PPREX

Principal Spectrum Preferred and Capital Securities Income Fund

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Prospectus
Enhanced fact sheet

    Principal Spectrum Preferred and Capital Securities Income Fund

    Highlights

    Active management based on specialized research and dynamic security selection to manage complex global markets

    • Deep and broad experience analyzing, managing, and pricing complex security structures across a variety of credit, interest rate, and regulatory conditions.
    • An emphasis on capital preservation equates to higher quality and capital structure bias.
    • Has delivered a low volatility profile and attractive risk-adjusted returns by selecting higher-quality and improving credits and avoiding speculative risks.

    Fund details

    as of 10/28/2024 unless indicated otherwise
    Fund ticker
    PPREX
    CUSIP
    74256W485
    Benchmark
    ICE BofA U.S. All Capital Securities Index
    Extended performance inception date
    05/01/2002
    NAV
    $9.27
    Total fund assets
    $6.3B
    Dividend frequency
    Monthly
    Minimum investment
    —
    Inception date
    01/03/2017
    Morningstar category
    Preferred Stock
    Investment approach
    The investment seeks to provide current income. The fund invests at least 80% of its net assets, plus any borrowing for investment purposes, in preferred securities and capital securities at the time of purchase. Preferred securities typically include preferred stock and various types of junior subordinated debt and trust preferred securities. It also invests up to 55% of its assets in below-investment-grade preferred securities and bonds (sometimes called “high yield bonds” or “junk bonds”), which are rated at the time of purchase Ba1 or lower by Moody’s and BB+ or lower by S&P Global.

    Performance & expenses

    As of 09/30/2024
    Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
    Total return 1.70% 4.50% 9.96% 16.11% 1.43% 3.21% 4.49% 5.52% —
    Benchmark performance
    ICE BofA U.S. All Capital Securities Index
    		 2.40% 6.08% 11.45% 18.65% 1.22% 3.37% 4.86% — —
    Morningstar category average
    Preferred Stock
    		 2.51% 6.12% 11.19% 18.40% 1.30% 3.18% 4.26% — —
    Morningstar percentile rankings — — — 82 40 48 46 — —
    # of funds in category 75 74 73 73 66 60 38 — 66
    Morningstar rating — — — — —
    30 Day SEC yield
    Unsubsidized as of 09/30/2024
    4.99%
    30 Day SEC yield
    Subsidized as of 09/30/2024
    4.99%
    Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted.
    Returns shown for periods of less than one year are not annualized.
    Index performance information: no deductions for fees, expenses or taxes. Indices are unmanaged and individuals cannot invest directly in an index.

    Ratings

    Morningstar Ratings

    as of 09/30/2024
    3-year
    66 funds
    5-year
    60 funds
    10-year
    38 funds
    Overall
    66 funds
    3 year | 66 funds
    5 year | 60 funds
    10 year | 38 funds
    Overall | 66 funds

    Holdings

    Top 10

    as of 09/30/2024
    % of Assets
    % of Assets
    1. Dominion Energy Inc
    1.95%
    2. JPMorgan Chase & Co
    1.89%
    3. Wells Fargo & Co
    1.79%
    4. PNC Financial Services Group Inc/The
    1.70%
    5. Principal Government Money Market Fund - Class R-6
    1.64%
    6. Charles Schwab Corp/The
    1.59%
    7. Intesa Sanpaolo SpA
    1.54%
    8. Huntington Bancshares Inc/OH
    1.37%
    9. HSBC Capital Funding Dollar 1 LP
    1.34%
    10. Liberty Mutual Group Inc
    1.32%
    The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
    May not reflect current holdings or allocations.

    Portfolio characteristics

    Qualified dividend income
    as of 09/30/2024
    65.31%
    # of holdings
    as of 09/30/2024
    332
    Average weighted coupon
    as of 09/30/2024
    6.07%
    Average yield to maturity
    as of 09/30/2024
    7.17%
    Turnover ratio
    as of 02/29/2024
    16.90%
    Weighted avg duration
    as of 09/30/2024
    3.30
    Yield to worst
    as of 09/30/2024
    5.50%
    May not reflect current holdings or allocations.

    Portfolio management

    Fred Diaz
    32 years of experience
    Bob Giangregorio
    21 years of experience
    L. Phillip Jacoby, IV
    42 years of experience
    Manu Krishnan, CFA
    20 years of experience
    Mark A. Lieb
    47 years of experience
    Kevin Nugent
    40 years of experience
    Satomi Yarnell
    15 years of experience

    Literature

    Investment materials

    Portfolio holdings

    Disclosures
    Principal Funds are distributed by Principal Funds Distributor, Inc. ALPS Distributors, Inc. is the distributor of the Principal ETFs. ALPS Distributors, Inc. and the Principal Funds are not affiliated.
    Contingent Capital Securities carry greater risk compared to other securities in times of credit stress. An issuer or regulator’s decision to write down, write off or convert a CoCo may result in complete loss on an investment.
    These calculated returns reflect the historical performance of the oldest share class of the Fund, adjusted to reflect the fees and expenses of the share class shown. Please see the Fund's prospectus for more information on specific expenses and see the Fund's most recent shareholder report for the actual date of first sale. Expenses are deducted from income earned by the Fund. As a result, dividends and investment results will differ for each share class.
    Spectrum Asset Management, Inc. is an affiliate of Principal Global Investors. Spectrum is a leading manager of institutional and retail preferred securities portfolios and manages portfolios for an international universe of corporate, insurance, and endowment clients.
    Fixed‐income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
    The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
    NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE
    Morningstar percentile rankings are based on total returns and do not reflect the inclusion of sales charges. If sales charges were reflected, rankings could be lower.
    Risks of preferred securities differ from risks inherent in other investments. In particular, in a bankruptcy preferred securities are senior to common stock but subordinate to other corporate debt.
    Performance assumes reinvestment of all dividends and capital gains.
    Principal Global Investors is the Investment Adviser of all funds included in the Principal Funds, Inc. Principal Funds are managed by Principal Global Investors, its boutique affiliates, and by many leading sub-advisors.
    To obtain a prospectus, download or call Customer Service at 1.800.222.5852. Carefully consider a fund’s objectives, risks, charges, and expenses. The prospectus, or summary prospectus if available, contains this and other information. Please read it carefully before investing.
    ICE BofA US All Capital Securities Index tracks the performance of fixed rate, US dollar denominated hybrid corporate and preferred securities publicly issued in the US domestic market. Qualifying securities must be rated by Moody’s, S&P or Fitch. Floating rate coupon or dividend securities are excluded, but zero, step and rating-dependent coupons are included.
    © 2024 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
    The Morningstar Medalist Rating™ is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to https://shareholders.morningstar.com/investor-relations/governance/Compliance--Disclosure/default.aspx.
    The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.
    The Analyst-Driven % data point displays the weighted percentage of a vehicle’s pillar ratings assigned directly or indirectly by analysts.
    The Data Coverage % data point is a summary metric describing the level of data completeness used to generate the overall rating.