|
|
|
|
|
|
Global
X Social Media ETF
NASDAQ:
SOCL |
Global
X S&P 500®
Covered Call ETF
NYSE
Arca: XYLD |
Global
X Lithium & Battery Tech ETF
NYSE
Arca: LIT |
Global
X Russell 2000 Covered Call ETF
Cboe
BZX: RYLD |
Global
X E-commerce ETF
NASDAQ:
EBIZ |
Global
X Nasdaq 100®
Covered Call & Growth ETF
NASDAQ:
QYLG |
Global
X Emerging Markets Internet & E-commerce ETF
NASDAQ:
EWEB |
Global
X S&P 500®
Covered Call & Growth ETF
NYSE
Arca: XYLG |
Global
X SuperDividend®
ETF
NYSE
Arca: SDIV |
Global
X SuperIncome™ Preferred ETF
NYSE
Arca: SPFF |
Global
X SuperDividend®
U.S. ETF
NYSE
Arca: DIV |
Global
X Renewable Energy Producers ETF
NASDAQ:
RNRG |
Global
X MSCI SuperDividend®
EAFE ETF
NASDAQ:
EFAS |
Global
X S&P 500®
Catholic Values ETF
NASDAQ:
CATH |
Global
X MSCI SuperDividend®
Emerging Markets ETF
NYSE
Arca: SDEM |
Global
X S&P Catholic Values Developed ex-U.S. ETF
NASDAQ:
CEFA |
Global
X SuperDividend®
REIT ETF
NASDAQ:
SRET |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF*
NASDAQ:
CAGG |
Global
X NASDAQ 100®
Covered Call ETF
NASDAQ:
QYLD |
Global
X Guru®
Index ETF
NYSE
Arca: GURU |
|
|
Prospectus
March 1,
2021
*
Not open for investment.
The
Securities and Exchange Commission ("SEC") has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
Shares
in a Fund (defined below) are not guaranteed or insured by the Federal Deposit
Insurance Corporation or any other agency of the U.S. Government, nor are shares
deposits or obligations of any bank. Such shares in a Fund involve investment
risks, including the loss of principal.
|
|
|
As
permitted by regulations adopted by the SEC, paper copies of the Funds’
shareholder reports will no longer be sent by mail, unless you
specifically request paper copies of the reports from your financial
intermediary (such as a broker-dealer or bank). Instead, shareholder
reports will be available on the Funds’ website
(www.globalxetfs.com/explore), and you will be notified by mail each time
a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you
will not be affected by this change and you need not take any action. You
may elect to receive shareholder reports and other communications from the
Funds electronically anytime by contacting your financial intermediary.
You may elect to receive all future Fund shareholder reports in paper free
of charge. Please contact your financial intermediary to inform them that
you wish to continue receiving paper copies of Fund shareholder reports
and for details about whether your election to receive reports in paper
will apply to all funds held with your financial
intermediary. |
TABLE
OF CONTENTS
|
|
|
|
|
|
FUND
SUMMARIES |
|
ADDITIONAL
INFORMATION ABOUT THE FUNDS |
|
A
FURTHER DISCUSSION OF PRINCIPAL RISKS |
|
A
FURTHER DISCUSSION OF OTHER RISKS |
|
PORTFOLIO
HOLDINGS INFORMATION |
|
FUND
MANAGEMENT |
|
DISTRIBUTOR |
|
BUYING
AND SELLING FUND SHARES |
|
FREQUENT
TRADING |
|
DISTRIBUTION
AND SERVICE PLAN |
|
DIVIDENDS
AND DISTRIBUTIONS |
|
TAXES |
|
DETERMINATION
OF NET ASSET VALUE |
|
PREMIUM/DISCOUNT
AND SHARE INFORMATION |
|
TOTAL
RETURN INFORMATION |
|
INFORMATION
REGARDING THE INDICES AND THE INDEX PROVIDERS |
|
OTHER
SERVICE PROVIDERS |
|
ADDITIONAL
INFORMATION |
|
FINANCIAL
HIGHLIGHTS |
|
OTHER
INFORMATION |
|
FUND
SUMMARIES
Global X Social Media
ETF
Ticker:
SOCL Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X Social Media ETF
seeks to provide investment results that correspond generally to the price and
yield performance, before fees and expenses, of the Solactive Social Media Total
Return Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.65% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.65% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$66 |
$208 |
$362 |
$810 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 19.23% of the average value of the
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund will invest at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund's 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Fund may lend
securities representing up to one-third of the value of the Fund’s total assets
(including the value of the collateral received).
The
Underlying Index tracks the equity performance of the largest and most liquid
companies involved in the social media industry, including companies that
provide social networking, file sharing, and other web-based media applications,
as defined by Solactive AG, the provider of the Underlying Index ("Index
Provider"). As of December 31, 2020, the Underlying Index had 38
constituents, 15 of which are foreign companies. The Fund's investment objective
and Underlying Index may be changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the interactive media and services industry and had significant
exposure to the communication services
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Investing in Social Media Companies:
The Fund invests in securities of social media companies, including companies
that provide social networking, file sharing, and other web-based media
applications. The risks related to investing in such companies include
disruption in service caused by hardware or software failure, interruptions or
delays in service by third-party data center hosting facilities and maintenance
providers, security breaches involving certain private, sensitive, proprietary
and confidential information managed and transmitted by social media companies,
and privacy concerns and laws, evolving Internet regulation and other foreign or
domestic regulations that may limit or otherwise affect the operations of such
companies. Additionally, the collection of data from consumers and other sources
could face increased scrutiny as regulators consider how the data is collected,
stored, safeguarded and used. Furthermore, the business models employed by the
companies in the social media industry may not prove to be successful. Through
its portfolio companies’ customers and suppliers, the Fund is exposed to
Asian
Economic Risk and
European
Economic Risk.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Communication Services Sector:
Companies
in the communications sector may be affected by industry competition,
substantial capital requirements, government regulation, cyclicality of revenues
and earnings, obsolescence of communications products and services due to
technological advancement, a potential decrease in the discretionary income of
targeted individuals and changing consumer tastes and interests.
Risks
Related to Investing in the Interactive Media and Services Industry:
The
success of the interactive media and services industry may be tied closely to
the performance of the overall domestic and global economy, interest rates,
competition and consumer confidence. Success depends heavily on disposable
household income and consumer spending. Also, companies in the interactive media
and services industry may be subject to severe competition, which may have an
adverse impact on their respective profitability. Changes in demographics and
consumer tastes can also affect the demand for, and success of, interactive
media and services in the marketplace.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in Emerging Markets:
The Fund targets social media companies globally and is expected to invest in
securities in emerging market countries. Investments in emerging markets may be
subject to a greater risk of loss than investments in developed markets.
Securities markets of emerging market countries are less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation, and are not subject to as extensive and frequent
accounting, financial, and other reporting requirements as the securities
markets of more developed countries, and there may be greater risk associated
with the custody of securities in emerging markets. It may be difficult or
impossible for the Fund to pursue claims against an emerging market issuer in
the courts of an
emerging
market country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in Russia:
Investing
in Russian securities involves significant risks, including legal, regulatory
and economic risks that are specific to Russia. In addition, investing in
Russian securities involves risks associated with the settlement of portfolio
transactions and loss of the Fund’s ownership rights in its portfolio securities
as a result of the system of share registration and custody in Russia. A number
of jurisdictions, including the U.S., Canada and the European Union, have
imposed economic sanctions on certain Russian individuals and Russian corporate
entities. Additionally, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Russian government or
Russian companies, may impact Russia’s economy and Russian issuers of securities
in which the Fund invests.
Risk
of Investing in South Korea: Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks that are specific to South Korea. In
addition, economic and political developments of South Korea’s neighbors,
including escalated tensions involving North Korea and any outbreak of
hostilities involving North Korea, or even the threat of an outbreak of
hostilities, may have a severe adverse effect on the South Korean
economy.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Investable
Universe of Companies Risk:
The investable universe of companies in which the Fund may invest may be
limited. If a company no longer meets the Index Provider’s criteria for
inclusion in the Underlying Index, the Fund may need to reduce or eliminate its
holdings in that company. The reduction or elimination of the Fund’s
holdings in the company may have an adverse impact on the liquidity of the
Fund’s overall portfolio holdings and on Fund performance.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased
liquidity
in the securities markets. The Fund’s NAV could decline over short periods due
to short-term market movements and over longer periods during market downturns.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the
Fund.
In addition, transactions by large shareholders may account for a large
percentage of the trading volume on a national securities exchange and may,
therefore, have a material upward or downward effect on the market price of the
Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
44.80% |
Worst
Quarter: |
3/31/2020 |
-14.80% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (11/14/2011) |
Global
X Social Media ETF: |
|
|
|
·Return before
taxes |
78.18% |
25.80% |
17.19% |
·Return
after taxes on distributions1 |
78.18% |
25.63% |
17.08% |
·Return
after taxes on distributions and sale of Fund Shares1 |
46.28% |
21.31% |
14.56% |
Solactive
Social Media Total Return Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
79.26% |
26.57% |
17.81% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.25% |
12.26% |
10.78% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio
Manager
of the Fund since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund
since March 1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June
10, 2019. Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund
since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X Lithium & Battery Tech
ETF
Ticker:
LIT Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The Global X Lithium &
Battery Tech ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Solactive Global Lithium Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.75% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.75% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$77 |
$240 |
$417 |
$930 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 65.14% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund also invests at least 80% of its total assets in securities of
companies that are economically tied to the lithium industry. Companies
economically tied to the lithium industry include those engaged in lithium
mining and lithium battery production. The Fund's 80% investment policies are
non-fundamental and require 60 days prior written notice to shareholders before
they can be changed. The Fund may lend securities representing up to one-third
of the value of the Fund’s total assets (including the value of the collateral
received).
The
Underlying Index is designed to measure broad-based equity market performance of
global companies involved in the lithium industry, as defined by Solactive AG,
the provider of the Underlying Index ("Index Provider"). As of December 31,
2020, the Underlying Index had 39 constituents, 34 of which are foreign
companies. The Fund's investment objective and Underlying Index may be changed
without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the chemicals industry and had significant exposure to the
materials sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
China
A-Shares Risk:
A-Shares are issued by companies incorporated in mainland China and are traded
on Chinese exchanges. Foreign investors can access A-Shares by obtaining a QFII
or a RQFII license, as well as through the Stock Connect Program, which is a
securities trading and clearing program with an aim to achieve mutual stock
market access between the China and Hong Kong markets. Stock Connect was
developed by Hong Kong Exchanges and Clearing Limited, the SSE (in the case of
Shanghai Connect) or the SZSE (in the case of Shenzhen Connect), and the China
Securities Depository and Clearing Corporation Limited (“CSDCC”). The Fund
currently intends to gain exposure to A-Shares through the Stock Connect
Programs. Investments in A-Shares are subject to various regulations and limits,
and the recoupment or repatriation of assets invested in A-Shares is subject to
restrictions by the Chinese government. In addition, investors from outside
Mainland China may face difficulties or prohibitions accessing certain A-Shares
that are part of a restricted list in countries such as the U.S. A-Shares may be
subject to frequent and widespread trading halts and may become illiquid.
Trading suspensions in certain stock could lead to greater market execution risk
and costs for the Fund, and the creation and redemption of Creation Units (as
defined below) may also be disrupted. These risks, among others, could adversely
affect the value of the Fund’s investments.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Small-Capitalization
Companies Risk:
Compared to mid- and large-capitalization companies, small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid.
Cash
Transaction Risk:
Unlike most exchange-traded funds ("ETFs"), the Fund intends to effect a
significant portion of creations and redemptions for cash, rather than in-kind
securities. As a result, an investment in the Fund may be less tax-efficient
than an investment in a more conventional ETF. Moreover, cash transactions may
have to be carried out over several days if the securities market is relatively
illiquid and may involve considerable brokerage fees and taxes. These factors
may result in wider spreads between the bid and the offered prices of the Fund’s
Shares than for more conventional ETFs.
Commodity
Exposure Risk: The
Fund invests in companies that are economically tied to the lithium industry,
which may be susceptible to fluctuations in the underlying commodities market.
Commodity prices may be influenced or characterized by unpredictable factors,
including, where applicable, high volatility, changes in supply and demand
relationships, weather, agriculture, trade, changes in interest rates and
monetary and other governmental policies, action and inaction. Securities of
companies held by the Fund that are dependent on a single commodity, or are
concentrated on a single commodity sector, may typically exhibit even higher
volatility attributable to commodity prices.
Commodity
Price Relationship Risk:
The Underlying Index measures the performance of companies involved in the
lithium mining and lithium-ion battery industries and not the performance of the
price of lithium itself. The securities of companies involved in the lithium
industry may under- or over-perform the price of lithium over the short-term or
the long-term.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Chemicals Industry:
The chemicals industry can be significantly affected by intense competition,
product obsolescence, raw materials prices, and government regulation, and can
be subject to risks associated with the production, handling and disposal of
hazardous components, and litigation arising out of environmental contamination.
Risks
Related to Investing in the Exploration Industry:
The exploration and development of mineral deposits involve significant
financial risks over a significant period of time, which even a combination of
careful evaluation, experience and knowledge may not eliminate. Few properties
which are explored are ultimately developed into producing mines. Major
expenditures may be required to establish reserves by drilling and to construct
mining and processing facilities at a site. In addition, mineral exploration
companies typically operate at a loss and are dependent on securing equity
and/or debt financing, which might be more difficult to secure for an
exploration company than for a more established counterpart.
Risks
Related to Investing in the Lithium-Ion Battery Industry:
Securities in the Fund’s portfolio involved in the manufacturing of lithium-ion
batteries are subject to the effects of price fluctuations of traditional and
alternative sources of energy, developments in battery and alternative energy
technology, the possibility that government subsidies for alternative energy
will be eliminated and the possibility that lithium-ion technology is not
suitable for widespread adoption.
Risks
Related to Investing in the Materials Sector:
Companies in the materials sector are affected by commodity price volatility,
exchange rates, import controls and worldwide competition. At times, worldwide
production of industrial materials has exceeded demand, leading to poor
investment returns or outright losses. Issuers in the materials sector are at
risk of depletion of resources, technological progress, labor relations,
governmental regulations and environmental damage and product liability
claims.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Exposure
to Non-Lithium Markets Risk:
Although the Fund invests a large percentage of its assets in the securities of
companies that are active in the exploration and/or mining of lithium,
these companies may derive a significant percentage of their profits from other
business activities including, for example, the production of fertilizers
and/or specialty and industrial chemicals. As a result, the performance of these
markets and the profits of these companies from such activities may
significantly impact the Fund’s performance.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Chile:
Investments
in Chilean issuers involve risks that are specific to Chile, including legal,
regulatory, political, currency, environmental and economic risks. Among other
things, the Chilean economy is heavily dependent on the export of certain
commodities.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual
and threatened responses to such activity, including purchasing restrictions,
sanctions, tariffs or cyberattacks on the Chinese government or Chinese
companies, may impact China’s economy and Chinese issuers of securities in which
the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Emerging Markets:
The Fund targets lithium companies globally and is expected to invest in
securities in emerging market countries. Investments in emerging markets may be
subject to a greater risk of loss than investments in developed markets.
Securities markets of emerging market countries are less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation, and are not subject to as extensive and frequent
accounting, financial, and other reporting requirements as the securities
markets of more developed countries, and there may be greater risk associated
with the custody of securities in emerging markets. It may be difficult or
impossible for the Fund to pursue claims against an emerging market issuer in
the courts of an emerging market country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in South Korea: Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks that are specific to South Korea. In
addition, economic and political developments of South Korea’s neighbors,
including escalated tensions involving North Korea and any outbreak of
hostilities involving North Korea, or even the threat of an outbreak of
hostilities, may have a severe adverse effect on the South Korean
economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Investable
Universe of Companies Risk:
The investable universe of companies in which the Fund may invest may be
limited. If a company no longer meets the Index Provider’s criteria for
inclusion in the Underlying Index, the Fund may need to
reduce
or eliminate its holdings in that company. The reduction or elimination of
the Fund’s holdings in the company may have an adverse impact on the liquidity
of the Fund’s overall portfolio holdings and on Fund performance.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Risks
Related to Stock Connect Programs:
The Stock Connect Programs are subject to daily and aggregate quota limitations,
which could affect the Fund’s ability to enter into and exit Stock Connect
positions on a timely basis. The Shenzen and Shanghai markets may operate when
the Stock Connect Programs are not active, and consequently the prices of shares
held via Stock Connect Programs may fluctuate at times when the Fund is unable
to add to or exit its positions. The Stock Connect Programs are new, and the
effect of the introduction of large numbers of foreign investors on the market
for trading Chinese-listed securities is not well understood. Regulations, such
as limitations on redemptions or suspension of trading, may adversely impact the
value of the Fund’s investments. The Fund's investments in A-Shares though the
Stock Connect Program are held by its custodian in accounts in 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 the 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 no guarantee that the Shenzen, Shanghai, and Hong
Kong Stock Exchanges will continue to support the Stock Connect Programs in the
future.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value
of
the loaned securities increases and the collateral is not increased accordingly.
Additionally, the Fund will bear any loss on the investment of cash collateral
it receives. These events could also trigger adverse tax consequences for the
Fund. As securities on loan may not be voted by the Fund, there is a risk that
the Fund may not be able to recall the securities in sufficient time to vote on
material proxy matters.
Tax
Status Risk: The
Fund intends to pay dividends each taxable year to enable it to continue to
satisfy the distribution requirements necessary to qualify for treatment as a
regulated investment company ("RIC"). If the Fund were to distribute to its
shareholders less than the minimum amount required for any year, the Fund would
become subject to federal income tax for that year on all of its taxable income
and recognized gains, even those distributed to its shareholders. In addition,
under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund may
not earn more than 10% of its annual gross income from gains resulting from the
sale of commodities and precious metals. This could make it more difficult for
the Fund to pursue its investment strategy and maintain qualification as a RIC.
In lieu of potential disqualification as a RIC, the Fund is permitted to pay a
tax for certain failures to satisfy this income requirement, which, in general,
are limited to those due to reasonable cause and not willful
neglect.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
12/31/2020 |
55.63% |
Worst
Quarter: |
9/30/2011 |
-31.46% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Ten
Years Ended December 31, 2020 |
Global
X Lithium & Battery Tech ETF: |
|
|
|
·Return before
taxes |
126.51% |
27.58% |
4.66% |
·Return
after taxes on distributions1 |
126.18% |
26.73% |
4.24% |
·Return
after taxes on distributions and sale of Fund
Shares1 |
74.99% |
22.46% |
3.49% |
Solactive
Global Lithium Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
125.58% |
27.61% |
5.13% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.25% |
12.26% |
9.12% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund
since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March
1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019.
Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund since
December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X E-commerce ETF
Ticker:
EBIZ Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X E-commerce ETF
("Fund") seeks to provide investment results that correspond generally to the
price and yield performance, before fees and expenses, of the Solactive
E-commerce Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.50% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.50% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$51 |
$160 |
$280 |
$628 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 42.01% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The Fund may lend securities representing up to one-third of the value of the
Fund’s total assets (including the value of the collateral received).
The
Underlying 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 Underlying Index
("Index Provider").
In
constructing the Underlying 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 Underlying 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 Underlying Index, certain minimum
market capitalization and liquidity criteria, as defined by the Index Provider,
must be met. As of December 31, 2020, 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 Underlying Index. As of December 31, 2020, companies
listed in the following countries were eligible for inclusion in the Underlying
Index: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, South Korea, Taiwan,
Turkey, the United Kingdom, and the United States.
The
Underlying 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
Underlying Index may include large-, mid- or small-capitalization companies, and
components primarily include information technology and consumer discretionary
companies. As of December 31, 2020, the Underlying Index had 39
constituents. The Fund's investment objective and Underlying Index may be
changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"outperform" the Underlying Index and does not seek temporary defensive
positions when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental to
shareholders, such as when there are practical difficulties or substantial costs
involved in compiling a portfolio of equity securities to follow the Underlying
Index, in instances in which a security in the Underlying Index becomes
temporarily illiquid, unavailable or less liquid, or as a result of legal
restrictions or limitations (such as tax diversification requirements) that
apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the internet and direct marketing retail industry and had
significant exposure to the consumer discretionary
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Investing in E-commerce Companies: E-commerce
companies typically face intense competition and are subject to fluctuating
consumer demand. Many of these companies compete aggressively on price,
potentially affecting their long run profitability. Due to the online nature of
E-commerce companies and their involvement in processing, storing and
transmitting large amounts of data, these companies are particularly vulnerable
to cyber security risk. This includes threats to operational software and
hardware, as well as theft of personal and transaction records and other
customer data. In the event of a cyberattack, E-commerce companies could suffer
serious adverse reputational and operational consequences, including liability
and litigation. E-commerce companies may participate in monopolistic practices
that could make them subject to higher levels of regulatory scrutiny and/or
potential break ups in the future, which could severely impact the viability of
these companies. Through its portfolio companies’ customers and suppliers, the
Fund is specifically exposed to Asian
Economic Risk,
European
Economic Risk
and North
American Economic Risk.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Consumer Discretionary Sector: The
consumer discretionary sector may be affected by changes in domestic and
international economies, exchange and interest rates, competition, consumers’
disposable income and consumer preferences, social trends and marketing
campaigns.
Risks
Related to Investing in the Internet and Direct Marketing Retail Industry:
Companies
in the internet and direct marketing retail industry are dependent on internal
infrastructure and on the availability, reliability and security of the internet
and related systems. Critical systems and operations may be vulnerable to damage
or interruption from fire, flood, power loss, telecommunications failure,
terrorist attacks, cyber-attacks, acts of war, break-ins, earthquake and similar
events. Any system interruption that results in the unavailability of a
company’s website or mobile app or reduced performance of transaction systems
could interrupt or substantially reduce a company’s ability to conduct its
business. Companies in the internet and direct marketing retail industry are
dependent on paid and unpaid natural search engines and are therefore dependent
on business decisions made by companies that offer natural search engines. Any
business changes by dominant providers of natural search engines can be
detrimental to an internet and direct marketing retail company’s business while
being totally outside of the control of such company.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in
more
developed markets. Less developed markets are more likely to experience problems
with the clearing and settling of trades and the holding of securities by local
banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Argentina:
Argentina has experienced high interest rates, economic volatility, severe
inflation, drastic currency devaluations and high unemployment rates. The
economy is heavily dependent on exports and commodities, making the economy
susceptible to fluctuations in commodity markets and sensitive to its
relationships with key trading partners. Argentina’s default on its debt in
2001, and its nationalization of private pensions in 2008, continues to impact
the confidence of investors in Argentina, which might adversely impact returns
in the Fund. Further defaults and related actions by Argentina may continue to
impact the confidence of investors in Argentina, which could limit the
government’s ability to borrow in the future. Argentina has privatized, certain
industries, which may lose money or be re-nationalized.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be
less
reliable or complete. There may be significant obstacles to obtaining
information necessary for investigations into or litigation against Chinese
companies and shareholders may have limited legal remedies. Investments in China
may be subject to loss due to expropriation or nationalization of assets and
property or the imposition of restrictions on foreign investments and
repatriation of capital. China has implemented a number of tax reforms in recent
years and may amend or revise its existing tax laws and/or procedures in the
future, possibly with retroactive effect. Changes in applicable Chinese tax law
could reduce the after-tax profits of the Fund, directly or indirectly,
including by reducing the after-tax profits of companies in China in which the
Fund invests. Uncertainties in Chinese tax rules could result in unexpected tax
liabilities for the Fund. Should legislation limit U.S. investors’ ability to
invest in specific Chinese companies through A-shares or other share class
listings that are part of the underlying holdings, these shares may be excluded
from Fund holdings.
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in Emerging Markets:
The Fund targets e-commerce companies globally and is expected to invest in
securities in emerging market countries. Investments in emerging markets may be
subject to a greater risk of loss than investments in developed markets.
Securities markets of emerging market countries are less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation, and are not subject to as extensive and frequent
accounting, financial, and other reporting requirements as the securities
markets of more developed countries, and there may be greater risk associated
with the custody of securities in emerging markets. It may be difficult or
impossible for the Fund to pursue claims against an emerging market issuer in
the courts of an emerging market country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases,
local
travel; significant disruptions to business operations (including business
closures); strained healthcare systems; disruptions to supply chains, consumer
demand and employee availability; and widespread uncertainty regarding the
duration and long-term effects of this pandemic. Some sectors of the economy and
individual issuers have experienced particularly large losses. In addition, the
COVID-19 pandemic may result in a sustained economic downturn or a global
recession, domestic and foreign political and social instability, damage to
diplomatic and international trade relations and increased volatility and/or
decreased liquidity in the securities markets. The Fund’s NAV could decline over
short periods due to short-term market movements and over longer periods during
market downturns.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Authorized Participants Concentration Risk may be heightened because the Fund
invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
55.92% |
Worst
Quarter: |
3/31/2020 |
-17.75% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Since
Inception (11/27/2018) |
Global
X E-commerce ETF: |
|
|
·Return before
taxes |
74.38% |
43.85% |
·Return
after taxes on distributions1 |
73.96% |
43.66% |
·Return
after taxes on distributions and sale of Fund Shares1 |
44.20% |
34.78% |
Solactive
E-commerce Index (net)
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
75.12% |
44.42% |
MSCI
ACWI Index (net)
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.25% |
17.24% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been Portfolio
Manager
of the Fund since the Fund's inception. Mr. Xie has been Portfolio Manager of
the Fund since March 1, 2019. Ms. Chan has been Portfolio Manager of the Fund
since June 10, 2019. Mr. Belanger and Ms. Yang have been Portfolio Managers of
the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X Emerging Markets Internet & E-commerce
ETF
Ticker:
EWEB Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X Emerging Markets
Internet & E-commerce ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the NASDAQ CTA Emerging Markets Internet & E-commerce Net Total
Return Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.65% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.65% |
1 Other Expenses are based
on estimated amounts for the current fiscal
year.
Example: The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
One
Year |
Three
Years |
$66 |
$208 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. This is a new fund and does not yet have
a portfolio turnover rate to disclose.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investments
purposes (if any), in the securities of the Underlying Index and in American
Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs") based on
the securities in the Underlying Index. The Fund's 80% investment policy is
non-fundamental and requires 60 days prior written notice to shareholders before
it can be changed.
The
Underlying 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 Underlying Index (the "Index Provider") and the Consumer Technology
Association (“CTA”). The Index Provider and the CTA have jointly developed the
eligibility and selection criteria for the Underlying Index. In order to be
eligible for inclusion in the Underlying 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.
The
Index Provider classifies countries as being “emerging markets” by employing
both a quantitative and qualitative review process. The quantitative criteria
that the Index Provider assesses include: (i) the Gross National Income (“GNI”)
per capita,
which
measures a country’s income divided by its population, which 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, the Index Provider applies a
supplementary qualitative review of each country’s investability to confirm each
country’s classification. The qualitative criteria that the Index Provider
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, the Index
Provider considers securities listed in Hong Kong (classified by the Index
Provider as a developed market) as eligible for inclusion in the Underlying
Index, to ensure representation in the Underlying Index of companies
incorporated or operating primarily in China.
The
eligible universe of the Underlying Index includes exchange-listed companies
that meet minimum market capitalization and liquidity criteria, as defined by
the Index Provider. As of December 31, 2020, 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 Underlying Index. As of December 31, 2020,
companies listed in the following countries were eligible for inclusion in the
Underlying Index: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece,
Hong Kong, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru,
Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey
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
Underlying 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
Underlying Index may include large-, mid- or small-capitalization companies, and
components primarily include communication services and consumer discretionary
companies. As of December 31, 2020, the Underlying Index had 49
constituents. The Fund's investment objective and Underlying Index may be
changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the internet and direct marketing retail industry and had
significant exposure to the consumer discretionary and communication services
sectors.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all
or part of your investment in the Fund, and the Fund’s performance could trail
that of other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Investing in Emerging Markets Internet & E-commerce
Companies: Emerging
Markets Internet & E-commerce Companies typically face intense competition
and are subject to fluctuating consumer demand. Many of these companies compete
aggressively on price, potentially affecting their long run profitability. Due
to the online nature of Emerging Markets Internet & E-commerce Companies and
their involvement in processing, storing and transmitting large amounts of data,
these companies are particularly vulnerable to cyber security risk. This
includes threats to operational software and hardware, as well as theft of
personal and transaction records and other customer data. In the event of a
cyberattack, Emerging Markets Internet & E-commerce Companies could suffer
serious adverse reputational and operational consequences, including liability
and litigation. E-commerce Companies may participate in monopolistic practices
that could make them subject to higher levels of regulatory scrutiny and/or
potential break ups in the future, which could severely impact the viability of
these companies. Through its portfolio companies’ customers and suppliers, the
Fund is specifically exposed to Asian
Economic Risk, European Economic Risk and
North American Economic Risk. Please
see "Reliance
on Trading Partners Risk"
in this Prospectus.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Communication Services Sector:
Companies
in the communications sector may be affected by industry competition,
substantial capital requirements, government regulation, cyclicality of revenues
and earnings, obsolescence of communications products and services due to
technological advancement, a potential decrease in the discretionary income of
targeted individuals and changing consumer tastes and interests.
Risks
Related to Investing in the Consumer Discretionary Sector: The
consumer discretionary sector may be affected by changes in domestic and
international economies, exchange and interest rates, competition, consumers’
disposable income and consumer preferences, social trends and marketing
campaigns.
Risks
Related to Investing in the Internet and Direct Marketing Retail Industry:
Companies
in the internet and direct marketing retail industry are dependent on internal
infrastructure and on the availability, reliability and security of the internet
and related systems. Critical systems and operations may be vulnerable to damage
or interruption from fire, flood, power loss, telecommunications failure,
terrorist attacks, cyber-attacks, acts of war, break-ins, earthquake
and
similar events. Any system interruption that results in the unavailability of a
company’s website or mobile app or reduced performance of transaction systems
could interrupt or substantially reduce a company’s ability to conduct its
business. Companies in the internet and direct marketing retail industry are
dependent on paid and unpaid natural search engines and are therefore dependent
on business decisions made by companies that offer natural search engines. Any
business changes by dominant providers of natural search engines can be
detrimental to an internet and direct marketing retail company’s business while
being totally outside of the control of such company.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Argentina:
Argentina has experienced high interest rates, economic volatility, severe
inflation, drastic currency devaluations and high unemployment rates. The
economy is heavily dependent on exports and commodities, making the economy
susceptible to fluctuations in commodity markets and sensitive to its
relationships with key trading partners. Argentina’s default on its debt in
2001, and its nationalization of private pensions in 2008, continues to impact
the confidence of investors in Argentina, which might adversely impact returns
in the Fund. Further defaults and related actions by Argentina may continue to
impact the confidence of investors in Argentina, which could limit the
government’s ability to borrow in the future. Argentina has privatized, certain
industries, which may lose money or be re-nationalized.
Risk
of Investing in Brazil: Investment
in Brazilian issuers involves risks that are specific to Brazil, including
legal, regulatory, political and economic risks. The Brazilian economy has
historically been exposed to high rates of inflation, debt, corruption, and
violence, each of which may reduce and/or prevent economic growth.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the
rapid
and pandemic spread of novel viruses commonly known as SARS, MERS, and COVID-19
(Coronavirus). Such health crises could exacerbate political, social, and
economic risks previously mentioned. Additionally, China is alleged to have
participated in state-sponsored cyberattacks against foreign companies and
foreign governments. Actual and threatened responses to such activity, including
purchasing restrictions, sanctions, tariffs or cyberattacks on the Chinese
government or Chinese companies, may impact China’s economy and Chinese issuers
of securities in which the Fund invests. Incidents involving China’s or the
region’s security, including the contagion of infectious viruses or diseases,
may cause uncertainty in Chinese markets and may adversely affect the Chinese
economy and the Fund’s investments. Export growth continues to be a major driver
of China’s rapid economic growth. Elevated trade tensions between China and its
trading partners, including the imposition of U.S. tariffs on certain Chinese
goods and increased international pressure related to Chinese trade policy and
forced technology transfers and intellectual property protections, may have a
substantial impact on the Chinese economy. Reduction in spending on Chinese
products and services, institution of additional tariffs or other trade barriers
(including as a result of heightened trade tensions between China and the U.S.
or in response to actual or alleged Chinese cyber activity), or a downturn in
any of the economies of China’s key trading partners may have an adverse impact
on the Chinese economy. The continuation or worsening of the current political
climate between China and the U.S. could result in additional regulatory
restrictions being contemplated or imposed in the U.S. or in China that could
impact the Fund’s ability to invest in certain companies. Chinese companies,
including Chinese companies that are listed on U.S. exchanges, are not subject
to the same degree of regulatory requirements, accounting standards or auditor
oversight as companies in more developed countries, and as a result, information
about the Chinese securities in which the Fund invests may be less reliable or
complete. There may be significant obstacles to obtaining information necessary
for investigations into or litigation against Chinese companies and shareholders
may have limited legal remedies. Investments in China may be subject to loss due
to expropriation or nationalization of assets and property or the imposition of
restrictions on foreign investments and repatriation of capital. China has
implemented a number of tax reforms in recent years and may amend or revise its
existing tax laws and/or procedures in the future, possibly with retroactive
effect. Changes in applicable Chinese tax law could reduce the after-tax profits
of the Fund, directly or indirectly, including by reducing the after-tax profits
of companies in China in which the Fund invests. Uncertainties in Chinese tax
rules could result in unexpected tax liabilities for the Fund. Should
legislation limit U.S. investors’ ability to invest in specific Chinese
companies through A-shares or other share class listings that are part of the
underlying holdings, these shares may be excluded from Fund holdings.
Risk
of Investing in Emerging Markets:
The Fund targets e-commerce companies globally and is expected to invest in
securities in emerging market countries. Investments in emerging markets may be
subject to a greater risk of loss than investments in developed markets.
Securities markets of emerging market countries are less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation, and are not subject to as extensive and frequent
accounting, financial, and other reporting requirements as the securities
markets of more developed countries, and there may be greater risk associated
with the custody of securities in emerging markets. It may be difficult or
impossible for the Fund to pursue claims against an emerging market issuer in
the courts of an emerging market country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in South Africa: Investing
in South African securities involves significant risks, including legal,
regulatory and economic risks specific to South Africa. Among other things,
South Africa’s economy is heavily dependent on its agriculture and mining
sectors, and, thus, susceptible to fluctuations in the commodity
markets.
Risk
of Investing in South Korea: Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks that are specific to South Korea. In
addition, economic and political developments of South Korea’s neighbors,
including escalated tensions involving North Korea and any outbreak of
hostilities involving North Korea, or even the threat of an outbreak of
hostilities, may have a severe adverse effect on the South Korean
economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be
deviations
between the current price of such an underlying security and the last quoted
price for the underlying security (i.e., the Fund’s quote from the closed
foreign market). These deviations could result in premiums or discounts to the
Fund’s NAV that may be greater than those experienced by other exchange-traded
funds ("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
New
Fund Risk: The
Fund is a new fund, with a limited operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. New funds are also subject
to Large Shareholder Risk.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its
methodology
may occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Reliance
on Trading Partners Risk: The
Fund invests in an economy that is heavily dependent upon trading with key
partners. Any reduction in this trading, including as a result of adverse
economic conditions in a trading partner’s economy, may cause an adverse impact
on the economy in which the Fund invests.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The Fund does not have a full calendar year
of performance. Once the Fund
has completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to the Underlying Index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the
future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Mr. Belanger and Ms. Yang have
been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
"Authorized Participants" (as defined in the SAI) who have entered into
agreements with the Fund's distributor, SEI Investments Distribution Co.
("Distributor"), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called “Creation Units”. The Fund will issue or redeem Creation
Units in return for a basket of cash and/or securities that the Fund specifies
any day that the national securities exchanges are open for business (“Business
Day”). An investor may incur costs attributable to the difference between the
highest price a buyer is willing to pay to purchase shares of the Fund (bid) and
the lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to
https://www.globalxetfs.com
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary's website for more
information.
Global
X SuperDividend®
ETF
Ticker:
SDIV Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X SuperDividend®
ETF ("Fund") seeks investment results that correspond generally to the price and
yield performance, before fees and expenses, of the Solactive Global
SuperDividend®
Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.58% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.01% |
Total
Annual Fund Operating Expenses: |
0.59% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$60 |
$189 |
$329 |
$738 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 124.55% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund's 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Fund may lend
securities representing up to one-third of the value of the Fund’s total assets
(including the value of the collateral received).
The
Underlying Index tracks the performance of 100 equally-weighted companies that
rank among the highest dividend yielding equity securities in the world,
including emerging market countries, as defined by Solactive AG, the provider of
the Underlying Index ("Index Provider"). The Fund's investment objective and
Underlying Index may be changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment
Risk:
The Fund may have exposure to companies that invest in real estate, such as
REITs, which exposes investors in the Fund to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which real
estate companies are organized and operated. Real estate is highly sensitive to
general and local economic conditions and developments and characterized by
intense competition and periodic overbuilding. Many real estate companies,
including REITs, utilize leverage (and some may be highly leveraged), which
increases risk and could adversely affect a real estate company's operations and
market value in periods of rising interest rates.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Small-Capitalization
Companies Risk:
Compared to mid- and large-capitalization companies, small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Credit
Risk: Credit
risk refers to the possibility that the issuer of the security will not be able
to make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of the Fund’s investment in that issuer. Securities rated in
the four highest categories by the rating agencies are considered investment
grade but they may also have some speculative characteristics. Investment grade
ratings do not guarantee that bonds will not lose value.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Brazil: Investment
in Brazilian issuers involves risks that are specific to Brazil, including
legal, regulatory, political and economic risks. The Brazilian economy has
historically been exposed to high rates of inflation, debt, corruption, and
violence, each of which may reduce and/or prevent economic growth.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and
strained
international relations, as well as major health crises. These health crises
include, but are not limited to, the rapid and pandemic spread of novel viruses
commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such health crises
could exacerbate political, social, and economic risks previously mentioned.
Additionally, China is alleged to have participated in state-sponsored
cyberattacks against foreign companies and foreign governments. Actual and
threatened responses to such activity, including purchasing restrictions,
sanctions, tariffs or cyberattacks on the Chinese government or Chinese
companies, may impact China’s economy and Chinese issuers of securities in which
the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Emerging Markets:
Investments in emerging markets may be subject to a greater risk of loss than
investments in developed markets. Securities markets of emerging market
countries are less liquid, subject to greater price volatility, have smaller
market capitalizations, have less government regulation, and are not subject to
as extensive and frequent accounting, financial, and other reporting
requirements as the securities markets of more developed countries, and there
may be greater risk associated with the custody of securities in emerging
markets. It may be difficult or impossible for the Fund to pursue claims against
an emerging market issuer in the courts of an emerging market
country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in Indonesia: Investments
in Indonesian issuers may subject the Fund to legal, regulatory, political,
security and economic risk specific to Indonesia. Among other things, the
Indonesian economy is heavily dependent on trading relationships with certain
key trading partners, including China, Japan, Singapore and the United States.
In the past, Indonesia has experienced acts of terrorism, predominantly targeted
at foreigners. Such acts of terrorism have had a negative impact on tourism, an
important sector of the Indonesian economy.
Risk
of Investing in Russia:
Investing
in Russian securities involves significant risks, including legal, regulatory
and economic risks that are specific to Russia. In addition, investing in
Russian securities involves risks associated with the settlement of portfolio
transactions and loss of the Fund’s ownership rights in its portfolio securities
as a result of the system of share registration and custody in Russia. A number
of jurisdictions, including the U.S., Canada and the European Union, have
imposed economic sanctions on certain Russian individuals and Russian corporate
entities. Additionally, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and
foreign
governments. Actual and threatened responses to such activity, including
purchasing restrictions, sanctions, tariffs or cyberattacks on the Russian
government or Russian companies, may impact Russia’s economy and Russian issuers
of securities in which the Fund invests.
Risk
of Investing in South Africa: Investing
in South African securities involves significant risks, including legal,
regulatory and economic risks specific to South Africa. Among other things,
South Africa’s economy is heavily dependent on its agriculture and mining
sectors, and, thus, susceptible to fluctuations in the commodity
markets.
Risk
of Investing in Thailand: Investments
in Thai issuers may subject the Fund to legal, regulatory, political, currency,
security, and economic risks specific to Thailand. Among other things,
Thailand’s economy is heavily dependent on trading relationships with certain
key trading partners, including the United States, China, Japan and other Asian
countries.
High
Dividend Yield Stocks Risk:
High-yielding stocks are often speculative, high risk investments. These
companies may be paying out more than they can support and may reduce their
dividends or stop paying dividends at any time, which could have a material
adverse effect on the stock price of these companies and the Fund’s performance.
Securities that pay dividends, as a group, can fall out of favor with the
market, potentially during periods of rising interest rates, causing such
companies to underperform companies that do not pay dividends.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even
outside
of a regular rebalance of the Underlying Index, the Adviser anticipates that the
Fund would sell such security. Maintaining investments in securities regardless
of market conditions or the performance of individual securities could cause the
Fund’s return to be lower than if the Fund employed an active
strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Prepayment
Risk:
When interest rates fall, certain obligations will be paid off by the obligor
more quickly than originally anticipated, and the Fund may have to invest the
proceeds in securities with lower yields.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases
Shares
at a time when the market price is at a premium to the NAV or sells Shares at a
time when the market price is at a discount to the NAV, the shareholder may
sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund
performance.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
12/31/2020 |
23.61% |
Worst
Quarter: |
3/31/2020 |
-46.59% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (06/08/2011) |
Global
X SuperDividend®
ETF: |
|
|
|
·Return before
taxes |
-20.71% |
-0.78% |
0.68% |
·Return
after taxes on distributions1 |
-22.65% |
-3.06% |
-1.48% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-11.98% |
-1.09% |
0.13% |
Solactive
Global SuperDividend®
Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-20.53% |
-0.84% |
0.45% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.25% |
12.26% |
9.27% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio
Manager
of the Fund since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund
since March 1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June
10, 2019. Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund
since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X SuperDividend® U.S. ETF
Ticker:
DIV Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X SuperDividend®
U.S. ETF ("Fund") seeks to provide investment results that correspond generally
to the price and yield performance, before fees and expenses, of the Indxx
SuperDividend® U.S. Low Volatility Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your investment):
|
|
|
|
|
|
Management
Fees: |
0.45% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.45% |
Example: The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$46 |
$144 |
$252 |
$567 |
Portfolio Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 93.44% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund also invests at least 80% of its total assets in
dividend-yielding U.S. securities. The Fund's 80% investment policies are
non-fundamental and require 60 days prior written notice to shareholders before
they can be changed. The Fund may lend securities representing up to one-third
of the value of the Fund’s total assets (including the value of the collateral
received).
The
Underlying Index tracks the performance of 50 equally-weighted common stocks,
including 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 provider of the Underlying
Index ("Index Provider"). The components of the Underlying Index have paid
dividends consistently over the last two years. The Underlying Index is
comprised of securities that the Index Provider determines to have lower
relative volatility, as measured by the beta, a measure of a security's
sensitivity to the movements of the broader market, of each security relative to
the market benchmark. The Fund's investment objective and Underlying Index may
be changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the energy sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Master
Limited Partnerships Investment Risk: Investments
in securities of an MLP involve risks that differ from investments in common
stock, including risks related to limited control and limited rights to vote on
matters affecting the MLP, risks related to potential conflicts of interest
between the MLP and the MLP’s general partner, and cash flow risks. MLP common
units and other equity securities can be affected by changes in macro-economic
and other factors affecting the stock market in general, including changes in
growth, unemployment, and inflation rates, as well as expectations of interest
rates. MLP common units and other equity securities can also be affected by
investor sentiment towards MLPs or the energy sector, changes in a particular
issuer’s financial condition, or unfavorable or unanticipated poor performance
of a particular issuer (in the case of MLPs, generally measured in terms of
distributable cash flow). Prices of common units of individual MLPs and other
equity securities also can be affected by fundamentals unique to the partnership
or company, including earnings power and coverage ratios.
Mortgage
Real Estate Investment Trusts (Mortgage REITs) Investment Risk:
Mortgage REITs are exposed to the risks specific to the real estate market as
well as credit risk, interest rate risk, leverage risk and prepayment risk.
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment
Risk:
The Fund may have exposure to companies that invest in real estate, such as
REITs, which exposes investors in the Fund to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which real
estate companies are organized and operated. Real estate is highly sensitive to
general and local economic conditions and developments and characterized by
intense competition and periodic overbuilding. Many real estate companies,
including REITs, utilize leverage (and
some
may be highly leveraged), which increases risk and could adversely affect a real
estate company's operations and market value in periods of rising interest
rates.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Small-Capitalization
Companies Risk:
Compared to mid- and large-capitalization companies, small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid.
Cash
Transaction Risk:
Unlike most exchange-traded funds ("ETFs"), the Fund intends to effect a
significant portion of creations and redemptions for cash, rather than in-kind
securities. As a result, an investment in the Fund may be less tax-efficient
than an investment in a more conventional ETF. Moreover, cash transactions may
have to be carried out over several days if the securities market is relatively
illiquid and may involve considerable brokerage fees and taxes. These factors
may result in wider spreads between the bid and the offered prices of the Fund’s
Shares than for more conventional ETFs.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Energy Sector:
The value of securities issued by companies in the energy sector may decline for
many reasons, including, without limitation, changes in energy prices;
international politics; energy conservation; the success of exploration
projects; natural disasters or other catastrophes; changes in exchange rates,
interest rates, or economic conditions; changes in demand for energy products
and services; and tax and other government regulatory policies. Actions taken by
central governments may dramatically impact supply and demand forces that
influence energy prices, resulting in sudden decreases in value for companies in
the energy sector.
Credit
Risk: Credit
risk refers to the possibility that the issuer of the security will not be able
to make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of the Fund’s investment in that issuer. Securities rated in
the four highest categories by the rating agencies are considered investment
grade but they may also have some speculative characteristics. Investment grade
ratings do not guarantee that bonds will not lose value.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty
in its markets and may adversely affect its economy and the Fund’s investments.
In addition, developed countries may be impacted by changes to the economic
conditions of certain key trading partners, regulatory burdens, debt burdens and
the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
High
Dividend Yield Stocks Risk:
High-yielding stocks are often speculative, high risk investments. These
companies may be paying out more than they can support and may reduce their
dividends or stop paying dividends at any time, which could have a material
adverse effect on the stock price of these companies and the Fund’s performance.
