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Principal Variable Contracts Funds Inc.

04/01/2026 | Press release | Distributed by Public on 04/01/2026 09:27

Prospectus by Investment Company (Form 497)


Principal Variable Contracts Funds, Inc. 711 High Street, Des Moines, IA 50392 515 247 5111 tel

April 1, 2026

Dear Contract Owner:

A Special Meeting of Shareholders (the "Meeting") of the Diversified Growth Strategic Allocation Account ("Growth Strategic") and Diversified Balanced Strategic Allocation Account ("Balanced Strategic"), each a series of Principal Variable Contracts Funds, Inc. ("PVC"), will be held at 801 Grand Avenue, Des Moines, Iowa 50392, on April 30, 2026 (i) at 10:00 a.m., Central Time, for Growth Strategic and (ii) 10:15 a.m., Central Time, for Balanced Strategic.

The Acquired Funds' shareholders of record are insurance company separate accounts that offer variable life and variable annuity contracts. You are receiving these materials because you own a variable annuity contract or variable life insurance policy issued by an insurance company that is a shareholder of record, and you have allocated contract value of such contract or policy to the Acquired Funds. As a result, you have the right to instruct your insurance company how to vote the shares of the Acquired Funds that represent your contract value. Your insurance company will vote, in accordance with your instructions, the number of Acquired Fund shares that represents that portion of your contract value invested in the Acquired Funds as of March 5, 2026, the record date for the Meeting.

Under each Plan: (i) the applicable Acquiring Fund will acquire all the assets, subject to all the liabilities, of the corresponding Acquired Fund in exchange for shares of the Acquiring Fund; and (ii) the Acquiring Fund shares will be distributed to the shareholders of the Acquired Fund in complete liquidation and termination of the Acquired Fund (each, a "Reorganization"). As a result of each Reorganization, each shareholder of the applicable Acquired Fund will become a shareholder of the corresponding Acquiring Fund. The total value of all shares of each Acquiring Fund issued in the Reorganization will equal the total value of the net assets of the corresponding Acquired Fund. The number of full and fractional shares of the Acquiring Fund received by a shareholder of the Acquired Fund will be equal in value to the value of that shareholder's shares of the Acquired Fund as of the close of regularly scheduled trading on the New York Stock Exchange ("NYSE") on the closing date of the Reorganization.

Holders of Class 2 shares of each Acquired Fund will receive Class 2 shares of the corresponding Acquiring Fund. Each Reorganization is expected to occur on or about the close of regularly scheduled trading on the NYSE on May 1, 2026.

*****

Enclosed you will find a Notice of Special Meeting of Shareholders, a Proxy Statement/Prospectus, and a voting instruction card for the shares of the Acquired Fund to which you had allocated contract value as of March 5, 2026, the record date for the Meeting. The Proxy Statement/Prospectus provides background information and describes in detail the proposals to be voted on at the Meeting.

The PVC Board of Directors has voted in favor of each proposed Reorganization and recommends that you vote FOR the proposed Reorganization(s).

In order for the shares of the Acquired Fund to which you had allocated contract value as of the record date to be voted at the Meeting, we urge you to read the Proxy Statement/Prospectus and then give your voting instructions in one of the following three ways:

By Internet: Follow the instructions located on your voting instruction card.

By Phone: The phone number is located on your voting instruction card. Be sure you have your control number, as printed on your voting instruction card, available when you call.

By Mail: Complete and sign your voting instruction card and enclose it in the postage-paid envelope provided in this proxy package, allowing sufficient time for receipt by us by April 29, 2026.

We appreciate you taking the time to respond to this important matter. Your vote is important. If you have any questions regarding your Fund's Reorganization, please call our Shareholder Services Department toll-free at 1 (800) 222-5852.


			Sincerely,


			Kamal Bhatia
			Director, Chair, President, and Chief Executive Officer
			Principal Variable Contracts Funds, Inc.

PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.

711 High Street

Des Moines, Iowa 50392

1 (800) 222-5852

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Contract Owners of the Diversified Growth Strategic Allocation Account and the Diversified Balanced Strategic Allocation Account:

Notice is hereby given that a Special Meeting of Shareholders (the "Meeting") of the Diversified Growth Strategic Allocation Account ("Growth Strategic") and Diversified Balanced Strategic Allocation Account ("Balanced Strategic") (each, an "Acquired Fund" and, collectively, the "Acquired Funds"), each a series of Principal Variable Contracts Funds, Inc. ("PVC"), will be held at 801 Grand Avenue, Des Moines, Iowa 50392, on April 30, 2026 at (i) 10:00 a.m., Central Time, for Growth Strategic, and (ii) 10:15 a.m., Central Time, for Balanced Strategic. A Proxy Statement/Prospectus providing information about the following proposals to be voted on at the Meeting is included with this notice. The Meeting is being held to consider and vote on such proposals as well as any other business that may properly come before the Meeting or any adjournment or postponement thereof.

