BMO Nasdaq 100 Equity Index ETF (ZNQ/ZNQ.U) (the "ETF")
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SEMI-ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE
BMO Nasdaq 100 Equity Index ETF (ZNQ/ZNQ.U) (the “ETF”)
For the 6-month period ended June 30, 2021 (the “Period”)
Manager: BMO Asset Management Inc. (the “Manager” and “portfolio manager”)
Management Discussion led by cyclical and value-oriented stocks which rotated
of Fund Performance into favour, while growth stocks, such as those from the
Information Technology sector, were impacted by rising
Results of Operations
long-term U.S. Treasury yields. During the Period, the S&P
The Canadian dollar (“CAD”) units of the ETF returned
500 Index, which represents the broad-based U.S. equity
10.11% versus the NASDAQ-100 Index (CAD) (the “Index”)
market, returned 12.0% (in Canadian dollars).
return of 10.17%. The difference in the performance of the
CAD units of the ETF relative to the Index (CAD) during the The ETF’s exposure to the Information Technology and
Period (-0.06%) resulted from the management expense Communication Services sectors contributed the most
ratio (-0.20%), and the impact of sampling and certain to performance. The ETF’s exposure to the Consumer
other factors (0.14%), which may have included holding Discretionary and Industrials sectors detracted the most
differences versus the Index (CAD) and the implementation from performance. The ETF’s holdings in Microsoft Corp
of the writing of puts. and Nvidia Corp. contributed the most to performance,
whereas its holdings in Tesla Inc. and Pinduoduo, Inc., ADR
For the period February 11, 2021 to June 30, 2021, the U.S.
were the largest detractors from performance.
dollar (“USD”) units of the ETF returned 6.07% versus the
NASDAQ-100 Index (USD) (the “Index”) return of 6.27%. New Series Option
The difference in the performance of the USD units of the On February 11, 2021, the Manager launched USD units of
ETF relative to the Index (USD) during the Period (-0.20%) the ETF (ticker: ZNQ.U) that will provide investors with
resulted from the management expense ratio (-0.20%). more currency choice. The USD units of the ETF are U.S.
dollar denominated units of the ETF.
The change in total net asset value during the Period from
approximately $93 million to approximately $120 million Recent Developments
had no impact on the performance of the ETF. Though equity market valuations seem over-stretched by
historical standards, there are multiple converging factors
Market Conditions
and market conditions that remain supportive of further
U.S. equity markets continued a strong rally through the
economic improvement and potential growth in equity
first half of 2021 and hit another all-time high at the end
markets. These include the supply chain constraints that
of the Period. The U.S. was a leader in vaccine rollouts
have hindered the economy from growing at a faster and
and a successful vaccination campaign led to a reopening
broader pace with businesses being unable to manufacture
of the economy, and increased consumer spending. The
products fast enough to meet demand, slack in the jobs
U.S. Federal Reserve Board (“Fed”) continued to provide
market recovery where the workforce participation rate
monetary and fiscal support and the overnight policy rate
has been slow to recover, as well as pent-up consumer
remained unchanged at 0.25%. The U.S. equity market was
This semi-annual management report of fund performance contains financial highlights but does not contain the complete semi-annual or
annual financial statements of the ETF. If the semi-annual financial statements of the ETF do not accompany the mailing of this report, you may
obtain a copy of the semi-annual or annual financial statements at your request, and at no cost, by calling 1-800-361-1392, by writing to us at
BMO Asset Management Inc., 250 Yonge Street, 7th Floor, Toronto, Ontario, M5B 2M8 or by visiting our website at www.bmo.com/etflegal
or SEDAR at www.sedar.com. You may also contact us using one of these methods to request a copy of the ETF’s proxy voting policies and
procedures, proxy voting disclosure record and/or quarterly portfolio disclosure.BMO Nasdaq 100 Equity Index ETF
demand, particularly for services. The market consensus (c) trades in debt securities in the secondary market with
for the outlook in the U.S., is an economy characterized BMO Nesbitt Burns Inc., an affiliate of the Manager, that is
by accelerating growth, better real gross domestic product trading with the ETF as principal; and
(GDP) growth for the rest of this year and early 2022, rising
(d) inter-fund trades
inflation and higher commodities prices. Until the Fed
and other central banks start raising rates, the interest rate (each, a “Related Party Transaction”).
