UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
_____________________________
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
Theof the Securities Exchange Act of 1934
(Amendment No. )
_____________________________
__
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Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)14a–6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12under § 240.14a–12
PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all the boxes that apply):
[X] No fee required.required
[ ] Fee paid previously with preliminary materials.materials
[ ] Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)14a–6(i)(1) and 0-11.0–11
PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND | | | | | |
Principal Diversified Select Real Asset Fund
711 High Street, Des Moines, IA 50392
515 247 5111 tel | |
711 High Street
Des Moines, Iowa 50392
March 6,_____, 2023
Dear Shareholder:
We cordially invite you to attend a joint annual meetingSpecial Meeting of shareholdersShareholders (including any adjournments or postponements, the "Meeting") of Principal Diversified Select Real Asset Fund ("PDSRA") and each series of Principal Exchange-Traded Funds ("PETF"(the "Fund"), Principal Funds, Inc. ("PFI"), and Principal Variable Contracts Funds, Inc. ("PVC"), allan investment companiescompany registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and advised by Principal Global Investors, LLC, to be held on April 26,August 31, 2023, at 10:00 a.m. Central Time, at 801 Grand Avenue, Des Moines, Iowa 50392.
The enclosed proxy materials relate to only PDSRA and are being sent only to the PDSRA shareholders that owned shares of PDSRA (the "Fund") as of the close of business on February 27, 2023, the record date forAt the Meeting, (the "Record Date"). PDSRA shareholders that owned shares of any series of PETF, PFI, or PVC as of the Record Date will separately receive proxy materials for only PETF, and/or PFI, and/or PVC. References in these proxy materials to the "Fund" and the "Board of Trustees" are to the PDSRA Fund and the PDSRA Board of Trustees, respectively, unless otherwise indicated.
The purpose of the Meeting for PDSRA shareholders is to elect the Board of Trustees, including four nominees for Independent Trustee who have not previously been elected by shareholders and two nominees for new Interested Trustee, in addition to the transaction of such other business as may properly come before the Meeting..
Shareholders of the Fund are beingwill be asked to:
•Elect thirteen Trustees as members ofto approve a change to the Board of Trustees.Fund's sub-classification under the 1940 Act from "diversified" to "non-diversified" and to change the related fundamental policy. If Fund shareholders approve these changes, the Fund's name will change to "Principal Real Asset Fund."
Enclosed you will find PDSRA’sa Notice of Joint AnnualSpecial Meeting of Shareholders, a Proxy Statement, and the proxy card(s) for shares of the Fund you owned as of the close of business on July 14, 2023, the Record Date.record date for the Meeting. The Proxy Statement provides background information and describes in detail the proposal to be voted on at the Meeting.
The PDSRAFund's Board of Trustees has voted in favor ofapproved the proposal and recommends that you vote “For” the proposal.
For your shares to be voted at the Meeting, we urge you to read the Proxy Statement and then vote your shares in one of the following three ways:
By Internet: Follow the instructions located on your proxy card(s). Be sure you have your control number, as printed on your proxy card(s), available when you call.
By Phone: The phone number is located on your proxy card(s). Be sure you have your control number, as printed on your proxy card(s), available when you call.
By Mail: Vote, sign, and date your proxy card(s) and return it in the postage-paid envelope provided in this proxy package, allowing sufficient time for receipt prior to the Meeting.
You may also vote your shares in person at the Meeting. Shareholders may call 1-833-290-26051-800-222-5852 to obtain instructions on how to attend the Meeting and vote their shares in person.
We appreciate you taking the time to respond to this matter. Your vote is important. If you have questions regarding the Meeting or these proxy materials, please call 1-833-290-2605.
| | | | | |
| Sincerely, |
| |
| Kamal Bhatia |
| President and Chief Executive Officer |
| Principal Diversified Select Real Asset Fund |
PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND
711 High Street
Des Moines, Iowa 50392
NOTICE OF JOINT ANNUALSPECIAL MEETING OF SHAREHOLDERS
To the Shareholders:
A joint annual meetingSpecial Meeting of shareholdersShareholders of Principal Diversified Select Real Asset Fund ("PDSRA"(the "Fund"), Principal Exchange-Traded Funds, Principal Funds, Inc., and Principal Variable Contracts Funds, Inc. will be held at 801 Grand Avenue, Des Moines, Iowa 50392 on April 26,August 31, 2023, at 10:00 a.m. Central Time (including any adjournments or postponements, the “Meeting”). For PDSRA,A Proxy Statement providing information about the following proposal to be voted on at the Meeting is included with this Notice. This Meeting is being held to consider and vote on the following mattersuch proposal, as well as any other business that may properly come before the Meeting:Meeting.
•Proposal: ElectionApproval to change the Fund's sub-classification under the Investment Company Act of 1940, as amended, from "diversified" to "non-diversified" and to change the related fundamental policy.
The Fund's Board of Trustees has approved the proposal and recommends that you vote “For” the proposal.
Approval of the Boardproposal requires the affirmative vote of Trustees.
Athe holders of at least a "Majority of the Outstanding Voting Securities" of the Fund (as defined in the accompanying Proxy Statement providing information about the above proposal to be voted on at the Meeting is included with this Notice.Statement).
Each Fund shareholder of record as of the close of business on February 27,July 14, 2023, the record date for the Meeting, is entitled to notice of and to vote at the Meeting. Shareholders may vote their shares, change their vote, and revoke their proxy at any time before it is voted at the Meeting by following the procedures outlined in the accompanying Proxy Statement.
The PDSRA Board of Trustees has voted in favor of all the proposals and recommends that you vote “For” all the proposals.
Your vote is important. No matter how many shares you own, please vote. To save your Fund(s)the Fund from incurring the cost of additional solicitations, please review the materials and vote today.
| | | | | |
| For the Board of Trustees |
| |
| Beth C. Wilson |
| Vice President and Secretary |
| Dated: _____, 2023 | |
| Dated: March 6, 2023Principal Diversified Select Real Asset Fund |
Important Notice Regarding Availability of Proxy Materials
for the Joint AnnualSpecial Meeting of Shareholders
to be Held on April 26,August 31, 2023. This
_________________
The Notice of Special Meeting of Shareholders, Proxy Statement, isand Form of Proxy Card
are available on the Internet atat: https://proxyvotinginfo.com/p/principal2023www.proxyvote.com.
TABLE OF CONTENTS
| | | | | | | | |
| TABLE OF CONTENTS |
| | |
| | Page |
| Introduction | |
| Voting Information | |
Proposal 1Proposal: | ElectionApproval to change the Fund’s sub-classification under the Investment Company Act of 1940, as amended, from "diversified" to "non-diversified" and to change the Board of Trusteesrelated fundamental policy | |
Independent Registered Public Accounting Firm | |
| Other Matters | |
| Appendix A | - Outstanding Shares and Share Ownership | |
Appendix B | Audit Committee Charter | |
PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND
711 High Street
Des Moines, Iowa 50392
PROXY STATEMENT
JOINT ANNUALSPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26,AUGUST 31, 2023
_________________
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees (the "Board") of Principal Diversified Select Real Asset Fund (“PDSRA” or(the "Fund") to be used at a Special Meeting of Shareholders of the "Fund"), Principal Exchange-Traded Funds ("PETF"), Principal Funds, Inc. ("PFI"), and Principal Variable Contracts Funds, Inc. ("PVC") will hold a joint annual meeting of shareholdersFund on April 26,August 31, 2023, at 10:00 a.m. Central Time, at 801 Grand Avenue, Des Moines, Iowa 50392 (including any adjournments or postponements, the “Meeting”). This Proxy Statement and the accompanying form of proxy card relate to PDSRA only and are beingwill be sent to PDSRAFund shareholders on or about March 16,_____, 2023. Separate proxy materials for eachFund shareholders of PETF, PFI and PVCrecord as of the close of business on July 14, 2023, are being sententitled to PETF, PFI and PVC shareholders, respectively.vote on the proposal, as set forth below.
PDSRAThe Fund is a Delaware statutory trust and a diversified, closed-end management investment company registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund is operated as an interval fund.
Principal Global Investors, LLC ("PGI") is the investment advisor and fund administrator to the Fund. Principal Funds Distributor, Inc. ("PFD") is the distributor for all share classes of the Fund. PGI and PFD are indirect, wholly owned subsidiaries of Principal Financial Group, Inc. (“PFG”). The address of PFDPGI and PGIPFD is in care of the Principal Financial Group, 711 High Street, Des Moines, Iowa 50392.
PDSRAThe Fund will furnish, without charge, copies of its most recent annual and semi-annual shareholder reports to any shareholder upon request. To obtain a copy of a report, please contact PDSRAthe Fund by calling the Shareholder Services Department toll free at 1-800-222-5852 or by writing to PDSRAthe Fund at Principal Diversified Select Real Asset Fund, P.O. Box 219971, Kansas City, MO 64121-9971. Copies of the Fund's most recent annual and semi-annual shareholder reports can also be obtained at www.PrincipalAM.com/IntervalProspectuses.
The Meeting is being held to vote on the proposal to elect the Board of Trustees (the "Proposal").
VOTING INFORMATION
Voting Procedures. This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees (the "Board") of PDSRA. Please vote your shares by returning the enclosed proxy cardcard(s) in the enclosed postage-paid envelope or by following the instructions on the proxy cardcard(s) for voting by telephone or Internet. Shareholders who wish to attend the Meeting in person may call 1-833-290-26051-800-222-5852 to obtain instructions on how to attend the Meeting and vote their shares in person.
If you properly complete and return the enclosed proxy cardcard(s) (or if you give your proxy by telephone or Internet), the persons named on the cardcard(s) as proxies will vote your shares as you indicate on the proxy cardcard(s) (or as you instruct by telephone or Internet) or "For" approval of the proposal if you do not give an indication. You may change your vote andor revoke your proxy at any time before it is voted at the Meeting in any of the following ways:
(i) by sending a written notice of revocation to the Meeting Secretary of Principal Diversified Select Real Asset Fund, in care of the Principal Financial Group, 711 High Street, Des Moines, Iowa 50392;
(ii) by submitting another properly signed proxy card at a later date to the Meeting Secretary of Principal Diversified Select Real Asset Fund, in care of the Principal Financial Group, 711 High Street, Des Moines, Iowa 50392;
(iii) by submitting another proxy by telephone or Internet at a later date; or
(iv) being present and voting in person at the Meeting after giving oral notice of the revocation to the Chair of the Meeting.
Voting Rights. Only Fund shareholders of record as of the close of business on February 27,July 14, 2023 (the “Record Date”), are entitled to notice of and to vote at the Meeting. The shareholders of the Fund and all share classes will vote together as a single class on the Proposa regarding the election of Trustees.proposal. You are entitled to one vote on the Proposalproposal for each share of the Fund you hold, and fractional votes for fractional shares held.
TheFor approval, the proposal requires the affirmative vote of a plurality“majority of the shares votedoutstanding voting securities” of the Fund, which is defined in the 1940 Act to mean, with respect to the Fund, the affirmative vote of the lesser of (1) 67% or more of the voting securities of the Fund present in person or by proxy at the Meeting, is required forif the electionholders of more than 50% of the outstanding voting securities of the Fund are present in person or by proxy, or (2) more than 50% of the outstanding voting securities of the Fund (such lesser amount being a Trustee under“Majority of the Proposal. This means that those nominees for Trustee receivingOutstanding Voting Securities”). Under this definition, the highest numberproposal could be approved by as little as approximately one-third of votes cast at the Meeting will be elected. The nominees are running unopposed, so each nominee is expected to be elected as a Trustee because all nominees who receive votes in favor will be elected.outstanding voting securities of the Fund.