Proposal 1:

Approval of a Plan of Acquisition providing for the reorganization of the Diversified Growth Strategic Allocation Account (Class 2) into the Diversified Growth Adaptive Allocation Account (Class 2).

(Only shareholders of the Diversified Growth Strategic Allocation Account will vote on this proposal.)

Proposal 2:

Approval of a Plan of Acquisition providing for the reorganization of the Diversified Balanced Strategic Allocation Account (Class 2) into the Diversified Balanced Adaptive Allocation Account (Class 2).

(Only shareholders of the Diversified Balanced Strategic Allocation Account will vote on this proposal.)

The PVC Board of Directors recommends that shareholders of each Acquired Fund vote FOR the Proposals.

Approval of each Proposal will require the affirmative vote of the holders of at least a "Majority of the Outstanding Voting Securities" (as defined in the accompanying Proxy Statement/Prospectus under "Voting Information - Voting rights") of the applicable Acquired Fund.

Each shareholder of record of each Acquired Fund at the close of business on March 5, 2026, the record date for the Meeting (the "Record Date"), is entitled to receive notice of and to vote at the Meeting and any adjournments or postponements thereof. The Acquired Funds' shareholders of record are insurance company separate accounts that offer variable life and variable annuity contracts. You are receiving these materials because you own a variable annuity contract or variable life insurance policy issued by an insurance company that is a shareholder of record, and you have allocated contract value of such contract or policy to one or more Acquired Funds. As a result, you have the right to instruct your insurance company how to vote the shares of the Acquired Funds that represent your contract value. Your insurance company will vote, in accordance with your instructions, the number of Acquired Fund shares that represents that portion of your contract value invested in each of the Acquired Funds as of the Record Date.

Please read the attached Proxy Statement/Prospectus.

By order of the Board of Directors

Kamal Bhatia

Director, Chair, President, and Chief Executive Officer

April 1, 2026

Des Moines, Iowa

PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.

711 High Street, Des Moines, Iowa 50392

1 (800) 222-5852

---------------------------------

IMPORTANT NOTICE OF INTERNET AVAILABILITY OF PROXY STATEMENT/PROSPECTUS FOR THE SHAREHOLDERS' MEETING TO BE HELD ON APRIL 30, 2026

This Proxy Statement/Prospectus is available on the Internet at:

https://proxyvotinginfo.com/p/pvcdiv

---------------------------------

RELATING TO THE REORGANIZATION OF

DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT INTO DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT and DIVERSIFIED BALANCED STRATEGIC ALLOCATION ACCOUNT INTO DIVERSIFIED BALANCED ADAPTIVE ALLOCATION ACCOUNT

This Proxy Statement/Prospectus is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board" or "Directors") of Principal Variable Contracts Funds, Inc. ("PVC") to be used at a Special Shareholder Meeting (the "Meeting") of the Diversified Growth Strategic Allocation Account ("Growth Strategic") and Diversified Balanced Strategic Allocation Account ("Balanced Strategic"), each a series of PVC, to be held at 801 Grand Avenue, Des Moines, Iowa 50392, on April 30, 2026 at (i) 10:00 a.m., Central Time, for Growth Strategic, and (ii) 10:15 a.m., Central Time, for Balanced Strategic.

At the Meeting, the shareholders of each of Growth Strategic and Balanced Strategic (each, an "Acquired Fund" and, together, the "Acquired Funds") will be asked to consider and approve a Plan of Acquisition (each, a "Plan") providing for its reorganization into, respectively, Diversified Growth Adaptive Allocation Account and the Diversified Balanced Adaptive Allocation Account (each, an "Acquiring Fund" and, together, the "Acquiring Funds") (the Acquired Funds and Acquiring Funds, together, the "Funds"). Each of these Funds is a separate series of PVC. PVC is a Maryland corporation and an open-end management investment company registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940, as amended (the "1940 Act").

All shares of the Acquired Funds are owned of record by insurance company separate accounts established to fund benefits under variable annuity contracts and variable life insurance policies (each, a "Contract") issued by such insurance companies. Persons holding Contracts are referred to herein as "Contract Owners."

Under each Plan: (i) the applicable Acquiring Fund will acquire all the assets, subject to all the liabilities, of the corresponding Acquired Fund in exchange for newly issued shares of the Acquiring Fund; and (ii) the Acquiring Fund shares will be distributed to the shareholders of the Acquired Fund in complete liquidation and termination of the Acquired Fund (each a "Reorganization"). As a result of each Reorganization, each shareholder of the Acquired Fund will become a shareholder of the corresponding Acquiring Fund. The total value of all shares of the Acquiring Fund issued in each Reorganization will equal the total value of the net assets of the corresponding Acquired Fund. The number of full and fractional shares of the Acquiring Fund received by a shareholder of the Acquired Fund will be equal in value to the value of that shareholder's shares of the Acquired Fund as of the close of regularly scheduled trading on the New York Stock Exchange ("NYSE") on the closing date of the Reorganization.

