations as of the close of the foreign market. Foreign securities and currencies are 
  also converted to U.S. dollars using the exchange rate in effect at the close of the NYSE. Occasionally, events 
  affecting the value of foreign securities occur when the foreign market is closed and the NYSE is open. The Fund 
  has adopted policies and procedures to “fair value” some or all securities held by a Fund if significant events occur 
  after the close of the market on which the foreign securities are traded but before the Fund’s NAV is calculated. 
  Significant events can be specific to a single security or can include events that affect a particular foreign market or 
  markets. A significant event can also include a general market movement in the U.S. securities markets. If Principal 
  believes that the market value of any or all of the foreign securities is materially affected by such an event, the 
  securities will be valued, and the Fund’s NAV will be calculated, using the policy adopted by the Fund. These fair 
  valuation procedures are intended to discourage shareholders from investing in the Fund for the purpose of 
  engaging in market timing or arbitrage transactions. 
  The trading of foreign securities generally or in a particular country or countries may not take place on all days the 
  NYSE is open, or may trade on days the NYSE is closed. Thus, the value of the foreign securities held by the Fund 
  may change on days when shareholders are unable to purchase or redeem shares. 
•  Certain securities issued by companies in emerging market countries may have more than one quoted valuation at 
  any point in time. These may be referred to as local price and premium price. The premium price is often a 
  negotiated price that may not consistently represent a price at which a specific transaction can be effected. The 
  Fund has a policy to value such securities at a price at which the Sub-Advisor expects the securities may be sold. 

PURCHASE OF FUND SHARES 
 
Shares may be purchased: 
•  via the internet. 
  •  standard method of accepting data for plans with fewer than 1,000 current and terminated (within the last five 
    years) members. 
  •  available 7 days a week (7 a.m. to 9 p.m. Central Time). 
•  using a modem. 
  •  plan contributions transferred electronically. 
  •  standard method of accepting data for plans with more than 1,000 current and terminated (within the last five 
    years) members. 
  •  available 24 hours a day, 7 days a week. 
 
To eliminate the need for safekeeping, the Funds will not issue certificates for shares. The Funds may periodically 
close to new purchases of shares or refuse any order to buy shares if Principal determines that doing so would be in 
the best interests of the Fund and its shareholders. 
 
Principal may recommend to the Board, and the Board may elect, to close certain funds to new and existing investors. 
 
REDEMPTION OF FUND SHARES 
 
Subject to any restrictions imposed by a plan, shares may be sold back to the Fund any day the NYSE is open. For 
more information about how to sell shares of the Fund, including any charges that a plan may impose, please consult 
the plan. 
 
The Fund generally sends payment for shares sold the business day after the sell order is received. Under unusual 
circumstances, the Fund may suspend redemptions, or postpone payment for more than seven days, as permitted by 
federal securities law. 
 
Distributions in Kind. Payment for shares of the Funds tendered for redemption is ordinarily made by check. 
However, the Funds may determine that it would be detrimental to the remaining shareholders of a Fund to make 
payment of a redemption order wholly or partly in cash. Under certain circumstances, therefore, each of the Funds 
may pay the redemption proceeds in whole or in part by a distribution “in kind” of securities from the Fund’s portfolio in 
lieu of cash. If a Fund pays the redemption proceeds in kind, the redeeming shareholder might incur brokerage or 
other costs in selling the securities for cash. Each Fund will value securities used to pay redemptions in kind using the 
same method the Fund uses to value its portfolio securities as described in this prospectus. 
 
Redemption fees. The Fund board of directors has determined that it is not necessary to impose a fee upon the 
redemption of fund shares, because the Fund has adopted transfer restrictions as described in “Exchange of 
Fund Shares.” 
 
EXCHANGE OF FUND SHARES 
 
An exchange between Funds is a redemption of shares of one Fund and a concurrent purchase of shares in another 
Fund with the redemption proceeds. A shareholder, including a beneficial owner of shares held in nominee name or a 
participant in a participant-directed employee benefit plan, may exchange Fund shares under certain circumstances. 
In addition to any restrictions an intermediary or an employee benefit plan imposes, Fund shares may be exchanged, 
without charge, for shares of any other Fund of the Principal Funds, provided that: 
•  the shareholder has not exchanged shares of the Fund within 30 days preceding the exchange, 
•  the share class of such other Fund is available through the plan, and 
•  the share class of such other Fund is available in the shareholder’s state of residence. 

All exchanges completed on the same day are considered a single exchange for purposes of this exchange limitation. 
In addition, the Fund will reject an order to purchase shares of any Fund if the shareholder redeemed shares from that 
Fund within the preceding 30-day period. The 30-day exchange or purchase restriction does not apply to exchanges 
or purchases made on a scheduled basis such as scheduled periodic portfolio rebalancing transactions. 
 
If Fund shares are purchased through an intermediary that is unable or unwilling to impose the 30-day exchange 
restriction described above, Fund management may waive this restriction in lieu of the exchange limitation that the 
intermediary is able to impose if, in management’s judgment, such limitation is reasonably likely to prevent excessive 
trading in Fund shares. In order to prevent excessive exchanges, and under other circumstances where the 
Fund Board of Directors or Principal believes it is in the best interests of the Fund, the Fund reserves the right to revise 
or terminate this exchange privilege, limit the amount or further limit the number of exchanges, reject any exchange or 
close an account. 
 
FREQUENT PURCHASES AND REDEMPTIONS 
 
The Funds are not designed for, and do not knowingly accommodate, frequent purchases and redemptions of fund 
shares by investors. If you intend to trade frequently and/or use market timing investment strategies, you should not 
purchase these Funds. 
 
Frequent purchases and redemptions pose a risk to the Funds because they may: 
•  Disrupt the management of the Funds by: 
  •  forcing the Funds to hold short-term (liquid) assets rather than investing for long term growth, which results in 
    lost investment opportunities for the Fund; and 
  •  causing unplanned portfolio turnover; 
•  Hurt the portfolio performance of the Funds; and 
•  Increase expenses of the Funds due to: 
  •  increased broker-dealer commissions and 
  •  increased recordkeeping and related costs. 
 
Certain Funds may be at greater risk of harm due to frequent purchases and redemptions. For example, those Funds 
that invest in foreign securities may appeal to investors attempting to take advantage of time-zone arbitrage. 
 
The Funds have adopted procedures to “fair value” foreign securities under certain circumstances, which are 
intended, in part, to discourage excessive trading of shares of the Funds. The Board of Directors of the Fund has also 
adopted policies and procedures with respect to frequent purchases and redemptions of shares of the Funds. The 
Funds monitor trading activity to identify and take action against abuses. While our policies and procedures are 
designed to identify and protect against abusive trading practices, there can be no certainty that we will identify and 
prevent abusive trading in all instances. If we are not able to identify such excessive trading practices, the Funds may 
be negatively impacted and may cause investors to suffer the harms described. When we do identify abusive trading, 
we will apply our policies and procedures in a fair and uniform manner. If we are not able to identify such abusive 
trading practices, the abuses described above may negatively impact the Funds. 
 
The Funds have adopted an exchange frequency restriction, described above in “Exchange of Fund Shares” to limit 
excessive trading in fund shares. 

DIVIDENDS AND DISTRIBUTIONS 
 
Dividends are based on estimates of income, expenses, and shareholder activity for the Fund. Actual income, 
expenses, and shareholder activity may differ from estimates; consequently, differences, if any, will be included in the 
calculation of subsequent dividends. The Funds pay their net investment income to shareholders of record on the 
business day prior to the payment date. 
 
The Bond Market Index and International Equity Index Funds each pay their net investment income annually in 
December. 
 
For more details on the payment schedule, go to www.principal.com. 
 
Net realized capital gains, if any, are distributed annually in December. Payments are made to shareholders of record 
on the business day prior to the payable date. Capital gains may be taxable at different rates, depending on the length 
of time that the Fund holds its assets. 
 
Dividend and capital gains distributions will be reinvested, without a sales charge, in shares of the Fund from which 
the distribution is paid. 
 
Generally, for federal income tax purposes, Fund distributions are taxable as ordinary income, except that any 
distributions of long-term capital gains will be taxed as such regardless of how long Fund shares have been held. 
Special tax rules apply to Fund distributions to retirement plans. A tax advisor should be consulted to determine the 
suitability of the Fund as an investment by such a plan and the tax treatment of distributions by the Fund. A tax advisor 
can also provide information on the potential impact of possible foreign, state, and local taxes. A Fund’s investments in 
foreign securities may be subject to foreign withholding taxes. In that case, the Fund’s yield on those securities would 
be decreased. 
 
To the extent that distributions the Funds pay are derived from a source other than net income (such as a return of 
capital), a notice will be included in your quarterly statement pursuant to Section 19(a) of the Investment Company Act 
of 1940, as amended, and Rule 19a-1 disclosing the source of such distributions. Furthermore, such notices shall be 
posted monthly on our web site at www.principal.com. You may request a copy of all such notices, free of charge, by 
telephoning 1-800-547-7754. The amounts and sources of distributions included in such notices are estimates only 
and you should not rely upon them for purposes of reporting income taxes. The Fund will send shareholders a 
Form 1099-DIV for the calendar year that will tell shareholders how to report these distributions for federal income tax 
purposes. 
 
TAX CONSIDERATIONS 
 
Shareholders are responsible for federal income tax (and any other taxes, including state and local income taxes, if 
applicable) on dividends and capital gains distributions whether such dividends or distributions are paid in cash or 
reinvested in additional shares. Special tax rules apply to distributions to IRAs and other retirement accounts. You 
should consult a tax advisor to determine the suitability of the Fund as an investment by such a plan and the tax 
treatment of Fund distributions. 
 
Generally, dividends paid by the Funds from interest, dividends, or net short-term capital gains will be taxed as 
ordinary income. Distributions properly designated by the Fund as deriving from net gains on securities held for more 
than one year are taxable as such (generally at a 15% tax rate), regardless of how long you have held your shares. 
For taxable years beginning before January 1, 2011, distributions of investment income properly designated by the 
Fund as derived from “qualified dividend income” will be taxed at the rates applicable to long-term capital gains. 
 
A dividend or distribution made shortly after the purchase of shares of a Fund by a shareholder, although in effect a 
return of capital to that shareholder, would be taxable to that shareholder as described above, subject to a holding 
period requirement for dividends designated as qualified dividend income. 
 
Because of tax law requirements, you must provide the Funds with an accurate and certified taxpayer identification 
number (for individuals, generally a Social Security number) to avoid “back-up” withholding, which is currently imposed 
at a rate of 28%. 
 
Early in each calendar year, each Fund will notify you of the amount and tax status of distributions paid to you for the 
preceding year. 

Any gain resulting from the sale, redemption, or exchange of your shares will generally also be subject to tax. You 
should consult your tax advisor for more information on your own tax situation, including possible foreign, state, and 
local taxes. 
 
Investments by a Fund in foreign securities may be subject to foreign withholding taxes. In that case, the Fund’s yield 
on those securities would be decreased. Shareholders of the Funds that invest in foreign securities may be entitled to 
claim a credit or deduction with respect to foreign taxes. In addition, the Fund’s investments in foreign securities or 
foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect the timing or 
amount of the Fund’s distributions. 
 
Investments by a Fund in certain debt instruments or derivatives may cause the Fund to recognize taxable income in 
excess of the cash generated by such instruments. As a result, the Fund could be required at times to liquidate other 
investments in order to satisfy its distribution requirements under the Internal Revenue Code. The Fund’s use of 
derivatives will also affect the amount, timing, and character of the Fund’s distributions. 
 
FUND ACCOUNT INFORMATION 
 
Statements 
Statements are sent each calendar quarter. The statements provide the number and value of shares owned by the 
plan, transactions during the quarter, dividends declared or paid, and other information. 
 
This information may also be accessed at www.principal.com. 
 
Orders Placed by Intermediaries 
Principal Funds may have an agreement with your intermediary, such as a broker-dealer, third party administrator, or 
trust company, that permits the intermediary to accept orders on behalf of the Fund until 3 p.m. Central Time. The 
agreement may include authorization for your intermediary to designate other intermediaries (“sub-designees”) to 
accept orders on behalf of the Fund on the same terms that apply to the intermediary. In such cases, if your 
intermediary or a sub-designee receives your order in correct form by 3 p.m. Central Time, transmits it to the Fund and 
pays for it in accordance with the agreement, the Fund will price the order at the next net asset value per share it 
computes after your intermediary or sub-designee received your order. 
 
Note: The time at which the Fund prices orders and the time until which the Fund or your intermediary or sub- 
designee will accept orders may change in the case of an emergency or if the New York Stock Exchange closes at a 
time other than 3 p.m. Central Time. 
 
Minimum Account Balance 
The Principal Funds reserves the right to set a minimum and redeem all shares in the Fund if the value of a plan’s 
investments in the Fund is less than the minimum. Principal Funds has set the minimum at $2.5 million. The 
redemption proceeds would then be sent according to the directions of the appropriate plan fiduciary. If the Fund 
exercises this right, the plan sponsor will be notified that the redemption is going to be made. The plan will have 
30 days to make an additional investment and bring plan assets up to the required minimum. The Fund reserves the 
right to change the minimum. 
 
Reservation of Rights 
The Principal Funds reserves the right to amend or terminate the special plans described in this prospectus. In 
addition, Principal Funds reserves the right to change the share classes described herein. Shareholders will be 
notified of any such action to the extent required by law. 
 
Multiple Translations 
This prospectus may be translated into other languages. In the event of any inconsistencies or ambiguity as to the 
meaning of any word or phrase in a translation, the English text will prevail. 

Procedures for Opening an Account 
To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial 
institutions to obtain, verify, and record information that identifies each person who opens an account. When you open 
an account, we will ask for your name, address, date of birth, and other information that will allow us to verify your 
identity. We may also ask to see your driver’s license or other identifying documents. 
 
If concerns arise with verification of your identity, no transactions, other than redemptions, will be permitted while we 
attempt to reconcile the concerns. If we are unable to verify your identify within 30 days of our receipt of your original 
purchase, the account(s) will be closed and redeemed in accordance with normal redemption procedures. 
 
Financial Statements 
Plans will receive annual financial statements for the Funds, audited by the Funds’ independent registered public 
accounting firm, Ernst & Young LLP. Plans will also receive a semiannual financial statement that is unaudited. 
 
PORTFOLIO HOLDINGS INFORMATION 
 
A description of the Fund's policies and procedures with respect to disclosure of the Fund's portfolio securities is 
available in the Fund's Statement of Additional Information. 

APPENDIX A 
 
SUMMARY OF PRINCIPAL RISKS 
 
The value of your investment in a Fund changes with the value of the investments held by that Fund. Many factors 
affect that value, and it is possible that you may lose money by investing in the Funds. Factors that may adversely 
affect a particular Fund as a whole are called “principal risks.” The principal risks of investing in the Funds are stated 
above as to each Fund in the Fund’s description. Each of these risks is summarized below. Additional information 
about the Funds, their investments, and the related risks is located under “Certain Investment Strategies and Related 
Risks” and in the Statement of Additional Information. 
 
Derivatives Risk 
Transactions in derivatives (such as options, futures, and swaps) may increase volatility, cause the liquidation of 
portfolio positions when not advantageous to do so and produce disproportionate losses. 
 
Equity Securities Risk 
Equity securities (common, preferred, and convertible preferred stocks and securities whose values are tied to the 
price of stocks, such as rights, warrants and convertible debt securities) could decline in value if the issuer's financial 
condition declines or in response to overall market and economic conditions. A fund's principal market segment(s), 
such as large cap, mid cap or small cap stocks, or growth or value stocks, may underperform other market segments 
or the equity markets as a whole. Investments in smaller companies and mid-size companies may involve greater risk 
and price volatility than investments in larger, more mature companies. 
 
Fixed-Income Securities Risk 
Fixed-income securities are subject to interest rate risk and credit quality risk. The market value of fixed-income 
securities generally declines when interest rates rise, and an issuer of fixed-income securities could default on its 
payment obligations. 
 
Foreign Securities Risk 
The risks of foreign securities include loss of value as a result of: political or economic instability; nationalization, 
expropriation or confiscatory taxation; changes in foreign exchange rates and foreign exchange restrictions; 
settlement delays; and limited government regulation (including less stringent reporting, accounting, and disclosure 
standards than are required of U.S. companies). 
 
Municipal Securities Risk 
Principal and interest payments on municipal securities may not be guaranteed by the issuing body and may be 
payable only from a particular source. That source may not perform as expected and payment obligations may not be 
made or made on time. 
 
Portfolio Duration Risk 
Portfolio duration is a measure of the expected life of a fixed-income security and its sensitivity to changes in interest 
rates. The longer a fund's average portfolio duration, the more sensitive the fund will be to changes in interest rates. 
 
Prepayment Risk 
Unscheduled prepayments on mortgage-backed and asset-backed securities may have to be reinvested at lower 
rates. A reduction in prepayments may increase the effective maturities of these securities, exposing them to the risk 
of decline in market value over time. 
 
Real Estate Securities Risk 
Real estate securities (including real estate investment trusts ("REITs")) are subject to the risks associated with direct 
ownership of real estate, including declines in value, adverse economic conditions, increases in expenses, regulatory 
changes and environmental problems. A REIT could fail to qualify for tax-free pass-through of income under the 
Internal Revenue Code, and Fund shareholders will indirectly bear their proportionate share of the expenses of REITs 
in which the Fund invests. 

Underlying Fund Risk 
An underlying fund to a fund of funds may experience relatively large redemptions or investments as the fund of funds 
periodically reallocates or rebalances its assets. These transactions may cause the underlying fund to sell portfolio 
securities to meet such redemptions, or to invest cash from such investments, at times it would not otherwise do so, 
and may as a result increase transaction costs and adversely affect underlying fund performance. 
 
U.S. Government Securities Risk 
Yields available from U.S. government securities are generally lower than yields from many other fixed-income 
securities. 
 
U.S. Government Sponsored Securities Risk 
Securities issued by U.S. government-sponsored or -chartered enterprises such as the Federal Home Loan Mortgage 
Corporation, the Federal National Mortgage Association, and the Federal Home Loan Banks are not issued or 
guaranteed by the U.S. Treasury. 

APPENDIX B 
Description of Bond Ratings: 
Moody’s Investors Service, Inc. Rating Definitions: 
Long-Term Obligation Ratings 
Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original 
maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. 
Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default. 
Aaa:  Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. 
Aa:  Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. 
A:  Obligations rated A are considered upper-medium grade and are subject to low credit risk. 
Baa:  Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such 
  may possess certain speculative characteristics. 
Ba:  Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. 
B:  Obligations rated B are considered speculative and are subject to high credit risk. 
Caa:  Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. 
Ca:  Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of 
  recovery of principal and interest. 
C:  Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for 
  recovery of principal or interest. 
NOTE: Moody’s appends numerical modifiers, 1, 2, and 3 to each generic rating classification from Aa through Caa. 
The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category, the modifier 2 
indicates a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of that generate rating category. 
SHORT-TERM NOTES: The four ratings of Moody’s for short-term notes are MIG 1, MIG 2, MIG 3, and MIG 4. MIG 1 
denotes “best quality, enjoying strong protection from established cash flows.” MIG 2 denotes “high quality” with 
“ample margins of protection.” MIG 3 notes are of “favorable quality but lacking the undeniable strength of the 
preceding grades.” MIG 4 notes are of “adequate quality, carrying specific risk for having protection and not distinctly 
or predominantly speculative.” 
Description of Moody’s Commercial Paper Ratings: 
Moody’s Commercial Paper ratings are opinions of the ability to repay punctually promissory obligations not having an 
original maturity in excess of nine months. Moody’s employs the following three designations, all judged to be 
investment grade, to indicate the relative repayment capacity of rated issuers: 
Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term 
promissory obligations. 
Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term 
promissory obligations. 

Issuers rated Prime-3 (or related supporting institutions) have an acceptable capacity for repayment of short-term 
promissory obligations. 
 
Issuers rated Not Prime do not fall within any of the Prime rating categories. 
 
Description of Standard & Poor’s Corporation’s Debt Ratings: 
 
A Standard & Poor’s debt rating is a current assessment of the creditworthiness of an obligor with respect to a specific 
obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees. 
 
The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to 
market price or suitability for a particular investor. 
 
The ratings are based on current information furnished by the issuer or obtained by Standard & Poor’s from other 
sources Standard & Poor’s considers reliable. Standard & Poor’s does not perform an audit in connection with any 
rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or 
withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances. 
 
The ratings are based, in varying degrees, on the following considerations: 
 
I.  Likelihood of default – capacity and willingness of the obligor as to the timely payment of interest and 
  repayment of principal in accordance with the terms of the obligation; 
 
II.  Nature of and provisions of the obligation; 
 
III.  Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or 
  other arrangement under the laws of bankruptcy and other laws affecting creditor’s rights. 
 
AAA:  Debt rated “AAA” has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay 
  principal is extremely strong. 
 
AA:  Debt rated “AA” has a very strong capacity to pay interest and repay principal and differs from the highest- 
  rated issues only in small degree. 
 
A:  Debt rated “A” has a strong capacity to pay interest and repay principal although they are somewhat more 
  susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher- 
  rated categories. 
 
BBB:  Debt rated “BBB” is regarded as having an adequate capacity to pay interest and repay principal. Whereas it 
  normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances 
  are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than 
  for debt in higher-rated categories. 
 
BB, B, CCC, CC: Debt rated “BB,” “B,” “CCC,” and “CC” is regarded, on balance, as predominantly speculative with 
                       respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. 
                       “BB” indicates the lowest degree of speculation and “CC” the highest degree of speculation. While 
                       such debt will likely have some quality and protective characteristics, these are outweighed by large 
                       uncertainties or major risk exposures to adverse conditions. 
 
C:  The rating “C” is reserved for income bonds on which no interest is being paid. 
 
D:  Debt rated “D” is in default, and payment of interest and/or repayment of principal is in arrears. 
 
Plus (+) or Minus (-): The ratings from “AA” to “B” may be modified by the addition of a plus or minus sign to show 
relative standing within the major rating categories. 

Provisional Ratings: The letter “p” indicates that the rating is provisional. A provisional rating assumes the successful 
completion of the project being financed by the bonds being rated and indicates that payment of debt service 
requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, 
however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood 
of, or the risk of default upon failure of, such completion. The investor should exercise his own judgment with respect 
to such likelihood and risk. 
 
NR:  Indicates that no rating has been requested, that there is insufficient information on which to base a rating or 
  that Standard & Poor’s does not rate a particular type of obligation as a matter of policy. 
 
Standard & Poor’s, Commercial Paper Ratings 
 
A Standard & Poor’s Commercial Paper Rating is a current assessment of the likelihood of timely payment of debt 
having an original maturity of no more than 365 days. Ratings are graded into four categories, ranging from “A” for the 
highest quality obligations to “D” for the lowest. Ratings are applicable to both taxable and tax-exempt commercial 
paper. The four categories are as follows: 
 
A:   Issues assigned the highest rating are regarded as having the greatest capacity for timely payment. Issues in 
   this category are delineated with the numbers 1, 2, and 3 to indicate the relative degree of safety. 
 
A-1:   This designation indicates that the degree of safety regarding timely payment is either overwhelming or very 
   strong. Issues that possess overwhelming safety characteristics will be given a “+” designation. 
 
A-2:   Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is 
   not as high as for issues designated “A-1.” 
 
A-3:   Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, 
   somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying the 
   highest designations. 
 
B:   Issues rated “B” are regarded as having only an adequate capacity for timely payment. However, such 
   capacity may be damaged by changing conditions or short-term adversities. 
 
C:   This rating is assigned to short-term debt obligations with a doubtful capacity for payment. 
 
D:   This rating indicates that the issue is either in default or is expected to be in default upon maturity. 
 
The Commercial Paper Rating is not a recommendation to purchase or sell a security. The ratings are based on 
current information furnished to Standard & Poor’s by the issuer and obtained by Standard & Poor’s from other 
sources it considers reliable. The ratings may be changed, suspended, or withdrawn as a result of changes in or 
unavailability of, such information. 
 
Standard & Poor’s rates notes with a maturity of less than three years as follows: 
 
SP-1:     A very strong, or strong, capacity to pay principal and interest. Issues that possess overwhelming safety 
     characteristics will be given a “+” designation. 
 
SP-2:     A satisfactory capacity to pay principal and interest. 
 
SP-3:     A speculative capacity to pay principal and interest. 

ADDITIONAL INFORMATION 
 
Additional information about the Fund (including the Fund’s policy regarding the disclosure of portfolio securities) is 
available in the Statement of Additional Information dated ______________, which is incorporated by reference into 
this prospectus. Additional information about the Funds’ investments is available in the Fund’s annual and semiannual 
reports to shareholders. In the Fund’s annual report, you will find a discussion of the market conditions and investment 
strategies that significantly affected the Funds’ performance during the last fiscal year. The Statement of Additional 
Information and the Fund’s annual and semi annual reports can be obtained free of charge by writing Principal Funds, 
P.O. Box 8024, Boston, MA 02266-8024. In addition, the Fund makes its Statement of Additional Information and 
annual and semi annual reports available, free of charge, on our website www.principal.com. To request this and other 
information about the Fund and to make shareholder inquiries, telephone 1-800-547-7754. 
 
Information about the Fund (including the Statement of Additional Information) can be reviewed and copied at the 
Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of 
the Public Reference Room may be obtained by calling the Commission at 1-202-551-8090. Reports and other 
information about the Fund are available on the EDGAR Database on the Commission’s internet site at http:// 
www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by electronic request at 
the following e-mail address: publicinfo@sec.gov, or by writing the Commission’s Public Reference Section, 100 F 
Street N.E., Washington, D.C. 20549-0102. 
 
The U.S. government does not insure or guarantee an investment in any of the Funds. 
 
Shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution, nor are 
shares of the Funds federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or 
any other agency. 
 
Principal Funds, Inc. SEC File 811-07572

PRINCIPAL FUNDS, INC.
(THE "FUND")
BOND MARKET INDEX FUND
INTERNATIONAL EQUITY INDEX FUND
Statement of Additional Information
dated ______________________, 2009
This Statement of Additional Information (SAI) is not a prospectus. It contains information in addition to the information 
in the Fund's prospectuses. The Fund's prospectuses, dated _________________, which we may amend from time to 
time, contain the basic information you should know before investing in the Fund. You should read this SAI together 
with the Fund's prospectuses for the Bond Market Index and International Equity Index Funds. 
For a free copy of the current prospectus or annual report, call 1-800-222-5852 or write: 
             Principal Funds 
             P.O. Box 8024 
             Boston, MA 02266-8024 
The prospectuses for Institutional, R-1, R-2, R-3, R-4, and R-5 share classes may be viewed at www.Principal.com. 

                                                                                                         TABLE OF CONTENTS 
Fund History 
Description of the Funds’ Investments and Risks 
Management 
Control Persons and Principal Holders of Securities 
Investment Advisory and Other Services 
Multiple Class Structure 
Intermediary Compensation 
Brokerage Allocation and Other Practices 
Purchase and Redemption of Shares 
Pricing of Fund Shares 
Taxation of the Funds 
Portfolio Holdings Disclosure 
Proxy Voting Policies and Procedures 
Independent Registered Public Accounting Firm 
Disclosure Regarding Portfolio Managers 
Appendix A - Description of Bond Ratings 
Appendix B - Proxy Voting Policies 

FUND HISTORY 
 
Principal Funds, Inc. ("the Registrant" or the "Fund") is a registered, open-end management investment company, 
commonly called a mutual fund. The Fund consists of multiple investment portfolios which are referred to as "Funds." 
Each portfolio operates for many purposes as if it were an independent mutual fund. Each portfolio has its own 
investment objective, strategy, and management team. Each of the Funds is diversified. 
 
The Fund was organized as Principal Special Markets Fund, Inc. on January 28, 1993 as a Maryland corporation. The 
Fund changed its name to Principal Investors Fund, Inc. effective September 14, 2000. The Fund changed its name to 
Principal Funds, Inc. effective June 13, 2008. 
 
The articles of incorporation have been amended in from time to time. Those amendments are as follows: 
 
• _________________________, to add Bond Market Index Fund and International Equity Index Fund. 

Classes offered by each Fund are shown in the table below.       
 
  Share Class
Fund Name  R-1  R-2  R-3  R-4  R-5  Institutional 
   Bond Market Index Fund  X  X  X  X  X  X 
   International Equity Index Fund  X  X  X  X  X  X 

Each class has different expenses. Because of these different expenses, the investment performance of the classes 
will vary. For more information, including your eligibility to purchase certain classes of shares, call Principal Funds at 
1-800-222-5852. 
 
DESCRIPTION OF THE FUNDS’ INVESTMENTS AND RISKS 
 
Fund Policies 
The investment objectives, investment strategies and the main risks of each Fund are described in the Prospectus. 
This Statement of Additional Information contains supplemental information about those strategies and risks and the 
types of securities the Sub-Advisor can select for each Fund. Additional information is also provided about the 
strategies that the Fund may use to try to achieve its objective. 
 
The composition of each Fund and the techniques and strategies that the Sub-Advisor may use in selecting securities 
will vary over time. A Fund is not required to use all of the investment techniques and strategies available to it in 
seeking its goals. 
 
Unless otherwise indicated, with the exception of the percentage limitations on borrowing, the restrictions apply at the 
time transactions are entered into. Accordingly, any later increase or decrease beyond the specified limitation, 
resulting from market fluctuations or in a rating by a rating service, does not require elimination of any security from the 
portfolio. 
 
The investment objective of each Fund and, except as described below as "Fundamental Restrictions," the investment 
strategies described in this Statement of Additional Information and the prospectuses are not fundamental and may be 
changed by the Board of Directors without shareholder approval. The Fundamental Restrictions may not be changed 
without a vote of a majority of the outstanding voting securities of the affected Fund. The Investment Company Act of 
1940, as amended, ("1940 Act") provides that "a vote of a majority of the outstanding voting securities" of a Fund 
means the affirmative vote of the lesser of 1) more than 50% of the outstanding shares or 2) 67% or more of the 
shares present at a meeting if more than 50% of the outstanding Fund shares are represented at the meeting in 
person or by proxy. Each share has one vote, with fractional shares voting proportionately. Shares of all classes of a 
Fund will vote together as a single class except when otherwise required by law or as determined by the Board of 
Directors. 
 
With the exception of the diversification test required by the Internal Revenue Code, the Funds will not consider 
collateral held in connection with securities lending activities when applying any of the following fundamental 
restrictions or any other investment restriction set forth in each Fund's prospectus or Statement of Additional 
Information. 

Bond Market Index and International Equity Index Funds. 
 
Fundamental Restrictions 
Each of the following numbered restrictions for the above-listed Funds is a matter of fundamental policy and may not 
be changed without shareholder approval. Each may not: 
 
1)  Issue any senior securities as defined in the 1940 Act. Purchasing and selling securities and futures contracts and 
  options thereon and borrowing money in accordance with restrictions described below do not involve the issuance 
  of a senior security. 
 
2)  Invest in physical commodities or commodity contracts (other than foreign currencies), but it may purchase and sell 
  financial futures contracts, options on such contracts, swaps, and securities backed by physical commodities. 
 
3)  Invest in real estate, although it may invest in securities that are secured by real estate and securities of issuers 
  that invest or deal in real estate. 
 
4)  Borrow money, except as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise 
  permitted by regulatory authority having jurisdiction, from time to time. 
 
5)  Make loans, except that the Fund may a) purchase and hold debt obligations in accordance with its investment 
  objectives and policies, b) enter into repurchase agreements, c) participate in an interfund lending program with 
  affiliated investment companies to the extent permitted by the 1940 Act or by any exemptions that may be granted 
  by the Securities and Exchange Commission (“SEC”), and d) lend its portfolio securities without limitation against 
  collateral (consisting of cash or liquid assets) equal at all times to not less than 100% of the value of the securities 
  lent. This limit does not apply to purchases of debt securities or commercial paper. 
 
6)  Invest more than 5% of its total assets in the securities of any one issuer (other than obligations issued or 
  guaranteed by the U.S. government or its agencies or instrumentalities) or purchase more than 10% of the 
  outstanding voting securities of any one issuer, except that this limitation shall apply only with respect to 75% of the 
  total assets of the Fund. 
 
7)  Act as an underwriter of securities, except to the extent that the Fund may be deemed to be an underwriter in 
  connection with the sale of securities held in its portfolio. 
 
8)  Concentrate its investments in any particular industry, except that the Fund may invest up to 25% of the value of 
  its total assets in a single industry, provided that, when the Fund has adopted a temporary defensive posture, there 
  shall be no limitation on the purchase of obligations issued or guaranteed by the U.S. government or its agencies 
  or instrumentalities. This restriction applies to the Bond Market Index and International Equity Index Funds except 
  to the extent that the related Index also is so concentrated. 
 
