Table of Contents
 
 
 
Financial Statements 1
Notes to Financial Statements 20
Schedules of Investments 35
Financial Highlights (Includes performance information) 92
Shareholder Expense Example 103
Supplemental Information 105

 



 

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Statements of Assets and Liabilities              
Principal Exchange-Traded Funds              
December 31, 2023 (unaudited)              
 
 
                Principal  
    Principal     Principal   Healthcare  
  Active High     Focused Blue   Innovators  
    Yield ETF     Chip ETF   ETF  
Investment in securities — at cost $ 148,797,781   $ 28,652,425 $ 75,561,320  
Investment in affiliated funds — at cost $ 2,025,368     $ $ 1,741,806  
Foreign currency — at cost $ 2     $ $  
Assets                  
Investment in securities — at value $ 147,935,139 (a) $ 30,783,098 $ 49,105,165 (a)
Investment in affiliated funds — at value   2,025,368         1,741,806  
Foreign currency — at value   2          
Cash   39,188       35    
Receivables:                  
Dividends   50,106       9,299   295  
Interest   2,273,032          
Securities lending income   2,713         11,545  
Fund shares sold   1,882,823     1,139,177    
Investment securities sold   11,090       10,377    
Total Assets   154,219,461     31,941,986   50,858,811  
 
Liabilities                  
Cash overdraft           573  
Accrued management and investment advisory fees   47,510       14,119   16,225  
Accrued distribution   905,584       56,457    
Payables:                  
Investment securities purchased   1,456,290     1,113,606    
Collateral obligation on securities loaned — at value   2,025,368         1,741,806  
Total Liabilities   4,434,752     1,184,182   1,758,604  
Net Assets Applicable to Outstanding Shares $ 149,784,709   $ 30,757,804 $ 49,100,207  
 
Net Assets Consist of:                  
Capital shares and additional paid-in-capital $ 168,704,484   $ 26,995,761 $ 96,553,509  
Total distributable earnings (accumulated loss)   (18,919,775 )   3,762,043   (47,453,302 )
Total Net Assets $ 149,784,709   $ 30,757,804 $ 49,100,207  
 
Net Asset Value Per Share:                  
Net assets $ 149,784,709   $ 30,757,804 $ 49,100,207  
Shares issued and outstanding   7,950,000     1,080,001   1,350,001  
Net asset value per share $ 18.84     $ 28.48 $ 36.37  
 
(a) Includes fair market value of securities loaned, see 'Securities Lending' in Notes to Financial Statements.        
 
 
 
 
See accompanying notes.                  
1                  

 


 

Statements of Assets and Liabilities            
Principal Exchange-Traded Funds            
December 31, 2023 (unaudited)            
 
 
    Principal            
    Investment           Principal Real
    Grade           Estate Active
    Corporate     Principal     Opportunities
    Active ETF     Quality ETF     ETF
Investment in securities — at cost $ 71,944,775   $ 37,842,658   $ 8,955,801
Investment in affiliated funds — at cost $ 476,560   $   $
Assets                
Investment in securities — at value $ 72,697,668 (a) $ 41,608,983   $ 9,159,610
Investment in affiliated funds — at value   476,560        
Cash   6,672        
Deposits with counterparty   42,720        
Receivables:                
Dividends   1,499     18,914     48,635
Interest   719,434        
Securities lending income   724        
Investment securities sold           82,471
Variation margin on financial derivative instruments   3,119        
Total Assets   73,948,396     41,627,897     9,290,716
 
Liabilities                
Accrued management and investment advisory fees   11,542     4,876     4,893
Accrued distribution   288,505     84,316     67,132
Payables:                
Investment securities purchased           63,495
Collateral obligation on securities loaned — at value   476,560        
Total Liabilities   776,607     89,192     135,520
Net Assets Applicable to Outstanding Shares $ 73,171,789   $ 41,538,705   $ 9,155,196
 
Net Assets Consist of:                
Capital shares and additional paid-in-capital $ 91,692,995   $ 47,815,190   $ 8,843,001
Total distributable earnings (accumulated loss)   (18,521,206 )   (6,276,485 )   312,195
Total Net Assets $ 73,171,789   $ 41,538,705   $ 9,155,196
 
Net Asset Value Per Share:                
Net assets $ 73,171,789   $ 41,538,705   $ 9,155,196
Shares issued and outstanding   3,500,001     680,001     380,001
Net asset value per share $ 20.91   $ 61.09   $ 24.09
 
(a) Includes fair market value of securities loaned, see 'Securities Lending' in Notes to Financial Statements.      
 
 
 
 
See accompanying notes.                
2                

 


 

  Statements of Assets and Liabilities            
  Principal Exchange-Traded Funds            
  December 31, 2023 (unaudited)            
 
 
      Principal     Principal      
      Spectrum   Spectrum Tax-      
      Preferred     Advantaged      
      Securities     Dividend     Principal U.S.
      Active ETF     Active ETF     Mega-Cap ETF
Investment in securities — at cost $ 791,246,032   $ 21,423,482   $ 1,703,265,972
Investment in affiliated funds — at cost $ 29,508   $   $
Assets                
Investment in securities — at value $ 776,816,870 (a) $ 20,592,451   $ 2,042,129,310
Investment in affiliated funds — at value   29,508        
Deposits with counterparty       25,988    
Receivables:                
  Dividends   111,171     14,166     2,566,002
  Interest   9,006,708     190,639    
  Securities lending income   440        
  Fund shares sold   13,078,122        
  Investment securities sold           2,810,989
  Expense reimbursement from Advisor           50,877
  Total Assets   799,042,819     20,823,244     2,047,557,178
 
Liabilities                
Cash overdraft   50        
Accrued management and investment advisory fees   343,443     10,460     254,384
Accrued distribution   2,945,379     84,625     7,907,776
Payables:                
  Investment securities purchased   9,262,238        
Collateral obligation on securities loaned — at value   29,508        
  Total Liabilities   12,580,618     95,085     8,162,160
Net Assets Applicable to Outstanding Shares $ 786,462,201   $ 20,728,159   $ 2,039,395,018
 
Net Assets Consist of:                
Capital shares and additional paid-in-capital $ 825,618,734   $ 23,199,790   $ 1,789,301,731
Total distributable earnings (accumulated loss)   (39,156,533 )   (2,471,631 )   250,093,287
  Total Net Assets $ 786,462,201   $ 20,728,159   $ 2,039,395,018
 
Net Asset Value Per Share:                
  Net assets $ 786,462,201   $ 20,728,159   $ 2,039,395,018
  Shares issued and outstanding   45,100,005     1,150,001     43,600,001
  Net asset value per share $ 17.44   $ 18.02   $ 46.78
 
(a) Includes fair market value of securities loaned, see 'Securities Lending' in Notes to Financial Statements.        
 
 
 
 
  See accompanying notes.                
  3                

 


 

  Statements of Assets and Liabilities        
  Principal Exchange-Traded Funds        
  December 31, 2023 (unaudited)        
 
 
    Principal U.S.   Principal Value  
    Small-Cap ETF     ETF  
Investment in securities — at cost $ 423,339,772   $ 52,841,441  
Investment in affiliated funds — at cost $ 1,495,118   $  
Assets            
Investment in securities — at value $ 462,027,654 (a) $ 56,944,009  
Investment in affiliated funds — at value   1,495,118      
Cash   15,943      
Receivables:            
  Dividends   432,973     114,567  
  Securities lending income   384      
  Investment securities sold       143,314  
  Total Assets   463,972,072     57,201,890  
 
Liabilities            
Accrued management and investment advisory fees   134,676     6,878  
Accrued distribution   1,119,832     344,133  
Collateral obligation on securities loaned — at value   1,495,118      
  Total Liabilities   2,749,626     351,011  
Net Assets Applicable to Outstanding Shares $ 461,222,446   $ 56,850,879  
 
Net Assets Consist of:            
Capital shares and additional paid-in-capital $ 599,610,068   $ 81,448,839  
Total distributable earnings (accumulated loss)   (138,387,622 )   (24,597,960 )
  Total Net Assets $ 461,222,446   $ 56,850,879  
 
Net Asset Value Per Share:            
  Net assets $ 461,222,446   $ 56,850,879  
  Shares issued and outstanding   10,040,001     1,310,001  
  Net asset value per share $ 45.94   $ 43.40  
 
(a) Includes fair market value of securities loaned, see 'Securities Lending' in Notes to Financial Statements.    
 
 
               
 
 
 
 
  See accompanying notes.            
  4            

 


 

Statements of Operations              
Principal Exchange-Traded Funds              
Six Months Ended December 31, 2023 (unaudited)              
 
 
                Principal  
    Principal     Principal     Healthcare  
  Active High     Focused Blue     Innovators  
    Yield ETF     Chip ETF (a)     ETF  
Net Investment Income (Loss)                  
Income:                  
Dividend $ 112,303   $ 99,488   $ 11,863  
Withholding tax       (548 )    
Interest   3,952,079          
Securities lending — net   28,847         45,678  
Total Income   4,093,229     98,940     57,541  
 
Expenses:                  
Management and investment advisory fees   224,308     42,683     99,397  
Total Expenses   224,308     42,683     99,397  
Net Investment Income (Loss)   3,868,921     56,257     (41,856 )
 
Net Realized and Unrealized Gain (Loss)                  
Net realized gain (loss) from:                  
Investment transactions   (1,119,066 )   18,046     1,007,966  
In-kind redemptions       1,613,524     502,149  
Change in unrealized appreciation (depreciation) of:                  
Investments   6,332,935     2,130,673     (2,158,865 )
Net Realized and Unrealized Gain (Loss)   5,213,869     3,762,243     (648,750 )
Net Increase (Decrease) in Net Assets Resulting from Operations $ 9,082,790   $ 3,818,500   $ (690,606 )
 
(a) Period from July 12, 2023, date operations commenced, through December 31, 2023.              

 

  See accompanying notes.  
  5

 


 

Statements of Operations              
Principal Exchange-Traded Funds              
Six Months Ended December 31, 2023 (unaudited)              
 
 
    Principal              
    Investment           Principal Real  
    Grade           Estate Active  
    Corporate     Principal     Opportunities  
  Active ETF     Quality ETF     ETF  
Net Investment Income (Loss)                  
Income:                  
Dividend $ 19,551   $ 205,398   $ 141,285  
Withholding tax       (748 )    
Interest   1,442,741          
Securities lending — net   2,292          
Total Income   1,464,584     204,650     141,285  
 
Expenses:                  
Management and investment advisory fees   56,238     27,430     22,045  
Total Expenses   56,238     27,430     22,045  
Net Investment Income (Loss)   1,408,346     177,220     119,240  
 
Net Realized and Unrealized Gain (Loss)                  
Net realized gain (loss) from:                  
Investment transactions   (1,077,679 )   (1,202 )   (23,551 )
In-kind redemptions       2,623,378     168,915  
Futures contracts   12,111          
Change in unrealized appreciation (depreciation) of:                  
Investments   3,351,440     66,484     675,028  
Futures contracts   (61,156 )        
Net Realized and Unrealized Gain (Loss)   2,224,716     2,688,660     820,392  
Net Increase (Decrease) in Net Assets Resulting from Operations $ 3,633,062   $ 2,865,880   $ 939,632  
 
 
 
 
  See accompanying notes.                  
6                  

 


 

Statements of Operations              
Principal Exchange-Traded Funds              
Six Months Ended December 31, 2023 (unaudited)              
 
 
    Principal     Principal        
    Spectrum     Spectrum Tax-        
    Preferred     Advantaged        
    Securities     Dividend     Principal U.S.  
  Active ETF     Active ETF     Mega-Cap ETF  
Net Investment Income (Loss)                  
Income:                  
Dividend $ 393,062   $ 68,739   $ 13,811,954  
Interest   15,891,518     480,488      
Securities lending — net   9,399          
Total Income   16,293,979     549,227     13,811,954  
 
