Principal Real Asset Fund (PDSRX) N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 Investment Company Act file number   811-07572

Principal Diversified Select Real Asset Fund

(Exact name of registrant as specified in charter)

 801 Grand Avenue, Des Moines, IA 50309

(Address of principal executive offices)                                                         (Zip code)

Principal Global Investors, LLC, 801 Grand Avenue, Des Moines, IA 50309

(Name and address of agent for service)

Registrant’s telephone number, including area code: 515-248-0156

Date of fiscal year end: March 31, 2019

Date of reporting period: September 30, 2019

ITEM 1 – REPORT TO STOCKHOLDERS

Principal

Diversified

Select

Real

Asset

Fund

Semiannual

Report

September

30,

2019

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up

for

eDelivery!

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Note:

If

your

shares

are

not

held

directly

with

Principal

Funds

but

through

a

brokerage

firm,

please

contact

your

broker

for

electronic

delivery

options

available.

Rev.

10/2019

EE11865PFI-02

FACTS

WHAT

DOES

PRINCIPAL

FUNDS

DO

WITH

YOUR

PERSONAL

INFORMATION?

Why?

Financial

companies

choose

how

they

share

your

personal

information.

Federal

law

gives

consumers

the

right

to

limit

some

but

not

all

sharing.

Federal

law

also

requires

us

to

tell

you

how

we

collect,

share,

and

protect

your

personal

information.

Please

read

this

notice

carefully

to

understand

what

we

do.

What?

The

types

of

personal

information

we

collect

and

share

depend

on

the

product

or

service

you

have

with

us.

This

information

can

include:

•

Social

Security

number

and

income

•

Assets

and

transaction

history

•

Account

transactions

and

account

balances

When

you

are

no

longer

our

customer,

we

continue

to

share

your

information

as

described

in

this

notice

How?

All

financial

companies

need

to

share

customers’

personal

information

to

run

their

everyday

business.

In

the

section

below,

we

list

the

reasons

financial

companies

can

share

their

customers’

personal

information;

the

reasons

Principal

Funds

chooses

to

share;

and

whether

you

can

limit

this

sharing.

REASONS

WE

CAN

SHARE

YOUR

PERSONAL

INFORMATION

DOES

PRINCIPAL

FUNDS

SHARE?

CAN

YOU

LIMIT

THIS

SHARING?

For

our

everyday

business

purposes

—such

as

to

process

your

transactions,

maintain

your

account(s),

respond

to

court

orders

and

legal

investigations,

or

report

to

credit

bureaus

Yes

No

For

our

marketing

purposes

—to

offer

our

products

and

services

to

you

Yes

No

For

joint

marketing

with

other

financial

companies

No

We

don’t

share

For

our

affiliates’

everyday

business

purposes

—

information

about

your

transactions

and

experiences

Yes

No

For

our

affiliates’

everyday

business

purposes

—

information

about

your

creditworthiness

No

We

don’t

share

For

nonaffiliates

to

market

to

you

No

We

don’t

share

Questions?

Call

1-800-222-5852

or

go

to

www.principalfunds.com/customer-support/contact-us

Page

2

EE11865PFI-02

|

10/2019

Who

we

are

Who

is

providing

this

notice?

Principal

Funds

includes

Principal

Funds,

Inc.,

Principal

Funds

Distributor,

Inc.,

and

Principal

Diversified

Select

Real

Asset

Fund.

What

we

do

How

does

Principal

Funds

protect

my

personal

information?

To

protect

your

personal

information

from

unauthorized

access

and

use,

we

use

security

measures

that

comply

with

federal

law.

These

measures

include

computer

safeguards

and

secured

files

and

buildings.

How

does

Principal

Funds

collect

my

personal

information?

We

collect

your

personal

information,

for

example,

when

you

•

Open

an

account

or

seek

advice

about

your

investments

•

Direct

us

to

buy

securities

or

make

deposits,

or

withdrawals

from

your

account

•

Give

us

your

contact

information

or

show

your

government

issued

ID

We

also

collect

your

personal

information

from

others,

such

as

affiliates,

or

other

companies.

Why

can’t

I

limit

all

sharing?

Federal

law

gives

you

the

right

to

limit

only

•

sharing

for

affiliates’

everyday

business

purposes–information

about

your

creditworthiness

•

affiliates

from

using

your

information

to

market

to

you

•

sharing

for

nonaffiliates

to

market

to

you

State

laws

and

individual

companies

may

give

you

additional

rights

to

limit

sharing.

Definitions

Affiliates

Companies

related

by

common

ownership

or

control.

They

can

be

financial

and

nonfinancial

companies.

•

Our

affiliates

include

companies

of

Principal

Financial

Group

®

Nonaffiliates

Companies

not

related

by

common

ownership

or

control.

They

can

be

financial

and

nonfinancial

companies.

•

Principal

Funds

does

not

share

with

nonaffiliates

so

they

can

market

to

you.

Joint

marketing

A

formal

agreement

between

nonaffiliated

financial

companies

that

together

market

financial

products

or

services

to

you.

•

Principal

Funds

does

not

jointly

market.

Other

important

information

This

Privacy

Notice

governs

information

that

you

provide

to

Principal

(or

that

we

otherwise

receive)

when

you

apply

for

or

receive

a

product

or

service

used

primarily

for

personal,

family

or

household

purposes.

We

may

collect

additional

information

depending

on

the

nature

of

your

relationship

with

Principal

or

if

you

interact

with

us

through

our

website

or

other

digital

technologies.

Details

about

how

we

protect

and

use

this

additional

information,

including

information

about

your

privacy

rights

under

California

law

such

as

the

California

Consumer

Privacy

Act,

are

available

online

at

www.principal.com/privacy-policies

.

If

you

do

not

have

access

to

www.principal.com/privacy-policies,

please

contact

us

at

1-800-986-3343

to

have

a

copy

mailed

to

you.

Table

of

Contents

Not

FDIC

or

NCUA

insured

May

lose

value

•

Not

a

deposit

•

No

bank

or

credit

union

guarantee

Not

insured

by

any

Federal

government

agency

Letter

from

the

President

1

Financial

Statements

2

Notes

to

Financial

Statements

6

Schedule

of

Investments

12

Financial

Highlights

(includes

performance

information)

18

Shareholder

Expense

Example

20

Supplemental

Information

21

1

Kamal

Bhatia

President,

Principal

Funds

GLOBAL

INVESTMENT

MANAGEMENT

•

ASSET

ALLOCATION

EXPERTISE

•

RETIREMENT

LEADERSHIP

Dear

Shareholder,

The

frenzy

about

imminent

recession

seemed

to

peak

in

August,

but

there

are

still

few

clear

signs

of

recovery.

On

the

edges,

though,

economic

momentum

feels

better.

Pulling

the

economy

back

from

the

brink

were

robust

household

spending,

solid

labor

markets,

healthy

wage

growth,

super-low

long-term

interest

rates,

and

easier

central

bank

policy.

In

China,

headlines

described

the

August

data

as

disappointing,

with

key

sectors

experiencing

slower

year-over-year

growth

than

July,

but

there’s

been

monthly

sequential

progress

since

the

low

earlier

this

year.

The

Eurozone

is

a

slightly

different

story.

Preliminary

results

of

September

business

surveys

were

well

below

expectations.

However,

overall

Euro-area

bank

loans

and

the

money

supply

are

rising,

job

growth

is

still

okay,

and

households

appear

resilient.

The

Japanese

economy

surprised

positively

in

the

first

half,

but,

like

the

Eurozone,

is

being

worn

down

by

the

global

slump.

The

U.S.

may

be

the

closest

to

a

clear

recovery

from

the

world

economic

stumble

of

the

last

20

months.

Geopolitical

risks

are

large

and

well

known.

But

the

biggest

recession

risk

seems

to

be

a

deterioration

in

corporate

profits.

We

continue

to

believe

that

the

most

prudent

approach

for

investing

is

to

select

a

portfolio

allocation

that

is

broadly

diversified

both

across

and

within

asset

classes.

We

encourage

you

to

work

closely

with

your

financial

professional

to

select

and

monitor

those

investments

best

suited

to

helping

you

work

toward

and

realize

your

financial

goals.

I

am

honored

to

join

our

team

at

Principal

Funds

to

continue

the

heritage

of

serving

you

for

your

retirement

and

wealth

management

goals.

Our

goal

is

to

meet

clients

with

a

variety

of

capabilities

that

service

their

needs

and

exceed

their

expectations.

The

continued

demand

for

product

innovation

combined

with

superior

execution

skills

has

become

a

key

differentiator

in

our

business.

Our

focus

at

Principal

Funds

has

always

been

on

consistent,

long-term

performance

for

our

investors.

Our

investment

strategies

cover

a

wide

range

of

asset

classes

to

help

you

diversify

your

portfolio

as

you

save

for

the

future—whether

you

are

investing

for

goals

that

are

years

down

the

road

or

closer

at

hand.

1

Thanks

for

your

continued

trust

and

financial

commitment

to

our

funds

family.

Sincerely,

Kamal

Bhatia

President,

Principal

Funds

1

Asset

allocation

and

diversification

do

not

ensure

a

profit

or

protect

against

a

loss.

Past

performance

does

not

guarantee

future

results.

*

All

data

and

market

commentary

from

September

2019

Economic

Insights

by

Robert

F.

Baur,

Ph.D.,

executive

director,

chief

global

economist.

Statement

of

Assets

and

Liabilities

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

2

See

accompanying

notes.

Amounts

in

thousands,

except

per

share

amounts

Principal

Diversified

Select

Real

Asset

Fund

Investment

in

securities--at

cost

......................................................................................................................

$

125,356‌

Foreign

currency--at

cost

..............................................................................................................................

$

178‌

Assets

Investment

in

securities--at

value 

......................................................................................................................

$

127,108‌

Foreign

currency--at

value

..............................................................................................................................

176‌

Receivables:

Dividends

and

interest

.............................................................................................................................

463‌

Expense

reimbursement

from

Manager

...........................................................................................................

62‌

Investment

securities

sold

.........................................................................................................................

159‌

Prepaid

transfer

agent

fees

..............................................................................................................................

18‌

Prepaid

expenses

........................................................................................................................................

40‌

Total

Assets  

128,026‌

Liabilities

Accrued

management

and

investment

advisory

fees

....................................................................................................

177‌

Accrued

directors'

expenses

.............................................................................................................................

1‌

Accrued

professional

fees

...............................................................................................................................

37‌

Accrued

valuation

expenses

.............................................................................................................................

23‌

Cash

overdraft

...........................................................................................................................................

1‌

Deposits

from

counterparty

.............................................................................................................................

–‌

Payables:

Investment

securities

purchased

..................................................................................................................

722‌

Total

Liabilities  

961‌

Net

Assets

Applicable

to

Outstanding

Shares

........................................................................................................

$

127,065‌

Net

Assets

Consist

of:

Capital

shares

and

additional

paid-in-capital

...........................................................................................................

$

125,000‌

Total

distributable

earnings

(accumulated

loss)

.........................................................................................................

2,065‌

Total

Net

Assets 

$

127,065‌

Capital

Stock

(par

value:

$.01

per

share):

Net

Asset

Value

Per

Share:

Class

A:

Net

Assets

......................................................................................................................................

$

253‌

Shares

Issued

and

Outstanding

....................................................................................................................

10‌

Net

Asset

Value

per

share

.........................................................................................................................

$

25.35‌

Maximum

Offering

Price

.........................................................................................................................

$

26.90‌

Class

Y:

Net

Assets

......................................................................................................................................

$

126,558‌

Shares

Issued

and

Outstanding

....................................................................................................................

4,987‌

Net

Asset

Value

per

share

.........................................................................................................................

$

25.38‌

Institutional:

Net

Assets

.................................................................................................................................

$

254‌

Shares

Issued

and

Outstanding

....................................................................................................................

10‌

Net

Asset

Value

per

share

.........................................................................................................................

$

25.37‌

Statement

of

Operations

Principal

Diversified

Select

Real

Asset

Fund

Period

Ended

September

30,

2019

(unaudited)

3

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

(a)

Net

Investment

Income

(Loss)

Income:

Dividends

..............................................................................................................................................

$

423‌

Withholding

tax

.......................................................................................................................................

(17‌)

Interest

.................................................................................................................................................

371‌

Total

Income

777‌

Expenses:

Management

and

investment

advisory

fees

...........................................................................................................

389‌

Registration

fees

-

Class

A

............................................................................................................................

10‌

Registration

fees

-

Class

Y

............................................................................................................................

14‌

Registration

fees

-

Institutional

.......................................................................................................................

11‌

Shareholder

reports

-

Class

A

.........................................................................................................................

1‌

Shareholder

reports

-

Class

Y

.........................................................................................................................

1‌

Shareholder

reports

-

Institutional

....................................................................................................................

1‌

Transfer agent

fees

-

Class

A

..........................................................................................................................

2‌

Transfer agent

fees

-

Class

Y

..........................................................................................................................

22‌

Transfer agent

fees

-

Institutional

.....................................................................................................................

5‌

Custodian

fees

.........................................................................................................................................

