Supplement dated July 1, 2010

to the Class J Prospectus

for Principal Funds, Inc.

dated March 16, 2010

This supplement updates information currently in the Prospectus. Retain this supplement with the Prospectus. 

DISTRIBUTION PLANS AND INTERMEDIARY COMPENSATION 

Effective July 1, 2010, in the first sentence under the table on page 12, delete 0.40% and substitute 0.35%. 

MANAGEMENT OF THE FUNDS 

Fees Paid to Principal 

Effective July 1, 2010, add the following information before the paragraph that begins, “The Fund operates as a 

Manager of Managers”: 

The Distributor has voluntarily agreed to limit the Fund’s Distribution and/or Service (12b-1) Fees normally 

payable by the Fund. The expense limit will maintain the level of Distribution and/or Service (12b-1) Fees 

(expressed as a percent of average net assets on an annualized basis) not to exceed 0.35% for Class J shares. 

The expense limit may be terminated at any time.