Expenses:                  
Management and investment advisory fees   1,740,749     60,665     1,243,013  
Less: Reimbursement from Advisor           (248,603 )
Total Expenses   1,740,749     60,665     994,410  
Net Investment Income (Loss)   14,553,230     488,562     12,817,544  
 
Net Realized and Unrealized Gain (Loss)                  
Net realized gain (loss) from:                  
Investment transactions   (415,744 )   (96,054 )   171,389  
In-kind redemptions           4,545,660  
Change in unrealized appreciation (depreciation) of:                  
Investments   29,912,254     901,432     137,704,874  
Net Realized and Unrealized Gain (Loss)   29,496,510     805,378     142,421,923  
Net Increase (Decrease) in Net Assets Resulting from Operations $ 44,049,740   $ 1,293,940   $ 155,239,467  
 
 
 
 
  See accompanying notes.                  
7                  

 


 

Statements of Operations        
Principal Exchange-Traded Funds        
Six Months Ended December 31, 2023 (unaudited)    
 
 
  Principal U.S.   Principal Value  
  Small-Cap ETF     ETF  
Net Investment Income (Loss)            
Income:            
Dividend $ 2,525,423   $ 623,077  
Withholding tax   (2,999 )    
Securities lending — net   1,563      
Total Income   2,523,987     623,077  
 
Expenses:            
Management and investment advisory fees   581,090     31,835  
Total Expenses   581,090     31,835  
Net Investment Income (Loss)   1,942,897     591,242  
 
Net Realized and Unrealized Gain (Loss)            
Net realized gain (loss) from:            
Investment transactions   (390,289 )   (399,647 )
In-kind redemptions   2,891,334     34,881  
Change in unrealized appreciation (depreciation) of:            
Investments   33,001,236     3,867,695  
Net Realized and Unrealized Gain (Loss)   35,502,281     3,502,929  
Net Increase (Decrease) in Net Assets Resulting from Operations $ 37,445,178   $ 4,094,171  
 
 
             
 
 
 
 
  See accompanying notes.            
8            

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)              
 
    Principal Active High Yield ETF  
    Period ended   Year ended  
    December 31, 2023   June 30, 2023  
Operations              
Net investment income (loss)   $ 3,868,921   $ 10,150,990  
Net realized gain (loss)     (1,119,066 )   (14,043,951 )
Change in unrealized appreciation (depreciation)     6,332,935     25,524,711  
Net Increase (Decrease) in Net Assets Resulting from Operations     9,082,790     21,631,750  
 
Dividends and Distributions to Shareholders              
From net investment income and net realized gain on investments     (4,709,498 )   (11,723,824 )
Total Dividends and Distributions     (4,709,498 )   (11,723,824 )
 
Capital Share Transactions              
Net increase (decrease) in capital share transactions     40,317,360     (123,588,810 )
Total Increase (Decrease) in Net Assets     44,690,652     (113,680,884 )
 
Net Assets              
Beginning of period   105,094,057     218,774,941  
End of period $ 149,784,709   $ 105,094,057  
 
Capital Share Transactions              
Dollars:              
Sold   $ 40,317,360   $ 170,914,816  
Redeemed         (294,503,626 )
Net Increase (Decrease)   $ 40,317,360   $ (123,588,810 )
Shares:              
Sold     2,200,000     9,400,000  
Redeemed         (16,000,000 )
Net Increase (Decrease)     2,200,000     (6,600,000 )
 
 
 
 
  See accompanying notes.              
9              

 


 

  Statement of Changes in Net Assets  
  Principal Exchange-Traded Funds  
                                          (unaudited)      
 
    Principal Focused  
      Blue Chip ETF  
      Period ended  
    December 31, 2023 (a)  
Operations      
Net investment income (loss) $ 56,257  
Net realized gain (loss)   1,631,570  
Change in unrealized appreciation (depreciation)   2,130,673  
  Net Increase (Decrease) in Net Assets Resulting from Operations   3,818,500  
 
Dividends and Distributions to Shareholders      
From net investment income and net realized gain on investments   (56,457 )
  Total Dividends and Distributions   (56,457 )
 
Capital Share Transactions      
Net increase (decrease) in capital share transactions   26,995,761  
  Total Increase (Decrease) in Net Assets   30,757,804  
 
Net Assets      
Beginning of period    
End of period $ 30,757,804  
 
Capital Share Transactions      
Dollars:      
  Sold $ 41,704,466  
  Redeemed   (14,708,705 )
Net Increase (Decrease) $ 26,995,761  
Shares:      
  Sold   1,620,001  
  Redeemed   (540,000 )
Net Increase (Decrease)   1,080,001  
 
(a) Period from July 12, 2023, date operations commenced, through December 31, 2023.      
 
 
 
 
  See accompanying notes.      
  10      

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)            
 
  Principal Healthcare Innovators ETF  
  Period ended     Year ended  
  December 31, 2023     June 30, 2023  
Operations            
Net investment income (loss) $ (41,856 ) $ (118,694 )
Net realized gain (loss)   1,510,115     (13,831,536 )
Change in unrealized appreciation (depreciation)   (2,158,865 )   19,829,648  
Net Increase (Decrease) in Net Assets Resulting from Operations   (690,606 )   5,879,418  
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   (4,206,532 )   (5,157,228 )
Total Increase (Decrease) in Net Assets   (4,897,138 )   722,190  
 
Net Assets            
Beginning of period   53,997,345     53,275,155  
End of period $ 49,100,207   $ 53,997,345  
 
Capital Share Transactions            
Dollars:            
Sold $ 1,783,852   $ 1,657,546  
Redeemed   (5,990,384 )   (6,814,774 )
Net Increase (Decrease) $ (4,206,532 ) $ (5,157,228 )
Shares:            
Sold   50,000     50,000  
Redeemed   (200,000 )   (200,000 )
Net Increase (Decrease)   (150,000 )   (150,000 )
 
 
 
 
See accompanying notes.            
11            

 


 

Statement of Changes in Net Assets            
Principal Exchange-Traded Funds            
(unaudited)              
 
  Principal Investment Grade Corporate  
    Active ETF    
  Period ended     Year ended  
  December 31, 2023     June 30, 2023  
Operations              
Net investment income (loss) $ 1,408,346     $ 3,068,027  
Net realized gain (loss)   (1,065,568 )     (64,443,368 )
Change in unrealized appreciation (depreciation)   3,290,284       65,388,314  
Net Increase (Decrease) in Net Assets Resulting from Operations   3,633,062       4,012,973  
 
Dividends and Distributions to Shareholders              
From net investment income and net realized gain on investments   (1,637,613 )     (4,589,877 )
Total Dividends and Distributions   (1,637,613 )     (4,589,877 )
 
Capital Share Transactions              
Net increase (decrease) in capital share transactions   24,002,144     (321,275,205 )
Total Increase (Decrease) in Net Assets   25,997,593     (321,852,109 )
 
Net Assets              
Beginning of period   47,174,196       369,026,305  
End of period $ 73,171,789     $ 47,174,196  
 
Capital Share Transactions              
Dollars:              
Sold $ 24,002,144     $ 41,226,063  
Redeemed       (362,501,268 )
Net Increase (Decrease) $ 24,002,144   $ (321,275,205 )
Shares:              
Sold   1,200,000       1,950,000  
Redeemed         (16,550,000 )
Net Increase (Decrease)   1,200,000       (14,600,000 )

 

See accompanying notes.  
  12

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)            
 
    Principal Quality ETF  
  Period ended   Year ended  
  December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 177,220   $ 388,565  
Net realized gain (loss)   2,622,176     1,353,440  
Change in unrealized appreciation (depreciation)   66,484     4,996,312  
Net Increase (Decrease) in Net Assets Resulting from Operations   2,865,880     6,738,317  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (260,916 )   (527,129 )
Total Dividends and Distributions   (260,916 )   (527,129 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   2,238,062     (15,004,459 )
Total Increase (Decrease) in Net Assets   4,843,026     (8,793,271 )
 
Net Assets            
Beginning of period   36,695,679     45,488,950  
End of period $ 41,538,705   $ 36,695,679  
 
Capital Share Transactions            
Dollars:            
Sold $ 20,201,099   $ 5,213,657  
Redeemed (17,963,037 )   (20,218,116 )
Net Increase (Decrease) $ 2,238,062   $ (15,004,459 )
Shares:            
Sold   350,000     100,000  
Redeemed   (320,000 )   (400,000 )
Net Increase (Decrease)   30,000     (300,000 )

 

  See accompanying notes.  
  13

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)            
 
    Principal Real Estate Active  
    Opportunities ETF  
  Period ended   Period ended  
  December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 119,240   $ 120,599  
Net realized gain (loss)   145,364     (55,825 )
Change in unrealized appreciation (depreciation)   675,028     (319,485 )
Net Increase (Decrease) in Net Assets Resulting from Operations   939,632     (254,711 )
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (136,132 )   (128,638 )
Total Dividends and Distributions   (136,132 )   (128,638 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   2,908,608     436,840  
Total Increase (Decrease) in Net Assets   3,712,108     53,491  
 
Net Assets            
Beginning of period   5,443,088     5,389,597  
End of period $ 9,155,196   $ 5,443,088  
 
Capital Share Transactions            
Dollars:            
Sold $ 4,685,438   $ 436,840  
Redeemed   (1,776,830 )    
Net Increase (Decrease) $ 2,908,608   $ 436,840  
Shares:            
Sold   220,000     20,000  
Redeemed   (80,000 )    
Net Increase (Decrease)   140,000     20,000  

 

  See accompanying notes.  
  14

 


 

Statement of Changes in Net Assets        
Principal Exchange-Traded Funds        
(unaudited)            
 
  Principal Spectrum Preferred Securities  
    Active ETF    
    Period ended   Year ended  
  December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 14,553,230   $ 18,424,959  
Net realized gain (loss)   (415,744 )   (13,463,446 )
Change in unrealized appreciation (depreciation)   29,912,254     8,786,436  
Net Increase (Decrease) in Net Assets Resulting from Operations   44,049,740     13,747,949  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (18,154,872 )   (20,075,762 )
Total Dividends and Distributions   (18,154,872 )   (20,075,762 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   184,581,104     237,357,268  
Total Increase (Decrease) in Net Assets   210,475,972     231,029,455  
 
Net Assets            
Beginning of period   575,986,229     344,956,774  
End of period $ 786,462,201   $ 575,986,229  
 
Capital Share Transactions            
Dollars:            
Sold $ 184,581,104   $ 317,487,703  
Redeemed       (80,130,435 )
Net Increase (Decrease) $ 184,581,104   $ 237,357,268  
Shares:            
Sold   10,950,000     18,650,000  
Redeemed       (4,550,000 )
Net Increase (Decrease)   10,950,000     14,100,000  

 

  See accompanying notes.  
  15

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)            
 
  Principal Spectrum Tax-Advantaged  
    Dividend Active ETF  
  Period ended   Year ended  
  December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 488,562   $ 995,863  
Net realized gain (loss)   (96,054 )   (994,934 )
Change in unrealized appreciation (depreciation)   901,432     141,114  
Net Increase (Decrease) in Net Assets Resulting from Operations   1,293,940     142,043  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (647,130 )   (1,148,780 )
Total Dividends and Distributions   (647,130 )   (1,148,780 )
 
Total Increase (Decrease) in Net Assets   646,810     (1,006,737 )
 
Net Assets            
Beginning of period   20,081,349     21,088,086  
End of period $ 20,728,159   $ 20,081,349  
 
