ck0001432353-20221031
Statement
of Additional Information
March 1,
2023
This
Statement of Additional Information ("SAI") is not a prospectus. It should be
read in conjunction with the current Prospectus (each a "Prospectus" and,
collectively, the "Prospectuses") for the following Funds ("Funds") of Global X
Funds®
("Trust") as such Prospectus may be revised or supplemented from time to
time:
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Global
X MSCI Colombia ETF (GXG) |
Global
X Guru®
Index ETF (GURU) |
Global
X MSCI China Consumer Discretionary ETF (CHIQ) |
Global
X SuperIncome™ Preferred ETF (SPFF) |
Global
X MSCI China Industrials ETF (CHII) |
Global
X SuperDividend®
U.S. ETF (DIV) |
Global
X MSCI China Communication Services ETF (CHIC) |
Global
X S&P 500®
Covered Call ETF (XYLD) |
Global
X MSCI China Financials ETF (CHIX) |
Global
X NASDAQ 100®
Covered Call ETF (QYLD) |
Global
X MSCI China Energy ETF (CHIE) |
Global
X MSCI SuperDividend®
Emerging Markets ETF (SDEM) |
Global
X MSCI China Materials ETF (CHIM) |
Global
X SuperDividend®
REIT ETF (SRET) |
Global
X MSCI Norway ETF (NORW) |
Global
X Renewable Energy Producers ETF (RNRG) |
Global
X FTSE Southeast Asia ETF (ASEA)
|
Global
X S&P 500®
Catholic Values ETF (CATH) |
Global
X MSCI Argentina ETF (ARGT) |
Global
X MSCI SuperDividend®
EAFE ETF (EFAS) |
Global
X MSCI Greece ETF (GREK) |
Global
X E-commerce ETF (EBIZ) |
Global
X MSCI Nigeria ETF (NGE) |
Global
X Russell 2000 Covered Call ETF (RYLD) |
Global
X MSCI Next Emerging & Frontier ETF (EMFM) |
Global
X S&P Catholic Values Developed ex-U.S. ETF (CEFA) |
Global
X MSCI Portugal ETF (PGAL) |
Global
X Nasdaq 100®
Covered Call & Growth ETF (QYLG) |
Global
X DAX Germany ETF (DAX) |
Global
X S&P 500®
Covered Call & Growth ETF (XYLG) |
Global
X MSCI Pakistan ETF (PAK) |
Global
X Emerging Markets Internet & E-commerce ETF (EWEB) |
Global
X MSCI China Consumer Staples ETF (CHIS) |
Global
X S&P 500®
Tail Risk ETF (XTR) |
Global
X MSCI China Health Care ETF (CHIH) |
Global
X S&P 500®
Risk Managed Income ETF (XRMI) |
Global
X MSCI China Information Technology ETF (CHIK) |
Global
X S&P 500®
Collar 95-110 ETF (XCLR) |
Global
X MSCI China Real Estate ETF (CHIR) |
Global
X NASDAQ 100®
Tail Risk ETF (QTR) |
Global
X MSCI China Utilities ETF (CHIU) |
Global
X NASDAQ 100®
Risk Managed Income ETF (QRMI) |
Global
X MSCI Vietnam ETF (VNAM) |
Global
X NASDAQ 100®
Collar 95-110 ETF (QCLR) |
Global
X Copper Miners ETF (COPX) |
Global
X Disruptive Materials ETF (DMAT) |
Global
X Silver Miners ETF (SIL) |
Global
X Dow 30®
Covered Call ETF (DJIA) |
Global
X Gold Explorers ETF (GOEX) |
Global
X Russell 2000 Covered Call & Growth ETF (RYLG) |
Global
X Uranium ETF (URA) |
Global
X Financials Covered Call & Growth ETF (FYLG) |
Global
X Lithium & Battery Tech ETF (LIT) |
Global
X Health Care Covered Call & Growth ETF (HYLG) |
Global
X SuperDividend®
ETF (SDIV) |
Global
X Information Technology Covered Call & Growth ETF (TYLG) |
Global
X Social Media ETF (SOCL) |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF (CAGG)* |
* Not
open for investment.
Each
Fund's Prospectus is dated March 1, 2023. Capitalized terms used herein
that are not defined have the same meaning as in the Prospectus, unless
otherwise noted. The financial statements and notes contained in the Annual
Report of the Trust and the Annual Report of each of the Predecessor Funds (as
defined below) are incorporated by reference into and are deemed to be part of
this SAI
(https://www.sec.gov/Archives/edgar/data/1432353/000113542823000018/commodities-ncsr.htm).
A copy of the Prospectus and Annual Reports may be obtained without charge by
writing to SEI Investments Global Funds Services, One Freedom Valley Drive Oaks,
PA 19456, calling 1-888-493-8631 or visiting www.globalxetfs.com. NYSE Arca Inc.
("NYSE Arca") is the principal U.S. national stock exchange on which all
operational Funds (other than the Global X DAX Germany ETF, Global X Social
Media ETF, Global X SuperDividend®
REIT ETF, Global X Renewable Energy Producers ETF, Global X S&P
500®
Catholic Values ETF, Global X MSCI SuperDividend®
EAFE ETF, Global X NASDAQ 100®
Covered Call ETF, Global X E-commerce ETF, Global X S&P Catholic Values
Developed ex-U.S. ETF, Global X Nasdaq 100®
Covered Call & Growth ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X S&P Catholic Values U.S. Aggregate Bond ETF, Global
X NASDAQ 100®
Tail Risk ETF, Global X NASDAQ 100®
Risk Managed Income ETF, Global X NASDAQ 100®
Collar 95-110 ETF and Global X Disruptive Materials ETF) identified in this SAI
are listed. The Global X DAX Germany ETF, Global X Social Media ETF, Global X
SuperDividend®
REIT ETF, Global X Renewable Energy Producers ETF, Global X S&P
500®
Catholic Values ETF, Global X MSCI SuperDividend®
EAFE ETF, Global X NASDAQ 100®
Covered Call ETF, Global X E-commerce ETF, Global X S&P Catholic Values
Developed ex-U.S. ETF, Global X Nasdaq 100®
Covered Call & Growth ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X S&P Catholic Values U.S. Aggregate Bond ETF, Global
X NASDAQ 100®
Tail Risk ETF, Global X NASDAQ 100®
Risk Managed Income ETF, Global X NASDAQ 100®
Collar 95-110 ETF and Global X Disruptive Materials ETF are listed on The NASDAQ
Stock Market LLC ("NASDAQ"). The NYSE Arca and NASDAQ are respectively referred
to herein as the "Exchange".
TABLE
OF CONTENTS
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GENERAL
DESCRIPTION OF THE TRUST AND FUNDS |
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ADDITIONAL
INVESTMENT INFORMATION |
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EXCHANGE
LISTING AND TRADING |
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INVESTMENT
OBJECTIVE, STRATEGIES AND RISKS |
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PORTFOLIO
TURNOVER |
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INFORMATION
REGARDING THE INDICES AND THE INDEX PROVIDERS |
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INVESTMENT
RESTRICTIONS |
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CURRENT
1940 ACT LIMITATIONS |
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CONTINUOUS
OFFERING |
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PORTFOLIO
HOLDINGS |
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MANAGEMENT
OF THE TRUST |
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BOARD
OF TRUSTEES AND OFFICERS |
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STANDING
BOARD COMMITTEES |
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TRUSTEE
AND OFFICER OWNERSHIP OF FUND SHARES |
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TRUSTEE
OWNERSHIP OF SECURITIES OF THE ADVISER AND RELATED COMPANIES |
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TRUSTEE
COMPENSATION |
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CODE
OF ETHICS |
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INVESTMENT
ADVISER |
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PORTFOLIO
MANAGERS |
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BROKERAGE
TRANSACTIONS |
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PROXY
VOTING |
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SUB-ADMINISTRATOR |
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DISTRIBUTOR |
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CUSTODIANS
AND TRANSFER AGENTS |
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SECURITIES
LENDING AGENTS |
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DESCRIPTION
OF SHARES |
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BOOK-ENTRY
ONLY SYSTEM |
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PURCHASE
AND REDEMPTION OF CREATION UNITS |
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TRANSACTIONS
IN CREATION UNITS |
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CREATION
UNIT AGGREGATIONS |
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PURCHASE
AND ISSUANCE OF CREATION UNIT AGGREGATIONS |
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REDEMPTION
OF CREATION UNITS |
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TAXES |
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U.S.
SHAREHOLDER |
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FUND
TAXATION |
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SECTIONS
351 AND 362 |
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FOREIGN
TAXES |
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TAXATION
OF FUND DISTRIBUTIONS |
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EXCESS
INCLUSION INCOME |
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TAXATION
OF INCOME FROM CERTAIN FINANCIAL INSTRUMENTS |
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SALES
OF SHARES |
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COST
BASIS REPORTING |
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REPORTING |
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BACKUP
WITHHOLDING |
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OTHER
TAXES |
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TAXATION
OF NON-U.S. SHAREHOLDERS |
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NET
ASSET VALUE |
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DISTRIBUTION
AND SERVICE PLAN |
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DIVIDENDS
AND DISTRIBUTIONS |
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GENERAL
POLICIES |
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DIVIDEND
REINVESTMENT SERVICE |
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FINANCIAL
STATEMENTS |
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OTHER
INFORMATION |
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CONTROL
PERSONS AND PRINCIPAL HOLDERS OF SECURITIES |
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INDEPENDENT
TRUSTEE COUNSEL |
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INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM |
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SECURITIES
LENDING AGENTS |
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ADDITIONAL
INFORMATION |
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APPENDIX
A |
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GENERAL
DESCRIPTION OF THE TRUST AND FUNDS
As
of February 1, 2023, the Trust consisted of 112 portfolios, 100 of which
were operational. The Trust was formed as a Delaware Statutory Trust on March 6,
2008 and is authorized to have multiple series or portfolios. The Trust is an
open-end management investment company, registered under the Investment Company
Act of 1940, as amended ("1940 Act"). The offering of the Trust's shares is
registered under the Securities Act of 1933, as amended ("Securities Act"). Each
Fund (other than the Global X MSCI Next Emerging & Frontier ETF, Global X
SuperDividend®
ETF, Global X SuperDividend®
U.S. ETF, Global X MSCI SuperDividend®
Emerging Markets ETF, Global X MSCI SuperDividend®
EAFE ETF, Global X SuperDividend®
REIT ETF, Global X SuperIncome™ Preferred ETF, Global X Guru®
Index ETF, Global X S&P 500®
Catholic Values ETF, Global X S&P 500®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X S&P
500®
Covered
Call & Growth ETF, Global X S&P 500®
Tail
Risk ETF, Global X S&P 500®
Risk Managed Income ETF, Global X S&P 500®
Collar 95-110 ETF and Global X Russell 2000 Covered Call & Growth ETF) is
"non-diversified" and, as such, the Fund's investments are not required to meet
certain diversification requirements under the 1940 Act. This SAI relates only
to the following Funds:
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Global
X MSCI Colombia ETF (GXG) |
Global
X Guru®
Index ETF (GURU) |
Global
X MSCI China Consumer Discretionary ETF (CHIQ) |
Global
X SuperIncome™ Preferred ETF (SPFF) |
Global
X MSCI China Industrials ETF (CHII) |
Global
X SuperDividend®
U.S. ETF (DIV) |
Global
X MSCI China Communication Services ETF (CHIC) |
Global
X S&P 500®
Covered Call ETF (XYLD) |
Global
X MSCI China Financials ETF (CHIX) |
Global
X NASDAQ 100®
Covered Call ETF (QYLD) |
Global
X MSCI China Energy ETF (CHIE) |
Global
X MSCI SuperDividend®
Emerging Markets ETF (SDEM) |
Global
X MSCI China Materials ETF (CHIM) |
Global
X SuperDividend®
REIT ETF (SRET) |
Global
X MSCI Norway ETF (NORW) |
Global
X Renewable Energy Producers ETF (RNRG) |
Global
X FTSE Southeast Asia ETF (ASEA)
|
Global
X S&P 500®
Catholic Values ETF (CATH) |
Global
X MSCI Argentina ETF (ARGT) |
Global
X MSCI SuperDividend®
EAFE ETF (EFAS) |
Global
X MSCI Greece ETF (GREK) |
Global
X E-commerce ETF (EBIZ) |
Global
X MSCI Nigeria ETF (NGE) |
Global
X Russell 2000 Covered Call ETF (RYLD) |
Global
X MSCI Next Emerging & Frontier ETF (EMFM) |
Global
X S&P Catholic Values Developed ex-U.S. ETF (CEFA) |
Global
X MSCI Portugal ETF (PGAL) |
Global
X Nasdaq 100®
Covered Call & Growth ETF (QYLG) |
Global
X DAX Germany ETF (DAX) |
Global
X S&P 500®
Covered Call & Growth ETF (XYLG) |
Global
X MSCI Pakistan ETF (PAK) |
Global
X Emerging Markets Internet & E-commerce ETF (EWEB) |
Global
X MSCI China Consumer Staples ETF (CHIS) |
Global
X S&P 500®
Tail Risk ETF (XTR) |
Global
X MSCI China Health Care ETF (CHIH) |
Global
X S&P 500®
Risk Managed Income ETF (XRMI) |
Global
X MSCI China Information Technology ETF (CHIK) |
Global
X S&P 500®
Collar 95-110 ETF (XCLR) |
Global
X MSCI China Real Estate ETF (CHIR) |
Global
X NASDAQ 100®
Tail Risk ETF (QTR) |
Global
X MSCI China Utilities ETF (CHIU) |
Global
X NASDAQ 100®
Risk Managed Income ETF (QRMI) |
Global
X MSCI Vietnam ETF (VNAM) |
Global
X NASDAQ 100®
Collar 95-110 ETF (QCLR) |
Global
X Copper Miners ETF (COPX) |
Global
X Disruptive Materials ETF (DMAT) |
Global
X Silver Miners ETF (SIL) |
Global
X Dow 30®
Covered Call ETF(DJIA) |
Global
X Gold Explorers ETF (GOEX) |
Global
X Russell 2000 Covered Call & Growth ETF (RYLG) |
Global
X Uranium ETF (URA) |
Global
X Financials Covered Call & Growth ETF (FYLG) |
Global
X Lithium & Battery Tech ETF (LIT) |
Global
X Health Care Covered Call & Growth ETF (HYLG) |
Global
X SuperDividend®
ETF (SDIV) |
Global
X Information Technology Covered Call & Growth ETF (TYLG) |
Global
X Social Media ETF (SOCL) |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF (CAGG)* |
The
following operational Funds changed names within the past five years:
The
Global X MSCI Greece ETF in 2016 (formerly known as the Global X FTSE Greece 20
ETF)
The
Global X MSCI SuperDividend®
Emerging Markets ETF in 2016 (formerly known as the Global X
SuperDividend®
Emerging Markets ETF)
The
Global X MSCI Portugal ETF in 2016 (formerly known as the Global X FTSE Portugal
20 ETF)
The
Global X FTSE Southeast Asia ETF in 2017 (formerly known as the Global X
Southeast Asia ETF)
The
Global X Lithium & Battery Tech ETF in 2017 (formerly known as the Global X
Lithium ETF)
The
Global X Social Media ETF in 2017 (formerly known as the Global X Social Media
Index ETF)
The
Global X MSCI China Consumer Discretionary ETF in 2018 (formerly known as the
Global X China Consumer ETF)
The
Global X MSCI China Energy ETF in 2018 (formerly known as the Global X China
Energy ETF)
The
Global X MSCI China Financials ETF in 2018 (formerly known as the Global X China
Financials ETF)
The
Global X MSCI China Industrials ETF in 2018 (formerly known as the Global X
China Industrials ETF)
The
Global X MSCI China Materials ETF in 2018 (formerly known as the Global X China
Materials ETF)
The
Global X MSCI China Communication Services ETF in 2018 (formerly known as the
Global X NASDAQ China Technology ETF)
The
Global X MSCI Next Emerging & Frontier ETF in 2019 (formerly known as the
Global X Next Emerging & Frontier ETF)
The
Global X Renewable Energy Producers ETF in 2021 (formerly known as the Global X
YieldCo & Renewable Energy Income ETF until January 31, 2021 and prior to
2018 previously known as the Global X YieldCo Index ETF)
The
Global X MSCI Norway ETF in 2021 (formerly known as the Global X FTSE Nordic
Region ETF)
The
Global X Disruptive Materials ETF in 2022 (formerly known as the Global X
Advanced Materials ETF)
On
October 29, 2021, the Global X MSCI Norway ETF (the “Acquired Fund”) was
reorganized into the Global X FTSE Nordic Region ETF (the “Acquiring Fund”),
each a separate series of the Trust (together, the “Combined Fund”) and the
Combined Fund was renamed the Global X MSCI Norway ETF. As a result of the
Reorganization as of the close of business on October 29, 2021, the Combined
Fund assumed the performance and accounting history of the Acquired
Fund.
The
Global X DAX Germany ETF, Global X NASDAQ 100®
Covered Call ETF and Global X S&P 500®
Covered Call ETF (each, a "Successor Fund") are each the successor to the
Horizons DAX Germany ETF, Horizons NASDAQ 100®
Covered Call ETF and Horizons S&P 500®
Covered Call ETF, respectively (each, a "Predecessor Fund"), each a series of
Horizons ETF Trust I. The Predecessor Funds were managed by Horizons ETFs
Management (US) LLC (the "Predecessor Adviser"). Each applicable Successor Fund
has the same investment objective and investment strategies as those of the
respective Predecessor Fund. Each Successor Fund acquired the assets and assumed
all of the liabilities of the applicable Predecessor Fund on December 24, 2018
(the "Reorganization").
The
investment objective of each Fund is to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of a specified benchmark index ("Underlying Index"). A Fund's
investment objective and Underlying Index may be changed without shareholder
approval. Shareholders will be given 60 days prior notice of any change of a
Fund's investment objective. If Global X Management Company LLC, the Funds'
investment adviser ("GXMC" or the "Adviser"), changes the Underlying Index, the
name of the Fund may be changed as well. Each Fund is managed by the
Adviser.
The
Funds offer and issue shares at net asset value per share ("NAV") only in
aggregations of a specified number of shares (each, a "Creation Unit" or a
"Creation Unit Aggregation"), generally in exchange for a basket of securities
included in each Fund's Underlying Index ("Deposit Securities"), together with
the deposit of a specified cash payment ("Cash Component"). The shares of the
Funds ("Shares") are, or will be, listed and expected to be traded on NYSE Arca,
NASDAQ or Cboe BZX.
Shares
trade in the secondary market and elsewhere at market prices that may be at,
above or below NAV. Shares are redeemable only in Creation Unit Aggregations
and, generally, in exchange for portfolio securities and a Cash Component. The
number of Shares per Creation Unit of each Fund are as follows:
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Fund |
Number
of Shares per Creation Unit |
Global
X MSCI Colombia ETF |
10,000 |
Global
X MSCI China Consumer Discretionary ETF |
10,000 |
Global
X MSCI China Industrials ETF |
10,000 |
Global
X MSCI China Communication Services ETF |
10,000 |
Global
X MSCI China Financials ETF |
10,000 |
Global
X MSCI China Energy ETF |
10,000 |
Global
X MSCI China Materials ETF |
10,000 |
Global
X MSCI Norway ETF |
10,000 |
Global
X FTSE Southeast Asia ETF |
10,000 |
Global
X MSCI Argentina ETF |
10,000 |
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Fund |
Number
of Shares per Creation Unit |
Global
X MSCI Greece ETF |
10,000 |
Global
X MSCI Nigeria ETF |
10,000 |
Global
X MSCI Next Emerging & Frontier ETF |
10,000 |
Global
X MSCI Portugal ETF |
10,000 |
Global
X DAX Germany ETF |
10,000 |
Global
X MSCI Pakistan ETF |
10,000 |
Global
X MSCI China Consumer Staples ETF |
10,000 |
Global
X MSCI China Health Care ETF |
10,000 |
Global
X MSCI China Information Technology ETF |
10,000 |
Global
X MSCI China Real Estate ETF |
10,000 |
Global
X MSCI China Utilities ETF |
10,000 |
Global
X MSCI Vietnam ETF |
10,000 |
Global
X Copper Miners ETF |
10,000 |
Global
X Silver Miners ETF |
10,000 |
Global
X Gold Explorers ETF |
10,000 |
Global
X Uranium ETF |
10,000 |
Global
X Lithium & Battery Tech ETF |
10,000 |
Global
X SuperDividend®
ETF |
10,000 |
Global
X Social Media ETF |
10,000 |
Global
X Guru®
Index ETF |
10,000 |
Global
X SuperIncome™ Preferred ETF |
10,000 |
Global
X SuperDividend®
U.S. ETF |
10,000 |
Global
X S&P 500®
Covered Call ETF |
10,000 |
Global
X NASDAQ 100®
Covered Call ETF |
10,000 |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
10,000 |
Global
X SuperDividend®
REIT ETF |
10,000 |
Global
X Renewable Energy Producers ETF |
10,000 |
Global
X S&P 500®
Catholic Values ETF |
10,000 |
Global
X MSCI SuperDividend®
EAFE ETF |
10,000 |
Global
X E-commerce ETF |
10,000 |
Global
X Russell 2000 Covered Call ETF |
10,000 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
10,000 |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
10,000 |
Global
X S&P 500®
Covered Call & Growth ETF |
10,000 |
Global
X Emerging Markets Internet & E-commerce ETF |
10,000 |
Global
X S&P 500®
Tail Risk ETF |
10,000 |
Global
X S&P 500®
Risk Managed Income ETF |
10,000 |
Global
X S&P 500®
Collar 95-110 ETF |
10,000 |
Global
X NASDAQ 100®
Tail Risk ETF |
10,000 |
Global
X NASDAQ 100®
Risk Managed Income ETF |
10,000 |
Global
X NASDAQ 100®
Collar 95-110 ETF |
10,000 |
Global
X Disruptive Materials ETF |
10,000 |
Global
X Dow 30®
Covered Call ETF |
10,000 |
Global
X Russell 2000 Covered Call & Growth ETF |
10,000 |
Global
X Financials Covered Call & Growth ETF |
10,000 |
Global
X Health Care Covered Call & Growth ETF |
10,000 |
Global
X Information Technology Covered Call & Growth ETF |
10,000 |
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|
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|
Fund |
Number
of Shares per Creation Unit |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF |
10,000 |
The
Trust reserves the right to offer a "cash" option for creations and redemptions
of Shares. Shares may be issued in advance of receipt of Deposit Securities
subject to various conditions, including a requirement to maintain on deposit
with the Trust cash equal to 110% of the market value of the missing Deposit
Securities. The required amount of deposit may be changed by the Adviser from
time to time. See the "Purchase and Redemption of Creation Units" section of
this SAI for further discussion. In each instance of such cash creations or
redemptions, transaction fees may be imposed that will be in addition to the
transaction fees associated with in-kind creations or redemptions. In all cases,
such conditions and fees will be limited in accordance with the requirements of
the Securities and Exchange Commission ("SEC") applicable to management
investment companies offering redeemable securities.
ADDITIONAL
INVESTMENT INFORMATION
EXCHANGE
LISTING AND TRADING
A
discussion of exchange listing and trading matters associated with an investment
in each Fund is contained in the applicable Prospectus. The discussion below
supplements, and should be read in conjunction with, that section of such
Prospectus.
Shares
of each Fund are listed for trading on the Exchange and trade throughout the day
on the Exchange and other secondary markets. There can be no assurance that each
Fund will continue to meet the listing requirements of the Exchange on which it
is listed. The Exchange may, but is not required to, remove the Shares of a Fund
from its listing if (1) following the initial twelve-month period beginning upon
the commencement of trading of the Fund, there are fewer than fifty (50) record
and/or beneficial holders of the Fund for thirty (30) or more consecutive
trading days, (2) the value of the Underlying Index on which the Fund is based
is no longer calculated or available, or (3) any other event shall occur or
condition exist that, in the opinion of the Exchange, makes further dealings on
the Exchange inadvisable. The Exchange will remove the Shares of a Fund from
listing and trading upon termination of the Fund.
As
in the case of other publicly traded securities, brokers' commissions on
transactions will be based on negotiated commission rates at customary
levels.
In
order to provide additional information regarding the indicative value of Shares
of each Fund, the Exchange or a designated "indicative optimized portfolio
value" ("IOPV") provider disseminates every fifteen seconds, through the
facilities of the Consolidated Tape Association, an updated IOPV for each Fund
as calculated by an information provider or a market data vendor. The Trust is
not involved in or responsible for any aspect of the calculation or
dissemination of the IOPVs and makes no representation or warranty as to the
accuracy of the IOPVs.
An
IOPV has a securities value component and a cash component. The securities
values included in an IOPV are the values of the Deposit Securities for the
applicable Fund. The IOPV is generally determined by using both current market
quotations and/or price quotations obtained from broker-dealers that may trade
in the portfolio securities held by a Fund. The quotations of certain Fund
holdings may not be updated during U.S. trading hours if such holdings do not
trade in the United States. While the IOPV reflects the current market value of
the Deposit Securities required to be deposited in connection with the purchase
of a Creation Unit Aggregation, it does not necessarily reflect the precise
composition of the current portfolio of securities held by the applicable Fund
at a particular point in time, because the current portfolio of the Fund may
include securities that are not a part of the Deposit Securities. Furthermore,
the IOPV does not capture certain items, such as tax liability accruals, which
may occur for Fund investments in certain foreign jurisdictions. Therefore, each
Fund's IOPV disseminated during the Exchange's trading hours should not be
viewed as a real time update of the Fund's NAV, which is calculated only once a
day.
In
addition to the securities component described in the preceding paragraph, the
IOPV for each Fund includes a cash component consisting of estimated accrued
dividends and other income, less expenses. If applicable, each IOPV also
reflects changes in currency exchange rates between the U.S. Dollar and the
applicable foreign currency.
The
Trust reserves the right to adjust the share prices of the Funds in the future
to maintain convenient trading ranges for investors. Any adjustments would be
accomplished through stock splits or reverse stock splits, which would have no
effect on the net assets of the applicable Fund.
INVESTMENT
OBJECTIVE, STRATEGIES AND RISKS
Each
Fund seeks to achieve its objective by investing primarily in securities issued
by companies that comprise the relevant Underlying Index and through
transactions that provide substantially similar exposure to securities in the
Underlying Index. Each Fund operates as an index fund and will not be actively
managed. Adverse performance of a security in a Fund's portfolio will ordinarily
not result in the elimination of the security from the Fund's portfolio. Each
Fund invests at least 80% of its total assets in the securities of its
Underlying Index and, if applicable, in American Depositary Receipts ("ADRs")
and Global Depositary Receipts ("GDRs") (collectively "Depositary Receipts")
based on the securities in its Underlying Index. Each Fund may also invest up to
20% of its assets in certain futures, options and swap contracts, cash and cash
equivalents, as well as in stocks not included in its Underlying Index but which
the Adviser believes will help the Fund track its Underlying Index.
All
Funds (other than the Global X Russell 2000 Covered Call ETF, the Global X
S&P Catholic Values U.S. Aggregate Bond ETF, the Global X Russell 2000
Covered Call & Growth ETF, the Global X Financials Covered Call & Growth
ETF, the Global X Health Care Covered Call & Growth ETF and the Global X
Information Technology Covered Call & Growth ETF, which uses a
representative sampling strategy) use a replication strategy. A replication
strategy is an indexing strategy that involves investing in the securities of
the Underlying Index in approximately the same proportions as in the Underlying
Index. However, a Fund may utilize a representative sampling strategy with
respect to its Underlying Index when a replication strategy might be detrimental
to its shareholders, such as when there are practical difficulties or
substantial costs involved in compiling a portfolio of securities to follow its
Underlying Index, or, in certain instances, when securities in the Underlying
Index become temporarily illiquid, unavailable or less liquid, or due to legal
restrictions (such as diversification requirements that apply to the Funds but
not the Underlying Index).
Because
of potential constraints that may arise for purchasing all of the securities in
the Underlying Index, the Global X Russell 2000 Covered Call ETF, the Global X
S&P Catholic Values U.S. Aggregate Bond ETF, the Global X Russell 2000
Covered Call & Growth ETF, the Global X Financials Covered Call & Growth
ETF, the Global X Health Care Covered Call & Growth ETF and the Global X
Information Technology Covered Call & Growth ETF may not purchase all of the
securities in the applicable Underlying Index. Instead, the Adviser will utilize
a representative sampling strategy in an effort to hold a portfolio of
securities with generally the same risk and return characteristics as the
applicable Underlying Index.
Each
Fund has adopted a non-fundamental investment policy to invest, under normal
circumstances, at least 80% of the value of its net assets, plus the amount of
any borrowings for investment purposes, in securities of the Fund's Underlying
Index and in Depositary Receipts based on securities in the Underlying Index. A
Fund also may have adopted an additional non-fundamental policy to invest at
least 80% of its total assets in securities as disclosed in its Prospectus. Each
Fund has also adopted a policy to provide its shareholders with at least 60 days
prior written notice of a change to its investment objective. If, subsequent to
an investment, the 80% requirement is no longer met, a Fund's future investments
will be made in a manner that will bring the Fund into compliance with this
policy.
The
following supplements the information contained in the Prospectus concerning the
investment objectives and policies of the Funds.
CYBER
SECURITY RISK. With
the increased use of technologies such as the Internet to conduct business, each
Fund is susceptible to operational, information security and related risks. In
general, cyber incidents can result from deliberate attacks or unintentional
events. Cyber attacks include, but are not limited to, gaining unauthorized
access to digital systems (e.g., through “hacking” or malicious software coding)
for purposes of misappropriating assets or sensitive information, corrupting
data, or causing operational disruption. Cyber attacks may also be carried out
in a manner that does not require gaining unauthorized access, such as causing
denial-of-service attacks on websites (i.e., efforts to make network services
unavailable to intended users). Cyber security failures or breaches suffered by
a Fund’s adviser, distributor and other service providers (including, but not
limited to, index providers, fund accountants, custodians, transfer agents and
administrators), market makers, Authorized Participants (as defined below) and
the issuers of securities in which the Funds invest have the ability to cause
disruptions and impact business operations potentially resulting in financial
losses, interference with a Fund’s ability to calculate its NAV, impediments to
trading, the inability of Fund shareholders to transact business, violations of
applicable privacy and other laws, regulatory fines, penalties, reputational
damage, reimbursement or other compensation costs, or additional compliance
costs. In addition, substantial costs may be incurred in order to prevent any
cyber incidents in the future. While the Funds have established business
continuity plans in the event of, and risk management systems to prevent, such
cyber attacks, there are inherent limitations in such plans and systems,
including the possibility that certain risks have not been identified.
Furthermore, the Funds cannot control the cyber security plans and systems put
in place by service providers to the Funds and issuers in which the Funds
invest, market makers or Authorized Participants. The Funds and their
shareholders could be negatively impacted as a result of any cyber incidents
impacting such parties.
DEPOSITARY
RECEIPTS.
ADRs are receipts that are traded in the United States evidencing ownership of
the underlying foreign securities and are denominated in U.S. dollars. GDRs are
receipts issued by a non-U.S. financial institution evidencing ownership of
underlying foreign or U.S. securities and usually are denominated in foreign
currencies. GDRs may not be denominated in the same currency as the securities
they represent. Generally, GDRs are designed for use in the foreign securities
markets.
To
the extent each Fund invests in ADRs, such ADRs will be listed on a national
securities exchange. To the extent each Fund invests in GDRs, such GDRs will be
listed on a foreign exchange. The Funds will not invest in any unlisted
Depositary Receipt or any Depositary Receipt for which pricing information is
not readily available. Generally, all Depositary Receipts must be sponsored. The
Funds, however, may invest in unsponsored Depositary Receipts under certain
limited circumstances. A non-sponsored depository may not provide the same
shareholder information that a sponsored depositary is required to provide under
its contractual arrangement with the issuer. Therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depositary Receipts.
NON-DIVERSIFICATION
RISK.
Non-diversification risk is the risk that a non-diversified fund may be more
susceptible to adverse financial, economic or other developments affecting any
single issuer, and more susceptible to greater losses because of these
developments. Each Fund (except the Global X MSCI Next Emerging & Frontier
ETF, Global X SuperDividend®
ETF, Global X SuperDividend®
U.S. ETF, Global X MSCI SuperDividend®
Emerging Markets ETF, Global X MSCI SuperDividend®
EAFE ETF, Global X SuperDividend®
REIT ETF, Global X SuperIncome™ Preferred ETF, Global X Guru®
Index ETF, Global X S&P 500®
Catholic Values ETF, Global X S&P 500®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X S&P
500®
Covered
Call & Growth ETF, Global X S&P 500®
Tail
Risk ETF, Global X S&P 500®
Risk Managed Income ETF, Global X S&P 500®
Collar 95-110 ETF and Global X Russell 2000 Covered Call & Growth ETF) is
classified as “non-diversified” for purposes of the 1940 Act. A
“non-diversified” classification means that a Fund is not limited by the 1940
Act with regard to the percentage of its assets that may be invested in the
securities of a single issuer. The securities of a particular issuer may
dominate the Underlying Index of a Fund and, consequently, a Fund’s investment
portfolio. Each Fund may also concentrate its investments in a particular
industry or group of industries, as noted in the description of the Fund. The
securities of issuers in particular industries may dominate the Underlying Index
of such a Fund and, consequently, the Fund’s investment portfolio. This may
adversely affect its performance or subject the Fund’s Shares to greater price
volatility than that experienced by less concentrated investment companies.
Each
Fund intends to maintain the required level of diversification and otherwise
conduct its operations so as to qualify as a “regulated investment company” for
purposes of the Internal Revenue Code of 1986, as amended (the “Code”), and to
relieve the Fund of any liability for federal income tax to the extent that its
earnings are distributed to shareholders. Compliance with the diversification
requirements of the Code may limit the investment flexibility of certain Funds
and may make it less likely that such a Fund will meet its investment objective.
SHORT-TERM
INSTRUMENTS AND TEMPORARY INVESTMENTS.
To the extent consistent with its investment policies, each Fund may invest in
short-term instruments, including money market instruments, on an ongoing basis
to provide liquidity or for other reasons. Money market instruments are
generally short-term investments that may include but are not limited to: (i)
shares of money market funds; (ii) obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities (including government-sponsored
enterprises ("GSE")); (iii) negotiable certificates of deposit ("CDs"), bankers'
acceptances, fixed time deposits, bank notes and other obligations of U.S. and
foreign banks (including foreign branches) and similar institutions; (iv)
commercial paper rated at the date of purchase "Prime-1" by Moody's Investors
Service, Inc. ("Moody's"), "A-1" by Standard & Poor's Rating Service
("S&P") or, if unrated, of comparable quality as determined by the Adviser;
(v) non-convertible corporate debt securities (e.g., bonds and debentures) with
remaining maturities at the date of purchase of not more than 397 days and that
satisfy the rating requirements set forth in Rule 2a-7 under the 1940 Act; (vi)
repurchase agreements; and (vii) short-term U.S. dollar-denominated obligations
of foreign banks (including U.S. branches) that, in the opinion of the Adviser,
are of comparable quality to obligations of U.S. banks which may be purchased by
a Fund. Any of these instruments may be purchased on a current or a
forward-settled basis.
Pursuant
to amendments adopted by the SEC in July 2014, money market fund regulations
require money market funds that do not meet the definitions of a retail money
market fund or government money market fund to transact at a floating NAV per
share (similar to all other non-money market mutual funds), instead of at a $1
stable share price, as well as permit (or, in certain circumstances, require)
money market funds to impose liquidity fees and redemption gates for use in
times of market stress. Any impact on the trading and value of money market
instruments as a result of these money market fund regulations may negatively
affect a Fund's yield and return potential.
Time
deposits are non-negotiable deposits maintained in banking institutions for
specified periods of time at stated interest rates. Bankers' acceptances are
time drafts drawn on commercial banks by borrowers, usually in connection with
international
transactions.
Commercial paper represents short-term unsecured promissory notes issued in
bearer form by banks or bank holding companies, corporations and finance
companies. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a stated maturity date and
bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand
by the investor but may be subject to early withdrawal penalties that vary
depending upon market conditions and the remaining maturity of the obligation.
There are no contractual restrictions on the right to transfer a beneficial
interest in a fixed time deposit to a third party. Bank notes generally rank
junior to deposit liabilities of banks and pari passu with other senior,
unsecured obligations of the bank. Bank notes are classified as "other
borrowings" on a bank's balance sheet, while deposit notes and certificates of
deposit are classified as deposits. Bank notes are not insured by the FDIC or
any other insurer.
Each
Fund may invest a portion of its assets in the obligations of foreign banks and
foreign branches of domestic banks. Such obligations include Eurodollar
Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated certificates
of deposit issued by offices of foreign and domestic banks located outside the
United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs,
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar-denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
Commercial
paper purchased by the Funds may include asset-backed commercial paper.
Asset-backed commercial paper is issued by a special purpose entity that is
organized to issue the commercial paper and to purchase trade receivables or
other financial assets. The credit quality of asset-backed commercial paper
depends primarily on the quality of these assets and the level of any additional
credit support.
EQUITY
SWAPS, TOTAL RATE OF RETURN SWAPS AND CURRENCY SWAPS.
Each Fund (other than the Global X MSCI Colombia ETF) may invest up to 20% of
its total assets in swap contracts.
A
swap is an agreement involving the exchange by a Fund with another party of
their respective commitments to pay or receive payments at specified dates based
upon or calculated by reference to changes in specified prices or rates (e.g.,
interest rates in the case of interest rate swaps) based on a specified amount
(the "notional" amount). Some swaps currently are, and more in the future will
be, exchange-traded and centrally cleared. Examples of swap agreements include,
but are not limited to, equity, index or other total return swaps and foreign
currency swaps.
Each
Fund may enter into equity swap contracts to invest in a market without owning
or taking physical custody of securities in circumstances in which direct
investment is restricted for legal reasons or is otherwise impracticable. These
instruments provide a great deal of flexibility. For example, a counterparty may
agree to pay a Fund the amount, if any, by which the notional amount of the
equity swap contract would have increased in value had it been invested in
particular stocks (or an index of stocks), plus the dividends that would have
been received on those stocks. In these cases, a Fund may agree to pay to the
counterparty the amount, if any, by which that notional amount would have
decreased in value had it been invested in the stocks. Therefore, the return to
a Fund on any equity swap contract should be the gain or loss on the notional
amount plus dividends on the stocks less the interest paid by the Fund on the
notional amount. In other cases, the counterparty and the Fund may each agree to
pay the other the difference between the relative investment performances that
would have been achieved if the notional amount of the equity swap contract had
been invested in different stocks (or indices of stocks).
Total
rate of return swaps are contracts that obligate a party to pay or receive
interest in exchange for the payment by the other party of the total return
generated by a security, a basket of securities, an index or an index component.
The Funds also may enter into currency swaps, which involve the exchange of the
rights of the Funds and another party to make or receive payments in specific
currencies. Currency swaps involve the exchange of rights of the Funds and
another party to make or receive payments in specific currencies.
Some
swaps transactions are entered into on a net basis, i.e., the two payment
streams are netted out, with a Fund receiving or paying, as the case may be,
only the net amount of the two payments. A Fund will enter into equity swaps
only on a net basis. Payments may be made at the conclusion of an equity swap
contract or periodically during its term. Equity swaps do not involve the
delivery of securities or other underlying assets. Accordingly, the risk of loss
with respect to equity swaps is limited to the net amount of payments that such
Fund is contractually obligated to make. If the other party to an equity swap,
or any
other
swap entered into on a net basis, defaults, a Fund's risk of loss consists of
the net amount of payments that such Fund is contractually entitled to receive,
if any. In contrast, other swaps transactions may involve the payment of the
gross amount owed. For example, currency swaps usually involve the delivery of
the entire principal amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. To the extent that the amount payable by a
Fund under a swap is covered by segregated cash or liquid assets, the Funds and
the Adviser believe that transactions do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to the
Funds' borrowing restrictions.
Swaps
that are centrally cleared are subject to the creditworthiness of the clearing
organizations involved in the transaction. For example, a Fund could lose margin
payments it has deposited with the clearing organization as well as the net
amount of gains not yet paid by the clearing organization if it breaches its
agreement with the Fund or becomes insolvent or goes into bankruptcy. In the
event of bankruptcy of the clearing organization, the Fund may be entitled to
the net amount of gains the Fund is entitled to receive plus the return of
margin owed to it only in proportion to the amount received by the clearing
organization's other customers, potentially resulting in losses to the
Fund.
To
the extent a swap is not centrally cleared, the use of swaps also involves the
risk that a loss may be sustained as a result of the insolvency or bankruptcy of
the counterparty or the failure of the counterparty to make required payments or
otherwise comply with the terms of the agreement.
A
Fund will not enter into any swap transactions unless the unsecured commercial
paper, senior debt or claims-paying ability of the other party is rated either
A, or A-1 or better by S&P or Fitch Ratings ("Fitch"); or A or Prime-1 or
better by Moody's, or has received a comparable rating from another organization
that is recognized as a nationally recognized statistical rating organization
("NRSRO") or, if unrated by such rating organization, is determined to be of
comparable quality by the Adviser. If a counterparty's creditworthiness
declines, the value of the swap might decline, potentially resulting in losses
to a Fund. Changing conditions in a particular market area, whether or not
directly related to the referenced assets that underlie the swap agreement, may
have an adverse impact on the creditworthiness of the counterparty. For example,
the counterparty may have experienced losses as a result of its exposure to a
sector of the market that adversely affect its creditworthiness. If there is a
default by the other party to such a transaction, a Fund will have contractual
remedies pursuant to the agreements related to the transaction. Such contractual
remedies, however, may be subject to bankruptcy and insolvency laws that may
affect such Fund's rights as a creditor (e.g.,
the Fund may not receive the net amount of payments that it contractually is
entitled to receive). The swap market has grown substantially in recent years
with a large number of banks and investment banking firms acting both as
principals and as agents utilizing standardized swap documentation. As a result,
the swap market has become relatively liquid in comparison with markets for
other similar instruments which are traded in the interbank market.
The
use of equity, total rate of return and currency swaps is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions.
In
connection with a Fund's position in a swaps contract, the Fund will segregate
liquid assets or will otherwise cover its position in accordance with applicable
SEC requirements.
FOREIGN
CURRENCY TRANSACTIONS.
To the extent consistent with its investment policies, each Fund may invest in
forward foreign currency exchange contracts and foreign currency futures
contracts. No Fund, however, expects to engage in currency transactions for
speculative purposes or for the purpose of hedging against declines in the value
of a Fund's assets that are denominated in a foreign currency. A Fund may enter
into forward foreign currency exchange contracts and foreign currency futures
contracts to facilitate local settlements or to protect against currency
exposure in connection with its distributions to shareholders.
Foreign
currency exchange contracts involve an obligation to purchase or sell a
specified currency on a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Fund to establish a rate of exchange for
a future point in time. Foreign currency futures contracts involve an obligation
to deliver or acquire the specified amount of a specific currency, at a
specified price and at a specified future time. Such futures contracts may be
settled on a net cash payment basis rather than by the sale and delivery of the
underlying currency. A Fund may incur costs in connection with forward foreign
currency exchange and futures contracts and conversions of foreign currencies
and U.S. dollars.
Liquid
assets equal to the amount of a Fund's assets that could be required to
consummate forward contracts will be segregated except to the extent the
contracts are otherwise "covered." The segregated assets will be valued at
market or fair value. If the market or fair value of such assets declines,
additional liquid assets will be segregated daily so that the value of the
segregated
assets
will equal the amount of such commitments by the Fund. A forward contract to
sell a foreign currency is "covered" if a Fund owns the currency (or securities
denominated in the currency) underlying the contract, or holds a forward
contract (or call option) permitting the Fund to buy the same currency at a
price that is (i) no higher than the Fund's price to sell the currency or (ii)
greater than the Fund's price to sell the currency provided the Fund segregates
liquid assets in the amount of the difference. A forward contract to buy a
foreign currency is "covered" if a Fund holds a forward contract (or call
option) permitting the Fund to sell the same currency at a price that is (i) as
high as or higher than the Fund's price to buy the currency or (ii) lower than
the Fund's price to buy the currency, provided the Fund segregates liquid assets
in the amount of the difference.
FOREIGN
INVESTMENTS – GENERAL.
To the extent consistent with its investment policies, each Fund may invest in
foreign securities. Investment in foreign securities involves special risks.
These include market risk, interest rate risk and the risks of investing in
securities of foreign issuers and of companies whose securities are principally
traded outside the United States on foreign exchanges or foreign
over-the-counter markets and in investments denominated in foreign currencies.
Market risk involves the possibility that stock prices will decline over short
or even extended periods. The stock markets tend to be cyclical, with periods of
generally rising prices and periods of generally declining prices. These cycles
will affect the value of a Fund to the extent that it invests in foreign stocks.
In addition, the performance of investments in securities denominated in a
foreign currency will depend on the strength of the foreign currency against the
U.S. dollar and the interest rate environment in the country issuing the
currency. Absent other events which could otherwise affect the value of a
foreign security (such as a change in the political climate or an issuer's
credit quality), appreciation in the value of the foreign currency generally can
be expected to increase the value of a foreign currency-denominated security in
terms of U.S. dollars. A rise in foreign interest rates or decline in the value
of the foreign currency relative to the U.S. dollar generally can be expected to
depress the value of a foreign currency-denominated security.
There
are other risks and costs involved in investing in foreign securities, which are
in addition to the usual risks inherent in domestic investments. Investment in
foreign securities involves higher costs than investment in U.S. securities,
including higher transaction and custody costs as well as the imposition of
additional taxes by foreign governments. Foreign investments also involve risks
associated with the level of currency exchange rates, less complete financial
information about the issuers, less market liquidity, more market volatility and
political instability. Future political and economic developments, the possible
imposition of withholding taxes on dividend income, the possible seizure or
nationalization of foreign holdings, the possible establishment of exchange
controls, or the adoption of other governmental restrictions might adversely
affect an investment in foreign securities. Additionally, foreign banks and
foreign branches of domestic banks are subject to less stringent reserve
requirements, and to different accounting, auditing and recordkeeping
requirements. Also, the legal remedies for investors may be more limited than
the remedies available in the U.S.
Although
a Fund may invest in securities denominated in foreign currencies, its portfolio
securities and other assets are valued in U.S. dollars. Currency exchange rates
may fluctuate significantly over short periods of time causing, together with
other factors, a Fund's NAV to fluctuate as well. Currency exchange rates can be
affected unpredictably by the intervention or the failure to intervene by U.S.
or foreign governments or central banks, or by currency controls or political
developments in the U.S. or abroad. To the extent that a Fund's total assets,
adjusted to reflect a Fund's net position after giving effect to currency
transactions, are denominated in the currencies of foreign countries, a Fund
will be more susceptible to the risk of adverse economic and political
developments within those countries.
Issuers
of foreign securities may also suffer from social, political and economic
instability. Such instability can lead to illiquidity or price volatility in
foreign securities traded on affected markets. Foreign issuers may be subject to
the risk that during certain periods the liquidity of securities of a particular
issuer or industry, or all the securities within a particular region, will be
adversely affected by economic, market or political events, or adverse investor
perceptions, which may cause temporary or permanent devaluation of the relevant
securities. In addition, if a market for a foreign security closes as a result
of such instability, it may be more difficult to obtain accurate independently
sourced prices for securities traded on these markets and may be difficult to
value the affected foreign securities for extended periods of time.
A
Fund also is subject to the possible imposition of exchange control regulations
or freezes on the convertibility of currency. In addition, through the use of
forward currency exchange contracts with other instruments, any net currency
positions of the Funds may expose them to risks independent of their securities
positions.
A
Fund will be subject to foreign withholding taxes with respect to certain
dividends or interest received from sources in foreign countries, and capital
gains on securities of certain foreign countries may be subject to taxation. To
the extent such taxes are not offset by credits or deductions allowed to
investors under U.S. federal income tax law, they may reduce the net return to
shareholders.
The
costs attributable to investing abroad usually are higher than investments in
domestic securities for several reasons, such as the higher cost of investment
research, higher costs of custody of foreign securities, higher commissions paid
on comparable transactions on foreign markets and additional costs arising from
delays in settlements of transactions involving foreign securities.
Foreign
markets also have different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Such delays in settlement could result in temporary periods when a
portion of the assets of a Fund remain un-invested and no return is earned on
such assets. The inability of a Fund to make intended security purchases or
sales due to settlement problems could result either in losses to a Fund due to
subsequent declines in value of the portfolio securities or, if a Fund has
entered into a contract to sell the securities, could result in possible
liability to the purchaser.
FOREIGN
INVESTMENTS – EMERGING MARKETS.
Countries with emerging markets are generally located in the Asia and Pacific
regions, the Middle East, Eastern Europe, Central America, South America, and
Africa. To the extent permitted by their investment policies, the Funds may
invest their assets in countries with emerging economies or securities markets.
The
securities markets of emerging countries are less liquid and subject to greater
price volatility, and have a smaller market capitalization, than the securities
markets of more developed countries. In certain countries, there may be fewer
publicly traded securities and the market may be dominated by a few issues or
sectors. Issuers and securities markets in such countries are not subject to as
extensive and frequent accounting, financial and other reporting requirements or
as comprehensive government regulations as are issuers and securities markets in
the U.S. In particular, the assets and profits appearing on the financial
statements of emerging country issuers may not reflect their financial position
or results of operations in the same manner as financial statements for U.S.
issuers. Substantially less information may be publicly available about emerging
country issuers than is available about issuers in the United States.
Emerging
country securities markets are typically marked by a high concentration of
market capitalization and trading volume in a small number of issuers
representing a limited number of industries, as well as a high concentration of
ownership of such securities by a limited number of investors. The markets for
securities in certain emerging countries are in the earliest stages of their
development. Even the markets for relatively widely traded securities in
emerging countries may not be able to absorb, without price disruptions, a
significant increase in trading volume or trades of a size customarily
undertaken by institutional investors in the securities markets of developed
countries. The limited size of many of these securities markets can cause prices
to be erratic for reasons apart from factors that affect the soundness and
competitiveness of the securities issuers. For example, prices may be unduly
influenced by traders who control large positions in these markets.