9)  Sell securities short (except where the Fund holds or has the right to obtain at no added cost a long position in 
  the securities sold that equals or exceeds the securities sold short). 

Non-Fundamental Restrictions 
Each of these Funds has also adopted the following restrictions that are not fundamental policies and may be changed 
without shareholder approval. It is contrary to each Fund's present policy to: 
 
1)  Invest more than 15% of its net assets in illiquid securities and in repurchase agreements maturing in more than 
  seven days except to the extent permitted by applicable law. 
 
2)  Pledge, mortgage, or hypothecate its assets, except to secure permitted borrowings. The deposit of underlying 
  securities and other assets in escrow and other collateral arrangements in connection with transactions in put or 
  call options, futures contracts, options on futures contracts, and over-the-counter swap contracts are not deemed 
  to be pledges or other encumbrances. 
 
3)  Invest in companies for the purpose of exercising control or management. 
 
4)  Invest more than 25% of its assets in foreign securities, except that the International Equity Index Fund may invest 
  up to 100% of its assets in foreign securities, the Bond Market Index Fund may invest in foreign securities to the 
  extent that the relevant index is so invested. 
 
5)  Invest more than 5% of its total assets in real estate limited partnership interests. 
 
6)  Acquire securities of other investment companies in reliance on Section 12(d)(1)(F) or (G) of the 1940 Act, or 
  otherwise acquire securities of other investment companies, except as permitted by the Investment Company Act, 
  rules adopted under the Act, exemptive orders issued by the SEC, no-action letters issued by the SEC staff or in 
  connection with a merger, consolidation, or plan of reorganization. The Fund may purchase securities of closed- 
  end investment companies in the open market where no underwriter or dealer's commission or profit, other than a 
  customary broker's commission, is involved. 
 
Each Fund has also adopted the non-fundamental policy, pursuant to SEC Rule 35d-1, which requires it, under normal 
circumstances, to invest at least 80% of its net assets in the type of securities, industry or geographic region (as 
described in the prospectus) as suggested by the name of the Fund. The Fund will provide 60-days notice to 
shareholders prior to implementing a change in this policy for the Fund. 
 
Investment Strategies and Risks 
Restricted Securities 
Generally, restricted securities are not readily marketable because they are subject to legal or contractual restrictions 
upon resale. They are sold only in a public offering with an effective registration statement or in a transaction that is 
exempt from the registration requirements of the Securities Act of 1933. When registration is required, a Fund may be 
obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the 
decision to sell and the time the Fund may be permitted to sell a security. If adverse market conditions were to develop 
during such a period, the Fund might obtain a less favorable price than existed when it decided to sell. Restricted 
securities and other securities not readily marketable are priced at fair value as determined in good faith by or under 
the direction of the Directors. 
 
Each of the Funds has adopted investment restrictions that limit its investments in restricted securities or other illiquid 
securities up to 15% of its net assets. The Directors have adopted procedures to determine the liquidity of Rule 4(2) 
short-term paper and of restricted securities under Rule 144A. Securities determined to be liquid under these 
procedures are excluded from the preceding investment restriction. 
 
Foreign Securities 
Foreign companies may not be subject to the same uniform accounting, auditing, and financial reporting practices as 
are required of U.S. companies. In addition, there may be less publicly available information about a foreign company 
than about a U.S. company. Securities of many foreign companies are less liquid and more volatile than securities of 
comparable U.S. companies. Commissions on foreign securities exchanges may be generally higher than those on 
U.S. exchanges. 

Foreign markets also have different clearance and settlement procedures than those in U.S. markets. In certain 
markets there have been times when settlements have been unable to keep pace with the volume of securities 
transactions, making it difficult to conduct these transactions. Delays in settlement could result in temporary periods 
when a portion of a Fund's assets is not invested and is earning no return. If a Fund is unable to make intended 
security purchases due to settlement problems, the Fund may miss attractive investment opportunities. In addition, a 
Fund may incur a loss as a result of a decline in the value of its portfolio if it is unable to sell a security. 
 
With respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political, or 
social instability, or diplomatic developments that could affect a Fund's investments in those countries. In addition, a 
Fund may also suffer losses due to nationalization, expropriation, or differing accounting practices and treatments. 
Investments in foreign securities are subject to laws of the foreign country that may limit the amount and types of 
foreign investments. Changes of governments or of economic or monetary policies, in the U.S. or abroad, changes in 
dealings between nations, currency convertibility, or exchange rates could result in investment losses for a Fund. 
Finally, even though certain currencies may be convertible into U.S. dollars, the conversion rates may be artificial 
relative to the actual market values and may be unfavorable to a Fund's investors. 
 
Foreign securities are often traded with less frequency and volume, and therefore may have greater price volatility, 
than is the case with many U.S. securities. Brokerage commissions, custodial services, and other costs relating to 
investment in foreign countries are generally more expensive than in the U.S. Though the Funds intend to acquire the 
securities of foreign issuers where there are public trading markets, economic or political turmoil in a country in which 
a Fund has a significant portion of its assets or deterioration of the relationship between the U.S. and a foreign country 
may negatively impact the liquidity of a Fund's portfolio. The Fund may have difficulty meeting a large number of 
redemption requests. Furthermore, there may be difficulties in obtaining or enforcing judgments against foreign 
issuers. 
 
Depositary Receipts 
Depositary Receipts are generally subject to the same sort of risks as direct investments in a foreign country, such as, 
currency risk, political and economic risk, and market risk, because their values depend on the performance of a 
foreign security denominated in its home currency. 
 
The Funds that may invest in foreign securities may invest in: 
•  American Depositary Receipts ("ADRs") - receipts issued by an American bank or trust company evidencing 
  ownership of underlying securities issued by a foreign issuer. They are designed for use in U.S. securities markets. 
•  European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs") - receipts typically issued by a 
  foreign financial institution to evidence an arrangement similar to that of ADRs. 
 
Depositary Receipts may be issued by sponsored or unsponsored programs. In sponsored programs, an issuer has 
made arrangements to have its securities traded in the form of Depositary Receipts. In unsponsored programs, the 
issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to 
sponsored and unsponsored programs are generally similar, in some cases it may be easier to obtain financial 
information from an issuer that has participated in the creation of a sponsored program. Accordingly, there may be 
less information available regarding issuers of securities of underlying unsponsored programs, and there may not be a 
correlation between the availability of such information and the market value of the Depositary Receipts. 
 
Securities of Smaller Companies 
The Funds may invest in securities of companies with small- or mid-sized market capitalizations. Market capitalization 
is defined as total current market value of a company's outstanding common stock. Investments in companies with 
smaller market capitalizations may involve greater risks and price volatility (wide, rapid fluctuations) than investments 
in larger, more mature companies. Smaller companies may be less mature than older companies. At this earlier stage 
of development, the companies may have limited product lines, reduced market liquidity for their shares, limited 
financial resources or less depth in management than larger or more established companies. Small companies also 
may be less significant within their industries and may be at a competitive disadvantage relative to their larger 
competitors. While smaller companies may be subject to these additional risks, they may also realize more substantial 
growth than larger or more established companies. Small company stocks may decline in price as large company 
stocks rise, or rise in price while larger company stocks decline. Investors should therefore expect the net asset value 
of the Fund that invests a substantial portion of its assets in small company stocks may be more volatile than the 
shares of a Fund that invests solely in larger company stocks. 

Unseasoned Issuers 
The Funds may invest in the securities of unseasoned issuers. Unseasoned issuers are companies with a record of 
less than three years continuous operation, including the operation of predecessors and parents. Unseasoned issuers 
by their nature have only a limited operating history that can be used for evaluating the companies' growth prospects. 
As a result, investment decisions for these securities may place a greater emphasis on current or planned product 
lines and the reputation and experience of the company's management and less emphasis on fundamental valuation 
factors than would be the case for more mature growth companies. In addition, many unseasoned issuers also may be 
small companies and involve the risks and price volatility associated with smaller companies. 
 
Spread Transactions, Options on Securities and Securities Indices, and Futures Contracts and Options on Futures 
Contracts 
The Funds may each engage in the practices described under this heading. 
 
•  Spread Transactions. Each Fund may purchase covered spread options. Such covered spread options are not 
  presently exchange listed or traded. The purchase of a spread option gives the Fund the right to put, or sell, a 
  security that it owns at a fixed dollar spread or fixed yield spread in relationship to another security that the Fund 
  does not own, but which is used as a benchmark. The risk to the Fund in purchasing covered spread options is the 
  cost of the premium paid for the spread option and any transaction costs. In addition, there is no assurance that 
  closing transactions will be available. The purchase of spread options can be used to protect each Fund against 
  adverse changes in prevailing credit quality spreads, i.e., the yield spread between high quality and lower quality 
  securities. The security covering the spread option is maintained in segregated accounts either with the Fund's 
  custodian or on the Fund's records. The Funds do not consider a security covered by a spread option to be 
  "pledged" as that term is used in the Fund's policy limiting the pledging or mortgaging of assets. 
 
•  Options on Securities and Securities Indices. Each Fund may write (sell) and purchase call and put options on 
  securities in which it invests and on securities indices based on securities in which the Fund invests. The Funds 
  may engage in these transactions to hedge against a decline in the value of securities owned or an increase in the 
  price of securities which the Fund plans to purchase, or to generate additional revenue. 
 
  • Writing Covered Call and Put Options. When a Fund writes a call option, it gives the purchaser of the option the 
     right to buy a specific security at a specified price at any time before the option expires. When a Fund writes a 
     put option, it gives the purchaser of the option the right to sell to the Fund a specific security at a specified price 
     at any time before the option expires. In both situations, the Fund receives a premium from the purchaser of the 
     option. 
 
     The premium received by a Fund reflects, among other factors, the current market price of the underlying 
     security, the relationship of the exercise price to the market price, the time period until the expiration of the 
     option and interest rates. The premium generates additional income for the Fund if the option expires 
     unexercised or is closed out at a profit. By writing a call, a Fund limits its opportunity to profit from any increase 
     in the market value of the underlying security above the exercise price of the option, but it retains the risk of loss 
     if the price of the security should decline. By writing a put, a Fund assumes the risk that it may have to purchase 
     the underlying security at a price that may be higher than its market value at time of exercise. 
 
     The Funds write only covered options and comply with applicable regulatory and exchange cover requirements. 
     The Funds usually own the underlying security covered by any outstanding call option. With respect to an 
     outstanding put option, each Fund deposits and maintains with its custodian or segregates on the Fund's 
     records, cash, or other liquid assets with a value at least equal to the exercise price of the option. 
 
     Once a Fund has written an option, it may terminate its obligation before the option is exercised. The Fund 
     executes a closing transaction by purchasing an option of the same series as the option previously written. The 
     Fund has a gain or loss depending on whether the premium received when the option was written exceeds the 
     closing purchase price plus related transaction costs. 

• Purchasing Call and Put Options. When a Fund purchases a call option, it receives, in return for the premium it 
   pays, the right to buy from the writer of the option the underlying security at a specified price at any time before the 
   option expires. A Fund purchases call options in anticipation of an increase in the market value of securities that it 
   intends ultimately to buy. During the life of the call option, the Fund is able to buy the underlying security at the 
   exercise price regardless of any increase in the market price of the underlying security. In order for a call option to 
   result in a gain, the market price of the underlying security must exceed the sum of the exercise price, the premium 
   paid, and transaction costs. 
 
   When a Fund purchases a put option, it receives, in return for the premium it pays, the right to sell to the writer of 
   the option the underlying security at a specified price at any time before the option expires. A Fund purchases put 
   options in anticipation of a decline in the market value of the underlying security. During the life of the put option, 
   the Fund is able to sell the underlying security at the exercise price regardless of any decline in the market price of 
   the underlying security. In order for a put option to result in a gain, the market price of the underlying security must 
   decline, during the option period, below the exercise price enough to cover the premium and transaction costs. 
 
   Once a Fund purchases an option, it may close out its position by selling an option of the same series as the option 
   previously purchased. The Fund has a gain or loss depending on whether the closing sale price exceeds the initial 
   purchase price plus related transaction costs. 
 
• Options on Securities Indices. Each Fund may purchase and sell put and call options on any securities index based 
   on securities in which the Fund may invest. Securities index options are designed to reflect price fluctuations in a 
   group of securities or segment of the securities market rather than price fluctuations in a single security. Options on 
   securities indices are similar to options on securities, except that the exercise of securities index options requires 
   cash payments and does not involve the actual purchase or sale of securities. The Funds engage in transactions in 
   put and call options on securities indices for the same purposes as they engage in transactions in options on 
   securities. When a Fund writes call options on securities indices, it holds in its portfolio underlying securities which, 
   in the judgment of the Sub-Advisor, correlate closely with the securities index and which have a value at least equal 
   to the aggregate amount of the securities index options. 
 
• Risks Associated with Option Transactions. An option position may be closed out only on an exchange that 
   provides a secondary market for an option of the same series. The Funds generally purchase or write only those 
   options for which there appears to be an active secondary market. However, there is no assurance that a liquid 
   secondary market on an exchange exists for any particular option, or at any particular time. If a Fund is unable to 
   effect closing sale transactions in options it has purchased, it has to exercise its options in order to realize any profit 
   and may incur transaction costs upon the purchase or sale of underlying securities. If a Fund is unable to effect a 
   closing purchase transaction for a covered option that it has written, it is not able to sell the underlying securities, or 
   dispose of the assets held in a segregated account, until the option expires or is exercised. A Fund's ability to 
   terminate option positions established in the over-the-counter market may be more limited than for exchange- 
   traded options and may also involve the risk that broker-dealers participating in such transactions might fail to meet 
   their obligations. 
 
• Futures Contracts and Options on Futures Contracts. Each Fund may purchase and sell financial futures contracts 
   and options on those contracts. Financial futures contracts are commodities contracts based on financial 
   instruments such as U.S. Treasury bonds or bills or on securities indices such as the S&P 500 Index. Futures 
   contracts, options on futures contracts, and the commodity exchanges on which they are traded are regulated by 
   the Commodity Futures Trading Commission. Through the purchase and sale of futures contracts and related 
   options, a Fund may seek to hedge against a decline in the value of securities owned by the Fund or an increase in 
   the price of securities that the Fund plans to purchase. Each Fund may enter into futures contracts and related 
   options transactions both for hedging and non-hedging purposes. 

• Futures Contracts. When a Fund sells a futures contract based on a financial instrument, the Fund is obligated to 
   deliver that kind of instrument at a specified future time for a specified price. When a Fund purchases that kind of 
   contract, it is obligated to take delivery of the instrument at a specified time and to pay the specified price. In most 
   instances, these contracts are closed out by entering into an offsetting transaction before the settlement date. The 
   Fund realizes a gain or loss depending on whether the price of an offsetting purchase plus transaction costs are 
   less or more than the price of the initial sale or on whether the price of an offsetting sale is more or less than the 
   price of the initial purchase plus transaction costs. Although the Funds usually liquidate futures contracts on 
   financial instruments, by entering into an offsetting transaction before the settlement date, they may make or take 
   delivery of the underlying securities when it appears economically advantageous to do so. 
 
   A futures contract based on a securities index provides for the purchase or sale of a group of securities at a 
   specified future time for a specified price. These contracts do not require actual delivery of securities but result in a 
   cash settlement. The amount of the settlement is based on the difference in value of the index between the time the 
   contract was entered into and the time it is liquidated (at its expiration or earlier if it is closed out by entering into an 
   offsetting transaction). 
 
   When a Fund purchases or sells a futures contract, it pays a commission to the futures commission merchant 
   through which the Fund executes the transaction. When entering into a futures transaction, the Fund does not pay 
   the execution price, as it does when it purchases a security, or a premium, as it does when it purchases an option. 
   Instead, the Fund deposits an amount of cash or other liquid assets (generally about 5% of the futures contract 
   amount) with its futures commission merchant. This amount is known as "initial margin." In contrast to the use of 
   margin account to purchase securities, the Fund's deposit of initial margin does not constitute the borrowing of 
   money to finance the transaction in the futures contract. The initial margin represents a good faith deposit that 
   helps assure the Fund's performance of the transaction. The futures commission merchant returns the initial 
   margin to the Fund upon termination of the futures contract if the Fund has satisfied all its contractual obligations. 
 
   Subsequent payments to and from the futures commission merchant, known as "variation margin," are required to 
   be made on a daily basis as the price of the futures contract fluctuates, a process known as "marking to market." 
   The fluctuations make the long or short positions in the futures contract more or less valuable. If the position is 
   closed out by taking an opposite position prior to the settlement date of the futures contract, a final determination of 
   variation margin is made. Any additional cash is required to be paid to or released by the broker and the Fund 
   realizes a loss or gain. 
 
   In using futures contracts, the Fund may seek to establish more certainly, than would otherwise be possible, the 
   effective price of or rate of return on portfolio securities or securities that the Fund proposes to acquire. A Fund, for 
   example, sells futures contracts in anticipation of a rise in interest rates that would cause a decline in the value of 
   its debt investments. When this kind of hedging is successful, the futures contract increases in value when the 
   Fund's debt securities decline in value and thereby keeps the Fund's net asset value from declining as much as it 
   otherwise would. A Fund may also sell futures contracts on securities indices in anticipation of or during a stock 
   market decline in an endeavor to offset a decrease in the market value of its equity investments. When a Fund is 
   not fully invested and anticipates an increase in the cost of securities it intends to purchase, it may purchase 
   financial futures contracts. When increases in the prices of equities are expected, a Fund may purchase futures 
   contracts on securities indices in order to gain rapid market exposure that may partially or entirely offset increases 
   in the cost of the equity securities it intends to purchase. 
 
• Options on Futures Contracts. The Funds may also purchase and write call and put options on futures contracts. A 
   call option on a futures contract gives the purchaser the right, in return for the premium paid, to purchase a futures 
   contract (assume a long position) at a specified exercise price at any time before the option expires. A put option 
   gives the purchaser the right, in return for the premium paid, to sell a futures contract (assume a short position), for 
   a specified exercise price, at any time before the option expires. 

       Upon the exercise of a call, the writer of the option is obligated to sell the futures contract (to deliver a long position 
       to the option holder) at the option exercise price, which will presumably be lower than the current market price of 
       the contract in the futures market. Upon exercise of a put, the writer of the option is obligated to purchase the 
       futures contract (deliver a short position to the option holder) at the option exercise price, which will presumably be 
       higher than the current market price of the contract in the futures market. However, as with the trading of futures, 
       most options are closed out prior to their expiration by the purchase or sale of an offsetting option at a market price 
       that reflects an increase or a decrease from the premium originally paid. Options on futures can be used to hedge 
       substantially the same risks addressed by the direct purchase or sale of the underlying futures contracts. For 
       example, if a Fund anticipates a rise in interest rates and a decline in the market value of the debt securities in its 
       portfolio, it might purchase put options or write call options on futures contracts instead of selling futures contracts. 
 
       If a Fund purchases an option on a futures contract, it may obtain benefits similar to those that would result if it held 
       the futures position itself. But in contrast to a futures transaction, the purchase of an option involves the payment of 
       a premium in addition to transaction costs. In the event of an adverse market movement, however, the Fund is not 
       subject to a risk of loss on the option transaction beyond the price of the premium it paid plus its transaction costs. 
 
       When a Fund writes an option on a futures contract, the premium paid by the purchaser is deposited with the 
       Fund's custodian. The Fund must maintain with its futures commission merchant all or a portion of the initial margin 
       requirement on the underlying futures contract. It assumes a risk of adverse movement in the price of the 
       underlying futures contract comparable to that involved in holding a futures position. Subsequent payments to and 
       from the futures commission merchant, similar to variation margin payments, are made as the premium and the 
       initial margin requirements are marked to market daily. The premium may partially offset an unfavorable change in 
       the value of portfolio securities, if the option is not exercised, or it may reduce the amount of any loss incurred by 
       the Fund if the option is exercised. 
 
• Risks Associated with Futures Transactions. There are a number of risks associated with transactions in futures 
       contracts and related options. A Fund's successful use of futures contracts is subject to the ability of the Sub- 
       Advisor to predict correctly the factors affecting the market values of the Fund's portfolio securities. For example, if 
       a Fund is hedged against the possibility of an increase in interest rates which would adversely affect debt securities 
       held by the Fund and the prices of those debt securities instead increases, the Fund loses part or all of the benefit 
       of the increased value of its securities it hedged because it has offsetting losses in its futures positions. Other risks 
       include imperfect correlation between price movements in the financial instrument or securities index underlying 
       the futures contract, on the one hand, and the price movements of either the futures contract itself or the securities 
       held by the Fund, on the other hand. If the prices do not move in the same direction or to the same extent, the 
       transaction may result in trading losses. 
 
       Prior to exercise or expiration, a position in futures may be terminated only by entering into a closing purchase or 
       sale transaction. This requires a secondary market on the relevant contract market. The Fund enters into a futures 
       contract or related option only if there appears to be a liquid secondary market. There can be no assurance, 
       however, that such a liquid secondary market exists for any particular futures contract or related option at any 
       specific time. Thus, it may not be possible to close out a futures position once it has been established. Under such 
       circumstances, the Fund continues to be required to make daily cash payments of variation margin in the event of 
       adverse price movements. In such situations, if the Fund has insufficient cash, it may be required to sell portfolio 
       securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. In 
       addition, the Fund may be required to perform under the terms of the futures contracts it holds. The inability to 
       close out futures positions also could have an adverse impact on the Fund's ability effectively to hedge its portfolio. 
 
       Most United States futures exchanges limit the amount of fluctuation permitted in futures contract prices during a 
       single trading day. This daily limit establishes the maximum amount that the price of a futures contract may vary 
       either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has 
       been reached in a particular type of contract, no more trades may be made on that day at a price beyond that limit. 
       The daily limit governs only price movements during a particular trading day and therefore does not limit potential 
       losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have 
       occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby 
       preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. 

• Limitations on the Use of Futures and Options on Futures Contracts. Each Fund intends to come within an 
       exclusion from the definition of "commodity pool operator" provided by Commodity Futures Trading Commission 
       regulations. 
 
       Each Fund may enter into futures contracts and related options transactions, for hedging purposes and for other 
       appropriate risk management purposes, and to modify the Fund's exposure to various currency, equity, or fixed- 
       income markets. Each Fund may engage in speculative futures trading. When using futures contracts and options 
       on futures contracts for hedging or risk management purposes, each Fund determines that the price fluctuations in 
       the contracts and options are substantially related to price fluctuations in securities held by the Fund or which it 
       expects to purchase. In pursuing traditional hedging activities, each Fund may sell futures contracts or acquire puts 
       to protect against a decline in the price of securities that the Fund owns. Each Fund may purchase futures 
       contracts or calls on futures contracts to protect the Fund against an increase in the price of securities the Fund 
       intends to purchase before it is in a position to do so. 
 
       When a Fund purchases a futures contract, or purchases a call option on a futures contract, it segregates portfolio 
       assets, which must be liquid and marked to the market daily, in a segregated account. The amount so segregated 
       plus the amount of initial margin held for the account of its futures commission merchant equals the market value of 
       the futures contract. 
 
       With respect to futures contracts that are not legally required to “cash settle,” a Fund may cover the open position 
       by setting aside or “earmarking” liquid assets in an amount equal to the market value of the futures contract. With 
       respect to futures that are required to “cash settle,” however, a Fund is permitted to set aside or “earmark” liquid 
       assets in an amount equal to the Fund’s daily marked to market (net) obligation, if any (in other words, the Fund’s 
       daily net liability, if any) rather than the market value of the futures contract. By setting aside or “earmarking” assets 
       equal to only its net obligation under cash-settled futures, a Fund will have the ability to utilize these contracts to a 
       greater extent than if the Fund were required to segregate or “earmark” assets equal to the full market value of the 
       futures contract. 
 
Mortgage- and Asset-Backed Securities 
The yield characteristics of the mortgage- and asset-backed securities in which the Funds may invest differ from those 
of traditional debt securities. Among the major differences are that the interest and principal payments are made more 
frequently on mortgage- and asset-backed securities (usually monthly) and that principal may be prepaid at any time 
because the underlying mortgage loans or other assets generally may be prepaid at any time. As a result, if the Fund 
purchases those securities at a premium, a prepayment rate that is faster than expected will reduce their yield, while a 
prepayment rate that is slower than expected will have the opposite effect of increasing yield. If the Fund purchases 
these securities at a discount, faster than expected prepayments will increase their yield, while slower than expected 
prepayments will reduce their yield. Amounts available for reinvestment by the Fund are likely to be greater during a 
period of declining interest rates and, as a result, are likely to be reinvested at lower interest rates than during a period 
of rising interest rates. 
 
In general, the prepayment rate for mortgage-backed securities decreases as interest rates rise and increases as 
interest rates fall. However, rising interest rates will tend to decrease the value of these securities. In addition, an 
increase in interest rates may affect the volatility of these securities by effectively changing a security that was 
considered a short-term security at the time of purchase into a long-term security. Long-term securities generally 
fluctuate more widely in response to changes in interest rates than short- or medium-term securities. 
 
The market for privately issued mortgage- and asset-backed securities is smaller and less liquid than the market for 
U.S. government mortgage-backed securities. A collateralized mortgage obligation may be structured in a manner that 
provides a wide variety of investment characteristics (yield, effective maturity, and interest rate sensitivity). As market 
conditions change, and especially during periods of rapid market interest rate changes, the ability of a collateralized 
mortgage obligation to provide the anticipated investment characteristics may be greatly diminished. Increased market 
volatility and/or reduced liquidity may result. 

Real Estate Investment Trusts (“REITs”) 
REITs are pooled investment vehicles that invest in income producing real estate, real estate related loans, or other 
types of real estate interests. U.S. REITs are allowed to eliminate corporate level federal tax so long as they meet 
certain requirements of the Internal Revenue Code. Foreign REITs ("REIT-like") entities may have similar tax 
treatment in their respective countries. Equity real estate investment trusts own real estate properties, while mortgage 
real estate investment trusts make construction, development, and long-term mortgage loans. Their value may be 
affected by changes in the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest 
rates, and tax and regulatory requirements, such as those relating to the environment. Both types of trusts are not 
diversified, are dependent upon management skill, are subject to heavy cash flow dependency, defaults by borrowers, 
self-liquidation, and the possibility of failing to qualify for tax-free status of income under the Internal Revenue Code 
and failing to maintain exemption from the 1940 Act. In addition, foreign REIT-like entities will be subject to foreign 
securities risks. (See "Foreign Securities") 
 
Zero-Coupon Securities 
The Funds may invest in zero-coupon securities. Zero-coupon securities have no stated interest rate and pay only the 
principal portion at a stated date in the future. They usually trade at a substantial discount from their face (par) value. 
Zero-coupon securities are subject to greater market value fluctuations in response to changing interest rates than 
debt obligations of comparable maturities that make distributions of interest in cash. 
 
Securities Lending 
All Funds may lend their portfolio securities. None of the Funds will lend its portfolio securities if as a result the 
aggregate of such loans made by the Fund would exceed the limits established by the 1940 Act. Portfolio securities 
may be lent to unaffiliated broker-dealers and other unaffiliated qualified financial institutions provided that such loans 
are callable at any time on not more than five business days' notice and that cash or other liquid assets equal to at 
least 100% of the market value of the securities loaned, determined daily, is deposited by the borrower with the Fund 
and is maintained each business day. While such securities are on loan, the borrower pays the Fund any income 
accruing thereon. The Fund may invest any cash collateral, thereby earning additional income, and may receive an 
agreed-upon fee from the borrower. Borrowed securities must be returned when the loan terminates. Any gain or loss 
in the market value of the borrowed securities that occurs during the term of the loan belongs to the Fund and its 
shareholders. A Fund pays reasonable administrative, custodial, and other fees in connection with such loans and 
may pay a negotiated portion of the interest earned on the cash or government securities pledged as collateral to the 
borrower or placing broker. A Fund does not normally retain voting rights attendant to securities it has lent, but it may 
call a loan of securities in anticipation of an important vote. 
 
Short Sales 
Each Fund may engage in “short sales against the box.” This technique involves selling either a security owned by the 
Fund, or a security equivalent in kind and amount to the security sold short that the Fund has the right to obtain, for 
delivery at a specified date in the future. A Fund may enter into a short sale against the box to hedge against 
anticipated declines in the market price of portfolio securities. If the value of the securities sold short increases prior to 
the scheduled delivery date, a Fund loses the opportunity to participate in the gain. 
 
Forward Foreign Currency Exchange Contracts 
The Funds may, but are not obligated to, enter into forward foreign currency exchange contracts. Currency 
transactions include forward currency contracts and exchange listed or over-the-counter options on currencies. A 
forward currency contract involves a privately negotiated obligation to purchase or sell a specific currency at a 
specified future date at a price set at the time of the contract. 
 
The typical use of a forward contract is to "lock in" the price of a security in U.S. dollars or some other foreign currency 
which a Fund is holding in its portfolio. By entering into a forward contract for the purchase or sale, for a fixed amount 
of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, a Fund 
may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the 
U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the 
security is denominated in or exposed to during the period between the date on which the security is purchased or sold 
and the date on which payment is made or received. 

The Sub-Advisor also may from time to time utilize forward contracts for other purposes. For example, they may be 
used to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate 
between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency. They also 
may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased 
are denominated in or exposed to. At times, a Fund may enter into "cross-currency" hedging transactions involving 
currencies other than those in which securities are held or proposed to be purchased are denominated. 
 
A Fund segregates liquid assets in an amount equal to its daily marked-to-market (net) obligation (i.e., its daily net 
liability, if any) with respect to forward currency contracts. It should be noted that the use of forward foreign currency 
exchange contracts does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a 
rate of exchange between the currencies that can be achieved at some future point in time. Additionally, although such 
contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit 
any potential gain that might result if the value of the currency increases. 
 
Currency hedging involves some of the same risks and considerations as other transactions with similar instruments. 
Currency transactions can result in losses to a Fund if the currency being hedged fluctuates in value to a degree or in 
a direction that is not anticipated. Further, the risk exists that the perceived linkage between various currencies may 
not be present or may not be present during the particular time that a Fund is engaging in proxy hedging. Currency 
transactions are also subject to risks different from those of other portfolio transactions. Because currency control is of 
great importance to the issuing governments and influences economic planning and policy, purchases and sales of 
currency and related instruments can be adversely affected by government exchange controls, limitations or 
restrictions on repatriation of currency, and manipulations or exchange restrictions imposed by governments. These 
forms of governmental actions can result in losses to a Fund if it is unable to deliver or receive currency or monies in 
settlement of obligations. They could also cause hedges the Fund has entered into to be rendered useless, resulting in 
full currency exposure as well as incurring transaction costs. Currency exchange rates may also fluctuate based on 
factors extrinsic to a country's economy. Buyers and sellers of currency forward contracts are subject to the same 
risks that apply to the use of forward contracts generally. Further, settlement of a currency forward contract for the 
purchase of most currencies must occur at a bank based in the issuing nation. The ability to establish and close out 
positions on trading options on currency futures contracts is subject to the maintenance of a liquid market that may not 
always be available. 
 
Moreover, a Fund bears the risk of loss of the amount expected to be received under a forward contract in the event of 
the default as bankruptcy of a forward counterparty. 
 
Repurchase and Reverse Repurchase Agreements, Mortgage Dollar Rolls and Sale-Buybacks 
The Funds may invest in repurchase and reverse repurchase agreements. In a repurchase agreement, a Fund 
purchases a security and simultaneously commits to resell that security to the seller at an agreed upon price on an 
agreed upon date within a number of days (usually not more than seven) from the date of purchase. The resale price 
consists of the purchase price plus an amount that is unrelated to the coupon rate or maturity of the purchased 
security. A repurchase agreement involves the obligation of the seller to pay the agreed upon price, which obligation is 
in effect secured by the value (at least equal to the amount of the agreed upon resale price and marked-to-market 
daily) of the underlying security or "collateral." A risk associated with repurchase agreements is the failure of the seller 
to repurchase the securities as agreed, which may cause a Fund to suffer a loss if the market value of such securities 
declines before they can be liquidated on the open market. In the event of bankruptcy or insolvency of the seller, a 
Fund may encounter delays and incur costs in liquidating the underlying security. Repurchase agreements that mature 
in more than seven days are subject to each Fund's limit on illiquid investments. While it is not possible to eliminate all 
risks from these transactions, it is the policy of the Fund to limit repurchase agreements to those parties whose 
creditworthiness has been reviewed and found satisfactory by the Sub-Advisor. 