Capital Share Transactions            
Dollars:            
Sold $   $  
Redeemed        
Net Increase (Decrease) $   $  
Shares:            
Sold        
Redeemed        
Net Increase (Decrease)        

 

  See accompanying notes.  
  16

 


 

Statement of Changes in Net Assets        
Principal Exchange-Traded Funds        
(unaudited)            
 
    Principal U.S. Mega-Cap ETF  
    Period ended     Year ended  
    December 31, 2023     June 30, 2023  
Operations            
Net investment income (loss) $ 12,817,544   $ 18,391,342  
Net realized gain (loss)   4,717,049     41,048,130  
Change in unrealized appreciation (depreciation)   137,704,874     199,046,571  
Net Increase (Decrease) in Net Assets Resulting from Operations   155,239,467     258,486,043  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (17,950,099 )   (19,885,169 )
Total Dividends and Distributions   (17,950,099 )   (19,885,169 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   438,252,129     (142,174,201 )
Total Increase (Decrease) in Net Assets   575,541,497     96,426,673  
 
Net Assets            
Beginning of period   1,463,853,521     1,367,426,848  
End of period $ 2,039,395,018   $ 1,463,853,521  
 
Capital Share Transactions            
Dollars:            
Sold $ 453,020,174   $ 206,613,201  
Redeemed   (14,768,045 )   (348,787,402 )
Net Increase (Decrease) $ 438,252,129   $ (142,174,201 )
Shares:            
Sold   10,430,000     5,200,000  
Redeemed   (330,000 )   (9,050,000 )
Net Increase (Decrease)   10,100,000     (3,850,000 )

 

  See accompanying notes.  
  17

 


 

Statement of Changes in Net Assets        
Principal Exchange-Traded Funds        
(unaudited)            
 
    Principal U.S. Small-Cap ETF (a)  
    Period ended   Year ended  
    December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 1,942,897   $ 4,061,837  
Net realized gain (loss)   2,501,045     (63,556,738 )
Change in unrealized appreciation (depreciation)   33,001,236     112,599,822  
Net Increase (Decrease) in Net Assets Resulting from Operations   37,445,178     53,104,921  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (2,291,140 )   (6,213,838 )
Total Dividends and Distributions   (2,291,140 )   (6,213,838 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   224,777,137     (461,864,330 )
Total Increase (Decrease) in Net Assets   259,931,175     (414,973,247 )
 
Net Assets            
Beginning of period   201,291,271     616,264,518  
End of period $ 461,222,446   $ 201,291,271  
 
Capital Share Transactions            
Dollars:            
Sold $ 238,640,229   $ 16,238,484  
Redeemed   (13,863,092 )   (478,102,814 )
Net Increase (Decrease) $ 224,777,137   $ (461,864,330 )
Shares:            
Sold   5,620,000     400,000  
Redeemed   (330,000 )   (11,850,000 )
Net Increase (Decrease)   5,290,000     (11,450,000 )
 
(a) Effective June 30, 2023, Principal U.S. Small-Cap Multi-Factor ETF changed its name to Principal U.S. Small-Cap ETF.  

 

  See accompanying notes.  
  18

 


 

Statement of Changes in Net Assets          
Principal Exchange-Traded Funds          
(unaudited)            
 
    Principal Value ETF  
  Period ended   Year ended  
  December 31, 2023   June 30, 2023  
Operations            
Net investment income (loss) $ 591,242   $ 1,631,621  
Net realized gain (loss)   (364,766 )   5,117,793  
Change in unrealized appreciation (depreciation)   3,867,695     5,432,725  
Net Increase (Decrease) in Net Assets Resulting from Operations   4,094,171     12,182,139  
 
Dividends and Distributions to Shareholders            
From net investment income and net realized gain on investments   (894,034 )   (4,060,672 )
Total Dividends and Distributions   (894,034 )   (4,060,672 )
 
Capital Share Transactions            
Net increase (decrease) in capital share transactions   16,310,760     (186,656,742 )
Total Increase (Decrease) in Net Assets   19,510,897     (178,535,275 )
 
Net Assets            
Beginning of period   37,339,982     215,875,257  
End of period $ 56,850,879   $ 37,339,982  
 
Capital Share Transactions            
Dollars:            
Sold $ 17,090,809   $ 39,360,027  
Redeemed   (780,049 )   (226,016,769 )
Net Increase (Decrease) $ 16,310,760   $ (186,656,742 )
Shares:            
Sold   430,000     1,000,000  
Redeemed   (20,000 )   (5,650,000 )
Net Increase (Decrease)   410,000     (4,650,000 )
 
 
             

 

  See accompanying notes.  
  19

 


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

1. Organization

The Principal Exchange-Traded Funds (the “Trust”) is a statutory trust organized under the laws of the State of Delaware in 2013 and is authorized to have multiple series or portfolios. The Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust currently consists of eleven series, Principal Active High Yield ETF, Principal Focused Blue Chip ETF, Principal Healthcare Innovators ETF, Principal Investment Grade Corporate Active ETF, Principal Quality ETF, Principal Real Estate Active Opportunities ETF, Principal Spectrum Preferred Securities Active ETF, Principal Spectrum Tax-Advantaged Dividend Active ETF, Principal U.S. Mega-Cap ETF, Principal U.S. Small-Cap ETF and Principal Value ETF (collectively, the “Funds” and individually, a “Fund”). The shares of the Funds are referred to herein as “Shares”.

Each of the Funds is an investment company and applies specialized accounting and reporting under Accounting Standards Codification Topic 946, Financial Services - Investment Companies. The Funds have not provided financial support and are not contractually required to provide financial support to any investee.

The Trust issues and redeems Shares at net asset value (“NAV”) only with Authorized Participants (“APs”) and only in aggregations of 50,000 Shares with the exception of Principal Focused Blue Chip ETF, Principal Healthcare Innovators ETF, Principal Quality ETF, Principal Real Estate Active Opportunities ETF, Principal U.S. Mega-Cap ETF, Principal U.S. Small-Cap ETF and Principal Value ETF which are issued and redeemed in aggregations of 20,000 shares (each a “Creation Unit” or multiples thereof “Creation Unit Aggregations”), which is subject to change. The Trust issues and redeems Creation Unit Aggregations in exchange for portfolio securities and/or cash, plus a fixed and/or variable transaction fee.

Shares trade on exchanges at market prices that may be below, at, or above NAV. Shares are listed on the respective exchanges as listed below:

Fund Exchange
Principal Active High Yield ETF NYSE Arca
Principal Focused Blue Chip ETF Cboe BZX Exchange, Inc.
Principal Healthcare Innovators ETF The Nasdaq Stock Market LLC
Principal Investment Grade Corporate Active ETF NYSE Arca
Principal Quality ETF The Nasdaq Stock Market LLC
Principal Real Estate Active Opportunities ETF NYSE Arca
Principal Spectrum Preferred Securities Active ETF NYSE Arca
Principal Spectrum Tax-Advantaged Dividend Active ETF NYSE Arca
Principal U.S. Mega-Cap ETF The Nasdaq Stock Market LLC
Principal U.S. Small-Cap ETF The Nasdaq Stock Market LLC
Principal Value ETF The Nasdaq Stock Market LLC

 

Principal Real Estate Active Opportunities ETF initial investment and commencement of operations was May 18, 2022.

Effective July 8, 2022 and July 15, 2022, Principal U.S. Small-Cap Multi-Factor ETF and Principal Healthcare Innovators ETF changed from passively managed funds to actively managed funds, respectively.

Effective June 30, 2023, Principal U.S. Small-Cap Multi-Factor ETF changed its name to Principal U.S. Small-Cap ETF.

Principal Focused Blue Chip ETF initial investment and commencement of operations was July 12, 2023.

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 Funds:

20


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

2. Significant Accounting Policies

Security Valuation. The Funds may invest in series of Principal Funds, Inc. and other investment funds, which may include money market funds and other registered open-end investment companies. Investments in registered open-end investment companies are valued at the respective fund's closing NAV per share on the day of valuation.

The Funds value securities for which market quotations are readily available at fair value, which is determined using the last reported sale price. If no sales are reported, as is regularly the case for some securities traded over-the-counter (“OTC”), 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 Principal Global Investors, LLC (“the Advisor”) under procedures established and periodically reviewed by the Board of Trustees.

The value of foreign securities used in computing the NAV 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 NAV are reflected in the Fund’s NAV and these securities are valued at fair value. 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 Depository Receipts (“ADRs”), futures contracts, industry indices, general indices, and foreign currencies.

To the extent the Funds invest in foreign securities listed on foreign exchanges which trade on days on which the Funds do not determine NAV, for example, weekends and other customary national U.S. holidays, the Fund’s NAV could be significantly affected on days when shares are not able to be issued or redeemed by APs.

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 effected. It is the policy of the Funds to value such securities at prices at which it is expected those shares may be sold, and the Advisor, or any sub-advisor, is authorized to make such determinations subject to such oversight by the Board of Trustees, 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 Funds’ 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.

21


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

2. Significant Accounting Policies (continued)

Income and Investment Transactions. The Funds record 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 Funds record 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 Funds are informed of the ex-dividend date. Interest income is recognized on an accrual basis. Payment in kind ("PIK") income is computed on the value of the securities received at the contractual rate specified in each loan agreement. 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.

Distributions from Real Estate Investment Trusts ("REITs") may be characterized as ordinary income, capital gain, or a return of capital to the Funds. The proper characterization of REIT distributions is generally not known until after the end of each calendar year. As such, estimates are used in reporting the character of income and distributions for financial statement purposes. Principal Real Estate Active Opportunities ETF receives substantial distributions from holdings in REITs.

Capital Share Transactions. Capital shares are issued and redeemed by the Funds only in a Creation Unit or Creation Unit Aggregations. Except when aggregated into at least a Creation Unit, Shares are not redeemable.

The consideration for the purchase of a Creation Unit or Creation Unit Aggregations of a Fund generally consists of a basket of cash and/or securities that the Fund specifies each business day. To offset transfer and other transaction costs associated with the issuance and redemption of Creation Unit Aggregations, APs are subject to standard creation and redemption transaction fees.

Expenses. For all Funds, a unitary investment management and advisory fee is charged. The Advisor covers all operating expenses through the investment management and advisory fee with the exception of 12b-1 fees, brokerage commissions and other expenses connected to the execution of portfolio transactions, interest expense, taxes, acquired fund fees and expenses, litigation expenses and other extraordinary expenses, if applicable.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders of the Funds are recorded on the ex-dividend date. Dividends and distributions to shareholders from net investment income and net realized gain from investments and foreign currency transactions are determined in accordance with federal tax regulations, which may differ from U.S. GAAP. These differences are primarily due to differing treatments for amortization of premiums and discounts, futures contracts, net operating losses, sales of passive foreign investment companies, partnership investments, foreign currency transactions, losses deferred due to wash sales, tax straddles, mortgage-backed securities, certain preferred securities, redemptions-in-kind, REITs, utilization of earnings and profits distributed to shareholders on redemption of Shares, and limitations imposed by Sections 381-384 of the Internal Revenue Code (“IRC”). 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 Funds each intend to qualify as a “regulated investment company” under the IRC and they intend to distribute each year substantially all of their 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 Funds' 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 their position. Tax positions not deemed to meet the “more likely than not” threshold would be recorded as a tax benefit or expense in the current year. The Funds recognize interest and penalties, if any, related to unrecognized tax positions as tax expense on the Statements of Operations. During the period ended

22


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

2. Significant Accounting Policies (continued)

December 31, 2023, the Funds did not record any such tax benefit or expense in the accompanying financial statements. The statute of limitations remains open for the last three years, once a return is filed. No examinations are in progress at this time.

