ck0000012601-20231231

Registration No. 002-35570

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 130

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 130

PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.

(Registrant Exact Name as Specified in Charter)

711 High Street

Des Moines, IA 50392

(Address of Principal Executive Offices)

(515) 247-5419

(Registrant's Telephone Number, including Area Code)


Laura B. Latham
The Principal Financial Group
Des Moines, Iowa 50392
(Name and Address of Agent for Service)

Approximate date of proposed public offering:

As soon as practicable after the effective date of this Registration Statement.

It is proposed that this filing will become effective (check appropriate box):

☐ immediately upon filing pursuant to paragraph (b)

☒ on May 1, 2024 pursuant to paragraph (b)

☐ 60 days after filing pursuant to paragraph (a)

☐ on (date) pursuant to paragraph (a)

☐ 75 days after filing pursuant to paragraph (a)(2)

☐ on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

☐ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of securities being registered:

Classes 1, 2, and 3 shares

EXPLANATORY NOTE

Principal Variable Contracts Funds, Inc. (the "Registrant") is filing this Amendment as an annual update to the Registrant’s Registration Statement. The Amendment includes the following: (1) facing page; (2) Part A (Prospectus for Classes 1, 2, and 3 shares); (3) Part B (Statement of Additional Information); (4) Part C; and (5) signature pages.


PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.

(“PVC” or the “Registrant”)

Class 1 Shares
Class 2 Shares
Class 3 Shares

The date of this Prospectus is May 1, 2024.

ACCOUNTS OF THE REGISTRANT
(each, a "Fund" and, together, the "Funds")



Equity Accounts						Asset Allocation Accounts
Blue Chip Account (Class 3)						Diversified Balanced Account (Class 1, Class 2, & Class 3)
Diversified International Account (Class 1)						Diversified Balanced Adaptive Allocation Account (Class 2 & Class 3)
Equity Income Account (Class 1, Class 2, & Class 3)						Diversified Balanced Strategic Allocation Account (Class 2 & Class 3)
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
Principal Capital Appreciation Account (Class 1 & Class 2)						Strategic Income Account (Class 1)
Real Estate Securities Account (Class 1 & Class 2)						2020 Account (Class 1)
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")
						SAM Balanced Portfolio (Class 1 & Class 2)
Fixed-Income Accounts						SAM Conservative Balanced Portfolio (Class 1 & Class 2)
Bond Market Index Account (Class 1)						SAM Conservative Growth Portfolio (Class 1 & Class 2)
Core Plus Bond Account (Class 1)						SAM Flexible Income Portfolio (Class 1 & Class 2)
Government & High Quality Bond Account (Class 1)						SAM Strategic Growth Portfolio (Class 1 & Class 2)
Short-Term Income Account (Class 1)


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.


TABLE OF CONTENTS
			PAGE
FUND SUMMARIES
Blue Chip Account			4
Bond Market Index Account			7
Core Plus Bond Account			10
Diversified Balanced Account			14
Diversified Balanced Adaptive Allocation Account			19
Diversified Balanced Strategic Allocation Account			24
Diversified Growth Account			29
Diversified Growth Adaptive Allocation Account			34
Diversified Growth Strategic Allocation Account			39
Diversified Income Account			44
Diversified International Account			49
Equity Income Account			52
Global Emerging Markets Account			55
Government & High Quality Bond Account			59
LargeCap Growth Account I			63
LargeCap S&P 500 Index Account			67
LargeCap S&P 500 Managed Volatility Index Account			70
MidCap Account			74
Principal Capital Appreciation Account			77
Principal LifeTime Strategic Income Account			80
Principal LifeTime 2020 Account			85
Principal LifeTime 2030 Account			91
Principal LifeTime 2040 Account			97
Principal LifeTime 2050 Account			102
Principal LifeTime 2060 Account			107
Real Estate Securities Account			112
SAM (Strategic Asset Management) Balanced Portfolio			116
SAM (Strategic Asset Management) Conservative Balanced Portfolio			120
SAM (Strategic Asset Management) Conservative Growth Portfolio			124
SAM (Strategic Asset Management) Flexible Income Portfolio			128
SAM (Strategic Asset Management) Strategic Growth Portfolio			132
Short-Term Income Account			136
SmallCap Account			140
U.S. LargeCap Buffer January Account			143
U.S. LargeCap Buffer April Account			151
U.S. LargeCap Buffer July Account			158
U.S. LargeCap Buffer October Account			166
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS			174
PORTFOLIO HOLDINGS INFORMATION			200
MANAGEMENT OF THE FUNDS			201
PRICING OF FUND SHARES			206
PURCHASE OF FUND SHARES			207
SALE OF FUND SHARES			208
DIVIDENDS AND DISTRIBUTIONS			209
FREQUENT PURCHASES AND REDEMPTIONS			209


TABLE OF CONTENTS
			PAGE
TAX CONSIDERATIONS			210
ONGOING FEES			210
DISTRIBUTION PLANS AND INTERMEDIARY COMPENSATION			211
FUND ACCOUNT INFORMATION			212
APPENDIX A – DESCRIPTION OF BOND RATINGS			A-1
APPENDIX B – FINANCIAL HIGHLIGHTS			B-1
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)


			Share Class
			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:


	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


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


	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

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			0.14%
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:


	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

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.

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

Total Returns as of December 31


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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

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

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.

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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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.

Principal Risks

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

•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.

•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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

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

Principal Risks of Investing in a Fund of Funds

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

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

Principal Investment Strategies

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

Principal Risks of Investing in a Fund of Funds

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.

•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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

DIVERSIFIED GROWTH ACCOUNT

Objective

The Fund seeks to provide long-term capital appreciation.

Fees and Expenses of the Fund

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


	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

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

DIVERSIFIED INTERNATIONAL ACCOUNT

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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

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

•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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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


	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

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

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

GLOBAL EMERGING MARKETS ACCOUNT

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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

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

•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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

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

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

LARGECAP GROWTH ACCOUNT I

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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


	1 year	3 years	5 years	10 years
LargeCap Growth Account I - Class 1	$70	$225	$393	$881

Portfolio Turnover

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

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.

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.

Performance

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%

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

Payments to Broker-Dealers and Other Financial Intermediaries

LARGECAP S&P 500 INDEX ACCOUNT

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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

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.

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

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

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.

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

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

MIDCAP ACCOUNT

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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

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

Performance

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%

Investment Advisor and Portfolio Managers

Principal Global Investors, LLC

•K. William Nolin (since 2000), Portfolio Manager

•Tom Rozycki (since 2013), Portfolio Manager

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

PRINCIPAL CAPITAL APPRECIATION ACCOUNT

Objective

The Fund seeks to provide long-term growth of capital.

Fees and Expenses of the Fund

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

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

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

PRINCIPAL LIFETIME STRATEGIC INCOME ACCOUNT

Objective

The Fund seeks current income, and as a secondary objective, capital appreciation.

Fees and Expenses of the Fund

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

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

Principal Risks of Investing in a Fund of Funds

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.

•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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

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 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

Principal Risks of Investing in a Fund of Funds

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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

Principal Investment Strategies

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

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.

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.

Performance

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

Payments to Broker-Dealers and Other Financial Intermediaries

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

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

Principal Investment Strategies

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.

Principal Risks

Principal Risks of Investing in a Fund of Funds

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.

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.

Performance

100

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

Payments to Broker-Dealers and Other Financial Intermediaries

101

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

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

Principal Investment Strategies

102

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.

Principal Risks

103

Principal Risks of Investing in a Fund of Funds

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.

104

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.

Performance

105

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

Payments to Broker-Dealers and Other Financial Intermediaries

106

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

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

Principal Investment Strategies

107

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.

Principal Risks

108

Principal Risks of Investing in a Fund of Funds

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.

109

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.

Performance

110

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

Payments to Broker-Dealers and Other Financial Intermediaries

111

REAL ESTATE SECURITIES ACCOUNT

Objective

The Fund seeks to generate a total return.

Fees and Expenses of the Fund

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

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.

112

Principal Risks

•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.

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.

113

Performance

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

114

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

115

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

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

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.

116

The Fund may temporarily exceed these percentage ranges and may alter the percentage ranges when it deems appropriate.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

117

Performance

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)%

118

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

Payments to Broker-Dealers and Other Financial Intermediaries

119

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

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

Principal Investment Strategies

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

120

The Fund may temporarily exceed these percentage ranges and may alter the percentage ranges when it deems appropriate.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

121

Performance

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)%

122

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

Payments to Broker-Dealers and Other Financial Intermediaries

123

SAM (STRATEGIC ASSET MANAGEMENT) CONSERVATIVE GROWTH PORTFOLIO

Objective

The Fund seeks to provide long-term capital appreciation.

Fees and Expenses of the Fund

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

Principal Investment Strategies

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

124

The Fund may temporarily exceed these percentage ranges and may alter the percentage ranges when it deems appropriate.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

125

Performance

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)%

126

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

Payments to Broker-Dealers and Other Financial Intermediaries

127

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

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

Principal Investment Strategies

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

128

The Fund may temporarily exceed these percentage ranges and may alter the percentage ranges when it deems appropriate.

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

129

Performance

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)%

130

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

Payments to Broker-Dealers and Other Financial Intermediaries

131

SAM (STRATEGIC ASSET MANAGEMENT) STRATEGIC GROWTH PORTFOLIO

Objective

The Fund seeks to provide long-term capital appreciation.

Fees and Expenses of the Fund

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

Principal Investment Strategies

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.

132

Principal Risks

Principal Risks of Investing in a Fund of Funds

Principal Risks due to the Fund's Investments in Underlying Funds

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.

133

Performance

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

134

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

135

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

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

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.

136

Principal Risks

137

Performance

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

138

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

139

SMALLCAP ACCOUNT

Objective

The Fund seeks long-term growth of capital.

Fees and Expenses of the Fund

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

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

140

Performance

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%

141

Investment Advisor and Portfolio Managers

Principal Global Investors, LLC

•Phil Nordhus (since 2006), Portfolio Manager

•Brian W. Pattinson (since 2011), Portfolio Manager

Tax Information

Payments to Broker-Dealers and Other Financial Intermediaries

142

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

143

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


	1 year	3 years	5 years	10 years
U.S. LargeCap Buffer January Account - Class 2	$105	$339	$591	$1,313

Portfolio Turnover

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.

144

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.

145

146

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’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.

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.

147

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.

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.

148

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.

Performance

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)%

149

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

Payments to Broker-Dealers and Other Financial Intermediaries

150

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 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.

Objective

Fees and Expenses of the Fund

151

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.

Example


	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

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.

152

153

154

Principal Risks

155

156

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.

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

Payments to Broker-Dealers and Other Financial Intermediaries

157

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 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.

Objective

Fees and Expenses of the Fund

158

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.

Example


	1 year	3 years	5 years	10 years
U.S. LargeCap Buffer July Account - Class 2	$102	$323	$561	$1,246

Portfolio Turnover

Principal Investment Strategies

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.

159

160

161

Principal Risks

162

163

Performance

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)%

164

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%

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

Payments to Broker-Dealers and Other Financial Intermediaries

165

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 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.

Objective

Fees and Expenses of the Fund

166

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.

Example


	1 year	3 years	5 years	10 years
U.S. LargeCap Buffer October Account - Class 2	$103	$337	$589	$1,311

Portfolio Turnover

Principal Investment Strategies

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.

167

168

169

Principal Risks

170

171

Performance

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)%

172

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%

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

Payments to Broker-Dealers and Other Financial Intermediaries

173

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.

174

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.

175

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.

176

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.

177

INVESTMENT STRATEGIES AND RISKS

BLUE CHIP

BOND MARKET
INDEX

CORE PLUS
BOND

DIVERSIFIED
BALANCED

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

X(1)

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

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.

178

INVESTMENT STRATEGIES AND RISKS

DIVERSIFIED
BALANCED
ADAPTIVE ALLOCATION

DIVERSIFIED
BALANCED
STRATEGIC ALLOCATION

DIVERSIFIED
GROWTH

DIVERSIFIED
GROWTH
ADAPTIVE ALLOCATION

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

Volatility Mitigation

179

INVESTMENT STRATEGIES AND RISKS

DIVERSIFIED
GROWTH
STRATEGIC ALLOCATION

DIVERSIFIED
INCOME

DIVERSIFIED

INTERNATIONAL

EQUITY INCOME

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

Volatility Mitigation

180

INVESTMENT STRATEGIES AND RISKS

GLOBAL
EMERGING
MARKETS

GOVERNMENT &
HIGH QUALITY
BOND

LARGECAP
GROWTH I

LARGECAP
S&P 500 INDEX

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

X(1)

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

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.

181

INVESTMENT STRATEGIES AND RISKS

LARGECAP
S&P 500
MANAGED
VOLATILITY INDEX

MIDCAP

PRINCIPAL
CAPITAL
APPRECIATION

PRINCIPAL
LIFETIME
STRATEGIC
INCOME

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

X(1)

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

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.

182

INVESTMENT STRATEGIES AND RISKS

PRINCIPAL
LIFETIME 2020

PRINCIPAL
LIFETIME 2030

PRINCIPAL
LIFETIME 2040

PRINCIPAL
LIFETIME 2050

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

Volatility Mitigation

183

INVESTMENT STRATEGIES AND RISKS

PRINCIPAL
LIFETIME 2060

REAL ESTATE
SECURITIES

SAM BALANCED

SAM
CONSERVATIVE
BALANCED

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

Volatility Mitigation

184

INVESTMENT STRATEGIES AND RISKS

SAM
CONSERVATIVE
GROWTH

SAM
FLEXIBLE
INCOME

SAM
STRATEGIC
GROWTH

SHORT-TERM
INCOME

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

Volatility Mitigation

185

INVESTMENT STRATEGIES AND RISKS

SMALLCAP

U.S. LARGECAP
BUFFER JANUARY

U.S. LARGECAP
BUFFER APRIL

U.S. LARGECAP
BUFFER JULY

Counterparty Risk

Derivatives

Emerging Markets

Equity Securities

• Growth Style

• Smaller Companies

• Value Style

Fixed-Income Securities

Foreign Currency

Foreign Securities

Fund of Funds

Hedging

High Portfolio Turnover

High Yield Securities

Industry Concentration

X(1)

Investment Company Securities

Leverage

Portfolio Duration

Real Estate Investment Trusts (“REITs”)

Real Estate Securities

Redemption and Large Transaction Risk

Securitized Products

Short Sales

U.S. Government and U.S. Government-Sponsored Securities

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			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.

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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.

188

•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.

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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.

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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.

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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.

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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:

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•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.


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%


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,

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•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.

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•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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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%

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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

All Other Accounts/Portfolios

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.

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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.

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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.

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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.

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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.

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•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.

211

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.

212

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.

A-1

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.

A-2

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.

A-3

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.

B-1


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

B-2


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.

B-3


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

B-4


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.

B-5


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

B-6


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.

B-7


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

B-8


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.

B-9


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

B-10


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.

B-11


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

B-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


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.

B-13


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

B-14


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.

B-15


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

B-16


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.

B-17


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

B-18


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.

B-19


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

B-20


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.

B-21


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

B-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


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.

B-23


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

B-24


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.

B-25


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

B-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


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.

B-27


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

B-28


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.

B-29


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

B-30


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.

B-31


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

B-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


25.97	%		$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.

B-33


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

B-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


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.

B-35


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

B-36


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.

B-37


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

B-38


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.

B-39


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

B-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


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.

B-41


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

B-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


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.

B-43


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

B-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


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.

B-45


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

B-46


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.

B-47


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

B-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


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.

B-49


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

B-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


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.

B-51


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

B-52


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.

B-53


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

B-54


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.

B-55


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

B-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


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.

B-57


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

B-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 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.

B-59


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

B-60


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.

B-61


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

B-62


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.

B-63


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

B-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


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.

B-65


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

B-66


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.

B-67


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

B-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


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.

(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.

B-69


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

B-70


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.

B-71


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 JULY ACCOUNT
Class 2 shares
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

B-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


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.

B-73


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 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

B-74


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


19.45	%		$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.

B-75

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: publicinfo@sec.gov.

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


PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.
(“PVC” or the “Registrant”)

Class 1 Shares
Class 2 Shares
Class 3 Shares

Statement of Additional Information


Dated May 1, 2024

This Statement of Additional Information (“SAI”) is not a prospectus. It contains information in addition to the information in the Registrant’s Prospectus. The Prospectus, which may be amended from time to time, contains the basic information you should know before investing in a Fund. You should read this SAI together with the Registrant’s Prospectus dated May 1, 2024.

Incorporation by Reference: The audited financial statements, schedules of investments, and auditor’s report included in the Registrant’s Annual Report to Shareholders, for the fiscal year ended December 31, 2023, are hereby incorporated by reference into and are legally a part of this SAI.

For a free copy of the current Prospectus, Semi-Annual Report, or Annual Report, call 1-800-222-5852 or write:

Principal Variable Contracts Funds, Inc.

P.O. Box 219971

Kansas City, MO 64121-9971

The Prospectus may be viewed at www.PrincipalAM.com/PVCProspectuses.


TABLE OF CONTENTS
			PAGE
HISTORY OF THE FUNDS			3
DESCRIPTION OF THE FUNDS' INVESTMENTS AND RISKS			5
LEADERSHIP STRUCTURE AND BOARD			41
INVESTMENT ADVISORY AND OTHER SERVICES			49
MULTIPLE CLASS STRUCTURE			57
INTERMEDIARY COMPENSATION			58
BROKERAGE ALLOCATION AND OTHER PRACTICES			58
SHAREHOLDER RIGHTS			63
PRICING OF FUND SHARES			64
TAX CONSIDERATIONS			65
PORTFOLIO HOLDINGS DISCLOSURE			66
PROXY VOTING POLICIES AND PROCEDURES			68
FINANCIAL STATEMENTS			68
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			68
GENERAL INFORMATION			69
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES			70
PORTFOLIO MANAGER DISCLOSURE			95
APPENDIX A – DESCRIPTION OF BOND RATINGS			A-1
APPENDIX B – PROXY VOTING POLICIES			B-1

HISTORY OF THE FUNDS

Principal Variable Contracts Funds, Inc. (“PVC” or the “Registrant”), a Maryland corporation, was organized as Principal Variable Contracts Fund, Inc. on May 27, 1997. The Registrant changed its name to its current name, Principal Variable Contracts Funds, Inc., effective May 17, 2008.

On January 12, 2007, the Registrant acquired WM Trust I, WM Trust II, and WM Strategic Asset Management Portfolios, LLC.

Classes offered by each series of the Registrant (each, a “Fund” and, together, the “Funds”) are shown in the following table.


	Share Class
Account/Portfolio	1	2	3
Blue Chip			X
Bond Market Index	X
Core Plus Bond	X
Diversified Balanced	X	X	X
Diversified Balanced Adaptive Allocation		X	X
Diversified Balanced Strategic Allocation		X	X
Diversified Growth		X	X
Diversified Growth Adaptive Allocation		X	X
Diversified Growth Strategic Allocation		X	X
Diversified Income		X	X
Diversified International	X
Equity Income	X	X	X
Global Emerging Markets	X
Government & High Quality Bond	X
LargeCap Growth I	X
LargeCap S&P 500 Index	X	X
LargeCap S&P 500 Managed Volatility Index	X
MidCap	X	X
Principal Capital Appreciation	X	X
Principal LifeTime Strategic Income	X
Principal LifeTime 2020	X
Principal LifeTime 2030	X
Principal LifeTime 2040	X
Principal LifeTime 2050	X
Principal LifeTime 2060	X
Real Estate Securities	X	X
SAM (Strategic Asset Management) Balanced	X	X
SAM (Strategic Asset Management) Conservative Balanced	X	X
SAM (Strategic Asset Management) Conservative Growth	X	X
SAM (Strategic Asset Management) Flexible Income	X	X
SAM (Strategic Asset Management) Strategic Growth	X	X
Short-Term Income	X
SmallCap	X	X
U.S. LargeCap Buffer January		X
U.S. LargeCap Buffer April		X
U.S. LargeCap Buffer July		X
U.S. LargeCap Buffer October		X

Each class has different expenses. Because of these different expenses, the investment performance of the classes will vary.

Principal Global Investors, LLC (“PGI” or the “Manager”) may recommend to the Board of Directors (the “Board”), and the Board may elect, to close certain Funds to new investors or close certain Funds to new and existing investors. PGI may make such a recommendation when a Fund approaches a size where additional investments in the Fund have the potential to adversely impact Fund performance and make it increasingly difficult to keep the Fund fully invested in a manner consistent with its investment objective. PGI may also recommend to the Board, and the Board may elect, to close certain share classes to new or new and existing investors.

DESCRIPTION OF THE FUNDS’ INVESTMENTS AND RISKS

The Registrant is a registered, open-end management investment company, commonly called a mutual fund. The Registrant consists of multiple investment portfolios, which are referred to as “Funds.” Each Fund has its own investment objective, strategies, and portfolio management team. As described below, each Fund has adopted a fundamental policy regarding diversification, as that term is used in the Investment Company Act of 1940, as amended (the “1940 Act”), and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

Fund Policies

The investment objective, principal investment strategies, and principal risks of each Fund are described in the Prospectus. This SAI contains supplemental information about those strategies and risks and the types of securities that those managing the investments of each Fund can select. Additional information is also provided about other strategies that each Fund may use to try to achieve its objective.

The composition of each Fund and the techniques and strategies that those managing a Fund’s investments may use in selecting securities will vary over time. A Fund is not required to use all of the investment techniques and strategies available to it in seeking its goals.

Unless otherwise indicated, with the exception of the percentage limitations on borrowing, the restrictions apply at the time transactions are entered into. Accordingly, any later increase or decrease beyond the specified limitation, resulting from market fluctuations or in a rating by a rating service, does not require elimination of any security from a Fund’s portfolio.

The investment objective of each Fund and, except as described below as “fundamental restrictions,” the investment strategies described in this SAI and the Prospectus are not fundamental and may be changed by the Board without shareholder approval.

With the exception of the diversification test required by the Internal Revenue Code, the Funds will not consider collateral held in connection with securities lending activities when applying any of the following fundamental restrictions or any other investment restriction set forth in the Prospectus or SAI.

Fundamental Restrictions

Except as specifically noted, each Fund has adopted the following fundamental restrictions. Each fundamental restriction is a matter of fundamental policy and may not be changed without a vote of a majority of the outstanding voting securities of the affected Fund, except as permitted by the 1940 Act or other governing statute and the rules thereunder, the U.S. Securities and Exchange Commission (the “SEC”), or other regulatory agency with authority over the Funds. The 1940 Act provides that “a vote of a majority of the outstanding voting securities” of a Fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding Fund shares or (2) 67% or more of the Fund shares present at a meeting if more than 50% of the outstanding Fund shares are represented at the meeting in person or by proxy. Each share has one vote, with fractional shares voting proportionately. Shares of all classes of a Fund will vote together as a single class, except when otherwise required by law or as determined by the Board.

Each Fund:

1)may not issue senior securities, except as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

2)may not purchase or sell commodities, except as permitted by applicable law, regulation, or regulatory authority having jurisdiction.

3)may not purchase or sell real estate, which term does not include securities of companies that deal in real estate or mortgages or investments secured by real estate or interests therein, except that each Fund reserves freedom of action to hold and to sell real estate acquired as a result of the Fund’s ownership of securities.

4)may not borrow money, except as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

5)may not make loans, except as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

6)has adopted a policy regarding diversification, as follows:

a)The LargeCap Growth I and Real Estate Securities Accounts have elected to be non-diversified.

b)The other Funds have each elected to be treated as a “diversified” investment company, as that term is used in the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

7)may not act as an underwriter of securities, except to the extent that the Fund may be deemed to be an underwriter in connection with the sale of securities held in its portfolio.

8)has adopted a concentration policy, as follows:

a)The Real Estate Securities Account will concentrate its investments in a particular industry or group of industries as described in the Prospectus.

b)The Bond Market Index, LargeCap S&P 500 Index, LargeCap S&P 500 Managed Volatility Index, and U.S. LargeCap Buffer Accounts will not concentrate their investments in a particular industry or group of industries except to the extent that the related Index is also so concentrated.

c)The remaining Funds may not concentrate, as that term is used in the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time, their investments in a particular industry or group of industries.

Non-Fundamental Restrictions

Except as specifically noted, each Fund has also adopted the following non-fundamental restrictions. Non-fundamental restrictions are not fundamental policies and may be changed without shareholder approval. It is contrary to each Fund’s present policy to:

1)Invest more than 15% of its net assets in illiquid securities and in repurchase agreements maturing in more than seven days, except to the extent permitted by applicable law or regulatory authority having jurisdiction, from time to time.

The Principal LifeTime, Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts and the Strategic Asset Management (“SAM”) Portfolios have not adopted this non-fundamental restriction.

2) Pledge, mortgage, or hypothecate its assets, except to secure permitted borrowings.

a)With respect to the Principal LifeTime, Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts, U.S. LargeCap Buffer Accounts, and SAM Portfolios, the deposit of underlying securities and other assets in escrow and other collateral arrangements in connection with transactions that involve any future payment obligation, as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by any regulatory authority having jurisdiction, from time to time, by the underlying funds are not deemed to be pledges, mortgages, hypothecations, or other encumbrances.

b) For all other Accounts, the deposit of underlying securities and other assets in escrow and other collateral arrangements in connection with transactions that involve any future payment obligation, as permitted under the 1940 Act, and as interpreted, modified, or otherwise permitted by any regulatory authority having jurisdiction, from time to time, are not deemed to be pledges, mortgages, hypothecations, or other encumbrances.

3) Invest in companies for the purpose of exercising control or management.

4) Invest more than 25% of its assets in foreign securities, however:

a)the Diversified International and Global Emerging Markets Accounts each may invest up to 100% of its assets in foreign securities;

b)the Bond Market Index, LargeCap S&P 500 Index, and LargeCap S&P 500 Managed Volatility Index Accounts may invest in foreign securities to the extent that the relevant index is so invested;

c)the Government & High Quality Bond Account may not invest in foreign securities; and

d)the Principal LifeTime, Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts and SAM Portfolios have not adopted this non‑fundamental restriction.

5) Invest more than 5% of its total assets in real estate limited partnership interests.

The Real Estate Securities, Principal LifeTime, Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts and SAM Portfolios have not adopted this non-fundamental restriction.

6) Acquire securities of other investment companies in reliance on Section 12(d)(1)(F) or (G) of the 1940 Act, invest more than 10% of its total assets in securities of other investment companies, invest more than 5% of its total assets in the securities of any one investment company, or acquire more than 3% of the outstanding voting securities of any one investment company, except in connection with a merger, consolidation, or plan of reorganization and except as permitted by the 1940 Act, SEC rules adopted under the 1940 Act, or exemptions granted by the SEC. The Fund may purchase securities of closed-end investment companies in the open market where no underwriter or dealer’s commission or profit, other than a customary broker’s commission, is involved.

The Principal LifeTime, Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts and SAM Portfolios have not adopted this non-fundamental restriction.

Non-Fundamental Policy - Rule 35d-1 under the 1940 Act - Investment Company Names

Except as specifically noted, each Fund has also adopted a non-fundamental policy, pursuant to SEC Rule 35d-1, which requires it, under normal circumstances, to invest at least 80% of its net assets, plus any borrowings for investment purposes, in the type of investments, industry, or geographic region (as described in the Prospectus) as suggested by the name of the Fund.

This policy applies at the time of purchase. A Fund will provide 60 days’ notice to shareholders prior to implementing a change in this policy for the Fund. For purposes of this non-fundamental policy, each Fund tests market capitalization ranges monthly.

For purposes of testing this requirement with respect to:

•Forward foreign currency contracts and other investments that have economic characteristics similar to foreign currency: the value of such contracts and investments may include the Fund’s investments in cash and/or cash equivalents to the extent such cash and/or cash equivalents are maintained with respect to the Fund’s exposure under its forward foreign currency contracts and similar investments.

•Derivatives instruments: each Fund will typically count the mark-to-market value of such derivatives. However, a Fund may use a derivative contract’s notional value when it determines that notional value is an appropriate measure of the Fund’s exposure to investments. For example, with respect to single-name equity swaps that are “fully paid” (equity swaps in which cash and/or cash equivalents are posted as collateral for the purpose of covering the full notional value of the swap), each Fund will count the value of such cash and/or cash equivalents.

•Investments in underlying funds (including ETFs): each Fund will count all investments in an underlying fund toward the requirement as long as 80% of the value of such underlying fund’s holdings focus on the particular type of investment suggested by the Fund name.

The Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, Diversified Income, Diversified International, Principal Capital Appreciation, and Short-Term Income Accounts, the Principal LifeTime Accounts, and the SAM Portfolios have not adopted this non-fundamental policy.

Investment Strategies and Risks Related to Borrowing and Senior Securities, Commodity-Related Investments, Industry Concentration, and Loans

Borrowing and Senior Securities

Under the 1940 Act, a fund that borrows money is required to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the fund’s total assets made for temporary or emergency purposes. If a fund invests the proceeds of borrowing, borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a fund’s portfolio. If a fund invests the proceeds of borrowing, money borrowed will be subject to interest costs that may or may not be recovered by earnings on the securities purchased. A fund also may be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.

Commodity-Related Investments

Under the 1940 Act, a fund’s registration statement must recite the fund’s policy with regard to investing in commodities. Each Fund may invest in commodities to the extent permitted by applicable law and under its fundamental and non-fundamental policies and restrictions. Pursuant to a claim for exclusion filed with the Commodity Futures Trading Commission (“CFTC”) on behalf of each of the Funds under Rule 4.5, PGI is not deemed to be a “commodity pool operator” under the Commodity Exchange Act (“CEA”) as it specifically relates to PGI’s operations with respect to the Funds, and the Funds, therefore, are not considered regulated commodity pools and are not subject to registration or regulation under the CEA.

The CFTC amended Rule 4.5 exclusions for certain otherwise regulated persons from the definition of the term “commodity pool operator.” Rule 4.5 provides that an investment company does not meet the definition of “commodity pool operator” if its use of futures contracts, options on futures contracts, and swaps is sufficiently limited that the fund can fall within one of two exclusions set out in Rule 4.5. Each Fund intends to limit its use of futures contracts, options on futures contracts, and swaps to the degree necessary to fall within one of the two exclusions. If a Fund is unable to do so, it may incur expenses that are necessary to comply with the CEA and rules the CFTC has adopted under it.

Industry Concentration

"Concentration” means a fund invests more than 25% of its net assets in a particular industry or group of industries. To monitor compliance with the policy regarding industry concentration, the Funds may use the industry classifications provided by Bloomberg, L.P., the Morgan Stanley Capital International (MSCI)/Standard & Poor’s Global Industry Classification Standard (GICS), the Directory of Companies Filing Annual Reports with the SEC, or any other reasonable industry classification system.

•Each Fund interprets its policy with respect to concentration in a particular industry to apply only to direct investments in the securities of issuers in a particular industry. To the extent a Fund invests its assets in underlying investment companies, 25% or more of such Fund’s total assets may be indirectly exposed to a particular industry or group of related industries through its investments in one or more underlying investment companies.

•For purposes of this restriction, government securities (such as treasury securities or mortgage-backed securities that are issued or guaranteed by the U.S. government, its agencies, or instrumentalities) are not subject to the Funds’ industry concentration restrictions.

•Each Fund views its investments in tax-exempt municipal securities as not representing interests in any particular industry or group of industries. For information about municipal securities, see the Municipal Obligations section.

Loans

A Fund may not make loans to other persons, except (i) as permitted by the 1940 Act and the Rules and Regulations thereunder, or other successor law governing the regulation of registered investment companies, or interpretations or modifications thereof by the SEC, SEC Staff, or other authority of competent jurisdiction, or (ii) pursuant to exemptive or other relief or permission from the SEC, SEC Staff, or other authority of competent jurisdiction. Generally, this means the Funds are typically permitted to make loans but must take into account potential issues such as liquidity, valuation, and avoidance of impermissible transactions. Examples of permissible loans include (a) the lending of its portfolio securities, (b) the purchase of debt securities, loan participations, and/or engaging in direct corporate loans in accordance with the Fund’s investment objective and policies, (c) the entry into a repurchase agreement (to the extent such entry is deemed to be a loan), and (d) loans to affiliated investment companies to the extent permitted by the 1940 Act or any exemptions therefrom that may be granted by the SEC.

Other Investment Strategies and Risks

Commodity Index-Linked Notes

A commodity index-linked note is a type of structured note that is a derivative instrument. Over the long term, the returns on a fund’s investments in commodity index-linked notes are expected to exhibit low or negative correlation with stocks and bonds, which means the prices of commodity-linked notes may move in a different direction than investments in traditional equity and debt securities. As an example, during periods of rising inflation, debt securities have historically tended to decrease in value and the prices of certain commodities, such as oil and metals, have historically tended to increase. The reverse may be true during “bull markets,” when the value of traditional securities such as stocks and bonds is increasing. Under such economic conditions, a fund’s investments in commodity index-linked notes may be expected not to perform as well as investments in traditional securities. There can be no assurance, however, that derivative instruments will perform in that manner in the future and, at certain times in the past, the price movements of commodity-linked investments have been parallel to debt and equity securities. If commodities prices move in tandem with the prices of financial assets, they may not provide overall portfolio diversification benefits.

Convertible Securities

A convertible security is a bond, debenture, note, preferred stock, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. A convertible security generally entitles the holder to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to non-convertible debt or preferred securities, as applicable. Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities entail more risk than its debt obligations. Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities.

Because of the conversion feature, the price of the convertible security will normally fluctuate in some proportion to changes in the price of the underlying asset, and as such is subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may tend to cushion the security against declines in the price of the underlying asset. However, the income component of convertible securities causes fluctuations based upon changes in interest rates and the credit quality of the issuer.

