ck0001432353-20231031
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Global
X S&P 500®
Covered Call ETF
NYSE
Arca: XYLD |
Global
X Russell 2000 Covered Call & Growth ETF
NYSE
Arca: RYLG |
Global
X NASDAQ 100®
Covered Call ETF
NASDAQ:
QYLD |
Global
X Financials Covered Call & Growth ETF
NYSE
Arca: FYLG |
Global
X Russell 2000 Covered Call ETF
NYSE
Arca: RYLD |
Global
X Health Care Covered Call & Growth ETF
NYSE
Arca: HYLG |
Global
X Nasdaq 100®
Covered Call & Growth ETF
NASDAQ:
QYLG |
Global
X Information Technology Covered Call & Growth ETF
NYSE
Arca: TYLG |
Global
X S&P 500®
Covered Call & Growth ETF
NYSE
Arca: XYLG |
Global
X Nasdaq 100 ESG Covered Call ETF
NASDAQ:
QYLE |
Global
X NASDAQ 100®
Risk Managed Income ETF
NASDAQ:
QRMI |
Global
X S&P 500 ESG Covered Call ETF
NYSE
Arca:
XYLE |
Global
X S&P 500®
Risk Managed Income ETF
NYSE
Arca: XRMI |
Global
X Dow 30®
Covered Call & Growth ETF
NYSE
Arca: DYLG |
Global
X Dow 30®
Covered
Call ETF
NYSE
Arca: DJIA |
Global
X MSCI Emerging Markets Covered Call ETF
NYSE
Arca:
EMCC |
Prospectus
March 1,
2024
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.
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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INVESTMENTS
BY INVESTMENT COMPANIES |
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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 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):
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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:
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One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 7.90% of the average value of its
portfolio.
PRINCIPAL INVESTMENT
STRATEGIES
The
Fund invests at least 80% of its total assets in the securities of the 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, 2023, the S&P 500 Index included common stocks of
companies with a market capitalization range of between approximately $6.6
billion and $3.0 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 and publishes or designates a
third-party index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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)
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Best
Quarter: |
3/31/2019 |
9.07% |
Worst
Quarter: |
3/31/2020 |
-21.52% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
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One
Year Ended December 31, 2023 |
Five
Years Ended December 31, 2023 |
Ten
Years Ended December 31. 2023 |
Global
X S&P 500®
Covered Call ETF:1 |
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·Return
before taxes |
11.04% |
7.08% |
6.04% |
·Return
after taxes on distributions2 |
10.40% |
5.25% |
4.56% |
·Return
after taxes on distributions and sale of Fund Shares2 |
6.53% |
4.70% |
4.14% |
Hybrid
CBOE S&P 500 BuyWrite Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
11.82% |
7.90% |
6.45% |
S&P
500®
Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
26.29% |
15.69% |
12.03% |
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; 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.
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 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):
|
|
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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:
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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 38.93% 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 or designates a third-party
index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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)
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Best
Quarter: |
6/30/2020 |
12.94% |
Worst
Quarter: |
3/31/2020 |
-16.43% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
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|
One
Year Ended December 31, 2023 |
Five
Years Ended December 31, 2023 |
Ten
Years Ended December 31. 2023 |
Global
X NASDAQ 100®
Covered Call ETF:1 |
|
| |
·Return
before taxes |
22.82% |
7.98% |
7.08% |
·Return
after taxes on distributions2 |
21.87% |
5.57% |
4.69% |
·Return
after taxes on distributions and sale of Fund Shares2 |
13.50% |
5.13% |
4.43% |
Hybrid
CBOE NASDAQ-100®
BuyWrite V2 Index3
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
23.54% |
8.74% |
7.94% |
NASDAQ-100®
Total Return Index
(Index returns do not
reflect deduction for fees, expenses, or
taxes) |
55.13% |
22.66% |
17.91% |
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; 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.
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: |
0.00% |
Acquired
Fund Fees and Expenses:1 |
0.03% |
Total
Annual Fund Operating Expenses: |
0.63% |
Expense
Reimbursement and/or Fee Waiver2 |
(0.03)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
“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.
2
Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (exclusive of taxes, 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, until at least March 1,
2025.