Securities that pay dividends, as a group, can fall out of favor with the
market, potentially during periods of rising interest rates, causing such
companies to underperform companies that do not pay dividends.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
MLP
Tax Risk:
Subject to the application of the partnership audit rules, MLPs that elect to be
taxed as partnerships do not pay U.S. federal income tax at the partnership
level. Rather, each partner is allocated a share of the partnership’s income,
gains, losses, deductions and expenses. 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. Additionally, as a result of the Fund's
exposure to MLPs taxed as partnerships, a portion of the Fund’s distributions
are expected to be treated as a return of capital for tax purposes. Return of
capital distributions are not taxable income to you, but reduce your tax basis
in your Fund Shares. Such a reduction in tax basis will result in larger taxable
gains and/or lower tax losses on a subsequent sale of Fund Shares. Shareholders
who sell their Shares for less than they bought them may still recognize a gain
due to the reduction in tax basis. Shareholders who periodically receive the
payment of dividends or other distributions consisting of a return of capital
may be under the impression that they are receiving net profits from the Fund
when, in fact, they are not. Shareholders should not assume that the source of
the distributions is from the net profits of the Fund. To the extent that the
distributions paid to you constitute a return of capital, the Fund's assets will
decline. A decline in the Fund's assets may also result in an increase in the
portion of a Fund's expense ratio that is not subject to a unitary fee or any
other form of contractual cap, and over time the distributions paid in excess of
net distributions received could work to erode the Fund's net asset value.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or
the
issuers of securities in which the Fund invests have the ability to cause
disruptions and negatively impact the Fund's business operations, potentially
resulting in financial losses to the Fund and its shareholders. The Fund and the
Adviser seek to reduce these operational risks through controls and procedures.
However, these measures do not address every possible risk and may be inadequate
for those risks that they are intended to address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Prepayment
Risk:
When interest rates fall, certain obligations will be paid off by the obligor
more quickly than originally anticipated, and the Fund may have to invest the
proceeds in securities with lower yields.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if
the
Fund does not meet certain conditions of the listing exchange. Any resulting
liquidation of the Fund could cause the Fund to incur elevated transaction costs
and could result in negative tax consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
19.58% |
Worst
Quarter: |
3/31/2020 |
-44.86% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (03/11/2013) |
Global
X SuperDividend®
U.S.
ETF: |
|
|
|
·Return before
taxes |
-22.89% |
0.05% |
1.78% |
·Return
after taxes on distributions1 |
-24.38% |
-1.63% |
0.10% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-13.27% |
-0.30% |
1.04% |
Indxx
SuperDividend®
U.S. Low Volatility Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
-23.13% |
0.73% |
2.34% |
S&P
500®
Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
18.40% |
15.22% |
14.22% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser: Global
X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019. Mr.
Belanger and Ms. Yang have been Portfolio Managers of the Fund since December
2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X MSCI SuperDividend®
EAFE ETF
Ticker:
EFAS Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X MSCI SuperDividend®
EAFE ETF ("Fund") seeks to provide investment results that correspond generally
to the price and yield performance, before fees and expenses, of the MSCI EAFE
Top 50 Dividend Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.55% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.01% |
Total
Annual Fund Operating Expenses: |
0.56% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$57 |
$179 |
$313 |
$701 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 59.28% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The
Underlying 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 provider of the Underlying
Index ("Index Provider"). The Underlying 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 Underlying Index is equal weighted
and rebalanced annually. As of December 31, 2020, components from the
following 15 developed market countries were eligible for inclusion in the
Underlying Index: Australia, Finland, France, Germany, Hong Kong, Israel, Italy,
Netherlands, New Zealand, Portugal, Singapore, Spain, Sweden, Switzerland, and
the United Kingdom. The Underlying Index may include large-, mid- or
small-capitalization companies. As of December 31, 2020, the Underlying
Index primarily includes components from the following sectors: Consumer
Discretionary, Energy, Financials, Materials, Real Estate, Telecommunication
Services, and Utilities. The components of the Underlying Index, and the degree
to which these components represent certain industries, are likely to change
over time. The Fund's investment objective and Underlying Index may be changed
without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment
Risk:
The Fund may have exposure to companies that invest in real estate, such as
REITs, which exposes investors in the Fund to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which real
estate companies are organized and operated. Real estate is highly sensitive to
general and local economic conditions and developments and characterized by
intense competition and periodic overbuilding. Many real estate companies,
including REITs, utilize leverage (and some may be highly leveraged), which
increases risk and could adversely affect a real estate company's operations and
market value in periods of rising interest rates.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have
smaller
revenues, narrower product lines, less management depth and experience, smaller
shares of their product or service markets, fewer financial resources and less
competitive strength than large-capitalization companies.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in Spain:
Investments in Spanish issuers may subject the Fund to legal, regulatory,
political, currency, security, and economic risks specific to Spain. Among other
things, Spain’s economy has been characterized by slow growth over the past few
years due to factors such as low housing sales and construction declines, and
international credit crises. Political tensions and social conflict have
escalated recently as a result of a referendum by Catalonia for independence
from Spain. The secessionist movement could have a negative impact on the
Spanish economy and a destabilizing effect on the country. This risk may be
heightened during times of increased market volatility or other unusual market
conditions. Spain’s economic
exposure
to specific industries, such as tourism, could make these economies especially
vulnerable to global crises, including but not limited to, pandemics such as
COVID-19.
Risk
of Investing in the United Kingdom:
Investments in United Kingdom issuers may subject the Fund to regulatory,
political, currency, security, and economic risks specific to the United
Kingdom. The United Kingdom has one of the largest economies in Europe, and the
United States and other European countries are substantial trading partners of
the United Kingdom. As a result, the United Kingdom’s economy may be impacted by
changes to the
economic
condition of the United States and other European countries. The United
Kingdom’s economy, along with certain other European Union economies,
experienced a significant economic slowdown during the recent financial crisis;
certain United Kingdom financial institutions suffered significant losses, were
severely under-capitalized and required government intervention to survive. In a
referendum held on June 23, 2016, the United Kingdom resolved to leave the
European Union, which departure has become known as “Brexit”. Brexit introduced
significant uncertainties and instability in the financial markets as the United
Kingdom negotiated its departure from the European Union. The United Kingdom
officially stopped being a member of the European Union on January 31, 2020.
Prior to the end of the “transition period” for Brexit, the European Union and
the United Kingdom ratified the EU-UK Trade and Cooperation Agreement (TCA),
which lays out the terms of the United Kingdom’s future cooperation with the
European Union. The political, economic and legal consequences of Brexit and the
TCA are not yet fully known.
High
Dividend Yield Stocks Risk:
High-yielding stocks are often speculative, high risk investments. These
companies may be paying out more than they can support and may reduce their
dividends or stop paying dividends at any time, which could have a material
adverse effect on the stock price of these companies and the Fund’s performance.
Securities that pay dividends, as a group, can fall out of favor with the
market, potentially during periods of rising interest rates, causing such
companies to underperform companies that do not pay dividends.
Investable
Universe of Companies Risk:
The investable universe of companies in which the Fund may invest may be
limited. If a company no longer meets the Index Provider’s criteria for
inclusion in the Underlying Index, the Fund may need to reduce or eliminate its
holdings in that company. The reduction or elimination of the Fund’s
holdings in the company may have an adverse impact on the liquidity of the
Fund’s overall portfolio holdings and on Fund performance.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases
Shares
at a time when the market price is at a premium to the NAV or sells Shares at a
time when the market price is at a discount to the NAV, the shareholder may
sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
12/31/2020 |
25.39% |
Worst
Quarter: |
3/31/2020 |
-32.96% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Since
Inception (11/14/2016) |
Global
X MSCI SuperDividend®
EAFE ETF: |
|
|
·Return before
taxes |
-5.16% |
5.58% |
·Return
after taxes on distributions1 |
-5.96% |
4.19% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-2.61% |
4.24% |
MSCI
EAFE Top 50 Dividend Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-4.40% |
6.08% |
MSCI
EAFE Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
7.82% |
9.76% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund
since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March
1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019.
Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund since
December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X MSCI SuperDividend®
Emerging Markets ETF
Ticker:
SDEM Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X MSCI SuperDividend®
Emerging Markets ETF ("Fund") seeks investment results that correspond generally
to the price and yield performance, before fees and expenses, of the MSCI
Emerging Markets Top 50 Dividend Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.65% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.02% |
Total
Annual Fund Operating Expenses: |
0.67% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$68 |
$214 |
$373 |
$835 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 93.04% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund's 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed.
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, India, Indonesia, Malaysia, Mexico, Pakistan, Romania,
Russia, South Africa, South Korea, Taiwan, Thailand 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. The Fund's investment objective and Underlying Index
may be changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"beat" the Underlying Index and does not seek temporary defensive positions when
markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental to
shareholders, such as when there are practical difficulties or substantial costs
involved in compiling a portfolio of equity securities to follow the Underlying
Index, in instances in which a security in the Underlying Index becomes
temporarily illiquid, unavailable or less liquid, or as a result of legal
restrictions or limitations (such as tax diversification requirements) that
apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the banking industry and had significant exposure to the
financials sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
China
A-Shares Risk:
A-Shares are issued by companies incorporated in mainland China and are traded
on Chinese exchanges. Foreign investors can access A-Shares by obtaining a QFII
or a RQFII license, as well as through the Stock Connect Program, which is a
securities trading and clearing program with an aim to achieve mutual stock
market access between the China and Hong Kong markets. Stock Connect was
developed by Hong Kong Exchanges and Clearing Limited, the SSE (in the case of
Shanghai Connect) or the SZSE (in the case of Shenzhen Connect), and the China
Securities Depository and Clearing Corporation Limited (“CSDCC”). The Fund
currently intends to gain exposure to A-Shares through the Stock Connect
Programs. Investments in A-Shares are subject to various regulations and limits,
and the recoupment or repatriation of assets invested in A-Shares is subject to
restrictions by the Chinese government. In addition, investors from outside
Mainland China may face difficulties or prohibitions accessing certain A-Shares
that are part of a restricted list in countries such as the U.S. A-Shares may be
subject to frequent and widespread trading halts and may become illiquid.
Trading suspensions in certain stock could lead to greater market execution risk
and costs for the Fund, and the creation and redemption of Creation Units (as
defined below) may also be disrupted. These risks, among others, could adversely
affect the value of the Fund’s investments.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Cash
Transaction Risk:
Unlike most exchange-traded funds ("ETFs"), the Fund intends to effect a
significant portion of creations and redemptions for cash, rather than in-kind
securities. As a result, an investment in the Fund may be less tax-efficient
than an investment in a more conventional ETF. Moreover, cash transactions may
have to be carried out over several days if the securities market is relatively
illiquid and may involve considerable brokerage fees and taxes. These factors
may result in wider spreads between the bid and the offered prices of the Fund’s
Shares than for more conventional ETFs.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Banking Industry:
The performance of stocks in the banking industry may be affected by extensive
governmental regulation which may limit both the amounts and types of loans and
other financial commitments they can make, and the interest rates and fees they
can charge and the amount of capital they must maintain. Profitability is
largely dependent on the availability and cost of capital funds and can
fluctuate significantly when interest rates change. Credit losses resulting from
financial difficulties of borrowers can negatively impact banking companies.
Banks may also be subject to severe price competition. Competition is high among
banking companies and failure to maintain or increase market share may result in
lost market value.
Risks
Related to Investing in the Financials Sector: Performance
of companies in the financials sector may be adversely impacted by many factors,
including, among others, government regulations, economic conditions, credit
rating downgrades, changes in interest rates, and decreased liquidity in credit
markets. This sector has experienced significant losses in the past, and the
impact of more stringent capital requirements and of current or future
regulation on any individual financial company or on the sector as a whole
cannot be predicted. In recent years, cyber-attacks and technology malfunctions
and failures have become increasingly frequent in this sector and have caused
significant losses to companies in this sector, which may negatively impact the
Fund.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in
opposite
directions. In addition, securities of foreign issuers may lose value due to
political, economic and geographic events affecting a foreign issuer or market.
During periods of social, political or economic instability in a country or
region, the value of a foreign security traded on U.S. exchanges could be
affected by, among other things, increasing price volatility, illiquidity, or
the closure of the primary market on which the security (or the security
underlying the ADR or GDR) is traded. You may lose money due to political,
economic and geographic events affecting a foreign issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Brazil: Investment
in Brazilian issuers involves risks that are specific to Brazil, including
legal, regulatory, political and economic risks. The Brazilian economy has
historically been exposed to high rates of inflation, debt, corruption, and
violence, each of which may reduce and/or prevent economic growth.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Emerging Markets:
Investments in emerging markets may be subject to a greater risk of loss than
investments in developed markets. Securities markets of emerging market
countries are less liquid, subject to greater price volatility, have smaller
market capitalizations, have less government regulation, and are not subject to
as extensive and frequent accounting, financial, and other reporting
requirements as the securities markets of more developed countries, and there
may be greater risk associated with the custody of securities in emerging
markets. It may be difficult or impossible for the Fund to pursue claims against
an emerging market issuer in the courts of an emerging market
country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in India:
Political and legal uncertainty, greater government control over the economy,
currency fluctuations or blockage, relatively underdeveloped securities markets
and the risk of nationalization or expropriation of assets may result in higher
potential for losses for investments in Indian securities.
Risk
of Investing in Malaysia: Investments
in Malaysian issuers may subject the Fund to legal, regulatory, political,
currency and economic risk specific to Malaysia. Among other things, Malaysia’s
economy is heavily dependent on trading relationships with certain key trading
partners, including the United States, China, Japan and Singapore. Reduction in
spending on Malaysian products and services, or economic or other changes in the
U.S. or any of the Asian economies, trade regulations or currency exchange rates
may have an adverse impact on the Malaysian economy.
Risk
of Investing in Russia:
Investing
in Russian securities involves significant risks, including legal, regulatory
and economic risks that are specific to Russia. In addition, investing in
Russian securities involves risks associated with the settlement of portfolio
transactions and loss of the Fund’s ownership rights in its portfolio securities
as a result of the system of share registration and custody in Russia. A number
of jurisdictions, including the U.S., Canada and the European Union, have
imposed economic sanctions on certain Russian individuals and Russian corporate
entities. Additionally, Russia is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Russian government or
Russian companies, may impact Russia’s economy and Russian issuers of securities
in which the Fund invests.
Risk
of Investing in South Africa: Investing
in South African securities involves significant risks, including legal,
regulatory and economic risks specific to South Africa. Among other things,
South Africa’s economy is heavily dependent on its agriculture and mining
sectors, and, thus, susceptible to fluctuations in the commodity
markets.
Risk
of Investing in South Korea: Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks that are specific to South Korea. In
addition, economic and political developments of South Korea’s neighbors,
including escalated tensions involving North Korea and any outbreak of
hostilities involving North Korea, or even the threat of an outbreak of
hostilities, may have a severe adverse effect on the South Korean
economy.
Risk
of Investing in Thailand: Investments
in Thai issuers may subject the Fund to legal, regulatory, political, currency,
security, and economic risks specific to Thailand. Among other things,
Thailand’s economy is heavily dependent on trading relationships with certain
key trading partners, including the United States, China, Japan and other Asian
countries.
Risk
of Investing in the United Arab Emirates:
The economy of the United Arab Emirates (the "UAE") is dominated by petroleum
exports. A sustained decrease in commodity prices, particularly oil and natural
gas, could have a negative impact on all aspects of the UAE economy. The nonoil
UAE economy, which is concentrated in Dubai’s service sector, could be affected
by declines in tourism, real estate, banking and re-export trade. The UAE and
the governments of the individual emirates exercise substantial influence over
many aspects of the private sector. Governmental actions could have a
significant effect on economic conditions in the UAE, which could adversely
affect the value of the Fund. In addition, recent political instability and
protests in North Africa and the Middle East have
caused
significant disruptions to many industries. Continued political and social
unrest in these areas may adversely affect the value of the Fund.
High
Dividend Yield Stocks Risk:
High-yielding stocks are often speculative, high risk investments. These
companies may be paying out more than they can support and may reduce their
dividends or stop paying dividends at any time, which could have a material
adverse effect on the stock price of these companies and the Fund’s performance.
Securities that pay dividends, as a group, can fall out of favor with the
market, potentially during periods of rising interest rates, causing such
companies to underperform companies that do not pay dividends.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Risks
Related to Stock Connect Programs:
The Stock Connect Programs are subject to daily and aggregate quota limitations,
which could affect the Fund’s ability to enter into and exit Stock Connect
positions on a timely basis. The Shenzen and Shanghai markets may operate when
the Stock Connect Programs are not active, and consequently the prices of shares
held via Stock Connect Programs may fluctuate at times when the Fund is unable
to add to or exit its positions. The Stock Connect Programs are new, and the
effect of the introduction of large numbers of foreign investors on the market
for trading Chinese-listed securities is not well understood. Regulations, such
as limitations on redemptions or suspension of trading, may adversely impact the
value of the Fund’s investments. The Fund's investments in A-Shares though the
Stock Connect Program are held by its custodian in accounts in 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 the 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 no
guarantee
that the Shenzen, Shanghai, and Hong Kong Stock Exchanges will continue to
support the Stock Connect Programs in the future.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance. On
November 16, 2016, the name of the Fund changed from the Global X
SuperDividend®
Emerging Markets ETF to the Global X MSCI SuperDividend®
Emerging Markets ETF to reflect a change in the Fund's Index Provider from
Indxx, LLC to MSCI, Inc. and a change in the Fund's underlying index from the
Indxx SuperDividend® Emerging Markets Index to the MSCI
Emerging Markets Top 50 Dividend Index. The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
12/31/2020 |
21.42% |
Worst
Quarter: |
3/31/2020 |
-33.34% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (03/16/2015) |
Global
X MSCI SuperDividend®
Emerging Markets ETF: |
|
|
|
·Return before
taxes |
-11.02% |
4.88% |
1.69% |
·Return
after taxes on distributions1 |
-12.52% |
3.36% |
0.16% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-6.15% |
3.71% |
1.17% |
Hybrid
MSCI Emerging Markets Top 50 Dividend Index (net)2
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-9.58% |
6.33% |
3.01% |
MSCI
Emerging Markets Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
18.31% |
12.81% |
8.17% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
2
Hybrid
index performance reflects the performance of the Indxx
SuperDividend®
Emerging Markets Index through November 15, 2016 and the MSCI Emerging Markets
Top 50 Dividend Index thereafter.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019. Mr.
Belanger and Ms. Yang have been Portfolio Managers of the Fund since December
2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X SuperDividend®
REIT ETF
Ticker:
SRET Exchange:
NASDAQ
INVESTMENT OBJECTIVE
The
Global X SuperDividend®
REIT ETF ("Fund") seeks investment results that correspond generally to the
price and yield performance, before fees and expenses, of the Solactive Global
SuperDividend®
REIT
Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.58% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.58% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$59 |
$186 |
$324 |
$726 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 106.23% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
Moreover, at least 80% of the Fund's total assets are invested in securities of
Real Estate Investment Trusts ("REITs"). The Fund's 80% investment policies are
non-fundamental and require 60 days prior written notice to shareholders before
they can be changed. The Fund may lend securities representing up to one-third
of the value of the Fund’s total assets (including the value of the collateral
received).
The
Underlying Index tracks the performance of REITs that rank among the highest
yielding REITs globally, as determined by Solactive AG, the provider of the
Underlying Index ("Index Provider"). The Index Provider screens the highest
yielding REITs to exclude REITs that have historically exhibited the highest
volatility, as determined by the Index Provider. As of December 31, 2020,
the Underlying Index had 30 constituents, 5 of which are foreign companies. The
Fund's investment objective and Underlying Index may be changed without
shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the equity real estate investment and mortgage real estate
investment industries and had significant exposure to the financials and real
estate sectors.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Mortgage
Real Estate Investment Trusts (Mortgage REITs) Investment Risk:
Mortgage REITs are exposed to the risks specific to the real estate market as
well as credit risk, interest rate risk, leverage risk and prepayment risk.
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment
Risk:
The Fund may have exposure to companies that invest in real estate, such as
REITs, which exposes investors in the Fund to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which real
estate companies are organized and operated. Real estate is highly sensitive to
general and local economic conditions and developments and characterized by
intense competition and periodic overbuilding. Many real estate companies,
including REITs, utilize leverage (and some may be highly leveraged), which
increases risk and could adversely affect a real estate company's operations and
market value in periods of rising interest rates.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have
smaller
revenues, narrower product lines, less management depth and experience, smaller
shares of their product or service markets, fewer financial resources and less
competitive strength than large-capitalization companies.
Small-Capitalization
Companies Risk:
Compared to mid- and large-capitalization companies, small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Equity Real Estate Investment Industry:
The Fund is concentrated in the Equity Real Estate Investment Industry, which
comprises Real Estate Investment Trusts (REITs). For more information, see
Asset
Class Risk - Real Estate Stocks and Real Estate Investment Trusts (REITs)
Investment Risk in
the SUMMARY OF PRINCIPAL RISKS and A FURTHER DISCUSSION OF PRINCIPAL RISKS
sections of the Prospectus.
Risks
Related to Investing in the Financials Sector: Performance
of companies in the financials sector may be adversely impacted by many factors,
including, among others, government regulations, economic conditions, credit
rating downgrades, changes in interest rates, and decreased liquidity in credit
markets. This sector has experienced significant losses in the past, and the
impact of more stringent capital requirements and of current or future
regulation on any individual financial company or on the sector as a whole
cannot be predicted. In recent years, cyber-attacks and technology malfunctions
and failures have become increasingly frequent in this sector and have caused
significant losses to companies in this sector, which may negatively impact the
Fund.
Risks
Related to Investing in the Mortgage Real Estate Investment Industry:
The Fund is concentrated in the Mortgage Real Estate Investment Industry, which
comprises Mortgage Real Estate Investment Trusts (Mortgage REITs), For more
information, see Risks
Related to Investing in Mortgage Real Estate Investment Trusts (Mortgage
REITs).
Risks
Related to Investing in the Real Estate Sector:
Real estate is highly sensitive to general and local economic conditions and
developments and characterized by intense competition and periodic overbuilding.
Many real estate companies utilize leverage (and some may be highly leveraged),
which increases risk and could adversely affect a real estate company's
operations and market value in periods of rising interest rates.
Credit
Risk: Credit
risk refers to the possibility that the issuer of the security will not be able
to make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of the Fund’s investment in that issuer. Securities rated in
the four highest categories by the rating agencies are considered investment
grade but they may also have some speculative characteristics. Investment grade
ratings do not guarantee that bonds will not lose value.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value
of
a foreign security traded on U.S. exchanges could be affected by, among other
things, increasing price volatility, illiquidity, or the closure of the primary
market on which the security (or the security underlying the ADR or GDR) is
traded. You may lose money due to political, economic and geographic events
affecting a foreign issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
High
Dividend Yield Stocks Risk:
High-yielding stocks are often speculative, high risk investments. These
companies may be paying out more than they can support and may reduce their
dividends or stop paying dividends at any time, which could have a material
adverse effect on the stock price of these companies and the Fund’s performance.
Securities that pay dividends, as a group, can fall out of favor with the
market, potentially during periods of rising interest rates, causing such
companies to underperform companies that do not pay dividends.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or
the
issuers of securities in which the Fund invests have the ability to cause
disruptions and negatively impact the Fund's business operations, potentially
resulting in financial losses to the Fund and its shareholders. The Fund and the
Adviser seek to reduce these operational risks through controls and procedures.
However, these measures do not address every possible risk and may be inadequate
for those risks that they are intended to address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Prepayment
Risk:
When interest rates fall, certain obligations will be paid off by the obligor
more quickly than originally anticipated, and the Fund may have to invest the
proceeds in securities with lower yields.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if
the
Fund does not meet certain conditions of the listing exchange. Any resulting
liquidation of the Fund could cause the Fund to incur elevated transaction costs
and could result in negative tax consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
22.73% |
Worst
Quarter: |
3/31/2020 |
-56.55% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (03/16/2015) |
Global
X SuperDividend®
REIT ETF: |
|
|
|
·Return before
taxes |
-36.52% |
1.44% |
-0.74% |
·Return
after taxes on distributions1 |
-38.11% |
-1.71% |
-3.92% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-21.69% |
0.02% |
-1.67% |
Solactive
Global SuperDividend®
REIT Index
(Index returns reflect
invested dividends net of U.S. and non-U.S. withholding taxes, but reflect
no deduction for fees, expenses, or other
taxes) |
-38.18% |
-0.43% |
-2.63% |
Solactive
Global SuperDividend®
REIT Index (net) (Index returns reflect
invested dividends net of non-U.S. withholding taxes, but reflect no
deduction for fees, expenses, or other
taxes) |
-36.72% |
1.95% |
-0.23% |
S&P
500®
Index (Index returns do not
reflect deduction for fees, expenses, or
taxes) |
18.40% |
15.22% |
12.96% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund
since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March
1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019.
Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund since
December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X NASDAQ 100®
Covered Call ETF
Ticker:
QYLD Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X NASDAQ 100®
Covered Call ETF ("Fund") seeks to provide investment results that closely
correspond, before fees and expenses, generally to the price and yield
performance of the CBOE NASDAQ-100®
BuyWrite V2 Index (the "Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.60% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.60% |
1 "Other Expenses"
information has been restated from fiscal year amounts to reflect estimated fees
and expenses for the upcoming fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 27.87% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
By
investing in the Underlying Index, the Fund follows a "buy-write" (also called a
covered call) investment strategy in which the Fund buys a stock or a basket of
stocks, and also writes (or sells) call options that correspond to the stock or
basket of stocks.
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 ("Reference Index"), and "writes" (or sells) a
succession of one-month at-the-money Reference Index covered call options. The
Underlying Index replicates the methodology used to calculate the BXN Index,
with one exception: the written Reference Index covered call options are held
until one day prior to the expiration dates (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.
Each
calendar month, the Fund will write (sell) a succession of one-month call
options on the Reference Index and will cover such options by holding the
securities underlying the options written. Each option written will (i) have an
exercise price generally at or above the prevailing market price of the
Reference Index; (ii) be traded on a national securities exchange; (iii) be 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 (unless the Fund "closes out" the option
through the repurchase of the option at the market close on the last day of
trading); (iv) expire on its date of maturity (in the next calendar month); (v)
only be subject to exercise on its expiration date; and (vi) be settled in cash.
In return for the payment of a premium to the Fund, a purchaser of the call
options written by the Fund is entitled to receive a cash payment from the Fund
equal to the difference between the value of the Reference Index and the
exercise price of the option if the value of the option on the expiration date
is above its exercise price. The Fund's covered call options may partially
protect the Fund from a decline in the price of the Reference Index through
means of the premiums received by the Fund. However, when the equity market is
rallying rapidly, the Underlying Index is expected to underperform the Reference
Index.
The
Underlying Index is sponsored by Nasdaq, Inc. (the "Index Provider"), which is
an organization that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"outperform" the Underlying Index and does not seek temporary defensive
positions when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental to
shareholders, such as when there are practical difficulties or substantial costs
involved in compiling a portfolio of equity securities to follow the Underlying
Index, in instances in which a security in the Underlying Index becomes
temporarily illiquid, unavailable or less liquid, or as a result of legal
restrictions or limitations (such as tax diversification requirements) that
apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling strategy.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the information technology
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Derivatives
Risk:
The Fund may gain exposure to different asset classes by investing in different
types of derivative instruments. Derivatives can be more sensitive to changes in
interest rates or to sudden fluctuations in market prices than conventional
securities, which can result in greater losses for the Fund. In addition, the
prices of the derivative instruments and the prices of underlying securities,
interest rates or currencies they are designed to reflect may not move together
as expected. A risk of the Fund’s use of derivatives is that the fluctuations in
their values may not correlate perfectly with the relevant reference index.
Derivatives are usually traded on margin, which may subject the
Fund
to margin calls. Margin calls may force the Fund to liquidate assets. On October
28, 2020, the SEC adopted new Rule 18f-4 under the 1940 Act, which governs the
use of derivatives by registered investment companies. New Rule 18f-4 imposes
limits on the amount of derivatives the Fund can enter into and replaces the
asset segregation framework previously used by the Fund to comply with Section
18 of the 1940 Act, among other requirements.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Information Technology Sector: Companies
in the information technology sector are subject to rapid changes in technology
product cycles; rapid product obsolescence; government regulation; and increased
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies and companies that rely heavily on technology tend to be more volatile
than the overall market and also are heavily dependent on patent and
intellectual property rights. In addition, information technology companies may
have limited product lines, markets, financial resources or
personnel.
Covered
Call Option Writing Risk:
By writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In addition, the Fund’s ability to sell the
securities underlying the options will be limited while the options are in
effect unless the Fund cancels out the option positions through the purchase of
offsetting identical options prior to the expiration of the written options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to write options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain
commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Options
Premium Tax Risk:
The Fund’s covered call investment strategy may limit its ability to distribute
dividends eligible for treatment as qualified dividend income, which for
non-corporate shareholders are subject to federal income tax at rates of up to
20%. The Fund’s investment strategy may also limit its ability to distribute
dividends eligible for the dividends-received deduction for corporate
shareholders. For these reasons, a significant portion of distributions received
by Fund shareholders may be subject to tax at effective tax rates that are
higher than the rates that would apply if the Fund were to engage in a different
investment strategy. You should consult your tax advisor as to the tax
consequences of acquiring, owning and disposing of Shares in the
Fund.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its
methodology
may occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
The
Fund operated as the Horizons NASDAQ 100® Covered Call ETF (the "Predecessor
Fund"), a series of Horizons ETF Trust I, prior to the Fund's acquisition of the
assets and assumption of the liabilities of the Predecessor Fund on December 24,
2018 (the "Reorganization"). As a result of the Reorganization, the Fund assumed
the performance and accounting history of the Predecessor Fund. Accordingly,
performance figures for the Fund for periods prior to the date of the
Reorganization represent the performance of the Predecessor
Fund.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
12.94% |
Worst
Quarter: |
3/31/2020 |
-16.43% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (12/11/2013) |
Global
X NASDAQ 100®
Covered Call ETF:1 |
|
|
|
·Return before
taxes |
8.76% |
10.19% |
9.03% |
·Return
after taxes on distributions2 |
7.88% |
7.71% |
6.63% |
·Return
after taxes on distributions and sale of Fund Shares2 |
5.18% |
6.76% |
5.90% |
Hybrid
CBOE NASDAQ-100®
BuyWrite V2 Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
10.14% |
11.42% |
10.06% |
NASDAQ-100®
Total Return Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
48.88% |
24.27% |
21.79% |
1
Performance shown for
periods prior to December 24, 2018, reflects that of the Predecessor
Fund.
2
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
3
Hybrid index performance
reflects the performance of the CBOE
NASDAQ-100®
BuyWrite Index through October 14, 2015 and CBOE NASDAQ-100®
BuyWrite V2 Index thereafter.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been Portfolio Manager of the Fund since the
Fund's inception in December 2018 and had managed the Predecessor Fund since
October 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019. Mr.
Belanger and Ms. Yang have been Portfolio Managers of the Fund since December
2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X S&P 500®
Covered Call ETF
Ticker:
XYLD Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Covered Call ETF ("Fund") seeks investment results that, before fees and
expenses, generally correspond to the performance of the CBOE S&P 500
BuyWrite Index (the "Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.60% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses:2 |
0.60% |
1 "Other Expenses"
information has been restated from fiscal year amounts to reflect estimated fees
and expenses for the upcoming fiscal
year.
2 Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (exclusive of taxes, commissions, and other
transaction expenses, interest, and extraordinary expenses (such as litigation
and indemnification expenses)) will not exceed 0.60% of the Fund’s average daily
net assets per year, effective August 21, 2020, until at least March 1,
2022.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 7.29% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The
Underlying Index is comprised of two parts: (1) all the equity securities in the
S&P 500® Index (the "Reference Index") in substantially similar weight as
the Reference Index; and (2) short (written) call options on up to 100% of the
S&P 500® Index.
The
Reference 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.
The
Underlying Index measures the performance of a hypothetical portfolio that
employs a covered call strategy. A covered call strategy is generally considered
to be an investment strategy in which an investor buys a security, and sells (or
"writes") a call option on that security in an attempt to generate more income.
Each time the Fund writes a covered call option, the Fund receives a payment of
money from the investor who buys the option from the Fund, which is called the
premium. If the value of the Fund's call option that it has written declines
because of a decline in the value of the S&P 500 Index, the premium that the
Fund received for writing the covered call option offsets this loss to some
extent.
The
premium paid by the buyer of the option provides income in addition to the
security's dividends or other distributions. The Underlying Index consists of
long positions in companies in the Reference Index and a single at-the-money
call option written on the S&P 500 Index. An "at-the-money" call option is a
call option with a strike price that is near to the market price of the
underlying asset (in this case, the market price of a share of the S&P 500
Index). These options are written (sold) systematically on the monthly option
writing date of the Underlying Index.
Generally,
in return for the option premium, the Fund gives the purchaser of the call
option either (1) the right to buy the security from the Fund at a specified
exercise (or "strike") price, or (2) the right to receive a cash payment equal
to any positive difference between the value of the security and the exercise
price on or before the expiration date of the option. The Fund writes options
that are the second variety such that the options give the option purchasers the
rights to receive cash payments equal to any positive differences between the
values of the securities and the exercise prices on the expiration dates of the
options. The Fund writes a single "at-the-money" call option, which is when the
strike price is near to the market price of the underlying asset, as determined
on the monthly option writing date of the Underlying Index in accordance with
the Underlying Index methodology. The Fund's covered call options may partially
protect the Fund from a decline in the price of the Reference Index through
means of the premiums received by the Fund. However, when the equity market is
rallying rapidly, the Underlying Index is expected to underperform the Reference
Index.
There
can be no assurance, however, that the Underlying Index will perform as
expected. The options in the Underlying Index will be traded on national options
exchanges. Long positions in the equity securities of the Underlying Index are,
in accordance with the Underlying Index's methodology, indexed to the Reference
Index, which includes rebalancing quarterly for share updates and on an
as-needed basis to account for corporate actions and market developments.
Options positions in the Underlying Index are written on up to 100% of the
S&P 500 Index and are rebalanced monthly, as well as on an as-needed basis
to account for corporate actions and market developments. As of
December 31, 2020, the S&P 500 Index included common stocks of
companies with a market capitalization range of between approximately $4.2
billion and $2.3 trillion.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of the Fund and Global
X Management Company LLC, the investment adviser for the Fund ("Adviser"). The
Index Provider maintains, calculates and publishes information regarding the
Underlying Index.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"outperform" the Underlying Index and does not seek temporary defensive
positions when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental to
shareholders, such as when there are practical difficulties or substantial costs
involved in compiling a portfolio of equity securities to follow the Underlying
Index, in instances in which a security in the Underlying Index becomes
temporarily illiquid, unavailable or less liquid, or as a result of legal
restrictions or limitations (such as tax diversification requirements) that
apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the information technology
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Derivatives
Risk:
The Fund may gain exposure to different asset classes by investing in different
types of derivative instruments. Derivatives can be more sensitive to changes in
interest rates or to sudden fluctuations in market prices than conventional
securities, which can result in greater losses for the Fund. In addition, the
prices of the derivative instruments and the prices of underlying securities,
interest rates or currencies they are designed to reflect may not move together
as expected. A risk of the Fund’s use of derivatives is that the fluctuations in
their values may not correlate perfectly with the relevant reference index.
Derivatives are usually traded on margin, which may subject the Fund to margin
calls. Margin calls may force the Fund to liquidate assets. On October 28, 2020,
the SEC adopted new Rule 18f-4 under the 1940 Act, which governs the use of
derivatives by registered investment companies. New Rule 18f-4 imposes limits on
the amount of derivatives the Fund can enter into and replaces the asset
segregation framework previously used by the Fund to comply with Section 18 of
the 1940 Act, among other requirements.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Information Technology Sector: Companies
in the information technology sector are subject to rapid changes in technology
product cycles; rapid product obsolescence; government regulation; and increased
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies and companies that rely heavily on technology tend to be more volatile
than the overall market and also are heavily dependent on patent and
intellectual property rights. In addition, information technology companies may
have limited product lines, markets, financial resources or
personnel.
Covered
Call Option Writing Risk:
By writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In
addition,
the Fund’s ability to sell the securities underlying the options will be limited
while the options are in effect unless the Fund cancels out the option positions
through the purchase of offsetting identical options prior to the expiration of
the written options. Exchanges may suspend the trading of options in volatile
markets. If trading is suspended, the Fund may be unable to write options at
times that may be desirable or advantageous to do so, which may increase the
risk of tracking error.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security.
Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Options
Premium Tax Risk:
The Fund’s covered call investment strategy may limit its ability to distribute
dividends eligible for treatment as qualified dividend income, which for
non-corporate shareholders are subject to federal income tax at rates of up to
20%. The Fund’s investment strategy may also limit its ability to distribute
dividends eligible for the dividends-received deduction for corporate
shareholders. For these reasons, a significant portion of distributions received
by Fund shareholders may be subject to tax at effective tax rates that are
higher than the rates that would apply if the Fund were to engage in a different
investment strategy. You should consult your tax advisor as to the tax
consequences of acquiring, owning and disposing of Shares in the Fund.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading
market
for Shares may result in Shares trading at a significant premium or discount to
NAV. If a shareholder purchases Shares at a time when the market price is at a
premium to the NAV or sells Shares at a time when the market price is at a
discount to the NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance. On
August 21, 2020, the Fund's underlying index changed from the CBOE S&P 500
2% OTM BuyWrite Index to the CBOE S&P 500 BuyWrite Index. The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
The
Fund operated as the Horizons S&P 500®
Covered Call ETF (the "Predecessor Fund"), a series of Horizons ETF Trust I,
prior to the Fund's acquisition of the assets and assumption of the liabilities
of the Predecessor Fund on December 24, 2018 (the "Reorganization"). As a result
of the Reorganization, the Fund assumed the performance and accounting history
of the Predecessor Fund. Accordingly, performance figures for the Fund for
periods prior to the date of the Reorganization represent the performance of the
Predecessor Fund.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
3/31/2019 |
9.07 % |
Worst
Quarter: |
3/31/2020 |
-21.52% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (06/21/2013) |
Global
X S&P 500®
Covered Call ETF:1 |
|
|
|
·Return before
taxes |
-0.66% |
7.42% |
7.66% |
·Return
after taxes on distributions2 |
-1.41% |
6.05% |
6.33% |
·Return
after taxes on distributions and sale of Fund Shares2 |
-0.40% |
5.16% |
5.52% |
Hybrid
CBOE S&P 500 BuyWrite Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
0.11% |
7.84% |
7.87% |
CBOE
S&P 500®
2%
OTM BuyWrite Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
2.27% |
9.08% |
8.80% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
18.40% |
15.22% |
14.36% |
1
Performance shown for
periods prior to December 24, 2018, reflects that of the Predecessor
Fund.
2
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
3
Hybrid
index performance reflects the performance of the S&P 500®
Stock Covered Call Index through September 14, 2017, the CBOE
S&P500®
2%
OTM BuyWrite Index through August 20, 2020 and the CBOE S&P 500 BuyWrite
Index thereafter.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been Portfolio Manager of the Fund since the
Fund's inception in December 2018 and had managed the Predecessor Fund since
October 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019. Mr.
Belanger and Ms. Yang have been Portfolio Managers of the Fund since December
2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X Russell 2000 Covered Call
ETF
Ticker:
RYLD Exchange: Cboe BZX
INVESTMENT OBJECTIVE
The Global X Russell 2000
Covered Call ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Cboe Russell 2000 BuyWrite Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.60% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Acquired
Fund Fees and Expenses:2 |
0.10% |
Total
Annual Fund Operating Expenses: |
0.70% |
Expense
Reimbursement and/or Fee Waiver3 |
(0.10)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
"Other Expenses"
information has been restated from fiscal year amounts to reflect estimated fees
and expenses for the upcoming fiscal
year.
2
“Acquired Fund Fees and
Expenses” sets forth the Fund’s pro rata portion of the cumulative expenses
charged by the exchange-traded funds, closed-end funds, business development
companies and other investment companies in which the Fund invests. These
expenses are calculated based on the Fund’s portfolio holdings during the prior
fiscal period. The actual Acquired Fund Fees and Expenses will vary with changes
in the allocations of the Fund’s assets. Total annual fund
operating expenses do not correlate with the ratios of expenses to average net
assets reported in the financial highlights tables in the Fund’s Prospectus and
in the Fund’s shareholder reports, which reflect the Fund’s operating expenses
and do not include acquired fund fees and
expenses.
3
Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (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 Fund's
average daily net assets per year, effective March 1,
2021, until at least March 1,
2022.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$214 |
$380 |
$861 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 11.16% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in component securities of the
Underlying Index or in investments that have economic characteristics that are
substantially identical to the economic characteristics of such component
securities, either individually or in the aggregate. The Fund's 80% investment
policy is non-fundamental and requires 60 days prior written notice to
shareholders before it can be changed.
The
Underlying Index measures the performance of a theoretical portfolio that holds
a portfolio of the stocks included in the Russell 2000 Index (the "Reference
Index"), and "writes" (or sells) a succession of one-month at-the-money covered
call options on the Reference Index. The written covered call options on the
Reference Index are held until expiration. The Reference 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"). In
seeking to track the Underlying Index, the Fund follows a "buy-write" (also
called a covered call) investment strategy on the Reference Index in which the
Fund purchases the component securities of the Reference Index or purchases
other investments (including other underlying ETFs) that have economic
characteristics that are substantially identical to the economic characteristics
of such component securities, and also writes (or sells) call options that
correspond to the Reference Index.
Each
calendar month, the Fund will write (sell) a succession of one-month call
options on the Reference Index and will cover such options by holding the
component securities of the Reference Index, or in investments that have
economic characteristics with substantially identical economic characteristics
of such component securities, either individually or in the aggregate. Each
option written will (i) have an exercise price generally at or above the
prevailing market price of the Reference Index; (ii) be traded on a national
securities exchange; (iii) be held until expiration (i.e., generally the third
Friday of the month) and be settled based on the final settlement price of the
option; (iv) expire on its date of maturity (in the next calendar month); (v)
only be subject to exercise on its expiration date; and (vi) be settled in
cash.
In
return for the payment of a premium to the Fund, a purchaser of the call options
written by the Fund is entitled to receive a cash payment from the Fund equal to
the difference between the value of the Reference Index and the exercise price
of the option if the value of the option on the expiration date is above its
exercise price. The Fund's covered call options may partially protect the Fund
from a decline in the price of the Reference Index through means of the premiums
received by the Fund. However, when the equity market is rallying rapidly, the
Underlying Index is expected to underperform the Reference Index.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of the Fund and Global X Management Company LLC, the
investment adviser for the Fund ("Adviser"). The Fund's investment objective and
Underlying Index may be changed without shareholder approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally uses a representative sampling strategy with respect to the
Underlying Index. "Representative sampling" is an indexing strategy that
involves investing in a representative sample of securities (including indirect
investments through underlying ETFs) that collectively has an investment profile
similar to the Underlying Index in terms of key risk factors, performance
attributes and other characteristics. Underlying ETFs may constitute a
substantial portion of the Fund's assets. These include country weightings,
market capitalization and other financial characteristics of securities. Under
normal circumstances, at least 80% of the Fund's total assets will be invested
in component securities of the Underlying Index or in investments that have
economic characteristics that are substantially identical to the economic
characteristics of such component securities, either individually or in the
aggregate. The Adviser expects that, over time, the correlation between the
Fund's performance and that of the Underlying Index, before fees and expenses,
will exceed 95%. A correlation percentage of 100% would indicate perfect
correlation.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Derivatives
Risk:
The Fund may gain exposure to different asset classes by investing in different
types of derivative instruments. Derivatives can be more sensitive to changes in
interest rates or to sudden fluctuations in market prices than conventional
securities, which can result in greater losses for the Fund. In addition, the
prices of the derivative instruments and the prices of underlying securities,
interest rates or currencies they are designed to reflect may not move together
as expected. A risk of the Fund’s use of derivatives is that the fluctuations in
their values may not correlate perfectly with the relevant reference index.
Derivatives are usually traded on margin, which may subject the Fund to margin
calls. Margin calls may force the Fund to liquidate assets. On October 28, 2020,
the SEC adopted new Rule 18f-4 under the 1940 Act, which governs the use of
derivatives by registered investment companies. New Rule 18f-4 imposes limits on
the amount of derivatives the Fund can enter into and replaces the asset
segregation framework previously used by the Fund to comply with Section 18 of
the 1940 Act, among other requirements.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
ETF
Investment Risk: While
the risks of owning shares of an underlying ETF generally reflect the risks of
owning the underlying securities of the index the ETF is designed to track, lack
of liquidity in the underlying ETF can result in its value being more volatile
than the underlying portfolio securities. Because the value of an underlying
ETF's shares depends on the demand in the market, the Adviser may not be able to
liquidate the Fund’s holdings in those shares at the most optimal time, thereby
adversely affecting the Fund’s performance. An underlying ETF may experience
tracking error in relation to the index tracked by the underlying ETF, which
could contribute to tracking error for the Fund. In addition, an underlying
ETF's shares may trade at a premium or discount to NAV.
In
addition, investments in the securities of underlying ETFs may involve
duplication of advisory fees and certain other expenses. The Fund will pay
brokerage commissions in connection with the purchase and sale of shares of the
underlying ETFs, which could result in greater expenses to the Fund. By
investing in an underlying ETF, the Fund becomes a shareholder thereof. As a
result, Fund shareholders indirectly bear the Fund’s proportionate share of the
fees and expenses indirectly paid by shareholders of the underlying ETF, in
addition to the fees and expenses Fund shareholders indirectly bear in
connection with the Fund’s own operations.
If
the underlying ETF fails to achieve its investment objective, the value of the
Fund’s investment may decline, adversely affecting the Fund’s performance.
Additionally, some ETFs are not registered under the Investment Company Act of
1940 (“1940 Act”) and therefore, are not subject to the regulatory scheme and
investor protections of the 1940 Act.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Small-Capitalization
Companies Risk:
Compared to mid- and large-capitalization companies, small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid.
Micro-Capitalization
Companies Risk:
Stock prices of micro-cap companies are significantly more volatile, and more
vulnerable to adverse business and economic developments, than those of larger
companies, and their earnings
and
revenues tend to be less predictable (and some companies may experience
significant losses). Microcap stocks may also be thinly traded, making it
difficult for the Fund to buy and sell them.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Covered
Call Option Writing Risk:
By writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In addition, the Fund’s ability to sell the
securities underlying the options will be limited while the options are in
effect unless the Fund cancels out the option positions through the purchase of
offsetting identical options prior to the expiration of the written options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to write options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased
liquidity
in the securities markets. The Fund’s NAV could decline over short periods due
to short-term market movements and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Options
Premium Tax Risk:
The Fund’s covered call investment strategy may limit its ability to distribute
dividends eligible for treatment as qualified dividend income, which for
non-corporate shareholders are subject to federal income tax at rates of up to
20%. The Fund’s investment strategy may also limit its ability to distribute
dividends eligible for the dividends-received deduction for corporate
shareholders. For these reasons, a significant portion of distributions received
by Fund shareholders may be subject to tax at effective tax rates that are
higher than the rates that would apply if the Fund were to engage in a different
investment strategy. You should consult your tax advisor as to the tax
consequences of acquiring, owning and disposing of Shares in the
Fund.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able
to
maintain sufficient assets to continue operations in which case the Board of
Trustees may determine to liquidate the Fund. In addition, transactions by large
shareholders may account for a large percentage of the trading volume on a
national securities exchange and may, therefore, have a material upward or
downward effect on the market price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
18.89% |
Worst
Quarter: |
3/31/2020 |
-31.81% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Since
Inception (4/17/2019) |
Global
X Russell 2000 Covered Call ETF: |
|
|
·Return before
taxes |
-0.50% |
4.71% |
·Return
after taxes on distributions1 |
-1.31% |
2.73% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-0.30% |
2.83% |
Cboe
Russell 2000 BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
0.36% |
5.86% |
Russell
2000 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
19.96% |
16.09% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Messrs. To and Xie have been Portfolio Managers of
the Fund since the Fund's inception. Ms. Chan has been Portfolio Manager of the
Fund since June 10, 2019. Mr. Belanger and Ms. Yang have been Portfolio Managers
of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X Nasdaq 100®
Covered Call & Growth ETF
Ticker:
QYLG Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X Nasdaq 100®
Covered Call & Growth ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Cboe Nasdaq 100 Half BuyWrite V2 Index ("Underlying
Index").