outlook remains the main risk factor and unknown to an
In accordance with the IRC’s standing instructions, in
otherwise positive U.S. market environment.
making a decision to cause the ETF to enter into a Related
Related Party Transactions Party Transaction, the Manager and the portfolio manager
The Manager, an indirect, wholly-owned subsidiary of of the ETF are required to comply with the Manager’s
Bank of Montreal (“BMO”), is the portfolio manager, written policies and procedures governing the Related Party
trustee and promoter of the ETF. From time to time, the Transaction and report periodically to the IRC, describing
Manager may, on behalf of the ETF, enter into transactions each instance that the Manager relied on the standing
or arrangements with or involving other members instructions and its compliance or non-compliance with the
of BMO Financial Group, or certain other persons or governing policies and procedures. The governing policies
companies that are related or connected to the Manager and procedures are designed to ensure that each Related
(each a “Related Party”). The purpose of this section is to Party Transaction (i) is made free from any influence of
provide a brief description of any transactions involving the BMO, BMO Nesbitt Burns Inc. or an associate or affiliate of
ETF and a Related Party. BMO and/or BMO Nesbitt Burns Inc. and without taking into
account any considerations relevant to BMO, BMO Nesbitt
Designated Broker
Burns Inc. or an associate or affiliate of BMO and/or
The Manager has entered into an agreement with
BMO Nesbitt Burns Inc.; (ii) represents the business
BMO Nesbitt Burns Inc., an affiliate of the Manager, to
judgment of the Manager, uninfluenced by considerations
act as designated broker and dealer for distribution of
other than the best interests of the ETF; and (iii) achieves
BMO exchange traded funds, on terms and conditions that
a fair and reasonable result for the ETF.
are comparable to arm’s length agreements in the exchange
traded funds industry. The material terms and conditions of Brokerage Commissions
the agreement have been disclosed in the ETF’s prospectus. The ETF pays standard brokerage commissions at market
rates to BMO Nesbitt Burns Inc., an affiliate of the Manager,
The Manager has also entered into agreements with other
for executing a portion of its trades. The brokerage
major dealers in Canada to act as dealers for the creation
commissions charged to the ETF (excluding exchange and
and redemption of units of BMO exchange traded funds.
other fees) during the periods were as follows:
Buying and Selling Securities
2021 2020
During the Period, the ETF relied on standing instructions Total brokerage commissions 76 95
provided by the independent review committee (“IRC”) for Brokerage Commissions paid to BMO Nesbitt Burns Inc. 21 33
any of the following related party transactions that may have
occurred in the ETF:
(a) investments in securities issued by BMO, an affiliate of
the Manager, or any other issuer related to the Manager;
(b) investments in a class of non-government debt securities
and/or equity securities of an issuer during the period of
distribution of those securities to the public and/or the
60-day period following the distribution period where
BMO Nesbitt Burns Inc., an affiliate of the Manager, or any
other affiliate of the Manager acted as an underwriter in
the distribution;BMO Nasdaq 100 Equity Index ETF
Financial Highlights Ratios and Supplemental Data
Financial years ended Dec. 31
The following tables show selected key financial Period ended
information about the ETF and are intended to help Listed CAD Units Jun. 30, 2021 2020 2019(5)
you understand the ETF’s financial performance for the Total net asset value (000’s) (1)
$ 113,604 92,554 71,382
Number of units outstanding (000’s)(1) 1,952 1,751 1,951
periods indicated. Management expense ratio(2) % 0.39 0.38 0.38
Management expense ratio before waivers
The ETF’s Net Assets per Unit(1) or absorptions(2) % 0.39 0.38 0.38
Financial years ended Dec. 31 Trading expense ratio(3) % 0.00 0.00 0.00
Period ended Portfolio turnover rate(4) % 46.87 120.59 107.09
Listed CAD Units Jun. 30, 2021 2020 2019(5)
Net asset value per unit $ 58.20 52.86 36.59
Net assets, beginning of period $ 52.86 36.59 30.00* Closing market price $ 58.29 52.65 36.57
Increase (decrease) from operations
