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: 515-235-1719

Date of fiscal year end: March 31, 2022

Date of reporting period: September 30, 2021

ITEM 1 – REPORT TO STOCKHOLDERS

Principal

Diversified

Select

Real

Asset

Fund

Semiannual

Report

September

30,

2021

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up

for

eDelivery!

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secure

and

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when

you

are,

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today.

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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

13

Financial

Highlights

(includes

performance

information)

19

Shareholder

Expense

Example

21

Supplemental

Information

22

Statement

of

Assets

and

Liabilities

September

30,

2021

(unaudited)

1

See

accompanying

notes.

Amounts

in

thousands,

except

per

share

amounts

Principal

Diversified

Select

Real

Asset

Fund

Investment

in

securities--at

cost

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

$

159,125‌

Foreign

currency--at

cost

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

$

16‌

Assets

Investment

in

securities--at

value 

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

$

175,030‌

Foreign

currency--at

value

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

15‌

Receivables:

Dividends

and

interest

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

298‌

Expense

reimbursement

from

Manager

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

79‌

Investment

securities

sold

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

152‌

Prepaid

directors'

expenses

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

2‌

Total

Assets  

175,576‌

Liabilities

Accrued

management

and

investment

advisory

fees

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

245‌

Accrued

transfer

agent

fees

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

31‌

Accrued

professional

fees

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

149‌

Accrued

other

expenses

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

12‌

Payables:

Investment

securities

purchased

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

162‌

Total

Liabilities  

599‌

Net

Assets

Applicable

to

Outstanding

Shares

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

$

174,977‌

Net

Assets

Consist

of:

Capital

shares

and

additional

paid-in-capital

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

$

152,639‌

Total

distributable

earnings

(accumulated

loss)

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

22,338‌

Total

Net

Assets 

$

174,977‌

Capital

Stock

(par

value:

$.01

per

share):

Net

Asset

Value

Per

Share:

Class

A

:

Net

Assets

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

$

347‌

Shares

Issued

and

Outstanding

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

13‌

Net

Asset

Value

per

share

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

$

27

.64‌

(a)

Maximum

Offering

Price

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

$

29

.34‌

Class

Y

:

Net

Assets

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

$

174,234‌

Shares

Issued

and

Outstanding

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

6,261‌

Net

Asset

Value

per

share

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

$

27

.83‌

Institutional

:

Net

Assets

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

$

396‌

Shares

Issued

and

Outstanding

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

14‌

Net

Asset

Value

per

share

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

$

27

.70‌

(a)

Redemption

price

per

share

is

equal

to

net

asset

value

per

share

less

any

applicable

contingent

deferred

sales

charge.

Statement

of

Operations

Six

Months

ended

September

30,

2021

(unaudited)

2

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Net

Investment

Income

(Loss)

Income:

Dividends

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

$

2,538‌

Withholding

tax

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

(

119‌

)

Interest

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

441‌

Total

Income

2,860‌

Expenses:

Management

and

investment

advisory

fees

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

1,462‌

Registration

fees

-

Class

A

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

8‌

Registration

fees

-

Class

Y

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

8‌

Registration

fees

-

Institutional

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

8‌

Shareholder

reports

-

Class

A

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

1‌

Shareholder

reports

-

Class

Y

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

2‌

Shareholder

reports

-

Institutional

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

4‌

Transfer agent

fees

-

Class

A

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

20‌

Transfer agent

fees

-

Class

Y

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

24‌

Transfer agent

fees

-

Institutional

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

30‌

Custodian

fees

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

21‌

Directors'

expenses

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

3‌

Professional fees

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

135‌

Other

expenses

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

40‌

Total

Gross

Expenses

1,766‌

Less: Reimbursement

from

Manager

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

374‌

Less:

Reimbursement

from

Manager

-

Class

A

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

30‌

Less:

Reimbursement

from

Manager

-

Class

Y

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

192‌

Less:

Reimbursement

from

Manager

-

Institutional

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

41‌

Total

Net

Expenses

1,129‌

Net

Investment

Income

(Loss)

1,731‌

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

Net

realized

gain

(loss)

from:

Investment

transactions

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

5,671‌

Foreign

currency

transactions

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

(

26‌

)

Net

change

in

unrealized

appreciation/(depreciation)

of:

Investments

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

4,045‌

Translation

of

assets

and

liabilities

in

foreign

currencies

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

(

2‌

)

Net

Realized

and

Unrealized

Gain

(Loss)

on

investments

and

foreign

currencies

9,688‌

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

$

11,419‌

Statement

of

Changes

in

Net

Assets

(unaudited)

3

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Period

Ended

September

30,

2021

Year

Ended

March

31,

2021

Operations

Net

investment

income

(loss)

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

$

1,731‌

$

3,681‌

Net

realized

gain

(loss)

on

investments

and

foreign

currencies

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

5,645‌

4,476‌

Net

change

in

unrealized

appreciation/(depreciation)

of

investments

and

foreign

currencies

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

4,043‌

38,287‌

Net

Increase

(Decrease)

in

Net

Assets

Resulting

from

Operations

11,419‌

46,444‌

Dividends

and

Distributions

to

Shareholders

From

net

investment

income

and

net

realized

gain

on

investments

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

(

2,678‌

)

(

4,772‌

)

Total

Dividends

and

Distributions

(

2,678‌

)

(

4,772‌

)

Capital

Share

Transactions

Net

increase

(decrease)

in

capital

share

transactions

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

2,828‌

22,841‌

Total

Increase

(Decrease)

in

Net

Assets

11,569‌

64,513‌

Net

Assets

Beginning

of

period

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

163,408‌

98,895‌

End

of

period

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

$

174,977‌

$

163,408‌

Class

A

Class

Y

Institutional

Capital

Share

Transactions:

Period

Ended

September

30,

2021

Dollars:

Sold

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

$

50‌

$

–‌

$

100‌

Reinvested

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

5‌

2,668‌

5‌

Net

Increase

(Decrease)

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

$

55‌

$

2,668‌

$

105‌

Shares:

Sold

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

3‌

–‌

3‌

Reinvested

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

–‌

97‌

–‌

Net

Increase

(Decrease)

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

3‌

97‌

3‌

Year

Ended

March

31,

2021

Dollars:

Sold

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

$

–‌

$

18,069‌

$

–‌

Reinvested

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

8‌

4,756‌

8‌

Net

Increase

(Decrease)

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

$

8‌

$

22,825‌

$

8‌

Shares:

Sold

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

–‌

887‌

–‌

Reinvested

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

–‌

196‌

1‌

Net

Increase

(Decrease)

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

–‌

1,083‌

1‌

Dividends

and

Distributions

to

Shareholders:

Period Ended

September

30,

2021

From

net

investment

income

and

net

realized

gain

on

investments

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

$

(

5‌

)

$

(

2,668‌

)

$

(

5‌

)

Total

Dividends

and

Distributions

$

(

5‌

)

$

(

2,668‌

)

$

(

5‌

)

Year

Ended

March

31,

2021

From

net

investment

income

and

net

realized

gain

on

investments

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

$

(

8‌

)

$

(

4,756‌

)

$

(

8‌

)

Total

Dividends

and

Distributions

$

(

8‌

)

$

(

4,756‌

)

$

(

8‌

)

Statement

of

Cash

Flows

Six

Months

Ended

September

30,

2021

(unaudited)

4

See

accompanying

notes.

Amounts

in

thousands

Principal

Diversified

Select

Real

Asset

Fund

Cash

Flows

from

Operating

Activities:

Net increase

in

net

assets

resulting

from

operations

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

$

11,419

Adjustments

to

reconcile

net

increase

in

net

assets

resulting

from

operations

to

net

cash

used

in

operating

activities:

Purchase

of

investment

securities

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

(54,487)

Proceeds

from

sale

of

investment

securities

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

50,138

Net

sales

or

(purchases)

of

short

term

securities

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

(57)

Net

accretion

of

bond

discounts

and

amortization

of

premiums

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

2,282

Change

in

unrealized

(appreciation)

depreciation

on

investments

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

(4,045)

Net

realized

gain

(loss)

from

investments

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

(5,671)

(Increase)

decrease

in

dividends

and

interest

receivable

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

166

(Increase)

decrease

in

investment

securities

sold

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

67

Increase

(decrease)

in

accrued

fees,

expenses,

and

expense

reimbursement

from

Manager

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

(26)

Increase

(decrease)

in

investment

securities

purchased

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

120

Net

cash

used

in

operating

activities

(94)

Cash

Flows

from

Financing

Activities:

Proceeds

from

shares

sold

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

150

Increase

(decrease)

in

cash

overdraft

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

(47)

Net

cash

provided

by

financing

activities

103

Net

increase in

cash

and

foreign

currency

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

9

Cash

and

Foreign

Currency:

Beginning

of

period

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

$

6

End

of

period

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

$

15

Supplemental

disclosure

of

cash

flow

information:

Reinvestment

of

dividends

and

distributions

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

$

2,678

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(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.

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,

including

exchange-traded

funds,

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

publicly

traded

investment

funds

and

private

investment

funds

are

collectively

referred

to

as

the

“Underlying

Funds”.

