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   811-23403

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, 2021

Date of reporting period: September 30, 2020

ITEM 1 – REPORT TO STOCKHOLDERS

Principal

Diversified

Select

Real

Asset

Fund

Semiannual

Report

September

30,

2020

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up

for

eDelivery!

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secure

and

ready

when

you

are,

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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.

01/2020

EE11865PFI-03

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-03

|

01/2020

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

Financial

Statements

1

Notes

to

Financial

Statements

5

Schedule

of

Investments

14

Financial

Highlights

(includes

performance

information)

20

Shareholder

Expense

Example

22

Supplemental

Information

23

Statement

of

Assets

and

Liabilities

September

30,

2020

(unaudited)

1

See

accompanying

notes.

Amounts

in

thousands,

except

per

share

amounts

Principal

Diversified

Select

Real

Asset

Fund

Investment

in

securities--at

cost

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

$

142,018‌

Assets

Investment

in

securities--at

value 

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

$

140,745‌

Cash

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

9‌

Receivables:

Dividends

and

interest

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

547‌

Expense

reimbursement

from

Manager

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

123‌

Investment

securities

sold

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

272‌

Prepaid

expenses

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

8‌

Total

Assets  

141,704‌

Liabilities

Accrued

management

and

investment

advisory

fees

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

195‌

Accrued

transfer

agent

fees

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

53‌

Accrued

directors'

expenses

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

2‌

Accrued

professional

fees

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

51‌

Accrued

valuation

fees

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

83‌

Cash

overdraft

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

71‌

Payables:

Investment

securities

purchased

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

41‌

Total

Liabilities  

496‌

Net

Assets

Applicable

to

Outstanding

Shares

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

$

141,208‌

Net

Assets

Consist

of:

Capital

shares

and

additional

paid-in-capital

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

$

147,181‌

Total

distributable

earnings

(accumulated

loss)

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

(

5,973‌

)

Total

Net

Assets 

$

141,208‌

Capital

Stock

(par

value:

$.01

per

share):

Net

Asset

Value

Per

Share:

Class

A

:

Net

Assets

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

$

239‌

Shares

Issued

and

Outstanding

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

10‌

Net

Asset

Value

per

share

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

$

23

.12‌

(a)

Maximum

Offering

Price

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

$

24

.53‌

Class

Y

:

Net

Assets

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

$

140,729‌

Shares

Issued

and

Outstanding

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

6,063‌

Net

Asset

Value

per

share

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

$

23

.21‌

Institutional

:

Net

Assets

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

$

240‌

Shares

Issued

and

Outstanding

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

10‌

Net

Asset

Value

per

share

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

$

23

.15‌

(a)

Redemption

price

per

share

is

equal

to

net

asset

value

per

share

less

any

applicable

contingent

deferred

sales

charge.

Statement

of

Operations

Period

Ended

September

30,

2020

(unaudited)

2

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Net

Investment

Income

(Loss)

Income:

Dividends

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

$

1,787‌

Withholding

tax

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

(

97‌

)

Interest

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

1,251‌

Total

Income

2,941‌

Expenses:

Management

and

investment

advisory

fees

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

1,082‌

Registration

fees

-

Class

A

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

17‌

Registration

fees

-

Class

Y

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

16‌

Registration

fees

-

Institutional

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

17‌

Shareholder

reports

-

Class

A

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

2‌

Shareholder

reports

-

Class

Y

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

4‌

Shareholder

reports

-

Institutional

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

2‌

Transfer agent

fees

-

Class

A

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

21‌

Transfer agent

fees

-

Class

Y

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

33‌

Transfer agent

fees

-

Institutional

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

27‌

Custodian

fees

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

16‌

Directors'

expenses

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

2‌

Professional fees

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

63‌

Valuation

expenses

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

62‌

Other

expenses

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

70‌

Total

Gross

Expenses

1,434‌

Less: Reimbursement

from

Manager

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

337‌

Less:

Reimbursement

from

Manager

-

Class

A

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

41‌

Less:

Reimbursement

from

Manager

-

Class

Y

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

263‌

Less:

Reimbursement

from

Manager

-

Institutional

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

46‌

Total

Net

Expenses

747‌

Net

Investment

Income

(Loss)

2,194‌

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

Net

realized

gain

(loss)

from:

Investment

transactions

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

(

3,081‌

)

Foreign

currency

transactions

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

(

25‌

)

Net

change

in

unrealized

appreciation/(depreciation)

of:

Investments

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

25,152‌

Translation

of

assets

and

liabilities

in

foreign

currencies

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

3‌

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

22,049‌

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

$

24,243‌

Statement

of

Changes

in

Net

Assets

(unaudited)

3

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Period

Ended

September

30,

2020

Period

Ended

March

31

,

2020

(a)

Operations

Net

investment

income

(loss)

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

$

2,194‌

$

2,114‌

Net

realized

gain

(loss)

on

investments

and

foreign

currencies

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

(3,106‌)

(1,792‌)

Net

change

in

unrealized

appreciation/depreciation

of

investments

and

translation

of

assets

&

liabilities

in

foreign

currencies

..

25,155‌

(26,427‌)

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

24,243‌

(26,105‌)

Dividends

and

Distributions

to

Shareholders

From

net

investment

income

and

net

realized

gain

on

investments

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

(2,138‌)

(1,974‌)

From

tax

return

of

capital

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

–‌

(238‌)

Total

Dividends

and

Distributions

(2,138‌)

(2,212‌)

Capital

Share

Transactions

Net

increase

(decrease)

in

capital

share

transactions

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

20,208‌

127,112‌

Total

Increase

(Decrease)

in

Net

Assets

42,313‌

98,795‌

Net

Assets

Beginning

of

period

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

98,895‌

100‌

End

of

period

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

$

141,208‌

$

98,895‌

Class

A

Class

Y

Institutional

Capital

Share

Transactions:

Period

Ended

September

30,

2020

Dollars:

Sold

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

$

–‌

$

18,070‌

$

–‌

Reinvested

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

3‌

2,131‌

4‌

Net

Increase

(Decrease)

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

$

3‌

$

20,201‌

$

4‌

Shares:

Sold

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

–‌

887‌

–‌

Reinvested

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

–‌

95‌

–‌

Net

Increase

(Decrease)

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

–‌

982‌

–‌

Period Ended

March

31,

2020

(a)

Dollars:

Sold

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

$

225‌

$

124,450‌

$

225‌

Reinvested

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

4‌

2,204‌

4‌

Net

Increase

(Decrease)

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

$

229‌

$

126,654‌

$

229‌

Shares:

Sold

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

9‌

4,985‌

9‌

Reinvested

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

–‌

94‌

–‌

Net

Increase

(Decrease)

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

9‌

5,079‌

9‌

Dividends

and

Distributions

to

Shareholders:

Period Ended

September

30,

2020

From

net

investment

income

and

net

realized

gain

on

investments

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

$

(3‌)

$

(2,131‌)

$

(4‌)

Total

Dividends

and

Distributions

$

(3‌)

$

(2,131‌)

$

(4‌)

Period Ended

March

31,

2020

(a)

From

net

investment

income

and

net

realized

gain

on

investments

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

$

(4‌)

$

(1,966‌)

$

(4‌)

From

tax

return

of

capital

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

–‌

(238‌)

–‌

Total

Dividends

and

Distributions

$

(4‌)

$

(2,204‌)

$

(4‌)

(a)

Period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020.

Statement

of

Cash

Flows

Period

Ended

September

30,

2020

(unaudited)

4

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Cash

Flows

from

Operating

Activities:

Net increase

in

net

assets

from

operations

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

$

24,243

Adjustments

to

reconcile

net

increase

in

net

assets

from

operations

to

net

cash

used

in

operating

activities:

Purchase

of

investment

securities

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

(47,914)

Proceeds

from

sale

of

investment

securities

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

29,297

Net

sales

or

(purchases)

of

short

term

securities

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

(1,686)

Net

accretion

of

bond

discounts

and

amortization

of

premiums

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

97

Change

in

unrealized

(appreciation)

depreciation

on

investments

(25,152)

Net

realized

gain

(loss)

from

investments

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

3,081

(Increase)

decrease

in

dividends

and

interest

receivable

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

(29)

(Increase)

decrease

in

investment

securities

sold

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

84

Increase

(decrease)

in

accrued

fees,

expenses,

and

expense

reimbursement

from

Manager

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

121

Increase

(decrease)

in

investment

securities

purchased

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

(197)

Net

cash used

by

operating

activities

(18,055)

Cash

Flows

from

Financing

Activities:

Proceeds

from

shares

sold

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

18,070

Increase

(decrease)

in

foreign

currency

cash

overdraft

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

71

Net

cash provided

by

financing

activities

18,141

Net

increase in

cash

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

86

Cash:

Beginning

of

period

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

$

(77)

End

of

period

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

$

9

Supplemental

disclosure

of

cash

flow

information:

Reinvestment

of

dividends

and

distributions

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

$

2,138

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

5

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

Class.

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

shareholders

should

not

rely

on

any

expectation

of

repurchase

offers

being

made

in

excess

of

5%.

Shareholders

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.

An

unlimited

number

of

shares

has

been

authorized

under

the

Agreement

and

Declaration

of

Trust.

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

Class

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

Class

shares

was

made

by

Principal

Financial

Services,

Inc.,

an

affiliate

of

the

Manager.

The

Fund

commenced

operations

on

June

25,

2019.

Prior

to

June

25,

2019,

the

Fund

had

no

operations

other

than

matters

relating

to

its

organization

and

the

initial

purchases

on

June

3,

2019.

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.

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

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

6

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board.

Many

factors,

provided

by

independent

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

American

depositary

receipts

(“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.

Currency

Translation.

Foreign

holdings

are

translated

to

U.S.

dollars

using

the

exchange

rate

at

the

daily

close

of

the

New

York

Stock

Exchange.

The

identified

cost

of

the

Fund’s

holdings

is

translated

at

approximate

rates

prevailing

when

acquired.

Income

and

expense

amounts

are

translated

at

approximate

rates

prevailing

when

received

or

paid,

with

daily

accruals

of

such

amounts

reported

at

approximate

rates

prevailing

at

the

date

of

valuation.

Since

the

carrying

amount

of

the

foreign

securities

is

determined

based

on

the

exchange

rate

and

market

values

at

the

close

of

the

period,

it

is

not

practicable

to

isolate

that

portion

of

the

results

of

operations

arising

as

a

result

of

changes

in

the

foreign

exchange

rates

from

the

fluctuations

arising

from

changes

in

the

market

prices

of

securities

during

the

period.

Net

realized

foreign

exchange

gains

or

losses

arise

from

sales

of

foreign

currencies,

currency

gains

or

losses

realized

between

trade

and

settlement

dates

on

security

transactions,

and

the

difference

between

the

amount

of

dividends,

interest

income,

interest

expense,

and

foreign

withholding

taxes

recorded

on

the

books

and

the

U.S.

dollar

equivalent

of

the

amounts

actually

received

or

paid.

Net

unrealized

appreciation

(depreciation)

on

translation

of

assets

and

liabilities

in

foreign

currencies

arise

from

changes

in

the

exchange

rate

relating

to

assets

and

liabilities,

other

than

investments

in

securities,

purchased

and

held

in

non-U.S.

denominated

currencies.

The

Fund

held

securities

denominated

in

foreign

currencies

that

exceeded

5%

of

net

assets

of

the

Fund

as

of

September

30,

2020:

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

and

to

the

callable

amount,

if

other

than

par.

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.

Distributions

from

Real

Estate

Investment

Trusts

(“REITs”)

and

private

investment

funds

may

be

characterized

as

ordinary

income,

net

capital

gain,

or

return

of

capital

to

the

Fund.

The

proper

characterization

of

distributions

from

REITs

and

private

investment

funds

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.

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

Principal

Diversified

Select

Real

Asset

Fund

Euro

7

.3%

Australian

Dollar

5

.0

2.