FEES AND EXPENSES
.This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.60% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.60% |
1 Other Expenses are based on
estimated amounts for the current fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. From the Fund's commencement of
operations on September 18, 2020 to the end of the most recent fiscal period,
the Fund's portfolio turnover rate was 1.65% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The
Underlying Index measures the performance of a theoretical portfolio that holds
a portfolio of the stocks included in the NASDAQ 100®
Index (the "Reference Index"), and "writes" (or sells) a succession of one-month
at-the-money covered call options on the Reference Index. The written covered
call options on the Reference Index correspond to approximately 50% of the value
of the portfolio of stocks in the Reference Index. The written covered call
options on the Reference Index are held until one day prior to expiration. The
Reference 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. In seeking to track the Underlying
Index, the Fund follows a "buy-write" investment strategy on the Reference Index
in which the Fund purchases the component securities of the Reference Index and
also writes (or sells) call options that correspond to approximately 50% of the
value of the portfolio of stocks in the Reference Index. By only writing call
options on approximately 50% of the value of the portfolio of stocks in the
Reference
Index,
the strategy can provide income generation from the call options while allowing
for some potential upside exposure to the growth of the underlying constituents
of the Reference Index, relative to a 100% covered call strategy.
Each
calendar month, the Fund will write (sell) a succession of one-month call
options corresponding to approximately 50% of the value of the portfolio of
stocks in the Reference Index and will cover such options by holding the
component securities of the Reference Index. Each option written will (i) have
an exercise price generally at or above the prevailing market price of the
Reference Index; (ii) be traded on a national securities exchange; (iii) be 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 (unless the Fund "closes out" the option
through the repurchase of the option at the market close on the last day of
trading); (iv) expire on its date of maturity (in the next calendar month); (v)
only be subject to exercise on its expiration date; and (vi) be settled in cash.
In
return for the payment of a premium to the Fund, a purchaser of the call options
written by the Fund is entitled to receive a cash payment from the Fund equal to
the difference between the value of the Reference Index and the exercise price
of the option if the value of the option on the expiration date is above its
exercise price. The Fund's covered call options may partially protect the Fund
from a decline in the price of the Reference Index through means of the premiums
received by the Fund. However, when the equity market is rallying rapidly, the
Underlying Index is expected to underperform the Reference Index.
The
Underlying Index is sponsored by Nasdaq, Inc. (the "Index Provider"), which is
an organization that is independent of the Fund and Global X Management Company
LLC, the investment adviser for the Fund ("Adviser"). The Fund's investment
objective and Underlying Index may be changed without shareholder
approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the information technology
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Derivatives
Risk:
The Fund may gain exposure to different asset classes by investing in different
types of derivative instruments. Derivatives can be more sensitive to changes in
interest rates or to sudden fluctuations in market prices
than
conventional securities, which can result in greater losses for the Fund. In
addition, the prices of the derivative instruments and the prices of underlying
securities, interest rates or currencies they are designed to reflect may not
move together as expected. A risk of the Fund’s use of derivatives is that the
fluctuations in their values may not correlate perfectly with the relevant
reference index. Derivatives are usually traded on margin, which may subject the
Fund to margin calls. Margin calls may force the Fund to liquidate assets. On
October 28, 2020, the SEC adopted new Rule 18f-4 under the 1940 Act, which
governs the use of derivatives by registered investment companies. New Rule
18f-4 imposes limits on the amount of derivatives the Fund can enter into and
replaces the asset segregation framework previously used by the Fund to comply
with Section 18 of the 1940 Act, among other requirements.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Information Technology Sector: Companies
in the information technology sector are subject to rapid changes in technology
product cycles; rapid product obsolescence; government regulation; and increased
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies and companies that rely heavily on technology tend to be more volatile
than the overall market and also are heavily dependent on patent and
intellectual property rights. In addition, information technology companies may
have limited product lines, markets, financial resources or
personnel.
Covered
Call Option Writing Risk:
By writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In addition, the Fund’s ability to sell the
securities underlying the options will be limited while the options are in
effect unless the Fund cancels out the option positions through the purchase of
offsetting identical options prior to the expiration of the written options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to write options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty
in its markets and may adversely affect its economy and the Fund’s investments.
In addition, developed countries may be impacted by changes to the economic
conditions of certain key trading partners, regulatory burdens, debt burdens and
the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
New
Fund Risk: The
Fund is a new fund, with a limited operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. New funds are also subject
to Large Shareholder Risk.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Options
Premium Tax Risk:
The Fund’s covered call investment strategy may limit its ability to distribute
dividends eligible for treatment as qualified dividend income, which for
non-corporate shareholders are subject to federal income tax at rates of up to
20%. The Fund’s investment strategy may also limit its ability to distribute
dividends eligible for the dividends-received deduction for corporate
shareholders. For these reasons, a significant portion of distributions received
by Fund shareholders may be subject to tax at effective tax rates that are
higher than the rates that would apply if the Fund were to engage in a different
investment strategy. You should consult your tax advisor as to the tax
consequences of acquiring, owning and disposing of Shares in the
Fund.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore,
it
would not necessarily buy or sell a security unless that security is added or
removed, respectively, from the Underlying Index, even if that security
generally is underperforming. Additionally, if a constituent of the Underlying
Index were removed, even outside of a regular rebalance of the Underlying Index,
the Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk:
The sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security and may differ from the value used by the Underlying
Index, particularly for securities that trade in low value or volatile markets
or that are valued using a fair value methodology (such as during trading
halts). The value of the securities in the Fund's portfolio may change on
days when shareholders will not be able to purchase or sell the Fund's
Shares.
PERFORMANCE
INFORMATION
The Fund does not have a full calendar year
of performance. Once the Fund
has completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to the Underlying Index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the
future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Mr. Belanger and Ms. Yang have
been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to
https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary's website for more
information.
Global
X S&P 500®
Covered Call & Growth ETF
Ticker:
XYLG Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Covered Call & Growth ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Cboe S&P 500 Half BuyWrite Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.60% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.60% |
1 Other Expenses are based
on estimated amounts for the current fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. From the Fund's commencement of
operations on September 18, 2020 to the end of the most recent fiscal period,
the Fund's portfolio turnover rate was 0.75% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The
Underlying Index measures the performance of a theoretical portfolio that holds
a portfolio of the stocks included in the S&P 500®
Index (the "Reference Index"), and "writes" (or sells) a succession of one-month
at-the-money covered call options on the Reference Index. The written covered
call options on the Reference Index correspond to approximately 50% of the value
of the portfolio of stocks in the Reference Index. The written covered call
options on the Reference Index are held until expiration. The Reference 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. In seeking to track the
Underlying Index, the Fund follows a "buy-write" investment strategy on the
Reference Index in which the Fund purchases the component securities of the
Reference Index and also writes (or sells) call options that correspond to
approximately 50% of the value of the portfolio of stocks in the Reference
Index. By only writing call options on approximately 50% of the value of the
portfolio of stocks in the Reference Index, the strategy can provide income
generation from the call options while allowing for some potential upside
exposure to the growth of the underlying constituents of the Reference Index,
relative to a 100% covered call strategy.
Each
calendar month, the Fund will write (sell) a succession of one-month call
options corresponding to approximately 50% of the value of the portfolio of
stocks in the Reference Index and will cover such options by holding the
component securities of the Reference Index. Each option written will (i) have
an exercise price generally at or above the prevailing market price of the
Reference Index; (ii) be traded on a national securities exchange; (iii) be held
until the expiration date (i.e., generally the third Friday of the month) and be
settled based on the final settlement price of the option; (iv) expire on its
date of maturity (in the next calendar month); (v) only be subject to exercise
on its expiration date; and (vi) be settled in cash.
In
return for the payment of a premium to the Fund, a purchaser of the call options
written by the Fund is entitled to receive a cash payment from the Fund equal to
the difference between the value of the Reference Index and the exercise price
of the option if the value of the option on the expiration date is above its
exercise price. The Fund's covered call options may partially protect the Fund
from a decline in the price of the Reference Index through means of the premiums
received by the Fund. However, when the equity market is rallying rapidly, the
Underlying Index is expected to underperform the Reference Index.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of the Fund and Global
X Management Company LLC, the investment adviser for the Fund ("Adviser"). The
Fund's investment objective and Underlying Index may be changed without
shareholder approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the information technology
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Derivatives
Risk:
The Fund may gain exposure to different asset classes by investing in different
types of derivative instruments. Derivatives can be more sensitive to changes in
interest rates or to sudden fluctuations in market prices than conventional
securities, which can result in greater losses for the Fund. In addition, the
prices of the derivative instruments and the prices of underlying securities,
interest rates or currencies they are designed to reflect may not move together
as expected. A risk of the Fund’s use of derivatives is that the fluctuations in
their values may not correlate perfectly with the relevant reference index.
Derivatives are usually traded on margin, which may subject the
Fund
to margin calls. Margin calls may force the Fund to liquidate assets. On October
28, 2020, the SEC adopted new Rule 18f-4 under the 1940 Act, which governs the
use of derivatives by registered investment companies. New Rule 18f-4 imposes
limits on the amount of derivatives the Fund can enter into and replaces the
asset segregation framework previously used by the Fund to comply with Section
18 of the 1940 Act, among other requirements.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Information Technology Sector: Companies
in the information technology sector are subject to rapid changes in technology
product cycles; rapid product obsolescence; government regulation; and increased
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies and companies that rely heavily on technology tend to be more volatile
than the overall market and also are heavily dependent on patent and
intellectual property rights. In addition, information technology companies may
have limited product lines, markets, financial resources or
personnel.
Covered
Call Option Writing Risk:
By writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In addition, the Fund’s ability to sell the
securities underlying the options will be limited while the options are in
effect unless the Fund cancels out the option positions through the purchase of
offsetting identical options prior to the expiration of the written options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to write options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain
commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
New
Fund Risk: The
Fund is a new fund, with a limited operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. New funds are also subject
to Large Shareholder Risk.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Options
Premium Tax Risk:
The Fund’s covered call investment strategy may limit its ability to distribute
dividends eligible for treatment as qualified dividend income, which for
non-corporate shareholders are subject to federal income tax at rates of up to
20%. The Fund’s investment strategy may also limit its ability to distribute
dividends eligible for the dividends-received deduction for corporate
shareholders. For these reasons, a significant portion of distributions received
by Fund shareholders may be subject to tax at effective tax rates that are
higher than the rates that would apply if the Fund were to engage in a different
investment strategy. You should consult your tax advisor as to the tax
consequences of acquiring, owning and disposing of Shares in the
Fund.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its
methodology
may occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk:
The sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security and may differ from the value used by the Underlying
Index, particularly for securities that trade in low value or volatile markets
or that are valued using a fair value methodology (such as during trading
halts). The value of the securities in the Fund's portfolio may change on
days when shareholders will not be able to purchase or sell the Fund's
Shares.
PERFORMANCE
INFORMATION
The Fund does not have a full calendar year
of performance. Once the Fund
has completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to the Underlying Index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the
future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Mr. Belanger and Ms. Yang have
been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to
https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary's website for more
information.
Global X SuperIncome™ Preferred
ETF
Ticker:
SPFF Exchange: NYSE
Arca
INVESTMENT OBJECTIVE
The
Global X SuperIncome™
Preferred ETF ("Fund") seeks investment results that correspond generally to the
price and yield performance, before fees and expenses, of the S&P Enhanced
Yield North American Preferred Stock Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.58% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.58% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$59 |
$186 |
$324 |
$726 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 67.65% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund will invest at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
Moreover, at least 80% of the Fund's total assets will be invested in preferred
securities. The Fund's 80% investment policies are non-fundamental and require
60 days prior written notice to shareholders before they can be changed. The
Fund may lend securities representing up to one-third of the value of the Fund’s
total assets (including the value of the collateral received).
The
Underlying Index tracks the performance of the highest-yielding preferred
securities in the United States and Canada, as determined by Standard &
Poor's Financial Services, LLC, a subsidiary of the McGraw-Hill Companies
("S&P"), the provider of the Underlying Index ("Index Provider"). The
Underlying 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 Provider. The Underlying Index does not
seek to directly reflect the performance of the companies issuing the preferred
stock. As of December 31, 2020, the Underlying Index had 48 constituents.
The Fund's investment objective and Underlying Index may be changed without
shareholder approval.
In
general, preferred stock is a class of equity security that pays a specified
dividend that must be paid before any dividends can be paid to common
stockholders, and which takes precedence over common stock in the event of the
company's liquidation. Although preferred stocks represent a partial ownership
interest in a company, preferred stocks generally do not carry voting rights and
have economic characteristics similar to fixed-income securities. Preferred
stocks generally are issued with a fixed par value and pay dividends based on a
percentage of that par value at a fixed or variable rate. Additionally,
preferred stocks often have a liquidation value that generally equals the
original purchase price of the preferred stock at the date of issuance. The
Underlying Index may include many different categories of preferred stock, such
as floating and fixed rate preferreds, perpetual preferred stock, trust
preferred securities, cumulative and non-cumulative preferreds or preferred
stocks with a callable or conversion feature.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation.
The
Fund concentrates its investments (i.e.,
holds 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was
concentrated in the banking industry and had significant exposure to the
financials sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Hybrid
Securities Investment Risk:
Hybrid securities are subject to the risks of equity securities and risks of
debt securities. The claims of holders of hybrid securities of an issuer are
generally subordinated to those of holders of traditional debt securities in
bankruptcy, and thus hybrid securities may be more volatile and subject to
greater risk than traditional debt securities and may, in certain circumstances,
even be more volatile than traditional equity securities. At the same time,
hybrid securities may not fully participate in gains of their issuer and thus
potential returns of such securities are generally more limited than traditional
equity securities, which would participate in such gains.
Preferred
Stock Investment Risk:
Preferred stock may be subordinated to bonds or other debt instruments in an
issuer’s capital structure, meaning that an issuer’s preferred stock generally
pays dividends only after the issuer makes required payments to holders of its
bonds and other debt. Additionally, in certain situations, an issuer may call or
redeem its preferred stock or convert it to common stock. Preferred stock may be
less liquid than many other types of securities, such as common stock, and
generally provides no voting rights with respect to the issuer. Preferred stock
is subject to many of the risks associated with debt securities, including
interest rate risk. As interest rates rise, the value of the preferred stocks
held by the Fund are likely to decline.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Banking Industry:
The performance of stocks in the banking industry may be affected by extensive
governmental regulation which may limit both the amounts and types of loans and
other financial commitments they can make, and the interest rates and fees they
can charge and the amount of capital they must maintain. Profitability is
largely dependent on the availability and cost of capital funds and can
fluctuate significantly when interest rates change. Credit losses resulting from
financial difficulties of borrowers can negatively impact banking companies.
Banks may also be subject to severe price competition. Competition is high among
banking companies and failure to maintain or increase market share may result in
lost market value.
Risks
Related to Investing in the Financials Sector: Performance
of companies in the financials sector may be adversely impacted by many factors,
including, among others, government regulations, economic conditions, credit
rating downgrades, changes in interest rates, and decreased liquidity in credit
markets. This sector has experienced significant losses in the past, and the
impact of more stringent capital requirements and of current or future
regulation on any individual financial company or on the sector as a whole
cannot be predicted. In recent years, cyber-attacks and technology malfunctions
and failures have become increasingly frequent in this sector and have caused
significant losses to companies in this sector, which may negatively impact the
Fund.
Credit
Risk: Credit
risk refers to the possibility that the issuer of the security will not be able
to make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of the Fund’s investment in that issuer. Securities rated in
the four highest categories by the rating agencies are considered investment
grade but they may also have some speculative characteristics. Investment grade
ratings do not guarantee that bonds will not lose value.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Foreign
Financial Institution Risk:
Certain of the securities that comprise the Underlying Index, while traded on
U.S. exchanges, may be issued by foreign financial institutions. Therefore, the
Fund may be subject to the risks of investing in securities issued by foreign
companies, which may not be subject to the same regulations as companies
domiciled in the U.S. The health of many foreign financial institutions is often
tied closely with the financial stability of the local economy in which they are
domiciled, and therefore are subject to additional risks including but not
limited to: policy changes, slow or decelerating economic growth, and high
levels of debt.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
High
Yield Securities Risk:
Securities that are rated below investment grade (commonly referred to as "junk
bonds", including those bonds rated lower than "BBB-" by Standard &
Poor’s®
(a division of the McGraw-Hill Companies, Inc.) ("S&P") and Fitch, Inc.
("Fitch"), "Baa3" by Moody’s®
Investors Service, Inc. ("Moody’s"), or "BBBL" by Dominion Bond Rating Service
Limited ("Dominion")), or are unrated but may be judged to be of comparable
quality, at the time of purchase, may be more volatile than higher-rated
securities of similar maturity. Investing in junk bonds is speculative.
Income
Risk:
Income
risk is the risk that the Fund’s income will decline because of falling interest
rates.
Interest
Rate Risk: Interest
rate risk is the risk that prices of fixed income securities generally increase
when interest rates decline and decrease when interest rates increase. The Fund
may lose money if short-term or long-term interest rates rise
sharply.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central
governments
and governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Authorized Participants Concentration Risk may be heightened because the Fund
invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
10.56% |
Worst
Quarter: |
3/31/2020 |
-17.18% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (07/16/2012) |
Global
X SuperIncome™ Preferred ETF: |
|
|
|
·Return before
taxes |
6.90% |
4.48% |
4.09% |
·Return
after taxes on distributions1 |
5.18% |
2.53% |
2.02% |
·Return
after taxes on distributions and sale of Fund Shares1 |
4.72% |
2.97% |
2.61% |
S&P
Enhanced Yield North American Preferred Stock Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
7.33% |
4.98% |
4.69% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
18.40% |
15.22% |
15.15% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund
since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March
1, 2019. Ms. Chan
has
been Portfolio Manager of the Fund since June 10, 2019. Mr. Belanger and Ms.
Yang have been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X Renewable Energy Producers
ETF
Ticker:
RNRG Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X Renewable Energy
Producers ETF ("Fund") (formerly known as the Global X YieldCo & Renewable
Energy Income ETF) seeks to track, before fees and expenses, the price and yield
performance of the Indxx Renewable Energy Producers Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.65% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.65% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Years |
Three
Years |
Five
Years |
Ten
Years |
$66 |
$208 |
$362 |
$810 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 29.27% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund's 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Fund may lend
securities representing up to one-third of the value of the Fund’s total assets
(including the value of the collateral received).
The
Underlying 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
provider of the Underlying Index ("Index Provider").
In
constructing the Underlying Index, the Index Provider first identifies FactSet
Industries related to renewable energy production. Companies within these
industries, as of the selection date, are further reviewed by the Index Provider
on the basis of revenue related to renewable energy production. To be eligible
for the Underlying Index, a company is considered by the Index Provider to be a
Renewable Energy Company if the company generates at least 50% of its revenues
from renewable energy production, as determined by the Index Provider. The Index
Provider 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
the Index Provider.
The
Underlying 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.
Generally speaking, this approach will limit the amount of concentration in the
largest market capitalization companies and increase company-level
diversification. The Underlying Index may include large-, mid- or
small-capitalization companies, and components may include, but are not limited
to, utilities, industrials and energy companies. The Fund's investment objective
and Underlying Index may be changed without shareholder approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"outperform" the Underlying Index and does not seek temporary defensive
positions when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The
Fund concentrates its investments (i.e., holds 25% or more of its total assets) in
a particular industry or group of industries to approximately the same extent
that the Underlying Index is concentrated. As of December 31, 2020, the
Underlying Index was concentrated in the electric utilities and independent
power and renewable energy industries and had significant exposure to the
utilities sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Investing in Renewable Energy Companies: Renewable
Energy Companies typically face intense competition, short product lifecycles
and potentially rapid product obsolescence. These companies may be significantly
affected by fluctuations in energy prices and in the supply and demand of
renewable energy, tax incentives, subsidies and other
governmental
regulations and policies. These companies are also heavily dependent on
intellectual property rights and may be adversely affected by loss or impairment
of those rights. Renewable Energy Companies may be adversely affected by
commodity price volatility, changes in exchange rates, imposition of import
controls, availability of certain inputs and materials required for production,
depletion of resources, technological developments and labor relations. A
decline in the price of conventional energy such as oil and natural gas could
have a materially adverse impact on Renewable Energy Companies. Renewable energy
resources may be highly dependent upon on government policies that support
renewable generation and enhance the economic viability of owning renewable
electric generation assets. Investors should additionally take notice of the
distinction between implemented government policy based on legislation and less
guaranteed commitments which may be aspirational, subject to political risk, and
difficult to enforce. Additionally, adverse environmental conditions may cause
fluctuations in renewable electric generation and adversely affect the cash
flows associated with Renewable Energy Companies.
Associated
Risks Related to Investing in YieldCos: Investments
in securities of YieldCos involve risks that differ from investments in
traditional operating companies, including risks related to the relationship
between the YieldCo and the company responsible for the formation of the YieldCo
(the "YieldCo Sponsor”). YieldCos typically remain dependent on the management
and administration services provided by or under the direction of the YieldCo
Sponsor and on the ability of the YieldCo Sponsor to identify and present the
YieldCo with acquisition opportunities, which may often be assets of the YieldCo
Sponsor itself. To the extent that the YieldCo relies on the YieldCo Sponsor for
developing new assets for potential future acquisitions, the YieldCo may be
dependent on the development capabilities and financial health of the YieldCo
Sponsor. YieldCo Sponsors may have interests that conflict with the interests of
the YieldCo, and may retain control of the YieldCo via classes of stock held by
the Yieldco Sponsor. Congress voted not to extend bonus depreciation in
2015 for qualifying capital equipment, meaning new YieldCo assets could be
subject to slower depreciation schedules and less ability to minimize tax
liabilities. Additionally, Congress could vote to eliminate production tax
credits (“PTCs”) for green energy projects, which could reduce the profitability
of companies, including YieldCos that operate in the renewable energy
space. YieldCo securities can be affected by macro-economic and other
factors affecting the stock market in general, expectations of interest rates,
investor sentiment towards YieldCos or the energy sector, changes in a
particular issuer’s financial condition, or unfavorable or unanticipated poor
performance of a particular issuer (in the case of YieldCos, generally measured
in terms of distributable cash flow). A YieldCo’s share price is typically a
multiple of its distributable cash flow. Therefore any event that limits
the YieldCo’s ability to maintain or grow its distributable cash flow would
likely have a negative impact on the YieldCo’s share price. Prices of YieldCo
securities also can be affected by fundamentals unique to the company, including
the robustness and consistency of its earnings and its ability to meet debt
obligations including the payment of interest and principle to creditors.
YieldCos may distribute all or substantially all of the cash available for
distribution, which may limit new acquisitions and future growth. YieldCos may
finance its growth strategy with debt, which may increase the YieldCo’s leverage
and the risks associated with the YieldCo. The ability of a YieldCo to maintain
or grow its dividend distributions may depend on the entity’s ability to
minimize its tax liabilities through the use of accelerated depreciation
schedules, tax loss carryforwards, and tax incentives. Changes to the current
tax code could result in greater tax liabilities, which would reduce the
YieldCo’s distributable cash flow.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Cash
Transaction Risk:
Unlike most exchange-traded funds ("ETFs"), the Fund intends to effect a
significant portion of creations and redemptions for cash, rather than in-kind
securities. As a result, an investment in the Fund may be less tax-efficient
than an investment in a more conventional ETF. Moreover, cash transactions may
have to be carried out over several days if the securities market is relatively
illiquid and may involve considerable brokerage fees and taxes. These factors
may result in wider spreads between the bid and the offered prices of the Fund’s
Shares than for more conventional ETFs.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure
to
such sectors. In such event, the Fund’s performance will be particularly
susceptible to adverse events impacting such industry or sector, which may
include, but are not limited to, the following: general economic conditions or
cyclical market patterns that could negatively affect supply and demand;
competition for resources; adverse labor relations; political or world events;
obsolescence of technologies; and increased competition or new product
introductions that may affect the profitability or viability of companies in a
particular industry or sector. As a result, the value of the Fund’s investments
may rise and fall more than the value of shares of a fund that invests in
securities of companies in a broader range of industries or sectors.
Risks
Related to Investing in the Electric Utilities Industry:
Companies in the electric utilities industry may face increased financing costs,
decreased demand resulting from energy conservation, and regulatory changes
which have a material impact on their business.
Risks
Related to Investing in the Independent Power and Renewable Electricity
Industry:
Companies in the independent power and renewable electricity industry may be
highly dependent upon government subsidies, contracts with government entities,
and the successful development of new and proprietary technologies. In addition,
seasonal weather conditions, fluctuations in the supply of and demand for energy
products, changes in energy prices, and international political events may cause
fluctuations in the performance of independent power and renewable electricity
companies and the prices of their securities.
Risks
Related to Investing in the Utilities Sector:
Companies in the utilities sector may be adversely affected by changes in
exchange rates, domestic and international competition and governmental
regulations on rates charged to customers. Privatization and deregulation in the
utilities sector may subject companies to greater competition and losses in
profitability. Companies in the utilities industry may have difficulty obtaining
an adequate return on invested capital, raising capital, or financing large
construction programs during periods of inflation or unsettled capital markets.
In addition, companies in the utilities sector may be adversely affected due to
increase in fuel and operating costs and the costs of complying with
regulations.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Custody
Risk:
The Fund may hold foreign securities and cash with foreign banks, agents, and
securities depositories appointed by the Fund's custodian. Investments in
emerging markets may be subject to even greater custody risks than investments
in more developed markets. Less developed markets are more likely to experience
problems with the clearing and settling of trades and the holding of securities
by local banks, agents and depositories.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Brazil: Investment
in Brazilian issuers involves risks that are specific to Brazil, including
legal, regulatory, political and economic risks. The Brazilian economy has
historically been exposed to high rates of inflation, debt, corruption, and
violence, each of which may reduce and/or prevent economic growth.
Risk
of Investing in Canada:
The Canadian economy is highly dependent on the demand for and price of natural
resources. As a result, the Canadian market is relatively concentrated in
issuers involved in the production and
distribution
of natural resources and any changes in these sectors could have an adverse
impact on the Canadian economy. The Canadian economy is heavily dependent on
relationships with certain key trading partners, including the United States and
China. Developments in the United States, including renegotiation of the North
American Free Trade Agreement (“NAFTA”) and ratification of the successor United
States-Mexico-Canada Agreement (“USMCA”), which went into effect on July 1,
2020, as well as the imposition of additional tariffs by the United States, may
have implications for the trade arrangements between the United States and
Canada, which could negatively affect the value of securities held by the Fund.
Risk
of Investing in Chile:
Investments
in Chilean issuers involve risks that are specific to Chile, including legal,
regulatory, political, currency, environmental and economic risks. Among other
things, the Chilean economy is heavily dependent on the export of certain
commodities.
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual and threatened responses to such activity, including purchasing
restrictions, sanctions, tariffs or cyberattacks on the Chinese government or
Chinese companies, may impact China’s economy and Chinese issuers of securities
in which the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns,
such
as terrorism and strained international relations. Incidents involving a
country’s or region’s security may cause uncertainty in its markets and may
adversely affect its economy and the Fund’s investments. In addition, developed
countries may be impacted by changes to the economic conditions of certain key
trading partners, regulatory burdens, debt burdens and the price or availability
of certain commodities.
Risk
of Investing in Emerging Markets:
The Fund targets Yieldco and Renewable Energy Companies globally and is expected
to invest in securities in emerging market countries. Investments in emerging
markets may be subject to a greater risk of loss than investments in developed
markets. Securities markets of emerging market countries are less liquid,
subject to greater price volatility, have smaller market capitalizations, have
less government regulation, and are not subject to as extensive and frequent
accounting, financial, and other reporting requirements as the securities
markets of more developed countries, and there may be greater risk associated
with the custody of securities in emerging markets. It may be difficult or
impossible for the Fund to pursue claims against an emerging market issuer in
the courts of an emerging market country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies. Emerging markets may be
more likely to experience inflation, political turmoil and rapid changes in
economic conditions than more developed markets. Emerging market economies’
exposure to specific industries, such as tourism, and lack of efficient or
sufficient health care systems, could make these economies especially vulnerable
to global crises, including but not limited to, pandemics such as the global
COVID-19 pandemic. Certain emerging market countries may have privatized, or
have begun the process of privatizing, certain entities and industries.
Privatized entities may lose money or be re-nationalized.
Risk
of Investing in New Zealand:
The New Zealand economy is heavily dependent on agricultural exports, and as a
result, is susceptible to fluctuations in demand for agricultural products. New
Zealand is also dependent on trade with key trading partners; a reduction in
such trade may cause an adverse impact on its economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Investable
Universe of Companies Risk:
The investable universe of companies in which the Fund may invest may be
limited. If a company no longer meets the Index Provider’s criteria for
inclusion in the Underlying Index, the Fund may need to reduce or eliminate its
holdings in that company. The reduction or elimination of the Fund’s
holdings in the company may have an adverse impact on the liquidity of the
Fund’s overall portfolio holdings and on Fund performance.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a
national
securities exchange and may, therefore, have a material upward or downward
effect on the market price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance. On
November 19, 2018, the name of the Fund changed from the Global X YieldCo Index
ETF to the Global X YieldCo & Renewable Energy Income ETF to reflect a
change in the Fund's underlying index from the Indxx Global YieldCo Index to the
Indxx YieldCo & Renewable Energy Income Index. The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
12/31/2020 |
24.58% |
Worst
Quarter: |
9/30/2015 |
-28.95% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (05/27/2015) |
Global
X Renewable Energy Producers ETF: |
|
|
|
·Return before
taxes |
25.31% |
15.93% |
7.79% |
·Return
after taxes on distributions1 |
24.27% |
14.82% |
6.70% |
·Return
after taxes on distributions and sale of Fund Shares1 |
15.60% |
12.41% |
5.70% |
Hybrid
Indxx Renewable Energy Producers Index (net)2
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
25.62% |
16.37% |
8.16% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.25% |
12.26% |
9.25% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
2
Hybrid index performance
reflects the performance of the Indxx Global YieldCo Index through November 18,
2018 and the Indxx YieldCo & Renewable Energy Income Index thereafter.
Effective February 1, 2021, the name of the Underlying Index changed from Indxx
YieldCo & Renewable Energy Income Index to the Indxx Renewable Energy
Producers Index.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been Portfolio Manager of the Fund since June 10, 2019. Mr.
Belanger and Ms. Yang have been Portfolio Managers of the Fund since December
2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X S&P 500®
Catholic Values ETF
Ticker:
CATH Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Catholic Values ETF ("Fund") seeks investment results that correspond generally
to the price and yield performance, before fees and expenses, of the S&P
500®
Catholic Values Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.29% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.29% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$30 |
$93 |
$163 |
$368 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 5.55% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index. The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
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 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,
2020, the Underlying Index had 457 constituents. The Fund's investment objective
and Underlying Index may be changed without shareholder
approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
"outperform" the Underlying Index and does not seek temporary defensive
positions when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental to
shareholders, such as when there are practical difficulties or substantial costs
involved in compiling a portfolio of equity securities to follow the Underlying
Index, in instances in which a security in the Underlying Index becomes
temporarily illiquid, unavailable or less liquid, or as a result of legal
restrictions or limitations (such as tax diversification requirements) that
apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The
Fund concentrates its investments (i.e.,
hold 25% or more of its total assets) in a particular industry or group of
industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index had significant
exposure to the information technology
sector.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Socially Responsible Investments:
Certain social responsibility investment criteria limit the types of securities
that can be included in the Underlying Index. This could cause the Underlying
Index to underperform other benchmark indices, and could cause the Fund to
underperform other funds that do not have a social responsibility focus.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Catholic
Values Investing Risk: The
Fund invests in securities that meet the Underlying Index’s investment criteria
by excluding the securities of companies based on such company's involvement in
one or more activities deemed by the investment criteria to be inconsistent with
Catholic teachings. There can be no guarantee that the activities of the
companies included in the Underlying Index will align with the moral and social
teachings of the Catholic Church, or that the Underlying Index’s investment
criteria will align fully with all interpretations of Catholic social teachings.
To the extent an investor intends to invest in a manner consistent with his or
her interpretation of Catholic social teachings, an investment in the Fund may
fail to achieve such objective.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Risks
Related to Investing in the Information Technology Sector: Companies
in the information technology sector are subject to rapid changes in technology
product cycles; rapid product obsolescence; government regulation; and increased
competition, both domestically and internationally, including competition from
foreign competitors with lower production costs. Information technology
companies and companies that rely heavily on technology tend to be more volatile
than the overall market and also are heavily dependent on patent and
intellectual property rights. In addition, information technology companies may
have limited product lines, markets, financial resources or
personnel.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the
electronic
systems of the Fund, the Adviser, and the Fund's other service providers, market
makers, Authorized Participants or the issuers of securities in which the Fund
invests have the ability to cause disruptions and negatively impact the Fund's
business operations, potentially resulting in financial losses to the Fund and
its shareholders. The Fund and the Adviser seek to reduce these operational
risks through controls and procedures. However, these measures do not address
every possible risk and may be inadequate for those risks that they are intended
to address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
21.14% |
Worst
Quarter: |
3/31/2020 |
-19.60% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Since
Inception (04/18/2016) |
Global
X S&P 500®
Catholic Values ETF: |
|
|
·Return before
taxes |
18.68% |
15.43% |
·Return
after taxes on distributions1 |
18.30% |
15.04% |
·Return
after taxes on distributions and sale of Fund Shares1 |
11.29% |
12.32% |
S&P
500®
Catholic Values Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
19.07% |
15.76% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
18.40% |
15.49% |
1
After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund since March 1,
2019. Ms. Chan
has
been Portfolio Manager of the Fund since June 10, 2019. Mr. Belanger and Ms.
Yang have been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global X S&P Catholic Values Developed ex-U.S.
ETF
Ticker:
CEFA Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X S&P Catholic
Values Developed ex-U.S. ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the S&P Developed ex-U.S. Catholic Values Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.35% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.35% |
1 Other Expenses are based
on estimated amounts for the current fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$36 |
$113 |
$197 |
$443 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. From the Fund's commencement of
operations on June 22, 2020 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 4.04% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investments
purposes (if any), in the securities of the Underlying Index and in American
Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs") based on
the securities in the Underlying Index. The Fund's 80% investment policy is
non-fundamental and requires 60 days prior written notice to shareholders before
it can be changed.
The
Underlying 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 Underlying 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
Underlying Index then reweights the remaining constituents so that the
Underlying Index’s sector exposures match the current sector exposures of the
S&P EPAC ex-Korea Large Cap Index. The Underlying Index is sponsored by
Standard & Poor’s Financial Services LLC (the "Index Provider"), which is an
organization that is independent of 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, 2020, the
Underlying Index had 489 constituents. The Fund's investment objective and
Underlying Index may be changed without shareholder approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Socially Responsible Investments:
Certain social responsibility investment criteria limit the types of securities
that can be included in the Underlying Index. This could cause the Underlying
Index to underperform other benchmark indices, and could cause the Fund to
underperform other funds that do not have a social responsibility focus.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Catholic
Values Investing Risk: The
Fund invests in securities that meet the Underlying Index’s investment criteria
by excluding the securities of companies based on such company's involvement in
one or more activities deemed by the investment criteria to be inconsistent with
Catholic teachings. There can be no guarantee that the activities of the
companies included in the Underlying Index will align with the moral and social
teachings of the Catholic Church, or that the Underlying Index’s
investment
criteria will align fully with all interpretations of Catholic social teachings.
To the extent an investor intends to invest in a manner consistent with his or
her interpretation of Catholic social teachings, an investment in the Fund may
fail to achieve such objective.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Australia: Investments
in Australian issuers may subject the Fund to regulatory, political, currency,
security, and economic risk specific to Australia. The Australian economy is
heavily dependent on exports from the energy, agricultural and mining sectors.
This makes the Australian economy susceptible to fluctuations in the commodity
markets. Australia is also dependent on trading with key trading
partners.
Risk
of Investing in Developed Europe:
The Fund is more exposed to the economic and political risks of Europe and of
the European countries in which it invests than funds whose investments are more
geographically diversified. Adverse economic and political events in Europe may
cause the Fund’s investments to decline in value. The economies and markets of
European countries are often closely connected and interdependent, and events in
one country in Europe can have an adverse impact on other European countries.
The Fund makes investments in securities of issuers that are domiciled in, or
have significant operations in, member states of the European Union that are
subject to economic and monetary controls that can adversely affect the Fund’s
investments. The European financial markets have experienced volatility and
adverse trends in recent years and these events have adversely affected the
exchange rate of the euro and may continue to significantly affect other
European countries.
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain
commodities.
Risk
of Investing in Japan:
The Japanese economy may be subject to considerable degrees of economic,
political and social instability, which could have a negative impact on Japanese
securities. Since the year 2000, Japan’s economic growth rate has remained
relatively low, and it may remain low in the future. In addition, Japan is
subject to the risk of natural disasters, such as earthquakes, volcanoes,
typhoons and tsunamis, which could negatively affect the Fund. Japan’s relations
with its neighbors have at times been strained, and strained relations with its
neighbors or trading partners may cause uncertainty in the Japanese markets and
adversely affect the overall Japanese economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
New
Fund Risk: The
Fund is a new fund, with a limited operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. New funds are also subject
to Large Shareholder Risk.
Non-Diversification
Risk:
The Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"). As a result, the Fund is subject to
the risk that it may be more volatile than a diversified fund because the Fund
may invest its assets in a smaller number of issuers or may invest a larger
proportion of its assets in a single issuer. As a result, the gains and losses
on a single investment may have a greater impact on the Fund’s NAV and may make
the Fund more volatile than more diversified funds.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index,
even
if that security generally is underperforming. Additionally, if a constituent of
the Underlying Index were removed, even outside of a regular rebalance of the
Underlying Index, the Adviser anticipates that the Fund would sell such
security. Maintaining investments in securities regardless of market conditions
or the performance of individual securities could cause the Fund’s return to be
lower than if the Fund employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Reliance
on Trading Partners Risk:
The Fund may invest in economies that are heavily dependent upon trading with
key partners. Any reduction in this trading, institution of tariffs or other
trade barriers or a slowdown in the economies of any of its key trading partners
may cause an adverse impact on the economies of the markets in which the Fund
invests. Through its portfolio companies' trading partners, the Fund is
specifically exposed to African
Economic Risk,
Asian Economic Risk,
Australasian Economic Risk, European Economic Risk,
Latin American Economic Risk,
Middle East Economic Risk,
and North
American Economic Risk.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The Fund does not have a full calendar year
of performance. Once the Fund
has completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to the Underlying Index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the
future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Mr. Belanger and Ms. Yang have
been Portfolio Managers of the Fund since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to
https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary's website for more
information.
Global X S&P Catholic Values U.S. Aggregate Bond
ETF
Ticker:
CAGG Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X S&P Catholic
Values U.S. Aggregate Bond ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the S&P U.S. Catholic Values Aggregate Bond Capped Index
("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.25% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.25% |
1 Other Expenses reflect estimated
expenses for the Fund's first fiscal year of
operations.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
One
Year |
Three
Years |
$26 |
$80 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. This is a new fund and does not yet have
a portfolio turnover rate to disclose.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investments
purposes (if any), in the securities of the Underlying Index. The Fund's 80%
investment policy is non-fundamental and requires 60 days prior written notice
to shareholders before it can be changed.
The
Underlying 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 Underlying 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 Underlying 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 Underlying Index
reweights the remaining corporate bonds so that the Underlying Index’s exposure
to corporate bonds matches the aggregate exposure to corporate bonds of the
S&P U.S. Aggregate Bond Index. The Underlying 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 Underlying Index is sponsored by
Standard & Poor’s Financial Services LLC (the "Index Provider"), which is an
organization that is independent of 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, 2020, the Underlying Index had 6,102 constituents. The Fund's
investment objective and Underlying Index may be changed without shareholder
approval.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally uses a representative sampling strategy with respect to the
Underlying Index. "Representative sampling" is an indexing strategy that
involves investing in a representative sample of securities that collectively
has an investment profile similar to the Underlying Index in terms of key risk
factors, performance attributes and other characteristics. These include country
weightings, market capitalization and other financial characteristics of
securities. The Fund may or may not hold all of the securities in the Underlying
Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Bond
Investment Risk:
Investments in debt securities are generally affected by changes in prevailing
interest rates and the creditworthiness of the issuer. Prices of debt securities
fall when prevailing interest rates rise. The Fund’s yield on investments in
debt securities will fluctuate as the securities in the Fund are rebalanced and
reinvested in securities with different interest rates. Investments in bonds are
also subject to credit risk. Credit risk is the risk that an issuer of debt
securities will be unable to pay principal and interest when due, or that the
value of the security will suffer because investors believe the issuer is less
able to make required principal and interest payments. This is broadly gauged by
the credit ratings of the debt securities in which the Fund invests. However,
credit ratings are only the opinions of the rating agencies issuing them, do not
purport to reflect the risk of fluctuations in market value and are not absolute
guarantees as to the payment of interest and the repayment of principal.
Callable
Debt Risk:
During periods of falling interest rates, an issuer of a callable bond held by
the Fund may “call” or repay the security before its stated maturity, and the
Fund may have to reinvest the proceeds in securities with lower yields, which
would result in a decline in the Fund’s income, or in securities with greater
risks or with other less favorable features.
U.S.
Agency Mortgage-Backed Securities Risk: The
Fund invests in mortgage-backed securities issued or guaranteed by the U.S.
government or one of its agencies or sponsored entities, some of which may not
be backed by the full faith and credit of the U.S. government. Mortgage-backed
securities represent interests in “pools” of mortgages
and
are subject to interest rate, prepayment, and extension risk. Mortgage-backed
securities react differently to changes in interest rates than other bonds, and
the prices of mortgage-backed securities may reflect adverse economic and market
conditions. Small movements in interest rates (both increases and decreases) may
quickly and significantly reduce the value of certain mortgage-backed
securities. Mortgage-backed securities are also subject to the risk of default
on the underlying mortgage loans, particularly during periods of economic
downturn. Default or bankruptcy of a counterparty to a “to be announced” (“TBA”)
transaction would expose the Fund to possible losses.
U.S.
Treasury Obligations Risk:
U.S. Treasury obligations may differ in their interest rates, maturities times
of issuance and other characteristics. Similar to other issuers, changes to the
financial condition or credit rating of the U.S. government may cause the value
of the Fund's investments in U.S. Treasury obligations to decline.
Associated
Risks Related to Socially Responsible Investments:
Certain social responsibility investment criteria limit the types of securities
that can be included in the Underlying Index. This could cause the Underlying
Index to underperform other benchmark indices, and could cause the Fund to
underperform other funds that do not have a social responsibility focus.
Catholic
Values Investing Risk: The
Fund invests in securities that meet the Underlying Index’s investment criteria
by excluding the securities of companies based on such company's involvement in
one or more activities deemed by the investment criteria to be inconsistent with
Catholic teachings. There can be no guarantee that the activities of the
companies included in the Underlying Index will align with the moral and social
teachings of the Catholic Church, or that the Underlying Index’s investment
criteria will align fully with all interpretations of Catholic social teachings.
To the extent an investor intends to invest in a manner consistent with his or
her interpretation of Catholic social teachings, an investment in the Fund may
fail to achieve such objective.
Concentration
Risk: To
the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Credit
Risk: Credit
risk refers to the possibility that the issuer of the security will not be able
to make principal and interest payments when due. Changes in an issuer’s credit
rating or the market’s perception of an issuer’s creditworthiness may also
affect the value of the Fund’s investment in that issuer. Securities rated in
the four highest categories by the rating agencies are considered investment
grade but they may also have some speculative characteristics. Investment grade
ratings do not guarantee that bonds will not lose value.
Extension
Risk:
Extension risk is the risk that, when interest rates rise, certain obligations
will be paid off by the issuer (or other obligated party) more slowly than
anticipated, causing the value of these debt securities to fall. Rising interest
rates tend to extend the duration of debt securities, making their market value
more sensitive to changes in interest rates. The value of longer-term debt
securities generally changes more in response to changes in interest rates than
shorter-term debt securities. As a result, in a period of rising interest rates,
securities may exhibit additional volatility and may lose value.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain
commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
Income
Risk:
Income
risk is the risk that the Fund’s income will decline because of falling interest
rates.
Interest
Rate Risk: Interest
rate risk is the risk that prices of fixed income securities generally increase
when interest rates decline and decrease when interest rates increase. The Fund
may lose money if short-term or long-term interest rates rise
sharply.
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
New
Fund Risk: The
Fund is a new fund, with no operating history, which may result in additional
risks for investors in the Fund. There can be no assurance that the Fund will
grow to or maintain an economically viable size, in which case the Board of
Trustees may determine to liquidate the Fund. While shareholder interests will
be the paramount consideration, the timing of any liquidation may not be
favorable to certain individual shareholders. New funds are also subject to
Large Shareholder Risk.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
Prepayment
Risk:
When interest rates fall, certain obligations will be paid off by the obligor
more quickly than originally anticipated, and the Fund may have to invest the
proceeds in securities with lower yields.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a national securities exchange
and may, therefore, have a material upward or downward effect on the market
price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading
losses.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The Fund has not commenced operations as of
the date of this Prospectus. Once the Fund
has completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risk of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to the index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the
future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa
Yang (“Portfolio Managers”).
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
Global
X Guru®
Index ETF
Ticker:
GURU Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X Guru®
Index ETF ("Fund") seeks investment results that correspond generally to the
price and yield performance, before fees and expenses, of the Solactive Guru
Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy, hold, and sell shares (“Shares”) of
the Fund. You may pay other fees, such as
brokerage commissions and other fees to financial intermediaries, which are not
reflected in the table and examples below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.75% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.75% |
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes that you invest
$10,000 in the Fund for the time periods indicated and then sell all of your
Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
|
|
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$77 |
$240 |
$417 |
$930 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year end,
the Fund's portfolio turnover rate was 124.90% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the
Underlying Index and in American Depositary Receipts ("ADRs") and Global
Depositary Receipts ("GDRs") based on the securities in the Underlying Index.
The Fund's 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Fund may lend
securities representing up to one-third of the value of the Fund’s total assets
(including the value of the collateral received).
The
Underlying Index is comprised of the top U.S. listed equity positions reported
on Form 13F by a select group of entities characterized as hedge funds, as
defined by Solactive AG, the provider of the Underlying Index ("Index
Provider").
Hedge
funds are selected by the Index Provider 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 Underlying Index. Additional filters are applied to
eliminate hedge funds that have high turnover rates for equity holdings. Only
hedge funds with a concentrated top holding are included in the selection
process.