If the conversion value of a convertible security increases to a point that approximates or exceeds its investment value, the value of the security will be principally influenced by its conversion value. A convertible security will sell at a premium over its conversion value to the extent investors place value on the right to acquire the underlying common stock while holding an income-producing security.

A convertible security may be subject to redemption at the option of the issuer at a predetermined price. If a convertible security held by a fund is called for redemption, the fund would be required to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the convertible security to a third party, which may have an adverse effect on the fund’s ability to achieve its investment objective.

Synthetic Convertibles

A “synthetic” convertible security may be created by combining separate securities that possess the two principal characteristics of a traditional convertible security, i.e., an income-producing security (“income-producing component”) and the right to acquire an equity security (“convertible component”). The income-producing component is achieved by investing in non-convertible, income-producing securities such as bonds, preferred stocks and money market instruments, which may be represented by derivative instruments. The convertible component is achieved by investing in securities or instruments such as warrants or options to buy common stock at a certain exercise price, or options on a stock index. Unlike a traditional convertible security, which is a single security having a single market value, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the “market value” of a synthetic convertible security is the sum of the values of its income-producing component and its convertible component. For this reason, the values of a synthetic convertible security and a traditional convertible security may respond differently to market fluctuations.

More flexibility is possible in the assembly of a synthetic convertible security than in the purchase of a convertible security. Although synthetic convertible securities may be selected where the two components are issued by a single issuer, thus making the synthetic convertible security similar to the traditional convertible security, the character of a synthetic convertible security allows the combination of components representing distinct issuers, when such a combination may better achieve a fund’s investment objective. A synthetic convertible security also is a more flexible investment in that its two components may be purchased separately. For example, a fund may purchase a warrant for inclusion in a synthetic convertible security but temporarily hold short-term investments while postponing the purchase of a corresponding bond pending development of more favorable market conditions.

A holder of a synthetic convertible security faces the risk of a decline in the price of the security or the level of the index involved in the convertible component, causing a decline in the value of the security or instrument, such as a call option or warrant, purchased to create the synthetic convertible security. Should the price of the stock fall below the exercise price and remain there throughout the exercise period, the entire amount paid for the call option or warrant would be lost. Because a synthetic convertible security includes the income-producing component as well, the holder of a synthetic convertible security also faces the risk that interest rates will rise, causing a decline in the value of the income-producing instrument.

A fund also may purchase synthetic convertible securities created by other parties, including convertible structured notes. Convertible structured notes are income-producing debentures linked to equity and are typically issued by investment banks. Convertible structured notes have the attributes of a convertible security; however, the investment bank that issues the convertible note, rather than the issuer of the underlying common stock into which the note is convertible, assumes credit risk associated with the underlying investment, and the fund in turn assumes credit risk associated with the convertible note.

Corporate Reorganizations

Funds may invest in securities for which a tender or exchange offer has been made or announced and in securities of companies for which a merger, consolidation, liquidation, or reorganization proposal has been announced if, in the judgment of those managing the fund’s investments, there is a reasonable prospect of capital appreciation significantly greater than the brokerage and other transaction expenses involved. The primary risk of such investments is that if the contemplated transaction is abandoned, revised, delayed, or becomes subject to unanticipated uncertainties, including, for example, new or revised laws or regulations, the market price of the securities may decline below the purchase price paid by a fund.

In general, securities that are the subject of such an offer or proposal sell at a premium to their historic market price immediately prior to the announcement of the offer or proposal. However, the increased market price of such securities may discount what the stated or appraised value of the security would be if the contemplated transaction were approved or consummated. Such investments may be advantageous when the discount: significantly overstates the risk of the contingencies involved; significantly undervalues the securities, assets, or cash to be received by shareholders of the prospective company as a result of the contemplated transaction; or fails adequately to recognize the possibility that the offer or proposal may be replaced or superseded by an offer or proposal of greater value. The evaluation of such contingencies requires unusually broad knowledge and experience on the part of those managing the fund’s investments, which must appraise not only the value of the issuer and its component businesses, but also the financial resources and business motivation of the offer or proposal as well as the dynamics of the business climate when the offer or proposal is in process.

Cyber Security Issues

Each Fund and its service providers may be subject to cyber security risks. Those risks include, among others, theft, misuse or corruption of data maintained online or digitally; denial of service attacks on websites; the loss or unauthorized release of confidential and proprietary information; operational disruption; or various other forms of cyber security breaches. Cyber-attacks against or security breakdowns of a Fund or its service providers may harm the Fund and its shareholders, potentially resulting in, among other things, financial losses, the inability of Fund shareholders to transact business, inability to calculate a fund’s NAV, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance and remediation costs. Cyber security risks may also affect issuers of securities in which a fund invests, potentially causing the fund’s investment in such issuers to lose value. Despite risk management processes, there can be no guarantee that a fund will avoid losses relating to cyber security risks or other information security breaches.

Derivatives

Options on Securities and Securities Indices

Funds may write (sell) and purchase call and put options on securities and on securities indices. Funds may engage in these transactions to hedge against a decline in the value of securities owned or an increase in the price of securities that the Fund plans to purchase, or to generate additional revenue.

•Exchange-Traded Options. An exchange-traded option may be closed out only on an exchange that generally provides a liquid secondary market for an option of the same series. If a liquid secondary market for an exchange-traded option does not exist, it might not be possible to effect a closing transaction with respect to a particular option, with the result that a Fund would have to exercise the option in order to consummate the transaction.

•Over the Counter (“OTC”) Options. OTC options differ from exchange-traded options in that they are two-party contracts, with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options. An OTC option (an option not traded on an established exchange) may be closed out only by agreement with the other party to the original option transaction. With OTC options, a Fund is at risk that the other party to the transaction will default on its obligations or will not permit the Fund to terminate the transaction before its scheduled maturity. While a Fund will seek to enter into OTC options only with dealers who agree to or are expected to be capable of entering into closing transactions with a Fund, there can be no assurance that a Fund will be able to liquidate an OTC option at a favorable price at any time prior to its expiration. OTC options are not subject to the protections afforded purchasers of listed options by the Options Clearing Corporation or other clearing organizations.

•FLexible EXchange Options (“FLEX Options”). FLEX Options are customized options contracts available through national securities exchanges that are guaranteed for settlement by the Options Clearing Corporation (“OCC”), a market clearinghouse. FLEX Options provide investors with the ability to customize terms of an option, including exercise prices, exercise styles (European-style options, which are exercisable only at the expiration date, versus American-style options, which are exercisable any time prior to the expiration date), and expiration dates, while achieving price discovery in competitive, transparent auction markets and avoiding the counterparty exposure of the OTC option positions.

There is no assurance that a liquid secondary market on an options exchange will exist for any particular option, or at any particular time, and for some options no secondary market on an exchange or elsewhere may exist. If a Fund is unable to close out a call option on securities that it has written before the option is exercised, the Fund may be required to purchase the optioned securities in order to satisfy its obligation under the option to deliver such securities. If the Fund is unable to effect a closing sale transaction with respect to options on securities that it has purchased, it would have to exercise the option in order to realize any profit and would incur transaction costs upon the purchase and sale of the underlying securities. The writing and purchasing of options is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Imperfect correlation between the options and securities markets may detract from the effectiveness of attempted hedging. Options transactions may result in significantly higher transaction costs and portfolio turnover for a Fund.

Writing Call and Put Options. When a Fund writes a call option, it gives the purchaser of the option the right to buy a specific security at a specified price at any time before the option expires. When a Fund writes a put option, it gives the purchaser of the option the right to sell to the Fund a specific security at a specified price at any time before the option expires. In both situations, the Fund receives a premium from the purchaser of the option.

The premium received by a Fund reflects, among other factors, the current market price of the underlying security, the relationship of the exercise price to the market price, the time period until the expiration of the option and interest rates. The premium generates additional income for the Fund if the option expires unexercised or is closed out at a profit. By writing a call, a Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option, but it retains the risk of loss if the price of the security should decline. By writing a put, a Fund assumes the risk that it may have to purchase the underlying security at a price that may be higher than its market value at time of exercise.

A Fund usually owns the underlying security covered by any outstanding call option. With respect to an outstanding put option, a Fund deposits and maintains with its custodian or segregates on the Fund’s records, cash, or other liquid assets with a value at least equal to the market value of the option that was written.

Once a Fund has written an option, it may terminate its obligation before the option is exercised. The Fund executes a closing transaction by purchasing an option of the same series as the option previously written. The Fund has a gain or loss depending on whether the premium received when the option was written exceeds the closing purchase price plus related transaction costs.

Purchasing Call and Put Options. When a Fund purchases a call option, it receives, in return for the premium it pays, the right to buy from the writer of the option the underlying security at a specified price at any time before the option expires. A Fund purchases call options in anticipation of an increase in the market value of securities that it intends ultimately to buy. During the life of the call option, the Fund is able to buy the underlying security at the exercise price regardless of any increase in the market price of the underlying security. For a call option to result in a gain, the market price of the underlying security must exceed the sum of the exercise price, the premium paid, and transaction costs.

When a Fund purchases a put option, it receives, in return for the premium it pays, the right to sell to the writer of the option the underlying security at a specified price at any time before the option expires. A Fund purchases put options in anticipation of a decline in the market value of the underlying security. During the life of the put option, the Fund is able to sell the underlying security at the exercise price regardless of any decline in the market price of the underlying security. In order for a put option to result in a gain, the market price of the underlying security must decline, during the option period, below the exercise price enough to cover the premium and transaction costs.

Once a Fund purchases an option, it may close out its position by selling an option of the same series as the option previously purchased. The Fund has a gain or loss depending on whether the closing sale price exceeds the initial purchase price plus related transaction costs.

Options on Securities Indices. Each Fund may purchase and sell put and call options on any securities index based on securities in which the Fund may invest. Securities index options are designed to reflect price fluctuations in a group of securities or segment of the securities market rather than price fluctuations in a single security. Options on securities indices are similar to options on securities, except that the exercise of securities index options requires cash payments and does not involve the actual purchase or sale of securities. Each Fund engages in transactions in put and call options on securities indices for the same purposes as they engage in transactions in options on securities. When a Fund writes call options on securities indices, it holds in its portfolio underlying securities which, in the judgment of those managing the fund’s investments, correlate closely with the securities index and which have a value at least equal to the aggregate amount of the securities index options.

Index Warrants. A Fund may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at a time when, in the case of a call warrant, the exercise price is more than the value of the underlying index, or in the case of a put warrant, the exercise price is less than the value of the underlying index. If a Fund were not to exercise an index warrant prior to its expiration, then a Fund would lose the amount of the purchase price paid by it for the warrant. A Fund will normally use index warrants in a manner similar to its use of options on securities indices.

Risks Associated with Option Transactions. An option position may be closed out only on an exchange that provides a secondary market for an option of the same series. A Fund generally purchases or writes only those options for which there appears to be an active secondary market. However, there is no assurance that a liquid secondary market on an exchange exists for any particular option, or at any particular time. If a Fund is unable to effect closing sale transactions in options it has purchased, it has to exercise its options in order to realize any profit and may incur transaction costs upon the purchase or sale of underlying securities. If the Fund is unable to effect a closing purchase transaction for a covered option that it has written, it is not able to sell the underlying securities until the option expires or is exercised. A Fund’s ability to terminate option positions established in the over-the-counter market may be more limited than for exchange-traded options and may also involve the risk that broker-dealers participating in such transactions might fail to meet their obligations.

Futures Contracts and Options on Futures Contracts

Funds may purchase and sell futures contracts of many types, including for example, futures contracts covering indexes, financial instruments, and foreign currencies. Funds may purchase and sell financial futures contracts and options on those contracts. Financial futures contracts are commodities contracts based on financial instruments such as U.S. Treasury bonds or bills or on securities indices such as the S&P 500 Index. The Commodity Futures Trading Commission regulates futures contracts, options on futures contracts, and the commodity exchanges on which they are traded. Through the purchase and sale of futures contracts and related options, a Fund may seek to hedge against a decline in the value of securities owned by the Fund or an increase in the price of securities that the Fund plans to purchase. Funds may also purchase and sell futures contracts and related options to maintain cash reserves while simulating full investment in securities and to keep substantially all of its assets exposed to the market. Funds may enter into futures contracts and related options transactions both for hedging and non-hedging purposes.

Futures Contracts. Funds may purchase or sell a futures contract to gain exposure to a particular market asset without directly purchasing that asset. When a Fund sells a futures contract based on a financial instrument, the Fund is obligated to deliver that kind of instrument at a specified future time for a specified price. When a Fund purchases that kind of contract, it is obligated to take delivery of the instrument at a specified time and to pay the specified price. In most instances, these contracts are closed out by entering into an offsetting transaction before the settlement date. The Fund realizes a gain or loss depending on whether the price of an offsetting purchase plus transaction costs are less or more than the price of the initial sale or on whether the price of an offsetting sale is more or less than the price of the initial purchase plus transaction costs. Although the Fund usually liquidates futures contracts on financial instruments, by entering into an offsetting transaction before the settlement date, they may make or take delivery of the underlying securities when it appears economically advantageous to do so.

A futures contract based on a securities index provides for the purchase or sale of a group of securities at a specified future time for a specified price. These contracts do not require actual delivery of securities but result in a cash settlement. The amount of the settlement is based on the difference in value of the index between the time the contract was entered into and the time it is liquidated (at its expiration or earlier if it is closed out by entering into an offsetting transaction).

When a Fund purchases or sells a futures contract, it pays a commission to the futures commission merchant through which the Fund executes the transaction. When entering into a futures transaction, the Fund does not pay the execution price, as it does when it purchases a security, or a premium, as it does when it purchases an option. Instead, the Fund deposits an amount of cash or other liquid assets (generally about 5% of the futures contract amount) with its futures commission merchant. This amount is known as “initial margin.” In contrast to the use of margin account to purchase securities, the Fund’s deposit of initial margin does not constitute the borrowing of money to finance the transaction in the futures contract. The initial margin represents a good faith deposit that helps assure the Fund’s performance of the transaction. The futures commission merchant returns the initial margin to the Fund upon termination of the futures contract if the Fund has satisfied all its contractual obligations.

Subsequent payments to and from the futures commission merchant, known as “variation margin,” are required to be made on a daily basis as the price of the futures contract fluctuates, a process known as “marking to market.” The fluctuations make the long or short positions in the futures contract more or less valuable. If the position is closed out by taking an opposite position prior to the settlement date of the futures contract, a final determination of variation margin is made. Any additional cash is required to be paid to or released by the broker and the Fund realizes a loss or gain.

In using futures contracts, a Fund may seek to establish with more certainty than would otherwise be possible the effective price of or rate of return on portfolio securities or securities that the Fund proposes to acquire. A Fund, for example, sells futures contracts in anticipation of a rise in interest rates that would cause a decline in the value of its debt investments. When this kind of hedging is successful, the futures contract increases in value when the Fund’s debt securities decline in value and thereby keeps the Fund’s net asset value from declining as much as it otherwise would. A Fund may also sell futures contracts on securities indices in anticipation of or during a stock market decline in an endeavor to offset a decrease in the market value of its equity investments. When a Fund is not fully invested and anticipates an increase in the cost of securities it intends to purchase, it may purchase financial futures contracts.

When increases in the prices of equities are expected, a Fund may purchase futures contracts on securities indices in order to gain rapid market exposure that may partially or entirely offset increases in the cost of the equity securities it intends to purchase.

Options on Futures Contracts. Funds may also purchase and write call and put options on futures contracts. A call option on a futures contract gives the purchaser the right, in return for the premium paid, to purchase a futures contract (assume a long position) at a specified exercise price at any time before the option expires. A put option gives the purchaser the right, in return for the premium paid, to sell a futures contract (assume a short position), for a specified exercise price, at any time before the option expires.

Upon the exercise of a call, the writer of the option is obligated to sell the futures contract (to deliver a long position to the option holder) at the option exercise price, which will presumably be lower than the current market price of the contract in the futures market. Upon exercise of a put, the writer of the option is obligated to purchase the futures contract (deliver a short position to the option holder) at the option exercise price, which will presumably be higher than the current market price of the contract in the futures market. However, as with the trading of futures, most options are closed out prior to their expiration by the purchase or sale of an offsetting option at a market price that reflects an increase or a decrease from the premium originally paid. Options on futures can be used to hedge substantially the same risks addressed by the direct purchase or sale of the underlying futures contracts. For example, if a Fund anticipates a rise in interest rates and a decline in the market value of the debt securities in its portfolio, it might purchase put options or write call options on futures contracts instead of selling futures contracts.

If a Fund purchases an option on a futures contract, it may obtain benefits similar to those that would result if it held the futures position itself. But in contrast to a futures transaction, the purchase of an option involves the payment of a premium in addition to transaction costs. In the event of an adverse market movement, however, the Fund is not subject to a risk of loss on the option transaction beyond the price of the premium it paid plus its transaction costs.

When a Fund writes an option on a futures contract, the premium paid by the purchaser is deposited with the Fund’s custodian. The Fund must maintain with its futures commission merchant all or a portion of the initial margin requirement on the underlying futures contract. It assumes a risk of adverse movement in the price of the underlying futures contract comparable to that involved in holding a futures position. Subsequent payments to and from the futures commission merchant, similar to variation margin payments, are made as the premium and the initial margin requirements are marked to market daily. The premium may partially offset an unfavorable change in the value of portfolio securities, if the option is not exercised, or it may reduce the amount of any loss incurred by the Fund if the option is exercised.

Risks Associated with Futures Transactions. There are many risks associated with transactions in futures contracts and related options. The value of the assets that are the subject of the futures contract may not move in the anticipated direction. A Fund’s successful use of futures contracts is subject to the ability of those managing the fund’s investments to predict correctly the factors affecting the market values of the Fund’s portfolio securities. For example, if a Fund is hedged against the possibility of an increase in interest rates which would adversely affect debt securities held by the Fund and the prices of those debt securities instead increases, the Fund loses part or all of the benefit of the increased value of its securities it hedged because it has offsetting losses in its futures positions. Other risks include imperfect correlation between price movements in the financial instrument or securities index underlying the futures contract, on the one hand, and the price movements of either the futures contract itself or the securities held by the Fund, on the other hand. If the prices do not move in the same direction or to the same extent, the transaction may result in trading losses.

Prior to exercise or expiration, a position in futures may be terminated only by entering into a closing purchase or sale transaction. This requires a secondary market on the relevant contract market. A Fund enters into a futures contract or related option only if there appears to be a liquid secondary market. There can be no assurance, however, that such a liquid secondary market exists for any particular futures contract or related option at any specific time. Thus, it may not be possible to close out a futures position once it has been established. Under such circumstances, the Fund continues to be required to make daily cash payments of variation margin in the event of adverse price movements. In such situations, if the Fund has insufficient cash, it may be required to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. In addition, the Fund may be required to perform under the terms of the futures contracts it holds. The inability to close out futures positions also could have an adverse impact on the Fund’s ability effectively to hedge its portfolio.

Most United States futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. This daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses.

Debt-Linked and Equity-Linked Securities

Each Fund may invest in debt-linked and equity-linked securities. The investment results of such instruments are intended to correspond generally to the performance of one or more specified equity or debt securities, or of a specific index or analogous “basket” of equity or debt securities. Therefore, investing in these instruments involves risks similar to the risks of investing in the underlying stocks or bonds directly. In addition, a Fund bears the risk that the issuer of an equity- or debt-linked security may default on its obligations under the instrument. Equity- and debt-linked securities are often used for many of the same purposes as, and share many of the same risks with, other derivative instruments as well as structured notes. Like many derivatives and structured notes, equity- and debt-linked securities may be considered illiquid, potentially limiting a Fund’s ability to dispose of them.

Hybrid Instruments

A hybrid instrument is a type of derivative that combines a traditional stock or bond with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some currency or securities index or another interest rate or some other economic factor (each a “benchmark”). The interest rate or (unlike most fixed income securities) the principal amount payable at maturity of a hybrid security may be increased or decreased, depending on changes in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be economically similar to a combination of a bond and a call option on oil.

Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management and increased total return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes the Fund to the credit risk of the issuer of the hybrids. These risks may cause significant fluctuations in the NAV of a Fund.

Certain hybrid instruments may provide exposure to the commodities markets. These are derivative securities with one or more commodity-linked components that have payment features similar to commodity futures contracts, commodity options or similar instruments. Commodity-linked hybrid instruments may be either equity or debt securities, leveraged or unleveraged, and are considered hybrid instruments because they have both security and commodity-like characteristics. A portion of the value of these instruments may be derived from the value of a commodity, futures contract, index or other economic variable and therefore are subject to many of the same risks as investments in those underlying securities, instruments or commodities.

Certain issuers of structured products such as hybrid instruments may be deemed to be investment companies as defined in the 1940 Act. As a result, a Fund’s investments in these products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the 1940 Act.

Spread Transactions

Funds may engage in spread trades, which typically represent a simultaneous purchase and sale of two different contracts designed to capture the change in the relationship in price between the two contracts. Spread transactions are typically accompanied by lower margin requirements and lower volatility than an outright purchase. Funds may purchase spread options. The purchase of a covered spread option gives the Fund the right to put, or sell, a security that it owns at a fixed dollar spread or fixed yield spread in relationship to another security that the Fund does not own, but which is used as a benchmark. The risk to the Fund in purchasing covered spread options is the cost of the premium paid for the spread option and any transaction costs. In addition, there is no assurance that closing transactions will be available. The security covering the spread option is maintained in segregated accounts either with the Fund’s custodian or on the Fund’s records. The Funds do not consider a security covered by a spread option to be “pledged” as that term is used in the Fund’s policy limiting the pledging or mortgaging of assets. The purchase of spread options can be used to protect Funds against adverse changes in prevailing credit quality spreads, i.e., the yield spread between high quality and lower quality securities.

Swap Agreements and Options on Swap Agreements

Funds may engage in swap transactions, including, but not limited to, swap agreements on interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps, to the extent permitted by its investment restrictions. To the extent a Fund may invest in foreign currency-denominated securities, it may also invest in currency swap agreements and currency exchange rate swap agreements. Funds may also enter into options on swap agreements (“swap options”).

Funds may enter into swap transactions for any legal purpose consistent with its investment objectives and policies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets; to protect against currency fluctuations; as a duration management technique; to protect against any increase in the price of securities a Fund anticipates purchasing at a later date; to gain exposure to one or more securities, currencies, or interest rates; to take advantage of perceived mispricing in the securities markets; or to gain exposure to certain markets in the most economical way possible.

Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities or commodities representing a particular index.

•Interest Rate Swaps. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (for example, an exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal). Forms of swap agreements also include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.

•Currency Swaps. A currency swap is an agreement to exchange cash flows on a notional amount based on changes in the relative values of the specified currencies.

•Index Swaps. An index swap is an agreement to make or receive payments based on the different returns that would be achieved if a notional amount were invested in a specified basket of securities (such as the S&P 500 Index) or in some other investment (such as U.S. Treasury Securities).

•Total Return Swaps. A total return swap is an agreement to make payments of the total return from a specified asset or instrument (or a basket of such instruments) during the specified period, in return for payments equal to a fixed or floating rate of interest or the total return from another specified asset or instrument. Alternatively, a total return swap can be structured so that one party will make payments to the other party if the value of the relevant asset or instrument increases, but receive payments from the other party if the value of that asset or instrument decreases.

•Commodity Swap Agreements. Consistent with a Fund’s investment objectives and general investment policies, certain of the Funds may invest in commodity swap agreements. For example, an investment in a commodity swap agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a total return commodity swap, a Fund will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, a Fund may pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is for more than one period, with interim swap payments, a Fund may pay an adjustable or floating fee. With a “floating” rate, the fee may be pegged to a base rate, such as the Secured Overnight Financing Rate (SOFR) or a similar reference rate, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, a Fund may be required to pay a higher fee at each swap reset date.

•Credit Default Swap Agreements. The “buyer” in a credit default contract is obligated to pay the “seller” a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or “par value,” of the reference obligation in exchange for the reference obligation. A Fund may be either the buyer or seller in a credit default swap transaction. If a Fund is a buyer and no event of default occurs, the Fund will lose its investment and recover nothing. However, if an event of default occurs, the Fund (if the buyer) will receive the full notional value of the reference obligation that may have little or no value. As a seller, a Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and five years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. In addition, collateral posting requirements are individually negotiated and there is no regulatory requirement that a counterparty post collateral to secure its obligations or a specified amount of cash, depending upon the terms of the swap, under a credit default swap. Furthermore, there is no requirement that a party be informed in advance when a credit default swap agreement is sold. Accordingly, a Fund may have difficulty identifying the party responsible for payment of its claims. The notional value of credit default swaps with respect to a particular investment is often larger than the total par value of such investment outstanding and, in event of a default, there may be difficulties in making the required deliveries of the reference investments, possibly delaying payments.

Funds may invest in derivative instruments that provide exposure to one or more credit default swaps. For example, a Fund may invest in a derivative instrument known as the Loan-Only Credit Default Swap Index (“LCDX”), a tradable index with 100 equally-weighted underlying single-name loan-only credit default swaps (“LCDS”). Each underlying LCDS references an issuer whose loans trade in the secondary leveraged loan market. A Fund can either buy the index (take on credit exposure) or sell the index (pass credit exposure to a counterparty). While investing in these types of derivatives will increase the universe of debt securities to which a Fund is exposed, such investments entail additional risks that are not typically associated with investments in other debt securities. Credit default swaps and other derivative instruments related to loans are subject to the risks associated with loans generally, as well as the risks of derivative transactions.

•Investment Pools. Funds may invest in publicly or privately issued interests in investment pools whose underlying assets are credit default, credit-linked, interest rate, currency exchange, equity-linked or other types of swap contracts and related underlying securities or securities loan agreements. The pools’ investment results may be designed to correspond generally to the performance of a specified securities index or “basket” of securities, or sometimes a single security. These types of pools are often used to gain exposure to multiple securities with a smaller investment than would be required to invest directly in the individual securities. They also may be used to gain exposure to foreign securities markets without investing in the foreign securities themselves and/or the relevant foreign market. To the extent that a Fund invests in pools of swaps and related underlying securities or securities loan agreements whose return corresponds to the performance of a foreign securities index or one or more foreign securities, investing in such pools will involve risks similar to the risks of investing in foreign securities. In addition to the risks associated with investing in swaps generally, a Fund bears the risks and costs generally associated with investing in pooled investment vehicles, such as paying the fees and expenses of the pool and the risk that the pool or the operator of the pool may default on its obligations to the holder of interests in the pool, such as a Fund. Interests in privately offered investment pools of swaps may be considered illiquid.

•Contracts for Differences. “Contracts for differences” are swap arrangements in which a Fund may agree with a counterparty that its return (or loss) will be based on the relative performance of two different groups or “baskets” of securities. For example, as to one of the baskets, a Fund’s return is based on theoretical long futures positions in the securities comprising that basket, and as to the other basket, a Fund’s return is based on theoretical short futures positions in the securities comprising that other basket. The notional sizes of the baskets will not necessarily be the same, which can give rise to investment leverage. Funds may also use actual long and short futures positions to achieve the market exposure(s) as contracts for differences. Funds may enter into swaps and contracts for differences for investment return, hedging, risk management and for investment leverage.

•Swaptions. A swap option (also known as “swaptions”) is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement, at some designated future time on specified terms. The buyer and seller of the swap option agree on the strike price, length of the option period, the term of the swap, notional amount, amortization and frequency of settlement. Funds may engage in swap options for hedging purposes or in an attempt to manage and mitigate credit and interest rate risk. Funds may write (sell) and purchase put and call swap options. The use of swap options involves risks, including, among others, imperfect correlation between movements of the price of the swap options and the price of the securities, indices or other assets serving as reference instruments for the swap option, reducing the effectiveness of the instrument for hedging or investment purposes.

Obligations under Swap Agreements. The swap agreements a Fund enters into settle in cash and, therefore, provide for calculation of the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund's current obligations (or rights) under such a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). A Fund's current obligations under such a swap agreement will be accrued daily (offset against any amounts owed to the Fund).

Risks Associated with Swap Agreements. Swaps can be highly volatile and may have a considerable impact on a Fund’s performance, as the potential gain or loss on any swap transaction is not subject to any fixed limit. Whether a Fund’s use of swap agreements or swap options will be successful in furthering its investment objective of total return will depend on the ability of those managing the fund’s investments to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Funds will enter into swap agreements only with counterparties that present minimal credit risks, as determined by those managing the fund’s investments. Certain restrictions imposed on each Fund by the Internal Revenue Code may limit a Fund’s ability to use swap agreements.

Depending on the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it writes a swap option than it will incur when it purchases a swap option. When a Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when a Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

Liquidity of Swap Agreements. Some swap markets have grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, these swap markets have become relatively liquid. The liquidity of swap agreements will be determined by those managing the fund’s investments based on various factors, including:

•the frequency of trades and quotations,

•the number of dealers and prospective purchasers in the marketplace,

•dealer undertakings to make a market,

•the nature of the security (including any demand or tender features), and

•the nature of the marketplace for trades (including the ability to assign or offset a portfolio's rights and obligations relating to the investment).

Such determination will govern whether a swap will be deemed to be within each Fund’s restriction on investments in illiquid securities.

Valuing Swap Agreements. For purposes of applying a fund’s investment policies and restrictions (as stated in the Prospectuses and this SAI) swap agreements are generally valued by the funds at market value. In the case of a credit default swap, however, in applying certain of the funds’ investment policies and restrictions the fund will value the credit default swap at its notional value or its full exposure value (i.e., the sum of the notional amount for the contract plus the market value), but may value the credit default swap at market value for purposes of applying certain of the funds’ other investment policies and restrictions. For example, a fund may value credit default swaps at full exposure value for purposes of the fund’s credit quality guidelines because such value reflects the fund’s actual economic exposure during the term of the credit default swap agreement. In this context, both the notional amount and the market value may be positive or negative depending on whether the fund is selling or buying protection through the credit default swap. The manner in which certain securities or other instruments are valued by a fund for purposes of applying investment policies and restrictions may differ from the manner in which those investments are valued by other types of investors.

Permissible Uses of Futures and Options on Futures Contracts

Each Fund may enter into futures contracts and related options transactions, for hedging purposes and for other appropriate risk management purposes, and to modify the Fund’s exposure to various currency, commodity, equity, or fixed-income markets. Each Fund may engage in futures trading in an effort to generate returns. When using futures contracts and options on futures contracts for hedging or risk management purposes, each Fund determines that the price fluctuations in the contracts and options are substantially related to price fluctuations in securities held by the Fund or which it expects to purchase. In pursuing traditional hedging activities, each Fund may sell futures contracts or acquire puts to protect against a decline in the price of securities that the Fund owns. Each Fund may purchase futures contracts or calls on futures contracts to protect the Fund against an increase in the price of securities the Fund intends to purchase before it is in a position to do so.

Limitations on the Use of Futures, Options on Futures Contracts, and Swaps

CFTC Rule 4.5 provides that an investment company does not meet the definition of “commodity pool operator” under the CEA if its use of futures contracts, options on futures contracts, and swaps is sufficiently limited that the fund can fall within one of two exclusions set out in Rule 4.5. Each Fund intends to limit its use of futures contracts, options on futures contracts, and swaps to the degree necessary to fall within one of the two exclusions. If a Fund is unable to do so, it may incur expenses that are necessary to comply with the CEA and the rules the CFTC has adopted under it.

Risk of Potential Government Regulation of Derivatives

It is possible that additional government regulation of various types of derivative instruments, including futures, options and swap agreements, may limit or prevent a fund from using such instruments as a part of its investment strategy, and could ultimately prevent a fund from being able to achieve its investment objective. It is difficult to predict the effects future legislation and regulation in this area, but the effects could be substantial and adverse. It is possible that legislative and regulatory activity could limit or restrict the ability of a fund to use certain instruments as a part of its investment strategy.

Limits or restrictions applicable to the counterparties with which the funds engage in derivative transactions could also prevent the funds from using certain instruments.

Environmental, Social, and Governance Factors in the Selection of Portfolio Securities

(Applicable to all or a portion of the following Funds: Blue Chip Account, Core Plus Bond Account, Diversified International Account, Equity Income Account, Global Emerging Markets Account, LargeCap Growth Account I, MidCap Account, Principal Capital Appreciation Account, Real Estate Securities Account, SAM Balanced Portfolio, SAM Conservative Balanced Portfolio, SAM Conservative Growth Portfolio, SAM Flexible Income Portfolio, SAM Strategic Growth Portfolio, and SmallCap Account)

The portfolio managers of the Funds consider one or more environmental, social, and/or governance (“ESG”) factors along with other, non-ESG factors in making investment decisions. The consideration of ESG factors is intended to further the stated objective of the particular Funds. These ESG factors are generally no more significant than other factors in the investment selection process, such that ESG factors may not be determinative in deciding to include or exclude any particular investment in the portfolio. By way of example, environmental factors can include one or more of the following: climate change, natural resources, pollution and waste, and environmental opportunities. Social factors can include one or more of the following: human capital, product liability, stakeholder opposition, and social opportunities. Governance factors can include corporate governance and/or corporate behavior. Integration of ESG factors is qualitative and subjective by nature. There is no guarantee that the criteria used, or judgment exercised, will reflect the beliefs or values of any particular investor. Further, there is no assurance that any strategy or integration of ESG factors will be successful or profitable.

Fixed-Income Securities

ETNs

Certain funds may invest in, or sell short, exchange-traded notes (“ETNs”). ETNs are typically senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market index less applicable fees and expenses. ETNs are listed on an exchange and traded in the secondary market. The fund may hold the ETN until maturity, at which time the issuer is obligated to pay a return linked to the performance of the relevant market index. ETNs do not make periodic interest payments and principal is not protected.

