Fund Manager Commentary (Debt Markets) 3. Fund Manager Commentary (Equity Markets) 4. Fund at a Glance (Equity / Balanced Schemes) 5

Index Contents Page No. Fund Manager Commentary (Debt Markets) 3 Fund Manager Commentary (Equity Markets) 4 Fund at a Glance (Equity / Balanced Schemes) 5 Fund at a Glance (Debt Schemes / Plans) 6-7 Principal Large Cap Fund 8 Principal Emerging Bluechip Fund 9 Principal Resurgent India Equity Fund 10 Principal Growth Fund 11 Principal Services Industries Fund 12 Principal Dividend Yield Fund 13 Principal Personal Tax Saver Fund 14 Principal Tax Savings Fund 15 Principal Index Fund 16 Principal Child Benefit Fund 17 Principal Balanced Fund 18 Principal Monthly Income Plan 19 Principal Monthly Income Plan - MIP Plus 20 Principal Income Fund 21 Principal Government Securities Fund 22 Principal Income Fund - Short Term Plan 23 Principal Ultra Short Term Fund 24 Principal Floating Rate Fund - Flexible Maturity Plan 25 Principal Floating Rate Fund - Short Maturity Plan 26 Principal Cash Management Fund - Liquid Option 27 Principal Money Manager Fund 28 Systematic Investment Plan (SIP) Returns 29 Disclaimers 30 Understanding Ratios & Risk Measures 31 2

Fund Manager Commentary Debt Markets Fixed Income Update for February 2010 Key Market Highlights Fiscal Deficit pegged at 5.5% of GDP for 2010-11 Fiscal deficit projected at 4.8% and 4.1% of GDP in 2011-12 and 2012-13, respectively Revenue deficit for 2010-11 projected at 4% Net Market Borrowings budgeted at Rs. 3,450 billion Gross Market Borrowings budgeted at Rs. 4,570 billion Disinvestment receipts for 2010-11 estimated at Rs. 400 billion Proceeds from 3G auction estimated at Rs. 350 billion Personal Income Tax slabs changed: Income up to Rs. 1.6 lakhs - Nil Income between Rs. 1.6 lakhs and Rs. 5 lakhs - 10% Income above Rs. 5 lakhs upto Rs. 8 lakhs - 20% Income above Rs. 8 lakhs - 30% Tax savings of up to Rs. 50,000 for individuals due to introduction of New Income Tax slabs Additional Deduction of Rs. 20,000 for investments in infrastructure bonds under section 80C Government to provide Oil and Fertilizer subsidy in cash instead of issuing bonds Diesel and Petrol prices hiked by 6-8% GDP growth for Q3 FY10 stood at 6% WPI inflation rose by 8.56% y-o-y in January from 7.31% in December IIP Growth for December delivered a massive surprise to consensus expectations by printing at 16.8% y-o-y, an all-time high for the current IIP series Food and Primary articles inflation eased in week ending 25th Feb, printing at 17.58% and 15.84% respectively, over last week Inter Bank liquidity continued to remain comfortable- avg. daily surplus in LAF was Rs. 643 billion Market impact During the month under review, GOI Security Markets had to confront a series of Bond negative events viz., the IIP printing at 16.8%, WPI Inflation rising by 8.56% above RBI's projection, and the Gross Borrowing program of Rs. 4,57,000 crs for FY 10-11 announced by Government, in its Federal Budget. Amidst such steep negative events, an unexpected event of China's RRR hike and U.S. Fed's discount rate hike, added further pressure to the already distressed Bond Markets. The 10 yr Benchmark bond rose from 7.59% to 1.5y high of 7.97%, before closing the month at 7.86%. Globally, the interest rate markets moved in a narrow range, with the US 10 yr gilt closing at 3.63% v/s 3.65%, UK 10 yr Gilt closing at 4.035% v/s 3.91%, Aus 10 yr closing at 5.42% v/s 5.37%, Korea 10 yr closing at 5.01% v/s 5.26%, over previous month. The Short Term Credit Markets reflected seasonal tightness and continued to trade nervously as banks continued to issue CDs to aggressively manage their Balance Sheet growth. The 1 yr CD rates rose from 6.00% to 6.80% m-o-m. The pressure was witnessed even in the 5yr segment, with 5yr AAA rated institutional Bond closing the month at 8.60% v/s 8.30% in previous month. However, the 5yr Bond-Gsec spread reduced from 0.93 bps to 0.88 bps. OIS markets however, played a consolation role to the bashing of GOI security markets. 1yr OIS closed at 4.97% v/s 4.98% m-o-m, while 5y closed at 7.02%. 2X5 OIS closed at 133 bps as against 121 bps in January 2010. Euro Closed the month at 1.3584 as against 1.396, USD/INR at 46.0850 v/s 46.16 and USD/JPY at 89.18 v/s 90.22 over previous month. Gold closed at $1112.10 as against $1084 in previous month. Oil prices closed at $78.21. Our Assessment INR Yields were range bound on account of: 1. Stronger IIP Data 2. Higher WPI inflation 3. Announcement of Borrowing Program in Federal Budget. Going Forward 1. The Gross Borrowing program of Rs. 4,57,000 crs was broadly in line with the Market Expectations. Considering the redemptions of Rs. 1,14,000 crs and expected Net State Government Borrowings of Rs. 1,00,000 crs, the net supply of SLR securities will be Rs. 4,45,000 crs. Nevertheless, this will be second consecutive year in which the net supply will be high. 2. Assuming that the Bank Deposits Grow @ 17% in line with RBI's target, additional SLR KEY FINANCIAL DATA Benchmarks Current Month Previous Month 26/02/10 31/01/10 1 yr CD 6.80% 6.00% 5 yr Corp Bond 8.60% 8.30% 10 yr Corp Bond 8.90% 8.66% 5 yr G-Sec 7.43% 7.29% 10 yr G-Sec 7.86% 7.59% 5 yr Bond G-Sec 1.03% 0.88% 10 yr Bond G-Sec 0.88% 0.93% US 10 yr Gilt 3.63% 3.65% Nymex Crude 78.21 73.54 Gold 1112.1 1084 USD INR 46.085 46.16 EUR USD 1.3584 1.396 USD JPY 89.18 90.22 Source- Internal February 2010 requirement from Banks would be at Rs. 2,15000-2,30,000 crs. In addition to that, assuming regulatory purchases from insurance companies and provident/pension funds of Rs. 1,50,000 crs, it would leave a demand gap of Rs. 65000-75000 crs. 3. In FY 09-10, the large borrowing program of Rs. 4,51,000 crs was largely supported by RBI through OMO purchases and MSS de-sequestering to the tune of Rs. 1,13,000 crs. 4. Going in to next Fiscal year (FY 10-11), markets will certainly miss RBI's intervention for filling in the demand gap of Rs. 65000-75000 crs. 5. The Financing of Government's mammoth borrowing requirement was easier in FY 09-10, since the demand for private credit was weak and the RBI helped via its liquidity-enhancing measures. However, in FY 10-11, financing the deficit would be more challenging as demand for credit picks up. The onus would be on RBI to ensure that liquidity remains sufficient to manage the Government's borrowing program or possibly conduct an OMO. However, these measures would run counter to the need to tighten liquidity and monetary policy in light of the rising growth and higher inflation. 