Significant

Accounting

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

7

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.

Dividends

and

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.

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

period.

During

the

period

ended

September

30,

2020,

the

Fund

did

not

record

any

such

tax

benefit

or

expense

in

the

accompanying

financial

statements.

Foreign

Taxes.

The

Fund

may

be

subject

to

foreign

income

taxes

imposed

by

certain

countries

in

which

it

invests.

Foreign

income

taxes

are

accrued

by

the

Fund

as

a

reduction

of

income.

These

amounts

are

shown

as

withholding

tax

on

the

statement

of

operations.

Recent

Accounting

Pronouncements.

In

March

2020,

the

Financial

Accounting

Standards

Board

("FASB") issued

Accounting

Standards

Update

("ASU")

No.

2020-04

Reference

Rate

Reform

(Topic

848);

Facilitation

of

the

Effects

of

Reference

Rate

Reform

on

Financial

Reporting, 

which

provides

optional

guidance

for

a

limited

period

of

time

to

ease

the

potential

burden

in

accounting

for

(or

recognizing

the

effects

of)

reference

rate

reform.

The

guidance

is

applicable

to

contracts

referencing

London

Interbank

Offered

Rate

(“LIBOR”)

or

another

reference

rate

that

is

expected

to

be

discontinued

due

to

reference

rate

reform.

The

ASU

is

effective

as

of

March

12,

2020

and

generally

can

be

applied

through

December

31,

2022.

Management

is

evaluating

the

underlying

securities

referencing

LIBOR

or

another

reference

rate

that

is

expected

to

be

discontinued

as

a

reference

rate

over

the

period

of

time

the

ASU

is

effective.  

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.

For

the

period

 ended

September

30,

2020

,

the

Fund

did

not

have

material

cross

trades.

Foreign

Currency

Contracts.

The

Fund

may

be

subject

to

foreign

currency

exchange

rate

risk

in

the

normal

course

of

pursuing

the

Fund's

investment

objectives.

The

Fund

may

use

foreign

currency

contracts

to

gain

exposure

to,

or

hedge

against

changes

in

the

value

of

foreign

currencies. The

Fund enters

into

forward

contracts

to

purchase

and

sell

foreign

currencies

at

a

specified

future

date

at

a

fixed

exchange

rate.

Forward

foreign

currency

contracts

are

valued

at

the

forward

rate,

and

are

marked-to-market

daily.

The

change

in

fair

value

is

recorded

by

the

Fund

as

an

unrealized

gain

or

loss.

When

the

contract

is

closed,

the

Fund

records

a

realized

gain

or

loss

equal

to

the

difference

between

the

value

of

the

contract

at

the

time

it

was

opened

and

the

value

at

the

time

it

was

closed.

The

use

of

forward

foreign

currency

contracts

does

not

eliminate

the

fluctuations

in

underlying

prices

of

the

Fund's

portfolio

securities,

but

it

does

establish

a

rate

of

exchange

that

can

be

achieved

in

the

future.

Although

forward

foreign

currency

contracts

limit

the

risk

of

loss

due

to

a

decline

in

the

value

of

the

hedged

currency,

they

also

limit

any

potential

gain

that

might

result

should

the

value

of

the

currency

increase.

In

addition,

the

Fund

could

be

exposed

to

risks

if

the

counterparties

to

the

contracts

are

unable

to

meet

the

terms

of

their

contracts

or

if

the

value

of

the

currency

changes

unfavorably

to

the

U.S.

dollar

or

other

respective

currency. 

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. 

2.

Significant

Accounting

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

8

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. 

Senior

Floating

Rate

Interests.

The

Fund

may

invest

in

senior

floating

rate

interests

(bank

loans).

Senior

floating

rate

interests

typically

hold

the

most

senior

position

in

the

capital

structure

of

a

business

entity

(the

“Borrower”),

are

secured

by

specific

collateral

and

have

a

claim

on

the

assets

and/or

stock

of

the

Borrower

that

is

senior

to

that

held

by

subordinated

debtholders

and

stockholders

of

the

Borrower.

Senior

floating

rate

interests

are

typically

structured

and

administered

by

a

financial

institution

that

acts

as

the

agent

of

the

lenders

participating

in

the

senior

floating

rate

interest.

Borrowers

of

senior

floating

rate

interests

are

typically

rated

below-investment-grade,

which

means

they

are

more

likely

to

default

than

investment-grade

loans.

A

default

could

lead

to

non-payment

of

income

which

would

result

in

a

reduction

of

income

to

the

Fund

and

there

can

be

no

assurance

that

the

liquidation

of

any

collateral

would

satisfy

the

Borrower’s

obligation

in

the

event

of

non-payment

of

scheduled

interest

or

principal

payments,

or

that

such

collateral

could

be

readily

liquidated.

Senior

floating

rate

interests

pay

interest

at

rates

which

are

periodically

reset

by

reference

to

a

base

lending

rate

plus

a

spread.

These

base

lending

rates

are

generally

the

prime

rate

offered

by

a

designated

U.S.

bank

or

the

London

Interbank

Offered

Rate

(“LIBOR”).

Senior

floating

rate

interests

generally

are

subject

to

mandatory

and/or

optional

prepayment.

Because

of

these

mandatory

prepayment

conditions

and

because

there

may

be

significant

economic

incentives

for

the

Borrower

to

repay,

prepayments

of

senior

floating

rate

interests

may

occur.

As

a

result,

the

actual

remaining

maturity

of

senior

floating

rate

interests

may

be

substantially

less

than

stated

maturities

shown

in

the

schedule

of

investments.

Unfunded

Commitments.

In

connection

with

the

senior

floating

rate

interests,

the

Fund

may

enter

into

unfunded

loan

commitments

(“commitments”).

All

or

a

portion

of

the

commitments

may

be

unfunded.

The

Fund

is

obligated

to

fund

these

commitments

at

the

Borrower’s

discretion.

Therefore,

the

Fund

must

have

funds

sufficient

to

cover

its

contractual

obligation.

Commitments

are

marked

to

market

daily

and

the

unrealized

gain

or

loss

is

shown

as

a

separate

line

item

called

unrealized

gain

or

loss

on

commitments

on

the

statement

of

assets

and

liabilities

and

included

in

the

net

change

in

unrealized

appreciation/(depreciation)

of

investments

on

the

statement

of

operations,

as

applicable.

As

of

September

30,

2020,

the

Fund

had

no

commitments

relating

to

senior

floating

rate

interests.

The

Fund

may

also

enter

into

unfunded

commitments

relating

to

potential

future

investments

in

private

investment

funds.

As

of

September

30,

2020,

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

Private

Investment

Fund

Unfunded

Commitment

Agrivest

Farmland

Fund

Brookfield

Senior

Mezzanine

Real

Estate

Finance

Fund

Brookfield

Super-Core

Infrastructure

Partners

Fund

CBRE

Caledon

Global

Infrastructure

Fund

Hancock

Timberland

and

Farmland

Fund

$6,000

5,000

5,000

6,000

11,880

3.

Operating

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

9

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.

Investments

which

are

generally

included

in

this

category

include

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

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,

pandemics,

accidents,

conflicts,

etc.).

The

following

is

a

summary

of

the

inputs

used

as

of

September

30,

2020

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*

$

—

$

33,503

$

—

$

33,503

Common

Stocks

Basic

Materials

2,744

2,991

—

5,735

Communications

40

92

—

132

Consumer,

Cyclical

111

211

—

322

4.

Fair

Valuation

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

10

*For

additional

detail

regarding

sector

classifications,

please

see

the

schedule

of

investments.

Certain

detailed

information

is

provided

for

those

Funds

with

significant

investments

in

Level

3

securities.

Quantitative

information

about

the

significant

unobservable

inputs

used

in

the

fair

value

measurements

categorized

within

Level

3

of

the

fair

value

hierarchy

is

as

follows

(amounts

in

thousands):

The

changes

in

investments

measured

at

fair

value

for

which

Level

3

inputs

have

been

used

to

determine

fair

value

are

as

follows

(amounts

in

thousands):

*Securities

are

transferred

into

Level

3

for

a

variety

of

reasons

including,

but

not

limited

to:

1.

Securities

where

trading

has

been

halted

2.

Securities

that

have

certain

restrictions

on

trading

3.

Instances

in

which

a

security

is

not

priced

by

a

pricing

service

**Securities

are

transferred

out

of

Level

3

for

a

variety

of

reasons

including,

but

not

limited

to:

1.

Securities

where

trading

resumes

2.

Securities

where

trading

restrictions

have

expired

3.

Instances

in

which

a

price

becomes

available

from

a

pricing

service

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

Consumer,

Non-cyclical

$

1,728

$

2,226

$

—

$

3,954

Energy

7,994

3,579

—

11,573

Financial

8,091

5,585

—

13,676

Industrial

5,588

2,016

—

7,604

Utilities

11,236

13,777

—

25,013

Convertible

Bonds*

—

—

4,312

4,312

Convertible

Preferred

Stocks

Energy

—

—

1,890

1,890

Financial

42

—

—

42

Investment

Companies

8,542

—

—

8,542

Preferred

Stocks

Utilities

564

—

—

564

Senior

Floating

Rate

Interests*

—

502

—

502

Total

$

46,680

$

64,482

$

6,202

$

117,364

Investments

Using

NAV

as

practical

expedient

Private

Investment

Funds

23,381

Total

investments

in

securities

$

—

$

—

$

—

$

140,745

Fund

Asset

Type

Fair

Value

as

of

September

30,

2020

Valuation

Technique

Unobservable

Input

Input

Valuations

Diversified

Select

Real

Asset

Fund

Convertible

Bonds

$

4,312

Lattice

model

Debt

discount

rate

23.86%

Preferred

Stocks

1,890

Lattice

model

Debt

discount

rate

8.72%

$

6,202

Fair

Value

March

31,

2020

Realized

Gain/

(Loss)

Accrued

Discounts/

Premiums

and

Change

in

Unrealized

Gain/

(Loss)

Purchases

Proceeds

from

Sales

Transfers

into

Level

3*

Transfers

Out

of

Level

3**

Fair

Value

September

30,

2020

Net

Change

in

Unrealized

Appreciation/

(Depreciation)

on

Investments

held

at

September

30,

2020

Diversified

Select

Real

Asset

Fund

Convertible

Bonds

$

—

$

—

$

2,535

$

1,777

$

—

$

—

$

—

$

4,312

$

2,535

Preferred

Stocks

—

—

642

—

—

1,248

—

1,890

642

Total

$

—

$

—

$

3,177

$

1,777

$

—

$

1,248

$

—

$

6,202

$

3,177

4.

Fair

Valuation

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

11

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

contractually

agreed

to

waive

0.53%

of

the

Fund’s

investment

advisory

and

management

fees.

It

is

expected

that

the

fee

waiver

will

continue

through

the

period

ending

July

31,

2021;

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.

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

expenses

borne

by

the

Manager

are

subject

to

reimbursement

by

the

Fund

through

the

fiscal

year

end,

provided

no

reimbursement

will

be

made

if

it

would

result

in

the

Fund

exceeding

the

total

operating

expense

limits.

Any

amounts

outstanding

at

the

end

of

the

fiscal

year

are

shown

as

an

expense

reimbursement

from

Manager

or

expense

reimbursement

to

Manager

on

the

statement

of

assets

and

liabilities

and

are

settled

monthly.

It

is

expected

that

the

operating

expense

limits

will

continue

through

the

period

ending

July

31,

2021;

however,

the

Fund

and

the

Manager,

the

parties

to

the

agreement,

may

mutually

agree

to

terminate

the

operating

expense

limits

prior

to

the

end

of

the

period.

The

operating

expense

limits

are

as

follows:

Distribution

Fees.

The

Class

A

shares

of

the

Fund

bear

distribution

fees.

The

fees

are

computed

at

an

annual

rate

of

0.25%

of

the

average

daily

net

assets

attributable

to

Class

A

shares

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.