ETNs are subject to credit risk and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs, it will bear their proportionate share of any fees and expenses borne by the ETN. The Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary market. ETNs are also subject to tax risk. The Internal Revenue Service (“IRS”) and Congress are considering proposals that would change the timing and character of income and gains from ETNs. There may also be times when an ETN share trades at a premium or discount to its market benchmark or strategy.

Funding Agreements

Some Funds may invest in Guaranteed Investment Contracts (“GICs”) and similar funding agreements. In connection with these investments, a Fund makes cash contributions to a deposit fund of an insurance company’s general account. The insurance company then credits to a Fund on a monthly basis guaranteed interest, which is based on an index (such as SOFR or a similar reference rate). The funding agreements provide that this guaranteed interest will not be less than a certain minimum rate. The purchase price paid for a funding agreement becomes part of the general assets of the insurance company. GICs are considered illiquid securities and will be subject to any limitations on such investments, unless there is an active and substantial secondary market for the particular instrument and market quotations are readily available.

Generally, funding agreements are not assignable or transferable without the permission of the issuing company, and an active secondary market in some funding agreements does not currently exist. Investments in GICs are subject to the risks associated with fixed-income instruments generally, and are specifically subject to the credit risk associated with an investment in the issuing insurance company.

Inflation-Indexed Bonds

Some Funds may invest in inflation-indexed bonds or inflation protected debt securities, which are fixed income securities whose value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers utilize a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the Consumer Price Index accruals as part of a semi-annual coupon. Inflation-indexed securities issued by the U.S. Treasury (Treasury Inflation Protected Securities or TIPS) have maturities of approximately five, ten or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis equal to a fixed percentage of the inflation-adjusted principal amount. If the periodic adjustment rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if the rate of inflation rises at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds. While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.

The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for Urban Consumers (CPI-U), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable inflation index calculated by that government. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Step-Coupon Securities

Each Fund may invest in step-coupon securities. Step-coupon securities trade at a discount from their face value and pay coupon interest. The coupon rate is low for an initial period and then increases to a higher coupon rate thereafter. Market values of these types of securities generally fluctuate in response to changes in interest rates to a greater degree than conventional interest-paying securities of comparable term and quality. Under many market conditions, investments in such securities may be illiquid, making it difficult for a Fund to dispose of them or determine their current value.

“Stripped” Securities

Each Fund may invest in stripped securities, which are usually structured with two or more classes that receive different proportions of the interest and principal distribution on a pool of U.S. government or foreign government securities or mortgage assets. In some cases, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). Stripped securities commonly have greater market volatility than other types of fixed-income securities. In the case of stripped mortgage securities, if the underlying mortgage assets experience greater than anticipated payments of principal, a Fund may fail to recoup fully its investments in IOs. Stripped securities may be illiquid. Stripped securities may be considered derivative securities.

Structured Notes

Some Funds may invest in a broad category of instruments known as “structured notes.” These instruments are debt obligations issued by industrial corporations, financial institutions or governmental or international agencies. Traditional debt obligations typically obligate the issuer to repay the principal plus a specified rate of interest. Structured notes, by contrast, obligate the issuer to pay amounts of principal or interest that are determined by reference to changes in some external factor or factors, or the principal and interest rate may vary from the stated rate because of changes in these factors. For example, the issuer’s obligations could be determined by reference to changes in the value of a foreign currency, an index of securities (such as the S&P 500 Index) or an interest rate (such as the U.S. Treasury bill rate). In some cases, the issuer’s obligations are determined by reference to changes over time in the difference (or “spread”) between two or more external factors (such as the U.S. prime lending rate and the total return of the stock market in a particular country, as measured by a stock index). In some cases, the issuer’s obligations may fluctuate inversely with changes in an external factor or factors (for example, if the U.S. prime lending rate goes up, the issuer’s interest payment obligations are reduced). In some cases, the issuer’s obligations may be determined by some multiple of the change in an external factor or factors (for example, three times the change in the U.S. Treasury bill rate). In some cases, the issuer’s obligations remain fixed (as with a traditional debt instrument) so long as an external factor or factors do not change by more than the specified amount (for example, if the value of a stock index does not exceed some specified maximum), but if the external factor or factors change by more than the specified amount, the issuer’s obligations may be sharply reduced.

Structured notes can serve many different purposes in the management of a fund. For example, they can be used to increase a fund’s exposure to changes in the value of assets that a fund would not ordinarily purchase directly (such as stocks traded in a market that is not open to U.S. investors). They also can be used to hedge the risks associated with other investments a fund holds. For example, if a structured note has an interest rate that fluctuates inversely with general changes in a country’s stock market index, the value of the structured note would generally move in the opposite direction to the value of holdings of stocks in that market, thus moderating the effect of stock market movements on the value of a fund’s portfolio as a whole. The cash flow on the underlying instruments may be apportioned among the newly issued structured notes to create securities with different investment characteristics such as varying maturities, payment priorities or interest rate provisions; the extent of the payments made with respect to structured notes is dependent on the extent of the cash flow on the underlying instruments.

Structured notes involve special risks. As with any debt obligation, structured notes involve the risk that the issuer will become insolvent or otherwise default on its payment obligations. This risk is in addition to the risk that the issuer’s obligations (and thus the value of a fund’s investment) will be reduced because of adverse changes in the external factor or factors to which the obligations are linked. The value of structured notes will in many cases be more volatile (that is, will change more rapidly or severely) than the value of traditional debt instruments. Volatility will be especially high if the issuer’s obligations are determined by reference to some multiple of the change in the external factor or factors. Structured notes also may be more difficult to accurately price than less complex securities and instruments or more traditional debt securities. Many structured notes have limited or no liquidity, so that a fund would be unable to dispose of the investment prior to maturity. As with all investments, successful use of structured notes depends in significant part on the accuracy of the analysis of those managing the fund’s investments of the issuer’s creditworthiness and financial prospects, and of their forecast as to changes in relevant economic and financial market conditions and factors. In instances where the issuer of a structured note is a foreign entity, the usual risks associated with investments in foreign securities apply. Structured notes may be considered derivative securities.

Zero-Coupon Securities

Each Fund may invest in zero-coupon securities. Zero-coupon securities have no stated interest rate and pay only the principal portion at a stated date in the future. They usually trade at a substantial discount from their face (par) value. Zero-coupon securities are subject to greater market value fluctuations in response to changing interest rates than debt obligations of comparable maturities that make distributions of interest in cash.

Foreign Currency Transactions

Options on Foreign Currencies

A Fund may buy and write options on foreign currencies in a manner similar to that in which futures or forward contracts on foreign currencies will be utilized. Each Fund may use options on foreign currencies to hedge against adverse changes in foreign currency conversion rates. For example, a decline in the U.S. dollar value of a foreign currency in which portfolio securities are denominated will reduce the U.S. dollar value of such securities, even if their value in the foreign currency remains constant. In order to protect against such diminutions in the value of the portfolio securities, a Fund may buy put options on the foreign currency. If the value of the currency declines, a Fund will have the right to sell such currency for a fixed amount in U.S. dollars, thereby offsetting, in whole or in part, the adverse effect on its portfolio. Conversely, when a rise in the U.S. dollar value of a currency in which securities to be acquired are denominated is projected, thereby increasing the cost of such securities, a Fund may buy call options on the foreign currency. The purchase of such options could offset, at least partially, the effects of the adverse movements in exchange rates. As in the case of other types of options, however, the benefit to a Fund from purchases of foreign currency options will be reduced by the amount of the premium and related transaction costs. In addition, if currency exchange rates do not move in the direction or to the extent desired, a Fund could sustain losses or lesser gains on transactions in foreign currency options that would require a Fund to forgo a portion or all of the benefits of advantageous changes in those rates.

Each Fund also may write options on foreign currencies. For example, to hedge against a potential decline in the U.S. dollar due to adverse fluctuations in exchange rates, a Fund could, instead of purchasing a put option, write a call option on the relevant currency. If the decline expected by a Fund occurs, the option will most likely not be exercised and the diminution in value of portfolio securities will be offset at least in part by the amount of the premium received. Similarly, instead of purchasing a call option to hedge against a potential increase in the U.S. dollar cost of securities to be acquired, a Fund could write a put option on the relevant currency which, if rates move in the manner projected by a Fund, will expire unexercised and allow a Fund to hedge the increased cost up to the amount of the premium. If exchange rates do not move in the expected direction, the option may be exercised and a Fund would be required to buy or sell the underlying currency at a loss, which may not be fully offset by the amount of the premium. Through the writing of options on foreign currencies, a Fund also may lose all or a portion of the benefits that might otherwise have been obtained from favorable movements in exchange rates.

Futures on Currency

A foreign currency future provides for the future sale by one party and purchase by another party of a specified quantity of foreign currency at a specified price and time. A public market exists in futures contracts covering a number of foreign currencies. Currency futures contracts are exchange-traded and change in value to reflect movements of a currency or a basket of currencies. Settlement must be made in a designated currency.

Forward Foreign Currency Exchange Contracts

Each Fund may, but is not obligated to, enter into forward foreign currency exchange contracts. Currency transactions include forward currency contracts and exchange listed or over-the-counter options on currencies. A forward currency contract involves a privately negotiated obligation to purchase or sell a specific currency at a specified future date at a price set at the time of the contract.

The typical use of a forward contract is to “lock in” the price of a security in U.S. dollars or some other foreign currency which a Fund is holding in its portfolio. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security transactions, a Fund may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated in or exposed to during the period between the date on which the security is purchased or sold and the date on which payment is made or received.

Those managing the fund’s investments also may from time to time utilize forward contracts for other purposes. For example, they may be used to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated in or exposed to. At times, each Fund may enter into “cross-currency” hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated.

It should be noted that the use of forward foreign currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange between the currencies that can be achieved at some future point in time. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit any potential gain that might result if the value of the currency increases.

Foreign Securities

Investing in foreign securities carries political and economic risks distinct from those associated with investing in the United States. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation on or delays in the removal of funds or other assets of a fund, political or financial instability, or diplomatic and other developments that could affect such investments. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment, or on the ability to repatriate assets or to convert currency into U.S. dollars. There may be a greater possibility of default by foreign governments or foreign-government sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability; military action or unrest; or adverse diplomatic developments.

Asia-Pacific Countries

In addition to the risks of foreign investing and the risks of investing in emerging markets, the developing market Asia-Pacific countries in which a Fund may invest are subject to certain additional or specific risks. In the Asia-Pacific markets, there is a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of investors and financial intermediaries. Many of these markets also may be affected by developments with respect to more established markets in the region, such as Japan and Hong Kong. Brokers in developing market Asia-Pacific countries typically are fewer in number and less well capitalized than brokers in the United States.

Many of the developing market Asia-Pacific countries may be subject to a greater degree of economic, political and social instability than is the case in the United States and Western European countries. Such instability may result from, among other things: (i) authoritarian governments or military involvement in political and economic decision- making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and/or (v) ethnic, religious and racial disaffection. In addition, the governments of many of such countries, such as Indonesia, have a heavy role in regulating and supervising the economy.

An additional risk common to most such countries is that the economy is heavily export-oriented and, accordingly, is dependent upon international trade. The existence of overburdened infrastructure and obsolete financial systems also present risks in certain countries, as do environmental problems. Certain economies also depend to a significant degree upon exports of primary commodities and, therefore, are vulnerable to changes in commodity prices that, in turn, may be affected by a variety of factors. The legal systems in certain developing market Asia-Pacific countries also may have an adverse impact on a Fund. The rights of investors in developing market Asia-Pacific companies may be more limited than those of shareholders of U.S. corporations. It may be difficult or impossible to obtain and/or enforce a judgment in a developing market Asia-Pacific country.

China

Investing in China involves special considerations, including: the risk of nationalization or expropriation of assets or confiscatory taxation; greater governmental involvement in and control over the economy, interest rates and currency exchange rates; controls on foreign investment and limitations on repatriation of invested capital; greater social, economic and political uncertainty; dependency on exports and the corresponding importance of international trade; and currency exchange rate fluctuations. The government of China maintains strict currency controls in support of economic, trade and political objectives and regularly intervenes in the currency market. The government’s actions in this respect may not be transparent or predictable. Furthermore, it is difficult for foreign investors to directly access money market securities in China because of investment and trading restrictions. These and other factors may decrease the value and liquidity of a fund’s investments.

A fund may obtain exposure to companies based or operated in China by investing through legal structures known as variable interest entities (“VIEs”). VIEs are not formally recognized under Chinese law and are subject to risks, such as the risk that China could cease to allow VIEs, could impose new restrictions on VIEs, or could deem the contractual arrangements of VIEs unenforceable. These risks could limit or eliminate the remedies and rights available to VIEs and their investors, such as a fund. If these risks materialize, the value of a fund’s investments in VIEs could be adversely affected, and a fund could incur significant losses with no available recourse.

Investments in Stock Connect and Bond Connect

Funds may invest in China A shares, which are shares of certain Chinese companies listed and traded through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs (“Stock Connect”). Stock Connect is a securities trading and clearing program established by Hong Kong Exchanges and Clearing Limited, the Shanghai Stock Exchange (“SSE”), the Shenzhen Stock Exchange (“SZSE”) and China Securities Depository and Clearing Corporation Limited, which seeks to provide mutual stock market access between Mainland China and Hong Kong. Trading through Stock Connect is subject to numerous restrictions and risks that could impair the Fund’s ability to invest in or sell China A shares and adversely affect the Fund’s performance, such as the following:

•China A shares generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules, regulations, and restrictions. Such securities may lose their eligibility, in which case they presumably could be sold but could no longer be purchased through Stock Connect. Market volatility and settlement difficulties in the China A share markets may result in significant fluctuations in the prices and liquidity of the securities traded on such markets. Further regulations or restrictions, such as limitations on redemptions or suspension of trading, may adversely impact the Fund.

•Stock Connect is generally only available on business days when both the China and Hong Kong markets are open and when banking services are available in both markets on the corresponding settlement days. As a result, a Fund may not be able trade when it would be otherwise attractive to do so, and the Fund may not be able to dispose of its China A shares in a timely manner.

•Investing in China A shares is subject to Stock Connect’s clearance and settlement procedures, which could pose risks to the Fund. Certain requirements must be completed before the market opening, or a Fund cannot sell the shares on that trading day. Stock Connect also imposes quotas that limit aggregate net purchases on an exchange on a particular day, and an investor cannot purchase and sell the same security through Stock Connect on the same trading day. Once the daily quota is reached, orders to purchase additional China A shares through Stock Connect will be rejected. Such restrictions could limit a Fund’s ability to sell its China A shares in a timely manner, or to sell them at all.

•If a Fund holds 5% or more of a China A share issuer’s total shares through Stock Connect investments, the Fund must return any profits obtained from the purchase and sale of those shares if both transactions occur within a six-month period. All accounts managed by the Funds’ Advisor and/or its affiliates will be aggregated for purposes of this 5% limitation, which makes it more likely that a Fund’s profits may be subject to these limitations.

•Stock Connect uses an omnibus clearing structure, and the Fund’s shares will be registered in its custodian’s name on the Central Clearing and Settlement System. This may limit the ability of the Fund’s advisor to effectively manage a Fund, and may expose the Fund to the credit risk of its custodian or to greater risk of expropriation. Investment in China A shares through Stock Connect may be available only through a single broker that is an affiliate of the Fund’s custodian, which may affect the quality of execution provided by such broker.

•China A shares purchased through Stock Connect will be held via a book entry omnibus account in the name of Hong Kong Securities Clearing Company Limited (“HKSCC”), Hong Kong’s clearing entity, and not the Fund’s name as the beneficial owner. Therefore, a Fund’s ability to exercise its rights as a shareholder and to pursue claims against the issuer of China A shares may be limited. While Chinese regulations and the Hong Kong Stock Exchange have issued clarifications and guidance supporting the concept of beneficial ownership through Stock Connect, the interpretation of beneficial ownership in China by regulators and courts may continue to evolve.

•The Fund’s investments in China A shares through Stock Connect are generally subject to Chinese securities regulations and listing rules, among other restrictions. The Fund will not benefit from access to Hong Kong investor compensation funds, which are set up to protect against defaults of trades, when investing through Stock Connect. Investments in China A shares may not be covered by the securities investor protection programs of the exchanges and, without the protection of such programs, will be subject to the risk of default by the broker. If the depository of the SSE and the SZSE defaulted, a Fund may not be able to recover fully its losses from the depository or may be delayed in receiving proceeds as part of any recovery process.

•Fees, costs and taxes imposed on foreign investors (such as the Fund) may be higher than comparable fees, costs and taxes imposed on owners of other securities that provide similar investment exposure. Trades using Stock Connect may also be subject to various fees, taxes and market charges imposed by Chinese market participants and regulatory authorities. Uncertainties in China’s tax rules related to the taxation of income and gains from investments in China A shares could result in unexpected tax liabilities for the Fund, and the withholding tax treatment of dividends and capital gains payable to overseas investors currently is unsettled.

•Because trades of eligible China A shares on Stock Connect must be settled in Renminbi (RMB), the Chinese currency, Funds investing through Stock Connect will be exposed to RMB currency risks. The ability to hedge RMB currency risks may be limited. The RMB is subject to exchange control restrictions, and the Fund could be adversely affected by delays in converting currencies into RMB and vice versa.

•Because Stock Connect is in its early stages, the effect on the market for trading China A shares with the introduction of numerous foreign investors is currently unknown. Stock Connect is relatively new and may be subject to further interpretation and guidance. There can be no assurance as to Stock Connect’s continued existence or whether future developments regarding the program may restrict or adversely affect the Fund’s investments or returns.

Funds may also invest in China Interbank bonds traded on the China Interbank Bond Market (“CIBM”) through the China - Hong Kong Bond Connect program (“Bond Connect”). In China, the Hong Kong Monetary Authority Central Money Markets Unit holds Bond Connect securities on behalf of investors (such as the Fund) in accounts maintained with maintained with a China-based custodian (either the China Central Depository & Clearing Co. or the Shanghai Clearing House). Investments using Bond Connect are subject to risks similar to those described above with respect to Stock Connect.

Europe

The economies and markets of European countries are often closely connected and interdependent, and events in one European country can have an adverse impact on other European countries. Certain funds may invest in securities of issuers that are domiciled in, or have significant operations in, member countries of the Economic and Monetary Union of the European Union (the “EU”), which requires member countries to comply with restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary controls. Decreasing imports or exports, changes in governmental or EU regulations on trade, changes in the exchange rate of the euro (the common currency of certain EU countries), the default or threat of default by an EU member country on its sovereign debt, and/or an economic recession in an EU member country may have a significant adverse effect on the economies of EU member countries and their trading partners, including some or all of the emerging markets countries. Although certain European countries do not use the euro, many of these countries are obliged to meet the criteria for joining the euro zone. Consequently, these countries must comply with many of the restrictions noted above. The European financial markets have experienced volatility and adverse trends in recent years due to concerns about economic downturns, rising government debt levels and the possible default of government debt in several European countries. Further defaults or restructurings by governments and other entities of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, one or more countries may abandon the euro and/or withdraw from the EU. The United Kingdom (the "UK") departed the EU on January 31, 2020 (commonly referred to as "Brexit"). As a result of Brexit, the UK may be less stable than it had been in prior years, and investments in the UK may be more volatile due to economic uncertainty and currency exchange rate fluctuations. The impact of these actions by European countries, especially if they occur in a disorderly fashion, is not clear but could be significant and far-reaching and could adversely impact the value of investments in the region.

Japan

Japanese investments may be significantly affected by events influencing Japan’s economy and the exchange rate between the Japanese yen and the U.S. dollar. Japan’s economy fell into a long recession in the 1990s. After a few years of mild recovery in the mid-2000s, Japan’s economy fell into another recession as a result of the recent global economic crisis. Japan is heavily dependent on exports and foreign oil. Japan is located in a seismically active area, and in 2011 experienced an earthquake of a sizable magnitude and a tsunami that significantly affected important elements of its infrastructure and resulted in a nuclear crisis. Since these events, Japan’s financial markets have fluctuated dramatically. The full extent of the impact of these events on Japan’s economy and on foreign investment in Japan is difficult to estimate. Japan’s economic prospects may be affected by the political and military situations of its near neighbors, notably North and South Korea, China, and Russia.

Latin America

Most Latin American countries have experienced, at one time or another, severe and persistent levels of inflation, including, in some cases, hyperinflation. This has, in turn, led to high interest rates, extreme measures by governments to keep inflation in check, and a generally debilitating effect on economic growth. Although inflation in many countries has lessened, there is no guarantee it will remain at lower levels. In addition, the political history of certain Latin American countries has been characterized by political uncertainty, intervention by the military in civilian and economic spheres, and political corruption. Such developments, if they were to reoccur, could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and result in significant disruption in securities markets. Certain Latin American countries may also have managed currencies, which are maintained at artificial levels to the U.S. dollar rather than at levels determined by the market. This type of system can lead to sudden and large adjustments in the currency which, in turn, can have a disruptive and negative effect on foreign investors. There is no significant foreign exchange market for many currencies and it would, as a result, be difficult for the Fund to engage in foreign currency transactions designed to protect the value of the Fund’s interests in securities denominated in such currencies. Finally, a number of Latin American countries are among the largest debtors of developing markets. There have been moratoria on, and reschedulings of, repayment with respect to these debts. Such events can restrict the flexibility of these debtor nations in the international markets and result in the imposition of onerous conditions on their economies.

High Yield Securities

Each Fund may invest a portion of its assets in bonds that are rated below investment grade (sometimes called “high yield bonds” or “junk bonds”), which are rated at the time of purchase Ba1 or lower by Moody’s and BB+ or lower by S&P Global Ratings. If the bond has been rated by only one of the rating agencies, that rating will determine the bond's rating; if the bond is rated differently by the rating agencies, the highest rating will be used; and if the bond has not been rated by either of the rating agencies, those selecting such investments will determine the bond's quality. Lower-rated bonds involve a higher degree of credit risk, which is the risk that the issuer will not make interest or principal payments when due. In the event of an unanticipated default, a fund would experience a reduction in its income and could expect a decline in the market value of the bonds so affected. Issuers of high yield securities may be involved in restructurings or bankruptcy proceedings that may not be successful. If an issuer defaults, it may not be able to pay all or a portion of interest and principal owed to the fund, it may exchange the high yield securities owned by the fund for other securities, including equities, and/or the fund may incur additional expenses while seeking recovery of its investment. Some funds may also invest in unrated bonds of foreign and domestic issuers. Unrated bonds, while not necessarily of lower quality than rated bonds, may not have as broad a market. Because of the size and perceived demand of the issue, among other factors, certain municipalities may not incur the expense of obtaining a rating. Those managing the fund’s investments will analyze the creditworthiness of the issuer, as well as any financial institution or other party responsible for payments on the bond, in determining whether to purchase unrated bonds. Unrated bonds will be included in the limitation each fund has with regard to high yield bonds unless those managing the fund’s investments deem such securities to be the equivalent of investment-grade bonds. Some of the high yield securities consist of Rule 144A securities. High yield securities may contain any type of interest rate payment or reset terms, including fixed rate, adjustable rate, zero coupon, contingent, deferred, payment-in-kind, and those with auction rate features.

Initial Public Offerings (“IPOs”)

An IPO is a company’s first offering of stock to the public. IPO risk is that the market value of IPO shares will fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for trading, and limited information about the issuer. The purchase of IPO shares may involve high transaction costs. IPO shares are subject to market risk and liquidity risk. In addition, the market for IPO shares can be speculative and/or inactive for extended periods. The limited number of shares available for trading in some IPOs may make it more difficult for a fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. Investors in IPO shares can be affected by substantial dilution in the value of their shares by sales of additional shares and by concentration of control in existing management and principal shareholders.

When a fund’s asset base is small, a significant portion of the fund’s performance could be attributable to investments in IPOs because such investments would have a magnified impact on the fund. As the fund’s assets grow, the effect of the fund’s investments in IPOs on the fund’s performance probably will decline, which could reduce the fund’s performance. Because of the price volatility of IPO shares, a fund may choose to hold IPO shares for a very short period. This may increase the turnover of the fund’s portfolio and lead to increased expenses to the fund, such as commissions and transaction costs. By selling IPO shares, the fund may realize taxable gains it will subsequently distribute to shareholders.

Interfund Lending and Borrowing

The SEC has granted an exemption permitting Principal Funds to borrow money from and lend money to each other for temporary or emergency purposes. The loans are subject to a number of conditions designed to ensure fair and equitable treatment of all participating funds, including the following: (1) no fund may borrow money through the program unless it receives a more favorable interest rate than a rate approximating the lowest interest rate at which bank loans would be available to any of the participating funds under a loan agreement; and (2) no fund may lend money through the program unless it receives a more favorable return than that available from an investment in overnight repurchase agreements. In addition, a fund may participate in the program only if and to the extent that such participation is consistent with a fund’s investment objectives and policies. Interfund loans and borrowings have a maximum duration of seven days. Loans may be called on one day’s notice. A fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional costs. The Board is responsible for overseeing and periodically reviewing the interfund lending program.

Inverse Floating Rate and Other Variable and Floating Rate Instruments

Each Fund may purchase variable and floating rate instruments. These instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate. These instruments may also include leveraged inverse floating rate debt instruments, or “inverse floaters”. The interest rate of an inverse floater resets in the opposite direction from the market rate of interest on a security or interest to which it is related. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest and is subject to many of the same risks as derivatives. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. Certain of these investments may be illiquid. The absence of an active secondary market with respect to these investments could make it difficult for a Fund to dispose of a variable or floating rate note if the issuer defaulted on its payment obligation or during periods that a Fund is not entitled to exercise its demand rights, and a Fund could, for these or other reasons, suffer a loss with respect to such instruments.

Investment Company Securities

Securities of other investment companies, including shares of closed-end investment companies (including interval funds), unit investment trusts, various exchange-traded funds (“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 certain closed-end investment companies, do not continuously offer their shares for sale (like open-end investment companies) but instead 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. An interval fund is a type of closed-end investment company that is continuously offered at net asset value, is not listed on an exchange, and only periodically offers to repurchase a limited amount of outstanding shares from its shareholders. Investing in interval funds involves liquidity risk, and the liquidity risk is even greater in interval funds that invest in securities of companies with smaller market capitalizations, derivatives, securities with substantial market and/or credit risk, or securities that are themselves illiquid. Other types of investment companies, such as ETFs, 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 NAV.

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.

Master Limited Partnerships (“MLPs”)

An MLP is an entity that is generally taxed as a partnership for federal income tax purposes and that derives each year at least 90% of its gross income from “Qualifying Income”. Qualifying Income includes interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from commodities or commodity futures, and income and gain from mineral or natural resources activities that generate Qualifying Income. MLP interests (known as units) are traded on securities exchanges or over-the-counter. An MLP’s organization as a partnership and compliance with the Qualifying Income rules generally eliminates federal tax at the entity level.

An MLP has one or more general partners (who may be individuals, corporations, or other partnerships) which manage the partnership, and limited partners, which provide capital to the partnership but have no role in its management. Typically, the general partner is owned by company management or another publicly traded sponsoring corporation. When an investor buys units in an MLP, the investor becomes a limited partner. Holders of MLP units have limited control and voting rights on matters affecting the partnership and are exposed to a remote possibility of liability for all of the obligations of that MLP in the event that a court determines that the rights of the holders of MLP units to vote to remove or replace the general partner of that MLP, to approve amendments to that MLP’s partnership agreement, or to take other action under the partnership agreement of that MLP would constitute “control” of the business of that MLP, or a court or governmental agency determines that the MLP is conducting business in a state without complying with the partnership statute of that state. Holders of MLP units are also exposed to the risk that they will be required to repay amounts to the MLP that are wrongfully distributed to them.

The business of certain MLPs is affected by supply and demand for energy commodities because such MLPs derive revenue and income based upon the volume of the underlying commodity produced, transported, processed, distributed, and/ or marketed. Pipeline MLPs have indirect commodity exposure to oil and gas price volatility because, although they do not own the underlying energy commodity, the general level of commodity prices may affect the volume of the commodity the MLP delivers to its customers and the cost of providing services such as distributing natural gas liquids. The costs of natural gas pipeline MLPs to perform services may exceed the negotiated rates under “negotiated rate” contracts. Processing MLPs may be directly affected by energy commodity prices. Propane MLPs own the underlying energy commodity, and therefore have direct exposure to energy commodity prices. The MLP industry in general could be hurt by market perception that MLP’s performance and valuation are directly tied to commodity prices.

Pipeline MLPs are common carrier transporters of natural gas, natural gas liquids (primarily propane, ethane, butane and natural gasoline), crude oil or refined petroleum products (gasoline, diesel fuel and jet fuel). Pipeline MLPs also may operate ancillary businesses such as storage and marketing of such products. Pipeline MLPs derive revenue from capacity and transportation fees. Historically, pipeline output has been less exposed to cyclical economic forces due to its low-cost structure and government-regulated nature. In addition, most pipeline MLPs have limited direct commodity price exposure because they do not own the product being shipped.

Processing MLPs are gatherers and processors of natural gas as well as providers of transportation, fractionation and storage of natural gas liquids (“NGLs”). Processing MLPs derive revenue from providing services to natural gas producers, which require treatment or processing before their natural gas commodity can be marketed to utilities and other end user markets. Revenue for the processor is fee based, although it is not uncommon to have some participation in the prices of the natural gas and NGL commodities for a portion of revenue.

Propane MLPs are distributors of propane to homeowners for space and water heating. Propane MLPs derive revenue from the resale of the commodity on a margin over wholesale cost. The ability to maintain margin is a key to profitability. Propane serves approximately 3% of the household energy needs in the United States, largely for homes beyond the geographic reach of natural gas distribution pipelines. Approximately 70% of annual cash flow is earned during the winter heating season (October through March). Accordingly, volumes are weather dependent, but have utility type functions similar to electricity and natural gas.

MLPs operating interstate pipelines and storage facilities are subject to substantial regulation by the Federal Energy Regulatory Commission (“FERC”), which regulates interstate transportation rates, services and other matters regarding natural gas pipelines including: the establishment of rates for service; regulation of pipeline storage and liquified natural gas facility construction; issuing certificates of need for companies intending to provide energy services or constructing and operating interstate pipeline and storage facilities; and certain other matters. FERC also regulates the interstate transportation of crude oil, including: regulation of rates and practices of oil pipeline companies; establishing equal service conditions to provide shippers with equal access to pipeline transportation; and establishment of reasonable rates for transporting petroleum and petroleum products by pipeline. Certain MLPs regulated by the FERC have the right, but are not obligated, to redeem common units held by an investor who is not subject to U.S. federal income taxation. The financial condition and results of operations of an MLP that redeems its common units could be adversely impacted.

MLPs are subject to various federal, state and local environmental laws and health and safety laws as well as laws and regulations specific to their particular activities. These laws and regulations address: health and safety standards for the operation of facilities, transportation systems and the handling of materials; air and water pollution requirements and standards; solid waste disposal requirements; land reclamation requirements; and requirements relating to the handling and disposition of hazardous materials. MLPs are subject to the costs of compliance with such laws applicable to them, and changes in such laws and regulations may adversely affect their results of operations.

MLPs may be subject to liability relating to the release of substances into the environment, including liability under federal “Superfund” and similar state laws for investigation and remediation of releases and threatened releases of hazardous materials, as well as liability for injury and property damage for accidental events, such as explosions or discharges of materials causing personal injury and damage to property. Such potential liabilities could have a material adverse effect upon the financial condition and results of operations of MLPs.

MLPs are subject to numerous business related risks, including: deterioration of business fundamentals reducing profitability due to development of alternative energy sources, consumer sentiment with respect to global warming, changing demographics in the markets served, unexpectedly prolonged and precipitous changes in commodity prices and increased competition that reduces the MLP’s market share; the lack of growth of markets requiring growth through acquisitions; disruptions in transportation systems; the dependence of certain MLPs upon the energy exploration and development activities of unrelated third parties; availability of capital for expansion and construction of needed facilities; a significant decrease in natural gas production due to depressed commodity prices or otherwise; the inability of MLPs to successfully integrate recent or future acquisitions; and the general level of the economy.

Municipal Obligations and AMT-Subject Bonds

Municipal Obligations are obligations issued by or on behalf of states, territories, and possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, including municipal utilities, or multi-state agencies or authorities. The interest on Municipal Obligations is exempt from federal income tax in the opinion of bond counsel to the issuer. Three major classifications of Municipal Obligations are: Municipal Bonds, that generally have a maturity at the time of issue of one year or more; Municipal Notes, that generally have a maturity at the time of issue of six months to three years; and Municipal Commercial Paper, that generally has a maturity at the time of issue of 30 to 270 days.

The term “Municipal Obligations” includes debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets, water and sewer works, and electric utilities. Other public purposes for which Municipal Obligations are issued include refunding outstanding obligations, obtaining funds for general operating expenses, and lending such funds to other public institutions and facilities. To the extent that a fund invests a significant portion of its assets in municipal obligations issued in connection with a single project, the fund likely will be affected by the economic, business or political environment of the project.

AMT-Subject Bonds are industrial development bonds issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated housing facilities, sports facilities, convention or trade show facilities, airport, mass transit, industrial, port or parking facilities, air or water pollution control facilities, and certain local facilities for water supply, gas, electricity, or sewage or solid waste disposal. They are considered to be Municipal Obligations if the interest paid thereon qualifies as exempt from federal income tax in the opinion of bond counsel to the issuer, even though the interest may be subject to the federal individual alternative minimum tax.

