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Mutual Funds and Investments: Glossary of Terms

A B C D E F G I J K L M N O P Q R S T U V W Y

401(k) The section of the IRS Tax Code which allows for pre-tax employee salary deferrals to be made to qualified profit sharing plans.
403(b) "Tax-sheltered annuities," are a form of defined contribution plan available only to employees of educational and charitable organizations. Subject to various limitations and restrictions, Section 403(b) of the Internal Revenue Code allows tax-deferred contributions to be made for such employees through an employee-funded plan, through voluntary salary reduction, or pursuant to an employer-funded plan through employer contributions.
457 Plan A deferred compensation plan referenced in Section 457 of the Internal Revenue Code for state and local governments, and in some cases, tax-exempt organizations. Participants can reduce their taxable income by deferring part of their salary into the plan and/or the employer can contribute. All contributions are considered deferred compensation.
-A-
Annual Report The yearly records of a corporation or a mutual fund company's performance and condition that is distributed to investors and/or shareholders.
Annuity A long-term investment that provides tax-free growth and income at regular intervals for as long as specified.
Appreciation The increase in the value of an asset.
Asset Allocation The process of distributing portfolio investments among the various available investment categories.
Automatic Investment Plan See Systematic Accumulation Plan.
Automatic Reinvestment An option permitting mutual fund shareholders to purchase additional shares by using fund dividend and/or capital gains distributions.
-B-
Back-End Load The payment of a surrender or sales charge upon the discontinuance of annuities or life insurance or sale of securities. (Also known as a contingent deferred sales charge.)
Balanced Fund A type of mutual fund whose stated investment policy is to have, at all times, some portion of its investment assets in bonds and stocks, creating a balance between the two types of securities.
Bear Market A falling market.
Beneficiary The person to whom the assets should be distributed upon the death of the accountholder.
Beta A coefficient measuring a stock's volatility in relation to the rest of the market. The S&P 500 Stock Index has a beta of 1. Any stock with a higher beta is more volatile than the market as a whole, and any with a lower beta is expected to rise and fall more slowly than the market.
Bid Price The highest price anyone will pay for a security at a given time. Used on the wholesale market for inter-dealer trading, not for quoting prices to the public.
Blue Chip Stock The issues of normally strong, well-established companies that have demonstrated their ability to pay dividends in uncertain markets.
Blue Sky Laws Securities laws in various states that protect investors against securities fraud.
Bond Bonds represent the borrowing of money by a corporation or government. The bond is a legal obligation of the company or government to repay principal at the maturity of the bond. Bonds are issued with a par value ($1,000) representing the amount of money borrowed by the company. The issuer promises to pay a percentage of the par value as interest on the borrowed funds.
Bond Fund A type of mutual fund whose investment policy is to provide stable income with a minimum of capital risks. It may invest in corporate, government or municipal bonds.
Breakpoint The schedule of sales charge discounts offered by a mutual fund for lump-sum or cumulative purchases of front-end loaded shares.
Broker An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm.

Or

The role of a broker firm when it acts as an agent for a customer and charges the customer a commission for its service.
Broker Dealer A person or firm which buys and sells securities either as an agent (matching a buyer with a seller) or as a principal (buying or selling from its own account).
Bull Market A rising market.
Business Day Any day the New York Stock Exchange is open for trading.
-C-
Capital Gain The profit resulting from the sale of capital assets.
Capital Gain Distribution Payments to mutual fund shareholders or profits realized on the sale of securities in the fund's portfolio. These amounts are usually distributed to shareholders.
Capital Loss The loss from the sale of a capital asset. Capital losses may be deductible for tax reporting purposes. However, specific rules must be followed in netting long-term gains and losses as well as short-term gains and losses.
Cash Position Percentage of mutual fund's portfolio held in cash and cash equivalents.
Certificate The actual piece of paper that is evidence of ownership of a security. Certificates are not ordinarily issued from Principal Funds, Inc. Instead, shareholders receive a confirmation each time they invest. The confirmation records a certain transaction at time of investment.
Certificates of Deposit (CD) Issued by most commercial banks, representing bank borrowing for a short period of time.
Closed-End Investment Company An investment company with a stipulated number of shares outstanding, usually organized as a Unit Investment Trust. Shares are traded over-the-counter and on securities exchanges in the same manner as stock. Unlike an open-end fund, shares will not be redeemed by the organizer, so liquidity depends on whether a secondary market has been established.