6‌

Directors'

expenses

....................................................................................................................................

1‌

Professional fees

......................................................................................................................................

37‌

Valuation

expenses

....................................................................................................................................

23‌

Other

expenses

........................................................................................................................................

1‌

Total

Gross

Expenses

524‌

Less: Reimbursement

from

Manager

.................................................................................................................

30‌

Less:

Reimbursement

from

Manager

-

Class

A

.......................................................................................................

13‌

Less:

Reimbursement

from

Manager

-

Class

Y

.......................................................................................................

104‌

Less:

Reimbursement

from

Manager

-

Institutional

..................................................................................................

17‌

Total

Net

Expenses

360‌

Net

Investment

Income

(Loss)

417‌

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

Net

realized

gain

(loss)

from:

Investment

transactions

...............................................................................................................................

(62‌)

Foreign

currency

transactions

.........................................................................................................................

(40‌)

Net

change

in

unrealized

appreciation/(depreciation)

of:

Investments

............................................................................................................................................

1,752‌

Translation

of

assets

and

liabilities

in

foreign

currencies

.............................................................................................

(2‌)

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

1,648‌

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

$

2,065‌

(a)

Period

from

June

25,

2019,

date

operations

commenced,

through

September

30,

2019.

Statement

of

Changes

in

Net

Assets

Principal

Diversified

Select

Real

Asset

Fund

(unaudited)

4

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Period Ended

September

30,

2019

(a)

Operations

Net

investment

income

(loss)

..................................................................................................................................

$

417‌

Net

realized

gain

(loss)

on

investments

and

foreign

currencies

...............................................................................................

(102‌)

Net

change

in

unrealized

appreciation/depreciation

of

investments

and

translation

of

assets

&

liabilities

in

foreign

currencies

.............................

1,750‌

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

2,065‌

Dividends

and

Distributions

to

Shareholders

From

net

investment

income

and

net

realized

gain

on

investments

...........................................................................................

–‌

Capital

Share

Transactions

Net

increase

(decrease)

in

capital

share

transactions

..........................................................................................................

125,000‌

Total

Increase

(Decrease)

in

Net

Assets

127,065‌

Net

Assets

Beginning

of

period

............................................................................................................................................

–‌

End

of

period

..................................................................................................................................................

$

127,065‌

Class

A

Class

Y

Institutional

Capital

Share

Transactions:

Period Ended

September

30,

2019

(a)

Dollars:

Sold

.......................................................................................

$

250‌

$

124,500‌

$

250‌

Net

Increase

(Decrease)

.........................................................................

$

250‌

$

124,500‌

$

250‌

Shares:

Sold

.......................................................................................

10‌

4,987‌

10‌

Net

Increase

(Decrease)

.........................................................................

10‌

4,987‌

10‌

Dividends

and

Distributions

to

Shareholders:

Period Ended

September

30,

2019

(a)

From

net

investment

income

and

net

realized

gain

on

investments

...........................................

$

–‌

$

–‌

$

–‌

Total

Dividends

and

Distributions

$

–‌

$

–‌

$

–‌

(a)

Period

from

June

25,

2019,

date

operations

commenced,

through

September

30,

2019.

Statement

of

Cash

Flows

Principal

Diversified

Select

Real

Asset

Fund

Period

Ended

September

30,

2019

(unaudited)

5

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

(a)

Cash

Flows

from

Operating

Activities:

Net increase

in

net

assets

from

operations

..............................................................................

$

2,065

Adjustments

to

reconcile

net

increase

in

net

assets

from

operations

to

net

cash

used

in

operating

activities:

Purchase

of

investment

securities

...............................................................................

(132,880

)

Proceeds

from

sale

of

investment

securities

........................................................................

13,285

Net

sales

or

(purchases)

of

short

term

securities

.....................................................................

(5,856

)

Net

accretion

of

bond

discounts

and

amortization

of

premiums

..........................................................

33

Unrealized

appreciation

on

investments

...........................................................................

(1,752

)

Net

realized

loss

from

investments

...............................................................................

62

Increase

in

accrued

dividend

and

interest

receivable

..................................................................

(463

)

Increase in

investment

securities

sold

.............................................................................

(159

)

Increase

in

accrued

fees,

expenses,

prepaid

expenses,

and

expense

reimbursement

from

Manager

..................................

118

Increase in

investment

securities

purchased

........................................................................

722

Net

cash

used

in

operating

activities

(124,825

)

Cash

Flows

from

Financing

Activities:

Proceeds

from

shares

sold

.....................................................................................

125,000

Net

cash

provided

by

financing

activities

125,000

Net

in

crease in

cash

and

foreign

currency

..........................................................................

175

Cash

and

Foreign

Currency:

Beginning

of

period

.........................................................................................

$

–

End

of

period

..............................................................................................

$

175

(a)

Period

from

June

25,

2019,

date

operations

commenced,

through

September

30,

2019.

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

6

1.

Organization

Principal

Diversified

Select

Real

Asset

Fund

(the

"Fund")

is

registered

under

the

Investment

Company

Act

of

1940,

as

amended,

as

a

diversified,

closed-end

management

investment

company.

The

Fund

continuously

offers

three

classes

of

shares:

Class

A,

Class

Y,

and

Institutional.

The

Fund

was

organized

as

a

Delaware

statutory

trust

on

September

21,

2018

pursuant

to

an

Agreement

and

Declaration

of

Trust

governed

by

the

State

of

Delaware.

Principal

Global

Investors,

LLC

(the

“Manager”)

serves

as

the

Fund’s

manager

and

advisor.

The

Fund

is

structured

as

an

interval

fund,

meaning

it

conducts

quarterly

repurchase

offers

of

no

less

than

5%

and

no

more

than

25%

of

the

Fund’s

outstanding

shares

at

net

asset

value.

Repurchase

offers

of

more

than

5%

are

made

solely

at

the

discretion

of

the

Fund’s

Board

of

Trustees

(the

“Board”),

and

investors

should

not

rely

on

any

expectation

of

repurchase

offers

being

made

in

excess

of

5%.

Investors

should

consider

the

Fund’s

shares

illiquid.

The

Fund’s

shares

are

not

listed

on

any

national

securities

exchange

and

are

not

publicly

traded.

There

is

currently

no

secondary

market

for

the

shares,

and

the

Fund

expects

that

no

secondary

market

will

develop.

Only

eligible

purchasers

can

buy

shares

of

the

Fund

in

that

share

class.

The

Manager

and

Principal

Funds

Distributor,

Inc.

(“the

Distributor”)

(an

affiliate

of

the

Manager),

the

principal

distributor

of

the

Fund,

reserve

the

right

to

broaden,

limit,

and

change

the

designation

of

eligible

purchasers

without

notice.

Shares

of

the

Fund

are

only

sold

in

U.S.

jurisdictions.

Subject

to

eligibility

and

minimum

initial

investment

requirements,

shares

of

the

Fund

may

be

purchased

directly

or

through

intermediary

organizations,

such

as

broker-dealers,

insurance

companies,

plan

sponsors,

third

party

administrators,

and

retirement

plans.

Minimum

initial

investment

requirements

are

$25,000

for

Class

A

shares

and

$100,000

for

Class

Y

and

Institutional

shares.

The

Fund

is

an

investment

company

and

applies

specialized

accounting

and

reporting

under

Accounting

Standards

Codification

Topic

946,

Financial

Services

-

Investment

Companies

.

The

Fund

has

not

provided

financial

support

and

is

not

contractually

required

to

provide

financial

support

to

any

investee.

Effective

June

3,

2019,

the

initial

purchase

of

$25,000

of

Class

A

shares,

$50,000

shares

of

Class

Y

shares,

and

$25,000

of

Institutional

shares

was

made

by

Principal

Financial

Services,

Inc.,

an

affiliate

of

the

Manager.

All

classes

of

shares

of

the

Fund

represent

interests

in

the

same

portfolio

of

investments

and

will

vote

together

as

a

single

class

except

where

otherwise

required

by

law

or

as

determined

by

the

Board.

In

addition,

the

Board

declares

separate

dividends

on

each

class

of

shares.

The

Fund

may

offer

additional

classes

of

shares

in

the

future.

2.

Significant

Accounting

Policies

The

preparation

of

financial

statements

in

conformity

with

U.S.

generally

accepted

accounting

principles

(“U.S.

GAAP”)

requires

management

to

make

estimates

and

assumptions

that

affect

the

reported

amounts

of

assets

and

liabilities

and

disclosure

of

contingent

assets

and

liabilities

at

the

date

of

the

financial

statements

and

the

reported

amounts

of

revenues

and

expenses

during

the

reporting

period.

Actual

results

could

differ

from

those

estimates.

The

following

summarizes

the

significant

accounting

policies

of

the

Fund:

Security

Valuation.

The

Fund

values

securities

for

which

market

quotations

are

readily

available

at

fair

value,

which

is

determined

using

the

last

reported

sale

price.

If

no

sales

are

reported,

as

is

regularly

the

case

for

some

securities

traded

over-the-counter,

securities

are

valued

using

the

last

reported

bid

price

or

an

evaluated

bid

price

provided

by

a

pricing

service.

Pricing

services

use

modeling

techniques

that

incorporate

security

characteristics

such

as

current

quotations

by

broker/dealers,

coupon,

maturity,

quality,

type

of

issue,

trading

characteristics,

other

yield

and

risk

factors,

and

other

market

conditions

to

determine

an

evaluated

bid

price

or,

in

the

case

of

certain

credit

default

swaps,

a

mean

price

provided

by

a

pricing

service.

When

reliable

market

quotations

are

not

considered

to

be

readily

available,

which

may

be

the

case,

for

example,

with

respect

to

restricted

securities,

certain

debt

securities,

preferred

stocks,

and

foreign

securities,

the

investments

are

valued

at

their

fair

value

as

determined

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board.

The

Fund

invests

in

other

publicly

traded

investment

funds

which

are

valued

at

the

respective

fund’s

net

asset

value.

In

addition,

the

Fund

invests

a

portion

of

its

assets

in

private

investment

funds

which

are

valued

at

fair

value

based

upon

the

net

asset

value

reported

on

a

periodic

basis.

The

appropriateness

of

the

fair

value

of

these

securities

is

monitored

by

the

Manager.

The

shares

of

other

investment

funds

are

referred

to

as

the

“Underlying

Funds”.

The

value

of

foreign

securities

used

in

computing

the

net

asset

value

per

share

is

generally

determined

as

of

the

close

of

the

foreign

exchange

where

the

security

is

principally

traded.

Events

that

occur

after

the

close

of

the

applicable

foreign

market

or

exchange

but

prior

to

the

calculation

of

the

Fund’s

net

asset

value

are

reflected

in

the

Fund’s

net

asset

value

and

these

securities

are

valued

at

fair

value

as

determined

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board.

Many

factors,

provided

by

independent

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

7

pricing

services,

are

reviewed

in

the

course

of

making

a

good

faith

determination

of

a

security’s

fair

value,

including,

but

not

limited

to,

price

movements

in

ADRs,

futures

contracts,

industry

indices,

general

indices,

and

foreign

currencies.

To

the

extent

the

Fund

invests

in

foreign

securities

listed

on

foreign

exchanges

which

trade

on

days

on

which

the

Fund

does

not

determine

net

asset

value,

for

example

weekends

and

other

customary

national

U.S.

holidays,

the

Fund’s

net

asset

value

could

be

significantly

affected

on

days

when

shareholders

cannot

purchase

or

redeem

shares.

Certain

securities

issued

by

companies

in

emerging

market

countries

may

have

more

than

one

quoted

valuation

at

any

given

point

in

time,

sometimes

referred

to

as

a

“local”

price

and

a

“premium”

price.

The

premium

price

is

often

a

negotiated

price,

which

may

not

consistently

represent

a

price

at

which

a

specific

transaction

can

be

affected.

It

is

the

policy

of

the

Fund

to

value

such

securities

at

prices

at

which

it

is

expected

those

shares

may

be

sold,

and

the

Manager

or

any

sub-advisor

is

authorized

to

make

such

determinations

subject

to

such

oversight

by

the

Board

as

may

occasionally

be

necessary.

Income

and

Investment

Transactions.

The

Fund

records

investment

transactions

on

a

trade

date

basis.

Trade

date

for

senior

floating

rate

interests

purchased

in

the

primary

market

is

considered

the

date

on

which

the

loan

allocations

are

determined.

Trade

date

for

senior

floating

rate

interests

purchased

in

the

secondary

market

is

the

date

on

which

the

transaction

is

entered

into.

The

identified

cost

basis

has

been

used

in

determining

the

net

realized

gain

or

loss

from

investment

transactions

and

unrealized

appreciation

or

depreciation

of

investments.

The

Fund

records

dividend

income

on

the

ex-dividend

date,

except

dividend

income

from

foreign

securities

whereby

the

ex-dividend

date

has

passed;

such

dividends

are

recorded

as

soon

as

the

Fund

is

informed

of

the

ex-dividend

date.

Interest

income

is

recognized

on

an

accrual

basis.