Additionally, market making and arbitrage activities are generally less
extensive in such markets, which may contribute to increased volatility and
reduced liquidity of such markets. The limited liquidity of emerging country
securities may also affect a Fund’s ability to accurately value its portfolio
securities or to acquire or dispose of securities at the price and time it
wishes to do so or in order to meet redemption requests.
Certain
emerging market countries may have antiquated legal systems, which may adversely
impact the Funds. For example, while the potential liability of a shareholder in
a U.S. corporation with respect to acts of the corporation is generally limited
to the amount of the shareholder’s investment, the notion of limited liability
is less clear in certain emerging market countries. Similarly, the rights of
investors in emerging market companies may be more limited than those of
shareholders in U.S. corporations.
Transaction
costs, including brokerage commissions or dealer mark-ups, in emerging countries
may be higher than in developed securities markets. In addition, existing laws
and regulations are often inconsistently applied. As legal systems in emerging
countries develop, foreign investors may be adversely affected by new or amended
laws and regulations. In circumstances where adequate laws exist, it may not be
possible to obtain swift and equitable enforcement of the law.
Certain
emerging market countries may restrict or control foreign investments in their
securities markets. These restrictions may limit a Fund’s investment in certain
emerging countries and may increase the expenses of such Fund. Certain emerging
countries require governmental approval prior to investments by foreign persons
or limit investment by foreign persons to only a specified percentage of an
issuer’s outstanding securities or a specific class of securities which may have
less advantageous terms (including price) than securities of the company
available for purchase by nationals. In addition, the repatriation of both
investment income and capital from emerging countries may be subject to
restrictions which require governmental consents or prohibit repatriation
entirely for a period of time. Even where there is no outright restriction on
repatriation of capital, the mechanics of repatriation may affect certain
aspects of the operation of a Fund. A Fund may be required to establish special
custodial or other arrangements before investing in certain emerging countries.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer’s securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level, for a period of
time around a shareholder meeting. These restrictions have the effect of barring
the purchase and sale of certain voting securities within a specified number of
days before, and in certain instances, after a shareholder meeting where a vote
of shareholders will be taken. Share blocking may prevent a Fund from buying or
selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in certain countries, the block cannot be removed. As a result of the
ramifications of voting ballots in markets that allow share blocking, the
Adviser, on behalf of a Fund, reserves the right to abstain from voting proxies
in those markets.
Emerging
countries may be subject to a substantially greater degree of economic,
political and social instability and disruption than more developed countries.
This instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, including changes or attempted changes in governments through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic or social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; (v) ethnic, religious and
racial disaffection or conflict; (vi) the absence of developed legal structures
governing foreign private investments and private property; (vii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (viii) certain national policies which may restrict a
Fund’s investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (ix) foreign taxation; (x)
the absence, in some cases, of a capital market structure or market-oriented
economy; and (xi) the possibility that economic developments may be slowed or
reversed by unanticipated political or social events in such countries. Such
economic, political and social instability could disrupt the principal financial
markets in which a Fund may invest and adversely affect the value of the Fund’s
assets. A Fund’s investments can also be adversely affected by any increase in
taxes or by political, economic or diplomatic developments.
The
economies of emerging countries may suffer from unfavorable growth of gross
domestic product, rates of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments. Many emerging countries have
experienced in the past, and continue to experience, high rates of inflation. In
certain countries inflation has at times accelerated rapidly to
hyperinflationary levels, creating a negative interest rate environment and
sharply eroding the value of outstanding financial assets in those countries.
Other emerging countries, on the other hand, have experienced deflationary
pressures and are in economic recessions. In addition, many emerging countries
are also highly dependent on international trade and exports, including exports
of oil and other commodities to sustain their economic growth. As a result,
emerging countries are particularly vulnerable to downturns of the world
economy.
A
portion of a Fund’s investments may be in Russian securities and instruments. As
a result of recent events, the United States and the Economic and Monetary Union
of the European Union, along with the regulatory bodies of a number of
countries, including Japan, Australia, Norway, Switzerland and Canada, have
imposed economic sanctions and renewed existing economic sanctions, which
consist of prohibiting certain securities trades, prohibiting certain private
transactions in the energy sector, asset freezes, and prohibition of all
business, against certain Russian individuals and Russian corporate entities.
New sanctions announced in February and March 2022 include measures against the
Russian financial sector and restrictions on business in the Donetsk and Luhansk
regions of Ukraine. The United States and other nations or international
organizations may impose additional, broader economic sanctions or take other
actions that may adversely affect Russian-related issuers in the future. These
sanctions, any future sanctions or other actions, or even the threat of further
sanctions or other actions, may negatively affect the value and liquidity of a
Fund’s investments. For example, a Fund may be prohibited from investing in
securities issued by companies subject to such sanctions. In addition, the
sanctions may require a Fund to freeze its existing investments in Russian
companies, prohibiting the Fund from buying, selling or otherwise transacting in
these investments. Russia may undertake countermeasures or retaliatory actions,
which may further impair the value and liquidity of a Fund’s portfolio and
potentially disrupt its operations. Also, if an affected security is included in
a Fund's Underlying Index, the Fund may, where practicable, seek to eliminate
its holdings of the affected security by employing or augmenting its
representative sampling strategy to seek to track the investment results of its
Underlying Index. The use of (or increased use of) a representative sampling
strategy may increase a Fund’s tracking error risk. These sanctions may also
lead to changes in a Fund’s Underlying Index. A Fund’s index provider may remove
securities from the Underlying Index or implement caps on the securities of
certain issuers that have been subject to recent economic sanctions. In such an
event, it is expected that a Fund will rebalance its portfolio to bring it in
line with its Underlying Index as a result of any such changes, which may result
in transaction costs and increased tracking error.
For
these or other reasons, a Fund could seek to suspend redemptions of Creation
Units, including in the event that an emergency exists in which it is not
reasonably practicable for the Fund to dispose of its securities or to determine
its net asset
value.
A Fund could also, among other things, limit or suspend creations of Creation
Units. During the period that creations or redemptions are affected, Shares
could trade at a significant premium or discount to their net asset value. In
the case of a period during which creations are suspended, a Fund could
experience substantial redemptions, which may cause the Fund to experience
increased transaction costs and make greater taxable distributions to
shareholders of a Fund. A Fund could liquidate all or a portion of its assets,
which may be at unfavorable prices. A Fund may also change its investment
objective by, for example, seeking to track an alternative index.
Investments
in Chinese A-Shares may pose additional risks relative to the risks of investing
in emerging markets securities generally. A-Shares are issued by companies
incorporated in mainland China and are traded in Renminbi (“RMB”) on the
Shanghai Stock Exchange and Shenzhen Stock Exchange. Historically, direct
participation in the A-Shares market has been limited to mainland Chinese
investors. Foreign investors have been able to invest in the mainland Chinese
securities markets through certain market-access programs. Among other programs,
foreign investors may invest in A-Shares listed and traded on the Shanghai Stock
Exchange and Shenzhen Stock Exchange through the Shanghai - Hong Kong and
Shenzhen - Hong Kong Stock Connect programs (“Stock Connect Programs”), which
launched in 2014 and 2016, respectively. These Stock Connect Programs are novel,
and Chinese regulators may alter or eliminate these programs at any time. The
Stock Connect Programs are securities trading and clearing programs between
either the Shanghai Stock Exchange (“SSE”) or Shenzhen Stock Exchange (“SZSE”)
and The Stock Exchange of Hong Kong Limited (“SEHK”), China Securities
Depository and Clearing Corporation Limited and Hong Kong Securities Clearing
Company Limited. The Stock Connect Programs are designed to permit mutual stock
market access between mainland China and Hong Kong by allowing investors to
trade and settle shares on each market via their local exchanges. Trading
through the Stock Connect Programs is subject to a daily quota (“Daily Quota”),
which limits the maximum daily net purchases on any particular day by Hong Kong
investors (and foreign investors trading through Hong Kong) trading mainland
Chinese listed securities and mainland Chinese investors trading Hong Kong
listed securities trading through the relevant Stock Connect Program.
Accordingly, direct investments in A-Shares will be limited by the Daily Quota
that limits total purchases through the Stock Connect Programs. The Daily Quota
is utilized by all non-mainland Chinese investors on a first-come-first-serve
basis. As such, buy orders for A-Shares would be rejected once the Daily Quota
is exceeded (although the investors would be permitted to sell A-Shares
regardless of the Daily Quota balance). The Daily Quota may restrict a Fund’s
ability to invest in A-Shares through the Stock Connect Programs on a timely
basis, which could affect the Funds’ ability to effectively pursue its
investment strategy. The Daily Quota is also subject to change.
In
addition, investments made through Stock Connect are subject to trading,
clearance and settlement procedures that are still relatively untested in
mainland China, which could pose risks to a Fund. Moreover, A-Shares purchased
through a Stock Connect Program generally may not be sold, purchased or
otherwise transferred other than through the Stock Connect Program in accordance
with applicable rules. A primary feature of the Stock Connect Programs is the
application of the home market’s laws and rules applicable to investors in
A-Shares (i.e. mainland China). Therefore, a Fund’s investments in A-Shares via
the Stock Connect Programs are subject to Chinese securities regulations and
listing rules, among other restrictions. While A-Shares must be designated as
eligible to be traded under a Stock Connect Program (such eligible A-Shares
listed on the SSE, the “SSE Securities,” and such eligible A-Shares listed on
the SZSE, the “SZSE Securities”), those A-Shares may also lose such designation,
and if this occurs, such A-Shares may be sold but could no longer be purchased
through the applicable Stock Connect Program. In addition, the Stock Connect
Programs will only operate on days when both the Chinese and Hong Kong markets
are open for trading and when banking services are available in both markets on
the corresponding settlement days. Therefore, an investment in A-Shares through
the Stock Connect Programs may subject a Fund to the risk of price fluctuations
on days when the Chinese markets are open, but the SEHK is not. Each of the
SEHK, SSE and SZSE reserves the right to suspend trading under the Stock Connect
Programs under certain circumstances. Where such a suspension of trading is
effected, a Fund’s ability to access A-Shares through the Stock Connect Programs
will be adversely affected.
A
Fund’s investments in A-Shares through a Stock Connect Program are held by its
custodian in accounts in the Central Clearing and Settlement System (“CCASS”)
maintained by the Hong Kong Securities Clearing Company Limited (“HKSCC”), which
in turn holds the A-Shares, as the nominee holder, through an omnibus securities
account in its name registered with the CSDCC. The precise nature and rights of
a Fund as the beneficial owner of the SSE Securities or SZSE Securities through
HKSCC as nominee is not well defined under Chinese law. There is a lack of a
clear definition of, and distinction between, legal ownership and beneficial
ownership under Chinese law and there have been few cases involving a nominee
account structure in Chinese courts. The exact nature and methods of enforcement
of the rights and interests of a Fund under Chinese law is also uncertain, and
there is a possibility that the SSE Securities or SZSE Securities may not be
regarded as held for the beneficial ownership of a Fund in the event of a credit
event with respect to HKSCC, the Fund’s custodian, or other market participants.
Notwithstanding
the fact that HKSCC does not claim proprietary interests in the SSE Securities
or SZSE Securities held in its omnibus stock account in the CSDCC, the CSDCC as
the share registrar for SSE- or SZSE-listed companies will still treat HKSCC as
one of the shareholders when it handles corporate actions in respect of such SSE
Securities or SZSE Securities.
HKSCC
monitors the corporate actions affecting SSE Securities and SZSE Securities and
keeps participants of CCASS informed of all such corporate actions that require
CCASS participants to take steps in order to participate in them. A Fund will
therefore depend on HKSCC for both settlement and notification and
implementation of corporate actions.
Other
market access programs, each of which may present different risks, may also be
used to provide non-Chinese investors with exposure to A-Shares. To the extent
that the Funds do not utilize such other market access programs, any disruptions
to a Stock Connect Program would be more likely to impact the Funds’ ability to
access exposure to A-Shares.
DERIVATIVES.
In October 2020, the SEC adopted Rule 18f-4 under the 1940 Act (“Rule 18f-4”),
which imposes new requirements and restrictions on the Funds’ use of derivatives
and eliminates the asset segregation framework previously used by funds,
including the Funds, to comply with Section 18 of the 1940 Act. Rule 18f-4
imposes limits on the amount of leverage risk to which a Fund may be exposed
through certain derivative instruments that may oblige the Fund to make payments
or incur additional obligations in the future. Under Rule 18f-4, the Funds’
investment in such derivatives is limited through a value-at risk or “VaR” test.
Funds whose use of such derivatives is more than a limited specified exposure
amount are required to establish and maintain a derivatives risk management
program, subject to oversight by the Board of Trustees of the Trust, and appoint
a derivatives risk manager to implement such program. To the extent a Fund’s
compliance with Rule 18f-4 changes how the Fund uses derivatives, Rule 18f-4 may
adversely affect the Fund’s performance and/or increase costs related to the
Fund’s use of derivatives.
FUTURES
CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.
To the extent consistent with its investment policies, each Fund (other than the
Global X MSCI Colombia ETF) may invest up to 20% of its total assets (minus any
percent of Fund assets invested in other derivatives) in U.S. or foreign futures
contracts and may purchase and sell call and put options on futures contracts.
These futures contracts and options will be used to simulate full investment in
the respective Underlying Index, to facilitate trading or to reduce transaction
costs. A Fund will only enter into futures contracts and options on futures
contracts that are traded on a U.S. or foreign exchange. A Fund will not use
futures or options for speculative purposes. In connection with a Fund's
position in a futures contract or related option, the Fund will segregate liquid
assets or will otherwise cover its position in accordance with applicable SEC
requirements.
Futures
Contracts.
Each Fund (other than the Global X MSCI Colombia ETF) may enter into certain
equity, index and currency futures transactions, as well as other futures
transactions that become available in the markets. By using such futures
contracts, the Funds may obtain exposure to certain equities, indexes and
currencies without actually investing in such instruments. Index futures may be
based on broad indices, such as the S&P 500 Index, or narrower indices. A
futures contract on foreign currency creates a binding obligation on one party
to deliver, and a corresponding obligation on another party to accept delivery
of, a stated quantity of foreign currency for an amount fixed in U.S. dollars.
Foreign currency futures may be used by a Fund to help the Fund track the price
and yield performance of its Underlying Index.
Some
futures contracts are traded on organized exchanges regulated by the SEC or
Commodity Futures Trading Commission ("CFTC"), and transactions on them are
cleared through a clearing corporation, which guarantees the performance of the
parties to the contract. If regulated by the CFTC, such exchanges may be
designated contract markets or swap execution facilities.
A
Fund may also engage in transactions in foreign stock index futures, which may
be traded on foreign exchanges. Participation in foreign futures and foreign
options transactions involves the execution and clearing of trades on or subject
to the rules of a foreign board of trade. Neither the National Futures
Association ("NFA") nor any domestic exchange regulates activities of any such
organization, even if it is formally linked to a domestic market. Moreover,
foreign laws and regulations and transactions executed under such laws and
regulations may not be afforded certain of the protective measures provided
domestically. In addition, the price of foreign futures or foreign options
contracts may be affected by any variance in the foreign exchange rate between
the time an order is placed and the time it is liquidated, offset or
exercised.
Unlike
purchases or sales of portfolio securities, no price is paid or received by a
Fund upon the purchase or sale of a futures contract. Initially, a Fund will be
required to deposit with the broker or in a segregated account with a custodian
or sub-custodian an amount of liquid assets, known as initial margin, based on
the value of the contract. The nature of initial margin in futures transactions
is different from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract, which is returned to the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, called variation margin,
to and from the broker, will be made on a daily basis as the price of the
underlying instruments fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking-to-market."
For example, when a Fund has purchased a futures contract and the price of the
contract has risen in response to a rise in the underlying instruments, that
position will have increased in value and the Fund will be entitled to receive
from the broker a variation margin payment equal to that increase in value.
Conversely,
where a Fund has purchased a futures contract and the price of the future
contract has declined in response to a decrease in the underlying instruments,
the position would be less valuable, and the Fund would be required to make a
variation margin payment to the broker. Prior to expiration of the futures
contract, the Adviser may elect to close the position by taking an opposite
position, subject to the availability of a secondary market, which will operate
to terminate the Fund's position in the futures contract. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or gain.
There
are several risks in connection with the use of futures by a Fund. One risk
arises because of the imperfect correlation between movements in the price of
the futures and movements in the price of the instruments which are the subject
of the hedge. The price of the future may move more than or less than the price
of the instruments being hedged. If the price of the futures moves less than the
price of the instruments which are the subject of the hedge, the hedge will not
be fully effective but, if the price of the instruments being hedged has moved
in an unfavorable direction, the Fund would be in a better position than if it
had not hedged at all. If the price of the instruments being hedged has moved in
a favorable direction, this advantage will be partially offset by the loss on
the futures. If the price of the futures moves more than the price of the hedged
instruments, the Fund involved will experience either a loss or gain on the
futures, which will not be completely offset by movements in the price of the
instruments that are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of instruments being hedged and movements
in the price of futures contracts, a Fund may buy or sell futures contracts in a
greater dollar amount than the dollar amount of instruments being hedged if the
volatility over a particular time period of the prices of such instruments has
been greater than the volatility over such time period of the futures, or if
otherwise deemed to be appropriate by the Adviser. Conversely, a Fund may buy or
sell fewer futures contracts if the volatility over a particular time period of
the prices of the instruments being hedged is less than the volatility over such
time period of the futures contract being used, or if otherwise deemed to be
appropriate by the Adviser.
In
addition to the possibility that there may be an imperfect correlation, or no
correlation at all, between movements in futures and the instruments being
hedged, the price of futures may not correlate perfectly with movement in the
cash market due to certain market distortions. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
off-setting transactions, which could distort the normal relationship between
the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the Adviser may still not result in
a successful hedging transaction over a short time frame.
In
general, positions in futures may be closed out only on an exchange, board of
trade or other trading facility that provides a secondary market for such
futures. Although each Fund intends to purchase or sell futures only on trading
facilities where there appear to be active secondary markets, there is no
assurance that a liquid secondary market on any trading facility will exist for
any particular contract or at any particular time. In such an event, it may not
be possible to close a futures contract position, and in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been
used to hedge portfolio securities, such securities may not be sold until the
futures contract can be terminated. In such circumstances, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities will in fact correlate with the price movements in
the futures contract and thus provide an offset on a futures
contract.
Further,
it should be noted that the liquidity of a secondary market in a futures
contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges, which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Successful
use of futures by a Fund is subject to the Adviser's ability to predict
correctly movements in the direction of the market. In addition, in such
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be, but
will not necessarily be, at increased prices which reflect the rising market. A
Fund may have to sell securities at a time when it may be disadvantageous to do
so.
Options
on Futures Contracts.
A Fund (other than the Global X MSCI Colombia ETF) may purchase and write
options on the futures contracts described above. A futures option gives the
holder, in return for the premium paid, the right to receive and execute a long
futures contract (if the option is a call) or a short futures contract (if the
option is a put) at a specified price at any time during the period of the
option. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. Each Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits.
Investments
in futures options involve some of the same considerations that are involved in
connection with investments in futures contracts (for example, the existence of
a liquid secondary market). In addition, the purchase or sale of an option also
entails the risk that changes in the value of the underlying futures contract
will not correspond to changes in the value of the option purchased. Depending
on the pricing of the option compared to either the futures contract upon which
it is based, or upon the price of the securities being hedged, an option may or
may not be less risky than ownership of the futures contract or such securities.
In general, the market prices of options can be expected to be more volatile
than the market prices on the underlying futures contract. Compared to the
purchase or sale of futures contracts, however, the purchase of call or put
options on futures contracts may frequently involve less potential risk to a
Fund because the maximum amount at risk is the premium paid for the options
(plus transaction costs). The writing of an option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
CFTC
REGULATION. The
Trust, on behalf of each Fund, has claimed an exclusion from the definition of
commodity pool operator ("CPO") under the Commodity Exchange Act ("CEA"), and
the Adviser has claimed an exemption from registration as a commodity trading
advisor ("CTA") under the CEA. Therefore, each Fund and the Adviser are not
subject to registration as a CPO or CTA. Under this CPO exclusion, a Fund may
only use a de minimis amount of commodity interests (such as futures contracts,
options on futures contracts and swaps) other than for bona fide hedging
purposes (as defined by the CFTC). A de minimis amount is defined as an amount
such that the aggregate initial margin and premiums required to establish these
positions (after taking into account unrealized profits and unrealized losses on
any such positions and excluding the amount by which options are "in-the-money"
at the time of purchase) may not exceed 5% of a Fund's net asset value or,
alternatively, the aggregate net notional value of those positions, determined
at the time the most recent position was established, may not exceed 100% of a
Fund's net asset value (after taking into account unrealized profits and
unrealized losses on any such positions). The Funds and the Adviser currently
are engaged only in a de minimis amount of such transactions and, therefore,
neither the Funds nor the Adviser are currently subject to the registration and
most regulatory requirements applicable to CPOs and CTAs, respectively. There
can be no certainty that the Funds or the Adviser will continue to qualify under
the applicable exclusion or exemption, as each Fund's investments may change
over time. If a Fund or the Adviser is subject to CFTC registration, it may
incur additional costs or be subject to additional regulatory
requirements.
GOVERNMENT
INTERVENTION IN FINANCIAL MARKETS.
The value of a Fund's holdings is generally subject to the risk of future local,
national, or global economic disturbances based on unknown weaknesses in the
markets in which the Fund invests. In the event of such a disturbance, issuers
of securities held by the Fund may experience significant declines in the value
of their assets and even cease operations or may receive government assistance
accompanied by increased restrictions on their business operations or other
government intervention. Governments or their agencies may acquire distressed
assets from financial institutions and acquire ownership interests in those
institutions. The implications of government ownership and disposition of these
assets are unclear, and such a program may have positive or negative effects on
the liquidity, valuation and performance of a Fund's portfolio holdings.
Past
instability during the 2008-2009 financial downturn led the U.S. Government,
other governments and financial and prudential regulators to take a number of
unprecedented actions designed to support certain financial institutions and
segments of the financial markets that experienced extreme volatility, and in
some cases a lack of liquidity. It is not certain that the U.S. Government will
intervene in response to a future market disturbance and the effect of any such
future intervention cannot be predicted. It is difficult for issuers to prepare
for the impact of future financial downturns, although companies can seek to
identify and manage future uncertainties through risk management
programs.
ILLIQUID
OR RESTRICTED SECURITIES.
To the extent consistent with its investment policies, each Fund may invest up
to 15% of its net assets in securities that are illiquid (calculated at the time
of investment). The Funds will comply with Rule 22e-4 under the 1940 Act in
managing illiquid investments. A Fund may purchase commercial paper issued
pursuant to Section 4(2) of the Securities Act, as well as securities that are
not registered under the Securities Act but can be sold to “qualified
institutional buyers” in accordance with Rule 144A under the Securities Act.
These securities will not be considered illiquid so
long
as the Adviser determines, under guidelines approved by the Trust’s Board of
Trustees, that an adequate trading market exists. This practice could increase
the level of illiquidity during any period that qualified institutional buyers
become uninterested in purchasing these securities.
INVESTMENT
COMPANIES.
Subject to applicable statutory and regulatory limitations described below, each
Fund may invest in shares of other investment companies, including open-end and
closed-end investment companies, business development companies and other
exchange-traded funds (“ETFs”). An investment in an investment company is
subject to the risks associated with that investment company’s portfolio
securities. Because the value of other investment company or ETF shares depends
on the NAV or the demand in the market, respectively, the Adviser may not be
able to liquidate a Fund’s holdings in those shares at the most optimal time,
adversely affecting the Fund’s performance. Investments in closed-end funds may
entail the additional risk that the market value of such investments may be
substantially less than their net asset value. To the extent a Fund invests in
shares of another investment company, the Fund will indirectly bear a
proportionate share of that investment company’s advisory fees and other
operating expenses. These fees are in addition to the management fees and other
operational expenses incurred directly by the Funds. In addition, the Funds
could incur a sales charge in connection with purchasing an investment company
security or a redemption fee upon the redemption of such security.
Section
12(d)(1)(A) of the 1940 Act provides that a fund may not purchase or otherwise
acquire the securities of other investment companies if, as a result of such
purchase or acquisition, it would own: (i) more than 3% of the total outstanding
voting stock of the acquired investment company; (ii) securities issued by any
one investment company having a value in excess of 5% of the fund’s total
assets; or (iii) securities issued by all investment companies having an
aggregate value in excess of 10% of the fund’s total assets. These limitations
are subject to certain statutory and regulatory exemptions including rule 12d1-4
under the 1940 Act (“Rule 12d1-4”). Rule 12d1-4 permits a Fund to invest in
other investment companies beyond the statutory limits, subject to certain
conditions. Among other conditions, Rule 12d1-4 prohibits a fund from acquiring
control of another investment company (other than an investment company in the
same group of investment companies), including by acquiring more than 25% of its
voting securities. In addition, Rule 12d1-4 imposes certain voting requirements
when a fund’s ownership of another investment company exceeds particular
thresholds. If shares of a fund are acquired by another investment company, the
“acquired” fund may not purchase or otherwise acquire the securities of an
investment company or private fund if immediately after such purchase or
acquisition, the securities of investment companies and private funds owned by
that acquired fund have an aggregate value in excess of 10% of the value of the
total assets of the fund, subject to certain exceptions. These restrictions may
limit the Funds’ ability to invest in other investment companies to the extent
desired. In addition, other unaffiliated investment companies may impose other
investment limitations or redemption restrictions which may also limit the
Funds’ flexibility with respect to making investments in those unaffiliated
investment companies.
The
Global X MSCI Pakistan ETF’s investment in investment companies and other pooled
investment vehicles will not exceed 10% of the Global X MSCI Pakistan ETF’s
assets.
POOLED
INVESTMENT VEHICLES.
The Funds may invest in the securities of pooled vehicles that are not
investment companies and, thus, not required to comply with the provisions of
the 1940 Act. As a shareholder of such pooled vehicles, the Funds will not have
all of the investor protections afforded by the 1940 Act. Such pooled vehicles
may, however, be required to comply with the provisions of other federal
securities laws, such as the Securities Act. These pooled vehicles typically
hold currency or commodities, such as gold or oil, or other property that is
itself not a security. If a Fund invests in, and thus, is a shareholder of, a
pooled vehicle, the Fund's shareholders will indirectly bear the Fund's
proportionate share of the fees and expenses paid by the pooled vehicle,
including any applicable management fees, in addition to both the management
fees payable directly by the Fund to the Adviser and the other expenses that the
Fund bears directly in connection with its own operations. In addition, a
Fund's investment in pooled investment vehicles may be considered illiquid and
subject to the Fund's restrictions on illiquid investments.
STRUCTURED
PRODUCTS. The
Funds may invest in structured products, including exchange traded notes
("ETNs") and equity-linked instruments. These types of structured products are
senior, unsecured unsubordinated debt securities issued by an underwriting bank
that are designed to provide returns that are linked to a particular benchmark
less investor fees. Structured products have a maturity date and, generally, are
backed only by the creditworthiness of the issuer. As a result, the value of a
structured product may be influenced by time to maturity, volatility and lack of
liquidity in the underlying market (e.g., the commodities market), changes
in the applicable interest rates, and changes in the issuer's credit rating and
economic, legal, political or geographic events that affect the referenced
market. Structured products also may be subject to credit risk. The value of an
ETN may also be subject to the level of supply and demand for the ETN.
LEVERAGE.
Under
the 1940 Act, a Fund is permitted to borrow from a bank up to 33 1/3% of its
total net assets for short-term or emergency purposes. Each Fund may borrow
money at fiscal quarter end to maintain the required level of diversification to
qualify as a RIC for purposes of the Code. As a result, a Fund may be exposed to
the risks of leverage, which
may
be considered a speculative investment technique. Leverage magnifies the
potential for gain and loss on amounts invested and therefore increases the
risks associated with investing in the Funds. If the value of a Fund's assets
increases, then leveraging would cause the Fund's NAV to increase more sharply
than it would have had the Fund not been leveraged. Conversely, if the value of
a Fund's assets decreases, leveraging would cause the Fund's NAV to decline more
sharply than it otherwise would have had the Fund not been leveraged. The Funds
may incur additional expenses in connection with borrowings.
MLP
RISK.
Investments in securities of MLPs involve risks that differ from an investment
in common stock. Holders of units of MLPs have more limited control rights and
limited rights to vote on matters affecting the MLP as compared to holders of
stock of a corporation. For example, MLP unit holders may not elect the general
partner or the directors of the general partner and the MLP unit holders have
limited ability to remove an MLP's general partner. An MLP is controlled by its
general partner, which generally has conflicts of interest and limited fiduciary
duties to the MLP, which may permit the general partner to favor its own
interests over the MLP's. A Fund investing in MLPs will derive the cash flow
associated from that investment from investments in equity securities of MLPs.
The amount of cash that each Fund investing in MLPs will have available to pay
or distribute to shareholders depends entirely on the ability of the MLPs that
each such Fund owns to make distributions to their partners and the tax
character of those distributions. Neither the Funds investing in MLPs nor the
Adviser has control over the actions of underlying MLPs. The amount of cash that
each individual MLP can distribute to its partners will depend on the amount of
cash it generates from operations, which will vary from quarter to quarter
depending on factors affecting the energy infrastructure market generally and on
factors affecting the particular business lines of the MLP. Available cash will
also depend on the MLPs' level of operating costs (including incentive
distributions to the general partner), level of capital expenditures, debt
service requirements, acquisition costs (if any), fluctuations in working
capital needs, and other factors. The benefit derived from an investment in an
MLP is also dependent on the MLP being treated as a partnership for federal
income tax purposes, which generally do not pay U.S. federal income tax at the
partnership level, subject to the application of the partnership audit rules. A
change in current tax law, or a change in the underlying business mix of a given
MLP, could result in an MLP that previously elected to be taxed as a partnership
being treated as a corporation for U.S. federal income tax purposes, which would
result in such MLP being required to pay U.S. federal income tax on its taxable
income. The classification of an MLP as a corporation for U.S. federal income
tax purposes would have the effect of reducing the amount of cash available for
distribution by the MLP. Thus, to the extent that any of the MLPs to which the
Fund has exposure are treated as a corporation for U.S. federal income tax
purposes, it could result in a reduction in the value of the Fund’s investment
and lower the Fund’s income. The Fund may also invest in MLPs that elect to be
taxed as corporations, which taxes would have the effect of reducing the amount
of cash available for distribution by the MLP.
Certain
MLPs depend upon their parent or sponsor entities for a majority of their
revenues. If their parent or sponsor entities fail to make such payments or
satisfy their obligations, the revenues and cash flows of such MLPs and ability
of such MLPs to make distributions to unit holders, such as a Fund, would be
adversely affected.
MLPs
are subject to various federal, state and local environmental laws and health
and safety laws as well as laws and regulations specific to their particular
activities. These laws and regulations address: health and safety standards for
the operation of facilities, transportation systems and the handling of
materials; air and water pollution requirements and standards; solid waste
disposal requirements; land reclamation requirements; and requirements relating
to the handling and disposition of hazardous materials. MLPs are subject to the
costs of compliance with such laws applicable to them, and changes in such laws
and regulations may adversely affect their results of operations.
MLPs
are subject to numerous business related risks, including: deterioration of
business fundamentals reducing profitability due to development of alternative
energy sources, among other things, consumer sentiment, changing demographics in
the markets served, unexpectedly prolonged and precipitous changes in commodity
prices and increased competition that reduces the MLP's market share; the lack
of growth of markets requiring growth through acquisitions; disruptions in
transportation systems; the dependence of certain MLPs upon unrelated third
parties; availability of capital for expansion and construction of needed
facilities; a significant decrease in production due to depressed commodity
prices or otherwise; the inability of MLPs to successfully integrate recent or
future acquisitions; and the general level of the economy.
NEW
FUND RISKS.
Certain of the Funds are new funds, with limited operating history, which may
result in additional risks for investors in the Funds. There can be no assurance
that these Funds will grow to or maintain an economically viable size, in which
case the Board of Trustees may determine to liquidate the Funds. While
shareholder interests will be the paramount consideration, the timing of any
liquidation may not be favorable to certain individual
shareholders.
OPTIONS.
To the extent consistent with its investment policies, the Global X S&P
500®
Covered Call ETF, Global X NASDAQ 100®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X S&P
500®
Covered Call & Growth ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X S&P 500®
Tail
Risk ETF, Global X S&P 500®
Risk Managed Income ETF, Global X S&P 500®
Collar 95-110 ETF, Global X NASDAQ 100®
Tail Risk ETF, Global X NASDAQ
100®
Risk Managed Income ETF, Global X NASDAQ 100®
Collar 95-110 ETF, Global X Dow 30®
Covered Call ETF, Global X Russell 2000 Covered Call & Growth ETF, Global X
Financials Covered Call & Growth ETF, Global X Health Care Covered Call
& Growth ETF and Global X Information Technology Covered Call & Growth
ETF may invest in put options and buy call options and write covered call and
secured put options that the Adviser believes will help the Fund to track its
Underlying Index. To the extent consistent with its investment policies, each
other Fund (other than the Global X MSCI Colombia ETF) may invest up to 20% of
its net assets (minus any percent of Fund assets invested in other derivatives)
in put options and call options and may write covered call and secured put
options that the Adviser believes will help the Fund to track its Underlying
Index. Such options may relate to particular securities, foreign and domestic
stock indices, financial instruments, foreign currencies or the yield
differential between two securities ("yield curve options") and may or may not
be listed on a domestic or foreign securities exchange or issued by the Options
Clearing Corporation. A call option for a particular security or currency gives
the purchaser of the option the right to buy, and a writer the obligation to
sell, the underlying security at the stated exercise price prior to the
expiration of the option, regardless of the market price of the security or
currency. The premium paid to the writer is in consideration for undertaking the
obligation under the option contract. A put option for a particular security or
currency gives the purchaser the right to sell the security or currency at the
stated exercise price prior to the expiration date of the option, regardless of
the market price of the security or currency. In contrast to an option on a
particular security, an option on an index provides the holder with the right to
make or receive a cash settlement upon exercise of the option. The amount of
this settlement will be equal to the difference between the closing price of the
index at the time of exercise and the exercise price of the option expressed in
dollars, times a specified multiple.
Options
trading is a highly specialized activity, which entails risk greater than
ordinary investment risk. Options on particular securities may be more volatile
than the underlying instruments and, therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying instruments themselves.
The
Funds will write call options only if they are "covered." In the case of a call
option on a security or currency, the option is "covered" if the Fund owns the
security or currency underlying the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or, if
additional cash consideration is required, liquid assets in such amount are
segregated) upon conversion or exchange of other securities held by it. For a
call option on an index, the option is covered if the Fund maintains with its
custodian a portfolio of securities substantially replicating the index, or
liquid assets equal to the contract value. A call option also is covered if the
Fund holds a call on the same security, currency or index as the call written
where the exercise price of the call held is (i) equal to or less than the
exercise price of the call written, or (ii) greater than the exercise price of
the call written, provided the Fund segregates liquid assets in the amount of
the difference.
All
put options written by a Fund would be covered, which means that such Fund will
segregate cash or liquid assets with a value at least equal to the exercise
price of the put option or will use the other methods described in the next
sentence. A put option also is covered if the Fund holds a put option on the
same security or currency as the option written where the exercise price of the
option held is (i) equal to or higher than the exercise price of the option
written, or (ii) less than the exercise price of the option written, provided
the Fund segregates liquid assets in the amount of the difference.
With
respect to yield curve options, a call (or put) option is covered if a Fund
holds another call (or put) option on the spread between the same two securities
and segregates liquid assets sufficient to cover the Fund's net liability under
the two options. Therefore, the Fund's liability for such a covered option
generally is limited to the difference between the amount of the Fund's
liability under the option written by the Fund less the value of the option held
by the Fund. Yield curve options also may be covered in such other manner as may
be in accordance with the requirements of the counterparty with which the option
is traded and applicable laws and regulations.
A
Fund's obligation to sell subject to a covered call option written by it, or to
purchase a security or currency subject to a secured put option written by it,
may be terminated prior to the expiration date of the option by the Fund's
execution of a closing purchase transaction, which is effected by purchasing on
an exchange an option of the same series (i.e.,
same underlying security or currency, exercise price and expiration date) as the
option previously written. Such a purchase does not result in the ownership of
an option. A closing purchase transaction will ordinarily be effected to realize
a profit on an outstanding option, to prevent an underlying instrument from
being called, to permit the sale of the underlying security or currency or to
permit the writing of a new option containing different terms on such underlying
security. The cost of such a liquidation purchase plus transaction costs may be
greater than the premium received upon the original option, in which event the
Fund will have incurred a loss in the transaction. There is no assurance that a
liquid secondary market will exist for any particular option. An option writer,
unable to effect a closing purchase transaction, will not be able to sell the
underlying security or currency (in the case of a covered call option) or
liquidate the segregated assets (in the case of a secured put option) until the
option expires or the optioned security or currency is delivered upon exercise
with the result that the writer in such circumstances will be subject to the
risk of market decline or appreciation in the instrument during such
period.
When
a Fund purchases an option, the premium paid by it is recorded as an asset of
the Fund. When a Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by the Fund is included in the liability
section of the Fund's statement of assets and liabilities as a deferred credit.
The amount of this asset or deferred credit will be subsequently
marked-to-market to reflect the current value of the option purchased or
written. The current value of the traded option is the last sale price or, in
the absence of a sale, the current bid price. If an option purchased by a Fund
expires unexercised, the Fund realizes a loss equal to the premium paid. If a
Fund enters into a closing sale transaction on an option purchased by it, the
Fund will realize a gain if the premium received by the Fund on the closing
transaction is more than the premium paid to purchase the option, or a loss if
it is less. If an option written by a Fund expires on the stipulated expiration
date or if a Fund enters into a closing purchase transaction, it will realize a
gain (or loss if the cost of a closing purchase transaction exceeds the net
premium received when the option is sold) and the deferred credit related to
such option will be eliminated. If an option written by a Fund is exercised, the
proceeds of the sale will be increased by the net premium originally received
and the Fund will realize a gain or loss.
There
are several risks associated with transactions in certain options. For example,
there are significant differences between the securities, currency and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. In addition, a liquid
secondary market for particular options, whether traded over-the-counter or on
an exchange, may be absent for reasons which include the following: there may be
insufficient trading interest in certain options; restrictions may be imposed by
an exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; the facilities of an exchange or the Options Clearing Corporation may
not at all times be adequate to handle current trading volume; or one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options that had been issued by the Options Clearing Corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.
REPURCHASE
AGREEMENTS.
To the extent consistent with its investment policies, each Fund may agree to
purchase portfolio securities from financial institutions subject to the
seller's agreement to repurchase them at a mutually agreed upon date and price
("repurchase agreements"). Each Fund may invest in repurchase agreements,
provided that a Fund may not invest more than 15% of its net assets in illiquid
securities or other illiquid assets (calculated at the time of investment),
including repurchase agreements maturing in more than seven days. Repurchase
agreements are considered to be loans under the 1940 Act. Although the
securities subject to a repurchase agreement may bear maturities exceeding one
year, settlement for the repurchase agreement will never be more than one year
after the Fund's acquisition of the securities and normally will be within a
shorter period of time. Securities subject to repurchase agreements normally are
held either by the Trust's custodian or sub-custodian, or in the Federal
Reserve/Treasury Book-Entry System. The seller under a repurchase agreement will
be required to maintain the value of the securities subject to the agreement in
an amount exceeding the repurchase price (including accrued interest). Default
by the seller would, however, expose a Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, a Fund could experience both delays in liquidating the
underlying security and losses, including: (a) possible decline in the value of
the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
REVERSE
REPURCHASE AGREEMENTS.
To the extent consistent with its investment policies, each Fund may borrow
funds by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). The Funds may use the proceeds of
reverse repurchase agreements to purchase other securities either maturing, or
under an agreement to resell, on a date simultaneous with or prior to the
expiration of the reverse repurchase agreement. Reverse repurchase agreements
are considered to be borrowings under the 1940 Act. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price. The Funds will pay interest on
amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, the applicable Fund will segregate liquid
assets in an amount at least equal to the market value of the securities, plus
accrued interest, subject to the agreement.
SECURITIES
LENDING.
Collateral for loans of portfolio securities made by a Fund may consist of cash,
cash equivalents, securities issued or guaranteed by the U.S. government or its
agencies or irrevocable bank letters of credit (or any combination thereof). The
borrower of securities will be required to maintain the market value of the
collateral at not less than the market value of the loaned securities, and such
value will be monitored on a daily basis. When a Fund lends its securities, it
continues to receive payments equal to the dividends and interest paid on the
securities loaned and simultaneously may earn interest on the investment of the
cash collateral. Investing the collateral subjects it to market depreciation or
appreciation, and each Fund is responsible for any loss that may result from its
investment in borrowed collateral. A Fund will have the right to terminate a
loan
at any time and recall the loaned securities within the normal and customary
settlement time for securities transactions. Although voting rights, or rights
to consent, attendant to securities on loan pass to the borrower, such loans may
be called so that the securities may be voted by a Fund if a material event
affecting the investment is to occur. As with other extensions of credit there
are risks of delay in recovering, or even loss of rights in, the collateral
should the borrower of the securities fail financially.
TRACKING
VARIANCE.
As discussed in the Prospectus, the Funds are subject to the risk of tracking
variance (also referred to as tracking error risk). Tracking variance may result
from share purchases and redemptions, transaction costs, expenses and other
factors. Share purchases and redemptions may necessitate the purchase and sale
of securities by a Fund and the resulting transaction costs, which may be
substantial because of the number and the characteristics of the securities
held. In addition, transaction costs are incurred because sales of securities
received in connection with spin-offs and other corporate reorganizations are
made to conform each Fund's holdings to its investment objective. Tracking
variance also may occur due to factors such as the size of a Fund, the
maintenance of a cash reserve pending investment or to meet expected
redemptions, changes made in the Fund's designated index or the manner in which
the index is calculated or because the indexing and investment approach of the
Adviser does not produce the intended goal of the Fund. Tracking variance is
monitored by the Adviser at least quarterly. In the event the performance of a
Fund is not comparable to the performance of its designated index, the Board of
Trustees will evaluate the reasons for the deviation and the availability of
corrective measures.
WARRANTS.
To the extent consistent with its investment policies, a Fund may purchase
warrants and similar rights, which are privileges issued by corporations
enabling the owners to subscribe to and purchase a specified number of shares of
the corporation at a specified price during a specified period of time. The
prices of warrants do not necessarily correlate with the prices of the
underlying shares. The purchase of warrants involves the risk that the
applicable Fund could lose the purchase value of a warrant if the right to
subscribe to additional shares is not exercised prior to the warrant's
expiration. Also, the purchase of warrants involves the risk that the effective
price paid for the warrant added to the subscription price of the related
security may exceed the value of the subscribed security's market price such as
when there is no movement in the level of the underlying security.
CORPORATE
DEBT SECURITIES.
A Fund may invest in investment grade corporate debt securities of any rating or
maturity. Investment grade corporate bonds are those rated BBB or better by
S&P®
or Baa or better by Moody's. Securities rated BBB by S&P®
are considered investment grade, but Moody's considers securities rated Baa to
have speculative characteristics. See Appendix A for a description of corporate
bond ratings. A Fund may also invest in unrated securities.
Corporate
debt securities are fixed-income securities issued by businesses to finance
their operations, although corporate debt instruments may also include bank
loans to companies. Notes, bonds, debentures and commercial paper are the most
common types of corporate debt securities, with the primary difference being
their maturities and secured or un-secured status. Commercial paper has the
shortest term and is usually unsecured.
The
broad category of corporate debt securities includes debt issued by domestic or
foreign companies of all kinds, including those with small-, mid- and
large-capitalizations. Corporate debt may be rated investment-grade or below
investment-grade and may carry variable or floating rates of
interest.
Because
of the wide range of types, and maturities, of corporate debt securities, as
well as the range of creditworthiness of its issuers, corporate debt securities
have widely varying potentials for return and risk profiles. For example,
commercial paper issued by a large established domestic corporation that is
rated investment-grade may have a modest return on principal but carries
relatively limited risk. On the other hand, a long-term corporate note issued by
a small foreign corporation from an emerging market country that has not been
rated may have the potential for relatively large returns on principal but
carries a relatively high degree of risk.
Corporate
debt securities carry both credit risk and interest rate risk. Credit risk is
the risk that a Fund could lose money if the issuer of a corporate debt security
is unable to pay interest or repay principal when it is due. Some corporate debt
securities that are rated below investment-grade are generally considered
speculative because they present a greater risk of loss, including default, than
higher quality debt securities. The credit risk of a particular issuer's debt
security may vary based on its priority for repayment. For example, higher
ranking (senior) debt securities have a higher priority than lower ranking
(subordinated) securities. This means that the issuer might not make payments on
subordinated securities while continuing to make payments on senior securities.
In addition, in the event of bankruptcy, holders of higher-ranking senior
securities may receive amounts otherwise payable to the holders of more junior
securities. Interest rate risk is the risk that the value of certain corporate
debt securities will tend to fall when interest rates rise. In general,
corporate debt securities with longer terms tend to fall more in value when
interest rates rise than corporate debt securities with shorter
terms.
JUNK
BONDS. A
Fund may invest in lower-rated debt securities, including securities in the
lowest credit rating category, of any maturity, otherwise known as "junk bonds."
Junk
bonds generally offer a higher current yield than that available for
higher-grade issues. However, lower-rated securities involve higher risks, in
that they are especially subject to adverse changes in general economic
conditions and in the industries in which the issuers are engaged, to changes in
the financial condition of the issuers and to price fluctuations in response to
changes in interest rates. During periods of economic downturn or rising
interest rates, highly leveraged issuers may experience financial stress that
could adversely affect their ability to make payments of interest and principal
and increase the possibility of default. In the past, the prices of many
lower-rated debt securities declined substantially, reflecting an expectation
that many issuers of such securities might experience financial difficulties. As
a result, the yields on lower-rated debt securities rose dramatically, but such
higher yields did not reflect the value of the income stream that holders of
such securities expected, but rather, the risk that holders of such securities
could lose a substantial portion of their value as a result of the issuers'
financial restructuring or default. There can be no assurance that such declines
will not recur.
The
market for lower-rated debt issues generally is thinner and less active than
that for higher quality securities, which may limit the Fund's ability to sell
such securities at fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether based on
fundamental analysis, may also decrease the values and liquidity of lower-rated
securities, especially in a thinly traded market. Changes by recognized rating
services in their rating of a fixed-income security may affect the value of
these investments. The Fund will not necessarily dispose of a security when its
rating is reduced below its rating at the time of purchase. However, the Adviser
will monitor the investment to determine whether continued investment in the
security will assist in meeting the Fund's investment objective.
U.S.
GOVERNMENT SECURITIES.
A Fund may invest in securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities in pursuit of its investment objective, in
order to deposit such securities as initial or variation margin, as "cover" for
the investment techniques it employs, as part of a cash reserve or for liquidity
purposes. U.S. government securities, such as Treasury bills, notes and bonds
and mortgage-backed securities guaranteed by the Government National Mortgage
Association ("Ginnie Mae"), are supported by the full faith and credit of the
United States; others are supported by the right of the issuer to borrow from
the U.S. Treasury; others are supported by the discretionary authority of the
U.S. government to purchase an agency's obligations; and still others are
supported only by the credit of the issuing agency, instrumentality, or
enterprise.
Although
U.S. government-sponsored enterprises, such as the Federal Home Loan Mortgage
Corporation ("Freddie Mac®")
and the Federal National Mortgage Association ("Fannie Mae®")
may be chartered or sponsored by Congress, they are not funded by Congressional
appropriations, and their securities are not issued by the U.S. Treasury nor
supported by the full faith and credit of the U.S. government. The maximum
potential liability of the issuers of some U.S. government securities held by a
Fund may greatly exceed their current resources, including any legal right to
support from the U.S. Treasury. It is possible that issuers of U.S. government
securities will not have the funds to meet their payment obligations in the
future. There is no assurance that the U.S. government would provide financial
support to its agencies and instrumentalities in the future if not required to
do so, even though the U.S. government has provided financial support to certain
U.S. government-sponsored enterprises in the past during periods of extremity.
Fannie Mae and Freddie Mac have been operating under conservatorship, with the
Federal Housing Finance Administration ("FHFA") acting as their conservator,
since September 2008. The entities are dependent upon the continued support of
the U.S. Treasury and FHFA in order to continue their business operations. These
factors, among others, could affect the future status and role of Fannie Mae and
Freddie Mac and the value of their securities and the securities which they
guarantee. Additionally, the U.S. government and its agencies and
instrumentalities do not guarantee the market values of their securities, which
may fluctuate.
U.S.
government agencies and instrumentalities that issue or guarantee securities
include the FHFA, Fannie Mae, the Farmers Home Administration, the Export-Import
Bank of the United States, the Small Business Administration, Ginnie Mae, the
General Services Administration, the Central Bank for Cooperatives, the Federal
Home Loan Banks, Freddie Mac, the Farm Credit Banks, the Maritime
Administration, the Tennessee Valley Authority, the Resolution Funding
Corporation and the Student Loan Marketing Association ("Sallie Mae®").
RECENT
MARKET CONDITIONS. Although
each Fund seeks to track its Underlying Index, the performance of the Underlying
Indices and the Funds are subject to general market conditions.
U.S.
recession risk has increased as the Federal Reserve (Fed) increased interest
rates at the fastest trajectory on record in an attempt to bring inflation back
to target levels. The tight labor market helped the U.S. consumer remain
resilient through this inflationary period. However, the personal savings rate
has decreased to its lowest level since 2005. The feedback loop between
employment
and consumption remains a focus for tracking recession risk. While job layoffs
have increased in tech related fields, the overall labor market has remained
tight. But operating efficiency is likely to become a focus as consumers push
back on price increases.
Currency
markets reflect expected interest rate and economic growth differentials. While
the language of the Fed remains hawkish, their shift to a slower rate raising
trajectory as they approach their terminal rate changed the dynamics for the
U.S. dollar and for international equity markets. This was compounded by
economic growth concerns in both Europe and China moving away from peak
pessimism, with Europe entering the winter with sufficient energy storage and
China’s shift away from its zero-COVID policy.