Commingle To mix together retirement money from different retirement plans (i.e. 401(k) money with money from an IRA).
Commission A portion of the sales charge that is paid to a registered representative as compensation for the sale of a security.
Compensation Wages, salaries, tips, professional fees, bonuses and other amounts one receive for providing services.
Common Stock An ownership (equity) interest in the company with a residual claim to profits and assets.
Common Stock Fund A mutual fund that emphasizes common stocks but can contain some bonds, short-term investments and cash for liquidity.
Confirmation A broker dealer's written verification of the execution of a securities transaction.
Conservative Growth Portfolio A low turnover portfolio which is likely to contain a high percentage of blue chip securities.
Consumer Price Index (CPI) An index which measures changes in prices based on a select group of goods and services.
Contingent Deferred Sales Charge (CDSC) A fee imposed when shares are redeemed (bought back by a fund) during the first few years of share ownership when an up-front sales charge is not paid.
Contribution A deposit into a retirement plan. Some may be tax deferred.
Cost Basis The purchase price of an investment, used to calculate capital gains when the investment is sold.
Current Yield The annual return on an investment stated as a percentage of the actual amount invested. With stocks, it is the annualized dividend divided by the stock's current market price. With bonds, current yield is the amount of return (the stated interest) divided by the current market price.
Custodial Account An account established for the benefit of a minor or other beneficiary. Although the account is in the name of the custodian, the account is the legal property of the minor and it becomes his or hers outright when reaching legal age, usually 18 in most states.
Custodian One who is responsible for the maintenance of an account but has no investment or management responsibilities.
-D-
Dealer A brokerage firm that buys or sells a security for its own account, and at its own risk, then charges the customer a mark-up or mark-down.
Deferred Compensation A nonqualified retirement plan which provides an employee the option to forego current compensation for payments during retirement.
Defined Benefit Plan A pension plan that promises to pay employees a specified amount at retirement. The plan states either the benefits to be received by employees after retirement or the method of determining such benefits.
Defined Contribution Plan A qualified pension plan that specifies the amount of the employer's contribution under a formula for a fixed-dollar contribution or a percentage of compensation. Specific limits are set as to the maximum contribution that can be made each year.
Deflation The opposite of inflation. Prices fall when more goods are available than demand requires. Can be a response to the tightening of credit.
Deposit Account Accounts in credit unions, banks, and savings and loan associations. Can include regular savings accounts, money market accounts, NOW accounts and time certificates of deposits.
Depreciation A bookkeeping entry which allows a charge against earnings to account for the decrease in property value through deterioration, wear or obsolescence. No specific funds are used, and no cash outlay is required.
Director Person elected by the shareholders to establish corporate policies. The directors appoint the president, vice presidents and all other operating officers. Directors are ultimately responsible for the investments made. They are also the ones who declare if and when distributions of income or realized capital gain shall be made.
Disclosure Statement Statement required by law to provide customer with rules and regulations governing their retirement plan and financial disclosure information.
Distributions The payment of realized capital gain by the fund. The shareholder has the option of receiving any realized capital gain distributions in cash or reinvesting in the fund (purchasing additional shares for his/her account at net asset value.)
Discount Rate The interest rate charged by the Federal Reserve to member banks that borrow funds. The discount rate will affect both consumer loan rates and mortgage interest rates over the long term.
Diversification Investing in a variety of investments to reduce investment risk.
Diversified Fund A type of mutual fund having most of its assets invested in many types of securities.
Dividend The pro-rata distribution of a corporation's net income as authorized by the board of directors. Dividends are usually made from current earnings. However, they may be made from past earnings if the company is not presently making a profit. Even if the company is making a profit, the board of directors may decide to invest in additional locations, equipment or expansion and not declare a dividend.
Dollar-Cost Averaging A method of inventing a specific number of dollars over consecutive periods. When investing the same dollar amount, more shares are purchased when prices are lower; fewer when prices are higher. Over a period of time, the average cost per share may be lower. Such a plan does not assure a profit nor protect against loss in declining markets. Since such a plan involves continuous investments regardless of fluctuating price levels, investors should consider their financial ability to continue purchases through periods of low price levels.
Dual Class Shares A mutual fund company can offer different types of sales charge structures for the same fund, such as Class A (front-end) and Class B (contingent deferred) sales charge shares.
-E-
Earned Income All wages, salaries, tips, professional fees, bonuses and amounts received for providing services are earned compensation.
Electronic Fund Transfer (EFT) Withdrawals or transfers of funds made by authorized financial institutions through electronic terminal, telephone, computer or magnetic tape.