Discounts

and

premiums

on

securities

are

accreted/amortized,

respectively,

on

the

level

yield

method

over

the

expected

lives

of

the

respective

securities.

Callable

debt

securities

purchased

at

a

premium

are

amortized

to

the

earliest

call

date.

The

Fund

allocates

all

income

and

realized

and

unrealized

gains

or

losses

on

a

daily

basis

to

each

class

of

shares

based

upon

the

relative

proportion

of

the

value

of

shares

outstanding

of

each

class.

Expenses.

Expenses

directly

attributed

to

the

Fund

are

charged

to

the

Fund.

Other

expenses

not

directly

attributed

to

the

Fund

are

apportioned

among

the

registered

investment

companies

managed

by

the

Manager.

Management

fees

are

allocated

daily

to

each

class

of

shares

based

upon

the

relative

proportion

of

the

value

of

shares

outstanding

of

each

class.

Expenses

specifically

attributable

to

a

particular

class

are

charged

directly

to

such

class

and

are

included

separately

in

the

statement

of

operations.

In

addition

to

the

expenses

the

Fund

bears

directly,

the

Fund

may

indirectly

bear

a

pro

rata

share

of

the

fees

and

expenses

of

the

Underlying

Funds

in

which

it

invests.

Because

the

Underlying

Funds

have

varied

expense

levels

and

the

Fund

may

own

different

proportions

of

Underlying

Funds

at

different

times,

the

amount

of

expense

incurred

indirectly

by

the

Fund

will

vary.

Expenses

included

in

the

statement

of

operations

of

the

Fund

do

not

include

any

expenses

associated

with

the

Underlying

Funds.

Distributions

to

Shareholders.

Dividends

and

distributions

to

shareholders

of

the

Fund

are

recorded

on

the

ex-dividend

date.

Dividends

and

distributions

to

shareholders

from

net

investment

income

and

net

realized

gain

from

investments

are

determined

in

accordance

with

federal

tax

regulations,

which

may

differ

from

U.S.

GAAP.

These

differences

are

primarily

due

to

differing

treatments

for

losses

deferred

due

to

wash

sales.

Permanent

book

and

tax

basis

differences

are

reclassified

within

the

capital

accounts

based

on

federal

tax-basis

treatment;

temporary

differences

do

not

require

reclassification.

To

the

extent

dividends

and

distributions

exceed

current

and

accumulated

earnings

and

profits

for

federal

income

tax

purposes;

they

are

reported

as

return

of

capital

distributions.

Distributions

from

REITs

may

be

characterized

as

ordinary

income,

net

capital

gain,

or

a

return

of

capital

to

the

Fund.

The

proper

characterization

of

REIT

distributions

is

generally

not

known

until

after

the

end

of

each

calendar

year.

As

such,

estimates

are

used

in

reporting

the

character

of

income

and

distributions

for

financial

statement

purposes.

Federal

Income

Taxes.

No

provision

for

federal

income

taxes

is

considered

necessary

because

the

Fund

intends

to

qualify

as

a

“regulated

investment

company”

under

the

Internal

Revenue

Code

and

intends

to

distribute

each

year

substantially

all

of

its

net

investment

income

and

realized

capital

gains

to

shareholders.

Management

evaluates

tax

positions

taken

or

expected

to

be

taken

in

the

course

of

preparing

the

Fund’s

tax

returns

to

determine

whether

it

is

“more

likely

than

not”

that

each

tax

position

would

be

sustained

upon

examination

by

a

taxing

authority

based

on

the

technical

merits

of

the

position.

Tax

positions

not

deemed

to

meet

the

more

likely

than

not

threshold

would

be

recorded

as

a

tax

benefit

or

expense

in

the

current

year.

During

the

period

ended

September

30,

2019

,

the

Fund

did

not

record

any

such

tax

benefit

or

expense

in

the

accompanying

financial

statements.

2.

Significant

Accounting

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

8

3.

Operating

Policies

Cross

Trades.

The

Fund

may

engage

in

cross

trades.

A

cross

trade

is

a

purchase

or

sale

transaction

between

affiliated

portfolios

executed

directly

or

through

an

intermediary.

Entities

may

be

considered

affiliated

if

they

have

a

common

investment

advisor,

so

a

fund

may

be

considered

affiliated

with

any

portfolio

for

which

the

Fund's

sub-advisor

acts

as

an

investment

advisor.

Such

transactions

are

permissible

provided

that

the

conditions

of

Rule

17a-7

under

the

Investment

Company

Act

of

1940

are

satisfied.

Illiquid

Securities.

Illiquid

securities

generally

cannot

be

sold

or

disposed

of

in

the

ordinary

course

of

business

(within

seven

calendar

days)

at

approximately

the

value

at

which

the

Fund

has

valued

the

investments.

This

may

have

an

adverse

effect

on

the

Fund’s

ability

to

dispose

of

particular

illiquid

securities

at

fair

value

and

may

limit

the

Fund’s

ability

to

obtain

accurate

market

quotations

for

purposes

of

valuing

the

securities. 

Indemnification.

Under

the

Fund’s

by-laws,

present

and

past

officers,

trustees

and

employees

are

indemnified

against

certain

liabilities

arising

out

of

the

performance

of

their

duties.

In

addition,

in

the

normal

course

of

business,

the

Fund

may

enter

into

a

variety

of

contracts

that

may

contain

representations

and

warranties

which

provide

general

indemnifications.

The

Fund’s

maximum

exposure

under

these

arrangements

is

unknown,

as

this

would

involve

future

claims

that

may

be

made

against

the

Fund.

Restricted

Securities.

The

Fund

may

invest

in

securities

that

are

subject

to

legal

or

contractual

restrictions

on

resale.

These

securities

generally

may

be

resold

in

transactions

exempt

from

registration

or

to

the

public

if

the

securities

are

registered.

Disposal

of

these

securities

may

involve

time-consuming

negotiations

and

expense,

and

prompt

sale

at

an

acceptable

price

may

be

difficult. 

Unfunded

Commitments.

As

of

September

30,

2019,

the

Fund

had

unfunded

commitments

relating

to

potential

future

investments

not

currently

held

as

reported

below

(amounts

in

thousands):

4.

Fair

Valuation

Fair

value

is

defined

as

the

price

that

the

Fund

would

receive

upon

selling

a

security

in

a

timely

transaction

to

an

independent

buyer

in

the

principal

or

most

advantageous

market

of

the

security

at

the

measurement

date.

In

determining

fair

value,

the

Fund

may

use

one

or

more

of

the

following

approaches:

market,

income

and/or

cost.

A

hierarchy

for

inputs

is

used

in

measuring

fair

value

that

maximizes

the

use

of

observable

inputs

and

minimizes

the

use

of

unobservable

inputs

by

requiring

that

the

most

observable

inputs

be

used

when

available.

Observable

inputs

are

inputs

that

reflect

the

assumptions

market

participants

would

use

in

pricing

the

asset

or

liability

developed

based

on

market

data

obtained

from

sources

independent

of

the

Fund.

Unobservable

inputs

are

inputs

that

reflect

the

Fund’s

own

estimates

about

the

estimates

market

participants

would

use

in

pricing

the

asset

or

liability

developed

based

on

the

best

information

available

in

the

circumstances.

The

three-tier

hierarchy

of

inputs

is

summarized

in

the

three

broad

levels

listed

below.

Level

1

–

Quoted

prices

are

available

in

active

markets

for

identical

securities

as

of

the

reporting

date.

The

type

of

securities

included

in

Level

1

includes

listed

equities

and

listed

derivatives.

Level

2

–

Other

significant

observable

inputs

(including

quoted

prices

for

similar

investments,

interest

rates,

prepayments

speeds,

credit

risk,

etc.).

Investments

which

are

generally

included

in

this

category

include

certain

foreign

equities,

corporate

bonds,

senior

floating

rate

interests,

municipal

bonds,

and

US

Government

and

Government

Agency

Obligations.

Level

3

–

Significant

unobservable

inputs

(including

the

Fund’s

assumptions

in

determining

the

fair

value

of

investments).

Investments

which

are

generally

included

in

this

category

include

certain

common

stocks,

corporate

bonds,

mortgage

backed

securities

or

senior

floating

rate

interests.

In

accordance

with

Accounting

Standards

Codification

820

–

Fair

Value

Measurement

,

the

Fund

has

elected

to

apply

the

practical

expedient

to

value

its

investments

in

private

investment

funds

at

their

respective

net

asset

value

each

calendar

quarter.

These

investments

are

excluded

from

the

fair

value

hierarchy.

The

availability

of

observable

inputs

can

vary

from

security

to

security

and

is

affected

by

a

wide

variety

of

factors,

including,

for

example,

the

type

of

security,

whether

the

security

is

new

and

not

yet

established

in

the

market

place,

and

other

characteristics

particular

to

the

transaction.

To

the

extent

that

valuation

is

based

on

models

or

inputs

that

are

less

observable

or

unobservable

in

the

market,

the

determination

Security

Name

Unfunded

Commitment

Brookfield

Senior

Mezzanine

Real

Estate

Finance

Fund

$5,000

Brookfield

Super-Core

Infrastructure

Partners

Fund

5,000

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

9

of

fair

value

requires

more

judgment.

Accordingly,

the

degree

of

judgment

exercised

by

the

Fund

in

determining

fair

value

is

greatest

for

instruments

categorized

in

Level

3.

In

certain

cases,

the

inputs

used

to

measure

fair

value

may

fall

into

different

levels

of

the

fair

value

hierarchy.

In

such

cases,

for

disclosure

purposes,

the

level

in

the

fair

value

hierarchy

within

which

the

fair

value

measurement

in

its

entirety

falls

is

determined

based

on

the

lowest

level

input

that

is

significant

to

the

fair

value

measurement

in

its

entirety.

Fair

value

is

a

market-based

measure

considered

from

the

perspective

of

a

market

participant

who

holds

the

asset

rather

than

an

entity

specific

measure.

Therefore,

even

when

market

assumptions

are

not

readily

available,

the

Fund’s

own

assumptions

are

set

to

reflect

those

that

market

participants

would

use

in

pricing

the

asset

or

liability

at

the

measurement

date.

The

Fund

uses

prices

and

inputs

that

are

current

as

of

the

measurement

date,

when

available.

Investments

which

are

included

in

the

Level

3

category

may

be

valued

using

quoted

prices

from

brokers

and

dealers

participating

in

the

market

for

these

investments.

These

investments

are

classified

as

Level

3

investments

due

to

the

lack

of

market

transparency

and

market

corroboration

to

support

these

quoted

prices.

Valuation

models

may

be

used

as

the

pricing

source

for

other

investments

classified

as

Level

3.

Valuation

models

rely

on

one

or

more

significant

unobservable

inputs

such

as

prepayment

rates,

probability

of

default,

or

loss

severity

in

the

event

of

default.

Significant

increases

in

any

of

those

inputs

in

isolation

would

result

in

a

significantly

lower

fair

value

measurement.

Benchmark

pricing

procedures

set

the

base

price

of

a

security

based

on

current

market

data.

The

base

price

may

be

a

broker-dealer

quote,

transaction

price,

or

internal

value

based

on

relevant

market

data.

The

fair

values

of

these

securities

are

dependent

on

economic,

political

and

other

considerations.

The

values

of

such

securities

may

be

affected

by

significant

changes

in

the

economic

conditions,

changes

in

government

policies,

and

other

factors

(e.g.,

natural

disasters,

accidents,

conflicts,

etc.).

Fair

value

of

these

investments

is

determined

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board.

The

Valuation

Committee

meets

at

least

monthly

and

reports

directly

to

the

Board.

A

pricing

group

(the

“Pricing

Group”),

who

reports

to

the

Valuation

Committee,

relies

on

the

established

pricing

policies

to

determine

fair

valuation.

Included

in

the

pricing

policies

is

an

overview

of

the

approved

valuation

approaches

established

for

each

asset

class.

The

Pricing

Group

will

consider

all

appropriate

information

available

when

determining

fair

valuation.

The

Pricing

Group

relies

on

externally

provided

valuation

inputs

to

determine

the

value

of

Level

3

securities.

Security

values

are

updated

as

new

information

becomes

available.

Valuation

data

and

changes

in

valuation

amounts

are

reviewed

on

a

daily

basis

based

on

specified

criteria

for

the

security,

asset

class,

and

other

factors.

In

addition,

valuation

data

is

periodically

compared

to

actual

transactions

executed

by

the

Fund

(i.e.,

purchases/sales)

and

differences

between

transaction

prices

and

prior

period

valuation

data

are

investigated

based

on

specified

tolerances.

