THE SECURITIES ACT OF 1933 | X |
Post-Effective Amendment No. 95 | X |
THE INVESTMENT COMPANY ACT OF 1940 | X |
Amendment No. 97 | X |
(Check Appropriate Box or Boxes) | |
Name and Address of Agent for Service: |
Britney L. Schnathorst |
Principal Financial Group |
Des Moines, IA 50392 |
____ | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
SIGNATURES | |
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Fund certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the city of Des Moines and State of Iowa, on the 24th day of June, 2020. | |
Principal Exchange-Traded Funds | |
(Registrant) | |
/s/ K. Bhatia _____________________________________ K. Bhatia President and Chief Executive Officer | |
Attest: /s/ Beth Wilson ______________________________________ Beth Wilson Vice President and Secretary | |
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. | |||
Signature | Title | Date | |
/s/ K. Bhatia __________________________ K. Bhatia | President and Chief Executive Officer (Principal Executive Officer) | June 24, 2020 | |
/s/ T. W. Bollin __________________________ T. W. Bollin | Chief Financial Officer (Principal Financial Officer) | June 24, 2020 | |
/s/ S. L. Reece __________________________ S. L. Reece | Vice President and Controller (Controller) | June 24, 2020 | |
(E. Ballantine)* __________________________ E. Ballantine | Trustee | June 24, 2020 | |
(L. T. Barnes)* __________________________ L. T. Barnes | Trustee | June 24, 2020 | |
(C. Damos)* __________________________ C. Damos | Trustee | June 24, 2020 | |
(T. M. Dunbar)* __________________________ T. M. Dunbar | Trustee | June 24, 2020 | |
(M. A. Grimmett)* __________________________ M. A. Grimmett | Trustee | June 24, 2020 | |
(P. G. Halter)* __________________________ P. G. Halter | Trustee | June 24, 2020 | |
(F. S. Hirsch)* __________________________ F. S. Hirsch | Trustee | June 24, 2020 | |
(T. Huang)* __________________________ T. Huang | Trustee | June 24, 2020 | |
(K. McMillan)* __________________________ K. McMillan | Trustee | June 24, 2020 | |
(E. A. Nickels)* __________________________ E. A. Nickels | Trustee | June 24, 2020 | |
(M. M. VanDeWeghe)* __________________________ M. M. VanDeWeghe | Trustee | June 24, 2020 | |
/s/ A. U. Shaikh | June 24, 2020 | ||
A. U. Shaikh | |||
Assistant Counsel | |||
* Pursuant to Power of Attorney appointing A. U. Shaikh Previously Filed as Ex-99(j)(ii) on February 6, 2015 (Accession No. 0001572661-15-000008), for E. A. Nickels on October 27, 2015 (Accession No. 0001572661-15-000049), for P. G. Halter on January 19, 2018 (Accession No. 0001572661-18-000005), for M. M. VanDeWeghe on 08/31/2018 (Accession No. 0001572661-18-000128), and for T. M. Dunbar on 07/03/2019 (Accession No. 0001572661-19-000155). | |||
'[59H6'(*-LRO_ <5
MZE10 5S_ ,0_A1X7^+FCC3_%?AO0?$U@I+"VU;3XKR$$]PLBL,_A7044 >5>
M%/V%O@MX&UB/4-(^$_P[T^^B8-'<1>'[42Q'U5MF5/TQ7JM%% !1110 4444
M %%%% !7XW_\%UO^"
| Label | Element | Value | |||||
|---|---|---|---|---|---|---|---|
| Prospectus: | rr_ProspectusTable | ||||||
| Document Type | dei_DocumentType | 485BPOS | |||||
| Document Period End Date | dei_DocumentPeriodEndDate | Jun. 30, 2020 | |||||
| Entity Registrant Name | dei_EntityRegistrantName | Principal Exchange-Traded Funds | |||||
| Central Index Key | dei_EntityCentralIndexKey | 0001572661 | |||||
| Amendment Flag | dei_AmendmentFlag | false | |||||
| Document Creation Date | dei_DocumentCreationDate | Jun. 12, 2020 | |||||
| Document Effective Date | dei_DocumentEffectiveDate | Jun. 15, 2020 | |||||
| Prospectus Date | rr_ProspectusDate | Jun. 15, 2020 | |||||
| Principal Exchange-Traded Funds | Principal Spectrum Tax-Advantaged Dividend Active ETF | |||||||
| Prospectus: | rr_ProspectusTable | ||||||
| Risk/Return [Heading] | rr_RiskReturnHeading | PRINCIPAL SPECTRUM TAX-ADVANTAGED DIVIDEND ACTIVE ETF | |||||
| Objective [Heading] | rr_ObjectiveHeading | Objective: | |||||
| Objective, Primary [Text Block] | rr_ObjectivePrimaryTextBlock | The Fund seeks to provide current income. |
|||||
| Expense [Heading] | rr_ExpenseHeading | Fees and Expenses of the Fund | |||||
| Expense Narrative [Text Block] | rr_ExpenseNarrativeTextBlock | This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund ("Shares"). Investors may pay brokerage commissions on their purchases and sales of Shares, which are not reflected in the table or the example below. |
|||||
| Operating Expenses Caption [Text] | rr_OperatingExpensesCaption | Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | |||||
| Portfolio Turnover [Heading] | rr_PortfolioTurnoverHeading | Portfolio Turnover | |||||
| Portfolio Turnover [Text Block] | rr_PortfolioTurnoverTextBlock | The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. This is a new fund and does not yet have a portfolio turnover rate to disclose. |
|||||
| Expense Exchange Traded Fund Commissions [Text] | rr_ExpenseExchangeTradedFundCommissions | Investors may pay brokerage commissions on their purchases and sales of Shares, which are not reflected in the table or the example below. | |||||