Municipal Bonds

Municipal Bonds may be either “general obligation” or “revenue” issues. General obligation bonds are secured by the issuer’s pledge of its faith, credit, and taxing power for the payment of principal and interest. Revenue bonds are payable from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source (e.g., the user of the facilities being financed), but not from the general taxing power. Industrial development bonds and pollution control bonds in most cases are revenue bonds and generally do not carry the pledge of the credit of the issuing municipality. The payment of the principal and interest on industrial revenue bonds depends solely on the ability of the user of the facilities financed by the bonds to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment. Funds may also invest in “moral obligation” bonds that are normally issued by special purpose public authorities. If an issuer of moral obligation bonds is unable to meet its obligations, the repayment of the bonds becomes a moral commitment but not a legal obligation of the state or municipality in question.

Municipal Commercial Paper

Municipal Commercial Paper refers to short-term obligations of municipalities that may be issued at a discount and may be referred to as Short-Term Discount Notes. Municipal Commercial Paper is likely to be used to meet seasonal working capital needs of a municipality or interim construction financing. Generally they are repaid from general revenues of the municipality or refinanced with long-term debt. In most cases Municipal Commercial Paper is backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or other institutions.

Municipal Notes

Municipal Notes usually are general obligations of the issuer and are sold in anticipation of a bond sale, collection of taxes, or receipt of other revenues. Payment of these notes is primarily dependent upon the issuer’s receipt of the anticipated revenues. Other notes include “Construction Loan Notes” issued to provide construction financing for specific projects, and “Bank Notes” issued by local governmental bodies and agencies to commercial banks as evidence of borrowings. Some notes (“Project Notes”) are issued by local agencies under a program administered by the U.S. Department of Housing and Urban Development. Project Notes are secured by the full faith and credit of the United States.

•Bank Notes are notes issued by local governmental bodies and agencies such as those described above to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working-capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.

•Bond Anticipation Notes (“BANs”) are usually general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long-term debt obligations or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer’s access to the long-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.

•Construction Loan Notes are issued to provide construction financing for specific projects. Permanent financing, the proceeds of which are applied to the payment of construction loan notes, is sometimes provided by a commitment by the Government National Mortgage Association (“GNMA”) to purchase the loan, accompanied by a commitment by the Federal Housing Administration to insure mortgage advances thereunder. In other instances, permanent financing is provided by commitments of banks to purchase the loan.

•Revenue Anticipation Notes (“RANs”) are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general they also constitute general obligations of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer’s ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and interest on RANs.

•Tax Anticipation Notes (“TANs”) are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. TANs are usually general obligations of the issuer. A weakness in an issuer’s capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delinquencies, could adversely affect the issuer’s ability to meet its obligations on outstanding TANs.

Other Municipal Obligations

Other kinds of Municipal Obligations are occasionally available in the marketplace, and the fund may invest in such other kinds of obligations to the extent consistent with its investment objective and limitations. Such obligations may be issued for different purposes and with different security than those mentioned.

Stand-By Commitments

Funds may acquire stand-by commitments with respect to municipal obligations held in their respective portfolios. Under a stand-by commitment, a broker-dealer, dealer, or bank would agree to purchase, at the relevant funds’ option, a specified municipal security at a specified price. Thus, a stand-by commitment may be viewed as the equivalent of a put option acquired by a fund with respect to a particular municipal security held in the fund’s portfolio.

The amount payable to a fund upon its exercise of a stand-by commitment normally would be 1) the acquisition cost of the municipal security (excluding any accrued interest that the fund paid on the acquisition), less any amortized market premium or plus any amortized market or original issue discount during the period the fund owned the security, plus, 2) all interest accrued on the security since the last interest payment date during the period the security was owned by the fund. Absent unusual circumstances, the fund would value the underlying municipal security at amortized cost. As a result, the amount payable by the broker-dealer, dealer or bank during the time a stand-by commitment is exercisable would be substantially the same as the value of the underlying municipal obligation.

A fund’s right to exercise a stand-by commitment would be unconditional and unqualified. Although a fund could not transfer a stand-by commitment, it could sell the underlying municipal security to a third party at any time. It is expected that stand-by commitments generally will be available to the funds without the payment of any direct or indirect consideration. The funds may, however, pay for stand-by commitments if such action is deemed necessary. In any event, the total amount paid for outstanding stand-by commitments held in a fund’s portfolio would not exceed 0.50% of the value of a fund’s total assets calculated immediately after each stand-by commitment is acquired.

The funds intend to enter into stand-by commitments only with broker-dealers, dealers, or banks that those managing the fund’s investments believe present minimum credit risks. A fund’s ability to exercise a stand-by commitment will depend upon the ability of the issuing institution to pay for the underlying securities at the time the stand-by commitment is exercised. The credit of each institution issuing a stand-by commitment to a fund will be evaluated on an ongoing basis by those managing the fund’s investments.

A fund intends to acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its right thereunder for trading purposes. The acquisition of a stand-by commitment would not affect the valuation of the underlying municipal security. Each stand-by commitment will be valued at zero in determining net asset value. Should a fund pay directly or indirectly for a stand-by commitment, its costs will be reflected in realized gain or loss when the commitment is exercised or expires. The maturity of a municipal security purchased by a fund will not be considered shortened by any stand-by commitment to which the obligation is subject. Thus, stand-by commitments will not affect the dollar-weighted average maturity of a fund’s portfolio.

Variable and Floating Rate Obligations

Certain Municipal Obligations, obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities, and debt instruments issued by domestic banks or corporations may carry variable or floating rates of interest. Such instruments bear interest at rates which are not fixed, but which vary with changes in specified market rates or indices, such as a bank prime rate or tax-exempt money market index. Variable rate notes are adjusted to current interest rate levels at certain specified times, such as every 30 days. A floating rate note adjusts automatically whenever there is a change in its base interest rate adjustor, e.g., a change in the prime lending rate or specified interest rate indices. Typically such instruments carry demand features permitting the fund to redeem at par.

The fund’s right to obtain payment at par on a demand instrument upon demand could be affected by events occurring between the date the fund elects to redeem the instrument and the date redemption proceeds are due which affects the ability of the issuer to pay the instrument at par value. Those managing the fund’s investments monitor on an ongoing basis the pricing, quality, and liquidity of such instruments and similarly monitor the ability of an issuer of a demand instrument, including those supported by bank letters of credit or guarantees, to pay principal and interest on demand. Although the ultimate maturity of such variable rate obligations may exceed one year, the fund treats the maturity of each variable rate demand obligation as the longer of a) the notice period required before the fund is entitled to payment of the principal amount through demand or b) the period remaining until the next interest rate adjustment. Floating rate instruments with demand features are deemed to have a maturity equal to the period remaining until the principal amount can be recovered through demand.

Funds may purchase participation interests in variable rate Municipal Obligations (such as industrial development bonds). A participation interest gives the purchaser an undivided interest in the Municipal Obligation in the proportion that its participation interest bears to the total principal amount of the Municipal Obligation. A fund has the right to demand payment on seven days’ notice, for all or any part of the fund’s participation interest in the Municipal Obligation, plus accrued interest. Each participation interest is backed by an irrevocable letter of credit or guarantee of a bank. Banks will retain a service and letter of credit fee and a fee for issuing repurchase commitments in an amount equal to the excess of the interest paid on the Municipal Obligations over the negotiated yield at which the instruments were purchased by the fund.

Risks of Municipal Obligations

The yields on Municipal Obligations are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions in the Municipal Obligations market, size of a particular offering, maturity of the obligation, and rating of the issue. The fund’s ability to achieve its investment objective also depends on the continuing ability of the issuers of the Municipal Obligations in which it invests to meet their obligation for the payment of interest and principal when due.

Municipal Obligations are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Act. They are also subject to federal or state laws, if any, which extend the time for payment of principal or interest, or both, or impose other constraints upon enforcement of such obligations or upon municipalities to levy taxes. The power or ability of issuers to pay, when due, principal of and interest on Municipal Obligations may also be materially affected by the results of litigation or other conditions.

From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on Municipal Obligations. It may be expected that similar proposals will be introduced in the future. If such a proposal was enacted, the ability of the fund to pay “exempt interest” dividends may be adversely affected. The fund would reevaluate its investment objective and policies and consider changes in its structure.

Pay-in-Kind Securities

Each Fund may invest in pay-in-kind securities. Pay-in-kind securities pay dividends or interest in the form of additional securities of the issuer, rather than in cash. These securities are usually issued and traded at a discount from their face amounts. The amount of the discount varies depending on various factors, such as the time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security, and the perceived credit quality of the issuer. The market prices of pay-in-kind securities generally are more volatile than the market prices of securities that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than are other types of securities having similar maturities and credit quality.

Portfolio Turnover (Active Trading)

Portfolio turnover is a measure of how frequently a portfolio’s securities are bought and sold. The portfolio turnover rate is generally calculated as the dollar value of the lesser of a portfolio’s purchases or sales of shares of securities during a given year, divided by the monthly average value of the portfolio securities during that year (excluding securities whose maturity or expiration at the time of acquisition were less than one year). For example, a portfolio reporting a 100% portfolio turnover rate would have purchased and sold securities worth as much as the monthly average value of its portfolio securities during the year.

It is not possible to predict future turnover rates with accuracy. Many variable factors are outside the control of a portfolio manager. The investment outlook for the securities in which a portfolio may invest may change as a result of unexpected developments in securities markets, economic or monetary policies, or political relationships. High market volatility may result in a portfolio manager using a more active trading strategy than might otherwise be employed. Each portfolio manager considers the economic effects of portfolio turnover but generally does not treat the portfolio turnover rate as a limiting factor in making investment decisions.

Sale of shares by investors may require the liquidation of portfolio securities to meet cash flow needs. In addition, changes in a particular portfolio’s holdings may be made whenever the portfolio manager considers that a security is no longer appropriate for the portfolio or that another security represents a relatively greater opportunity. Such changes may be made without regard to the length of time that a security has been held.

Higher portfolio turnover rates generally increase transaction costs that are expenses of the Fund. Active trading may generate short-term gains (losses) for taxable shareholders.

The following Funds had significant variation in portfolio turnover rates over the two most recently completed fiscal years:


Account/Portfolio	2023	2022	Comments
Blue Chip	8.8%	91.9%	Turnover was higher in 2022 due to a large fund outflow.
Bond Market Index	47.4	102.0	Turnover decreased in 2023 due to lower volatility in client-driven cash flows.
Diversified Balanced Adaptive Allocation	35.7	104.9	Turnover was higher in 2022 due to heightened equity market volatility.
Diversified Growth Adaptive Allocation	38.6	101.8	Turnover was higher in 2022 due to heightened equity market volatility.
LargeCap S&P 500 Index	2.3	9.0	Turnover decreased in 2023 due to smaller cash flows in 2023.
Principal LifeTime Strategic Income	15.3	37.6	Turnover was higher in 2022 due to heightened market volatility.
SAM Flexible Income	24.8	54.1	Turnover was higher in 2022 due to more active portfolio management and repositioning.
U.S. LargeCap Buffer July	69.3	20.0	Turnover was higher in 2023 due to larger cash flows in 2023 and because the fund had a full year of operations in 2023.
U.S. LargeCap Buffer October	47.4	180.0	Turnover decreased in 2023 due to smaller cash flows in 2023.

Preferred Securities

Preferred securities can include: traditional preferred securities, hybrid-preferred securities, $25 par hybrid preferred securities, baby bonds, U.S. dividend received deduction (“DRD”) preferred stock, fixed rate and floating rate adjustable preferred securities, step-up preferred securities, public and 144A $1000 par capital securities including U.S. agency subordinated debt issues, trust originated preferred securities, monthly income preferred securities, quarterly income bond securities, quarterly income debt securities, quarterly income preferred securities, corporate trust securities, public income notes, and other trust preferred securities.

•Traditional Preferred Securities. Traditional preferred securities may be issued by an entity taxable as a corporation and pay fixed or floating rate dividends. However, these claims are subordinated to more senior creditors, including senior debt holders. “Preference” means that a company must pay dividends on its preferred securities before paying any dividends on its common stock, and the claims of preferred securities holders are ahead of common stockholders’ claims on assets in a corporate liquidation. Holders of preferred securities usually have no right to vote for corporate directors or on other matters. Preferred securities share many investment characteristics with both common stock and bonds.

•Hybrid or Trust Preferred Securities. Hybrid-preferred securities are debt instruments that have characteristics similar to those of traditional preferred securities (characteristics of both subordinated debt and preferred stock). Hybrid preferred securities may be issued by corporations, generally in the form of interest-bearing instruments with preferred securities characteristics, or by an affiliated trust or partnership of the corporation, generally in the form of preferred interests in subordinated business trusts or similarly structured securities. The hybrid-preferred securities market consists of both fixed and adjustable coupon rate securities that are either perpetual in nature or have stated maturity dates. Hybrid preferred holders generally have claims to assets in a corporate liquidation that are senior to those of traditional preferred securities but subordinate to those of senior debt holders. Certain subordinated debt and senior debt issues that have preferred characteristics are also considered to be part of the broader preferred securities market.

Preferred securities may be issued by trusts (likely one that is wholly-owned by a financial institution or other corporate entity, typically a bank holding company) or other special purpose entities established by operating companies, and are therefore not direct obligations of operating companies. The financial institution creates the trust and owns the trust’s common securities. The trust uses the sale proceeds of its preferred securities to purchase, for example, subordinated debt issued by the financial institution. The financial institution uses the proceeds from the subordinated debt sale to increase its capital while the trust receives periodic interest payments from the financial institution for holding the subordinated debt. The trust uses the funds received to make dividend payments to the holders of the trust preferred securities. The primary advantage of this structure may be that the trust preferred securities are treated by the financial institution as debt securities for tax purposes and as equity for the calculation of capital requirements.

Trust preferred securities typically bear a market rate coupon comparable to interest rates available on debt of a similarly rated issuer. Typical characteristics include long-term maturities, early redemption by the issuer, periodic fixed or variable interest payments, and maturities at face value. Holders of trust preferred securities have limited voting rights to control the activities of the trust and no voting rights with respect to the financial institution. The market value of trust preferred securities may be more volatile than those of conventional debt securities. Trust preferred securities may be issued in reliance on Rule 144A under the 1933 Act and subject to restrictions on resale. There can be no assurance as to the liquidity of trust preferred securities and the ability of holders, such as a fund, to sell their holdings. The condition of the financial institution can be looked to identify the risks of trust preferred securities as the trust typically has no business operations other than to issue the trust preferred securities. If the financial institution defaults on interest payments to the trust, the trust will not be able to make dividend payments to holders of its securities, such as a fund.

•Floating Rate Preferred Securities. Floating rate preferred securities provide for a periodic adjustment in the interest rate paid on the securities. The terms of such securities provide that interest rates are adjusted periodically based upon an interest rate adjustment index. The adjustment intervals may be regular, and range from daily up to annually, or may be event-based, such as a change in the short-term interest rate. Because of the interest rate reset feature, floating rate securities provide the Fund with a certain degree of protection against rising interest rates, although the interest rates of floating rate securities will participate in any declines in interest rates as well.

If a portion of a fund’s income consists of dividends paid by U.S. corporations, a portion of the dividends paid by the fund may be eligible for the corporate dividends-received deduction for corporate shareholders. In addition, distributions reported by a fund as derived from qualified dividend income (“QDI”) will be taxed in the hands of individuals at the reduced rates applicable to net capital gains, provided certain holding period and other requirements are met by both the shareholder and the fund. Dividend income that a fund receives from REITs, if any, will generally not be treated as QDI and will not qualify for the corporate dividends-received deduction. It is unclear the extent to which distributions a fund receives from investments in certain preferred securities will be eligible for treatment as QDI or for the corporate dividends-received deduction. A fund cannot predict at this time what portion, if any, of its dividends will qualify for the corporate dividends-received deduction or be eligible for the reduced rates of taxation applicable to QDI.

Real Estate Investment Trusts (“REITs”)

REITs are pooled investment vehicles that invest in income producing real estate, real estate related loans, or other types of real estate interests. U.S. REITs are allowed to eliminate corporate level federal tax so long as they meet certain requirements of the Internal Revenue Code. Foreign REITs (“REIT-like”) entities may have similar tax treatment in their respective countries. Equity real estate investment trusts own real estate properties, while mortgage real estate investment trusts make and/or invests in construction, development, and long-term mortgage loans. Their value may be affected by changes in the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, and tax and regulatory requirements, such as those relating to the environment. Both types of trusts are not diversified, are dependent upon management skill, are subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to qualify for tax-free status of income under the Internal Revenue Code and failing to maintain exemption from the 1940 Act. In addition, foreign REIT-like entities will be subject to foreign securities risks. (See “Foreign Securities”).

Repurchase and Reverse Repurchase Agreements, Mortgage Dollar Rolls and Sale-Buybacks

Each Fund may invest in repurchase and reverse repurchase agreements. Repurchase agreements typically involve the purchase of debt securities from a financial institution such as a bank, savings and loan association, or broker-dealer. A repurchase agreement provides that the fund sells back to the seller and that the seller repurchases the underlying securities at a specified price on a specific date. Repurchase agreements may be viewed as loans by a fund collateralized by the underlying securities. This arrangement results in a fixed rate of return that is not subject to market fluctuation while the fund holds the security. In the event of a default or bankruptcy by a selling financial institution, the affected fund bears a risk of loss. To minimize such risks, the fund enters into repurchase agreements only with parties those managing the fund’s investments deem creditworthy (those that are large, well-capitalized, and well-established financial institutions). In addition, the value of the securities collateralizing the repurchase agreement is, and during the entire term of the repurchase agreement remains, at least equal to the acquisition price the Funds pay to the seller of the securities.

In a repurchase agreement, a Fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon price on an agreed upon date within a number of days (usually not more than seven) from the date of purchase. The resale price consists of the purchase price plus an amount that is unrelated to the coupon rate or maturity of the purchased security. A repurchase agreement involves the obligation of the seller to pay the agreed upon price, which obligation is in effect secured by the value (at least equal to the amount of the agreed upon resale price and marked-to-market daily) of the underlying security or “collateral.” A risk associated with repurchase agreements is the failure of the seller to repurchase the securities as agreed, which may cause a Fund to suffer a loss if the market value of such securities declines before they can be liquidated on the open market. In the event of bankruptcy or insolvency of the seller, a Fund may encounter delays and incur costs in liquidating the underlying security. Repurchase agreements that mature in more than seven days are subject to each Fund’s limit on illiquid investments. While it is not possible to eliminate all risks from these transactions, it is the policy of the Fund to limit repurchase agreements to those parties whose creditworthiness has been reviewed and found satisfactory by those managing the fund’s investments.

Each Fund may use reverse repurchase agreements, mortgage dollar rolls, and economically similar transactions to obtain cash to satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity of selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or notes. In a reverse repurchase agreement, a Fund sells a portfolio security to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. A Fund will enter into reverse repurchase agreements only with parties that those managing the fund's investments deem creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This technique may also have a leveraging effect on the Fund.

A “mortgage dollar roll” is similar to a reverse repurchase agreement in certain respects. In a “dollar roll” transaction a Fund sells a mortgage-related security, such as a security issued by the Government National Mortgage Association, to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a pre-determined price. A dollar roll can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which a Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are “substantially identical.” To be considered “substantially identical,” the securities returned to a Fund generally must: 1) be collateralized by the same types of underlying mortgages; 2) be issued by the same agency and be part of the same program; 3) have a similar original stated maturity; 4) have identical net coupon rates; 5) have similar market yields (and therefore price); and 6) satisfy “good delivery” requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within 0.01% of the initial amount delivered.

Each Fund also may effect simultaneous purchase and sale transactions that are known as “sale-buybacks.” A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty who purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of the Fund’s repurchase of the underlying security.

Restricted and Illiquid Securities

A Fund may experience difficulty in valuing and selling illiquid securities and, in some cases, may be unable to value or sell certain illiquid securities for an indefinite period of time. Illiquid securities may include a wide variety of investments, such as (1) repurchase agreements maturing in more than seven days (unless the agreements have demand/redemption features), (2) OTC options contracts and certain other derivatives (including certain swap agreements), (3) fixed time deposits that are not subject to prepayment or do not provide for withdrawal penalties upon prepayment (other than overnight deposits), (4) loan interests and other direct debt instruments, (5) certain municipal lease obligations, (6) commercial paper issued pursuant to Section 4(a)(2) of the 1933 Act, (7) thinly-traded securities, and (8) securities whose resale is restricted under the federal securities laws or contractual provisions (including restricted, privately placed securities that, under the federal securities laws, generally may be resold only to qualified institutional buyers). Generally, restricted securities may be sold only in a public offering for which a registration statement has been filed and declared effective or in a transaction that is exempt from the registration requirements of the Securities Act of 1933. When registration is required, a Fund that owns restricted securities may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a restricted security. If adverse market conditions were to develop during such a period, the Fund might obtain a less favorable price than existed when it decided to sell.

Illiquid and restricted securities are priced at fair value as determined in good faith by PGI as the Funds’ valuation designee, subject to the Board’s oversight. As described above, some of the Funds have adopted investment restrictions that limit investments in illiquid securities.

Royalty Trusts

A royalty trust generally acquires an interest in natural resource or chemical companies and distributes the income it receives to its investors. A sustained decline in demand for natural resource and related products could adversely affect royalty trust revenues and cash flows. Such a decline could result from a recession or other adverse economic conditions, an increase in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs, or a shift in consumer demand. Rising interest rates could harm the performance and limit the capital appreciation of royalty trusts because of the increased availability of alternative investments at more competitive yields. Fund shareholders will indirectly bear their proportionate share of the royalty trusts’ expenses.

Securitized Products - Mortgage- and Asset-Backed Securities

The yield characteristics of the mortgage- and asset-backed securities in which a Fund may invest differ from those of traditional debt securities. Among the major differences are that the interest and principal payments are made more frequently on mortgage- and asset-backed securities (usually monthly) and that principal may be prepaid at any time because the underlying mortgage loans or other assets generally may be prepaid at any time. As a result, if a Fund purchases those securities at a premium, a prepayment rate that is faster than expected will reduce their yield, while a prepayment rate that is slower than expected will have the opposite effect of increasing yield. If the Fund purchases these securities at a discount, faster than expected prepayments will increase their yield, while slower than expected prepayments will reduce their yield. Amounts available for reinvestment by a Fund are likely to be greater during a period of declining interest rates and, as a result, are likely to be reinvested at lower interest rates than during a period of rising interest rates.

In general, the prepayment rate for mortgage-backed securities decreases as interest rates rise and increases as interest rates fall. However, rising interest rates will tend to decrease the value of these securities. In addition, an increase in interest rates may affect the volatility of these securities by effectively changing a security that was considered a short-term security at the time of purchase into a long-term security. Long-term securities generally fluctuate more widely in response to changes in interest rates than short- or medium-term securities.

The market for privately issued mortgage- and asset-backed securities is smaller and less liquid than the market for U.S. government mortgage-backed securities. A collateralized mortgage obligation (“CMO”) may be structured in a manner that provides a wide variety of investment characteristics (yield, effective maturity, and interest rate sensitivity). As market conditions change, and especially during periods of rapid market interest rate changes, the ability of a CMO to provide the anticipated investment characteristics may be greatly diminished. Increased market volatility and/or reduced liquidity may result.

Each Fund may invest in each of collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”), other collateralized debt obligations (“CDOs”), and other similarly structured securities. CBOs, CLOs, and other CDOs are types of asset-backed securities. A CBO is a trust that is often backed by a diversified pool of high risk, below-investment-grade fixed-income securities. The collateral can be from many different types of fixed-income securities, such as high yield debt, residential privately issued mortgage-related securities, commercial privately issued mortgage-related securities, trust preferred securities, and emerging market debt. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. Other CDOs are trusts backed by other types of assets representing obligations of various parties. CBOs, CLOs, and other CDOs may charge management fees and administrative expenses.

Short Sales

A short sale involves the sale by a fund of a security that it does not own with the expectation of covering settlement by purchasing the same security at a later date at a lower price. A fund may also enter into a short position by using a derivative instrument, such as a future, forward, or swap agreement. If the price of the security or derivative increases prior to the time the fund is required to replace the borrowed security, 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 broker. Therefore, short sales involve the risk that losses may be exaggerated, potentially losing more money than the value of the investment.

A “short sale against the box” is a technique that involves selling either a security owned by a fund, or a security equivalent in kind and amount to the security sold short that the fund has the right to obtain, at no additional cost, for delivery at a specified date in the future. Each fund may enter into a short sale against the box to hedge against anticipated declines in the market price of portfolio securities. If the value of the securities sold short against the box increases prior to the scheduled delivery date, a fund will lose money.

Special Purpose Acquisition Companies (“SPACs”)

Each Fund may invest in securities of special purpose acquisition companies (“SPACs”) or similar special purpose entities that pool funds to seek potential acquisition opportunities. Unless and until an acquisition is completed, a SPAC or similar entity generally maintains assets (less a portion retained to cover expenses) in a trust account comprised of U.S. government securities, money market securities, and cash, and similar investments whose returns or yields may be significantly lower than those of the Fund’s other investments. Because SPACs and similar entities are in essence blank-check companies without an operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entity’s management to identify and complete a profitable acquisition, which may not occur. For example, even if an acquisition or merger target is identified, the Fund may elect not to participate in, or vote to approve, the proposed transaction. Moreover, an acquisition or merger once effected may prove unsuccessful and an investment in the SPAC may lose value.

SPACs are also subject to the following additional risks:

•The risk that, in the case of SPACs used as an opportunity for startups to go public without going through the traditional IPO process, such startups may become publicly traded with potentially less due diligence than what is typical in a traditional IPO through an underwriter and may not be experienced in facing the challenges, expenses and risks of being a public company, including the increased regulatory and financial scrutiny and the need to comply with applicable governance and accounting requirements.

•SPAC sponsors may have a potential conflict of interest to complete a deal that may be unfavorable for other investors in the SPAC. For example, SPAC sponsors often own warrants to acquire additional shares of the company at a fixed price, and the exercise by the SPAC sponsor of its warrants may dilute the value of the equity interests of other investors in the SPAC.

•Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices.

•Only a thinly traded market for shares of or interests in a SPAC may develop, or there may be no market at all, leaving the Fund unable to sell its interest in a SPAC or to sell its interest only at a lower price. Investments in SPACs may include private placements, including PIPEs, and, accordingly, may be considered illiquid and/or be subject to restrictions on resale.

•Values of investments in SPACs may be highly volatile and may depreciate significantly over time.

Supranational Entities

Each Fund may invest in obligations of supranational entities. A supranational entity is an entity designated or supported by national governments to promote economic reconstruction, development or trade amongst nations. Examples of supranational entities include the International Bank for Reconstruction and Development (also known as the World Bank) and the European Investment Bank. Obligations of supranational entities are subject to the risk that the governments on whose support the entity depends for its financial backing or repayment may be unable or unwilling to provide that support. Obligations of a supranational entity that are denominated in foreign currencies will also be subject to the risks associated with investments in foreign currencies.

Synthetic Securities

Incidental to other transactions in fixed income securities and/or for investment purposes, a Fund also may combine options on securities with cash, cash equivalent investments or other fixed income securities in order to create “synthetic” securities which approximate desired risk and return profiles. This may be done where a “non-synthetic” security having the desired risk/return profile either is unavailable (e.g., short-term securities of certain non-U.S. governments) or possesses undesirable characteristics (e.g., interest payments on the security would be subject to non-U.S. withholding taxes). A Fund also may purchase forward non-U.S. exchange contracts in conjunction with U.S. dollar-denominated securities in order to create a synthetic non-U.S. currency denominated security which approximates desired risk and return characteristics where the non-synthetic securities either are not available in non-U.S. markets or possess undesirable characteristics. The use of synthetic bonds and other synthetic securities may involve risks different from, or potentially greater than, risks associated with direct investments in securities and other assets. Synthetic securities may increase other Fund risks, including market risk, liquidity risk, and credit risk, and their value may or may not correlate with the value of the relevant underlying asset.

Temporary Defensive Measures/Money Market Instruments

Each Fund may make money market investments (cash equivalents), without limit, pending other investment or settlement, for liquidity, or in adverse market conditions. Following are descriptions of the types of money market instruments that each Fund may purchase:

•U.S. Government Securities - Securities issued or guaranteed by the U.S. government, including treasury bills, notes, and bonds.

•U.S. Government Agency Securities - Obligations issued or guaranteed by agencies or instrumentalities of the U.S. government.

•U.S. agency obligations include, but are not limited to, the Bank for Cooperatives, Federal Home Loan Banks, and Federal Intermediate Credit Banks.

•U.S. instrumentality obligations include, but are not limited to, the Export-Import Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association.

Some obligations issued or guaranteed by U.S. government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury. Others, such as those issued by the Federal National Mortgage Association, are supported by discretionary authority of the U.S. government to purchase certain obligations of the agency or instrumentality. Still others, such as those issued by the Student Loan Marketing Association, are supported only by the credit of the agency or instrumentality.

•Bank Obligations - Certificates of deposit, time deposits and bankers’ acceptances of U.S. commercial banks having total assets of at least one billion dollars and overseas branches of U.S. commercial banks and foreign banks, which in the opinion of those managing the fund’s investments, are of comparable quality. A Fund may acquire obligations of U.S. banks that are not members of the Federal Reserve System or of the Federal Deposit Insurance Corporation.

Certificates of deposit are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits.

Obligations of foreign banks and obligations of overseas branches of U.S. banks are subject to somewhat different regulations and risks than those of U.S. domestic banks. For example, an issuing bank may be able to maintain that the liability for an investment is solely that of the overseas branch which could expose a Fund to a greater risk of loss. In addition, obligations of foreign banks or of overseas branches of U.S. banks may be affected by governmental action in the country of domicile of the branch or parent bank. Examples of adverse foreign governmental actions include the imposition of currency controls, the imposition of withholding taxes on interest income payable on such obligations, interest limitations, seizure or nationalization of assets, or the declaration of a moratorium. Deposits in foreign banks or foreign branches of U.S. banks are not covered by the Federal Deposit Insurance Corporation and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks or the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to United States banks. Foreign banks are not generally subject to examination by any United States Government agency or instrumentality. A Fund only buys short-term instruments where the risks of adverse governmental action are believed by those managing the fund’s investments to be minimal. A Fund considers these factors, along with other appropriate factors, in making an investment decision to acquire such obligations. It only acquires those which, in the opinion of management, are of an investment quality comparable to other debt securities bought by the Fund.

A certificate of deposit is issued against funds deposited in a bank or savings and loan association for a definite period of time, at a specified rate of return. Normally they are negotiable. However, a Fund occasionally may invest in certificates of deposit which are not negotiable. Such certificates may provide for interest penalties in the event of withdrawal prior to their maturity. A bankers’ acceptance is a short-term credit instrument issued by corporations to finance the import, export, transfer, or storage of goods. They are termed “accepted” when a bank guarantees their payment at maturity and reflect the obligation of both the bank and drawer to pay the face amount of the instrument at maturity.

•Commercial Paper - Short-term promissory notes issued by U.S. or foreign corporations.

•Short-term Corporate Debt - Corporate notes, bonds, and debentures that at the time of purchase have 397 days or less remaining to maturity, with certain exceptions permitted by applicable regulations.

•Repurchase Agreements - Instruments under which securities are purchased from a bank or securities dealer with an agreement by the seller to repurchase the securities at the same price plus interest at a specified rate.

•Taxable Municipal Obligations - Short-term obligations issued or guaranteed by state and municipal issuers which generate taxable income.

U.S. Government and U.S. Government-Sponsored Securities

U.S. government securities refers to a variety of debt securities issued by or guaranteed by the U.S. Treasury, such as Treasury bills, notes, and bonds and mortgage-backed securities guaranteed by the Government National Mortgage Association (Ginnie Mae), and are supported by the full faith and credit of the United States meaning that the U.S. government is required to repay the principal in the event of default. 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. The U.S. government does not guarantee the market price of any U.S. government security.

U.S. government securities and U.S. government-sponsored securities may be adversely impacted by changes in interest rates or a default by or decline in the credit rating of the applicable government-sponsored entity. 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.

Warrants and Rights

The Funds may invest in warrants and rights. A warrant is an instrument that gives the holder a right to purchase a given number of shares of a particular security at a specified price until a stated expiration date. Buying a warrant generally can provide a greater potential for profit or loss than an investment of equivalent amounts in the underlying common stock. The market value of a warrant does not necessarily move with the value of the underlying securities. If a holder does not sell the warrant, it risks the loss of its entire investment if the market price of the underlying security does not, before the expiration date, exceed the exercise price of the warrant. Investment in warrants is a speculative activity. Warrants pay no dividends and confer no rights (other than the right to purchase the underlying securities) with respect to the assets of the issuer. A right is a privilege granted to existing shareholders of a corporation to subscribe for shares of a new issue of common stock before it is issued. Rights normally have a short life, usually two to four weeks, are freely transferable and entitle the holder to buy the new common stock at a lower price than the public offering price.

When-Issued, Delayed Delivery, and Forward Commitment Transactions

Each of the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. Typically, no income accrues on securities a Fund has committed to purchase prior to the time delivery of the securities is made.

When purchasing a security on a when-issued, delayed delivery, or forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. Because the Fund is not required to pay for the security until the delivery date, these risks are in addition to the risks associated with the Fund’s other investments. If the Fund remains substantially fully invested at a time when when-issued, delayed delivery, or forward commitment purchases are outstanding, the purchases may result in a form of leverage.