6. WPI inflation is expected to trend higher and would touch double digits in March, as core inflationary pressures gain strength. This will further add nervousness to the interest rates markets. 7. Supply of bonds far outstrips the demand for bonds and with the borrowing likely to be front-loaded, is it expected to put additional pressure on long term bond yields. 8. Against the above backdrop, the 10 yr Bond yield is expected to head towards 8.25% in near term. Our Portfolio Strategy Recap - February 2010 1. We had marginally increased the duration of the Long Term Bond and Gilt Fund in anticipation of lower Borrowing Program. However, with no positive surprises from Budget, we have reduced the duration of the said funds. 2. In the short term fund we had earlier reduced the mark to mark component by selling assets in 1-3 year bucket and buying carry assets in the 6 month to 1 year bucket so as to reduce portfolio volatility. We continue to manage the fund with the same strategy. 3. Liquid funds, we have been maintaining a judicious mix of cash and short term instruments. We expect shorter end of the curve to remain under selling pressure and hence would like to to remain invested in 1-3 month CD's and good quality corporate CP's. 4. Ultra Short term fund continues to maintain a low average maturity of 110-120 days as against its stated objective of higher average maturity owing to huge volatility at the shorter end compounded by tightness expected in the market as this fiscal year comes to an end based on CRR hike and advance tax outflows. fiscal year. Strategy going Forward 1. Going forward, we may continue to run the portfolios with lower duration and would look to increase the duration when 10 yr G-Sec crosses 8.25%. In Long Term Bond Fund, we may look to add sum High yielding Money Market Instruments in order to increase the carry of the portfolio. 2. In the short term fund we have considerably reduced the mark to market component to ensure reduced volatility in the returns for the investor as we feel that the front end of the curve would continue to remain under pressure. We have positioned the portfolio mostly in 3 month to 1 year bucket so that investor continues to earn carry which is above the Ultra short term funds category returns with minor volatility depending on the short term rates movement. 3. Liquid funds, we have been maintaining a judicious mix of cash and short term instruments. The overnight rates are likely to touch the upper band of LAF corridor in March due to the impact of CRR hike and advance tax outflow. As such, the shorter end of the curve would remain under pressure and hence would like to to remain invested in 1-3 month CD's and good quality corporate CP's. 4. Currently Ultra short term fund is running a low average maturity but we plan to increase the average maturity in March as we expect to lock in at higher rates for six month to one year owing to year end tightness and volatility as usually witnessed at year end. GILT OUTLOOK MATRIX Outlook Key Drivers Key Risks Short Term Neutral Impact of CRR hike Rising inflationary Advance tax outflows expectations Natural demand from Rise in RBI policy rates investors Long Term Negative Rise in central bank Borrowing to be Front policy rates loaded Better economic Higher borrowing in growth numbers longer segment Higher trending inflation CORPORATE BOND OUTLOOK MATRIX Outlook Key Drivers Key Risks Short Term Neutral Attractive carry High supply in terms of refinancing and reissuance's by banks and corporates. Long Term Negative Rise in central bank Credit markets to remain policy rates strained Higher supply Crowding out of Govt. Borrowing programme 3

Fund Manager Commentary Equity Markets February 2010 Review of Equity Market for the Month of February 2010 The correction in the Indian equity market which began in January continued in the first week of February (the BSE Sensex corrected approx 12% from its Jan peak), and thereafter resumed its gradual uptrend. The market ended the month at close to the Jan-end levels (large cap indices were up 0.4-0.8% while midcap and smallcap indices were down 0.5-2%). Sectors such as IT, Auto, Pharma, Metals, Capital Goods and Banking Sectors outperperformed while Real Estate, Oil and Gas, Power and FMCG Sectors underperformed. The Auto Sector (passenger vehicles, two-wheelers and commercial vehicles) continued to maintain their strong volume growth in Feb, partly aided by preponement of purchases in anticipation of the excise duty increase in the Union Budget. Globally, Equities performance was mixed with most country indices ending in a range of -4% to +5%, and the MSCI world ending with gain of 0.4%. The Index of Industrial Production (IIP) for Dec 09 rose to a 15-year high of 16.8%. Even though this was due to the low base effect (IIP in Dec 08 was a negative 0.2%), it was nevertheless much higher than expected. However, this could moderate in coming months. India's food-price inflation rate stayed above 17 % for a 6th week and may accelerate after truckers raised freight rates on account of higher fuel costs. India's GDP grew 6% in the third quarter ending Dec 09, lower than expected, a deceleration from 7.9% growth during the Sep 09 quarter. The 9-month GDP growth now stands at 6.7%, and the full-year FY10 GDP growth is likely to be 7-7.5%, which could rise to 8-8.5% in FY11. The major event in Feb, the Union Budget, was well-received by the Indian equity market (the BSE Sensex rose aprox 4.5% in the 5 trading sessions post the Budget, including the Budget day), as it attempts to maintain a balance between economic growth and deficit control. The partial rollback of stimulus measures effected last year, in terms of excise duties, was in line with expectations, though the increase in customs duty on crude and petro products was an unexpected one, and the extent of the hike in excise duties on cigarettes, too, was more than expected. Indirect tax proposals are expected to result in Rs. 46,500 cr additional revenues, with the total tax revenues expected to rise by Rs. 20,500 cr after accounting for the expected fall of Rs. 20,000 cr in direct tax proposals. The positive surprise came in from the cut in personal taxes (an attempt to boost consumption), a cut in surcharge on corporate income tax, as well as the fiscal deficit target of 5.5% for FY11 (4.8% and 4.1% for the subsequent years) as against 6.9% for the current