PHYFX | Principal High Yield Fund | Principal Asset Management

PHYFX

Principal High Yield Fund

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Prospectus

Overview

Performance

As of 11/30/2025

YTD

6.32%

1-year

5.68%

3-year

8.65%

5-year

4.91%

10-year

5.77%

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.

Overall Morningstar Rating™

As of 11/30/2025

Highlights

A defensive high yield bond fund with a long-term focus on generating income.

History of consistent long-term outperformance and drawdown mitigation.
Independent, forward looking credit analysis to exploit ratings inefficiencies; well-defined exit strategies to minimize the cost of mistakes.
Proprietary data science tools to challenge biases and avoid unintended risks.

Fund details

as of 12/19/2025 unless indicated otherwise

Fund ticker

PHYFX

CUSIP

74256W626

Benchmark

Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index

Extended performance inception date

04/08/1998

NAV

$6.70

Total fund assets

$6.61B

Dividend frequency

Daily

Minimum investment

—

Inception date

11/22/2016

Morningstar category

High Yield Bond

Investment approach

The investment seeks to provide a high level of current income. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in below investment grade bonds and bank loans (sometimes called “high yield” or “junk”), which are rated Ba1 or lower by Moody’s Investors Service, Inc. (“Moody’s”) and BB+ or lower by S&P Global Ratings. It also invests in investment grade bank loans (also known as senior floating rate interests) and securities of foreign issuers.

Performance & expenses

As of 11/30/2025

As of 09/30/2025

Month end Quarter end

Name	1 month	3 month	YTD	1-year	3-year	5-year	10-year	Since inception	Overall
Name	1 month	3 month	YTD	1-year	3-year	5-year	10-year	Since inception	Overall	Total return	0.23%	0.98%	6.32%	5.68%	8.65%	4.91%	5.77%	6.74%	—
Benchmark performance Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index	0.58%	1.56%	8.01%	7.55%	9.63%	4.78%	6.19%	—	—
Morningstar category average High Yield Bond	0.46%	1.38%	7.34%	6.92%	8.82%	4.45%	5.25%	—	—
Morningstar percentile rankings	—	—	—	88	61	29	22	—	—
# of funds in category	639	633	621	621	581	543	437	—	581
Morningstar rating Morningstar ratings disclosure Morningstar ratings are based on risk-adjusted returns. The Morningstar Rating™ for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product 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. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.	—	—	—	—				—

30-Day SEC yield

Unsubsidized as of 11/30/2025

6.84%

30-Day SEC yield

Subsidized as of 11/30/2025

6.84%

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.

Name	1 month	3 month	YTD	1-year	3-year	5-year	10-year	Since inception	Overall
Name	1 month	3 month	YTD	1-year	3-year	5-year	10-year	Since inception	Overall	Total return	0.70%	1.90%	6.03%	5.96%	10.56%	5.72%	5.83%	6.77%	—
Benchmark performance Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index	0.82%	2.54%	7.22%	7.41%	11.09%	5.54%	6.16%	—	—
Morningstar category average High Yield Bond	0.73%	2.35%	6.66%	6.93%	10.21%	5.18%	5.24%	—	—

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.

Data	2024	2023	2022	2021	2020
Total return	7.54%	12.79%	-8.26%	5.72%	6.52%
Morningstar category average High Yield Bond	7.63%	12.08%	-10.09%	4.77%	4.91%

Date	Type	Dollar per share
11/28/2025	Income	0.0355
10/31/2025	Income	0.0431
09/30/2025	Income	0.0372
08/29/2025	Income	0.0411
07/31/2025	Income	0.0391
06/30/2025	Income	0.0358
05/30/2025	Income	0.0398
04/30/2025	Income	0.0386
03/31/2025	Income	0.0366
02/28/2025	Income	0.0353
01/31/2025	Income	0.0407
12/31/2024	Income	0.0393
11/29/2024	Income	0.0388
10/31/2024	Income	0.0379
09/30/2024	Income	0.0339
08/30/2024	Income	0.0411
07/31/2024	Income	0.0389
06/28/2024	Income	0.0346
05/31/2024	Income	0.0405
04/30/2024	Income	0.0364
03/28/2024	Income	0.0373
02/29/2024	Income	0.0345
01/31/2024	Income	0.0354
12/29/2023	Income	0.0379
11/30/2023	Income	0.0352
10/31/2023	Income	0.0367
09/29/2023	Income	0.0360
08/31/2023	Income	0.0346
07/31/2023	Income	0.0319
06/30/2023	Income	0.0351
05/31/2023	Income	0.0344
04/28/2023	Income	0.0304
03/31/2023	Income	0.0359
02/28/2023	Income	0.0299
01/31/2023	Income	0.0307
12/30/2022	Income	0.0349

Ratings

Morningstar ratings

Morningstar ratings disclosure

Overall Morningstar Rating™ as of 11/30/25 among High Yield Bond Funds. Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product 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. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.

as of 11/30/2025

3-year

581 funds

5-year

543 funds

10-year

437 funds

Overall

581 funds

3 year | 581 funds

5 year | 543 funds

10 year | 437 funds

Overall | 581 funds

Holdings

Top 10

as of 11/30/2025

% of Assets

1. Principal Government Money Mar

1.84%

2. United States Treasury Note/Bo

1.47%

3. EchoStar Corp

0.76%

4. Smyrna Ready Mix Concrete LLC

0.76%

5. Lightning Power LLC

0.73%

6. Jazz Securities DAC

0.72%

7. Freedom Mortgage Holdings LLC

0.72%

8. Taseko Mines Ltd

0.71%

9. Victra Holdings LLC / Victra F

0.70%

10. Global Aircraft Leasing Co Ltd

0.68%

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

Average effective maturity

as of 11/30/2025

6.67

# of holdings

as of 11/30/2025

449

Average weighted coupon

as of 11/30/2025

6.75%

Average yield to maturity

as of 11/30/2025

7.44%

Turnover ratio

as of 04/30/2025

38.00%

Weighted avg duration

as of 11/30/2025

2.78

Weighted avg life to worst

as of 11/30/2025

3.68

Yield to worst

as of 11/30/2025

6.97%

May not reflect current holdings or allocations.

Portfolio management

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.

Fixed‐income investment options are subject to interest rate risk, and their value will decline as interest rates rise.

Non-investment grade securities offer a potentially higher yield but carry a greater degree of risk. Potential investors should be aware that fixed Investments carry credit risks, default risk, liquidity risks, currency risks, operational risks, legal risks, counterparty risk and valuation risks

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.

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 prospectus online 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.

The Bloomberg US HY Ba/B 2% Issuer Cap Index includes the USD-denominated, high yield, fixed-rate corporate bonds that are Ba or B rated. Issuer exposure is capped at 2%. (Legacy Ticker: LBICTRUU)

© 2025 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.

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.