ck0000012601-20231231
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| PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
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| (“PVC”
or the “Registrant”) |
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| Class
1 Shares |
| Class
2 Shares |
| Class
3 Shares |
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The
date of this Prospectus is May 1,
2024. |
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| ACCOUNTS
OF THE REGISTRANT |
| (each,
a "Fund" and, together, the "Funds") |
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| Equity
Accounts |
| Asset
Allocation Accounts |
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Blue
Chip Account (Class 3) |
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Diversified
Balanced Account (Class 1, Class 2, &
Class
3) |
|
Diversified
International Account (Class 1) |
|
Diversified
Balanced Adaptive Allocation Account (Class 2 &
Class
3) |
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Equity
Income Account (Class 1, Class 2, &
Class
3) |
|
Diversified
Balanced Strategic Allocation Account (Class 2 &
Class
3) |
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Global
Emerging Markets Account (Class 1) |
|
Diversified
Growth Account (Class 2 & Class
3) |
|
LargeCap
Growth Account I (Class 1) |
|
Diversified
Growth Adaptive Allocation Account (Class 2 &
Class
3) |
|
LargeCap
S&P 500 Index Account (Class 1 & Class
2) |
|
Diversified
Growth Strategic Allocation Account (Class 2 &
Class
3) |
|
LargeCap
S&P 500 Managed Volatility Index Account (Class
1) |
|
Diversified
Income Account (Class 2 & Class
3) |
|
MidCap
Account (Class 1 & Class
2) |
| Principal
LifeTime Accounts |
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Principal
Capital Appreciation Account (Class 1 & Class
2) |
|
Strategic
Income Account (Class 1) |
|
Real
Estate Securities Account (Class 1 & Class
2) |
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2020
Account (Class 1) |
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SmallCap
Account (Class 1 & Class
2) |
|
2030
Account (Class 1) |
|
U.S.
LargeCap Buffer January Account (Class 2) |
|
2040
Account (Class 1) |
|
U.S.
LargeCap Buffer April Account (Class 2) |
|
2050
Account (Class 1) |
|
U.S.
LargeCap Buffer July Account (Class 2) |
|
2060
Account (Class 1) |
|
U.S.
LargeCap Buffer October Account (Class 2) |
| Strategic
Asset Management Portfolios (the "SAM Portfolios") |
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SAM
Balanced Portfolio (Class 1 & Class
2) |
| Fixed-Income
Accounts |
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SAM
Conservative Balanced Portfolio (Class 1 & Class
2) |
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Bond
Market Index Account (Class 1) |
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SAM
Conservative Growth Portfolio (Class 1 & Class
2) |
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Core
Plus Bond Account (Class 1) |
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SAM
Flexible Income Portfolio (Class 1 & Class
2) |
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Government
& High Quality Bond Account (Class 1) |
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SAM
Strategic Growth Portfolio (Class 1 & Class
2) |
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Short-Term
Income Account (Class 1) |
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| Effective
May 1, 2024, the Diversified Balanced Managed Volatility Account changed
its name to Diversified Balanced Strategic Allocation Account; the
Diversified Balanced Volatility Control Account changed its name to
Diversified Balanced Adaptive Allocation Account; the Diversified Growth
Managed Volatility Account changed its name to Diversified Growth
Strategic Allocation Account; and the Diversified Growth Volatility
Control Account changed its name to Diversified Growth Adaptive Allocation
Account. |
This
Prospectus describes a mutual fund organized by Principal Life Insurance Company
(“Principal Life”). The Registrant provides a choice of investment
objectives through the Funds listed above.
The
Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
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TABLE
OF CONTENTS |
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| PAGE |
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FUND
SUMMARIES |
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| Blue
Chip Account |
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| Bond
Market Index Account |
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| Core
Plus Bond Account |
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| Diversified
Balanced Account |
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| Diversified
Balanced Adaptive Allocation Account |
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| Diversified
Balanced Strategic Allocation Account |
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| Diversified
Growth Account |
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| Diversified
Growth Adaptive Allocation Account |
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| Diversified
Growth Strategic Allocation Account |
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| Diversified
Income Account |
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| Diversified
International Account |
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| Equity
Income Account |
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| Global
Emerging Markets Account |
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| Government
& High Quality Bond Account |
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| LargeCap
Growth Account I |
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| LargeCap
S&P 500 Index Account |
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| LargeCap
S&P 500 Managed Volatility Index Account |
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| MidCap
Account |
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| Principal
Capital Appreciation Account |
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| Principal
LifeTime Strategic Income Account |
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| Principal
LifeTime 2020 Account |
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| Principal
LifeTime 2030 Account |
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| Principal
LifeTime 2040 Account |
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| Principal
LifeTime 2050 Account |
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| Principal
LifeTime 2060 Account |
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| Real
Estate Securities Account |
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| SAM
(Strategic Asset Management) Balanced Portfolio |
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| SAM
(Strategic Asset Management) Conservative Balanced Portfolio |
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| SAM
(Strategic Asset Management) Conservative Growth Portfolio |
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| SAM
(Strategic Asset Management) Flexible Income Portfolio |
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| SAM
(Strategic Asset Management) Strategic Growth Portfolio |
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| Short-Term
Income Account |
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| SmallCap
Account |
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| U.S.
LargeCap Buffer January Account |
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| U.S.
LargeCap Buffer April Account |
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| U.S.
LargeCap Buffer July Account |
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| U.S.
LargeCap Buffer October Account |
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| ADDITIONAL
INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS |
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| PORTFOLIO
HOLDINGS INFORMATION |
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| MANAGEMENT
OF THE FUNDS |
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| PRICING
OF FUND SHARES |
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| PURCHASE
OF FUND SHARES |
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| SALE
OF FUND SHARES |
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| DIVIDENDS
AND DISTRIBUTIONS |
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| FREQUENT
PURCHASES AND REDEMPTIONS |
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TABLE
OF CONTENTS |
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| PAGE |
| TAX
CONSIDERATIONS |
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| ONGOING
FEES |
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| DISTRIBUTION
PLANS AND INTERMEDIARY COMPENSATION |
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| FUND
ACCOUNT INFORMATION |
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| APPENDIX
A – DESCRIPTION OF BOND RATINGS |
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| APPENDIX
B – FINANCIAL HIGHLIGHTS |
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| ADDITIONAL
INFORMATION |
C |
BLUE CHIP
ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
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| Share
Class |
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| Class
3 |
| Management
Fees |
0.60% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
| Other
Expenses |
0.31% |
| Total
Annual Fund Operating Expenses |
1.16% |
|
Expense
Reimbursement(1) |
(0.11)% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
1.05% |
(1) Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 1.05% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal
year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
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| 1
year |
3
years |
5
years |
10
years |
| Blue
Chip Account - Class 3 |
$107 |
$358 |
$628 |
$1,399 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
8.8% of the average
value of its portfolio.
Principal Investment
Strategies
Under normal
circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies with large
market capitalizations at the time of purchase that, in the opinion of Principal
Global Investors, LLC (“PGI”), the Fund’s investment advisor, display
characteristics of a “blue chip” company. For
this Fund, companies with large market capitalizations are those with market
capitalizations similar to companies in the Russell 1000®
Growth Index (as of March 31, 2024, this was between approximately $794.3
million and $3.1 trillion).
In PGI’s view, “blue chip” companies typically display some or all of the
following characteristics: (1) large, well-established, and financially sound
companies; (2) issuers with market capitalizations in the billions; (3) are
considered market leaders or among the top three companies in its sector; and
(4) commonly considered household names. The Fund tends to focus on securities
of companies that show potential for growth of capital as well as an expectation
for above-average earnings.
In
selecting securities in which to invest, PGI uses a bottom-up, fundamental
process, focusing on a fundamental analysis of individual companies. The Fund
invests in securities of foreign companies. The
Fund invested significantly in industries within the financials and information
technology sectors as of March 31, 2024.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if
growth companies do not increase their earnings at a rate expected by investors,
the market price of their stock may decline significantly, even if earnings show
an absolute increase. Growth company stocks also typically lack the dividend
yield that can lessen price declines in market
downturns.
Financials
Sector Risk. A fund that invests significantly in financial services companies may
be more susceptible to adverse economic or regulatory occurrences affecting
financial services companies. Financial companies may be adversely affected in
certain market cycles, including periods of rising interest rates, which may
restrict the availability and increase the cost of capital, and declining
economic conditions, which may cause credit losses due to financial difficulties
of borrowers. Because many types of financial companies are especially
vulnerable to these economic cycles, the Fund’s investments in these companies
may lose significant value during such periods.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result of:
political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Information
Technology Sector Risk. Companies in the information technology sector may face dramatic and
often unpredictable changes in growth rates and are particularly vulnerable to
changes in technology product cycles, product obsolescence, government
regulation, and competition, both domestically and internationally. Such
companies are heavily dependent on patent and intellectual property rights, the
loss or impairment of which may adversely affect
profitability.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(December 9, 2020).
Total Returns as of
December 31
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| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
17.47% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(20.36)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
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| 1
Year |
Life
of Fund |
| Blue Chip
Account - Class 3 |
39.09% |
7.11% |
|
Russell 1000
Index (reflects no deduction for
fees, expenses, or taxes) |
26.53% |
9.39% |
|
Russell 1000
Growth Index (reflects no deduction for
fees, expenses, or taxes) |
42.68% |
9.50% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 1000 Index in order to meet
the revised definition of “broad-based securities market index.”
The Russell 1000 Growth Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•K.
William Nolin (since 2020), Portfolio Manager
•Tom
Rozycki (since 2020), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
BOND MARKET INDEX
ACCOUNT
Objective
The
Fund seeks to provide current income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
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| Share
Class |
|
| Class
1 |
| Management
Fees |
0.14% |
| Other
Expenses |
0.01% |
| Total
Annual Fund Operating Expenses |
0.15% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
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| 1
year |
3
years |
5
years |
10
years |
| Bond
Market Index Account - Class 1 |
$15 |
$48 |
$85 |
$192 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund's portfolio turnover rate was
47.4% of the average
value of its portfolio.
Principal Investment
Strategies
Under normal
circumstances, the Fund uses a passive investment approach known as “sampling”
to invest at least 80% of its net assets, plus any borrowings for investment
purposes, in investments designed to track the Bloomberg U.S. Aggregate Bond
Index (the “Index”) at the time of purchase. The Index is
composed of investment-grade, fixed-rate debt issues with maturities of one year
or more, including government securities, corporate securities, and asset-backed
and mortgage-backed securities (securitized products). As
of March 31, 2024, the Index was composed of 13,530 issues. The Index is
rebalanced monthly to reflect securities that have dropped out of or entered the
Index in the preceding month. Generally, the Fund makes corresponding changes to
its portfolio shortly after Index changes are made public. Because of the
practical difficulties and expense of purchasing all of the securities in the
Index, the Fund does not purchase all of the securities in the Index. Instead,
the Fund uses a sampling methodology to purchase securities with generally the
same risk and return characteristics of the Index. Under normal circumstances,
the Fund maintains an average portfolio duration that is in line with the
duration of the Index, which as of March 31, 2024 was 6.11 years.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As
of March 31, 2024, approximately 26% of the bonds represented in the Index were
U.S. agency mortgage-backed pass-through securities.
U.S. agency mortgage-backed pass-through securities are securities issued by
entities such as the Government National Mortgage Association (GNMA) and the
Federal National Mortgage Association (FNMA) that are backed by pools of
mortgages.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
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|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
6.70% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2022 |
(5.86)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Bond Market
Index Account - Class 1 |
5.51% |
0.92% |
1.57% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Jeff
Callahan (since 2020), Portfolio Manager
•Darryl
Trunnel (since 2019), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
CORE PLUS BOND
ACCOUNT
Objective
The
Fund seeks to provide current income and, as a
secondary objective, capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.48% |
| Other
Expenses |
0.02% |
| Total
Annual Fund Operating Expenses |
0.50% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Core
Plus Bond Account - Class 1 |
$51 |
$160 |
$280 |
$628 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
143.3% of the average
value of its portfolio.
Principal Investment
Strategies
Under normal
circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in bonds or other debt securities at the
time of purchase. Such investments include securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities;
asset-backed securities and mortgage-backed securities (securitized products,
including collateralized mortgage obligations); corporate bonds; and foreign
securities, including emerging market securities. The Fund invests in
investment-grade securities and, with respect to up to 25% of its assets, in
below-investment-grade securities (sometimes called “high yield” or “junk”),
which are rated at the time of purchase Ba1 or lower by Moody’s Investors
Service, Inc. (“Moody’s”) and BB+ or lower by S&P Global Ratings (“S&P
Global”). If the security has been rated by only one of the rating agencies,
that rating will determine the security’s rating; if the security is rated
differently by the rating agencies, the highest rating will be used; and if the
security has not been rated by either of the rating agencies, those selecting
such investments will determine the security’s quality. The Fund is not managed
to a particular maturity. Under normal circumstances, the Fund maintains an
average portfolio duration that is within ±25% of the duration of the Bloomberg
U.S. Aggregate Bond Index, which as of March 31, 2024 was 6.11 years. The Fund’s
strategies may result in the active and frequent trading of the Fund’s portfolio
securities.
The Fund enters into dollar roll transactions, which may involve
leverage. The Fund invests in derivatives, including Treasury futures and
interest rate swaps to manage the fixed-income exposure (including for hedging
purposes) and credit default swaps to increase or decrease, in an efficient
manner, exposures to certain sectors or individual issuers. A derivative is a
financial arrangement, the value of which is derived from, or based on, a
traditional security, asset, or market index.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Credit
Default Swaps. Credit default swaps involve special risks in addition to those
associated with swaps generally because they are difficult to value, are highly
susceptible to liquidity and credit risk, and generally pay a return to the
party that has paid the premium only in the event of an actual default by the
issuer of the underlying obligation (as opposed to a credit downgrade or other
indication of financial difficulty). The protection “buyer” in a credit default
contract may be obligated to pay the protection “seller” an up-front payment or
a periodic stream of payments over the term of the contract, provided,
generally, that no credit event on a reference obligation has occurred. If a
credit event occurs, the seller generally must pay the buyer the “par value”
(i.e., full notional value) of the swap in exchange for an equal face amount of
deliverable obligations of the reference entity described in the swap, or the
seller may be required to deliver the related net cash amount, if the swap is
cash settled. The Fund may be either the buyer or seller in the
transaction.
•Futures
and Swaps. These derivative instruments involve
specific risks, including: the imperfect correlation between the change in
market value of the instruments held by the fund and the price of the
instruments; possible lack of a liquid secondary market for an instrument and
the resulting inability to close it when desired; counterparty risk; and if the
fund has insufficient cash, it may have to sell securities from its portfolio to
meet any applicable daily variation margin
requirements.
Emerging
Markets Risk. Investments
in emerging markets may have more risk than those in developed markets because
the emerging markets are less developed and more illiquid. Emerging markets can
also be subject to increased social, economic, regulatory, and political
uncertainties and can be extremely volatile. The U.S. Securities and Exchange
Commission, the U.S. Department of Justice, and other U.S. authorities may be
limited in their ability to pursue bad actors in emerging markets, including
with respect to fraud.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result of:
political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
High
Portfolio Turnover Risk. High portfolio turnover (more than 100%) caused by active and
frequent trading of portfolio securities may result in accelerating the
realization of taxable gains and losses, lower fund performance, and increased
brokerage costs.
High
Yield Securities Risk. High yield fixed-income securities (commonly referred to as “junk
bonds”) are subject to greater credit quality risk than higher rated
fixed-income securities and should be considered speculative.
Leverage
Risk. Leverage created by borrowing or certain types of transactions or
investments may impair the fund’s liquidity, cause it to liquidate positions at
an unfavorable time, increase volatility of the fund’s net asset value, or
diminish the fund’s performance.
Portfolio
Duration Risk. Portfolio
duration is a measure of the expected life of a fixed-income security and its
sensitivity to changes in interest rates. The longer a fund’s average portfolio
duration, the more sensitive the fund will be to changes in interest rates,
which means funds with longer average portfolio durations may be more volatile
than those with shorter durations.
Real
Estate Securities Risk. Investing in real estate securities subjects the fund to the risks
associated with the real estate market (which are similar to the risks
associated with direct ownership in real estate), including declines in real
estate values, loss due to casualty or condemnation, property taxes, interest
rate changes, increased expenses, cash flow of underlying real estate assets,
regulatory changes (including zoning, land use, and rents), and environmental
problems, as well as to the risks related to the management skill and
creditworthiness of the issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
7.36% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2022 |
(6.01)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Core Plus
Bond Account - Class 1 |
5.34% |
1.61% |
2.01% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•William
C. Armstrong (since 2000), Portfolio Manager
•Bryan
C. Davis (since 2022), Portfolio Manager
•Michael
Goosay (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED BALANCED
ACCOUNT
Objective
The
Fund seeks to provide as high a level of total return (consisting of reinvested
income and capital appreciation) as is consistent with reasonable
risk.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
Class
3 |
| Management
Fees |
0.05% |
0.05% |
0.05% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
0.25% |
| Other
Expenses |
0.00% |
0.00% |
0.15% |
| Acquired
Fund Fees and Expenses |
0.18% |
0.18% |
0.18% |
| Total
Annual Fund Operating Expenses |
0.23% |
0.48% |
0.63% |
|
Expense
Reimbursement(1) |
N/A |
N/A |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.23% |
0.48% |
0.63% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.48% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal
year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the same.
The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Balanced Account - Class 1 |
$24 |
$74 |
$130 |
$293 |
| Diversified
Balanced Account - Class 2 |
49 |
154 |
269 |
604 |
| Diversified
Balanced Account - Class 3 |
64 |
202 |
351 |
786 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
13.9% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund
generally allocates approximately 50% of its assets to equity index Underlying
Funds to gain broad market capitalization exposure to both U.S. and non-U.S
investments, including investments in smaller companies, and approximately 50%
to fixed-income index Underlying Funds for intermediate duration fixed-income
exposure. The asset class diversification of the Fund is
designed to moderate overall price volatility and cushion severe losses in any
one investment sector.
The
Fund’s assets are allocated among Underlying Funds in accordance with the Fund’s
investment objective and based on qualitative and quantitative analyses and the
relative market valuations of the Underlying Funds. Without shareholder
approval, Principal Global Investors, LLC (“PGI”), the Fund’s investment
advisor, may alter the percentage ranges and/or substitute or remove Underlying
Funds when it deems appropriate. The Fund is rebalanced monthly.
The
Underlying Funds utilize derivative strategies. A derivative is a financial
arrangement, the value of which is derived from, or based on, a traditional
security, asset, or market index. Specifically, the Underlying Funds invest in
equity index futures and ETFs to manage the equity
exposure.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 1 shares (May 1, 2017) and Class 3
shares (December 9, 2020), the performance shown in the table for these newer
classes is that of the Fund’s Class 2 shares, adjusted to reflect the respective
fees and expenses of each class. However, where the adjustment for fees and
expenses results in performance for a newer class that is higher than the
historical performance of the Class 2 shares, the historical performance of
Class 2 shares is used. These adjustments result in performance for such periods
that is no higher than the historical performance of the Class 2
shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
11.21% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(10.31)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
Balanced Account - Class 1 |
14.17% |
7.63% |
6.03% |
| Diversified
Balanced Account - Class 2 |
13.86% |
7.37% |
5.85% |
| Diversified
Balanced Account - Class 3 |
13.72% |
7.21% |
5.69% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Diversified
Balanced Custom Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
14.37% |
7.79% |
6.36% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.27% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.66% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Diversified Balanced Custom Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the custom index is also shown. The
weightings of the Diversified Balanced Custom Index are as follows: 50%
Bloomberg U.S. Aggregate Bond Index, 35% S&P 500 Index, 7% MSCI EAFE Index
NTR, 4% S&P MidCap 400 Index, and 4% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED BALANCED
ADAPTIVE ALLOCATION ACCOUNT
Objective
The
Fund seeks to provide as high a level of total return (consisting of reinvested
income and capital appreciation) as is consistent with reasonable risk, while
seeking to control volatility.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.12% |
0.12% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.01% |
0.16% |
| Acquired
Fund Fees and Expenses |
0.15% |
0.15% |
| Total
Annual Fund Operating Expenses |
0.53% |
0.68% |
|
Expense
Reimbursement(1) |
N/A% |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.53% |
0.68% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.55% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the same.
The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Balanced Adaptive Allocation Account - Class 2 |
$54 |
$170 |
$296 |
$665 |
| Diversified
Balanced Adaptive Allocation Account - Class 3 |
69 |
218 |
379 |
847 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
35.7% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund also
invests in cash and cash equivalents (as investments and/or to serve as margin
or collateral for derivatives positions) and derivative instruments (primarily
exchange-traded futures). A derivative is a financial arrangement, the value of
which is derived from, or based on, a traditional security, asset, or market
index.
The
Fund uses a systematic approach to identify volatility signals in the market and
determine whether equity market volatility is below or above average. During
periods of lower equity market volatility, the Fund generally allocates
approximately 50% of its assets to equity index Underlying Funds and long
positions in ETFs and exchange-traded futures to gain broad market
capitalization exposure to both U.S. and non-U.S. equity investments, including
investments in smaller companies, and approximately 50% to fixed-income
Underlying Funds for intermediate duration fixed-income exposure.
During
periods of higher equity market volatility, the Fund implements a volatility
control strategy to hedge its equity exposure. Specifically, the Fund invests in
cash and/or cash equivalents, such as high-quality, short-term money market
investments, and/or takes short positions in exchange-traded
futures.
The Fund’s assets are allocated among Underlying Funds in accordance
with the Fund’s investment objective and based on qualitative and quantitative
analyses and the relative market valuations of the Underlying Funds. Without
shareholder approval, Principal Global Investors, LLC (“PGI”), the Fund’s
investment advisor, may alter the percentage ranges and strategy allocations
and/or substitute or remove Underlying Funds when it deems appropriate. For
example, during periods of higher equity market volatility, the allocations to
the equity Underlying Funds might be reduced. The asset class diversification of
the Fund is designed to moderate overall price volatility and cushion severe
losses in any one investment sector.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it does
not own with the hope of purchasing the same security at a later date at a lower
price. A fund may also enter into a short derivative position through a futures
contract or swap agreement. If the price of the security or derivative has
increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(March 30, 2017).
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
9.18% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(8.01)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
Life
of Fund |
| Diversified
Balanced Adaptive Allocation Account - Class 2 |
13.08% |
6.16% |
5.15% |
| Diversified
Balanced Adaptive Allocation Account - Class 3 |
12.83% |
6.01% |
5.00% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.21% |
|
Diversified
Balanced Adaptive Allocation Custom Index (except
as noted for MSCI EAFE Index NTR, reflects no deduction for fees,
expenses, or taxes) |
14.37% |
7.79% |
6.53% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.21% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.95% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
5.99% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.20% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.63% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Diversified Balanced Adaptive
Allocation Custom Index (f/k/a Diversified Balanced Volatility Control Custom
Index) is included as an additional index for the Fund as it shows how the
Fund’s performance compares with returns of indices of funds with similar
investment objectives. Performance of each component of the custom index is also
shown. The weightings of the Diversified Balanced Adaptive Allocation Custom
Index (f/k/a Diversified Balanced Volatility Control Custom Index) are as
follows: 50% Bloomberg U.S. Aggregate Bond Index, 35% S&P 500 Index, 7% MSCI
EAFE Index NTR, 4% S&P MidCap 400 Index, and 4% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2018), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED BALANCED
STRATEGIC ALLOCATION ACCOUNT
Objective
The
Fund seeks to provide as high a level of total return (consisting of reinvested
income and capital appreciation) as is consistent with reasonable risk, with an
emphasis on managing volatility.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.05% |
0.05% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.01% |
0.16% |
| Acquired
Fund Fees and Expenses |
0.24% |
0.24% |
| Total
Annual Fund Operating Expenses |
0.55% |
0.70% |
|
Expense
Reimbursement
(1) |
0.00% |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.55% |
0.70% |
(1)
Principal Global
Investors, LLC ("PGI"), the investment advisor, has contractually agreed to
limit the Fund’s expenses by paying, if necessary, expenses normally payable by
the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.31% for Class 2 and 0.48% for Class 3 shares. It is expected that the
expense limits will continue through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limits
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
|
Diversified
Balanced Strategic Allocation Account - Class 2 |
$56 |
$176 |
$307 |
$689 |
| Diversified
Balanced Strategic Allocation Account - Class 3 |
72 |
224 |
390 |
871 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
16.4% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund
generally allocates approximately 50% of its assets to equity index Underlying
Funds to gain broad market capitalization exposure to both U.S. and non-U.S
investments, including investments in smaller companies, and approximately 50%
to fixed-income index Underlying Funds for intermediate duration fixed-income
exposure. The asset class diversification of the Fund is
designed to moderate overall price volatility and cushion severe losses in any
one investment sector.
The
Fund’s assets are allocated among Underlying Funds in accordance with the Fund’s
investment objective and based on qualitative and quantitative analyses and the
relative market valuations of the Underlying Funds. Without shareholder
approval, Principal Global Investors, LLC (“PGI”), the Fund’s investment
advisor, may alter the percentage ranges and/or substitute or remove Underlying
Funds when it deems appropriate. The Fund is rebalanced monthly.
The
Underlying Funds utilize derivative strategies. A derivative is a financial
arrangement, the value of which is derived from, or based on, a traditional
security, asset, or market index. Specifically, the Underlying Funds invest in
equity index futures and ETFs to manage the equity exposure, as well as vertical
call spreads and vertical put spreads as part of an active strategy intended to
reduce volatility. Vertical spreads are the simultaneous purchase and sale of
two options of the same type with the same expiration date but two different
strike prices. The strike price is the fixed price at which the owner of the
option can buy (in the case of a call), or sell (in the case of a put), the
underlying security.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options
involve specific risks, including: the imperfect correlation between the change
in market value of the instruments held by the Fund and the price of the
options; counterparty risk; difference in trading hours for the options markets
and the markets for the underlying securities (rate movements can take place in
the underlying markets that cannot be reflected in the options markets); and an
insufficient liquid secondary market for particular
options.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio
duration is a measure of the expected life of a fixed-income security and its
sensitivity to changes in interest rates. The longer a fund’s average portfolio
duration, the more sensitive the fund will be to changes in interest rates,
which means funds with longer average portfolio durations may be more volatile
than those with shorter durations.
Real
Estate Securities Risk. Investing in real estate securities subjects the fund to the risks
associated with the real estate market (which are similar to the risks
associated with direct ownership in real estate), including declines in real
estate values, loss due to casualty or condemnation, property taxes, interest
rate changes, increased expenses, cash flow of underlying real estate assets,
regulatory changes (including zoning, land use, and rents), and environmental
problems, as well as to the risks related to the management skill and
creditworthiness of the issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
10.73% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(9.89)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
Balanced Strategic Allocation Account - Class 2 |
13.09% |
6.92% |
5.49% |
| Diversified
Balanced Strategic Allocation Account - Class 3 |
13.04% |
6.78% |
5.34% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Diversified
Balanced Strategic Allocation Custom Index (except
as noted for MSCI EAFE Index NTR, reflects no deduction for fees,
expenses, or taxes) |
14.37% |
7.79% |
6.36% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.27% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.66% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Diversified Balanced Strategic
Allocation Custom Index (f/k/a Diversified Balanced Managed Volatility Custom
Index) is included as an additional index for the Fund as it shows how the
Fund’s performance compares with returns of indices of funds with similar
investment objectives. Performance of each component of the custom index is also
shown. The weightings of the Diversified Balanced Strategic Allocation Custom
Index (f/k/a Diversified Balanced Managed Volatility Custom Index) are as
follows: 50% Bloomberg U.S. Aggregate Bond Index, 35% S&P 500 Index, 7% MSCI
EAFE Index NTR, 4% S&P MidCap 400 Index, and 4% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED GROWTH
ACCOUNT
Objective
The
Fund seeks to provide long-term capital
appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.05% |
0.05% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.00% |
0.15% |
| Acquired
Fund Fees and Expenses |
0.19% |
0.19% |
| Total
Annual Fund Operating Expenses |
0.49% |
0.64% |
|
Expense
Reimbursement(1) |
N/A |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.49% |
0.64% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.48% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal
year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the same.
The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Growth Account - Class 2 |
$50 |
$157 |
$274 |
$616 |
| Diversified
Growth Account - Class 3 |
65 |
205 |
357 |
798 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
13.7% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund
generally allocates approximately 65% of its assets to equity index Underlying
Funds to gain broad market capitalization exposure to both U.S. and non-U.S
investments, including investments in smaller companies, and approximately 35%
to fixed-income index Underlying Funds for intermediate duration fixed-income
exposure. The asset class diversification of the Fund is
designed to moderate overall price volatility and cushion severe losses in any
one investment sector.
The
Fund’s assets are allocated among Underlying Funds in accordance with the Fund’s
investment objective and based on qualitative and quantitative analyses and the
relative market valuations of the Underlying Funds. Without shareholder
approval, Principal Global Investors, LLC (“PGI”), the Fund’s investment
advisor, may alter the percentage ranges and/or substitute or remove Underlying
Funds when it deems appropriate. The Fund is rebalanced monthly.
The
Underlying Funds utilize derivative strategies. A derivative is a financial
arrangement, the value of which is derived from, or based on, a traditional
security, asset, or market index. Specifically, the Underlying Funds invest in
equity index futures and ETFs to manage the equity
exposure.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result of:
political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
13.81% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(13.22)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
Growth Account - Class 2 |
16.60% |
9.24% |
7.08% |
| Diversified
Growth Account - Class 3 |
16.40% |
9.07% |
6.92% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
Diversified
Growth Custom Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
17.07% |
9.68% |
7.59% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.27% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.66% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The Diversified Growth Custom Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the custom index is also shown. The
weightings of the Diversified Growth Custom Index are as follows: 45% S&P
500 Index, 35% Bloomberg U.S. Aggregate Bond Index, 10% MSCI EAFE Index NTR, 5%
S&P MidCap 400 Index, and 5% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED GROWTH
ADAPTIVE ALLOCATION ACCOUNT
Objective
The
Fund seeks to provide long-term capital appreciation, while seeking to control
volatility.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.12% |
0.12% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.00% |
0.15% |
| Acquired
Fund Fees and Expenses |
0.16% |
0.16% |
| Total
Annual Fund Operating Expenses |
0.53% |
0.68% |
|
Expense
Reimbursement(1) |
N/A% |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.53% |
0.68% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.55% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the same.
The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Growth Adaptive Allocation Account - Class 2 |
$54 |
$170 |
$296 |
$665 |
| Diversified
Growth Adaptive Allocation Account - Class 3 |
69 |
218 |
379 |
847 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
38.6% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund also
invests in cash and cash equivalents (as investments and/or to serve as margin
or collateral for derivatives positions) and derivative instruments (primarily
exchange-traded futures). A derivative is a financial arrangement, the value of
which is derived from, or based on, a traditional security, asset, or market
index.
The
Fund uses a systematic approach to identify volatility signals in the market and
determine whether equity market volatility is below or above average. During
periods of lower equity market volatility, the Fund generally allocates
approximately 65% of its assets to equity index Underlying Funds and long
positions in ETFs and exchange-traded futures to gain broad market
capitalization exposure to both U.S. and non-U.S. equity investments, including
investments in smaller companies, and approximately 35% to fixed-income
Underlying Funds for intermediate duration fixed-income exposure.
During
periods of higher equity market volatility, the Fund implements a volatility
control strategy to hedge its equity exposure. Specifically, the Fund invests in
cash and/or cash equivalents, such as high-quality, short-term money market
investments, and/or takes short positions in exchange-traded
futures.
The Fund’s assets are allocated among Underlying Funds in accordance
with the Fund’s investment objective and based on qualitative and quantitative
analyses and the relative market valuations of the Underlying Funds. Without
shareholder approval, Principal Global Investors, LLC (“PGI”), the Fund’s
investment advisor, may alter the percentage ranges and strategy allocations
and/or substitute or remove Underlying Funds when it deems appropriate. For
example, during periods of higher equity market volatility, the allocations to
the equity Underlying Funds might be reduced. The asset class diversification of
the Fund is designed to moderate overall price volatility and cushion severe
losses in any one investment sector.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it does
not own with the hope of purchasing the same security at a later date at a lower
price. A fund may also enter into a short derivative position through a futures
contract or swap agreement. If the price of the security or derivative has
increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the futures contract; possible
lack of a liquid secondary market for a futures contract and the resulting
inability to close a futures contract when desired; counterparty risk; and if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result of:
political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(March 30,
2017).
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
9.81% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(8.91)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
Life
of Fund |
| Diversified
Growth Adaptive Allocation Account - Class 2 |
15.33% |
7.72% |
6.37% |
| Diversified
Growth Adaptive Allocation Account - Class 3 |
15.19% |
7.57% |
6.23% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.95% |
|
Diversified
Growth Adaptive Allocation Custom Index (except
as noted for MSCI EAFE Index NTR, reflects no deduction for fees,
expenses, or taxes) |
17.07% |
9.68% |
7.99% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.95% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.21% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
5.99% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.20% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.63% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The Diversified Growth Adaptive
Allocation Custom Index (f/k/a Diversified Growth Volatility Control Custom
Index) is included as an additional index for the Fund as it shows how the
Fund’s performance compares with returns of indices of funds with similar
investment objectives. Performance of each component of the custom index is also
shown. The weightings of the Diversified Growth Adaptive Allocation Custom Index
(f/k/a Diversified Growth Volatility Control Custom Index) are as follows: 45%
S&P 500 Index, 35% Bloomberg U.S. Aggregate Bond Index, 10% MSCI EAFE Index
NTR, 5% S&P MidCap 400 Index, and 5% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2018), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED GROWTH
STRATEGIC ALLOCATION ACCOUNT
Objective
The
Fund seeks to provide long-term capital appreciation, with an emphasis on
managing volatility.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.05% |
0.05% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.01% |
0.16% |
| Acquired
Fund Fees and Expenses |
0.27% |
0.27% |
| Total
Annual Fund Operating Expenses |
0.58% |
0.73% |
|
Expense
Reimbursement(1) |
N/A |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.58% |
0.73% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.48% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund’s operating expenses remain the same.
The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Growth Strategic Allocation Account - Class 2 |
$59 |
$186 |
$324 |
$726 |
| Diversified
Growth Strategic Allocation Account - Class 3 |
75 |
233 |
406 |
906 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
15.6% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund generally
allocates approximately 65% of its assets to equity index Underlying Funds to
gain broad market capitalization exposure to both U.S. and non-U.S investments,
including investments in smaller companies, and approximately 35% to
fixed-income index Underlying Funds for intermediate duration fixed-income
exposure. The asset class diversification of the Fund is designed to moderate
overall price volatility and cushion severe losses in any one investment
sector.
The
Fund’s assets are allocated among Underlying Funds in accordance with the Fund’s
investment objective and based on qualitative and quantitative analyses and the
relative market valuations of the Underlying Funds. Without shareholder
approval, Principal Global Investors, LLC (“PGI”), the Fund’s investment
advisor, may alter the percentage ranges and/or substitute or remove Underlying
Funds when it deems appropriate. The Fund is rebalanced monthly.
The
Underlying Funds utilize derivative strategies. A derivative is a financial
arrangement, the value of which is derived from, or based on, a traditional
security, asset, or market index. Specifically, the Underlying Funds invest in
equity index futures and ETFs to manage the equity exposure, as well as vertical
call spreads and vertical put spreads as part of an active strategy intended to
reduce volatility. Vertical spreads are the simultaneous purchase and sale of
two options of the same type with the same expiration date but two different
strike prices. The strike price is the fixed price at which the owner of the
option can buy (in the case of a call), or sell (in the case of a put), the
underlying security.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options
involve specific risks, including: the imperfect correlation between the change
in market value of the instruments held by the Fund and the price of the
options; counterparty risk; difference in trading hours for the options markets
and the markets for the underlying securities (rate movements can take place in
the underlying markets that cannot be reflected in the options markets); and an
insufficient liquid secondary market for particular
options.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit quality,
and liquidity risks. The market value of fixed-income securities generally
declines when interest rates rise, and increased interest rates may adversely
affect the liquidity of certain fixed-income securities. Moreover, an issuer of
fixed-income securities could default on its payment obligations due to
increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result of:
political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
13.21% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(12.71)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
Growth Strategic Allocation Account - Class 2 |
15.60% |
8.68% |
6.62% |
| Diversified
Growth Strategic Allocation Account - Class 3 |
15.37% |
8.50% |
6.46% |
|
S&P 500
Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
Diversified Growth Strategic Allocation
Custom Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
17.07% |
9.68% |
7.59% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.27% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.66% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The Diversified Growth Strategic
Allocation Custom Index (f/k/a Diversified Growth Managed Volatility Custom
Index) is included as an additional index for the Fund as it shows how the
Fund’s performance compares with returns of indices of funds with similar
investment objectives. Performance of each component of the custom index is also
shown. The weightings of the Diversified Growth Strategic Allocation Custom
Index (f/k/a Diversified Growth Managed Volatility Custom Index) are as follows:
45% S&P 500 Index, 35% Bloomberg U.S. Aggregate Bond Index, 10% MSCI EAFE
Index NTR, 5% S&P MidCap 400 Index, and 5% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED INCOME
ACCOUNT
Objective
The
Fund seeks to provide a high level of total return (consisting of reinvestment
of income with some capital appreciation).
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
Class
3 |
| Management
Fees |
0.05% |
0.05% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
0.25% |
| Other
Expenses |
0.01% |
0.16% |
| Acquired
Fund Fees and Expenses |
0.17% |
0.17% |
| Total
Annual Fund Operating Expenses |
0.48% |
0.63% |
|
Expense
Reimbursement(1) |
N/A |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.48% |
0.63% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.48% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund’s operating
expenses remain the same. The
calculation of costs takes into account any applicable contractual fee waivers
and/or expense reimbursements for the period noted in the table
above.
If separate account expenses and contract-level expenses were included, expenses
would be higher. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
Income Account - Class 2 |
$49 |
$154 |
$269 |
$604 |
| Diversified
Income Account - Class 3 |
64 |
202 |
351 |
786 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
15.8% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a fund of funds and invests in funds and exchange-traded funds
(“ETFs”) of Principal Funds, Inc., PVC, Principal Exchange-Traded Funds, and
other fund complexes (collectively, the “Underlying Funds”). The Fund
generally allocates approximately 35% of its assets to equity index Underlying
Funds to gain broad market capitalization exposure to both U.S. and non-U.S
investments, including investments in smaller companies, and approximately 65%
to fixed-income index Underlying Funds for intermediate duration fixed-income
exposure. The asset class diversification of the Fund is
designed to moderate overall price volatility and cushion severe losses in any
one investment sector.
The
Fund’s assets are allocated among Underlying Funds in accordance with the Fund’s
investment objective and based on qualitative and quantitative analyses and the
relative market valuations of the Underlying Funds. Without shareholder
approval, Principal Global Investors, LLC (“PGI”), the Fund’s investment
advisor, may alter the percentage ranges and/or substitute or remove Underlying
Funds when it deems appropriate. The Fund is rebalanced monthly.
The
Underlying Funds utilize derivative strategies. A derivative is a financial
arrangement, the value of which is derived from, or based on, a traditional
security, asset, or market index. Specifically, the Underlying Funds invest in
equity index futures and ETFs to manage the equity
exposure.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific
risks, including: the imperfect correlation between the change in market value
of the instruments held by the Fund and the price of the futures contract;
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; counterparty risk;
and if the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 2 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 2
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 2 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
8.67% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(8.70)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
Income Account - Class 2 |
11.20% |
5.43% |
4.57% |
| Diversified
Income Account - Class 3 |
11.08% |
5.26% |
4.41% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Diversified Income Custom Index
(except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
11.71% |
5.87% |
5.09% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
S&P
MidCap 400 Index (reflects no deduction for
fees, expenses, or taxes) |
16.44% |
12.62% |
9.27% |
|
S&P
SmallCap 600 Index (reflects no deduction for
fees, expenses, or taxes) |
16.05% |
11.03% |
8.66% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Diversified Income Custom Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the custom index is also shown. The
weightings of the Diversified Income Custom Index are as follows: 65% Bloomberg
U.S. Aggregate Bond Index, 25% S&P 500 Index, 4% MSCI EAFE Index NTR, 3%
S&P MidCap 400 Index, and 3% S&P SmallCap 600
Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2023), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
DIVERSIFIED
INTERNATIONAL ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
|
Management
Fees(1) |
0.81% |
|
Other
Expenses(2) |
0.08% |
| Total
Annual Fund Operating Expenses |
0.89% |
(1)Fees
have been restated to reflect current fees.
(2)Includes
0.03% of expenses associated with the reclaim of foreign taxes paid.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Diversified
International Account - Class 1 |
$91 |
$284 |
$493 |
$1,096 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
36.5% of the average
value of its portfolio.
Principal Investment
Strategies
The Fund
invests primarily in foreign equity securities. The Fund has no
limitation on the percentage of assets that are invested in any one country or
denominated in any one currency, but the Fund typically invests in foreign
securities of at least 20 countries. Primary consideration is given to
securities of issuers of developed areas (for example, Japan, Western Europe,
Canada, Australia, Hong Kong, and Singapore); however, the Fund also invests in
emerging market securities. The Fund invests in equity securities regardless of
market capitalization size (small, medium, or large) and style (growth or
value).
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Emerging
Markets Risk. Investments
in emerging markets may have more risk than those in developed markets because
the emerging markets are less developed and more illiquid. Emerging markets can
also be subject to increased social, economic, regulatory, and political
uncertainties and can be extremely volatile. The U.S. Securities and Exchange
Commission, the U.S. Department of Justice, and other U.S. authorities may be
limited in their ability to pursue bad actors in emerging markets, including
with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value
investing entails the risk that value stocks may continue to be undervalued by
the market for extended periods, including the entire period during which the
stock is held by a fund, or the events that would cause the stock price to
increase may not occur as anticipated or at all. Moreover, a stock that appears
to be undervalued actually may be appropriately priced at a low level and,
therefore, would not be profitable for the
fund.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
18.11% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(23.04)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Diversified
International Account - Class 1 |
17.45% |
8.01% |
4.23% |
|
MSCI ACWI
Ex USA Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
15.62% |
7.08% |
3.83% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Paul
H. Blankenhagen (since 2003), Portfolio Manager
•Juliet
Cohn (since 2004), Portfolio Manager (remove
on July 31, 2024)
•George
Maris (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
EQUITY INCOME
ACCOUNT
Objective
The
Fund seeks to provide current income and long-term growth of income and
capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
Class
3 |
| Management
Fees |
0.48% |
0.48% |
0.48% |
| Distribution
and/or Service (12b-1) Fees |
N/A% |
0.25% |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
0.16% |
| Total
Annual Fund Operating Expenses |
0.49% |
0.74% |
0.89% |
|
Expense
Reimbursement(1) |
N/A% |
N/A% |
0.00% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
0.49% |
0.74% |
0.89% |
(1)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.91% for Class 3 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Equity
Income Account - Class 1 |
$50 |
$157 |
$274 |
$616 |
| Equity
Income Account - Class 2 |
76 |
237 |
411 |
918 |
| Equity
Income Account - Class 3 |
91 |
284 |
493 |
1,096 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
12.9% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in dividend-paying equity securities at the
time of purchase. The Fund usually invests in equity securities
of companies with large and medium market capitalizations. The Fund invests in
value equity securities, an investment strategy that emphasizes buying equity
securities that appear to be undervalued. The Fund also invests in securities of
foreign issuers.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 3 shares (December 9, 2020), the
performance shown in the table for Class 3 shares is that of the Fund’s Class 1
shares, adjusted to reflect the fees and expenses of the Class 3 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 1 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2020 |
15.69% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(25.51)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Equity
Income Account - Class 1 |
11.22% |
10.87% |
9.22% |
| Equity
Income Account - Class 2 |
10.93% |
10.58% |
8.94% |
| Equity
Income Account - Class 3 |
11.00% |
10.47% |
8.82% |
|
Russell
1000 Index (reflects no deduction for
fees, expenses, or taxes) |
26.53% |
15.52% |
11.80% |
|
Russell
1000 Value Index (reflects no deduction for
fees, expenses, or taxes) |
11.46% |
10.91% |
8.40% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 1000 Index in order to meet
the revised definition of “broad-based securities market index.”
The Russell 1000 Value Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Daniel
R. Coleman (since 2010), Portfolio Manager
•Sarah
E. Radecki (since 2021), Portfolio Manager
•Nedret
Vidinli (since 2017), Associate Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
GLOBAL EMERGING MARKETS
ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
1.00% |
| Other
Expenses |
0.16% |
| Total
Annual Fund Operating Expenses |
1.16% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Global
Emerging Markets Account - Class 1 |
$118 |
$368 |
$638 |
$1,409 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
33.0% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of emerging market
companies at the time of purchase. The Fund considers a security
to be tied economically to an emerging market if one or more of the following
criteria is present: (i) the issuer or guarantor of the security has its
principal place of business or principal office in an emerging market; (ii) the
principal trading market for the security is in an emerging market; (iii) the
issuer or guarantor of the security derives a majority of its revenue from
emerging markets; or (iv) the currency of settlement of the security is the
currency of an emerging market.
The
Fund considers “emerging market” to mean any market that is considered to be an
emerging market by the international financial community (including the MSCI
Emerging Markets Index or Bloomberg Emerging Markets USD Aggregate Bond
Index).
Emerging markets generally exclude the United States, Canada, Japan, Australia,
Hong Kong, Singapore, New Zealand, and most nations located in Western Europe.
The Fund invests in equity securities regardless of market capitalization
(small, medium, or large) and style (growth or
value).
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Emerging
Markets Risk. Investments
in emerging markets may have more risk than those in developed markets because
the emerging markets are less developed and more illiquid. Emerging markets can
also be subject to increased social, economic, regulatory, and political
uncertainties and can be extremely volatile. The U.S. Securities and Exchange
Commission, the U.S. Department of Justice, and other U.S. authorities may be
limited in their ability to pursue bad actors in emerging markets, including
with respect to fraud.
•China
Investment Risk. The Fund invests a significant portion
of its assets in securities of issuers located or operating in China. Investing
in China involves certain heightened risks and considerations, including, among
others: frequent trading suspensions and government interventions (including by
nationalizing assets); currency exchange rate fluctuations or blockages; limits
on using brokers and on foreign ownership; different financial reporting
standards; higher dependence on exports and international trade; political and
social instability; infectious disease outbreaks; regional and global conflicts;
increased trade tariffs, embargoes, and other trade limitations; custody and
other risks associated with programs used to access Chinese securities; and
uncertainties in tax rules that could result in unexpected tax liabilities for
the Fund. Significant portions of the Chinese securities markets may become
rapidly illiquid, as Chinese issuers have the ability to suspend the trading of
their equity securities. Moreover, actions by the U.S. government, such as
delisting of certain Chinese companies from U.S. securities exchanges or
otherwise restricting their operations in the U.S., may negatively impact the
value of such securities held by the Fund.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
•Value
Style Risk. Value investing entails the risk that value stocks may continue to
be undervalued by the market for extended periods, including the entire period
during which the stock is held by a fund, or the events that would cause the
stock price to increase may not occur as anticipated or at all. Moreover, a
stock that appears to be undervalued actually may be appropriately priced at a
low level and, therefore, would not be profitable for the
fund.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
During
2016, the Fund experienced a significant one-time gain of approximately $0.07
per share as the result of a settlement in a litigation proceeding. If such gain
had not been recognized, the total return amounts expressed herein would have
been lower.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
19.63% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(24.46)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
|
| Global
Emerging Markets Account - Class 1 |
12.53% |
4.18% |
2.17% |
(1) |
|
MSCI
Emerging Markets Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
9.83% |
3.69% |
2.66% |
|
(1)
During 2016, the Fund experienced a significant one-time gain of approximately
$0.07 per share as the result of a settlement in a litigation proceeding. If
such gain had not been recognized, the total return amounts expressed herein
would have been lower.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Jeffrey
Kilkenny (since 2020), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
GOVERNMENT & HIGH
QUALITY BOND ACCOUNT
Objective
The
Fund seeks to provide a high level of current income consistent with safety and
liquidity.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.50% |
| Other
Expenses |
0.03% |
| Total
Annual Fund Operating Expenses |
0.53% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Government &
High Quality Bond Account - Class 1 |
$54 |
$170 |
$296 |
$665 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
173.6% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in debt securities issued by the U.S.
government, its agencies, or instrumentalities or debt securities that are
rated, at the time of purchase, AAA by S&P Global Ratings (“S&P Global”)
or Aaa by Moody’s Investors Service, Inc. (“Moody’s”),
including, but not limited to, asset-backed securities (“ABS”), mortgage
securities such as agency and non-agency collateralized mortgage obligations,
and other obligations that are secured by mortgages or mortgage-backed
securities (“MBS”) (also referred to as securitized products). The Fund also
invests in ABS and MBS that are rated lower than AAA by S&P Global or Aaa by
Moody’s (or of comparable quality), including collateralized mortgage
obligations, and in other obligations that are secured by mortgages or MBS. The
MBS in which the Fund invests include MBS trading in the to-be-announced (“TBA”)
markets. If a security has been rated by only one of the rating agencies, that
rating will determine the security’s rating; if the security is rated
differently by the rating agencies, the highest rating will be used; and if the
security has not been rated by either of the rating agencies, those selecting
such investments will determine the security’s quality.
Under
normal circumstances, the Fund maintains an average portfolio duration that is
within ±50% of the duration of the Bloomberg U.S. Agency Fixed Rate MBS Index,
which as of March 31, 2024 was 5.72 years. The Fund is not managed to a
particular maturity. The Fund’s strategies may result in the active and frequent
trading of the Fund’s portfolio securities.
The
Fund invests in derivatives, including Treasury futures and securities delivered
in TBA transactions, to manage the fixed-income exposure. A derivative is a
financial arrangement, the value of which is derived from, or based on, a
traditional security, asset, or market index.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific
risks, including: the imperfect correlation between the change in market value
of the instruments held by the Fund and the price of the futures contract;
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; counterparty risk;
and if the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
High
Portfolio Turnover Risk. High portfolio turnover (more than 100%) caused by active and
frequent trading of portfolio securities may result in accelerating the
realization of taxable gains and losses, lower fund performance, and increased
brokerage costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk). With respect to securities that are delivered in TBA
transactions, there is a risk that the actual securities received by the Fund
may be less favorable than what was anticipated when entering into the
transaction.