Foreign Taxes. Certain Funds are subject to foreign income taxes imposed by certain countries in which they invest. Foreign income taxes are accrued by the Funds as a reduction of income. These amounts are shown as withholding tax on the Statements 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 Inter-Bank 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. In December 2022, the FASB issued ASU No. 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 which updates and clarifies ASU No. 2020-04. The amendments in this ASU defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. Management expects these ASUs will not have a material impact on the Funds' financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820); Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which provides clarifying guidance that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Management expects the ASU will not have a material impact on the Funds' financial statements.

Tracking Basket Structure. Principal Focused Blue Chip ETF and Principal Real Estate Active Opportunities ETF operate pursuant to an exemptive order from the Securities and Exchange Commission (“SEC”) and do not publicly disclose its complete portfolio holdings each business day. Instead, the Funds publish each business day on its website a “Tracking Basket” which is designed to closely track the daily performance of the Funds but is not the Funds' actual portfolio. The Funds' Tracking Basket structure may affect the price at which shares of the Funds trade in the secondary market. Although the Tracking Basket is intended to provide investors with enough information to allow for an effective arbitrage mechanism that will keep the market price of the Funds at or close to the Funds' NAV, there is a risk that market prices will vary significantly from NAV.

3. Operating Policies

Contingent Convertible Securities (“CoCos”). As footnoted in the Schedules of Investments, certain of the Funds invest in contingent convertible securities. CoCos are hybrid debt securities that may convert into equity or have their principal written down upon the occurrence of certain “triggers”. Although a contingent convertible security's equity conversion and principal write-down features are tailored to the particular issuing banking institution and its regulatory requirements, triggers are generally linked to regulatory capital thresholds or regulatory actions calling into question such institution's continued viability as a going-concern. CoCos may have no stated maturity and fully discretionary coupons, which means coupon payments can be canceled at the issuing banking institution's discretion or at the request of the relevant regulatory authority without causing a default. To provide the appropriate regulatory capital treatment, CoCos are usually issued in the form of subordinated debt instruments that rank junior to the claims of holders of more senior obligations in the event of the issuer's liquidation. If CoCos are converted into equity securities due to a trigger event, holders will be further subordinated. The future value of CoCos is unpredictable and is influenced by many factors including, without limitation: the creditworthiness of the issuer and/or fluctuations in such issuer's applicable capital ratios; supply and demand for CoCos; general market conditions and available liquidity; and economic, financial and political events that affect the issuer, its particular market or the financial markets in general. Due to these features, CoCos may have substantially greater risk than other securities in times of financial stress. Because of the uncertainty regarding whether a conversion event will occur, it may be difficult to predict when, if at all, a contingent convertible security will be converted to equity, and a fund may suffer losses as a result. If the trigger

23


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

3. Operating Policies (continued) level is breached, the issuer's decision to write down, write off or convert a contingent convertible security may result in the fund's complete loss on an investment in CoCos with no chance of recovery even if the issuer remains in existence.

Cross Trades. The Funds may engage in cross trades. A cross trade is a purchase or sale transaction between affiliated portfolios executed directly or through an intermediary. Mutual funds and other managed portfolios 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 1940 Act are satisfied. For the period ended December 31, 2023, the Funds did not engage in cross trades.

Deposits with Counterparty. Cash pledged as collateral is reflected as an asset on the Statements of Assets and Liabilities as deposits with counterparty. There are a variety of security types which require varying levels of pledged collateral. Customer account agreements govern cleared derivatives transactions such as futures contracts. Such transactions require posting of initial margin as determined by each relevant clearing agency which is segregated in an account at a futures commission merchant (“FCM”) registered with the Commodity Futures Trading Commission. As of December 31, 2023, deposits with counterparty for Principal Investment Grade Corporate Active ETF and Principal Spectrum Tax-Advantaged Dividend Active ETF were $42,720 and $25,988 respectively.

Futures Contracts. The Funds are subject to equity price risk, interest rate risk, and foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The Funds may enter into futures contracts to hedge against changes in, or to gain exposure to, change in the value of equities, interest rates and foreign currencies. Initial margin deposits are made by cash deposits or segregation of specific securities as may be required by the exchange on which the transaction was conducted. Pursuant to the contracts, typically a Fund agrees to receive from or pay to the broker, an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the Funds as variation margin receivable or payable on financial derivative instruments. For those contracts where daily variation margin payments are not received from or paid to the broker, the cumulative unrealized gains or losses are included in variation margin receivable or payable on financial derivative instruments. Futures contracts are marked to market daily at the closing settlement price or in the absence of such a price, the most recent quoted bid price. If there are no quotations available, the security is valued at the last available closing settlement price. During the period the futures contracts are open, daily changes in the fair value of the contracts are recognized as unrealized gains or losses. These unrealized gains or losses are included as a component of net unrealized appreciation (depreciation) of investments on the Statements of Assets and Liabilities. When the contracts are closed, the Funds recognize a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s cost basis in the contract. There is minimal counterparty credit risk to the Funds because futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

Long and short U.S. Treasury futures contracts are used to obtain interest rate exposure in order to manage duration of the Principal Investment Grade Corporate Active ETF. The notional values of the futures contracts will vary in accordance with changing duration of this Fund.

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 each of the Funds has valued the investments. This may have an adverse effect on each of the Funds’ ability to dispose of particular illiquid securities at fair value and may limit each of the Funds’ ability to obtain accurate market quotations for purposes of valuing the securities.

Indemnification. In a normal course of business, the Funds enter into contracts that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve potential future claims against the Funds that have not yet occurred. Based on management's experience, the risk of loss would be remote.

24


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

3. Operating Policies (continued)

Restricted Securities. Certain of the Funds 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.

Securities Lending. As footnoted in the Schedules of Investments, certain of the Funds may lend portfolio securities to approved brokerage firms to earn additional income. The Funds receive collateral, in the form of cash, against the loaned securities. During the period of the loan, the borrower must maintain collateral in an amount not less than 102% of the market value of the domestic and foreign fixed income loaned securities and 105% of the market value of the foreign equity loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The transactions are accounted for as secured borrowings and the remaining contractual maturity is overnight and continuous for all securities. The cash collateral received is usually invested in a SEC-registered money market mutual fund and the Funds could realize a loss on such investments. Further, the Funds could experience a delay in recovering their securities and possible loss of income or value if the borrower fails to return them. Securities lending income, net of related fees, is shown on the Statements of Operations.

Senior Floating Rate Interests. The Fund may invest in senior floating rate interests (bank loans). Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically 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, LIBOR, Secured Overnight Financing Rate (“SOFR”), or a similar reference rate.

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.

In connection with the senior floating rate interests, the Fund may also enter into unfunded loan commitments. All or a portion of the loan 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. Unfunded loan 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 statements of operations, as applicable. As of period end, the unfunded loan commitments are categorized as Level 2 within the disclosure hierarchy. As of December 31, 2023, there were no unfunded loan commitments.

Underlying Funds. An underlying fund may experience relatively large redemptions or purchases as the investee fund periodically reallocates or rebalances its assets. These transactions may accelerate the realization of taxable income if sales of portfolio securities result in gains and could increase transaction costs.

The Advisor is the advisor to Principal Funds, Inc., Principal Variable Contracts Funds, Inc. (affiliates of the Advisor) and other asset allocation programs. The Advisor is committed to minimizing the potential impact of underlying fund risk to the extent consistent with pursuing the investment objectives of the investee funds which it manages. Each may face conflicts of interest in fulfilling its responsibilities to all such funds.

25


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

 
3. Operating Policies (continued)                          
 
As of December 31, 2023, series of Principal Funds, Inc. and Principal Variable Contracts Funds, Inc. owned the  
following percentages, in aggregate, of the outstanding Shares of the Funds listed below:            
 
      Total Percentage of            
Fund     Outstanding Shares Owned            
Principal Active High Yield ETF         27.60 %          
Principal U.S. Mega-Cap ETF         82.44                
Principal U.S. Small-Cap ETF         85.66                
 
U.S. Government Agencies or Government-Sponsored Enterprises. Certain of the Funds may invest in U.S.  
Government agencies or government-sponsored enterprises. U.S. Government securities are obligations of, and in  
certain cases, guaranteed by, the U.S. Government or its agencies. The U.S. Government does not guarantee the NAV  
of the Funds’ Shares. Some U.S. Government securities such as treasury bills, notes and bonds, and securities  
guaranteed by the Government National Mortgage Association (“GNMA”) are supported by the full faith and credit  
of the U.S. Government. Other securities, such as those of the Federal Home Loan Bank, are supported by the right  
of the issuer to borrow from the U.S. Department of the Treasury. Still other securities, such as those of the Federal  
National Mortgage Association (“FNMA”), are supported by the discretionary authority of the U.S. Government to  
purchase the agency’s obligations.                          
 
Government related guarantors (those not backed by the full faith and credit of the U.S. Government) include FNMA  
and Federal Home Loan Mortgage Corporation (“FHLMC”). FNMA is a government sponsored corporation, the  
common stock of which is owned entirely by private stockholders. FNMA purchases conventional residential  
mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan  
associations, mutual savings banks, commercial banks, credit unions, and mortgage bankers. Pass-through securities  
issued by FNMA are guaranteed as to the timely payment of principal and interest by FNMA, but are not backed by  
the full faith and credit of the U.S. Government. FHLMC issues participation certificates, which are pass-through  
securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely  
payment of interest and ultimate collection of principal, but participation certificates are not backed by the full faith  
and credit of the U.S. Government.                          
 
Derivatives. The following tables provide information about where on the Statements of Assets and Liabilities and  
Statements of Operations information about derivatives can be found:                    
 
  Asset Derivatives       Liability Derivatives      
  December 31, 2023       December 31, 2023      
 
  Statement of Assets and       Statement of Assets and      
Derivatives not accounted for as hedging instruments Liabilities Location Fair Value   Liabilities Location   Fair Value  
Principal Investment Grade Corporate Active ETF                          
Interest rate contracts Receivables, Total           Payables, Total        
  distributable earnings           distributable earnings      
  (accumulated loss) $ 131,929 * (accumulated loss) $ (135,281 ) *
 
* Includes cumulative unrealized appreciation (depreciation) of futures contracts as shown in the Schedule of Investments. Only the portion of the  
unrealized appreciation (depreciation) not yet cash settled is shown in the Statements of Assets and Liabilities as variation margin.      
 
        Net Realized Gain or   Net Change in Unrealized  
        (Loss) on Derivatives     Appreciation  
  Location of Gain or (Loss) on Recognized in     (Depreciation) of  
  Derivatives Recognized in   Statement of   Derivatives Recognized in  
Derivatives not accounted for as hedging instruments Statement of Operations   Operations   Statement of Operations  
Principal Investment Grade Corporate Active ETF                          
Interest rate contracts Futures contracts     $ 12,111   $ (61,156 )

 

26


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

3. Operating Policies (continued)

The following table includes a summary of the monthly average outstanding notional by derivative instrument type for the period ended December 31, 2023:

Contract Type Derivative Type   Average Notional
Principal Investment Grade Corporate Active ETF      
Interest rate contracts Futures — Short $ 3,652,250
  Futures — Long   1,753,245

 

4. Fair Valuation

Fair value is defined as the price that the Funds would receive upon selling a security or transferring a liability 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 Funds 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 Funds. 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, prepayment speeds, credit risk, etc.). Investments which are generally included in this category include certain corporate bonds, senior floating rate interests, OTC derivatives, mortgage-backed securities and municipal bonds.

Level 3 — Significant unobservable inputs (including the Funds' assumptions in determining the fair value of investments). Investments which are generally included in this category include certain corporate bonds and certain common stocks.

