ck0001432353-20221031
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Global
X Social Media ETF
NASDAQ:
SOCL |
Global
X Nasdaq 100®
Covered Call & Growth ETF
NASDAQ:
QYLG |
Global
X Lithium & Battery Tech ETF
NYSE
Arca: LIT |
Global
X S&P 500®
Covered Call & Growth ETF
NYSE
Arca: XYLG |
Global
X Renewable Energy Producers ETF
NASDAQ:
RNRG |
Global
X Russell 2000 Covered Call & Growth ETF
NYSE
Arca: RYLG |
Global
X Disruptive Materials ETF
NASDAQ:
DMAT |
Global
X Financials Covered Call & Growth ETF
NYSE
Arca: FYLG |
Global
X E-commerce ETF
NASDAQ:
EBIZ |
Global
X Health Care Covered Call & Growth ETF
NYSE
Arca: HYLG |
Global
X Emerging Markets Internet & E-commerce ETF
NASDAQ:
EWEB |
Global
X Information Technology Covered Call & Growth ETF
NYSE
Arca: TYLG |
Global
X SuperDividend®
ETF
NYSE
Arca: SDIV |
Global
X S&P 500®
Tail Risk ETF
NYSE
Arca: XTR |
Global
X SuperDividend®
U.S. ETF
NYSE
Arca: DIV |
Global
X S&P 500®
Risk Managed Income ETF
NYSE
Arca: XRMI |
Global
X MSCI SuperDividend®
EAFE ETF
NASDAQ:
EFAS |
Global
X S&P 500®
Collar 95-110 ETF
NYSE
Arca: XCLR |
Global
X MSCI SuperDividend®
Emerging Markets ETF
NYSE
Arca: SDEM |
Global
X NASDAQ 100®
Tail Risk ETF
NASDAQ:
QTR |
Global
X SuperDividend®
REIT ETF
NASDAQ:
SRET |
Global
X NASDAQ 100®
Risk Managed Income ETF
NASDAQ:
QRMI |
Global
X SuperIncome™ Preferred ETF
NYSE
Arca: SPFF |
Global
X NASDAQ 100®
Collar 95-110 ETF
NASDAQ:
QCLR |
Global
X NASDAQ 100®
Covered Call ETF
NASDAQ:
QYLD |
Global
X S&P 500®
Catholic Values ETF
NASDAQ:
CATH |
Global
X S&P 500®
Covered Call ETF
NYSE
Arca: XYLD |
Global
X S&P Catholic Values Developed ex-U.S. ETF
NASDAQ:
CEFA |
Global
X Russell 2000 Covered Call ETF
NYSE
Arca: RYLD |
Global
X Guru®
Index ETF
NYSE
Arca: GURU |
Global
X Dow 30®
Covered
Call ETF
NYSE
Arca: DJIA |
Global
X S&P Catholic Values U.S. Aggregate Bond ETF*
NASDAQ:
CAGG |
Prospectus
March 1,
2023
*
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.
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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
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FUND
SUMMARIES |
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ADDITIONAL
INFORMATION ABOUT THE FUNDS |
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A
FURTHER DISCUSSION OF PRINCIPAL RISKS |
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A
FURTHER DISCUSSION OF OTHER RISKS |
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PORTFOLIO
HOLDINGS INFORMATION |
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FUND
MANAGEMENT |
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DISTRIBUTOR |
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BUYING
AND SELLING FUND SHARES |
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FREQUENT
TRADING |
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DISTRIBUTION
AND SERVICE PLAN |
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DIVIDENDS
AND DISTRIBUTIONS |
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TAXES |
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DETERMINATION
OF NET ASSET VALUE |
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PREMIUM/DISCOUNT
AND SHARE INFORMATION |
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TOTAL
RETURN INFORMATION |
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INFORMATION
REGARDING THE INDICES AND THE INDEX PROVIDERS |
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OTHER
SERVICE PROVIDERS |
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ADDITIONAL
INFORMATION |
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FINANCIAL
HIGHLIGHTS |
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OTHER
INFORMATION |
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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):
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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:
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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 21.59% 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
Solactive Social Media Total Return Index ("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, 2022, the Underlying Index had 42
constituents, 16 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines
the relative weightings of the securities in the Underlying Index and publishes
information regarding the market value of the Underlying Index.
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, 2022, 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 communication services 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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.
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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access. As of December 31, 2022, the Fund had significant exposure to
VIEs, as defined above.
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 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
6/30/2022 |
-22.23% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Ten
Years Ended December 31, 2022 |
Global
X Social Media ETF: |
|
|
|
·Return before
taxes |
-42.27% |
-1.16% |
9.41% |
·Return
after taxes on distributions1 |
-42.27% |
-1.16% |
9.34% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-25.03% |
-0.88% |
7.73% |
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) |
-42.13% |
-0.64% |
9.94% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.36% |
5.23% |
7.98% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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 38.73% 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 Solactive
Global Lithium Index ("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,
2022, the Underlying Index had 40 constituents, 33 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines
the relative weightings of the securities in the Underlying Index and publishes
information regarding the market value of the Underlying Index.
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, 2022, 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
Qualified Foreign Institutional Investor ("QFII") or a Renminbi Qualified
Foreign Institutional Investor ("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
Shanghai Stock Exchange ("SSE") (in the case of Shanghai Connect) or the
Shenzhen Stock Exchange ("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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk
that Chinese authorities can intervene in their operations and structure.
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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the
activities
at the Chinese-based operating company are limited and the operating company may
engage in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access.
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 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. Japan’s economy has suffered from low growth and low inflation for a
prolonged period of time since the collapse of its bubble economy, and that may
continue despite the efforts of the Bank of Japan and policymakers. 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
3/31/2020 |
-20.32% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Ten
Years Ended December 31, 2022 |
Global
X Lithium & Battery Tech ETF: |
|
|
|
·Return before
taxes |
-29.69% |
10.10% |
8.81% |
·Return
after taxes on distributions1 |
-29.85% |
9.73% |
8.40% |
·Return
after taxes on distributions and sale of Fund
Shares1 |
-17.46% |
7.87% |
7.02% |
Solactive
Global Lithium Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-29.28% |
10.28% |
9.32% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.36% |
5.23% |
7.98% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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") 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: |
0.01% |
Total
Annual Fund Operating Expenses: |
0.66% |
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 |
$67 |
$211 |
$368 |
$822 |
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 18.33% 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 Indxx
Renewable Energy Producers Index ("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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying
Index.
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, 2022, the
Underlying Index was concentrated in the independent power and renewable energy
industry 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 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 Independent Power and Renewable Electricity
Producers Industry:
Companies in the independent power and renewable electricity producers 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 producers 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 sector 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 China:
Investment exposure to China subjects the Fund to risks specific to China.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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.
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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access.
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.
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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business
day and fluctuates with changes in the market value of the Fund’s holdings. The
trading price of the Fund’s shares fluctuates, in some cases materially,
throughout trading hours in response to changes in the Fund’s NAV.
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: |
3/31/2020 |
-18.03% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (05/27/2015) |
Global
X Renewable Energy Producers ETF: |
|
|
|
·Return before
taxes |
-15.06% |
3.81% |
1.66% |
·Return
after taxes on distributions1 |
-15.18% |
3.09% |
0.87% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-8.65% |
2.88% |
1.12% |
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) |
-14.73% |
4.22% |
2.05% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.36% |
5.23% |
6.28% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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 Disruptive Materials ETF
Ticker:
DMAT Exchange: NASDAQ
INVESTMENT OBJECTIVE
The Global X Disruptive
Materials ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Solactive Disruptive Materials 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 tables and examples
below.
Annual
Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your
investment):
|
|
|
|
|
|
Management
Fees: |
0.59% |
Distribution
and Service (12b-1) Fees: |
None |
Other
Expenses:1 |
0.00% |
Total
Annual Fund Operating Expenses: |
0.59% |
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 |
$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. From the Fund's commencement of
operations on January 24, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 25.34% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investment
purposes (if any), in the securities of the Solactive Disruptive Materials Index
(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 companies that produce
metals and other raw or composite materials that have been identified as being
essential to disruptive technologies such as lithium batteries, solar panels,
wind turbines, fuel cells, robotics, and 3D printers. Each material has been
determined by Solactive AG, the provider of the Underlying Index (the “Index
Provider”) to be instrumental to the development and materialization of one or
more disruptive technologies. Disruptive technologies refer to those
technologies that are essential to the development and materialization of
long-term, structural changes to existing products, services, industries, or
sectors. Specifically, the Underlying Index will include securities issued by
“Disruptive Materials Companies” as defined by the Index Provider. Disruptive
Materials Companies are those companies that derive at least 50% of their
revenues in aggregate from the exploration, mining, production and/or
enhancement of one or more of the following ten materials categories: Carbon
Fiber, Cobalt, Copper, Graphene & Graphite, Lithium, Manganese, Nickel,
Platinum & Palladium, Rare Earth Elements, and Zinc (collectively,
“Disruptive Materials Categories”). Companies engaged in
exploration
and mining include those companies involved in locating and extracting
disruptive materials. Companies engaged in production include those companies
involved in manufacturing, processing, and trading disruptive materials for
primary usage. Companies engaged in enhancement include those companies involved
in refining, developing, and/or smelting materials to extract and purify
disruptive materials. As of December 31, 2022, the Underlying Index had 49
constituents.
For
the Lithium category, companies that derive greater than 25% but less than 50%
of revenue from the production and/or processing of lithium are also eligible
for inclusion (collectively, “Diversified Lithium Companies”). In addition,
companies with primary business operations in the exploration, mining,
production and/or enhancement of one or more of the Disruptive Materials
Categories, but which are not currently generating revenue, are also eligible
for inclusion (collectively, “Pre-Revenue Disruptive Materials Companies”). To
determine whether a company has primary business operations in the exploration,
mining, production and/or enhancement of one or more of the Disruptive Materials
Categories, the Index Provider reviews the public financial disclosures and
filings of the company, and identifies the products and business segments
disclosed therein. The Index Provider then reviews the management discussion and
analysis, as well as the level of investment the company allocates to those
products and segments, to determine whether those business operations are the
primary operations of the company.
In
constructing the Underlying Index, the Index Provider applies a proprietary
natural language processing algorithm to the eligible universe, which seeks to
identify and rank companies involved in each of the Disruptive Materials
Categories based on filings, disclosures, and other public information (e.g.,
regulatory filings, earnings transcripts, etc.). The highest-ranking companies
identified by the natural language processing algorithm in each Disruptive
Materials Category, as of the selection date, are further reviewed by the Index
Provider to confirm they derive at least 50% of their revenues from one of the
Disruptive Materials Categories as described above, derive between 25% and 50%
of their revenues from the Lithium category in the case of Diversified Lithium
Companies, or
have
primary business operations in the exploration, mining, production and/or
enhancement of one or more of the Disruptive Materials Categories but do not
currently generate revenues in the case of Pre-Revenue Disruptive Materials
Companies. The five highest-ranking Disruptive Materials Companies and
Pre-Revenue Disruptive Materials Companies according to free float market
capitalization from each Disruptive Materials Category are included in the
Underlying Index. For the Lithium category, the five highest-ranking Disruptive
Materials Companies, Pre-Revenue Disruptive Materials Companies and Diversified
Lithium Companies according to free float market capitalization are
included.
If
fewer than five companies are identified that satisfy the above criteria within
a Disruptive Materials Category, all eligible companies are selected, and the
category consists of fewer than five companies.
To
be a part of the eligible universe of the Underlying Index, companies must be
classified in one of the following Economies according to FactSet (a leading
financial data provider that maintains a comprehensive structured taxonomy
designed to offer precise classification of global companies and their
individual business units): Basic Materials, Industrials, or Technology. In
addition, certain minimum market capitalization and liquidity criteria, as
defined by the Index Provider, must be met. As of December 31, 2022,
companies must have a minimum market capitalization of $100 million and a
minimum average daily turnover for the last 6 months greater than or equal to $1
million in order to be eligible for inclusion in the Underlying Index. As of
December 31, 2022, companies listed in the following countries were
eligible for inclusion in the Underlying Index: Australia, Austria, Belgium,
Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, Egypt, Finland,
France, Germany, Greece, Hong Kong, Hungary, Indonesia, Ireland, Israel, Italy,
Japan, Kuwait, Malaysia, Mexico, Netherlands, New Zealand, Norway, Pakistan,
Peru, Philippines, Poland, Portugal, Qatar, Saudi Arabia, Singapore, South
Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey,
United Kingdom, United States, and the United Arab Emirates. As of
December 31, 2022, the Underlying Index had significant exposure to Chinese
issuers. The Fund may invest in China A-Shares, which are issued by companies
incorporated in mainland China and traded on Chinese exchanges. The Fund may
invest in securities of issuers located in emerging markets.
The
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 maximum weight of a company is capped at 4%, and all
constituents are subject to a minimum weight of 0.3%. In addition, Diversified
Lithium Companies and Pre-Revenue Disruptive Materials Companies are subject to
an aggregate weight cap of 10% at each semi-annual rebalance. Generally
speaking, modified capitalization weighting will limit the amount of
concentration in the largest market capitalization companies and increase
company-level diversification. The Underlying Index may include large-, mid-,
small-, or micro-capitalization companies, and components primarily include
materials 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). In addition, any
determinations related to the constituents of the Underlying Index are made
independent of the Fund's portfolio managers. 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, 2022, the Underlying Index was
concentrated in the metals and mining industry and had significant exposure to
the materials sector. The Fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified
fund.
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
Qualified Foreign Institutional Investor ("QFII") or a Renminbi Qualified
Foreign Institutional Investor ("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
Shanghai Stock Exchange ("SSE") (in the case of Shanghai Connect) or the
Shenzhen Stock Exchange ("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.
Depositary
Receipts Risk: The
Fund may invest in depositary receipts, such as ADRs and GDRs. Depositary
receipts may be subject to certain of the risks associated with direct
investments in the securities of foreign companies. For additional details on
these risks, please see Foreign
Securities Risk.
Moreover, depositary receipts may not track the
price
of the underlying foreign securities on which they are based. A holder of
depositary receipts may also be subject to fees and the credit risk of the
financial institution acting as depositary.
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 Disruptive Materials Companies:
Disruptive Materials Companies engage in the exploration, mining, production
and/or enhancement of metals and other raw or composite materials that have been
identified as being essential to many of the world’s most disruptive
technologies. There is no guarantee that demand for these technologies will
continue, or that the raw materials currently used in the production of these
materials will continue to be utilized. A reduction of demand for the
technologies that utilize these disruptive materials, or of the materials
themselves, would have an adverse impact on the Fund. Companies involved in the
various activities that are related to the exploration, mining, production
and/or enhancement of disruptive materials may be medium-, small-, or
micro-capitalization companies. These companies tend to have volatile share
prices and are highly dependent on the price of the underlying disruptive
materials, which may fluctuate substantially over short periods of time. The
value of such companies may be significantly affected by the success of
exploration projects, political and economic conditions in geographies where the
companies operate, government royalties, energy conservation, environmental
policies, commodity price volatility, changes in exchange rates, imposition of
import/export controls, increased competition, depletion of resources and labor
relations, and other world events. The exploration, mining, production and/or
enhancement of disruptive materials can require large amounts of capital and, if
companies involved in such activities are mismanaged, the share prices of such
companies could decline even as prices for the underlying materials rise. In
addition, companies involved in the various activities that are related to the
exploration, mining, production and/or enhancement of disruptive materials may
be at risk for environmental damage allegations and potentially punitive claims.
Exploration, mining, production and/or enhancement of disruptive materials may
involve environmentally intensive processes, and Disruptive Materials Companies
may be at risk for environmental damage liabilities, as well as mandated
expenditures for safety, pollution control, and environment
remediation.
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 will hold securities that are dependent on a single commodity, or are
concentrated on a single commodity sector, that typically exhibit even higher
volatility attributable to commodity prices. 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.
Commodity
Price Relationship Risk: 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.
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. Additionally, the Chinese government
heavily regulates the domestic exchange of foreign currencies and yuan exchange
rates in China, which may adversely affect the operations and financial results
of the Fund’s investments in China. Shares purchased through the Stock Connect
Programs will be purchased using offshore yuan, the value of which may differ
from and experience greater volatility than the value of onshore yuan. Offshore
yuan cannot be freely remitted into or transferred out of China, and there is no
assurance that there will always be sufficient amounts of offshore yuan
available for the Fund to invest in all components of the Underlying
Index.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 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.
Risks
Related to Investing in the Metals and Mining Industry: Securities
in the Fund's portfolio may be significantly subject to the effects of
competitive pressures in the mining industry and commodity prices generally.
Commodity prices may be affected by changes in inflation rates, interest rates,
monetary policy, economic conditions, and political stability. Commodity prices
may fluctuate substantially over short periods of time; therefore, the Fund’s
Share price may be more volatile than other types of investments. In addition,
metals and mining companies may also be significantly affected by import
controls, worldwide competition, liability for environmental damage, depletion
of resources, and mandated expenditures for safety and pollution control
devices. Metals and mining companies may have significant operations in areas at
risk for social and political unrest, security concerns and environmental
damage. These companies may also be at risk for increased government regulation
and intervention. Such risks may adversely affect the issuers to which the Fund
has exposure.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access.
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 Mexico: Investments
in Mexican issuers involve risks that are specific to Mexico, including legal,
regulatory, political, currency, security and economic risks. In the past,
Mexico has experienced high interest rates, economic volatility and high
unemployment rates. Recent political developments in the U.S. have potential
implications for the current trade arrangements between the U.S. and Mexico,
which could negatively affect the value of securities held by the
Fund.
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 Zambia: Zambia
faces significant poverty and has a large public sector and poor social sector
delivery systems. Economic regulations and red tape are extensive, and
corruption is widespread, which continues to have a negative impact on the
Zambian economy despite recent reforms. The bureaucratic procedures surrounding
the process of obtaining licenses encourage the widespread use of facilitation
payments. Despite recent diversification efforts, the Zambian economy is heavily
dependent on the copper mining industry.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 economies which are 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 economies and on the companies in which the Fund invests. Because of this
interdependence and the economies in which the Fund invests, the Fund is
specifically exposed to Asian
Economic Risk.
Economies in emerging market countries generally are dependent heavily upon
commodity prices and international trade and, accordingly, may be affected
adversely by the economies of their trading partners, trade barriers, exchange
or capital controls, managed adjustments in relative currency values, and may
suffer from extreme and volatile debt burdens or inflation rates.
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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.
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 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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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
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 25.82% 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 Solactive
E-commerce Index ("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, 2022, companies must have a minimum market
capitalization of $200 million and a minimum average daily turnover for the last
6 months greater than or equal to $2 million in order to be eligible for
inclusion in the Underlying Index. As of December 31, 2022, 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, Poland, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland,
Taiwan, Turkey, 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, 2022, the Underlying Index had 40
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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying
Index.
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, 2022, 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. Chinese E-commerce Companies have been subject to heightened
scrutiny as regulators seek to rein in monopolistic practices and prevent the
‘disorderly expansion of capital’ under the Common Prosperity initiative.
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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without
the
Chinese-based issuer’s authorization to enter into contractual arrangements in
China. Chops and seals, which are carved stamps used to sign documents,
represent a legally binding commitment by the company. Moreover, any future
regulatory action may prohibit the ability of the shell company to receive the
economic benefits of the Chinese-based operating company, which may cause the
value of the Fund’s investment in the listed shell company to suffer a
significant loss. For example, in 2021, the Chinese government prohibited use of
the VIE structure for investment in after-school tutoring companies. There is no
guarantee that the Chinese government will not place similar restrictions on
other industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access. As of December 31, 2022, the Fund had significant exposure to
VIEs, as defined above.
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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support
should
economic growth slow. Additionally, China’s shift away from a zero-COVID policy
creates both opportunities and risks, causing uncertainty for global economic
growth. Market risk factors may result in 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
6/30/2022 |
-24.25% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (11/27/2018) |
Global
X E-commerce ETF: |
|
|
·Return before
taxes |
-40.77% |
2.40% |
·Return
after taxes on distributions1 |
-40.79% |
2.29% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-24.13% |
1.89% |
Solactive
E-commerce Index (net)
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-40.55% |
2.84% |
MSCI
ACWI Index (net)
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.36% |
7.62% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager
of
the Fund since the Fund's inception. Mr. Xie has been a Portfolio Manager of the
Fund since March 1, 2019. Ms. Chan has been a Portfolio Manager of the Fund
since June 10, 2019. Ms. Yang has been a Portfolio Manager of the Fund since
December 2020. Mr. Lu has been a Portfolio Manager of the Fund since March
2022.
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: |
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 26.27% of the average value of the
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investment
purposes (if any), in the securities of the NASDAQ CTA Emerging Markets Internet
& E-commerce Net Total Return Index ("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, 2022, companies must have a minimum
free float market capitalization of $1 billion and a minimum average daily
turnover for the last six months greater than or equal to $5 million in order to
be eligible for inclusion in the Underlying Index. As of December 31, 2022,
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, Indonesia, Kuwait, Malaysia, Mexico, Peru, Philippines,
Poland, Qatar, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand,
Turkey, United Arab Emirates and the United States (as a function of emerging
market exposure obtained through the use of ADRs). The Fund may have significant
exposure to a particular foreign country or foreign currency.
The
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, 2022, 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying
Index.
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, 2022, 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. Chinese E-commerce Companies have been subject to heightened
scrutiny as regulators seek to rein in monopolistic practices and prevent the
‘disorderly expansion of capital’ under the Common Prosperity initiative.
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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 communication services 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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.
Economic,
Political and Social Risk
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. Chinese companies
are also subject to the risk that Chinese authorities can intervene in their
operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the
activities
at the Chinese-based operating company are limited and the operating company may
engage in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access. As of December 31, 2022, the Fund had significant exposure to
VIEs, as defined above.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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.
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
13.05% |
Worst
Quarter: |
9/30/2021 |
-24.76% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (11/09/2020)
|
Global
X Emerging Markets Internet & E-commerce ETF: |
|
|
·Return before
taxes |
-28.05% |
-28.73% |
·Return
after taxes on distributions1 |
-28.05% |
-28.73% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-16.61% |
-20.79% |
NASDAQ
CTA Emerging Markets Internet & E-commerce Net Total Return Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-27.76% |
-28.34% |
MSCI
Emerging Markets Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-20.09% |
-7.55% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Ms. Yang has been a Portfolio
Manager of the Fund since December 2020. Mr. Lu has been a Portfolio Manager of
the Fund since March 2022.
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: |
0.03% |
Total
Annual Fund Operating Expenses: |
0.61% |
Expense
Reimbursement and/or Fee Waiver1 |
(0.03)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.58% |
1
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 and extraordinary expenses
(such as litigation and indemnification expenses)) will not exceed 0.58% of the
Fund's average daily net assets per year, effective March 1, 2023, until
at least March 1,
2024.
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 |
$192 |
$337 |
$759 |
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 91.10% 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 Solactive
Global SuperDividend®
Index ("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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index.
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, 2022, the Underlying Index 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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.
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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access.
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:
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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Ten
Years Ended December 31, 2022 |
Global
X SuperDividend®
ETF: |
|
|
|
·Return before
taxes |
-26.43% |
-10.31% |
-2.05% |
·Return
after taxes on distributions1 |
-28.68% |
-12.65% |
-4.34% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-15.12% |
-7.60% |
-1.66% |
Solactive
Global SuperDividend®
Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-28.52% |
-10.71% |
-2.35% |
MSCI
ACWI Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.36% |
5.23% |
7.98% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager
of
the Fund since March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund
since March 1, 2019. Ms. Chan has been a Portfolio Manager of the Fund since
June 10, 2019. Ms. Yang has been a Portfolio Manager of the Fund since December
2020. Mr. Lu has been a Portfolio Manager of the Fund since March
2022.
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 38.51% 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 Indxx
SuperDividend®
U.S. Low Volatility Index ("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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index.
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, 2022, 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (03/11/2013) |
Global
X SuperDividend®
U.S.
ETF: |
|
|
|
·Return before
taxes |
-4.05% |
0.71% |
3.79% |
·Return
after taxes on distributions1 |
-5.26% |
-1.07% |
2.13% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-1.92% |
0.03% |
2.49% |
Indxx
SuperDividend®
U.S. Low Volatility Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
-3.40% |
1.05% |
4.36% |
S&P
500®
Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
-18.11% |
9.42% |
11.77% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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: |
0.02% |
Total
Annual Fund Operating Expenses: |
0.57% |
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 |
$58 |
$183 |
$318 |
$714 |
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 34.00% 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 MSCI EAFE
Top 50 Dividend Index ("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, 2022, 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, 2022, 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying
Index.
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, 2022, the Underlying Index was
concentrated in the insurance 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 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 Insurance Industry: The
insurance industry may be significantly affected by changes in interest rates,
catastrophic events, price and market competition, the imposition of premium
rate caps, or other changes in government regulation or tax law, among other
factors.
Different
segments of the insurance industry can be significantly affected by changes in
mortality and morbidity rates, environmental clean-up costs and catastrophic
events such as earthquakes, hurricanes and terrorist acts.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 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. Japan’s economy has suffered from low growth and low inflation for a
prolonged period of time since the collapse of its bubble economy, and that may
continue despite the efforts of the Bank of Japan and policymakers. 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.
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”. The United Kingdom officially stopped being a member of the
European Union on January 31, 2020. On December 30, 2020, the United Kingdom and
the European Union signed an agreement on the terms governing certain aspects of
the European Union’s and the United Kingdom’s relationship following the end of
the transition period, the EU-UK Trade and Cooperation Agreement (the “TCA”).
Notwithstanding the TCA, there is likely to be considerable uncertainty as to
the United Kingdom’s post-transition framework, and in particular, as to the
arrangements which will apply to the United Kingdom’s relationships with the
European Union and with other countries, which is likely to continue to develop
and could result in increased volatility and illiquidity and potentially lower
economic growth.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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)
|
|
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|
|
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|
Best
Quarter: |
12/31/2020 |
25.39% |
Worst
Quarter: |
3/31/2020 |
-32.96% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (11/14/2016) |
Global
X MSCI SuperDividend®
EAFE ETF: |
|
|
|
·Return before
taxes |
-7.61% |
0.02% |
4.29% |
·Return
after taxes on distributions1 |
-9.02% |
-1.25% |
2.91% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-3.29% |
0.03% |
3.31% |
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) |
-7.27% |
0.52% |
4.79% |
MSCI
EAFE Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-14.45% |
1.54% |
5.62% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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 101.78% 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 MSCI
Emerging Markets Top 50 Dividend Index ("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
MSCI Emerging Markets Top 50 Dividend Index tracks the performance of 50
equally-weighted companies that rank among the highest dividend yielding equity
securities in Emerging Markets, as defined by MSCI. The Underlying Index may
include components from the following countries: Brazil, Chile, China, Colombia,
Czech Republic, Egypt, Greece, Hungary, India, Indonesia, South Korea, Kuwait,
Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa,
Taiwan, Thailand, Turkey and United Arab Emirates. The MSCI Emerging Markets Top
50 Dividend Index begins with the MSCI Emerging Markets Index, which is a
capitalization-weighted index, as its starting universe, and then follows a
rules-based methodology that is designed to select among the highest dividend
yielding equity securities of the MSCI Emerging Markets Index. The MSCI Emerging
Markets Top 50 Dividend Index is equal weighted and rebalanced annually. 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index.
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, 2022, the Underlying Index 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
Qualified Foreign Institutional Investor ("QFII") or a Renminbi Qualified
Foreign Institutional Investor ("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
Shanghai Stock Exchange ("SSE") (in the case of Shanghai Connect) or the
Shenzhen Stock Exchange ("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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or other key figures
within companies, or speculation about such actions, may lead to sudden and
unpredictable falls in the value of securities within the Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access.
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 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 Taiwan: Investments
in Taiwanese issuers involve risks that are specific to Taiwan, including legal,
regulatory, political and economic risks. Political and economic developments of
Taiwan’s neighbors may have an adverse effect on Taiwan’s economy. Specifically,
Taiwan’s geographic proximity and history of political contention with China
have resulted in ongoing tensions, which may materially affect the Taiwanese
economy and its securities market.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business
day and fluctuates with changes in the market value of the Fund’s holdings. The
trading price of the Fund’s shares fluctuates, in some cases materially,
throughout trading hours in response to changes in the Fund’s NAV.
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.
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
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (03/16/2015) |
Global
X MSCI SuperDividend®
Emerging Markets ETF: |
|
|
|
·Return before
taxes |
-21.09% |
-7.05% |
-1.52% |
·Return
after taxes on distributions1 |
-22.10% |
-8.45% |
-3.00% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-11.37% |
-4.94% |
-0.97% |
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) |
-21.36% |
-6.29% |
-0.38% |
MSCI
Emerging Markets Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-20.09% |
-1.40% |
2.67% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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: |
0.01% |
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 82.67% 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 Solactive
Global SuperDividend®
REIT
Index ("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, 2022,
the Underlying Index had 28 constituents, 12 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines
the relative weightings of the securities in the Underlying Index and publishes
information regarding the market value of the Underlying Index.
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, 2022, 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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:
The real estate sector includes real estate companies focused on commercial and
residential real estate development, sales, operations, and services, as well as
real estate investment trusts (“REITs”). 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.