The

value

of

foreign

securities

used

in

computing

the

net

asset

value

per

share

is

generally

determined

as

of

the

close

of

the

foreign

exchange

where

the

security

is

principally

traded.

Events

that

occur

after

the

close

of

the

applicable

foreign

market

or

exchange

but

prior

to

the

calculation

of

the

Fund’s

net

asset

value

are

reflected

in

the

Fund’s

net

asset

value

and

these

securities

are

valued

at

fair

value

as

determined

in

good

faith

by

the

Manager

under

procedures

established

and

periodically

reviewed

by

the

Board.

Many

factors,

provided

by

independent

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.

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

6

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

as

of

September

30,

2021

as

follows:

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

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

Principal

Diversified

Select

Real

Asset

Fund

Euro

5

.5%

2.

Significant

Accounting

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

7

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,

2021,

the

Fund

did

not

record

any

such

tax

benefit

or

expense

in

the

accompanying

financial

statements.

The

statute

of

limitations

remains

open

for

the

last

three

fiscal

years,

once

a

return

is

filed.

No

examinations

are

in

progress

at

this

time.

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

impact

of

the

ASU

over

the

period

of

time

the

ASU

is

effective.

3.

Operating

Policies

Borrowings.

T

he

Fund

participates

in

a

line

of

credit

with

a

bank

which

allows

a

borrowing

commitment

amount

of

up

to

$15

million.

Borrowings

may

be

used

for

investment

purposes,

to

meet

repurchase

requests

and/or

to

facilitate

the

handling

of

unusual

or

unanticipated

short-term

cash

requirements.

The

Fund

will

pledge

securities

as

collateral

for

borrowing

on

the

line

of

credit

and

maintain

an

aggregate

collateral

value

not

less

than

the

outstanding

borrowing

amount

at

all

times.

Interest

is

charged

at

an

annual

rate

equal

to

LIBOR

plus

0.85%.

Additionally,

a

commitment

fee

is

charged

at

an

annual

rate

of

0.40%

on

any

day

when

the

outstanding

borrowing

amount

is

less

than

90%

of

the

borrowing

commitment

amount.

The

interest

expense

and

commitment

fee

associated

with

these

borrowings

is

included

in

other

expenses

on

the

statement

of

operations.

There

were

no

outstanding

borrowings

as

of

September

30,

2021.

During

the

period

ended

September

30,

2021,

the

Fund

borrowed

against

the

line

of

credit

as

follows

(amounts

in

thousands):

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,

2021

,

the

Fund

did

not

engage

in

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.

Average

Daily

Outstanding

Balance

Weighted

Average

Annual

Interest

Rate

Principal

Diversified

Select

Real

Asset

Fund

$

133

0.98

%

2.

Significant

Accounting

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

8

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. 

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.

Private

Investments

in

Public

Equity.

The

Fund

may

invest

in

private

investments

in

public

equity

(“PIPEs”)

which

are

issued

by

a

company

in

the

secondary

market

as

a

means

of

raising

capital.

In

connection

with

PIPEs,

the

Fund

may

enter

into

unfunded

commitments.

Commitments

may

be

subject

to

various

contingencies

and

are

recognized

as

a

financial

instrument

when

the

commitment

is

legally

binding.

These

contingencies

are

considered

in

the

valuation

of

the

commitments.

The

Fund

is

obligated

to

fund

these

commitments

when

the

contingencies

are

met

and

therefore,

the

Fund

must

have

funds

sufficient

to

cover

its

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

unfunded

commitments

on

the

statements

of

assets

and

liabilities

and

included

in

the

net

change

in

unrealized

appreciation/(depreciation)

of

investments

on

the

statement

of

operations,

as

applicable.

Commitments

are

typically

categorized

as

Level

2

within

the

disclosure

hierarchy.

As

of

September

30,

2021

,

the

Fund

had

no

unfunded

commitments

in

connection

with

PIPEs.

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

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,

2021,

the

Fund

had

no

commitments

relating

to

senior

floating

rate

interests.

3.

Operating

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

9

The

Fund

may

also

enter

into

unfunded

commitments

relating

to

potential

future

investments

in

private

investment

funds.

As

of

September

30,

2021,

the

Fund

had

unfunded

commitments

relating

to

potential

future

investments,

as

follows

(amounts

in

thousands):

4.

Fair

Valuation

Fair

value

is

defined

as

the

price

that

the

Fund

would

receive

upon

selling

a

security

in

a

timely

transaction

to

an

independent

buyer

in

the

principal

or

most

advantageous

market

of

the

security

at

the

measurement

date.

In

determining

fair

value,

the

Fund

may

use

one

or

more

of

the

following

approaches:

market,

income

and/or

cost.

A

hierarchy

for

inputs

is

used

in

measuring

fair

value

that

maximizes

the

use

of

observable

inputs

and

minimizes

the

use

of

unobservable

inputs

by

requiring

that

the

most

observable

inputs

be

used

when

available.

Observable

inputs

are

inputs

that

reflect

the

assumptions

market

participants

would

use

in

pricing

the

asset

or

liability

developed

based

on

market

data

obtained

from

sources

independent

of

the

Fund.

Unobservable

inputs

are

inputs

that

reflect

the

Fund’s

own

estimates

about

the

estimates

market

participants

would

use

in

pricing

the

asset

or

liability

developed

based

on

the

best

information

available

in

the

circumstances.

The

three-tier

hierarchy

of

inputs

is

summarized

in

the

three

broad

levels

listed

below.

Level

1

–

Quoted

prices

are

available

in

active

markets

for

identical

securities

as

of

the

reporting

date.

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,

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

month

or

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.

Private

Investment

Fund

Unfunded

Commitment

Brookfield

Senior

Mezzanine

Real

Estate

Finance

Fund,

LP

$

5,000

GDIF

US

Hedged

Feeder

Fund,

LP

1,800

3.

Operating

Policies

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

10

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,

2021

in

valuing

the

Fund’s

securities

carried

at

value

(amounts

in

thousands):

*For

additional

detail

regarding

sector

classifications,

please

see

the

schedule

of

investments.

5.

Management

Agreement

and

Transactions

with

Affiliates

Management

Services.

The

Fund

has

agreed

to

pay

investment

advisory

and

management

fees

to

the

Manager

computed

at

an

annual

percentage

rate

of

the

Fund’s

average

daily

net

assets.

A

portion

of

the

management

fee

is

paid

by

the

Manager

to

the

sub-advisors

of

the

Fund,

which

may

be

affiliates

of

the

Manager.

The

annual

rate

paid

by

the

Fund

is

based

upon

the

aggregate

average

daily

net

assets

(“aggregate

net

assets”)

of

the

Fund.

The

investment

advisory

and

management

fee

schedule

for

the

Fund

is

1.70%

of

aggregate

net

assets

up

to

$1.5

billion

and

1.65%

of

aggregate

net

assets

over

$1.5

billion.

The

Manager

has

contractually

agreed

to

waive

0.25%

of

the

Fund’s

investment

advisory

and

management

fees

effective

August

1,

2021.

Prior

to

August

1,

2021,

the

contractual

fee

waiver

was

0.53%.

It

is

expected

that

the

fee

waiver

will

continue

through

the

period

ending

July

31,

2022;

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

tax

reclaim

recovery

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

period

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,

2022;

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.

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*

$

—

$

14,839

$

—

$

14,839

Common

Stocks

Basic

Materials

2,917

2,751

—

5,668

Communications

51

96

—

147

Consumer,

Cyclical

256

473

—

729

Consumer,

Non-cyclical

1,831

2,046

—

3,877

Diversified

168

—

—

168

Energy

19,082

2,516

—

21,598

Financial

10,785

7,541

—

18,326

Industrial

5,900

4,873

—

10,773

Utilities

9,919

7,558

—

17,477

Convertible

Preferred

Stocks

98

—

—

98

Investment

Companies

2,336

—

—

2,336

Total

$

53,343

$

42,693

$

—

$

96,036

Investments

Using

NAV

as

practical

expedient

Private

Investment

Funds

78

,

994

Total

investments

in

securities

$

—

$

—

$

—

$

17

5,030

4.

Fair

Valuation

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

11

The

operating

expense

limits

are

as

follows:

*Prior

to

August

1,

2021,

the

contractual

expense

limit

was

1.67%.

**Prior

to

August

1,

2021,

the

contractual

expense

limit

was

1.17%.

^Prior

to

August

1,

2021,

the

contractual

expense

limit

was

1.37%.

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.

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

ended

September

30,

2021,

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,

2021,

there

were

no

sales

charges

retained

by

the

Distributor.

Affiliated

Ownership

.

As

of

September

30,

2021,

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,

2021,

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):

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

ended

September

30,

2021,

no

shares

of

the

Fund

were

repurchased

during

the

repurchase

offer

windows.

Share

Class

Operating

Expense

Limit

Expiration

Class

A

1.98%*

July

31,

2022

Class

Y

1.48**

%

July

31,

2022

Institutional

1.68^

%

July

31,

2022

Class

A

Class

Y

Institutional

Principal

Diversified

Select

Real

Asset

Fund

11

6,261

11

Purchases

Sales

Principal

Diversified

Select

Real

Asset

Fund

$

54,352

$

49,962

5.