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
7.26% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q3
2022 |
(5.32)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Government
& High Quality Bond Account - Class 1 |
4.64% |
(0.06)% |
1.01% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Bloomberg
U.S. Agency Fixed Rate MBS Index (reflects no deduction for
fees, expenses, or taxes) |
5.05% |
0.25% |
1.39% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Bloomberg U.S. Agency Fixed Rate
MBS Index is included as an additional index for the Fund as it shows how the
Fund’s performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Bryan
C. Davis (since 2019), Portfolio Manager
•Zach
Gassmann (since 2019), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
LARGECAP GROWTH ACCOUNT
I
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.70% |
| Other
Expenses |
0.01% |
| Total
Annual Fund Operating Expenses |
0.71% |
|
Fee
Waiver and Expense Reimbursement(1)(2) |
(0.02)% |
| Total
Annual Fund Operating Expenses after Fee Waiver and Expense
Reimbursement |
0.69% |
(1)
Principal Global Investors, LLC ("PGI"), the investment advisor, has
contractually agreed to waive a portion of the Fund's management fees through
the period ending April 30, 2025. The fee waiver will reduce the Fund's
management fees by 0.016% (expressed as a percent of average net assets on an
annualized basis). It is expected that the fee waiver will continue through the
period disclosed; however, Principal Variable Contracts Funds, Inc. and PGI, the
parties to the agreement, may mutually agree to terminate the fee waiver prior
to the end of the period.
(2)
Principal Global
Investors, LLC ("PGI"), the investment advisor, has contractually agreed to
limit the Fund’s expenses by paying, if necessary, expenses normally payable by
the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.69% for Class 1 shares. It is expected that the expense limit will
continue through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal
year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| LargeCap
Growth Account I - Class 1 |
$70 |
$225 |
$393 |
$881 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
28.2% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies with large
market capitalizations at the time of purchase. For this Fund,
companies with large market capitalizations are those with market
capitalizations within the range of companies comprising the Russell
1000®
Growth
Index (as of March 31, 2024, this was between approximately $794.3 million
and $3.1 trillion). The Fund also invests in growth equity securities, an
investment strategy that emphasizes buying equity securities of companies whose
potential for growth of capital and earnings is expected to be above average,
and equity securities of companies with medium market capitalizations. The Fund
invested significantly in industries within the health care and information
technology sectors as of March 31, 2024.
The
Fund is primarily actively managed by the sub-advisors. In addition, Principal
Global Investors, LLC may invest up to 30% of the Fund’s assets using an index
sampling strategy designed to match the performance of the Russell
1000®
Growth Index.
The
Fund is considered non-diversified, which means it can invest a higher
percentage of assets in securities of individual issuers than a diversified
fund. As a result, changes in the value of a single investment could cause
greater fluctuations in the Fund’s share price than would occur in a more
diversified fund.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments
in smaller companies may involve greater risk and price volatility than
investments in larger, more mature companies. Smaller companies may have limited
product lines, markets, or financial resources; lack the competitive strength of
larger companies; have less experienced managers; or depend on a few key
employees. Their securities often are less widely held and trade less frequently
and in lesser quantities, and their market prices often fluctuate more, than
securities of larger companies.
Health
Care Sector Risk. A
fund that invests in securities of companies in the health care sector (which
includes companies involved in several industries, including biotechnology
research and production, drugs and pharmaceuticals, and health care facilities
and services) is subject to the direct risks of investing in such companies.
These companies are subject to extensive competition (due to, among others,
generic drug sales or the loss of patent protection), product liability
litigation, and increased government regulation. Research and development costs
of bringing new drugs to market are substantial, and there is no guarantee that
a proposed product will ever come to market. Such companies are heavily
dependent on patent and intellectual property rights, the loss or impairment of
which may adversely affect profitability. Health care facility operators may be
affected by the demand for services, efforts by government or insurers to limit
rates, restriction of government financial assistance, and competition from
other providers.
Information
Technology Sector Risk. Companies in the information technology sector may face dramatic and
often unpredictable changes in growth rates and are particularly vulnerable to
changes in technology product cycles, product obsolescence, government
regulation, and competition, both domestically and internationally. Such
companies are heavily dependent on patent and intellectual property rights, the
loss or impairment of which may adversely affect
profitability.
Non-Diversification
Risk. A non-diversified fund may invest a high percentage of its assets
in the securities of a small number of issuers and is more likely than
diversified funds to be significantly affected by a specific security’s poor
performance.
Passive
Strategy Risk. A portion of the Fund seeks to match the performance of a specified
index. However, the correlation between the performance of this portion of the
Fund and index performance may be affected by many factors, such as Fund
expenses, the timing of cash flows into and out of the Fund, changes in
securities markets, and changes in the composition of the
index.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
27.91% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(21.64)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| LargeCap
Growth Account I - Class 1 |
40.34% |
15.66% |
13.01% |
|
Russell
1000 Index (reflects no deduction for
fees, expenses, or taxes) |
26.53% |
15.52% |
11.80% |
|
Russell
1000 Growth Index (reflects no deduction for
fees, expenses, or taxes) |
42.68% |
19.50% |
14.86% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 1000 Index in order to meet
the revised definition of “broad-based securities market index.”
The Russell 1000 Growth Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2009), Portfolio Manager
•Randy
L. Welch (since 2009), Portfolio Manager
Sub-Advisors
Brown
Advisory, LLC
T.
Rowe Price Associates, Inc.
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
LARGECAP S&P 500
INDEX ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.20% |
0.20% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
| Total
Annual Fund Operating Expenses |
0.21% |
0.46% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| LargeCap
S&P 500 Index Account - Class 1 |
$22 |
$68 |
$118 |
$268 |
| LargeCap
S&P 500 Index Account - Class 2 |
47 |
148 |
258 |
579 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
2.3% of the average
value of its portfolio.
Principal
Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies that
compose the Standard & Poor’s® (“S&P”) 500 Index (the “Index”) at the time of
purchase. The
Index is designed to represent U.S. equities with risk/return characteristics of
the large cap universe. As of March 31, 2024, the market capitalization
range of the companies comprising the Index was between approximately $5.2
billion and $3.1 trillion. Each component stock of the Index is weighted in
proportion to its total market value. The
Index is rebalanced quarterly.
The
Fund employs a passive investment approach designed to attempt to track the
performance of the Index. In seeking its objective, the Fund typically employs a
replication strategy, which involves investing in all the securities that make
up the Index, in the same proportions as the Index.
The
Fund uses derivative strategies and invests in exchange-traded funds (“ETFs”). A
derivative is a financial arrangement, the value of which is derived from, or
based on, a traditional security, asset, or market index. Specifically, the Fund
invests in index futures and equity ETFs on a daily basis to gain exposure to
the Index in an effort to minimize tracking error relative to the
benchmark.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
Note: “Standard
& Poor’s 500®”
and “S&P 500®”
are trademarks of S&P Global and have been licensed by Principal. The Fund
is not sponsored, endorsed, sold, or promoted by S&P Global, and S&P
Global makes no representation regarding the advisability of investing in the
Fund.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific
risks, including: the imperfect correlation between the change in market value
of the instruments held by the Fund and the price of the futures contract;
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; counterparty risk;
and if the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 2 shares (May 1, 2015), the
performance shown in the table for Class 2 shares is that of the Fund’s Class 1
shares, adjusted to reflect the fees and expenses of the Class 2 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 1 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
20.47% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(19.66)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| LargeCap
S&P 500 Index Account - Class 1 |
25.97% |
15.37% |
11.72% |
| LargeCap
S&P 500 Index Account - Class 2 |
25.68% |
15.10% |
11.44% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2018), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
LARGECAP S&P 500
MANAGED VOLATILITY INDEX ACCOUNT
Objective
The
Fund seeks long-term growth of capital, with an emphasis on managing
volatility.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.35% |
| Other
Expenses |
0.02% |
| Acquired
Fund Fees and Expenses |
0.01% |
| Total
Annual Fund Operating Expenses |
0.38% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| LargeCap
S&P 500 Managed Volatility Index Account - Class 1 |
$39 |
$122 |
$213 |
$480 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
5.7% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies that
compose the Standard & Poor’s® (“S&P”) 500 Index (the “Index”) at the time of
purchase. The Index is designed to represent U.S. equities
with risk/return characteristics of the large cap universe, which include growth
and value stocks. As
of March 31, 2024, the market capitalization range of companies comprising
the Index was between approximately $5.2 billion and $3.1 trillion.
The index is rebalanced quarterly.
In
part, the Fund employs a passive investment approach designed to attempt to
track the performance of the Index. In seeking its objective, the Fund typically
employs a replication strategy, which involves investing in all the securities
that make up the Index, in the same proportion as the Index. The Fund also uses
derivative strategies and exchange-traded funds (“ETFs”). A derivative is a
financial arrangement, the value of which is derived from, or based on, a
traditional security, asset, or market index. Specifically, this portion of the
Fund invests in index futures and ETFs on a daily basis to gain exposure to the
Index in an effort to minimize tracking error relative to the
benchmark.
The
Fund also employs an active volatility management strategy that buys vertical
put spreads and vertical call spreads on the S&P 500 Index, S&P 500
Index futures, and an S&P 500 Index ETF. Vertical spreads are the
simultaneous purchase and sale of two options of the same type with the same
expiration date but two different strike prices. The strike price is the fixed
price at which the owner of the option can buy (in the case of a call), or sell
(in the case of a put), the underlying security. This strategy seeks to produce
gains regardless of the directional movement of the S&P 500 Index and
mitigate volatility.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
Note: “Standard
& Poor’s 500®”
and “S&P 500®”
are trademarks of S&P Global and have been licensed by PGI. The Fund is not
sponsored, endorsed, sold, or promoted by S&P Global, and S&P Global
makes no representation regarding the advisability of investing in the
Fund.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options
involve specific risks, including: the imperfect correlation between the change
in market value of the instruments held by the Fund and the price of the
options; counterparty risk; difference in trading hours for the options markets
and the markets for the underlying securities (rate movements can take place in
the underlying markets that cannot be reflected in the options markets); and an
insufficient liquid secondary market for particular
options.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The bar chart shows changes in the Fund’s performance from year to
year. The table shows how the Fund’s average annual returns for 1, 5, and 10
years (or, if shorter, the life of the Fund) compare with those of one or more
broad measures of market performance. Performance figures for the Fund do not
include any separate account expenses, cost of insurance, or other
contract-level expenses; total returns for the Fund would be lower if such
expenses were included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
19.15% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(18.53)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| LargeCap
S&P 500 Managed Volatility Index Account - Class
1 |
23.67% |
14.16% |
10.75% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
15.69% |
12.03% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2018), Portfolio Manager
Sub-Advisor
and Portfolio Managers
Spectrum
Asset Management, Inc.
•L.
Phillip Jacoby, IV (since 2013), Chief Investment Officer and Back-up Portfolio
Manager
•Manu
Krishnan (since 2013), Vice President and Back-up Portfolio Manager
•Kevin
Nugent (since 2013), Vice President and Primary Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
MIDCAP
ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.54% |
0.54% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
| Total
Annual Fund Operating Expenses |
0.55% |
0.80% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| MidCap
Account - Class 1 |
$56 |
$176 |
$307 |
$689 |
| MidCap
Account - Class 2 |
82 |
255 |
444 |
990 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
8.8% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies with
medium market capitalizations at the time of purchase.
For
this Fund, companies with medium market capitalizations are those with market
capitalizations within the range of companies comprising the Russell
MidCap®
Index (as of March 31, 2024, this was between approximately $348.0 million
and $89.0 billion). The Fund also invests in foreign
securities.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
24.91% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(23.86)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| MidCap
Account - Class 1 |
26.08% |
15.60% |
11.87% |
| MidCap
Account - Class 2 |
25.74% |
15.31% |
11.58% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
Russell
MidCap Index (reflects no deduction for
fees, expenses, or taxes) |
17.23% |
12.68% |
9.42% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The Russell MidCap Index is included
as an additional index for the Fund as it shows how the Fund’s performance
compares with the returns of an index of funds with similar investment
objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•K.
William Nolin (since 2000), Portfolio Manager
•Tom
Rozycki (since 2013), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL CAPITAL
APPRECIATION ACCOUNT
Objective
The
Fund seeks to provide long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.63% |
0.63% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.02% |
0.02% |
| Total
Annual Fund Operating Expenses |
0.65% |
0.90% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
Capital Appreciation Account - Class 1 |
$66 |
$208 |
$362 |
$810 |
| Principal
Capital Appreciation Account - Class 2 |
92 |
287 |
498 |
1,108 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
49.6% of the average
value of its portfolio.
Principal Investment
Strategies
The Fund
invests primarily in equity securities of companies with any market
capitalization, but it has a greater exposure to large market capitalization
companies than small or medium market capitalization companies.
Those managing the Fund’s investments seek to invest in securities of businesses
that they believe are trading at a discount to their private market value (i.e.,
the value of the business if it was sold), have a competitive advantage, and/or
that have barriers to entry in their respective
industries.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
19.79% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(19.40)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
Capital Appreciation Account - Class 1 |
25.15% |
16.03% |
11.89% |
| Principal
Capital Appreciation Account - Class 2 |
24.85% |
15.74% |
11.61% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Daniel
R. Coleman (since 2010), Portfolio Manager
•Theodore
Jayne (since 2015), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME
STRATEGIC INCOME ACCOUNT
Objective
The Fund seeks current income, and as a secondary objective, capital
appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.05% |
| Acquired
Fund Fees and Expenses |
0.49% |
| Total
Annual Fund Operating Expenses |
0.54% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime Strategic Income Account – Class 1 |
$55 |
$173 |
$302 |
$677 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
15.3% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund invests according to an asset allocation strategy designed for investors
primarily seeking current income and secondarily capital appreciation. The
Fund’s asset allocation is designed for investors who are approximately 10 years
beyond the normal retirement age of 65. The Fund is a fund of funds and invests
in underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The diversification of the Fund is designed to moderate overall
price volatility. The Fund may add, remove, or substitute underlying funds at
any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of large market
capitalization companies, fixed-income securities, domestic and foreign
securities, securities denominated in foreign currencies, investment companies,
securitized products, U.S. government and U.S. government-sponsored securities,
and derivatives. A derivative is a financial arrangement, the value of which is
derived from, or based on, a traditional security, asset, or market index. The
underlying funds principally use futures, options, swaps (including, for
example, credit default, interest rate, and currency swaps), and forwards in
order to gain exposure to a variety of securities or asset classes or attempt to
reduce risk.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Credit
Default Swaps. Credit default swaps involve special risks in addition to those
associated with swaps generally because they are difficult to value, are highly
susceptible to liquidity and credit risk, and generally pay a return to the
party that has paid the premium only in the event of an actual default by the
issuer of the underlying obligation (as opposed to a credit downgrade or other
indication of financial difficulty). The protection “buyer” in a credit default
contract may be obligated to pay the protection “seller” an up-front payment or
a periodic stream of payments over the term of the contract, provided,
generally, that no credit event on a reference obligation has occurred. If a
credit event occurs, the seller generally must pay the buyer the “par value”
(i.e., full notional value) of the swap in exchange for an equal face amount of
deliverable obligations of the reference entity described in the swap, or the
seller may be required to deliver the related net cash amount, if the swap is
cash settled. The Fund may be either the buyer or seller in the
transaction.
•Forward
Contracts, Futures, and Swaps. Forward contracts, futures, and swaps involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the fund and the price of the forward contract, future, or
swap; possible lack of a liquid secondary market for a forward contract, future,
or swap and the resulting inability to close a forward contract, future, or swap
when desired; counterparty risk; and if the fund has insufficient cash, it may
have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
8.47% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q2
2022 |
(8.43)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime Strategic Income Account - Class 1 |
10.79% |
4.54% |
3.64% |
|
Bloomberg U.S.
Aggregate Bond Index (reflects no deduction for fees, expenses, or
taxes) |
5.53% |
1.10% |
1.81% |
|
S&P
Target Date Retirement Income Index (reflects no deduction for
fees, expenses, or taxes) |
10.35% |
4.90% |
3.98% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The S&P Target Date Retirement
Income Index is included as an additional index for the Fund as it shows how the
Fund’s performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2007), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2007), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME 2020
ACCOUNT
Objective
The
Fund seeks a total return consisting of long-term growth of capital and current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.02% |
| Acquired
Fund Fees and Expenses |
0.53% |
| Total
Annual Fund Operating Expenses |
0.55% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime 2020 Account - Class 1 |
$56 |
$176 |
$307 |
$689 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
14.0% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a “target date fund” that invests according to an asset
allocation strategy designed for investors having a retirement investment goal
close to the year in the Fund’s name. The Fund is a fund of funds and invests in
underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The asset class diversification of the Fund is designed to moderate
overall price volatility. The Fund may add, remove, or substitute underlying
funds at any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of small, medium, and large
market capitalization companies, fixed-income securities, domestic and foreign
securities, securities denominated in foreign currencies, investment companies,
U.S. government and U.S. government-sponsored securities, and derivatives. A
derivative is a financial arrangement, the value of which is derived from, or
based on, a traditional security, asset, or market index. The underlying funds
principally use futures, options, swaps (including, for example, credit default,
interest rate, and currency swaps), and forwards in order to gain exposure to a
variety of securities or asset classes or attempt to reduce risk.
The
Fund’s asset allocation will become more conservative over time as investment
goals near (for example, retirement, which is assumed to begin at age 65) and
investors become more risk-averse. Approximately 10 years after its target year,
the Fund’s underlying fund allocation is expected to match that of the Principal
LifeTime Strategic Income Account. At that time, the Fund may be combined with
the Principal LifeTime Strategic Income Account if the Board of Directors
determines that the combination is in the best interests of Fund shareholders.
It is expected that at the target date in the Fund’s name, the shareholder will
begin gradually withdrawing the account’s value.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Credit
Default Swaps. Credit default swaps involve special risks in addition to those
associated with swaps generally because they are difficult to value, are highly
susceptible to liquidity and credit risk, and generally pay a return to the
party that has paid the premium only in the event of an actual default by the
issuer of the underlying obligation (as opposed to a credit downgrade or other
indication of financial difficulty). The protection “buyer” in a credit default
contract may be obligated to pay the protection “seller” an up-front payment or
a periodic stream of payments over the term of the contract, provided,
generally, that no credit event on a reference obligation has occurred. If a
credit event occurs, the seller generally must pay the buyer the “par value”
(i.e., full notional value) of the swap in exchange for an equal face amount of
deliverable obligations of the reference entity described in the swap, or the
seller may be required to deliver the related net cash amount, if the swap is
cash settled. The Fund may be either the buyer or seller in the
transaction.
•Forward
Contracts, Futures, and Swaps. Forward contracts, futures, and swaps involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the fund and the price of the forward contract, future, or
swap; possible lack of a liquid secondary market for a forward contract, future,
or swap and the resulting inability to close a forward contract, future, or swap
when desired; counterparty risk; and if the fund has insufficient cash, it may
have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
12.53% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(11.58)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime 2020 Account - Class 1 |
12.26% |
6.95% |
5.34% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
S&P
Target Date 2020 Index (reflects no deduction for
fees, expenses, or taxes) |
12.32% |
6.47% |
5.28% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The S&P Target Date 2020 Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2007), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2007), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME 2030
ACCOUNT
Objective
The
Fund seeks a total return consisting of long-term growth of capital and current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.01% |
| Acquired
Fund Fees and Expenses |
0.57% |
| Total
Annual Fund Operating Expenses |
0.58% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime 2030 Account - Class 1 |
$59 |
$186 |
$324 |
$726 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
14.2% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a “target date fund” that invests according to an asset
allocation strategy designed for investors having a retirement investment goal
close to the year in the Fund’s name. The Fund is a fund of funds and invests in
underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The asset class diversification of the Fund is designed to moderate
overall price volatility. The Fund may add, remove, or substitute underlying
funds at any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of small, medium, and large
market capitalization companies, fixed-income securities, domestic and foreign
securities, securities denominated in foreign currencies, investment companies
(including index funds), U.S. government and U.S. government-sponsored
securities, and derivatives. A derivative is a financial arrangement, the value
of which is derived from, or based on, a traditional security, asset, or market
index. The underlying funds principally use futures, options, swaps (including,
for example, credit default, interest rate, and currency swaps), and forwards in
order to gain exposure to a variety of securities or asset classes or attempt to
reduce risk.
The
Fund’s asset allocation will become more conservative over time as investment
goals near (for example, retirement, which is assumed to begin at age 65) and
investors become more risk-averse. Approximately 10 years after its target year,
the Fund’s underlying fund allocation is expected to match that of the Principal
LifeTime Strategic Income Account. At that time, the Fund may be combined with
the Principal LifeTime Strategic Income Account if the Board of Directors
determines that the combination is in the best interests of Fund shareholders.
It is expected that at the target date in the Fund’s name, the shareholder will
begin gradually withdrawing the account’s value.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Credit
Default Swaps. Credit default swaps involve special risks in addition to those
associated with swaps generally because they are difficult to value, are highly
susceptible to liquidity and credit risk, and generally pay a return to the
party that has paid the premium only in the event of an actual default by the
issuer of the underlying obligation (as opposed to a credit downgrade or other
indication of financial difficulty). The protection “buyer” in a credit default
contract may be obligated to pay the protection “seller” an up-front payment or
a periodic stream of payments over the term of the contract, provided,
generally, that no credit event on a reference obligation has occurred. If a
credit event occurs, the seller generally must pay the buyer the “par value”
(i.e., full notional value) of the swap in exchange for an equal face amount of
deliverable obligations of the reference entity described in the swap, or the
seller may be required to deliver the related net cash amount, if the swap is
cash settled. The Fund may be either the buyer or seller in the
transaction.
•Forward
Contracts, Futures, and Swaps. Forward contracts, futures, and swaps involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the fund and the price of the forward contract, future, or
swap; possible lack of a liquid secondary market for a forward contract, future,
or swap and the resulting inability to close a forward contract, future, or swap
when desired; counterparty risk; and if the fund has insufficient cash, it may
have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
15.73% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(15.70)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime 2030 Account - Class 1 |
15.09% |
8.64% |
6.33% |
|
S&P
1500 TR (reflects no deduction for
fees, expenses, or taxes) |
25.47% |
15.39% |
11.76% |
|
S&P
Target Date 2030 Index (reflects no deduction for
fees, expenses, or taxes) |
14.80% |
8.42% |
6.44% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 1500 TR in order to meet
the revised definition of “broad-based securities market index.”
The S&P Target Date 2030 Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2007), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2007), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME 2040
ACCOUNT
Objective
The
Fund seeks a total return consisting of long-term growth of capital and current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.02% |
| Acquired
Fund Fees and Expenses |
0.62% |
| Total
Annual Fund Operating Expenses |
0.64% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime 2040 Account - Class 1 |
$65 |
$205 |
$357 |
$798 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
21.2% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a “target date fund” that invests according to an asset
allocation strategy designed for investors having a retirement investment goal
close to the year in the Fund’s name. The Fund is a fund of funds and invests in
underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The asset class diversification of the Fund is designed to moderate
overall price volatility. The Fund may add, remove, or substitute underlying
funds at any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of small, medium, and large
market capitalization companies, fixed-income securities, domestic and foreign
(including those in emerging markets) securities, securities denominated in
foreign currencies, investment companies (including index funds), U.S.
government and U.S. government-sponsored securities, and derivatives. A
derivative is a financial arrangement, the value of which is derived from, or
based on, a traditional security, asset, or market index. The underlying funds
principally use equity index futures and options in order to gain exposure to a
variety of securities or asset classes or attempt to reduce risk.
The
Fund’s asset allocation will become more conservative over time as investment
goals near (for example, retirement, which is assumed to begin at age 65) and
investors become more risk-averse. Approximately 10 years after its target year,
the Fund’s underlying fund allocation is expected to match that of the Principal
LifeTime Strategic Income Account. At that time, the Fund may be combined with
the Principal LifeTime Strategic Income Account if the Board of Directors
determines that the combination is in the best interests of Fund shareholders.
It is expected that at the target date in the Fund’s name, the shareholder will
begin gradually withdrawing the account’s value.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
18.06% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(18.74)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime 2040 Account - Class 1 |
18.27% |
10.10% |
7.16% |
|
S&P
1500 TR (reflects no deduction for
fees, expenses, or taxes) |
25.47% |
15.39% |
11.76% |
|
S&P
Target Date 2040 Index (reflects no deduction for
fees, expenses, or taxes) |
18.16% |
10.22% |
7.49% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 1500 TR in order to meet
the revised definition of “broad-based securities market index.”
The S&P Target Date 2040 Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2007), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2007), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME 2050
ACCOUNT
Objective
The
Fund seeks a total return consisting of long-term growth of capital and current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.03% |
| Acquired
Fund Fees and Expenses |
0.66% |
| Total
Annual Fund Operating Expenses |
0.69% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime 2050 Account - Class 1 |
$70 |
$221 |
$384 |
$859 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
24.8% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a “target date fund” that invests according to an asset
allocation strategy designed for investors having a retirement investment goal
close to the year in the Fund’s name. The Fund is a fund of funds and invests in
underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The asset class diversification of the Fund is designed to moderate
overall price volatility. The Fund may add, remove, or substitute underlying
funds at any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of small, medium, and large
market capitalization companies, fixed-income securities, domestic and foreign
(including those in emerging markets) securities, securities denominated in
foreign currencies, investment companies (including index funds), and
derivatives. A derivative is a financial arrangement, the value of which is
derived from, or based on, a traditional security, asset, or market index. The
underlying funds principally use equity index futures and options in order to
gain exposure to a variety of securities or asset classes or attempt to reduce
risk.
The
Fund’s asset allocation will become more conservative over time as investment
goals near (for example, retirement, which is assumed to begin at age 65) and
investors become more risk-averse. Approximately 10 years after its target year,
the Fund’s underlying fund allocation is expected to match that of the Principal
LifeTime Strategic Income Account. At that time, the Fund may be combined with
the Principal LifeTime Strategic Income Account if the Board of Directors
determines that the combination is in the best interests of Fund shareholders.
It is expected that at the target date in the Fund’s name, the shareholder will
begin gradually withdrawing the account’s value.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The bar chart shows changes in the Fund’s performance from year to
year. The table shows how the Fund’s average annual returns for 1, 5, and 10
years (or, if shorter, the life of the Fund) compare with those of one or more
broad measures of market performance. Performance figures for the Fund do not
include any separate account expenses, cost of insurance, or other
contract-level expenses; total returns for the Fund would be lower if such
expenses were included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
19.68% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(20.78)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime 2050 Account - Class 1 |
20.38% |
11.02% |
7.68% |
|
S&P
1500 TR (reflects no deduction for
fees, expenses, or taxes) |
25.47% |
15.39% |
11.76% |
|
S&P
Target Date 2050 Index (reflects no deduction for
fees, expenses, or taxes) |
19.58% |
10.92% |
7.92% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 1500 TR in order to meet
the revised definition of “broad-based securities market index.”
The S&P Target Date 2050 Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2007), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2007), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
PRINCIPAL LIFETIME 2060
ACCOUNT
Objective
The
Fund seeks a total return consisting of long-term growth of capital and current
income.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.00% |
| Other
Expenses |
0.09% |
| Acquired
Fund Fees and Expenses |
0.66% |
| Total
Annual Fund Operating Expenses |
0.75% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Principal
LifeTime 2060 Account - Class 1 |
$77 |
$240 |
$417 |
$930 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
21.1% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund operates as a “target date fund” that invests according to an asset
allocation strategy designed for investors having a retirement investment goal
close to the year in the Fund’s name. The Fund is a fund of funds and invests in
underlying funds of Principal Funds, Inc. (“PFI”) and of Principal Variable
Contracts Funds, Inc. (“PVC”). Its underlying funds consist of domestic and
foreign equity funds, fixed-income funds, real asset funds, and other funds that
aim to offer diversification beyond traditional equity and fixed-income
securities. The asset class diversification of the Fund is designed to moderate
overall price volatility. The Fund may add, remove, or substitute underlying
funds at any time.
The
Fund is managed with strategic or long-term asset class targets and target
ranges. There is a rebalancing strategy that aligns with the target weights to
identify asset classes that are either overweight or underweight. The Fund may
shift asset class targets in response to normal evaluative processes, the
shortening time horizon of the Fund, or changes in market forces or Fund
circumstances.
In
selecting underlying funds and target weights, the Fund considers both
quantitative measures (e.g., past performance, expected levels of risk and
returns, expense levels, diversification, and style consistency) and qualitative
factors (e.g., organizational stability, investment experience, investment and
risk management processes, and information, trading, and compliance systems).
There are no minimum or maximum percentages of assets that the Fund must invest
in a specific asset class or underlying fund.
The
underlying funds invest in growth and value stocks of small, medium, and large
market capitalization companies, fixed-income securities, domestic and foreign
(including those in emerging markets) securities, securities denominated in
foreign currencies, investment companies (including index funds), and
derivatives. A derivative is a financial arrangement, the value of which is
derived from, or based on, a traditional security, asset, or market index. The
underlying funds principally use equity index futures and options in order to
gain exposure to a variety of securities or asset classes or attempt to reduce
risk.
The
Fund’s asset allocation will become more conservative over time as investment
goals near (for example, retirement, which is assumed to begin at age 65) and
investors become more risk-averse. Approximately 10 years after its target year,
the Fund’s underlying fund allocation is expected to match that of the Principal
LifeTime Strategic Income Account. At that time, the Fund may be combined with
the Principal LifeTime Strategic Income Account if the Board of Directors
determines that the combination is in the best interests of Fund shareholders.
It is expected that at the target date in the Fund’s name, the shareholder will
begin gradually withdrawing the account’s value.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund shareholders bear indirectly their proportionate share of the
expenses of other investment companies (for example, other mutual funds or
exchange-traded funds) in which the Fund invests (“underlying funds”). The
Fund’s selection and weighting of asset classes and allocation of investments in
underlying funds may cause it to underperform other funds with a similar
investment objective. The Fund’s performance and risks correspond directly to
the performance and risks of the underlying funds in which it invests,
proportionately in accordance with the weightings of such investments, and there
is no assurance that the underlying funds will achieve their investment
objectives. Management of the Fund entails potential conflicts of interest: the
Fund invests in affiliated underlying funds; and PGI and its affiliates may earn
different fees from different underlying funds and may have an incentive to
allocate more Fund assets to underlying funds from which they receive higher
fees.
Target
Date Fund Risk. A
target date fund should not be selected based solely on age or retirement date
because there is no guarantee that this Fund will provide adequate income at or
through retirement.
Principal
Risks due to the Fund's Investments in Underlying Funds
Counterparty
Risk. Counterparty risk is the risk that the counterparty to a contract or
other obligation will be unable or unwilling to honor its
obligations.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial investment.
•Futures.
Futures contracts involve specific risks, including: the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; possible lack of a liquid secondary
market for a futures contract and the resulting inability to close a futures
contract when desired; counterparty risk; and if the Fund has insufficient cash,
it may have to sell securities from its portfolio to meet daily variation margin
requirements.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Index
Fund Risk. Index funds use a passive investment approach and generally do not
attempt to manage market volatility, use defensive strategies, or reduce the
effect of any long-term periods of poor investment performance. Therefore, the
Fund may hold securities that present risks that an investment advisor
researching individual securities might seek to avoid. An index fund has
operating and other expenses while an index does not. As a result, over time,
index funds tend to underperform the index. The correlation between fund
performance and index performance may also be affected by the type of passive
investment approach used by a fund (sampling or replication), changes in
securities markets, changes in the composition of the index, and the timing of
purchases and sales of fund shares. Errors or delays in compiling or rebalancing
the Index may impact the performance of the Fund and increase transaction
costs.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
20.23% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(21.87)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Principal
LifeTime 2060 Account - Class 1 |
20.28% |
11.32% |
7.73% |
|
S&P
1500 TR (reflects no deduction for
fees, expenses, or taxes) |
25.47% |
15.39% |
11.76% |
|
S&P
Target Date 2060 Index (reflects no deduction for
fees, expenses, or taxes) |
19.74% |
11.04% |
8.04% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 1500 TR in order to meet
the revised definition of “broad-based securities market index.”
The S&P Target Date 2060 Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•James
W. Fennessey (since 2013), Portfolio Manager
•Scott
Smith (since 2017), Portfolio Manager
•Randy
L. Welch (since 2013), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
REAL ESTATE SECURITIES
ACCOUNT
Objective
The
Fund seeks to generate a total return.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.78% |
0.78% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.02% |
0.02% |
| Total
Annual Fund Operating Expenses |
0.80% |
1.05% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Real
Estate Securities Account - Class 1 |
$82 |
$255 |
$444 |
$990 |
| Real
Estate Securities Account - Class 2 |
107 |
334 |
579 |
1,283 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s
performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
16.2% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies
principally engaged in the real estate industry at the time of
purchase. A real estate company has at least 50% of its assets,
income, or profits derived from products or services related to the real estate
industry. Real estate companies include real estate investment trusts (“REITs”)
and companies with substantial real estate holdings such as paper, lumber,
hotel, and entertainment companies, as well as those whose products and services
relate to the real estate industry, including building supply manufacturers,
mortgage lenders, and mortgage servicing companies.
REITs
are pooled investment vehicles that invest in income-producing real estate, real
estate-related loans, or other types of real estate interests. REITs are
corporations or business trusts that are permitted to eliminate corporate level
federal income taxes by meeting certain requirements of the Internal Revenue
Code.
The
Fund invests in equity securities regardless of market capitalization (small,
medium, or large). The Fund invests in growth and value equity securities. The
Fund concentrates its investments (invest more than 25% of its net assets) in
securities in the real estate industry.
The
Fund is considered non-diversified, which means it can invest a higher
percentage of assets in securities of individual issuers than a diversified
fund. As a result, changes in the value of a single investment could cause
greater fluctuations in the Fund’s share price than would occur in a more
diversified fund.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Industry
Concentration Risk. A
fund that concentrates investments in a particular industry or group of
industries has greater exposure than other funds to market, economic, and other
factors affecting that industry or group of industries.
•Real
Estate. A fund concentrating in the real
estate industry is subject to the risks associated with direct ownership of real
estate, securities of companies in the real estate industry, and/or real estate
investment trusts. These risks are explained more fully below in Real Estate
Investment Trusts (REITs) Risk and Real Estate Securities
Risk.
Non-Diversification
Risk. A non-diversified fund may invest a high percentage of its assets in
the securities of a small number of issuers and is more likely than diversified
funds to be significantly affected by a specific security’s poor
performance.
Real
Estate Investment Trusts (“REITs”) Risk. In
addition to risks associated with investing in real estate securities, REITs are
dependent upon management skills, are not diversified, and are subject to heavy
cash flow dependency, risks of default by borrowers, and self-liquidation.
Investment in REITs also involves risks similar to risks of investing in small
market capitalization companies, such as limited financial resources, less
frequent and limited volume trading, and may be subject to more abrupt or
erratic price movements than larger company securities. A REIT could fail to
qualify for tax-free pass-through of income under the Internal Revenue Code.
Fund shareholders will indirectly bear their proportionate share of the expenses
of REITs in which the fund invests.
Real
Estate Securities Risk. Investing
in real estate securities subjects the fund to the risks associated with the
real estate market (which are similar to the risks associated with direct
ownership in real estate), including declines in real estate values, loss due to
casualty or condemnation, property taxes, interest rate changes, increased
expenses, cash flow of underlying real estate assets, regulatory changes
(including zoning, land use, and rents), and environmental problems, as well as
to the risks related to the management skill and creditworthiness of the
issuer.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q1
2019 |
17.53% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(22.98)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Real Estate
Securities Account - Class 1 |
13.33% |
8.52% |
8.71% |
| Real Estate
Securities Account - Class 2 |
13.01% |
8.24% |
8.44% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
FTSE
NAREIT All Equity REIT Index (reflects no deduction for
fees, expenses, or taxes) |
11.36% |
7.59% |
7.95% |
|
MSCI US
REIT Index (reflects no deduction for
fees, expenses, or taxes) |
13.74% |
7.40% |
7.60% |
Effective March 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The FTSE NAREIT All Equity REIT Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of an index of funds with similar investment
objectives. Prior to March 1, 2024, the Fund’s index was the MSCI US REIT
Index.
Investment
Advisor
Principal
Global Investors, LLC
Sub-Advisor
and Portfolio Managers
Principal
Real Estate Investors, LLC
•Keith
Bokota (since 2013), Portfolio Manager
•Anthony
Kenkel (since 2012), Portfolio Manager
•Kelly
D. Rush (since 2000), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SAM (STRATEGIC ASSET
MANAGEMENT) BALANCED PORTFOLIO
Objective
The
Fund seeks
to provide as high a level of total return (consisting of reinvested income and
capital appreciation) as is consistent with reasonable
risk.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.23% |
0.23% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
| Acquired
Fund Fees and Expenses |
0.49% |
0.49% |
| Total
Annual Fund Operating Expenses |
0.73% |
0.98% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SAM
Balanced Portfolio - Class 1 |
$75 |
$233 |
$406 |
$906 |
| SAM
Balanced Portfolio - Class 2 |
100 |
312 |
542 |
1,201 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
26.7% of the average
value of its portfolio.
Principal Investment
Strategies
The
SAM Portfolios operate as funds of funds and invest principally in funds and
exchange-traded funds (“ETFs”) of Principal Funds, Inc., PVC, and Principal
Exchange-Traded Funds (“Underlying Funds”). Each SAM Portfolio generally
categorizes each Underlying Fund as a fixed-income, equity, or specialty fund
based on its investment profile. Each SAM Portfolio typically allocates its
assets among Underlying Funds, and within predetermined percentage ranges, as
determined by the SAM Portfolio in accordance with its outlook for the economy,
the financial markets, and the relative market valuations of the Underlying
Funds. The asset class diversification of the SAM Portfolio is designed to
moderate overall price volatility and cushion severe losses in any one
investment sector.
The
Fund generally invests:
•between
20%
and
60%
of
its
assets
in
fixed-income
funds,
and
less
than
40% in any one fixed-income fund; such funds generally invest in fixed-income
instruments such as securitized products and corporate bonds;
•between
40% and 80% of its assets in equity funds, and less than 30% in any one equity
fund; such funds generally invest in equity securities of domestic and foreign
companies (including in emerging markets), including small, medium, and large
market capitalization companies, and growth and value stock; and
•less
than 20% of its assets in specialty funds, and less than 20% in any one
specialty fund; such funds generally offer unique combinations of traditional
equity securities and fixed-income securities or use alternative investment
strategies that aim to offer diversification beyond traditional equity and
fixed-income securities and include investments in such assets as
infrastructure, commodities, currencies, and natural resources
companies.
The Fund may temporarily exceed these percentage ranges and may
alter the percentage ranges when it deems
appropriate.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund
shareholders bear indirectly their proportionate share of the expenses of other
investment companies (for example, other mutual funds or exchange-traded funds)
in which the Fund invests (“underlying funds”). The Fund’s selection and
weighting of asset classes and allocation of investments in underlying funds may
cause it to underperform other funds with a similar investment objective. The
Fund’s performance and risks correspond directly to the performance and risks of
the underlying funds in which it invests, proportionately in accordance with the
weightings of such investments, and there is no assurance that the underlying
funds will achieve their investment objectives. Management of the Fund entails
potential conflicts of interest: the Fund invests in affiliated underlying
funds; and PGI and its affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more Fund assets to
underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
13.19% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(15.32)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SAM
Balanced Portfolio - Class 1 |
16.00% |
8.12% |
6.23% |
| SAM
Balanced Portfolio - Class 2 |
15.65% |
7.84% |
5.96% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
SAM
Balanced Blended Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
16.41% |
8.69% |
6.73% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The SAM Balanced Blended Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the blended index is also shown.
The weightings for SAM Balanced Blended Index are as follows: 45% Russell 3000
Index, 40% Bloomberg U.S. Aggregate Bond Index, and 15% MSCI EAFE Index
NTR.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2022), Portfolio Manager
•Todd
A. Jablonski (since 2010), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SAM (STRATEGIC ASSET
MANAGEMENT) CONSERVATIVE BALANCED PORTFOLIO
Objective
The
Fund
seeks to provide a high level of total return (consisting of reinvestment of
income and capital appreciation), consistent with a moderate degree of principal
risk.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.23% |
0.23% |
| Distribution
and/or Service (12b-1) Fees |
N/A% |
0.25% |
| Other
Expenses |
0.02% |
0.02% |
| Acquired
Fund Fees and Expenses |
0.45% |
0.45% |
| Total
Annual Fund Operating Expenses |
0.70% |
0.95% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SAM
Conservative Balanced Portfolio - Class 1 |
$72 |
$224 |
$390 |
$871 |
| SAM
Conservative Balanced Portfolio - Class 2 |
97 |
303 |
525 |
1,166 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
28.4% of the average
value of its portfolio.
Principal Investment
Strategies
The
SAM Portfolios operate as funds of funds and invest principally in funds and
exchange-traded funds (“ETFs”) of Principal Funds, Inc., PVC, and Principal
Exchange-Traded Funds (“Underlying Funds”). Each SAM Portfolio generally
categorizes each Underlying Fund as a fixed-income, equity, or specialty fund
based on its investment profile. Each SAM Portfolio typically allocates its
assets among Underlying Funds, and within predetermined percentage ranges, as
determined by the SAM Portfolio in accordance with its outlook for the economy,
the financial markets, and the relative market valuations of the Underlying
Funds. The asset class diversification of the SAM Portfolio is designed to
moderate overall price volatility and cushion severe losses in any one
investment sector.
The
Fund generally invests:
•between
40% and 80% of its assets in fixed-income funds, and less than 40% in any one
fixed-income fund; such funds generally invest in fixed-income instruments such
as high yield securities (or “junk” bonds), securitized products and corporate
bonds;
•between
20% and 60% of its assets in equity funds, and less than 30% in any one equity
fund; such funds generally invest in equity securities of domestic and foreign
companies (including in emerging markets), including small, medium, and large
market capitalization companies, and growth and value stock; and
•less
than 20% of its assets in specialty funds, and less than 20% in any one
specialty fund; such funds generally offer unique combinations of traditional
equity securities and fixed-income securities or use alternative investment
strategies that aim to offer diversification beyond traditional equity and
fixed-income securities and include investments in such assets as
infrastructure, commodities, currencies, and natural resources
companies.
The Fund may temporarily exceed these percentage ranges and may
alter the percentage ranges when it deems
appropriate.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund
shareholders bear indirectly their proportionate share of the expenses of other
investment companies (for example, other mutual funds or exchange-traded funds)
in which the Fund invests (“underlying funds”). The Fund’s selection and
weighting of asset classes and allocation of investments in underlying funds may
cause it to underperform other funds with a similar investment objective. The
Fund’s performance and risks correspond directly to the performance and risks of
the underlying funds in which it invests, proportionately in accordance with the
weightings of such investments, and there is no assurance that the underlying
funds will achieve their investment objectives. Management of the Fund entails
potential conflicts of interest: the Fund invests in affiliated underlying
funds; and PGI and its affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more Fund assets to
underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
High
Yield Securities Risk. High yield fixed-income securities (commonly referred to as “junk
bonds”) are subject to greater credit quality risk than higher rated
fixed-income securities and should be considered speculative.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
10.38% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(11.48)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SAM
Conservative Balanced Portfolio - Class 1 |
11.97% |
5.95% |
4.87% |
| SAM
Conservative Balanced Portfolio - Class 2 |
11.80% |
5.70% |
4.62% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
SAM
Conservative Balanced Blended Index (except
as noted for MSCI EAFE Index NTR, reflects no deduction for fees,
expenses, or taxes) |
12.71% |
6.22% |
5.15% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Russell
3000 Index
(reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The SAM Conservative Balanced Blended
Index is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the blended index is also shown.
The weightings for SAM Conservative Balanced Blended Index are as follows: 60%
Bloomberg U.S. Aggregate Bond Index, 30% Russell 3000 Index, and 10% MSCI EAFE
Index NTR.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2022), Portfolio Manager
•Todd
A. Jablonski (since 2010), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SAM (STRATEGIC ASSET
MANAGEMENT) CONSERVATIVE GROWTH PORTFOLIO
Objective
The
Fund seeks
to provide long-term capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.23% |
0.23% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
| Acquired
Fund Fees and Expenses |
0.53% |
0.53% |
| Total
Annual Fund Operating Expenses |
0.77% |
1.02% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SAM
Conservative Growth Portfolio – Class 1 |
$79 |
$246 |
$428 |
$954 |
| SAM
Conservative Growth Portfolio - Class 2 |
104 |
325 |
563 |
1,248 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
28.0% of the average
value of its portfolio.
Principal Investment
Strategies
The
SAM Portfolios operate as funds of funds and invest principally in funds and
exchange-traded funds (“ETFs”) of Principal Funds, Inc., PVC, and Principal
Exchange-Traded Funds (“Underlying Funds”). Each SAM Portfolio generally
categorizes each Underlying Fund as a fixed-income, equity, or specialty fund
based on its investment profile. Each SAM Portfolio typically allocates its
assets among Underlying Funds, and within predetermined percentage ranges, as
determined by the SAM Portfolio in accordance with its outlook for the economy,
the financial markets, and the relative market valuations of the Underlying
Funds. The asset class diversification of the SAM Portfolio is designed to
moderate overall price volatility and cushion severe losses in any one
investment sector.
The
Fund generally invests:
•between
0% and 40% of its assets in fixed-income funds, and less than 30% in any one
fixed-income fund; such funds generally invest in fixed-income instruments such
as corporate bonds;
•between
60% and 100% of its assets in equity funds, and less than 40% in any one equity
fund; such funds generally invest in equity securities of domestic and foreign
companies (including in emerging markets), including small, medium, and large
market capitalization companies, and growth and value stock; and
•less
than 20% of its assets in specialty funds, and less than 20% in any one
specialty fund; such funds generally offer unique combinations of traditional
equity securities and fixed-income securities or use alternative investment
strategies that aim to offer diversification beyond traditional equity and
fixed-income securities and include investments in such assets as
infrastructure, commodities, currencies, and natural resources
companies.
The Fund may temporarily exceed these percentage ranges and may
alter the percentage ranges when it deems
appropriate.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund
shareholders bear indirectly their proportionate share of the expenses of other
investment companies (for example, other mutual funds or exchange-traded funds)
in which the Fund invests (“underlying funds”). The Fund’s selection and
weighting of asset classes and allocation of investments in underlying funds may
cause it to underperform other funds with a similar investment objective. The
Fund’s performance and risks correspond directly to the performance and risks of
the underlying funds in which it invests, proportionately in accordance with the
weightings of such investments, and there is no assurance that the underlying
funds will achieve their investment objectives. Management of the Fund entails
potential conflicts of interest: the Fund invests in affiliated underlying
funds; and PGI and its affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more Fund assets to
underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
16.04% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(19.01)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SAM
Conservative Growth Portfolio - Class 1 |
19.37% |
10.12% |
7.49% |
| SAM
Conservative Growth Portfolio - Class 2 |
19.05% |
9.83% |
7.22% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
SAM
Conservative Growth Blended Index (except
as noted for MSCI EAFE Index NTR, reflects no deduction for fees,
expenses, or taxes) |
20.18% |
11.10% |
8.25% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The SAM Conservative Growth Blended
Index is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the blended index is also shown.
The weightings for SAM Conservative Growth Blended Index are as follows: 60%
Russell 3000 Index, 20% Bloomberg U.S. Aggregate Bond Index, and 20% MSCI EAFE
Index NTR.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2022), Portfolio Manager
•Todd
A. Jablonski (since 2010), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SAM (STRATEGIC ASSET
MANAGEMENT) FLEXIBLE INCOME PORTFOLIO
Objective
The
Fund
seeks to provide a high level of total return (consisting of reinvestment of
income with some capital appreciation).
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.23% |
0.23% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.02% |
0.02% |
| Acquired
Fund Fees and Expenses |
0.40% |
0.40% |
| Total
Annual Fund Operating Expenses |
0.65% |
0.90% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SAM
Flexible Income Portfolio - Class 1 |
$66 |
$208 |
$362 |
$810 |
| SAM
Flexible Income Portfolio - Class 2 |
92 |
287 |
498 |
1,108 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
24.8% of the average
value of its portfolio.
Principal Investment
Strategies
The
SAM Portfolios operate as funds of funds and invest principally in funds and
exchange-traded funds (“ETFs”) of Principal Funds, Inc., PVC, and Principal
Exchange-Traded Funds (“Underlying Funds”). Each SAM Portfolio generally
categorizes each Underlying Fund as a fixed-income, equity, or specialty fund
based on its investment profile. Each SAM Portfolio typically allocates its
assets among Underlying Funds, and within predetermined percentage ranges, as
determined by the SAM Portfolio in accordance with its outlook for the economy,
the financial markets, and the relative market valuations of the Underlying
Funds. The asset class diversification of the SAM Portfolio is designed to
moderate overall price volatility and cushion severe losses in any one
investment sector.
The
Fund generally invests:
•between
55% and 95% of its assets in fixed-income funds, and less than 40% in any one
fixed-income fund; such funds generally invest in fixed-income instruments such
as high yield securities (or “junk” bonds), securitized products, and corporate
bonds;
•between
5% and 45% of its assets in equity funds, and less than 30% in any one equity
fund; such funds generally invest in equity securities of domestic and foreign
companies, including small, medium, and large market capitalization companies,
and growth and value stock; and
•less
than 20% of its assets in specialty funds, and less than 20% in any one
specialty fund; such funds generally offer unique combinations of traditional
equity securities and fixed-income securities or use alternative investment
strategies that aim to offer diversification beyond traditional equity and
fixed-income securities and include investments in such assets as
infrastructure, commodities, currencies, and natural resources
companies.