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 |
$61 |
$199 |
$348 |
$783 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 19.24% 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 FTSE Russell 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 Index Provider determines the relative weighting of
the securities in the underlying index and publishes or designates a third-party
index calculation agent to publish 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 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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,
2023)
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|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (4/17/2019) |
Global
X Russell 2000 Covered Call ETF: |
| |
·Return
before taxes |
0.34% |
3.11% |
·Return
after taxes on distributions1 |
-0.47% |
0.86% |
·Return
after taxes on distributions and sale of Fund Shares1 |
0.20% |
1.51% |
Cboe
Russell 2000 BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
0.97% |
3.93% |
Russell
2000 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.93% |
7.05% |
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; 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. 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 & 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 28.03% 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 Index Provider determines the relative
weightings of the securities in the underlying index and publishes or designates
a third-party index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
3/31/2023 |
15.85% |
Worst
Quarter: |
6/30/2022 |
-18.31% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (09/18/2020)
|
Global
X Nasdaq 100®
Covered Call & Growth ETF: |
| |
·Return
before taxes |
38.16% |
10.53% |
·Return
after taxes on distributions1 |
37.62% |
8.71% |
·Return
after taxes on distributions and sale of Fund Shares1 |
22.59% |
7.35% |
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) |
38.92% |
11.16% |
NASDAQ-100®
Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
55.13% |
14.93% |
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; 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. 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 5.25% 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 Index Provider determines the
relative weightings of the securities in the underlying index and publishes or
designates a third-party index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (09/18/2020)
|
Global
X S&P 500®
Covered Call & Growth ETF: |
| |
·Return
before taxes |
18.19% |
10.12% |
·Return
after taxes on distributions1 |
17.83% |
8.58% |
·Return
after taxes on distributions and sale of Fund Shares1 |
10.76% |
7.17% |
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) |
19.00% |
10.96% |
S&P
500®
Index (net)
(Index returns reflect
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
26.29% |
13.43% |
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; 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. 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®
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: |
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 22.73% 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
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 or designates a third-party index calculation
agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
3/31/2023 |
7.36% |
Worst
Quarter: |
6/30/2022 |
-8.70% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (8/25/2021) |
Global
X NASDAQ 100®
Risk Managed Income ETF: |
| |
·Return
before taxes |
11.45% |
-4.74% |
·Return
after taxes on distributions1 |
10.55% |
-5.74% |
·Return
after taxes on distributions and sale of Fund Shares1 |
6.77% |
-3.99% |
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) |
11.65% |
-4.77% |
NASDAQ-100®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
55.13% |
4.79% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To and Xie 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: |
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 4.85% 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 or designates a third-party
index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
3/31/2023 |
2.88% |
Worst
Quarter: |
6/30/2022 |
-8.00% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (8/25/2021) |
Global
X S&P 500®
Risk Managed Income ETF: |
| |
·Return
before taxes |
4.50% |
-3.46% |
·Return
after taxes on distributions1 |
3.65% |
-4.84% |
·Return
after taxes on distributions and sale of Fund Shares1 |
2.66% |
-3.17% |
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) |
5.29% |
-2.93% |
S&P
500®
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
26.29% |
4.20% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To and Xie 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 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: |
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 6.67% 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 or designates a third-party
index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
12/31/2023 |
4.35% |
Worst
Quarter: |
9/30/2023 |
(1.60)% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (02/23/2022) |
Global
X Dow 30®
Covered Call ETF: |
| |
·Return
before taxes |
8.82% |
3.35% |
·Return
after taxes on distributions1 |
8.36% |
2.10% |
·Return
after taxes on distributions and sale of Fund Shares1 |
5.22% |
1.99% |
DJIA
Cboe BuyWrite v2 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
9.75% |
4.38% |
DJIA
Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.18% |
9.53% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To and Xie 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 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: |
0.00% |
Acquired
Fund Fees and Expenses:1 |
0.10% |
Total
Annual Fund Operating Expenses: |
0.70% |
Expense
Reimbursement and/or Fee Waiver:2 |
(0.10)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
“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.
2
Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (exclusive of taxes, 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, until at least March 1,
2025.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your Shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
| |
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$214 |
$380 |
$861 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. During the most recent fiscal year, the
Fund's portfolio turnover rate was 5.48% 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, 2023, the Reference Index had
1,966 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 or
designates a third-party index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have
a significant impact on the Fund and its investments and trading of its Shares.
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 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: |
12/31/2023 |
7.63% |
Worst
Quarter: |
9/30/2023 |
-4.13% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (10/04/2022) |
Global
X Russell 2000 Covered Call & Growth ETF: |
| |
·Return
before taxes |
8.50% |
6.55% |
·Return
after taxes on distributions1 |
7.95% |
4.67% |
·Return
after taxes on distributions and sale of Fund Shares1 |
5.02% |
4.14% |
Cboe
Russell 2000 Half BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
8.96% |
6.99% |
Russell
2000 Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
16.93% |
13.04% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu 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 |
0.05% |
Total
Annual Fund Operating Expenses: |
0.65% |
Expense
Reimbursement and/or Fee Waiver:3 |
(0.05)% |
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, until at least March 1,
2025.
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 |
$203 |
$357 |
$806 |
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 November 21, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 16.45% of the average value of its
portfolio.
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 12:59 p.m. ET to 1:00 p.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 1:00 p.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 2:00 p.m. ET; (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, 2023, the Reference Index was comprised of 72
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 or designates a third-party
index calculation agent to publish 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, 2023, the
Underlying Index was concentrated in the banking and financial services
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 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 Financial Services Industry: The
performance of stocks in the Financial Services industry may be adversely
impacted by the banking, insurance, mortgage financing, and transaction &
payment processing services activities, government regulations, economic
conditions, credit rating downgrades, and other factors which could adversely
affect financial markets.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
12/31/2023 |
9.32% |
Worst
Quarter: |
3/31/2023 |
(5.37)% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (11/21/2022) |
Global
X Financials Covered Call & Growth ETF: |
| |
·Return
before taxes |
6.96% |
4.59% |
·Return
after taxes on distributions1 |
5.38% |
3.01% |
·Return
after taxes on distributions and sale of Fund Shares1 |
4.06% |
2.77% |
Cboe
S&P Financial Select Sector Half BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
8.27% |
5.95% |
Financial
Select Sector Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
12.15% |
7.93% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu 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: |
0.00% |
Acquired
Fund Fees and Expenses:1 |
0.05% |
Total
Annual Fund Operating Expenses: |
0.65% |
Expense
Reimbursement and/or Fee Waiver:2 |
(0.05)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
“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.
2
Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (exclusive of taxes, 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, until at least March 1,
2025.
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 |
$203 |
$357 |
$806 |
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 November 21, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 6.85% of the average value of its
portfolio.