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 Funds 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.

27


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

4. Fair Valuation (continued)

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 Funds’ own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Funds use prices and inputs that are current as of the measurement date, to the extent 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.

The fair values of these entities are dependent on economic, political and other considerations. The values of the underlying investee entities 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 inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those instruments.

During the period there were no significant purchases, sales, or transfers into or out of Level 3.

The following is a summary of the inputs used as of December 31, 2023, in valuing the Funds' securities carried at fair value:

        Level 2 —        
        Other   Level 3 —    
    Level 1 —   Significant   Significant    
    Quoted   Observable   Unobservable    
Fund   Prices   Inputs   Inputs   Totals (Level 1,2,3)
 
Principal Active High Yield ETF                
Bonds* $ $ 129,834,827 $ — $   129,834,827
Senior Floating Rate Interests*     8,199,632     8,199,632
U.S. Government & Government Agency                
Obligations*     1,558,029     1,558,029
Investment Companies   10,368,019       10,368,019
Total investments in securities $ 10,368,019 $ 139,592,488 $ — $   149,960,507
 
Principal Focused Blue Chip ETF                
Common Stocks* $ 30,714,126 $ — $   — $   30,714,126
Investment Companies   68,972       68,972
Total investments in securities $ 30,783,098 $ — $   — $   30,783,098
 
Principal Healthcare Innovators ETF                
Common Stocks*                
Basic Materials $ 45,719 $ — $   — $   45,719
Consumer, Non-cyclical   48,838,460     3,797   48,842,257
Industrial   105,735       105,735
Technology   36,945       36,945
Investment Companies   1,816,315       1,816,315
Total investments in securities $ 50,843,174 $ — $   3,797 $ 50,846,971

 

28


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

 
 
4. Fair Valuation (continued)                  
 
        Level 2 —          
        Other   Level 3 —      
    Level 1 —   Significant   Significant      
    Quoted   Observable   Unobservable      
Fund   Prices   Inputs   Inputs   Totals (Level 1,2,3)  
 
Principal Investment Grade Corporate Active ETF              
Bonds* $ — $   69,339,351 $ — $   69,339,351  
U.S. Government & Government Agency                  
Obligations*     3,111,088     3,111,088  
Investment Companies   723,789       723,789  
Total investments in securities $ 723,789 $ 72,450,439 $ — $   73,174,228  
Derivative Assets                  
Interest rate contracts                  
Futures $ 131,929 $ — $   — $   131,929  
Derivative Liabilities                  
Interest rate contracts                  
Futures $ (135,281 ) $ — $   — $   (135,281 )
 
Principal Quality ETF                  
Common Stocks* $ 41,488,810 $ — $   — $   41,488,810  
Investment Companies   120,173       120,173  
Total investments in securities $ 41,608,983 $ — $   — $   41,608,983  
 
Principal Real Estate Active Opportunities ETF              
Common Stocks* $ 8,944,507 $ — $   — $   8,944,507  
Investment Companies   215,103       215,103  
Total investments in securities $ 9,159,610 $ — $   — $   9,159,610  
 
Principal Spectrum Preferred Securities Active ETF              
Bonds* $ $   757,035,926 $ — $   757,035,926  
Investment Companies   19,810,452       19,810,452  
Total investments in securities $ 19,810,452 $ 757,035,926 $ — $   776,846,378  
 
Principal Spectrum Tax-Advantaged Dividend Active ETF              
Preferred Stocks* $ 2,110,692 $ — $   — $   2,110,692  
Bonds*     17,914,921     17,914,921  
Investment Companies   566,838       566,838  
Total investments in securities $ 2,677,530 $ 17,914,921 $ — $   20,592,451  
 
Principal U.S. Mega-Cap ETF                  
Common Stocks* $ 2,034,328,572 $ — $   — $   2,034,328,572  
Investment Companies   7,800,738       7,800,738  
Total investments in securities $ 2,042,129,310 $ — $   — $   2,042,129,310  
 
Principal U.S. Small-Cap ETF                  
Common Stocks*                  
Basic Materials $ 10,515,201 $ — $   — $   10,515,201  
Communications   17,524,435       17,524,435  
Consumer, Cyclical   54,541,521       54,541,521  
Consumer, Non-cyclical   105,019,321     3,863   105,023,184  
Energy   33,453,676       33,453,676  
Financial   96,633,760       96,633,760  
Industrial   80,411,338       80,411,338  
Technology   49,796,636       49,796,636  
Utilities   12,239,612       12,239,612  
Investment Companies   3,383,409       3,383,409  
Total investments in securities $ 463,518,909 $ — $   3,863 $ 463,522,772  
 
Principal Value ETF                  
Common Stocks* $ 56,644,659 $ — $   — $   56,644,659  
Investment Companies   299,350       299,350  
Total investments in securities $ 56,944,009 $ — $   — $   56,944,009  

 

* For additional detail regarding sector and/or sub-industry classifications, please see the Schedules of Investments.

29


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

5. Management Agreement and Transactions with Affiliates

Management Services. The Funds have agreed to pay management and investment advisory fees to the Advisor computed at an annual percentage rate of each of the Funds' average daily net assets. A portion of the management fee is paid by the Advisor to the sub-advisor of the Funds, which is also an affiliate of the Advisor. The management fee schedule for the Funds is as follows:

  First   Next   Next   Over  
Fund $500 Million   $500 Million   $500 Million   $1.5 Billion  
Principal Healthcare Innovators ETF 0.42 % 0.40 % 0.38 % 0.37 %
 
Fund             All Assets  
Principal Active High Yield ETF             0.39 %
Principal Focused Blue Chip ETF             0.58  
Principal Investment Grade Corporate Active ETF             0.19  
Principal Quality ETF             0.15  
Principal Real Estate Active Opportunities ETF             0.65  
Principal Spectrum Preferred Securities Active ETF             0.55  
Principal Spectrum Tax-Advantaged Dividend Active ETF             0.60  
Principal U.S. Mega-Cap ETF             0.15  
Principal U.S. Small-Cap ETF             0.38  
Principal Value ETF             0.15  

 

The Advisor has contractually agreed to limit the expenses (excluding interest expense, expenses related to fund investments, acquired fund fees and expenses, tax reclaim recovery expenses, and other extraordinary expenses) for certain of the Funds. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits.

The limit is expressed as a percentage of average daily net assets attributable to each Fund on an annualized basis during the reporting period. The expenses borne by the Advisor 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 limit. Any amount outstanding at the end of the period are shown as an expense reimbursement from Advisor or expense reimbursement to Advisor on the Statements of Assets and Liabilities. The expense limit for Principal U.S. Mega-Cap ETF is 0.12% through October 31, 2024. No other Funds had expense limitation agreements in place during the year.

Affiliated Ownership. At December 31, 2023, Principal Financial Services, Inc., (an affiliate of the Advisor), Principal Funds, Inc., (an affiliate to the Advisor), and Principal Variable Contracts Funds, Inc., (an affiliate of the Advisor) owned Shares of the Funds as follows:

Fund Shares
Principal Active High Yield ETF 2,194,200
Principal Focused Blue Chip ETF 198,099
Principal Real Estate Active Opportunities ETF 199,204
Principal Spectrum Tax-Advantaged Dividend Active ETF 995,521
Principal U.S. Mega-Cap ETF 35,944,800
Principal U.S. Small-Cap ETF 8,600,000

 

30


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

6. Investment Transactions

For the period ended December 31, 2023, the cost of investment securities purchased and proceeds from investment securities sold (not including short-term investments and in-kind transactions) by the Funds were as follows:

    Non-U.S. Government   U.S. Government
Fund   Purchases   Sales   Purchases   Sales
Principal Active High Yield ETF $ 34,144,276 $ 20,458,917 $ $ 1,468,794
Principal Focused Blue Chip ETF   1,915,613   1,521,182    
Principal Healthcare Innovators ETF   4,383,493   4,022,929    
Principal Investment Grade Corporate Active ETF   28,984,224   28,552,556   17,010,290   16,386,859
Principal Quality ETF   18,690   12,793    
Principal Real Estate Active Opportunities ETF   1,041,714   1,102,594    
Principal Spectrum Preferred Securities Active ETF   163,544,071   20,159,785    
Principal Spectrum Tax-Advantaged Dividend Active ETF   1,945,213   2,230,256    
Principal U.S. Mega-Cap ETF   2,702,538   6,201,758    
Principal U.S. Small-Cap ETF   8,634,508   7,060,062    
Principal Value ETF   24,526,113   24,793,238    

 

For the period ended December 31, 2023, in-kind transactions were as follows:

Fund   Purchases   Sales
Principal Active High Yield ETF $ 26,614,996 $
Principal Focused Blue Chip ETF   40,926,946   14,369,163
Principal Healthcare Innovators ETF   1,778,616   5,972,183
Principal Investment Grade Corporate Active ETF   22,098,018  
Principal Quality ETF   20,161,144   17,916,471
Principal Real Estate Active Opportunities ETF   4,412,584   1,608,088
Principal Spectrum Preferred Securities Active ETF   31,435,257  
Principal U.S. Mega-Cap ETF   450,667,309   14,709,100
Principal U.S. Small-Cap ETF   237,664,231   13,807,791
Principal Value ETF   17,077,074   777,016

 

Unsettled in-kind purchases and sales at the end of the period are included in investment securities purchased and investment securities sold, respectively, on the Statements of Assets and Liabilities.

31


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

7. Federal Tax Information

Distributions to Shareholders. The federal income tax character of distributions paid for the periods ended June 30, 2023, and December 31, 2023 was as follows:

  Ordinary Income   Long-Term Capital Gain*   Section 1250 Gain**
  Period ended       Period ended       Period ended    
  December 31,   Period ended   December 31,   Period ended   December 31,   Period ended
Fund 2023   June 30, 2023   2023   June 30, 2023   2023   June 30, 2023
Principal Active High Yield ETF $ 4,709,498 $ 11,723,824 $ $ $ $
Principal Focused Blue Chip ETF 56,457   N/A     N/A     N/A
Principal Investment Grade                      
Corporate Active ETF 1,637,613   4,589,877        
Principal Quality ETF 260,916   527,129        
Principal Real Estate Active                      
Opportunities ETF 136,132   125,835     1,790     1,013
Principal Spectrum Preferred                      
Securities Active ETF 18,154,872   20,075,762        
Principal Spectrum Tax-                      
Advantaged Dividend Active ETF 647,130   1,148,780        
Principal U.S. Mega-Cap ETF 17,950,099   19,885,169        
Principal U.S. Small-Cap ETF 2,291,140   6,213,838        
Principal Value ETF 894,034   4,060,672        

 

* The Funds designate these distributions as long-term capital gain dividends per IRC Sec. 852(b)(3)(C) in the 20-percent group (which may be taxed at a 20-percent rate, a 15-percent rate or a 0-percent rate, depending on the shareholder’s taxable income).

** Unrecaptured Section 1250 gains are gains from the sale of depreciable property that are subject to a maximum tax rate of 25%.

Certain Funds may also utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

For U.S. federal income tax purposes, short-term capital gain distributions are considered ordinary income distributions.