For

the

period

ending

September

30,

2020,

the

Fund's

distribution

fees

were

less

than

$500.

Chief

Compliance

Officer

Expenses.

The

Fund

pays

certain

expenses

associated

with

the

Chief

Compliance

Officer

(“CCO”).

This

expense

is

allocated

among

the

registered

investment

companies

managed

by

the

Manager

based

on

the

relative

net

assets

of

each

fund

and

is

shown

on

the

statement

of

operations.

For

the

period

ending

September

30,

2020,

the

Fund’s

CCO

expenses

were

less

than

$500.

Sales

Charges.

The

Distributor

retains

sales

charges

on

certain

sales

of

Class

A

shares

based

on

declining

rates

which

begin

at

5.75%.

For

the

period

ended

September

30,

2020,

there

were

no

sales

charges

retained

by

the

Distributor.

Affiliated

Ownership

.

As

of

September

30,

2020,

Principal

Financial

Services

Inc.

and

Principal

Life

Insurance

Company

(each

an

affiliate

of

the

Manager)

owned

shares

of

the

Fund

as

follows

(amounts

of

shares

in

thousands):

6.

Investment

Transactions

For

the

period

ended

September

30,

2020,

the

cost

of

investment

securities

purchased

and

proceeds

from

investment

securities

sold

(not

including

short-term

investments,

return

of

capital,

and

mergers)

by

the

Fund

were

as

follows

(amounts

in

thousands):

Share

Class

Operating

Expense

Limit

Expiration

Class

A

1.67%

July

31,

2021

Class

Y

1.17%

July

31,

2021

Institutional

Class

1.37%

July

31,

2021

Class

A

Class

Y

Institutional

Principal

Diversified

Select

Real

Asset

Fund

10

6,063

10

Purchases

Sales

Principal

Diversified

Select

Real

Asset

Fund

$

46,045

$

27,439

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

12

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

Pricing

Date,

the

date

that

will

be

used

to

determine

the

Fund’s

net

asset

value

per

share

applicable

to

the

repurchase.

The

Fund

will

make

quarterly

repurchase

offers

every

three

months,

in

the

following

months:

March,

June,

September,

and

December.

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

Pricing

Date.

If

a

repurchase

offer

by

the

Fund

is

oversubscribed,

the

Fund

may

repurchase,

but

is

not

required

to

repurchase,

additional

shares

up

to

a

maximum

amount

of

2%

of

the

outstanding

shares

of

the

Fund.

If

the

Fund

determines

not

to

repurchase

additional

shares

beyond

the

repurchase

offer

amount,

or

if

shareholders

tender

an

amount

of

shares

greater

than

that

which

the

Fund

is

entitled

to

repurchase,

the

Fund

will

repurchase

the

shares

tendered

on

a

pro

rata

basis.

For

the

period

from

April

1,

2020

through

September

30,

2020,

no

shares

of

the

Fund

were

repurchased

during

the

repurchase

offer

windows.

8.

Federal

Tax

Information

Distributions

to

Shareholders.

The

federal

income

tax

character

of

distributions

paid

for

the

periods

ended

September

30,

2020

and

March

31,

2020,

were

as

follows

(amounts

in

thousands):

Distributable

Earnings.

As

of

March

31,

2020

,

the

components

of

distributable

earnings

(accumulated

loss)

on

a

federal

tax

basis

were

as

follows

(amounts

in

thousands):

Capital

Loss

Carryforwards.

For

federal

income

tax

purposes,

capital

loss

carryforwards

are

losses

that

can

be

used

to

offset

future

capital

gains

of

the

Fund.

As

of

March

31,

2020

,

the

Fund

had

approximate

net

capital

loss

carryforwards

as

follows

(amounts

in

thousands):

Capital

losses

will

be

carried

forward

with

no

expiration

and

with

the

character

of

the

loss

retained.

For

the

period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020

,

the

Fund

did

not

utilize

any

capital

loss

carryforwards.

Late-Year

Losses.

A

regulated

investment

company

may

elect

to

treat

any

portion

of

its

qualified

late-year

loss

as

arising

on

the

first

day

of

the

next

taxable

year.

Qualified

late-year

losses

are

certain

capital

and

ordinary

losses

which

occur

during

the

portion

of

the

fund’s

taxable

year

subsequent

to

October

31

and

December

31,

respectively.

For

the

taxable

period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020

,

the

Fund

does

not

plan

to

defer

any

late-year

losses.

Reclassification

of

Capital

Accounts.

The

Fund

may

record

reclassifications

in

its

capital

accounts.

These

reclassifications

have

no

impact

on

the

total

net

assets

of

the

Fund.

The

reclassifications

are

a

result

of

permanent

differences

between

U.S.

GAAP

and

tax

accounting.

Adjustments

are

made

to

reflect

the

impact

these

items

have

on

current

and

future

distributions

to

shareholders.

Therefore,

the

source

of

the

Fund’s

distributions

may

be

shown

in

the

accompanying

statement

of

changes

in

net

assets

as

from

net

investment

income

and

net

realized

Ordinary

Income

Return

of

Capital

September

30,

2020

March

31,

2020

September

30,

2020

March

31,

2020

Principal

Diversified

Select

Real

Asset

Fund

$

2,138

$

1,974

$

—

$

238

Accumulated

Losses

Net

Unrealized

Appreciation

(Depreciation)

Total

Accumulated

Earnings

(Deficit)

Principal

Diversified

Select

Real

Asset

Fund

$

(580)

$

(27,498)

$

(28,078)

Short-Term

Long-Term

Total

Principal

Diversified

Select

Real

Asset

Fund

$

580

$

—

$

580

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

13

gain

on

investments

or

from

tax

return

of

capital

depending

on

the

type

of

book

and

tax

differences

that

exist.

For

the

period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020,

the

Fund

recorded

reclassifications

as

follows

(amounts

in

thousands):

Federal

Income

Tax

Basis.

As

of

September

30,

2020

,

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.

Other

Matters

As

of

the

date

these

financial

statements

were

available

to

be

issued,

the

outbreak

of

the

novel

coronavirus

(“COVID-19”)

in

many

countries

continues

to

adversely

impact

global

commercial

activity

and

has

contributed

to

significant

volatility

in

financial

markets.

The

global

impact

of

the

outbreak

has

been

rapidly

evolving

and

many

countries

have

reacted

by

instituting

quarantines

and

restriction

on

travel.

Such

measures,

as

well

as

the

general

uncertainty

surrounding

the

dangers

and

impact

of

COVID-19,

are

creating

significant

disruption

in

supply

chains

and

economic

activity.

As

COVID-19

continues

to

spread,

the

potential

impacts,

including

a

global,

regional

or

other

economic

recession,

are

increasingly

difficult

to

assess.

These

events,

or

fear

of

such

an

event,

present

material

uncertainty

and

risk

with

respect

to

the

Fund’s

performance

and

financial

results.

10.

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.

Total

Distributable

Earnings

(Accumulated

Loss)

Capital

Shares

and

Additional

Paid-in-Capital

Principal

Diversified

Select

Real

Asset

Fund

$

1

$

(

1

)

Unrealized

Appreciation

Unrealized

(Depreciation)

Net

Unrealized

Appreciation/

(Depreciation)

Cost

for

Federal

Income

Tax

Purposes

Principal

Diversified

Select

Real

Asset

Fund

$

10,102

$

(12,445)

$

(2,343)

$

143,088

8.

Federal

Tax

Information

(continued)

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

See

accompanying

notes.

14

INVESTMENT

COMPANIES

-

6.05%

Shares

Held

Value

(000's)

Exchange-Traded

Funds

-

0.18%

SPDR

S&P

Global

Natural

Resources

ETF

6,579‌

$

248‌

Money

Market

Funds

-

5.87%

Morgan

Stanley

Institutional

Liquidity

Funds

-

Government

Portfolio

-

Institutional

Class

0.02%

(a)

8,294,422‌

8,294‌

TOTAL

INVESTMENT

COMPANIES

$

8,542‌

PRIVATE

INVESTMENT

FUNDS

-

16.56%

Shares/Units

Held

Value

(000's)

Agriculture

-

4.98%

Ceres

Farmland

Holdings,

LP

(b)

6,000,000‌

$

6,224‌

UBS

AgriVest

Farmland

Fund,

LP

(b)

400‌

809‌

$

7,033‌

Diversified

Financial

Services

-

2.16%

Sound

Point

CLO

Fund,

LP

(b)

N/A‌

3,044‌

Forest

Products

&

Paper

-

5.81%

BTG

Pactual

Open

Ended

Core

US

Timberland

Fund,

LP

(b)

6,905‌

8,081‌

Hancock

Timberland

and

Farmland

Fund,

LP

(b)

117‌

120‌

$

8,201‌

Real

Estate

-

3.61%

UBS

Trumbull

Property

Growth

&

Income

Fund,

LP

(b)

200‌

5,103‌

TOTAL

PRIVATE

INVESTMENT

FUNDS

$

23,381‌

COMMON

STOCKS

-

48.16%

Shares

Held

Value

(000's)

Agriculture

-

0.18%

Archer-Daniels-Midland

Co

2,728‌

$

127‌

Bunge

Ltd

2,677‌

122‌

$

249‌

Biotechnology

-

0.09%

Corteva

Inc

4,278‌

123‌

Building

Materials

-

0.32%

Fortune

Brands

Home

&

Security

Inc

1,396‌

121‌

Geberit

AG

366‌

217‌

Masco

Corp

2,023‌

111‌

$

449‌

Chemicals

-

0.86%

CF

Industries

Holdings

Inc

3,743‌

115‌

Ecolab

Inc

1,877‌

375‌

FMC

Corp

1,144‌

121‌

ICL

Group

Ltd

32,780‌

116‌

Mosaic

Co/The

6,701‌

122‌

Nutrien

Ltd

3,294‌

129‌

Sociedad

Quimica

y

Minera

de

Chile

SA

ADR

3,895‌

126‌

Yara

International

ASA

2,896‌

112‌

$

1,216‌

Commercial

Services

-

1.49%

Atlas

Arteria

Ltd

194,816‌

856‌

Transurban

Group

122,066‌

1,246‌

$

2,102‌

Consumer

Products

-

0.10%

Avery

Dennison

Corp

1,059‌

135‌

Electric

-

11.54%

AusNet

Services

791,770‌

1,069‌

Brookfield

Renewable

Corp

25,987‌

1,523‌

Clearway

Energy

Inc

-

Class

C

54,027‌

1,457‌

Dominion

Energy

Inc

3,488‌

275‌

Duke

Energy

Corp

13,018‌

1,153‌

Edison

International

13,232‌

673‌

EDP

-

Energias

de

Portugal

SA

229,558‌

1,129‌

Emera

Inc

25,702‌

1,056‌

National

Grid

PLC

68,105‌

782‌

Public

Service

Enterprise

Group

Inc

19,523‌

1,072‌

Red

Electrica

Corp

SA

87,944‌

1,649‌

Southern

Co/The

16,990‌

921‌

Spark

Infrastructure

Group

729,230‌

1,071‌

SSE

PLC

50,681‌

789‌

Terna

Rete

Elettrica

Nazionale

SpA

124,301‌

870‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Electric

(continued)

Transmissora

Alianca

de

Energia

Eletrica

SA

160,500‌

$

801‌

$

16,290‌

Electronics

-

0.34%

Badger

Meter

Inc

3,666‌

240‌

Watts

Water

Technologies

Inc

2,429‌

243‌

$

483‌

Energy

-

Alternate

Sources

-

1.90%

Enviva

Partners

LP

(c),(d),(e)

30,769‌

1,239‌

NextEra

Energy

Partners

LP

24,136‌

1,447‌

$

2,686‌

Engineering

&

Construction

-

0.99%

AECOM

(c)

3,039‌

127‌

Aena

SME

SA

(c),(f)