| Expense Example [Heading] | rr_ExpenseExampleHeading | Example | |||||
| Expense Example Narrative [Text Block] | rr_ExpenseExampleNarrativeTextBlock | This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. |
|||||
| Expense Example by, Year, Caption [Text] | rr_ExpenseExampleByYearCaption | The Example assumes that you invest $10,000 in the Fund for the time periods indicated. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: | |||||
| Strategy [Heading] | rr_StrategyHeading | Principal Investment Strategies | |||||
| Strategy Narrative [Text Block] | rr_StrategyNarrativeTextBlock | Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in dividend-paying securities at the time of purchase. Such securities include, without limitation, preferred securities and capital securities of U.S. and non-U.S. issuers. The Fund invests significantly in securities that, at the time of issuance, are eligible to pay dividends that qualify for favorable U.S. federal income tax treatment, such as dividends treated as “qualified dividend income” (“QDI”) or qualified dividends from real estate investment trusts (“REITS”). However, the Fund also invests in securities that are not eligible for such treatment. Examples of preferred securities in which the Fund invests include preferred stock, certain depositary receipts, REITs, and various types of junior subordinated debt. Such preferred securities generally pay fixed and floating rate distributions and are junior to all forms of the company's senior debt, but may have "preference" over common stock in the payment of distributions and the liquidation of a company's assets. Capital securities are securities issued by financial institutions and other corporate issuers for purposes of satisfying regulatory capital requirements of obtaining agency credit. Examples of capital securities in which the Fund invests include subordinated debt securities, certain preferred securities, and contingent convertible securities (“Cocos”). Cocos are hybrid debt securities typically issued by non-US banking institutions that have contractual equity conversion or principal write-down features that are triggered by regulatory capital thresholds or regulatory actions calling into question the issuing banking institution’s continued viability as a going-concern if the conversion trigger were not exercised. The Fund defines "dividend-paying securities" to include preferred and capital securities that make payments and distributions that are treated as dividends for U.S. federal income tax purposes. The Fund invests in investment grade securities and in below investment grade securities (sometimes called “high yield” or "junk"). The Fund is not managed to a particular maturity or duration. The Fund concentrates its investments (invests more than 25% of its net assets) in securities in one or more industries (i.e., banking, insurance and commercial finance) within the financial services sector. |
|||||
| Risk [Heading] | rr_RiskHeading | Principal Risks | |||||
| Risk Narrative [Text Block] | rr_RiskNarrativeTextBlock | The value of your investment in the Fund changes with the value of the Fund's investments. Many factors affect that value, and it is possible to lose money by investing in the Fund. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The principal risks of investing in the Fund are listed below in alphabetical order and not in order of significance. Capital Securities Risk. In addition to the risks associated with other types of preferred securities and fixed-income securities, investing in capital securities includes the risk that the value of securities may decline in response to changes in legislation and regulations applicable to financial institutions and financial markets, increased competition, adverse changes in general or industry-specific economic conditions, or unfavorable interest rates. Contingent Convertible Securities Risk. In addition to the general risks associated with fixed-income securities and convertible securities, the risks of investing in contingent convertible securities (“CoCos”) include the risk that a CoCo may be written down, written off or converted into an equity security when the issuer’s capital ratio falls below a specified trigger level, or in a regulator’s discretion depending on the regulator’s judgment about the issuer’s solvency prospects. Due to these features, CoCos may have substantially greater risk than other securities in times of financial stress. If the trigger level is breached, the issuer’s decision to write down, write off or convert a CoCo may result in the fund's complete loss on an investment in CoCos with no chance of recovery even if the issuer remains in existence. Dividend-Oriented Stocks Risk. Companies that have paid regular dividends to shareholders may decrease or eliminate dividend payments in the future. For example, a sharp rise in interest rates or economic downturn could cause a company to unexpectedly reduce or eliminate its dividend. Additionally, the Fund’s performance during a broad market advance could suffer