Equity A property's value in excess of the total amount of charges or liens against it. May also derive the interest of preferred and common stockholders in a company.
ERISA Employee Retirement Income Security Act of 1974. Far-reaching reforms affecting qualified retirement plans.
Exchange Privilege The right of an investor to transfer to another mutual fund under the same management without incurring any additional sales charge. The exchange is considered a sale and repurchase under the tax code (ie a gain or loss is realized).
Ex-Dividend Date The date on and after which a buyer of stock or mutual funds are cut off from entitlement to any dividends that have been declared.
Exemptions Amounts of certain types of interest, depreciation, losses and other items that may be subtracted from gross income for tax purposes. Personal exemptions are specified dollar amounts that may be taken for the taxpayer, spouse, and qualified dependents. Additional exemptions may be taken for blindness and for being age 65 or over.
-F-
Fiduciary A person vested with legal power to be used on behalf of another person.
Financial Industry Regulation Association (FINRA) The self-regulatory organization for the over-the-counter stock market.
First-In, First-Out (FIFO) An inventory accounting method which assumes that the first goods purchased are the first sold. It is also commonly used to determine the cost basis of redeemed mutual fund shares.
Fiscal Year A corporation's accounting year. Due to the nature of their particular business, some companies do not use the calendar year for their bookkeeping. As an example, the fiscal year for all Principal Funds ends October 31.
Fixed-Dollar Option A payout option in a withdrawal plan which provides the client with a payment of a predetermined dollar amount.
Fixed Percentage Option The option in a withdrawal plan that provides the limit with a payment equal to the liquidated value of a set percentage of the mutual fund account.
Fixed Shares Option A withdrawal plan option which provides for the liquidation of the client's account by a set future time.
Forward Pricing Pricing of mutual fund shares. The valuation of the portfolio occurs at least once per day. Orders to purchase or redeem shares will always be completed at the next valuation.
Front-End Load A sales charge levied with the purchase of an annuity, security, or life insurance product.
-G-
General Securities A term used to describe the area which handles the buying and selling of stocks and bonds.
Gift Tax Taxes imposed by the federal government upon the transfer of property or money by gift during lifetime.
Government Securities The debt obligations of the US Government.
Gross National Product The total production of goods and services in the United States over a one-year period, as measured by current prices.
Growth and Income Fund A mutual fund that seeks both capital appreciation and a reasonable income. It is somewhat more conservative in its investments than a growth fund.
Growth Fund A type of diversified common stock fund that has capital appreciation as its primary goal. It invests in companies that reinvest most of their earnings for expansion, research or development.
-I-
Income Dividends Payments to mutual fund shareholders of dividends, interest and short-term capital gains earned on the fund's portfolio securities after deduction of operating expenses.
Income Fund A type of mutual fund that seeks to provide a stable current income from investments by investing in securities that pay a higher-than-average return on investments.
Individual Retirement Account A plan which allows a person earning income to make annual contributions to an account for retirement. Contributions are limited to the lesser of $2,000 or 100% of compensation. The account is tax-deferred. Contributions may be deductible.
Inheritance Tax A tax placed on heirs for the right to receive property from another at death.
Interest The price paid for the use of money.
Investment Anything acquired for the purpose of producing income or a profit.
Investment Advisor An advisor can be the organization employed by a mutual fund to advise it in the investment, supervision and management of the investment company's assets.
Investment Banker One who arranges long-term financing by acting both as an underwriter and as an advisor.
Investment Company Mutual funds, Closed-end companies, and other companies that are principally engaged in the business of investing the funds of shareholders. Most of these companies are registered with the Securities and Exchange Commission under the Investment Company Act of 1940.
Investment Objective The goal, (e.g., long-term capital growth, current income, etc.) which an investor of a mutual fund pursues.
Investment Vehicle A selected means of making an investment.
Irrevocable Trust A trust which the grantor cannot terminate.
-J-
Joint Account An account owned by two or more people which enables all of them to use the account.
Joint or Survivor An option under an annuity which provides payments, sometimes reduced, to a survivor after the annuitant's death.
Joint Tenants In Common (TEN COM) An ownership designation where two or more individuals may hold fractional interests in an undivided asset. At the time of death of one of the tenants, the decedent's interest passes on to his or her estate, not to other tenant(s).
Joint Tenants with Right of Survivorship (JTTEN) An ownership designation whereby the entire asset is owned by two or more individuals equally. At the death of one of the tenants, the decedent's interest passes to the surviving joint tenant.