The
war between Russia and Ukraine contributed to elevated energy prices in 2022.
Sanctions against the Russian energy industry in response to the war has
reshaped global energy supply agreements. While Europe successfully shifted its
energy supply agreements to restock their energy storage before the winter,
energy remains a key risk factor to European economic growth and inflation
pressures. Escalations or signs of moving towards negotiations could lead to
near term energy price volatility. Additionally, the potential for improved
Chinese economic growth is a key consideration for energy prices and other
economic growth focused commodities. China’s shift away from its zero-COVID
policy, its real estate rescue plan, and expectations of more easing of
financial conditions could help restore confidence and stability, helping to
improve Chinese economic growth during 2023. However, Chinese economic growth
remains uncertain and the impact of higher COVID cases remains a risk factor.
It
is impossible to predict the effects of these or similar events in the future on
the Funds, although it is possible that these or similar events could have a
significant adverse impact on the NAV and/or risk profile of a
Fund.
PORTFOLIO
TURNOVER
For
the fiscal year ended October 31, 2022, the portfolio turnover rate for
each of the following Funds varied from such Fund's portfolio turnover rate for
the fiscal years ended October 31, 2021 and October 31, 2020 due to the
application of each Fund's respective index methodology:
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2021 |
2022 |
Global
X MSCI Colombia ETF |
20.85% |
16.08% |
50.35% |
Global
X MSCI China Consumer Discretionary ETF |
32.56% |
34.56% |
22.64% |
Global
X MSCI China Industrials ETF |
19.54% |
66.09% |
105.23% |
Global
X MSCI China Communication Services ETF |
27.78% |
65.54% |
30.28% |
Global
X MSCI China Financials ETF |
21.72% |
21.42% |
37.97% |
Global
X MSCI China Energy ETF |
34.18% |
51.48% |
106.55% |
Global
X MSCI China Materials ETF |
36.02% |
26.64% |
101.99% |
Global
X MSCI Norway ETF* |
8.38% |
9.74% |
15.58% |
Global
X FTSE Southeast Asia ETF |
5.98% |
13.46% |
13.92% |
Global
X MSCI Argentina ETF |
49.17% |
31.35% |
44.70% |
Global
X MSCI Greece ETF |
28.48% |
38.42% |
24.34% |
Global
X MSCI Nigeria ETF |
18.79% |
5.79% |
1.95% |
Global
X MSCI Next Emerging & Frontier ETF |
31.66% |
28.62% |
20.09% |
Global
X MSCI Portugal ETF |
25.19% |
53.05% |
40.76% |
Global
X DAX Germany ETF* |
10.93% |
24.22% |
10.74% |
Global
X MSCI Pakistan ETF |
52.38% |
41.83% |
28.59% |
Global
X MSCI China Consumer Staples ETF |
44.54% |
35.56% |
65.46% |
Global
X MSCI China Health Care ETF |
31.60% |
29.41% |
20.49% |
Global
X MSCI China Information Technology ETF |
29.01% |
52.48% |
32.20% |
Global
X MSCI China Real Estate ETF |
25.75% |
38.66% |
45.91% |
Global
X MSCI China Utilities ETF |
37.12% |
44.06% |
38.78% |
Global
X MSCI Vietnam ETF |
N/A |
N/A |
78.28% |
Global
X Copper Miners ETF |
16.85% |
20.13% |
30.46% |
Global
X Silver Miners ETF |
19.95% |
15.61% |
17.72% |
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2021 |
2022 |
Global
X Gold Explorers ETF |
18.81% |
18.30% |
30.04% |
Global
X Uranium ETF |
59.21% |
30.01% |
26.47% |
Global
X Lithium & Battery Tech ETF |
65.14% |
39.09% |
38.73% |
Global
X SuperDividend®
ETF |
124.55% |
82.37% |
91.10% |
Global
X Social Media ETF |
19.23% |
30.89% |
21.59% |
Global
X Guru®
Index ETF |
124.90% |
121.91% |
111.39% |
Global
X SuperIncome™ Preferred ETF |
67.65% |
98.47% |
39.39% |
Global
X SuperDividend®
U.S. ETF |
93.44% |
60.53% |
38.51% |
Global
X S&P 500®
Covered Call ETF* |
7.29% |
4.84% |
15.60% |
Global
X NASDAQ 100®
Covered Call ETF* |
27.87% |
19.99% |
31.11% |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
93.04% |
102.27% |
101.78% |
Global
X SuperDividend®
REIT ETF |
106.23% |
59.44% |
82.67% |
Global
X Renewable Energy Producers ETF |
29.27% |
55.97% |
18.33% |
Global
X S&P 500®
Catholic Values ETF |
5.55% |
8.29% |
6.79% |
Global
X MSCI SuperDividend®
EAFE ETF |
59.28% |
88.53% |
34.00% |
Global
X E-commerce ETF |
42.01% |
14.64% |
25.82% |
Global
X Russell 2000 Covered Call ETF |
11.16% |
8.94% |
186.48% |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
4.04% |
17.17% |
12.83% |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
1.65% |
11.21% |
18.12% |
Global
X S&P 500®
Covered Call & Growth ETF |
0.75% |
12.17% |
9.36% |
Global
X Emerging Markets Internet & E-commerce ETF |
N/A |
23.61% |
26.27% |
Global
X S&P 500®
Tail Risk ETF |
N/A |
6.21% |
7.40% |
Global
X S&P 500®
Risk Managed Income ETF |
N/A |
7.08% |
21.62% |
Global
X S&P 500®
Collar 95-110 ETF |
N/A |
6.44% |
8.96% |
Global
X NASDAQ 100®
Tail Risk ETF |
N/A |
1.71% |
13.88% |
Global
X NASDAQ 100®
Risk Managed Income ETF |
N/A |
2.16% |
27.40% |
Global
X NASDAQ 100®
Collar 95-110 ETF |
N/A |
2.11% |
9.89% |
Global
X Disruptive Materials ETF |
N/A |
N/A |
25.34% |
Global
X Dow 30®
Covered
Call ETF |
N/A |
N/A |
8.82% |
Global
X Russell 2000 Covered Call & Growth ETF |
N/A |
N/A |
0.00% |
Global
X Financials Covered Call & Growth ETF |
N/A |
N/A |
N/A |
Global
X Health Care Covered Call & Growth ETF |
N/A |
N/A |
N/A |
Global
X Information Technology Covered Call & Growth ETF |
N/A |
N/A |
N/A |
* Reflects
the portfolio turnover of the predecessor fund.
For
the fiscal year ended October 31, 2022, the Global X MSCI China Industrials ETF,
the Global X MSCI China Energy ETF and the Global X MSCI China Materials ETF,
each experienced above-average turnover as a result of increased redemptions
caused by volatility in the Chinese markets over the past year. For the fiscal
year ended October 31, 2022, the Global X Russell 2000 Covered Call ETF
experienced above-average turnover as a result of the transition from investing
primarily in an underlying unaffiliated ETF to investing primarily in equity
securities. It is anticipated that the Global X SuperIncome™ Preferred ETF will
have above-average portfolio turnover for the fiscal year ended October 31, 2023
in connection with its underlying index change.
INFORMATION
REGARDING THE INDICES AND THE INDEX PROVIDERS
MSCI
All Colombia Select 25/50 Index
The
MSCI All Colombia Select 25/50 Index applies additional liquidity screens on the
MSCI All Colombia Index, which is designed to represent the performance of the
broad Colombia equity universe. The broad Colombia equity universe includes
securities that are classified in Colombia according to the MSCI Global
Investable Market Index Methodology, together with
companies
that are headquartered or listed in Colombia and carry out the majority of their
operations in Colombia. A specific capping methodology is applied to facilitate
compliance with the rules governing the listing of financial products on
exchanges in the United States. The index targets a minimum of 25 securities and
20 issuers at construction. The index is designed to take into account the 25%
and 50% concentration constraints required for a fund to qualify as a RIC under
the Code in the United States. At each quarterly rebalance, no single index
constituent may exceed 25% of the index weight, and the sum of all constituents
with index weights greater than 5% may not exceed 50%. The index is maintained
by MSCI.
MSCI
China Consumer Discretionary 10/50 Index
The
MSCI China Consumer Discretionary 10/50 Index tracks the performance of
companies in the MSCI China Index (the "Parent Index") that are classified as
engaged in the consumer discretionary sector, as defined by MSCI, Inc., the
provider of the MSCI China Consumer Discretionary 10/50 Index. The Parent Index
is a free float-adjusted market capitalization-weighted index designed to
measure the performance of securities that are classified as operating in China
according to the MSCI Global Investable Markets Index Methodology, and that
satisfy minimum market capitalization and liquidity thresholds. The securities
eligible for inclusion in the MSCI China Consumer Discretionary 10/50 Index
include H-Shares (securities of companies incorporated in China that are
denominated in Hong Kong Dollars and listed on the Hong Kong Stock Exchange (the
"HKSE")), B-Shares (securities of companies denominated in U.S. dollars or Hong
Kong dollars and listed on Shanghai Stock Exchange (the "SSE") or Shenzen Stock
Exchange (the "SZSE")), Red Chips (securities of companies with a majority of
their business operations in mainland China and that are controlled by the
national government or local governments of China, traded on the HKSE in Hong
Kong dollars), P-Chips (securities of companies with the majority of their
business operations in mainland China and controlled by individuals in China,
but that are incorporated outside of China), A-Shares (securities of companies
incorporated in mainland China that trade on Chinese exchanges in renminbi) that
are accessible through the Shanghai-Hong Kong Stock Connect program ("Shanghai
Connect") or the Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect",
and together with Shanghai Connect, "Stock Connect Programs"), and foreign
listings such as American Depository Receipts ("ADRs"). From time to time, other
stock exchanges in China may participate in Stock Connect, and A-shares listed
and traded on such other stock exchanges and accessible through Stock Connect
may be added to the MSCI China Consumer Discretionary 10/50 Index, as determined
by MSCI.
The
MSCI China Consumer Discretionary 10/50 Index follows a rules-based methodology
that is designed to select constituents of the Parent Index that are classified
in the consumer discretionary sector under the Global Industry Classification
System (GICS). The MSCI China Consumer Discretionary 10/50 Index is weighted
according to each component's free-float adjusted market capitalization, but is
modified so that, as of the rebalance date, no group entity (defined by the
Index Provider as companies with a controlling stake owned by one entity)
constitutes more than 10% of the MSCI China Consumer Discretionary 10/50 Index
and so that, in the aggregate, the individual group entities that would
represent more than 5% of the MSCI China Consumer Discretionary 10/50 Index
represent no more than 50% of the MSCI China Consumer Discretionary 10/50 Index
("10/50 Cap"). The MSCI China Consumer Discretionary 10/50 Index is
reconstituted and re-weighted quarterly. The MSCI China Consumer Discretionary
10/50 Index may include large- and mid-capitalization companies. As of
December 31, 2022, the MSCI China Consumer Discretionary 10/50 Index had 73
constituents.
MSCI
China Industrials 10/50 Index
The
MSCI China Industrials 10/50 Index tracks the performance of companies in the
MSCI China Index (the "Parent Index") that are classified as engaged in the
industrials sector, as defined by MSCI, Inc., the provider of the MSCI China
Industrials 10/50 Index. The Parent Index is a free float-adjusted market
capitalization-weighted index designed to measure the performance of securities
that are classified as operating in China according to the MSCI Global
Investable Markets Index Methodology, and that satisfy minimum market
capitalization and liquidity thresholds. The securities eligible for inclusion
in the MSCI China Industrials 10/50 Index include H-Shares (securities of
companies incorporated in China that are denominated in Hong Kong Dollars and
listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities of
companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Industrials 10/50 Index, as determined by MSCI.
The
MSCI China Industrials 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
industrials sector under the Global Industry Classification System (GICS). The
MSCI China Industrials 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Industrials 10/50 Index and so that, in the aggregate, the individual
group entities that would represent more than 5% of the MSCI China Industrials
10/50 Index represent no more than 50% of the MSCI China Industrials 10/50 Index
("10/50 Cap"). The MSCI China Industrials 10/50 Index is reconstituted and
re-weighted quarterly. The MSCI China Industrials 10/50 Index may include large-
and mid-capitalization companies. As of December 31, 2022, the MSCI China
Industrials 10/50 Index had 111 constituents.
MSCI
China Communication Services 10/50 Index
The
MSCI China Communication Services 10/50 Index tracks the performance of
companies in the MSCI China Index (the "Parent Index") that are classified in
the communication services sector, as defined by MSCI, Inc., the provider of the
MSCI China Communication Services 10/50 Index. The Parent Index is a free
float-adjusted market capitalization-weighted index designed to measure the
performance of securities that are classified as operating in China according to
the MSCI Global Investable Markets Index Methodology, and that satisfy minimum
market capitalization and liquidity thresholds. The securities eligible for
inclusion in the MSCI China Communication Services 10/50 Index include H-Shares
(securities of companies incorporated in China that are denominated in Hong Kong
Dollars and listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares
(securities of companies denominated in U.S. dollars or Hong Kong dollars and
listed on Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the
"SZSE")), Red Chips (securities of companies with a majority of their business
operations in mainland China and that are controlled by the national government
or local governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Communication Services 10/50 Index, as determined by
MSCI.
The
MSCI China Communication Services 10/50 Index follows a rules-based methodology
that is designed to select constituents of the Parent Index that are classified
as engaged in the communication services sector under the Global Industry
Classification System (GICS). The MSCI China Communication Services 10/50 Index
is weighted according to each component's free-float adjusted market
capitalization, but is modified so that, as of the rebalance date, no group
entity (defined by the Index Provider as companies with a controlling stake
owned by one entity) constitutes more than 10% of the MSCI China Communication
Services 10/50 Index and so that, in the aggregate, the individual group
entities that would represent more than 5% of the MSCI China Communication
Services 10/50 Index represent no more than 50% of the MSCI China Communication
Services 10/50 Index ("10/50 Cap"). The MSCI China Communication Services 10/50
Index is reconstituted and re-weighted quarterly. The MSCI China Communication
Services 10/50 Index may include large- and mid-capitalization companies. As of
December 31, 2022, the MSCI China Communication Services 10/50 Index had 23
constituents.
MSCI
China Financials 10/50 Index
The
MSCI China Financials 10/50 Index tracks the performance of companies in the
MSCI China Index (the "Parent Index") that are classified as engaged in the
financials sector, as defined by MSCI, Inc., the provider of the MSCI China
Financials 10/50 Index. The Parent Index is a free float-adjusted market
capitalization-weighted index designed to measure the performance of securities
that are classified as operating in China according to the MSCI Global
Investable Markets Index Methodology, and that satisfy minimum market
capitalization and liquidity thresholds. The securities eligible for inclusion
in the MSCI China Financials 10/50 Index include H-Shares (securities of
companies incorporated in China that are denominated in Hong Kong Dollars and
listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities of
companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai
Connect,
"Stock Connect Programs"), and foreign listings such as American Depository
Receipts ("ADRs"). From time to time, other stock exchanges in China may
participate in Stock Connect, and A-shares listed and traded on such other stock
exchanges and accessible through Stock Connect may be added to the MSCI China
Financials 10/50 Index, as determined by MSCI.
The
MSCI China Financials 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
financials sector under the Global Industry Classification System (GICS). The
MSCI China Financials 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Financials 10/50 Index and so that, in the aggregate, the individual group
entities that would represent more than 5% of the MSCI China Financials 10/50
Index represent no more than 50% of the MSCI China Financials 10/50 Index
("10/50 Cap"). The MSCI China Financials 10/50 Index is reconstituted and
re-weighted quarterly. The MSCI China Financials 10/50 Index may include large-
and mid-capitalization companies. As of December 31, 2022, the MSCI China
Financials 10/50 Index had 92 constituents.
MSCI
China Energy IMI Plus 10/50 Index
The
MSCI China Energy IMI Plus 10/50 Index tracks the performance of companies in
the MSCI China Investable Market Index (the "Parent Index") that are classified
as engaged in the energy sector, as defined by MSCI, Inc., the provider of the
MSCI China Energy IMI Plus 10/50 Index. The Parent Index is a free
float-adjusted market capitalization-weighted index designed to measure the
performance of securities that are classified as operating in China according to
the MSCI Global Investable Markets Index Methodology, and that satisfy minimum
market capitalization and liquidity thresholds. The securities eligible for
inclusion in the MSCI China Energy IMI Plus 10/50 Index include H-Shares
(securities of companies incorporated in China that are denominated in Hong Kong
Dollars and listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares
(securities of companies denominated in U.S. dollars or Hong Kong dollars and
listed on Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the
"SZSE")), Red Chips (securities of companies with a majority of their business
operations in mainland China and that are controlled by the national government
or local governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Energy IMI Plus 10/50 Index, as determined by MSCI.
The
MSCI China Energy IMI Plus 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
energy sector under the Global Industry Classification System (GICS). The MSCI
China Energy IMI Plus 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no issuer constitutes more than 10% of the MSCI China Energy IMI
Plus 10/50 Index and so that, in the aggregate, the issuers that would represent
more than 5% of the MSCI China Energy IMI Plus 10/50 Index represent no more
than 50% of the MSCI China Energy IMI Plus 10/50 Index ("10/50 Cap"). The MSCI
China Energy IMI Plus 10/50 Index is reconstituted and re-weighted quarterly.
The MSCI China Energy IMI Plus 10/50 Index may include large-, mid-and
small-capitalization companies. As of December 31, 2022, the MSCI China
Energy IMI Plus 10/50 Index had 28 constituents.
MSCI
China Materials 10/50 Index
The
MSCI China Materials 10/50 Index tracks the performance of companies in the MSCI
China Index (the "Parent Index") that are classified as engaged in the materials
sector, as defined by MSCI, Inc., the provider of the MSCI China Materials 10/50
Index. The Parent Index is a free float-adjusted market capitalization-weighted
index designed to measure the performance of securities that are classified as
operating in China according to the MSCI Global Investable Markets Index
Methodology, and that satisfy minimum market capitalization and liquidity
thresholds. The securities eligible for inclusion in the MSCI China Materials
10/50 Index include H-Shares (securities of companies incorporated in China that
are denominated in Hong Kong Dollars and listed on the Hong Kong Stock Exchange
(the "HKSE")), B-Shares (securities of companies denominated in U.S. dollars or
Hong Kong dollars and listed on Shanghai Stock Exchange (the "SSE") or Shenzen
Stock Exchange (the "SZSE")), Red Chips (securities of companies with a majority
of their business operations in mainland China and that are controlled by the
national government or local governments of China, traded on the HKSE in Hong
Kong dollars), P-Chips (securities of companies with the majority of their
business operations in mainland China and controlled by individuals in China,
but that are
incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Materials 10/50 Index, as determined by MSCI.
The
MSCI China Materials 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
materials sector under the Global Industry Classification System (GICS). The
MSCI China Materials 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Materials 10/50 Index and so that, in the aggregate, the individual group
entities that would represent more than 5% of the MSCI China Materials 10/50
Index represent no more than 50% of the MSCI China Materials 10/50 Index ("10/50
Cap"). The MSCI China Materials 10/50 Index is reconstituted and re-weighted
quarterly. The MSCI China Materials 10/50 Index may include large- and
mid-capitalization companies. As of December 31, 2022, the MSCI China
Materials 10/50 Index had 105 constituents.
MSCI
Norway IMI 25/50 Index
The
MSCI Norway IMI 25/50 Index is designed to measure the performance of the
large-, mid-, and small-capitalization segments of the Norwegian market. It
applies certain investment limits that are imposed on RICs under the Code. With
69 constituents as of December 31, 2022, the index covers approximately 99%
of the free float-adjusted market capitalization in Norway. The index is
maintained by MSCI.
FTSE/ASEAN
40 Index
The
FTSE/ASEAN 40 Index tracks the equity performance of the 40 largest companies in
the five ASEAN regions: Singapore, Malaysia, Indonesia, Thailand and
Philippines. The index is free-float adjusted and weighted by modified market
capitalization and designed using eligible stocks within the FTSE All-World
universe. Stocks are liquidity screened to ensure that the index is tradable.
The index is maintained by FTSE.
MSCI
All Argentina 25/50 Index
The
MSCI All Argentina 25/50 Index is designed to represent the performance of the
broad Argentina equity universe, while including a minimum number of
constituents. The broad Argentina equity universe includes securities that are
classified in Argentina according to the MSCI Global Investable Market Index
Methodology, together with companies that are headquartered or listed in
Argentina and carry out the majority of their operations in Argentina. The index
targets a minimum of 25 securities and 20 issuers at construction. The index is
designed to take into account the 25% and 50% concentration constraints required
for a fund to qualify as a regulated investment company ("RIC") under the Code
in the United States. At each quarterly rebalance, no single index constituent
may exceed 25% of the index weight, and the sum of all constituents with index
weights greater than 5% may not exceed 50%. The index is maintained by
MSCI.
MSCI
All Greece Select 25/50 Index
The
MSCI All Greece Select 25/50 Index is designed to represent the performance of
the Broad Greece Equity Universe, while including constituents with minimum
levels of liquidity. The Broad Greece Equity Universe includes securities that
are classified in Greece according to the MSCI Global Investable Market Index
Methodology, companies that are headquartered or listed in Greece and carry out
the majority of their operations in Greece, and companies with economic exposure
greater than 20% to Greece, as defined in the MSCI Economic Exposure Data
Methodology. A specific capping methodology is applied to facilitate compliance
with the rules governing the listing of financial products on exchanges in the
United States. The Index is maintained by MSCI.
MSCI
All Nigeria Select 25/50 Index
The
MSCI All Nigeria Select 25/50 Index is designed to represent the performance of
the broad Nigeria equity universe, while including a minimum number of
constituents. The broad Nigeria equity universe includes securities that are
classified in Nigeria according to the MSCI Global Investable Market Index
Methodology, together with companies that are headquartered or listed in Nigeria
and carry out the majority of their operations in Nigeria. Further, the index
only includes securities with a minimum liquidity threshold of $100,000 average
daily traded value, subject to 20 constituents being included in the index. If
not,
securities are added in decreasing order of average daily traded value until 20
securities are selected. The index targets a minimum of 20 securities at
construction. The index is maintained by MSCI.
MSCI
Select Emerging and Frontier Markets Access Index
The
MSCI Select Emerging and Frontier Markets Access Index is designed to reflect
equity performance of select emerging markets and frontier markets companies
while maintaining diversification across individual countries, sectors and
issuers. The index is constructed from the MSCI EFM ex BRICKT (Brazil, Russia,
India, China, South Korea & Taiwan) Index (the "Parent
Index").
Securities from the Parent Index are classified into emerging markets countries
and frontier markets countries based on the market classification approach of
MSCI, the provider of the index. Constituents within the emerging markets
countries classification are weighted by free-float adjusted market
capitalization and constituents within the frontier markets countries
classification are weighted by their double free-float adjusted market
capitalization, in each case, subject
to
applicable country, sector, and issuer capping constraints. As of
December 31, 2022, the index had 202
constituents from the following countries:
Indonesia, Malaysia, Mexico, Philippines, Poland, Qatar, Saudi Arabia, South
Africa, Thailand, Turkey, United Arab Emirates and Vietnam. The index is
maintained by MSCI.
MSCI
All Portugal Plus 25/50 Index
The
MSCI All Portugal Plus 25/50 Index is designed to represent the performance of
the Broad Portugal Equity Universe, while including constituents with minimum
levels of liquidity. The Broad Portugal Equity Universe includes securities that
are classified in Portugal according to the MSCI Global Investable Market Index
Methodology, together with companies that are headquartered or listed in
Portugal and carry out the majority of their operations in Portugal. A specific
capping methodology is applied to facilitate compliance with the rules governing
the listing of financial products on exchanges in the United States. The index
is maintained by MSCI.
DAX
Index
The
DAX Index tracks the segment of the largest and most actively traded companies -
known as blue chips - on the German equities market. It contains the shares of
the 30 largest and most liquid companies admitted to the Frankfurt Stock
Exchange in the Prime Standard segment. The DAX Index represents about 80% of
the free-float market capitalization authorized in Germany.
MSCI
All Pakistan Select 25/50 Index
The
MSCI All Pakistan Select 25/50 Index is designed to represent the performance of
the broad Pakistan equity universe, while including a minimum number of
constituents. The broad Pakistan equity universe includes securities that are
classified in Pakistan according to the MSCI Global Investable Market Index
Methodology, together with companies that are headquartered or listed in
Pakistan and carry out the majority of their operations in Pakistan. The index
targets a minimum of 25 securities and 20 issuers at construction. The index is
designed to take into account the 25% and 50% concentration constraints required
for a fund to qualify as a RIC under the Code in the United States. At each
quarterly rebalance, no single index constituent may exceed 25% of the index
weight, and the sum of all constituents with index weights greater than 5% may
not exceed 50%. The index is maintained by MSCI.
MSCI
China Consumer Staples 10/50 Index
The
MSCI China Consumer Staples 10/50 Index tracks the performance of companies in
the MSCI China Index (the "Parent Index") that are classified as engaged in the
consumer staples sector, as defined by MSCI, Inc., the provider of the MSCI
China Consumer Staples 10/50 Index. The Parent Index is a free float-adjusted
market capitalization-weighted index designed to measure the performance of
securities that are classified as operating in China according to the MSCI
Global Investable Markets Index Methodology, and that satisfy minimum market
capitalization and liquidity thresholds. The securities eligible for inclusion
in the MSCI China Consumer Staples 10/50 Index include H-Shares (securities of
companies incorporated in China that are denominated in Hong Kong Dollars and
listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities of
companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and
together
with Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Consumer Staples 10/50 Index, as determined by MSCI.
The
MSCI China Consumer Staples 10/50 Index follows a rules-based methodology that
is designed to select constituents of the Parent Index that are classified in
the consumer staples sector under the Global Industry Classification System
(GICS). The MSCI China Consumer Staples 10/50 Index is weighted according to
each component's free-float adjusted market capitalization, but is modified so
that, as of the rebalance date, no group entity (defined by the Index Provider
as companies with a controlling stake owned by one entity) constitutes more than
10% of the MSCI China Consumer Staples 10/50 Index and so that, in the
aggregate, the individual group entities that would represent more than 5% of
the MSCI China Consumer Staples 10/50 Index represent no more than 50% of the
MSCI China Consumer Staples 10/50 Index ("10/50 Cap"). The MSCI China Consumer
Staples 10/50 Index is reconstituted and re-weighted quarterly. The MSCI China
Consumer Staples 10/50 Index may include large- and mid-capitalization
companies. As of December 31, 2022, the MSCI China Consumer Staples 10/50
Index had 54 constituents.
MSCI
China Health Care 10/50 Index
The
MSCI China Health Care 10/50 Index tracks the performance of companies in the
MSCI China Index (the "Parent Index") that are classified as engaged in the
health care sector, as defined by MSCI, Inc., the provider of the MSCI China
Health Care 10/50 Index. The Parent Index is a free float-adjusted market
capitalization-weighted index designed to measure the performance of securities
that are classified as operating in China according to the MSCI Global
Investable Markets Index Methodology, and that satisfy minimum market
capitalization and liquidity thresholds. The securities eligible for inclusion
in the MSCI China Health Care 10/50 Index include H-Shares (securities of
companies incorporated in China that are denominated in Hong Kong Dollars and
listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities of
companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Health Care 10/50 Index, as determined by MSCI.
The
MSCI China Health Care 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
health care sector under the Global Industry Classification System (GICS). The
MSCI China Health Care 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Health Care 10/50 Index and so that, in the aggregate, the individual
group entities that would represent more than 5% of the MSCI China Health Care
10/50 Index represent no more than 50% of the MSCI China Health Care 10/50 Index
("10/50 Cap"). The MSCI China Health Care 10/50 Index is reconstituted and
re-weighted quarterly. The MSCI China Health Care 10/50 Index may include large-
and mid-capitalization companies. As of December 31, 2022, the MSCI China
Health Care 10/50 Index had 79 constituents.
MSCI
China Information Technology 10/50 Index
The
MSCI China Information Technology 10/50 Index tracks the performance of
companies in the MSCI China Index (the "Parent Index") that are classified as
engaged in the information technology sector, as defined by MSCI, Inc., the
provider of the MSCI China Information Technology 10/50 Index. The Parent Index
is a free float-adjusted market capitalization-weighted index designed to
measure the performance of securities that are classified as operating in China
according to the MSCI Global Investable Markets Index Methodology, and that
satisfy minimum market capitalization and liquidity thresholds. The securities
eligible for inclusion in the MSCI China Information Technology 10/50 Index
include H-Shares (securities of companies incorporated in China that are
denominated in Hong Kong Dollars and listed on the Hong Kong Stock Exchange (the
"HKSE")), B-Shares (securities of companies denominated in U.S. dollars or Hong
Kong dollars and listed on Shanghai Stock Exchange (the "SSE") or Shenzen Stock
Exchange (the "SZSE")), Red Chips (securities of companies with a majority of
their business operations in mainland China and that are controlled by the
national government or local governments of China, traded
on
the HKSE in Hong Kong dollars), P-Chips (securities of companies with the
majority of their business operations in mainland China and controlled by
individuals in China, but that are incorporated outside of China), A-Shares
(securities of companies incorporated in mainland China that trade on Chinese
exchanges in renminbi) that are accessible through the Shanghai-Hong Kong Stock
Connect program ("Shanghai Connect") or the Shenzhen-Hong Kong Stock Connect
program ("Shenzhen Connect", and together with Shanghai Connect, "Stock Connect
Programs"), and foreign listings such as American Depository Receipts ("ADRs").
From time to time, other stock exchanges in China may participate in Stock
Connect, and A-shares listed and traded on such other stock exchanges and
accessible through Stock Connect may be added to the MSCI China Information
Technology 10/50 Index, as determined by MSCI.
The
MSCI China Information Technology 10/50 Index follows a rules-based methodology
that is designed to select constituents of the Parent Index that are classified
in the information technology sector under the Global Industry Classification
System (GICS). The MSCI China Information Technology 10/50 Index is weighted
according to each component's free-float adjusted market capitalization, but is
modified so that, as of the rebalance date, no group entity (defined by the
Index Provider as companies with a controlling stake owned by one entity)
constitutes more than 10% of the MSCI China Information Technology 10/50 Index
and so that, in the aggregate, the individual group entities that would
represent more than 5% of the MSCI China Information Technology 10/50 Index
represent no more than 50% of the MSCI China Information Technology 10/50 Index
("10/50 Cap"). The MSCI China Information Technology 10/50 Index is
reconstituted and re-weighted quarterly. The MSCI China Information Technology
10/50 Index may include large- and mid-capitalization companies. As of
December 31, 2022, the MSCI China Information Technology 10/50 Index had
105 constituents.
MSCI
China Real Estate 10/50 Index
The
MSCI China Real Estate 10/50 Index tracks the performance of companies in the
MSCI China Index (the "Parent Index") that are classified as engaged in the real
estate sector, as defined by MSCI, Inc., the provider of the MSCI China Real
Estate 10/50 Index. The Parent Index is a free float-adjusted market
capitalization-weighted index designed to measure the performance of securities
that are classified as operating in China according to the MSCI Global
Investable Markets Index Methodology, and that satisfy minimum market
capitalization and liquidity thresholds. The securities eligible for inclusion
in the MSCI China Real Estate 10/50 Index include H-Shares (securities of
companies incorporated in China that are denominated in Hong Kong Dollars and
listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities of
companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Real Estate 10/50 Index, as determined by MSCI.
The
MSCI China Real Estate 10/50 Index follows a rules-based methodology that is
designed to select constituents of the Parent Index that are classified in the
real estate sector under the Global Industry Classification System (GICS). The
MSCI China Real Estate 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Real Estate 10/50 Index and so that, in the aggregate, the individual
group entities that would represent more than 5% of the MSCI China Real Estate
10/50 Index represent no more than 50% of the MSCI China Real Estate 10/50 Index
("10/50 Cap"). The MSCI China Real Estate 10/50 Index is reconstituted and
re-weighted quarterly. The MSCI China Real Estate 10/50 Index may include large-
and mid-capitalization companies. As of December 31, 2022, the MSCI China
Real Estate 10/50 Index had 24 constituents.
MSCI
China Utilities 10/50 Index
The
MSCI China Utilities 10/50 Index tracks the performance of companies in the MSCI
China Index (the "Parent Index") that are classified as engaged in the utilities
sector, as defined by MSCI, Inc., the provider of the MSCI China Utilities 10/50
Index. The Parent Index is a free float-adjusted market capitalization-weighted
index designed to measure the performance of securities that are classified as
operating in China according to the MSCI Global Investable Markets Index
Methodology, and that satisfy minimum market capitalization and liquidity
thresholds. The securities eligible for inclusion in the MSCI China Utilities
10/50 Index include H-Shares (securities of companies incorporated in China that
are denominated in Hong Kong
Dollars
and listed on the Hong Kong Stock Exchange (the "HKSE")), B-Shares (securities
of companies denominated in U.S. dollars or Hong Kong dollars and listed on
Shanghai Stock Exchange (the "SSE") or Shenzen Stock Exchange (the "SZSE")), Red
Chips (securities of companies with a majority of their business operations in
mainland China and that are controlled by the national government or local
governments of China, traded on the HKSE in Hong Kong dollars), P-Chips
(securities of companies with the majority of their business operations in
mainland China and controlled by individuals in China, but that are incorporated
outside of China), A-Shares (securities of companies incorporated in mainland
China that trade on Chinese exchanges in renminbi) that are accessible through
the Shanghai-Hong Kong Stock Connect program ("Shanghai Connect") or the
Shenzhen-Hong Kong Stock Connect program ("Shenzhen Connect", and together with
Shanghai Connect, "Stock Connect Programs"), and foreign listings such as
American Depository Receipts ("ADRs"). From time to time, other stock exchanges
in China may participate in Stock Connect, and A-shares listed and traded on
such other stock exchanges and accessible through Stock Connect may be added to
the MSCI China Utilities 10/50 Index, as determined by MSCI.
The
MSCI China Utilities 10/50 Index follows a rules-based methodology that is
designed to select all constituents of the Parent Index that are classified in
the utilities sector under the Global Industry Classification System (GICS). The
MSCI China Utilities 10/50 Index is weighted according to each component's
free-float adjusted market capitalization, but is modified so that, as of the
rebalance date, no group entity (defined by the Index Provider as companies with
a controlling stake owned by one entity) constitutes more than 10% of the MSCI
China Utilities 10/50 Index and so that, in the aggregate, the individual group
entities that would represent more than 5% of the MSCI China Utilities 10/50
Index represent no more than 50% of the MSCI China Utilities 10/50 Index ("10/50
Cap"). The MSCI China Utilities 10/50 Index is reconstituted and re-weighted
quarterly. The MSCI China Utilities 10/50 Index may include large- and
mid-capitalization companies. As of December 31, 2022, the MSCI China
Utilities 10/50 Index had 25 constituents.
MSCI
Vietnam IMI Select 25/50 Index
The
MSCI Vietnam IMI Select 25/50 Index is designed to represent the performance of
the broad Vietnam equity universe, while including a minimum number of
constituents, as defined by MSCI, Inc. ("MSCI"), the provider of the MSCI
Vietnam IMI Select 25/50 Index. The broad Vietnam equity universe includes
securities that are classified in Vietnam according to the MSCI Global
Investable Market Index Methodology, together with companies that are
headquartered or listed in Vietnam and carry out the majority of their
operations in Vietnam, as determined solely by MSCI. The country classification
of a company is generally determined by MSCI using the company’s country of
incorporation and the primary listing of its securities. MSCI will classify a
company in the country of incorporation if its securities have a primary listing
in that country. In such cases where a company’s securities have a primary
listing outside of the country of incorporation, additional criteria such as the
location of the company’s headquarters and the geographic distribution of its
operations (e.g. assets and revenues), management, and shareholder base are
considered by the Index Provider for classification purposes. The MSCI Vietnam
IMI Select 25/50 Index follows a rules-based methodology that is designed to
select all securities that satisfy the above criteria and which have a market
capitalization greater than or equal to the 99th
percentile of listed developed market securities, have an annual traded value
ratio (a measure of liquidity calculated by MSCI) greater than or equal to 15%,
and have traded on greater than or equal to 50% of trading days over the past
twelve months.
The
MSCI Vietnam IMI Select 25/50 Index is weighted according to each component's
free-float adjusted market capitalization. Free-float adjusted market
capitalization measures a company’s market capitalization discounted by the
percentage of its shares readily available to be traded by the general public in
the open market (“free float”). In addition, a liquidity discount factor based
on the security’s annual traded value ratio (“ATVR”) is applied. ATVR is a
liquidity metric calculated by MSCI. The liquidity discount factor is applied to
each company’s free float market capitalization for the purposes of calculating
the allocated index weight to each constituent, such that the allocated index
weight is lower for less liquid securities (and higher for more liquid
securities) than it would otherwise be. The weights are further modified for
diversification purposes, so that, as of the rebalance date, no group entity
(defined by MSCI as companies that are jointly controlled by a single parent
company) constitutes more than 25% of the MSCI Vietnam IMI Select 25/50 Index
and so that, in the aggregate, the individual group entities that would
represent more than 5% of the MSCI Vietnam IMI Select 25/50 Index represent no
more than 50% of the MSCI Vietnam IMI Select 25/50 Index ("25/50 Cap"). The MSCI
Vietnam IMI Select 25/50 Index and the Fund are reconstituted and re-weighted
quarterly. The MSCI Vietnam IMI Select 25/50 Index may include large-, mid- and
small-capitalization companies, and components primarily include real estate
companies. As of December 31, 2022, small capitalization companies are
those companies with a market capitalization of $300 million or more but less
than $2 billion; mid-capitalization companies are those companies with a market
capitalization of $2 billion or more but less than $10 billion; and
large-capitalization companies are those companies with a market capitalization
of $10 billion or greater. As of December 31, 2022, the MSCI Vietnam IMI
Select 25/50 Index had 62 constituents.
Solactive
Global Copper Miners Total Return Index
The
Solactive Global Copper Miners Total Return Index tracks the performance of the
largest and most liquid listed companies that are active in some aspect of the
copper mining industry, such as copper mining, refining or exploration. The
index is calculated as a total return index in U.S. dollars and adjusted
semi-annually. The stocks are screened for liquidity and weighted according to
modified free-float market capitalization. A specific capping methodology is
used at the time of the semi-annual index review to seek to assure compliance
with the rules governing the listing of financial products on exchanges in the
United States. The index is maintained by Solactive AG.
Solactive
Global Silver Miners Total Return Index
The
Solactive Global Silver Miners Total Return Index tracks the performance of the
largest and most liquid listed companies that are active in some aspect of the
silver mining industry such as silver mining, refining or exploration. The index
is calculated as a total return index in U.S. dollars and adjusted
semi-annually. The stocks are screened for liquidity and weighted according to
modified free-float market capitalization. A specific capping methodology is
used at the time of the semi-annual index review to seek to assure compliance
with the rules governing the listing of financial products on exchanges in the
United States. The index is maintained by Solactive AG.
Solactive
Global Gold Explorers & Developers Total Return Index
The
Solactive Global Gold Explorers & Developers Total Return Index is designed
to measure broad based equity market performance of global companies involved in
gold exploration, including companies that are engaged in both gold exploration
and limited levels of gold production ("Developers"). The stocks are screened
for liquidity and weighted according to modified free-float market
capitalization. A specific capping methodology is used at the time of the
semi-annual index review to seek to assure compliance with the rules governing
the listing of financial products on exchanges in the United
States.
Solactive
Global Uranium & Nuclear Components Total Return Index
The
Solactive Global Uranium & Nuclear Components Total Return Index is designed
to measure broad based equity market performance of global companies involved in
the uranium industry, including companies that are engaged in uranium mining,
exploration for uranium, technologies related to the uranium industry and the
production of nuclear components, and investment trust whose primary purpose is
to provide exposure to physical uranium. The stocks are screened for liquidity
and weighted according to modified effective market capitalization, using a
scheme that accounts for liquidity in determining final weights. In addition,
Minerva Analytics Ltd. will screen the companies for exposure to "Controversial
Weapons". A company will be considered as exposed to Controversial Weapons if:
(i) it is involved in the production development or maintenance of
anti-personnel mines, biological or chemical weapons, cluster munitions,
depleted uranium, nuclear weapons, or any other weapon that violate humanitarian
principles through normal use; (ii) it produces or develops key and dedicated
components for controversial weapons; (iii) it holds more than a 20% stake in a
company that is involved in controversial weapons; or it is more than 50% owned
by a company that is involved in controversial weapons. A specific capping
methodology is used at the time of the semi-annual index review to seek to
assure compliance with the rules governing the listing of financial products on
exchanges in the United States. The Index is maintained by Solactive
AG.
Solactive
Global Lithium Index
The
Solactive Global Lithium Index tracks the performance of the largest and most
liquid listed companies that are active in the exploration and/or mining of
Lithium or the production of Lithium batteries. The index is calculated as a
total return index in U.S. dollars and adjusted semi-annually. The stocks are
screened for liquidity and weighted according to modified free-float market
capitalization. A specific capping methodology is used at the time of the
semi-annual index review to seek to assure compliance with the rules governing
the listing of financial products on exchanges in the United States. The index
is maintained by Solactive AG.
Solactive
Global SuperDividend®
Index
The
Solactive Global SuperDividend®
Index tracks the equity performance of 100 equally weighted companies that rank
among the highest dividend-yielding equity securities in the world. The index
provider applies certain dividend stability filters. The index is maintained by
Solactive AG.
Solactive
Social Media Total Return Index
The
Solactive Social Media Total Return Index is designed to reflect the equity
performance of companies involved in the social media industry, including
companies that provide social networking, file sharing, and other web-based
media
applications.
The stocks are screened for liquidity and weighted according to modified
free-float market capitalization. The index is maintained by Solactive
AG.
Solactive
Guru Index
The
Solactive Guru Index is comprised of the top U.S. listed equity positions
reported on Form 13F by a select group of entities that Solactive AG
characterizes as hedge funds. Hedge funds are selected from a pool of thousands
of privately offered pooled investment vehicles based on the size of their
reported equity holdings and the efficacy of replicating their publicly
disclosed positions. Hedge funds must have minimum reported holdings of $500
million in their Form 13F to be considered for the index. Additional filters are
applied to eliminate hedge funds that have high turnover rates for equity
holdings. Only hedge funds with concentrated top holdings are included in the
selection process.
Once
the hedge fund pool has been determined, the index provider utilizes 13F filings
to compile the top stock holding from each of these hedge funds. The index is
calculated as a total return index and adjusted quarterly. The stocks are
screened for liquidity and equal weighted. The Index is maintained by Solactive
AG.
Global
X U.S. High Yield Preferred Index
The
Global X U.S. High Yield Preferred Index is owned and was developed by Global X
Management Company LLC, the index provider, which is an affiliate of the Fund
and is also the Adviser. As is the case with any use of an affiliated index
provider by any ETF, this relationship poses potential conflicts. However,
Global X Management Company LLC, as a registered investment adviser, has taken
steps that are designed to ensure that these potential conflicts are mitigated.
The Global X U.S. High Yield Preferred Index tracks the performance of the
highest-yielding preferred securities in the United States, as determined by
Solactive AG, the administrator of the Global X U.S. High Yield Preferred Index.
The Global X U.S. High Yield Preferred Index is comprised of preferred stocks
that meet certain criteria relating to size, liquidity, issuer concentration and
rating, maturity and other requirements, as determined by the Index
Administrator. The Global X U.S. High Yield Preferred Stock Index does not seek
to directly reflect the performance of the companies issuing the preferred
stock.
Indxx
SuperDividend®
U.S. Low Volatility Index
The
Indxx SuperDividend®
U.S. Low Volatility Index is maintained by Indxx, LLC. The index tracks the
performance of 50 equally weighted common stocks, master limited partnerships
("MLPs") and real estate investment trusts ("REITs") that rank among the highest
dividend-yielding equity securities in the United States, as defined by Indxx,
LLC. The components of the index have paid dividends consistently over the last
two years. The Underlying Index is comprised of securities that Indxx, LLC
determines to have lower relative volatility (i.e., low beta) than the
market.
CBOE
S&P 500®
BuyWrite Index
The
CBOE S&P 500®
BuyWrite Index is a benchmark index that measures the performance of a
theoretical portfolio that holds a portfolio of the stocks included in the
S&P 500®
Index ("S&P 500 Index"), and "writes" (or sells) a succession of one-month
at-the-money S&P 500 Index covered call options.
CBOE
NASDAQ-100®
BuyWrite V2 Index
The
CBOE NASDAQ-100®
BuyWrite Index ("BXN Index") is a benchmark index that measures the performance
of a theoretical portfolio that holds a portfolio of the stocks included in the
NASDAQ-100®
Index ("NASDAQ-100 Index"), and "writes" (or sells) a succession of one-month
at-the-money NASDAQ-100 Index covered call options. The CBOE
NASDAQ-100®
BuyWrite V2 Index ("BXNT Index") replicates the methodology used to calculate
the BXN Index, with one exception: the written NASDAQ-100®
Index covered call options are held until one day prior to the expiration date
(i.e., generally the Thursday preceding the Third Friday of the month) and are
liquidated at a volume-weighted average price determined at the
close.
MSCI
Emerging Markets Top 50 Dividend Index
The
MSCI Emerging Markets Top 50 Dividend Index tracks the performance of 50
equally weighted companies that rank among the highest dividend yielding equity
securities in Emerging Markets, as defined by MSCI. The Underlying Index may
include components from the following countries: Brazil, Chile, China, Colombia,
Czech Republic, Egypt, Greece, Hungary, India, Indonesia, South Korea, Kuwait,
Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa,
Taiwan, Thailand, Turkey and United Arab Emirates. The MSCI Emerging Markets Top
50 Dividend Index begins with the
MSCI
Emerging Markets Index, which is a capitalization-weighted index, as its
starting universe, and then follows a rules-based methodology that is designed
to select among the highest dividend yielding equity securities of the MSCI
Emerging Markets Index. The MSCI Emerging Markets Top 50 Dividend Index is equal
weighted and rebalanced annually.
Solactive
Global SuperDividend®
REIT Index
The
Solactive Global SuperDividend®
REIT Index tracks the performance of REITs that rank among the highest-yielding
REITs globally, as determined by the index provider. The index is maintained by
Solactive AG.
Indxx
Renewable Energy Producers Index
The
Indxx Renewable Energy Producers Index is designed to provide exposure to
publicly traded companies that produce energy from renewable sources including
wind, solar, hydroelectric, geothermal, and biofuels (including publicly traded
companies that are formed to own operating assets that produce defined cash
flows (“YieldCos”)) (collectively, "Renewable Energy Companies"), as defined by
Indxx LLC, the index provider.
In
constructing the Indxx Renewable Energy Producers Index, Indxx LLC first
identifies FactSet Industries related to renewable energy production. Companies
within these industries, as of the selection date, are further reviewed by Indxx
LLC on the basis of revenue related to renewable energy production. To be
eligible for the Indxx Renewable Energy Producers Index, a company is considered
by Indxx LLC to be a Renewable Energy Company if the company generates at least
50% of its revenues from renewable energy production, as determined by Indxx
LLC. Indxx LLC classifies Renewable Energy Companies as those companies that
produce energy from renewable sources, including: wind, solar, hydroelectric,
geothermal, and biofuels (including YieldCos), as determined by Indxx
LLC.
S&P
500®
Catholic Values Index
The
S&P 500®
Catholic Values Index is designed to provide exposure to U.S. equity securities
included in the S&P 500®
Index while maintaining alignment with the moral and social teachings of the
Catholic Church. The Underlying Index is based on the S&P 500®
Index, and generally comprises approximately 500 or less U.S. listed common
stocks. All index constituents are members of the S&P 500®
Index and follow the eligibility criteria for that index. From this starting
universe, constituents are screened to exclude companies involved in activities
which are perceived to be inconsistent with Catholic values as outlined in the
Socially Responsible Investment Guidelines of the United States Conference of
Catholic Bishops ("USCCB"). The Underlying Index then reweights the remaining
constituents so that the Underlying Index's sector exposures matches the sector
exposures of the S&P 500®
Index. The Underlying Index is sponsored by Standard & Poor's Financial
Services LLC (the "Index Provider"), which is an organization that is
independent of, and unaffiliated with, the Fund and Global X Management Company
LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index. As of
December 31, 2022, the Underlying Index had 445 constituents. The Fund's
investment objective and Underlying Index may be changed without shareholder
approval.
MSCI
EAFE Top 50 Dividend Index
The
MSCI EAFE Top 50 Dividend Index tracks the performance of 50 equally-weighted
companies that rank among the highest dividend yielding equity securities in
Europe, Australasia and the Far East, as defined by MSCI. The MSCI EAFE Top 50
Dividend Index begins with the MSCI EAFE Index, which is a
capitalization-weighted index, and then follows a rules-based methodology that
is designed to select among the highest dividend yielding equity securities of
the MSCI EAFE Index. The MSCI EAFE Top 50 Dividend Index is equal weighted and
rebalanced annually. As of December 31, 2022, components from the following
developed market countries were eligible for inclusion in the MSCI EAFE Top 50
Dividend Index: Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New
Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. The MSCI EAFE Top 50 Dividend Index may include large-, mid- or
small-capitalization companies. The MSCI EAFE Top 50 Dividend Index primarily
includes components from the following sectors: Consumer Discretionary, Energy,
Financials, Materials, Real Estate, Telecommunication Services, and Utilities.
The components of the MSCI EAFE Top 50 Dividend Index, and the degree to which
these components represent certain industries, are likely to change over time.
Solactive
E-commerce Index
The
Solactive E-commerce Index is designed to provide exposure to exchange-listed
companies that are positioned to benefit from the increased adoption of
e-commerce as a distribution model, including but not limited to companies whose
principal
business
is in operating e-commerce platforms, providing e-commerce software and
services, and/or selling goods and services online (collectively, "E-commerce
Companies"), as defined by Solactive AG, the provider of the Solactive
E-commerce Index ("Index Provider").