year. Banking stocks rallied on alower-than-expected Government borrowing target, and some of the weaker banks also rallied on the Rs. 16,500 cr allocation towards recapitalization for boosting their Tier 1 capital; while NBFCs rallied following the proposal to issue banking licences to new players. The non-extension of the sunset clause for STPI tax-exemption for IT companies beyond March 2010 could lead to some short-term underperformance of the sector due to the impact on earnings. Any shortfall in the targeted disinvestment programme of Rs. 40,000 cr (against an expected Rs. 25,000 cr in the current year) or in the targeted 3G spectrum auctions in the Telecom Sector, of Rs. 36,000 cr would need to be watched for (as these two together constitute 1.1% of the GDP), especially in the light of a very small provision for oil subsidies (Rs. 3000 cr) in the budget. The hike in petrol and diesel prices (by 6-7%), coupled with most sectors (like Steel, Cement, Auto, etc) passing on the excise increase, could cause an upward pressure on inflation; any shortfall in the monsoon this year for a second successive year, could further heighten this. FIIs turned net buyers of approx 464m$ (approx Rs. 2100 cr) in Feb compared to net sellers in Jan. FIIs have been buyers of approx 940m$ in the first few days following the Budget. Domestic funds continued to be net sellers at $ 156 mn (approx Rs. 700 cr), a smaller extent than in Jan. The rupee has been fairly stable around Rs. 46 to a dollar during Feb. International commodity prices were impacted in mid-feb by the tightening in China in terms of an increase in Cash Reserve Ratio, and also by a strengthening of the dollar due to the concerns in some of the European countries. However, commodity prices recovered by the end of the month. Challenges to global GDP growth could stem from the high level of public debt in most countries, unemployment levels continuing to be high, and the Govt efforts in China to prevent their economy from overheating. During February, we added or introduced, among others, IDFC, ICICI Bank, HDFC Bank, J&K Bank, REC, Maruti Suzuki, Exide Industries, Apollo Tyres, Sterlite Industries, Dr Reddy, Aurobindo Pharma, HCL Tech, Mphasis, Infinite Computers, Bharti Airtel, Power Trading Corpn., Petronet LNG, HT Media, BHEL, Jyoti Structures, Sadbhav Engg., Gammon Infra, etc. We reduced or exited, among others, TCS, Oracle Financial, Crompton Greaves, Voltas, Concor, ITC, Dabur, SBI, Axis Bank, Federal Bank, Allahabad Bank, CRISIL, Bajaj Holding, Bajaj Auto, HPCL, ONGC, Indraprastha Gas, Castrol, Biocon, etc. Global factors such as a resolution/bailout of sovereign credit issues (such as Greece and some of the other European countries like Spain, Portugal and Italy), the relative strength of the US dollar(the Euro has declined almost 11% versus the US dollar between early December 2009 and February 2010) could influence global equity flows in the near-term, which could influence flows towards the Indian market as well; while the recent budget proposals could influence stock-specific performance in the Indian market. Within emerging markets, India (which did not have any quarter of negative GDP growth unlike most countries last year), coupled with political stability and growth visibility, is likely to continue to be one of the favoured markets, with the extent of valuation premium over other emerging markets being a possible hindrance to a continued rally, the other headwinds could be high inflation, liquidity tightening, difficulty in achieving the lower fiscal deficit target and a larger supply of paper in the primary market in the form of PSU disinvestments and the private sector. As mentioned in our earlier commentaries, we continue to believe that 2010 could be much more of a bottom-up, stock-picker's market in India than it was in 2009 which was largely a case of P-E re-rating (Sensex valuations are now at 15.5xfy11 expected earnings for a CAGR of 13% over the 2 years FY09-11) driven by a large liquidity inflow on the back of a resilient economy and political stability. 4

Fund at a Glance (Equity / Balanced Schemes) Particulars Principal Principal Emerging Principal Resurgent Principal Principal Services Large Cap Fund Bluechip Fund India Equity Fund Growth Fund Industries Fund Nature of the An Open-ended An Open-ended An Open-ended An Open-ended An Open-ended Scheme Equity Scheme Equity Scheme Equity Scheme Equity Scheme Equity Scheme Allotment Date November 11, 2005 November 12, 2008 June 30, 2000 October 25, 2000 March 6, 2006 Investment Plans / Options Growth & Dividend The Dividend Option offers facility of Payout, Reinvestment and Sweep. Fund Manger Rajat Jain Rajat Jain Shyam Bhat Shyam Bhat Shyam Bhat Total Investment 20 years 20 years 15 years 15 years 15 years Experience Managing the Since September 2009 Since January 2010 Since January 2009 Since May 2004 Since March 2006 Current Fund Benchmark BSE 100 Index CNX Midcap Index BSE 200 Index BSE 200 Index CNX Services Sector Index Minimum New Investor: Rs. 5,000 New Investor: Rs. 5,000 New Investor: Rs. 5,000 New Investor: Rs. 5,000 New Investor: Rs. 5,000 Application Amount Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Cut Off Time 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm Exit Load If redeemed on or before 1 Year from the date of allotment - 1%. (including STP / SWP, if available) SIP SWP / STP Minimum number & Amount of SIP/SWP/STP (if available) Available Available 6 installment of Rs. 500/- each. Particulars Principal Principal Personal Principal Principal Principal Principal Dividend Yield Fund Tax Saver Fund Tax Savings Fund Index Fund Child Benefit Fund Balanced Fund Nature of the An Open-ended An Open-ended Equity An Open-ended Equity An Open-ended An Open-ended An Open-ended Scheme Equity Scheme Linked Savings Scheme Linked Savings Scheme Index Scheme Balanced Scheme Balanced Scheme Allotment Date October 15, 2004 March 31, 1996 March 31, 1996 July 27, 1999 January 7, 1998 January 14, 2000 Investment Plans / Growth & Dividend No Plans or Options at present Growth & Dividend Career Builder Plan Growth & Dividend Options The Dividend Option The Dividend Option No option under the Plan The Dividend Option offers facility of Payout, offers facility of Payout, offers facility of Payout, Reinvestment and Sweep. Reinvestment and Sweep. Reinvestment and Sweep. Fund Manger Shyam Bhat Rajat Jain Shyam Bhat Shyam Bhat Rajat Jain Rajat Jain Total Investment 