497

September 26, 2012

Securities and Exchange Commission

Via EDGAR

Re:       Principal Funds, Inc.

File Nos. 033-59474, 811-07572

Interactive data files for previous 497 filing

Pursuant to Rule 497 under the Securities Act of 1933, as amended, Principal Funds, Inc. (“the Registrant”) is filing interactive data files that relate to the supplement the Registrant filed on September 14, 2012 (SEC Accession No. 0000898745-12-000608) and now is incorporating by reference.

Exhibit No.                                                                                     Exhibits

Ex-101.INS                                                        XBRL Instance Document

Ex-101.SCH                                                      XBRL Taxonomy Extension Schema Document

Ex-101.CAL                                                       XBRL Taxonomy Extension Calculations Linkbase Document

Ex-101.DEF                                                      XBRL Taxonomy Extension Definition Linkbase Document

Ex-101.LAB                                                       XBRL Taxonomy Extension Labels Linkbase Document

Ex-101.PRE                                                      XBRL Taxonomy Extension Presentation Linkbase Document

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

SmallCap Blend Fund (Prospectus Summary): | SmallCap Blend Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

SmallCap Blend Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the first paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

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.

SmallCap Blend Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PLLAX

SmallCap Blend Fund | Class B

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PLLBX

SmallCap Blend Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PSMCX

XML

SmallCap Blend Fund (Prospectus Summary): | SmallCap Blend Fund

SmallCap Blend Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Under the Principal Investment Strategies heading, delete the first paragraph and substitute:  

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.

XML

LargeCap Growth Fund (Prospectus Summary): | LargeCap Growth Fund

LargeCap Growth Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

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.

XML

MidCap Blend Fund (Prospectus Summary): | MidCap Blend Fund

MidCap Blend Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Under the Principal Investment Strategies heading, delete the first paragraph and substitute:  

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.

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

MidCap Blend Fund (Prospectus Summary): | MidCap Blend Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

MidCap Blend Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the first paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

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.

MidCap Blend Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PEMGX

MidCap Blend Fund | Class B

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PRMBX

MidCap Blend Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PMBCX

MidCap Blend Fund | Class P Shares

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PMCPX

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

LargeCap Growth Fund (Prospectus Summary): | LargeCap Growth Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

LargeCap Growth Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

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.

LargeCap Growth Fund | Class B

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PRGBX

LargeCap Growth Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PRGWX

LargeCap Growth Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PLGCX

LargeCap Growth Fund | Class P Shares

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PGLPX

XML

Label	Element	Value
Risk/Return:	rr_RiskReturnAbstract
Document Type	dei_DocumentType	Other
Document Period End Date	dei_DocumentPeriodEndDate	Sep. 14, 2012
Registrant Name	dei_EntityRegistrantName	PRINCIPAL FUNDS INC
Central Index Key	dei_EntityCentralIndexKey	0000898745
Amendment Flag	dei_AmendmentFlag	false
Document Creation Date	dei_DocumentCreationDate	Sep. 14, 2012
Document Effective Date	dei_DocumentEffectiveDate	Sep. 14, 2012
Prospectus Date	rr_ProspectusDate	Feb. 29, 2012

XML

LargeCap Value Fund (Prospectus Summary): | LargeCap Value Fund

LargeCap Value Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

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.

XML

Global Diversified Income Fund (Prospectus Summary): | Global Diversified Income Fund

Global Diversified Income Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

On September 10, 2012, the Board of Directors of Principal Funds, Inc. approved the hiring of Post Advisory Group, Inc. (“Post”) as sub-advisor for the Global Diversified Income Fund. The proposal to hire Post will be submitted for shareholder vote at a Special Meeting of Shareholders of Global Diversified Income Fund tentatively scheduled for December 10, 2012. Additional information about this proposal will be provided in the Proxy Statement that is expected to be mailed to record date shareholders of Global Diversified Income Fund in October 2012. If shareholders approve this proposal, Post is expected to begin managing Global Diversified Income Fund assets in January 2013.

Under the Principal Investment Strategies heading, delete the fourth paragraph and substitute:  

The Fund may also write (or sell) call options by using equity index/exchange traded fund (“ETF”) call options on the indices represented by certain asset categories of the Fund, including global real estate, global value equity, MLPs, and publicly-traded infrastructure. Call option overwriting is an investment strategy that is used to generate income through receipt of the call option premium and reduce portfolio volatility.

