PRINCIPAL FUNDS, INC. (“PFI”) nbsp;· PRINCIPAL FUNDS, INC. (“PFI”) Class A Shares Class C Shares Class J Shares Class P Shares Class Institutional Shares Class R-1 Shares Class R-2 Shares

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  • PRINCIPAL FUNDS, INC. (PFI)Class A SharesClass C SharesClass J SharesClass P Shares

    Class Institutional SharesClass R-1 SharesClass R-2 SharesClass R-3 SharesClass R-4 SharesClass R-5 SharesClass R-6 SharesClass S Shares

    The date of this Prospectus is December 31, 2014.

    Ticker Symbols by Share ClassFund A C J P Inst. R-1 R-2 R-3 R-4 R-5 R-6 S

    Blue Chip PBLAX PBLCX PBLPX PBCKXBond Market Index PBIJX PNIIX PBIMX PBINX PBOIX PBIPX PBIQXCapital Securities PCSFXCredit OpportunitiesExplorer

    PCEAX PCOIX

    Diversified Real Asset PRDAX PRDCX PRDPX PDRDX PDARXDynamic High YieldExplorer

    PDYAX PDYIX

    Global Multi-Strategy PMSAX PMSCX PMSPX PSMIXGlobal Opportunities PGLAX PGOCX PGXPX PGOIXInternational EquityIndex

    PIDIX PILIX PINEX PIIOX PIIPX PIIQX

    International SmallCompany

    PICAX PCOPX PISMX

    Opportunistic Municipal PMOAX PMODX PMOQXOrigin Emerging Markets POEYX POEIX POEFXPreferred Securities PPSAX PRFCX PPSJX PPSPX PPSIX PUSAX PPRSX PNARX PQARX PPARXReal Estate Allocation PAEDX PADDXReal Estate Debt Income PRDYX PRDIXSmall-MidCap DividendIncome

    PMDAX PMDDX PMDPX PMDIX

    The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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    Principal Funds, Inc.

    Supplement dated March 13, 2015to the Statutory Prospectus dated December 31, 2014

    (as supplemented on January 9, 2015 and February 2, 2015)

    This supplement updates information currently in the Statutory Prospectus. Please retain this supplement for future reference.

    Fund Summary for Diversified Real Asset Fund

    Effective on or about March 27, 2015, add the following to the list titled Sub-Advisors under the Management heading:

    Macquarie Capital Investment Management LLC

    MANAGEMENT OF THE FUNDS

    Effective on or about March 27, 2015, add the following to The Sub-Advisors sub-section:

    Sub-Advisor: Macquarie Capital Investment Management LLC (Macquarie), 125 West 55th Street, New York, NY 10019, is a registered investment advisor that is dedicated to the management of infrastructure securities accounts.

    Macquarie is a sub-advisor for the global infrastructure portion of the Diversified Real Asset Fund.

    Add the following to Appendix C - Related Performance of Certain Sub-Advisors:

    Principal Global Investors, LLC

    Principal Global Investors, LLC ("PGI") is the sub-advisor for the Credit Opportunities Explorer Fund (the "Fund"). The Fund has no historical performance to disclose in this prospectus. Therefore, the Fund provides you with the following Performance Results table that shows the performance results of PGI's Global Credit Opportunities Composite as well as the performance of the Barclays Global Aggregate Corporate USD Hedged Index, a broad-based securities market index comparable to PGI's composite.

    PGI's composite consists of historical information about all client accounts PGI manages that have investment objectives, policies, and strategies substantially similar to those of the Fund. The composite is provided to illustrate PGI's past performance in managing accounts with investment objectives and strategies substantially similar to those of the Fund. The composite does not represent the performance of the Fund. PGI's composite is provided for time periods during which the Fund did not exist and, therefore, had no performance.

    PGI computes its composite performance based upon its asset weighted average performance with regard to accounts it manages that have investment objectives, policies, and strategies substantially similar to those of the Fund. PGIs composite performance results are net of trading expenses, management fees, and any performance incentive fees incurred by any client account in the composite. If PGI's composite performance results were to be adjusted to reflect the fees and expenses of the Fund, the composite performance results shown would be lower. Although the Fund and the client accounts comprising the PGI composite have substantially similar investment objectives, policies, and strategies, you should not assume that the Fund will achieve the same performance as the composite. For example, the Funds future performance may be better or worse than the composite's performance due to, among other things, differences in sales charges, expenses, asset sizes, and cash flows of the Fund and those of the client accounts represented in the composite.