Total revenue $ 0.20 0.41 0.32
Period ended
Total expenses(2) $ (0.14) (0.23) (0.16) Listed USD Units Jun. 30, 2021(6)
Realized gains (losses) for the period $ 3.68 4.81 1.81 Total net asset value (000’s)(1) $ 5,917
Unrealized gains (losses) for the period $ 1.36 7.53 3.44 Number of units outstanding (000’s)(1) 150
Total increase (decrease) from operations(3) $ 5.10 12.52 5.41 Management expense ratio(2) % 0.40
Distributions Management expense ratio before waivers or absorptions(2) % 0.41
From income (excluding dividends) $ — — — Trading expense ratio(3) % 0.00
From dividends $ — 0.22 0.15 Portfolio turnover rate(4) % 46.87
From capital gains $ — — — Net asset value per unit† $ 31.82
Return of capital $ — 0.03 0.04 Closing market price† $ 31.50
Total Annual Distributions(4) $ — 0.25 0.19
Net assets, end of period $ 58.20 52.86 36.59
†
Amounts stated in U.S. dollars
(1)
This information is provided as at June 30 or December 31 of the period shown.
(2)
Management expense ratio is based on total expenses (excluding commissions and other portfolio
Period ended
transaction costs) for the stated period and is expressed as an annualized percentage of daily
Listed USD Units† Jun. 30, 2021(6)
average net asset value during the period.
Net assets, beginning of period $ 30.00* (3)
The trading expense ratio represents total commissions and other portfolio transaction costs
Increase (decrease) from operations expressed as an annualized percentage of daily average net asset value during the period.
Total revenue $ 0.09 (4)
The ETF’s portfolio turnover rate indicates how actively the ETF’s portfolio manager manages its
Total expenses(2) $ (0.07) portfolio investments. A portfolio turnover rate of 100% is equivalent to the ETF buying and selling
Realized gains (losses) for the period $ 2.95 all of the securities in its portfolio once in the course of the year. The higher an ETF’s portfolio
turnover rate in a year, the greater the trading costs payable by the ETF in the year, and the greater
Unrealized gains (losses) for the period $ (0.01) the chance of an investor receiving taxable capital gains in the year. There is not necessarily
Total increase (decrease) from operations(3) $ 2.96 a relationship between a high turnover rate and the performance of an ETF.
Distributions (5)
The information in this column is for the period beginning February 7, 2019 (the ETF’s establishment
From income (excluding dividends) $ — date) and ending December 31, 2019.
From dividends $ —
(6)
The information in this column is for the period beginning January 14, 2021 (the ETF’s establishment
From capital gains $ — date) and ending June 30, 2021.
Return of capital $ — Management Fees
Total Annual Distributions(4) $ —
The Manager is responsible for the day-to-day management
Net assets, end of period $ 31.82
of the business and operations of the ETF. The Manager
†
Amounts stated in U.S. dollars
* Initial net assets. monitors and evaluates the ETF’s performance, manages
(1)
This information is derived from the ETF’s unaudited semi-annual and audited annual financial the portfolio and provides certain administrative services
statements.
required by the ETF. As compensation for its services, the
(2)
Includes commissions and other portfolio transaction costs and withholding taxes.
(3)
Net assets and distributions are based on the actual number of units outstanding at the relevant Manager is entitled to receive a management fee payable
time. The increase/decrease from operations is based on the weighted average number of units quarterly and calculated based on the daily net asset value
outstanding over the financial period. This table is not intended to be a reconciliation of beginning
to ending net assets per unit. of the ETF at the annual rate set out in the table below.
(4)
Distributions were either paid in cash or reinvested in additional units of the ETF, or both. The
allocation of the distribution from each of income, dividends, capital gains and return of capital for Annual
the period ended June 30, is based on the Manager’s best estimate, which is the ETF’s semi-annual Ticker Management Fee Rate
period end. However, actual allocation of distributions is determined as at December 15, the ETF’s %
tax year-end. Accordingly, the actual allocation among income, dividends, capital gains and return
ZNQ 0.35
of capital may differ from these estimates.