The

following

is

a

summary

of

the

inputs

used

as

of

September

30,

2019

in

valuing

the

Fund’s

securities

carried

at

value

(amounts

in

thousands):

Fund

Level

1

-

Quoted

Prices

Level

2

-

Other

Significant

Observable

Inputs

Level

3

-

Significant

Unobservable

Inputs

Totals

(Level

1,2,3)

Principal

Diversified

Select

Real

Asset

Fund

Bonds*

$

—

$

39,912

$

—

$

39,912

Common

Stocks

Basic

Materials

3,288

4,885

—

8,173

Communications

—

93

—

93

Consumer,

Cyclical

—

74

—

74

Consumer,

Non-cyclical

1,843

1,516

—

3,359

Energy

16,985

2,814

—

19,799

Financial

9,708

6,381

—

16,089

Industrial

5,412

906

—

6,318

Technology

188

—

—

188

Utilities

6,575

7,391

—

13,966

Investment

Companies

6,077

—

—

6,077

Senior

Floating

Rate

Interests*

—

1,309

—

1,309

Total

$

50,076

$

65,281

$

—

$

115,357

4.

Fair

Valuation

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

10

*For

additional

detail

regarding

sector

classifications,

please

see

the

schedule

of

investments.

5.

Management

Agreement

and

Transactions

with

Affiliates

Management

Services.

The

Fund

has

agreed

to

pay

investment

advisory

and

management

fees

to

the

Manager

computed

at

an

annual

percentage

rate

of

the

Fund’s

average

daily

net

assets.

A

portion

of

the

management

fee

is

paid

by

the

Manager

to

the

sub-advisors

of

the

Fund,

which

may

be

affiliates

of

the

Manager.

The

annual

rate

paid

by

the

Fund

is

based

upon

the

aggregate

average

daily

net

assets

(“aggregate

net

assets”)

of

the

Fund.

The

investment

advisory

and

management

fee

schedule

for

the

Fund

is

1.70%

of

aggregate

net

assets

up

to

$1.5

billion

and

1.65%

of

aggregate

net

assets

over

$1.5

billion.

The

Manager

has

agreed

to

waive

0.13%

of

the

Fund’s

investment

advisory

and

management

fees.

It

is

expected

that

the

fee

waiver

will

continue

through

the

period

ending

July

31,

2020;

however,

the

Fund

and

the

Manager,

the

parties

to

the

agreement

may

mutually

agree

to

terminate

the

fee

waiver

prior

to

the

end

of

the

period.

The

Manager

has

contractually

agreed

to

limit

the

Fund’s

expenses

(excluding

interest

expense,

expenses

related

to

fund

investments,

acquired

fund

fees

and

expenses,

and

other

extraordinary

expenses).

The

reductions

and

reimbursements

are

in

amounts

that

maintain

total

operating

expenses

at

or

below

certain

limits.

It

is

expected

that

the

fee

waiver

will

continue

through

the

period

ending

July

31,

2020;

however,

the

Fund

and

the

Manager,

the

parties

to

the

agreement

may

mutually

agree

to

terminate

the

fee

waiver

prior

to

the

end

of

the

period.

The

limits

are

expressed

as

a

percentage

of

average

daily

net

assets

attributable

to

each

class

of

shares

on

an

annualized

basis

during

the

reporting

period.

The

operating

expense

limits

are

as

follows:

Amounts

owed

to

the

Fund

under

the

terms

of

the

expense

limitation

agreement

are

reflected

in

the

statement

of

assets

and

liabilities

as

expense

reimbursement

from

Manager

and

are

settled

periodically.

Distribution

Fees.

The

Class

A

shares

of

the

Fund

bear

distribution

fees.

The

fee

is

computed

at

an

annual

rate

of

the

average

daily

net

assets

attributable

to

each

class

of

the

Fund.

Distribution

fees

are

paid

to

the

Distributor

of

the

Fund.

A

portion

of

the

distribution

fees

may

be

paid

to

other

selling

dealers

for

providing

certain

services.

The

annual

rate

is

0.25%

for

Class

A.

Chief

Compliance

Officer

Expenses.

The

Fund

pays

certain

expenses

associated

with

the

Chief

Compliance

Officer

(“CCO”).

This

expense

is

allocated

based

on

the

relative

net

assets

of

each

fund

in

the

Manager’s

fund

complex

and

is

shown

on

the

statement

of

operations.

For

the

period

ending

September

30,

2019,

the

Fund’s

CCO

expenses

were

less

than

$500.

Sales

Charges.

The

Distributor

retains

sales

charges

on

sales

of

Class

A

shares

based

on

declining

rates

which

begin

at

5.75%.

For

the

period

ended

September

30,

2019,

there

were

no

sales

charges

retained

by

the

Distributor.

6.

Investment

Transactions

For

the

period

ended

September

30,

2019,

the

cost

of

investment

securities

purchased

and

proceeds

from

investment

securities

sold

(not

including

short-term

investments

and

return

of

capital)

by

the

Fund

were

as

follows

(amounts

in

thousands):

Fund

Level

1

-

Quoted

Prices

Level

2

-

Other

Significant

Observable

Inputs

Level

3

-

Significant

Unobservable

Inputs

Totals

(Level

1,2,3)

Principal

Diversified

Select

Real

Asset

Fund

Investments

Using

NAV

as

a

practical

expedient

Private

Investment

Funds

11,751

Total

investments

in

securities

$

127,108

Share

Class

Operating

Expense

Limit

Class

A

2.07%

Class

Y

1.57%

Institutional

1.77%

Purchases

Sales

Principal

Diversified

Select

Real

Asset

Fund

$

1

3

2,873

$

13,248

4.

Fair

Valuation

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

11

7.

Repurchase

Offers

The

Fund

has

a

fundamental

policy

to

make

quarterly

repurchase

offers

for

no

less

than

5%

and

not

more

than

25%

of

its

shares

at

a

price

equal

to

net

asset

value

per

share,

unless

suspended

or

postponed

in

accordance

with

regulatory

requirements,

and

that

each

quarterly

repurchase

pricing

share

occur

on

the

Repurchase

Price

Date.

The

Fund

will

repurchase

shares

that

are

tendered

by

a

specific

date

(the

“Repurchase

Request

Deadline”),

which

will

be

established

by

the

Board

in

accordance

with

Rule

23c-3,

as

amended

from

time

to

time.

Rule

23c-3

requires

the

Repurchase

Request

Deadline

to

be

no

less

than

21

and

no

more

than

42

days

after

the

Fund

sends

notification

to

shareholders

of

the

repurchase

offer.

There

will

be

a

maximum

14

calendar

day

period,

or

the

next

business

day

if

the

14th

calendar

day

is

not

a

business

day,

between

the

Repurchase

Request

Deadline

and

the

Repurchase

Price

Date.

During

the

period

ended

September

30,

2019,

the

Fund

completed

no

quarterly

repurchase

offers.

8.

Federal

Tax

Information

Federal

Income

Tax

Basis.

At

September

30,

2019,

the

net

federal

income

tax

unrealized

appreciation

(depreciation)

and

federal

tax

cost

of

investments

held

by

the

Fund

were

as

follows

(amounts

in

thousands):

9.

Subsequent

Events

Management

has

evaluated

events

and

transactions

that

have

occurred

through

the

date

the

financial

statements

were

issued

that

would

merit

recognition

or

disclosure

in

the

financial

statements.

There

were

no

items

requiring

adjustment

of

the

financial

statements

or

additional

disclosure.

Unrealized

Appreciation

Unrealized

(Depreciation)

Net

Unrealized

Appreciation/

(Depreciation)

Cost

for

Federal

Income

Tax

Purposes

Principal

Diversified

Select

Real

Asset

Fund

$

3,222

$

(1,469)

$

1,753

$

125,35

5

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

See

accompanying

notes.

12

INVESTMENT

COMPANIES

-

4.78%

Shares

Held

Value

(000's)

Exchange-Traded

Funds

-

0.17%

SPDR

S&P

Global

Natural

Resources

ETF

5,112‌

$

221‌

Money

Market

Funds

-

4.61%

Morgan

Stanley

Institutional

Liquidity

Funds

-

Government

Portfolio

1.97

%

(a)

5,856,418‌

5,856‌

TOTAL

INVESTMENT

COMPANIES

$

6,077‌

PRIVATE

INVESTMENT

FUNDS

-

9.25%

Shares

Held

Value

(000's)

Diversified

Financial

Services

-

2.95%

Sound

Point

CLO

Fund,

LP

(

b)

N/A‌

3,751‌

Forest

Products

&

Paper

-

6.30%

BTG

Pactual

Open

Ended

Core

US

Timberland

Fund,

LP

(b)

6,888‌

8,000‌

TOTAL

PRIVATE

INVESTMENT

FUNDS

$

11,751‌

COMMON

STOCKS

-

53.56%

Shares

Held

Value

(000's)

Agriculture

-

0.27%

Archer-Daniels-Midland

Co

4,282‌

176‌

Bunge

Ltd

3,051‌

173‌

$

349‌

Biotechnology

-

0.12%

Corteva

Inc

5,557‌

156‌

Chemicals

-

1.48%

CF

Industries

Holdings

Inc

3,381‌

166‌

Ecolab

Inc

1,805‌

357‌

FMC

Corp

1,887‌

165‌

Israel

Chemicals

Ltd

36,096‌

181‌

K+S

AG

10,301‌

143‌

Mosaic

Co/The

8,861‌

182‌

Nutrien

Ltd

3,229‌

161‌

OCI

NV

(c)

7,423‌

175‌

Sociedad

Quimica

y

Minera

de

Chile

SA

ADR

6,613‌

184‌

Yara

International

ASA

3,754‌

162‌

$

1,876‌

Commercial

Services

-

1.07%

Atlantia

SpA

14,811‌

358‌

China

Merchants

Port

Holdings

Co

Ltd

296,000‌

445‌

Transurban

Group

55,661‌

553‌

$

1,356‌

Consumer

Products

-

0.13%

Avery

Dennison

Corp

1,410‌

160‌

Diversified

Financial

Services

-

0.18%

Centuria

Capital

Group

149,635‌

222‌

Electric

-

4.80%

Atlantica

Yield

PLC

23,741‌

572‌

AusNet

Services

305,438‌

374‌

Clearway

Energy

Inc

-

Class

C

16,221‌

296‌

Dominion

Energy

Inc

7,983‌

647‌

EDP

-

Energias

de

Portugal

SA

116,378‌

452‌

Emera

Inc

15,769‌

692‌

Hydro

One

Ltd

(d)

42,313‌

782‌

Red

Electrica

Corp

SA

38,455‌

779‌

Spark

Infrastructure

Group

312,657‌

456‌

SSE

PLC

45,880‌

702‌

Transmissora

Alianca

de

Energia

Eletrica

SA

49,500‌

342‌

$

6,094‌

Electronics

-

0.44%

Badger

Meter

Inc

8,343‌

448‌

Watts

Water

Technologies

Inc

1,247‌

117‌

$

565‌

Energy

-

Alternate

Sources

-

0.56%

NextEra

Energy

Partners

LP

5,698‌

301‌

Pattern

Energy

Group

Inc

6,609‌

178‌

TerraForm

Power

Inc

13,042‌

238‌

$

717‌

Engineering

&

Construction

-

0.29%

Grupo

Aeroportuario

del

Pacifico

SAB

de

CV

22,000‌

212‌

Sydney

Airport

29,630‌

161‌

$

373‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Environmental

Control

-

2.07%

AquaVenture

Holdings

Ltd

(c)

26,187‌

$

509‌

China

Water

Affairs

Group

Ltd

428,000‌

332‌

Evoqua

Water

Technologies

Corp

(c)

22,381‌

381‌

Pentair

PLC

15,894‌

601‌

Tetra

Tech

Inc

9,301‌

807‌

$

2,630‌

Food

-

0.26%

Ingredion

Inc

2,108‌

172‌

Wilmar

International

Ltd

59,300‌

160‌

$

332‌

Forest

Products

&

Paper

-

1.07%

International

Paper

Co

4,167‌

174‌

Mondi

PLC

8,378‌

161‌

Nine

Dragons

Paper

Holdings

Ltd

215,000‌

181‌

Oji

Holdings

Corp

34,900‌

164‌

Smurfit

Kappa

Group

PLC

5,273‌

157‌

Stora

Enso

Oyj

14,550‌

175‌

Svenska

Cellulosa

AB

SCA

18,876‌

168‌

UPM-

Kymmene

Oyj

6,034‌

178‌

$

1,358‌

Gas

-

0.97%

National

Grid

PLC

55,449‌

600‌

Snam

SpA

124,207‌

628‌

$

1,228‌

Healthcare

-

Products

-

0.79%

Danaher

Corp

6,969‌

1,006‌

Iron

&

Steel

-

1.33%

ArcelorMittal

11,302‌

159‌

Evraz

PLC

26,961‌

155‌

Fortescue

Metals

Group

Ltd

30,233‌

180‌

JFE

Holdings

Inc

13,900‌

168‌

Nippon

Steel

Corp

11,600‌

163‌

Novolipetsk

Steel

PJSC

7,333‌

159‌

Nucor

Corp

3,327‌

170‌

POSCO

935‌

177‌

thyssenkrupp

AG

13,313‌

184‌

Vale

SA

ADR

(c)

14,814‌

170‌

$

1,685‌

Lodging

-

0.06%

City

Developments

Ltd

10,400‌

74‌

Machinery

-

Diversified

-

1.49%

Ebara

Corp

8,900‌

239‌

IDEX

Corp

2,976‌

488‌

Mueller

Water

Products

Inc

-

Class

A

11,083‌

125‌

Xylem

Inc/NY

13,152‌

1,047‌

$

1,899‌

Mining

-

2.56%

Agnico

Eagle

Mines

Ltd

2,601‌

139‌

Anglo

American

PLC

7,541‌

173‌

Antofagasta

PLC

15,451‌

170‌

Barrick

Gold

Corp

8,389‌

145‌

BHP

Group

Ltd

6,664‌

165‌

Franco-Nevada

Corp

1,664‌

152‌

Freeport-McMoRan

Inc

17,732‌

170‌

Glencore

PLC

(c)

56,471‌

170‌

Kirkland

Lake

Gold

Ltd

3,344‌

150‌

Korea

Zinc

Co

Ltd

453‌

169‌

MMC

Norilsk

Nickel

PJSC

ADR

6,720‌

172‌

Newcrest

Mining

Ltd

6,537‌

151‌

Newmont

Goldcorp

Corp

4,085‌

155‌

Norsk

Hydro

ASA

51,454‌

181‌

Rio

Tinto

Ltd

2,761‌

173‌

South32

Ltd

91,617‌

162‌

Southern

Copper

Corp

5,156‌

176‌

Sumitomo

Metal

Mining

Co

Ltd

5,800‌

181‌

Teck

Resources

Ltd

9,551‌

155‌

Wheaton

Precious

Metals

Corp

5,529‌

145‌

$

3,254‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

See

accompanying

notes.