In
constructing the Solactive E-commerce Index, the Index Provider first applies a
proprietary natural language processing algorithm to the eligible universe,
which seeks to identify and rank companies with direct exposure to the
e-commerce industry based on filings, disclosures and other public information
(e.g. regulatory filings, earnings transcripts, etc.). Companies identified by
the natural language processing algorithm, as of the selection date, are further
reviewed by the Index Provider on the basis of revenue related to e-commerce
activities. To be eligible for the Solactive E-commerce Index, a company is
considered by the Index Provider to be an E-commerce Company if the company
generates at least 50% of its revenues from e-commerce activities, as determined
by the Index Provider. E-commerce Companies are those companies that (i) operate
e-commerce platforms that connect buyers and sellers of goods and services via
online marketplaces, (ii) provide e-commerce software, analytics or services
that facilitate the development and enhancement of e-commerce platforms, and/or
(iii) primarily sell goods and services online and generate the majority of
their overall revenue from online retail, as determined by the Index
Provider.
To
be a part of the eligible universe of the Solactive E-commerce Index, certain
minimum market capitalization and liquidity criteria, as defined by the Index
Provider, must be met. As of December 31, 2022, companies must have a
minimum market capitalization of $200 million and a minimum average daily
turnover for the last 6 months greater than or equal to $2 million in order to
be eligible for inclusion in the Solactive E-commerce Index and must retain a
minimum average daily turnover for the last 6 months greater than or equal to
$1.4 million in order to be eligible to remain in the Solactive E-commerce
Index. As of December 31, 2022, companies listed in the following countries
were eligible for inclusion in the Solactive E-commerce Index: Australia,
Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Poland,
Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey,
United Kingdom and the United States.
The
Solactive E-commerce Index is weighted according to a modified capitalization
weighting methodology and is reconstituted and re-weighted semi-annually, with
each included security being allocated a maximum weight of 4% and a minimum
weight of 0.3% in connection with each semi-annual rebalance. Modified
capitalization weighting seeks to weight constituents primarily based on market
capitalization, but subject to caps on the weights of the individual securities.
Generally
speaking,
this approach will limit the amount of concentration in the largest market
capitalization companies and increase company-level diversification. The
Solactive E-commerce Index may include large-, mid- or small- capitalization
companies, and components primarily include information technology and consumer
discretionary companies.
Cboe
Russell 2000 BuyWrite Index
The
Cboe Russell 2000 BuyWrite Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the Russell 2000
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the Russell 2000 Index. The written covered call options on the
Russell 2000 Index are held until expiration. The Russell 2000 Index is an
equity benchmark which measures the performance of the small-capitalization
sector of the U.S. equity market, as defined by FTSE Russell.
S&P
Developed Ex-U.S. Catholic Values Index
The
S&P Developed ex-U.S. Catholic Values Index is designed to provide exposure
to developed market equity securities outside the U.S. while maintaining
alignment with the moral and social teachings of the Catholic Church. The
S&P Developed ex-U.S. Catholic Values Index is based on the S&P EPAC
ex-Korea Large Cap Index, a benchmark index that provides exposure to the large
capitalization segment of developed markets within the Europe and Asia Pacific
regions, excluding Korea. The S&P EPAC ex-Korea Large Cap Index does not
target any specific sector exposure. All index constituents are members of the
S&P EPAC ex-Korea Large Cap Index and follow the eligibility criteria for
that index. From this starting universe, constituents are screened to exclude
companies involved in activities which are perceived to be inconsistent with
Catholic values as outlined in the Socially Responsible Investment Guidelines of
the United States Conference of Catholic Bishops ("USCCB"). The S&P
Developed ex-U.S. Catholic Values Index then reweights the remaining
constituents so that the S&P Developed ex-U.S. Catholic Values Index’s
sector exposures match the current sector exposures of the S&P EPAC ex-Korea
Large Cap Index. The S&P Developed ex-U.S. Catholic Values Index is
sponsored by Standard & Poor’s Financial Services LLC (the "Index
Provider"). The Index Provider determines the relative weightings of the
securities in the Underlying Index and publishes information regarding the
market value of the S&P Developed ex-U.S. Catholic Values Index. As of
December 31, 2022, the Underlying Index had 434 constituents. The Fund's
investment objective and Underlying Index may be changed without shareholder
approval.
Cboe
Nasdaq 100 Half BuyWrite V2 Index
The
Cboe Nasdaq 100 Half BuyWrite V2 Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the NASDAQ
100®
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the NASDAQ 100®
Index. The written covered call options on the NASDAQ 100®
Index correspond to approximately 50% of the value of the portfolio of stocks in
the NASDAQ 100®
Index. The written covered call options on the NASDAQ 100®
Index are held until one day prior to expiration. The NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification.
The
Cboe Nasdaq 100 Half BuyWrite V2 Index is sponsored by Nasdaq, Inc., which is an
organization that is independent of the Fund and the Adviser.
Cboe
S&P 500 Half BuyWrite Index
The
Cboe S&P 500 Half BuyWrite Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the S&P 500
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the S&P 500®
Index. The written covered call options on the S&P 500®
Index correspond to approximately 50% of the value of the portfolio of stocks in
the S&P 500®
Index. The written covered call options on the S&P 500®
Index are held until expiration. The S&P 500®
Index is a float-adjusted market capitalization weighted index which measures
the performance of the equity securities of 500 industrial, information
technology, utility and financial companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
The
Cboe S&P 500 Half BuyWrite Index is sponsored by S&P Dow Jones Indices
LLC, which is an organization that is independent of the Fund and the Adviser.
Nasdaq
CTA Emerging Markets Internet & E-commerce Net Total Return
Index
The
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index is
designed to provide exposure to exchange-listed companies that are expected to
benefit from further adoption of internet and e-commerce technologies in
emerging markets countries (collectively, "Emerging Markets Internet &
E-commerce Companies"), as defined by Nasdaq, Inc., the provider of the Nasdaq
CTA Emerging Markets Internet & E-commerce Net Total Return Index and the
Consumer Technology Association (the “CTA”). Nasdaq, Inc. and the CTA have
jointly developed the eligibility and selection criteria for the Nasdaq CTA
Emerging Markets Internet & E-commerce Net Total Return Index. In order to
be eligible for inclusion in the Nasdaq CTA Emerging Markets Internet &
E-commerce Net Total Return Index, a company is considered by the CTA to be an
Emerging Markets Internet & E-commerce Company if it derives at least 50% of
its revenue, operating income, or assets from: (i) internet-related services
(including social media and online entertainment), (ii) internet retail
commerce, (iii) internet search engine services, and/or (iv) software delivered
via the internet.
Nasdaq,
Inc. classifies countries as being “emerging markets” by employing both a
quantitative and qualitative review process. The quantitative criteria that
Nasdaq, Inc. assesses include: (i) the Gross National Income (“GNI”) per capita,
which measures a country’s income divided by its population, must be greater
than $1,000 and less than $20,000 for three consecutive years; (ii) the
aggregate market capitalization of index eligible companies listed in the
country must be greater than $20 billion and less than $30 billion; (iii) the
aggregate annual traded value of companies listed in the country; and (iv) the
total number of index eligible securities listed in the country must be at least
5. In addition to the quantitative criteria, Nasdaq, Inc. applies a
supplementary qualitative review of each country’s investability to confirm each
country’s classification. The qualitative criteria that Nasdaq, Inc. assesses
include: (i) restrictions that may be imposed on foreign investment; (ii)
currency convertibility; and/or (iii) the ability for capital to move from one
country to another country without restrictions. Additionally, Nasdaq, Inc.
considers securities listed in Hong Kong (classified by Nasdaq, Inc. as a
developed market) as eligible for inclusion in the Nasdaq CTA Emerging Markets
Internet & E-commerce Net Total Return Index, to ensure representation in
the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index
of companies incorporated or operating primarily in China.
The
eligible universe of the Nasdaq CTA Emerging Markets Internet & E-commerce
Net Total Return Index includes exchange-listed companies that meet minimum
market capitalization and liquidity criteria, as defined by Nasdaq, Inc. As of
December 31, 2022, companies must have a minimum free float market
capitalization of $1 billion and a minimum average daily turnover for the last
six months greater than or equal to $5 million in order to be eligible for
inclusion in the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total
Return Index. As of December 31, 2022, companies listed in the following
countries were eligible for inclusion in the Nasdaq CTA Emerging Markets
Internet & E-commerce Net Total Return Index: Brazil, Chile, China,
Colombia, Czech Republic, Egypt, Greece, Hong Kong, Hungary, Indonesia, Kuwait,
Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa,
South Korea, Taiwan, Thailand, Turkey, United Arab Emirates and the United
States (as a function of emerging market exposure obtained through the use of
ADRs). The Fund may have significant exposure to a particular foreign country or
foreign currency.
The
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index is
weighted according to a modified capitalization weighting methodology and is
reconstituted and re-weighted semi-annually. Modified capitalization weighting
seeks to weight constituents primarily based on market capitalization, but
subject to caps on the weights of the individual securities. During each
rebalance, the five largest securities by free float market capitalization are
individually capped at a maximum weight of 8% and all other constituents are
capped at a maximum weight of 4%. Generally speaking, this approach will limit
the amount of concentration in the largest market capitalization companies and
increase company-level diversification. The Nasdaq CTA Emerging Markets Internet
& E-commerce Net Total Return Index may include large-, mid- or
small-capitalization companies, and components primarily include communication
services and consumer discretionary companies. As of December 31, 2022, the
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index had
39 constituents.
S&P
U.S. Catholic Values Aggregate Bond Capped Index
The
S&P U.S. Catholic Values Aggregate Bond Capped Index is designed to provide
exposure to U.S. investment grade bonds while maintaining alignment with the
moral and social teachings of the Catholic Church. The S&P U.S. Catholic
Values Aggregate Bond Capped Index includes investment grade U.S. Treasury
bonds, U.S. government-related bonds, U.S. corporate bonds, and U.S.
mortgage-backed securities. All corporate bonds included in the S&P U.S.
Catholic Values Aggregate Bond Capped Index are investment grade bonds issued by
constituents of the S&P 500 Index, and the issuers follow the eligibility
criteria for that index. Investment grade corporate bonds are those rated BBB-
or better by S&P Global Ratings, Baa3 or better by Moody's Investors
Service, and BBB- or better by Fitch Ratings. From this starting universe,
corporate bond issuers are screened to exclude companies involved in activities
which are perceived to be inconsistent with Catholic values as outlined in the
Socially Responsible Investment Guidelines of the United States Conference of
Catholic Bishops ("USCCB"). The S&P U.S. Catholic Values Aggregate Bond
Capped Index reweights the remaining corporate bonds so that the S&P U.S.
Catholic Values Aggregate Bond Capped Index’s exposure to corporate bonds
matches the aggregate exposure to corporate bonds of the S&P U.S. Aggregate
Bond Index. The S&P U.S. Catholic Values Aggregate Bond Capped Index then
reweights the sector exposure of the qualifying corporate bonds to match the
sector exposure of corporate bonds of the S&P U.S. Aggregate Bond Index. The
S&P U.S. Aggregate Bond Index is designed to measure the performance of
publicly issued U.S. dollar denominated investment-grade debt and is weighted
based on market value. The S&P U.S. Aggregate Bond Index includes U.S.
treasuries, quasi-governments, corporates, taxable municipal bonds, foreign
agency, supranational, federal agency, and non-U.S. debentures, covered bonds,
and residential mortgage pass-throughs. The S&P U.S. Catholic Values
Aggregate Bond Capped Index is sponsored by Standard & Poor’s Financial
Services LLC, which is an organization that is independent of the Fund and the
Adviser. Standard & Poor’s Financial Services LLC determines the relative
weightings of the securities in the S&P U.S. Catholic Values Aggregate Bond
Capped Index and publishes information regarding the market value of the S&P
U.S. Catholic Values Aggregate Bond Capped Index. As of December 31, 2022,
the S&P U.S. Catholic Values Aggregate Bond Capped Index had 6216
constituents.
Cboe
S&P 500 Tail Risk Index
The
Cboe S&P 500 Tail Risk Index measures the performance of a risk management
strategy that holds the underlying stocks of the S&P 500®
Index and applies a protective put strategy (i.e. long (purchased) put options)
on the S&P 500®
Index. The Cboe S&P 500 Tail Risk Index specifically reflects the
performance of the component securities of the S&P 500®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the S&P
500®
Index.
On
a quarterly basis, the Cboe S&P 500 Tail Risk Index will take long positions
in quarterly put options with an exercise price generally at 10% below the
prevailing market price of the S&P 500®
Index. However, if put options with that precise strike price are unavailable,
the Cboe S&P 500 Tail Risk Index will instead select the put option with the
strike price closest to but greater than 10% below the prevailing market price
of the S&P 500®
Index. Each option position will (i) be traded on a national
securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
Cboe
S&P 500 Risk Managed Income Index
The
Cboe S&P 500 Risk Managed Income Index measures the performance of a risk
managed income strategy that holds the underlying stocks of the S&P
500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index. The Cboe S&P 500 Risk Managed Income Index specifically reflects the
performance of the component securities of the S&P 500®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in at-the-money (“ATM”) call options, each corresponding to
the value of the portfolio of stocks in the S&P 500®
Index. The options collar seeks to generate a net-credit, meaning that the
premium received from the sale of the call options will be greater than the
premium paid when buying the put options.
On
a monthly basis, the Cboe S&P 500 Risk Managed Income Index will take long
positions in monthly put options with an exercise price generally at 5% below
the prevailing market price of the S&P 500®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the S&P 500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Cboe S&P 500 Risk Managed Income Index will instead select
the put option with the strike price closest to but greater than 5% below the
prevailing market price of the S&P 500®
Index, and call options with the strike price closest to but greater than the
prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
Cboe
S&P 500 3-Month Collar 95-110 Index
The
Cboe S&P 500 3-Month Collar 95-110 Index measures the performance of a risk
management strategy that holds the underlying stocks of the S&P
500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index. The Cboe S&P 500 3-Month Collar 95-110 Index specifically reflects
the performance of the component securities of the S&P 500®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in 10% OTM call options, each corresponding to the value of
the portfolio of stocks in the S&P 500®
Index.
On
a quarterly basis, the Cboe S&P 500 3-Month Collar 95-110 Index will take
long positions in quarterly put options with an exercise price generally at 5%
below the prevailing market price of the S&P 500®
Index and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the S&P
500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Cboe S&P 500 3-Month Collar 95-110 Index will instead
select the put option with the strike price closest to but greater than 5% below
the prevailing market price of the S&P 500®
Index, and call options with the strike price closest to but greater than 10%
above the prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors,
regarded as generally representative of the U.S. stock market. A float-adjusted
market capitalization weighted index weights each index component according to
its market capitalization, using the number of shares that are readily available
for purchase on the open market.
Nasdaq-100
Quarterly Protective Put 90 Index
The
Nasdaq-100 Quarterly Protective Put 90 Index measures the performance of a risk
management strategy that holds the underlying stocks of the NASDAQ
100®
Index
and applies a protective put strategy (i.e. long (purchased) put options) on the
NASDAQ 100®
Index. The Nasdaq-100 Quarterly Protective Put 90 Index specifically reflects
the performance of the component securities of the NASDAQ 100®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the NASDAQ
100®
Index. On a quarterly basis, the Nasdaq-100 Quarterly Protective Put 90 Index
will take long positions in quarterly put options with an exercise price
generally at 10% below the prevailing market price of the NASDAQ 100®
Index. However, if put options with that precise strike price are unavailable,
the Nasdaq-100 Quarterly Protective Put 90 Index will instead select the put
option with the strike price closest to but greater than 10% below the
prevailing market price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Nasdaq-100
Monthly Net Credit Collar 95-100 Index
The
Nasdaq-100 Monthly Net Credit Collar 95-100 Index measures the performance of a
risk managed income strategy that holds the underlying stocks of the NASDAQ
100®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the NASDAQ 100®
Index. The Nasdaq-100 Monthly Net Credit Collar 95-100 Index specifically
reflects the performance of the component securities of the NASDAQ
100®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in at-the-money (“ATM”) call options, each corresponding to
the value of the portfolio of stocks in the NASDAQ 100®
Index. The options collar seeks to generate a net-credit, meaning that the
premium received from the sale of the call options will be greater than the
premium paid when buying the put options.
On
a monthly basis, the Nasdaq-100 Monthly Net Credit Collar 95-100 Index will take
long positions in monthly put options with an exercise price generally at 5%
below the prevailing market price of the NASDAQ 100®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the NASDAQ 100®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Nasdaq-100 Monthly Net Credit Collar 95-100 Index instead
select the put option with the strike price closest to 5% below the prevailing
market price of the NASDAQ 100®
Index, and call options with the strike price closest to the prevailing market
price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification. The Fund's investment objective and Underlying
Index may be changed without shareholder approval.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Nasdaq-100
Quarterly Collar 95-110 Index
The
Nasdaq-100 Quarterly Collar 95-110 Index measures the performance of a risk
management strategy that holds the underlying stocks of the NASDAQ
100®
Index
and applies an options collar strategy (i.e., a mix of short (sold) call options
and long (purchased) put options) on the NASDAQ 100®
Index. The Nasdaq-100 Quarterly Collar 95-110 Index specifically
reflects
the performance of the component securities of the NASDAQ 100®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in 10% OTM call options, each corresponding to the value of
the portfolio of stocks in the NASDAQ 100®
Index.
On
a quarterly basis, the Nasdaq-100 Quarterly Collar 95-110 Index will take long
positions in quarterly put options with an exercise price generally at 5% below
the prevailing market price of the NASDAQ 100®
Index and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the NASDAQ 100®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Nasdaq-100 Quarterly Collar 95-110 Index will instead select
the put option with the strike price closest to 5% below the prevailing market
price of the NASDAQ ®
Index, and call options with the strike price closest to 10% above the
prevailing market price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index
is a modified market capitalization weighted index containing equity securities
of the 100 largest non-financial companies listed on the NASDAQ Stock Market.
Modified capitalization weighting seeks to weight constituents primarily based
on market capitalization, but subject to caps on the weights of the individual
securities. Generally speaking, this approach will limit the amount of
concentration in the largest market capitalization companies and increase
company-level diversification.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Solactive
Disruptive Materials Index
The
Solactive Disruptive Materials Index is designed to provide exposure to
companies that produce metals and other raw or composite materials that have
been identified as being essential to disruptive technologies such as lithium
batteries, solar panels, wind turbines, fuel cells, robotics, and 3D printers.
Each material has been determined by Solactive AG, the provider of the Solactive
Disruptive Materials Index to be instrumental to the development and
materialization of one or more disruptive technologies. Disruptive technologies
refer to those technologies that are essential to the development and
materialization of long-term, structural changes to existing products, services,
industries, or sectors. Specifically, the Solactive Disruptive Materials Index
will include securities issued by “Disruptive Materials Companies” as defined by
Solactive AG. Disruptive Materials Companies are those companies that derive at
least 50% of their revenues in aggregate from the exploration, mining,
production and/or enhancement of one or more of the following ten materials
categories: Carbon Fiber, Cobalt, Copper, Graphene & Graphite, Lithium,
Manganese, Nickel, Platinum & Palladium, Rare Earth Elements, and Zinc
(collectively, “Disruptive Materials Categories”). Companies engaged in
exploration and mining include those companies involved in locating and
extracting disruptive materials. Companies engaged in production include those
companies involved in manufacturing, processing, and trading disruptive
materials for primary usage. Companies engaged in enhancement include those
companies involved in refining, developing, and/or smelting materials to extract
and purify disruptive materials. As of December 31, 2022, the Solactive
Disruptive Materials Index had 49 constituents.
For
the Lithium category, companies that derive greater than 25% but less than 50%
of revenue from the production and/or processing of lithium are also eligible
for inclusion (collectively, “Diversified Lithium Companies”). In addition,
companies with primary business operations in the exploration, mining,
production and/or enhancement of one or more of the Disruptive Materials
Categories, but which are not currently generating revenue, are also eligible
for inclusion (collectively, “Pre-Revenue Disruptive Materials Companies”). To
determine whether a company has primary business operations in the exploration,
mining, production and/or enhancement of one or more of the Disruptive Materials
Categories, Solactive AG reviews the public financial disclosures and filings of
the company, and identifies the products and business segments disclosed
therein. Solactive AG then reviews the management discussion and analysis, as
well as the level of investment the company allocates to those products and
segments, to determine whether those business operations are the primary
operations of the company.
In
constructing the Solactive Disruptive Materials Index, Solactive AG applies a
proprietary natural language processing algorithm to the eligible universe,
which seeks to identify and rank companies involved in each of the Disruptive
Materials Categories based on filings, disclosures, and other public information
(e.g., regulatory filings, earnings transcripts, etc.). The highest-ranking
companies identified by the natural language processing algorithm in each
Disruptive Materials Category, as of the selection date, are further reviewed by
Solactive AG to confirm they derive at least 50% of their revenues from one of
the Disruptive Materials Categories as described above, derive between 25% and
50% of their revenues from the Lithium category in the case of Diversified
Lithium Companies, or have primary business operations in the exploration,
mining, production and/
or
enhancement of one or more of the Disruptive Materials Categories but do not
currently generate revenues in the case of Pre-Revenue Disruptive Materials
Companies. The five highest-ranking Disruptive Materials Companies and
Pre-Revenue Disruptive Materials Companies according to free float market
capitalization from each Disruptive Materials Category are included in the
Solactive Disruptive Materials Index. For the Lithium category, the five
highest-ranking Disruptive Materials Companies, Pre-Revenue Disruptive Materials
Companies and Diversified Lithium Companies according to free float market
capitalization are included. If fewer than five companies are identified that
satisfy the above criteria within a Disruptive Materials Category, all eligible
companies are selected, and the category consists of fewer than five companies.
To
be a part of the eligible universe of the Solactive Disruptive Materials Index,
companies must be classified in one of the following Economies according to
FactSet (a leading financial data provider that maintains a comprehensive
structured taxonomy designed to offer precise classification of global companies
and their individual business units): Basic Materials, Industrials, or
Technology. In addition, certain minimum market capitalization and liquidity
criteria, as defined by the Solactive AG, must be met. As of December 31, 2022,
companies must have a minimum market capitalization of $100 million and a
minimum average daily turnover for the last 6 months greater than or equal to $1
million in order to be eligible for inclusion in the Solactive Disruptive
Materials Index. As of December 31, 2022, companies listed in the following
countries were eligible for inclusion in the Solactive Disruptive Materials
Index: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia,
Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong,
Hungary, Indonesia, Ireland, Israel, Italy, Japan, Kuwait, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Pakistan, Peru, Philippines, Poland, Portugal,
Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States, and the
United Arab Emirates. As of December 31, 2022, the Solactive Disruptive
Materials Index had significant exposure to Chinese issuers. The Fund may invest
in China A-Shares, which are issued by companies incorporated in mainland China
and traded on Chinese exchanges. The Fund may invest in securities of issuers
located in emerging markets.
The
Solactive Disruptive Materials Index is weighted according to a modified
capitalization weighting methodology and is reconstituted and re-weighted
semi-annually. Modified capitalization weighting seeks to weight constituents
primarily based on market capitalization, but subject to caps on the weights of
the individual securities. During each rebalance, the maximum weight of a
company is capped at 4%, and all constituents are subject to a minimum weight of
0.3%. In addition, Diversified Lithium Companies and Pre-Revenue Disruptive
Materials Companies are subject to an aggregate weight cap of 10% at each
semi-annual rebalance. Generally speaking, modified capitalization weighting
will limit the amount of concentration in the largest market capitalization
companies and increase company-level diversification. The Solactive Disruptive
Materials Index may include large-, mid-, small-, or micro-capitalization
companies, and components primarily include materials companies.
DJIA
Cboe BuyWrite v2 Index
The
DJIA Cboe BuyWrite v2 Index measures the performance of a covered call strategy
that holds the underlying stocks of the Dow Jones Industrial Average®
and "writes" (or sells) a succession of one-month at-the-money (“ATM”) covered
call options on a fund that has economic characteristics that are substantially
identical to the economic characteristics of the components of the Dow Jones
Industrial Average®
(“Reference Fund”). The DJIA Cboe BuyWrite v2 Index specifically reflects the
performance of the component securities of the Dow Jones Industrial
Average®,
combined with written (sold) ATM call options corresponding to the value of the
portfolio of stocks in the Dow Jones Industrial Average®.
The
DJIA Cboe BuyWrite v2 Index is sponsored by S&P Dow Jones Indices LLC, which
is an organization that is independent of the Fund and the Adviser.
Cboe
Russell 2000 Half BuyWrite Index
The
Cboe Russell 2000 Half BuyWrite Index measures the performance of a covered call
strategy that holds a theoretical portfolio of the underlying stocks of the
Russell 2000 Index "writes" (or sells) a succession of one-month at-the-money
(“ATM”) covered call options on the Russell 2000 Index. The written covered call
options on the Russell 2000 Index correspond to approximately 50% of the value
of the portfolio of stocks in the Russell 2000 Index. The Cboe Russell 2000 Half
BuyWrite Index specifically reflects the performance of the component securities
of the Russell 2000 Index combined with written (sold) ATM call options
corresponding to the value of 50% of the value of the portfolio of stocks in the
Russell 2000 Index. The Fund invests in the securities reflected in the Cboe
Russell 2000 Half BuyWrite Index or in investments (including other underlying
ETFs) that have economic characteristics that are substantially identical to the
economic characteristics of such component securities, and cannot invest
directly in the Cboe Russell 2000 Half BuyWrite Index itself.
The
Russell 2000 Index is an equity benchmark which measures the performance of the
small-capitalization sector of the U.S. equity market as defined by FTSE
Russell, the index provider.
Cboe
S&P Financial Select Sector Half BuyWrite Index
The
Cboe S&P Financial Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Financial Select Sector Index. The
Cboe S&P Financial Select Sector Half BuyWrite Index "writes" (or sells) a
succession of one-month at-the-money covered call options on the Financial
Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Financial
Select Sector Index, as determined by S&P Dow Jones Indices LLC. The call
options correspond to approximately 50% of the value of the securities in the
Financial Select Sector Index, therefore representing a partially covered call
strategy. The call options written (sold) by the Fund will be FLexible EXchange
(“FLEX”) options. The Fund invests in the securities reflected in the Underlying
Index and cannot invest directly in the Cboe S&P Financial Select Sector
Half BuyWrite Index itself.
The
Cboe S&P Financial Select Sector Half BuyWrite Index is sponsored by S&P
Dow Jones Indices LLC, which is an organization that is independent of the Fund
and the Adviser.
Cboe
S&P Health Care Select Sector Half BuyWrite Index
The
Cboe S&P Health Care Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Health Care Select Sector Index.
The Cboe S&P Health Care Select Sector Half BuyWrite Index "writes" (or
sells) a succession of one-month at-the-money covered call options on the Health
Care Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Health Care
Select Sector Index, as determined by S&P Dow Jones Indices LLC. The call
options correspond to approximately 50% of the value of the securities in the
Health Care Select Sector Index, therefore representing a partially covered call
strategy. The call options written (sold) by the Fund will be FLexible EXchange
(“FLEX”) options. The Fund invests in the securities reflected in the Cboe
S&P Health Care Select Sector Half BuyWrite Index and cannot invest directly
in the Cboe S&P Health Care Select Sector Half BuyWrite Index itself.
The
Cboe S&P Health Care Select Sector Half BuyWrite Index is sponsored by
S&P Dow Jones Indices LLC, which is an organization that is independent of
the Fund and the Adviser.
Cboe
S&P Technology Select Sector Half BuyWrite Index
The
Cboe S&P Technology Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Information Technology Select
Sector Index. The Cboe S&P Technology Select Sector Half BuyWrite Index
"writes" (or sells) a succession of one-month at-the-money covered call options
on the Information Technology Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Information
Technology Select Sector Index, as determined by S&P Dow Jones Indices LLC.
The call options correspond to approximately 50% of the value of the securities
in the Information Technology Select Sector Index, therefore representing a
partially covered call strategy. The call options written (sold) by the Fund
will be FLexible EXchange (“FLEX”) options. The Fund invests in the securities
reflected in the Cboe S&P Technology Select Sector Half BuyWrite Index and
cannot invest directly in the Cboe S&P Technology Select Sector Half
BuyWrite Index itself.
The
Cboe S&P Technology Select Sector Half BuyWrite Index is sponsored by
S&P Dow Jones Indices LLC, which is an organization that is independent of
the Fund and the Adviser.
Disclaimers
Indxx
is a service mark of Indxx and has been licensed for use for certain purposes by
the Adviser. The Funds are not sponsored, endorsed, sold or promoted by Indxx.
Indxx makes no representation or warranty, express or implied, to the owners of
the Funds or any member of the public regarding the advisability of investing in
securities generally or in the Funds particularly. Indxx has no obligation to
take the needs of the Adviser or the shareholders of the Funds into
consideration in determining, composing or calculating the Underlying Indices.
Indxx is not responsible for and has not participated in the determination of
the timing, amount or pricing of the Fund Shares to be issued or in the
determination or calculation of the equation by which the Fund Shares are to be
converted into cash. Indxx has no obligation or liability in connection with the
administration, marketing or trading of the Funds.
Solactive
AG is a leading company in the structuring and indexing business for
institutional clients. Solactive AG runs the Solactive index platform. Solactive
indices are used by issuers worldwide as underlying indices for financial
products. Solactive AG does not sponsor, endorse or promote any Funds and is not
in any way connected to them and does not accept any liability in relation to
their issue, operation and trading.
Standard
& Poor's®,
S&P®
and S&P 500 Stock Covered Call™ are registered trademarks of Standard &
Poor's Financial Services LLC ("S&P") and have been licensed for use by the
Adviser. Each of the Global X S&P 500®
Catholic Values ETF, Global X S&P 500®
Covered Call ETF, Global X S&P Catholic Values Developed ex-U.S. ETF, Global
X S&P 500®
Covered
Call & Growth ETF, Global X S&P 500®
Tail Risk ETF, Global X S&P 500®
Risk Managed Income ETF, Global X S&P 500®
Collar 95-110 ETF and Global X S&P Catholic Values U.S. Aggregate Bond ETF
("ETF") is not sponsored, endorsed, sold or promoted by Standard & Poor's
and its affiliates ("S&P"). S&P makes no representation, condition or
warranty, express or implied, to the owners of the ETF or any member of the
public regarding the advisability of investing in securities generally or in the
ETF particularly or the ability of the S&P 500®
Catholic Values Index, S&P 500 Stock Covered Call Index, S&P Developed
ex-U.S. Catholic Values Index and S&P U.S. Catholic Values Aggregate Bond
Capped Index (an "Index") to track the performance of certain financial markets
and/or sections thereof and/or of groups of assets or asset classes. S&P's
only relationship to the Adviser is the licensing of certain trademarks and
trade names and of the index which is determined, composed and calculated by
S&P without regard to the Adviser or the ETF. S&P has no obligation to
take the needs of Global X Management Company, LLC or the owners of the ETF into
consideration in determining, composing or calculating the index. S&P is not
responsible for and has not participated in the determination of the prices and
amount of the ETF or the timing of the issuance or sale of the ETF or in the
determination or calculation of the equation by which the ETF units are to be
converted into cash. S&P has no obligation or liability in connection with
the administration, marketing, or trading of the ETF.
Neither
S&P, its affiliates nor third party licensors, guarantees the accuracy
and/or the completeness of the index or any data included therein and S&P,
its affiliates and their third party licensors, shall have no liability for any
errors, omissions, or interruptions therein. S&P, its affiliates and third
party licensors make no warranty, condition or representation, express or
implied, as to the results to be obtained by to Adviser, owners of the ETF, or
any other person or entity from the use of the index or any data included
therein. S&P makes no express or implied warranties, representations or
conditions, and expressly disclaims all warranties or conditions of
merchantability or fitness for a particular purpose or use and any other express
or implied warranty or condition with respect to the index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P, its
affiliates or their third party licensors, have any liability for any special,
punitive, indirect, or consequential damages (including lost profits) resulting
from the use of the index or any data included therein, even if notified of the
possibility of such damages.
FTSE
is a world-leader in the creation and management of over 100,000 equity, bond
and hedge fund indices. With offices in Beijing, London, Frankfurt, Hong Kong,
Boston, Shanghai, Madrid, Paris, New York, San Francisco, Sydney and Tokyo, FTSE
Group services clients in 77 countries worldwide. FTSE is an independent company
owned by the Financial Times and the London Stock Exchange. FTSE does not give
financial advice to clients, which allows for the provision of truly objective
market information. FTSE indices are used extensively by investors world-wide
such as consultants, asset owners, asset managers, investment banks, stock
exchanges and brokers.
NO
FUND IS SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC. ("MSCI"), ANY OF ITS
AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED
IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX
(COLLECTIVELY, THE ''MSCI PARTIES"). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY
OF MSCI. MSCI AND THE MSCI INDEX NAMES ARE SERVICE MARK (S) OF MSCI OR ITS
AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY THE ADVISER.
NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, TO THE ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR ENTITY
REGARDING THE ADVISABILITY OF INVESTING IN FUNDS GENERALLY OR IN THIS FUND
PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK
MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN
TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE
DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS FUND OR THE
ISSUER OR OWNERS OF THIS FUND OR ANY OTHER PERSON OR ENTITY. NONE OF THE MSCI
PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER OR OWNERS OF THIS
FUND OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING
OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR
HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES
OF THIS FUND TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION
BY OR THE CONSIDERATION INTO WHICH THIS FUND IS REDEEMABLE. FURTHER, NONE OF THE
MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THIS
FUND OR ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION,
MARKETING OR OFFERING OF THIS FUND. ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR
INCLUSION IN OR FOR USE IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT
MSCI CONSIDERS RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE
ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA
INCLUDED
THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE ISSUER OF THE FUND. OWNERS OF THE FUND, OR ANY
OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED
THEREIN. NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS,
OMISSIONS OR INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA
INCLUDED THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED
WARRANTIES OF ANY KIND. AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO EACH MSCI INDEX AND ANY DATA INCLUDED THERE IN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIAB I LITY FOR
ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
No
purchaser, seller or holder of this Fund, or any other person or entity, should
use or refer to any MSCI trade name, trademark or service mark to sponsor,
endorse, market or promote this Fund without first contacting MSCI to determine
whether MSCI's permission is required. Under no circumstances may any person or
entity claim any affiliation with MSCI without the prior written permission of
MSCI.
The
Adviser has entered into a license agreement with Qontigo Index GmbH ("Qontigo")
to use the DAX Index. The Global X DAX Germany ETF is permitted to use the DAX
Index pursuant to a sublicense agreement with the Adviser. This financial
instrument is neither sponsored nor promoted, distributed or in any other manner
supported by Qontigo. Qontigo does not give any explicit or implicit warranty or
representation, neither regarding the results deriving from the use of the DAX
Index and/or the DAX Index Trademark nor regarding the DAX Index value at a
certain point in time or on a certain date nor in any other respect. The DAX
Index is calculated and published by Qontigo. Nevertheless, as far as admissible
under statutory law Qontigo will not be liable vis-à-vis third parties for
potential errors in the DAX Index. Moreover, there is no obligation for Qontigo
vis-à-vis third parties, including investors, to point out potential errors in
the DAX Index. Neither the publication of the DAX Index by Qontigo nor the
granting of a license regarding the DAX Index as well as the DAX Index Trademark
for the utilization in connection with the financial instrument or other
securities or financial products, which derived from the DAX Index, represents a
recommendation by Qontigo for a capital investment or contains in any manner a
warranty or opinion by Qontigo with respect to the attractiveness on an
investment in this product. In its capacity as sole owner of all rights to the
DAX Index and the DAX Index Trademark Qontigo has solely licensed to the issuer
of the financial instrument the utilization of the DAX Index and the DAX Index
Trademark as well as any reference to the DAX Index and the DAX Index Trademark
in connection with the financial instrument.
"CBOE®"
is a registered trademark of Chicago Board Options Exchange, Incorporated
("CBOE"). NASDAQ®,
NASDAQ-100®
and NASDAQ-100 Index®
are registered trademarks of Nasdaq, Inc. ("NASDAQ"). NASDAQ has granted the
Adviser ("Licensee") a license to use the BXNT Index for purposes of Licensee's
Global X NASDAQ 100®
Covered Call ETF, the Cboe Nasdaq 100 Half BuyWrite V2 Index for purposes of
Licensee's Global X Nasdaq 100®
Covered Call & Growth ETF, the NASDAQ Emerging Markets Internet &
E-commerce Index for purposes of Licensee's Global X Emerging Markets Internet
& E-commerce ETF, the Cboe S&P Financial Select Sector Half BuyWrite
Index for purposes of Licensee's Global X Financials Covered Call & Growth
ETF, the Cboe S&P Health Care Select Sector Half BuyWrite Index for purposes
of Licensee's Global X Health Care Covered Call & Growth ETF and the Cboe
S&P Technology Select Sector Half BuyWrite Index for purposes of Licensee's
Global X Information Technology Covered Call & Growth ETF. The Global X
NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF and the Global X Information
Technology Covered Call & Growth ETF are not sponsored, endorsed, sold or
promoted by NASDAQ, CBOE or their affiliates (NASDAQ and CBOE, collectively with
their affiliates, are referred to as the "Corporations"). The Corporations have
not passed on the legality or suitability of, or the accuracy or adequacy of
descriptions and disclosures relating to, the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF and the Global X Information
Technology Covered Call & Growth ETF. The Corporations make no
representation or warranty, express or implied to the owners of the Global X
NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF, the Global X Information
Technology Covered Call & Growth ETF or any member of the public regarding
the advisability of investing in securities generally or in the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF particularly, or the ability of the
BXNT Index, the Cboe Nasdaq 100 Half BuyWrite V2 Index, the NASDAQ Emerging
Markets Internet & E-commerce Index, the Cboe S&P Financial Select
Sector Half BuyWrite Index, the Cboe S&P Health Care Select Sector Half
BuyWrite
or the Cboe S&P Technology Select Sector Half BuyWrite Index to track
general stock market performance. The Corporations' only relationship to Global
X Management Company LLC (the "Licensee") is in the licensing of the
Nasdaq®,
CBOE®,
NASDAQ-100®
and NASDAQ-100 Index®
and
certain trade names of the Corporations and the use of the BXNT Index, the Cboe
Nasdaq 100 Half BuyWrite V2 Index, the NASDAQ Emerging Markets Internet &
E-commerce Index, the Cboe S&P Financial Select Sector Half BuyWrite Index,
the Cboe S&P Health Care Select Sector Half BuyWrite and the Cboe S&P
Technology Select Sector Half BuyWrite Index which is determined, composed and
calculated by the Corporations without regard to Licensee or the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF. The Corporations have no obligation to
take the needs of the Licensee or the owners of the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF into consideration in determining,
composing or calculating the BXNT Index, the Cboe Nasdaq 100 Half BuyWrite V2
Index, the NASDAQ Emerging Markets Internet & E-commerce Index, the Cboe
S&P Financial Select Sector Half BuyWrite Index, the Cboe S&P Health
Care Select Sector Half BuyWrite or the Cboe S&P Technology Select Sector
Half BuyWrite Index. The Corporations are not responsible for and have not
participated in the determination of the timing of, prices at, or quantities of
the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF to be issued or in the determination or
calculation of the equation by which the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF is to be converted into cash. The
Corporations have no liability in connection with the administration, marketing
or trading of the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF.
THE
CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF
THE CBOE NASDAQ 100 BXNT INDEX, THE CBOE NASDAQ 100 HALF BUYWRITE V2 INDEX, THE
NASDAQ EMERGING MARKETS INTERNET & E-COMMERCE INDEX, THE CBOE S&P
FINANCIAL SELECT SECTOR HALF BUYWRITE INDEX, THE CBOE S&P HEALTH CARE SELECT
SECTOR HALF BUYWRITE OR THE CBOE S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE
INDEX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE GLOBAL X
NASDAQ 100®
COVERED CALL ETF, THE GLOBAL X NASDAQ 100®
COVERED CALL & GROWTH ETF, THE GLOBAL X EMERGING MARKETS INTERNET &
E-COMMERCE ETF, THE GLOBAL X FINANCIALS COVERED CALL & GROWTH ETF, THE
GLOBAL X HEALTH CARE COVERED CALL & GROWTH ETF OR THE GLOBAL X INFORMATION
TECHNOLOGY COVERED CALL & GROWTH ETF OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE BXNT INDEX, THE CBOE NASDAQ 100 HALF BUYWRITE V2 INDEX, THE NASDAQ
EMERGING MARKETS INTERNET & E-COMMERCE INDEX, THE CBOE S&P FINANCIAL
SELECT SECTOR HALF BUYWRITE INDEX, THE CBOE S&P HEALTH CARE SELECT SECTOR
HALF BUYWRITE, THE CBOE S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX OR
ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BXNT INDEX, THE CBOE NASDAQ
100 HALF BUYWRITE V2 INDEX, THE NASDAQ EMERGING MARKETS INTERNET &
E-COMMERCE INDEX, THE CBOE S&P FINANCIAL SELECT SECTOR HALF BUYWRITE INDEX,
THE CBOE S&P HEALTH CARE SELECT SECTOR HALF BUYWRITE, THE CBOE S&P
TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT,
OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
Global
X Management Company LLC owns all rights to the trademark, name and intellectual
property associated with the Global X U.S. High Yield Preferred Index. No
representation is made by Global X Management Company LLC that the Global X U.S.
High Yield Preferred Index is accurate or complete or that investment in the
Global X U.S. High Yield Preferred Index or the Fund will be profitable or
suitable for any person. The Global X U.S. High Yield Preferred Index is
administered and calculated by Solactive AG and Global X Management Company LLC
will have no liability for any error in calculation of the Global X U.S. High
Yield Preferred Index. Global X Management Company LLC does not guarantee that
the Global X U.S. High Yield Preferred Index or the underlying methodology is
accurate or complete.
INVESTMENT
RESTRICTIONS
Each
Fund is subject to the investment policies enumerated in this section, which may
be changed with respect to a particular Fund only by a vote of the holders of a
majority of such Fund's outstanding Shares, which is defined by the 1940 Act as:
(i) more than 50% of the Fund's outstanding shares; or (ii) 67% or more of the
Fund's shares present at a shareholder meeting if more than 50% of the Fund's
outstanding shares are represented at the meeting in person or by proxy,
whichever is less.
The
Funds:
1.May
not issue any senior security, except as permitted under the 1940 Act, and as
interpreted or modified by regulatory authority having jurisdiction, from time
to time;
2.May
not borrow money, except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to
time;
3.May
not act as an underwriter of securities within the meaning of the Securities
Act, except as permitted under the Securities Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time. Among
other things, to the extent that a Fund may be deemed to be an underwriter
within the meaning of the Securities Act, this would permit the Fund to act as
an underwriter of securities in connection with the purchase and sale of its
portfolio securities in the ordinary course of pursuing its investment
objective, investment policies and investment program;
4.May
not purchase or sell real estate or any interests therein, except as permitted
under the 1940 Act, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time. Notwithstanding this limitation, a Fund
may, among other things: (i) acquire or lease office space for its own use; (ii)
invest in securities of issuers that invest in real estate or interests therein;
(iii) invest in mortgage-related securities and other securities that are
secured by real estate or interests therein; or (iv) hold and sell real estate
acquired by the Fund as a result of the ownership of securities;
5.May
not purchase physical commodities or contracts relating to physical commodities,
except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;
6.May
not make loans, except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time;
and
7.May
not "concentrate" its investments in a particular industry or group of
industries: (I) except that a Fund will concentrate to approximately the same
extent that its Underlying Index concentrates in the securities of such
particular industry or group of industries; and (II) except as permitted under
the 1940 Act, and as interpreted or modified by regulatory authority having
jurisdiction from time to time, provided that, without limiting the generality
of the foregoing: (a) this limitation will not apply to a Fund's investments in:
(i) securities of other investment companies; (ii) securities issued or
guaranteed as to principal and/or interest by the U.S. government, its agencies
or instrumentalities; (iii) repurchase agreements (collateralized by the
instruments described in clause (ii)) or (iv) securities of state or municipal
governments and their political subdivisions are not considered to be issued by
members of any industry; (b) wholly owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to the financing activities of the parents; and (c) utilities will be
divided according to their services, for example, gas, gas transmission,
electric and gas, electric and telephone will each be considered a separate
industry.
Notwithstanding
these fundamental investment restrictions, each Fund may purchase securities of
other investment companies to the full extent permitted under Section 12 or any
other provision of the 1940 Act (or any successor provision thereto) or under
any regulation or order of the SEC.
If
a percentage limitation is satisfied at the time of investment, a later increase
or decrease in such percentage resulting from a change in the value of a Fund's
investments will not constitute a violation of such limitation, except that any
borrowing by the Fund that exceeds the fundamental investment limitations stated
above must be reduced to meet such limitations within the period required by the
1940 Act (currently three days). In addition, if a Fund's holdings of illiquid
securities exceed 15% of net assets because of changes in the value of the
Fund's investments, the Fund will act in accordance with Rule 22e-4 under the
1940 Act and will take action to reduce its holdings of illiquid securities
within a time frame deemed to be in the best interest of the Fund. Otherwise, a
Fund may continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's
assets.
Any
investment restriction which involves a maximum percentage (other than the
restriction set forth above in investment restriction No. 2) will not be
considered violated unless an excess over the percentage occurs immediately
after, and is caused by, an acquisition or encumbrance of securities or assets
of a Fund. The 1940 Act requires that if the asset coverage for borrowings at
any time falls below the limits under the 1940 Act described in investment
restriction No. 2, a Fund will, within three days thereafter (not including
Sundays and holidays), reduce the amount of its borrowings to an extent that the
net asset coverage of such borrowings shall conform to such limits.
CURRENT
1940 ACT LIMITATIONS
BORROWING.
Investment companies generally may not borrow money, except that an investment
company may borrow money in an amount not exceeding 33 1/3% of its total assets
(including the amount borrowed) less liabilities (other than
borrowings).
UNDERWRITING.
Investment companies generally may not act as an underwriter of another issuer's
securities, except to the extent that an investment company may be deemed to be
an underwriter within the meaning of the Securities Act in connection with the
purchase or sale of portfolio securities.
REAL
ESTATE.
Investment companies generally may not purchase or sell real estate unless
acquired as a result of ownership of securities or other instruments (but
investment companies may purchase or sell securities or other instruments backed
by real estate or of issuers engaged in real estate activities).
LOANS.
Investment companies generally may not lend any security or make any other loan
if, as a result, more than 33 1/3% of its total assets would be lent to other
parties, but this limitation does not apply to purchases of debt securities or
to repurchase agreements, or to acquisitions of loans, loan participations or
other forms of debt instruments.
PHYSICAL
COMMODITIES.
Investment companies generally may not purchase or sell physical commodities
unless acquired as a result of ownership of securities or other instruments (but
investment companies may purchase or sell options, futures contracts or other
derivative instruments, and invest in securities or other instruments backed by
physical commodities).
CONCENTRATION.
For purposes of calculating concentration percentages, investment companies
investing in (a) affiliated investment companies are required to look through to
the holdings of the affiliated investment companies and include the holdings in
calculations of concentration percentages, and (ii) unaffiliated investment
companies are required to include the holdings of the unaffiliated investment
companies to the extent that they are concentrated in calculations of
concentration percentages. In addition, revenue bonds are characterized by the
industry in which the revenue is used.
CONTINUOUS
OFFERING
The
method by which Creation Unit Aggregations of Shares are created and traded may
raise certain issues under applicable securities laws. Because new Creation Unit
Aggregations of Shares are issued and sold by the Funds on an ongoing basis, at
any point a "distribution," as such term is used in the Securities Act, may
occur. Broker-dealers and other persons are cautioned that some activities on
their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus delivery requirement and
liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with
the Distributor, breaks them down into constituent shares, and sells such shares
directly to customers, or if it chooses to couple the creation of a supply of
new shares with an active selling effort involving solicitation of secondary
market demand for shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter. Broker-dealer firms should also note that dealers who are not
"underwriters" but are effecting transactions in shares, whether or not
participating in the distribution of shares, generally are required to deliver a
prospectus. This is because the prospectus delivery exemption in Section 4(a)(3)
of the Securities Act is not available in respect of such transactions as a
result of Section 24(d) of the 1940 Act. Firms that incur a prospectus delivery
obligation with respect to shares of the Funds are reminded that, pursuant to
Rule 153 under the Securities Act, a prospectus delivery obligation under
Section 5(b)(2) of the Securities Act owed to an exchange member in connection
with a sale on the Exchange is satisfied by the fact that the prospectus is
available at the Exchange upon request. The prospectus delivery mechanism
provided in Rule 153 is only available with respect to transactions on an
exchange.
The
Adviser or its affiliates (each, as applicable, a “Selling Shareholder”) may
purchase Creation Unit Aggregations through a broker-dealer to “seed” (in whole
or in part) Funds as they are launched or thereafter, or may purchase shares
from broker-dealers or other investors that have previously provided “seed” for
Funds when they were launched or otherwise in secondary market transactions, and
because the Selling Shareholder may be deemed an affiliate of such Funds, the
shares are being registered to permit the resale of these shares from time to
time after purchase. The Fund will not receive any of the proceeds from the
resale by the Selling Shareholders of these shares.
The
Selling Shareholder intends to sell all or a portion of the shares owned by it
and offered hereby from time to time directly or through one or more
broker-dealers, and may also hedge such positions. The shares may be sold
on any national securities exchange on which the shares may be listed or quoted
at the time of sale, in the over-the-counter market or in transactions other
than on these exchanges or systems at fixed prices, at prevailing market prices
at the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions. The Selling Shareholder may use any
one or more of the following methods when selling shares:
•ordinary
brokerage transactions through brokers or dealers (who may act as agents or
principals) or directly to one or more purchasers;
•privately
negotiated transactions;
•through
the writing or settlement of options or other hedging transactions, whether such
options are listed on an options exchange or otherwise; and
•any
other method permitted pursuant to applicable law.
The
Selling Shareholder may also loan or pledge shares to broker-dealers that in
turn may sell such shares, to the extent permitted by applicable law. The
Selling Shareholder may also enter into options or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares, which shares such broker-dealer or other
financial institution may resell.
