Bond Market Index Fund (Third Prospectus Summary) | Bond Market Index Fund

Bond Market Index Fund

Objective:

The Fund seeks to provide current income.

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.

Shareholder Fees (fees paid directly from your investment): None

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

Annual Fund Operating Expenses Bond Market Index Fund		Class R-1	Class R-2	Class R-3	Class R-4	Class R-5
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%
Other Expenses		0.54%	0.46%	0.33%	0.29%	0.27%
Total Annual Fund Operating Expenses		1.14%	1.01%	0.83%	0.64%	0.52%
Expense Reimbursement	[1]
Total Annual Fund Operating Expenses after Expense Reimbursement		1.14%	1.01%	0.83%	0.64%	0.52%

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 Bond Market Index 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 R-1	116	362	628	1,386
Class R-2	103	322	558	1,236
Class R-3	85	265	460	1,025
Class R-4	65	205	357	798
Class R-5	53	167	291	653

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 84.6% of the average value of its portfolio.

Principal Investment Strategies

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

debt securities held by the Barclays Capital U.S. Aggregate Bond Index (the

"Index") at the time of purchase. The Index is composed of investment grade,

fixed rate debt issues, including government, corporate, asset-backed, and

mortgage-backed securities, with maturities of one year or more. The Fund

employs a passive investment approach designed to attempt to track the

performance of the Index. Under normal circumstances, the Fund maintains an

average portfolio duration that is in line with the duration of the Barclays

Capital U.S. Aggregate Bond Index, which as of August 31, 2011 was 5.05 years.

Principal Risks

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.



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:



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.



Index Fund Investment Risk. More likely than not, an index fund will not provide

investment performance that matches the index performance due to cashflows and

the fees and expenses of the fund.



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 (extension risk).



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.



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.

Performance

The following information provides an indication of the risks of investing in

the Fund. The bar chart shows the investment returns of the Fund's Class R-2

shares for each full calendar year of operations for 10 years (or, if shorter,

the life of the Fund). The table shows, for each share class of the Fund and for

the last one, five, and ten calendar year periods (or, if shorter, the life of

the Fund), how the Fund's average annual total returns compare to the returns of

one or more broad-based market indices. Past performance (before and after

taxes) is not necessarily an indication of how the Fund will perform in the

future. You may get updated performance information online at www.principal.com

or by calling 1-800-547-7754.



The R-1 through R-5 Class shares were first sold on December 30, 2009. For

periods prior to the date on which these classes began operations, their returns

are based on the performance of the Fund's Institutional Class shares adjusted

to reflect the fees and expenses of these classes. The adjustments result in

performance (for the periods prior to the date these classes began operations)

that is no higher than the historical performance of the Institutional Class

shares.

Total Returns as of December 31 each year (Class R-2 shares)

^[1]

Highest return for a quarter during  Q2 '10 3.17%

the period of the bar chart above:



Lowest return for a quarter during   Q4 '10 -1.55%

the period of the bar chart above:

Average Annual Total Returns For the periods ended December 31, 2010

Average Annual Total Returns Bond Market Index Fund	Average Annual Returns, Label	Average Annual Returns, 1 Year	Average Annual Returns, Since Inception	Average Annual Returns, Inception Date
Class R-1	Class R-1 Return Before Taxes	4.96%	4.84%	Dec. 30, 2009
Class R-2	Class R-2 Return Before Taxes	5.05%	4.93%	Dec. 30, 2009
Class R-3	Class R-3 Return Before Taxes	5.31%	5.19%	Dec. 30, 2009
Class R-4	Class R-4 Return Before Taxes	5.47%	5.35%	Dec. 30, 2009
Class R-5	Class R-5 Return Before Taxes	5.64%	5.51%	Dec. 30, 2009
After Taxes on Distributions Class R-1	Class R-1 Return After Taxes on Distributions	4.45%	4.34%	Dec. 30, 2009
After Taxes on Distributions and Sales Class R-1	Class R-1 Return After Taxes on Distribution and Sale of Fund Shares	3.23%	3.83%	Dec. 30, 2009
Barclays Capital Aggregate Bond Index	Barclays Capital Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes)	6.54%	6.35%	Dec. 30, 2009

After-tax returns are calculated using the historical highest individual federal

marginal income tax rates and do not reflect the impact of state and local

taxes. Actual after-tax returns depend on an investor's tax situation and may

differ from those shown. The after-tax returns shown are not relevant to

investors who hold their Fund shares through tax-deferred arrangements, such as

401(k) plans or individual retirement accounts. After-tax returns are shown for

Class R-1 shares only and would be different for Class R-2, R-3, R-4 and R-5

shares.

[1] Principal Management Corporation ("Principal") has contractually agreed to limit the Fund's 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, 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 1.18% 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. 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.

[1] The year-to-date return as of September 30, 2011 was 5.81% for Class R-2 shares.