13

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Oil

&

Gas

-

3.78%

BP

PLC

26,751‌

$

169‌

Canadian

Natural

Resources

Ltd

6,807‌

181‌

Chevron

Corp

1,384‌

164‌

CNOOC

Ltd

109,000‌

167‌

ConocoPhillips

3,123‌

178‌

Ecopetrol

SA

ADR

10,320‌

176‌

Eni

SpA

10,817‌

165‌

EOG

Resources

Inc

2,196‌

163‌

Equinor

ASA

9,524‌

180‌

Exxon

Mobil

Corp

2,379‌

168‌

Gazprom

PJSC

ADR

23,617‌

163‌

Imperial

Oil

Ltd

6,628‌

173‌

LUKOIL

PJSC

ADR

2,028‌

168‌

Marathon

Petroleum

Corp

3,311‌

201‌

Neste

Oyj

5,166‌

171‌

Novatek

PJSC

840‌

170‌

Occidental

Petroleum

Corp

3,747‌

167‌

Petroleo

Brasileiro

SA

ADR

12,026‌

174‌

Phillips

66

1,652‌

169‌

Pioneer

Natural

Resources

Co

1,320‌

166‌

Repsol

SA

11,193‌

175‌

Rosneft

Oil

Co

PJSC

26,741‌

171‌

Royal

Dutch

Shell

PLC

-

A

Shares

5,880‌

172‌

Suncor

Energy

Inc

5,560‌

175‌

Tatneft

PJSC

ADR

2,451‌

156‌

TOTAL

SA

3,260‌

170‌

Valero

Energy

Corp

2,164‌

185‌

Woodside

Petroleum

Ltd

7,527‌

164‌

$

4,801‌

Oil

&

Gas

Services

-

0.26%

Halliburton

Co

8,649‌

163‌

Schlumberger

Ltd

5,024‌

172‌

$

335‌

Packaging

&

Containers

-

0.67%

Amcor

PLC

16,594‌

162‌

DS

Smith

PLC

39,355‌

174‌

Packaging

Corp

of

America

1,620‌

172‌

Sealed

Air

Corp

4,092‌

170‌

Westrock

Co

4,767‌

173‌

$

851‌

Pipelines

-

10.98%

AltaGas

Ltd

20,217‌

297‌

APA

Group

58,506‌

453‌

Cheniere

Energy

Inc

(c)

15,092‌

952‌

Cheniere

Energy

Partners

LP

5,232‌

238‌

Enbridge

Inc

25,721‌

903‌

Energy

Transfer

LP

82,519‌

1,079‌

Enterprise

Products

Partners

LP

39,389‌

1,126‌

EQM

Midstream

Partners

LP

10,777‌

352‌

Gibson

Energy

Inc

17,278‌

297‌

Kinder

Morgan

Inc/DE

44,893‌

925‌

Magellan

Midstream

Partners

LP

16,162‌

1,071‌

MPLX

LP

39,197‌

1,098‌

ONEOK

Inc

14,340‌

1,057‌

Pembina

Pipeline

Corp

6,175‌

229‌

Phillips

66

Partners

LP

17,161‌

972‌

Plains

All

American

Pipeline

LP

52,280‌

1,085‌

Targa

Resources

Corp

9,685‌

389‌

Williams

Cos

Inc/The

59,193‌

1,423‌

$

13,946‌

Real

Estate

-

1.48%

Aroundtown

SA

23,169‌

189‌

Castellum

AB

4,426‌

95‌

Entra

ASA

(d)

4,504‌

71‌

Fabege

AB

4,380‌

72‌

LEG

Immobilien

AG

1,087‌

124‌

Midea

Real

Estate

Holding

Ltd

(d)

28,600‌

69‌

Mitsubishi

Estate

Co

Ltd

13,200‌

255‌

Mitsui

Fudosan

Co

Ltd

2,400‌

60‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Real

Estate

(continued)

New

World

Development

Co

Ltd

87,000‌

$

113‌

Sun

Hung

Kai

Properties

Ltd

15,500‌

223‌

TLG

Immobilien

AG

2,757‌

75‌

Tokyo

Tatemono

Co

Ltd

7,500‌

106‌

Vonovia

SE

7,120‌

361‌

Wihlborgs

Fastigheter

AB

4,346‌

71‌

$

1,884‌

REITs

-

11.00%

AIMS

APAC

REIT

40,700‌

42‌

Alexandria

Real

Estate

Equities

Inc

1,538‌

237‌

Allied

Properties

Real

Estate

Investment

Trust

3,400‌

137‌

Altarea

SCA

219‌

45‌

American

Homes

4

Rent

8,634‌

224‌

Americold

Realty

Trust

4,059‌

150‌

Apartment

Investment

&

Management

Co

3,379‌

176‌

Arena

REIT

82,655‌

160‌

Big

Yellow

Group

PLC

13,179‌

168‌

Centuria

Industrial

REIT

20,500‌

45‌

Centuria

Metropolitan

REIT

23,205‌

48‌

Centuria

Metropolitan

REIT

(c)

23,099‌

47‌

CFE

Capital

S

de

RL

de

CV

311,100‌

371‌

Crown

Castle

International

Corp

3,897‌

542‌

CubeSmart

7,603‌

265‌

Daiwa

Office

Investment

Corp

16‌

124‌

Dexus

13,775‌

111‌

Dream

Industrial

Real

Estate

Investment

Trust

35,800‌

357‌

Duke

Realty

Corp

5,037‌

171‌

EPR

Properties

4,670‌

359‌

Equinix

Inc

523‌

302‌

Essential

Properties

Realty

Trust

Inc

6,745‌

155‌

Essex

Property

Trust

Inc

824‌

269‌

Extra

Space

Storage

Inc

1,811‌

212‌

Gecina

SA

1,063‌

167‌

Goodman

Group

30,207‌

289‌

HCP

Inc

8,571‌

305‌

Healthcare

Realty

Trust

Inc

4,690‌

157‌

Healthcare

Trust

of

America

Inc

10,535‌

310‌

Host

Hotels

&

Resorts

Inc

4,609‌

80‌

Independence

Realty

Trust

Inc

25,716‌

368‌

Industrial

&

Infrastructure

Fund

Investment

Corp

66‌

95‌

Industrial

Logistics

Properties

Trust

10,261‌

218‌

Inmobiliaria

Colonial

Socimi

SA

6,870‌

83‌

Investec

Australia

Property

Fund

(c)

33,578‌

35‌

Invitation

Homes

Inc

16,648‌

493‌

Japan

Hotel

REIT

Investment

Corp

326‌

243‌

Japan

Retail

Fund

Investment

Corp

61‌

129‌

Kilroy

Realty

Corp

1,762‌

137‌

Klepierre

SA

2,695‌

92‌

Lendlease

Global

Commercial

REIT

(c),(e)

55,500‌

35‌

Link

REIT

26,000‌

287‌

Macquarie

Mexico

Real

Estate

Management

SA

de

CV

(d)

67,100‌

85‌

MCUBS

MidCity

Investment

Corp

184‌

202‌

Merlin

Properties

Socimi

SA

16,998‌

237‌

Minto

Apartment

Real

Estate

Investment

Trust

5,800‌

99‌

NewRiver

REIT

PLC

33,403‌

80‌

NSI

NV

3,251‌

140‌

Physicians

Realty

Trust

14,738‌

262‌

PLA

Administradora

Industrial

S

de

RL

de

CV

79,900‌

123‌

Prologis

Inc

6,321‌

539‌

Prologis

Property

Mexico

SA

de

CV

31,100‌

65‌

Rayonier

Inc

6,080‌

171‌

Rexford

Industrial

Realty

Inc

2,955‌

130‌

Sabana

Shari'ah

Compliant

Industrial

Real

Estate

Investment

Trust

520,000‌

171‌

Sabra

Health

Care

REIT

Inc

15,426‌

354‌

Segro

PLC

39,591‌

395‌

Sekisui

House

Reit

Inc

329‌

295‌

Simon

Property

Group

Inc

557‌

87‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

See

accompanying

notes.

14

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

REITs

(continued)

Stockland

44,784‌

$

138‌

STORE

Capital

Corp

7,719‌

289‌

Summit

Industrial

Income

REIT

828‌

8‌

Sun

Communities

Inc

2,387‌

354‌

Sunstone

Hotel

Investors

Inc

6,160‌

85‌

Taubman

Centers

Inc

1,025‌

42‌

Terreno

Realty

Corp

1,700‌

87‌

UNITE

Group

PLC/The

6,859‌

92‌

United

Urban

Investment

Corp

146‌

280‌

VICI

Properties

Inc

9,198‌

208‌

Welltower

Inc

4,808‌

436‌

Weyerhaeuser

Co

10,429‌

289‌

$

13,983‌

Software

-

0.15%

InterXion

Holding

NV

(c)

2,311‌

188‌

Telecommunications

-

0.07%

Eutelsat

Communications

SA

5,016‌

93‌

Water

-

5.23%

Aguas

Andinas

SA

1,064,962‌

582‌

American

Water

Works

Co

Inc

9,328‌

1,159‌

Aqua

America

Inc

26,028‌

1,167‌

Guangdong

Investment

Ltd

222,000‌

435‌

Middlesex

Water

Co

4,669‌

303‌

Pennon

Group

PLC

21,834‌

222‌

SJW

Group

4,165‌

284‌

Suez

50,134‌

788‌

United

Utilities

Group

PLC

63,356‌

643‌

Veolia

Environnement

SA

28,804‌

730‌

York

Water

Co/The

7,576‌

331‌

$

6,644‌

TOTAL

COMMON

STOCKS

$

68,059‌

BONDS

-

31.41%

Principal

Amount

(000's)

Value

(000's)

Commercial

Mortgage

Backed

Securities

-

23.52%

Banc

of

America

Commercial

Mortgage

Trust

2015-UBS7

3.17%,

09/15/2048

$

1,000‌

$

833‌

BANK

2018-BNK13

3.00%,

08/15/2061

(d)

2,000‌

1,791‌

BANK

2018-BNK15

4.80%,

11/15/2061

(f)

2,000‌

2,234‌

BANK

2019-BNK20

0.84%,

09/15/2061

(f)

15,200‌

1,055‌

BENCHMARK

2018-B6

Mortgage

Trust

3.27%,

10/10/2051

(d),(f)

1,000‌

940‌

3.27%,

10/10/2051

(d),(f)

550‌

474‌

Benchmark

2019-B12

Mortgage

Trust

3.00%,

08/15/2052

(d)

2,391‌

2,215‌

Cantor

Commercial

Real

Estate

Lending

2019-CF1

4.35%,

05/15/2052

(f)

1,000‌

1,084‌

CD

2017-CD4

Mortgage

Trust

4.35%,

05/10/2050

(f)

2,000‌

2,147‌

Citigroup

Commercial

Mortgage

Trust

2018-C6

5.24%,

11/10/2051

(f)

1,000‌

1,154‌

Citigroup

Commercial

Mortgage

Trust

2019-GC41

3.00%,

08/10/2056

(d)

1,750‌

1,619‌

3.00%,

08/10/2056

(d)

1,400‌

991‌

Csail

2015-C2

Commercial

Mortgage

Trust

3.23%,

06/15/2057

(d)

500‌

384‌

4.34%,

06/15/2057

(f)

500‌

446‌

DBGS

2018-5BP

Mortgage

Trust

2.67%,

06/15/2033

(d)

2,000‌

1,995‌

1.00

x

1

Month

USD

LIBOR

+

0.65%

GS

Mortgage

Securities

Trust

2013-GCJ14

4.91%,

08/10/2046

(d),(f)

539‌

551‌

BONDS

(continued)

Principal

Amount

(000’s)