The
Selling Shareholder and any broker-dealer or agents participating in the
distribution of shares may be deemed to be “underwriters” within the meaning of
Section 2(11) of the Securities Act in connection with such sales. In such
event, any commissions paid to any such broker-dealer or agent and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Shareholder who
may be deemed an "underwriter" within the meaning of Section 2(11) of the
Securities Act will be subject to the applicable prospectus delivery
requirements of the Securities Act.
The
Selling Shareholder has informed the Fund that it is not a registered
broker-dealer and does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the shares. Upon the
Fund being notified in writing by the Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this SAI will
be filed, if required, pursuant to Rule 497 under the Securities Act, disclosing
(i) the name of each Selling Shareholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which
such shares were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in the Fund’s Prospectus and SAI, and (vi)
other facts material to the transaction.
The
Selling Shareholder and any other person participating in such distribution will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and
sales of any of the shares by the Selling Shareholder and any other
participating person. To the extent applicable, Regulation M may also
restrict the ability of any person engaged in the distribution of the shares to
engage in market-making activities with respect to the shares. All of the
foregoing may affect the marketability of the shares and the ability of any
person or entity to engage in market-making activities with respect to the
shares. There is a risk that the Selling Shareholder may redeem its
investments in the Fund or otherwise sell its shares to a third party that may
redeem. As with redemptions by other large shareholders, such redemptions could
have a significant negative impact on the Fund.
PORTFOLIO
HOLDINGS
Policy
on Disclosure of Portfolio Holdings
The
Board of Trustees of the Trust has adopted a policy on disclosure of portfolio
holdings, which it believes is in the best interests of the Funds' shareholders.
The policy is designed to: (i) protect the confidentiality of the Funds'
non-public portfolio holdings information, (ii) prevent the selective disclosure
of such information, and (iii) ensure compliance by the Adviser and the Funds
with the federal securities laws, including the 1940 Act and the rules
promulgated thereunder and general principles of fiduciary duty. The Funds'
portfolio holdings, or information derived from the Funds' portfolio holdings,
may, in the Adviser's discretion, be made available to third parties if (i) such
disclosure has been included in a Fund's public filings with the SEC or is
disclosed on the Fund's publicly accessible Website, (ii) such disclosure is
determined by the Chief Compliance Officer ("CCO") to be in the best interests
of Fund shareholders and consistent with applicable law; (iii) such disclosure
is made equally available to anyone requesting it; and (iv) the Adviser
determines that the disclosure does not present the risk of such information
being used to trade against the Funds.
Each
business day, portfolio holdings information will be provided to the Transfer
Agent or other agent for dissemination through the facilities of the National
Securities Clearing Corporation ("NSCC") and/or other fee based subscription
services to NSCC members and/or subscribers to those other fee based
subscription services, including Authorized Participants (defined below), and to
entities that publish and/or analyze such information in connection with the
process of purchasing or redeeming Creation Units or trading Shares of the Funds
in the secondary market. Information with respect to each Fund's portfolio
holdings is also disseminated daily on the Fund's Website.
The
Distributor may also make available portfolio holdings information to other
institutional market participants and entities that provide information
services. This information typically reflects each Fund's anticipated holdings
on the following business day. "Authorized Participants" are generally large
institutional investors that have been authorized by the Distributor to purchase
and redeem large blocks of Shares (known as Creation Units) pursuant to legal
requirements pursuant to which the Funds offer and redeem Shares ("Global X
Order"). Other than portfolio holdings information made available in connection
with the creation/redemption process, as discussed above, portfolio holdings
information that is not filed with the SEC or posted on the publicly available
Website may be provided to third parties only in limited circumstances, as
described above.
Disclosure
to providers of auditing, custody, proxy voting and other similar services for
the Funds, as well as rating and ranking organizations, will generally be
permitted; however, information may be disclosed to other third parties
(including, without limitation, individuals, institutional investors, and
Authorized Participants that sell Shares of a Fund) only upon approval by the
CCO. The recipients who may receive non-public portfolio holdings information
are as follows: the Adviser and its affiliates, the Funds' independent
registered public accounting firm, the Distributor, administrator and custodian,
the Funds' legal counsel, the Funds' financial printer and the Funds' proxy
voting service. These entities are obligated to keep such information
confidential. Third-party providers of custodial or accounting services to a
Fund may release non-public portfolio holdings information of a Fund only with
the permission of the CCO.
Portfolio
holdings will be disclosed through required filings with the SEC. Each Fund
files its portfolio holdings with the SEC for each fiscal quarter on Form N-CSR
(with respect to each annual period and semiannual period) and Form N-PORT (with
respect to the first and third quarters of the Fund's fiscal year). Shareholders
may obtain a Fund's Forms N-CSR and N-PORT filings on the SEC's Website at
sec.gov. In addition, the Funds' Forms N-CSR and N-PORT filings may be reviewed
and copied at the SEC's public reference room in Washington, DC. You may call
the SEC at 1-800-SEC-0330 for information about the SEC's Website or the
operation of the public reference room.
Under
the policy on disclosure of portfolio holdings, the Board of Trustees is to
receive information, on a quarterly basis, regarding any other disclosures of
non-public portfolio holdings information that were permitted during the
preceding quarter.
MANAGEMENT
OF THE TRUST
BOARD
OF TRUSTEES AND OFFICERS
The
business and affairs of the Trust are overseen by the Board of Trustees
("Board"). Subject to the provisions of the Trust's Declaration of Trust and
By-Laws and Delaware law, the Board has all powers necessary and convenient to
carry out this general oversight responsibility, including the power to elect
and remove the Trust's officers. The focus of the Board's oversight of the
business and affairs of the Trust (and each of the Funds) is to protect the
interests of the shareholders in the Funds.
The
Board appoints and oversees the Trust's officers and service providers. The
Adviser is responsible for the day-to-day management and operations of the Trust
and each of the Funds, based on each Fund's investment objective, strategies,
policies, and restrictions and agreements entered into by the Trust and/or the
Adviser on behalf of the Trust. In carrying out its general oversight
responsibility, the Board regularly interacts with and receives reports from the
senior personnel of the Trust's service providers (including, in particular, the
Adviser) and the Trust's CCO. The Board is assisted by the Trust's independent
registered
public accounting firm (who reports directly to the Trust's Audit Committee),
independent counsel to the Independent Trustees (as defined below), counsel to
the Trust and the Adviser, and other experts selected and approved by the Board.
BOARD
STRUCTURE AND RELATED MATTERS.
Board members who are not “interested persons” of the Trust, as defined in
Section 2(a)(19) of the 1940 Act (“Independent Trustees”), constitute 75 percent
of the Board. Mr. Charles A. Baker, an Independent Trustee, serves as
Independent Chairman of the Board. The Independent Chairman helps to facilitate
communication among the Independent Trustees as well as communication between
the Independent Trustees and management of the Trust. The Independent Chairman
may assume such other duties and perform such activities as the Board may, from
time to time, determine should be handled by the Independent Chairman. Mr. Luis
Berruga is the sole Board member who is an “interested person” of the Trust
(“Interested Trustee”). Mr. Berruga is an Interested Trustee due to his
affiliation with the Adviser. The Board believes that having an interested
person on the Board facilitates the ability of the Independent Trustees to fully
understand (i) the Adviser’s commitment to providing and/or arranging for the
provision of quality services to the Funds and (ii) corporate and financial
matters of the Adviser that may be of importance in the Board’s decision-making
process.
The
Trustees discharge their responsibilities collectively as a Board, as well as
through Board committees, each of which operates pursuant to a charter that
delineates the specific responsibilities of that committee. The Board has
established two standing committees: an Audit Committee and a Nominating and
Governance Committee. Currently, each of the Independent Trustees serves on each
of these committees, which are comprised solely of Independent
Trustees.
The
Board periodically evaluates its structure and composition as well as various
aspects of its operations. On an annual basis, the Board conducts a
self-evaluation process that, among other things, considers (i) whether the
Board and its committees are functioning effectively, (ii) given the size and
composition of the Board and each of its committees, whether the Trustees are
able to effectively oversee the number of funds in the complex and (iii) whether
the mix of skills, perspectives, qualifications, attributes, education, and
relevant experience of the Trustees helps to enhance the Board's
effectiveness.
There
are no specific required qualifications for Board membership. The Board believes
that the different skills, perspectives, qualifications, attributes, education,
and relevant experience of each of the Trustees provide the Board with a variety
of complementary skills. Please note that (i) none of the Trustees is an
"expert" within the meaning of the federal securities laws and (ii) the Board is
not responsible for the day to day operations of the Trust and the
Funds.
The
Board of Trustees met five (5) times during the fiscal period ended
October 31, 2022. The Board may hold special meetings, as needed, either in
person or by telephone, to address matters arising between regular
meetings.
The
Trustees are identified in the table below, which provides information as to
their principal business occupations held during the last five years and certain
other information. Each Trustee serves until his or her death, resignation or
removal and replacement. As of February 1, 2023, each of the Trustees
oversaw 112 funds (100 of which were operational). The address for all Trustees
and officers is c/o Global X Funds®,
605 3rd Avenue, 43rd Floor, New York, New York 10158.
Independent
Trustees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(Year
of Birth) |
Position(s)
Held
with
Funds |
Principal
Occupation(s) During the Past 5 Years |
Number
of
Portfolios
in Fund
Complex Overseen
by
Trustees |
Other
Directorships Held by Trustees during the
Past
5 Years |
Charles
A. Baker (1953) |
Trustee
(since 07/2018) |
Chief
Executive Officer of Investment Innovations LLC (investment consulting)
(since 2013); Managing Director of NYSE Euronext (2003 to
2012) |
112
(100 of which are operational) |
Trustee
of OSI ETF Trust (2016-2022) |
Susan
M. Ciccarone (1973) |
Trustee
(since 09/2019) |
Partner,
Further Global Capital Management (private equity) (since 2017); formerly
Chief Operating Officer (2014-2016) and Chief Financial Officer
(2012-2016), Emerging Global Advisors, LLC (ETF issuer) |
112
(100 of which are operational) |
Director
of E78 Partners (since 2022); Director of ProSight Global, Inc. (since
2021); Director of Casa Holdco LP, parent of Celink (since 2018);
Chairman, Payment Alliance International, Inc.
(2019-2021) |
Clifford
J. Weber (1963) |
Trustee
(since 07/2018) |
Owner,
Financial Products Consulting Group LLC (consulting services to financial
institutions) (since 2015); Formerly, Executive Vice President of Global
Index and Exchange-Traded Products, NYSE Market, Inc., a subsidiary of
Intercontinental Exchange (ETF/ETP listing exchange)
(2013-2015) |
112
(100 of which are operational) |
Chairman
(since 2017) and Trustee (since 2015) of Clough Funds Trust; Chairman and
Trustee of Clayton Street Trust (since 2016); Chairman and Trustee of
Janus Detroit Street Trust (since 2016); Chairman and Trustee of Elevation
ETF Trust (2016-2018); Trustee of Clough Global Equity Fund (since 2017);
Trustee of Clough Global Dividend and Income Fund (since 2017); and
Trustee of Clough Global Opportunities Fund (since
2017) |
Interested
Trustee/Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(Year
of Birth) |
Position(s)
Held
with
Funds |
Principal
Occupation(s)
During
the Past 5 Years |
Number
of Portfolios in Fund Complex Overseen by Trustees |
Other
Directorships
Held
by Trustees During the Past 5 Years |
Luis
Berruga (1977) |
Trustee
(since 07/2018); President (since 2018) |
Chief
Executive Officer, GXMC (since 07/2018), Chief Financial Officer (since
02/2014) and Chief Operating Officer (09/2015 - 07/2018) |
112
(100 of which are operational) |
None |
John
Belanger (1982) |
Chief
Operating Officer and Chief Financial Officer (since 12/2020) |
Chief
Operating Officer and Head of Portfolio Management & Portfolio
Administration, GXMC (since 12/2020); Portfolio Manager (12/2020-04/2022);
Secretary of the Trust (03/2020-09/2020); Head of Product Management, GXMC
(since 01/2020); Consultant to GXMC (09/2018-12/2019); Chief Operating
Officer, Rex Shares, LLC (2014-2018) |
n/a |
n/a |
Susan
Lively (1981) |
Secretary
(since 09/2020) |
General
Counsel, GXMC (since 09/2020); Senior Corporate Counsel at Franklin
Templeton (previously, Managing Director and Associate General Counsel at
Legg Mason & Co., LLC) (2014-2020) |
n/a |
n/a |
Eric
Griffith1
(1969) |
Assistant
Secretary (since 02/2020) |
Counsel,
SEI Investments (since 10/2019); Vice President and Assistant General
Counsel, JPMorgan Chase & Co. (2012-2018) |
n/a |
n/a |
Joe
Costello (1974) |
Chief
Compliance Officer (since 09/2016) |
Chief
Compliance Officer, GXMC (since 09/2016) |
n/a |
n/a |
Ronnie
Riven (1984) |
Treasurer
and Principal Accounting Officer (since 12/2020) |
Head
of Finance & Business Management, GXMC (since 01/2022); Treasurer,
GXMC (since 02/2022); Director of Finance, GXMC (08/2018-12/2021);
Director of Accounting and Finance at Barclays Center
(2016-2018) |
n/a |
n/a |
Eric
Olsen1
(1970) |
Assistant
Treasurer (since 05/2021) |
Director
of Accounting, SEI Investment Manager Services (March 2021 to present);
Deputy Head of Fund Operations, Traditional Assets, Aberdeen Standard
Investments (2013-2021) |
n/a |
n/a |
1 These
officers of the Trust also serve as officers of one or more funds for which SEI
Investments Company or an affiliate acts as investment manager, administrator or
distributor.
In
addition to the information set forth in the table above, each Trustee possesses
other relevant skills, perspectives, qualifications, attributes, education, and
relevant experience. The following provides additional information about certain
qualifications and experience of each of the Trustees and the reason why he or
she was selected to serve as Trustee.
Charles
A. Baker: Mr. Baker has extensive knowledge of and experience in the financial
services industry, including previously serving as Managing Director of NYSE
Euronext. Additionally, Mr. Baker has experience serving as an independent
director for an ETF trust.
Luis
Berruga: Mr. Berruga has extensive knowledge of and experience in the financial
services industry, including serving as President and Chief Operating Officer of
the Adviser. Mr. Berruga received his MBA from the Kellogg School of Management
at Northwestern University.
Susan
M. Ciccarone: Ms. Ciccarone has extensive knowledge of and experience in the
financial services and investment management industries. She is currently a
partner of Further Global Capital Management, a private equity firm, and
previously served as Chief Operating and Chief Financial Officer of an adviser
to ETFs. Ms. Ciccarone received her MBA from the Wharton School of the
University of Pennsylvania.
Clifford
J. Weber: Mr. Weber has experience previously serving as a senior executive of
stock exchanges with responsibilities including ETF and exchange-traded product
issues, experience with the structure and operations of ETFs, experience with
secondary market transactions involving ETFs, and experience serving as a mutual
fund independent director.
RISK
MANAGEMENT OVERSIGHT.
The Funds are subject to a variety of risks, including (but not limited to)
investment risk, financial risk, legal, regulatory and compliance risk, and
operational risk. Consistent with its responsibility for general oversight of
the business and affairs of the Trust and the Funds, the Board oversees the
Adviser's day-to-day management of the risks to which the Trust and the Funds
are subject. The Board has charged the Adviser with (i) identifying possible
events and circumstances that could have demonstrable, adverse effects on the
business and affairs of the Trust and the Funds; (ii) implementing of processes
and controls to lessen the possibility that such events or circumstances occur
or mitigate the effects of such events or circumstances if they do occur; and
(iii) creating and maintaining a system designed to continuously evaluate
business and market conditions to facilitate the processes described in (i) and
(ii) above. The Adviser seeks to address the day-to-day risk management of the
Trust and the Funds by relying on the Trust's compliance policies and procedures
(i.e., the Trust's compliance program) as well as the compliance programs of the
Trust's various service providers, internal control mechanisms and other risk
oversight mechanisms as well as the assistance of the Trust's sub-administrator.
The Adviser also separately considers potential risks that may impact the
individual Funds.
As
noted above, on behalf of the Trust, the Board has adopted, and periodically
reviews, various compliance policies and procedures that are designed to address
certain risks to the Trust and the Funds. In addition, under the general
oversight of the Board, the Adviser and the Trust's other service providers have
adopted a variety of processes, policies, procedures and controls designed to
address particular risks to which the Trust and the Funds are subject. Different
processes, policies, procedures and controls are employed with respect to
different types of risks. Further, the Adviser oversees and regularly monitors
the investments, operations, and compliance of the Funds' investments with
various regulatory and other requirements.
Because
the day-to-day operations of the Funds are carried out by the Adviser, the risk
exposure of the Trust and the Funds are mitigated but not eliminated by the
processes overseen by the Board. In addition to the risk management processes,
policies, procedures, and controls implemented by the Adviser, the Board seeks
to oversee the risk management structure of the Trust and the Funds directly and
through its committees (as described below). In this regard, the Board has
requested that the Adviser, the CCO for the Trust and the Adviser, the
independent auditors for the Trust, and counsel to the Trust and Adviser provide
the Board with periodic reports regarding issues that should be focused on by
the Board members. In large part, the Board oversees the Adviser's management of
the Trust's risk management structure through the Board's review of regular
reports, presentations and other information from officers of the Trust and
other persons. Senior officers of the Trust, including the Trust's CCO,
regularly report to the Board on a range of matters, including those relating to
risk management. In this regard, the Board periodically receives reports
regarding the Trust's service providers, either directly or through the CCO. On
at least a quarterly basis, the Independent Trustees meet with the CCO to
discuss matters relating to the Trust's compliance program and, in accordance
with Rule 38a-1 under the 1940 Act, the Board receives at least annually a
written report from the CCO regarding the effectiveness of the Trust's
compliance program. In connection with the CCO's annual Rule 38a-1 compliance
report to the Board, the Independent Trustees meet with the CCO in executive
session to discuss the Trust's compliance program.
Further,
the Board regularly receives reports from the Adviser with respect to the Funds'
investments and securities trading and, as necessary, any fair valuation
determinations made by the Adviser with respect to certain investments held by
the Funds.
Senior
officers of the Trust and Adviser routinely report regularly to the Board on
valuation matters, internal controls, accounting and financial reporting
policies and practices. In addition, the Audit Committee receives
information on the Funds' internal controls and financial reporting from the
Trust's independent registered public accounting firm.
The
Board recognizes that not all risks that may affect the Funds can be identified
nor can processes and controls be developed to eliminate or mitigate their
occurrence or effects of certain risks. Some risks are simply beyond the
reasonable control of the Funds, their management and service providers.
Although the risk management process, policies and procedures of the Funds,
their management and service providers are designed to be effective, there is no
guarantee that they will eliminate or mitigate all such risks. Moreover, it may
be necessary to bear certain risks to achieve each Fund's investment
objective.
STANDING
BOARD COMMITTEES
The
Board of Trustees currently has two standing committees: an Audit Committee and
a Nominating and Governance Committee. Currently, each Independent Trustee
serves on each of these committees.
AUDIT
COMMITTEE.
The purposes of the Audit Committee are to assist the Board in (1) its oversight
of the Trust's accounting and financial reporting principles and policies and
related controls and procedures maintained by or on behalf of the Trust; (2) its
oversight of the Trust's financial statements and the independent audit thereof;
(3) selecting, evaluating and, where deemed appropriate, replacing the
independent registered public accounting firm (or nominating the independent
registered public accounting firm to be proposed for shareholder approval in any
proxy statement); and (4) evaluating the independence of the independent
registered public accounting firm. During the fiscal period ended
October 31, 2022, the Audit Committee held three (3) meetings.
NOMINATING
AND GOVERNANCE COMMITTEE.
The purposes of the Nominating and Governance Committee are, among other things,
to assist the Board in (1) its assessment of the adequacy of the Board's
adherence to industry corporate governance best practices; (2) periodic
evaluation of the operation of the Trust and meetings with management of the
Trust concerning the Trust's operations and the application of policies and
procedures to the Funds; (3) review, consideration and recommendation to the
full Board regarding Independent Trustee compensation; (4) identification and
evaluation of potential candidates to fill a vacancy on the Board; and (5)
selection from among potential candidates of a nominee to be presented to the
full Board for its consideration. The Nominating and Governance Committee will
not consider shareholders' nominees. During the fiscal period ended
October 31, 2022, the Nominating and Governance Committee held two (2)
meetings.
TRUSTEE
AND OFFICER OWNERSHIP OF FUND SHARES
To
the best of the Trust's knowledge, as of the date of this SAI, the Trustees and
officers of the Trust, as a group, owned less than 1% of the Shares of each
Fund.
Securities
Ownership
Listed
below for each Trustee is a dollar range of securities beneficially owned in a
Fund together with the aggregate dollar range of equity securities in all
registered investment companies overseen by each Trustee that are in the same
family of investment companies as the Trust, as of December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
Name
of Trustee |
Fund |
Dollar
Range of Equity Securities In Fund |
Aggregate
Dollar Range of Equity Securities in All Funds Overseen by Trustee in
Family of Investment Companies |
Independent
Trustees |
|
|
|
Charles
A. Baker |
None |
None |
$10,001-$50,000 |
|
|
|
|
Susan
M. Ciccarone |
None |
None |
None |
|
|
|
|
Clifford
J. Weber |
None |
None |
None |
|
|
|
|
Interested
Trustee |
|
|
|
Luis
Berruga |
Global
X E-commerce ETF |
$1–$10,000 |
over
$100,000 |
|
Global
X MSCI China Health Care ETF |
$1–$10,000 |
|
Global
X MSCI China Information Technology ETF |
$1–$10,000 |
|
Global
X S&P 500®
Covered Call ETF |
over
$100,000 |
|
Global
X NASDAQ 100®
Covered Call ETF |
over
$100,000 |
|
Global
X Nasdaq 100®
Covered Call & Growth ETF |
over
$100,000 |
|
Global
X S&P 500®
Covered Call & Growth ETF |
over
$100,000 |
|
Global
X SuperDividend®
REIT ETF |
over
$100,000 |
|
Global
X Renewable Energy Producers ETF |
$10,001–$50,000 |
|
Global
X MSCI SuperDividend®
Emerging Markets ETF |
$10,001–$50,000 |
|
Global
X NASDAQ 100®
Risk Managed Income ETF |
$10,001–$50,000 |
|
Global
X Russell 2000 Covered Call ETF |
over
$100,000 |
|
Global
X S&P 500®
Risk Managed Income ETF |
$10,001–$50,000 |
|
Global
X NASDAQ 100®
Collar 95-110 ETF |
$1–$10,000 |
|
Global
X NASDAQ 100®
Tail Risk ETF |
$1–$10,000 |
|
Global
X S&P 500®
Collar
95-110 ETF |
$1–$10,000 |
|
Global
X S&P 500®
Tail Risk ETF |
$1–$10,000 |
TRUSTEE
OWNERSHIP OF SECURITIES OF THE ADVISER AND RELATED COMPANIES
As
of December 31, 2022, no Independent Trustee (or any of his or her immediate
family members) owned beneficially or of record securities of any Trust
investment adviser, its principal underwriter, or any person directly or
indirectly, controlling, controlled by or under common control with any Trust
investment adviser or principal underwriter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
of Independent Trustee |
Name
of Owners and Relationship to Trustee |
Company |
Title
of Class |
Value
of Securities |
Percent
of Class |
Charles
A. Baker |
None |
None |
None |
None |
None |
Susan
M. Ciccarone |
None |
None |
None |
None |
None |
Clifford
J. Weber |
None |
None |
None |
None |
None |
No
Independent Trustee or immediate family member has during the two most recently
completed calendar years had: (i) any material interest, direct or
indirect, in any transaction or series of similar transactions, in which the
amount involved exceeds $120,000; or (ii) any direct or indirect
relationship of any nature, in which the amount involved exceeds $120,000,
with:
•the
Funds;
•an
officer of the Trust;
•an
investment company, or person that would be an investment company but for the
exclusions provided by Sections 3(c)(1) and 3(c)(7) of the 1940 Act, having the
same investment adviser or principal underwriter as the Funds or having an
investment adviser or principal underwriter that directly or indirectly
controls, is controlled by, or is under common control with the Adviser or
principal underwriter of the Funds;
•an
officer or an investment company, or a person that would be an investment
company but for the exclusions provided by Sections 3(c)(1) and 3(c)(7) of the
1940 Act, having the same investment adviser or principal underwriter as the
Funds or having an investment adviser or principal underwriter that directly or
indirectly controls, is controlled by, or is under common control with the
Adviser or principal underwriter of the Funds;
•the
Adviser or principal underwriter of the Funds;
•an
officer of the Adviser or principal underwriter of the Funds;
•a
person directly or indirectly controlling, controlled by, or under common
control with the Adviser or principal underwriter of the Funds; or
•an
officer of a person directly or indirectly controlling, controlled by, or under
common control with the Adviser or principal underwriter of the
Funds.
TRUSTEE
COMPENSATION
The
Interested Trustee is not compensated by the Trust. Rather, he is compensated by
the Adviser. Independent Trustee fees are paid from the unitary fee paid to the
Adviser by the Funds. All of the Independent Trustees are reimbursed for their
travel expenses and other reasonable out-of-pocket expenses incurred in
connection with attending Board meetings (these other expenses are subject to
Board review to ensure that they are not excessive). The Trust does not accrue
pension or retirement benefits as part of the Fund's expenses, and Trustees are
not entitled to benefits upon retirement from the Board. The Trust's officers
receive no compensation directly from the Trust.
The
following sets forth the fees paid to each Trustee for the fiscal year ended
October 31, 2022, unless otherwise indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
of
Independent
Trustee |
|
Aggregate
Compensation from the Funds |
|
Pension
or Retirement Benefits Accrued as Part of Funds Expenses |
|
Total
Compensation from Trust* |
Charles
A. Baker |
|
$100,402 |
|
$0 |
|
$182,500 |
Susan
M. Ciccarone |
|
$100,402 |
|
$0 |
|
$182,500 |
Clifford
J. Weber |
|
$100,402 |
|
$0 |
|
$182,500 |
*
Information is as of December 31, 2022.
CODE
OF ETHICS
The
Trust, the Adviser, and the Distributor each have adopted a code of ethics, as
required by applicable law, which is designed to prevent affiliated persons of
the Trust, the Adviser, and the Distributor from engaging in deceptive,
manipulative or fraudulent activities in connection with securities held or to
be acquired by the Funds (which may also be held by persons subject to a code of
ethics). There can be no assurance that the codes of ethics will be effective in
preventing such activities. The codes of ethics permit personnel subject to them
to invest in securities, including securities that may be held or purchased by
the Funds. The codes of ethics are on file with the SEC and are available to the
public.
INVESTMENT
ADVISER
The
Adviser, Global X Management Company LLC, serves as investment manager to the
Funds pursuant to an Investment Advisory Agreement between the Trust and the
Adviser. It is registered as an investment adviser with the SEC and is located
at 605 3rd Avenue, 43rd Floor, New York, New York 10158. The Adviser was
organized in Delaware on March 28, 2008 as a limited liability company. On July
2, 2018, the Adviser consummated a transaction pursuant to which the Adviser
became an indirect, wholly-owned subsidiary of Mirae Asset Global Investments
Co., Ltd. ("Mirae"). In this manner, the Adviser is
ultimately
controlled by Mirae, which is a leading financial services company in Korea and
is the headquarters for the Mirae Asset Global Investments Group.
Pursuant
to a Supervision and Administration Agreement between the Trust and the Adviser,
the Adviser oversees the operation of the Funds, provides or causes to be
furnished the advisory, supervisory, administrative, distribution, transfer
agency, custody and all other services necessary for the Funds to operate, and
exercises day-to-day oversight over the Funds' service providers. Under the
Supervision and Administration Agreement, the Adviser also bears all the fees
and expenses incurred in connection with its obligations under the Supervision
and Administration Agreement, including, but not limited to, the costs of
various third-party services required by the Funds, including audit, certain
custody, portfolio accounting, legal, transfer agency and printing costs, except
those fees and expenses specifically assumed by the Trust on behalf of each
Fund.
Under
the Investment Advisory Agreement between the Trust and the Adviser, the Adviser
is responsible for the management of the investment portfolio of each Fund. The
ability of the Adviser to successfully implement each Fund's investment
strategies will influence such Fund's performance significantly.
Each
Fund pays the Adviser a fee ("Management Fee") for the advisory, supervisory,
administrative and other services it requires under an all-in fee structure.
Each Fund pays (or will pay, for Funds that have not yet commenced operations) a
monthly Management Fee to the Adviser at the annual rates set forth in the table
below (stated as a percentage of each Fund's respective average daily net
assets).
|
|
|
|
|
|
Fund |
Management
Fee |
Global
X MSCI Colombia ETF |
0.61% |
Global
X MSCI China Consumer Discretionary ETF |
0.65% |
Global
X MSCI China Industrials ETF |
0.65% |
Global
X MSCI China Communication Services ETF |
0.65% |
Global
X MSCI China Financials ETF |
0.65% |
Global
X MSCI China Energy ETF |
0.65% |
Global
X MSCI China Materials ETF |
0.65% |
Global
X MSCI Norway ETF |
0.50% |
Global
X FTSE Southeast Asia ETF |
0.65% |
Global
X MSCI Argentina ETF |
0.59% |
Global
X MSCI Greece ETF |
0.55% |
Global
X MSCI Nigeria ETF |
0.68% |
Global
X MSCI Next Emerging & Frontier ETF |
0.49% |
Global
X MSCI Portugal ETF |
0.55% |
Global
X DAX Germany ETF |
0.20% |
Global
X MSCI Pakistan ETF |
0.68% |
Global
X MSCI China Consumer Staples ETF |
0.65% |
Global
X MSCI China Health Care ETF |
0.65% |
Global
X MSCI China Information Technology ETF |
0.65% |
Global
X MSCI China Real Estate ETF |
0.65% |
Global
X MSCI China Utilities ETF |
0.65% |
Global
X MSCI Vietnam ETF |
0.50% |
Global
X Copper Miners ETF |
0.65% |
Global
X Silver Miners ETF |
0.65% |
Global
X Gold Explorers ETF |
0.65% |
Global
X Uranium ETF |
0.69% |
Global
X Lithium & Battery Tech ETF |
0.75% |
Global
X SuperDividend®
ETF |
0.58%1 |
Global
X Social Media ETF |
0.65% |
Global
X Guru®
Index ETF |
0.75% |
Global
X SuperIncome™ Preferred ETF |
0.58% |
Global
X SuperDividend®
U.S. ETF |
0.45% |
|
|
|
|
|
|
Fund |
Management
Fee |
Global
X S&P 500®
Covered Call ETF |
0.60% |
Global
X NASDAQ 100®
Covered Call ETF |
0.60% |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
0.65% |
Global
X SuperDividend®
REIT ETF |
0.58% |
Global
X Renewable Energy Producers ETF |
0.65% |
Global
X S&P 500®
Catholic Values ETF |
0.29% |
Global
X MSCI SuperDividend®
EAFE ETF |
0.55% |
Global
X E-commerce ETF |
0.50% |
Global
X Russell 2000 Covered Call ETF |
0.60%2 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
0.35% |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
0.60% |
Global
X S&P 500®
Covered Call & Growth ETF |
0.60% |
Global
X Emerging Markets Internet & E-commerce ETF |
0.65% |
Global
X S&P 500®
Tail Risk ETF |
0.60% |
Global
X S&P 500®
Risk Managed Income ETF |
0.60% |
Global
X S&P 500®
Collar 95-110 ETF |
0.60% |
Global
X NASDAQ 100®
Tail Risk ETF |
0.60% |
Global
X NASDAQ 100®
Risk Managed Income ETF |
0.60% |
Global
X NASDAQ 100®
Collar 95-110 ETF |
0.60% |
Global
X Disruptive Materials ETF |
0.59% |
Global
X Dow 30®
Covered
Call ETF |
0.60% |
Global
X Russell 2000 Covered Call & Growth ETF |
0.60%3 |
Global
X Financials Covered Call & Growth ETF |
0.60%4 |
Global
X Health Care Covered Call & Growth ETF |
0.60%5 |
Global
X Information Technology Covered Call & Growth ETF |
0.60%6 |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF |
0.25% |
In
addition, each Fund bears other fees and expenses that are not covered by the
Supervision and Administration Agreement, which may vary and will affect the
total expense ratio of a Fund, such as taxes, brokerage fees, commissions and
other transaction expenses, interest and extraordinary expenses (such as
litigation and indemnification expenses). In addition, the Global X MSCI Greece
ETF, Global X MSCI Nigeria ETF, Global X MSCI Next Emerging & Frontier ETF,
Global X MSCI Portugal ETF and Global X MSCI Pakistan ETF may pay asset-based
custodial fees that are not covered by the Supervision and Administration
Agreement. The Adviser may earn a profit on the Management Fee paid by the
Funds. Also, the Adviser, and not shareholders of the Funds, would benefit from
any price decreases in third-party services, including decreases resulting from
an increase in net assets.
The
Board of Trustees of the Trust voted to approve a lower Management Fee for the
Global X DAX Germany ETF of 0.20% effective March 1, 2021.
The
Board of Trustees of the Trust voted to approve a lower Management Fee for the
Global X Disruptive Materials ETF of 0.59% effective January 7,
2022.
1
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
SuperDividend®
ETF to the extent necessary to assure that the operating expenses of the Global
X SuperDividend®
ETF (exclusive of taxes, brokerage fees, commissions, and other transaction
expenses and extraordinary expenses (such as litigation and indemnification
expenses)) will not exceed 0.58% of the average daily net assets of the Global X
SuperDividend®
ETF per year until at least March 1, 2024.
2
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Russell
2000 Covered Call ETF to the extent necessary to assure that the operating
expenses of the Global X Russell 2000 Covered Call ETF (exclusive of taxes,
brokerage fees, commissions, and other transaction expenses,
interest,
and extraordinary expenses (such as litigation and indemnification expenses))
will not exceed 0.60% of the average daily net assets of the Global X Russell
2000 Covered Call ETF per year until at least March 1, 2024.
3
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Russell
2000 Covered Call & Growth ETF to the extent necessary to assure that the
operating expenses of the Global X Russell 2000 Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Russell 2000 Covered Call & Growth ETF per year until at
least March 1, 2024.
4
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
Financials Covered Call & Growth ETF to the extent necessary to assure that
the operating expenses of the Global X Financials Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Financials Covered Call & Growth ETF per year until at least
March 1, 2024.
5
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Health
Care Covered Call & Growth ETF to the extent necessary to assure that the
operating expenses of the Global X Health Care Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Health Care Covered Call & Growth ETF per year until at
least March 1, 2024.
6
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
Information Technology Covered Call & Growth ETF to the extent necessary to
assure that the operating expenses of the Global X Information Technology
Covered Call & Growth ETF (exclusive of taxes, brokerage fees, commissions,
and other transaction expenses, interest, and extraordinary expenses (such as
litigation and indemnification expenses)) will not exceed 0.60% of the average
daily net assets of the Global X Information Technology Covered Call &
Growth ETF per year until at least March 1, 2024.
The
Adviser and its affiliates deal, trade and invest for their own accounts in the
types of securities in which a Fund also may invest. The Adviser does not use
inside information in making investment decisions on behalf of the
Funds.
Each
of the Supervision and Administration Agreement and the related Investment
Advisory Agreement remains in effect for two (2) years from its effective date
and thereafter continues in effect for as long as its continuance is
specifically approved at least annually, by (i) the Board of Trustees of the
Trust, or by the vote of a majority (as defined in the 1940 Act) of the
outstanding Shares of the Fund, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to the Investment Advisory Agreement
or interested persons of the Adviser, cast in person at a meeting called for the
purpose of voting on such approval. Each of the Supervision and Administration
Agreement and the related Investment Advisory Agreement provides that it may be
terminated at any time without the payment of any penalty, by the Board of
Trustees of the Trust or by vote of a majority of the Funds' shareholders, on 60
calendar days written notice to the Adviser, and by the Adviser on the same
notice to the Trust, and that it shall be automatically terminated if it is
assigned.
Each
of the Supervision and Administration Agreement and the related Investment
Advisory Agreement provides that the Adviser shall not be liable to each Fund or
its shareholders for anything other than willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties. The Investment
Advisory Agreement also provides that the Adviser may engage in other
businesses, devote time and attention to any other business, whether of a
similar or dissimilar nature, and render investment advisory services to
others.
The
Management Fees paid by each operational Fund to the Adviser and the aggregated
amount of Management Fees reimbursed or waived by the Adviser (net of expenses
reimbursed to the Adviser under the applicable Expense Limitation Agreement) for
the fiscal years ended October 31, 2020, 2021 and 2022 are set forth in the
chart below. With respect to the Predecessor Funds, the aggregate investment
advisory fee waived by the Predecessor Adviser (net expenses reimbursed to the
Predecessor Adviser under the expense limitation agreement that was then in
effect) are set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fees Paid for the Fiscal Year Ended |
Reimbursements
or Waivers for the Fiscal Year Ended |
|
Fund |
October
31, 2020 |
October
31, 2021 |
October
31, 2022 |
October
31, 2020 |
October
31, 2021 |
October
31, 2022 |
Date
of Commencement of Investment Operations |
Global
X MSCI Colombia ETF |
304,028 |
251,254 |
201,989 |
|
|
|
02/05/2009 |
Global
X MSCI China Consumer Discretionary ETF |
1,206,428 |
4,423,478 |
2,448,391 |
|
|
|
11/30/2009 |
Global
X MSCI China Industrials ETF |
12,924 |
19,979 |
75,330 |
|
|
|
11/30/2009 |
Global
X MSCI China Communication Services ETF |
124,732 |
102,643 |
59,401 |
|
|
|
12/08/2009 |
Global
X MSCI China Financials ETF |
287,558 |
376,684 |
400,660 |
|
|
|
12/10/2009 |
Global
X MSCI China Energy ETF |
10,437 |
18,452 |
43,997 |
|
|
|
12/15/2009 |
Global
X MSCI China Materials ETF |
11,256 |
30,529 |
36,539 |
|
|
|
01/12/2010 |
Global
X MSCI Norway ETF |
238,657 |
237,832 |
506,046 |
|
|
|
11/09/2010 |
Global
X FTSE Southeast Asia ETF |
146,393 |
212,302 |
248,178 |
|
|
|
02/16/2011 |
Global
X MSCI Argentina ETF |
309,772 |
253,795 |
175,705 |
|
|
|
03/02/2011 |
Global
X MSCI Greece ETF |
1,094,783 |
857,664 |
663,875 |
|
|
|
12/07/2011 |
Global
X MSCI Nigeria ETF |
123,491 |
293,234 |
297,850 |
|
|
|
04/02/2013 |
Global
X MSCI Next Emerging & Frontier ETF |
74,579 |
92,761 |
101,497 |
|
|
|
11/06/2013 |
Global
X MSCI Portugal ETF |
95,615 |
84,173 |
61,424 |
|
|
|
11/12/2013 |
Global
X DAX Germany ETF* |
87,042 |
103,075 |
66,212 |
(48,356) |
(26,435) |
|
10/22/2014 |
Global
X MSCI Pakistan ETF |
290,077 |
219,490 |
123,776 |
|
|
|
04/22/2015 |
Global
X MSCI China Consumer Staples ETF |
52,651 |
131,935 |
98,056 |
|
|
|
12/11/2018 |
Global
X MSCI China Health Care ETF |
38,896 |
120,361 |
76,876 |
|
|
|
12/11/2018 |
Global
X MSCI China Information Technology ETF |
71,068 |
223,776 |
145,532 |
|
|
|
12/11/2018 |
Global
X MSCI China Real Estate ETF |
47,197 |
36,990 |
46,218 |
|
|
|
12/11/2018 |
Global
X MSCI China Utilities ETF |
9,201 |
10,956 |
13,308 |
|
|
|
12/11/2018 |
Global
X Copper Miners ETF |
467,753 |
4,862,889 |
9,981,710 |
|
|
|
04/19/2010 |
Global
X Silver Miners ETF |
4,422,725 |
7,754,578 |
6,192,399 |
|
|
|
04/19/2010 |
Global
X Gold Explorers ETF |
310,944 |
362,911 |
268,941 |
|
|
|
11/03/2010 |
Global
X Uranium ETF |
1,089,760 |
3,942,004 |
10,500,338 |
|
|
|
11/04/2010 |
Global
X Lithium & Battery Tech ETF |
4,305,340 |
24,325,097 |
35,950,931 |
|
|
|
07/22/2010 |
Global
X SuperDividend®
ETF |
4,193,913 |
5,113,691 |
4,770,868 |
|
|
|
06/08/2011 |
Global
X Social Media ETF |
966,853 |
2,615,063 |
1,527,640 |
|
|
|
11/14/2011 |
Global
X Guru®
Index ETF |
414,735 |
535,587 |
427,935 |
|
|
|
06/04/2012 |
Global
X SuperIncome™ Preferred ETF |
1,073,279 |
1,226,468 |
1,220,587 |
|
|
|
07/16/2012 |
Global
X SuperDividend®
U.S. ETF |
2,065,363 |
2,767,013 |
3,136,379 |
|
|
|
03/11/2013 |
Global
X S&P 500®
Covered Call ETF* |
785,946 |
1,701,201 |
8,472,002 |
(133) |
(16) |
|
06/21/2013 |
Global
X NASDAQ 100®
Covered Call ETF* |
6,217,544 |
16,896,510 |
38,866,576 |
(506) |
(40) |
|
12/11/2013 |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
120,981 |
294,228 |
429,924 |
|
|
|
03/16/2015 |
Global
X SuperDividend®
REIT ETF |
2,106,459 |
2,618,112 |
2,142,347 |
|
|
|
03/16/2015 |
Global
X Renewable Energy Producers ETF |
290,591 |
754,490 |
763,510 |
|
|
|
05/27/2015 |
Global
X S&P 500®
Catholic Values ETF |
955,620 |
1,495,289 |
1,696,326 |
|
|
|
04/18/2016 |
Global
X MSCI SuperDividend®
EAFE ETF |
56,865 |
64,424 |
61,466 |
|
|
|
11/14/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Fees Paid for the Fiscal Year Ended |
Reimbursements
or Waivers for the Fiscal Year Ended |
|
Fund |
October
31, 2020 |
October
31, 2021 |
October
31, 2022 |
October
31, 2020 |
October
31, 2021 |
October
31, 2022 |
Date
of Commencement of Investment Operations |
Global
X E-commerce ETF |
157,190 |
980,423 |
527,219 |
|
|
|
11/27/2018 |
Global
X Russell 2000 Covered Call ETF |
83,391 |
1,053,988 |
6,700,656 |
|
(175,662) |
(719,490) |
04/17/2019 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
3,232 |
11,318 |
18,596 |
|
|
|
06/22/2020 |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
2,711 |
97,164 |
349,272 |
|
|
|
09/18/2020 |
Global
X S&P 500®
Covered Call & Growth ETF |
2,337 |
50,636 |
227,859 |
|
|
|
09/18/2020 |
Global
X Emerging Markets Internet & E-commerce ETF |
— |
36,760 |
19,552 |
|
|
|
11/09/2020 |
Global
X S&P 500®
Tail Risk ETF |
— |
3,166 |
19,622 |
|
|
|
08/25/2021 |
Global
X S&P 500®
Risk Managed Income ETF |
— |
3,585 |
115,866 |
|
|
|
08/25/2021 |
Global
X S&P 500®
Collar 95-110 ETF |
— |
3,085 |
22,585 |
|
|
|
08/25/2021 |
Global
X NASDAQ 100®
Tail Risk ETF |
— |
3,155 |
17,228 |
|
|
|
08/25/2021 |
Global
X NASDAQ 100®
Risk Managed Income ETF |
— |
3,781 |
66,424 |
|
|
|
08/25/2021 |
Global
X NASDAQ 100®
Collar 95-110 ETF |
— |
2,974 |
22,722 |
|
|
|
08/25/2021 |
Global
X MSCI Vietnam ETF |
— |
— |
26,577 |
|
|
|
12/07/2021 |
Global
X Disruptive Materials ETF |
— |
— |
17,940 |
|
|
|
01/24/2022 |
Global
X Dow 30®
Covered Call ETF |
— |
— |
101,109 |
|
|
|
02/23/2022 |
Global
X Russell 2000 Covered Call & Growth ETF |
— |
— |
1,091 |
|
|
(184) |
10/04/2022 |
Global
X Financials Covered Call & Growth ETF |
— |
— |
— |
|
|
|
11/21/2022 |
Global
X Health Care Covered Call & Growth ETF |
— |
— |
— |
|
|
|
11/21/2022 |
Global
X Information Technology Covered Call & Growth ETF |
— |
— |
— |
|
|
|
11/21/2022 |
*Reflects
the investment advisory fees paid to and aggregate investment advisory fee
waived by the Predecessor Adviser (net expenses reimbursed to the Predecessor
Adviser under the expense limitation agreement that was then in effect).
PORTFOLIO
MANAGERS
The
portfolio managers Nam To, Wayne Xie, Kimberly Chan, Vanessa Yang and Sandy Lu
are employees of the Adviser.
Portfolio
Manager's Compensation
The
Adviser believes that its compensation program is competitively positioned to
attract and retain high-caliber investment professionals. Portfolio managers
receive a salary and are eligible to receive an annual bonus. A portfolio
manager's salary compensation is designed to be competitive with the marketplace
and reflect the portfolio manager's relative experience and contribution to the
Funds. Base salary compensation is reviewed and adjusted annually to reflect
increases in the cost of living and market rates. The
annual incentive bonus opportunity provides cash bonuses based upon (a)
individual performance in the functional aspects of the portfolio manager role,
(b) achievement of strategic goals related to process and technology
improvement, and (c) overall company performance. Portfolio manager
compensation is not tied to the performance of the individual funds
themselves. Senior members of the portfolio management team may have stock
options of the Adviser.
Other
Accounts Managed by Portfolio Managers
It
is anticipated that a portfolio manager will be responsible for multiple
investment accounts, including other investment companies registered under the
1940 Act. As a general matter, certain conflicts of interest may arise in
connection with a portfolio manager's management of a Fund's investments, on the
one hand, and the investments of other accounts for which the portfolio manager
is responsible, on the other. For example, it is possible that the various
accounts managed could have different investment strategies that, at times,
might conflict with one another to the possible detriment of a Fund.
Alternatively, to the extent that the same investment opportunities might be
desirable for more than one account, possible conflicts could arise in
determining how to allocate them. Other potential conflicts might include
conflicts created by specific portfolio manager compensation arrangements and
conflicts relating to selection of brokers or dealers to execute a Fund's
trades. The Adviser has structured a portfolio manager's compensation in a
manner, and the Funds and the Adviser have adopted policies, procedures and a
code of ethics, reasonably designed to safeguard the Funds from being negatively
affected as a result of any such conflicts that may arise.
The
Portfolio Managers were responsible for the management of the following accounts
as of October 31, 2022, unless otherwise stated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Accounts Managed |
Accounts
With Respect To Which The Advisory Fee Is Based On The Performance of
The Account |
Name
of Portfolio Manager |
Category
of Account |
Number
of Accounts in Category |
Total
Assets in Accounts in Category |
Number
of Accounts in Category |
Total
Assets in Accounts in Category |
Nam
To |
Registered
investment companies |
94 |
$36,007,081,546 |
0 |
$0.00 |
|
Other
pooled investment vehicles |
26 |
$295,656,530 |
0 |
$0.00 |
|
Other
accounts |
0 |
$0.00 |
0 |
$0.00 |
|
|
|
|
|
|
Wayne
Xie |
Registered
investment companies |
94 |
$36,007,081,546 |
0 |
$0.00 |
|
Other
pooled investment vehicles |
26 |
$295,656,530 |
0 |
$0.00 |
|
Other
accounts |
0 |
$0.00 |
0 |
$0.00 |
|
|
|
|
|
|
Kimberly
Chan |
Registered
investment companies |
94 |
$36,007,081,546 |
0 |
$0.00 |
|
Other
pooled investment vehicles |
26 |
$295,656,530 |
0 |
$0.00 |
|
Other
accounts |
0 |
$0.00 |
0 |
$0.00 |
|
|
|
|
|
|
Vanessa
Yang |
Registered
investment companies |
94 |
$36,007,081,546 |
0 |
$0.00 |
|
Other
pooled investment vehicles |
26 |
$295,656,530 |
0 |
$0.00 |
|
Other
accounts |
0 |
$0.00 |
0 |
$0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandy
Lu |
Registered
investment companies |
94 |
$36,007,081,546 |
0 |
$0.00 |
|
Other
pooled investment vehicles |
26 |
$295,656,530 |
0 |
$0.00 |
|
Other
accounts |
0 |
$0.00 |
0 |
$0.00 |
Although
the Funds in the Trust that are managed by Messrs. To, Xie and Lu and Ms. Chan
and Ms. Yang may have different investment strategies, each has an investment
objective of seeking to replicate, before fees and expenses, its respective
underlying index. The Adviser does not believe that management of the various
accounts presents a material conflict of interest for Messrs. To, Xie and Lu and
Ms. Chan and Ms. Yang or the Adviser.
Disclosure
of Securities Ownership
Listed
below for each Portfolio Manager is a dollar range of securities beneficially
owned in a Fund as of October 31, 2022, unless otherwise
stated:
|
|
|
|
|
|
|
|
|
Name
of Portfolio Manager |
Fund |
Dollar
Range of Equity Securities In Fund |
Nam
To |
None |
None |
|
|
|
Wayne
Xie |
Global
X Russell 2000 Covered Call ETF |
over
$100,000 |
|
Global
X E-commerce ETF |
$1–$10,000 |
|
|
|
Kimberly
Chan |
Global
X NASDAQ 100®
Covered Call ETF |
$1–$10,000 |
|
|
|
Vanessa
Yang |
None |
None |
|
|
|
Sandy
Lu |
None |
None |
BROKERAGE
TRANSACTIONS
The
policy of the Trust regarding purchases and sales of securities is that primary
consideration will be given to obtaining the most favorable prices and efficient
executions of transactions. Consistent with this policy, when securities
transactions are effected on a stock exchange, the Trust's policy is to pay
commissions that are considered fair and reasonable without necessarily
determining that the lowest possible commissions are paid in all circumstances.