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 12:59 p.m. ET to 1:00 p.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 1:00 p.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 2:00 p.m. ET; (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, 2023, the Reference Index was comprised of 64
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 or designates a third-party
index calculation agent to publish 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, 2023, 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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
12/31/2023 |
5.04% |
Worst
Quarter: |
3/31/2023 |
(2.25)% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (11/21/2022) |
Global
X Health Care Covered Call & Growth ETF: |
| |
·Return
before taxes |
4.07% |
4.99% |
·Return
after taxes on distributions1 |
1.17% |
2.16% |
·Return
after taxes on distributions and sale of Fund Shares1 |
2.36% |
2.59% |
Cboe
S&P Health Care Select Sector Half BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
4.00% |
4.91% |
Health
Care Select Sector Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
2.06% |
3.10% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu 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: |
0.00% |
Acquired
Fund Fees and Expenses:1 |
0.05% |
Total
Annual Fund Operating Expenses: |
0.65% |
Expense
Reimbursement and/or Fee Waiver:2 |
(0.05)% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement: |
0.60% |
1
“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.
2
Pursuant to an Expense
Limitation Agreement, the Adviser has contractually agreed to reimburse or waive
fees and/or limit Fund expenses to the extent necessary to assure that the
operating expenses of the Fund (exclusive of taxes, 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, until at least March 1,
2025.
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 |
$203 |
$357 |
$806 |
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 November 21, 2022 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 13.93% of the average value of its
portfolio.
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 12:59 p.m. ET to 1:00 p.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 1:00 p.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 2:00 p.m. ET; (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, 2023, the Reference Index was comprised of 64
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 or designates a third-party
index calculation agent to publish 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, 2023, the
Underlying Index was concentrated in the semiconductors and semiconductor
equipment and software industries 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 Semiconductors and Semiconductor Equipment Industry:
The
semiconductors and semiconductor equipment industry is highly competitive, and
certain companies in this industry may be restricted from operating in certain
markets due to the sensitive nature of these technologies. Companies in this
space generally seek to increase silicon capacity, improve yields, and reduce
die size in their product designs which may result in significant increases in
worldwide supply and downward pressure on prices. Companies involved in the
semiconductors and semiconductor equipment industry face increased risk from
trade agreements between countries that develop these technologies and countries
in which customers of these technologies are based. Lack of resolution or
potential imposition of trade tariffs may hinder the companies’ ability to
successfully deploy their inventories. The success of such companies frequently
depends on the ability to develop and produce competitive new semiconductor
technologies. Companies in this industry frequently undertake substantial
research and development expenses in order to remain competitive, and a failure
to successfully demonstrate advanced functionality and performance can have a
material impact on the company’s
business.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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: |
3/31/2023 |
17.37% |
Worst
Quarter: |
9/30/2023 |
(4.35)% |
Average Annual
Total Returns (for the Periods Ended December 31,
2023)
|
|
|
|
|
|
|
| |
|
One
Year Ended December 31, 2023 |
Since
Inception (11/21/2022) |
Global
X Information Technology Covered Call & Growth ETF: |
| |
·Return
before taxes |
41.59% |
34.12% |
·Return
after taxes on distributions1 |
34.91% |
28.18% |
·Return
after taxes on distributions and sale of Fund Shares1 |
24.37% |
23.42% |
Cboe
S&P Technology Select Sector Half BuyWrite Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
42.52% |
34.94% |
Information
Technology Select Sector Index
(Index returns reflects
invested dividends net of withholding taxes, but reflect no deduction for
fees, expenses, or other
taxes) |
56.13% |
43.40% |
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu 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 Nasdaq 100
ESG Covered Call ETF
Ticker:
QYLE Exchange: NASDAQ
INVESTMENT
OBJECTIVE
The
Global X Nasdaq 100 ESG Covered Call ETF ("Fund") seeks to provide investment
results that correspond generally to the price and yield performance, before
fees and expenses, of the Nasdaq-100 ESG 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 |
0.01% |
Total
Annual Fund Operating Expenses: |
0.61% |
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 |
$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. From the Fund's commencement of
operations on February 21, 2023 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 11.82% of the average value of its
portfolio.
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 Nasdaq-100 ESG 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 seeks to provide long exposure to an equity portfolio that
applies a set of specific Environmental, Social and Governance (“ESG”) criteria
as part of its security selection process, while also selling call options
generally associated with such exposure. Specifically, the Underlying Index
measures the performance of a covered call strategy, also known as a “buy-write”
strategy, that seeks to provide long exposure by “buying” the underlying
components of the Nasdaq-100 ESG Index (the “Reference Index”) and to generate
options premium income by “writing” (selling) a succession of one-month,
at-the-money (“ATM”) covered call options on the Nasdaq-100 Index. In seeking to
track the Underlying Index, the Fund invests in the securities reflected in the
Underlying Index by purchasing the underlying holdings of the Reference Index in
proportion to their weight in the Reference Index, and systematically writing
(selling) a succession of one-month, ATM covered call options on the Nasdaq-100
Index. The implications of the written (sold) call options are described in more
detail here:
Call
Options
– When the Fund sells a call option, the Fund receives a premium in exchange for
an obligation to sell shares of the Nasdaq-100 Index at a strike price on the
expiration date if the buyer of the call option exercises it. If the
Nasdaq-100
Index 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 Nasdaq-100 Index and the strike price. If the Nasdaq-100 Index
closes below the strike price as of the expiration date, the call option may end
up worthless and the investor retains the premium. Generally speaking, an
at-the-money (“ATM”) call option refers to an option where the strike price of
the option is equal to the price of the underlying asset at the time when the
option is written (sold).
On
a monthly basis, the Underlying Index seeks to achieve its objective by writing
(selling) a succession of one-month, ATM call options on the Nasdaq-100 Index
corresponding to approximately 100% of the value of the securities in the
Reference Index, and will cover such options by holding the component securities
of the Reference Index in the same weighting proportion as the Reference Index.
