Principal LifeTime Series Target-Date Fund Series Report. Morningstar Opinion

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1 Page 1 of 5 Morningstar Target-Date Fund Report For Financial Professional Use Only. Target-Date Rating Top Above Below Bottom Key Features Annual Expense Ratio.76% Active/Passive Exposure 89% Active Open/Closed Architecture 51% Closed Total Net Assets ($M) 18,833 Executive Summary Performance This series passed its 1-year anniversary in early 211, but it's the three-year track record that really matters since a new glide path was installed in 27. Over that time period, this series has turned in a so-so showing thanks, in part, to poor performance from its bond funds during 28. Portfolio This series invests in two dozen funds, which can make it hard to get a handle on the portfolio. Roughly 45% of assets in the underlying funds are in-house offerings, while the rest are handled by a solid set of subadvisors that include PIMCO and Black- Rock. Principal recently tinkered with the underlying fund lineup, adding an alternative asset sleeve. Price Above Principal cuts fees on this series in July 29. The expenses are now below the category average and are better than other fund families that hire outside advisors. People Below Veteran Jeff Tyler now heads the portfolio construction team at Principal Management Corporation, and a separate team at Principal Global Investors handles asset-allocation development and execution. The team has hired good subadvisors, but Principal's own managers are more of a mixed bag. Parent Principal is a giant in the defined-contribution market. It has developed a solid, but not industry-leading, culture. Its fund board doesn't meet the highest standards for independence. Process Principal went back to the drawing board on its glide path in 27 and decided to give greater weighting to longevity risk. It has added stocks to its allocations throughout the glide path, but the shifts were most prominent in the 21 fund. The funds now continue to decrease equities until 15 years beyond the retirement date. Strategic Glide Path Total Equity Exposure 1% Principal LifeTime Industry Industry Maximum/ Industry Minimum Retirement Date Principal LifeTime Industry Yr Total Return * * * * ( * * * * * ( Yr Performance Quartile Available Funds Retirement Income Fund 21 Fund 215 Fund 22 Fund 225 Fund 23 Fund Morningstar Opinion A new manager doesn't plan to make major changes in the Principal LifeTime funds. The management of this series underwent some changes in March 211 when Jeff Tyler joined the team and two other managers left for other positions at Principal. Tyler previously spent many years at American Century, where he helped create that firm's targetdate series, the Livestrong funds. That series has a significantly more conservative glide path than Principal's funds, but Tyler says that the two series are made for different types of investors, and he doesn't plan to make any major changes here for now. In fact, this series used to be more conservative before 27, when a mostly new team made the glide path more equity-heavy and expanded the range of underlying funds. The more aggressive glide path was designed to address longevity risk, or the risk that investors will live so long past the retirement date that they run out of money. At the same time, the managers added many externally subadvised funds to the lineup, so that the percentage of assets managed internally by Principal-affiliated managers fell to about 5% from % (and now stands at 45%). A less extensive round of changes came in the first half of 21. In order to streamline the lineup, one large-value fund and two large-blend funds were dropped, and two small-value funds were replaced by one. In addition, Principal allocated a chunk of assets 235 Fund 2 Fund 245 Fund David Kathman Fund Analyst Fund 255 Fund across the lineup (ranging from 1% in the 255 fund to almost 5% in the Retirement Income fund) to Principal Diversified Real Asset, a newly created fund providing exposure to REITs, Treasury Inflation-Protected Securities, commodities, and master limited partnerships. This fund is designed to protect against inflation and to provide returns uncorrelated with the broad stock market. The 21 changes have had only a modest effect on returns. The LifeTime portfolios still invest in more than two dozen underlying funds, one of the larger lineups in the target-date universe. That means the funds are well diversified, but the influence of any one underlying fund is muted. On a performance level, the underlying funds have been somewhat mixed bags. The lineup's two biggest holdings are now externally subadvised funds, one of which (Large Cap Growth I) has an excellent five-year record, the other of which (Large Cap Value I) has struggled. The LifeTime funds had a great year in 21, when each offering ranked in its category's top quartile, and the 21 through 22 funds were among the best in their peer groups thanks to their relatively aggressive positioning. That bounce was encouraging, but the funds' three-year records are still middling across the board. The addition of Tyler looks like a positive step, but it remains to be seen whether he can help distinguish this series from the pack.

