Tax-Exempt Bond Fund formerly Tax-Exempt Bond Fund I (Prospectus Summary): | Tax-Exempt Bond Fund formerly Tax-Exempt Bond Fund I

TAX-EXEMPT BOND FUND    

Supplement dated June 16, 2011

to the Class A, Class B, and Class C Prospectus

for Principal Funds, Inc.

dated March 1, 2011

(as supplemented on March 14, 2011 and March 15, 2011)  

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

Prospectus.  

On June 14, 2011, the Board of Directors of Principal Funds, Inc. approved the termination of Invesco  

Advisers, Inc. as sub-advisor and recommended the hiring of Principal Global Investors, LLC (“PGI”). The  

proposal to hire PGI will be submitted for shareholder vote at a Special Meeting of Shareholders of Tax-  

Exempt Bond Fund tentatively scheduled for September 6, 2011. Additional information about this  

proposal will be provided in the Proxy Statement that is expected to be mailed to record date  

shareholders of Tax-Exempt Bond Fund in July 2011. If shareholders approve this proposal, PGI is  

expected to begin managing Fund assets on or about September 12, 2011.