Item 1. |
Reports to Shareholders.
|
Performance Overview
|
1
|
Report of Independent Registered Public Accounting Firm
|
8
|
Statement of Investments
|
9
|
Statement of Assets and Liabilities
|
15
|
Statement of Operations
|
16
|
Statements of Changes in Net Assets
|
17
|
Statement of Cash Flows
|
18
|
Financial Highlights
|
19
|
Notes to Financial Statements
|
21
|
Dividend Reinvestment Plan
|
31
|
Trustees & Officers
|
33
|
Additional Information
|
|
Portfolio Holdings
|
39
|
Proxy Voting
|
39
|
Section 19(A) Notices
|
39
|
Unaudited Tax Information
|
40
|
Data Privacy Policies and Procedures
|
40
|
Custodian and Transfer Agent
|
40
|
Legal Counsel
|
41
|
Independent Registered Public Accounting Firm
|
41
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
Annual Report | October 31, 2016
|
1
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
2
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
Annual Report | October 31, 2016
|
3
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
4
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
TOTAL RETURNS
(1)
|
ANNUALIZED | ||
Fund
|
1 Year
|
3 Year
|
Since Inception
(2)
|
Net Asset Value (NAV)
(3)
|
5.94%
|
8.64%
|
9.40%
|
Market Price
(4)
|
4.80%
|
7.48%
|
3.65%
|
Barclays U.S. Aggregate Bond Index
|
4.37%
|
3.48%
|
3.77%
|
MSCI World Index
|
1.18%
|
3.82%
|
7.57%
|
(1)
|
Total returns assume reinvestment of all distributions.
|
(2)
|
The Fund commenced operations on June 25, 2013.
|
(3)
|
Performance returns are net of management fees and other Fund expenses.
|
(4)
|
Market price is the value at which the Fund trades on an exchange. This market price can be higher or lower than its NAV.
|
Annual Report | October 31, 2016
|
5
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
^
|
Holdings are subject to change.
|
Percentages are based on total investments of the Fund.
|
6
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Performance Overview
|
October 31, 2016 (Unaudited)
|
% of Total Investments
|
|
United States
|
83.18%
|
Japan
|
3.24%
|
Australia
|
2.26%
|
Netherlands
|
1.95%
|
Singapore
|
1.75%
|
Hong Kong
|
1.36%
|
France
|
1.23%
|
Great Britain
|
1.01%
|
Finland
|
0.79%
|
Canada
|
0.69%
|
Germany
|
0.69%
|
Mexico
|
0.66%
|
Spain
|
0.51%
|
Luxembourg
|
0.27%
|
Jersey
|
0.21%
|
Guernsey
|
0.14%
|
South Africa
|
0.06%
|
100.00%
|
Annual Report | October 31, 2016
|
7
|
8
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Statement of Investments
|
Description
|
Shares
|
Value
(Note 2)
|
||||||
COMMON STOCKS (50.42%)
|
||||||||
Computer Software (0.47%)
|
||||||||
InterXion Holding N.V.
(a)
|
16,400
|
$
|
610,572
|
|||||
Real Estate Management/Services (2.79%)
|
||||||||
Aeon Mall Co., Ltd.
|
17,500
|
260,322
|
||||||
Atrium European Real Estate, Ltd.
|
96,100
|
411,320
|
||||||
Citycon OYJ
|
389,193
|
912,578
|
||||||
Deutsche Wohnen AG
|
25,000
|
815,629
|
||||||
Mitsubishi Estate Co., Ltd.
|
34,000
|
674,845
|
||||||
Sponda OYJ
|
125,000
|
591,687
|
||||||
3,666,381
|
||||||||
Real Estate Operation/Development (4.51%)
|
||||||||
ADO Properties SA
(b)(c)
|
13,937
|
507,862
|
||||||
Croesus Retail Trust
|
2,282,730
|
1,411,068
|
||||||
Inmobiliaria Colonial SA
|
60,000
|
423,710
|
||||||
Mitsui Fudosan Co., Ltd.
|
50,000
|
1,139,744
|
||||||
New World Development Co., Ltd.
|
931,000
|
1,160,816
|
||||||
Sumitomo Realty & Development Co., Ltd.
|
28,000
|
737,713
|
||||||
TLG Immobilien AG
|
12,000
|
251,341
|
||||||
Tokyo Tatemono Co., Ltd.
|
22,000
|
280,271
|
||||||
5,912,525
|
||||||||
REITS-Apartments (2.36%)
|
||||||||
Apartment Investment & Management Co., Class A
|
19,700
|
868,179
|
||||||
Essex Property Trust, Inc.
|
8,600
|
1,841,174
|
||||||
Japan Rental Housing Investments, Inc.
|
500
|
386,669
|
||||||
3,096,022
|
||||||||
REITS-Diversified (13.80%)
|
||||||||
Altarea SCA
|
8,469
|
1,617,651
|
||||||
Crombie Real Estate Investment Trust
|
20,897
|
210,793
|
||||||
Crown Castle International Corp.
|
19,000
|
1,728,810
|
||||||
Dexus Property Group
|
210,000
|
1,428,138
|
||||||
Duke Realty Corp.
|
23,700
|
619,755
|
||||||
Empiric Student Property PLC
|
150,000
|
203,337
|
||||||
EPR Properties
|
8,400
|
610,848
|
||||||
Equinix, Inc.
|
2,100
|
750,288
|
||||||
Frasers Logistics & Industrial Trust
(a)(c)
|
786,387
|
545,455
|
||||||
Klepierre
|
18,000
|
736,338
|
||||||
Liberty Property Trust
|
32,200
|
1,301,846
|
||||||
Londonmetric Property PLC
|
145,000
|
264,623
|
||||||
Mapletree Commercial Trust
|
139,600
|
153,522
|
||||||
Merlin Properties Socimi SA
|
50,000
|
562,048
|
||||||
Mirvac Group
|
443,000
|
704,309
|
||||||
Nomura Real Estate Master Fund, Inc.
|
250
|
405,264
|
||||||
Secure Income REIT PLC
|
15,401
|
58,720
|
Annual Report | October 31, 2016
|
9
|
Principal Real Estate Income Fund
|
Statement of Investments
|
Description
|
Shares
|
Value
(Note 2)
|
||||||
REITS-Diversified (13.80%) (continued)
|
||||||||
Segro PLC
|
80,187
|
$
|
429,107
|
|||||
Sekisui House REIT, Inc.
|
307
|
414,817
|
||||||
Spring Real Estate Investment Trust
|
2,870,000
|
1,210,088
|
||||||
STAG Industrial, Inc.
|
65,120
|
1,502,319
|
||||||
Stockland
|
180,100
|
605,549
|
||||||
Viva Energy REIT
(a)
|
310,137
|
533,182
|
||||||
Wereldhave N.V.
|
33,988
|
1,522,075
|
||||||
18,118,882
|
||||||||
REITS-Health Care (4.13%)
|
||||||||
Care Capital Properties, Inc.
|
35,000
|
929,950
|
||||||
Medical Properties Trust, Inc.