    The client accounts in PGIs composite can change from time-to-time. Some of the accounts included in the PGI composite are not mutual funds registered under the Investment Company Act of 1940 (1940 Act). Those accounts are not subject to investment limitations, diversification requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code. If such requirements were applicable to these accounts, the performance of the composite shown below may have been lower.

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    Portions of the information below are based on data supplied by PGI and from statistical services, reports, or other sources believed by Principal Management Corporation (Principal) to be reliable. However, Principal has not verified or audited such information.

    Composite performance reflects taxes paid on foreign dividends and is calculated on an individual client basis to reflect each clients tax status.

    Current performance of the PGI composite may be lower or higher than the performance data shown below.

    PERFORMANCE RESULTS

    Total Returns as of December 31

    Highest return for a quarter during the period of the bar chart above: Q2 '12 5.29%Lowest return for a quarter during the period of the bar chart above: Q2 '13 (3.11)%

    Average Annual Total ReturnsThrough December 31, 2014

    1 YearLife of Composite

    (1/1/2012)Global Credit Opportunities Composite 5.51% 8.14%Barclays Global Aggregate Corporate USD Hedged Index 7.60% 6.10%

    FV822CS-02

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    Supplement dated February 2, 2015to the Prospectus for Principal Funds, Inc.

    dated December 31, 2014

    as supplemented on January 9, 2015

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

    FUND SUMMARIES

    GLOBAL MULTI-STRATEGY FUND

    Delete the objective and substitute:

    The Fund seeks to achieve long-term capital appreciation with an emphasis on positive total returns and managing volatility.

    SMALL-MIDCAP DIVIDEND INCOME FUND

    Delete the objective and substitute:

    The Fund seeks to provide current income and long-term growth of income and capital.

    FV822CS-01

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    Supplement dated January 9, 2015to the Classes A, C, J, P, Institutional, R-1, R-2, R-3, R-4, R-5, R-6 and S Shares Prospectus

    for Principal Funds, Inc.dated December 31, 2014

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

    FUND SUMMARIES

    BOND MARKET INDEX FUND

    Delete Footnote 1 to the Annual Fund Operating Expenses table and substitute:

    (1) Expense information in the table has been restated to reflect current fees. Effective December 31, 2013, Distribution and/or Service (12b-1) Fees for Class J shares were reduced.

    ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS

    Delete the second paragraph and substitute:

    The Board of Directors may change each Fund's objective or the investment strategies without a shareholder vote if it determines such a change is in the best interests of the Fund. If there is a material change to a Fund's investment objective or investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that each Fund will meet its objective.

    Delete the column for the Opportunistic Municipal Fund and substitute:

    INVESTMENT STRATEGIES AND RISKSOPPORTUNISTIC

    MUNICIPALArbitrage Not ApplicableBank Loans (also known as Senior Floating Rate interests) Non-PrincipalCommodity Index-Linked Notes Not ApplicableCommodity-Related Investments Not ApplicableConvertible Securities Non-PrincipalDerivatives PrincipalEmerging Markets Not ApplicableEquity Securities Not ApplicableExchange Traded Funds (ETFs) PrincipalFixed Income Securities PrincipalForeign Securities Not ApplicableFund of Funds Not ApplicableGeographic Concentration PrincipalHedging PrincipalHigh Yield Securities PrincipalIndex Funds Not ApplicableIndustry Concentration Not ApplicableInitial Public Offerings ("IPOs") Not ApplicableInverse Floating Rate Investments PrincipalLeverage PrincipalLiquidity Risk(1) Non-PrincipalManagement Risk(1) Non-PrincipalMarket Volatility and Issuer Risk(1) Non-Principal

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    Master Limited Partnerships Not ApplicableMunicipal Obligations and AMT-Subject Bonds PrincipalPortfolio Turnover Non-PrincipalPreferred Securities Not ApplicableReal Estate Investment Trusts Not ApplicableReal Estate Securities Not ApplicableRepurchase Agreements Non-PrincipalRoyalty Trusts Not ApplicableSecuritized Products Not ApplicableShort Sales Not ApplicableSmall and Medium Market Capitalization Companies Non-PrincipalTemporary Defensive Measures Non-PrincipalUnderlying Funds Not Applicable(1) These risks are not deemed principal for purposes of this table because they apply to almost all funds; however,

    in certain circumstances, they could significantly affect the net asset value, yield, and total return.

    MANAGEMENT OF THE FUNDS

    After the second paragraph under The Manager, add:

    Cash Management ProgramThe following Fund has adopted a special cash management program, which is executed by Principal: Origin Emerging Markets.