The number of votes eligible to be cast at the Meeting with respect to the Fund as of the Record Date and other share ownership information are set forth in Appendix A to this Proxy Statement.
Quorum Requirements; Abstentions and Broker Non-Votes. A quorum must be present at the Meeting for the transaction of business by the Fund.business. For the Proposa,proposal, the presence in person or by proxy of one-third of the shares of PDSRAthe Fund outstanding as ofat the close of business on the Record Date constitutes a quorum.
Abstentions, if any, will be considered present for purposes of determining the existence of a quorum but will be disregarded in determining the votes cast on athe proposal. As a result, with respect tobecause the Proposal requiringproposal requires the affirmative vote of a pluralityMajority of shares cast at the Meeting,Outstanding Voting Securities, as defined above, abstentions will have nothe effect onof a vote against the outcomeproposal.
Broker-dealer firms holding shares of the Proposal.
Broker non-votes, if any, will also be considered presentFund in "street name" for purposesthe benefit of determiningtheir customers and clients are generally required to request the existenceinstructions of a quorum.such customers and clients on how to vote their shares before the Fund's Meeting. The Funds understandFund understands that, under the rules of the New York Stock Exchange brokers and nominees(the "NYSE"), such broker-dealer firms may, for certain "routine" matters, grant certain discretionary authority to the proxies identified on the proxy card to vote without instructions from their customers and clients if no instructions have been received prior to the date specified in the broker's or nominee's requestsbroker-dealer firm's request for voting instructions. A "broker non-vote" occurs when a"Broker non-votes" are shares held by brokers or nominees, typically in "street name," for which the broker or nominee indicates it hasproperly submits a proxy but that are not voted because instructions have not been received voting instructions from beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary authority to vote such shares on a shareholderparticular matter. Broker non-votes typically occur when both routine and is barred from voting the shares without such shareholder instructions because thenon-routine proposals are being considered at a meeting. The proposal is considered non-routinea "non-routine" matter for which, under the rules of the New York Stock Exchange. The ProposalNYSE, uninstructed shares may not be voted by broker-dealers. As a result, it is considered routine undernot expected that broker non-votes will be received with respect to the rules ofproposal at the New York Stock Exchange, so if you do not give your broker or nominee voting instructions on the Proposal, your broker or nominee may vote your shares in its discretion, resulting in no broker non-votes. However, if your broker or nominee does not exercise such discretion and a broker non-vote results, such broker non-vote will have no effect on the outcome of the Proposal.
If the necessary quorum to transact business or the vote required to approve Proposalthe proposal is not obtained at the Meeting, the persons named as proxies or any shareholder present at the Meeting may propose one or more adjournments of the Meeting in accordance with applicable law to permit further solicitation of proxies. Any such adjournment as to any matter with respect to the Fund will require the affirmative vote of the holders of a majority of the shares of the Fund present in person or by proxy at the Meeting. The persons named as proxies and any shareholder present at the Meeting will vote for or against any adjournment in their discretion.
Solicitation Procedures. PDSRAThe Fund intends to solicit proxies by mail. Officers or employees of PDSRA,the Fund, PGI, or their affiliates may make additional solicitations by telephone, Internet, or personal contact. They will not be specially compensated for these services. Brokerage houses, banks, and other fiduciaries may be requested to forward soliciting materials to their customers and to obtain authorization for the execution of proxies. For those services, PDSRAthe Fund will reimburse them for their out-of-pocket expenses. PDSRAThe Fund has retained the services of a professional proxy soliciting firm, DiCosta Partners,Broadridge Financial Solutions, Inc., to assist in soliciting proxies and provide other services in connection therewith and estimates that the aggregate cost of such services will be approximately $4,300.$3,000.
Expenses of the Meeting. The FundPGI, the Fund's investment advisor, will pay the expenses of the Meeting, including those associated with the preparation and distribution of proxy materials and the solicitation of proxies.
PROPOSAL
APPROVAL TO
ELECTIONCHANGE THE FUND'S SUB-CLASSIFICATION UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, FROM "DIVERSIFIED" TO "NON-DIVERSIFIED" AND
TO CHANGE THE BOARD OF TRUSTEESRELATED FUNDAMENTAL POLICY
(ShareholdersThe Fund's investment objective is to seek to provide long-term total return (after Fund fees and expenses) in excess of inflation. Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in real assets and real asset companies. Real assets include, without limitation, investments related to real estate, agriculture, infrastructure, energy, natural resources, and timber. Real asset companies include companies that primarily own, explore, mine, process, or otherwise develop real assets. The Fund invests in real assets and real asset companies directly, and indirectly through other entities, including private institutional investment funds that pursue these strategies. Indirect private investments may represent a substantial portion of the Fund)Fund’s assets. The Fund is advised by PGI and sub-advised by two sub-advisors, ClearBridge Investments (North America) Pty Limited and Principal Real Estate Investors, LLC.
Currently, the Fund is sub-classified as a “diversified” fund for purposes of Section 5(b) of the 1940 Act and has adopted a related fundamental policy. The Fund, therefore, is limited as to the amount it may invest in any single issuer, including interests in individual private funds. Specifically, with respect to 75% of its total assets, the Fund may not invest in a security if, as a result of such investment, more than 5% of its total assets (calculated at the time of purchase) would be invested in securities of any one issuer. Additionally, with respect to 75% of its total assets, the Fund may not hold more than 10% of the outstanding voting securities of any one issuer. These restrictions do not apply to U.S. government securities, securities of other investment companies, or cash and cash items (including receivables).
At its January 26, 2023 meeting,Subject to approval of the Fund's shareholders, the Board namedhas approved a change to the thirteen persons listed below as nominees for election as Trustees. Eleven of the nominees currently serve as Trustees. The other nominees, Kamal Bhatia and Kenneth McCullum, each will become a Trustee immediately if elected as a Trustee at the Meeting. If elected, Mr. Bhatia will fill the vacancy on the Board created by the departure of Timothy Dunbar, who will retire effective at the end of the Meeting.
Each nominee has agreed to be named in this Proxy Statement and to serve if elected. The Board has no reason to believe that any of the nominees will become unavailable for election as a Trustee. However, if that should occur before the Meeting, your proxy will be voted for the individual(s) recommended by the Board to fill each resulting vacancy.
The following table presents certain information regarding PDSRA's Trustees and the new nominees, including their principal occupations (which, unless specific dates are shown, are of more than five years duration) and other directorships held in reporting companies under the Securities Exchange Act of 1934 or registered investment companiesFund's sub-classification under the 1940 Act. Mr. DunbarAct to a “non-diversified” company and a change to the Fund's related fundamental policy. This fundamental policy, which may only be changed with shareholder approval, currently provides that the Fund, as a fundamental policy, "has elected to be treated as a 'diversified' investment company, as that term is not standing for re-election at the Meeting because he is retiring from the Board effective at the end of the Meeting. Information is listed separately for those Trustees and nominees who are “interested persons” (as definedused in the 1940 Act) of PDSRA (the “Interested Trustees”)Act, as amended, and those Trustees and nominees who are not interested persons of PDSRA (the “Independent Trustees”). Fouras interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time." If approved by Fund shareholders, the Fund will change this fundamental policy so it provides that the Fund, as a fundamental policy, "has elected to be non-diversified." If Fund shareholders approve these changes, the Fund's name will change to "Principal Real Asset Fund," consistent with the non-diversified sub-classification. In determining to approve the change to a "non-diversified" fund, the Board considered information from PGI regarding the potential impact of the nominees for Independent Trustee, Mr. Hymes, Mr. Lattimer, Ms. Dryer,change on the Fund and Ms. Grieb, have not previously been elected Trustees by PDSRA's shareholders. its shareholders, as well as the following.
The Board’s NominatingBoard and Governance Committee, composed of four of PDSRA’s Independent Trustees, selectedPGI believe that PGI and nominated Mr. Hymes, Mr. Lattimer, Ms. Dryer, and Ms. Grieb as candidates for Trustee upon the recommendations of one orFund’s sub-advisors can more effectively execute the Fund’s investment strategy if the Fund is non-diversified because being non-diversified would give the Fund additional flexibility to invest a greater portion of the Trustees orFund’s assets in individual private funds. As part of its investment strategy, the Fund invests in interests in individual private funds, which are deemed single investments for purposes of the 1940 Act Section 5(b) diversification test. The underwriting process for these individual private funds can be lengthy, which can hinder the Fund’s ability to invest in enough issuers to meet diversification testing. Further, the lead time to add new interests in new private funds can be extensive, given the queues in place to committed capital from existing investors. It is, therefore, more efficient to have greater flexibility with respect to position sizing (which non-diversified status would give) in order to achieve the assistance of a professional search firm. The two new nominees for Interested Trustee, Mr. Bhatia and Mr. McCullum, have not previously served as Trustees, and both were selected and nominated as candidates for Trustee uponFund's target exposure to private assets. No material changes to the recommendations of PGI, PDSRA'sFund's investment advisor.
All individuals whostrategy are current PDSRA Trustees also serve as Directors of PFI and PVC, mutual funds advised by PGI; and as Trustees of PETF, an exchange-traded fund advised by PGI. All individuals who are nominees as PDSRA Trustees are also currently standing as nominees for election as directors or trustees, as applicable, of PFI, PVC, and PETF and,expected if elected by those respective shareholders, will serve as directors or trustees, as applicable, of PFI, PVC, and PETF. If the same individuals are not elected by the shareholders of eachthe Fund approve this proposal.
If Fund shareholders approve this proposal, the Fund may be subject to additional investment risks. As a "non‑diversified" fund, the Fund would be permitted to invest a greater percentage of PFI, PVC, PETF,its assets in fewer issuers than a "diversified" fund. As a result, the Fund may be more susceptible to adverse developments affecting any single issuer held in its portfolio and PDSRA,may be more susceptible to greater losses because of these developments. Accordingly, if Fund shareholders approve this proposal, the compositions of those boards will differ. PFI, PVC, PETF, and PDSRA (collectively,Fund could be subject to greater risk than it currently is subject to as a "diversified" fund. No other material changes to the “Fund Complex”) currently offer shares of a combined total of 130 funds.
Each Trustee generally will serve until the next annual meeting of shareholders or until such Trustee’s earlier death, resignation, or removal. Independent Trustees have a 72-year age limit and, for Independent Trustees elected on or after September 14, 2021, a 72-year age limit or a 15-year term limit, whichever occurs first. The Board may waive the age or term limits in the Board’s discretion. Pursuant to this policy, Messrs. Barnes and HirschFund's risks are expected to retire in December 2023.
if shareholders of the Fund approve this proposal.
| | | | | | | | | | | | | | |
INDEPENDENT BOARD MEMBERS and NOMINEES |
Name, Address,
and Year of Birth | Board Positions Held with
Fund Complex | Principal Occupation(s)
During Past 5 Years | Number of Portfolios Overseen in Fund Complex | Other Directorships
Held During
Past 5 Years |
Leroy T. Barnes, Jr.