|
25,000
|
348,500
|
||||||
Physicians Realty Trust
|
24,000
|
474,480
|
||||||
Sabra Health Care REIT, Inc.
|
29,500
|
687,350
|
||||||
Senior Housing Properties Trust
|
91,000
|
1,935,570
|
||||||
Welltower, Inc.
|
15,319
|
1,049,811
|
||||||
5,425,661
|
||||||||
REITS-Hotels (1.70%)
|
||||||||
Hoshino Resorts REIT, Inc.
|
30
|
175,932
|
||||||
Hospitality Properties Trust
|
25,600
|
700,416
|
||||||
Hospitality Property Fund Ltd., Class B
|
110,000
|
106,625
|
||||||
Japan Hotel REIT Investment Corp.
|
700
|
473,252
|
||||||
Sunstone Hotel Investors, Inc.
|
62,000
|
778,720
|
||||||
2,234,945
|
||||||||
REITS-Manufactured Homes (1.12%)
|
||||||||
Sun Communities, Inc.
|
19,083
|
1,468,055
|
||||||
REITS-Mortgage (0.28%)
|
||||||||
CYS Investments, Inc.
|
43,100
|
371,522
|
||||||
|
||||||||
REITS-Office Property (4.73%)
|
||||||||
Alexandria Real Estate Equities, Inc.
|
8,000
|
862,480
|
||||||
alstria office REIT-AG
|
20,000
|
258,081
|
||||||
Brandywine Realty Trust
|
38,100
|
590,550
|
||||||
Champion Real Estate Investment Trust
|
405,000
|
230,293
|
||||||
City Office REIT, Inc.
|
84,500
|
1,061,320
|
||||||
Corporate Office Properties Trust
|
13,500
|
360,315
|
||||||
Investa Office Fund
|
165,000
|
532,186
|
||||||
Kilroy Realty Corp.
|
10,500
|
754,215
|
||||||
SL Green Realty Corp.
|
10,400
|
1,021,488
|
||||||
Viva Industrial Trust
|
939,500
|
540,234
|
||||||
6,211,162
|
||||||||
REITS-Regional Malls (3.22%)
|
||||||||
Simon Property Group, Inc.
|
22,700
|
4,221,292
|
10
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Statement of Investments
|
Description
|
Shares
|
Value
(Note 2)
|
||||||
REITS-Shopping Centers (4.18%)
|
||||||||
Aventus Retail Property Fund, Ltd.
|
95,000
|
$
|
164,767
|
|||||
Equity One, Inc.
|
11,000
|
313,500
|
||||||
Fortune Real Estate Investment Trust
|
587,000
|
711,465
|
||||||
Hammerson PLC
|
64,500
|
435,004
|
||||||
Kenedix Retail REIT Corp.
|
418
|
1,008,429
|
||||||
NewRiver Retail, Ltd.
|
149,000
|
565,366
|
||||||
Ramco-Gershenson Properties Trust
|
18,400
|
319,056
|
||||||
Scentre Group REIT
|
115,000
|
368,293
|
||||||
Vastned Retail N.V.
|
41,600
|
1,598,781
|
||||||
|
5,484,661
|
|||||||
REITS-Single Tenant (2.67%)
|
||||||||
Agree Realty Corp.
|
15,700
|
759,095
|
||||||
Spirit Realty Capital, Inc.
|
118,000
|
1,405,380
|
||||||
STORE Capital Corp.
|
48,881
|
1,333,963
|
||||||
3,498,438
|
||||||||
REITS-Storage/Warehousing (1.44%)
|
||||||||
CubeSmart
|
22,000
|
573,540
|
||||||
National Storage Affiliates Trust
|
54,545
|
1,067,991
|
||||||
Safestore Holdings PLC
|
56,000
|
245,594
|
||||||
1,887,125
|
||||||||
REITS-Warehouse/Industrials (3.02%)
|
||||||||
Granite Real Estate Investment Trust
|
8,000
|
251,696
|
||||||
Japan Logistics Fund, Inc.
|
115
|
250,134
|
||||||
PLA Administradora Industrial S de RL de CV
|
645,000
|
1,069,824
|
||||||
Prologis Property Mexico SA de CV
|
120,000
|
201,894
|
||||||
Prologis, Inc.
|
17,000
|
886,720
|
||||||
Terreno Realty Corp.
|
17,000
|
443,700
|
||||||
WPT Industrial Real Estate Investment Trust
|
72,800
|
865,592
|
||||||
|
3,969,560
|
|||||||
TOTAL COMMON STOCKS (Cost $63,137,244)
|
66,176,803
|
Rate
|
Maturity
Date
|
Principal
Amount
|
Value
(Note 2)
|
|||||||||
COMMERCIAL MORTGAGE BACKED SECURITIES (91.57%)
|
||||||||||||
Commercial Mortgage Backed Securities-Other (57.40%)
|
||||||||||||
Bank of America Commercial Mortgage Trust, Series 2008-1
(d)
|
6.270%
|
|
01/10/18
|
$
|
2,500,000
|
$
|
2,488,212
|
|||||
CD Commercial Mortgage Trust, Series 2007-CD4
(d)
|
5.398%
|
|
12/11/49
|
9,690,942
|
8,168,881
|
|||||||
Credit Suisse Commercial Mortgage Trust, Series 2006-C4
(d)
|
5.538%
|
|
09/15/39
|
4,030,399
|
4,048,088
|
|||||||
Credit Suisse Commercial Mortgage Trust, Series 2007-C1
|
5.416%
|
|
02/15/40
|
10,000,000
|
9,952,825
|
Annual Report | October 31, 2016
|
11
|
Principal Real Estate Income Fund
|
Statement of Investments
|
Rate
|
Maturity
Date
|
Principal
Amount
|
Value
(Note 2)
|
|||||||||
Commercial Mortgage Backed Securities-Other (continued)
|
||||||||||||
CSAIL Commercial Mortgage Trust, Series 2015-C4
(d)
|
3.585%
|
|
11/11/48
|
$
|
5,000,000
|
$
|
3,433,170
|
|||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2011-KAIV
(d)(e)
|
3.615%
|
|
06/25/41
|
9,000,000
|
1,306,307
|
|||||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2012-K052
(d)(e)
|
1.611%
|
|
01/25/26
|
9,690,000
|
1,027,746
|
|||||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2012-K706
(d)(e)
|
1.903%
|
|
12/25/18
|
59,524,000
|
2,123,626
|
|||||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2012-K707
(d)(e)
|
1.806%
|
|
01/25/19
|
27,555,000
|
961,890
|
|||||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2012-K709
(d)(e)
|
1.700%
|
|
04/25/40
|
30,601,130
|
1,150,804
|
|||||||
FHLMC Multifamily Structured Pass Through Certificates, Series 2012-K710
(d)(e)
|
1.661%
|
|
06/25/42
|
27,830,000
|
1,060,868
|
|||||||
