PPSJX
Prospectus
Principal Spectrum Preferred and Capital Securities Income Fund
Prospectus
Overview
Performance & expenses
Ratings
Holdings
Portfolio characteristics
Portfolio management
Literature
Overview
Performance
As of 12/31/2025
YTD
Returns shown for periods of less than one year are not annualized.
7.65%
1 year
7.65%
3 year
7.84%
5 year
2.81%
10 year
4.31%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted.
Overall Morningstar Rating™
As of 12/31/2025

Overall Morningstar Rating™ as of 12/31/25 among Preferred Stock Funds. Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
Highlights

Active management based on specialized research and dynamic security selection to manage complex global markets

  • Deep and broad experience analyzing, managing, and pricing complex security structures across a variety of credit, interest rate, and regulatory conditions.
  • An emphasis on capital preservation equates to higher quality and capital structure bias.
  • Has delivered a low volatility profile and attractive risk-adjusted returns by selecting higher-quality and improving credits and avoiding speculative risks.
Fund details as of 01/28/2026 unless indicated otherwise
Fund ticker
PPSJX
CUSIP
74253Q184
Benchmark
ICE BofA U.S. All Capital Securities Index
Extended performance inception date
05/01/2002
NAV
$9.11
Total fund assets
Total Fund Assets as of 12/31/2025
$5.15B
Dividend frequency
Monthly
Minimum investment
$1,000.00
Inception date
12/29/2003
Morningstar category
Preferred Stock
Investment approach The investment seeks to provide current income. The fund invests at least 80% of its net assets, plus any borrowing for investment purposes, in preferred securities and capital securities. Preferred securities typically include preferred stock and various types of junior subordinated debt and trust preferred securities. It also invests up to 55% of its assets in below-investment-grade preferred securities and bonds (sometimes called “high yield bonds” or “junk bonds”), which are rated at the time of purchase Ba1 or lower by Moody’s and BB+ or lower by S&P Global.
Performance & expenses
Annual returns Calendar year Distributions Expenses
As of 12/31/2025
As of 12/31/2025
Month end Quarter end
Performance and Expenses Data Table
Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
Excluding sales charge 0.72% 1.02% 7.65% 7.65% 7.84% 2.81% 4.31% 5.08% —
Including sales charge -0.28% 0.03% 6.65% 6.65% 7.84% 2.81% 4.31% 5.08% —
Benchmark performance
ICE BofA U.S. All Capital Securities Index
 0.40% 0.28% 6.77% 6.77% 8.55% 2.41% 4.64% — —
Morningstar category average
Preferred Stock
 0.62% 0.74% 6.31% 6.31% 8.36% 2.71% 4.22% — —
Morningstar percentile rankings
Morningstar percentile rankings are based on total returns 		— — — 39 59 57 51 — —
# of funds in category 71 71 70 70 66 59 44 — 66
Morningstar rating

