0000898745 2026-03-01 2026-03-01 0000898745 ck0000898745:S000007077Member 2026-03-01 2026-03-01 0000898745 ck0000898745:S000007122Member 2026-03-01 2026-03-01 0000898745 ck0000898745:S000014237Member 2026-03-01 2026-03-01 0000898745 ck0000898745:S000014237Member ck0000898745:AlternativeMinimumTaxRiskMember 2026-03-01 2026-03-01 497 0000898745 false N-1A <div style="text-align:center"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:12pt;font-weight:700;line-height:120%">Principal Funds, Inc.</span></div><div style="text-align:center"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:12pt;font-weight:700;line-height:120%">Supplement dated June 15, 2026</span></div><div style="text-align:center"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:12pt;font-weight:700;line-height:120%">to the Prospectus and Statement of Additional Information </span></div><div style="margin-bottom:12pt;text-align:center"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:12pt;font-weight:700;line-height:120%">both dated March 1, 2026<br/>(as previously supplemented)</span></div><div style="margin-bottom:12pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:120%">This supplement updates information contained in the Prospectus and Statement of Additional Information. Please retain this supplement for future reference.</span></div><div style="margin-bottom:9pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:120%">The changes described below are being made to the Prospectus.</span></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">SUMMARY FOR LARGECAP GROWTH FUND I</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Effective June 26, 2026, under </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Principal Investment Strategies</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">, delete the second paragraph and replace with the following:</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Fund is primarily actively managed by the sub-advisors. In addition, Principal Global Investors, LLC may invest up to 30% of the Fund’s assets using an index sampling strategy designed to match the performance of the Russell Top 200</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:6.5pt;font-weight:400;line-height:120%;position:relative;top:-3.5pt;vertical-align:baseline">®</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Growth Index.</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">On or about June 30, 2026, delete </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">T. Rowe Price Associates, Inc.</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> from the </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Sub-Advisors</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> section and add the following in alphabetical order: </span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Fred Alger Management, LLC</span></div><div><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">SUMMARY FOR LARGECAP VALUE FUND III</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Effective June 26, 2026, under </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Principal Investment Strategies</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">, delete the second paragraph and replace with the following:</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Fund is primarily actively managed by the sub-advisors. In addition, Principal Global Investors, LLC may invest up to 30% of the Fund’s assets using an index sampling strategy designed to match the performance of the Russell Top 200</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:6.5pt;font-weight:400;line-height:120%;position:relative;top:-3.5pt;vertical-align:baseline">®</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Value Index.</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">On or about June 30, 2026, delete </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Westwood Management Corp.</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> from the </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Sub-Advisors</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> section and add the following in alphabetical order: </span></div><div><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Federated MDTA LLC</span></div><div style="margin-bottom:6pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Hotchkis and Wiley Capital Management, LLC</span></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">SUMMARY FOR SHORT-TERM INCOME FUND</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Effective June 30, 2026, under </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Investment Advisor and Portfolio Managers</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">, add the following in alphabetical order:</span></div><div style="margin-bottom:6pt;padding-left:9pt;text-align:justify;text-indent:-9pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">•</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%;padding-left:5.5pt">Zach Gassmann (since 2026), Portfolio Manager</span></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">SUMMARY FOR TAX-EXEMPT BOND FUND</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Under </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Principal Investment Strategies</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">, add the following to the end of the second paragraph:</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Up to 20% of the Fund’s assets may be invested in municipal obligations that generate interest income subject to federal alternative minimum tax (“AMT”). Municipal obligations subject to AMT will not be deemed as eligible tax-exempt bonds for the purposes of determining whether the Fund meets its 80% policy. For shareholders subject to AMT, a portion of the Fund’s dividends may be subject to federal tax.</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">In the </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Principal Risks</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%"> section, add the following to the alphabetical list of risks:</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Alternative Minimum Tax Risk</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">. A portion of the Fund’s otherwise tax-exempt income may be taxable to those shareholders subject to the federal alternative minimum tax.