15 years 20 years 15 years 15 years 20 years 20 years Experience Managing the Since October 2004 Since January 2010 Since January 2009 Since January 2007 Since January 2010 Since January 2010 Current Fund Benchmark S&P CNX 500 Index BSE 100 Index BSE 200 Index S&P CNX Nifty Index Crisil Balanced Fund Index Crisil Balanced Fund Index Minimum New Investor: Rs. 5,000 New Investor: Rs. 500 New Investor: Rs. 500 New Investor: Rs. 5,000 New Investor: Rs. 5,000 New Investor: Rs. 5,000 Application Amount Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Cut Off Time 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm Exit Load If redeemed on or before Nil Nil If redeemed on or before If redeemed on or before 1 Year from the (including STP / SWP, 1 Year from the 30 Days from the date of allotment - 1%. if available) date of allotment - 1%. date of allotment - 1%. SIP Available SWP / STP Available Available after lock-in period Available Not Available Available Minimum number & Amount of SIP/SWP/STP (if available) 6 installment of Rs. 500/- each. 5

Fund at a Glance (Debt Schemes / Plans) Particulars Principal Principal Monthly Principal Principal Principal Monthly Income Plan Income Plan - MIP Plus Income Fund Government Securities Income Fund - Fund Short Term Plan Nature of the An Open-ended fund. Monthly Income is not assured and An Open-ended An Open-ended dedicated An Open-ended Scheme is subject to the availability of distributable surplus Income Scheme Gilt Scheme investing in Income Scheme Government Securities Allotment Date May 23, 2002 December 30, 2003 Regular Plan: October 25, 2000 August 23, 2001 Regular Plan: April 24, 2002 Institutional Plan: May 09, 2003 Institutional Plan: May 09, 2003 Investment Plans / Growth & Dividend Growth & Dividend Regular Plan / Institutional Plan : Growth & Dividend Regular Plan / Institutional Plan : Options Growth & Dividend Growth & Dividend Dividend Frequencies Monthly / Quarterly Monthly / Quarterly Regular Plan : Quarterly / Half-Yearly / Annual Regular Plan: Monthly Quarterly / Half-Yearly / Annual Institutional Plan: Institutional Plan: Quarterly Weekly / Monthly Fund Manger Shyam Bhat Shyam Bhat Sandeep Nigudkar Sandeep Nigudkar Shobit Gupta Total Investment 15 years 15 years 8 years 8 years 12 years Experience Managing the Since January 2010 Since January 2010 Since December 2009 Since December 2009 Since September 2009 Current Fund Benchmark Crisil MIP Blended Index Crisil MIP Blended Index Crisil Composite Bond I-Sec Composite Index CRISIL Short-Term Bond Fund Index Fund Index Minimum New Investor: Rs. 5,000 New Investor: Rs. 5,000 Regular Plan : New Investor: Rs. 5,000 Regular Plan : Application Amount Existing Investor: Rs. 500 Existing Investor: Rs. 500 New Investor: Rs. 5,000 Existing Investor: Rs. 500 New Investor: Rs. 5,000 Existing Investor: Rs. 500 Existing Investor: Rs. 500 Institutional Plan : Institutional Plan : New Investor: Rs. 10 lakhs New Investor: Rs. 10 lakhs and Existing Investor: Rs. 1 lakh any amount thereafter under the plan with a minimum of Rs. 1 lakh in each option. Existing Investor: Rs. 1 lakh and any amount thereafter under each option. Cut Off Time Subscription 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm Redemption 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm Exit Load If redeemed on or before 1 Year from the Nil 1% if redeemed on or Nil (including SIP / SWP, date of allotment - 1%. before 365 Days from the if available) date of allotment. SIP Available Available Available in Regular Plan Available Available in Regular Plan SWP / STP Available Available Available in Regular Plan Available Available in Regular Plan Minimum number & Amount of SIP/SWP/STP (if available) 6 installment of Rs. 500/- each. 6

Fund at a Glance (Debt Schemes / Plans) Particulars Principal Principal Principal Principal Principal Ultra Short Term Fund Floating Rate Fund - Floating Rate Fund - Cash Management Fund - Money Manager Fund Flexible Maturity Plan Short Maturity Plan Liquid Option Nature of the An Open-ended An Open-ended Liquid Plan An Open-ended Liquid Scheme An Open-ended Liquid Scheme Debt Scheme Income Scheme Scheme Allotment Date November 6, 2007 September 14, 2004 September 14, 2004 Regular Plan: October 25, 2000 December 28, 2007 Institutional Plan: May 09, 2003 Institutional Premium Plan: August 30, 2004 Investment Plans / Growth & Dividend Regular Plan / Institutional Plan : Regular Plan / Institutional Plan : Regular Plan / Institutional Plan / Regular Plan / Options Growth & Dividend Growth & Dividend Institutional Premium Plan : Institutional Plan : Growth & Dividend Growth & Dividend Dividend Frequencies Daily / Weekly / Monthly Daily / Weekly / Monthly Daily / Weekly / Monthly Daily / Weekly / Monthly Daily / Weekly / Monthly Fund Manger Shobit Gupta Shobit Gupta Shobit Gupta Shobit Gupta Shobit Gupta Total Investment 12 years 12 years 12 years 12 years 12 years Experience Managing the Since September 2009 Since September 2009 Since September 2009 Since September 2009 Since September 2009 Current Fund Benchmark Crisil Liquid Fund Index Crisil Liquid Fund Index Crisil Liquid Fund Index Crisil Liquid Fund Index Crisil Liquid Fund Index Minimum New Investor: Rs. 5,000 Regular Plan: Regular Plan : Regular Plan : Application Amount Existing Investor: Rs. 1,000 New Investor: Rs. 5,000. New Investor: Rs. 5,000 New Investor: Rs. 5,000 Existing Investor: Rs. 500 Existing Investor: Rs. 1,000 Existing Investor: Rs. 1,000 Institutional Plan : Institutional Plan : Institutional Plan : New Investor: Rs. 1 crore and any amount thereafter under New Investor: Rs. 1 crore and any New Investor: Rs. 1 crore and each option, with a minimum of Rs. 1 lakh in each option. amount thereafter under the plan, any amount thereafter under Existing Investor: Rs. 1 lakh and any amount thereafter under with a minimum of Rs. 1 lakh in the plan, with a minimum of each option. each option. Rs. 1 lakh in each option. Existing Investor: Existing Investor: Rs. 1 lakh and any amount Rs. 1 lakh and any amount thereafter under each option. thereafter under each plan. Institutional Premium Plan : New Investor: Rs. 10 crores and any amount thereafter under the plan, with a minimum of Rs. 1 lakh in each option. Existing Investor: Rs. 1 lakh and any amount thereafter under each option. Cut Off Time Subscription 3.00 pm 3.00 pm 12.00 pm 12.00 pm 12.00 pm Redemption 3.00 pm 3.00 pm 3.00 pm 3.00 pm 3.00 pm Exit Load If redeemed on or before Nil Nil Nil Nil (including STP / SWP, 30 days from the date of if available) allotment - 0.25%. SIP Available Available in Regular Plan Not Available Not Available Not Available SWP / STP Available Available in Regular Plan Available in Regular Plan Available in Regular Plan Available in Regular Plan Minimum number & Amount of SIP/SWP/STP (if available) 6 installment of Rs. 500/- each. 7