When the Fund has sold a security on a when-issued, delayed delivery, or forward commitment basis, the Fund does not participate in future gains or losses with respect to the security. If the other party to a transaction fails to deliver or pay for the securities, the Fund could miss a favorable price or yield opportunity or could suffer a loss. A Fund may dispose of or renegotiate a transaction after it is entered into, and may sell when-issued, delayed delivery, or forward commitment securities before they are delivered, which may result in a capital gain or loss. There is no percentage limitation on the extent to which the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis.

LEADERSHIP STRUCTURE AND BOARD

PVC's Board has overall responsibility for overseeing PVC's operations in accordance with the 1940 Act, other applicable laws, and PVC's charter. Each Board Member serves on the Boards of the following investment companies: Principal Funds, Inc. (“PFI”), Principal Variable Contracts Funds, Inc. (“PVC”), Principal Exchange-Traded Funds (“PETF”), and Principal Real Asset Fund (“PRA”), which are collectively referred to in this SAI as the “Fund Complex.” Board Members who are affiliated persons of any investment advisor, the principal distributor, or the principal underwriter of the Fund Complex are considered “interested persons” of the Funds (as defined in the 1940 Act) and are referred to in this SAI as “Interested Board Members.” Board Members who are not Interested Board Members are referred to as “Independent Board Members.”

Each Board Member generally serves until the next annual meeting of shareholders or until such Board Member’s earlier death, resignation, or removal. Independent Board Members have a 72-year age limit and, for Independent Board Members elected on or after September 14, 2021, a 72-year age limit or a 15-year term limit, whichever occurs first. The Board may waive the age or term limits in the Board’s discretion. The Board elects officers to supervise the day-to-day operations of the Fund Complex. Officers serve at the pleasure of the Board, and each officer has the same position with each investment company in the Fund Complex.

The Board meets in regularly scheduled meetings eight times throughout the year. Board meetings may occur in-person, by telephone, or virtually. In addition, the Board holds special meetings or informal conference calls to discuss specific matters that may arise or require action between regular meetings. Independent Board Members also meet annually to consider renewal of advisory contracts.

The Chairman of the Board is an interested person of the Fund Complex. The Independent Board Members have appointed a Lead Independent Board Member whose role is to review and approve, with the Chairman, each Board meeting’s agenda and to facilitate communication between and among the Independent Board Members, management, and the full Board. The Board’s leadership structure is appropriate for the Fund Complex given its characteristics and circumstances, including the number of portfolios, variety of asset classes, net assets, and distribution arrangements. The appropriateness of this structure is enhanced by the establishment and allocation of responsibilities among the following Committees, which report their activities to the Board on a regular basis.


Committee and Independent Board Members	Primary Purpose and Responsibilities	Meetings Held During the Last Fiscal Year
15(c) Committee Karen McMillan, Chair Katharin S. Dyer Fritz S. Hirsch Padelford L. Lattimer	The Committee’s primary purpose is to assist the Board in performing the annual review of the Funds’ advisory and sub-advisory agreements pursuant to Section 15(c) of the 1940 Act. The Committee is responsible for requesting and reviewing related materials.	6
Audit Committee Victor L. Hymes, Chair Craig Damos Frances P. Grieb Elizabeth A. Nickels	The Committee’s primary purpose is to assist the Board by serving as an independent and objective party to monitor the Fund Complex’s accounting policies, financial reporting, and internal control system, as well as the work of the independent registered public accountants. The Audit Committee assists Board oversight of 1) the integrity of the Fund Complex’s financial statements; 2) the Fund Complex’s compliance with certain legal and regulatory requirements; 3) the independent registered public accountants’ qualifications and independence; and 4) the performance of the Fund Complex’s independent registered public accountants. The Audit Committee also facilitates communication among the independent registered public accountants, PGI’s internal auditors, Fund Complex management, and the Board.	9
Executive Committee Kamal Bhatia, Chair Craig Damos Kenneth A. McCullum	The Committee’s primary purpose is to exercise certain powers of the Board when the Board is not in session. When the Board is not in session, the Committee may exercise all powers of the Board in the management of the Fund Complex’s business except the power to 1) issue stock, except as permitted by law; 2) recommend to the shareholders any action that requires shareholder approval; 3) amend the bylaws; or 4) approve any merger or share exchange that does not require shareholder approval.	None
Nominating and Governance Committee Elizabeth A. Nickels, Chair Craig Damos Fritz S. Hirsch Victor L. Hymes Karen McMillan	The Committee’s primary purpose is to oversee the structure and efficiency of the Board and the committees. The Committee is responsible for evaluating Board membership and functions, committee membership and functions, insurance coverage, and legal matters. The Committee’s nominating functions include selecting and nominating Independent Board Member candidates for election to the Board. Generally, the Committee requests nominee suggestions from Board Members and management. In addition, the Committee considers candidates recommended by shareholders of the Fund Complex. Recommendations should be submitted in writing to the Principal Funds Complex Secretary, in care of the Principal Funds Complex, 711 High Street, Des Moines, IA 50392. Such recommendations must include all information specified in the Committee’s charter and must conform with the procedures set forth in Appendix A thereto, which can be found at https://secure02.principal.com/publicvsupply/GetFile?fm=MM13013&ty=VOP&EXT=.VOP. Examples of such information include the nominee’s biographical information; relevant educational and professional background of the nominee; the number of shares of each Fund owned of record and beneficially by the nominee and by the recommending shareholder; any other information regarding the nominee that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies for the election of board members; whether the nominee is an “interested person” of the Funds as defined in the 1940 Act; and the written consent of the nominee to be named as a nominee and serve as a board member if elected. When evaluating a potential nominee for Independent Board Member, the Committee may consider, among other factors: educational background; relevant business and industry experience; whether the person is an “interested person” of the Funds as defined in the 1940 Act; and whether the person is willing to serve, and willing and able to commit the time necessary to attend meetings and perform the duties of an Independent Board Member. In addition, the Committee may consider whether a candidate’s background, experience, skills and views would complement the background, experience, skills and views of other Board Members and would contribute to the diversity of the Board. The final decision is based on a combination of factors, including the strengths and the experience an individual may bring to the Board. The Board does not regularly use the services of professional search firms to identify or evaluate potential candidates or nominees.	5
Operations Committee Padelford L. Lattimer, Chair Katharin S. Dyer Karen McMillan Thomas A. Swank	The Committee’s primary purpose is to review and oversee the provision of administrative and distribution services to the Fund Complex, communications with the Fund Complex’s shareholders, and the Fund Complex’s operations.	4

Risk oversight forms part of the Board’s general oversight of the Fund Complex. The Board has appointed a Chief Compliance Officer who oversees the implementation and testing of the Funds' compliance program and reports to the Board regarding compliance matters for the Funds and principal service providers. As part of its regular oversight functions, the Board, directly or through a committee, interacts with and reviews reports from, among others: Fund Complex management, sub-advisors, the Chief Compliance Officer, the independent registered public accounting firm, and internal auditors for PGI or its affiliates, as appropriate. The Board, with the assistance of management and PGI, reviews investment policies and risks in connection with its review of Fund Complex performance. In addition, as part of the Board’s periodic review of advisory, sub-advisory, and other service provider agreements, the Board may consider risk management aspects of their operations and the functions for which they are responsible. With respect to valuation, the Board has designated PGI as the Funds’ valuation designee, as permitted by SEC Rule 2a-5, where PGI is responsible for the day-to-day valuation and oversight responsibilities of the Funds, subject to the Board’s oversight. PGI has established a Valuation Committee to fulfill its oversight responsibilities as the Funds’ valuation designee.

Each Board Member has significant prior senior management and/or board experience. Board Members are selected and retained based upon their skills, experience, judgment, analytical ability, diligence, and ability to work effectively with other Board Members, a commitment to the interests of shareholders, and, for each Independent Board Member, a demonstrated willingness to take an independent and questioning view of management. In addition to these general qualifications, the Board seeks members who build upon the Board’s diversity. Below is a brief discussion of the specific education, experience, qualifications, or skills that led to the conclusion that each person identified below should serve as a Board Member. As required by rules adopted under the 1940 Act, the Independent Board Members select and nominate all candidates for Independent Board Member positions.

Independent Board Members

Craig Damos. Mr. Damos has served as an Independent Board Member of the Fund Complex since 2008. Since 2011, Mr. Damos has served as the President of C.P. Damos Consulting, LLC (doing business as Craig Damos Consulting). He has also served as a Director of the employees’ stock ownership plan of the Baker Group since 2020. Mr. Damos served as President and Chief Executive Officer of Weitz Company from 2006 to 2010; Vertical Growth Officer of Weitz Company from 2004 to 2006; and Chief Financial Officer of Weitz Company from 2000 to 2004. From 2005 to 2008, Mr. Damos served as a Director of West Bank. Through his education, employment experience, and experience as a board member, Mr. Damos is experienced with financial, accounting, regulatory, and investment matters.

Katharin S. Dyer. Ms. Dyer has served as an Independent Board Member of the Fund Complex since 2023. She is the Founder and Chief Executive Officer of PivotWise, a firm providing strategic advice focused on digital transformation. Ms. Dyer currently serves as a Director of Liquidity Services and the Grameen Foundation. She was formerly employed by IBM Global Services as a Global Partner and a member of the senior leadership team from 2016 to 2018. Ms. Dyer was a member of the Global Management Team at American Express Company from 2013 to 2015. Through her education, employment experience, and experience as a board member, Ms. Dyer is experienced with financial, information and digital technology, investment, and regulatory matters.

Frances P. Grieb. Ms. Grieb has served as an Independent Board Member of the Fund Complex since 2023. Ms. Grieb currently serves as a Director of First Interstate BancSystem, Inc. and the National Advisory Board of the College of Business at the University of Nebraska at Omaha. She is a member of the American Institute of Certified Public Accountants and the National Association of Corporate Directors. From 2014 to 2022, she served as a Director of Great Western Bancorp, Inc. Ms. Grieb is a retired partner having served in various leadership roles at Deloitte LLP from 1982 to 2010. Ms. Grieb is a retired Certified Public Accountant. Through her education, employment experience, and experience as a board member, Ms. Grieb is experienced with financial, accounting, investment, and regulatory matters.

Fritz S. Hirsch. Mr. Hirsch has served as an Independent Board Member of the Fund Complex since 2005. From 2011 to 2015, Mr. Hirsch served as Chief Executive Officer of MAM USA. He served as President and Chief Executive Officer of Sassy, Inc. from 1986 to 2009, and Chief Financial Officer of Sassy, Inc. from 1983 to 1985. Through his education, employment experience, and experience as a board member, Mr. Hirsch is experienced with financial, accounting, regulatory, and investment matters.

Victor L. Hymes. Mr. Hymes has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Founder, Chief Executive Officer, and Chief Investment Officer of Legato Capital Management, LLC. Over the past thirty years, Mr. Hymes has served in the roles of Chief Executive Officer, Chief Operating Officer, Chief Investment Officer, portfolio manager, and other senior management positions with investment management firms, including Zurich Scudder Investments, Inc., Goldman, Sachs & Co., and Kidder, Peabody & Co. Mr. Hymes has served on numerous boards and has chaired four investment committees over the past two decades. Through his education, employment experience, and experience as a board member, Mr. Hymes is experienced with financial, accounting, regulatory, and investment matters.

Padelford L. Lattimer. Mr. Lattimer has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Managing Partner for TBA Management Consulting LLC. For more than twenty years, Mr. Lattimer served in various capacities at financial services companies, including as a senior managing director for TIAA Cref Asset Management (2004-2010), First Vice President at Mellon Financial Corporation (2002-2004), and in product management roles at Citibank (2000-2002). Through his education, employment experience, and experience as a board member, Mr. Lattimer is experienced with financial, regulatory, and investment matters.

Karen McMillan. Ms. McMillan has served as an Independent Board Member of the Fund Complex since 2014. Ms. McMillan is the founder and owner of Tyche Consulting LLC. She served as a Managing Director of Patomak Global Partners, LLC from 2014 to 2021. From 2007 to 2014, Ms. McMillan served as General Counsel to the Investment Company Institute. Prior to that (from 1999-2007), she worked as an attorney in private practice, specializing in the mutual fund industry. From 1991 to 1999, she served in various roles as counsel at the SEC, Division of Investment Management, including as Assistant Chief Counsel. Through her professional education, experience as an attorney, and experience as a board member, Ms. McMillan is experienced in financial, investment, and regulatory matters.

Elizabeth A. Nickels. Ms. Nickels has served as an Independent Board Member of the Fund Complex since 2015. From 2000 to 2022, Ms. Nickels served as a Director of SpartanNash. From 2008 to 2017, she served as a Director of the not-for-profit Spectrum Health System; from 2014 to 2016, she served as a Director of Charlotte Russe; from 2014 to 2015, she served as a Director of Follet Corporation; and from 2013 to 2015, she served as a Director of PetSmart. Ms. Nickels was formerly employed by Herman Miller, Inc. in several capacities: from 2012 to 2014, as the Executive Director of the Herman Miller Foundation; from 2007 to 2012, as President of Herman Miller Healthcare; and from 2000 to 2007, as Chief Financial Officer. Through her education, employment experience, and experience as a board member, Ms. Nickels is experienced with financial, accounting, and regulatory matters.

Thomas A. Swank. Mr. Swank has served as an Independent Board Member of the Fund Complex since March 2024. From 2015 to 2023, Mr. Swank served as the Chief Executive Officer and President of Wellabe, formerly American Enterprise Group, Inc. He has served as the Chairman of the Board for Wellabe since 2023 and as a Director since 2015. Mr. Swank has also served as a Director on the Director Forum 500 - American Council of Life Insurers since 2015. Through his education, employment experience, and experience as a board member, Mr. Swank is experienced with financial, accounting, regulatory, and investment matters.

Interested Board Members

Kamal Bhatia. Mr. Bhatia has served as Chair of the Fund Complex since 2023. He has also served as President and Chief Executive Officer of the Fund Complex since 2019. Since February 2024, Mr. Bhatia has served as the President and Chief Executive Officer for Principal Asset ManagementSM. He served as Senior Executive Managing Director - Global Head of Investments for Principal Asset ManagementSM in 2023 and a Senior Executive Director and Chief Operating Officer of Principal Asset ManagementSM from 2019 to 2023. Mr. Bhatia joined Principal® in 2019 and serves as a director of numerous Principal® affiliates. From 2011 to 2019, he was a Senior Vice President for Oppenheimer Funds. Mr. Bhatia is a CFA® charter holder. Through his education and experience, Mr. Bhatia is experienced with financial, marketing, regulatory, and investment matters.

Kenneth A. McCullum. Mr. McCullum has served as a Board Member of the Fund Complex since 2023. Mr. McCullum has served as Executive Vice President and Chief Risk Officer for Principal® since 2023. Prior to that, he served as Senior Vice President and Chief Risk Officer for Principal® from 2020 to 2023 and Vice President and Chief Actuary for Principal® from 2015 to 2020. From 2013 to 2015, Mr. McCullum was an Executive Vice President responsible for business development at Delaware Life Insurance Company. He served as a Senior Vice President for the life annuity business at Sun Life from 2010 to 2013. Mr. McCullum is a Fellow of the Society of Actuaries and is a Member of the American Academy of Actuaries. Through his education and experience, Mr. McCullum is experienced with financial, accounting, regulatory, and investment matters.

Additional Information Regarding Board Members and Officers

The following tables present additional information regarding the Board Members and Fund Complex officers, including their principal occupations, which, unless specific dates are shown, are of more than five years duration. For each Board Member, the tables also include information concerning other directorships held in reporting companies under the Securities Exchange Act of 1934 or registered investment companies under the 1940 Act.

INDEPENDENT BOARD MEMBERS

Name, Address,
and Year of Birth

Board Positions Held
with Fund Complex

Principal Occupation(s)
During Past 5 Years

Number of
Portfolios
Overseen
in Fund
Complex

Other
Directorships
Held During
Past 5 Years

Craig Damos
711 High Street
Des Moines, IA 50392
1954

Lead Independent Board Member
(since 2020)
Director, PFI and PVC (since 2008)
Trustee, PETF (since 2014)
Trustee, PRA (since 2019)

President, C.P. Damos Consulting, LLC (consulting services)

126

None

Katharin S. Dyer
711 High Street
Des Moines, IA 50392
1957

Director, PFI and PVC (since 2023)
Trustee, PETF and PRA (since 2023)

Founder and Chief Executive Officer,
PivotWise (consulting services)

126

Liquidity Services, Inc.
(2020-present)

Frances P. Grieb
711 High Street
Des Moines, IA 50392
1960

Director, PFI and PVC (since 2023)
Trustee, PETF and PRA (since 2023)

Retired

126

First Interstate BancSystem,
  Inc. (2022-present);
Great Western Bancorp, Inc.
  and Great Western Bank
  (2014-2022)

Fritz S. Hirsch
711 High Street
Des Moines, IA 50392
1951

Director, PFI and PVC (since 2005)
Trustee, PETF (since 2014)
Trustee, PRA (since 2019)

Interim CEO, MAM USA (manufacturer of infant and juvenile products) from February 2020-October 2020

126

MAM USA (2011-present)

Victor L. Hymes
711 High Street
Des Moines, IA 50392
1957

Director, PFI and PVC (since 2020)
Trustee, PETF and PRA (since 2020)

Founder, CEO, CIO, Legato Capital Management, LLC (investment management company)

126

None

Padelford L. Lattimer
711 High Street
Des Moines, IA 50392
1961

Director, PFI and PVC (since 2020)
Trustee, PETF and PRA (since 2020)

Managing Partner, TBA Management Consulting LLC (management consulting and staffing company)

126

None

Karen McMillan
711 High Street
Des Moines, IA 50392
1961

Director, PFI and PVC (since 2014)
Trustee, PETF (since 2014)
Trustee, PRA (since 2019)

Founder/Owner, Tyche Consulting
  LLC (consulting services);
Managing Director, Patomak Global
  Partners, LLC (financial services
  consulting) from 2014-2021

126

None

Elizabeth A. Nickels
711 High Street
Des Moines, IA 50392
1962

Director, PFI and PVC (since 2015)
Trustee, PETF (since 2015)
Trustee, PRA (since 2019)

Retired

126

SpartanNash (2000-2022)

Thomas A. Swank
711 High Street
Des Moines, IA 50392
1960

Director, PFI and PVC (since 2024)
Trustee, PRA and PETF (since 2024)

Chief Executive Officer and President,
Wellabe (formerly, American Enterprise Group, Inc.) (life and
health insurance) from 2015-2023

126

Wellabe (formerly, American
Enterprise Group, Inc.)
(2015-present)

INTERESTED BOARD MEMBERS

Name, Address,
and Year of Birth

Positions Held
with Fund Complex

Principal Occupation(s)
During Past 5 Years

Number of
Portfolios
Overseen
in Fund
Complex

Other
Directorships
Held During
Past 5 Years

Kamal Bhatia
711 High Street
Des Moines, IA 50392
1972

Director and Chair, PFI and PVC
  (since 2023)
Trustee and Chair, PETF and PRA
  (since 2023)
Chief Executive Officer and President
  (since 2019)

Principal Financial Group*

President and Chief Executive Officer – Principal Asset ManagementSM (since 2024)

Senior Executive Managing Director - Global Head of Investments – Principal Asset ManagementSM (2023)

Senior Executive Director and Chief

Operating Officer – Principal Asset

ManagementSM (2019-2023)

President – Principal Funds (2019-2020)

OppenheimerFunds, Inc.

Senior Vice President (2011-2019)

126

None

Kenneth A. McCullum
711 High Street
Des Moines, IA 50392
1964

Director, PFI and PVC (since 2023)
Trustee, PETF and PRA (since 2023)

Principal Financial Group*

Executive Vice President and Chief Risk

Officer (since 2023)

Senior Vice President and Chief Risk Officer (2020-2023)

Vice President and Chief Actuary (2015-2020)

126

None


FUND COMPLEX OFFICERS
Name, Address, and Year of Birth	Position(s) Held with Fund Complex	Principal Occupation(s) During Past 5 Years
George Djurasovic 711 High Street Des Moines, IA 50392 1971	Vice President and General Counsel (since 2023)	Principal Financial Group* Vice President and General Counsel – Principal Asset ManagementSM (since 2022) Artisan Partners Limited Partnership Global Chief Compliance Officer (2013-2022)
Calvin Eib 711 High Street Des Moines, IA 50392 1963	Assistant Tax Counsel (since 2023)	Principal Financial Group* Counsel (since 2021) Transamerica Tax Counsel (2016-2021)
Beth Graff 711 High Street Des Moines, IA 50392 1968	Vice President and Assistant Controller (since 2021)	Principal Financial Group* Senior Director – Fund Accounting (since 2024) Director – Fund Accounting (2016-2024)
Gina L. Graham 711 High Street Des Moines, IA 50392 1965	Treasurer (since 2016)	Principal Financial Group* Vice President and Treasurer (since 2016)
Megan Hoffmann 711 High Street Des Moines, IA 50392 1979	Vice President and Controller (since 2021)	Principal Financial Group* Senior Director – Fund Administration (since 2024) Director – Accounting (2020-2024) Assistant Director – Accounting (2017-2020)
Laura B. Latham 711 High Street Des Moines, IA 50392 1986	Counsel and Assistant Secretary (since 2023) Assistant Counsel and Assistant Secretary (2018-2023)	Principal Financial Group* Counsel (since 2018)
Diane K. Nelson 711 High Street Des Moines, IA 50392 1965	AML Officer (since 2016)	Principal Financial Group* Director – Compliance (since 2024) Chief Compliance Officer/AML Officer (2015-2024)


FUND COMPLEX OFFICERS
Name, Address, and Year of Birth	Position(s) Held with Fund Complex	Principal Occupation(s) During Past 5 Years
Tara Parks 711 High Street Des Moines, IA 50392 1983	Vice President and Assistant Controller (since 2021)	Principal Financial Group* Senior Director – Fund Tax (since 2024) Director – Accounting (2019-2024) ALPS Fund Services Tax Manager (2011-2019)
Deanna Y. Pellack 711 High Street Des Moines, IA 50392 1987	Counsel and Assistant Secretary (since 2023) Assistant Counsel and Assistant Secretary (2022-2023)	Principal Financial Group* Counsel (since 2022) The Northern Trust Company Vice President (2019-2022)
Sara L. Reece 711 High Street Des Moines, IA 50392 1975	Vice President and Chief Operating Officer (since 2021) Vice President and Controller (2016-2021)	Principal Financial Group* Managing Director – Global Fund Ops (since 2021) Director – Accounting (2015-2021)
Teri R. Root 711 High Street Des Moines, IA 50392 1979	Chief Compliance Officer (since 2018)	Principal Financial Group* Chief Compliance Officer – Funds (since 2018) Vice President (since 2015)
Michael Scholten 711 High Street Des Moines, IA 50392 1979	Chief Financial Officer (since 2021)	Principal Financial Group* Assistant Vice President and Actuary (since 2021) Chief Financial Officer – Funds/Platforms (2015-2021)
Adam U. Shaikh 711 High Street Des Moines, IA 50392 1972	Vice President and Assistant General Counsel (since 2023) Assistant Secretary (since 2022) Assistant Counsel (2006-2023)	Principal Financial Group* Assistant General Counsel (since 2018)
John L. Sullivan 711 High Street Des Moines, IA 50392 1970	Counsel and Assistant Secretary (since 2023) Assistant Counsel and Assistant Secretary (2019-2023)	Principal Financial Group* Assistant General Counsel (since 2023) Counsel (2019-2023)
Dan L. Westholm 711 High Street Des Moines, IA 50392 1966	Assistant Treasurer (since 2006)	Principal Financial Group* Assistant Vice President – Treasury (since 2013)
Beth C. Wilson 711 High Street Des Moines, IA 50392 1956	Vice President and Secretary (since 2007)	Principal Financial Group* Director and Secretary – Funds (since 2007)
Jared A. Yepsen 711 High Street Des Moines, IA 50392 1981	Assistant Tax Counsel (since 2017)	Principal Financial Group* Assistant General Counsel (since 2023) Counsel (2015-2023)

*The reference to Principal Financial Group includes positions held by the Interested Board Member / Fund Complex Officer, including as an officer, employee, and/or director, with affiliates or subsidiaries of Principal Financial Group. The titles set forth in this SAI are each Interested Board Member's / Fund Complex Officer’s title with Principal Workforce, LLC.

Board Member Ownership of Securities

The following tables set forth the dollar range of the equity securities of Funds included in this SAI, and aggregate dollar range of the equity securities of the funds in the Fund Complex, that were beneficially owned by the Board Members as of December 31, 2023. As of that date, Board Members did not own shares of the Funds included in this SAI that are not listed.

For the purpose of these tables, beneficial ownership means a direct or indirect pecuniary interest. Only Interested Board Members are eligible to participate in an employee benefit program that invests in the Fund Complex. Board Members who beneficially owned shares of the series of PVC did so through variable life insurance and variable annuity contracts. Please note that exact dollar amounts of securities held are not listed. Rather, ownership is listed based on the following dollar ranges:


A			$0
B			$1 up to and including $10,000
C			$10,001 up to and including $50,000
D			$50,001 up to and including $100,000
E			$100,001 or more

Independent Board Members

Account/Portfolio

Damos

Dyer(1)

Grieb(1)

Hirsch

Hymes

Lattimer

McMillan

Nickels

Swank(2)

Accounts/Portfolios in this SAI

Total Fund Complex

(1)Appointment effective January 26, 2023.

(2)Appointment effective March 13, 2024.


	Interested Board Members
Account/Portfolio	Bhatia(1)	McCullum(1)
Accounts/Portfolios in this SAI	A	A
Total Fund Complex	E	E

(1)Appointment effective January 26, 2023.

Board Member and Officer Compensation

The Fund Complex does not pay any remuneration to its officers or to any Board Members listed above as Interested Board Members. The Board annually considers a proposal to reimburse PGI for certain expenses, including a portion of the Chief Compliance Officer’s compensation. If the proposal is adopted, these amounts are allocated across all Funds based on relative net assets of each portfolio.

Each Independent Board Member received compensation for service as a member of the Boards of all investment companies in the Fund Complex based on a schedule that takes into account an annual retainer amount, the number of meetings attended, and expenses incurred. Board Member compensation and related expenses are allocated to each of the Funds based on the net assets of each relative to combined net assets of the Fund Complex.

The following table provides information regarding the compensation received by the Independent Board Members from the Funds included in this SAI and from the Fund Complex during the fiscal year ended December 31, 2023. On that date, there were 4 investment companies in the Fund Complex. The Fund Complex does not provide retirement benefits or pensions to any of the Board Members.


Board Member	Funds in this SAI	Fund Complex
Craig Damos	$33,818	$399,250
Katharin S. Dyer(1)	$33,280	$391,750
Frances P. Grieb(1)	$33,180	$390,500
Fritz S. Hirsch	$28,736	$339,250
Victor L. Hymes	$30,218	$356,750
Padelford L. Lattimer	$30,007	$354,250
Karen McMillan	$30,319	$358,000
Elizabeth A. Nickels	$30,218	$356,750
Thomas A. Swank(2)	$0	$0

(1)Ms. Dyer and Ms. Grieb were both elected to the Board effective January 26, 2023.

(2)Mr. Swank was elected to the Board effective March 13, 2024, and, therefore, did not receive compensation from the Funds or the Fund Complex for the fiscal year ended December 31, 2023.

INVESTMENT ADVISORY AND OTHER SERVICES

Investment Advisors

Principal Global Investors, LLC (doing business as Principal Asset ManagementSM) (“PGI”), an indirect subsidiary of Principal Financial Group, Inc. (“Principal®”), serves as the investment advisor for the Funds. Principal Management Corporation, previously an affiliate of PGI, served as the investment advisor to the Funds prior to its merger with and into PGI on May 1, 2017.

PGI directly makes decisions to purchase or sell securities for each Fund, except for those Funds or portions of Funds for which PGI has retained a sub-advisor to provide such services, as described below.

Affiliated Persons of the Registrant Who are Affiliated Persons of the Advisor

For information about affiliated persons of the Registrant who are also affiliated persons of PGI or affiliated advisors, see the Interested Board Members and Fund Complex Officers tables in the “Leadership Structure and Board” section.

Sub-Advisors

PGI has executed agreements with various sub-advisors. Under those sub-advisory agreements, the sub-advisor agrees to assume the obligations of PGI to provide investment advisory services for a specific Fund. For these services, PGI pays each sub-advisor a fee, which is set forth in greater detail below in the "Sub-Advisory Agreements for the Funds" section.

Sub-Advisor: Brown Advisory, LLC (“Brown”) is a wholly-owned subsidiary of Brown Advisory Management, LLC.

Fund(s): a portion of the assets of LargeCap Growth I

Sub-Advisor: Principal Real Estate Investors, LLC (doing business as Principal Real Estate) (“Principal-REI”) is an indirect subsidiary of Principal Financial Group, Inc.

Fund(s): Real Estate Securities

Sub-Advisor: Spectrum Asset Management, Inc. (“Spectrum”) is an indirect subsidiary of Principal Financial Group, Inc.

Fund(s): a portion of the assets of LargeCap S&P 500 Managed Volatility Index

Sub-Advisor: T. Rowe Price Associates, Inc. (“T. Rowe Price”) is a wholly-owned subsidiary of T. Rowe Price Group, Inc., a financial services holding company.

Fund(s): a portion of the assets of LargeCap Growth I

Codes of Ethics

The Registrant, PGI, PFD, and each of the sub-advisors have adopted Codes of Ethics (“Codes”) under Rule 17j-1 of the 1940 Act. PGI and the sub-advisors have each also adopted such a Code under Rule 204A-1 of the Investment Advisers Act of 1940. These Codes are designed to prevent, among other things, persons with access to information regarding the portfolio trading activity of the Funds from using that information for their personal benefit. Except in limited circumstances, the Code for PGI and the Registrant prohibits portfolio managers from personally trading securities that are held or traded in the actively managed portfolios for which they are responsible. Certain sub-advisors have adopted Codes that do not permit personnel subject to such Code to invest in securities that may be purchased or held by a Fund. However, other sub-advisors’ Codes do permit, subject to conditions, personnel subject to the Code to invest in securities that may be purchased or held by a Fund. The Registrant’s Board reviews reports at least annually regarding the operation of the Code of Ethics of the Registrant, PGI, PFD, and each sub-advisor. A copy of the Registrant’s Code will be provided upon request, which may be made by contacting the Registrant.

Management Agreement

Under the terms of the Management Agreement with the Registrant, PGI, the investment advisor, is entitled to receive a fee computed and accrued daily and payable monthly, at the following annual rates, for providing investment advisory services and specified other services. The management fee schedule for each Fund is as follows (expressed as a percentage of average net assets).


			Net Asset Value of Account
Account/Portfolio			Overall Fee
Bond Market Index			0.14%
Diversified Balanced			0.05%
Diversified Balanced Adaptive Allocation			0.12%
Diversified Balanced Strategic Allocation			0.05%
Diversified Growth Adaptive Allocation			0.12%
Diversified Growth Strategic Allocation			0.05%
Diversified Income			0.05%
LargeCap S&P 500 Managed Volatility Index			0.35%
Principal LifeTime Strategic Income			0.00%
Principal LifeTime 2020			0.00%
Principal LifeTime 2030			0.00%
Principal LifeTime 2040			0.00%
Principal LifeTime 2050			0.00%
Principal LifeTime 2060			0.00%
U.S. LargeCap Buffer January			0.69%
U.S. LargeCap Buffer April			0.69%
U.S. LargeCap Buffer July			0.69%
U.S. LargeCap Buffer October			0.69%


	Net Asset Value of Account
Account/Portfolio	First $100 million	Next $100 million	Next $100 million	Next $100 million	Thereafter
Core Plus Bond	0.50%	0.45%	0.40%	0.35%	0.30%
Government & High Quality Bond	0.50%	0.48%	0.46%	0.45%	0.44%
LargeCap Growth I	0.80%	0.75%	0.70%	0.65%	0.60%
Real Estate Securities	0.79%	0.77%	0.73%	0.70%	0.68%
SmallCap	0.85%	0.80%	0.75%	0.70%	0.65%


	Net Asset Value of Account
Account/Portfolio	First $100 million	Next $100 million	Next $100 million	Next $100 million	Next $300 million	Next $300 million	Over $1 billion
Equity Income	0.60%	0.55%	0.50%	0.45%	0.40%	0.39%	0.38%
MidCap	0.65%	0.60%	0.55%	0.50%	0.45%	0.44%	0.43%


	Net Asset Value of Account
Account/Portfolio	First $250 million	Next $250 million	Next $250 million	Next $250 million	Thereafter
Diversified International	0.81%	0.78%	0.75%	0.70%	0.65%
Global Emerging Markets	1.00%	0.98%	0.96%	0.95%	0.90%


	Net Asset Value of Account
Account/Portfolio	First $500 million	Over $500 million
Blue Chip	0.60%	0.55%
Principal Capital Appreciation	0.625%	0.500%
Short-Term Income	0.40%	0.39%


	Net Asset Value of Account
Account/Portfolio	First $1 billion	Over $1 billion
SAM Balanced*	0.25%	0.20%
SAM Conservative Balanced*	0.25%	0.20%
SAM Conservative Growth*	0.25%	0.20%
SAM Flexible Income*	0.25%	0.20%
SAM Strategic Growth*	0.25%	0.20%

* Breakpoints are based on aggregate SAM Portfolio net assets.


