Global Multi-Strategy Fund (First Prospectus Summary) | Global Multi-Strategy Fund

Global Multi-Strategy Fund

Objective:

The Fund seeks to achieve long-term capital appreciation with an emphasis on

positive total returns and relatively low volatility.

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 Global Multi-Strategy Fund	Class A Shares	Class P Shares
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	3.75%	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 Global Multi-Strategy Fund		Class A Shares	Class P Shares
Management Fees		1.60%	1.60%
Distribution and/or Service (12b-1) Fees		0.25%
Dividend and Interest Expense on Short Sales	[1]	1.56%	1.56%
Remainder of Other Expenses	[1]	0.23%	0.23%
Total Annual Fund Operating Expenses		3.64%	3.39%
Expense Reimbursement	[2]	0.08%	0.03%
Total Annual Fund Operating Expenses after Expense Reimbursement		3.56%	3.36%

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 Global Multi-Strategy Fund (USD $)	Expense Example, With Redemption, 1 Year	Expense Example, With Redemption, 3 Years
Class A Shares	720	1,439
Class P Shares	339	1,039

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

Expense Example, No Redemption Global Multi-Strategy Fund (USD $)	Expense Example, No Redemption, 1 Year	Expense Example, No Redemption, 3 Years
Class A Shares	720	1,439
Class P Shares	339	1,039

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.

This is a new Fund and does not yet have a portfolio turnover rate to disclose.

Principal Investment Strategies

Principal Management Corporation ("Principal"), the Fund's investment adviser,

allocates the Fund's assets among one or more of the investment strategies

described below, which are executed by one or more of the Fund's sub-advisors.

In making these allocations, Principal seeks to combine the strategies of the

sub-advisors efficiently and systematically so that the Fund generates, through

a diversified set of investment strategies, a positive total return with

relatively low volatility and low sensitivity or correlation to market indices.

By allocating the Fund's assets among a variety of investment strategies, which

will vary from time-to-time, the Fund seeks to lessen risk and reduce

volatility. Principal may also direct a sub-advisor to reduce or omit its

investment in certain assets or asset classes in an effort to achieve its

desired combination of the Fund's strategies.



In pursuing its strategies, the Fund invests in a broad range of instruments

including, but not limited to, equities, bonds, currencies, convertible

securities and derivatives such as futures, options, swaps (including, for

example, credit default, interest rate, and currency swaps) and forwards. The

Fund intends to engage in many derivative transactions to gain exposure to a

variety of securities or attempt to reduce risk. The Fund intends to invest in

securities that are tied economically to a number of countries throughout the

world, including the U.S.; however, the Fund has no requirements as to the

amount of its net assets that it invests in foreign securities. The Fund is

considered non-diversified, which means it can invest a higher percentage of

assets in securities of individual issuers than a diversified fund. The Fund may

actively trade securities.



Some of the strategies take long and/or short positions. When taking a short

position, the Fund may sell an instrument that it does not own and then borrow

to meet its settlement obligations. The Fund may take short positions in

futures, forwards or swaps. A short position will benefit from a decrease in

price of the underlying instrument and will lose value if the price of the

underlying instrument increases. Long positions will profit if the value of the

instrument increases. Simultaneously engaging in long investing and short

selling reduces the net exposure of the overall portfolio to general market

movements. Relative value positions may be taken as well in the various

strategies. Relative value strategies capitalize on price differences between

similar securities or relative value among securities of the same company.



The Fund may use all or some of the following strategies to varying degrees,

depending on market conditions, and may add additional strategies. Principal may

allocate 0 to 100% of the Fund's assets to any of these strategies at any time.