711 High Street
Des Moines, IA 50392
1951
| Director, PFI and PVC (since 2012) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019) | Retired
| 131 | McClatchy Newspapers, Inc. (2000 - 2020); Frontier Communications, Inc.(2005 - 2019) |
Craig Damos
711 High Street
Des Moines, IA 50392
1954
| Lead Independent Board Member
(since 2020)
Director, PFI and PVC (since 2008) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
| President, C.P. Damos Consulting LLC (consulting services) | 131 | None |
Katharin S. Dyer
711 High Street
Des Moines, IA 50392
1957 | Director, PFI and PVC (since 2023) Trustee, PETF and PDSRA (since 2023 | Founder and Chief Executive Officer, Pivotwise (consulting services)
Global Partner, IBM (technology company) from 2016-2018 | 131 | Liquidity Services, Inc. (2020 - present) |
Frances P. Grieb
711 High Street
Des Moines, IA 50392
1960 | Director, PFI and PVC (since 2023) Trustee, PETF and PDSRA (since 2023 | Retired | 131 | First Interstate BancSystems, Inc. (2022 - present)
Great Western Bancorp, Inc. and Great Western Bank (2014 - 2022) |
Fritz S. Hirsch
711 High Street
Des Moines, IA 50392
1951
| Director, PFI and PVC (since 2005) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019)
| Interim CEO, MAM USA (manufacturer of infant and juvenile products) February 2020 to October 2020, | 131 | MAM USA (2011 - present) |
Victor L. Hymes
711 High Street
Des Moines, IA 50392
1957
| Director, PFI and PVC (since 2020) Trustee, PDSRA and PETF (since 2020)
| Founder, CEO, and Chief Investment Officer, Legato Capital Management, LLC (investment management company) | 131 | None |
Padelford L. Lattimer
711 High Street
Des Moines, IA 50392
1961
| Director, PFI and PVC (since 2020) Trustee, PDSRA and PETF (since 2020)
| Managing Partner, TBA Management Consulting LLC (management consulting and staffing company) | 131 | None |
Karen McMillan
711 High Street
Des Moines, IA 50392
1961 | Director, PFI and PVC (since 2014) Trustee, PETF (since 2014)
Trustee, PDSRA (since 2019) | Founder/Owner, Tyche Consulting LLC (consulting services)
Managing Director, Patomak Global Partners, LLC
(financial services consulting) from 2014-2021 | 131 | None |
Elizabeth A. Nickels
711 High Street
Des Moines, IA 50392
1962 | Director, PFI and PVC (since 2015) Trustee, PETF (since 2015)
Trustee, PDSRA (since 2019) | Retired | 131 | SpartanNash (2000 - 2022) |
Mary M. VanDeWeghe
711 High Street
Des Moines, IA 50392
1959 | Director, PFI and PVC (since 2018) Trustee, PETF (since 2018)
Trustee, PDSRA (since 2019) | CEO and President, Forte Consulting, Inc. (financial and management consulting) | 131 | Helmerich & Payne (2019 - present);
Denbury Resources Inc. ( 2019 - 2020) |
The following Trustees are consideredEven if Fund shareholders approve this proposal, the Fund intends to be Interested Trustees because they are affiliated personscontinue to comply with federal tax diversification restrictions of PGI or PFD.
| | | | | | | | | | | | | | |
INTERESTED BOARD MEMBERS and NOMINEES |
Name, Address,
and Year of Birth | Board Positions Held
with Fund Complex
| Positions with PGI
and its affiliates;
Principal Occupation(s)
During Past 5 Years**
(unless noted otherwise)
| Number of
Portfolios
Overseen
in Fund
Complex | Other Directorships Held During
Past 5 Years |
Kamal Bhatia
711 High Street
Des Moines, IA 50392
1972 | President and Chief Executive Officer (since 2019) | PGI
Director (since 2019)
President-Principal Funds (since 2019)
PFD
Director (since 2019)
PFGI, PFSI, and PLIC
Senior Executive Director and Chief Operating Officer - PAM (since 2022)
Senior Executive Director and Chief Operating Officer - PGI (2020-2022)
President-Principal Funds (2019-2020)
Post
Director (since 2020)
Principal-REI
Senior Executive Director and Chief Operating Officer - PGI (since 2022)
Director (since 2020)
PSS
Executive Vice President (since 2019)
Director and Chair (2019-2022)
Spectrum
Director (since 2021)
Origin
Additional Director (since 2022)
Oppenheimer Funds
Senior Vice President (2011-2019)
| 131 | None |
Patrick G. Halter
711 High Street
Des Moines, IA 50392
1959 | Director, PFI and PVC (since 2017) Trustee, PETF (since 2017)
Trustee, PDSRA (since 2019) | PGI
Chair (since 2018)
Chief Executive Officer and
President (since 2018)
Director (since 2003)
PFGI, PFSI, and PLIC
President and Chief Executive
Officer - PAM (since 2022)
President - PGAM (2020-2022)
Post
Director (since 2017)
Chair (2017-2020)
Principal-REI
President - PGAM (since 2022)
Director and Chair (since 2004)
Chief Executive Officer and
President (2018-2021)
Origin
Director (2018-2019)
| 131 | None |
Kenneth A. McCullum
711 High Street
Des Moines, IA 50392
1964 | | PFSI
Senior Vice President (since 2020)
Vice President and Chief Actuary (2015-2020)
PLIC
Senior Vice President and Chief Risk Officer (since 2020)
Vice President and Chief Actuary (2015-2020)
| 131 | None |
| | | | | |
**Abbreviations used:
| |
Origin Asset Management LLP (Origin) | Principal Global Investors, LLC (PGI) |
Post Advisory Group, LLC (Post) | Principal Life Insurance Company (PLIC) |
Principal Asset Management (PAM) | Principal Real Estate Investors, LLC (Principal - REI) |
Principal Financial Group, Inc. (PFGI) | Principal Securities, Inc. (PSI) |
Principal Financial Services, Inc. (PFSI) | Principal Shareholder Services, Inc. (PSS) |
Principal Funds Distributor, Inc. (PFD) | Spectrum Asset Management, Inc. (Spectrum) |
Principal Global Asset Management (PGAM) | |
Correspondence intended for the Board or for an individual Trustee may be sent to the attentionSubchapter M of the BoardInternal Revenue Code of 1986, as amended (the “IRC”). For purposes of the IRC, the Fund operates as a “regulated investment company.” As a regulated investment company under the IRC, the Fund must diversify its holdings so that, in general, at the close of each quarter of its taxable year, (i) at least 50% of the fair market value of the Fund's total (gross) assets is comprised of cash, cash items, U.S. government securities, securities of other regulated investment companies, and other securities limited in respect of any one issuer to an amount not greater in value than 5% of the value of the Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer; and (ii) not more than 25% of the value of its total (gross) assets is invested in the securities of any one issuer (other than U.S. government securities and securities of other regulated investment companies), two or more issuers controlled by the Fund and engaged in the same, similar, or related trades or businesses, or certain publicly traded partnerships. These federal tax diversification requirements, or the individual Trustee at 711 High Street, Des Moines, Iowa 50392. All communications addressedFund's determination to comply with them, may change in the Board or to an individual Trustee received by PDSRA are forwarded to the full Board or to the individual Trustee.future without shareholder approval.
Officers of PDSRA
The following table presents certain information regarding the current officers of PDSRA, including their principal occupations (which, unless specific dates are shown, are of more than five years duration). Officers serve at the pleasure of the Board. Each PDSRA officer holds the same position with PFI, PVC, and PETF.
| | | | | | | | |
FUND COMPLEX OFFICERS |
Name, Address
and Year of Birth
| Position(s) Held
with Fund Complex
| Positions with PGI and its Affiliates;
Principal Occupations During Past 5 Years**
|
Kamal Bhatia
711 High Street
Des Moines, IA 50392
1972 | President and Chief Executive Officer
(since 2019) | PGI
Director (since 2019)
President-Principal Funds (since 2019)
PFD
Director (since 2019)
PFGI, PFSI, and PLIC
Senior Executive Director and Chief Operating Officer - PAM (since 2022)
Senior Executive Director and Chief Operating Officer - PGI
(2020-2022)
President-Principal Funds (2019-2020)
Post
Director (since 2020)
Principal-REI
Senior Executive Director and Chief Operating Officer - PGI
(since 2022)
Director (since 2020)
PSS
Executive Vice President (since 2019)
Director and Chair (2019-2022)
Spectrum
Director (since 2021)
Origin
Additional Director (since 2022)
Oppenheimer Funds
Senior Vice President (2011-2019)
|
Randy D. Bolin
711 High Street
Des Moines, IA 50392
1961 | Assistant Tax Counsel (since 2020) | Vice President/Associate General Counsel, PGI (since 2016)
Vice President/Associate General Counsel, PFSI (since 2013)
Vice President/Associate General Counsel, PLIC (since 2013)
|
Beth Graff
711 High Street
Des Moines, IA 50392
1968
| Vice President and Assistant Controller
(since 2021)
| Director – Fund Accounting, PLIC (since 2016)
|
Gina L. Graham
711 High Street
Des Moines, IA 50392
1965 | Treasurer (since 2016) | Vice President and Treasurer, PGI (since 2016)
Vice President and Treasurer, PFD (since 2016)
Vice President and Treasurer, PFSI (since 2016)
Vice President and Treasurer, PLIC (since 2016)
Vice President and Treasurer, Principal - REI (since 2017)
Vice President and Treasurer, PSI (since 2016)
Vice President and Treasurer, PSS (since 2016)
Vice President and Treasurer, RobustWealth, Inc. (since 2018) |
Megan Hoffmann
711 High Street
Des Moines, IA 50392
1979
| Vice President and Controller (since 2021) | Director – Accounting, PLIC (since 2020)
Assistant Director – Accounting, PLIC (2017-2020)
|
| | | | | | | | |
FUND COMPLEX OFFICERS |
Name, Address
and Year of Birth
| Position(s) Held
with Fund Complex
| Positions with PGI and its Affiliates;
Principal Occupations During Past 5 Years**
|
Laura B. Latham
711 High Street
Des Moines, IA 50392
1986 | Assistant Counsel and Assistant Secretary
(since 2018) | Counsel, PGI (since 2018)
Counsel, PLIC (since 2018)
|
Diane K. Nelson
711 High Street
Des Moines, IA 50392
1965 | AML Officer (since 2016) | Chief Compliance Officer/AML Officer, PSS (since 2015) |
Tara Parks
711 High Street
Des Moines, IA 50392
1983
| Vice President and Assistant Controller
(since 2021)
| Director – Accounting, PLIC (since 2019)
Tax Manager – ALPS Fund Services (2011 – 2019)
|
Deanna Y. Pellack
711 High Street
Des Moines, IA 50392
1987 | Assistant Counsel and Assistant Secretary (since 2022) | Counsel, PLIC (since 2022)
Vice President, The Northern Trust Company (2019-2022)
Second Vice President, The Northern Trust Company (2014-2019) Secretary, Advisers Investment Trust (2021-2022)
Assistant Secretary, Advisers Investment Trust (2018-2021)
|
Sara L. Reece
711 High Street
Des Moines, IA 50392
1975 | Vice President and Chief Operating Officer (since 2021)
Vice President and Controller (2016-2021)
| Managing Director – Global Fund Ops, PLIC (since 2021)
Managing Director – Financial Analysis/ Planning, PLIC (2021)
Director – Accounting, PLIC (2015-2021)
|
Teri R. Root
711 High Street
Des Moines, IA 50392
1979 | Chief Compliance Officer (since 2018)
Interim Chief Compliance Officer (2018)
Deputy Chief Compliance Officer
(2015-2018) | Chief Compliance Officer - Funds, PGI (since 2018)
Vice President, PSS (since 2015) |
Michael Scholten
711 High Street
Des Moines, IA 50392
1979
| Chief Financial Officer (since 2021) | Chief Operations Officer, PFD (since 2022)
Chief Financial Officer, PFD (2016-2022)
Assistant Vice President and Actuary, PLIC (since 2021)
Chief Financial Officer – Funds/Platforms, PLIC (since 2015)
Chief Financial Officer, PSS (since 2015)
|
Adam U. Shaikh
711 High Street
Des Moines, IA 50392