	Net Asset Value of Account
Account/Portfolio	First $3 billion	Over $3 billion
Diversified Growth	0.05%	0.04%
LargeCap S&P 500 Index	0.20%	0.18%

Fund Operating Expenses

Except for certain Fund expenses set out below, PGI is responsible for expenses, administrative duties, and services, including the following: expenses incurred in connection with the registration of the Funds and the Funds’ shares with the SEC; office space, facilities, and costs of keeping the Funds’ books; compensation of all personnel who are officers and all Board Members who are affiliated with PGI; fees for auditors and legal counsel; preparing and printing Fund prospectuses; and administration of shareholder accounts, including issuance, maintenance of the open account system, dividend disbursement, reports to shareholders, and redemptions. However, some or all of these expenses may be assumed by Principal Life, and some or all of the administrative duties and services may be delegated by PGI to Principal Life or an affiliate thereof.

Each Fund pays for certain corporate expenses incurred in its operation. Among such expenses, each Fund pays brokerage commissions on portfolio transactions; transfer taxes and other charges and fees attributable to investment transactions; any other local, state, or federal taxes; fees and expenses of all Board Members who are not affiliated with PGI; interest; and fees for the Funds’ custodian.

Contractual Limits on Total Annual Fund Operating Expenses

PGI has contractually agreed to limit Fund expenses (excluding interest expense, expenses related to fund investments, acquired fund fees and expenses, and tax reclaim recovery expenses and other extraordinary expenses) on certain share classes of certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each respective class on an annualized basis. Subject to applicable expense limits, the Funds may reimburse PGI for expenses incurred during the current fiscal year.

The operating expense limits and the agreement terms are as follows:

Contractual Limits on Total Annual Fund Operating Expenses

Account

Class 1

Class 2

Class 3

Expiration

Blue Chip

N/A

1.05%

04/30/2025

Diversified Balanced

N/A

0.48%

04/30/2025

Diversified Balanced Adaptive Allocation

N/A

0.55%

04/30/2025

Diversified Balanced Strategic Allocation

N/A

0.31%

0.48%

04/30/2025

Diversified Growth

N/A

0.48%

04/30/2025

Diversified Growth Adaptive Allocation

N/A

0.55%

04/30/2025

Diversified Growth Strategic Allocation

N/A

0.48%

04/30/2025

Diversified Income

N/A

0.48%

04/30/2025

Equity Income

N/A

0.91%

04/30/2025

LargeCap Growth I

0.69%

N/A

04/30/2025

U.S. LargeCap Buffer January

N/A

0.95%

N/A

04/30/2025

U.S. LargeCap Buffer April

N/A

0.95%

N/A

04/30/2025

U.S. LargeCap Buffer July

N/A

0.95%

N/A

04/30/2025

U.S. LargeCap Buffer October

N/A

0.95%

N/A

04/30/2025

Contractual Management Fee Waivers

PGI has contractually agreed to waive a portion of certain Fund’s management fees. The fee waiver will reduce the Fund’s management fees by the amounts listed below:


Contractual Management Fee Waivers
Account	Waiver	Expiration
LargeCap Growth I	0.016%	4/30/2025

Management Fees Paid

Management fees paid for investment management services (before any waivers/reimbursements from PGI) during the periods indicated were as follows:


Management Fees Paid for Periods Ended December 31 (amounts in thousands)
Account/Portfolio	2023			2022			2021
Blue Chip	$	72		$	50		$	47
Bond Market Index	3,305			3,508			3,993
Core Plus Bond	917			965			1,117
Diversified Balanced	372			419			509
Diversified Balanced Adaptive Allocation	267		(1)	251			250
Diversified Balanced Strategic Allocation	69		(1)	79			93
Diversified Growth	1,531			1,674			1,974
Diversified Growth Adaptive Allocation	1,565		(1)	1,421			1,369
Diversified Growth Strategic Allocation	146		(1)	163			195
Diversified Income	126			138			165
Diversified International	2,096			2,111			2,546
Equity Income	3,076			3,199			3,535
Global Emerging Markets	679			735		(3)	1,069
Government & High Quality Bond	615			883			977
LargeCap Growth I	3,568			3,583			4,507
LargeCap S&P 500 Index	5,355			6,600			7,719
LargeCap S&P 500 Managed Volatility Index	633			909			1,085
MidCap	3,113			3,247			3,532
Principal Capital Appreciation	1,045			1,017			1,124
Principal LifeTime 2020	—			—			—
Principal LifeTime 2030	—			—			—
Principal LifeTime 2040	—			—			—
Principal LifeTime 2050	—			—			—
Principal LifeTime 2060	—			—			—
Principal LifeTime Strategic Income	—			—			—
Real Estate Securities	1,093			1,208			1,296
SAM Balanced	1,330			1,431			1,660
SAM Conservative Balanced	376			410			457
SAM Conservative Growth	842			852			944
SAM Flexible Income	323			375			427
SAM Strategic Growth	846			829			895
Short-Term Income	549			632			670
SmallCap	1,401			1,521			1,850
U.S LargeCap Buffer January	126			1		(4)	—
U.S. LargeCap Buffer April	184		(2)	—			—
U.S LargeCap Buffer July	363			87		(5)	—
U.S LargeCap Buffer October	123			40		(6)	—

(1) 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.

(2) Period from March 29, 2023, date operations commenced, through December 31, 2023.

(3) Effective May 1, 2022, International Emerging Markets Account changed its name to Global Emerging Markets Account.

(4) Period from December 28, 2022, date operations commenced, through December 31, 2022.

(5) Period from June 29, 2022, date operations commenced, through December 31, 2022.

(6) Period from September 29, 2022, date operations commenced, through December 31, 2022.

Management Fees Waived

For the following Funds, PGI waived a portion of the management fee during the periods indicated as follows:


Management Fees Waived for Periods Ended December 31 (amounts in thousands)
Account	2023		2022		2021
LargeCap Growth I	$	82	$	82	$	107

Expenses Reimbursed

For the following Funds, PGI reimbursed certain expenses during the periods indicated as follows:


Expenses Reimbursed for Periods Ended December 31 (amounts in thousands)
Account	2023			2022			2021
Blue Chip	$	13		$	8		$	10
Diversified Balanced Strategic Allocation	1		(1)	—			—
LargeCap Growth I	11			1			—
U.S. LargeCap Buffer January	10			4		(3)	—
U.S. LargeCap Buffer April	5		(2)	—			—
U.S. LargeCap Buffer July	12			4		(4)	—
U.S. LargeCap Buffer October	13			6		(5)	—

(1) Effective May 1, 2024, Diversified Balanced Managed Volatility changed its name to Diversified Balanced Strategic Allocation.

(2) Period from March 29, 2023, date operations commenced through December 31, 2023.

(3) Period from December 28, 2022, date operations commenced, through December 31, 2022.

(4) Period from June 29, 2022, date operations commenced, through December 31, 2022.

(5) Period from September 29, 2022, date operations commenced, through December 31, 2022.

Sub-Advisory Agreements for the Funds

PGI (and not the Funds) pays the sub-advisors fees determined pursuant to a sub-advisory agreement with each sub-advisor, including those sub-advisors that are at least 95% owned, directly or indirectly, by PGI or its affiliates (“Wholly-Owned Sub-Advisors”) and the sub-advisors for the Funds listed in the tables below. Fees paid to sub-advisors are individually negotiated between PGI and each sub-advisor and may vary.


Aggregate Fees Paid to Sub-Advisors (other than Wholly-Owned Sub-Advisors) for Fiscal Years Ended December 31 (dollar amounts in thousands)
Account	2023		2022		2021
	Dollar Amount	Percent of Average Daily Net Assets	Dollar Amount	Percent of Average Daily Net Assets	Dollar Amount	Percent of Average Daily Net Assets
LargeCap Growth I	$992	0.22%	$1,053	0.23%	$1,368	0.23%

Distributor

Principal Funds Distributor, Inc. (“PFD” or the “Distributor”), a Washington corporation, serves as the distributor for the Funds’ Classes 1, 2, and 3 shares on a continuous basis. PFD is a registered broker-dealer under the Securities and Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). PFD is located at 711 High Street, Des Moines, IA 50392.

PFD serves as distributor to the Funds pursuant to a Distribution Agreement (the “Distribution Agreement”), which provides that the Registrant will pay all fees and expenses in connection with (1) the preparation and filing of registration statements; (2) necessary state filings; (3) preparation and distribution of prospectuses and shareholder reports to current shareholders, tax information, notices, proxy statements, and proxies; (4) preparation and distribution of dividend and capital gain payments to shareholders; (5) issuance, transfer, registry, and maintenance of open account charges; and (6) communication with shareholders concerning these items. The Registrant will also pay taxes, including, in the case of redeemed shares, any initial transfer taxes unpaid. PFD will assume responsibility for (or will enter into arrangements providing for the payment of) the expense of printing prospectuses used for the solicitation of new accounts of the Funds. PFD will also pay (or will enter into arrangements providing for the payment of) the expenses of other sales literature for the Funds, as well as other expenses in connection with the sale and offering for sale of Fund shares.

Pursuant to the Distribution Agreement, PFD acts as an agent of the Registrant with respect to sales and repurchases of Fund shares in the various states PFD is qualified as a broker-dealer. PFD accepts orders for Fund shares at net asset value. Other than 12b-1 fees paid to PFD with respect to Classes 2 and 3 shares, no compensation is paid to PFD.

Rule 12b-1 Fees/Distribution Plans and Agreements

Classes 2 and 3 shares of the Funds are subject to a Distribution Plan and Agreement (described below), sometimes referred to as a Rule 12b-1 Plan. Rule 12b-1 permits a fund to pay expenses associated with the distribution of its shares and for providing services to shareholders in accordance with a plan adopted by the Board and approved by its shareholders. Pursuant to such rule, the Board and initial shareholders of Classes 2 and 3 shares have approved and entered into a Distribution Plan and Agreement (each, a “Plan” and together, the “Plans”). The Registrant believes the Plans will be beneficial as they may position the Funds to be able to build and retain assets, which will, in turn, have a beneficial effect on total expense ratios and provide flexibility in the management of the Funds by reducing the need to liquidate portfolio securities to meet redemptions. The Registrant also believes the Plans will encourage registered representatives to provide ongoing servicing to the shareholders.

In adopting and annually approving continuation of the Plans, the Board (including a majority of the Independent Board Members) determined that there was a reasonable likelihood that the Plans would benefit the Funds and the shareholders of the affected classes. Pursuant to Rule 12b-1, information about revenues and expenses under the Plans is presented to the Board each quarter for its consideration in continuing the Plans. Continuance of the Plans must be approved by the Board, including a majority of the Independent Board Members, annually. The Plans may be amended by a vote of the Board, including a majority of the Independent Board Members, except that the Plans may not be amended to materially increase the amount spent for distribution without majority approval of the shareholders of the affected class. The Plans may be terminated upon a vote of a majority of the Independent Board Members or by vote of a majority of the outstanding voting securities of the affected class.

Payments under the Plans will normally be made for accounts that are closed to new investors.

The Plans provide that each Fund makes payments to the Distributor from assets of the Classes 2 and 3 shares to compensate the Distributor and other selling dealers, various banks, broker-dealers, and other financial intermediaries, for providing certain distribution services and shareholder services. Such services may include, but are not limited to:

•formulation and implementation of marketing and promotional activities;

•preparation, printing, and distribution of sales literature;

•preparation, printing, and distribution of prospectuses and the Fund reports to other than existing shareholders;

•obtaining such information with respect to marketing and promotional activities as the Distributor deems advisable;

•making payments to dealers and others engaged in the sale of shares or who engage in shareholder support services; and

•providing training, marketing, and support with respect to the sale of shares.

Each Fund pays the Distributor a fee after the end of each month at an annual rate of 0.25% of the respective daily net asset value of the assets attributable to the Classes 2 and 3 shares.

The Distributor may remit on a continuous basis up to 0.25% to its registered representatives and other financial intermediaries as a trail fee in recognition of their services and assistance.

If the Distributor’s actual expenses are less than the Rule 12b-1 fee it receives, the Distributor is entitled to retain the full amount of the fees.

For the fiscal year ended December 31, 2023, each Fund made the following 12b-1 payments to PFD, and PFD, from these 12b-1 payments, made the following payments to financial intermediaries that distribute and/or service the Fund’s shares. The “Retained by PFD” column reflects the difference between the amount paid by the Fund to PFD and the amount of that 12b-1 fee paid by PFD to financial intermediaries. That difference/remainder is then used by PFD to pay for other 12b-1-eligible expenses. For the fiscal year ended December 31, 2023, the 12b-1-eligible expenses for each Fund were greater than the amount of the Fund’s 12b-1 payments to PFD.


Account/Portfolio	Paid by Fund to PFD (amount in thousands)	Paid by PFD to Financial Intermediaries (amount in thousands)	Retained by PFD (amounts in thousands)
Blue Chip	$30	$30	$0
Bond Market Index	—	—	—
Core Plus Bond	—	—	—
Diversified Balanced	1,776	1,775	1
Diversified Balanced Adaptive Allocation(1)	555	555	0
Diversified Balanced Strategic Allocation(1)	345	345	0
Diversified Growth	7,658	7,656	2
Diversified Growth Adaptive Allocation(1)	3,262	3,262	0
Diversified Growth Strategic Allocation(1)	732	732	0
Diversified Income	627	627	0
Diversified International	—	—	—
Equity Income	152	152	0
Global Emerging Markets	—	—	—
Government & High Quality Bond	—	—	—
LargeCap Growth I	—	—	—
LargeCap S&P 500 Index	118	118	0
LargeCap S&P 500 Managed Volatility Index	—	—	—
MidCap	91	91	0
Principal Capital Appreciation	101	101	0
Principal LifeTime 2020	—	—	—
Principal LifeTime 2030	—	—	—
Principal LifeTime 2040	—	—	—
Principal LifeTime 2050	—	—	—
Principal LifeTime 2060	—	—	—
Principal LifeTime Strategic Income	—	—	—
Real Estate Securities	24	24	0
SAM Balanced	336	336	0
SAM Conservative Balanced	75	75	0
SAM Conservative Growth	418	418	0
SAM Flexible Income	89	89	0
SAM Strategic Growth	448	448	0
Short-Term Income	—	—	—
SmallCap	22	22	0
U.S. LargeCap Buffer January	46	43	3
U.S. LargeCap Buffer April(2)	66	65	1
U.S. LargeCap Buffer July	132	131	1
U.S. LargeCap Buffer October	44	42	2

(2) Period from March 29, 2023, the date operations commenced, through December 31, 2023.

Custodian

The custodian of the portfolio securities and cash assets of the Funds is The Bank of New York Mellon, One Wall Street, New York, NY 10286. The custodian performs no managerial or policy-making functions for the Funds.

Administrative Services Plan and Agreement

The Funds’ Class 3 shares pay an administrative services fee under the terms of an Administrative Services Plan and Agreement. The Administrative Services Plan and Agreement provides for services to beneficial owners of Fund shares. Such services include:

•teleservicing support to contract owners in connection with the Funds;

•delivery of current prospectuses, reports, notices, proxies and proxy statements, and other informational materials to existing contract owners;

•facilitation of the tabulation of contract owners’ votes in the event of a contract owner vote; and receiving, tabulating, and transmitting proxies executed by or on behalf of contract owners;

•maintenance of contract owner records reflecting shares purchased and redeemed and share balances, and the conveyance of that information to PVC or PGI as may be reasonably requested;

•provision of support services, including providing information about PVC and its Funds and answering questions concerning PVC and its Funds, including questions respecting contract owners’ interests in one or more Funds;

•provision and administration of insurance features for the benefit of contract owners in connection with the Funds, which may include fund transfers, dollar cost averaging, asset allocation, portfolio rebalancing, earnings sweep, and pre-authorized deposits and withdrawals;

•receiving, aggregating, and forwarding purchase and redemption orders; acting as the nominee for contract owners; maintaining account records and providing contract owners with account statements; processing dividend payments; issuing contract owners reports and transaction confirmations; and providing sub-accounting services; and

•general account administration activities and providing such similar services to contract owners as PVC may reasonably request.

As compensation for these services, PVC will pay service fees equal to 0.15% of the average daily net assets attributable to the Class 3 shares. The service fees are calculated and accrued daily and paid monthly to Principal Shareholder Services (“PSS”) (or at such other intervals as PVC and PSS may agree). PSS will generally, at its discretion, appoint (and may at any time remove) other parties, including companies affiliated with PSS, as its agent to carry out the provisions of the Administrative Services Plan and Agreement. However, the appointment of an agent shall not relieve PSS of any of its responsibilities or liabilities under such agreement. Any fees paid to agents under such agreement shall be the sole responsibility of PSS.

Transfer Agent

Principal Shareholder Services, Inc. (“PSS”) (711 High Street, Des Moines, IA 50392) provides transfer agency services for the Registrant. The Registrant currently pays no fee for the services PSS provides to the Classes 1, 2, and 3 shares pursuant to the Transfer Agency Agreement for Classes 1, 2, and 3 shares.

Securities Lending Agent

The Bank of New York Mellon serves as the securities lending agent for the Funds. Information regarding securities lending during the Funds’ fiscal year ended December 31, 2023 is as follows:


Account	Gross income (including from cash collateral reinvestment)	Fees paid to securities lending agent from a revenue split	Fees paid for any cash collateral management service that are not included in revenue split	Administrative fees not included in revenue split	Indemnification fees not included in revenue split	Net rebate paid to borrower	Other fees not included in revenue split	Aggregate fees/ compensation	Net income from securities lending
Bond Market Index	$572,514	$17,395	$—	$—	$—	$398,490	$—	$415,885	$156,629
Core Plus Bond	100,986	4,926	—	—	—	51,711	—	56,637	44,349
Diversified International	102,147	997	—	—	—	92,178	—	93,175	8,972
Equity Income	104,346	8,652	—	—	—	17,821	—	26,473	77,873
Global Emerging Markets	13,970	390	—	—	—	10,068	—	10,458	3,512
Government & High Quality Bond	23,432	1,460	—	—	—	8,829	—	10,289	13,143
LargeCap Growth I	12,176	2,730	—	—	—	(15,139)	—	(12,409)	24,585
LargeCap S&P 500 Index	15,080	2,925	—	—	—	(14,174)	—	(11,249)	26,329
LargeCap S&P 500 Managed Volatility Index	654	202	—	—	—	(1,363)	—	(1,162)	1,816
MidCap	26,956	198	—	—	—	24,978	—	25,176	1,780
Principal Capital Appreciation	1,772	47	—	—	—	1,305	—	1,351	421
Short-Term Income	18,394	450	—	—	—	13,888	—	14,338	4,056
SmallCap	41,911	1,369	—	—	—	28,217	—	29,586	12,325

The services provided by The Bank of New York Mellon, as securities lending agent for the Funds, include: coordinating, with the Funds, the selection of securities to be loaned; negotiating loan terms; monitoring the value of securities loaned and corresponding collateral, marking to market daily; coordinating collateral movements; monitoring dividends; and transferring, recalling, and arranging the return of loaned securities to the Funds upon loan termination.

MULTIPLE CLASS STRUCTURE

The Board has adopted a multiple class plan (the "Multiple Class Plan") pursuant to SEC Rule 18f-3. The share classes each Fund offers are identified in the chart included under the heading “History of the Funds”. The share classes offered under the Multiple Class Plan include Classes 1, 2, and 3 shares, which are available without any front-end sales charge or contingent deferred sales charge.

INTERMEDIARY COMPENSATION

As of the date of this SAI, the Distributor anticipates that the firms that will receive additional payments for distribution of the applicable variable annuities and variable life insurance contracts that include shares of the Funds as investment options, or for the distribution of the Funds to retirement plans, or for administrative services (other than Rule 12b-1 fees and the reimbursement of costs, such as those associated with education, training and marketing efforts, conferences, ticket charges, and other general marketing expenses) include, but are not necessarily limited to, the following:

American General Life Insurance Company

Equitable Financial Life Insurance Company

Equitable Financial Life Insurance Company of America

Midland National Life Insurance Company

New York Life Insurance and Annuity Corporation

Principal Life Insurance Company

Principal National Life Insurance Company

The United States Life Insurance Company in the City of New York

Thrivent Financial for Lutherans

The preceding list is subject to change at any time without notice. Any additions, modifications, or deletions to the financial intermediaries identified in this list that have occurred since the date noted above are not reflected. To obtain a current list, call 1-800-222-5852.

See the Distribution Plans and Intermediary Compensation section of the Prospectus for additional information.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Brokerage on Purchases and Sales of Securities

All orders for the purchase or sale of portfolio securities are placed on behalf of a Fund by PGI or by the Fund’s sub-advisor pursuant to the terms of the applicable sub-advisory agreement. In distributing brokerage business arising out of the placement of orders for the purchase and sale of securities for any Fund, the objective of PGI and of each Fund’s sub-advisor is to obtain the best overall terms. In pursuing this objective, PGI or the sub-advisor considers all matters it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and executing capability of the broker or dealer, confidentiality, including trade anonymity, and the reasonableness of the commission, if any (for the specific transaction and on a continuing basis). This may mean in some instances that PGI or a sub-advisor will pay a broker commissions that are in excess of the amount of commissions another broker might have charged for executing the same transaction when PGI or the sub-advisor believes that such commissions are reasonable in light of a) the size and difficulty of the transaction, b) the quality of the execution provided, and c) the level of commissions paid relative to commissions paid by other institutional investors. Such factors are viewed both in terms of that particular transaction and in terms of all transactions that broker executes for accounts over which PGI or the sub-advisor exercises investment discretion. The Board has also adopted a policy and procedure designed to prevent each of the Funds from compensating a broker/dealer for promoting or selling Fund shares by directing brokerage transactions to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling Fund shares. Therefore, PGI or a sub-advisor may not compensate a broker/dealer for promoting or selling Fund shares by directing brokerage transactions to that broker/dealer for the purpose of compensating the broker/dealer for promoting or selling Fund shares. PGI or a sub-advisor may purchase securities in the over-the-counter market, utilizing the services of principal market makers unless better terms can be obtained by purchases through brokers or dealers, and may purchase securities listed on the NYSE from non-Exchange members in transactions off the Exchange.

PGI or a sub-advisor may give consideration in the allocation of business to services performed by a broker (e.g., the furnishing of statistical data and research generally consisting of, but not limited to, information of the following types: analyses and reports concerning issuers, industries, economic factors, and trends; portfolio strategy; performance of client accounts; and access to research analysts, corporate management personnel, and industry experts). If any such allocation is made, the primary criteria used will be to obtain the best overall terms for such transactions or terms that are reasonable in relation to the research or brokerage services provided by the broker or dealer when viewed in terms of either a particular transaction or a sub-advisor’s overall responsibilities to the accounts under its management. PGI or a sub-advisor generally pays additional commission amounts for such research services. Statistical data and research information received from brokers or dealers as described above may be useful in varying degrees and PGI or a sub-advisor may use it in servicing some or all of the accounts it manages.

PGI and the sub-advisors allocated portfolio transactions for the Funds indicated in the following table to certain brokers for the year ended December 31, 2023 due to research services provided by such brokers. The table also indicates the commissions paid to such brokers as a result of these portfolio transactions.


Account	Amount of Transactions Because of Research Services Provided	Related Commissions Paid
Blue Chip	$4,337,765	$953
Diversified International	131,583,525	75,159
Equity Income	184,011,224	70,292
Global Emerging Markets	17,658,667	10,756
LargeCap Growth I	65,979,753	16,055
LargeCap S&P 500 Index	142,592,867	33,214
LargeCap S&P 500 Managed Volatility Index	23,499,385	3,965
MidCap	127,629,570	38,882
Principal Capital Appreciation	111,398,389	32,156
Real Estate Securities	39,541,830	22,802
SmallCap	59,592,536	43,145

Subject to the rules promulgated by the SEC, as well as other regulatory requirements, the Board has approved procedures whereby a Fund may purchase securities that are offered in underwritings in which an affiliate of a sub‑advisor, or PGI, participates. These procedures prohibit a Fund from directly or indirectly benefiting a sub‑advisor affiliate or PGI affiliate in connection with such underwritings. In addition, for underwritings where a sub-advisor affiliate or PGI participates as a principal underwriter, certain restrictions may apply that could, among other things, limit the amount of securities that a Fund could purchase in the underwritings. The sub-advisor shall determine the amounts and proportions of orders allocated to the sub-advisor or affiliate. The Board will receive quarterly reports on these transactions.

The Board has approved procedures that permit a Fund to effect a purchase or sale transaction between the Fund and any other affiliated investment company or between a Fund and affiliated persons of the Fund under limited circumstances prescribed by SEC Rules. Any such transaction must be effected without any payment other than a cash payment for the securities, for which a market quotation is readily available, at the current market price; must be consistent with the investment objective, investment strategy, and risk profile of the Fund; and no brokerage commission or fee (except for customary transfer fees), or other remuneration may be paid in connection with the transaction. The Board will receive quarterly reports on these transactions.

The Board has also approved procedures that permit a Fund’s sub-advisor(s) to place portfolio trades with an affiliated broker under circumstances prescribed by SEC Rules 17e-1 and 17a-10. The procedures require that total commissions, fees, or other remuneration received or to be received by an affiliated broker must be reasonable and fair compared to the commissions, fees, or other remuneration received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable time period. The Board will receive quarterly reports on these transactions.

Purchases and sales of debt securities and money market instruments usually are principal transactions; portfolio securities are normally purchased directly from the issuer or from an underwriter or marketmakers for the securities. Such transactions are usually conducted on a net basis with a Fund paying no brokerage commissions. Purchases from underwriters include a commission or concession paid by the issuer to the underwriter, and the purchases from dealers serving as marketmakers include the spread between the bid and asked prices.

The following table shows the brokerage commissions paid during the periods indicated.


Total Brokerage Commissions Paid for Periods Ended December 31
Account/Portfolio	2023			2022		2021
Blue Chip	$	1,411		$ 2,268		$ 775
Bond Market Index	7,400			7,300		6,650
Core Plus Bond	0			1,527		3,615
Diversified Balanced	—			—		—
Diversified Balanced Adaptive Allocation	6,982		(1)	18,582		4,228
Diversified Balanced Strategic Allocation	—		(1)	—		—
Diversified Growth	—			—		—
Diversified Growth Adaptive Allocation	50,588		(1)	94,105		27,768
Diversified Growth Strategic Allocation	—		(1)	—		—
Diversified Income	—			—		—
Diversified International	176,457			204,914		201,377
Equity Income	107,213			140,788		101,431
Global Emerging Markets	52,622			50,961		64,730
Government & High Quality Bond	—			—		—
LargeCap Growth I	52,978			47,330		40,392
LargeCap S&P 500 Index	58,610			94,680		58,598
LargeCap S&P 500 Managed Volatility Index	11,622			15,040		12,624
MidCap	74,010			80,733		79,935
Principal Capital Appreciation	61,002			56,180		32,830
Principal LifeTime 2020	—			—		—
Principal LifeTime 2030	—			—		—
Principal LifeTime 2040	—			—		—
Principal LifeTime 2050	—			—		—
Principal LifeTime 2060	—			—		—
Principal LifeTime Strategic Income	—			—		—
Real Estate Securities	38,247			40,599		31,243
SAM Balanced	7,690			20,150		19,170
SAM Conservative Balanced	1,622			4,747		5,060
SAM Conservative Growth	4,880			13,143		10,870
SAM Flexible Income	1,520			12,483		1,550
SAM Strategic Growth	5,620			8,275		8,940
Short-Term Income	—			—		—
SmallCap	84,807			75,255		130,531
U.S. LargeCap Buffer January	4,499			1,642	(3)	—
U.S. LargeCap Buffer April	8,055		(2)	—		—
U.S. LargeCap Buffer July	10,588			1,958	(4)	—
U.S. LargeCap Buffer October	1,587			2,267	(5)	—

(1)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.

(2)Period from March 29, 2023, the date operations commenced, through December 31, 2023.

(3)Period from December 28, 2022, date operations commenced, through December 31, 2022.

(4)Period from June 29, 2022, date operations commenced, through December 31, 2022.

(5)Period from September 29, 2022, date operations commenced, through December 31, 2022.

Primary reasons for changes in brokerage commissions for those Funds with relatively greater variations for the three years were changes in commission rates; changes in Fund size; changes in market conditions; changes in money managers of certain Funds; and implementation of investment strategies. In some cases, such events required substantial portfolio restructurings, resulting in increased securities transactions and brokerage commissions.

None of the Funds paid brokerage commissions to brokers affiliated with PGI or such Fund’s sub-advisors for the three most recent fiscal years.

The following table indicates the value of each Fund’s aggregate holdings of the securities of its regular brokers or dealers for the fiscal year ended December 31, 2023.


Holdings of Securities of Principal Variable Contracts Funds, Inc. Regular Brokers and Dealers
Account	Broker or Dealer	Holdings (in thousands)
Bond Market Index	Bank of Montreal	$	1,385
	Barclays PLC	4,213
	Citigroup Inc	9,582
	Goldman Sachs Group Inc/The	8,897
	Jefferies Group LLC	723
	JPMorgan Chase & Co	13,688
	Morgan Stanley	11,348
	Nomura Holdings Inc	1,571
	UBS Group AG	483
	Wells Fargo & Co	10,675
Core Plus Bond	Bank of Montreal	$	207
	Barclays PLC	968
	BNP Paribas SA	382
	Citigroup Inc	1,237
	Goldman Sachs Group Inc/The	966
	JPMorgan Chase & Co	1,758
	Morgan Stanley	3,571
	UBS Group AG	469
	Wells Fargo & Co	822
Equity Income	JPMorgan Chase & Co	$	22,551
	Morgan Stanley	19,555
LargeCap S&P 500 Index	Citigroup Inc	$	6,742
	Goldman Sachs Group Inc/The	8,615
	JPMorgan Chase & Co	33,675
	Morgan Stanley	8,070
	Wells Fargo & Co	12,241
LargeCap S&P 500 Managed Volatility Index	Citigroup Inc	$	407
	Goldman Sachs Group Inc/The	520
	JPMorgan Chase & Co	2,031
	Morgan Stanley	487
	Wells Fargo & Co	738
Principal Capital Appreciation	JPMorgan Chase & Co	$	4,509
	Morgan Stanley	1,954
Short-Term Income	Bank of Montreal	$	553
	Barclays PLC	957
	BNP Paribas SA	403
	Citigroup Inc	1,498
	Goldman Sachs Group Inc/The	1,363
	JPMorgan Chase & Co	1,940
	Morgan Stanley	1,758
	UBS Group AG	1,380
	Wells Fargo & Co	1,639
SmallCap	Stifel Financial Corp	$	1,404

Allocation of Trades

By the Manager (PGI). PGI has its own trading platform and personnel that perform trade-related functions. Where applicable, PGI trades on behalf of its own clients. Such transactions are executed in accordance with PGI’s trading policies and procedures, including, but not limited to, trade allocations and order aggregation, purchase of new issues, and directed brokerage. PGI acts as discretionary investment advisor for a variety of individual accounts, ERISA accounts, registered investment companies, insurance company separate accounts, and public employee retirement plans and places orders to trade portfolio securities for each of these accounts. Managing multiple accounts may give rise to potential conflicts of interest including, for example, conflicts among investment strategies and conflicts in the allocation of investment opportunities. PGI has adopted and implemented policies and procedures that it believes address the potential conflicts associated with managing accounts for multiple clients and are designed to ensure that all clients are treated fairly and equitably. These procedures include allocation policies and procedures and internal review processes.

If, in carrying out the investment objectives of its respective clients, occasions arise in which PGI deems it advisable to purchase or sell the same equity securities for two or more client accounts at the same or approximately the same time, PGI may submit the orders to purchase or sell to a broker/dealer for execution on an aggregate or “bunched” basis. PGI will not aggregate orders unless it believes that aggregation is consistent with (1) its duty to seek best execution and (2) the terms of its investment advisory agreements. In distributing the securities purchased or the proceeds of sale to the client accounts participating in a bunched trade, no advisory account will be favored over any other account and each account that participates in an aggregated order will participate at the average share price for all transactions of PGI relating to that aggregated order on a given business day, with all transaction costs relating to that aggregated order shared on a pro rata basis.

Because of PGI’s role as investment advisor to each of the Funds and discretionary advisor to funds of funds and some underlying funds, conflicts may arise in connection with the services PGI provides to funds of funds with respect to asset class and target weights for each asset class and investments made in underlying funds. PGI also provides advisory services to funds that have multiple investment advisors (“Multi-Managed Funds”). These services include determining the portion of a Multi-Managed Fund’s portfolio to be allocated to an advisor. Conflicts may arise in connection with the services PGI provides to the funds of funds that it manages, in connection with the services PGI provides to other funds of funds and Multi-Managed Funds, for the following reasons:

•PGI serves as the investment advisor to the underlying funds in which the funds of funds invest, sometimes as the discretionary advisor, and an affiliated investment advisor may serve as sub-advisor to the funds in which a fund of funds may invest. This raises a potential conflict because PGI’s or an affiliated company’s profit margin may vary depending upon the underlying fund in which the funds of funds invest.

•PGI or an affiliated person may serve as investment advisor to a portion of a Multi-Managed Fund. In addition, PGI might recommend that an affiliated person serve as sub-advisor to a portion of a Multi-Managed Fund. This raises a potential conflict because PGI’s or an affiliated investment advisor’s profit margin may vary depending on the extent to which a Multi-Managed Fund’s assets are managed by PGI or allocated to an affiliated advisor.

•A sub-advisor may determine that the asset class PVC has hired it to manage (for example, small capitalization growth stocks) can be managed effectively only by limiting the amount of money devoted to the purchase of securities in the asset class. In such a case, a sub-advisor may impose a limit on the amount of money PVC may place with the sub-advisor for management. When a sub-advisor for two or more PVC Funds imposes such a limit, PGI and/or the sub-advisor may need to determine which Fund will be required to limit its investment in the asset class and the degree to which the Fund will be so limited. PGI and the sub-advisor may face a conflict of interest in making its determination.