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. Where all
or a portion of the Fund's underlying securities trade in a market that is
closed when the market in which the Fund's shares are listed and trading is
open, there may be differences between the last quote from the security’s closed
foreign market and the value of the security during the Fund’s domestic trading
day. This in turn could lead to differences between the market price of the
Fund’s shares and the underlying value of those shares.
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 Singapore: Investments
in Singaporean issuers involve risks that are specific to Singapore, including
legal, regulatory, political and economic risks. In addition, because
Singapore’s economy is export-driven, Singapore relies heavily on its trading
partners. Political and economic developments of Singapore's neighbors may have
an adverse effect on Singapore's 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and
risks,
causing uncertainty for global economic growth. Market risk factors may result
in 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 |
22.73% |
Worst
Quarter: |
3/31/2020 |
-56.55% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (03/16/2015) |
Global
X SuperDividend®
REIT ETF: |
|
|
|
·Return before
taxes |
-17.80% |
-7.14% |
-1.37% |
·Return
after taxes on distributions1 |
-19.56% |
-9.44% |
-4.21% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-10.46% |
-5.86% |
-1.93% |
Solactive
Global SuperDividend®
REIT Index
(net)
(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) |
-17.43% |
-6.80% |
-0.86% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-18.11% |
9.42% |
10.22% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a Portfolio Manager of the Fund since June 10, 2019. Ms.
Yang has been a Portfolio Manager of the Fund since December 2020. Mr. Lu has
been a Portfolio Manager of the Fund since March 2022.
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 Global X U.S. High Yield
Preferred 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 39.39% 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
Global X U.S. High Yield Preferred Index ("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 is owned and was developed by Global X Management Company LLC
(the “Index Provider”), an affiliate of the Fund and the Fund’s investment
adviser (the “Adviser”). The Underlying Index tracks the performance of the
highest-yielding preferred securities listed in the United States, as determined
by Solactive AG, the administrator of the Underlying Index (“Index
Administrator”). 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 Administrator. The
Underlying Index does not seek to directly reflect the performance of the
companies issuing the preferred
stock.
As of December 31, 2022, the Underlying Index had 50 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
Index Administrator 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, 2022, 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.
Affiliated
Index Provider Risk: The
Adviser also serves as the Fund’s Index Provider, which may present the
appearance of a conflict of interest. For example, a potential conflict could
arise if the Adviser were to exercise undue influence with respect to regular
and/or extraordinary updates to the methodology or composition of the Underlying
Index, including in a manner that might improve the apparent performance of the
Fund relative to the performance of the Underlying Index. Additionally,
potential conflicts could arise to the extent that portfolio managers of the
Adviser become aware of contemplated methodology changes or rebalance activity
prior to disclosure to the public, which could facilitate “front running” on
behalf of other funds managed by the Adviser with similar exposure. Although the
Adviser has taken steps designed to ensure that these potential conflicts are
mitigated (e.g., via the adoption of policies and procedures that are designed
to minimize potential conflicts of interest and ensure independence with respect
to the operation of the index, as well as the implementation of informational
barriers designed to minimize the potential for the misuse of information about
the Underlying Index), there can be no assurance that such measures will be
successful.
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.
LIBOR
Transition Risk: The
Fund invests in financial instruments that utilize London Interbank Offered Rate
(“LIBOR”) as the reference or benchmark rate for variable interest rate
calculations. On July 27, 2017, the head of the United Kingdom’s Financial
Conduct Authority ("FCA") announced a desire to phase out the use of LIBOR by
the end of 2021. In March 2021, the FCA and LIBOR's administrator, ICE Benchmark
Administration, announced that most LIBOR settings will no longer be published
after the end of 2021 and a selection of widely used U.S. dollar LIBOR rates
will continue to be published until June 2023 in order to assist with the
transition. There remains uncertainty regarding the effect of the LIBOR
transition process and therefore any impact of a transition away from LIBOR on
the Fund or the instruments in which the Fund invests cannot yet be determined.
There is no assurance that the composition or characteristics of any alternative
reference rate (e.g., the Secured Overnight Financing Rate (“SOFR”), which is
intended to replace the U.S. dollar LIBOR) will be similar to or produce the
same value or economic equivalence as LIBOR or that instruments using an
alternative rate will have the same volume or liquidity. As a result, the
transition process might lead to increased volatility and reduced liquidity in
markets that currently rely on LIBOR to determine interest rates; a reduction in
the value of some LIBOR-based investments; increased difficulty in borrowing or
refinancing and diminished effectiveness of any applicable hedging strategies
against instruments whose terms currently include LIBOR; and/or costs incurred
in connection with temporary borrowings and closing out positions and entering
into new agreements. Any such effects of the transition away from LIBOR and the
adoption of alternative reference rates could result in losses to the Fund.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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. The impact of changes in capital requirements and recent or
future regulation of any individual banking company, or of the financials sector
as a whole, cannot be predicted. In recent years, cyberattacks 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 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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. On
April 3, 2023, the Fund will change its Underlying Index from the S&P
Enhanced Yield North American Preferred Stock Index to the Global X U.S. High
Yield Preferred 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: |
6/30/2020 |
10.56% |
Worst
Quarter: |
3/31/2020 |
-17.18% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Ten
Years Ended December 31, 2022 |
Global
X SuperIncome™ Preferred ETF: |
|
|
|
·Return before
taxes |
-14.74% |
1.05% |
2.02% |
·Return
after taxes on distributions1 |
-16.17% |
-0.72% |
0.07% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-7.93% |
0.56% |
1.17% |
S&P
Enhanced Yield North American Preferred Stock Index2
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-14.36% |
1.51% |
2.61% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-18.11% |
9.42% |
12.56% |
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
Effective April 3, 2023,
the Underlying Index will be changed to the Global X U.S. High Yield Preferred
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a
Portfolio
Manager of the Fund since June 10, 2019. Ms. Yang has been a Portfolio Manager
of the Fund since December 2020. Mr. Lu has been a Portfolio Manager of the Fund
since March 2022.
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: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.60% |
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 31.11% 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 CBOE
NASDAQ-100®
BuyWrite V2 Index (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, and unaffiliated with, the Fund and
Global X Management Company LLC, the investment adviser for the Fund
("Adviser"). The Index Provider determines the relative weightings of the
securities in the Underlying Index and publishes information regarding the
market value of the Underlying Index.
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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (12/11/2013) |
Global
X NASDAQ 100®
Covered Call ETF:1 |
|
|
|
·Return before
taxes |
-19.00% |
3.00% |
5.64% |
·Return
after taxes on distributions2 |
-19.80% |
0.50% |
3.13% |
·Return
after taxes on distributions and sale of Fund Shares2 |
-11.24% |
1.35% |
3.33% |
Hybrid
CBOE NASDAQ-100®
BuyWrite V2 Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-18.71% |
3.98% |
6.53% |
NASDAQ-100®
Total Return Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-32.38% |
12.36% |
14.71% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“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. Ms.
Yang has been Portfolio Manager of the Fund since December 2020. Mr. Lu has been
a Portfolio Manager of the Fund since March 2022.
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: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.60% |
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 15.60% 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 CBOE
S&P 500 BuyWrite Index (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, 2022, the S&P 500 Index included common stocks of
companies with a market capitalization range of between approximately $6.5
billion and $2.9 trillion.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). The Index Provider 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (06/21/2013) |
Global
X S&P 500®
Covered Call ETF:1 |
|
|
|
·Return before
taxes |
-12.07% |
3.59% |
6.57% |
·Return
after taxes on distributions2 |
-13.28% |
1.82% |
4.95% |
·Return
after taxes on distributions and sale of Fund Shares2 |
-7.13% |
2.05% |
4.55% |
Hybrid
CBOE S&P 500 BuyWrite Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-11.37% |
4.50% |
6.90% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-18.11% |
9.42% |
11.79% |
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 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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“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. Ms.
Yang has been Portfolio Manager of the Fund since December 2020. Mr. Lu has been
a Portfolio Manager of the Fund since March 2022.
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: NYSE Arca
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 |
0.01% |
Acquired
Fund Fees and Expenses:2 |
0.05% |
Total
Annual Fund Operating Expenses: |
0.66% |
Expense
Reimbursement and/or Fee Waiver3 |
(0.06)% |
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, 2023, until at least
March 1,
2024.
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 |
$205 |
$362 |
$817 |
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 186.48% 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
Cboe Russell 2000 BuyWrite Index ("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, and unaffiliated with, 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (4/17/2019) |
Global
X Russell 2000 Covered Call ETF: |
|
|
·Return before
taxes |
-13.09% |
3.87% |
·Return
after taxes on distributions1 |
-14.28% |
1.22% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-7.73% |
1.97% |
Cboe
Russell 2000 BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-12.62% |
4.74% |
Russell
2000 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-20.44% |
4.53% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie have been Portfolio Managers of the
Fund since the Fund's inception. Ms. Chan has been a Portfolio Manager of the
Fund since June 10, 2019. Ms. Yang has been a Portfolio Manager of the Fund
since December 2020. Mr. Lu has been a Portfolio Manager of the Fund since March
2022.
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 Dow 30®
Covered Call ETF
Ticker:
DJIA Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X Dow 30®
Covered
Call ETF ("Fund") seeks to provide investment results that correspond generally
to the price and yield performance, before fees and expenses, of the DJIA Cboe
BuyWrite v2 Index ("Underlying Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy and hold 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 tables 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. From the Fund's commencement of
operations on February 23, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 8.82% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its net assets, plus the amount of any borrowings
for investment purposes, in the securities of the DJIA Cboe BuyWrite v2 Index
(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 covered call strategy that holds
a theoretical portfolio of the underlying stocks of the Dow Jones Industrial
Average®
(the
"Reference Index") and "writes" (or sells) a succession of one-month
at-the-money (“ATM”) covered call options on the Reference Index. The Underlying
Index specifically reflects the performance of the component securities of the
Reference Index, combined with written (sold) ATM call options corresponding to
the value of the portfolio of stocks in the Reference Index. The Fund invests in
the securities reflected in the Underlying Index, and cannot invest directly in
the Underlying Index itself. The implications of the written (sold) call option
are described in more detail here:
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the
premium.
On
a monthly basis, the Underlying Index’s hypothetical portfolio will write (sell)
a succession of one-month call options corresponding to the value of the
underlying stocks of the Reference Index and will cover such options by holding
the component securities of the Reference Index. Each call option written in the
Underlying Index’s hypothetical portfolio will have an exercise price generally
at the prevailing market price of the Reference Index. However, if call options
with those precise strike prices are unavailable, the Underlying Index’s
hypothetical portfolio will instead select the call options with the strike
price closest to but above the prevailing market price of the Reference Index.
Each option position in the Underlying Index’s hypothetical portfolio will (i)
be traded on a national securities exchange; (ii) be held until expiration date;
(iii) expire on its date of maturity; (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
Reference Index is a price weighted index containing equity securities of 30 of
the largest U.S. listed companies. Price weighting seeks to weight constituents
based on share price. The Fund's investment objective and Underlying Index may
be changed without shareholder approval.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by the Fund
will be collateralized by the Fund's equity holdings at the time the Fund sells
the options. By selling call options on the value of the portfolio of stocks in
the Reference Index, the Fund's covered call strategy may generate income. If
the price of the Reference Index is above the strike price of the Fund’s call
options positions upon the expiration of the call option, then at expiration the
Fund would owe the purchaser of the call option the difference between the
strike price and the value of the Reference Index, so the amount owed with
respect to the call option would offset any gains the Fund may experience from
the securities held. For example, if the price of the Reference Index were to
increase by 15% from the time the call options were sold to the time the call
options expired, then the call options would be expected to have a value equal
to approximately 15% of the value the portfolio had at the time when the call
options were sold, which would offset all of the Fund’s gains from the increase
in the Reference Index over the relevant period. However, if the price of the
Reference Index is below the strike price of the Fund’s call options positions
at expiry, the call options will expire worthless and the Fund will retain the
premium. An investor that purchases Fund shares other than on the day that the
Fund takes writes (sells) monthly call options, or who sells shares other than
on the day that the call options expire, may experience different investment
returns, depending on the relative difference between the strike price of the
Fund’s call options positions, and the price of the Reference
Index.
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., 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, 2022, the Underlying Index was not
concentrated in any industry. The Fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified
fund.
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 will invest in options, a type of derivative instrument. 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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:The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since September 2022.
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
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"
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 18.12% 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 Cboe
Nasdaq 100 Half BuyWrite V2 Index ("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, and unaffiliated with, 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2021 |
8.13% |
Worst
Quarter: |
6/30/2022 |
-18.31% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (09/18/2020)
|
Global
X Nasdaq 100®
Covered Call & Growth ETF: |
|
|
·Return before
taxes |
-26.25% |
0.25% |
·Return
after taxes on distributions1 |
-26.66% |
-1.94% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-15.53% |
-0.48% |
Cboe
Nasdaq 100 Half BuyWrite V2 Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-25.80% |
0.83% |
NASDAQ-100®
Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-32.38% |
0.79% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan
have
been Portfolio Managers of the Fund since the Fund's inception. Ms. Yang has
been a Portfolio Manager of the Fund since December 2020. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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"
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 9.36% 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 Cboe
S&P 500 Half BuyWrite Index ("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, and unaffiliated
with, 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2021 |
9.04% |
Worst
Quarter: |
6/30/2022 |
-13.72% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (09/18/2020)
|
Global
X S&P 500®
Covered Call & Growth ETF: |
|
|
·Return before
taxes |
-15.24% |
6.77% |
·Return
after taxes on distributions1 |
-15.96% |
4.76% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-9.01% |
4.42% |
Cboe
S&P 500 Half BuyWrite Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-14.69% |
7.62% |
S&P
500®
Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.11% |
8.22% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Ms. Yang has been a Portfolio
Manager of the Fund since December 2020. Mr. Lu has been a Portfolio Manager of
the Fund since March 2022.
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 & Growth
ETF
Ticker:
RYLG Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The Global X Russell 2000
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 Russell 2000 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 tables 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 Waiver:3 |
(0.10)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
Other Expenses are based
on estimated amounts for the current 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 November 11, 2022, until at least
March 1,
2024.
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. From the Fund's commencement of
operations on October 4, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 0% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its net assets, plus the amount of any borrowings
for investment purposes (if any), in the securities of the Cboe Russell 2000
Half BuyWrite Index (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 covered call strategy that holds
a theoretical portfolio of the underlying stocks of the Russell 2000 Index (the
"Reference Index") and "writes" (or sells) a succession of one-month
at-the-money (“ATM”) 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 Underlying
Index specifically reflects the performance of the component securities of the
Reference Index combined with written (sold) ATM call options corresponding to
the value of 50% of the value of the portfolio of stocks in the Reference Index.
The Fund invests in the securities reflected in the Underlying Index or in
investments (including other underlying ETFs) that have economic characteristics
that are substantially identical to the economic characteristics of such
component securities, and cannot invest directly in the Underlying Index itself.
The implications of the written (sold) call option are described in more detail
here:
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
On
a monthly basis, the Underlying Index’s hypothetical portfolio will write (sell)
a succession of one-month call options corresponding to approximately 50% of the
value of the underlying stocks of the Reference Index and will cover such
options by holding the component securities of the Reference Index. Each call
option written in the Underlying Index’s hypothetical portfolio will have an
exercise price generally at the prevailing market price of the Reference Index.
However, if call options with those precise strike prices are unavailable, the
Underlying Index’s hypothetical portfolio will instead select the call options
with the strike price closest to but above the prevailing market price of the
Reference Index. Each option position in the Underlying Index’s hypothetical
portfolio will (i) be traded on a national securities exchange; (ii) be held
until expiration date; (iii) expire on its date of maturity; (iv) only be
subject to exercise on its expiration date; and (v) be settled in cash.
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”). As of December 31, 2022, the Reference Index had
1,950 constituents, with a minimum market capitalization of $6.1 million and a
maximum market capitalization of $7.9 billion and was not concentrated in any
particular sector.
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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). In addition, any
determinations related to the constituents of the Underlying Index are made
independent of the Fund's portfolio managers. 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 call options sold by the Fund
will be collateralized by the Fund's equity holdings at the time the Fund sells
the options. By selling call options on approximately 50% of the value of the
portfolio of stocks in the Reference Index, the Fund's covered call strategy may
generate income 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. If the price of the Reference Index is above the strike
price of the Fund’s call options positions upon the expiration of the call
option, then at expiration the Fund would owe the purchaser of the call option
the difference between the strike price and the value of the Reference Index, so
the amount owed with respect to the call option would offset some gains the Fund
may experience from the securities held. For example, if the price of the
Reference Index were to increase by 15% from the time the call options were sold
to the time the call options expired, then the call options would be expected to
have a value equal to approximately 7.5% of the value the portfolio had at the
time when the call options were sold, which would offset approximately half of
the Fund’s gains from the increase in the Reference Index over the relevant
period. However, if the price of the Reference Index is below the strike price
of the Fund’s call options positions at expiry, the call options will expire
worthless and the Fund will retain the
premium.
An investor that purchases Fund shares other than on the day that the Fund takes
writes (sells) monthly call options, or who sells shares other than on the day
that the call options expire, may experience different investment returns,
depending on the relative difference between the strike price of the Fund’s call
options positions, and the price of the Reference Index.
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 net assets, plus the amount of
any borrowings for investment purposes (if any), 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., 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To, Xie and Lu and Ms. Chan and Ms. Yang have
been Portfolio Managers of the Fund since the Fund's inception.
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
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 Financials Covered Call & Growth
ETF
Ticker:
FYLG Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The Global X Financials
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 Financial Select Sector 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 tables 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 |
0.06% |
Total
Annual Fund Operating Expenses: |
0.66% |
Expense
Reimbursement and/or Fee Waiver:3 |
(0.06)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1 Other Expenses are based
on estimated amounts for the current 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. 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 November 1, 2022, until at least
March 1,
2024.
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 |
$61 |
$205 |
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 net assets, plus borrowings for investment purposes (if any), in the
securities of the Cboe S&P Financial Select Sector Half BuyWrite Index (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 partially covered call strategy
that holds a theoretical portfolio of the underlying securities of the Financial
Select Sector Index (the “Reference Index”). The Underlying Index "writes" (or
sells) a succession of one-month at-the-money covered call options on the
Financial Select Sector SPDR®
Fund
(the “Reference Fund”), or such other fund that seeks to track the performance
of the Reference Index, as determined by the Index Provider. The call options
correspond to approximately 50% of the value of the securities in the Reference
Index, therefore representing a partially covered call strategy.
The
call options written (sold) by the Fund will be FLexible EXchange (“FLEX”)
options. The Fund invests in the securities reflected in the Underlying Index or
in investments (including other underlying ETFs) that have economic
characteristics that are substantially identical to the economic characteristics
of such component securities and cannot invest directly in the Underlying Index
itself. The implications of the written (sold) FLEX call options are described
in more detail here:
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
FLEX
Options
– FLEX options are options guaranteed by the Options Clearing Corporation (OCC),
that allow investors to customize key contract terms, including expiration date,
exercise style, and exercise price, and expanded position limits.
On
a monthly basis, the Underlying Index’s hypothetical portfolio will write (sell)
a succession of one-month FLEX call options on the Reference Fund corresponding
to approximately 50% of the value of the securities in the Reference Index and
will cover such options by holding the component securities of the Reference
Index. The exercise price of each FLEX call option written is the listed option
reference price closest to the Volume Weighted Average Price (“VWAP”) of the
Reference Fund from 12:59p.m. ET to 1:00p.m. ET on the roll date or, if the
Reference Fund does not trade during this period, the last mid-price of the
Reference Fund before 1:00p.m. ET. The roll date is a specified day of each
month when the open call options position of the Underlying Index expires, and a
new call option position is opened that will expire as of the next roll date.
The roll date for the Underlying Index is the business day prior to the standard
monthly listed option expiry date, the latter typically being the third Friday
of each month. Each option position will (i) be held until one day prior to the
expiration date (i.e., generally the Thursday preceding the third Friday of the
month) and liquidated at a 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); (ii) expire on its date of maturity (in the next
calendar month); and (iii) only be subject to exercise on its expiration date.
Because FLEX options may not trade regularly, the Underlying Index will utilize
a model-based valuation for the FLEX options that references the quoted prices
for listed options on the Reference Fund.
The
Reference Index is a modified market capitalization weighted index containing
the securities of the S&P 500 Index that are classified within the
financials sector under the Global Industry Classification System ("GICS"),
including securities of companies from the following industries: diversified
financial services; insurance; banks; capital markets; mortgage real estate
investment trusts (“REITs”); consumer finance; and thrifts and mortgage finance.
The Reference Index is one of eleven Select Sector Indexes developed and
maintained in accordance with the following criteria: (1) each of the component
securities in the Index is a constituent of the S&P 500 Index; and (2) the
Reference Index is calculated by S&P Dow Jones Indices LLC (“S&P DJI”)
based on a proprietary “modified market capitalization” methodology, which means
that modifications may be made to the market capitalization weights of single
stock concentrations in order to conform to the requirements of the Internal
Revenue Code of 1986, as amended (the “Internal Revenue Code” or “IRC”). As of
December 31, 2022, the Reference Index was comprised of 67
holdings.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by the Fund
will be collateralized by the Fund's equity holdings at the time the Fund sells
the options. By selling call options corresponding to approximately 50% of the
value of the portfolio of stocks in the Reference Index, the Fund's partially
covered call strategy may generate income 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. If the price of the Reference
Fund is above the strike price of the Fund’s call options positions upon the
expiration of the call options, then at expiration the Fund would owe the
purchaser of the call option the difference between the strike price and the
price of the Reference Fund, so the amount owed with respect to the call option
would be expected to offset approximately half of the gains the Fund may
experience from the securities held. For example, if the price of the Reference
Fund were to increase by 15% from the time the call options were sold to the
time the call options expired, then the call options could be expected to have a
value equal to approximately 7.5% of the value the portfolio had at the time
when the call options were sold, which would offset approximately half of the
Fund’s gains from the increase in the Reference Index over the relevant period,
as long as the performance of the Reference Fund generally corresponds to the
performance of the Reference Index. However, if the price of the Reference Fund
is below the strike price of the Fund’s call options positions at expiry, the
call options will expire worthless, and the Fund will retain the premium. An
investor that purchases Fund shares other than on the day that the Fund writes
(sells) monthly call options, or who sells shares other than on the day that the
call options expire, may experience different investment returns, depending on
the relative difference between the strike price of the Fund’s call options
positions, and the price of the Reference Fund.
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 net assets, plus the amount of any borrowings for investment purposes (if
any), 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., 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, 2022, the Underlying Index was
concentrated in the banking and capital markets industries and had significant
exposure to the financials sector. The Fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified
fund.
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 will invest in options, a type of derivative instrument. 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.
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.
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.
Correlation
Risk: In
seeking to track the performance of the Underlying Index, the Fund anticipates
holding component securities of the Reference Index and writing call options on
the Reference Fund. While it is anticipated that the performance of the
Reference Fund, and of the call options written on the Reference Fund, will
generally correspond to the performance of the component securities of the
Reference Index, there can be no guarantee that such performance will be highly
correlated. It is possible that the value of the component securities of the
Reference Index may diverge from the value of the Reference Fund on which the
call options are written. if such performance diverges, this may cause the
performance of the call options to offset more or less than 50% of the gains of
the component securities during a roll period. If this occurs, the total return
of the Fund will deviate from the total return expectations of a 50% covered
call strategy.
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.
Flex
Options Risk: The
Fund will utilize FLEX options issued and guaranteed for settlement by the OCC.
The Fund bears the risk that the OCC will be unable to, or unwilling to, perform
their obligations under the contracts. In the unlikely event that the OCC cannot
meet their obligations, the Fund could suffer significant losses. Additionally,
FLEX options may be more illiquid than other securities, including traditional
options. To the extent that the FLEX options may not be expected to experience
regular trading, the FLEX options held by the Fund may be valued based on a
price quotation or other equivalent indication of
value
supplied by a pricing service, rather than based on a price last traded on an
exchange. In less liquid markets for FLEX options, the Fund may have difficulty
entering into or closing out certain positions at designated times and/or
prices, including in connection with the monthly options roll process. With the
creation and redemption of Shares, to the extent market participants are not
willing or able to enter into FLEX option transactions with the Fund at prices
that reflect the market price of the Shares, the Fund’s net asset value (“NAV”)
and, in turn the share price of the Fund, could suffer significant losses. The
Fund may experience substantial downside from specific FLEX option positions,
and some may expire worthless. As a FLEX option approaches the predetermined
expiration date, its value typically moves in parallel with the value of the
Reference Fund. However, prior to such date, the value of the FLEX options may
not increase or decrease at the same rate as the Reference Fund’s share price on
a day-to-day basis. The value of the underlying FLEX options will be affected by
many market factors, such as changes in the Reference Fund’s share price,
interest rates, the volatility of the Reference Fund, and the remaining time to
until the FLEX options expire.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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. The impact of changes in capital requirements and recent or
future regulation of any individual banking company, or of the financials sector
as a whole, cannot be predicted. In recent years, cyberattacks 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 Capital Markets Industry: Companies
in the capital markets industry may be significantly affected by stock and bank
trading activity, changes in governmental regulation, continuing increases in
price competition, decreases in fees or fee-related business, including
investment banking, brokerage, asset management and other servicing fees,
fluctuations in interest rates and other factors which could adversely affect
financial markets.
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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To, Xie and Lu and Ms. Chan and Ms. Yang have
been Portfolio Managers of the Fund since the Fund's inception.
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
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 Health Care Covered Call & Growth
ETF
Ticker:
HYLG Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The Global X Health Care
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 Health Care Select Sector 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 tables 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 |
0.06% |
Total
Annual Fund Operating Expenses: |
0.66% |
Expense
Reimbursement and/or Fee Waiver:3 |
(0.06)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1 Other Expenses are based
on estimated amounts for the current 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. 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 November 1, 2022, until at least
March 1,
2024.
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 |
$61 |
$205 |
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 net assets, plus borrowings for investment purposes (if any), in the
securities of the Cboe S&P Health Care Select Sector Half BuyWrite Index
(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 partially covered call strategy
that holds a theoretical portfolio of the underlying securities of the Health
Care Select Sector Index (the “Reference Index”). The Underlying Index "writes"
(or sells) a succession of one-month at-the-money covered call options on the
Health Care Select Sector SPDR®
Fund (the “Reference Fund”), or such other fund that seeks to track the
performance of the Reference Index, as determined by the Index
Provider.
The
call options correspond to approximately 50% of the value of the securities in
the Reference Index, therefore representing a partially covered call
strategy.
The
call options written (sold) by the Fund will be FLexible EXchange (“FLEX”)
options. The Fund invests in the securities reflected in the Underlying Index or
in investments (including other underlying ETFs) that have economic
characteristics that are substantially identical to the economic characteristics
of such component securities and cannot invest directly in the Underlying Index
itself. The implications of the written (sold) FLEX call options are described
in more detail here:
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
FLEX
Options –
FLEX options are options guaranteed by the Options Clearing Corporation (OCC),
that allow investors to customize key contract terms, including expiration date,
exercise style, and exercise price, and expanded position limits.
On
a monthly basis, the Underlying Index’s hypothetical portfolio will write (sell)
a succession of one-month FLEX call options on the Reference Fund corresponding
to approximately 50% of the value of the securities in the Reference Index and
will cover such options by holding the component securities of the Reference
Index. The exercise price of each FLEX call option written is the listed option
reference price closest to the Volume Weighted Average Price (“VWAP”) of the
Reference Fund from 12:59p.m. ET to 1:00p.m. ET on the roll date or, if the
Reference Fund does not trade during this period, the last mid-price of the
Reference Fund before 1:00p.m. ET. The roll date is a specified day of each
month when the open call options position of the Underlying Index expires, and a
new call option position is opened that will expire as of the next roll date.
The roll date for the Underlying Index is the business day prior to the standard
monthly listed option expiry date, the latter typically being the third Friday
of each month. Each option position will (i) be held until one day prior to the
expiration date (i.e., generally the Thursday preceding the third Friday of the
month) and liquidated at a 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); (ii) expire on its date of maturity (in the next
calendar month); and (iii) only be subject to exercise on its expiration date.
Because FLEX options may not trade regularly, the Underlying Index will utilize
a model-based valuation for the FLEX options that references the quoted prices
for listed options on the Reference Fund.
The
Reference Index is a modified market capitalization weighted index containing
the securities of the S&P 500 Index that are classified within the health
care sector under the Global Industry Classification System ("GICS"), including
securities of companies from the following industries: pharmaceuticals; health
care equipment and supplies; health care providers and services; biotechnology;
life sciences tools and services; and health care technology. The Reference
Index is one of eleven Select Sector Indexes developed and maintained in
accordance with the following criteria: (1) each of the component securities in
the Index is a constituent of the S&P 500 Index; and (2) the Reference Index
is calculated by S&P Dow Jones Indices LLC (“S&P DJI”) based on a
proprietary “modified market capitalization” methodology, which means that
modifications may be made to the market capitalization weights of single stock
concentrations in order to conform to the requirements of the Internal Revenue
Code of 1986, as amended (the “Internal Revenue Code” or “IRC”).
