Enhance Your Nasdaq-100® Exposure with this ETF

It’s no secret that technology stocks have been the market generals for many years now. And there’s little reason to expect this to change. Today’s most innovative large-cap companies have demonstrated years of superior revenue growth, pricing power, and cash flow potential. Whether it’s self-driving cars, smartphones, social media, or generative AI, it’s not surprising that the companies driving growth in the economy are seeing above-average gains in their share prices.

It just so happens that so many of these innovators reside in the Nasdaq-100® Index. And as the chart below shows, this index has delivered outsized returns for investors. There’s certainly been volatility along the way, but the trend is clear.

Historical Performance of Nasdaq-100® Index

The Nasdaq-100® + Income = A Winning Combination

As impressive as the Nasdaq’s returns have been, an innovative ETF from Summit Global Investments aims to make them even better. Using an options premium overlay, the SGI Enhanced Nasdaq-100® ETF (QXQ) seeks to outperform the benchmark Nasdaq-100® Index. In a nutshell, using options the fund seeks to increase returns when markets rise, and decrease losses when markets decline.

How QXQ Works

QXQ is distinct in that during different market scenarios our investment team can invest the equity portion of the portfolio in the underlying stocks that make up the index but at other times we can and may shift to using e-mini Nasdaq 100 index futures to create the same effect of owning and properly weighting the underlying stocks. This approach helps ensure that the ETF is exposed to leading edge companies powering technological revolutions while allowing us to meet the other goals for the fund in terms of utilizing options premium.

To this growth component, QXQ adds an income element. The fund’s managers use an actively traded put and call options1 strategy that writes/sells options with deep out-of-the-money strike prices that generally have an expiration date within 1-7 days to generate income. In so doing, the fund seeks to provide an “enhanced” yield compared to traditional option-based strategies. Options that expire within 1 - 7 days and that are deep out-of-the-money exhibit a greater tendency to expire worthless and help avoid additional costs to the fund of needing to close out the options contracts through repurchasing them at a higher price.

By seeking to generate income via options, QXQ appeals to investors who otherwise might forego exposure to large-cap growth companies. What’s more, the ETF’s potential income generation may also offer some downside mitigation, something that resonates with investors and advisors concerned about the possibility of a looming market correction. By taking in option premiums, QXQ effectively creates a buffer against some potential losses its equity holdings.

This feature is in keeping with the philosophy of Summit Global Investments. Managing downside risk is at the core of everything the firm’s portfolio managers do. They are driven to find, assess and mitigate potential risks in individual securities, systemically in companies, and across combinations of companies. Underpinning this risk management is a recognition that large losses can be very damaging to a portfolio—they are to be avoided at all costs.

QXQ: A Compelling Component Across Market Cycles

At present, stock markets are exuberant, and investors are being rewarded with capital growth. Whether it’s this year or not, however, the tide will go out, as it always does. A correction might be triggered by a recession, geopolitics, or simply a recognition that equities have risen too far too fast.

QXQ seeks to be an all-weather ETF. When stocks are rising, the exposure of the fund to the Nasdaq -100® means investors can participate in the innovation-led bull market. What’s more, with SGI’s proprietary options overlay, there’s the potential to enjoy enhanced positive returns during the good times. In a bear market, meanwhile, the overlay may result in the ETF experiencing smaller drawdowns compared to the Nasdaq-100.  For long-term investors, it’s the best of both worlds.

IMPORTANT INFORMATION

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The summary and statutory prospectuses contain this and other important information about the investment company and may be obtained by calling (888) 251-4847 or visit our website at sgiam.com. Read the prospectus or summary prospectus carefully before investing.

1 Call and Put Options A Call Option gives the buyer the right, but not the obligation to buy the underlying security at the exercise price, at or within a specified time. A Put Option gives the buyer the right, but not the obligation to sell the underlying security at the exercise price, at or within a specified time.

Investing involves risk, including possible loss of principal. The Fund is a newly organized, diversified management investment company with no operating history. To the extent the Fund invests in Underlying Funds that invest in fixed income securities, the Fund will be subject to fixed income securities risks. While fixed income securities normally fluctuate less in price than stocks, there have been extended periods of increases in interest rates that have caused significant declines in fixed income securities prices. To the extent that a Fund invests in Underlying Funds that invest in high-yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”), the Fund may be subject to greater levels of interest rate and credit risk than funds that do not invest in such securities. Small-cap companies that the Underlying Funds may invest in may be more volatile than, and not as readily marketable as, those of larger companies. Small companies may also have limited product lines, markets or financial resources and may be dependent on relatively small or inexperienced management groups. Underlying Funds that invest in foreign securities may be subject to special risks, including, but not limited to, currency exchange rate volatility, political, social or economic instability, less publicly available information, less stringent investor protections and differences in taxation, auditing and other financial practices. Investments in emerging market securities by Underlying Funds are subject to higher risks than those in developed countries because there is greater uncertainty in less established markets and economies. To the extent the Fund invests in. Underlying Funds that focus their investments in a particular industry or sector, the Fund’s shares may be more volatile and fluctuate more than shares of a fund investing in a broader range of securities.

Leverage amplifies changes in the Fund’s NAV and may make the Fund more volatile. Derivatives may create leverage and can result in losses to the Fund that exceed the amount originally invested and may accelerate the rate of losses. There can be no assurance that the Fund’s use of any leverage will be successful. An option is a type of derivative instrument that gives the holder the right (but not the obligation) to buy (a “call”) or sell (a “put”) an asset in the near future at an agreed upon price prior to the expiration date of the option. The Fund may “cover” a call option by owning the security underlying the option or through other means. The price and value of options can be highly volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including its anticipated volatility, the time remaining until the expiration of the option contract and economic events.

The Fund’s investments in derivative instruments including options, forward currency exchange contracts, swaps and futures, which may be leveraged, may result in losses. Investments in derivative instruments may result in losses exceeding the amounts invested. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with investments in more traditional securities and instruments.

Diversification does not eliminate the risk of experiencing investment loss.

Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the funds. Brokerage commissions will reduce returns.

Distributed by Quasar Distributors, LLC

Nasdaq® and Nasdaq-100® are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Summit Global Investments. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the product(s).