In seeking to determine the reasonableness of brokerage commissions paid in any
transaction, the Adviser relies upon its experience and knowledge regarding
commissions generally charged by various brokers and in various jurisdictions.
The Adviser effects transactions for the Funds with those brokers and dealers
that the Adviser believes provide the most favorable prices and are capable of
providing the most efficient and best execution of trades. The primary
consideration of the Adviser is to seek prompt execution of orders at the most
favorable net price. The sale of Shares by a broker-dealer is not a factor in
the selection of broker-dealers. The Adviser and its affiliates do not currently
participate in any soft dollar transactions with respect to the Funds, although
the Adviser relies on Section 28(e) of the 1934 Act in effecting or executing
transactions for the Funds. Accordingly, in selecting broker-dealers to execute
a particular transaction, the Adviser may consider the brokerage and research
services (as those terms are defined in Section 28(e) of the 1934 Act) provided
to the Funds and/or other accounts over which the Adviser or its affiliates
exercise investment discretion. The Adviser may cause the Funds to pay a
broker-dealer that furnishes brokerage and research services a higher commission
than that which might be charged by another broker-dealer for effecting the same
transaction, provided that the Adviser determines in good faith that such
commission is reasonable in relation the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Adviser to the
Funds. Such brokerage and research services might consist of reports and
statistics on specific companies or industries or broad overviews of the
securities markets and the economy. Shareholders of the Funds
should
understand that the services provided by such brokers may be useful to the
Adviser in connection with its services to other clients.
The
Adviser assumes general supervision over placing orders on behalf of the Funds
for the purchase or sale of portfolio securities. If purchases or sales of
portfolio securities by the Funds are considered at or about the same time,
transactions in such securities are allocated among the Funds in a manner deemed
equitable to the Funds by the Adviser. Bundling or bunching transactions for the
Funds is intended to result in better prices for portfolio securities and lower
brokerage commissions, which should be beneficial to the Funds.
The
aggregate brokerage commissions paid by each Fund during the fiscal periods
ended October 31, 2020, 2021, and 2022 are set forth in the chart
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
Commissions Paid for the Fiscal Period Ended |
|
Fund |
October
31, 2020 |
October
31, 2021 |
October
31, 2022 |
Date
of Commencement of Investment Operations |
Global
X MSCI Colombia ETF |
31,946 |
16,698 |
43,907 |
02/05/2009 |
Global
X MSCI China Consumer Discretionary ETF |
92,150 |
349,533 |
119,607 |
11/30/2009 |
Global
X MSCI China Industrials ETF |
511 |
3,305 |
27,443 |
11/30/2009 |
Global
X MSCI China Communication Services ETF |
9,192 |
12,267 |
3,737 |
12/08/2009 |
Global
X MSCI China Financials ETF |
20,240 |
23,978 |
52,925 |
12/10/2009 |
Global
X MSCI China Energy ETF |
1,056 |
3,054 |
17,381 |
12/15/2009 |
Global
X MSCI China Materials ETF |
1,236 |
3,928 |
9,550 |
01/12/2010 |
Global
X MSCI Norway ETF* |
4,396 |
4,432 |
16,255 |
11/09/2010 |
Global
X FTSE Southeast Asia ETF |
2,064 |
8,152 |
8,489 |
02/16/2011 |
Global
X MSCI Argentina ETF |
37,488 |
14,166 |
17,229 |
03/02/2011 |
Global
X MSCI Greece ETF |
91,443 |
99,958 |
54,004 |
12/07/2011 |
Global
X MSCI Nigeria ETF |
156,463 |
67,468 |
16,651 |
04/02/2013 |
Global
X MSCI Next Emerging & Frontier ETF |
21,453 |
26,544 |
15,441 |
11/06/2013 |
Global
X MSCI Portugal ETF |
4,347 |
7,941 |
4,495 |
11/12/2013 |
Global
X DAX Germany ETF* |
2,230 |
10,493 |
3,299 |
10/22/2014 |
Global
X MSCI Pakistan ETF |
160,455 |
107,839 |
43,467 |
04/22/2015 |
Global
X MSCI China Consumer Staples ETF |
14,892 |
10,444 |
17,547 |
12/11/2018 |
Global
X MSCI China Health Care ETF |
6,595 |
10,915 |
3,468 |
12/11/2018 |
Global
X MSCI China Information Technology ETF |
14,787 |
26,396 |
11,530 |
12/11/2018 |
Global
X MSCI China Real Estate ETF |
7,786 |
2,521 |
7,858 |
12/11/2018 |
Global
X MSCI China Utilities ETF |
631 |
1,010 |
1,864 |
12/11/2018 |
Global
X Copper Miners ETF |
21,470 |
228,567 |
655,519 |
04/19/2010 |
Global
X Silver Miners ETF |
204,150 |
290,819 |
339,244 |
04/19/2010 |
Global
X Gold Explorers ETF |
13,311 |
11,527 |
13,352 |
11/03/2010 |
Global
X Uranium ETF |
131,753 |
239,546 |
442,881 |
11/04/2010 |
Global
X Lithium & Battery Tech ETF |
543,718 |
3,132,832 |
2,290,944 |
07/22/2010 |
Global
X SuperDividend®
ETF |
1,077,888 |
887,609 |
1,050,139 |
06/08/2011 |
Global
X Social Media ETF |
21,309 |
112,793 |
38,163 |
11/14/2011 |
Global
X Guru®
Index ETF |
24,496 |
21,688 |
16,118 |
06/04/2012 |
Global
X SuperIncome™ Preferred ETF |
63,285 |
102,203 |
44,887 |
07/16/2012 |
Global
X SuperDividend®
U.S. ETF |
689,198 |
260,645 |
279,648 |
03/11/2013 |
Global
X S&P 500®
Covered Call ETF* |
95,010 |
67,805 |
358,823 |
06/21/2013 |
Global
X NASDAQ 100®
Covered Call ETF* |
216,607 |
236,352 |
528,031 |
12/11/2013 |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
35,445 |
105,343 |
115,685 |
03/16/2015 |
Global
X SuperDividend®
REIT ETF |
624,669 |
265,710 |
304,480 |
03/16/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X Renewable Energy Producers ETF |
19,736 |
94,999 |
19,965 |
05/27/2015 |
Global
X S&P 500®
Catholic Values ETF |
5,483 |
6,747 |
4,093 |
04/18/2016 |
Global
X MSCI SuperDividend®
EAFE ETF |
7,199 |
10,482 |
4,184 |
11/14/2016 |
Global
X E-commerce ETF |
13,571 |
14,403 |
15,097 |
11/27/2018 |
Global
X Russell 2000 Covered Call ETF |
26,492 |
65,255 |
683,913 |
04/17/2019 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
107 |
598 |
695 |
06/22/2020 |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
118 |
2359 |
4,426 |
09/18/2020 |
Global
X S&P 500®
Covered Call & Growth ETF |
513 |
8585 |
12,440 |
09/18/2020 |
Global
X Emerging Markets Internet & E-commerce ETF |
— |
1,624 |
644 |
11/09/2020 |
Global
X S&P 500®
Tail Risk ETF |
— |
429 |
556 |
08/25/2021 |
Global
X S&P 500®
Risk Managed Income ETF |
— |
2,119 |
20,847 |
08/25/2021 |
Global
X S&P 500®
Collar 95-110 ETF |
— |
670 |
1,451 |
08/25/2021 |
Global
X NASDAQ 100®
Tail Risk ETF |
— |
60 |
280 |
08/25/2021 |
Global
X NASDAQ 100®
Risk Managed Income ETF |
— |
355 |
4,856 |
08/25/2021 |
Global
X NASDAQ 100®
Collar 95-110 ETF |
— |
137 |
509 |
08/25/2021 |
Global
X MSCI Vietnam ETF |
— |
— |
30,657 |
12/07/2021 |
Global
X Disruptive Materials ETF |
— |
— |
2,594 |
01/24/2022 |
Global
X Dow 30®
Covered Call ETF |
— |
— |
26,593 |
02/23/2022 |
Global
X Russell 2000 Covered Call & Growth ETF |
— |
— |
80 |
10/04/2022 |
Global
X Financials Covered Call & Growth ETF |
— |
— |
— |
11/21/2022 |
Global
X Health Care Covered Call & Growth ETF |
— |
— |
— |
11/21/2022 |
Global
X Information Technology Covered Call & Growth ETF |
— |
— |
— |
11/21/2022 |
* Reflects
the aggregate brokerage commissions paid by the applicable predecessor fund.
PROXY
VOTING
The
Funds have delegated proxy voting responsibilities to the Adviser, subject to
the Board of Trustees' oversight. In delegating proxy responsibilities, the
Board of Trustees has directed that proxies be voted consistent with each Fund's
and its shareholders' best interests and in compliance with all applicable proxy
voting rules and regulations. The Adviser has adopted proxy voting policies and
guidelines for this purpose ("Proxy Voting Policies") and the Adviser has
engaged a third party proxy solicitation firm, Glass Lewis & Co. ("Glass
Lewis"), an independent third party proxy service that is responsible for the
actual voting of all proxies in a timely manner, while the CCO is responsible
for monitoring the effectiveness of the Proxy Voting Policies. The Proxy Voting
Policies have been adopted by the Trust as the policies and procedures that the
Adviser will use when voting proxies on behalf of the Funds.
In
addition to the general Proxy Voting Policies, the Adviser has adopted the
Catholic voting policy addendum (the "Catholic Policy Addendum") with respect to
the Global X S&P 500®
Catholic Values ETF and the ESG (Environmental, Social & Governance) voting
policy addendum for the Global X Renewable Energy Producers ETF.
I.
General Guidelines
Except
in instances where the Adviser has provided Glass Lewis with different
direction, Glass Lewis has agreed to vote proxies in accordance with
recommendations developed by Glass Lewis and overseen by the Advisor. The Glass
Lewis guidelines address a wide variety of individual topics, including, among
other matters, shareholder voting rights, anti-takeover defenses, board
structures, the election of directors, executive and director compensation,
reorganizations, mergers, and various shareholder proposals. The Glass Lewis
guidelines encourage the maximization of return for shareholders through
identifying and avoiding financial, audit and corporate governance risks.
Detailed information on Glass Lewis’s proxy voting guidelines are available
under “Proxy Paper GuidelinesTM”
from Glass Lewis at www.glasslewis.com/guidelines.
The
Proxy Voting Policies are designed to ensure that all issues brought to
shareholders are analyzed in light of the Adviser's fiduciary responsibilities.
The Proxy Voting Policies address the Adviser's oversight of Glass Lewis, as
well as when securities on loan are recalled to participate in proxy votes.
Additionally, the Proxy Voting Policies address material conflicts of interest
that
may arise between the interests of the Funds and the interests of the Adviser.
In situations in which there is a conflict of interest between the interests of
the Adviser or its affiliates and the interests of the Fund’s shareholders, the
Adviser will take necessary actions to resolve the conflict and to protect the
interests of shareholders.
II.
Oversight of Third Party Solicitation Firm
The
Advisor has reviewed the principles and procedures employed by Glass Lewis in
making recommendations on voting proxies on each issue presented, and has
satisfied itself that Glass Lewis’s recommendations are (i) based upon an
appropriate level of diligence and research, and (ii) designed to further the
interests of shareholders, and not serve other unrelated or improper interests.
The Advisor shall review its determinations as to Glass Lewis at least
annually.
III.
Record of Proxy Voting
Information
on how the Funds voted proxies relating to portfolio securities during the most
recent 12 month period ended June 30 is available (1) without charge, upon
request, by calling 1-888-843-7824 and (2) on the SEC's website at
www.sec.gov.
SUB-ADMINISTRATOR
SEI
Investments Global Funds Services ("SEIGFS"), located at One Freedom Valley
Drive, Oaks, PA 19456, serves as sub-administrator to the Funds. As
sub-administrator, SEIGFS provides the Funds with all required general
administrative services, including, without limitation, office space, equipment,
and personnel; clerical and general back office services; bookkeeping, internal
accounting and secretarial services; the calculation of NAV; and the
coordination or preparation and filing of all reports, registration statements,
proxy statements and all other materials required to be filed or furnished by
the Funds under federal and state securities laws. As compensation for these
services, SEIGFS receives certain out-of-pocket costs, transaction fees and
asset-based fees which are accrued daily and paid monthly by the Adviser from
its fees.
DISTRIBUTOR
The
Trust has entered into a Distribution Agreement under which SEI Investments
Distribution Co. ("SIDCO"), with principal offices at One Freedom Valley Drive,
Oaks, PA 19456, serves as the Funds' underwriter and distributor of Creation
Units. The distributor has no obligation to sell any specific quantity of Shares
of the Funds. SIDCO bears the following costs and expenses relating to the
distribution of Shares: (i) the costs of processing and maintaining records of
creations of Creation Units; (ii) all costs of maintaining the records required
of a registered broker/dealer; (iii) the expenses of maintaining its
registration or qualification as a dealer or broker under federal or state laws;
(iv) filing fees; and (v) all other expenses incurred in connection with the
distribution services as contemplated in the Distribution Agreement. No
compensation is payable by the Trust to SIDCO for such distribution services.
The Distribution Agreement provides that the Trust will indemnify SIDCO against
certain liabilities relating to untrue statements or omissions of material fact
except those resulting from the reliance on information furnished to the Trust
by SIDCO, or those resulting from the willful misfeasance, bad faith or gross
negligence of SIDCO, or SIDCO's reckless disregard of its duties and obligations
under the Distribution Agreement. SIDCO, its affiliates and officers have no
role in determining the investment policies or which securities are to be
purchased or sold by the Trust or the Funds. The Distributor is not affiliated
with the Trust, the Adviser or any stock exchange.
Additionally,
the Adviser or its affiliates may, from time to time, and from its own
resources, pay, defray or absorb costs relating to distribution, including
payments out of its own resources to SIDCO or to otherwise promote the sale of
shares.
CUSTODIANS
AND TRANSFER AGENTS
For
all Funds other than the Global X Russell 2000 Covered Call & Growth ETF,
the Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, Brown Brothers Harriman & Co. ("BBH"), located at 50
Post Office Square, Boston, MA 02110, serves as custodian of the Funds' assets.
As custodian, BBH has agreed to (1) make receipts and disbursements of money on
behalf of each Fund, (2) collect and receive all income and other payments and
distributions on account of each Fund's portfolio investments, (3) respond to
correspondence from shareholders, security brokers and others relating to its
duties; and (4) make periodic reports to the Funds concerning the Funds'
operations. BBH does not exercise any supervisory function over the purchase and
sale of securities. As compensation for these services, BBH receives certain
out-of-pocket costs, transaction fees and asset-based fees which are accrued
daily and paid monthly by the Adviser from its fees.
As
transfer agent, BBH has agreed to (1) issue and redeem Shares of each Fund, (2)
make dividend and other distributions to shareholders of each Fund, (3) respond
to correspondence by shareholders and others relating to its duties; (4)
maintain
shareholder
accounts, and (5) make periodic reports to the Funds. As compensation for these
services, BBH receives certain out-of-pocket costs, transaction fees and
asset-based fees which are accrued daily and paid monthly by the Adviser from
its fees.
For
the Global X Russell 2000 Covered Call & Growth ETF, the Global X Financials
Covered Call & Growth ETF, the Global X Health Care Covered Call &
Growth ETF and the Global X Information Technology Covered Call & Growth
ETF, the Bank of New York Mellon (“BNY Mellon”), located at 240 Greenwich
Street, New York, New York 10286, is the custodian of the Trust’s portfolio
securities and cash on behalf of each Fund. BNY Mellon may appoint domestic and
foreign sub-custodians and use depositories from time to time to hold securities
and other instruments purchased by the Trust in foreign countries and to hold
cash and currencies for the Trust on behalf of each Fund.
BNY
Mellon also serves as the Trust’s transfer agent on behalf of each Fund for
which it acts as custodian. Under its transfer agency agreement with the Trust,
BNY Mellon has undertaken with the Trust to provide the following services with
respect to each Fund: (i) perform and facilitate the performance of purchases
and redemptions of Creation Units, (ii) prepare and transmit by means of
Depository Trust Company’s (“DTC”) book-entry system payments for dividends and
distributions on or with respect to the Shares declared by the Trust on behalf
of each Fund, as applicable, (iii) prepare and deliver reports, information and
documents as specified in the transfer agency agreement, (iv) perform the
customary services of a transfer agent and dividend disbursing agent, and (v)
render certain other miscellaneous services as specified in the transfer agency
agreement or as otherwise agreed upon.
SECURITIES
LENDING AGENTS
The
Board of Trustees has approved each Fund's participation in a securities lending
program. BBH serves as the securities lending agent for each Fund except for the
Global X Russell 2000 Covered Call & Growth ETF, the Global X Financials
Covered Call & Growth ETF, the Global X Health Care Covered Call &
Growth ETF and the Global X Information Technology Covered Call & Growth
ETF. BNY Mellon serves as the securities lending agent for each of the Global X
Russell 2000 Covered Call & Growth ETF, the Global X Financials Covered Call
& Growth ETF, the Global X Health Care Covered Call & Growth ETF and the
Global X Information Technology Covered Call & Growth ETF.
For
the fiscal year ended October 31, 2022, the total income earned by the
Funds, as well as the fees and/or compensation paid by the Funds (in dollars)
pursuant to a securities lending agreement between the Trust and BBH, with
respect to certain of the Funds, and BBH as securities lending agent were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X MSCI Colombia ETF |
Global
X MSCI China Consumer Discretionary ETF |
Global
X MSCI China Communication Services ETF |
Gross
income earned by the Fund from securities lending
activities |
$19,903.20 |
$183,871.56 |
$1,153.08 |
Fees
paid to Securities Lending Agent from revenue split |
$1,906.65 |
$22,014.90 |
$105.09 |
Fees
paid for any cash collateral management service (including fees deducted
from a pooled cash collateral reinvestment vehicle) not included in a
revenue split |
$1,822.47 |
$4,208.98 |
$126.39 |
Administrative
fees not included in a revenue split |
— |
— |
— |
Indemnification
fees not included in a revenue split |
— |
— |
— |
Rebate
(paid to borrower) |
$5,235.42 |
14,518.19 |
344.38 |
Other
fees not included above |
— |
— |
— |
Aggregate
fees/compensation paid by the Fund for securities lending
activities |
$8,964.54 |
$40,742.07 |
$575.86 |
Net
income from securities lending activities |
$10,938.66 |
$143,129.49 |
$577.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X FTSE Southeast Asia ETF |
Global
X MSCI Argentina ETF |
Global
X MSCI Greece ETF |
Gross
income earned by the Fund from securities lending
activities |
$4,333.25 |
$51,737.60 |
$3,819.52 |
Fees
paid to Securities Lending Agent from revenue split |
$110.11 |
$4,814.34 |
$496.59 |
Fees
paid for any cash collateral management service (including fees deducted
from a pooled cash collateral reinvestment vehicle) not included in a
revenue split |
$140.11 |
$2,117.23 |
$68.59 |
Administrative
fees not included in a revenue split |
— |
— |
— |
Indemnification
fees not included in a revenue split |
— |
— |
— |
Rebate
(paid to borrower) |
3,485.88 |
$14,681.38 |
— |
Other
fees not included above |
— |
— |
— |
Aggregate
fees/compensation paid by the Fund for securities lending
activities |
$3,736.10 |
$21,612.95 |
$565.18 |
Net
income from securities lending activities |
$597.15 |
$30,124.65 |
$3,254.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X MSCI Portugal ETF |
Global
X MSCI China Information Technology ETF |
Global
X Copper Miners ETF |
Global
X Silver Miners ETF |
Global
X Gold Explorers ETF |
Gross
income earned by the Fund from securities lending
activities |
$20,255.30 |
$3,439.06 |
$565,202.40 |
$1,763,346.52 |
$101,699.51 |
Fees
paid to Securities Lending Agent from revenue split |
$1,981.57 |
$444.49 |
$69,191.35 |
$197,192.33 |
$12,152.70 |
Fees
paid for any cash collateral management service (including fees deducted
from a pooled cash collateral reinvestment vehicle) not included in a
revenue split |
$237.07 |
$149.66 |
$14,331.23 |
$46,636.37 |
$2,134.99 |
Administrative
fees not included in a revenue split |
— |
— |
— |
— |
— |
Indemnification
fees not included in a revenue split |
— |
— |
— |
— |
— |
Rebate
(paid to borrower) |
5,003.36 |
17.88 |
32,960.11 |
$246,324.67 |
8,191.75 |
Other
fees not included above |
— |
— |
— |
— |
— |
Aggregate
fees/compensation paid by the Fund for securities lending
activities |
$7,222.00 |
$612.03 |
$116,482.69 |
$490,153.37 |
$22,479.44 |
Net
income from securities lending activities |
$13,033.30 |
$2,827.03 |
$448,719.71 |
$1,273,193.15 |
$79,220.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X Uranium ETF |
Global
X Lithium & Battery Tech ETF |
Global
X SuperDividend® ETF |
Global
X Social Media ETF |
Global
X Guru® Index ETF |
Global
X SuperIncome™ Preferred ETF |
Gross
income earned by the Fund from securities lending
activities |
$3,758,218.94 |
$14,075,173.50 |
$2,260,158.96 |
$61,734.19 |
$35,369.98 |
$245,514.50 |
Fees
paid to Securities Lending Agent from revenue split |
$426,194.71 |
$1,791,009.94 |
$274,506.84 |
$3,389.92 |
$3,370.56 |
$30,330.59 |
Fees
paid for any cash collateral management service (including fees deducted
from a pooled cash collateral reinvestment vehicle) not included in a
revenue split |
$73,208.58 |
$135,143.18 |
$28,726.64 |
$3,224.54 |
$1,214.19 |
$3,745.29 |
Administrative
fees not included in a revenue split |
— |
— |
— |
— |
— |
— |
Indemnification
fees not included in a revenue split |
— |
— |
— |
— |
— |
— |
Rebate
(paid to borrower) |
$479,597.37 |
298,109.7 |
148,572.09 |
$35,645.20 |
9,445.01 |
12,200.53 |
Other
fees not included above |
— |
— |
— |
— |
— |
— |
Aggregate
fees/compensation paid by the Fund for securities lending
activities |
$979,000.66 |
$2,224,262.82 |
$451,805.57 |
$42,259.66 |
$14,029.76 |
$46,276.41 |
Net
income from securities lending activities |
$2,779,218.28 |
$11,850,910.68 |
$1,808,353.39 |
$19,474.53 |
$21,340.22 |
$199,238.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X SuperDividend® U.S. ETF |
Global
X SuperDividend® REIT ETF |
Global
X Renewable Energy Producers ETF |
Global
X E-commerce ETF |
Gross
income earned by the Fund from securities lending
activities |
$281,004.34 |
$125,529.04 |
$89,715.72 |
$24,646.21 |
Fees
paid to Securities Lending Agent from revenue split |
$21,598.85 |
$5,829.10 |
$10,558.03 |
$2,114.16 |
Fees
paid for any cash collateral management service (including fees deducted
from a pooled cash collateral reinvestment vehicle) not included in a
revenue split |
$11,682.66 |
$6,092.57 |
$2,054.48 |
$2,514.09 |
Administrative
fees not included in a revenue split |
— |
— |
— |
— |
Indemnification
fees not included in a revenue split |
— |
— |
— |
— |
Rebate
(paid to borrower) |
114,852.77 |
80,689.4 |
8,493.43 |
8,362.38 |
Other
fees not included above |
— |
— |
— |
— |
Aggregate
fees/compensation paid by the Fund for securities lending
activities |
$148,134.28 |
$92,611.07 |
$21,105.94 |
$12,990.63 |
Net
income from securities lending activities |
$132,870.06 |
$32,917.97 |
$68,609.78 |
$11,655.58 |
For
the fiscal year ended October 31, 2022, BBH as securities lending agent
provided the following services to the Funds in connection with their securities
lending activities: (i) entering into loans subject to guidelines or
restrictions provided by the applicable Funds; (ii) establishing and maintaining
collateral accounts; (iii) monitoring daily the value of the loaned securities
and collateral; (iv) seeking additional collateral as necessary from borrowers,
and returning collateral to borrowers; (v) receiving and holding collateral from
borrowers, and facilitating the investment and reinvestment of cash collateral;
(vi) negotiating loan terms; (vii) selecting securities to be loaned subject to
guidelines or restrictions provided by the Funds; (viii) recordkeeping and
account servicing; (ix) monitoring dividend and proxy activity relating to
loaned securities; and (x) arranging for return of loaned securities to the
applicable Funds at loan termination.
DESCRIPTION
OF SHARES
The
Declaration of Trust of the Trust ("Declaration") permits the Trust's Board to
issue an unlimited number of full and fractional shares of beneficial interest
of one or more separate series representing interests in one or more investment
portfolios. The Board of Trustees or the Trust may create additional series and
each series may be divided into classes.
Under
the terms of the Declaration, each Share of each Fund represents a proportionate
interest in the particular Fund with each other share of its class in the same
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are authorized by the Trustees and declared by the
Trust. Upon any liquidation of a Fund, shareholders of each class of the Fund
are entitled to share pro rata in the net assets belonging to that class
available for distribution. Shares do not have any preemptive or conversion
rights. The right of redemption is described in the Prospectus. In addition,
pursuant to the terms of the 1940 Act, the right of a shareholder to redeem
Shares and the date of payment by a Fund may be suspended for more than seven
days (i) for any period during which the New York Stock Exchange is closed,
other than the customary weekends or holidays, or trading in the markets the
Fund normally utilizes is closed or is restricted as determined by the SEC, (ii)
during any emergency, as determined by the SEC, as a result of which it is not
reasonably practicable for such Fund to dispose of instruments owned by it or
fairly to determine the value of its net assets, or (iii) for such other period
as the SEC may by order permit for the protection of the shareholders of such
Fund. The Trust also may suspend or postpone the recording of the transfer of
its shares upon the occurrence of any of the foregoing conditions. In addition,
Shares of each Fund are redeemable at the unilateral option of the Trust. The
Declaration permits the Board to alter the number of Shares constituting a
Creation Unit or to specify that shares of beneficial interest of the Trust may
be individually redeemable. Shares when issued as described in the Prospectus
are validly issued, fully paid and non-assessable. In the interests of economy
and convenience, certificates representing Shares of the Funds are not
issued.
Following
the creation of the initial Creation Unit Aggregation(s) of a Fund and
immediately prior to the commencement of trading in such Fund's Shares, a holder
of Shares may be a "control person" of the Fund, as defined in the 1940 Act. A
Fund cannot predict the length of time for which one or more shareholders may
remain a control person of the Fund.
The
proceeds received by each Fund for each issue or sale of its Shares, and all net
investment income, realized and unrealized gain and proceeds thereof, subject
only to the rights of creditors of that Fund, will be specifically allocated to
and constitute the underlying assets of that Fund. The underlying assets of each
Fund will be segregated on the books of account, and will be charged with the
liabilities in respect to that Fund and with a share of the general liabilities
of the Trust. Expenses with respect
to
the Funds normally are allocated in proportion to the NAV of the respective
Fund, except where allocations of direct expenses can otherwise be fairly
made.
Shareholders
are entitled to one vote for each full Share held and proportionate fractional
votes for fractional Shares held. The funds of the Trust entitled to vote on a
matter will vote in the aggregate and not by fund, except as required by law or
when the matter to be voted on affects only the interests of shareholders of a
particular fund or class.
Rule
18f-2 under the 1940 Act provides that any matter required by the provisions of
the 1940 Act or applicable state law, or otherwise, to be submitted to the
holders of the outstanding voting securities of an investment company (such as
the Trust) shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
investment portfolio affected by such matter. Rule 18f-2 further provides that
an investment portfolio shall be deemed to be affected by a matter unless the
interests of each investment portfolio in the matter are substantially identical
or the matter does not affect any interest of the investment portfolio. Under
Rule 18f-2, the approval of an Investment Advisory Agreement, a distribution
plan subject to Rule 12b-1 under the 1940 Act or any change in the fundamental
investment policy would be effectively acted upon with respect to an investment
portfolio only if approved by a majority of the outstanding shares of such
investment portfolio. However, Rule 18f-2 also provides that the ratification of
the appointment of independent accountants, the approval of principal
underwriting contracts and the election of Trustees are exempt from the separate
voting requirements stated above.
The
Trust is not required to hold annual meetings of shareholders and does not
intend to hold such meetings. In the event that a meeting of shareholders is
held, each share of the Trust will be entitled, as determined by the Trustees
without the vote or consent of shareholders, to one vote for each share
represented by such shares on all matters presented to shareholders, including
the election of Trustees (this method of voting being referred to as
"dollar-based voting"). However, to the extent required by the 1940 Act or
otherwise determined by the Trustees, series and classes of the Trust will vote
separately from each other. Shareholders of the Trust do not have cumulative
voting rights in the election of Trustees and, accordingly, the holders of more
than 50% of the aggregate voting power of the Trust may elect all of the
Trustees, irrespective of the vote of the other shareholders. Meetings of
shareholders of the Trust, or any series or class thereof, may be called by the
Trustees, the President or Secretary of the Trust or upon the written request of
holders of at least a majority of the shares entitled to vote at such meeting.
The shareholders of the Trust will have voting rights only with respect to the
limited number of matters specified in the Declaration and such other matters as
the Trustees may determine or may be required by law.
The
Declaration authorizes the Trustees, without shareholder approval (except as
stated in the next paragraph), to cause the Trust, or any series thereof, to
merge or consolidate with any corporation, association, trust or other
organization or sell or exchange all or substantially all of the property
belonging to the Trust, or any series thereof. In addition, the Trustees,
without shareholder approval, may adopt a "master-feeder" structure by investing
substantially all of the assets of a series of the Trust in the securities of
another open-end investment company or pooled portfolio.
The
Declaration also authorizes the Trustees, in connection with the termination or
other reorganization of the Trust or any series or class by way of merger,
consolidation, the sale of all or substantially all of the assets, or otherwise,
to classify the shareholders of any class into one or more separate groups and
to provide for the different treatment of shares held by the different groups,
provided that such termination or reorganization is approved by a majority of
the outstanding voting securities (as defined in the 1940 Act) of each group of
shareholders that are so classified.
The
Declaration permits the Trustees to amend the Declaration without a shareholder
vote. However, shareholders of the Trust have the right to vote on any
amendment: (i) that would adversely affect the voting rights of shareholders
specified in the Declaration; (ii) that is required by law to be approved by
shareholders; (iii) to the amendment section of the Declaration; or (iv) that
the Trustees determine to submit to shareholders.
The
Declaration permits the termination of the Trust or of any series or class of
the Trust: (i) by vote of a majority of the affected shareholders at a meeting
of shareholders of the Trust, series or class; or (ii) by vote of a majority of
the Trustees without shareholder approval if the Trustees determine that such
action is in the best interest of the Trust or its shareholders. The factors and
events that the Trustees may take into account in making such determination
include: (i) the inability of the Trust or any series or class to maintain its
assets at an appropriate size; (ii) changes in laws or regulations governing the
Trust, or any series or class thereof, or affecting assets of the type in which
it invests; or (iii) economic developments or trends having a significant
adverse impact on their business or operations.
In
the event of a termination of the Trust or a Fund, the Board, in its sole
discretion, could determine to permit the shares to be redeemable in
aggregations smaller than Creation Unit Aggregations or to be individually
redeemable. In such circumstance, the Trust may make redemptions in-kind, for
cash, or for a combination of cash or securities.
The
Declaration provides that the Trustees will not be liable to any person other
than the Trust or a shareholder and that a Trustee will not be liable for any
act as a Trustee. Additionally, subject to applicable federal law, no person who
is or who has been a Trustee or officer of the Trust shall be liable to the
Trust or to any shareholder for money damages, except for liability resulting
from (a) actual receipt of an improper benefit or profit in money, property or
services or (b) active and deliberate dishonesty established by a final judgment
and which is material to the cause of action. However, nothing in the
Declaration protects a Trustee against any liability to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. The Declaration provides for indemnification of Trustees and
officers of the Trust unless the indemnitee is liable to the Trust or any
shareholder by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such person's
office.
The
Declaration provides that each shareholder, by virtue of becoming such, will be
held to have expressly assented and agreed to the terms of the
Declaration.
The
Declaration provides that a shareholder of the Trust may bring a derivative
action on behalf of the Trust only if the following conditions are met: (i) the
shareholder was a shareholder at the time of the action complained of; (ii) the
shareholder was a shareholder at the time demand is made; (iii) the shareholder
must make demand to the Trustees before commencing a derivative action on behalf
of the Trust; (iv) any shareholders that hold at least 10% of the outstanding
shares of the Trust (or 10% of the outstanding shares of the series or class to
which such action relates) must join in the request for the Trustees to commence
such action; and (v) the Trustees must be afforded a reasonable amount of time
to consider such shareholder request and to investigate the basis of such claim.
The Declaration also provides that no person, other than the Trustees, who is
not a shareholder of a particular series or class shall be entitled to bring any
derivative action, suit or other proceeding on behalf of or with respect to such
series or class. The Trustees will be entitled to retain counsel or other
advisers in considering the merits of the request and will require an
undertaking by the shareholders making such request to reimburse the Trust for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
The
term "majority of the outstanding shares" of either the Trust or a particular
fund or investment portfolio means, with respect to the approval of an
Investment Advisory Agreement, a distribution plan or a change in the
fundamental investment policy, the vote of the lesser of (i) 67% or more of the
shares of the Trust or such fund or portfolio present at a meeting, if the
holders of more than 50% of the outstanding shares of the Trust or such fund or
portfolio are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Trust or such fund or portfolio.
BOOK-ENTRY
ONLY SYSTEM
The
following information supplements and should be read in conjunction with the
"Shareholder Information" section in the Prospectus. The Depository Trust
Company ("DTC") acts as Securities Depository for the shares of the Trust.
Shares of each Fund are represented by securities registered in the name of DTC
or its nominee and deposited with, or on behalf of, DTC.
DTC,
a limited-purpose trust company, was created to hold securities of its
participants ("DTC Participants") and to facilitate the clearance and settlement
of securities transactions among the DTC Participants in such securities through
electronic book-entry changes in accounts of the DTC Participants, thereby
eliminating the need for physical movement of securities' certificates. DTC
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. More specifically, DTC is a subsidiary of the
Depository Trust and Clearing Corporation ("DTCC"), which is owned by its member
firms, including international broker/dealers, correspondent and clearing banks,
mutual fund companies and investment banks. Access to the DTC system is also
available to others such as banks, brokers, dealers and Trust companies that
clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("Indirect Participants").
Beneficial
ownership of shares is limited to DTC Participants, Indirect Participants and
persons holding interests through DTC Participants and Indirect Participants.
Ownership of beneficial interests in shares (owners of such beneficial interests
are referred to herein as "Beneficial Owners") is shown on, and the transfer of
ownership is effected only through, records maintained by DTC (with respect to
DTC Participants) and on the records of DTC Participants (with respect to
Indirect Participants and Beneficial Owners that are not DTC Participants).
Beneficial Owners will receive from or through the DTC Participant a written
confirmation relating to their purchase of shares. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
of certain investors to acquire beneficial interests in shares.
Beneficial
Owners of shares are not entitled to have shares registered in their names, will
not receive or be entitled to receive physical delivery of certificates in
definitive form and are not considered the registered holder thereof.
Accordingly, each Beneficial Owner must rely on the procedures of DTC, the DTC
Participant and any Indirect Participant through which such Beneficial Owner
holds its interests, to exercise any rights of a holder of shares. The Trust
understands that under existing industry practice, in the event the Trust
requests any action of holders of shares, or a Beneficial Owner desires to take
any action that DTC, as the record owner of all outstanding shares, is entitled
to take, DTC would authorize the DTC Participants to take such action and that
the DTC Participants would authorize the Indirect Participants and Beneficial
Owners acting through such DTC Participants to take such action and would
otherwise act upon the instructions of Beneficial Owners owning through them. As
described above, the Trust recognizes DTC or its nominee as the owner of all
shares for all purposes.
Conveyance
of all notices, statements and other communications to Beneficial Owners is
effected as follows. Pursuant to the Depositary Agreement between the Trust and
DTC, DTC is required to make available to the Trust upon request and for a fee
to be charged to the Trust a listing of the share holdings of each DTC
Participant. The Trust shall inquire of each such DTC Participant as to the
number of Beneficial Owners holding shares of the Funds, directly or indirectly,
through such DTC Participant. The Trust shall provide each such DTC Participant
with copies of such notice, statement or other communication, in such form,
number and at such place as such DTC Participant may reasonably request, in
order that such notice, statement or communication may be transmitted by such
DTC Participant, directly or indirectly, to such Beneficial Owners. In addition,
the Trust shall pay to each such DTC Participant a fair and reasonable amount as
reimbursement for the expenses attendant to such transmittal, all subject to
applicable statutory and regulatory requirements.
Share
distributions shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all shares of the Trust. DTC or its nominee, upon receipt
of any such distributions, shall credit immediately DTC Participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in shares as shown on the records of DTC or its nominee. Payments by DTC
Participants to Indirect Participants and Beneficial Owners of shares held
through such DTC Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a "street name," and will be the
responsibility of such DTC Participants. The Trust has no responsibility or
liability for any aspects of the records relating to or notices to Beneficial
Owners, or payments made on account of beneficial ownership interests in such
shares, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests or for any other aspect of the relationship
between DTC and the DTC Participants or the relationship between such DTC
Participants and the Indirect Participants and Beneficial Owners owning through
such DTC Participants.
DTC
may determine to discontinue providing its service with respect to shares of the
Trust at any time by giving reasonable notice to the Trust and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Trust shall take action either to find a replacement for DTC
to perform its functions at a comparable cost or, if such a replacement is
unavailable, to issue and deliver printed certificates representing ownership of
shares, unless the Trust makes other arrangements with respect thereto
satisfactory to the Exchange on which shares are listed.
PURCHASE
AND REDEMPTION OF CREATION UNITS
TRANSACTIONS
IN CREATION UNITS
The
Fund may issue or redeem Creation Units in return for a “custom basket” or a
“standard basket” of cash and/or securities that the Fund specifies any Business
Day (defined below). A custom basket is defined as either (i) a basket that is
composed of a non-representative selection of the exchange-traded fund’s
portfolio holdings; or (ii) a representative basket that is different from the
initial basket used in transactions on the same business day. A standard basket
is a basket of securities, assets or other positions that is generally
representative of the Fund’s portfolio in exchange for which an exchange-traded
fund issues (or in return for which it redeems) creation units.
All
standard and custom baskets will be governed by the Trust’s written policies and
procedure for basket creation, including (with respect to custom baskets): (i)
detailed parameters for the construction and acceptance of custom baskets that
are in the best interest of the Fund and its shareholders, including the process
for any revisions to, or deviations from, those parameters; and (ii) a
specification of the titles or roles of the employees of the Adviser (and the
Sub-Adviser) who are required to review each custom basket for compliance with
those parameters.
CREATION
UNIT AGGREGATIONS
The
Trust issues and sells Shares of each Fund only in Creation Unit Aggregations.
The Board reserves the right to declare a split or a consolidation in the number
of shares outstanding of any fund of the Trust, and to make a corresponding
change in the
number
of shares constituting a Creation Unit, in the event that the per share price in
the secondary market rises (or declines) to an amount that falls outside the
range deemed desirable by the Board.
PURCHASE
AND ISSUANCE OF CREATION UNIT AGGREGATIONS
General.
The Trust issues and sells Shares of each Fund only in Creation Units on a
continuous basis through the Distributor, without a sales load, at the Fund's
NAV next determined after receipt, on any Business Day (as defined herein), of
an order in proper form.
A
"Business Day" with respect to each Fund is any day on which the NYSE is open
for business. As of the date of this SAI, the NYSE observes the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Juneteenth National Independence Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
Portfolio
Deposit.
The consideration for purchase of a Creation Unit of Shares of a Fund generally
consists of the in-kind deposit of a designated portfolio of securities (the
"Deposit Securities") constituting an optimized representation of the Fund's
Underlying Index and an amount of cash in U.S. dollars computed as described
below (the "Cash Component"). Together, the Deposit Securities and the Cash
Component constitute the "Portfolio Deposit," which represents the minimum
initial and subsequent investment amount for a Creation Unit of such Fund. The
Cash Component is an amount equal to the Balancing Amount (as defined below).
The "Balancing Amount" is an amount equal to the difference between (x) the net
asset value (per Creation Unit) of a Fund and (y) the "Deposit Amount" which is
the market value (per Creation Unit) of the Deposit Securities. The Balancing
Amount serves the function of compensating for any differences between the net
asset value per Creation Unit and the Deposit Amount. If the Balancing Amount is
a positive number (i.e.,
the net asset value per Creation Unit is more than the Deposit Amount), the
Authorized Participant will deliver the Balancing Amount. If the Balancing
Amount is a negative number (i.e.,
the net asset value per Creation Unit is less than the Deposit Amount), the
Authorized Participant will receive the Balancing Amount. Payment of any stamp
duty or other similar fees and expenses payable upon transfer of beneficial
ownership of the Deposit Securities shall be the sole responsibility of the
Authorized Participant that purchased the Creation Unit. The Authorized
Participant must ensure that all Deposit Securities properly denote change in
beneficial ownership.
The
Adviser makes available through the NSCC on each Business Day, prior to the
opening of business on the relevant Exchange (currently 9:30 a.m., Eastern
Time), the list of the names and the required number of shares of each Deposit
Security to be included in the current Portfolio Deposit (based on information
at the end of the previous Business Day) for each Fund. Such Portfolio
Securities are applicable, subject to any adjustments as described below, to
purchases of Creation Units of a given Fund until such time as the
next-announced Deposit Securities composition is made available.
The
identity and number of shares of the Deposit Securities required for a Portfolio
Deposit for each Fund changes pursuant to changes in the composition of the
Fund's portfolio and as rebalancing adjustments and corporate action events are
reflected from time to time by the Adviser with a view to the investment
objective of the Fund. The composition of the Deposit Securities may also change
in response to adjustments to the weighting or composition of the securities
constituting the Underlying Index.
In
addition, the Trust reserves the right to permit or require the substitution of
an amount of cash (that is a "cash in lieu" amount) to be added to the Cash
Component to replace any Deposit Security which may not be available in
sufficient quantity for delivery or that may not be eligible for transfer
through the systems of DTC or the clearing process or for other similar reasons.
The Trust also reserves the right to permit or require a cash in lieu amount
where the delivery of Deposit Securities by the Authorized Participant would be
restricted under the securities laws or where delivery of Deposit Securities to
the Authorized Participant would result in the disposition of Deposit Securities
by the Authorized Participant becoming restricted under the securities laws, and
in certain other situations. The adjustments described above will reflect
changes, known to the Adviser on the date of announcement to be in effect by the
time of delivery of the Portfolio Deposit, in the composition of the Underlying
Index, or resulting from stock splits and other corporate actions.
In
addition to the list of names and numbers of securities constituting the current
Deposit Securities of a Portfolio Deposit, on each Business Day, the Cash
Component effective through and including the previous Business Day, per
outstanding Creation Unit of each Fund, will be made available.
Role
of the Authorized Participant.
Creation Units of shares may be purchased only by or through a DTC Participant
that has entered into an Authorized Participant Agreement with the Distributor.
Such Authorized Participant will agree pursuant to the terms of such Authorized
Participant Agreement on behalf of itself or any investor on whose behalf it
will act, as the case may be, to certain conditions, including that such
Authorized Participant will make available in advance of each purchase of
Creation Units an amount of cash sufficient to pay the Cash Component, once the
NAV of a Creation Unit is next determined
after
receipt of the purchase order in proper form, together with the transaction fee
described below. The Authorized Participant may require the investor to enter
into an agreement with such Authorized Participant with respect to certain
matters, including payment of the Cash Component. Investors who are not
Authorized Participants must make appropriate arrangements with an Authorized
Participant. Investors should be aware that their particular broker may not be a
DTC Participant or may not have executed an Authorized Participant Agreement,
and that therefore orders to purchase Creation Units may have to be placed by
the investor's broker through an Authorized Participant. As a result, purchase
orders placed through an Authorized Participant may result in additional charges
to such investor. The Trust does not expect to enter into an Authorized
Participant Agreement with more than a small number of DTC Participants that
have international capabilities. A list of the current Authorized Participants
may be obtained from the Distributor.
Purchase
Order.
To initiate an order for a Creation Unit of shares of a Fund, the Authorized
Participant must submit to the Distributor an irrevocable order to purchase
Shares of a Fund. With respect to a Fund, the Distributor will notify the
Adviser and the Custodian of such order. The Custodian will then provide such
information to the appropriate local sub-custodian(s). The Custodian shall cause
the appropriate local sub-custodian(s) of a Fund to maintain an account into
which the Authorized Participant shall deliver, on behalf of itself or the party
on whose behalf it is acting, the securities included in the designated
Portfolio Deposit (or the cash value of all or a part of such securities, in the
case of a permitted or required cash purchase or cash in lieu amount), with any
appropriate adjustments as advised by the Trust. Deposit Securities must be
delivered to an account maintained at the applicable local sub-custodian. Those
placing orders to purchase Creation Units through an Authorized Participant
should allow sufficient time to permit proper submission of the purchase order
to the Distributor by the cut-off time (as described below) on such Business
Day.
The
Authorized Participant must also make available on or before the contractual
settlement date, by means satisfactory to the Trust, immediately available or
same day funds in U.S. dollars estimated by the Trust to be sufficient to pay
the Cash Component next determined after acceptance of the purchase order,
together with the applicable purchase transaction fee. Any excess funds will be
returned following settlement of the issue of the Creation Unit. Those placing
orders should ascertain the applicable deadline for cash transfers by contacting
the operations department of the broker or depositary institution effectuating
the transfer of the Cash Component. This deadline is likely to be significantly
earlier than the closing time of the regular trading session on the
Exchange.
Investors
should be aware that an Authorized Participant may require orders for purchases
of shares placed with it to be in the particular form required by the individual
Authorized Participant.
Timing
of Submission of Purchase Orders.
For the Global X S&P 500®
Covered Call ETF, the Global X NASDAQ 100®
Covered Call ETF, the Global X Russell 2000 Covered Call ETF, the Global X
S&P 500®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Covered
Call & Growth ETF, the Global X S&P 500®
Tail
Risk ETF, the Global X S&P 500®
Risk Managed Income ETF, the Global X S&P 500®
Collar 95-110 ETF, the Global X NASDAQ 100®
Tail Risk ETF, the Global X NASDAQ 100®
Risk Managed Income ETF, the Global X NASDAQ 100®
Collar 95-110 ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, an Authorized Participant must submit an irrevocable
purchase order no later than the earlier of (i) 2:00 p.m., Eastern Time or (ii)
two hours before the closing time of the trading session on the relevant Fund's
Exchange, on any Business Day in order to receive that Business Day's NAV. For
all Funds other than the Global X S&P 500®
Covered Call ETF, the Global X NASDAQ 100®
Covered Call ETF, the Global X Russell 2000 Covered Call ETF, the Global X
S&P 500®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Covered
Call & Growth ETF, the Global X S&P 500®
Tail
Risk ETF, the Global X S&P 500®
Risk Managed Income ETF, the Global X S&P 500®
Collar 95-110 ETF, the Global X NASDAQ 100®
Tail Risk ETF, the Global X NASDAQ 100®
Risk Managed Income ETF, the Global X NASDAQ 100®
Collar 95-110 ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, an Authorized Participant must submit an irrevocable
purchase order no later than the earlier of (i) 4:00 p.m., Eastern Time or (ii)
the closing time of the trading session on the relevant Fund's Exchange, on any
Business Day in order to receive that Business Day's NAV.
Acceptance
of Purchase Order.
Subject to the conditions that (i) an irrevocable purchase order has been
submitted by the Authorized Participant (either on its own or another investor's
behalf) and (ii) arrangements satisfactory to the Trust are in place for payment
of the Cash Component and any other cash amounts which may be due, the Trust
will accept the order, subject to its right (and the right of the Distributor
and the Adviser) to reject any order until acceptance.
Once
the Trust has accepted an order, upon next determination of the NAV of the
shares, the Trust will confirm the issuance of a Creation Unit of the Fund,
against receipt of payment, at such NAV. The Distributor will then transmit a
confirmation of acceptance to the Authorized Participant that placed the
order.
The
SEC has expressed the view that a suspension of creations that impairs the
arbitrage mechanism applicable to the trading of ETF shares in the secondary
market is inconsistent with Rule 6c-11 under the 1940 Act. The SEC’s position
does not prohibit the suspension or rejection of creations in all instances. The
Trust reserves the right, to the extent consistent with the provisions of Rule
6c-11 under the 1940 Act and the SEC’s position, to reject or revoke acceptance
of a purchase order transmitted to it by the Distributor in respect of any Fund
including instances in which: (a) the order is not in proper form; (b) the
investor(s), upon obtaining the shares ordered, would own 80% or more of the
currently outstanding shares of any Fund; (c) the Deposit Securities delivered
do not conform to the identify and number of shares disseminated through the
facilities of the NSCC for that date by the Adviser, as described above; (d) the
acceptance of the Portfolio Deposit would, in the opinion of counsel, be
unlawful; or (e) in the event that circumstances outside the control of the
Trust, the Distributor and the Adviser make it for all practical purposes
impossible to process purchase orders. Examples of such circumstances include
acts of God; public service or utility problems resulting in telephone, telecopy
or computer failures; fires, floods or extreme weather conditions; market
conditions or activities causing trading halts; systems failures involving
computer or other informational systems affecting the Trust, the Distributor,
DTC, NSCC, the Adviser, the Custodian, a sub-custodian or any other participant
in the creation process; and similar extraordinary events. The Trust shall
notify a prospective purchaser and/or the Authorized Participant acting on
behalf of such person of its rejection of the order of such person. The Trust,
the Custodian, any sub-custodian and the Distributor are under no duty, however,
to give notification of any defects or irregularities in the delivery of
Portfolio Deposits nor shall either of them incur any liability for the failure
to give any such notification.