As
of December 31, 2022, the Reference Index was comprised of 63
holdings.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by the Fund
will be collateralized by the Fund's equity holdings at
the
time the Fund sells the options. By selling call options corresponding to
approximately 50% of the value of the portfolio of stocks in the Reference
Index, the Fund's partially covered call strategy may generate income 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.
If the price of the Reference Fund is above the strike price of the Fund’s call
options positions upon the expiration of the call options, then at expiration
the Fund would owe the purchaser of the call option the difference between the
strike price and the price of the Reference Fund, so the amount owed with
respect to the call option would be expected to offset approximately half of the
gains the Fund may experience from the securities held. For example, if the
price of the Reference Fund were to increase by 15% from the time the call
options were sold to the time the call options expired, then the call options
could be expected to have a value equal to approximately 7.5% of the value the
portfolio had at the time when the call options were sold, which would offset
approximately half of the Fund’s gains from the increase in the Reference Index
over the relevant period, as long as the performance of the Reference Fund
generally corresponds to the performance of the Reference Index. However, if the
price of the Reference Fund is below the strike price of the Fund’s call options
positions at expiry, the call options will expire worthless, and the Fund will
retain the premium. An investor that purchases Fund shares other than on the day
that the Fund writes (sells) monthly call options, or who sells shares other
than on the day that the call options expire, may experience different
investment returns, depending on the relative difference between the strike
price of the Fund’s call options positions, and the price of the Reference
Fund.
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 net assets, plus the amount of
any borrowings for investment purposes (if any), 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., 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, 2022, the Underlying Index was
concentrated in the pharmaceuticals industry and had significant exposure to the
health care sector. The Fund is classified as “non-diversified,”
which means it may invest a larger percentage of its assets in a smaller number
of issuers than a diversified fund.
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 will invest in options, a type of derivative instrument. 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.
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.
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.
Correlation
Risk: In
seeking to track the performance of the Underlying Index, the Fund anticipates
holding component securities of the Reference Index and writing call options on
the Reference Fund. While it is anticipated that the performance of the
Reference Fund, and of the call options written on the Reference Fund, will
generally correspond to the performance of the component securities of the
Reference Index, there can be no guarantee that such performance will be highly
correlated. It is possible that the value of the component securities of the
Reference Index may diverge from the value of the Reference Fund on which the
call options are written. if such performance diverges, this may cause the
performance of the call options to offset more or less than 50% of the gains of
the component securities during a roll period. If this occurs, the total return
of the Fund will deviate from the total return expectations of a 50% covered
call strategy.
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.
Flex
Options Risk: The
Fund will utilize FLEX options issued and guaranteed for settlement by the OCC.
The Fund bears the risk that the OCC will be unable to, or unwilling to, perform
their obligations under the contracts. In the unlikely event that the OCC cannot
meet their obligations, the Fund could suffer significant losses. Additionally,
FLEX options may be more illiquid than other securities, including traditional
options. To the extent that the FLEX options may not be expected to experience
regular trading, the FLEX options held by the Fund may be valued based on a
price quotation or other equivalent indication of value supplied by a pricing
service, rather than based on a price last traded on an exchange. In less liquid
markets for FLEX options, the Fund may have difficulty entering into or closing
out certain positions at designated times and/or prices, including
in
connection with the monthly options roll process. With the creation and
redemption of Shares, to the extent market participants are not willing or able
to enter into FLEX option transactions with the Fund at prices that reflect the
market price of the Shares, the Fund’s net asset value (“NAV”) and, in turn the
share price of the Fund, could suffer significant losses. The Fund may
experience substantial downside from specific FLEX option positions, and some
may expire worthless. As a FLEX option approaches the predetermined expiration
date, its value typically moves in parallel with the value of the Reference
Fund. However, prior to such date, the value of the FLEX options may not
increase or decrease at the same rate as the Reference Fund’s share price on a
day-to-day basis. The value of the underlying FLEX options will be affected by
many market factors, such as changes in the Reference Fund’s share price,
interest rates, the volatility of the Reference Fund, and the remaining time to
until the FLEX options expire.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 Health Care Sector: The
health care sector may be affected by government regulations and government
health care programs, increases or decreases in the cost of medical products and
services, an increased emphasis on outpatient services, and product liability
claims, among other factors. Many health care companies are heavily dependent on
patent protection, and the expiration of a company's patent may adversely affect
that company's profitability. Health care companies are subject to competitive
forces that may result in price discounting and may be thinly capitalized and
susceptible to product obsolescence. Companies in the health care sector may
also be affected by unforeseen circumstances including but not limited to the
spread of infectious disease which could impact drug development priorities and
pipelines, supply and demand dynamics for health care equipment, as well as the
ability to receive care in health care service facilities.
Risks
Related to Investing in the Pharmaceuticals Industry: Companies
in the pharmaceuticals industry may be affected by industry competition,
dependency on a limited number of products, obsolescence of products, government
approvals and regulations, loss or impairment of intellectual property rights
and litigation regarding product liability. Demand for pharmaceuticals,
generally speaking and specific to sub-segments, may fluctuate due to unexpected
events, including but not limited to global health crises like pandemics which
could strain health care systems and alter health care needs. Such demand
fluctuations could positively or negatively impact pharmaceutical companies.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To, Xie and Lu and Ms. Chan and Ms. Yang have
been Portfolio Managers of the Fund since the Fund's inception.
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
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 Information Technology Covered Call &
Growth ETF
Ticker:
TYLG Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The Global X Information
Technology 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 Technology Select Sector 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 tables 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 |
0.06% |
Total
Annual Fund Operating Expenses: |
0.66% |
Expense
Reimbursement and/or Fee Waiver:3 |
(0.06)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1 Other Expenses are based
on estimated amounts for the current 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. 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 November 1, 2022, until at least
March 1,
2024.
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 |
$61 |
$205 |
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 net assets, plus borrowings for investment purposes (if any), in the
securities of the Cboe S&P Technology Select Sector Half BuyWrite Index (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 partially covered call strategy
that holds a theoretical portfolio of the underlying securities of the
Information Technology Select Sector Index (the “Reference Index”). The
Underlying Index "writes" (or sells) a succession of one-month at-the-money
covered call options on the Information Technology Select Sector
SPDR®
Fund (the “Reference Fund”), or such other fund that seeks to track the
performance of the Reference Index, as determined by the Index Provider. The
call options correspond to approximately 50% of the value of the securities in
the Reference Index, therefore representing a partially covered call strategy.
The call options written (sold) by the Fund will be FLexible EXchange (“FLEX”)
options. The Fund invests in the securities reflected in the Underlying Index or
in investments (including other underlying ETFs) that have economic
characteristics that are substantially identical to the economic characteristics
of such component securities and cannot invest directly in the Underlying Index
itself. The implications of the written (sold) FLEX call options are described
in more detail here:
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
FLEX
Options
– FLEX options are options guaranteed by the Options Clearing Corporation (OCC),
that allow investors to customize key contract terms, including expiration date,
exercise style, and exercise price, and expanded position limits.
On
a monthly basis, the Underlying Index’s hypothetical portfolio will write (sell)
a succession of one-month FLEX call options on the Reference Fund corresponding
to approximately 50% of the value of the securities in the Reference Index and
will cover such options by holding the component securities of the Reference
Index. The exercise price of each FLEX call option written is the listed option
reference price closest to the Volume Weighted Average Price (“VWAP”) of the
Reference Fund from 12:59p.m. ET to 1:00p.m. ET on the roll date or, if the
Reference Fund does not trade during this period, the last mid-price of the
Reference Fund before 1:00p.m. ET. The roll date is a specified day of each
month when the open call options position of the Underlying Index expires, and a
new call option position is opened that will expire as of the next roll date.
The roll date for the Underlying Index is the business day prior to the standard
monthly listed option expiry date, the latter typically being the third Friday
of each month. Each option position will (i) be held until one day prior to the
expiration date (i.e., generally the Thursday preceding the third Friday of the
month) and liquidated at a 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); (ii) expire on its date of maturity (in the next
calendar month); and (iii) only be subject to exercise on its expiration date.
Because FLEX options may not trade regularly, the Underlying Index will utilize
a model-based valuation for the FLEX options that references the quoted prices
for listed options on the Reference Fund.
The
Reference Index is a modified market capitalization weighted index containing
the securities of the S&P 500 Index that are classified within the
information technology sector under the Global Industry Classification System
("GICS"), including securities of companies from the following industries:
technology hardware, storage, and peripherals; software; communications
equipment; semiconductors and semiconductor equipment; IT services; and
electronic equipment, instruments and components. The Reference Index is one of
eleven Select Sector Indexes developed and maintained in accordance with the
following criteria: (1) each of the component securities in the Reference Index
is a constituent of the S&P 500 Index; and (2) the Reference Index is
calculated by S&P Dow Jones Indices LLC (“S&P DJI”) based on a
proprietary “modified market capitalization” methodology, which means that
modifications may be made to the market capitalization weights of single stock
concentrations in order to conform to the requirements of the Internal Revenue
Code of 1986, as amended (the “Internal Revenue Code” or “IRC”). As of
December 31, 2022, the Reference Index was comprised of 76
holdings.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by the Fund
will be collateralized by the Fund's equity holdings at
the
time the Fund sells the options. By selling call options corresponding to
approximately 50% of the value of the portfolio of stocks in the Reference
Index, the Fund's partially covered call strategy may generate income 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.
If the price of the Reference Fund is above the strike price of the Fund’s call
options positions upon the expiration of the call options, then at expiration
the Fund would owe the purchaser of the call option the difference between the
strike price and the price of the Reference Fund, so the amount owed with
respect to the call option would be expected to offset approximately half of the
gains the Fund may experience from the securities held. For example, if the
price of the Reference Fund were to increase by 15% from the time the call
options were sold to the time the call options expired, then the call options
could be expected to have a value equal to approximately 7.5% of the value the
portfolio had at the time when the call options were sold, which would offset
approximately half of the Fund’s gains from the increase in the Reference Index
over the relevant period, as long as the performance of the Reference Fund
generally corresponds to the performance of the Reference Index. However, if the
price of the Reference Fund is below the strike price of the Fund’s call options
positions at expiry, the call options will expire worthless, and the Fund will
retain the premium. An investor that purchases Fund shares other than on the day
that the Fund writes (sells) monthly call options, or who sells shares other
than on the day that the call options expire, may experience different
investment returns, depending on the relative difference between the strike
price of the Fund’s call options positions, and the price of the Reference
Fund.
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 net assets, plus the amount of
any borrowings for investment purposes (if any), 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., 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, 2022, the Underlying Index was
concentrated in the software industry and had significant exposure to the
information technology sector. The Fund is classified as
“non-diversified,” which means it may invest a larger percentage of its assets
in a smaller number of issuers than a diversified
fund.
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 will invest in options, a type of derivative instrument. 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.
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.
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.
Correlation
Risk: In
seeking to track the performance of the Underlying Index, the Fund anticipates
holding component securities of the Reference Index and writing call options on
the Reference Fund. While it is anticipated that the performance of the
Reference Fund, and of the call options written on the Reference Fund, will
generally correspond to the performance of the component securities of the
Reference Index, there can be no guarantee that such performance will be highly
correlated. It is possible that the value of the component securities of the
Reference Index may diverge from the value of the Reference Fund on which the
call options are written. if such performance diverges, this may cause the
performance of the call options to offset more or less than 50% of the gains of
the component securities during a roll period. If this occurs, the total return
of the Fund will deviate from the total return expectations of a 50% covered
call strategy.
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.
Flex
Options Risk: The
Fund will utilize FLEX options issued and guaranteed for settlement by the OCC.
The Fund bears the risk that the OCC will be unable to, or unwilling to, perform
their obligations under the contracts. In the unlikely event that the OCC cannot
meet their obligations, the Fund could suffer significant losses. Additionally,
FLEX options may be more illiquid than other securities, including traditional
options. To the extent that the FLEX options may not be expected to experience
regular trading, the FLEX options held by the Fund may be valued based on a
price quotation or other equivalent indication of value supplied by a pricing
service, rather than based on a price last traded on an exchange. In less liquid
markets for FLEX options, the Fund may have difficulty entering into or closing
out certain positions at designated times and/or prices, including in connection
with the monthly options roll process. With the creation and redemption of
Shares, to the extent market participants are not willing or able to enter into
FLEX option transactions with the Fund at prices that reflect the market price
of
the
Shares, the Fund’s net asset value (“NAV”) and, in turn the share price of the
Fund, could suffer significant losses. The Fund may experience substantial
downside from specific FLEX option positions, and some may expire worthless. As
a FLEX option approaches the predetermined expiration date, its value typically
moves in parallel with the value of the Reference Fund. However, prior to such
date, the value of the FLEX options may not increase or decrease at the same
rate as the Reference Fund’s share price on a day-to-day basis. The value of the
underlying FLEX options will be affected by many market factors, such as changes
in the Reference Fund’s share price, interest rates, the volatility of the
Reference Fund, and the remaining time to until the FLEX options
expire.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
Risks
Related to Investing in the Software Industry: The
software industry can be significantly affected by intense competition,
aggressive pricing, technological innovations, and product obsolescence.
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.
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 U.S. 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,
at the start of 2023, central banks had already increased interest rates at the
fastest rate on record, and it is unknown how long this trend will continue and
when inflation will return to target levels. This increases the risk that
monetary policy may provide less support should economic growth slow.
Additionally, China’s shift away from a zero-COVID policy creates both
opportunities and risks, causing uncertainty for global economic growth. Market
risk factors may result in 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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To, Xie and Lu and Ms. Chan and Ms. Yang have
been Portfolio Managers of the Fund since the Fund's inception.
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
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®
Tail
Risk ETF
Ticker:
XTR Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Tail
Risk 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 Tail Risk 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 tables 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: |
0.01% |
Total
Annual Fund Operating Expenses: |
0.61% |
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 |
$62 |
$195 |
$340 |
$762 |
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 7.40% 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 Cboe
S&P 500 Tail Risk Index ("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 risk management strategy that
holds the underlying stocks of the S&P 500®
Index and applies a protective put strategy (i.e. long (purchased) put options)
on the S&P 500®
Index. The Underlying Index specifically reflects the performance of the
component securities of the S&P 500®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the S&P
500®
Index. The implications of the long put option are described in more detail
here:
Put
Options
- When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option, the investor will be entitled to receive the
difference between the value of the reference asset and the strike price. If the
reference asset closes above the strike price as of the expiration date, the put
option may end up worthless and the investor’s loss is limited to the amount of
premium it paid.
On
a quarterly basis, the Underlying Index will take long positions in quarterly
put options with an exercise price generally at 10% below the prevailing market
price of the S&P 500®
Index. However, if put options with that precise strike price are unavailable,
the Underlying Index will instead select the put option with the strike price
closest to but greater than 10% below the prevailing market price of the S&P
500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index
is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market. The Fund's investment
objective and Underlying Index may be changed without shareholder
approval.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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. By purchasing put options
on the value of the portfolio of stocks in the S&P 500®
Index, the Fund’s protective put strategy may protect the Fund from a
significant decline in the price of the S&P 500®
Index, if the put options become in the money. If the value of the S&P
500®
Index
is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the S&P 500®
Index,
so the value of the put option would protect the Fund from further losses below
the strike price of the put. For example, if the S&P 500®
Index
were to fall by 15% from the time the put option was purchased to the time the
put option expired, then the put option would be expected to have a value equal
to approximately 5% of the value the portfolio had at the time when the put
option was purchased, which would limit the Fund’s loss from the decrease in the
S&P 500®
Index
over the relevant period to 10%. The level of protection the Fund provides from
declines in the price of the S&P 500®
Index
during the period a given put option contract is held will vary depending on the
relative difference between the strike price of the Fund’s put option position
and the price of the S&P 500®
Index.
However, if the S&P 500®
Index does not fall below the strike price of the purchased put option during
the time the put option is held, then the put option will expire worthless, and
the Fund’s strategy will underperform the S&P 500®
Index during this time period due to the cost of purchasing the put options. An
investor that purchases Fund shares other than on the day that the Fund takes
long positions in quarterly put options, or who sells shares other than on the
day that the put option expires, may experience different investment returns,
depending on the relative difference between the strike price of the Fund’s put
options positions and the price of the S&P 500®
Index.
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., 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, 2022, 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 will invest in options, a type of derivative instrument. 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.
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.
Protective
Put Options Risk: By
purchasing put options in return for the payment of premiums, the Fund may be
protected from a significant decline in the price of the S&P 500®
Index if the put options become in the money, but during periods where the
S&P 500®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s long
put options positions are put on may experience different levels of downside
protection depending on market performance. 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 options positions through the sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase options at times that may be desirable or
advantageous to do so, which may increase the risk of tracking
error.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
3.30% |
Worst
Quarter: |
6/30/2022 |
-10.91% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X S&P 500®
Tail Risk ETF: |
|
|
·Return before
taxes |
-17.46% |
-10.74% |
·Return
after taxes on distributions1 |
-17.82% |
-11.62% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-10.33% |
-8.45% |
Cboe
S&P 500 Tail Risk Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-16.94% |
-10.09% |
S&P
500®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.11% |
-9.63% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan
and
Ms. Yang have been Portfolio Managers of the Fund since the Fund's inception.
Mr. Lu has been a Portfolio Manager of the Fund since March 2022.
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
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®
Risk Managed Income ETF
Ticker:
XRMI Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Risk
Managed Income 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 Risk Managed Income Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy and hold 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 tables 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 21.62% 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 Cboe
S&P 500 Risk Managed Income Index ("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 risk managed income strategy that
holds the underlying stocks of the S&P 500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index.
The Underlying Index specifically reflects the performance of the component
securities of the S&P 500®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in at-the-money (“ATM”) call options, each corresponding to
the value of the portfolio of stocks in the S&P 500®
Index. The options collar seeks to generate a net-credit, meaning that the
premium received from the sale of the call options will be greater than the
premium paid when buying the put options. The implications of the long put
option and short call option are described in more detail here:
Put
Options
- When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option,
the
investor will be entitled to receive the difference between the value of the
reference asset and the strike price. If the reference asset closes above the
strike price as of the expiration date, the put option may end up worthless and
the investor’s loss is limited to the amount of premium it paid.
Call
Options –
When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
On
a monthly basis, the Underlying Index will take long positions in monthly put
options with an exercise price generally at 5% below the prevailing market price
of the S&P 500®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the S&P 500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Underlying Index will instead select the put option with the
strike price closest to but greater than 5% below the prevailing market price of
the S&P 500®
Index, and call options with the strike price closest to but greater than the
prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors,
regarded as generally representative of the U.S. stock market. A float-adjusted
market capitalization weighted index weights each index component according to
its market capitalization, using the number of shares that are readily available
for purchase on the open market. The Fund's investment objective and Underlying
Index may be changed without shareholder approval.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by
the Fund will be collateralized by the Fund's equity holdings at the time the
Fund sells the options. By purchasing put options and selling call options on
the value of the portfolio of stocks in the S&P 500®
Index, the Fund's collar strategy may generate income while protecting the Fund
from a significant decline in the price of the S&P 500®
Index, if the put options become in the money. If the value of the S&P
500®
Index
is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the S&P 500®
Index,
so the value of the put option would protect the Fund from further losses below
the strike price of the put. For example, if the S&P 500®
Index
were to fall by 15% from the time the put option was purchased to the time the
put option expired, then the put option would be expected to have a value equal
to approximately 10% of the value the portfolio had at the time when the put
option was purchased, which would limit the Fund’s loss from the decrease in the
S&P 500®
Index
over the relevant period to 5%. The value of protection the Fund provides from
declines in the price of the S&P 500®
Index
during the period a given put option contract is held will vary depending on the
relative difference between the strike price of the Fund’s put option position
and the price of the S&P 500®
Index.
Similarly, if the level of the S&P 500®
Index
is above the strike price of the Fund’s call options positions upon the
expiration of the call option, then at expiration the Fund would owe the
purchaser of the call option the difference between the strike price and the
value of the S&P 500®
Index,
so the amount owed with respect to the call option offset any gains the Fund may
experience from the securities held. For example, if the S&P 500®
Index
were to increase by 15% from the time the call option was sold to the time the
call option expired, then the call option would be expected to have a value
equal to approximately 15% of the value the portfolio had at the time when the
put option was purchased, which offset all of the Fund’s gains from the increase
in the S&P 500®
Index
over the relevant period. However, if the price of the S&P 500®
Index
is below the strike price of the Fund’s call options positions at expiry, the
call options will expire worthless and the Fund will retain the premium. An
investor that purchases Fund shares other than on the day that the Fund takes
long positions in monthly put options and short positions in monthly call
options, or who sells shares other than on the day that the put options and call
options expire, may experience different investment returns, depending on the
relative difference between the strike price of the Fund’s put options positions
and call options positions, and the price of the S&P 500®
Index.
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., 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, 2022, 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.
Collar
Option Risk: The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 S&P 500®
Index above the exercise prices of such options. By purchasing put options in
return for the payment of premiums, the Fund may be protected from a significant
decline in the price of the S&P 500®
Index if the put options become in the money, but during periods where the
S&P 500®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s short
call options positions and long put options positions are put on may experience
different levels of downside protection and upside participation depending on
market performance. 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 options positions through the purchase or sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase or sell options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Derivatives
Risk:
The Fund will invest in options, a type of derivative instrument. 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
0.36% |
Worst
Quarter: |
6/30/2022 |
-8.00% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X S&P 500®
Risk Managed Income ETF: |
|
|
·Return before
taxes |
-13.96% |
-8.95% |
·Return
after taxes on distributions1 |
-15.16% |
-10.68% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-8.25% |
-7.37% |
CBOE
S&P 500 Risk Managed Income Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-13.61% |
-8.60% |
S&P
500®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.11% |
-9.63% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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
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® Collar 95-110 ETF
Ticker:
XCLR Exchange: NYSE Arca
INVESTMENT OBJECTIVE
The
Global X S&P 500®
Collar 95-110 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 3-Month Collar 95-110 Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy and hold 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 tables 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 8.96% 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 Cboe
S&P 500 3-Month Collar 95-110 Index ("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 risk management strategy that
holds the underlying stocks of the S&P 500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index. The Underlying Index specifically reflects the performance of the
component securities of the S&P 500®
Index,
combined with a long position in 5% out-of-the money (“OTM”) put options and a
short position in 10% OTM call options, each corresponding to the value of the
portfolio of stocks in the S&P 500®
Index. The implications of the long put option and short call option are
described in more detail here:
Put
Options
- When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option, the investor will be entitled to receive the
difference between the value of the reference asset and the strike price. If the
reference
asset closes above the strike price as of the expiration date, the put option
may end up worthless and the investor’s loss is limited to the amount of premium
it paid.
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
On
a quarterly basis, the Underlying Index will take long positions in quarterly
put options with an exercise price generally at 5% below the prevailing market
price of the S&P 500®
Index and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the S&P
500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Underlying Index will instead select the put option with the
strike price closest to but greater than 5% below the prevailing market price of
the S&P 500®
Index, and call options with the strike price closest to but greater than 10%
above the prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market. The Fund's investment
objective and Underlying Index may be changed without shareholder
approval.
The
Underlying Index is sponsored by S&P Dow Jones Indices LLC (the "Index
Provider"), which is an organization that is independent of, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). In addition, any determinations related to the
constituents of the Underlying Index are made independent of the Fund's
portfolio managers. 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 call options sold by
the Fund will be collateralized by the Fund's equity holdings at the time the
Fund sells the options. By purchasing put options and selling call options on
the value of the portfolio of stocks in the S&P 500®
Index, the Fund's collar strategy may generate some income, which may offset
some of the cost of purchasing the put option, while protecting the Fund from a
significant decline in the price of the S&P 500®
Index, if the put options become in the money. If the value of the S&P 500®
Index is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the S&P 500® Index, so
the value of the put option would protect the Fund from further losses below the
strike price of the put. For example, if the S&P 500® Index were to fall by
15% from the time the put option was purchased to the time the put option
expired, then the put option would be expected to have a value equal to
approximately 10% of the value the portfolio had at the time when the put option
was purchased, which would limit the Fund’s loss from the decrease in the
S&P 500®
Index over the relevant period to 5%. The level of protection the Fund provides
from declines in the price of the S&P 500®
Index
during the period a given put option contract is held will vary depending on the
relative difference between the strike price of the Fund’s put options positions
and the price of the S&P 500®
Index.
Similarly, if the value of the S&P 500® Index is above the strike price of
the Fund’s call options positions upon the expiration of the call option, then
at expiration the Fund would owe the purchaser of the call option the difference
between the strike price and the value of the S&P 500® Index, so the amount
owed with respect to the call option offset any gains the Fund may experience
from the securities held. For example, if the S&P 500®
Index were to increase by 15% from the time the call option was sold to the time
the call option expired, then the call option would be expected to have a value
equal to approximately 5% of the value the portfolio had at the time when the
call option was purchased, which limit the Fund’s gains from the increase in the
S&P 500® Index over the relevant period to 10%. An investor that purchases
Fund shares other than on the day that the Fund takes long positions in
quarterly put options and short positions in quarterly call options, or who
sells shares other than on the day that the put options and call options expire,
may experience different investment returns, depending on the relative
difference between the strike price of the Fund’s put options positions and call
options positions, and the price of the S&P 500®
Index.
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., 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, 2022, 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.
Collar
Option Risk: The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 S&P 500®
Index above the exercise prices of such options. By purchasing put options in
return for the payment of premiums, the Fund may be protected from a significant
decline in the price of the S&P 500®
Index if the put options become in the money, but during periods where the
S&P 500®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s short
call options positions and long put options positions are put on may experience
different levels of downside protection and upside participation depending on
market performance. 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 options positions through the purchase or sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase or sell options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Derivatives
Risk:
The Fund will invest in options, a type of derivative instrument. 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
1.69% |
Worst
Quarter: |
6/30/2022 |
-6.82% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X S&P 500®
Collar 95-110 ETF: |
|
|
·Return before
taxes |
-12.58% |
-7.57% |
·Return
after taxes on distributions1 |
-12.93% |
-8.31% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-7.45% |
-6.03% |
Cboe
S&P 500 3-Month Collar 95-110 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-12.42% |
-7.19% |
S&P
500®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-18.11% |
-9.63% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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
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®
Tail Risk ETF
Ticker:
QTR Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X NASDAQ 100®
Tail Risk ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Nasdaq-100 Quarterly Protective Put 90 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 tables 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: |
0.01% |
Total
Annual Fund Operating Expenses: |
0.61% |
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 |
$62 |
$195 |
$340 |
$762 |
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 13.88% 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
Nasdaq-100 Quarterly Protective Put 90 Index ("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 risk management strategy that
holds the underlying stocks of the NASDAQ 100®
Index
and applies a protective put strategy (i.e. long (purchased) put options) on the
NASDAQ 100®
Index. The Underlying Index specifically reflects the performance of the
component securities of the NASDAQ 100®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the NASDAQ
100®
Index. The implications of the long put option are described in more detail
here:
Put
Options -
When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option, the investor will be entitled to receive the
difference between the value of the reference asset and the strike price. If the
reference asset closes above the strike price as of the expiration date, the put
option may end up worthless and the investor’s loss is limited to the amount of
premium it paid.
On
a quarterly basis, the Underlying Index will take long positions in quarterly
put options with an exercise price generally at 10% below the prevailing market
price of the NASDAQ 100®
Index. However, if put options with that precise strike price are
unavailable,
the Underlying Index will instead select the put option with the strike price
closest to but greater than 10% below the prevailing market price of the NASDAQ
100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification. The Fund's investment objective and Underlying
Index may be changed without shareholder approval.
The
Underlying Index is sponsored by Nasdaq, Inc. (the "Index Provider"), which is
an organization that is independent of, and unaffiliated with, the Fund and
Global X Management Company LLC, the investment adviser for the Fund
("Adviser"). In addition, any determinations related to the constituents of the
Underlying Index are made independent of the Fund's portfolio managers. 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. By purchasing put options
on the value of the portfolio of stocks in the NASDAQ 100®
Index,
the Fund’s protective put strategy may protect the Fund from a significant
decline in the price of the NASDAQ 100®
Index, if the put options become in the money. If the value of the NASDAQ
100®
Index
is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the NASDAQ 100®
Index,
so the value of the put option would protect the Fund from further losses below
the strike price of the put. For example, if the NASDAQ 100®
Index
were to fall by 15% from the time the put option was purchased to the time the
put option expired, then the put option would be expected to have a value equal
to approximately 5% of the value the portfolio had at the time when the put
option was purchased, which would limit the Fund’s loss from the decrease in the
NASDAQ 100®
Index
over the relevant period to 10%. The level of protection the Fund provides from
declines in the price of the NASDAQ 100®
Index
during the period a given put option contract is held will vary depending on the
relative difference between the strike price of the Fund’s put option position
and the price of the NASDAQ 100®
Index.
However, if the NASDAQ 100®
Index does not fall below the strike price of the purchased put option during
the time the put option is held, then the put option will expire worthless, and
the Fund’s strategy will underperform the NASDAQ 100®
Index during this time period due to the cost of purchasing the put options. An
investor that purchases Fund shares other than on the day that the Fund takes
long positions in quarterly put options, or who sells shares other than on the
day that the put option expires, may experience different investment returns,
depending on the relative difference between the strike price of the Fund’s put
options positions and the price of the NASDAQ 100®
Index.
