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									                                             Principal LifeTime Portfolios

                                     Manager Profile
                                                     Sub-advised by:


As part of our ongoing due diligence process, Principal Life Insurance Company (Principal Life) has created this
Manager Profile. With this profile, we hope to provide you with an in-depth review of the qualitative factors that led to
the selection and inclusion of this option in our investment line-up.

Here you will find information relating to the sub-advisor organization, philosophy and process, and resources for the
Principal LifeTime Portfolios, advised by Principal Management Corporation and sub-advised by Principal Global

Principal Management Corporation has served as advisor to the Principal Funds since 1969. The Principal Funds
had $66.2 billion in assets under management as of December 31, 2010.                     As advisor to the funds, Principal
Management Corporation oversees the due diligence process of Principal Life, our proprietary process for identifying,
selecting and monitoring investment managers. The Principal Funds offer a full range of investment options covering
all core style boxes and several niche options. The Funds are sub-advised by a variety of investment managers
representing some of the nation’s leading asset managers and investment boutiques.

Principal Global Investors, the institutional asset management affiliate of the Principal Financial Group, managed
$232.4 billion in assets as of December 31, 2010 1 .            The firm focuses on delivering consistently competitive
investment performance and superior service on behalf of its clients. Principal Global Investors has expertise in
equities, fixed income and real estate investments, as well as specialized overlay and advisory services. The firm

1 Principal Global Investors is the asset management arm of the Principal Financial Group ® (The Principal ®) and includes the
asset management operations of the following subsidiaries of The Principal: Principal Global Investors, LLC; Principal Real Estate
Investors, LLC; Spectrum Asset Management, Inc.; Post Advisory Group, LLC; Columbus Circle Investors, Edge Asset
Management, Inc.; Principal Global Investors (Europe) Limited; Principal Global Investors (Singapore) Ltd.; Principal Global
Investors (Australia) Ltd.; and the majority owned affiliates of Principal International, Inc.
upholds the highest standards of excellence in investment research, risk management, ethics, fiduciary responsibility
and client service. Principal Global Investors is a member of the Principal Financial Group®.

                                              Philosophy and process
The Principal LifeTime portfolios provide a robust asset allocation alternative to participants with differing anticipated
retirement dates. These portfolios invest solely in underlying funds of Principal Funds, Inc., based on a variety of
asset classes, styles and managers. The most conservative portfolio is Principal LifeTime Strategic Income,
historically designed for participants at or near retirement. Principal LifeTime 2010, 2015, 2020, 2025, 2030, 2035,
2040, 2045, 2050 and 2055 portfolios are designed for participants planning to retire on or near those dates.

The Strategic Income portfolio is also appropriate for individuals who are approximately 15 years into retirement. All
other Principal LifeTime portfolios are managed approximately 10-15 years beyond their target date. The aging
process (i.e., “glide path”) of the Principal LifeTime portfolios is constructed so that the equity weights change slowly
over time with the goal of potentially increasing participants' returns during the accumulation phase. Each of the
Principal LifeTime portfolios gradually becomes more conservative as its targeted year approaches, the approximate
year when the participant will start withdrawing money and it is expected that approximately 15 years after its target
year, the breakdown of each portfolio will match that of the Principal LifeTime Strategic Income portfolio.**

The more conservative portfolios feature an inflation-protected bond asset class to help increase their ability to
maintain an income stream that keeps pace with inflation. Most of the Principal LifeTime portfolios also include high
yield bonds and emerging market equities to help improve their risk and return profiles. Neither the principal nor the
underlying assets of Principal LifeTime Funds are guaranteed at any time, including the target date and investment
risk remains at all times.

In addition, the Principal LifeTime portfolios are diversified by manager. Portfolios with a high allocation to equities
feature a broadened selection of underlying funds. In addition to Principal Global Investors, portfolios have access to
additional top-tier investment management firms.
For example, assume you have elected to direct contributions to the 2030 portfolio and have 20 years until
retirement. Today, the asset allocation is approximately 49% U.S. Equities, 23% Non-U.S. Equities, 23% Fixed
Income and 5% Real Estate. Over time, the 2030 portfolio will continue to become more conservative and once
the target date is reached, the asset mix would shift to 31% U.S. Equities, 10% Non-U.S. Equities, and 59% Fixed
Income. Approximately 15 years after the target date, the portfolio would be allocated 18% to
U.S. Equities, 4% Non-U.S. Equities and 78% Fixed Income.