Value

(000’s)

Commercial

Mortgage

Backed

Securities

(continued)

GS

Mortgage

Securities

Trust

2019-GC40

1.30%,

07/10/2052

(d),(f),(g)

$

9,860‌

$

998‌

3.00%,

07/10/2052

(d)

2,000‌

1,856‌

GS

Mortgage

Securities

Trust

2019-GC42

0.94%,

09/01/2052

(d),(f)

3,246‌

266‌

2.80%,

09/01/2052

(d)

1,500‌

1,343‌

JPMBB

Commercial

Mortgage

Securities

Trust

2014-C21

4.81%,

08/15/2047

(d),(f)

1,000‌

944‌

JPMBB

Commercial

Mortgage

Securities

Trust

2015-C28

3.86%,

10/15/2048

(d),(e),(f)

500‌

105‌

JPMBB

Commercial

Mortgage

Securities

Trust

2015-C29

3.79%,

05/15/2048

(f)

500‌

432‌

JPMCC

Commercial

Mortgage

Securities

Trust

2019-COR4

3.00%,

03/10/2052

(d),(f)

2,000‌

1,904‌

Morgan

Stanley

Bank

of

America

Merrill

Lynch

Trust

2015-C25

4.68%,

10/15/2048

(d),(f)

1,000‌

878‌

4.68%,

10/15/2048

(d),(f)

500‌

400‌

WFRBS

Commercial

Mortgage

Trust

2014-C20

3.99%,

05/15/2047

(d)

500‌

402‌

WFRBS

Commercial

Mortgage

Trust

2014-C21

3.50%,

08/15/2047

(d)

500‌

439‌

$

29,880‌

Consumer

Products

-

0.24%

Kronos

Acquisition

Holdings

Inc

9.00%,

08/15/2023

(d)

350‌

309‌

Healthcare

-

Services

-

0.57%

Hadrian

Merger

Sub

Inc

8.50%,

05/01/2026

(d)

750‌

728‌

Insurance

-

0.73%

Acrisure

LLC

/

Acrisure

Finance

Inc

7.00%,

11/15/2025

(d)

207‌

193‌

10.13%,

08/01/2026

(d)

700‌

731‌

$

924‌

Media

-

0.98%

Cengage

Learning

Inc

9.50%,

06/15/2024

(d)

700‌

640‌

McGraw-Hill

Global

Education

Holdings

LLC

/

McGraw-Hill

Global

Education

Finance

7.88%,

05/15/2024

(d)

700‌

606‌

$

1,246‌

Miscellaneous

Manufacturers

-

0.48%

FXI

Holdings

Inc

7.88%,

11/01/2024

(d)

700‌

609‌

Mortgage

Backed

Securities

-

2.30%

Freddie

Mac

STACR

2019-HQA3

9.56%,

09/25/2049

(d)

500‌

511‌

1.00

x

1

Month

USD

LIBOR

+

7.50%

Freddie

Mac

STACR

Trust

2019-DNA2

12.52%,

03/25/2049

(d)

900‌

1,054‌

1.00

x

1

Month

USD

LIBOR

+

10.50%

Freddie

Mac

STACR

Trust

2019-DNA3

10.17%,

07/25/2049

(d)

250‌

281‌

1.00

x

1

Month

USD

LIBOR

+

8.15%

Freddie

Mac

STACR

Trust

2019-HQA2

13.27%,

04/25/2049

(d)

900‌

1,080‌

1.00

x

1

Month

USD

LIBOR

+

11.25%

$

2,926‌

Other

Asset

Backed

Securities

-

0.37%

Oaktree

CLO

2019-4

Ltd

0.00%,

10/20/2032

(c),(d),(h)

500‌

477‌

1.00

x

3

Month

USD

LIBOR

+

7.23%

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

See

accompanying

notes.

15

BONDS

(continued)

Principal

Amount

(000’s)

Value

(000’s)

Retail

-

0.57%

Staples

Inc

10.75%,

04/15/2027

(d)

$

700‌

$

719‌

Software

-

0.55%

Granite

Merger

Sub

2

Inc

11.00%,

07/15/2027

(d)

700‌

697‌

Telecommunications

-

1.10%

Consolidated

Communications

Inc

6.50%,

10/01/2022

700‌

648‌

Gogo

Intermediate

Holdings

LLC

/

Gogo

Finance

Co

Inc

9.88%,

05/01/2024

(d)

700‌

749‌

$

1,397‌

TOTAL

BONDS

$

39,912‌

SENIOR

FLOATING

RATE

INTERESTS

-

1.03%

Principal

Amount

(000's)

Value

(000's)

Automobile

Parts

&

Equipment

-

0.54%

GC

EOS

Buyer

Inc

10.76%,

06/29/2026

(

i

)

$

700‌

$

685‌

US

LIBOR

+

2.75%

Telecommunications

-

0.49%

West

Corp

6.11%,

10/10/2024

(

i

)

700‌

624‌

US

LIBOR

+

1.75%

TOTAL

SENIOR

FLOATING

RATE

INTERESTS

$

1,309‌

Total

Investments

$

127,108‌

Other

Assets

and

Liabilities

-  (0.03)%

(43‌)

TOTAL

NET

ASSETS

-

100.00%

$

127,065‌

(a)

Current

yield

shown

is

as

of

period

end.

(b)

Private

Investment

Funds

have

a

quarterly

redemption

frequency

and

are

considered

restricted

securities.

Please

see

Private

Investment

Funds

sub-

schedule

for

additional

information.

(c)

Non-income

producing

security

(d)

Security

exempt

from

registration

under

Rule

144A

of

the

Securities

Act

of

1933.

These

securities

may

be

resold

in

transactions

exempt

from

registration,

normally

to

qualified

institutional

buyers.

At

the

end

of

the

period,

the

value

of

these

securities

totaled

$30,886

or

24.31%

of

net

assets.

(e)

Fair

value

of

these

investments

is

determined

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board

of

Directors.

Certain

inputs

used

in

the

valuation

may

be

unobservable;

however,

each

security

is

evaluated

individually

for

purposes

of

ASC

820

which

results

in

not

all

securities

being

identified

as

Level

3

of

the

fair

value

hierarchy.

At

the

end

of

the

period,

the

fair

value

of

these

securities

totaled

$140

or

0.11%

of

net

assets.

(f)

Certain

variable

rate

securities

are

not

based

on

a

published

reference

rate

and

spread

but

are

determined

by

the

issuer

or

agent

and

are

based

on

current

market

conditions.  These

securities

do

not

indicate

a

reference

rate

and

spread

in

their

description.

Rate

shown

is

the

rate

in

effect

as

of

period

end.

(g)

Security

is

an

Interest

Only

Strip.

(h)

Security

purchased

on

a

when-issued

basis.

(

i

)

Rate

information

disclosed

is

based

on

an

average

weighted

rate

of

the

underlying

tranches

as

of

period

end.

Portfolio

Summary  (unaudited)

Sector

Percent

Mortgage

Securities

25.82‌%

Financial

16.34‌%

Energy

15.58‌%

Industrial

11.74‌%

Utilities

11.00‌%

Basic

Materials

6.44‌%

Money

Market

Funds

4.61‌%

Consumer,

Non-cyclical

3.45‌%

Communications

2.64‌%

Consumer,

Cyclical

1.17‌%

Technology

0.70‌%

Asset

Backed

Securities

0.37‌%

Investment

Companies

0.17‌%

Other

Assets

and

Liabilities

(0.03‌)%

TOTAL

NET

ASSETS

100.00%

Private

Investment

Funds

Security

Name

Acquisition

Date

Cost

Value

Redemption

Notice

(days)

Percent

of

Net

Assets

BTG

Pactual

Open

Ended

Core

US

Timberland

Fund,

LP

(a)

07/01/2019

$

8,000‌

$

8,000‌

90

6.30%

Sound

Point

CLO

Fund,

LP

(b)

08/01/2019

4,000‌

3,751‌

60

2.95%

Total

$

11,751‌

9.25%

Amounts

in

thousands.

(a)

Redemptions

are

subject

to

a

two-year

holding

period

from

the

acquisition

date.

(b)

Redemptions

are

subject

to

a

one-year

holding

period

from

the

acquisition

date.

Glossary

to

the

Schedule

of

Investments

September

30,

2019

(unaudited)

See

accompanying

notes.

16

Currency

Abbreviations

USD/$

United

States

Dollar

See

accompanying

notes.

18

Financial

Highlights

Principal

Diversified

Select

Real

Asset

Fund

(unaudited)

Selected

data

for

a

share

of

Capital

Stock

outstanding

throughout

each

year

ended

March

31

(except

as

noted):

Net

Asset

Value,

Beginning

of

Period

Net

Investment

Income

(Loss)(a)

Net

Realized

and

Unrealized

Gain

(Loss)

on

Investments

Total

From

Investment

Operations

Net

Asset

Value,

End

of

Period

PRINCIPAL

DIVERSIFIED

SELECT

REAL

ASSET

FUND

Class

A

shares

2019(b)

$

25.00‌

$

0.08‌

$

0.27‌

$

0.35‌

$

25.35‌

Class

Y

shares

2019(b)

25.00‌

0.12‌

0.26‌

0.38‌

25.38‌

Institutional

shares

2019(b)

25.00‌

0.10‌

0.27‌

0.37‌

25.37‌

See

accompanying

notes.

19

Financial

Highlights

(Continued)

Principal

Diversified

Select

Real

Asset

Fund

(unaudited)

Total

Return

Net

Assets,

End

of

Period

(in

thousands)

Ratio

of

Expenses

to

Average

Net

Assets

Ratio

of

Net

Investment

Income

to

Average

Net

Assets

Portfolio

Turnover

Rate

Average

Commission

Rate

Paid

1.40‌

%

(c),(d)

$

253‌

2.07‌%

 (e

),(

f)

1.25‌

%

(e)

66.2‌

%

(e)

$0.0041‌

1.52‌

(c)

$

126,558‌

1.5

7‌

(e

),(

f)

1.82‌

(e)

66.2‌

(e)

$0.0041‌

1.48‌

(c)

254‌

1.7

7‌

(e)

,(f)

1.55‌

(e)

66.2‌

(e)

$0.0041‌

(a)

Calculated

based

on

average

shares

outstanding

during

the

period.

(b)

Period

from

June

25,

2019,

date

operations

commenced,

through

September

30,

2019.

(c)

Total

return

amounts

have

not

been

annualized.

(d)

Total

return

is

calculated

without

the

front-end

sales

charge

or

contingent

deferred

sales

charge,

if

applicable.

(e)

Computed

on

an

annualized

basis.

(f)

Reflects

Manager's

contractual

expense

limit.

Shareholder

Expense

Example

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2019

(unaudited)

20

As

a

shareholder

of

Principal

Diversified

Select

Real

Asset

Fund,

you

incur

two

types

of

costs:

(1)

transaction

costs,

including

sales

charges

on

purchase

payments

and

contingent

deferred

sales

charges;

and

(2)

ongoing

costs,

including

management

fees;

distribution

fees;

and

other

fund

expenses.

In

addition

to

the

expenses

the

Fund

bear

directly,

the

Fund

may

indirectly

bear

its

pro

rata

share

of

the

expenses

incurred

by

the

investment

companies

in

which

the

Fund

invests.

This

Example

is

intended

to

help

you

understand

your

ongoing

costs

(in

dollars)

of

investing

in

Principal

Diversified

Select

Real

Asset

Fund

and

to

compare

these

costs

with

the

ongoing

costs

of

investing

in

other

mutual

funds.

The

Example

is

based

on

an

investment

of

$1,000

invested

at

the

beginning

of

the

period

and

held

for

the

entire

period

(April

1,

2019

to

September

30,

2019),

unless

otherwise

noted.

Actual

Expenses

The

first

section

of

the

table

below

provides

information

about

actual

account

values

and

actual

expenses.

You

may

use

the

information

in

this

section,

together

with

the

amount

you

invested,

to

estimate

the

expenses

that

you

paid

over

the

period.

Simply

divide

your

account

value

by

$1,000

(for

example,

an

$8,600

account

value

divided

by

$1,000

=

8.6),

then

multiply

the

result

by

the

number

in

the

first

section

under

the

heading

entitled

“Expenses

Paid

During

Period”

to

estimate

the

expenses

you

paid

on

your

account

during

this

period.

Additional

account

fees

may

apply

to

certain

types

of

investment

products

which

are

not

included

in

the

table

below.

If

they

were,

the

estimate

of

expenses

you

paid

during

the

period

would

be

higher,

and

your

ending

account

value

lower,

by

this

amount.

Hypothetical

Example

for

Comparison

Purposes

The

second

section

of

the

table

below

provides

information

about

hypothetical

account

values

and

hypothetical

expenses

based

on

the

Fund’s

actual

expense

ratio

and

an

assumed

rate

of

return

of

5%

per

year

before

expenses,

which

is

not

the

Fund’s

actual

return.

The

hypothetical

account

values

and

expenses

may

not

be

used

to

estimate

the

actual

ending

account

balance

or

expenses

you

paid

for

the

period.