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., 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, 2022, the Underlying Index had significant
exposure to the information technology sector. The Fund is
classified as "non-diversified," which means it may invest a larger percentage
of its assets in a smaller number of issuers than a diversified
fund.
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 will invest in options, a type of derivative instrument. 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.
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.
Protective
Put Options Risk: By
purchasing put options in return for the payment of premiums, the Fund may be
protected from a significant decline in the price of the NASDAQ 100®
Index if the put options become in the money, but during periods where the
NASDAQ 100®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s long
put options positions are put on may experience different levels of downside
protection depending on market performance. 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 options positions through the sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase options at times that may be desirable or
advantageous to do so, which may increase the risk of tracking
error.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
-3.79% |
Worst
Quarter: |
6/30/2022 |
-14.00% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X NASDAQ 100®
Tail Risk ETF: |
|
|
·Return before
taxes |
-28.69% |
-20.32% |
·Return
after taxes on distributions1 |
-28.79% |
-20.86% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-16.98% |
-15.49% |
NASDAQ
100 Quarterly Protective Put 90 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-28.37% |
19.97% |
NASDAQ-100®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-32.38% |
-21.62% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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
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®
Risk Managed Income ETF
Ticker:
QRMI Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X NASDAQ 100®
Risk
Managed Income ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Nasdaq-100 Monthly Net Credit Collar 95-100 Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy and hold 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 tables 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 27.40% 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
Nasdaq-100 Monthly Net Credit Collar 95-100 Index ("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 risk managed income strategy that
holds the underlying stocks of the NASDAQ 100®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the NASDAQ 100®
Index. The Underlying Index specifically reflects the performance of the
component securities of the NASDAQ 100®
Index,
combined with a long position in 5% out-of-the money (“OTM”) put options and a
short position in at-the-money (“ATM”) call options, each corresponding to the
value of the portfolio of stocks in the NASDAQ 100® Index. The options collar
seeks to generate a net-credit, meaning that the premium received from the sale
of the call options will be greater than the premium paid when buying the put
options. The implications of the long put option and short call option are
described in more detail here:
Put
Options
- When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option,
the
investor will be entitled to receive the difference between the value of the
reference asset and the strike price. If the reference asset closes above the
strike price as of the expiration date, the put option may end up worthless and
the investor’s loss is limited to the amount of premium it paid.
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
On
a monthly basis, the Underlying Index will take long positions in monthly put
options with an exercise price generally at 5% below the prevailing market price
of the NASDAQ 100®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the NASDAQ 100® Index. However, if
put and/or call options with those precise strike prices are unavailable, the
Underlying Index will instead select the put option with the strike price
closest to 5% below the prevailing market price of the NASDAQ 100®
Index, and call options with the strike price closest to the prevailing market
price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100® Index is a modified market capitalization weighted index containing
equity securities of the 100 largest non-financial companies listed on the
NASDAQ Stock Market. Modified capitalization weighting seeks to weight
constituents primarily based on market capitalization, but subject to caps on
the weights of the individual securities. Generally speaking, this approach will
limit the amount of concentration in the largest market capitalization companies
and increase company-level diversification. The Fund's investment objective and
Underlying Index may be changed without shareholder approval.
The
Underlying Index is sponsored by Nasdaq, Inc. (the "Index Provider"), which is
an organization that is independent of, and unaffiliated with, the Fund and
Global X Management Company LLC, the investment adviser for the Fund
("Adviser"). In addition, any determinations related to the constituents of the
Underlying Index are made independent of the Fund's portfolio managers. 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 call options sold by
the Fund will be collateralized by the Fund's equity holdings at the time the
Fund sells the options. By purchasing put options and selling call options on
the value of the portfolio of stocks in the NASDAQ 100®
Index, the Fund's collar strategy may generate income while protecting the Fund
from a significant decline in the price of the NASDAQ 100®
Index, if the put options become in the money. If the value of the NASDAQ
100®
Index
is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the NASDAQ 100®
Index,
so the value of the put option would protect the Fund from further losses below
the strike price of the put. For example, if the NASDAQ 100®
Index
were to fall by 15% from the time the put option was purchased to the time the
put option expired, then the put option would be expected to have a value equal
to approximately 10% of the value the portfolio had at the time when the put
option was purchased, which would limit the Fund’s loss from the decrease in the
NASDAQ 100®
Index
over the relevant period to 5%. The value of protection the Fund provides from
declines in the price of the NASDAQ 100®
Index
during the period a given put option contract is held will vary depending on the
relative difference between the strike price of the Fund’s put option position
and the price of the NASDAQ 100®
Index.
Similarly, if the level of the NASDAQ 100®
Index
is above the strike price of the Fund’s call options positions upon the
expiration of the call option, then at expiration the Fund would owe the
purchaser of the call option the difference between the strike price and the
value of the NASDAQ 100®
Index,
so the amount owed with respect to the call option offset any gains the Fund may
experience from the securities held. For example, if the NASDAQ 100®
Index
were to increase by 15% from the time the call option was sold to the time the
call option expired, then the call option would be expected to have a value
equal to approximately 15% of the value the portfolio had at the time when the
put option was purchased, which offset all of the Fund’s gains from the increase
in the NASDAQ 100®
Index
over the relevant period. However, if the price of the NASDAQ 100®
Index
is below the strike price of the Fund’s call options positions at expiry, the
call options will expire worthless and the Fund will retain the premium. An
investor that purchases Fund shares other than on the day that the Fund takes
long positions in monthly put options and short positions in monthly call
options, or who sells shares other than on the day that the put options and call
options expire, may experience different investment returns, depending on the
relative difference between the strike price of the Fund’s put options positions
and call options positions, and the price of the NASDAQ 100®
Index.
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., 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, 2022, the Underlying Index had significant
exposure to the information technology sector. The Fund is
classified as "non-diversified," which means it may invest a larger percentage
of its assets in a smaller number of issuers than a diversified
fund.
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.
Collar
Option Risk: The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 NASDAQ 100®
Index above the exercise prices of such options. By purchasing put options in
return for the payment of premiums, the Fund may be protected from a significant
decline in the price of the NASDAQ 100®
Index if the put options become in the money, but during periods where the
NASDAQ 100®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s short
call options positions and long put options positions are put on may experience
different levels of downside protection and upside participation depending on
market performance. 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 options positions through the purchase or sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase or sell options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Derivatives
Risk:
The Fund will invest in options, a type of derivative instrument. 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times
of
market stress, Shares may be more likely to trade at a premium or discount to
NAV and/or at wider intraday bid-ask spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
12/31/2022 |
-2.16% |
Worst
Quarter: |
6/30/2022 |
-8.70% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X NASDAQ 100®
Risk Managed Income ETF: |
|
|
·Return before
taxes |
-18.49% |
-15.19% |
·Return
after taxes on distributions1 |
-19.18% |
-16.23% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-10.94% |
-11.80% |
NASDAQ
100 Monthly Net Credit Collar 95-100 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-17.96% |
-15.35% |
NASDAQ-100®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-32.38% |
-21.62% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan
and
Ms. Yang have been Portfolio Managers of the Fund since the Fund's inception.
Mr. Lu has been a Portfolio Manager of the Fund since March 2022.
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
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® Collar 95-110 ETF
Ticker:
QCLR Exchange: NASDAQ
INVESTMENT OBJECTIVE
The
Global X NASDAQ 100®
Collar 95-110 ETF ("Fund") seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Nasdaq-100 Quarterly Collar 95-110 Index ("Underlying
Index").
FEES AND EXPENSES
This table describes the fees
and expenses that you may pay if you buy and hold 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 tables 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 9.89% 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
Nasdaq-100 Quarterly Collar 95-110 Index ("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 risk management strategy that
holds the underlying stocks of the NASDAQ 100®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the NASDAQ 100®
Index.
The Underlying Index specifically reflects the performance of the component
securities of the NASDAQ 100®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in 10% OTM call options, each corresponding to the value of
the portfolio of stocks in the NASDAQ 100®
Index.
The implications of the long put option and short call option are described in
more detail here:
Put
Options
- When an investor purchases a put option, the investor pays an amount (premium)
to acquire the right (but not the obligation) to sell shares of a reference
asset at a specified exercise (“strike”) price on the expiration date. If the
reference asset closes below the strike price as of the expiration date and the
investor exercises the put option, the investor will be entitled to receive the
difference between the value of the reference asset and the strike price. If the
reference asset closes above the strike price as of the expiration date, the put
option may end up worthless and the investor’s loss is limited to the amount of
premium it paid.
Call
Options
– When an investor sells a call option, the investor receives a premium in
exchange for an obligation to sell shares of a reference asset at a strike price
on the expiration date if the buyer of the call option exercises it. If the
reference asset closes above the strike price as of the expiration date and the
buyer exercises the call option, the investor will have to pay the difference
between the value of the reference asset and the strike price. If the reference
asset closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium.
On
a quarterly basis, the Underlying Index will take long positions in quarterly
put options with an exercise price generally at 5% below the prevailing market
price of the NASDAQ 100®
Index
and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the NASDAQ 100®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Underlying Index will instead select the put option with the
strike price closest to 5% below the prevailing market price of the NASDAQ
100®
Index, and call options with the strike price closest to 10% above the
prevailing market price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification. The Fund's investment objective and Underlying
Index may be changed without shareholder approval.
The
Underlying Index is sponsored by Nasdaq, Inc. (the "Index Provider"), which is
an organization that is independent of, and unaffiliated with, the Fund and
Global X Management Company LLC, the investment adviser for the Fund
("Adviser"). In addition, any determinations related to the constituents of the
Underlying Index are made independent of the Fund's portfolio managers. 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 call options sold by
the Fund will be collateralized by the Fund's equity holdings at the time the
Fund sells the options. By purchasing put options and selling call options on
the value of the portfolio of stocks in the NASDAQ 100®
Index, the Fund's collar strategy may generate some income, which may offset
some of the cost of purchasing the put option, while protecting the Fund from a
significant decline in the price of the NASDAQ 100®
Index, if the put options become in the money. If the value of the NASDAQ
100®
Index is below the strike price of the Fund’s put options positions upon the
expiration of the put option, then at expiration the put will be worth the
difference between the strike price and the value of the NASDAQ 100®
Index, so the value of the put option would protect the Fund from further losses
below the strike price of the put. For example, if the NASDAQ 100®
Index were to fall by 15% from the time the put option was purchased to the time
the put option expired, then the put option would be expected to have a value
equal to approximately 10% of the value the portfolio had at the time when the
put option was purchased, which would limit the Fund’s loss from the decrease in
the NASDAQ 100®
Index over the relevant period to 5%. The level of protection the Fund provides
from declines in the price of the NASDAQ 100®
Index during the period a given put option contract is held will vary depending
on the relative difference between the strike price of the Fund’s put options
positions and the price of the NASDAQ 100®
Index. Similarly, if the value of the NASDAQ 100®
Index is above the strike price of the Fund’s call options positions upon the
expiration of the call option, then at expiration the Fund would owe the
purchaser of the call option the difference between the strike price and the
value of the NASDAQ 100®
Index,
so the amount owed with respect to the call option offset any gains the Fund may
experience from the securities held. For example, if the NASDAQ 100®
Index were to increase by 15% from the time the call option was sold to the time
the call option expired, then the call option would be expected to have a value
equal to approximately 5% of the value the portfolio had at the time when the
call option was purchased, which limit the Fund’s gains from the increase in the
NASDAQ 100®
Index over the relevant period to 10%. An investor that purchases Fund shares
other than on the day that the Fund takes long positions in quarterly put
options and short positions in quarterly call options, or who sells shares other
than on the day that the put options and call options expire, may experience
different investment returns, depending on the relative difference between the
strike price of the Fund’s put options positions and call options positions, and
the price of the NASDAQ 100®
Index.
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., 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, 2022, the Underlying Index had significant
exposure to the information technology sector. The Fund is
classified as "non-diversified," which means it may invest a larger percentage
of its assets in a smaller number of issuers than a diversified
fund.
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.
Collar
Option Risk: The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 NASDAQ 100®
Index above the exercise prices of such options. By purchasing put options in
return for the payment of premiums, the Fund may be protected from a significant
decline in the price of the NASDAQ 100®
Index if the put options become in the money, but during periods where the
NASDAQ 100®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s short
call options positions and long put options positions are put on may experience
different levels of downside protection and upside participation depending on
market performance. 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 options positions through the purchase or sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase or sell options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
Derivatives
Risk:
The Fund will invest in options, a type of derivative instrument. 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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 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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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: |
9/30/2022 |
-1.13% |
Worst
Quarter: |
6/30/2022 |
-8.34% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (8/25/2021) |
Global
X NASDAQ 100®
Collar
95-110 ETF: |
|
|
·Return before
taxes |
-18.30% |
-12.17% |
·Return
after taxes on distributions1 |
-18.39% |
-12.66% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-10.83% |
-9.39% |
NASDAQ
-100 Quarterly Collar 95-110 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-17.21% |
-11.28% |
NASDAQ-100®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-32.38% |
-21.62% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan and Ms. Yang have been
Portfolio Managers of the Fund since the Fund's inception. Mr. Lu has been a
Portfolio Manager of the Fund since March 2022.
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
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 6.79% 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 S&P
500®
Catholic Values Index ("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, and unaffiliated with, the Fund and Global X Management Company
LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index. As of
December 31, 2022, the Underlying Index had 445 constituents. The Fund's
investment objective and Underlying Index may be changed without shareholder
approval.
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, 2022, 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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each
business day and fluctuates with changes in the market value of the Fund’s
holdings. The trading price of the Fund’s shares fluctuates, in some cases
materially, throughout trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Since
Inception (04/18/2016)
|
Global
X S&P 500®
Catholic Values ETF: |
|
|
|
·Return before
taxes |
-20.05% |
8.77% |
11.07% |
·Return
after taxes on distributions1 |
-20.30% |
8.40% |
10.71% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-11.69% |
6.89% |
8.91% |
S&P
500®
Catholic Values Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-19.88% |
9.10% |
10.98% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
-18.11% |
9.42% |
11.50% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager of the Fund since
March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund since March 1,
2019. Ms. Chan has been a
Portfolio
Manager of the Fund since June 10, 2019. Ms. Yang has been a Portfolio Manager
of the Fund since December 2020. Mr. Lu has been a Portfolio Manager of the Fund
since March 2022.
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: |
0.00% |
Total
Annual Fund Operating Expenses: |
0.35% |
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. During the most recent fiscal year, the
Fund's portfolio turnover rate was 12.83% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets, plus borrowings for investment
purposes (if any), in the securities of the S&P Developed ex-U.S. Catholic
Values Index ("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, and unaffiliated with, the Fund and Global
X Management Company LLC, the investment adviser for the Fund ("Adviser"). The
Index Provider determines the relative weightings of the
securities
in the Underlying Index and publishes information regarding the market value of
the Underlying Index. As of December 31, 2022, the Underlying Index had 434
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, 2022, 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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 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 France: The
Fund’s investment in French issuers subjects the Fund to legal, regulatory,
political, currency, security, and economic risks specific to France. Ongoing
concerns in relation to the economic health of the European Union (the “EU”)
continue to constrain the economic resilience of certain EU member states,
including France. External demand for French exports may be negatively impacted
by the United Kingdom’s (the “U.K.”) exit from the EU. As a result, the French
economy may experience adverse trends due to concerns about a prolonged economic
downturn, potential weakness in exports, high rates of unemployment and rising
government debt levels. The French economy is dependent on agricultural exports,
and as a result, is susceptible to fluctuations in demand for agricultural
products. France has experienced several terrorist attacks over the past several
years, creating a climate of insecurity that has been detrimental to tourism and
that could adversely affect growth.
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. Japan’s economy has suffered from low growth and low inflation for a
prolonged period of time since the collapse of its bubble economy, and that may
continue despite the efforts of the Bank of Japan and policymakers. 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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.
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is
calculated at the end of each business day and fluctuates with changes in the
market value of the Fund’s holdings. The trading price of the Fund’s shares
fluctuates, in some cases materially, throughout trading hours in response to
changes in the Fund’s NAV.
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: |
12/31/2022 |
16.17% |
Worst
Quarter: |
6/30/2022 |
-15.72% |
Average Annual Total Returns (for the Periods
Ended December 31, 2022)
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Since
Inception (06/22/2020)
|
Global
X S&P Catholic Values Developed ex-U.S. ETF: |
|
|
·Return before
taxes |
-17.07% |
3.77% |
·Return
after taxes on distributions1 |
-17.42% |
3.13% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-9.67% |
2.95% |
S&P
Developed ex-U.S. Catholic Values Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-16.91% |
4.09% |
MSCI
EAFE Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
-14.45% |
5.50% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Messrs. To and Xie and Ms. Chan have been Portfolio
Managers of the Fund since the Fund's inception. Ms. Yang has been a Portfolio
Manager of the Fund since December 2020. Mr. Lu has been a Portfolio Manager of
the Fund since March 2022.
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 111.39% 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 Solactive
Guru Index ("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, 2022, the Underlying Index had 79 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, and unaffiliated with, the Fund and Global X Management
Company LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index.
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, 2022, 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.
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.
Focus
Risk:
To the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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. Where all or a portion of the Fund's underlying securities
trade in a market that is closed when the market in which the Fund's shares are
listed and trading is open, there may be differences between the last quote from
the security’s closed foreign market and the value of the security during the
Fund’s domestic trading day. This in turn could lead to differences between the
market price of the Fund’s shares and the underlying value of those shares.
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.
Economic,
Political and Social Risk
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. Chinese companies are also subject to the risk that Chinese
authorities can intervene in their operations and structure. 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 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.
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.
Security
Risk
China
has experienced security concerns, such as terrorism and strained international
relations. 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.
Heavy
Government Control and Regulation
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. Furthermore, government actions against leaders or
other key figures within companies, or speculation about such actions, may lead
to sudden and unpredictable falls in the value of securities within the
Fund.
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. 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the Chinese government restricts foreign
ownership to raise capital from foreign investors. While the shell company has
no equity ownership of the VIE, these contractual arrangements permit the shell
company to consolidate the VIE’s financial statements with its own for
accounting purposes and provide for economic exposure to the performance of the
underlying Chinese operating company.
Therefore,
an investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual
arrangements with the listed shell company by making them invalid. If these
contracts were found to be unenforceable under Chinese law, investors in the
listed shell company, such as the Fund, may suffer significant losses with
little or no recourse available. If the Chinese government determines that the
agreements establishing the VIE structures do not comply with Chinese law and
regulations, including those related to restrictions on foreign ownership, it
could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
Chinese government will not place similar restrictions on other
industries.
Chinese
equities that utilize the VIE structure to list in the U.S. as ADRs face the
risk of regulatory action from U.S. authorities, including the risk of
delisting. This will depend in part on whether U.S. regulatory authorities are
satisfied with their access to Mainland China and Hong Kong for the purpose of
conducting inspections on the quality of audits for these companies. Although
the U.S. and China reached an agreement in September 2022 to grant the U.S.
access for such inspections, there is no guarantee that the agreement will hold
up or that U.S. regulatory authorities will continue to feel satisfied with
their access. As of December 31, 2022, the Fund had significant exposure to
VIEs, as defined above.
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: 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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times
of
market stress, Shares may be more likely to trade at a premium or discount to
NAV and/or at wider intraday bid-ask spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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, 2022)
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year Ended December 31, 2022 |
Five
Years Ended December 31, 2022 |
Ten
Years Ended December 31, 2022 |
Global
X Guru®
Index ETF: |
|
|
|
·Return before
taxes |
-27.74% |
3.73% |
7.65% |
·Return
after taxes on distributions1 |
-27.77% |
3.44% |
7.44% |
·Return
after taxes on distributions and sale of Fund Shares1 |
-16.40% |
2.80% |
6.17% |
Solactive Guru Index
(net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other taxes)
|
-27.50% |
3.93% |
7.99% |
S&P
500®
Index
(Index returns do not
reflect deductions for fees, expenses, or
taxes) |
-18.11% |
9.42% |
12.56% |
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“Portfolio Managers”). Mr. To has been a Portfolio Manager
of
the Fund since March 1, 2018. Mr. Xie has been a Portfolio Manager of the Fund
since March 1, 2019. Ms. Chan has been a Portfolio Manager of the Fund since
June 10, 2019. Ms. Yang has been a Portfolio Manager of the Fund since December
2020. Mr. Lu has been a Portfolio Manager of the Fund since March
2022.
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 Fund has not commenced operations
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 investment
purposes (if any), in the securities of the S&P U.S. Catholic Values
Aggregate Bond Capped Index ("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, and unaffiliated with, the Fund and Global
X Management Company LLC, the investment adviser for the Fund ("Adviser"). The
Index Provider determines the relative weightings of the securities in the
Underlying Index and publishes information regarding the market value of the
Underlying Index. As of December 31, 2022, the Underlying Index had 6,216
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, 2022, 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.
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.
Focus
Risk: To
the extent that the Underlying Index focuses in investments related to a
particular industry or group of industries, the Fund will also focus 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.
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 U.S. 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, at the start of 2023,
central banks had already increased interest rates at the fastest rate on
record, and it is unknown how long this trend will continue and when inflation
will return to target levels. This increases the risk that monetary policy may
provide less support should economic growth slow. Additionally, China’s shift
away from a zero-COVID policy creates both opportunities and risks, causing
uncertainty for global economic growth. Market risk factors may result in
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, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, 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: The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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. In stressed market
conditions, the market for the Shares may become less liquid in response to the
deteriorating liquidity of the Fund’s portfolio. This adverse effect on the
liquidity of the Shares, as well as 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. The NAV of the Fund is calculated at the end of each business day and
fluctuates with changes in the market value of the Fund’s holdings. The trading
price of the Fund’s shares fluctuates, in some cases materially, throughout
trading hours in response to changes in the Fund’s NAV.
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 Nam To, CFA; Wayne Xie; Kimberly Chan; Vanessa Yang; and Sandy Lu, CFA
(“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.
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, the
Global X Russell 2000 Covered Call & Growth ETF, the Global X Financials
Covered Call & Growth ETF, the Global X Health Care Covered Call &
Growth ETF, the Global X Information Technology Covered Call & Growth ETF
and the 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, the Global X Russell 2000 Covered Call & Growth ETF, the Global X
Financials Covered Call & Growth ETF, the Global X Health Care Covered Call
& Growth ETF, the Global X Information Technology Covered Call & Growth
ETF and the 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. In addition, each Fund may also
invest in equity index futures for cash flow management purposes and as a
portfolio management technique. 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
upon at least 60 days prior written notice to shareholders.
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.
Affiliated
Index Provider Risk
Affiliated
Index Provider Risk applies to the Global X SuperIncome™
Preferred
ETF
The
Adviser also serves as the Fund’s Index Provider, which may present the
appearance of a conflict of interest. For example, a potential conflict could
arise if the Adviser were to exercise undue influence with respect to regular
and/or extraordinary updates to the methodology or composition of the Underlying
Index, including in a manner that might improve the apparent performance of the
Fund relative to the performance of the Underlying Index. Additionally,
potential conflicts could arise to the extent that portfolio managers of the
Adviser become aware of contemplated methodology changes or rebalance activity
prior to disclosure to the public, which could facilitate “front running” on
behalf of other funds managed by the Adviser with similar exposure. Although the
Adviser has taken steps designed to ensure that these potential conflicts are
mitigated (e.g., via the adoption of policies and procedures that are designed
to minimize potential conflicts of interest and ensure independence with
respect
to the operation of the index, as well as the implementation of informational
barriers designed to minimize the potential for the misuse of information about
the Underlying Index), there can be no assurance that such measures will be
successful.
Asset
Class Risk
Asset
Class Risk applies to each Fund
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
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, Global X
Disruptive Materials 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 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.
Collar
Option Risk
Collar
Option Risk applies to the Global X S&P 500 Risk Managed Income ETF, Global
X S&P 500 Collar 95-110 ETF, Global X Nasdaq 100 Risk Managed Income ETF and
Global X Nasdaq 100 Collar 95-110 ETF
The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 NASDAQ 100® Index above the exercise prices of
such options. By purchasing put options in return for the payment of premiums,
the Fund may be protected from a significant decline in the price of the NASDAQ
100® Index if the put options become in the money, but during periods where the
NASDAQ 100® Index appreciates, the Fund will underperform due to the cost of the
premiums paid. Investors who purchase shares of the Fund outside of when the
Fund’s short call options positions and long put options positions are put on
may experience different levels of downside protection and upside participation
depending on market performance. 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 options positions through the purchase or
sale of offsetting identical options prior to the expiration of the options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to purchase or sell options at times that may
be desirable or advantageous to do so, which may increase the risk of tracking
error.
The
Fund’s collar strategy will consist of a mix of short call options positions and
long put options positions. By selling 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 S&P 500® Index above the exercise prices of
such options. By purchasing put options in return for the payment of premiums,
the Fund may be protected from a significant decline in the price of the S&P
500® Index if the put options become in the money, but during periods where the
S&P 500® Index appreciates, the Fund will underperform due to the cost of
the premiums paid. Investors who purchase shares of the Fund outside of when the
Fund’s short call options positions and long put options positions are put on
may experience different levels of downside protection and upside participation
depending on market performance. 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 options positions through the purchase or
sale of offsetting identical options prior to the expiration of the options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to purchase or sell options at times that may
be desirable or advantageous to do so, which may increase the risk of tracking
error.
Depositary
Receipts Risk
Depositary
Receipts Risk applies to the Global X Disruptive Materials ETF
The
Fund may invest in depositary receipts, such as ADRs and GDRs. ADRs are
certificates that evidence ownership of shares of a foreign issuer and are
alternatives to purchasing the underlying foreign securities directly in their
national markets and currencies. GDRs are certificates issued by an
international bank that generally are traded and denominated in the currencies
of countries other than the home country of the issuer of the underlying
shares. Depositary receipts may be subject to certain of the risks
associated with direct investments in the securities of foreign companies. For
additional details on these risks, please see Foreign Securities Risk.
Moreover, depositary receipts may not track the price of the underlying foreign
securities on which they are based. Certain countries may limit the ability
to convert depositary receipts into the underlying foreign securities and vice
versa, which may cause the securities of the foreign company to trade at a
discount or premium to the market price of the related depositary receipts. A
holder of depositary receipts may also be subject to fees and the credit risk of
the financial institution acting as depositary.
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 Dow 30®
Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X
S&P 500 Covered Call & Growth ETF, Global X Russell 2000 Covered Call
& Growth ETF, Global X Financials Covered Call & Growth ETF, Global X
Health Care Covered Call & Growth ETF, Global X Information Technology
Covered Call & Growth ETF, Global X S&P 500 Tail Risk ETF, Global X
S&P 500 Risk Managed Income ETF, Global X S&P 500 Collar 95-110 ETF,
Global X Nasdaq 100 Tail Risk ETF, Global X Nasdaq 100 Risk Managed Income ETF
and Global X Nasdaq 100 Collar 95-110 ETF
The
Fund will invest in options, which are a type of derivative instrument. There is
no assurance that sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any particular option or at any
particular time, and, for some options, no such secondary market may exist. The
possible absence of a liquid secondary market for options and/or possible
exchange-imposed price fluctuation limits, may make it difficult or impossible
to close out a position when desired. Options are subject to the risk 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 value of an option
position will reflect, among other things, the current market value of the
underlying instrument, the time remaining until expiration, the relationship of
the strike price to the market price of the underlying instrument, the
historical price volatility of the underlying instrument and general market
conditions. Options can be more sensitive to sudden fluctuations in market
prices than conventional securities, which can result in greater losses for the
Fund.
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.
Equity
Securities Risk
Equity
Securities Risk applies to the Global X Social Media ETF, Global X Lithium &
Battery Tech ETF, Global X Renewable Energy Producers ETF, Global X Disruptive
Materials 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 SuperIncome™ Preferred
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 Dow 30® Covered Call ETF,
Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered
Call & Growth ETF, Global X Russell 2000 Covered Call & Growth ETF,
Global X Financials Covered Call & Growth ETF, Global X Health Care Covered
Call & Growth ETF, Global X Information Technology Covered Call & Growth
ETF, Global X S&P 500 Tail Risk ETF, Global X S&P 500 Risk Managed
Income ETF, Global X S&P 500 Collar 95-110 ETF and Global X Nasdaq 100 Tail
Risk 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, Global X
Russell 2000 Covered Call & Growth ETF, Global X Financials Covered Call
& Growth ETF, Global X Health Care Covered Call & Growth ETF and Global
X Information Technology Covered Call & Growth ETF
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.
Flex
Options Risk
Flex
Options Risk applies to the Global X Financials Covered Call & Growth ETF,
Global X Health Care Covered Call & Growth ETF and Global X Information
Technology Covered Call & Growth ETF
The
Fund will utilize FLEX options issued and guaranteed for settlement by the OCC.