Issuance
of a Creation Unit.
Except as provided herein, a Creation Unit of shares of a Fund will not be
issued until the transfer of good title to the Trust of the Deposit Securities
and the payment of the Cash Component have been completed. When the applicable
local sub-custodian(s) have confirmed to the Custodian that the required
securities included in the Portfolio Deposit (or the cash value thereof) have
been delivered to the account of the applicable local sub-custodian or
sub-custodians, the Distributor and the Adviser shall be notified of such
delivery, and the Trust will issue and cause the delivery of the Creation Unit.
Creation Units typically are issued on a "T+2 basis" (that is, two Business Days
after trade date). However, as discussed in this SAI, the Fund reserves the
right to settle redemption transactions and deliver redemption proceeds related
to “foreign investments” (i.e., any security, asset or other position of the
Fund issued by a foreign issuer that is traded on a trading market outside of
the United States) in excess of seven days with settlement as soon as
practicable, but in no event later than 15 days after the tender of shares for
redemption in order to accommodate local market holidays, or series of
consecutive holidays, or the extended delivery cycles for transferring foreign
investments.
To
the extent contemplated by an Authorized Participant's agreement with the
Distributor, the Trust will issue Creation Units to such Authorized Participant
notwithstanding the fact that the corresponding Portfolio Deposits have not been
received in part or in whole, in reliance on the undertaking of the Authorized
Participant to deliver the missing Deposit Securities as soon as possible, which
undertaking shall be secured by such Authorized Participant's delivery and
maintenance of collateral having a value equal to 110%, which the Adviser may
change from time to time, of the value of the missing Deposit Securities in
accordance with the Trust's then-effective procedures. Such collateral must be
delivered no later than 2:00 p.m., Eastern Time, on the contractual settlement
date. The only collateral that is acceptable to the Trust is cash in U.S.
Dollars or an irrevocable letter of credit in form, and drawn on a bank, that is
satisfactory to the Trust. The cash collateral posted by the Authorized
Participant may be invested at the risk of the Authorized Participant, and
income, if any, on invested cash collateral will be paid to that Authorized
Participant. Information concerning the Trust's current procedures for
collateralization of missing Deposit Securities is available from the
Distributor. The Authorized Participant Agreement will permit the Trust to buy
the missing Deposit Securities at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Trust of
purchasing such securities and the cash collateral or the amount that may be
drawn under any letter of credit.
In
certain cases, Authorized Participants will create and redeem Creation Units on
the same trade date. In these instances, the Trust reserves the right to settle
these transactions on a net basis. All questions as to the number of shares of
each security in the Deposit Securities and the validity, form, eligibility and
acceptance for deposit of any securities to be delivered shall be determined by
the Trust, and the Trust's determination shall be final and
binding.
Cash
Purchase Method.
When cash purchases of Creation Units are available or specified for a Fund,
they will be effected in essentially the same manner as in-kind purchases
thereof. In addition, the Trust may in its discretion make Creation Units of any
of the other funds available for purchase and redemption in U.S. dollars. In the
case of a cash purchase, the investor must pay the cash equivalent of the
Deposit Securities it would otherwise be required to provide through an in-kind
purchase, plus the same Cash Component required to be paid by an in-kind
purchaser. In addition, to offset the Trust's brokerage and other transaction
costs associated with using the cash to purchase the requisite Deposit
Securities, the investor will be required to pay
a
fixed purchase transaction fee, plus an additional variable charge for cash
purchases, which is expressed as a percentage of the value of the Deposit
Securities. The transaction fees for in-kind and cash purchases of Creation
Units are described below.
Purchase
Transaction Fee.
A standard creation transaction fee is imposed to offset the transfer,
processing and other transaction costs associated with the issuance of Creation
Units. The standard creation transaction fee is charged on each Creation Unit
created by an Authorized Participant on the day of the transaction. The standard
creation transaction fee is generally fixed at the amount shown in the table
regardless of the number of Creation Units being purchased, but may be reduced
by each Fund if transfer and processing expenses associated with the creation
are anticipated to be lower than the stated fee. In the case of cash creations
or where a Fund permits or requires an Authorized Participant to substitute cash
in lieu of depositing a portion of the Deposit Securities, the Authorized
Participant may be assessed an additional variable charge to compensate the
Funds for the costs associated with purchasing the applicable securities. As a
result, in order to seek to replicate the in-kind creation order process, the
Funds expect to purchase, in the secondary market or to otherwise gain exposure
to, the portfolio securities that could have been delivered as a result of an
in-kind creation order pursuant to local law or market convention, or for other
reasons ("Market Purchases"). In such cases where a Fund makes Market Purchases,
the Authorized Participant will reimburse the Fund for, among other things, any
difference between the market value at the which the securities and/or financial
instruments were purchased by the Fund and the cash in lieu amount (which
amount, at the Adviser's discretion, may be capped), applicable registration
fees, brokerage commissions and certain taxes. The Adviser may adjust the
transaction fee to the extent the composition of the creation securities changes
or cash in lieu is added to the Cash Component to protect ongoing shareholders.
Authorized Participants are also responsible for the costs of transferring the
Deposit Securities to the Funds. Investors who use the services of a broker or
other financial intermediary to acquire Fund shares may be charged a fee for
such services. The following table sets forth each Fund's standard creation
transaction fees. The fees may be waived for a Fund until it reaches a certain
asset size.
|
|
|
|
|
|
Fund |
Standard
Fee for In-Kind and Cash Purchases |
Global
X MSCI Colombia ETF |
$1,500 |
Global
X MSCI China Consumer Discretionary ETF |
$1,600 |
Global
X MSCI China Industrials ETF |
$2,100 |
Global
X MSCI China Communication Services ETF |
$400 |
Global
X MSCI China Financials ETF |
$2,100 |
Global
X MSCI China Energy ETF |
$800 |
Global
X MSCI China Materials ETF |
$2,000 |
Global
X MSCI Norway ETF |
$900 |
Global
X FTSE Southeast Asia ETF |
$2,100 |
Global
X MSCI Argentina ETF |
$500 |
Global
X MSCI Greece ETF |
$500 |
Global
X MSCI Nigeria ETF |
$1,300 |
Global
X MSCI Next Emerging & Frontier ETF |
$9,500 |
Global
X MSCI Portugal ETF |
$700 |
Global
X DAX Germany ETF |
$500 |
Global
X MSCI Pakistan ETF |
$1,500 |
Global
X MSCI China Consumer Staples ETF |
$1,300 |
Global
X MSCI China Health Care ETF |
$1,400 |
Global
X MSCI China Information Technology ETF |
$1,900 |
Global
X MSCI China Real Estate ETF |
$600 |
Global
X MSCI China Utilities ETF |
$600 |
Global
X MSCI Vietnam ETF |
$1,000 |
Global
X Copper Miners ETF |
$600 |
Global
X Silver Miners ETF |
$500 |
Global
X Gold Explorers ETF |
$1,000 |
Global
X Uranium ETF |
$500 |
Global
X Lithium & Battery Tech ETF |
$1,000 |
Global
X SuperDividend®
ETF |
$2,000 |
|
|
|
|
|
|
Fund |
Standard
Fee for In-Kind and Cash Purchases |
Global
X Social Media ETF |
$300 |
Global
X Guru®
Index ETF |
$250 |
Global
X SuperIncome™ Preferred ETF |
$300 |
Global
X SuperDividend®
U.S. ETF |
$150 |
Global
X S&P 500®
Covered Call ETF |
$2,000 |
Global
X NASDAQ 100®
Covered Call ETF |
$500 |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
$1,600 |
Global
X SuperDividend®
REIT ETF |
$400 |
Global
X Renewable Energy Producers ETF |
$1,100 |
Global
X S&P 500®
Catholic Values ETF |
$1,300 |
Global
X MSCI SuperDividend®
EAFE ETF |
$1,000 |
Global
X E-commerce ETF |
$250 |
Global
X Russell 2000 Covered Call ETF |
$250 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
$8,000 |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
$500 |
Global
X S&P 500®
Covered Call & Growth ETF |
$1,500 |
Global
X Emerging Markets Internet & E-commerce ETF |
$800 |
Global
X S&P 500®
Tail
Risk ETF |
$2,000 |
Global
X S&P 500®
Risk
Managed Income ETF |
$2,000 |
Global
X S&P 500®
Collar 95-110 ETF |
$2,000 |
Global
X NASDAQ 100®
Tail Risk ETF |
$500 |
Global
X NASDAQ 100®
Risk
Managed Income ETF |
$500 |
Global
X NASDAQ 100®
Collar 95-110 ETF |
$500 |
Global
X Disruptive Materials ETF |
$800 |
Global
X Dow 30®
Covered Call ETF |
$250 |
Global
X Russell 2000 Covered Call & Growth ETF |
$250 |
Global
X Financials Covered Call & Growth ETF |
$250 |
Global
X Health Care Covered Call & Growth ETF |
$250 |
Global
X Information Technology Covered Call & Growth ETF |
$250 |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF |
$300 |
REDEMPTION
OF CREATION UNITS
Shares
of a Fund may be redeemed only in Creation Units at its NAV next determined
after receipt of a redemption request in proper form by the Distributor. The
Trust will not redeem shares in amounts less than Creation Units. Beneficial
owners also may sell Shares in the secondary market, but must accumulate enough
Shares to constitute a Creation Unit in order to have such Shares redeemed by
the Trust. There can be no assurance, however, that there will be sufficient
liquidity in the public trading market at any time to permit assembly of a
Creation Unit. Investors should expect to incur brokerage and other costs in
connection with assembling a sufficient number of Shares to constitute a
redeemable Creation Unit.
With
respect to each Fund the Adviser makes available through the NSCC prior to the
opening of business on the Exchange (currently 9:30 a.m., Eastern Time) on each
Business Day, the identity and number of shares that will be applicable (subject
to possible amendment or correction) to redemption requests received in proper
form (as defined below) on that day ("Portfolio Securities"). Portfolio
Securities received on redemption may not be identical to Deposit Securities
that are applicable to creation of Creation Units. Unless cash redemptions are
available or specified for a Fund, the redemption proceeds for a Creation Unit
generally consist of Portfolio Securities on the Business Day of the request for
redemption, plus cash in an amount equal to the difference between the NAV of
the shares being redeemed, as next determined after a receipt of a request in
proper form, and the value of the Portfolio Securities, less the redemption
transaction fee described below. The redemption transaction fee described below
is deducted from such redemption proceeds.
A
fixed redemption transaction fee payable to the custodian is imposed on each
redemption transaction. Redemptions of Creation Units for cash are required to
pay an additional variable charge to compensate the relevant Fund for brokerage
and market impact expenses relating to disposing of portfolio securities. The
redemption transaction fee for redemptions in-kind and for cash and the
additional variable charge for cash redemptions (when cash redemptions are
available or specified) are listed in the table below. Investors will also bear
the costs of transferring the Portfolio Deposit from the Trust to their account
or on their order. Investors who use the services of a broker or other such
intermediary may be charged a fee for such services.
|
|
|
|
|
|
|
|
|
Fund |
Standard
Fee for In-Kind and Cash Redemptions |
Maximum
Additional Variable Charge for Cash Redemptions* |
Global
X MSCI Colombia ETF |
$1,500 |
2% |
Global
X MSCI China Consumer Discretionary ETF |
$1,600 |
2% |
Global
X MSCI China Industrials ETF |
$2,100 |
2% |
Global
X MSCI China Communication Services ETF |
$400 |
2% |
Global
X MSCI China Financials ETF |
$2,100 |
2% |
Global
X MSCI China Energy ETF |
$800 |
2% |
Global
X MSCI China Materials ETF |
$2,000 |
2% |
Global
X MSCI Norway ETF |
$900 |
2% |
Global
X FTSE Southeast Asia ETF |
$2,100 |
2% |
Global
X MSCI Argentina ETF |
$500 |
2% |
Global
X MSCI Greece ETF |
$500 |
2% |
Global
X MSCI Nigeria ETF |
$1,300 |
2% |
Global
X MSCI Next Emerging & Frontier ETF |
$9,500 |
2% |
Global
X MSCI Portugal ETF |
$700 |
2% |
Global
X DAX Germany ETF |
$500 |
2% |
Global
X MSCI Pakistan ETF |
$1,500 |
2% |
Global
X MSCI China Consumer Staples ETF |
$1,300 |
2% |
Global
X MSCI China Health Care ETF |
$1,400 |
2% |
Global
X MSCI China Information Technology ETF |
$1,900 |
2% |
Global
X MSCI China Real Estate ETF |
$600 |
2% |
Global
X MSCI China Utilities ETF |
$600 |
2% |
Global
X MSCI Vietnam ETF |
$1,000 |
2% |
Global
X Copper Miners ETF |
$600 |
2% |
Global
X Silver Miners ETF |
$500 |
2% |
Global
X Gold Explorers ETF |
$1,000 |
2% |
Global
X Uranium ETF |
$500 |
2% |
Global
X Lithium & Battery Tech ETF |
$1,000 |
2% |
Global
X SuperDividend®
ETF |
$2,000 |
2% |
Global
X Social Media ETF |
$300 |
2% |
Global
X Guru®
Index ETF |
$250 |
2% |
Global
X SuperIncome™ Preferred ETF |
$300 |
2% |
Global
X SuperDividend®
U.S. ETF |
$150 |
2% |
Global
X S&P 500®
Covered Call ETF |
$2,000 |
2% |
Global
X NASDAQ 100®
Covered Call ETF |
$500 |
2% |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
$1,600 |
2% |
Global
X SuperDividend®
REIT ETF |
$400 |
2% |
Global
X Renewable Energy Producers ETF |
$1,100 |
2% |
Global
X S&P 500®
Catholic Values ETF |
$1,300 |
2% |
Global
X MSCI SuperDividend®
EAFE ETF |
$1,000 |
2% |
Global
X E-commerce ETF |
$250 |
2% |
|
|
|
|
|
|
|
|
|
Fund |
Standard
Fee for In-Kind and Cash Redemptions |
Maximum
Additional Variable Charge for Cash Redemptions* |
Global
X Russell 2000 Covered Call ETF |
$1,500 |
2% |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
$8,000 |
2% |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
$500 |
2% |
Global
X S&P 500®
Covered Call & Growth ETF |
$1,500 |
2% |
Global
X Emerging Markets Internet & E-commerce ETF |
$800 |
2% |
Global
X S&P 500®
Tail
Risk ETF |
$2,000 |
2% |
Global
X S&P 500®
Risk
Managed Income ETF |
$2,000 |
2% |
Global
X S&P 500®
Collar 95-110 ETF |
$2,000 |
2% |
Global
X NASDAQ 100®
Tail Risk ETF |
$500 |
2% |
Global
X NASDAQ 100®
Risk
Managed Income ETF |
$500 |
2% |
Global
X NASDAQ 100®
Collar 95-110 ETF |
$500 |
2% |
Global
X Disruptive Materials ETF |
$800 |
2% |
Global
X Dow 30®
Covered Call ETF |
$250 |
2% |
Global
X Russell 2000 Covered Call & Growth ETF |
$250 |
2% |
Global
X Financials Covered Call & Growth ETF |
$250 |
2% |
Global
X Health Care Covered Call & Growth ETF |
$250 |
2% |
Global
X Information Technology Covered Call & Growth ETF |
$250 |
2% |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF |
$300 |
2% |
* As
a percentage of the net asset value per Creation Unit, inclusive of the standard
redemption transaction fee.
Redemption
requests in respect of Creation Units must be submitted to the Distributor by or
through an Authorized Participant. Investors other than Authorized Participants
are responsible for making arrangements for a redemption request through an
Authorized Participant. For the Global X S&P 500®
Covered Call ETF, the Global X NASDAQ 100®
Covered Call ETF, the Global X Russell 2000 Covered Call ETF, the Global X
S&P 500®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Covered
Call & Growth ETF, the Global X S&P 500®
Tail
Risk ETF, the Global X S&P 500®
Risk Managed Income ETF, the Global X S&P 500®
Collar 95-110 ETF, the Global X NASDAQ 100®
Tail Risk ETF, the Global X NASDAQ 100®
Risk Managed Income ETF, the Global X NASDAQ 100®
Collar 95-110 ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, an Authorized Participant must submit an irrevocable
redemption request no later than the earlier of (i) 2:00 p.m., Eastern Time or
(ii) two hours prior to the closing time of the trading session on the relevant
Fund's Exchange, on any Business Day in order to receive that Business Day's
NAV. For all Funds other than the Global X S&P 500®
Covered Call ETF, the Global X NASDAQ 100®
Covered Call ETF, the Global X Russell 2000 Covered Call ETF, the Global X
S&P 500®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Covered
Call & Growth ETF, the Global X S&P 500®
Tail
Risk ETF, the Global X S&P 500®
Risk Managed Income ETF, the Global X S&P 500®
Collar 95-110 ETF, the Global X NASDAQ 100®
Tail Risk ETF, the Global X NASDAQ 100®
Risk Managed Income ETF, the Global X NASDAQ 100®
Collar 95-110 ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, an Authorized Participant must submit an irrevocable
redemption request no later than the earlier of (i) 4:00 p.m., Eastern Time or
(ii) the closing time of the trading session on the relevant Fund's Exchange, on
any Business Day in order to receive that Business Day's NAV.
The
Distributor will provide a list of current Authorized Participants upon request.
The Authorized Participant must transmit the request for redemption, in the form
required by the Trust, to the Distributor in accordance with procedures set
forth in the Authorized Participant Agreement. Investors should be aware that
their particular broker may not have executed an Authorized Participant
Agreement, and that, therefore, requests to redeem Creation Units may have to be
placed by the investor's broker through an Authorized Participant who has
executed an Authorized Participant Agreement. At any given time there will be
only a limited number of broker-dealers that have executed an Authorized
Participant Agreement. Investors making a redemption request should be aware
that such request must be in the form specified by such Authorized Participant.
Investors making a request to redeem Creation Units should allow sufficient time
to permit proper submission of the request by an Authorized Participant and
transfer of the shares to the Trust's Transfer Agent; such investors should
allow for the additional time that may
be
required to effect redemptions through their banks, brokers or other financial
intermediaries if such intermediaries are not Authorized
Participants.
Orders
to redeem Creation Unit Aggregations of Funds based on foreign indexes must be
delivered through an Authorized Participant that has executed an Authorized
Participant Agreement. Investors other than Authorized Participants are
responsible for making arrangements for a redemption request to be made through
an Authorized Participant. An order to redeem Creation Unit Aggregations of a
Fund is deemed received by the Trust on the Business Day if: (i) such order is
received by the Fund's distributor not later than the closing time of the
applicable Exchange on the applicable Business Day; (ii) such order is
accompanied or followed by the requisite number of Shares of the Fund specified
in such order, which delivery must be made through DTC to the Fund's custodian
no later than 10:00 a.m., Eastern Time, on the next Business Day following the
day the order was transmitted; and (iii) all other procedures set forth in the
Authorized Participant Agreement are properly followed. Deliveries of Fund
securities to redeeming investors generally will be made within two Business
Days. Due to the schedule of holidays in certain countries, however, the
delivery of in-kind redemption proceeds for a Fund may take longer than two
Business Days after the day on which the redemption request is received in
proper form. In such cases, settlement will occur as soon as practicable, but in
any event no longer than fifteen days after the tender of Shares is received in
proper form.
A
redemption request is considered to be in "proper form" if (i) an Authorized
Participant has transferred or caused to be transferred to the Trust's Transfer
Agent the Creation Unit of Shares being redeemed through the book-entry system
of DTC so as to be effective by the relevant Exchange closing time on any
Business Day and (ii) a request in form satisfactory to the Trust is received by
the Distributor from the Authorized Participant on behalf of itself or another
redeeming investor within the time periods specified above. If the Transfer
Agent does not receive the investor's shares through DTC's facilities by 10:00
a.m., Eastern Time, on the Business Day next following the day that the
redemption request is received, the redemption request shall be rejected.
Investors should be aware that the deadline for such transfers of Shares through
the DTC system may be significantly earlier than the close of business on the
relevant Exchange. Those making redemption requests should ascertain the
deadline applicable to transfers of shares through the DTC system by contacting
the operations department of the broker or depositary institution effecting the
transfer of the shares.
Upon
receiving a redemption request, the Distributor shall notify the Trust and the
Trust's Transfer Agent of such redemption request. The tender of an investor's
Shares for redemption and the distribution of the cash redemption payment in
respect of Creation Units redeemed will be effected through DTC and the relevant
Authorized Participant to the beneficial owner thereof as recorded on the
book-entry system of DTC or the DTC Participant through which such investor
holds, as the case may be, or by such other means specified by the Authorized
Participant submitting the redemption request.
In
connection with taking delivery of shares of Portfolio Securities upon
redemption of shares of a Fund, a redeeming Beneficial Owner, or Authorized
Participant acting on behalf of such Beneficial Owner, must maintain appropriate
security arrangements with a qualified broker-dealer, bank or other custody
providers in each jurisdiction in which any of the Portfolio Securities are
customarily traded, to which account such Portfolio Securities will be
delivered.
Deliveries
of redemption proceeds by a Fund generally will be made within two Business Days
(that is "T+2"). However, the Fund reserves the right, including under stressed
market conditions, to take up to seven days after the receipt of a redemption
request to pay an Authorized Participant, all as permitted by the 1940 Act. The
Fund further reserves the right to settle redemption transactions and deliver
redemption proceeds related to foreign investments in excess of seven days with
settlement as soon as practicable, but in no event later than 15 days after the
tender of shares for redemption in order to accommodate local market holidays,
or series of consecutive holidays, or the extended delivery cycles for
transferring foreign investments. The ability of the Trust to effect in-kind
creations and redemptions within two business days of receipt of an order in
good form is subject, among other things, to the condition that, within the time
period from the date of the order to the date of delivery of the securities,
there are no days that are holidays in the applicable foreign market. For every
occurrence of one or more intervening holidays in the applicable foreign market
that are not holidays observed in the U.S. equity market, the redemption
settlement cycle will be extended by the number of such intervening holidays,
subject to a maximum of 15 days as permitted by rule. In addition to holidays,
other unforeseeable closings in a foreign market due to emergencies may also
prevent the Trust from delivering securities within the normal settlement
period. The securities delivery cycles currently practicable for transferring
portfolio securities to redeeming investors, coupled with foreign market holiday
schedules, will require a delivery process longer than seven calendar days in
certain circumstances.
If
neither the redeeming Beneficial Owner nor the Authorized Participant acting on
behalf of such redeeming Beneficial Owner has appropriate arrangements to take
delivery of the portfolio securities in the applicable jurisdiction and it is
not possible to make other such arrangements, or if it is not possible to effect
deliveries of the Portfolio Securities in such jurisdiction, the Trust may in
its discretion redeem such shares in cash (i.e., U.S. dollars or non U.S.
currency), and the redeeming Beneficial Owner will be required to receive its
redemption proceeds in cash. In addition, an investor may request a redemption
in cash
that
the Trust may, in its sole discretion, permit. In either case, the investor will
receive a cash payment equal to the net asset value of its Shares based on the
NAV of shares of the relevant Fund next determined after the redemption request
is received in proper form (minus a redemption transaction fee and additional
variable charge for cash redemptions specified above, to offset the Trust's
brokerage and other transaction costs associated with the disposition of
Portfolio Securities). The Trust may also, in its sole discretion, upon request
of a shareholder, provide such redeemer a portfolio of securities that differ
from the exact composition of the Portfolio Securities but does not differ in
NAV. Redemptions of shares for Deposit Securities will be subject to compliance
with applicable U.S. federal and state securities laws and each Fund (whether or
not it otherwise permits cash redemptions) reserves the right to redeem Creation
Units for cash to the extent that the Fund could not lawfully deliver specific
Deposit Securities upon redemptions or could not do so without first registering
the Deposit Securities under such laws.
In
the event that cash redemptions are permitted or required by the Trust, proceeds
will be paid to the Authorized Participant redeeming shares on behalf of the
redeeming investor as soon as practicable after the date of redemption (within
seven calendar days thereafter, except for the instances involving foreign
investments in which payment may be delayed in order to accommodate local market
holidays, or series of consecutive holidays, or the extended delivery cycles for
transferring foreign investments. In such instances, the Fund reserves the right
to settle redemption transactions and deliver redemption proceeds as soon as
practicable, but in no event later than 15 days after the tender of shares for
redemption.
To
the extent contemplated by an Authorized Participant's agreement with the
Distributor, in the event the Authorized Participant that has submitted a
redemption request in proper form is unable to transfer all or part of the
Creation Units to be redeemed to the Trust, at or prior to 10:00 a.m., Eastern
Time, on the Business Day after the date of submission of such redemption
request, the Distributor will nonetheless accept the redemption request in
reliance on the undertaking by the Authorized Participant to deliver the missing
shares as soon as possible. Such undertaking shall be secured by the Authorized
Participant's delivery and maintenance of collateral consisting of cash having a
value equal to 110%, which the Adviser may change from time to time, of the
value of the missing shares in accordance with the Trust's then-effective
procedures. The only collateral that is acceptable to the Trust is cash in U.S.
dollars or an irrevocable letter of credit in form, and drawn on a bank, that is
satisfactory to the Trust. The Trust's current procedures for collateralization
of missing shares require, among other things, that any cash collateral shall be
held by the Trust's custodian, and that the fees of the custodian and any
sub-custodians in respect of the delivery, maintenance and redelivery of the
cash collateral shall be payable by the Authorized Participant. The cash
collateral posted by the Authorized Participant may be invested at the risk of
the Authorized Participant, and income, if any, on invested cash collateral will
be paid to that Authorized Participant. The Authorized Participant Agreement
permits the Trust to purchase the missing shares or acquire the portfolio
securities and the Cash Component underlying such shares at any time and
subjects the Authorized Participant to liability for any shortfall between the
cost to the Trust of purchasing such shares, Portfolio Securities or Cash
Component and the cash collateral or the amount that may be drawn under any
letter of credit.
Because
the portfolio securities of a Fund may trade on the relevant Exchange(s) on days
that the Exchange is closed or are otherwise not Business Days for such Fund,
shareholders may not be able to redeem their shares of such Fund, or to purchase
or sell shares of such Fund on the Exchange, on days when the NAV of such Fund
could be significantly affected by events in the relevant foreign
markets.
The
right of redemption may be suspended or the date of payment postponed with
respect to any Fund (1) for any period during which the Exchange is closed
(other than customary weekend and holiday closings); (2) for any period during
which trading on the Exchange is suspended or restricted; (3) for any period
during which an emergency exists as a result of which disposal of the shares of
the Fund's portfolio securities or determination of its net asset value is not
reasonably practicable; or (4) in such other circumstance as is permitted by the
SEC.
TAXES
The
following summarizes certain additional tax considerations generally affecting
the Funds and their shareholders that are not described in the Prospectus. No
attempt is made to present a detailed explanation of the tax treatment of the
Funds or their shareholders, and the discussions here and in the Prospectus are
not intended as a substitute for careful tax planning. Potential investors
should consult their tax advisers with specific reference to their own tax
situations.
The
discussions of the federal tax consequences in the Prospectus and this SAI are
based on the Code and the regulations, rulings and decisions under it, as in
effect on the date of this SAI. Future legislative or administrative changes or
court decisions may significantly change the statements included herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein. This discussion does not address all aspects
of U.S. federal income taxation that may be relevant to shareholders in light of
their particular circumstances or to shareholders subject to special treatment
under U.S. federal income tax laws (e.g., certain financial institutions,
insurance companies, dealers in stock or securities, tax-exempt
organizations,
persons who have entered into hedging transactions with respect to Shares of a
Fund, persons who borrow in order to acquire Shares, and certain foreign
taxpayers). Furthermore, this discussion does not reflect possible application
of the alternative minimum tax ("AMT"). Unless otherwise noted, this discussion
assumes Shares of each Fund are held by U.S. shareholders and that such Shares
are held as capital assets. No representation is made as to the tax consequences
of the operation of any Fund.
U.S.
SHAREHOLDER
A
U.S. shareholder is a beneficial owner of Shares of a Fund that is for U.S.
federal income tax purposes:
•a
citizen or individual resident of the United States (including certain former
citizens and former long-term residents);
•a
domestic corporation or other entity treated as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the United
States or any state thereof or the District of Columbia;
•an
estate, the income of which is subject to U.S. federal income taxation
regardless of its source; or
•a
trust if a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the
authority to control all of its substantial decisions or the trust has made a
valid election in effect under applicable Treasury Regulations to be treated as
a U.S. person.
A
"Non-U.S. shareholder" is a beneficial owner of Shares of a Fund that is an
individual, corporation, trust or estate and is not a U.S. shareholder. If a
partnership (including any entity treated as a partnership for U.S. federal
income tax purposes) holds Shares of a Fund, the tax treatment of a partner in
the partnership generally depends upon the status of the partner and the
activities of the partnership. A prospective shareholder who is a partner of a
partnership holding Shares should consult its tax advisors with respect to the
purchase, ownership and disposition of its Shares.
FUND
TAXATION
Each
Fund is treated as a separate corporation for federal income tax purposes.
Losses in one fund do not offset gains in another fund and the requirements
(other than certain organizational requirements) for qualifying for regulated
investment company status as described below are determined at the Fund level
rather than the Trust level.
Each
Fund has elected and intends to qualify as a regulated investment company
("RIC") under Subchapter M of Subtitle A, Chapter 1, of the Code. As a RIC, each
Fund generally will be exempt from federal income tax on its net investment
income and realized capital gains that it distributes to shareholders, provided
that it distributes an amount equal to at least the sum of 90% of its tax-exempt
income and 90% of its investment company taxable income (net investment income
and the excess of net short-term capital gain over net long-term capital loss),
if any, for the year (the "Distribution Requirement") and satisfies certain
other requirements of the Code that are described below. Each Fund intends to
make sufficient distributions or deemed distributions each year to avoid
liability for corporate income tax. If a Fund were to fail to make sufficient
distributions, it could be liable for corporate income tax and for excise tax in
respect of the shortfall or, if the shortfall is large enough, such Fund could
be disqualified as a RIC.
In
addition to satisfaction of the Distribution Requirement, a Fund must derive
with respect to a taxable year at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans and gains from the
sale or other disposition of stock or securities or foreign currencies, or from
other income derived with respect to its business of investing in such stock,
securities, or currencies or net income derived from an interest in a qualified
publicly traded partnership (the "Income Requirement"). A "qualified publicly
traded partnership" ("QPTP") is generally defined as a publicly traded
partnership under Section 7704 of the Code, which is generally a partnership the
interests in which are "traded on an established securities market" or are
"readily tradable on a secondary market (or the substantial equivalent
thereof)". However, for these purposes, a QPTP does not include a publicly
traded partnership if 90% or more of its income is as described
above.
Also,
at the close of each quarter of its taxable year, at least 50% of the value of a
Fund's assets must consist of cash and cash items, U.S. government securities,
securities of other regulated investment companies and securities of other
issuers (as to which the Fund does not hold more than 5% of the value of its
total assets in securities of such issuer and as to which the Fund does not hold
more than 10% of the outstanding voting securities (including securities of a
QPTP of such issuer), and no more than 25% of the value of the Fund's total
assets may be invested in the securities of (i) any one issuer (other than U.S.
government securities and securities of other regulated investment companies),
(ii) two or more issuers which such Fund
controls
and which are engaged in the same or similar trades or businesses or (iii) one
or more QPTPs (the "Asset Diversification Requirement"). Each Fund intends to
comply with these requirements.
If
a RIC fails this asset-diversification test, such RIC, in addition to other cure
provisions previously permitted, has a 6-month period to correct any failure
without incurring a penalty if such failure is "de minimis," meaning that the
failure does not exceed the lesser of 1% of the RIC's assets, or $10
million.
If
for any taxable year a Fund does not qualify as a RIC, all of its taxable income
will be subject to tax at the corporate income tax rate without any deduction
for distributions to shareholders. In such event, the shareholders would
recognize dividend income on distributions to the extent of such Fund's current
and accumulated earnings and profits. Failure to qualify as a regulated
investment company would thus have a negative impact on the Fund's income and
performance. Subject to savings provisions for certain failures to satisfy the
Income Requirement or Asset Diversification Requirement, which, in general, are
limited to those due to reasonable cause and not willful neglect, it is possible
that the Fund will not qualify as a regulated investment company in any given
tax year. Even if such savings provisions apply, the Fund may be subject to a
monetary sanction of $50,000 or more.
The
Code imposes a nondeductible 4% excise tax on regulated investment companies
that fail to currently distribute an amount equal to specified percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). Each Fund intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and capital gain net
income each calendar year to avoid liability for this excise tax.
Each
Fund intends to distribute annually to its shareholders all or substantially all
of its investment company taxable income, and any net realized long-term capital
gains in excess of net realized short-term capital losses (including any capital
loss carryovers). However, if a Fund retains for investment an amount equal to
all or a portion of its net long-term capital gains in excess of its net
short-term capital losses (including any capital loss carryovers), it will be
subject to a corporate tax on the amount retained. In that event, a Fund may
designate such retained amounts as undistributed capital gains in a notice to
its shareholders who (a) will be required to include in income for U.S. federal
income tax purposes, as long-term capital gains, their proportionate shares of
the undistributed amount, (b) will be entitled to credit their proportionate
shares of the tax paid by the Fund on the undistributed amount against their
U.S. federal income tax liabilities, if any, and to claim refunds to the extent
their credits exceed their liabilities, if any, and (c) will be entitled to
increase their tax basis, for U.S. federal income tax purposes, in their Shares
by an amount equal to the difference between the amount of undistributed capital
gains included in the shareholder's income and the tax deemed paid by the
shareholder. Organizations or persons not subject to U.S. federal income tax on
such capital gains will be entitled to a refund of their pro rata share of such
taxes paid by such Fund upon filing appropriate returns or claims for refund
with the Internal Revenue Service ("IRS").
Investors
considering buying shares just prior to a dividend or capital gain distribution
should be aware that, although the price of Shares just purchased at that time
may reflect the amount of the forthcoming distribution, such dividend or
distribution may nevertheless be taxable to them. If a Fund is the holder of
record of any stock on the record date for any dividends payable with respect to
such stock, such dividends will be included in such Fund's gross income not as
of the date received but as of the later of (a) the date such stock became
ex-dividend with respect to such dividends (that is, the date on which a buyer
of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date such Fund acquired such stock. Accordingly, to
satisfy its income distribution requirements, a Fund may be required to pay
dividends based on anticipated earnings, and shareholders may receive dividends
in an earlier year than would otherwise be the case.
For
investors that hold their Fund Shares in a taxable account, a high portfolio
turnover rate may result in higher taxes. This is because a Fund with a high
turnover rate is likely to accelerate the recognition of capital gains and more
of such gains are likely to be taxable as short-term rather than long-term
capital gains in contrast to a comparable fund with a low turnover rate. Any
such higher taxes would reduce the Fund’s after-tax performance.
A
RIC is permitted to carry forward net capital losses to offset capital gains
realized in later years, and the losses carried forward retain their original
character as either long-term or short-term losses.
SECTIONS
351 AND 362
The
Trust on behalf of each Fund has the right to reject an order for a purchase of
Shares of a Fund if the purchaser (or group of purchasers) would, upon obtaining
the Shares so ordered, own 80% or more of the outstanding Shares of the Fund and
if, pursuant to Sections 351 and 362 of the Code, the Fund would have a basis in
the securities different from the market value of such securities on the date of
deposit. If a Fund's basis in such securities on the date of deposit was less
than market value on such date, such Fund, upon disposition of the securities,
would recognize more taxable gain or less taxable loss than if its basis
in
the securities had been equal to market value. It is not anticipated that the
Trust will exercise the right of rejection except in a case where the Trust
determines that accepting the order could result in material adverse tax
consequences to a Fund or its shareholders. The Trust also has the right to
require information necessary to determine deemed and beneficial share ownership
for purposes of the 80% determination.
FOREIGN
TAXES
It
is expected that certain income of the Funds will be subject to foreign
withholding taxes and other taxes imposed by countries in which the Funds
invest. If a Fund is liable for foreign income taxes, including such withholding
taxes and more than 50% of the value of a Fund's total assets at the close of
the taxable year consists of stock or securities of foreign corporations, such
Fund may file an election with the IRS to "pass through" to the Fund's
shareholders the amount of foreign income taxes paid by the Fund. The Funds
expect to be able to make this election, though no assurance can be given that
they will be able to do so. Pursuant to this election, a shareholder (a) will
include in gross income (in addition to taxable dividends actually received) the
shareholder's pro rata share of the foreign income taxes paid by a Fund; (b)
will treat the shareholder's pro rata share of such foreign income taxes as
having been paid by the shareholder; and (c) may, subject to certain
limitations, be entitled either to deduct the shareholder's pro rata share of
such foreign income taxes in computing the shareholder's taxable income or to
use it as a foreign tax credit against U.S. income taxes. Shortly after any year
for which a Fund makes such a pass-through election, the Fund will report to its
shareholders, in writing, the amount per Share of such foreign tax that must be
included in each shareholder's gross income and the amount which will be
available for deduction or credit.
If
a Fund does not make the election, any foreign taxes paid or accrued will
represent an expense to such Fund, which will reduce its net investment income.
Absent this election, shareholders will not be able to claim either a credit or
deduction for their pro rata shares of such taxes paid by the Fund, nor will
shareholders be required to treat their pro rata shares of such taxes as amounts
distributed to them.
The
rules governing foreign tax credits are complex and, therefore, shareholders
should consult their own tax advisors regarding the availability of foreign tax
credits in their particular circumstances.
TAXATION
OF FUND DISTRIBUTIONS
Distributions.
Distributions
by a Fund of its net short-term capital gains will be taxable as ordinary
income. Distributions of net realized long-term capital gains, if any, that a
Fund designates as capital gains dividends are taxable as long-term capital
gains, whether paid in cash or in shares and regardless of how long a
shareholder has held shares of such Fund. All other dividends of a Fund
(including dividends from short-term capital gains) from its current and
accumulated earnings and profits ("regular dividends") are generally subject to
tax as ordinary income except as described below for qualified
dividends.
Return
of Capital. Distributions
in excess of a Fund's current and accumulated earnings and profits will, as to
each shareholder, be treated as a tax-free return of capital to the extent of a
shareholder's basis in his shares of such Fund, and as a capital gain thereafter
(if the shareholder holds his Shares of such Fund as capital assets).
Shareholders receiving dividends or distributions in the form of additional
Shares should be treated for U.S. federal income tax purposes as receiving a
distribution in an amount equal to the amount of money that the shareholders
receiving cash dividends or distributions will receive, and should have a cost
basis in the Shares received equal to such amount. Dividends paid by a Fund that
are attributable to dividends received by the Fund from domestic corporations
may qualify for the federal dividends-received deduction for
corporations.
Extraordinary
Dividends. If
an individual, trust or estate receives a regular dividend or qualified
dividends qualifying for the long-term capital gains rates and such dividend
constitutes an "extraordinary dividend," and the individual subsequently
recognizes a loss on the sale or exchange of stock in respect of which the
extraordinary dividend was paid, then the loss will be long-term capital loss to
the extent of such extraordinary dividend. An extraordinary dividend on common
stock for this purpose is generally a dividend (i) in an amount greater than or
equal to 10% of the taxpayer's tax basis (or trading value) in a share of stock,
aggregating dividends with ex-dividend dates within an 85-day period or (ii) in
an amount greater than 20% of the taxpayer's tax basis (or trading value) in a
share of stock, aggregating dividends with ex-dividend dates within a 365-day
period.
Qualified
Dividend Income. Distributions
by a Fund of investment company taxable income (excluding any short-term capital
gains) whether received in cash or shares will be taxable either as ordinary
income or as qualified dividend income, eligible for the reduced maximum rate to
individuals of 20% to the extent the Fund receives qualified dividend income on
the securities it holds and the Fund designates the distribution as qualified
dividend income. Qualified dividend income is, in general, dividend income from
taxable domestic corporations and certain foreign corporations (e.g., foreign
corporations incorporated in a possession of the United States or in certain
countries with a comprehensive tax treaty with the United States, or the stock
of
which
is readily tradable on an established securities market in the United States). A
dividend will not be treated as qualified dividend income to the extent that (i)
the shareholder has not held the shares on which the dividend was paid for more
than 60 days during the 121-day period that begins on the date that is 60 days
before the date on which the shares become ex dividend with respect to such
dividend (and the Fund also satisfies those holding period requirements with
respect to the securities it holds that paid the dividends distributed to the
shareholder), (ii) the shareholder is under an obligation (whether pursuant to a
short sale or otherwise) to make related payments with respect to substantially
similar or related property, or (iii) the shareholder elects to treat such
dividend as investment income under section 163(d)(4)(B) of the
Code.
Qualified
REIT Dividends and Income from QPTPs. Under
the 2017 Tax Cuts and Jobs Act, "qualified REIT dividends" (i.e., ordinary REIT
dividends other than capital gain dividends and portions of REIT dividends
designated as qualified dividend income) are treated as eligible for a 20%
deduction by noncorporate taxpayers. This deduction, if allowed in full, equates
to a maximum effective tax rate of 29.6% (37% top rate applied to income after
20% deduction). A Fund may choose to report the special character of "qualified
REIT dividends". A noncorporate shareholder receiving such dividends would treat
them as eligible for the 20% deduction, provided Fund shares were held by the
shareholder for more than 45 days during the 91-day period beginning on the date
that is 45 days before the date on which the shares become ex-dividend with
respect to such dividend). The amount of a RIC's dividends eligible for the 20%
deduction for a taxable year is limited to the excess of the RIC's qualified
REIT dividends for the taxable year over allocable expenses. The IRS continues
to study whether conduit treatment of income from QPTPs (income from MLPs) for
purposes of the 20% deduction by noncorporate taxpayers is appropriate in the
context of publicly traded partnerships.
Corporate
Dividends-Received Deduction. A
Fund's dividends that are paid to its corporate shareholders and are
attributable to qualifying dividends it received from U.S. domestic corporations
may be eligible, in the hands of such shareholders, for the corporate
dividends-received deduction, subject to certain holding period requirements and
debt financing limitations.
Medicare
Tax.
Certain
U.S. shareholders, including individuals and estates and trusts, are subject to
an additional 3.8% Medicare tax on all or a portion of their "net investment
income," which includes dividends from a Fund and net gains from the disposition
of shares of a Fund. U.S. shareholders are urged to consult their own tax
advisors regarding the implications of the additional Medicare tax resulting
from an investment in a Fund.
EXCESS
INCLUSION INCOME
Certain
types of income received by a Fund from REITs, real estate mortgage investment
conduits ("REMICs"), taxable mortgage pools ("TMPs") or other investments may
cause a Fund to designate some or all of its distributions as "excess inclusion
income." Such excess inclusion income may (1) constitute taxable income, as
"unrelated business taxable income" ("UBTI") for Fund shareholders who would
otherwise be tax-exempt, such as individual retirement accounts, 401(k)
accounts, Keogh plans, pension plans and certain charitable entities; (2) as
UBTI, cause a charitable remainder trust to be subject to a 100% excise tax on
its UBTI; (3) not be offset against net operating losses for tax purposes; (4)
not be eligible for reduced U.S. withholding for non-U.S. shareholders even from
tax treaty countries; and (5) cause a Fund to be subject to tax if certain
"disqualified organizations" as defined by the Code are Fund
shareholders.
TAXATION
OF INCOME FROM CERTAIN FINANCIAL INSTRUMENTS AND PFICS
The
tax principles applicable to transactions in financial instruments and futures
contracts and options that may be engaged in by a Fund including the effect of
fluctuations in the value of foreign currencies, and investments in passive
foreign investment companies, are complex and, in some cases, uncertain. Such
transactions and investments may cause a Fund to recognize taxable income prior
to the receipt of cash, thereby requiring such Fund to liquidate other
positions, or to borrow money, so as to make sufficient distributions to
shareholders to avoid corporate-level tax. Moreover, some or all of the taxable
income recognized may be ordinary income or short-term capital gain, so that the
distributions may be taxable to shareholders as ordinary income.
Options,
Futures, Forward Contracts, Swap Agreements, Hedges, Straddles and Other
Transactions.
In general, option premiums received by a Fund are not immediately included in
the income of the Fund. Instead, the premiums are recognized (i) when the
option contract expires, (ii) the option is exercised by the holder, or
(iii) the Fund transfers or otherwise terminates the option (e.g., through
a closing transaction). If a call option written by a Fund is exercised and the
Fund sells or delivers the underlying stock, the Fund generally will recognize
capital gain or loss equal to (a) sum of the strike price and the option
premium received by the Fund minus (b) a Fund's basis in the stock. Such
gain or loss generally will be short-term or long-term depending upon the
holding period of the underlying stock. If securities are purchased by a Fund
pursuant to the exercise of a put option written by it, the Fund generally will
subtract the premium received for purposes of computing its cost basis in the
securities purchased. The gain or loss that may arise in respect of any
termination of a Fund's obligation under an option other
than
through the exercise of the option will be short-term gain or loss, depending on
whether the premium income received by the Fund is greater or less than the
amount paid by the Fund (if any) in terminating the transaction. Thus, for
example, if an option written by a Fund expires unexercised, the Fund generally
will recognize short-term gain equal to the premium received.
Certain
covered call writing activities of a Fund may trigger the U.S. federal income
tax straddle rules of section 1092 of the Code, requiring that losses be
deferred and holding periods be tolled on offsetting positions in options and
stocks deemed to constitute substantially similar or related property. Options
on single stocks that are not "deep in the money" may constitute qualified
covered calls, which generally are not subject to the straddle rules; the
holding period on stock underlying qualified covered calls that are "in the
money" although not "deep in the money" will be suspended during the period that
such calls are outstanding. Thus, the straddle rules and the rules governing
qualified covered calls could cause gains that would otherwise constitute
long-term capital gains to be treated as short-term capital gains, and
distributions that would otherwise constitute "qualified dividend income" or
qualify for the dividends-received deduction to fail to satisfy the holding
period requirements and therefore to be taxed as ordinary income or fail to
qualify for the 50% dividends-received deduction, as the case may
be.
The
tax treatment of certain futures contracts entered into by a Fund as well as
listed non-equity options written or purchased by a Fund on U.S. exchanges
(including options on futures contracts, equity indices and debt securities)
will be governed by Section 1256 of the Code ("Section 1256 Contracts").
Gains or losses on Section 1256 Contracts generally are considered 60%
long-term and 40% short-term capital gains or losses ("60/40"), although certain
foreign currency gains and losses from such contracts may be treated as ordinary
in character. Also, Section 1256 Contracts held by a Fund at the end of
each taxable year (and, for purposes of the 4% excise tax, on certain other
dates as prescribed under the Code) are "marked to market" with the result that
unrealized gains or losses are treated as though they were realized and the
resulting gain or loss is treated as ordinary or 60/40 gain or loss, as
applicable.
In
addition to the special rules described above in respect of futures and options
transactions, a Fund's transactions in other derivative instruments (e.g.,
forward contracts and swap agreements) as well as any of its other hedging,
short sale or similar transactions, may be subject to one or more special tax
rules (e.g., notional principal contract, straddle, constructive sale, wash sale
and short sale rules). These rules may affect whether gains and losses
recognized by a Fund are treated as ordinary or capital or as short-term or
long-term, accelerate the recognition of income or gains to the Fund, defer
losses to the Fund, and cause adjustments in the holding periods of the Fund's
securities. These rules could therefore affect the amount, timing and/or
character of distributions to shareholders. Because these and other tax rules
applicable to these types of transactions are in some cases uncertain under
current law, an adverse determination or future guidance by the IRS with respect
to these rules (which determination or guidance may be retroactive) may affect
whether a Fund has made sufficient distributions, and otherwise satisfied the
relevant requirements, to maintain its qualification as a RIC and avoid
Fund-level tax. Each Fund will monitor its transactions, will make appropriate
tax elections and will make appropriate entries in its books and records in
order to mitigate the effect of these rules.
Certain
of a Fund's investments in derivative instruments and foreign
currency-denominated instruments, and any of a Fund's transactions in foreign
currencies and hedging activities, are likely to produce a difference between a
Fund's book income and the sum of its taxable income and net tax-exempt income
(if any). If there is a difference between a Fund's book income and the sum of
its taxable income and net tax-exempt income (if any), the Fund may be required
to distribute amounts in excess of its book income or a portion of Fund
distributions may be treated as a return of capital to shareholders. If a Fund's
book income exceeds the sum of its taxable income (including realized capital
gains) and net tax-exempt income (if any), the distribution (if any) of such
excess generally will be treated as (i) a dividend to the extent of the
Fund's remaining earnings and profits (including earnings and profits arising
from tax-exempt income), (ii) thereafter, as a return of capital to the extent
of the recipient's basis in the shares, and (iii) thereafter, as gain from the
sale or exchange of a capital asset. If a Fund's book income is less than the
sum of its taxable income and net tax-exempt income (if any), the Fund could be
required to make distributions exceeding book income to qualify as a RIC that is
accorded special tax treatment.
Commodities.
Gains from the disposition of commodities, including precious metals, will
neither be considered qualifying income for purposes of satisfying the Income
Requirement nor qualifying assets for purposes of satisfying the Asset
Diversification Requirement. Also, the IRS has issued a revenue ruling which
holds that income derived from commodity- linked swaps is not qualifying income
for purposes of the Income Requirement. In a subsequent revenue ruling, as well
as in a number of follow on private letter rulings (upon which only the fund
that received the private letter ruling may rely), the IRS provides that income
from certain alternative investments which create commodity exposure, such as
certain commodity-linked or structured notes or a corporate subsidiary that
invests in commodities, may be considered qualifying income under the Code.
However, the portion of such rulings relating to the treatment of a corporation
as a RIC that require a determination of whether a financial instrument or
position is a security under section 2(a)(36) of the 1940 Act was revoked
because of changes in the IRS’s position. (A financial instrument or position
that constitutes a security under section 2(a)(36) of the 1940 Act generates
qualifying income for a corporation taxed as a regulated investment company).