A Fund may use reverse repurchase agreements, mortgage dollar rolls, and economically similar transactions to 
obtain cash to satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the 
necessity of selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or 
notes. In a reverse repurchase agreement, a Fund sells a portfolio security to another party, such as a bank or broker- 
dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. While a reverse 
repurchase agreement is outstanding, a Fund will maintain cash or appropriate liquid assets to cover its obligation 
under the agreement. The Fund will enter into reverse repurchase agreements only with parties that the Sub-Advisor 
deems creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest 
earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This 
technique may also have a leveraging effect on the Fund, although the Fund's intent to segregate assets in the 
amount of the reverse repurchase obligation minimizes this effect. 
 
A "mortgage dollar roll" is similar to a reverse repurchase agreement in certain respects. In a "dollar roll" transaction a 
Fund sells a mortgage-related security, such as a security issued by the Government National Mortgage Association, 
to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a 
pre-determined price. A dollar roll can be viewed, like a reverse repurchase agreement, as a collateralized borrowing 
in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse 
repurchase agreements, the dealer with which a Fund enters into a dollar roll transaction is not obligated to return the 
same securities as those originally sold by the Fund, but only securities which are "substantially identical." To be 
considered "substantially identical," the securities returned to a Fund generally must: 1) be collateralized by the same 
types of underlying mortgages; 2) be issued by the same agency and be part of the same program; 3) have a similar 
original stated maturity; 4) have identical net coupon rates; 5) have similar market yields (and therefore price); and 6) 
satisfy "good delivery" requirements, meaning that the aggregate principal amounts of the securities delivered and 
received back must be within 0.01% of the initial amount delivered. 
 
A Fund's obligations under a dollar roll agreement must be covered by segregated liquid assets equal in value to the 
securities subject to repurchase by the Fund. 
A Fund also may effect simultaneous purchase and sale transactions that are known as "sale-buybacks." A sale- 
buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty who purchases 
the security is entitled to receive any principal or interest payments made on the underlying security pending 
settlement of the Fund's repurchase of the underlying security. A Fund's obligations under a sale-buyback typically 
would be offset by liquid assets equal in value to the amount of the Fund's forward commitment to repurchase the 
subject security. 
 
Swap Agreements and Options on Swap Agreements 
Each Fund may engage in swap transactions, including, but not limited to, swap agreements on interest rates, security 
or commodity indexes, specific securities and commodities, and credit and event-linked swaps, to the extent permitted 
by its investment restrictions. To the extent a Fund may invest in foreign currency-denominated securities, it may also 
invest in currency exchange rate swap agreements. A Fund may also enter into options on swap agreements ("swap 
options"). 
 
A Fund may enter into swap transactions for any legal purpose consistent with its investment objectives and policies, 
such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining 
a return or spread through purchases and/or sales of instruments in other markets, to protect against currency 
fluctuations, as a duration management technique, to protect against any increase in the price of securities a Fund 
anticipates purchasing at a later date, or to gain exposure to certain markets in the most economical way possible. 

Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a 
few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or 
differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may 
be adjusted for an interest factor. The gross returns to be exchanged or "swapped" between the parties are generally 
calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount 
invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities or commodities 
representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a 
premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or 
"cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the 
extent that interest rates fall below a specified rate, or "floor"; and interest rate collars, under which a party sells a cap 
and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given 
minimum or maximum levels. Consistent with a Fund's investment objectives and general investment policies, certain 
of the Funds may invest in commodity swap agreements. For example, an investment in a commodity swap 
agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a 
total return commodity swap, a Fund will receive the price appreciation of a commodity index, a portion of the index, or 
a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, a Fund may 
pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is for more than one 
period, with interim swap payments, a Fund may pay an adjustable or floating fee. With a "floating" rate, the fee may 
be pegged to a base rate, such as the London Interbank Offered Rate, and is adjusted each period. Therefore, if 
interest rates increase over the term of the swap contract, a Fund may be required to pay a higher fee at each swap 
reset date. 
 
A Fund may enter into credit default swap agreements. The "buyer" in a credit default contract is obligated to pay the 
"seller" a periodic stream of payments over the term of the contract provided that no event of default on an underlying 
reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or 
"par value," of the reference obligation in exchange for the reference obligation. A Fund may be either the buyer or 
seller in a credit default swap transaction. If a Fund is a buyer and no event of default occurs, the Fund will lose its 
investment and recover nothing. However, if an event of default occurs, the Fund (if the buyer) will receive the full 
notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of 
income throughout the term of the contract, which typically is between six months and three years, provided that there 
is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference 
obligation. 
 
A swap option is a contract that gives a counterparty the right (but not the obligation) in return for payment of a 
premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap 
agreement, at some designated future time on specified terms. Each Fund may write (sell) and purchase put and call 
swap options. Most swap agreements entered into by the Funds would calculate the obligations of the parties to the 
agreement on a "net basis." Consequently, a Fund's current obligations (or rights) under a swap agreement will 
generally be equal only to the net amount to be paid or received under the agreement based on the relative values of 
the positions held by each party to the agreement (the "net amount"). A Fund's current obligations under a swap 
agreement will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net 
amounts owed to a swap counterparty will be covered by the segregation of assets determined to be liquid by the 
Manager or Sub-Advisor in accordance with procedures established by the Board of Directors, to avoid any potential 
leveraging of the Fund's portfolio. Obligations under swap agreements so covered will not be construed to be "senior 
securities" for purposes of the Fund's investment restriction concerning senior securities. Each Fund will not enter into 
a swap agreement with any single party if the net amount owed or to be received under existing contracts with that 
party would exceed 5% of the Fund's total assets. 

Whether a Fund's use of swap agreements or swap options will be successful in furthering its investment objective of 
total return will depend on the ability of the Fund's Manager or Sub-Advisor to predict correctly whether certain types of 
investments are likely to produce greater returns than other investments. Because they are two party contracts and 
because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. 
Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event 
of the default or bankruptcy of a swap agreement counterparty. The Funds will enter into swap agreements only with 
counterparties that present minimal credit risks, as determined by the Fund's Manager or Sub-Advisor. Certain 
restrictions imposed on the Funds by the Internal Revenue Code may limit the Funds' ability to use swap agreements. 
The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps 
market, including potential government regulation, could adversely affect a Fund's ability to terminate existing swap 
agreements or to realize amounts to be received under such agreements. 
 
Depending on the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it 
writes a swap option than it will incur when it purchases a swap option. When a Fund purchases a swap option, it risks 
losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when 
a Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the 
underlying agreement. 
 
Liquidity. Some swap markets have grown substantially in recent years with a large number of banks and investment 
banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, these 
swap markets have become relatively liquid. 
 
The liquidity of swap agreements will be determined by the Manager or Sub-Advisor based on various factors, 
including: 
•  the frequency of trades and quotations, 
•  the number of dealers and prospective purchasers in the marketplace, 
•  dealer undertakings to make a market, 
•  the nature of the security (including any demand or tender features), and 
•  the nature of the marketplace for trades (including the ability to assign or offset a portfolio's rights and obligations 
  relating to the investment). 
 
Such determination will govern whether a swap will be deemed to be within each Fund's restriction on investments in 
illiquid securities. 
 
For purposes of applying the Funds' investment policies and restrictions (as stated in the Prospectuses and this 
Statement of Additional Information) swap agreements are generally valued by the Funds at market value. In the case 
of a credit default swap sold by a Fund (i.e., where the Fund is selling credit default protection), however, the Fund will 
value the swap at its notional amount. The manner in which the Funds value certain securities or other instruments for 
purposes of applying investment policies and restrictions may differ from the manner in which those investments are 
valued by other types of investors. 
 
When-Issued, Delayed Delivery, and Forward Commitment Transactions 
Each of the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. 
When such purchases are outstanding, the Fund will segregate until the settlement date assets determined to be 
liquid by the Sub-Advisor in accordance with procedures established by the Board of Directors, in an amount sufficient 
to meet the purchase price. Typically, no income accrues on securities a Fund has committed to purchase prior to the 
time delivery of the securities is made, although a Fund may earn income on securities it has segregated. 
 
When purchasing a security on a when-issued, delayed delivery, or forward commitment basis, the Fund assumes the 
rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such 
fluctuations into account when determining its net asset value. Because the Fund is not required to pay for the security 
until the delivery date, these risks are in addition to the risks associated with the Fund's other investments. If the Fund 
remains substantially fully invested at a time when when-issued, delayed delivery, or forward commitment purchases 
are outstanding, the purchases may result in a form of leverage. 

When the Fund has sold a security on a when-issued, delayed delivery, or forward commitment basis, the Fund does 
not participate in future gains or losses with respect to the security. If the other party to a transaction fails to deliver or 
pay for the securities, the Fund could miss a favorable price or yield opportunity or could suffer a loss. A Fund may 
dispose of or renegotiate a transaction after it is entered into, and may sell when-issued, delayed delivery, or forward 
commitment securities before they are delivered, which may result in a capital gain or loss. There is no percentage 
limitation on the extent to which the Funds may purchase or sell securities on a when-issued, delayed delivery, or 
forward commitment basis. 
 
Money Market Instruments/Temporary Defensive Position 
All of the Funds may make money market investments (cash equivalents), without limit, pending other investment or 
settlement, for liquidity, or in adverse market conditions. Following are descriptions of the types of money market 
instruments that the Funds may purchase: 
 
•  U.S. Government Securities - Securities issued or guaranteed by the U.S. government, including treasury bills, 
  notes, and bonds. 
 
•  U.S. Government Agency Securities - Obligations issued or guaranteed by agencies or instrumentalities of the U.S. 
  government. 
  •  U.S. agency obligations include, but are not limited to, the Bank for Cooperatives, Federal Home Loan Banks, 
    and Federal Intermediate Credit Banks. 
  •  U.S. instrumentality obligations include, but are not limited to, the Export-Import Bank, Federal Home Loan 
    Mortgage Corporation, and Federal National Mortgage Association. 
 
  Some obligations issued or guaranteed by U.S. government agencies and instrumentalities are supported by the 
  full faith and credit of the U.S. Treasury. Others, such as those issued by the Federal National Mortgage 
  Association, are supported by discretionary authority of the U.S. government to purchase certain obligations of the 
  agency or instrumentality. Still others, such as those issued by the Student Loan Marketing Association, are 
  supported only by the credit of the agency or instrumentality. 
 
•  Bank Obligations - Certificates of deposit, time deposits and bankers' acceptances of U.S. commercial banks 
  having total assets of at least one billion dollars and overseas branches of U.S. commercial banks and foreign 
  banks, which in the opinion of the Sub-Advisor, are of comparable quality. However, each such bank with its 
  branches has total assets of at least five billion dollars, and certificates, including time deposits of domestic savings 
  and loan associations having at least one billion dollars in assets that are insured by the Federal Savings and Loan 
  Insurance Corporation. The Fund may acquire obligations of U.S. banks that are not members of the Federal 
  Reserve System or of the Federal Deposit Insurance Corporation. 
 
  Obligations of foreign banks and obligations of overseas branches of U.S. banks are subject to somewhat different 
  regulations and risks than those of U.S. domestic banks. For example, an issuing bank may be able to maintain 
  that the liability for an investment is solely that of the overseas branch which could expose a Fund to a greater risk 
  of loss. In addition, obligations of foreign banks or of overseas branches of U.S. banks may be affected by 
  governmental action in the country of domicile of the branch or parent bank. Examples of adverse foreign 
  governmental actions include the imposition of currency controls, the imposition of withholding taxes on interest 
  income payable on such obligations, interest limitations, seizure or nationalization of assets, or the declaration of a 
  moratorium. Deposits in foreign banks or foreign branches of U.S. banks are not covered by the Federal Deposit 
  Insurance Corporation. A Fund only buys short-term instruments where the risks of adverse governmental action 
  are believed by the Sub-Advisor to be minimal. A Fund considers these factors, along with other appropriate 
  factors, in making an investment decision to acquire such obligations. It only acquires those which, in the opinion of 
  management, are of an investment quality comparable to other debt securities bought by the Fund. A Fund may 
  invest in certificates of deposit of selected banks having less than one billion dollars of assets providing the 
  certificates do not exceed the level of insurance (currently $100,000) provided by the applicable government 
  agency. 

  A certificate of deposit is issued against funds deposited in a bank or savings and loan association for a definite 
  period of time, at a specified rate of return. Normally they are negotiable. However, a Fund occasionally may invest 
  in certificates of deposit which are not negotiable. Such certificates may provide for interest penalties in the event 
  of withdrawal prior to their maturity. A bankers' acceptance is a short-term credit instrument issued by corporations 
  to finance the import, export, transfer, or storage of goods. They are termed "accepted" when a bank guarantees 
  their payment at maturity and reflect the obligation of both the bank and drawer to pay the face amount of the 
  instrument at maturity. 
 
•  Commercial Paper - Short-term promissory notes issued by U.S. or foreign corporations. 
•  Short-term Corporate Debt - Corporate notes, bonds, and debentures that at the time of purchase have 397 days 
  or less remaining to maturity. 
•  Repurchase Agreements - Instruments under which securities are purchased from a bank or securities dealer with 
  an agreement by the seller to repurchase the securities at the same price plus interest at a specified rate. 
•  Taxable Municipal Obligations - Short-term obligations issued or guaranteed by state and municipal issuers which 
  generate taxable income. 
 
The ratings of nationally recognized statistical rating organization ("NRSRO"), such as Moody's Investor Services, Inc. 
("Moody's") and Standard & Poor's ("S&P"), which are described in Appendix A, represent their opinions as to the 
quality of the money market instruments which they undertake to rate. It should be emphasized, however, that ratings 
are general and are not absolute standards of quality. These ratings, including ratings of NRSROs other than Moody's 
and S&P, are the initial criteria for selection of portfolio investments, but the Sub-Advisor further evaluates these 
securities. 
 
Other Investment Companies 
Each Fund reserves the right to invest up to 10% of its total assets in the securities of all investment companies, but 
may not acquire more than 3% of the voting securities of, nor invest more than 5% of its total assets in securities of, 
any other investment company. Securities of other investment companies, including shares of closed-end investment 
companies, unit investment trusts, various exchange-traded funds ("ETFs"), and other open-end investment 
companies, represent interests in professionally managed portfolios that may invest in any type of instrument. Certain 
types of investment companies, such as closed-end investment companies, issue a fixed number of shares that trade 
on a stock exchange or over-the-counter at a premium or a discount to their net asset value. Others are continuously 
offered at net asset value, but may also be traded in the secondary market. ETFs are often structured to perform in a 
similar fashion to a broad-based securities index. Investing in ETFs involves substantially the same risks as investing 
directly in the underlying instruments. In addition, ETFs involve the risk that they will not perform in exactly the same 
fashion, or in response to the same factors, as the index or underlying instruments. 
 
As a shareholder in an investment company, a Fund would bear its ratable share of that entity's expenses, including its 
advisory and administrative fees. The Fund would also continue to pay its own advisory fees and other expenses. 
Consequently, the Fund and its shareholders, in effect, will be absorbing two levels of fees with respect to investments 
in other investment companies. 
 
Industry Concentrations 
Each of the Funds may not concentrate (invest more than 25% of its assets) its investments in any particular industry. 
The Bond Market Index and International Equity Index Funds may concentrate their investments in a particular 
industry only to the extent that the relevant indices are so concentrated. The Funds use industry classifications based 
on the "Directory of Companies Filing Annual Reports with the Securities and Exchange Commission ("SEC")." The 
Funds interpret their policy with respect to concentration in a particular industry to apply to direct investments in the 
securities of issuers in a particular industry. For purposes of this restriction, mortgage-backed securities that are 
issued or guaranteed by the U.S. government, its agencies or instrumentalities are not subject to the Funds' industry 
concentration restrictions, by virtue of the exclusion from that test available to all U.S. government securities. In the 
case of privately issued mortgage-related securities, or any asset-backed securities, and municipal obligations issued 
by government or political subdivisions of governments, the Funds take the position that such securities do not 
represent interests in any particular "industry" or group of industries. 

Portfolio Turnover 
Portfolio turnover is a measure of how frequently a portfolio's securities are bought and sold. The portfolio turnover 
rate is generally calculated as the dollar value of the lesser of a portfolio's purchases or sales of shares of securities 
during a given year, divided by the monthly average value of the portfolio securities during that year (excluding 
securities whose maturity or expiration at the time of acquisition were less than one year). For example, a portfolio 
reporting a 100% portfolio turnover rate would have purchased and sold securities worth as much as the monthly 
average value of its portfolio securities during the year. 
 
It is not possible to predict future turnover rates with accuracy. Many variable factors are outside the control of a 
portfolio manager. The investment outlook for the securities in which a portfolio may invest may change as a result of 
unexpected developments in securities markets, economic or monetary policies, or political relationships. High market 
volatility may result in a portfolio manager using a more active trading strategy than might otherwise be employed. 
Each portfolio manager considers the economic effects of portfolio turnover but generally does not treat the portfolio 
turnover rate as a limiting factor in making investment decisions. 
 
Sale of shares by investors may require the liquidation of portfolio securities to meet cash flow needs. In addition, 
changes in a particular portfolio's holdings may be made whenever the portfolio manager considers that a security is 
no longer appropriate for the portfolio or that another security represents a relatively greater opportunity. Such 
changes may be made without regard to the length of time that a security has been held. 
 
Higher portfolio turnover rates generally increase transaction costs that are expenses of the Account. Active trading 
may generate short-term gains (losses) for taxable shareholders. 
 
MANAGEMENT 
 
Board of Directors 
Under Maryland law, the Board of Directors of the Fund is responsible for overseeing the management of the Fund's 
business and affairs. The Board meets several times during the year to fulfill this responsibility. Other than serving as 
Directors, most of the Board members have no affiliation with the Fund or its service providers. Each Director serves 
until a successor is duly qualified and elected. 
 
Management Information 
The following table presents certain information regarding the Directors of the Fund, including their principal 
occupations which, unless specific dates are shown, are of more than five years duration. In addition, the table 
includes information concerning other directorships held by each Director in reporting companies under the Securities 
Exchange Act of 1934 or registered investment companies under the 1940 Act. Information is listed separately for 
those Directors who are "interested persons" (as defined in the 1940 Act) of the Fund (the "Interested Directors") and 
those Directors who are not interested persons of the Fund (the "Independent Directors"). All Directors serve as 
directors for each of the two investment companies (with a total of 107 portfolios) sponsored by Principal Life 
Insurance Company (“Principal Life”): the Fund and Principal Variable Contracts Funds, Inc. As used in this SAI, the 
“Fund Complex” refers to all series of Principal Funds, Inc. (including those not contained in this SAI) and Principal 
Variable Contracts Funds, Inc. 
 
Each officer of the Fund has the same position with Principal Variable Contracts Funds, Inc. 

The following directors are considered to be Independent Directors.       
 
 
 
        Number   
        of Portfolios   
        in Fund  Other 
    Length of    Complex  Directorships 
Name, Address, and    Time Served  Principal Occupation(s)  Overseen  Held by 
Year of Birth       Position(s) Held with Fund   as Director  During Past 5 Years  by Director  Director 
   Elizabeth Ballantine  Director  Since 2004  Principal, EBA Associates  107  The McClatchy Company 
   711 High Street  Member Nominating and    (consulting and investments)     
   Des Moines, Iowa 50392  Governance Committee         
   1948           
 
   Kristianne Blake  Director  Since 2007  President, Kristianne Gates  107  Avista Corporation; Russell 
   711 High Street  Member Operations Committee    Blake, P.S. (CPA specializing in    Investment Company* 
   Des Moines, Iowa 50392      personal financial and tax    Russell Investment Funds* 
   1954      planning)    (48 portfolios overseen) 
 
   Craig Damos  Director  Since 2008  CEO/President, Vertical Growth  107  None 
   711 High Street  Member Operations Committee    Officer, and CFO, The Weitz     
   Des Moines, Iowa 50392      Company (general construction)     
   1954           
 
     Richard W. Gilbert  Director  Since 2000  President, Gilbert  107  Calamos Asset 
     711 High Street  Member Executive Committee    Communications, Inc.    Management, Inc. 
     Des Moines,  Member Nominating and    (management advisory services)    (2005) 
     Iowa 50392  Governance Committee         
     1940           
 
   Mark A. Grimmett  Director     Since 2004  Executive Vice President and  107  None 
   711 High Street  Member Audit Committee    CFO, Merle Norman Cosmetics,     
   Des Moines,      Inc. (manufacturer and distributor     
   Iowa 50392      of skin care products)     
   1960           
 
   Fritz S. Hirsch  Director  Since 2005  President and CEO, Sassy, Inc.  107  None 
   711 High Street  Member Audit Committee    (manufacturer of infant and     
   Des Moines,      juvenile products)     
   Iowa 50392           
   1951           
 
   William C. Kimball  Director  Since 2000  Retired. Formerly, Chairman and  107  Casey’s General Store 
   711 High Street  Member Nominating and    CEO, Medicap Pharmacies, Inc.    Inc. 
   Des Moines,  Governance Committee    (chain of retail pharmacies)     
   Iowa 50392           
   1947           
 
   Barbara A. Lukavsky  Director  Since 1993  President and CEO, Barbican  107  None 
   711 High Street  Member Nominating and    Enterprises, Inc.     
   Des Moines,  Governance Committee    (holding company for franchises     
   Iowa 50392      in the cosmetics industry)     
   1940 

        Number     
        of Portfolios      
        in Fund  Other 
    Length of    Complex  Directorships 
Name, Address, and    Time Served  Principal Occupation(s)  Overseen  Held by 
Year of Birth  Position(s) Held with Fund  as Director  During Past 5 Years  by Director  Director 
               
 
 Daniel Pavelich  Director         Since 2007  Retired. Formerly, Chairman and    107  Catalytic Inc; Vaagen 
 711 High Street  Member Audit Committee    CEO of BDO Seidman (tax,      Bros. Lumber, Inc. 
 Des Moines,      accounting and financial         
 Iowa 50392      consulting services)         
 1944                 
 
* The Funds and the Funds of Russell Investment Funds and Russell Investment Company have one or more common sub-advisors.       
 
The following directors are considered to be Interested Directors because they are affiliated persons of Principal Management Corporation (the 
“Manager”); Principal Global Investors, LLC, Principal Funds Distributor, Inc. (“PFD”), the principal underwriter (the “Distributor”).   
 
The address for Principal Funds Distributor, Inc. is as follows:             
   1100 Investment Boulevard               
El Dorado Hills, CA  95762-5710               
 
        Positions with the Manager and its  Number of Portfolios  Other 
       Name, Address and        Affiliates; Principal Occupation(s)    in Fund Complex  Directorships 
Year of Birth         Position(s) Held with Fund  Length of Time Served  During Past 5 Years    Overseen by Director  Held by Director 
 Ralph C. Eucher     Director  Since 1999     Director, the Manager since 1999.      107  None 
 711 High Street     Chairman and Chief Executive       President, the Manager 1999-2008         
 Des Moines,     Officer       Director, PFD since 2007.         
 Iowa 50392     Member Executive Committee       Director, Princor since 1999. President,       
 1952         Princor 1999-2005. Senior Vice         
         President, Principal Life, since 2002.       
         Prior thereto, Vice President.         
 
 Nora M. Everett     Director  Since 2008     President since 2008. Senior Vice      107  None 
 711 High Street     President       President and Deputy General         
 Des Moines,     Member Executive Committee       Counsel, Principal Financial Group,         
 Iowa 50392         Inc. 2004-2008. Vice President and       
 1959         Counsel, Principal Financial Group,         
         Inc. 2001-2004.         
 
 William G. Papesh     Director  Since 2007     Retired December 2007. Prior thereto,    107  None 
 711 High Street     Member Operations Committee       President and CEO of WM Group of       
 Des Moines,         Funds; President and Director of Edge       
 Iowa 50392         Asset Management, Inc.         
 1943                 

Officers of the Fund     
 
The following table presents certain information regarding the officers of the Fund, including their principal occupations which, unless specific dates 
are shown, are of more than five years duration. Officers serve at the pleasure of the Board of Directors. 
 
 
Name, Address and  Position(s) Held with Fund and  Positions with the Manager and its Affiliates; 
Year of Birth  Length of Time Served  Principal Occupations During Past 5 Years 
Craig L. Bassett  Treasurer (since 1993)  Vice President and Treasurer, Principal Life 
711 High Street     
Des Moines, Iowa 50392     
1952     
 
Michael J. Beer  Executive Vice President  Executive Vice President and Chief Operating Officer, the Manager; 
711 High Street  (since 1993)  Executive Vice President, PFD, since 2007; President, Princor, since 2005 
Des Moines, Iowa 50392     
1961     
 
 
Randy L. Bergstrom  Assistant Tax Counsel  Counsel, Principal Life 
711 High Street  (since 2005)   
Des Moines, Iowa 50392     
1955     
 
David J. Brown  Chief Compliance Officer  Vice President, Product and Distribution Compliance, Principal Life; Senior 
711 High Street  (since 2004)  Vice President, the Manager, since 2004; Senior Vice President, PFD, 
Des Moines, Iowa 50392    since 2007, Second Vice President, Princor, since 2003, and prior thereto, 
1960    Vice President, the Manager and Princor 
 
Jill R. Brown  Senior Vice President  Second Vice President, Principal Financial Group and Senior Vice 
1100 Investment Boulevard, Ste 200  (since 2007)  President, the Manager and Princor, since 2006, Chief Financial Officer, 
El Dorado Hills, CA 95762    Princor, since 2003, Vice President, Princor 2003-2006. Senior Vice 
1967    President and Chief Financial Officer, PFD, since 2007; prior thereto, 
    Assistant Financial Controller, Principal Life 
 
Cary Fuchs  Senior Vice President of Distribution  President, Principal Funds Distributor, since 2007; Director of Mutual Fund 
1100 Investment Boulevard, Ste 200  (since 2007)  Operations, Principal Shareholder Services, since 2005; prior thereto, 
El Dorado Hills, CA 95762    Divisional Vice President, Boston Financial Data Services 
1957     
 
Steve G. Gallaher  Assistant Counsel  Second Vice President and Counsel, Principal Life since 2006; 
711 High Street  (since 2006)  Self-Employed Writer in 2005; 2004 and prior thereto, Senior Vice 
Des Moines, Iowa 50392    President and Counsel of Principal Residential Mortgage, Inc. 
1955     
 
Ernest H. Gillum  Vice President and Assistant Secretary  Vice President and Chief Compliance Officer, the Manager, since 2004, 
711 High Street  (since 1993)  and prior thereto, Vice President, Compliance and Product Development, 
Des Moines, Iowa 50392    the Manager 
1955     

Name, Address and  Position(s) Held with Fund and  Positions with the Manager and its Affiliates; 
Year of Birth  Length of Time Served  Principal Occupations During Past 5 Years 
Patrick A. Kirchner  Assistant Counsel  Counsel, Principal Life 
711 High Street  (since 2002)   
Des Moines, Iowa 50392     
1960     
 
Carolyn F. Kolks  Assistant Tax Counsel  Counsel, Principal Life, since 2003 and prior thereto, Attorney 
711 High Street  (since 2005)   
Des Moines, Iowa 50392     
1962     
 
 
Layne A. Rasmussen  Vice President, Controller and Chief  Vice President and Controller - Mutual Funds, the Manager 
711 High Street  Financial Officer   
Des Moines, Iowa 50392  (since 2000)   
1958     
 
Michael D. Roughton  Counsel  Vice President and Senior Securities Counsel, Principal Financial Group, 
711 High Street  (since 1993)  Inc.; Senior Vice President and Counsel, the Manager, PFD, and Princor; 
Des Moines, Iowa 50392    and Counsel, Principal Global 
1951     
 
Adam U. Shaikh  Assistant Counsel  Counsel, Principal Life, since 2006. Prior thereto, practicing attorney. 
711 High Street  (since 2006)   
Des Moines, Iowa 50392     
1972     
 
Dan L. Westholm  Assistant Treasurer  Director Treasury, since 2003. Prior thereto, Assistant Treasurer. 
711 High Street  (since 2006)   
Des Moines, Iowa 50392     
1966     
 
Beth C. Wilson  Vice President and Secretary  Director and Secretary, Principal Funds, since 2007. Prior thereto, 
711 High Street  (since 2007)  Business Manager for Pella Corp. 
Des Moines, Iowa 50392     
1956     

Board Committees 
 
The Fund Complex's board has the following four committees: Audit Committee, Executive Committee, Nominating 
and Governance Committee, and Operations Committee. Committee membership is identified on the previous pages. 
Each committee must report its activities to the Board on a regular basis. 
 
Audit Committee 
The primary purpose of the Committee is to assist the Board in fulfilling certain of its responsibilities. The Audit 
Committee serves as an independent and objective party to monitor the Fund Complex's accounting policies, financial 
reporting and internal control system, as well as the work of the independent registered public accountants. The Audit 
Committee assists Board oversight of 1) the integrity of the Fund Complex's financial statements; 2) the Fund 
Complex's compliance with certain legal and regulatory requirements; 3) the independent registered public 
accountants' qualifications and independence; and 4) the performance of the Fund Complex's independent registered 
public accountants. The Audit Committee also serves to provide an open avenue of communication among the 
independent registered public accountants, the Manager's internal auditors, Fund Complex management, and the 
Board. The Audit Committee held five meetings during the last fiscal year. 
 
Executive Committee 
The Committee's primary purpose is to exercise certain powers of the Board of Directors when the Board is not in 
session. When the Board is not in session, the Committee may exercise all powers of the Board in the management of 
the business of the Fund Complex except the power to 1) authorize dividends or distributions on stock; 2) issue stock, 
except as permitted by law 3) recommend to the stockholders any action which requires stockholder approval; 4) 
amend the bylaws; or 5) approve any merger or share exchange which does not require stockholder approval. The 
Executive Committee held zero meetings during the last fiscal year. 
 
Nominating and Governance Committee 
The Committee's primary purpose is to oversee 1) the structure and efficiency of the Boards of Directors and the 
committees the Boards establish, and 2) the activities of the Fund Complex's Chief Compliance Officer. The 
Committee responsibilities include evaluating board membership and functions, committee membership and 
functions, insurance coverage, and legal and compliance matters. 
 
The nominating functions of the Nominating and Governance Committee include selecting and nominating all 
candidates who are not "interested persons" of the Fund Complex (as defined in the 1940 Act) for election to the 
Board. Generally, the committee requests director nominee suggestions from the committee members and 
management. In addition, the committee will consider director candidates recommended by shareholders of the Fund 
Complex. Recommendations should be submitted in writing to Principal Funds, Inc. at 680 8th Street, Des Moines, 
Iowa 50392. The committee has not established any specific minimum qualifications for nominees. When evaluating a 
person as a potential nominee to serve as an independent director, the committee will generally consider, among 
other factors: age; education; relevant business experience; geographical factors; whether the person is 
"independent" and otherwise qualified under applicable laws and regulations to serve as a director; and whether the 
person is willing to serve, and willing and able to commit the time necessary for attendance at meetings and the 
performance of the duties of an independent director. The committee also meets personally with the nominees and 
conducts a reference check. The final decision is based on a combination of factors, including the strengths and the 
experience an individual may bring to the Board. The Board does not use regularly the services of any professional 
search firms to identify or evaluate or assist in identifying or evaluating potential candidates or nominees.The 
Nominating and Governance Committee held four meetings during the last fiscal year. 
 
Operations Committee 
The Committee's primary purpose is to oversee the provision of administrative and distribution services to the Fund 
Complex, communications with the Fund Complex's shareholders, and review and oversight of the Fund Complex's 
operations. The Operations Committee held four meetings during the last fiscal year. 
 
The following tables set forth the aggregate dollar range of the equity securities of the mutual funds within the Fund 
Complex which were beneficially owned by the Directors as of December 31, 2008. 

For the purpose of these tables, beneficial ownership means a direct or indirect pecuniary interest. Only the Directors 
who are "interested persons" are eligible to participate in an employee benefit program which invests in Principal 
Funds, Inc. Directors who beneficially owned shares of the series of the Principal Variable Contracts Funds, Inc. did so 
through variable life insurance and variable annuity contracts. Please note that exact dollar amounts of securities held 
are not listed. Rather, ownership is listed based on the following dollar ranges:       
 
Independent Directors (not Considered to be "Interested Persons")           
A  $0                   
B  $1 up to and including $10,000                 
C   $10,001 up to and including $50,000                 
D   $50,001 up to and including $100,000                 
E  $100,001 or more                   
 
         
Ballantine Blake Damos Gilbert Grimmett Hirsch Kimball Lukavsky Pavelich 
     Total Fund Complex*  D  E  C           E  E  E  E  E  E 
  *Because the inception date of these Funds is _____, there was no ownership of these Funds as of December 31, 2008.   
 