Management

Agreement

and

Transactions

with

Affiliates

(continued)

Notes

to

Financial

Statements

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

12

8.

Federal

Tax

Information

Distributions

to

Shareholders.

The

federal

income

tax

character

of

distributions

paid

for

the

period

ended

September

30,

2021

and

year

ended

March

31,

2021

,

were

as

follows

(amounts

in

thousands):

For

U.S.

federal

income

tax

purposes,

short-term

capital

gain

distributions

are

considered

ordinary

income

distributions.

Distributable

Earnings.

As

of

March

31,

2021,

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,

2021

,

the

Fund

had

no

capital

loss

carryforwards.

For

the

year

ended

March

31,

2021

,

the

Fund

utilized

approximately

$580,000

in

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

year

ended

March

31,

2021

,

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

gain

on

investments

or

from

tax

return

of

capital

depending

on

the

type

of

book

and

tax

differences

that

exist.

For

the

year

ended

March

31,

2021,

the

Fund

recorded

reclassifications

as

follows

(amounts

in

thousands):

Federal

Income

Tax

Basis.

As

of

September

30,

2021

,

the

net

federal

income

tax

unrealized

appreciation

(depreciation)

and

federal

tax

cost

of

investments

held

by

the

Fund

were

as

follows

(amounts

in

thousands):

9.

Subsequent

Events

Management

has

evaluated

events

and

transactions

that

have

occurred

through

the

date

the

financial

statements

were

issued

that

would

merit

recognition

or

disclosure

in

the

financial

statements.

There

were

no

items

requiring

adjustment

of

the

financial

statements

or

additional

disclosure.

Ordinary

Income

September

30

,

2021

March

31,

2021

Principal

Diversified

Select

Real

Asset

Fund

$

2,678

$

4,772

Undistributed

Ordinary

Income

Undistributed

Long-Term

Capital

Gains

Net

Unrealized

Appreciation

(Depreciation)

Total

Accumulated

Earnings

(Deficit)

Principal

Diversified

Select

Real

Asset

Fund

$

3,368

$

826

$

9,403

$

13,597

Total

Distributable

Earnings

(Accumulated

Loss)

Capital

Shares

and

Additional

Paid-in-Capital

Principal

Diversified

Select

Real

Asset

Fund

$

3

$

(3

)

Unrealized

Appreciation

Unrealized

(Depreciation)

Net

Unrealized

Appreciation/

(Depreciation)

Cost

for

Federal

Income

Tax

Purposes

Principal

Diversified

Select

Real

Asset

Fund

$

17,137

$

(3,689)

$

13,448

$

161,582

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

See

accompanying

notes.

13

INVESTMENT

COMPANIES

-

1

.33

%

Shares

Held

Value

(000's)

Exchange-Traded

Funds

-

0

.13

%

SPDR

S&P

Global

Natural

Resources

ETF

4,492‌

$

231‌

Money

Market

Funds

-

1

.20

%

Morgan

Stanley

Institutional

Liquidity

Funds

-

Government

Portfolio

-

Institutional

Class

0.03%

(a)

2,105,306‌

2,105‌

TOTAL

INVESTMENT

COMPANIES

$

2,336‌

PRIVATE

INVESTMENT

FUNDS

-

45

.15

%

Shares

Held

Value

(000's)

Agriculture

-

18

.90

%

Ceres

Farmland

Holdings,

LP

(b)

N/A

$

7,889‌

Hancock

Timberland

and

Farmland

Fund,

LP

(b)

N/A

11,927‌

UBS

AgriVest

Farmland

Fund

(b)

N/A

13,246‌

$

33,062‌

Diversified

Financial

Services

-

2

.47

%

Sound

Point

CLO

Fund,

LP

(b),(c)

N/A

4,330‌

Energy

-

Alternate

Sources

-

6

.34

%

Brookfield

Super-Core

Infrastructure

Partners

Fund,

LP

(b),(c)

N/A

5,098‌

CBRE

Caledon

Global

Infrastructure

Fund

(International),

LP

(b),(c)

N/A

6,000‌

$

11,098‌

Private

Equity

-

2

.49

%

GDIF

US

Hedged

Feeder

Fund,

LP

(b),(c)

N/A

4,349‌

Real

Estate

-

6

.89

%

PGIM

Real

Estate

US

Debt

Fund,

LP

(b)

N/A

5,070‌

UBS

Trumbull

Property

Growth

&

Income

Fund

(b)

N/A

6,985‌

$

12,055‌

REITs

-

8

.06

%

BTG

Pactual

Open

Ended

Core

US

Timberland

Fund,

LP

(b)

N/A

14,100‌

TOTAL

PRIVATE

INVESTMENT

FUNDS

$

78,994‌

COMMON

STOCKS

-

45

.01

%

Shares

Held

Value

(000's)

Agriculture

-

0

.21

%

Archer-Daniels-Midland

Co

2,014‌

$

121‌

Bunge

Ltd

1,596‌

130‌

Darling

Ingredients

Inc

(c)

1,622‌

116‌

$

367‌

Automobile

Parts

&

Equipment

-

0

.23

%

Georg

Fischer

AG

266‌

394‌

Biotechnology

-

0

.07

%

Corteva

Inc

2,750‌

116‌

Building

Materials

-

0

.27

%

Fortune

Brands

Home

&

Security

Inc

1,829‌

163‌

Geberit

AG

316‌

232‌

Masco

Corp

1,435‌

80‌

$

475‌

Chemicals

-

0

.88

%

CF

Industries

Holdings

Inc

2,660‌

149‌

Diversey

Holdings

Ltd

(c)

9,821‌

158‌

Ecolab

Inc

2,331‌

486‌

FMC

Corp

1,290‌

118‌

ICL

Group

Ltd

17,069‌

124‌

Mosaic

Co/The

3,755‌

134‌

Nutrien

Ltd

1,993‌

129‌

Sociedad

Quimica

y

Minera

de

Chile

SA

ADR

2,319‌

125‌

Yara

International

ASA

2,410‌

119‌

$

1,542‌

Commercial

Services

-

1

.23

%

Atlas

Arteria

Ltd

246,741‌

1,138‌

CCR

SA

105,700‌

228‌

Transurban

Group

78,043‌

786‌

$

2,152‌

Consumer

Products

-

0

.06

%

Avery

Dennison

Corp

537‌

111‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Electric

-

6

.67

%

AusNet

Services

Ltd

589,491‌

$

1,067‌

Brookfield

Renewable

Corp

15,690‌

609‌

Clearway

Energy

Inc

-

Class

C

37,655‌

1,140‌

CPFL

Energia

SA

82,200‌

407‌

EDP

-

Energias

de

Portugal

SA

126,664‌

665‌

Entergy

Corp

3,524‌

350‌

Evoqua

Water

Technologies

Corp

(c)

14,700‌

552‌

Exelon

Corp

28,151‌

1,361‌

Iberdrola

SA

54,169‌

545‌

National

Grid

PLC

93,369‌

1,113‌

NextEra

Energy

Inc

4,525‌

355‌

Public

Service

Enterprise

Group

Inc

16,010‌

975‌

Red

Electrica

Corp

SA

28,876‌

579‌

Southern

Co/The

15,275‌

947‌

SSE

PLC

47,884‌

1,008‌

$

11,673‌

Electronics

-

0

.15

%

Badger

Meter

Inc

2,509‌

254‌

Energy

-

Alternate

Sources

-

1

.01

%

NextEra

Energy

Partners

LP

9,427‌

710‌

Sunnova

Energy

International

Inc

(c)

32,143‌

1,059‌

$

1,769‌

Engineering

&

Construction

-

2

.25

%

AECOM

(c)

3,820‌

241‌

Aena

SME

SA

(c),(d)

4,709‌

812‌

Eiffage

SA

117‌

12‌

Ferrovial

SA

19,346‌

565‌

Grupo

Aeroportuario

del

Pacifico

SAB

de

CV

(c)

56,700‌

659‌

Stantec

Inc

5,263‌

247‌

Sydney

Airport

(c)

148,758‌

874‌

Vinci

SA

5,141‌

535‌

$

3,945‌

Environmental

Control

-

1

.28

%

China

Water

Affairs

Group

Ltd

246,000‌

275‌

Kurita

Water

Industries

Ltd

8,900‌

428‌

METAWATER

Co

Ltd

8,800‌

148‌

Montrose

Environmental

Group

Inc

(c)

1,198‌

74‌

Pentair

PLC

9,227‌

670‌

Tetra

Tech

Inc

4,351‌

650‌

$

2,245‌

Food

-

0

.14

%

Ingredion

Inc

1,375‌

122‌

Wilmar

International

Ltd

39,300‌

122‌

$

244‌

Forest

Products

&

Paper

-

0

.49

%

International

Paper

Co

2,013‌

113‌

Mondi

PLC

4,382‌

107‌

Nine

Dragons

Paper

Holdings

Ltd

88,000‌

108‌

Smurfit

Kappa

Group

PLC

2,109‌

111‌

Stora

Enso

Oyj

6,179‌

103‌

Suzano

SA

ADR

(c)

10,383‌

104‌

Svenska

Cellulosa

AB

SCA

6,860‌

106‌

UPM-Kymmene

Oyj

2,975‌

105‌

$

857‌

Gas

-

1

.53

%

Enagas

SA

30,363‌

675‌

Snam

SpA

158,828‌

879‌

Western

Midstream

Partners

LP

53,492‌

1,121‌

$

2,675‌

Healthcare

-

Products

-

0

.51

%

Danaher

Corp

2,912‌

887‌

Holding

Companies

-

Diversified

-

0

.10

%

Sustainable

Development

Acquisition

I

Corp

(c)

16,624‌

162‌

Sustainable

Development

Acquisition

I

Corp

-

Warrants

(c)

8,311‌

6‌

$

168‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

See

accompanying

notes.

