497

December 28, 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 December 14, 2012 (SEC Accession No. 0000012601-12-000149) and now is incorporating by reference.

1

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

2

XML

High Yield Fund I (Prospectus Summary): | High Yield Fund I

High Yield Fund I  

Supplement dated December 14, 2012

to the Institutional Class Shares Prospectus

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, April 9, 2012, April 20, 2012, June 15, 2012, July 17, 2012,

September 14, 2012, November 13, 2012, and November 27, 2012)

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

FUND SUMMARIES

Principal Investment Strategies

Effective March 1, 2013, delete the first sentence under the Principal Investment Strategies and substitute:

Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds (sometimes called “high yield bonds” or "junk bonds") which are rated at the time of purchase Ba1 or lower by Moody's and BB+ or lower by S&P (if the bond has been rated by only one of those agencies, that rating will determine whether the bond is below investment grade; if the bond has not been rated by either of those agencies, the Sub-Advisor will determine whether the bond is of a quality comparable to those rated below investment grade).

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

High Yield Fund I (Prospectus Summary): | High Yield Fund I

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

High Yield Fund I  

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated December 14, 2012

to the Institutional Class Shares Prospectus

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, April 9, 2012, April 20, 2012, June 15, 2012, July 17, 2012,

September 14, 2012, November 13, 2012, and November 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Principal Investment Strategies

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

Effective March 1, 2013, delete the first sentence under the Principal Investment Strategies and substitute:

Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds (sometimes called “high yield bonds” or "junk bonds") which are rated at the time of purchase Ba1 or lower by Moody's and BB+ or lower by S&P (if the bond has been rated by only one of those agencies, that rating will determine whether the bond is below investment grade; if the bond has not been rated by either of those agencies, the Sub-Advisor will determine whether the bond is of a quality comparable to those rated below investment grade).

High Yield Fund I | Institutional Class

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PYHIX

XML

Label	Element	Value
Risk/Return:	rr_RiskReturnAbstract
Document Type	dei_DocumentType	Other
Document Period End Date	dei_DocumentPeriodEndDate	Dec. 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	Dec. 14, 2012
Document Effective Date	dei_DocumentEffectiveDate	Dec. 14, 2012
Prospectus Date	rr_ProspectusDate	Feb. 29, 2012

XML

High Yield Fund (Prospectus Summary): | High Yield Fund

High Yield Fund   

Supplement dated December 14, 2012

to the Institutional Class Shares Prospectus

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, April 9, 2012, April 20, 2012, June 15, 2012, July 17, 2012,

September 14, 2012, November 13, 2012, and November 27, 2012)

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

FUND SUMMARIES

Principal Investment Strategies

Effective March 1, 2013, delete the first sentence under the Principal Investment Strategies and substitute:

Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds (sometimes called “high yield bonds” or "junk bonds") which are rated at the time of purchase Ba1 or lower by Moody's and BB+ or lower by S&P (if the bond has been rated by only one of those agencies, that rating will determine whether the bond is below investment grade; if the bond has not been rated by either of those agencies the Sub-Advisor will determine whether the bond is of a quality comparable to those rated below investment grade).

XML

Label

Element

Value

Risk/Return:

rr_RiskReturnAbstract

Prospectus Date

rr_ProspectusDate

Feb. 29, 2012

High Yield Fund (Prospectus Summary): | High Yield Fund

Risk/Return:

rr_RiskReturnAbstract

Risk/Return, Heading

rr_RiskReturnHeading

High Yield Fund   

Supplement Text

ck0000898745_SupplementTextBlock

Supplement dated December 14, 2012

to the Institutional Class Shares Prospectus

for Principal Funds, Inc.

dated February 29, 2012

(as supplemented on March 16, 2012, April 9, 2012, April 20, 2012, June 15, 2012, July 17, 2012,

September 14, 2012, November 13, 2012, and November 27, 2012)

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

FUND SUMMARIES

Investment Strategy, Heading

rr_StrategyHeading

Principal Investment Strategies

Investment Strategy, Narrative

rr_StrategyNarrativeTextBlock

Effective March 1, 2013, delete the first sentence under the Principal Investment Strategies and substitute:

Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds (sometimes called “high yield bonds” or "junk bonds") which are rated at the time of purchase Ba1 or lower by Moody's and BB+ or lower by S&P (if the bond has been rated by only one of those agencies, that rating will determine whether the bond is below investment grade; if the bond has not been rated by either of those agencies the Sub-Advisor will determine whether the bond is of a quality comparable to those rated below investment grade).

High Yield Fund | Institutional Class

Risk/Return:

rr_RiskReturnAbstract

Trading Symbol

dei_TradingSymbol

PHYTX