 
Directors Considered to be "Interested Persons"             
A  $0                   
B  $1 up to and including $10,000                 
C   $10,001 up to and including $50,000                 
D   $50,001 up to and including $100,000                 
E  $100,001 or more                   
 
        Nora M.  Ralph C.    William       
        Everett  Eucher    Papesh       
   Total Fund Complex*      E  E    A       
  *Because the inception date of the Funds is _____, there was no ownership of these Funds as of       
  December 31, 2008.                   
 
 
Compensation. The Fund does not pay any remuneration to its Directors who are employed by the Manager or its 
affiliates or to its officers who are furnished to the Fund by the Manager and its affiliates pursuant to the Management 
Agreement. Each Director who is not an "interested person" received compensation for service as a member of the 
Boards of all investment companies sponsored by Principal Life based on a schedule that takes into account an 
annual retainer amount, the number of meetings attended, and expenses incurred. Director compensation and related 
expenses are allocated to each of the Funds based on the net assets of each relative to combined net assets of all of 
the investment companies sponsored by Principal Life.             
The following table provides information regarding the compensation received by the Independent Directors from the 
Funds included in this SAI and from the Fund Complex during the fiscal year ended August 31, 2009. On that date, 
there were 2 funds (with a total of 105 portfolios in the Fund Complex). The Fund does not provide retirement benefits 
to any of the Directors.                   
 
            Fund       
 Director        The Fund  Complex       
  Elizabeth Ballantine        0*  $126,638       
  Kristianne Blake        0*  $134,463       
  Craig Damos        0*  $129,588       
  Richard W. Gilbert        0*  $145,263       
  Mark A. Grimmett        0*  $121,575       
  Fritz Hirsch        0*  $136,950       
  William C. Kimball        0*  $128,638       
  Barbara A. Lukavsky        0*  $133,013       
  Daniel Pavelich        0*  $132,075       
 
  * Because the inception date of these Funds is _____, there was no compensation paid by these       
  Funds as of August 31, 2009.                   

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 
 
Control Persons 
It is presumed that a person who owns more than 25% of the voting securities of a fund controls the fund. A control 
person could control the outcome of proposals presented to shareholders for approval. 
 
Because the inception date of the Funds included in this SAI is _____, there are no control persons to disclose at this 
time. 
 
The Directors and Officers of the Fund, member companies of the Principal Financial Group, and certain other 
persons may purchase shares of the Funds without the payment of any sales charge. The sales charge is waived on 
these transactions because there are either no distribution costs or only minimal distribution costs associated with the 
transactions. 
 
The Principal LifeTime Funds, SAM Portfolios, or Principal Life Insurance Company will vote in the same proportion as 
shares of the Funds owned by other shareholders. Therefore, neither the Principal LifeTime Funds, SAM Portfolios nor 
Principal Life Insurance Company exercise voting discretion. 
 
The By-laws of the Fund sets the quorum requirement (a quorum must be present at a meeting of shareholders for 
business to be transacted). The By-laws of the Fund states that a quorum is "The presence in person or by proxy of 
one-third of the shares of each Fund outstanding at the close of business on the Record Date constitutes a quorum for 
a meeting of that Fund." 
 
Certain proposals presented to shareholders for approval require the vote of a "majority of the outstanding voting 
securities," which is a term defined in the 1940 Act to mean, with respect to a Fund, the affirmative vote of the lesser of 
1) 67% or more of the voting securities of the Fund present at the meeting of that Fund, if the holders of more than 
50% of the outstanding voting securities of the Fund are present in person or by proxy, or 2) more than 50% of the 
outstanding voting securities of the Fund (a "Majority of the Outstanding Voting Securities"). 
 
Principal Holders of Securities 
Because the inception date of the Funds included in the SAI is _____, there are no Principal Holders for Securities to 
disclose at this time. 
 
Management Ownership 
As of ______, 2009, the Officers and Directors of the Fund as a group owned less than 1% of the outstanding shares 
of any Class of any of the Funds. 

INVESTMENT ADVISORY AND OTHER SERVICES   
 
Investment Advisors     
The Manager of the Fund is Principal Management Corporation ("Principal"), a wholly owned subsidiary of Principal 
Financial Services, Inc. Principal is an affiliate of Principal Life. The address of Principal is the Principal Financial 
Group, Des Moines, Iowa 50392. Principal was organized on January 10, 1969, and since that time has managed 
various mutual funds sponsored by Principal Life.   
 
Principal has executed agreements with various Sub-Advisors. Under those Sub-Advisory agreements, the Sub- 
Advisor agrees to assume the obligations of Principal to provide investment advisory services for a specific Fund. For 
these services, Principal pays each Sub-Advisor a fee.   
 
Sub-Advisor(s): Mellon Capital Management Corporation ("Mellon Capital"), 50 Fremont Street, Suite 3900, San 
  Francisco, CA 94105. Mellon Capital provides investment advisory services and is a wholly owned 
  subsidiary of Mellon Financial Corporation ("Mellon"). 
 
Fund(s):  Bond Market Index   
 
 
 
Sub-Advisor:  Principal Global Investors, LLC (“PGI”) is an indirect wholly owned subsidiary of Principal Life 
  Insurance Company, an affiliate of Principal, and a member of the Principal Financial Group. PGI 
  manages equity, fixed-income, and real estate investments primarily for institutional investors, including 
  Principal Life. PGI’s headquarters address is 801 Grand Avenue, Des Moines, IA 50392. Its other 
  primary asset management office is in New York, with asset management offices of affiliate advisors in 
  several non-U.S. locations including London, Sydney and Singapore. 
 
Fund(s):  International Equity Index   
 
Each of the persons affiliated with the Fund who is also an affiliated person of Principal or an affiliated advisor is 
named below, together with the capacities in which such person is affiliated: 
 
 
Name                         Office Held With The Fund  Office Held with Principal/or affiliated advisor 
   Craig L. Bassett    Treasurer  Treasurer (Principal); Vice President and Treasurer (PGI) 
   Michael J. Beer    Executive Vice President  Director, Executive Vice President and Chief Operating 
      Officer (Principal) 
   Randy L. Bergstrom  Assistant Tax Counsel  Counsel (PGI) 
   David J. Brown    Chief Compliance Officer  Senior Vice President (Principal) 
   Jill R. Brown    Senior Vice President  Senior Vice President/Chief Financial Officer (Principal) 
   Ralph C. Eucher  Chairman and CEO  Director (Principal) 
   Nora M. Everett    Director and President  President and Director (Principal) 
   Cary Fuchs    Senior Vice President of Distribution  President (PFD) 
   Stephen G. Gallaher  Assistant Counsel  Assistant General Counsel (Principal) 
   Ernest H. Gillum  Vice President and Assistant Secretary  Vice President and Chief Compliance Officer (Principal) 
   Patrick A. Kirchner  Assistant Counsel  Assistant General Counsel (Principal) and (PGI) 
   Carolyn Kolks    Assistant Tax Counsel  Counsel (PGI) 
   Layne A. Rasmussen  Vice President, Controller, and Chief Financial Officer  Vice President and Controller - Principal Funds (Principal) 
   Michael D. Roughton  Counsel  Senior Vice President and Senior Securities Counsel 
      (Principal); Vice President and Associate General Counsel 
      (PGI) 
   Adam U. Shaikh  Assistant Counsel  Counsel (Principal) 
   Dan L. Westholm  Assistant Treasurer  Director-Treasury (Principal) 
   Beth C. Wilson    Vice President and Secretary  Vice President (Principal) 

Codes of Ethics               
The Fund, Principal, each of the Sub-Advisors, and PFD have adopted Codes of Ethics ("Codes") under Rule 17j-1 of 
the 1940 Act. Principal has also adopted such a Code under Rule 204A-1 of the Investment Advisers Act of 1940. 
These Codes are designed to prevent persons with access to information regarding the portfolio trading activity of a 
Fund from using that information for their personal benefit. In certain circumstances, personal securities trading is 
permitted in accordance with procedures established by the Codes. The Boards of Directors of Principal, the Fund, 
and PFD, each of the Sub-Advisors periodically review their respective Codes. The Codes are on file with, and 
available from, the SEC. A copy of the Fund's Code will also be provided upon request, which may be made by 
contacting the Fund.               
 
 
 
The management fee schedules for the Funds are as follows (expressed as a percentage of average net assets): 
 
  All             
Fund  Assets             
   Bond Market Index Fund   0.25%             
   International Equity Index Fund  0.25             
 
Each Fund pays all of its operating expenses, except those Funds for which Principal has agreed to pay such 
expenses. Under the terms of the Management Agreement, Principal is responsible for paying the expenses 
associated with the organization of each Fund, including the expenses incurred in the initial registration of the Funds 
with the SEC, compensation of personnel, officers and directors who are also affiliated with Principal, and expenses 
and compensation associated with furnishing office space and all necessary office facilities and equipment and 
personnel necessary to perform the general corporate functions of the Fund. Portfolio accounting services are 
provided to each Fund at cost, under the terms of the Management Agreement. Principal Shareholder Services, Inc., a 
wholly owned subsidiary of Principal, provides transfer agent services for Class R-1, R-2, R-3, R-4, R-5, and 
Institutional Class shares, including qualifying shares of the Fund for sale in states and other jurisdictions, for each 
Fund pursuant to an additional agreement with the Fund. Principal is also responsible for providing certain shareholder 
services to the R-1, R-2, R-3, R-4 and R-5 share classes pursuant to an additional agreement.   
 
The Manager has contractually agreed to limit the Fund's expenses (excluding interest the Funds incur in connection 
with investments they make) on certain share classes 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 respective class on an annualized basis. The expenses borne by the 
Manager are subject to reimbursement by the Funds through the expiration date, provided no reimbursement will be 
made if it would result in the Funds’ exceeding the total operating expense limits. The operating expense limits and the 
agreement terms are as follows:               
 
            Institutional   
         R-1  R-2  R-3  R-4  R-5  Class  Expiration 
   Bond Market Index Fund       1.18%  1.05%  0.87%  0.68%  0.56%  0.30%  12/31/2010 
   International Equity Index Fund       1.23%  1.10%  0.92%  0.73%  0.61%  0.35%  12/31/2010 
 
Sub-Advisory Agreements for the Funds             
Funds for which Principal Global Investors, LLC ("PGI") serves as Sub-Advisor. The Manager pays PGI a fee, 
computed and paid monthly, at an annual rate as shown below.         
 
 
  Net Asset Value of Fund         
  First    Over         
  $500    $500         
million  million
International Equity Index (PGI)   0.05%  0.03%
             
                          

Other Funds         
In calculating the fee for each Fund, the Sub-Advisor has agreed that, assets of any existing registered investment 
company sponsored by Principal Life Insurance Company to which the Sub-Advisor provides investment advisory 
services and which have the same investment mandate as the Fund for which the fee is being calculated, will be 
combined (together, the "Aggregated Assets"). The fee charged for the assets in a Fund shall be determined by 
calculating a fee on the value of the Aggregated Assets using the fee schedules described in the tables below and 
multiplying the aggregate fee by a fraction, the numerator of which is the amount of assets in the Fund and the 
denominator of which is the amount of the Aggregated Assets.       
 
    Net Asset Value of Fund
    First         Next         Next  Over 
 Fund  $200 million  $300 million  $500 million  $1 billion 
  Bond Market Index Fund (Mellon Capital)  0.08%         0.06%         0.05%  0.04% 
 
Custodian         
The custodian of the portfolio securities and cash assets of the Funds is Bank of New York Mellon, One Wall Street, 
New York, NY 10286. The custodian performs no managerial or policy-making functions for the Funds. 
 
MULTIPLE CLASS STRUCTURE         
 
The Board of Directors has adopted a multiple class plan (the Multiple Class Plan) pursuant to SEC Rule 18f-3. The 
share classes that are offered by each Fund are identified in the chart included under the heading "Fund History." The 
share classes offered under the plan include: Institutional Class, R-1 Class, R-2 Class, R-3 Class, R-4 Class, R-5 
Class, Class J, Class A, Class B, Class C, and Class S shares.       
 
The R-1, R-2, R-3, R-4, R-5, and Institutional Classes are available without any front-end sales charge or contingent 
deferred sales charge. The R-1, R-2, R-3, R-4, and R-5 Classes are available through employer-sponsored retirement 
plans. Such plans may impose fees in addition to those charged by the Funds. The R-1, R-2, R-3, R-4, and R-5 share 
classes are subject to asset based charges (described below).       
 
Principal receives a fee for providing investment advisory and certain corporate administrative services under the 
terms of the Management Agreement. In addition to the management fee, the Fund's R-1, R-2, R-3, R-4, and R-5 
Class shares pay Principal a service fee and an administrative services fee under the terms of a Service Agreement 
and an Administrative Services Agreement.         
 
Service Agreement (R-1, R-2, R-3, R-4, and R-5 Classes only)       
The Service Agreement provides for Principal to provide certain personal services to shareholders (plan sponsors) 
and beneficial owners (plan members) of those classes. These personal services include:   
•   responding to plan sponsor and plan member inquiries;       
•   providing information regarding plan sponsor and plan member investments; and   
•   providing other similar personal services or services related to the maintenance of shareholder accounts as 
   contemplated by Financial Industry Regulatory Authority (FINRA) Rule 2830 (or any successor thereto). 
 
As compensation for these services, the Fund will pay Principal service fees equal to 0.25% of the average daily net 
assets attributable each of the R-1 and R-2 classes, 0.17% of the average daily net assets of the R-3 Class, and 
0.15% of the average daily net assets attributable to each of the R-4 and R-5 Classes. The service fees are calculated 
and accrued daily and paid monthly to Principal (or at such other intervals as the Fund and Principal may agree). 
 
Administrative Service Agreement (R-1, R-2, R-3, R-4, and R-5 Classes only)     
The Administrative Service Agreement provides for Principal to provide services to beneficial owners of Fund shares. 
Such services include:         
•  receiving, aggregating, and processing purchase, exchange, and redemption requests from plan shareholders; 
•  providing plan shareholders with a service that invests the assets of their accounts in shares pursuant to pre- 
   authorized instructions submitted by plan members;       

•  processing dividend payments from the Funds on behalf of plan shareholders and changing shareholder account 
  designations; 
•  acting as shareholder of record and nominee for plans; 
•  maintaining account records for shareholders and/or other beneficial owners; 
•  providing notification to plan shareholders of transactions affecting their accounts; 
•  forwarding prospectuses, financial reports, tax information and other communications from the Fund to beneficial 
  owners; 
•  distributing, receiving, tabulating and transmitting proxy ballots of plan shareholders; and 
•  other similar administrative services. 
 
As compensation for these services, the Fund will pay Principal service fees equal to 0.28% of the average daily net 
assets attributable to the R-1 Class, 0.20% of the average daily net assets of the R-2 Class, 0.15% of the average 
daily net assets of the R-3 Class, 0.13% of the average daily net assets of the R-4 Class and 0.11% of the average 
daily net assets of the R-5 Class. The service fees are calculated and accrued daily and paid monthly to Principal (or 
at such other intervals as the Fund and Principal may agree). 
Principal may, at its discretion appoint (and may at any time remove), other parties, including companies affiliated with 
Principal, as its agent to carry out the provisions of the Service Agreement and/or the Administrative Service 
Agreement. However, the appointment of an agent shall not relieve Principal of any of its responsibilities or liabilities 
under those Agreements. Any fees paid to agents under these Agreements shall be the sole responsibility of Principal. 
 
Rule 12b-1 Fees / Distribution Plans and Agreements 
In addition to the management and service fees, certain of the Fund's share classes, are subject to Distribution Plans 
and Agreements (described below) sometimes referred to as a Rule 12b-1 Plan. Rule 12b-1 permits a fund to pay 
expenses associated with the distribution of its shares in accordance with a plan adopted by the Board of Directors 
and approved by its shareholders. Pursuant to such rule, the Board of Directors and initial shareholders of the R-1, 
R-2, R-3, and R-4 Classes of shares have approved and entered into a Distribution Plan and Agreement. The Fund 
believes the Distribution Plan and Agreement will be beneficial as it may position the Fund to be able to build and 
retain assets which will, in turn, have a positive effect on total expense ratios and provide flexibility in the management 
of the Fund by reducing the need to liquidate portfolio securities to meet redemptions. The Fund also believes the Plan 
will encourage registered representatives to provide ongoing servicing to the shareholders. 
 
In adopting the Plans, the Board of Directors (including a majority of directors who are not interested persons of the 
Fund (as defined in the 1940 Act), hereafter referred to as the independent directors) determined that there was a 
reasonable likelihood that the Plan would benefit the Funds and the shareholders of the affected classes. Pursuant to 
Rule 12b-1, information about revenues and expenses under the Plans is presented to the Board of Directors each 
quarter for its consideration in continuing the Plans. Continuance of the Plans must be approved by the Board of 
Directors, including a majority of the independent directors, annually. The Plans may be amended by a vote of the 
Board of Directors, including a majority of the independent directors, except that the Plans may not be amended to 
materially increase the amount spent for distribution without majority approval of the shareholders of the affected 
class. The Plans terminate automatically in the event of an assignment and may be terminated upon a vote of a 
majority of the independent directors or by vote of a majority of the outstanding voting securities of the affected class. 
 
Payments under the 12b-1 plans will not automatically terminate for funds that are closed to new investors or to 
additional purchases by existing shareholders. The Fund Board will determine whether to terminate, modify or leave 
unchanged the 12b-1 plan at the time the board directs the implementation of the closure of the fund. 
The Plans provide that each Fund makes payments to the Fund's Distributor from assets of each share class that has 
a Plan to compensate the Distributor and other selling dealers, various banks, broker-dealers and other financial 
intermediaries, for providing certain services to the Fund. Such services may include: 
•  formulation and implementation of marketing and promotional activities; 
•  preparation, printing, and distribution of sales literature; 
•  preparation, printing, and distribution of prospectuses and the Fund reports to other than existing shareholders; 
•  obtaining such information with respect to marketing and promotional activities as the Distributor deems advisable; 
•  making payments to dealers and others engaged in the sale of shares or who engage in shareholder support 
  services; and 
•  providing training, marketing, and support with respect to the sale of shares. 

The Fund pays the Distributor a fee after the end of each month at an annual rate as a percentage of the daily net 
asset value of the assets attributable to each share class as follows:   
 
    Maximum 
    Annualized 
  Share Class  12b-1 Fee 
   R-1  0.35% 
   R-2  0.30% 
   R-3  0.25% 
   R-4  0.10% 
The Distributor may remit on a continuous basis all of these sums to its investment representatives and other financial 
intermediaries as a trail fee in recognition of their services and assistance.   
Currently, the Distributor makes payments to dealers on accounts for which such dealer is designated dealer of 
record. Payments are based on the average net asset value of the accounts invested in R-1 Class, R-2 Class, R-3 
Class, or R-4 Class shares.   
At least quarterly, the Distributor provides to the Fund's Board of Directors, and the Board reviews, a written report of 
the amounts expended pursuant to the Plans and the purposes for which such expenditures were made. 
Under the Plans, the Funds have no legal obligation to pay any amount that exceeds the compensation limit. The 
Funds do not pay, directly or indirectly, interest, carrying charges, or other financing costs in association with these 
Plans. All fees paid under a Fund's Rule 12b-1 Plan are paid to the Distributor, which is entitled to retain such fees 
paid by the Fund without regard to the expenses which it incurs.   
 
Transfer Agency Agreement (Institutional Class, Class R-1, Class R-2, Class R-3, Class R-4, and Class R-5 shares) 
The Transfer Agency Agreement provides for Principal Shareholder Services, Inc. (“PSS”) (1100 Investment 
Boulevard, El Dorado Hills, CA 95762-5710), a wholly owned subsidiary of Principal, to act as transfer and 
shareholder servicing agent for the Institutional Class, Class R-1, Class R-2, Class R-3, Class R-4, and Class R-5. 
PSS provides these services to the Class R-1, Class R-2, Class R-3, Class R-4, and Class R-5 shares without charge. 
The Fund pays PSS a fee for the services provided pursuant to the agreement in an amount equal to the costs 
incurred by PSS for providing such services. With respect to the Institutional Class shares, the Fund will pay PSS a fee 
for the services provided pursuant to the Agreement in an amount equal to the costs incurred by PSS for providing 
such services. The services include:   
 
•  issuance, transfer, conversion, cancellation, and registry of ownership of Fund shares, and maintenance of open 
  account system;   
•  preparation and distribution of dividend and capital gain payments to shareholders; 
•  delivery, redemption and repurchase of shares, and remittances to shareholders; 
•  the tabulation of proxy ballots and the preparation and distribution to shareholders of notices, proxy statements and 
  proxies, reports, confirmation of transactions, prospectuses and tax information; 
•  communication with shareholders concerning the above items; and   
•  use of its best efforts to qualify the Capital Stock of the Fund for sale in states and jurisdictions as directed by the 
  Fund.   

INTERMEDIARY COMPENSATION 
 
Additional Payments to Intermediaries. In addition to, rather than in lieu of, payments for distribution-related expenses 
and for providing services to shareholders pursuant to 12b-1 plans, the transfer agent (PSS) or one of its affiliates may 
enter into agreements with intermediaries pursuant to which the intermediary will be paid for administrative, 
networking, recordkeeping, sub-transfer agency and shareholder services. Intermediaries may include, among others, 
broker-dealers, registered investment advisors, banks, trust companies, pension plan consultants, retirement plan 
administrators, and insurance companies. For Class R-1, R-2, R-3, R-4 and R-5 shares, such compensation is 
generally paid out of the Service Fees and Administrative Service Fees that are disclosed in the prospectus. Such 
compensation is generally based on the average asset value of fund shares for the relevant share class held by clients 
of the intermediary. Principal Life Insurance Company is one such intermediary that provides services to retirement 
plans, and it is typically paid some or all of the Service Fees and Administrative Service Fees pertaining to such plans. 
 
In addition, Principal or its affiliates may pay compensation, from their own resources, to certain intermediaries that 
support the distribution or sale of shares of the Fund or provide services to Fund shareholders. 
 
Plan recordkeepers, who may have affiliated financial intermediaries that sell shares of the funds, may be paid 
additional amounts. In addition, financial intermediaries may be affiliates of entities that receive compensation from the 
Distributor for maintaining retirement plan platforms that facilitate trading by affiliated and non-affiliated financial 
intermediaries and recordkeeping for retirement plans. 
 
A number of factors may be considered in determining the amount of these additional payments, including each 
financial intermediary's Fund sales and assets, as well as the willingness and ability of the financial intermediary to 
give the Distributor access to its Financial Professionals for educational and marketing purposes. In some cases, 
intermediaries will include the Funds on a preferred list. The Distributor's goals include making the Financial 
Professionals who interact with current and prospective investors and shareholders more knowledgeable about the 
Funds so that they can provide suitable information and advice about the Funds and related investor services. 
 
Expense Reimbursement 
Additionally, the Distributor will, in some cases, provide payments to reimburse directly or indirectly the costs incurred 
by intermediaries and their associated Financial Professionals in connection with educational seminars and training 
and marketing efforts related to the Funds for the intermediaries' employees and representatives and/or their clients 
and potential clients. The costs and expenses associated with these efforts may include travel, lodging, entertainment, 
and meals. The Distributor will also, in some cases, provide payment or reimbursement for expenses associated with 
qualifying dealers' conferences, transactions (ticket) charges, and general marketing expenses. 
 
Additional Information 
Financial Professionals may receive some or all of the amounts paid to the intermediary with which he or she is 
associated. If one mutual fund sponsor pays more compensation than another, your Financial Professional and his or 
her intermediary may have an incentive to recommend one fund complex over another. Similarly, if your Financial 
Professional or his or her intermediary receives more compensation for one share class versus another, then they 
may have an incentive to recommend that share class. 

As of October 1, 2009, the Distributor anticipates that the firms that will receive additional payments as described in 
the Additional Payments to Intermediaries section above (other than Rule 12b-1 fees and Expense Reimbursement) 
include, but are not necessarily limited to, the following: 

Acsencus  National Financial Services 
ADP Retirement Services  National Planning Corp. 
Alerus Retirement Solutions  Nationwide 
American Century Investments  New York State Deferred Compensation Plan 
American General Life Insurance  Newport Retirement Plan Services 
Ameriprise  Next Financial 
AST Trust Company  NFP Securities 
Bank of America Securities  North Ridge Securities 
Benefit Plan Administrators  Northeast Retirement Services 
Cadaret Grant  Northwestern Mutual 
Charles Schwab & Co.  NRP Financial 
Charles Schwab Trust Company  NYLife Distributors LLC 
Chase Investments Services Corp.  Pershing 
Commonwealth Financial Network  Plan Administrators, Inc. 
CompuSys  Princeton Retirement Group (GPC Securities) 
CPI  Principal Global Investors 
Daily Access Corporation  Principal Life Insurance Company 
Digital Retirement Solutions  Principal Trust Company 
Edward Jones  ProEquities 
ePlan Services  Prudential 
Expert Plan  Raymond James 
Farmers Financial  RBC Capital Markets 
Fidelity Brokerage Services  RBC Dain Rauscher 
Financial Data Services  Reliance Trust Company 
Financial Network Investment Corp  Robert W. Baird & Co. 
First Allied Securities  Royal Alliance Associates, Inc. 
First American Bank  SagePoint Financial, Inc. 
First Clearing  Saxony Securities 
Foothill Securities  Scottrade 
FSC Securities  Securian Financial Services 
G.A. Reppie  Securities America 
Geneos Wealth Management  SII Investments 
Genesis Employee Benefit  Southwest Securities 
GPC Securities, Inc.  Standard Retirement Services 
Gunn Allen Financial  Stifel Nicolaus & Company 
GWFS Equities  SunAmerica 
H. Beck, Inc.  T. Rowe Price Retirement Plan Services 
Howe Bames Investment  TD Ameritrade 
ICMA-Retirement Corp.  Texas Pension Consultants 
ING Financial Partners  The Investment Center 
Investacorp  Thrivent Financial 
J.W. Cole Financial  Thrivent Investment Management 
James T. Borello & Co.  TransAm Securities 
Janney Montgomery Scott  Triad Advisors 
JP Morgan  TruSource 
July Business Services  U.S. Wealth Advisors 

Key Investments  UBS Financial Services 
Lincoln Financial  Unison 
Lincoln Investment Planning  Vanguard Brokerage Services 
LPL  VSR Financial Services 
Mercer HR Services  Wedbush Morgan Securities 
Merrill Lynch  Wells Fargo Advisors, LLC 
MidAtlantic Capital  Wells Fargo Investments 
Morgan Keegan  Wilmington Trust Company 
Morgan Stanley  Workman Securities 
Morgan Stanley Smith Barney  WRP Investments 
MSCS Financial Services   

To obtain a current list of such firms, call 1-800-547-7754. 
 
Please speak with your Financial Professional to learn more about the total amounts paid to your Financial 
Professional and his or her intermediary by the Funds, the Distributor and its affiliates, and by sponsors of other 
mutual funds he or she may recommend to you. You should also carefully review disclosures made by your Financial 
Professional at the time of purchase. 
 
Your intermediary may charge fees and commissions, including processing fees, in addition to those described in this 
SAI. The amount and applicability of any such fee is determined and disclosed separately by the intermediary. You 
should ask your Financial Professional for information about any fees and/or commissions that are charged. 
 
Although a Fund may use brokers who sell shares of the Funds to effect portfolio transactions, the sale of shares is not 
considered as a factor by the Fund's Sub-Advisors when selecting brokers to effect portfolio transactions. 
 
BROKERAGE ALLOCATION AND OTHER PRACTICES 
 
Brokerage on Purchases and Sales of Securities 
All orders for the purchase or sale of portfolio securities are placed on behalf of a Fund by the Fund's Sub-Advisor 
pursuant to the terms of the applicable sub-advisory agreement. In distributing brokerage business arising out of the 
placement of orders for the purchase and sale of securities for any Fund, the objective of each Fund's Sub-Advisor is 
to obtain the best overall terms. In pursuing this objective, a Sub-Advisor considers all matters it deems relevant, 
including the breadth of the market in the security, the price of the security, the financial condition and executing 
capability of the broker or dealer, confidentiality, including trade anonymity, and the reasonableness of the 
commission, if any (for the specific transaction and on a continuing basis). This may mean in some instances that a 
Sub-Advisor will pay a broker commissions that are in excess of the amount of commissions another broker might 
have charged for executing the same transaction when the Sub-Advisor believes that such commissions are 
reasonable in light of a) the size and difficulty of the transaction, b) the quality of the execution provided, and c) the 
level of commissions paid relative to commissions paid by other institutional investors. (Such factors are viewed both 
in terms of that particular transaction and in terms of all transactions that broker executes for accounts over which the 
Sub-Advisor exercises investment discretion. The Board has also adopted a policy and procedure designed to prevent 
the funds from compensating a broker/dealer for promoting or selling fund shares by directing brokerage transactions 
to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling fund shares. 
Therefore, the Sub-Advisor may not compensate a broker/dealer for promoting or selling fund shares by directing 
brokerage transactions to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling 
fund shares. A Sub-Advisor may purchase securities in the over-the-counter market, utilizing the services of principal 
market makers unless better terms can be obtained by purchases through brokers or dealers, and may purchase 
securities listed on the NYSE from non-Exchange members in transactions off the Exchange.) 

A Sub-Advisor may give consideration in the allocation of business to services performed by a broker (e.g., the 
furnishing of statistical data and research generally consisting of, but not limited to, information of the following types: 
analyses and reports concerning issuers, industries, economic factors and trends, portfolio strategy, and performance 
of client accounts). If any such allocation is made, the primary criteria used will be to obtain the best overall terms for 
such transactions. A Sub-Advisor may also pay additional commission amounts for research services. Such statistical 
data and research information received from brokers or dealers as described above may be useful in varying degrees 
and a Sub-Advisor may use it in servicing some or all of the accounts it manages. 
 
Subject to the rules promulgated by the SEC, as well as other regulatory requirements, the Board has approved 
procedures whereby a Fund may purchase securities that are offered in underwritings in which an affiliate of a Sub- 
Advisor, or the Manager, participates. These procedures prohibit a Fund from directly or indirectly benefiting a Sub- 
Advisor affiliate or a Manager affiliate in connection with such underwritings. In addition, for underwritings where a 
Sub-Advisor affiliate or a Manager participates as a principal underwriter, certain restrictions may apply that could, 
among other things, limit the amount of securities that the Fund could purchase in the underwritings. The Sub-Advisor 
shall determine the amounts and proportions of orders allocated to the Sub-Advisor or affiliate. The Directors of the 
Fund will receive quarterly reports on these transactions. 
 
The Board has approved procedures that permit a Fund to effect a purchase or sale transaction between the Fund and 
any other affiliated mutual fund or between the Fund and affiliated persons of the Fund under limited circumstances 
prescribed by SEC rules. Any such transaction must be effected without any payment other than a cash payment for 
the securities, for which a market quotation is readily available, at the current market price; no brokerage commission 
or fee (except for customary transfer fees), or other remuneration may be paid in connection with the transaction. The 
Board receives quarterly reports of all such transactions. 
 
The Board has also approved procedures that permit a Fund's sub-advisor to place portfolio trades with an affiliated 
broker under circumstances prescribed by SEC Rules 17e-1 and 17a-10. The procedures require that total 
commissions, fees, or other remuneration received or to be received by an affiliated broker must be reasonable and 
fair compared to the commissions, fees or other remuneration received by other brokers in connection with 
comparable transactions involving similar securities being purchased or sold on a securities exchange during a 
comparable time period. The Board receives quarterly reports of all transactions completed pursuant to the Fund's 
procedures. 
 
Purchases and sales of debt securities and money market instruments usually are principal transactions; portfolio 
securities are normally purchased directly from the issuer or from an underwriter or marketmakers for the securities. 
Such transactions are usually conducted on a net basis with the Fund paying no brokerage commissions. Purchases 
from underwriters include a commission or concession paid by the issuer to the underwriter, and the purchases from 
dealers serving as marketmakers include the spread between the bid and asked prices. 
 
The Board has approved procedures whereby a Fund may participate in a commission recapture program. 
Commission recapture is a form of institutional discount brokerage that returns commission dollars directly to a Fund. 
It provides a way to gain control over the commission expenses incurred by a Fund's Manager and/or Sub-Advisor, 
which can be significant over time and thereby reduces expenses, improves cash flow and conserves assets. A Fund 
can derive commission recapture dollars from both equity trading commissions and fixed-income (commission 
equivalent) spreads. The Funds may participate in a program through a relationship with Frank Russell Securities, Inc. 
From time to time, the Board reviews whether participation in the recapture program is in the best interest of the 
Funds. 