I.Holders of Class 2 shares of the Diversified Growth Strategic Allocation Account (Acquired Fund) will receive Class 2 shares of the Diversified Growth Adaptive Allocation Account (Acquiring Fund).

II.Holders of Class 2 shares of the Diversified Balanced Strategic Allocation Account (Acquired Fund) will receive Class 2 shares of the Diversified Balanced Adaptive Allocation Account (Acquiring Fund).

Each Reorganization is expected to occur on or about the close of regularly scheduled trading on the NYSE on May 1, 2026. The terms and conditions of the Reorganization are more fully described below in this Proxy Statement/Prospectus and in the Forms of Plan of Acquisition, which are attached hereto as Appendix A.

Approval of each Reorganization will require the affirmative vote of the holders of at least a "Majority of the Outstanding Voting Securities" (as defined below in this Proxy Statement/Prospectus under "Voting Information - Voting rights") of the applicable Acquired Fund.

This Proxy Statement/Prospectus contains information shareholders should know about each Reorganization. Please read it carefully and retain it for future reference. The Annual and Semi-Annual Reports to Shareholders of PVC contain additional information about the investments of the Acquired and Acquiring Funds. The Annual Report contains discussions of the market conditions and investment strategies that significantly affected these Funds during the fiscal year ended December 31, 2025. Copies of these reports may be obtained at no charge by calling our Shareholder Services Department toll-free at 1 (800) 222-5852 or online at www.principalfunds.com/prospectuses.

The Statement of Additional Information dated April 1, 2026 (the "Statement of Additional Information" or "SAI") relating to this Proxy Statement/Prospectus has been filed with the SEC (File No. 333-293918) and is incorporated by reference into this Proxy Statement/Prospectus. PVC's Prospectus dated May 1, 2025 and as supplemented, and the Statement of Additional Information for PVC dated May 1, 2025, and as supplemented, have been filed with the SEC (File No. 002-35570). Copies of these documents may be obtained without charge by writing to Principal Variable Contracts Funds, Inc., P.O. Box 219971, Kansas City, MO 64121-9971 or by calling our Shareholder Services Department toll-free at 1 (800) 222-5852. You may also call our Shareholder Services Department toll free at 1 (800) 222-5852 if you have any questions regarding your Fund's Reorganization.

PVC is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, the 1940 Act, and the rules thereunder, and PVC files reports, proxy materials, and other information with the SEC. Such reports, proxy materials, and other information are available on the SEC's EDGAR Database on its Internet site at www.sec.gov.

The SEC has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.

The date of this Proxy Statement/Prospectus is April 1, 2026.


TABLE OF CONTENTS

			Page

INTRODUCTION			4
THE REORGANIZATIONS			5
I.Plan of Acquisition Providing for the Reorganization of the Diversified Growth Strategic Allocation Account into the Diversified Growth Adaptive Allocation Account			6
Comparison of Acquired and Acquiring Funds			6
Comparison of Investment Objectives and Strategies			7
Comparison of Principal Investment Risks			7
Fees and Expenses of the Funds			10
Performance			12
Board Consideration of the Reorganization			14
II.Plan of Acquisition Providing for the Reorganization of the Diversified Balanced Strategic Allocation Account into the Diversified Balanced Adaptive Allocation Account			16
Comparison of Acquired and Acquiring Funds			16
Comparison of Investment Objectives and Strategies			17
Comparison of Principal Investment Risks			17
Fees and Expenses of the Funds			20
Performance			22
Board Consideration of the Reorganization			24
INFORMATION ABOUT THE REORGANIZATIONS			26
Plans of Acquisition			26
Description of the Securities to Be Issued			26
Federal Income Tax Consequences			27
CAPITALIZATION			28
ADDITIONAL INFORMATION ABOUT INVESTMENT STRATEGIES AND RISKS			29
ADDITIONAL INFORMATION ABOUT THE FUNDS			41
Multiple Classes of Shares			41
Intermediary Compensation			41
Dividends and Distributions			41
Pricing of Fund Shares			41
TAX INFORMATION			42
DISTRIBUTION PLAN AND ADDITIONAL INFORMATION REGARDING INTERMEDIARY COMPENSATION			42
THE COST OF INVESTING AND ONGOING FEES			43
FREQUENT PURCHASES AND REDEMPTIONS			44
SHAREHOLDER RIGHTS			45
PURCHASE OF FUND SHARES			45
REDEMPTION OF FUND SHARES			46
PORTFOLIO HOLDINGS INFORMATION			47
VOTING INFORMATION			47
OUTSTANDING SHARES AND SHARE OWNERSHIP			48
FINANCIAL STATEMENTS			50
LEGAL MATTERS			50
OTHER INFORMATION			51
APPENDIX A - FORMS OF PLANS OF ACQUISITION			A-1
Diversified Growth Strategic Allocation Account and Diversified Growth Adaptive Allocation Account			A-2
Diversified Balanced Strategic Allocation Account and Diversified Balanced Adaptive Allocation Account			A-5
APPENDIX B - DESCRIPTION OF BOND RATINGS			B-1
APPENDIX C - FINANCIAL HIGHLIGHTS			C-1

INTRODUCTION

This Proxy Statement/Prospectus is being furnished to shareholders of the Acquired Funds to provide information regarding the Plans and the Reorganizations.