Greenwich Capital Commercial Funding Corp. Commercial Mortgage Trust, Series 2007-GG9
(d)
|
5.505%
|
|
02/10/17
|
7,500,000
|
7,112,768
|
|||||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2006-CIBC16
|
5.623%
|
|
05/12/45
|
2,500,000
|
2,505,737
|
|||||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2006-CIBC17
(d)
|
5.489%
|
|
12/12/43
|
3,642,959
|
1,568,851
|
|||||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2007-CIBC19
(d)
|
5.715%
|
|
05/12/17
|
3,500,000
|
2,832,823
|
|||||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C15
(b)(d)(e)
|
1.485%
|
|
10/15/23
|
11,500,000
|
945,850
|
|||||||
LB-CMT Commercial Mortgage Trust, Series 2007-C3
(d)
|
5.916%
|
|
06/15/17
|
1,000,000
|
994,627
|
|||||||
LB-UBS Commercial Mortgage Trust, Series 2006-C7
|
5.407%
|
|
11/15/16
|
2,453,777
|
1,924,529
|
|||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2015-C20
(b)(d)(e)
|
1.612%
|
|
02/15/25
|
23,967,000
|
2,361,138
|
|||||||
Morgan Stanley Capital I Trust, Series 2016-UB11XE
(b)(d)(e)
|
1.500%
|
|
08/15/26
|
13,495,500
|
1,401,056
|
|||||||
Wachovia Bank Commercial Mortgage Trust, Series 2006-C29
(d)
|
5.368%
|
|
11/15/48
|
13,000,000
|
12,971,842
|
12
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Statement of Investments
|
Rate
|
Maturity
Date
|
Principal
Amount
|
Value
(Note 2)
|
|||||||||
Commercial Mortgage Backed Securities-Other (continued)
|
||||||||||||
Wachovia Bank Commercial Mortgage Trust, Series 2007-C30
(d)
|
5.413%
|
|
12/15/43
|
$
|
5,000,000
|
$
|
5,001,058
|
|||||
75,342,696
|
||||||||||||
Commercial Mortgage Backed Securities-Subordinated (34.17%)
|
||||||||||||
Bank of America Commercial Mortgage Trust, Series 2006-6
|
5.480%
|
|
10/10/45
|
3,000,000
|
3,005,905
|
|||||||
Bank of America Commercial Mortgage Trust, Series 2016-UBS10
(b)
|
3.000%
|
|
06/15/49
|
3,500,000
|
2,437,259
|
|||||||
Commercial Mortgage Trust, Series 2013-CR11
(b)(d)
|
4.371%
|
|
10/10/23
|
5,108,000
|
3,600,460
|
|||||||
Commercial Mortgage Trust, Series 2014-CCRE17
(b)(d)
|
4.299%
|
|
05/10/24
|
6,000,000
|
3,817,801
|
|||||||
Commercial Mortgage Trust, Series 2014-CR14
(b)(d)
|
3.496%
|
|
01/10/24
|
2,000,000
|
1,223,489
|
|||||||
Goldman Sachs Mortgage Securities Trust, Series 2013-GC13
(b)(d)
|
4.065%
|
|
07/10/23
|
3,000,000
|
2,702,013
|
|||||||
Goldman Sachs Mortgage Securities Trust, Series 2013-GC16
(b)(d)
|
5.320%
|
|
11/10/46
|
2,342,405
|
2,185,206
|
|||||||
Goldman Sachs Mortgage Securities Trust, Series 2014-GC22
(b)
|
3.582%
|
|
06/10/47
|
2,840,000
|
1,698,342
|
|||||||
JPMBB Commercial Mortgage Securities Trust, Series 2013-C15
(b)
|
3.500%
|
|
10/15/23
|
2,500,000
|
1,868,451
|
|||||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2013-C16
(b)(d)
|
4.975%
|
|
11/15/23
|
2,117,483
|
2,013,919
|
|||||||
Merrill Lynch Mortgage Trust, Series 2006-C1
(d)
|
5.554%
|
|
05/12/39
|
9,000,000
|
7,733,916
|
|||||||
Merrill Lynch-CFC Commercial Mortgage Trust, Series 2006-2
(b)(d)
|
5.754%
|
|
06/12/46
|
1,064,501
|
1,062,360
|
|||||||
Merrill Lynch-CFC Commercial Mortgage Trust, Series 2006-3
(d)
|
5.554%
|
|
11/12/16
|
2,500,000
|
2,392,127
|
|||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C8
(b)(d)
|
4.062%
|
|
02/15/23
|
3,000,000
|
2,699,407
|
|||||||
Morgan Stanley Capital I Trust, Series 2016-UB11E
(b)(d)
|
2.709%
|
|
08/15/26
|
5,000,000
|
2,591,462
|
|||||||
Wells Fargo Commercial Mortgage Trust, Series 2015-NXS1
(d)
|
4.104%
|
|
05/15/48
|
3,440,000
|
2,817,162
|
|||||||
Wells Fargo Commercial Mortgage Trust, Series 2015-NXS3
(b)
|
3.153%
|
|
09/15/57
|
1,500,000
|
1,009,615
|
|||||||
44,858,894
|
||||||||||||
TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES (Cost $122,661,873)
|
120,201,590
|
Annual Report | October 31, 2016
|
13
|
Principal Real Estate Income Fund
|
Statement of Investments
|
7-Day
Yield
|
Shares
|
Value
(Note 2)
|
||||||||||
SHORT TERM INVESTMENTS (4.04%)
|
||||||||||||
State Street Institutional Treasury Plus Money Market Fund
|
0.220%
|
|
5,301,708
|
$
|
5,301,708
|
|||||||
TOTAL SHORT TERM INVESTMENTS (Cost $5,301,708)
|
5,301,708
|
|||||||||||
TOTAL INVESTMENTS (146.03%) (Cost $191,100,825)
|
$
|
191,680,101
|
||||||||||
Liabilities in Excess of Other Assets (-46.03%)
|
(60,420,183
|
)
|
||||||||||
NET ASSETS (100.00%)
|
$
|
131,259,918
|
(a) |
Non-income producing security.
|
(b) |
Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may normally be sold to qualified institutional buyers in transactions exempt from registration. The total value of Rule 144A securities amounts $34,125,690, which represents approximately 26.00% of net assets as of October 31, 2016.
|
(c) |
Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. As of October 31, 2016, the aggregate market value of those securities was $1,053,317, representing 0.80% of net assets.
|
(d) |
Interest rate will change at a future date. Interest rate shown reflects the rate in effect at October 31, 2016.
|
(e) |
Interest only security.