Once
the hedge fund pool has been determined, the Index Provider utilizes Form 13F
filings to compile the top stock holding
from
each of these hedge funds. The stocks are screened for liquidity, equal
weighted, and rebalanced quarterly following the Form 13F filing timeline. As of
December 31, 2020, the Underlying Index had 55 constituents. The Fund's
investment objective and Underlying Index may be changed without shareholder
approval.
The
Underlying Index is sponsored by the Index Provider, which is an organization
that is independent of 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.
The
Adviser uses a "passive" or indexing approach to try to achieve the Fund's
investment objective. Unlike many investment companies, the Fund does not try to
outperform the Underlying Index and does not seek temporary defensive positions
when markets decline or appear overvalued.
The
Fund generally will 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,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling
strategy.
The Fund concentrates its investments
(i.e., holds 25% or more of its total assets) in a particular industry or group
of industries to approximately the same extent that the Underlying Index is
concentrated. As of December 31, 2020, the Underlying Index was not
concentrated in any industry.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose all or part of
your investment in the Fund, and the Fund’s performance could trail that of
other investments. There is no guarantee that the
Fund will achieve its investment objective. An investment in the Fund is not a
bank deposit and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency, the Adviser or any of its
affiliates. The Fund is subject to the principal risks noted
below, any of which may adversely affect the Fund’s net asset value (“NAV”),
trading price, yield, total return and ability to meet its investment objective,
as well as other risks that are described in greater detail in the Additional
Information About the Funds
section of this Prospectus and in the Statement of Additional Information
(“SAI”). The order of the below risk factors does not indicate the significance
of any particular risk factor.
Asset
Class Risk:
Securities and other assets in the Underlying Index or otherwise held in the
Fund's portfolio may underperform in comparison to the general securities
markets, a particular securities market or other asset classes.
Equity
Securities Risk:
Equity securities are subject to changes in value, and their values may be more
volatile than other asset classes, as a result of such factors as a company’s
business performance, investor perceptions, stock market trends and general
economic conditions.
Associated
Risks Related to Form 13F Data:
The Form 13F filings used to select the securities in the Underlying Index are
filed up to 45 days after the end of each calendar quarter. Therefore, a given
investor may have already sold its position by the time the security is added to
the Underlying Index. Furthermore, the Form 13F filing may only disclose a
subset of a particular investor’s holdings, as not all securities are required
to be reported on the Form 13F. As a result, the Form 13F may not provide a
complete picture of the holdings of a given investor. An investor may hold long
positions for a number of reasons, and the Index Provider has not investigated
such reasons or the strategies followed by an investor who makes the
filings. The Underlying Index may not be representative of the investor's
universe or the strategies that give rise to the reported holdings. Because the
Form 13F filing is publicly available information, it is possible that other
investors are also monitoring these filings and investing accordingly. This may
result in inflation of the share price of securities in which the Fund
invests.
Capitalization
Risk:
Investing in issuers within the same market capitalization category carries the
risk that the category may be out of favor due to current market conditions or
investor sentiment.
Large-Capitalization
Companies Risk: Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk: Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Concentration
Risk:
To the extent that the Underlying Index concentrates in investments related to a
particular industry or group of industries, the Fund will also concentrate its
investments to approximately the same extent. Similarly, if the Underlying Index
has significant exposure to one or more sectors, the Fund’s investments will
likely have significant exposure to such sectors. In such event, the Fund’s
performance will be particularly susceptible to adverse events impacting such
industry or sector, which may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. As a result, the
value of the Fund’s investments may rise and fall more than the value of shares
of a fund that invests in securities of companies in a broader range of
industries or sectors.
Currency
Risk:
The Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Currency exchange
rates can be very volatile and can change quickly and unpredictably. As a
result, the Fund's NAV may change quickly and without warning, which could have
a significant negative impact on the Fund.
Foreign
Securities Risk:
The Fund may invest, within U.S. regulations, in foreign securities. The Fund's
investments in foreign securities can be riskier than U.S. securities
investments. Investments in the securities of foreign issuers (including
investments in ADRs and GDRs) are subject to the risks associated with investing
in those foreign markets, such as heightened risks of inflation or
nationalization. The prices of foreign securities and the prices of U.S.
securities have, at times, moved in opposite directions. In addition, securities
of foreign issuers may lose value due to political, economic and geographic
events affecting a foreign issuer or market. During periods of social, political
or economic instability in a country or region, the value of a foreign security
traded on U.S. exchanges could be affected by, among other things, increasing
price volatility, illiquidity, or the closure of the primary market on which the
security (or the security underlying the ADR or GDR) is traded. You may lose
money due to political, economic and geographic events affecting a foreign
issuer or market.
Geographic
Risk: A
natural, biological or other disaster could occur in a geographic region in
which the Fund invests, which could affect the economy or particular business
operations of companies in the specific geographic region, causing an adverse
impact on the Fund’s investments in the affected region or in a region
economically tied to the affected region. The securities in which the Fund
invests and, consequently, the Fund are also subject to specific risks as a
result of their business operations, including, but not limited to:
Risk
of Investing in China:
Investment exposure to China subjects the Fund to risks specific to China. China
may be subject to considerable degrees of economic, political and social
instability. Concerns about the rising government and household debt levels
could impact the stability of the Chinese economy. China is an emerging market
and demonstrates significantly higher volatility from time to time in comparison
to developed markets. Over the last few decades, the Chinese government has
undertaken reform of economic and market practices, including recent reforms to
liberalize its capital markets and expand the sphere for private ownership of
property in China. However, Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies resulting from governmental
influence, a lack of publicly available information and/or political and social
instability. Internal social unrest or confrontations with other neighboring
countries, including military conflicts in response to such events, may also
disrupt economic development in China and result in a greater risk of currency
fluctuations, currency convertibility, interest rate fluctuations and higher
rates of inflation. China has experienced security concerns, such as terrorism
and strained international relations, as well as major health crises. These
health crises include, but are not limited to, the rapid and pandemic spread of
novel viruses commonly known as SARS, MERS, and COVID-19 (Coronavirus). Such
health crises could exacerbate political, social, and economic risks previously
mentioned. Additionally, China is alleged to have participated in
state-sponsored cyberattacks against foreign companies and foreign governments.
Actual
and threatened responses to such activity, including purchasing restrictions,
sanctions, tariffs or cyberattacks on the Chinese government or Chinese
companies, may impact China’s economy and Chinese issuers of securities in which
the Fund invests. Incidents involving China’s or the region’s security,
including the contagion of infectious viruses or diseases, may cause uncertainty
in Chinese markets and may adversely affect the Chinese economy and the Fund’s
investments. Export growth continues to be a major driver of China’s rapid
economic growth. Elevated trade tensions between China and its trading partners,
including the imposition of U.S. tariffs on certain Chinese goods and increased
international pressure related to Chinese trade policy and forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. Reduction in spending on Chinese products and services,
institution of additional tariffs or other trade barriers (including as a result
of heightened trade tensions between China and the U.S. or in response to actual
or alleged Chinese cyber activity), or a downturn in any of the economies of
China’s key trading partners may have an adverse impact on the Chinese economy.
The continuation or worsening of the current political climate between China and
the U.S. could result in additional regulatory restrictions being contemplated
or imposed in the U.S. or in China that could impact the Fund’s ability to
invest in certain companies. Chinese companies, including Chinese companies that
are listed on U.S. exchanges, are not subject to the same degree of regulatory
requirements, accounting standards or auditor oversight as companies in more
developed countries, and as a result, information about the Chinese securities
in which the Fund invests may be less reliable or complete. There may be
significant obstacles to obtaining information necessary for investigations into
or litigation against Chinese companies and shareholders may have limited legal
remedies. Investments in China may be subject to loss due to expropriation or
nationalization of assets and property or the imposition of restrictions on
foreign investments and repatriation of capital. China has implemented a number
of tax reforms in recent years and may amend or revise its existing tax laws
and/or procedures in the future, possibly with retroactive effect. Changes in
applicable Chinese tax law could reduce the after-tax profits of the Fund,
directly or indirectly, including by reducing the after-tax profits of companies
in China in which the Fund invests. Uncertainties in Chinese tax rules could
result in unexpected tax liabilities for the Fund. Should legislation limit U.S.
investors’ ability to invest in specific Chinese companies through A-shares or
other share class listings that are part of the underlying holdings, these
shares may be excluded from Fund holdings.
Risk
of Investing in Developed Markets:
The Fund’s investment in a developed country issuer may subject the Fund to
regulatory, political, currency, security, economic and other risks associated
with developed countries. Developed countries tend to represent a significant
portion of the global economy and have generally experienced slower economic
growth than some less developed countries. Certain developed countries have
experienced security concerns, such as terrorism and strained international
relations. Incidents involving a country’s or region’s security may cause
uncertainty in its markets and may adversely affect its economy and the Fund’s
investments. In addition, developed countries may be impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in the United States:
A decrease in imports or exports, changes in trade regulations and/or an
economic recession in the U.S. may have a material adverse effect on the U.S.
economy.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk:
Fund performance depends on the performance of individual companies in which the
Fund invests. Changes to the financial condition of any of those companies may
cause the value of such company's securities to decline.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund. If the securities held
by the Fund experience poor liquidity, the Fund may be unable to transact at
advantageous times or prices, which may decrease the Fund’s returns. In
addition, there is a risk that policy changes by central governments and
governmental agencies, including the Federal Reserve or the European Central
Bank, which could include increasing interest rates, could cause increased
volatility in financial markets and lead to higher levels of Fund redemptions
from Authorized Participants, which could have a negative impact on the Fund.
Furthermore, local, regional or global events such as war, acts of terrorism,
the spread of infectious illness or other public health issues, recessions, or
other events could have a significant impact on the Fund and its investments and
trading of its Shares. For example, the rapid and global spread of a highly
contagious novel coronavirus respiratory disease, designated COVID-19, has
resulted in extreme volatility in the financial markets and severe losses;
reduced liquidity of many instruments; restrictions on international and, in
some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions
to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
Operational
Risk:
The Fund is exposed to operational risk arising from a number of factors,
including but not limited to human error, processing and communication errors,
errors of the Fund's service providers, counterparties or other third-parties,
failed or inadequate processes and technology or systems failures. Additionally,
cyber security failures or breaches of the electronic systems of the Fund, the
Adviser, and the Fund's other service providers, market makers, Authorized
Participants or the issuers of securities in which the Fund invests have the
ability to cause disruptions and negatively impact the Fund's business
operations, potentially resulting in financial losses to the Fund and its
shareholders. The Fund and the Adviser seek to reduce these operational risks
through controls and procedures. However, these measures do not address every
possible risk and may be inadequate for those risks that they are intended to
address.
Passive
Investment Risk:
The Fund is not actively managed, and the Adviser does not attempt to take
defensive positions in declining markets. Unlike many investment companies, the
Fund does not seek to outperform its Underlying Index. Therefore, it would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk:
There is no guarantee that the Fund will achieve a high degree of correlation to
the Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk:
The Fund may not fully replicate its Underlying Index and may hold securities
not included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk:
Tracking error may occur because of differences between the instruments held in
the Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not. ETFs that track indices with significant weight in emerging
markets issuers may experience higher tracking error than other ETFs that do not
track such indices.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, Shares may be more likely to trade at a premium or
discount to NAV, and possibly face trading halts and/or delisting from an
exchange. Authorized Participants Concentration Risk may be heightened because
the Fund invests in non-U.S. securities.
Large
Shareholder Risk: Redemptions
by large shareholders could have a significant negative impact on the Fund. If a
large shareholder were to redeem all, or a large portion, of its Shares, there
is no guarantee that the Fund will be able to maintain sufficient assets to
continue operations in which case the Board of Trustees may determine to
liquidate the Fund. In addition, transactions by large shareholders may account
for a large percentage of the trading volume on a
national
securities exchange and may, therefore, have a material upward or downward
effect on the market price of the Shares.
Listing
Standards Risk: Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks:
Shares of the Fund are publicly traded on a national securities exchange, which
may subject shareholders to numerous market trading risks. Disruptions to
creations and redemptions, the existence of extreme market volatility or
potential lack of assets in the Fund or an active trading market for Shares may
result in Shares trading at a significant premium or discount to NAV. If a
shareholder purchases Shares at a time when the market price is at a premium to
the NAV or sells Shares at a time when the market price is at a discount to the
NAV, the shareholder may sustain losses.
Securities
Lending Risk:
Securities lending involves a risk of loss because the borrower may fail to
return the securities in a timely manner or at all. If the Fund is not able to
recover the securities loaned, it may sell the collateral and purchase a
replacement security in the market. Lending securities entails a risk of loss to
the Fund if and to the extent that the market value of the loaned securities
increases and the collateral is not increased accordingly. Additionally, the
Fund will bear any loss on the investment of cash collateral it receives. These
events could also trigger adverse tax consequences for the Fund. As securities
on loan may not be voted by the Fund, there is a risk that the Fund may not be
able to recall the securities in sufficient time to vote on material proxy
matters.
Trading
Halt Risk:
An exchange or market may close or issue trading halts on specific securities,
or the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk: The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At
times, the Fund may have a portfolio turnover rate substantially greater than
100%. For example, a portfolio turnover rate of 300%
is equivalent to the Fund buying and selling all of its securities three times
during the course of a year. A
high portfolio turnover rate would result in
high brokerage costs for the Fund, may result in higher taxes when shares are
held in a taxable account and lower Fund performance.
Valuation
Risk: The sales price the Fund could receive for
a security may differ from the Fund’s valuation of the security and may differ
from the value used by the Underlying Index, particularly for securities that
trade in low value or volatile markets or that are valued using a fair value
methodology (such as during trading halts). The value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
PERFORMANCE
INFORMATION
The bar chart
and table that follow show how the Fund performed on a calendar year basis and
provide an indication of the risks of investing in the Fund by showing changes
in the Fund's performance from year to year and by showing how the Fund's
average annual returns for the indicated periods compare with the Fund's
benchmark index and a broad measure of market performance.
The Fund's past performance
(before and after taxes) is not necessarily indicative of how the Fund will
perform in the future. Updated performance information is
available online at www.globalxetfs.com.
Annual Total Returns (Years Ended December
31)
|
|
|
|
|
|
|
|
|
Best
Quarter: |
6/30/2020 |
26.73% |
Worst
Quarter: |
3/31/2020 |
-24.72% |
Average Annual Total Returns (for the Periods
Ended December 31, 2020)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2020 |
Five
Years Ended December 31, 2020 |
Since
Inception (6/4/2012) |
Global
X Guru®
Index ETF: |
|
|
|
·Return before
taxes |
25.39% |
14.62% |
14.95% |
·Return
after taxes on distributions1 |
23.94% |
14.27% |
14.46% |
·Return
after taxes on distributions and sale of Fund Shares1 |
14.97% |
11.62% |
12.26% |
Solactive Guru Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other taxes)
|
25.37% |
14.85% |
15.33% |
S&P
500®
Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
18.40% |
15.22% |
15.73% |
1 After-tax returns are
calculated using the historical highest individual U.S. federal marginal income
tax rates and do not reflect the impact of state and local
taxes. Your actual after-tax returns
will depend on your specific tax situation and may differ from those shown
above. After-tax returns are not relevant to investors who hold Shares of the
Fund through tax-advantaged arrangements, such as 401(k) plans or individual
retirement accounts (IRAs).
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers: The
professionals primarily responsible for the day-to-day management of the Fund
are John Belanger, CFA; Nam To, CFA; Wayne Xie; Kimberly Chan; and Vanessa Yang
(“Portfolio Managers”). Mr. To has been a Portfolio
Manager
of the Fund since March 1, 2018. Mr. Xie has been Portfolio Manager of the Fund
since March 1, 2019. Ms. Chan has been Portfolio Manager of the Fund since June
10, 2019. Mr. Belanger and Ms. Yang have been Portfolio Managers of the Fund
since December 2020.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
“Authorized Participants” (as defined in the SAI) who have entered into
agreements with the Fund’s distributor, SEI Investments Distribution Co.
(“Distributor”), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called Creation Units. The Fund will issue or redeem Creation Units
in return for a basket of cash and/or securities that the Fund specifies any day
that the national securities exchanges are open for business (“Business Day”).
An investor may incur costs attributable to the difference between the highest
price a buyer is willing to pay to purchase shares of the Fund (bid) and the
lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access information regarding the Fund’s net asset value, market price, premiums
and discounts, and bid-ask spreads, please go to https://www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement,
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary’s website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUNDS
This
Prospectus contains information about investing in a Fund. Please read this
Prospectus carefully before you make any investment decisions. Shares of a Fund
are listed for trading on a national securities exchange. The market price for a
Share of a Fund may be different from the Fund's most recent NAV. ETFs are funds
that trade like other publicly-traded securities. A Fund is designed to track an
Underlying Index. Similar to shares of an index mutual fund, each Share of a
Fund represents an ownership interest in an underlying portfolio of securities.
Unlike shares of a mutual fund, which can be bought and redeemed from the
issuing fund by all shareholders at a price based on NAV, Shares of a Fund may
be purchased or redeemed directly from the Fund at NAV solely by Authorized
Participants and only in Creation Unit increments. Also unlike shares of a
mutual fund, Shares of a Fund are listed on a national securities exchange and
trade in the secondary market at market prices that change throughout the day. A
Fund is designed to be used as part of broader asset allocation strategies.
Accordingly, an investment in a Fund should not constitute a complete investment
program. An index is a financial calculation, based on a grouping of financial
instruments, and is not an investment product, while a Fund is an actual
investment portfolio. The performance of a Fund and its Underlying Index may
vary for a number of reasons, including transaction costs, non-U.S. currency
valuations, asset valuations, corporate actions (such as mergers and spin-offs),
timing variances and differences between a Fund’s portfolio and the Underlying
Index resulting from the Fund's legal restrictions (such as diversification
requirements) that apply to the Fund but not to the Underlying Index.
Each
Fund invests at least 80% of its total assets in the securities of the
Underlying Index, other than the Global X Russell 2000 Covered Call ETF and
Global X S&P Catholic Values U.S. Aggregate Bond ETF, which will invest at
least 80% of its total assets in a representative sample of securities that
collectively has an investment profile similar to the Underlying Index. Each
Fund’s 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Adviser anticipates
that, generally, each Fund (other than the Global X Russell 2000 Covered Call
ETF and Global X S&P Catholic Values U.S. Aggregate Bond ETF, which may
invest in a representative sample of securities that collectively has an
investment profile similar to the Underlying Index) will hold all of the
securities that comprise its Underlying Index in proportion to their weightings
in such Underlying Index. However, under various circumstances, it may not be
possible or practicable to purchase all of those securities in those weightings.
In these circumstances, a Fund may purchase a sample of securities in its
Underlying Index. There also may be instances in which the Adviser may choose to
underweight or overweight a security in a Fund’s Underlying Index, purchase
securities not in the Fund’s Underlying Index that the Adviser believes are
appropriate to substitute for certain securities in such Underlying Index or
utilize various combinations of other available investment techniques in seeking
to replicate as closely as possible, before fees and expenses, the price and
yield performance of a Fund’s Underlying Index. Each Fund may sell securities
that are represented in its Underlying Index in anticipation of their removal
from such Underlying Index or purchase securities not represented in its Index
in anticipation of their addition to such Underlying Index. Each Fund’s
investment objective and its Underlying Index may be changed without shareholder
approval.
A
FURTHER DISCUSSION OF PRINCIPAL RISKS
Each
Fund is subject to various risks, including the principal risks noted below, any
of which may adversely affect the Fund’s NAV, trading price, yield, total return
and ability to meet its investment objective. You could lose all or part of your
investment in the Fund, and the Fund could underperform other investments.
Asset
Class Risk
The
returns from the types of securities and/or assets in which the Fund invests may
under-perform returns from the various general securities markets or different
asset classes. The assets in the Underlying Index may under-perform investments
that track other markets, segments, sectors or assets. Different types of assets
tend to go through cycles of out-performance and under-performance in comparison
to the general securities markets.
Bond
Investment Risk
Bond
Investment Risk applies to the Global X S&P Catholic Values U.S. Aggregate
Bond ETF
Investments
in debt securities are generally affected by changes in prevailing interest
rates and the creditworthiness of the issuer. Prices of debt securities fall
when prevailing interest rates rise. The Fund’s yield on investments in debt
securities will fluctuate as the securities in the Fund are rebalanced and
reinvested in securities with different interest rates. Investments in bonds are
also subject to credit risk. Credit risk is the risk that an issuer of debt
securities will be unable to pay principal and interest when due, or that the
value of the security will suffer because investors believe the
issuer
is less able to make required principal and interest payments. This is broadly
gauged by the credit ratings of the debt securities in which the Fund invests.
However, credit ratings are only the opinions of the rating agencies issuing
them, do not purport to reflect the risk of fluctuations in market value and are
not absolute guarantees as to the payment of interest and the repayment of
principal.
Callable
Debt Risk
Callable
Debt Risk applies to the Global X S&P Catholic Values U.S. Aggregate Bond
ETF
Some
debt securities may be redeemed at the option of the issuer, or “called,” before
their stated maturity date. In general, an issuer will call its debt securities
if they can be refinanced by issuing new debt securities which bear a lower
interest rate. The Fund is subject to the possibility that during periods of
falling interest rates an issuer will call its high yielding debt securities.
The Fund would then be forced to invest the unanticipated proceeds at lower
interest rates, likely resulting in a decline in the Fund’s income, or in
securities with greater risks or with other less favorable features. Such
redemptions and subsequent reinvestments would also increase the Fund’s
portfolio turnover. If a called debt security was purchased by the Fund at a
premium, the value of the premium may be lost in the event of a
redemption.
China
A-Shares Risk
China
A-Shares Risk applies to the Global X Lithium & Battery Tech ETF and Global
X MSCI SuperDividend® Emerging Markets ETF
A-Shares
are issued by companies incorporated in mainland China and are traded on Chinese
exchanges. Foreign investors can access A-Shares by obtaining a QFII or a RQFII
license, as well as through the Stock Connect Programs. The Fund currently
intends to gain exposure to A-Shares through the Stock Connect Programs. Trading
suspensions in certain stocks could lead to greater market execution risk,
valuation risks, liquidity risks and costs for the Fund, as well as for
Authorized Participants that create and redeem Creation Units of the Fund. The
SSE and SZSE currently apply a daily limit, set at 10%, of the amount of
fluctuation permitted in the prices of A-shares during a single trading day. The
daily limit refers to price movements only and does not restrict trading within
the relevant limit. There can be no assurance that a liquid market on an
exchange will exist for any particular A-share or for any particular time.
Additionally, during instances where aggregate limits on foreign ownership are
exceeded. the Fund may be unable to purchase additional equity securities of a
particular company. This could increase the Fund’s tracking error and/or cause
the Fund to trade in the market at greater bid-ask spreads or greater premiums
or discounts to the Fund’s NAV. Given that the A-share market is considered
volatile and unstable (with the risk of widespread trading suspensions or
government intervention), the creation and redemption of Creation Units (as
defined below) may also be disrupted. These risks, among others, could adversely
affect the value of the Fund’s investments.
Derivatives
Risk
Derivatives
Risk applies to the Global X NASDAQ 100® Covered Call ETF, Global X S&P 500®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF and Global X S&P 500 Covered Call & Growth
ETF
Derivatives
risk is the risk that loss may result from the Fund’s investments in options,
futures and swap contracts, which may be leveraged and are types of derivatives.
Investments in leveraged instruments may result in losses exceeding the amounts
invested. The Fund may use these instruments to help it track its Underlying
Index. Compared to conventional securities, derivatives can be more sensitive to
changes in interest rates or to sudden fluctuations in market prices and thus
the Fund’s losses may be greater if it invests in derivatives than if it invests
only in conventional securities.
Derivative
instruments may be leveraged, which may result in losses exceeding the amounts
invested. Risks of these instruments include:
•That
prices of the instruments and the prices of underlying securities, interest
rates or currencies they are designed to reflect do not move together as
expected; a risk of the Fund’s use of derivatives is that the fluctuations in
their values may not correlate perfectly with its Underlying Index;
•The
possible absence of a liquid secondary market for any particular instrument and,
for exchange traded instruments, possible exchange-imposed price fluctuation
limits, either of which may make it difficult or impossible to close out a
position when desired;
•That
adverse price movements in an instrument can result in a loss substantially
greater than the Fund’s initial investment in that instrument (in some cases,
the potential loss is unlimited);
•Particularly
in the case of privately-negotiated instruments, that the counterparty will not
perform its obligations, which could leave the Fund worse off than if it had not
entered into the position;
•The
inability to close out certain hedged positions to avoid adverse tax
consequences, and the fact that some of these instruments may have uncertain tax
implications for the Fund;
•The
fact that “speculative position limits” imposed by the CFTC and certain futures
exchanges on net long and short positions may require the Fund to limit or
unravel positions in certain types of instruments; and
The
high levels of volatility some of these instruments may exhibit, in some cases
due to the high levels of leverage an investor may achieve with them. On October
28, 2020, the SEC adopted new regulations governing the use of derivatives by
registered investment companies. The Fund will be required to implement and
comply with Rule 18f-4 by the third quarter of 2022. Rule 18f-4 will impose
limits on the amount of derivatives a fund can enter into, eliminate the asset
segregation framework currently used by funds to comply with Section 18 of the
Investment Company Act of 1940, as amended, treat derivatives as senior
securities so that a failure to comply with the limits would result in a
statutory violation and require funds whose use of derivatives is more than a
limited specified exposure amount to establish and maintain a comprehensive
derivatives risk management program and appoint a derivatives risk
manager.
Equity
Securities Risk
Equity
Securities Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet
& E-commerce ETF, Global X SuperDividend® ETF, Global X SuperDividend® U.S.
ETF, Global X MSCI SuperDividend® EAFE ETF, Global X MSCI SuperDividend®
Emerging Markets ETF, Global X SuperDividend® REIT ETF, Global X NASDAQ 100®
Covered Call ETF, Global X S&P 500® Covered Call ETF, Global X Russell 2000
Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X
S&P 500 Covered Call & Growth ETF, Global X SuperIncome™ Preferred ETF,
Global X Renewable Energy Producers ETF, Global X S&P 500® Catholic Values
ETF, Global X S&P Catholic Values Developed ex-U.S. ETF and Global X Guru®
Index ETF
The
Fund may invest in equity securities, which are subject to changes in value that
may be attributable to market perception of a particular issuer, general stock
market fluctuations that affect all issuers, or as a result of such factors as a
company’s business performance, investor perceptions, stock market trends and
general economic conditions. Investments in equity securities may be more
volatile than investments in other asset classes.
ETF
Investment Risk
ETF
Investment Risk applies to the Global X Russell 2000 Covered Call
ETF
The
Fund may hold ETFs to gain exposure to certain asset classes. As a result, the
Fund may be subject to the same risks as the underlying ETFs. While the risks of
owning shares of an underlying ETF generally reflect the risks of owning the
underlying securities the ETF is designed to track, lack of liquidity in an
underlying ETF can result in its value being more volatile than the underlying
portfolio securities. Because the value of an underlying ETF's shares depends on
the demand in the market, the Adviser may not be able to liquidate the Fund’s
holdings in those shares at the most optimal time, thereby adversely affecting
the Fund’s performance. An underlying ETF may experience tracking error in
relation to the index tracked by the underlying ETF, which could contribute to
tracking error for the Fund. In addition, an underlying ETF's shares may trade
at a premium or discount to NAV.
In
addition, investments in the securities of underlying ETFs may involve
duplication of advisory fees and certain other expenses. The Fund will pay
brokerage commissions in connection with the purchase and sale of shares of
underlying ETFs, which could result in greater expenses to the Fund. By
investing in an underlying ETF, the Fund becomes a shareholder thereof. As a
result, Fund shareholders indirectly bear the Fund’s proportionate share of the
fees and expenses indirectly paid by shareholders of the underlying ETF, in
addition to the fees and expenses Fund
shareholders
indirectly bear in connection with the Fund’s own operations. In addition,
certain of the underlying ETFs may hold common portfolio positions, thereby
reducing the diversification benefits of an asset allocation style.
If
an underlying ETF fails to achieve its investment objective, the value of the
Fund’s investment may decline, adversely affecting the Fund’s performance.
Additionally, some ETFs are not registered under the 1940 Act and therefore, are
not subject to the regulatory scheme and investor protections of the 1940 Act.
A
complete list of each underlying ETF held by the Fund can be found daily on the
Trust’s website. Each investor should review the complete description of the
principal risks of each underlying ETF prior to investing in the
Fund.
Hybrid
Securities Investment Risk
Hybrid
Securities Investment Risk applies to the Global X SuperIncome™ Preferred ETF
Hybrid
securities are securities which contain characteristics of both a debt security
and an equity security. Therefore, hybrid securities are subject to the risks of
equity securities and risks of debt securities. The terms of hybrid instruments
may vary substantially, and certain hybrid securities may be subject to similar
risks as preferred stocks, such as interest rate risk, issuer risk, dividend
risk, call risk, and extension risk. The claims of holders of hybrid securities
of an issuer are generally subordinated to those of holders of traditional debt
securities in bankruptcy, and thus hybrid securities may be more volatile and
subject to greater risk than traditional debt securities, and may in certain
circumstances even be more volatile than traditional equity securities. At the
same time, hybrid securities may not fully participate in gains of their issuer
and thus potential returns of such securities are generally more limited than
traditional equity securities, which would participate in such gains. Hybrid
securities may also be more limited in their rights to participate in management
decisions of an issuer (such as voting for the board of directors). Certain
hybrid securities may be more thinly traded and less liquid than either publicly
issued equity securities or debt securities, especially hybrid securities that
are “customized” to meet the needs of particular investors, potentially making
it difficult for the Fund to sell such securities at a favorable price or at
all. Any of these features could cause a loss in market value of hybrid
securities held by the Fund or otherwise adversely affect the Fund.
Master
Limited Partnerships Investment Risk
Master
Limited Partnerships Investment Risk applies to the Global X SuperDividend® U.S.
ETF
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 such 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. MLPs are controlled by their general partners, which
generally have conflicts of interest and limited fiduciary duties to the MLPs,
which may permit the general partners to favor their own interests over the
MLPs. The amount of cash that the Fund will have available to pay or distribute
to you depends entirely on the ability of the MLPs that the Fund owns to make
distributions to their partners and the tax character of those distributions.
Neither the Fund 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 Fund expects to
generate significant investment income, and the Fund’s investments may not
distribute the expected or anticipated levels of cash, resulting in the risk
that the Fund may not have the ability to make cash distributions as investors
expect from MLP-focused investments.
Certain
MLPs in which the Fund may invest 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 the 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 an 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.
Mortgage
Real Estate Investment Trusts (Mortgage REITs) Investment Risk
Mortgage
Real Estate Investment Trusts (Mortgage REITs) Investment Risk applies to the
Global X SuperDividend® U.S. ETF and Global X SuperDividend® REIT
ETF
Mortgage
REITs are exposed to the risks specific to the real estate market as well as the
risks that relate specifically to the way in which Mortgage REITs are organized
and operated. Mortgage REITs are subject to the credit risk of the borrowers to
whom they extend credit. Mortgage REITs are subject to significant interest rate
risk. Interest rate risk refers to fluctuations in the value of a Mortgage
REIT’s investment in fixed rate obligations resulting from changes in the
general level of interest rates. When the general level of interest rates goes
up, the value of a Mortgage REIT’s investment in fixed rate obligations goes
down. When the general level of interest rates goes down, the value of a
Mortgage REIT’s investment in fixed rate obligations goes up.
Mortgage
REITs typically use leverage and many are highly leveraged, which exposes them
to leverage risk. Leverage risk refers to the risk that leverage created from
borrowing may impair a Mortgage REIT’s liquidity, cause it to liquidate
positions at an unfavorable time, increase the volatility of the values of
securities issued by the Mortgage REIT and incur substantial losses if its
borrowing costs increase.
Mortgage
REITs are subject to prepayment risk, which is the risk that borrowers may
prepay their mortgage loans at faster than expected rates. Prepayment rates
generally increase when interest rates fall and decrease when interest rates
rise. These faster than expected payments may adversely affect a Mortgage REIT’s
profitability because the Mortgage REIT may be forced to replace investments
that have been redeemed or repaid early with other investments having a lower
yield. Additionally, rising interest rates may cause the duration of a Mortgage
REIT’s investments to be longer than anticipated and increase such investments’
interest rate sensitivity.
Real
estate investment trusts are subject to special U.S. federal tax requirements. A
real estate investment trust’s failure to comply with these requirements may
negatively affect its performance.
Mortgage
REITs may be dependent upon their management skills and may have limited
financial resources. Mortgage REITs are generally not diversified and may be
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. In addition, transactions between Mortgage REITs and their
affiliates may be subject to conflicts of interest which may adversely affect a
Mortgage REIT’s shareholders.
Preferred
Stock Investment Risk
Preferred
Stock Investment Risk applies to the Global X SuperIncome™ Preferred
ETF
Unlike
interest payments on debt securities, dividend payments on a preferred stock
typically must be declared by the issuer’s board of directors. An issuer’s board
of directors is generally not under any obligation to pay a dividend (even if
such dividends have accrued), and may suspend payment of dividends on preferred
stock at any time. In the event an issuer of preferred stock experiences
economic difficulties, the issuer’s preferred stock may lose substantial value
due to the reduced likelihood that the issuer’s board of directors will declare
a dividend and the fact that the preferred stock may be subordinated to other
securities of the same issuer. Preferred stock may be less liquid than many
other types of securities, such as common stock, and generally provides no
voting rights with respect to the issuer. Certain additional risks associated
with preferred stock could adversely affect investments in the Fund.
Interest
Rate Risk
Because
many preferred stocks pay dividends at a fixed rate, their market price can be
sensitive to changes in interest rates in a manner similar to bonds - that is,
as interest rates rise, the value of the preferred stocks held by the Fund are
likely to decline. To the extent that the Fund invests a substantial portion of
its assets in fixed rate preferred stocks, rising interest rates may cause the
value of the Fund’s investments to decline significantly.
Issuer
Risk
Because
many preferred stocks allow holders to convert the preferred stock into common
stock of the issuer, their market price can be sensitive to changes in the value
of the issuer’s common stock. To the extent that the Fund invests a substantial
portion of its assets in convertible preferred stocks, declining common stock
values may also cause the value of the Fund’s investments to decline.
Dividend
Risk
There
is a chance that the issuer of any of the Fund’s holdings will have its ability
to pay dividends deteriorate or will default (fail to make scheduled dividend
payments on the preferred stock or scheduled interest payments on other
obligations of the issuer not held by the Fund), which would negatively affect
the value of any such holding.
Call
Risk
Preferred
stocks are subject to market volatility and the prices of preferred stocks will
fluctuate based on market demand. Preferred stocks often have call features
which allow the issuer to redeem the security at its discretion. If a preferred
stock is redeemed by the issuer, it will be removed from the Underlying Index.
The redemption of preferred stocks having a higher than average yield may cause
a decrease in the yield of the Underlying Index and the Fund.
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment
Risk
Real
Estate Stocks and Real Estate Investment Trusts (REITs) Investment Risk applies
to the Global X SuperDividend® ETF, Global X SuperDividend® U.S. ETF, Global X
MSCI SuperDividend® EAFE ETF and Global X SuperDividend® REIT ETF
The
Fund invests in companies or underlying funds that invest in real estate, such
as REITs, which exposes investors in the Fund to the risks of owning real estate
directly, as well as to risks that relate specifically to the way in which real
estate companies are organized and operated. Real estate is highly sensitive to
general and local economic conditions and developments, and characterized by
intense competition and periodic overbuilding. Many real estate companies,
including REITs, utilize leverage (and some may be highly leveraged), which
increases risk and could adversely affect a real estate company's operations and
market value in periods of rising interest rates.
Concentration
Risk
Real
estate companies may own a limited number of properties and concentrate their
investments in a particular geographic region or property type.
Equity
REITs Risk
Certain
REITs may make direct investments in real estate. These REITs are often referred
to as "Equity REITs." Equity REITs invest primarily in real properties and earn
rental income from leasing those properties. Equity REITs may also realize gains
or losses from the sale of the properties. Equity REITs will be affected by
conditions in the real estate rental market and by changes in the value of the
properties they own. A decline in rental income may occur because of extended
vacancies, limitations on rents, the failure to collect rents, increased
competition from other properties or poor management. Equity REITs also can be
affected by rising interest rates. Rising interest rates may cause investors to
demand a high annual yield from future distributions that, in turn, could
decrease the market prices for such REITs. In addition, rising interest rates
also increase the costs of obtaining financing for real estate projects. Because
many real estate projects are dependent upon receiving financing, this could
cause the value of the Equity REITs in which the Fund invests to decline.
Interest
Rate Risk
Rising
interest rate could result in higher costs of capital for real estate companies,
which could negatively affect a real estate company's ability to meet its
payment obligations.
Leverage
Risk
Real
estate companies may use leverage (and some may be highly leveraged), which
increases investment risk and the risks normally associated with debt financing,
and could adversely affect a real estate company's operations and market value
in periods of rising interest rates. Financing covenants related to a real
estate company's leveraging may affect the ability of the real estate company to
operate effectively. In addition, real property may be subject to quality of
credit extended and defaults by borrowers and tenants. Leveraging may also
increase repayment risk.
Liquidity
Risk
Investing
in real estate companies may involve risks similar to those associated with
investing in small-capitalization companies. Real estate company securities may
be volatile. There may be less trading in real estate company shares, which
means that buy and sell transactions in those shares could have a magnified
impact on share price, resulting in abrupt or erratic price fluctuations. In
addition, real estate is relatively illiquid and, therefore, a real estate
company may have a limited ability to vary or liquidate its investments in
properties in response to changes in economic or other conditions.
Operational
Risk
Real
estate companies are dependent upon management skills and may have limited
financial resources. Real estate companies are generally not diversified and may
be subject to heavy cash flow dependency, default by borrowers and
self-liquidation. In addition, transactions between real estate companies and
their affiliates may be subject to conflicts of interest, which may adversely
affect a real estate company's shareholders. A real estate company may also have
joint ventures in certain of its properties and, consequently, its ability to
control decisions relating to such properties may be limited.
Property
Risk
Real
estate companies may be subject to risks relating to functional obsolescence or
reduced desirability of properties; extended vacancies due to economic
conditions and tenant bankruptcies; catastrophic events such as earthquakes,
hurricanes, tornadoes and terrorist acts; and casualty or condemnation losses.
Real estate income and values also may be greatly affected by demographic
trends, such as population shifts, changing tastes and values, or increasing
vacancies or declining rents resulting from legal, cultural, technological,
global or local developments.
Regulatory
Risk
Real
estate income and values may be adversely affected by applicable domestic and
foreign laws (including tax laws). Government actions, such as tax increases,
zoning law changes or environmental regulations also may have a major impact on
real estate.
Repayment
Risk
The
prices of real estate company securities may drop because of the failure of
borrowers to repay their loans, poor management, or the inability to obtain
financing either on favorable terms or at all. If the properties do not generate
sufficient income to meet operating expenses, including, where applicable, debt
service, ground lease payments, tenant improvements, third-party leasing
commissions and other capital expenditures, the income and ability of the real
estate companies to make payments of interest and principal on their loans will
be adversely affected.
U.S.
Tax Risk
Certain
U.S. real estate companies are subject to special U.S. federal tax requirements.
A REIT that fails to comply with such tax requirements may be subject to U.S.
federal income taxation, which may affect the value of the REIT and the
characterization of the REIT's distributions. The U.S. federal tax requirement
that a REIT distributes
substantially
all of its net income to its shareholders may result in the REIT having
insufficient capital for future expenditures.
U.S.
Agency Mortgage-Backed Securities Risk
U.S.
Agency Mortgage-Backed Securities Risk applies to the Global X S&P Catholic
Values U.S. Aggregate Bond ETF
The
Fund invests in securities backed by pools of mortgages issued or guaranteed by
the U.S. government or one of its agencies or sponsored entities, including
Fannie Mae, Freddie Mac or Ginnie Mae. While securities guaranteed by Ginnie Mae
are backed by the full faith and credit of the U.S. government, securities
issued by Fannie Mae and Freddie Mac are not backed by the full faith and credit
of the U.S. government, and there can be no assurance that the U.S. government
would provide financial support to its agencies or sponsored entities where it
is not obligated to do so. Any actual or potential disruption to these agencies
or sponsored, or the financial condition or credit of the U.S. government, could
cause the value of mortgage-backed securities held by the Fund to decline.
Mortgage-backed securities represent interests in “pools” of mortgages and, due
to the nature of these loans they represent, are subject to prepayment and
extension risk. Prepayment risk is the risk that, during periods of falling
interest rates, an issuer of mortgages and other fixed-income securities may be
able to repay principal prior to the security’s maturity. This may cause the
Fund to have to reinvest in securities with a lower yield or higher risk of
default, resulting in a decline in the Fund’s income or return potential.
Mortgage-backed securities are also subject to extension risk, which is the risk
that when interest rates rise, certain mortgage-backed securities will be paid
off substantially more slowly than originally anticipated and the value of those
securities may fall sharply, resulting in a decline in income and potentially in
the value of the investment. Because of prepayment and extension risks,
mortgage-backed securities react differently to changes in interest rates than
other bonds. Small movements in interest rates (both increases and decreases)
may quickly and significantly reduce the value of certain mortgage-backed
securities. These securities are also subject to the risk of default on the
underlying mortgage loans, particularly during periods of economic downturn. The
Fund seeks to obtain exposure to the fixed-rate portion of U.S. agency
mortgage-pass through securities primarily through “to be announced” (“TBA”)
securities, or TBA transactions. TBAs refer to a commonly used mechanism for the
forward settlement of U.S. agency mortgage-backed securities, and not to a
separate type of mortgage-backed securities. Default or bankruptcy of a
counterparty to a TBA transaction would expose the Fund to possible losses
because of adverse market action, expenses or delays in connection with the
purchase or sale of the pools of mortgage pass-through securities specified in
the TBA transaction.
U.S.
Treasury Obligations Risk
U.S.
Treasury Obligations Risk applies to the Global X S&P Catholic Values U.S.
Aggregate Bond ETF
Investments
in debt securities are generally affected by changes in prevailing interest
rates and the creditworthiness of the issuer. Prices of U.S. Treasury securities
fall when prevailing interest rates rise. Price fluctuations of longer-term U.S.
Treasury securities are greater than price fluctuations of shorter-term U.S.
Treasury securities and may be as great as price fluctuations of common stock.
The Fund’s yield on investments in U.S. Treasury securities will fluctuate as
the Fund is invested in U.S. Treasury securities with different interest
rates.
Associated
Risks Related to Form 13F Data
Associated
Risks Related to Form 13F Data applies to the Global X Guru® Index ETF
The
Form 13F filings used to select the securities in the Underlying Index are filed
up to 45 days after the end of each calendar quarter. Therefore a given investor
may have already sold its position by the time the security is added to the
Underlying Index. Furthermore, the Form 13F filing may only disclose a subset of
a particular investor's holdings, as not all securities are required to be
reported on the Form 13F. As a result, the Form 13F may not provide a complete
picture of the holdings of a given investor. Because the Form 13F filing is
publicly available information, it is possible that other investors are also
monitoring these filings and investing accordingly. This may result in inflation
of the share price of securities in which the Fund invests.
Associated
Risks Related to Investing in E-commerce Companies
Associated
Risks Related to Investing in E-commerce Companies applies to the Global X
E-commerce ETF
E-commerce
companies typically face intense competition and are subject to fluctuating
consumer demand. Many of these companies compete aggressively on price,
potentially affecting their long run profitability. Due to the online nature of
E-
commerce
companies and their involvement in processing, storing and transmitting large
amounts of data, these companies are particularly vulnerable to cyber security
risk. This includes threats to operational software and hardware, as well as
theft of personal and transaction records and other customer data. In the event
of a cyberattack, E-commerce companies could suffer serious adverse reputational
and operational consequences, including liability and litigation. E-commerce
companies may participate in monopolistic practices that could make them subject
to higher levels of regulatory scrutiny and/or potential break ups in the
future, which could severely impact the viability of these companies. Through
its portfolio companies’ customers and suppliers, the Fund is specifically
exposed to Asian Economic Risk, European Economic Risk and North American
Economic Risk.
Associated
Risks Related to Investing in Emerging Markets Internet & E-commerce
Companies
Associated
Risks Related to Investing in Emerging Markets Internet & E-commerce
Companies applies to the Global X Emerging Markets Internet & E-commerce
ETF
Emerging
Markets Internet & E-commerce Companies typically face intense competition
and are subject to fluctuating consumer demand. Many of these companies compete
aggressively on price, potentially affecting their long run profitability. Due
to the online nature of Emerging Markets Internet & E-commerce Companies and
their involvement in processing, storing and transmitting large amounts of data,
these companies are particularly vulnerable to cyber security risk. This
includes threats to operational software and hardware, as well as theft of
personal and transaction records and other customer data. In the event of a
cyberattack, Emerging Markets Internet & E-commerce Companies could suffer
serious adverse reputational and operational consequences, including liability
and litigation. E-commerce Companies may participate in monopolistic practices
that could make them subject to higher levels of regulatory scrutiny and/or
potential break ups in the future, which could severely impact the viability of
these companies. Through its portfolio companies’ customers and suppliers, the
Fund is specifically exposed to Asian Economic Risk, European Economic Risk and
North American Economic Risk. Please see "Reliance
on Trading Partners Risk"
in this Prospectus.
Associated
Risks Related to Investing in Renewable Energy Companies
Associated
Risks Related to Investing in Renewable Energy Companies applies to the Global X
Renewable Energy Producers ETF
Renewable
Energy Companies typically face intense competition, short product lifecycles
and potentially rapid product obsolescence. These companies may be significantly
affected by fluctuations in energy prices and in the supply and demand of
renewable energy, tax incentives, subsidies and other governmental regulations
and policies. These companies are also heavily dependent on intellectual
property rights and may be adversely affected by loss or impairment of those
rights. Renewable Energy Companies may be adversely affected by commodity price
volatility, changes in exchange rates, imposition of import controls,
availability of certain inputs and materials required for production, depletion
of resources, technological developments and labor relations. A decline in the
price of conventional energy such as oil and natural gas could have a materially
adverse impact on Renewable Energy Companies. Renewable energy resources may be
highly dependent upon on government policies that support renewable generation
and enhance the economic viability of owning renewable electric generation
assets. Such policies can include tax credits, accelerated cost-recovery systems
of depreciation and renewable portfolio standard (“RPS”) programs, which mandate
that a specified percentage of electricity sales come from eligible sources of
renewable energy. Any failure to extend such policies could materially and
adversely affect the business, financial condition, results of operations and
cash flow of Renewable Energy Companies. Additionally, investors should take
notice of the distinction between implemented government policy based on
legislation and less guaranteed commitments which may be aspirational, subject
to political risk, and difficult to enforce.
The
electricity produced and revenues generated by variable renewable energy
generation facilities, including solar electric or wind energy, is highly
dependent on suitable environmental conditions. Furthermore, components used in
the generation of renewable energy could be damaged by severe weather events,
such as hailstorms or tornadoes. In addition, replacement and spare parts for
key components may be difficult or costly to acquire or may be unavailable.