-K-
Keogh Plan A qualified tax-deferred retirement plan for persons who are self-employed and unincorporated or who earn extra income through personal services aside from their regular employment. Also, can be referred to as a HR-10 Plan.
-L-
Last-In-First-Out (LIFO) An inventory accounting method which assumes that the last goods purchased are the first sold.
Liquidation Conversion of assets into cash.
Load Sales charge. May be front-end load, low load or contingent deferred sales charge (back-end).
Long-Term Capital Gain (LTCG) Under the Taxpayer Relief Act of 1997, special tax rates generally apply to capital assets held longer than 18 months. Always check current tax codes for current rules.
Long-Term Capital Loss Under TRA-86 and after 1986, long-term capital losses offset ordinary income dollar-for-dollar, but may be used only to offset capital gains plus $3,000 of other income annually. Excess losses can be carried forward to offset income in future years, subject to the $3,000 limit. Always check current tax codes for current rules.
Lump-Sum Distribution A distribution of the participant's entire shares in a retirement plan within one tax year. When this is done, it's important to expect the tax consequences of either a rollover to another qualified plan or to accept current taxation under a special 5 or 10-year averaging method. Under TRA-86, persons at least 50 years old on 1-1-86 will be eligible for either 10-year averaging of 1986 income tax rates or 5-year averaging at the new income tax rates, without regard to attainment of age 59 1/2. Always check current tax codes for current rules.
-M-
Management Company The organization responsible for the selection and management of a mutual fund's investment portfolio.
Market Risk Uncertainty about loss of capital due to changes in the market price of the security. A direct investment risk.
Market Timing An investment strategy seeking profits by buying and selling securities in anticipation of market conditions.
Market Value The price at which a security sells in the marketplace. For mutual funds, this is the net asset value per share.
Medical Savings Account (MSA) A tax-exempt trust or custodial account established for the purpose of paying medical expenses in conjunction with a high-deductible health care plan.
Migration of Shares The term usually describes the reclassification of Class B shares to Class A shares after a set number of years in the Class B fund. Also referred to as "reclassification."
Money Market A market for short-term debt issues. Money market instruments are forms of debt that mature in less than a year and are very liquid. Treasury bills make up the bulk of trading in the money markets.
Multi-Class Shares More than a two-class (dual-class) system sales charges. May be front-end, back-end, contingent-deferred or low-level charge structures. The prospectus must always describe what charge or sales structure is associated for their mutual funds.
Mutual Fund An investment company that offers and sells outstanding securities which are redeemable on demand by the shareholder at current net asset value. All owners of the fund share in the gains or losses of the fund.
-N-
NASDAQS National Association of Securities Dealers Automated Quotation System - developed by the NASD. A communications system for exchanging over the counter quotes between member broker-dealers.
Net Asset Value The value of mutual fund shares determined by deducting the fund's liabilities from the total assets of the portfolio and dividing this amount by the number of shares outstanding.
No-Load Implies no sales charges.
No-Load Fund A mutual fund which can be purchased without paying a sales charge.
Non-Qualified Plan Any plan which does not meet IRS requirements for contributions to be a current tax deduction. Includes individually purchased annuities, deferred compensation and mutual fund accumulation plans.
-O-
Offering Price The net asset value of a mutual fund plus the sales charge.
Open-End Fund A mutual fund which does not have a set number of shares. New shares are sold as market demand requires. The investment company has an obligation, however, to purchase the shares from investors as they are submitted for redemption.
Open-End Investment Company The more formal name for an open-end mutual fund, indicating that it continuously issues and redeems (buy back) its shares on demand.
-P-
Payable Date The day on which a distribution is paid to shareholders. If the shareholder has taken the option to reinvest his distributions, the reinvestment is made on the payable date at that day's net asset value per share.
Payroll Deduction Plan (PDP) An investing program by which an employee can invest in mutual funds of choice through deductions from each paycheck.
Pension Plan A qualified retirement plan which is established by an employer for the benefit of its employees and their beneficiaries. The plan can provide for either a specific contribution or a specific benefit.
Portfolio Managers Specialists employed by mutual fund companies to invest the pool of money in accordance with the fund's investment objectives.
Power of Attorney (POA) The legal right to act on behalf of another individual.
Preferred Stock Stock that has a prior claim over common stock as to both dividends and distributions in liquidations.