Each call option written in the Underlying Index will have an exercise price
generally at the prevailing market price of the Nasdaq-100 Index. However, if
call options with those precise strike prices are unavailable, the Underlying
Index will instead select the call options with the strike price closest to but
above the prevailing market price of the Nasdaq-100 Index. Each option position
in the Underlying Index’s composition 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
Nasdaq-100 Index is composed of securities issued by 100 of the largest
non-financial companies listed on the Nasdaq Global Select Market or Nasdaq
Global Market (two of the three tiers of The Nasdaq Stock Market for the U.S.
with the most stringent listing requirements) by market capitalization, as
defined by Nasdaq (the “Index Provider”).
The
Reference Index comprises the securities included in the Nasdaq-100 Index after
excluding certain companies that are: 1) engaged in identified business
activities, 2) subject to certain controversy, and/or 3) fail to comply with
certain fundamental principles. Specifically, the Reference Index employs
negative screens to exclude securities of companies with business activities
that do not meet certain ESG eligibility criteria. Such screens rely on
information from Sustainalytics, a globally-recognized independent provider of
ESG research, ratings, and data. Companies’ business activities are
distinguished between categories with absolute prohibitions (which do not allow
any involvement by a company in a certain business activity) and categories that
permit a de minimis amount of a certain business activity (generally, permitting
a company to derive less than 5% of its revenues from, or to own less than 10%
of another company that engages in, such activity). Examples of business
activities with absolute prohibitions include, but are not limited to, arctic
oil & gas exploration, cannabis production and controversial weapons, while
examples of business activities with limited prohibitions include, but are not
limited to, alcoholic beverages, gambling and nuclear power production.
The
Reference Index also utilizes information from Sustainalytics to determine
issuers’ business controversy levels and ESG Risk Rating Score. Sustainalytics
reviews corporate filings and public disclosures to assess a company’s ESG
profile. The ESG Risk Rating Score is designed to measure the magnitude of a
company’s unmanaged ESG risk, and it is composed of three building blocks that
contribute to a company’s overall rating: (1) corporate governance, (2) material
ESG issues (“MEIs”), and (3) idiosyncratic ESG issues. The final ESG Risk
Ratings Score is calculated as the sum of the individual material ESG issues’
unmanaged risk scores and is intended to represent the overall unmanaged risk of
a company. Companies are assigned risk scores ranging from 0 (indicating that
ESG risks have been fully managed) to greater than 50 (indicating the highest
level of unmanaged ESG risk). The Index Provider excludes companies with an ESG
risk rating of 40 or higher (i.e., a “severe risk” rating) from the Underlying
Index.
Sustainalytics
also monitors companies for controversies pertaining to ESG and assesses
incidents and events in terms of their level of impact on the environment and
society and the related risk to the company itself. Incidents are defined as
company activities with unintended and/or undesired negative environmental
and/or social impacts on stakeholders, while events are defined as a series of
isolated or related incidents that pertain to the same ESG issues. Events are
scored by a team of analysts on a scale from 1 (low ESG impact) to 5 (severe ESG
impact), depending on the reputational risk to the company and potential impact
on stakeholders, as determined by Sustainalytics. The Index Provider excludes
companies with a Sustainalytics controversy rating higher than 4 from the
Reference Index.
Additionally,
eligible issuers must be deemed compliant with the principles of the United
Nations Global Compact (“UNGC”). The UNGC is an arrangement by which companies
voluntarily and publicly commit to a set of principles drawn from key UN
Conventions and Declarations. The principles of the UNGC represent a set of
values that the UN believes responsible businesses should incorporate into their
operations in order to meet fundamental responsibilities in the areas of human
rights, labor, the environment, and anti-corruption.
Companies
in the Reference Index are weighted by their market capitalization and adjusted
by their Sustainalytics ESG Risk Rating Score. Capping to weights are employed,
where necessary, to meet diversification standards, as determined by the Index
Provider. The Reference Index is rebalanced
quarterly.
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 or designates a third-party index calculation agent to publish
information regarding the market value of the Underlying Index. As of
December 31, 2023, the Underlying Index had 94 constituents.
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 Nasdaq-100 Index, the Fund's covered call strategy may generate income. If
the price 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 would generally offset any gains the Fund may
experience from the securities in the Reference Index held by the Fund. For
example, if the price of the Nasdaq-100 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
generally offset all of the Fund’s gains from the increase in the Reference
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.
Because
options contracts on the Reference Index are not currently listed, the
Underlying Index will write options on the Nasdaq-100 Index. As a result, the
performance of the Reference Index, which include most (but not all) of the
securities included in the Nasdaq-100 Index, may diverge from the performance of
the Nasdaq-100 Index. If the constituents of the Reference Index which are not
constituents of the Nasdaq-100 Index underperform the other constituents of the
Nasdaq-100 Index, and the Nasdaq-100 Index options written by the Fund expire in
the money, then the Fund’s performance will be negative during such period, even
if the performance of the Reference Index during such period is positive.
Additionally, the value of the Nasdaq-100 Index and the Reference Index may move
up or down after the strike price of the call options is selected for a given
period, in which case movements in the value of the options contracts may be
expected to offset movements in the Reference Index to a greater or lesser
extent. As a result, 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 Nasdaq-100
Index at the time when the investor purchases or sells the Fund.
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, 2023, 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 Fund
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. On October 28, 2020, the SEC adopted Rule 18f-4 (“Rule 18f-4”) under the
1940 Act, which governs the use of derivatives by registered investment
companies. Rule 18f-4 imposes limits on the amount of derivatives the Fund can
enter into.
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.