14

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Home

Builders

-

0

.08

%

DR

Horton

Inc

615‌

$

52‌

Persimmon

PLC

2,222‌

79‌

$

131‌

Housewares

-

0

.06

%

Scotts

Miracle-Gro

Co/The

770‌

113‌

Internet

-

0

.03

%

21Vianet

Group

Inc

ADR

(c)

2,943‌

51‌

Iron

&

Steel

-

0

.47

%

ArcelorMittal

SA

3,607‌

111‌

Fortescue

Metals

Group

Ltd

7,875‌

84‌

Nippon

Steel

Corp

5,900‌

106‌

Novolipetsk

Steel

PJSC

3,618‌

107‌

Nucor

Corp

1,029‌

101‌

POSCO

415‌

114‌

Severstal

PAO

5,210‌

109‌

Vale

SA

ADR

6,338‌

88‌

$

820‌

Lodging

-

0

.05

%

Travel

+

Leisure

Co

1,673‌

91‌

Machinery

-

Diversified

-

1

.07

%

IDEX

Corp

1,717‌

356‌

Lindsay

Corp

1,636‌

248‌

Mueller

Water

Products

Inc

-

Class

A

23,740‌

361‌

Xylem

Inc/NY

7,325‌

906‌

$

1,871‌

Metal

Fabrication

&

Hardware

-

0

.31

%

Advanced

Drainage

Systems

Inc

5,065‌

548‌

Mining

-

1

.40

%

Agnico

Eagle

Mines

Ltd

2,103‌

109‌

Anglo

American

PLC

2,863‌

100‌

Antofagasta

PLC

6,031‌

110‌

Barrick

Gold

Corp

6,022‌

109‌

BHP

Group

Ltd

3,625‌

97‌

First

Quantum

Minerals

Ltd

5,811‌

108‌

Franco-Nevada

Corp

831‌

108‌

Freeport-McMoRan

Inc

3,321‌

108‌

Glencore

PLC

(c)

26,828‌

126‌

Kirkland

Lake

Gold

Ltd

3,035‌

126‌

MMC

Norilsk

Nickel

PJSC

ADR

3,679‌

110‌

Newcrest

Mining

Ltd

6,684‌

111‌

Newmont

Corp

2,084‌

113‌

Norsk

Hydro

ASA

17,531‌

131‌

Polymetal

International

PLC

6,065‌

103‌

Polyus

PJSC

1,363‌

111‌

Rio

Tinto

Ltd

1,475‌

105‌

South32

Ltd

52,674‌

131‌

Southern

Copper

Corp

1,931‌

108‌

Sumitomo

Metal

Mining

Co

Ltd

3,100‌

112‌

Vedanta

Ltd

ADR

7,343‌

112‌

Wheaton

Precious

Metals

Corp

2,687‌

101‌

$

2,449‌

Oil

&

Gas

-

2

.13

%

BP

PLC

29,579‌

135‌

Canadian

Natural

Resources

Ltd

3,660‌

134‌

Chevron

Corp

1,249‌

127‌

ConocoPhillips

2,178‌

148‌

Ecopetrol

SA

ADR

8,660‌

124‌

Eni

SpA

9,797‌

131‌

EOG

Resources

Inc

1,789‌

144‌

Equinor

ASA

5,697‌

145‌

Exxon

Mobil

Corp

2,217‌

130‌

Gazprom

PJSC

ADR

14,558‌

144‌

Hess

Corp

1,757‌

137‌

LUKOIL

PJSC

ADR

1,427‌

135‌

Marathon

Petroleum

Corp

2,041‌

126‌

Neste

Oyj

1,986‌

112‌

Novatek

PJSC

511‌

134‌

Occidental

Petroleum

Corp

4,707‌

139‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Oil

&

Gas

(continued)

Petroleo

Brasileiro

SA

ADR

11,152‌

$

115‌

Phillips

66

1,700‌

119‌

Pioneer

Natural

Resources

Co

808‌

135‌

Reliance

Industries

Ltd

(d)

1,956‌

133‌

Repsol

SA

10,550‌

138‌

Rosneft

Oil

Co

PJSC

16,743‌

140‌

Royal

Dutch

Shell

PLC

-

A

Shares

6,136‌

136‌

Suncor

Energy

Inc

6,482‌

134‌

Tatneft

PJSC

ADR

3,035‌

132‌

TotalEnergies

SE

2,743‌

131‌

Valero

Energy

Corp

1,822‌

129‌

Woodside

Petroleum

Ltd

8,485‌

145‌

$

3,732‌

Oil

&

Gas

Services

-

0

.15

%

Halliburton

Co

6,049‌

131‌

Schlumberger

NV

4,310‌

127‌

$

258‌

Packaging

&

Containers

-

0

.38

%

Amcor

PLC

9,408‌

109‌

DS

Smith

PLC

19,854‌

110‌

Packaging

Corp

of

America

798‌

110‌

Sealed

Air

Corp

1,982‌

108‌

SIG

Combibloc

Group

AG

(c)

3,950‌

105‌

Westrock

Co

2,322‌

116‌

$

658‌

Pipelines

-

9

.05

%

APA

Group

100,257‌

625‌

Cheniere

Energy

Inc

20,746‌

2,026‌

DCP

Midstream

LP

39,382‌

1,112‌

Enbridge

Inc

29,653‌

1,181‌

Energy

Transfer

LP

103,107‌

988‌

Enterprise

Products

Partners

LP

23,115‌

500‌

Gibson

Energy

Inc

39,355‌

723‌

MPLX

LP

43,545‌

1,240‌

ONEOK

Inc

18,597‌

1,078‌

Pembina

Pipeline

Corp

32,056‌

1,016‌

Plains

All

American

Pipeline

LP

55,741‌

567‌

Targa

Resources

Corp

46,290‌

2,278‌

TC

Energy

Corp

13,365‌

643‌

Williams

Cos

Inc/The

71,790‌

1,862‌

$

15,839‌

Private

Equity

-

0

.18

%

Capitaland

Investment

Ltd/Singapore

(c)

59,700‌

149‌

Centuria

Capital

Group

71,392‌

174‌

$

323‌

Real

Estate

-

1

.72

%

Castellum

AB

4,690‌

114‌

ESR

Kendall

Square

REIT

Co

Ltd

12,612‌

68‌

Fabege

AB

5,752‌

87‌

Hongkong

Land

Holdings

Ltd

31,800‌

152‌

LEG

Immobilien

SE

1,929‌

272‌

Midea

Real

Estate

Holding

Ltd

(d)

31,800‌

55‌

Mitsubishi

Estate

Co

Ltd

17,000‌

271‌

Mitsui

Fudosan

Co

Ltd

18,400‌

437‌

New

World

Development

Co

Ltd

52,750‌

215‌

Samhallsbyggnadsbolaget

i

Norden

AB

32,900‌

182‌

Sun

Hung

Kai

Properties

Ltd

18,000‌

225‌

Sunac

Services

Holdings

Ltd

(d)

86,000‌

177‌

Vonovia

SE

10,004‌

600‌

Wihlborgs

Fastigheter

AB

5,302‌

105‌

Zhongliang

Holdings

Group

Co

Ltd

108,000‌

56‌

$

3,016‌

REITs

-

8

.57

%

Activia

Properties

Inc

18‌

74‌

Agree

Realty

Corp

1,430‌

95‌

AIMS

APAC

REIT

115,200‌

122‌

Alexandria

Real

Estate

Equities

Inc

378‌

72‌

Allied

Properties

Real

Estate

Investment

Trust

4,300‌

137‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

See

accompanying

notes.