because dividend-paying securities may not experience the same capital appreciation as non-dividend paying securities. Fixed-Income Securities Risk. Fixed-income securities are subject to interest rate, credit quality, and liquidity risks. The market value of fixed-income securities generally declines when interest rates rise, and increased interest rates may adversely affect the liquidity of certain fixed-income securities. Moreover, an issuer of fixed-income securities could default on its payment obligations due to increased interest rates or for other reasons. Foreign Securities Risk. The risks of foreign securities include loss of value as a result of: political or economic instability; nationalization, expropriation or confiscatory taxation; settlement delays; and limited government regulation (including less stringent reporting, accounting, and disclosure standards than are required of U.S. companies). High Yield Securities Risk. High yield fixed-income securities (commonly referred to as "junk bonds") are subject to greater credit quality risk than higher rated fixed-income securities and should be considered speculative. Industry Concentration Risk. A fund that concentrates investments in a particular industry or group of industries has greater exposure than other funds to market, economic and other factors affecting that industry or group of industries.
Market Trading Risks. The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, and disruption to the activities of market makers, authorized participants, or other participants and in the creation/redemption process of the Fund. ANY OF THESE FACTORS MAY LEAD TO THE FUND’S SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV. Portfolio Duration Risk. Portfolio duration is a measure of the expected life of a fixed-income security and its sensitivity to changes in interest rates. The longer a fund's average portfolio duration, the more sensitive the fund will be to changes in interest rates, which means funds with longer average portfolio durations may be more volatile than those with shorter durations. Preferred Securities Risk. Because preferred securities have a lower priority claim on assets or earnings than senior bonds and other debt instruments in a company's capital structure, they are subject to greater credit and liquidation risk than more senior debt instruments. In addition, preferred securities are subject to other risks, such as limited or no voting rights, deferring or skipping distributions, interest rate risk, and redeeming the security prior to any stated maturity date. Real Estate Investment Trusts ("REITs") Risk. In addition to risks associated with investing in real estate securities, REITs are dependent upon management skills, are not diversified, and are subject to heavy cash flow dependency, risks of default by borrowers, and self-liquidation. Investment in REITs also involves risks similar to risks of investing in small market capitalization companies, such as limited financial resources, less frequent and limited volume trading, and may be subject to more abrupt or erratic price movements than larger company securities. A REIT could fail to qualify for tax-free pass-through of income under the Internal Revenue Code. Fund shareholders will indirectly bear their proportionate share of the expenses of REITs in which the fund invests. Real Estate Securities Risk. Investing in real estate securities subjects the fund to the risks associated with the real estate market (which are similar to the risks associated with direct ownership in real estate), including declines in real estate values, loss due to casualty or condemnation, property taxes, interest rate changes, increased expenses, cash flow of underlying real estate assets, regulatory changes (including zoning, land use and rents), and environmental problems, as well as to the risks related to the management skill and creditworthiness of the issuer. Redemption and Large Transaction Risk. Ownership of the fund's shares may be concentrated in one or a few large investors (such as funds of funds, institutional investors, and asset allocation programs) that may redeem or purchase shares in large quantities. These transactions may cause the fund to sell securities to meet redemptions or to invest additional cash at times it would not otherwise do so, which may result in increased transaction costs, increased expenses, changes to expense ratios, and adverse effects to fund performance. Such transactions may also accelerate the realization of taxable income if sales of portfolio securities result in gains. Tax-Advantaged Strategy Risk. 