Unfavorable environmental conditions could impair the effectiveness of assets or
reduce their output beneath their rated capacity or require shutdown of key
equipment, impeding operation of renewable assets. Actual climatic conditions at
a facility site, particularly wind conditions, may not conform to the historical
findings and, therefore, renewable energy facilities may not meet anticipated
production levels or the rated capacity of the generation assets, which could
adversely affect the business, financial condition and results of operations and
cash flows of Renewable Energy Companies.
Associated
Risks Related to Investing in Social Media Companies
Associated
Risks Related to Investing in Social Media Companies applies to the Global X
Social Media ETF
The
Fund invests in securities of companies engaged in the social media industry,
including companies that provide social networking, file sharing, and other
web-based media applications. The risks related to investing in such companies
include disruption in service caused by hardware or software failure,
interruptions or delays in service by third-party data center hosting facilities
and maintenance providers, security breaches involving certain private,
sensitive, proprietary and confidential information managed and transmitted by
social media companies, privacy concerns and laws, evolving Internet regulation
and other foreign or domestic regulations that may limit or otherwise affect the
operations of such companies. Furthermore, the business models employed by the
companies in the social media industry may not prove to be successful.
Social
Media companies face risks related to the technology industry. Technology
companies are generally subject to the risks of rapidly changing technologies,
short product life cycles, fierce competition, aggressive pricing and reduced
profit margins, loss of patent, copyright and trademark protections, cyclical
market patterns, evolving industry standards and frequent new product
introductions. Social Media companies may be smaller and less experienced
companies, with limited product lines, markets or financial resources and fewer
experienced management or marketing personnel. Technology company stocks,
particularly those involved with the internet, have experienced extreme price
and volume fluctuations that often have been unrelated to their operating
performance.
Many
social media companies utilize the internet for key parts of their business
models. Internet companies are subject to rapid changes in technology, worldwide
competition, rapid obsolescence of products and services, loss of patent
protections, cyclical market patterns, evolving industry standards, frequent new
product introductions and the considerable risk of owning small capitalization
companies that have recently begun operations. Through its portfolio companies’
customers and suppliers, the Fund is exposed to Asian
Economic Risk and
European
Economic Risk.
Associated
Risks Related to Investing in YieldCos
Associated
Risks Related to Investing in YieldCos applies to the Global X Renewable Energy
Producers ETF
Investments
in securities of YieldCos involve risks that differ from investments in
traditional operating companies, including risks related to the relationship
between the YieldCo and the company responsible for the formation of the YieldCo
(the “Yieldco Sponsor”). Yieldcos typically remain dependent on the management
and administration services provided by or under the direction of the Yieldco
Sponsor and on the ability of the Yieldco Sponsor to identify and present the
YieldCo with acquisition opportunities, which may often be assets of the Yieldco
Sponsor itself. Yieldco Sponsors may have interests that conflict with the
interests of the YieldCo, and may retain control of the YieldCo via classes of
stock held by the Yieldco Sponsor.
Yieldco
securities can be affected by macro-economic and other factors affecting the
stock market in general, expectations of interest rates, investor sentiment
towards YieldCos or the energy sector, changes in a particular issuer’s
financial condition, or unfavorable or unanticipated poor performance of a
particular issuer (in the case of YieldCos, generally measured in terms of
distributable cash flow). Prices of YieldCo securities also can be affected by
fundamentals unique to the company, including earnings power and coverage
ratios.
Yieldcos
may distribute all or substantially all of the cash available for distribution
each quarter and rely primarily upon external financing sources, including via
new debt and/or equity, to fund acquisitions and growth capital expenditures.
Yieldcos may be precluded from pursuing otherwise attractive acquisitions if the
projected short-term cash flow from the acquisition or investment is not
adequate to service the capital raised to fund the acquisition or investment.
Yieldco growth may not be as fast as that of businesses that reinvest their
available cash to expand ongoing operations. To the extent YieldCos issue
additional equity securities in connection with any acquisitions or growth
capital expenditures, the payment of dividends on these additional equity
securities may increase the risk that the YieldCo will be unable to maintain or
increase its per share dividend. The incurrence of debt to finance the YieldCo’s
growth strategy will result in increased interest expense and the imposition of
additional or more restrictive covenants, which, in turn, may impact the cash
distributions by the YieldCo. The ability of a YieldCo to maintain or grow its
dividend distributions may depend on the entity’s ability to minimize its tax
liabilities through the use of accelerated depreciation schedules, tax loss
carryforwards, and tax incentives.
Associated
Risks Related to Socially Responsible Investments
Associated
Risks Related to Socially Responsible Investments applies to the Global X
S&P 500® Catholic Values ETF, Global X S&P Catholic Values Developed
ex-U.S. ETF and Global X S&P Catholic Values U.S. Aggregate Bond ETF
Certain
social responsibility investment criteria limit the types of securities that can
be included in the Underlying Index. In order to comply with its social
responsibility investment criteria, the Underlying Index may be required to
exclude advantageous investment opportunities or reduce exposure at
inappropriate times. This could cause the Underlying Index to underperform other
benchmark indices. The Fund’s social responsibility investment criteria could
therefore cause it to underperform funds that do not maintain social
responsibility investment criteria by limiting the Fund’s exposure to certain
types of profitable activity.
Capitalization
Risk
Investing
in issuers within the same market capitalization category carries the risk that
the category may be out of favor due to current market conditions or investor
sentiment.
Large-Capitalization
Companies Risk
Large-Capitalization
Companies Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet
& E-commerce ETF, Global X SuperDividend® U.S. ETF, Global X MSCI
SuperDividend® EAFE ETF, Global X MSCI SuperDividend® Emerging Markets ETF,
Global X NASDAQ 100® Covered Call ETF, Global X S&P 500® Covered Call ETF,
Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered
Call & Growth ETF, Global X SuperIncome™ Preferred ETF, Global X Renewable
Energy Producers ETF, Global X S&P 500® Catholic Values ETF, Global X
S&P Catholic Values Developed ex-U.S. ETF and Global X Guru® Index
ETF
Large-capitalization
companies may trail the returns of the overall stock market.
Large-capitalization stocks tend to go through cycles of doing better - or worse
- than the stock market in general. These periods have, in the past, lasted for
as long as several years.
Mid-Capitalization
Companies Risk
Mid-Capitalization
Companies Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X SuperDividend® ETF, Global X SuperDividend® U.S. ETF,
Global X MSCI SuperDividend® EAFE ETF, Global X MSCI SuperDividend® Emerging
Markets ETF, Global X SuperDividend® REIT ETF, Global X SuperIncome™ Preferred
ETF, Global X Renewable Energy Producers ETF and Global X Guru® Index
ETF
Mid-capitalization
companies may have greater price volatility, lower trading volume and less
liquidity than large-capitalization companies. In addition, mid-capitalization
companies may have smaller revenues, narrower product lines, less management
depth and experience, smaller shares of their product or service markets, fewer
financial resources and less competitive strength than large-capitalization
companies.
Small-Capitalization
Companies Risk
Small-Capitalization
Companies Risk applies to the Global X Lithium & Battery Tech ETF, Global X
SuperDividend® ETF, Global X SuperDividend® U.S. ETF, Global X SuperDividend®
REIT ETF and Global X Russell 2000 Covered Call ETF
The
Fund may invest a significant percentage of its assets in small-capitalization
companies. If it does so, it may be subject to certain risks associated with
small-capitalization companies. These companies often have greater price
volatility, lower trading volume and less liquidity than larger, more
established companies. In addition, these companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences. These companies tend to have smaller revenues, narrower
product lines, less management depth and experience, smaller shares of their
product or service markets, fewer financial resources and less competitive
strength than larger companies.
Micro-Capitalization
Companies Risk
Micro-Capitalization
Companies Risk applies to the Global X Russell 2000 Covered Call ETF
The
Fund may invest in micro-capitalization companies. These companies are subject
to substantially greater risks of loss and price fluctuations because their
earnings and revenues tend to be less predictable (and some companies may
experience significant losses), and their share prices tend to be more volatile
and their markets less liquid than
companies
with larger market capitalizations. Micro-capitalization companies may be newly
formed or in the early stages of development, with limited product lines,
markets or financial resources and may lack management depth. In addition, there
may be less public information available about these companies. The shares of
micro-capitalization companies tend to trade less frequently than those of
larger, more established companies, which can adversely affect the pricing of
these securities and the future ability to sell these securities. Also, it may
take a long time before the Fund realizes a gain, if any, on an investment in a
micro-capitalization company.
Cash
Transaction Risk
Cash
Transaction Risk applies to the Global X Lithium & Battery Tech ETF, Global
X SuperDividend® U.S. ETF, Global X MSCI SuperDividend® Emerging Markets ETF and
Global X Renewable Energy Producers ETF
Unlike
most ETFs, the Fund intends to effect a significant portion of creations and
redemptions for cash, rather than in-kind securities. As a result, an investment
in the Fund may be less tax-efficient than an investment in a more conventional
ETF. ETFs generally are able to make in-kind redemptions and avoid being taxed
on gain on the distributed portfolio securities at the Fund level. Because the
Fund currently intends to effect redemptions for cash, rather than in-kind
distributions, it may be required to sell portfolio securities in order to
obtain the cash needed to distribute redemption proceeds. If the Fund recognizes
gain on these sales, this generally will cause the Fund to recognize gain it
might not otherwise have recognized, or to recognize such gain sooner than would
otherwise be required if it were to distribute portfolio securities in-kind. The
Fund generally intends to distribute these gains to shareholders to avoid being
taxed on this gain at the Fund level and otherwise comply with the special tax
rules that apply to it. This strategy may cause shareholders to be subject to
tax on gains they would not otherwise be subject to, or at an earlier date than,
if they had made an investment in a different ETF. Moreover, cash transactions
may have to be carried out over several days if the securities market is
relatively illiquid and may involve considerable brokerage fees and taxes. These
factors may result in wider spreads between the bid and the offered prices of
the Fund’s Shares than for more conventional ETFs. To the extent that the
maximum additional
variable charge for cash creation or cash redemption transactions is
insufficient to cover the transaction costs of purchasing or selling portfolio
securities, the Fund’s performance could be negatively impacted.
Catholic
Values Investing Risk
Catholic
Values Investing Risk applies to the Global X S&P 500® Catholic Values ETF,
Global X S&P Catholic Values Developed ex-U.S. ETF and Global X S&P
Catholic Values U.S. Aggregate Bond ETF
The
Fund invests in securities that meet the Underlying Index’s investment criteria
by excluding the securities of companies based on such company's involvement in
one or more activities deemed by the investment criteria to be inconsistent with
Catholic teachings. There can be no guarantee that the activities of the
companies included in the Underlying Index will align with the moral and social
teachings of the Catholic Church, or that the Underlying Index’s investment
criteria will align fully with all interpretations of Catholic social teachings.
To the extent an investor intends to invest in a manner consistent with his or
her interpretation of Catholic social teachings, an investment in the Fund may
fail to achieve such objective.
Commodity
Exposure Risk
Commodity
Exposure Risk applies to the Global X Lithium & Battery Tech
ETF
To
the extent that its Underlying Index invests in, or otherwise has exposure to,
securities and markets that are susceptible to fluctuations in certain commodity
markets, any negative changes in commodity markets could have a great impact on
the Fund. Commodity prices may be influenced or characterized by unpredictable
factors, including, where applicable, high volatility, changes in supply and
demand relationships, weather, agriculture, trade, changes in interest rates and
monetary and other governmental policies, action and inaction. Securities of
companies held by the Fund that are dependent on a single commodity, or are
concentrated on a single commodity sector, may typically exhibit even higher
volatility attributable to commodity prices.
Commodity
Price Relationship Risk
Commodity
Price Relationship Risk applies to the Global X Lithium & Battery Tech
ETF
The
Underlying Index measures the performance of companies engaged in a particular
industry and not the performance of commodities prices themselves. Companies may
under- or over-perform commodities prices over the short-term or the long-term.
Concentration
Risk
Concentration
Risk applies to each Fund
In
following its methodology, the Underlying Index may be concentrated to a
significant degree in securities of issuers a particular industry or group of
industries and/or may have significant exposure to one or more sectors. To the
extent that the Underlying Index concentrates in the securities of issuers in
such an area, the Fund will also concentrate its investments to approximately
the same extent. In such event, the Fund’s performance will be particularly
susceptible to adverse events impacting such industry or sector, and the Fund
will face greater risk than if it were diversified broadly over numerous such
areas. Such heightened risks, any of which may adversely affect the companies in
which the Fund invests, may include, but are not limited to, the following:
general economic conditions or cyclical market patterns that could negatively
affect supply and demand; competition for resources; adverse labor relations;
political or world events; obsolescence of technologies; and increased
competition or new product introductions that may affect the profitability or
viability of companies in a particular industry or sector. In addition, at
times, such industry, group of industries or sector may be out of favor and
underperform other such categories or the market as a whole.
Risks
Related to Investing in the Banking Industry
Risks
Related to Investing in the Banking Industry applies to the Global X MSCI
SuperDividend® Emerging Markets ETF and Global X SuperIncome™ Preferred
ETF
The
performance of stocks in the banking industry may be affected by extensive
governmental regulation which may limit both the amounts and types of loans and
other financial commitments they can make, and the interest rates and fees they
can charge and the amount of capital they must maintain. Profitability is
largely dependent on the availability and cost of capital funds and can
fluctuate significantly when interest rates change. Credit losses resulting from
financial difficulties of borrowers can negatively impact banking companies.
Banks may also be subject to severe price competition. Competition is high among
banking companies and failure to maintain or increase market share may result in
lost market value.
Risks
Related to Investing in the Chemicals Industry
Risks
Related to Investing in the Chemicals Industry applies to the Global X Lithium
& Battery Tech ETF
The chemicals industry
can be significantly affected by competition, product obsolescence, raw
materials prices, and government regulation. As regulations are developed and
enforced, chemical companies could be required to alter or cease production of a
product, to pay fines, to pay for cleaning up a disposal site, or to agree to
restrictions on their operations. Some of the materials and processes used by
these companies involve hazardous components and there can be risks associated
with their production, handling, and disposal.
Risks
Related to Investing in the Communication Services Sector
Risks
Related to Investing in the Communication Services Sector applies to the Global
X Social Media ETF and Global X Emerging Markets Internet & E-commerce
ETF
The
communication services sector of a country’s economy is often subject to
extensive government regulation. The costs of complying with governmental
regulations, delays or failure to receive required regulatory approvals, or the
enactment of new regulatory requirements may negatively affect the business of
communications companies. Government actions around the world, specifically in
the area of pre-marketing clearance of products and prices, can be arbitrary and
unpredictable. Companies in the communication services sector may encounter
distressed cash flows due to the need to commit substantial capital to meet
increasing competition, particularly in developing new products and services
using new technology. Technological innovations may make the products and
services of certain communications companies obsolete.
In
the U.S., the communication services sector is characterized by increasing
competition and regulation by the U.S. Federal Communications Commission and
various state regulatory authorities. Companies in the communication services
sector are generally required to obtain franchises or licenses in order to
provide services in a given location. Licensing and franchise rights in the
communication services sector are limited, which may provide an advantage to
certain participants. Limited availability of such rights, high barriers to
market entry and regulatory oversight, among
other
factors, have led to consolidation of companies within the sector, which could
lead to further regulation or other negative effects in the future.
Companies
in the media and entertainment industries (e.g., companies engaged in television
or radio broadcasting, publishing, motion pictures, music by recording artists,
casinos, and recreation and amusement businesses) can be significantly affected
by several factors, including competition, particularly in formulating products
and services using new technologies, cyclicality of revenues and earnings, a
potential decrease in the discretionary income of targeted individuals, changing
consumer tastes and interests, and the potential increase in state and federal
government regulation. Companies in the media and entertainment industries may
become obsolete quickly. Advertising spending can be an important revenue source
for media and entertainment companies. During economic downturns advertising
spending typically decreases and, as a result, media and entertainment companies
tend to generate less revenue.
Risks
Related to Investing in the Consumer Discretionary Sector
Risks
Related to Investing in the Consumer Discretionary Sector applies to the Global
X E-commerce ETF and Global X Emerging Markets Internet & E-commerce
ETF
The
success of consumer product manufacturers and retailers is tied closely to the
performance of the overall domestic and international economy, interest rates,
competition and consumer confidence. Success depends heavily on disposable
household income and consumer spending and may be strongly affected by social
trends and marketing campaigns. Changes in demographics and consumer tastes can
also affect the demand for, and success of, consumer products and services in
the marketplace.
Risks
Related to Investing in the Electric Utilities Industry
Risks
Related to Investing in the Electric Utilities Industry applies to the Global X
Renewable Energy Producers ETF
Companies
in the electric utilities industry may face large capital expenditures in
connection with their operations and may therefore be subject to the risk
associated with any increase in the cost of borrowing to finance capital
construction. Reliance on capital construction projects may increase the risks
associated with natural disasters, terrorist attacks, government intervention or
other factors that may render an electric utility company’s equipment unusable
or obsolete and negatively impact profitability. Electric utilities may face
decreased demand resulting from energy conservation, localized power generation
and storage, and regulatory changes, which have a material impact on their
business. Deregulation may subject companies in the electric utilities industry
to greater competition and may adversely affect their profitability.
Risks
Related to Investing in the Energy Sector
Risks
Related to Investing in the Energy Sector applies to the Global X SuperDividend®
U.S. ETF
The
success of companies in the energy sector may be cyclical and highly dependent
on energy prices. Securities of companies in the energy sector are subject to
swift energy price and supply fluctuations caused by events relating to
international politics, energy conservation, the success of exploration
projects, and tax and other governmental regulatory policies. Actions taken by
central governments may dramatically impact supply and demand forces that
influence energy prices, resulting in sudden decreases in value for companies in
the energy sector. Weak demand for the companies’ products or services or for
energy products and services in general, as well as negative developments in
these other areas, would adversely impact the Fund's performance. Companies in
the oil and gas sector (including alternative energy suppliers) may be adversely
affected by natural disasters or other catastrophes and may be at risk for
environmental damage claims. Additionally, these companies could be negatively
impacted by the adoption of other and/or novel energy sources, driven by
economic, environmental, and/or regulatory reasons, among others. These
companies may also be adversely affected by changes in exchange rates, interest
rates, economic conditions or world events in the regions that the companies
operate (i.e., expropriation, nationalization, confiscation of assets and coups,
social unrest, violence or labor unrest). Investments in companies located in
emerging market countries may heighten these risks. Companies engaged in the
distribution of energy, including electricity and gas, may be adversely affected
by governmental limitation on rates charged to customers. Deregulation and
greater competition may adversely affect the profitability of these companies
and lead to diversification outside of their original geographic regions and
their traditional lines of business, potentially increasing risk and making the
price of their equity securities more volatile.
Risks
Related to Investing in the Equity Real Estate Investment Industry
Risks
Related to Investing in the Equity Real Estate Investment Industry applies to
the Global X SuperDividend® REIT ETF
The
Fund is concentrated in the Equity Real Estate Investment Industry, which
comprises Real Estate Investment Trusts (REITs). For more information, see
Asset
Class Risk - Real Estate Stocks and Real Estate Investment Trusts (REITs)
Investment Risk in
the SUMMARY OF PRINCIPAL RISKS and A FURTHER DISCUSSION OF PRINCIPAL RISKS
sections of the Prospectus.
Risks
Related to Investing in the Exploration Industry
Risks
Related to Investing in the Exploration Industry applies to the Global X Lithium
& Battery Tech ETF
Companies
that are only in the exploration stage are typically unable to adopt specific
strategies for controlling the impact of the price of commodities. If a natural
disaster or other event with a significant economic impact occurs in a region
where the companies in which the Fund invests operate, such disaster or event
could negatively affect the profitability of such companies and, in turn, the
Fund’s investment in them. The Fund may invest in early stage mining companies
that are in the exploration stage only or that hold properties that might not
ultimately produce physical commodities. The exploration and development of
mineral deposits involve significant financial risks over a significant period
of time, which even a combination of careful evaluation, experience and
knowledge may not eliminate. Few properties which are explored are ultimately
developed into producing mines. Major expenditures may be required to establish
reserves by drilling and to construct mining and processing facilities at a
site. In addition, many early stage miners operate at a loss and are dependent
on securing equity and/or debt financing, which might be more difficult to
secure for an early stage mining company than for a more.
Risks
Related to Investing in the Financials Sector
Risks
Related to Investing in the Financials Sector applies to the Global X MSCI
SuperDividend® Emerging Markets ETF, Global X SuperDividend® REIT ETF and Global
X SuperIncome™ Preferred ETF
Companies
in the financials sector are subject to government intervention and extensive
governmental regulation, which may adversely affect the scope of their
activities, the prices they can charge, the amount of capital they must maintain
and, potentially, their size. Governmental regulation may change frequently and
may have significant adverse consequences for companies in the financials
sector, including effects not intended by such regulation. Recently enacted
legislation in the U.S. has relaxed capital requirements and other regulatory
burdens on certain U.S. banks. While the effect of the legislation may benefit
certain companies in the financials sector, increased risk taking by affected
banks may also result in greater overall risk in the financials sector. The
impact of changes in capital requirements, or recent or future regulation in
various countries, on any individual financial company or on the financials
sector as a whole cannot be predicted. The financials sector is exposed to risks
that may impact the value of investments in the financials sector more severely
than investments outside this sector, including operating with substantial
financial leverage. The financials sector may also be adversely affected by
increases in interest rates and loan losses, decreases in the availability of
money or asset valuations and adverse conditions in other related markets.
Additionally, the deterioration of the credit markets during the 2008-2009
global financial crisis caused an adverse impact in a broad range of mortgage,
asset-backed, auction rate and other markets, including U.S. and international
credit and interbank money markets generally, thereby affecting a wide range of
financial services institutions and markets. This situation created instability
in the financial services markets and caused certain financial services
companies to incur large losses or even become insolvent or bankrupt. Some
financial services companies experienced downgrades in their credit ratings,
declines in the valuations of their assets, took action to raise capital (such
as the issuance of debt or equity securities), or even ceased operations. These
actions caused the securities of many financial services companies to decline in
value and could occur again if credit markets were substantially affected once
more. Insurance companies may be subject to severe price competition. The
financials sector is also a target for cyber-attacks and may experience
technology malfunctions and disruptions. In recent years, cyber-attacks and
technology malfunctions and failures have become increasingly frequent in this
sector and have reportedly caused losses to companies in this sector, which may
negatively impact the Fund.
Risks
Related to Investing in the Independent Power and Renewable Electricity
Industry
Risks
Related to Investing in the Independent Power and Renewable Electricity Industry
applies to the Global X Renewable Energy Producers ETF
Companies
in the independent power and renewable electricity industry may be highly
dependent upon government subsidies, contracts with government entities, and the
successful development of new and proprietary technologies. In addition,
seasonal weather conditions, fluctuations in the supply of and demand for energy
products, changes in energy prices, and international political events may cause
fluctuations in the performance of independent power and renewable electricity
companies and the prices of their securities.
Risks
Related to Investing in the Information Technology Sector
Risks
Related to Investing in the Information Technology Sector applies to the Global
X NASDAQ 100® Covered Call ETF, Global X S&P 500® Covered Call ETF, Global X
NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered Call
& Growth ETF and Global X S&P 500® Catholic Values ETF
Market
or economic factors impacting information technology companies and companies
that rely heavily on technology advances could have a major effect on the value
of the Fund’s investments. The value of stocks of information technology
companies and companies that rely heavily on technology is particularly
vulnerable to rapid changes in technology product cycles, rapid product
obsolescence, government regulation and increased competition, both domestically
and internationally, including competition from foreign competitors with lower
production costs. Information technology companies and companies that rely
heavily on technology, especially those of smaller, less-seasoned companies,
tend to be more volatile than the overall market. These companies also are
heavily dependent on patent and intellectual property rights, the loss or
impairment of which may adversely affect profitability. Additionally, companies
in the information technology sector may face dramatic and often unpredictable
changes in growth rates and competition for the services of qualified personnel.
Companies in the information technology sector are facing increased government
and regulatory scrutiny and may be subject to adverse government or regulatory
action. Companies in the application software industry, in particular, may also
be negatively affected by the decline or fluctuation of subscription renewal
rates for their products and services, which may have an adverse effect on
profit margins. Companies in the systems software industry may be adversely
affected by, among other things, actual or perceived security vulnerabilities in
their products and services, which may result in individual or class action
lawsuits, state or federal enforcement actions and other remediation costs.
Risks
Related to Investing in the Interactive Media and Services Industry
Risks
Related to Investing in the Interactive Media and Services Industry applies to
the Global X Social Media ETF
The
success of the interactive media and services industry may be tied closely to
the performance of the overall domestic and global economy, interest rates,
competition and consumer confidence. Success depends heavily on disposable
household income and consumer spending. Also, companies in the interactive media
and services industry may be subject to severe competition, which may have an
adverse impact on their respective profitability. Changes in demographics and
consumer tastes can also affect the demand for, and success of, interactive
media and services in the marketplace.
Risks
Related to Investing in the Internet and Direct Marketing Retail
Industry
Risks
Related to Investing in the Internet and Direct Marketing Retail Industry
applies to the Global X E-commerce ETF and Global X Emerging Markets Internet
& E-commerce ETF
Companies
in the internet and direct marketing retail industry are dependent on internal
infrastructure and on the availability, reliability and security of the internet
and related systems. Critical systems and operations may be vulnerable to damage
or interruption from fire, flood, power loss, telecommunications failure,
terrorist attacks, cyber-attacks, acts of war, break-ins, earthquake and similar
events. Any system interruption that results in the unavailability of a
company’s website or mobile app or reduced performance of transaction systems
could interrupt or substantially reduce a company’s ability to conduct its
business. Companies in the internet and direct marketing retail industry are
dependent on paid and unpaid natural search engines and are therefore dependent
on business decisions made by companies that offer natural search engines. Any
business changes by dominant providers of natural search engines can be
detrimental to an internet and direct marketing retail company’s business while
being totally outside of the control of such company.
Risks
Related to Investing in the Lithium-Ion Battery Industry
Risks
Related to Investing in the Lithium-Ion Battery Industry applies to the Global X
Lithium & Battery Tech ETF
Securities
in the Fund’s portfolio involved in the manufacturing of lithium-ion batteries
are subject to the effects of price fluctuations of traditional and alternative
sources of energy, supply and demand of alternative energy sources, energy
conservation, the success of exploration projects and tax and other government
regulations and policies. The lithium-ion battery industry can be significantly
affected by obsolescence of existing technology, short product lifecycles,
falling prices and profits, competition from new market entrants and general
economic conditions. Companies in this industry could be adversely affected by
commodity price volatility, imposition of import controls, increased
competition, depletion of resources, technological developments and labor
relations. If government subsidies and economic incentives for alternative
energy are reduced or eliminated, the demand for lithium-ion batteries may
decline and cause corresponding declines in the revenues and profits of
lithium-ion battery companies. If lithium-ion technology is not suitable for
widespread adoption, or sufficient demand for lithium-ion products does not
develop or takes long periods of time to develop, the revenues of lithium-ion
battery companies may decline.
Risks
Related to Investing in the Materials Sector
Risks
Related to Investing in the Materials Sector applies to the Global X Lithium
& Battery Tech ETF
Issuers
in the materials sector could be adversely affected by commodity price
volatility, exchange rates, import controls, increased competition, depletion of
resources, technical advances, labor relations, over-production, litigation and
government regulations, among other factors. At times, worldwide production of
industrial materials has exceeded demand as a result of over-building or
economic downturns, leading to poor investment returns or losses. Issuers in the
materials sector are at risk for environmental damage and product liability
claims and may be adversely affected by depletion of resources, technical
progress, labor relations and governmental regulations.
Risks
Related to Investing in the Mortgage Real Estate Investment Industry
Risks
Related to Investing in the Mortgage Real Estate Investment Industry applies to
the Global X SuperDividend® REIT ETF
The
Fund is concentrated in the Mortgage Real Estate Investment Industry, which
comprises Mortgage Real Estate Investment Trusts (Mortgage REITs), For more
information, see Risks
Related to Investing in Mortgage Real Estate Investment Trusts (Mortgage
REITs).
Risks
Related to Investing in the Real Estate Sector
Risks
Related to Investing in the Real Estate Sector applies to the Global X
SuperDividend® REIT ETF
Real
estate is highly sensitive to general and local economic conditions and
developments and characterized by intense competition and periodic overbuilding.
Many real estate companies utilize leverage (and some may be highly leveraged),
which increases risk and could adversely affect a real estate company's
operations and market value in periods of rising interest rates.
Risks
Related to Investing in the Utilities Sector
Risks
Related to Investing in the Utilities Sector applies to the Global X Renewable
Energy Producers ETF
Stock
prices for companies in the utilities sector are affected by supply and demand,
operating costs, government regulation, environmental factors, liabilities for
environmental damage and general civil liabilities, and rate caps or rate
exchanges. Although rate changes of a utility usually fluctuate in approximate
correlation with financing costs due to political and regulatory factors, rate
changes ordinarily occur only following a delay after the changes in financing
costs. This factor will tend to favorably affect a regulated utility company's
earnings and dividends in times of decreasing costs, but conversely, will tend
to adversely affect earnings and dividends are rising in times of rising costs.
The value of regulated utility equity securities may tend to have an inverse
relationship to the movement of interest rates. Certain utility companies have
experienced full or partial deregulation in recent years. These utility
companies are frequently more similar to industrial companies in that they are
subject to greater competition and have been permitted by regulators to
diversify outside of their original geographic regions and their traditional
lines of business. These opportunities may permit certain utility companies to
earn more than their traditional regulated rate of return. Some companies,
however, may be forced to defend their core business and may be less profitable.
In addition, natural
disasters,
terrorist attacks, government intervention or other factors may render a utility
company's equipment unusable or obsolete and negatively impact
profitability.
Covered
Call Option Writing Risk
Covered
Call Option Writing Risk applies to the Global X NASDAQ 100® Covered Call ETF,
Global X S&P 500® Covered Call ETF, Global X Russell 2000 Covered Call ETF,
Global X NASDAQ 100® Covered Call & Growth ETF and Global X S&P 500
Covered Call & Growth ETF
By
writing covered call options in return for the receipt of premiums, the Fund
will give up the opportunity to benefit from potential increases in the value of
the Reference Index above the exercise prices of such options, but will continue
to bear the risk of declines in the value of the Reference Index. The premiums
received from the options may not be sufficient to offset any losses sustained
from the volatility of the underlying stocks over time. As a result, the risks
associated with writing covered call options may be similar to the risks
associated with writing put options. In addition, the Fund’s ability to sell the
securities underlying the options will be limited while the options are in
effect unless the Fund cancels out the option positions through the purchase of
offsetting identical options prior to the expiration of the written options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to write options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Credit
Risk
Credit
Risk applies to the Global X SuperDividend® ETF, Global X SuperDividend® U.S.
ETF, Global X SuperDividend® REIT ETF, Global X SuperIncome™ Preferred ETF and
Global X S&P Catholic Values U.S. Aggregate Bond ETF
Credit
risk is the risk that the issuer of the security will not be able to make
principal and interest payments when due. Changes in an issuer’s credit rating
or the market’s perception of an issuer’s creditworthiness may also affect the
value of the Fund’s investment in that issuer. Securities rated in the four
highest categories by the rating agencies are considered investment grade, but
they may also have some speculative characteristics. Investment grade ratings do
not guarantee that bonds will not lose value.
Currency
Risk
Currency
Risk applies to the Global X Social Media ETF, Global X Lithium & Battery
Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X SuperDividend® ETF, Global X MSCI SuperDividend® EAFE
ETF, Global X MSCI SuperDividend® Emerging Markets ETF, Global X SuperDividend®
REIT ETF, Global X SuperIncome™ Preferred ETF, Global X Renewable Energy
Producers ETF, Global X S&P Catholic Values Developed ex-U.S. ETF and Global
X Guru® Index ETF
Foreign
currencies are subject to risks, which include changes in the debt level and
trade deficit of the country issuing the foreign currency; inflation rates of
the United States and the country issuing the foreign currency; investors’
expectations concerning inflation rates; interest rates of the United States and
the country issuing the foreign currency; investors’ expectations concerning
interest rates; investment and trading activities of mutual funds, hedge funds
and currency funds; and global or regional political, economic or financial
events and situations.
In
addition, a foreign currency in which the Fund invests may not maintain its
long-term value in terms of purchasing power in the future. When the price of a
foreign currency in which the Fund invests declines, it may have an adverse
impact on the Fund.
Foreign
exchange rates are influenced by the factors identified above and may also be
influenced by: changing supply and demand for a particular currency; monetary
policies of governments (including exchange control programs, restrictions on
local exchanges or markets and limitations on foreign investment in a country or
on investment by residents of a country in other countries); changes in balances
of payments and trade; trade restrictions; and currency devaluations and
revaluations. Also, governments from time to time intervene in the currency
markets, directly and by regulation, in order to influence prices directly.
These events and actions are unpredictable. The resulting volatility in the
USD/foreign currency exchange rate could materially and adversely affect the
performance of the Fund.
Custody
Risk
Custody
Risk applies to the Global X Social Media ETF, Global X Lithium & Battery
Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X SuperDividend® ETF, Global X MSCI SuperDividend®
Emerging Markets ETF and Global X Renewable Energy Producers ETF
Custody
risk refers to risks in the process of clearing and settling trades and in the
holding of securities by local banks, agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local markets. Governments or trade groups may compel local agents to hold
securities in designated depositories that are subject to independent
evaluation. Generally, the less developed a country’s securities market, the
greater the likelihood of custody problems occurring.
Exposure
to Non-Lithium Markets Risk
Exposure
to Non-Lithium Markets Risk applies to the Global X Lithium & Battery Tech
ETF
Although
the Fund invests a large percentage of its assets in the securities of companies
that are active in the exploration and/or mining of lithium, these
companies may derive a significant percentage of their profits from other
business activities including, for example, the production of fertilizers and/or
specialty and industrial chemicals. As a result, the performance of these
markets and the profits of these companies from such activities may
significantly impact the Fund’s performance.
Foreign
Financial Institution Risk
Foreign
Financial Institution Risk applies to the Global X SuperIncome™ Preferred ETF
Certain
of the securities that comprise the Underlying Index, while traded on U.S.
exchanges, may be issued by foreign financial institutions. Securities issued by
non-U.S. issuers have different risks from securities issued by U.S. issuers.
These include differences in accounting, auditing, and financial reporting
standards, the possibility of expropriation or confiscatory taxation, adverse
changes in investment or exchange control regulations, political instability
which could affect U.S. investments in non-U.S. countries, and potential
restrictions of the flow of international capital. Non-U.S. issuers may be
subject to fewer governmental regulations than U.S. issuers. Moreover,
individual non-U.S. economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross domestic product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment
positions. In addition, the value of these securities may fluctuate due to
changes in the exchange rate of the issuer's local currency against the U.S.
dollar. The health of many foreign financial institutions is often tied closely
with the financial stability of the local economy in which they are domiciled,
and therefore are subject to additional risks including but not limited to:
policy changes, slow economic growth, and high levels of debt.
Foreign
Securities Risk
Foreign
Securities Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet
& E-commerce ETF, Global X SuperDividend® ETF, Global X MSCI SuperDividend®
EAFE ETF, Global X MSCI SuperDividend® Emerging Markets ETF, Global X
SuperDividend® REIT ETF, Global X SuperIncome™ Preferred ETF, Global X Renewable
Energy Producers ETF, Global X S&P Catholic Values Developed ex-U.S. ETF and
Global X Guru® Index ETF
The
Fund’s assets may be invested within the equity markets of countries outside of
the United States. These markets are subject to special risks associated with
foreign investment, including, but not limited to: lower levels of liquidity and
market efficiency; greater securities price volatility; exchange rate
fluctuations and exchange controls; less availability of public information
about issuers; limitations on foreign ownership of securities; imposition of
withholding or other taxes; imposition of restrictions on the expatriation of
the assets of the Fund; restrictions placed on U.S. investors by U.S.
regulations governing foreign investments; higher transaction and custody costs
and delays in settlement procedures; difficulties in enforcing contractual
obligations; lower levels of regulation of the securities market; weaker
accounting, disclosure and reporting requirements; and legal principles relating
to corporate governance and directors’ fiduciary duties and liabilities.
Shareholder rights under the laws of some foreign countries may not be as
favorable as U.S. laws. Thus, a shareholder may have more difficulty in
asserting its rights or enforcing a judgment against a foreign company than a
shareholder of a comparable U.S. company. Investment of more than 25% of the
Fund’s total assets in securities located in one country or region will subject
the Fund to increased country or region risk with respect to that country or
region.
Extension
Risk
Extension
Risk applies to Global X S&P Catholic Values U.S. Aggregate Bond
ETF
Extension
risk is the risk that, when interest rates rise, certain obligations will be
paid off by the issuer (or other obligated party) more slowly than anticipated,
causing the value of these debt securities to fall. Rising interest rates tend
to extend the duration of debt securities, making them more sensitive to changes
in interest rates. The value of longer-term debt securities generally changes
more in response to changes in interest rates than shorter-term debt securities.
As a result, in a period of rising interest rates, securities may exhibit
additional volatility and may lose value. Extension risk is particularly
prevalent for a callable debt security where an increase in interest rates could
result in the issuer of that security choosing not to redeem the debt security
as anticipated on the security’s call date. Such a decision by the issuer could
have the effect of lengthening the debt security’s expected maturity, making it
more vulnerable to interest rate risk and reducing its market
value.
Geographic
Risk
Geographic
Risk applies to each Fund
Geographic
risk is the risk that the Fund’s assets may be concentrated in countries located
in the same geographic region. This concentration will subject the Fund to risks
associated with that particular region, or a region economically tied to that
particular region, such as a natural, biological or other disaster. Outbreaks of
contagious viruses and diseases may reduce business activity or disrupt market
activity, and have the potential to exacerbate market risks in the countries and
regions in which they occur. The securities in which the Fund invests and,
consequently, the Fund are also subject to specific risks as a result of their
business operations, including, but not limited to:
Risk
of Investing in Argentina
Risk
of Investing in Argentina applies to the Global X E-commerce ETF and Global X
Emerging Markets Internet & E-commerce ETF
Argentina’s
economy is heavily dependent on exports and commodities, making the economy
susceptible to fluctuations in commodity markets and sensitive to its
relationships with key trading partners. Argentina’s key trading and foreign
investment partners are Brazil, China and the U.S. Reduction in spending on
Argentinean products and services, or changes in China, the U.S., or any of the
Latin American economies, trade regulations or currency exchange rates may
adversely impact the Argentinean economy.
Argentina
has experienced a high level of debt and public spending. Argentina’s default on
its debt in 2001, as well as its nationalization of private pensions in 2008,
continues to impact the confidence of investors in Argentina, which might
adversely impact returns in the Fund. In 2014, minority bondholders of
Argentina’s previously defaulted debt sought, and won, an injunction that
prohibited Argentina from repaying bonds that had been renegotiated, unless they
simultaneously paid the holdout minority bondholders their full amount due as
well. As a result, the Argentinian government, in 2014, subsequently entered a
technical default on its debt. In 2016, after a series of court appeals and
negotiations, the government and minority bondholders entered into a settlement
to resolve the dispute. Further defaults, potential debt renegotiations with the
IMF or other international creditors, and related actions by Argentina may
continue to impact the confidence of investors in Argentina, which could limit
the government’s ability to borrow in the future.
Argentina
has experienced periods of significant political instability and certain sectors
and regions of Argentina experience high unemployment, which may cause downturns
in the Argentinean market and adversely impact investments in the Fund. Heavy
regulation of labor and product markets is pervasive in Argentina and may stifle
Argentinean economic growth or contribute to prolonged periods of recession.
Argentina has privatized, certain industries, which may lose money or be
re-nationalized. In the past, Argentina’s government decided to partially
nationalize YPF S.A., Argentina’s largest energy company.
Argentina
has previously imposed capital controls that affected the inflow and
repatriation of capital and the free transfer of securities. If such capital
controls are reinstituted, or if new capital controls are implemented, it could
disrupt the creation/redemption process, which could affect the trading of Fund
shares, resulting in Fund shares trading at a price that is materially different
from NAV.
Risk
of Investing in Australia
Risk
of Investing in Australia applies to the Global X S&P Catholic Values
Developed ex-U.S. ETF
Investment
in Australian issuers may subject the Fund to regulatory, political, currency,
security, and economic risk specific to Australia. The Australian economy is
heavily dependent on exports from the energy, agricultural and mining sectors.
As a result, the Australian economy is susceptible to fluctuations in the
commodity markets. The Australian economy is also becoming increasingly
dependent on its growing services industry. The Australian economy is dependent
on trading with key trading partners, including the U.S., China, Japan, South
Korea, other Asian and certain European countries. Economic events in the U.S.,
Asia, or in other key trading countries can have a significant economic effect
on the Australian economy. Reduction in spending on Australian products and
services, or changes in any of the economies may cause an adverse impact on the
Australian economy.
Risk
of Investing in Brazil
Risk
of Investing in Brazil applies to the Global X Emerging Markets Internet &
E-commerce ETF, Global X SuperDividend® ETF, Global X MSCI SuperDividend®
Emerging Markets ETF and Global X Renewable Energy Producers ETF
Investment
in Brazilian issuers involves risks that are specific to Brazil, including
legal, regulatory, political, currency and economic risks. Specifically,
Brazilian issuers are subject to possible regulatory and economic interventions
by the Brazilian government, including the imposition of wage and price controls
and the limitation of imports. In addition, the market for Brazilian securities
is directly influenced by the flow of international capital and economic and
market conditions of certain countries, especially other emerging market
countries in Central and South America. The Brazilian economy has historically
been exposed to high rates of inflation, a high level of debt, and violence,
each of which may reduce and/or prevent economic growth. A rising unemployment
rate could also have the same effect.
Risk
of Investing in Canada
Risk
of Investing in Canada applies to the Global X Renewable Energy Producers
ETF
The
United States is Canada’s largest trading and investment partner, and the
Canadian economy is significantly affected by developments in the U.S. economy
and by changes in U.S. trade policy. Since the implementation of NAFTA in 1994
among Canada, the United States and Mexico, total two-way merchandise trade
between the United States and Canada has more than doubled. To further this
relationship, the three NAFTA countries entered into the Security and Prosperity
Partnership of North America in March 2005, which has further affected Canada’s
dependency on the U.S. economy. Any downturn in U.S. or Mexican economic
activity is likely to have an adverse impact on the Canadian economy. The
Canadian economy is also dependent upon external trade with other key trading
partners, including China and the European Union. Any trade policy changes by
the United States, China or the European Union which reduced Canada's ability to
trade with such regions could therefore have significant impact on the Canadian
economy. Developments in the United States, including renegotiation of NAFTA,
ratification of the successor USMCA, which received legislative approval and
went into effect in 2020, and imposition of tariffs by the United States, may
have implications for the trade arrangements among the United States and Canada,
which could negatively affect the value of securities held by the Funds. In
addition, Canada is a large supplier of natural resources (e.g., oil, natural
gas and agricultural products). As a result, the Canadian economy is sensitive
to fluctuations in certain commodity prices.
Risk
of Investing in Chile
Risk
of Investing in Chile applies to the Global X Lithium & Battery Tech ETF and
Global X Renewable Energy Producers ETF
Investment
in Chilean issuers involves risks that are specific to Chile, including, legal,
regulatory, political, environmental and economic risks. Chile’s economy is
export-dependent and relies heavily on trading relationships with certain key
trading partners, including China, Brazil, Japan, South Korea, the U.S.,
Argentina and Germany. Future changes in the price or the demand for Chilean
exported products by China, Brazil, Japan, South Korea, the U.S., Argentina and
Germany, changes in these countries’ economies, trade regulations or currency
exchange rates could adversely impact the Chilean economy and the issuers to
which the Fund has exposure.
Risk
of Investing in China
Risk
of Investing in China applies to the Global X Social Media ETF, Global X Lithium
& Battery Tech ETF, Global X E-commerce ETF, Global X Emerging Markets
Internet & E-commerce ETF, Global X SuperDividend® ETF, Global X MSCI
SuperDividend® Emerging Markets ETF, Global X Renewable Energy Producers ETF and
Global X Guru® Index ETF
The
Chinese economy is subject to a considerable degree of economic, political and
social instability.
Political
and Social Risk
The
Chinese government is authoritarian and has periodically used force to suppress
civil dissent. Disparities of wealth and the pace of economic liberalization may
lead to social turmoil, violence and labor unrest. In addition, China continues
to experience disagreements related to integration with Hong Kong and religious
and nationalist disputes in Tibet and Xinjiang. There is also a greater risk in
China than in many other countries of currency fluctuations, currency
nonconvertibility, interest rate fluctuations and higher rates of inflation as a
result of internal social unrest or conflicts with other countries.
Unanticipated political or social developments may result in sudden and
significant investment losses. China’s growing income inequality, rapidly aging
population and significant environmental issues also are factors that may affect
the Chinese economy. Concerns about the rising government and household debt
levels could impact the stability of the Chinese economy.
Heavy
Government Control and Regulation
The
Chinese government has implemented significant economic reforms in order to
liberalize trade policy, promote foreign investment in the economy, reduce
government control of the economy and develop market mechanisms. There can be no
assurance these reforms will continue or that they will be effective. Despite
recent reform and privatizations, government control over certain sectors or
enterprises and significant regulation of investment and industry is still
pervasive, including restrictions on investment in companies or industries
deemed to be sensitive to particular national interests, and the Chinese
government may restrict foreign ownership of Chinese corporations and/or the
repatriation of assets by foreign investors. Limitations or restrictions on
foreign ownership of securities may have adverse effects on the liquidity and
performance of the Fund and could lead to higher tracking error. Chinese
government intervention in the market may have a negative impact on market
sentiment, which may in turn affect the performance of the Chinese economy and
the Fund’s investments. Chinese markets generally continue to experience
inefficiency, volatility and pricing anomalies that may be connected to
governmental influence, lack of publicly-available information, and political
and social instability.
Economic
Risk
The
Chinese economy has grown rapidly in the recent past and there is no assurance
that this growth rate will be maintained. In fact, the Chinese economy may
experience a significant slowdown as a result of, among other things, a
deterioration in global demand for Chinese exports, as well as contraction in
spending on domestic goods by Chinese consumers. In addition, China may
experience substantial rates of inflation or economic recessions, which would
have a negative effect on its economy and securities market. Delays in
enterprise restructuring, slow development of well-functioning financial markets
and widespread corruption have also hindered performance of the Chinese economy.
China continues to receive substantial pressure from trading partners to
liberalize official currency exchange rates.