Principal Large Cap Fund (An open-ended equity scheme) Rs. 455.75 crore Growth Option : Rs. 24.76 Dividend Option : Rs. 18.33 To provide capital appreciation and /or dividend distribution by predominantly investing in companies having a large market capitalization. For the purpose of this Fund, Large Cap Companies are defined as those having market capitalization greater than Rs.750 crore as on the date of investment (or any such amount as may be specified by India Index Services & Products Ltd (IISL) from time to time) being the upper limit of market capitalisation as a criteria for inclusion of a company in CNX Midcap 200 Index. However, should IISL come out with a definition of Large Cap companies, the same will be utilized. NAV^ BSE 100 Last 6 Months 31-Aug-09 13.32 6.48 Last 1 Year 27-Feb-09 112.24 94.28 Last 3 Years 28-Feb-07 15.44 10.31 Since Inception 11-Nov-05 23.50 16.95 compounded annualised basis. Performance of the dividend option for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Option. July 28, 2009 2.0000 17.6700 February 5, 2008 2.0000 23.5600 May 15, 2007 1.5000 17.7600 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 37.40% Beta^ 0.97 Sharpe Ratio^ (Annualised) 0.39 Portfolio Turnover Ratio** 1.40 Expense Ratio# 2.29% Note: ^ The above measures have been calculated by taking rolling returns for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. MARKET CAP ALLOCATION (As on Feb. 28, 2010) % of NAV Equity & Equity Related Instruments of Large Cap Companies 94.68 Equity & Equity Related Instruments of Mid Cap & Other Companies 1.57 Cash & Other Assets 3.75 Instrument Industry % of NAV Equity 96.25 Reliance Industries Ltd Petroleum Products 5.80 Oracle Financial Services Software Ltd Software 4.07 Infosys Technologies Ltd Software 4.00 ICICI Bank Ltd Banks 3.83 Bajaj Holdings & Investment Ltd Finance 3.39 HDFC Bank Ltd Banks 3.37 Cipla Ltd Pharmaceuticals 3.29 Shree Cement Ltd Cement 3.20 Larsen & Toubro Ltd Construction Project 3.09 Indian Oil Corporation Ltd Petroleum Products 3.06 State Bank of India Banks 3.03 Oil & Natural Gas Corporation Ltd Oil 2.70 Sterlite Industries (India) Ltd Non - Ferrous Metals 2.66 Lupin Ltd Pharmaceuticals 2.63 Allahabad Bank Banks 2.62 Bharat Heavy Electricals Ltd Industrial Capital Goods 2.58 Glaxosmithkline Pharmaceuticals Ltd Pharmaceuticals 2.44 Dabur India Ltd Consumer Non Durables 2.23 Bharti Airtel Ltd Telecom - Services 2.21 ABB Ltd Industrial Capital Goods 2.18 I T C Ltd Consumer Non Durables 2.14 Crompton Greaves Ltd Industrial Capital Goods 2.11 NTPC Ltd Power 2.09 Maruti Suzuki India Ltd Auto 2.08 Tata Consultancy Services Ltd Software 1.92 Godrej Consumer Products Ltd Consumer Non Durables 1.89 Nagarjuna Construction Co. Ltd Construction Project 1.78 Castrol (India) Ltd Petroleum Products 1.76 Hero Honda Motors Ltd Auto 1.76 Siemens Ltd Industrial Capital Goods 1.73 Tata Chemicals Ltd Fertilisers 1.67 Sintex Industries Ltd Industrial Products 1.57 Infrastructure Development Finance Co. Ltd Finance 1.40 Bajaj Finserv Ltd Finance 1.40 GAIL (India) Ltd Gas 1.31 Oil India Ltd Oil 1.30 HCL Technologies Ltd Software 1.21 UltraTech Cement Ltd Cement 1.14 Dr. Reddys Laboratories Ltd Pharmaceuticals 1.13 Hindalco Industries Ltd Non - Ferrous Metals 0.89 Nestle India Ltd Consumer Non Durables 0.86 Tata Steel Ltd Ferrous Metals 0.76 Cash and Other Assets 3.75 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Banks Software Petroleum Products Pharmaceuticals Industrial Capital Goods Consumer Non Durables Finance Construction Project Cement Oil 4.34% 3.99% 4.87% 6.19% 7.12% 8.59% 9.49% 11.19% 10.62% 12.84% 0.00 4.00 8.00 12.00 16.00 Value Research Rating Principal Large Cap Fund (Growth Option) $ (Rated out of 155 schemes in Equity Diversified category for 3 & 5 yrs period ended February 28, 2010) CRISIL CPR Rating Principal Large Cap Fund CPR 1 $$ (Ranked out of 31 schemes in Large Cap Oriented Equity Schemes category for 2 yr period ended Dec. 31, 2009) Past performance is no guarantee of future result. ( $ / $$ for ranking methodology please refer page 30.) 8

Principal Emerging Bluechip Fund (An open-ended equity scheme) Rs. 240.73 crore Growth Option : Rs. 27.55 Dividend Option : Rs. 21.80 To achieve long-term capital appreciation by investing in equity & equity related instruments of Mid Cap & Small Cap companies. NAV^ CNX Midcap Index Last 6 Months 31-Aug-09 20.36 17.15 Last 1 Year 27-Feb-09 171.10 126.20 Since Inception 12-Nov-08 119.32 68.29 compounded annualised basis. Performance of the dividend option for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Option. June 19, 2009 4.0000 19.3500 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Portfolio Turnover Ratio** 1.30 Expense Ratio# 2.40% ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. MARKET CAP ALLOCATION (As on Feb. 28, 2010) % of NAV Equity and equity related instruments of Mid Cap Companies 68.78 Equity and equity related instruments of Small Cap Companies 7.92 Equity and equity related instruments of Companies other than Mid & Small Cap 9.65 Cash and Money Market / Fixed Income Securities (including MIBOR Linked Short Term Papers & Securitised Debt) 13.64 Market Cap Range of CNX Midcap Index As on 31st December, 2009 Rs.33,706.73 Crs - Rs.1440.70 Crs Instrument Industry % of NAV Equity 86.36 Crompton Greaves Ltd Industrial Capital Goods 2.38 Usha Martin Ltd Ferrous Metals 2.36 Pantaloon Retail (India) Ltd Retailing 2.30 Glenmark Pharmaceuticals Ltd Pharmaceuticals 2.25 Asian Paints Ltd Consumer Non Durables 2.24 Rural Electrification Corporation Ltd Finance 2.02 Tata Tea Ltd Consumer Non Durables 1.94 Sun TV Network Ltd Media & Entertainment 1.94 GVK Power & Infrastructures Ltd Power 1.94 Torrent Pharmaceuticals Ltd Pharmaceuticals 1.92 Tata Steel Ltd Ferrous Metals 1.91 Sintex Industries Ltd Industrial Products 1.85 Oracle Financial Services Software Ltd Software 1.84 Shree Cement Ltd Cement 1.71 Lupin Ltd Pharmaceuticals 1.68 Union Bank of India Banks 1.59 Jay Shree Tea & Industries Ltd Consumer Non Durables 1.58 Jammu & Kashmir Bank Ltd Banks 1.56 Petronet