|
14
|
www.principalcef.com
|
Statement of Assets and Liabilities
|
October 31, 2016
|
ASSETS:
|
||||
Investments,
at
value
|
$
|
191,680,101
|
||
Receivable
for
investments
sold
|
526,117
|
|||
Interest
receivable
|
855,219
|
|||
Dividends
receivable
|
174,562
|
|||
Prepaid
and
other
assets
|
38,099
|
|||
Total
Assets
|
193,274,098
|
|||
LIABILITIES:
|
||||
Loan
payable
(Note
3)
|
60,000,000
|
|||
Interest
due
on
loan
payable
|
128,479
|
|||
Payable
for
investments
purchased
|
1,574,138
|
|||
Payable
to
adviser
|
170,882
|
|||
Payable
to
administrator
|
29,902
|
|||
Payable
to
transfer
agent
|
2,166
|
|||
Payable
for
trustee
fees
|
21,910
|
|||
Other
payables
|
86,703
|
|||
Total
Liabilities
|
62,014,180
|
|||
Net
Assets
|
$
|
131,259,918
|
||
NET
ASSETS
CONSIST
OF:
|
||||
Paid
-
in
capital
|
$
|
131,315,474
|
||
Distributions
in
excess
of
net
investment
income
|
(628,565
|
)
|
||
Accumulated
net
realized
gain
on
investments
and
foreign
currency transactions
|
5,950
|
|||
Net
unrealized
appreciation
on
investments
and
translation
of
assets
and liabilities
denominated
in
foreign
currencies
|
567,059
|
|||
Net
Assets
|
$
|
131,259,918
|
||
PRICING
OF
SHARES:
|
||||
Net
Assets
|
$
|
131,259,918
|
||
Shares
of
beneficial
interest
outstanding
(unlimited
number
of
shares authorized,
no
par
value
per
share)
|
6,899,800
|
|||
Net
asset
value
per
share
|
$
|
19.02
|
||
Cost
of
Investments
|
$
|
191,100,825
|
Annual Report | October 31, 2016
|
15
|
Principal Real Estate Income Fund
|
Statement of Operations
|
INVESTMENT
INCOME:
|
||||
Interest
|
$
|
9,836,771
|
||
Dividends
(net
of
foreign
withholding
tax
of
$156,903)
|
3,189,361
|
|||
Total
Investment
Income
|
13,026,132
|
|||
EXPENSES:
|
||||
Investment
advisory
fees
|
2,016,334
|
|||
Interest
on
loan
|
993,591
|
|||
Administration
fees
|
308,843
|
|||
Transfer
agent
fees
|
28,760
|
|||
Audit
fees
|
31,000
|
|||
Legal
fees
|
74,766
|
|||
Custodian
fees
|
23,247
|
|||
Trustee
fees
|
81,034
|
|||
Printing
fees
|
20,945
|
|||
Insurance
fees
|
41,800
|
|||
Excise
tax
|
62,621
|
|||
Other
|
42,216
|
|||
Total
Expenses
|
3,725,157
|
|||
Net
Investment
Income
|
9,300,975
|
|||
REALIZED
AND
UNREALIZED
GAIN/(LOSS)
ON
INVESTMENTS
AND
FOREIGN CURRENCY:
|
||||
Net
realized
gain/(loss)
on:
|
||||
Investments
|
2,162,498
|
|||
Foreign
currency
transactions
|
(27,353
|
)
|
||
Net
realized
gain
|
2,135,145
|
|||
Net
change
in
unrealized
appreciation/(depreciation)
on:
|
||||
Investments
|
(5,340,153
|
)
|
||
Translation
of
assets
and
liabilities
denominated
in
foreign
currencies
|
(8,638
|
)
|
||
Net
change
in
unrealized
appreciation
|
(5,348,791
|
)
|
||
Net
Realized
and
Unrealized
Loss
on
Investments
and
Foreign
Currency
|
(3,213,646
|
)
|
||
Net
Increase
in
Net
Assets
Resulting
from
Operations
|
$
|
6,087,329
|
16
|
www.principalcef.com
|
For the
Year Ended
October 31, 2016
|
For the
Year Ended
October 31, 2015
|
|||||||
OPERATIONS:
|
||||||||
Net
investment
income
|
$
|
9,300,975
|
$
|
10,066,328
|
||||
Net
realized
gain
on
investments
and
foreign
currency transactions
|
2,135,145
|
859,321
|
||||||
Net
change
in
unrealized
appreciation
on
investments and
translation
of
assets
and
liabilities denominated
in
foreign
currencies
|
(5,348,791
|
)
|
(6,868,461
|
)
|
||||
Net
increase
in
net
assets
resulting
from
operations
|
6,087,329
|
4,057,188
|
||||||
DISTRIBUTIONS
TO
SHAREHOLDERS:
|
||||||||
From
net
investment
income
|
(12,005,652
|
)
|
(11,469,338
|
)
|
||||
From
net
realized
gains
|
–
|
(432,817
|
)
|
|||||
Net
decrease
in
net
assets
from
distributions
to shareholders
|
(12,005,652
|
)
|
(11,902,155
|
)
|
||||
Net
Decrease
in
Net
Assets
|
(5,918,323
|
)
|
(7,844,967
|
)
|
||||
NET
ASSETS:
|
||||||||
Beginning
of
period
|
137,178,241
|
145,023,208
|
||||||
End
of
period
(including
undistributed/(distributions
in excess
of)
net
investment
income
of
$(628,565) and
$212,817)
|
$
|
131,259,918
|
$
|
137,178,241
|
||||
OTHER
INFORMATION:
|
||||||||
Share
Transactions:
|
||||||||
Shares
outstanding
-
beginning
of
period
|
6,899,800
|
6,899,800
|
||||||
Net
increase
in
shares
outstanding
|
–
|
–
|
||||||
Shares
outstanding
-
end
of
period
|
6,899,800
|
6,899,800
|
Annual Report | October 31, 2016
|
17
|
Principal Real Estate Income Fund
|
Statement of Cash Flows
|
CASH
FLOWS
FROM
OPERATING
ACTIVITIES:
|
||||
Net
increase
in
net
assets
resulting
from
operations
|
$
|
6,087,329
|
||
Adjustments
to
reconcile
net
increase
in
net
assets
from
operations
to
net cash
provided
by
operating
activities:
|
||||
Purchases
of
investment
securities
|
(75,469,605
|
)
|
||
Proceeds
from
disposition
of
investment
securities
|
82,558,785
|
|||
Net
purchases
of
short
-
term
investment
securities
|
(3,364,094
|
)
|
||
Net
realized
(gain)/loss
on:
|
||||
Investments
|
(2,162,498
|
)
|
||
Net
change
in
unrealized
(appreciation)/depreciation
on:
|
||||
Investments
|
5,340,153
|
|||
Amortization
of
discounts
and
premiums
|
(814,891
|
)
|
||
Increase
in
interest
receivable
|
(54,112
|
)
|
||
Decrease
in
dividends
receivable
|
7,259
|
|||
Decrease
in
prepaid
and
other
assets
|
16,581
|
|||
Decrease
in
foreign
cash
due
to custodian
|
(181,508
|
)
|
||
Increase
in
interest
due
on
loan payable
|
35,230
|
|||
Decrease
in
payable
to