Allocation of Trades by the Sub-Advisors 
Each Sub-Advisor manages a number of accounts other than the Fund's portfolios. Each has adopted and 
implemented policies and procedures that it believes address the potential conflicts associated with managing 
accounts for multiple clients and ensures that all clients are treated fairly and equitably. 
 
Investments the Sub-Advisor deems appropriate for the Fund's portfolio may also be deemed appropriate by it for 
other accounts. Therefore, the same security may be purchased or sold at or about the same time for both the Fund's 
portfolio and other accounts. In such circumstances, the Sub-Advisor may determine that orders for the purchase or 
sale of the same security for the Fund's portfolio and one or more other accounts should be combined. In this event 
the transactions will be priced and allocated in a manner deemed by the Sub-Advisor to be equitable and in the best 
interests of the Fund portfolio and such other accounts. While in some instances combined orders could adversely 
affect the price or volume of a security, the Fund believes that its participation in such transactions on balance will 
produce better overall results for the Fund. 
 
PURCHASE AND REDEMPTION OF SHARES 
 
Purchase of Shares 
Participating insurance companies and certain other designated organizations are authorized to receive purchase 
orders on the Funds' behalf and those organizations are authorized to designate their agents and affiliates as 
intermediaries to receive purchase orders. Purchase orders are deemed received by a Fund when authorized 
organizations, their agents or affiliates receive the order. The Funds are not responsible for the failure of any 
designated organization or its agents or affiliates to carry out its obligations to its customers. Shares of the Funds are 
purchased at the net asset value ("NAV") per share, as determined at the close of the regular trading session of the 
NYSE next occurring after a purchase order is received and accepted by an authorized agent of a Fund. In order to 
receive a day's price, an order must be received in good order by the close of the regular trading session of the NYSE 
as described below in "Pricing of Fund Shares." 
 
Sales of Shares 
Payment for shares tendered for redemption is ordinarily made in cash. The Fund may determine, however, that it 
would be detrimental to the remaining shareholders to make payment of a redemption order wholly or partly in cash. 
The Fund may, therefore, pay the redemption proceeds in whole or in part by a distribution "in kind" of securities from 
the Fund's portfolio in lieu of cash. If the Fund pays the redemption proceeds in kind, the redeeming shareholder might 
incur brokerage or other costs in selling the securities for cash. The Fund will value securities used to pay redemptions 
in kind using the same method the Fund uses to value its portfolio securities as described below in "Pricing of Fund 
Shares." 
 
The right to require the Funds to redeem their shares may be suspended, or the date of payment may be postponed, 
whenever: 1) trading on the NYSE is restricted, as determined by the SEC, or the NYSE is closed except for holidays 
and weekends; 2) the SEC permits such suspension and so orders; or 3) an emergency exists as determined by the 
SEC so that disposal of securities or determination of NAV is not reasonably practicable. 
 
Certain designated organizations are authorized to receive sell orders on the Fund's behalf and those organizations 
are authorized to designate their agents and affiliates as intermediaries to receive redemption orders. Redemption 
orders are deemed received by the Fund when authorized organizations, their agents or affiliates receive the order. 
The Fund is not responsible for the failure of any designated organization or its agents or affiliates to carry out its 
obligations to its customers. 
 
Principal Management Corporation (the "Manager") may recommend to the Board, and the Board may elect, to close 
certain funds to new investors or close certain funds to new and existing investors. The Manager may make such a 
recommendation when a fund approaches a size where additional investments in the fund have the potential to 
adversely impact fund performance and make it increasingly difficult to keep the fund fully invested in a manner 
consistent with its investment objective. 

PRICING OF FUND SHARES 
 
Each Fund's shares are bought and sold at the current net asset value ("NAV") per share. Each Fund's NAV for each 
class is calculated each day the New York Stock Exchange ("NYSE") is open, as of the close of business of the 
Exchange (normally 3:00 p.m. Central Time). The NAV of Fund shares is not determined on days the NYSE is closed 
(generally, New Year's Day; Martin Luther King, Jr. Day; Washington's Birthday/Presidents' Day; Good Friday; 
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas). When an order to buy or sell 
shares is received, the share price used to fill the order is the next price calculated after the order is received in proper 
form. 
 
For these Funds, the share price is calculated by: 
•  taking the current market value of the total assets of the Fund 
•  subtracting liabilities of the Fund 
•  dividing the remainder proportionately into the classes of the Fund 
•  subtracting the liability of each class 
•  dividing the remainder by the total number of shares owned in that class. 
In determining NAV, securities listed on an Exchange, the NASDAQ National Market and foreign markets are valued 
at the closing prices on such markets, or if such price is lacking for the trading period immediately preceding the time 
of determination, such securities are valued at their current bid price. 
Municipal securities held by the Funds are traded primarily in the over-the-counter market. Valuations of such 
securities are furnished by one or more pricing services employed by the Funds and are based upon appraisals 
obtained by a pricing service, in reliance upon information concerning market transactions and quotations from 
recognized municipal securities dealers. 
Other securities that are traded on the over-the-counter market are valued at their closing bid prices. Each Fund will 
determine the market value of individual securities held by it, by using prices provided by one or more professional 
pricing services which may provide market prices to other funds, or, as needed, by obtaining market quotations from 
independent broker-dealers. Short-term securities maturing within 60 days are valued on an amortized cost basis. 
Securities for which quotations are not readily available, and other assets, are valued at fair value determined in good 
faith under procedures established by and under the supervision of the Board of Directors. 
 
A Fund's securities may be traded on foreign securities markets that close each day prior to the time the NYSE closes. 
In addition, foreign securities trading generally or in a particular country or countries may not take place on all 
business days in New York. The Fund has adopted policies and procedures to "fair value" some or all securities held 
by a Fund if significant events occur after the close of the market on which the foreign securities are traded but before 
the Fund's NAV is calculated. Significant events can be specific to a single security or can include events that impact a 
particular foreign market or markets. A significant event can also include a general market movement in the U.S. 
securities markets. These fair valuation procedures are intended to discourage shareholders from investing in the 
Fund for the purpose of engaging in market timing or arbitrage transactions. The values of foreign securities used in 
computing share price are determined at the time the foreign market closes. Foreign securities and currencies are 
converted to U.S. dollars using the exchange rate in effect at the close of the NYSE. Occasionally, events affecting the 
value of foreign securities occur when the foreign market is closed and the NYSE is open. The NAV of a Fund 
investing in foreign securities may change on days when shareholders are unable to purchase or redeem shares. If 
the Sub-Advisor believes that the market value is materially affected, the share price will be calculated using the policy 
adopted by the Fund. 
Certain securities issued by companies in emerging market countries may have more than one quoted valuation at 
any 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 the oversight of the Board of 
Directors as may from time to time be necessary. 

TAXATION OF THE FUNDS 
 
It is a policy of the Funds to make distributions of substantially all of their respective investment income and any net 
realized capital gains. The Funds intend to qualify as regulated investment companies by satisfying certain 
requirements prescribed by Subchapter M of the Internal Revenue Code. If a Fund fails to qualify as a regulated 
investment company, it will be liable for taxes, significantly reducing its distributions to shareholders and eliminating 
shareholders' ability to treat distributions (as long or short-term capital gains or qualifying dividends) of the Fund in the 
manner they were received by the Fund. 
 
All income dividends and capital gains distributions, if any, on a Fund's R-1, R-2, R-3, R-4, R-5, and Institutional class 
shares are reinvested automatically in additional shares of the same class of the same Fund. The reinvestment will be 
made at the NAV determined on the first business day following the record date. 
 
Certain Funds may purchase securities of certain foreign corporations considered to be passive foreign investment 
companies by the Internal Revenue Service. In order to avoid taxes and interest that must be paid by the Funds if 
these instruments appreciate in value, the Funds may make various elections permitted by the tax laws. However, 
these elections could require that the Funds recognize additional taxable income, which in turn must be distributed. 
 
The Fund is required in certain cases to withhold and remit to the U.S. Treasury 28% of ordinary income dividends and 
capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder 1) who has provided either 
an incorrect tax identification number or no number at all, 2) who is subject to backup withholding by the Internal 
Revenue Service for failure to report the receipt of interest or dividend income properly, or 3) who has failed to certify 
to the Fund that it is not subject to backup withholding or that it is a corporation or other "exempt recipient." 
 
A shareholder recognizes gain or loss on the sale or redemption of shares of the Fund in an amount equal to the 
difference between the proceeds of the sales or redemption and the shareholder's adjusted tax basis in the shares. All 
or a portion of any loss so recognized may be disallowed if the shareholder purchases other shares of the Fund within 
30 days before or after the sale or redemption. In general, any gain or loss arising from (or treated as arising from) the 
sale or redemption of shares of the Fund is considered capital gain or loss (long-term capital gain or loss if the shares 
were held for longer than one year). However, any capital loss arising from the sales or redemption of shares held for 
six months or less is disallowed to the extent of the amount of exempt-interest dividends received on such shares and 
(to the extent not disallowed) is treated as a long-term capital loss to the extent of the amount of capital gain dividends 
received on such shares. Capital losses in any year are deductible only to the extent of capital gains plus, in the case 
of a noncorporate taxpayer, $3,000 of ordinary income. 
 
If a shareholder a) incurs a sales charge in acquiring shares of the Fund, b) disposes of such shares less than 91 days 
after they are acquired, and c) subsequently acquires shares of the Fund or another fund at a reduced sales charge 
pursuant to a right to reinvest at such reduced sales charge acquired in connection with the acquisition of the shares 
disposed of, then the sales charge on the shares disposed of (to the extent of the reduction in the sales charge on the 
shares subsequently acquired) shall not be taken into account in determining gain or loss on the shares disposed of 
but shall be treated as incurred on the acquisition of the shares subsequently acquired. 
 
Shareholders should consult their own tax advisors as to the federal, state and local tax consequences of ownership of 
shares of the Funds in their particular circumstances. 

Special Tax Considerations 
 
International Funds 
Some foreign securities purchased by the Funds may be subject to foreign taxes that could reduce the yield on such 
securities. The amount of such foreign taxes is expected to be insignificant. The Funds may from year to year make 
the election permitted under Section 853 of the Internal Revenue Code to pass through such taxes to shareholders. If 
such election is not made, any foreign taxes paid or accrued will represent an expense to each affected Fund that will 
reduce its investment company taxable income. 
 
Futures Contracts and Options 
As previously discussed, some of the Funds invest in futures contracts or options thereon, index options, or options 
traded on qualified exchanges. For federal income tax purposes, capital gains and losses on futures contracts or 
options thereon, index options or options traded on qualified exchanges are generally treated as 60% long-term and 
40% short-term. In addition, the Funds must recognize any unrealized gains and losses on such positions held at the 
end of the fiscal year. A Fund may elect out of such tax treatment, however, for a futures or options position that is part 
of an "identified mixed straddle" such as a put option purchased with respect to a portfolio security. Gains and losses 
on futures and options included in an identified mixed straddle are considered 100% short-term and unrealized gains 
or losses on such positions are not realized at year-end. The straddle provisions of the Code may require the deferral 
of realized losses to the extent that a Fund has unrealized gains in certain offsetting positions at the end of the fiscal 
year. The Code may also require recharacterization of all or a part of losses on certain offsetting positions from short- 
term to long-term, as well as adjustment of the holding periods of straddle positions. 

PORTFOLIO HOLDINGS DISCLOSURE 
 
The Fund may publish month-end portfolio holdings information for each Fund's portfolio on the principal.com website 
and on the principalfunds.com website on the fifteenth business day of the following month. The Funds may also 
occasionally publish information on the website relating to specific events, such as the impact of a natural disaster, 
corporate debt default or similar events on portfolio holdings. It is the Fund's policy to disclose only public information 
regarding portfolio holdings (i.e. information published on the website or filed with the SEC), except as described 
below. 
 
Non-Specific Information. Under the Disclosure Policy, the Funds may distribute non-specific information about the 
Funds and/or summary information about the Funds as requested. Such information will not identify any specific 
portfolio holding, but may reflect, among other things, the quality, character, or sector distribution of a Fund's holdings. 
This information may be made available at any time (or without delay). 
 
Policy. The Fund and Principal have adopted a policy of disclosing non-public portfolio holdings information to third 
parties only to the extent required by federal law, and to the following third parties, so long as such third party has 
agreed, or is legally obligated, to maintain the confidentiality of the information and to refrain from using such 
information to engage in securities transactions: 
 
   1)Daily to the Fund's portfolio pricing services, FT Interactive Data Corporation, J.J. Kenny, Standard & Poor’s 
           Securities Evaluations, Inc. and PricingDirect, Inc. (formerly doing business as Bear Stearns Pricing Direct Inc.) 
           to obtain prices for portfolio securities; 
 
   2)Upon proper request to government regulatory agencies or to self regulatory organizations; 
 
   3)As needed to Ernst & Young LLP, the independent registered public accounting firm, in connection with the 
           performance of the services provided by Ernst & Young LLP to the Fund; 
 
   4)To the sub-advisers' proxy service providers (Automatic Data Processing, Glass Lews & Co., and RiskMetrics 
           Group) to facilitate voting of proxies; and 
 
   5)To the Fund's custodian, and tax service provider, The Bank of New York Mellon, in connection with the tax and 
           custodial services it provides to the Fund. 
 
The Fund is also permitted to enter into arrangements to disclose portfolio holdings to other third parties in connection 
with the performance of a legitimate business purpose if such third party agrees in writing to maintain the 
confidentiality of the information prior to the information being disclosed. Any such written agreement must be 
approved by an officer of the Fund, the Manager or the Fund's sub-advisor. Approval must be based on a reasonable 
belief that disclosure to such other third party is in the best interests of the Fund's shareholders. If a conflict of interest 
is identified in connection with disclosure to any such third party, the Fund's or the Manager's Chief Compliance 
Officer ("CCO") must approve such disclosure, in writing before it occurs. Such third parties currently include: 

Abel Noser  Interactive Data 
Advent  Investment Company Institute 
Ashland Partners  ITG Plexus Alpha Capture 
The Bank of New York Mellon  J.P. Morgan Investor Services 
Bloomberg, LP  Mellon Analytical Solutions 
Broadridge  MISYS International Banking Systems Inc. 
Charles River Development  Omgeo LLC 
Citigroup  RiskMetrics Group 
Confluence Technologies, Inc.  Russell Implementation Services, Inc. 
Depository Trust Co.  R.R. Donnelley and Sons Company 
Eagle Investment Systems  Standard & Poor's Securities Evaluations, Inc. 
Electra Securities Transaction and   
Reconciliation System (STaARS)  State Street 
EzE Castle Software LLC  SunGard PTA 
FactSet Research Systems  Thompson Baseline 
Financial Tracking, LLC  Vestek 
Fiserve (formally Check Free Investment Services)  Wolters Kluwer Financial Service 
Glass Lewis & Co.   
Hub Data   

Any agreement by which any Fund or any party acting on behalf of the Fund agrees to provide Fund portfolio 
information to a third party, other than a third party identified in the policy described above, must be approved prior to 
information being provided to the third party, unless the third party is a regulator or has a duty to maintain the 
confidentiality of such information and to refrain from using such information to engage in securities transactions. A 
written record of approval will be made by the person granting approval. 
 
The Fund's non-public portfolio holdings information policy applies without variation to individual investors, institutional 
investors, intermediaries that distribute the Fund's shares, third party service providers, rating and ranking 
organizations, and affiliated persons of the Fund. Neither the Fund nor the Manager nor any other party receive 
compensation in connection with the disclosure of Fund portfolio information. The Fund's CCO will periodically, but no 
less frequently than annually, review the Fund's portfolio holdings disclosure policy and recommend changes the CCO 
believes are appropriate, if any, to the Fund's Board of Directors. In addition, the Fund's Board of Directors must 
approve any change in the Fund's portfolio holdings disclosure policy that would expand the distribution of such 
information. 
 
PROXY VOTING POLICIES AND PROCEDURES 
 
The Board of Directors has delegated responsibility for decisions regarding proxy voting for securities held by each 
Fund to that Fund's Sub-Advisor. The Sub-Advisor will vote such proxies in accordance with its proxy policies and 
procedures, which have been reviewed by the Board of Directors, and which are found in Appendix B. Any material 
changes to the proxy policies and procedures will be submitted to the Board of Directors for approval. 
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
 
Ernst & Young LLP (233 South Wacker Drive, Chicago, IL 60606), independent registered public accounting firm, is 
the independent registered public accounting firm for the Fund Complex. 

DISCLOSURE REGARDING PORTFOLIO MANAGERS       
(AS PROVIDED BY THE SUB-ADVISORS)         
 
 
Sub-Advisor: Mellon Capital Management Corporation (“Mellon Capital”)   
This information is as of June 30, 2009.         
 
               Other Accounts Managed   
      Number of   
    Total Assets  Accounts that  Total Assets of the 
  Total  in the  base the  Accounts that base 
  Number of  Accounts (in  Advisory Fee on  the Advisory Fee on 
  Accounts  $ millions)  Performance  Performance 
   David Kwan, CFA         
   Bond Market Index Fund  59  $15,472  1  $225,308,562 
   Registered investment companies  13  $1,614  0  $0 
   Other pooled investment vehicles  22  $9,483  0  $0 
   Other accounts  24  $4,375  1  $225,308,562 
 
   Zandra Zelaya, CFA         
   Bond Market Index Fund  59  $15,472  1  $225,308,562 
   Registered investment companies  13  $1,614  0  $0 
   Other pooled investment vehicles  22  $9,483  0  $0 
   Other accounts  24  $4,375  1  $225,308,562 
 
Conflicts of Interest         

• a description of any material conflicts of interest that may arise in connection with the Portfolio Manager's 
       management of the Fund's investments, on the one hand, and the investments of the other accounts included in 
       response to this question, on the other. This description would include, for example, material conflicts between 
       the investment strategy of the Fund and the investment strategy of other accounts managed by the Portfolio 
       Manager and material conflicts in allocation of investment opportunities between the Fund and other accounts 
       managed by the Portfolio Manager. 

Because the portfolio managers manage multiple portfolios for multiple clients, the potential for conflicts of 
interest exists. Each portfolio manager generally manages portfolios having substantially the same 
investment style as the Fund identified above (hereinafter, “the Fund”). However, the portfolios managed by 
a portfolio manager may not have portfolio compositions identical to those of the Fund managed by the 
portfolio manager due, for example, to specific investment limitations or guidelines present in some 
portfolios or accounts, but not others. The portfolio managers may purchase securities for one portfolio and 
not another portfolio, and the performance of securities purchased for one portfolio may vary from the 
performance of securities purchased for other portfolios. A portfolio manager may place transactions on 
behalf of other accounts that are directly or indirectly contrary to investment decisions made on behalf of the 
Fund, or make investment decisions that are similar to those made for the Fund, both of which have the 
potential to adversely impact the Fund depending on market conditions. For example, a portfolio manager 
may purchase a security in one portfolio while appropriately selling that same security in another portfolio. In 
addition, some of these portfolios have fee structures that are or have the potential to be higher than the 
advisory fees paid by the Fund, which can cause potential conflicts in the allocation of investment 
opportunities between the Fund and the other accounts. However, the compensation structure for portfolio 
managers does not generally provide incentive to favor one account over another because that part of a 
manager's bonus based on performance is not based on the performance of one account to the exclusion of 
others. There are many other factors considered in determining the portfolio manager's bonus and there is 
no formula that is applied to weight the factors listed. In addition, current trading practices do not allow 
Mellon Capital Management Corporation to intentionally favor one portfolio over another as trades are 
executed as trade orders are received. Portfolio's rebalancing dates also generally vary between fund 
families. Program trades created from the portfolio rebalance are executed at market on close. 
 
Compensation 
 
1. Describe the structure of, and the method used to determine, the compensation of each Portfolio Manager. For 
each type of compensation (e.g., salary, bonus, deferred compensation, retirement plans and arrangements), 
describe with specificity the criteria on which that type of compensation is based, for example, whether 
compensation is fixed, whether (and, if so, how) compensation is based on Fund pre- or after-tax performance over 
a certain time period, and whether (and, if so, how) compensation is based on the value of assets held in the Fund's 
portfolio. For example, if compensation is based solely or in part on performance, identify any benchmark used to 
measure performance and state the length of the period over which performance is measured. 
 
       •  Compensation includes, without limitation, salary, bonus, deferred compensation, and pension and retirement 
  plans and arrangements, whether the compensation is cash or non-cash. Group life, health, hospitalization, 
  medical reimbursement, relocation, and pension and retirement plans and arrangements may be omitted, 
  provided that they do not discriminate in scope, terms, or operation in favor of the Portfolio Manager or a group 
  of employees that includes the Portfolio Manager and are available generally to all salaried employees. The 
  value of compensation is not required to be disclosed. 
 
       •  Include a description of the structure of, and the method used to determine, any compensation received by the 
  Portfolio Manager from the Fund, the Fund's investment adviser, or any other source with respect to 
  management of the Fund and any other accounts included in this questionnaire. This description must clearly 
  disclose any differences between the method used to determine the Portfolio Manager's compensation with 
  respect to the Fund and other accounts, e.g., if the Portfolio Manager receives part of an advisory fee that is 
  based on performance with respect to some accounts but not the Fund, this must be disclosed. 
 
The primary objectives of the Mellon Capital compensation plans are to: 
 
  •  Motivate and reward continued growth and profitability 
  •  Attract and retain high-performing individuals critical to the on-going success of Mellon Capital 
  •  Motivate and reward strong business/investment performance 
  •  Create an ownership mentality for all employees 

The investment professionals' cash compensation is comprised primarily of a market-based base salary and 
(variable) incentives (annual and long term). An investment professional's base salary is determined by the 
employees' experience and performance in the role, taking into account the ongoing compensation 
benchmark analyses. A portfolio manager's base salary is generally a fixed amount that may change as a 
result of an annual review, upon assumption of new duties, or when a market adjustment of the position 
occurs. Funding for the Mellon Capital Annual Incentive Plan and Long Term Incentive Plan is through a pre- 
determined fixed percentage of overall Mellon Capital profitability. Therefore, all bonus awards are based 
initially on Mellon Capital's financial performance. The employees are eligible to receive annual cash bonus 
awards from the Annual Incentive Plan. Annual incentive opportunities are pre-established for each 
individual, expressed as a percentage of base salary ("target awards"). These targets are derived based on a 
review of competitive market data for each position annually. Annual awards are determined by applying 
multiples to this target award. Awards are 100% discretionary. Factors considered in awards include 
individual performance, team performance, investment performance of the associated portfolio(s) and 
qualitative behavioral factors. Other factors considered in determining the award are the asset size and 
revenue growth/retention of the products managed. Awards are paid in cash on an annual basis. 
 
All key staff of Mellon Capital are also eligible to participate in the Mellon Capital Long Term Incentive Plan. 
These positions have a high level of accountability and a large impact on the success of the business due to 
the position's scope and overall responsibility. In addition, the participants have demonstrated a long-term 
performance track record and have the potential for a continued leadership role. This plan provides for an 
annual award, payable in cash after a three-year cliff vesting period. The value of the award increases during 
the vesting period based upon the growth in Mellon Capital's net income. 
 
Mellon Capital's portfolio managers responsible for managing mutual funds are paid by Mellon Capital and 
not by the mutual funds. The same methodology described above is used to determine portfolio manager 
compensation with respect to the management of mutual funds and other accounts. 
 
Mutual fund portfolio managers are also eligible for the standard retirement benefits and health and welfare 
benefits available to all Mellon Capital employees. Certain portfolio managers may be eligible for additional 
retirement benefits under several supplemental retirement plans that Mellon Capital provides to restore 
dollar-for-dollar the benefits of management employees that had been cut back solely as a result of certain 
limits due to the tax laws. These plans are structured to provide the same retirement benefits as the standard 
retirement benefits. In addition, mutual fund portfolio managers whose compensation exceeds certain limits 
may elect to defer a portion of their salary and/or bonus under The Bank of New York Mellon Corporation 
Deferred Compensation Plan for Employees. 
 
 
 
Ownership of Securities 
 
2. For each Portfolio Manager, state the dollar range of equity securities in the Fund beneficially owned (as defined by 
     Securities Exchange Act of 1934 Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none, $1 - 
     $10,000; $10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 - $1,000,000; or over $1,000,000. 
     If the Portfolio Manager has reasons for not holding shares of the Fund, e.g., that its investment objectives do not 
     match the Portfolio Manager's, you may provide an explanation of those reasons. 

Portfolio Manager  Funds Managed by Portfolio Manager  Dollar Range of Securities 
  (list each fund on its own line)  Owned by the Portfolio Manager 
 
David Kwan  Bond Market Index Fund  None 
 
Zandra Zelaya  Bond Market Index Fund  None 

Sub-Advisor: Principal Global Investors, LLC (“PGI”)       
This information is as of June 30, 2009.         
  Other Accounts Managed     
      Number of   
      Accounts   
      that base  Total Assets of 
      the Advisory  the Accounts 
               Total    Fee on  that base the 
               Number of  Total Assets in the  Performance  Advisory Fee on 
               Accounts  Accounts    Performance 
   Dirk Laschanzky    7,293,672,190.21  0  0 
   International Equity Index Fund         
   Registered investment companies               4  1,497,542,119.46     
   Other pooled investment vehicles               3  5,701,499,790.51     
   Other accounts               4  94,630,280.24     
 
   Scott Smith    7,293,672,190.21  0  0 
   International Equity Index Fund         
   Registered investment companies               4  1,497,542,119.46     
   Other pooled investment vehicles               3  5,701,499,790.51     
   Other accounts               4  94,630,280.24     

Conflicts of Interest 
       • a description of any material conflicts of interest that may arise in connection with the Portfolio Manager's 
               management of the Fund's investments, on the one hand, and the investments of the other accounts included in 
               response to this question, on the other. This description would include, for example, material conflicts between 
               the investment strategy of the Fund and the investment strategy of other accounts managed by the Portfolio 
               Manager and material conflicts in allocation of investment opportunities between the Fund and other accounts 
               managed by the Portfolio Manager. 
 
None. 
Compensation 
1. Describe the structure of, and the method used to determine, the compensation of each Portfolio Manager. For 
     each type of compensation (e.g., salary, bonus, deferred compensation, retirement plans and arrangements), 
     describe with specificity the criteria on which that type of compensation is based, for example, whether 
     compensation is fixed, whether (and, if so, how) compensation is based on Fund pre- or after-tax performance over 
     a certain time period, and whether (and, if so, how) compensation is based on the value of assets held in the Fund's 
     portfolio. For example, if compensation is based solely or in part on performance, identify any benchmark used to 
     measure performance and state the length of the period over which performance is measured. 
       • Compensation includes, without limitation, salary, bonus, deferred compensation, and pension and retirement 
               plans and arrangements, whether the compensation is cash or non-cash. Group life, health, hospitalization, 
               medical reimbursement, relocation, and pension and retirement plans and arrangements may be omitted, 
               provided that they do not discriminate in scope, terms, or operation in favor of the Portfolio Manager or a group 
               of employees that includes the Portfolio Manager and are available generally to all salaried employees. The 
               value of compensation is not required to be disclosed. 

   • Include a description of the structure of, and the method used to determine, any compensation received by the 
           Portfolio Manager from the Fund, the Fund's investment adviser, or any other source with respect to 
           management of the Fund and any other accounts included in this questionnaire. This description must clearly 
           disclose any differences between the method used to determine the Portfolio Manager's compensation with 
           respect to the Fund and other accounts, e.g., if the Portfolio Manager receives part of an advisory fee that is 
           based on performance with respect to some accounts but not the Fund, this must be disclosed. 
 
PGI offers all employees a competitive salary and incentive compensation plan that is evaluated annually. 
Percentages of base salary versus performance bonus vary by position but are based on nationally competitive 
market data and are consistent with industry standards. Total cash compensation is targeted at the median of the 
market and benefits are targeted slightly above median. The investment staff is compensated under a base salary plus 
variable annual bonus (incentive compensation). The incentive compensation plan for equity portfolio managers is 
90% weighted to investment performance and 10% weighted to PGI annual performance score. The incentive bonus 
for equity portfolio managers ranges from 150% to 300% of actual base earnings, depending on job level. 
 
•   Investment performance is based on gross performance versus a benchmark, peer group or both, depending on 
   the client mandate.     
•   Performance versus peers is measured for a period up to three years (shorter if the portfolio manager has 
   managed the respective portfolio for a period less than three years).   
•   Versus the peer group, incentive payout starts at 54th percentile and reaches 100% at the 25th percentile for the 1, 
   2, and 3-year periods. 3.33% of incentive payout is achieved at 54th percentile. No payout is realized if 
   performance is at or below 55th percentile.   
 
As a wholly-owned subsidiary of Principal Financial Group, all PGI employees are eligible to participate in an 
Employee Stock Purchase Plan that allows them to purchase company stock at a 15% discount. In addition, through a 
401(k) plan, employees are able to contribute to an Employee Stock Ownership Plan (ESOP) through which they can 
buy additional company stock.     
 
Ownership of Securities     
 
2. For each Portfolio Manager, state the dollar range of equity securities in the Fund beneficially owned (as defined by 
  Securities Exchange Act of 1934 Rule 16a-1(a)(2)) by the Portfolio Manager using the following ranges: none, $1 - 
  $10,000; $10,001 - $50,000; $50,001 - $100,000; $100,001 - $500,000; $500,001 - $1,000,000; or over 
  $1,000,000. If the Portfolio Manager has reasons for not holding shares of the Fund, e.g., that its investment 
  objectives do not match the Portfolio Manager's, you may provide an explanation of those reasons. 
 
 
 
      Dollar Range of Securities 
    Funds Managed by Portfolio Manager  Owned by the Portfolio 
  Portfolio Manager  (list each fund on its own line)  Manager 
  Dirk Laschanzky  International Equity Index Fund  None 
  Scott Smith  International Equity Index Fund  None 

APPENDIX A 
Description of Bond Ratings 
Moody's Investors Service, Inc. Rating Definitions: 
Long-Term Obligation Ratings 
Moody's long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original 
maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. 
Such ratings reflect both the likelihood of default and any financial loss suffered in the event of default. 
Aaa:  Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. 
Aa:  Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. 
A:  Obligations rated A are considered upper-medium grade and are subject to low credit risk. 
Baa:  Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such 
  may possess certain speculative characteristics. 
Ba:  Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk. 
B:  Obligations rated B are considered speculative and are subject to high credit risk. 
Caa:  Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk. 
Ca:  Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of 
  recovery of principal and interest. 
C:  Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for 
  recovery of principal or interest. 
NOTE: Moody's appends numerical modifiers, 1, 2, and 3 to each generic rating classification from Aa through Caa. 
The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category, the modifier 2 
indicates a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of that generate rating category. 
SHORT-TERM NOTES: The four ratings of Moody's for short-term notes are MIG 1, MIG 2, MIG 3, and MIG 4. MIG 1 
denotes "best quality, enjoying strong protection from established cash flows." MIG 2 denotes "high quality" with 
"ample margins of protection." MIG 3 notes are of "favorable quality but lacking the undeniable strength of the 
preceding grades." MIG 4 notes are of "adequate quality, carrying specific risk for having protection and not distinctly 
or predominantly speculative." 
Description of Moody's Commercial Paper Ratings: 
Moody's Commercial Paper ratings are opinions of the ability to repay punctually promissory obligations not having an 
original maturity in excess of nine months. Moody's employs the following three designations, all judged to be 
investment grade, to indicate the relative repayment capacity of rated issuers: 
Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term 
promissory obligations. 
Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term 
promissory obligations. 

Issuers rated Prime-3 (or related supporting institutions) have an acceptable capacity for repayment of short-term 
promissory obligations. 
 
Issuers rated Not Prime do not fall within any of the Prime rating categories. 
 
Description of Standard & Poor's Corporation's Debt Ratings: 
A Standard & Poor's debt rating is a current assessment of the creditworthiness of an obligor with respect to a specific 
obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees. 
 
The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to 
market price or suitability for a particular investor. 
 
The ratings are based on current information furnished by the issuer or obtained by Standard & Poor's from other 
sources Standard & Poor's considers reliable. Standard & Poor's does not perform an audit in connection with any 
rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or 
withdrawn as a result of changes in, or unavailability of, such information, or for other circumstances. 
 
The ratings are based, in varying degrees, on the following considerations: 
 
l.  Likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and 
  repayment of principal in accordance with the terms of the obligation; 
 
II.  Nature of and provisions of the obligation; 
 
III.  Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or 
  other arrangement under the laws of bankruptcy and other laws affecting creditor's rights. 
 
AAA:  Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay 
  principal is extremely strong. 
 
AA:  Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest- 
  rated issues only in small degree. 
 