1,785‌

248‌

Grupo

Aeroportuario

del

Pacifico

SAB

de

CV

45,200‌

363‌

Stantec

Inc

6,774‌

206‌

Sydney

Airport

105,757‌

449‌

$

1,393‌

Environmental

Control

-

1.80%

China

Water

Affairs

Group

Ltd

256,000‌

202‌

Evoqua

Water

Technologies

Corp

(c)

23,385‌

496‌

Kurita

Water

Industries

Ltd

11,600‌

384‌

METAWATER

Co

Ltd

11,800‌

258‌

Montrose

Environmental

Group

Inc

(c)

4,598‌

109‌

Pentair

PLC

10,486‌

480‌

Tetra

Tech

Inc

6,421‌

613‌

$

2,542‌

Food

-

0.17%

Ingredion

Inc

1,519‌

115‌

Wilmar

International

Ltd

38,100‌

124‌

$

239‌

Forest

Products

&

Paper

-

0.74%

International

Paper

Co

3,367‌

136‌

Mondi

PLC

6,244‌

132‌

Nine

Dragons

Paper

Holdings

Ltd

110,000‌

139‌

Oji

Holdings

Corp

27,000‌

124‌

Smurfit

Kappa

Group

PLC

3,441‌

135‌

Stora

Enso

Oyj

8,284‌

130‌

Svenska

Cellulosa

AB

SCA

(c)

9,454‌

130‌

UPM-

Kymmene

Oyj

4,020‌

122‌

$

1,048‌

Gas

-

2.00%

Enagas

SA

35,046‌

809‌

Italgas

SpA

102,919‌

649‌

Snam

SpA

264,583‌

1,361‌

$

2,819‌

Healthcare

-

Products

-

0.78%

Danaher

Corp

5,135‌

1,106‌

Home

Furnishings

-

0.12%

Coway

Co

Ltd

(c)

2,470‌

168‌

Housewares

-

0.08%

Scotts

Miracle-

Gro

Co/The

725‌

111‌

Internet

-

0.03%

21Vianet

Group

Inc

ADR

(c)

1,743‌

40‌

Iron

&

Steel

-

0.51%

ArcelorMittal

SA

(c)

9,634‌

128‌

Fortescue

Metals

Group

Ltd

9,482‌

111‌

Nippon

Steel

Corp

(c)

12,400‌

117‌

Nucor

Corp

2,686‌

121‌

POSCO

787‌

132‌

Vale

SA

ADR

11,105‌

117‌

$

726‌

Lodging

-

0.03%

City

Developments

Ltd

7,700‌

43‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

See

accompanying

notes.

15

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Machinery

-

Diversified

-

1.09%

IDEX

Corp

1,853‌

$

338‌

Mueller

Water

Products

Inc

-

Class

A

19,689‌

205‌

Xylem

Inc

/NY

11,868‌

998‌

$

1,541‌

Metal

Fabrication

&

Hardware

-

0.30%

Advanced

Drainage

Systems

Inc

6,789‌

424‌

Mining

-

1.94%

Agnico

Eagle

Mines

Ltd

1,481‌

118‌

Anglo

American

PLC

4,978‌

120‌

AngloGold

Ashanti

Ltd

ADR

4,138‌

109‌

Antofagasta

PLC

8,495‌

112‌

Barrick

Gold

Corp

4,119‌

116‌

BHP

Group

Ltd

4,357‌

113‌

Franco-Nevada

Corp

812‌

114‌

Freeport-McMoRan

Inc

7,825‌

122‌

Fresnillo

PLC

7,226‌

112‌

Glencore

PLC

(c)

53,926‌

112‌

Gold

Fields

Ltd

ADR

9,375‌

115‌

Kinross

Gold

Corp

13,744‌

121‌

Kirkland

Lake

Gold

Ltd

2,289‌

112‌

Korea

Zinc

Co

Ltd

365‌

118‌

MMC

Norilsk

Nickel

PJSC

ADR

4,689‌

113‌

Newcrest

Mining

Ltd

5,168‌

117‌

Newmont

Corp

1,815‌

115‌

Polymetal

International

PLC

4,498‌

98‌

Polyus

PJSC

993‌

105‌

Rio

Tinto

Ltd

1,687‌

115‌

South32

Ltd

78,654‌

117‌

Southern

Copper

Corp

2,539‌

115‌

Sumitomo

Metal

Mining

Co

Ltd

4,000‌

124‌

Wheaton

Precious

Metals

Corp

2,283‌

112‌

$

2,745‌

Oil

&

Gas

-

2.08%

BP

PLC

34,530‌

100‌

Canadian

Natural

Resources

Ltd

6,188‌

99‌

Chevron

Corp

1,456‌

105‌

CNOOC

Ltd

107,000‌

103‌

ConocoPhillips

3,223‌

106‌

Ecopetrol

SA

ADR

10,725‌

106‌

Eni

SpA

13,094‌

102‌

EOG

Resources

Inc

2,694‌

97‌

Equinor

ASA

7,487‌

106‌

Exxon

Mobil

Corp

3,058‌

105‌

Gazprom

PJSC

ADR

25,103‌

109‌

LUKOIL

PJSC

ADR

1,785‌

103‌

Marathon

Petroleum

Corp

3,444‌

101‌

Neste

Oyj

2,278‌

120‌

Novatek

PJSC

826‌

113‌

Occidental

Petroleum

Corp

9,588‌

96‌

Petroleo

Brasileiro

SA

ADR

14,951‌

106‌

Phillips

66

2,088‌

108‌

Pioneer

Natural

Resources

Co

1,176‌

101‌

Reliance

Industries

Ltd

(f)

2,109‌

128‌

Repsol

SA

15,424‌

104‌

Rosneft

Oil

Co

PJSC

24,045‌

118‌

Royal

Dutch

Shell

PLC

-

A

Shares

8,243‌

103‌

Suncor

Energy

Inc

7,604‌

93‌

Tatneft

PJSC

ADR

2,734‌

98‌

TOTAL

SE

3,086‌

106‌

Valero

Energy

Corp

2,322‌

101‌

Woodside

Petroleum

Ltd

8,436‌

107‌

$

2,944‌

Oil

&

Gas

Services

-

0.13%

Halliburton

Co

7,550‌

91‌

Schlumberger

NV

6,425‌

100‌

$

191‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Packaging

&

Containers

-

0.55%

Amcor

PLC

11,045‌

$

122‌

DS

Smith

PLC

35,265‌

134‌

Packaging

Corp

of

America

1,207‌

132‌

Sealed

Air

Corp

3,108‌

120‌

SIG

Combibloc

Group

AG

(c)

6,200‌

124‌

Westrock

Co

4,027‌

140‌

$

772‌

Pipelines

-

4.07%

APA

Group

96,842‌

720‌

Cheniere

Energy

Inc

(c)

8,562‌

396‌

Enbridge

Inc

14,569‌

426‌

Enterprise

Products

Partners

LP

37,087‌

586‌

Equitrans

Midstream

Corp

20,203‌

171‌

Gibson

Energy

Inc

26,743‌

433‌

Hess

Midstream

LP

13,730‌

207‌

Kinder

Morgan

Inc

25,785‌

318‌

Magellan

Midstream

Partners

LP

10,311‌

353‌

MPLX

LP

27,006‌

425‌

Noble

Midstream

Partners

LP

48,304‌

353‌

ONEOK

Inc

8,357‌

217‌

Plains

All

American

Pipeline

LP

24,013‌

144‌

Williams

Cos

Inc

/The

51,058‌

1,003‌

$

5,752‌

Private

Equity

-

0.17%

Centuria

Capital

Group

148,230‌

239‌

Real

Estate

-

1.52%

Castellum

AB

4,881‌

111‌

Entra

ASA

(f)

5,078‌

71‌

ESR

Cayman

Ltd

(c),(f)

2,400‌

7‌

Fabege

AB

5,831‌

81‌

LEG

Immobilien

AG

1,274‌

182‌

Midea

Real

Estate

Holding

Ltd

(f)

21,200‌

51‌

Mitsubishi

Estate

Co

Ltd

14,300‌

217‌

Mitsui

Fudosan

Co

Ltd

6,900‌

120‌

New

World

Development

Co

Ltd

46,750‌

228‌

Sun

Hung

Kai

Properties

Ltd

15,000‌

193‌

Vonovia

SE

9,627‌

660‌

Wihlborgs

Fastigheter

AB

4,747‌

94‌

Zhongliang

Holdings

Group

Co

Ltd

203,000‌

132‌

$

2,147‌

REITs

-

8.00%

AIMS

APAC

REIT

65,200‌

58‌

Alexandria

Real

Estate

Equities

Inc

413‌

66‌

American

Campus

Communities

Inc

1,040‌

36‌

American

Homes

4

Rent

7,287‌

208‌

American

Tower

Corp

421‌

102‌

Apartment

Investment

and

Management

Co

2,674‌

90‌

Arena

REIT

72,239‌

141‌

AvalonBay

Communities

Inc

580‌

87‌

Big

Yellow

Group

PLC

15,809‌

212‌

Broadstone

Net

Lease

Inc

4,533‌

76‌

Camden

Property

Trust

1,000‌

89‌

Centuria

Industrial

REIT

33,365‌

75‌

Centuria

Office

REIT

32,976‌

48‌

CFE

Capital

S

de

RL

de

CV

526,500‌

611‌

CoreSite

Realty

Corp

1,608‌

191‌

CRE

Logistics

REIT

Inc

(c)

35‌

52‌

Crown

Castle

International

Corp

4,883‌

813‌

CubeSmart

7,103‌

230‌

CyrusOne

Inc

1,804‌

126‌

Daiwa

Office

Investment

Corp

15‌

86‌

Dexus

13,775‌

88‌

Dream

Industrial

Real

Estate

Investment

Trust

29,600‌

251‌

Equinix

Inc

309‌

235‌

Essential

Properties

Realty

Trust

Inc

5,145‌

94‌

Essex

Property

Trust

Inc

246‌

49‌

Gecina

SA

1,139‌

150‌

Goodman

Group

14,508‌

188‌

Healthcare

Trust

of

America

Inc

7,253‌

189‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

See

accompanying

notes.