PGI implements the following in an effort to limit the appearance of conflicts of interest and the opportunity for events that could trigger an actual conflict of interest:

•PGI implements a process for selecting underlying funds that emphasizes the selection of funds within the Principal Funds Complex that are determined to be consistent with the fund of fund’s objective and principal investment strategies. However, PGI will select an unaffiliated underlying fund managed by an unaffiliated sub-advisor when deemed necessary or appropriate based upon a consideration of the Fund’s objective and investment strategies and available expertise and resources within the Principal organization.

•PGI uses a process to select investment advisors that emphasizes the selection of PGI or Principal-affiliated sub-advisors that are determined to be qualified under PGI’s due diligence process. However, PGI will select an unaffiliated sub-advisor to manage all or a portion of a Fund’s portfolio when deemed necessary or appropriate based upon a consideration of the Fund’s objective and investment strategies and available expertise and resources within the Principal organization.

•PGI provides ongoing oversight of the Funds’ investments to monitor adherence to their investment program.

By the Sub-Advisors. The portfolio managers of each sub-advisor manage a number of accounts other than the Funds’ portfolios, including in some instances proprietary or personal accounts. Managing multiple accounts may give rise to potential conflicts of interest, including, for example, conflicts among investment strategies, allocating time and attention to account management, allocation of investment opportunities, knowledge of and timing of fund trades, selection of brokers and dealers, and compensation for the account. Each has adopted and implemented policies and procedures that it believes address the potential conflicts associated with managing accounts for multiple clients and personal accounts and are designed to ensure that all clients and client accounts are treated fairly and equitably. These procedures include allocation policies and procedures, personal trading policies and procedures, internal review processes, and, in some cases, review by independent third parties.

Investments the sub-advisor deems appropriate for a Fund’s portfolio may also be deemed appropriate by it for other accounts. Therefore, the same security may be purchased or sold at or about the same time for both the Fund’s portfolio and other accounts. In such circumstances, the sub-advisor may determine that orders for the purchase or sale of the same security for the Fund’s portfolio and one or more other accounts should be combined. In this event, the transactions will be priced and allocated in a manner deemed by the sub-advisor to be equitable and in the best interests of the Fund’s portfolio and such other accounts. While in some instances combined orders could adversely affect the price or volume of a security, the Fund believes that its participation in such transactions on balance will produce better overall results for the Fund.

SHAREHOLDER RIGHTS

Each Fund shareholder is eligible to vote, either in person or by proxy, at all shareholder meetings for that Fund. This includes the right to vote on the election of board members, selection of the independent registered public accounting firm, and other matters submitted to meetings of shareholders of the Fund. Each share has equal rights with every other share of the Fund as to dividends, earnings, voting, assets, and redemption. Shares are fully paid, non-assessable, and have no preemptive or appraisal rights. Shares of a Fund are issued as full or fractional shares. Each fractional share has proportionately the same rights including voting as are provided for a full share. Shareholders of the Fund may remove any board member with or without cause by the vote of a majority of the votes entitled to be cast at a meeting of all Fund shareholders.

A quorum must be present at a meeting of shareholders for business to be transacted. PVC’s Bylaws state that a quorum is the presence in person or by proxy of the holders of one-third of the shares of capital stock of PVC or, when the meeting relates to a certain Fund, that Fund, issued and outstanding and entitled to vote on the record date.

Certain proposals presented to shareholders for approval require the vote of a “majority of the outstanding voting securities,” which is a term defined in the 1940 Act to mean, with respect to a Fund, the affirmative vote of the lesser of 1) 67% or more of the voting securities of the Fund present at the meeting of that Fund, if the holders of more than 50% of the outstanding voting securities of the Fund are present in person or by proxy, or 2) more than 50% of the outstanding voting securities of the Fund.

PVC’s Bylaws provide that PVC does not need to hold an annual meeting of shareholders unless required by applicable law, including under the 1940 Act if required for the following actions: election of board members, approval of an investment advisory agreement, ratification of the selection of the independent registered public accounting firm, and approval of the distribution agreement. PVC intends to hold shareholder meetings only when required by law and at such other times when the Board deems it to be appropriate.

See the “Proxy Voting Policies and Procedures” section below for information regarding Principal Life’s process for voting shares attributable to variable products.

Shareholder inquiries should be directed to: Principal Variable Contracts Funds, Inc., 711 High Street, Des Moines, IA 50392.

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 for each class is calculated each day the New York Stock Exchange (“NYSE”) is open, as of the close of business of the NYSE (normally 3:00 p.m. Central Time). The NAV of Fund shares is not determined on days the NYSE is closed (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). When an order to buy or sell shares is received, the share price used to fill the order is the next price calculated after the order is received in proper form.

For all Funds the share price 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 owned in that class.

In determining NAV, securities listed on an Exchange, the Nasdaq National Market, and any foreign markets within the Western Hemisphere are valued at the closing prices on such markets, or if such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price.

Municipal securities held by the Funds are traded primarily in the over-the-counter market. Valuations of such securities are furnished by one or more pricing services employed by the Funds and are based upon appraisals obtained by a pricing service, in reliance upon information concerning market transactions and quotations from recognized municipal securities dealers.

Other securities that are traded on the over-the-counter market are valued at their closing bid prices. Each Fund will determine the market value of individual securities held by it, by using prices provided by one or more professional pricing services that may provide market prices to other funds, or, as needed, by obtaining market quotations from independent broker-dealers. Debt securities with remaining maturities of sixty days or less for which market quotations and information furnished by a third-party pricing service are not readily available will be valued at amortized cost, which approximates current value. Securities for which quotations are not readily available, and other assets, are valued at fair value determined in good faith under procedures established by and under the supervision of the Board.

A Fund’s securities may be traded on foreign securities markets that close each day prior to the time the NYSE closes. In addition, foreign securities trading generally or in a particular country or countries may not take place on all business days in New York. The Fund has adopted policies and procedures to “fair value” some or all securities held by a Fund. These fair valuation procedures are intended to discourage shareholders from investing in the Fund for the purpose of engaging in market timing or arbitrage transactions. The values of foreign securities used in computing share price are determined at the time the foreign market closes. Foreign securities and currencies are converted to U.S. dollars using the exchange rate in effect at the close of the NYSE. Occasionally, events affecting the value of foreign securities occur when the foreign market is closed and the NYSE is open. The NAV of a Fund investing in foreign securities may change on days when shareholders are unable to purchase or redeem shares. If the Manager believes that the market value is materially affected, the share price will be calculated using the policy adopted by the Fund.

Certain securities issued by companies in emerging markets may have more than one quoted valuation at any point in time, sometimes referred to as a “local” price and a “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. It is the policy of the Funds to value such securities at prices at which it is expected those shares may be sold, and PGI is authorized to make such determinations subject to the oversight of the Board as may from time to time be necessary.

TAX CONSIDERATIONS

Qualification as a Regulated Investment Company

Each Fund intends to qualify annually to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “IRC”), by satisfying certain requirements prescribed by Subchapter M of the IRC. To qualify as a RIC, a Fund must invest in assets that produce types of income specified in the IRC (“Qualifying Income”). Whether the income from derivatives, swaps, commodity-linked derivatives, and other commodity/natural resource-related securities is Qualifying Income is unclear under current law. Accordingly, a Fund’s ability to invest in certain derivatives, swaps, commodity-linked derivatives, and other commodity/natural resource-related securities may be restricted. Further, if a Fund does invest in these types of securities and the income is not determined to be Qualifying Income, it may cause the Fund to fail to qualify as a RIC under the IRC for a given year. In addition, a Fund must satisfy certain diversification tests under the IRC to qualify as a RIC. If a Fund fails to qualify as a RIC, it will be liable for taxes, significantly reducing its distributions to shareholders and eliminating shareholders’ ability to treat distributions (as long- or short-term capital gains or qualifying dividends) of the Fund in the manner they were received by the Fund.

Futures Contracts and Options

As previously discussed, some of the Funds invest in futures contracts or options thereon, index options, or options traded on qualified exchanges. For federal income tax purposes, capital gains and losses on futures contracts or options thereon, index options, or options traded on qualified exchanges are generally treated as 60% long-term and 40% short-term. In addition, the Funds must recognize any unrealized gains and losses on such positions held at the end of the fiscal year. A Fund may elect out of such tax treatment, however, for a futures or options position that is part of an “identified mixed straddle” such as a put option purchased with respect to a portfolio security. Gains and losses on futures and options included in an identified mixed straddle are considered 100% short-term, and unrealized gains or losses on such positions are not realized at year-end. The straddle provisions of the IRC may require the deferral of realized losses to the extent that a Fund has unrealized gains in certain offsetting positions at the end of the fiscal year. The IRC may also require recharacterization of all or a part of losses on certain offsetting positions from short-term to long-term, as well as adjustment of the holding periods of straddle positions.

International Funds

Some foreign securities purchased by the Funds may be subject to foreign withholding taxes that could reduce the yield on such securities. The amount of such foreign taxes is expected to be insignificant. Shareholders of the Funds that invest in foreign securities may be entitled to claim a credit or deduction with respect to foreign taxes. The Funds may from year to year make an election to pass through such taxes to shareholders. If such election is not made, any foreign taxes paid or accrued will represent an expense to each affected Fund that will reduce its investment company taxable income. Certain Funds may purchase securities of certain foreign corporations considered to be passive foreign investment companies by the IRS. In order to avoid taxes and interest that must be paid by the Funds if these instruments appreciate in value, the Funds may make various elections permitted by the tax laws. However, these elections could require that the Funds recognize additional taxable income, which in turn must be distributed. In addition, the Fund’s investments in foreign securities or foreign currencies may increase or accelerate the Fund’s recognition of ordinary income and may affect the timing or amount of the Fund’s distributions.

Under the Foreign Account Tax Compliance Act (“FATCA”), a Fund may be required to withhold a 30% tax on (a) dividends paid by the Fund, and (b) certain capital gain distributions and/or the proceeds arising from the sale of Fund shares paid by the Fund after December 31, 2018, to certain foreign entities, referred to as foreign financial institutions or non-financial foreign entities, that fail to comply (or be deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. The IRS recently issued proposed regulations indicating its intent to eliminate the 30% withholding tax on gross proceeds. A Fund may disclose the information that it receives from its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA. Withholding also may be required if a foreign entity that is a shareholder of a Fund fails to provide the Fund with appropriate certifications or other documentation concerning its status under FATCA.

PORTFOLIO HOLDINGS DISCLOSURE

The portfolio holdings of any Fund that is a fund of funds are shares of underlying mutual funds; holdings of any fund of funds may be made available upon request. In addition, the Funds may publish month-end portfolio holdings information for each Fund’s portfolio on the www.PrincipalAM.com website on the thirteenth business day of the following month. The Funds may also occasionally publish information on the websites relating to specific events, such as the impact of a natural disaster, corporate debt default, or similar events on portfolio holdings. The Funds may also occasionally publish information on the websites concerning the removal, addition, or change in weightings of underlying funds in which the funds of funds invest. It is the Funds’ policy to disclose only public information regarding portfolio holdings (i.e., information published on the websites or filed with the SEC), except as described below.

Non-Specific Information. Under the Portfolio Holdings Disclosure Policy, the Funds may distribute non-specific information about the Funds and/or summary information about the Funds as requested. Such information will not identify any specific portfolio holding, but may reflect, among other things, the quality, character, or sector distribution of a Fund’s holdings. This information may be made available at any time (or without delay).

Policy. The Funds and PGI have adopted a policy of disclosing non-public portfolio holdings information to third parties only to the extent required by federal law, and to the following third parties, so long as such third party has agreed, or is legally obligated, to maintain the confidentiality of the information and to refrain from using such information to engage in securities transactions:

1)Daily to the Funds’ portfolio pricing services, Bloomberg LP, ICE Data Services, J.P. Morgan PricingDirect, Inc., and IHS Markit Partners, to obtain prices for portfolio securities;

2)Upon proper request to government regulatory agencies or to self-regulatory organizations;

3)As needed to Ernst & Young LLP, the independent registered public accounting firm, in connection with the performance of the services provided by Ernst & Young LLP to the Funds;

4)To the sub-advisors’ proxy service providers (Broadridge Financial Solutions, LLC, Glass Lewis & Co., and Institutional Shareholder Services (ISS)) to facilitate voting of proxies;

5)To the Funds’ custodian, The Bank of New York Mellon, in connection with the custodial services it provides to the Funds; and

6)Kessler, Topaz, Meltzer & Check, LLP, in connection with legal services it provides to the Funds.

The Funds are also permitted to enter into arrangements to disclose portfolio holdings to other third parties in connection with the performance of a legitimate business purpose if such third party agrees in writing to maintain the confidentiality of the information prior to the information being disclosed. Any such written agreement must be approved by an officer of the Funds, PGI, or the Fund’s sub-advisor. Approval must be based on a reasonable belief that disclosure to such other third party is in the best interests of the Fund’s shareholders. If a conflict of interest is identified in connection with disclosure to any such third party, the Fund’s or PGI’s Chief Compliance Officer (“CCO”) must approve such disclosure, in writing, before it occurs. The Funds currently have disclosure agreements with the following:


Abacus Group LLC	Clearpar (Markit)	LiquidNet
Abel Noser	Confluence Technologies	Loomis, Sayles & Company, LP
ACA Compliance Alpha	Deutsche Bank	Markit WSO Services
ACA Market Abuse Surveillance Module	DTCC OASYS	Microsoft Azure
Accenture	Dynamo Software	Morgan Stanley
Advent Axys	Eagle	Morningstar, Inc.
Advent APX	Eagle Investment Systems Corp.	MSCI
Advent Geneva	Electra	MSCI ESG Risk Metrics
Allvue Systems	Electra Information Systems	MSCI - Risk Metrics
Ashland Partners	Essentia Analytics	Natixis Investment Managers
Askia, LLC	Everest (Allvue Systems)	Northern Trust
Assette	FactSet	Northern Trust Integrated Trading Solutions
Bank of America	FactSet Research Systems Inc.	Omgeo LLC
Barra	Financial Recovery Technologies (FRT)	PORTIA (SS&C Technologies)
BlackRock Aladdin	Financial Tracking Technologies LLC	Qontigo (Axioma Risk System)
BlackRock Institutional Trust Company, N.A.	FIS Global Asset Management	Russell Investments Implementation
Bloomberg AIM	FIS PTA	Services, LLC
Bloomberg LP	Global Trading Analytics	S3
Bloomberg Port	Goldman Sachs	SEI Global Services, Inc.
Bloomberg Professional Services	Gresham Technologies	SEI Investments Co
BNY Mellon	ICE Data Pricing & Reference Data	SS&C Advent
Broadridge Business Process Outsourcing	ICE Liquidity	SS&C (Evare)
Solutions, LLC	IHS Markit LTD	SS&C Eze
Broadridge Financial Solutions Inc. /	INDATA	SS&C Vision FI
Proxy Edge	Indus Valley Partners (IVP)	State Street Bank & Trust
Brown Brothers Harriman	InvestCloud Inc	SWIFT
Charles River	Investment Company Institute (ICI)	TSI (Virtus)
Charles River Development	JP Morgan	Virtu Americas LLC
Charles River Trading System	LexisNexis	Virtus Shared Services

Any agreement by which any Fund or any party acting on behalf of the Fund agrees to provide Fund portfolio information to a third party, other than a third party identified in the policy described above, must be approved prior to information being provided to the third party, unless the third party is a regulator or has a duty to maintain the confidentiality of such information and to refrain from using such information to engage in securities transactions. A written record of approval will be made by the person granting approval.

The Funds’ non-public portfolio holdings information policy applies without variation to individual investors, institutional investors, intermediaries that distribute the Funds’ shares, third-party service providers, rating and ranking organizations, and affiliated persons of the Funds. Neither the Funds nor PGI nor any other party receives compensation in connection with the disclosure of Fund portfolio information. The Funds’ CCO will periodically, but no less frequently than annually, review the Funds’ portfolio holdings disclosure policy and recommend changes the CCO believes are appropriate, if any, to the Board. In addition, the Board must approve any change in the Funds’ portfolio holdings disclosure policy that would expand the distribution of such information.

PROXY VOTING POLICIES AND PROCEDURES

The Board has delegated responsibility for decisions regarding proxy voting for securities held by each Fund to PGI or to the Fund’s sub-advisor, as appropriate. PGI and each sub-advisor will vote such proxies in accordance with its proxy policies and procedures, which have been reviewed by the Board, and which are found in Appendix B to this SAI. Any material changes to the proxy policies and procedures will be submitted to the Board for approval.

The Funds that operate as funds of funds invest in shares of other Funds and shares of funds of PFI or PETF. PGI is authorized to vote proxies related to the underlying funds. If an underlying fund holds a shareholder meeting, in order to avoid any potential conflict of interest, PGI will vote shares of such fund on any proposal submitted to the fund’s shareholders in the same proportion as the votes of other shareholders of the underlying fund.

For Funds that participate in a securities lending program, the voting rights for securities that are loaned are transferred to the borrower. Therefore, the lender (i.e., a Fund) is not entitled to vote the loaned securities, unless it recalls those securities. Those managing the Fund’s investments may recall securities for voting purposes when they reasonably believe the ability to vote such securities outweighs the additional revenue received if such securities were not recalled.

Principal Life votes each Fund’s shares allocated to each of its registered separate accounts and attributable to variable annuity contracts or variable life insurance policies participating in the separate accounts. The shares are voted in accordance with instructions received from contract holders, policy owners, participants, and annuitants. Other shares of each Fund held by each separate account, including shares for which no timely voting instructions are received, are voted in proportion to the instructions that are received with respect to contracts or policies participating in that separate account. Principal Life will vote the shares based upon the instructions received from contract owners, regardless of the number of contract owners who provide such instructions. A potential effect of this proportional voting is that a small number of contract owners may determine the outcome of a shareholder vote if only a small number of contract owners provide voting instructions. Shares of each of the Funds held in the general account of Principal Life or in the unregistered separate accounts are voted in proportion to the instructions that are received with respect to contracts and policies participating in its registered and unregistered separate accounts. If Principal Life determines, under applicable law, that a Fund’s shares held in one or more separate accounts or in its general account need not be voted according to the instructions that are received, it may vote those Fund shares in its own right. Shares held by retirement plans are voted in accordance with the governing documents of the plans.

Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2023, is available, without charge, upon request, by calling 1-800-222-5852 or by accessing the Funds’ most recently filed Form N-PX on the SEC website at www.sec.gov.

FINANCIAL STATEMENTS

The financial statements of the Funds at December 31, 2023, are incorporated herein by reference to the Registrant’s most recent Annual Report to Sharehol ders filed with the SEC on Form N-CSR.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Ernst & Young LLP (700 Nicollet Mall, Suite 500, Minneapolis, MN 55402) is the independent registered public accounting firm for the Fund Complex.

GENERAL INFORMATION

LargeCap S&P 500 Index and LargeCap S&P 500 Managed Volatility Index Accounts

The Funds are not sponsored, endorsed, sold, or promoted by S&P Global (“S&P Global”). S&P Global makes no representation or warranty, express or implied, to Fund shareholders or any member of the public regarding the advisability of investing in securities generally or in these Funds particularly or the ability of the S&P 500 Index to track general stock market performance. S&P Global’s only relationship to Principal Life Insurance Company and PGI is the licensing of certain trademarks and trade names of S&P Global and the S&P 500 Index which are determined, composed, and calculated by S&P Global without regard to Principal Life Insurance Company, PGI, or the Funds. S&P Global has no obligation to take the needs of Principal Life Insurance Company, PGI or Fund shareholders into consideration in determining, composing or calculating the S&P 500 Index. S&P Global is not responsible for and has not participated in the determination of the prices of the Funds or the timing of the issuance or sale of the Funds or in the determination or calculation of the equation by which the Funds are to be converted into cash. S&P Global has no obligation or liability in connection with the administration, marketing, or trading of the Funds.

S&P GLOBAL DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA CONTAINED THEREIN AND S&P GLOBAL SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P GLOBAL MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY PRINCIPAL LIFE INSURANCE COMPANY, PRINCIPAL, FUND SHAREHOLDERS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P GLOBAL MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P GLOBAL HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following list identifies shareholders who own more than 25% of the voting securities of a Fund as of March 31, 2024. It is presumed that a person who owns more than 25% of the voting securities of a Fund controls the Fund. A control person could control the outcome of proposals presented to shareholders for approval. The information is listed in alphabetical order by Fund.

Account/Portfolio Name

Percentage
of Voting
Securities
Owned of
Each
Account

Control Person – Name and Address

Jurisdiction
Under
Which the
Company is
Organized
(when control
person is a
company)

Parent of Control
Person
(when control
person is a company)

BLUE CHIP

86.84%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

BOND MARKET INDEX

43.80%

DIVERSIFIED GROWTH ACCOUNT

MARYLAND

PRINCIPAL

ATTN MUTUAL FUND ACCOUNTING H221

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

CORE PLUS BOND

97.75%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED BALANCED

99.71%

PRINCIPAL LIFE INSURANCE CO

IOWA

PRINCIPAL

RIS FIN MGMT B&C T-005-W40

FINANCIAL GROUP

THE PRINCIPAL FINANCIAL GROUP

DES MOINES IA 50392-0001

DIVERSIFIED BALANCED

99.99%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ADAPTIVE ALLOCATION

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED BALANCED

99.99%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

STRATEGIC ALLOCATION

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED GROWTH

99.97%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED GROWTH

99.99%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ADAPTIVE ALLOCATION

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED GROWTH

99.99%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

STRATEGIC ALLOCATION

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

DIVERSIFIED INCOME

99.96%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN INDIVIDUAL LIFE ACCOUNTING

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

Account/Portfolio Name

Percentage
of Voting
Securities
Owned of
Each
Account

Control Person – Name and Address

Jurisdiction
Under
Which the
Company is
Organized
(when control
person is a
company)

Parent of Control
Person
(when control
person is a company)

DIVERSIFIED INTERNATIONAL

98.93%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

EQUITY INCOME

51.81%

PRINCIPAL LIFE INSURANCE CO

IOWA

PRINCIPAL

RIS FIN MGMT B&C T-005-W40

FINANCIAL GROUP

PRINCIPAL FINANCIAL GROUP

DES MOINES IA 50392-0001

GLOBAL EMERGING

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

MARKETS

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

GOVERNMENT & HIGH

81.38%

PRINCIPAL LIFE INSURANCE CO

IOWA

PRINCIPAL

QUALITY BOND

RIS FIN MGMT B&C T-005-W40

FINANCIAL GROUP

PRINCIPAL FINANCIAL GROUP

DES MOINES IA 50392-0001

LARGECAP GROWTH I

98.12%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

LARGECAP S&P 500 INDEX

48.16%

DIVERSIFIED GROWTH ACCOUNT

MARYLAND

PRINCIPAL

ATTN MUTUAL FUND ACCOUNTING H221

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

LARGECAP S&P 500 INDEX

26.28%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

LARGECAP S&P 500

73.38%

DIVERSIFIED GROWTH STRATEGIC

MARYLAND

PRINCIPAL

MANAGED VOLATILITY INDEX

ALLOCATION ACCOUNT

FINANCIAL GROUP

ATTN MUTUAL FUND ACCOUNTING H221

711 HIGH ST

DES MOINES IA 50392-0001

LARGECAP S&P 500

26.62%

DIVERSIFIED BALANCED STRATEGIC

MARYLAND

PRINCIPAL

MANAGED VOLATILITY INDEX

ALLOCATION ACCOUNT

FINANCIAL GROUP

ATTN MUTUAL FUND ACCOUNTING H221

711 HIGH ST

DES MOINES IA 50392-0001

MIDCAP

91.11%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL CAPITAL

68.73%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

APPRECIATION

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL LIFETIME 2020

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

Account/Portfolio Name

Percentage
of Voting
Securities
Owned of
Each
Account

Control Person – Name and Address

Jurisdiction
Under
Which the
Company is
Organized
(when control
person is a
company)

Parent of Control
Person
(when control
person is a company)

PRINCIPAL LIFETIME 2030

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL LIFETIME 2040

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL LIFETIME 2050

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL LIFETIME 2060

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

PRINCIPAL LIFETIME

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

STRATEGIC INCOME

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

REAL ESTATE SECURITIES

88.45%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SAM BALANCED

77.69%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SAM CONSERVATIVE

88.99%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

BALANCED

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SAM CONSERVATIVE

54.10%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

GROWTH

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SAM CONSERVATIVE

36.95%

FARMERS NEW WORLD LIFE INS CO

CALIFORNIA

FARMER'S

GROWTH

ATTN SEGREGATED ASSETS

INSURANCE GROUP

3120 139TH AVE SW SUITE 300

BELLEVUE WA 98005

SAM FLEXIBLE INCOME

90.95%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SAM STRATEGIC GROWTH

54.22%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

Account/Portfolio Name

Percentage
of Voting
Securities
Owned of
Each
Account

Control Person – Name and Address

Jurisdiction
Under
Which the
Company is
Organized
(when control
person is a
company)

Parent of Control
Person
(when control
person is a company)

SAM STRATEGIC GROWTH

42.64%

FARMERS NEW WORLD LIFE INS CO

CALIFORNIA

FARMER'S

ATTN SEGREGATED ASSETS

INSURANCE GROUP

3120 139TH AVE SW SUITE 300

BELLEVUE WA 98005

SHORT-TERM INCOME

99.15%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

SMALLCAP

95.58%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

US LARGECAP BUFFER

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

JANUARY

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

ATTN INDIVIDUAL LIFE ACCOUNTING

711 HIGH ST

DES MOINES IA 50392-0001

US LARGECAP BUFFER APRIL

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

US LARGECAP BUFFER JULY

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

US LARGECAP BUFFER

100.00%

PRINCIPAL LIFE INSURANCE CO CUST

IOWA

PRINCIPAL

OCTOBER

ATTN IND ACCTNG G-12-S41

FINANCIAL GROUP

711 HIGH ST

DES MOINES IA 50392-0001

Funds that operate as funds of funds and Principal Life Insurance Company will vote in the same proportion as shares of the Funds owned by other shareholders. Therefore, neither the funds of funds nor Principal Life Insurance Company exercise voting discretion.

Principal Holders of Securities

The Registrant is unaware of any persons who own beneficially (but are not shareholders of record) 5% or more of any class of the Funds’ outstanding shares. The following list identifies the shareholders of record who own 5% or more of any class of the Funds’ outstanding shares as of March 31, 2024. The list is presented in alphabetical order by Fund.


Fund/Class	Percentage of Ownership	Name and Address of Owner
BLUE CHIP, Class 3	65.41%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
BLUE CHIP, Class 3	12.92%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
BLUE CHIP, Class 3	7.20%	MIDLAND NATIONAL LIFE
		8300 MILLS CIVIC PKWY
		WDM IA 50266-3833
BLUE CHIP, Class 3	5.74%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
BOND MARKET INDEX, Class 1	43.80%	DIVERSIFIED GROWTH ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
BOND MARKET INDEX, Class 1	21.66%	DIVERSIFIED GROWTH ADAPTIVE
		ALLOCATION ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
BOND MARKET INDEX, Class 1	14.87%	DIVERSIFIED BALANCED ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
BOND MARKET INDEX, Class 1	6.47%	DIVERSIFIED INCOME ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
BOND MARKET INDEX, Class 1	5.03%	DIVERSIFIED BALANCED ADAPTIVE
		ALLOCATION ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
CORE PLUS BOND, Class 1	17.77%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
CORE PLUS BOND, Class 1	14.89%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
CORE PLUS BOND, Class 1	13.93%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
CORE PLUS BOND, Class 1	13.41%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
CORE PLUS BOND, Class 1	11.17%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
CORE PLUS BOND, Class 1	5.98%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED ADAPTIVE ALLOCATION,	100.00%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED ADAPTIVE ALLOCATION,	100.00%	PRINCIPAL GLOBAL INVESTORS LLC
Class 3		ATTN SEAN CLINES 801-9A08
		801 GRAND AVE
		DES MOINES IA 50309-8000
DIVERSIFIED BALANCED STRATEGIC ALLOCATION,	74.77%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED STRATEGIC ALLOCATION,	11.68%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED STRATEGIC ALLOCATION,	10.95%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INCOME
		SOLUTIONS
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
DIVERSIFIED BALANCED STRATEGIC ALLOCATION,	100.00%	PRINCIPAL GLOBAL INVESTORS LLC
Class 3		ATTN SEAN CLINES 801-9A08
		801 GRAND AVE
		DES MOINES IA 50309-8000
DIVERSIFIED BALANCED, Class 1	44.72%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		PRINCIPAL FLEXIBLE VARIABLE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED, Class 1	28.40%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL - PRINFLEX
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED, Class 1	5.62%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		FLEXIBLE VARIABLE LIFE INSURANCE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED, Class 1	5.30%	PRINCIPAL LIFE INSURANCE CO
		SEPARATE ACCOUNT B - PREMIER
		RIS FIN MGMT B&C T-005-W40
		THE PRINCIPAL FINANCIAL GROUP
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED, Class 2	93.73%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED BALANCED, Class 3	99.48%	MIDLAND NATIONAL LIFE
		8300 MILLS CIVIC PKWY
		WDM IA 50266-3833
DIVERSIFIED GROWTH ADAPTIVE ALLOCATION,	100.00%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED GROWTH ADAPTIVE ALLOCATION,	100.00%	PRINCIPAL GLOBAL INVESTORS LLC
Class 3		ATTN SEAN CLINES 801-9A08
		801 GRAND AVE
		DES MOINES IA 50309-8000
DIVERSIFIED GROWTH STRATEGIC ALLOCATION,	80.67%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
DIVERSIFIED GROWTH STRATEGIC ALLOCATION,	9.66%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED GROWTH STRATEGIC ALLOCATION,	6.06%	PRINCIPAL LIFE INSURANCE CO CUST
Class 2		FBO PRINCIPAL LIFETIME INCOME
		SOLUTIONS
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED GROWTH STRATEGIC ALLOCATION,	100.00%	PRINCIPAL GLOBAL INVESTORS LLC
Class 3		ATTN SEAN CLINES 801-9A08
		801 GRAND AVE
		DES MOINES IA 50309-8000
DIVERSIFIED GROWTH, Class 2	92.85%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED GROWTH, Class 2	6.37%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED GROWTH, Class 3	98.65%	MIDLAND NATIONAL LIFE
		8300 MILLS CIVIC PKWY
		WDM IA 50266-3833
DIVERSIFIED INCOME, Class 2	63.06%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INCOME, Class 2	35.53%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INCOME, Class 3	100.00%	MIDLAND NATIONAL LIFE
		8300 MILLS CIVIC PKWY
		WDM IA 50266-3833
DIVERSIFIED INTERNATIONAL, Class 1	18.82%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	15.93%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
DIVERSIFIED INTERNATIONAL, Class 1	14.42%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	10.50%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	8.18%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	7.73%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	6.27%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
DIVERSIFIED INTERNATIONAL, Class 1	6.07%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	16.49%	TIAA-CREF LIFE SEPARATE ACCOUNT
		VA-1 OF TIAA-CREF LIFE INS CO
		8500 ANDREW CARNEGIE BLVD
		MAIL CODE - E3/N6
		CHARLOTTE NC 28262-8500
EQUITY INCOME, Class 1	13.34%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	11.13%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	8.30%	SAM STRATEGIC GROWTH PORTFOLIO PVC
		ATTN MUTUAL FUND ACCOUNTING-H221
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	6.99%	SAM CONS GROWTH PORTFOLIO PVC
		ATTN MUTUAL FUND ACCOUNTING-H221
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
EQUITY INCOME, Class 1	6.84%	SAM BALANCED PORTFOLIO PVC
		ATTN MUTUAL FUND ACCOUNTING-H221
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	6.48%	PRINCIPAL LIFE INSURANCE CO
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		PRINCIPAL FINANCIAL GROUP
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 1	5.95%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 2	42.26%	THRIVENT FINANCIAL FOR LUTHERANS
		901 MARQUETTE AVE STE 2500
		MINNEAPOLIS MN 55402-3211
EQUITY INCOME, Class 2	21.17%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
EQUITY INCOME, Class 2	13.46%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
EQUITY INCOME, Class 2	8.53%	SUNAMERICA ANNUITY & LIFE ASSURANCE CO
		VARIABLE SEPARATE ACCOUNT
		ATTN LEGAL DEPARTMENT
		21650 OXNARD STREET STE 750
		WOODLAND HILLS CA 91367-4997
EQUITY INCOME, Class 2	7.04%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
EQUITY INCOME, Class 3	32.31%	EQUITABLE LIFE SEPARATE ACCOUNT AR
		U/A DTD 01/10/2022
		1290 AVE OF THE AMERICAS 16TH FL
		NEW YORK NY 10104-0101
EQUITY INCOME, Class 3	31.75%	MIDLAND NATIONAL LIFE
		8300 MILLS CIVIC PKWY
		WDM IA 50266-3833
EQUITY INCOME, Class 3	11.88%	EQUITABLE LIFE SEPARATE ACCOUNT A
		U/A DTD 01/10/2022
		1290 AVE OF THE AMERICAS 16TH FL
		NEW YORK NY 10104-0101
EQUITY INCOME, Class 3	11.74%	EQUITABLE AMERICA VARIABLE ACCOUNT
		70A U/A DTD 01/10/2022
		1290 AVENUE OF THE AMERICAS 16TH FL
		NEW YORK NY 10104-0101
EQUITY INCOME, Class 3	11.36%	EQUITABLE LIFE SEPARATE ACCOUNT A G
		U/A DTD 01/10/2022
		1290 AVE OF THE AMERICAS 16TH FL
		NEW YORK NY 10104-0101