Principal Variable Contracts Funds, Inc. PVC is a Maryland corporation and an open-end management investment company registered with the SEC under the 1940 Act. PVC currently offers 36 separate series (the "PVC Funds"), including the Acquired Funds and the Acquiring Funds. The sponsor of PVC is Principal Life Insurance Company ("Principal Life"), and the investment advisor to the PVC Funds is Principal Global Investors, LLC ("PGI"). Principal Funds Distributor, Inc. (the "Distributor" or "PFD") is the distributor for all Fund shares. Principal Life is an insurance company organized in 1879 under the laws of the State of Iowa. Principal Life, PGI, and PFD are indirect, wholly-owned subsidiaries of Principal Financial Group, Inc. ("PFG"). Principal Life, PGI, and PFD's mailing address is Principal Financial Group, 711 High Street, Des Moines, Iowa 50392.

Investment Management. Pursuant to an investment advisory agreement with PVC, PGI provides investment advisory services to each PVC Fund and is also responsible for, among other things, administering the business and affairs of each PVC Fund. PGI is also responsible for selecting, contracting with, compensating, and monitoring the performance of any sub-advisors that manage the investment of the assets of the PVC Funds pursuant to sub-advisory agreements. Neither the Acquired Funds nor the Acquiring Funds are sub-advised.

PGI is located at 801 Grand Avenue, Des Moines, IA 50392. PGI is an indirect, wholly owned subsidiary of PFG.

THE REORGANIZATIONS

At its meeting held on December 9, 2025, the PVC Board of Directors (the "Board"), including all the Directors who are not "interested persons" (as defined in the 1940 Act) of PVC (the "Independent Directors"), approved the Reorganizations pursuant to the Plans providing for the reorganizations of the Acquired Funds into the corresponding Acquiring Fund. The Board concluded that each Reorganization is in the best interests of the applicable Acquired Fund and Acquiring Fund and that the interests of existing shareholders of the Funds will not be diluted as a result of the Reorganization. The factors that the Board considered in deciding to approve each Reorganization are discussed under "THE REORGANIZATIONS - Board Consideration of the Reorganization."

Each Reorganization contemplates: (i) the transfer of all the assets, subject to all of the liabilities, of the applicable Acquired Fund to the corresponding Acquiring Fund in exchange for newly issued shares of the Acquiring Fund; and (ii) the distribution to Acquired Fund shareholders of the corresponding Acquiring Fund shares in complete liquidation and termination of the Acquired Fund. As a result of the Reorganizations, each shareholder of an Acquired Fund will become a shareholder of the corresponding Acquiring Fund. In each Reorganization, the Acquiring Fund will issue to the corresponding Acquired Fund a number of shares with a total value equal to the total value of the net assets of the Acquired Fund, and each shareholder of the Acquired Fund will receive a number of full and fractional shares of the Acquiring Fund with a value equal to the value of that shareholder's shares of the Acquired Fund, as of the close of regularly scheduled trading on the NYSE on the closing date of the Reorganization (the "Effective Time"). The closing date of each Reorganization is expected to be on or about May 1, 2026.

Holders of Class 2 shares of an Acquired Fund will receive Class 2 shares of the corresponding Acquiring Fund. The terms and conditions of each Reorganization are more fully described below in this Proxy Statement/Prospectus and in the Forms of Plans of Acquisition, which are attached hereto as Appendix A.

The Board of Directors believes that each Reorganization is in the best interests of shareholders of the applicable Acquired Funds and the corresponding Acquiring Fund for the reasons described in this Proxy Statement/Prospectus. Combining the Funds will not result in any dilution of the interests of existing shareholders of the Funds. Please see "THE REORGANIZATIONS - Board Consideration of the Reorganization" for additional information about the Board's consideration of each Reorganization.

Furthermore, the Funds will obtain an opinion of legal counsel to the effect that no gain or loss should be recognized by any shareholder for federal income tax purposes as a result of the Reorganization. Please see "Information About the Reorganization - Federal Income Tax Consequences" for additional information about the federal income tax consequences of each Reorganization.

PGI serves as investment advisor to the Acquired and the Acquiring Funds. Please see "Plan of Acquisition Providing for the Reorganization of the Diversified Growth Strategic Allocation Account into the Diversified Growth Adaptive Allocation Account" and "Plan of Acquisition Providing for the Reorganization of the Diversified Balanced Strategic Allocation Account into the Diversified Balanced Adaptive Allocation Account" below for additional comparison information between the Acquired Funds and Acquiring Funds, as well as information about the Acquiring Funds post-Reorganization.