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
— — — —
—
30-Day SEC yield
30-Day SEC yield represents net investment income earned by a fund over a 30-day period, stated as an annual percentage. Unsubsidized as of 12/31/2025
4.89%
30-Day SEC yield
30-Day SEC yield represents net investment income earned by a fund over a 30-day period, stated as an annual percentage. Subsidized as of 12/31/2025
4.89%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns shown for periods of less than one year are not annualized. Index performance information: no deductions for fees, expenses or taxes. Indices are unmanaged and individuals cannot invest directly in an index.
Performance and Expenses Data Table
Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
Excluding sales charge 0.72% 1.02% 7.65% 7.65% 7.84% 2.81% 4.31% 5.08% —
Including sales charge -0.28% 0.03% 6.65% 6.65% 7.84% 2.81% 4.31% 5.08% —
Benchmark performance
ICE BofA U.S. All Capital Securities Index
 0.40% 0.28% 6.77% 6.77% 8.55% 2.41% 4.64% — —
Morningstar category average
Preferred Stock
 0.62% 0.74% 6.31% 6.31% 8.36% 2.71% 4.22% — —
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns shown for periods of less than one year are not annualized. Index performance information: no deductions for fees, expenses or taxes. Indices are unmanaged and individuals cannot invest directly in an index.
Performance and Expenses Data Table
Data 2025 2024 2023 2022 2021
Excluding sales charge 7.65% 9.65% 6.25% -10.93% 2.83%
Including sales charge 6.65% 8.65% 5.25% -11.77% 1.84%
Morningstar category average
Preferred Stock
 6.31% 9.60% 9.70% -14.82% 6.23%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted.
Performance and Expenses Data Table
Date Type Dollar per share
01/27/2026 Income 0.0398
12/29/2025 Income 0.0549
11/24/2025 Income 0.0512
10/28/2025 Income 0.0464
09/25/2025 Income 0.0432
08/26/2025 Income 0.0450
07/28/2025 Income 0.0429
06/25/2025 Income 0.0399
05/27/2025 Income 0.0354
04/25/2025 Income 0.0388
03/26/2025 Income 0.0365
02/25/2025 Income 0.0362
01/28/2025 Income 0.0358
12/27/2024 Income 0.0479
11/22/2024 Income 0.0464
10/28/2024 Income 0.0460
09/25/2024 Income 0.0446
08/27/2024 Income 0.0370
07/26/2024 Income 0.0382
06/25/2024 Income 0.0361
05/28/2024 Income 0.0361
04/25/2024 Income 0.0362
03/25/2024 Income 0.0355
02/26/2024 Income 0.0349
01/26/2024 Income 0.0347
12/27/2023 Income 0.0452
11/27/2023 Income 0.0437
10/26/2023 Income 0.0443
09/26/2023 Income 0.0432
08/28/2023 Income 0.0347
07/26/2023 Income 0.0337
06/27/2023 Income 0.0335
05/25/2023 Income 0.0331
04/25/2023 Income 0.0334
03/28/2023 Income 0.0344
02/23/2023 Income 0.0351
Expense ratio gross
As of current prospectus date
1.00%
Expense ratio net
As of current prospectus date
1.00%
Expense limit expiration date
—
Maximum up-front sales charge
—
Contingent deferred sales charge
1.00%
In situations where the net and gross fund expense figures are different, the investment manager has contractually agreed to limit the investment option's expense. Differences may also be shown due to the investment manager choosing to pay certain expenses that would normally be payable by the fund. The gross fund expense figure does not reflect any waivers or caps on the mutual fund. Performance shown reflects the application of net expenses of the fund.
Ratings Morningstar ratings

Overall Morningstar Rating™ as of 12/31/25 among Preferred Stock Funds. Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
as of 12/31/2025
3-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
66 funds
5-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
59 funds
10-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
44 funds
Overall

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
66 funds
Holdings
Top 10 as of 12/31/2025
% of Assets % of Assets
% of Assets
1 PNC Financial Services Group I
2.23%
2 Liberty Mutual Group Inc
1.72%
3 Bank of America Corp
1.72%
4 ING Groep NV
1.65%
5 Barclays PLC
1.57%
6 NatWest Group PLC
1.46%
7 MetLife Inc
1.44%
8 Huntington Bancshares Inc/OH
1.41%
9 Nationwide Financial Services
1.34%
10 MetLife Inc
1.27%
The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
May not reflect current holdings or allocations.
Portfolio characteristics
Analysis Sector Credit Quality
Qualified dividend income
There can be no assurance as to the portion of the Fund’s distributions that will qualify for favorable federal income tax treatment. The Fund may make investments and pay dividends that are ineligible for favorable tax treatment or that otherwise do not meet the requirements for such treatment, and shareholders must satisfy certain requirements to take advantage of beneficial tax treatment. as of 12/31/2025
65.83%
# of holdings as of 12/31/2025
314
Average weighted coupon as of 12/31/2025
6.73%
Average yield to maturity as of 12/31/2025
7.34%
Turnover ratio
Turnover is calculated semi-annually; reflects most recent available calculation. as of 08/31/2025
24.80%
Weighted avg duration as of 12/31/2025
4.69
Yield to worst
The lowest potential yield that can be received on a bond without the issuer defaulting. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer. as of 12/31/2025
5.68%
May not reflect current holdings or allocations.
May not reflect current holdings or allocations.
May not reflect current holdings or allocations.
Portfolio management
Fred Diaz
34 years of experience
Bob Giangregorio
23 years of experience
Lewis Jacoby
44 years of experience
Manu Krishnan, CFA
22 years of experience
Kevin Nugent
42 years of experience