A:  Debt rated "A" has a strong capacity to pay interest and repay principal although they are somewhat more 
  susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher- 
  rated categories. 
 
BBB:  Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it 
  normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances 
  are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than 
  for debt in higher-rated categories. 
 
BB, B, CCC, CC: Debt rated "BB," "B," "CCC," and "CC" is regarded, on balance, as predominantly speculative with 
  respect to capacity to pay interest and repay principal in accordance with the terms of the 
  obligation. "BB" indicates the lowest degree of speculation and "CC" the highest degree of 
  speculation. While such debt will likely have some quality and protective characteristics, these are 
  outweighed by large uncertainties or major risk exposures to adverse conditions. 
 
C:  The rating "C" is reserved for income bonds on which no interest is being paid. 
 
D:  Debt rated "D" is in default, and payment of interest and/or repayment of principal is in arrears. 
 
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the addition of a plus or minus sign to show 
relative standing within the major rating categories. 

Provisional Ratings: The letter "p" indicates that the rating is provisional. A provisional rating assumes the successful 
completion of the project being financed by the bonds being rated and indicates that payment of debt service 
requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, 
however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood 
of, or the risk of default upon failure of, such completion. The investor should exercise his own judgment with respect 
to such likelihood and risk. 
 
NR:  Indicates that no rating has been requested, that there is insufficient information on which to base a rating or 
  that Standard & Poor's does not rate a particular type of obligation as a matter of policy. 
 
Standard & Poor's, Commercial Paper Ratings 
 
A Standard & Poor's Commercial Paper Rating is a current assessment of the likelihood of timely payment of debt 
having an original maturity of no more than 365 days. Ratings are graded into four categories, ranging from "A" for the 
highest quality obligations to "D" for the lowest. Ratings are applicable to both taxable and tax-exempt commercial 
paper. The four categories are as follows: 
 
A:  Issues assigned the highest rating are regarded as having the greatest capacity for timely payment. Issues in 
  this category are delineated with the numbers 1, 2, and 3 to indicate the relative degree of safety. 
 
A-1:  This designation indicates that the degree of safety regarding timely payment is either overwhelming or very 
  strong. Issues that possess overwhelming safety characteristics will be given a "+" designation. 
 
A-2:  Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is 
  not as high as for issues designated "A-1." 
 
A-3:  Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, 
  somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying the 
  highest designations. 
 
B:  Issues rated "B" are regarded as having only an adequate capacity for timely payment. However, such 
  capacity may be damaged by changing conditions or short-term adversities. 
 
C:  This rating is assigned to short-term debt obligations with a doubtful capacity for payment. 
 
D:  This rating indicates that the issue is either in default or is expected to be in default upon maturity. 
 
The Commercial Paper Rating is not a recommendation to purchase or sell a security. The ratings are based on 
current information furnished to Standard & Poor's by the issuer and obtained by Standard & Poor's from other 
sources it considers reliable. The ratings may be changed, suspended, or withdrawn as a result of changes in or 
unavailability of, such information. 
 
Standard & Poor's rates notes with a maturity of less than three years as follows: 
 
SP-1:  A very strong, or strong, capacity to pay principal and interest. Issues that possess overwhelming safety 
  characteristics will be given a "+" designation. 
 
SP-2:  A satisfactory capacity to pay principal and interest. 
 
SP-3:  A speculative capacity to pay principal and interest. 

APPENDIX B 
Proxy Voting Policies 
The proxy voting policies applicable to each Fund appear in the following order: 
The Manager’s proxy voting policy is first, followed by the Sub-Advisors, alphabetically. 

Proxy Voting Policies and Procedures For
Principal Investors Fund
Principal Variable Contracts Fund
Principal Retail Funds
(December 15, 2003)
 
 
It is each fund's policy to delegate authority to its advisor or sub-advisor, as appropriate, 
to vote proxy ballots relating to the fund's portfolio securities in accordance with the 
advisor's or sub-advisor's voting policies and procedures. 
 
The advisor or sub-advisor must provide, on a quarterly basis: 
 
         1.  Written affirmation that all proxies voted during the preceding calendar quarter, 
  other than those specifically identified by the advisor or sub-advisor, were voted 
  in a manner consistent with the advisor's or sub-advisor's voting policies and 
  procedures. In order to monitor the potential effect of conflicts of interest of an 
  advisor or sub-advisor, the advisor or sub-advisor will identify any proxies the 
  advisor or sub-advisor voted in a manner inconsistent with its policies and 
  procedures. The advisor or sub-advisor shall list each such vote, explain why the 
  advisor or sub-advisor voted in a manner contrary to its policies and procedures, 
  state whether the advisor or sub-advisor’s vote was consistent with the 
  recommendation to the advisor or sub-advisor of a third party and, if so, identify 
  the third party; and 
 
         2.  Written notification of any changes to the advisor's or sub-advisor's proxy voting 
  policies and procedures made during the preceding calendar quarter. 
 
 
The advisor or sub-advisor must provide, no later than July 31 of each year, the following 
information regarding each proxy vote cast during the 12-month period ended June 30 
for each fund portfolio or portion of fund portfolio for which it serves as investment 
advisor, in a format acceptable to fund management: 
 
         1.  Identification of the issuer of the security; 
         2.  Exchange ticker symbol of the security; 
         3.  CUSIP number of the security; 
         4.  The date of the shareholder meeting; 
         5.  A brief description of the subject of the vote; 
         6.  Whether the proposal was put forward by the issuer or a shareholder; 
         7.  Whether and how the vote was cast; 
         8.  Whether the vote was cast for or against management of the issuer. 

  THE BANK OF NEW YORK MELLON CORPORATION 
 
  PROXY VOTING POLICY 
  (Revised: October 24, 2008) 
 
 
 
1.  Scope of Policy - This Proxy Voting Policy has been adopted by certain of the investment 
  advisory subsidiaries of The Bank of New York Mellon Corporation (“BNY Mellon”), the 
  investment companies advised by such subsidiaries (the “Funds”), and the banking 
  subsidiaries of BNY Mellon (BNY Mellon’s investment advisory and banking subsidiaries 
  are hereinafter referred to individually as a “Subsidiary” and collectively as the 
  “Subsidiaries”). 
 
2.  Fiduciary Duty - We recognize that an investment adviser is a fiduciary that owes its clients 
  a duty of utmost good faith and full and fair disclosure of all material facts. We further 
  recognize that the right to vote proxies is an asset, just as the economic investment 
  represented by the shares is an asset. An investment adviser's duty of loyalty precludes the 
  adviser from subrogating its clients' interests to its own. Accordingly, in voting proxies, we 
  will seek to act solely in the best financial and economic interests of our clients, including the 
  Funds and their shareholders, and for the exclusive benefit of pension and other employee 
  benefit plan participants. With regard to voting proxies of foreign companies, a Subsidiary 
  weighs the cost of voting, and potential inability to sell, the shares against the benefit of 
  voting the shares to determine whether or not to vote. 
 
3.  Long-Term Perspective - We recognize that management of a publicly-held company may 
  need protection from the market’s frequent focus on short-term considerations, so as to be 
  able to concentrate on such long-term goals as productivity and development of competitive 
  products and services. 
 
4.  Limited Role of Shareholders - We believe that a shareholder’s role in the governance of a 
  publicly-held company is generally limited to monitoring the performance of the company 
  and its managers and voting on matters which properly come to a shareholder vote. We will 
  carefully review proposals that would limit shareholder control or could affect shareholder 
  values. 
 
5.  Anti-takeover Proposals - We generally will oppose proposals that seem designed to 
  insulate management unnecessarily from the wishes of a majority of the shareholders and that 
  would lead to a determination of a company’s future by a minority of its shareholders. We 
  will generally support proposals that seem to have as their primary purpose providing 
  management with temporary or short-term insulation from outside influences so as to enable 
  them to bargain effectively with potential suitors and otherwise achieve identified long-term 
  goals to the extent such proposals are discrete and not bundled with other proposals. 
 
6.  “Social” Issues - On questions of social responsibility where economic performance does 
  not appear to be an issue, we will attempt to ensure that management reasonably responds to 
  the social issues. Responsiveness will be measured by management's efforts to address the 
  particular social issue including, where appropriate, assessment of the implications of the 
  proposal to the ongoing operations of the company. We will pay particular attention to repeat 
  issues where management has failed in the intervening period to take actions previously 
  committed to. 
 
  With respect to clients having investment policies that require proxies to be cast in a certain 
  manner on particular social responsibility issues, proposals relating to such issues will be 

  evaluated and voted separately by the client’s portfolio manager in accordance with such 
  policies, rather than pursuant to the procedures set forth in section 7. 
 
7.  Proxy Voting Process - Every voting proposal is reviewed, categorized and analyzed in 
  accordance with our written guidelines in effect from time to time. Our guidelines are 
  reviewed periodically and updated as necessary to reflect new issues and any changes in our 
  policies on specific issues. Items that can be categorized will be voted in accordance with 
  any applicable guidelines or referred to the BNY Mellon Proxy Policy Committee (the 
  “Committee”), if the applicable guidelines so require. Proposals for which a guideline has not 
  yet been established, for example, new proposals arising from emerging economic or 
  regulatory issues, will be referred to the Committee for discussion and vote. Additionally, the 
  Committee may elect to review any proposal where it has identified a particular issue for 
  special scrutiny in light of new information. The Committee will also consider specific 
  interests and issues raised by a Subsidiary to the Committee, which interests and issues may 
  require that a vote for an account managed by a Subsidiary be cast differently from the 
  collective vote in order to act in the best interests of such account's beneficial owners. 
 
8.  Material Conflicts of Interest - We recognize our duty to vote proxies in the best interests 
  of our clients. We seek to avoid material conflicts of interest through the establishment of our 
  Committee structure, which applies detailed, pre-determined proxy voting guidelines in an 
  objective and consistent manner across client accounts, based on internal and external 
  research and recommendations provided by a third party vendor, and without consideration of 
  any client relationship factors. Further, we engage a third party as an independent fiduciary 
  to vote all proxies for BNY Mellon securities and Fund securities. 
 
9.  Securities Lending - We seek to balance the economic benefits of engaging in lending 
  securities against the inability to vote on proxy proposals to determine whether to recall 
  shares, unless a plan fiduciary retains the right to direct us to recall shares. 
 
10. Recordkeeping - We will keep, or cause our agents to keep, the records for each voting 
  proposal required by law. 
 
11. Disclosure - We will furnish a copy of this Proxy Voting Policy and any related procedures, 
  or a description thereof, to investment advisory clients as required by law. In addition, we 
  will furnish a copy of this Proxy Voting Policy, any related procedures, and our voting 
  guidelines to investment advisory clients upon request. The Funds shall include this Proxy 
  Voting Policy and any related procedures, or a description thereof, in their Statements of 
  Additional Information, and shall disclose their proxy votes, as required by law. We 
  recognize that the applicable trust or account document, the applicable client agreement, the 
  Employee Retirement Income Security Act of 1974 (ERISA) and certain laws may require 
  disclosure of other information relating to proxy voting in certain circumstances. This 
  information will only be disclosed to those who have an interest in the account for which 
  shares are voted, and after the shareholder meeting has concluded. 

Proxy Voting and Class Action Monitoring
 
Background 
 
Rule 206(4)-6 under the Advisers Act requires every investment adviser who exercises voting authority with 
respect to client securities to adopt and implement written policies and procedures, reasonably designed to 
ensure that the adviser votes proxies in the best interest of its clients. The procedures must address material 
conflicts that may arise in connection with proxy voting. The Rule further requires the adviser to provide a 
concise summary of the adviser’s proxy voting process and offer to provide copies of the complete proxy 
voting policy and procedures to clients upon request. Lastly, the Rule requires that the adviser disclose to 
clients how they may obtain information on how the adviser voted their proxies. 
 
Risks   
 
In developing this policy and procedures, the Advisers considered numerous risks associated with their 
voting of client proxies. This analysis includes risks such as: 
 
         •  The Advisers do not maintain a written proxy voting policy as required by Rule 206(4)-6. 
 
         •  Proxies are not voted in Clients’ best interests. 
 
         •  Proxies are not identified and voted in a timely manner. 
 
         •  Conflicts between the Advisers’ interests and the Client are not identified; therefore, proxies are not 
  voted appropriately. 
 
         •  The third-party proxy voting services utilized by the Advisers are not independent. 
 
         •  Proxy voting records and Client requests to review proxy votes are not maintained. 
 
The Advisers have established the following guidelines as an attempt to mitigate these risks. 
 
Policy   
 
The Advisers believe that proxy voting and the analysis of corporate governance issues, in general, are 
important elements of the portfolio management services we provide to our advisory clients. Our guiding 
principles in performing proxy voting are to make decisions that (i) favor proposals that tend to maximize a 
company's shareholder value and (ii) are not influenced by conflicts of interest. These principles reflect the 
Advisers’ belief that sound corporate governance will create a framework within which a company can be 
managed in the interests of its shareholders. 
 
In addition, as a fiduciary, the Advisers also monitor Clients’ ability to participate in class action events 
through the regular portfolio management process. Accordingly, the Advisers have adopted the policies and 
procedures set out below, which are designed to ensure that the Advisers comply with legal, fiduciary, and 
contractual obligations with respect to proxy voting and class actions. 

Proxy Voting Procedures 
 
The Advisers have implemented these procedures with the premise that portfolio management personnel base 
their determinations of whether to invest in a particular company on a variety of factors, and while corporate 
governance is one such factor, it may not be the primary consideration. As such, the principles and positions 
reflected in the procedures are designed to guide in the voting of proxies, and not necessarily in making 
investment decisions. 
 
The Operations Department has assigned a Proxy Voting Coordinator to manage the proxy voting process. 
The Investment Accounting Department has delegated the handling of class action activities to a Senior 
Investment Accounting Leader. 
 
Institutional Shareholder Services 
 
Based on the Advisers’ investment philosophy and approach to portfolio construction, and given the 
complexity of the issues that may be raised in connection with proxy votes, the Advisers have retained the 
services of Institutional Shareholder Services (“ISS”). ISS, a wholly owned subsidiary of RiskMetrics 
Group, is an independent company that specializes in providing a variety of fiduciary-level proxy-related 
services to institutional investment managers. The services provided to the Advisers include in-depth 
research, voting recommendations, vote execution, recordkeeping, and reporting. 
 
The Advisers have elected to follow the ISS Standard Proxy Voting Guidelines (the “Guidelines”), which 
embody the positions and factors that the Advisers’ Portfolio Management Teams (“PM Teams”) generally 
consider important in casting proxy votes.11 The Guidelines address a wide variety of individual topics, 
including, among other matters, shareholder voting rights, anti-takeover defenses, board structures, the 
election of directors, executive and director compensation, reorganizations, mergers, and various shareholder 
proposals. In connection with each proxy vote, ISS prepares a written analysis and recommendation (an 
“ISS Recommendation”) that reflects ISS’s application of the Guidelines to the particular proxy issues. ISS 
Proxy Voting Guidelines Summaries are accessible to all PM Teams on the ISS system. They are also 
available from the Proxy Voting Coordinator, who has been assigned by the Operations Department to 
manage the proxy voting process. 
 
Voting Against ISS Recommendations 
 
On any particular proxy vote, Portfolio Managers may decide to diverge from the Guidelines. Where the 
Guidelines do not direct a particular response and instead list relevant factors, the ISS Recommendation will 
reflect ISS’s own evaluation of the factors. As mentioned above, the PM Teams have access to the ISS 
Recommendations and may determine that it is in the best interest of Clients to vote differently. 
 
In the event that judgment differs from that of ISS, the Advisers will memorialize the reasons supporting that 
judgment and retain a copy of those records for the Advisers’ files. In such cases, our procedures require: 
 
                   1.  The requesting PM Team to set forth the reasons for their decision; 
                   2.  The approval of the lead Portfolio Manager for the requesting PM Team; 
                   3.  Notification to the Proxy Voting Coordinator and other appropriate personnel (including other 
  PGI/PrinREI Portfolio Managers who may own the particular security); 
                   4.  A determination that the decision is not influenced by any conflict of interest; and 
                   5.  The creation of a written record reflecting the process (See Appendix XXIX). 
 
 
11 The Advisers have various Portfolio Manager Teams organized by asset classes and investment strategies. 

Additionally, the Compliance Department will periodically review the voting of proxies to ensure that all 
such votes – particularly those diverging from the judgment of ISS – were voted consistent with the 
Advisers’ fiduciary duties. 
 
Conflicts of Interest 
 
The Advisers have implemented procedures designed to prevent conflicts of interest from influencing proxy 
voting decisions. These procedures include our use of the Guidelines and ISS Recommendations. Proxy 
votes cast by the Advisers in accordance with the Guidelines and ISS Recommendations are generally not 
viewed as being the product of any conflicts of interest because the Advisers cast such votes pursuant to a 
pre-determined policy based upon the recommendations of an independent third party. 
 
Our procedures also prohibit the influence of conflicts of interest where a PM Team decides to vote against 
an ISS Recommendation, as described above. In exceptional circumstances, the approval process may also 
include consultation with the Advisers’ senior management, the Law Department, Outside Counsel, and/or 
the Client whose account may be affected by the conflict. The Advisers will maintain a record of the 
resolution of any proxy voting conflict of interest. 
 
Proxy Voting Instructions and New Accounts 
 
Institutional Accounts 
 
As part of the new account opening process for discretionary institutional Clients, the Advisers’ Client 
Services Department is responsible for sending a proxy letter to the Client’s custodian. This letter instructs 
the custodian to send the Client’s proxy materials to ISS for voting. The custodian must complete the letter 
and fax it to ISS, with a copy to the Advisers’ Client Services Department and the Proxy Voting Coordinator. 
This process is designed to ensure and document that the custodian is aware of its responsibility to send 
proxies to ISS. 
 
The Client Services Department is responsible for maintaining this proxy instruction letter in the Client’s file 
and for scanning it into the Advisers’ OnBase system. These steps are part of the Advisers’ Account 
Opening Process. 
 
SMA – Wrap Accounts 
 
The Advisers’ SMA Operations Department is responsible for servicing wrap accounts, which includes 
setting up the accounts for proxy voting with ISS. The SMA Operations Department is responsible for 
sending a letter to the Client’s custodian, with instructions to send the Client’s proxy materials to ISS for 
voting. The custodian must complete the letter and fax it to ISS, with a copy to the SMA Operations 
Department and the Proxy Voting Coordinator. The SMA Operations Department will coordinate with Citi 
(wrap program administrator), the respective wrap program sponsor, and the Compliance Department in 
ensuring that proxies are voted in accordance with Clients’ instructions. 
 
Fixed Income and Private Investments 
 
Voting decisions with respect to Client investments in fixed income securities and the securities of privately- 
held issuers will generally be made by the relevant Portfolio Managers based on their assessment of the 
particular transactions or other matters at issue. 

Client Direction 
 
Clients may choose to vote proxies themselves, in which case they must arrange for their custodians to send 
proxy materials directly to them. Upon request, the Advisers can accommodate individual Clients that have 
developed their own guidelines with ISS or another proxy service. Clients may also discuss with the Advis- 
ers the possibility of receiving individualized reports or other individualized services regarding proxy voting 
conducted on their behalf. Such requests should be centralized through the Advisers’ Proxy Voting Coordi- 
nator. 
 
Securities Lending 
 
At times, neither the Advisers nor ISS will be allowed to vote proxies on behalf of Clients when those 
Clients have adopted a securities lending program. Typically, Clients who have adopted securities lending 
programs have made a general determination that the lending program provides a greater economic benefit 
than retaining the ability to vote proxies. Notwithstanding this fact, in the event that a proxy voting matter 
has the potential to materially enhance the economic value of the Client’s position and that position is lent 
out, the Advisers will make reasonable efforts to inform the Client that neither the Advisers nor ISS is able to 
vote the proxy until the lent security is recalled. 
 
Abstaining from Voting Certain Proxies 
 
The Advisers shall at no time ignore or neglect their proxy voting responsibilities. However, there may be 
times when refraining from voting is in the Client’s best interest, such as when the Advisers’ analysis of a 
particular proxy issue reveals that the cost of voting the proxy may exceed the expected benefit to the Client. 
Such proxies may be voted on a best-efforts basis. These issues may include, but are not limited to: 
 
-  Restrictions for share blocking countries;12 
-  Casting a vote on a foreign security may require that the adviser engage a translator; 
-  Restrictions on foreigners’ ability to exercise votes; 
-  Requirements to vote proxies in person; 
-  Requirements to provide local agents with power of attorney to facilitate the voting instructions; 
-  Untimely notice of shareholder meeting; 
-  Restrictions on the sale of securities for a period of time in proximity to the shareholder meeting. 
 
Proxy Solicitation 
 
Employees must promptly inform the Advisers’ Proxy Voting Coordinator of the receipt of any solicitation 
from any person related to Clients’ proxies. As a matter of practice, the Advisers will not reveal or disclose 
to any third party how the Advisers may have voted (or intend to vote) on a particular proxy until after such 
proxies have been counted at a shareholder’s meeting. However, the Proxy Voting Coordinator may disclose 
that it is the Advisers’ general policy to follow the ISS Guidelines. At no time may any Employee accept 
any remuneration in the solicitation of proxies. 
 
 
 
 
12  In certain markets where share blocking occurs, shares must be “frozen” for trading purposes at the custodian or 
sub-custodian in order to vote. During the time that shares are blocked, any pending trades will not settle. Depending on 
the market, this period can last from one day to three weeks. Any sales that must be executed will settle late and poten- 
tially be subject to interest charges or other punitive fees. 

Handling of Information Requests Regarding Proxies 
 
Employees may be contacted by various entities that request or provide information related to particular 
proxy issues. Specifically, investor relations, proxy solicitation, and corporate/financial communications 
firms (e.g., Thomson Financial, Richard Davies, DF King, Georgeson Shareholder) may contact the Advisers 
to ask questions regarding total holdings of a particular stock across advisory Clients, or how the Advisers 
intends to vote on a particular proxy. In addition, issuers may call (or hire third parties to call) with inten- 
tions to influence the Advisers’ votes (i.e., to vote against ISS). 
 
Employees that receive information requests related to proxy votes should forward such communications 
(e.g., calls, e-mails, etc.) to the Advisers’ Proxy Voting Coordinator. The Proxy Voting Coordinator will 
take steps to verify the identity of the caller and his/her firm prior to exchanging any information. In 
addition, the Proxy Voting Coordinator may consult with the appropriate Portfolio Manager(s) and/or the 
CCO or CCO NA with respect to the type of information that can be disclosed. Certain information may have 
to be provided pursuant to foreign legal requirements (e.g., Section 793 of the UK Companies Act). 
 
External Managers 
 
Where Client assets are placed with managers outside of the Advisers, whether through separate accounts, 
funds-of-funds or other structures, such external managers generally will be responsible for voting proxies in 
accordance with the managers’ own policies. The Advisers may, however, retain such responsibilities where 
deemed appropriate. 
 
Proxy Voting Errors 
 
In the event that any Employee becomes aware of an error related to proxy voting, he/she must promptly 
report that matter to the Advisers’ Proxy Voting Coordinator. The Proxy Voting Coordinator will take 
immediate steps to determine whether the impact of the error is material and to address the matter. The 
Proxy Voting Coordinator, with the assistance of the CCO or CCO NA, will generally prepare a memo 
describing the analysis and the resolution of the matter. Supporting documentation (e.g., correspondence 
with ISS, Client, Portfolio Managers/ analysts, etc.) will be maintained by the Compliance Department. 
Depending on the severity of the issue, the Law Department, Outside Counsel, and/or affected Clients may 
be contacted. However, the Advisers may opt to refrain from notifying non-material de minimis errors to 
Clients. 
 
Recordkeeping 
 
The Advisers must maintain the documentation described in the following section for a period of not less 
than five (5) years, the first two (2) years at the principal place of business. The Compliance Department, in 
coordination with ISS, is responsible for the following procedures and for ensuring that the required 
documentation is retained. 
 
 
 
 
Client request to review proxy votes: 

         •  Any request, whether written (including e-mail) or oral, received by any Employee of the Advisers, 
  must be promptly reported to the Proxy Voting Coordinator. All written requests must be retained in 
  the Client’s permanent file. 
 
         •  The Proxy Voting Coordinator will record the identity of the Client, the date of the request, and the 
  disposition (e.g., provided a written or oral response to Client’s request, referred to third party, not a 
  proxy voting client, other dispositions, etc.) in a suitable place. 
 
         •  The Proxy Voting Coordinator will furnish the information requested to the Client within a 
  reasonable time period (generally within 10 business days). The Advisers will maintain a copy of 
  the written record provided in response to Client’s written (including e-mail) or oral request. A copy 
  of the written response should be attached and maintained with the Client’s written request, if 
  applicable and maintained in the permanent file. 
 
         •  Clients are permitted to request the proxy voting record for the 5 year period prior to their request. 
 
Proxy statements received regarding client securities: 
 
         •  Upon inadvertent receipt of a proxy, the Advisers will generally forward to ISS for voting, unless the 
  client has instructed otherwise. 
 
  Note: The Advisers are permitted to rely on proxy statements filed on the SEC’s EDGAR system 
  instead of keeping their own copies. 
 
Proxy voting records: 
 
         •  The Advisers’ proxy voting record is maintained by ISS. The Advisers’ Proxy Voting Coordinator, 
  with the assistance of the Client Services and SMA Operations Departments, will periodically ensure 
  that ISS has complete, accurate, and current records of Clients who have instructed the Advisers to 
  vote proxies on their behalf. 
 
         •  The Advisers will maintain documentation to support the decision to vote against the ISS 
  recommendation. 
 
         •  The Advisers will maintain documentation or notes or any communications received from third 
  parties, other industry analysts, third party service providers, company’s management discussions, 
  etc. that were material in the basis for the decision. 
 
Procedures for Class Actions 
 
In general, it is the Advisers’ policy not to file class actions on behalf of Clients. The Advisers specifically 
will not act on behalf of former Clients who may have owned the affected security but subsequently termi- 
nated their relationship with the Advisers. The Advisers will only file class actions on behalf of Clients if 
that responsibility is specifically stated in the advisory contract. The process of filing class actions is carried 
out by the Investment Accounting Department. In the event the Advisers opt out of a class action settlement, 
the Advisers will maintain documentation of any cost/benefit analysis to support that decision. This policy 
is disclosed to clients on Schedule F of Form ADV Part II. 
 
The Advisers are mindful that they have a duty to avoid and detect conflicts of interest that may arise in the 
class action process. Where actual, potential or apparent conflicts are identified regarding any material mat- 

ter, the Advisers will manage the conflict by seeking instruction from the Law Department and/or outside 
counsel. It is the Advisers’ general policy not to act as lead plaintiff in class actions. 
 
Disclosure 
 
The Advisers will ensure that Part II of Form ADV is updated as necessary to reflect: (i) all material changes 
to this policy; and (ii) regulatory requirements. 
 
Responsibility 
 
Various individuals and departments are responsible for carrying out the Advisers’ proxy voting and class 
action practices, as mentioned throughout these policies and procedures. The Operations Department has 
assigned a Proxy Voting Coordinator to manage the proxy voting process. The Investment Accounting 
Department has delegated the handling of class action activities to a Senior Investment Accounting Leader. 
In general, the Advisers’ CCO or CCO NA (or their designee) will oversee the decisions related to proxy 
voting, class actions, conflicts of interest, and applicable record keeping and disclosures. 

PART C. OTHER INFORMATION   
 
Item 23. Exhibits.     
(a)  (1)  a.  Articles of Amendment and Restatement -- Filed as Ex-99.B1.A on 04/12/1996 (Accession No. 
      0000898745-96-000012)   
    b.  Articles of Amendment and Restatement -- Filed as Ex-99.A1.B on 09/22/00 (Accession No. 
      0000898745-00-500024)   
    c.  Articles of Amendment and Restatement dated 6/14/02 -- Filed as Ex-99.A.1.C on 12/30/02 
      (Accession No. 0001126871-02-000036) 
    d.  Articles of Amendment dated 5/23/05 -- Filed as Ex-99.A on 09/08/05 (Accession No. 0000898786- 
      05-000254)   
    e.  Articles of Amendment dated 9/30/05 -- Filed as Ex-99.A on 11/22/05 (Accession No. 0000870786- 
      05-000263)   
    f.  Articles of Amendment dated 7/7/06 (Incorporated by reference from exhibit #1(2)b to registration 
      statement No. 333-137477 filed on Form N-14 on 9/20/06 Accession No. 0000009713-06-000062) 
    g.  Articles of Amendment dated 06/04/08 -- Filed as Ex-99.A on 07/17/08 (Accession No. 
      0000009713-08-000060)   
    h.  Articles of Amendment dated 06/30/09 * 
 
  (2)  Articles of Amendment -- Filed as Ex-99.B1 on 09/12/97 (Accession No. 0000898745-97-000023) 
 
  (3)  a.  Certificate of Correction dated 9/14/00 -- Filed as Ex-99.A3 on 09/22/00 (Accession No. 
      0000898745-00-500024)   
    b.  Certificate of Correction dated 12/13/00 -- Filed as Ex-99.A3 on 10/12/01 (Accession No. 
      0001127048-01-500041)   
 
  (4)  a.  Articles Supplementary dated 12/11/00 -- Filed as Ex-99.A.4A on 02/25/02 (Accession No. 
      0000870786-02-000051)   
    b.  Articles Supplementary dated 3/12/01 – Filed as EX-99.A.4B on 02/25/02 (Accession No. 
      0000870786-02-000051)   
    c.  Articles Supplementary dated 4/16/02 -- Filed as Ex-99.A.4.C on 12/30/02 (Accession No. 
      0001126871-02-000036)   
    d.  Articles Supplementary dated 9/25/02 -- Filed as Ex-99.A.4.D on 12/30/02 (Accession No. 
      0001126871-02-000036)   
    e.  Articles Supplementary dated 2/5/03 – Filed as Ex-99.A on 02/25/03 (Accession No. 0000870786- 
      03-000031)   
    f.  Articles Supplementary dated 4/30/03 -- Filed as Ex-99.A4F on 09/11/03 (Accession No. 
      0000870786-03-000169)   
    g.  Articles Supplementary dated 6/10/03 -- Filed as Ex-99.A4G on 09/11/03 (Accession No. 
      0000870786-03-000169)   
    h.  Articles Supplementary dated 9/9/03 -- Filed as Ex-99.A4H on 09/11/03 (Accession No. 
      0000870786-03-000169)   
    i.  Articles Supplementary dated 11/6/03 – Filed as Ex-99.A on 12/15/03 (Accession No. 0000870786- 
      03-000202)   
    j.  Articles Supplementary dated 1/29/04-- Filed as Ex-99.A on 02/26/04 (Accession No. 0001127048- 
      04-000033)   
    k.  Articles Supplementary dated 3/8/04-- Filed as Ex-99.A on 07/27/04 (Accession No. 0000870786-04- 
      000163)   
    l.  Articles Supplementary dated 6/14/04 – Filed as Ex-99.A on 09/27/2004 (Accession No. 
      0000870786-04-000207)   
    m.  Articles Supplementary dated 9/13/04 – Filed as Ex-99.A on 12/13/04 (Accession No. 0000870786- 
      04-000242)   
    n.  Articles Supplementary dated 10/1/04 – Filed as Ex-99.A on 12/13/04 (Accession No. 0000870786- 
      04-000242)   
    o.  Articles Supplementary dated 12/13/04 -- Filed as Ex-99.A on 02/28/05 (Accession No. 0000870786- 
      05-000065)   

    p.  Articles Supplementary dated 2/4/05 – Filed as Ex-99.A on 05/16/05 (Accession No. 0000870786- 
      05-000194)   
    q.  Articles Supplementary dated 2/24/05 – Filed as Ex-99.A on 05/16/05 (Accession No. 0000870786- 
      05-000194)   
    r.  Articles Supplementary dated 5/6/05 – Filed as Ex-99.A on 09/08/05 (Accession No. 0000870786- 
      05-000254)   
    s.  Articles Supplementary dated 12/20/05 (filed 2/28/06) 
    t.  Articles Supplementary dated 9/20/06 (Incorporated by reference from exhibit #1(4)t to registration 
      statement No. 333-137477 filed on Form N-14 on 9/20/06 Accession No. 0000009713-06-000062) 
    u.  Articles Supplementary dated 1/12/07 -- Filed as Ex-99.A on 01/16/07 (Accession No. 0000898745- 
      07-000011)   
    v.  Articles Supplementary dated 1/22/07 -- Filed as Ex-99.A on 07/18/07 (Accession No. 0000898745- 
      07-000086)   
    w.  Articles Supplementary dated 7/24/07 -- Filed as Ex-99.A on 09/28/07 (Accession No. 0000898745- 
      07-000152)   
    x.  Articles Supplementary dated 09/13/07 -- Filed as Ex-99.A on 12/14/07 (Accession No. 0000898745- 
      07-000184)   
    y.  Articles Supplementary dated 1/3/08 -- Filed as Ex-99.A.4.Y on 02/20/08 (Accession No. 
      0000950137-08-002501   
    z.  Articles Supplementary dated 3/13/08 -- Filed as Ex-99.A4Z on 05/01/08 (Accession No. 
      0000950137-08-006512)   
    aa.  Articles Supplementary dated 06/23/08 -- Filed as Ex-99.A on 07/17/08 (Accession No. 
       0000009713-08-000060)   
    bb.  Articles Supplementary dated 09/10/08 Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.A.4 on 
      12/12/08 (Accession No. 0000898745-08-000166) 
    cc.  Articles Supplementary dated 10/31/08 – Filed as Ex-99.A.4 on 12/12/08 (Accession No. 
      0000898745-08-000166)   
    dd.  Articles Supplementary dated 01/13/09* 
    ee.  Articles Supplementary dated 03/10/09* 
    ff.  Articles Supplementary dated 05/01/09* 
    gg.  Articles Supplementary dated 06/19/09* 
 
 
(b)  By-laws -- Filed as Ex-99.B on 12/29/05 (Accession No. 0000898745-05-000035) 
 
(c)  These have been previously filed as noted in response to Items 23(a) and 23(b). 
 