Payment of the direct expenses and out-of-pocket fees incurred in connection with the Reorganizations, including printing, mailing, legal, and audit fees, will be shared by PGI and the applicable Acquired Fund.

Each of the Acquired and the Acquiring Funds qualify, and following the Reorganizations it is expected that each Acquiring Fund will continue to qualify, as a Regulated Investment Company for tax purposes.

I.Plan of Acquisition Providing for the Reorganization of the

Diversified Growth Strategic Allocation Account into the Diversified Growth Adaptive Allocation Account

At its meeting held on December 9, 2025, the Board of PVC, including the Independent Directors, approved the Plan, providing for the reorganization of the Diversified Growth Strategic Allocation Account (the "Acquired Fund") into the Diversified Growth Adaptive Allocation Account (the "Acquiring Fund").

Comparison of Acquired Fund and Acquiring Fund

The following tables provide comparative information with respect to the Acquired Fund and the Acquiring Fund.

The Funds have substantially similar objectives in that the Acquired Fund seeks to provide long-term capital appreciation, with an emphasis on managing volatility, while the Acquiring Fund seeks to provide long-term capital appreciation, while seeking to control volatility. As described in the tables below, their principal investment strategies are also substantially similar.

The Acquired Fund operates as a fund of funds. It generally allocates approximately 65% of its assets to underlying equity index registered investment companies to gain broad market exposure to U.S. and non-U.S. investments, including those of smaller companies, and the remaining 35% of its assets to underlying fixed-income index underlying registered investment companies for intermediate duration fixed-income exposure. The underlying index funds invest in derivatives with the intention of managing equity exposure and reducing volatility.

The Acquiring Fund also operates as a fund of funds but may also invest directly in derivatives. It generally allocates approximately 65% of its assets to underlying equity index registered investment companies and exchange-traded futures to gain broad market exposure to U.S. and non-U.S. investments, including those of smaller companies, and the remaining 35% of its assets to underlying fixed-income index underlying registered investment companies 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, possibly taking short positions in exchange-traded futures.


DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Approximate Net Assets as of January 31, 2026						Approximate Net Assets as of January 31, 2026
$196,125,000						$1,459,467,000


DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Investment Advisor						Investment Advisor
PGI						PGI

PGI Portfolio Managers						PGI Portfolio Managers
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.						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.
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.						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. 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.
						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.

Comparison of Investment Objectives and Strategies


DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Investment Objective						Investment Objective
The Fund seeks to provide long-term capital appreciation, with an emphasis on managing volatility.						The Fund seeks to provide long-term capital appreciation, while seeking to control volatility.

Principal Investment Strategies						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. 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/or substitute or remove Underlying Funds when it deems appropriate. The Fund is rebalanced monthly. 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.						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. 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.

Temporary Defensive Investing

For temporary defensive purposes in times of unusual or adverse market, economic, or political conditions, each Fund may invest up to 100% of its assets in cash and cash equivalents. In taking such defensive measures, either Fund may fail to achieve its investment objective.

Fundamental Investment Restrictions

The Funds are subject to identical fundamental investment restrictions, which may not be changed without a shareholder vote. These fundamental restrictions deal with such matters as the issuance of senior securities, purchasing or selling real estate or commodities, borrowing money, making loans, underwriting securities of other issuers, diversification or concentration of investments, and short sales of securities. The fundamental investment restrictions of the Funds are described in the Statement of Additional Information under "Description of the Funds' Investments and Risks - Fundamental Restrictions."

Additional Information

The investment objective of each Fund may be changed by the Board without shareholder approval.

Additional information about the investment strategies and the types of securities in which the Funds may invest is discussed below under "Additional Information About Investment Strategies and Risks," as well as in the Statement of Additional Information.

The Statement of Additional Information provides further information about the portfolio managers for each Fund, including information about compensation, other accounts managed, and ownership of Fund shares.

Comparison of Principal Investment Risks

Shareholders should consider the amount and character of investment risk involved in the respective investment objectives and strategies of the Acquired Fund and the Acquiring Fund.

Principal Risks Applicable to Both Funds

The following principal risks are applicable to the Acquired Fund and the Acquiring Fund:

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

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.

•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.

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.

•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.

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.

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).

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.

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.

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.

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.

Additional Principal Risks of Investing in the Acquired Fund

The following are additional principal risks of investing in the Acquired Fund that are not principal risks of the Acquiring Fund.

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.

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.

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.

Additional Principal Risks of Investing in the Acquiring Fund

The following are additional principal risks of investing in the Acquiring Fund that are not principal risks of the Acquired Fund.

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.

Fees and Expenses of the Funds

Fees and Expenses as a % of average daily net assets

The following table shows: (a) the ratios of expenses to average net assets of the Acquired Fund for the fiscal year ended December 31, 2025; (b) the ratios of expenses to average net assets of the Acquiring Fund for the fiscal year ended December 31, 2025; and (c) the pro forma expense ratios of the Acquiring Fund for the fiscal year ended December 31, 2025 assuming that the Reorganization had taken place at the commencement of the fiscal year ended December 31, 2025.