Accordingly, a Fund may decide to invest in
certain
commodity-linked notes only to the extent it obtains an opinion of counsel
confirming that income from such investments should be qualifying income. In
addition, a RIC may gain exposure to commodities through investment in a QPTP,
such as an exchange- traded fund or ETF that is classified as a partnership and
which invests in commodities. Accordingly, the extent to which a Fund invests in
commodities or commodity-linked derivatives may be limited by the Income
Requirement and the Asset Diversification Requirement, which the Fund must
continue to satisfy to maintain its status as a RIC. A Fund also may be limited
in its ability to sell its investments in commodities, commodity-linked
derivatives, and certain ETFs or be forced to sell other investments to generate
income due to the Income Requirement. If a Fund does not appropriately limit
such investments or if such investments (or the income earned on such
investments) were to be recharacterized for U.S. tax purposes, the Fund could
fail to qualify as a RIC. In lieu of potential disqualification, a Fund is
permitted to pay a tax for certain failures to satisfy the Asset Diversification
Test or Income Requirement, which, in general, are limited to those due to
reasonable cause and not willful neglect.
Original
Issue Discount, Pay-In-Kind Securities, Market Discount and Commodity-Linked
Notes.
Some debt obligations with a fixed maturity date of more than one year from the
date of issuance (and zero-coupon debt obligations with a fixed maturity date of
more than one year from the date of issuance) that may be acquired by a Fund may
be treated as debt obligations that are issued originally at a discount.
Generally, the amount of the original issue discount ("OID") is treated as
interest income and is included in a Fund's taxable income (and required to be
distributed by the Fund) over the term of the debt obligation, even though
payment of that amount is not received until a later time, upon partial or full
repayment or disposition of the debt security.
Some
debt obligations (with a fixed maturity date of more than one year from the date
of issuance) that may be acquired by a Fund in the secondary market may be
treated as having "market discount." Very generally, market discount is the
excess of the stated redemption price of a debt obligation (or in the case of an
obligations issued with OID, its "revised issue price") over the purchase price
of such obligation. Generally, any gain recognized on the disposition of, and
any partial payment of principal on, a debt obligation having market discount is
treated as ordinary income to the extent the gain, or principal payment, does
not exceed the "accrued market discount" on such debt obligation. Alternatively,
a Fund may elect to accrue market discount currently, in which case the Fund
will be required to include the accrued market discount in the Fund's income (as
ordinary income) and thus distribute it over the term of the debt security, even
though payment of that amount is not received until a later time, upon partial
or full repayment or disposition of the debt security. The rate at which the
market discount accrues, and thus is included in a Fund's income, will depend
upon which of the permitted accrual methods the Fund elects. In the case of
higher-risk securities, the amount of market discount may be unclear. See
"Higher-Risk Securities."
Some
debt obligations (with a fixed maturity date of one year or less from the date
of issuance) that may be acquired by a Fund may be treated as having
"acquisition discount" (very generally, the excess of the stated redemption
price over the purchase price), or OID in the case of certain types of debt
obligations. A Fund will be required to include the acquisition discount, or
OID, in income (as ordinary income) over the term of the debt obligation, even
though payment of that amount is not received until a later time, upon partial
or full repayment or disposition of the debt security. A Fund may make one or
more of the elections applicable to debt obligations having acquisition
discount, or OID, which could affect the character and timing of recognition of
income.
In
addition, payment-in-kind securities will, and commodity-linked notes may, give
rise to income that is required to be distributed and is taxable even though the
Fund holding the security receives no interest payment in cash on the security
during the year.
If
a Fund holds the foregoing kinds of securities, it may be required to pay out as
an income distribution each year an amount that is greater than the total amount
of cash interest the Fund actually received. Such distributions may be made from
the cash assets of a Fund or by liquidation of portfolio securities, if
necessary (including when it is not advantageous to do so). A Fund may realize
gains or losses from such liquidations. In the event a Fund realizes net capital
gains from such transactions, its shareholders may receive a larger capital gain
distribution than they would in the absence of such transactions.
Higher-Risk
Securities.
To the extent such investments are permissible for a Fund, a Fund may invest in
debt obligations that are in the lowest rating categories or are unrated,
including debt obligations of issuers not currently paying interest or who are
in default. Investments in debt obligations that are at risk of or in default
present special tax issues for a Fund. Tax rules are not entirely clear about
issues such as when a Fund may cease to accrue interest, OID or market discount,
when and to what extent deductions may be taken for bad debts or worthless
securities and how payments received on obligations in default should be
allocated between principal and income. In limited circumstances, it may also
not be clear whether a Fund should recognize market discount on a debt
obligation, and if so, what amount of market discount the Fund should recognize.
These and other related issues will be addressed by a Fund when, as and if it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a RIC and does not become subject to
U.S. federal income or excise tax.
Issuer
Deductibility of Interest.
A portion of the interest paid or accrued on certain high yield discount
obligations owned by a Fund may not be deductible to (and thus, may affect the
cash flow of) the issuer. If a portion of the interest paid or accrued on
certain high yield discount obligations is not deductible, that portion will be
treated as a dividend for purposes of the corporate dividends-received
deduction. In such cases, if the issuer of the high yield discount obligations
is a domestic corporation, dividend payments by a Fund may be eligible for the
dividends-received deduction to the extent of the deemed dividend portion of
such accrued interest.
Interest
paid on debt obligations owned by a Fund, if any, that are considered for U.S.
tax purposes to be payable in the equity of the issuer or a related party will
not be deductible to the issuer, possibly affecting the cash flow of the
issuer.
Securities
Lending.
While securities are loaned out by a Fund, the Fund generally will receive from
the borrower amounts equal to any dividends or interest paid on the borrowed
securities. For federal income tax purposes, payments made “in lieu of”
dividends are not considered dividend income. These distributions will neither
qualify for the reduced rate of federal income taxation for individuals on
qualified dividends income, if otherwise available, nor the 50%
dividends-received deduction for corporations. Also, any foreign tax withheld on
payments made “in lieu of” dividends or interest may not qualify for the
passthrough of foreign tax credits to shareholders.
Tax-Exempt
Shareholders.
A tax-exempt shareholder could recognize UBTI by virtue of its investment in a
Fund if Shares in the Fund constitute debt-financed property in the hands of the
tax-exempt shareholder within the meaning of section 514(b) of the Code.
Furthermore, a tax-exempt shareholder may recognize UBTI if a Fund recognizes
"excess inclusion income" derived from direct or indirect investments in
residual interests in REMICs or equity interests in TMPs if the amount of such
income recognized by the Fund exceeds the Fund's investment company taxable
income (after taking into account deductions for dividends paid by the
Fund).
In
addition, special tax consequences apply to charitable remainder trusts ("CRTs")
that invest in RICs that invest directly or indirectly in residual interests in
REMICs or equity interests in TMPs. Under legislation enacted in
December 2006, a CRT (as defined in Section 664 of the Code) that realizes
any UBTI for a taxable year must pay an excise tax annually of an amount equal
to such UBTI. Under IRS guidance issued in October 2006, a CRT will not
recognize UBTI solely as a result of investing in a regulated investment company
that recognizes "excess inclusion income." Rather, if at any time during any
taxable year a CRT (or one of certain other tax-exempt shareholders, such as the
United States, a state or political subdivision, or an agency or instrumentality
thereof, and certain energy cooperatives) is a record holder of a share in the
regulated investment company that recognizes "excess inclusion income," then the
RIC will be subject to a tax on that portion of its "excess inclusion income"
for the taxable year that is allocable to such shareholders, at the corporate
income tax rate. The extent to which this IRS guidance remains applicable in
light of the December 2006 legislation is unclear. To the extent permitted
under the 1940 Act, a Fund may elect to specially allocate any such tax to the
applicable CRT, or other shareholder, and thus reduce such shareholder's
distributions for the year by the amount of the tax that relates to such
shareholder's interest in the Fund. Each Fund has not yet determined whether
such an election will be made. CRTs and other tax-exempt investors are urged to
consult their tax advisers concerning the consequences of investing in a
Fund.
Passive
Foreign Investment Companies.
A
passive foreign investment company ("PFIC") is any foreign corporation:
(i) 75% or more of the gross income of which for the taxable year is
passive income, or (ii) the average percentage of the assets of which
(generally by value, but by adjusted tax basis in certain cases) that produce or
are held for the production of passive income is at least 50%. Generally,
passive income for this purpose means dividends, interest (including income
equivalent to interest), royalties, rents, annuities, the excess of gains over
losses from certain property transactions and commodities transactions, and
foreign currency gains. Passive income for this purpose does not include rents
and royalties received by the foreign corporation from an active business and
certain income received from related persons.
Equity
investments by a Fund in certain PFICs could potentially subject the Fund to a
U.S. federal income tax or other charge (including interest charges) on the
distributions received from the PFIC or on proceeds received from the
disposition of shares in the PFIC. This tax cannot be eliminated by making
distributions to Fund shareholders. However, a Fund may elect to avoid the
imposition of that tax. For example, if a Fund is in a position to and elects to
treat a PFIC as a "qualified electing fund" (i.e., make a "QEF election"), the
Fund will be required to include its share of the PFIC's income and net capital
gains annually, regardless of whether it receives any distribution from the
PFIC. Alternatively, a Fund may make an election to mark the gains (and to a
limited extent losses) in its PFIC holdings "to the market" as though it had
sold and repurchased its holdings in those PFICs on the last day of the Fund's
taxable year. Such gains and losses are treated as ordinary income and loss. The
QEF and mark-to-market elections may accelerate the recognition of income
(without the receipt of cash) and increase the amount required to be distributed
by a Fund to avoid taxation. Making either of these elections therefore may
require a Fund to liquidate other investments (including when it is not
advantageous to do so) to meet its distribution requirement, which also may
accelerate
the recognition of gain and affect the Fund's total return. Dividends paid by
PFICs will not be eligible to be treated as "qualified dividend
income."
Because
it is not always possible to identify a foreign corporation as a PFIC, a Fund
may be liable for corporate-level tax on any ultimate gain or distributions on
the shares if such Fund fails to make an election to recognize income annually
during the period of its ownership of the shares.
Foreign
Currency Transactions.
A Fund's transactions in foreign currencies, foreign currency-denominated debt
obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the value of the
foreign currency concerned. Any such net gains could require a larger dividend
toward the end of the calendar year. Any such net losses will generally reduce
and potentially require the re-characterization of prior ordinary income
distributions. Such ordinary income treatment may accelerate a Fund's
distributions to shareholders and increase the distributions taxed to
shareholders as ordinary income. Any net ordinary losses so created cannot be
carried forward by a Fund to offset income or gains earned in subsequent taxable
years.
Investments
in partnerships and QPTPs.
For
purposes of the Income Requirement, income derived by a Fund from a partnership
that is not a QPTP will be treated as qualifying income only to the extent such
income is attributable to items of income of the partnership that would be
qualifying income if realized directly by such Fund. While the rules are not
entirely clear with respect to a Fund investing in a partnership outside a
master feeder structure, for purposes of testing whether a Fund satisfies the
Asset Diversification Requirement, the Fund generally is treated as owning a pro
rata share of the underlying assets of a partnership. In contrast, different
rules apply to a partnership that is a QPTP. All of the net income derived by a
Fund from an interest in a QPTP will be treated as qualifying income but the
Fund may not invest more than 25% of its total assets in one or more QPTPs.
However, there can be no assurance that a partnership classified as a QPTP in
one year will qualify as a QPTP in the next year. Any such failure to annually
qualify as a QPTP might, in turn, cause a Fund to fail to qualify as a RIC.
Although, in general, the passive loss rules of the Code do not apply to RICs,
such rules do apply to a Fund with respect to items attributable to an interest
in a QPTP. Fund investments in partnerships, including in QPTPs, may result in
the fund being subject to state, local or foreign income, franchise, or
withholding tax liabilities.
If
an MLP is treated as a partnership for U.S. federal income tax purposes (whether
or not a QPTP), all or portion of the dividends received by a Fund from the MLP
likely will be treated as a return of capital for U.S. federal income tax
purposes because of accelerated deductions available with respect to the
activities of such MLPs. Further, because of these accelerated deductions, on
the disposition of interests in such an MLP, a Fund likely will realize taxable
income in excess of economic gain with respect to those MLP interests (or if the
Fund does not dispose of the MLP, the Fund could realize taxable income in
excess of cash flow with respect to the MLP in a later period), and the Fund
must take such income into account in determining whether the Fund has satisfied
its Distribution Requirement. A Fund may have to borrow or liquidate securities
to satisfy its Distribution Requirement and to meet its redemption requests,
even though investment considerations might otherwise make it undesirable for
the Fund to sell securities or borrow money at such time. In addition, any gain
recognized, either upon the sale of a Fund's MLP interest or sale by the MLP of
property held by it, including in excess of economic gain thereon, treated as
so-called "recapture income," will be treated as ordinary income. Therefore, to
the extent a Fund invests in MLPs, Fund shareholders might receive greater
amounts of distributions from the Fund taxable as ordinary income than they
otherwise would in the absence of such MLP investments.
Although
MLPs are generally expected to be treated as partnerships for U.S. federal
income tax purposes, some MLPs may be treated as PFICs or "regular" corporations
for U.S. federal income tax purposes. The treatment of particular MLPs for U.S.
federal income tax purposes will affect the extent to which a Fund can invest in
MLPs and will impact the amount, character, and timing of income recognized by
the Fund.
SALES
OF SHARES
Sales,
exchanges and redemptions (including redemptions in-kind) of Fund Shares are
taxable transactions for federal and state income tax purposes. A redemption of
Shares by a Fund will be treated as a sale. An Authorized Participant who
exchanges securities for Creation Units generally will recognize a gain or a
loss. The gain or loss will be equal to the difference between the market value
of the Creation Units at the time of purchase (plus any cash received by the
Authorized Participant as part of the issue) and the Authorized Participant's
aggregate basis in the securities surrendered (plus any cash paid by the
Authorized Participant as part of the issue). An Authorized Participant who
exchanges Creation Units for securities generally will recognize a gain or loss
equal to the difference between the Authorized Participant's basis in the
Creation Units (plus any cash paid by the Authorized Participant as part of the
redemption) and the aggregate market value of the securities received (plus any
cash received by the Authorized Participant as part of the redemption). The IRS,
however, may assert that a loss realized upon an exchange of securities for
Creation Units cannot be deducted currently under the rules governing "wash
sales," or on the basis
that
there has been no significant change in economic position. Persons exchanging
securities should consult their own tax advisor with respect to whether the wash
sale rules apply and when a loss might be deductible.
Under
current federal tax laws, any capital gain or loss realized upon redemption of
Creation Units is generally treated as long-term capital gain or loss if the
Shares have been held for more than one year and as a short-term capital gain or
loss if the Shares have been held for one year or less assuming that such
Creation Units are held as a capital asset.
If
a Fund redeems Creation Units in cash, it may recognize more capital gains than
it will if it redeems Creation Units in-kind.
Any
loss realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in a Fund, within a 61-day period
beginning 30 days before and ending 30 days after the disposition of the shares.
In such a case, the basis of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a shareholder on the sale of the Fund
Shares held by the shareholder for six months or less will be treated for U.S.
federal income tax purposes as a long-term capital loss to the extent of any
distributions or deemed distributions of long-term capital gains received by the
shareholder with respect to such Shares.
COST
BASIS REPORTING
Federal
law requires that mutual fund companies or intermediaries report their
shareholders' cost basis, gain/loss, and holding period to the IRS on the
shareholders' Consolidated Form 1099s when "covered" securities are sold.
Covered securities are any RIC and/or dividend reinvestment plan shares acquired
on or after January 1, 2012.
Each
Fund or intermediaries (broker) will choose or has chosen a standing (default)
tax lot identification method for all shareholders. A tax lot identification
method is the way the broker will determine which specific shares are deemed to
be sold when there are multiple purchases on different dates at differing net
asset values, and the entire position is not sold at one time. A broker's
standing tax lot identification method is the method covered Shares will be
reported on your Consolidated Form 1099 if you do not select a specific tax lot
identification method. You may choose a method different than the standing
method and will be able to do so at the time of your purchase or upon the sale
of covered Shares. Please refer to the appropriate IRS regulations or consult
your tax advisor with regard to your personal circumstances. Shareholders will
be notified as to which default tax lot identification method their broker will
use.
For
those securities defined as "covered" under current IRS cost basis tax reporting
regulations, a Fund is responsible for maintaining accurate cost basis and tax
lot information for tax reporting purposes. A broker is not responsible for the
reliability or accuracy of the information for those securities that are not
"covered." A Fund and its service providers do not provide tax advice. You
should consult independent sources, which may include a tax professional, with
respect to any decisions you may make with respect to choosing a tax lot
identification method.
REPORTING
If
a shareholder recognizes a loss with respect to a Fund's Shares of $2 million or
more for an individual shareholder or $10 million or more for a corporate
shareholder, the shareholder may be required to file with the IRS a disclosure
statement on Form 8886. Direct shareholders of portfolio securities are in many
cases exempted from this reporting requirement, but under current guidance,
shareholders of a RIC are not exempted. The fact that a loss is reportable under
these regulations does not affect the legal determination of whether the
taxpayer's treatment of the loss is proper. Shareholders should consult their
tax advisors to determine the applicability of these regulations in light of
their individual circumstances. Under recently enacted legislation, certain
tax-exempt entities and their managers may be subject to excise tax if they are
parties to certain reportable transactions.
The
foregoing discussion is a summary only and is not intended as a substitute for
careful tax planning. Purchasers of Shares should consult their own tax advisers
as to the tax consequences of investing in such shares, including under state,
local and foreign tax laws. Finally, the foregoing discussion is based on
applicable provisions of the Code, regulations, judicial authority and
administrative interpretations in effect on the date of this SAI. Changes in
applicable authority could materially affect the conclusions discussed above,
and such changes often occur.
BACKUP
WITHHOLDING
Withholding
is required on dividends and gross sales proceeds paid to any shareholder who:
(1) has failed to provide a correct taxpayer identification number; (2) is
subject to backup withholding by the IRS; (3) has failed to certify to a Fund
that such
shareholder
is not subject to backup withholding; or (4) has not certified that such
shareholder is a U.S. person (including a U.S. resident alien)." When
withholding is required, the amount will be 24% of any distributions or proceeds
paid.
OTHER
TAXES
Dividends,
distributions and redemption proceeds may also be subject to additional state,
local and foreign taxes depending on each shareholder's particular
situation.
TAXATION
OF NON-U.S. SHAREHOLDERS
Dividends
paid to non-U.S. shareholders are generally subject to withholding tax at a 30%
rate or a reduced rate specified by an applicable income tax treaty to the
extent derived from investment income and short-term capital gains. In order to
obtain a reduced rate of withholding, a non-U.S. shareholder will be required to
provide an IRS Form W-8BEN or W-8BEN-E certifying its entitlement to benefits
under a treaty. The withholding tax does not apply to regular dividends paid to
a non-U.S. shareholder who provides a Form W-8ECI, certifying that the dividends
are effectively connected with the non-U.S. shareholder's conduct of a trade or
business within the United States. Instead, the effectively connected dividends
will be subject to regular U.S. income tax as if the non-U.S. shareholder were a
U.S. shareholder. A non-U.S. corporation receiving effectively connected
dividends may also be subject to additional "branch profits tax" imposed at a
rate of 30% (or lower treaty rate). A non-U.S. shareholder who fails to provide
an IRS Form W-8BEN or other applicable form may be subject to backup withholding
at the appropriate rate.
In
general, capital gain dividends reported shareholders as paid from its net
long-term capital gains, other than long-term capital gains realized on
disposition of U.S. real property interests (see the discussion below), are not
subject to U.S. withholding tax unless you are a nonresident alien individual
present in the U.S. for a period or periods aggregating 183 days or more during
the calendar year. Generally, dividends reported to shareholders as
interest-related dividends paid from the Fund's qualified net interest income
from U.S. sources and short-term capital gain dividends reported to shareholders
as paid from its net short-term capital gains, other than short-term capital
gains realized on disposition of U.S. real property interests (see the
discussion below), are not subject to U.S. withholding tax unless you were a
nonresident alien individual present in the U.S. for a period or periods
aggregating 183 days or more during the calendar year. The Fund reserves the
right to not report interest-related dividends or short-term capital gain
dividends. Additionally, the Fund's reporting of interest-related dividends or
short-term capital gain dividends may not be passed through to shareholders by
intermediaries who have assumed tax reporting responsibilities for this income
in managed or omnibus accounts due to systems limitations or operational
constraints.
For
foreign shareholders of a Fund, a distribution attributable to such Fund's sale
of a REIT or other U.S. real property holding company will be treated as real
property gain subject to withholding tax at the corporate income tax rate if 50%
or more of the value of such Fund's assets are invested in REITs and other U.S.
real property holding corporations and if the foreign shareholder has held more
than 5% of a class of stock at any time during the one-year period ending on the
date of the distribution. A distribution from a Fund will be treated as
attributable to a U.S. real property interest only if such distribution is
attributable to a distribution received by such Fund from a REIT. Restrictions
apply regarding wash sales and substitute payment transactions. Because each
Fund expects to invest less than 50% of its assets at all times, directly or
indirectly, in U.S. real property interests, each Fund expects that neither gain
on the sale or redemption of Fund shares nor Fund dividends and distributions
would be subject to FIRPTA reporting and tax withholding.
Under
the Foreign Account Tax Compliance Act ("FATCA"), a 30% withholding tax is
imposed on income dividends paid by the Fund to certain foreign entities,
referred to as foreign financial institutions or nonfinancial foreign entities,
that fail to comply (or be deemed compliant) with extensive reporting and
withholding requirements designed to inform the U.S. department of the Treasury
of U.S.-owned foreign investment accounts. After December 31, 2018, FATCA
withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund
Shares, however based on proposed regulations issued by the IRS, which can be
relied upon currently, such withholding is no longer required unless final
regulations provide otherwise (which is not expected). Information about a
shareholder in a Fund may be disclosed to the IRS, non-U.S. taxing authorities
or other parties as necessary to comply with FATCA. Withholding also may be
required if a foreign entity that is a shareholder of a Fund fails to provide
the appropriate certifications or other documentation concerning its status
under FATCA.
Each
prospective shareholder is urged to consult its tax adviser regarding the
applicability of FATCA and any other reporting requirements with respect to the
prospective shareholder's own situation, including investments through an
intermediary.
NET
ASSET VALUE
The
NAV for each Fund is calculated by deducting all of the Fund's liabilities
(including accrued expenses) from the total value of its assets (including the
securities held by the Fund plus any cash or other assets, including interest
and dividends accrued but not yet received) and dividing the result by the
number of shares outstanding, and generally rounded to the nearest cent,
although each Fund reserves the right to calculate its NAV to more than two
decimal places. The NAV for each Fund will generally be determined by SEIGFS
once daily Monday through Friday generally as of the regularly scheduled close
of business of the Exchange (normally 4:00 p.m. Eastern Time) on each day that
the Exchange is open for trading, based on prices at the time of closing,
provided that (a) any assets or liabilities denominated in currencies other than
the U.S. dollar shall be translated into U.S. dollars at the prevailing market
rates on the date of valuation as quoted by one or more major banks or dealers
that makes a two-way market in such currencies (or a data service provider based
on quotations received from such banks or dealers); and (b) U.S. fixed-income
assets may be valued as of the announced closing time for trading in
fixed-income instruments on any day that the Bond Market Association announces
an early closing time.
In
calculating a Fund's NAV, the Fund's investments are generally valued using
market valuations. In the event that current market valuations are not readily
available or such valuations do not reflect current market values, the affected
investments will be valued using fair value pricing pursuant to the pricing
policy and procedures approved by the Board. A market valuation generally means
a valuation (i) obtained from an exchange, or a major market maker (or dealer),
(ii) based on a price quotation or other equivalent indication of value supplied
by an exchange, a pricing service, or a major market maker (or dealer) or (iii)
based on amortized cost. In the case of shares of funds that are not traded on
an exchange, a market valuation means such fund's published NAV per share.
SEIGFS may use various pricing services or discontinue the use of any pricing
service.
In
the event that current market valuations are not readily available or such
valuations do not reflect current market values, the affected investments will
be valued using fair value pricing pursuant to the pricing policy and procedures
approved by a Fund's Board of Trustees. A price obtained from a pricing service
based on such pricing service's valuation matrix may be used to fair value a
security. The frequency with which a Fund's investments are valued using fair
value pricing is primarily a function of the types of securities and other
assets in which the Fund invests pursuant to its investment objective,
strategies and limitations.
Investments
that may be valued using fair value pricing include, but are not limited to: (i)
an unlisted security related to corporate actions; (ii) a restricted security
(i.e., one that may not be publicly sold without registration under the
Securities Act of 1933, as amended (the "Securities Act")); (iii) a security
whose trading has been suspended or which has been de-listed from its primary
trading exchange; (iv) a security that is thinly traded; (v) a security in
default or bankruptcy proceedings for which there is no current market
quotation; (vi) a security affected by currency controls or restrictions; and
(vii) a security affected by a significant event (i.e., an event that occurs
after the close of the markets on which the security is traded but before the
time as of which the Fund's NAV is computed and that may materially affect the
value of the Fund's investments). Examples of events that may be "significant
events" are government actions, natural disasters, armed conflict, acts of
terrorism, and significant market fluctuations.
Valuing
a Fund's investments using fair value pricing will result in using prices for
those investments that may differ from current market valuations. Use of fair
value prices and certain current market valuations could result in a difference
between the prices used to calculate a Fund's net asset value and the prices
used by the Fund's Underlying Index, which, in turn, could result in a
difference between the Fund's performance and the performance of the Fund's
Underlying Index.
The
value of assets denominated in foreign currencies is converted into U.S. dollars
using exchange rates deemed appropriate by the Adviser as investment adviser.
Any use of fair value prices, current market valuations or exchange rates
different from the prices and rates used by the Index Providers may adversely
affect a Fund's ability to track its Underlying Index.
Each
Fund will publish the following information on the Fund’s website for each
portfolio holding that will form the basis of the next calculation of current
net asset value per share: (A) the ticker symbol (if available); (B) CUSIP or
other identifier; (C) a description of the holding; (D) quantity of each
security or other asset held; and (E) the percentage weight of the holding in
the portfolio.
DISTRIBUTION
AND SERVICE PLAN
The
Board of Trustees of the Trust has adopted a distribution and services plan
("Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Fund is
authorized to pay distribution fees in connection with the sale and distribution
of its Shares and pay service fees in connection with the provision of ongoing
services to shareholders of each class and the maintenance of shareholder
accounts in an amount up to 0.25% of its average daily net assets each
year.
No
Rule 12b-1 fees are currently paid by the Funds, and there are no current plans
to impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because these fees are paid out of each Fund's assets on an ongoing
basis, these fees will increase the cost of your investment in the Funds. By
purchasing Shares subject to distribution fees and service fees, you may pay
more over time than you would by purchasing Shares with other types of sales
charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the rules of
FINRA. The net income attributable to Shares will be reduced by the amount of
distribution fees and service fees and other expenses.
DIVIDENDS
AND DISTRIBUTIONS
GENERAL
POLICIES
Dividends
from net investment income, including any net foreign currency gains, are
declared and paid at least annually and any net realized securities gains are
distributed at least annually. To improve tracking error or comply with the
distribution requirements of the Code, dividends may be declared and paid more
frequently than annually for certain funds. Dividends and securities gains
distributions are distributed in U.S. dollars and cannot be automatically
reinvested in additional Shares of the Funds. The Trust reserves the right to
declare special distributions if, in its reasonable discretion, such action is
necessary or advisable to preserve the status of each Fund as a RIC or to avoid
imposition of income or excise taxes on undistributed income.
Dividends
and other distributions of shares are distributed on a pro rata basis to
Beneficial Owners of such shares. Dividend payments are made through DTC
Participants and Indirect Participants to Beneficial Owners then of record with
proceeds received from the Funds.
DIVIDEND
REINVESTMENT SERVICE
No
dividend reinvestment service is provided by the Trust. Broker-dealers may make
available the DTC book-entry Dividend Reinvestment Service for use by Beneficial
Owners of the Funds for reinvestment of their dividend distributions. Beneficial
Owners should contact their broker to determine the availability and costs of
the service and the details of participation therein. Brokers may require
Beneficial Owners to adhere to specific procedures and timetables. If this
service is available and used, dividend distributions of both income and
realized gains will be automatically reinvested in additional whole shares of
the same Fund purchased in the secondary market.
FINANCIAL
STATEMENTS
Audited
financial statements and financial highlights for the Trust as of
October 31, 2022, including the notes thereto, and the reports of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
are incorporated herein by reference from the Trust's October 31, 2022
Annual Report to shareholders
OTHER
INFORMATION
CONTROL
PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Although
the Trust does not have information concerning the beneficial ownership of
shares held in the names of Authorized Participants, as of February 1,
2023, the following persons owned, of record or beneficially, 5% or more of the
following Funds.
Global
X MSCI Colombia ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
State
Street Bank & Trust Company 1776 Heritage Drive, North Quincy, MA
02171 |
19.48% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
13.19% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
7.95% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.18% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
7.13% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
6.92% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
5.57% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
5.26% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
5.07% |
Global
X MSCI China Consumer Discretionary ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Euroclear
Bank SA/NV 1 Boulevard du Roi Albert II, Brussels, BE 01210 |
21.30% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
20.61% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
8.98% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.48% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
6.68% |
Global
X MSCI China Industrials ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
45.33% |
J.P.
Morgan Securities
LLC/JPMC
383
Madison Ave, New York, NY 10179 |
9.99% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
6.45% |
UBS
Securities LLC 677 Washington Boulevard, Stamford, CT 06912 |
6.44% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.19% |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
6.03% |
Global
X MSCI China Communication Services ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
22.84% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
12.12% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
8.53% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
7.93% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
6.15% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.39% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
5.21% |
Global
X MSCI China Financials ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
16.32% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
11.83% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
11.59% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
7.77% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.48% |
Global
X MSCI China Energy ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
26.73% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
17.42% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
14.87% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
9.75% |
Global
X MSCI China Materials ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
LPL
Financial LLC LPL Financial, 4707 Executive Dr., San Diego, CA
92121-3091 |
18.80% |
J.P.
Morgan Securities
LLC/JPMC
383
Madison Ave, New York, NY 10179 |
15.41% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
13.60% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
12.77% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
9.15% |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
5.28% |
Global
X MSCI Norway ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
21.30% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
15.91% |
Baird
(Robert W.) & Co., Incorporated 777 East Wisconsin Avenue, First
Wisconsin Center, Milwaukee, WI 53202 |
8.21% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
6.15% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
6.04% |
Global
X FTSE Southeast Asia ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
23.42% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
12.62% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
9.20% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
5.94% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
5.58% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
5.57% |
Global
X MSCI Argentina ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
16.58% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
14.36% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
10.05% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
9.08% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
8.24% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
6.27% |
Global
X MSCI Greece ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
13.67% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
12.87% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
11.98% |
State
Street Bank & Trust Company 1776 Heritage Drive, North Quincy, MA
02171 |
9.18% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.53% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
6.00% |
Global
X MSCI Nigeria ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
20.41% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
12.85% |
Vanguard
Marketing Corporation 100 Vanguard Boulevard, Malvern, PA
19355 |
10.58% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.40% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
8.44% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
8.29% |
Global
X MSCI Next Emerging & Frontier ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
LPL
Financial LLC LPL Financial, 4707 Executive Dr., San Diego, CA
92121-3091 |
43.95% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
14.83% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
9.27% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
8.90% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
6.61% |
Global
X MSCI Portugal ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
48.13% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.29% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
6.55% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
5.05% |
Global
X DAX Germany ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
40.18% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
16.17% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.75% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.55% |
Global
X MSCI Pakistan ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
12.87% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
11.65% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
11.58% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
10.35% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.12% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
8.65% |
Vanguard
Marketing Corporation 100 Vanguard Boulevard, Malvern, PA
19355 |
5.72% |
Global
X MSCI China Consumer Staples ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
JPMorgan
Chase Bank, National Association 14201 Dallas Parkway, Chase
International Plaza, Dallas, TX 75254-2916 |
43.94% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
31.37% |
Global
X MSCI China Health Care ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
16.17% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
13.75% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
9.26% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.88% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
7.73% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
7.55% |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
5.71% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
5.05% |
Global
X MSCI China Information Technology ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
16.19% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
14.92% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
13.89% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
12.90% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
12.87% |
Global
X MSCI China Real Estate ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
14.98% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
11.82% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
9.64% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
9.40% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
8.91% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
7.00% |
Apex
Clearing Corporation 1155 Long Island Ave, Edgewood, NY 11717 |
5.32% |
Global
X MSCI China Utilities ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
59.29% |
Citigroup
Global Markets Inc. 580 Crosspoint Parkway, Getzville, NY
14068 |
11.11% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
10.47% |
Global
X MSCI Vietnam ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
50.81% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
10.56% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
9.81% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
6.04% |
Global
X Copper Miners ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
50.64% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
6.55% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
5.37% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
5.15% |
Global
X Silver Miners ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
11.42% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
11.26% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
8.09% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
7.50% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
5.68% |
Wells
Fargo Clearing Services, LLC 1 North Jefferson Ave, St. Louis, MO
63103 |
5.22% |
Global
X Gold Explorers ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
15.79% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
13.40% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.15% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
7.76% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
7.70% |
Vanguard
Marketing Corporation 100 Vanguard Boulevard, Malvern, PA
19355 |
7.58% |
Brown
Brothers Harriman & Co. 525 Washington Blvd., Jersey City, NJ
07310 |
5.04% |
Global
X Uranium ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
20.06% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
8.64% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
6.78% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
6.23% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
5.93% |
Global
X Lithium & Battery Tech ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
15.26% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
14.50% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
10.68% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.22% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
5.01% |
Global
X SuperDividend®
ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
16.07% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
12.52% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
9.21% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
9.06% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
6.91% |
Global
X Social Media ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
PNC
Bank, N.A. 8800 Tinicum Boulevard, Philadelphia, PA
19153-3198 |
14.21% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
10.26% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.79% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
7.76% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
6.62% |
JPMorgan
Chase Bank, National Association 14201 Dallas Parkway, Chase
International Plaza, Dallas, TX 75254-2916 |
5.67% |
Global
X Guru®
Index
ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Apex
Clearing Corporation 1155 Long Island Ave, Edgewood, NY 11717 |
30.67% |
JPMorgan
Chase Bank, National Association 14201 Dallas Parkway, Chase
International Plaza, Dallas, TX 75254-2916 |
11.96% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
7.06% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
5.83% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.18% |
Global
X SuperIncome™ Preferred ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
16.97% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
16.34% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
15.25% |
LPL
Financial LLC LPL Financial, 4707 Executive Dr., San Diego, CA
92121-3091 |
6.77% |
Wells
Fargo Clearing Services, LLC 1 North Jefferson Ave, St. Louis, MO
63103 |
6.72% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.36% |
Global
X SuperDividend®
U.S. ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
18.73% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
11.95% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
11.11% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
6.75% |
Wells
Fargo Clearing Services, LLC 1 North Jefferson Ave, St. Louis, MO
63103 |
5.91% |
Global
X S&P 500®
Covered Call ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
11.95% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
11.67% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
10.34% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.26% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.76% |
Global
X NASDAQ 100®
Covered Call ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
14.47% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
14.15% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
12.51% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.46% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
5.12% |
Global
X MSCI SuperDividend®
Emerging Markets ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
14.77% |
HSBC
Bank USA, National Association/Clearing 452 Fifth Avenue, New York, NY
10018 |
13.06% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
10.74% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
10.62% |
Goldman
Sachs International 133 Peterborough Court, 4th Floor, London, UK ECY
A2BB |
9.43% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.14% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.28% |
Global
X SuperDividend®
REIT ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
21.73% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
11.89% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
9.34% |
JPMorgan
Chase Bank, National Association 14201 Dallas Parkway, Chase
International Plaza, Dallas, TX 75254-2916 |
6.97% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
6.41% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
5.85% |
LPL
Financial LLC LPL Financial, 4707 Executive Dr., San Diego, CA
92121-3091 |
5.71% |
Global
X Renewable Energy Producers ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
20.73% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
19.35% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.13% |
Brown
Brothers Harriman and Company/ETF 525 Washington Blvd, Newport Towers,
Jersey City, NJ 07310 |
8.84% |
Citibank,
N.A./S.D. Indeval Institucion para el Deposito de Valores, S.A. de
C.V. Av. Paseo de la Reforma 255, Mexico City, Mexico 06500 |
6.26% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.36% |
Global
X S&P 500®
Catholic Values ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
15.59% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
14.33% |
Morgan
Stanley Smith Barney LLC 1 Harborside Financial Center, Plaza II,
Jersey City, NJ 07311 |
8.62% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
7.52% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.63% |
Vanguard
Marketing Corporation 100 Vanguard Boulevard, Malvern, PA
19355 |
5.28% |
Global
X MSCI SuperDividend®
EAFE ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
25.46% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
18.12% |
LPL
Financial LLC LPL Financial, 4707 Executive Dr., San Diego, CA
92121-3091 |
12.56% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
8.42% |
Axos
Clearing LLC 1200 Landmark Center, Suite 800, Omaha, NE
68102-1916 |
5.50% |
Global
X E-commerce ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
JPMorgan
Chase Bank, National Association 14201 Dallas Parkway, Chase
International Plaza, Dallas, TX 75254-2916 |
20.38% |
UBS
Financial Services Inc. 1000 Harbor Boulevard, Weehawken, NJ
07086-6790 |
11.12% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
9.35% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
8.31% |
Axos
Clearing LLC 1200 Landmark Center, Suite 800, Omaha, NE
68102-1916 |
5.71% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
5.12% |
Global
X Russell 2000 Covered Call ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
17.58% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
13.77% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
13.64% |
Merrill
Lynch, Pierce, Fenner & Smith Incorporated One Bryant Park, New
York, NY 10036 |
5.34% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
5.14% |
Global
X S&P Catholic Values Developed ex-U.S. ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
26.87% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
16.31% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
12.08% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
11.88% |
RBC
Dominion Securities Inc./CDS Commerce Court South, P.O. Box 50,
Toronto, Ontario, Canada M5J 2W7 |
8.92% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
7.08% |
J.P.
Morgan Securities
LLC/JPMC
383
Madison Ave, New York, NY 10179 |
6.40% |
Global
X Nasdaq 100®
Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
19.80% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
12.46% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
10.81% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
7.03% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
6.62% |
The
Bank of New York Mellon One Wall Street, 5th Floor, New York, NY
10286-0001 |
6.15% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
5.72% |
Global
X S&P 500®
Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
48.75% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
13.27% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
8.48% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
6.39% |
Global
X Emerging Markets Internet & E-commerce ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
J.P.
Morgan Securities
LLC/JPMC
383
Madison Ave, New York, NY 10179 |
17.92% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
15.88% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
15.10% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
9.54% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
7.00% |
Global
X S&P 500®
Tail Risk ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
85.70% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
8.74% |
Global
X S&P 500®
Risk Managed Income ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
34.58% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
19.76% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
11.56% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
9.03% |
Global
X S&P 500®
Collar 95-110 ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
57.79% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
23.79% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
6.98% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
5.03% |
Global
X NASDAQ 100®
Tail Risk ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
60.08% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
21.94% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
8.46% |
Global
X NASDAQ 100®
Risk Managed Income ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
18.10% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
17.70% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
14.27% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
14.06% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
9.13% |
E*Trade
Securities LLC 1271 Avenue of the Americas, 14th Floor, New York, NY
10020 |
5.93% |
Global
X NASDAQ 100®
Collar 95-110 ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
75.58% |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
8.15% |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
5.70% |
Global
X Disruptive Materials
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
26.46% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
23.64% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
15.01% |
J.P.
Morgan Securities
LLC/JPMC
383
Madison Ave, New York, NY 10179 |
9.10% |
Citibank,
N.A. 3800 Citigroup Center, Tampa, FL 33610-9122 |
7.29% |
Global
X Dow 30®
Covered Call ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
28.86% |
National
Financial Services LLC 200 Liberty Street, New York, NY 10281 |
19.30% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
14.15% |
Pershing
LLC One Pershing Plaza, Jersey City, NJ 07399 |
9.35% |
Global
X Russell 2000 Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Interactive
Brokers, LLC/Retail Clearance Two Pickwick Plaza, 2nd Floor, Greenwich,
CT 06830 |
58.04% |
Charles
Schwab & Co., Inc. 101 Montgomery Street, San Francisco, CA
94104 |
23.25% |
TD
Ameritrade Clearing, Inc. 200 S 108th Ave, Omaha, NE 68154 |
5.20% |
Global
X Financials Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
89.63% |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
6.33% |
Global
X Health Care Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
Goldman,
Sachs & Co. LLC 180 Maiden Lane, New York, NY 10038 |
88.78% |
Global
X Information Technology Covered Call & Growth ETF
|
|
|
|
|
|
Name
and Address of Beneficial Owner |
Percentage
of Outstanding Shares of Fund Owned |
BofA
Securities, Inc. 1 Bryant Park, New York, NY 10036 |
96.71% |
INDEPENDENT
TRUSTEE COUNSEL
Stradley
Ronon Stevens & Young, LLP, with offices at 2000 K Street N.W. Suite 700,
Washington, DC 20006, is Fund Counsel and Counsel to the Independent Trustees of
the Trust.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers
LLP serves as the Funds' independent registered public accounting
firm.
SECURITIES
LENDING AGENTS
The
Bank of New York Mellon and Brown Brothers Harriman & Co. serve as the
securities lending agents for the Trust.
ADDITIONAL
INFORMATION
The
Prospectus and this SAI do not contain all the information included in the
registration statement filed with the SEC under the Securities Act with respect
to the securities offered by the Trust's Prospectus. Certain portions of the
registration statement have been omitted from the Prospectus and this SAI
pursuant to the rules and regulations of the SEC. The registration statement,
including the exhibits filed therewith, may be examined at the office of the SEC
in Washington, D.C.
Statements
contained in the Prospectus or in this SAI as to the contents of any contract or
other documents referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement of which the Prospectus and this SAI form
a part, each such statement being qualified in all respects by such
reference.
APPENDIX
A
DESCRIPTION
OF CORPORATE BOND RATINGS
Following
are expanded explanations of the ratings shown in the Prospectus and this
SAI.
Description
of Moody's Investors Service, Inc. - Global Long-Term Obligation
Ratings
Ratings
assigned on Moody's global long-term rating scale are forward-looking opinions
of the relative credit risks of financial obligations issued by non-financial
corporates, financial institutions, structured finance vehicles, project finance
vehicles, and public sector entities. Long-term ratings are assigned to issuers
or obligations with an original maturity of one year or more and reflect both on
the likelihood of a default on contractually promised payments and the expected
financial loss suffered in the event of default. Such ratings have been
published by Moody's Investors Service, Inc. and Moody's Analytics
Inc.
Aaa:
Obligations rated Aaa are judged to be of the highest quality, subject to the
lowest level of credit risk.
Aa:
Obligations
rated Aa are judged to be of high quality and are subject to very low credit
risk.
A:
Obligations rated A are judged to be upper-medium grade and are subject to low
credit risk.
Baa:
Obligations rated Baa are judged to be medium-grade and subject to moderate
credit risk and as such may possess certain speculative
characteristics.
Ba:
Obligations rated Ba are judged to be speculative and are subject to substantial
credit risk.
B:
Obligations rated B are considered speculative and are subject to high credit
risk.
Caa:
Obligations
rated Caa are judged to be speculative of poor standing and are subject to very
high credit risk.
Ca:
Obligations
rated Ca are highly speculative and are likely in, or very near, default, with
some prospect of recovery of principal and interest.
C:
Obligations rated C are the lowest rated and are typically in default, with
little prospect for recovery of principal or interest.
Note:
Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category. Additionally, a "(hyb)" indicator is appended to
all ratings of hybrid securities issued by banks, insurers, finance companies,
and securities firms.*
*
By their terms, hybrid securities allow for the omission of scheduled dividends,
interest, or principal payments, which can potentially result in impairment if
such an omission occurs. Hybrid securities may also be subject to contractually
allowable write-downs of principal that could result in impairment. Together
with the hybrid indicator, the long-term obligation rating assigned to a hybrid
security is an expression of the relative credit risk associated with that
security.
Description
of Moody's Investors Service, Inc. - National Long-Term Scale
Ratings
Moody's
long-term National Scale Ratings (NSRs) are opinions of the relative
creditworthiness of issuers and financial obligations within a particular
country. NSRs are not designed to be compared among countries; rather, they
address relative credit risk within a given country. Moody's assigns national
scale ratings in certain local capital markets in which investors have found the
global rating scale provides inadequate differentiation among credits or is
inconsistent with a rating scale already in common use in the country. In each
specific country, the last two characters of the rating indicate the country in
which the issuer is located (e.g., Aaa.br for Brazil).
Aaa.n:
Issuers
or issues rated Aaa.n demonstrate the strongest creditworthiness relative to
other domestic issuers.
Aa.n:
Issuers or issues rated Aa.n demonstrate very strong creditworthiness relative
to other domestic issuers.
A.n:
Issuers
or issues rated A.n present above-average creditworthiness relative to other
domestic issuers.
Baa.n:
Issuers
or issues rated Baa.n represent average creditworthiness relative to other
domestic issuers.
Ba.n:
Issuers
or issues rated Ba.n demonstrate below-average creditworthiness relative to
other domestic issuers.
B.n:
Issuers
or issues rated B.n demonstrate weak creditworthiness relative to other domestic
issuers.
Caa.n:
Issuers
or issues rated Caa.n demonstrate very weak creditworthiness relative to other
domestic issuers.
Ca.n:
Issuers
or issues rated Ca.n demonstrate extremely weak creditworthiness relative to
other domestic issuers.
C.n:
Issuers
or issues rated C.n demonstrate the weakest creditworthiness relative to other
domestic issuers.
Note:
Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
classification from Aa through Caa. The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category. National scale long-term ratings of D.ar and E.ar
may also be applied to Argentine obligations.
Description
of S&P Global Ratings' - Long-Term Issue Credit Ratings*
Issue
credit ratings are based, in varying degrees, on S&P Global Ratings'
analysis of the following considerations:
•Likelihood
of payment—capacity and willingness of the obligor to meet its financial
commitment on an obligation in accordance with the terms of the
obligation;
•Nature
and provisions of the obligation, and the promise S&P Global Ratings
imputes.
•Protection
afforded by, and relative position of, the financial obligation in the event of
a bankruptcy, reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
Issue
ratings are an assessment of default risk, but may incorporate an assessment of
relative seniority or ultimate recovery in the event of default. Junior
obligations are typically rated lower than senior obligations, to reflect the
lower priority in bankruptcy, as noted above. (Such differentiation may apply
when an entity has both senior and subordinated obligations, secured and
unsecured obligations, or operating company and holding company
obligations.)
AAA:
An
obligation rated 'AAA' has the highest rating assigned by S&P Global
Ratings. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA:
An
obligation rated 'AA' differs from the highest-rated obligations only to a small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A:
An
obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB:
An
obligation rated 'BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB;
B; CCC; CC; and C: Obligations
rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant
speculative characteristics. 'BB' indicates the least degree of speculation and
'C' the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB:
An
obligation rated 'BB' is less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the
obligation.
B:
An
obligation rated 'B' is more vulnerable to nonpayment than obligations rated
'BB', but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC:
An obligation rated 'CCC' is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the
obligation.
CC:
An
obligation rated 'CC' is currently highly vulnerable to nonpayment. The 'CC'
rating is used when a default has not yet occurred, but S&P Global Ratings
expects default to be a virtual certainty, regardless of the anticipated time to
default.
C:
An
obligation rated 'C' is currently highly vulnerable to nonpayment, and the
obligation is expected to have lower relative seniority or lower ultimate
recovery compared to obligations that are rated higher.
D:
An
obligation rated 'D' is in default or in breach of an imputed promise. For
non-hybrid capital instruments, the 'D' rating category is used when payments on
an obligation are not made on the date due, unless S&P Global Ratings
believes that such payments will be made within five business days in the
absence of a stated grace period or within the earlier of the stated grace
period or 30 calendar days. The 'D' rating also will be used upon the filing of
a bankruptcy petition or the taking of similar action and where default on an
obligation is a virtual certainty, for example due to automatic stay provisions.
A rating on an obligation is lowered to 'D' if it is subject to a distressed
exchange offer.
*The
ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating
categories.
Description
of DBRS - Long Term Obligation Ratings:
The
DBRS® long-term rating scale provides an opinion on the risk of default. That
is, the risk that an issuer will fail to satisfy its financial obligations in
accordance with the terms under which an obligation has been issued. Ratings are
based on quantitative and qualitative considerations relevant to the issuer, and
the relative ranking of claims. All rating categories other than AAA and D also
contain subcategories "(high)" and "(low)". The absence of either a "(high)" or
"(low)" designation indicates the rating is in the middle of the
category.
AAA:
Highest credit quality. The capacity for the payment of financial obligations is
exceptionally high and unlikely to be adversely affected by future
events.
AA:
Superior credit quality. The capacity for the payment of financial obligations
is considered high. Credit quality differs from AAA only to a small degree.
Unlikely to be significantly vulnerable to future events.
A:
Good credit quality. The capacity for the payment of financial obligations is
substantial, but of lesser credit quality than AA. May be vulnerable to future
events, but qualifying negative factors are considered manageable.
BBB:
Adequate credit quality. The capacity for the payment of financial obligations
is considered acceptable. May be vulnerable to future events.
BB:
Speculative, non-investment grade credit quality. The capacity for the payment
of financial obligations is uncertain. Vulnerable to future events.
B:
Highly speculative credit quality. There is a high level of uncertainty as to
the capacity to meet financial obligations.
CCC,
CC, C:
Very highly speculative credit quality. In danger of defaulting on financial
obligations. There is little difference between these three categories, although
CC and C ratings are normally applied to obligations that are seen as highly
likely to default, or subordinated to obligations rated in the CCC to B range.
Obligations in respect of which default has not technically taken place but is
considered inevitable may be rated in the C category.
D:
When
the issuer has filed under any applicable bankruptcy, insolvency or winding up
statute or there is a failure to satisfy an obligation after the exhaustion of
grace periods, a downgrade to D may occur. DBRS may also use SD (Selective
Default) in cases where only some securities are impacted, such as the case of a
"distressed exchange."
GLX-SX-010-1100