(d)  (1)  a.  Management Agreement -- Filed as Ex-99.B5A on 09/12/97 (Accession No. 0000898745-97-000023) 
    b.  1st Amendment to the Management Agreement -- Filed as Ex-99.D1.B on 09/22/00 
      (Accession No. 0000898745-00-500024) 
    c.  Management Agreement -- Filed as Ex-99.D1.C on 12/05/00 (Accession No. 0000898745-00- 
      000021)   
    d.  Amendment to Management Agreement dated 9/9/02 -- Filed as Ex-99.D.1.D on 12/30/02 
      (Accession No. 0001126871-02-000036) 
    e.  Amendment to Management Agreement dated 3/11/02 – Filed as Ex-99.D on 02/25/03 (Accession 
      No. 0000870786-03-000031)   
    f.  Amendment to Management Agreement dated 12/10/02 – Filed as Ex-99.D on 02/25/03 (Accession 
      No. 0000870786-03-000031)   
    g.  Amendment to Management Agreement dated 10/22/03 – Filed as Ex-99.D on 12/15/03 
      (Accession No. 0000870786-03-000202) 
    h.  Amendment to Management Agreement dated 3/8/04 -- Filed as Ex-99.D on 06/01/04 (Accession No. 
      0000898745-04-000003)   
    i.  Amendment to Management Agreement dated 6/14/04 – Filed as Ex-99.D on 09/27/2004 (Accession 
      No. 0000870786-04-000207)   
    j.  Amendment to Management Agreement dated 7/29/04 – Filed as Ex-99.A on 09/27/2004 
      (Accession No. 0000870786-04-000207) 

  k.  Amendment to Management Agreement dated 9/13/04 – Filed as Ex-99.A on 09/27/2004 (Accession 
    No. 0000870786-04-000207) 
  l.  Amendment to Management Agreement dated 12/13/04 -- Filed as Ex-99.D on 02/28/05 (Accession 
    No. 0000870786-05-000065) 
  m.  Amendment to Management Agreement dated 1/1/05 -- Filed as Ex-99.D on 02/28/05 (Accession No. 
    0000870786-05-000065) 
  n.  Amendment to Management Agreement dated 9/30/05 -- Filed as Ex-99.D on 11/22/05 (Accession 
    No. 0000870786-05-000263) 
  o.  Amendment to Management Agreement dated 1/12/07 -- Filed as Ex-99.D on 01/16/07 (Accession 
    No. 0000898745-07-000011) 
  p.  Amendment to Management Agreement dated 9/12/07 -- Filed as Ex-99.B5A on 09/12/97 
    (Accession No. 0000898745-97-000023) 
  q.  Amendment to Management Agreement dated 10/01/07 -- Filed as Ex-99.D on 12/14/07 (Accession 
    No. 0000898745-07-000184) 
  r.  Amendment to Management Agreement dated 10/31/07 -- Filed as Ex-99.D on 12/14/07 (Accession 
    No. 0000898745-07-000184) 
  s.  Amendment to Management Agreement dated 2/7/08 -- Filed as Ex-99.D1S on 05/01/08 (Accession 
    No. 0000950137-08-006512) 
  t.  Amended & Restated Management Agreement dated 6/24/08 -- Filed as Ex-99.D on 09/30/08 
    (Accession No. 0000898745-08-000083) 
  u.  Amended & Restated Management Agreement dated 07/01/09* 
 
(2)  a.  American Century Sub-Advisory Agreement -- Filed as Ex-99.D3 on 12/05/00 (Accession No. 
    0000898745-00-000021) 
  b.  Amended & Restated Sub-Adv Agreement with Amer. Century -- Filed as Ex-99.D3B on 09/11/03 
    (Accession No. 0000870786-03-000169) 
  c.  Amended & Restated Sub-Adv Agreement with Amer. Century – Filed as Ex-99.D on 09/27/2004 
    (Accession No. 0000870786-04-000207) 
  d.  Amended & Restated Sub-Adv Agreement with Amer. Century dated 6/13/05 – Filed as Ex-99.D 
    on 09/08/05 (Accession No. 0000870786-05-000254) 
  e.  Amended & Restated Sub-Adv Agreement with Amer. Century dated 9/19/06 (Incorporated by 
    reference from exhibit #6(3)e to registration statement No. 333-137477 filed on Form N-14 on 
    10/6/06 Accession No. 0000898745-06-000145) 
 
(3)  a.  AXA Rosenberg Investment Management LLC Sub-Advisory Agreement dated September 30, 2008 
    -- Filed as Ex-99.D on 12/12/08 (Accession No. 0000898745-08-000166) 
 
(4)  a.  Barrow Hanley Sub-Advisory Agreement dtd 7/12/05 – Filed as Ex-99.D on 09/08/05 (Accession 
    No. 0000870786-05-000254) 
 
(5)  a.  Bernstein Sub-Advisory Agreement -- Filed as Ex-99.D4 on 12/05/00 (Accession No. 0000898745- 
    00-000021) 
  b.  Amendment to Bernstein Sub-Advisory Agreement dated 3/28/03 -- Filed as Ex-99.D4B on 09/11/03 
    (Accession No. 0000870786-03-000169) 
  c.  Amended & Restated Bernstein Sub-Advisory Agreement dated 7/1/04 – Filed as Ex-99.D on 
    09/27/2004 (Accession No. 0000870786-04-000207) 
 
(6)  a.  BlackRock Sub-Advisory Agreement dated 12/31/08 -- Filed as Ex-99.D(6)A on 07/29/09 (Accession 
    No. 0000898745-09-000354) 
 
(7)  a.  Brown Investment Advisor Incorporated Sub-Advisory Agreement dated 07/01/09 -- Filed as Ex- 
    99.D(6)A on 07/29/09 (Accession No. 0000898745-09-000354) 
 
(8)  a.  Causeway Capital Management LLC Sub-Advisory Agreement dated September 30, 2008-- Filed as 
    Ex-99.D8A on 12/12/08 (Accession No. 0000898745-08-000166) 

(9)  a.  Columbus Circle Investors Sub-Advisory Agreement dated 1/5/05 – Filed as Ex-99.D on 09/08/05 
    (Accession No. 0000870786-05-000254)   
  b.  Amended & Restated Sub-Adv Agreement with Columbus Circle dated 9/15/05 -- Filed as Ex-99.D 
    on 10/20/06 (Accession No. 0000898745-06-000160)   
  c.  Amended & Restated Sub-Adv Agreement with Columbus Circle dated 12/15/06 -- Filed as Ex-99.D 
    on 01/16/07 (Accession No. 0000898745-07-000011)   
  d.  Amended & Restated Sub-Adv Agreement with Columbus Circle dated 05/01/09* 
 
(10)  a.  Dimensional Fund Advisors Sub-Advisory Agreement-- Filed as Ex-99.D on 06/01/04 (Accession No. 
    0000898745-04-000003)   
 
(11)  a.  Edge Asset Management Sub-Advisory Agreement dated 1/12/07 -- Filed as Ex-99.D on 01/16/07 
    (Accession No. 0000898745-07-000011)   
 
(12)  a.  Emerald Advisors, Inc. Sub-Advisory Agreement dated 07/01/09 *   
 
(13)  a.  Essex Investment Management Company, LLC. Sub-Advisory Agreement dated 6/30/06 -- Filed as 
    Ex-99.D on 10/20/06 (Accession No. 0000898745-06-000160)   
 
(14)  a.  Goldman Sachs Sub-Advisory Agreement -- Filed as Ex-99.D.21 on 12/30/02 (Accession No. 
    0001126871-02-000036)   
  b.  Amended & Restated Sub-Adv Agreement with Goldman Sachs -- Filed as Ex-99.D21B on 09/11/03 
    (Accession No. 0000870786-03-000169)   
  c.  Amended & Restated Goldman Sachs Sub-Advisory Agreement dated 11/20/03 – Filed as Ex-99.D 
    on 12/15/03 (Accession No. 0000870786-03-000202)   
  d.  Amended & Restated Goldman Sachs Sub-Advisory Agreement dated 6/30/04 -- Filed as Ex-99.D 
    on 02/28/05 (Accession No. 0000870786-05-000065)   
(15)  a.  Guggenheim Sub-Advisory Agreement dated 09/16/09*   
(16)  a.  Jacobs Levy Equity Management, Inc. Sub-Advisory Agreement dated 6/15/06 -- Filed as Ex-99.D 
    on 10/20/06 (Accession No. 0000898745-06-000160)   
  b.  Amended & Restated Sub-Advisory Agreement with Jacobs Levy dated 1/2/07 -- Filed as Ex- 
    99.D23 (B) on 02/20/08 (Accession No. 0000950137-08-002501)   
  c.  Amended & Restated Sub-Advisory Agreement with Jacobs Levy dated 05/01/09* 
(17)  a.  JP Morgan Sub-Advisory Agreement -- Filed as Ex-99.D.18 on 12/30/02 (Accession No. 
    0001126871-02-000036)   
  b.  Amended & Restated Sub-Adv Agreement with JP Morgan -- Filed as Ex-99.D18B on 09/11/03 
    (Accession No. 0000870786-03-000169)   
  c.  Amended & Restated Sub-Adv Agreement with JP Morgan dated 7/18/07 -- Filed as Ex-99.D on 
    09/28/07 (Accession No. 0000898745-07-000152)   
(18)  a.  Lehman Brothers (now known as Neuberger Berman Fixed Income LLC) dated 7/18/07 -- Filed as 
    Ex-99.D on 09/28/07 (Accession No. 0000898745-07-000152)   
  b.  Amended & Restated Sub-Adv Agreement with Lehman Brothers (now known as Neuberger Berman 
    Fixed Income LLC) dated 05/04/09*   
(19)  a.  Los Angeles Capital Management Sub-Advisory Agreement – Filed as Ex-99.D on 09/27/2004 
    (Accession No. 0000870786-04-000207)   
  b.  Amended & Restated Sub-Adv Agreement with LA Capital dated 9/12/05 -- Filed as Ex-99.D on 
    11/22/05 (Accession No. 0000870786-05-000263)   
(20)  a.  Mellon Equity Associates LLP Sub-Advisory Agreement dtd 12/21/04 -- Filed as Ex-99.D on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  b.  Amended & Restated Sub-Adv Agreement with Mellon Equity dated 8/8/05 -- Filed as Ex-99.D on 
    11/22/05 (Accession No. 0000870786-05-000263)   
  c.  Amended & Restated Sub-Adv Agreement with Mellon Capital dated 1/1/08 – Filed as Ex-99.D on 
    03/28/2008 (Accession No. 0000898745-08-000017)   
(21)  a.  Montag & Caldwell, Inc. Sub-Advisory Agreement dated 07/01/09 -- Filed as Ex-99.D(6)A on 
    07/29/09 (Accession No. 0000898745-09-000354)   

(22)  a.  Pacific Investment Management Company LLC Sub-Advisory Agreement dated September 30, 2008 
    -- Filed as Ex-99.D23A on 12/12/08 (Accession No. 0000898745-08-000166) 
  b.  Amended & Restated Sub-Adv Agreement with Pacific Investment Management Company LLC 
    dated 04/01/09*     
 
(23)  a.  Principal Global Investors Sub-Advisory Agreement -- Filed as Ex-99.D.19 on 12/30/02 (Accession 
    No. 0001126871-02-000036)     
  b.  Amended and Restated PGI Sub-Advisory Agreement (filed 02/26/03) 
  c.  Amended & Restated Sub-Adv Agreement with PGI -- Filed as Ex-99.D19C on 09/11/03 (Accession 
    No. 0000870786-03-000169)     
  d.  Amended & Restated Sub-Adv Agreement with PGI-- Filed as Ex-99.D on 06/01/04 (Accession No. 
    0000898745-04-000003)     
  e.  Amended & Restated Sub-Adv Agreement with PGI dtd 7-29-04 – Filed as Ex-99.D on 09/27/2004 
    (Accession No. 0000870786-04-000207)     
  f.  Amended & Restated Sub-Adv Agreement with PGI dtd 9-13-04 – Filed as Ex-99.D on 12/13/04 
    (Accession No. 0000870786-04-000242)     
  g.  Amended & Restated Sub-Adv Agreement with PGI dtd 12-13-04 – Filed as Ex-99.D on 09/08/05 
    (Accession No. 0000870786-05-000254)     
  h.  Amended & Restated Sub-Adv Agreement with PGI dtd 7-1-05 – Filed as Ex-99.D on 09/08/05 
    (Accession No. 0000870786-05-000254)     
  i.  Sub-Sub-Advisory Agreement with Spectrum dtd 7/1/2005 -- Filed as Ex-99.D on 12/29/05 
    (Accession No. 0000898745-05-000035)     
  j.  Sub-Sub-Advisory Agreement with Post dtd 7/1/2005 -- Filed as Ex-99.D on 12/29/05 (Accession 
    No. 0000898745-05-000035)     
  k.  Amended & Restated Sub-Adv Agreement with PGI dtd 3/1/06 -- Filed as Ex-99.D on 02/28/06 
    (Accession No. 0000870786-06-000034)     
  l.  Amended & Restated Sub-Adv Agreement with PGI dtd 01/01/09* 
  m.  Amended & Restated Sub-Adv Agreement with PGI dtd 07/01/09* 
  n.  Amended & Restated Sub-Adv Agreement with PGI dtd  ** 
(24)  a.  Principal Capital Real Estate Investors Sub-Advisory Agreement – Filed as Ex-99.D on 02/27/01 
    (Accession No. 0000898745-01-500019     
  b.  1st Amendment to the PCREI Sub-Advisory Agreement –Filed as Ex-99.D10B on 02/25/02 
    (Accession No. 000870786-02-000051)     
  c.  2nd Amendment to the PCREI Sub-Advisory Agreement –Filed as Ex-99.D10C on 02/25/02 
    (Accession No. 000870786-02-000051)     
  d.  Amended & Restated Sub-Adv Agreement with PCREI -- Filed as Ex-99.D10D on 09/11/03 
    (Accession No. 0000870786-03-000169)     
  e.  Amended & Restated Sub-Adv Agreement with PREI dated 9/12/05 -- Filed as Ex-99.D on 12/29/05 
    (Accession No. 0000898745-05-000035)     
  f.  Amended & Restated Sub-Adv Agreement with PREI dated 1/1/06 -- Filed as Ex-99.D on 02/28/06 
    (Accession No. 0000870786-06-000034)     
  g.  Amended & Restated Sub-Adv Agreement with PREI dated 10/1/07 -- Filed as Ex-99.D o09/28/07 
    (Accession No. 0000898745-07-000152)     
 
(25)  a.  Pyramis Global Advisors, LLC dated 1/1/07 -- Filed as Ex-99.D on 01/16/07 (Accession No. 
    0000898745-07-000011)     
 
(26)  a.  Spectrum Sub-Advisory Agreement -- Filed as Ex-99.D.15 on 04/29/02 (Accession No. 0000870786- 
    02-000086)     
  b.  Amended & Restated Sub-Adv Agreement with Spectrum -- Filed as Ex-99.D15B on 09/11/03 
    (Accession No. 0000870786-03-000169)     
  c.  Amended & Restated Sub-Adv Agreement with Spectrum dated 9/12/05 -- Filed as Ex-99.D on 
    12/29/05 (Accession No. 0000898745-05-000035)     
 
(27)  a.  T. Rowe Price Sub-Advisory Agreement dated 3/8/04 -- Filed as Ex-99.D on 06/01/04 (Accession No. 
    0000898745-04-000003)     

    b.  Amended & Restated Sub-Adv Agreement with T. Rowe Price dated 8/24/04 – Filed as Ex-99.D on 
      09/27/2004 (Accession No. 0000870786-04-000207)   
    c.  Amended & Restated Sub-Adv Agreement with T. Rowe Price dated 8/1/05 -- Filed as Ex-99.D on 
      12/29/05 (Accession No. 0000898745-05-000035)   
    d.  Amended & Restated Sub-Adv Agreement with T. Rowe Price dated 8/1/06 -- Filed as Ex-99.D on 
      10/20/06 (Accession No. 0000898745-06-000160)   
 
  (28)  a.  Thompson, Siegel & Walmsley LLC Sub-Advisory Agreement dated 10/01/09* 
 
  (29)  a.  Tortoise Capital Advisors LLC Sub-Advisory Agreement dated 09/23/09*   
 
  (30)  a.  Turner Sub-Advisory Agreement -- Filed as Ex-99.D11 on 12/05/00 (Accession No. 0000898745-00- 
      000021)   
    b.  Amended & Restated Sub-Adv Agreement with Turner dated 10/31/07 -- Filed as Ex-99.D on 
      12/14/07 (Accession No. 0000898745-07-000184)   
 
  (31)  a.  UBS Global Asset Management Sub-Advisory Agreement -- Filed as Ex-99.D.16 on 04/29/02 
      (Accession No. 0000870786-02-000086)   
    b.  Amended & Restated Sub-Adv Agreement with UBS -- Filed as Ex-99.D16B on 09/11/03 (Accession 
      No. 0000870786-03-000169)   
    c.  Amended & Restated Sub-Adv Agreement with UBS dated 4/1/04 -- Filed as Ex-99.D on 06/01/04 
      (Accession No. 0000898745-04-000003)   
    d.  Amended & Restated Sub-Adv Agreement with UBS dated 7/1/09*   
 
  (32)  a.  Vaughan Nelson Investment Management Sub-Advisory Agreement dtd 9/21/05 -- Filed as Ex-99.A 
      on 11/22/05 (Accession No. 0000870786-05-000263)   
 
  (33)  a.  Van Kampen Sub-Advisory Agreement dated 1/12/07 -- Filed as Ex-99.D on 01/16/07 (Accession 
      No. 0000898745-07-000011)   
    b.  Amended & Restated Sub-Adv Agreement with Van Kampen dated 4/1/07 – Filed as Ex-99.D on 
      07/18/07 (Accession No. 0000898745-07-000086)   
 
  (34)  a.  Westwood Management Corporation Sub-Advisory Agreement dated 7/15/08 -- Filed as Ex-99.P on 
      07/17/08 (Accession No. 0000009713-08-000060)   
 
(e)  (1)  a.  Distribution Agreement -- Filed as Ex-99.B6.A on 04/12/1996 (Accession No. 0000898745-96- 
      000012)   
    b.  1st Amendment to the Distribution Agreement -- Filed as Ex-99.E1.B on 09/22/00 (Accession No. 
      0000898745-00-500024)   
    c.  Distribution Agreement -- Filed as Ex-99.E1.C on 09/22/00 (Accession No. 0000898745-00-500024) 
    d.  Distribution Plan and Agreement (Select Class) -- Filed as Ex-99.E.1.D on 12/30/02 (Accession No. 
      0001126871-02-000036)   
    e.  Amended and Restated Distribution Plan and Agreement (Select Class) -- Filed as Ex-99.E.1.E on 
      12/30/02 (Accession No. 0001126871-02-000036)   
    f.  Amended and Restated Distribution Plan and Agreement (Advisors Select Class) -- Filed as Ex- 
      99.E.1.F on 12/30/02 (Accession No. 0001126871-02-000036)   
    g.  Amended and Restated Distribution Plan and Agreement (Advisors Preferred Class) -- Filed as Ex- 
      99.E.1.G on 12/30/02 (Accession No. 0001126871-02-000036)   
    h.  Amended and Restated Distribution Plan and Agreement (Class J) -- Filed as Ex-99.E.1.H on 
      12/30/02 (Accession No. 0001126871-02-000036)   
    i.  Amended and Restated Distribution Agreement -- Filed as Ex-99.E.1.I on 12/30/02 (Accession No. 
      0001126871-02-000036)   
    j.  Amendment to Distribution Plan and Agreement (Advisors Preferred Class) -- Filed as Ex-99.E on 
      02/25/03 (Accession No. 0000870786-03-000031)   
    k.  Amendment to Distribution Plan and Agreement (Advisors Select Class) -- Filed as Ex-99.E on 
      02/25/03 (Accession No. 0000870786-03-000031)   

    l.  Amendment to Distribution Plan and Agreement (Select Class) -- Filed as Ex-99.E on 02/25/03 
      (Accession No. 0000870786-03-000031)   
    m.  Amendment to Distribution Agreement dtd 03/02 -- Filed as Ex-99.E on 02/25/03 (Accession No. 
      0000870786-03-000031)   
    n.  Amendment to Distribution Agreement dtd 12/02 -- Filed as Ex-99.E on 02/25/03 (Accession No. 
      0000870786-03-000031)   
    o.  Amended & Restated Distribution Agreement dtd 10/22/03 – Filed as Ex-99.E on 12/15/03 
      (Accession No. 0000870786-03-000202)   
    p.  Amended & Restated Distribution Agreement dtd 6/14/04 – Filed as Ex-99.E on 09/27/2004 
      (Accession No. 0000870786-04-000207)   
    q.  Amended & Restated Distribution Agreement dtd 2/24/05 – Filed as Ex-99.E on 09/08/05 
      (Accession No. 0000870786-05-000254)   
    r.  Distribution Agreement (Class A, B and C) dtd 1/12/07 -- Filed as Ex-99.E on 01/16/07 (Accession 
      No. 0000898745-07-000011)   
    s.  Distribution Agreement (Instl and J) dtd 1/12/07 -- Filed as Ex-99.A on 01/16/07 (Accession No. 
      0000898745-07-000011)   
    t.  Distribution Agreement (Class A, B, C, J, Institutional, Advisors Preferred, Preferred, Advisors Select, 
      Select, Advisors Signature Classes) dtd 3/11/08 -- Filed as Ex-99.E1T on 05/01/08 (Accession No. 
      0000950137-08-006512)   
    u.  Distribution Agreement (Class A, Class B, Class C, Class J, Preferred Class, Advisors Preferred 
      Class, Select Class, Advisors Select Class, Advisors Signature Class, Institutional Class and Class S 
      Shares dated 5/1/08 – Filed as Ex-99.E on 07/29/09 (Accession No. 0000898745-09-000354) 
 
  (2)  a.  Selling Agreement--Advantage Classes -- Filed as Ex-99.E2A on 09/11/03 (Accession No. 
      0000870786-03-000169)   
    b.  Selling Agreement--J Shares -- Filed as Ex-99.E2B on 09/11/03 (Accession No. 0000870786-03- 
      000169)   
    c.  Selling Agreement--Class A and Class B Shares – Filed as Ex-99.E on 09/08/05 (Accession No. 
      0000870786-05-000254)   
    d.  Selling Agreement--Class S Shares -- Filed as Ex-99.E on 07/17/08 (Accession No. 
      0000009713-08-000060)   
 
(f)  N/A       
 
(g)  (1)  a.  Domestic Portfolio Custodian Agreement with Bank of New York -- Filed as Ex-99.B8.A on 
      04/12/1996 (Accession No. 0000898745-96-000012) 
    b.  Domestic Funds Custodian Agreement with Bank of New York -- Filed as Ex-99.G1.B on 12/05/00 
      (Accession No. 0000898745-00-000021)   
    c.  Domestic and Global Custodian Agreement with Bank of New York -- Filed as Ex-99.G on 11/22/05 
      (Accession No. 0000870786-05-000263)   
(h)  (1)  a.  Transfer Agency Agreement for Class I shares -- Filed as Ex-99.H1 on 09/22/00 (Accession No. 
      0000898745-00-500024)   
    b.  Amended & Restated Transfer Agency Agreement for Class I Shares -- Filed as Ex-99.H.1.B on 
      12/30/02 (Accession No. 0001126871-02-000036) 
    c.  Transfer Agency Agreement for Class J Shares -- Filed as Ex-99.H.1.C on 12/30/02 (Accession No. 
      0001126871-02-000036)   
    d.  1st Amendment to Transfer Agency Agreement for Class J Shares -- Filed as Ex-99.H.1.D on 
      12/30/02 (Accession No. 0001126871-02-000036) 
    e.  Amended and Restated Transfer Agency Agreement for Class J Shares dtd 10/22/03 -- Filed as Ex- 
      99.H on 02/28/05 (Accession No. 0000870786-05-000065) 
    f.  Amended and Restated Transfer Agency Agreement for Class J, Class A and Class B Shares dtd 
      12/13/04 -- Filed as Ex-99.H on 02/28/05 (Accession No. 0000870786-05-000065) 
    g.  Transfer Agency Agreement (Class A, B, C, J and Institutional) dtd 1/12/07 -- Filed as Ex-99.H on 
      01/16/07 (Accession No. 0000898745-07-000011) 
    h.  Amended and Restated Transfer Agency Agreement (Class A, B, C, J Institutional, and S) dtd 5/1/08 
-- Filed as Ex-99.H1H on 05/01/08 (Accession No. 0000950137-08-006512)
 

(2)  a.  Shareholder Services Agreement -- Filed as Ex-99.H on 12/15/00 (Accession No. 0000898745-00- 
    500047)   
  b.  Amended & Restated Shareholder Services Agreement dtd 6/14/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  c.  Amended & Restated Shareholder Services Agreement dtd 6/14/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  d.  Amended & Restated Shareholder Services Agreement dtd 9/13/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  e.  Amended & Restated Shareholder Services Agreement dtd 12/13/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  f.  Amended & Restated Shareholder Services Agreement dtd 9/30/05 -- Filed as Ex-99.H on 12/29/05 
    (Accession No. 0000898745-05-000035)   
  g.  Amended & Restated Shareholder Services Agreement dtd 1/1/06 -- Filed as Ex-99.H on 10/20/06 
    (Accession No. 0000898745-06-000160)   
  h.  Amended & Restated Shareholder Services Agreement dtd 1/12/07 -- Filed as Ex-99.H on 12/14/07 
    (Accession No. 0000898745-07-000184)   
 
(3)  a.  Investment Service Agreement -- Filed as Ex-99.B5B on 09/12/97 (Accession No. 0000898745-97- 
    000023)   
  b.  1st Amendment to the Investment Service Agreement -- Filed as Ex-99.H3.B on 09/22/00 (Accession 
    No. 0000898745-00-500024)   
  c.  Investment Service Agreement -- Filed as Ex-99.H.3.C on 12/30/02 (Accession No. 0001126871-02- 
    000036)   
 
(4)  a.  Accounting Services Agreement -- Filed as Ex-99.H4 on 09/22/00 (Accession No. 0000898745-00- 
    500024)   
  b.  Amended & Restated Accounting Services Agreement dtd 1/12/07 -- Filed as Ex-99.H on 01/16/07 
    (Accession No. 0000898745-07-000011)   
 
(5)  a.  Administrative Services Agreement -- Filed as Ex-99.H5 on 09/22/00 (Accession No. 0000898745- 
    00-500024)   
  b.  Amended Administrative Services Agreement -- Filed as Ex-99.H.5.B on 12/30/02 (Accession No. 
    0001126871-02-000036)   
  c.  Amended Administrative Services Agreement dtd 6/14/04 – Filed as Ex-99.H on 09/27/2004 
    (Accession No. 0000870786-04-000207)   
 
(6)  a.  Service Agreement -- Filed as Ex-99.H6 on 09/22/00 (Accession No. 0000898745-00-500024) 
  b.  Amended & Restated Service Agreement dtd 6/14/04 -- Filed as Ex-99.H on 02/28/05 (Accession No. 
    0000870786-05-000065)   
  c.  Amended & Restated Service Agreement dtd 9/30/05 -- Filed as Ex-99.H on 11/22/05 (Accession No. 
    0000870786-05-000263)   
 
(7)  a.  Service Sub-Agreement -- Filed as Ex-99.H7 on 09/22/00 (Accession No. 0000898745-00-500024) 
  b.  Amended & Restated Service Sub-Agreement dtd 1/13/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  c.  Amended & Restated Service Sub-Agreement dtd 6/14/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  d.  Amended & Restated Service Sub-Agreement dtd 6/14/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  e.  Amended & Restated Service Sub-Agreement dtd 9/13/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  f.  Amended & Restated Service Sub-Agreement dtd 12/13/04 -- Filed as Ex-99.H on 02/28/05 
    (Accession No. 0000870786-05-000065)   
  g.  Amended & Restated Service Sub-Agreement dtd 9/30/05 -- Filed as Ex-99.A on 11/22/05 
    (Accession No. 0000870786-05-000263)   
 
(8)  Plan of Acquisition European Fund -- Filed as Ex-99.H.8 on 12/30/02 (Accession No. 0001126871-02- 
  000036)   

  (9)  Plan of Acquisition Pacific Basin Fund -- Filed as Ex-99.H.9 on 12/30/02 (Accession No. 0001126871-02- 
    000036) 
  (10)  Plan of Acquisition Technology Fund -- Filed as Ex-99.H.10 on 12/30/02 (Accession No. 0001126871-02- 
    000036) 
  (11)  Plan of Acquisition Balanced Fund -- Filed as Ex-99.H11 on 09/11/03 (Accession No. 0000870786-03- 
    000169) 
  (12)  Plan of Acquisition International SmallCap Fund -- Filed as Ex-99.H12 on 09/11/03 (Accession No. 
    0000870786-03-000169) 
  (13)  Plan of Acquisition Partners MidCap Blend -- Filed as Ex-99.H11 on 09/11/03 (Accession No. 0000870786- 
    03-000169) 
  (14)  Plan of Acquisition High Quality Long-Term Bond – Filed as Ex-99.H on 09/08/05 (Accession No. 
    0000870786-05-000254) 
  (15)  Form of Agreement and Plan of Reorganization PIF and WM Trust I – Filed as Appendix A to N-14 on 
    09/20/06 (Accession No. 0000009713-06-000062) 
  (16)  Form of Agreement and Plan of Reorganization PIF and WM Trust II – Filed as Appendix A to N-14 on 
    09/20/06 (Accession No. 0000009713-06-000062) 
  (17)  Form of Agreement and Plan of Reorganization PIF and WM SAM – Filed as Appendix A to N-14 on 
    09/20/06 (Accession No. 0000009713-06-000062) 
  (18)  Plan of Reorganization Equity Income I and Equity Income – Filed as Appendix A to N-14 on 09/28/06 
    (Accession No. 0000898745-06-000141) 
  (19)  Plan of Reorganization Tax-Exempt Bond I and Tax-Exempt Bond -- Filed as Appendix A to N-14 on 
    09/28/06 (Accession No. 0000898745-06-000141) 
  (20)  Plan of Reorganization Partners LargeCap Growth II and Partners LargeCap Growth – Filed as Appendix A 
    to N-14 on 10/06/06 (Accession No. 0000898745-06-000145) 
  (21)  Service Agreement between Principal Investors Fund, Inc. and Principal Shareholder Services, Inc. for 
    S class shares. dtd 5/1/08 -- Filed as Ex-99.H21A on 05/01/08 (Accession No. 0000950137-08-006512) 
  (22)  Plan of Acquisition California Insured Intermediate Municipal Fund and California Municipal Fund -- Filed as 
    Ex-99.H on 07/17/08 (Accession No. 0000009713-08-000060) 
  (23)  Plan of Acquisition Global Equity Fund I and International Fund I – Filed as Ex-99.H23 on 09/30/08 
    (Accession No. 0000898745-08-000083 
  (24)  Plan of Acquisition MidCap Growth Fund I and MidCap Growth Fund III – Filed as Ex-99.H24 on 09/30/08 
    (Accession No. 0000898745-08-000083 
  (25)  Plan of Acquisition SmallCap Blend Fund I and SmallCap S&P 600 Index Fund – Filed as Ex-99.H25 on 
    09/30/08 (Accession No. 0000898745-08-000083 
  (26)  Plan of Acquisition Government & High Quality Bond Fund and Mortgage Securities Fund – Filed as Ex-99.H 
    on 07/29/09 (Accession No. 0000898745-09-000354) 
  (27)  Plan of Acquisition MidCap Growth II and MidCap Growth III – Filed as Ex-99.H on 07/29/09 (Accession No. 
    0000898745-09-000354) 
  (28)  Plan of Acquisition SmallCap Growth III and SmallCap Growth I – Filed as Ex-99.H on 07/29/09 (Accession 
    No. 0000898745-09-000354) 
  (29)  Plan of Acquisition of LargeCap Blend Fund I, Disciplined LargeCap Blend Fund, LargeCap Growth Fund I, 
    LargeCap Growth Fund, LargeCap Blend Fund II, LargeCap Growth Fund II, LargeCap Value Fund III, 
    LargeCap Value Fund, SmallCap Growth Fund II and SmallCap Growth Fund – (Incorporated by reference from 
    the registration statement on Form N-14, File 333-161535, as filed with the Commission on 08/25/09)(Accession No. 
    0000898745-09-000410) 
  (30)  Plan of Acquisition of Ultra Short Bond Fund and Money Market Fund – (Incorporated by reference from the 
    registration statement on Form N-14, File 333-162074, as filed with the Commission on 09/23/09) )(Accession No. 
    0000898745-09-000463) 
 