These fees and expenses do not include the effect of any sales charge, separate account expenses or other contract level expenses which may be applied at the variable life insurance or variable annuity product level. If such charges or fees were included, overall expenses would be higher and would lower the Acquired Fund's and Acquiring Fund's performance.

Holders of Class 2 shares of the Acquired Fund will receive Class 2 shares of the Acquiring Fund.

Annual Fund Operating Expenses

(expenses that you pay each year as a percentage of the value of your investment)


(a) DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)
Class	Management Fees	Distribution and/or Service (12b-1) Fees	Other Expenses	Acquired Fund Fees and Expenses	Total Annual Fund Operating Expenses
2	0.05%	0.25%	0.01%	0.27%	0.58%
(b) DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)
Class	Management Fees	Distribution and/or Service (12b-1) Fees	Other Expenses	Acquired Fund Fees and Expenses	Total Annual Fund Operating Expenses
2	0.12%	0.25%	0.00%	0.16%	0.53%
(c) DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund) (Pro forma assuming Reorganization)
Class	Management Fees	Distribution and/or Service (12b-1) Fees	Other Expenses	Acquired Fund Fees and Expenses	Total Annual Fund Operating Expenses
2	0.12%	0.25%	0.00%	0.16%	0.53%

Examples: The following examples are intended to help you compare the costs of investing in shares of the Acquired Fund, the Acquiring Fund, and the Acquiring Fund on a pro forma basis assuming that the Reorganization has taken place. The examples assume that fund expenses continue at the rates shown in the table above, that you invest $10,000 in the particular fund for the time periods indicated and then redeem all of your shares at the end of those periods, and that all dividends and distributions are reinvested. The examples also assume that your investment has a 5% return each year. If separate account expenses and contract level expenses were included, expenses would be higher. The examples should not be considered a representation of future expense of the Acquired Fund or the Acquiring Fund. Actual expense may be greater or less than those shown.


(a) DIVERSIFIED GROWTH STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)
Class	1 year	3 years	5 years	10 years
Assumes redemption at the end of the periods listed:
2	$59	$186	$324	$726
(b) DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)
Class	1 year	3 years	5 years	10 years
Assumes redemption at the end of the periods listed:
2	$54	$170	$296	$665
(c) DIVERSIFIED GROWTH ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund) (Pro forma assuming Reorganization)
Class	1 year	3 years	5 years	10 years
Assumes redemption at the end of the periods listed:
2	$54	$170	$296	$665

Portfolio Turnover

The Funds 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 Funds' and the underlying funds' performance. During the most recent fiscal year, the Acquired Fund's portfolio turnover rate was 22.2% of the average value of its portfolio while the portfolio turnover rate for the Acquiring Fund was 44.4%.

Investment Management Fees and Schedules

The management fee for each Fund paid (as a percentage of the Fund's average daily net assets) for the fiscal year ended December 31, 2025 is set forth below:


Diversified Growth Strategic Allocation Account (Acquired Fund)						Diversified Growth Adaptive Allocation Account (Acquiring Fund)
0.05%						0.12%

The discussions regarding the basis for the Board's approval of each Fund's management agreement are available in the Registrant's Form N-CSR filing on the SEC's website at www.sec.gov for the period ending December 31, 2025.

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 charts show the investment returns of each Fund's Class 2 shares for each full calendar year of operations for 10 years (or, if shorter, the life of the Fund). The tables show for the last one, five, and ten calendar year periods (or, if shorter, the life of the Fund), how each Fund's average annual total returns compare with those of one or more broad measures of market performance. Performance figures for the Funds do not include any separate account expenses, cost of insurance, or other contract-level expenses; total returns for the Funds would be lower if such expenses were included.

Life of Fund returns are measured from the date the Acquiring Fund's shares were first sold (March 30, 2017).

Calendar Year Total Return (%) as of 12/31 Each Year

Diversified Growth Strategic Allocation Account (Acquired Fund)


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, 2025


	1 Year	5 Years	10 Years
Diversified Growth Strategic Allocation Account - Class 2	13.59%	7.10%	8.40%
S&P 500 Index (reflects no deduction for fees, expenses, or taxes)	17.88%	14.42%	14.82%
Diversified Growth Strategic Allocation Custom Index (except as noted for MSCI EAFE Index NTR, reflects no deduction for fees, expenses, or taxes)	14.38%	8.14%	9.40%
S&P 500 Index (reflects no deduction for fees, expenses, or taxes)	17.88%	14.42%	14.82%
Bloomberg US Aggregate Index (reflects no deduction for fees, expenses, or taxes)	7.30%	(0.36)%	2.01%
MSCI EAFE Index NTR (reflects withholding taxes on foreign dividends but no deduction for fees, expenses, or other taxes)	31.22%	8.92%	8.18%
S&P MidCap 400 Index (reflects no deduction for fees, expenses, or taxes)	7.50%	9.12%	10.72%
S&P SmallCap 600 Index (reflects no deduction for fees, expenses, or taxes)	6.02%	7.31%	9.81%

The S&P 500 Index is the Fund's primary broad-based index. The Diversified Growth Strategic Allocation 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 are as follows: 45% S&P 500 Index, 35% Bloomberg US Aggregate Index, 10% MSCI EAFE Index NTR, 5% S&P MidCap 400 Index, and 5% S&P SmallCap 600 Index.