ESG
Investing Strategy Risk:
The stocks of companies with favorable ESG attributes, as determined by the
Index Provider, may underperform the stock market as a whole. As a result, the
Fund may underperform other funds that do not screen companies based on ESG
attributes. The criteria used to select companies for investment may result in
the Fund investing in securities, industries or sectors that underperform the
market as a whole, forgoing opportunities to invest in securities that might
otherwise be advantageous to buy or underperform other funds screened for ESG
standards. In addition, it is possible that the Index Provider could overlook,
misapply and/or otherwise fail to accurately screen for the stated ESG criteria,
potentially resulting in a company or companies being included in the Underlying
Index that do not meet the stated ESG criteria.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu and Ms. Yang have been Portfolio Managers of
the Fund since 2023.
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
ESG Covered Call ETF
Ticker:
XYLE Exchange: NYSE Arca
INVESTMENT
OBJECTIVE
The
Global X S&P 500 ESG 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 S&P 500 ESG 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% |
Total
Annual Fund Operating Expenses: |
0.60% |
1 Other Expenses are based on
estimated amounts for the current fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your Shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
| |
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. From the Fund's commencement of
operations on February 21, 2023 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 13.87% of the average value of its
portfolio.
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 500 ESG 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 seeks to provide long exposure to an equity portfolio that
applies a set of specific Environmental, Social and Governance (“ESG”) criteria
as part of its security selection process, while also selling call options
generally associated with such exposure. Specifically, the Underlying Index
measures the performance of a covered call strategy, also known as a “buy-write”
strategy, that seeks to provide long exposure by “buying” the underlying
components of the S&P 500 ESG Index (the “Reference Index”) and to generate
options premium income by “writing” (selling) a succession of one-month,
at-the-money (“ATM”) covered call options on the Reference Index. In seeking to
track the Underlying Index, the Fund invests in the securities reflected in the
Underlying Index by purchasing the underlying holdings of the Reference Index in
proportion to their weight in the Reference Index, and systematically writing
(selling) a succession of one-month, ATM covered call options on the Reference
Index. The implications of the written (sold) call options are described in more
detail here:
Call
Options
– When the Fund sells a call option, the Fund receives a premium in exchange for
an obligation to sell shares of the Reference Index at a strike price on the
expiration date if the buyer of the call option exercises it. If the
Reference
Index 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 Index and the strike price. If the Reference Index
closes below the strike price as of the expiration date, the call option may end
up worthless and the investor retains the premium. Generally speaking, an
at-the-money (“ATM”) call option refers to an option where the strike price of
the option is equal to the price of the underlying asset at the time when the
option is written (sold). .
On
a monthly basis, the Underlying Index’s portfolio will write (sell) a succession
of one-month call options corresponding to the value of the underlying
securities 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 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 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 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 designed to measure the performance of securities meeting
certain sustainability criteria (criteria related to Environmental, Social and
Governance (“ESG”) factors), while maintaining similar overall industry group
weights as the S&P 500 Index, as determined by S&P (the “Index
Provider”). The S&P 500 Index is a float adjusted market capitalization
equity benchmark which is generally regarded as being representative of the
large-cap segment 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 Reference Index is rebalanced
annually.
The
Reference Index is designed to measure the performance of securities meeting
certain sustainability criteria (criteria related to ESG factors), while
maintaining similar overall industry group weights as the S&P 500 Index. The
Reference Index employs negative screens to exclude securities of companies with
business activities that do not meet the eligibility criteria. Such screens rely
on information from Sustainalytics, a globally-recognized independent provider
of ESG research, ratings, and data. Companies’ business activities are
distinguished between categories with absolute prohibitions (which do not allow
any involvement by a company in a certain business activity) and categories that
permit a de minimis amount of a certain business activity (generally, permitting
a company to derive less than 5% of its revenues from, or to own less than 25%
of another company that engages in, such activity). Examples of business
activities with absolute prohibitions include, but are not limited to, arctic
oil & gas exploration, cannabis production and controversial weapons, while
examples of business activities with limited prohibitions include, but are not
limited to, alcoholic beverages, gambling and nuclear power production.
In
addition, the Reference Index excludes the following:
•Companies
that are classified by Sustainalytics as being non-compliant with the United
Nations Global Compact (“UNGC”) principles (“Non-Compliant UNGC Companies”).
Non-Compliant UNGC Companies are (i) companies found to have been responsible
for egregious and severe violations of commonly accepted international norms
related to human rights, labor rights, the environment and business ethics, or
(ii) companies deemed to facilitate third parties in human rights violations due
to their involvement in certain weapons with disproportional and/or
non-discriminatory impact on citizens and society;
•Companies
that have an S&P Dow Jones Indices (“DJI”) ESG Score, as assigned by SAM, an
ESG scoring business unit of S&P Global, Inc. (an affiliate of the Index
Provider), that falls within the worst 25% of scores from each Global Industry
Classification Standard (GICS) industry group in the underlying universe of
companies eligible for inclusion in the Index (the “Investment Universe”);
or
•Companies
that do not have (i) Sustainalytics coverage for determining tobacco-,
controversial weapons-, oil sands-, small arms-, military weapons- and thermal
coal-related involvement or compliance with UNGC principles; or (ii) an S&P
DJI ESG Score.
S&P
DJI ESG Scores are assigned by SAM using its Corporate Sustainability Assessment
(“CSA”), which is an annual evaluation of a company’s sustainability practices.