The Fund may temporarily exceed these percentage ranges and may
alter the percentage ranges when it deems
appropriate.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund
shareholders bear indirectly their proportionate share of the expenses of other
investment companies (for example, other mutual funds or exchange-traded funds)
in which the Fund invests (“underlying funds”). The Fund’s selection and
weighting of asset classes and allocation of investments in underlying funds may
cause it to underperform other funds with a similar investment objective. The
Fund’s performance and risks correspond directly to the performance and risks of
the underlying funds in which it invests, proportionately in accordance with the
weightings of such investments, and there is no assurance that the underlying
funds will achieve their investment objectives. Management of the Fund entails
potential conflicts of interest: the Fund invests in affiliated underlying
funds; and PGI and its affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more Fund assets to
underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying
Funds
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
High
Yield Securities Risk. High yield fixed-income securities (commonly referred to as “junk
bonds”) are subject to greater credit quality risk than higher rated
fixed-income securities and should be considered speculative.
Portfolio
Duration Risk. Portfolio duration is a measure of the expected life of a
fixed-income security and its sensitivity to changes in interest rates. The
longer a fund’s average portfolio duration, the more sensitive the fund will be
to changes in interest rates, which means funds with longer average portfolio
durations may be more volatile than those with shorter
durations.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments
in securitized products are subject to risks similar to traditional fixed-income
securities, such as credit, interest rate, liquidity, prepayment, extension, and
default risk, as well as additional risks associated with the nature of the
assets and the servicing of those assets. Unscheduled prepayments on securitized
products may have to be reinvested at lower rates. A reduction in prepayments
may increase the effective maturities of these securities, exposing them to the
risk of decline in market value over time (extension
risk).
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
7.83% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(8.66)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SAM
Flexible Income Portfolio - Class 1 |
9.37% |
4.29% |
3.92% |
| SAM
Flexible Income Portfolio - Class 2 |
9.21% |
4.05% |
3.67% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
SAM
Flexible Income Blended Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
10.07% |
4.41% |
4.01% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Russell
3000 Index
(reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The SAM Flexible Income Blended Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with returns of indices of funds with similar investment
objectives. Performance of each component of the blended index is also shown.
The weightings for SAM Flexible Income Blended Index are as follows: 75%
Bloomberg U.S. Aggregate Bond Index, 20% Russell 3000 Index, and 5% MSCI EAFE
Index NTR.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2022), Portfolio Manager
•Todd
A. Jablonski (since 2010), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SAM (STRATEGIC ASSET
MANAGEMENT) STRATEGIC GROWTH PORTFOLIO
Objective
The
Fund seeks
to provide long-term capital appreciation.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.23% |
0.23% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.01% |
0.01% |
| Acquired
Fund Fees and Expenses |
0.56% |
0.56% |
| Total
Annual Fund Operating Expenses |
0.80% |
1.05% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SAM
Strategic Growth Portfolio - Class 1 |
$82 |
$255 |
$444 |
$990 |
| SAM
Strategic Growth Portfolio - Class 2 |
107 |
334 |
579 |
1,283 |
Portfolio
Turnover
The
Fund and each underlying fund pays transaction costs, such as commissions, when
it buys and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs. These costs, which are not
reflected in Annual Fund Operating Expenses or in the Example, affect the Fund’s
and the underlying fund's performance. During
the most recent fiscal year, the Fund’s portfolio turnover rate was
30.2% of the average
value of its portfolio.
Principal Investment
Strategies
The
SAM Portfolios operate as funds of funds and invest principally in funds and
exchange-traded funds (“ETFs”) of Principal Funds, Inc., PVC, and Principal
Exchange-Traded Funds (“Underlying Funds”). Each SAM Portfolio generally
categorizes each Underlying Fund as a fixed-income, equity, or specialty fund
based on its investment profile. Each SAM Portfolio typically allocates its
assets among Underlying Funds, and within predetermined percentage ranges, as
determined by the SAM Portfolio in accordance with its outlook for the economy,
the financial markets, and the relative market valuations of the Underlying
Funds. The asset class diversification of the SAM Portfolio is designed to
moderate overall price volatility and cushion severe losses in any one
investment sector.
The
Fund generally invests:
•between
75% and 100% of its assets in equity funds, and less than 50% in any one equity
fund; such funds generally invest in equity securities of domestic and foreign
companies (including in emerging markets), including small, medium, and large
market capitalization companies, and growth and value stock;
•and
less than 20% of its assets in specialty funds, and less than 20% in any one
specialty fund; such funds generally offer unique combinations of traditional
equity securities or use alternative investment strategies that aim to offer
diversification beyond traditional equity securities and include investments in
such assets as infrastructure, commodities, currencies, and natural resources
companies.
The
Fund may temporarily exceed these percentage ranges and may alter the percentage
ranges when it deems appropriate.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Principal
Risks of Investing in a Fund of Funds
Fund
of Funds Risk. Fund
shareholders bear indirectly their proportionate share of the expenses of other
investment companies (for example, other mutual funds or exchange-traded funds)
in which the Fund invests (“underlying funds”). The Fund’s selection and
weighting of asset classes and allocation of investments in underlying funds may
cause it to underperform other funds with a similar investment objective. The
Fund’s performance and risks correspond directly to the performance and risks of
the underlying funds in which it invests, proportionately in accordance with the
weightings of such investments, and there is no assurance that the underlying
funds will achieve their investment objectives. Management of the Fund entails
potential conflicts of interest: the Fund invests in affiliated underlying
funds; and PGI and its affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more Fund assets to
underlying funds from which they receive higher
fees.
Principal
Risks due to the Fund's Investments in Underlying Funds
Emerging
Markets Risk. Investments in emerging markets may have more risk than those in
developed markets because the emerging markets are less developed and more
illiquid. Emerging markets can also be subject to increased social, economic,
regulatory, and political uncertainties and can be extremely volatile. The U.S.
Securities and Exchange Commission, the U.S. Department of Justice, and other
U.S. authorities may be limited in their ability to pursue bad actors in
emerging markets, including with respect to fraud.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Growth
Style Risk. Growth investing entails the risk that if growth companies do not
increase their earnings at a rate expected by investors, the market price of
their stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
lessen price declines in market downturns.
•Smaller
Companies Risk. Investments in smaller companies may involve greater risk and price
volatility than investments in larger, more mature companies. Smaller companies
may have limited product lines, markets, or financial resources; lack the
competitive strength of larger companies; have less experienced managers; or
depend on a few key employees. Their securities often are less widely held and
trade less frequently and in lesser quantities, and their market prices often
fluctuate more, than securities of larger companies.
•Value
Style Risk. Value investing entails the risk that
value stocks may continue to be undervalued by the market for extended periods,
including the entire period during which the stock is held by a fund, or the
events that would cause the stock price to increase may not occur as anticipated
or at all. Moreover, a stock that appears to be undervalued actually may be
appropriately priced at a low level and, therefore, would not be profitable for
the fund.
Foreign
Currency Risk. Risks of investing in securities denominated in, or that trade in,
foreign (non-U.S.) currencies include changes in foreign exchange rates and
foreign exchange restrictions.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
19.27% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(22.11)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SAM
Strategic Growth Portfolio - Class 1 |
21.86% |
11.78% |
8.26% |
| SAM
Strategic Growth Portfolio - Class 2 |
21.58% |
11.50% |
7.99% |
|
Russell
3000 Index
(reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
SAM
Strategic Growth Blended Index (except as noted for MSCI
EAFE Index NTR, reflects no deduction for fees, expenses, or
taxes) |
22.96% |
12.77% |
9.25% |
|
Russell
3000 Index
(reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
MSCI EAFE
Index NTR (reflects withholding taxes
on foreign dividends, but no deduction for fees, expenses, or other
taxes) |
18.24% |
8.16% |
4.28% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The SAM
Strategic Growth Blended Index is included as an additional index for the Fund
as it shows how the Fund’s performance compares with returns of indices of funds
with similar investment objectives. Performance of each component of the blended
index is also shown. The weightings for SAM Strategic Growth Blended Index are
as follows: 70% Russell 3000
Index, 25% MSCI EAFE Index NTR, and 5%
Bloomberg U.S. Aggregate Bond Index.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Brody
Dass (since 2022), Portfolio Manager
•Todd
A. Jablonski (since 2010), Portfolio Manager
•Yesim
Tokat-Acikel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SHORT-TERM INCOME
ACCOUNT
Objective
The
Fund seeks to provide as high a level of current income as is consistent with
prudent investment management and stability of
principal.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
| Management
Fees |
0.40% |
| Other
Expenses |
0.03% |
| Total
Annual Fund Operating Expenses |
0.43% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| Short-Term
Income Account - Class 1 |
$44 |
$138 |
$241 |
$542 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
38.7% of the average
value of its portfolio.
Principal Investment
Strategies
The
Fund seeks to achieve its investment objective by investing in a broad range of
high-quality, fixed-income securities. The Fund invests primarily in
high-quality short-term bonds and other fixed-income securities that, at the
time of purchase, are rated BBB- or higher by S&P Global Ratings (“S&P
Global”) or Baa3 or higher by Moody’s Investors Service, Inc. (“Moody’s”). If
the security has been rated by only one of the rating agencies, that rating will
determine the security’s rating; if the security is rated differently by the
rating agencies, the highest rating will be used; and if the security has not
been rated by either of the rating agencies, those selecting such investments
will determine the security’s quality. The Fund’s investments also include
corporate securities, government securities, mortgage-backed and asset-backed
securities (securitized products), and foreign securities.
Under
normal circumstances, the Fund maintains an effective maturity of five years or
less and an average portfolio duration that is within ±30% of the duration of
the Bloomberg Credit 1-3 Year Index, which as of March 31, 2024 was 1.83
years.
The
Fund invests in derivatives, including Treasury futures, to manage the
fixed-income exposure. A derivative is a financial arrangement, the value of
which is derived from, or based on, a traditional security, asset, or market
index.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Futures.
Futures contracts involve specific
risks, including: the imperfect correlation between the change in market value
of the instruments held by the Fund and the price of the futures contract;
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; counterparty risk;
and if the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin
requirements.
Fixed-Income
Securities Risk. Fixed-income securities are subject to interest rate, credit
quality, and liquidity risks. The market value of fixed-income securities
generally declines when interest rates rise, and increased interest rates may
adversely affect the liquidity of certain fixed-income securities. Moreover, an
issuer of fixed-income securities could default on its payment obligations due
to increased interest rates or for other reasons.
Foreign
Securities Risk. The risks of foreign securities include loss of value as a result
of: political or economic instability; nationalization, expropriation, or
confiscatory taxation; settlement delays; and limited government regulation
(including less stringent reporting, accounting, and disclosure standards than
are required of U.S. companies).
Portfolio
Duration Risk. Portfolio
duration is a measure of the expected life of a fixed-income security and its
sensitivity to changes in interest rates. The longer a fund’s average portfolio
duration, the more sensitive the fund will be to changes in interest rates,
which means funds with longer average portfolio durations may be more volatile
than those with shorter durations.
Real
Estate Securities Risk. Investing in real estate securities subjects the fund to the risks
associated with the real estate market (which are similar to the risks
associated with direct ownership in real estate), including declines in real
estate values, loss due to casualty or condemnation, property taxes, interest
rate changes, increased expenses, cash flow of underlying real estate assets,
regulatory changes (including zoning, land use, and rents), and environmental
problems, as well as to the risks related to the management skill and
creditworthiness of the issuer.
Redemption
and Large Transaction Risk. Ownership
of the Fund’s shares may be concentrated in one or a few large investors (such
as funds of funds, institutional investors, and asset allocation programs) that
may redeem or purchase shares in large quantities. These transactions may cause
the Fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
Fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
Securitized
Products Risk. Investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Unscheduled
prepayments on securitized products may have to be reinvested at lower rates. A
reduction in prepayments may increase the effective maturities of these
securities, exposing them to the risk of decline in market value over time
(extension risk).
U.S.
Government Securities Risk. Yields
available from U.S. government securities are generally lower than yields from
many other fixed-income securities. The value of U.S. government securities may
be adversely impacted by changes in interest rates, changes in the credit rating
of the U.S. government, or a default by the U.S.
government.
U.S.
Government-Sponsored Securities Risk. Securities issued by U.S. government-sponsored enterprises such as
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, and the Federal Home Loan Banks are not issued or guaranteed by the
U.S. government.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
3.14% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2022 |
(2.37)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| Short-Term
Income Account - Class 1 |
5.60% |
1.84% |
1.72% |
|
Bloomberg
U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses, or taxes) |
5.53% |
1.10% |
1.81% |
|
Bloomberg
Credit 1-3 Year Index (reflects no deduction for
fees, expenses, or taxes) |
5.28% |
2.03% |
1.75% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Bloomberg U.S. Aggregate Bond Index
in order to meet the revised definition of “broad-based securities market
index.” The Bloomberg Credit 1-3 Year Index
is included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•John
R. Friedl (since 2010), Portfolio Manager
•Michael
Goosay (since 2023), Portfolio Manager
•Scott
J. Peterson (since 2010), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
SMALLCAP
ACCOUNT
Objective
The
Fund seeks long-term growth of capital.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
1 |
Class
2 |
| Management
Fees |
0.83% |
0.83% |
| Distribution
and/or Service (12b-1) Fees |
N/A |
0.25% |
| Other
Expenses |
0.02% |
0.02% |
| Total
Annual Fund Operating Expenses |
0.85% |
1.10% |
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| SmallCap
Account - Class 1 |
$87 |
$271 |
$471 |
$1,049 |
| SmallCap
Account - Class 2 |
112 |
350 |
606 |
1,340 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
24.6% of the average
value of its portfolio.
Principal Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in equity securities of companies with small
market capitalizations at the time of purchase. For
this Fund, companies with small market capitalizations are those with market
capitalizations within the range of companies comprising the Russell
2000®
Index (as of March 31, 2024, this was between approximately $11.7 million
and $58.4 billion).
Those managing the Fund’s investments seek to invest in securities of companies
that they believe have improving and sustainable business fundamentals, rising
investor expectations, and attractive relative
valuations.
Principal
Risks
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Equity
Securities Risk. A
variety of factors can negatively impact the value of equity securities held by
a fund, including a decline in the issuer’s financial condition, unfavorable
performance of the issuer’s sector or industry, or changes in response to
overall market and economic conditions. A fund’s principal market segment(s)
(such as market capitalization or style) may underperform other market segments
or the equity markets as a whole.
•Smaller
Companies Risk. Investments in smaller companies may
involve greater risk and price volatility than investments in larger, more
mature companies. Smaller companies may have limited product lines, markets, or
financial resources; lack the competitive strength of larger companies; have
less experienced managers; or depend on a few key employees. Their securities
often are less widely held and trade less frequently and in lesser quantities,
and their market prices often fluctuate more, than securities of larger
companies.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s Class 1 performance from year to year. The
table shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
For
periods prior to the inception date of Class 2 shares (February 17, 2015), the
performance shown in the table for Class 2 shares is that of the Fund’s Class 1
shares, adjusted to reflect the fees and expenses of the Class 2 shares. These
adjustments result in performance for such periods that is no higher than the
historical performance of the Class 1 shares.
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q2
2020 |
28.64% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q1
2020 |
(30.53)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
5
Years |
10
Years |
| SmallCap
Account - Class 1 |
15.53% |
11.39% |
7.81% |
| SmallCap
Account - Class 2 |
15.39% |
11.13% |
7.55% |
|
Russell
3000 Index (reflects no deduction for
fees, expenses, or taxes) |
25.96% |
15.16% |
11.48% |
|
Russell
2000 Index (reflects no deduction for
fees, expenses, or taxes) |
16.93% |
9.97% |
7.16% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the Russell 3000 Index in order to meet
the revised definition of “broad-based securities market index.”
The Russell 2000 Index is included as
an additional index for the Fund as it shows how the Fund’s performance compares
with the returns of an index of funds with similar investment
objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Phil
Nordhus (since 2006), Portfolio Manager
•Brian
W. Pattinson (since 2011), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
U.S. LARGECAP BUFFER
JANUARY ACCOUNT
•The
Fund employs a defined outcome strategy, but there is no guarantee that such
outcomes for an Outcome Period, as defined below, will be achieved. You may lose
some or all of your money by investing in the Fund.
The Fund’s defined outcome strategy seeks to provide investors with returns
(before
Fund fees and expenses)
based on the S&P 500 Price Return Index (the “Index”), while seeking to
provide a buffer against the first 10% of Index losses (before
Fund fees and expenses),
over a twelve-month period beginning on January 1 and ending on December 31. The
Fund has characteristics unlike many other typical investment products and may
not be suitable for all investors. It is important that investors understand the
Fund’s investment strategy before making an investment in the Fund.
•The
defined outcomes may only be realized if you are holding shares on the first day
of an Outcome Period and continue to hold them on the last day of that Outcome
Period. If you purchase shares after an Outcome Period has begun or sell shares
prior to an Outcome Period’s conclusion, you may experience investment returns
very different from those that the Fund seeks to provide. Investors purchasing
shares of the Fund after the Outcome Period begins can see their expected
outcomes until the end of the period by visiting the Fund’s website,
https://annuity.principal.com/variableannuity/bufferaccounts. The Fund’s
performance over an Outcome Period will be exposed to losses beyond the Buffer,
as defined below, in the amount of the Fund’s expenses.
•The
Fund will not terminate after the conclusion of the Outcome Period. After the
conclusion of an Outcome Period with respect to the Fund, another will
begin.
•The
Fund only seeks to provide shareholders that hold shares for an entire Outcome
Period with a Buffer against a pre-determined percentage of Index declines. You
will bear all losses beyond that pre-determined percentage as described below.
While the Fund seeks to limit losses for shareholders who hold shares for the
entire Outcome Period, there is no guarantee it will successfully do
so.
•The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important information about the Fund, including, among other items,
Outcome Period start and end dates, information about the Buffer, the Fund’s
performance during the current Outcome Period relative to its Buffer, and
potential outcomes for the Fund updated on a daily basis. If you are
contemplating purchasing or selling shares of the Fund, please visit the
website.
•Investors
should consider this investment only under the following circumstances: they
fully understand the risks inherent in an investment in the Fund; they seek
returns based on the performance of the Index, while also seeking to be buffered
against the first 10% of Index losses, over an Outcome Period; they are willing
to hold shares for the entirety of an Outcome Period; they are willing to accept
the risk of losing their entire investment; and they have visited the Fund’s
website and understand the outcomes available based on timing of
purchase.
Objective
The Fund seeks to provide investors with returns (before fees and
expenses) based on the S&P 500 Price Return Index (the “Index”), while
seeking to provide a buffer against the first 10% (prior to taking into account
any fees and expenses of the Fund) of Index losses, over a twelve-month period
beginning on January 1 and ending on December 31.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
| Management
Fees |
0.69% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
|
Other
Expenses(1) |
0.09% |
| Acquired
Fund Fees and Expenses |
0.05% |
| Total
Annual Fund Operating Expenses |
1.08% |
|
Expense
Reimbursement(2) |
(0.05)% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
1.03% |
(1)Includes
0.03% of interest expense on borrowings. The expense is not subject to the
contractual expense limit.
(2)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.95% for Class 2 shares. It is expected the expense limit will continue
through the period ending
April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| U.S.
LargeCap Buffer January Account - Class 2 |
$105 |
$339 |
$591 |
$1,313 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
136.3% of the average
value of its portfolio.
Principal
Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in exchange-traded funds (“ETFs”) and
options that reference the S&P 500 Price Return Index (the “Index”) at the
time of each purchase. The Index represents U.S. equities with risk/return
characteristics of the large cap universe. As
of March 31, 2024, the market capitalization range of the Index was between
approximately $5.2 billion and $3.1 trillion. The Index is distinct from the
S&P 500 Total Return Index in that it only tracks the performance of the
stock prices of the companies included in the Index and does not include returns
from dividends paid by the companies included in the Index. The Fund's
strategies may result in the active and frequent trading of the Fund's portfolio
securities.
The
Fund’s investment advisor, Principal Global Investors, LLC (“PGI”), employs a
defined outcome strategy that uses options to seek to achieve exposure to the
Index while mitigating the first 10% decline in the Index (the “Buffer”) over a
12-month period beginning on the first day of each January (the
“Specified Date”). The one-year period following the Specified Date is referred
to as the “Outcome Period.” Subject to certain limitations described in more
detail below, the Fund generally seeks to maintain net costs from its use of
options approximately equal to its anticipated receipt of dividends as
determined at the beginning of the Outcome Period. Intra-period cash flows are
managed to target and maintain the return pattern determined at the beginning of
the Outcome Period. Accordingly, changes in the amounts of dividends paid by
companies underlying the Index and changes in the value of companies underlying
the Index can cause performance to be lower than the performance of the Index.
At
the beginning of each Outcome Period, the Fund will purchase ETFs and call
options that reference the Index and a put option at-the-money for the purpose
of providing downside protection. The Fund will sell (write) put options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
lower than the closing value of the Index or an ETF that tracks the Index at the
beginning of the Outcome Period. The Fund will sell (write) call options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
higher than the closing value of the Index or an ETF that tracks the Index at
the beginning of the Outcome Period. As the seller of these options, the Fund
receives a premium from the buyer of the options. The Fund expects to write the
call options on one or more of the ETFs owned by the Fund or the Index to the
extent necessary to maintain its net costs from the purchase and sale of options
approximately equal to its anticipated receipt of dividends, as determined at
the beginning of the Outcome Period, but it will do so only to the extent that
the written call options on each respective ETF or the Index have an aggregate
notional value less than or equal to the market value of the respective ETF or
the Index owned by the Fund. The Fund will generally not seek to offset the
costs of call options purchased. The Fund’s returns are generally expected to
appreciate to a similar extent as the Index for the first 10% of the Index
gains. The prices of the call options and put options sold and purchased by the
Fund, in addition to the Fund’s direct investments in underlying ETFs, will
determine the Fund’s exposure to the Index during the Outcome Period.
Intra-period cash flows are managed to target and maintain the return pattern
determined at the beginning of the Outcome Period.
An
option gives the purchaser of the option the right to purchase (for a call
option) or sell (for a put option) the underlying asset (or deliver cash equal
to the value of an underlying index) at a specified price (the strike price). If
the underlying asset declines in value, the value of a put option will generally
increase (and the value of a call option will generally decrease and may end up
worthless), and in the event the underlying asset appreciates in value, the
value of a put option will generally decrease and may end up worthless (and the
value of a call option will generally increase). Due
to the cost of the options used by the Fund, the correlation of the Fund’s
performance to that of the Index is expected to be less than if the Fund
invested directly in the Index without using options, and could be substantially
less.
This means that if the Index experiences gains for an Outcome Period, the Fund
may not realize gains to the same extent, as illustrated in the second
hypothetical graphical illustration below.
The
Fund’s strategy is to seek to protect investors from a decline of up to 10% in
the performance of the Index over the Outcome Period. The
Fund is not designed to protect against declines of more than 10% in the level
of the Index, and there can be no guarantee that the Fund will be successful in
implementing its strategy to buffer against the first 10% of Index
losses.
The Fund, and therefore investors, will bear all losses exceeding 10%. In
addition, because the outcome is calculated before taking into account the
Fund’s expenses, Fund performance over an Outcome Period will be exposed to
losses beyond the Buffer in the amount of such Fund expenses. The Fund may
underperform the Index due to the cost of the Buffer protection.
The
Fund will invest in exchange-traded FLexible EXchange Options (“FLEX Options”),
which are customized exchange-traded option contracts available through the
Chicago Board Option Exchange (“Cboe”) that are guaranteed for settlement by The
Options Clearing Corporation (“OCC”). FLEX Options provide investors with the
ability to customize exercise prices, exercise styles, and expiration dates. All
FLEX Options in the Fund are European-style options (i.e., they can only be
exercised at the expiration date of the option) based on the Index or an ETF
that tracks the Index and have an expiration date that is the last day of the
Outcome Period.
The
hypothetical graphical illustrations provided below are designed to illustrate
the hypothetical outcomes of the Buffer strategy based upon hypothetical
performance of the Index for a shareholder that holds shares for the entirety of
an Outcome Period. The illustrations assume that the Fund will write call
options with an aggregate notional amount equal to 50% of the market value of
the ETFs and purchased call options. There is no guarantee that the Fund will be
successful in its attempt to provide such outcomes for an Outcome Period, and
the actual aggregate notional amount of written call options could be
significantly different depending upon changes in the amounts of dividends paid
by companies underlying the Index, changes in the value of companies underlying
the index, and the relative prices of the options used by the Fund. The
returns that the Fund seeks to provide do not include the costs associated with
purchasing shares of the Fund and the expenses incurred by the
Fund.
The
Buffer is designed to have its full effect only for investors who continually
hold Fund shares for an entire Outcome Period. The Fund is designed to seek to
achieve the results described above for investments made on the first day of the
Outcome Period and held until the last day of the Outcome Period. Investments
made on any other day may differ significantly, positively or negatively, from
the results described above.
The
Fund’s operations are intended to be continuous. It will not terminate and
distribute its assets at the conclusion of each Outcome Period. On the Specified
Date, another Outcome Period will commence, and the Fund will invest in a new
set of FLEX Options.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important Fund information on a daily basis, including information
about the Buffer, current Outcome Period start and end dates, and information
relating to the remaining potential outcomes of an investment in the Fund.
Investors considering purchasing shares should visit the website for the latest
information.
Note: “Standard
& Poor's 500®”
and “S&P 500®” are trademarks of S&P Global and have been licensed by PGI.
The Fund is not sponsored, endorsed, sold, or promoted by S&P Global, and
S&P Global makes no representation regarding the advisability of investing
in the Fund.
Principal
Risks
The
Fund has characteristics unlike many other traditional investment products and
is not appropriate for all investors. In particular, investment in the Fund may
not be appropriate for investors who do not intend to maintain their investment
through the entire Outcome Period. There is no guarantee that the Fund will be
able to achieve the stated Defined Outcome.
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Buffered
Loss Risk. There
can be no guarantee that the Fund will be successful in its strategy to provide
buffer protection against Index losses if the Index decreases over the Outcome
Period by 10% or less. A shareholder may lose his or her entire investment. The
Fund’s strategy seeks to deliver returns that match the Index (but will be less
than the Index due to the cost of the options used by the Fund), while limiting
downside losses, if shares are bought on the day on which the Fund enters into
the options and held until those options expire at the end of each Outcome
Period. Intra-period cash flows are managed to target and maintain the return
pattern determined at the beginning of the Outcome Period. Accordingly, changes
in the amounts of dividends paid by companies underlying the Index and changes
in the value of companies underlying the Index can cause performance to be lower
than the performance of the Index. Further, in the event an investor purchases
shares after the date on which the options were entered into or sells shares
prior to the expiration of the options, the Buffer that the Fund seeks to
provide may not be available. The Fund does not provide principal protection,
and an investor may experience significant losses on its investment, including
the loss of its entire investment.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Exchange-Traded
Funds Risk. When the Fund invests in ETFs, you will indirectly bear fees and
expenses charged by the ETFs in addition to the Fund’s direct fees and expenses.
In addition, the Fund may be affected by losses of the ETFs and the level of
risk arising from the investment practices of the ETFs (such as the use of
leverage by the ETFs). The Fund has no control over the investments and related
risks taken by the ETFs in which it invests. Additionally, investments in ETFs
are also subject to the following risks: (i) the market price of an ETF’s shares
may trade above or below their net asset value; (ii) an active trading market
for an ETF’s shares may not develop or be maintained; or (iii) trading of an
ETF’s shares may be halted for a number of reasons.
FLEX
Options Risk. The Fund may invest in FLEX Options issued and guaranteed for
settlement by the OCC. The Fund bears the risk that the OCC will be unable or
unwilling to perform its obligations under the FLEX Options contracts. If the
OCC becomes insolvent or is otherwise unable to meet its settlement obligations,
the Fund could incur significant losses. Additionally, FLEX Options may be
illiquid if trading in the FLEX Options is limited or absent, and in such cases,
the Fund may have difficulty closing out certain FLEX Options positions at
desired times and prices, decreasing the value of the FLEX Options. There is no
guarantee that a liquid secondary trading market will exist for FLEX Options,
and a less liquid trading market may adversely impact the value of FLEX Options.
The Fund intends to treat any income it may derive from the FLEX Options as
“qualifying income” under the provisions of the Internal Revenue Code applicable
to regulated investment companies (“RICs”). In addition, based upon language in
legislative history, the Fund intends to treat the issuer of the FLEX Options as
the referenced asset for diversification purposes. If the income is not
qualifying income or the issuer of the FLEX Options is not appropriately the
referenced asset, the Fund could lose its own status as a RIC.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
High
Portfolio Turnover Risk. High
portfolio turnover (more than 100%) caused by active and frequent trading of
portfolio securities may result in accelerating the realization of taxable gains
and losses, lower fund performance, and increased brokerage
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Outcome
Period Risk. The
Fund’s strategy seeks to match the performance of the Index, before the
deduction of Fund expenses, and subject to the Buffer amount, only if an
investor holds Fund shares on the first day of the Outcome Period and continues
holding his or her shares until the last day of the Outcome Period. If you
redeem your shares before the end of the Outcome Period, you may experience
investment returns very different from those that the Fund seeks to provide,
including potentially a loss of some or all of your investment.
In particular, you will receive no protection against losses from
the Buffer amount if you redeem before the last day of the Outcome Period, and
you might lose some or all of your investment.
Passive
Strategy Risk. A portion of the Fund seeks to match the performance of a specified
index. However, the correlation between the performance of this portion of the
Fund and index performance may be affected by many factors, such as Fund
expenses, the timing of cash flows into and out of the Fund, changes in
securities markets, and changes in the composition of the
index.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption. Further, the Fund’s strategy may be sensitive to
large purchases and redemptions occurring near the Outcome Period end date
and/or large redemptions in each quarter following the Outcome Period end date,
which may affect the Fund’s ability to achieve its defined outcome
strategy.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it
does not own with the hope of purchasing the same security at a later date at a
lower price. A fund may also enter into a short derivative position through a
futures contract or swap agreement. If the price of the security or derivative
has increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Tracking
Error Risk. The Fund may be subject to tracking error, which is the divergence
of the Fund’s performance (without regard to the Buffer amount) from that of the
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund’s portfolio and those included in the
Index, the Fund’s expenses, changes in the composition of the index, transaction
costs incurred by the Fund (such as brokerage commissions in executing
transactions), the Fund’s holding of uninvested cash, and the timing of
purchases and redemptions of Fund shares.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(December 29, 2022).
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
9.01% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q3
2023 |
(2.45)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
Life
of Fund |
| U.S.
LargeCap Buffer January Account - Class 2 |
19.42% |
19.25% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
26.35% |
|
S&P
500 Price Return Index (reflects no deduction for
fees, expenses, or taxes) |
24.23% |
24.29% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The S&P 500 Price Return Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2022), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
U.S. LARGECAP BUFFER
APRIL ACCOUNT
•The
Fund employs a defined outcome strategy, but there is no guarantee that such
outcomes for an Outcome Period, as defined below, will be achieved. You may lose
some or all of your money by investing in the Fund.
The Fund’s defined outcome strategy seeks to provide investors with returns
(before
Fund fees and expenses)
based on the S&P 500 Price Return Index (the “Index”), while seeking to
provide a buffer against the first 10% of Index losses (before
Fund fees and expenses),
over a twelve-month period beginning on April 1 and ending on March 31. The Fund
has characteristics unlike many other typical investment products and may not be
suitable for all investors. It is important that investors understand the Fund’s
investment strategy before making an investment in the Fund.
•The
defined outcomes may only be realized if you are holding shares on the first day
of an Outcome Period and continue to hold them on the last day of that Outcome
Period. If you purchase shares after an Outcome Period has begun or sell shares
prior to an Outcome Period’s conclusion, you may experience investment returns
very different from those that the Fund seeks to provide. Investors purchasing
shares of the Fund after the Outcome Period begins can see their expected
outcomes until the end of the period by visiting the Fund’s website,
https://annuity.principal.com/variableannuity/bufferaccounts. The Fund’s
performance over an Outcome Period will be exposed to losses beyond the Buffer,
as defined below, in the amount of the Fund’s expenses.
•The
Fund will not terminate after the conclusion of the Outcome Period. After the
conclusion of an Outcome Period with respect to the Fund, another will
begin.
•The
Fund only seeks to provide shareholders that hold shares for an entire Outcome
Period with a Buffer against a pre-determined percentage of Index declines. You
will bear all losses beyond that pre-determined percentage as described below.
While the Fund seeks to limit losses for shareholders who hold shares for the
entire Outcome Period, there is no guarantee it will successfully do
so.
•The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important information about the Fund, including, among other items,
Outcome Period start and end dates, information about the Buffer, the Fund’s
performance during the current Outcome Period relative to its Buffer, and
potential outcomes for the Fund updated on a daily basis. If you are
contemplating purchasing or selling shares of the Fund, please visit the
website.
•Investors
should consider this investment only under the following circumstances: they
fully understand the risks inherent in an investment in the Fund; they seek
returns based on the performance of the Index, while also seeking to be buffered
against the first 10% of Index losses, over an Outcome Period; they are willing
to hold shares for the entirety of an Outcome Period; they are willing to accept
the risk of losing their entire investment; and they have visited the Fund’s
website and understand the outcomes available based on timing of
purchase.
Objective
The Fund seeks to provide investors with returns (before fees and
expenses) based on the S&P 500 Price Return Index (the “Index”), while
seeking to provide a buffer against the first 10% (prior to taking into account
any fees and expenses of the Fund) of Index losses, over a twelve-month period
beginning on April 1 and ending on March 31.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
| Management
Fees |
0.69% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
|
Other
Expenses(1) |
0.06% |
| Acquired
Fund Fees and Expenses |
0.05% |
| Total
Annual Fund Operating Expenses |
1.05% |
|
Expense
Reimbursement(2) |
(0.02)% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
1.03% |
(1)Includes
0.03% of interest expense on borrowings. The expense is not subject to the
contractual expense limit.
(2)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.95% for Class 2 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| U.S.
LargeCap Buffer April Account - Class 2 |
$105 |
$332 |
$577 |
$1,281 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
From
March 29, 2023, the date operations commenced, through December 31, 2023, the
Fund’s annualized portfolio turnover rate was 182.4% of the average value of its
portfolio.
Principal
Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in exchange-traded funds (“ETFs”) and
options that reference the S&P 500 Price Return Index (the “Index”) at the
time of each purchase. The Index represents U.S. equities with risk/return
characteristics of the large cap universe. As
of March 31, 2024, the market capitalization range of the Index was between
approximately $5.2 billion and $3.1 trillion. The Index is distinct from the
S&P 500 Total Return Index in that it only tracks the performance of the
stock prices of the companies included in the Index and does not include returns
from dividends paid by the companies included in the Index. The Fund's
strategies may result in the active and frequent trading of the Fund's portfolio
securities.
The
Fund’s investment advisor, Principal Global Investors, LLC (“PGI”), employs a
defined outcome strategy that uses options to seek to achieve exposure to the
Index while mitigating the first 10% decline in the Index (the “Buffer”) over a
12-month period beginning on the first day of each April (the
“Specified Date”). The one-year period following the Specified Date is referred
to as the “Outcome Period.” Subject to certain limitations described in more
detail below, the Fund generally seeks to maintain net costs from its use of
options approximately equal to its anticipated receipt of dividends as
determined at the beginning of the Outcome Period. Intra-period cash flows are
managed to target and maintain the return pattern determined at the beginning of
the Outcome Period. Accordingly, changes in the amounts of dividends paid by
companies underlying the Index and changes in the value of companies underlying
the Index can cause performance to be lower than the performance of the Index.
At
the beginning of each Outcome Period, the Fund will purchase ETFs and call
options that reference the Index and a put option at-the-money for the purpose
of providing downside protection. The Fund will sell (write) put options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
lower than the closing value of the Index or an ETF that tracks the Index at the
beginning of the Outcome Period. The Fund will sell (write) call options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
higher than the closing value of the Index or an ETF that tracks the Index at
the beginning of the Outcome Period. As the seller of these options, the Fund
receives a premium from the buyer of the options. The Fund expects to write the
call options on one or more of the ETFs owned by the Fund or the Index to the
extent necessary to maintain its net costs from the purchase and sale of options
approximately equal to its anticipated receipt of dividends, as determined at
the beginning of the Outcome Period, but it will do so only to the extent that
the written call options on each respective ETF or the Index have an aggregate
notional value less than or equal to the market value of the respective ETF or
the Index owned by the Fund. The Fund will generally not seek to offset the
costs of call options purchased. The Fund’s returns are generally expected to
appreciate to a similar extent as the Index for the first 10% of the Index
gains. The prices of the call options and put options sold and purchased by the
Fund, in addition to the Fund’s direct investments in underlying ETFs, will
determine the Fund’s exposure to the Index during the Outcome Period.
Intra-period cash flows are managed to target and maintain the return pattern
determined at the beginning of the Outcome Period.
An
option gives the purchaser of the option the right to purchase (for a call
option) or sell (for a put option) the underlying asset (or deliver cash equal
to the value of an underlying index) at a specified price (the strike price). If
the underlying asset declines in value, the value of a put option will generally
increase (and the value of a call option will generally decrease and may end up
worthless), and in the event the underlying asset appreciates in value, the
value of a put option will generally decrease and may end up worthless (and the
value of a call option will generally increase). Due
to the cost of the options used by the Fund, the correlation of the Fund’s
performance to that of the Index is expected to be less than if the Fund
invested directly in the Index without using options, and could be substantially
less.
This means that if the Index experiences gains for an Outcome Period, the Fund
may not realize gains to the same extent, as illustrated in the second
hypothetical graphical illustration below.
The
Fund’s strategy is to seek to protect investors from a decline of up to 10% in
the performance of the Index over the Outcome Period. The
Fund is not designed to protect against declines of more than 10% in the level
of the Index, and there can be no guarantee that the Fund will be successful in
implementing its strategy to buffer against the first 10% of Index
losses.
The Fund, and therefore investors, will bear all losses exceeding 10%. In
addition, because the outcome is calculated before taking into account the
Fund’s expenses, Fund performance over an Outcome Period will be exposed to
losses beyond the Buffer in the amount of such Fund expenses. The Fund may
underperform the Index due to the cost of the Buffer protection.
The
Fund will invest in exchange-traded FLexible EXchange Options (“FLEX Options”),
which are customized exchange-traded option contracts available through the
Chicago Board Option Exchange (“Cboe”) that are guaranteed for settlement by The
Options Clearing Corporation (“OCC”). FLEX Options provide investors with the
ability to customize exercise prices, exercise styles, and expiration dates. All
FLEX Options in the Fund are European-style options (i.e., they can only be
exercised at the expiration date of the option) based on the Index or an ETF
that tracks the Index and have an expiration date that is the last day of the
Outcome Period.
The
hypothetical graphical illustrations provided below are designed to illustrate
the hypothetical outcomes of the Buffer strategy based upon hypothetical
performance of the Index for a shareholder that holds shares for the entirety of
an Outcome Period. The illustrations assume that the Fund will write call
options with an aggregate notional amount equal to 50% of the market value of
the ETFs and purchased call options. There is no guarantee that the Fund will be
successful in its attempt to provide such outcomes for an Outcome Period, and
the actual aggregate notional amount of written call options could be
significantly different depending upon changes in the amounts of dividends paid
by companies underlying the Index, changes in the value of companies underlying
the index, and the relative prices of the options used by the Fund. The
returns that the Fund seeks to provide do not include the costs associated with
purchasing shares of the Fund and the expenses incurred by the
Fund.
The
Buffer is designed to have its full effect only for investors who continually
hold Fund shares for an entire Outcome Period. The Fund is designed to seek to
achieve the results described above for investments made on the first day of the
Outcome Period and held until the last day of the Outcome Period. Investments
made on any other day may differ significantly, positively or negatively, from
the results described above.
The
Fund’s operations are intended to be continuous. It will not terminate and
distribute its assets at the conclusion of each Outcome Period. On the Specified
Date, another Outcome Period will commence, and the Fund will invest in a new
set of FLEX Options.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important Fund information on a daily basis, including information
about the Buffer, current Outcome Period start and end dates, and information
relating to the remaining potential outcomes of an investment in the Fund.
Investors considering purchasing shares should visit the website for the latest
information.
Note: “Standard
& Poor's 500®”
and “S&P 500®”
are trademarks of S&P Global and have been licensed by PGI. The Fund is not
sponsored, endorsed, sold, or promoted by S&P Global, and S&P Global
makes no representation regarding the advisability of investing in the
Fund.
Principal
Risks
The
Fund has characteristics unlike many other traditional investment products and
is not appropriate for all investors. In particular, investment in the Fund may
not be appropriate for investors who do not intend to maintain their investment
through the entire Outcome Period. There is no guarantee that the Fund will be
able to achieve the stated Defined Outcome.
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Buffered
Loss Risk. There
can be no guarantee that the Fund will be successful in its strategy to provide
buffer protection against Index losses if the Index decreases over the Outcome
Period by 10% or less. A shareholder may lose his or her entire investment. The
Fund’s strategy seeks to deliver returns that match the Index (but will be less
than the Index due to the cost of the options used by the Fund), while limiting
downside losses, if shares are bought on the day on which the Fund enters into
the options and held until those options expire at the end of each Outcome
Period. Intra-period cash flows are managed to target and maintain the return
pattern determined at the beginning of the Outcome Period. Accordingly, changes
in the amounts of dividends paid by companies underlying the Index and changes
in the value of companies underlying the Index can cause performance to be lower
than the performance of the Index. Further, in the event an investor purchases
shares after the date on which the options were entered into or sells shares
prior to the expiration of the options, the Buffer that the Fund seeks to
provide may not be available. The Fund does not provide principal protection,
and an investor may experience significant losses on its investment, including
the loss of its entire investment.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Exchange-Traded
Funds Risk. When the Fund invests in ETFs, you will indirectly bear fees and
expenses charged by the ETFs in addition to the Fund’s direct fees and expenses.
In addition, the Fund may be affected by losses of the ETFs and the level of
risk arising from the investment practices of the ETFs (such as the use of
leverage by the ETFs). The Fund has no control over the investments and related
risks taken by the ETFs in which it invests. Additionally, investments in ETFs
are also subject to the following risks: (i) the market price of an ETF’s shares
may trade above or below their net asset value; (ii) an active trading market
for an ETF’s shares may not develop or be maintained; or (iii) trading of an
ETF’s shares may be halted for a number of reasons.
FLEX
Options Risk. The Fund may invest in FLEX Options issued and guaranteed for
settlement by the OCC. The Fund bears the risk that the OCC will be unable or
unwilling to perform its obligations under the FLEX Options contracts. If the
OCC becomes insolvent or is otherwise unable to meet its settlement obligations,
the Fund could incur significant losses. Additionally, FLEX Options may be
illiquid if trading in the FLEX Options is limited or absent, and in such cases,
the Fund may have difficulty closing out certain FLEX Options positions at
desired times and prices, decreasing the value of the FLEX Options. There is no
guarantee that a liquid secondary trading market will exist for FLEX Options,
and a less liquid trading market may adversely impact the value of FLEX Options.
The Fund intends to treat any income it may derive from the FLEX Options as
“qualifying income” under the provisions of the Internal Revenue Code applicable
to regulated investment companies (“RICs”). In addition, based upon language in
legislative history, the Fund intends to treat the issuer of the FLEX Options as
the referenced asset for diversification purposes. If the income is not
qualifying income or the issuer of the FLEX Options is not appropriately the
referenced asset, the Fund could lose its own status as a RIC.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
High
Portfolio Turnover Risk. High
portfolio turnover (more than 100%) caused by active and frequent trading of
portfolio securities may result in accelerating the realization of taxable gains
and losses, lower fund performance, and increased brokerage
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Outcome
Period Risk. The
Fund’s strategy seeks to match the performance of the Index, before the
deduction of Fund expenses, and subject to the Buffer amount, only if an
investor holds Fund shares on the first day of the Outcome Period and continues
holding his or her shares until the last day of the Outcome Period. If you
redeem your shares before the end of the Outcome Period, you may experience
investment returns very different from those that the Fund seeks to provide,
including potentially a loss of some or all of your investment.
In particular, you will receive no protection against losses from
the Buffer amount if you redeem before the last day of the Outcome Period, and
you might lose some or all of your investment.
Passive
Strategy Risk. A portion of the Fund seeks to match the performance of a specified
index. However, the correlation between the performance of this portion of the
Fund and index performance may be affected by many factors, such as Fund
expenses, the timing of cash flows into and out of the Fund, changes in
securities markets, and changes in the composition of the
index.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption. Further, the Fund’s strategy may be sensitive to
large purchases and redemptions occurring near the Outcome Period end date
and/or large redemptions in each quarter following the Outcome Period end date,
which may affect the Fund’s ability to achieve its defined outcome
strategy.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it
does not own with the hope of purchasing the same security at a later date at a
lower price. A fund may also enter into a short derivative position through a
futures contract or swap agreement. If the price of the security or derivative
has increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Tracking
Error Risk. The Fund may be subject to tracking error, which is the divergence
of the Fund’s performance (without regard to the Buffer amount) from that of the
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund’s portfolio and those included in the
Index, the Fund’s expenses, changes in the composition of the index, transaction
costs incurred by the Fund (such as brokerage commissions in executing
transactions), the Fund’s holding of uninvested cash, and the timing of
purchases and redemptions of Fund shares.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
No
performance information is shown below because the Fund has not yet had a
calendar year of performance. The
Fund’s performance is benchmarked against the S&P 500 Index and the S&P
500 Price Return Index. Performance information provides an indication of the
risks of investing in the Fund. Past
performance is not necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The S&P 500 Price Return Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2023), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
U.S. LARGECAP BUFFER
JULY ACCOUNT
•The
Fund employs a defined outcome strategy, but there is no guarantee that such
outcomes for an Outcome Period, as defined below, will be achieved. You may lose
some or all of your money by investing in the Fund.
The Fund’s defined outcome strategy seeks to provide investors with returns
(before
Fund fees and expenses)
based on the S&P 500 Price Return Index (the “Index”), while seeking to
provide a buffer against the first 10% of Index losses (before
Fund fees and expenses),
over a twelve-month period beginning on July 1 and ending on June 30. The Fund
has characteristics unlike many other typical investment products and may not be
suitable for all investors. It is important that investors understand the Fund’s
investment strategy before making an investment in the Fund.
•The
defined outcomes may only be realized if you are holding shares on the first day
of an Outcome Period and continue to hold them on the last day of that Outcome
Period. If you purchase shares after an Outcome Period has begun or sell shares
prior to an Outcome Period’s conclusion, you may experience investment returns
very different from those that the Fund seeks to provide. Investors purchasing
shares of the Fund after the Outcome Period begins can see their expected
outcomes until the end of the period by visiting the Fund’s website,
https://annuity.principal.com/variableannuity/bufferaccounts. The Fund’s
performance over an Outcome Period will be exposed to losses beyond the Buffer,
as defined below, in the amount of the Fund’s expenses.
•The
Fund will not terminate after the conclusion of the Outcome Period. After the
conclusion of an Outcome Period with respect to the Fund, another will
begin.
•The
Fund only seeks to provide shareholders that hold shares for an entire Outcome
Period with a Buffer against a pre-determined percentage of Index declines. You
will bear all losses beyond that pre-determined percentage as described below.
While the Fund seeks to limit losses for shareholders who hold shares for the
entire Outcome Period, there is no guarantee it will successfully do
so.
•The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important information about the Fund, including, among other items,
Outcome Period start and end dates, information about the Buffer, the Fund’s
performance during the current Outcome Period relative to its Buffer, and
potential outcomes for the Fund updated on a daily basis. If you are
contemplating purchasing or selling shares of the Fund, please visit the
website.
•Investors
should consider this investment only under the following circumstances: they
fully understand the risks inherent in an investment in the Fund; they seek
returns based on the performance of the Index, while also seeking to be buffered
against the first 10% of Index losses, over an Outcome Period; they are willing
to hold shares for the entirety of an Outcome Period; they are willing to accept
the risk of losing their entire investment; and they have visited the Fund’s
website and understand the outcomes available based on timing of
purchase.
Objective
The Fund seeks to provide investors with returns (before fees and
expenses) based on the S&P 500 Price Return Index (the “Index”), while
seeking to provide a buffer against the first 10% (prior to taking into account
any fees and expenses of the Fund) of Index losses, over a twelve-month period
beginning on July 1 and ending on June 30.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
| Management
Fees |
0.69% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
|
Other
Expenses(1) |
0.04% |
| Acquired
Fund Fees and Expenses |
0.04% |
| Total
Annual Fund Operating Expenses |
1.02% |
|
Expense
Reimbursement(2) |
(0.02)% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
1.00% |
(1)Includes
0.01% of interest expense on borrowings. The expense is not subject to the
contractual expense limit.
(2)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.95% for Class 2 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| U.S.
LargeCap Buffer July Account - Class 2 |
$102 |
$323 |
$561 |
$1,246 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
69.3% of the average
value of its portfolio.
Principal
Investment
Strategies
Under normal circumstances, the Fund invests at least 80%
of its net assets, plus any borrowings for investment purposes, in
exchange-traded funds (“ETFs”) and options that reference the S&P 500 Price
Return Index (the “Index”) at the time of each purchase.
The Index represents U.S. equities with risk/return characteristics
of the large cap universe. As of March 31, 2024, the
market capitalization range of the Index was between approximately $5.2 billion
and $3.1 trillion. The Index is distinct from the S&P 500 Total Return Index
in that it only tracks the performance of the stock prices of the companies
included in the Index and does not include returns from dividends paid by the
companies included in the Index. The Fund's strategies may result in the active
and frequent trading of the Fund's portfolio securities.
The
Fund’s investment advisor, Principal Global Investors, LLC (“PGI”), employs a
defined outcome strategy that uses options to seek to achieve exposure to the
Index while mitigating the first 10% decline in the Index (the “Buffer”) over a
12-month period beginning on the first day of each July (the
“Specified Date”). The one-year period following the Specified Date is referred
to as the “Outcome Period.” Subject to certain limitations described in more
detail below, the Fund generally seeks to maintain net costs from its use of
options approximately equal to its anticipated receipt of dividends as
determined at the beginning of the Outcome Period. Intra-period cash flows are
managed to target and maintain the return pattern determined at the beginning of
the Outcome Period. Accordingly, changes in the amounts of dividends paid by
companies underlying the Index and changes in the value of companies underlying
the Index can cause performance to be lower than the performance of the Index.
