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Investment Type: pif

International Emerging Markets R5 Fund (PEPSX)

Quick Facts Ticker: PEPSX Inception Date: 12/06/2000 Morningstar Category: Diversified Emerging Markets Total Net Assets (mil): $1,349.71	Investment Strategy    What's this? The investment seeks long-term growth of capital. The fund normally invests at least 80% of net assets (plus any borrowings for investment purposes) in equity securities of emerging market countries, which means any country considered to be an emerging country by the international financial community (including the International Bank for Reconstruction and Development and the International Financial Corporation). It may engage in financial derivatives transactions, for portfolio and currency hedging purposes.
Morningstar Style Box™   as of 07/31/2010 What's this?	Overall Morningstar Star Rating™   as of 08/31/2010 What's this? Out of 264 Diversified Emerging Markets Funds Morningstar's Star Ratings reflect risk adjusted performance and are derived from a weighted average of the performance figures associated with its three, five, and ten-year (if applicable) time periods.

Total Returns

Investment results shown represent historical performance and do not guarantee future results. Investment returns and principal values fluctuate with changes in interest rates and other market conditions so the value, when redeemed, may be worth more or less than original costs. Current performance may be lower or higher than the performance data shown.

In situations where the net and gross total investment expense figures are different, the mutual fund or the underlying fund in which a Separate Account invests has waived/capped a portion of its management fees through the date displayed in the waiver expiration date or contractual cap expiration date column. Differences may also be shown due to the fund family choosing to pay certain expenses that would normally be payable by the fund. Returns displayed are based on net total investment expense.

Month-End | Quarter-End

Average Annual Total Returns as of 08/31/2010

1 Month 3 Month YTD 1 Year 3 Year 5 Year 10 Year Since      Inception* Total Return % -2.23 6.49 -1.85 16.71 -5.26 11.20 --- 13.47 MSCI - Emerging Markets NDTR D Index % -1.94 5.44 -0.33 18.02 -1.50 12.38 --- --- Diversified Emerging Markets Category % -1.93 6.53 0.23 17.29 -3.56 10.49 10.35 --- Morningstar Percentile Ranking** --- --- --- 50 71 31 --- --- # of Funds in Category 407 402 389 376 264 201 125 ---

* Inception Date: 12/06/2000

**Morningstar percentile rankings are based on total returns.

Expenses

  as of 08/31/2010

Total Investment Expense - Gross:	1.51%
Total Investment Expense - Net:	1.51%

Growth of $10,000

   What's this?

Performance assumes reinvestment of all dividends and capital gains. Extended performance is calculated based on the historical performance of the investment option's oldest share class, adjusted for the fees and expenses of the share class shown. Periods of less than one year are not annualized.

Investment Subadvisors

   What's this?

Principal Global Investors

Portfolio Managers

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Michael L. Reynal Since 03/01/2001 M.B.A. , Dartmouth College

Michael Ade , CFA Since 05/30/2007 B.S. , University of Wisconsin

Mihail Dobrinov , CFA Since 05/30/2007 M.B.A. , University of Iowa

© 2010 Morningstar, Inc. All Rights Reserved. Part of the mutual fund data contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Returns shown for periods of less than one year are not annualized. 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, 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. The full name of this investment option is Principal International Emerging Markets R5 Fund. 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 downloaded from our site, or by contacting us at 1.800.547.7754. Please read the prospectus carefully before investing. Not FDIC Insured May Lose Value - Not a Deposit - No Bank Guarantee Not Insured by any Federal Government Agency

MSCI - Emerging Markets NDTR D Index measures equity market performance in the global emerging markets. It consists of 26 emerging market countries in Europe, Latin America and the Pacific Basin. International and global investment options are subject to additional risk due to fluctuating exchange rates, foreign accounting and financial policies, and other economic and political environments. Instances of high double-digit returns were achieved primarily during favorable market conditions and may not be sustainable over time.