Distributable Earnings. As of June 30, 2023, the components of distributable earnings (accumulated loss) on a federal income tax basis were:

                Late Year            
          Ordinary and             
    Undistributed                              Undistributed                               Unrealized                                                    Post October         Other  
    Ordinary         Long-Term                             Appreciation/                                             Capital Loss                                            Capital Loss   Temporary  
Fund   Income         Capital Gains                              (Depreciation)                                         Deferrals                                           Carryforward                                      Differences*  
Principal Active High Yield ETF $ 656,023 $ — $ (7,931,831 ) $ — $ (16,035,217 ) $ (17,958 )
Principal Healthcare Innovators ETF     (24,621,653 )   (22,787 ) (22,118,256 )    
Principal Investment Grade Corporate Active ETF   193,559   (2,771,882 )     (17,938,332 )    
Principal Quality ETF   83,653   3,696,087       (12,661,189 )    
Principal Real Estate Active Opportunities ETF   36,613   (471,965 )     (55,953 )    
Principal Spectrum Preferred Securities Active ETF   2,357,841   (51,137,916 )     (16,867,569 )   (596,243 )
Principal Spectrum Tax-Advantaged Dividend Active ETF   80,896   (2,137,437 )     (1,079,880 )   (17,980 )
Principal U.S. Mega-Cap ETF   5,163,903   200,801,873       (93,161,857 )    
Principal U.S. Small-Cap ETF   461,676   5,555,223       (179,558,559 )    
Principal Value ETF   317,403   214,982       (28,330,482 )    

 

*      Represents book-to-tax accounting differences.

32


 

Notes to Financial Statements
Principal Exchange-Traded Funds
December 31, 2023 (unaudited)

 
7. Federal Tax Information (continued)                
 
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 June 30, 2023, the Funds had approximate net capital loss carryforwards  
as follows:                
 
  No Expiration No Expiration     Annual  
Fund Short-Term Long-Term   Total Limitations*  
Principal Active High Yield ETF $ 8,931,997 $ 7,103,220 $ 16,035,217         $ 1,874,152**
Principal Healthcare Innovators ETF   7,798,727   14,319,529   22,118,256  
Principal Investment Grade Corporate Active ETF   6,804,194   11,134,138   17,938,332 473,238  
Principal Quality ETF   11,535,823   1,125,366   12,661,189  
Principal Real Estate Active Opportunities ETF   52,803   3,150   55,953  
Principal Spectrum Preferred Securities Active ETF   5,405,847   11,461,722   16,867,569  
Principal Spectrum Tax-Advantaged Dividend Active ETF   410,394   669,486   1,079,880  
Principal U.S. Mega-Cap ETF   80,544,792   12,617,065   93,161,857  
Principal U.S. Small-Cap ETF   136,509,426   43,049,133   179,558,559  
Principal Value ETF   26,205,033   2,125,449   28,330,482 230,798  

 

* In accordance with IRC Sections 381-384, a portion of certain Funds’ losses have been subjected to an annual limitation.
** Certain losses are subject to an annual limit of $1,874,152 and certain losses are subject to an additional annual limit of $6,296,672.
 
All of these capital losses were generated in taxable years beginning after the enactment date of the Regulated
Investment Company Modernization Act of 2010 on December 22, 2010, and will be carried forward with no
expiration and with the character of the loss retained.      
 
For the year ended June 30, 2023, the Fund utilized capital loss carryforwards as follows:  
 
    Short-Term   Long-Term
Fund   Utilized   Utilized
Principal Quality ETF $ 365,231 $
Principal Value ETF   187,203   63,135
 
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 June 30, 2023, the Funds intend to defer late-year capital and ordinary losses as follows:
 
Fund   Late Year Ordinary Loss   Post October Capital Loss
Principal Healthcare Innovators ETF $ 22,787 $
 
Reclassification of Capital Accounts. The Funds may record reclassifications in their capital accounts. These
reclassifications have no impact on the total net assets of the Funds. 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 Funds’ distributions may be shown in the
accompanying Statement of Changes in Net Assets as from net investment income and net realized gains on
investments or from tax return of capital depending on the type of book and tax differences that exist. For the period
ended June 30, 2023, the Funds recorded reclassifications as follows:    
 
 
 
 
33

 


 

Notes to Financial Statements          
Principal Exchange-Traded Funds          
December 31, 2023 (unaudited)          
 
7. Federal Tax Information (continued)            
 
    Total        
  Distributable Earnings        
Fund (Accumulated Loss)     Paid In Capital  
Principal Active High Yield ETF $ 10,235,610   $ (10,235,610 )
Principal Healthcare Innovators ETF   (657,096 )   657,096  
Principal Investment Grade Corporate Active ETF   56,092,908     (56,092,908 )
Principal Quality ETF   (1,580,891 )   1,580,891  
Principal Real Estate Active Opportunities ETF   (4 )   4  
Principal Spectrum Preferred Securities Active ETF   3,171,030     (3,171,030 )
Principal Spectrum Tax-Advantaged Dividend Active ETF   (1 )   1  
Principal U.S. Mega-Cap ETF   (66,233,347 )   66,233,347  
Principal U.S. Small-Cap ETF   31,829,343     (31,829,343 )
Principal Value ETF   (4,887,348 )   4,887,348  

 

Federal Income Tax Basis. As of June 30, 2023, the net federal income tax unrealized appreciation (depreciation) and federal tax cost of investments held by each Fund were as follows:

                    Cost for
              Net Unrealized     Federal
    Unrealized   Unrealized     Appreciation     Income Tax
Fund   Appreciation   Depreciation     (Depreciation)     Purposes
Principal Active High Yield ETF $ 69,282 $ (8,001,113 ) $ (7,931,831 ) $ 115,099,104
Principal Healthcare Innovators ETF   5,698,445   (30,320,097 )   (24,621,652 )   80,057,611
Principal Investment Grade Corporate Active ETF   91,177   (2,863,059 )   (2,771,882 )   49,874,904
Principal Quality ETF   4,648,653   (952,566 )   3,696,087     32,984,964
Principal Real Estate Active Opportunities ETF   81,858   (553,823 )   (471,965 )   5,891,744
Principal Spectrum Preferred Securities Active ETF   1,221,182   (52,359,097 )   (51,137,915 )   621,433,289
Principal Spectrum Tax-Advantaged Dividend Active ETF   75,415   (2,212,854 )   (2,137,439 )   22,006,451
Principal U.S. Mega-Cap ETF   229,402,393   (28,600,520 )   200,801,873     1,262,477,407
Principal U.S. Small-Cap ETF   25,665,607   (20,110,384 )   5,555,223     196,399,637
Principal Value ETF   2,454,126   (2,239,144 )   214,982     37,054,324

 

8. Subsequent Events

Management has evaluated events or 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.

34


 

Schedule of Investments      
Principal Active High Yield ETF      
December 31, 2023 (unaudited)      
 
    Principal    
BONDS — 86.68%   Amount   Value
 
Aerospace & Defense — 2.49%        
Bombardier, Inc.        
7.50%, 02/01/2029 (a),(b) $ 755,000 $ 767,516
8.75%, 11/15/2030 (a)   994,000   1,058,315
Triumph Group, Inc.        
7.75%, 08/15/2025 (b)   1,908,000   1,901,877
      $ 3,727,708
 
Airlines — 0.05%        
United Airlines 2016-1 Class B Pass-Through Trust        
3.65%, 07/07/2027   87,275   82,641
 
Auto Manufacturers — 0.83%        
Ford Motor Credit Co. LLC        
3.38%, 11/13/2025   1,016,000   972,223
4.54%, 08/01/2026   279,000   270,158
      $ 1,242,381
 
Auto Parts & Equipment — 2.01%        
Dana, Inc.        
4.25%, 09/01/2030   1,605,000   1,422,555
Tenneco, Inc.        
8.00%, 11/17/2028 (a)   1,864,000   1,591,390
      $ 3,013,945
 
Banks — 2.89%        
Barclays PLC        
(5-year Treasury Constant Maturity Rate + 5.43%),        
8.00%, 03/15/2029 (c),(d)   2,234,000   2,192,475
JPMorgan Chase & Co.        
(3-month Term Secured Overnight Financing Rate + 3.13%),        
4.60%, 02/01/2025 (c),(d)   2,222,000   2,142,719
      $ 4,335,194
 
Building Materials — 2.41%        
AmeriTex HoldCo Intermediate LLC        
10.25%, 10/15/2028 (a)   1,274,000   1,305,850
Smyrna Ready Mix Concrete LLC        
6.00%, 11/01/2028 (a)   2,336,000   2,299,977
      $ 3,605,827
 
Chemicals — 4.06%        
Consolidated Energy Finance SA        
5.63%, 10/15/2028 (a)   1,508,000   1,276,944
Kobe U.S. Midco 2, Inc.        
9.25%, PIK 10.00%; 11/01/2026 (a),(e)   2,218,650   1,653,028
Olympus Water U.S. Holding Corp.        
6.25%, 10/01/2029 (a),(b)   2,527,000   2,244,382
Tronox, Inc.        
4.63%, 03/15/2029 (a)   1,029,000   911,486
      $ 6,085,840
 
Commercial Services — 3.06%        
Albion Financing 1 SARL/Aggreko Holdings, Inc.        
6.13%, 10/15/2026 (a)   1,290,000   1,277,822
Garda World Security Corp.        
6.00%, 06/01/2029 (a)   262,000   234,851
9.50%, 11/01/2027 (a)   1,345,000   1,355,960

 

See accompanying notes.

35


 

Schedule of Investments        
Principal Active High Yield ETF      
December 31, 2023 (unaudited)      
 
    Principal    
BONDS (continued)   Amount   Value
 
Commercial Services (continued)        
WASH Multifamily Acquisition, Inc.        
5.75%, 04/15/2026 (a) $ 1,778,000 $ 1,711,142
      $ 4,579,775
 
Computers — 1.43%        
Seagate HDD Cayman        
5.75%, 12/01/2034   815,000   782,277
9.63%, 12/01/2032   1,189,525   1,360,222
      $ 2,142,499
 
Distribution/Wholesale — 0.36%        
Verde Purchaser LLC        
10.50%, 11/30/2030 (a)   535,000   539,093
 
Diversified Financial Services — 7.02%        
AerCap Holdings NV        
(5-year Treasury Constant Maturity Rate + 4.54%),        
5.88%, 10/10/2079 (c)   2,228,000   2,199,923
Credit Acceptance Corp.        
9.25%, 12/15/2028 (a)   1,271,000   1,354,823
Global Aircraft Leasing Co. Ltd.        
6.50%, PIK 7.25%; 09/15/2024 (a),(e)   2,275,558   2,139,025
Macquarie Airfinance Holdings Ltd.        
8.13%, 03/30/2029 (a)   1,191,000   1,244,860
8.38%, 05/01/2028 (a)   1,259,000   1,318,614
OneMain Finance Corp.        
3.50%, 01/15/2027   167,000   154,549
4.00%, 09/15/2030   2,085,000   1,784,250
6.63%, 01/15/2028   318,000   321,033
      $ 10,517,077
 
Electric — 3.80%        
Clearway Energy Operating LLC        
3.75%, 02/15/2031 (a)   2,416,000   2,128,039
GenOn Energy, Inc.        
0.00%, 10/15/2020 (f),(g),(h)   3,100,000  
NextEra Energy Operating Partners LP        
7.25%, 01/15/2029 (a)   760,000   795,649
NRG Energy, Inc.        
3.88%, 02/15/2032 (a)   148,000   126,695
(5-year Treasury Constant Maturity Rate + 5.92%),        
10.25%, 03/15/2028 (a),(c),(d)   301,000   313,367
Vistra Corp.        
(5-year Treasury Constant Maturity Rate + 5.74%),        
7.00%, 12/15/2026 (a),(c),(d)   919,000   905,215
Vistra Operations Co. LLC        
4.38%, 05/01/2029 (a)   1,524,000   1,422,668
      $ 5,691,633
 
Electronics — 0.91%        
Sensata Technologies, Inc.        
3.75%, 02/15/2031 (a)   1,544,000   1,359,848
 
Entertainment — 6.33%        
Boyne USA, Inc.        
4.75%, 05/15/2029 (a)   1,980,000   1,861,981

 

See accompanying notes.