Profit-Sharing Plan A qualified retirement plan established by an employer for the benefit of its employees and their beneficiaries in which contributions may vary each year according to the corporation's actual profits.
Prospectus The legal document which must be given to every investor who purchases registered securities in an offering. It explains the details of the company and all charges and expenses.
Proxy Written authorization given by a shareholder to a third party to represent and vote shares at a meeting of shareholders.
Proxy Statement Information required to be given to each shareholder as a prerequisite for solicitation of proxies for a security subject to the requirements of the Securities Exchange Act of 1934.
-Q-
Qualified Retirement Plan A pension, profit-sharing or employer-maintained retirement plan meeting the requirements of Sections 401 (a), 403(a) or 501(c) of the Internal Revenue Code.
-R-
Real Estate Investment Trust (REIT) A corporation or trust that uses the pooled capital of many investors to invest in direct ownership of either income property or mortgage loans. These investments offer tax benefits in addition to interest and capital gain distributions.
Reclassification After your Class B shares have been held long enough that a redemption fee no longer applies (7 years for Class-B shares), your shares automatically convert to Class-A shares. Unlike B shares, class-A shares have a front-end sales charge (for "new" investments) and lower annual expenses than B shares; you will not incur a new sales charge through reclassification. Reclassification is not a taxable event. Share classes have different share prices; as a result, you may own more or fewer A shares than you did B shares. See the prospectus for more details.
Record Date A day usually specified by the board of directors for distribution of dividends, realized capital gains or for some other purpose, such as proxy solicitation.
Redemption The act of selling mutual fund shares at the current net asset value, which may be worth more or less than original cost.
Redemption Fee The fee charged by some mutual funds when the investor sells shares back to the investment company. See Contingent Deferred Sales Charge.
Redemption Price The amount per share paid to the shareholder of an "open end" investment company upon presentation of the shares for redemption. It is usually the net asset value per share next determined after the redemption request is received in proper form. This price may be more or less than the shareholder's cost, depending on the market value of the company's portfolio.
Registered Representative Person associated with an NASD member firm, including assistant officers other than principals, who are engaged in the securities business or investment banking for the members. Functions include supervision, solicitation or conduct of business in securities, or training of persons associated with a member for any of these functions.
Reinvestment Privilege A service provided by most mutual funds for the automatic reinvestment of income dividends and capital gains distributions in additional shares. Reinvestment is at net asset value and usually without a sales charge.
Rights of Accumulation A term referring to the reduced sales charges if the current shares to purchase is affected by breakpoint when aggregated.
Rollover A distribution of tax-deferred retirement funds from one custodian to another.
Roth IRA It is a type of IRA available in 1998 that allows for after-tax contributions up to the lesser of $2,000 or 100% of earned income. The most significant feature of the Roth IRA is that distributions are not required during the owner's lifetime and, when taken, distributions are tax free as long as the account has been in existence for five years and the distributions are taken after age 59 1/2.
-S-
Sales Charge or Load The amount added to the net asset value of mutual fund shares which provides the offering price.
SEC Securities and Exchange Commission established by Congress to help protect investors after the crash of 1929. The SEC administers:
  • the Securities Act of 1933
  • the Securities Exchange Act of 1934
  • the Trust Indenture Act
  • the Investment Company Act of 1940
  • the Investment Advisors Act of 1940
  • the Public Utility Holding Company Act
SAR-SEP A salary deferral SEP (simplified employee pension plan) established by the employer allowing an employee to defer a pretax portion of his/her salary into an IRA. Effective January 1, 1997, employers could no longer establish a new SAR-SEP plan.
Self-Directed Plan A retirement plan managed by the plan participants subject to some legal limitations of the IRS. Selections of individual investments are made by the participant.
Settlement Date The date on which securities are delivered and the purchase price is paid. All transactions must be settled within three (3) business days.
Share Draft A check-like instrument allowing money market shareholders to withdraw funds or pay bills from their account.
Shares Units of ownership in a mutual fund.
Signature Guarantee A warranty by the guarantor that the signature of the shareholder is genuine and the shareholder is competent and authorized to sign. Not the same as acknowledgment by a notary public.
SIMPLE IRA A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a simplified, tax-favored retirement plan for small employers that provides for elective contributions by employees, mandatory employer contributions, and meets certain vesting, participation and administrative requirements.
Simplified Employee Pension (SEP) An individual retirement account or annuity that permits an employer (or individual, if self-employed) to contribute each year to an IRA up to the lesser of 15% of compensation or $30,000 to all qualified plan participants.