Fund/Class	Percentage of Ownership	Name and Address of Owner
GLOBAL EMERGING MARKETS, Class 1	19.99%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	16.09%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	10.72%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	10.50%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	7.94%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	6.98%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	6.04%	PRINCIPAL LIFE INSURANCE CO CUST
		VARIABLE UNIVERSAL LIFE INCOME II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	6.00%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GLOBAL EMERGING MARKETS, Class 1	5.63%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992
GOVERNMENT & HIGH QUALITY BOND, Class 1	19.55%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
GOVERNMENT & HIGH QUALITY BOND, Class 1	14.99%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND, Class 1	12.07%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND, Class 1	9.12%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND, Class 1	6.77%	SAM BALANCED PORTFOLIO PVC
		ATTN MUTUAL FUND ACCOUNTING-H221
		711 HIGH ST
		DES MOINES IA 50392-0001
GOVERNMENT & HIGH QUALITY BOND, Class 1	5.78%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP GROWTH I, Class 1	22.51%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP GROWTH I, Class 1	22.29%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP GROWTH I, Class 1	18.51%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP GROWTH I, Class 1	10.93%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX, Class 1	49.16%	DIVERSIFIED GROWTH ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX, Class 1	13.51%	DIVERSIFIED GROWTH ADAPTIVE
		ALLOCATION ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
LARGECAP S&P 500 INDEX, Class 1	11.36%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX, Class 1	9.09%	DIVERSIFIED BALANCED ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX, Class 2	88.23%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 INDEX, Class 2	8.57%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY V2
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 MANAGED VOLATILITY INDEX,	26.62%	DIVERSIFIED BALANCED STRATEGIC
Class 1		ALLOCATION ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
LARGECAP S&P 500 MANAGED VOLATILITY INDEX,	73.38%	DIVERSIFIED GROWTH STRATEGIC
Class 2		ALLOCATION ACCOUNT
		ATTN MUTUAL FUND ACCOUNTING H221
		711 HIGH ST
		DES MOINES IA 50392-0001
MIDCAP, Class 1	31.47%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
MIDCAP, Class 1	16.41%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
MIDCAP, Class 1	13.02%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
MIDCAP, Class 2	46.12%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
MIDCAP, Class 2	38.07%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
MIDCAP, Class 2	8.47%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
PRINCIPAL CAPITAL APPRECIATION, Class 1	33.59%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION, Class 1	21.59%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION, Class 1	8.42%	SUNAMERICA ANNUITY & LIFE ASSURANCE CO
		VARIABLE SEPARATE ACCOUNT
		ATTN LEGAL DEPARTMENT
		21650 OXNARD STREET STE 750
		WOODLAND HILLS CA 91367-4997
PRINCIPAL CAPITAL APPRECIATION, Class 1	7.13%	AMERICAN GENERAL LIFE INSURANCE CO
		VARIABLE PRODUCTS DEPARTMENT
		ATTN: DEBORAH KERAI
		PO BOX 1591
		HOUSTON TX 77251-1591
PRINCIPAL CAPITAL APPRECIATION, Class 1	5.35%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION, Class 2	54.45%	THRIVENT FINANCIAL FOR LUTHERANS
		901 MARQUETTE AVE STE 2500
		MINNEAPOLIS MN 55402-3211
PRINCIPAL CAPITAL APPRECIATION, Class 2	25.22%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL CAPITAL APPRECIATION, Class 2	6.86%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005


Fund/Class	Percentage of Ownership	Name and Address of Owner
PRINCIPAL LIFETIME 2020, Class 1	34.26%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020, Class 1	28.32%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020, Class 1	12.69%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2020, Class 1	8.84%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030, Class 1	42.19%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030, Class 1	15.19%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030, Class 1	12.91%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2030, Class 1	12.07%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040, Class 1	39.25%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040, Class 1	15.29%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
PRINCIPAL LIFETIME 2040, Class 1	14.79%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040, Class 1	6.43%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040, Class 1	5.32%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2040, Class 1	5.17%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO PRIVATE PLACEMENT VUL
		ATTN INDIVIDUAL ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	31.83%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	14.97%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	12.94%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	10.57%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	8.15%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2050, Class 1	5.04%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992


Fund/Class	Percentage of Ownership	Name and Address of Owner
PRINCIPAL LIFETIME 2060, Class 1	36.14%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060, Class 1	19.16%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060, Class 1	14.23%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME 2060, Class 1	16.56%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992
PRINCIPAL LIFETIME STRATEGIC INCOME, Class 1	42.33%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INCOME, Class 1	23.80%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INCOME, Class 1	13.27%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
PRINCIPAL LIFETIME STRATEGIC INCOME, Class 1	9.88%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 1	16.01%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 1	13.56%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
REAL ESTATE SECURITIES, Class 1	13.27%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 1	10.22%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 1	6.27%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 1	5.01%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992
REAL ESTATE SECURITIES, Class 2	80.38%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 2	10.07%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES VARIABLE
		ANNUITY V2
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
REAL ESTATE SECURITIES, Class 2	7.65%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM BALANCED, Class 1	58.59%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM BALANCED, Class 1	7.23%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM BALANCED, Class 1	5.81%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992


Fund/Class	Percentage of Ownership	Name and Address of Owner
SAM BALANCED, Class 1	5.27%	PRINCIPAL LIFE INSURANCE CO CUST
		VARIABLE UNIVERSAL LIFE INCOME II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM BALANCED, Class 2	29.75%	FARMERS NEW WORLD LIFE INS CO
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM BALANCED, Class 2	21.91%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM BALANCED, Class 2	13.64%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM BALANCED, Class 2	12.40%	SUNAMERICA ANNUITY & LIFE ASSURANCE CO
		VARIABLE SEPARATE ACCOUNT
		ATTN LEGAL DEPARTMENT
		21650 OXNARD STREET STE 750
		WOODLAND HILLS CA 91367-4997
SAM BALANCED, Class 2	11.46%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE BALANCED, Class 1	41.21%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED, Class 1	29.49%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED, Class 1	5.59%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED, Class 1	5.35%	PRINCIPAL LIFE INSURANCE CO CUST
		VARIABLE UNIVERSAL LIFE INCOME II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE BALANCED, Class 2	39.67%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
SAM CONSERVATIVE BALANCED, Class 2	24.86%	FARMERS NEW WORLD LIFE INS CO
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE BALANCED, Class 2	10.87%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE BALANCED, Class 2	8.19%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE BALANCED, Class 2	5.37%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES VARIABLE
		ANNUITY V2
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 1	23.30%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 1	17.31%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992
SAM CONSERVATIVE GROWTH, Class 1	13.14%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 1	12.05%	PRINCIPAL LIFE INSURANCE CO CUST
		VARIABLE UNIVERSAL LIFE INCOME II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 1	6.38%	AMERICAN GENERAL LIFE INSURANCE CO
		VARIABLE PRODUCTS DEPARTMENT
		ATTN: DEBORAH KERAI
		PO BOX 1591
		HOUSTON TX 77251-1591
SAM CONSERVATIVE GROWTH, Class 1	5.31%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 2	38.32%	FARMERS NEW WORLD LIFE INS CO
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE GROWTH, Class 2	26.77%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005


Fund/Class	Percentage of Ownership	Name and Address of Owner
SAM CONSERVATIVE GROWTH, Class 2	11.58%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM CONSERVATIVE GROWTH, Class 2	11.06%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM CONSERVATIVE GROWTH, Class 2	5.90%	SUNAMERICA ANNUITY & LIFE ASSURANCE CO
		VARIABLE SEPARATE ACCOUNT
		ATTN LEGAL DEPARTMENT
		21650 OXNARD STREET STE 750
		WOODLAND HILLS CA 91367-4997
SAM FLEXIBLE INCOME, Class 1	49.20%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME, Class 1	14.31%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME, Class 1	12.13%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME, Class 2	60.97%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME, Class 2	11.50%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM FLEXIBLE INCOME, Class 2	7.30%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES VARIABLE
		ANNUITY V2
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM FLEXIBLE INCOME, Class 2	7.11%	SUNAMERICA ANNUITY & LIFE ASSURANCE CO
		VARIABLE SEPARATE ACCOUNT
		ATTN LEGAL DEPARTMENT
		21650 OXNARD STREET STE 750
		WOODLAND HILLS CA 91367-4997


Fund/Class	Percentage of Ownership	Name and Address of Owner
SAM FLEXIBLE INCOME, Class 2	5.98%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 1	29.56%	PRINCIPAL NATIONAL LIFE INS CO
		FBO VUL INCOME III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST G-012-S41
		DES MOINES IA 50392-9992
SAM STRATEGIC GROWTH, Class 1	15.27%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 1	13.63%	PRINCIPAL LIFE INSURANCE CO CUST
		VARIABLE UNIVERSAL LIFE INCOME II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 1	7.54%	PRINCIPAL LIFE INSURANCE CO CUST
		VUL INCOME
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 1	6.95%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 1	5.18%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 2	44.78%	FARMERS NEW WORLD LIFE INS CO
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM STRATEGIC GROWTH, Class 2	30.44%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SAM STRATEGIC GROWTH, Class 2	9.48%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SAM STRATEGIC GROWTH, Class 2	7.83%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005


Fund/Class	Percentage of Ownership	Name and Address of Owner
SHORT-TERM INCOME, Class 1	38.70%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SHORT-TERM INCOME, Class 1	24.09%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SHORT-TERM INCOME, Class 1	11.70%	PRINCIPAL NATIONAL LIFE INSURANCE CO
		CUST FBO VARIABLE UNIVERSAL LIFE III
		ATTN INDIVIDUAL ACCOUNT
		711 HIGH ST
		DES MOINES IA 50392-0001
SHORT-TERM INCOME, Class 1	7.75%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SHORT-TERM INCOME, Class 1	5.51%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 1	23.35%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 1	18.62%	PRINCIPAL LIFE INSURANCE CO CUST
		PRINFLEX LIFE
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 1	15.45%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 1	7.86%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INDIVIDUAL -
		EXECUTIVE VARIABLE UNIVERSAL LIFE
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 1	6.79%	PRINCIPAL LIFE INSURANCE CO CUST
		EXEC VAR UNIVERSAL LIFE II
		ATTN IND ACCTNG G-12-S41
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
SMALLCAP, Class 2	45.68%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
SMALLCAP, Class 2	26.68%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
SMALLCAP, Class 2	14.89%	FARMERS NEW WORLD LIFE INS CO
		ATTN SEGREGATED ASSETS
		3120 139TH AVE SW SUITE 300
		BELLEVUE WA 98005
US LARGECAP BUFFER JANUARY, Class 2	71.41%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER JANUARY, Class 2	12.60%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER JANUARY, Class 2	9.08%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER JANUARY, Class 2	5.49%	PRINCIPAL LIFE INSURANCE CO CUST
		FLEX VARIABLE ANNUITY
		ATTN IND ACCTNG G-12-S41
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER APRIL, Class 2	64.33%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER APRIL, Class 2	26.62%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER JULY, Class 2	69.06%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001


Fund/Class	Percentage of Ownership	Name and Address of Owner
US LARGECAP BUFFER JULY, Class 2	19.62%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER JULY, Class 2	5.38%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL INVESTMENT PLUS
		VARIABLE ANNUITY
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER OCTOBER, Class 2	61.14%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL PIVOT SERIES
		VARIABLE ANNUITY III
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001
US LARGECAP BUFFER OCTOBER, Class 2	34.27%	PRINCIPAL LIFE INSURANCE CO CUST
		FBO PRINCIPAL LIFETIME INSURANCE
		SOLUTIONS II
		ATTN INDIVIDUAL LIFE ACCOUNTING
		711 HIGH ST
		DES MOINES IA 50392-0001

Management Ownership

As of March 31, 2024, the Board Members and officers of the Funds, as a group, owned less than 1% of the outstanding shares of any class of any of the Funds.

PORTFOLIO MANAGER DISCLOSURE

(as provided by the Investment Advisors)

This section contains information about portfolio managers and the other accounts they manage, their compensation, and their ownership of securities. The “Ownership of Securities” tables reflect the portfolio managers’ beneficial ownership, which means a direct or indirect pecuniary interest. For some portfolio managers, this includes beneficial ownership of Fund shares through variable life insurance and variable annuity contracts. For information about potential material conflicts of interest, see Brokerage Allocation and Other Practices - Allocation of Trades.

This section lists information about PGI’s portfolio managers first. Next, the section includes information about the sub-advisors’ portfolio managers alphabetically by sub-advisor.

Information in this section is as of December 31, 2023, unless otherwise noted.

Advisor: Principal Global Investors, LLC (Principal Asset Allocation Portfolio Managers)


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
Brody Dass: Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts; and SAM Balanced, SAM Conservative Balanced, SAM Conservative Growth, SAM Flexible Income, and SAM Strategic Growth Portfolios

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	5	$13.7 billion	0	$0
Other accounts	3	$72.7 million	0	$0
James W. Fennessey: LargeCap Growth I and Principal LifeTime Strategic Income, 2020, 2030, 2040, 2050, and 2060 Accounts

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	61	$100.5 billion	0	$0
Other accounts	33	$3.4 billion	0	$0
Todd A. Jablonski: SAM Balanced, SAM Conservative Balanced, SAM Conservative Growth, SAM Flexible Income, and SAM Strategic Growth Portfolios

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	7	$13.9 billion	0	$0
Other accounts	9	$173.7 million	0	$0
Tyler O'Donnell(1): Diversified Balanced Adaptive Allocation and Diversified Growth Adaptive Allocation Accounts

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	23	$66.8 billion	0	$0
Other accounts	3	$2.4 billion	0	$0
Aaron J. Siebel(1): Diversified Balanced Adaptive Allocation and Diversified Growth Adaptive Allocation Accounts

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	28	$69.5 billion	0	$0
Other accounts	4	$3.2 billion	0	$0
Scott Smith: Principal LifeTime Strategic Income, 2020, 2030, 2040, 2050, and 2060 Accounts

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	38	$82.6 billion	0	$0
Other accounts	22	$3.4 billion	0	$0
Yesim Tokat-Acikel: Diversified Balanced, Diversified Balanced Adaptive Allocation, Diversified Balanced Strategic Allocation, Diversified Growth, Diversified Growth Adaptive Allocation, Diversified Growth Strategic Allocation, and Diversified Income Accounts; and SAM Balanced, SAM Conservative Balanced, SAM Conservative Growth, SAM Flexible Income, and SAM Strategic Growth Portfolios

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	6	$13.8 billion	0	$0
Other accounts	3	$72.7 million	0	$0
Randy L. Welch: LargeCap Growth I and Principal LifeTime Strategic Income, 2020, 2030, 2040, 2050, and 2060 Accounts

Registered investment companies	0	$0	0	$0
Other pooled investment vehicles	61	$100.5 billion	0	$0
Other accounts	33	$3.4 billion	0	$0


(1)			For more information regarding Tyler O'Donnell’s and Aaron J. Siebel’s Other Accounts Managed, see Advisor: Principal Global Investors, LLC (Principal Equities Portfolio Managers).

Compensation

PGI offers the Funds’ investment team a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.

Compensation for each Fund’s investment team is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention, and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one-year, three-year, and five-year periods, calculated quarterly, reinforcing a longer-term orientation.

Payments under the variable incentive plan may be in the form of cash or a combination of cash and deferred compensation. The amount of variable compensation delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team via a co-investment program. Both payment vehicles are subject to a three-year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives (e.g., co-investment), alignment with PFG stakeholders, and talent retention.

In addition to deferred compensation obtained through their compensation programming, team members have investments acquired through their participation in the PFG employee stock purchase plan, retirement plans, and direct personal investments. It should be noted that PFG’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e., “clones”).

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
Brody Dass	Diversified Balanced	None
Brody Dass	Diversified Balanced Adaptive Allocation	None
Brody Dass	Diversified Balanced Strategic Allocation	None
Brody Dass	Diversified Growth	None
Brody Dass	Diversified Growth Adaptive Allocation	None
Brody Dass	Diversified Growth Strategic Allocation	None
Brody Dass	Diversified Income	None
Brody Dass	SAM Balanced	None
Brody Dass	SAM Conservative Balanced	None
Brody Dass	SAM Conservative Growth	None
Brody Dass	SAM Flexible Income	None
Brody Dass	SAM Strategic Growth	None
James W. Fennessey	LargeCap Growth I	None
James W. Fennessey	Principal LifeTime Strategic Income	None
James W. Fennessey	Principal LifeTime 2020	None
James W. Fennessey	Principal LifeTime 2030	None
James W. Fennessey	Principal LifeTime 2040	None
James W. Fennessey	Principal LifeTime 2050	None
James W. Fennessey	Principal LifeTime 2060	None
Todd A. Jablonski	SAM Balanced	None
Todd A. Jablonski	SAM Conservative Balanced	None
Todd A. Jablonski	SAM Conservative Growth	None
Todd A. Jablonski	SAM Flexible Income	None
Todd A. Jablonski	SAM Strategic Growth	None
Tyler O'Donnell(1)	Diversified Balanced Adaptive Allocation	None
Tyler O'Donnell(1)	Diversified Growth Adaptive Allocation	None


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
Aaron J. Siebel(1)	Diversified Balanced Adaptive Allocation	None
Aaron J. Siebel(1)	Diversified Growth Adaptive Allocation	None
Scott Smith	Principal LifeTime Strategic Income	None
Scott Smith	Principal LifeTime 2020	None
Scott Smith	Principal LifeTime 2030	None
Scott Smith	Principal LifeTime 2040	None
Scott Smith	Principal LifeTime 2050	None
Scott Smith	Principal LifeTime 2060	None
Yesim Tokat-Acikel	Diversified Balanced	None
Yesim Tokat-Acikel	Diversified Balanced Adaptive Allocation	None
Yesim Tokat-Acikel	Diversified Balanced Strategic Allocation	None
Yesim Tokat-Acikel	Diversified Growth	None
Yesim Tokat-Acikel	Diversified Growth Adaptive Allocation	None
Yesim Tokat-Acikel	Diversified Growth Strategic Allocation	None
Yesim Tokat-Acikel	Diversified Income	None
Yesim Tokat-Acikel	SAM Balanced	None
Yesim Tokat-Acikel	SAM Conservative Balanced	None
Yesim Tokat-Acikel	SAM Conservative Growth	None
Yesim Tokat-Acikel	SAM Flexible Income	None
Yesim Tokat-Acikel	SAM Strategic Growth	None
Randy L. Welch	LargeCap Growth I	None
Randy L. Welch	Principal LifeTime Strategic Income	None
Randy L. Welch	Principal LifeTime 2020	None
Randy L. Welch	Principal LifeTime 2030	None
Randy L. Welch	Principal LifeTime 2040	None
Randy L. Welch	Principal LifeTime 2050	None
Randy L. Welch	Principal LifeTime 2060	None


(1)			For more information regarding Tyler O'Donnell's and Aaron J. Siebel’s Ownership of Securities, see Advisor: Principal Global Investors, LLC (Principal Equities Portfolio Managers).

Advisor: Principal Global Investors, LLC (Principal Edge Portfolio Managers)


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
Daniel R. Coleman: Equity Income and Principal Capital Appreciation Accounts

Registered investment companies	5	$14.2 billion	0	$0
Other pooled investment vehicles	2	$348.2 million	0	$0
Other accounts	46	$3.6 billion	0	$0
Theodore Jayne: Principal Capital Appreciation Account

Registered investment companies	2	$4.1 billion	0	$0
Other pooled investment vehicles	0	$0	0	$0
Other accounts	9	$221.7 million	0	$0
Sarah E. Radecki: Equity Income Account

Registered investment companies	3	$10.1 billion	0	$0
Other pooled investment vehicles	2	$348.2 million	0	$0
Other accounts	36	$3.3 billion	0	$0
Nedret Vidinli: Equity Income Account

Registered investment companies	2	$8.8 billion	0	$0
Other pooled investment vehicles	1	$235.9 million	0	$0
Other accounts	10	$365.0 million	0	$0

Compensation

Compensation for each Fund’s investment team is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention, and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one-year, three-year, and five-year periods, calculated quarterly, reinforcing a longer-term orientation.

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
Daniel R. Coleman	Equity Income	None
Daniel R. Coleman	Principal Capital Appreciation	None
Theodore Jayne	Principal Capital Appreciation	None
Sarah E. Radecki	Equity Income	None
Nedret Vidinli	Equity Income	None

100

On July 31, 2024, in the Advisor: Principal Global Investors, LLC (Principal Equities Portfolio Managers) section, remove all references to Juliet Cohn.

Advisor: Principal Global Investors, LLC (Principal Equities Portfolio Managers)


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
Paul H. Blankenhagen: Diversified International Account

Registered investment companies	3	$5.5 billion	0	$0
Other pooled investment vehicles	3	$12.1 billion	0	$0
Other accounts	11	$1.3 billion	1	$328.3 million
Juliet Cohn: Diversified International Account

Registered investment companies	3	$5.5 billion	0	$0
Other pooled investment vehicles	3	$12.1 billion	0	$0
Other accounts	11	$1.3 billion	1	$328.3 million
Jeffrey Kilkenny: Global Emerging Markets Account

Registered investment companies	1	$240.3 million	0	$0
Other pooled investment vehicles	1	$196.5 million	0	$0
Other accounts	0	$0	0	$0
George Maris: Diversified International Account

Registered investment companies	1	$5.1 billion	0	$0
Other pooled investment vehicles	2	$11.9 billion	0	$0
Other accounts	10	$936.2 million	1	$328.3 million
K. William Nolin: Blue Chip and MidCap Accounts

Registered investment companies	6	$33.2 billion	0	$0
Other pooled investment vehicles	4	$3.1 billion	0	$0
Other accounts	71	$14.4 billion	0	$0
Phil Nordhus: SmallCap Account

Registered investment companies	5	$1.3 billion	0	$0
Other pooled investment vehicles	1	$654.6 million	0	$0
Other accounts	27	$3.2 billion	2	$518.1 million
Tyler O'Donnell(1): LargeCap S&P 500 Index, LargeCap S&P 500 Managed Volatility Index, U.S. LargeCap Buffer January, U.S. LargeCap Buffer April, U.S. LargeCap Buffer July, and U.S. LargeCap Buffer October Accounts

Registered investment companies	16	$14.4 billion	0	$0
Other pooled investment vehicles	3	$46.6 billion	0	$0
Other accounts	2	$2.2 billion	0	$0
Brian W. Pattinson: SmallCap Account

Registered investment companies	7	$2.0 billion	0	$0
Other pooled investment vehicles	3	$2.3 billion	0	$0
Other accounts	39	$4.7 billion	2	$518.1 million
Tom Rozycki: Blue Chip and MidCap Accounts

Registered investment companies	6	$33.2 billion	0	$0
Other pooled investment vehicles	4	$3.1 billion	0	$0
Other accounts	71	$14.4 billion	0	$0
Aaron J. Siebel(1): LargeCap S&P 500 Index, LargeCap S&P 500 Managed Volatility Index, U.S. LargeCap Buffer January, U.S. LargeCap Buffer April, U.S. LargeCap Buffer July, and U.S. LargeCap Buffer October Accounts

Registered investment companies	22	$17.8 billion	0	$0
Other pooled investment vehicles	3	$46.6 billion	0	$0
Other accounts	2	$2.2 billion	0	$0


(1)			For more information regarding Tyler O'Donnell’s and Aaron J. Siebel’s Other Accounts Managed, see Advisor: Principal Global Investors, LLC (Principal Asset Allocation Portfolio Managers).

101

Compensation

Compensation for each Fund’s investment team is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention, and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one-year, three-year, and five-year periods, calculated quarterly, reinforcing a longer-term orientation.

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
Paul H. Blankenhagen	Diversified International	None
Juliet Cohn	Diversified International	None
Jeffrey Kilkenny	Global Emerging Markets	None
George Maris	Diversified International	None
K. William Nolin	Blue Chip	None
K. William Nolin	MidCap	None
Phil Nordhus	SmallCap	None
Tyler O’Donnell(1)	LargeCap S&P 500 Index	None
Tyler O’Donnell(1)	LargeCap S&P 500 Managed Volatility Index	None
Tyler O’Donnell(1)	U.S. LargeCap Buffer January	None
Tyler O’Donnell(1)	U.S. LargeCap Buffer April	None
Tyler O’Donnell(1)	U.S. LargeCap Buffer July	None
Tyler O’Donnell(1)	U.S. LargeCap Buffer October	None
Brian W. Pattinson	SmallCap	None
Tom Rozycki	Blue Chip	None
Tom Rozycki	MidCap	None
Aaron J. Siebel(1)	LargeCap S&P 500 Index	None
Aaron J. Siebel(1)	LargeCap S&P 500 Managed Volatility Index	None
Aaron J. Siebel(1)	U.S. LargeCap Buffer January	None
Aaron J. Siebel(1)	U.S. LargeCap Buffer April	None
Aaron J. Siebel(1)	U.S. LargeCap Buffer July	None
Aaron J. Siebel(1)	U.S. LargeCap Buffer October	None


(1)			For more information regarding Tyler O'Donnell’s and Aaron J. Siebel’s Ownership of Securities, see Advisor: Principal Global Investors, LLC (Principal Asset Allocation Portfolio Managers).

102

Advisor: Principal Global Investors, LLC (Principal Fixed Income Portfolio Managers)


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
William C. Armstrong: Core Plus Bond Account

Registered investment companies	4	$2.0 billion	0	$0
Other pooled investment vehicles	3	$3.1 billion	0	$0
Other accounts	33	$1.4 billion	2	$372.0 million
Jeff Callahan: Bond Market Index Account

Registered investment companies	1	$2.1 billion	0	$0
Other pooled investment vehicles	3	$11.7 billion	0	$0
Other accounts	1	$3.6 billion	0	$0
Bryan C. Davis: Core Plus Bond and Government & High Quality Bond Accounts

Registered investment companies	10	$4.1 billion	0	$0
Other pooled investment vehicles	10	$7.8 billion	0	$0
Other accounts	14	$4.4 billion	2	$8.5 million
John R. Friedl: Short-Term Income Account

Registered investment companies	2	$13.4 billion	0	$0
Other pooled investment vehicles	2	$1.7 billion	0	$0
Other accounts	10	$220.8 million	0	$0
Zach Gassmann: Government & High Quality Bond Account

Registered investment companies	9	$1.2 billion	0	$0
Other pooled investment vehicles	8	$1.3 billion	0	$0
Other accounts	10	$384.2 million	3	$2.9 million
Michael Goosay: Core Plus Bond and Short-Term Income Accounts

Registered investment companies	3	$14.0 billion	0	$0
Other pooled investment vehicles	4	$4.7 billion	0	$0
Other accounts	13	$1.3 billion	2	$372.0 million
Scott J. Peterson: Short-Term Income Account

Registered investment companies	2	$13.4 billion	0	$0
Other pooled investment vehicles	2	$1.7 billion	0	$0
Other accounts	10	$220.8 million	0	$0
Darryl Trunnel: Bond Market Index Account

Registered investment companies	12	$3.2 billion	1	$572.4 million
Other pooled investment vehicles	19	$15.6 billion	0	$0
Other accounts	31	$10.7 billion	4	$1.1 billion

Compensation

Compensation for each Fund’s investment team is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention, and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one-year, three-year, and five-year periods, calculated quarterly, reinforcing a longer-term orientation.

103

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
William C. Armstrong	Core Plus Bond	None
Jeff Callahan	Bond Market Index	None
Bryan C. Davis	Core Plus Bond	None
Bryan C. Davis	Government & High Quality Bond	None
John R. Friedl	Short-Term Income	None
Zach Gassmann	Government & High Quality Bond	None
Michael Goosay	Core Plus Bond	None
Michael Goosay	Short-Term Income	None
Scott J. Peterson	Short-Term Income	None
Darryl Trunnel	Bond Market Index	None

104

Sub-Advisor: Principal Real Estate Investors, LLC


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
Keith Bokota: Real Estate Securities Account

Registered investment companies	3	$6.5 billion	0	$0
Other pooled investment vehicles	2	$1.4 billion	0	$0
Other accounts	41	$3.3 billion	1	$108.4 million
Anthony Kenkel: Real Estate Securities Account

Registered investment companies	10	$9.7 billion	0	$0
Other pooled investment vehicles	5	$2.8 billion	0	$0
Other accounts	82	$9.4 billion	5	$509.5 million
Kelly D. Rush: Real Estate Securities Account

Registered investment companies	10	$9.7 billion	0	$0
Other pooled investment vehicles	5	$2.8 billion	0	$0
Other accounts	82	$9.4 billion	5	$509.5 million

Compensation

Principal Real Estate Investors, LLC offers the Funds’ investment team a competitive compensation structure that is evaluated annually relative to other global asset management firms to ensure its continued competitiveness and alignment with industry best practices. The objective of the structure is to offer market competitive compensation that aligns individual and team contributions with firm and client performance objectives in a manner that is consistent with industry standards and business results.

Compensation for each Fund’s investment team is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The variable component is designed to reinforce delivery of investment performance, firm performance, team collaboration, regulatory compliance, operational excellence, client retention, and client satisfaction. Investment performance is measured on a pre-tax basis against relative client benchmarks and peer groups over one-year, three-year, and five-year periods, calculated quarterly, reinforcing a longer-term orientation.

Payments under the variable incentive plan may be in the form of cash or a combination of cash and deferred compensation. The amount of variable compensation delivered in the form of deferred compensation depends on the size of an individual’s incentive award as it relates to a tiered deferral scale. Deferred compensation is required to be invested into Principal Financial Group (“PFG”) restricted stock units and funds managed by the team via a co-investment program. Both payment vehicles are subject to a three-year vesting schedule. The overall measurement framework and the deferred component are well aligned with our desired focus on clients’ objectives, alignment with PFG stakeholders, and talent retention.

In addition to deferred compensation obtained through their compensation programming, team members have investments acquired through their participation in PFG’s employee stock purchase plan, retirement plans, and direct personal investments. It should be noted that PFG’s retirement plans and deferred compensation plans generally utilize its non-registered group separate accounts or commingled vehicles rather than the traditional mutual funds. However, in each instance these vehicles are managed in lockstep alignment with the mutual funds (i.e., “clones”).

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
Keith Bokota	Real Estate Securities	None
Anthony Kenkel	Real Estate Securities	None
Kelly D. Rush	Real Estate Securities	None

105

Sub-Advisor: Spectrum Asset Management, Inc.


	Other Accounts Managed
	Total Number of Accounts	Total Assets in the Accounts	Number of Accounts that base the Advisory Fee on Performance	Total Assets of the Accounts that base the Advisory Fee on Performance
L. Phillip Jacoby, IV: LargeCap S&P 500 Managed Volatility Index Account

Registered investment companies	7	$8.1 billion	0	$0
Other pooled investment vehicles	7	$4.3 billion	0	$0
Other accounts	70	$7.6 billion	0	$0
Manu Krishnan: LargeCap S&P 500 Managed Volatility Index Account

Registered investment companies	7	$8.1 billion	0	$0
Other pooled investment vehicles	7	$4.3 billion	0	$0
Other accounts	70	$7.6 billion	0	$0
Kevin Nugent: LargeCap S&P 500 Managed Volatility Index Account

Registered investment companies	7	$8.1 billion	0	$0
Other pooled investment vehicles	7	$4.3 billion	0	$0
Other accounts	70	$7.6 billion	0	$0

Compensation

Spectrum Asset Management offers investment professionals a competitive compensation structure that is evaluated relative to other asset management firms to ensure the firm’s continued competitiveness and alignment with industry best practices. The objective of the structure is to align individual and team contributions with client performance objectives in a manner that is consistent with industry standards and business results.

Compensation for investment professionals at all levels is comprised of base salary and variable incentive components. As team members advance in their careers, the variable component increases in its proportion commensurate with responsibility levels. The incentive component is aligned with the performance and goals of the firm. Salaries are established based on a benchmark of salary levels of relevant asset management firms, taking into account each portfolio manager’s position and responsibilities, experience, contribution to client servicing, compliance with firm policies and procedures and regulatory requirements, work ethic, seniority and length of service, and contribution to the overall functioning of the organization. Spectrum attempts to award all compensation in a manner that promotes sound risk management principles. Base salaries are fixed, but are subject to periodic adjustments, usually on an annual basis.

The variable incentive is in the form of a discretionary bonus and may represent a significant proportion of an individual’s total annual compensation. Discretionary bonuses are determined quarterly and are based on a methodology used by senior management that takes into consideration several factors, including but not necessarily limited to those listed below:

•Changes in overall firm assets under management. (Portfolio managers are not directly incentivized to increase assets (“AUM”), although they are indirectly compensated as a result of an increase in AUM.)

•Portfolio performance (on a pre-tax basis) relative to benchmarks measured annually.

•Contribution to client servicing.

•Compliance with firm policies and procedures and regulatory requirements.

•Work ethic.

•Seniority and length of service.

•Contribution to overall functioning of organization.

Ownership of Securities


Portfolio Manager	PVC Accounts/Portfolios Managed by Portfolio Manager	Dollar Range of Securities Owned by the Portfolio Manager
L. Phillip Jacoby, IV	LargeCap S&P 500 Managed Volatility Index	None
Manu Krishnan	LargeCap S&P 500 Managed Volatility Index	None
Kevin Nugent	LargeCap S&P 500 Managed Volatility Index	None

106

APPENDIX A – DESCRIPTION OF BOND RATINGS

Moody’s Investors Service, Inc. Rating Definitions:

Long-Term Obligation Ratings


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.*