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| Alpha- Alpha measures the difference between an investment's actual returns and its expected performance, given its level of risk (as measured by beta). A positive alpha figure indicates that the investment has performed better than expected. In contrast, a negative alpha indicates that an investment has underperformed, given the expectations established by the investment's beta. Many investors see alpha as a measurement of the value added or subtracted by an investment's manager. |
| Beta- Beta is a measure of an investment's sensitivity to market movements. It measures the relationship between an investment's excess return over T-bills and the excess return of the benchmark index. By definition, the beta of the benchmark (in this case, an index) is 1.00. Accordingly, an investment with a 1.10 beta has performed 10% better than its benchmark index - after deducting the T-bill rate - than the index in up markets and 10% worse in down markets, assuming all other factors remain constant. Conversely, a beta of 0.85 indicates that the investment has performed 15% worse than the index in up markets and 15% better in down markets. A low beta does not imply that the investment has a low level of volatility, though; rather, a low beta means only that the investment's returns do not move in step with the chosen index. |
| R-Squared- R-squared ranges from 0 to 100 and reveals how closely an investment's returns track those of a benchmark index. An R-squared of 100 means that all movements of an investment are completely correlated with movements in the index. For example, mutual funds that invest only in S&P 500 stocks will have an R-squared very close to 100 relative to the S&P 500 index. Conversely, a low R-squared indicates that very few of the investment's movements are explained by movements in its benchmark index. |
| Standard Deviation- Standard deviation is a statistical measure of how much an investment's returns are likely to fluctuate. These ranges assume that an investment's returns fall in a typical bell-shaped distribution. In any case, the greater the standard deviation, the greater the volatility. When an investment has a high standard deviation, its range of performance has been very wide, indicating that there is a greater potential for volatility. |
| Mean- Represents the annualized total return for a fund over a certain time period; usually in years. |
| Sharpe Ratio- Measures how an investment balances risks and rewards. The higher the Sharpe ratio, the better the investment's historical risk-adjusted performance. The Sharpe ratio is a measure developed by Nobel Laureate William Sharpe to evaluate how an investment balances risks and rewards. The higher the Sharpe ratio, the better the investment's historical risk-adjusted performance. It is calculated using standard deviation and excess return to determine reward per unit of risk. First, the average monthly return of the 90-day Treasury bill (over the defined time period) is subtracted from the investment's average monthly return. The difference in total return represents the investment's excess return beyond that of the 90-day Treasury bill, a risk-free investment. An arithmetic annualized excess return is then calculated by multiplying this monthly return by 12. To show a relationship between excess return and risk, this number is divided by the standard deviation of the investment's annualized excess returns. |
| Excess Return- The difference between an investment option's return and the return of an external standard such as a passive index. |
| Tracking Error- Also known as "excess risk," defined as the standard deviation or volatility of excess returns. |
| Information Ratio- A risk-adjusted measure commonly used to evaluate an active manager's involvement skill. It's defined as the manager's excess return divided by the variability or standard deviation of the excess return. |
 © 2024 Morningstar, Inc. All Rights Reserved. Part of the mutual fund data 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. Investment options are subject to investment risk. Shares or unit values will fluctuate and investments, when redeemed, may be worth more or less than their original cost. The initial offering of Executive Variable Universal Life (Executive VUL) was May 28, 2002. The initial offering of Benefit Variable Universal Life (Benefit VUL) was September, 2002. The initial offering of PrinFlex® Life was February 7, 1997. The initial offering of Principal Variable Universal Life (VUL) Income was August 23, 2004. The initial offering of Principal Variable Universal Life (VUL) Income Plus, the VUL Income with the Surrender Charge Adjustment Rider, was February 18, 2006. The initial offering of Principal Variable Universal Life (VUL) Accumulator II was February 11, 2003. The initial offering of Variable Universal Life Accumulator was November 19, 2001. The initial offering of Flex Variable Life Insurance was November 1, 1988. The initial offering of Survivorship Variable Universal Life was July 1, 1999. The initial offering of The Principal Variable Annuity was June 16, 1994. The initial offering of Principal Freedom Variable Annuity was April 30, 1999. The initial offering of The Principal Investment Plus Variable Annuity was January 4, 2005. The initial offering of Principal Freedom Variable Annuity 2 was September 18, 2006. The initial offering of Principal Variable Universal Life (VUL) Income II was 07/03/2008. The initial offering of Executive Variable Universal Life II (Executive VUL II) was October 3, 2008. The initial offering of Benefit Variable Universal Life II (Benefit VUL II) was October 3, 2008. Some of the underlying funds into which the divisions invest were offered prior to these dates. Inception dates are noted. This material is authorized for distribution to prospective investors only when preceded or accompanied by a current prospectus for the Variable Universal Life product or Variable Annuity product and the underlying investment options. Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Securities offered through Principal Securities, Inc., 800-247-9988, member SIPC. Principal National, Principal Life, and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392. Not FDIC Insured May Lose Value - Not a Deposit - No Bank Guarantee Not Insured by any Federal Government Agency |
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| Fees and expenses are only one of several factors that participants and beneficiaries should consider when making investment decisions. The cumulative effect of fees and expenses can substantially reduce the growth of a participant's or beneficiary's retirement account. Participants and beneficiaries can visit the Employee Benefit Security Administration's website for an example demonstrating the long-term effect of fees and expenses. |
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