15

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

REITs

(continued)

American

Homes

4

Rent

8,089‌

$

308‌

American

Tower

Corp

388‌

103‌

Apartment

Income

REIT

Corp

2,281‌

111‌

Arena

REIT

23,891‌

72‌

AvalonBay

Communities

Inc

514‌

114‌

Big

Yellow

Group

PLC

17,793‌

335‌

Broadstone

Net

Lease

Inc

4,833‌

120‌

CapitaLand

Integrated

Commercial

Trust

9,233‌

14‌

Centuria

Industrial

REIT

51,395‌

137‌

Centuria

Office

REIT

24,576‌

44‌

CFE

Capital

S

de

RL

de

CV

257,400‌

355‌

Charter

Hall

Group

4,100‌

50‌

City

Office

REIT

Inc

3,037‌

54‌

CoreSite

Realty

Corp

1,633‌

226‌

CRE

Logistics

REIT

Inc

65‌

121‌

Crown

Castle

International

Corp

5,817‌

1,008‌

CubeSmart

6,334‌

307‌

CyrusOne

Inc

2,004‌

155‌

Daiwa

House

REIT

Investment

Corp

108‌

317‌

Daiwa

Office

Investment

Corp

15‌

101‌

Dexus

36,496‌

281‌

Dream

Industrial

Real

Estate

Investment

Trust

28,400‌

363‌

Equinix

Inc

197‌

156‌

ESR-REIT

251,188‌

86‌

Essex

Property

Trust

Inc

196‌

63‌

First

Industrial

Realty

Trust

Inc

3,200‌

167‌

Gecina

SA

1,007‌

135‌

Goodman

Group

8,808‌

135‌

Healthcare

Trust

of

America

Inc

5,486‌

163‌

HealthCo

REIT

(c)

11,326‌

18‌

Independence

Realty

Trust

Inc

20,619‌

420‌

Industrial

&

Infrastructure

Fund

Investment

Corp

67‌

122‌

Industrial

Logistics

Properties

Trust

11,461‌

291‌

Ingenia

Communities

Group

25,309‌

119‌

Inmobiliaria

Colonial

Socimi

SA

13,226‌

128‌

Invitation

Homes

Inc

14,923‌

572‌

Irongate

Group

89,080‌

97‌

Klepierre

SA

4,249‌

95‌

Lendlease

Global

Commercial

REIT

71,800‌

46‌

Mapletree

Industrial

Trust

31,500‌

64‌

Medical

Properties

Trust

Inc

12,837‌

258‌

Merlin

Properties

Socimi

SA

18,214‌

187‌

MGM

Growth

Properties

LLC

9,443‌

362‌

Minto

Apartment

Real

Estate

Investment

Trust

(d)

2,300‌

41‌

National

Storage

Affiliates

Trust

4,400‌

232‌

NewRiver

REIT

PLC

42,933‌

48‌

Nexus

Real

Estate

Investment

Trust

19,300‌

195‌

Nomura

Real

Estate

Master

Fund

Inc

77‌

111‌

NSI

NV

6,236‌

231‌

Park

Hotels

&

Resorts

Inc

(c)

5,813‌

111‌

Plymouth

Industrial

REIT

Inc

6,414‌

146‌

Prologis

Inc

5,129‌

643‌

Rexford

Industrial

Realty

Inc

3,141‌

178‌

Sabra

Health

Care

REIT

Inc

19,632‌

289‌

Saul

Centers

Inc

3,248‌

143‌

Segro

PLC

27,968‌

449‌

Sekisui

House

Reit

Inc

252‌

209‌

SF

Real

Estate

Investment

Trust

(c)

302,000‌

153‌

STORE

Capital

Corp

4,945‌

158‌

Summit

Industrial

Income

REIT

20,630‌

339‌

Sun

Communities

Inc

3,489‌

646‌

Sunstone

Hotel

Investors

Inc

(c)

9,230‌

110‌

UNITE

Group

PLC/The

6,901‌

101‌

Ventas

Inc

11,524‌

636‌

VICI

Properties

Inc

18,190‌

517‌

Welltower

Inc

2,434‌

201‌

Weyerhaeuser

Co

6,196‌

220‌

$

14,987‌

COMMON

STOCKS

(continued)

Shares

Held

Value

(000’s)

Telecommunications

-

0

.05

%

Eutelsat

Communications

SA

6,962‌

$

96‌

Transportation

-

0

.44

%

Getlink

SE

49,769‌

777‌

Water

-

1

.79

%

American

Water

Works

Co

Inc

6,105‌

1,032‌

Essential

Utilities

Inc

16,897‌

779‌

Grupo

Rotoplas

SAB

de

CV

(c)

70,200‌

88‌

Middlesex

Water

Co

1,244‌

128‌

Pennon

Group

PLC

16,426‌

250‌

Suez

SA

5,278‌

120‌

Veolia

Environnement

SA

20,934‌

640‌

Veolia

Environnement

SA

-

Rights

(c)

20,934‌

17‌

York

Water

Co/The

1,710‌

75‌

$

3,129‌

TOTAL

COMMON

STOCKS

$

78,763‌

CONVERTIBLE

PREFERRED

STOCKS

-

0

.06

%

Shares

Held

Value

(000's)

REITs

-

0

.06

%

RPT

Realty

7.25%

(e)

1,650‌

$

98‌

TOTAL

CONVERTIBLE

PREFERRED

STOCKS

$

98‌

BONDS

-

8

.48

%

Principal

Amount

(000's)

Value

(000's)

Commercial

Mortgage

Backed

Securities

-

8

.48

%

BANK

2018-BNK13

3.00%,

08/15/2061

(d)

$

2,000‌

$

1,799‌

BANK

2019-BNK22

1.50%,

11/15/2062

(d),(f),(g)

2,000‌

190‌

2.08%,

11/15/2062

(d),(g)

1,000‌

700‌

Benchmark

2018-B3

Mortgage

Trust

3.21%,

04/10/2051

(d),(g)

1,000‌

934‌

Benchmark

2018-B6

Mortgage

Trust

3.26%,

10/10/2051

(d),(g)

1,000‌

955‌

Benchmark

2019-B13

Mortgage

Trust

1.14%,

08/15/2057

(d),(f),(g)

1,750‌

113‌

3.00%,

08/15/2057

(d)

1,750‌

1,174‌

Benchmark

2020-B20

Mortgage

Trust

1.66%,

10/15/2053

(d),(f),(g)

3,250‌

385‌

Benchmark

2020-B21

Mortgage

Trust

1.57%,

12/17/2053

(f),(g)

8,990‌

956‌

Benchmark

2021-B28

Mortgage

Trust

1.49%,

08/15/2054

(d),(f),(g)

4,000‌

470‌

Benchmark

2021-B29

Mortgage

Trust

2.00%,

09/15/2054

(d)

1,000‌

848‌

Citigroup

Commercial

Mortgage

Trust

2018-C6

5.23%,

11/10/2051

(g)

1,000‌

1,126‌

Citigroup

Commercial

Mortgage

Trust

2019-GC41

3.00%,

08/10/2056

(d)

1,400‌

940‌

Freddie

Mac

Multifamily

Structured

Pass

Through

Certificates

1.63%,

01/25/2027

(f),(g)

11,985‌

839‌

2.53%,

03/25/2049

(f),(g)

6,890‌

917‌

GS

Mortgage

Securities

Trust

2013-GCJ14

4.90%,

08/10/2046

(d),(g)

539‌

531‌

GS

Mortgage

Securities

Trust

2019-GC40

1.30%,

07/10/2052

(d),(f),(g)

9,860‌

856‌

GS

Mortgage

Securities

Trust

2019-GC42

1.07%,

09/01/2052

(d),(f),(g)

3,246‌

226‌

Morgan

Stanley

Bank

of

America

Merrill

Lynch

Trust

2015-C25

4.68%,

10/15/2048

(d),(g)

1,000‌

880‌

$

14,839‌

TOTAL

BONDS

$

14,839‌

Total

Investments

$

175,030‌

Other

Assets

and

Liabilities

-  (0.03)%

(

53‌

)

TOTAL

NET

ASSETS

-

100.00%

$

174,977‌

Schedule

of

Investments

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

See

accompanying

notes.

16

(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)

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

$12,219

or

6.98%

of

net

assets.

(e)

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.

(f)

Security

is

an

Interest

Only

Strip.

(g)

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.

Portfolio

Summary  (unaudited)

Sector

Percent

Financial

30

.44‌

%

Consumer,

Non-cyclical

21

.12‌

%

Energy

18

.68‌

%

Utilities

9

.99‌

%

Mortgage

Securities

8

.48‌

%

Industrial

6

.15‌

%

Basic

Materials

3

.24‌

%

Money

Market

Funds

1

.20‌

%

Consumer,

Cyclical

0

.42‌

%

Investment

Companies

0

.13‌

%

Diversified

0

.10‌

%

Communications

0

.08‌

%

Other

Assets

and

Liabilities

(

0

.03‌

)

%

TOTAL

NET

ASSETS

100.00%

Private

Investment

Funds

Security

Name

Acquisition

Date

Cost

Value

Redemption

Notice

(days)

Percent

of

Net

Assets

Brookfield

Super-Core

Infrastructure

Partners

Fund,

LP

(a)

07/01/2021

$

5,000‌

$

5,098‌

N/A

2.91%

BTG

Pactual

Open

Ended

Core

US

Timberland

Fund,

LP

(b)

07/01/2019

-

06/30/2021

13,000‌

14,100‌

90

8.06%

CBRE

Caledon

Global

Infrastructure

Fund

(International),

LP

(c)

07/16/2021

6,000‌

6,000‌

N/A

3.43%

Ceres

Farmland

Holdings,

LP

(d)

11/06/2019,

02/05/2021

7,000‌

7,889‌

N/A

4.51%

GDIF

US

Hedged

Feeder

Fund,

LP

(e)

04/23/2021

4,200‌

4,349‌

N/A

2.49%

Hancock

Timberland

and

Farmland

Fund,

LP

(f)

08/12/2020

-

06/22/2021

12,000‌

11,927‌

N/A

6.82%

PGIM

Real

Estate

US

Debt

Fund,

LP

(g)

04/30/2021,

06/30/2021

5,058‌

5,070‌

N/A

2.90%

Sound

Point

CLO

Fund,

LP

(h)

08/06/2019

4,000‌

4,330‌

60

2.47%

UBS

AgriVest

Farmland

Fund

(i)

07/01/2020

-

06/30/2021

13,035‌

13,246‌

60

7.57%

UBS

Trumbull

Property

Growth

&

Income

Fund

(j)

07/01/2020,

06/30/2021

6,030‌

6,985‌

60

3.99%

Total

$

78,994‌

45.15%

The

private

investment

funds

listed

in

the

table

do

not

include

any

unfunded

commitments.