At
the beginning of each Outcome Period, the Fund will purchase ETFs and call
options that reference the Index and a put option at-the-money for the purpose
of providing downside protection. The Fund will sell (write) put options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
lower than the closing value of the Index or an ETF that tracks the Index at the
beginning of the Outcome Period. The Fund will sell (write) call options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
higher than the closing value of the Index or an ETF that tracks the Index at
the beginning of the Outcome Period. As the seller of these options, the Fund
receives a premium from the buyer of the options. The Fund expects to write the
call options on one or more of the ETFs owned by the Fund or the Index to the
extent necessary to maintain its net costs from the purchase and sale of options
approximately equal to its anticipated receipt of dividends, as determined at
the beginning of the Outcome Period, but it will do so only to the extent that
the written call options on each respective ETF or the Index have an aggregate
notional value less than or equal to the market value of the respective ETF or
the Index owned by the Fund. The Fund will generally not seek to offset the
costs of call options purchased. The Fund’s returns are generally expected to
appreciate to a similar extent as the Index for the first 10% of the Index
gains. The prices of the call options and put options sold and purchased by the
Fund, in addition to the Fund’s direct investments in underlying ETFs, will
determine the Fund’s exposure to the Index during the Outcome Period.
Intra-period cash flows are managed to target and maintain the return pattern
determined at the beginning of the Outcome Period.
An
option gives the purchaser of the option the right to purchase (for a call
option) or sell (for a put option) the underlying asset (or deliver cash equal
to the value of an underlying index) at a specified price (the strike price). If
the underlying asset declines in value, the value of a put option will generally
increase (and the value of a call option will generally decrease and may end up
worthless), and in the event the underlying asset appreciates in value, the
value of a put option will generally decrease and may end up worthless (and the
value of a call option will generally increase). Due
to the cost of the options used by the Fund, the correlation of the Fund’s
performance to that of the Index is expected to be less than if the Fund
invested directly in the Index without using options, and could be substantially
less.
This means that if the Index experiences gains for an Outcome Period, the Fund
may not realize gains to the same extent, as illustrated in the second
hypothetical graphical illustration below.
The
Fund’s strategy is to seek to protect investors from a decline of up to 10% in
the performance of the Index over the Outcome Period. The
Fund is not designed to protect against declines of more than 10% in the level
of the Index, and there can be no guarantee that the Fund will be successful in
implementing its strategy to buffer against the first 10% of Index
losses.
The Fund, and therefore investors, will bear all losses exceeding 10%. In
addition, because the outcome is calculated before taking into account the
Fund’s expenses, Fund performance over an Outcome Period will be exposed to
losses beyond the Buffer in the amount of such Fund expenses. The Fund may
underperform the Index due to the cost of the Buffer protection.
The
Fund will invest in exchange-traded FLexible EXchange Options (“FLEX Options”),
which are customized exchange-traded option contracts available through the
Chicago Board Option Exchange (“Cboe”) that are guaranteed for settlement by The
Options Clearing Corporation (“OCC”). FLEX Options provide investors with the
ability to customize exercise prices, exercise styles, and expiration dates. All
FLEX Options in the Fund are European-style options (i.e., they can only be
exercised at the expiration date of the option) based on the Index or an ETF
that tracks the Index and have an expiration date that is the last day of the
Outcome Period.
The
hypothetical graphical illustrations provided below are designed to illustrate
the hypothetical outcomes of the Buffer strategy based upon hypothetical
performance of the Index for a shareholder that holds shares for the entirety of
an Outcome Period. The illustrations assume that the Fund will write call
options with an aggregate notional amount equal to 50% of the market value of
the ETFs and purchased call options. There is no guarantee that the Fund will be
successful in its attempt to provide such outcomes for an Outcome Period, and
the actual aggregate notional amount of written call options could be
significantly different depending upon changes in the amounts of dividends paid
by companies underlying the Index, changes in the value of companies underlying
the index, and the relative prices of the options used by the Fund. The
returns that the Fund seeks to provide do not include the costs associated with
purchasing shares of the Fund and the expenses incurred by the
Fund.
The
Buffer is designed to have its full effect only for investors who continually
hold Fund shares for an entire Outcome Period. The Fund is designed to seek to
achieve the results described above for investments made on the first day of the
Outcome Period and held until the last day of the Outcome Period. Investments
made on any other day may differ significantly, positively or negatively, from
the results described above.
The
Fund’s operations are intended to be continuous. It will not terminate and
distribute its assets at the conclusion of each Outcome Period. On the Specified
Date, another Outcome Period will commence, and the Fund will invest in a new
set of FLEX Options.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important Fund information on a daily basis, including information
about the Buffer, current Outcome Period start and end dates, and information
relating to the remaining potential outcomes of an investment in the Fund.
Investors considering purchasing shares should visit the website for the latest
information.
Note: “Standard
& Poor's 500®”
and “S&P 500®”
are trademarks of S&P Global and have been licensed by PGI. The Fund is not
sponsored, endorsed, sold, or promoted by S&P Global, and S&P Global
makes no representation regarding the advisability of investing in the
Fund.
Principal
Risks
The
Fund has characteristics unlike many other traditional investment products and
is not appropriate for all investors. In particular, investment in the Fund may
not be appropriate for investors who do not intend to maintain their investment
through the entire Outcome Period. There is no guarantee that the Fund will be
able to achieve the stated Defined Outcome.
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Buffered
Loss Risk. There
can be no guarantee that the Fund will be successful in its strategy to provide
buffer protection against Index losses if the Index decreases over the Outcome
Period by 10% or less. A shareholder may lose his or her entire investment. The
Fund’s strategy seeks to deliver returns that match the Index (but will be less
than the Index due to the cost of the options used by the Fund), while limiting
downside losses, if shares are bought on the day on which the Fund enters into
the options and held until those options expire at the end of each Outcome
Period. Intra-period cash flows are managed to target and maintain the return
pattern determined at the beginning of the Outcome Period. Accordingly, changes
in the amounts of dividends paid by companies underlying the Index and changes
in the value of companies underlying the Index can cause performance to be lower
than the performance of the Index. Further, in the event an investor purchases
shares after the date on which the options were entered into or sells shares
prior to the expiration of the options, the Buffer that the Fund seeks to
provide may not be available. The Fund does not provide principal protection,
and an investor may experience significant losses on its investment, including
the loss of its entire investment.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Exchange-Traded
Funds Risk. When the Fund invests in ETFs, you will indirectly bear fees and
expenses charged by the ETFs in addition to the Fund’s direct fees and expenses.
In addition, the Fund may be affected by losses of the ETFs and the level of
risk arising from the investment practices of the ETFs (such as the use of
leverage by the ETFs). The Fund has no control over the investments and related
risks taken by the ETFs in which it invests. Additionally, investments in ETFs
are also subject to the following risks: (i) the market price of an ETF’s shares
may trade above or below their net asset value; (ii) an active trading market
for an ETF’s shares may not develop or be maintained; or (iii) trading of an
ETF’s shares may be halted for a number of reasons.
FLEX
Options Risk. The Fund may invest in FLEX Options issued and guaranteed for
settlement by the OCC. The Fund bears the risk that the OCC will be unable or
unwilling to perform its obligations under the FLEX Options contracts. If the
OCC becomes insolvent or is otherwise unable to meet its settlement obligations,
the Fund could incur significant losses. Additionally, FLEX Options may be
illiquid if trading in the FLEX Options is limited or absent, and in such cases,
the Fund may have difficulty closing out certain FLEX Options positions at
desired times and prices, decreasing the value of the FLEX Options. There is no
guarantee that a liquid secondary trading market will exist for FLEX Options,
and a less liquid trading market may adversely impact the value of FLEX Options.
The Fund intends to treat any income it may derive from the FLEX Options as
“qualifying income” under the provisions of the Internal Revenue Code applicable
to regulated investment companies (“RICs”). In addition, based upon language in
legislative history, the Fund intends to treat the issuer of the FLEX Options as
the referenced asset for diversification purposes. If the income is not
qualifying income or the issuer of the FLEX Options is not appropriately the
referenced asset, the Fund could lose its own status as a RIC.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
High
Portfolio Turnover Risk. High
portfolio turnover (more than 100%) caused by active and frequent trading of
portfolio securities may result in accelerating the realization of taxable gains
and losses, lower fund performance, and increased brokerage
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Outcome
Period Risk. The
Fund’s strategy seeks to match the performance of the Index, before the
deduction of Fund expenses, and subject to the Buffer amount, only if an
investor holds Fund shares on the first day of the Outcome Period and continues
holding his or her shares until the last day of the Outcome Period. If you
redeem your shares before the end of the Outcome Period, you may experience
investment returns very different from those that the Fund seeks to provide,
including potentially a loss of some or all of your investment.
In particular, you will receive no protection against losses from
the Buffer amount if you redeem before the last day of the Outcome Period, and
you might lose some or all of your investment.
Passive
Strategy Risk. A portion of the Fund seeks to match the performance of a specified
index. However, the correlation between the performance of this portion of the
Fund and index performance may be affected by many factors, such as Fund
expenses, the timing of cash flows into and out of the Fund, changes in
securities markets, and changes in the composition of the
index.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption. Further, the Fund’s strategy may be sensitive to
large purchases and redemptions occurring near the Outcome Period end date
and/or large redemptions in each quarter following the Outcome Period end date,
which may affect the Fund’s ability to achieve its defined outcome
strategy.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it
does not own with the hope of purchasing the same security at a later date at a
lower price. A fund may also enter into a short derivative position through a
futures contract or swap agreement. If the price of the security or derivative
has increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Tracking
Error Risk. The Fund may be subject to tracking error, which is the divergence
of the Fund’s performance (without regard to the Buffer amount) from that of the
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund’s portfolio and those included in the
Index, the Fund’s expenses, changes in the composition of the index, transaction
costs incurred by the Fund (such as brokerage commissions in executing
transactions), the Fund’s holding of uninvested cash, and the timing of
purchases and redemptions of Fund shares.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(June 29, 2022).
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
8.53% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q3
2023 |
(2.22)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
Life
of Fund |
| U.S.
LargeCap Buffer July Account - Class 2 |
18.23% |
13.19% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
17.79% |
|
S&P
500 Price Return Index (reflects no deduction for
fees, expenses, or taxes) |
24.23% |
15.83% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The S&P 500 Price Return Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2022), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
U.S. LARGECAP BUFFER
OCTOBER ACCOUNT
•The
Fund employs a defined outcome strategy, but there is no guarantee that such
outcomes for an Outcome Period, as defined below, will be achieved. You may lose
some or all of your money by investing in the Fund.
The Fund’s defined outcome strategy seeks to provide investors with returns
(before
Fund fees and expenses)
based on the S&P 500 Price Return Index (the “Index”), while seeking to
provide a buffer against the first 10% of Index losses (before
Fund fees and expenses),
over a twelve-month period beginning on October 1 and ending on September 30.
The Fund has characteristics unlike many other typical investment products and
may not be suitable for all investors. It is important that investors understand
the Fund’s investment strategy before making an investment in the
Fund.
•The
defined outcomes may only be realized if you are holding shares on the first day
of an Outcome Period and continue to hold them on the last day of that Outcome
Period. If you purchase shares after an Outcome Period has begun or sell shares
prior to an Outcome Period’s conclusion, you may experience investment returns
very different from those that the Fund seeks to provide. Investors purchasing
shares of the Fund after the Outcome Period begins can see their expected
outcomes until the end of the period by visiting the Fund’s website,
https://annuity.principal.com/variableannuity/bufferaccounts. The Fund’s
performance over an Outcome Period will be exposed to losses beyond the Buffer,
as defined below, in the amount of the Fund’s expenses.
•The
Fund will not terminate after the conclusion of the Outcome Period. After the
conclusion of an Outcome Period with respect to the Fund, another will
begin.
•The
Fund only seeks to provide shareholders that hold shares for an entire Outcome
Period with a Buffer against a pre-determined percentage of Index declines. You
will bear all losses beyond that pre-determined percentage as described below.
While the Fund seeks to limit losses for shareholders who hold shares for the
entire Outcome Period, there is no guarantee it will successfully do
so.
•The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important information about the Fund, including, among other items,
Outcome Period start and end dates, information about the Buffer, the Fund’s
performance during the current Outcome Period relative to its Buffer, and
potential outcomes for the Fund updated on a daily basis. If you are
contemplating purchasing or selling shares of the Fund, please visit the
website.
•Investors
should consider this investment only under the following circumstances: they
fully understand the risks inherent in an investment in the Fund; they seek
returns based on the performance of the Index, while also seeking to be buffered
against the first 10% of Index losses, over an Outcome Period; they are willing
to hold shares for the entirety of an Outcome Period; they are willing to accept
the risk of losing their entire investment; and they have visited the Fund’s
website and understand the outcomes available based on timing of
purchase.
Objective
The Fund seeks to provide investors with returns (before fees and
expenses) based on the S&P 500 Price Return Index (the “Index”), while
seeking to provide a buffer against the first 10% (prior to taking into account
any fees and expenses of the Fund) of Index losses, over a twelve-month period
beginning on October 1 and ending on September 30.
Fees and Expenses of the
Fund
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the table and examples
below.
These fees and expenses do not reflect the fees and expenses of any variable
insurance contract that may invest in the Fund and would be higher if they
did.
Annual Fund
Operating Expenses
(expenses that you pay each year as a percentage of the
value of your investment)
|
|
|
|
|
| |
|
| Share
Class |
|
| Class
2 |
| Management
Fees |
0.69% |
| Distribution
and/or Service (12b-1) Fees |
0.25% |
|
Other
Expenses(1) |
0.10% |
| Acquired
Fund Fees and Expenses |
0.04% |
| Total
Annual Fund Operating Expenses |
1.08% |
|
Expense
Reimbursement(2) |
(0.07)% |
| Total
Annual Fund Operating Expenses after Expense Reimbursement |
1.01% |
(1)Includes
0.02% of interest expense on borrowings. The expense is not subject to the
contractual expense limit.
(2)Principal
Global Investors, LLC ("PGI"), the investment advisor, has contractually agreed
to limit the Fund's expenses by paying, if necessary, expenses normally payable
by the Fund (excluding interest expense, expenses related to fund investments,
acquired fund fees and expenses, and tax reclaim recovery expenses and other
extraordinary expenses) to maintain a total level of operating expenses
(expressed as a percent of average net assets on an annualized basis) not to
exceed 0.95% for Class 2 shares. It is expected the expense limit will continue
through the period ending April 30,
2025; however, Principal Variable Contracts Funds, Inc. and PGI,
the parties to the agreement, may mutually agree to terminate the expense limit
prior to the end of the period. Subject to applicable expense limits, the Fund
may reimburse PGI for expenses incurred during the current fiscal
year.
Example
This Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund’s operating expenses
remain the same. The calculation of costs takes into account any applicable
contractual fee waivers and/or expense reimbursements for the period noted in
the table above. If separate account expenses and contract-level expenses were
included, expenses would be higher. Although your actual costs may be higher or
lower, based on these assumptions your costs would
be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| 1
year |
3
years |
5
years |
10
years |
| U.S.
LargeCap Buffer October Account - Class 2 |
$103 |
$337 |
$589 |
$1,311 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs. These costs, which are not reflected in
Annual Fund Operating Expenses or in the Example, affect the Fund’s performance.
During
the most recent fiscal year, the Fund’s portfolio turnover rate was
47.4% of the average
value of its portfolio.
Principal
Investment
Strategies
Under
normal circumstances, the Fund invests at least 80% of its net assets, plus any
borrowings for investment purposes, in exchange-traded funds (“ETFs”) and
options that reference the S&P 500 Price Return Index (the “Index”) at the
time of each purchase. The Index represents U.S. equities with risk/return
characteristics of the large cap universe. As
of March 31, 2024, the market capitalization range of the Index was between
approximately $5.2 billion and $3.1 trillion. The Index is distinct from the
S&P 500 Total Return Index in that it only tracks the performance of the
stock prices of the companies included in the Index and does not include returns
from dividends paid by the companies included in the Index. The Fund's
strategies may result in the active and frequent trading of the Fund's portfolio
securities.
The
Fund’s investment advisor, Principal Global Investors, LLC (“PGI”), employs a
defined outcome strategy that uses options to seek to achieve exposure to the
Index while mitigating the first 10% decline in the Index (the “Buffer”) over a
12-month period beginning on the first day of each October (the
“Specified Date”). The one-year period following the Specified Date is referred
to as the “Outcome Period.” Subject to certain limitations described in more
detail below, the Fund generally seeks to maintain net costs from its use of
options approximately equal to its anticipated receipt of dividends as
determined at the beginning of the Outcome Period. Intra-period cash flows are
managed to target and maintain the return pattern determined at the beginning of
the Outcome Period. Accordingly, changes in the amounts of dividends paid by
companies underlying the Index and changes in the value of companies underlying
the Index can cause performance to be lower than the performance of the Index.
At
the beginning of each Outcome Period, the Fund will purchase ETFs and call
options that reference the Index and a put option at-the-money for the purpose
of providing downside protection. The Fund will sell (write) put options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
lower than the closing value of the Index or an ETF that tracks the Index at the
beginning of the Outcome Period. The Fund will sell (write) call options on the
Index or an ETF that tracks the Index with a strike price approximately 10%
higher than the closing value of the Index or an ETF that tracks the Index at
the beginning of the Outcome Period. As the seller of these options, the Fund
receives a premium from the buyer of the options. The Fund expects to write the
call options on one or more of the ETFs owned by the Fund or the Index to the
extent necessary to maintain its net costs from the purchase and sale of options
approximately equal to its anticipated receipt of dividends, as determined at
the beginning of the Outcome Period, but it will do so only to the extent that
the written call options on each respective ETF or the Index have an aggregate
notional value less than or equal to the market value of the respective ETF or
the Index owned by the Fund. The Fund will generally not seek to offset the
costs of call options purchased. The Fund’s returns are generally expected to
appreciate to a similar extent as the Index for the first 10% of the Index
gains. The prices of the call options and put options sold and purchased by the
Fund, in addition to the Fund’s direct investments in underlying ETFs, will
determine the Fund’s exposure to the Index during the Outcome Period.
Intra-period cash flows are managed to target and maintain the return pattern
determined at the beginning of the Outcome Period.
An
option gives the purchaser of the option the right to purchase (for a call
option) or sell (for a put option) the underlying asset (or deliver cash equal
to the value of an underlying index) at a specified price (the strike price). If
the underlying asset declines in value, the value of a put option will generally
increase (and the value of a call option will generally decrease and may end up
worthless), and in the event the underlying asset appreciates in value, the
value of a put option will generally decrease and may end up worthless (and the
value of a call option will generally increase). Due
to the cost of the options used by the Fund, the correlation of the Fund’s
performance to that of the Index is expected to be less than if the Fund
invested directly in the Index without using options, and could be substantially
less.
This means that if the Index experiences gains for an Outcome Period, the Fund
may not realize gains to the same extent, as illustrated in the second
hypothetical graphical illustration below.
The
Fund’s strategy is to seek to protect investors from a decline of up to 10% in
the performance of the Index over the Outcome Period. The
Fund is not designed to protect against declines of more than 10% in the level
of the Index, and there can be no guarantee that the Fund will be successful in
implementing its strategy to buffer against the first 10% of Index
losses.
The Fund, and therefore investors, will bear all losses exceeding 10%. In
addition, because the outcome is calculated before taking into account the
Fund’s expenses, Fund performance over an Outcome Period will be exposed to
losses beyond the Buffer in the amount of such Fund expenses. The Fund may
underperform the Index due to the cost of the Buffer protection.
The
Fund will invest in exchange-traded FLexible EXchange Options (“FLEX Options”),
which are customized exchange-traded option contracts available through the
Chicago Board Option Exchange (“Cboe”) that are guaranteed for settlement by The
Options Clearing Corporation (“OCC”). FLEX Options provide investors with the
ability to customize exercise prices, exercise styles, and expiration dates. All
FLEX Options in the Fund are European-style options (i.e., they can only be
exercised at the expiration date of the option) based on the Index or an ETF
that tracks the Index and have an expiration date that is the last day of the
Outcome Period.
The
hypothetical graphical illustrations provided below are designed to illustrate
the hypothetical outcomes of the Buffer strategy based upon hypothetical
performance of the Index for a shareholder that holds shares for the entirety of
an Outcome Period. The illustrations assume that the Fund will write call
options with an aggregate notional amount equal to 50% of the market value of
the ETFs and purchased call options. There is no guarantee that the Fund will be
successful in its attempt to provide such outcomes for an Outcome Period, and
the actual aggregate notional amount of written call options could be
significantly different depending upon changes in the amounts of dividends paid
by companies underlying the Index, changes in the value of companies underlying
the index, and the relative prices of the options used by the Fund. The
returns that the Fund seeks to provide do not include the costs associated with
purchasing shares of the Fund and the expenses incurred by the
Fund.
The
Buffer is designed to have its full effect only for investors who continually
hold Fund shares for an entire Outcome Period. The Fund is designed to seek to
achieve the results described above for investments made on the first day of the
Outcome Period and held until the last day of the Outcome Period. Investments
made on any other day may differ significantly, positively or negatively, from
the results described above.
The
Fund’s operations are intended to be continuous. It will not terminate and
distribute its assets at the conclusion of each Outcome Period. On the Specified
Date, another Outcome Period will commence, and the Fund will invest in a new
set of FLEX Options.
The
Fund will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated. As of March 31, 2024, the Index was not concentrated in any
industry.
The
Fund’s website, https://annuity.principal.com/variableannuity/bufferaccounts,
provides important Fund information on a daily basis, including information
about the Buffer, current Outcome Period start and end dates, and information
relating to the remaining potential outcomes of an investment in the Fund.
Investors considering purchasing shares should visit the website for the latest
information.
Note: “Standard
& Poor's 500®”
and “S&P 500®”
are trademarks of S&P Global and have been licensed by PGI. The Fund is not
sponsored, endorsed, sold, or promoted by S&P Global, and S&P Global
makes no representation regarding the advisability of investing in the
Fund.
Principal
Risks
The
Fund has characteristics unlike many other traditional investment products and
is not appropriate for all investors. In particular, investment in the Fund may
not be appropriate for investors who do not intend to maintain their investment
through the entire Outcome Period. There is no guarantee that the Fund will be
able to achieve the stated Defined Outcome.
The
value of your investment in the Fund changes with the value of the Fund’s
investments. Many factors affect that value, and it is possible to lose money
by investing in the Fund. An investment in the
Fund is not a deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
The principal risks of investing in the Fund are listed below in alphabetical
order and not in order of significance.
Buffered
Loss Risk. There
can be no guarantee that the Fund will be successful in its strategy to provide
buffer protection against Index losses if the Index decreases over the Outcome
Period by 10% or less. A shareholder may lose his or her entire investment. The
Fund’s strategy seeks to deliver returns that match the Index (but will be less
than the Index due to the cost of the options used by the Fund), while limiting
downside losses, if shares are bought on the day on which the Fund enters into
the options and held until those options expire at the end of each Outcome
Period. Intra-period cash flows are managed to target and maintain the return
pattern determined at the beginning of the Outcome Period. Accordingly, changes
in the amounts of dividends paid by companies underlying the Index and changes
in the value of companies underlying the Index can cause performance to be lower
than the performance of the Index. Further, in the event an investor purchases
shares after the date on which the options were entered into or sells shares
prior to the expiration of the options, the Buffer that the Fund seeks to
provide may not be available. The Fund does not provide principal protection,
and an investor may experience significant losses on its investment, including
the loss of its entire investment.
Derivatives
Risk. Derivatives
may not move in the direction anticipated by the portfolio manager. Transactions
in derivatives may increase volatility, cause the liquidation of portfolio
positions when not advantageous to do so, and result in disproportionate losses
that may be substantially greater than a fund’s initial
investment.
•Options.
Options involve specific risks,
including: the imperfect correlation between the change in market value of the
instruments held by the Fund and the price of the options; counterparty risk;
difference in trading hours for the options markets and the markets for the
underlying securities (rate movements can take place in the underlying markets
that cannot be reflected in the options markets); and an insufficient liquid
secondary market for particular options.
Equity
Securities Risk. A variety of factors can negatively impact the value of equity
securities held by a fund, including a decline in the issuer’s financial
condition, unfavorable performance of the issuer’s sector or industry, or
changes in response to overall market and economic conditions. A fund’s
principal market segment(s) (such as market capitalization or style) may
underperform other market segments or the equity markets as a
whole.
Exchange-Traded
Funds Risk. When the Fund invests in ETFs, you will indirectly bear fees and
expenses charged by the ETFs in addition to the Fund’s direct fees and expenses.
In addition, the Fund may be affected by losses of the ETFs and the level of
risk arising from the investment practices of the ETFs (such as the use of
leverage by the ETFs). The Fund has no control over the investments and related
risks taken by the ETFs in which it invests. Additionally, investments in ETFs
are also subject to the following risks: (i) the market price of an ETF’s shares
may trade above or below their net asset value; (ii) an active trading market
for an ETF’s shares may not develop or be maintained; or (iii) trading of an
ETF’s shares may be halted for a number of reasons.
FLEX
Options Risk. The Fund may invest in FLEX Options issued and guaranteed for
settlement by the OCC. The Fund bears the risk that the OCC will be unable or
unwilling to perform its obligations under the FLEX Options contracts. If the
OCC becomes insolvent or is otherwise unable to meet its settlement obligations,
the Fund could incur significant losses. Additionally, FLEX Options may be
illiquid if trading in the FLEX Options is limited or absent, and in such cases,
the Fund may have difficulty closing out certain FLEX Options positions at
desired times and prices, decreasing the value of the FLEX Options. There is no
guarantee that a liquid secondary trading market will exist for FLEX Options,
and a less liquid trading market may adversely impact the value of FLEX Options.
The Fund intends to treat any income it may derive from the FLEX Options as
“qualifying income” under the provisions of the Internal Revenue Code applicable
to regulated investment companies (“RICs”). In addition, based upon language in
legislative history, the Fund intends to treat the issuer of the FLEX Options as
the referenced asset for diversification purposes. If the income is not
qualifying income or the issuer of the FLEX Options is not appropriately the
referenced asset, the Fund could lose its own status as a RIC.
Hedging
Risk. A fund that implements a hedging strategy using derivatives and/or
securities could expose the fund to the risk that can arise when a change in the
value of a hedge does not match a change in the value of the asset it hedges. In
other words, the change in value of the hedge could move in a direction that
does not match the change in value of the underlying asset, resulting in a risk
of loss to the fund.
High
Portfolio Turnover Risk. High
portfolio turnover (more than 100%) caused by active and frequent trading of
portfolio securities may result in accelerating the realization of taxable gains
and losses, lower fund performance, and increased brokerage
costs.
Industry
Concentration Risk. A fund that concentrates investments in a particular industry or
group of industries has greater exposure than other funds to market, economic,
and other factors affecting that industry or group of
industries.
Investment
Company Securities Risk. A fund that invests in another investment company (for example,
another fund or an exchange-traded fund (or ETF)) is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company.
Outcome
Period Risk. The
Fund’s strategy seeks to match the performance of the Index, before the
deduction of Fund expenses, and subject to the Buffer amount, only if an
investor holds Fund shares on the first day of the Outcome Period and continues
holding his or her shares until the last day of the Outcome Period. If you
redeem your shares before the end of the Outcome Period, you may experience
investment returns very different from those that the Fund seeks to provide,
including potentially a loss of some or all of your investment.
In particular, you will receive no protection against losses from
the Buffer amount if you redeem before the last day of the Outcome Period, and
you might lose some or all of your investment.
Passive
Strategy Risk. A portion of the Fund seeks to match the performance of a specified
index. However, the correlation between the performance of this portion of the
Fund and index performance may be affected by many factors, such as Fund
expenses, the timing of cash flows into and out of the Fund, changes in
securities markets, and changes in the composition of the
index.
Redemption
and Large Transaction Risk. Ownership of the Fund’s shares may be concentrated in one or a few
large investors (such as funds of funds, institutional investors, and asset
allocation programs) that may redeem or purchase shares in large quantities.
These transactions may cause the Fund to sell securities to meet redemptions or
to invest additional cash at times it would not otherwise do so, which may
result in increased transaction costs, increased expenses, changes to expense
ratios, and adverse effects to Fund performance. Such transactions may also
accelerate the realization of taxable income if sales of portfolio securities
result in gains. Moreover, reallocations by large shareholders among share
classes of a fund may result in changes to the expense ratios of affected
classes, which may increase the expenses paid by shareholders of the class that
experienced the redemption. Further, the Fund’s strategy may be sensitive to
large purchases and redemptions occurring near the Outcome Period end date
and/or large redemptions in each quarter following the Outcome Period end date,
which may affect the Fund’s ability to achieve its defined outcome
strategy.
Short
Sales Risk. A short sale involves the sale by the Fund of a security that it
does not own with the hope of purchasing the same security at a later date at a
lower price. A fund may also enter into a short derivative position through a
futures contract or swap agreement. If the price of the security or derivative
has increased during this time, then the Fund will incur a loss equal to the
increase in price from the time that the short sale was entered into plus any
premiums and interest paid to the third party. Therefore, short sales involve
the risk that losses may be exaggerated, potentially losing more money than the
actual cost of the investment. Also, there is the risk that the third party to
the short sale may fail to honor its contract terms, causing a loss to the
Fund.
Tracking
Error Risk. The Fund may be subject to tracking error, which is the divergence
of the Fund’s performance (without regard to the Buffer amount) from that of the
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund’s portfolio and those included in the
Index, the Fund’s expenses, changes in the composition of the index, transaction
costs incurred by the Fund (such as brokerage commissions in executing
transactions), the Fund’s holding of uninvested cash, and the timing of
purchases and redemptions of Fund shares.
Volatility
Mitigation Risk. Volatility mitigation strategies may increase the Fund’s transaction
costs, which could increase losses or reduce gains. These strategies may not
protect the Fund from market declines and may reduce the Fund’s participation in
market gains.
Performance
The following
information provides some indication of the risks of investing in the
Fund. Past performance is not
necessarily an indication of how the Fund will perform in the
future. You may get updated performance information by calling
1-800-222-5852.
The
bar chart shows changes in the Fund’s performance from year to year. The table
shows how the Fund’s average annual returns for 1, 5, and 10 years (or, if
shorter, the life of the Fund) compare with those of one or more broad measures
of market performance. Performance figures for the Fund do not include any
separate account expenses, cost of insurance, or other contract-level expenses;
total returns for the Fund would be lower if such expenses were
included.
Life
of Fund returns are measured from the date the Fund’s shares were first sold
(September 29, 2022).
Total Returns as of
December 31
|
|
|
|
|
|
|
|
| |
| Highest
return for a quarter during the period of the bar chart
above: |
Q4
2023 |
8.70% |
| Lowest
return for a quarter during the period of the bar chart
above: |
Q3
2023 |
(2.45)% |
Average
Annual Total Returns
For
the periods ended December 31, 2023
|
|
|
|
|
|
|
|
| |
|
| 1
Year |
Life
of Fund |
| U.S.
LargeCap Buffer October Account - Class 2 |
19.45% |
20.05% |
|
S&P
500 Index (reflects no deduction for
fees, expenses, or taxes) |
26.29% |
23.96% |
|
S&P
500 Price Return Index (reflects no deduction for
fees, expenses, or taxes) |
24.23% |
21.90% |
Effective May 1, 2024, the Fund
changed its primary broad-based index to the S&P 500 Index in order to meet
the revised definition of “broad-based securities market index.”
The S&P 500 Price Return Index is
included as an additional index for the Fund as it shows how the Fund’s
performance compares with the returns of an index of funds with similar
investment objectives.
Investment
Advisor and Portfolio Managers
Principal
Global Investors, LLC
•Tyler
O'Donnell (since 2023), Portfolio Manager
•Aaron
J. Siebel (since 2022), Portfolio Manager
Tax
Information
The
Fund intends to comply with applicable variable asset diversification
regulations. Taxation to you will depend on what you do with your variable life
insurance or variable annuity contract. See your variable product prospectus for
information about the tax implications of investing in the Fund.
Payments
to Broker-Dealers and Other Financial Intermediaries
If
you purchase through a broker-dealer or other financial intermediary (such as an
insurance company), the Fund and its related companies may pay the intermediary
for the sale of Fund shares and related services. These payments may create a
conflict of interest by influencing the broker-dealer or other intermediary and
your salesperson to recommend the Fund over another investment, to recommend one
Fund or share class of the Fund over another Fund or share class, or to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another. Ask your salesperson or visit your financial intermediary’s
website for more information.
ADDITIONAL
INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS
Each
Fund’s investment objective is described in the summary section for each Fund.
The summary section also describes each Fund’s principal investment strategies,
including the types of securities in which each Fund invests, and the principal
risks of investing in each Fund. The principal investment strategies are not the
only investment strategies available to each Fund, but they are the ones each
Fund primarily uses to achieve its investment objective.
Except
for Fundamental Restrictions described in the Registrant’s Statement of
Additional Information (“SAI”), the Registrant’s Board (the “Board”) may change
any Fund’s objective or investment strategies without a shareholder vote if it
determines such a change is in the best interests of the Fund. If there is a
material change to a Fund’s investment objective or investment strategies, you
should consider whether the Fund remains an appropriate investment for you.
There is no guarantee that each Fund will meet its objective.
Each
Fund is designed to be a portion of an investor’s portfolio. No Fund is intended
to be a complete investment program. Investors should consider the risks of a
Fund before making an investment; it is possible to lose money by investing in a
Fund.
The
following investment strategies and risks (before the “Strategy and Risk Table”
below) apply to the Funds and, depending on market conditions, can materially
impact the management of the Funds.
Active
Management
The
performance of a fund that is actively managed (including hybrid funds or
passively managed funds that use a sampling approach that includes some actively
managed components) will reflect, in part, the ability of those managing the
investments of the fund to make investment decisions that are suited to
achieving the fund’s investment objective. Actively managed funds may invest
differently from the benchmark against which the Fund’s performance is compared.
When making decisions about whether to buy or sell equity securities,
considerations may include, among other things, a company’s strength in
fundamentals, its potential for earnings growth over time, its ability to
navigate certain macroeconomic environments, the current price of its securities
relative to their perceived worth and relative to others in its industry, and
analysis from computer models. When making decisions about whether to buy or
sell fixed-income investments, considerations may include, among other things,
the strength of certain sectors of the fixed-income market relative to others,
interest rates; a range of economic, political, and financial factors; the
balance between supply and demand for certain asset classes; the credit quality
of individual issuers; the fundamental strengths of corporate and municipal
issuers; and other general market conditions.
Models,
which may assist portfolio managers and analysts in formulating their securities
trading and allocation decisions by providing investment and risk management
insights, may also expose a fund to risks. Models may be predictive in nature,
which models depend heavily on the accuracy and reliability of historical data
that is supplied by others and may be incorrect or incorrectly input. The fund
bears the risk that the quantitative models used will not be successful in
identifying trends or in determining the size and direction of investment
positions that will enable the fund to achieve its investment objective. In
addition, “model prices” will often differ substantially from market prices,
especially for instruments with complex characteristics, such as derivative
instruments.
An
active fund’s investment performance depends upon the successful allocation of
the fund’s assets among asset classes, geographical regions, industry sectors,
and specific issuers and investments. There is no guarantee that these
allocation techniques and decisions will produce the desired results. It is
possible to lose money on an investment in a fund as a result of these
allocation decisions. If a fund’s investment strategies do not perform as
expected, the fund could underperform other funds with similar investment
objectives or lose money. Moreover, buying and selling securities to adjust the
fund’s asset allocation may increase portfolio turnover and generate transaction
costs.
Investment
advisors with large assets under management in a Fund, or in other funds that
have the same strategy as a Fund, may have difficulty fully investing such
Fund’s assets according to its investment objective due to potential liquidity
constraints and high transaction costs. Typically, small-cap, mid-cap, and
emerging market equity funds are more susceptible to such a risk. A Fund may add
additional investment advisors or close the Fund to new investors to address
such risks.
Passive
Management (Index Funds)
Some
funds (including index funds, hybrid funds that include a passive component, and
“buffer” funds that seek returns based on an index) use a passive, or indexing,
investment approach. Funds that are pure index funds do not attempt to manage
market volatility, use defensive strategies, or reduce the effect of any
long-term periods of poor stock or bond performance. Some index funds attempt to
fully replicate their relevant target index by investing primarily in the
securities held by the index in approximately the same proportion of the
weightings in the index. However, because of the difficulty of executing some
relatively small securities trades, other index funds may use a “sampling”
approach and may not be invested in the less heavily weighted securities held by
the index. Some index funds may invest in index futures, swaps, and/or
exchange-traded funds on a daily basis in an effort to minimize tracking error
relative to the benchmark.
It
is unlikely that an index fund’s performance will perfectly correlate with the
performance of the fund’s relevant index. An index fund’s ability to match the
performance of its index may be affected by many factors, such as fund expenses,
the timing of cash flows into and out of the fund, changes in securities
markets, and changes in the composition of the index.
The
providers of the Funds' respective underlying indexes do not provide any
warranty or accept any liability for the quality, accuracy, or completeness of
any index or its related data. Those managing an index fund’s investments manage
such fund consistently with the underlying index provided by the index provider
and do not provide any warranty or guarantee against the index provider’s or its
agent’s errors. Errors in the quality, accuracy, and completeness of the data
used to compile an underlying index may occur and may not be identified and
corrected in a timely manner, or at all. Such errors may negatively or
positively impact the performance of a fund.
Unusual
market conditions may cause an index provider to postpone a scheduled rebalance,
which could cause a fund’s underlying index to vary from its normal or expected
composition. The postponement of a scheduled rebalance, particularly in a time
of market volatility, could mean that constituents that would otherwise be
removed at rebalance due to changes in market capitalizations, issuer credit
ratings, or other reasons may remain, causing the performance and constituents
of the underlying index to vary from those expected under normal conditions.
Apart from scheduled rebalances, an index provider may carry out additional
index rebalances due to unusual market conditions or in order, for example, to
correct an error in the selection of index constituents. When an index is
rebalanced and an index fund in turn rebalances its portfolio, such fund and its
shareholders bear any related transaction costs and market
exposure.
Cash
Management
A
Fund may have uninvested cash balances pending investment in other securities,
pending payment of redemptions, or in other circumstances where liquidity is
necessary or desirable. A Fund may hold uninvested cash; invest it in cash
equivalents such as money market funds, including the Principal Funds, Inc. -
Government Money Market Fund; lend it to other Funds pursuant to the Funds'
interfund lending facility; and/or invest in other instruments that those
managing the Fund’s assets deem appropriate for cash management purposes.
Generally, these types of investments offer less potential for gains than other
types of securities. For example, to attempt to provide returns similar to its
benchmark, a Fund (regardless of how it designates usage of derivatives and
investment companies) may invest uninvested cash in derivatives, such as stock
index futures contracts, or exchange-traded funds (“ETFs”), including Principal
Exchange-Traded Funds ETFs. In selecting such investments, Principal Global
Investors, LLC (“PGI”), the Funds’ advisor, may have conflicts of interest due
to economic or other incentives to make or retain an investment in certain
affiliated funds instead of in other investments that may be appropriate for a
Fund.
Liquidity
The
Funds have established a liquidity risk management program as required by the
U.S. Securities and Exchange Commission’s (the “SEC”) Liquidity Rule. Under the
program, PGI assesses, manages, and periodically reviews each Fund’s liquidity
risk, which is the risk that a Fund could not meet requests to redeem shares
issued by the Fund without significant dilution of the remaining investors’
interests in the Fund. As part of the program, PGI classifies each investment as
a “highly liquid investment,” “moderately liquid investment,” “less liquid
investment,” or “illiquid investment.” The liquidity of a Fund’s portfolio
investments is determined based on relevant market, trading, and
investment-specific considerations under the program. To the extent that an
investment is deemed to be an illiquid investment or a less liquid investment, a
Fund can expect to be exposed to greater liquidity risk.
Certain
fund holdings may be deemed to be less liquid or illiquid because they cannot be
readily sold without significantly impacting the value of the holdings. A fund
is exposed to liquidity risk when trading volume, lack of a market maker, or
legal restrictions impair its ability to sell particular securities or close
derivative positions at an advantageous price. Funds with principal investment
strategies that involve securities of companies with smaller market
capitalizations, foreign securities, derivatives, high yield bonds, and bank
loans, or securities with substantial market and/or credit risk, tend to have
the greatest exposure to liquidity risk.
Liquidity
risk also refers to the risk of unusually high redemption requests, redemption
requests by certain large shareholders such as institutional investors or asset
allocators, or other unusual market conditions that may make it difficult for a
fund to sell investments within the allowable time period to meet redemptions.
Meeting such redemption requests could require a fund to sell securities at
reduced prices or under unfavorable conditions, which would reduce the value of
the fund.
Market
Volatility and Securities Issuers
The
value of a fund’s portfolio securities may decrease in response to overall stock
or bond market movements. Markets tend to move in cycles, with periods of rising
prices and periods of falling prices. Stocks tend to go up and down in value
more than bonds. The value of a security may decline for reasons directly
related to the issuer, such as management performance, financial leverage, and
reduced demand for the issuer’s goods or services. As a result, the value of an
individual security or particular type of security can be more volatile than the
market as a whole and can perform differently from the value of the market as a
whole.
Additionally,
U.S. and world economies, as well as markets (or certain market sectors), may
experience greater volatility in response to the occurrence of natural or
man-made disasters and geopolitical events, such as war, acts of terrorism,
pandemics, military actions, trade disputes, or political instability. Moreover,
if a fund’s investments are concentrated in certain sectors, its performance
could be worse than the overall market.
Global
events can impact the securities markets. Russia's invasion of Ukraine in 2022
has resulted in sanctions being levied by the United States, European Union, and
other countries against Russia. Russia's military actions and the resulting
sanctions could adversely affect global energy and financial markets and, thus,
could affect the value of the fund's investments, even beyond any direct
exposure the fund may have to Russian issuers or the adjoining geographic
regions. The extent and duration of the military action, sanctions, and
resulting market disruptions could be substantial.
Other
market disruption events include the pandemic spread of the novel coronavirus
designated as COVID-19. The transmission of COVID-19 and efforts to contain its
spread resulted in border closings and other travel restrictions and
disruptions; disruptions to business operations, supply chains, and customer
activity; event cancellations and restrictions; service cancellations and
reductions; significant challenges in the healthcare industry; and quarantines.
Health crises may exacerbate other pre-existing political, social, economic,
market, and financial risks and negatively affect the global economy, as well as
the economies of individual countries, the financial performance of individual
companies and sectors, and the markets in general in significant ways.
Market
disruption events could also impair the information technology and other
operational systems upon which a fund’s investment advisor or sub-advisor rely,
and could otherwise disrupt the ability of the fund’s service providers to
perform essential tasks. In certain cases, an exchange or market may close or
issue trading halts on either specific securities or even the entire market,
which may result in a fund being, among other things, unable to buy or sell
certain securities or financial instruments or accurately price its
investments.
Governmental
and quasi-governmental authorities and regulators throughout the world, such as
the Federal Reserve, have in the past responded to major economic disruptions
with a variety of significant fiscal and monetary policy changes, including but
not limited to, direct capital infusions into companies, new monetary programs,
and dramatic changes to interest rates. Certain of those policy changes were
implemented or considered in response to the COVID-19 outbreak and inflationary
pressures. Such policy changes may adversely affect the value, volatility, and
liquidity of dividend and interest-paying securities.
The
impact of current and future market disruption events may last for an extended
period of time and could result in a substantial economic downturn or recession.
Such events could have significant adverse direct or indirect effects on the
funds and their investments, and may result in a fund’s inability to achieve its
investment objective, cause funds to experience significant redemptions, cause
the postponement of reconstitution/rebalance dates of passive funds’ underlying
indices, adversely affect the prices and liquidity of the securities and other
instruments in which a fund invests, negatively impact the fund’s performance,
and cause losses on your investment in the fund. You should also review this
Prospectus and the SAI to understand each Fund’s discretion to implement
temporary defensive measures, as well as the circumstances in which a Fund may
satisfy redemption requests in-kind.
Securities
Lending
To
generate additional income, a Fund may lend its portfolio securities to
broker-dealers and other institutional borrowers to the extent permitted under
the Investment Company Act of 1940, as amended (the “1940 Act”) or the rules,
regulations, or interpretations thereunder. A Fund that lends its securities
will continue to receive amounts equal to the interest or dividend payments
generated by the loaned securities. In addition to receiving these amounts, the
Fund generates income on the loaned securities by receiving a fee from the
borrower, and by earning interest on the collateral received from the borrower.
A negotiated portion of the income is paid to a securities lending agent (e.g.,
a bank or trust company) that arranged the loan. During the term of the loan,
the Fund’s investment performance will reflect changes in the value of the
loaned securities.
A
borrower’s obligations under a securities loan is secured continuously by
collateral posted by the borrower and held by the custodian in an amount at
least equal to the market value of the loaned securities. Generally, cash
collateral that a Fund receives from securities lending activities will be
invested in the Principal Funds, Inc. - Government Money Market Fund, which is
managed by PGI and for which PGI receives a management fee. The collateral may
also be invested in unaffiliated money market funds.
Securities
lending involves exposure to certain risks, including the risk of losses
resulting from problems in the settlement and accounting process; the risk of a
mismatch between the return on cash collateral reinvestments and the fees each
Fund has agreed to pay a borrower; and credit, legal, counterparty, and market
risk. A Fund’s participation in a securities lending transaction may affect the
amount, timing, and character of distributions derived from such transaction to
shareholders. Qualified dividend income does not include “payments in lieu of
dividends,” which the Funds anticipate they will receive in securities lending
transactions.
Temporary
Defensive Measures
From
time to time, as part of its investment strategy, a Fund may invest without
limit in cash and cash equivalents for temporary defensive purposes in response
to adverse market, economic, or political conditions. For this purpose, cash
equivalents include: bank notes, bank certificates of deposit, bankers’
acceptances, repurchase agreements, commercial paper, and commercial paper
master notes, which are floating rate debt instruments without a fixed maturity.
In addition, a Fund may purchase U.S. government securities, preferred stocks,
and debt securities, whether or not convertible into or carrying rights for
common stock. There is no limit on the extent to which a Fund may take temporary
defensive measures. In taking such measures, a Fund may lose the benefit of
upswings and may limit its ability to meet, or fail to achieve, its investment
objective.
Strategy
and Risk Table
The
following table lists each Fund and identifies whether the strategies and risks
discussed in this section (listed in alphabetical order and not in order of
significance) are principal for a Fund. The risks described below for each Fund
that operates as a fund of funds (as identified in the table) include risks at
both the fund of funds level and underlying funds level. Each Fund is also
subject to the risks of any underlying funds in which it invests.
The
SAI contains additional information about investment strategies and their
related risks.
|
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| |
| INVESTMENT
STRATEGIES AND RISKS |
BLUE
CHIP |
BOND
MARKET
INDEX |
CORE
PLUS
BOND |
DIVERSIFIED
BALANCED |
| Counterparty
Risk |
|
| X |
|
| Derivatives |
|
| X |
X |
| Emerging
Markets |
|
| X |
|
| Equity
Securities |
X |
|
| X |
| •
Growth Style |
X |
|
| |
| •
Smaller Companies |
|
|
| X |
| •
Value Style |
|
|
| |
| Fixed-Income
Securities |
| X |
X |
X |
| Foreign
Currency |
X |
| X |
|
| Foreign
Securities |
X |
| X |
|
| Fund
of Funds |
|
|
| X |
| Hedging |
|
| X |
|
| High
Portfolio Turnover |
|
| X |
|
| High
Yield Securities |
|
| X |
|
| Industry
Concentration |
|
X(1) |
| |
| Investment
Company Securities |
|
|
| X |
| Leverage |
|
| X |
|
| Portfolio
Duration |
| X |
X |
X |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
| X |
X |
X |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
| X |
X |
X |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
| X |
X |
X |
| Volatility
Mitigation |
|
|
| |
(1) The
Account will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
DIVERSIFIED
BALANCED
ADAPTIVE
ALLOCATION |
DIVERSIFIED
BALANCED
STRATEGIC
ALLOCATION |
| DIVERSIFIED
GROWTH |
DIVERSIFIED
GROWTH
ADAPTIVE
ALLOCATION |
| Counterparty
Risk |
| X |
|
| |
| Derivatives |
X |
X |
| X |
X |
| Emerging
Markets |
|
|
|
| |
| Equity
Securities |
X |
X |
| X |
X |
| •
Growth Style |
|
|
|
| |
| •
Smaller Companies |
X |
X |
| X |
X |
| •
Value Style |
|
|
|
| |
| Fixed-Income
Securities |
X |
X |
| X |
X |
| Foreign
Currency |
|
|
| X |
X |
| Foreign
Securities |
|
|
| X |
X |
| Fund
of Funds |
X |
X |
| X |
X |
| Hedging |
X |
X |
|
| X |
| High
Portfolio Turnover |
|
|
|
| |
| High
Yield Securities |
|
|
|
| |
| Industry
Concentration |
|
|
|
| |
| Investment
Company Securities |
X |
X |
| X |
X |
| Leverage |
|
|
|
| |
| Portfolio
Duration |
X |
X |
| X |
X |
| Real
Estate Investment Trusts (“REITs”) |
|
|
|
| |
| Real
Estate Securities |
X |
X |
| X |
X |
| Redemption
and Large Transaction Risk |
X |
X |
| X |
X |
| Securitized
Products |
X |
X |
| X |
X |
| Short
Sales |
X |
|
|
| X |
| U.S.
