Diversified Real Asset Fund (First Prospectus Summary) | Diversified Real Asset Fund

Diversified Real Asset Fund

Objective:

The Fund seeks a long-term total return in excess of inflation.

Fees and Expenses of the Fund

This table describes the fees and expenses that you may pay if you buy and hold

shares of the Fund. You may qualify for sales charge discounts if you and your

family invest, or agree to invest in the future, at least $100,000 in Principal

Funds, Inc. More information about these and other discounts is available from

your financial professional and in "Choosing a Share Class and The Costs of

Investing" beginning on page 47 of the Fund's prospectus and "Multiple Class

Structure" beginning on page 58 of the Fund's Statement of Additional

Information.

Shareholder Fees (fees paid directly from your investment)

Shareholder Fees Diversified Real Asset Fund	Class A Shares	Class C Shares	Class P Shares
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	3.75%	none	none
Maximum Deferred Sales Charge (Load) (as a percentage of dollars subject to charge)	1.00%	1.00%	none

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

Annual Fund Operating Expenses Diversified Real Asset Fund		Class A Shares	Class C Shares	Class P Shares
Management Fees		0.85%	0.85%	0.85%
Distribution and/or Service (12b-1) Fees		0.25%	1.00%
Other Expenses		0.22%	0.33%	1.04%
Total Annual Fund Operating Expenses		1.32%	2.18%	1.89%
Expense Reimbursement	[1]	0.07%	0.18%	0.84%
Total Annual Fund Operating Expenses after Expense Reimbursement		1.25%	2.00%	1.05%

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 and then redeem all of your shares at the end of those periods. 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:

Expense Example Diversified Real Asset Fund (USD $)	Expense Example, With Redemption, 1 Year	Expense Example, With Redemption, 3 Years	Expense Example, With Redemption, 5 Years	Expense Example, With Redemption, 10 Years
Class A Shares	498	770	1,064	1,900
Class C Shares	303	662	1,152	2,500
Class P Shares	107	500	935	2,145

You would pay the following expenses if you did not redeem your shares:

Expense Example, No Redemption Diversified Real Asset Fund (USD $)	Expense Example, No Redemption, 1 Year	Expense Example, No Redemption, 3 Years	Expense Example, No Redemption, 5 Years	Expense Example, No Redemption, 10 Years
Class A Shares	498	770	1,064	1,900
Class C Shares	203	662	1,152	2,500
Class P Shares	107	500	935	2,145

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sells

securities (or "turns over" its portfolio). A higher portfolio turnover rate may

indicate higher transaction costs and may result in higher taxes when Fund

shares are held in a taxable account. These costs, which are not reflected in

annual fund operating expenses or in the example, affect the Fund's performance.

During the most recent fiscal year, the Fund's annualized portfolio turnover

rate was 59.7% of the average value of its portfolio.

Principal Investment Strategies

The Fund seeks to achieve its investment objective by allocating its assets

among the following general investment categories: inflation-indexed bonds, real

estate investment trusts (REITs), commodity index-linked notes, fixed-income

securities, securities of natural resource companies and master limited

partnerships (MLPs). Under normal circumstances, the Fund invests at least 80%

of its assets in securities that fall into these categories at the time of

purchase.



The Fund may concentrate its investments (invest more than 25% of its net

assets) in securities in the real estate and energy/natural resources

industries.



In managing the Fund, Principal Management Corporation ("Principal"), the Fund's

investment advisor, determines the Fund's strategic asset allocation among the

general investment categories described below, which are executed by multiple

sub-advisors. The allocations will vary from time to time, and the Fund may add

additional investment categories.



A portion of the Fund's assets currently will be invested primarily in

inflation-indexed bonds issued by the U.S. and non-U.S. governments, their

agencies or instrumentalities and U.S. and non-U.S. corporations.

Inflation-indexed bonds are fixed-income securities that are structured to

provide protection against inflation. The value of the bond's principal or the

interest income paid on the bond is adjusted to track changes in an official

inflation measure.



A portion of the Fund's assets currently will be invested in a combination of

commodity index-linked notes and fixed-income securities. Commodities are assets

that have tangible properties, such as oil, coal, natural gas, agricultural

products, industrial metals, livestock and precious metals. In order to gain

exposure to the commodities markets without investing directly in physical

commodities, the Fund invests in commodity index-linked notes. Commodity

index-linked notes are derivative debt instruments with principal and/or coupon

payments linked to the performance of commodity indices. These notes are

sometimes referred to as "structured notes" because the terms of these notes may

be structured by the issuer and the purchaser of the note. The value of these

notes will rise or fall in response to changes in the underlying commodity index

and will be subject to credit and interest rate risks that typically affect debt

securities. The fixed income securities will primarily be short-term U.S.