The CSA focuses on ESG factors that SAM determines are financially material to
the company, relative to its industry peer companies as determined by SAM. The
CSA is a questionnaire-based analysis process focused on ESG factors, with the
aim of identifying the extent to which companies are equipped to recognize and
respond to emerging sustainability opportunities and challenges in the global
market. Companies are evaluated based on a range of financially relevant
sustainability criteria, covering environmental, social, and governance
dimensions. Companies’ responses to questions are assigned values, which are
then aggregated into criteria, dimension, and total ESG scores, using an
industry-specific weighting scheme. An interdisciplinary team of analysts
designs, monitors, and refines the annual S&P
Global
CSA, with the purpose of generating additional insights into companies’
value-creating and risk-mitigating ESG potential. The assessment centers on
sustainability criteria that are financially relevant to corporate performance,
valuation, and security selection.
After
implementing the exclusion criteria described above, the remaining companies are
then ranked based on their S&P DJI ESG Score. For each GICS industry group,
companies are selected for inclusion in the Index primarily in decreasing order
of S&P DJIESG Score until approximately 75% of the float adjusted market
capitalization of the industry group is reached.
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 or designates a third-party index calculation agent to publish
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, 2023, 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 Fund
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. On October 28, 2020, the SEC adopted Rule 18f-4 (“Rule 18f-4”) under the
1940 Act, which governs the use of derivatives by registered investment
companies. Rule 18f-4 imposes limits on the amount of derivatives the Fund can
enter into.
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.
ESG
Investing Strategy Risk:
The stocks of companies with favorable ESG attributes, as determined by the
Index Provider, may underperform the stock market as a whole. As a result, the
Fund may underperform other funds that do not screen companies based on ESG
attributes. The criteria used to select companies for investment may result in
the Fund investing in securities, industries or sectors that underperform the
market as a whole, forgoing opportunities to invest in securities that might
otherwise be advantageous to buy or underperform other funds screened for ESG
standards. In addition, it is possible that the Index Provider could overlook,
misapply and/or otherwise fail to accurately screen for the stated ESG criteria,
potentially resulting in a company or companies being included in the Underlying
Index that do not meet the stated ESG criteria.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu and Ms. Yang have been Portfolio Managers of
the Fund since 2023.
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 Dow 30®
Covered Call & Growth ETF
Ticker:
DYLG Exchange: NYSE Arca
INVESTMENT
OBJECTIVE
The
Global X Dow 30®
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 DJIA 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% |
Total
Annual Fund Operating Expenses: |
0.60% |
1
Other Expenses are based on
estimated amounts for the current fiscal
year.
Example:
The following example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other funds. This example does not take into account customary
brokerage commissions that you pay when purchasing or selling Shares of the Fund
in the secondary market. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your Shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
|
|
|
|
|
|
|
|
|
|
| |
One
Year |
Three
Years |
Five
Years |
Ten
Years |
$61 |
$192 |
$335 |
$750 |
Portfolio
Turnover:
The Fund pays transaction
costs, such as commissions, when it buys and sells securities (or "turns over"
its portfolio). A higher portfolio turnover rate may indicate higher transaction
costs and may result in higher taxes when Shares are held in a taxable account.
These costs, which are not reflected in annual fund operating expenses or in the
example, affect the Fund's performance. From the Fund's commencement of
operations on July 25, 2023 to the end of the most recent fiscal period, the
Fund's portfolio turnover rate was 0.21% 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 DJIA
Half 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 measures the performance of a partially 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 covered call options on the Reference Index. The call options
correspond to approximately 50% of the value of the securities in the Reference
Index, therefore representing a partially covered call strategy. 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.
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 portfolio 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 call option
written in the Underlying Index’s 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 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 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 options component of the Underlying Index
is rebalanced (“rolled”) monthly.
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. As of December 31, 2023, the
Underlying Index had 30 constituents.
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 or designates a third-party
index calculation agent to publish information regarding the market value of the
Underlying Index. 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 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 also 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 options, 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 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
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 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 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, 2023, 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 Fund
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu and Ms. Yang have been Portfolio Managers of
the Fund since 2023.
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 MSCI Emerging
Markets Covered Call ETF
Ticker:
EMCC Exchange: NYSE Arca
INVESTMENT
OBJECTIVE
The
Global X MSCI Emerging Markets 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 MSCI Emerging Markets IMI 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 |
0.09% |
Total
Annual Fund Operating Expenses: |
0.69% |
Expense
Reimbursement and/or Fee Waiver:3 |
(0.09)% |
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 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, until at least March 1,
2025.
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 |
$212 |
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 MSCI Emerging Markets IMI
BuyWrite Index (the "Underlying Index") or in investments that are substantially
identical to
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
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 "writes"
(or sells) a call option on that security in an attempt to generate more income.
Each time a 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 fund's value declines because of a decline in the value of a
reference index, the premium that the fund received for writing the covered call
option offsets this loss to some extent. The Underlying Index’s covered call
strategy buys the underlying securities of a reference index and “writes” (or
sells) covered call options on the underlying securities of a reference fund.
Specifically, the Underlying Index holds a theoretical portfolio of the
underlying securities of the MSCI Emerging Markets Investable Market Index (the
“Reference Index”) and "writes" (or sells) a succession of one-month
at-the-money (“ATM”) covered call options on the iShares Core MSCI Emerging
Markets ETF (“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 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 are substantially
identical to 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 the Fund sells a call option, the Fund 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 Fund 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 Fund 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, 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 100% of the value of the securities in the Reference Index, and
will cover such options by holding investments (including other underlying ETFs)
that are substantially identical to such component securities. 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
12:59 p.m. ET to 1:00 p.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
1:00 p.m. ET. The roll date is a specified day of each month when the open call
options position of the Underlying Index is liquidated, 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 2:00 p.m. ET; (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.