Government and U.S. Government-Sponsored Securities |
X |
X |
| X |
X |
| Volatility
Mitigation |
X |
X |
|
| X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
DIVERSIFIED
GROWTH
STRATEGIC
ALLOCATION |
DIVERSIFIED
INCOME |
DIVERSIFIED
INTERNATIONAL |
EQUITY
INCOME |
| Counterparty
Risk |
X |
|
| |
| Derivatives |
X |
X |
| |
| Emerging
Markets |
|
| X |
|
| Equity
Securities |
X |
X |
X |
X |
| •
Growth Style |
|
| X |
|
| •
Smaller Companies |
X |
X |
X |
X |
| •
Value Style |
|
| X |
X |
| Fixed-Income
Securities |
X |
X |
| |
| Foreign
Currency |
X |
| X |
|
| Foreign
Securities |
X |
| X |
X |
| Fund
of Funds |
X |
X |
| |
| Hedging |
X |
|
| |
| High
Portfolio Turnover |
|
|
| |
| High
Yield Securities |
|
|
| |
| Industry
Concentration |
|
|
| |
| Investment
Company Securities |
X |
X |
| |
| Leverage |
|
|
| |
| Portfolio
Duration |
X |
X |
| |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
X |
X |
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
X |
X |
| |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
X |
X |
| |
| Volatility
Mitigation |
X |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
GLOBAL
EMERGING
MARKETS |
GOVERNMENT
&
HIGH QUALITY
BOND |
LARGECAP
GROWTH
I |
LARGECAP
S&P
500 INDEX |
| Counterparty
Risk |
|
|
| |
| Derivatives |
| X |
| X |
| Emerging
Markets |
X |
|
| |
| Equity
Securities |
X |
| X |
X |
| •
Growth Style |
X |
| X |
|
| •
Smaller Companies |
X |
| X |
|
| •
Value Style |
X |
|
| |
| Fixed-Income
Securities |
| X |
| |
| Foreign
Currency |
X |
|
| |
| Foreign
Securities |
X |
|
| |
| Fund
of Funds |
|
|
| |
| Hedging |
|
|
| |
| High
Portfolio Turnover |
| X |
| |
| High
Yield Securities |
|
|
| |
| Industry
Concentration |
|
|
|
X(1) |
| Investment
Company Securities |
|
|
| X |
| Leverage |
|
|
| |
| Portfolio
Duration |
| X |
| |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
| X |
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
| X |
| |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
| X |
| |
| Volatility
Mitigation |
|
|
| |
(1) The
Account will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated.
|
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| |
| INVESTMENT
STRATEGIES AND RISKS |
LARGECAP
S&P 500
MANAGED
VOLATILITY INDEX |
MIDCAP |
PRINCIPAL
CAPITAL
APPRECIATION |
PRINCIPAL
LIFETIME
STRATEGIC
INCOME |
| Counterparty
Risk |
|
|
| X |
| Derivatives |
X |
|
| X |
| Emerging
Markets |
|
|
| |
| Equity
Securities |
X |
X |
X |
X |
| •
Growth Style |
|
|
| X |
| •
Smaller Companies |
| X |
X |
|
| •
Value Style |
|
|
| X |
| Fixed-Income
Securities |
|
|
| X |
| Foreign
Currency |
|
|
| X |
| Foreign
Securities |
| X |
| X |
| Fund
of Funds |
|
|
| X |
| Hedging |
X |
|
| |
| High
Portfolio Turnover |
|
|
| |
| High
Yield Securities |
|
|
| |
| Industry
Concentration |
X(1) |
|
| |
| Investment
Company Securities |
X |
|
| X |
| Leverage |
|
|
| |
| Portfolio
Duration |
|
|
| X |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
|
|
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
|
|
| X |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
|
|
| X |
| Volatility
Mitigation |
X |
|
| |
(1) The
Account will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
PRINCIPAL
LIFETIME
2020 |
PRINCIPAL
LIFETIME
2030 |
PRINCIPAL
LIFETIME
2040 |
PRINCIPAL
LIFETIME
2050 |
| Counterparty
Risk |
X |
X |
X |
X |
| Derivatives |
X |
X |
X |
X |
| Emerging
Markets |
|
| X |
X |
| Equity
Securities |
X |
X |
X |
X |
| •
Growth Style |
X |
X |
X |
X |
| •
Smaller Companies |
X |
X |
X |
X |
| •
Value Style |
X |
X |
X |
X |
| Fixed-Income
Securities |
X |
X |
X |
X |
| Foreign
Currency |
X |
X |
X |
X |
| Foreign
Securities |
X |
X |
X |
X |
| Fund
of Funds |
X |
X |
X |
X |
| Hedging |
|
|
| |
| High
Portfolio Turnover |
|
|
| |
| High
Yield Securities |
|
|
| |
| Industry
Concentration |
|
|
| |
| Investment
Company Securities |
X |
X |
X |
X |
| Leverage |
|
|
| |
| Portfolio
Duration |
X |
X |
X |
X |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
|
|
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
X |
X |
X |
|
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
X |
X |
X |
|
| Volatility
Mitigation |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
PRINCIPAL
LIFETIME
2060 |
REAL
ESTATE
SECURITIES |
SAM
BALANCED |
SAM
CONSERVATIVE
BALANCED |
| Counterparty
Risk |
X |
|
| |
| Derivatives |
X |
|
| |
| Emerging
Markets |
X |
| X |
X |
| Equity
Securities |
X |
X |
X |
X |
| •
Growth Style |
X |
X |
X |
X |
| •
Smaller Companies |
X |
X |
X |
X |
| •
Value Style |
X |
X |
X |
X |
| Fixed-Income
Securities |
X |
| X |
X |
| Foreign
Currency |
X |
| X |
X |
| Foreign
Securities |
X |
| X |
X |
| Fund
of Funds |
X |
| X |
X |
| Hedging |
|
|
| |
| High
Portfolio Turnover |
|
|
| |
| High
Yield Securities |
|
|
| X |
| Industry
Concentration |
| X |
| |
| Investment
Company Securities |
X |
| X |
X |
| Leverage |
|
|
| |
| Portfolio
Duration |
X |
| X |
X |
| Real
Estate Investment Trusts (“REITs”) |
| X |
| |
| Real
Estate Securities |
| X |
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
|
| X |
X |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
|
|
| |
| Volatility
Mitigation |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
SAM
CONSERVATIVE
GROWTH |
SAM
FLEXIBLE
INCOME |
SAM
STRATEGIC
GROWTH |
SHORT-TERM
INCOME |
| Counterparty
Risk |
|
|
| |
| Derivatives |
|
|
| X |
| Emerging
Markets |
X |
| X |
|
| Equity
Securities |
X |
X |
X |
|
| •
Growth Style |
X |
X |
X |
|
| •
Smaller Companies |
X |
X |
X |
|
| •
Value Style |
X |
X |
X |
|
| Fixed-Income
Securities |
X |
X |
| X |
| Foreign
Currency |
X |
| X |
|
| Foreign
Securities |
X |
X |
X |
X |
| Fund
of Funds |
X |
X |
X |
|
| Hedging |
|
|
| |
| High
Portfolio Turnover |
|
|
| |
| High
Yield Securities |
| X |
| |
| Industry
Concentration |
|
|
| |
| Investment
Company Securities |
X |
X |
X |
|
| Leverage |
|
|
| |
| Portfolio
Duration |
X |
X |
| X |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
|
|
| X |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
| X |
| X |
| Short
Sales |
|
|
| |
| U.S.
Government and U.S. Government-Sponsored Securities |
|
|
| X |
| Volatility
Mitigation |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
SMALLCAP |
U.S.
LARGECAP
BUFFER JANUARY |
U.S.
LARGECAP
BUFFER APRIL |
U.S.
LARGECAP
BUFFER JULY |
| Counterparty
Risk |
|
|
| |
| Derivatives |
| X |
X |
X |
| Emerging
Markets |
|
|
| |
| Equity
Securities |
X |
X |
X |
X |
| •
Growth Style |
|
|
| |
| •
Smaller Companies |
X |
|
| |
| •
Value Style |
|
|
| |
| Fixed-Income
Securities |
|
|
| |
| Foreign
Currency |
|
|
| |
| Foreign
Securities |
|
|
| |
| Fund
of Funds |
|
|
| |
| Hedging |
| X |
X |
X |
| High
Portfolio Turnover |
| X |
X |
X |
| High
Yield Securities |
|
|
| |
| Industry
Concentration |
|
X(1) |
X(1) |
X(1) |
| Investment
Company Securities |
| X |
X |
X |
| Leverage |
|
|
| |
| Portfolio
Duration |
|
|
| |
| Real
Estate Investment Trusts (“REITs”) |
|
|
| |
| Real
Estate Securities |
|
|
| |
| Redemption
and Large Transaction Risk |
X |
X |
X |
X |
| Securitized
Products |
|
|
| |
| Short
Sales |
| X |
X |
X |
| U.S.
Government and U.S. Government-Sponsored Securities |
|
|
| |
| Volatility
Mitigation |
| X |
X |
X |
(1) The
Account will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated.
|
|
|
|
|
| |
| INVESTMENT
STRATEGIES AND RISKS |
U.S.
LARGECAP
BUFFER OCTOBER |
| Counterparty
Risk |
|
| Derivatives |
X |
| Emerging
Markets |
|
| Equity
Securities |
X |
| •
Growth Style |
|
| •
Smaller Companies |
|
| •
Value Style |
|
| Fixed-Income
Securities |
|
| Foreign
Currency |
|
| Foreign
Securities |
|
| Fund
of Funds |
|
| Hedging |
X |
| High
Portfolio Turnover |
X |
| High
Yield Securities |
|
| Industry
Concentration |
X(1) |
| Investment
Company Securities |
X |
| Leverage |
|
| Portfolio
Duration |
|
| Real
Estate Investment Trusts (“REITs”) |
|
| Real
Estate Securities |
|
| Redemption
and Large Transaction Risk |
X |
| Securitized
Products |
|
| Short
Sales |
X |
| U.S.
Government and U.S. Government-Sponsored Securities |
|
| Volatility
Mitigation |
X |
(1) The
Account will not concentrate (i.e., invest more than 25% of its assets) its
investments in a particular industry except to the extent the Index is so
concentrated.
Counterparty
Risk
Counterparty
risk is the risk that the counterparty to a contract or other obligation will be
unable or unwilling to honor its obligations. If a counterparty fails to meet
its contractual obligations, goes bankrupt, or otherwise experiences a business
interruption, a fund could miss investment opportunities or otherwise hold
investments it would prefer to sell, resulting in losses for the fund. In
addition, a fund may suffer losses if a counterparty fails to comply with
applicable laws or other requirements. Counterparty risk is pronounced during
unusually adverse market conditions and is particularly acute in environments in
which financial services firms are exposed to systemic risks.
Derivatives
Generally,
a derivative is a financial arrangement, the value of which is derived from, or
based on, a traditional security, asset, or market index. A fund may invest in
certain derivative strategies to earn income, manage or adjust the risk profile
of the fund, replace more direct investments, or obtain exposure to certain
markets. A fund may enter into forward commitment agreements, which call for the
fund to purchase or sell a security on a future date at a fixed price. A fund
may also enter into contracts to sell its investments either on demand or at a
specific interval.
The
risks associated with derivative investments include:
•increased
volatility of a fund and/or the failure of the investment to mitigate volatility
as intended;
•the
inability of those managing investments of the fund to correctly predict the
direction of securities prices, interest rates, currency exchange rates, asset
values, and other economic factors;
•losses
caused by unanticipated market movements, which may be substantially greater
than a fund's initial investment and are potentially unlimited;
•the
possibility that there may be no liquid secondary market, which may make it
difficult or impossible to close out a position when desired;
•the
possibility that the counterparty may fail to perform its obligations;
and
•the
inability to close out certain hedged positions to avoid adverse tax
consequences.
There
are many different types of derivatives and many different ways to use them. The
specific derivatives that are principal strategies of each Fund are listed in
its Fund Summary.
•Commodity
index-linked notes are derivative debt instruments issued by U.S. and foreign
banks, brokerage firms, insurance companies, and other corporations with
principal and/or coupon payments linked to the performance of commodity indices.
These notes expose a fund to movements in commodity prices. They are also
subject to credit, counterparty, and interest rate risk. Commodity index-linked
notes are often leveraged, increasing the volatility of each note’s market value
relative to changes in the underlying commodity index. At the maturity of the
note, a fund may receive more or less principal than it originally invested. A
fund may also receive interest payments on the note that are less than the
stated coupon interest payments.
•Credit
default swap agreements may be entered into by a fund as a “buyer” or “seller”
of credit protection. Credit default swap agreements involve special risks
because they may be difficult to value, are highly susceptible to liquidity and
credit risk, and generally pay a return to the party that has paid the premium
only in the event of an actual default by the issuer of the underlying
obligation (as opposed to a credit downgrade or other indication of financial
difficulty). Credit default swaps can increase credit risk because a fund has
exposure to both the issuer of the referenced obligation and the counterparty to
the credit default swap.
•Foreign
currency contracts (such as foreign currency options and foreign currency
forward and swap agreements) may be used by funds to increase exposure to a
foreign currency or to shift exposure to foreign currency fluctuations from one
country to another. A forward currency contract involves a privately negotiated
obligation to purchase or sell a specific currency at a future date at a price
set in the contract. For currency contracts, there is also a risk of government
action through exchange controls that would restrict the ability of a fund to
deliver or receive currency.
•Forwards,
futures contracts, and options thereon (including commodities futures); options
(including put or call options); and swap agreements and over-the-counter swap
agreements (e.g., interest rate swaps, total return swaps, and credit default
swaps) may be used by funds for hedging purposes in order to try to mitigate or
protect against potential losses due to changing interest rates, securities
prices, asset values, currency exchange rates, and other market conditions;
non-hedging purposes to seek to increase the fund’s income or otherwise enhance
return; and as a low-cost method of gaining exposure to a particular market
without investing directly in those securities or assets.
These
derivative investments are subject to special risk considerations, particularly
the imperfect correlation between the change in market value of the instruments
held by a fund and the price of the derivative instrument. If a fund has
insufficient cash, it may have to sell securities from its portfolio to meet
daily variation margin requirements, even when it may be disadvantageous to do
so. Options and swap agreements also involve counterparty risk. With respect to
options, there may be difference in trading hours for the options markets and
the markets for the underlying securities (rate movements can take place in the
underlying markets that cannot be reflected in the options markets) and an
insufficient liquid secondary market for particular options.
•Index/structured
securities are derivative securities whose value or performance is linked to
other equity securities (such as depositary receipts), currencies, interest
rates, indices, or other financial indicators (reference indices).
Emerging
Markets
The
Funds consider a security to be tied economically to an emerging market if the
issuer or guarantor of the security has its principal place of business or
principal office in an emerging market, has its principal securities trading
market in an emerging market, or derives a majority of its revenue from emerging
markets. The Funds also consider a security to be tied economically to an
emerging market if the currency of settlement of the security is the currency of
the emerging market.
Usually,
the term “emerging market” (also called a “developing market”) means any market
that is considered to be an emerging market by the international financial
community (such as markets tied to securities included in the MSCI Emerging
Markets Index or Bloomberg Emerging Markets USD Aggregate Bond Index). Emerging
markets generally exclude the U.S., Canada, Japan, Hong Kong, Singapore,
Australia, New Zealand, and most nations located in Western Europe.
Investments
in companies in emerging markets are subject to higher risks than investments in
companies in more developed markets. These risks include:
•increased
social, political, and economic instability;
•a
smaller market for these securities and low or nonexistent trading volume that
results in a lack of liquidity and greater price volatility;
•lack
of publicly available information, including reports of payments of dividends or
interest on outstanding securities;
•foreign
government policies that may restrict opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national
interests;
•relatively
new capital market structure or market-oriented economy;
•the
possibility that recent favorable economic developments may be slowed or
reversed by unanticipated political or social events in these
countries;
•restrictions
that may make it difficult or impossible for a fund to vote proxies, exercise
shareholder rights, pursue legal remedies, and obtain judgments in foreign
courts; and
•possible
losses through the holding of securities in domestic and foreign custodial banks
and depositories.
In
addition, many developing markets have experienced substantial and, in some
periods, extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies, currencies, interest rates, and securities markets of
those markets.
Repatriation
of investment income, capital, and proceeds of sales by foreign investors may
require governmental registration and/or approval in some developing markets. A
fund could be adversely affected by delays in or a refusal to grant any required
governmental registration or approval for repatriation.
Further,
the economies of developing markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be adversely
affected by trade barriers, exchange controls, managed adjustments in relative
currency values, and other protectionist measures imposed or negotiated by the
countries with which they trade.
The
SEC, the U.S. Department of Justice, and other U.S. authorities may be limited
in their ability to pursue bad actors, including instances of fraud in emerging
markets. For example, in certain emerging markets, there are significant legal
obstacles to obtaining information needed for investigations or litigation.
Similar limitations apply to the pursuit of actions against individuals,
including officers, who may have engaged in fraud or wrongdoing. In addition,
local authorities often are constrained in their ability to assist U.S.
authorities and overseas investors more generally. There are also legal or other
obstacles to seeking access to funds in a foreign country.
Equity
Securities
Equity
securities include common stocks, convertible securities, depositary receipts,
rights (an offering of common stock to investors who currently own shares, which
entitle them to buy subsequent issues at a discount from the offering price),
and warrants (the right to purchase securities from the issuer at a specified
price, normally higher than the current market price). Common stocks, the most
familiar type, represent an equity (ownership) interest in a corporation. The
value of a company’s stock may fall as a result of factors directly relating to
that company, such as decisions made by its management or lower demand for the
company’s products or services. A stock’s value may also fall because of factors
affecting not just the company, but also companies in the same industry or in a
number of different industries, such as increases in production costs. The value
of a company’s stock may also be affected by changes in financial markets that
are relatively unrelated to the company or its industry, such as changes in
interest rates or currency exchange rates. In addition, a company’s stock
generally pays dividends only after the company invests in its own business and
makes required payments to holders of its bonds and other debt. For this reason,
the value of a company’s stock will usually react more strongly than its bonds
and other debt to actual or perceived changes in the company’s financial
condition or prospects.
Some
funds focus their investments on certain market capitalization ranges. Market
capitalization is defined as total current market value of a company’s
outstanding equity securities. The market capitalization of companies in a
fund’s portfolios and their related indexes will change over time, and, except
to the extent consistent with its principal investment strategies (for example,
for an index fund that uses a replication strategy), a fund will not
automatically sell a security just because it falls outside of the market
capitalization range of its index(es).
Growth
Style
The
prices of growth stocks may be based largely on expectations of future earnings,
and their prices can decline rapidly and significantly in reaction to negative
news about such factors as earnings, revenues, the economy, political
developments, or other news. Growth stocks may underperform value stocks and
stocks in other broad style categories (and the stock market as a whole) over
any period of time and may shift in and out of favor with investors generally,
sometimes rapidly, depending on changes in market, economic, and other factors.
As a result, a fund that holds substantial investments in growth stocks may
underperform other funds that invest more broadly or favor different investment
styles. Because growth companies typically reinvest their earnings, growth
stocks typically do not pay dividends at levels associated with other types of
stocks, if at all.
Smaller
Companies
Investments
in companies with smaller market capitalizations may involve greater risks and
price volatility (wide, rapid fluctuations) than investments in larger, more
mature companies. Small company stocks may decline in price as large company
stocks rise, or rise in price while larger company stocks decline. The net asset
value of a fund that invests a substantial portion of its assets in small
company stocks may be more volatile than the net asset value of a fund that
invests solely in larger company stocks. Small companies may be less significant
within their industries and may be at a competitive disadvantage relative to
their larger competitors. Smaller companies may be less mature than larger
companies. At this earlier stage of development, the companies may have limited
product lines, reduced market liquidity for their shares, limited financial
resources, or less depth in management than larger or more established
companies. While smaller companies may be subject to these additional risks,
they may also realize more substantial growth than larger or more established
companies.
Unseasoned
issuers are companies with a record of less than three years continuous
operation, including the operation of predecessors and parents. Many unseasoned
issuers also may be small companies and involve the risks and price volatility
associated with smaller companies. Unseasoned issuers by their nature have only
a limited operating history that can be used for evaluating the company’s growth
prospects. As a result, these securities may place a greater emphasis on current
or planned product lines and the reputation and experience of the company’s
management and less emphasis on fundamental valuation factors than would be the
case for more mature growth companies.
Value
Style
Value
stocks present the risk that they may decline in price or never reach their
expected full market value because the market fails to recognize the stock’s
intrinsic worth. Value stocks may underperform growth stocks and stocks in other
broad style categories (and the stock market as a whole) over any period of time
and may shift in and out of favor with investors generally, sometimes rapidly,
depending on changes in market, economic, and other factors. As a result, a fund
that holds substantial investments in value stocks may underperform other funds
that invest more broadly or favor different investment styles.
Fixed-Income
Securities
Fixed-income
securities include bonds and other debt instruments that are used by issuers to
borrow money from investors (examples include corporate bonds, convertible
securities, asset-and mortgage-backed securities, and municipal, agency, and
U.S. government securities). The issuer of a fixed-income security generally
pays the investor a fixed, variable, or floating rate of interest. The amount
borrowed must be repaid at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from their face
values.
Fixed-income
securities are sensitive to changes in interest rates. Interest rate changes can
be sudden and unpredictable, and are influenced by a number of factors,
including governmental policy, monetary policy, inflation expectations,
perceptions of risk, and supply and demand for fixed-income securities. In
general, fixed-income security prices rise when interest rates fall and fall
when interest rates rise. An increase in interest rates from a low interest rate
environment may lead to heightened volatility, rapid sales of fixed-income
securities, and redemptions alongside reduced liquidity and dealer market-making
capacity in fixed-income markets.
If
interest rates fall, issuers of callable bonds may call (repay) securities with
high interest rates before their maturity dates; this is known as call risk. In
this case, a fund would likely reinvest the proceeds from these securities at
lower interest rates, resulting in a decline in the fund's income. Very low
interest rates, including rates that fall below zero (where banks charge for
depositing money), may detract from a Fund’s performance and its ability to
maintain positive returns to the extent the Fund is exposed to such interest
rates. To the extent a Fund holds an investment with a negative interest rate to
maturity, the Fund would generate a negative return on that investment. Floating
rate securities generally are less sensitive to interest rate changes but may
decline in value if their interest rates do not rise as much, or as quickly, as
interest rates in general. Conversely, floating rate securities will not
generally increase in value if interest rates decline.
In
June 2023, the Secured Overnight Financing Rate (“SOFR”) replaced the London
InterBank Offered Rate (“LIBOR”) as the benchmark interest rate for
dollar-denominated derivatives and loans in the United States pursuant to the
Adjustable Interest Rate (LIBOR) Act. Prior to the adoption of SOFR, LIBOR was
the globally accepted benchmark for interest rates; however, the United
Kingdom’s Financial Conduct Authority, which regulated LIBOR, ceased publication
of non-U.S. dollar LIBOR, 1-week U.S. dollar LIBOR, and 2-month U.S. dollar
LIBOR rates on December 31, 2021, and the remaining, most widely used U.S.
dollar LIBOR rates stopped being published on June 30, 2023. Countries
outside of the United States have opted to use different alternatives to LIBOR
than SOFR. The effect of LIBOR's discontinuation and replacement on new or
existing financial instruments or operational processes will vary depending on a
number of factors, including, for example, fallback provisions in contracts,
replacement language in contracts, and legislative action. In addition, LIBOR’s
discontinuation and replacement may affect the value, liquidity, or return on
certain Fund investments and may result in costs in connection with closing out
positions and entering into new trades. These impacts are likely to persist
until new reference rates and fallbacks for both legacy and new instruments and
contracts are commercially accepted and market practices become settled. SOFR is
calculated by short-term repurchase agreements, backed by U.S. Treasuries. LIBOR
was a forward-looking rate, while SOFR reflects an overnight rate, making SOFR
much less susceptible to market fluctuations and manipulations than
LIBOR.
Fixed-income
securities are also affected by the credit quality of the issuer.
Investment-grade debt securities are medium and high-quality securities. Some
bonds, such as lower grade or “junk” bonds, may have speculative characteristics
and may be particularly sensitive to economic conditions and the financial
condition of the issuers. Credit risk refers to the possibility that the issuer
of the security will not be able to make principal and interest payments when
due.
Additionally,
a Fund's investments in companies with smaller market capitalizations may
involve greater risks, price volatility (wide, rapid fluctuations), and less
liquidity than investments in larger, more mature companies.
Foreign
Currency
Certain
of a fund’s investments will be denominated in foreign currencies or traded in
securities markets in which settlements are made in foreign currencies. Any
income on such investments is generally paid to a fund in foreign currencies. In
addition, funds may engage in foreign currency transactions for both hedging and
investment purposes, as well as to increase exposure to a foreign currency or to
shift exposure to foreign currency fluctuations from one country to
another.
The
value of foreign currencies relative to the U.S. dollar varies continually,
causing changes in the dollar value of a fund’s portfolio investments (even if
the local market price of the investments is unchanged) and changes in the
dollar value of a fund’s income available for distribution to its shareholders.
The effect of changes in the dollar value of a foreign currency on the dollar
value of a fund’s assets and on the net investment income available for
distribution may be favorable or unfavorable. Transactions in non-U.S.
currencies are also subject to many of the risks of investing in foreign
(non-U.S.) securities; for example, changes in foreign economies and political
climates are more likely to affect a fund that has foreign currency exposure
than a fund that invests exclusively in U.S. companies and currency. There also
may be less government supervision of foreign markets, resulting in non-uniform
accounting practices and less publicly available information. Transactions in
foreign currencies, foreign currency denominated debt, and certain foreign
currency options, futures contracts, and forward contracts (and similar
instruments) may give rise to ordinary income or loss to the extent such income
or loss results from fluctuations in the value of the foreign currency
concerned.
A
fund may incur costs in connection with conversions between various currencies.
In addition, a fund may be required to liquidate portfolio assets, or may incur
increased currency conversion costs, to compensate for a decline in the dollar
value of a foreign currency occurring between the time when a fund declares and
pays a dividend, or between the time when a fund accrues and pays an operating
expense in U.S. dollars. To protect against a change in the foreign currency
exchange rate between the date on which a fund contracts to purchase or sell a
security and the settlement date for the purchase or sale, to gain exposure to
one or more foreign currencies, or to “lock in” the equivalent of a dividend or
interest payment in another currency, a fund might purchase or sell a foreign
currency on a spot (i.e., cash) basis at the prevailing spot rate.
Currency
hedging involves some of the same general risks and considerations as other
transactions with similar instruments (i.e., derivative instruments) and
hedging. Currency transactions are also subject to additional risks. Because
currency control is of great importance to the issuing governments and
influences economic planning and policy, purchases and sales of currency and
related instruments can be adversely affected by government exchange controls,
limitations or restrictions on repatriation of currency, and manipulations or
exchange restrictions imposed by governments. These forms of governmental
actions can result in losses to a fund if it is unable to deliver or receive
currency or monies in settlement of obligations. They could also cause hedges
the fund has entered into to be rendered useless, resulting in full currency
exposure as well as incurring transaction costs. Settlement of a currency
forward contract for the purchase of most currencies must occur at a bank based
in the issuing nation. The ability to establish and close out positions on
trading options on currency futures contracts is subject to the maintenance of a
liquid market that may not always be available.
Foreign
Securities
The
Funds consider a security to be tied economically to countries outside the U.S.
(a “foreign security”) if the issuer or guarantor of the security has its
principal place of business or principal office outside the U.S., has its
principal securities trading market outside the U.S., or derives a majority of
its revenue from outside the U.S. The Funds also consider a security to be a
foreign security if the settlement currency for the security is currency of a
country outside of the U.S.
There
may be less publicly available information about foreign companies than U.S.
companies, and information about foreign securities in which the Funds invest
may be less reliable or complete. Foreign companies, including those listed on
U.S. securities exchanges, may not be subject to the same uniform accounting,
auditing, and financial reporting practices as are required of U.S. companies
with respect to such matters as insider trading rules, tender offer regulation,
accounting standards or auditor oversight, stockholder proxy requirements, and
the requirements mandating timely and accurate disclosure of information. For
example, the Chinese government has taken positions that prevent the Public
Company Accounting Oversight Board from inspecting the audit work and practices
of accounting firms in mainland China and Hong Kong for compliance with U.S. law
and professional standards. In addition, securities of many foreign companies
are less liquid and more volatile than securities of comparable U.S. companies.
Commissions on foreign securities exchanges may be generally higher than those
on U.S. exchanges.
Foreign
markets also have different clearance and settlement procedures than those in
U.S. markets. In certain markets, there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct these transactions. Delays in settlement could result in
temporary periods when a portion of fund assets is not invested and earning no
return. If a fund is unable to make intended security purchases due to
settlement problems, the fund may miss attractive investment opportunities. In
addition, a fund may incur a loss as a result of a decline in the value of its
portfolio if it is unable to sell a security.
With
respect to certain foreign countries, there is the possibility of
nationalization, expropriation, or confiscatory taxation, political or social
instability, or diplomatic developments that could affect a fund’s investments
in those countries. In addition, a fund may also suffer losses due to differing
accounting practices and treatments. Investments in foreign securities are
subject to laws of the foreign country that may limit the amount and types of
foreign investments. Changes of governments or of economic or monetary policies,
in the U.S. or abroad, changes in dealings between nations, currency
convertibility, or exchange rates could result in investment losses for a
fund.
Foreign
securities are often traded with less frequency and volume and, therefore, may
have greater price volatility than is the case with many U.S. securities.
Brokerage commissions, custodial services, and other costs relating to
investment in foreign countries are generally more expensive than in the U.S.
Though the fund intends to acquire the securities of foreign issuers where there
are public trading markets, economic or political turmoil in a country in which
a fund has a significant portion of its assets or deterioration of the
relationship between the U.S. and a foreign country may reduce the liquidity of
a fund’s portfolio. The fund may have difficulty meeting a large number of
redemption requests. Furthermore, there may be difficulties in obtaining or
enforcing judgments against foreign issuers.
A
fund may invest in a foreign company by purchasing depositary receipts.
Depositary receipts are certificates of ownership of shares in a foreign-based
issuer held by a bank or other financial institution. They are alternatives to
purchasing the underlying security but are subject to the foreign securities
risks to which they relate.
A
fund may file claims to recover foreign withholding taxes on dividend and
interest income (if any) received from issuers in certain countries and capital
gains on the disposition of stocks or securities where such withholding tax
reclaim is possible. Whether or when a fund will receive a withholding tax
refund is within the control of the tax authorities in such countries. Where a
fund expects to recover withholding taxes, the net asset value of a fund
generally includes accruals for such tax refunds. If the likelihood of recovery
materially decreases, accruals in the fund’s net asset value for such refunds
may be written down partially or in full, which will adversely affect the fund’s
net asset value. Shareholders in the fund at the time an accrual is written down
will bear the impact of the resulting reduction in net asset value regardless of
whether they were shareholders during the accrual period. Conversely, if a fund
receives a tax refund that has not been previously accrued, shareholders in the
fund at the time of the successful recovery will benefit from the resulting
increase in the fund’s net asset value. Shareholders who sold their shares prior
to such time will not benefit from such increase in the fund’s net asset
value.
If
a fund’s portfolio invests significantly in a certain geographic region, any
negative development affecting that region will have a greater impact on the
fund than a fund that is not as heavily invested in that region. For example,
with respect to funds that invest significantly in China:
•Investing
in China involves certain heightened risks and considerations, including, among
others: frequent trading suspensions and government interventions (including by
nationalizing assets); currency exchange rate fluctuations or blockages; limits
on using brokers and on foreign ownership; different financial reporting
standards, as described above; higher dependence on exports and international
trade; political and social instability; infectious disease outbreaks; regional
and global conflicts; increased trade tariffs, embargoes, and other trade
limitations; custody and other risks associated with programs used to access
Chinese securities; and uncertainties in tax rules that could result in
unexpected tax liabilities for the Fund. Significant portions of the Chinese
securities markets may become rapidly illiquid, as Chinese issuers have the
ability to suspend the trading of their equity securities. Moreover, actions by
the U.S. government, such as delisting of certain Chinese companies from U.S.
securities exchanges or otherwise restricting their operations in the U.S., may
negatively impact the value of such securities held by the funds.
Fund
of Funds
The
performance and risks of a fund of funds directly correspond to the performance
and risks of the underlying funds in which the fund invests.
As
of December 31, 2023, the PVC Principal LifeTime Accounts, PVC SAM Portfolios,
Diversified Balanced Account, Diversified Balanced Adaptive Allocation Account,
Diversified Balanced Strategic Allocation Account, Diversified Growth Account,
Diversified Growth Adaptive Allocation Account, Diversified Growth Strategic
Allocation Account, and Diversified Income Account assets were allocated among
the underlying funds as identified in the tables below.
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|
Underlying
Fund |
Diversified
Balanced
Account |
Diversified
Balanced
Adaptive
Allocation
Account |
Diversified
Balanced
Strategic
Allocation
Account |
Diversified
Growth
Account |
Diversified
Growth
Adaptive
Allocation
Account |
Diversified
Growth
Strategic
Allocation
Account |
Diversified
Income
Account |
| Bond
Market Index Account |
50.0% |
62.5% |
50.0% |
35.1% |
43.9% |
35.1% |
65.1% |
| International
Equity Index Fund |
7.1% |
8.8% |
7.1% |
10.1% |
12.6% |
10.1% |
4.0% |
| LargeCap
S&P 500 Index Account |
34.9% |
18.7% |
0.0% |
44.8% |
31.1% |
0.0% |
24.9% |
| LargeCap
S&P 500 Managed Volatility Index Account |
0.0% |
0.0% |
34.9% |
0.0% |
0.0% |
44.8% |
0.0% |
| MidCap
S&P 400 Index Fund |
4.0% |
5.0% |
4.0% |
5.0% |
6.2% |
5.0% |
3.0% |
| SmallCap
S&P 600 Index Fund |
4.0% |
5.0% |
4.0% |
5.0% |
6.2% |
5.0% |
3.0% |
| Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
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| Underlying
Fund |
Principal
LifeTime Strategic
Income Account |
Principal
LifeTime
2020
Account |
Principal
LifeTime
2030
Account |
Principal
LifeTime
2040
Account |
Principal
LifeTime
2050
Account |
Principal
LifeTime
2060
Account |
| Blue
Chip Fund |
4.0% |
5.0% |
6.9% |
9.2% |
10.9% |
10.7% |
| Core
Fixed Income Fund |
33.8% |
31.5% |
33.8% |
15.1% |
2.9% |
3.0% |
| Diversified
International Fund |
5.2% |
6.6% |
9.1% |
12.1% |
14.3% |
14.4% |
| Diversified
Real Asset Fund |
2.3% |
2.3% |
0.0% |
0.0% |
0.0% |
0.0% |
| Equity
Income Fund |
3.4% |
4.2% |
5.8% |
7.8% |
9.2% |
9.2% |
| High
Income Fund |
6.7% |
5.8% |
4.6% |
3.0% |
1.0% |
1.0% |
| Inflation
Protection Fund |
6.1% |
5.3% |
0.0% |
0.0% |
0.0% |
0.0% |
| International
Small Company Fund |
0.8% |
1.0% |
1.5% |
2.0% |
2.3% |
2.4% |
| LargeCap
Growth Fund I |
3.9% |
4.9% |
6.7% |
9.0% |
10.6% |
10.5% |
| LargeCap
S&P 500 Index Fund |
3.7% |
4.6% |
6.1% |
8.5% |
10.0% |
9.9% |
| LargeCap
Value Fund III |
3.3% |
4.1% |
5.8% |
7.7% |
9.0% |
9.1% |
| MidCap
Fund |
0.6% |
0.7% |
1.1% |
1.8% |
2.1% |
2.1% |
| MidCap
Growth Fund III |
1.7% |
2.1% |
2.9% |
3.6% |
4.2% |
4.2% |
| MidCap
Value Fund I |
2.2% |
2.8% |
3.9% |
5.2% |
6.1% |
6.1% |
| Origin
Emerging Markets Fund |
1.3% |
1.6% |
2.2% |
3.0% |
3.6% |
3.6% |
| Overseas
Fund |
2.8% |
3.6% |
4.8% |
6.4% |
7.6% |
7.4% |
| Real
Estate Securities Fund |
0.0% |
0.0% |
2.3% |
2.3% |
2.3% |
2.3% |
| Short-Term
Income Fund |
16.8% |
12.1% |
0.0% |
0.0% |
0.0% |
0.0% |
| SmallCap
Growth Fund I |
0.7% |
0.9% |
1.2% |
1.6% |
1.9% |
2.0% |
| SmallCap
Value Fund II |
0.7% |
0.9% |
1.3% |
1.7% |
2.0% |
2.1% |
| Total |
100.0% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
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Underlying
Fund |
SAM
Balanced
Portfolio |
SAM
Conservative
Balanced Portfolio |
SAM
Conservative
Growth Portfolio |
SAM
Flexible Income Portfolio |
SAM
Strategic
Growth
Portfolio |
| Blue
Chip Fund |
8.8% |
5.8% |
12.3% |
1.9% |
14.3% |
| Bond
Market Index Fund |
4.5% |
10.9% |
2.3% |
15.8% |
0.0% |
| Core
Fixed Income Fund |
14.7% |
25.3% |
6.4% |
30.5% |
0.0% |
| Diversified
International Fund |
3.8% |
2.5% |
5.8% |
2.6% |
5.1% |
| Diversified
Real Asset Fund |
3.1% |
2.8% |
3.5% |
1.5% |
3.6% |
| Equity
Income Account |
7.3% |
6.2% |
10.6% |
3.2% |
12.0% |
| Finisterre
Emerging Markets Total Return Bond Fund |
1.3% |
2.3% |
0.8% |
2.6% |
0.0% |
| Global
Real Estate Securities Fund |
0.0% |
0.0% |
0.0% |
0.5% |
0.0% |
| Government
& High Quality Bond Account |
1.4% |
2.4% |
0.6% |
4.3% |
0.0% |
| High
Yield Fund |
3.8% |
4.2% |
1.5% |
3.4% |
0.0% |
| Inflation
Protection Fund |
1.7% |
3.7% |
0.7% |
5.5% |
0.0% |
| International
Equity Index Fund |
0.5% |
0.5% |
1.0% |
0.0% |
1.3% |
| International
Small Company Fund |
1.0% |
0.6% |
1.4% |
0.0% |
2.4% |
| LargeCap
Growth Fund I |
3.4% |
1.2% |
4.4% |
0.9% |
5.2% |
| LargeCap
S&P 500 Index Fund |
2.1% |
1.5% |
2.5% |
1.0% |
3.1% |
| LargeCap
Value Fund III |
3.7% |
1.2% |
5.1% |
1.0% |
5.9% |
| MidCap
Account |
1.6% |
1.0% |
1.9% |
0.0% |
2.0% |
| Origin
Emerging Markets Fund |
2.2% |
1.4% |
2.8% |
0.5% |
3.8% |
| Overseas
Fund |
2.9% |
1.0% |
2.5% |
0.0% |
5.0% |
| Principal
Active High Yield ETF |
0.0% |
0.0% |
0.0% |
1.7% |
0.0% |
| Principal
Capital Appreciation Fund |
9.4% |
6.1% |
12.2% |
4.3% |
14.6% |
| Principal
Government Money Market Fund |
0.5% |
0.7% |
0.7% |
0.5% |
0.7% |
| Principal
U.S. Mega-Cap ETF |
11.7% |
8.1% |
12.4% |
7.1% |
13.3% |
| Principal
U.S. Small-Cap ETF |
2.7% |
1.8% |
3.6% |
0.0% |
4.2% |
| Real
Estate Securities Account |
1.0% |
0.8% |
1.5% |
0.5% |
0.9% |
| Short-Term
Income Fund |
1.9% |
2.6% |
0.0% |
3.5% |
0.0% |
| Small-MidCap
Dividend Income Fund |
2.1% |
1.5% |
2.2% |
3.3% |
2.6% |
| Spectrum
Preferred and Capital Securities Income Fund |
2.9% |
3.9% |
1.3% |
3.9% |
0.0% |
| Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
A
fund of funds indirectly bears its pro-rata share of the expenses of the
underlying funds in which it invests, as well as directly incurring expenses.
Therefore, investment in a fund of funds is more costly than investing directly
in shares of the underlying funds. Generally, if an underlying fund offers
multiple classes of shares for investment by funds of funds, the Funds will
purchase shares of the class with the lowest expense ratio (expressed as a
percent of average net assets on an annualized basis) at the time of
purchase.
If
you are considering investing in a Principal LifeTime Account, you should take
into account your estimated retirement date and risk tolerance. In general, each
Principal LifeTime Account is managed with the assumption that the investor will
invest in a Principal LifeTime Account whose stated date is closest to the date
the shareholder retires. Choosing a fund targeting an earlier date represents a
more conservative choice; choosing a fund with a later date represents a more
aggressive choice. It is important to note that the retirement year of the fund
you select should not necessarily represent the specific year you intend to
start drawing retirement assets. It should be a guide only. Generally, the
potential for higher returns over time is accompanied by the higher risk of a
decline in the value of your principal. Investors should realize that the
Principal LifeTime Accounts are not a complete solution to their retirement
needs. Investors must weigh many factors when considering when to retire, what
their retirement needs will be, and what sources of income they may
have.
There
are five Strategic Asset Management (“SAM”) Portfolios: Flexible Income,
Conservative Balanced, Balanced, Conservative Growth, and Strategic Growth. The
SAM Portfolios offer long-term investors different asset allocation strategies
having different levels of potential investment risk and reward. The SAM
Portfolios share the same risks but often with different levels of exposure. In
general, relative to the other Portfolios:
•the
Balanced Portfolio should offer investors the potential for a medium level of
income and a medium level of capital growth, while exposing them to a medium
level of principal risk,
•the
Conservative Balanced Portfolio should offer investors the potential for a
medium-to-high level of income and a medium-to-low level of capital growth,
while exposing them to a medium-to-low level of principal risk,
•the
Conservative Growth Portfolio should offer investors the potential for a
low-to-medium level of income and a medium-to-high level of capital growth,
while exposing them to a medium-to-high level of principal risk,
•the
Flexible Income Portfolio should offer investors the potential for a high level
of income and a low level of capital growth, while exposing them to a low level
of principal risk, and
•the
Strategic Growth Portfolio should offer investors the potential for a high level
of capital growth, and a corresponding level of principal risk.
Funds
of funds can be subject to payment-in-kind liquidity risk: if an underlying fund
pays a redemption request by the fund wholly or partly by a distribution-in-kind
of portfolio securities rather than in cash, the fund may hold such portfolio
securities until those managing the investments of the fund determine that it is
appropriate to dispose of them.
Management
of funds of funds entails potential conflicts of interest: a fund of fund may
invest in affiliated underlying funds, and those who manage the fund’s
investments and their affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more fund of fund assets
to underlying funds from which they receive higher fees.
Hedging
Hedging
is a strategy that can be used to attempt to mitigate or protect against
potential losses due to changing interest rates, securities prices, asset
values, currency exchange rates, and other market conditions. The success of a
fund’s hedging strategy will be subject to the ability of those managing the
fund’s investments to correctly assess the degree of correlation between the
performance of the instruments used in the hedging strategy and the performance
of the investments in the portfolio being hedged. Since the characteristics of
many securities change as markets change or time passes, the success of a fund’s
hedging strategy will also be subject to the ability of those managing the
fund’s investments to continually recalculate, readjust, and execute hedges in
an efficient and timely manner. For a variety of reasons, those managing the
fund’s investments may not seek to establish a perfect correlation between such
hedging instruments and the portfolio holdings being hedged. Such imperfect
correlation may prevent a fund from achieving the intended hedge or expose a
fund to risk of loss. In addition, it is not possible to hedge fully or
perfectly against any risk, and hedging entails its own costs.
High
Portfolio Turnover
“Portfolio
turnover” is the term used in the industry for measuring the amount of trading
that occurs in a fund’s portfolio during the year. For example, a 100% turnover
rate means that, on average, every security in the portfolio has been replaced
once during the year. Funds with high turnover rates (more than 100%) often have
higher transaction costs (which are paid by the fund) and may lower the fund’s
performance. High portfolio turnover can result in a lower capital gain
distribution due to higher transaction costs added to the basis of the assets or
can result in lower ordinary income distributions to shareholders when the
transaction costs cannot be added to the basis of assets. Both events reduce
fund performance.
Please
consider all the factors when you compare the turnover rates of different funds.
You should also be aware that the “total return” line in the Financial
Highlights section reflects portfolio turnover costs.
High
Yield Securities
Below-investment-grade
securities are fixed-income securities that are rated at the time of purchase
Ba1 or lower by Moody’s Investors Service, Inc. (“Moody’s”) and BB+ or lower by
S&P Global Ratings (“S&P Global”). If the security has been rated by
only one of the rating agencies, that rating will determine the security's
rating; if the security is rated differently by the rating agencies, the highest
rating will be used; and if the security has not been rated by either of the
rating agencies, those selecting such investments will determine the security's
quality.
Below-investment-grade
securities are sometimes referred to as high yield or “junk bonds” and are
considered speculative, particularly with respect to the issuer’s continuing
ability to meet principal and interest payments. Such securities could be in
default at time of purchase. Each fund of funds may invest in underlying funds
that may invest in such securities.
Investing
in high yield securities involves special risks in addition to those associated
with investing in investment-grade securities:
•High
yield securities may be less liquid than investment-grade
securities.
•The
secondary market on which high yield securities are traded may be less liquid,
which may reduce the price of the security and adversely affect, and cause large
fluctuations in, the daily price of the Fund's shares.
•Analysis
of the creditworthiness of issuers of high yield securities is more complex. To
the extent a Fund invests in high yield securities, its ability to meet its
objective may be more dependent on such credit analyses.
•High
yield securities may be more susceptible to real or perceived adverse economic
and competitive industry conditions. Although high yield securities prices tend
to be less sensitive to interest rate changes than those of investment-grade
securities, they tend to be more sensitive to adverse economic downturns or
individual corporate developments. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of high yield securities, especially in a thinly traded
market.
•If
the issuer of high yield securities defaults, a Fund may incur additional
expenses to seek recovery.
•If
an issuer of high yield securities undergoes a corporate restructuring, such
high yield securities may become exchanged for or converted into reorganized
equity of the underlying issuer. Moreover, to the extent that a bond indenture
or loan agreement does not contain sufficiently protective covenants or
otherwise permits the issuer to take certain actions to the Fund's detriment
(such as distributing cash to equity holders, incurring additional indebtedness,
and disposing of assets), the underlying value of the high yield security may
decline.
The
use of credit ratings for evaluating high yield securities also involves certain
risks. For example, credit ratings reflect the safety of principal and interest
payments, not the market value risk of high yield securities. Also, credit
rating agencies may fail to change credit ratings in a timely manner to reflect
subsequent events. If a credit rating agency changes the rating of a portfolio
security held by a Fund, the Fund may retain the security.
Industry
Concentration
A
fund that concentrates its investments (invests more than 25% of its net assets)
in a particular industry (or group of industries) is more exposed to the overall
condition of the particular industry than a fund that invests in a wider variety
of industries. A particular industry could be affected by economic, business,
supply-and-demand, political, or regulatory factors. Companies within the same
industry could react similarly to such factors. As a result, a fund’s
concentration in a particular industry would increase the possibility that the
fund’s performance will be affected by such factors.
Investment
Company Securities
Securities
of other investment companies, including shares of closed-end investment
companies, unit investment trusts, various ETFs, and other open-end investment
companies, represent interests in professionally managed portfolios that may
invest in a variety of instruments. Certain types of investment companies, such
as closed-end investment companies, issue a fixed number of shares that trade on
a stock exchange or over-the-counter at a premium or a discount to their net
asset value. Others are continuously offered at net asset value but may also be
traded in the secondary market. ETFs are often structured to perform in a
similar fashion to a broad-based securities index. Investing in ETFs involves
generally the same risks as investing directly in the underlying instruments.
Investing in ETFs involves the risk that they will not perform in exactly the
same fashion, or in response to the same factors, as the index or underlying
instruments. Shares of ETFs may trade at prices other than net asset
value.
A
fund that invests in another investment company is subject to the risks
associated with direct ownership of the securities in which such investment
company invests. Fund shareholders indirectly bear their proportionate share of
the expenses of each such investment company, including its advisory and
administrative fees. The Fund would also continue to pay its own advisory fees
and other expenses. Consequently, the Fund and its shareholders would, in
effect, absorb two levels of fees with respect to investments in other
investment companies.
A
fund may invest in affiliated underlying funds, and those who manage such fund’s
investments and their affiliates may earn different fees from different
underlying funds and may have an incentive to allocate more fund assets to
underlying funds from which they receive higher fees.
Leverage
If
a fund makes investments in futures contracts, forward contracts, swaps, and
other derivative instruments, these instruments provide the economic effect of
financial leverage by creating additional investment exposure, as well as the
potential for greater loss. If a fund uses leverage through activities such as
borrowing, entering into short sales, purchasing securities on margin or on a
“when-issued” basis, or purchasing derivative instruments in an effort to
increase its returns, the fund has the risk of magnified capital losses that
occur when losses affect an asset base, enlarged by borrowings or the creation
of liabilities, that exceeds the net assets of the fund. The net asset value of
a fund employing leverage will be more volatile and sensitive to market
movements. Leverage may involve the creation of a liability that requires the
fund to pay interest. Leveraging may cause a fund to liquidate portfolio
positions to satisfy its obligations when it may not be advantageous to do so.
To the extent that a fund is not able to close out a leveraged position because
of market illiquidity, a fund’s liquidity may be impaired.
Portfolio
Duration
Average
duration is a mathematical calculation of the average life of a bond (or for a
bond fund, the average life of the fund’s underlying bonds, weighted by the
percentage of the fund’s assets that each represents) that serves as a useful
measure of its price risk. Duration is an estimate of how much the value of the
bonds held by a fund will fluctuate in response to a change in interest rates.
For example, if a fund has an average duration of 4 years and interest rates
rise by 1%, the value of the bonds held by the fund will decline by
approximately 4%, and if the interest rates decline by 1%, the value of the
bonds held by the fund will increase by approximately 4%. Longer term bonds and
zero coupon bonds are generally more sensitive to interest rate changes.
Duration, which measures price sensitivity to interest rate changes, is not
necessarily equal to average maturity.