36


 

  Schedule of Investments      
  Principal Active High Yield ETF      
  December 31, 2023 (unaudited)      
 
    Principal    
BONDS (continued)   Amount   Value
 
Entertainment (continued)        
CCM Merger, Inc.        
6.38%, 05/01/2026 (a) $ 2,074,000 $ 2,022,150
Churchill Downs, Inc.        
5.75%, 04/01/2030 (a)   2,249,000   2,192,756
Cinemark USA, Inc.        
5.25%, 07/15/2028 (a)   1,788,000   1,640,319
Lions Gate Capital Holdings LLC        
5.50%, 04/15/2029 (a),(b)   1,816,000   1,358,550
Wynn Resorts Finance LLC/Wynn Resorts Capital Corp.      
7.13%, 02/15/2031 (a)   393,000   409,279
      $ 9,485,035
 
Food — 2.43%        
Chobani LLC/Chobani Finance Corp., Inc.        
7.50%, 04/15/2025 (a)   1,796,000   1,787,020
Pilgrim's Pride Corp.        
3.50%, 03/01/2032   1,917,000   1,620,670
4.25%, 04/15/2031   251,000   226,709
      $ 3,634,399
 
Forest Products & Paper — 0.48%        
Mercer International, Inc.        
5.13%, 02/01/2029   774,000   664,827
12.88%, 10/01/2028 (a)   55,000   60,118
      $ 724,945
 
Healthcare — Services — 2.71%        
Acadia Healthcare Co., Inc.        
5.00%, 04/15/2029 (a)   2,334,000   2,240,637
Tenet Healthcare Corp.        
6.13%, 06/15/2030   1,800,000   1,819,957
      $ 4,060,594
 
Home Builders — 2.32%        
Adams Homes, Inc.        
9.25%, 10/15/2028 (a)   1,424,000   1,444,118
Forestar Group, Inc.        
3.85%, 05/15/2026 (a)   336,000   320,065
5.00%, 03/01/2028 (a)   1,786,000   1,718,149
      $ 3,482,332
 
Household Products/Wares — 0.97%        
Kronos Acquisition Holdings, Inc./KIK Custom Products, Inc.      
5.00%, 12/31/2026 (a)   750,000   731,250
7.00%, 12/31/2027 (a)   750,000   716,250
      $ 1,447,500
 
Insurance — 0.91%        
Acrisure LLC/Acrisure Finance, Inc.        
4.25%, 02/15/2029 (a)   398,000   359,374
7.00%, 11/15/2025 (a)   1,006,000   1,003,604
      $ 1,362,978
 
Investment Companies — 2.62%        
Compass Group Diversified Holdings LLC        
5.25%, 04/15/2029 (a)   1,991,000   1,880,740

 

See accompanying notes.

37


 

Schedule of Investments        
Principal Active High Yield ETF      
December 31, 2023 (unaudited)      
 
    Principal    
BONDS (continued)   Amount   Value
 
Investment Companies (continued)        
Icahn Enterprises LP/Icahn Enterprises Finance Corp.        
4.38%, 02/01/2029 $ 2,445,000 $ 2,041,721
      $ 3,922,461
 
Iron & Steel — 0.97%        
TMS International Corp.        
6.25%, 04/15/2029 (a)   1,758,000   1,450,350
 
Leisure Time — 1.41%        
Life Time, Inc.        
5.75%, 01/15/2026 (a)   2,130,000   2,114,685
 
Lodging — 1.03%        
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.        
5.25%, 05/15/2027 (a)   763,000   742,478
Wynn Macau Ltd.        
5.63%, 08/26/2028 (a)   868,000   803,876
      $ 1,546,354
 
Machinery — Diversified — 1.28%        
Maxim Crane Works Holdings Capital LLC        
11.50%, 09/01/2028 (a)   1,848,000   1,914,972
 
Media — 5.97%        
CCO Holdings LLC/CCO Holdings Capital Corp.        
4.25%, 02/01/2031 (a)   1,750,000   1,529,378
4.75%, 02/01/2032 (a)   552,000   486,842
Directv Financing LLC/Directv Financing Co.-Obligor, Inc.        
5.88%, 08/15/2027 (a)   2,061,000   1,936,468
DISH DBS Corp.        
5.13%, 06/01/2029   252,000   129,878
5.25%, 12/01/2026 (a)   13,284   11,381
7.38%, 07/01/2028   1,075,000   642,611
DISH Network Corp.        
11.75%, 11/15/2027 (a)   1,523,000   1,589,794
Scripps Escrow II, Inc.        
5.38%, 01/15/2031 (a)   652,000   478,503
Sirius XM Radio, Inc.        
3.13%, 09/01/2026 (a)   1,494,000   1,403,867
UPC Holding BV        
5.50%, 01/15/2028 (a)   779,000   734,387
      $ 8,943,109
 
Mining — 1.37%        
Taseko Mines Ltd.        
7.00%, 02/15/2026 (a)   2,162,000   2,048,925
 
Oil & Gas — 5.15%        
Aethon United BR LP/Aethon United Finance Corp.        
8.25%, 02/15/2026 (a)   1,761,000   1,769,805
Civitas Resources, Inc.        
8.63%, 11/01/2030 (a)   1,387,000   1,471,222
Comstock Resources, Inc.        
5.88%, 01/15/2030 (a)   2,021,000   1,752,814
Diamond Foreign Asset Co./Diamond Finance LLC        
8.50%, 10/01/2030 (a)   1,419,000   1,451,072

 

See accompanying notes.

38


 

Schedule of Investments        
Principal Active High Yield ETF      
December 31, 2023 (unaudited)      
 
    Principal    
BONDS (continued)   Amount   Value
 
Oil & Gas (continued)        
MEG Energy Corp.        
7.13%, 02/01/2027 (a) $ 1,244,000 $ 1,264,195
      $ 7,709,108
 
Oil & Gas Services — 0.97%        
Archrock Partners LP/Archrock Partners Finance Corp.        
6.25%, 04/01/2028 (a)   1,471,000   1,448,935
 
Packaging & Containers — 1.44%        
Clydesdale Acquisition Holdings, Inc.        
6.63%, 04/15/2029 (a)   190,000   186,878
8.75%, 04/15/2030 (a),(b)   673,000   627,483
LABL, Inc.        
5.88%, 11/01/2028 (a)   378,000   342,477
8.25%, 11/01/2029 (a)   621,000   523,193
9.50%, 11/01/2028 (a)   479,000   483,790
      $ 2,163,821
 
Pharmaceuticals — 3.21%        
AdaptHealth LLC        
5.13%, 03/01/2030 (a)   1,773,000   1,383,071
BellRing Brands, Inc.        
7.00%, 03/15/2030 (a)   1,414,000   1,463,447
Jazz Securities DAC        
4.38%, 01/15/2029 (a)   2,104,000   1,959,697
      $ 4,806,215
 
Pipelines — 4.50%        
Antero Midstream Partners LP/Antero Midstream Finance Corp.        
5.38%, 06/15/2029 (a)   1,004,000   965,214
5.75%, 03/01/2027 (a)   651,000   645,946
DT Midstream, Inc.        
4.13%, 06/15/2029 (a)   1,576,000   1,449,894
Genesis Energy LP/Genesis Energy Finance Corp.        
8.25%, 01/15/2029   378,000   388,979
Hess Midstream Operations LP        
4.25%, 02/15/2030 (a)   1,979,000   1,820,680
Venture Global LNG, Inc.        
8.38%, 06/01/2031 (a)   130,000   129,933
9.50%, 02/01/2029 (a)   1,261,000   1,334,348
      $ 6,734,994
 
REITs — 2.93%        
CBL & Associates LP        
0.00%, 12/15/2026 (f),(g),(h)   6,000,000  
HAT Holdings I LLC/HAT Holdings II LLC        
3.38%, 06/15/2026 (a)   1,084,000   1,018,818
3.75%, 09/15/2030 (a)   511,000   430,342
8.00%, 06/15/2027 (a)   338,000   351,974
Ladder Capital Finance Holdings LLLP/Ladder Capital Finance Corp.        
4.75%, 06/15/2029 (a)   2,862,000   2,580,622
      $ 4,381,756
 
Retail — 3.71%        
Bath & Body Works, Inc.        
5.25%, 02/01/2028   344,000   340,237
6.63%, 10/01/2030 (a)   567,000   579,504

 

See accompanying notes.

39


 

Schedule of Investments      
Principal Active High Yield ETF      
December 31, 2023 (unaudited)      
 
    Principal    
BONDS (continued)   Amount   Value
 
Retail (continued)        
Bath & Body Works, Inc. (continued)        
6.75%, 07/01/2036 $ 297,000 $ 298,876
9.38%, 07/01/2025 (a)   30,000   31,672
Fertitta Entertainment LLC/Fertitta Entertainment Finance Co., Inc.      
4.63%, 01/15/2029 (a)   917,000   832,058
6.75%, 01/15/2030 (a)   679,000   596,164
LSF9 Atlantis Holdings LLC/Victra Finance Corp.        
7.75%, 02/15/2026 (a)   1,906,000   1,828,340
Park River Holdings, Inc.        
5.63%, 02/01/2029 (a)   775,000   619,144
Patrick Industries, Inc.        
4.75%, 05/01/2029 (a)   476,000   433,453
      $ 5,559,448
 
Software — 1.42%        
Open Text Corp.        
3.88%, 12/01/2029 (a)   2,371,000   2,126,393
 
Telecommunications — 0.19%        
Level 3 Financing, Inc.        
10.50%, 05/15/2030 (a)   295,000   286,057
 
Transportation — 1.04%        
Watco Cos. LLC/Watco Finance Corp.        
6.50%, 06/15/2027 (a)   1,556,000   1,556,000
TOTAL BONDS     $ 129,834,827
    Principal    
SENIOR FLOATING RATE INTERESTS — 5.48%   Amount   Value
 
Airlines — 2.03%        
AAdvantage Loyalty IP Ltd., 2021 Term Loan B        
(3-month Term Secured Overnight Financing Rate + 4.75%),        
10.43%, 04/20/2028 $ 1,219,500 $ 1,251,134
United Airlines, Inc., 2021 Term Loan B        
(1-month Term Secured Overnight Financing Rate + 3.75%),        
9.22%, 04/21/2028   1,776,973   1,780,917
      $ 3,032,051
 
Auto Parts & Equipment — 0.13%        
Tenneco, Inc., 2022 Term Loan B        
(3-month Term Secured Overnight Financing Rate + 5.00%),        
10.45%-10.47%, 11/17/2028   225,000   197,874
 
Forest Products & Paper — 0.82%        
Spectrum Group Buyer, Inc., 2022 Term Loan B        
(3-month Term Secured Overnight Financing Rate + 6.50%),        
11.95%, 05/19/2028   1,368,283   1,230,087
 
Healthcare — Products — 0.98%        
Medline Borrower LP, USD Term Loan B        
(1-month Term Secured Overnight Financing Rate + 3.00%),        
8.47%, 10/23/2028   1,461,307   1,467,240
 
Healthcare — Services — 0.91%        
Star Parent, Inc., Term Loan B        
(3-month Term Secured Overnight Financing Rate + 4.00%),        
9.35%, 09/27/2030   1,385,000   1,367,106
 
 
 
 
See accompanying notes. 40      

 


 

      Schedule of Investments        
      Principal Active High Yield ETF        
 
      December 31, 2023 (unaudited)        
        Principal      
SENIOR FLOATING RATE INTERESTS (continued) Amount   Value  
 
