Small-MidCap Dividend Income Fund (First Prospectus Summary) | Small-MidCap Dividend Income Fund

Small-MidCap Dividend Income Fund

Objective:

The Fund primarily seeks to provide a relatively high level of current income

and long-term growth of income, and

secondarily long-term growth of capital, while investing primarily in small- to

mid-capitalization companies.

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 $50,000 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 Small-MidCap Dividend Income Fund	Class A	Class P
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	5.50%	none
Maximum Deferred Sales Charge (Load) (as a percentage of dollars subject to charge)	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 Small-MidCap Dividend Income Fund		Class A	Class P
Management Fees		0.80%	0.80%
Distribution and/or Service (12b-1) Fees		0.25%
Other Expenses	[1]	0.60%	0.60%
Acquired Fund Fees and Expenses		0.06%	0.06%
Total Annual Fund Operating Expenses		1.71%	1.46%
Expense Reimbursement	[2]	0.25%	0.40%
Total Annual Fund Operating Expenses after Expense Reimbursement		1.46%	1.06%

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 Small-MidCap Dividend Income 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	690	1,032	1,401	2,435
Class P	108	416	753	1,706

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

Expense Example, No Redemption Small-MidCap Dividend Income 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	690	1,032	1,401	2,435
Class P	108	416	753	1,706

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.

From June 6, 2011, date operations commenced, through August 31, 2011, the

Fund's annualized portfolio turnover rate was 43.5% of the average value of its

portfolio.

Principal Investment Strategies

Under normal circumstances, the Fund invests at least 80% of its net assets in

dividend-paying equity securities of companies with small to medium market

capitalizations (those with market capitalizations ranging from between $200

million and $7 billion) at the time of purchase. The Fund invests in value

equity securities, an investment strategy that emphasizes buying equity

securities that appear to be undervalued. The Fund will invest in the securities

of foreign issuers, real estate investment trusts, preferred securities,

convertible securities, fixed-income securities, master limited partnerships,

and royalty trusts.

Principal Risks

The Fund may be an appropriate investment for investors who seek dividends to

generate income or to reinvest for growth and who can accept fluctuations in the

value of investments and the risks of investing in real estate investment trust

securities and foreign securities.



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:



Convertible Securities Risk. Convertible securities can be bonds, notes,

debentures, preferred stock or other securities which are convertible into

common stock. Convertible securities are subject to both the credit and interest

rate risks associated with fixed income securities and to the stock market risk

associated with equity securities.



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.



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).



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.



Preferred Securities Risk. Preferred securities are junior subordinated

securities in a company's capital structure and therefore can be subject to

greater credit and liquidation risk. An issuer of preferred securities could

redeem the security prior to the stated maturity date and reduce the return of

the security.



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.



Royalty Trust Risk. A royalty trust generally acquires an interest in natural

resource or chemical companies and distributes the income it receives to its

investors. A sustained decline in demand for natural resource and related

products could adversely affect royalty trust revenues and cash flows. Such a

decline could result from a recession or other adverse economic conditions, an

increase in the market price of the underlying commodity, higher taxes or other

regulatory actions that increase costs, or a shift in consumer demand. Rising

interest rates could adversely affect the performance, and limit the capital

appreciation, of royalty trusts because of the increased availability of

alternative investments at more competitive yields. Fund shareholders will

indirectly bear their proportionate share of the royalty trusts' expenses.



Value Stock Risk. The market may not recognize the intrinsic value of value

stocks for a long time, or they may be appropriately priced at the time of

purchase.

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

Russell 2500 Value Index.

[1] Other Expenses estimated for the year ending August 31, 2012.

[2] Principal Management Corporation ("Principal"), the investment advisor, has contractually agreed to limit the Fund's expenses attributable to Class A and expenses identified as "Other Expenses" for Class P and, if necessary, pay expenses normally payable by the Fund, excluding interest expenses, through the period ending February 28, 2013. The expense limit will maintain a total level of operating expenses and Acquired Fund Fees and Expenses (expressed as a percent of average net assets on an annualized basis) not to exceed 1.40% for Class A. 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.