Under thePrincipal Investment Strategiesheading, delete the fifth paragraph and substitute:

A portion of the Fund's assets may be invested in high yield and other income-producing securities including bank loans, corporate bonds, corporate loan participations and assignments, and securities of companies in bankruptcy proceedings or otherwise in the process of debt restructuring. "High yield" securities are commonly known as "junk bonds" and are rated at the time of purchase Ba1 or lower by Moody's Investor Service, Inc. ("Moody's") or BB+ or lower by Standard & Poor's Rating Service ("S&P"). These securities offer a higher yield than other, higher rated securities, but they carry a greater degree of risk and are considered speculative with respect to the issuer's ability to pay interest and to repay principal.

Under the Principal Risks heading, add:  

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.

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

Equity Income Fund formerly Equity Income Fund I (Prospectus Summary): | Equity Income Fund formerly Equity Income Fund I

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

Equity Income Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

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.

Equity Income Fund formerly Equity Income Fund I | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PQIAX

Equity Income Fund formerly Equity Income Fund I | Class B

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PQUBX

Equity Income Fund formerly Equity Income Fund I | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PEUCX

Equity Income Fund formerly Equity Income Fund I | Class P Shares

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PEQPX

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

Global Diversified Income Fund (Prospectus Summary): | Global Diversified Income Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

Global Diversified Income Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

On September 10, 2012, the Board of Directors of Principal Funds, Inc. approved the hiring of Post Advisory Group, Inc. (“Post”) as sub-advisor for the Global Diversified Income Fund. The proposal to hire Post will be submitted for shareholder vote at a Special Meeting of Shareholders of Global Diversified Income Fund tentatively scheduled for December 10, 2012. Additional information about this proposal will be provided in the Proxy Statement that is expected to be mailed to record date shareholders of Global Diversified Income Fund in October 2012. If shareholders approve this proposal, Post is expected to begin managing Global Diversified Income Fund assets in January 2013.

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the fourth paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

The Fund may also write (or sell) call options by using equity index/exchange traded fund (“ETF”) call options on the indices represented by certain asset categories of the Fund, including global real estate, global value equity, MLPs, and publicly-traded infrastructure. Call option overwriting is an investment strategy that is used to generate income through receipt of the call option premium and reduce portfolio volatility.

Investment Strategy, Heading 1

ck0000898745_InvestmentStrategyHeading1

Under thePrincipal Investment Strategiesheading, delete the fifth paragraph and substitute:

InvestmentStrategy, Narrative 1

ck0000898745_InvestmentstrategyNarrative1

A portion of the Fund's assets may be invested in high yield and other income-producing securities including bank loans, corporate bonds, corporate loan participations and assignments, and securities of companies in bankruptcy proceedings or otherwise in the process of debt restructuring. "High yield" securities are commonly known as "junk bonds" and are rated at the time of purchase Ba1 or lower by Moody's Investor Service, Inc. ("Moody's") or BB+ or lower by Standard & Poor's Rating Service ("S&P"). These securities offer a higher yield than other, higher rated securities, but they carry a greater degree of risk and are considered speculative with respect to the issuer's ability to pay interest and to repay principal.

Risk, Heading

rr_RiskHeading

Under the Principal Risks heading, add:  

Risk, Narrative

rr_RiskNarrativeTextBlock

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.

Global Diversified Income Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PGBAX

Global Diversified Income Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PGDCX

Global Diversified Income Fund | Class P Shares

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PGDPX

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

LargeCap Value Fund (Prospectus Summary): | LargeCap Value Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

LargeCap Value Fund  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

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.

LargeCap Value Fund | Class B

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PCCBX

LargeCap Value Fund | Class A

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PCACX

LargeCap Value Fund | Class C

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PLUCX

XML

Equity Income Fund formerly Equity Income Fund I (Prospectus Summary): | Equity Income Fund formerly Equity Income Fund I

Equity Income Fund  

Supplement dated September 14, 2012

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

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, March 29, 2012, April 9, 2012, April 20, 2012,
May 11, 2012, June 15, 2012, July 17, 2012, and July 27, 2012)

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

FUND SUMMARIES

Under the Principal Investment Strategies heading, delete the paragraph and substitute:  

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.