Treasury and Agency notes and bonds.



A portion of the Fund's assets currently will be invested in REITs. REITs are

corporations or business trusts that are permitted to eliminate corporate level

federal income taxes by meeting certain requirements of the Internal Revenue

Code.



A portion of the Fund's assets currently will be invested in securities of all

companies that primarily own, explore, mine, process or otherwise develop

natural resources, or supply goods and services to such companies. Natural

resources generally include precious metals, such as gold, silver and platinum,

ferrous and nonferrous metals, such as iron, aluminum and copper, strategic

metals such as uranium and titanium, hydrocarbons such as coal and oil,

timberland, undeveloped real property and agricultural commodities.



A portion of the Fund's assets currently will be invested in MLPs. MLPs are

engaged in the transportation, storage, processing, refining, marketing,

production, or mining of natural resources. The Fund will invest primarily in

the mid-stream category, which is generally comprised of pipelines used to

gather, transport, and distribute natural gas, crude oil, and refined petroleum

products.

Principal Risks

The Fund may be an appropriate investment for investors seeking to maintain

their purchasing power, who are willing to accept the risks associated with

investing in commodity index-linked notes, fixed-income securities,

inflation-indexed bonds, equity securities and real estate.



The value of your investment in the Fund changes with the value of the Fund's

investments. Many factors affect that value, and it is possible to lose money by

investing in the Fund. An investment in the Fund is not a deposit of a bank and

is not insured or guaranteed by the Federal Deposit Insurance Corporation or any

other government agency. The principal risks of investing in the Fund, in

alphabetical order, are:



Asset Allocation Risk. A fund's selection and weighting of asset classes may

cause it to underperform other funds with a similar investment objective.



Commodity Index-Linked Notes Risk. The value of commodities may be affected by

overall market movements and other factors affecting the value of a particular

industry or commodity. These notes expose the fund to movements in commodity

prices. They are also subject to credit, counterparty, and interest rate risk.

Commodity index-linked notes are often leveraged. At the maturity of the note,

the fund may receive more or less principal than it originally invested. The

fund may also receive interest payments on the note that are less than the

stated coupon interest payments.



Counterparty Risk. Counterparty risk is the risk that the counterparty to a

derivatives contract or repurchase agreement, the borrower of a portfolio's

securities, or other obligation, will be unable or unwilling to make timely

principal, interest, or settlement payments, or otherwise to honor its

obligations.



Derivatives Risk. Transactions in derivatives (such as options, futures,

currency contracts, 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, convertible preferred stocks

and other 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.



Industry Concentration (Sector) Risk. A fund that concentrates investments in a

particular industry or group of industries (e.g., energy, real estate,

technology, financial services) has greater exposure than other funds to market,

economic and other factors affecting that industry or sector.



Leverage Risk. Leverage created by borrowing or certain types of transactions or

investments, such as reverse repurchase agreements, loans of portfolio

securities, and the use of when-issued, delayed delivery or forward commitment

transactions, or derivative instruments, may impair the fund's liquidity, cause

it to liquidate positions at an unfavorable time, increase volatility of the

fund's net asset value, or diminish the fund's performance.



Master Limited Partnership ("MLP") Risk. MLPs are publicly-traded limited

partnership interests or units. An MLP that invests in a particular industry

(e.g., oil and gas) will be harmed by detrimental economic events within that

industry. As partnerships, MLPs may be subject to less regulation (and less

protection for investors) under state laws than corporations. In addition, MLPs

may be subject to state taxation in certain jurisdictions, which may reduce the

amount of income an MLP pays to its investors.



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.



Real Estate Investment Trusts ("REITs") Risk. 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.



Real Estate Securities Risk. Real estate securities 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.



Risk of Being an Underlying Fund. An underlying fund of 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.

Performance

No performance information is shown because the Fund has not yet had a calendar

year of performance. The Fund's performance will be benchmarked against the

Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index.

[1] Principal Management Corporation ("Principal"), the investment advisor, has contractually agreed to limit the Fund's expenses attributable to Class A and Class C shares, and expenses identified as "Other Expenses" for Class P and, if necessary, pay expenses normally payable by the Fund, excluding interest expense, through the period ending December 31, 2012. 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 1.25% for Class A and 2.00% for Class C. In addition, for Class P, the expense limit will maintain "Other Expenses" (expressed as a percent of average net assets on an annualized basis) not to exceed 0.20%. It is expected that the expense limit will continue through the period disclosed; however, Principal Funds, Inc. and Principal, the parties to the agreement, may agree to terminate the expense limit prior to the end of the period.