The Fund bears the risk that the OCC will be unable to, or unwilling to, perform
their obligations under the contracts. In the unlikely event that the OCC cannot
meet their obligations, the Fund could suffer significant losses. Additionally,
FLEX options may be more illiquid than other securities, including traditional
options. To the extent that the FLEX options may not be expected to experience
regular trading, the FLEX options held by the Fund may be valued based on a
price quotation or other equivalent indication of value supplied by a pricing
service, rather than based on a price last traded on an exchange. In less liquid
markets for FLEX options, the Fund may have difficulty entering into or closing
out certain positions at designated times and/or prices, including in connection
with the monthly options roll process. With the creation and redemption of
Shares, to the extent market participants are not willing or able to enter into
FLEX option transactions with the Fund at prices that reflect the market price
of the Shares, the Fund’s net asset value (“NAV”) and, in turn the share price
of the Fund, could suffer significant losses. The Fund may experience
substantial downside from specific FLEX option positions, and some may expire
worthless. As a FLEX option approaches the predetermined expiration date, its
value typically moves in parallel with the value of the Reference Fund. However,
prior to such date, the value of the FLEX options may not increase or decrease
at the same rate as the Reference Fund’s share price on a day-to-day basis. The
value of the underlying FLEX options will be affected by many market factors,
such as changes in the Reference Fund’s share price, interest rates, the
volatility of the Reference Fund, and the remaining time to until the FLEX
options expire.
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.
LIBOR
Transition Risk
LIBOR
Transition Risk applies to the Global X SuperIncome™ Preferred ETF
The
Fund invests in financial instruments that utilize London Interbank Offered Rate
(“LIBOR”) as the reference or benchmark rate for variable interest rate
calculations. On July 27, 2017, the head of the United Kingdom’s Financial
Conduct Authority announced a desire to phase out the use of LIBOR by the end of
2021. In March 2021, the FCA and LIBOR's administrator, ICE Benchmark
Administration, announced that most LIBOR settings will no longer be published
after the end of 2021 and a selection of widely used U.S. dollar LIBOR rates
will continue to be published until June 2023 in order to assist with the
transition. There remains uncertainty regarding the effect of the LIBOR
transition process and therefore any impact of a transition away from LIBOR on
the Fund or the instruments in which the Fund invests cannot yet be determined.
There is no assurance that the composition or characteristics of any alternative
reference rate (e.g., the Secured Overnight Financing Rate (“SOFR”), which is
intended to replace the U.S. dollar LIBOR) will be similar to or produce the
same value or economic equivalence as LIBOR or that instruments using an
alternative rate will have the same volume or liquidity. As a result, the
transition process might lead to increased volatility and reduced liquidity in
markets that currently rely on LIBOR to determine interest rates; a reduction in
the value of some LIBOR-based investments; increased difficulty in borrowing or
refinancing and diminished effectiveness of any applicable hedging strategies
against instruments whose terms currently include LIBOR; and/or costs incurred
in connection with temporary borrowings and closing out positions and entering
into new agreements. Any such effects of the transition away from LIBOR and the
adoption of alternative reference rates could result in losses to 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.
Protective
Put Options Risk
Protective
Put Options Risk applies to Global X Nasdaq 100 Tail Risk ETF
By
purchasing put options in return for the payment of premiums, the Fund may be
protected from a significant decline in the price of the NASDAQ 100® Index if
the put options become in the money, but during periods where the NASDAQ 100®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s long
put options positions are put on may experience different levels of downside
protection depending on market performance. 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 options positions through the sale of
offsetting identical options prior to the expiration of the options. Exchanges
may suspend the trading of options in volatile markets. If trading is suspended,
the Fund may be unable to purchase options at times that may be desirable or
advantageous to do so, which may increase the risk of tracking
error.
Protective
Put Options Risk applies to the Global X S&P 500 Tail Risk ETF
By
purchasing put options in return for the payment of premiums, the Fund may be
protected from a significant decline in the price of the S&P 500® Index if
the put options become in the money, but during periods where the S&P 500®
Index appreciates, the Fund will underperform due to the cost of the premiums
paid. Investors who purchase shares of the Fund outside of when the Fund’s long
put options positions are put on may experience different levels of downside
protection depending on market performance. 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 options positions through the
sale
of offsetting identical options prior to the expiration of the options.
Exchanges may suspend the trading of options in volatile markets. If trading is
suspended, the Fund may be unable to purchase options at times that may be
desirable or advantageous to do so, which may increase the risk of tracking
error.
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. Should there be any
changes to the Form 13F requirements, including but not limited to reducing the
number of firms required to file a Form 13F, or changing the timeline for
reporting, could impact the efficacy of relying on 13F data.
Associated
Risks Related to Investing in Disruptive Materials Companies
Associated
Risks Related to Investing in Disruptive Materials Companies applies to the
Global X Disruptive Materials ETF
Disruptive
Materials Companies engage in the exploration, mining, production and/or
enhancement of metals and other raw or composite materials that have been
identified as being essential to many of the world’s most disruptive
technologies. There is no guarantee that demand for these technologies will
continue, or that the raw materials currently used in the production of these
materials will continue to be utilized. A reduction of demand for the
technologies that utilize these disruptive materials, or of the materials
themselves, would have an adverse impact on the Fund. Companies involved in the
various activities that are related to the exploration, mining, production
and/or enhancement of disruptive materials may be medium-, small-, or
micro-capitalization companies. These companies tend to have volatile share
prices and are highly dependent on the price of the underlying disruptive
materials, which may fluctuate substantially over short periods of time. The
value of such companies may be significantly affected by the success of
exploration projects, political and economic conditions in geographies where the
companies operate, government royalties, energy conservation, environmental
policies, commodity price volatility, changes in exchange rates, imposition of
import/export controls, increased competition, depletion of resources and labor
relations, and other world events. The exploration, mining, production and/or
enhancement of disruptive materials can require large amounts of capital and, if
companies involved in such activities are mismanaged, the share prices of such
companies could decline even as prices for the underlying materials rise. In
addition, companies involved in the various activities that are related to the
exploration, mining, production and/or enhancement of disruptive materials may
be at risk for environmental damage allegations and potentially punitive claims.
Exploration, mining, production and/or enhancement of disruptive materials may
involve environmentally intensive processes, and Disruptive Materials Companies
may be at risk for environmental damage liabilities, as well as mandated
expenditures for safety, pollution control, and environment
remediation.
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. E-commerce
companies are exposed to macroeconomic risks of consumer recessionary fears,
potentially resulting in lower consumer spending. Chinese E-commerce Companies
have been subject to heightened scrutiny as regulators seek to rein in
monopolistic practices and sudden regulatory moves could have unpredictable and
adverse impacts on relevant securities. 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. Chinese
E-commerce Companies have been subject to heightened scrutiny as regulators seek
to rein in monopolistic practices and prevent the ‘disorderly expansion of
capital’ under the Common Prosperity initiative. 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 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 Renewable Energy Producers ETF, Global X Disruptive
Materials 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
SuperIncome™ Preferred ETF, Global X NASDAQ 100® Covered Call ETF, Global X
S&P 500® Covered Call ETF, Global X Dow 30® Covered Call ETF, Global X
NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered Call
& Growth ETF, Global X Financials Covered Call & Growth ETF, Global X
Health Care Covered Call & Growth ETF, Global X Information Technology
Covered Call & Growth ETF, Global X S&P 500 Tail Risk ETF, Global X
S&P 500 Risk Managed Income ETF, Global X S&P 500 Collar 95-110 ETF,
Global X Nasdaq 100 Tail Risk ETF, Global X Nasdaq 100 Risk Managed Income ETF,
Global X Nasdaq 100 Collar 95-110 ETF, Global X S&P 500® Catholic Values ETF
and Global X S&P Catholic Values Developed ex-U.S. 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 Renewable Energy Producers ETF, Global X Disruptive
Materials 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 Russell 2000 Covered
Call ETF, Global X Russell 2000 Covered Call & Growth 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 Social Media ETF, Global X Renewable
Energy Producers ETF, Global X Disruptive Materials ETF, Global X E-commerce
ETF, Global X SuperDividend® ETF, Global X SuperDividend® U.S. ETF, Global X
SuperDividend® REIT ETF, Global X Russell 2000 Covered Call ETF and Global X
Russell 2000 Covered Call & Growth 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.
Cash
Transaction Risk
Cash
Transaction Risk applies to the Global X Lithium & Battery Tech ETF, Global
X Renewable Energy Producers ETF, Global X Disruptive Materials ETF and Global X
MSCI SuperDividend® Emerging Markets 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 and Global
X Disruptive Materials 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
and Global X Disruptive Materials 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.
Correlation
Risk
Correlation
Risk applies to the Global X Financials Covered Call & Growth ETF, Global X
Health Care Covered Call & Growth ETF and Global X Information Technology
Covered Call & Growth ETF
In
seeking to track the performance of the Underlying Index, the Fund anticipates
holding component securities of the Reference Index and writing call options on
the Reference Fund. While it is anticipated that the performance of the
Reference Fund, and of the call options written on the Reference Fund, will
generally correspond to the performance of the component securities of the
Reference Index, there can be no guarantee that such performance will be highly
correlated. It is possible that the value of the component securities of the
Reference Index may diverge from the value of the Reference Fund on which the
call options are written. if such performance diverges, this may cause the
performance of the call options to offset more or less than 50% of the gains of
the component securities during a roll period. If this occurs, the total return
of the Fund will deviate from the total return expectations of a 50% covered
call strategy.
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 Dow 30® Covered Call ETF, Global X NASDAQ 100® Covered Call &
Growth ETF, Global X S&P 500 Covered Call & Growth ETF, Global X Russell
2000 Covered Call & Growth ETF, Global X Financials Covered Call &
Growth ETF, Global X Health Care Covered Call & Growth ETF and Global X
Information Technology Covered Call & Growth ETF
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 Renewable Energy Producers ETF, Global X Disruptive Materials
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 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 Renewable Energy Producers ETF, Global X Disruptive Materials
ETF, Global X E-commerce ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X SuperDividend® ETF and Global X MSCI SuperDividend®
Emerging Markets 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.
Extension
Risk
Extension
Risk applies to the 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.
Focus
Risk
Focus
Risk applies to each Fund
In
following its methodology, the Underlying Index may be focused to a significant
degree in securities of issuers in 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 focuses in the securities of issuers in such an area, the
Fund will also focus 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
SuperIncome™ Preferred ETF and Global X Financials Covered Call & Growth
ETF
Companies
in the banking sector of an economy are subject to extensive governmental
regulation and intervention, 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. The extent to which the Fund may invest in a
company that engages in securities-related activities or banking is limited by
applicable law. Extensive governmental regulation may limit the amounts and
types of loans and other financial commitments companies in the banking sector
can make, the interest rates and fees they can charge, the scope of their
activities, the prices they can charge and the amount of capital they must
maintain. Such governmental regulation may change frequently and may have
significant adverse consequences for companies in the banking sector, including
effects not intended by such regulation. Legislation enacted in 2018 in the U.S.
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 U.S. and global 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. Certain risks may impact the value of investments in
the financials sector more severely than those of investments outside this
sector, including the risks associated with companies that operate with
substantial financial leverage. Banking companies may also be adversely affected
by increases in interest rates and loan losses, decreases in the availability of
money or asset valuations, credit rating downgrades and adverse conditions in
other related markets. Their profitability is heavily dependent on the
availability and cost of capital funds and can fluctuate significantly when
interest rates change or due to increased competition. Credit losses resulting
from financial difficulties of borrowers can negatively impact banking
companies. The banking sector is particularly sensitive to fluctuations in
interest rates. The banking sector is also a target for cyberattacks, and may
experience technology malfunctions and disruptions. In recent years,
cyberattacks 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 Capital Markets Industry
Risks
Related to Investing in the Capital Markets Industry applies to the Global X
Financials Covered Call & Growth ETF
Companies
in the capital markets industry may be significantly affected by stock and bank
trading activity, changes in governmental regulation, continuing increases in
price competition, decreases in fees or fee-related business, including
investment banking, brokerage, asset management and other servicing fees,
fluctuations in interest rates and other factors which could adversely affect
financial markets.
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 consists of both companies in the
telecommunication services industry as well as those in the media and
entertainment industry. Examples of companies in the telecommunication services
industry group include providers of fiber-optic, fixed-line, cellular and
wireless telecommunications networks. Companies in the media and entertainment
industry group encompass a variety of services and products including television
broadcasting, gaming products, social media, networking platforms, online
classifieds, online review websites, and Internet search engines. Companies in
the communication services sector may be affected by industry competition,
substantial
capital requirements, government regulation, and obsolescence of communications
products and services due to technological advancement. Fluctuating domestic and
international demand, shifting demographics and often unpredictable changes in
consumer tastes can drastically affect a communication services company's
profitability. In addition, while all companies may be susceptible to network
security breaches, certain companies in the communication services sector may be
particular targets of hacking and potential theft of proprietary or consumer
information or disruptions in service, which could have a material adverse
effect on their businesses.
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. Furthermore, operations of
foreign communication services sector companies may be perceived by domestic
regulators as national security risks, resulting in restrictions or even bans on
such operations.
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. Moreover, the consumer discretionary sector can
be significantly affected by several factors, including, without limitation, the
performance of domestic and international economies, exchange rates, changing
consumer preferences, demographics, marketing campaigns, cyclical revenue
generation, consumer confidence, commodity price volatility, labor relations,
interest rates, import and export controls, intense competition, technological
developments and government regulation. Consumer recessionary fears could impact
discretionary spending due to rising interest rates and a high inflationary
environment.
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
SuperDividend® ETF, Global X MSCI SuperDividend® EAFE ETF, Global X
SuperDividend® REIT ETF, Global X SuperIncome™ Preferred ETF and Global X
Financials Covered Call & Growth 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 Health Care Sector
Risks
Related to Investing in the Health Care Sector applies to the Global X Health
Care Covered Call & Growth ETF
The
profitability of companies in the health care sector may be adversely affected
by the following factors, among others: extensive government regulations,
restrictions on government reimbursement for medical expenses, rising costs of
medical products and services, pricing pressure, an increased emphasis on
outpatient services, changes in the demand for medical products and services, a
limited number of products, industry innovation, changes in technologies and
other market developments. A number of issuers in the health care sector have
recently merged or otherwise experienced consolidation. The effects of this
trend toward consolidation are unknown and may be far-reaching. Many health care
companies are heavily dependent on patent protection. The expiration of a
company’s patents may adversely affect that company’s profitability. Many health
care companies are subject to extensive litigation based on product liability
and similar claims. Health care companies are subject to competitive forces that
may make it difficult to raise prices and, in fact, may result in price
discounting. Many new products in the health care sector may be subject to
regulatory approvals. The process of obtaining such approvals may be long and
costly, and such efforts ultimately may be unsuccessful. Companies in the health
care sector may be thinly capitalized and may be susceptible to product
obsolescence. In addition, a number of legislative proposals concerning health
care have been considered by the U.S. Congress in recent years. It is unclear
what proposals will ultimately be enacted, if any, and what effect they may have
on U.S. and non-U.S. companies in the health care sector. Companies in the
health care sector may also be affected by unforeseen circumstances including
but not limited to the spread of infectious disease which could impact drug
development
priorities and pipelines, supply and demand dynamics for health care equipment,
as well as the ability to receive care in health care service
facilities.
Risks
Related to Investing in the Independent Power and Renewable Electricity
Producers Industry
Risks
Related to Investing in the Independent Power and Renewable Electricity
Producers Industry applies to the Global X Renewable Energy Producers
ETF
Companies
in the independent power and renewable electricity producers 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
producers 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, Global X Information Technology Covered Call & Growth ETF,
Global X S&P 500 Tail Risk ETF, Global X S&P 500 Risk Managed Income
ETF, Global X S&P 500 Collar 95-110 ETF, Global X Nasdaq 100 Tail Risk ETF,
Global X Nasdaq 100 Risk Managed Income ETF, Global X Nasdaq 100 Collar 95-110
ETF 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 Insurance Industry
Risks
Related to Investing in the Insurance Industry applies to the Global X MSCI
SuperDividend® EAFE ETF
The
insurance industry is subject to extensive government regulation and can be
significantly affected by changes in interest rates, general economic
conditions, price and market competition, the imposition of premium rate caps or
other changes in government regulation or tax law. Certain segments of the
insurance industry can be significantly affected by mortality and morbidity
rates, environmental clean-up costs and catastrophic events such as earthquakes,
hurricanes and terrorist acts.
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, Global X Disruptive Materials ETF and Global X MSCI
SuperDividend® Emerging Markets 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 Metals and Mining Industry
Risks
Related to Investing in the Metals and Mining Industry applies to the Global X
Disruptive Materials ETF
Because
the Fund invests in stocks and depositary receipts of U.S. and foreign companies
that are involved in the mining industry, it is subject to certain risks
associated with such companies. Competitive pressures may have a significant
effect on the financial condition of companies in the mining industry. Also,
mining companies are highly dependent on the price of the commodity they
produce. These prices may fluctuate substantially over short periods of time;
therefore the Fund’s Share price may be more volatile than other types of
investments. In particular, a drop in the price of a given commodity could
adversely affect the profitability of mining companies and their ability to
secure financing. In addition, metals and mining companies may be significantly
affected by changes in global demand for certain metals, economic developments,
energy conservation, the success of exploration projects, changes in exchange
rates,
interest rates, economic conditions, tax treatment, trade treaties, and
government regulation and intervention, and events in the regions that the
companies to which the Fund has exposure operate (e.g., expropriation,
nationalization, confiscation of assets and property, the imposition of
restrictions on foreign investments or repatriation of capital, military coups,
social or political unrest, violence and labor unrest).
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
The
real estate sector includes real estate companies focused on commercial and
residential real estate development, sales, operations, and services, as well as
real estate investment trusts (“REITs”). 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 Software Industry
Risks
Related to Investing in the Software Industry applies to the Global X
Information Technology Covered Call & Growth ETF
The
software industry can be significantly affected by intense competition,
aggressive pricing, technological innovations, and product obsolescence.
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 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.
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 Renewable Energy Producers ETF, Global X Disruptive
Materials 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 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. Where all or a portion of the Fund's underlying securities trade in a
market that is closed when the market in which the Fund's shares are listed and
trading is open, there may be differences between the last quote from the
security’s closed foreign market and the value of the security during the Fund’s
domestic trading day. This in turn could lead to differences between the market
price of the Fund’s shares and the underlying value of those shares.
Geographic
Risk
Geographic
Risk applies to each Fund
Geographic
risk is the risk that the Fund’s assets may be focused in countries located in
the same geographic region. This investment focus 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 Australia
Risk
of Investing in Australia applies to the Global X Lithium & Battery Tech ETF
and Global X Disruptive Materials 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 Renewable Energy Producers ETF,
Global X E-commerce ETF, Global X Emerging Markets Internet & E-commerce
ETF, Global X SuperDividend® ETF and Global X MSCI SuperDividend® Emerging
Markets 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. Corruption and subsequent legal
consequences have led to political upsets and sudden changes in leadership.
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,
Global X Disruptive Materials ETF and Global X MSCI SuperDividend® Emerging
Markets 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 Renewable Energy Producers ETF, Global X
Disruptive Materials 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 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. Chinese companies that maintain
large amounts of sensitive data or produce some form of adverse social cost are
particularly at risk as the government moves forward with the Common Prosperity
agenda. 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, a systemic failure in the
property sector, 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. In response to the Covid-19 crisis,
China is implementing strict lockdowns to keep cases extremely low and there is
no assurance that China will relax this approach or not revert back to it after
an attempt at relaxation. 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 are 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.
Special
Risk Considerations of Investing in China – Variable Interest Entity
Investments
For
purposes of raising capital offshore on exchanges outside of China, including on
U.S. exchanges, many Chinese-based operating companies are structured as
Variable Interest Entities (“VIEs”). In this structure, the Chinese-based
operating company is the VIE and establishes a shell company in a foreign
jurisdiction, such as the Cayman Islands. The shell company lists on a foreign
exchange and enters into contractual arrangements with the VIE. This structure
allows Chinese companies in which the government restricts foreign ownership to
raise capital from foreign investors. While the shell company has no equity
ownership of the VIE, these contractual arrangements permit the shell company to
consolidate the VIE’s financial statements with its own for accounting purposes
and provide for economic exposure
to
the performance of the underlying Chinese operating company. Therefore, an
investor in the listed shell company, such as the Fund, will have exposure to
the Chinese-based operating company only through contractual arrangements and
has no ownership in the Chinese-based operating company. Furthermore, because
the shell company only has specific rights provided for in these service
agreements with the VIE, its abilities to control the activities at the
Chinese-based operating company are limited and the operating company may engage
in activities that negatively impact investment value.
While
the VIE structure has been widely adopted, it is not formally recognized under
Chinese law and therefore there is a risk that the Chinese government could
prohibit the existence of such structures or negatively impact the VIE’s
contractual arrangements with the listed shell company by making them invalid.
If these contracts were found to be unenforceable under Chinese law, investors
in the listed shell company, such as the Fund, may suffer significant losses
with little or no recourse available. If the Chinese government determines that
the agreements establishing the VIE structures do not comply with Chinese law
and regulations, including those related to restrictions on foreign ownership,
it could subject a Chinese-based issuer to penalties, revocation of business and
operating licenses, or forfeiture of ownership interest. In addition, the listed
shell company’s control over a VIE may also be jeopardized if a natural person
who holds the equity interest in the VIE breaches the terms of the agreement, is
subject to legal proceedings or if any physical instruments for authenticating
documentation, such as chops and seals, are used without the Chinese-based
issuer’s authorization to enter into contractual arrangements in China. Chops
and seals, which are carved stamps used to sign documents, represent a legally
binding commitment by the company. Moreover, any future regulatory action may
prohibit the ability of the shell company to receive the economic benefits of
the Chinese-based operating company, which may cause the value of the Fund’s
investment in the listed shell company to suffer a significant loss. For
example, in 2021, the Chinese government prohibited use of the VIE structure for
investment in after-school tutoring companies. There is no guarantee that the
government will not place similar restrictions on other
industries.
Chinese equities that utilize the VIE structure to list in
the U.S. as ADRs face the risk of regulatory action from U.S. authorities,
including the risk of delisting. This will depend in part on whether U.S.
regulatory authorities are satisfied with their access to Mainland China and
Hong Kong for the purpose of conducting inspections on the quality of audits for
these companies. Although the U.S. and China reached an agreement in September
2022 to grant the U.S. access for such inspections, there is no guarantee that
the agreement will hold up or that U.S. regulatory authorities will continue to
feel satisfied with their access.
Risk
of Investing in Developed Europe
Risk
of Investing in Developed Europe applies to the Global X S&P Catholic Values
Developed ex-U.S. ETF
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
Risk
of Investing in Developed Markets applies to the Global X Renewable Energy
Producers ETF, Global X E-commerce ETF, Global X SuperDividend® ETF, Global X
SuperDividend® U.S. ETF, Global X MSCI SuperDividend® EAFE ETF, Global X
SuperDividend® REIT ETF, Global X SuperIncome™ Preferred 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 Dow 30® Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X S&P 500 Covered Call & Growth
ETF, Global X Russell 2000 Covered Call & Growth ETF, Global X Financials
Covered Call & Growth ETF, Global X Health Care Covered Call & Growth
ETF, Global X Information Technology Covered Call & Growth ETF, Global X
S&P 500 Tail Risk ETF, Global X S&P 500 Risk Managed Income ETF, Global
X S&P 500 Collar 95-110 ETF, Global X Nasdaq 100 Tail Risk ETF, Global X
Nasdaq 100 Risk Managed Income ETF, Global X Nasdaq 100 Collar 95-110 ETF,
Global X S&P 500® Catholic Values ETF, Global X S&P Catholic Values
Developed ex-U.S. 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, 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 Renewable Energy Producers
ETF, Global X Disruptive Materials 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 Guru® Index
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 France
Risk
of Investing in France applies to the Global X S&P Catholic Values Developed
ex-U.S. ETF
Investment
in French issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risk specific to France. As a result of the
COVID-19 pandemic in 2020, the French economy, along with certain other EU
economies, experienced a significant economic slowdown. The 2022 invasion of
Ukraine by Russia created economic headwinds and potential threats to energy
security for France and other EU nations. Ongoing concerns in relation to the
economic health of the European Union (the “EU”) continue to constrain the
economic resilience of certain EU member states, including France. Interest
rates on France’s debt may rise to levels that make it difficult for it to
service high debt levels without significant financial help from, among others,
the European Central Bank and could potentially result in default. In addition,
the French economy is dependent to a significant extent on the economies of
certain key trading partners, including Germany and other Western European
countries. Reduction in spending on French products and services, or changes in
any of the economies may cause an adverse impact on the French economy. In
addition, France has been subject to acts of terrorism, which has created a
climate of insecurity that has been detrimental to tourism and may lead to
further adverse economic consequences. The French economy is dependent on
exports from the agricultural sector. Leading agricultural exports include dairy
products, meat, wine, fruit and vegetables, and fish. As a result, the French
economy is susceptible to fluctuations in demand for agricultural
products.
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. 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 Japan
Risk
of Investing in Japan applies to the Global X Lithium & Battery Tech ETF,
Global X MSCI SuperDividend® EAFE ETF and 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.
Population decline and an aging society could contribute further to lower
growth. 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.
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. There is a risk of maritime conflict between Japan and China over the
Senkaku or Diaoyu Islands, and between Japan and South Korea over the Liancourt
Rocks. Strained relations may cause uncertainty in the Japanese markets and
adversely affect the overall Japanese economy, particularly in times of crisis.
An invasion of Taiwan by China could be a catalyst for regional destabilization.
In 2022, Japan began increasing its defense spending significantly in
preparation for a potential crisis in Taiwan.
Risk
of Investing in Mexico
Risk
of Investing in Mexico applies to the Global X Disruptive Materials
ETF
Investment
in Mexican issuers involves risks that are specific to Mexico, including
regulatory, political, and economic risks. The Mexican economy is dependent upon
external trade with other economies, specifically with the United States and
certain Latin American countries. As a result, Mexico is dependent on, among
other things, the U.S. economy and any change in the price or demand for Mexican
exports may have an adverse impact on the Mexican economy. For example, lower
oil prices have negatively impacted Petróleos Mexicanos, the Mexican state-owned
petroleum company, which accounts for a significant percentage of the Mexican
government’s tax revenue. Mexico has experienced adverse economic impacts as a
result of earthquakes and hurricanes, as well as outbreaks of violence.
Incidents involving Mexico’s security may have an adverse effect on the Mexican
economy and cause uncertainty in its financial markets. In the past, Mexico has
experienced high interest rates, economic volatility and high unemployment
rates.
Political
and Social Risk
Mexico
has been destabilized by local insurrections, social upheavals, drug related
violence, and the public health crisis related to the COVID-19 outbreak.
Recurrence of these or similar conditions may adversely impact the Mexican
economy. Recently, Mexican elections have been contentious and have been very
closely decided. Changes in political parties or other Mexican political events
may affect the economy and cause instability.
Currency
Instability Risk
Historically,
Mexico has experienced substantial economic instability resulting from, among
other things, periods of very high inflation and significant devaluations of the
Mexican currency, the peso.
Relations
with the United States
Recent
political developments in the U.S. have raised potential implications for the
current trade arrangements between the U.S. and Mexico, which could negatively
affect the value of securities held by the Fund.
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 Singapore
Risk
of Investing in Singapore applies to the Global X SuperDividend® REIT
ETF
Investments
in Singaporean issuers may subject the Fund to legal, regulatory, political,
currency and economic risks specific to Singapore. Specifically, political and
economic developments of its neighbors may have an adverse effect on Singapore’s
economy. In addition, because its economy is export driven, Singapore relies
heavily on its trading partners. China is a major purchaser of Singapore’s
exports and serves as a source of Singapore’s imports. Singapore derives a
significant portion of its foreign investments from China. Singapore is also
sensitive to the socio-political and economic developments of its neighbors,
Indonesia and Malaysia, relying on both as markets for Singapore’s service
industry and on Malaysia for its raw water supply. Singapore also has
substantial economic exposure to Hong Kong and the U.S. As a result, Singapore’s
economy is susceptible to fluctuations in the world economy. A downturn in the
economies of China, Malaysia, Indonesia, Hong Kong, or the U.S., among other
countries or regions, could adversely affect Singapore’s economy. In addition,
Singapore’s economy may be particularly vulnerable to external market changes
due to its smaller size. Rising labor costs and increasing environmental
consciousness have led some labor-intensive industries to relocate to countries
with cheaper work forces, and continued labor outsourcing may adversely affect
the Singaporean economy.
Risk
of Investing in South Africa
Risk
of Investing in South Africa applies to the Global X Disruptive Materials ETF,
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 Taiwan
Risk
of Investing in Taiwan applies to the Global X MSCI SuperDividend® Emerging
Markets ETF
Investments
in Taiwanese issuers may subject the Fund to legal, regulatory, political,
currency and economic risks that are specific to Taiwan. Specifically, Taiwan’s
geographic proximity and history of political contention with China have
resulted in ongoing tensions between the two countries. These tensions may
materially affect the Taiwanese economy and its securities market. These
tensions may evolve into a military conflict between China and Taiwan, with
potential participation by other regional powers such as the US and Japan.
Taiwan’s lack of formal recognition by most countries around the world leaves
its legal status ambiguous and often prevents Taiwan from membership in
international organizations. The establishment of diplomatic ties between Taiwan
and another country could result in both Taiwan and that country facing economic
or diplomatic retaliation from China. Taiwan’s economy is export-oriented, so it
depends on an open world trade regime and remains vulnerable to fluctuations in
the world economy. Rising labor costs and increasing environmental consciousness
have led some labor-intensive industries to relocate to countries with cheaper
work forces, and continued labor outsourcing may adversely affect the Taiwanese
economy.