</span></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">MANAGEMENT OF THE FUNDS</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">On or about June 30, 2026, under </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">The Sub-Advisors</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">section, delete all references to </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">T. Rowe Price Associates, Inc., Westwood Management Corp</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">., and </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Hotchkis and Wiley Capital Management, LLC </span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">and add the following to the alphabetical list of sub-advisors:</span></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:468.00pt"><tr><td style="width:1.0pt"></td><td style="width:75.25pt"></td><td style="width:1.0pt"></td><td style="width:1.0pt"></td><td style="width:388.75pt"></td><td style="width:1.0pt"></td></tr><tr style="height:38pt"><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:100%">Sub-Advisor:</span></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Federated MDTA LLC (“Federated”)</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, 125 High Street, Oliver Street Tower, 21st Floor, Boston, MA 02110, was founded in 1997 and is an investment advisory firm registered with the SEC. </span></div></td></tr><tr style="height:3pt"><td colspan="3" style="padding:0 1pt"></td><td colspan="3" style="padding:0 1pt"></td></tr><tr style="height:14pt"><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:100%">Fund(s):</span></td><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:bottom"><div style="padding-left:72pt;text-indent:-72pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:100%">a portion of LargeCap Value III</span></div></td></tr></table></div><div style="text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:468.00pt"><tr><td style="width:1.0pt"></td><td style="width:75.25pt"></td><td style="width:1.0pt"></td><td style="width:1.0pt"></td><td style="width:388.75pt"></td><td style="width:1.0pt"></td></tr><tr style="height:38pt"><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:100%">Sub-Advisor:</span></div></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Fred Alger Management, LLC (“Alger”)</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, 100 Pearl Street, 27th Floor, New York, NY 10004, was founded in 1964 and is an SEC registered investment advisory firm that specializes in growth equity investment strategies.</span></div></td></tr><tr style="height:3pt"><td colspan="3" style="padding:0 1pt"></td><td colspan="3" style="padding:0 1pt"></td></tr><tr style="height:14pt"><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><div style="padding-left:72pt;text-align:justify;text-indent:-72pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Fund(s):</span></div></td><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><div style="padding-left:72pt;text-indent:-72pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">a portion of LargeCap Growth I</span></div></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:468.00pt"><tr><td style="width:1.0pt"></td><td style="width:75.25pt"></td><td style="width:1.0pt"></td><td style="width:1.0pt"></td><td style="width:388.75pt"></td><td style="width:1.0pt"></td></tr><tr style="height:39pt"><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:100%">Sub-Advisor:</span></div></td><td colspan="3" style="border-top:1pt solid #000;padding:2px 1pt;text-align:left;vertical-align:top"><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Hotchkis and Wiley Capital Management, LLC</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">, 601 S. Figueroa Street, 39th Floor, Los Angeles, CA 90017, is an investment advisory firm founded in 1980 that manages value portfolios for institutional and individual investors.</span></div></td></tr><tr style="height:3pt"><td colspan="3" style="padding:0 1pt"></td><td colspan="3" style="padding:0 1pt 0 73pt;text-indent:-72pt"></td></tr><tr style="height:14pt"><td colspan="3" style="padding:2px 1pt;text-align:left;vertical-align:top"><div style="padding-left:72pt;text-align:justify;text-indent:-72pt"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Fund(s):</span></div></td><td colspan="3" style="padding:2px 1pt 2px 73pt;text-align:left;text-indent:-72pt;vertical-align:top"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">a portion of LargeCap Value III and SmallCap Value II</span></td></tr></table></div><div style="padding-left:72pt;text-align:justify;text-indent:-72pt"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"></td><td style="width:98.900%"></td><td style="width:0.1%"></td></tr><tr style="height:3pt"><td colspan="3" style="border-bottom:1pt solid #000000;padding:0 1pt"></td></tr></table></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:120%">REDEMPTION OF FUND SHARES</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-style:italic;font-weight:400;line-height:120%">Delete the fifth paragraph and replace with the following:</span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The agreement for the above-mentioned line of credit is with State Street Bank and Trust Company.</span></div> Principal Funds, Inc. 2026-06-15 2026-03-01 SUMMARY FOR LARGECAP GROWTH FUND I Effective June 26, 2026, under Principal Investment Strategies, delete the second paragraph and replace with the following: <div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Fund is primarily actively managed by the sub-advisors. In addition, Principal Global Investors, LLC may invest up to 30% of the Fund’s assets using an index sampling strategy designed to match the performance of the Russell Top 200</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:6.5pt;font-weight:400;line-height:120%;position:relative;top:-3.5pt;vertical-align:baseline">®</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Growth Index.</span></div> SUMMARY FOR LARGECAP VALUE FUND III Effective June 26, 2026, under Principal Investment Strategies, delete the second paragraph and replace with the following: <div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Fund is primarily actively managed by the sub-advisors. In addition, Principal Global Investors, LLC may invest up to 30% of the Fund’s assets using an index sampling strategy designed to match the performance of the Russell Top 200</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:6.5pt;font-weight:400;line-height:120%;position:relative;top:-3.5pt;vertical-align:baseline">®</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%"> Value Index.</span></div> SUMMARY FOR TAX-EXEMPT BOND FUND Under Principal Investment Strategies, add the following to the end of the second paragraph: <div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Up to 20% of the Fund’s assets may be invested in municipal obligations that generate interest income subject to federal alternative minimum tax (“AMT”). Municipal obligations subject to AMT will not be deemed as eligible tax-exempt bonds for the purposes of determining whether the Fund meets its 80% policy. For shareholders subject to AMT, a portion of the Fund’s dividends may be subject to federal tax.</span></div> Municipal obligations subject to AMT will not be deemed as eligible tax-exempt bonds for the purposes of determining whether the Fund meets its 80% policy. For shareholders subject to AMT, a portion of the Fund’s dividends may be subject to federal tax. <div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Alternative Minimum Tax Risk</span><span style="color:#000000;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">. A portion of the Fund’s otherwise tax-exempt income may be taxable to those shareholders subject to the federal alternative minimum tax.</span></div>