1972 | Assistant Secretary (since 2022)
Assistant Counsel (since 2006) | Assistant General Counsel, PGI (since 2018)
Counsel, PLIC (since 2006) |
John L. Sullivan
711 High Street
Des Moines, IA 50392
1970 | Assistant Counsel and Assistant Secretary
(since 2019) | Counsel, PGI (since 2020)
Counsel, PLIC (since 2019)
Prior thereto, Attorney in Private Practice |
Dan L. Westholm
711 High Street
Des Moines, IA 50392
1966 | Assistant Treasurer (since 2006) | Assistant Vice President-Treasury, PGI (since 2013)
Assistant Vice President-Treasury, PFD (since 2013)
Assistant Vice President-Treasury, PLIC (since 2014)
Assistant Vice President-Treasury, PSI (since 2013)
Assistant Vice President-Treasury, PSS (since 2013) |
Beth C. Wilson
711 High Street
Des Moines, IA 50392
1956 | Vice President and Secretary (since 2007) | Director and Secretary-Funds, PLIC (since 2007) |
| | | | | | | | |
FUND COMPLEX OFFICERS |
Name, Address
and Year of Birth
| Position(s) Held
with Fund Complex
| Positions with PGI and its Affiliates;
Principal Occupations During Past 5 Years**
|
Clint L. Woods
711 High Street
Des Moines, IA 50392
1961 | Counsel, Vice President, and
Assistant Secretary (since 2018)
Of Counsel (2015-2018)
| PGI
Vice President, Associate General Counsel, and Assistant Secretary
(since 2021)
Vice President, Associate General Counsel, and Secretary (2020-2021)
Vice President, Associate General Counsel, Governance Officer, and
Assistant Corporate Secretary (2018-2020)
PFD
Vice President, Associate General Counsel, and Secretary (since 2021)
Vice President, Associate General Counsel, and
Assistant Corporate Secretary (2019-2021)
PFSI
Vice President, Associate Counsel, Governance Officer, and
Assistant Corporate Secretary (since 2015)
PLIC
Vice President, Associate General Counsel, Governance Officer, and
Assistant Corporate Secretary (since 2015)
Post
Assistant Secretary (since 2021)
Secretary (2020-2021)
Principal-REI
Vice President, Associate General Counsel, Governance Officer,
and Secretary (since 2020)
Vice President, Associate Counsel, Governance Officer, and
Assistant Corporate Secretary (2020)
PSI
Vice President, Associate General Counsel, and Secretary (2021-2022)
Vice President, Associate General Counsel, and Assistant Corporate
Secretary (2019-2021)
PSS
Vice President, Associate General Counsel, and Secretary (since 2021)
Vice President, Associate General Counsel, and Assistant Corporate
Secretary (2019-2021)
RobustWealth, Inc.
Vice President, Associate General Counsel, and Assistant Corporate
Secretary (since 2019)
Spectrum
Assistant Secretary (since 2021)
Secretary (2020-2021)
|
Jared A. Yepsen
711 High Street
Des Moines, IA 50392
1981 | Assistant Tax Counsel (since 2017) | Counsel, PGI (2017-2019)
Counsel, PLIC (since 2015) |
| | | | | |
**Abbreviations used:
| |
Origin Asset Management LLP (Origin) | Principal Global Investors, LLC (PGI) |
Post Advisory Group, LLC (Post) | Principal Life Insurance Company (PLIC) |
Principal Asset Management (PAM) | Principal Real Estate Investors, LLC (Principal - REI) |
Principal Financial Group, Inc. (PFGI) | Principal Securities, Inc. (PSI) |
Principal Financial Services, Inc. (PFSI) | Principal Shareholder Services, Inc. (PSS) |
Principal Funds Distributor, Inc. (PFD) | Spectrum Asset Management, Inc. (Spectrum) |
Principal Global Asset Management (PGAM) | |
Leadership Structure of the Board of Trustees
The Board is responsible for overseeing PDSRA's operations in accordance with the 1940 Act, other applicable laws, and PDSRA's declaration of trust. In addition to serving on the PDSRA Board, each Trustee serves on the PFI Board, PVC Board, and the PETF Board. The Board elects the officers of PDSRA to supervise its day-to-day operations. The Board meets in regularly scheduled meetings eight times throughout the year. Board meetings may occur in-person, by telephone, or virtually. In addition, the Board holds special meetings or informal calls to discuss specific matters that may arise or require action between regularly scheduled meetings. Independent Trustees meet annually to consider renewal of PDSRA's advisory contracts.
As of the Record Date, the Board is composed of twelve members, ten of whom are Independent Trustees. As stated above, Mr. Dunbar has announced his intention to retire as member of the Board effective at the end of the Meeting. Mr. Bhatia will fill the Board vacancy created by Mr. Dunbar's retirement, effective immediately, if he is elected a Trustee at the Meeting. Following Mr. Dunbar's retirement and if all nominees are elected, the Board will be composed of thirteen members, ten of whom are Independent Trustees.
Currently, the Chair of the Board, Timothy M. Dunbar is an interested person of PDSRA. The Independent Trustees have appointed a lead Independent Trustee, currently Mr. Damos, whose role is to review andIf Fund shareholders do not approve with the Chair, each Board meeting's agenda and to facilitate communication between and among the Independent Trustees, management, and the full Board. The Board’s leadership structure is appropriate forthis proposal, the Fund Complex given the characteristicswill remain “diversified” and circumstances, including the number of portfolios, variety of asset classes, the net assets, and distribution arrangements. The appropriateness of this structure is enhanced by the establishment and allocation of responsibilities among the Board committees, which are described below and which report their activities to the Board on a regular basis. Following Mr. Dunbar's retirement at the end of the Meeting, the Board anticipates continuing its current governance structure with an interested Board Chair and a lead Independent Trustee.
Each Trustee and Trustee nominee has significant prior senior management and/or board experience. The Trustees were selected to serve, and continue to serve, on the Board based upon their skills, experience, judgment, analytical ability, diligence, ability to work effectively with other Board members, a commitment to the interests of shareholders, and, for each Independent Trustee, a demonstrated willingness to take an independent and questioning view of management. In addition to these general qualifications, the Board seeks members who will build upon the Board's diversity. Below is a brief discussion of the specific education, experience, qualifications, or skills that led to the conclusion that each person identified below should serve as a Trustee. As required by rules adopted under the 1940 Act, the Independent Trustees select and nominate all candidates for Independent Trustee positions.
Independent Board Members
Leroy T. Barnes, Jr. Mr. Barnes has served as an Independent Board Member of the Fund Complex since 2012. From 2001 to 2005, Mr. Barnes served as Vice President and Treasurer of PG&E Corporation. From 1997 to 2001, Mr. Barnes served as Vice President and Treasurer of Gap, Inc. Through his education, employment experience, and experience as a board member, Mr. Barnes is experienced with financial, accounting, regulatory and investment matters.
Craig Damos. Mr. Damos has served as an Independent Board Member of the Fund Complex since 2008. Since 2011, Mr. Damos has served as the President of C.P. Damos Consulting, LLC (doing business as Craig Damos Consulting). He has also served as a director of the employees' stock ownership plan of the Baker Group since 2020. Mr. Damos served as President and Chief Executive Officer of Weitz Company from 2006 to 2010; Vertical Growth Officer of Weitz Company from 2004 to 2006; and Chief Financial Officer of Weitz Company from 2000 to 2004. From 2005 to 2008, Mr. Damos served as a director of West Bank. Through his education, employment experience, and experience as a board member, Mr. Damos is experienced with financial, accounting, regulatory and investment matters.
Katharin S. Dyer. Ms. Dyer has served as an Independent Board Member of the Fund Complex since January 2023. She is the founder and Chief Executive Officer of PivotWise, a firm providing strategic advice focused on digital transformation. Ms. Dyer currently serves as a director of Liquidity Services and the Grameen Foundation. She previously served as a director of Providence Health from 2019 to 2021, Noora Health from 2018 to 2021, YWCA of Nashville and Middle Tennessee from 2016 to 2022, and CARE from 2001 to 2013. She was formerly employed by IBM Global Services as a Global Partner and a member of the senior leadership team from 2016 to 2018. Ms. Dyer was a member of the Global Management Team at American Express Company from 2013 to 2015. Through her education, employment experience, and experience as a board member, Ms. Dyer is experienced with financial, information and digital technology, investment, and regulatory matters.
Frances P. Grieb. Ms. Grieb has served as an Independent Board Member of the Fund Complex since January 2023. Ms. Grieb currently serves as a director of First Interstate BancSystem, Inc. and the National Advisory Board of the College of Business at the University of Nebraska at Omaha. She is a member of the American Institute of Certified Public Accountants and the National Association of Corporate Directors. From 2014 to 2022, she served as a director of Great Western Bancorp, Inc. Ms. Grieb is a retired partner having served in various leadership roles at Deloitte LLP from 1982 to 2010. Ms. Grieb is a retired Certified Public Accountant. Through her education, employment experience, and experience as a board member, Ms. Grieb is experienced with financial, accounting, investment, and regulatory matters.
Fritz S. Hirsch. Mr. Hirsch has served as an Independent Board Member of the Fund Complex since 2005. From 2011 to 2015, Mr. Hirsch served as CEO of MAM USA. He served as President and Chief Executive Officer of Sassy, Inc. from 1986 to 2009, and Chief Financial Officer of Sassy, Inc. from 1983 to 1985. Through his education, employment experience, and experience as a board member, Mr. Hirsch is experienced with financial, accounting, regulatory and investment matters.
Victor L. Hymes. Mr. Hymes has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Founder, Chief Executive Officer, and Chief Investment Officer of Legato Capital Management, LLC. Over the past thirty years, Mr. Hymes has served in the roles of CEO, COO, CIO, portfolio manager and other senior management positions with investment management firms, including Zurich Scudder Investments, Inc., Goldman, Sachs & Co., and Kidder, Peabody & Co. Mr. Hymes has served on numerous boards, and has chaired four investment committees over the past two decades.Through his education, employment experience and experience as a board member, Mr. Hymes is experienced with financial, accounting, regulatory, and investment matters.
Padelford L. Lattimer. Mr. Lattimer has served as an Independent Board Member of the Fund Complex since 2020. He currently serves as Managing Partner for TBA Management Consulting LLC. For more than twenty years, Mr. Lattimer served in various capacities at financial services companies, including as a senior managing director for TIAA Cref Asset Management (2004-2010), First Vice President at Mellon Financial Corporation (2002-2004), and in product management roles at Citibank (2000-2002). Through his education, employment experience and experience as a board member, Mr. Lattimer is experienced with financial, regulatory and investment matters.