Real
Estate Investment Trusts (“REITs”)
REITs
involve certain unique risks in addition to the risks associated with investing
in the real estate industry in general (such as possible declines in the value
of real estate, lack of availability of mortgage funds, or extended vacancies of
property). REITs are characterized as: equity REITs, which primarily own
property and generate revenue from rental income; mortgage REITs, which invest
in real estate mortgages; and hybrid REITs, which combine the characteristics of
both equity and mortgage REITs. Equity REITs may be affected by changes in the
value of the underlying property owned by the REITs, while mortgage REITs may be
affected by the quality of any credit extended. REITs are dependent upon
management skills, are not diversified, and are subject to heavy cash flow
dependency, risks of default by borrowers, and self-liquidation. A fund that
invests in a REIT is subject to the REIT’s expenses, including management fees,
and will remain subject to the fund’s advisory fees with respect to the assets
so invested. REITs are also subject to the possibilities of failing to qualify
for the special tax treatment accorded REITs under the Internal Revenue Code and
failing to maintain their exemptions from registration under the 1940
Act.
Regular
REIT dividends received by a Fund from a REIT will not qualify for the corporate
dividends-received deduction and generally will not constitute qualified
dividend income for U.S. income tax purposes. Any distribution of income
attributable to regular REIT dividends from a Fund’s investment in a REIT will
not qualify for the deduction that would be available to a non-corporate
shareholder were the shareholder to own such REIT directly.
Investment
in REITs also involves risks similar to those associated with investing in small
market capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume, and may be subject to more abrupt
or erratic price movements than larger company securities.
Real
Estate Securities
Investing
in securities of companies in the real estate industry subjects a fund to the
special risks associated with the real estate market and the real estate
industry in general. Generally, companies in the real estate industry are
considered to be those that have principal activity involving the development,
ownership, construction, management, or sale of real estate; have significant
real estate holdings, such as hospitality companies, healthcare facilities,
supermarkets, mining, lumber, and/or paper companies; and/or provide products or
services related to the real estate industry, such as financial institutions
that make and/or service mortgage loans and manufacturers or distributors of
building supplies. Securities of companies in the real estate industry are
sensitive to factors such as loss to casualty or condemnation, changes in real
estate values, property taxes, interest rates, cash flow of underlying real
estate assets, occupancy rates, government regulations affecting zoning, land
use and rents, and the management skill and creditworthiness of the issuer.
Companies in the real estate industry may also be subject to liabilities under
environmental and hazardous waste laws.
Redemption
and Large Transaction Risk
Ownership
of a fund’s shares may be concentrated in one or a few large investors (such as
funds of funds, institutional investors, and asset allocation programs) that may
redeem or purchase shares in large quantities. These transactions may cause a
fund to sell securities to meet redemptions or to invest additional cash at
times it would not otherwise do so, which may result in increased transaction
costs, increased expenses, changes to expense ratios, and adverse effects to
fund performance. Such transactions may also accelerate the realization of
taxable income if sales of portfolio securities result in gains. Moreover,
reallocations by large shareholders among share classes of a fund may result in
changes to the expense ratios of affected classes, which may increase the
expenses paid by shareholders of the class that experienced the
redemption.
As
an example, as of December 31, 2023, series of the Registrant owned the
following percentages, in the aggregate, of the outstanding shares of the
underlying funds listed below. PGI is the advisor to the PFI and PVC funds of
funds and is committed to minimizing the potential impact of redemption and
large transaction risk on underlying funds to the extent consistent with
pursuing the investment objectives of the funds of funds that it manages.
However, PGI and its affiliates may face conflicts of interest in fulfilling
responsibilities to all such funds.
|
|
|
|
|
| |
| Account |
Total
Percentage of Outstanding Shares Owned |
| Bond
Market Index |
98.54% |
| Equity
Income |
21.97% |
| Government
& High Quality Bond |
16.89% |
| LargeCap
S&P 500 Index |
75.11% |
| LargeCap
S&P 500 Managed Volatility Index |
100.00% |
| MidCap
|
4.33% |
| Real
Estate Securities |
11.24% |
Securitized
Products
Securitized
products are fixed-income instruments that represent interests in underlying
pools of collateral or assets. The value of the securitized product is derived
from the performance, value, and cash flows of the underlying
asset(s).
A
fund’s investments in securitized products are subject to risks similar to
traditional fixed-income securities, such as credit, interest rate, liquidity,
prepayment, extension, and default risk, as well as additional risks associated
with the nature of the assets and the servicing of those assets. Prepayment risk
may make it difficult to calculate the average life of a fund’s investment in
securitized products. Securitized products are generally issued as pass-through
certificates, which represent the right to receive principal and interest
payments collected on the underlying pool of assets, which are passed through to
the security holder. Therefore, repayment depends on the cash flows generated by
the underlying pool of assets. The securities may be rated as investment grade
or below investment grade.
The
specific securitized products that are principal strategies of each Fund are
listed in its Fund Summary.
•Mortgage-backed
securities (“MBS”) represent an interest in a pool of underlying mortgage loans
secured by real property. MBS are sensitive to changes in interest rates but may
respond to these changes differently from other fixed-income securities due to
the possibility of prepayment of the underlying mortgage loans. If interest
rates fall and the underlying loans are prepaid faster than expected, the fund
may have to reinvest the prepaid principal in lower yielding securities, thus
reducing the fund’s income. Conversely, rising interest rates tend to discourage
refinancings and the underlying loans may be prepaid more slowly than expected,
reducing a fund’s potential to reinvest the principal in higher yielding
securities and extending the duration of the underlying loans. In addition, when
market conditions result in an increase in default rates on the underlying loans
and the foreclosure values of the underlying real estate is less than the
outstanding amount due on the underlying loan, collection of the full amount of
accrued interest and principal on these investments may be doubtful. The risk of
such defaults is generally higher in the case of underlying mortgage pools that
include sub-prime mortgages (mortgages granted to borrowers whose credit
histories would not support conventional mortgages).
•Commercial
mortgage-backed securities (“CMBS”) represent an interest in a pool of
underlying commercial mortgage loans secured by real property such as retail,
office, hotel, multi-family, and industrial properties. CMBS are issued in
several classes with different levels of yield and credit protection, and the
CMBS class in which a fund invests influences the interest rate, credit, and
prepayment risks. Many of the loans related to CMBS do not allow voluntary
prepayment, which can help mitigate or eliminate prepayment risk.
•Asset-backed
securities (“ABS”) are backed by non-mortgage assets such as company
receivables, company loans, truck and auto loans, student loans, leases, and
credit card receivables. ABS entail credit risk. They also may present a risk
that, in the event of default, the liquidation value of the underlying assets
may be inadequate to pay any unpaid interest or principal.
Short
Sales
A
fund enters into a short sale by selling a security it has borrowed (typically
from a broker or other institution) with the hope of purchasing the same
security at a later date at a lower price. A fund may also take a short position
in a derivative instrument, such as a future, forward or swap. If the market
price of the security or derivatives increases, the fund will suffer a
(potentially unlimited) loss when it replaces the security or derivative at the
higher price. In certain cases, purchasing a security to cover a short position
can itself cause the price of the security to rise further, thereby exacerbating
the loss. In addition, a fund may not always be able to borrow the security at a
particular time or at an acceptable price. Before a fund replaces a borrowed
security, it is required to post collateral to cover the fund’s short position,
marking the collateral to market daily. This obligation limits a fund’s
investment flexibility, as well as its ability to meet redemption requests or
other current obligations. A short position in a derivative instrument involves
the risk of a theoretically unlimited increase in the value of the underlying
instrument. Short sales also involve transaction and other costs that will
reduce potential fund gains and increase potential fund losses.
Certain
funds may also invest the proceeds received from short selling securities, which
creates additional leverage. Using such leverage allows the fund to use the
proceeds to purchase additional securities, thereby increasing its exposure to
assets, such that its total assets may be greater than its capital. Leverage
also magnifies the volatility of changes in the value of the fund’s portfolio.
The effect of the use of leverage by the fund in a market that moves adversely
to its investments could result in substantial losses to the fund, which would
be greater than if the fund were not leveraged. Because a short position loses
value as the security’s price increases, the loss on a short sale is
theoretically unlimited.
The
short sale proceeds utilized by a fund to leverage investments are
collateralized by all or a portion of such fund’s portfolio. Accordingly, a fund
may pledge securities in order to effect short sales, utilize short sale
proceeds or otherwise obtain leverage for investment or other purposes. Should
the securities pledged to brokers to secure the fund’s margin accounts decline
in value, the fund could be subject to a “margin call”, pursuant to which the
fund must either deposit additional funds or securities with the broker or
suffer mandatory liquidation of all or a portion of the pledged securities to
compensate for the decline in value. The banks and dealers that provide leverage
to the fund have discretion to change the fund’s margin requirements at any
time. Changes by counterparties in the foregoing may result in large margin
calls, loss of leverage and forced liquidations of positions at disadvantageous
prices. The utilization of short sale proceeds for leverage will cause the fund
to be subject to higher transaction fees and other costs.
U.S.
Government and U.S. Government-Sponsored Securities
U.S.
government securities, such as Treasury bills, notes, and bonds and
mortgage-backed securities guaranteed by the Government National Mortgage
Association (Ginnie Mae), are supported by the full faith and credit of the
United States; others are supported by the right of the issuer to borrow from
the U.S. Treasury; others are supported by the discretionary authority of the
U.S. government to purchase the agency’s obligations; and still others are
supported only by the credit of the issuing agency, instrumentality, or
enterprise.
Although
U.S. government-sponsored enterprises such as the Federal Home Loan Mortgage
Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie
Mae) may be chartered or sponsored by Congress, they are not funded by
Congressional appropriations, and their securities are not issued by the U.S.
Treasury nor supported by the full faith and credit of the U.S.
government.
There
is no assurance that the U.S. government would provide financial support to its
agencies and instrumentalities if not required to do so. In addition, certain
governmental entities have been subject to regulatory scrutiny regarding their
accounting policies and practices and other concerns that may result in
legislation, changes in regulatory oversight, and/or other consequences that
could adversely affect the credit quality, availability, or investment character
of securities issued by these entities. The value and liquidity of U.S.
government securities may be affected adversely by changes in the ratings of
those securities.
Volatility
Mitigation
Volatility
mitigation strategies may increase fund transaction costs, which could increase
losses or reduce gains. These strategies may not protect the fund from market
declines and may reduce the fund’s participation in market gains.
PORTFOLIO
HOLDINGS INFORMATION
A
description of the Registrant’s policies and procedures with respect to
disclosure of the Funds' portfolio securities is available in the Funds'
SAI.
MANAGEMENT
OF THE FUNDS
The
Manager and Advisor
Principal
Global Investors, LLC (“PGI”), an indirect subsidiary of Principal Financial
Group, Inc.®
(“Principal®”),
serves as the manager and advisor for the Funds. Through the Management
Agreement with the Registrant, PGI provides investment advisory services and
certain corporate administrative services for the Funds.
Advisor:
Principal Global Investors, LLC (doing
business as Principal Asset ManagementSM),
711 High Street, Des Moines, IA 50392, is part of a diversified global asset
management organization that utilizes specialized investment teams and
affiliates to provide institutional investors and individuals with diverse
investment capabilities, including fixed income, equities, real estate,
currency, asset allocation, and stable value. In addition to its asset
management offices in the U.S., PGI has asset management offices of affiliate
advisors located in Europe, Asia, Latin America, and Australia. PGI has been a
registered investment advisor since 1998.
Accounts/Portfolios: In
fulfilling its investment advisory responsibilities, PGI provides day-to-day
discretionary investment services (directly making decisions to purchase or sell
securities) for all or a portion of the following Funds:
|
|
|
|
|
| |
|
|
•Blue
Chip (services provided by Principal Aligned, an investment team within
PGI) |
|
|
•Bond
Market Index |
|
|
•Core
Plus Bond |
|
|
•Diversified
Balanced (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Balanced Adaptive Allocation (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Balanced Strategic Allocation (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Growth (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Growth Adaptive Allocation (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Growth Strategic Allocation (services provided by Principal Asset
Allocation) |
|
|
•Diversified
Income (services provided by Principal Asset
Allocation) |
|
|
•Diversified
International |
|
|
•Equity
Income (services provided by Principal Edge, an investment team within
PGI) |
|
|
•Global
Emerging Markets |
|
|
•Government
& High Quality Bond |
|
|
•LargeCap
Growth I (services provided by Principal Asset
Allocation) |
|
|
•LargeCap
S&P 500 Index |
|
|
•LargeCap
S&P 500 Managed Volatility Index (passive index strategy
portion) |
|
|
•MidCap
(services provided by Principal Aligned, an investment team within
PGI) |
|
|
•Principal
Capital Appreciation (services provided by Principal Edge, an investment
team within PGI) |
|
|
•Principal
LifeTime Accounts (services provided by Principal Asset
Allocation) |
|
|
•SAM
(Strategic Asset Management) Portfolios (services provided by Principal
Asset Allocation) |
|
|
•Short-Term
Income |
|
|
•SmallCap |
|
|
•U.S.
LargeCap Buffer January (services provided by Principal Asset
Allocation) |
|
|
•U.S.
LargeCap Buffer April (services provided by Principal Asset
Allocation) |
|
|
•U.S.
LargeCap Buffer July (services provided by Principal Asset
Allocation) |
|
|
•U.S.
LargeCap Buffer October (services provided by Principal Asset
Allocation) |
Several
of the Funds have multiple sub-advisors. A team within Principal
Asset
Allocation, an investment team within PGI and whose members are identified in
each Fund Summary and listed below, determines the portion of those Funds’
assets that PGI and each sub-advisor will manage and may reallocate Fund assets
among PGI and the sub-advisors from time-to-time. This team agrees on allocation
decisions and shares authority and responsibility for day-to-day portfolio
management, with no limitation on the authority of one portfolio manager in
relation to another.
The
decision to reallocate Fund assets between PGI acting in a discretionary
advisory capacity and the sub-advisors may be based on a variety of factors,
including, but not limited to: the investment capacity of PGI and each
sub-advisor, portfolio diversification, volume of net cash flows, fund
liquidity, investment performance, investment strategies, changes in PGI or each
sub-advisor’s firm or investment professionals, or changes in the number of
sub-advisors. Ordinarily, reallocations of Fund assets among sub-advisors occur
as a sub-advisor liquidates assets in the normal course of portfolio management
or with net new cash flows; however, at times, existing Fund assets may be
reallocated among PGI and/or the sub-advisors.
The
Fund Summaries identified the portfolio managers and the Funds they manage.
Additional information about the portfolio managers follows. With respect to the
biographies of PGI portfolio managers, references to Principal®
encompass various entities and groups within the Principal organization, such as
its majority- and wholly-owned subsidiaries, as well as investment teams within
PGI.
As
reflected in the Fund Summaries, the day-to-day portfolio management, for some
Funds, is shared by multiple portfolio managers. In each such case, the
portfolio managers operate as a team, sharing authority and responsibility for
research and the day-to-day management of the portfolio. However, for the Blue
Chip and MidCap Accounts, Mr. Nolin has ultimate decision making authority. Mr.
Rozycki may make investment decisions
in
Mr.
Nolin’s
absence.
William
C. Armstrong has
been with Principal®
since 1992. He earned a bachelor’s degree from Kearney State College and an
M.B.A. from the University of Iowa. Mr. Armstrong has earned the right to use
the Chartered Financial Analyst designation.
Paul
H. Blankenhagen has
been with Principal®
since 1992. He earned a bachelor’s degree in Finance from Iowa State University
and a master’s degree from Drake University. Mr. Blankenhagen has earned the
right to use the Chartered Financial Analyst designation.
Jeff
Callahan has
been with Principal®
since
2006. He earned a bachelor’s degree in Business Administration with an emphasis
in Finance from Wartburg College and an M.B.A. from the University of Iowa. Mr.
Callahan has earned the right to use the Chartered Financial Analyst
designation.
On
July 31, 2024, remove Juliet
Cohn.
Juliet
Cohn has
been with Principal®
since 2003. She earned a bachelor’s degree in Mathematics from Trinity College,
Cambridge, England.
Daniel
R. Coleman has
been with Principal®
since 2001. He earned a bachelor’s degree in Finance from the University of
Washington and an M.B.A. from New York University.
Brody
Dass has
been with Principal®
since 2015. He earned a bachelor’s degree from the University of Iowa. Mr. Dass
has earned the right to use the Chartered Financial Analyst
designation.
Bryan
C. Davis has
been with Principal®
since 1993. He earned a bachelor’s degree in Finance from the University of
Iowa. Mr. Davis has earned the right to use the Chartered Financial Analyst
designation.
James
W. Fennessey has
been with Principal®
since 2000. Mr. Fennessey earned a bachelor’s degree in Business Administration,
with an emphasis in Finance, and a minor in Economics from Truman State
University. Mr. Fennessey has earned the right to use the Chartered Financial
Analyst designation.
John
R. Friedl has
been with Principal®
since 1998. He earned a bachelor’s degree in Communications and History from the
University of Washington and a master’s degree in Finance from Seattle
University. Mr. Friedl has earned the right to use the Chartered Financial
Analyst designation.
Zach
Gassmann has
been with Principal®
since 2007. He received a bachelor’s degree in Accounting from Simpson College
and a master’s degree in Financial Management from Drake University. Mr.
Gassmann has earned the right to use the Chartered Financial Analyst
designation.
Michael
Goosay has
been with Principal®
since
2023. Prior to that, Mr. Goosay was the Head of Global Pensions and Multi-Sector
Fixed Income Portfolio Management at Goldman Sachs Asset Management since 2009.
He earned a bachelor’s degree in Finance from Albright College and an M.B.A.
from Rutgers University.
Todd
A. Jablonski has
been with Principal®
since 2010. He earned a bachelor’s degree in Economics from the University of
Virginia and an M.B.A. with an emphasis in Quantitative Finance from New York
University’s Stern School of Business. Mr. Jablonski has earned the right to use
the Chartered Financial Analyst designation.
Theodore
Jayne has
been with Principal®
since 2015. He earned a bachelor’s degree in Anthropology from Harvard
University. Mr. Jayne has earned the right to use the Chartered Financial
Analyst designation.
Jeffrey
Kilkenny was
with Principal®
from 1999-2006 and rejoined Principal®
in 2012. He earned a bachelor’s degree in Finance from the University of Iowa.
Mr. Kilkenny has earned the right to use the Chartered Financial Analyst
designation.
George
Maris
has
been with Principal®
since
2023. Prior to that, Mr. Maris was the Head of Equities, Americas region, and
Lead Portfolio Manager of the Global Alpha Equity Team at Janus Henderson
Investors since 2011. He earned a bachelor’s degree in Economics from
Swarthmore College, an M.B.A. from the University of Chicago, and a J.D. from
the University of Illinois. Mr. Maris has earned the right to use the
Chartered Financial Analyst designation.
K.
William Nolin has
been with Principal®
since 1993. He earned a bachelor’s degree in Finance from the University of Iowa
and an M.B.A. from the Yale School of Management. Mr. Nolin has earned the right
to use the Chartered Financial Analyst designation.
Phil
Nordhus has
been with Principal®
since 1990. He earned a bachelor’s degree in Economics from Kansas State
University and an M.B.A. from Drake University. Mr. Nordhus has earned the right
to use the Chartered Financial Analyst designation.
Tyler
O’Donnell has
been with Principal®
since
2015. He earned bachelor’s degrees in Mathematics and Biochemistry from the
University of Iowa and an M.B.A. from Iowa State University. Mr. O’Donnell has
earned the right to use the Chartered Financial Analyst designation.
Brian
W. Pattinson has
been with Principal®
since 1994. He earned a bachelor’s degree and an M.B.A. in Finance from the
University of Iowa. Mr. Pattinson has earned the right to use the Chartered
Financial Analyst designation.
Scott
J. Peterson has
been with Principal®
since 2002. He earned a bachelor’s degree in Mathematics from Brigham Young
University and an M.B.A. from New York University’s Stern School of Business.
Mr. Peterson has earned the right to use the Chartered Financial Analyst
designation.
Sarah
E. Radecki has
been with Principal®
since 1999. She earned bachelor’s degrees in Political Science and Economics
from Saint Mary’s College of California and a master’s degree in Economics from
the University of California at Santa Barbara. Ms. Radecki has earned the right
to use the Chartered Financial Analyst designation.
Tom
Rozycki has
been with Principal®
since 2001. He earned a bachelor’s degree in Finance from Drake University. Mr.
Rozycki has earned the right to use the Chartered Financial Analyst designation.
Aaron
J. Siebel has
been with Principal®
since 2005. He earned a bachelor’s degree in Finance from the University of
Iowa. Mr. Siebel has earned the right to use the Chartered Financial Analyst
designation.
Scott
Smith has
been with Principal®
since 1999. He earned a bachelor’s degree in Finance from Iowa State
University.
Yesim
Tokat-Acikel has
been with Principal®
since 2023. Prior to that, Ms. Tokat-Acikel was a Managing Director, Head of
Multi-Asset Research, Co-Head of ESG, and Portfolio Manager for PGIM
Quantitative Solutions, a business of Prudential Financial, since 2010. She
earned a bachelor’s degree in Industrial Engineering from Bilkent University, a
master’s degree in Industrial Engineering from the University of Arizona, and a
PhD in Financial Economics from the University of California, Santa
Barbara.
Darryl
Trunnel has
been with Principal®
since 2008. He earned a bachelor’s degree in Agricultural Business from Iowa
State University. Mr. Trunnel has earned the right to use the Chartered
Financial Analyst designation.
Nedret
Vidinli has
been with Principal®
since 2010. He earned a bachelor’s degree in Business Administration at Drake
University and an M.B.A. at Benedictine University. Mr. Vidinli has earned the
right to use the Chartered Financial Analyst designation.
Randy
L. Welch has
been with Principal®
since 1989. He earned a bachelor’s degree in Business/Finance from Grand View
College and an M.B.A. from Drake University. Mr. Welch is an affiliate member of
the Chartered Financial Analysts (CFA) Institute.
The
Sub-Advisors
PGI
has signed contracts with various sub-advisors. Under the sub-advisory
agreements, the sub-advisor agrees to assume the obligations of PGI to provide
investment advisory services to the portion of the assets of a specific Fund
allocated to it by PGI. For these services, PGI pays the sub-advisor a
fee.
PGI
or the sub-advisor provides the Board with a recommended investment program. The
program must be consistent with the Fund’s investment objective and policies.
Within the scope of the approved investment program, the sub-advisor advises the
Fund on its investment policy and determines which securities are bought or
sold, and in what amounts.
The
Fund Summaries identified the sub-advisors, portfolio managers, and the Funds
they manage. Additional information follows.
|
|
|
|
|
| |
| Sub-Advisor: |
Brown
Advisory, LLC (“Brown”),
901 South Bond Street, Suite 400, Baltimore, Maryland 21231, is a
registered investment advisor that works with institutions, corporations,
nonprofits, families, and individuals. |
| Fund(s): |
a
portion of LargeCap Growth I |
|
|
|
|
|
| |
| Sub-Advisor: |
Principal
Real Estate Investors, LLC
(doing business as Principal Real Estate) (“Principal-REI”),
711 High Street, Des Moines, IA 50392, was founded in 2000 and manages
commercial real estate across the spectrum of public and private equity
and debt investments, primarily for institutional
investors. |
| Fund(s): |
Real
Estate Securities |
The
portfolio managers operate as a team, sharing authority and responsibility for
research and the day-to-day management of the portfolio with no limitation on
the authority of one portfolio manager in relation to another.
Keith
Bokota has
been with Principal-REI since 2007. He earned a bachelor’s degree in Finance and
International Business from Georgetown University. Mr. Bokota has earned the
right to use the Chartered Financial Analyst designation.
Anthony
Kenkel has
been with Principal-REI since 2005. He earned a bachelor’s degree in Finance
from Drake University and an M.B.A. from the University of Chicago Graduate
School of Business. Mr. Kenkel has earned the right to use the Chartered
Financial Analyst and Financial Risk Manager designations.
Kelly
D. Rush has
been with Principal-REI since 2000 and the predecessor firms since 1987. He
earned a B.A. in Finance and an M.B.A. in Business Administration from the
University of Iowa. Mr. Rush has earned the right to use the Chartered Financial
Analyst designation.
|
|
|
|
|
| |
|
Sub-Advisor: |
Spectrum
Asset Management, Inc. (“Spectrum”),
2 High Ridge Park, Stamford, CT 06905, founded in 1987, manages portfolios
of preferred securities for corporate, pension fund, insurance, and
endowment clients; open-end and closed-end mutual funds; and separately
managed account programs for high net worth individual investors, as well
as provides volatility mitigation solutions for some client
portfolios. |
| Fund(s): |
a
portion of LargeCap S&P 500 Managed Volatility Index (active
volatility mitigation strategy) |
Mr.
Nugent is the primary portfolio manager and is responsible for the overall
volatility mitigation strategy and day-to-day portfolio management of this
strategy.
L.
Phillip Jacoby, IV joined
Spectrum in 1995. Mr. Jacoby earned a B.S. in Finance from the Boston University
School of Management.
Manu
Krishnan joined
Spectrum in 2004. Mr. Krishnan earned a B.S. in Mechanical Engineering from the
College of Engineering, Osmania University, India, an M.S. in Mechanical
Engineering from the University of Delaware, and an M.B.A. in Finance from
Cornell University. Mr. Krishnan has earned the right to use the Chartered
Financial Analyst designation.
Kevin
Nugent joined
Spectrum in 2012. Mr. Nugent earned a B.A. from Ohio Wesleyan
University.
|
|
|
|
|
| |
| Sub-Advisor: |
T.
Rowe Price Associates, Inc. (“T. Rowe Price”),
100 East Pratt Street, Baltimore, MD 21202, has over 75 years of
investment management experience. |
| Fund(s): |
a
portion of LargeCap Growth I |
The
SAI provides additional information about each portfolio manager’s compensation,
other accounts managed by the portfolio manager, and the portfolio manager’s
ownership of securities in the Funds.
Participating
Affiliate Agreement
In
rendering investment advisory services to a Fund, the advisor and each
sub-advisor may use the resources of one or more of its respective foreign
(non-U.S.) affiliates that are not registered under the Investment Advisers Act
of 1940, as amended, to provide portfolio management, research, and trading
services to the Fund. Under a Participating Affiliate Agreement, and pursuant to
applicable guidance from the Staff of the SEC, U.S. registered advisors are
allowed to use investment advisory and trading resources of such unregistered
advisory affiliates subject to the regulatory supervision of the registered
advisor. For example, some Principal Fund Complex assets are managed by
employees of Principal Global Investors (Europe) Limited pursuant to such an
arrangement. Each such affiliate and any of their respective employees who
provide services to a Fund are considered under the Participating Affiliate
Agreement to be “supervised persons” of the advisor or sub-advisor (as
applicable) as that term is defined in the Investment Advisers Act of 1940, as
amended.
Fees
Paid to PGI
Each
Fund pays PGI a fee for its services, which includes the fee PGI pays to
sub-advisors, as applicable.
The
management fee schedule for the U.S. LargeCap Buffer April Account, which has
not completed a full fiscal year, is as follows:
|
|
|
|
|
| |
| Net
Asset Value of Account |
|
Account |
All
Assets |
| U.S.
LargeCap Buffer April |
0.69% |
The
fee each Fund paid (as a percentage of the Fund’s average daily net assets) for
the fiscal year ended December 31, 2023 was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Account/Portfolio |
|
Account/Portfolio |
| Blue
Chip |
0.60% |
| Principal
Capital Appreciation |
0.63% |
| Bond
Market Index |
0.14% |
| Principal
LifeTime 2020 |
0.00% |
| Core
Plus Bond |
0.48% |
| Principal
LifeTime 2030 |
0.00% |
| Diversified
Balanced |
0.05% |
| Principal
LifeTime 2040 |
0.00% |
| Diversified
Balanced Adaptive Allocation |
0.12% |
| Principal
LifeTime 2050 |
0.00% |
| Diversified
Balanced Strategic Allocation |
0.05% |
| Principal
LifeTime 2060 |
0.00% |
| Diversified
Growth |
0.05% |
| Principal
LifeTime Strategic Income |
0.00% |
| Diversified
Growth Adaptive Allocation |
0.12% |
| Real
Estate Securities |
0.78% |
| Diversified
Growth Strategic Allocation |
0.05% |
| SAM
Balanced |
0.23% |
| Diversified
Income |
0.05% |
| SAM
Conservative Balanced |
0.23% |
| Diversified
International |
0.85% |
| SAM
Conservative Growth |
0.23% |
| Equity
Income |
0.48% |
| SAM
Flexible Income |
0.23% |
| Global
Emerging Markets |
1.00% |
| SAM
Strategic Growth |
0.23% |
| Government
& High Quality Bond |
0.50% |
| Short-Term
Income |
0.40% |
| LargeCap
Growth I |
0.70% |
| SmallCap |
0.83% |
| LargeCap
S&P 500 Index |
0.20% |
| U.S.
LargeCap Buffer January |
0.69% |
| LargeCap
S&P 500 Managed Volatility Index |
0.35% |
| U.S.
LargeCap Buffer July |
0.69% |
| MidCap |
0.54% |
| U.S.
LargeCap Buffer October |
0.69% |
Availability
of the discussions regarding the basis for the Board’s approval of various
management and sub-advisory agreements is as follows:
|
|
|
|
|
|
|
|
| |
|
| Annual
Report to Shareholders
for the period ending December 31,
2023 |
| Account/Portfolio |
Management
Agreement |
Sub-Advisory
Agreement |
| All
Accounts/Portfolios |
X |
X |
Manager
of Managers
The
Registrant operates as a Manager of Managers. Under an order received from the
SEC (the “Order”), the Registrant and PGI may enter into and materially amend
agreements with unaffiliated and wholly-owned affiliated sub-advisors
(affiliated sub-advisors that are at least 95% owned, directly or indirectly, by
PGI or an affiliated person of PGI) without obtaining shareholder approval,
including to:
•hire
one or more sub-advisors;
•change
sub-advisors; and
•reallocate
management fees between PGI and sub-advisors.
Although
there is no present intent to do so, the Funds may, in the future, rely on
current SEC Staff guidance that expands relief under the Order to allow PGI to
enter into and materially amend agreements with majority-owned affiliated
sub-advisors (affiliated sub-advisors that are at least 50% owned, directly or
indirectly, by PGI or an affiliated person of PGI), and, further, to all
sub-advisors regardless of the degree of affiliation with PGI.
In
order to rely on the varying degrees of relief granted by the Order and/or the
SEC Staff guidance, a Fund must receive approval from its shareholders (or, in
the case of a new Fund, the Fund’s sole initial shareholder before the Fund is
available to the other purchasers).
The
shareholders of each Fund have approved such Fund’s reliance on the Order, as
supplemented by the SEC Staff guidance, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Account/Portfolio |
Unaffiliated
Sub-Advisors |
Wholly-Owned
Affiliated Sub-Advisors |
Majority-Owned
Affiliated Sub-Advisors |
Any
Other Sub-Advisors Regardless of
Degree of Affiliation |
| LargeCap
S&P 500 Managed Volatility Index |
X |
X |
X |
|
| All
Other Accounts/Portfolios |
X |
X |
X |
X |
PGI
has ultimate responsibility for the investment performance of each Fund that
utilizes a sub-advisor due to its responsibility to oversee sub-advisors and
recommend their hiring, termination, and replacement.
In
accordance with a separate exemptive order that the Registrant and PGI have
obtained from the SEC, the Board may approve a new sub-advisory agreement or a
material amendment to an existing sub-advisory agreement at a meeting that is
not in person, provided that the Board Members are able to participate in the
meeting using a means of communication that allows them to hear each other
simultaneously during the meeting and the other conditions in the exemptive
order are met.
PRICING
OF FUND SHARES
Each
Fund’s shares are bought and sold at the current net asset value (“NAV”) per
share. Each Fund’s NAV is calculated each day the New York Stock Exchange
(“NYSE”) is open. Shares are not priced on the days on which the NYSE is closed
for trading, generally: New Year’s Day; Martin Luther King, Jr. Day;
Washington’s Birthday/Presidents’ Day; Good Friday; Memorial Day; Juneteenth;
Independence Day; Labor Day; Thanksgiving Day; and Christmas. The NAV is
determined at the close of business of the NYSE (normally, 3:00 p.m. Central
Time). When an order to buy or sell shares is received, the share price used to
fill the order is the next price calculated after we receive the order in proper
form.
The
Funds will not treat an intraday unscheduled disruption in NYSE trading as a
closure of the NYSE and will price shares as of 3:00 p.m. Central Time, if the
particular disruption directly affects only the NYSE.
For
all Funds, NAV is calculated by:
• taking
the current market value of the total assets of the Fund,
• subtracting
liabilities of the Fund,
• dividing
the remainder proportionately into the classes of the Fund,
• subtracting
the liability of each class, and
• dividing
the remainder by the total number of shares outstanding for that
class.
With
respect to any portion of a Fund’s assets invested in other registered
investment companies, that portion of the Fund's NAV is calculated based on the
price (NAV or market, as applicable) of such other registered investment
companies.
Notes:
•If
market quotations are not readily available for a security owned by a Fund, its
fair value is determined using a policy adopted by the Board. Fair valuation
pricing is subjective and creates the possibility that the fair value determined
for a security may differ materially from the value that could be realized upon
the sale of the security.
•A
Fund’s securities may be traded on foreign securities markets that generally
complete trading at various times during the day before the close of the NYSE.
Foreign securities and currencies are converted to U.S. dollars using the
exchange rate in effect at the close of the NYSE. Securities traded outside of
the Western Hemisphere are valued using a fair value policy adopted by the
Registrant. These fair valuation procedures are intended to discourage
shareholders from investing in the Funds for the purpose of engaging in market
timing or arbitrage transactions.
•The
trading of foreign securities generally or in a particular country or countries
may not take place on all days the NYSE is open or may trade on days the NYSE is
closed. Thus, the value of the foreign securities held by a Fund may change on
days when shareholders are unable to purchase or redeem shares.
•Certain
securities issued by companies in emerging markets may have more than one quoted
valuation at any point in time. These may be referred to as local price and
premium price. The premium price is often a negotiated price that may not
consistently represent a price at which a specific transaction can be effected.
The Registrant has a policy to value such securities at a price at which PGI
expects the securities may be sold.
PURCHASE
OF FUND SHARES
Principal
Variable Contracts Funds, Inc. offers accounts in three share classes: 1, 2, and
3. Funds available in multiple share classes have the same investments, but
differing expenses. Classes 1, 2, and 3 shares are available in this
Prospectus.
Shares
are purchased from the Funds’ principal underwriter (the “Distributor”) on any
business day (normally any day when the NYSE is open for regular trading) upon
request through the insurance company issuing the variable annuity, variable
life contract, or the trustees or administrators of the qualified retirement
plan offering the Fund. There are no sales charges on shares of the Funds;
however, your variable contract may impose a charge. There are no restrictions
on amounts to be invested in shares of the Funds.
The
Funds, at their discretion, may permit the purchase of shares using securities
as consideration (a purchase in-kind) in accordance with procedures approved by
the Board. Each Fund will value securities used to purchase its shares using the
same method the Registrant uses to value its portfolio securities as described
in this Prospectus.
Shareholder
accounts for each Fund are maintained under an open account system. Under this
system, an account is opened and maintained for each investor. Each investment
is confirmed by sending the investor a statement of account showing the current
purchase and the total number of shares owned. The statement of account is
treated by each Fund as evidence of ownership of Fund shares. Share certificates
are not issued.
No
salesperson, broker-dealer, or other person is authorized to give information or
make representations about a Fund other than those contained in this Prospectus.
Information or representations not contained in this Prospectus may not be
relied upon as having been provided or made by the Registrant, a Fund, PGI, any
sub-advisor, or Principal Funds Distributor, Inc.
Eligible
Purchasers
Only
certain eligible purchasers may buy shares of the Funds. Eligible purchasers are
limited to 1) separate accounts of Principal Life or of other insurance
companies, 2) Principal Life or any of its subsidiaries or affiliates, and 3)
trustees of other managers of any qualified profit sharing, incentive, or bonus
plan established by Principal Life or any subsidiary or affiliate of such
company, for employees of such company, subsidiary, or affiliate. Such trustees
or managers may buy Fund shares only in their capacities as trustees or managers
and not for their personal accounts. The Board reserves the right to broaden or
limit the designation of eligible purchaser.
Each
Fund serves as the underlying investment vehicle for variable annuity contracts
and variable life insurance policies that are funded through separate accounts
established by Principal Life and by other insurance companies as well as for
certain qualified plans. It is possible that in the future, it may not be
advantageous for variable life insurance separate accounts, variable annuity
separate accounts, and qualified plan investors to invest in the Funds at the
same time. Although neither Principal Life nor the Registrant currently foresees
any such disadvantage, the Board monitors events in order to identify any
material conflicts between such policy owners, contract holders, and qualified
plan investors. Material conflict could result from, for example, 1) changes in
state insurance laws, 2) changes in federal income tax law, 3) changes in the
investment management of a Fund, or 4) differences in voting instructions
between those given by policy owners, those given by contract holders, and those
given by qualified plan investors. Should it be necessary, the Board would
determine what action, if any, should be taken. Such action could include the
sale of Fund shares by one or more of the separate accounts or qualified plans,
which could have adverse consequences.
PGI
may recommend to the Board, and the Board may elect, to close certain Funds or
share classes to new investors or close certain Funds or share classes to new
and existing investors.
Restricted
Transfers
Shares
of each of the Funds may be transferred to an eligible purchaser. However, if a
Fund is requested to transfer shares to other than an eligible purchaser, the
Fund has the right, at its election, to purchase the shares at the net asset
value next calculated after the receipt of the transfer request. However, the
Fund must give written notification to the transferee(s) of the shares of the
election to buy the shares within seven days of the request. Settlement for the
shares shall be made within the seven-day period.
SALE
OF FUND SHARES
Variable
contracts owners should refer to the variable contract product prospectus for
details on how to allocate policy or contract value. Qualified plan participants
should refer to the qualified plan documents.
Each
Fund sells its shares on any business day (normally any day when the NYSE is
open for regular trading) upon request through the insurance company issuing the
variable annuity, variable life contract, or the trustees or administrators of
the qualified retirement plan offering the Fund. There is no charge for the
redemption. Shares are redeemed at the NAV per share next computed after the
request is received by the Fund in proper and complete form.
Sale
proceeds are generally sent the following business day after the request is
received in proper form. However, the right to sell shares may be suspended up
to seven days, as permitted by federal securities law, during any period when 1)
trading on the NYSE is restricted as determined by the SEC or when the NYSE is
closed for reasons other than weekends and holidays or 2) an emergency exists,
as determined by the SEC, as a result of which a) disposal by a fund of
securities owned by it is not reasonably practicable, b) it is not reasonably
practicable for a fund to fairly determine the value of its net assets, or c)
the SEC permits suspension for the protection of security holders.
If
payments are delayed and the instruction is not canceled by the shareholder’s
written instruction, the amount of the transaction is determined as of the first
valuation date following the expiration of the permitted delay. The transaction
occurs within five days thereafter.
In
addition, payments on surrender requests submitted before a related premium
payment made by check has cleared may be delayed up to seven days. This permits
payment to be collected on the check.
Distributions
in Kind
The
Registrant may determine that it would be detrimental to the remaining
shareholders of a Fund to make payment of a redemption order wholly or partly in
cash. Under certain circumstances, therefore, each of the Funds may pay the
redemption proceeds in whole or in part by a distribution “in kind” of
securities from the Fund’s portfolio in lieu of cash. If a Fund pays the
redemption proceeds in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. In addition, the securities
received will be subject to market risk until sold. Typically, such in kind
redemptions would be distributed pro rata. Each Fund will value securities used
to pay redemptions in kind using the same method the Registrant uses to value
its portfolio securities as described in this Prospectus.
Under
normal circumstances, each Fund expects to meet redemption requests through
holdings of cash, the sale of investments held in cash equivalents, and/or by
selling liquid index futures or other instruments used for cash management
purposes. In situations in which such holdings are not sufficient to meet
redemption requests, a Fund will typically borrow money through the Fund’s
interfund lending facility or through a bank line-of-credit. No Fund can borrow
under the bank line-of-credit while also a lender under the interfund lending
facility. Each Fund may also choose to sell portfolio assets for the purpose of
meeting such requests. Each Fund further reserves the right to distribute “in
kind” securities from the Fund’s portfolio in lieu (in whole or in part) of cash
under certain circumstances, including under stressed market
conditions.
The
agreement for the above-mentioned line of credit is with The Bank of New York
Mellon.
DIVIDENDS
AND DISTRIBUTIONS
The
Funds earn dividends, interest, and other income from investments and distribute
this income (less expenses) as dividends. The Funds also realize capital gains
from investments and distribute these gains (less any losses) as capital gain
distributions. The Funds normally make dividends and capital gain distributions
at least annually, in September. Dividends and capital gain distributions are
automatically reinvested in additional shares of the Fund making the
distribution.
To
the extent that distributions the Fund pays are derived from a source other than
net income (such as a return of capital), you will receive a notice disclosing
the source of such distributions. You may request a copy of all such notices,
free of charge, by telephoning 1-800-222-5852. The amounts and sources of
distributions included in such notices are estimates only and you should not
rely upon them for purposes of reporting income taxes. The Fund will send
eligible shareholders a Form 1099-DIV for the calendar year that will tell
shareholders how to report these distributions for federal income tax purposes.
Distribution notices and fund-related tax information are also available at
www.principal.com/tax-center.
FREQUENT
PURCHASES AND REDEMPTIONS
The
Funds are not designed for, and do not knowingly accommodate, frequent purchases
and redemptions (“excessive trading”) of Fund shares by investors. If you intend
to trade frequently and/or use market timing investment strategies, do not
purchase shares of these Funds.
Frequent
purchases and redemptions pose a risk to the Funds because they
may:
• Disrupt
the management of the Funds by:
◦forcing
the Funds to hold short-term (liquid) assets rather than investing for long-term
growth, which results in lost investment opportunities for the Funds;
and
◦causing
unplanned portfolio turnover;
•Hurt
the portfolio performance of the Funds; and
•Increase
expenses of the Funds due to:
• increased
broker-dealer commissions and
• increased
recordkeeping and related costs.
If
we are not able to identify such excessive trading practices, the Funds and
their shareholders may be harmed. The harm of undetected excessive trading in
shares of the underlying Funds in which the funds of funds invest could flow
through to the funds of funds as they would for any Fund
shareholder.
Certain
Funds may be at greater risk of harm due to frequent purchases and redemptions.
For example, those Funds that invest in foreign securities may appeal to
investors attempting to take advantage of time-zone arbitrage. This risk is
particularly relevant to the Diversified International and Global Emerging
Market Accounts. The Funds have adopted fair valuation procedures. These
procedures are intended to discourage market timing transactions in shares of
the Funds.
As
each Fund is only available through variable annuity or variable life contracts
or to qualified retirement plans, the Funds must rely on the insurance company
that issues the contract, or the trustees or administrators of qualified
retirement plans (“intermediary”), to monitor customer trading activity to
identify and take action against excessive trading. There can be no certainty
that the intermediary will identify and prevent excessive trading in all
instances. As such, the Funds’ transfer agent also employs transaction
monitoring that management believes is reasonably likely to assist in
identifying and preventing excessive trading in Fund shares. When an
intermediary or the Funds’ transfer agent identifies excessive trading, it will
act to curtail such trading in a fair and uniform manner. If an intermediary or
the Funds’ transfer agent is unable to identify such abusive trading practices,
the abuses described above may negatively impact the Funds.
If
an intermediary, or the Fund, deems excessive trading practices to be occurring,
it will take action that may include, but is not limited to:
•Rejecting
exchange instructions from a shareholder or other person authorized by the
shareholder to direct exchanges;
•Restricting
submission of exchange requests by, for example, allowing exchange requests to
be submitted by 1st class U.S. mail only and disallowing requests made via the
internet, by facsimile, by overnight courier, or by telephone;
•Limiting
the dollar amount of an exchange and/or the number of exchanges during a
year;
•Requiring
a holding period of a minimum of 30 days before permitting exchanges among the
Funds where there is evidence of at least one round-trip exchange (exchange or
redemption of shares that were purchased within 30 days of the
exchange/redemption); and
•Taking
such other action as directed by the Fund.
The
Board has found the imposition of a redemption fee with respect to redemptions
from Class 1, Class 2, and Class 3 shares of the Funds is neither necessary nor
appropriate in light of measures taken by intermediaries through which such
shares are currently available.
In
order to prevent excessive trading, the Funds have reserved the right to accept
or reject, without prior written notice, any exchange requests (an exchange
request is a redemption request coupled with a request to purchase shares with
the proceeds of the redemption; such restriction applies to the purchase of fund
shares in an exchange request and does not restrict a shareholder from
requesting a redemption). In some instances, an exchange may be completed prior
to a determination of abusive trading. In those instances, the intermediary will
reverse an exchange (within one business day of the exchange) and return the
account holdings to the positions held prior to the exchange. The intermediary
will give you notice in writing in this instance.
TAX
CONSIDERATIONS
The
Funds intend to comply with applicable variable asset diversification
regulations. If a Fund fails to comply with such regulations, contracts invested
in the Fund will not be treated as annuity, endowment, or life insurance
contracts under the Internal Revenue Code.
Contract
owners should review the applicable contract prospectus for information
concerning the federal income tax treatment of their contracts and distributions
from the Fund to the separate accounts.
Contract
owners are urged to consult their tax advisors regarding the status of their
contracts under state and local tax laws.
In
addition, the Funds have elected and intend to qualify and be eligible to be
treated each year as regulated investment companies ("RICs") under the Internal
Revenue Code of 1986, as amended (the "Code"). The Funds must satisfy certain
diversification and qualifying income tests under the Code in order to qualify
as RICs. If a Fund were to fail to qualify and be eligible to be treated as a
RIC, the Fund would be subject to corporate-level taxation, thereby reducing the
return on a shareholder's investment. In addition, a Fund could be required to
recognize unrealized gains, pay taxes, and make distributions (which could be
subject to interest charges) before requalifying for taxation as a
RIC.
ONGOING
FEES
The
ongoing fees are the operating expenses of a Fund, which are described in the
“Annual Fund Operating Expenses” table included in the Summary for each Fund.
These expenses reduce the value of each share you own. Because they are ongoing,
they increase the cost of investing in the Funds.
The
Funds that operate as funds of funds, as shareholders in the underlying funds,
bear their pro rata share of the operating expenses incurred by each underlying
fund. The investment return of each fund of funds is net of the underlying
funds’ operating expenses.
Each
Fund pays ongoing fees to PGI and others who provide services to the Fund. These
fees include:
•Management
Fee — Through the Management Agreement with the Registrant, PGI has agreed to
provide investment advisory services and corporate administrative services to
the Funds.
•Distribution
Fee — The Funds with Class 2 and Class 3 shares have adopted a distribution plan
under Rule 12b-1 of the 1940 Act for its Class 2 and Class 3 shares. Under the
plan, Class 2 and Class 3 shares of each Fund pays a distribution fee based on
the average daily NAV of the Fund. These fees pay distribution and other
expenses for the sale of Fund shares and for services provided to shareholders.
Because they are ongoing fees, over time they will increase the cost of your
investment and may cost you more than paying other types of sales
charges.
•Other
Expenses — A portion of certain expenses are allocated to all classes of the
Funds, unless an expense is specific to a particular share class. Other expenses
include, for example, interest expense, expenses related to fund investments,
and index licensing fees. An additional example of an other expense includes an
Administrative Services Fee for Class 3 shares pursuant to an Administrative
Services Plan and Agreement under which PSS or certain intermediaries are
required to provide shareholder and administrative services for variable
contract owners that allocate their contract values to Class 3 shares of the
Fund.
•Acquired
Fund Fees and Expenses — Fees and expenses charged by other investment companies
in which a Fund invests a portion of its assets.
DISTRIBUTION
PLANS AND INTERMEDIARY COMPENSATION
Distribution
and/or Service (12b-1) Fees
Principal
Funds Distributor, Inc. (“PFD” or the “Distributor”) is the distributor for the
shares of the Funds. PFD is an affiliate of Principal Life Insurance Company, a
subsidiary of Principal Financial Group, Inc., and a member of
Principal®.
The
Registrant has adopted a distribution plan pursuant to Rule 12b-1 under the 1940
Act for Class 2 and Class 3 shares of the Funds. Under the 12b-1 plans, each
Fund makes payments from its assets attributable to Class 2 and Class 3 shares
to the Fund’s Distributor for distribution-related expenses and for providing
services to shareholders of that share class. Payments under the 12b-1 plans are
made by the Funds to the Distributor pursuant to the 12b-1 plans regardless of
the expenses incurred by the Distributor. When the Distributor receives Rule
12b-1 fees, it may pay some or all of them to financial intermediaries whose
customers are Class 2 and Class 3 shareholders for sales support services and
for providing services to shareholders of that share class. Financial
intermediaries may include, among others, broker-dealers, registered investment
advisors, banks, trust companies, pension plan consultants, retirement plan
administrators, and insurance companies.
Because
Rule 12b-1 fees are paid out of Fund assets and are ongoing fees, over time they
will increase the cost of your investment in the Funds and may cost you more
than other types of sales charges.
The
maximum annualized Rule 12b-1 fee for distribution related expenses and/or for
providing services to shareholders (as a percentage of average daily net assets)
for Class 2 and Class 3 shares of each Fund is 0.25%.
Payments
under the 12b-1 plans will not automatically terminate for Funds that are closed
to new investors or to additional purchases by existing shareholders. The Board
will determine whether to terminate, modify, or leave unchanged the 12b-1 plan
if the Board directs the closure of a Fund.
Payments
to Financial Professionals and Their Firms
Financial
intermediaries receive compensation from the Distributor and its affiliates for
marketing, selling, and/or providing services to variable annuities and variable
life insurance contracts that invest in the Funds. Financial intermediaries also
receive compensation for marketing, selling, and/or providing services to
certain retirement plans that offer the Funds as investment options. Financial
intermediaries may include, among others, broker/dealers, registered investment
advisors, banks, trust companies, pension plan consultants, retirement plan
administrators, and insurance companies. Financial Professionals who deal with
investors on an individual basis are typically associated with a financial
intermediary. The Distributor and its affiliates may fund this compensation from
various sources, including any Rule 12b-1 Plan fee that the Fund pays to the
Distributor. Individual Financial Professionals may receive some or all of the
amounts paid to the financial intermediary with which he or she is
associated.