2 Page 2 of 5 Morningstar Target-Date Fund Report For Financial Professional Use Only. Performance The Principal LifeTime funds had a very good year in 21. Every fund in the lineup finished the year in the top quartile of its category, and the 21, 215, and 22 funds were all in the top 1%. All the funds posted similar results in the first four months of 211. But even with those strong recent results, and the longer-dated funds sporting top-quartile five-year returns, results across the lineup have been fairly middling since Principal installed a new glide path in 27. The 27 changes added equity exposure across the board in order to address longevity risk, or the risk that people will live so far beyond the retirement date that they'll deplete their savings. Funds within 15 years of their target date now carry stock exposure that is greater than the industry average, and the 21 fund has 8 percentage points more equity exposure than the average competitor. That greater equity weighting hurt the short-dated funds in 28 but helped them in 21, when the 21 fund was among the best performers in its peer group. Conversely, the longer-dated funds aren't so equity-heavy relative to their peers, so their asset allocation has had less effect on their performance. The performance of the underlying funds has been mixed. The top holding of the LifeTime funds, Large Cap Growth I, has been a very strong performer, but the second-largest holding, Large Cap Value I, has posted mediocre results for the past five years. The lineup's top fixed-income fund is Bond & Mortgage Securities, which holds about 2% of its assets in relatively risky below-investment-grade bonds. Such holdings hurt the fund badly in 27 and 28 but helped it rebound strongly in 29 and 21. This series is unusual in that it has a small strategic allocation to Principal Preferred Securities. This fund hurt performance in 27 and especially in 28, when it dropped 22.3%. It came roaring back to gain 46% in 29 and 16% in 21. This fund accounts for a 3% position in most of the portfolios, down from 6% previously. Overall, shareholders should expect somewhat greater volatility than peers, given the glide-path structure and aggressive nature of some underlying holdings. Target-Date Fund Performance as of YTD Yr 3-Yr % Rank 3-Yr 5-Yr 5-Yr % Rank Star Return % Return % Return % Return % in Cat Std Dev Return % in Cat Rating Principal LifeTime 21 Instl QQQQ Principal LifeTime 215 Instl QQQ Principal LifeTime 22 Instl QQQQ Principal LifeTime 225 Instl QQQ Principal LifeTime 23 Instl QQQQ Principal LifeTime 235 Instl QQQ Principal LifeTime 2 Instl QQQQ Principal LifeTime 245 Instl QQQ Principal LifeTime 25 Instl QQQ Principal LifeTime 255 Instl QQQ Principal LifeTime Strategic Inc Instl QQQ For peer comparisons, 1 = highest return or lowest risk, 1 = lowest return or highest risk. Target Date Funds Risk-Adjusted Returns +/- Category Data as of Attribution Analysis Trailing 3-Year Returns as of % 2.9 Glide Path 2.66 Cost.69 Selection 1.46 Total Risk-adjusted return exceeding category average Risk-adjusted return trailing category average Category Data is based on longest available performance history: three or five years. For series with more than 18 months of history, but less than three years of history, the risk-adjusted return of the appropriate Morningstar Lifetime Moderate Index is used to create a 3-year history Principal LifeTime Glide Path.36 Cost.1 Selection -1.6 Total -.

Page 3 of 5 Morningstar Target-Date Fund Report 3-31-211 For Financial Professional Use Only.