16

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

REITs

(continued)

Healthpeak

Properties

Inc

6,606‌

$

179‌

Independence

Realty

Trust

Inc

24,316‌

282‌

Industrial

&

Infrastructure

Fund

Investment

Corp

68‌

117‌

Industrial

Logistics

Properties

Trust

10,761‌

235‌

Ingenia

Communities

Group

46,361‌

153‌

Inmobiliaria

Colonial

Socimi

SA

9,731‌

80‌

Investec

Australia

Property

Fund

26,578‌

25‌

Invitation

Homes

Inc

15,123‌

423‌

Japan

Hotel

REIT

Investment

Corp

211‌

104‌

Lendlease

Global

Commercial

REIT

41,300‌

21‌

Link

REIT

23,100‌

189‌

Merlin

Properties

Socimi

SA

12,739‌

106‌

MGM

Growth

Properties

LLC

3,391‌

95‌

Minto

Apartment

Real

Estate

Investment

Trust

4,200‌

58‌

NewRiver

REIT

PLC

33,633‌

21‌

Nippon

Prologis

REIT

Inc

(c)

30‌

101‌

Nomura

Real

Estate

Master

Fund

Inc

100‌

125‌

NSI

NV

4,036‌

142‌

Park

Hotels

&

Resorts

Inc

6,593‌

66‌

Plymouth

Industrial

REIT

Inc

5,614‌

69‌

Prologis

Inc

8,107‌

816‌

Rayonier

Inc

4,171‌

110‌

Rexford

Industrial

Realty

Inc

2,355‌

108‌

Sabana

Shari'ah

Compliant

Industrial

Real

Estate

Investment

Trust

220,000‌

59‌

Sabra

Health

Care

REIT

Inc

5,414‌

75‌

Segro

PLC

32,317‌

388‌

Sekisui

House

Reit

Inc

246‌

182‌

Simon

Property

Group

Inc

271‌

18‌

STORE

Capital

Corp

7,295‌

200‌

Summit

Industrial

Income

REIT

22,930‌

221‌

Sun

Communities

Inc

1,857‌

261‌

Sunstone

Hotel

Investors

Inc

4,860‌

39‌

Taubman

Centers

Inc

614‌

20‌

Terreno

Realty

Corp

1,300‌

71‌

UNITE

Group

PLC/The

7,492‌

81‌

United

Urban

Investment

Corp

157‌

175‌

Ventas

Inc

3,172‌

133‌

VICI

Properties

Inc

8,201‌

192‌

Vicinity

Centres

32,220‌

32‌

Welltower

Inc

6,543‌

360‌

Weyerhaeuser

Co

7,512‌

214‌

WPT

Industrial

Real

Estate

Investment

Trust

23,821‌

303‌

$

11,290‌

Telecommunications

-

0.06%

Eutelsat

Communications

SA

9,433‌

92‌

Water

-

4.18%

Aguas

Andinas

SA

2,357,856‌

661‌

American

Water

Works

Co

Inc

8,842‌

1,281‌

Essential

Utilities

Inc

19,628‌

790‌

Guangdong

Investment

Ltd

180,000‌

286‌

Middlesex

Water

Co

1,438‌

89‌

Pennon

Group

PLC

23,599‌

314‌

Severn

Trent

PLC

19,739‌

622‌

Suez

SA

31,010‌

573‌

United

Utilities

Group

PLC

50,446‌

557‌

Veolia

Environnement

SA

27,136‌

586‌

York

Water

Co/The

3,441‌

145‌

$

5,904‌

TOTAL

COMMON

STOCKS

$

68,009‌

CONVERTIBLE

PREFERRED

STOCKS

-

1.37%

Shares

Held

Value

(000's)

Pipelines

-

1.34%

Targa

Resources

Corp

9.50%,

02/18/2021

(d),(e),(g),(h)

2,000‌

$

1,890‌

REITs

-

0.03%

RPT

Realty

7.25%

(g)

1,037‌

42‌

TOTAL

CONVERTIBLE

PREFERRED

STOCKS

$

1,932‌

PREFERRED

STOCKS

-

0.40%

Shares

Held

Value

(000's)

Electric

-

0.40%

Cia

de

Transmissao

de

Energia

Eletrica

Paulista

0.15%

145,300‌

$

564‌

TOTAL

PREFERRED

STOCKS

$

564‌

BONDS

-

23.73%

Principal

Amount

(000's)

Value

(000's)

Commercial

Mortgage

Backed

Securities

-

17.43%

Banc

of

America

Commercial

Mortgage

Trust

2015-UBS7

3.17%,

09/15/2048

$

1,000‌

$

676‌

BANK

2018-BNK13

3.00%,

08/15/2061

(f)

2,000‌

1,424‌

BANK

2018-BNK15

4.81%,

11/15/2061

(

i

)

1,100‌

1,114‌

BANK

2019-BNK22

1.50%,

11/15/2062

(f),(

i

),(j)

2,000‌

209‌

2.08%,

11/15/2062

(f),(

i

)

1,000‌

386‌

Benchmark

2018-B6

Mortgage

Trust

3.27%,

10/10/2051

(f),(

i

)

1,000‌

819‌

3.27%,

10/10/2051

(f),(

i

)

550‌

388‌

Benchmark

2019-B12

Mortgage

Trust

3.00%,

08/15/2052

(f)

2,391‌

2,034‌

Benchmark

2019-B13

Mortgage

Trust

1.14%,

08/15/2057

(f),(

i

),(j)

1,750‌

125‌

3.00%,

08/15/2057

(f)

1,750‌

706‌

Cantor

Commercial

Real

Estate

Lending

2019-CF1

4.35%,

05/15/2052

(

i

)

1,000‌

1,085‌

CCUBS

Commercial

Mortgage

Trust

2017-C1

3.91%,

11/15/2050

(

i

)

1,000‌

1,135‌

Citigroup

Commercial

Mortgage

Trust

2018-C6

5.24%,

11/10/2051

(

i

)

1,000‌

988‌

Citigroup

Commercial

Mortgage

Trust

2019-GC41

3.00%,

08/10/2056

(f)

1,750‌

1,435‌

3.00%,

08/10/2056

(f)

1,400‌

605‌

COMM

2015-CCRE25

Mortgage

Trust

4.69%,

08/10/2048

(f),(

i

)

500‌

320‌

Csail

2015-C2

Commercial

Mortgage

Trust

3.23%,

06/15/2057

(f)

500‌

251‌

4.33%,

06/15/2057

(

i

)

500‌

332‌

DBJPM

20-C9

Mortgage

Trust

3.61%,

09/15/2053

(

i

)

500‌

516‌

Freddie

Mac

Multifamily

Structured

Pass

Through

Certificates

1.63%,

01/25/2027

(

i

),(j)

11,986‌

993‌

GS

Mortgage

Securities

Trust

2013-GCJ14

4.90%,

08/10/2046

(f),(

i

)

539‌

408‌

GS

Mortgage

Securities

Trust

2019-GC40

1.30%,

07/10/2052

(f),(

i

),(j)

9,860‌

859‌

3.00%,

07/10/2052

(f)

2,000‌

1,671‌

GS

Mortgage

Securities

Trust

2019-GC42

0.94%,

09/01/2052

(f),(

i

),(j)

3,246‌

231‌

2.80%,

09/01/2052

(f)

1,500‌

1,263‌

JPMBB

Commercial

Mortgage

Securities

Trust

2014-C21

4.81%,

08/15/2047

(f),(

i

)

1,000‌

876‌

JPMBB

Commercial

Mortgage

Securities

Trust

2015-C28

3.79%,

10/15/2048

(f),(

i

)

500‌

75‌

JPMBB

Commercial

Mortgage

Securities

Trust

2015-C29

3.85%,

05/15/2048

(

i

)

560‌

416‌

JPMCC

Commercial

Mortgage

Securities

Trust

2019-COR4

3.00%,

03/10/2052

(f)

2,000‌

1,627‌

Morgan

Stanley

Bank

of

America

Merrill

Lynch

Trust

2015-C25

4.68%,

10/15/2048

(f),(

i

)

1,000‌

626‌

4.68%,

10/15/2048

(f),(

i

)

500‌

354‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

See

accompanying

notes.

17

BONDS

(continued)

Principal

Amount

(000’s)

Value

(000’s)

Commercial

Mortgage

Backed

Securities

(continued)

WFRBS

Commercial

Mortgage

Trust

2014-C20

3.99%,

05/15/2047

(f)

$

500‌

$

306‌

WFRBS

Commercial

Mortgage

Trust

2014-C21

3.50%,

08/15/2047

(f)

500‌

354‌

$

24,607‌

Commercial

Services

-

0.55%

APX

Group

Inc

6.75%,

02/15/2027

(f)

750‌

778‌

Food

-

0.35%

H-Food

Holdings

LLC

/

Hearthside

Finance

Co

Inc

8.50%,

06/01/2026

(f)

500‌

489‌

Healthcare

-

Services

-

0.53%

Hadrian

Merger

Sub

Inc

8.50%,

05/01/2026

(f)

750‌

746‌

Insurance

-

0.55%

Acrisure

LLC

/

Acrisure

Finance

Inc

10.13%,

08/01/2026

(f)

700‌

775‌

Leisure

Products

&

Services

-

0.44%

Constellation

Merger

Sub

Inc

8.50%,

09/15/2025

(f)

750‌

623‌

Media

-

0.19%

Cengage

Learning

Inc

9.50%,

06/15/2024

(f)

406‌

268‌

McGraw-Hill

Global

Education

Holdings

LLC

/

McGraw-Hill

Global

Education

Finance

7.88%,

05/15/2024

(f)

15‌

8‌

$

276‌

Miscellaneous

Manufacturers

-

0.58%

FXI

Holdings

Inc

7.88%,

11/01/2024

(f)

688‌

653‌

12.25%,

11/15/2026

(f)

160‌

171‌

$

824‌

Mortgage

Backed

Securities

-

1.82%

Freddie

Mac

STACR

2019-HQA3

7.65%,

09/25/2049

(f)

500‌

401‌

1.00

x

1

Month

USD

LIBOR

+

7.50%

Freddie

Mac

STACR

Remic

Trust

2020-DNA2

4.95%,

02/25/2050

(f)

500‌

300‌

1.00

x

1

Month

USD

LIBOR

+

4.80%

Freddie

Mac

STACR

Trust

2019-DNA2

10.65%,

03/25/2049

(f)

900‌

828‌

1.00

x

1

Month

USD

LIBOR

+

10.50%

Freddie

Mac

STACR

Trust

2019-DNA3

8.30%,

07/25/2049

(f)

250‌

198‌

1.00

x

1

Month

USD

LIBOR

+

8.15%

Freddie

Mac

STACR

Trust

2019-HQA2

11.40%,

04/25/2049

(f)

900‌

844‌

1.00

x

1

Month

USD

LIBOR

+

11.25%

$

2,571‌

Other

Asset

Backed

Securities

-

0.31%

Oaktree

CLO

2019-4

Ltd

7.50%,

10/20/2032

(f)

500‌

439‌

1.00

x

3

Month

USD

LIBOR

+

7.23%

Retail

-

0.40%

Staples

Inc

10.75%,

04/15/2027

(f)

700‌

561‌

Telecommunications

-

0.58%

Consolidated

Communications

Inc

6.50%,

10/01/2022

417‌

417‌

Gogo

Intermediate

Holdings

LLC

/

Gogo

Finance

Co

Inc

9.88%,

05/01/2024

(f)

372‌

397‌

$

814‌

TOTAL

BONDS

$

33,503‌

CONVERTIBLE

BONDS

-

3.05%

Principal

Amount

(000's)

Value

(000's)

Energy

-

Alternate

Sources

-

3.05%

Sunnova

Energy

International

Inc

9.75%,

04/30/2025

(d),(e),(h),(

i

)

$

1,777‌

$

4,312‌

TOTAL

CONVERTIBLE

BONDS

$

4,312‌

SENIOR

FLOATING

RATE

INTERESTS

-

0.36%

Principal

Amount

(000's)

Value

(000's)

Automobile

Parts

&

Equipment

-

0.36%

GC

EOS

Buyer

Inc

9.58%,

06/29/2026

(k)

$

700‌

$

502‌

3

Month

USD

LIBOR

+

2.75%

TOTAL

SENIOR

FLOATING

RATE

INTERESTS

$

502‌

Total

Investments

$

140,745‌

Other

Assets

and

Liabilities

-  0.32%

463‌

TOTAL

NET

ASSETS

-

100.00%

$

141,208‌

(a)

Current

yield

shown

is

as

of

period

end.

(b)

Private

Investment

Funds

have

quarterly

or

annual

redemption

frequencies

and

are

considered

restricted

securities.

Please

see

Private

Investment

Funds

sub-schedule

for

additional

information.

(c)

Non-income

producing

security

(d)

Restricted

Security.

Please

see

Restricted

Securities

sub-schedule

for

additional

information.

(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

$7,441

or

5.27%

of

net

assets.

(f)

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

$26,336

or

18.65%

of

net

assets.

(g)

Perpetual

security.

Perpetual

securities

pay

an

indefinite

stream

of

interest,

but

they

may

be

called

by

the

issuer

at

an

earlier

date.

Date

shown,

if

any,

reflects

the

next

call

date

or

final

legal

maturity

date.

Rate

shown

is

as

of

period

end.

(h)

The

value

of

these

investments

was

determined

using

significant

unobservable

inputs.

(

i

)

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.

(j)

Security

is

an

Interest

Only

Strip.