Ongoing
Payments
In
the case of Class 2 and Class 3, and pursuant to the Rule 12b-1 Plan applicable
to Class 2 and Class 3 shares, the Distributor generally makes ongoing payments
to your financial intermediary at an annual rate of 0.25% of average net assets
attributable to your indirect investment in the Funds. In addition, the
Distributor or PGI may make from its own resources ongoing payments to an
insurance company, which payments will generally not exceed 0.27% of the average
net assets of the Funds held by the insurance company in its separate accounts.
The payments are for distribution support and/or administrative services and may
be made with respect to either or all classes of shares of the
Funds.
Other
Payments to Intermediaries
In
addition to any commissions that may be paid at the time of sale and ongoing
payments, the Distributor and its affiliates, at their expense, currently
provide additional payments to financial intermediaries that sell variable
annuities and variable life insurance contracts that may be funded by shares of
the Funds, or may sell shares of the Funds to retirement plans for distribution
services. Although payments made to each qualifying financial intermediary in
any given year may vary, such payments will generally not exceed 0.25% of the
current year’s sales of applicable variable annuities and variable life
insurance contracts that may be funded by account shares, or 0.25% of the
current year’s sales of Fund shares to retirement plans by that financial
intermediary.
Additionally,
in some cases the Distributor and its affiliates will provide payments or
reimbursements in connection with the costs of conferences, educational
seminars, due diligence trips, training, and marketing efforts related to the
Funds for the financial intermediary’s personnel and/or their clients and
potential clients. Such activities may be sponsored by financial intermediaries
or the Distributor. The costs associated with such activities may include
travel, lodging, entertainment, and meals. In some cases the Distributor will
also provide payment or reimbursement for expenses associated with transactions
(“ticket”) charges and general marketing expenses.
In
addition to the other payments described in this section, the Registrant has
entered into an Administrative Services Plan and Agreement with Principal
Shareholder Services (“PSS”), pursuant to which intermediaries receive payments
for providing administrative services relating to the Funds' Class 3 shares.
Such compensation is paid out of the Administrative Service Fees that are
disclosed in this Prospectus as Other Expenses.
For
more information, see the SAI. See also the section titled “Payments to
Broker-Dealers and Other Financial Intermediaries” in each Fund
Summary.
Your
variable life insurance or variable annuity contract or your retirement plan may
impose other charges and expenses, some of which may also be used in connection
with the sale of such contracts in addition to those described in the
prospectus. The amount and applicability of any insurance contract fee are
determined and disclosed separately within the prospectus for your insurance
contract.
The
payments described in this Prospectus may create a conflict of interest by
influencing your Financial Professional or your financial intermediary to
recommend one variable annuity, variable life insurance policy, or mutual fund
over another, or to recommend one Fund or share class over another Fund or share
class. Ask your Financial Professional or visit your financial intermediary’s
website for more information about the total amounts paid to them by PGI and its
affiliates, and by sponsors of other investment companies your Financial
Professional may recommend to you.
Your
financial intermediary may charge you additional fees other than those disclosed
in this Prospectus. Ask your Financial Professional about any fees and
commissions they charge.
FUND
ACCOUNT INFORMATION
Financial
Statements
Shareholders
will receive annual financial statements for the Funds, audited by the Funds'
independent registered public accounting firm. Shareholders will also receive
semi-annual financial statements that are unaudited.
APPENDIX
A – DESCRIPTION OF BOND RATINGS
Moody’s
Investors Service, Inc. Rating Definitions:
Long-Term
Obligation Ratings
Ratings
assigned on Moody’s global long-term obligation rating scales are
forward-looking opinions of the relative credit risk of financial obligations
issued by non-financial corporates, financial institutions, structured finance
vehicles, project finance vehicles, and public sector entities. Long-term
ratings are assigned to issuers or obligations with an original maturity of one
year or more and reflect both on the likelihood of a default or impairment on
contractual financial obligations and the expected financial loss suffered in
the event of default or impairment.1
1
For
certain structured finance, preferred stock and hybrid securities in which
payment default events are either not defined or do not match investor’s
expectations for timely payment, the ratings reflect the likelihood of
impairment and the expected financial loss in the event of
impairment.
|
|
|
|
|
| |
| Aaa: |
Obligations
rated Aaa are judged to be of the highest quality, subject to the lowest
level of credit risk. |
| Aa: |
Obligations
rated Aa are judged to be of high quality and are subject to very low
credit risk. |
| A: |
Obligations
rated A are considered upper-medium grade and are subject to low credit
risk. |
| Baa: |
Obligations
rated Baa are subject to moderate credit risk. They are considered
medium-grade and as such may possess certain speculative
characteristics. |
| Ba: |
Obligations
rated Ba are judged to be speculative and are subject to substantial
credit risk. |
| B: |
Obligations
rated B are considered speculative and are subject to high credit
risk. |
| Caa: |
Obligations
rated Caa are judged to be speculative of poor standing and are subject to
very high credit risk. |
| Ca: |
Obligations
rated Ca are highly speculative and are likely in, or very near, default,
with some prospect of recovery of principal and
interest. |
| C: |
Obligations
rated C are the lowest rated class of bonds and are typically in default,
with little prospect for recovery of principal or
interest. |
|
|
|
|
|
| |
| NOTE: |
Moody’s
appends numerical modifiers, 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category, the
modifier 2 indicates a mid-range ranking, and the modifier 3 indicates a
ranking in the lower end of that generic rating category. Additionally, a
“(hyb)” indicator is appended to all ratings of hybrid securities issued
by banks, issuers, financial companies, and securities
firms.* |
*By
their terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if
such an omission occurs. Hybrid securities may also be subject to contractually
allowable write-downs of principal that could result in impairment. Together the
hybrid indicator, the long-term obligation rating assigned to a hybrid security
is an expression of the relative credit risk associated with that
security.
SHORT-TERM
NOTES: Short-term ratings are assigned to obligations with an original maturity
of thirteen months or less and reflect both on the likelihood of a default or
impairment on contractual financial obligations and the expected financial loss
suffered in the event of default. Moody’s employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment ability of rated issuers:
Issuers
rated Prime-1 (or related supporting institutions) have a superior ability to
repay short-term debt obligations.
Issuers
rated Prime-2 (or related supporting institutions) have a strong ability to
repay short-term debt obligations.
Issuers
rated Prime-3 (or related supporting institutions) have an acceptable ability to
repay short-term obligations.
Issuers
rated Not Prime do not fall within any of the Prime rating
categories.
US
MUNICIPAL SHORT-TERM DEBT: The Municipal Investment Grade (MIG) scale is used to
rate US municipal bonds of up to three years maturity. MIG ratings are divided
into three levels - MIG 1 through MIG 3 - while speculative grade short-term
obligations are designated SG.
MIG
1 denotes superior credit quality, afforded excellent protection from
established cash flows, highly reliable liquidity support, or demonstrated
broad-based access to the market for refinancing.
MIG
2 denotes strong credit quality with ample margins of protection, although not
as large as in the preceding group.
MIG
3 notes are of acceptable credit quality. Liquidity and cash-flow protection may
be narrow and market access for refinancing is likely to be less
well-established.
SG
denotes speculative-grade credit quality and may lack sufficient margins of
protection.
Description
of S&P Global Ratings’ Credit Rating Definitions:
S&P
Global’s credit rating, both long-term and short-term, is a forward-looking
opinion of the creditworthiness of an obligor with respect to a specific
obligation. This assessment takes into consideration the creditworthiness of
guarantors, insurers, or other forms of credit enhancement on the
obligation.
The
credit rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The
ratings are statements of opinion as of the date they are expressed furnished by
the issuer or obtained by S&P Global Ratings from other sources S&P
Global Ratings considers reliable. S&P Global Ratings does not perform an
audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or for other
circumstances.
The
ratings are based, in varying degrees, on the following
considerations:
•Likelihood
of payment - capacity and willingness of the obligor to meet its financial
commitment on an obligation in accordance with the terms of the
obligation;
•Nature
of and provisions of the financial obligation;
•Protection
afforded by, and relative position of, the financial obligation in the event of
bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditor’s rights.
LONG-TERM
CREDIT RATINGS:
|
|
|
|
|
| |
| AAA: |
Obligations
rated ‘AAA’ have the highest rating assigned by S&P Global Ratings.
The obligor’s capacity to meet its financial commitment on the obligation
is extremely strong. |
| AA: |
Obligations
rated ‘AA’ differ from the highest-rated issues only in small degree. The
obligor’s capacity to meet its financial commitment on the obligation is
very strong. |
| A:
|
Obligations
rated ‘A’ have a strong capacity to meet financial commitment on the
obligation although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. |
| BBB: |
Obligations
rated ‘BBB’ exhibit adequate protection parameters; however, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to meet financial commitment on the
obligation. |
|
BB,
B, CCC,
CC
and C: |
Obligations
rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded, on balance, as having
significant speculative characteristics. ‘BB’ indicates the lowest degree
of speculation and ‘C’ the highest degree of speculation. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major risk exposures to
adverse conditions. |
| BB: |
Obligations
rated ‘BB’ are less vulnerable to nonpayment than other speculative
issues. However it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
the obligor’s inadequate capacity to meet its financial commitment on the
obligation. |
| B: |
Obligations
rated ‘B’ are more vulnerable to nonpayment than ‘BB’ but the obligor
currently has the capacity to meet its financial commitment on the
obligation. Adverse business, financial, or economic conditions will
likely impair this capacity. |
| CCC: |
Obligations
rated ‘CCC’ are currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation. If adverse business,
financial, or economic conditions occur, the obligor is not likely to have
the capacity to meet its financial commitment on the
obligation. |
| CC: |
Obligations
rated ‘CC’ are currently highly vulnerable to nonpayment. The ‘CC’ rating
is used when a default has not yet occurred but S&P Global Ratings
expects default to be a virtual certainty, regardless of anticipated time
to default. |
| C:
|
The
rating ‘C’ is highly vulnerable to nonpayment, the obligation is expected
to have lower relative seniority or lower ultimate recovery compared to
higher rated obligations. |
| D:
|
Obligations
rated ‘D’ are in default, or in breach of an imputed promise. For
non-hybrid capital instruments, the ‘D’ rating category is used when
payments on an obligation are not made on the date due, unless S&P
Global Ratings believes that such payments will be made within five
business days in the absence of a stated grace period or within the
earlier of the stated grace period or 30 calendar days. The rating will
also be used upon filing for bankruptcy petition or the taking of similar
action and where default is a virtual certainty. If an obligation is
subject to a distressed exchange offer the rating is lowered to
‘D’. |
Plus
(+) or Minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
|
|
|
|
|
| |
| NR: |
Indicates
that no rating has been requested, that there is insufficient information
on which to base a rating or that S&P Global Ratings does not rate a
particular type of obligation as a matter of
policy. |
SHORT-TERM
CREDIT RATINGS: Ratings are graded into four categories, ranging from ‘A-1’ for
the highest quality obligations to ‘D’ for the lowest.
|
|
|
|
|
| |
| A-1:
|
This
is the highest category. The obligor’s capacity to meet its financial
commitment on the obligation is strong. Within this category, certain
obligations are designated with a plus sign (+). This indicates that the
obligor’s capacity to meet its financial commitment on these obligations
is extremely strong. |
| A-2:
|
Issues
carrying this designation are somewhat more susceptible to the adverse
effects of the changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor’s capacity
to meet its financial commitment on the obligation is
satisfactory. |
| A-3:
|
Issues
carrying this designation exhibit adequate capacity to meet their
financial obligations. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of the
obligor to meet it financial commitment on the
obligation. |
| B:
|
Issues
rated ‘B’ are regarded as vulnerable and have significant speculative
characteristics. The obligor has capacity to meet financial commitments;
however, it faces major ongoing uncertainties which could lead to
obligor’s inadequate capacity to meet its financial
obligations. |
| C:
|
This
rating is assigned to short-term debt obligations that are currently
vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions to meet its financial commitment on the
obligation. |
| D:
|
This
rating indicates that the issue is either in default or in breach of an
imputed promise. For non-hybrid capital instruments, the ‘D’ rating
category is used when payments on an obligation are not made on the date
due, unless S&P Global Ratings believes that such payments will be
made within any stated grace period. However, any stated grace period
longer than five business days will be treated as five business days. The
rating will also be used upon filing for bankruptcy petition or the taking
of similar action and where default is a virtual certainty. If an
obligation is subject to a distressed debt restructuring the rating is
lowered to ‘D’. |
MUNICIPAL
SHORT-TERM NOTE RATINGS: S&P Global Ratings rates U.S. municipal notes with
a maturity of less than three years as follows:
|
|
|
|
|
| |
| SP-1:
|
A
strong capacity to pay principal and interest. Issues that possess a very
strong capacity to pay debt service is given a “+”
designation. |
| SP-2:
|
A
satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the terms of
the notes. |
| SP-3:
|
A
speculative capacity to pay principal and interest. |
|
D: |
Assigned
upon failure to pay the note when due, completion of a distressed debt
restructuring, or the filing of a bankruptcy petition or the taking of
similar action and where default on an obligation is a virtual certainty.
|
APPENDIX
B — FINANCIAL HIGHLIGHTS
The
following financial highlights tables are intended to help you understand each
Fund’s financial performance for the periods shown. Certain information reflects
returns for a single Fund share. The total returns in each table represent the
rate that an investor would have earned or lost each period on an investment in
the Fund (assuming reinvestment of all distributions). This
information has been derived from the financial statements audited by Ernst
& Young LLP, Independent Registered Public Accounting Firm, whose report,
along with each Fund’s financial statements, is included in Principal Variable
Contracts Funds, Inc. Annual
Report to Shareholders
for the fiscal year ended December 31, 2023, which is available upon request,
and incorporated by reference into the SAI.
To
request a free copy of the latest Annual or Semi-Annual report for the Funds,
you may telephone 1-800-222-5852.
Effective
May 1, 2024, the Diversified Balanced Managed Volatility Account changed its
name to Diversified Balanced Strategic Allocation Account; the Diversified
Balanced Volatility Control Account changed its name to Diversified Balanced
Adaptive Allocation Account; the Diversified Growth Managed Volatility Account
changed its name to Diversified Growth Strategic Allocation Account; and the
Diversified Growth Volatility Control Account changed its name to Diversified
Growth Adaptive Allocation Account.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
| |
|
|
Net
Asset
Value,
Beginning
of
Period |
Net
Investment
Income
(Loss)(a) |
Net
Realized
and
Unrealized
Gain
(Loss) on
Investments |
Total
From
Investment
Operations |
Distributions
from
Realized
Gains |
Total
Dividends
and
Distributions |
Net
Asset
Value,
End
of Period |
| BLUE
CHIP ACCOUNT |
|
|
|
|
|
| |
| Class
3 shares |
|
|
|
|
|
| |
|
2023 |
$8.80 |
| ($0.01) |
| $3.45 |
| $3.44 |
| $– |
| $– |
| $12.24 |
|
| 2022 |
12.81 |
| (0.03) |
| (3.97) |
| (4.00) |
(0.01) |
| (0.01) |
| 8.80 |
|
| 2021 |
10.34 |
| (0.08) |
| 2.64 |
| 2.56 |
| (0.09) |
| (0.09) |
| 12.81 |
|
| 2020(d) |
10.00 |
| – |
| 0.34 |
| 0.34 |
| – |
| – |
| 10.34 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| 39.09 |
% |
| $16,196 |
| 1.05 |
% |
(c) |
(0.08) |
% |
| 8.8 |
% |
|
| (31.20) |
|
| 8,679 |
| 1.05 |
| (c) |
(0.33) |
|
| 91.9 |
| |
| 24.72 |
|
| 13,515 |
| 1.05 |
| (c) |
(0.63) |
|
| 12.5 |
| |
| 3.40 |
| (e) |
5,170 |
| 1.05 |
| (c),(f) |
(0.66) |
| (f) |
54.6 |
| (f) |
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(e)Total
return amounts have not been annualized.
(f)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
BOND
MARKET
INDEX
ACCOUNT |
|
|
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
| 2023 |
$9.13 |
| $0.28 |
| $0.21 |
| $0.49 |
| ($0.22) |
| $– |
| ($0.22) |
| $9.40 |
|
| 2022 |
10.76 |
| 0.21 |
| (1.62) |
| (1.41) |
| (0.21) |
| (0.01) |
| (0.22) |
| 9.13 |
|
| 2021 |
11.21 |
| 0.17 |
| (0.37) |
| (0.20) |
| (0.22) |
| (0.03) |
| (0.25) |
| 10.76 |
|
| 2020 |
10.72 |
| 0.23 |
| 0.55 |
| 0.78 |
| (0.29) |
| – |
| (0.29) |
| 11.21 |
|
| 2019 |
10.15 |
| 0.28 |
| 0.58 |
| 0.86 |
| (0.29) |
| – |
| (0.29) |
| 10.72 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 5.51 |
% |
$2,440,279 |
| 0.15 |
% |
| 3.07 |
% |
47.4 |
% |
| (13.16) |
| 2,290,071 |
| 0.14 |
|
| 2.19 |
| 102.0 |
|
| (1.83) |
| 2,900,608 |
| 0.14 |
|
| 1.58 |
| 130.5 |
|
| 7.29 |
| 2,735,259 |
| 0.14 |
|
| 2.04 |
| 104.0 |
|
| 8.47 |
| 2,539,460 |
| 0.15 |
| (c) |
2.60 |
| 93.6 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| CORE
PLUS BOND ACCOUNT |
|
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$9.42 |
| $0.34 |
| $0.15 |
| $0.49 |
| ($0.28) |
| $– |
| ($0.28) |
| $9.63 |
|
| 2022 |
11.48 |
| 0.28 |
| (1.90) |
| (1.62) |
| (0.32) |
| (0.12) |
| (0.44) |
| 9.42 |
|
| 2021 |
12.15 |
| 0.25 |
| (0.30) |
| (0.05) |
| (0.32) |
| (0.30) |
| (0.62) |
| 11.48 |
|
| 2020 |
11.50 |
| 0.23 |
| 0.86 |
| 1.09 |
| (0.44) |
| – |
| (0.44) |
| 12.15 |
|
| 2019 |
10.81 |
| 0.34 |
| 0.72 |
| 1.06 |
| (0.37) |
| – |
| (0.37) |
| 11.50 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 5.34 |
% |
$199,271 |
| 0.50 |
% |
3.57 |
% |
143.3 |
% |
| (14.13) |
| 187,023 |
| 0.49 |
| 2.76 |
| 146.8 |
|
| (0.45) |
| 236,382 |
| 0.47 |
| 2.12 |
| 150.8 |
|
| 9.55 |
| 255,956 |
| 0.47 |
| 1.92 |
| 210.3 |
|
| 9.81 |
| 252,874 |
| 0.47 |
| 2.99 |
| 152.4 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
BALANCED ACCOUNT |
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$13.57 |
| $0.27 |
| $1.57 |
| $1.84 |
| ($0.29) |
| ($0.91) |
| ($1.20) |
| $14.21 |
|
| 2022 |
18.11 |
| 0.28 |
| (2.96) |
| (2.68) |
| (0.40) |
| (1.46) |
| (1.86) |
| 13.57 |
|
| 2021 |
17.58 |
| 0.36 |
| 1.55 |
| 1.91 |
| (0.40) |
| (0.98) |
| (1.38) |
| 18.11 |
|
| 2020 |
16.52 |
| 0.36 |
| 1.70 |
| 2.06 |
| (0.40) |
| (0.60) |
| (1.00) |
| 17.58 |
|
| 2019 |
14.87 |
| 0.36 |
| 2.34 |
| 2.70 |
| (0.35) |
| (0.70) |
| (1.05) |
| 16.52 |
|
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
13.61 |
| 0.24 |
| 1.57 |
| 1.81 |
| (0.25) |
| (0.91) |
| (1.16) |
| 14.26 |
|
| 2022 |
18.15 |
| 0.24 |
| (2.97) |
| (2.73) |
| (0.35) |
| (1.46) |
| (1.81) |
| 13.61 |
|
| 2021 |
17.61 |
| 0.31 |
| 1.57 |
| 1.88 |
| (0.36) |
| (0.98) |
| (1.34) |
| 18.15 |
|
| 2020 |
16.55 |
| 0.32 |
| 1.70 |
| 2.02 |
| (0.36) |
| (0.60) |
| (0.96) |
| 17.61 |
|
| 2019 |
14.88 |
| 0.32 |
| 2.36 |
| 2.68 |
| (0.31) |
| (0.70) |
| (1.01) |
| 16.55 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
| 2023 |
13.45 |
| 0.30 |
| 1.47 |
| 1.77 |
| (0.26) |
| (0.91) |
| (1.17) |
| 14.05 |
|
| 2022 |
18.04 |
| 0.26 |
| (3.00) |
| (2.74) |
| (0.39) |
| (1.46) |
| (1.85) |
| 13.45 |
|
| 2021 |
17.58 |
| 0.68 |
| 1.16 |
| 1.84 |
| (0.40) |
| (0.98) |
| (1.38) |
| 18.04 |
|
| 2020(e) |
17.32 |
| 0.05 |
| 0.21 |
| 0.26 |
| – |
| – |
| – |
| 17.58 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Gross Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| 14.17 |
% |
| $33,872 |
| 0.05 |
% |
| – |
% |
| 1.95 |
% |
| 13.9 |
% |
| (14.85) |
|
| 32,564 |
| 0.05 |
|
| – |
|
| 1.79 |
|
| 19.5 |
|
| 11.06 |
|
| 41,982 |
| 0.05 |
|
| – |
|
| 2.00 |
|
| 14.3 |
|
| 12.96 |
|
| 40,515 |
| 0.05 |
|
| – |
|
| 2.18 |
|
| 23.6 |
|
| 18.43 |
|
| 40,694 |
| 0.05 |
|
| – |
|
| 2.25 |
|
| 16.9 |
|
|
|
|
|
|
|
|
|
|
| |
| 13.86 |
|
| 701,248 |
| 0.30 |
|
| – |
|
| 1.68 |
|
| 13.9 |
|
| (15.10) |
|
| 715,788 |
| 0.30 |
|
| – |
|
| 1.52 |
|
| 19.5 |
|
| 10.83 |
|
| 962,935 |
| 0.30 |
|
| – |
|
| 1.72 |
|
| 14.3 |
|
| 12.63 |
|
| 979,751 |
| 0.30 |
|
| – |
|
| 1.95 |
|
| 23.6 |
|
| 18.23 |
|
| 988,264 |
| 0.30 |
| (c) |
0.30 |
| (d) |
1.96 |
|
| 16.9 |
|
|
|
|
|
|
|
|
|
|
| |
| 13.72 |
|
| 2,070 |
| 0.45 |
|
| – |
|
| 2.15 |
|
| 13.9 |
|
| (15.24) |
|
| 563 |
| 0.45 |
|
| – |
|
| 1.72 |
|
| 19.5 |
|
| 10.65 |
|
| 327 |
| 0.45 |
|
| – |
|
| 3.79 |
|
| 14.3 |
|
| 1.50 |
| (f) |
10 |
| 0.45 |
| (g) |
– |
|
| 4.31 |
| (g) |
23.6 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's voluntary expense limit.
(d)Excludes
expense reimbursement from Manager.
(e)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(f)Total
return amounts have not been annualized.
(g)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
BALANCED MANAGED VOLATILITY ACCOUNT |
|
|
|
| |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$11.00 |
| $0.18 |
| $1.22 |
| $1.40 |
| ($0.19) |
| ($0.54) |
| ($0.73) |
| $11.67 |
|
| 2022 |
14.43 |
| 0.17 |
| (2.27) |
| (2.10) |
| (0.35) |
| (0.98) |
| (1.33) |
| 11.00 |
|
| 2021 |
13.65 |
| 0.32 |
| 1.03 |
| 1.35 |
| (0.25) |
| (0.32) |
| (0.57) |
| 14.43 |
|
| 2020 |
12.91 |
| 0.24 |
| 1.26 |
| 1.50 |
| (0.25) |
| (0.51) |
| (0.76) |
| 13.65 |
|
| 2019 |
11.34 |
| 0.23 |
| 1.74 |
| 1.97 |
| (0.21) |
| (0.19) |
| (0.40) |
| 12.91 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
| 2023 |
10.95 |
| 0.18 |
| 1.20 |
| 1.38 |
| (0.17) |
| (0.54) |
| (0.71) |
| 11.62 |
|
| 2022 |
14.38 |
| 0.16 |
| (2.28) |
| (2.12) |
| (0.33) |
| (0.98) |
| (1.31) |
| 10.95 |
|
| 2021 |
13.65 |
| 0.31 |
| 1.02 |
| 1.33 |
| (0.28) |
| (0.32) |
| (0.60) |
| 14.38 |
|
| 2020(d) |
13.46 |
| 0.04 |
| 0.15 |
| 0.19 |
| – |
| – |
| – |
| 13.65 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| 13.09 |
% |
| $134,117 |
| 0.31 |
% |
(c) |
1.62 |
% |
| 16.4 |
% |
| (14.63) |
|
| 141,384 |
| 0.31 |
| (c) |
1.36 |
|
| 21.0 |
|
| 9.94 |
|
| 184,060 |
| 0.31 |
| (c) |
2.24 |
|
| 18.7 |
|
| 12.03 |
|
| 185,139 |
| 0.31 |
| (c) |
1.84 |
|
| 25.0 |
|
| 17.48 |
|
| 176,235 |
| 0.31 |
| (c) |
1.90 |
|
| 21.3 |
|
|
|
|
|
|
|
|
| |
| 13.04 |
|
| 11 |
| 0.46 |
|
| 1.57 |
|
| 16.4 |
|
| (14.79) |
|
| 9 |
| 0.46 |
|
| 1.28 |
|
| 21.0 |
|
| 9.81 |
|
| 11 |
| 0.46 |
|
| 2.17 |
|
| 18.7 |
|
| 1.41 |
| (e) |
10 |
| 0.46 |
| (f) |
4.31 |
| (f) |
25.0 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
(d)Period
from
December
9,
2020,
date
operations
commenced,
through
December
31,
2020.
(e)Total
return
amounts
have
not
been
annualized.
(f)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
DIVERSIFIED
BALANCED
VOLATILITY
CONTROL
ACCOUNT |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$10.53 |
| $0.19 |
| $1.18 |
| $1.37 |
| ($0.15) |
| ($0.09) |
| ($0.24) |
| $11.66 |
|
| 2022 |
13.27 |
| 0.16 |
| (1.99) |
| (1.83) |
| (0.20) |
| (0.71) |
| (0.91) |
| 10.53 |
|
| 2021 |
12.40 |
| 0.22 |
| 1.02 |
| 1.24 |
| (0.17) |
| (0.20) |
| (0.37) |
| 13.27 |
|
| 2020 |
11.71 |
| 0.20 |
| 0.81 |
| 1.01 |
| (0.18) |
| (0.14) |
| (0.32) |
| 12.40 |
|
| 2019 |
10.31 |
| 0.28 |
| 1.30 |
| 1.58 |
| (0.09) |
| (0.09) |
| (0.18) |
| 11.71 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
10.51 |
| 0.18 |
| 1.16 |
| 1.34 |
| (0.13) |
| (0.09) |
| (0.22) |
| 11.63 |
|
| 2022 |
13.23 |
| 0.14 |
| (1.97) |
| (1.83) |
| (0.18) |
| (0.71) |
| (0.89) |
| 10.51 |
|
| 2021 |
12.40 |
| 0.19 |
| 1.03 |
| 1.22 |
| (0.19) |
| (0.20) |
| (0.39) |
| 13.23 |
|
| 2020(d) |
12.22 |
| 0.04 |
| 0.14 |
| 0.18 |
| – |
| – |
| – |
| 12.40 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| 13.08 |
% |
| $241,311 |
| 0.38 |
% |
| 1.76 |
% |
| 35.7 |
% |
| (13.79) |
|
| 207,220 |
| 0.38 |
|
| 1.40 |
|
| 104.9 |
|
| 10.08 |
|
| 229,787 |
| 0.38 |
|
| 1.67 |
|
| 47.6 |
|
| 8.82 |
|
| 184,469 |
| 0.38 |
| (c) |
1.73 |
|
| 83.5 |
|
| 15.47 |
|
| 145,371 |
| 0.38 |
| (c) |
2.47 |
|
| 33.1 |
|
|
|
|
|
|
|
|
| |
| 12.83 |
|
| 11 |
| 0.53 |
|
| 1.61 |
|
| 35.7 |
|
| (13.84) |
|
| 10 |
| 0.53 |
|
| 1.25 |
|
| 104.9 |
|
| 9.94 |
|
| 11 |
| 0.53 |
|
| 1.48 |
|
| 47.6 |
|
| 1.47 |
| (e) |
10 |
| 0.53 |
| (f) |
5.62 |
| (f) |
83.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(e)Total
return amounts have not been annualized.
(f)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
DIVERSIFIED
GROWTH
ACCOUNT |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$16.20 |
| $0.27 |
| $2.32 |
| $2.59 |
| ($0.29) |
| ($1.15) |
| ($1.44) |
| $17.35 |
|
| 2022 |
21.68 |
| 0.27 |
| (3.66) |
| (3.39) |
| (0.40) |
| (1.69) |
| (2.09) |
| 16.20 |
|
| 2021 |
20.15 |
| 0.37 |
| 2.56 |
| 2.93 |
| (0.38) |
| (1.02) |
| (1.40) |
| 21.68 |
|
| 2020 |
18.69 |
| 0.35 |
| 2.12 |
| 2.47 |
| (0.37) |
| (0.64) |
| (1.01) |
| 20.15 |
|
| 2019 |
16.29 |
| 0.34 |
| 3.06 |
| 3.40 |
| (0.33) |
| (0.67) |
| (1.00) |
| 18.69 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
16.07 |
| 0.26 |
| 2.28 |
| 2.54 |
| (0.28) |
| (1.15) |
| (1.43) |
| 17.18 |
|
| 2022 |
21.60 |
| 0.23 |
| (3.64) |
| (3.41) |
| (0.43) |
| (1.69) |
| (2.12) |
| 16.07 |
|
| 2021 |
20.15 |
| 0.42 |
| 2.48 |
| 2.90 |
| (0.43) |
| (1.02) |
| (1.45) |
| 21.60 |
|
| 2020(e) |
19.80 |
| 0.07 |
| 0.28 |
| 0.35 |
| – |
| – |
| – |
| 20.15 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Gross Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| 16.60 |
% |
| $3,076,955 |
| 0.30 |
% |
| – |
% |
| 1.59 |
% |
| 13.7 |
% |
| (15.70) |
|
| 3,045,729 |
| 0.30 |
|
| – |
|
| 1.47 |
|
| 20.1 |
|
| 14.79 |
|
| 3,974,179 |
| 0.30 |
|
| – |
|
| 1.74 |
|
| 14.7 |
|
| 13.76 |
|
| 3,853,082 |
| 0.30 |
|
| – |
|
| 1.89 |
|
| 23.0 |
|
| 21.20 |
|
| 3,772,145 |
| 0.30 |
| (c) |
0.30 |
| (d) |
1.89 |
|
| 16.0 |
|
|
|
|
|
|
|
|
|
|
| |
| 16.40 |
|
| 281 |
| 0.45 |
|
| – |
|
| 1.56 |
|
| 13.7 |
|
| (15.84) |
|
| 208 |
| 0.45 |
|
| – |
|
| 1.27 |
|
| 20.1 |
|
| 14.63 |
|
| 277 |
| 0.45 |
|
| – |
|
| 2.00 |
|
| 14.7 |
|
| 1.77 |
| (f) |
10 |
| 0.45 |
| (g) |
– |
|
| 5.91 |
| (g) |
23.0 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's voluntary expense limit.
(d)Excludes
expense reimbursement from Manager.
(e)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(f)Total
return amounts have not been annualized.
(g)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
GROWTH MANAGED VOLATILITY ACCOUNT |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$11.75 |
| $0.19 |
| $1.58 |
| $1.77 |
| ($0.18) |
| ($0.75) |
| ($0.93) |
| $12.59 |
|
| 2022 |
15.66 |
| 0.17 |
| (2.54) |
| (2.37) |
| (0.40) |
| (1.14) |
| (1.54) |
| 11.75 |
|
| 2021 |
14.33 |
| 0.36 |
| 1.58 |
| 1.94 |
| (0.24) |
| (0.37) |
| (0.61) |
| 15.66 |
|
| 2020 |
13.53 |
| 0.23 |
| 1.46 |
| 1.69 |
| (0.25) |
| (0.64) |
| (0.89) |
| 14.33 |
|
| 2019 |
11.61 |
| 0.23 |
| 2.09 |
| 2.32 |
| (0.20) |
| (0.20) |
| (0.40) |
| 13.53 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
11.70 |
| 0.18 |
| 1.56 |
| 1.74 |
| (0.17) |
| (0.75) |
| (0.92) |
| 12.52 |
|
| 2022 |
15.59 |
| 0.15 |
| (2.51) |
| (2.36) |
| (0.39) |
| (1.14) |
| (1.53) |
| 11.70 |
|
| 2021 |
14.33 |
| 0.35 |
| 1.56 |
| 1.91 |
| (0.28) |
| (0.37) |
| (0.65) |
| 15.59 |
|
| 2020(d) |
14.09 |
| 0.05 |
| 0.19 |
| 0.24 |
| – |
| – |
| – |
| 14.33 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| 15.60 |
% |
| $293,439 |
| 0.31 |
% |
| 1.53 |
% |
| 15.6 |
% |
| (15.12) |
|
| 292,960 |
| 0.30 |
|
| 1.25 |
|
| 19.9 |
|
| 13.70 |
|
| 388,912 |
| 0.30 |
|
| 2.39 |
|
| 17.4 |
|
| 13.06 |
|
| 378,238 |
| 0.30 |
| (c) |
1.74 |
|
| 22.3 |
|
| 20.18 |
|
| 353,687 |
| 0.31 |
| (c) |
1.80 |
|
| 18.8 |
|
|
|
|
|
|
|
|
| |
| 15.37 |
|
| 11 |
| 0.46 |
|
| 1.48 |
|
| 15.6 |
|
| (15.17) |
|
| 10 |
| 0.45 |
|
| 1.17 |
|
| 19.9 |
|
| 13.44 |
|
| 12 |
| 0.45 |
|
| 2.31 |
|
| 17.4 |
|
| 1.70 |
| (e) |
10 |
| 0.45 |
| (f) |
5.91 |
| (f) |
22.3 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(e)Total
return amounts have not been annualized.
(f)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
GROWTH VOLATILITY CONTROL ACCOUNT |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$11.07 |
| $0.20 |
| $1.47 |
| $1.67 |
| ($0.14) |
| ($0.18) |
| ($0.32) |
| $12.42 |
|
| 2022 |
14.07 |
| 0.17 |
| (2.12) |
| (1.95) |
| (0.20) |
| (0.85) |
| (1.05) |
| 11.07 |
|
| 2021 |
12.68 |
| 0.23 |
| 1.52 |
| 1.75 |
| (0.16) |
| (0.20) |
| (0.36) |
| 14.07 |
|
| 2020 |
12.00 |
| 0.19 |
| 0.86 |
| 1.05 |
| (0.18) |
| (0.19) |
| (0.37) |
| 12.68 |
|
| 2019 |
10.37 |
| 0.26 |
| 1.55 |
| 1.81 |
| (0.10) |
| (0.08) |
| (0.18) |
| 12.00 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
11.04 |
| 0.18 |
| 1.47 |
| 1.65 |
| (0.12) |
| (0.18) |
| (0.30) |
| 12.39 |
|
| 2022 |
14.03 |
| 0.14 |
| (2.10) |
| (1.96) |
| (0.18) |
| (0.85) |
| (1.03) |
| 11.04 |
|
| 2021 |
12.68 |
| 0.20 |
| 1.53 |
| 1.73 |
| (0.18) |
| (0.20) |
| (0.38) |
| 14.03 |
|
| 2020(d) |
12.47 |
| 0.05 |
| 0.16 |
| 0.21 |
| – |
| – |
| – |
| 12.68 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| 15.33 |
% |
| $1,440,339 |
| 0.37 |
% |
| 1.68 |
% |
| 38.6 |
% |
| (13.82) |
|
| 1,196,821 |
| 0.37 |
|
| 1.36 |
|
| 101.8 |
|
| 13.89 |
|
| 1,277,128 |
| 0.37 |
|
| 1.69 |
|
| 57.4 |
|
| 8.98 |
|
| 995,575 |
| 0.37 |
|
| 1.63 |
|
| 85.9 |
|
| 17.57 |
|
| 765,417 |
| 0.37 |
| (c) |
2.32 |
|
| 36.2 |
|
|
|
|
|
|
|
|
| |
| 15.19 |
|
| 11 |
| 0.52 |
|
| 1.53 |
|
| 38.6 |
|
| (13.97) |
|
| 10 |
| 0.52 |
|
| 1.18 |
|
| 101.8 |
|
| 13.74 |
|
| 12 |
| 0.52 |
|
| 1.46 |
|
| 57.4 |
|
| 1.68 |
| (e) |
10 |
| 0.52 |
| (f) |
7.20 |
| (f) |
85.9 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(e)Total
return amounts have not been annualized.
(f)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
INCOME ACCOUNT |
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
$12.00 |
| $0.22 |
| $1.08 |
| $1.30 |
| ($0.22) |
| ($0.51) |
| ($0.73) |
| $12.57 |
|
| 2022 |
15.21 |
| 0.21 |
| (2.41) |
| (2.20) |
| (0.29) |
| (0.72) |
| (1.01) |
| 12.00 |
|
| 2021 |
14.82 |
| 0.26 |
| 0.77 |
| 1.03 |
| (0.29) |
| (0.35) |
| (0.64) |
| 15.21 |
|
| 2020 |
13.82 |
| 0.30 |
| 1.23 |
| 1.53 |
| (0.28) |
| (0.25) |
| (0.53) |
| 14.82 |
|
| 2019 |
12.46 |
| 0.29 |
| 1.58 |
| 1.87 |
| (0.22) |
| (0.29) |
| (0.51) |
| 13.82 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
12.21 |
| 0.24 |
| 1.08 |
| 1.32 |
| (0.09) |
| (0.51) |
| (0.60) |
| 12.93 |
|
| 2022 |
15.15 |
| (0.01) |
| (2.21) |
| (2.22) |
| – |
| (0.72) |
| (0.72) |
| 12.21 |
|
| 2021 |
14.82 |
| 0.58 |
| 0.42 |
| 1.00 |
| (0.32) |
| (0.35) |
| (0.67) |
| 15.15 |
|
| 2020(e) |
14.65 |
| 0.02 |
| 0.15 |
| 0.17 |
| – |
| – |
| – |
| 14.82 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Gross Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
| 11.20 |
% |
| $246,966 |
| 0.31 |
% |
| – |
% |
| 1.80 |
% |
| 15.8 |
% |
| (14.54) |
|
| 254,300 |
| 0.30 |
|
| – |
|
| 1.58 |
|
| 23.5 |
|
| 6.96 |
|
| 325,983 |
| 0.30 |
| (c) |
0.30 |
| (d) |
1.75 |
|
| 24.8 |
|
| 11.27 |
|
| 323,525 |
| 0.30 |
| (c) |
0.30 |
| (d) |
2.10 |
|
| 31.2 |
|
| 15.16 |
|
| 279,888 |
| 0.31 |
| (c) |
0.31 |
| (d) |
2.16 |
|
| 25.6 |
|
|
|
|
|
|
|
|
|
|
| |
| 11.08 |
|
| 87 |
| 0.46 |
|
| – |
|
| 1.90 |
|
| 15.8 |
|
| (14.73) |
|
| 54 |
| 0.45 |
|
| – |
|
| (0.04) |
|
| 23.5 |
|
| 6.78 |
|
| 781 |
| 0.45 |
|
| – |
|
| 3.83 |
|
| 24.8 |
|
| 1.16 |
| (f) |
10 |
| 0.45 |
| (g) |
– |
|
| 2.69 |
| (g) |
31.2 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's voluntary expense limit.
(d)Excludes
expense reimbursement from Manager.
(e)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(f)Total
return amounts have not been annualized.
(g)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| DIVERSIFIED
INTERNATIONAL ACCOUNT |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$13.36 |
| $0.25 |
| $2.07 |
| $2.32 |
| ($0.19) |
| $– |
| ($0.19) |
| $15.49 |
|
| 2022 |
19.17 |
| 0.31 |
| (4.21) |
| (3.90) |
| (0.42) |
| (1.49) |
| (1.91) |
| 13.36 |
|
| 2021 |
17.77 |
| 0.28 |
| 1.46 |
| 1.74 |
| (0.25) |
| (0.09) |
| (0.34) |
| 19.17 |
|
| 2020 |
15.71 |
| 0.18 |
| 2.29 |
| 2.47 |
| (0.41) |
| – |
| (0.41) |
| 17.77 |
|
| 2019 |
13.72 |
| 0.28 |
| 2.75 |
| 3.03 |
| (0.26) |
| (0.78) |
| (1.04) |
| 15.71 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 17.45 |
% |
$256,075 |
| 0.93 |
% |
1.75 |
% |
36.5 |
% |
| (20.00) |
| 236,721 |
| 0.92 |
| 2.02 |
| 46.9 |
|
| 9.75 |
| 299,426 |
| 0.90 |
| 1.49 |
| 36.6 |
|
| 16.16 |
| 291,726 |
| 0.92 |
| 1.19 |
| 47.1 |
|
| 22.69 |
| 266,768 |
| 0.93 |
| 1.86 |
| 43.7 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| EQUITY
INCOME ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
|
2023 |
$26.54 |
| $0.64 |
| $2.20 |
| $2.84 |
| ($0.58) |
| ($1.29) |
| ($1.87) |
| $27.51 |
|
| 2022 |
34.25 |
| 0.59 |
| (4.25) |
| (3.66) |
| (0.60) |
| (3.45) |
| (4.05) |
| 26.54 |
|
| 2021 |
28.54 |
| 0.55 |
| 5.82 |
| 6.37 |
| (0.64) |
| (0.02) |
| (0.66) |
| 34.25 |
|
| 2020 |
28.19 |
| 0.55 |
| 1.08 |
| 1.63 |
| (0.52) |
| (0.76) |
| (1.28) |
| 28.54 |
|
| 2019 |
22.86 |
| 0.56 |
| 6.00 |
| 6.56 |
| (0.51) |
| (0.72) |
| (1.23) |
| 28.19 |
|
| Class
2 shares |
|
|
|
|
|
|
| |
|
2023 |
26.19 |
| 0.57 |
| 2.16 |
| 2.73 |
| (0.52) |
| (1.29) |
| (1.81) |
| 27.11 |
|
| 2022 |
33.87 |
| 0.51 |
| (4.20) |
| (3.69) |
| (0.54) |
| (3.45) |
| (3.99) |
| 26.19 |
|
| 2021 |
28.26 |
| 0.47 |
| 5.75 |
| 6.22 |
| (0.59) |
| (0.02) |
| (0.61) |
| 33.87 |
|
| 2020 |
27.93 |
| 0.48 |
| 1.06 |
| 1.54 |
| (0.45) |
| (0.76) |
| (1.21) |
| 28.26 |
|
| 2019 |
22.66 |
| 0.49 |
| 5.95 |
| 6.44 |
| (0.45) |
| (0.72) |
| (1.17) |
| 27.93 |
|
| Class
3 shares |
|
|
|
|
|
|
| |
|
2023 |
26.30 |
| 0.55 |
| 2.21 |
| 2.76 |
| (0.53) |
| (1.29) |
| (1.82) |
| 27.24 |
|
| 2022 |
34.10 |
| 0.47 |
| (4.23) |
| (3.76) |
| (0.59) |
| (3.45) |
| (4.04) |
| 26.30 |
|
| 2021 |
28.53 |
| 0.47 |
| 5.76 |
| 6.23 |
| (0.64) |
| (0.02) |
| (0.66) |
| 34.10 |
|
| 2020(c) |
27.94 |
| 0.03 |
| 0.56 |
| 0.59 |
| – |
| – |
| – |
| 28.53 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Return(b) |
| Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
| Portfolio
Turnover Rate |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| 11.22 |
% |
| $598,294 |
| 0.49 |
% |
| 2.41 |
% |
| 12.9 |
% |
| (10.50) |
|
| 625,764 |
| 0.48 |
|
| 1.99 |
|
| 19.6 |
|
| 22.47 |
|
| 701,625 |
| 0.47 |
|
| 1.73 |
|
| 9.6 |
|
| 6.43 |
|
| 755,882 |
| 0.48 |
|
| 2.18 |
|
| 21.0 |
|
| 29.09 |
|
| 741,311 |
| 0.47 |
|
| 2.16 |
|
| 17.9 |
|
|
|
|
|
|
|
|
| |
| 10.93 |
|
| 65,603 |
| 0.74 |
|
| 2.16 |
|
| 12.9 |
|
| (10.72) |
|
| 56,495 |
| 0.73 |
|
| 1.75 |
|
| 19.6 |
|
| 22.15 |
|
| 53,723 |
| 0.72 |
|
| 1.48 |
|
| 9.6 |
|
| 6.15 |
|
| 33,951 |
| 0.73 |
|
| 1.93 |
|
| 21.0 |
|
| 28.78 |
|
| 31,874 |
| 0.72 |
|
| 1.91 |
|
| 17.9 |
|
|
|
|
|
|
|
|
| |
| 11.00 |
|
| 1,105 |
| 0.89 |
|
| 2.08 |
|
| 12.9 |
|
| (10.86) |
|
| 308 |
| 0.88 |
|
| 1.61 |
|
| 19.6 |
|
| 21.97 |
|
| 148 |
| 0.87 |
|
| 1.43 |
|
| 9.6 |
|
| 2.11 |
| (d) |
10 |
| 0.88 |
| (e) |
1.88 |
| (e) |
21.0 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Period
from December 9, 2020, date operations commenced, through December 31,
2020.
(d)Total
return amounts have not been annualized.
