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The Principal Mortgage Securities Fund name changing to the Principal Government & High Quality Bond Fund
Principal Funds management has approved changing the name of the Principal Mortgage Securities Fund to the Principal Government & High Quality Bond Fund effective September 30, 2009. This change will affect the A, B, C, J, I, and R1 – R5 share classes of the Fund. The PVC Mortgage Securities Accounts will not be affected by the change.
Why is the name changing?
Principal Funds management has determined that, in order to align the name of the Fund with its corresponding separate account and to better reflect the strategy of the Fund, a name change helps ensure consistency across product lines.
And, based on feedback from our intermediaries, at a time when investors are seeking lower-risk investments, it is a challenge for some financial professionals to promote the Mortgage Securities Fund because of its name. In the current economic environment, the word “Mortgage” is difficult for financial professionals and investors to overcome when assessing funds.
As a result, it was management’s recommendation to rename the Fund the Government & High Quality Bond Fund. The investment objective and strategy, which is to provide a high level of current income consistent with safety and liquidity, will remain unchanged.
Also, the Principal Mortgage Securities Fund recently acquired the Principal Government & High Quality Bond Fund. This merger was successfully completed in April 2009. Changing the name of the Principal Mortgage Securities Fund to the Principal Government & High Quality Bond Fund will align the names of the PFI fund and related Principal Life Insurance Company separate account. This will help to avoid confusion among retirement plan sales and service representatives promoting this product.
What does this mean to shareholders?
Management believes this name change should benefit shareholders by allowing the Fund to be marketed more widely, creating a broader demand for the Fund. As a result of these broader marketing efforts, net cash flows and assets will potentially grow. Although we believe the fees currently charged to shareholders are competitive, this potential additional growth should provide added scale, creating the opportunity for reduced shareholder expense ratios in the future.
No shareholder action is required. A notice of the planned name change is being sent to Mortgage Securities Fund shareholders with their statements in early July.
Questions
If you have any questions regarding this merger, contact our Sales Support Hotline at 800-787-1621.
6834082011
To obtain a prospectus, order online or call Customer Service at 1.800.222.5852
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 Customer Service at 1.800.222.5852.
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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