transfer agent
|
(6,318
|
)
|
||
Decrease
in
payable
to
adviser
|
(4,937
|
)
|
||
Decrease
in
payable
to
administrator
|
(1,804
|
)
|
||
Increase
in
payable
for
trustee fees
|
33
|
|||
Increase
in
other
payables
|
20,049
|
|||
Net
cash
provided
by
operating activities
|
$
|
12,005,652
|
||
CASH
FLOWS
USED
IN
FINANCING
ACTIVITIES:
|
||||
Cash
distributions
paid
|
$
|
(12,005,652
|
)
|
|
Net
cash
used
in
financing
activities
|
$
|
(12,005,652
|
)
|
|
Effect
of
exchange
rates
on
cash
|
$
|
–
|
||
Net
increase
in
cash
|
$
|
–
|
||
Cash,
beginning
balance
|
$
|
–
|
||
Cash,
ending
balance
|
$
|
–
|
||
SUPPLEMENTAL
DISCLOSURE
OF
CASH
FLOW
INFORMATION:
|
||||
Cash
paid
during
the
period
for interest
from
bank
borrowing
|
$
|
958,361
|
18
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Financial Highlights
|
For the
Year Ended
October 31, 2016
|
For the
Year Ended
October 31, 2015
|
For the
Year Ended
October 31, 2014
|
For the Period
June 25, 2013 (Commencement)
to
October 31, 2013
|
|||||||||||||
Net
asset
value
-
beginning
of period
|
$
|
19.88
|
$
|
21.02
|
$
|
19.68
|
$
|
19.10
|
||||||||
Income/(loss)
from investment
operations:
|
||||||||||||||||
Net
investment
income
(a)
|
1.35
|
1.46
|
1.57
|
0.33
|
||||||||||||
Net realized and unrealized gain/(loss) on investments
|
(0.47
|
)
|
(0.87
|
)
|
1.44
|
0.70
|
||||||||||
Total
income
from investment
operations
|
0.88
|
0.59
|
3.01
|
1.03
|
||||||||||||
Less
distributions
to common
shareholders:
|
||||||||||||||||
From
net
investment
income
|
(1.74
|
)
|
(1.67
|
)
|
(1.67
|
)
|
(0.41
|
)
|
||||||||
From
net
realized
gains
|
–
|
(0.06
|
)
|
–
|
–
|
|||||||||||
Total
distributions
|
(1.74
|
)
|
(1.73
|
)
|
(1.67
|
)
|
(0.41
|
)
|
||||||||
Capital
share
transactions:
|
||||||||||||||||
Common
share
offering
costs charged
to
paid
-
in
capital
|
–
|
–
|
–
|
(0.04
|
)
|
|||||||||||
Total
capital
share transactions
|
–
|
–
|
–
|
(0.04
|
)
|
|||||||||||
Net
increase/(decrease)
in net
asset
value
|
(0.86
|
)
|
(1.14
|
)
|
1.34
|
0.58
|
||||||||||
Net
asset
value
-
end
of period
|
$
|
19.02
|
$
|
19.88
|
$
|
21.02
|
$
|
19.68
|
||||||||
Market
price
-
end
of
period
|
$
|
16.62
|
$
|
17.56
|
$
|
19.34
|
$
|
17.76
|
||||||||
Total
Return
(b)
|
5.94
|
%
|
3.61
|
%
|
16.82
|
%
|
5.40
|
%
|
||||||||
Total
Return
-
Market
Price
(b)
|
4.80
|
%
|
(0.54
|
%)
|
19.10
|
%
|
(9.16
|
%)
|
||||||||
Supplemental
Data:
|
||||||||||||||||
Net
assets,
end
of
period
(in thousands)
|
$
|
131,260
|
$
|
137,178
|
$
|
145,023
|
$
|
135,798
|
||||||||
Ratios
to
Average
Net Assets:
|
||||||||||||||||
Total
expenses
|
2.82
|
%
|
2.59
|
%
|
2.59
|
%
|
2.15
|
%
(c)
|
||||||||
Total
expenses
excluding interest
expense
|
2.07
|
%
|
2.08
|
%
|
2.04
|
%
|
1.99
|
%
(c)
|
||||||||
Net
investment
income
|
7.04
|
%
|
7.02
|
%
|
7.74
|
%
|
5.01
|
%
(c)
|
||||||||
Total
expenses
to
average managed
assets
(d)
|
1.94
|
%
|
1.83
|
%
|
1.81
|
%
|
1.93
|
%
(c)
|
Annual Report | October 31, 2016
|
19
|
Principal Real Estate Income Fund
|
Financial Highlights
|
For the
Year Ended
October 31, 2016
|
For the
Year Ended
October 31, 2015
|
For the
Year Ended
October 31, 2014
|
For the Period
June 25, 2013
(Commencement)
to
October 31, 2013
|
|||||||||||||
Portfolio
turnover
rate
|
41
|
%
|
22
|
%
|
18
|
%
|
1
|
%
(e)
|
||||||||
Borrowings
at
End
of
Period
|
||||||||||||||||
Aggregate
Amount Outstanding
(in thousands)
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
$
|
60,000
|
||||||||
Asset
Coverage
Per
$1,000 (in
thousands)
|
$
|
3,188
|
$
|
3,286
|
$
|
3,417
|
$
|
3,263
|
(a)
|
Calculated using average shares throughout the period.
|
(b)
|
Total investment return is calculated assuming a purchase of common share at the opening on the first day and a sale at closing on the last day of each period reported. For purposes of this calculation, dividends and distributions, if any, are assumed to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment returns do not reflect brokerage commissions, if any. Periods less than one year are not annualized.
|
(c)
|
Annualized.
|
(d)
|
Average managed assets represent net assets applicable to common shares plus average amount of borrowings during the period.
|
(e)
|
Not annualized.
|
20
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Annual Report | October 31, 2016
|
21
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
22
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Level 1 –
|
Unadjusted quoted prices in active markets for identical investments, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date;
|
Level 2 –
|
Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and
|
Level 3 –
|
Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.
|
Investments in Securities at Value*
|
Level 1 -
Quoted Prices
|
Level 2 -
Other Significant
Observable Inputs
|
Level 3 -
Significant
Unobservable
Inputs
|
Total
|
||||||||||||
Common Stocks
|
$
|
66,176,803
|
$
|
–
|
$
|
–
|
$
|
66,176,803
|
||||||||
Commercial Mortgage Backed Securities
|
–
|
120,201,590
|
–
|
120,201,590
|
||||||||||||
Short Term Investments
|
5,301,708
|
–
|
–
|
5,301,708
|
||||||||||||
Total
|
$
|
71,478,511
|
$
|
120,201,590
|
$
|
–
|
$
|
191,680,101
|
*
|
See Statement of Investments for industry classifications.
