Fund Description: Principal U.S. Small Cap Index ETF is an exchange-traded index fund or Index ETF which is a separate investment portfolio of the Principal Exchange-Traded Funds, an open-end investment management company. INVESTMENT OBJECTIVE: The Principal U.S. Small Cap Index ETF seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq U.S. Small Cap Select Leaders Index. INDEX DESCRIPTION: The Nasdaq U.S. Small Cap Select Leaders Index is designed to provide exposure to equity securities (including growth and value stock) of U.S. small-capitalization companies within the Nasdaq US Small Cap Index that exhibit potential for high degrees of sustainable shareholder yield, pricing power and strong momentum, while adjusting for liquidity and quality as determined by a quantitative model. The Index methodology ranks securities according to three factors: sustainable shareholder yield; pricing power; and momentum. Once the three individual ranks are determined, they are normalized by industry so that the results are sector-neutral. The ranks are then averaged to determine eligibility for inclusion in the Index. The Index is rebalanced semi-annually. FUND STRATEGY: Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the Index at the time of purchase. The Fund employs a passive investment approach designed to attempt to track the performance of the Index. In seeking its objective, the Fund typically employs a full replication strategy which involves investing in all the securities that make up the Index, in the same approximate proportions as the Index. The Fund can, however, use a sampling methodology to purchase a subset of the securities in the Index in an effort to hold a portfolio of securities with generally the same risk and return characteristics of the Index. The Fund can also invest in securities not included in the Index that the Sub-Advisor believes will help the fund track the Index. FUND MANAGEMENT: Principal Management Corp. serves as the investment adviser to the Fund. Principal Global Investors, LLC serves as the sub-adviser to the Fund.