LNG Ltd Gas 1.53 Power Finance Corporation Ltd Finance 1.53 Solar Explosives Ltd Chemicals 1.46 Exide Industries Ltd Ignore -Abresives & Grinding Wheels 1.34 Arvind Ltd Textile Products 1.33 Corporation Bank Banks 1.33 Biocon Ltd Pharmaceuticals 1.31 KSK Energy Ventures Ltd Power 1.31 Infotech Enterprises Ltd Software 1.29 Nagarjuna Construction Co. Ltd Construction Project 1.25 Sadbhav Engineering Ltd Construction 1.25 Mahindra & Mahindra Financial Services Ltd Finance 1.24 Kesoram Industries Ltd Cement 1.24 Bharti Airtel Ltd Telecom - Services 1.22 Hindustan Petroleum Corporation Ltd Petroleum Products 1.21 Apollo Tyres Ltd Auto Ancillaries 1.21 HT Media Ltd Media & Entertainment 1.15 CESC Ltd Power 1.13 Maruti Suzuki India Ltd Auto 1.13 Castrol (India) Ltd Petroleum Products 1.11 Edelweiss Capital Ltd Finance 1.11 Bajaj Holdings & Investment Ltd Finance 1.10 Godrej Consumer Products Ltd Consumer Non Durables 1.09 ICICI Bank Ltd Banks 1.09 Lanco Infratech Ltd Construction Project 1.06 HDFC Bank Ltd Banks 1.06 Orient Paper & Industries Ltd Cement 1.06 B L Kashyap & Sons Ltd Construction 1.05 Gammon Infrastructure Projects Ltd Construction 1.05 Infrastructure Development Finance Co. Ltd Finance 0.99 Container Corporation of India Ltd Transportation 0.98 UltraTech Cement Ltd Cement 0.98 Bharat Heavy Electricals Ltd Industrial Capital Goods 0.98 CRISIL Ltd Finance 0.96 Chambal Fertilizers & Chemicals Ltd Fertilisers 0.87 Allahabad Bank Banks 0.87 Aurobindo Pharma Ltd Pharmaceuticals 0.86 Jyoti Structures Ltd Power 0.85 Sesa Goa Ltd Minerals/Mining 0.83 Sterlite Industries (India) Ltd Non - Ferrous Metals 0.81 Gujarat NRE Coke Ltd Minerals/Mining 0.76 Bank of Baroda Banks 0.73 Oil & Natural Gas Corporation Ltd Oil 0.70 Bharat Electronics Ltd Industrial Capital Goods 0.66 DLF Ltd Construction 0.66 Godrej Properties Ltd Construction 0.53 Mahindra Holidays & Resorts India Ltd Hotels 0.49 Gillette India Ltd Consumer Non Durables 0.37 Graphite India Ltd Industrial Products 0.35 Jubilant Foodworks Ltd Consumer Non Durables 0.32 Infinite Computer Solutions (India) Ltd Software 0.24 Oil India Ltd Oil 0.22 NHPC Ltd Power 0.11 Cash and Other Assets 13.64 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Finance Banks Pharmaceuticals Consumer Non Durables Power Cement Construction Ferrous Metals Industrial Capital Goods Software 3.37% 4.53% 4.27% 4.02% 5.34% 4.99% 8.03% 7.54% 8.22% 8.96% 0.00 2.00 4.00 6.00 8.00 10.00 ICRA Mutual Fund Awards 2010 @ Principal Emerging Bluechip Fund - Growth Option (Ranked within the top 5% of 98 schemes in ICRA Open-Ended Diversified Equity Schemes - Defensive category for 1 year period ended December 31, 2009) Past performance is no guarantee of future result. ( @ for ranking methodology please refer page 30.) 9

Principal Resurgent India Equity Fund (An open-ended equity scheme) Rs. 133.67 crore Growth Plan : Rs. 81.79 Dividend Plan : Rs. 11.62 To generate long term capital appreciation by investing in equity and equity related securities of Indian Companies that are perceived to be potential growth stories. NAV^ BSE 200 Last 6 Months 31-Aug-09 8.94 7.32 Last 1 Year 27-Feb-09 79.85 98.64 Last 3 Years 28-Feb-07 5.06 10.28 Last 5 Years 28-Feb-05 15.20 18.21 Since Inception 30-Jun-00 24.29 15.49 compounded annualised basis. Performance of the dividend plan for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Plan. March 10, 2008 4.2500 16.4100 February 26, 2007 5.0000 18.7000 August 31, 2006 5.0000 19.7900 March 23, 2006 6.5000 28.2400 December 2, 2005 5.0000 28.1300 August 2, 2005 5.5000 29.8600 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 32.81% Beta^ 0.84 Sharpe Ratio^ (Annualised) 0.13 Portfolio Turnover Ratio** 1.60 Expense Ratio# 2.43% Note: ^ The above measures have been calculated by taking rollings return for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. Instrument Industry % of NAV Equity 97.76 Reliance Industries Ltd Petroleum Products 4.53 Infosys Technologies Ltd Software 3.26 Larsen & Toubro Ltd Construction Project 3.12 Tata Consultancy Services Ltd Software 3.10 ICICI Bank Ltd Banks 3.05 Kesoram Industries Ltd Cement 2.96 Torrent Pharmaceuticals Ltd Pharmaceuticals 2.88 Sintex Industries Ltd Industrial Products 2.75 Aurobindo Pharma Ltd Pharmaceuticals 2.70 Infrastructure Development Finance Co. Ltd Finance 2.63 Sterlite Industries (India) Ltd Non - Ferrous Metals 2.59 Oil India Ltd Oil 2.48 Nagarjuna Construction Co. Ltd Construction Project 2.44 Crompton Greaves Ltd Industrial Capital Goods 2.40 HDFC Bank Ltd Banks 2.30 Jaiprakash Associates Ltd Cement 2.28 Bharti Airtel Ltd Telecom - Services 2.24 I T C Ltd Consumer Non Durables 2.10 Bharat Heavy Electricals Ltd Industrial Capital Goods 2.09 Oracle Financial Services Software Ltd Software 2.02 Mphasis Ltd Software 1.99 Tata Tea Ltd Consumer Non Durables 1.96 Tata Power Co. Ltd Power 1.94 Bank of Baroda Banks 1.85 PTC India Ltd Power 1.75 CESC Ltd Power 1.72 Siemens Ltd Industrial Capital Goods 1.71 Power Finance Corporation Ltd Finance 1.70 Sun TV Network Ltd Media & Entertainment 1.58 Maruti Suzuki India Ltd Auto 1.58 NTPC Ltd Power 1.55 Oil & Natural Gas Corporation Ltd Oil 1.54 GlaxoSmithkline Consumer Healthcare Ltd Consumer Non Durables 1.49 Rural Electrification Corporation Ltd Finance 1.43 NHPC Ltd Power 1.34 Axis Bank Ltd Banks 1.30 Housing Development Finance Corpn. Ltd Finance 1.28 Lupin Ltd Pharmaceuticals 1.25 Bajaj Holdings & Investment Ltd Finance 1.21 State Bank of India Banks 1.17 Corporation Bank Banks 1.15 Tata Steel Ltd Ferrous Metals 1.14 Bajaj Auto Ltd Auto 1.09 Infinite Computer Solutions (India) Ltd Software 1.00 Dr. Reddys Laboratories Ltd Pharmaceuticals 0.98 Jyoti Structures Ltd Power 0.98 Reliance Communications Ltd Telecom - Services 0.93 Biocon Ltd Pharmaceuticals 0.89 Allahabad Bank Banks 0.79 Godrej Properties Ltd Construction 0.79 Castrol (India) Ltd Petroleum Products 0.75 Indian Oil Corporation Ltd Petroleum Products 0.72 Hindustan Petroleum Corporation Ltd Petroleum Products 0.71 Voltas Ltd Construction Project 0.52 Cash and Other Assets 2.24 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Banks Software Power Pharmaceuticals Finance Petroleum Products Industrial Capital Goods Construction Project Consumer Non Durables Cement 6.09% 5.55% 5.25% 6.72% 6.21% 8.71% 8.25% 9.30% 11.62% 11.37% 0.00 4.00 8.00 12.00 16.00 10