|
Annual Report | October 31, 2016
|
23
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
24
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Annual Report | October 31, 2016
|
25
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Average Interest Rate | 1.604% |
Average Outstanding Loan Payable | $60,000,000 |
26
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Ex-Date
|
Record Date
|
Payable Date
|
Rate (per share)
|
November 17, 2016
|
November 21, 2016
|
November 30, 2016
|
$0.145
|
December 15, 2016
|
December 19, 2016
|
December 28, 2016
|
$0.145
|
Annual Report | October 31, 2016
|
27
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Purchases
|
Sales
|
$76,968,620
|
$81,603,045
|
For the Year Ended October 31, 2016 | For the Year Ended October 31, 2015 | |||||||
Ordinary Income
|
$
|
12,005,652
|
$
|
11,469,338
|
||||
Long
-
Term Capital Gain
|
–
|
432,817
|
||||||
Total
|
$
|
12,005,652
|
$
|
11,902,155
|
28
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
Paid-in capital
|
Distributions in
excess of
net
investment
income
|
Accumulated net
realized gain on
investments and
foreign currency
transactions
|
||||||||||
Principal Real Estate Income Fund | $ | (55,499 | ) | $ | 1,863,295 | $ | (1,807,796 | ) |
Principal Real Estate Income Fund
|
||||
Undistributed Ordinary Income
|
$
|
243,944
|
||
Unrealized Depreciation
|
(299,107
|
)
|
||
Cumulative Effect of Other Timing Difference
|
(393
|
)
|
||
Total
|
$
|
(55,556
|
)
|
Principal Real Estate Income Fund | ||||
Cost of investments for income tax purposes
|
$
|
191,966,991
|
||
Gross appreciation on investments (excess of value over tax cost)
|
$
|
6,620,531
|
||
Gross depreciation on investments (excess of tax cost over value)
|
(6,907,421
|
)
|
||
Net depreciation of foreign currency and derivatives
|
(12,217
|
)
|
||
Net unrealized depreciation on investments
|
$ | (299,107 | ) |
Annual Report | October 31, 2016
|
29
|
Principal Real Estate Income Fund
|
Notes to Financial Statements
|
30
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Dividend Reinvestment Plan |
Annual Report | October 31, 2016
|
31
|
Principal Real Estate Income Fund
|
Dividend Reinvestment Plan |
32
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
Name and
Year of
Birth
|
Position(s)
Held with
Registrant
|
Term of
Office and
Length of
Time
Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
(1)
Overseen
by Trustee
|
Other
Directorships
(2)
Held by Trustee
During Past 5
Years
|
Rick A. Pederson (1952)
|
Trustee
|
Term expires in 2018. Has served since April 2013.
|
President, Foundation Properties, Inc. (a real estate investment management company), 1994 - present; Advisory Board member, Bow River Capital Partners (private equity management), 2003 - present; Advisor, Pauls Corporation (real estate investment management and development), 2008 - present; Chairman, Ross Consulting Group (real estate consulting services) 1983-2013; Advisory Board, Neenan Company (construction services) 2002-present; Board Member, Prosci Inc. (private business services) 2013-present; Board Member, Citywide Banks (Colorado community bank) 2014-present; Board Member, Strong-Bridge Consulting, 2015-present; Director, National Western Stock Show (not for profit) 2010 - present; Director, History Colorado (not for profit) 2015-present.
|
22
|
Westcore Trust (12 funds); ALPS ETF Trust (21 funds)
|
Annual Report | October 31, 2016
|
33
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
Name and
Year of
Birth
|
Position(s)
Held with
Registrant
|
Term of
Office and
Length of
Time
Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
(1)
Overseen
by Trustee
|
Other
Directorships
(2)
Held by Trustee
During Past 5
Years
|
Jerry G. Rutledge (1944)
|
Trustee
|
Term expires in 2017. Has served since April 2013.
|
President and owner of Rutledge’s Inc. (retail clothing business); Regent of the University of Colorado (1994– 2007). Director, University of Colorado Hospital (2007–present).
|
14
|
Clough Global Allocation Funds (1 fund); Clough Global Equity Fund (1 fund); Clough Global Opportunities Fund (1 fund); Financial Investors Trust (31 funds)
|
Ernest J. Scalberg (1945)
|
Trustee
|
Term expires in 2019. Has served since April 2013.
|
Formerly the Research Professor and Director of the GLOBE Center, Monterey Institute of International Studies (2009 – 2014); Associate Vice President for External Programs and Dean of Fisher Graduate School of International Business (2001– 2009); Director, Advisor or Trustee to numerous non-profit organizations (1974– present); and Chairman of the Board of the Foundation, International University in Geneva (IUG), Switzerland (2005– present).
|
1
|
The Select Sector SPDR Trust (11 funds).
|
34
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
Name and
Year of
Birth
|
Position(s)
Held with
Registrant
|
Term of
Office and
Length of
Time
Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
(1)
Overseen
by Trustee
|
Other
Directorships
(2)
Held by Trustee
During Past 5
Years
|
Thomas A. Carter
(5)
(1966)
|
Chairman, Trustee and President
|
Term expires in 2017. Has served since August 2012.
|
Mr. Carter joined ALPS in 1994 and is currently President and Director of the Adviser, and APSD, and Executive Vice President and Director of ALPS, ADI and AHI. Because of his position with AHI, ALPS, ADI, the Adviser and APSD, Mr. Carter is deemed an affiliate of the Fund as defined under the 1940 Act. Before joining ALPS, Mr. Carter was with Deloitte & Touche LLP, where he worked with a diverse group of clients, primarily within the financial services industry. Mr. Carter is a Certified Public Accountant and received his Bachelor of Science in Accounting from the University of Colorado at Boulder.
|
33
|
ALPS Variable Investment Trust (10 funds) and ALPS ETF Trust (21 funds) and RiverNorth Opportunities Fund, Inc. (1 fund)
|
Annual Report | October 31, 2016
|
35
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
36
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
Name and
Year of
Birth
|
Position(s)
Held with
Registrant
|
Term of
Office and
Length of
Time
Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
(1)
Overseen
by Trustee
|
Other
Directorships
(2)
Held by Trustee
During Past 5
Years
|
Andrea E. Kuchli (1985)
|
Secretary
|
Has served since August 2015
|
Ms. Kuchli has been Vice President and Senior Counsel of ALPS Fund Services, Inc. and the Adviser since February 2015. Prior to that Ms. Kuchli served as an Associate Attorney with Davis Graham & Stubbs LLP from April 2014 to February 2015, and as an Associate Attorney with Dechert LLP from September 2011 to April 2014. Ms. Kuchli is also Secretary of the Elevation ETF Trust, Assistant Secretary of the James Advantage Funds (May 2015 – present), and Assistant Secretary of the ALPS ETF Trust.
|
N/A
|
N/A
|
Abigail J. Murray (1975)
|
Assistant Secretary
|
Has served since September 2016
|
Ms. Murray joined ALPS in April 2015. She is currently Vice President and Senior Counsel of ALPS. Prior to joining ALPS, Ms. Murray was an Attorney and Managing Member at Murray & Rouvina PLC from 2014 to 2015 and an Associate with Vedder Price P.C. from 2007 to 2014. Ms. Murray is also the Secretary of ALPS ETF Trust, Clough Global Allocation Fund, Clough Global Equity Fund, Clough Global Opportunities Fund, Clough Funds Trust, The Caldwell & Orkin Funds, Inc. and RiverNorth Opportunities Fund, Inc. and Assistant Secretary of Elevation ETF Trust.