    Each Fund in the cash management program has cash available in its portfolio to meet redemption requests and to pay expenses. Additionally, each Fund receives cash when shareholders purchase shares. Each Fund invests its cash in money market investments and in stock index futures contracts reflecting the Fund's market capitalization to gain exposure to the market. Stock index futures provide returns similar to those of common stocks. Principal believes that, over the long term, this strategy will enhance the investment performance of the Funds.

    FV822CS-0

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    TABLE OF CONTENTS

    FUND SUMMARIESBlue Chip FundBond Market Index FundCapital Securities FundCredit Opportunities Explorer FundDiversified Real Asset FundDynamic High Yield Explorer FundGlobal Multi-Strategy FundGlobal Opportunities FundInternational Equity Index FundInternational Small Company FundOpportunistic Municipal FundOrigin Emerging Markets FundPreferred Securities FundReal Estate Allocation FundReal Estate Debt Income FundSmall-MidCap Dividend Income Fund

    ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKSPORTFOLIO HOLDINGS INFORMATIONMANAGEMENT OF THE FUNDSPRICING OF FUND SHARESCONTACT PRINCIPAL FUNDS, INC.PURCHASE OF FUND SHARESREDEMPTION OF FUND SHARESEXCHANGE OF FUND SHARESDIVIDENDS AND DISTRIBUTIONSFREQUENT PURCHASES AND REDEMPTIONSTAX CONSIDERATIONSCHOOSING A SHARE CLASS AND THE COSTS OF INVESTINGDISTRIBUTION PLANS AND INTERMEDIARY COMPENSATIONFUND ACCOUNT INFORMATIONFINANCIAL HIGHLIGHTSAPPENDIX A DESCRIPTION OF BOND RATINGSAPPENDIX B ADDITIONAL FUND-SPECIFIC INFORMATIONAPPENDIX C RELATED PERFORMANCE OF CERTAIN SUB-ADVISORSADDITIONAL INFORMATION

    48

    1215192629364044475255616568738989979899

    103105107108109110115118121146151152158

  • 4

    BLUE CHIP FUNDObjective: The Fund seeks long-term growth of capital.

    Fees and Expenses of the FundThis table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of Principal Funds, Inc. More information about these and other discounts is available from your financial professional and in Choosing a Share Class and The Costs of Investing beginning on page 111 of the Funds prospectus and Multiple Class Structure beginning on page 3 of the Funds Statement of Additional Information.

    Shareholder Fees (fees paid directly from your investment)

    Share ClassA C P Inst.

    Maximum Sales Charge (Load) Imposed on Purchases (as apercentage of offering price)

    5.50% None None None

    Maximum Deferred Sales Charge (Load) (as a percentage of theoffering price or NAV when Sales Load is paid, whichever is less)

    1.00% 1.00% None None

    Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

    Share ClassA C P Inst.

    Management Fees 0.70% 0.70% 0.70% 0.70%Distribution and/or Service (12b-1) Fees 0.25% 1.00% N/A N/AOther Expenses 1.00% 2.52% 2.54% 0.02%Total Annual Fund Operating Expenses 1.95% 4.22% 3.24% 0.72%Expense Reimbursement (1) (0.60)% (2.12)% (2.34)% %

    Total Annual Fund Operating Expenses after ExpenseReimbursement

    1.35% 2.10% 0.90% 0.72%

    (1)Principal Management Corporation ("Principal"), the investment advisor, has contractually agreed to limit the Funds expenses by paying, ifnecessary, expenses normally payable by the Fund, (excluding interest expense, expenses related to fund investments, acquired fund feesand expenses, and other extraordinary expenses) to maintain a total level of operating expenses (expressed as a percent of average netassets on an annualized basis) not to exceed 1.35% for Class A, 2.10% for Class C, and 0.75% for Institutional Class shares. In addition, forClass P, the expense limit will maintain "Other Expenses" (expressed as a percent of average net assets on an annualized basis) not toexceed 0.20%, (excluding interest expense, expenses related to fund investments, acquired fund fees and expenses, and other extraordinaryexpenses). It is expected that the expense limits will continue through the period ending December 30, 2015; however, Principal Funds, Inc.and Principal, the parties to the agreement, may agree to terminate the expense limits prior to the end of the period.

    ExampleThis Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

    The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

    1 year 3 years 5 years 10 yearsClass A $680 $1,074 $1,492 $2,654Class C 313 1,088 1,977 4,261Class P 92 778 1,489 3,379Institutional Class 74 230 401 894

    With respect to Class C shares, you would pay the following expenses if you did not redeem your shares (all other classes would be the same as in the above example):

    1 year 3 years 5 years 10 yearsClass C $213 $1,088 $1,977 $4,261

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    Portfolio TurnoverThe Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not...

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