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. For example, only certain individual and non-corporate taxpayers (and not corporate and other certain taxpayers) are eligible for reduced income tax rates (0%-20%) on QDI or to deduct up to 20% of qualified dividends from REITs (“QRD”). Additionally, in order to benefit from QDI or QRD treatment, both the Fund and eligible shareholders must meet holding period requirements. Some taxpayers (including certain individuals, trusts, and estates) may be subject to an additional 3.8% tax on QDI. Current regulations provide for favorable QRD treatment only for dividends distributed during the 2018-2025 tax years. Moreover, the Internal Revenue Service may take a contrary position as to the tax treatment of certain dividends. Federal income tax laws with respect to qualified dividends or other favorable tax treatment may change, and any applicable reduced income tax rate or deduction may change or be eliminated for some or all taxpayers. Therefore, some or all of the Fund’s dividends may be subject to ordinary income tax rates and/or may not qualify for any special deduction under U.S. federal income tax laws. Any dividends made by the Fund will also be subject to applicable state and local tax. Because the Fund makes investment decisions based in part on tax considerations, the Fund’s pre-tax performance may be lower than the performance of similar funds that are not tax-managed. |
|||||
| Risk Lose Money [Text] | rr_RiskLoseMoney | The value of your investment in the Fund changes with the value of the Fund's investments. Many factors affect that value, and it is possible to lose money by investing in the Fund. | |||||
| Risk Not Insured Depository Institution [Text] | rr_RiskNotInsuredDepositoryInstitution | An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. | |||||
| Bar Chart and Performance Table [Heading] | rr_BarChartAndPerformanceTableHeading | Performance | |||||
| Performance Narrative [Text Block] | rr_PerformanceNarrativeTextBlock | No performance information is shown because the Fund has not yet had a calendar year of performance. The Fund’s performance is benchmarked against the ICE BofA Merrill Lynch 7% Constrained DRD Eligible Preferred Securities Index. Performance information provides an indication of the risks of investing in the Fund. Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. You may get updated performance information by calling 1-800-787-1621 or online at www.principaletfs.com. |
|||||
| Performance Availability Phone [Text] | rr_PerformanceAvailabilityPhone | 1-800-787-1621 | |||||
| Performance Availability Website Address [Text] | rr_PerformanceAvailabilityWebSiteAddress | www.principaletfs.com | |||||
| Performance Past Does Not Indicate Future [Text] | rr_PerformancePastDoesNotIndicateFuture | Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. | |||||
| Principal Exchange-Traded Funds | Principal Spectrum Tax-Advantaged Dividend Active ETF | Principal Spectrum Tax-Advantaged Dividend Active ETF | |||||||
| Prospectus: | rr_ProspectusTable | ||||||
| Trading Symbol | dei_TradingSymbol | PQDI | |||||
| Management Fees (as a percentage of Assets) | rr_ManagementFeesOverAssets | 0.60% | |||||
| Other Expenses (as a percentage of Assets): | rr_OtherExpensesOverAssets | none | |||||
| Expenses (as a percentage of Assets) | rr_ExpensesOverAssets | 0.60% | [1] | ||||
| Expense Example, with Redemption, 1 Year | rr_ExpenseExampleYear01 | $ 61 | |||||
| Expense Example, with Redemption, 3 Years | rr_ExpenseExampleYear03 | $ 192 | |||||
| |||||||
Total | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Principal Exchange-Traded Funds | Principal Spectrum Tax-Advantaged Dividend Active ETF | ||||||||||||||
| PRINCIPAL SPECTRUM TAX-ADVANTAGED DIVIDEND ACTIVE ETF | ||||||||||||||
| Objective: | ||||||||||||||
The Fund seeks to provide current income. | ||||||||||||||
| Fees and Expenses of the Fund | ||||||||||||||
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund ("Shares"). Investors may pay brokerage commissions on their purchases and sales of Shares, which are not reflected in the table or the example below. | ||||||||||||||
| Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||||||||||||
| ||||||||||||||
| Example | ||||||||||||||
This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. | ||||||||||||||
| The Example assumes that you invest $10,000 in the Fund for the time periods indicated. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: | ||||||||||||||
| ||||||||||||||
| Portfolio Turnover | ||||||||||||||
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. This is a new fund and does not yet have a portfolio turnover rate to disclose. | ||||||||||||||
| Principal Investment Strategies | ||||||||||||||