No information
Literature
Investment materials Fact sheet
Commentary
Prospectus, Annual report, Semi-annual report and Statement of additional information
Portfolio holdings 07/2025
08/2025
09/2025
10/2025
11/2025
12/2025
Principal Funds are distributed by Principal Funds Distributor, Inc. ALPS Distributors, Inc. is the distributor of the Principal ETFs. ALPS Distributors, Inc. and the Principal Funds are not affiliated.
Contingent Capital Securities carry greater risk compared to other securities in times of credit stress. An issuer or regulator’s decision to write down, write off or convert a CoCo may result in complete loss on an investment.
Spectrum Asset Management, Inc. is an affiliate of Principal Global Investors. Spectrum is a leading manager of institutional and retail preferred securities portfolios and manages portfolios for an international universe of corporate, insurance, and endowment clients.
Fixed‐income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE
Morningstar percentile rankings are based on total returns and do not reflect the inclusion of sales charges. If sales charges were reflected, rankings could be lower.
Risks of preferred securities differ from risks inherent in other investments. In particular, in a bankruptcy preferred securities are senior to common stock but subordinate to other corporate debt.
Performance assumes reinvestment of all dividends and capital gains.
Principal Global Investors is the Investment Adviser of all funds included in the Principal Funds, Inc. Principal Funds are managed by Principal Global Investors, its boutique affiliates, and by many leading sub-advisors.
To obtain a prospectus, download prospectus online or call Customer Service at 1-800-222-5852 . Carefully consider a fund’s objectives, risks, charges, and expenses. The prospectus, or summary prospectus if available, contains this and other information. Please read it carefully before investing.
ICE BofA US All Capital Securities Index tracks the performance of fixed rate, US dollar denominated hybrid corporate and preferred securities publicly issued in the US domestic market. Qualifying securities must be rated by Moody’s, S&P or Fitch. Floating rate coupon or dividend securities are excluded, but zero, step and rating-dependent coupons are included.
© 2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Morningstar Medalist Rating™ is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please refer to the Morningstar shareholder disclosures .
The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.
The Analyst-Driven % data point displays the weighted percentage of a vehicle’s pillar ratings assigned directly or indirectly by analysts.
The Data Coverage % data point is a summary metric describing the level of data completeness used to generate the overall rating.
These calculated returns reflect the historical performance of the oldest share class of the Fund, adjusted to reflect the fees and expenses of the share class shown. Please see the Fund's prospectus for more information on specific expenses and see the Fund's most recent shareholder report for the actual date of first sale. Expenses are deducted from income earned by the Fund. As a result, dividends and investment results will differ for each share class.
Overview
Performance
As of 12/31/2025
YTD
Returns shown for periods of less than one year are not annualized.
7.65%
1 year
7.65%
3 year
7.84%
5 year
2.81%
10 year
4.31%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted.
Overall Morningstar Rating™
As of 12/31/2025

Overall Morningstar Rating™ as of 12/31/25 among Preferred Stock Funds. Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
Highlights

Active management based on specialized research and dynamic security selection to manage complex global markets

  • Deep and broad experience analyzing, managing, and pricing complex security structures across a variety of credit, interest rate, and regulatory conditions.
  • An emphasis on capital preservation equates to higher quality and capital structure bias.
  • Has delivered a low volatility profile and attractive risk-adjusted returns by selecting higher-quality and improving credits and avoiding speculative risks.
Fund details as of 01/28/2026 unless indicated otherwise
Fund ticker
PPSJX
CUSIP
74253Q184
Benchmark
ICE BofA U.S. All Capital Securities Index
Extended performance inception date
05/01/2002
NAV
$9.11
Total fund assets
Total Fund Assets as of 12/31/2025
$5.15B
Dividend frequency
Monthly
Minimum investment
$1,000.00
Inception date
12/29/2003
Morningstar category
Preferred Stock
Investment approach The investment seeks to provide current income. The fund invests at least 80% of its net assets, plus any borrowing for investment purposes, in preferred securities and capital securities. Preferred securities typically include preferred stock and various types of junior subordinated debt and trust preferred securities. It also invests up to 55% of its assets in below-investment-grade preferred securities and bonds (sometimes called “high yield bonds” or “junk bonds”), which are rated at the time of purchase Ba1 or lower by Moody’s and BB+ or lower by S&P Global.
Performance & expenses
Annual returns Calendar year Distributions Expenses
As of 12/31/2025
As of 12/31/2025
Month end Quarter end
Performance and Expenses Data Table
Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
Excluding sales charge 0.72% 1.02% 7.65% 7.65% 7.84% 2.81% 4.31% 5.08% —
Including sales charge -0.28% 0.03% 6.65% 6.65% 7.84% 2.81% 4.31% 5.08% —
Benchmark performance
ICE BofA U.S. All Capital Securities Index
 0.40% 0.28% 6.77% 6.77% 8.55% 2.41% 4.64% — —
Morningstar category average
Preferred Stock
 0.62% 0.74% 6.31% 6.31% 8.36% 2.71% 4.22% — —
Morningstar percentile rankings
Morningstar percentile rankings are based on total returns 		— — — 39 59 57 51 — —
# of funds in category 71 71 70 70 66 59 44 — 66
Morningstar rating