Karen McMillan. Ms. McMillan has served as an Independent Board Member of the Fund Complex since 2014. Ms. McMillan is the founder and owner of Tyche Consulting LLC. She served as a Managing Director of Patomak Global Partners, LLC from 2014 to 2021. From 2007 to 2014, Ms. McMillan served as general counsel to the Investment Company Institute. Prior to that (from 1999 to 2007), she worked as an attorney in private practice, specializing in the mutual fund industry. From 1991 to 1999, she served in various roles as counsel at the SEC, Division of Investment Management, including as Assistant Chief Counsel. Through her professional education, experience as an attorney, and experience as a board member, Ms. McMillan is experienced in financial, investment, and regulatory matters.
Elizabeth A. Nickels.Ms. Nickels has served as an Independent Board Member of the Fund Complex since 2015. From 2000 to 2022, Ms. Nickels served as a director of SpartanNash. From 2008 to 2017, she served as a director of the not-for-profit Spectrum Health System; from 2014 to 2016, she served as a director of Charlotte Russe; from 2014 to 2015, she served as a director of Follet Corporation; and from 2013 to 2015, she served as a director of PetSmart. Ms. Nickels was formerly employed by Herman Miller, Inc. in several capacities: from 2012 to 2014, as the Executive Director of the Herman Miller Foundation; from 2007 to 2012, as President of Herman Miller Healthcare; and from 2000 to 2007, as Chief Financial Officer. Through her education, employment experience, and experience as a board member, Ms. Nickels is experienced with financial, accounting, and regulatory matters.
Mary M. VanDeWeghe. Ms. VanDeWeghe has served as an Independent Board Member of the Fund Complex since 2018. She is CEO and President of Forte Consulting, Inc., and was previously employed as a Finance Professor at Georgetown University from 2009 to 2016, Senior Vice President - Finance at Lockheed Martin Corporation from 2006 to 2009, a Finance Professor at the University of Maryland from 1996 to 2006, and in various positions at J.P. Morgan from 1983 to 1996. Ms. VanDeWeghe currently serves as a director of Helmerich & Payne (2019-present) and previously served as a director of Denbury Resources Inc. from 2019 to 2020, Brown Advisory from 2003 to 2018, B/E Aerospace from 2014 to 2017, WP Carey from 2014 to 2017, and Nalco (and its successor Ecolab) from 2009 to 2014. Through her education, employment experience, and experience as a board member, Ms. VanDeWeghe is experienced with financial, accounting, investment, and regulatory matters.
Interested Board Members
Kamal Bhatia. Mr. Bhatia serves as the Chief Operating Officer for Principal® Asset Management. He has served as President and Chief Executive Officer of the Fund Complex since 2019. Mr. Bhatia joined Principal® in 2019 and serves as a director of numerous Principal® affiliates. From 2011 to 2019 he was a Senior Vice President for Oppenheimer Funds. Mr. Bhatia is a CFA® charter holder. Through his education and experience, Mr. Bhatia is experienced with financial, marketing, regulatory, and investment matters.
Patrick G. Halter. Mr. Halter has served as a Board Member of the Fund Complex since 2017. Mr. Halter also serves as President for Principal® Asset Management and as Chief Executive Officer, President and Chair of PGI, and Chief Executive Officer, President and Chair of Principal Real Estate Investors. He serves on numerous boards of directors of Principal® affiliates and has served in various other positions since joining Principal® in 1984. Through his education and employment experience, Mr. Halter is experienced with financial, accounting, regulatory, and investment matters.
Kenneth A. McCullum. Mr. McCullum has served as Senior Vice President and Chief Risk Officer for Principal® since 2020. He served as Vice President and Chief Actuary for Principal® from 2015 to 2020. From 2013 to 2015 Mr. McCullum was an Executive Vice President responsible for business development at Delaware Life Insurance Company. He served as a Senior Vice President for the life annuity business at Sun Life from 2010 to 2013. Mr. McCullum is a Fellow of the Society of Actuaries, and is a Member of the American Academy of Actuaries. Through his education and experience, Mr. McCullum is experienced with financial, accounting, regulatory, and investment matters.
Risk oversight forms part of the Board’s general oversight of the Fund Complex. The Board has appointed a Chief Compliance Officer who oversees the implementation and testing of the Funds' compliance program and reports to the Board regarding compliance matters for the Funds and principal service providers. As part of its regular oversight functions, the Board, directly or through a committee, interacts with and reviews reports from, among others: Fund Complex management, sub-advisors, the Chief Compliance Officer, the independent registered public accounting firm, and internal auditors for PGI or its affiliates, as appropriate. The Board, with the assistance of management and PGI, reviews investment policies and risks in connection with its review of Fund Complex performance. In addition, as part of the Board’s periodic review of advisory, sub-advisory, and other service provider agreements, the Board may consider risk management aspects of their operations and the functions for which they are responsible. With respect to valuation, the Board has designated PGI as the Funds’ valuation designee, as permitted by SEC Rule 2a-5, where PGI is responsible for the day-to-day valuation and oversight responsibilities of the Funds, subject to the Board’s oversight. PGI has establishedrelated fundamental policy, and the Fund's name will not change.
The 1940 Act rules permit a Valuation Committeefund that is sub-classified as "non-diversified" to fulfill its oversight responsibilitiesoperate temporarily as "diversified" without a formal, shareholder-approved sub-classification change as long as the Funds’ valuation designee.
The Board has establishedfund was diversified for less than three consecutive years. As a result, if Fund shareholders approve the following committees and the membership of each committee to assist in its oversight functions, including its oversight of the risks PDSRA faces.
Board Committees
Audit Committee
The Audit Committee's primary purpose is to assist the Board in fulfilling certain of its responsibilities. The Audit Committee serves as an independent and objective party to monitorproposal, the Fund Complex's accounting policies, valuation policiesmay from time to time operate as "diversified" based upon prevailing market conditions and procedures, financial reporting, and internal control systems, as well as the work of the independent registered public accounting firm. The Audit Committee assists Board oversight of (1) the integrity ofinvestment opportunities. If the Fund Complex's financial statements; (2)operates as "diversified" for more than three consecutive years, the Fund Complex's compliance with certain legal and regulatory requirements; (3) the independent registered public accounting firm's qualifications and independence; (4) the performance of the Fund Complex's independent registered public accounting firm; and (5) the valuation process for the Fund Complex. The Audit Committee also servesFund's formal sub-classification would automatically revert back to provide an open avenue of communication among the independent registered public accounting firm, PGI's internal auditors, Fund Complex management, and the Board. The Audit committee reviews and discusses the audited financial statements with management, discusses with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and by the SEC, and receives the written disclosures and the letter"diversified" from the independent account required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and discusses with the independent accountant the independent accountant’s independence. Based upon these reviews and discussions, the Audit Committee determines whether to recommend to the Board that the audited financial
statements be included in the Fund’s annual report to shareholders. As of the Record Date, the Audit Committee is composed of Mr. Barnes, Ms. Grieb, Mr. Hymes (Chair), Ms. Nickels, and Ms. VanDeWeghe.
A copy of the Audit Committee Charter is included as Appendix B to this Proxy Statement.
Executive Committee
The Executive Committee’s primary purpose is to exercise certain powers of the Board when the Board is not in session. When the Board is not in session, the Executive Committee may exercise all powers of the Board in the management of the Fund Complex's business except the power to (1) issue stock, except as permitted by law; (2) recommend to the shareholders any action that requires shareholder approval; (3) amend the declaration of trust or bylaws; or (4) approve any merger or share exchange that does not require"non-diversified," without shareholder approval. As of the Record Date, the Executive Committee is composed of Mr. Damos, Mr. Dunbar (Chair), and Mr. Halter.
Nominating and Governance Committee
The Nominating and Governance Committee's primary purpose is to oversee the structure and efficiency of the Board and the committees established by the Board. The Nominating and Governance Committee responsibilities include evaluating Board membership and functions, committee membership and functions, insurance coverage, and legal matters.
The nominating functions of the Nominating and Governance Committee include selecting and nominating independent trustee candidates for election to the Board. Generally, the Nominating and Governance Committee requests trustee nominee suggestions from the Board and management, but may, and occasionally does, engage a professional recruiting firm to assist it in identifying and evaluating candidates. In addition, the Nominating and Governance Committee will consider trustee candidates recommended by shareholders of the Fund Complex.
Trustee recommendations should be submitted in writing to Principal Diversified Select Real Asset Fund at 711 High Street, Des Moines, Iowa 50392. When evaluating a person as a potential nominee to serve as an Independent Trustee, the Nominating and Governance Committee will generally consider, among other factors: potential term of service; educational background; relevant business and industry experience; whether the person is an "interested person" of the Fund as defined in the 1940 Act; and whether the person is willing to serve, and willing and able to commit the time necessary to attend meetings and perform the duties of an independent trustee. The final decision regarding a nominee is based on a combination of factors, including the strengths and the experience a specific individual may bring to the Board. The Nominating and Governance Committee believes the Board generally benefits from diversity of background, experience, and views among its members, and considers these factors in evaluating the composition of the Board. As of the Record Date, the Nominating and Governance Committee is composed of Mr. Damos, Mr. Hirsch, Mr. Hymes, and Ms. Nickels (Chair).
Operations Committee
The Operations Committee’s primary purpose is to oversee the provision of administrative and distribution services to the Fund Complex, communications with Fund Complex shareholders, and review and oversight of Fund Complex operations. As of the Record Date, the Operations Committee is composed of Mr. Damos, Ms. Dyer, Mr. Lattimer (Chair), and Ms. McMillan.
15(c) Committee
The 15(c) Committee's primary purpose is to assist the Board in performing the annual review of the Fund Complex's advisory and sub-advisory agreements pursuant to Section 15(c) of the 1940 Act. The 15(c) Committee's responsibilities include requesting and reviewing related materials. As of the Record Date, the 15(c) Committee is composed of Mr. Hirsch, Mr. Lattimer, Ms. McMillan (Chair), and Ms. VanDeWeghe.
Board and Committee Meetings
The Board of Trustees held the following Board and Board committee meetings during the 2022 fiscal year:
| | | | | | | | |
Board/Committee | | Fiscal Year Ended
March 31, 2022 |
Board of Trustees | | 8 |
Audit Committee | | 9 |
Executive Committee | | 0 |
Nominating and Governance Committee | | 5 |
Operations Committee | | 4 |
15(c) Committee | | 5 |
For the 2022 fiscal year, each then-serving Trustee attended at least 75% of the aggregate number of meetings of the Board and of each Board committee on which the Trustee served, held during the time the Trustee was a member of the Board.
None of the Funds currently have a formal policy regarding Board members’ attendance at shareholders’ meetings. None of the Funds held, or were required to hold, a shareholders’ meeting at which Board members were elected during its last fiscal year.
Compensation
The Fund Complex does not pay any remuneration to its officers or to any Interested Trustees. The Board annually considers a proposal to reimburse PGI for certain expenses, including a portion of the Chief Compliance Officer's compensation. If the proposal is adopted, these amounts are allocated across all Funds based on relative net assets of each portfolio.