(e)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
GLOBAL
EMERGING
MARKETS
ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$13.39 |
| $0.21 |
| $1.45 |
| $1.66 |
| ($0.36) |
| $– |
| ($0.36) |
| $14.69 |
|
| 2022 |
19.67 |
| 0.31 |
| (4.78) |
| (4.47) |
| (0.26) |
| (1.55) |
| (1.81) |
| 13.39 |
|
| 2021 |
19.94 |
| 0.21 |
| (0.08) |
| 0.13 |
| (0.09) |
| (0.31) |
| (0.40) |
| 19.67 |
|
| 2020 |
17.13 |
| 0.12 |
| 3.10 |
| 3.22 |
| (0.41) |
| – |
| (0.41) |
| 19.94 |
|
| 2019 |
15.12 |
| 0.40 |
| 2.20 |
| 2.60 |
| (0.15) |
| (0.44) |
| (0.59) |
| 17.13 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 12.53 |
% |
$67,407 |
| 1.16 |
% |
(c) |
1.50 |
% |
33.0 |
% |
| (22.66) |
| 68,015 |
| 1.10 |
| (c) |
1.98 |
| 34.5 |
|
| 0.58 |
| 90,815 |
| 1.18 |
| (c) |
1.01 |
| 35.7 |
|
| 19.23 |
| 93,839 |
| 1.21 |
| (c),(d) |
0.71 |
| 57.6 |
|
| 17.60 |
| 89,729 |
| 1.20 |
| (c) |
2.46 |
| 112.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Includes
0.01% of expenses associated with the reclaim of foreign taxes paid. The expense
is not subject to the Manager's contractual expense limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
Net
Asset
Value,
Beginning
of
Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From
Investment
Operations |
Dividends
from Net Investment Income |
Total
Dividends and Distributions |
Net
Asset
Value,
End
of Period |
|
GOVERNMENT
&
HIGH
QUALITY
BOND
ACCOUNT |
|
|
|
| |
| Class
1 shares |
|
|
|
| |
| 2023 |
$8.24 |
| $0.23 |
| $0.14 |
| $0.37 |
| ($0.19) |
| ($0.19) |
| $8.42 |
|
| 2022 |
9.48 |
| 0.12 |
| (1.24) |
| (1.12) |
| (0.12) |
| (0.12) |
| 8.24 |
|
| 2021 |
9.83 |
| 0.04 |
| (0.17) |
| (0.13) |
| (0.22) |
| (0.22) |
| 9.48 |
|
| 2020 |
9.81 |
| 0.12 |
| 0.16 |
| 0.28 |
| (0.26) |
| (0.26) |
| 9.83 |
|
| 2019 |
9.47 |
| 0.22 |
| 0.39 |
| 0.61 |
| (0.27) |
| (0.27) |
| 9.81 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
| |
|
|
|
|
| |
| 4.64 |
% |
$121,708 |
| 0.53 |
% |
2.82 |
% |
173.6 |
% |
| (11.81) |
| 138,346 |
| 0.50 |
| 1.32 |
| 281.4 |
|
| (1.32) |
| 197,777 |
| 0.50 |
| 0.40 |
| 360.7 |
|
| 2.87 |
| 227,996 |
| 0.51 |
| 1.22 |
| 124.6 |
|
| 6.45 |
| 241,332 |
| 0.51 |
| 2.26 |
| 22.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
LARGECAP
GROWTH
ACCOUNT
I |
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
|
2023 |
$30.22 |
| $– |
| $12.03 |
| $12.03 |
| $– |
| ($1.83) |
| ($1.83) |
| $40.42 |
|
| 2022 |
52.48 |
| (0.06) |
| (17.54) |
| (17.60) |
| – |
| (4.66) |
| (4.66) |
| 30.22 |
|
| 2021 |
48.46 |
| (0.14) |
| 10.65 |
| 10.51 |
| – |
| (6.49) |
| (6.49) |
| 52.48 |
|
| 2020 |
37.64 |
| (0.06) |
| 13.36 |
| 13.30 |
| (0.01) |
| (2.47) |
| (2.48) |
| 48.46 |
|
| 2019 |
30.10 |
| 0.01 |
| 10.27 |
| 10.28 |
| (0.02) |
| (2.72) |
| (2.74) |
| 37.64 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 40.34 |
% |
$580,072 |
| 0.69 |
% |
(c) |
(0.01) |
% |
28.2 |
% |
| (34.16) |
| 439,493 |
| 0.69 |
| (c) |
(0.16) |
| 28.1 |
|
| 21.89 |
| 706,656 |
| 0.66 |
| (c) |
(0.26) |
| 22.1 |
|
| 36.20 |
| 612,357 |
| 0.69 |
| (c) |
(0.14) |
| 42.2 |
|
| 34.92 |
| 502,653 |
| 0.71 |
| (c) |
0.03 |
| 30.4 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted):
|
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
LARGECAP
S&P
500
INDEX
ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
|
2023 |
$18.24 |
| $0.30 |
| $4.36 |
| $4.66 |
| ($0.30) |
| ($0.87) |
| ($1.17) |
| $21.73 |
|
| 2022 |
25.53 |
| 0.29 |
| (4.92) |
| (4.63) |
| (0.28) |
| (2.38) |
| (2.66) |
| 18.24 |
|
| 2021 |
21.94 |
| 0.27 |
| 5.77 |
| 6.04 |
| (0.35) |
| (2.10) |
| (2.45) |
| 25.53 |
|
| 2020 |
20.19 |
| 0.31 |
| 3.12 |
| 3.43 |
| (0.37) |
| (1.31) |
| (1.68) |
| 21.94 |
|
| 2019 |
16.39 |
| 0.34 |
| 4.66 |
| 5.00 |
| (0.37) |
| (0.83) |
| (1.20) |
| 20.19 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
17.91 |
| 0.25 |
| 4.26 |
| 4.51 |
| (0.25) |
| (0.87) |
| (1.12) |
| 21.30 |
|
| 2022 |
25.13 |
| 0.23 |
| (4.83) |
| (4.60) |
| (0.24) |
| (2.38) |
| (2.62) |
| 17.91 |
|
| 2021 |
21.65 |
| 0.21 |
| 5.69 |
| 5.90 |
| (0.32) |
| (2.10) |
| (2.42) |
| 25.13 |
|
| 2020 |
19.97 |
| 0.26 |
| 3.07 |
| 3.33 |
| (0.34) |
| (1.31) |
| (1.65) |
| 21.65 |
|
| 2019 |
16.24 |
| 0.29 |
| 4.62 |
| 4.91 |
| (0.35) |
| (0.83) |
| (1.18) |
| 19.97 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 25.97 |
% |
| $2,735,181 |
| 0.21 |
% |
1.49 |
% |
2.3 |
% |
| (18.33) |
|
| 2,516,267 |
| 0.24 |
| 1.34 |
| 9.0 |
|
| 28.33 |
|
| 3,162,615 |
| 0.25 |
| 1.11 |
| 2.6 |
|
| 18.08 |
|
| 2,892,842 |
| 0.25 |
| 1.60 |
| 11.1 |
|
| 31.10 |
|
| 2,693,344 |
| 0.25 |
| 1.80 |
| 3.5 |
|
|
|
|
|
|
| |
| 25.68 |
| (c) |
52,310 |
| 0.46 |
| 1.24 |
| 2.3 |
|
| (18.53) |
|
| 42,034 |
| 0.49 |
| 1.10 |
| 9.0 |
|
| 28.05 |
|
| 46,634 |
| 0.50 |
| 0.86 |
| 2.6 |
|
| 17.77 |
|
| 27,801 |
| 0.50 |
| 1.35 |
| 11.1 |
|
| 30.82 |
|
| 15,834 |
| 0.50 |
| 1.56 |
| 3.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
LARGECAP
S&P
500
MANAGED
VOLATILITY
INDEX
ACCOUNT |
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
| 2023 |
$13.88 |
| $0.22 |
| $2.99 |
| $3.21 |
| ($0.20) |
| ($0.94) |
| ($1.14) |
| $15.95 |
|
| 2022 |
18.86 |
| 0.17 |
| (3.34) |
| (3.17) |
| (0.17) |
| (1.64) |
| (1.81) |
| 13.88 |
|
| 2021 |
16.90 |
| 0.15 |
| 4.02 |
| 4.17 |
| (0.23) |
| (1.98) |
| (2.21) |
| 18.86 |
|
| 2020 |
15.06 |
| 0.20 |
| 2.24 |
| 2.44 |
| (0.25) |
| (0.35) |
| (0.60) |
| 16.90 |
|
| 2019 |
12.74 |
| 0.23 |
| 3.36 |
| 3.59 |
| (0.24) |
| (1.03) |
| (1.27) |
| 15.06 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
| |
|
|
|
|
| |
| 23.67 |
% |
$178,475 |
| 0.37 |
% |
1.45 |
% |
5.7 |
% |
| (16.95) |
| 181,155 |
| 0.46 |
| 1.09 |
| 8.3 |
|
| 25.55 |
| 239,895 |
| 0.46 |
| 0.84 |
| 2.6 |
|
| 16.67 |
| 235,112 |
| 0.46 |
| 1.31 |
| 8.9 |
|
| 28.92 |
| 217,779 |
| 0.47 |
| 1.59 |
| 3.8 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
MIDCAP
ACCOUNT |
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
|
2023 |
$51.25 |
| $0.17 |
| $13.04 |
| $13.21 |
| $– |
| ($1.44) |
| ($1.44) |
| $63.02 |
|
| 2022 |
74.76 |
| 0.11 |
| (17.16) |
| (17.05) |
| (0.11) |
| (6.35) |
| (6.46) |
| 51.25 |
|
| 2021 |
63.69 |
| – |
| 15.93 |
| 15.93 |
| (0.09) |
| (4.77) |
| (4.86) |
| 74.76 |
|
| 2020 |
59.93 |
| 0.08 |
| 9.93 |
| 10.01 |
| (0.44) |
| (5.81) |
| (6.25) |
| 63.69 |
|
| 2019 |
48.53 |
| 0.43 |
| 19.93 |
| 20.36 |
| (0.17) |
| (8.79) |
| (8.96) |
| 59.93 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
50.56 |
| 0.04 |
| 12.83 |
| 12.87 |
| – |
| (1.44) |
| (1.44) |
| 61.99 |
|
| 2022 |
73.89 |
| (0.03) |
| (16.95) |
| (16.98) |
| – |
| (6.35) |
| (6.35) |
| 50.56 |
|
| 2021 |
63.08 |
| (0.18) |
| 15.76 |
| 15.58 |
| – |
| (4.77) |
| (4.77) |
| 73.89 |
|
| 2020 |
59.42 |
| (0.07) |
| 9.84 |
| 9.77 |
| (0.30) |
| (5.81) |
| (6.11) |
| 63.08 |
|
| 2019 |
48.19 |
| 0.28 |
| 19.77 |
| 20.05 |
| (0.03) |
| (8.79) |
| (8.82) |
| 59.42 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of Expenses to Average Net
Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 26.08 |
% |
(c) |
$573,406 |
| 0.55 |
% |
0.30 |
% |
8.8 |
% |
| (22.98) |
|
| 554,971 |
| 0.54 |
| 0.19 |
| 15.1 |
|
| 25.53 |
|
| 711,126 |
| 0.53 |
| (0.01) |
| 17.1 |
|
| 18.33 |
| (c) |
604,094 |
| 0.54 |
| 0.14 |
| 12.2 |
|
| 43.10 |
| (c) |
587,854 |
| 0.55 |
| 0.72 |
| 10.5 |
|
|
|
|
|
|
| |
| 25.74 |
|
| 41,324 |
| 0.80 |
| 0.07 |
| 8.8 |
|
| (23.16) |
|
| 32,800 |
| 0.79 |
| (0.05) |
| 15.1 |
|
| 25.20 |
|
| 38,773 |
| 0.78 |
| (0.26) |
| 17.1 |
|
| 18.07 |
|
| 25,643 |
| 0.79 |
| (0.12) |
| 12.2 |
|
| 42.72 |
| (c) |
20,808 |
| 0.80 |
| 0.48 |
| 10.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
PRINCIPAL
CAPITAL
APPRECIATION
ACCOUNT |
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$30.36 |
| $0.30 |
| $7.12 |
| $7.42 |
| ($0.28) |
| ($2.20) |
| ($2.48) |
| $35.30 |
|
| 2022 |
41.87 |
| 0.30 |
| (7.16) |
| (6.86) |
| (0.29) |
| (4.36) |
| (4.65) |
| 30.36 |
|
| 2021 |
34.30 |
| 0.28 |
| 9.13 |
| 9.41 |
| (0.33) |
| (1.51) |
| (1.84) |
| 41.87 |
|
| 2020 |
30.72 |
| 0.31 |
| 5.21 |
| 5.52 |
| (0.41) |
| (1.53) |
| (1.94) |
| 34.30 |
|
| 2019 |
25.86 |
| 0.38 |
| 7.77 |
| 8.15 |
| (0.50) |
| (2.79) |
| (3.29) |
| 30.72 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
29.78 |
| 0.21 |
| 6.98 |
| 7.19 |
| (0.22) |
| (2.20) |
| (2.42) |
| 34.55 |
|
| 2022 |
41.19 |
| 0.21 |
| (7.04) |
| (6.83) |
| (0.22) |
| (4.36) |
| (4.58) |
| 29.78 |
|
| 2021 |
33.81 |
| 0.18 |
| 8.99 |
| 9.17 |
| (0.28) |
| (1.51) |
| (1.79) |
| 41.19 |
|
| 2020 |
30.32 |
| 0.24 |
| 5.13 |
| 5.37 |
| (0.35) |
| (1.53) |
| (1.88) |
| 33.81 |
|
| 2019 |
25.58 |
| 0.30 |
| 7.67 |
| 7.97 |
| (0.44) |
| (2.79) |
| (3.23) |
| 30.32 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of
Net
Investment
Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
| |
|
|
|
|
| |
| 25.15 |
% |
$134,161 |
| 0.65 |
% |
0.90 |
% |
49.6 |
% |
| (16.42) |
121,010 |
| 0.63 |
| 0.85 |
| 53.1 |
|
| 27.82 |
| 163,159 |
| 0.63 |
| 0.73 |
| 30.6 |
|
| 18.72 |
| 147,026 |
| 0.63 |
| 1.03 |
| 36.5 |
|
| 32.49 |
| 143,227 |
| 0.64 |
| 1.27 |
| 29.5 |
|
|
|
|
|
| |
| 24.85 |
| 49,164 |
| 0.90 |
| 0.66 |
| 49.6 |
|
| (16.62) |
33,069 |
| 0.88 |
| 0.63 |
| 53.1 |
|
| 27.50 |
31,088 |
| 0.88 |
| 0.47 |
| 30.6 |
|
| 18.44 |
| 18,688 |
| 0.88 |
| 0.79 |
| 36.5 |
|
| 32.10 |
13,536 |
| 0.89 |
| 1.03 |
| 29.5 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
PRINCIPAL
LIFETIME
STRATEGIC
INCOME
ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
| |
| 2023 |
$10.12 |
| $0.33 |
| $0.76 |
| $1.09 |
| ($0.13) |
| ($0.05) |
| ($0.18) |
| $11.03 |
|
| 2022 |
12.62 |
| 0.28 |
| (1.93) |
| (1.65) |
| (0.37) |
| (0.48) |
| (0.85) |
| 10.12 |
|
| 2021 |
12.84 |
| 0.37 |
| 0.21 |
| 0.58 |
| (0.25) |
| (0.55) |
| (0.80) |
| 12.62 |
|
| 2020 |
11.92 |
| 0.25 |
| 0.96 |
| 1.21 |
| (0.28) |
| (0.01) |
| (0.29) |
| 12.84 |
|
| 2019 |
11.30 |
| 0.33 |
| 1.06 |
| 1.39 |
| (0.29) |
| (0.48) |
| (0.77) |
| 11.92 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 10.79 |
% |
$55,858 |
| 0.05 |
% |
3.15 |
% |
15.3 |
% |
| (13.09) |
| 24,133 |
| 0.03 |
| 2.50 |
| 37.6 |
|
| 4.53 |
| 30,129 |
| 0.02 |
| 2.85 |
| 35.6 |
|
| 10.30 |
| 31,025 |
| 0.03 |
| 2.07 |
| 68.6 |
|
| 12.46 |
| 26,279 |
| 0.06 |
| 2.79 |
| 69.0 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
PRINCIPAL
LIFETIME
2020
ACCOUNT |
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
|
2023 |
$11.62 |
| $0.34 |
| $1.06 |
| $1.40 |
| ($0.33) |
| ($0.19) |
| ($0.52) |
| $12.50 |
|
| 2022 |
15.19 |
| 0.30 |
| (2.47) |
| (2.17) |
| (0.45) |
| (0.95) |
| (1.40) |
| 11.62 |
|
| 2021 |
14.99 |
| 0.42 |
| 0.94 |
| 1.36 |
| (0.26) |
| (0.90) |
| (1.16) |
| 15.19 |
|
| 2020 |
13.90 |
| 0.25 |
| 1.49 |
| 1.74 |
| (0.38) |
| (0.27) |
| (0.65) |
| 14.99 |
|
| 2019 |
12.60 |
| 0.34 |
| 1.90 |
| 2.24 |
| (0.34) |
| (0.60) |
| (0.94) |
| 13.90 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
| |
|
|
|
|
| |
| 12.26 |
% |
$152,073 |
| 0.02 |
% |
2.80 |
% |
14.0 |
% |
| (14.38) |
| 151,551 |
| 0.01 |
| 2.32 |
| 25.4 |
|
| 9.17 |
| 196,334 |
| 0.00 |
| 2.72 |
| 23.3 |
|
| 12.89 |
| 194,167 |
| 0.01 |
| 1.81 |
| 53.4 |
|
| 18.12 |
| 190,475 |
| 0.01 |
| 2.47 |
| 52.7 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
PRINCIPAL
LIFETIME
2030
ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
|
2023 |
$11.70 |
| $0.31 |
| $1.42 |
| $1.73 |
| ($0.22) |
| ($0.26) |
| ($0.48) |
| $12.95 |
|
| 2022 |
15.60 |
| 0.25 |
| (2.87) |
| (2.62) |
| (0.38) |
| (0.90) |
| (1.28) |
| 11.70 |
|
| 2021 |
14.51 |
| 0.43 |
| 1.41 |
| 1.84 |
| (0.21) |
| (0.54) |
| (0.75) |
| 15.60 |
|
| 2020 |
13.12 |
| 0.23 |
| 1.67 |
| 1.90 |
| (0.28) |
| (0.23) |
| (0.51) |
| 14.51 |
|
| 2019 |
11.58 |
| 0.32 |
| 2.18 |
| 2.50 |
| (0.27) |
| (0.69) |
| (0.96) |
| 13.12 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 15.09 |
% |
$276,060 |
| 0.01 |
% |
2.55 |
% |
14.2 |
% |
| (16.84) |
| 227,664 |
| 0.00 |
| 1.89 |
| 25.6 |
|
| 12.79 |
| 262,864 |
| 0.00 |
| 2.78 |
| 26.8 |
|
| 14.89 |
| 228,291 |
| 0.01 |
| 1.77 |
| 52.3 |
|
| 22.01 |
| 182,172 |
| 0.01 |
| 2.47 |
| 35.8 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| PRINCIPAL
LIFETIME 2040 ACCOUNT |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$14.59 |
| $0.34 |
| $2.28 |
| $2.62 |
| ($0.21) |
| ($0.40) |
| ($0.61) |
| $16.60 |
|
| 2022 |
19.94 |
| 0.25 |
| (3.85) |
| (3.60) |
| (0.55) |
| (1.20) |
| (1.75) |
| 14.59 |
|
| 2021 |
18.09 |
| 0.62 |
| 2.13 |
| 2.75 |
| (0.25) |
| (0.65) |
| (0.90) |
| 19.94 |
|
| 2020 |
16.22 |
| 0.29 |
| 2.23 |
| 2.52 |
| (0.32) |
| (0.33) |
| (0.65) |
| 18.09 |
|
| 2019 |
13.94 |
| 0.37 |
| 3.01 |
| 3.38 |
| (0.30) |
| (0.80) |
| (1.10) |
| 16.22 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 18.27 |
% |
$150,890 |
| 0.02 |
% |
2.17 |
% |
21.2 |
% |
| (18.10) |
| 118,055 |
| 0.01 |
| 1.52 |
| 25.2 |
|
| 15.29 |
| 134,172 |
| 0.01 |
| 3.18 |
| 19.9 |
|
| 16.11 |
| 107,137 |
| 0.01 |
| 1.82 |
| 38.9 |
|
| 24.74 |
| 85,405 |
| 0.02 |
| 2.36 |
| 28.8 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| PRINCIPAL
LIFETIME 2050 ACCOUNT |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$13.96 |
| $0.28 |
| $2.52 |
| $2.80 |
| ($0.18) |
| ($0.47) |
| ($0.65) |
| $16.11 |
|
| 2022 |
19.60 |
| 0.20 |
| (3.88) |
| (3.68) |
| (0.59) |
| (1.37) |
| (1.96) |
| 13.96 |
|
| 2021 |
17.47 |
| 0.64 |
| 2.32 |
| 2.96 |
| (0.22) |
| (0.61) |
| (0.83) |
| 19.60 |
|
| 2020 |
15.59 |
| 0.27 |
| 2.24 |
| 2.51 |
| (0.28) |
| (0.35) |
| (0.63) |
| 17.47 |
|
| 2019 |
13.37 |
| 0.32 |
| 3.12 |
| 3.44 |
| (0.29) |
| (0.93) |
| (1.22) |
| 15.59 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
| |
|
|
|
|
| |
| 20.38 |
% |
$70,704 |
| 0.03 |
% |
1.83 |
% |
24.8 |
% |
| (18.81) |
| 56,830 |
| 0.01 |
| 1.22 |
| 33.0 |
|
| 17.02 |
| 68,527 |
| 0.01 |
| 3.37 |
| 28.1 |
|
| 16.68 |
| 49,779 |
| 0.02 |
| 1.75 |
| 32.8 |
|
| 26.39 |
| 38,881 |
| 0.04 |
| 2.11 |
| 24.9 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| PRINCIPAL
LIFETIME 2060 ACCOUNT |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$13.56 |
| $0.28 |
| $2.42 |
| $2.70 |
| ($0.16) |
| ($0.43) |
| ($0.59) |
| $15.67 |
|
| 2022 |
18.81 |
| 0.19 |
| (3.71) |
| (3.52) |
| (0.52) |
| (1.21) |
| (1.73) |
| 13.56 |
|
| 2021 |
16.49 |
| 0.61 |
| 2.33 |
| 2.94 |
| (0.18) |
| (0.44) |
| (0.62) |
| 18.81 |
|
| 2020 |
14.68 |
| 0.25 |
| 2.10 |
| 2.35 |
| (0.22) |
| (0.32) |
| (0.54) |
| 16.49 |
|
| 2019 |
12.32 |
| 0.30 |
| 2.99 |
| 3.29 |
| (0.20) |
| (0.73) |
| (0.93) |
| 14.68 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 20.28 |
% |
$21,432 |
| 0.09 |
% |
| 1.94 |
% |
21.1 |
% |
| (18.78) |
| 15,131 |
| 0.04 |
| (c) |
1.21 |
| 36.5 |
|
| 17.96 |
| 17,280 |
| 0.03 |
| (c) |
3.38 |
| 25.3 |
|
| 16.58 |
| 11,468 |
| 0.07 |
| (c) |
1.73 |
| 58.8 |
|
| 27.24 |
| 8,131 |
| 0.10 |
| (c) |
2.15 |
| 38.6 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| REAL
ESTATE SECURITIES ACCOUNT |
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
| |
| 2023 |
$16.97 |
| $0.44 |
| $1.71 |
| $2.15 |
| ($0.35) |
| ($0.65) |
| ($1.00) |
| $18.12 |
|
| 2022 |
24.82 |
| 0.32 |
| (6.46) |
| (6.14) |
| (0.26) |
| (1.45) |
| (1.71) |
| 16.97 |
|
| 2021 |
19.11 |
| 0.28 |
| 7.26 |
| 7.54 |
| (0.33) |
| (1.50) |
| (1.83) |
| 24.82 |
|
| 2020 |
21.50 |
| 0.36 |
| (1.21) |
| (0.85) |
| (0.39) |
| (1.15) |
| (1.54) |
| 19.11 |
|
| 2019 |
17.86 |
| 0.34 |
| 5.18 |
| 5.52 |
| (0.40) |
| (1.48) |
| (1.88) |
| 21.50 |
|
| Class
2 shares |
|
|
|
|
|
|
| |
| 2023 |
17.00 |
| 0.40 |
| 1.71 |
| 2.11 |
| (0.31) |
| (0.65) |
| (0.96) |
| 18.15 |
|
| 2022 |
24.86 |
| 0.28 |
| (6.47) |
| (6.19) |
| (0.22) |
| (1.45) |
| (1.67) |
| 17.00 |
|
| 2021 |
19.16 |
| 0.23 |
| 7.26 |
| 7.49 |
| (0.29) |
| (1.50) |
| (1.79) |
| 24.86 |
|
| 2020 |
21.56 |
| 0.34 |
| (1.24) |
| (0.90) |
| (0.35) |
| (1.15) |
| (1.50) |
| 19.16 |
|
| 2019 |
17.92 |
| 0.30 |
| 5.18 |
| 5.48 |
| (0.36) |
| (1.48) |
| (1.84) |
| 21.56 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 13.33 |
% |
$143,715 |
| 0.80 |
% |
| 2.57 |
% |
16.2 |
% |
| (25.41) |
| 124,969 |
| 0.79 |
|
| 1.59 |
| 18.5 |
|
| 40.44 |
| 174,922 |
| 0.82 |
|
| 1.25 |
| 23.1 |
|
| (3.42) |
| 129,617 |
| 0.83 |
|
| 1.89 |
| 35.4 |
|
| 31.26 |
| 155,569 |
| 0.88 |
| (c) |
1.62 |
| 19.3 |
|
|
|
|
|
|
| |
| 13.01 |
| 10,644 |
| 1.05 |
|
| 2.33 |
| 16.2 |
|
| (25.58) |
| 9,358 |
| 1.04 |
|
| 1.38 |
| 18.5 |
|
| 40.04 |
| 11,650 |
| 1.07 |
|
| 1.02 |
| 23.1 |
|
| (3.65) |
| 6,965 |
| 1.08 |
|
| 1.80 |
| 35.4 |
|
| 30.94 |
| 6,361 |
| 1.13 |
| (c) |
1.43 |
| 19.3 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SAM
BALANCED PORTFOLIO |
|
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
|
2023 |
$12.71 |
| $0.28 |
| $1.69 |
| $1.97 |
| ($0.33) |
| ($0.58) |
| ($0.91) |
| $13.77 |
|
| 2022 |
18.11 |
| 0.33 |
| (3.23) |
| (2.90) |
| (0.38) |
| (2.12) |
| (2.50) |
| 12.71 |
|
| 2021 |
16.51 |
| 0.35 |
| 1.91 |
| 2.26 |
| (0.28) |
| (0.38) |
| (0.66) |
| 18.11 |
|
| 2020 |
15.67 |
| 0.26 |
| 1.43 |
| 1.69 |
| (0.35) |
| (0.50) |
| (0.85) |
| 16.51 |
|
| 2019 |
13.90 |
| 0.31 |
| 2.43 |
| 2.74 |
| (0.40) |
| (0.57) |
| (0.97) |
| 15.67 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
12.50 |
| 0.24 |
| 1.65 |
| 1.89 |
| (0.29) |
| (0.58) |
| (0.87) |
| 13.52 |
|
| 2022 |
17.84 |
| 0.29 |
| (3.17) |
| (2.88) |
| (0.34) |
| (2.12) |
| (2.46) |
| 12.50 |
|
| 2021 |
16.29 |
| 0.32 |
| 1.85 |
| 2.17 |
| (0.24) |
| (0.38) |
| (0.62) |
| 17.84 |
|
| 2020 |
15.48 |
| 0.23 |
| 1.39 |
| 1.62 |
| (0.31) |
| (0.50) |
| (0.81) |
| 16.29 |
|
| 2019 |
13.74 |
| 0.28 |
| 2.39 |
| 2.67 |
| (0.36) |
| (0.57) |
| (0.93) |
| 15.48 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 16.00 |
% |
$449,622 |
| 0.24 |
% |
| 2.09 |
% |
26.7 |
% |
| (16.15) |
| 438,565 |
| 0.23 |
|
| 2.17 |
| 43.2 |
|
| 13.74 |
| 588,703 |
| 0.23 |
|
| 2.00 |
| 38.9 |
|
| 11.28 |
| 568,806 |
| 0.23 |
|
| 1.74 |
| 18.9 |
|
| 20.01 |
| 574,960 |
| 0.24 |
| (c) |
2.06 |
| 23.0 |
|
|
|
|
|
|
| |
| 15.65 |
| 140,962 |
| 0.49 |
|
| 1.87 |
| 26.7 |
|
| (16.29) |
| 129,635 |
| 0.48 |
|
| 1.98 |
| 43.2 |
|
| 13.39 |
| 156,241 |
| 0.48 |
|
| 1.83 |
| 38.9 |
|
| 10.96 |
| 134,181 |
| 0.48 |
|
| 1.56 |
| 18.9 |
|
| 19.74 |
| 123,870 |
| 0.49 |
| (c) |
1.89 |
| 23.0 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SAM
CONSERVATIVE BALANCED PORTFOLIO |
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$10.23 |
| $0.28 |
| $0.93 |
| $1.21 |
| ($0.31) |
| ($0.08) |
| ($0.39) |
| $11.05 |
|
| 2022 |
13.61 |
| 0.30 |
| (2.25) |
| (1.95) |
| (0.30) |
| (1.13) |
| (1.43) |
| 10.23 |
|
| 2021 |
12.80 |
| 0.29 |
| 0.95 |
| 1.24 |
| (0.25) |
| (0.18) |
| (0.43) |
| 13.61 |
|
| 2020 |
12.19 |
| 0.24 |
| 0.89 |
| 1.13 |
| (0.29) |
| (0.23) |
| (0.52) |
| 12.80 |
|
| 2019 |
11.05 |
| 0.28 |
| 1.45 |
| 1.73 |
| (0.35) |
| (0.24) |
| (0.59) |
| 12.19 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
10.05 |
| 0.25 |
| 0.92 |
| 1.17 |
| (0.28) |
| (0.08) |
| (0.36) |
| 10.86 |
|
| 2022 |
13.40 |
| 0.27 |
| (2.22) |
| (1.95) |
| (0.27) |
| (1.13) |
| (1.40) |
| 10.05 |
|
| 2021 |
12.61 |
| 0.26 |
| 0.93 |
| 1.19 |
| (0.22) |
| (0.18) |
| (0.40) |
| 13.40 |
|
| 2020 |
12.03 |
| 0.22 |
| 0.86 |
| 1.08 |
| (0.27) |
| (0.23) |
| (0.50) |
| 12.61 |
|
| 2019 |
10.91 |
| 0.25 |
| 1.43 |
| 1.68 |
| (0.32) |
| (0.24) |
| (0.56) |
| 12.03 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 11.97 |
% |
$133,470 |
| 0.25 |
% |
| 2.60 |
% |
28.4 |
% |
| (14.45) |
| 134,379 |
| 0.24 |
|
| 2.57 |
| 52.1 |
|
| 9.71 |
| 169,338 |
| 0.23 |
|
| 2.13 |
| 41.2 |
|
| 9.60 |
| 164,411 |
| 0.24 |
|
| 2.03 |
| 23.4 |
|
| 15.88 |
| 164,095 |
| 0.24 |
| (c) |
2.32 |
| 30.8 |
|
|
|
|
|
|
| |
| 11.80 |
| 31,903 |
| 0.50 |
|
| 2.41 |
| 28.4 |
|
| (14.69) |
| 28,916 |
| 0.49 |
|
| 2.35 |
| 52.1 |
|
| 9.48 |
| 34,318 |
| 0.48 |
|
| 1.95 |
| 41.2 |
|
| 9.25 |
| 30,178 |
| 0.49 |
|
| 1.85 |
| 23.4 |
|
| 15.66 |
| 25,380 |
| 0.49 |
| (c) |
2.15 |
| 30.8 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SAM
CONSERVATIVE GROWTH PORTFOLIO |
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
| 2023 |
$17.65 |
| $0.31 |
| $3.01 |
| $3.32 |
| ($0.34) |
| ($1.01) |
| ($1.35) |
| $19.62 |
|
| 2022 |
24.82 |
| 0.36 |
| (4.75) |
| (4.39) |
| (0.45) |
| (2.33) |
| (2.78) |
| 17.65 |
|
| 2021 |
21.75 |
| 0.44 |
| 3.40 |
| 3.84 |
| (0.29) |
| (0.48) |
| (0.77) |
| 24.82 |
|
| 2020 |
19.94 |
| 0.28 |
| 2.22 |
| 2.50 |
| (0.37) |
| (0.32) |
| (0.69) |
| 21.75 |
|
| 2019 |
17.16 |
| 0.36 |
| 3.68 |
| 4.04 |
| (0.36) |
| (0.90) |
| (1.26) |
| 19.94 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
17.31 |
| 0.27 |
| 2.94 |
| 3.21 |
| (0.30) |
| (1.01) |
| (1.31) |
| 19.21 |
|
| 2022 |
24.39 |
| 0.31 |
| (4.66) |
| (4.35) |
| (0.40) |
| (2.33) |
| (2.73) |
| 17.31 |
|
| 2021 |
21.40 |
| 0.39 |
| 3.32 |
| 3.71 |
| (0.24) |
| (0.48) |
| (0.72) |
| 24.39 |
|
| 2020 |
19.63 |
| 0.24 |
| 2.17 |
| 2.41 |
| (0.32) |
| (0.32) |
| (0.64) |
| 21.40 |
|
| 2019 |
16.92 |
| 0.32 |
| 3.61 |
| 3.93 |
| (0.32) |
| (0.90) |
| (1.22) |
| 19.63 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 19.37 |
% |
$205,429 |
| 0.24 |
% |
| 1.66 |
% |
28.0 |
% |
| (17.79) |
| 190,273 |
| 0.23 |
|
| 1.75 |
| 43.0 |
|
| 17.75 |
| 242,713 |
| 0.23 |
|
| 1.85 |
| 43.6 |
|
| 12.95 |
| 226,009 |
| 0.23 |
|
| 1.46 |
| 20.7 |
|
| 24.06 |
| 213,346 |
| 0.24 |
| (c) |
1.89 |
| 16.2 |
|
|
|
|
|
|
| |
| 19.05 |
| 181,031 |
| 0.49 |
|
| 1.45 |
| 28.0 |
|
| (17.97) |
| 155,472 |
| 0.48 |
|
| 1.52 |
| 43.0 |
|
| 17.44 |
| 192,114 |
| 0.48 |
|
| 1.67 |
| 43.6 |
|
| 12.68 |
| 158,606 |
| 0.48 |
|
| 1.28 |
| 20.7 |
|
| 23.68 |
| 143,501 |
| 0.49 |
| (c) |
1.68 |
| 16.2 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SAM
FLEXIBLE INCOME PORTFOLIO |
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
|
2023 |
$10.17 |
| $0.30 |
| $0.63 |
| $0.93 |
| ($0.35) |
| $– |
| ($0.35) |
| $10.75 |
|
| 2022 |
13.17 |
| 0.32 |
| (2.03) |
| (1.71) |
| (0.35) |
| (0.94) |
| (1.29) |
| 10.17 |
|
| 2021 |
12.81 |
| 0.32 |
| 0.55 |
| 0.87 |
| (0.31) |
| (0.20) |
| (0.51) |
| 13.17 |
|
| 2020 |
12.58 |
| 0.31 |
| 0.57 |
| 0.88 |
| (0.36) |
| (0.29) |
| (0.65) |
| 12.81 |
|
| 2019 |
11.86 |
| 0.33 |
| 1.22 |
| 1.55 |
| (0.46) |
| (0.37) |
| (0.83) |
| 12.58 |
|
|
Class
2
shares |
|
|
|
|
|
|
| |
|
2023 |
10.02 |
| 0.28 |
| 0.61 |
| 0.89 |
| (0.32) |
| – |
| (0.32) |
| 10.59 |
|
| 2022 |
13.00 |
| 0.29 |
| (2.01) |
| (1.72) |
| (0.32) |
| (0.94) |
| (1.26) |
| 10.02 |
|
| 2021 |
12.66 |
| 0.30 |
| 0.53 |
| 0.83 |
| (0.29) |
| (0.20) |
| (0.49) |
| 13.00 |
|
| 2020 |
12.44 |
| 0.28 |
| 0.56 |
| 0.84 |
| (0.33) |
| (0.29) |
| (0.62) |
| 12.66 |
|
| 2019 |
11.74 |
| 0.31 |
| 1.19 |
| 1.50 |
| (0.43) |
| (0.37) |
| (0.80) |
| 12.44 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 9.37 |
% |
| $99,003 |
| 0.25 |
% |
2.87 |
% |
24.8 |
% |
| (13.11) |
|
| 108,390 |
| 0.24 |
| 2.82 |
| 54.1 |
|
| 6.89 |
|
| 148,266 |
| 0.23 |
| 2.41 |
| 44.0 |
|
| 7.27 |
|
| 149,396 |
| 0.24 |
| 2.51 |
| 38.6 |
|
| 13.25 |
|
| 157,922 |
| 0.24 |
| 2.65 |
| 37.4 |
|
|
|
|
|
|
| |
| 9.21 |
| (c) |
37,028 |
| 0.50 |
| 2.72 |
| 24.8 |
|
| (13.37) |
|
| 34,633 |
| 0.49 |
| 2.58 |
| 54.1 |
|
| 6.61 |
|
| 45,586 |
| 0.48 |
| 2.31 |
| 44.0 |
|
| 7.03 |
|
| 34,866 |
| 0.49 |
| 2.31 |
| 38.6 |
|
| 12.97 |
|
| 30,663 |
| 0.49 |
| 2.46 |
| 37.4 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SAM
STRATEGIC GROWTH PORTFOLIO |
|
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
|
2023 |
$19.76 |
| $0.28 |
| $3.95 |
| $4.23 |
| ($0.31) |
| ($0.80) |
| ($1.11) |
| $22.88 |
|
| 2022 |
28.09 |
| 0.33 |
| (5.59) |
| (5.26) |
| (0.52) |
| (2.55) |
| (3.07) |
| 19.76 |
|
| 2021 |
24.17 |
| 0.53 |
| 4.24 |
| 4.77 |
| (0.26) |
| (0.59) |
| (0.85) |
| 28.09 |
|
| 2020 |
21.85 |
| 0.26 |
| 2.96 |
| 3.22 |
| (0.38) |
| (0.52) |
| (0.90) |
| 24.17 |
|
| 2019 |
18.36 |
| 0.39 |
| 4.54 |
| 4.93 |
| (0.33) |
| (1.11) |
| (1.44) |
| 21.85 |
|
| Class
2 shares |
|
|
|
|
|
|
| |
|
2023 |
19.39 |
| 0.22 |
| 3.88 |
| 4.10 |
| (0.26) |
| (0.80) |
| (1.06) |
| 22.43 |
|
| 2022 |
27.62 |
| 0.27 |
| (5.49) |
| (5.22) |
| (0.46) |
| (2.55) |
| (3.01) |
| 19.39 |
|
| 2021 |
23.80 |
| 0.46 |
| 4.16 |
| 4.62 |
| (0.21) |
| (0.59) |
| (0.80) |
| 27.62 |
|
| 2020 |
21.53 |
| 0.22 |
| 2.91 |
| 3.13 |
| (0.34) |
| (0.52) |
| (0.86) |
| 23.80 |
|
| 2019 |
18.11 |
| 0.34 |
| 4.47 |
| 4.81 |
| (0.28) |
| (1.11) |
| (1.39) |
| 21.53 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
Total
Return(b) |
Net
Assets,
End of Period (in thousands) |
Ratio
of
Expenses
to
Average
Net
Assets |
Ratio
of Net Investment Income
to
Average
Net
Assets |
Portfolio
Turnover
Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 21.86 |
% |
$203,367 |
| 0.24 |
% |
| 1.31 |
% |
30.2 |
% |
| (18.78) |
| 174,041 |
| 0.23 |
|
| 1.45 |
| 40.8 |
|
| 19.86 |
| 223,578 |
| 0.23 |
|
| 1.97 |
| 35.9 |
|
| 15.40 |
| 187,904 |
| 0.23 |
|
| 1.24 |
| 22.3 |
|
| 27.44 |
| 169,489 |
| 0.24 |
| (c) |
1.89 |
| 20.3 |
|
|
|
|
|
|
| |
| 21.58 |
| 196,700 |
| 0.49 |
|
| 1.07 |
| 30.2 |
|
| (18.98) |
| 164,885 |
| 0.48 |
|
| 1.22 |
| 40.8 |
|
| 19.54 |
| 205,369 |
| 0.48 |
|
| 1.76 |
| 35.9 |
|
| 15.13 |
| 167,706 |
| 0.48 |
|
| 1.09 |
| 22.3 |
|
| 27.13 |
| 145,924 |
| 0.49 |
| (c) |
1.67 |
| 20.3 |
|
(a)Calculated
based
on
average
shares
outstanding
during
the
period.
(b)Total
return
does
not
reflect
charges
attributable
to
separate
accounts.
Inclusion
of
these
charges
would
reduce
the
amounts
shown.
(c)Reflects
Manager's
contractual
expense
limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
SHORT-TERM
INCOME ACCOUNT |
|
|
|
|
|
| |
|
Class
1
shares |
|
|
|
|
|
|
| |
| 2023 |
$2.41 |
| $0.08 |
| $0.05 |
| $0.13 |
| ($0.04) |
| $– |
| ($0.04) |
| $2.50 |
|
| 2022 |
2.53 |
| 0.04 |
| (0.13) |
| (0.09) |
| (0.03) |
| – |
| (0.03) |
| 2.41 |
|
| 2021 |
2.60 |
| 0.03 |
| (0.05) |
| (0.02) |
| (0.04) |
| (0.01) |
| (0.05) |
| 2.53 |
|
| 2020 |
2.57 |
| 0.04 |
| 0.05 |
| 0.09 |
| (0.06) |
| – |
| (0.06) |
| 2.60 |
|
| 2019 |
2.52 |
| 0.06 |
| 0.06 |
| 0.12 |
| (0.07) |
| – |
| (0.07) |
| 2.57 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 5.60 |
% |
$135,924 |
| 0.43 |
% |
| 3.40 |
% |
38.7 |
% |
| (3.45) |
| 134,122 |
| 0.46 |
|
| 1.74 |
| 57.7 |
|
| (0.72) |
| 140,532 |
| 0.47 |
|
| 1.09 |
| 56.7 |
|
| 3.36 |
| 157,019 |
| 0.51 |
| (c) |
1.61 |
| 73.7 |
|
| 4.70 |
| 130,852 |
| 0.51 |
| (c) |
2.31 |
| 54.2 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Selected
data
for
a
share
of
Capital
Stock
outstanding
throughout
each
year
ended
December
31
(except
as
noted): |
|
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
| SMALLCAP
ACCOUNT |
|
|
|
|
|
|
| |
| Class
1 shares |
|
|
|
|
|
|
| |
|
2023 |
$13.03 |
| $0.05 |
| $1.98 |
| $2.03 |
| ($0.04) |
| $– |
| ($0.04) |
| $15.02 |
|
| 2022 |
20.05 |
| 0.05 |
| (4.08) |
| (4.03) |
| (0.01) |
| (2.98) |
| (2.99) |
13.03 |
| 2021 |
17.26 |
| (0.01) |
| 3.48 |
| 3.47 |
| (0.06) |
| (0.62) |
| (0.68) |
20.05 |
| 2020 |
15.33 |
| 0.03 |
| 3.03 |
| 3.06 |
| (0.07) |
| (1.06) |
| (1.13) |
17.26 |
| 2019 |
14.30 |
| 0.08 |
| 3.67 |
| 3.75 |
| (0.06) |
| (2.66) |
| (2.72) |
15.33 |
| Class
2 shares |
|
|
|
|
|
|
| |
|
2023 |
12.91 |
| 0.02 |
| 1.96 |
| 1.98 |
| (0.01) |
| – |
| (0.01) |
14.88 |
| 2022 |
19.93 |
| 0.01 |
| (4.05) |
| (4.04) |
| – |
| (2.98) |
| (2.98) |
12.91 |
| 2021 |
17.17 |
| (0.06) |
| 3.47 |
| 3.41 |
| (0.03) |
| (0.62) |
| (0.65) |
19.93 |
| 2020 |
15.26 |
| – |
| 3.01 |
| 3.01 |
| (0.04) |
| (1.06) |
| (1.10) |
17.17 |
| 2019 |
14.24 |
| 0.04 |
| 3.66 |
| 3.70 |
| (0.02) |
| (2.66) |
| (2.68) |
15.26 |
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
| |
|
|
|
|
|
| |
| 15.53 |
% |
(c) |
$166,600 |
| 0.85 |
% |
0.38 |
% |
24.6 |
% |
| (20.63) |
| (c) |
156,903 |
| 0.84 |
| 0.32 |
| 18.0 |
|
| 20.12 |
|
| 213,890 |
| 0.82 |
| (0.04) |
| 36.6 |
|
| 22.20 |
|
| 195,848 |
| 0.84 |
| 0.24 |
| 38.8 |
|
| 27.40 |
|
| 184,434 |
| 0.84 |
| 0.53 |
| 34.7 |
|
|
|
|
|
|
| |
| 15.39 |
| (c) |
9,225 |
| 1.10 |
| 0.13 |
| 24.6 |
|
| (20.88) |
|
| 8,383 |
| 1.09 |
| 0.07 |
| 18.0 |
|
| 19.86 |
|
| 10,497 |
| 1.07 |
| (0.29) |
| 36.6 |
|
| 21.87 |
|
| 8,414 |
| 1.09 |
| (0.01) |
| 38.8 |
|
| 27.12 |
|
| 6,829 |
| 1.09 |
| 0.28 |
| 34.7 |
|
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
U.S.
LARGECAP
BUFFER
JANUARY
ACCOUNT |
|
|
|
|
|
| |
|
Class
2
shares |
|
|
|
|
|
|
| |
| 2023 |
$9.99 |
| $0.05 |
| $1.90 |
| $1.95 |
| ($0.07) |
| ($1.80) |
| ($1.87) |
| $10.07 |
|
| 2022(f) |
10.00 |
| – |
| (0.01) |
| (0.01) |
| – |
| – |
| – |
| 9.99 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| 19.42 |
% |
(c) |
$58,333 |
| 0.98 |
% |
(d),(e) |
0.47 |
% |
| 136.3 |
% |
|
| 0.00 |
| (c),(g) |
26,581 |
| 0.95 |
| (d),(h) |
3.20 |
| (h) |
0.0 |
| (h) |
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
(d)Reflects
Manager's contractual expense limit.
(e)Includes
0.03% of interest expense associated with borrowings. The expense is not subject
to the Manager's contractual expense limit.
(f)Period
from December 28, 2022, date operations commenced, through December 31,
2022.
(g)Total
return amounts have not been annualized.
(h)Computed
on an annualized basis.
|
|
| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
U.S.
LARGECAP
BUFFER
APRIL
ACCOUNT |
|
|
|
|
|
| |
|
Class
2
shares |
|
|
|
|
|
|
| |
| 2023(b) |
$10.00 |
| $0.03 |
| $1.25 |
| $1.28 |
| ($0.06) |
| ($1.32) |
| ($1.38) |
| $9.90 |
|
|
|
| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| Total
Return |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
| 12.87 |
% |
(c),(d) |
$22,730 |
| 0.98 |
% |
(e),(f),(g) |
0.43 |
% |
(e) |
182.4 |
% |
(e) |
(a)Calculated
based on average shares outstanding during the period.
(b)Period
from March 29, 2023, date operations commenced, through December 31,
2023.
(c)Total
return amounts have not been annualized.
(d)Total
return is calculated using the traded net asset value which may differ from the
reported net asset value. The traded net asset value is the net asset value
which a shareholder would have paid or received from a subscription or
redemption.
(e)Computed
on an annualized basis.
(f)Reflects
Manager's contractual expense limit.
(g)Includes
0.03% of interest expense associated with borrowings. The expense is not subject
to the Manager's contractual expense limit.
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|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
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| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
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| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
U.S.
LARGECAP
BUFFER
JULY
ACCOUNT |
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| |
|
Class
2
shares |
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|
|
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| |
| 2023 |
$10.16 |
| $0.07 |
| $1.78 |
| $1.85 |
| ($0.04) |
| ($0.30) |
| ($0.34) |
| $11.67 |
|
| 2022(e) |
10.00 |
| 0.04 |
| 0.15 |
| 0.19 |
| (0.03) |
| – |
| (0.03) |
| 10.16 |
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FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
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| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
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| |
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| 18.23 |
% |
| $54,229 |
| 0.96 |
% |
(c),(d) |
0.61 |
% |
| 69.3 |
% |
|
| 1.93 |
| (f) |
26,247 |
| 0.95 |
| (c),(g) |
0.72 |
| (g) |
20.0 |
| (g) |
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Includes
0.01% of interest expense associated with borrowings. The expense is not subject
to the Manager's contractual expense limit.
(e)Period
from June 29, 2022, date operations commenced, through December 31,
2022.
(f)Total
return amounts have not been annualized.
(g)Computed
on an annualized basis.
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| |
|
FINANCIAL
HIGHLIGHTS
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
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| |
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| |
| Selected
data for a share of Capital Stock outstanding throughout each year ended
December 31 (except as noted): |
|
|
|
|
|
|
|
|
| |
|
| Net
Asset Value, Beginning of Period |
Net
Investment Income (Loss)(a) |
Net
Realized and Unrealized Gain (Loss) on Investments |
Total
From Investment Operations |
Dividends
from Net Investment Income |
Distributions
from Realized Gains |
Total
Dividends and Distributions |
Net
Asset Value, End of Period |
|
U.S.
LARGECAP
BUFFER
OCTOBER
ACCOUNT |
|
|
|
|
|
| |
|
Class
2
shares |
|
|
|
|
|
|
| |
| 2023 |
$10.51 |
| $0.05 |
| $1.98 |
| $2.03 |
| ($0.05) |
| ($0.79) |
| ($0.84) |
| $11.70 |
|
| 2022(e) |
10.00 |
| 0.02 |
| 0.51 |
| 0.53 |
| (0.02) |
| – |
| (0.02) |
| 10.51 |
|
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| |
|
FINANCIAL
HIGHLIGHTS (continued)
PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC. |
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| Total
Return(b) |
Net
Assets, End of Period (in thousands) |
Ratio
of Expenses to Average Net Assets |
Ratio
of Net Investment Income
to Average Net Assets |
Portfolio
Turnover Rate |
|
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| |
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| |
| 19.45 |
% |
| $18,800 |
| 0.97 |
% |
(c),(d) |
0.47 |
% |
| 47.4 |
% |
|
| 5.29 |
| (f) |
17,978 |
| 0.99 |
| (c),(g),(h) |
0.68 |
| (g) |
180.0 |
| (g) |
(a)Calculated
based on average shares outstanding during the period.
(b)Total
return does not reflect charges attributable to separate accounts. Inclusion of
these charges would reduce the amounts shown.
(c)Reflects
Manager's contractual expense limit.
(d)Includes
0.02% of interest expense associated with borrowings. The expense is not subject
to the Manager's contractual expense limit.
(e)Period
from September 29, 2022, date operations commenced, through December 31,
2022.
(f)Total
return amounts have not been annualized.
(g)Computed
on an annualized basis.
(h)Includes
0.04% of interest expense associated with borrowings. The expense is not subject
to the Manager's contractual expense limit.
ADDITIONAL
INFORMATION
Additional
information about the Funds is available in the SAI dated May 1, 2024, which is
incorporated by reference into this Prospectus.
Additional information about each Fund’s investments is available in the
Registrant’s Annual and Semi-Annual Reports to Shareholders. In the Registrant’s
Annual Report, you will find a discussion of the market conditions and
investment strategies that significantly affected each Fund’s performance during
the last fiscal year. The SAI and the Registrant’s Annual and Semi-Annual
Reports can be obtained free of charge by writing Principal Variable Contracts
Funds, Inc., P.O. Box 219971, Kansas City, MO 64121-9971. In addition, the
Registrant makes its SAI and Annual and Semi-Annual Reports available, free of
charge, on www.PrincipalAM.com/PVCProspectuses. To request this and other
information about the Funds and to make shareholder inquiries, telephone
1-800-222-5852.
Reports
and other information about the Registrant are available on the EDGAR Database
on the SEC’s internet site at www.sec.gov. Copies of this information may be
obtained, upon payment of a duplicating fee, by electronic request at the
following e-mail address: [email protected].
The
Registrant has entered into a management agreement with PGI. The Registrant
and/or PGI, on behalf of the Funds, enter into contractual arrangements with
various parties, including, among others, the Funds' sub-advisors, distributor,
transfer agent, and custodian, who provide services to the Funds. These
arrangements are between the Registrant and/or PGI and the applicable service
provider. Shareholders are not parties to, or intended to be third-party
beneficiaries of, any of these arrangements. Such arrangements are not intended
to create in any individual shareholder or group of shareholders any right,
including the right to enforce such arrangements against the service providers
or to seek any remedy thereunder against PGI or any other service provider,
either directly or on behalf of the Registrant or any Fund.
This
Prospectus provides information that you should consider in determining whether
to purchase shares of a Fund. This Prospectus, the SAI, or the contracts that
are exhibits to the Registrant’s registration statement are not intended to give
rise to any agreement or contract between the Registrant and/or any Fund and any
investor, or give rise to any contract or other rights in any individual
shareholder, group of shareholders, or other person other than any rights
conferred explicitly by federal or state securities laws that may not be
waived.
The
U.S. government does not insure or guarantee an investment in any of the Funds.
Shares
of the Funds are not deposits or obligations of, or guaranteed or endorsed by,
Principal Bank or any other financial institution, nor are shares of the Funds
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
Principal
Variable Contracts Funds, Inc. SEC File 811-01944