|
N/A
|
N/A
|
Annual Report | October 31, 2016
|
37
|
Principal Real Estate Income Fund
|
Trustees & Officers
|
Name and
Year of
Birth
|
Position(s)
Held with
Registrant
|
Term of
Office and
Length of
Time
Served
|
Principal Occupation(s)
During Past 5 Years
|
Number of
Funds in
Fund
Complex
(1)
Overseen
by Trustee
|
Other
Directorships
(2)
Held by Trustee
During Past 5
Years
|
Andrew Meloni (1969)
|
Assistant Treasurer
|
Has served since September 2016
|
Mr. Meloni is a Fund Controller for ALPS Fund Services, Inc. Mr. Meloni joined ALPS in 2007 and because of his position with ALPS, he is deemed an affiliate of the Fund as defined under the 1940 Act. Mr. Meloni is also Assistant Treasurer to the Liberty All-Star Equity Fund, Liberty All-Star Growth Fund, Inc. and RiverNorth Opportunities Fund, Inc.
|
N/A
|
N/A
|
(1) |
The term “Fund Complex” means two or more registered investment companies that:
|
(a) |
hold themselves out to investors as related companies for purposes of investment and investor services; or
|
(b) |
have a common investment adviser or that have an investment adviser that is an affiliated person of the investment adviser of any of the other registered investment companies.
|
(2) |
The numbers enclosed in the parentheticals represent the number of funds overseen in each respective directorship held by the Trustee. With respect to ALPS ETF Trust and ALPS Variable Investment Trust, all funds are included in the total funds in the Fund Complex column. With respect to Financial Investors Trust, 13 funds are included in the total funds in the Fund Complex column.
|
(3) |
“Interested Trustees” refers to those Trustees who constitute “interested persons” of a Fund as defined in the 1940 Act.
|
(4) |
Officers are elected annually. Each officer will hold such office until a successor has been elected by the Board.
|
(5) |
Mr. Carter is considered to be an “Interested Trustee” because of his affiliation with the Adviser and ALPS.
|
38
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Additional Information
|
Annual Report | October 31, 2016
|
39
|
Principal Real Estate Income Fund
|
Additional Information
|
● |
Only such information received from customers, through application forms or otherwise, and information about customers’ Fund transactions will be collected.
|
● |
None of such information about customers (or former customers) will be disclosed to anyone, except as permitted by law (which includes disclosure to employees necessary to service your account).
|
● |
Policies and procedures (including physical, electronic and procedural safeguards) are in place and designed to protect the confidentiality and properly disposal of such information.
|
● |
The Fund does not currently obtain consumer information. If the Fund were to obtain consumer information at any time in the future, it would employ appropriate procedural safeguards that comply with federal standards to protect against unauthorized access to and properly dispose of consumer information.
|
40
|
www.principalcef.com
|
Principal Real Estate Income Fund
|
Additional Information
|
Annual Report | October 31, 2016
|
41
|
Item 2. |
Code of Ethics.
|
(a) |
The Registrant, as of the end of the period covered by the report, has adopted a Code of Ethics that applies to the Registrant’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller or any persons performing similar functions on behalf of the Registrant.
|
(b) |
Not Applicable.
|
(c) |
During the period covered by this report, no amendments were made to the provisions of the Code of Ethics referenced in 2 (a) above.
|
(d) |
During the period covered by this report, no implicit or explicit waivers to the provision of the Code of Ethics referenced in 2 (a) above were granted.
|
(e) |
Not Applicable.
|
(f) |
The Registrant’s Code of Ethics is attached as Exhibit 12.A.1 hereto.
|
Item 3. |
Audit Committee Financial Expert.
|
Item 4. |
Principal Accountant Fees and Services.
|
(a) |
Audit Fees
: The aggregate fees billed for professional services rendered by Cohen & Company, Ltd (“Cohen”) for each of the last two fiscal years ended October 31, 2016 and October 31, 2015 for the audit of the Registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $28,000 in 2016 and $28,000 in 2015.
|
(b) |
Audit-Related Fees
: The aggregate fees billed in each of the last two fiscal years for assurance and related services by Cohen that are reasonably related to the performance of the audit of the Registrant's financial statements and are not reported under paragraph (a) of this Item were $0 in 2016 and $0 in 2015.
|
(c) |
Tax Fees
: The aggregate fees billed in
each of the last two fiscal years
for professional services rendered by Cohen for tax compliance, tax advice, and tax planning were $3,000 in 2016 and $3,000 in 2015. These fees are comprised of fees relating income tax return preparation fees, excise tax return preparation fees and review of dividend distribution calculation fees.
|
(d) |
All Other Fees
: The aggregate fees billed in each of the last two fiscal years for products and services provided by Cohen, other than the services reported in paragraphs (a) through (c) of this Item were $0 in 2016 and $0 in 2015.
|
(e)(1) |
Audit Committee Pre-Approval Policies and Procedures
: All services to be performed by the Registrant's principal auditors must be pre-approved by the Registrant's Audit Committee or by the Audit Committee’s designee pursuant to the Audit Committee’s Pre-Approval Policies and Procedures.
|
(e)(2) |
No services described in paragraphs (b) through (d) were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
|
(f) |
Not applicable.
|
(g) |
The aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, and rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant for each of the last two fiscal years of the Registrant were $3,000 in 2016 and $0 for 2015.
|
(h) |
Not applicable.
|
Item 5. |
Audit Committee of Listed Registrants.
|
Item 6. |
Schedule of Investments.
|
(a) |
Schedule of Investments is included as part of the Report to Shareholders filed under Item 1 of this form.
|
(b) |
Not applicable to the Registrant.
|
Item 7. |
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
|
Item 8. |
Portfolio Managers of Closed-End Management Investment Companies.
|
(a)(1) |
Portfolio Managers
|
Portfolio Managers Name
|
Title
|
Length of Service
|
Business Experience: 5 Years
|
|||
Marc Peterson, CFA
|
Portfolio Manager
|
Since Inception
|
Managing Director, Portfolio Management – Principal Real Estate Investors, LLC (“PrinREI”)
|
|||
Kelly D. Rush, CFA
|
Portfolio Manager
|
Since Inception
|
Head of Global Real Estate Securities – PrinREI
|
(a)(2) |
As of October 31, 2016, the Portfolio Managers listed above are also responsible for the day-to-day management of the following:
|
Portfolio Managers Name
|
Registered Investment Companies
(1)
|
Other Pooled Investment Vehicles
(2)
|
Other Accounts
(3)
|
|||
Marc Peterson, CFA
|
4 Accounts
$1,924.5
million Total Assets
|
2 Accounts
$55.4
million
Total Assets
|
15 Accounts
$6,985.6
million Total Assets
|
|||
Kelly D. Rush, CFA
|
7 Accounts
$
7,302.2
million Total Assets
|
5 Accounts
$980.1
million Total Assets
|
48 Accounts
$4,823.0
million Total Assets
|
(1) |
Registered Investment Companies include all mutual funds and closed-end funds. For Registered Investment Companies, assets represent net assets of all open-end investment companies and gross assets of all closed-end investment companies.
|
(2) |
Other Pooled Investment Vehicles include, but are not limited to, securities of issuers exempt from registration under Section 3(c) of the 1940 Act, such as hedge funds.
|
(3) |
Other Accounts include, but are not limited to, individual managed accounts, separate accounts, institutional accounts, pension funds and collateralized bond obligations.
|
(a)(3) |
Compensation of Portfolio Managers and Material Conflicts of Interest
|
(a)(4) |
Dollar Range of Securities Owned as of October 31, 2016.