Each Independent Trustee received compensation for service as a member of the Boards of all investment companies in the Fund Complex based on a schedule that takes into account an annual retainer amount, the number of meetings attended, and expenses incurred. Trustee compensation and related expenses are allocated to each of the Funds based on the net assets of each relative to combined net assets of the Fund Complex.
The following table provides information regarding the compensation received by the Independent Trustees from PDSRA during the 2022 fiscal year. As stated above, the Fund Complex includes PFI, PVC, PETF, and PDSRA. PDSRA does not provide retirement benefits to any Trustee.
| | | | | | | | | | | | | | | | | | | | |
| Trustee | | PDSRA FY Ended 3/31/22 | | | Fund Complex
FY Ended
3/31/22 |
| Leroy T. Barnes, Jr. | | | $236 | | | $307,500 |
| Craig Damos | | | $272 | | | $353,780 |
| Fritz S. Hirsch | | | $252 | | | $327,500 |
| Victor L. Hymes | | | $243 | | | $315,000 |
| Padelford L. Lattimer | | | $238 | | | $310,000 |
| Karen McMillan | | | $244 | | | $317,500 |
| Elizabeth A. Nickels | | | $254 | | | $330,000 |
| Mary M. VanDeWeghe | | | $240 | | | $312,500 |
Ms. Dyer and Ms. Grieb were both elected to the Board effective January 26, 2023, and therefore did not receive compensation from PDSRA or the Fund Complex for the fiscal year ended March 31, 2022.
Share Ownership
The following tables set forth the dollar range of the equity securities of the Fund, and the aggregate dollar range of the equity securities of all funds in the Fund Complex, that were beneficially owned by the Trustees and Trustee nominees as of December 31, 2022.
For the purpose of these tables, beneficial ownership means a direct or indirect pecuniary interest. Only Interested Trustees are eligible to participate in an employee benefit program that invests in the Fund Complex. Trustees who beneficially owned shares of a series of PVC did so through variable life insurance and variable annuity contracts. Please note that exact dollar amounts of securities held are not listed. Rather, ownership is listed based on the following dollar ranges:
| | | | | |
A - $0 | D - $50,001 up to and including $100,000 |
B - $1 up to and including $10,000 | E - $100,001 or more |
C - $10,001 up to and including $50,000 | |
Independent Trustees (Not Considered to Be “Interested Persons”)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
ETF | Barnes | Damos | Hirsch | Hymes | Lattimer | McMillan | Nickels | VanDeWeghe |
PDSRA | A | A | A | A | A | A | A | A |
Total Fund Complex | E | E | E | E | C | E | E | E |
Ms. Dyer and Ms. Grieb were both elected to the Board effective January 26, 2023, and did not have ownership in the Funds or the Fund Complex as of December 31, 2022.
Trustees Considered to be "Interested Persons"
| | | | | | | | | | | | | | | | | |
| Board Members as of 12/31/2022 | | Board Nominees |
Fund | Dunbar | Halter | | Bhatia | McCullum |
PDSRA | A | A | | A | A |
Total Fund Complex | E | E | | E | E |
Required vote. The shareholders of the Fund and all share classes will vote together on the election of Trustees. The affirmative vote of a plurality of the shares voted at the Meeting at which a quorum is present is required for the election of a Trustee of PDSRA. If one or more nominee(s) for Trustee are not elected, the Board will determine what action, if any, should be taken.
The Board of Trustees recommends that shareholders vote “For” each nominee.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Ernst & Young LLP (“Ernst & Young”) has been selected as the independent registered public accounting firm for PDSRA for their fiscal years ending March 31, 2023 and served as such for the last two fiscal years of the Funds. The independent registered public accounting firm audits annual financial statements for PDSRA and reviews regulatory filings that include those financial statements. Representatives of Ernst & Young are expected to be present at the Meeting, have been given the opportunity to make a statement if they so desire, and will be available to answer appropriate questions.
The Audit Committee of the Board (the “Audit Committee”) has adopted the following policy regarding approval and pre-approval of audit and non-audit services provided by the independent registered public accounting firm (the “independent auditor”).
* * *
The Principal Funds
Policy on Auditor Independence
The purpose of this policy is to ensure the independence of the Principal Funds' primary independent auditor. This policy is established by the Audit Committee (the "Committee") of the Boards of Directors of Principal Funds, Inc. and Principal Variable Contracts Funds, Inc. and the Board of Trustees of Principal Exchange-Traded Funds and any registered closed-end management investment company that is operated as an interval fund and managed by Principal Global Investors, LLC1 (the “Funds”) (the “Boards of the Funds”) effective for all engagements of the primary independent auditor.
1. The primary independent auditor, its subsidiaries and affiliates shall not provide Prohibited Services to the Funds. For the purposes of this policy, Prohibited Services are:
•Services that are subject to audit procedure during a financial statement audit;
•Services where the auditor would act on behalf of management;
•Services where the auditor is an advocate to the client's position in an adversarial proceeding;
•Bookkeeping or other services related to the accounting records or financial statements of the Funds, its subsidiaries and affiliates;
•Financial information systems design and implementation;
•Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
•Actuarial services;
•Internal audit functions or human resources;
•Broker or dealer, investment advisor, or investment banking services;
•Legal services and expert services unrelated to the audit;
•Tax planning services related to listed, confidential and aggressive transactions;
•Personal tax planning services to individuals in a financial reporting oversight role with regard to the Funds (other than members of the Boards of the Funds who are not also officers of the Funds), including the immediate family members of such individuals;
•Any other service that the Public Company Accounting Oversight Board (PCAOB) determines, by regulation, is impermissible.
2. (A) All services the primary independent auditor, its subsidiaries and affiliates provide to the Funds, and (B) Audit services, including audits of annual financial statements, audits of acquired or divested businesses or review of regulatory filings, any independent auditor provides, shall be approved by the Committee in advance in accordance with the following procedure:
Each quarter, Management will present to the Committee for pre-approval, a detailed description of each particular service, excluding tax services, for which pre-approval is sought and a range of fees for such service. The Committee may delegate pre-approval authority to one or more of its members provided such delegated member(s) shall present a report of any services approved to the full Committee at its next regularly scheduled meeting. The Committee Chairperson shall
1The first such interval fund is the Principal Diversified Select Real Asset Fund; Management, subject to Board approval, may create others, each of which would be formed as a separate trust.
have pre-approval authority for changes to any range of fees applicable to services the Committee previously approved and for new services and the range of fees for such services that arise between regularly scheduled Committee meetings.
Similarly, the primary independent auditor will present to the Committee for pre- approval a written description of the nature and scope of all tax services not expressly prohibited, including the fee arrangements for such services, and the potential effects of such services on the audit firm’s independence.
In considering whether to pre-approve the primary independent auditor’s provision of non-audit services, the Committee will consider whether the services are compatible with the maintenance of such auditor's independence. The Committee will also consider whether the primary independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Funds' business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Funds' ability to manage or control risk or improve audit quality.
3. The provisions of this policy shall apply to all audit and non-audit services provided directly to the Funds. Additionally, the provisions of this policy shall apply to non-audit services provided to Principal Global Investors, LLC (“PGI”) or an affiliate of PGI that provides ongoing services to the Funds if the engagement relates directly to the operations and financial reporting of the Funds.
4. Not less than annually, the primary independent auditor shall report to the Committee in writing all relationships that may reasonably be thought to bear on independence between the auditor and the Funds or persons in financial reporting oversight roles with respect to any services provided by the auditor, its subsidiaries or affiliates as of the date of the communication, pursuant to Rule 3526 of the PCAOB. The primary independent auditor shall discuss with the Committee the potential effects of such relationships on the independence of the auditor. In addition, the primary independent auditor shall affirm, in writing, that, as of the date of the communication, it is independent within the meaning of the federal securities laws and Rule 3520 of the PCAOB.
5. The Committee shall ensure that the lead (or coordinating) audit partners, as well as the reviewing audit partner, of the Funds' primary independent auditor are rotated at least every five years and subject upon rotation to a five year "time out" period. All other audit partners of the primary independent auditor, excluding partners who simply consult with others on the audit engagement regarding technical issues, shall rotate after seven years and be subject upon rotation to a two year "time out" period.
6. Neither the Funds nor PGI may hire or promote any former partner, principal, shareholder or professional employee (Former Employee) of the primary independent auditor into a financial reporting oversight role unless the Former Employee (1) has severed his/her economic interest in the independent audit firm, and (2) was not a member of the audit engagement team for the Funds during the one year period preceding the date that the audit procedures began for the fiscal period in which the Funds or PGI proposes to hire or promote the Former Employee. Neither the Funds nor PGI shall, without prior written consent of the primary independent auditor, hire or promote any Former Employee into a role not prohibited above if the Former Employee had provided any services to the Funds or PGI during the 12 months preceding the date of filing of the Funds' most recent annual report with the SEC. Upon termination of the primary independent auditor, the Funds or PGI shall not, without prior written consent of the former primary independent auditor, hire or promote any Former Employee for a period of up to 12 months from termination.
7. For persons recently promoted or hired into a financial reporting oversight role (other than members of the Boards of the Funds who are not also officers of the Funds), any personal tax planning services pursuant to an engagement that was in progress before the hiring or promotion and provided by the primary independent auditor must be completed on or before 180 days after the hiring or promotion.
8. The phrase "financial reporting oversight role" means a role in which a person is in a position to exercise influence over the contents of the financial statements or anyone who prepares them, such as a member
of the board of directors or similar management or governing body, chief executive officer, president, chief operating officer, chief financial officer, counsel, controller, chief internal auditor, or any equivalent positions.
* * *
The Audit Committee has considered whether the provision of non-audit services that were rendered to PDSRA’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to PDSRA that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Audit Fees. During the last two fiscal years, Ernst & Young has billed the following amounts for their professional services.
March 31, 2021 — $129,100
March 31, 2022 — $100,000
Audit-Related Fees. Ernst & Young provided audit-related services to PDSRA that are not included under “Audit Fees” above. These services related to the review of filings on Form N-1A. During the last two fiscal years, Ernst & Young has billed the following amounts for those professional services (situations in which these services were performed but an Ernst & Young invoice was not received during the fiscal year are reflected below as "$0").
March 31, 2021 — $0
March 31, 2022 — $0
Ernst & Young billed no fees that the Audit Committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
Tax Fees. Ernst & Young prepares and reviews the federal income tax returns and federal excise tax returns of PDSRA. In connection with this review, Ernst & Young prepares and reviews the calculation of PDSRA's dividend distributions that are included as deductions on the tax returns. Ernst & Young also provides services to identify passive foreign investment companies. Ernst & Young also provides services to understand and comply with tax laws in certain foreign countries and services to determine the taxability of corporate actions.
During the last two fiscal years, Ernst & Young has billed the following amounts for their professional tax services.
March 31, 2021 — $10,588
March 31, 2022 — $11,699
Ernst & Young billed no fees that the Audit Committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
All Other Fees. Ernst & Young has not billed PDSRA for other products or services during the last two fiscal years.
Ernst & Young billed no fees that the Audit Committee was required to pre-approve pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The aggregate non-audit fees Ernst & Young billed to PDSRA, its investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to PDSRA for each of its last two fiscal years were as follows.