Amounts

in

thousands.

(a)

This

open-end

fund

will

invest

in

high-quality,

core

infrastructure

assets

principally

throughout

North

America,

Europe

and

Australia

with

a

focus

on

current

yield,

diversification

and

inflation

protection.

Specifically,

the

fund

will

focus

on

regulated

or

contracted

assets

in

the

utilities,

energy,

power

and

transportation

sector

where

Brookfield

has

established

operating

expertise.

Of

those

sectors,

utilities

will

be

a

significant

focus

and

transportation

would

be

a

much

smaller

allocation

in

the

portfolio

given

its

more

cyclical

nature.

Redemptions

are

subject

to

a

three-year

holding

period

from

the

acquisition

date.

(b)

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.

(c)

The

fund

will

seek

to

invest

in

a

global,

diversified

portfolio

of

high-quality

core

and

core-plus

mid-market

infrastructure

investments

with

stable

returns,

inflation

protection,

low

volatility,

predictable

yield

and

a

low

correlation

with

other

asset

classes

through

an

open-end

structure.

Redemptions

are

subject

to

a

three-year

holding

period

from

the

acquisition

date.

(d)

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.

(e)

This

feeder

fund

offers

hedging

to

protect

against

currency

movements

in

the

Global

Diversified

Infrastructure

Fund

which

invests

in

diversified

infrastructure

investments.

Redemptions

are

subject

to

a

three-year

holding

period

from

the

acquisition

date.

(f)

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.

(g)

This

fund

is

comprised

of

loans

with

strong

fundamentals

and

focused

on

income

return.

Redemptions

are

available

if

inflows

of

capital

offset

the

requested

redemption

amount

and

if

liquidity

is

sufficient.

(h)

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.

(i)

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.

Redemptions

are

permitted

with

written

redemption

notice

60

days

prior

to

the

end

of

the

quarter.

(j)

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.

Redemptions

are

permitted

with

written

redemption

notice

60

days

prior

to

the

end

of

the

quarter.

Glossary

to

the

Schedule

of

Investments

September

30,

2021

(unaudited)

See

accompanying

notes.

17

Currency

Abbreviations

USD/$

United

States

Dollar

See

accompanying

notes.

19

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

Distributions

from

Realized

Gains

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,

2021(c)

$

26.27‌

$

0.21‌

$

1.55‌

$

1.76‌

(

$

0.39‌)

$

–‌

$

–‌

(

$

0.39‌)

$

27.64‌

March

31,

2021

19.35‌

0.49‌

7.18‌

7.67‌

(

0.52‌)

(

0.23‌)

–‌

(

0.75‌)

26

.27‌

March

31,

2020(i)

25.00‌

0.36‌

(

5.61‌)

(

5.25‌)

(

0.35‌)

–‌

(

0.05‌)

(

0.40‌)

19.35‌

Class

Y

shares

September

30,

2021(c)

26.42‌

0.28‌

1.56‌

1.84‌

(

0.43‌)

–‌

–‌

(

0.43‌)

27.83‌

March

31,

2021

19.39‌

0.62‌

7.20‌

7.82‌

(

0.55‌)

(

0.24‌)

–‌

(

0.79‌)

26.42‌

March

31,

2020(i)

25.00‌

0.47‌

(

5.64‌)

(

5.17‌)

(

0.39‌)

–‌

(

0.05‌)

(

0.44‌)

19.39‌

Institutional

shares

September

30,

2021(c)

26.33‌

0.26‌

1.54‌

1.80‌

(

0.43‌)

–‌

–‌

(

0.43‌)

27.70‌

March

31,

2021

19

.36‌

0.56‌

7.20‌

7.76‌

(

0.55‌)

(

0.24‌)

–‌

(

0.79‌)

26.33‌

March

31,

2020(i)

25.00‌

0.41‌

(

5.61‌)

(

5.20‌)

(

0.39‌)

–‌

(

0.05‌)

(

0.44‌)

19.36‌

See

accompanying

notes.

20

Financial

Highlights

(Continued)

(unaudited)

Total

Return

Net

Assets,

End

of

Period

(in

thousands)

Ratio

of

Expenses

to

Average

Net

Assets

Ratio

of

Expenses

to

Average

Net

Assets

(Excluding

Interest

Expense

and

Fees)(b)

Ratio

of

Net

Investment

Income

to

Average

Net

Assets

Portfolio

Turnover

Rate

6.30‌

%

(d),(e),(f)

$

347‌

1.82‌

%

(g),(h)

1.78‌

%

(g),(h)

1.53‌

%

(g)

59.8‌

%

(g)

39.63‌

(e),(f)

276‌

1.67‌

(h)

N/A‌

2.11‌

56.0‌

(21.27‌)

(d),(f)

197‌

1.94‌

(g),(h)

N/A‌

1.87‌

(g)

56.8‌

(g)

6.58‌

(d),(e)

174,234‌

1.31‌

(g),(h)

1.27‌

(g),(h)

2.01‌

(g)

59.8‌

(g)

40.36‌

(e)

162,855‌

1.17‌

(h)

N/A‌

2.61‌

56.0‌

(20.98‌)

(d)

98,501‌

1.43‌

(g),(h)

N/A‌

2.47‌

(g)

56.8‌

(g)

6.48‌

(d),(e)

396‌

1.52‌

(g),(h)

1.48‌

(g),(h)

1.90‌

(g)

59.8‌

(g)

40.06‌

(e)

277‌

1.37‌

(h)

N/A‌

2.41‌

56.0‌

(21.10‌)

(d)

197‌

1.64‌

(g),(h)

N/A‌

2.17‌

(g)

56.8‌

(g)

(a)

Calculated

based

on

average

shares

outstanding

during

the

period.

(b)

Excludes

interest

expense

and

commitment

fees

charged

on

borrowings.

See

"Operating

Policies"

in

notes

to

financial

statements.

(c)

Six

months

ended

September

30,

2021.

(d)

Total

return

amounts

have

not

been

annualized.

(e)

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.

(f)

Total

return

is

calculated

without

the

front-end

sales

charge

or

contingent

deferred

sales

charge.

(g)

Computed

on

an

annualized

basis.

(h)

Reflects

Manager's

contractual

expense

limit.

(i)

Period

from

June

25,

2019,

date

operations

commenced,

through

March

31,

2020.

Shareholder

Expense

Example

Principal

Diversified

Select

Real

Asset

Fund

September

30,

2021

(unaudited)

21

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

bears

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

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,

2021

to

September

30,

2021

,

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,

2021

Ending

Account

Value

September

30,

2021

Expenses

Paid

During Period

April

1,

2021 to

September

30,

2021

(a)

Beginning

Account

Value

April

1,

2021

Ending

Account

Value

September

30,

2021 

Expenses

Paid

During Period

April

1,

2021 to

September

30,

2021

(a)

Annualized

Expense

Ratio

Principal

Diversified

Select

Real

Asset

Fund

Class

A

$

1,000.00‌

$

1,062.99‌

$

9.41‌

$

1,000.00‌

$

1,015.94‌

$

9.20‌

1.82‌

%

Class

Y

1,000.00‌

1,065.81‌

6.78‌

1,000.00‌

1,018.50‌

6.63‌

1.31‌

Institutional

1,000.00‌

1,064.83‌

7.87‌

1,000.00‌

1,017.45‌

7.69‌

1.52‌

Principal

Diversified

Select

Real

Asset

Fund

(Excluding

Interest

Expense

and

Fees)

Class

A

1,000.00‌

1,062.99‌

9.21‌

1,000.00‌

1,016.14‌

9.00‌

1.78‌

Class

Y

1,000.00‌

1,065.81‌

6.58‌

1,000.00‌

1,018.70‌

6.43‌

1.27‌

Institutional

1,000.00‌

1,064.83‌

7.66‌

1,000.00‌

1,017.65‌

7.49‌

1.48‌

(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).

Principal

Diversified

Select

Real

Asset

Fund

(unaudited)

22

Notification

of

Source

of

Distributions

Pursuant

to

Rule

19a-1

of

the

Investment

Company

Act

of

1940

As

noted

in

the

table

provided

below,

Principal

Diversified

Select

Real

Asset

Fund

made

distributions

for

the

months

of

June

2021

and

September

2021

for

which

a

portion

is

estimated

to

be

in

excess

of

the

Fund’s

current

and

accumulated

net

income.

As

of

these

month

ends,

the

estimated

sources

of

these

distributions

were

as

follows:

The

ultimate

composition

of

these

distributions

may

vary

from

the

estimates

provided

above

due

to

a

variety

of

factors

including

future

income

and

expenses,

and

realized

gains

and

losses

from

the

purchase

and

sale

of

securities.

