Principal High Yield Fund Hits 10-Year Milestone: Consistent, strong management has yielded consistent, strong performance
July 23, 2008 (Des Moines, IA) — The Principal High Yield Fund (CPHYX) has reached a 10-year milestone of consistent performance and management, utilizing the same investment philosophy and portfolio manager since its inception on April 8, 1998.
The Principal High Yield Fund has outpaced its Morningstar peer averages every calendar year since its inception. The fund has demonstrated consistent top-tier performance by achieving Morningstar's overall five-star rating for the three-, five- and 10-year periods (as of June 30, 2008).* The Principal High Yield Fund is one of the funds found in the Principal Funds lineup.
Gary Pokrzywinski has managed the fund since day one. According to Morningstar statistics dated June 30, 2008, Pokrzywinski has the longest tenure of any portfolio manager of a high-yield bond fund (class A/up-front load) that has an overall five-star rating.
"We've taken a consistent, long-term approach that has yielded consistent, long-term returns," said Pokrzywinski. "Our strategy of using broken convertibles, emerging markets and Real Estate Investment Trusts (REITs) for added diversification and return potential makes us unique among high-yield funds."
The fund favors industries with "positive secular characteristics" including such sectors as health care, finance, technology, telecommunications/media, gaming and services.
"Often we are able to buy very good companies at depressed prices because the industry for one reason or another is out of favor," Pokrzywinski said. "The companies we are buying tend not to be the cheapest but rather what we see as the best. They are companies that we believe can survive the industry downturn and thrive as the industry rebounds."
The Principal High Yield Fund is managed by Edge Asset Management, an affiliate of Principal Global Investors. Pokrzywinski joined the firm in 1992. Based in Seattle, Edge Asset Management's heritage dates back to 1939 when it launched what is now known as the Principal Equity Income Fund, one of the first 50 mutual funds in the United States.
In addition to the Principal High Yield Fund, Principal Funds offers a range of fixed-income products for asset allocation and diversification strategies. Principal Funds is supported by the global asset management capabilities of Principal Global Investors, one of the many subadvisors of the funds, which manages $242.4 billion 1 in assets for retirement plans and other institutional clients including mutual funds.
About Principal Funds
Principal Funds is a leading provider of mutual fund solutions, with more than $59 billion 2 in assets under management. Principal Funds offers global investment management, asset allocation expertise and is a retirement leader. Principal Funds is the fifth largest manager of lifecycle funds (including target-date and target-risk funds) in the industry.3 Principal Funds are sold through a nationwide network of financial professionals associated with brokerage and financial planning firms. The companies that make up Principal Funds are members of the Principal Financial Group®.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®)4 is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $304.2 billion in assets under management5 and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
*For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating(TM) based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. Principal High Yield Fund was rated against the US OE High Yield Bond in the high-yield bond fund category for the 3-, 5-, and 10-year periods, respectively. With respect to these large value funds, the Principal High Yield Fund received a Morningstar Rating of five stars, five stars, and five stars for the 3-, 5-, and 10-year periods, respectively. Past performance is no guarantee of future results.
Before investing, you should carefully consider a fund's investment objectives, risks, charges and expenses. Contact your financial professional, visit www.principal.com, or call 800-547-7754 to obtain a prospectus containing this and other information. Read the prospectus carefully before investing.
A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.
Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise. Lower-rated securities are subject to additional credit and default risks. International investing involves increased risks due to currency fluctuations, political or social instability, and differences in accounting standards. REIT securities are subject to risk factors associated with the real estate industry and tax factors of REIT registration.
No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.
Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., member of the Principal Financial Group®. Principal Funds Distributor, Principal Shareholder Services, Principal Management Corporation and its affiliates, and Principal Funds, Inc. are collectively referred to as Principal Funds.
1) As of March 31, 2008
2) As of June 30, 2008. Includes Principal Investors Fund, Inc. and Principal Variable Contracts Fund, Inc. assets
3) As of March 31, 2008. Source: Financial Research Corporation Mutual Fund Lifecycle Report 1Q08
4) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
5) As of March 31, 2008