(k)

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

19.25‌%

Utilities

18.12‌%

Financial

16.12‌%

Energy

12.57‌%

Industrial

11.70‌%

Consumer,

Non-cyclical

9.22‌%

Money

Market

Funds

5.87‌%

Basic

Materials

4.05‌%

Consumer,

Cyclical

1.43‌%

Communications

0.86‌%

Asset

Backed

Securities

0.31‌%

Investment

Companies

0.18‌%

Other

Assets

and

Liabilities

0.32‌%

TOTAL

NET

ASSETS

100.00%

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

See

accompanying

notes.

18

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

$

8,081‌

90

5.73%

Ceres

Farmland

Holdings,

LP

(b)

11/06/2019

6,000‌

6,224‌

N/A

4.41%

Hancock

Timberland

and

Farmland

Fund,

LP

(c)

04/28/2020

120‌

120‌

N/A

0.08%

Sound

Point

CLO

Fund,

LP

(d)

08/01/2019

4,000‌

3,044‌

60

2.16%

UBS

AgriVest

Farmland

Fund,

LP

(e)

06/10/2020

800‌

809‌

60

0.57%

UBS

Trumbull

Property

Growth

&

Income

Fund,

LP

(f)

03/18/2020

5,000‌

5,103‌

60

3.61%

Total

$

23,381‌

16.56%

The

private

investment

funds

listed

in

the

table

do

not

include

any

unfunded

commitments.

Amounts

in

thousands.

(a)

The

fund

was

established

to

invest

and

reinvest

assets

of

the

investors

through

the

REIT,

primarily

in

interests

(including

ownership

or

leasehold

interests)

in

real

property,

which

is

to

be

planted

with

trees,

or

real

property

on

which

trees

are

growing

(timberland),

trees

growing

on

timberland,

or

trees

which

have

been

cut

but

not

removed

from

the

timberland

(timber);

contracts

or

agreements

for

the

cutting

and/or

use

of

timber

on

timberland.

Timber

investments

are

not

intended

to

produce

immediate

revenues.

Redemptions

are

subject

to

a

two-year

holding

period

from

the

acquisition

date.

(b)

The

fund

is

an

open-ended

investment

fund

whose

objective

is

to

generate

an

attractive

total

return

through

the

acquisition

and

management

of

farmland

in

the

Midwestern

United

States.

Redemptions

are

subject

to

a

one-year

holding

period

from

the

acquisition

date.

After

the

holding

period

has

expired,

redemptions

are

permitted

with

written

redemption

notice

five

months

prior

to

the

annual

redemption

date,

which

is

the

last

day

of

February.

(c)

This

open-end

fund

blends

the

two

asset

classes

of

timberland

and

farmland.

The

geographic

focus

will

be

in

the

U.S.,

Canada,

Australia,

New

Zealand,

Chile,

Brazil,

Uruguay,

and

Western

Europe.

Agriculture

investments

will

be

diversified

among

row

crops

(corn,

soy,

wheat,

etc.),

permanent

crops

(vines/trees),

and

commodity

crops

(cotton,

lettuce,

strawberries,

etc.).

Redemptions

are

subject

to

a

three-year

holding

period

from

the

acquisition

date.

After

the

holding

period

has

expired,

redemptions

are

permitted

with

written

redemption

notice

given

by

April

30th

of

that

year.

(d)

The

fund

was

organized

for

the

purpose

of

trading

and

investing

in

residual

tranches

and

other

notes

issued

by

and

with

respect

to

collateralized

loan

obligations.

Redemptions

are

subject

to

a

one-year

holding

period

from

the

acquisition

date.

(e)

This

open-end

fund

invests

primarily

in

U.S.

farmland.

It

is

a

well-diversified

portfolio

across

many

regions

of

the

country

and

diversified

across

row

crops,

vegetable

crops,

and

permanent

crops.

(f)

This

open-end,

commingled

private

real

estate

portfolio

combines

value-add

properties

with

capital

appreciation

potential

and

more

stable

income-generating

properties.

Properties

in

the

portfolio

typically

start

as development,

renovation,

repositioning,

or

lease-up

stage

investments,

and

transition

toward

stabilized

assets.

Restricted

Securities

Security

Name

Acquisition

Date

Cost

Value

Percent

of

Net

Assets

Enviva

Partners

LP

06/23/2020

$

1,000‌

$

1,239‌

0.88%

Sunnova

Energy

International

Inc

9.75%,

04/30/2025

05/21/2020

1,777‌

4,312‌

3.05%

Targa

Resources

Corp  

9.50%,

02/18/2021

11/18/2019

2,150‌

1,890‌

1.34%

Total

$

7,441‌

5.27%

Amounts

in

thousands.

Glossary

to

the

Schedule

of

Investments

September

30,

2020

(unaudited)

See

accompanying

notes.

19

Currency

Abbreviations

USD/$

United

States

Dollar

See

accompanying

notes.

20

Financial

Highlights

(unaudited)

Net

Asset

Value,

Beginning

of

Period

Net

Investment

Income

(Loss)

(a)

Net

Realized

and

Unrealized

Gain

(Loss)

on

Investments

Total

From

Investment

Operations

Dividends

from

Net

Investment

Income

Tax

Return

of

Capital

Distribution

Total

Dividends

and

Distributions

Net

Asset

Value,

End

of

Period

PRINCIPAL

DIVERSIFIED

SELECT

REAL

ASSET

FUND

Class

A

shares

September

30,

2020(b)

$

19

.35‌

$

0

.32‌

$

3

.79‌

$

4

.11‌

(

$

0

.34‌

)

$

–‌

(

$

0

.34‌

)

$

23

.12‌

March

31,

2020(h)

25

.00‌

0

.36‌

(

5

.61‌

)

(

5

.25‌

)

(

0

.35‌

)

(

0

.05‌

)

(

0

.40‌

)

19

.35‌

Class

Y

shares

September

30,

2020(b)

19

.39‌

0

.37‌

3

.81‌

4

.18‌

(

0

.36‌

)

–‌

(

0

.36‌

)

23

.21‌

March

31,

2020(h)

25

.00‌

0

.47‌

(

5

.64‌

)

(

5

.17‌

)

(

0

.39‌

)

(

0

.05‌

)

(

0

.44‌

)

19

.39‌

Institutional

shares

September

30,

2020(b)

19

.36‌

0

.35‌

3

.80‌

4

.15‌

(

0

.36‌

)

–‌

(

0

.36‌

)

23

.15‌

March

31,

2020(h)

25

.00‌

0

.41‌

(

5

.61‌

)

(

5

.20‌

)

(

0

.39‌

)

(

0

.05‌

)

(

0

.44‌

)

19

.36‌

See

accompanying

notes.

21

Financial

Highlights

(Continued)

(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

21

.05‌

%

(c)

,(d)

,(e)

$

239‌

1

.67‌

%

(f)

,(g)

2

.92‌

%

(f)

37

.3‌

%

(f)

(

21

.27‌

)

(c)

,(e)

197‌

1

.93‌

(f)

,(g)

1

.86‌

(f)

56

.8‌

(f)

21

.40‌

(c)

,(d)

140,729‌

1

.17‌

(f)

,(g)

3

.44‌

(f)

37

.3‌

(f)

(

20

.98‌

)

(c)

98,501‌

1

.42‌

(f)

,(g)

2

.46‌

(f)

56

.8‌

(f)

21

.28‌

(c)

,(d)

240‌

1

.37‌

(f)

,(g)

3

.22‌

(f)

37

.3‌

(f)

(

21

.10‌

)

(c)

197‌

1

.63‌

(f)

,(g)

2

.15‌

(f)

56

.8‌

(f)

(a)

Calculated

based

on

average

shares

outstanding

during

the

period.

(b)

Six

months

ended

September

30,

2020.

(c)

Total

return

amounts

have

not

been

annualized.

(d)

Total

return

is

calculated

using

the

traded

net

asset

value

which

may

differ

from

the

reported

net

asset

value.

The

traded

net

asset

value

is

the

net

asset

value

which

a

shareholder

would

have

paid

or

received

from

a

subscription

or

redemption.

(e)

Total

return

is

calculated

without

the

front-end

sales

charge

or

contingent

deferred

sales

charge.

(f)

Computed

on

an

annualized

basis.

(g)

Reflects

Manager's

contractual

expense

limit.

(h)

Period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020.

Shareholder

Expense

Example

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2020

(unaudited)

22

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,

2020

to

September

30,

2020

,

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

April

1,

2020

Ending

Account

Value

September

30,

2020

Expenses

Paid

During Period

April

1,

2020 to

September

30,

2020

(a)

Beginning

Account

Value

April

1,

2020

Ending

Account

Value

September

30,

2020 

Expenses

Paid

During Period

April

1,

2020 to

September

30,

2020

(a)

Annualized

Expense

Ratio

Principal

Diversified

Select

Real

Asset

Fund

Class

A

$

1,000.00‌

$

1,210.47‌

$

9.25‌

$

1,000.00

$

1,016.70‌

$

8.44‌

1.67‌

%

Institutional

1,000.00‌

1,212.78‌

7.60‌

1,000.00

1,018.20‌

6.93‌

1.37‌

Class

Y

1,000.00‌

1,214.00‌

6.49‌

1,000.00

1,019.20‌

5.92‌

1.17‌

(a)

Expenses

are

equal

to

a

fund's

annualized

expense

ratio

multiplied

by

the

average

account

value

over

the

period,

multiplied

by

183/365

(to

reflect

the

one-half

year

period).

23

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

until

the

trustee

reaches

age

72

(unless

such

mandatory

age

is

waived

by

the

Board).

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

125

Durango

Herald,

Inc.;

McClatchy

Newspapers,

Inc.

Leroy

T.

Barnes,

Jr.

Trustee

since

2019

Member,

Audit

Committee

Member,

Nominating

and

Governance

Committee

1951

Retired.

125

McClatchy

Newspapers,

Inc.;

Frontier

Communications,

Inc.;

formerly,

Herbalife

Ltd.

Craig

Damos

Lead

Independent

Trustee

since

2020

Trustee

since

2019

Member,

Nominating

and

Governance

Committee

Member,

15(c)

Committee

Member,

Executive

Committee

1954

President,

C.P.

Damos

Consulting

LLC

125

None

Mark

A.

Grimmett

Trustee

since

2019

Member,

Audit

Committee

Member,

15(c)

Committee

1960

Formerly,

Executive

Vice

President

and

CFO,

Merle

Norman

Cosmetics,

Inc.

125

None

Fritz

S.

Hirsch

Trustee

since

2019

Member,

Nominating

and

Governance

Committee

Member,

Operations

Committee

Member,

15(c)

Committee

1951

Formerly,

CEO,

MAM

USA

125

MAM

USA

Tao

Huang

Trustee

since

2019

Member,

Operations

Committee

Member,

15(c)

Committee

1962

Retired.

125

Armstrong

World

Industries,

Inc.

and

Equity

Lifestyle

Properties,

Inc.

John

D.

Kenney

Trustee

since

2020

Member,

Operations

Committee

1965

Formerly,

Legg

Mason

Global

Asset

Management

125

Formerly:

Legg

Mason

Investment

Management

Affiliates:

Brandywine

Global;

Clarion

Partners;

ClearBridge

Investments;

Entrust

Global;

Legg

Mason

Poland;

Martin

Currie

Investment

Management;

Permal

Group

(merged

into

Entrust);

QS

Investors;

RARE

Infrastructure;

Royce

and

Associates;

and

Western

Asset

Management

Karen

(“Karrie”)

McMillan

Trustee

since

2019

Member,

Operations

Committee

1961

Managing

Director,

Patomak

Global

Partners,

LLC

125

None

24

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

Elizabeth

A.

Nickels

Trustee

since

2019

Member,

Audit

Committee

1962

Retired.

125

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.