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
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30-Day SEC yield
30-Day SEC yield represents net investment income earned by a fund over a 30-day period, stated as an annual percentage. Unsubsidized as of 12/31/2025
4.89%
30-Day SEC yield
30-Day SEC yield represents net investment income earned by a fund over a 30-day period, stated as an annual percentage. Subsidized as of 12/31/2025
4.89%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns shown for periods of less than one year are not annualized. Index performance information: no deductions for fees, expenses or taxes. Indices are unmanaged and individuals cannot invest directly in an index.
Performance and Expenses Data Table
Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
Excluding sales charge 0.72% 1.02% 7.65% 7.65% 7.84% 2.81% 4.31% 5.08% —
Including sales charge -0.28% 0.03% 6.65% 6.65% 7.84% 2.81% 4.31% 5.08% —
Benchmark performance
ICE BofA U.S. All Capital Securities Index
 0.40% 0.28% 6.77% 6.77% 8.55% 2.41% 4.64% — —
Morningstar category average
Preferred Stock
 0.62% 0.74% 6.31% 6.31% 8.36% 2.71% 4.22% — —
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns shown for periods of less than one year are not annualized. Index performance information: no deductions for fees, expenses or taxes. Indices are unmanaged and individuals cannot invest directly in an index.
Performance and Expenses Data Table
Data 2025 2024 2023 2022 2021
Excluding sales charge 7.65% 9.65% 6.25% -10.93% 2.83%
Including sales charge 6.65% 8.65% 5.25% -11.77% 1.84%
Morningstar category average
Preferred Stock
 6.31% 9.60% 9.70% -14.82% 6.23%
Returns represent past performance and do not guarantee future results. Share price, principal value, and return will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted.
Performance and Expenses Data Table
Date Type Dollar per share
01/27/2026 Income 0.0398
12/29/2025 Income 0.0549
11/24/2025 Income 0.0512
10/28/2025 Income 0.0464
09/25/2025 Income 0.0432
08/26/2025 Income 0.0450
07/28/2025 Income 0.0429
06/25/2025 Income 0.0399
05/27/2025 Income 0.0354
04/25/2025 Income 0.0388
03/26/2025 Income 0.0365
02/25/2025 Income 0.0362
01/28/2025 Income 0.0358
12/27/2024 Income 0.0479
11/22/2024 Income 0.0464
10/28/2024 Income 0.0460
09/25/2024 Income 0.0446
08/27/2024 Income 0.0370
07/26/2024 Income 0.0382
06/25/2024 Income 0.0361
05/28/2024 Income 0.0361
04/25/2024 Income 0.0362
03/25/2024 Income 0.0355
02/26/2024 Income 0.0349
01/26/2024 Income 0.0347
12/27/2023 Income 0.0452
11/27/2023 Income 0.0437
10/26/2023 Income 0.0443
09/26/2023 Income 0.0432
08/28/2023 Income 0.0347
07/26/2023 Income 0.0337
06/27/2023 Income 0.0335
05/25/2023 Income 0.0331
04/25/2023 Income 0.0334
03/28/2023 Income 0.0344
02/23/2023 Income 0.0351
Expense ratio gross
As of current prospectus date
1.00%
Expense ratio net
As of current prospectus date
1.00%
Expense limit expiration date
—
Maximum up-front sales charge
—
Contingent deferred sales charge
1.00%
In situations where the net and gross fund expense figures are different, the investment manager has contractually agreed to limit the investment option's expense. Differences may also be shown due to the investment manager choosing to pay certain expenses that would normally be payable by the fund. The gross fund expense figure does not reflect any waivers or caps on the mutual fund. Performance shown reflects the application of net expenses of the fund.
Ratings
Morningstar ratings

Overall Morningstar Rating™ as of 12/31/25 among Preferred Stock Funds. Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
as of 12/31/2025
3-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
66 funds
5-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
59 funds
10-year

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
44 funds
Overall

Morningstar ratings are based on risk-adjusted returns.

