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text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with large market capitalizations (those with market capitalizations similar to companies in the Russell 1000 ® Growth Index (as of December 31, 2011, this range was between approximately $117 million and $401.25 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average.   PCPPX PLGPX PDPPX PEPPX PLSGX LargeCap Value Fund   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with large market capitalizations (those with market capitalizations similar to companies in the Russell 1000 ® Value Index, which as of December 31, 2011 ranged between approximately $117 million and $401.25 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 may actively trade portfolio securities.   PLSVX PLVNX PLVMX PLVPX PLVSX MidCap Blend Fund   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with medium market capitalizations (those with market capitalizations similar to companies in the Russell Midcap ® Index (as of December 31, 2011, this range was between approximately $117 million and $20.51 billion) at the time of purchase. The Fund may invest in foreign securities.   PMSBX PMBNX PMBMX PMBPX PMBSX LargeCap Growth Fund I   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with large market capitalizations (those with market capitalization ranges similar to the companies in the Russell 1000 ® Growth Index (as of December 31, 2011, this range was between approximately $117 million and $401.25 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average. The Fund may also invest in securities of foreign companies.   PCRSX PPUNX PPUMX PPUPX PPUSX MidCap Growth Fund   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with medium market capitalizations (those with market capitalizations similar to companies in the Russell Midcap ® Growth Index (as of December 31, 2011, this range was between approximately $117 million and $20.51 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average. The Fund may actively trade portfolio securities and invest its assets in the securities of foreign issuers.   PGPPX PFPPX PHPPX PIPPX PMSGX MidCap Value Fund III   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with medium market capitalizations (those with market capitalizations similar to companies in the Russell Midcap ® Value Index (as of December 31, 2011, this range was between approximately $117 million and $20.51 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 may invest in real estate investment trusts.   PKPPX PJPPX PLPPX PMPPX PMSVX LargeCap Growth Fund II   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with large market capitalizations (those with market capitalizations similar to companies in the Russell 1000 ® Growth Index (as of December 31, 2011, the range was between approximately $117 million and $401.25 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average.   PDASX PPTNX PPTMX PPTPX PPTSX LargeCap Value Fund III   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in companies with large market capitalizations similar to companies in the Russell 1000 ® Value Index (approximately $117 million to $401.25 billion as of December 31, 2011) 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.   PESAX PPSNX PPSFX PPSRX PPSSX LargeCap Value Fund I   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in securities of companies with large market capitalizations (those with market capitalizations similar to companies in the Russell 1000 ® Value Index (as of December 31, 2011, this range was between approximately $117 million and $401.25 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.   PABEX PABDX PAFBX PAGBX PVUAX MidCap Growth Fund III   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with medium market capitalizations (those with market capitalizations similar to companies in the Russell Midcap ® Growth Index (as of December 31, 2011, this range was between approximately $117 million and $20.51 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average. The Fund may actively trade portfolio securities.   PHASX PPQNX PPQMX PPQPX PPQSX SmallCap Value Fund II   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of U.S. companies with small market capitalizations (those with market capitalizations similar to companies in the Russell 2000 ® Value Index (as of December 31, 2011, this range was between approximately $20 million and $3.7 billion)) or in securities with market capitalizations of $3.5 billion or less 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 also invest in real estate investment trusts.   PKARX PJARX PLARX PSTWX PCPTX MidCap Value Fund I   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in a diversified portfolio of equity securities of companies with a medium market capitalization (those with market capitalizations similar to companies in the Russell Midcap ® Value Index (as of December 31, 2011, the range was between approximately $117 million and $20.51 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 also invest in real estate investment trusts.   PABUX PMPRX PABVX PABWX PLASX SmallCap Growth Fund I   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with small market capitalizations (those with market capitalizations equal to or smaller than the greater of: 1) $4.0 billion or 2) the highest market capitalization of the companies in the Russell 2000 ® Growth Index (as of December 31, 2011, the range was between approximately $23 million and $3.7 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average.   PNASX PPNNX PPNMX PPNPX PPNSX SmallCap Growth Fund II   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">securities of companies with small market capitalizations (those with market capitalizations equal to or smaller than the greater of 1) $2.5 billion or 2) the highest market capitalization of the companies in the Russell 2000 ® Growth Index (as of December 31, 2011, this range was between approximately $23 million and $3.7 billion)) at the time of purchase. The Fund invests in growth equity securities; growth orientation emphasizes buying equity securities of companies whose potential for growth of capital and earnings is expected to be above average.   PPASX PPMNX PPMMX PPMPX PPMSX SmallCap Blend Fund   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the first paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies with small market capitalizations (those with market capitalizations similar to companies in the Russell 2000 ® Index (as of December 31, 2011, this range was between approximately $20 million and $3.7 billion)) at the time of purchase.   PSABX PSBNX PSBMX PSBPX PSBSX Equity Income Fund   <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">Supplement dated September 14, 2012 <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">to the Class R-1, Class R-2, Class R-3, Class R-4 and Class R-5 Shares Prospectus <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">for Principal Funds, Inc. <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">dated February 29, 2012 <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" align="center" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt; text-align:center;line-height:normal;text-autospace:none">(as supplemented on March 16, 2012, April 23, 2012, June 15, 2012, and July 17, 2012) <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">  <p class="MsoNormal" style="font-size:11.0pt;font-family:'calibri','sans-serif';margin-top:12.0pt;margin-right:0in;margin-bottom: 0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal;page-break-after: avoid;text-autospace:none">FUND SUMMARIES   Under the Principal Investment Strategies heading, delete the paragraph and substitute:   <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-left:0in;font-size:11.0pt;font-family:'calibri','sans-serif';margin-bottom:0in;margin-bottom:.0001pt;line-height: normal;text-autospace:none">Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in dividend-paying equity securities. The Fund usually invests in equity securities of companies with large market capitalizations (those included in the S&P 500 Index, which as of December 31, 2011 ranged between $1.57 billion and $401.25 billion), but may also invest in equity securities of companies with medium market capitalizations (those included in the Russell Midcap ® Index, which as of December 31, 2011 ranged between $117 million and $20.51 billion). The Fund invests in value equity securities, an investment strategy that emphasizes buying equity securities that appear to be undervalued. The Fund will also invest in real estate investment trusts and securities of foreign issuers.   PIEMX PEINX PEIOX PEIPX PEIQX