Principal Funds CORRESP Correspondence with SEC

BY EDGAR TRANSMISSION
December 13, 2011
Ms. Christina DiAngelo
Mr. Kieran Brown
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:	Principal Funds, Inc.
	Response to SEC Staff Comments on:
	Registration Statement on Form N-14
	Pursuant to Securities Act of 1933
	Registration No. 333-178050
Dear Ms. DiAngelo and Mr. Brown:
This letter responds, on behalf of Principal Funds, Inc. (the “Registrant”), to the comments of the staff of the
Securities and Exchange Commission (“Commission”), which you communicated to me on Friday,
December 9, 2011. Changes in response to staff comments will be made by the Registrant in a Form 497
related to the Reorganizations of the SmallCap Value Fund into the SmallCap Blend Fund and the SmallCap
Growth Fund into the SmallCap Blend Fund.
Comments from Ms. DiAngelo:
Comment 1.As discussed, please confirm that the effect of the significant redemption of the SmallCap
Value Fund did not materially affect the fees and expenses of the Fund. Also, please confirm that the
previous response given to Comment 2 in correspondence filed on December 9, 2011 (Accession No.
0000898745-11-000806) (File No. 333-178050) was erroneous with regards to the disclosure that the
redemption caused a 40 basis point increase of fees and expenses.
	Response.The Fund confirms that the significant redemption in the SmallCap Value Fund that occurred
	in June and July of 2011 did not materially affect the fees and expenses of the Fund. Further, the Fund
	confirms that the disclosure made in Comment 2 in correspondence filed on December 9, 2011
	(Accession No. 0000898745-11-000806) (File No. 333-178050) was erroneous and that such
	redemption did not cause a 40 basis point increase in fees and expenses of the Fund as previously
	disclosed.
Comments from Mr. Brown:
Comment 2.On the coversheet, please include a phone number for Principal Funds, Inc.
	Response.The requested disclosure will be made.
Comment 3.On the coversheet, include a brief description of the investment objectives of the Acquiring
Fund and the Acquired Funds.
	Response.The requested disclosure will be made.

Page 2 

Comment 4.On page one of the Registration Statement/Proxy, please revise disclosure to conform with 

Item 1(b)(4)(1) of Form N-14. 

Response.The requested disclosure will be made. 

Comment 5.Include disclosure on page one that the Funds prospectuses and SAI are incorporated by 

reference as such documents are supplemented “as of the date of the filing of the “Registration 

Statement/Proxy”. 

Response.The requested disclosure will be made. 

Comment 6.Clarify that the disposition of target fund portfolio securities will occur before the transaction 

in the last paragraph under the “Reorganization” section. 

Response.The requested disclosure will be made. 

Comment 7.For both proposals, please change the disclosure of the range of the indexes in the Principal 

Investment Strategies section to read $20 million instead of $0.02 billion. 

Response.The requested disclosure will be made. 

Comment 8.Please confirm in correspondence that the contractual caps noted in the fee tables for both 

proposals are effective for at least one year from the date of the Registration Statement/Proxy. 

Response.The Fund confirms that the contractual caps noted in the fee tables for both proposals are 

effective for at least one year from the date of the Registration Statement/Proxy. 

Comment 9.In correspondence, please explain why the Board considered the direct or indirect benefits that 

could be derived by PMC or it affiliates with respect to both proposals. 

Response.The Board considered the direct and/or indirect benefits that could be derived by PMC (or its 

affiliates) with respect to both proposals to vet any potential conflicts of interest. 

Comment 10.Please conform the section titled “Distribution Plans and Intermediary Compensation” to 

make clear that there is only one Acquired Fund. 

Response.The requested disclosure will be made. 

Please call me at 515-235-9328 or Jennifer Mills at 515-235-9154 if you have any questions. 

Very truly yours, 

/s/ Adam U. Shaikh 

Adam U. Shaikh 

Assistant Counsel 

Principal Funds, Inc.