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SAM Portfolios Enhanced with Recent Product Adjustments

In November 2010 the Asset Allocation Team at Edge Asset Management began implementing a series of product enhancements to the five Principal Strategic Asset Management (SAM) Portfolios (sub-advised by Edge). The changes, which include a wider range of asset classes and underlying funds, along with a reclassification of each Portfolio's overall composition, were completed on December 31, 2010.

These enhancements are intended to improve and update the investment process and increase the Portfolios' overall diversification levels, providing additional opportunities to enhance returns and increase risk management efficiencies.

The most significant product enhancements include:

  • Redefinition of asset classes: The Asset Allocation Team redefined the class and sub-category detail that now totals 27 distinct asset classes. These asset classes include a variety of additional categories including commodities, inflation protection securities, and international real estate.*
  • Manager composition: Traditionally the Asset Allocation Team has looked primarily at the asset class level to manage risk and enhance returns. Going forward, the Team will be evaluating the underlying investment managers for multiple factors including correlation, traditional due diligence, and active risk/return profile.
  • Increased number of underlying funds: The Asset Allocation Team is increasing the total number of underlying funds from 16 to 24. Notable fund additions include the Principal Global Diversified Income Fund, Principal Diversified Real Asset Fund, Principal Inflation Protection Fund, and Principal Global Real Estate Securities Fund.

Sophistication of a Managed Account, Simplicity of a Mutual Fund

The five Principal SAM Portfolios are designed to provide investors an innovative approach to target-risk investing. Your clients can choose among five different SAM Portfolios to fit their participants goals and risk tolerance.

Details of changes to the SAM Portfolio underlying funds and asset classes are listed below. Items in bold represent new funds and asset class categories.

Underlying Funds   Asset Classes
Unchanged   Equities - Unchanged
Principal Capital Appreciation Fund   Convertible Securities
Principal Diversified International Fund   U.S. Large-Cap Growth
Principal Equity Income Fund   U.S. Large-Cap Value
Principal Government & High Quality Bond Fund   U.S. Mid-Cap Growth
Principal High Yield Fund   U.S. Mid-Cap Value
Principal Income Fund   U.S. REITs
Principal International Emerging Markets Fund   U.S. Small-Cap Growth
Principal LargeCap Growth Fund   U.S. Small-Cap Value
Principal LargeCap Growth Fund II   Equities - Added / Changed
Principal LargeCap Value Fund III   Before Enhancements After Enhancements
Principal MidCap Blend Fund   International Developed Market Stocks International Developed Market Growth
Principal Preferred Securities Fund   International Developed Market Value
Principal Real Estate Securities Fund   International Emerging Market Stocks International Emerging Market Growth
Principal Short-Term Income Fund   International Emerging Market Value
Principal SmallCap Growth Fund     Commodities
Principal SmallCap Value Fund   International Real Estate
Funds Added   U.S. Master Limited Partnerships
Principal Diversified Real Asset Fund   Fixed Income - Unchanged
Principal Global Diversified Income Fund   U.S. Government Securities
Principal Global Real Estate Securities Fund   U.S. High Yield Corporate Bonds
Principal Inflation Protection Fund   U.S. Investment Grade Corporate Bonds
Principal LargeCap Blend Fund II   U.S. Mortgage & Asset-Backed Securities
Principal MidCap Growth Fund III   Fixed Income - Changed / Added
Principal SmallCap Growth Fund I   Before Enhancements After Enhancements
Principal SmallCap Value Fund II   Preferred Securities Preferred Stocks
    Preferred Capital Securities
    Bank Loans
  International Developed
Market Bonds
  International Emerging
Market Bonds
  U.S. Commercial Mortgage-Backed Securities
  U.S. Treasury Inflation-Protected Securities
  Cash Cash
       

Investors should carefully consider a fund's investment objectives, risks, charges, and expenses prior to investing. A prospectus, or summary prospectus if available, containing this and other information can be obtained by contacting a financial professional, visiting principalfunds.com, or calling 800.986.3343. Read the prospectus carefully before investing.


 

Global Investment Management, Asset Allocation Expertise, Retirement Leadership

*Asset allocation/diversification does not guarantee a profit or protect against a loss.

To obtain a prospectus, download online or call The Principal® at 1.800.986.3343

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call The Principal® at 1.800.986.3343.

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.

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.

Not FDIC or NCUA/NCUSIF insured - May lose value - No bank guarantee - Not a deposit - Not insured by any federal government agency

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