Elevated
geopolitical tensions between China and its trading partners, including the
imposition of U.S. tariffs on certain Chinese goods, the imposition of trade and
non-trade related barriers for certain Chinese companies, and increased
international pressure related to Chinese trade policy, forced technology
transfers and intellectual property protections, may have a substantial impact
on the Chinese economy. The continuation or worsening of the current political
climate between China and the U.S. could result in additional regulatory
restrictions being contemplated or imposed on the U.S. or in China that could
impact the Fund’s ability to invest in certain companies. Reduction in spending
on Chinese products and services, institution of additional tariffs or other
trade barriers (including as a result of heightened trade tensions between China
and the U.S. or in response to actual or alleged Chinese cyber activity), or a
downturn in any of the economies of China’s key trading partners may have an
adverse impact on the Chinese economy and the Chinese issuers of securities in
which the Fund invests. For example, the U.S. has added certain foreign
technology companies to the U.S. Department of Commerce’s Bureau of Industry and
Security’s “Entity List,” which is a list of companies believed to pose a
national security risk to the U.S. U.S. investors may also be barred by U.S.
authorities from investing in certain companies, including those with ties to
the military, intelligence, and security services in China. Actions like these
may have unanticipated and disruptive effects on the Chinese economy. Any such
response that targets Chinese financial markets or securities exchanges could
interfere with orderly trading, delay
settlement
or cause market disruptions. Public health crises or major health-related
developments may have a substantial impact on the Chinese economy or holdings in
the Fund. Outbreaks of contagious viruses and diseases, including the novel
viruses commonly known as SARS, MERS, and Covid-19 (Coronavirus), may reduce
business activity or disrupt market activity, and have the potential to
exacerbate market risks such as volatility in exchange rates or the trading of
Chinese securities listed domestically or abroad. Likewise, factories, ports,
and critical infrastructure in China may close to limit contagion risk. Foreign
investors’ access to domestic markets may also be limited during such health
crises, especially if domestic exchanges are closed for an extended period.
Market closures could interfere with the orderly trading or settlement
mechanisms of Chinese securities listed domestically or abroad. The Chinese
economy or holdings in the Fund may also be adversely impacted should health
crises create political uncertainty or social unrest. The implications of such
health crises is difficult to ascertain but may put strain on China’s supply
chains, trading relationships, and international relations.
Expropriation
Risk
The
Chinese government maintains a major role in economic policy making and
investing in China involves risk of loss due to expropriation, nationalization,
confiscation of assets and property or the imposition of restrictions on foreign
investments and on repatriation of capital invested.
Security
Risk
China
has strained international relations with Taiwan, India, Russia and other
neighbors due to territorial disputes, historical animosities, defense concerns
and other security concerns. Relations between China’s Han ethnic majority and
other ethnic groups in China, including Tibetans and Uighurs, are also strained
and have been marked by protests and violence. Additionally, China is alleged to
have participated in state-sponsored cyberattacks against foreign companies and
foreign governments. Actual and threatened responses to such activity, including
purchasing restrictions, sanctions, tariffs or cyberattacks on the Chinese
government or Chinese companies, may impact China’s economy and Chinese issuers
of securities in which the Fund invests. These situations may cause uncertainty
in the Chinese market and may adversely affect the Chinese economy. In addition,
conflict on the Korean Peninsula could adversely affect the Chinese economy.
Tax
Risk
China
has implemented a number of tax reforms in recent years and may amend or revise
its existing tax laws and/or procedures in the future, possibly with retroactive
effect. Changes in applicable Chinese tax law could reduce the after-tax profits
of the Fund, directly or indirectly, including by reducing the after-tax profits
of companies in China in which the Fund invests. Uncertainties in Chinese tax
rules could result in unexpected tax liabilities for the Fund.
Hong
Kong Political Risk
Hong
Kong reverted to Chinese sovereignty on July 1, 1997 as a Special Administrative
Region (SAR) of the People’s Republic of China under the principle of “one
country, two systems.” Although China is obligated to maintain the current
capitalist economic and social system of Hong Kong through June 30, 2047, the
continuation of economic and social freedoms enjoyed in Hong Kong is dependent
on the government of China. Since 1997, there have been tensions between the
Chinese government and many people in Hong Kong who perceive China as tightening
of control over Hong Kong’s semi-autonomous liberal political, economic, legal,
and social framework. Recent protests and unrest have increased tensions even
further. Due to the interconnected nature of the Hong Kong and Chinese
economies, this instability in Hong Kong may cause uncertainty in the Hong Kong
and Chinese markets. In addition, the Hong Kong dollar trades at a fixed
exchange rate in relation to (or, is “pegged” to) the U.S. dollar, which has
contributed to the growth and stability of the Hong Kong economy. However, it is
uncertain how long the currency peg will continue or what effect the
establishment of an alternative exchange rate system would have on the Hong Kong
economy. Because the Fund’s NAV is denominated in U.S. dollars, the
establishment of an alternative exchange rate system could result in a decline
in the Fund’s NAV.
Risk
of Investing in Developed Markets
Risk
of Investing in Developed Markets applies to the Global X Social Media ETF,
Global X E-commerce ETF, Global X SuperDividend® U.S. ETF, Global X MSCI
SuperDividend® EAFE ETF, Global X SuperDividend® REIT ETF, Global X NASDAQ 100®
Covered Call ETF, Global X S&P 500® Covered Call ETF, Global X Russell 2000
Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X
S&P 500 Covered Call & Growth ETF,
Global
X SuperIncome™ Preferred ETF, Global X Renewable Energy Producers ETF, Global X
S&P 500® Catholic Values ETF, Global X S&P Catholic Values Developed
ex-U.S. ETF, Global X S&P Catholic Values U.S. Aggregate Bond ETF and Global
X Guru® Index ETF
Investment
in developed country issuers may subject the Fund to regulatory, political,
currency, security, and economic risk specific to developed countries. Developed
countries generally tend to rely on services sectors (e.g., the financial
services sector) as the primary means of economic growth. A prolonged slowdown
in, among others, services sectors is likely to have a negative impact on
economies of certain developed countries, although economies of individual
developed countries can be impacted by slowdowns in other sectors. In the past,
certain developed countries have been targets of terrorism, and some geographic
areas in which the Fund invests have experienced strained international
relations due to territorial disputes, historical animosities, defense concerns
and other security concerns. These situations may cause uncertainty in the
financial markets in these countries or geographic areas and may adversely
affect the performance of the issuers to which the Fund has exposure. Heavy
regulation of certain markets, including labor and product markets, may have an
adverse effect on certain issuers. Such regulations may negatively affect
economic growth or cause prolonged periods of recession. Many developed
countries are heavily indebted and face rising healthcare and retirement
expenses and may be underprepared for global health crises. For example, the
rapid and global spread of a highly contagious novel coronavirus respiratory
disease, designated COVID-19, has resulted in extreme volatility in the
financial markets and severe losses; reduced liquidity of many instruments;
restrictions on international and, in some cases, local travel; significant
disruptions to business operations (including business closures); strained
healthcare systems; disruptions to supply chains, consumer demand and employee
availability; and widespread uncertainty regarding the duration and long-term
effects of this pandemic. In addition, price fluctuations of certain commodities
and regulations impacting the import of commodities may negatively affect
developed country economies.
Risk
of Investing in Emerging Markets
Risk
of Investing in Emerging Markets applies to the Global X Social Media ETF,
Global X Lithium & Battery Tech ETF, Global X E-commerce ETF, Global X
Emerging Markets Internet & E-commerce ETF, Global X SuperDividend® ETF,
Global X MSCI SuperDividend® Emerging Markets ETF and Global X Renewable Energy
Producers ETF
The
securities markets of emerging market countries may be less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation and not be subject to as extensive and frequent
accounting, financial and other reporting requirements as the securities markets
of more developed countries, as has historically been the case. Issuers and
securities markets in emerging markets are generally 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 developed markets. In particular, the assets and profits appearing on the
financial statements of emerging market issuers may not reflect their financial
position or results of operations in the same manner as financial statements for
developed market issuers. Substantially less information may be publicly
available about emerging market issuers than is available about issuers in
developed markets. It may be difficult or impossible for the Fund to pursue
claims against an emerging market issuer in the courts of an emerging market
country.
There
may be significant obstacles to obtaining information necessary for
investigations into or litigation against emerging market companies and
shareholders may have limited legal rights and remedies.
Emerging
markets are generally located in the Asia and Pacific regions, the Middle East,
Eastern Europe, Latin America, and Africa. Emerging markets typically are
classified as such by lacking one or more of the following characteristics:
sustainability of economic development, large and liquid securities markets,
openness to foreign ownership, ease of capital inflows and outflows, efficiency
of the market’s operational framework, and/or stability of the institutional
framework. The Fund’s purchase and sale of portfolio securities in certain
emerging market countries may be constrained by limitations relating to daily
changes in the prices of listed securities, periodic trading or settlement
volume and/or limitations on aggregate holdings of foreign investors. Such
limitations may be computed based on the aggregate trading volume by or holdings
of the Fund, the Adviser, its affiliates and their respective clients and other
service providers. The Fund may not be able to sell securities in circumstances
where price, trading or settlement volume limitations have been reached.
Foreign
investment in the securities markets of certain emerging market countries is
restricted or controlled to varying degrees, which may limit investment in such
countries or increase the administrative costs of such investments. For example,
certain Asian countries require government 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 issuer available for purchase
by
nationals. In addition, certain countries may restrict or prohibit investment
opportunities in issuers or industries deemed important to national interests.
Such restrictions may affect the market price, liquidity and rights of
securities that may be purchased by the Fund. The repatriation of both
investment income and capital from certain emerging market countries is subject
to restrictions, such as the need for governmental consents. In situations where
a country restricts direct investment in securities (which may occur in certain
Asian, Latin American and other countries), the Fund may invest in such
countries through other investment funds in such countries. Certain emerging
market countries may have privatized, or have begun the process of privatizing,
certain entities and industries. Privatized entities may lose money or be
re-nationalized.
Many
emerging market countries have experienced currency devaluations, substantial
(and, in some cases, extremely high) rates of inflation, and economic
recessions. These circumstances have had a negative effect on the economies and
securities markets of those emerging market countries. Economies in emerging
market countries generally are dependent upon commodity prices and international
trade and, accordingly, have been, and may continue to be, affected adversely by
the economies of their trading partners, trade barriers, exchange controls,
managed adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which they trade. As a result,
emerging market countries are particularly vulnerable to downturns of the world
economy. The 2008-2009 global financial crisis tightened international credit
supplies and weakened the global demand for their exports. As a result, certain
of these economies faced significant economic difficulties, which caused some
emerging market economies to fall into recession. Recovery from such conditions
may be gradual and/or halting as weak economic conditions in developed markets
may continue to suppress demand for exports from emerging market countries.
Many
emerging market countries are subject to a substantial degree of economic,
political and social instability. Governments of some emerging market countries
are authoritarian in nature or have been installed or removed as a result of
military coups, while governments in other emerging market countries have
periodically used force to suppress civil dissent. Disparities of wealth, the
pace and success of democratization, and ethnic, religious and racial
disaffection, among other factors, have also led to social unrest, violence
and/or labor unrest in some emerging market countries. Many emerging market
countries have experienced strained international relations due to border
disputes, historical animosities or other defense concerns. These situations may
cause uncertainty in the markets and may adversely affect the performance of
these economies. Unanticipated political, social, and public health developments
may result in sudden and significant investment losses. Many emerging markets
may be underprepared for global health crises. For example, the rapid and global
spread of a highly contagious novel coronavirus respiratory disease, designated
COVID-19, has resulted in extreme volatility in the financial markets and severe
losses; reduced liquidity of many instruments; restrictions on international
and, in some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic.
Investing in emerging market countries involves greater risk of loss due to
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investments and on repatriation of capital
invested. As an example, in the past some Eastern European governments have
expropriated substantial amounts of private property, and many claims of the
property owners have never been fully settled. There is no assurance that
similar expropriations will not occur in other emerging market countries,
including China.
As
a result of heightened geopolitical tensions, various countries have imposed
economic sanctions, imposed non-trade barriers and renewed existing economic
sanctions on specific emerging markets and on issuers within those markets.
These non-trade barriers consist of prohibiting certain securities trades,
prohibiting certain private transactions in certain sectors and with respect to
certain companies, asset freezes, and prohibition of all business, against
certain individuals and companies. The United States and other nations or
international organizations may impose additional, broader economic sanctions or
take other actions that may adversely affect certain emerging markets in the
future. These actions, any future sanctions or other actions, or even the threat
of further sanctions or other actions, may negatively affect the value and
liquidity of the Fund’s investments. For example, the Fund may be prohibited
from investing in securities issued by companies subject to such sanctions. In
addition, sanctions may require the Fund to freeze its existing investments,
prohibiting the Fund from buying, selling or otherwise transacting in these
investments. Also, if an affected security is included in the 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 the Underlying Index. The
use of (or increased use of) a representative sampling strategy may increase the
Fund’s tracking error risk. Actions barring some or all transactions with a
specific company will likely have a substantial, negative impact on the value of
such company’s securities. These sanctions may also lead to changes in the
Fund’s Underlying Index. The 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 the 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. The Fund’s
investment in emerging market countries may also be subject to withholding or
other taxes, which may be significant and may reduce the return to the Fund from
an investment in such countries.
Settlement
and clearance procedures in emerging market countries are frequently less
developed and reliable than those in the United States and may involve the
Fund’s delivery of securities before receipt of payment for their sale. In
addition, significant delays may occur in certain markets in registering the
transfer of securities. Settlement, clearance or registration problems may make
it more difficult for the Fund to value its portfolio securities and could cause
the Fund to miss attractive investment opportunities, to have a portion of its
assets uninvested or to incur losses due to the failure of a counterparty to pay
for securities the Fund has delivered or the Fund’s inability to complete its
contractual obligations because of theft or other reasons. In addition, local
agents and depositories are subject to local standards of care that may not be
as rigorous as developed countries. Governments and other groups may also
require local agents to hold securities in depositories that are not subject to
independent verification. The less developed a country’s securities market, the
greater the risk to the Fund.
The
creditworthiness of the local securities firms used by the Fund in emerging
market countries may not be as sound as the creditworthiness of firms used in
more developed countries. As a result, the Fund may be subject to a greater risk
of loss if a securities firm defaults in the performance of its
responsibilities.
The
Fund’s use of foreign currency management techniques in emerging market
countries may be limited. Due to the limited market for these instruments in
emerging market countries, all or a significant portion of the Fund's currency
exposure in emerging market countries may not be covered by such instruments.
Rising
interest rates, combined with widening credit spreads, could negatively impact
the value of emerging market debt and increase funding costs for foreign
issuers. In such a scenario, foreign issuers might not be able to service their
debt obligations, the market for emerging market debt could suffer from reduced
liquidity, and the Fund could lose money.
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 the 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 the Fund, reserves the right to abstain from voting
proxies in those markets.
Risk
of Investing in India
Risk
of Investing in India applies to the Global X MSCI SuperDividend® Emerging
Markets ETF
India
is an emerging market country and exhibits significantly greater market
volatility from time to time in comparison to more developed markets. Political
and legal uncertainty, greater government control over the economy, currency
fluctuations or blockage, and the risk of nationalization or expropriation of
assets may result in higher potential for losses.
Moreover,
governmental actions can have a significant effect on the economic conditions in
India, which could adversely affect the value and liquidity of the Fund’s
investments. In November of 2016, the Indian government eliminated certain large
denomination cash notes as legal tender, causing uncertainty in certain
financial markets. The securities markets in India are comparatively
underdeveloped, and stockbrokers and other intermediaries may not perform as
well as their counterparts in the United States and other more developed
securities markets. The limited liquidity of the Indian securities markets may
also affect the Fund’s ability to acquire or dispose of securities at the price
and time that it desires.
Global
factors and foreign actions may inhibit the flow of foreign capital on which
India is dependent to sustain its growth. In addition, the Reserve Bank of India
(“RBI”) has imposed limits on foreign ownership of Indian securities, which may
decrease the liquidity of the Fund’s portfolio and result in extreme volatility
in the prices of Indian securities. These factors, coupled with the lack of
extensive accounting, auditing and financial reporting standards and practices,
as compared to the U.S., may increase the Fund’s risk of loss.
Further,
certain Indian regulatory approvals, including approvals from the Securities and
Exchange Board of India (“SEBI”), the RBI, the central government and the tax
authorities (to the extent that tax benefits need to be utilized), may be
required before the Fund can make investments in the securities of Indian
companies. Capital gains from Indian securities may be subject to local
taxation.
Risk
of Investing in Indonesia
Risk
of Investing in Indonesia applies to the Global X SuperDividend®
ETF
Investment
in Indonesian issuers involves risks that are specific to Indonesia, including
legal, regulatory, political, security and economic risks. The securities
markets of Indonesia are underdeveloped and are often considered to be less
correlated to global economic cycles than those markets located in more
developed countries. As a result, securities markets in Indonesia are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, inflation, greater price fluctuations,
uncertainty regarding the existence of trading markets, governmental control and
heavy regulation of labor and industry. Moreover, trading on securities markets
may be suspended altogether. The government in Indonesia may restrict or control
to varying degrees the ability of foreign investors to invest in securities of
issuers located or operating in Indonesia. These restrictions and/or controls
may at times limit or prevent foreign investment in securities of issuers
located or operating in Indonesia. These factors, among others, make investing
in issuers located or operating in Indonesia significantly riskier than
investing in issuers located or operating in more developed countries, and any
one of them could cause a decline in the value of the Fund’s Shares. The value
of the Indonesian Rupiah may be subject to a high degree of fluctuation. The
Fund’s exposure to the Indonesian Rupiah and changes in value of the Indonesian
Rupiah versus the U.S. dollar may result in reduced returns for the Fund. The
Indonesian economy, among other things, is dependent upon external trade with
other economies, specifically China, Japan, Singapore and the United States. In
the past, Indonesia has experienced acts of terrorism, predominantly targeted at
foreigners. Such acts of terrorism have had a negative impact on tourism, an
important sector of the Indonesian economy.
Risk
of Investing in Japan
Risk
of Investing in Japan applies to the Global X S&P Catholic Values Developed
ex-U.S. ETF
Japan
may be subject to political, economic, nuclear, and labor risks, among others.
Any of these risks, individually or in the aggregate, can impact an investment
made in Japan.
Economic
Risk
The
growth of Japan’s economy has recently lagged that of its Asian neighbors and
other major developed economies. Since the year 2000, Japan’s economic growth
rate has remained relatively low, and it may remain low in the future. The
Japanese economy is heavily dependent on international trade and has been
adversely affected by trade tariffs, other protectionist measures, competition
from emerging economies and the economic conditions of its trading partners.
Japan is also heavily dependent on oil and other commodity imports, and higher
commodity prices could therefore have a negative impact on the Japanese economy.
Political
Risk
Historically,
Japan has had unpredictable national politics and may experience frequent
political turnover. Future political developments may lead to changes in policy
that might adversely affect the Fund’s investments. In addition, China has
become an important trading partner with Japan. Japan’s political relationship
with China, however, has become strained. Should political tension increase, it
could adversely affect the Japanese economy and destabilize the region as a
whole.
Large
Government and Corporate Debt Risk
The
Japanese economy faces several concerns, including a financial system with large
levels of nonperforming loans, over-leveraged corporate balance sheets,
extensive cross-ownership by major corporations, a changing corporate governance
structure, and large government deficits. These issues may cause a slowdown of
the Japanese economy.
Currency
Risk
The
Japanese yen has fluctuated widely at times and any increase in its value may
cause a decline in exports that could weaken the Japanese economy. Japan has, in
the past, intervened in the currency markets to attempt to maintain or reduce
the value of the yen. Japanese intervention in the currency markets could cause
the value of the yen to fluctuate sharply and unpredictably and could cause
losses to investors.
Nuclear
Energy Risk
The
nuclear power plant catastrophe in Japan in March 2011 may have long-term
effects on the Japanese economy and its nuclear energy industry, the extent of
which are currently unknown.
Labor
Risk
Japan
has an aging workforce and has experienced a significant population decline in
recent years. Japan’s labor market appears to be undergoing fundamental
structural changes, as a labor market traditionally accustomed to lifetime
employment adjusts to meet the need for increased labor mobility, which may
adversely affect Japan’s economic competitiveness.
Security
Risk
Japan's
relations with its neighbors, particularly China, North Korea, South Korea and
Russia, have at times been strained due to territorial disputes, historical
animosities and defense concerns. Most recently, the Japanese government has
shown concern over the increased nuclear and military activity by North Korea
and China. Strained relations may cause uncertainty in the Japanese markets and
adversely affect the overall Japanese economy, particularly in times of crisis.
Risk
of Investing in Malaysia
Risk
of Investing in Malaysia applies to the Global X MSCI SuperDividend® Emerging
Markets ETF
Investments
in Malaysian issuers involve risks that are specific to Malaysia, including,
legal, regulatory, political, currency and economic risks. The Malaysian
economy, among other things is dependent upon external trade with other
economies, including the United States, China, Japan and Singapore. As a result,
Malaysia is dependent on the economies of these other countries and any change
in the price or demand for Malaysian exports may have an adverse impact on the
Malaysian economy. In addition, the Malaysian economy is heavily focused on
export of electronic goods. As a result, Malaysia’s reliance on the electronics
sector makes it vulnerable to economic downturns in, among other sectors, the
technology sector. Volatility in the exchange rate of the Malaysian currency and
general economic deterioration has previously led to the imposition and then
reversal of stringent capital controls, a prohibition on repatriation of capital
and an indefinite prohibition on free transfers of securities. There can be no
assurance that a similar levy will not be reinstated by Malaysian authorities in
the future, to the possible detriment of the Fund and its shareholders.
Malaysian capital controls have been changed in significant ways since they were
adopted and without prior warning. There can be no assurance that Malaysian
capital controls will not be changed in the future in ways that adversely affect
the Fund and its shareholders.
Risk
of Investing in New Zealand
Risk
of Investing in New Zealand applies to the Global X Renewable Energy Producers
ETF
The
New Zealand economy is heavily dependent on exports from the agricultural
sector. Leading agricultural exports include dairy products, meat, forest
products, fruit and vegetables, fish, and wool. New Zealand also has substantial
reserves of natural gas, coal, and oil. As a result, the New Zealand economy is
susceptible to fluctuations in demand for agricultural products and certain
commodities. The New Zealand economy is also becoming increasingly dependent on
its growing services industry.
Risk
of Investing in Russia
Risk
of Investing in Russia applies to the Global X Social Media ETF, Global X
SuperDividend® ETF and Global X MSCI SuperDividend® Emerging Markets
ETF
Investing
in Russian securities involves significant risks, in addition to those described
under “Risk of Investing in Emerging Markets” and “Foreign Securities Risk” that
are not typically associated with investing in U.S. securities, including:
•
•The
risk of delays in settling portfolio transactions and the risk of loss arising
out of the system of share registration and custody used in Russia;
•Risks
in connection with the maintenance of the Fund’s portfolio securities and cash
with foreign sub-custodians and securities depositories, including the risk that
appropriate sub-custody arrangements will not be available to the Fund;
•The
risk that the Fund’s ownership rights in portfolio securities could be lost
through fraud or negligence because ownership in shares of Russian companies is
recorded by the companies themselves and by registrars, rather than by a central
registration system;
•The
risk that the Fund may not be able to pursue claims on behalf of its
shareholders because of the system of share registration and custody, and
because Russian banking institutions and registrars are not guaranteed by the
Russian government; and
•The
risk that various responses by other nation-states to alleged Russian activity
will impact Russia's economy and Russian issuers of securities in which the Fund
invests.
The
U.S. and the Economic and Monetary Union of the EU, along with the regulatory
bodies of a number of countries including Japan, Australia, Norway, Switzerland
and Canada (collectively, “Sanctioning Bodies”), have imposed economic
sanctions, which consist of asset freezes and sectoral sanctions, on certain
Russian individuals and Russian corporate entities. The Sanctioning Bodies could
also institute broader sanctions on Russia. These sanctions, or even the threat
of further sanctions, may result in the decline of the value and liquidity of
Russian securities, a weakening of the ruble or other adverse consequences to
the Russian economy. These sanctions could also result in the immediate freezing
of Russian securities and/or funds invested in prohibited assets, impairing the
ability of the Fund to buy, sell, receive or deliver those securities and/or
assets.
The
sanctions against certain Russian issuers include prohibitions on transacting in
or dealing in issuances of debt or equity of such issuers. Compliance with each
of these sanctions may impair the ability of the Fund to buy, sell, hold,
receive or deliver the affected securities or other securities of such issuers.
If it becomes impracticable or unlawful for the Fund to hold securities subject
to, or otherwise affected by, sanctions (collectively, “affected securities”),
or if deemed appropriate by the Adviser, the Fund may prohibit in-kind deposits
of the affected securities in connection with creation transactions and instead
require a cash deposit, which may also increase the Fund’s transaction costs.
The Fund may also be legally required to freeze assets in a blocked account.
Also,
if an affected security is included in the 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 the Fund’s tracking error risk.
If the affected securities constitute a significant percentage of the Underlying
Index, the Fund may not be able to effectively implement a representative
sampling strategy, which may result in significant tracking error between the
Fund’s performance and the performance of its Underlying Index.
Current
or future sanctions may result in Russia taking counter measures or retaliatory
actions, which may further impair the value and liquidity of Russian securities.
These retaliatory measures may include the immediate freezing of Russian assets
held by the Fund. In the event of such a freezing of any Fund assets, including
depositary receipts, the Fund may need to liquidate non-restricted assets in
order to satisfy any Fund redemption orders. The liquidation of Fund assets
during this time may also result in the Fund receiving substantially lower
prices for its securities.
These
sanctions may also lead to changes in the Fund’s Underlying Index. The 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 the Fund will
rebalance its portfolio to bring it in line with the Underlying Index as a
result of any such changes, which may result in transaction costs and increased
tracking error. These sanctions, the volatility that may result in the trading
markets for Russian securities and the possibility that Russia may impose
investment or currency controls on investors may cause the Fund to invest in, or
increase the Fund’s investments in, depositary receipts that represent the
securities of the Underlying Index. These investments may result in increased
transaction costs and increased tracking error.
Risk
of Investing in South Africa
Risk
of Investing in South Africa applies to the Global X Emerging Markets Internet
& E-commerce ETF, Global X SuperDividend® ETF and Global X MSCI
SuperDividend® Emerging Markets ETF
South
Africa’s two-tiered economy, with one rivaling developed countries and the other
exhibiting many characteristics of developing countries, is characterized by
uneven distribution of wealth and income and high rates of unemployment.
Although economic reforms have been enacted to promote growth and foreign
investments, there can be no assurance that these programs will achieve the
desired results. In addition, South Africa’s inadequate currency reserves have
left its currency vulnerable, at times, to devaluation. Despite significant
reform and privatization, the South African government continues to control a
large share of South African economic activity. Heavy regulation of labor and
product markets is pervasive and may stifle South African economic growth or
cause prolonged periods of recession. The agriculture and mining sectors of
South Africa’s economy account for a large portion of its exports, and thus the
South African economy is susceptible to fluctuations in these commodity markets.
In recent years, an unstable electricity supply in South Africa has stifled
economic growth, which may adversely affect the value of the Fund’s investments.
Risk
of Investing in South Korea
Risk
of Investing in South Korea applies to the Global X Social Media ETF, Global X
Lithium & Battery Tech ETF, Global X Emerging Markets Internet &
E-commerce ETF and Global X MSCI SuperDividend® Emerging Markets
ETF
Investments
in South Korean issuers involve risks that are specific to South Korea,
including legal, regulatory, political, currency, security and economic risks.
Substantial political tensions exist between North Korea and South Korea.
Escalated tensions involving the two nations and the outbreak of hostilities
between the two nations, or even the threat of an outbreak of hostilities, could
have a severe adverse effect on the South Korean economy. In addition, South
Korea’s economic growth potential has recently been on a decline because of a
rapidly aging population and structural problems, among other factors. The South
Korean economy is heavily reliant on trading exports and disruptions or
decreases in trade activity could lead to further declines.
Risk
of Investing in Spain
Risk
of Investing in Spain applies to the Global X MSCI SuperDividend® EAFE
ETF
Investment
in Spanish issuers involves risks that are specific to Spain, including, legal,
regulatory, political, currency, security and economic risks. The Spanish
economy, along with certain other EU economies, experienced a significant
economic slowdown during the financial crisis that began in 2008. In reaction to
the crisis, the Spanish government introduced austerity reforms aimed at
reducing its fiscal deficit to sustainable levels. Austerity reforms included,
among other things, reduction in government employees’ salaries, freezing of
pension funds, and suspension of public work projects. Such austerity reforms,
while directed at stimulating the Spanish economy in the long-term, may have a
negative short-term effect on Spain’s financial markets. Due largely to
outstanding bad loans to construction companies and real estate developers,
Spanish banks underwent a series of mergers to increase liquidity and made
efforts to shift debt off of their balance sheets. However, reports indicate
that debt levels remain high, although bank lending has contracted. In addition,
unemployment rates remain high. These factors could adversely impact growth
potential of Spanish stocks in which the Fund invests. In addition, the Spanish
government is engaged in a long-running campaign against terrorism. Acts of
terrorism on Spanish soil or against Spanish interests abroad may cause
uncertainty in the Spanish financial markets and adversely affect the
performance of the issuers to which the Fund has exposure. Political tensions
and social conflict have escalated recently as a result of a referendum by
Catalonia for independence from Spain. The secessionist movement could have a
negative impact on the Spanish economy and a destabilizing effect on the
country.
Risk
of Investing in Thailand
Risk
of Investing in Thailand applies to the Global X SuperDividend® ETF and Global X
MSCI SuperDividend® Emerging Markets ETF
Investment
in Thai issuers involves risks that are specific to Thailand, including, legal,
regulatory, political, security and economic risks. Thailand’s economy is
export-dependent and relies heavily on trading relationships with certain key
trading partners, including the U.S., China, Japan and other Asian countries.
Political uncertainty and the military coup that occurred in 2014 weakened
Thailand’s economic growth by reducing domestic and international demand for
both goods and services. Future changes in the price or the demand for
Thailand’s exported products by the U.S., China, Japan or other Asian countries,
or changes in these countries’ economies, trade regulations or currency exchange
rates could adversely impact the Thai economy and the issuers to which the Fund
has exposure. Economic and political instability have contributed to high price
volatility in the Thai equity and currency markets, which could affect
investments in the Fund. The Thai economy has experienced periods of substantial
inflation, currency devaluations and economic recessions, any of which may have
a negative effect on the Thai economy and securities markets. Thailand has at
times been destabilized by frequent government turnover and significant
political changes, including military coups. Recurrence of these conditions,
unanticipated or sudden changes in the political structure or other Thai
political events may result in sudden and significant investment losses. In
addition, household debt levels, political uncertainty and an aging population
pose risks to Thailand’s economic growth.
Risk
of Investing in the United Arab Emirates
Risk
of Investing in the United Arab Emirates applies to the Global X MSCI
SuperDividend® Emerging Markets ETF
The
economy of the United Arab Emirates (the "UAE") is dominated by petroleum
exports. A sustained decrease in commodity prices, particularly oil and natural
gas, could have a negative impact on all aspects of the UAE economy. The nonoil
UAE economy, which is concentrated in Dubai’s service sector, could be affected
by declines in tourism, real estate, banking and re-export trade. The UAE and
the governments of the individual emirates exercise substantial influence over
many aspects of the private sector. Governmental actions could have a
significant effect on economic conditions in the UAE, which could adversely
affect the value of the Fund. In addition, recent political instability and
protests in North Africa and the Middle East have caused significant disruptions
to many industries. Continued political and social unrest in these areas may
adversely affect the value of the Fund.
Risk
of Investing in the United Kingdom
Risk
of Investing in the United Kingdom applies to the Global X MSCI SuperDividend®
EAFE ETF
Investment
in United Kingdom issuers may subject the Fund to regulatory, political,
currency, security, and economic risks specific to the United Kingdom. The
United Kingdom’s economy relies heavily on the export of financial services to
the U.S. and other European countries. A prolonged slowdown in the financial
services sector may have a negative impact on the United Kingdom’s economy. In
the past, the United Kingdom has been a target of terrorism. Acts of terrorism
in the United Kingdom or against United Kingdom interests may cause uncertainty
in the United Kingdom’s financial markets and adversely affect the performance
of the issuers to which the Fund has exposure. In a referendum held on June 23,
2016, the United Kingdom resolved to leave the European Union (Brexit). On
January 31, 2020, the United Kingdom officially left the European Union, but
uncertainties continue to surround negotiations with the European Union
regarding their relationship. Brexit has introduced significant uncertainties
and instability in the financial markets as the United Kingdom negotiates its
exit from the European Union. Several European businesses have already moved
part of their operations out of the United Kingdom and continue to prepare for
disruption related to Brexit, the consequences of which could be severe for
European and United Kingdom businesses. The Fund will face risks associated with
the potential uncertainty and consequences that may follow Brexit, including
with respect to volatility in exchange rates and interest rates. Brexit could
adversely affect European or worldwide political, regulatory, economic or market
conditions and could contribute to instability in global political institutions,
regulatory agencies and financial markets. Brexit has also led to legal
uncertainty and could lead to politically divergent national laws and
regulations as a new relationship between the United Kingdom and European Union
is defined and the United Kingdom determines which European Union laws to
replace or replicate. Any of these effects of Brexit could adversely affect any
of the companies to which the Fund has exposure and any other assets that the
Fund invests in. Prior to the end of the “transition period” for Brexit, the
European Union and the United Kingdom ratified the EU-UK Trade and Cooperation
Agreement (TCA), which lays out the terms of the United Kingdom’s future
cooperation with the European Union. The
long-term political, economic and legal consequences of Brexit and the TCA are
not yet fully known, although in the short term, financial markets may
experience heightened volatility, particularly those in
the
United Kingdom and Europe, but possibly worldwide. The United Kingdom and Europe
may be less stable than it has been in recent years, and investments in the
United Kingdom and the European Union may be difficult to value, or subject to
greater or more frequent rises and falls in value.
Risk
of Investing in the United States
Risk
of Investing in the United States applies to the Global X Social Media ETF,
Global X E-commerce ETF, Global X SuperDividend® U.S. ETF, Global X
SuperDividend® REIT ETF, Global X NASDAQ 100® Covered Call ETF, Global X S&P
500® Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X NASDAQ
100® Covered Call & Growth ETF, Global X S&P 500 Covered Call &
Growth ETF, Global X SuperIncome™ Preferred ETF, Global X S&P 500® Catholic
Values ETF, Global X S&P Catholic Values U.S. Aggregate Bond ETF and Global
X Guru® Index ETF
A
decrease in imports or exports, changes in trade regulations and/or an economic
recession in the U.S. may have a material adverse effect on the U.S. economy and
the securities listed on U.S. exchanges. Proposed and adopted policy and
legislative changes in the U.S. are changing many aspects of financial and other
regulation and may have a significant effect on the U.S. markets generally, as
well as on the value of certain securities. In addition, a continued rise in the
U.S. public debt level or the imposition of U.S. austerity measures may
adversely affect U.S. economic growth and the securities to which the Fund has
exposure. The U.S. has developed increasingly strained relations with a number
of foreign countries. If these relations continue to worsen, it could adversely
affect U.S. issuers as well as non-U.S. issuers that rely on the U.S. for trade.
The U.S. has also experienced increased internal unrest and discord. If this
trend were to continue, it may have an adverse impact on the U.S. economy and
the issuers in which the Fund invests.
Geographic
Economic Exposure Risk
The
constituents held by the Fund may have partners, suppliers and/or customers
located in various geographic regions, and the geographic regions in which Fund
constituents are located may have trading partners in other geographic regions.
As a result, an economic downturn in one or more of these regions may impact the
performance of the constituents in which the Fund invests, even if the Fund does
not invest directly in companies located in such region. The risks related to
such regions may include:
African
Economic Risk
The
economies of African countries are subject to risks not typically associated
with more developed economies, countries or geographic regions. Such heightened
risks include, among others, expropriation and/or nationalization of assets,
restrictions on and government intervention in international trade, confiscatory
taxation, political instability, including authoritarian and/or military
involvement in governmental decision making, armed conflict, civil war, and
social instability as a result of religious, ethnic and/or socioeconomic unrest.
The
securities markets in Africa are underdeveloped and are often considered to be
less correlated to global economic cycles than markets located in more developed
countries or geographic regions. Securities markets in Africa are subject to
greater risks associated with market volatility, lower market capitalization,
lower trading volume, illiquidity, inflation, greater price fluctuations,
uncertainty regarding the existence of trading markets, governmental control and
heavy regulation of labor and industry. Moreover, trading on securities markets
may be suspended altogether.
Certain
governments in Africa may restrict or control to varying degrees the ability of
foreign investors to invest in securities of issuers located or operating in
those countries. These restrictions and/or controls may at times limit or
prevent foreign investment in securities of issuers located or operating in
countries in Africa. Moreover, certain countries in Africa may require
governmental approval or special licenses prior to investment by foreign
investors; may limit the amount of investment by foreign investors in a
particular industry and/or issuer; may limit such foreign investment to a
certain class of securities of an issuer that may have less advantageous rights
than the classes available for purchase by domestic investors of those
countries; and/or may impose additional taxes on foreign investors. These
factors, among others, make investing in issuers located or operating in
countries in Africa significantly riskier than investing in issuers located or
operating in more developed countries.
Asian
Economic Risk
Many
Asian economies have experienced rapid growth and industrialization in recent
years, but there is no assurance that this growth rate will be maintained. Other
Asian economies, however, have experienced high inflation, high unemployment,
currency devaluations and restrictions, and over-extension of credit.
Geopolitical hostility, political instability, as well as economic or
environmental events in any one Asian country may have a significant economic
effect on the entire Asian region, as well as on major trading partners outside
Asia. Any adverse event in the Asian markets may have a significant adverse
effect on some or all of the economies of the countries in which the Fund
invests. Many Asian countries are subject to political risk, including political
instability, corruption and regional conflict with neighboring countries. North
Korea and South Korea each have substantial military capabilities, and
historical tensions between the two countries present the risk of war. Escalated
tensions involving the two countries and any outbreak of hostilities between the
two countries, or even the threat of an outbreak of hostilities, could have a
severe adverse effect on the entire Asian region. Certain Asian countries have
also developed increasingly strained relationships with the U.S., and if these
relations were to worsen, they could adversely affect Asian issuers that rely on
the U.S. for trade. In addition, many Asian countries are subject to social and
labor risks associated with demands for improved political, economic and social
conditions.
Australasian
Economic Risk
The
economies of Australasia, which include Australia and New Zealand, are dependent
on exports from the agricultural and mining sectors. This makes Australasian
economies susceptible to fluctuations in the commodity markets. Australasian
economies are also increasingly dependent on their growing service industries.
Because the economies of Australasia are dependent on the economies of Asia,
Europe and the United States as key trading partners and investors, reduction in
spending by any of these trading partners on Australasian products and services,
or negative changes in any of these economies, may cause an adverse impact on
some or all of the Australasian economies.
European
Economic Risk
The
economies of Europe are highly dependent on each other, both as key trading
partners and, in many cases, as fellow members maintaining the euro. Decreasing
European imports, new trade regulations, changes in exchange rates, a recession
in Europe, or a slowing of economic growth in this region could have an adverse
impact on the securities in which the Fund invests. Reduction in trading
activity among European countries may cause an adverse impact on each nation’s
individual economies. The Economic and Monetary Union of the European Union (the
“EU”) requires compliance with restrictions on inflation rates, deficits,
interest rates, debt levels and fiscal and monetary controls, each of which may
significantly affect every country in Europe, including those countries that are
not members of the EU. Decreasing imports or exports, changes in governmental or
EU regulations on trade, changes in the exchange rate of the euro, the default
or threat of default by an EU member country on its sovereign debt, and
recessions in an EU member country may have a significant adverse effect on the
economies of EU member countries and their trading partners. The European
financial markets have historically experienced volatility and adverse trends
due to concerns about economic downturns or rising government debt levels in
several European countries, including, but not limited to, Austria, Belgium,
Cyprus, France, Greece, Ireland, Italy, Portugal, Spain and Ukraine. These
events have adversely affected the exchange rate of the euro and may continue to
significantly affect European countries.
Latin
American Economic Risk
High
interest rates, inflation, government defaults and unemployment rates are
characteristics of the economies in some Latin American countries. Currency
devaluations in any Latin American country can have a significant effect on the
entire region. Because commodities such as oil and gas, minerals and metals can
represent a significant percentage of the region’s exports, the economies of
Latin American countries may be particularly sensitive to fluctuations in
commodity prices. As a result, the economies in many Latin American countries
could experience significant volatility.
Middle
East Economic Risk
Middle
Eastern governments have exercised and continue to exercise substantial
influence over many aspects of the private sector. Many economies in the Middle
East are highly reliant on income from the sale of oil or trade with countries
involved in the sale of oil, and their economies are therefore vulnerable to
changes in the market for oil and foreign currency values. As global demand for
oil fluctuates, many Middle Eastern economies may be significantly impacted. A
sustained decrease in commodity prices could have a significant negative impact
on all aspects of the economy in the region. Middle Eastern economies may be
subject to acts of terrorism, political strife, religious, ethnic
or
socioeconomic unrest and sudden outbreaks of hostilities with neighboring
countries. Certain Middle Eastern countries have strained relations with other
Middle Eastern countries due to territorial disputes, historical animosities,
international alliances, religious tensions or defense concerns, which may
adversely affect the economies of these countries. Certain Middle Eastern
countries experience significant unemployment, as well as widespread
underemployment. Many Middle Eastern countries have little or no democratic
tradition. Many Middle Eastern countries periodically have experienced
political, economic and social unrest as protestors have called for widespread
reform. Some of these protests have resulted in a governmental regime change,
internal conflict or civil war. If further regime changes were to occur,
internal conflict were to intensify, or a civil war were to continue in any of
these countries, such instability could adversely affect the economies of Middle
Eastern countries.
North
American Economic Risk
A
decrease in imports or exports, changes in trade regulations or an economic
recession in any North American country can have a significant economic effect
on the entire North American region and on some or all of the North American
countries to which the Fund has economic exposure. The U.S. is Canada's and
Mexico's largest trading and investment partner. The Canadian and Mexican
economies are significantly affected by developments in the U.S. economy. Since
the implementation of the North American Free Trade Agreement (“NAFTA”) in 1994
among Canada, the U.S. and Mexico, total merchandise trade among the three
countries has increased. However, political developments in the U.S., including
the renegotiation of NAFTA and imposition of tariffs by the U.S., may have
implications for the trade arrangements among the U.S., Mexico and Canada, which
could negatively affect the value of securities held by the Fund. Policy and
legislative changes in any of the three countries may have a significant effect
on North American economies generally, as well as on the value of certain
securities held by the Fund.
High
Dividend Yield Stocks Risk
High
Dividend Yield Stocks Risk applies to the Global X SuperDividend® ETF, Global X
SuperDividend® U.S. ETF, Global X MSCI SuperDividend® EAFE ETF, Global X MSCI
SuperDividend® Emerging Markets ETF and Global X SuperDividend® REIT
ETF
High-yielding
stocks are often speculative, high risk investments. These companies may be
paying out more than they can support and may reduce their dividends or stop
paying dividends at any time, which could have a material adverse effect on the
stock price of these companies and the Fund’s performance. Securities that pay
dividends, as a group, can fall out of favor with the market, potentially during
periods of rising interest rates, causing such companies to underperform
companies that do not pay dividends.
High
Yield Securities Risk
High
Yield Securities Risk applies to the Global X SuperIncome™ Preferred
ETF
High
yield securities typically involve greater risk and are less liquid than higher
grade issues. Changes in general economic conditions, changes in the financial
condition of the issuers and changes in interest rates may adversely impact the
ability of issuers of high yield securities to make timely payments of interest
and principal.
The
Fund may invest in high yield securities that offer generally a higher current
yield than that available from higher grade issues, but they typically involve
greater risk. Securities rated below investment grade commonly are referred to
as “junk bonds.” The ability of issuers of high yield securities to make timely
payments of interest and principal may be impacted by adverse changes in general
economic conditions, changes in the financial condition of their issuers and
price fluctuations in response to changes in interest rates. High yield
securities are less liquid than investment grade securities and may be difficult
to price or sell, particularly in times of negative sentiment toward high yield
securities. Issuers of high yield securities may have a larger amount of
outstanding debt relative to their assets than issuers of investment grade
securities have. Periods of economic downturn or rising interest rates may cause
the issuers of high yield securities to experience financial distress, which
could adversely impact their ability to make timely payments of principal and
interest and could increase the possibility of default. The market value and
liquidity of high yield securities may be impacted negatively by adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, especially in a market characterized by low trade volume.
Income
Risk
Income
Risk applies to the Global X SuperIncome™ Preferred ETF and Global X S&P
Catholic Values U.S. Aggregate Bond ETF
The
Fund’s income may decline when interest rates fall. This decline can occur
because the Fund may invest in or have exposure to lower-yielding bonds as bonds
in its portfolio mature or the Fund otherwise needs to purchase additional
bonds.
Interest
Rate Risk
Interest
Rate Risk applies to the Global X SuperIncome™ Preferred ETF and Global X
S&P Catholic Values U.S. Aggregate Bond ETF
Interest
rate risk is the risk that prices of fixed income securities generally increase
in value when interest rates decline and decrease in value when interest rates
increase. The Fund may lose money if short-term or long-term interest rates rise
sharply.
Investors
should note that interest rates currently are at, or near, historic lows, but
may ultimately increase, with potentially sudden and unpredictable effects on
the markets and the Fund’s investments.
Securities
of lower credit quality or with longer durations tend to be more sensitive to
changes in interest rates, often making them more volatile in response to
interest rate changes than securities of higher credit quality or with shorter
durations. Interest rate fluctuations may also negatively impact the values of
equity and other non-fixed income securities.
Inflation-indexed
bonds, including Treasury Inflation-Protected Securities, decline in value when
real interest rates rise (the real interest rate is the rate of interest an
investor expects to receive after allowing for inflation). In certain interest
rate environments, such as when real interest rates are rising faster than
nominal interest rates, inflation-indexed bonds may experience greater losses
than other fixed income securities with similar durations.
Variable
and floating rate securities generally are less sensitive to interest rate
changes but may decline in value if their interest rates do not rise as much, or
as quickly, as interest rates in general. Conversely, floating rate securities
will not generally increase in value if interest rates decline. Inverse floating
rate securities may decrease in value if interest rates increase. Inverse
floating rate securities may also exhibit greater price volatility than a fixed
rate obligation with similar credit quality. When the Fund holds variable or
floating rate securities, a decrease (or, in the case of inverse floating rate
securities, an increase) in market interest rates will adversely affect the
income received from such securities, which may also impact the net asset value
of the Fund’s Shares.
Following
the financial crisis that began in 2007, the Board of Governors of the Federal
Reserve System (“Federal Reserve”) has attempted to stabilize the U.S. economy
and support the U.S. economic recovery by keeping the federal funds rate at or
near zero percent. In addition, the Federal Reserve purchased large quantities
of securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities on the open market (“Quantitative Easing”). As the Federal
Reserve's holdings from Quantitative Easing decrease, and to the extent that the
Federal Reserve raises the federal funds rate, there is a risk that interest
rates across the U.S. financial system will rise. Such policies may expose
fixed-income and related markets to heightened volatility and may reduce
liquidity for certain Fund investments, which could cause the value of the
Fund’s investments and the NAV of the Fund’s Shares to decline. To the extent
the Fund experiences high redemptions in connection with these developments or
otherwise, the Fund may experience increased portfolio turnover, which will
increase the costs that the Fund incurs and may lower the Fund’s performance.