Design and management of Principal LifeTime portfolios is a collaborative effort of the investment teams of Principal
Management Corporation and Principal Global Investors. Using our proprietary due diligence process as its base,
Principal Management Corporation handles glide path design and portfolio construction decisions for the Principal
LifeTime portfolios — including identifying, selecting and monitoring investment managers for each underlying
investment option within the portfolios. Changes are implemented if necessary to maintain strategic asset allocation
targets and ensure retirement-appropriate investment options.

Principal Management Corporation has retained Principal Global Investors to develop, implement and monitor the
asset allocation and rebalancing decisions for the Principal LifeTime portfolios. The asset allocation process of
Principal Global Investors provides a structured framework for the management of broadly diversified balanced
portfolios, fund-of-fund structures and fund selection advisory services. The firm’s strategies incorporate a wide
range of asset classes and investment styles. Primary emphasis is placed on equity vs. fixed income allocation
decisions with a secondary focus on growth vs. value, large cap vs. small cap and domestic vs. international equity
exposure. In general, Principal Global Investors advocates broad diversification including exposure to international
and small/mid-cap stocks, broad market fixed income and income-oriented real estate and preferred securities. The
process begins with the determination of an appropriate long-term neutral asset mix based on client return objectives
and risk tolerance. Principal Global Investors then gradually adjusts this mix within predetermined ranges to enhance
risk-adjusted results over time. The firm’s approach is strategic in nature, rather than tactical. Asset allocation shifts
are based on a combination of market conditions and relative attractiveness. The degree of allocation changes also
reflects the proportional size of a particular asset class and the risk/reward potential of deviating from the neutral mix.
Allocation targets rarely deviate by more than 10% from long-term neutral targets.

All marginal shifts in asset mix are based on a consistent three-dimensional analytical framework. First, Principal
Global Investors evaluates securities based on factors such as price multiples, earnings and yield measures relative
to long-term historical norms.    Next, the firm analyzes fundamental economic and market conditions to identify
potential dislocations and event opportunities. The third dimension focuses on market trends in terms of comparisons
of relative price strength and investor sentiment to validate other measures and test the timeliness of our decisions.
By combining these distinct perspectives and information management tools, the approach provides a truly balanced
framework for optimizing portfolios over time.
                                             FOR MORE INFORMATION

                        For more information, please visit our website www.principal.com
                                       or call your Corporate Center Contact.

Before directing retirement funds to a separate account, investors should carefully consider the
investment objectives, risks, charges and expenses of the separate account as well as their
individual risk tolerance, time horizon and goals. For additional information contact us at 1-800-

Before investing in mutual funds, investors should carefully consider the investment objectives,
risks, charges and expenses of the funds. This and other information is contained in the free
prospectus, which can be obtained from your local representative, by visiting www.principal.com
or by contacting us at 1-800-547-7754, or visiting www.principalfunds.com or by contacting us at 1-
800-222-5852. Please read the prospectus carefully before investing.

Investment options are subject to investment risk. Shares or unit values will fluctuate and investments,
when redeemed, may be worth more or less than their original cost.

This investment option is available through a Separate Account or Principal Funds, Inc. mutual fund.
Separate Accounts are made available through a group annuity contract with the Principal Life Insurance
Company, Des Moines, IA 50392.

Asset allocation does not guarantee a profit or protect against a loss. Investing in real estate, small-cap,
international, and high-yield investment options involves additional risks.

Equity investment options involve greater risk, including heightened volatility, than fixed-income
investment options. Fixed-income investment options are subject to interest rate risk, and their value will
decline as interest rates rise.

Fixed-income and asset allocation investment options that invest in mortgage securities are subject to
increased risk due to real estate exposure.

Additionally, there is no guarantee this investment option will provide adequate income at or through

** The individual Principal LifeTime Funds may be combined with the Principal LifeTime Strategic Income Fund if the
Board of Directors of Principal Funds, Inc., determines at the time that the combination is in the best interests of Fund
shareholders. Principal LifeTime Separate Accounts invest wholly in the Institutional share class of the corresponding
Principal LifeTime Fund.

                 Principal Financial Group, Des Moines, Iowa 50392-0001, www.principal.com
Insurance products and plan administrative services are provided by Principal Life Insurance Company. Principal
Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities are offered through Princor Financial Services
Corporation, 1-800-547-7754, member SIPC and/or independent broker dealers. Securities sold by a Princor
Registered Representative are offered through Princor®. Principal Funds Distributor, Princor, and Principal Life are
members of the Principal Financial Group®, Des Moines, IA 50392. Certain investment options may not be available in
all states or U.S. commonwealths.

                                                    PQ 8175-1 | 03/2011
                                                       # t10021101yj

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