expense ratio in the initial filing.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Fund invests primarily in U.S.-listed equity securities. The Fund also sells exchange-listed call options on the S&P 500 Index (the “Index”) to seek additional cash flow (in the form of premiums on the options) that may be distributed to shareholders on a monthly basis. A portion of the call option proceeds are used to purchase exchange-listed Index puts in an attempt to cushion the Fund’s performance when the market experiences severe declines.
The equity securities held by the Fund are selected using a mathematical optimization process, which attempts to tilt the Fund’s common stock portfolio toward higher dividend paying stocks. The equity securities held by the Fund may include non-U.S. securities that are listed on a U.S. securities exchange in the form of American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs,” and together with ADRs, “Depositary Receipts”). The equity securities in the Fund’s portfolio are periodically rebalanced.
The option portion of the portfolio generally consists of covered calls and long puts on the Index. The portfolio may also contain put or call options on other indexes as part of its hedging strategy. The call options sold by the Fund are typically a laddered portfolio of one-week, one-month, two-month and three-month call options sold at-the-money to slightly out-of-the-money. The Fund’s hedging positions typically average two to three months to expiration and consists of out-of-the-money Index put options.
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