March 31, 2021 — $10,588
March 31, 2022 — $11,699
Ernst & Young billed PSS, PFD, and PGI an aggregate of the following amounts for the last two years:
| | | | | | | | |
| 2022 | 2021 |
| Principal Shareholder Services | $4,725 | $4,500 |
| Principal Fund Distributor | $4,715 | $4,490 |
| PGI | $175,770 | $106,900 |
Ernst & Young provided no services during PDSRA's last two fiscal years that the Audit Committee was required to approve pursuant to paragraph (c)(7)(i)(C) of Rule 2.01 of Regulation S-X.
OTHER MATTERS
PDSRAThe Fund does not know of any matters to be presented at the Meeting other than those mentionedthe proposal described in this Proxy Statement. If any other matters properly come before the Meeting, the shares represented by proxies will be voted in accordance with the best judgment of the person or persons voting the proxies.
PDSRAThe Fund is not required to hold annual meetings of shareholders and, therefore, cannot determine when the next meeting of shareholders will be held. Shareholder proposals to be presented at any future meeting of shareholders of PDSRA or anythe Fund must be received by PDSRAthe Fund a reasonable time before PDSRAthe Fund commences soliciting proxies for that meeting in order for such proposals to be considered for inclusion in the proxy materials relating to that meeting. PDSRAThe Fund has adopted procedures by which shareholders may recommend nominees to the PDSRAFund's Board. A copy of the procedures can be found in the Nominating and Governance Committee Charter at https://secure02.principal.com/publicvsupply/GetFile?fm=MM13013&ty=VOP&EXT=.VOP.
Only one copy of this Proxy Statement may be mailed to households, even if more than one person in a household is a Fund shareholder of record, unless PDSRAthe Fund has received instructions to the contrary. If you need additional copies of this Proxy Statement, or if you do not want the mailing of a Proxy Statement to be combined with those for other members of your household in the future, or if you are receiving multiple copies and would rather receive just one copy for the household, please contact the Shareholder Services Department toll free at 1-800-222-5852 or by writing to PDSRAthe Fund at Principal Diversified Select Real Asset Fund, P.O. Box 219971, Kansas City, MO 64121-9971. PDSRAThe Fund will promptly deliver, upon request, a separate copy of this Proxy Statement to any shareholder residing at an address to which only one copy was mailed.
BY ORDER OF THE BOARD OF TRUSTEES
March 6,_____, 2023
Des Moines, Iowa
_________________
It is important that proxies be returned promptly.
Therefore, you are urged to complete, sign, date, and return the proxy cardcard(s) in the enclosed envelope or give theiryour proxy by telephone or Internet immediately.
APPENDIX A
OUTSTANDING SHARES AND SHARE OWNERSHIP
The following table shows, as of the Record Date, the number of shares outstanding and entitled to vote for each class of shares of the Fund.
| | | | | |
PDSRAShare Class | SHARES
OUTSTANDING
Shares Outstanding |
Principal Diversified Select Real Asset Fund | |
[TO BE FILEDUPDATED BY AMENDMENT] |
| |
As of December 31, 2022, the Trustees, Trustee nominees,Record Date, Board members and officers of PDSRAthe Fund together owned beneficially less than 1% of the outstanding shares of any class of shares of the Funds.Fund.
As of January 31, 2023,the Record Date, the following persons owned of record, or were known by PDSRAthe Fund to own beneficially, 5% or more of the outstanding shares of any class of shares of the Funds.Fund.
| | | | | | | | | | | |
| Fund/Class | Percent of Ownership | Number of Shares | Name and Address of Owner |
| Class A | 44.99% | 11,961 | PRINCIPAL FINANCIAL SERVICES INC |
| | | 711 HIGH ST |
| | | DES MOINES, IA 50392 |
| | | |
| Class A | 46.90% | 12,466 | LPL FINANCIAL |
| | | 4707 EXECUTIVE DR |
| | | SAN DIEGO, CA 92121-3091 |
| | | |
| Class A | 8.11% | 2,156 | JESSICA S BUSH AND WARREN SCOTT BUSH TEN COM |
| | | 2800 BERKSHIRE DR |
| | | NORWALK, IA 50211-9671 |
| | | |
| Institutional Class | 96.98% | 387,460 | LPL FINANCIAL |
| | | 4707 EXECUTIVE DR |
| | | SAN DIEGO, CA 92121-3091 |
| | | |
| Class Y | 69.34% | 3,981,616 | PRINCIPAL LIFE INSURANCE COMPANY |
| | | 711 HIGH ST |
| | | DES MOINES, IA 50392 |
| | | |
| Class Y | 30.66% | 1,760,316 | PRINCIPAL FINANCIAL SERVICES INC |
| | | 711 HIGH ST |
| | | DES MOINES, IA 50392 |
| | | | | | | | | | | |
| Share Class | Percent of Ownership | Number of Shares | Name and Address Owner |
| | | |
| [TO BE UPDATED BY AMENDMENT] |
| | | |
APPENDIX B
AUDIT COMMITTEE CHARTER
KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature [Joint Owners] Date PRINCIPAL FUNDS2
Audit Committee Charter (Amended September 13, 2022)
This charter sets forthFINANCIAL GROUP - H208 P.O. BOX 9276 DES MOINES, IA 50306 2. Transact such other business as may properly come before the purpose, operating guidelines and responsibilities ofMeeting or any adjournments or postponements thereof. 1. Approval to change the Audit Committee (the “Committee”) of the Boards of Directors/Trustees of the Principal Funds (the “Funds”). The Committee reviews the charter at least annually.
Purpose
The primary purpose of the Committee is to assist the Board in fulfilling certain of its responsibilities. The Audit Committee serves as an independent and objective party to monitor the Funds’ accounting policies, valuation policies and procedures3, financial reporting and internal control systems, as well as the work of the independent registered public accounting firm. The Audit Committee assists Board oversight of (1) the integrity of the Funds’ financial statements; (2) the Funds’ compliance with certain legal and regulatory requirements;4 (3) the independent registered public accounting firm’s qualifications and independence; (4) the performance of the Funds’ independent registered public accounting firm; and (5) the valuation process for the Funds. The Audit Committee also serves to provide an open avenue of communication among the independent registered public accounting firm, the Manager’s internal auditors, Fund management, and the Board.
The Committee’s role is limited to oversight. PGI is responsible for preparing the Funds’ financial statements in accordance with generally accepted accounting principles, determining appropriate valuations, and for establishing and maintaining appropriate systems for accounting, financial reporting and internal control over financial reporting. The independent registered public accounting firm is responsible for conducting an audit of the Funds’ financial statements in accordance with applicable legal and professional standards, including the standards set by the Public Company Accounting Oversight Board.
Although the Committee has the responsibilities and powers set forth in this charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Funds’ financial statements are complete and accurate and have been prepared in accordance with generally accepted accounting principles. Nothing in this charter shall be construed to reduce the responsibilities or liabilities of the Funds’ service providers, including the independent registered public accounting firm. The independent registered public accounting firm is ultimately accountable to the Funds’ Board and the Committee.
Operating Guidelines
The Board shall appoint the members of the Committee and the Committee’s Chair. Members of the Committee may not be interested persons of the Funds, as defined inFund's sub-classification under the Investment Company Act of 1940, as amended. The number of Committee members shall satisfy each of the securities exchanges on which the Funds offers shares. In addition, a member of the Committee may not, other than in his or her capacity as a member of the Committee, the Board or any other board committee, accept directly or indirectly any consulting, advisory, or other compensatory feeamended, from the Funds or any affiliate of the Funds.
2Includes Principal Funds, Inc., Principal Variable Contracts Funds, Inc., Principal Exchange-Traded Funds, and any registered closed-end investment company operated as an interval fund and managed by Principal Global Investors, LLC.
3Principal Global Investors, LLC (“PGI”) is the Funds’ valuation designee pursuant"diversified" to SEC Rule 2a-5. Accordingly, this responsibility includes monitoring PGI’s valuation policies and procedures applicable to the Funds.
4The Board has delegated to other committees oversight of various legal and regulatory requirements. The Audit Committee’s function is limited to the activities set forth in this charter.
Each member of the Committee shall be financially literate, as such qualification is interpreted by the Funds’ Board in its business judgment. At least one member of the Committee must have accounting or related financial management expertise, as the Board interprets such qualification in its business judgment. The Board will determine whether any member of the Committee is an “audit committee financial expert” as defined in Item 3 of Form N-CSR.
There shall be four regular meetings of the Committee each year. In conjunction with these meetings, the Committee shall meet in private executive sessions. The Committee or its Chair may call additional meetings as each deems appropriate. The Committee shall meet periodically, in separate executive sessions, with representatives of Fund Management, the Manager’s internal auditors and the Funds’ independent registered public accounting firm. The Committee may also request to meet with internal legal counsel and compliance personnel of the Manager and with personnel of entities that provide significant accounting or administrative services to the Funds to discuss matters relating to the Funds’ accounting and compliance as well as other Fund-related matters.
Except as provided by law, the following provisions shall govern the conduct of Committee meetings:
•Notice. Notice shall be given as provided for meetings of the Board of Directors/Trustees of the Principal Funds.
•Quorum. At any Committee meeting a majority of the Committee members shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.
•Action by Vote. When a quorum is present at any meeting, a majority of Committee members may take any action.
•Action by Written Consent. Any action required or permitted to be taken at any Committee meeting may be taken without a meeting if all of the Committee members consent to the action in writing or by electronic transmission and such consents are filed with the records of the meetings of the Committee. Such consent shall be treated for all purposes as a vote taken at a Committee meeting.
•Presence Through Communications Equipment. The members of the Committee may participate in a Committee meeting by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.
•Minutes. Minutes of the meeting shall be taken and circulated to all members of the Committee in a timely manner.
Responsibilities
The Responsibilities of the Committee include, but are not limited to, the following:
Overseeing Valuation Process:
•Review and approve modifications to the Funds’ and their valuation designee’s valuation policies and procedures, as applicable.
•Review activities of the Valuation committee.
•Review Money Market Fund oversight.
•Review NAV error reports, and errors/omissions reports.
•Review the fair valuation process.
Overseeing Financial Reporting Process:
•Review with Fund management and the independent registered public accounting firm, the organizational structure, reporting relationship, adequacy of resources and qualifications of the senior Fund management personnel responsible for accounting and financial reporting.
•Review any legal or regulatory matters that arise that could have a material impact on the Funds’ financial statements.
•Oversee the compliance with the Funds’ Code of Ethics for Principal Executive and Senior Financial Officers and consider changes prior to presentation for Board approval.
•Review after fiscal year end, prior to the filing of the Funds’ annual financial statements, a report from the independent registered public accounting firm on:
◦All critical accounting policies and practices to be used;
◦All alternative treatments of financial information within generally accepted accounting principles for policies and practices related to material items that have been discussed with Fund management, the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent registered public accounting firm;
◦Other material written communications between the independent registered public accounting firm and Fund management including any audit problems or difficulties and management’s response, the management representation letter or schedule of unadjusted differences, if any; and
◦All non-audit services provided to an entity in the “investment company complex” as defined in paragraph (f)(14) of Rule 2‑01 of Regulation S‑X that were not pre-approved by the Audit Committee.
Monitoring System of Internal Controls:
•Review with Fund management and the independent registered public accounting firm their separate evaluation of the adequacy and effectiveness of the Funds’ system of internal controls, including those of the Funds’ service providers.
•Review with the Manager’s internal auditors any findings or recommendations related to the Funds’ systems for accounting, valuation, financial reporting and internal controls and Fund management’s response.