125

Denbury

Resources

Inc.

and

Helmerich

&

Payne;

Formerly:

B/E

Aerospace;

Brown

Advisory;

Denbury

Resources

Inc.;

Nalco

(and

its

successor

Ecolab);

and

WP

Carey

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

Chair

and

Trustee

since

2019

Member,

Executive

Committee

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)

125

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

125

None

25

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

Kamal

Bhatia

President,

Chief

Executive

Officer

Des

Moines,

IA

50392

1972

President,

PFG,

PFSI,

and

PLIC

since

2019

Senior

Vice

President,

OppenheimerFunds

(2011-

2019)

Principal

Executive

Officer,

OC

Private

Capital

(2017-2019)

Randy

D.

Bolin

Assistant

Tax

Counsel

1961

Vice

President

and

Associate

General

Counsel,

PGI

since

2016

Assistant

General

Counsel,

PGI

(2007-2016)

Vice

President

and

Associate

General

Counsel,

PFSI

and

PLIC

since

2013

Tracy

W.

Bollin

Chief

Financial

Officer

Des

Moines,

IA

50392

1970

Managing

Director,

PGI

since

2016

Senior

Vice

President,

PFD

since

2015

Chief

Financial

Officer,

PFD

(2010-2016)

Chief

Operating

Officer

and

Senior

Vice

President,

PMC

(2015–2017)

Director,

PMC

(2014–2017)

President,

PSS

since

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

Sara

L.

Reece

Vice

President

and

Controller

Des

Moines,

IA

50392

1975

Director

-

Accounting,

PLIC

since

2015

Teri

R.

Root

Chief

Compliance

Officer

Des

Moines,

IA

50392

1979

Chief

Compliance

Officer

–

Funds,

PGI

since

2018

Interim

Chief

Compliance

Officer

(2018)

Deputy

Chief

Compliance

Officer

(2015-2018)

Deputy

Chief

Compliance

Officer,

PGI

since

2017

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

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

(2014-2017)

John

Sullivan

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1970

Counsel,

PGI

since

2019

Prior

thereto,

Attorney

in

Private

Practice

26

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

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.

Name,

Position

Held

with

the

Fund,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

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

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

and

Corporate

Secretary,

PLIC

since

2013

Jared

Yepsen

Assistant

Tax

Counsel

Des

Moines,

IA

50392

1981

Counsel,

PGI

since

2017

Counsel,

PLIC

since

2015

27

Additional

information

about

the

Fund

is

available

in

the

Prospectus

dated

August

1,

2020

and

as

supplemented,

and

the

Statement

of

Additional

Information

dated

August

1,

2020

and

as

supplemented.

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

for

the

first

and

third

quarters

of

each

fiscal

year

as

an

exhibit

to

its

reports

on

Form

N-PORT.

The

Fund’s

Form

N-PORT

reports

are

available

on

the

Commission’s

website

at

www.

sec.gov.

28

BOARD

CONSIDERATION

OF

INVESTMENT

ADVISORY

CONTRACTS

During

the

period

covered

by

this

report,

the

Board

of

Directors

of

Principal

Diversified

Select

Real

Asset

Fund

(“DSRA”)

approved

(1)

an

amended

Subadvisory

Agreement

between

ClearBridge

RARE

Infrastructure

(North

America)

Pty

Limited

(“ClearBridge”)

and

Principal

Global

Investors,

LLC

(the

“Manager”

or

“PGI”);

(2)

a

new

subadvisory

agreement

between

PGI

and

ClearBridge;

and

(3)

the

annual

review

and

renewal

of

the

Management

Agreement

and

various

subadvisory

agreements

for

the

Fund.

ClearBridge

Amended

Subadvisory

Agreement

On

June

8,

2020,

the

Board

considered

the

approval

of

an

amended

subadvisory

agreement

(the

“Subadvisory

Agreement”)

between

the

Manager

and

ClearBridge

RARE

Infrastructure

(North

America)

Pty

Limited

(the

“Subadvisor”)

in

connection

with

a

proposal

to

change

the

methodology

for

calculating

the

subadvisory

fee

and

to

amend

the

subadvisory

fee

schedule

to

reduce

the

effective

subadvisory

fee

rate

payable

at

certain

asset

levels.

Nature,

Quality

and

Extent

of

Services

The

Board

reviewed

materials

received

from

the

Manager

regarding

the

proposed

amendment

to

the

Fund’s

Subadvisory

Agreement

and

noted

that

because

the

subadvisory

fee

was

paid

by

the

Manager,

the

amendment

would

not

change

the

management

fee

rate

paid

by

the

Fund.

The

Board

considered

the

Manager’s

representation

that

the

amendment

would

not

reduce

the

quality

or

quantity

of

the

services

the

Subadvisor

provides

to

the

Fund

and

that

the

Subadvisor’s

obligations

under

the

Subadvisory

Agreement

would

remain

the

same

in

all

material

respects.

The

Board

also

considered

that

the

Manager

was

not

proposing

any

material

changes

to

the

terms

of

the

Subadvisory

Agreement

other

than

the

methodology

for

calculating

the

subadvisory

fee

and

the

subadvisory

fee

schedule.

The

Board

considered

that

they

had

last

approved

the

Subadvisory

Agreement

for

the

Fund

during

the

annual

contract

renewal

process

that

concluded

at

the

Board

of

Trustees’

September

2019

meeting.

They

noted

that

during

the

annual

contract

renewal

process,

they

had

considered

the

nature,

quality

and

extent

of

the

services

provided

by

the

Subadvisor

under

the

Subadvisory

Agreement

and

had

concluded,

based

upon

the

information

provided,

that

the

terms

of

the

Subadvisory

Agreement

were

reasonable

and

that

approval

of

the

Subadvisory

Agreement

was

in

the

best

interests

of

the

Fund.

Overall

Conclusions

Based

upon

all

of

the

information

considered,

the

Board

concluded

that

it

was

in

the

best

interests

of

the

Fund

to

approve

the

amended

Subadvisory

Agreement.

ClearBridge

New

Subadvisory

Agreement

On

June

8,

2020,

the

Board

considered

the

approval

of

a

new

subadvisory

agreement

(the

“New

Subadvisory

Agreement”)

between

the

Manager

and

ClearBridge

RARE

Infrastructure

(North

America)

Pty

Limited

(the

“Subadvisor”)

with

respect

to

the

public

global

infrastructure

investment

sleeve

of

the

Fund.

The

New

Subadvisory

Agreement

was

proposed

in

light

of

an

anticipated

change

in

control

transaction

with

respect

to

the

Subadvisor

(such

transaction

subsequently

occurring

on

July

31,

2020).

This

transaction

resulted

in

an

“assignment”

(as

defined

in

the

Investment

Company

Act

of

1940)

of

the

then

current

subadvisory

agreement

between

the

Manager

and

the

Subadvisor

(the

“Current

Subadvisory

Agreement”),

causing

the

Current

Subadvisory

Agreement

to

terminate

automatically.

The

Manager

proposed

that

the

Board

approve

the

New

Subadvisory

Agreement

to

take

effect

upon

the

termination

of

the

Current

Subadvisory

Agreement

in

order

to

allow

the

Subadvisor

to

continue

to

provide

portfolio

management

services

to

the

Fund

following

the

change

in

control.

The

Board

reviewed

materials

received

from

the

Manager

regarding

the

proposed

change

in

control

transaction.

The

Board

considered

that

they

had

last

approved

the

annual

renewal

of

the

Current

Subadvisory

Agreement

for

the

Fund

during

the

annual

contract

renewal

process

that

concluded

at

the

Board

of

Trustees’

September

2019

meeting,

and

that

they

had

subsequently

approved

an

amendment

to

the

Current

Subadvisory

Agreement

at

the

Board

of

Trustees’

June

2020

meeting

to

change

the

methodology

for

calculating

the

subadvisory

fee

and

to

amend

the

subadvisory

fee

schedule

to

reduce

the

effective

subadvisory

fee

rate

payable

at

certain

asset

levels.

They

noted

that

during

the

annual

contract

renewal

process,

they

had

considered

the

nature,

quality

and

extent

of

the

services

provided

by

the

Subadvisor

under

the

Current

Subadvisory

Agreement

and

had

concluded,

based

upon

the

information

provided,

that

the

terms

of

the

Current

Subadvisory

Agreement

were

reasonable

and

that

approval

of

the

Current

Subadvisory

Agreement

was

in

the

best

interest

of

the

Fund.

The

Board

considered

the

Manager’s

statement

that

there

were

no

anticipated

changes

to

the

current

portfolio

management

team,

investment

philosophy

or

process

at

the

Subadvisor,

that

the

change

in

ownership

was

not

expected

to

impact

the

nature,

quality

or

extent

of

services

that

the

Subadvisor

provides

to

the

Fund

and

that

the

Manager,

after

considering

the

assignment,

continued

to

believe

that

the

Subadvisor

is

an

appropriate

subadvisor

for

the

Fund.

The

Board

also

noted

the

Manager’s

statement

that

the

New

Subadvisory

Agreement

for

the

Fund

would

be

identical

to

the

Current

Subadvisory

Agreement

in

all

material

respects

(including

the

subadvisory

fee

schedule).

In

addition,

the

Board

considered

that

the

New

Subadvisory

Agreement

is

subject

to

approval

by

the

Fund’s

shareholders,

and

that

the

Subadvisor

will

cover

the

costs

of

filing

and

distributing

an

information

statement.

29

Based

upon

all

of

the

information

considered,

the

Board

concluded

that

it

was

in

the

best

interests

of

the

Fund

to

approve

the

New

Subadvisory

Agreement

to

take

effect

following

the

change

in

control

of

the

Subadvisor

and,

accordingly,

recommended

that

the

shareholders

of

the

Fund

vote

to

approve

the

New

Subadvisory

Agreement.

Annual

Review

and

Renewal

of

Management

Agreement

and

Subadvisory

Agreements

At

its

September

15,

2020

meeting,

the

Board

performed

its

annual

review

and

renewal

process

relating

to

the

Management

Agreement

and

the

Subadvisory

Agreements

for

the

Fund.

Section

15(c)

of

the

Investment

Company

Act

of

1940

(the

“1940

Act”)

requires

the

Board,

including

a

majority

of

the

Directors

who

have

no

direct

or

indirect

interest

in

the

investment

advisory

agreements

and

who

are

not

“interested

persons”

of

PFI,

as

defined

in

the

1940

Act

(the

“Board”),

annually

to

review

and

to

consider

the

continuation

of:

(1)

the

Management

Agreement

between

Principal

Global

Investors,

LLC

(the

“Manager”)

and

DSRA;

and

(2)

the

Subadvisory

Agreements

between

the

Manager

and

each

of

ClearBridge

RARE

Infrastructure

(North

America)

Pty

Limited;

DDJ

Capital

Management,

LLC;

KLS

Diversified

Asset

Management

LP;

Principal

Real

Estate

Investors,

LLC;

and

Tortoise

Capital

Advisors,

L.L.C.;

(collectively,

the

“Subadvisors”).

The

Management

Agreement

and

the

Subadvisory

Agreements

are

collectively

referred

to

as

the

“Advisory

Agreements.”

The

Board

considered

the

factors

and

reached

the

conclusions

described

below

relating

to

the

continuation

of

the

Advisory

Agreements.

In

evaluating

the

Advisory

Agreements,

the

Board

reviewed

a

broad

range

of

information

requested

for

this

purpose,

including,

among

other

information,

information

regarding

performance,

advisory

fees,

total

expenses,

profitability

from

the

Advisory

Agreements

to

the

Manager

and

information

about

economies

of

scale.

The

Board

reviewed

the

materials

provided

and

concluded

that

it

was

provided

all

information

reasonably

necessary

to

evaluate

the

Advisory

Agreements.

Management

Agreement

The

Board

considered,

among

other

factors,

that

the

Manager

and

its

affiliates

have

demonstrated

a

long-term

commitment

to

support

the

Fund,

including

undertakings

to

cap

Fund

expenses

and/or

waive

management

fees

for

the

Fund.

In

addition,

the

Board

considered

the

following

factors

for

the

Fund.