3 Page 3 of 5 Morningstar Target-Date Fund Report For Financial Professional Use Only. Portfolio Holding-based Style Map - Equity Data as of A selection committee builds the portfolios from a roster of funds, including in-house offerings and external subadvisors. Principal has brought in some strong outside advisors such as PIMCO, BlackRock, and Westwood Management. But around 45% of the assets are still controlled by Principal funds, and their performance has not been noteworthy on the whole. Large Cap Growth I, a fund subadvised in part by T. Rowe Price, had stellar years in 29, when its 51% gain ranked in the category's top decile, and 21, when it gained 19% and ranked in the top quartile. Principal High Yield I, subadvised by JP Morgan and Neuberger Berman, is in the top 5% of its category over the trailing three- and five-year time periods as of March 31, 211. Bond & Mortgage Securities, an inhouse fund and a key series holding, has rebounded strongly since dropping 14.2% in 28, but it remains near the bottom quartile of its category over the trailing five-year period. Large Cap Value and International Growth are Principal-run funds that also are in or near the bottom quartiles of their respective categories. Principal recently simplified the lineup, although the changes don't alter the outlook here. It removed Large Cap Value III, Disciplined Large Blend, Small Cap Value, and Small Cap Value I, merged away Large Cap Blend I, and added Small Cap Value II. The changes involve funds with small weightings, and the quality of the new funds is just on par with those leaving, so the impact should be minor. One wild card is a new position in Principal Diversified Real Asset. The fund carries five subadvisors, including Credit Suisse and BlackRock, but it was just launched in March 21, so it is unproven in terms of performance. Deep- Value Core- Value Core Core- Growth High- Growth Giant Large Mid Small Micro Zone represents 75% of series' largest domestic stock holdings Fund centroid represents weighted average of series' domestic stock holdings Top Investments as of Yr 5-Yr % of 3-Yr % Rank 3-Yr 5-Yr % Rank Morningstar Star Category Assets Return % in Cat Std Dev Return % in Cat Risk Rating Principal Large Cap Growth I Inst Large Growth Above QQQQ Principal Large Cap Value I Inst Large Value Above QQ Principal Large Cap S&P 5 Index Inst Large Blend QQQ Principal Bond & Mtg Securities Inst Intermediate-Term Bond Above QQ Principal Core Plus Bond I Institutional Intermediate-Term Bond Principal International Value I Instl Foreign Large Value Principal Large Cap Growth Inst Large Growth QQQ Principal Large Cap Value Inst Large Value QQQ Principal High Yield I Inst High Yield Bond QQQQQ Principal International Growth Inst Foreign Large Growth QQ Total # Holdings 25 % Portfolio in Top 1 Holdings Overall Morningstar Rating 3.4 Price Above As of July 1, 29, the annual fees for this series were trimmed by about.9 percentage points. The Institutional share class, which accounts for two thirds of assets, carries a.76% annual expense ratio. That is below the industry average of.86%. Cost vs. Industry Principal LifeTime Instl.76% Industry.86% Avg Cost Per Share Class Exp Ratio (%) Net Assets ($M) Instl.76% 12,4 J 1.31% 1,818 R5 1.2% 1,2 R3 1.33% 99 R4 1.14% 895

4 Page 4 of 5 Morningstar Target-Date Fund Report For Financial Professional Use Only. People Below Management: A three-person group from Principal Management Corporation--Jeff Tyler, James Fennessey, and Randy Welch make day-to-day calls on portfolio construction and select the outside advisors. Dirk Laschanzky and Dave Blake at Principal Global Investors work on the glide-path structure and handle other duties such as rebalancing. Tyler, who joined Principal in March 211, spent many years at American Century, where he was head of asset allocation and helped create that firm's target-date lineup. The underlying funds are run by a somewhat mixed bag of outside advisors and internal portfolio managers. Manager Incentives: The LifeTime funds receive partial credit when it comes to manager compensation. All of the five managers on this series except newcomer Jeff Tyler (who started March 1, 211) have personal stakes in the funds or in an equivalent 1(k) plan. Two of them exceed the $1, level, but neither has more than $5, invested. PGI managers earn more when the funds outperform relative to peers over the trailing three-year time period. Other managers are held to a five-year performance benchmark. Management Manager Start Date Dirk Laschanzky 3-21 Randy Welch 5-27 James Fennessey 5-27 Michael Finnegan 6-27 David Blake 3-28 Tim Dunbar 3-28 Jeffrey R. Tyler Tenure Longest Tenure Target-Date Industry Tenure 4.5 years 1.2 years 5. years Underlying Funds' Management Tenure 3.3 years Longest Tenure 13. years Mutual Fund Industry Tenure 4.5 years Parent Corporate Culture: Principal is a well-known record keeper for defined benefit plans, less so for running successful mutual funds. That said, management is experienced, and it has increased the firm's assets under management through the LifeTime funds and through the acquisition of the Strategic Asset Management lineup from Washington Mutual. About half of the series' assets are run by Principal funds that are decent but not category leaders. To its credit, Principal has brought in excellent outside managers and doesn't avoid removing one of its own offerings from the LifeTime lineup. There isn't anything terribly wrong with this firm. It just doesn't stand out. Board Oversight: The fund board that oversees this target-date series does not meet Morningstar's standard for independence because its chairman, Ralph Eucher, also serves as chairman of the funds' advisor (Principal Management Corporation) and distributor (Principal Funds Distributor). The independent trustees, however, do invest adequately in the funds they oversee. All nine independent directors invest more than $1, in Principal funds. As for the board's service to shareholders, it oversees a sensible lineup of funds that aren't bloated or overly expensive. Transparency: Principal includes a fair amount of target-date information on its participant website, including underlying holdings of the funds, quarterly manager commentaries, and a methodology paper that includes glide-path information. The funds' prospectus is difficult to navigate because it lumps all Principal funds into a several-hundred-page prospectus, though the new summary prospectus puts the most relevant information in a more accessible form. Despite improvements, even more effective disclosure would be welcome. Regulatory History: According to recent disclosures, the Principal funds have not been subject to a regulatory sanction in recent years. Fund Family Data Star Rating QQQ % of Assets w/star Rating 88.8% Assets (listed in USD $Mil) Mutual Fund Assets 45,139 ETF Assets Other Assets 55,356 Total Assets ($M) 1,496 Number of Funds 139 Stewardship Grade D Manager Tenure 3.9 years Longest Manager Tenure 13. years 5-year Manager Retention Rate (%) 88.4%