•Receive and review a report from the Manager’s internal auditors regarding any complaints on accounting, valuation, auditing and internal control matters.
•Receive and review information from the Principal Financial Group’s Chief Internal Auditor and the Funds’ Chief Compliance Officer regarding any complaints concerning questionable accounting, valuation, internal accounting controls, audit matters, or fund accounting matters made through the Principal Financial Group’s “whistleblower” procedures by employees of the Funds or the investment advisor, sub-advisors, administrators, principal underwriters, or any other provider of accounting related services for the Funds. Principal Financial Group’s whistleblower procedures are intended to empower employees and others to confidentially and anonymously report any unethical employee behavior, and those procedures will be used to facilitate the identification by the Principal Financial Group’s Chief Internal Auditor and the Funds’ Chief Compliance Officer of complaint information for the Audit Committee’s review.
•Review with the Funds’ principal executive officer and/or principal financial officer, in connection with the required certifications on Form N-CSR, any significant deficiencies in the design or
operation of internal control over financial reporting or material weaknesses therein and any reported evidence of fraud involving management or other employees who have a significant role in the Funds’ internal control over financial reporting.
•Review the Manager’s internal audit function, including its audit plans, staffing and explanations for any deviations from plans.
•Review PGI’s valuation risk matrix for the Funds at least annually in addition to other reports required by SEC Rule 2a-5.
Overseeing the Engagement and Performance of the Funds’ Independent Registered Public Accounting Firm:
•Following evaluation, approve and recommend to the Board, the appointment, retention or termination of any independent registered public accounting firm employed by the Funds and approve the fees and other compensation to be paid to such independent registered public accounting firm.
•Meet with the Funds’ independent registered public accounting firm, including private meetings, as necessary, to: (i) review the arrangements for the annual audit and any other audits or non-audit services; (ii) discuss any matters of concern brought to its attention relating to the Funds’ financial statements, including any proposed adjustments to such statements recommended by the independent registered public accounting firm, or other results of said audit(s); (iii) consider the independent registered public accounting firm’s comments with respect to the Funds’ financial policies, procedures and internal accounting controls and management’s responses thereto; (iv) review with management and the independent registered public accounting firm the annual financial statements, including a discussion with the independent registered public accounting firm of matters required by professional standards and (v) review the form of opinion the independent registered public accounting firm proposes to render to the Board.
•Receive and evaluate on a periodic basis the formal written disclosures and letters from the independent registered public accounting firm as required by the Public Company Accounting Oversight Board (“PCAOB”) Rule 3526.5
•Set policies relating to the hiring by entities within the Fund complex of employees or former employees of the independent registered public accounting firm.
•Obtain and review a report by the independent registered public accounting firm, at least annually, describing any material issues raised by the most recent PCAOB review of the independent registered public accounting firm or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm.
•Review and pre-approve all services, including all audit and non-audit services, performed by the Funds’ independent registered public accounting firm for the Funds.
•Review and pre-approve all non-audit services performed by the Funds’ independent registered public accounting firm for the Manager or any entity controlling, controlled by or under common control with the Manager that provides ongoing services to the Funds, if the engagement relates directly to the operations and financial reporting of the Funds;"non-diversified" and to develop, tochange the extent
5PCAOB Rule 3526 generally requires, among other things, that an auditor: (i) describe to the Committee, in writing, all relationships between the registered public accounting firm or any affiliates of the firm and the audit client or persons in financial reporting oversight roles at the audit client that, as of the date of the communication, may reasonably be thought to bear on independence; (ii) discuss with the Committee the potential effects of the relationships described in (i) on the independence of the registered public accounting firm; (iii) affirm to the Committee, in writing, that, as of the date of the communication, the registered public accounting firm is independent in compliance with PCAOB Rule 3520; and (iv) document the substance of its discussion with the Committee.
deemed appropriate by the Committee, policies and procedures for pre-approval of the engagement of the Funds’ independent registered public accounting firm to provide any of these non-audit services.
•Consider the controls applied by the independent registered public accounting firm in an effort to assure that all items requiring pre-approval by the Committee are identified and referred to the Committee in a timely fashion.
•Review annual audit plans of the independent registered public accounting firm for the Funds.
Other Responsibilities
•Report activities to the Boards of Directors/Trustees on a regular basis.
•Conduct an annual self-evaluation.
•Maintain communication with counsel for independent directors/trustees.
•Investigate any other matter brought to its attention within the scope of its duties, with the authority in its discretion to retain legal, accounting or other experts or consultants to advise the Committee, at the expense of the Funds, if, in the Committee’s judgment, that is appropriate.
•Perform any other acts consistent with this Charter, the Funds’ Charter, By-Laws and governing law, as the Committee or the Board deems necessary or appropriate.
Funding
The Committee shall receive appropriate funding, as determined by the Committee, for payment of (i) compensation to the independent registered public accounting firm for approved audit or non-audit services for the Funds; (ii) compensation to any legal, accounting or other experts or consultants retained by the Committee; and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
PDSRA_100154_0423 PO Box 211230, Eagan, MN 55121-9984 VOTE BY MAIL 1. Read the proxy statement. 2. Check the appropriate box(es) on the reverse side of the proxy card. 3. Sign, date and return the proxy card in the envelope provided. VOTE ONLINE 1. Read the proxy statement and have the proxy card at hand. 2. Go to: www.proxyvotenow.com/dsra2023 3. Follow the simple instructions. VOTE BY PHONE 1. Read the proxy statement and have the proxy card at hand. 2. Call toll-free: 855-672-4278 3. Follow the simple instructions. PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 26, 2023 THIS PROXY IS SOLICITED ON BEHALF OFrelated fundamental policy. V20702-S71057 THE BOARD OF TRUSTEES The undersigned shareholder of the Principal Diversified Select Real Asset Fund (the “Fund”) hereby appoints each of Laura Latham, Adam Shaikh, and Clint Woods, collectively or individually, as his or her attorney-in-fact and proxy, with the power of substitution of each, to vote and act with respect to all shares of the Fund, which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on April 26, 2023 at 10:00 a.m. Central Time, at 801 Grand Avenue, Des Moines, Iowa 50392, and at any adjournment thereof. The attorneys named will vote the shares represented by this proxy in accordance with the choice made on this ballot.RECOMMENDS A VOTE FOR THE FOLLOWING: THANK YOU FOR VOTING. PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE REQUIRED IF THIS PROXY IS PROPERLY EXECUTED BUT NO CHOICE IS INDICATED AS TOMAILED IN THE PROPOSALS, THIS PROXY WILL BE VOTED “FOR” THE PROPOSALS. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF. CONTROL NUMBER AUTHORIZED SIGNATURE(S) This section must be completed for your vote to be counted. Signature(s) and Title(s), if applicable Sign in the box above DateU.S. Note: Please sign exactlythis proxy as your name(s) appear(s)name appears on this proxy card. If signing for estates, trusts, orthe books of the Fund. Joint owners should each sign personally. Trustees and other fiduciaries your title orshould indicate the capacity should be statedin which they sign, and where more than one name appears, a majority must sign. If shares are held jointly, one or more joint owners should sign personally. If a corporation, thethis signature should be that of an authorized officer who should state his or her title. ! ! ! For Against Abstain To vote by Internet 1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to website www.proxyvote.com or scan the QR Barcode above 3) Follow the instructions provided on the website. To vote by Telephone 1) Read the Proxy Statement and have the proxy card below at hand. 2) Call 1-800-690-6903 3) Follow the instructions. To vote by Mail 1) Read the Proxy Statement. 2) Check the appropriate box on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided. SCAN TO VIEW MATERIALS & VOTEw
PDSRA_100154_0423 should state his or her title.
PDSRA_100154_0423 Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting of Shareholders to be heldHeld on April 26, 2023.August 31, 2023: The Notice and Proxy Statement for this Meeting is available at https://proxyvotinginfo.com/p/principal2023 YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. PLEASE CAST YOUR VOTE TODAY! YOUR SIGNATURE IS REQUIRED FOR YOUR VOTE TO BE COUNTED. IF YOU ARE NOT VOTING BY PHONE OR INTERNET, PLEASE SIGN AND DATEwww.proxyvote.com. V20703-S71057 The undersigned holder of shares of beneficial interest of the Fund hereby appoints Kamal Bhatia, Laura B. Latham, Adam U. Shaikh, and Beth C. Wilson, and each of them, with full power of substitution and revocation, as proxies to represent the undersigned at the Special Meeting of Shareholders of the Fund to be held at 801 Grand Avenue, Des Moines, Iowa 50392 on August 31, 2023 at 10:00 a.m. Central Time, and at any and all adjournments or postponements thereof, and to vote all shares of beneficial interest of the Fund which the undersigned would be entitled to vote, with all powers the undersigned would possess if personally present, in accordance with the instructions on this proxy. WHEN THIS PROXY CARDIS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH HEREIN AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING NOTICE OF SPECIAL MEETING AND PROXY STATEMENT. PRINCIPAL DIVERSIFIED SELECT REAL ASSET FUND SPECIAL MEETING OF SHAREHOLDERS August 31, 2023 PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE HEREOF AND PROMPTLY RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. This proxy is solicited on behalf of the Board of Trustees. It will be voted as specified. If no specification is made, this proxy shall be voted “FOR” the proposals. The Board of Trustees has voted in favor of all the proposals and recommends that you vote “FOR” all the proposals. TO VOTE, MARK BOX(ES) BELOWNO POSTAGE REQUIRED IF MAILED IN BLUE OR BLACK INK AS FOLLOWS: 1. To elect thirteen Trustees to the Board of Trustees. FOR ALL WITHHOLD ALL FOR ALL EXCEPT* (01) Leroy T. Barnes, Jr. (08) Karen McMillan (02) Craig Damos (09) Elizabeth A. Nickels (03) Katharin S. Dyer (10) Mary M. VanDeWeghe (04) Frances P. Grieb (11) Kamal Bhatia (05) Fritz S. Hirsch (12) Patrick G. Halter (06) Victor L. Hymes (13) Kenneth A. McCullum (07) Padelford L. Lattimer *Instruction: To withhold authority to vote for any individual nominee(s), mark the FOR ALL EXCEPT box and write the nominee(s) number(s) on the line below.THE U.S.
INBOUND - CLOSED RECORDING Thank you for calling the Principal proxy voting line. Our offices are closed. Please call us back during our normal business hours which are, Monday through Friday, 10:00 a.m. to 11:00 p.m. Eastern time. Thank you and have a nice day. INBOUND - CALL IN QUEUE MESSAGE Thank you for calling the Principal proxy voting line. Our proxy specialists are currently assisting other shareholders. Your call is important to us. Please continue to hold and your call will be answered in the order in which it was received. END OF CAMPAIGN MESSAGE* Thank you for calling the Principal proxy voting line. The Joint Annual Meeting of Shareholders scheduled for April 26, 2023 has concluded. As a result, this toll-free number is no longer in service for proxy related shareholder calls. If you have questions about your investment in Principal Funds, Inc., Principal Variable Contracts Funds, Inc., Principal Exchange-Traded Funds or Principal Diversified Select Real Asset Fund, please contact your Financial Advisor or call Principal directly at 800-222-5852. Thank you. *Please note that the End Of Campaign Message should not be applied until DCP has provided instruction to do so. PRINCIPAL 2023 INBOUND LINE MESSAGING