The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower.
66 funds
Holdings
Top 10 as of 12/31/2025
% of Assets % of Assets
% of Assets
1 PNC Financial Services Group I
2.23%
2 Liberty Mutual Group Inc
1.72%
3 Bank of America Corp
1.72%
4 ING Groep NV
1.65%
5 Barclays PLC
1.57%
6 NatWest Group PLC
1.46%
7 MetLife Inc
1.44%
8 Huntington Bancshares Inc/OH
1.41%
9 Nationwide Financial Services
1.34%
10 MetLife Inc
1.27%
The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
May not reflect current holdings or allocations.
Portfolio characteristics
Analysis Sector Credit Quality
Qualified dividend income
There can be no assurance as to the portion of the Fund’s distributions that will qualify for favorable federal income tax treatment. The Fund may make investments and pay dividends that are ineligible for favorable tax treatment or that otherwise do not meet the requirements for such treatment, and shareholders must satisfy certain requirements to take advantage of beneficial tax treatment. as of 12/31/2025
65.83%
# of holdings as of 12/31/2025
314
Average weighted coupon as of 12/31/2025
6.73%
Average yield to maturity as of 12/31/2025
7.34%
Turnover ratio
Turnover is calculated semi-annually; reflects most recent available calculation. as of 08/31/2025
24.80%
Weighted avg duration as of 12/31/2025
4.69
Yield to worst
The lowest potential yield that can be received on a bond without the issuer defaulting. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer. as of 12/31/2025
5.68%
May not reflect current holdings or allocations.
May not reflect current holdings or allocations.
May not reflect current holdings or allocations.
Portfolio management
Fred Diaz
34 years of experience
Bob Giangregorio
23 years of experience
Lewis Jacoby
44 years of experience
Manu Krishnan, CFA
22 years of experience
Kevin Nugent
42 years of experience

No information
Literature
Investment materials Fact sheet
Commentary
Prospectus, Annual report, Semi-annual report and Statement of additional information
Portfolio holdings 07/2025
08/2025
09/2025
10/2025
11/2025
12/2025
Principal Funds are distributed by Principal Funds Distributor, Inc. ALPS Distributors, Inc. is the distributor of the Principal ETFs. ALPS Distributors, Inc. and the Principal Funds are not affiliated.
Contingent Capital Securities carry greater risk compared to other securities in times of credit stress. An issuer or regulator’s decision to write down, write off or convert a CoCo may result in complete loss on an investment.
Spectrum Asset Management, Inc. is an affiliate of Principal Global Investors. Spectrum is a leading manager of institutional and retail preferred securities portfolios and manages portfolios for an international universe of corporate, insurance, and endowment clients.
Fixed‐income investment options are subject to interest rate risk, and their value will decline as interest rates rise.
The holdings listed do not constitute a recommendation to purchase or sell a particular security. Cash and/or derivative positions that are not part of the core investment strategy will not be reflected in the top holdings list.
NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE
Morningstar percentile rankings are based on total returns and do not reflect the inclusion of sales charges. If sales charges were reflected, rankings could be lower.
Risks of preferred securities differ from risks inherent in other investments. In particular, in a bankruptcy preferred securities are senior to common stock but subordinate to other corporate debt.
Performance assumes reinvestment of all dividends and capital gains.
Principal Global Investors is the Investment Adviser of all funds included in the Principal Funds, Inc. Principal Funds are managed by Principal Global Investors, its boutique affiliates, and by many leading sub-advisors.
To obtain a prospectus, download prospectus online or call Customer Service at 1-800-222-5852 . Carefully consider a fund’s objectives, risks, charges, and expenses. The prospectus, or summary prospectus if available, contains this and other information. Please read it carefully before investing.
ICE BofA US All Capital Securities Index tracks the performance of fixed rate, US dollar denominated hybrid corporate and preferred securities publicly issued in the US domestic market. Qualifying securities must be rated by Moody’s, S&P or Fitch. Floating rate coupon or dividend securities are excluded, but zero, step and rating-dependent coupons are included.
© 2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Morningstar Medalist Rating™ is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please refer to the Morningstar shareholder disclosures .
The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.
The Analyst-Driven % data point displays the weighted percentage of a vehicle’s pillar ratings assigned directly or indirectly by analysts.
The Data Coverage % data point is a summary metric describing the level of data completeness used to generate the overall rating.
These calculated returns reflect the historical performance of the oldest share class of the Fund, adjusted to reflect the fees and expenses of the share class shown. Please see the Fund's prospectus for more information on specific expenses and see the Fund's most recent shareholder report for the actual date of first sale. Expenses are deducted from income earned by the Fund. As a result, dividends and investment results will differ for each share class.