You

may

use

this

information

to

compare

the

ongoing

costs

of

investing

in

the

Fund

and

other

funds.

To

do

so,

compare

this

5%

hypothetical

example

with

the

5%

hypothetical

examples

that

appear

in

the

shareholder

reports

of

the

other

funds.

Please

note

that

the

expenses

shown

in

the

table

are

meant

to

highlight

your

ongoing

costs

only

and

do

not

reflect

any

transaction

costs,

such

as

sales

charges

on

purchase

payments,

contingent

deferred

sales

charges,

redemption

fees

or

exchange

fees.

Therefore,

the

second

section

of

the

table

is

useful

in

comparing

ongoing

costs

only,

and

will

not

help

you

determine

the

relative

total

costs

of

owning

different

funds.

In

addition,

if

these

transaction

costs

were

included,

your

costs

would

have

been

higher.

Actual

Hypothetical

Beginning

Account

Value

June

25,

2019

Ending

Account

Value

September

30,

2019

Expenses

Paid

During Period

June

25,

2019 to

September

30,

2019

(a)

Beginning

Account

Value

April

1,

2019

Ending

Account

Value

September

30,

2019 

Expenses

Paid

During Period

April

1,

2019 to

September

30,

2019

(b)

Annualized

Expense

Ratio

Principal

Diversified

Select

Real

Asset

Fund

Class

A

$

1,000.00‌

$

1,014.00‌

$

5.52‌

$

1,000.00‌

$

1,014.65‌

$

10.43‌

2.07‌

%

Class

Y

1,000.00‌

1,015.20‌

4.19‌

1,000.00‌

1,017.15‌

7.92‌

1.57‌

Institutional

1,000.00‌

1,014.80‌

4.73‌

1,000.00‌

1,016.15‌

8.92‌

1.77‌

(a)

Expenses

are

equal

to

a

fund's

annualized

expense

ratio

multiplied

by

the

average

account

value

over

the

period

(June

25,

2019,

to

September

30,

2019),

multiplied

by

97/366

(to

reflect

the

period

since

inception).

(b)

Expenses

are

equal

to

a

fund's

annualized

expense

ratio

multiplied

by

the

average

account

value

over

the

period,

multiplied

by

183/366

(to

reflect

the

one-half

year

period).

21

FUND TRUSTEES

AND

OFFICERS

Under Delaware

law,

a

Board

of

Trustees

oversees

the

Fund.

The Trustees

have

financial

or

other

relevant

experience

and

meet

several

times

during

the

year

to

review

contracts, Fund

activities

and

the

quality

of

services

provided

to

the

Fund.

Each

trustee

also

serves

on

the

Board

of

Principal

Variable

Contracts

Funds,

Inc.,

Principal

Funds,

Inc.,

and Principal

Exchange-Traded

Funds.

Each trustee

generally

serves

an

indefinite

term

until

his

or

her

successor

is

duly

elected

and

qualified. Trustees

considered

to

be

“interested

persons”

as

defined

in

the

Investment

Company

Act

of

1940,

as

shown

below

are

considered

to

be

interested

because

of

an

affiliation

with

the

Manager.

The

following

trustees

are

considered

not

to

be

“interested

persons”

as

defined

in

the

1940

Act.

Name,

Position

Held

with

the

Fund,

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Trustee

Other

Directorships

Held

by

Trustee

During

Past

5

Years

Elizabeth

Ballantine

Trustee

since

2019

Member,

Nominating

and

Governance

Committee

1948

Principal,

EBA

Associates

129

Durango

Herald,

Inc.;

McClatchy

Newspapers,

Inc.

Leroy

T.

Barnes,

Jr.

Trustee

since

2019

Member,

Audit

Committee

1951

Retired.

129

McClatchy

Newspapers,

Inc.;

Frontier

Communications,

Inc.;

formerly,

Herbalife

Ltd.

Craig

Damos

Trustee

since

2019

Member,

Audit

Committee

Member,

15(c)

Committee

Member,

Executive

Committee

1954

President,

C.P.

Damos

Consulting

LLC

129

None

Mark

A.

Grimmett

Lead

Independent

Trustee

since

2019

Trustee

since

2019

Member,

Nominating

and

Governance

Committee

Member,

15(c)

Committee

Member,

Executive

Committee

1960

Formerly,

Executive

Vice

President

and

CFO,

Merle

Norman

Cosmetics,

Inc.

129

None

Fritz

S.

Hirsch

Trustee

since

2019

Member,

Operations

Committee

Member,

15(c)

Committee

1951

Formerly,

CEO,

MAM

USA

129

MAM

USA

Tao

Huang

Trustee

since

2019

Member,

Operations

Committee

Member,

15(c)

Committee

1962

Retired.

129

Armstrong

World

Industries,

Inc.

and

Equity

Lifestyle

Properties,

Inc.

Karen

(“Karrie”)

McMillan

Trustee

since

2019

Member,

Operations

Committee

1961

Managing

Director,

Patomak

Global

Partners,

LLC.

Formerly,

General

Counsel,

Investment

Company

Institute

129

None

Elizabeth

A.

Nickels

Trustee

since

2019

Member,

Audit

Committee

1962

Formerly,

Executive

Director,

Herman

Miller

Foundation;

Formerly

President,

Herman

Miller

Healthcare

129

SpartanNash;

formerly:

Charlotte

Russe;

Follet

Corporation;

PetSmart;

Spectrum

Health

Systems

Mary

M.

(“Meg”)

VanDeWeghe

Trustee

since

2019

Member,

Operations

Committee

1959

CEO

and

President,

Forte

Consulting,

Inc.

129

Denbury

Resources

Inc.

and

Helmerich

&

Payne;

Formerly:

Brown

Advisory;

B/E

Aerospace;

WP

Carey;

Nalco

(and

its

successor

Ecolab)

22

The

following

trustees

are

considered

to

be

“interested

persons”

as

defined

in

the

1940

Act,

because

of

an

affiliation

with

the

Manager.

Correspondence

intended

for

each

trustee

who

is

other

than

an

interested

trustee

may

be

sent

to

655

9th

Street,

Des

Moines,

IA

50392.

Name,

Position

Held

with

the

Fund,

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Trustee

Other

Directorships

Held

by

Trustee

During

Past

5

Years

Timothy

M.

Dunbar

Trustee

since

2019

1957

Director,

PGI

since

2018

President,

Principal

Global

Asset

Management,

PGI,

Principal

Life

Insurance

Company

(“PLIC”),

Principal

Financial

Services,

Inc.

(“PFSI”),

and

Principal

Financial

Group

(“PFG”)

since

2018

Chair/Executive

Vice

President,

RobustWealth,

Inc.

since

2018

Director,

Post

Advisory

Group,

LLC

(“Post”)

since

2018

Executive

Vice

President/Chief

Investment

Officer,

PLIC,

PFSI

and

PFG

(2014-2018)

129

None

Patrick

Halter

Trustee

since

2019

Member,

Executive

Committee

1959

Chief

Executive

Officer

and

President,

PGI

since

2018

Chief

Operating

Officer,

PGI

(2017-2018)

Chair,

PGI

since

2018

Director,

PGI

(2003-2018)

Director,

Finisterre

Capital

LLP

since

2018

Director,

Origin

Asset

Management

LLP

since

2018

Chair,

Post

since

2017

Chief

Executive

Officer,

Principal

Real

Estate

Investors,

LLC

(“PREI”)

since

2005

Chair,

PREI

since

2004

Chair,

Spectrum

Asset

Management,

Inc.

since

2017

Director,

CCIP,

LLC

since

2017

129

None

23

The

following

table

presents

officers

of

the

Fund.

Name,

Position

Held

with

the

Fund,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Randy

L.

Bergstrom

Assistant

Tax

Counsel

Des

Moines,

IA

50392

1955

Counsel,

PGI

Counsel,

PLIC

Jennifer

A.

Block

Deputy

Chief

Compliance

Officer

Des

Moines,

IA

50392

1973

Vice

President

and

Counsel

(2017-2018)

Assistant

Counsel

(2010-2017)

Assistant

Secretary

(2015-2018)

Counsel,

PGI

(2017-2018)

Counsel,

PLIC

(2009-2018)

Counsel,

PMC

(2009-2013,

2014-2017)

Kamal

Bhatia

President,

Chief

Executive

Officer

1972

President,

PFG,

PFSI,

and

PLIC

since

2019

Senior

Vice

President,

OppenheimerFunds

(2011-

2019)

Principal

Executive

Officer,

OC

Private

Capital

(2017-2019)

Tracy

Bollin

Chief

Financial

Officer

Des

Moines,

IA

50392

1970

Managing

Director,

PGI

since

2016

Chief

Operating

Officer,

PMC

(2015-2017)

Chief

Financial

Officer,

PFA

(2010-2015)

Senior

Vice

President,

PFD

since

2015

Chief

Financial

Officer,

PFD

(2010-2016)

Senior

Vice

President,

PMC

(2015–2017)

Chief

Financial

Officer,

PMC

(2010-2015)

Director,

PMC

(2014–2017)

Chief

Financial

Officer,

PSI

(2010-2015)

Director,

PSS

since

2014

President,

PSS

since

2015

Chief

Financial

Officer,

PSS

(2010-2015)

Gina

L.

Graham

Treasurer

Des

Moines,

IA

50392

1965

Vice

President/Treasurer,

PFA

since

2016

Vice

President/Treasurer,

PFD

since

2016

Vice

President/Treasurer,

PGI

since

2016

Vice

President/Treasurer,

PLIC

since

2016

Vice

President/Treasurer,

PMC

(2016-2017)

Vice

President/Treasurer,

PREI

since

2016

Vice

President/Treasurer,

PSI

since

2016

Vice

President/Treasurer,

PSS

since

2016

Laura

B.

Latham

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1986

Counsel,

PGI

since

2018

Prior

thereto,

Attorney

in

Private

Practice

Diane

K.

Nelson

AML

Officer

Des

Moines,

IA

50392

1965

Chief

Compliance

Officer/AML

Officer,

PSS

since

2015

Compliance

Advisor,

PMC

(2013-2015)

Sara

L.

Reece

Vice

President

and

Controller

Des

Moines,

IA

50392

1975

Director

-

Accounting,

PLIC

since

2015

Assistant

Financial

Controller,

PLIC

prior

to

2015

Teri

R.

Root

Chief

Compliance

Officer

Des

Moines,

IA

50392

1979

Interim

Chief

Compliance

Officer

(2018)

Deputy

Chief

Compliance

Officer

(2015-2018)

Deputy

Chief

Compliance

Officer,

PGI

(2017-2018)

Vice

President

and

Chief

Compliance

Officer,

PMC

(2015–2017)

Vice

President,

PSS

since

2015

Britney

L.

Schnathorst

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1981

Counsel,

PLIC

since

2013

Prior

thereto,

Attorney

in

Private

Practice

Adam

U.

Shaikh

Assistant

Counsel

Des

Moines,

IA

50392

1972

Assistant

General

Counsel,

PGI

since

2018

Counsel,

PGI

(2017-2018)

Counsel,

PLIC

since

2006

Counsel,

PMC

(2007-2013,

2014-2017)

24

The

15(c)

Committee’s

primary

purpose

is

to

assist

the

Board

in

performing

the

annual

review

of

the

Fund’s

advisory

and

sub-advisory

agreements

pursuant

to

Section

15(c)

of

the

1940

Act.

The

Committee

responsibilities

include

requesting

and

reviewing

materials.

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

monitor

the

Fund

Complex’s

accounting

policies,

financial

reporting

and

internal

control

system,

as

well

as

the

work

of

the

independent

registered

public

accountants.

The

Audit

Committee

assists

Board

oversight

of

1)

the

integrity

of

the

Fund

Complex’s

financial

statements;

2)

the

Fund

Complex’s

compliance

with

certain

legal

and

regulatory

requirements;

3)

the

independent

registered

public

accountants’

qualifications

and

independence;

and

4)

the

performance

of

the

Fund

Complex’s

independent

registered

public

accountants.

The

Audit

Committee

also

provides

an

open

avenue

of

communication

among

the

independent

registered

public

accountants,

the

Manager’s

internal

auditors,

Fund

Complex

management,

and

the

Board.

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

Committee

may

exercise

all

powers

of

the

Board

in

the

management

of

the

business

of

the

Fund

Complex

except

the

power

to

1)

authorize

dividends

or

distributions

on

stock;

2)

issue

stock,

except

as

permitted

by

law;

3)

recommend

to

the

stockholders

any

action

which

requires

stockholder

approval;

4)

amend

the

bylaws;

or

5)

approve

any

merger

or

share

exchange

which

does

not

require

stockholder

approval.

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

Committee

responsibilities

include

evaluating

Board

membership

and

functions,

committee

membership

and

functions,

insurance

coverage,

and

legal

matters.

The

nominating

functions

of

the

Committee

include

selecting

and

nominating

all

candidates

who

are

not

“interested

persons”

of

the

Fund

Complex

for

election

to

the

Board.

Generally,

the

Committee

requests

trustee

nominee

suggestions

from

the

committee

members

and

management.