The liquidity levels of the Fund’s investments may also be affected.
Further,
fixed income markets have consistently grown over the past three decades while
the capacity for traditional dealer counterparties to engage in fixed income
trading has not kept pace and in some cases has decreased. As a result, dealer
inventories of corporate bonds, which provide a core indication of the ability
of financial intermediaries to “make markets,” are at or near historic lows in
relation to market size. This reduction in dealer inventories could potentially
lead to decreased liquidity and increased volatility in the fixed income
markets. If sudden or large-scale rises in interest rates were to occur, the
Fund could also face above-average redemption requests, which could cause the
Fund to lose value due to downward pricing forces and reduced market liquidity.
International
Closed Market Trading Risk
International
Closed Market Trading Risk applies to the Global X Social Media ETF, Global X
Lithium & Battery Tech ETF, Global X E-commerce ETF, Global X Emerging
Markets Internet & E-commerce ETF, Global X SuperDividend® ETF, Global X
MSCI SuperDividend® EAFE ETF, Global X MSCI SuperDividend® Emerging Markets ETF,
Global X SuperDividend® REIT ETF, Global X SuperIncome™ Preferred ETF, Global X
Renewable Energy Producers ETF, Global X S&P Catholic Values Developed
ex-U.S. ETF and Global X Guru® Index ETF
To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other ETFs.
Investable
Universe of Companies Risk
Investable
Universe of Companies Risk applies to the Global X Social Media ETF, Global X
Lithium & Battery Tech ETF, Global X MSCI SuperDividend® EAFE ETF and Global
X Renewable Energy Producers ETF
The
investable universe of companies in which the Fund may invest may be limited. If
a company no longer meets the Index Provider’s criteria for inclusion in the
Underlying Index, the Fund may need to reduce or eliminate its holdings in that
company. The reduction or elimination of the Fund’s holdings in the company may
have an adverse impact on the liquidity of the Fund’s overall portfolio holdings
and on Fund performance.
Issuer
Risk
Issuer
Risk applies to each Fund
Issuer
risk is the risk that any of the individual companies that the Fund invests in
may perform badly, causing the value of its securities to decline. Poor
performance may be caused by poor management decisions, competitive pressures,
changes in technology, disruptions in supply, labor problems or shortages,
corporate restructurings, fraudulent disclosures or other factors. Issuers may,
in times of distress or on their own discretion, decide to reduce or eliminate
dividends, which would also cause their stock prices to decline.
Market
Risk
Market
Risk applies to each Fund
Market
risk is the risk that the value of the securities in which the Fund invests may
go up or down in response to the prospects of individual issuers and/or general
economic conditions. Turbulence in the financial markets and reduced market
liquidity may negatively affect issuers, which could have an adverse effect on
the Fund. If the securities held by the Fund experience poor liquidity, the Fund
may be unable to transact at advantageous times or prices, which may decrease
the Fund’s returns. In addition, there is a risk that policy changes by central
governments and governmental agencies, including the Federal Reserve or the
European Central Bank, which could include increasing interest rates, could
cause increased volatility in financial markets and lead to higher levels of
Fund redemptions from Authorized Participants, which could have a negative
impact on the Fund. Furthermore, local, regional or global events such as war,
acts of terrorism, the spread of infectious illness or other public health
issues, recessions, or other events could have a significant impact on the Fund
and its investments and trading of its Shares. For example, the rapid and global
spread of a highly contagious novel coronavirus respiratory disease, designated
COVID-19, has resulted in extreme volatility in the financial markets and severe
losses; reduced liquidity of many instruments; restrictions on international
and, in some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic. Some
sectors of the economy and individual issuers have experienced particularly
large losses. In addition, the COVID-19 pandemic may result in a sustained
economic downturn or a global recession, domestic and foreign political and
social instability, damage to diplomatic and international trade relations and
increased volatility and/or decreased liquidity in the securities markets. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns.
MLP
Tax Risk
MLP
Tax Risk applies to the Global X SuperDividend® U.S. ETF
Subject
to the application of the partnership audit rules, MLPs that elect to be taxed
as partnerships do not pay U.S. federal income tax at the partnership level.
Rather, each partner is allocated a share of the partnership’s income, gains,
losses, deductions and expenses. 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. Additionally, as a result of the Fund's exposure to
MLPs taxed as partnerships, a portion of the Fund’s distributions are expected
to be treated as a return of capital for tax purposes. Return of capital
distributions are not taxable income to you, but reduce your tax basis in your
Fund Shares. Such a reduction in tax basis will result in larger taxable gains
and/or lower tax losses on a subsequent sale of Fund Shares. Shareholders who
sell their Shares for less than they bought them may still recognize a gain due
to the reduction in tax basis. Shareholders who periodically receive the payment
of dividends or other distributions consisting of a return of capital may be
under the impression that they are receiving net profits from the Fund when, in
fact, they are not. Shareholders should not assume that the source of the
distributions is from the net profits of the Fund. To the extent that the
distributions paid to you constitute a return of capital, the Fund's assets will
decline. A decline in the Fund's assets may also result in an increase in the
portion of a Fund's expense ratio that is not subject to a unitary fee or any
other form of contractual cap, and over time the distributions paid in excess of
net distributions received could work to erode the Fund's net asset value.
New
Fund Risk
New
Fund Risk applies to the Global X Emerging Markets Internet & E-commerce
ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500
Covered Call & Growth ETF, Global X S&P Catholic Values Developed
ex-U.S. ETF and Global X S&P Catholic Values U.S. Aggregate Bond
ETF
The
Fund is a new fund, with no operating history or a limited operating history, as
applicable, which may result in additional risks for investors in the Fund.
There can be no assurance that the Fund will grow to or maintain an economically
viable size, in which case the Board of Trustees may determine to liquidate the
Fund. While shareholder interests will be the paramount consideration, the
timing of any liquidation may not be favorable to certain individual
shareholders. From time to time an Authorized Participant, a third-party
investor, the Adviser or another affiliate of the Adviser or the Fund may invest
in the Fund and hold its investment for a specific period of time in order to
facilitate commencement of the Fund’s operations or for the Fund to achieve size
or scale. There can be no assurance that any such entity would not redeem its
investment or that the size of the Fund would be maintained at such levels which
could negatively impact the Fund.
Non-Diversification
Risk
Non-Diversification
Risk applies to the Global X Social Media ETF, Global X Lithium & Battery
Tech ETF, Global X E-commerce ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X NASDAQ 100® Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X Renewable Energy Producers ETF and
Global X S&P Catholic Values Developed ex-U.S. ETF
The
Fund is classified as a “non-diversified” investment company under the 1940 Act.
This means that the Fund may invest most of its assets in securities issued by
or representing a small number of companies. As a result, the Fund may be more
susceptible to the risks associated with these particular companies, or to a
single economic, political or regulatory occurrence affecting these companies.
Operational
Risk
Operational
Risk applies to each Fund
The
Fund is exposed to operational risk arising from a number of factors, including
but not limited to human error, processing and communication errors, errors of
the Fund's service providers, counterparties or other third-parties, failed or
inadequate processes and technology or systems failures.
With
the increased use of technologies such as the internet to conduct business, the
Fund, Authorized Participants, service providers and the relevant listing
exchange are susceptible to operational, information security and related
“cyber” risks both directly and through their service providers. Similar types
of cyber security risks are also present for issuers of securities in which the
Fund invests, which could result in material adverse consequences for such
issuers and may cause the Fund’s investment in such portfolio companies to lose
value. Unlike many other types of risks faced by the Fund, these risks typically
are not covered by insurance. In general, cyber incidents can result from
deliberate attacks or unintentional events. Cyber incidents 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).
Recently, geopolitical tensions may have increased the scale and sophistication
of deliberate attacks, particularly those from nation-states or from entities
with nation-state backing. Cyber security failures by or breaches of the systems
of the Adviser and the Fund’s distributor and other service providers
(including, but not limited to, the Index Provider, fund accountants,
custodians, transfer agents and administrators), market makers, Authorized
Participants, or the issuers of securities in which the Fund invests, have the
ability to cause disruptions and impact business operations, potentially
resulting in: financial losses, interference with the Fund’s ability to
calculate its NAV, disclosure of confidential trading information, impediments
to trading, submission of erroneous trades or erroneous creation or redemption
orders, the inability of the Fund or its service providers 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, cyber-attacks may render records of Fund assets
and transactions, shareholder ownership of Fund Shares, and other data integral
to the functioning of the Fund inaccessible or inaccurate or incomplete.
Substantial costs may be incurred by the Fund in order to resolve or prevent
cyber incidents in the future. While the Fund has 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 and that
prevention and remediation efforts will not be successful. Furthermore, the Fund
cannot control the cyber security plans and systems put in place by service
providers to the Fund, issuers in which the Fund invests, the Index
Provider, market makers or Authorized Participants. The Fund and its
shareholders could be negatively impacted as a result.
The
Fund and the Adviser seek to reduce these operational risks through controls and
procedures. However, these measures do not address every possible risk and may
be inadequate for those risks that they are intended to address.
Options
Premium Tax Risk
Options
Premium Tax Risk applies to the Global X NASDAQ 100® Covered Call ETF, Global X
S&P 500® Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X
NASDAQ 100® Covered Call & Growth ETF and Global X S&P 500 Covered Call
& Growth ETF
The
Fund’s investment strategy of selling call options may increase the amount of
capital gain that the Fund realizes. As a result, the Fund will not be able to
designate a portion of its distributions as being eligible for lower rates of
tax in the hands of non-corporate shareholders (dividends that are commonly
referred to as “qualified dividend income”) or as being eligible for the
dividends received deduction when received by certain corporate shareholders.
For these reasons, a significant portion of income received from the Fund may be
subject to tax at effective tax rates that are higher than the rates that would
apply if the Fund were to engage in a different investment strategy. You should
consult your tax advisor as to the tax consequences of acquiring, owning and
disposing of Shares in the Fund.
Passive
Investment Risk
Passive
Investment Risk applies to each Fund
The
Fund is not actively managed and may be affected by a general decline in market
segments relating to the Underlying Index. The Fund invests in securities
included in, or representative of, the Underlying Index regardless of their
investment merits, and the Adviser does not otherwise attempt to take defensive
positions in declining markets. Unlike many investment companies, the Fund does
not seek to outperform its Underlying Index. Therefore, the Fund would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk
There
is no guarantee that the Fund will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk
The
Fund may not fully replicate its Underlying Index and may hold securities not
included in its Underlying Index. Therefore, the Fund is subject to management
risk. That is, the Adviser’s investment strategy, the implementation of which is
subject to a number of constraints, may cause the Fund to underperform the
market or its relevant benchmark or adversely affect the ability of the Fund to
achieve its investment objective. The ability of the Adviser to successfully
implement the Fund’s investment strategies will influence the Fund’s performance
significantly.
Tracking
Error Risk
Tracking
error is the divergence of the Fund's performance from that of the Underlying
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund's portfolio and those included in the
Underlying Index, pricing differences (including differences between a
security's price at the local market close and the Fund's valuation of a
security at the time of calculation of the Fund's NAV), transaction costs
incurred by the Fund, the Fund's holding of uninvested cash, differences in
timing of the accrual of or the valuation of dividends or interest, tax gains or
losses, changes to the Underlying Index or the costs to the Fund of complying
with various new or existing regulatory requirements. This risk may be
heightened during times of increased market volatility or other unusual market
conditions. Tracking error also may result because the Fund incurs fees and
expenses, while the Underlying Index does not. ETFs that track indices with
significant weight in emerging markets issuers may experience higher tracking
error than other ETFs that do not track such indices.
Prepayment
Risk
Prepayment
Risk applies to the Global X SuperDividend® ETF, Global X SuperDividend® U.S.
ETF, Global X SuperDividend® REIT ETF and Global X S&P Catholic Values U.S.
Aggregate Bond ETF
When
interest rates fall, certain obligations will be paid off by the obligor more
quickly than originally anticipated, and the Fund may have to invest the
proceeds in securities with lower yields.
Reliance
on Trading Partners Risk
Reliance
on Trading Partners Risk applies to the Global X Emerging Markets Internet &
E-commerce ETF and Global X S&P Catholic Values Developed ex-U.S.
ETF
The
Fund may invest in economies that are heavily dependent upon trading with key
partners. Any reduction in this trading, institution of tariffs or other trade
barriers or a slowdown in the economies of any of its key trading partners may
cause an adverse impact on the economies of the markets in which the Fund
invests.
Risks
Associated with Exchange-Traded Funds
Risks
Associated with Exchange-Traded Funds applies to each Fund
As
an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk
The
Fund has a limited number of financial institutions that may act as Authorized
Participants. Only Authorized Participants who have entered into agreements with
the Fund's distributor may engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, and no other Authorized Participant is able to step
forward to create and redeem in either of those cases, Shares may trade like
closed-end fund shares at a discount to NAV, and may possibly face trading halts
and/or delisting from the Exchange.
Large
Shareholder Risk
Certain
shareholders, including an Authorized Participant, the Adviser or an affiliate
of the Adviser, may own a substantial amount of the Fund’s Shares. Additionally,
from time to time an Authorized Participant, a third-party investor, the
Adviser, or an affiliate of the Adviser may invest in the Fund and hold its
investment for a specific period
of
time in order to facilitate commencement of the Fund’s operations or to allow
the Fund to achieve size or scale. Redemptions by large shareholders could
have a significant negative impact on the Fund. If a large shareholder were to
redeem all, or a large portion, of its Shares, there is no guarantee that the
Fund will be able to maintain sufficient assets to continue operations in which
case the Board of Trustees may determine to liquidate the Fund. In addition,
transactions by large shareholders may account for a large percentage of the
trading volume on the Exchange and may, therefore, have a material upward or
downward effect on the market price of the Shares.
Listing
Standards Risk
Under
continuous listing standards adopted by the Fund’s listing exchange, the Fund
will be required to confirm on an ongoing basis that the components of the
Underlying Index satisfy the applicable listing requirements. In the event that
the Underlying Index does not comply with the applicable listing requirements,
the Fund would be required to rectify such non-compliance by requesting that the
Index Provider modify the Underlying Index, adopting a new underlying index, or
obtaining relief from the SEC. Failure to rectify such non-compliance may result
in the Fund being delisted by the listing exchange. In addition, the Fund may
face the risk of being delisted if the Fund does not meet certain conditions of
the listing exchange. Any resulting liquidation of the Fund could cause the Fund
to incur elevated transaction costs and could result in negative tax
consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks
Absence
of Active Market
Although
Shares of the Fund are or will be listed for trading on a U.S. exchange and may
be listed on certain foreign exchanges, there can be no assurance that an active
trading market for the Shares will develop or be maintained.
Risks
of Secondary Listings
The
Fund's Shares may be listed or traded on U.S. and non-U.S. exchanges other than
the U.S. exchange where the Fund’s primary listing is maintained. There can be
no assurance that the Fund’s Shares will continue to trade on any such exchange
or in any market or that the Fund's Shares will continue to meet the
requirements for listing or trading on any exchange or in any market. The Fund's
Shares may be less actively traded in certain markets than others, and investors
are subject to the execution and settlement risks and market standards of the
market where they or their brokers direct their trades for execution. Certain
information available to investors who trade Shares on a U.S. exchange during
regular U.S. market hours may not be available to investors who trade in other
markets, which may result in secondary market prices in such markets being less
efficient.
Secondary
Market Trading Risk
Shares
of the Fund may trade in the secondary market on days when the Fund does not
accept orders to purchase or redeem Shares. On such days, Shares may trade in
the secondary market with more significant premiums or discounts than might be
experienced on days when the Fund accepts purchase and redemption orders.
Secondary
market trading in Fund Shares may be halted by a stock exchange because of
market conditions or other reasons. In addition, trading in Fund Shares on a
stock exchange or in any market may be subject to trading halts caused by
extraordinary market volatility pursuant to "circuit breaker" rules on the stock
exchange or market. There can be no assurance that the requirements necessary to
maintain the listing or trading of Fund Shares will continue to be met or will
remain unchanged.
Shares
of the Fund May Trade at Prices Other Than NAV
Shares
of the Fund may trade at, above or below NAV. The per share NAV of the Fund will
fluctuate with changes in the market value of the Fund’s holdings. The trading
prices of Shares will fluctuate in accordance with changes in the Fund's NAV as
well as market supply and demand. The trading prices of the Fund's Shares may
deviate significantly from NAV during periods of market volatility or when the
Fund has relatively few assets or experiences a lower trading volume. Any of
these factors may lead to the Fund's Shares trading at a premium or discount to
NAV. While the creation/redemption feature is designed to make it likely that
Shares normally will trade close to the Fund’s NAV, market prices are not
expected to correlate exactly with the Fund's NAV due to timing reasons as well
as market supply and demand factors. In addition, disruptions to creations and
redemptions or the existence of extreme market volatility may result in trading
prices that differ significantly from NAV. If a shareholder purchases at a time
when the
market
price is at a premium to the NAV or sells at a time when the market price is at
a discount to the NAV, the shareholder may sustain losses.
Since
foreign exchanges may be open on days when the Fund does not price Shares, the
value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell Shares.
Costs
of Buying or Selling Fund Shares
Buying
or selling Fund Shares involves two types of costs that apply to all securities
transactions. When buying or selling Shares of the Fund through a broker, you
will likely incur a brokerage commission or other charges imposed by brokers as
determined by that broker. In addition, you may incur the cost of the "spread" -
that is, the difference between what professional investors are willing to pay
for Fund Shares (the "bid" price) and the market price at which they are willing
to sell Fund Shares (the "ask" price). Because of the costs inherent in buying
or selling Fund Shares, frequent trading may detract significantly from
investment results and an investment in Fund Shares may not be advisable for
investors who anticipate regularly making small investments.
Risks
Related to Stock Connect Programs
Risks
Related to Stock Connect Programs applies to the Global X Lithium & Battery
Tech ETF and Global X MSCI SuperDividend® Emerging Markets ETF
Investing
in securities through Stock Connect Programs is subject to trading, clearance,
settlement and other procedures, which could pose risks to the Fund. The Stock
Connect Programs are subject to daily and aggregate quota limitations, which
limit 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. The daily
quota is not specific to the Fund and is utilized on a first-come-first-serve
basis. As such, buy orders via the Stock Connect Programs could be rejected once
the daily quota is exceeded. The daily quota may thereby restrict the Fund’s
ability to invest through Stock Connect Programs on a timely basis, which could
affect the Fund’s ability to effectively pursue its investment strategy. The
daily quota is also subject to change. It is possible for securities eligible to
be purchased via the Stock Connect Programs to lose such designation, which
could impact the Fund's ability to pursue its investment strategy.
In
order to comply with applicable local market rules and to facilitate orderly
operations of the Fund, including the timely settlement of Stock Connect Program
trades placed by or on behalf of the Fund, the Fund utilizes an operating model
that may reduce the risks of trade failures; however, it will also allow Stock
Connect Program trades to be settled without the prior verification by the Fund.
Accordingly, this operating model may subject the Fund to additional risks,
including an increased risk of inadvertently exceeding certain trade or other
restrictions or limits placed on the Fund and/or its affiliates, and a
heightened risk of erroneous trades, which may negatively impact the Fund.
Additionally, the Shenzen and Shanghai markets may operate when the Stock
Connect Programs are not active, and consequently the prices of shares held via
Stock Connect Programs may fluctuate at times when the Fund is unable to add to
or exit its positions.
The
Stock Connect Programs are new, and the effect of the introduction of large
numbers of foreign investors on the market for trading Chinese-listed securities
is not well understood. Regulations, such as limitations on redemptions or
suspension of trading, may adversely impact the value of the Fund’s investments.
The Fund's investments in A-Shares though the Stock Connect Program are held by
its custodian in accounts in 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
the 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 no
guarantee that the Shenzen, Shanghai, and Hong Kong Stock Exchanges will
continue to support the Stock Connect Programs in the future. The securities
regimes and legal systems of China and Hong Kong differ significantly, and
issues may arise based on these differences. Different fees, costs and taxes are
imposed on foreign investors acquiring securities through Stock Connect
Programs, and these fees, costs and taxes may be higher than comparable fees,
costs and taxes imposed on owners of other Chinese securities providing similar
investment exposure.
Securities
Lending Risk
Securities
Lending Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X E-commerce ETF, Global X SuperDividend® ETF, Global X
SuperDividend® U.S. ETF, Global X SuperDividend® REIT ETF, Global X SuperIncome™
Preferred ETF, Global X Renewable Energy Producers ETF and Global X Guru® Index
ETF
The
Fund may engage in lending its portfolio securities. The Fund may lend its
portfolio securities to the extent noted under Fund Summaries-Principal
Investment Strategies. In connection with such loans, the Fund receives liquid
collateral equal to at least 102% of the value of domestic equity securities and
ADRs and 105% of the value of the foreign equity securities (other than ADRs)
being lent. This collateral is marked-to-market on a daily basis. Although the
Fund will receive collateral in connection with all loans of its securities
holdings, the Fund would be exposed to a risk of loss should a borrower default
on its obligation to return the borrowed securities (e.g., the loaned securities
may have appreciated beyond the value of the collateral held by the Fund). In
addition, the Fund will bear the risk of loss of any cash collateral that it
invests. Also, as securities on loan may not be voted by the Fund, there is a
risk that the Fund may not be able to recall the securities in sufficient time
to vote on material proxy matters.
Trading
Halt Risk
Trading
Halt Risk applies to each Fund
An
exchange or market may close or issue trading halts on specific securities, or
the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Turnover
Risk
Turnover
Risk applies to the Global X NASDAQ 100® Covered Call ETF, Global X S&P 500®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X S&P 500 Covered Call & Growth
ETF and Global X Guru® Index ETF
The
Fund may engage in frequent and active trading, which may significantly increase
the Fund’s portfolio turnover rate. At times, the Fund may have a portfolio
turnover rate substantially greater than 100%. For example, a portfolio turnover
rate of 300% is equivalent to the Fund buying and selling all of its securities
three times during the course of a year. A high portfolio turnover rate would
result in high brokerage costs for the Fund, may result in higher taxes when
shares are held in a taxable account and lower Fund performance.
Valuation
Risk
Valuation
Risk applies to each Fund
The
sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security and may differ from the value used by the Underlying
Index, particularly for securities that trade in low value or volatile markets
or that are valued using a fair value methodology (such as during trading
halts). Because non-U.S. exchanges may be open on days when the Fund does not
price its Shares, the value of the securities in the Fund's portfolio may change
on days when shareholders will not be able to purchase or sell the Fund's
Shares.
A
FURTHER DISCUSSION OF OTHER RISKS
Each
Fund may also be subject to certain other risks associated with its investments
and investment strategies.
Exclusion
from the Definition of a Commodity Pool Operator Risk
With
respect to the Fund, the Adviser has claimed an exclusion from the definition of
“commodity pool operator” (“CPO”) under the Commodity Exchange Act, as amended
(“CEA”), and the rules of the Commodity Futures Trading Commission (“CFTC”) and,
therefore, is not subject to CFTC registration or regulation as a CPO. In
addition, the Adviser is relying upon a related exclusion from the definition of
“commodity trading advisor” (“CTA”) under the CEA and the rules of the CFTC. The
terms of the CPO exclusion require the Fund, among other things, to adhere to
certain limits on its investments in “commodity interests.” Commodity interests
include commodity futures, commodity options and swaps. Because the Adviser and
the Fund intend to comply with the terms of the CPO exclusion, the Fund may, in
the future, need to adjust its investment strategies, consistent with its
investment objective, to limit its investments in these types of instruments.
The Fund is not intended as a vehicle for trading in the commodity futures,
commodity options or swaps markets. The CFTC has neither reviewed nor approved
the Adviser’s reliance on these exclusions, or the Fund, its investment
strategies or this Prospectus.
Leverage
Risk
Under
the 1940 Act, the Fund is permitted to borrow from a bank up to 33 1/3% of its
net assets for short term or emergency purposes. The Fund may borrow money at
fiscal quarter end to maintain the required level of diversification to qualify
as a regulated investment company ("RIC") for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"). As a result, the 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
Fund. If the value of the Fund's assets increases, then leveraging would cause
the Fund's NAV to increase more sharply than it would have had the Fund not
leveraged. Conversely, if the value of the Fund's assets decreases, leveraging
would cause the Fund's NAV to decline more sharply than it otherwise would have
had the Fund not leveraged. The Fund may incur additional expenses in connection
with borrowings.
Qualification
as a Regulated Investment Company Risk
The
Fund must meet a number of diversification requirements to qualify as a RIC
under Section 851 of the Code and, if qualified, to continue to qualify. If the
Fund experiences difficulty in meeting those requirements for any fiscal
quarter, it might enter into borrowings in order to increase the portion of the
Fund’s total assets represented by cash, cash items, and U.S. government
securities shortly thereafter and, as of the close of the following fiscal
quarter, to attempt to meet the requirements. However, the Fund may incur
additional expenses in connection with any such borrowings, and increased
investments by the Fund in cash, cash items, and U.S. government securities
(whether the Fund makes such investments from borrowings) are likely to reduce
the Fund’s return to investors.
Tax
Treaty Reclaims Uncertainty
The
Fund may accrue for certain tax reclaims eligible under current bilateral double
taxation treaties between the United States government and foreign
governments. It is possible that the Fund ultimately may not be able to
recover some or all of the outstanding tax reclaims, which may adversely affect
the valuation of the Fund.
PORTFOLIO
HOLDINGS INFORMATION
A
description of the policies and procedures of Global X Funds®
(the "Trust") with respect to the disclosure of the Funds’ portfolio securities
is available in the Funds’ combined Statement of Additional Information (“SAI”).
The top holdings of each Fund and Fund Fact Sheets providing information
regarding each Fund’s top holdings can be found at www.globalxetfs.com and may
be requested by calling 1-888-493-8631.
FUND
MANAGEMENT
Investment
Adviser
Global
X Management Company LLC (the "Adviser") serves as the investment adviser and
the administrator for the Funds. Subject to the supervision of the Trust's Board
of Trustees, the Adviser is responsible for managing the investment activities
of the Funds and the Funds' business affairs and other administrative matters.
The Adviser has been a registered investment adviser since 2008. The Adviser is
a Delaware limited liability company with its principal offices located at 605
3rd Avenue, 43rd Floor, New York, New York 10158. As of February 1, 2021,
the Adviser provided investment advisory services for assets of approximately
$25 billion.
Pursuant
to a Supervision and Administration Agreement and subject to the general
supervision of the Board of Trustees, the Adviser provides or causes to be
furnished, all supervisory, administrative and other services reasonably
necessary for the operation of the Funds and also bears the costs of various
third-party services required by the Funds, including audit, certain custody,
portfolio accounting, legal, transfer agency and printing costs. The Supervision
and Administration Agreement also requires the Adviser to provide investment
advisory services to the Funds pursuant to an Investment Advisory Agreement.
Each
Fund pays the Adviser a fee ("Management Fee") in return for providing
investment advisory, supervisory and administrative services under an all-in fee
structure. During the fiscal year ended October 31, 2020, the Funds listed
below were not operational. The Management Fee for each Fund is at an annual
rate (stated as a percentage of the average daily net assets of the Fund) as
follows:
|
|
|
|
|
|
Fund |
Management
Fee |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF |
0.25% |
Global
X Emerging Markets Internet & E-commerce ETF |
0.65% |
Each
Fund pays the Adviser a fee (“Management Fee”) in return for providing
investment advisory, supervisory and administrative services under an all-in fee
structure. For the fiscal year ended October 31, 2020, the Funds paid a monthly
Management Fee to the Adviser at the following annual rates (stated as a
percentage of the average daily net assets of each Fund taken separately):
|
|
|
|
|
|
|
|
|
Fund |
|
Management
Fee
|
Global
X Lithium & Battery Tech ETF |
|
0.75% |
Global
X SuperDividend®
ETF |
|
0.58% |
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% |
Global
X S&P 500®
Covered Call ETF |
|
0.65%* |
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 |
|
0.68%** |
Global
X Russell 2000 Covered Call ETF |
|
0.60% |
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% |
*
The Board of Trustees of the Trust voted to approve a lower Management Fee for
the Global X S&P 500®
Covered Call ETF of 0.60% effective August 21, 2020. Prior to that, the Global X
S&P 500®
Covered Call ETF was subject to a Management Fee of 0.65%.
**The
Board of Trustees of the Trust voted to approve lower Management Fees for the
Global X E-commerce ETF of 0.50% effective November 18, 2019. Prior to that, the
Global X E-commerce ETF was subject to a Management Fee of 0.68%.
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 ratio of a Fund, such as taxes, brokerage fees, commissions and other
transaction expenses, interest and extraordinary expenses (such as litigation
and indemnification expenses). 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.
Pursuant
to an Expense Limitation Agreement, the Adviser has contractually agreed to
reimburse or waive fees and/or limit expenses for the Global X S&P
500®
Covered Call ETF to the extent necessary to assure that the operating expenses
of the Global X S&P 500®
Covered Call ETF (exclusive of taxes, 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 S&P 500®
Covered Call ETF per year until at least March 1, 2022.
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, 2022.
The
Adviser or its affiliates may pay compensation, out of profits derived from the
Adviser’s Management Fee or other resources and not as an additional charge to
the Funds, to certain financial institutions (which may include banks,
securities dealers and other industry professionals) for the sale and/or
distribution of Fund Shares or the retention and/or servicing of Fund investors
and Fund Shares (“revenue sharing”). These payments are in addition to any other
fees described in the fee table or elsewhere in the Prospectus or SAI. Examples
of “revenue sharing” payments include, but are not limited to, payments to
financial institutions for “shelf space” or access to a third party platform or
fund offering list or other marketing programs, including, but not limited to,
inclusion of the Funds on preferred or recommended sales lists, mutual fund
“supermarket” platforms and other formal sales programs; granting the Adviser
access to the financial institution’s sales force; granting the Adviser access
to the financial institution’s conferences and meetings; assistance in training
and educating the financial institution’s personnel; and obtaining other forms
of marketing support. The level of revenue sharing payments made to financial
institutions may be a fixed fee or based upon one or more of the following
factors: gross sales, current assets and/or number of accounts of the Fund
attributable to the financial institution, or other factors as agreed to by the
Adviser and the financial institution or any combination thereof. The amount of
these revenue sharing payments is determined at the discretion of the Adviser
from time to time, may be substantial, and may be different for different
financial institutions depending upon the services provided by the financial
institution. Such payments may provide an incentive for the financial
institution to make Shares of the Funds available to its customers and may allow
the Funds greater access to the financial institution’s customers.
Approval
of Advisory Agreement
Discussions
regarding the basis for the Board of Trustees' approval of the Supervision and
Administration Agreement and the related Investment Advisory Agreement for each
Fund (other than the Global X Emerging Markets Internet & E-commerce ETF and
the Global X S&P Catholic Values U.S. Aggregate Bond ETF) are available in
the Funds' Semi-Annual Report to Shareholders for the fiscal half-year ended
April 30 and/or Annual Report to Shareholders for the fiscal year ended October
31. A discussion regarding the basis for the Board of Trustees' approval of the
Supervision and Administration Agreement and the related Investment Advisory
Agreement for the other Funds mentioned above will be available in the Funds'
first Semi-Annual or Annual Report to shareholders for the period ended April 30
or October 31, respectively.
Portfolio
Management
The
Portfolio Managers who are currently responsible for the day-to-day management
of each Fund's portfolio are John Belanger, Nam To, Wayne Xie, Kimberly Chan and
Vanessa Yang.
John
Belanger:
John Belanger, CFA, joined the Adviser in 2020. He currently holds the positions
of Senior Vice President, Head of Product Management, Head of Portfolio
Management & Portfolio Administration and Chief Operating Officer with the
Adviser. Mr. Belanger served as Chief Operating Officer of REX Shares, LLC from
2014-2018. Mr. Belanger graduated from Rice University with a Bachelor of Arts
in Mathematics and Philosophy in 2004 and graduated from the University of Texas
School of Law in 2008.
Nam
To:
Nam To, CFA joined the Adviser in July 2017. Prior to that, Mr. To was a Global
Economics Research Analyst at Bunge Limited from 2014 to 2017. Mr. To received
his Bachelor of Arts in Philosophy and Economics from Cornell University in
2014.
Wayne
Xie:
Wayne Xie joined the Adviser in July 2018 as a Portfolio Management Associate.
Previously, Mr. Xie was an Analyst at VanEck Associates on the Equity ETF
Investment Management team from 2010 to 2018 and a Portfolio Administrator at
VanEck Associates from 2007 to 2010. Mr. Xie received his Bachelor of Science
from the State University of New York at Buffalo in 2002.
Kimberly
Chan:
Kimberly Chan joined the Adviser in June 2018 and is a Portfolio Management
Associate. Previously, Ms. Chan was a U.S. Associate Trader at Credit Agricole
from 2016 to 2018, and an Investment Analyst at MetLife Investments from 2015 to
2016. Ms. Chan received her Bachelor of Science from New York University in
2015.
Vanessa
Yang:
Vanessa Yang, Portfolio Management Associate, joined the Adviser in 2016 as a
Portfolio Administrator. She was appointed to the portfolio management team in
June 2019. Previously, Ms. Yang was a Portfolio Administrator at VanEck
Associates from 2011 to 2014. Ms. Yang received her MS in Financial Engineering
from Drucker School of Management in 2010 and her BS in Economics from Guangdong
University of Foreign Studies in 2008.
The
SAI provides additional information about the Portfolio Managers’ compensation
structure, other accounts managed by the Portfolio Managers, and the Portfolio
Managers' ownership of Shares of the Funds.
DISTRIBUTOR
SEI
Investments Distribution Co. ("Distributor") distributes Creation Units for the
Funds on an agency basis. The Distributor does not maintain a secondary market
in Shares. The Distributor has no role in determining the policies of the Funds
or the securities that are purchased or sold by each Fund. The Distributor’s
principal address is One Freedom Valley Drive, Oaks, PA 19456. The Distributor
is not affiliated with the Adviser.
BUYING
AND SELLING FUND SHARES
Shares
of the Funds trade on a national securities exchange and in the secondary market
during the trading day. Shares can be bought and sold throughout the trading day
like other shares of publicly-traded securities. There is no minimum investment
for purchases made on a national securities exchange. When buying or selling
Shares through a broker, you will incur customary brokerage commissions and
charges. In addition, you will also incur the cost of the “spread,” which is the
difference between what professional investors are willing to pay for Shares
(the “bid” price) and the price at which they are willing to sell Shares (the
“ask” price). The commission is frequently a fixed amount and may be a
significant proportional cost for investors seeking to buy or sell small amounts
of Shares. The spread with respect to Shares varies over time based on a Fund’s
trading volume and market liquidity and is generally lower if a Fund has
significant trading volume and market liquidity and higher if a Fund has little
trading volume and market liquidity. Because of the costs of buying and selling
Shares, frequent trading may reduce investment return.
Shares
of a Fund may be acquired or redeemed directly from the Fund only by Authorized
Participants (as defined in the SAI) and only in Creation Units or multiples
thereof, as discussed in the "Creations and Redemptions" section in the SAI.
Except for the Global X Lithium & Battery Tech ETF, Global X SuperDividend®
U.S. ETF, Global X MSCI SuperDividend® Emerging Markets ETF and Global X
Renewable Energy Producers ETF, the Funds anticipate regularly meeting
redemption requests primarily through in-kind redemptions. However, the Funds
reserve the right to pay redemption proceeds to an Authorized Participant in
cash, consistent with the Trust’s exemptive relief. Cash used for redemptions
will be raised from the sale of portfolio assets or may come from existing
holdings of cash or cash equivalents.
Shares
generally trade in the secondary market in amounts less than a Creation Unit.
Shares of the Funds trade under the trading symbol listed for each Fund in the
Fund Summaries section of the Prospectus.
The
Funds are listed on a national securities exchange, which is open for trading
Monday through Friday and is closed on weekends and the following holidays, as
observed: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Book
Entry
Shares
of the Funds are held in book-entry form, which means that no stock certificates
are issued. The Depository Trust Company (“DTC”) or its nominee is the record
owner of all outstanding Shares and is recognized as the owner of all Shares for
all purposes.
Investors
owning Shares are beneficial owners as shown on the records of DTC or its
participants. DTC serves as the securities depository for all Shares.
Participants include DTC, securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any rights as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any securities that you hold in
book entry or “street name” form.
FREQUENT
TRADING
Unlike
frequent trading of shares of a traditional open-end mutual fund (i.e., not
exchange-traded shares), frequent trading of Shares on the secondary market does
not disrupt portfolio management, increase a Fund's trading costs, lead to
realization of capital gains, or otherwise harm Fund shareholders because these
trades do not involve a Fund directly. A few institutional investors are
authorized to purchase and redeem the Funds' Shares directly with the Funds.
When these trades are effected in-kind (i.e.,
for securities, and not for cash), they do not cause any of the harmful effects
(noted above) that may result from frequent cash trades. Moreover, each Fund
imposes transaction fees on in-kind purchases and redemptions of the Fund
intended to cover the custodial and other costs incurred by the Fund in
effecting in-kind trades. These fees increase if an investor
substitutes
cash in part or in whole for securities, reflecting the fact that the Fund’s
trading costs increase in those circumstances, although transaction fees are
subject to certain limits and therefore may not cover all related costs incurred
by a Fund. For these reasons, the Board of Trustees has determined that it is
not necessary to adopt policies and procedures to detect and deter frequent
trading and market-timing in Shares of the Funds.
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 a Fund, 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 a Fund. 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 of a Fund.
DIVIDENDS
AND DISTRIBUTIONS
Dividends
from net investment income, including any net foreign currency gains, generally
are declared and paid at least annually and any net realized capital gains are
distributed at least annually. In order to improve tracking error or comply with
the distribution requirements of the Code, dividends may be declared and paid
more frequently than annually for a Fund.
Dividends
and other distributions on Shares are distributed on a pro rata basis to
beneficial owners of such Shares. Dividend payments are made through DTC
participants to beneficial owners then of record with proceeds received from a
Fund. Dividends and security gain distributions are distributed in U.S. dollars
and cannot be automatically reinvested in additional Shares.
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 a Fund 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
purchased in the secondary market.
INVESTMENTS
BY INVESTMENT COMPANIES
Section
12(d)(1) of the 1940 Act restricts investments by investment companies in the
securities of other investment companies, including shares of the Fund.
Registered investment companies and unit investment trusts that enter into a
participation agreement with the Trust ("Investing Funds") are permitted to
invest in certain Global X Funds beyond the limits set forth in Section 12(d)(1)
of the 1940 Act subject to certain terms and conditions set forth in an SEC
exemptive order issued to the Trust. With respect to the Global X Russell 2000
Covered Call ETF, which invests in Underlying ETFs, Investing Funds must adhere
to the limits set forth in Section 12(d)(1) when investing in the
Fund.
TAXES
The
following is a summary of certain tax considerations that may be relevant to an
investor in a Fund. Except where otherwise indicated, the discussion relates to
investors who are individual United States citizens or residents and is based on
current tax law. You should consult your tax advisor for further information
regarding federal, state, local and/or foreign tax consequences relevant to your
specific situation.
Distributions.
Each Fund receives income and gains on its investments. The income, less
expenses incurred in the operation of a Fund, constitutes the Fund's net
investment income from which dividends may be paid to you. Each Fund intends to
qualify as a RIC under the Code for federal tax purposes and to distribute to
shareholders substantially all of its net investment income and net capital gain
each year. Except as otherwise noted below, you will generally be subject to
federal income tax on a Fund’s distributions to you. For federal income tax
purposes, Fund distributions attributable to short-term capital gains and net
investment
income are taxable to you as ordinary income. Distributions attributable to net
capital gains (the excess of net long-term capital gains over net short-term
capital losses) of a Fund generally are taxable to you as long-term capital
gains. This is true no matter how long you own your Shares or whether you take
distributions in cash or additional Shares. The maximum long-term capital gain
rate applicable to individuals is 20%.
Distributions
of “qualifying dividends” will also generally be taxable to you at long-term
capital gain rates as long as certain requirements are met. In general, if 95%
or more of the gross income of a Fund (other than net capital gain) consists of
dividends received from domestic corporations or “qualified” foreign
corporations (“qualifying dividends”), then all distributions received by
individual shareholders of a Fund will be treated as qualifying dividends. But
if less than 95% of the gross income of a Fund (other than net capital gain)
consists of qualifying dividends, then distributions received by individual
shareholders of a Fund will be qualifying dividends only to the extent they are
derived from qualifying dividends earned by such Fund. For the lower rates to
apply, you must have owned your Shares for at least 61 days during the 121-day
period beginning on the date that is 60 days before such Fund’s ex-dividend date
(and such Fund will need to have met a similar holding period requirement with
respect to the Shares of the corporation paying the qualifying dividend). The
amount of a Fund’s distributions that qualify for this favorable treatment may
be reduced as a result of such Fund’s securities lending activities (if any), a
high portfolio turnover rate or investments in debt securities or
“non-qualified” foreign corporations. In addition, whether distributions
received from foreign corporations are qualifying dividends will depend on
several factors including the country of residence of the corporation making the
distribution. Accordingly, distributions from many of the Funds’ holdings may
not be qualifying dividends.
A
portion of distributions paid to shareholders that are corporations may also
qualify for the dividends-received deduction for corporations, subject to
certain holding period requirements and debt financing limitations. The amount
of the dividends qualifying for this deduction may, however, be reduced as a
result of such Fund’s securities lending activities, by a high portfolio
turnover rate or by investments in debt securities or foreign corporations.
Distributions
from a Fund will generally be taxable to you in the year in which they are paid,
with one exception. Dividends and distributions declared by a Fund in October,
November or December and paid in January of the following year are taxed as
though they were paid on December 31.
You
should note that if you buy Shares of a Fund shortly before it makes a
distribution, the distribution will be fully taxable to you even though, as an
economic matter, it simply represents a return of a portion of your investment.
This adverse tax result is known as “buying into a dividend.”
You
will be informed of the amount of your ordinary income dividends, qualifying
dividend income, and capital gain distributions at the time they are paid, and
you will be advised of the tax status for federal income tax purposes shortly
after the close of each calendar year. If you have not held Shares for a full
year, a Fund may designate and distribute to you, as ordinary income or capital
gain, a percentage of income that is not equal to the actual amount of such
income earned during the period of your investment in such Fund.
A
Fund’s investments in partnerships, including in partnerships defined as
Qualified Publicly Traded Partnerships for tax purposes, may result in such Fund
being subject to state, local or foreign income, franchise or withholding tax
liabilities.
Qualified
REIT Dividends.
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.
Excise
Tax Distribution Requirements.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
RIC’s “required distribution” for the calendar year ending within the RIC’s
taxable year over the “distributed amount” for such calendar year. The term
“required distribution” means the sum of (a) 98% of ordinary income (generally
net investment income) for the calendar year, (b) 98.2% of capital gain (both
long-term and short-term) for the one-year period ending on October 31 (or
December 31, if a Fund so elects), and (c) the sum of any untaxed, undistributed
net investment income and net capital gains of the RIC for prior periods. The
term “distributed amount” generally means the sum of (a) amounts actually
distributed by a Fund from its current year’s ordinary income and capital gain
net income and (b) any amount on which a Fund
pays
income tax for the taxable year ending in the calendar year. Although each Fund
intends to distribute its net investment income and net capital gains so as to
avoid excise tax liability, a Fund may determine that it is in the interest of
shareholders to distribute a lesser amount. The Funds intend to declare and pay
these amounts in December (or in January, which must be treated by you as
received in December) to avoid these excise taxes but can give no assurances
that their distributions will be sufficient to eliminate all such taxes.
Foreign
Currencies.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time a Fund accrues interest or other receivables or
accrues expenses or other liabilities denominated in a foreign currency, and the
time such Fund actually collects such receivables or pays such liabilities, are
treated as ordinary income or ordinary loss. Similarly, gains or losses from the
disposition of foreign currencies, from the disposition of debt securities
denominated in a foreign currency, or from the disposition of a forward foreign
currency contract which are attributable to fluctuations in the value of the
foreign currency between the date of acquisition of the asset and the date of
disposition also are treated as ordinary income or loss. These gains or losses,
referred to under the Code as “section 988” gains or losses, increase or
decrease the amount of a Fund’s investment company taxable income available to
be distributed to its shareholders as ordinary income, rather than increasing or
decreasing the amount of such Fund’s net capital gain.
Foreign
Taxes.
Each Fund will be subject to foreign withholding taxes with respect to certain
payments received from sources in foreign countries. If at the close of the
taxable year more than 50% in value of a Fund’s assets consists of stock in
foreign corporations, such Fund will be eligible to make an election to treat a
proportionate amount of those taxes as constituting a distribution to each
shareholder, which would allow you either (subject to certain limitations) (1)
to credit that proportionate amount of taxes against your U.S. Federal income
tax liability as a foreign tax credit or (2) to take that amount as an itemized
deduction. If a Fund is not eligible or chooses not to make this election, it
will be entitled to deduct such taxes in computing the amounts it is required to
distribute.
Sales
and Exchanges.
The sale of Shares is a taxable event on which a gain or loss is recognized. The
amount of gain or loss is based on the difference between your tax basis in
Shares and the amount you receive for them upon disposition. Generally, you will
recognize long-term capital gain or loss if you have held your Shares for over
one year at the time you sell or exchange them. Gains and losses on Shares held
for one year or less will generally constitute short-term capital gains, except
that a loss on Shares held six months or less will be re-characterized as a
long-term capital loss to the extent of any long-term capital gain distributions
that you have received on the Shares. A loss realized on a sale or exchange of
Shares may be disallowed under the so-called “wash sale” rules to the extent the
Shares disposed of are replaced with other Shares of that same Fund within a
period of 61 days beginning 30 days before and ending 30 days after the Shares
are disposed of, such as pursuant to a dividend reinvestment in Shares of a
Fund. If disallowed, the loss will be reflected in an adjustment to the basis of
the Shares acquired.
Taxes
on Purchase and Redemption of Creation Units. An
Authorized Participant who exchanges equity 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 equity
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 Internal Revenue Service
(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 such Creation Units are held as a capital
asset.
IRAs
and Other Tax-Qualified Plans.
The one major exception to the preceding tax principles is that distributions
on, and sales, exchanges and redemptions of, Shares held in an IRA or other
tax-qualified plan are not currently taxable but may be taxable when funds are
withdrawn from the tax qualified plan, unless the Shares were purchased with
borrowed funds.
Medicare
Tax. An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from a
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds a threshold amount.
This Medicare tax, if applicable, is reported by you on, and paid with, your
federal income tax return.
Backup
Withholding.
Each Fund will be required in certain cases to withhold and remit to the U.S.
Treasury backup withholding at the applicable rate on dividends and gross sales
proceeds paid to any shareholder (i) who has either provided an incorrect tax
identification number or no number at all, (ii) who is subject to backup
withholding by the IRS, or (iii) who has failed to certify to a Fund, when
required to do so, that he or she is not subject to backup withholding or is an
“exempt recipient.”