(i)  Legal Opinion -- Filed as Ex-99.B10 on 04/12/1996 (Accession No. 0000898745-96-000012) 
 
(j)  (1)  Consents of Auditors ** 
  (2)  Rule 485(b) opinion – N/A 
  (3)  Power of Attorneys – Filed as Ex-99.J3 on 12/12/08 (Accession No. 0000898745-08-000166 
 
(k)  N/A   
 
(l)  (1)  Initial Capital Agreement-ISP & MBS -- Filed as Ex-99.B13 on 04/12/1996 

    (Accession No. 0000898745-96-000012)   
  (2)  Initial Capital Agreement-IEP -- Filed as Ex-99.L2 on 09/22/00 (Accession No. 0000898745-00-500024) 
  (3)  Initial Capital Agreement-ICP -- Filed as Ex-99.L3 on 09/22/00 (Accession No. 0000898745-00-500024) 
  (4-38)  Initial Capital Agreement -- Filed as Ex-99.L4-L38 on 12/05/00 (Accession No. 0000898745-00-000021) 
  (39)  Initial Capital Agreement dtd 12/30/02 -- Filed as Ex-99.L.39 on 12/30/02 (Accession No. 0001126871-02- 
    000036)     
  (40-41) Initial Capital Agreement dtd 12/29/03 & 12/30/03-- Filed as Ex-99.L on 02/26/04 (Accession No. 
    0001127048-04-000033)     
  (42)  Initial Capital Agreement dtd 6/1/04 -- Filed as Ex-99.L on 07/27/04 (Accession No. 0000870786-04-000163) 
  (43)  Initial Capital Agreement dtd 11/1/04 – Filed as Ex-99.L on 12/13/04 (Accession No. 0000870786-04- 
    000242)     
  (44)  Initial Capital Agreement dtd 12/29/04 -- Filed as Ex-99.L on 02/28/05 (Accession No. 0000870786-05- 
    000065)     
  (45)  Initial Capital Agreement dtd 3/1/05 – Filed as Ex-99.L on 05/16/05 (Accession No. 0000870786-05- 
    000194)     
  (46)  Initial Capital Agreement dtd 6/28/05 -- Filed as Ex-99.L on 11/22/05 (Accession No. 0000870786-05-000263) 
  (47)  Initial Capital Agreement dtd 3/15/06 -- Filed as Ex-99.L on 10/20/06 (Accession No. 0000898745-06- 
    000160)     
  (48)  Initial Capital Agreement dtd 1/10/07 -- Filed as Ex-99.L (48) on 02/20/08 (Accession No. 0000950137-08- 
    002501)     
  (49)  Initial Capital Agreement dtd 10/1/07 – Filed as Ex-99.L on 03/28/2008 (Accession No. 0000898745-08- 
    000017)     
  (50)  Initial Capital Agreement dtd 2/29/08 – Filed as Ex-99.L on 03/28/2008 (Accession No. 0000898745-08- 
    000017)     
  (51)  Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.L on 07/17/08 (Accession No. 0000009713-08-000060) 
  (52)  Initial Capital Agreement dtd 9/30/08 -- Filed as Ex-99.L on 12/12/08 (Accession No. 0000898745-08-000166) 
  (53)  Initial Capital Agreement dtd 12/15/08 -- Filed as Ex-99.L on 12/31/08 (Accession No. 0000898745-08- 
    000184)     
(m)  Rule 12b-1 Plan       
 
  (1)  Class A Plan -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05-000065) 
    a.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
      000263)     
    b.  Amended & Restated dtd 12/1/05 (Incorporated by reference from exhibit #10(6)b to registration 
      statement No. 333-137477 filed on Form N-14 on 9/20/06 Accession No. 0000009713-06-000062) 
    c.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
      000011)     
    d.  Amended & Restated dtd 10/01/07 -- Filed as Ex-99.M on 12/14/07 (Accession No. 0000898745-07- 
      000184)     
 
  (2)  Class B Plan -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05-000065) 
    a.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
      000263)     
    b.  Amended & Restated dtd 12/1/05 (Incorporated by reference from exhibit #10(7)b to registration 
      statement No. 333-137477 filed on Form N-14 on 9/20/06 Accession No. 0000009713-06-000062) 
    c.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
      000011)     
    d.  Amended & Restated dtd 3/13/07 -- Filed as Ex-99.M on 12/14/07 (Accession No. 0000898745-07- 
      000184)     
  (3)  Class C Plan     
    a.  dated 9/11/06 (Incorporated by reference from exhibit #10(8)a to registration statement No. 333- 
      137477 filed on Form N-14 on 09/20/06 Accession No. 0000009713-06-000062) 
    b.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
      000011)     
    c.  Amended & Restated dtd 10/01/07 -- Filed as Ex-99.M on 12/14/07 (Accession No. 0000898745-07- 
      000184)     

(4)  Class J Plan   
  a.  Amended & Restated dtd 9/9/02 -- Filed as Ex-99.E.1.H on 12/30/02 (Accession No. 0001126871- 
    02-000036)   
  b.  Amended & Restated dtd 9/13/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
    04-000207)   
  c.  Amended & Restated dtd 12/13/04 -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05- 
    000065)   
  d.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
    000263)   
  e.  Amended & Restated dtd 9/11/06 (Incorporated by reference from exhibit #10(4)e to registration 
    statement No. 333-137477 filed on Form N-14 on 10/6/06) 
  f.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
    000011)   
  g.  Amended & Restated dtd 1/1/08 – Filed as Ex-99.M.4G on 02/28/08 (Accession No. 0000950137-08- 
    002501)   
  h.  Amended & Restated dtd 1/1/08 -- Filed as Ex-99.M4H on 05/01/08 (Accession No. 0000950137-08- 
    006512)   
  i.  Amended & Restated dtd 3/11/08 -- Filed as Ex-99.M4H on 05/01/08 (Accession No. 0000950137- 
    08-006512)   
 
(5)  R-1 f/k/a Advisors Signature Plan – Filed as Ex-99.M on 12/13/04 (Accession No. 0000870786-04-000242) 
  a.  Amended & Restated dtd 9/13/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
    04-000207)   
  b.  Amended & Restated dtd 12/13/04 -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05- 
    000065)   
  c.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
    000263)   
  d.  Amended & Restated dtd 9/11/06 (Incorporated by reference from exhibit #10(5)d to registration 
    statement No. 333-137477 filed on Form N-14 on 10/6/06 Accession No. 0000898745-06-000145) 
  e.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
    000011)   
  f.  Amended & Restated dtd 3/11/08 -- Filed as Ex-99.M5F on 05/01/08 (Accession No. 0000950137- 
    08-006512)   
  g.  Amended & Restated Distribution Plan and Agreement Class R-1 dtd 6/24/08 – Filed as Ex-99.M1J 
    on 09/30/08 (Accession No. 0000898745-08-000083 
  h.  Amended & Restated Distribution Plan and Agreement Class R-1 dtd 09/16/09* 
 
(6)  R-2 f/k/a Advisors Select Plan -- Filed as Ex-99.M2 on 09/22/00 (Accession No. 0000898745-00-500024) 
  a.  Amended & Restated dtd 9/9/02 -- Filed as Ex-99.E.1.F on 12/30/02 (Accession No. 0001126871- 
    02-000036)   
  b.  Amended & Restated dtd 3/11/04 – Filed as Ex-99.M on 03/16/04 (Accession No. 0000870786-04- 
    000044)   
  c.  Amended & Restated dtd 6/14/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
    04-000207)   
  d.  Amended & Restated dtd 9/13/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
    04-000207)   
  e.  Amended & Restated dtd 12/13/04 -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05- 
    000065)   
  f.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
    000263)   
  g.  Amended & Restated dtd 9/11/06 (Incorporated by reference from exhibit #10(2)g to registration 
    statement No. 333-137477 filed on Form N-14 on 10/6/06 Accession No. 0000898745-06-000142) 
  h.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
    000011)   
  i.  Amended & Restated dtd 3/11/08 -- Filed as Ex-99.M2I on 05/01/08 (Accession No. 0000950137-08- 
    006512)   

    j.  Amended & Restated Distribution Plan and Agreement Class R-2 dtd 6/24/08 – Filed as Ex-99.M2J 
      on 09/30/08 (Accession No. 0000898745-08-000083) 
    k.  Amended & Restated Distribution Plan and Agreement Class R-2 dtd 09/16/09* 
 
  (7)  R-3 f/k/a Advisors Preferred Plan -- Filed as Ex-99.M1 on 09/22/00 (Accession No. 0000898745-00-500024) 
    a.  Amended & Restated dtd 9/9/02 -- Filed as Ex-99.E.1.G on 12/30/02 (Accession No. 0001126871- 
      02-000036)   
    b.  Amended & Restated dtd 3/11/04 -- Filed as Ex-99.M on 03/16/04 (Accession No. 0000870786-04- 
      00044)   
    c.  Amended & Restated dtd 6/14/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
      04-000207)   
    d.  Amended & Restated dtd 9/13/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
      04-000207)   
    e.  Amended & Restated dtd 12/13/04 -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05- 
      000065)   
    f.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
      000263)   
    g.  Amended & Restated dtd 9/11/06 (Incorporated by reference from exhibit #10(1)g 
      to registration statement No. 333-137477 filed on Form N-14 on 10/6/06 Accession No. 0000898745- 
      06-00145)   
    h.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
      000011)   
    i.  Amended & Restated dtd 3/11/08 -- Filed as Ex-99.M1I on 05/01/08 (Accession No. 0000950137- 
      08-006512)   
    j.  Amended & Restated Distribution Plan and Agreement Class R-3 dtd 6/24/08 – Filed as Ex-99.M3J 
      on 09/30/08 (Accession No. 0000898745-08-000083 
    i.  Amended & Restated Distribution Plan and Agreement Class R-3 dtd 09/16/09* 
 
  (8)  R-4 f/k/a Select Plan -- Filed as Ex-99.E.1.D on 12/30/02 (Accession No. 0001126871-02-000036) 
    a.  Amended & Restated dtd 9/9/02 -- Filed as Ex-99.E.1.E on 12/30/02 (Accession No. 0001126871- 
      02-000036)   
    b.  Amended & Restated dtd 3/11/04 – Filed as Ex-99.M on 03/16/04 (Accession No. 0000870786-04- 
      000044)   
    c.  Amended & Restated dtd 6/14/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
      04-000207)   
    d.  Amended & Restated dtd 9/13/04 – Filed as Ex-99.M on 09/27/2004 (Accession No. 0000870786- 
      04-000207)   
    e.  Amended & Restated dtd 12/13/04 -- Filed as Ex-99.M on 02/28/05 (Accession No. 0000870786-05- 
      000065)   
    f.  Amended & Restated dtd 9/30/05 -- Filed as Ex-99.M on 11/22/05 (Accession No. 0000870786-05- 
      000263)   
    g.  Amended & Restated dtd 9/11/06 (Incorporated by reference from exhibit #10(3)g to registration 
      statement No. 333-137477 filed on Form N-14 on 10/6/06 Accession No. 0000898745-06-000145) 
    h.  Amended & Restated dtd 1/12/07 -- Filed as Ex-99.M on 01/16/07 (Accession No. 0000898745-07- 
      000011)   
    i.  Amended & Restated dtd 3/11/08 -- Filed as Ex-99.M3I on 05/01/08 (Accession No. 0000950137-08- 
      006512)   
    j.  Amended & Restated Distribution Plan and Agreement Class R-4 dtd 6/24/08 – Filed as Ex-99.M5G 
      on 09/30/08 (Accession No. 0000898745-08-000083 
    k.  Amended & Restated Distribution Plan and Agreement Class R-4 dtd 09/16/09* 
 
  (9)  Class S Plan dtd 5/1/08 -- Filed as Ex-99.M9 on 05/01/08 (Accession No. 0000950137-08-006512) 
 
(n)  (1)  Rule 18f-3 Plan dtd 3/10/08 -- Filed as Ex-99.N1 on 05/01/08 (Accession No. 0000950137-08-006512) 
 
(o)  Reserved     
 
(p)  Codes of Ethics     

  (1)  Alliance Bernstein Code of Ethics -- Filed as Ex-99.P on 12/14/07 (Accession No. 0000898745-07-000184) 
  (2)  American Century Investment Management – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09- 
    000354)   
  (3)  AXA Rosenberg Investment Management Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.P on 
    07/17/08 (Accession No. 0000009713-08-000060) 
  (4)  The Bank of New York Mellon Code of Ethics -- Filed as Ex-99.P(8) on 02/20/08 (Accession No. 
    0000950137-08-002501)   
  (5)  Barrow Hanley Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09-000354) 
  (6)  BlackRock Code of Ethics – Filed as Ex-99.P7 on 12/12/08 (Accession No. 0000898745-08-000166) 
  (7)  Brown Investment Advisor Incorporated Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 
    0000898745-09-000354)   
  (8)  Causeway Capital Management LLC Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.P on 07/17/08 
    (Accession No. 0000009713-08-000060) 
  (9)  Clearbridge Advisors Code of Ethics* 
  (10)  Columbus Circle Investors Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09- 
    000354)   
  (11)  Dimensional Fund Advisors Code of Ethics -- Filed as Ex-99.P on 12/29/05 (Accession No. 0000898745-05- 
    000035)   
  (12)  Edge Asset Management Code of Ethics -- Filed as Ex-99.P(29) on 02/20/08 (Accession No. 0000950137- 
    08-002501)   
  (13)  Emerald Advisers Inc. Code of Ethics -- Filed as Ex-99.P(17) on 02/20/08 (Accession No. 0000950137-08- 
    002501)   
  (14)  Essex Code of Ethics (filed 1/16/07) -- Filed as Ex-99.P on 12/14/07 (Accession No. 0000898745-07-000184) 
  (15)  Goldman Sachs Code of Ethics -- Filed as Ex-99.P on 12/14/07 (Accession No. 0000898745-07-000184 
  (16)  Guggenheim Investment Management LLC Code of Ethics * 
  (17)  Jacobs Levy Code of Ethics -- Filed as Ex-99.P on 10/20/06 (Accession No. 0000898745-06-000160) 
  (18)  JP Morgan Code of Ethics -- Filed as Ex-99.P on 12/14/07 (Accession No. 0000898745-07-000184 
  (19)  Lehman Brothers Code of Ethics (now known as Neuberger Berman Fixed Income LLC) – Filed as Ex-99.P 
    on 07/29/09 (Accession No. 0000898745-09-000354) 
  (20)  Los Angeles Capital Management and Equity Research, Inc. Code of Ethics – Filed as Ex-99.P on 07/29/09 
    (Accession No. 0000898745-09-000354) 
  (21)  Montag & Caldwell, Inc. Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09- 
    000354)   
  (22)  Morgan Stanley Investment Management – Filed as Ex-99.P on 03/27/07 (Accession No. 0000898745-07- 
    000036)   
  (23)  Pacific Investment Management Company LLC Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.P on 
    07/17/08 (Accession No. 0000009713-08-000060) 
  (24)  Principal Global Investors/Principal Real Estate Investors Code of Ethics Filed as Ex-99.P on 
    03/27/07(Accession No. 0000898745-07-000036 
  (25)  Principal Funds, Inc. Principal Variable Contracts Funds, Inc., Principal Management Corporation, Principal 
    Financial Advisors, Inc., Princor Financial Services Corporation, Principal Funds Distributor Code of Ethics 
    Initial Capital Agreement dtd 6/9/09 – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09-000354) 
  (26)  Pyramis Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09-000354) 
  (27)  Sr. & Executive Officers Code of Ethics (Sarbanes) -- Filed as Ex-99.P21 on 09/11/03 (Accession No. 
    0000870786-03-000169)   
  (28)  Spectrum Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09-000354) 
  (29)  T. Rowe Price Code of Ethics – Filed as Ex-99.P on 07/29/09 (Accession No. 0000898745-09-000354) 
  (30)  Thompson, Siegel & Walmsley LLC Code of Ethics* 
  (31)  Tortoise Capital Advisors LLC Code of Ethics* 
  (32)  Turner Investment Partners -- Filed as Ex-99.P on 02/28/05 (Accession No. 0000870786-05-000065) 
  (33)  UBS Code of Ethics dtd 06/25/09* 
  (34)  Vaughan-Nelson Code of Ethics -- Filed as Ex-99.P on 12/14/07 (Accession No. 0000898745-07-000184 
  (35)  Westwood Management Corporation Code of Ethics Initial Capital Agreement dtd 5/1/08 -- Filed as Ex-99.P 
    on 07/17/08 (Accession No. 0000009713-08-000060) 
*  Filed herein.   
**  To be filed by amendment.   

Item 24.    Persons Controlled by or Under Common Control with Registrant 
 
    The Registrant does not control and is not under common control with any person. 
 
Item 25.    Indemnification 
 
         Under Section 2-418 of the Maryland General Corporation Law, with respect to any proceedings against a present or 
former director, officer, agent or employee (a "corporate representative") of the Registrant, the Registrant may indemnify the 
corporate representative against judgments, fines, penalties, and amounts paid in settlement, and against expenses, 
including attorneys' fees, if such expenses were actually incurred by the corporate representative in connection with the 
proceeding, unless it is established that: 
 
         (i)  The act or omission of the corporate representative was material to the matter giving rise to the proceeding; and 
  1.  Was committed in bad faith; or 
  2.  Was the result of active and deliberate dishonesty; or 
 
         (ii)  The corporate representative actually received an improper personal benefit in money, property, or services; or 
 
         (iii) In the case of any criminal proceeding, the corporate representative had reasonable cause to believe that the act or 
omission was unlawful. 
 
         If a proceeding is brought by or on behalf of the Registrant, however, the Registrant may not indemnify a corporate 
representative who has been adjudged to be liable to the Registrant. Under the Registrant's Articles of Incorporation and 
Bylaws, directors and officers of Registrant are entitled to indemnification by the Registrant to the fullest extent permitted 
under Maryland law and the Investment Company Act of 1940. Reference is made to Article VI, Section 7 of the Registrant's 
Articles of Incorporation, Article 12 of Registrant's Bylaws and Section 2-418 of the Maryland General Corporation Law. 
 
         The Registrant has agreed to indemnify, defend and hold the Distributors, their officers and directors, and any person 
who controls the Distributors within the meaning of Section 15 of the Securities Act of 1933, free and harmless from and 
against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, 
demands or liabilities and any counsel fees incurred in connection therewith) which the Distributors, their officers, directors or 
any such controlling person may incur under the Securities Act of 1933, or under common law or otherwise, arising out of or 
based upon any untrue statement of a material fact contained in the Registrant's registration statement or prospectus or 
arising out of or based upon any alleged omission to state a material fact required to be stated in either thereof or necessary 
to make the statements in either thereof not misleading, except insofar as such claims, demands, liabilities or expenses arise 
out of or are based upon any such untrue statement or omission made in conformity with information furnished in writing by 
the Distributors to the Registrant for use in the Registrant's registration statement or prospectus: provided, however, that this 
indemnity agreement, to the extent that it might require indemnity of any person who is also an officer or director of the 
Registrant or who controls the Registrant within the meaning of Section 15 of the Securities Act of 1933, shall not inure to the 
benefit of such officer, director or controlling person unless a court of competent jurisdiction shall determine, or it shall have 
been determined by controlling precedent that such result would not be against public policy as expressed in the Securities 
Act of 1933, and further provided, that in no event shall anything contained herein be so construed as to protect the 
Distributors against any liability to the Registrant or to its security holders to which the Distributors would otherwise be subject 
by reason of willful misfeasance, bad faith, or gross negligence, in the performance of their duties, or by reason of their 
reckless disregard of their obligations under this Agreement. The Registrant's agreement to indemnify the Distributors, their 
officers and directors and any such controlling person as aforesaid is expressly conditioned upon the Registrant being 
promptly notified of any action brought against the Distributors, their officers or directors, or any such controlling person, such 
notification to be given by letter or telegram addressed to the Registrant. 
 
         Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and  
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the 
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and 
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by 
the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful 
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the 
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling 

precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy 
as expressed in the Act and will be governed by the final adjudication of such issue. 
 
Item 26.  Business or Other Connection of Investment Adviser 
 
         Principal Management Corporation ("PMC") serves as investment adviser and administrator for Principal Variable 
Contracts Funds, Inc. ("PVC") and Principal Funds, Inc.("Principal Funds"). PVC and Principal Funds are funds sponsored by 
Principal Life Insurance Company. 
 
         A complete list of the officers and directors of the investment adviser, Principal Management Corporation, are set out 
below. This list includes some of the same people (designated by an *), who serve as officers and directors of the Registrant. 
For these people the information as set out in the Statement of Additional Information (See Part B) under the caption 
"Directors and Officers of the Fund" is incorporated by reference. 

NAME &  COMPANY &   
OFFICE WITH  PRINCIPAL   
INVESTMENT  BUSINESS  NATURE OF 
ADVISER  ADDRESS  RELATIONSHIP 
Michael C. Anagnost  Principal Life  Director - IT 
Vice President-  Insurance Company(1)   
Chief Technology Officer     
 
John E. Aschenbrenner  Principal Life  President, Insurance & 
Director  Insurance Company (1)  Financial Services 
 
Patricia A. Barry  Principal Life  Counsel 
Assistant Corporate  Insurance Company (1)   
Secretary     
 
*Craig L. Bassett  Principal Life  See Part B 
Treasurer  Insurance Company (1)   
 
*Michael J. Beer  Principal Life  See Part B 
Executive Vice President/  Insurance Company (1)   
Chief Operating Officer,     
Director     
 
Tracy W. Bollin  Principal Funds  Assistant Controller 
Financial Controller  Distributor, Inc.(2)   
and Princor Financial
Services Corporation (1)
 
*David J. Brown  Principal Life  See Part B 
Senior Vice President  Insurance Company (1)   
 
*Jill R. Brown  Principal Funds  See Part B 
Senior Vice President/  Distributor, Inc.(2)   
Chief Financial Officer     
 
David P. Desing  Principal Life  Assistant Treasurer 
Assistant Treasurer  Insurance Company (1)   
 
*Ralph C. Eucher  Principal Life  See Part B 
Director  Insurance Company (1)   
 
*Nora M. Everett  Principal Life  See Part B 

President and Director  Insurance Company (1)   
 
James W. Fennessey  Principal  Asset Allocation Committee 
Vice President  Financial Advisors, Inc.(1)   
 
Michael P. Finnegan  Principal Life  Second Vice President - 
Senior Vice President -  Insurance Company (1)  Investment Services 
Investment Services     
 
Louis E. Flori  Principal Life  Vice President – Capital Markets 
Vice President – Capital Markets  Insurance Company (1)   
 
*Stephen G. Gallaher  Principal Life  See Part B 
Assistant General Counsel  Insurance Company (1)   
 
*Ernest H. Gillum  Principal Life  See Part B 
Vice President and Chief  Insurance Company (1)   
Compliance Officer     
 
Eric W. Hays  Principal Life  Assistant Vice President – IT 
Senior Vice President –  Insurance Company (1)   
Chief Information Officer     
Joyce N. Hoffman  Principal Life  Senior Vice President and 
Senior Vice President and  Insurance Company (1)  Corporate Secretary 
Corporate Secretary     
 
*Patrick A. Kirchner  Principal Life  See Part B 
Assistant General Counsel  Insurance Company (1)   
Deanna L. Mankle  Principal Life  Assistant Treasurer 
Assistant Treasurer  Insurance Company (1)   
 
Jennifer A. Mills  Principal Life  Attorney 
Counsel  Insurance Company (1)   
Mariateresa Monaco  Principal Life  Portfolio Manager 
Vice President/Portfolio Management  Insurance Company (1)   
 
*Layne A. Rasmussen  Principal Life  See Part B 
Vice President and  Insurance Company (1)   
Controller - Principal Funds     
David L. Reichart  Princor  Senior Vice President 
Senior Vice President  Financial Services   
  Corporation(1)   
 
*Michael D. Roughton  Principal Life  See Part B 
Senior Vice President and  Insurance Company (1)   
Senior Securities Counsel     
 
*Adam U. Shaikh  Principal Life  See Part B 
Counsel  Insurance Company (1)   
 
Mark A. Stark  Principal Life  Vice President - 
Vice President -  Insurance Company (1)  Investment Services 
Investment Services     
 
Randy L. Welch  Principal Life  Vice President - 
Vice President -  Insurance Company (1)  Investment Services 
Investment Services     
*Dan L. Westholm  Principal Life  See Part B 

Director - Treasury  Insurance Company (1)   
 
*Beth C. Wilson  Principal Life  See Part B 
Vice President  Insurance Company (1)   
Larry D. Zimpleman  Principal Life  President and Chief Executive 
Chairman of the Board  Insurance Company (1)  Officer 

(1)  711 High Street 
                                         Des Moines, IA 50309
(2)  1100 Investment Boulevard, Ste 200 
  El Dorado Hills, CA 95762 

Item 27.  Principal Underwriter 
 
(a)  Principal Funds Distributor ("PFD") act as principal underwriter for Principal Funds, Inc. and Principal Variable Contracts 
  Funds, Inc. PFD also serves as the principal underwriter for certain variable contracts issued by Farmers New World Life 
  Insurance Company through Farmers Variable Life Separate Account A. PFD also serves as the principal underwriter for 
  certain variable contracts issued by AIG SunAmerica Life Assurance Company and First SunAmerica Life Insurance 
  Company, through their respective separate accounts. 

(1)  (2)  (3) 
  Positions and offices   
Name and principal  with principal  Positions and Offices 
business address  underwriter (PFD)  with the Fund 
Lindsay L. Amadeo  Director - Marketing  None 
The Principal  Communications   
Financial Group(1)     
 
Michael C. Anagnost  Vice President -  None 
The Principal  Chief Technology Officer   
Financial Group(1)     
 
Phillip J. Barbaria  Chief Compliance Officer  None 
Principal Funds     
Distributor, Inc. (1)     
 
Patricia A. Barry  Assistant Corporate  None 
The Principal  Secretary   
Financial Group(1)     
 
Craig L. Bassett  Treasurer  Treasurer 
The Principal     
Financial Group(1)     
 
Michael J. Beer  Executive Vice President  Executive Vice President 
The Principal     
Financial Group(1)     
 
Lisa Bertholf  Director - Marketing  None 
The Principal     
Financial Group(1)     
 
Tracy W. Bollin  Assistant Controller  None 
The Principal     
Financial Group(1)     

David J. Brown  Senior Vice President  Chief Compliance Officer 
The Principal     
Financial Group(1)     
 
Jill R. Brown  Director  Senior Vice President 
The Principal  Senior Vice President and   
Financial Group(1)  Chief Financial Officer   
 
Bret J. Bussanmas  Vice President -  None 
The Principal  Distribution   
Financial Group(1)     
 
P. Scott Cawley  Product Marketing Officer  None 
The Principal     
Financial Group(1)     
 
Ralph C. Eucher  Chairman of the Board  Chairman of the Board and 
The Principal    Chief Executive Officer 
Financial Group(1)     
 
Nora M. Everett  Director  President and Director 
The Principal     
Financial Group (1)     
 
Cary Fuchs  President  Senior Vice President of Distribution 
Principal Funds     
Distributor, Inc.(2)     
 
Stephen G. Gallaher  Assistant General Counsel  Assistant Counsel 
The Principal     
Financial Group(1)     
 
Eric W. Hays  Senior Vice President and  None 
The Principal  Chief Information Officer   
Financial Group(1)     
 
Tim Hill  Vice President - Distribution  None 
Principal Funds     
Distributor, Inc.(1)     
 
Joyce N. Hoffman  Senior Vice President and  None 
The Principal  Corporate Secretary   
Financial Group(1)     
 
Daniel J. Houston  Director  None 
The Principal     
Financial Group(1)     
 
Jennifer A. Mills  Counsel  None 
The Principal     
Financial Group (1)     
 
Timothy J. Minard  Director  None 
The Principal     
Financial Group(1)     

Kevin J. Morris  Director - Marketing  None 
Principal Funds     
Distributor, Inc.(1)     
 
David L. Reichart  Senior Vice  None 
The Principal  President/Distribution   
Financial Group(1)     
 
Michael D. Roughton  Senior Vice President/Counsel  Counsel 
The Principal     
Financial Group(1)     
 
Paul Schieber  Regional Vice President  None 
The Principal     
Financial Group (1)     
 
Adam U. Shaikh  Counsel  Assistant Counsel 
The Principal     
Financial Group(1)     
 
Mark A. Stark  Vice President – Investor  None 
The Principal  Services   
Financial Group(1)     

  (1)  1100 Investment Boulevard, Ste 200 
    El Dorado Hills, CA 95762-5710 
(c) N/A.     

Item 28.           Location of Accounts and Records 
         All accounts, books or other documents of the Registrant are located at the offices of the Registrant and its Investment 
Adviser in the Principal Life Insurance Company home office building, The Principal Financial Group, Des Moines, Iowa 
50392.   
Item 29.           Management Services 
  N/A. 
Item 30.           Undertakings 
  N/A. 

SIGNATURES
 
 
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has 
duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, duly authorized 
in the City of Des Moines and State of Iowa, on the 7th day of October, 2009. 

Principal Funds, Inc. 
(Registrant) 
 
 
 
/s/ R. C. Eucher 
R. C. Eucher 
Chairman of the Board and 
Chief Executive Officer 

Attest: 
 
 
     /s/ Beth Wilson 
Beth Wilson 
Vice President and Secretary 

Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been 
signed below by the following persons in the capacities and on the dates indicated. 

Signature    Title Date   
 
/s/ R. C. Eucher         
    Chairman of the Board  October 7,  2009 
R. C. Eucher    and Chief Executive     
    Officer (Principal     
    Executive Officer)     
 
/s/ L. A. Rasmussen         
    Vice President,  October 7,  2009 
L. A. Rasmussen    Controller and Chief     
    Financial Officer     
    (Principal Financial     
    Officer and Controller)     
 
/s/ N. M. Everett         
    President and Director  October 7,  2009 
N. M. Everett         
 
 
/s/ M. J. Beer         
    Executive Vice President  October 7,  2009 
M. J. Beer         
 
(E. Ballantine)*         
    Director  October 7,  2009 
E. Ballantine         
 
(K. Blake)*         
    Director  October 7,  2009 
K. Blake         
 
(C. Damos)*         
    Director  October 7,  2009 
C. Damos         
 
(R. W. Gilbert)*         
    Director  October 7,  2009 
R. W. Gilbert         
 
(M. A. Grimmett)*         
    Director  October 7,  2009 
M. A. Grimmett         
 
(F. S. Hirsch)*         
    Director  October 7,  2009 
F. S. Hirsch         
 
(W. C. Kimball)*         
    Director  October 7,  2009 
W. C. Kimball         

(B. A. Lukavsky)*         
  Director    October 7,  2009 
B. A. Lukavsky         
 
(W. G. Papesh)*         
  Director    October 7,  2009 
W. G. Papesh         
 
(D. Pavelich)*         
  Director    October 7,  2009 
D. Pavelich         
 
 
                         /s/ M. J. Beer   
    *By     
      M. J. Beer   
      Executive Vice President   
 
      *Pursuant to Powers of Attorney 
      Previously filed on December 12, 2008