Risk
of Investing in Thailand
Risk
of Investing in Thailand applies to the Global X Renewable Energy Producers
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 Kingdom
Risk
of Investing in the United Kingdom applies to the Global X MSCI SuperDividend®
EAFE ETF
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”. The United Kingdom
officially stopped being a member of the European Union on January 31, 2020. On
December 30, 2020, the United Kingdom and the European Union signed an agreement
on the terms governing certain aspects of the European Union’s and the United
Kingdom’s relationship following the end of the transition period, the EU-UK
Trade and Cooperation Agreement (the “TCA”). Notwithstanding the TCA, there is
likely to be considerable uncertainty as to the United Kingdom’s post-transition
framework, and in particular, as to the arrangements which will apply to the
United Kingdom’s relationships with the European Union and with other countries,
which is likely to continue to develop and could result in increased volatility
and illiquidity and potentially lower economic growth. In October 2022, the
United Kingdom suffered a pension fund crisis that prompted intervention by the
Bank of England and damaged investor confidence in its financial
stability.
Risk
of Investing in the United States
Risk
of Investing in the United States applies to the Global X SuperDividend® U.S.
ETF, Global X SuperDividend® REIT ETF, Global X SuperIncome™ Preferred 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 Dow 30®
Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X
S&P 500 Covered Call & Growth ETF, Global X Russell 2000 Covered Call
& Growth ETF, Global X Financials Covered Call & Growth ETF, Global X
Health Care Covered Call & Growth ETF, Global X Information Technology
Covered Call & Growth ETF, Global X S&P 500 Tail Risk ETF, Global X
S&P 500 Risk Managed Income ETF, Global X S&P 500 Collar 95-110 ETF,
Global X Nasdaq 100 Tail Risk ETF, Global X Nasdaq 100 Risk Managed Income ETF,
Global X Nasdaq 100 Collar 95-110 ETF, Global X S&P 500® Catholic Values
ETF, Global X Guru® Index ETF and Global X S&P Catholic Values U.S.
Aggregate Bond 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.
Risk
of Investing in Zambia
Risk
of Investing in Zambia applies to the Global X Disruptive Materials
ETF
Zambia
faces significant poverty and has a large public sector and poor social sector
delivery systems. Economic regulations and red tape are extensive, and
corruption is widespread, which continues to have a negative impact on the
Zambian economy despite recent reforms. The bureaucratic procedures surrounding
the process of obtaining licenses encourage the widespread use of facilitation
payments. Despite recent diversification efforts, the Zambian economy is heavily
dependent on the copper mining industry.
Geographic
Economic Exposure Risk
Geographic
Economic Exposure Risk applies to each Fund
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. Hong
Kong is currently administered as a Special Administrative Region under the
sovereignty of the People’s Republic of China, but pro-independence sentiment
and political dissatisfaction towards China have resulted and may continue to
result in widespread protests. In 2020, China passed the National Security Law
in Hong Kong, which tightened political freedoms and heightens risk for any
businesses or individuals that express pro-independence views. 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. Maritime disputes in the South China Sea are
complex and involve conflicting claims by China, Brunei, Indonesia, Malaysia,
the Philippines, Taiwan and Vietnam, and there is a risk that these disputes
could escalate into armed conflict between any of the aforementioned countries.
Furthermore, there are numerous disputes over islands in East Asia that pose
security risks, including but not necessarily limited to the Liancourt Rocks
dispute between Japan and Korea, the Senkaku/Diaoyu Islands dispute between
China and Japan, and the Kuril Islands dispute between Japan and Russia.
Although Taiwan currently has a government that is separate from that of the
People’s Republic of China, the PRC lays claim to Taiwan and has enacted
legislation mandating military invasion should Taiwan’s government formally
declare independence. China may also choose to launch an invasion of Taiwan even
without the Taiwanese government formally declaring independence and there is a
high risk that such a conflict would draw in other actors such as the United
States and Japan. In response to the elevated risk of conflict in Taiwan, in
2022 the government of Japan moved to dramatically raise its defense budget and
lift longstanding restrictions on obtaining missiles with strike capabilities.
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. Political stability is also a concern
in Latin America, with the risk of contested election results, military coups,
and mass social disorder presenting complex risks.
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 Renewable Energy Producers ETF, Global
X Disruptive Materials 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
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 Renewable Energy Producers ETF and
Global X Disruptive Materials 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 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, at the start of 2023, central banks had already increased interest
rates at the fastest rate on record, the unknown is the length of time they
remain restrictive and when inflation returns to target levels. This increases
the risk that monetary policy may provide less support should economic growth
slow. Additionally, China’s shift away from their zero-COVID policy creates both
opportunities and risks, establishing China as the wildcard for global economic
growth. Market risk factors may result in 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 Disruptive Materials ETF, Global X Dow 30®
Covered Call ETF, Global X Russell 2000 Covered Call & Growth ETF, Global X
Financials Covered Call & Growth ETF, Global X Health Care Covered Call
& Growth ETF, Global X Information Technology Covered Call & Growth 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 Renewable Energy Producers ETF, Global X Disruptive Materials
ETF, Global X E-commerce ETF, Global X Emerging Markets Internet &
E-commerce ETF, Global X NASDAQ 100® Covered Call ETF, Global X Dow 30® Covered
Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X
Financials Covered Call & Growth ETF, Global X Health Care Covered Call
& Growth ETF, Global X Information Technology Covered Call & Growth ETF,
Global X Nasdaq 100 Tail
Risk
ETF, Global X Nasdaq 100 Risk Managed Income ETF, Global X Nasdaq 100 Collar
95-110 ETF and Global X 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
Dow 30 Covered Call® ETF, Global X NASDAQ 100® Covered Call & Growth ETF,
Global X S&P 500 Covered Call & Growth ETF, Global X Russell 2000
Covered Call & Growth ETF, Global X Financials Covered Call & Growth
ETF, Global X Health Care Covered Call & Growth ETF, Global X Information
Technology Covered Call & Growth ETF, Global X S&P 500 Tail Risk ETF,
Global X S&P 500 Risk Managed Income ETF, Global X S&P 500 Collar 95-110
ETF, Global X Nasdaq 100 Tail Risk ETF, Global X Nasdaq 100 Risk Managed Income
ETF and Global X Nasdaq 100 Collar 95-110 ETF
The
Fund’s investment strategy 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. While the Fund is passively managed,
implementation of the Fund’s principal investment strategy may result in
tracking error risk, which is described below. 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 Disruptive Materials ETF,
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, such as in times of market stress, 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/or at wider intraday bid-ask spreads, 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
The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's shares
being delisted by 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
Only
Authorized Participants who have entered into agreements with the Fund’s
distributor may engage in creation or redemption transactions directly with the
Fund. Shares of the Fund may trade in the secondary market on days when the Fund
does not accept orders to purchase or redeem Shares from Authorized
Participants. 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. In
stressed market conditions, the market for the Shares may become less liquid in
response to the deteriorating liquidity of the Fund’s portfolio. 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, Global X Disruptive Materials 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 Renewable Energy Producers ETF, Global X E-commerce
ETF, Global X SuperDividend® ETF, Global X SuperDividend® U.S. ETF, Global X
MSCI SuperDividend® Emerging Markets ETF, Global X SuperDividend® REIT ETF,
Global X SuperIncome™ Preferred 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.
Tax
Status Risk
Tax
Status Risk applies to the Global X Lithium & Battery Tech ETF and Global X
Disruptive Materials ETF
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"). 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 selling precious metals and other commodities.
This could make it more difficult for the Fund to qualify as a RIC. If a
portfolio 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 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
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 MSCI SuperDividend® Emerging Markets ETF, Global X
SuperIncome™ Preferred 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
Dow 30 Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF,
Global X S&P 500 Covered Call & Growth ETF, Global X Russell 2000
Covered Call & Growth ETF, Global X Financials Covered Call & Growth
ETF, Global X Health Care Covered Call & Growth ETF, Global X Information
Technology Covered Call & Growth ETF, Global X S&P 500 Tail Risk ETF,
Global X S&P 500 Risk Managed Income ETF, Global X S&P 500 Collar 95-110
ETF, Global X Nasdaq 100 Tail Risk ETF, Global X Nasdaq 100 Risk Managed Income
ETF, Global X Nasdaq 100 Collar 95-110 ETF 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
When
the Fund receives dividend and interest income (if any) from issuers in certain
countries, such distributions may be subject to partial withholding by local tax
authorities in order to satisfy potential local tax obligations. The Fund may
file claims to recover such withholding tax in jurisdictions where withholding
tax reclaim is possible, which may be the case as a result of bilateral treaties
between the United States and local governments. Whether or when the Fund will
receive a withholding tax refund in the future is within the control of the tax
authorities in such countries. Where the Fund expects to recover withholding tax
based on a continuous assessment of probability of recovery, the NAV of the Fund
generally includes accruals for such tax refunds. The Fund continues to evaluate
tax developments for potential impact to the probability of recovery. If the
likelihood of receiving refunds materially decreases, for example due to a
change in tax regulation or approach, accruals in the Fund’s NAV for such
refunds may need to be written down partially or in full, which will adversely
affect that Fund’s NAV. Investors in the Fund at the time an accrual is written
down will bear the impact of any resulting reduction in NAV regardless of
whether they were investors during the accrual period. Conversely, if the Fund
receives a tax refund that has not been previously accrued, investors in the
Fund at the time the claim is successful will benefit from any resulting
increase in the Fund’s NAV. Investors who sold their shares prior to such time
will not benefit from such NAV increase.
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/explore/(click on the name of your Fund) 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, 2023,
the Adviser provided investment advisory services for assets of approximately
$40 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, 2022, 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 Financials Covered Call & Growth ETF |
0.60%* |
Global
X Health Care Covered Call & Growth ETF |
0.60%** |
Global
X Information Technology Covered Call & Growth ETF |
0.60%*** |
*
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
Financials Covered Call & Growth ETF to the extent necessary to assure that
the operating expenses of the Global X Financials Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Financials Covered Call & Growth ETF per year until at least
March 1, 2024.
**
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Health
Care Covered Call & Growth ETF to the extent necessary to assure that the
operating expenses of the Global X Health Care Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Health Care Covered Call & Growth ETF per year until at
least March 1, 2024.
***
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
Information Technology Covered Call & Growth ETF to the extent necessary to
assure that the operating expenses of the Global X Information Technology
Covered Call & Growth ETF (exclusive of taxes, brokerage fees, commissions,
and other transaction expenses, interest, and extraordinary expenses (such as
litigation and indemnification expenses)) will not exceed 0.60% of the average
daily net assets of the Global X Information Technology Covered Call &
Growth ETF per year until at least March 1, 2024.
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, 2022, 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 |
0.60% |
Global
X NASDAQ 100®
Covered Call ETF |
0.60% |
Global
X MSCI SuperDividend®
Emerging Markets ETF |
0.65% |
Global
X SuperDividend®
REIT ETF |
0.58% |
Global
X Renewable Energy Producers ETF |
0.65% |
Global
X S&P 500®
Catholic Values ETF |
0.29% |
Global
X MSCI SuperDividend®
EAFE ETF |
0.55% |
Global
X E-commerce ETF |
0.50% |
Global
X Russell 2000 Covered Call ETF |
0.60%** |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
0.35% |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
0.60% |
Global
X S&P 500®
Covered Call & Growth ETF |
0.60% |
Global
X Emerging Markets Internet & E-commerce ETF |
0.65% |
Global
X S&P 500®
Tail Risk ETF |
0.60% |
|
|
|
|
|
|
Global
X S&P 500®
Risk Managed Income ETF |
0.60% |
Global
X S&P 500®
Collar 95-110 ETF |
0.60% |
Global
X NASDAQ 100®
Tail Risk ETF |
0.60% |
Global
X NASDAQ 100®
Risk Managed Income ETF |
0.60% |
Global
X NASDAQ 100®
Collar 95-110 ETF |
0.60% |
Global
X Disruptive Materials ETF |
0.59% |
Global
X Dow 30®
Covered
Call ETF |
0.60% |
Global
X Russell 2000 Covered Call & Growth ETF |
0.60%*** |
*
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
SuperDividend®
ETF to the extent necessary to assure that the operating expenses of the Global
X SuperDividend®
ETF (exclusive of taxes, brokerage fees, commissions, and other transaction
expenses and extraordinary expenses (such as litigation and indemnification
expenses)) will not exceed 0.58% of the average daily net assets of the Global X
SuperDividend®
ETF per year until at least March 1, 2024.
**
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Russell
2000 Covered Call ETF to the extent necessary to assure that the operating
expenses of the Global X Russell 2000 Covered Call ETF (exclusive of taxes,
brokerage fees, commissions, and other transaction expenses, interest, and
extraordinary expenses (such as litigation and indemnification expenses)) will
not exceed 0.60% of the average daily net assets of the Global X Russell 2000
Covered Call ETF per year until at least March 1, 2024.
***
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Russell
2000 Covered Call & Growth ETF to the extent necessary to assure that the
operating expenses of the Global X Russell 2000 Covered Call & Growth ETF
(exclusive of taxes, brokerage fees, commissions, and other transaction
expenses, interest, and extraordinary expenses (such as litigation and
indemnification expenses)) will not exceed 0.60% of the average daily net assets
of the Global X Russell 2000 Covered Call & Growth ETF per year until at
least March 1, 2024.
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.
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 a 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 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 Global X S&P Catholic Values U.S. Aggregate Bond
ETF will be available in the Fund’s 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 Nam To, Wayne Xie, Kimberly Chan, Vanessa Yang and
Sandy Lu.
Nam
To:
Nam To, CFA, Portfolio Manager, 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, Director of Portfolio Management, 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, Portfolio Manager, joined the Adviser in June 2018. 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 Manager, 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.
Sandy
Lu:
Sandy Lu, CFA, Portfolio Manager, joined the Adviser in September 2021.
Previously, Mr. Lu was a Portfolio Analyst and Junior Portfolio Manager at PGIM
Fixed Income from 2014 to 2021, and a Fixed Income Portfolio Analyst at Lincoln
Financial Group from 2010 to 2014. Mr. Lu received his Bachelor of Science in
Economics from the Wharton School of the University of Pennsylvania. He earned
his CFA designation in September 2015, and holds the Series 3
license.
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 returns.
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 Renewable
Energy Producers ETF, Global X Disruptive Materials ETF and Global X MSCI
SuperDividend® Emerging Markets 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, Juneteenth National Independence 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 a 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
fund-of-funds investment 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 conditions set forth in
Rule 12d1-4 under the 1940 Act. With respect to the Global X Russell 2000
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, which invest 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 has elected
and 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 you receive. 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.
Subject
to oversight by the Board of Trustees, the Adviser, as “valuation designee,”
performs fair value determinations of Fund investments. In addition, the
Adviser, as the valuation designee, is responsible for periodically assessing
any material risks associated with the determination of the fair value of a
Fund's investments; establishing and applying fair value methodologies; testing
the appropriateness of fair value methodologies; and overseeing and evaluating
third-party pricing services. The Adviser has established a fair value committee
to assist with its designated responsibilities as valuation
designee.
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,
Global X Financials Covered Call & Growth ETF, Global X Health Care Covered
Call & Growth ETF and Global X Information Technology Covered Call &
Growth 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, 2022.
“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 10/31/22
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV |
MARKET |
UNDERLYING
INDEX |
Global
X Lithium & Battery Tech ETF 1 |
7.88% |
7.84% |
8.40% |
Global
X SuperDividend®
ETF2 |
-2.45% |
-2.39% |
-2.86% |
Global
X Social Media ETF3 |
5.04% |
5.04% |
5.59% |
Global
X Guru®
Index ETF4 |
9.28% |
9.28% |
9.63% |
Global
X SuperIncome™ Preferred ETF5 |
2.40% |
2.53% |
3.01% |
Global
X SuperDividend®
U.S. ETF6 |
3.90% |
3.97% |
4.47% |
Global
X S&P 500®
Covered Call ETF7*** |
6.63% |
6.70% |
6.95% |
Global
X NASDAQ 100®
Covered Call ETF8**** |
5.68% |
5.66% |
6.58% |
Global
X MSCI SuperDividend®
Emerging
Markets ETF9* |
-3.22% |
-3.21% |
-2.11% |
Global
X SuperDividend®
REIT ETF10 |
-1.75% |
-1.82% |
-1.25% |
Global
X Renewable Energy Producers ETF11** |
1.53% |
1.53% |
1.92% |
Global
X S&P 500®
Catholic Values ETF12 |
11.50% |
11.51% |
11.40% |
Global
X MSCI SuperDividend®
EAFE ETF13 |
1.99% |
1.71% |
2.50% |
Global
X E-commerce ETF14 |
0.64% |
0.62% |
1.08% |
Global
X Russell 2000 Covered Call ETF15 |
4.62% |
4.64% |
5.53% |
Global
X S&P Catholic Values Developed ex-U.S. ETF16 |
-0.61% |
-0.49% |
-0.29% |
Global
X Nasdaq 100®
Covered
Call & Growth ETF17 |
1.12% |
1.19% |
1.69% |
Global
X S&P 500®
Covered Call & Growth ETF18 |
7.34% |
7.34% |
8.20% |
Global
X Emerging Markets Internet & E-commerce ETF19 |
-39.51% |
-39.34% |
-39.19% |
Global
X S&P 500®
Tail Risk ETF20 |
-10.88% |
-10.82% |
-10.23% |
Global
X S&P 500®
Risk Managed Income ETF21 |
-9.37% |
-9.44% |
-9.04% |
Global
X S&P 500®
Collar 95-110 ETF22 |
-7.17% |
-7.14% |
-6.82% |
Global
X NASDAQ 100®
Tail Risk ETF23 |
-19.38% |
-19.20% |
-18.66% |
Global
X NASDAQ 100®
Risk Managed Income ETF24 |
-15.27% |
-15.20% |
-15.47% |
Global
X NASDAQ 100®
Collar 95-110 ETF25 |
-9.76% |
-9.90% |
-8.86% |
Global
X Disruptive Materials ETF26 |
N/A |
N/A |
N/A |
Global
X Dow 30®
Covered Call ETF27 |
N/A |
N/A |
N/A |
Global
X Russell 2000 Covered Call & Growth ETF28 |
N/A |
N/A |
N/A |
1 For
the period since inception on 07/22/10 to 10/31/22
2 For
the period since inception on 06/08/11 to 10/31/22
3 For
the period since inception on 11/14/11 to 10/31/22
4 For
the period since inception on 06/04/12 to 10/31/22
5 For
the period since inception on 07/16/12 to 10/31/22
6 For
the period since inception on 03/11/13 to 10/31/22
7 For
the period since inception on 06/21/13 to 10/31/22.
Performance includes the performance of the Predecessor Fund.
8 For
the period since inception on 12/11/13 to 10/31/22.
Performance includes the performance of the Predecessor Fund.
9 For
the period since inception on 03/16/15 to 10/31/22
10 For
the period since inception on 03/16/15 to 10/31/22
11 For
the period since inception on 05/27/15 to 10/31/22
12 For
the period since inception on 04/18/16 to 10/31/22
13 For
the period since inception on 11/14/16 to 10/31/22
14 For
the period since inception on 11/27/18 to 10/31/22
15 For
the period since inception on 04/22/19 to 10/31/22
16 For
the period since inception on 06/22/20 to 10/31/22
17 For
the period since inception on 09/18/20 to 10/31/22
18 For
the period since inception on 09/18/20 to 10/31/22
19
For the period since inception on 11/09/20 to 10/31/22
20
For the period since inception on 08/25/21 to 10/31/22
21
For
the period since inception on 08/25/21 to 10/31/22
22
For
the period since inception on 08/25/21 to 10/31/22
23
For
the period since inception on 08/25/21 to 10/31/22
24
For
the period since inception on 08/25/21 to 10/31/22
25
For
the period since inception on 08/25/21 to 10/31/22
26
For the period since inception on 01/24/22 to 10/31/22
27
For the period since inception on 02/23/22 to 10/31/22
28
For the period since inception on 10/04/22 to 10/31/22
*
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 10/31/22
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV |
MARKET |
UNDERLYING
INDEX |
Global
X Lithium & Battery Tech ETF 1 |
153.97% |
152.83% |
169.33% |
Global
X SuperDividend®
ETF2 |
-24.64% |
-24.15% |
-28.20% |
Global
X Social Media ETF3 |
71.57% |
71.43% |
81.53% |
Global
X Guru®
Index ETF4 |
152.01% |
152.07% |
160.50% |
Global
X SuperIncome™ Preferred ETF5 |
27.69% |
29.32% |
35.70% |
Global
X SuperDividend®
U.S. ETF6 |
44.66% |
45.62% |
52.41% |
Global
X S&P 500®
Covered Call ETF7*** |
82.43% |
83.50% |
87.70% |
Global
X NASDAQ 100®
Covered Call ETF8**** |
63.47% |
63.13% |
76.20% |
Global
X MSCI SuperDividend®
Emerging
Markets ETF9* |
-22.09% |
-22.02% |
-15.02% |
Global
X SuperDividend®
REIT ETF10 |
-12.62% |
-13.08% |
-9.12% |
Global
X Renewable Energy Producers ETF11** |
11.98% |
11.97% |
15.19% |
Global
X S&P 500®
Catholic Values ETF12 |
103.81% |
103.93% |
102.64% |
Global
X MSCI SuperDividend®
EAFE ETF13 |
12.46% |
10.64% |
15.89% |
Global
X E-commerce ETF14 |
2.53% |
2.47% |
4.30% |
Global
X Russell 2000 Covered Call ETF15 |
17.35% |
17.41% |
21.00% |
Global
X S&P Catholic Values Developed ex-U.S. ETF16 |
-1.42% |
-1.16% |
-0.68% |
Global
X Nasdaq 100®
Covered
Call & Growth ETF17 |
2.38% |
2.55% |
3.62% |
Global
X S&P 500®
Covered
Call & Growth ETF 18 |
16.18% |
16.17% |
18.16% |
Global
X Emerging Markets Internet & E-commerce ETF19 |
-62.95% |
-62.75% |
-62.56% |
Global
X S&P 500®
Tail Risk ETF20 |
-12.75% |
-12.68% |
-11.99% |
Global
X S&P 500®
Risk Managed Income ETF21 |
-10.99% |
-11.08% |
-10.61% |
Global
X S&P 500®
Collar 95-110 ETF22 |
-8.43% |
-8.40% |
-8.02% |
Global
X NASDAQ 100®
Tail Risk ETF23 |
-22.51% |
-22.30% |
-21.68% |
Global
X NASDAQ 100®
Risk Managed Income ETF24 |
-17.81% |
-17.73% |
-18.04% |
Global
X NASDAQ 100®
Collar 95-110 ETF25 |
-11.44% |
-11.60% |
-10.40% |
Global
X Disruptive Materials ETF26 |
-22.98% |
-23.40% |
-22.72% |
Global
X Dow 30®
Covered Call ETF27 |
-2.77% |
-2.52% |
-1.98% |
Global
X Russell 2000 Covered Call & Growth ETF28 |
3.14% |
3.22% |
2.98% |
1 For
the period since inception on 07/22/10 to 10/31/22
2 For
the period since inception on 06/08/11 to 10/31/22
3 For
the period since inception on 11/14/11 to 10/31/22
4 For
the period since inception on 06/04/12 to 10/31/22
5 For
the period since inception on 07/16/12 to 10/31/22
6 For
the period since inception on 03/11/13 to 10/31/22
7 For
the period since inception on 06/21/13 to 10/31/22.
Performance includes the performance of the Predecessor Fund.
8 For
the period since inception on 12/11/13 to 10/31/22.
Performance includes the performance of the Predecessor Fund.
9 For
the period since inception on 03/16/15 to 10/31/22
10 For
the period since inception on 03/16/15 to 10/31/22
11 For
the period since inception on 05/27/15 to 10/31/22
12 For
the period since inception on 04/18/16 to 10/31/22
13 For
the period since inception on 11/14/16 to 10/31/22
14 For
the period since inception on 11/27/18 to 10/31/22
15 For
the period since inception on 04/22/19 to 10/31/22
16 For
the period since inception on 06/22/20 to 10/31/22
17 For
the period since inception on 09/18/20 to 10/31/22
18 For
the period since inception on 09/18/20 to 10/31/22
19
For the period since inception on 11/09/20 to 10/31/22
20
For the period since inception on 08/25/21 to 10/31/22
21
For
the period since inception on 08/25/21 to 10/31/22
22
For
the period since inception on 08/25/21 to 10/31/22
23
For
the period since inception on 08/25/21 to 10/31/22
24
For
the period since inception on 08/25/21 to 10/31/22
25
For
the period since inception on 08/25/21 to 10/31/22
26
For the period since inception on 01/24/22 to 10/31/22
27
For the period since inception on 02/23/22 to 10/31/22
28
For the period since inception on 10/04/22 to 10/31/22
*
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.
Global
X U.S. High Yield Preferred Index
The
Global X U.S. High Yield Preferred Index is owned and was developed by Global X
Management Company LLC, the index provider, which is an affiliate of the Fund
and is also the Adviser. As is the case with any use of an affiliated index
provider by any ETF, this relationship poses potential conflicts. However,
Global X Management Company LLC, as a registered investment adviser, has taken
steps that are designed to ensure that these potential conflicts are mitigated.
The Global X U.S. High Yield Preferred Index tracks the performance of the
highest-yielding preferred securities in the United States, as determined by
Solactive AG, the administrator of the Global X U.S. High Yield Preferred Index.
The Global X U.S. High Yield Preferred Index is comprised of preferred stocks
that meet certain criteria relating to size, liquidity, issuer concentration and
rating, maturity and other requirements, as determined by the Index
Administrator. The Global X U.S. High Yield Preferred Stock Index does not seek
to directly reflect the performance of the companies issuing the preferred
stock.
Indxx
SuperDividend®
U.S. Low Volatility Index
The
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, Greece, Hungary, India, Indonesia, South Korea, Kuwait,
Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa,
Taiwan, Thailand, Turkey and United Arab Emirates. The MSCI Emerging Markets Top
50 Dividend Index begins with the MSCI Emerging Markets Index, which is a
capitalization-weighted index, as its starting universe, and then follows a
rules-based methodology that is designed to select among the highest dividend
yielding equity securities of the MSCI Emerging Markets Index. The MSCI Emerging
Markets Top 50 Dividend Index is equal weighted and rebalanced
annually.
Solactive
Global SuperDividend®
REIT Index
The
Solactive Global SuperDividend®
REIT Index tracks the performance of REITs that rank among the highest yielding
REITs globally, as determined by the Index Provider. The 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, and unaffiliated with, the Fund and Global X Management Company
LLC, the investment adviser for the Fund ("Adviser"). The Index Provider
determines the relative weightings of the securities in the Underlying Index and
publishes information regarding the market value of the Underlying Index. As of
December 31,
2022, the Underlying Index had 445 constituents. The Fund's investment objective
and Underlying Index may be changed without shareholder approval.
MSCI
EAFE Top 50 Dividend Index
The
MSCI EAFE Top 50 Dividend Index tracks the performance of 50 equally-weighted
companies that rank among the highest dividend yielding equity securities in
Europe, Australasia and the Far East, as defined by MSCI. The MSCI EAFE Top 50
Dividend Index begins with the MSCI EAFE Index, which is a
capitalization-weighted index, and then follows a rules-based methodology that
is designed to select among the highest dividend yielding equity securities of
the MSCI EAFE Index. The MSCI EAFE Top 50 Dividend Index is equal weighted and
rebalanced annually. As of December 31, 2022, components from the following
developed market countries were eligible for inclusion in the MSCI EAFE Top 50
Dividend Index: Australia, Austria, Belgium, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New
Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. The MSCI EAFE Top 50 Dividend Index may include large-, mid- or
small-capitalization companies. The MSCI EAFE Top 50 Dividend Index primarily
includes components from the following sectors: Consumer Discretionary, Energy,
Financials, Materials, Real Estate, Telecommunication Services, and Utilities.
The components of the MSCI EAFE Top 50 Dividend Index, and the degree to which
these components represent certain industries, are likely to change over time.
Solactive
E-commerce Index
The
Solactive E-commerce Index is designed to provide exposure to exchange-listed
companies that are positioned to benefit from the increased adoption of
e-commerce as a distribution model, including but not limited to companies whose
principal business is in operating e-commerce platforms, providing e-commerce
software and services, and/or selling goods and services online (collectively,
"E-commerce Companies"), as defined by Solactive AG, the provider of the
Solactive E-commerce Index ("Index Provider").
In
constructing the Solactive E-commerce Index, the Index Provider first applies a
proprietary natural language processing algorithm to the eligible universe,
which seeks to identify and rank companies with direct exposure to the
e-commerce industry based on filings, disclosures and other public information
(e.g. regulatory filings, earnings transcripts, etc.). Companies identified by
the natural language processing algorithm, as of the selection date, are further
reviewed by the Index Provider on the basis of revenue related to e-commerce
activities. To be eligible for the Solactive E-commerce Index, a company is
considered by the Index Provider to be an E-commerce Company if the company
generates at least 50% of its revenues from e-commerce activities, as determined
by the Index Provider. E-commerce Companies are those companies that (i) operate
e-commerce platforms that connect buyers and sellers of goods and services via
online marketplaces, (ii) provide e-commerce software, analytics or services
that facilitate the development and enhancement of e-commerce platforms, and/or
(iii) primarily sell goods and services online and generate the majority of
their overall revenue from online retail, as determined by the Index
Provider.