Principal Growth Fund (An open-ended equity scheme) Rs. 198.75 crore Growth Plan : Rs. 47.86 Dividend Plan : Rs. 21.68 To achieve long-term capital appreciation. NAV^ BSE 200 Last 6 Months 31-Aug-09 7.99 7.32 Last 1 Year 27-Feb-09 78.67 98.64 Last 3 Years 28-Feb-07 0.91 10.28 Last 5 Years 28-Feb-05 11.42 18.21 Since Inception 25-Oct-00 18.24 18.99 compounded annualised basis. Performance of the dividend plan for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Option. December 31, 2007 2.5000 37.1400 March 20, 2006 2.5000 24.6400 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 34.67% Beta^ 0.89 Sharpe Ratio^ (Annualised) 0.003 Portfolio Turnover Ratio** 1.74 Expense Ratio# 2.37% Note: ^ The above measures have been calculated by taking rolling returns for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. Instrument Industry % of NAV Equity 97.84 Reliance Industries Ltd Petroleum Products 4.60 ICICI Bank Ltd Banks 3.10 Tata Consultancy Services Ltd Software 2.98 Larsen & Toubro Ltd Construction Project 2.92 Infosys Technologies Ltd Software 2.91 Torrent Pharmaceuticals Ltd Pharmaceuticals 2.82 Sterlite Industries (India) Ltd Non - Ferrous Metals 2.75 Infrastructure Development Finance Co. Ltd Finance 2.65 Aurobindo Pharma Ltd Pharmaceuticals 2.63 Kesoram Industries Ltd Cement 2.63 Sintex Industries Ltd Industrial Products 2.61 Nagarjuna Construction Co. Ltd Construction Project 2.53 Crompton Greaves Ltd Industrial Capital Goods 2.41 HDFC Bank Ltd Banks 2.36 Oil India Ltd Oil 2.35 Mphasis Ltd Software 2.27 Jaiprakash Associates Ltd Cement 2.21 Bharti Airtel Ltd Telecom - Services 2.20 Tata Tea Ltd Consumer Non Durables 2.16 Tata Power Co. Ltd Power 2.09 I T C Ltd Consumer Non Durables 2.07 Jammu & Kashmir Bank Ltd Banks 1.99 Bharat Heavy Electricals Ltd Industrial Capital Goods 1.97 Siemens Ltd Industrial Capital Goods 1.95 Oracle Financial Services Software Ltd Software 1.83 State Bank of India Banks 1.80 Power Finance Corporation Ltd Finance 1.68 Sun TV Network Ltd Media & Entertainment 1.67 Jyoti Structures Ltd Power 1.67 CESC Ltd Power 1.61 Maruti Suzuki India Ltd Auto 1.60 Oil & Natural Gas Corporation Ltd Oil 1.54 Bajaj Auto Ltd Auto 1.50 PTC India Ltd Power 1.48 Axis Bank Ltd Banks 1.41 NTPC Ltd Power 1.39 Lupin Ltd Pharmaceuticals 1.37 Rural Electrification Corporation Ltd Finance 1.37 Bank of Baroda Banks 1.32 Petronet LNG Ltd Gas 1.28 Housing Development Finance Corpn. Ltd Finance 1.28 Bajaj Holdings & Investment Ltd Finance 1.23 Tata Steel Ltd Ferrous Metals 1.16 NHPC Ltd Power 1.07 Infinite Computer Solutions (India) Ltd Software 0.98 HT Media Ltd Media & Entertainment 0.94 Godrej Properties Ltd Construction 0.77 Voltas Ltd Construction Project 0.76 Biocon Ltd Pharmaceuticals 0.74 Dr. Reddys Laboratories Ltd Pharmaceuticals 0.72 Allahabad Bank Banks 0.66 Indian Oil Corporation Ltd Petroleum Products 0.56 Hindustan Petroleum Corporation Ltd Petroleum Products 0.52 Reliance Communications Ltd Telecom - Services 0.45 Dabur India Ltd Consumer Non Durables 0.31 Cash and Other Assets 2.16 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Banks 12.63% Software 10.97% Power 9.31% Pharmaceuticals 8.28% Finance 8.21% Industrial Capital Goods 6.32% Construction Project 6.21% Petroleum Products 5.69% Cement 4.84% Consumer Non Durables 4.54% 0.00 4.00 8.00 12.00 16.00 11

Principal Services Industries Fund (An open-ended equity scheme) Rs. 122.80 crore Growth Option : Rs. 13.33 Dividend Option : Rs. 11.82 To provide capital appreciation and income distribution to the unit holders by investing predominantly in equity/equity related securities of the companies belonging to the services industries and the balance in debt securities and money market instruments including call money. NAV^ CNX Services Sector Index Last 6 Months 31-Aug-09 7.59 4.97 Last 1 Year 27-Feb-09 84.94 77.13 Last 3 Years 28-Feb-07 6.68 7.00 Since Inception 6-Mar-06 7.49 10.75 compounded annualised basis. Performance of the dividend option for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Option. February 22, 2010 1.50 13.19 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 34.20% Beta^ 0.96 Sharpe Ratio^ (Annualised) 0.17 Portfolio Turnover Ratio** 1.65 Expense Ratio# 2.44% Note: ^ The above measures have been calculated by taking rolling returns for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. Tata Consultancy Services Ltd Software 3.72 CESC Ltd Power 3.70 Mphasis Ltd Software 3.62 Corporation Bank Banks 2.96 Jyoti Structures Ltd Power 2.95 Rural Electrification Corporation Ltd Finance 2.67 PTC India Ltd Power 2.65 Jammu & Kashmir Bank Ltd Banks 2.48 Power Grid Corporation of India Ltd Power 2.38 HT Media Ltd Media & Entertainment 2.26 Sun TV Network Ltd Media & Entertainment 2.11 Infinite Computer Solutions (India) Ltd Software 1.91 NHPC Ltd Power 1.81 Oracle Financial Services Software Ltd Software 1.75 Bajaj Holdings & Investment Ltd Finance 1.61 Reliance Communications Ltd Telecom - Services 1.55 GAIL (India) Ltd Gas 1.22 Housing Development Finance Corpn. Ltd Finance 1.16 Axis Bank Ltd Banks 1.14 State Bank of India Banks 1.11 Container Corporation of India Ltd Transportation 1.10 Allahabad Bank Banks 0.27 Cash and Other Assets 6.43 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Software 23.12% Power 19.31% Banks 17.43% Finance 15.31% Telecom - Services 7.15% Gas 5.79% Media & Entertainment 4.37% Transportation 1.10% 0.00 5.00 10.00 15.00 20.00 25.00 Instrument Industry % of NAV Equity 93.57 Infrastructure Development Finance Co. Ltd Finance 6.10 NTPC Ltd Power 5.82 Bharti Airtel Ltd Telecom - Services 5.60 ICICI Bank Ltd Banks 5.57 Petronet LNG Ltd Gas 4.57 Infosys Technologies Ltd Software 4.42 HCL Technologies Ltd Software 3.95 HDFC Bank Ltd Banks 3.89 Power Finance Corporation Ltd Finance 3.77 Wipro Ltd Software 3.75 12

