PTDIX

Principal LifeTime 2040 Fund

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Prospectus

    Principal LifeTime 2040 Fund

    Fund details

    as of 01/07/2026 unless indicated otherwise
    Fund ticker
    PTDIX
    CUSIP
    74253M332
    Benchmark
    S&P Target Date 2040 Index
    NAV
    $16.91
    Total fund assets
    $4.61B
    Dividend frequency
    Annually
    Minimum investment
    —
    Inception date
    03/01/2001
    Morningstar category
    Target-Date 2040
    Investment approach
    The investment seeks a total return consisting of long-term growth of capital and current income. The fund operates as a "target date fund" that invests according to an asset allocation strategy designed for investors having a retirement investment goal close to the year in 2040. It is a fund of funds and invests in underlying funds of Principal Exchange-Traded Funds (“PETF”) and Principal Funds, Inc. (“PFI”). Its underlying funds consist of domestic and foreign equity funds, fixed-income funds, real asset funds, and other funds that aim to offer diversification beyond traditional equity and fixed-income securities.

    Performance & expenses

    As of 12/31/2025
    Name 1 month 3 month YTD 1-year 3-year 5-year 10-year Since inception Overall
    Total return 0.29% 2.03% 15.55% 15.55% 15.11% 7.59% 9.37% 7.14% —
    Benchmark performance — — — — — — — — —
    Morningstar category average — — — — — — — — —
    Morningstar percentile rankings — — — 87 78 84 68 — —
    # of funds in category 187 187 187 187 174 161 110 — 174
    Morningstar rating — — — — —
    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.

    Holdings

    Top 10

    as of 11/30/2025
    % of Assets
    % of Assets
    1. International Equity Fund
    19.74%
    2. Core Fixed Income Fund
    18.97%
    3. LargeCap S&P 500 Index Fund
    16.19%
    4. LargeCap Growth Fund I
    7.12%
    5. Equity Income Fund
    7.08%
    6. Blue Chip Fund
    6.67%
    7. LargeCap Value Fund III
    6.51%
    8. Global Emerging Markets Fund
    4.01%
    9. SmallCap Fund
    3.42%
    10. High Yield Fund
    3.21%
    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

    # of holdings
    as of 12/31/2025
    4,497
    Turnover ratio
    as of 10/31/2025
    38.90%
    R-squared (3-year)
    as of 11/30/2025
    98.54
    Sharpe ratio (3-year)
    as of 11/30/2025
    0.77
    Standard deviation (3-year)
    as of 11/30/2025
    10.88
    Tracking error (3-year)
    as of 11/30/2025
    1.46
    May not reflect current holdings or allocations.

    Portfolio management

    James Fennessey, CFA
    26 years of experience
    Chad Severin
    23 years of experience
    Scott Smith
    27 years of experience
    May Tong, CFA
    25 years of experience
    Randy Welch
    41 years of experience

    Literature

    Investment materials

    Portfolio holdings

    Disclosures
    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.
    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
    Asset allocation and diversification does not ensure a profit or protect against a loss. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. These risks are magnified in emerging markets. Fixed-income and asset allocation investment options that invest in mortgage securities are subject to increased risk due to real estate exposure.
    The Principal LifeTime Funds, which are target-date funds, invest in underlying Principal Funds. Each Principal LifeTime Fund is managed toward a particular target (retirement) date, or the approximate date the participant or investor starts withdrawing money. As each Principal LifeTime Fund approaches its target date, the investment mix becomes more conservative by increasing exposure to generally more conservative investment options and reducing exposure to typically more aggressive investment options. The asset allocation for each Principal LifeTime Fund is regularly readjusted within a timeframe that extends 10 years beyond the target date, at which point it reaches its most conservative allocation. Principal LifeTime Funds assume the value of the investor’s account will be withdrawn gradually during retirement. Neither the principal nor the underlying assets of the Principal LifeTime Funds are guaranteed at any time, including the target date. Investment risk remains at all times.
    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.
    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.
    Standard & Poor's Target Date Index Series is comprised of nine multi-asset class indices, each corresponding to a particular target retirement date. The asset class mix for each index is determined once per year through a process designed to reflect the overall opportunity of the markets represented, adjusted for risk associated with the time remaining to the relevant target date.
    There is no guarantee that a target date investment will provide adequate income at or through retirement. A target date fund's (TDF) glidepath is typically set to align with a retirement age of 65, which maybe your plan's normal retirement date (NRD). If your plan's NRD/age is different, the plan may default you to a TDF based on the plans NRD/Age. Participants may choose a TDF that does not match the plan's intended retirement date but instead aligns more to their investment risk. Compare the different TDF's to see how the mix of investments shift based on the TDF glide path.
    © 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.