Under normal circumstances, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in dividend-paying securities at the time of purchase. Such securities include, without limitation, preferred securities and capital securities of U.S. and non-U.S. issuers. The Fund invests significantly in securities that, at the time of issuance, are eligible to pay dividends that qualify for favorable U.S. federal income tax treatment, such as dividends treated as “qualified dividend income” (“QDI”) or qualified dividends from real estate investment trusts (“REITS”). However, the Fund also invests in securities that are not eligible for such treatment. Examples of preferred securities in which the Fund invests include preferred stock, certain depositary receipts, REITs, and various types of junior subordinated debt. Such preferred securities generally pay fixed and floating rate distributions and are junior to all forms of the company's senior debt, but may have "preference" over common stock in the payment of distributions and the liquidation of a company's assets. Capital securities are securities issued by financial institutions and other corporate issuers for purposes of satisfying regulatory capital requirements of obtaining agency credit. Examples of capital securities in which the Fund invests include subordinated debt securities, certain preferred securities, and contingent convertible securities (“Cocos”). Cocos are hybrid debt securities typically issued by non-US banking institutions that have contractual equity conversion or principal write-down features that are triggered by regulatory capital thresholds or regulatory actions calling into question the issuing banking institution’s continued viability as a going-concern if the conversion trigger were not exercised. The Fund defines "dividend-paying securities" to include preferred and capital securities that make payments and distributions that are treated as dividends for U.S. federal income tax purposes. The Fund invests in investment grade securities and in below investment grade securities (sometimes called “high yield” or "junk"). The Fund is not managed to a particular maturity or duration. The Fund concentrates its investments (invests more than 25% of its net assets) in securities in one or more industries (i.e., banking, insurance and commercial finance) within the financial services sector. | ||||||||||||||
| Principal Risks | ||||||||||||||
The value of your investment in the Fund changes with the value of the Fund's investments. Many factors affect that value, and it is possible to lose money by investing in the Fund. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The principal risks of investing in the Fund are listed below in alphabetical order and not in order of significance. Capital Securities Risk. In addition to the risks associated with other types of preferred securities and fixed-income securities, investing in capital securities includes the risk that the value of securities may decline in response to changes in legislation and regulations applicable to financial institutions and financial markets, increased competition, adverse changes in general or industry-specific economic conditions, or unfavorable interest rates. Contingent Convertible Securities Risk. In addition to the general risks associated with fixed-income securities and convertible securities, the risks of investing in contingent convertible securities (“CoCos”) include the risk that a CoCo may be written down, written off or converted into an equity security when the issuer’s capital ratio falls below a specified trigger level, or in a regulator’s discretion depending on the regulator’s judgment about the issuer’s solvency prospects. Due to these features, CoCos may have substantially greater risk than other securities in times of financial stress. If the trigger level is breached, the issuer’s decision to write down, write off or convert a CoCo may result in the fund's complete loss on an investment in CoCos with no chance of recovery even if the issuer remains in existence. Dividend-Oriented Stocks Risk. Companies that have paid regular dividends to shareholders may decrease or eliminate dividend payments in the future. For example, a sharp rise in interest rates or economic downturn could cause a company to unexpectedly reduce or eliminate its dividend. Additionally, the Fund’s performance during a broad market advance could suffer because dividend-paying securities may not experience the same capital appreciation as non-dividend paying securities. Fixed-Income Securities Risk. Fixed-income securities are subject to interest rate, credit quality, and liquidity risks. The market value of fixed-income securities generally declines when interest rates rise, and increased interest rates may adversely affect the liquidity of certain fixed-income securities. Moreover, an issuer of fixed-income securities could default on its payment obligations due to increased interest rates or for other reasons. Foreign Securities Risk. The risks of foreign securities include loss of value as a result of: political or economic instability; nationalization, expropriation or confiscatory taxation; settlement delays; and limited government regulation (including less stringent reporting, accounting, and disclosure standards than are required of U.S. companies). High Yield Securities Risk. High yield fixed-income securities (commonly referred to as "junk bonds") are subject to greater credit quality risk than higher rated fixed-income securities and should be considered speculative. Industry Concentration Risk. A fund that concentrates investments in a particular industry or group of industries has greater exposure than other funds to market, economic and other factors affecting that industry or group of industries.