In
seeking to track the Underlying Index, the Fund follows a "buy-write" investment
strategy on the Reference Index in which the Fund purchases investments
(including other underlying ETFs) that are substantially identical to the
Reference Index and also writes (or sells) call options on the Reference Fund
that correspond to approximately 100% of the value of securities in the
Reference Index. The
call options sold by the Fund will be collateralized by the Fund's equity
holdings at the time the Fund sells the options.
If
the price of the Reference Fund is above the strike price of the Fund’s call
options positions upon the closing out of the call option, then the Fund would
owe the purchaser of the call option the difference between the strike price and
the value of the Reference Fund, 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 Fund were to increase by 15% from the
time the call options were sold to the time the call options were closed out,
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 approximately all 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 when closed out, the call options will be
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 are closed out,
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.
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 Fund 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 loss associated with 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
Reference Index is an equity benchmark which measures the performance of the
large, mid and small-capitalization equity market across Emerging Markets, as
defined by MSCI, Inc. (the “Index Provider”). The Reference Index is a free
float-adjusted market capitalization weighted index that includes securities
classified as Emerging Markets according to the Index Provider, which screens
companies using size, liquidity and other criteria in order to determine the
investable universe. As of December 31, 2023, the Reference Index’s largest
exposures were to constituents with material exposure to largest exposures were
to constituents with material exposure to China, India and Taiwan, and to
constituents representing the financials and information technology sectors..
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 or designates a third-party index calculation agent to publish
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 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 are
substantially identical to 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, 2023, 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 Fund
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:
The Fund is expected to primarily hold ETFs to gain exposure to certain asset
classes. As a result, the Fund will 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 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.
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.
Currency
Risk:
The Fund may invest in underlying ETF(s), which are expected to 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.
Geographic
Economic Exposure Risk: The
underlying ETF(s) in which the Fund invests may hold constituents which 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:
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.
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.
Responses
to financial problems by European governments, central banks and others,
including austerity measures and reforms, may not produce the desired results,
may result in social unrest, may limit future growth and economic recovery or
may have other unintended consequences. Further defaults or restructurings by
governments and other entities of their debt could have additional adverse
effects on economies, financial markets and asset valuations around the world.
In addition, one or more countries may abandon the euro and/or withdraw from the
EU. In a referendum held on June 23, 2016, the United Kingdom resolved to leave
the European Union, which departure has become known as “Brexit”. Brexit
introduced significant uncertainties and instability in the financial markets as
the United Kingdom negotiated its departure from the European Union. The United
Kingdom officially stopped being a member of the European Union on January 31,
2020. Prior to the end of the “transition period” for Brexit, the European Union
and the United Kingdom ratified the EU-UK Trade and Cooperation Agreement (TCA),
which lays out the terms of the United Kingdom's future cooperation with the
European Union. The political, economic and legal consequences of Brexit and the
TCA are not yet fully known. Secessionist movements, such as the Catalan
movement in Spain and the independence movement in Scotland, as well as
governmental or other responses to such movements, may also create instability
and uncertainty in the region. In addition, the national politics of countries
in the EU have been unpredictable and subject to influence by varying political
groups and ideologies. The governments of EU countries may be subject to change
and such countries may experience social and political unrest. Unanticipated or
sudden political or social developments may result in sudden and significant
investment losses. In February 2022, Russia launched an invasion of Ukraine,
which led to disruptions of gas supplies and inflows of refugees to Europe, and
significant risk of European governments being pulled into armed conflict with
Russia. Furthermore, sanctions by the EU against Russia were met with sanctions
against the EU by Russia. The economic fallout of the war in Ukraine has had and
will likely continue to have a negative impact on the economic stability of
Europe. The occurrence of terrorist incidents throughout Europe also could
impact financial markets. The impact of these events is not clear but could be
significant and far-reaching and could adversely affect the value and liquidity
of the Fund’s investments.
Economies of certain Eastern European countries rely heavily on the
export of commodities, including oil and gas, and certain metals. As a result,
such economies will be impacted by international commodity prices and are
particularly vulnerable to global demand for these products. Oil and gas
infrastructure in Eastern Europe is at significant risk of being impacted by the
Russia-Ukraine war. Acts of terrorism in certain Eastern European countries may
cause uncertainty in their financial markets and adversely affect the
performance of the issuers to which the Fund has exposure. The securities
markets in Eastern European countries are substantially smaller and
inexperienced, with less government supervision and regulation of stock
exchanges and are less liquid and more volatile than securities markets in the
United States or Western European countries. Other risks related to the
economies of Eastern European include: the absence of legal structures governing
private and foreign investments and private property; the possibility of
expropriation; certain national policies which may restrict the capital market
activity, including, without limitation, restrictions on investing in issuers or
industries deemed sensitive to relevant national interests.
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.
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 be
enforced 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 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.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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.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.
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; Vanessa Yang; and Sandy Lu, CFA (“Portfolio
Managers”). Messrs. To, Xie and Lu 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.
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 MSCI Emerging Markets Covered Call 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 MSCI Emerging Markets Covered Call 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.
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.
Collar
Option Risk
Collar
Option Risk applies to the Global X Nasdaq 100 Risk Managed Income ETF and
Global X S&P 500 Risk Managed Income 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.
Derivatives
Risk
Derivatives
Risk applies to each Fund
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 each Fund
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, Global X
Information Technology Covered Call & Growth ETF and Global X MSCI Emerging
Markets Covered Call ETF
The
Fund may hold ETFs to gain exposure to certain asset classes. As a result, the
Fund may be subject to the same risks as the underlying ETFs. While the risks of
owning shares of an underlying ETF generally reflect the risks of owning the
underlying securities the ETF is designed to track, lack of liquidity in an
underlying ETF can result in its value being more volatile than the underlying
portfolio securities. Because the value of an underlying ETF's shares depends on
the demand in the market, the Adviser may not be able to liquidate the Fund’s
holdings in those shares at the most optimal time, thereby adversely affecting
the Fund’s performance. An underlying ETF may experience tracking error in
relation to the index tracked by the underlying ETF, which could contribute to
tracking error for the Fund. In addition, an underlying ETF's shares may trade
at a premium or discount to NAV.