Credit Long/Short and Distressed Credit. This strategy utilizes a flexible

investment approach that allocates investments across a global range of

investment opportunities related to credit, currencies and interest rates, while

employing risk management strategies. This strategy invests in fixed income

securities and instruments and may invest in both investment-grade securities

and high yield, below-investment grade securities (sometimes called "junk bonds"

and are rated at the time of purchase BB+ or lower by S&P or rated Ba1 or lower

by Moody's or of equivalent rating as determined by the sub-advisor). This

strategy may also invest in the following securities: securities denominated in

foreign currencies and in U.S. dollar denominated securities of foreign issuers,

preferred securities, convertible securities, Rule 144A securities, mortgage or

asset-backed securities, floating rate debt (including bank loans), distressed

investments, emerging markets, equities and derivative instruments, such as

options, futures contracts, forwards or swap agreements. This strategy may

utilize derivative instruments in an effort to minimize volatility. Also, at

times, this strategy expects to gain its investment exposure substantially

through the use of derivatives. The notional value of this strategy's long and

short investment exposures may at times each reach 100% of the assets invested

in this strategy (excluding instruments used primarily for duration, yield

curve, and interest rate management and short-term investments), although these

exposures may be higher or lower at any given time. This strategy may purchase

or sell securities on a when-issued, delayed delivery or forward commitment

basis and may engage in short sales. The strategy may, without limitation, seek

to obtain market exposure to the securities in which it primarily invests by

entering into a series of purchase and sale contracts or by using other

investment techniques (such as buy backs or dollar rolls).



Equity Long/Short. This strategy provides long and short exposure to a

diversified portfolio of equities which involves simultaneously investing in

equities (i.e., investing long) the sub-advisor expects to increase in value

(securities the sub-advisor believes are undervalued) and either selling

equities (i.e., short sales or short selling) the sub-advisor expects to

decrease in value (securities the sub-advisor believes are overvalued) or

hedging the equity exposure in another way. Long/short equity may maintain

overweights of industry exposures and also seeks to exploit pricing

inefficiencies between related equity securities. This strategy has available

two methods of analysis: fundamental analysis, a method of security analysis

that involves examining a company's financial statements and operations,

especially sales, earnings, products, management and competition and

quantitative analysis, a method of security analysis that involves use of

mathematical models to examine a company's measurable characteristics such as

revenue, earnings, margins and market share.



Equity Market Neutral. This strategy seeks to profit by exploiting pricing

inefficiencies between related equity securities and neutralizing exposure to

market risk by maintaining long and short positions. Equity market neutral is

not expected to have industry overweights.



Dedicated Short Bias. The dedicated short bias strategy seeks to profit by

shorting stocks that have negative market sentiment and neutralizing exposure to

market risk by maintaining long and short positions.



Global Macro. Global macro strategies seek to profit from movement in the prices

of securities that are highly sensitive to macroeconomic conditions, across a

broad spectrum of assets. This strategy provides long and short exposure to

developed country equities, currencies, and bonds markets.



Emerging Markets. This strategy seeks to profit from investing in equities,

bonds, and currencies of issuers in emerging markets. This strategy provides

long and short exposure to emerging country equity, debt, and currency markets,

and long and short exposure to a basket of liquid equity securities traded on

emerging and developed market exchanges.



Convertible Arbitrage. Convertible arbitrage strategies seek to profit from the

complexity of the pricing of convertible bonds (which contain elements of both a

fixed income security and an equity option) by structuring trades using multiple

securities within the capital structure of a convertible bond issuer. The Fund

may purchase the convertible bond of a given issuer and simultaneously sell

short the common stock of that same issuer to take advantage of a mispricing of

either security. This strategy takes positions in various global convertible

debt and preferred securities and an offsetting position in various global

equities directly linked to the convertible securities. In implementing this

strategy, the Fund may use derivatives to hedge against a decline in interest

rates or credit exposure.



Managed Futures. Managed futures strategies seek to profit from the design and

implementation of quantitative selection models to help predict upcoming

movements in any combination of fixed income, currency, or equity markets. This

strategy provides long and short exposure to developed country equities, bonds

and currency markets and long and short exposure to emerging country equity and

currency markets.



Event Driven. Event driven strategies seek to profit from investing in the

securities of companies based not on a value or growth investment style but

rather on the basis that a specific event or catalyst will affect future prices.