Page 5 of 5 Morningstar Target-Date Fund Report 3-31-211 For Financial Professional Use Only.

path. The glide path had been more conservative than the typical peer's, so in most cases these changes brought it in line with the competition.

5 Page 5 of 5 Morningstar Target-Date Fund Report For Financial Professional Use Only. Process Glide Path: After a reassessment in 26, Principal placed greater emphasis on longevity risk (the risk investors may outlive their savings) and added to its equity stakes all along the glide path. The glide path had been more conservative than the typical peer's, so in most cases these changes brought it in line with the competition. The later-dated funds start out with 9% in equity and then decrease very gradually in the early years. The 21 fund, with roughly half in stocks, remains on the aggressive side. Shortly before retirement age, the glide path decreases more quickly, reaching 52.5% in stocks. It declines for 15 years after retirement, when it levels at a 25%/75% stock/bond mix. Within the domestic-equity sleeve, the managers try to keep the funds style-neutral to the Russell 3 Index. Non-U.S. stocks range from 25% in the retirement income fund to 29% in the longest-dated funds. Throughout the glide path, there are small (typically 4% to 5%) stakes dedicated to high-yield bonds and, quite unusually, preferred securities--all intended to diversify returns and produce income. Closer to retirement, Treasury Inflation-Protected Securities are introduced, and in 21 a real-assets stake was added. Principal does not have a tactical allocation program in place, but based on an analysis of various quantitative and qualitative metrics, the managers can choose either to delay rebalancing or to rebalance early, within 5 percentage points of the strategic weightings. Although not nearly as aggressive or dynamic as many tactical programs, there is an element of tactical allocation that comes with this rebalancing program. Rationale: When re-evaluating its glide path in 26, Principal conducted extensive stochastic modeling using various assumptions and, in particular, tested out three distinct glide paths: conservative (similar to its old allocations), aggressive, and a hybrid. The firm paid particular attention to how investors, including its own plan participants, behave during periods of extreme duress. As a result, the managers rejected the aggressive glide path because investors may sell off their assets at the wrong time. Meanwhile, the conservative approach did not adequately address longevity risk. The glide path it chose is fairly middle-of-the road, though it remains a bit more aggressive than the norm from five to 1 years before retirement. Strategic Glide Path Total Equity Exposure 1% Principal LifeTime Industry Industry Maximum/ Industry Minimum Retirement Date Principal LifeTime Industry Yr Total Return * * * * ( * * * * * ( Yr Performance Quartile Equity Allocation 1% U.S. Large Cap U.S. Mid/Small Cap Non-U.S. Developed Non-U.S. Emerging Other Equity % Retirement Date U.S. Large Cap U.S. Mid/Small Cap Non-U.S. Developed Non-U.S. Emerging Other Fixed-Income Allocation 1% TIPS U.S. Government U.S. Investment Grade U.S. High Yield Foreign Cash Other Fixed Income % Retirement Date TIPS U.S. Government U.S. Investment Grade U.S. High Yield Foreign Cash Other

Oppenheimer Transition Target-Date Fund Series Report. Morningstar Opinion

Oppenheimer Transition Target-Date Fund Series Report. Morningstar Opinion Page 1 of 5 Morningstar Target-Date Fund Series Report 3-31-211 For Financial Professional Use Only. Target-Date Series Rating Top Above Below Key Features Annual Expense Ratio 1.44% Active/Passive Exposure