|
Portfolio Managers
|
Dollar Range of the Registrant’s Securities Owned by the Portfolio Managers
|
||
Marc Peterson, CFA
|
$1 - $10,000
|
||
Kelly D. Rush, CFA
|
None |
Item 9. |
Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
|
Item 10. |
Submission of Matters to a Vote of Security Holders.
|
Item 11. |
Controls and Procedures.
|
(a) |
The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
|
(b) |
There was no change in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
|
Item 12. |
Exhibits.
|
(a)(1) |
The Code of Ethics that applies to the Registrant’s Principal Executive Officer and Principal Financial Officer is attached hereto as exhibit EX‑99.12.A.1.
|
(a)(2) |
The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as exhibit EX‑99.CERT.
|
(a)(3) |
Not applicable.
|
(b) |
A certification for the Registrant’s Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as exhibit EX‑99.906CERT.
|
(c) |
The Proxy Voting Policies and Procedures are incorporated by reference to Exhibit EX-99. Item 7 to the Registrant’s Certified Shareholder Report on Form N-CSR, File No. 811-22742, filed on December 30, 2015.
|
By:
|
/s/ Thomas A. Carter
|
|
Thomas A. Carter
|
||
President (Principal Executive Officer)
|
||
Date:
|
January 9, 2017
|
By:
|
/s/ Thomas A. Carter
|
|
Thomas A. Carter
|
||
President (Principal Executive Officer)
|
||
Date:
|
January 9, 2017
|
By:
|
/s/ Patrick D. Buchanan
|
|
Patrick D. Buchanan
|
||
Treasurer (Principal Financial Officer)
|
||
Date:
|
January 9, 2017
|
I. |
P
URPOSE
OF THE
C
ODE
|
• |
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
|
• |
full, fair, accurate, timely, and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in any other public communications by the Fund;
|
• |
compliance with applicable governmental laws, rules and regulations;
|
• |
the prompt internal reporting of violations of the Code to the appropriate persons as set forth in the Code; and
|
• |
accountability for adherence to the Code.
|
II. |
C
OVERED
P
ERSONS
|
III. |
H
ONEST AND
E
THICAL
C
ONDUCT
|
A. |
Honesty, Diligence and Professional Responsibility
|
• |
with honesty, diligence, and a commitment to professional and ethical responsibility;
|
• |
carefully, thoroughly and in a timely manner; and
|
• |
in conformity with applicable professional and technical standards.
|
B. |
Objectivity/Avoidance of Undisclosed Conflicts of Interest
|
• |
use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;
|
• |
cause the Fund to take action, or fail to take actions, for the individual personal benefit of the Covered Officer rather than the benefit of the Fund; or
|
• |
use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.
|
C. |
Preparation of Financial Statements
|
• |
making, or permitting or directing another to make, materially false or misleading entries in the Fund’s financial statements or records;
|
• |
failing to correct the Fund’s financial statements or records that are materially false or misleading when he or she has the authority to record an entry; and
|
• |
signing, or permitting or directing another to sign, a document containing materially false or misleading financial information.
|
• |
The Covered Officer should consider whether (i) the entry or the failure to record a transaction in the records, or (ii) the financial statement presentation or the nature or omission of disclosure in the financial statements, as proposed by the supervisor, represents the use of an acceptable alternative and does not materially misrepresent the facts or result in an omission of a material fact. If, after appropriate research or consultation, the Covered Officer concludes that the matter has authoritative support and/or does not result in a material misrepresentation, the Covered Officer need do nothing further.
|
• |
If the Covered Officer concludes that the financial statements or records could be materially misstated as a result of the supervisor’s determination, the Covered Officer should follow the reporting procedures set forth in Section VI of this Code.
|
IV. |
F
ULL
,
F
AIR
,
A
CCURATE
,
T
IMELY AND
U
NDERSTANDABLE
D
ISCLOSURE
|
V. |
C
OMPLIANCE WITH
A
PPLICABLE
L
AWS
,
R
ULES AND
R
EGULATIONS
|
VI. |
R
EPORTING AND
A
CCOUNTABILITY
|
A. |
Any Covered Officer who knows of any violation of this Code or who questions whether a situation, activity or practice is acceptable must immediately report such practice to the Fund’s Audit Committee. The Audit Committee shall take appropriate action to investigate any reported potential violations. If, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action. Any matter that the Audit Committee believes is a violation will be reported to the Chairman of the Board of Trustees. The Audit Committee shall respond to the Covered Officer within a reasonable period of time.
|
B. |
If the Covered Officer is not satisfied with the response of the Audit Committee, the Covered Officer shall report the matter to the Chairman of the Board of Trustees. If the Chairman is unavailable, the Covered Officer may report the matter to any other member of the Board of Trustees. The person receiving the report shall consider the matter, refer it to the full Board of Trustees if he or she deems appropriate, and respond to the Covered Officer within a reasonable amount of time. If the Board of Trustees concurs that a violation has occurred, it will consider appropriate action, which may include review of and appropriate modifications to applicable policies and procedures or notification to appropriate personnel of the investment adviser or its board.
|
C. |
If the Board of Trustees determines that a Covered Officer violated this Code, failed to report a known or suspected violation of this Code, or provided intentionally false or malicious information in connection with an alleged violation of this Code, the Board of Trustees may take disciplinary
action against any such Covered Officer to the extent the Board of Trustees deems appropriate. No Covered Officer will be disciplined for reporting a concern in good faith.
|
VII. |
D
ISCLOSURE OF THIS
C
ODE
|
• |
Filing a copy of this Code as an exhibit to the Fund’s annual report on Form NCSR;
|
• |
Posting the text of this Code on the Fund’s Internet website and disclosing, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted this Code on its Internet website; or
|
• |
Providing an undertaking in the Fund’s most recent report on Form N-CSR to provide a copy of this Code to any person without charge upon request, and explaining the manner in which such a request may be made.
|
VIII. |
W
AIVERS
|
IX. |
A
MENDMENTS
|
X. |
C
ONFIDENTIALITY
|
|
|
|
Officer Name (Please Print)
|
Officer Signature
|
|
|
||
Date
|
1. |
I have reviewed this report on Form N-CSR of Principal Real Estate Income Fund;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);
|
a. |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b. |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
|
/s/ Thomas A. Carter
|
|
Thomas A. Carter
|
||
President (Principal Executive Officer)
|
||
Date:
|
January 9, 2017
|
1. |
I have reviewed this report on Form N-CSR of Principal Real Estate Income Fund;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
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a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
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d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);
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a. |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
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b. |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Patrick D. Buchanan
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Patrick D. Buchanan
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||
Treasurer (Principal Financial Officer)
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||
Date:
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January 9, 2017
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(i) |
the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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(ii) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated:
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January 9, 2017
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|
By:
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/s/ Thomas A. Carter
|
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Thomas A. Carter
|
||
President (Principal Executive Officer)
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(i) |
the Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(ii) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated:
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January 9, 2017
|
|
By:
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/s/ Patrick D. Buchanan
|
|
Patrick D. Buchanan
|
||
Treasurer (Principal Financial Officer)
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||