Cost
Basis Reporting.
Federal law requires that shareholders' cost basis, gain/loss, and holding
period be reported to the IRS and to shareholders on the 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.
For
those securities defined as "covered" under current IRS cost basis tax reporting
regulations, accurate cost basis and tax lot information must be maintained for
tax reporting purposes. This information is not required for Shares that are not
"covered." The Funds and their 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. Shareholders should contact their financial
intermediaries with respect to reporting of cost basis and available elections
for their accounts.
State
and Local Taxes.
You may also be subject to state and local taxes on income and gain attributable
to your ownership of Shares. You should consult your tax advisor regarding the
tax status of distributions in your state and locality.
U.S.
Tax Treatment of Foreign Shareholders.
A non-U.S. shareholder generally will not be subject to U.S. withholding tax on
gain from the redemption of Shares or on capital gain dividends (i.e., dividends
attributable to long-term capital gains of a Fund) unless, in the case of a
shareholder who is a non-resident alien individual, the shareholder is present
in the United States for 183 days or more during the taxable year and certain
other conditions are met. Non-U.S. shareholders generally will be subject to
U.S. withholding tax at a rate of 30% (or a lower treaty rate, if applicable) on
distributions by a Fund of net investment income, other ordinary income, and the
excess, if any, of net short-term capital gain over net long-term capital loss
for the year, unless the distributions are effectively connected with a U.S.
trade or business of the shareholder. Exemptions from U.S. withholding tax are
provided for certain capital gain dividends paid by a Fund from net long-term
capital gains, if any, interest-related dividends paid by the Fund from its
qualified net interest income from U.S. sources and short-term capital gain
dividends, if such amounts are reported by the Fund. Non-U.S. shareholders are
subject to special U.S. tax certification requirements to avoid backup
withholding and claim any treaty benefits. Non-U.S. shareholders should consult
their tax advisors regarding the U.S. and foreign tax consequences of investing
in a Fund.
Other
Reporting and Withholding Requirements. Under
the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax is
imposed on income dividends paid by a 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 may 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.
Consult
Your Tax Professional.
Your investment in a Fund could have additional tax consequences. You should
consult your tax professional for information regarding all tax consequences
applicable to your investments in a Fund. More tax information relating to the
Funds is also provided in the SAI. This short summary is not intended as a
substitute for careful tax planning.
DETERMINATION
OF NET ASSET VALUE
Each
Fund calculates its NAV as of the regularly scheduled close of business of the
New York Stock Exchange (“NYSE”) (normally 4:00 p.m. Eastern time) on each day
that the NYSE is open for business, based on prices at the time of closing,
provided that 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
make a two-way market in such currencies (or a data service provider based on
quotations received from such banks or dealers). The NAV of each Fund is
calculated by dividing the value of the net assets of such Fund (i.e., the value
of its total assets less total liabilities) by the total number of outstanding
Shares, generally rounded to the nearest cent. The price of Fund Shares is based
on market price, and because ETF shares trade at market prices rather than NAV,
Shares may trade at a price greater than NAV (a premium) or less than NAV (a
discount).
In
calculating a Fund’s NAV, the Fund’s investments are generally valued using
market valuations. 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, provided the amortized cost is approximately the value on
current sale of the security. 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. A
Fund 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 the 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 NAV 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.
Because
foreign markets may be open on different days than the days during which a
shareholder may purchase Shares, the value of a Fund’s investments may change on
days when shareholders are not able to purchase Shares. Additionally, due to
varying holiday schedules, redemption requests made on certain dates may result
in a settlement period exceeding seven calendar days.
The
value of assets denominated in foreign currencies is converted into U.S. dollars
using exchange rates deemed appropriate by the Adviser. Any use of a different
rate from the rates used by each Index Provider may adversely affect a Fund’s
ability to track its Underlying Index.
The
right of redemption may be suspended or the date of payment postponed with
respect to a Fund (1) for any period during which the NYSE or listing exchange
is closed (other than customary weekend and holiday closings), (2) for any
period during which trading on the NYSE or listing exchange is suspended or
restricted, (3) for any period during which an emergency exists as a result of
which disposal of the Fund’s portfolio securities or determination of its NAV is
not reasonably practicable, or (4) in such other circumstances as the SEC
permits.
PREMIUM/DISCOUNT
AND SHARE INFORMATION
Once
available, information regarding how often the Shares of each Fund traded on the
national securities exchanges at a price above (i.e., at a premium to) or below
(i.e., at a discount to) the NAV of the Fund, the Fund's per share NAV, and the
median bid-ask spread of the Shares can be found at www.globalxetfs.com.
TOTAL
RETURN INFORMATION
Each
Fund except for the Global X S&P Catholic Values U.S. Aggregate Bond ETF and
Global X Emerging Markets Internet & E-commerce ETF had commenced operations
as of the most recent fiscal year end.
The
tables that follow present information about the total returns of each
operational Fund's Underlying Index and the total returns of each such Fund. The
information presented for each Fund is as of the most recent fiscal year ended
October 31, 2020.
“Annualized
Total Returns” or "Cumulative Total Returns" represent the total change in value
of an investment over the periods indicated.
Each
Fund’s per share NAV is the value of one share of the Fund as calculated in
accordance with the standard formula for valuing mutual fund Shares. The NAV
return is based on the NAV of each Fund and the market return is based on the
market prices of the Fund. The price used to calculate market prices is
determined by using the midpoint between the bid and the ask on the primary
stock exchange on which Shares of the Fund are listed for trading, as of the
time that the Fund’s NAV is calculated. Market and NAV returns assume that
dividends and capital gain distributions have been reinvested in the Fund at
market prices and NAV, respectively.
An
index is a statistical composite that tracks a specified financial market or
sector. Unlike a Fund, an Underlying Index does not actually hold a portfolio of
securities and therefore does not incur the expenses incurred by the Fund. These
expenses negatively impact the performance of a Fund. Also, market returns do
not include brokerage commissions that may be payable on secondary market
transactions. If brokerage commissions were included, market returns would be
lower. The returns shown in the tables below do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption or
sale of Fund Shares. The investment return and principal value of Shares of a
Fund will vary with changes in market conditions. Shares of a Fund may be worth
more or less than their original cost when they are redeemed or sold in the
market. A Fund’s past performance is no guarantee of future results.
Annualized
Total Returns
Inception
to 10/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV |
MARKET |
UNDERLYING
INDEX |
Global
X Lithium & Battery Tech ETF 1 |
4.77% |
4.84% |
5.24% |
Global
X SuperDividend®
ETF2 |
-1.58% |
-1.57% |
-1.80% |
Global
X Social Media ETF3 |
15.26% |
15.30% |
15.87% |
Global
X Guru®
Index ETF4 |
12.78% |
12.74% |
13.17% |
Global
X SuperIncome™ Preferred ETF5 |
3.24% |
3.37% |
3.85% |
Global
X SuperDividend®
U.S. ETF6 |
0.04% |
0.13% |
0.62% |
Global
X S&P 500®
Covered Call ETF7*** |
6.26% |
6.50% |
6.46% |
Global
X NASDAQ 100®
Covered Call ETF8**** |
7.38% |
7.39% |
8.41% |
Global
X MSCI SuperDividend®
Emerging
Markets ETF9* |
-1.96% |
-1.89% |
-0.72% |
Global
X SuperDividend®
REIT ETF10 |
-3.92% |
-3.89% |
-5.68% |
Global
X Renewable Energy Producers ETF11** |
4.01% |
3.99% |
4.38% |
Global
X S&P 500®
Catholic Values ETF12 |
12.44% |
12.27% |
12.77% |
Global
X MSCI SuperDividend®
EAFE ETF13 |
-1.02% |
-1.34% |
-0.58% |
Global
X E-commerce ETF14 |
35.29% |
35.42% |
35.88% |
Global
X Russell 2000 Covered Call ETF15 |
-2.45% |
-2.43% |
-1.26% |
Global
X S&P Catholic Values Developed ex-U.S. ETF16 |
N/A |
N/A |
N/A |
Global
X Nasdaq 100®
Covered
Call & Growth ETF17 |
N/A |
N/A |
N/A |
Global
X S&P 500®
Covered Call & Growth ETF18 |
N/A |
N/A |
N/A |
1 For
the period since inception on 07/22/10 to 10/31/20
2 For
the period since inception on 06/08/11 to 10/31/20
3 For
the period since inception on 11/14/11 to 10/31/20
4 For
the period since inception on 06/04/12 to 10/31/20
5 For
the period since inception on 07/16/12 to 10/31/20
6 For
the period since inception on 03/11/13 to 10/31/20
7 For
the period since inception on 06/21/13 to 10/31/20.
Performance includes the performance of the Predecessor Fund.
8 For
the period since inception on 12/11/13 to 10/31/20.
Performance includes the performance of the Predecessor Fund.
9 For
the period since inception on 03/16/15 to 10/31/20
10 For
the period since inception on 03/16/15 to 10/31/20
11 For
the period since inception on 05/27/15 to 10/31/20
12 For
the period since inception on 04/18/16 to 10/31/20
13 For
the period since inception on 11/14/16 to 10/31/20
14 For
the period since inception on 11/27/18 to 10/31/20
15 For
the period since inception on 04/22/19 to 10/31/20
16 For
the period since inception on 06/22/20 to 10/31/20
17 For
the period since inception on 09/18/20 to 10/31/20
18 For
the period since inception on 09/18/20 to 10/31/20
*
Hybrid index performance reflects the performance of the Indxx
SuperDividend®
Emerging Markets Index through November 15, 2016 and the MSCI Emerging Markets
Top 50 Dividend Index thereafter.
**
Hybrid index performance reflects the performance of the Indxx Global YieldCo
Index through November 18, 2018 and the Indxx YieldCo & Renewable Energy
Income Index thereafter.
***
Hybrid index performance reflects the performance of the S&P 500®
Stock Covered Call Index through September 14, 2017, the CBOE S&P 500 2% OTM
BuyWrite Index through August 20, 2020 and the CBOE S&P 500®
BuyWrite
Index thereafter.
****
Hybrid index performance reflects the performance of the CBOE
NASDAQ-100®
BuyWrite Index through October 14, 2015 and CBOE NASDAQ-100®
BuyWrite V2 Index thereafter.
Cumulative
Total Returns
Inception
to 10/31/20
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV |
MARKET |
UNDERLYING
INDEX |
Global
X Lithium & Battery Tech ETF 1 |
61.42% |
62.46% |
69.15% |
Global
X SuperDividend®
ETF2 |
-13.89% |
-13.79% |
-15.66% |
Global
X Social Media ETF3 |
256.95% |
258.05% |
274.79% |
Global
X Guru®
Index ETF4 |
174.85% |
174.04% |
183.27% |
Global
X SuperIncome™ Preferred ETF5 |
30.29% |
31.64% |
36.83% |
Global
X SuperDividend®
U.S. ETF6 |
0.33% |
0.96% |
4.85% |
Global
X S&P 500®
Covered Call ETF7*** |
56.38% |
58.95% |
58.48% |
Global
X NASDAQ 100®
Covered Call ETF8**** |
63.26% |
63.36% |
74.50% |
Global
X MSCI SuperDividend®
Emerging
Markets ETF9* |
-10.54% |
-10.17% |
-3.99% |
Global
X SuperDividend®
REIT ETF10 |
-20.13% |
-19.99% |
-28.08% |
Global
X Renewable Energy Producers ETF11** |
23.77% |
23.67% |
26.23% |
Global
X S&P 500®
Catholic Values ETF12 |
70.13% |
68.99% |
72.58% |
Global
X MSCI SuperDividend®
EAFE ETF13 |
-3.99% |
-5.22% |
-2.27% |
Global
X E-commerce ETF14 |
78.93% |
79.26% |
80.66% |
Global
X Russell 2000 Covered Call ETF15 |
-3.74% |
-3.71% |
-1.93% |
Global
X S&P Catholic Values Developed ex-U.S. ETF16 |
-0.28% |
-0.20% |
-0.19% |
Global
X Nasdaq 100®
Covered
Call & Growth ETF17 |
0.40% |
0.05% |
0.36% |
Global
X S&P 500®
Covered
Call & Growth ETF 18 |
-1.60% |
-1.96% |
-1.95% |
1 For
the period since inception on 07/22/10 to 10/31/20
2 For
the period since inception on 06/08/11 to 10/31/20
3 For
the period since inception on 11/14/11 to 10/31/20
4 For
the period since inception on 06/04/12 to 10/31/20
5 For
the period since inception on 07/16/12 to 10/31/20
6 For
the period since inception on 03/11/13 to 10/31/20
7 For
the period since inception on 06/21/13 to 10/31/20.
Performance includes the performance of the Predecessor Fund.
8 For
the period since inception on 12/11/13 to 10/31/20.
Performance includes the performance of the Predecessor Fund.
9 For
the period since inception on 03/16/15 to 10/31/20
10 For
the period since inception on 03/16/15 to 10/31/20
11 For
the period since inception on 05/27/15 to 10/31/20
12 For
the period since inception on 04/18/16 to 10/31/20
13 For
the period since inception on 11/14/16 to 10/31/20
14 For
the period since inception on 11/27/18 to 10/31/20
15 For
the period since inception on 04/22/19 to 10/31/20
16 For
the period since inception on 06/22/20 to 10/31/20
17 For
the period since inception on 09/18/20 to 10/31/20
18 For
the period since inception on 09/18/20 to 10/31/20
*
Hybrid index performance reflects the performance of the Indxx
SuperDividend®
Emerging Markets Index through November 15, 2016 and the MSCI Emerging Markets
Top 50 Dividend Index thereafter.
**
Hybrid index performance reflects the performance of the Indxx Global YieldCo
Index through November 18, 2018 and the Indxx YieldCo & Renewable Energy
Income Index thereafter.
***
Hybrid index performance reflects the performance of the S&P 500®
Stock Covered Call Index through September 14, 2017, the CBOE S&P 500 2% OTM
BuyWrite Index through August 20, 2020 and the CBOE S&P 500®
BuyWrite
Index thereafter.
****
Hybrid index performance reflects the performance of the CBOE
NASDAQ-100®
BuyWrite Index through October 14, 2015 and CBOE NASDAQ-100®
BuyWrite V2 Index thereafter.
INFORMATION
REGARDING THE INDICES AND THE INDEX PROVIDERS
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 USD 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 Underlying 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 Form 13F
filings to compile the top stock holding from each of these hedge funds. The
Underlying Index is calculated as a total return index and adjusted quarterly.
The stocks are screened for liquidity and equal weighted. The Underlying Index
is maintained by Solactive AG.
S&P
Enhanced Yield North American Preferred Stock Index
The
S&P Enhanced Yield North American Preferred Stock Index tracks the
performance of the highest yielding preferred securities in the United States,
as determined by the Index Provider. The Underlying 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 Provider. The Underlying Index does not seek to directly reflect the
performance of the companies issuing the preferred stock. The Underlying Index
is maintained by S&P.
Indxx
SuperDividend®
U.S. Low Volatility Index
The
Underlying Index is maintained by Indxx, LLC. The Underlying Index tracks the
performance of 50 equally weighted common stocks, MLPs and REITs that rank among
the highest dividend yielding equity securities in the United States, as defined
by Indxx, LLC. The components of the Underlying 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, India, Indonesia, Malaysia, Mexico, Pakistan, Romania,
Russia, South Africa, South Korea, Taiwan, Thailand 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 Underlying 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 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,
2020, the Underlying Index had 457 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, 2020, 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, 2020, 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, 2020, 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, Portugal,
Singapore, Spain, Sweden, Switzerland, South Korea, Taiwan, Turkey, the 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 Reference 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 Underlying Index’s sector exposures match the current
sector exposures of the S&P EPAC ex-Korea Large Cap Index. The Underlying
Index is sponsored by Standard & Poor’s Financial Services LLC (the "Index
Provider"), which is an organization that is independent of 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, 2020, the Underlying Index had 489
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, 2020, 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, 2020, 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, India, Indonesia,
Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa,
South Korea, Taiwan, Thailand, Turkey 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, 2020, the
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index had
49 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, 2020, the S&P U.S. Catholic Values
Aggregate Bond Capped Index had 6102 constituents.
Disclaimers
Indxx
is a service mark of Indxx, LLC 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 SuperIncome™ Preferred ETF, 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 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 Enhanced
Yield North American Preferred Stock Index, 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.
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.
"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, and the NASDAQ Emerging Markets Internet &
E-commerce Index for purposes of Licensee's Global X Emerging Markets Internet
& E-commerce ETF. The Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, and the Global X Emerging Markets Internet &
E-commerce 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, and the Global X Emerging Markets Internet &
E-commerce 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 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, or the Global X Emerging Markets Internet &
E-commerce ETF particularly, or the ability of the BXNT Index, the Cboe Nasdaq
100 Half BuyWrite V2 Index, or the NASDAQ Emerging Markets Internet &
E-commerce 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, and the NASDAQ Emerging Markets Internet
& E-commerce 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, or the Global X Emerging Markets Internet &
E-commerce 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, or the Global X Emerging Markets Internet &
E-commerce ETF into consideration in determining, composing or calculating the
BXNT Index, the Cboe Nasdaq 100 Half BuyWrite V2 Index, or the NASDAQ Emerging
Markets Internet & E-commerce 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, or the Global X Emerging Markets Internet &
E-commerce 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,
or
the Global X Emerging Markets Internet & E-commerce 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, or the Global X Emerging Markets Internet &
E-commerce 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 OR
THE NASDAQ EMERGING MARKETS INTERNET & E-COMMERCE 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, OR THE
GLOBAL X EMERGING MARKETS INTERNET & E-COMMERCE 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 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 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.
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.
OTHER
SERVICE PROVIDERS
SEI
Investments Global Funds Services is the sub-administrator for each Fund.
Brown
Brothers Harriman & Co. is the custodian and transfer agent for each Fund.
Stradley
Ronon Stevens & Young, LLP serves as counsel for the Trust and the Trust's
Independent Trustees.
PricewaterhouseCoopers
LLP serves as the Funds' independent registered public accounting firm and has
audited the financial statements for the Funds for the fiscal years ended
October 31, 2016, 2017, 2018, 2019 and 2020. PricewaterhouseCoopers LLP did not
serve as the Predecessor Funds' independent registered public accounting firm or
audit the financial statements of the Predecessor Funds, including during the
fiscal years ended October 31, 2016, 2017 and 2018.
ADDITIONAL
INFORMATION
The
Trust enters into contractual arrangements with various parties, including among
others, the Funds’ Adviser, sub-adviser(s) (if applicable), custodian, and
transfer agent who provide services to the Funds. Shareholders are not parties
to any such contractual arrangements and are not intended beneficiaries of those
contractual arrangements, and those contractual arrangements are not intended to
create in any shareholder any right to enforce them against the service
providers or to seek any remedy under them against the service providers, either
directly or on behalf of the Trust.
This
Prospectus provides information concerning the Funds that investors should
consider in determining whether to purchase Fund Shares. Neither this Prospectus
nor the SAI is intended, or should be read, to be or give rise to an agreement
or contract between the Trust or the Funds and any investor, or to give rise to
any rights in any shareholder or other person other than any rights under
federal or state law that may not be waived.
FINANCIAL
HIGHLIGHTS
Each
Fund other than Global X S&P Catholic Values U.S. Aggregate Bond ETF and
Global X Emerging Markets Internet & E-commerce ETF had commenced operations
and has financial highlights for the fiscal year ended October 31, 2020.
The financial highlights tables are intended to help investors understand a
Fund's financial performance since the Fund's inception. Certain information
reflects financial results for a single Share of a Fund. The total returns in
the tables represent the rate that an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of all dividends and
distributions.
PricewaterhouseCoopers
LLP serves as the Funds' independent registered public accounting firm and has
audited the financial statements of the Funds for the fiscal years ended October
31, 2016, 2017, 2018, 2019 and 2020. The Funds' financial statements are
available without charge upon request. PricewaterhouseCoopers LLP did not serve
as the Predecessor Funds' independent registered public accounting firm or audit
the financial statements of the Predecessor Funds, including during the fiscal
years ended October 31, 2016, 2017 and 2018.
The
Global X NASDAQ 100®
Covered Call ETF and Global X S&P 500®
Covered Call ETF each assumed the performance and accounting history of its
respective Predecessor Fund as a result of the Reorganization. Accordingly, the
performance information shown below for the Global X NASDAQ 100®
Covered Call ETF and Global X S&P 500®
for the fiscal years ended October 31, 2016, 2017 and 2018 is that of its
Predecessor Fund. The Predecessor Fund's former independent registered public
accounting firm audited the financial statements of the Predecessor Fund for the
fiscal years ended October 31, 2016, 2017 and 2018.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
Net
Investment Income (Loss) ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of Capital ($) |
Total
from Distributions ($) |
Net
Asset Value, End of Period ($) |
Total
Return (%)** |
Net
Assets End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income (Loss) to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X Social Media ETF |
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
31.92 |
(0.11) |
20.14 |
20.03 |
— |
— |
— |
— |
51.95 |
62.75 |
225,999 |
0.65 |
(0.28) |
19.23 |
2019 |
29.10 |
(0.10) |
2.92 |
2.82 |
— |
— |
— |
— |
31.92 |
9.69 |
121,289 |
0.65 |
(0.33) |
16.92 |
2018 |
32.67 |
(0.06) |
(3.02) |
(3.08) |
(0.49) |
— |
— |
(0.49) |
29.10 |
(9.61) |
129,496 |
0.65 |
(0.16) |
21.36 |
2017 |
23.53 |
0.10 |
9.08 |
9.18 |
(0.04) |
— |
— |
(0.04) |
32.67 |
39.09 |
164,998 |
0.65 |
0.35 |
41.40 |
2016 |
19.29 |
0.02 |
4.22 |
4.24 |
— |
— |
— |
***
|
23.53 |
21.99 |
134,111 |
0.65 |
0.12 |
39.89 |
Global
X Lithium & Battery Tech ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
25.04 |
0.40 |
17.86 |
18.26 |
(0.44) |
— |
— |
(0.44) |
42.86 |
73.82 |
868,894 |
0.75 |
1.30 |
65.14 |
2019 |
30.32 |
0.48 |
(4.86) |
(4.38) |
(0.90) |
— |
— |
(0.90) |
25.04 |
(14.61) |
455,124 |
0.75 |
1.75 |
35.28 |
2018 |
39.14 |
0.33 |
(7.89) |
(7.56) |
(1.26) |
— |
— |
(1.26) |
30.32 |
(20.01) |
739,153 |
0.75 |
0.96 |
16.48 |
2017 |
24.02 |
0.33 |
15.31 |
15.64 |
(0.52) |
— |
— |
(0.52) |
39.14 |
66.46 |
950,071 |
0.75 |
1.02 |
68.13 |
2016 |
20.62 |
0.27 |
3.18 |
3.45 |
(0.05) |
— |
— |
(0.05) |
24.02 |
16.76 |
112,304 |
0.76 |
1.21 |
44.90 |
Global
X E-commerce ETF |
|
|
|
|
|
|
|
|
|
|
2020 |
17.58 |
0.19 |
9.05 |
9.24 |
(0.03) |
— |
— |
(0.03) |
26.79 |
52.67 |
91,083 |
0.50 |
0.75 |
42.01 |
2019(1) |
15.00 |
(0.05) |
2.63 |
2.58 |
— |
— |
— |
— |
17.58 |
17.20 |
3,517 |
0.68†
|
(0.32)†
|
23.50 |
|
|
|
|
|
|
(1) |
The
Fund commenced operations on November 27, 2018. |
*
|
Per
share data calculated using average shares method. |
**
|
Total
return is for the period indicated and has not been annualized. The return
shown does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. |
***
|
Amount
rounds to less than $0.005. |
†
|
Annualized. |
††
|
Portfolio
turnover rate is for the period indicated and periods of less than one
year have not been annualized. Excludes effect of in-kind
transfers. |
Amounts
designated as "—" are $0 or have been rounded to $0.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
Net
Investment Income ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of Capital ($) |
Total
from Distributions ($) |
Net
Asset Value, End of Period ($) |
Total
Return (%)** |
Net
Assets End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X SuperDividend® ETF |
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
17.25 |
0.86 |
(6.34) |
(5.48) |
(1.04) |
— |
(0.12) |
(1.16) |
10.61 |
(32.80) |
626,871 |
0.59 |
6.62 |
124.55 |
2019 |
19.06 |
1.24 |
(1.47) |
(0.23) |
(1.38) |
— |
(0.20) |
(1.58) |
17.25 |
(1.02) |
932,111 |
0.59 |
7.03 |
56.85 |
2018 |
21.51 |
1.35 |
(2.26) |
(0.91) |
(1.43) |
— |
(0.11) |
(1.54) |
19.06 |
(4.65) |
912,968 |
0.59 |
6.48 |
59.48 |
2017 |
20.43 |
1.08 |
1.45 |
2.53 |
(1.22) |
— |
(0.23) |
(1.45) |
21.51 |
12.69 |
992,893 |
0.58 |
5.07 |
67.38 |
2016 |
20.65 |
1.15 |
0.08 |
1.23 |
(1.30) |
— |
(0.15) |
(1.45) |
20.43 |
6.23 |
801,816 |
0.58 |
5.67 |
39.06 |
Global
X SuperDividend® U.S. ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
23.34 |
0.62 |
(7.45) |
(6.83) |
(1.14) |
— |
(0.38) |
(1.52) |
14.99 |
(30.12) |
412,110 |
0.45 |
3.50 |
93.44 |
2019 |
24.53 |
1.12 |
(0.56) |
0.56 |
(1.49) |
— |
(0.26) |
(1.75) |
23.34 |
2.61 |
544,884 |
0.46 |
4.83 |
60.00 |
2018 |
25.18 |
1.07 |
(0.17) |
0.90 |
(1.35) |
— |
(0.20) |
(1.55) |
24.53 |
3.66 |
413,311 |
0.46 |
4.31 |
33.25 |
2017 |
24.00 |
0.79#
|
1.94 |
2.73 |
(0.96) |
— |
(0.59) |
(1.55) |
25.18 |
11.64 |
425,579 |
0.45 |
3.15 |
53.01 |
2016 |
25.23 |
0.92#
|
(0.40) |
0.52 |
(1.07) |
— |
(0.68) |
(1.75) |
24.00 |
2.13 |
338,397 |
0.45 |
3.77#
|
53.45 |
Global
X MSCI SuperDividend® EAFE ETF |
|
|
|
|
|
|
|
|
|
|
2020 |
16.11 |
0.56 |
(4.53) |
(3.97) |
(0.55) |
— |
(0.15) |
(0.70) |
11.44 |
(25.24) |
7,436 |
0.56 |
4.07 |
59.28 |
2019 |
15.96 |
0.82 |
0.36 |
1.18 |
(1.03) |
— |
— |
(1.03) |
16.11 |
7.81 |
18,527 |
0.56 |
5.23 |
29.81 |
2018 |
18.13 |
1.12 |
(2.04) |
(0.92) |
(1.10) |
(0.15) |
— |
(1.25) |
15.96 |
(5.59) |
4,788 |
0.56 |
6.36 |
52.96 |
2017(2) |
14.87 |
0.81 |
3.04 |
3.85 |
(0.59) |
— |
— |
(0.59) |
18.13 |
26.19 |
1,813 |
0.56†
|
4.97†
|
45.40 |
Global
X MSCI SuperDividend® Emerging Markets ETF |
|
|
|
|
|
|
|
|
|
|
2020 |
12.95
|
0.55
|
(3.17) |
(2.62) |
(0.66) |
— |
(0.14) |
(0.80) |
9.53 |
(21.01) |
20,007 |
0.67 |
5.04 |
93.04 |
2019 |
12.91
|
0.87
|
0.05
|
0.92
|
(0.88) |
— |
— |
(0.88) |
12.95 |
7.14 |
17,489 |
0.66 |
6.51 |
66.65 |
2018 |
15.94
|
0.90
|
(3.02) |
(2.12) |
(0.91) |
— |
— |
(0.91) |
12.91 |
(14.10) |
12,260 |
0.67 |
5.89 |
79.52 |
2017 |
14.96
|
0.83
|
0.91
|
1.74
|
(0.76) |
— |
— |
(0.76) |
15.94 |
11.95 |
12,748 |
0.66 |
5.25 |
122.32 |
2016 |
13.73
|
0.59
|
1.41
|
2.00
|
(0.77) |
— |
— |
(0.77) |
14.96 |
15.58 |
3,740 |
0.65 |
4.49 |
64.83 |
Global
X SuperDividend® REIT ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
15.33 |
0.56 |
(7.41) |
(6.85) |
(0.86) |
— |
(0.06) |
(0.92) |
7.56 |
(45.94) |
311,625 |
0.58 |
5.74 |
106.23 |
2019 |
14.62 |
0.99 |
0.91 |
1.90 |
(1.19) |
— |
— |
(1.19) |
15.33 |
13.68 |
364,790 |
0.59 |
6.71 |
34.16 |
2018 |
15.29 |
0.92 |
(0.28) |
0.64 |
(1.31) |
— |
— |
(1.31) |
14.62 |
4.30 |
118,408 |
0.59 |
6.15 |
41.61 |
2017 |
14.60 |
0.86 |
0.96 |
1.82
|
(1.13) |
— |
— |
(1.13) |
15.29 |
13.00 |
51,986 |
0.58 |
5.74 |
54.96 |
2016 |
13.18
|
0.91
|
1.72
|
2.63
|
(1.21) |
— |
— |
(1.21) |
14.60 |
21.01 |
34,302 |
0.56 |
6.23 |
16.87 |
|
|
|
|
|
|
(1) |
The
Fund commenced operations on November 14, 2016. |
*
|
Per
share data calculated using average shares method. |
**
|
Total
return is for the period indicated and has not been annualized. The return
shown does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. |
†
|
Annualized. |
††
|
Portfolio
turnover rate is for the period indicated and periods of less than one
year have not been annualized. Excludes effect of in-kind
transfers. |
#
|
Effective
November 1, 2015, the Fund changed its method for estimating the
characterization of amounts distributed by master limited partnerships,
which correspondingly impacted the financial highlight ratios and per
share disclosures to the extent that the fund recorded investment income
that differed from amounts previously
estimated. |
Amounts
designated as "—" are $0 or have been rounded to $0.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
Net
Investment Income ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of
Capital
($)‡ |
Total
from Distributions ($) |
Net
Asset Value, End of Period ($) |
Total
Return (%)** |
Net
Assets End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X NASDAQ 100®
Covered Call ETF(1) |
|
|
|
|
|
|
|
|
|
|
|
2020 |
23.10 |
0.06 |
(0.06) |
— |
(0.06) |
— |
(2.39) |
(2.45) |
20.65 |
0.21 |
1,325,642 |
0.67
(2) |
0.27 |
27.87 |
2019 |
23.45 |
0.06 |
1.95 |
2.01 |
(1.83) |
— |
(0.53) |
(2.36) |
23.10 |
9.39 |
768,036 |
0.85
(2) |
0.26 |
11.82 |
2018 |
24.30 |
0.07 |
1.71 |
1.78 |
(0.87) |
(0.11) |
(1.65) |
(2.63) |
23.45 |
7.44 |
395,202 |
0.68
(3) |
0.30 |
15.00 |
2017 |
22.06 |
0.12 |
3.93 |
4.05 |
(1.81) |
— |
— |
(1.81) |
24.30 |
19.04 |
157,980 |
0.60 |
0.53 |
4.00 |
2016 |
23.51 |
0.15 |
0.53 |
0.68 |
(1.06) |
— |
(1.07) |
(2.13) |
22.06 |
3.32 |
52,952 |
0.60 |
0.69 |
9.00 |
Global
X S&P 500®
Covered Call ETF(1) |
|
|
|
|
|
|
|
|
|
|
|
2020 |
49.39 |
0.56 |
(4.17) |
(3.61) |
(0.58) |
— |
(2.75) |
(3.33) |
42.45 |
(7.42) |
103,992 |
0.71
(4) |
1.22 |
7.29 |
2019 |
48.56 |
0.56 |
3.30 |
3.86 |
(2.27) |
(0.39) |
(0.37) |
(3.03) |
49.39 |
8.40 |
133,353 |
0.87
(4) |
1.16 |
3.92 |
2018 |
50.10 |
0.62 |
1.88 |
2.50 |
(0.22) |
(1.22) |
(2.60) |
(4.04) |
48.56 |
4.97 |
77,701 |
0.65 |
1.22 |
4.00 |
2017(5) |
47.62 |
0.34 |
2.67 |
3.01 |
(0.53) |
— |
— |
(0.53) |
50.10 |
6.35 |
62,628 |
0.65†
|
1.39†
|
8.00 |
2017(6) |
43.11 |
0.66 |
5.39 |
6.05 |
(1.54) |
— |
— |
(1.54) |
47.62 |
14.29 |
64,413 |
0.65 |
1.46 |
21.00 |
2016(6) |
45.39 |
0.70 |
(0.90) |
(0.20) |
(1.50) |
— |
(0.58) |
(2.08) |
43.11 |
(0.29) |
60,459 |
0.65 |
1.61 |
7.00 |
Global
X Russell 2000 Covered Call ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
25.24 |
0.12 |
(2.51) |
(2.39) |
(0.11) |
(0.17) |
(2.12) |
(2.40) |
20.45 |
(9.18) |
21,475 |
0.56#
|
0.68 |
11.16 |
2019(7) |
25.00 |
0.09 |
1.37 |
1.46 |
(1.22) |
— |
— |
(1.22) |
25.24 |
5.99 |
8,833 |
0.82†#
|
0.68†
|
5.82 |
Global
X NASDAQ 100® Covered Call & Growth ETF |
|
|
|
2020(8) |
26.30 |
— |
0.11 |
0.11 |
— |
— |
(0.14) |
(0.14) |
26.27 |
0.40 |
6,568 |
0.60†
|
(0.10)†
|
1.65 |
Global
X S&P 500 Covered Call & Growth ETF |
|
|
|
2020(8) |
25.22 |
0.02 |
(0.41) |
(0.41) |
(0.02) |
— |
(0.12) |
(0.14) |
24.69 |
(1.60) |
3,704 |
0.60†
|
0.75†
|
0.75 |
|
|
|
|
|
|
(1) |
The
financial statements include the financial information of the Predecessor
Funds through December 21, 2018 (See Note 1 in Notes to Financial
Statements). As a result of the Reorganization, the Fund assumed the
performance and accounting history of the Predecessor Fund. Accordingly,
performance figures for the Fund for periods prior to the date of the
Reorganization represent the performance of the Predecessor
Fund. |
(2) |
Excluding
broker fees on written options, the ratio of expenses to average net
assets would have been 0.60% and 0.60% for the year ended October 31, 2020
and October 31, 2019, respectively. The ratio of Expenses to Average Net
Assets includes the effect of a waiver. If these offsets were excluded,
the ratio would have been 0.60% and 0.60% for the year ended October 31,
2020 and year ended October 31, 2019. |
(3) |
Includes
excise tax. If this excise expense was not included, the ratio would have
been 0.60%. |
(4) |
Excluding
broker fees on written options, the ratio of expenses to average net
assets would have been 0.64% and 0.65% for the year ended October 31, 2020
and year ended October 31, 2019, respectively The ratio of Expenses to
Average Net Assets includes the effect of a waiver. If these offsets were
excluded, the ratio would have been 0.64% and 0.65% for the year ended
October 31, 2020 and year ended October 31, 2019. |
(5) |
Effective
October 31, 2017, the Predecessor Fund changed its fiscal year end from
April 30 to October 31. The information presented is from May 1, 2017
through October 31, 2017. |
(6) |
For
the year or period end from April 30. |
(7) |
The
Fund commenced operations on April 17, 2019. |
(8) |
The
Fund commenced operations on September 18, 2020. |
*
|
Per
share data calculated using average shares method. |
**
|
Total
return is for the period indicated and has not been annualized. The return
shown does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. |
†
|
Annualized. |
††
|
Portfolio
turnover rate is for the period indicated and periods of less than one
year have not been annualized. Excludes effect of in-kind
transfers. |
#
|
Excluding
broker fees on written options, the ratio of expenses to average net
assets would have been 0.60% and 0.60% for the year ended October 31, 2020
and period ended October 31, 2019, respectively. The ratio of Expenses to
Average Net Assets includes the effect of a waiver. If these offsets were
excluded, the ratio would have been 0.68% and 0.97% for the year ended
October 31, 2020 and period ended October 31, 2019,
respectively. |
Amounts
designated as "—" are $0 or have been rounded to $0.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
Net
Investment Income ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of Capital ($) |
Total
from Distributions ($) |
Net
Asset Value, End of Period ($) |
Total
Return (%)** |
Net
Assets End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X SuperIncome™ Preferred ETF |
|
|
|
|
|
|
|
|
|
|
2020 |
11.73 |
0.60 |
(0.53) |
0.07 |
(0.65) |
— |
(0.03) |
(0.68) |
11.12 |
0.81 |
184,015 |
0.58 |
5.47 |
67.65 |
2019 |
11.49 |
0.66 |
0.32 |
0.98 |
(0.73) |
— |
(0.01) |
(0.74) |
11.73 |
8.87 |
201,092 |
0.58 |
5.72 |
55.98 |
2018 |
12.44 |
0.78 |
(0.88) |
(0.10) |
(0.85) |
— |
— |
(0.85) |
11.49 |
(0.87) |
186,154 |
0.58 |
6.48 |
105.48 |
2017 |
13.16 |
0.82 |
(0.65) |
0.17 |
(0.85) |
— |
(0.04) |
(0.89) |
12.44 |
1.31 |
236,331 |
0.58 |
6.39 |
45.12 |
2016 |
13.49 |
0.91 |
(0.33) |
0.58 |
(0.91) |
— |
— |
(0.91) |
13.16 |
4.44 |
232,206 |
0.58 |
6.81 |
47.62 |
Global
X Renewable Energy Producers ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
13.79 |
0.41 |
1.13 |
1.54 |
(0.46) |
— |
— |
(0.46) |
14.87 |
11.39 |
66,192 |
0.65 |
2.89 |
29.27 |
2019 |
11.52 |
0.13 |
2.61 |
2.74 |
(0.47) |
— |
— |
(0.47) |
13.79 |
24.34 |
26,205 |
0.65 |
1.01 |
87.06 |
2018 |
12.53 |
0.37 |
(0.80) |
(0.43) |
(0.50) |
— |
(0.08) |
(0.58) |
11.52 |
(3.50) |
15,556 |
0.65 |
3.07 |
33.50 |
2017 |
11.16 |
0.28#
|
1.59 |
1.87 |
(0.50) |
— |
— |
(0.50) |
12.53 |
17.30 |
20,046 |
0.65 |
2.37#
|
25.99 |
2016 |
11.06 |
0.41#
|
0.35 |
0.76 |
(0.48) |
— |
(0.18) |
(0.66) |
11.16 |
7.25 |
6,695 |
0.66 |
3.78#
|
40.25 |
|
|
|
|
|
|
*
|
Per
share data calculated using average shares method. |
**
|
Total
return is for the period indicated and has not been annualized. The return
shown does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. |
#
|
Effective
November 1, 2015, the Fund changed its method for estimating the
characterization of amounts distributed by master limited partnerships,
which correspondingly impacted the financial highlight ratios and per
share disclosures to the extent that the fund recorded investment income
that differed from amounts previously estimated. |
††
|
Portfolio
turnover rate is for the period indicated and periods of less than one
year have not been annualized. Excludes effect of in-kind
transfers. |
Amounts
designated as "—" are $0 or have been rounded to $0.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
Net
Investment Income ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of Capital ($) |
Total
from Distributions ($) |
Net
Asset Value, End of Period ($) |
Total
Return (%)** |
Net
Assets End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X S&P 500®
Catholic
Values ETF |
|
|
|
|
|
|
|
|
|
|
|
2020 |
37.23
|
0.58
|
3.08
|
3.66 |
(0.55) |
(0.02) |
— |
(0.57) |
40.32 |
9.89 |
379,053 |
0.29 |
1.51 |
5.55 |
2019 |
33.59 |
0.58 |
3.92 |
4.50 |
(0.81) |
(0.05) |
— |
(0.86) |
37.23 |
13.86 |
275,511 |
0.29 |
1.66 |
8.54 |
2018 |
31.83 |
0.58 |
1.60 |
2.18 |
(0.41) |
(0.01) |
— |
(0.42) |
33.59 |
6.86 |
147,789 |
0.29@
|
1.72 |
4.33 |
2017 |
25.74 |
0.48 |
5.74 |
6.22 |
(0.13) |
***
|
— |
(0.13) |
31.83 |
24.27 |
114,581 |
0.29@
|
1.64 |
6.09 |
2016(2) |
25.14 |
0.24 |
0.36 |
0.60 |
— |
— |
— |
— |
25.74 |
2.39 |
39,899 |
0.29@†
|
1.75†
|
2.80 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
|
|
|
|
|
|
|
|
2020(2) |
25.05 |
0.19 |
(0.26) |
(0.07) |
— |
— |
— |
— |
24.98 |
(0.28) |
2,498 |
0.35†
|
2.02†
|
4.04 |
Global
X Guru® Index ETF |
|
|
|
|
|
|
|
|
2020 |
34.02 |
0.33 |
3.32 |
3.65 |
(0.34) |
— |
(0.02) |
(0.36) |
37.31 |
10.84 |
55,961 |
0.75 |
0.96 |
124.90 |
2019 |
30.09 |
0.12 |
4.02 |
4.14 |
(0.17) |
— |
(0.04) |
(0.21) |
34.02 |
13.90 |
56,134 |
0.75 |
0.38 |
126.44 |
2018 |
28.7 |
0.11 |
1.44 |
1.55 |
(0.16) |
— |
— |
(0.16) |
30.09 |
5.40 |
57,180 |
0.75 |
0.36 |
112.64 |
2017 |
23.14 |
0.14#
|
5.47 |
5.61 |
(0.05) |
— |
— |
(0.05) |
28.70 |
24.30 |
55,956 |
0.75 |
0.54#
|
94.71 |
2016 |
23.96 |
0.12#
|
(0.83) |
(0.71) |
(0.09) |
— |
(0.02) |
(0.11) |
23.14 |
(2.97) |
59,013 |
0.75 |
0.52#
|
102.07 |
|
|
|
|
|
|
(1) |
The
Fund commenced operations on April 18, 2016. |
(2) |
The
Fund commenced operations on June 22, 2020. |
*
|
Per
share data calculated using average shares method. |
**
|
Total
return is for the period indicated and has not been annualized. The return
shown does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares. |
***
|
Amount
rounds to less than $0.005. |
#
|
Effective
November 1, 2015, the Fund changed its method for estimating the
characterization of amounts distributed by master limited partnerships,
which correspondingly impacted the financial highlight ratios and per
share disclosures to the extent that the fund recorded investment income
that differed from amounts previously estimated. |
†
|
Annualized. |
††
|
Portfolio
turnover rate is for the period indicated and periods of less than one
year have not been annualized. Excludes effect of in-kind
transfers. |
‡
|
The
ratio of Expenses to Average Net Assets includes the effect of a waiver.
If these offsets were excluded, the ratio would have been 0.22%, 0.30%,
0.35% and 0.35% for the years ended October 31, 2019, 2018, 2017 and 2016,
respectively. |
@
|
The
ratio of Expenses to Average Net Assets includes the effect of a waiver.
If these offsets were excluded, the ratio would have been 0.32%, 0.39% and
0.39% for the years ended October 31, 2018, 2017 and 2016,
respectively. |
Amounts
designated as "—" are $0 or have been rounded to $0.
OTHER
INFORMATION
The
Funds are not sponsored, endorsed, sold or promoted by any national securities
exchange. No national securities exchange makes any representation or warranty,
express or implied, to the owners of Shares or any member of the public
regarding the advisability of investing in securities generally or in the Funds
particularly or the ability of the Funds to achieve their objectives. No
national securities exchange has any obligation or liability in connection with
the administration, marketing or trading of the Funds.
For
purposes of the 1940 Act, shares that are issued by a registered investment
company and purchases of such shares by investment companies and companies
relying on Sections 3(c)(1) or 3(c)(7) of the 1940 Act are subject to the
restrictions set forth in Section 12(d)(1) of the 1940 Act, except as permitted
by an exemptive order that permits registered investment companies to invest in
shares beyond the limits in Section 12(d)(1)(A), subject to certain terms and
conditions.
The
Trust has obtained an SEC order permitting registered investment companies to
invest in Shares, as described above. One such condition stated in the order is
that investment companies relying on the order must enter into a written
agreement with the Trust.
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Funds on an ongoing basis, a “distribution,” as such term is used in the
Securities Act, may occur at any point. 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 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 Units 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-dealers
who are not “underwriters” but are participating in a distribution (as
contrasted with ordinary secondary trading transactions), and thus dealing with
Shares that are part of an “unsold allotment” within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
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. As a result, broker-dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of 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 NYSE Arca, NASDAQ or Cboe BZX is satisfied
by the fact that the prospectus is available at NYSE Arca, NASDAQ or Cboe BZX
upon request. The prospectus delivery mechanism provided in Rule 153 is only
available with respect to transactions on an exchange.
For
more information visit our website at
www.globalxetfs.com
or
call 1-888-493-8631
|
|
|
Investment
Adviser and Administrator
Global
X Management Company LLC
605
Third Avenue, 43rd Floor
New
York, NY 10158
|
Distributor
SEI
Investments Distribution Co.
One
Freedom Valley Drive
Oaks,
PA 19456
|
Custodian
and Transfer Agent
Brown
Brothers Harriman & Co.
50
Post Office Square
Boston,
MA 02110
|
Sub-Administrator
SEI
Investments Global Funds Services
One
Freedom Valley Drive
Oaks,
PA 19456
|
Legal
Counsel to the Global X Funds®
and Independent Trustees
Stradley
Ronon Stevens & Young, LLP
2000
K Street, N.W., Suite 700
Washington,
DC 20006
|
Independent
Registered Public Accounting Firm
PricewaterhouseCoopers
LLP
Two
Commerce Square, Suite 1800
2001
Market Street
Philadelphia,
PA 19103 |
A
Statement of Additional Information dated March 1, 2021, which contains
more details about the Funds, is incorporated by reference in its entirety into
this Prospectus, which means that it is legally part of this Prospectus.
Additional
information about each Fund that has commenced operations and its investments is
available in its annual and semi-annual reports to shareholders. The annual
report explains the market conditions and investment strategies affecting each
Fund’s performance during its last fiscal year.
You
can ask questions or obtain a free copy of each such Fund’s semi-annual and
annual report or the Statement of Additional Information by calling
1-888-493-8631. Free copies of a Fund’s semi-annual and annual report and the
Statement of Additional Information are available from our website at
www.globalxetfs.com.
Information
about each Fund, including its semi-annual and annual reports and the Statement
of Additional Information, has been filed with the SEC. It can be reviewed and
copied on the EDGAR database on the SEC’s internet site (http://www.sec.gov).
You can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC’s e-mail address ([email protected]).
PROSPECTUS
Distributor
SEI
Investments Distribution Co.
One
Freedom Valley Drive
Oaks,
PA 19456
March 1,
2021
Investment
Company Act File No.: 811-22209
GLX-PS-020-1100