SIPC Securities Investors Protection Corporation. A federally chartered, non-profit membership corporation. SIPC is organized to provide protection against financial loss to customers of broker dealers who get into financial difficulties.
Spousal Individual Retirement Account An account established by an employed or self-employed spouse to provide retirement benefits for a non-employed spouse (or for a spouse who elects to be treated as having no compensation or is not covered in a retirement plan.) By law, two accounts must be established.
Spread The difference between the bid price and the ask price.
Statement of Intention A signed purchase agreement under which a mutual fund can sell shares to an investor at a lower overall sales charge based on the total dollar amount of the intended investment. A statement of intention is valid only if the investor completes the terms of the purchase agreement within the specified time period.
Stock Ownership shares of a corporation.
Stock Dividend A pro rata distribution of additional shares of stock to stockholders.
Street Name The name of the broker-dealer or its nominee in which title to customer securities may be held as a service. Holding securities in street name facilitates trading, and customers do not need to worry about safekeeping.
Suitability The appropriateness of an investment for a particular investor, taking into account his or her income, investment objectives, financial status and level of investment sophistication.
Surrender Charge The fee charged for the withdrawal of funds from an investment.
Systematic Accumulation Plan (AIP) Automatic investments where monthly payments are drawn on a shareholder's bank account and invested in the fund(s) systematically. The minimum amount of a monthly AIP with Principal Funds is $50.
Systematic Withdrawal Plan (SWP) Regular automatic redemption of a specified amount of money or specified number of shares from a mutual fund account.
-T-
Tax Deferred Postponement of payment of taxes until a future time.
Tax-Deferred Annuity (TDA) A program available to employees of certain public school systems and nonprofit organizations. An annuity is purchased with a part of the employee's income which is excluded from current taxation. Taxes are paid by the employee when he or she begins to draw the annuity. Also called tax-sheltered annuity. Mutual funds can also be used for TDA custodial accounts.
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) This law placed many restrictions on qualified retirement plans and provided additional requirements for taxpayers' compliance.
Tax Reform Act of 1986 (TRA 86) This law made substantial changes in the tax structure for individuals and businesses, shifting some taxation from individuals to businesses.
Tenants in Common See Joint Tenant in Common
Total Return A measure of the total change in value of an investment, assuming dividends and capital gains distributions are reinvested.
Transfer Describes the process of changing the registration of an account by moving funds from one account to another.

Or

Transfer IRA assets from one IRA custodian/trustee to another custodian/trustee.
The customer never receives the assets.
Transfer Agent The person responsible for issuing and redeeming shares of the mutual fund, custody of client's shares if certificates are not issued, sending confirmations and sending distributions to clients of a fund.
Trust A legal arrangement under which property and assets may be held and managed for the benefit of another person.
Trustee One who is holding legal title to an account, directs the investment of the funds in the account and has management responsibilities.
-U-
Uniform Gifts to Minors Act (UGMA)/Uniform Transfer to Minors Act (UTMA) Adopted by most states, the act permits a parent or guardian to give cash or securities to a minor child.
Unit Investment Trust Investment company investing in a fixed portfolio of securities. Unit investment trusts provide for professional selection of the securities to be held by the trust, but once purchased, there is generally no trading of the securities. An investor will purchase units in the trust representing an undivided interest in the securities held.
-V-
Valuation The monetary worth of the account is the fair market value of the investments held as of that date.
Variable Annuity (VA) An annuity funded by a separate account that invests in securities. Funds accumulate at a variable rate. If the cash value is left in the account during the payout period, payments will vary with the underlying performance of the securities.
Vesting To have a non-forfeitable right to an allocated portion of an account ownership.
Voluntary Contributions Additional funds placed in qualified plans by articipants in the plan. Contributions accumulate tax deferred but are not tax deductible.
-W-
Withdrawal Plan A systematic withdrawal from an account. Withdrawals may be based on a fixed dollar amount or fixed number. This plan is normally a free service offered by a mutual fund.
-Y-
Yield The dividends or interest rate expressed as a percentage of the price.

Before investing in mutual funds, investors should carefully consider the investment objectives, risks, charges and expenses of the funds. This and other information is contained in the free prospectus, which can be obtained by:

Please read the prospectus carefully before investing. See the mutual fund section of our site for a description of the different share classes.

Investment and insurance products are: not a deposit · not FDIC Insured ·
not insured by any federal government agency · not a bank guarantee · and may lose value.

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