This strategy attempts to capitalize on price discrepancies and returns

generated by corporate activity, such as merger arbitrage. In merger arbitrage,

the Fund will employ a diversified, disciplined strategy to attempt to capture

the returns from holding a long/short portfolio of stocks of companies involved

in mergers.



Fixed Income Arbitrage. Fixed income arbitrage seeks to profit from exploiting

mispricing of various, liquid fixed income or interest rate sensitive

securities. This strategy provides long and short exposure to developed country

bond and currency markets, long and short exposure to investment grade credit

markets and long and short exposure to forward mortgage-backed securities

trading in the to be announced ("TBA") market.

Principal Risks

The Fund may be an appropriate investment for investors who seek long-term

capital appreciation and who can accept the risks of investing in a variety of

global markets and a variety of instruments.



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:



Active Trading Risk. Actively trading portfolio securities may accelerate

realization of taxable gains and losses, lower fund performance and may result

in high portfolio turnover rates and increased brokerage costs.



Arbitrage Trading Risk. The underlying relationships between securities in which

the fund takes arbitrage investment positions may change in an adverse manner,

in which case the fund may realize losses.



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

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



Bank Loans Risk. Changes in economic conditions are likely to cause issuers of

bank loans (also known as senior floating rate interests) to be unable to meet

their obligations. In addition, the value of the collateral securing the loan

may decline, causing a loan to be substantially unsecured. Underlying credit

agreements governing the bank loans, reliance on market makers, priority of

repayment and overall market volatility may harm the liquidity of loans.



Basis Risk. A hedge using derivatives and/or securities could expose the fund to

basis risk. Basis risk could arise when the change in price of the hedge may not

match the change in price of the asset it hedges. In other words, the hedge

moves in a direction that does not match the asset it is trying to hedge.



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.



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.



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.



Distressed Investments Risk. A fund's investment in instruments involving loans,

loan participations, bonds, notes, non-performing and sub-performing mortgage

loans, many of which are not publicly traded, may involve a substantial degree

of risk for the following reasons. These instruments may become illiquid and the

prices of such instruments may be extremely volatile. Valuing such instruments

may be difficult and a fund may lose all of its investment, or it may be

required to accept cash or securities with a value less than the fund's original

investment. Issuers of distressed securities are typically in a weak financial

condition and may default, in which case the fund may lose its entire

investment.



Emerging Market Risk. Investments in emerging market countries may have more

risk than those in developed market countries because the emerging markets are

less developed and more illiquid. Emerging market countries can also be subject

to increased social, economic, regulatory, and political uncertainties and can

be extremely volatile.



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.



Event-Driven Trading Risk. Event-driven trading involves the risk that the

special situation may not occur as anticipated, if at all, and that the market

price of a stock declines.



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).



High Yield Securities Risk. High yield fixed-income securities (commonly

referred to as "junk bonds") are subject to greater credit quality risk than

higher rated fixed-income securities and should be considered speculative.



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.



Non-Diversification Risk. A non-diversified fund may invest a high percentage of

its assets in the securities of a small number of issuers and is more likely

than diversified funds to be significantly affected by a specific security's

poor performance.



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.



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.



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).



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.



Short Sale Risk. A short sale involves the sale by the fund of a security that

it does not own with the hope of purchasing the same security at a later date at

a lower price. A fund may also enter into a short derivative position through a

futures contract or swap agreement. If the price of the security or derivative

has increased during this time, then the fund will incur a loss equal to the

increase in price from the time that the short sale was entered into plus any

premiums and interest paid to the third party. Therefore, short sales involve

the risk that losses may be exaggerated, potentially losing more money than the

actual cost of the investment. Also, there is the risk that the third party to

the short sale may fail to honor its contract terms, causing a loss to the fund.



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 HRFI

(Hedge Fund Research Inc.) Funds-of-Funds Composite 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 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 2.00% 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.