Market Trading Risks. The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, and disruption to the activities of market makers, authorized participants, or other participants and in the creation/redemption process of the Fund. ANY OF THESE FACTORS MAY LEAD TO THE FUND’S SHARES TRADING AT A PREMIUM OR DISCOUNT TO NAV. Portfolio Duration Risk. Portfolio duration is a measure of the expected life of a fixed-income security and its sensitivity to changes in interest rates. The longer a fund's average portfolio duration, the more sensitive the fund will be to changes in interest rates, which means funds with longer average portfolio durations may be more volatile than those with shorter durations. Preferred Securities Risk. Because preferred securities have a lower priority claim on assets or earnings than senior bonds and other debt instruments in a company's capital structure, they are subject to greater credit and liquidation risk than more senior debt instruments. In addition, preferred securities are subject to other risks, such as limited or no voting rights, deferring or skipping distributions, interest rate risk, and redeeming the security prior to any stated maturity date. Real Estate Investment Trusts ("REITs") Risk. In addition to risks associated with investing in real estate securities, REITs are dependent upon management skills, are not diversified, and are subject to heavy cash flow dependency, risks of default by borrowers, and self-liquidation. Investment in REITs also involves risks similar to risks of investing in small market capitalization companies, such as limited financial resources, less frequent and limited volume trading, and may be subject to more abrupt or erratic price movements than larger company securities. A REIT could fail to qualify for tax-free pass-through of income under the Internal Revenue Code. Fund shareholders will indirectly bear their proportionate share of the expenses of REITs in which the fund invests. Real Estate Securities Risk. Investing in real estate securities subjects the fund to the risks associated with the real estate market (which are similar to the risks associated with direct ownership in real estate), including declines in real estate values, loss due to casualty or condemnation, property taxes, interest rate changes, increased expenses, cash flow of underlying real estate assets, regulatory changes (including zoning, land use and rents), and environmental problems, as well as to the risks related to the management skill and creditworthiness of the issuer. Redemption and Large Transaction Risk. Ownership of the fund's shares may be concentrated in one or a few large investors (such as funds of funds, institutional investors, and asset allocation programs) that may redeem or purchase shares in large quantities. These transactions may cause the fund to sell securities to meet redemptions or to invest additional cash at times it would not otherwise do so, which may result in increased transaction costs, increased expenses, changes to expense ratios, and adverse effects to fund performance. Such transactions may also accelerate the realization of taxable income if sales of portfolio securities result in gains. Tax-Advantaged Strategy Risk. 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. For example, only certain individual and non-corporate taxpayers (and not corporate and other certain taxpayers) are eligible for reduced income tax rates (0%-20%) on QDI or to deduct up to 20% of qualified dividends from REITs (“QRD”). Additionally, in order to benefit from QDI or QRD treatment, both the Fund and eligible shareholders must meet holding period requirements. Some taxpayers (including certain individuals, trusts, and estates) may be subject to an additional 3.8% tax on QDI. Current regulations provide for favorable QRD treatment only for dividends distributed during the 2018-2025 tax years. Moreover, the Internal Revenue Service may take a contrary position as to the tax treatment of certain dividends. Federal income tax laws with respect to qualified dividends or other favorable tax treatment may change, and any applicable reduced income tax rate or deduction may change or be eliminated for some or all taxpayers. Therefore, some or all of the Fund’s dividends may be subject to ordinary income tax rates and/or may not qualify for any special deduction under U.S. federal income tax laws. Any dividends made by the Fund will also be subject to applicable state and local tax. Because the Fund makes investment decisions based in part on tax considerations, the Fund’s pre-tax performance may be lower than the performance of similar funds that are not tax-managed. | ||||||||||||||
| Performance | ||||||||||||||
No performance information is shown because the Fund has not yet had a calendar year of performance. The Fund’s performance is benchmarked against the ICE BofA Merrill Lynch 7% Constrained DRD Eligible Preferred Securities Index. Performance information provides an indication of the risks of investing in the Fund. Past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. You may get updated performance information by calling 1-800-787-1621 or online at www.principaletfs.com. | ||||||||||||||