Calendar Year Total Return (%) as of 12/31 Each Year

Diversified Growth Adaptive Allocation Account (Acquiring Fund)


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, 2025


	1 Year	5 Years	Life of Fund
Diversified Growth Adaptive Allocation Account - Class 2	7.31%	6.13%	6.98%
S&P 500 Index (reflects no deduction for fees, expenses, or taxes)	17.88%	14.42%	14.40%
Diversified Growth Adaptive Allocation Custom Index (except as noted for MSCI EAFE Index NTR, reflects no deduction for fees, expenses, or taxes)	14.38%	8.14%	8.59%
S&P 500 Index (reflects no deduction for fees, expenses, or taxes)	17.88%	14.42%	14.40%
Bloomberg US Aggregate Index (reflects no deduction for fees, expenses, or taxes)	7.30%	(0.36)%	1.24%
MSCI EAFE Index NTR (reflects withholding taxes on foreign dividends, but no deduction for fees, expenses, or other taxes)	31.22%	8.92%	5.70%
S&P MidCap 400 Index (reflects no deduction for fees, expenses, or taxes)	7.50%	9.12%	9.72%
S&P SmallCap 600 Index (reflects no deduction for fees, expenses, or taxes)	6.02%	7.31%	8.51%

The S&P 500 Index is the Fund's primary broad-based index. The Diversified Growth Adaptive Allocation 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 are as follows: 45% S&P 500 Index, 35% Bloomberg US Aggregate Index, 10% MSCI EAFE Index NTR, 5% S&P MidCap 400 Index, and 5% S&P SmallCap 600 Index.

Board Consideration of the Reorganization

At its December 9, 2025 meeting, the Board of Directors of Principal Variable Contracts Funds, Inc. ("PVC"), including the directors who are not interested persons as defined by the Investment Company Act of 1940, as amended (the "Independent Directors"), considered information presented by Principal Global Investors, LLC ("PGI") regarding the proposed reorganization of PVC Diversified Growth Strategic Allocation Account (the "Acquired Fund") into PVC Diversified Growth Adaptive Allocation Account (the "Acquiring Fund") (the "Reorganization"). The Independent Directors were assisted by independent legal counsel. The Board of Directors of PVC evaluated such information as it deemed necessary to consider the proposed Reorganization. At the meeting, the Board approved the Reorganization after concluding that participation in the Reorganization is in the best interests of the Acquired Fund and the Acquiring Fund and that the interests of existing shareholders of each Fund will not be diluted as a result of the Reorganization.

In determining whether to approve the Reorganization, the Board made inquiry into a number of matters and considered, among other things, the following factors, in no order of priority:

•the prospects for growth of and for achieving economies of scale by the Acquired Fund as compared to those of the Acquiring Fund;

•the Funds' similar investment objectives, similar principal investment strategies and principal risks, and identical fundamental investment restrictions;

•the Funds' current management fee rates and expense ratios and the expected management fee rate and expense ratio of the Acquiring Fund following the Reorganization;

•the estimated direct costs of the Reorganization, composed of audit costs that will be borne by PGI and proxy/registration statement-related costs that will be borne by the Funds;

•the estimated trading costs associated with disposing of any portfolio securities of the Acquired Fund and reinvesting the proceeds in connection with the Reorganization;

•the differences in the portfolio management teams of the Acquired Fund and the Acquiring Fund;

•information regarding the Funds' investment performance and risk-return profiles, including PGI's statement regarding the impact of recent market conditions on Acquiring Fund performance;

•the direct or indirect federal income tax consequences of the Reorganization and their expected impact on contract owners of the insurance separate accounts that own the Acquired Fund shares;

•any direct or indirect benefits, including potential economic benefits, expected to be derived by PGI and its affiliates from the Reorganization;

•the absence of any material differences in the rights of shareholders of the Funds;

•the terms and conditions of the Plan; and

•possible alternatives to the Reorganization, including maintaining the status quo or pursuing the liquidation of the Acquired Fund.