The

Board

concluded

that

a

relationship

with

a

capable

and

conscientious

investment

adviser

is

in

the

best

interest

of

the

Fund.

Nature,

Quality

and

Extent

of

Services

The

Board

considered

the

nature,

quality

and

extent

of

the

services

provided

under

the

Management

Agreement,

including

accounting

and

administrative

services,

as

applicable.

The

Board

considered

the

experience

and

skills

of

senior

management

leading

Fund

operations,

the

experience

and

skills

of

the

personnel

performing

the

functions

under

the

Management

Agreement

and

the

resources

made

available

to

such

personnel,

the

ability

of

the

Manager

to

attract

and

retain

high-quality

personnel

and

the

organizational

depth

and

stability

of

the

Manager.

The

Board

concluded

that

appropriate

resources

were

provided

under

the

Management

Agreement.

The

Board

also

considered

that

for

the

Fund,

during

the

periods

reviewed,

the

Manager

had

delegated

day-to-day

portfolio

management

responsibility

to

the

subadvisors.

The

Board

noted

that

the

Manager’s

process

for

the

selection

of

Subadvisors

emphasizes

the

selection

of

Principal-affiliated

subadvisors

that

are

determined

to

be

qualified

under

the

Manager’s

due

diligence

process,

but

that

the

Manager

will

select

an

unaffiliated

subadvisor

to

manage

all

or

a

portion

of

the

Fund’s

investment

portfolio

when

deemed

necessary

or

appropriate

based

upon

a

consideration

of

the

Fund’s

investment

mandate

and

available

expertise

and

resources

within

the

Principal

organization.

With

respect

to

the

Fund

with

unaffiliated

subadvisors,

the

Board

considered

the

due

diligence

process

developed

by

the

Manager

for

purposes

of

selecting

a

qualified

unaffiliated

subadvisor

for

the

Fund.

The

Board

considered

the

Manager’s

due

diligence

process

for

monitoring

and

replacing

Subadvisors

and

for

monitoring

the

investment

performance

of

the

Manager.

The

Board

also

considered

the

compliance

program

established

by

the

Manager

for

the

Fund,

the

quality

of

that

program

and

the

level

of

compliance

attained

by

the

Fund.

The

Board

noted

that

they

had

reviewed

annual

best

execution

and

soft

dollar

reports

and

information

regarding

the

research

payment

accounts

for

the

Fund

and

included

this

information

in

their

consideration

of

the

renewal

of

the

Advisory

Agreements.

Based

upon

all

relevant

factors,

the

Board

concluded

that

the

nature,

quality

and

extent

of

the

services

provided

by

the

Manager

to

the

Fund

under

the

Management

Agreement

was

satisfactory.

Investment

Performance

The

Board

reviewed

the

Fund’s

investment

performance

for

a

period

starting

at

the

Fund’s

inception

and

ending

on

March

31,

2020.

The

Board

noted

that

the

Fund

had

commenced

operations

recently

and,

accordingly,

limited

performance

information

was

considered.

Comparative

performance

information

was

based

upon

data

provided

by

Refinitiv

(formerly

Lipper).

The

Board

also

considered

whether

investment

results

were

consistent

with

the

Fund’s

investment

objective(s)

and

policies.

The

Board

concluded

that

the

Fund’s

investment

returns

met

acceptable

levels

of

investment

performance.

Investment

Management

Fees

The

Board

considered

the

Fund’s

effective

management

fee

rate.

For

the

Fund,

other

than

as

noted

below,

the

Board

received

certain

information

from

Broadridge.

The

Board

received

information

comparing

the

Fund’s

(1) effective

contractual

management

fee

rate

at

30

current

asset

levels

and

at

theoretical

asset

levels,

(2) effective

net

management

fee

rate

(after

any

fee

waivers)

at

average

fiscal-year

asset

levels,

(3) actual

non-management

expense

rate

at

average

fiscal-year

asset

levels

and

(4) total

net

expense

ratio

(including,

as

applicable,

acquired

fund

fees

and

expenses

and

after

any

expense

caps

or

fee

waivers)

at

average

fiscal-year

asset

levels

for

Institutional

Class

shares

for

DSRA,

to

investment

advisory

fee

rates,

non-management

expense

rates

and

expense

ratios

of

funds

in

a

peer

group

selected

by

Broadridge

(“Expense

Group”)

and

a

broad-based,

industry

category

defined

by

Broadridge

(“Expense

Universe”).

In

evaluating

the

management

fee

rates,

the

Board

considered

a

variety

of

factors,

including

the

effective

fee

rates,

breakpoints,

comparisons

to

fee

rates

of

peer

group

funds

and

other

funds

and

nonfund

accounts

managed

by

the

Manager,

subadvisory

fee

rates

paid,

services

provided,

investment

performance,

total

net

expense

ratios,

profitability,

the

existence

and

sharing

of

economies

of

scale,

fall-out

benefits

and

expense

caps

and

fee

waivers.

The

Board

considered

the

impact

of

changes

in

subadvisory

fee

rates

put

into

effect

since

September

2019.

Profitability

The

Board

reviewed

detailed

information

regarding

revenues

the

Manager

received

under

the

Management

Agreement

and

the

estimated

direct

and

indirect

costs

incurred

in

providing

to

the

Fund

the

services

described

in

the

Management

Agreement

for

the

year

ended

December

31,

2019.

The

Board

also

considered

the

returns

on

revenue

generated

in

connection

with

the

payment

of

subadvisory

fees

to

an

affiliated

Subadvisor

(Principal

Real

Estate

Investors

LLC)

and

the

aggregated

return

on

revenue

to

the

Manager

and

its

affiliates

for

the

year

ended

December

31,

2019.

The

Board

concluded

that

the

management

fee

for

the

Fund

was

reasonable.

Economies

of

Scale

The

Board

considered

whether

there

are

economies

of

scale

with

respect

to

the

management

of

the

Fund

and

whether

the

Fund

benefits

from

any

such

economies

of

scale.

The

Board

considered

the

Manager’s

biennial

breakpoint

study

that

was

received

by

the

Board

in

March

2020

and

the

Manager’s

representation

that

the

Fund

is

initially

priced

as

though

the

Fund

had

reached

scale,

reflecting

a

sharing

of

economies

of

scale.

The

Board

then

reviewed

the

levels

at

which

breakpoints

occur,

the

incremental

declines

in

management

fee

rates

at

each

breakpoint

and

the

amount

of

fee

reductions

that

had

been

provided

to

shareholders

as

a

result

of

these

breakpoints.

The

Board

considered

cost

saving

passed

along

to

the

Fund

as

a

result

of

certain

expense

caps

and

fee

waivers.

The

Board

considered

whether

the

effective

management

fee

rate

for

the

Fund

under

the

Management

Agreement

is

reasonable

in

relation

to

the

asset

size

of

the

Fund.

The

Board

also

noted

management’s

explanation

of

efficiencies

in

the

Manager’s

cost

structure.

The

Board

concluded

that

the

fee

schedule

for

the

Fund

reflects

an

appropriate

level

of

sharing

of

any

economies

of

scale.

Other

Benefits

to

Manager

The

Board

also

considered

the

character

and

amount

of

other

incidental

benefits

received

by

the

Manager

and

its

affiliates

from

their

relationships

with

the

Fund.

The

Board

noted

that

the

Manager

uses

fund

commissions

to

buy

Section

28(e)

eligible

products

and

services.

The

Board

concluded

that

the

incidental

benefits

received

by

the

Manager

and

its

affiliates

were

appropriate.

Subadvisory

Agreements

Nature,

Quality

and

Extent

of

Services

The

Board

considered

the

nature,

quality

and

extent

of

the

services

provided

under

each

Subadvisory

Agreement.

The

Board

considered

the

reputation,

qualifications

and

background

of

the

Subadvisor,

the

investment

approach

of

the

Subadvisor,

the

experience

and

skills

of

investment

personnel

responsible

for

the

day-to-day

management

of

the

Fund

and

the

resources

made

available

to

such

personnel.

The

Board

also

considered

the

Subadvisors’

compliance

with

investment

policies

and

general

legal

compliance.

Based

upon

all

relevant

factors,

the

Board

concluded

that

the

nature,

quality

and

extent

of

the

services

provided

by

the

Subadvisors

to

the

Fund

under

the

Subadvisory

Agreements

are

satisfactory.

Investment

Performance

The

Manager

had

advised

the

Board

that

the

investment

services

delivered

by

each

Subadvisor

to

the

Fund

were

reasonable.

Based

upon

all

relevant

factors,

the

Board

concluded

that

each

Subadvisor

is

qualified

and

that

either:

(1)

the

investment

performance

of

the

Subadvisor

met

acceptable

levels

of

investment

performance;

or

(2)

although

the

Fund

experienced

underperformance

from

the

applicable

Subadvisor,

based

upon

the

Fund’s

particular

circumstances

or

in

light

of

remedial

efforts

being

taken

to

improve

performance,

as

applicable,

it

was

in

the

best

interests

of

the

Fund

to

continue

to

closely

monitor

performance

and

to

renew

the

Subadvisory

Agreement.

In

each

case

involving

underperformance,

the

Board

concluded

that

the

Manager

was

providing

effective

monitoring.

Fees,

Economies

of

Scale

and

Profitability

The

Board

considered

the

subadvisory

fee

rates,

noting

that

the

Manager

compensates

each

Subadvisor

from

its

own

management

fee,

so

that

shareholders

pay

only

the

management

fee.

For

the

Fund,

the

Board

received

certain

information

from

Broadridge

comparing

the

Fund’s

subadvisory

fee

rate

at

current

asset

levels

and

at

theoretical

asset

levels

to

subadvisory

fee

rates

of

subadvised

funds

in

the

Expense

Group

and,

if

available,

the

Expense

Universe.

31

The

Board

considered

whether

there

are

economies

of

scale

with

respect

to

the

subadvisory

services

provided

to

the

Fund

and,

if

so,

whether

the

subadvisory

fees

reflect

such

economies

of

scale

through

breakpoints

in

fee

schedules

or

whether

the

subadvisory

fee

schedule

is

otherwise

appropriate

at

current

asset

levels.

In

addition,

in

evaluating

the

subadvisory

fee

rates

and

the

factor

of

profitability,

with

respect

to

unaffiliated

Subadvisors,

the

Board

considered

that

the

subadvisory

fee

rate

was

negotiated

at

arm’s

length

between

the

Manager

and

the

Subadvisor.

The

Board

considered

the

profitability

of

the

affiliated

Subadvisors

in

conjunction

with

their

review

of

the

profitability

of

the

Manager.

Other

Benefits

to

Subadvisors

The

Board

also

considered

the

character

and

amount

of

other

incidental

benefits

received

by

each

Subadvisor

when

evaluating

the

subadvisory

fees.

The

Board

considered

as

a

part

of

this

analysis

each

Subadvisor’s

brokerage

practices,

soft

dollar

practices

and

use

of

research

payment

accounts.

The

Board

concluded

that

the

incidental

benefits

received

by

each

Subadvisor

were

appropriate.

Overall

Conclusions

Based

upon

all

of

the

information

considered

and

the

conclusions

reached,

the

Board

determined

that

the

terms

of

each

Advisory

Agreement,

including

the

fee

rate

payable

thereunder,

continue

to

be

fair

and

reasonable

and

that

the

continuation

of

each

Advisory

Agreement,

with

the

actions

proposed

by

the

Manager,

is

in

the

best

interests

of

the

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.

©

2020

Principal

Financial

Services,

Inc.

|

INF100SAR-01

|

09/2020

|

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

There have been no material changes to the procedures by which shareholders may recommend nominees to registrant’s board.

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 and Rule 30a-2(a) under the Investment Company Act are attached hereto as

Exhibit 99.CERT

.

(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act is 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 11/16/2020

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 11/16/2020

By /s/ Tracy W. Bollin

              Tracy W. Bollin, Chief Financial Officer

Date 11/16/2020