SIZE DOES MATTER!

Large cap companies are huge players in the market and flag bearers of the economy with a long term track record. Due to their size they tend to be comparatively unaffected by rough economic times and investments in large cap companies lend credibility to any investment portfolio as they are bought more for actual performance rather than a potential future. Large cap companies also can venture into non-core businesses as they have the resources to commit to new businesses and such non-core businesses thus add the high growth potential to large caps which is generally associated with mid caps.

A Larger Role to Play

Large caps are a valuable part of portfolio diversification and provide stability and long term investing protection, neither growing too rapidly nor falling too dramatically based on daily stock market news. This makes them fairly liquid instruments and a preferred investment option for many investors, mainly institutional. FIIs seeking to invest in Indian markets usually make their first investment in large cap stocks. Their role in the portfolio is to provide steady returns with comparatively lower risk so that investors can invest (speculate) in other type of stocks to increase their earnings potential. They lend credibility to any investment portfolio, as they are bought more for actual performance rather than a potential future.

Introducing Principal Large Cap Fund – Benefit from Size

Large Cap ‘based’ Mutual Funds are an ideal investment tool for investors as they capture this essence of large cap companies while providing the benefits of investing in mutual funds, diversification and facility to invest in small amounts. Defining the right market cap is fundamental to realize the real potential, and Principal Large Cap Fund, a frontrunner in this category, is a true large cap fund that seeks to invest in fundamentally strong companies with large market capitalization equal to or greater than Rs 3500 crores (subject to periodic review in line with the market levels), with a small amount of the portfolio having a lower market capitalization of not less than Rs 2000 crores.

The fund, a relatively unknown in its category with no blue-chip or opportunities tagline, has a smaller corpus of Rs 414.32 crores and relies on a focused investment strategy of only 25 - 30 stocks to deliver a solid performance. At present, the top five holdings account for 29 percent of the corpus with the portfolio well diversified at the sector level as well with investments across 16 sectors. Currently, banking is the top sector holding accounting for 18.58 percent, followed by industrial capital goods (13.95 percent), finance (13.32 percent) and construction (9.35 percent).

Fund Performance (as on February 29, 2008)

Note: Past performance may or may not be sustained in the future

Returns are calculated on compounded annualized basis ^ Growth Option

This 2 year old fund has proven to be a solid performer and a front runner in the large cap category, being rated CPR 1 by Crisil and ranked among the World’s 100 Top Performing Equity Schemes (Ranked # 96) by Lipper. Much of this success can be attributed to the investment philosophy and style at Principal, a combination of picking fundamentally strong companies and disciplined risk management.

On a final note, there is still a lot of steam left in the large cap companies which will play a major role in India’s future growth. The stellar performance of Principal Large Cap Fund since inception cannot be ignored making it an ideal pick and a ‘new favorite’ among large cap funds. Invest now and you will find Principal Large Cap Fund as a rewarding long-term investment.

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Disclaimer: CRISIL CPR 1 - The composite performance of Principal Large Cap Fund in the Large Cap-oriented equity scheme category (31 schemes) is “Very Good” and ranks within the top 10% of the schemes ranked in the category. The criteria used in computing the CRISIL Composite Performance Rank are Superior Return Score, based on NAVs over the 2-year period ended December 31, 2007, concentration and liquidity of the scheme. The methodology does not take into account the entry and exit loads levied by the scheme. The CRISIL CPR is no indication of the performance that can be expected from the scheme in future. A detailed methodology of the CRISIL CPR is available at www.crisil.com Rankings and Award Source: CRISIL FundServices, CRISIL Ltd. Lipper Disclaimer - Principal Large Cap Fund-Growth has secured a rank of 96 among the 100 top performing equity funds in the world during the year 2007, as per Lipper data. The customized report, highlighting the 100 top performing equity funds in the world during the year 2007, is based on the study of all funds under the equity asset class tracked by Lipper, and having a minimum track record of at least one year as of December 2007 end. In total 24,887 equity funds (primary) qualified for the study. All returns are denominated in INR for the period ending on 31st December 2007. Data source: Lipper, a Reuters Company www.lipperweb.com Statutory Details: Principal Mutual Fund has been constituted as a trust with Principal Financial Group (Mauritius) Limited, Punjab National Bank and Vijaya Bank as the co-settlors. Sponsor: Principal Financial Services Inc., USA. Trustee: Principal Trustee Company Private Limited. Investment Manager: Principal Pnb Asset Management Company Private Limited. Risk Factors: Mutual funds and securities investments are subject to market risks and there can be no assurance and no guarantee that the objectives of Principal Mutual Fund can be achieved. As with any investment in securities, the NAV of the units issued under the scheme(s) can go up or down, depending upon the factors and forces affecting the capital markets. Past performance of the Sponsor/ AMC/ Principal Mutual Fund/ Punjab National Bank/ Vijaya Bank does not indicate or guarantee the future performance of the Schemes of Principal Mutual Fund. Principal Large Cap Fund (An open-ended Equity Scheme; Investment Objective: To provide capital appreciation and /or dividend distribution by predominantly investing in companies having a large market capitalization. For the purpose of this Fund, Large Cap Companies are defined as those having market capitalization greater than Rs.750 crore as on the date of investment (or any such amount as may be specified by India Index Services Ltd (IISL) from time to time) being the upper limit of market capitalisation as a criteria for inclusion of a company in CNX Midcap 200 Index. However, should IISL come out with a definition of ‘Large Cap companies’, the same will be utilized. Load Structure: Entry Load: For Direct Investment - Nil. For investments less than Rs. 3 crores - 2.25%. For investments of Rs. 3 crores and above - Nil. Exit Load: For Investments less than 3 crores - 1.5% if redeemed on or before 180 days from the date of allotment, 1% if redeemed after 180 days but on or before 365 days from the date of allotment, Nil if redeemed after 365 days from the date of allotment. For investments of Rs.3 crores and above - 0.50% if redeemed on or before 180 days from the date of allotment, Nil if redeemed after 180 days from the date of allotment.), is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme or its future prospects or returns. The Sponsor is not responsible or liable for any loss resulting from the operations of the Mutual Fund beyond the contribution of an amount of Rs. 25 Lakhs towards setting up Principal Mutual Fund. Investors in the scheme(s) are not being offered a guaranteed or assured rate of return or monthly or regular/periodical income distribution, and the actual returns and/or periodical income distribution of an investor will be based on the distributable surplus. For scheme specific risk factors, terms of issue etc. investors are urged to read the Offer Document carefully and consult with their legal/tax/investment advisor before they invest the Scheme. Copy of offer document of the scheme(s) can be obtained at the investor service centers of AMC and our Toll Fee No.: 1800 22 5600 and Website: www.principalindia.com