Share-split context: A reverse split was recorded on Aug 1, 2024 with coefficient 0.333333. A reverse split combines multiple old shares into fewer new shares and mechanically raises the quoted price per share. That mechanical increase does not restore lost investment value. The returns in this report are already split-adjusted, while reverse-split history remains a separate structural warning.

What this ETF is trying to do

The DEFIANCE NASDAQ 100 WEEKLY DISTRIBUTION ETF (ticker: QQQY) is an ETF that uses options to try to create income. It is designed to provide frequent cash payments to investors, often on a weekly basis.

What the numbers show

When looking at this ETF, it is important to understand two different types of returns: price return and total return.

• Price return only tracks how much the share price changes.

• Total return tracks the change in share price plus any cash distributions received.

The numbers show a big difference between these two. For example, over the last year, the price return was approximately -10.88%, meaning the share price went down. However, the one-year total return was approximately 23.99%. This means that even though the share price fell, the cash payments helped the overall value grow.

Over three years, the price return was approximately -58.95%, while the three-year total return was approximately 67.20%.

It is also important to note that this ETF has a history of "reverse splits." In a reverse split, multiple old shares are combined into fewer new shares. This makes the price per share go up mechanically, but this increase does not restore lost investment value. The most recent event was on August 1, 2024.

Income and distribution explanation

This ETF is known for its frequent distributions. The distribution yield is approximately 33.59%. Most of these payments happen on Thursdays.

While a high distribution yield can provide a lot of cash, it is important to remember that a high yield does not guarantee a high total return. Investors should always look at the total return to see if the cash payments are enough to make up for any changes in the share price.

NAV erosion explanation

"NAV erosion" refers to a decline in the value of the underlying assets in the ETF. StockValueFinder uses an "erosion-risk score" to measure this risk. This ETF has an erosion-risk score of 75, which is labeled as "mild price erosion." This means there is a measurement of mild risk regarding the decline in share prices.

Pros

• High Total Returns: Despite falling share prices, the total returns (which include distributions) have been positive over the last year and three years.

• Frequent Income: The ETF provides very frequent cash distributions, mostly on a weekly basis.

Cons

• Falling Share Prices: The price return has been negative for the year-to-date, one-year, and three-year periods.

• Erosion Risk: There is a measurement of mild price erosion.

Beginner takeaway

QQQY is an ETF focused on providing frequent cash income. If you look only at the share price, it may look like the investment is losing value. However, when you include the cash distributions in the "total return," the numbers show different results. Always remember that high cash payments can exist even while the share price is dropping.

Top Holdings:

• FIRST AMERICAN GOVERNMENT OBLIGS X (FGXXX): 0.48%