Mining — 0.61%            
Arsenal AIC Parent LLC            
  (1-month Term Secured Overnight Financing Rate + 4.50%),        
  9.86%, 08/18/2030   $ 902,738 $ 905,274  
TOTAL SENIOR FLOATING RATE INTERESTS   $ 8,199,632  
U.S. GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS — Principal      
1.04 %   Amount   Value  
 
U.S. Treasury — 1.04%            
  3.50%, 04/30/2028   $ 1,583,200 $ 1,558,029  
TOTAL U.S. GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS   $ 1,558,029  
INVESTMENT COMPANIES — 6.92%     Shares Held   Value  
 
Money Market Funds — 6.92%            
Principal Government Money Market Fund — Class R-6 5.26% (i),(j),(k) 2,025,368 $ 2,025,368  
State Street Institutional U.S. Government Money Market Fund — Premier Class        
5.32 % (k)   8,342,651   8,342,651  
TOTAL INVESTMENT COMPANIES       $ 10,368,019  
Total Investments       $ 149,960,507  
Other Assets and Liabilities — (0.12)%         (175,798 )
 
Total Net Assets — 100.00%       $ 149,784,709  
 
(a) 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 $106,073,460 or 70.82% of net assets.        
(b) Security or a portion of the security was on loan. At the end of the period, the value of these securities totaled $1,985,351 or  
  1.33% of net assets.            
(c) Rate shown is as of period end. The rate may be a variable or floating rate or a fixed rate which may convert to a variable or  
  floating rate in the future.            
(d) 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.    
(e) Payment in kind; the issuer has the option of paying additional securities in lieu of cash.      
(f) Non-income producing security.            
(g) The value of these investments was determined using significant unobservable inputs, in good faith by the Advisor, under  
  procedures established and periodically reviewed by the Board of Trustees.        
(h) Security is defaulted.            
(i) Affiliated Security. Security is either an affiliate (and registered under the Investment Company Act of 1940) or an affiliate  
  as defined by the Investment Company Act of 1940 (controls 5.00% or more of the outstanding voting shares of the security).  
  Please see Affiliated Securities sub-schedule for transactional information.        
(j) Security or a portion of the security was received as collateral for securities lending. At the end of the period, the value of  
  these securities totaled $2,025,368 or 1.35% of net assets.        
(k) 1-day yield shown as of period end.            
 
 
 
 
See accompanying notes.   41        

 


 

    Schedule of Investments            
    Principal Active High Yield ETF      
    December 31, 2023 (unaudited)      
 
Portfolio Summary                
Sector     Percent            
Consumer, Cyclical       20.23 %          
Financial       16.37 %          
Consumer, Non-cyclical       14.26 %          
Energy       10.61 %          
Industrial       9.57 %          
Basic Materials       8.31 %          
Money Market Funds       6.92 %          
Communications       6.16 %          
Utilities       3.80 %          
Technology       2.85 %          
Government       1.04 %          
Other Assets and Liabilities       (0.12 )%          
TOTAL NET ASSETS       100.00 %          
 
    June 30, 2023 Purchases       Sales   December 31, 2023
Affiliated Securities   Value   Cost       Proceeds   Value
Principal Government Money                    
Market Fund — Class R-6 5.26% $ 3,219,013 $ 9,073,500   $ 10,267,145 $ 2,025,368
  $ 3,219,013 $ 9,073,500   $ 10,267,145 $ 2,025,368
 
              Realized Gain    
        Realized       from   Change in
      Gain/(Loss) on     Capital Gain   Unrealized
    Income (a) Investments     Distributions   Gain/(Loss)
Principal Government Money                    
Market Fund — Class R-6 5.26% $ $     $ $
  $ $     $ $
 
(a) Amount excludes earnings from securities lending collateral.                

 

See accompanying notes.

42


 

  Schedule of Investments      
  Principal Focused Blue Chip ETF      
  December 31, 2023 (unaudited)      
 
COMMON STOCKS — 99.86%   Shares Held   Value
Aerospace & Defense — 4.65%        
TransDigm Group, Inc.   1,415 $ 1,431,414
Commercial Services — 8.20%        
CoStar Group, Inc. (a)   12,169   1,063,449
Moody's Corp.   1,984   774,871
S&P Global, Inc.   1,551   683,246
      $ 2,521,566
Diversified Financial Services — 13.02%        
Charles Schwab Corp.   6,607   454,562
Mastercard, Inc., Class A   5,099   2,174,774
Visa, Inc., Class A   5,277   1,373,867
      $ 4,003,203
Healthcare — Products — 4.49%        
Danaher Corp.   5,966   1,380,174
Insurance — 4.14%        
Progressive Corp.   7,992   1,272,966
Internet — 23.71%        
Alphabet, Inc., Class C (a)   24,975   3,519,727
Amazon.com, Inc. (a)   22,262   3,382,488
Netflix, Inc. (a)   800   389,504
      $ 7,291,719
Lodging — 2.74%        
Hilton Worldwide Holdings, Inc.   4,622   841,620
Pharmaceuticals — 1.78%        
Zoetis, Inc.   2,774   547,504
Private Equity — 4.67%        
Brookfield Corp., Class A   35,833   1,437,620
REITs — 3.38%        
American Tower Corp.   4,820   1,040,542
Retail — 1.57%        
O'Reilly Automotive, Inc. (a)   509   483,591
Software — 24.42%        
Adobe, Inc. (a)   2,247   1,340,560
Intuit, Inc.   1,826   1,141,305
Microsoft Corp.   11,135   4,187,205
Roper Technologies, Inc.   1,546   842,833
      $ 7,511,903
Transportation — 3.09%        
Union Pacific Corp.   3,869   950,304
TOTAL COMMON STOCKS     $ 30,714,126
INVESTMENT COMPANIES — 0.22%   Shares Held   Value
Money Market Fund — 0.22%        
State Street Institutional U.S. Government Money Market Fund — Premier Class      
5.32% (b)   68,972 $ 68,972
TOTAL INVESTMENT COMPANIES     $ 68,972
 
 
 
 
See accompanying notes. 43      

 


 

      Schedule of Investments            
      Principal Focused Blue Chip ETF        
      December 31, 2023 (unaudited)        
 
Total Investments               $ 30,783,098  
Other Assets and Liabilities — (0.08)%             (25,294 )
Total Net Assets — 100.00%               $ 30,757,804  
 
(a) Non-income producing security.                    
(b) 1-day yield shown as of period end.                    
 
  Portfolio Summary                
Sector     Percent            
Financial       25.21 %          
Technology       24.42 %          
Communications       23.71 %          
Consumer, Non-cyclical       14.47 %          
Industrial       7.74 %          
Consumer, Cyclical       4.31 %          
Money Market Fund       0.22 %          
Other Assets and Liabilities       (0.08 )%          
TOTAL NET ASSETS       100.00 %          
 
      June 30, 2023 Purchases     Sales   December 31, 2023  
Affiliated Securities   Value   Cost     Proceeds   Value  
Principal Government Money                    
Market Fund — Class R-6 5.26% $ $ 18,250   $ 18,250 $  
    $ $ 18,250   $ 18,250 $  
 
              Realized Gain      
          Realized     from   Change in  
        Gain/(Loss) on   Capital Gain   Unrealized  
      Income (a) Investments   Distributions   Gain/(Loss)  
Principal Government Money                    
Market Fund — Class R-6 5.26% $ $   $ $  
    $ $   $ $  
 
(a) Amount excludes earnings from securities lending collateral.                
 
 
 
 
See accompanying notes.     44              

 


 

  Schedule of Investments      
  Principal Healthcare Innovators ETF      
  December 31, 2023 (unaudited)      
 
COMMON STOCKS — 99.86%   Shares Held   Value
 
Biotechnology — 64.66%        
2seventy bio, Inc. (a),(b)   9,767 $ 41,705
4D Molecular Therapeutics, Inc. (a)   5,129   103,914
Aadi Bioscience, Inc. (a)   6,180   12,484
ACADIA Pharmaceuticals, Inc. (a)   20,061   628,110
Adicet Bio, Inc. (a)   8,366   15,812
ADMA Biologics, Inc. (a)   33,510   151,465
Aerovate Therapeutics, Inc. (a)   4,316   97,671
Agenus, Inc. (a)   51,688   42,793
Akero Therapeutics, Inc. (a)   6,014   140,427
Allogene Therapeutics, Inc. (a)   22,716   72,918
Allovir, Inc. (a)   16,532   11,238
Alnylam Pharmaceuticals, Inc. (a)   7,844   1,501,420
Amicus Therapeutics, Inc. (a)   35,119   498,339
AnaptysBio, Inc. (a)   4,475   95,854
Anavex Life Sciences Corp. (a),(b)   12,525   116,608
ANI Pharmaceuticals, Inc. (a)   2,737   150,918
Apellis Pharmaceuticals, Inc. (a)   13,482   807,033
Arbutus Biopharma Corp. (a)   29,306   73,265
Arcellx, Inc. (a)   6,219   345,154
Arcturus Therapeutics Holdings, Inc. (a)   4,084   128,769
Arcus Biosciences, Inc. (a)   9,819   187,543
Arcutis Biotherapeutics, Inc. (a),(b)   8,700   28,101
Arrowhead Pharmaceuticals, Inc. (a)   13,370   409,122
Atara Biotherapeutics, Inc. (a)   19,457   9,978
Atea Pharmaceuticals, Inc. (a)   17,813   54,330
Aurinia Pharmaceuticals, Inc. (a)   19,050   171,259
Avidity Biosciences, Inc. (a)   10,175   92,084
Axsome Therapeutics, Inc. (a)   5,391   429,070
Beam Therapeutics, Inc. (a),(b)   9,235   251,377
Bio-Rad Laboratories, Inc., Class A (a)   3,405   1,099,440
BioCryst Pharmaceuticals, Inc. (a)   25,453   152,463
Biohaven Ltd. (a)   9,830   420,724
Bluebird Bio, Inc. (a)   19,796   27,318
Blueprint Medicines Corp. (a)   7,474   689,402
Bridgebio Pharma, Inc. (a)   20,889   843,289
C4 Therapeutics, Inc. (a)   14,753   83,354
Cara Therapeutics, Inc. (a)   11,525   8,563
Caribou Biosciences, Inc. (a)   13,439   77,005
Cassava Sciences, Inc. (a),(b)   6,013   135,353
Cassava Sciences, Inc.-Warrants   2,441  
Celldex Therapeutics, Inc. (a)   6,204   246,051
Cerevel Therapeutics Holdings, Inc. (a)   19,052   807,805
Chinook Therapeutics, Inc. (a),(c)   9,493   3,797
Cogent Biosciences, Inc. (a)   10,079   59,265
Crinetics Pharmaceuticals, Inc. (a)   7,796   277,382
Cullinan Oncology, Inc. (a)   7,446   75,875
Cytokinetics, Inc. (a)   11,678   974,996
Day One Biopharmaceuticals, Inc. (a)   10,541   153,899
Deciphera Pharmaceuticals, Inc. (a)   10,668   172,075
Denali Therapeutics, Inc. (a)   16,841   361,408
Design Therapeutics, Inc. (a)   10,649   28,220
Dyne Therapeutics, Inc. (a)   8,992   119,594
Edgewise Therapeutics, Inc. (a)   11,021   120,570
Editas Medicine, Inc. (a)   11,419   115,674
Emergent BioSolutions, Inc. (a)   7,468   17,923
Erasca, Inc. (a)   26,524   56,496
Esperion Therapeutics, Inc. (a),(b)   33,633   100,563
Evolus, Inc. (a)   9,606   101,151

 

See accompanying notes.

45


 

  Schedule of Investments      
  Principal Healthcare Innovators ETF      
  December 31, 2023 (unaudited)      
 
COMMON STOCKS (continued)   Shares Held   Value