Please

note

that

this

information

is

being

provided

to

satisfy

certain

notice

requirements

under

the

Investment

Company

Act

of

1940.

Tax

reporting

information

for

shareholders

of

the

Fund

will

not

be

available

until

the

end

of

the

Fund’s

fiscal

year.

As

a

result,

shareholders

should

not

use

the

information

provided

in

this

notice

for

tax

reporting

purposes.

June

2021

Fund

Net

Income

Realized

Gain

Capital

Sources

Principal

Diversified

Select

Real

Asset

Fund

25.11%

74.89%

0.00%

September

2021

Fund

Net

Income

Realized

Gain

Capital

Sources

Principal

Diversified

Select

Real

Asset

Fund

0.00%

100.00%

0.00%

23

FUND

BOARD

OF

TRUSTEES

AND

OFFICERS

The

Board

of

Trustees

(the

“Board”)

has

overall

responsibility

for

overseeing

the

Fund’s

operations

in

accordance

with

the

Investment

Act

of

1940,

as

amended

(the

“1940

Act”),

other

applicable

laws,

and

the

Fund’s

charter.

Each

member

of

the

Board

(“Board

Member”)

serves

on

the

Board

of

the

following

investment

companies

sponsored

by

Principal

Life

Insurance

Company:

Principal

Funds,

Inc.,

Principal

Variable

Contracts

Funds,

Inc.,

Principal

Exchange-Traded

Funds,

and

Principal

Diversified

Select

Real

Asset

Fund

which

are

collectively

referred

to

as

the

“Fund

Complex”.

Board

Members

that

are

affiliated

persons

of

any

investment

advisor,

the

principal

distributor,

or

the

principal

underwriter

of

the

Fund

Complex

are

considered

“interested

persons”

of

the

Fund

(as

defined

in

the

1940

Act)

and

are

shown

below

as

“Interested

Board

Members”.

Board

Members

who

are

not

Interested

Board

Members

are

shown

below

as

“Independent

Board

Members”.

Each

Board

Member

generally

serves

until

the

next

annual

meeting

of

stockholders

or

until

such

Board

Member’s

earlier

death,

resignation,

or

removal.

Independent

Board

Members

have

a

72-year

age

limit

and,

for

Independent

Board

Members

elected

on

or

after

September

14,

2021,

a

72-year

age

limit

or

a

15-year

term

limit,

whichever

occurs

first.

The

Board

may

waive

the

age

or

term

limits

in

the

Board’s

discretion.

Officers

serve

at

the

pleasure

of

the

Board,

and

each

officer

has

the

same

position

with

each

investment

company

in

the

Fund

Complex.

INDEPENDENT

BOARD

MEMBERS

Name,

Position

Held

with

the

Fund

Complex,

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member

Other

Directorships

Held

by

Board

Member

During

Past

5

Years

Elizabeth

Ballantine

Board

Member

since

2004

Chair,

Nominating

and

Governance

Committee

1948

Principal,

EBA

Associates

126

Durango

Herald,

Inc.;

McClatchy

Newspapers,

Inc.

Leroy

T.

Barnes,

Jr.

Board

Member

since

2012

Member,

Audit

Committee

Member,

Nominating

and

Governance

Committee

1951

Retired

126

McClatchy

Newspapers,

Inc.;

Frontier

Communications,

Inc.;

formerly,

Herbalife

Ltd.

Craig

Damos

Lead

Independent

Board

Member

since

2020

Board

Member

since

2008

Member,

Nominating

and

Governance

Committee

Member,

Executive

Committee

1954

President,

C.P.

Damos

Consulting

LLC

126

None

Fritz

S.

Hirsch

Board

Member

since

2005

Member,

Operations

Committee

Chair,

15(c)

Committee

1951

Interim

CEO,

MAM

USA:

February

2020

to

October

2020

126

MAM

USA

Victor

Hymes

Board

Member

since

2020

Member,

Audit

Committee

1957

Founder

and

Managing

Member

of

Legato

Capital

Management,

LLC

126

Formerly,

Montgomery

Street

Income

Securities

Inc.

John

D.

Kenney

Board

Member

since

2020

Member,

Operations

Committee

Member,

15(c)

Committee

1965

Formerly,

Legg

Mason

Global

Asset

Management

126

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

Padelford

(“Padel”)

L.

Lattimer

Board

Member

since

2020

Member,

Operations

Committee

Member,

15(c)

Committee

1961

TBA

Management

Consulting

LLC

126

None

Karen

(“Karrie”)

McMillan

Board

Member

since

2014

Chair,

Operations

Committee

1961

Founder/Owner,

Tyche

Consulting

LLC

Formerly,

Managing

Trustee,

Patomak

Global

Partners,

LLC

126

None

24

INTERESTED

BOARD

MEMBERS

Correspondence

intended

for

each

Board

Member

who

is

other

than

an

Interested

Board

Member

may

be

sent

to

655

9th

Street,

Des

Moines,

IA

50392.

Name,

Position

Held

with

the

Fund

Complex,

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Number

of

Portfolios

in

Fund

Complex

Overseen

by

Board

Member

Other

Directorships

Held

by

Board

Member

During

Past

5

Years

Elizabeth

A.

Nickels

Board

Member

since

2015

Chair,

Audit

Committee

Member,

Nominating

and

Governance

Committee

1962

Retired

126

SpartanNash;

Formerly:

Charlotte

Russe;

Follet

Corporation;

PetSmart;

Spectrum

Health

Systems

Mary

M.

(“Meg”)

VanDeWeghe

Board

Member

since

2018

Member,

Audit

Committee

Member,

15(c)

Committee

1959

CEO

and

President,

Forte

Consulting,

Inc.

126

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

Complex,

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

Board

Member

since

2019

Chair,

Executive

Committee

1957

President-Principal

Global

Asset

Management

(“PGAM”),

Principal

Global

Investors,

LLC

(“PGI”)

since

2018

Director,

PGI

(2018-2020)

Division

President,

Principal

Financial

Services,

Inc.

(“PFSI)

and

Principal

Life

Insurance

Company

(“PLIC”)

(2020–2021)

Executive

Vice

President

and

Chief

Investment

Officer,

PFSI

and

PLIC

(2014-2018)

President

–

PGAM,

PFSI

and

PLIC

(2018-2020)

Director,

Post

Advisory

Group,

LLC

(“Post”)

(2018-

2020)

Chair

and

Executive

Vice

President,

RobustWealth,

Inc.

(2018-2020)

126

None

Patrick

G.

Halter

Member,

Executive

Committee

Board

Member

since

2017

1959

Chair,

PGI

since

2018

Chief

Executive

Officer

and

President,

PGI

since

2018

Chief

Operating

Officer,

PGI

(2017-2018)

Director,

PGI

(2003-2018)

Director,

Origin

Asset

Management

LLP

(2018-

2019)

President,

PGAM,

PFSI,

and

PLIC

since

2020

Director,

Post

since

2017

Chair,

Principal

Real

Estate

Investors,

LLC

(“PREI”)

since

2004

President

and

Chief

Executive

Officer,

PGI,

PREI

since

2018

Chief

Executive

Officer,

PREI

(2005-2018)

Chair,

Spectrum

Asset

Management,

Inc.

(“Spectrum”)

since

2017

126

None

25

FUND

COMPLEX

OFFICERS

Name,

Position

Held

with

the

Fund

Complex,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Kamal

Bhatia

President

and

Chief

Executive

Officer

Des

Moines,

IA

50392

1972

Director,

PGI

since

2019

President-Principal

Funds,

PGI

since

2019

Principal

Executive

Officer,

OPC

Private

Capital

(2017-2019)

Senior

Vice

President,

OppenheimerFunds

(2011-

2019)

Director,

Principal

Funds

Distributor,

Inc.

(“PFD”)

since

2019

Senior

Executive

Director

and

Chief

Operating

Officer,

PFSI

and

PLIC

since

2020

President,

PFSI

and

PLIC

(2019-2020)

Director,

Post

since

2020

Director,

PREI

since

2020

Chair

and

Executive

Vice

President,

(Principal

Shareholder

Services,

Inc.

(“PSS’)

since

2019

Randy

D.

Bolin

Assistant

Tax

Counsel

Des

Moines,

IA

50392

1961

Vice

President

and

Associate

General

Counsel,

PGI

since

2016

Vice

President

and

Associate

General

Counsel,

PFSI

since

2013

Vice

President

and

Associate

General

Counsel,

PLIC

since

2013

Beth

Graff

Vice

President

and

Assistant

Controller

Des

Moines,

IA

50392

1968

Director

–

Fund

Accounting

since

2016

Gina

L.

Graham

Treasurer

Des

Moines,

IA

50392

1965

Vice

President

and

Treasurer,

PGI

since

2016

Vice

President

and

Treasurer,

PFD

since

2016

Vice

President

and

Treasurer,

PFSI

since

2016

Vice

President

and

Treasurer,

PLIC

since

2016

Vice

President

and

Treasurer,

PREI

since

2017

Vice

President

and

Treasurer,

Principal

Securities,

Inc.