In

addition,

the

Committee

will

consider

Trustee

candidates

recommended

by

shareholders

of

the

Fund

Complex.

Recommendations

should

be

submitted

in

writing

to

Principal

Funds,

Inc.

at

711

High

Street,

Des

Moines,

IA

50392.

When

evaluating

a

person

as

a

potential

nominee

to

serve

as

an

Independent

Trustee,

the

Committee

will

generally

consider,

among

other

factors:

age;

education;

relevant

business

experience;

geographical

factors;

whether

the

person

is

“independent”

and

otherwise

qualified

under

applicable

laws

and

regulations

to

serve

as

a

trustee;

and

whether

the

person

is

willing

to

serve,

and

willing

and

able

to

commit

the

time

necessary

for

attendance

at

meetings

and

the

performance

of

the

duties

of

an

independent

trustee.

The

Committee

also

meets

personally

with

the

nominees

and

conducts

a

reference

check.

The

final

decision

is

based

on

a

combination

of

factors,

including

the

strengths

and

the

experience

an

individual

may

bring

to

the

Board.

The

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.

The

Board

Name,

Position

Held

with

the

Fund,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

John

Sullivan

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1970

Counsel,

PGI

since

2019

Prior

thereto,

Attorney

in

Private

Practice

Dan

Westholm

Assistant

Treasurer

Des

Moines,

IA

50392

1966

Assistant

Vice

President/Treasurer,

PGI

since

2017

Assistant

Vice

President/Treasury,

PFA

since

2013

Assistant

Vice

President/Treasury,

PFD

since

2013

Assistant

Vice

President/Treasury,

PLIC

since

2014

Director

–

Treasury,

PLIC

(2007-2014)

Assistant

Vice

President/Treasury,

PMC

(2013-

2017)

Assistant

Vice

President/Treasury,

PSI

since

2013

Assistant

Vice

President/Treasury,

PSS

since

2013

Beth

Wilson

Vice

President

and

Secretary

Des

Moines,

IA

50392

1956

Director

and

Secretary

–

Funds,

PLIC

Clint

Woods

Counsel,

Vice

President,

and

Assistant

Secretary

Des

Moines,

IA

50392

1961

Of

Counsel

(2017-2018)

Vice

President

(2016-2017)

Counsel

(2015-2017)

Vice

President,

PLIC

since

2015

Associate

General

Counsel,

Governance

Officer,

and

Assistant

Corporate

Secretary,

PLIC

since

2013

Jared

Yepsen

Assistant

Tax

Counsel

Des

Moines,

IA

50392

1981

Counsel,

PGI

since

2017

Counsel,

PLIC

since

2015

Senior

Attorney,

Transamerica

Life

Insurance

Company

(2013-2015)

25

does

not

use

regularly

the

services

of

any

professional

search

firms

to

identify

or

evaluate

or

assist

in

identifying

or

evaluating

potential

candidates

or

nominees.

The

Operations

Committee’s

primary

purpose

is

to

oversee

the

provision

of

administrative

and

distribution

services

to

the

Funds

Complex,

communications

with

the

Fund

Complex’s

shareholders,

and

review

and

oversight

of

the

Fund

Complex’s

operations.

Additional

information

about

the

Fund

is

available

in

the

Prospectus

dated

June

25,

2019,

and

the

Statement

of

Additional

Information

dated

June

25,

2019.

These

documents

may

be

obtained

free

of

charge

by

writing

Principal

Diversified

Select

Real

Asset

Fund,

P.O.

Box

219971,

Kansas

City,

MO

64121-9971,

or

telephoning

1-800-222-5852.

The

prospectus

may

be

viewed

at

www.PrincipalFunds.com/interval-funds.

PROXY

VOTING

POLICIES

A

description

of

the

policies

and

procedures

the

Fund

uses

to

determine

how

to

vote

proxies

relating

to

portfolio

securities

and

the

results

of

the

proxy

votes

for

the

most

recent

twelve

months

ended

June

30

may

be

obtained

free

of

charge

by

telephoning

1-800-222-5852,

or

on

the

SEC

website

at

www.sec.gov.

SCHEDULES

OF

INVESTMENTS

The

Fund

files

complete

schedules

of

investments

with

the

Securities

and

Exchange

Commission

as

of

June

30

and

December

31

each

year

as

a

part

of

Form

N-PORT.

The

Fund’s

Form

N-PORT

can

be

reviewed

and

copied

at

the

Commission’s

Public

Reference

Room

in

Washington,

D.C.

or

on

the

Commission’s

website

at

www.sec.gov.

Information

on

the

operation

of

the

Public

Reference

Room

may

be

obtained

by

calling

the

Commission

at

1-202-551-8090.

26

BOARD

CONSIDERATION

OF

INVESTMENT

ADVISORY

CONTRACTS

During

the

period

covered

by

this

report,

the

Board

of

Trustees

(the

“Board”)

of

the

Principal

Diversified

Select

Real

Asset

Fund

(the

“Fund”)

approved

a

sub-sub-advisory

agreement

between

Principal

Global

Investors,

LLC

(the

“Manager”),

Tortoise

Capital

Advisers,

L.L.C.

(the

“Sub-advisor”)

and

Tortoise

Credit

Strategies,

LLC

(the

“Sub-Sub-Advisor”)

with

respect

to

a

private

social

infrastructure

debt

strategy

of

the

Fund.

TCS

Sub-Sub-Advisory

Agreement

–

Principal

Diversified

Select

Real

Asset

Fund

On

September

10,

2019,

the

Board

considered

whether

to

approve

a

sub-sub-advisory

agreement

(the

“Sub-Sub-Advisory

Agreement”)

among

the

Manager,

the

Subadvisor

and

the

Sub-Sub-Advisor

with

respect

to

a

private

social

infrastructure

debt

strategy

of

the

Fund.

Based

upon

their

review,

the

Board

concluded

that

it

was

in

the

best

interests

of

the

Fund

to

approve

the

Sub-Sub-Advisory

Agreement

and,

accordingly,

recommended

to

the

Board

the

approval

of

the

Sub-Sub-Advisory

Agreement.

In

reaching

this

conclusion,

no

single

factor

was

determinative

in

the

Board’s

analysis,

but

rather

the

Board

considered

a

variety

of

factors.

The

Board

considered

various

factors,

including

the

following,

and

made

certain

findings

and

conclusions

with

regard

thereto,

in

approving

the

Sub-Sub-Advisory

Agreement.

Nature,

Quality

and

Extent

of

Services.

The

Board

considered

the

nature,

quality

and

extent

of

the

services

expected

to

be

provided

under

the

Sub-Sub-Advisory

Agreement.

The

Board

considered

the

reputation,

qualifications

and

background

of

the

Sub-Sub-Advisor,

the

investment

approach

of

the

Sub-Sub-Advisor,

the

experience

and

skills

of

the

Sub-Sub-Advisor’s

investment

personnel

who

would

be

responsible

for

the

day-to-day

management

of

the

Fund

and

the

resources

made

available

to

such

personnel.

The

Board

noted

that

the

Sub-Advisor,

which

is

an

affiliate

under

common

control

with

the

Sub-Sub-Advisor,

currently

provides

sub-advisory

services

to

an

investment

sleeve

of

the

Fund

and

an

investment

sleeve

of

a

series

of

Principal

Funds,

Inc.,

and

that

the

Board

had

reviewed

and

recommended

for

renewal

those

sub-advisory

agreements

at

their

September

2019

meeting.

In

addition,

the

Board

considered

the

Manager’s

program

for

recommending,

monitoring

and

replacing

sub-

advisors

(including

sub-sub-advisors)

and

that

the

Manager

recommended

the

Sub-Sub-Advisor

based

upon

that

program.

Investment

Performance.

The

Board

reviewed

the

historical

oneyear

and

since

inception

(January

27,

2017)

performance

returns,

gross

and

net

of

Fund

expenses,

as

of

June

30,

2019

of

a

portfolio

that

the

Sub-Sub-Advisor

currently

manages

in

accordance

with

the

Sub-Sub-Advisor’s

proposed

investment

strategy

for

the

Fund,

as

compared

to

the

historical

performance

returns

of

a

relevant

benchmark

index

and

two

relevant

Morningstar

categories.

The

Board

concluded,

based

upon

the

information

provided,

that

the

Sub-Sub-Advisor

is

qualified.

Fees,

Economies

of

Scale

and

Profitability.

The

Board

considered

the

proposed

sub-sub-advisory

fee,

noting

that

the

Sub-Advisor

would

compensate

the

Sub-Sub-Advisor

from

its

own

sub-advisory

fee

and,

in

turn,

that

the

Manager

compensates

the

Sub-Advisor

from

its

own

management

fee,

so

that

shareholders

would

pay

only

the

management

fee.

The

Board

noted

that

the

proposed

sub-sub-advisory

fee

schedule

includes

breakpoints

and

concluded

that

the

sub-sub-advisory

fee

schedule

reflects

an

appropriate

recognition

of

economies

of

scale

at

currently

anticipated

asset

levels.

The

Board

considered

the

Manager’s

statement

that

it

found

the

proposed

sub-advisory

and

sub-sub-advisory

fee

schedules

to

be

competitive.

The

Board

also

considered

that

the

Sub-Sub-Advisor’s

appointment

was

contingent

upon

the

Fund’s

shareholders

approving

the

Sub-Sub-

Advisory

Agreement,

and

that

the

Manager

would

cover

the

costs

of

filing

and

distributing

an

information

statement.

On

the

basis

of

the

information

provided,

the

Board

concluded

that

the

proposed

sub-sub-advisory

fee

was

reasonable.

Other

Benefits.

The

Board

also

considered

the

character

and

amount

of

other

fall-out

benefits

to

be

received

by

the

Sub-Sub-Advisor.

The

Board

noted

that

the

Sub-Advisor

and

the

Sub-Sub-Advisor

will

not

utilize

soft

dollars

in

connection

with

the

services

provided

to

the

Fund.

The

Board

further

noted

the

Manager’s

statement

that

there

would

be

no

known

fall-out

benefits.

Overall

Conclusions.

Based

upon

all

of

the

information

considered

and

the

conclusions

reached,

the

Board

determined

that

the

terms

of

the

Sub-Sub-Advisory

Agreement

were

fair

and

reasonable,

and

that

approval

of

the

Sub-Sub-Advisory

Agreement

was

in

the

best

interests

of

the

Fund.

Accordingly,

the

Board

approved

the

Sub-Sub-Advisory

Agreement.

27

Action

by

Written

Consent

of

Shareholders

of

Principal

Diversified

Select

Real

Asset

Fund

In

Lieu

of

Meeting

September

11,

2019

Approval

of

a

Sub-Sub

Advisory

Agreement

pursuant

to

which

Tortoise

Credit

Strategies,

LLC

would

provide

investment

management

services

to

Principal

Diversified

Select

Real

Asset

Fund.

Principal

Funds

Distributor,

Inc.

711

High

Street

Des

Moines,

IA

50392-6370

Do

not

use

this

address

for

business

correspondence

principalfunds.com

Investing

involves

risk,

including

possible

loss

of

principal.

This

shareholder

report

is

published

as

general

information

for

the

shareholders

of

Principal

Diversified

Select

Real

Asset

Fund.

This

material

is

not

authorized

for

distribution

unless

preceded

or

accompanied

by

a

current

prospectus

or

a

summary

prospectus

that

includes

more

information

regarding

the

risk

factors,

expenses,

policies,

and

objectives

of

the

funds.

Investors

should

read

the

prospectus

or

summary

prospectus

carefully

before

investing.

To

obtain

a

prospectus

or

summary

prospectus,

please

contact

your

financial

professional

or

call

800-222-5852.

Principal

Funds

are

distributed

by

Principal

Funds

Distributor,

Inc.

Principal,

Principal

and

symbol

design,

and

Principal

Financial

Group

are

registered

trademarks

and

services

marks

of

Principal

Financial

Services,

Inc.,

a

Principal

Financial

Group

company.

©

2019

Principal

Financial

Services,

Inc.

|

INF100SAR-0

|

09/2019

|

949589

ITEM 2 – CODE OF ETHICS

Not applicable to semi-annual reports.

ITEM 3 – AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable to semi-annual reports.

ITEM 4 – PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable to semi-annual reports.

ITEM 5 – AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6 – SCHEDULE OF INVESTMENTS

Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.

ITEM 7 – DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable to semi-annual reports.

ITEM 8 – PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable to semi-annual reports.

ITEM 9 – PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

Not applicable.

ITEM 10 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 11 – CONTROLS AND PROCEDURES

a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing).

(b) There have been no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12 – DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 13 – EXHIBITS

(a)(1) Code of Ethics - Not applicable to semi-annual reports.

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.CERT.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Principal Diversified Select Real Asset Fund

By /s/ Kamal Bhatia

            Kamal Bhatia, President and CEO

Date 11/15/2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By /s/ Kamal Bhatia

            Kamal Bhatia, President and CEO

Date 11/15/2019

By /s/ Tracy W. Bollin

            Tracy W. Bollin, Chief Financial Officer

Date 11/15/2019