Principal Dividend Yield Fund (An open-ended equity scheme) Rs. 108.86 crore Growth Plan : Rs. 19.63 Dividend Plan : Rs. 14.49 To provide capital appreciation and / or dividend distribution by investing predominantly in a well-diversified portfolio of companies that have a relatively high dividend yield. NAV^ S&P CNX 500 Last 6 Months 31-Aug-09 12.62 7.48 Last 1 Year 27-Feb-09 89.63 95.71 Last 3 Years 28-Feb-07 10.63 9.93 Last 5 Years 28-Feb-05 11.88 17.71 Since Inception 15-Oct-04 13.38 20.62 compounded annualised basis. Performance of the dividend plan for the investors would be net of the dividend distribution tax, as applicable. ^ Growth Option. October 12, 2007 1.5000 15.4400 April 24, 2006 1.5000 15.7200 October 3, 2005 0.7500 13.5100 April 20, 2005 0.5000 11.0900 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 33.77% Beta^ 0.85 Sharpe Ratio^ (Annualised) 0.27 Portfolio Turnover Ratio** 1.47 Expense Ratio# 2.47% Note: ^ The above measures have been calculated by taking rolling returns for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. Corporation Bank Banks 2.93 Castrol (India) Ltd Petroleum Products 2.55 Ambuja Cements Ltd Cement 2.30 Allahabad Bank Banks 2.28 Chambal Fertilizers & Chemicals Ltd Fertilisers 2.19 Aurobindo Pharma Ltd Pharmaceuticals 2.19 Mphasis Ltd Software 2.09 I T C Ltd Consumer Non Durables 2.09 Tata Chemicals Ltd Fertilisers 2.09 Reliance Industries Ltd Petroleum Products 2.01 Hindustan Unilever Ltd Diversified 1.97 Andhra Bank Banks 1.94 ICICI Bank Ltd Banks 1.85 Nagarjuna Construction Co. Ltd Construction Project 1.80 Torrent Pharmaceuticals Ltd Pharmaceuticals 1.79 Tata Consultancy Services Ltd Software 1.78 Godrej Consumer Products Ltd Consumer Non Durables 1.75 Bajaj Auto Ltd Auto 1.65 Indraprastha Gas Ltd Gas 1.61 Sterlite Industries (India) Ltd Non - Ferrous Metals 1.47 Sintex Industries Ltd Industrial Products 1.44 Larsen & Toubro Ltd Construction Project 1.44 Tata Steel Ltd Ferrous Metals 1.40 GAIL (India) Ltd Gas 1.36 Infosys Technologies Ltd Software 1.31 Glaxosmithkline Pharmaceuticals Ltd Pharmaceuticals 1.23 Federal Bank Ltd Banks 1.15 Nestle India Ltd Consumer Non Durables 1.06 Bharti Airtel Ltd Telecom - Services 0.92 Crompton Greaves Ltd Industrial Capital Goods 0.80 Oracle Financial Services Software Ltd Software 0.66 Indian Oil Corporation Ltd Petroleum Products 0.65 State Bank of India Banks 0.58 Lupin Ltd Pharmaceuticals 0.57 Hindustan Petroleum Corporation Ltd Petroleum Products 0.49 Housing Development Finance Corpn. Ltd Finance 0.43 Balmer Lawrie & Co. Ltd Transportation 0.33 Navneet Publications (India) Ltd Consumer Non Durables 0.16 Cash and Other Assets 4.86 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Instrument Industry % of NAV Equity 95.14 Rural Electrification Corporation Ltd Finance 5.28 Power Finance Corporation Ltd Finance 4.93 NTPC Ltd Power 4.29 Oil India Ltd Oil 4.11 Kesoram Industries Ltd Cement 3.85 Bajaj Holdings & Investment Ltd Finance 3.58 Jammu & Kashmir Bank Ltd Banks 3.36 Oil & Natural Gas Corporation Ltd Oil 3.21 Petronet LNG Ltd Gas 3.18 Tata Tea Ltd Consumer Non Durables 3.01 Finance 14.22% Banks 14.11% Consumer Non Durables 8.07% Oil 7.32% Cement 6.15% Gas 6.14% Software 5.85% Pharmaceuticals 5.77% Petroleum Products 5.70% Power 4.29% 0.00 4.00 8.00 12.00 16.00 13

Principal Personal Tax Saver Fund (An open-ended equity linked savings scheme) Rs. 571.59 crore Rs. 85.61 To provide long term growth of capital. The Investment Manager will aim to achieve a return on assets in excess of the performance of BSE 100 Index. NAV BSE 100 Last 6 Months 31-Aug-09 8.85 6.48 Last 1 Year 27-Feb-09 96.58 94.28 Last 3 Years 28-Feb-07 8.45 10.31 Last 5 Years 28-Feb-05 17.85 19.39 Since Inception 31-Mar-96 26.15 13.25 compounded annualised basis assuming that all payouts have been reinvested at the then prevailing NAV. Performance for the investors would be net of the dividend distribution tax, as applicable. March 25, 2008 40.0000 124.66 February 26, 2008 20.0000 172.57 December 31, 2007 11.0000 221.26 October 30, 2007 11.0000 190.53 March 13, 2006 10.0000 118.96 November 2, 2005 40.0000 124.43 * On face value of Rs 10. RATIOS & OTHER DETAILS (As on Feb. 28, 2010) Standard Deviation^ (Annualised) 37.26% Beta^ 0.95 Sharpe Ratio^ (Annualised) 0.27 Portfolio Turnover Ratio** 1.12 Expense Ratio# 2.24% Note: ^ The above measures have been calculated by taking rolling returns for a 3 year period with 4.13% risk free rate of return. ** Portfolio Turnover Ratio is calculated as lower of sales or purchases divided by average AUM for last rolling 12 months. # Calculated as year to date ratio to average AUM. Free Accidental Death Insurance 150 times the number of units## Tata Consultancy Services Ltd Software 2.49 Pantaloon Retail (India) Ltd Retailing 2.34 Bharat Heavy Electricals Ltd Industrial Capital Goods 2.06 Bajaj Holdings & Investment Ltd Finance 2.03 NTPC Ltd Power 1.99 Tata Tea Ltd Consumer Non Durables 1.87 Oil India Ltd Oil 1.82 Tata Steel Ltd Ferrous Metals 1.71 Siemens Ltd Industrial Capital Goods 1.68 Corporation Bank Banks 1.56 Power Finance Corporation Ltd Finance 1.54 Wipro Ltd Software 1.54 DLF Ltd Construction 1.46 Union Bank of India Banks 1.38 Sintex Industries Ltd Industrial Products 1.36 Lanco Infratech Ltd Construction Project 1.34 Glenmark Pharmaceuticals Ltd Pharmaceuticals 1.33 Petronet LNG Ltd Gas 1.29 KSK Energy Ventures Ltd Power 1.28 Dr. Reddys Laboratories Ltd Pharmaceuticals 1.20 Hindalco Industries Ltd Non - Ferrous Metals 1.14 Cairn India Ltd Oil 1.12 Infrastructure Development Finance Co. Ltd Finance 1.12 Indian Oil Corporation Ltd Petroleum Products 1.11 Cipla Ltd Pharmaceuticals 1.11 Tata Power Co. Ltd Power 1.10 Nagarjuna Construction Co. Ltd Construction Project 1.08 Castrol (India) Ltd Petroleum Products 1.07 Bajaj Auto Ltd Auto 1.05 Housing Development Finance Corpn. Ltd Finance 1.05 Tata Chemicals Ltd Fertilisers 1.01 CESC Ltd Power 1.01 GVK Power & Infrastructures Ltd Power 1.00 NHPC Ltd Power 0.99 HCL Technologies Ltd Software 0.96 Bharat Petroleum Corporation Ltd Petroleum Products 0.96 UltraTech Cement Ltd Cement 0.94 Hindustan Unilever Ltd Diversified 0.87 Godrej Properties Ltd Construction 0.73 Federal Bank Ltd Banks 0.70 Hindustan Petroleum Corporation Ltd Petroleum Products 0.67 CRISIL Ltd Finance 0.66 Indian Bank Banks 0.43 Cash and Other Assets 3.62 Instrument Industry % of NAV Equity 96.38 Reliance Industries Ltd Petroleum Products 5.27 ICICI Bank Ltd Banks 4.14 HDFC Bank Ltd Banks 3.53 Larsen & Toubro Ltd Construction Project 3.45 Oil & Natural Gas Corporation Ltd Oil 3.01 Infosys Technologies Ltd Software 3.00 I T C Ltd Consumer Non Durables 2.97 Crompton Greaves Ltd Industrial Capital Goods 2.81 State Bank of India Banks 2.75 Sterlite Industries (India) Ltd Non - Ferrous Metals 2.69 Bharti Airtel Ltd Telecom - Services 2.64 Oracle Financial Services Software Ltd Software 2.50 Maruti Suzuki India Ltd Auto 2.50 SECTOR ALLOCATION (TOP 10) (As on Feb. 28, 2010) Banks 14.48% Software 10.50% Petroleum Products 9.07% Power 7.37% Industrial Capital Goods 6.55% Finance 6.40% Oil 5.95% Construction Project 5.87% Consumer Non Durables 4.84% Non - Ferrous Metals 3.82% 0.00 4.00 8.00 12.00 16.00 ## Conditions Apply. Also, subject to a maximum of Rs. 1 lakh. 14