(“PSI”)

since

2016

Vice

President

and

Treasurer,

PSS

since

2016

Vice

President

and

Treasurer,

RobustWealth,

Inc.

since

2018

Megan

Hoffmann

Vice

President

and

Controller

Des

Moines,

IA

50392

1979

Director

–

Accounting,

PLIC

since

2020

Assistant

Director

–

Accounting,

PLIC

(2017-2020)

Prior

thereto,

Senior

Accounting

Analyst,

PLIC

Laura

B.

Latham

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1986

Counsel,

PGI

since

2018

Counsel,

PLIC

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

Tara

Parks

Vice

President

and

Assistant

Controller

Des

Moines,

IA

50392

1983

Director

–

Accounting,

PLIC

since

2019

Tax

Manager

–

ALPS

Fund

Services

(2011-2019)

Sara

L.

Reece

Vice

President

and

Chief

Operating

Officer

Des

Moines,

IA

50392

1975

Vice

President

and

Controller

(2016-2021)

Managing

Director

–

Global

Funds

Ops,

PLIC

since

2021

Managing

Director

–

Financial

Analysis/

Planning,

PLIC

(2021)

Director

-

Accounting,

PLIC

(2015-2021)

26

Name,

Position

Held

with

the

Fund

Complex,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

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,

PGI

(2015-2018)

Vice

President

and

Chief

Compliance

Officer,

PMC

(2015–2017)

Vice

President,

PSS

since

2015

Michael

Scholten

Chief

Financial

Officer

Des

Moines,

IA

50392

1979

Chief

Financial

Officer

–

PFD

since

2016

Assistant

Vice

President

and

Actuary,

PLIC

since

2021

Chief

Financial

Officer

–

Funds/Platforms,

PLIC

since

2015

Chief

Financial

Officer,

PSS

since

2015

Britney

L.

Schnathorst

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1981

Counsel,

PGI

since

2018

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

(2007-2017)

John

L.

Sullivan

Assistant

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1970

Counsel,

PGI

since

2020

Counsel,

PLIC

since

2019

Prior

thereto,

Attorney

in

Private

Practice

Dan

L.

Westholm

Assistant

Treasurer

Des

Moines,

IA

50392

1966

Assistant

Vice

President

and

Treasurer,

PGI

since

2013

Assistant

Vice

President-Treasury,

PFD

since

2013

Assistant

Vice

President-Treasury,

PLIC

since

2014

Assistant

Vice

President-Treasury,

PSI

since

2013

Assistant

Vice

President-Treasury,

PSS

since

2013

Beth

C.

Wilson

Vice

President

and

Secretary

Des

Moines,

IA

50392

1956

Director

and

Secretary

–

Funds,

PLIC

since

2007

Clint

L.

Woods

Vice

President,

Counsel

and

Assistant

Secretary

Des

Moines,

IA

50392

1961

Of

Counsel

(2017-2018)

Vice

President

(2016-2017)

Counsel

(2015-2017)

Vice

President,

Associate

General

Counsel

and

Secretary,

PGI

since

2020

Vice

President,

Associate

General

Counsel,

Governance

Officer,

and

Assistant

Corporate

Secretary,

PGI

(2018-2020)

Vice

President,

Associate

General

Counsel

and

Assistant

Corporate

Secretary,

PFD

since

2019

Vice

President,

Associate

General

Counsel,

Governance

Officer

and

Assistant

Corporate

Secretary,

PFSI

since

2019

Vice

President,

Associate

General

Counsel,

Governance

Officer

and

Assistant

Corporate

Secretary,

PLIC

since

2015

Secretary,

Post

since

2020

Vice

President,

Associate

General

Counsel,

Governance

Officer

and

Secretary,

PREI

since

2020

Vice

President,

Associate

General

Counsel,

Governance

Officer

and

Assistant

Corporate

Secretary,

PREI

(2020)

Vice

President,

Associate

General

Counsel

and

Assistant

Corporate

Secretary,

PSI

since

2019

Vice

President,

Associate

General

Counsel

and

Assistant

Corporate

Secretary,

PSS

since

2019

Vice

President,

Associate

General

Counsel

and

Assistant

Secretary,

RobustWealth,

Inc.

since

2019

Secretary,

Spectrum

since

2020

27

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

related

materials.

The

Audit

Committee’s

primary

purpose

is

to

assist

the

Board

by

serving

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

Fund

Complex's

business

except

the

power

to

1)

issue

stock,

except

as

permitted

by

law;

2)

recommend

to

the

stockholders

any

action

which

requires

stockholder

approval;

3)

amend

the

bylaws;

or

4)

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.

The

Committee

is

responsible

for

evaluating

Board

membership

and

functions,

committee

membership

and

functions,

insurance

coverage,

and

legal

matters.

The

Committee's

nominating

functions

include

selecting

and

nominating

Independent

Board

Member

candidates

for

election

to

the

Board.

Generally,

the

Committee

requests

nominee

suggestions

from

Board

Members

and

management.

In

addition,

the

Committee

considers

candidates

recommended

by

shareholders

of

the

Fund

Complex.

Recommendations

should

be

submitted

in

writing

to

the

Principal

Funds

Complex

Secretary,

in

care

of

the

Principal

Funds

Complex,

711

High

Street,

Des

Moines,

IA

50392.

Such

recommendations

must

include

all

information

specified

in

the

Committee’s

charter

and

must

conform

with

the

procedures

set

forth

in

Appendix

A

thereto,

which

can

be

found

at

https://www.principalglobal.com/documentdownload/160950.

Examples

of

such

information

include

the

nominee’s

biographical

information;

relevant

educational

and

professional

background

of

the

nominee;

the

number

of

shares

of

each

Fund

owned

of

record

and

beneficially

by

the

nominee

and

by

the

recommending

shareholder;

any

other

information

regarding

the

nominee

that

would

be

required

to

be

disclosed

in

a

proxy

statement

or

other

filing

required

to

be

made

in

connection

with

the

solicitation

of

proxies

for

the

election

of

board

members;

whether

the

nominee

is

an

“interested

person”

of

the

Fund

as

defined

in

the

1940

Act;

and

the

written

consent

of

the

nominee

to

be

named

as

a

nominee

and

serve

as

a

board

member

if

elected.

When

evaluating

a

potential

nominee

for

Independent

Board

Member,

the

Committee

may

consider,

among

other

factors:

educational

background;

relevant

business

and

industry

experience;

whether

the

person

is

an

"interested

person"

of

the

Fund

as

defined

in

the

1940

Act;

and

whether

the

person

is

willing

to

serve,

and

willing

and

able

to

commit

the

time

necessary

to

attend

meetings

and

perform

the

duties

of

an

Independent

Board

Member. In

addition,

the

Committee

may

consider

whether

a

candidate’s

background,

experience,

skills

and

views

would

complement

the

background,

experience,

skills

and

views

of

other

Board

Members

and

would

contribute

to

the

diversity

of

the

Board. The

Committee

meets

with

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

Board

does

not

regularly

use

the

services

of

professional

search

firms

to

identify

or

evaluate

potential

candidates

or

nominees.

The

Operations

Committee’s

primary

purpose

is

to

oversee

the

provision

of

administrative

and

distribution

services

to

the

Funds

Complex,

communications

with

the

Fund

Complex’s

shareholders,

and

review

and

oversight

of

the

Fund

Complex’s

operations.

Additional

information

about

the

Fund

is

available

in

the

Prospectus

dated

August

1,

2021

and

as

supplemented,

and

the

Statement

of

Additional

Information

dated

August

1,

2021

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

Securities

and

Exchange

Commission

website

at

www.sec.gov.

Name,

Position

Held

with

the

Fund

Complex,

Address,

and

Year

of

Birth

Principal

Occupation(s)

During

past

5

years

Jared

A.

Yepsen

Assistant

Tax

Counsel

Des

Moines,

IA

50392

1981

Counsel,

PGI

(2017-2019)

Counsel,

PLIC

since

2015

28

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

Commissions

website

at

www.sec.

gov

and

www.PrincipalFunds.com//interval-funds

29

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”

or

the

“Fund”)

considered

the

renewal

of

the

Management

Agreement

and

various

subadvisory

agreements

for

the

Fund.

Annual

Review

and

Renewal

of

Management

Agreement

and

Subadvisory

Agreements

At

its

September

14,

2021

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

Investments

(North

America)

Pty

Limited;

DDJ

Capital

Management,

LLC;

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,

2021

and

compared

performance

information

based

upon

data

provided

by

Refinitiv.

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

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)

30

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

non-fund

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

2020.

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,

2020.

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,

2020.

The

Board

concluded

that

the

profitability

to

the

Manager

under

the

management

agreement

was

not

unreasonable.

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

2021

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

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the

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Select

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Asset

Fund.

This

material

is

not

authorized

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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

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prospectus

or

summary

prospectus,

please

contact

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call

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©

2021

Principal

Financial

Services,

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|

INF100SAR-02

|

09/2021

|

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

The registrant has adopted procedures by which shareholders may recommend nominees to the registrant’s Board. A copy of the procedures can be found in the Nominating and Governance Committee charter at

https://www.principalglobal.com/documentdownload/160950

.

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 period covered by this report 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 of 1940 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 of 1940 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 11/17/2021

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 11/17/2021

By /s/ Michael Scholten

              Michael Scholten, Chief Financial Officer

Date 11/17/2021