ZNQ.U 0.35
(5)
The information in this column is for the period beginning February 7, 2019 (the ETF’s establishment
date) and ending December 31, 2019.
(6)
The information in this column is for the period beginning January 14, 2021 (the ETF’s establishment
date) and ending June 30, 2021.BMO Nasdaq 100 Equity Index ETF
Past Performance Summary of Investment Portfolio
The ETF’s performance information assumes that all As at June 30, 2021
distributions made by the ETF in the periods shown were % of Net
used to purchase additional units of the ETF and is based on Portfolio Allocation Asset Value
the net asset value of the ETF. Information Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.9
Communication Services.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6
The performance information does not take into account
Consumer Discretionary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4
sales, redemption, distribution or other optional charges Health Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
that, if applicable, would have reduced returns or Consumer Staples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8
performance. Please remember that how the ETF has Industrials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
performed in the past does not indicate how it will perform Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9
in the future.
Total Portfolio Allocation 100.0
Year-by-Year Returns
% of Net
The following bar charts show the performance of the ETF
Top 25 Holdings Asset Value
for each of the financial years shown and for the six-month
Apple Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0
period ended June 30, 2021, and illustrate how the ETF’s
Microsoft Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8
performance has changed year to year. The charts show,
Amazon.com, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3
in percentage terms, how much an investment made on Alphabet Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
the first day of each financial year would have increased or Facebook, Inc., Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0
decreased by the last day of each financial year. Tesla Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
NVIDIA Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7
Listed CAD Units
45.15 PayPal Holdings, Inc... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
50%
Adobe Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0
25% 22.59
10.11 Comcast Corporation, Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
0% Netflix, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
-25% Intel Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Cisco Systems, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
-24%
PepsiCo, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
2019(1) 2020 2021(3)
Broadcom Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Listed USD Units
T-Mobile US, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
50%
Texas Instruments Incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
25% Costco Wholesale Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
6.07
0% QUALCOMM Incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
-25% Amgen Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
Charter Communications, Inc., Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
-24%
Intuit Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
2021(2)
Starbucks Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
(1)
For the period beginning with the performance launch date
of February 12, 2019 to December 31, 2019. Applied Materials, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0
(2)
For the period beginning with the performance launch date Advanced Micro Devices, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8
of February 11, 2021 to June 30, 2021.
(3)
For the six-month period ended June 30, 2021. Top Holdings as a Percentage of Total Net Asset Value 73.3
Total Net Asset Value $119,521,323
The summary of investment portfolio may change due to the ETF’s ongoing
portfolio transactions. Updates are available quarterly.Caution regarding forward-looking statements
This document may contain forward-looking statements relating to anticipated future events, results, circumstances,
performance or expectations that are not historical facts but instead represent our beliefs regarding future events. By their nature,
forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties.
There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers
of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future
results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or
implied in the forward-looking statements. Actual results may differ materially from management expectations as projected in
such forward-looking statements for a variety of reasons, including but not limited to market and general economic conditions,
interest rates, regulatory and statutory developments, the effects of competition in the geographic and business areas in which
the ETF may invest in and the risks detailed from time to time in the ETFs’ prospectus. We caution that the foregoing list of
factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to investing in
the ETF, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the
inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, BMO Asset Management Inc.
does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, unless required by applicable law.
NASDAQ®, and NASDAQ-100 Index® or NASDAQ-100 Index® Hedged to CAD, are registered trademarks of Nasdaq, Inc. (which
with its affiliates is referred to as the “Corporations”) and are licensed for use by the Manager. The ETF(s) have not been passed
on by the Corporations as to their legality or suitability. The ETF(s) are not issued, endorsed, sold, or promoted by the Corporations.
The Corporations make no warranties and bear no liability with respect to the ETF(s).
BMO exchange traded funds are managed and administered by BMO Asset Management Inc., an investment fund manager and
portfolio manager and separate legal entity from Bank of Montreal.
®/TM
Registered trade-marks/trade-mark of Bank of Montreal, used under license.
www.bmo.com/etflegal
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