To
be a part of the eligible universe of the Solactive E-commerce Index, certain
minimum market capitalization and liquidity criteria, as defined by the Index
Provider, must be met. As of December 31, 2022, companies must have a
minimum market capitalization of $200 million and a minimum average daily
turnover for the last 6 months greater than or equal to $2 million in order to
be eligible for inclusion in the Solactive E-commerce Index and must retain a
minimum average daily turnover for the last 6 months greater than or equal to
$1.4 million in order to be eligible to remain in the Solactive E-commerce
Index. As of December 31, 2022, companies listed in the following countries
were eligible for inclusion in the Solactive E-commerce Index: Australia,
Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Poland,
Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey,
United Kingdom and the United States.
The
Solactive E-commerce Index is weighted according to a modified capitalization
weighting methodology and is reconstituted and re-weighted semi-annually, with
each included security being allocated a maximum weight of 4% and a minimum
weight of 0.3% in connection with each semi-annual rebalance. Modified
capitalization weighting seeks to weight constituents primarily based on market
capitalization, but subject to caps on the weights of the individual securities.
Generally speaking, this approach will limit the amount of concentration in the
largest market capitalization companies and increase company-level
diversification. The Solactive E-commerce Index may include large-, mid- or
small-capitalization companies, and components primarily include information
technology and consumer discretionary companies.
Cboe
Russell 2000 BuyWrite Index
The
Cboe Russell 2000 BuyWrite Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the Russell 2000
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the 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, and unaffiliated
with, the Fund and Global X Management Company LLC, the investment adviser for
the Fund ("Adviser"). The Index Provider determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
market value of the Underlying Index. As of December 31, 2022, the
Underlying Index had 434 constituents. The Fund's investment objective and
Underlying Index may be changed without shareholder approval.
Cboe
Nasdaq 100 Half BuyWrite V2 Index
The
Cboe Nasdaq 100 Half BuyWrite V2 Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the NASDAQ
100®
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the NASDAQ 100®
Index. The written covered call options on the NASDAQ 100®
Index correspond to approximately 50% of the value of the portfolio of stocks in
the NASDAQ 100®
Index. The written covered call options on the NASDAQ 100®
Index are held until one day prior to expiration. The NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification.
The
Cboe Nasdaq 100 Half BuyWrite V2 Index is sponsored by Nasdaq, Inc., which is an
organization that is independent of the Fund and the Adviser.
Cboe
S&P 500 Half BuyWrite Index
The
Cboe S&P 500 Half BuyWrite Index measures the performance of a theoretical
portfolio that holds a portfolio of the stocks included in the S&P 500
Index, and "writes" (or sells) a succession of one-month at-the-money covered
call options on the S&P 500®
Index. The written covered call options on the S&P 500®
Index correspond to approximately 50% of the value of the portfolio of stocks in
the S&P 500®
Index. The written covered call options on the S&P 500®
Index are held until expiration. The S&P 500®
Index is a float-adjusted market capitalization weighted index which measures
the performance of the equity securities of 500 industrial, information
technology, utility and financial companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
The
Cboe S&P 500 Half BuyWrite Index is sponsored by S&P Dow Jones Indices
LLC, which is an organization that is independent of the Fund and the Adviser.
Nasdaq
CTA Emerging Markets Internet & E-commerce Net Total Return
Index
The
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index is
designed to provide exposure to exchange-listed companies that are expected to
benefit from further adoption of internet and e-commerce technologies in
emerging markets countries (collectively, "Emerging Markets Internet &
E-commerce Companies"), as defined by Nasdaq, Inc.,
the
provider of the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total
Return Index and the Consumer Technology Association (the “CTA”). Nasdaq, Inc.
and the CTA have jointly developed the eligibility and selection criteria for
the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return
Index. In order to be eligible for inclusion in the Nasdaq CTA Emerging Markets
Internet & E-commerce Net Total Return Index, a company is considered by the
CTA to be an Emerging Markets Internet & E-commerce Company if it derives at
least 50% of its revenue, operating income, or assets from: (i) internet-related
services (including social media and online entertainment), (ii) internet retail
commerce, (iii) internet search engine services, and/or (iv) software delivered
via the internet.
Nasdaq,
Inc. classifies countries as being “emerging markets” by employing both a
quantitative and qualitative review process. The quantitative criteria that
Nasdaq, Inc. assesses include: (i) the Gross National Income (“GNI”) per capita,
which measures a country’s income divided by its population, must be greater
than $1,000 and less than $20,000 for three consecutive years; (ii) the
aggregate market capitalization of index eligible companies listed in the
country must be greater than $20 billion and less than $30 billion; (iii) the
aggregate annual traded value of companies listed in the country; and (iv) the
total number of index eligible securities listed in the country must be at least
5. In addition to the quantitative criteria, Nasdaq, Inc. applies a
supplementary qualitative review of each country’s investability to confirm each
country’s classification. The qualitative criteria that Nasdaq, Inc. assesses
include: (i) restrictions that may be imposed on foreign investment; (ii)
currency convertibility; and/or (iii) the ability for capital to move from one
country to another country without restrictions. Additionally, Nasdaq, Inc.
considers securities listed in Hong Kong (classified by Nasdaq, Inc. as a
developed market) as eligible for inclusion in the Nasdaq CTA Emerging Markets
Internet & E-commerce Net Total Return Index, to ensure representation in
the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index
of companies incorporated or operating primarily in China.
The
eligible universe of the Nasdaq CTA Emerging Markets Internet & E-commerce
Net Total Return Index includes exchange-listed companies that meet minimum
market capitalization and liquidity criteria, as defined by Nasdaq, Inc. As of
December 31, 2022, companies must have a minimum free float market
capitalization of $1 billion and a minimum average daily turnover for the last
six months greater than or equal to $5 million in order to be eligible for
inclusion in the Nasdaq CTA Emerging Markets Internet & E-commerce Net Total
Return Index. As of December 31, 2022, companies listed in the following
countries were eligible for inclusion in the Nasdaq CTA Emerging Markets
Internet & E-commerce Net Total Return Index: Brazil, Chile, China,
Colombia, Czech Republic, Egypt, Greece, Hong Kong, Hungary, Indonesia, Kuwait,
Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa,
South Korea, Taiwan, Thailand, Turkey, United Arab Emirates and the United
States (as a function of emerging market exposure obtained through the use of
ADRs). The Fund may have significant exposure to a particular foreign country or
foreign currency.
The
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index is
weighted according to a modified capitalization weighting methodology and is
reconstituted and re-weighted semi-annually. Modified capitalization weighting
seeks to weight constituents primarily based on market capitalization, but
subject to caps on the weights of the individual securities. During each
rebalance, the five largest securities by free float market capitalization are
individually capped at a maximum weight of 8% and all other constituents are
capped at a maximum weight of 4%. Generally speaking, this approach will limit
the amount of concentration in the largest market capitalization companies and
increase company-level diversification. The Nasdaq CTA Emerging Markets Internet
& E-commerce Net Total Return Index may include large-, mid- or
small-capitalization companies, and components primarily include communication
services and consumer discretionary companies. As of December 31, 2022, the
Nasdaq CTA Emerging Markets Internet & E-commerce Net Total Return Index had
39 constituents.
S&P
U.S. Catholic Values Aggregate Bond Capped Index
The
S&P U.S. Catholic Values Aggregate Bond Capped Index is designed to provide
exposure to U.S. investment grade bonds while maintaining alignment with the
moral and social teachings of the Catholic Church. The S&P U.S. Catholic
Values Aggregate Bond Capped Index includes investment grade U.S. Treasury
bonds, U.S. government-related bonds, U.S. corporate bonds, and U.S.
mortgage-backed securities. All corporate bonds included in the S&P U.S.
Catholic Values Aggregate Bond Capped Index are investment grade bonds issued by
constituents of the S&P 500 Index, and the issuers follow the eligibility
criteria for that index. Investment grade corporate bonds are those rated BBB-
or better by S&P Global Ratings, Baa3 or better by Moody's Investors
Service, and BBB- or better by Fitch Ratings. From this starting universe,
corporate bond issuers are screened to exclude companies involved in activities
which are perceived to be inconsistent with Catholic values as outlined in the
Socially Responsible Investment Guidelines of the United States Conference of
Catholic Bishops ("USCCB"). The S&P U.S. Catholic Values Aggregate Bond
Capped Index reweights the remaining corporate bonds so that the S&P U.S.
Catholic Values Aggregate Bond Capped Index’s exposure to corporate bonds
matches the aggregate exposure to corporate bonds of the S&P U.S. Aggregate
Bond Index. The S&P U.S. Catholic Values Aggregate Bond Capped Index then
reweights the sector exposure of the qualifying corporate bonds to match the
sector exposure of corporate bonds of the S&P U.S. Aggregate Bond
Index.
The S&P U.S. Aggregate Bond Index is designed to measure the performance of
publicly issued U.S. dollar denominated investment-grade debt and is weighted
based on market value. The S&P U.S. Aggregate Bond Index includes U.S.
treasuries, quasi-governments, corporates, taxable municipal bonds, foreign
agency, supranational, federal agency, and non-U.S. debentures, covered bonds,
and residential mortgage pass-throughs. The S&P U.S. Catholic Values
Aggregate Bond Capped Index is sponsored by Standard & Poor’s Financial
Services LLC, which is an organization that is independent of the Fund and the
Adviser. Standard & Poor’s Financial Services LLC determines the relative
weightings of the securities in the S&P U.S. Catholic Values Aggregate Bond
Capped Index and publishes information regarding the market value of the S&P
U.S. Catholic Values Aggregate Bond Capped Index. As of December 31, 2022,
the S&P U.S. Catholic Values Aggregate Bond Capped Index had 6216
constituents.
Cboe
S&P 500 Tail Risk Index
The
Cboe S&P 500 Tail Risk Index measures the performance of a risk management
strategy that holds the underlying stocks of the S&P 500®
Index and applies a protective put strategy (i.e. long (purchased) put options)
on the S&P 500®
Index. The Cboe S&P 500 Tail Risk Index specifically reflects the
performance of the component securities of the S&P 500®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the S&P
500®
Index.
On
a quarterly basis, the Cboe S&P 500 Tail Risk Index will take long positions
in quarterly put options with an exercise price generally at 10% below the
prevailing market price of the S&P 500®
Index. However, if put options with that precise strike price are unavailable,
the Cboe S&P 500 Tail Risk Index will instead select the put option with the
strike price closest to but greater than 10% below the prevailing market price
of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
Cboe
S&P 500 Risk Managed Income Index
The
Cboe S&P 500 Risk Managed Income Index measures the performance of a risk
managed income strategy that holds the underlying stocks of the S&P
500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index. The Cboe S&P 500 Risk Managed Income Index specifically reflects the
performance of the component securities of the S&P 500®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in at-the-money (“ATM”) call options, each corresponding to
the value of the portfolio of stocks in the S&P 500®
Index. The options collar seeks to generate a net-credit, meaning that the
premium received from the sale of the call options will be greater than the
premium paid when buying the put options.
On
a monthly basis, the Cboe S&P 500 Risk Managed Income Index will take long
positions in monthly put options with an exercise price generally at 5% below
the prevailing market price of the S&P 500®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the S&P 500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Cboe S&P 500 Risk Managed Income Index will instead select
the put option with the strike price closest to but greater than 5% below the
prevailing market price of the S&P 500®
Index, and call options with the strike price closest to but greater than the
prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors, regarded as generally representative of the U.S. stock market. A
float-adjusted market capitalization weighted index weights each index component
according to its market capitalization, using the number of shares that are
readily available for purchase on the open market.
Cboe
S&P 500 3-Month Collar 95-110 Index
The
Cboe S&P 500 3-Month Collar 95-110 Index measures the performance of a risk
management strategy that holds the underlying stocks of the S&P
500®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the S&P 500®
Index. The Cboe S&P 500 3-Month Collar 95-110 Index specifically reflects
the
performance
of the component securities of the S&P 500®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in 10% OTM call options, each corresponding to the value of
the portfolio of stocks in the S&P 500®
Index.
On
a quarterly basis, the Cboe S&P 500 3-Month Collar 95-110 Index will take
long positions in quarterly put options with an exercise price generally at 5%
below the prevailing market price of the S&P 500®
Index and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the S&P
500®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Cboe S&P 500 3-Month Collar 95-110 Index will instead
select the put option with the strike price closest to but greater than 5% below
the prevailing market price of the S&P 500®
Index, and call options with the strike price closest to but greater than 10%
above the prevailing market price of the S&P 500®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
S&P 500®
Index is a float-adjusted market capitalization weighted index containing equity
securities of 500 industrial, information technology, utility and financial
companies amongst other GICS®
sectors,
regarded as generally representative of the U.S. stock market. A float-adjusted
market capitalization weighted index weights each index component according to
its market capitalization, using the number of shares that are readily available
for purchase on the open market.
Nasdaq-100
Quarterly Protective Put 90 Index
The
Nasdaq-100 Quarterly Protective Put 90 Index measures the performance of a risk
management strategy that holds the underlying stocks of the NASDAQ
100®
Index
and applies a protective put strategy (i.e. long (purchased) put options) on the
NASDAQ 100®
Index. The Nasdaq-100 Quarterly Protective Put 90 Index specifically reflects
the performance of the component securities of the NASDAQ 100®
Index, combined with a long position in 10% out-of-the-money (“OTM”) put options
that correspond to the value of the portfolio of stocks in the NASDAQ
100®
Index. On a quarterly basis, the Nasdaq-100 Quarterly Protective Put 90 Index
will take long positions in quarterly put options with an exercise price
generally at 10% below the prevailing market price of the NASDAQ 100®
Index. However, if put options with that precise strike price are unavailable,
the Nasdaq-100 Quarterly Protective Put 90 Index will instead select the put
option with the strike price closest to but greater than 10% below the
prevailing market price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Nasdaq-100
Monthly Net Credit Collar 95-100 Index
The
Nasdaq-100 Monthly Net Credit Collar 95-100 Index measures the performance of a
risk managed income strategy that holds the underlying stocks of the NASDAQ
100®
Index and applies an options collar strategy (i.e., a mix of short (sold) call
options and long (purchased) put options) on the NASDAQ 100®
Index. The Nasdaq-100 Monthly Net Credit Collar 95-100 Index specifically
reflects the performance of the component securities of the NASDAQ
100®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in at-the-money (“ATM”) call options, each corresponding to
the value of the portfolio of stocks in the NASDAQ 100®
Index. The options collar seeks to generate a net-credit, meaning that the
premium received from the sale of the call options will be greater than the
premium paid when buying the put options.
On
a monthly basis, the Nasdaq-100 Monthly Net Credit Collar 95-100 Index will take
long positions in monthly put options with an exercise price generally at 5%
below the prevailing market price of the NASDAQ 100®
Index and take short positions in monthly call options with an exercise price
generally at the prevailing market price of the NASDAQ 100®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Nasdaq-100 Monthly Net Credit Collar 95-100
Index
instead select the put option with the strike price closest to 5% below the
prevailing market price of the NASDAQ 100®
Index, and call options with the strike price closest to the prevailing market
price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar month); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index is a modified market capitalization weighted index containing equity
securities of the 100 largest non-financial companies listed on the NASDAQ Stock
Market. Modified capitalization weighting seeks to weight constituents primarily
based on market capitalization, but subject to caps on the weights of the
individual securities. Generally speaking, this approach will limit the amount
of concentration in the largest market capitalization companies and increase
company-level diversification. The Fund's investment objective and Underlying
Index may be changed without shareholder approval.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Nasdaq-100
Quarterly Collar 95-110 Index
The
Nasdaq-100 Quarterly Collar 95-110 Index measures the performance of a risk
management strategy that holds the underlying stocks of the NASDAQ
100®
Index
and applies an options collar strategy (i.e., a mix of short (sold) call options
and long (purchased) put options) on the NASDAQ 100®
Index. The Nasdaq-100 Quarterly Collar 95-110 Index specifically reflects the
performance of the component securities of the NASDAQ 100®
Index, combined with a long position in 5% out-of-the money (“OTM”) put options
and a short position in 10% OTM call options, each corresponding to the value of
the portfolio of stocks in the NASDAQ 100®
Index.
On
a quarterly basis, the Nasdaq-100 Quarterly Collar 95-110 Index will take long
positions in quarterly put options with an exercise price generally at 5% below
the prevailing market price of the NASDAQ 100®
Index and take short positions in quarterly call options with an exercise price
generally at 10% above the prevailing market price of the NASDAQ 100®
Index. However, if put and/or call options with those precise strike prices are
unavailable, the Nasdaq-100 Quarterly Collar 95-110 Index will instead select
the put option with the strike price closest to 5% below the prevailing market
price of the NASDAQ ®
Index, and call options with the strike price closest to 10% above the
prevailing market price of the NASDAQ 100®
Index. Each option position will (i) be traded on a national securities
exchange; (ii) be held until the expiration date; (iii) expire on its date of
maturity (in the next calendar quarter); (iv) only be subject to exercise on its
expiration date; and (v) be settled in cash.
The
NASDAQ 100®
Index
is a modified market capitalization weighted index containing equity securities
of the 100 largest non-financial companies listed on the NASDAQ Stock Market.
Modified capitalization weighting seeks to weight constituents primarily based
on market capitalization, but subject to caps on the weights of the individual
securities. Generally speaking, this approach will limit the amount of
concentration in the largest market capitalization companies and increase
company-level diversification.
The
Underlying Index administered by Nasdaq, Inc. in conjunction with its third
party contributor, Volos Portfolio Solutions, LLC., which are organizations that
are independent of the Fund and Global X Management Company LLC, the investment
adviser for the Fund ("Adviser"). Nasdaq determines the relative weightings of
the securities in the Underlying Index and publishes information regarding the
value of the Underlying Index.
Solactive
Disruptive Materials Index
The
Solactive Disruptive Materials Index is designed to provide exposure to
companies that produce metals and other raw or composite materials that have
been identified as being essential to disruptive technologies such as lithium
batteries, solar panels, wind turbines, fuel cells, robotics, and 3D printers.
Each material has been determined by Solactive AG, the provider of the Solactive
Disruptive Materials Index to be instrumental to the development and
materialization of one or more disruptive technologies. Disruptive technologies
refer to those technologies that are essential to the development and
materialization of long-term, structural changes to existing products, services,
industries, or sectors. Specifically, the Solactive Disruptive Materials Index
will include securities issued by “Disruptive Materials Companies” as defined by
Solactive AG. Disruptive Materials Companies are those companies that derive at
least 50% of their revenues in aggregate from the exploration, mining,
production and/or enhancement of one or more of the following ten materials
categories: Carbon Fiber, Cobalt, Copper, Graphene & Graphite, Lithium,
Manganese, Nickel, Platinum & Palladium, Rare Earth Elements, and Zinc
(collectively, “Disruptive Materials Categories”). Companies engaged in
exploration and mining include those companies involved in locating and
extracting disruptive materials. Companies engaged in production include those
companies involved in
manufacturing,
processing, and trading disruptive materials for primary usage. Companies
engaged in enhancement include those companies involved in refining, developing,
and/or smelting materials to extract and purify disruptive materials.As of
December 31, 2022, the Solactive Disruptive Materials Index had 49
constituents.
For
the Lithium category, companies that derive greater than 25% but less than 50%
of revenue from the production and/or processing of lithium are also eligible
for inclusion (collectively, “Diversified Lithium Companies”). In addition,
companies with primary business operations in the exploration, mining,
production and/or enhancement of one or more of the Disruptive Materials
Categories, but which are not currently generating revenue, are also eligible
for inclusion (collectively, “Pre-Revenue Disruptive Materials Companies”). To
determine whether a company has primary business operations in the exploration,
mining, production and/or enhancement of one or more of the Disruptive Materials
Categories, Solactive AG reviews the public financial disclosures and filings of
the company, and identifies the products and business segments disclosed
therein. Solactive AG then reviews the management discussion and analysis, as
well as the level of investment the company allocates to those products and
segments, to determine whether those business operations are the primary
operations of the company.
In
constructing the Solactive Disruptive Materials Index, Solactive AG applies a
proprietary natural language processing algorithm to the eligible universe,
which seeks to identify and rank companies involved in each of the Disruptive
Materials Categories based on filings, disclosures, and other public information
(e.g., regulatory filings, earnings transcripts, etc.). The highest-ranking
companies identified by the natural language processing algorithm in each
Disruptive Materials Category, as of the selection date, are further reviewed by
Solactive AG to confirm they derive at least 50% of their revenues from one of
the Disruptive Materials Categories as described above, derive between 25% and
50% of their revenues from the Lithium category in the case of Diversified
Lithium Companies, or have primary business operations in the exploration,
mining, production and/or enhancement of one or more of the Disruptive Materials
Categories but do not currently generate revenues in the case of Pre-Revenue
Disruptive Materials Companies. The five highest-ranking Disruptive Materials
Companies and Pre-Revenue Disruptive Materials Companies according to free float
market capitalization from each Disruptive Materials Category are included in
the Solactive Disruptive Materials Index. For the Lithium category, the five
highest-ranking Disruptive Materials Companies, Pre-Revenue Disruptive Materials
Companies and Diversified Lithium Companies according to free float market
capitalization are included. If fewer than five companies are identified that
satisfy the above criteria within a Disruptive Materials Category, all eligible
companies are selected, and the category consists of fewer than five companies.
To
be a part of the eligible universe of the Solactive Disruptive Materials Index,
companies must be classified in one of the following Economies according to
FactSet (a leading financial data provider that maintains a comprehensive
structured taxonomy designed to offer precise classification of global companies
and their individual business units): Basic Materials, Industrials, or
Technology. In addition, certain minimum market capitalization and liquidity
criteria, as defined by the Solactive AG, must be met. As of December 31, 2022,
companies must have a minimum market capitalization of $100 million and a
minimum average daily turnover for the last 6 months greater than or equal to $1
million in order to be eligible for inclusion in the Solactive Disruptive
Materials Index. As of December 31, 2022, companies listed in the following
countries were eligible for inclusion in the Solactive Disruptive Materials
Index: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia,
Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong,
Hungary, Indonesia, Ireland, Israel, Italy, Japan, Kuwait, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Pakistan, Peru, Philippines, Poland, Portugal,
Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States, and the
United Arab Emirates. As of December 31, 2022, the Solactive Disruptive
Materials Index had significant exposure to Chinese issuers. The Fund may invest
in China A-Shares, which are issued by companies incorporated in mainland China
and traded on Chinese exchanges. The Fund may invest in securities of issuers
located in emerging markets.
The
Solactive Disruptive Materials Index is weighted according to a modified
capitalization weighting methodology and is reconstituted and re-weighted
semi-annually. Modified capitalization weighting seeks to weight constituents
primarily based on market capitalization, but subject to caps on the weights of
the individual securities. During each rebalance, the maximum weight of a
company is capped at 4%, and all constituents are subject to a minimum weight of
0.3%. In addition, Diversified Lithium Companies and Pre-Revenue Disruptive
Materials Companies are subject to an aggregate weight cap of 10% at each
semi-annual rebalance. Generally speaking, modified capitalization weighting
will limit the amount of concentration in the largest market capitalization
companies and increase company-level diversification. The Solactive Disruptive
Materials Index may include large-, mid-, small-, or micro-capitalization
companies, and components primarily include materials companies.
DJIA
Cboe BuyWrite v2 Index
The
DJIA Cboe BuyWrite v2 Index measures the performance of a covered call strategy
that holds the underlying stocks of the Dow Jones Industrial Average®
and "writes" (or sells) a succession of one-month at-the-money (“ATM”) covered
call options on a fund that has economic characteristics that are substantially
identical to the economic characteristics of the components of the Dow Jones
Industrial Average®
(“Reference Fund”). The DJIA Cboe BuyWrite v2 Index specifically reflects the
performance
of the component securities of the Dow Jones Industrial Average®,
combined with written (sold) ATM call options corresponding to the value of the
portfolio of stocks in the Dow Jones Industrial Average®.
The
DJIA Cboe BuyWrite v2 Index is sponsored by S&P Dow Jones Indices LLC, which
is an organization that is independent of the Fund and the Adviser.
Cboe
Russell 2000 Half BuyWrite Index
The
Cboe Russell 2000 Half BuyWrite Index measures the performance of a covered call
strategy that holds a theoretical portfolio of the underlying stocks of the
Russell 2000 Index "writes" (or sells) a succession of one-month at-the-money
(“ATM”) covered call options on the Russell 2000 Index. The written covered call
options on the Russell 2000 Index correspond to approximately 50% of the value
of the portfolio of stocks in the Russell 2000 Index. The Cboe Russell 2000 Half
BuyWrite Index specifically reflects the performance of the component securities
of the Russell 2000 Index combined with written (sold) ATM call options
corresponding to the value of 50% of the value of the portfolio of stocks in the
Russell 2000 Index. The Fund invests in the securities reflected in the Cboe
Russell 2000 Half BuyWrite Index or in investments (including other underlying
ETFs) that have economic characteristics that are substantially identical to the
economic characteristics of such component securities, and cannot invest
directly in the Cboe Russell 2000 Half BuyWrite Index itself.
The
Russell 2000 Index is an equity benchmark which measures the performance of the
small-capitalization sector of the U.S. equity market as defined by FTSE
Russell, the index provider.
Cboe
S&P Financial Select Sector Half BuyWrite Index
The
Cboe S&P Financial Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Financial Select Sector Index. The
Cboe S&P Financial Select Sector Half BuyWrite Index "writes" (or sells) a
succession of one-month at-the-money covered call options on the Financial
Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Financial
Select Sector Index, as determined by S&P Dow Jones Indices LLC. The call
options correspond to approximately 50% of the value of the securities in the
Financial Select Sector Index, therefore representing a partially covered call
strategy. The call options written (sold) by the Fund will be FLexible EXchange
(“FLEX”) options. The Fund invests in the securities reflected in the Underlying
Index and cannot invest directly in the Cboe S&P Financial Select Sector
Half BuyWrite Index itself.
The
Cboe S&P Financial Select Sector Half BuyWrite Index is sponsored by S&P
Dow Jones Indices LLC, which is an organization that is independent of the Fund
and the Adviser.
Cboe
S&P Health Care Select Sector Half BuyWrite Index
The
Cboe S&P Health Care Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Health Care Select Sector Index.
The Cboe S&P Health Care Select Sector Half BuyWrite Index "writes" (or
sells) a succession of one-month at-the-money covered call options on the Health
Care Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Health Care
Select Sector Index, as determined by S&P Dow Jones Indices LLC. The call
options correspond to approximately 50% of the value of the securities in the
Health Care Select Sector Index, therefore representing a partially covered call
strategy. The call options written (sold) by the Fund will be FLexible EXchange
(“FLEX”) options. The Fund invests in the securities reflected in the Cboe
S&P Health Care Select Sector Half BuyWrite Index and cannot invest directly
in the Cboe S&P Health Care Select Sector Half BuyWrite Index itself.
The
Cboe S&P Health Care Select Sector Half BuyWrite Index is sponsored by
S&P Dow Jones Indices LLC, which is an organization that is independent of
the Fund and the Adviser.
Cboe
S&P Technology Select Sector Half BuyWrite Index
The
Cboe S&P Technology Select Sector Half BuyWrite Index measures the
performance of a partially covered call strategy that holds a theoretical
portfolio of the underlying securities of the Information Technology Select
Sector Index. The Cboe S&P Technology Select Sector Half BuyWrite Index
"writes" (or sells) a succession of one-month at-the-money covered call options
on the Information Technology Select Sector SPDR®
Fund, or such other fund that seeks to track the performance of the Information
Technology Select Sector Index, as determined by S&P Dow Jones Indices LLC.
The call options correspond to approximately 50% of the value of the securities
in the Information Technology Select Sector Index, therefore representing a
partially covered call strategy. The call options written (sold) by the Fund
will be FLexible EXchange (“FLEX”) options. The
Fund
invests in the securities reflected in the Cboe S&P Technology Select Sector
Half BuyWrite Index and cannot invest directly in the Cboe S&P Technology
Select Sector Half BuyWrite Index itself.
The
Cboe S&P Technology Select Sector Half BuyWrite Index is sponsored by
S&P Dow Jones Indices LLC, which is an organization that is independent of
the Fund and the Adviser.
Disclaimers
Indxx
is a service mark of Indxx, 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 S&P 500®
Catholic Values ETF, Global X S&P 500®
Covered Call ETF, Global X S&P Catholic Values Developed ex-U.S. ETF, Global
X S&P 500®
Covered
Call & Growth ETF, Global X S&P 500®
Tail Risk ETF, Global X S&P 500®
Risk Managed Income ETF, Global X S&P 500®
Collar 95-110 ETF and Global X S&P Catholic Values U.S. Aggregate Bond ETF
("ETF") is not sponsored, endorsed, sold or promoted by Standard & Poor's
and its affiliates ("S&P"). S&P makes no representation, condition or
warranty, express or implied, to the owners of the ETF or any member of the
public regarding the advisability of investing in securities generally or in the
ETF particularly or the ability of the S&P 500®
Catholic Values Index, S&P 500 Stock Covered Call Index, S&P Developed
ex-U.S. Catholic Values Index and S&P U.S. Catholic Values Aggregate Bond
Capped Index (an "Index") to track the performance of certain financial markets
and/or sections thereof and/or of groups of assets or asset classes. S&P's
only relationship to the Adviser is the licensing of certain trademarks and
trade names and of the index which is determined, composed and calculated by
S&P without regard to the Adviser or the ETF. S&P has no obligation to
take the needs of Global X Management Company, LLC or the owners of the ETF into
consideration in determining, composing or calculating the index. S&P is not
responsible for and has not participated in the determination of the prices and
amount of the ETF or the timing of the issuance or sale of the ETF or in the
determination or calculation of the equation by which the ETF units are to be
converted into cash. S&P has no obligation or liability in connection with
the administration, marketing, or trading of the ETF.