The Board believes that the Reorganization will serve the best interests of existing shareholders for the following reasons, among others:

•the Acquired Fund and the Acquiring Fund have similar investment objectives, similar principal investment strategies and principal risks, identical fundamental investment restrictions and similar portfolio management teams, with the portfolio managers of the Acquired Fund also serving on the Acquiring Fund's portfolio management team;

•PGI has advised that the Acquired Fund has not been able to grow its assets and gain scale;

•based on information provided by PGI, the post-Reorganization management fee rate for the Acquiring Fund will be higher than the pre-Reorganization management fee rate for the Acquired Fund, and the post-Reorganization expense ratio, including acquired fund fees and expenses, of the Acquiring Fund's Class 2 shares (the Fund's only share class) is expected to be lower than the pre-Reorganization expense ratio, including acquired fund fees and expenses, of the Acquired Fund's Class 2 shares;

•the Acquiring Fund has underperformed the Acquired Fund during recent periods, but PGI has advised that the Funds have comparable investment strategies, and that the Acquiring Fund would be expected to provide comparable investment outcomes to those of the Acquired Fund over a full market cycle;

•the Board has concluded that the Reorganization will not result in the dilution of the interests of shareholders of the Acquired Fund or the Acquiring Fund;

•the Funds will obtain an opinion of legal counsel to the effect that the Reorganization should qualify as a tax-free reorganization for U.S. federal income tax purposes, and no gain or loss should be recognized as a result of the Reorganization by the Funds and their shareholders;

•PGI, as investment advisor to the Acquiring Fund, is expected to provide high quality investment advisory services and personnel;

•PGI, as investment advisor to the Acquired Fund, will pay the audit costs to be incurred in connection with the Reorganization;

•based on information provided by PGI, the proxy/registration statement-related costs to be borne by the Funds, as well as the costs associated with transitioning the Acquired Fund's portfolio holdings to align with the Acquiring Fund's principal investment strategy, are expected to be recovered by the Funds' shareholders within two months following the Reorganization due to the expected post-Reorganization expense ratio, including acquired fund fees and expenses, of the Acquiring Fund's Class 2 shares compared to the pre-Reorganization expense ratio, including acquired fund fees and expenses, of the Acquired Fund's Class 2 shares;

•the taxable impact of capital gains realized in connection with repositioning the Acquired Fund's portfolio in connection with the Reorganization are not expected to flow through to the contract owners of the insurance separate accounts that own the Acquired Fund shares;

•liquidation of the Acquired Fund, as an alternative to the Reorganization, would cause a distribution to the Acquired Fund shareholders that is unanticipated, may be inconsistent with the Acquired Fund shareholders' investment plans or goals, and would force Acquired Fund shareholders to take additional action to select new investment options; and

•for the reasons set forth above, the Reorganization is expected to be more beneficial to shareholders of the Acquired Fund than maintaining the status quo.

II.Plan of Acquisition Providing for the Reorganization of the

Diversified Balanced Strategic Allocation Account into the Diversified Balanced Adaptive Allocation Account

At its meeting held on December 9, 2025, the Board of PVC, including the Independent Directors, approved the Plan, providing for the reorganization of the Diversified Balanced Strategic Allocation Account (the "Acquired Fund") into the Diversified Balanced Adaptive Allocation Account (the "Acquiring Fund").

Comparison of Acquired Fund and Acquiring Fund

The following tables provide comparative information with respect to the Acquired Fund and the Acquiring Fund.

The Funds have substantially similar objectives in that the Acquired 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, while the Acquiring 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. As described in the tables below, their principal investment strategies are also substantially similar.

The Acquired Fund operates as a fund of funds. It generally allocates approximately 50% of its assets to underlying equity index registered investment companies to gain broad market exposure to U.S. and non-U.S. investments, including those of smaller companies, and the remaining 50% of its assets to underlying fixed-income index underlying registered investment companies for intermediate duration fixed-income exposure. The underlying index funds invest in derivatives with the intention of managing equity exposure and reducing volatility.

The Acquiring Fund also operates as a fund of funds but may also invest directly in derivatives. It generally allocates approximately 50% of its assets to underlying equity index registered investment companies and exchange-traded futures to gain broad market exposure to U.S. and non-U.S. investments, including those of smaller companies, and the remaining 50% of its assets to underlying fixed-income index underlying registered investment companies 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, possibly taking short positions in exchange-traded futures.


DIVERSIFIED BALANCED STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED BALANCED ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Approximate Net Assets as of January 31, 2026						Approximate Net Assets as of January 31, 2026
$87,319,000						$214,320,000


DIVERSIFIED BALANCED STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED BALANCED ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Investment Advisor						Investment Advisor
PGI						PGI

PGI Portfolio Managers						PGI Portfolio Managers
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.						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.
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.						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. 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.
						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.

Comparison of Investment Objectives and Strategies


DIVERSIFIED BALANCED STRATEGIC ALLOCATION ACCOUNT (Acquired Fund)						DIVERSIFIED BALANCED ADAPTIVE ALLOCATION ACCOUNT (Acquiring Fund)

Investment Objective						Investment 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.						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.

Principal Investment Strategies						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. 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/or substitute or remove Underlying Funds when it deems appropriate. The Fund is rebalanced monthly. 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.						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.