Neither
S&P, its affiliates nor third party licensors, guarantees the accuracy
and/or the completeness of the index or any data included therein and S&P,
its affiliates and their third party licensors, shall have no liability for any
errors, omissions, or interruptions therein. S&P, its affiliates and third
party licensors make no warranty, condition or representation, express or
implied, as to the results to be obtained by to Adviser, owners of the ETF, or
any other person or entity from the use of the index or any data included
therein. S&P makes no express or implied warranties, representations or
conditions, and expressly disclaims all warranties or conditions of
merchantability or fitness for a particular purpose or use and any other express
or implied warranty or condition with respect to the index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P, its
affiliates or their third party licensors, have any liability for any special,
punitive, indirect, or consequential damages (including lost profits) resulting
from the use of the index or any data included therein, even if notified of the
possibility of such damages.
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, the NASDAQ Emerging Markets Internet &
E-commerce Index for purposes of Licensee's Global X Emerging Markets Internet
& E-commerce ETF, the Cboe S&P Financial Select Sector Half BuyWrite
Index for purposes of Licensee's Global X Financials Covered Call & Growth
ETF, the Cboe S&P Health Care Select Sector Half BuyWrite Index for purposes
of Licensee's Global X Health Care Covered Call & Growth ETF and the Cboe
S&P Technology Select Sector Half BuyWrite Index for purposes of Licensee's
Global X Information Technology Covered Call & Growth ETF. The Global X
NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF and the Global X Information
Technology Covered Call & Growth ETF are not sponsored, endorsed, sold or
promoted by NASDAQ, CBOE or their affiliates (NASDAQ and CBOE, collectively with
their affiliates, are referred to as the "Corporations"). The Corporations have
not passed on the legality or suitability of, or the accuracy or adequacy of
descriptions and disclosures relating to, the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF and the Global X Information
Technology Covered Call & Growth ETF. The Corporations make no
representation or warranty, express or implied to the owners of the Global X
NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF, the Global X Information
Technology Covered Call & Growth ETF or any member of the public regarding
the advisability of investing in securities generally or in the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF particularly, or the ability of the
BXNT Index, the Cboe Nasdaq 100 Half BuyWrite V2 Index, the NASDAQ Emerging
Markets Internet & E-commerce Index, the Cboe S&P Financial Select
Sector Half BuyWrite Index, the Cboe S&P Health Care Select Sector Half
BuyWrite or the Cboe S&P Technology Select Sector Half BuyWrite Index to
track general stock market performance. The Corporations' only relationship to
Global X Management Company LLC (the "Licensee") is in the licensing of the
Nasdaq®,
CBOE®,
NASDAQ-100®
and NASDAQ-100 Index®
and
certain trade names of the Corporations and the use of the BXNT Index, the Cboe
Nasdaq 100 Half BuyWrite V2 Index, the NASDAQ Emerging Markets Internet &
E-commerce Index, the Cboe S&P Financial Select Sector Half BuyWrite Index,
the Cboe S&P Health Care Select Sector Half BuyWrite and the Cboe S&P
Technology Select Sector Half BuyWrite Index which is determined, composed and
calculated by the Corporations without regard to Licensee or the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF. The Corporations have no obligation to
take the needs of the Licensee or the owners of the Global X NASDAQ
100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF into consideration in determining,
composing or calculating the BXNT Index, the Cboe Nasdaq 100 Half BuyWrite V2
Index, the NASDAQ Emerging Markets Internet & E-commerce Index, the Cboe
S&P Financial Select Sector Half BuyWrite Index, the Cboe S&P Health
Care Select Sector Half BuyWrite or the Cboe S&P Technology Select Sector
Half BuyWrite Index. The Corporations are not responsible for and have not
participated in the determination of the timing of, prices at, or quantities of
the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF to be issued or in the determination or
calculation of the equation by which the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF is to be converted into cash. The
Corporations have no liability in connection with the administration, marketing
or trading of the Global X NASDAQ 100®
Covered Call ETF, the Global X Nasdaq 100®
Covered Call & Growth ETF, the Global X Emerging Markets Internet &
E-commerce ETF, the Global X Financials Covered Call & Growth ETF, the
Global X Health Care Covered Call & Growth ETF or the Global X Information
Technology Covered Call & Growth ETF.
THE
CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF
THE CBOE NASDAQ 100 BXNT INDEX, THE CBOE NASDAQ 100 HALF BUYWRITE V2 INDEX, THE
NASDAQ EMERGING MARKETS INTERNET & E-COMMERCE INDEX, THE CBOE S&P
FINANCIAL SELECT SECTOR HALF BUYWRITE INDEX, THE CBOE S&P HEALTH CARE SELECT
SECTOR HALF BUYWRITE OR THE CBOE S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE
INDEX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE GLOBAL X
NASDAQ 100®
COVERED CALL ETF, THE GLOBAL X NASDAQ 100®
COVERED CALL & GROWTH ETF, THE GLOBAL X EMERGING MARKETS INTERNET &
E-COMMERCE ETF, THE GLOBAL X FINANCIALS COVERED CALL & GROWTH ETF, THE
GLOBAL X HEALTH CARE COVERED CALL & GROWTH ETF OR THE GLOBAL X INFORMATION
TECHNOLOGY COVERED CALL & GROWTH ETF OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE BXNT INDEX, THE CBOE NASDAQ 100 HALF BUYWRITE V2 INDEX, THE NASDAQ
EMERGING MARKETS INTERNET & E-COMMERCE INDEX, THE CBOE S&P FINANCIAL
SELECT SECTOR HALF BUYWRITE INDEX, THE CBOE S&P HEALTH CARE SELECT SECTOR
HALF BUYWRITE, THE CBOE S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX OR
ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BXNT INDEX, THE CBOE NASDAQ
100 HALF BUYWRITE V2 INDEX, THE NASDAQ EMERGING MARKETS INTERNET &
E-COMMERCE INDEX, THE CBOE S&P FINANCIAL SELECT SECTOR HALF BUYWRITE INDEX,
THE CBOE S&P HEALTH CARE SELECT SECTOR HALF BUYWRITE, THE CBOE S&P
TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT,
OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
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.
Global
X Management Company LLC owns all rights to the trademark, name and intellectual
property associated with the Global X U.S. High Yield Preferred Index. No
representation is made by Global X Management Company LLC that the Global
X
U.S. High Yield Preferred Index is accurate or complete or that investment in
the Global X U.S. High Yield Preferred Index or the Global X
SupeIncomeTM
Preferred ETF will be profitable or suitable for any person. The Global X U.S.
High Yield Preferred Index is administered and calculated by Solactive AG and
Global X Management Company LLC will have no liability for any error in
calculation of the Global X U.S. High Yield Preferred Index. Global X Management
Company LLC does not guarantee that the Global X U.S. High Yield Preferred Index
or the underlying methodology is accurate or complete.
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
except the Global X Russell 2000 Covered Call & Growth ETF, the Global X
Financials Covered Call & Growth ETF, the Global X Health Care Covered Call
& Growth ETF and the Global X Information Technology Covered Call &
Growth ETF. The Bank of New York Mellon serves as custodian and transfer agent
to the Global X Russell 2000 Covered Call & Growth ETF, the Global X
Financials Covered Call & Growth ETF, the Global X Health Care Covered Call
& Growth ETF and the Global X Information Technology Covered Call &
Growth ETF.
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, 2018, 2019, 2020, 2021 and 2022. 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 year ended October 31, 2018.
ADDITIONAL
INFORMATION
The
Trust enters into contractual arrangements with various parties, including among
others, the Funds’ Adviser, sub-adviser(s) (as applicable), custodian(s), and
transfer agent(s) 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, except the Global X S&P Catholic Values U.S. Aggregate Bond ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF and the Global X Information Technology Covered
Call & Growth ETF, had commenced operations and has financial highlights for
the fiscal year ended October 31, 2022. 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, 2018, 2019, 2020, 2021 and 2022. 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
year ended October 31, 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 year ended October 31, 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 year ended
October 31, 2018.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
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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 Lithium & Battery Tech ETF |
|
|
|
|
|
|
|
|
|
|
|
2022 |
91.07 |
0.26 |
(23.99) |
(23.73) |
(0.21) |
— |
— |
(0.21) |
67.13 |
(26.10) |
3,899,509 |
0.75 |
0.33 |
38.73 |
2021 |
42.86 |
0.12 |
48.21 |
48.33 |
(0.12) |
— |
— |
(0.12) |
91.07 |
112.89 |
5,375,399 |
0.75 |
0.17 |
39.09 |
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 |
Global
X SuperDividend® ETF |
|
|
|
|
|
|
|
|
|
|
|
2022(1) |
39.03 |
2.31 |
(14.68) |
(12.37) |
(2.65) |
— |
(0.96) |
(3.61) |
23.05 |
(33.80) |
676,279 |
0.61 |
7.39 |
91.10 |
2021(1) |
31.83 |
2.82 |
7.38 |
10.20 |
(3.00) |
— |
— |
(3.00) |
39.03 |
32.21 |
930,431 |
0.58 |
6.98 |
82.37 |
2020(1) |
51.75 |
2.58 |
(19.02) |
(16.44) |
(3.12) |
— |
(0.36) |
(3.48) |
31.83 |
(32.80) |
626,871 |
0.59 |
6.62 |
124.55 |
2019(1) |
57.18 |
3.72 |
(4.41) |
(0.69) |
(4.14) |
— |
(0.60) |
(4.74) |
51.75 |
(1.02) |
932,111 |
0.59 |
7.03 |
56.85 |
2018(1) |
64.53 |
4.05 |
(6.78) |
(2.73) |
(4.29) |
— |
(0.33) |
(4.62) |
57.18 |
(4.65) |
912,968 |
0.59 |
6.48 |
59.48 |
Global
X Social Media ETF |
|
|
|
|
|
|
|
|
|
|
|
2022 |
61.26 |
0.03 |
(36.29) |
(36.26) |
— |
— |
(0.12) |
(0.12) |
24.88 |
(59.24) |
103,245 |
0.65 |
0.06 |
21.59 |
2021 |
51.95 |
(0.31) |
9.62 |
9.31 |
— |
— |
— |
— |
61.26 |
17.94 |
401,893 |
0.65 |
(0.48) |
30.89 |
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 |
Global
X Guru® Index ETF |
|
|
|
|
|
|
|
|
|
|
|
2022 |
50.24 |
0.01 |
(16.72) |
(16.71) |
(0.01) |
— |
(0.04) |
(0.05) |
33.48 |
(33.28) |
46,535 |
0.75 |
0.02 |
111.39 |
2021 |
37.31 |
0.69 |
13.14 |
13.83 |
(0.90) |
— |
— |
(0.90) |
50.24 |
37.43 |
75,856 |
0.75 |
1.47 |
121.91 |
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 |
28.70 |
0.11 |
1.44 |
1.55 |
(0.16) |
— |
— |
(0.16) |
30.09 |
5.40 |
57,180 |
0.75 |
0.36 |
112.64 |
|
|
|
|
|
|
*
|
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. |
††
|
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. |
(1) |
Per
share amounts have been adjusted for a 1 for 3 reverse share split on
December 19, 2022 (See Note 11 in the Notes to Financial
Statements). |
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 |
|
|
|
|
|
|
|
|
|
|
|
2022 |
11.94 |
0.54 |
(2.13) |
(1.59) |
(0.65) |
— |
(0.03) |
(0.68) |
9.67 |
(13.81) |
195,159 |
0.58 |
5.04 |
39.39 |
2021 |
11.12 |
0.61 |
0.89 |
1.50 |
(0.68) |
— |
— |
(0.68) |
11.94 |
13.71 |
234,953 |
0.58 |
5.13 |
98.47 |
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 |
Global
X SuperDividend® U.S. ETF |
|
|
|
|
|
|
|
|
|
|
|
2022 |
20.13 |
0.67 |
(0.41) |
0.26 |
(0.81) |
— |
(0.40) |
(1.21) |
19.18 |
1.16 |
683,864 |
0.45 |
3.34 |
38.51 |
2021 |
14.99 |
0.65 |
5.59 |
6.24 |
(0.99) |
— |
(0.11) |
(1.10) |
20.13 |
42.53 |
669,734 |
0.45 |
3.41 |
60.53 |
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 |
Global
X S&P 500® Covered Call ETF (1) |
|
|
|
|
|
|
|
|
|
|
2022 |
50.37 |
0.45 |
(5.50) |
(5.05) |
(1.05) |
(0.11) |
(4.16) |
(5.32) |
40.00 |
(10.72) |
1,934,545 |
0.60 |
1.00 |
15.60 |
2021 |
42.45 |
0.39 |
12.14 |
12.53 |
(4.61) |
— |
— |
(4.61) |
50.37 |
30.67 |
669,855 |
0.60 |
0.80 |
4.84 |
2020 |
49.39 |
0.56 |
(4.17) |
(3.61) |
(0.58) |
— |
(2.75) |
(3.33) |
42.45 |
(7.42) |
103,992 |
0.71(2) |
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(2) |
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 |
Global
X NASDAQ 100® Covered Call ETF (1) |
|
|
|
|
|
|
|
|
|
|
2022 |
22.82 |
0.05 |
(4.13) |
(4.08) |
(0.24) |
(0.50) |
(1.85) |
(2.59) |
16.15 |
(19.18) |
6,397,648 |
0.60 |
0.25 |
31.11 |
2021 |
20.65 |
0.02 |
4.73 |
4.75 |
(2.58) |
— |
— |
(2.58) |
22.82 |
23.89 |
5,036,215 |
0.60 |
0.11 |
19.99 |
2020 |
23.10 |
0.06 |
(0.06) |
— |
(0.06) |
— |
(2.39) |
(2.45) |
20.65 |
0.21 |
1,325,642 |
0.67(3) |
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(3) |
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(4) |
0.30 |
15.00 |
|
|
|
|
|
|
*
|
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. |
†† |
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. |
(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 0.64% 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. |
(3) |
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. |
(4) |
Includes
excise tax. If this excise expense was not included, the ratio would have
been 0.60%. |
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 MSCI SuperDividend® Emerging Markets ETF |
2022(1) |
33.78 |
1.67 |
(11.44) |
(9.77) |
(2.19) |
— |
(0.46) |
(2.65) |
21.36 |
(30.80) |
39,168 |
0.67 |
5.88 |
101.78 |
2021(1) |
28.59 |
3.06 |
4.35 |
7.41 |
(2.22) |
— |
— |
(2.22) |
33.78 |
25.83 |
62,696 |
0.72 |
8.59 |
102.27 |
2020(1) |
38.85 |
1.65 |
(9.51) |
(7.86) |
(1.98) |
— |
(0.42) |
(2.40) |
28.59 |
(21.01) |
20,007 |
0.67 |
5.04 |
93.04 |
2019(1) |
38.73 |
2.61 |
0.15 |
2.76 |
(2.64) |
— |
— |
(2.64) |
38.85 |
7.14 |
17,489 |
0.66 |
6.51 |
66.65 |
2018(1) |
47.82 |
2.70 |
(9.06) |
(6.36) |
(2.73) |
— |
— |
(2.73) |
38.73 |
(14.10) |
12,260 |
0.67 |
5.89 |
79.52 |
Global
X SuperDividend® REIT ETF |
2022(1) |
29.46 |
1.13 |
(7.14) |
(6.01) |
(1.10) |
— |
(0.70) |
(1.80) |
21.65 |
(21.21) |
286,655 |
0.59 |
4.36 |
82.67 |
2021(1) |
22.68 |
1.14 |
7.50 |
8.64 |
(1.23) |
— |
(0.63) |
(1.86) |
29.46 |
38.84 |
467,934 |
0.58 |
3.99 |
59.44 |
2020(1) |
45.99 |
1.68 |
(22.23) |
(20.55) |
(2.58) |
— |
(0.18) |
(2.76) |
22.68 |
(45.94) |
311,625 |
0.58 |
5.74 |
106.23 |
2019(1) |
43.86 |
2.97 |
2.73 |
5.70 |
(3.57) |
— |
— |
(3.57) |
45.99 |
13.68 |
364,790 |
0.59 |
6.71 |
34.16 |
2018(1) |
45.87 |
2.76 |
(0.84) |
1.92 |
(3.93) |
— |
— |
(3.93) |
43.86 |
4.30 |
118,408 |
0.59 |
6.15 |
41.61 |
Global
X Renewable Energy Producers ETF |
2022 |
16.82 |
0.15 |
(3.76) |
(3.61) |
(0.16) |
— |
— |
(0.16) |
13.05 |
(21.57) |
90,970 |
0.66 |
1.01 |
18.33 |
2021 |
14.87 |
0.23 |
2.05 |
2.28 |
(0.30) |
(0.03) |
— |
(0.33) |
16.82 |
15.37 |
146,976 |
0.65 |
1.39 |
55.97 |
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 |
Global
X S&P 500® Catholic Values ETF |
2022 |
57.22 |
0.61 |
(9.99) |
(9.38) |
(0.57) |
(0.08) |
— |
(0.65) |
47.19 |
(16.53) |
549,288 |
0.29 |
1.17 |
6.79 |
2021 |
40.32 |
0.56 |
16.89 |
17.45 |
(0.55) |
— |
— |
(0.55) |
57.22 |
43.54 |
593,985 |
0.29 |
1.09 |
8.29 |
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 |
Global
X MSCI SuperDividend® EAFE ETF |
2022 |
15.62 |
1.00 |
(3.70) |
(2.70) |
(0.94) |
— |
— |
(0.94) |
11.98 |
(18.12) |
8,384 |
0.57 |
6.89 |
34.00 |
2021 |
11.44 |
0.79 |
4.10 |
4.89 |
(0.71) |
— |
— |
(0.71) |
15.62 |
43.05 |
14,058 |
0.55 |
5.12 |
88.53 |
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 |
|
|
|
|
|
|
*
|
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. |
††
|
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 0.32% for the
year ended October 31, 2018. |
(1) |
Per
share amounts have been adjusted for a 1 for 3 reverse share split on
December 19, 2022 (See Note 11 in the Notes to Financial
Statements). |
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 (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 E-commerce ETF |
2022 |
31.19 |
0.08 |
(15.97) |
(15.89) |
(0.05) |
(0.10) |
(0.01) |
(0.16) |
15.14 |
(51.19) |
42,241 |
0.50 |
0.34 |
25.82 |
2021 |
26.79 |
(0.04) |
4.70 |
4.66 |
(0.13) |
(0.13) |
— |
(0.26) |
31.19 |
17.39 |
197,751 |
0.50 |
(0.11) |
14.64 |
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 |
Global
X Russell 2000 Covered Call ETF |
2022 |
25.18 |
0.19 |
(3.10) |
(2.91) |
(0.44) |
(0.31) |
(1.97) |
(2.72) |
19.55 |
(12.18) |
1,342,241 |
0.55(3)(4) |
0.86 |
186.48 |
2021 |
20.45 |
0.13 |
7.50 |
7.63 |
(2.90) |
— |
— |
(2.90) |
25.18 |
38.82 |
554,446 |
0.50(3) |
0.53 |
8.94 |
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(3) |
0.68 |
11.16 |
2019(2) |
25.00 |
0.09 |
1.37 |
1.46 |
(1.22) |
— |
— |
(1.22) |
25.24 |
5.99 |
8,833 |
0.82†(3) |
0.68† |
5.82 |
Global
X S&P Catholic Values Developed ex-U.S. ETF |
2022 |
32.80 |
0.77 |
(9.11) |
(8.34) |
(0.79) |
(0.37) |
— |
(1.16) |
23.30 |
(26.11) |
5,592 |
0.35 |
2.83 |
12.83 |
2021 |
24.98 |
0.70 |
7.71 |
8.41 |
(0.59) |
— |
— |
(0.59) |
32.80 |
33.79 |
4,264 |
0.35 |
2.22 |
17.17 |
2020(5) |
25.05 |
0.19 |
(0.26) |
(0.07) |
— |
— |
— |
— |
24.98 |
(0.28) |
2,498 |
0.35† |
2.02† |
4.04 |
Global
X Nasdaq 100® Covered Call & Growth ETF |
2022 |
33.09 |
0.06 |
(7.29) |
(7.23) |
(0.20) |
(1.60) |
(1.26) |
(3.06) |
22.80 |
(23.57) |
61,105 |
0.61(7) |
0.23 |
18.12 |
2021 |
26.27 |
0.02 |
8.56 |
8.58 |
(1.76) |
— |
— |
(1.76) |
33.09 |
33.42 |
44,671 |
0.60 |
0.06 |
11.21 |
2020(6) |
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 |
2022 |
31.83 |
0.27 |
(4.03) |
(3.76) |
(0.42) |
(1.10) |
(1.08) |
(2.60) |
25.47 |
(12.63) |
41,511 |
0.61(7) |
0.94 |
9.36 |
2021 |
24.69 |
0.22 |
8.29 |
8.51 |
(1.37) |
— |
— |
(1.37) |
31.83 |
35.18 |
35,018 |
0.60 |
0.74 |
12.17 |
2020(6) |
25.22 |
0.02 |
(0.41) |
(0.39) |
(0.02) |
— |
(0.12) |
(0.14) |
24.69 |
(1.60) |
3,704 |
0.60† |
0.75† |
0.75 |
Global
X Emerging Markets Internet & E-commerce ETF |
2022(8) |
35.97 |
0.04 |
(19.55) |
(19.51) |
— |
— |
(0.08) |
(0.08) |
16.38 |
(54.30) |
1,966 |
0.65 |
0.14 |
26.27 |
2021(8)(9) |
44.37 |
(0.21) |
(8.19) |
(8.40) |
— |
— |
— |
— |
35.97 |
(18.93) |
4,555 |
0.65† |
(0.49)† |
23.61 |
|
|
|
|
|
|
*
|
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. |
(1) |
The
Fund commenced operations on November 27, 2018. |
(2) |
The
Fund commenced operations on April 17, 2019. |
(3) |
The
ratio of Expenses to Average Net Assets includes the effect of a waiver
due to acquired fund fees and expenses. The ratio to Average Net Assets
does not include acquired fund fees and expenses of the underlying
investments, if applicable. If these offsets were excluded, the ratio
would have been 0.60%, 0.60%, 0.68% and 0.97% for the year ended October
31, 2022 to the year ended October 31, 2019, respectively. |
(4) |
Includes
fees charged by the Fund custodian that were reimbursed by the custodian
to the Fund subsequent to the reporting period. Excluding these fees, the
ratio to average net assets would have been 0.54%. |
(5) |
The
Fund commenced operations on June 22, 2020. |
(6) |
The
Fund commenced operations on September 18, 2020. |
(7) |
Includes
fees charged by the Fund custodian that were reimbursed by the custodian
to the Fund subsequent to the reporting period. Excluding these fees, the
ratio to average net assets would have been 0.60%. |
(8) |
Per
share amounts have been adjusted for a 1 for 3 reverse share split on
December 19, 2022 (See Note 11 in the Notes to Financial
Statements). |
(9) |
The
Fund commenced operations on November 9,
2020. |
Amounts
designated as "—" are $0 or have been rounded to $0.
Selected
Per Share Data & Ratios
For
a Share Outstanding Throughout the Period
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Asset Value, Beginning of Period ($) |
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 NASDAQ 100® Tail Risk ETF |
2022 |
25.59
|
0.04
|
(6.03) |
(5.99) |
(0.03) |
(0.49) |
— |
(0.52) |
19.08 |
(23.90) |
1,908 |
0.61 |
0.19 |
13.88 |
2021(1) |
25.13
|
(0.01) |
0.47
|
0.46 |
— |
— |
— |
— |
25.59 |
1.83 |
3,326 |
0.60† |
(0.12)† |
1.71 |
Global
X NASDAQ 100® Risk Managed Income ETF |
2022 |
24.12 |
0.04 |
(4.04) |
(4.00) |
(0.25) |
— |
(1.70) |
(1.95) |
18.17 |
(17.24) |
10,720 |
0.62(2) |
0.19 |
27.40 |
2021(1) |
24.60 |
(0.01) |
(0.16) |
(0.17) |
— |
— |
(0.31) |
(0.31) |
24.12 |
(0.69) |
4,341 |
0.60† |
(0.15)† |
2.16 |
Global
X NASDAQ 100® Collar 95-110 ETF |
2022 |
25.78 |
0.04 |
(3.38) |
(3.34) |
(0.02) |
(0.42) |
— |
(0.44) |
22.00 |
(13.19) |
3,081 |
0.62(2) |
0.18 |
9.89 |
2021(1) |
25.27 |
(0.01) |
0.52 |
0.51 |
— |
— |
— |
— |
25.78 |
2.06 |
2,836 |
0.60† |
(0.11)† |
2.11 |
Global
X S&P 500® Tail Risk ETF |
2022 |
27.72 |
0.23 |
(4.00) |
(3.77) |
(0.16) |
(0.58) |
— |
(0.74) |
23.21 |
(13.98) |
3,017 |
0.61 |
0.92 |
7.40 |
2021(1) |
27.33 |
0.03 |
0.36 |
0.39 |
— |
— |
— |
— |
27.72 |
1.43 |
3,604 |
0.60† |
0.58† |
6.21 |
Global
X S&P 500® Risk Managed Income ETF |
2022 |
26.83 |
0.23 |
(3.38) |
(3.15) |
(0.52) |
(0.07) |
(2.04) |
(2.63) |
21.05 |
(12.39) |
24,634 |
0.63(2) |
0.97 |
21.62 |
2021(1) |
26.77 |
0.03 |
0.39 |
0.42 |
(0.36) |
— |
— |
(0.36) |
26.83 |
1.60 |
5,902 |
0.60† |
0.57† |
7.08 |
Global
X S&P 500® Collar 95-110 ETF |
2022 |
27.57 |
0.23 |
(2.77) |
(2.54) |
(0.16) |
(0.40) |
— |
(0.56) |
24.47 |
(9.40) |
3,915 |
0.64(2) |
0.90 |
8.96 |
2021(1) |
27.28 |
0.03 |
0.26 |
0.29 |
— |
— |
— |
— |
27.57 |
1.06 |
3,308 |
0.60† |
0.58† |
6.44 |
|
|
|
|
|
|
*
|
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. |
(1) |
The
Fund commenced operations on August 25, 2021. |
(2) |
Includes
fees charged by the Fund custodian that were reimbursed by the custodian
to the Fund subsequent to the reporting period. Excluding these fees, the
ratio to average net assets would have been
0.61%. |
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 (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 Disruptive Materials ETF |
2022(1) |
23.75
|
0.45
|
(5.88) |
(5.43) |
(0.25) |
— |
— |
(0.25) |
18.07 |
(22.98) |
3,433 |
0.60† |
2.72† |
25.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X Dow 30® Covered Call ETF |
2022(2) |
24.13 |
0.22 |
(0.86) |
(0.64) |
(0.64) |
— |
(0.96) |
(1.60) |
21.89 |
(2.77) |
52,985 |
0.61†(3) |
1.42† |
8.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
X Russell 2000 Covered Call & Growth ETF |
2022(4) |
25.90 |
(0.01) |
0.82 |
0.81 |
(0.13) |
— |
— |
(0.13) |
26.58 |
3.14 |
2,658 |
0.50†@ |
(0.50)† |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
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. |
@ |
The
ratio of Expenses to Average Net Assets includes the effect of a waiver
due to acquired fund fees and expenses. The ratio to Average Net Assets
does not include acquired fund fees and expenses of the underlying
investments, if applicable. If these offsets were excluded, the ratio
would have been 0.60% for the year ended October 31, 2022. |
(1) |
The
Fund commenced operations on January 24, 2022. |
(2) |
The
Fund commenced operations on February 23, 2022. |
(3) |
Includes
fees charged by the Fund custodian that were reimbursed by the custodian
to the Fund subsequent to the reporting period. Excluding these fees, the
ratio to average net assets would have been 0.60%. |
(4) |
The
Fund commenced operations on October 4,
2022. |
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. Registered
investment companies are permitted to invest in certain of the Funds beyond the
limits set forth in section 12(d)(1), subject to certain conditions set forth in
Rule 12d1-4 under the 1940 Act, including that such investment companies enter
into an agreement with such Fund.
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 or NASDAQ is satisfied by the fact
that the prospectus is available at NYSE Arca or NASDAQ 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
|
Custodians
and Transfer Agents
Brown
Brothers Harriman & Co.
50
Post Office Square
Boston,
MA 02110
The
Bank of New York Mellon
240
Greenwich Street
New
York, New York 10286
|
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, 2023, 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,
2023
Investment
Company Act File No.: 811-22209
GLX-PS-020-1200