In
addition, investments in the securities of underlying ETFs may involve
duplication of advisory fees and certain other expenses. The Fund will pay
brokerage commissions in connection with the purchase and sale of shares of
underlying ETFs, which could result in greater expenses to the Fund. By
investing in an underlying ETF, the Fund becomes a shareholder thereof. As a
result, Fund shareholders indirectly bear the Fund’s proportionate share of the
fees and expenses indirectly paid by shareholders of the underlying ETF, in
addition to the fees and expenses Fund shareholders indirectly bear in
connection with the Fund’s own operations. In addition, certain of the
underlying ETFs may hold common portfolio positions, thereby reducing the
diversification benefits of an asset allocation style.
If
an underlying ETF fails to achieve its investment objective, the value of the
Fund’s investment may decline, adversely affecting the Fund’s performance.
Additionally, some ETFs are not registered under the 1940 Act and therefore, are
not subject to the regulatory scheme and investor protections of the 1940 Act.
A
complete list of each underlying ETF held by the Fund can be found daily on the
Trust’s website. Each investor should review the complete description of the
principal risks of each underlying ETF prior to investing in the
Fund.
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 S&P 500® Covered Call ETF, Global X
NASDAQ 100® Covered Call ETF, Global X NASDAQ 100® Covered Call & Growth
ETF, Global X S&P 500 Covered Call & Growth ETF, Global X Nasdaq 100
Risk Managed Income ETF, Global X S&P 500 Risk Managed Income ETF, Global X
Dow 30 Covered Call 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 ESG Covered Call
ETF , Global X S&P 500 ESG Covered Call ETF , Global X Dow 30 Covered Call
& Growth ETF and Global X MSCI Emerging Markets Covered Call 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 Russell 2000 Covered Call ETF, Global X
Russell 2000 Covered Call & Growth ETF and Global X MSCI Emerging Markets
Covered Call 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 Russell 2000 Covered Call ETF, Global X
Russell 2000 Covered Call & Growth ETF and Global X MSCI Emerging Markets
Covered Call ETF
The
Fund may invest a significant percentage of its assets in small-capitalization
companies. If it does so, it may be subject to certain risks associated with
small-capitalization companies. These companies often have greater price
volatility, lower trading volume and less liquidity than larger, more
established companies. In addition, these companies are often subject to less
analyst coverage and may be in early and less predictable periods of their
corporate existences. These companies tend to have smaller revenues, narrower
product lines, less management depth and experience, smaller shares of their
product or service markets, fewer financial resources and less competitive
strength than larger companies.
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 S&P 500® Covered Call ETF,
Global X NASDAQ 100® Covered Call ETF, Global X Russell 2000 Covered Call ETF,
Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered
Call & Growth ETF, Global X 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, Global X Nasdaq 100 ESG Covered Call
ETF , Global X S&P 500 ESG Covered Call ETF , Global X Dow 30 Covered Call
& Growth ETF and Global X MSCI Emerging Markets Covered Call 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.
Currency
Risk
Currency
Risk applies to the Global X MSCI Emerging Markets Covered Call 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.
ESG
Investing Strategy Risk
ESG
Investing Strategy Risk applies to the Global X Nasdaq 100 ESG Covered Call ETF
and Global X S&P 500 ESG Covered Call ETF
The
stocks of companies with favorable ESG attributes, as determined by the Index
Provider, may underperform the stock market as a whole. As a result, the Fund
may underperform other funds that do not screen companies based on ESG
attributes. The criteria used to select companies for investment may result in
the Fund investing in securities, industries or sectors that underperform the
market as a whole, forgoing opportunities to invest in securities that might
otherwise be advantageous to buy or underperform other funds screened for ESG
standards. In addition, it is possible that the Index Provider could overlook,
misapply and/or otherwise fail to accurately screen for the stated ESG criteria,
potentially resulting in a company or companies being included in the Underlying
Index that do not meet the stated ESG criteria.
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.
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 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 Financials Sector
Risks
Related to Investing in the Financials Sector applies to the 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 Financial Services Industry
Risks
Related to Investing in the Financial Services Industry applies to the Global X
Financials Covered Call & Growth ETF
The
performance of stocks in the Financial Services industry may be adversely
impacted by the banking, insurance, mortgage financing, and transaction &
payment processing services activities, government regulations, economic
conditions, credit rating downgrades, and other factors which could adversely
affect financial markets.
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 Information Technology Sector
Risks
Related to Investing in the Information Technology Sector applies to the Global
X S&P 500® Covered Call ETF, Global X NASDAQ 100® Covered Call ETF, Global X
NASDAQ 100® Covered Call & Growth ETF, Global X S&P 500 Covered Call
& Growth ETF, Global X Nasdaq 100 Risk Managed Income ETF, Global X S&P
500 Risk Managed Income ETF, Global X Information Technology Covered Call &
Growth ETF, Global X Nasdaq 100 ESG Covered Call ETF and Global X S&P 500
ESG Covered Call 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 Pharmaceuticals Industry
Risks
Related to Investing in the Pharmaceuticals Industry applies to the Global X
Health Care Covered Call & Growth ETF
Companies
in the pharmaceuticals industry are subject to competitive forces that may make
it difficult to raise prices and, in fact, may result in price discounting. The
profitability of some companies in the pharmaceuticals industry may be dependent
on a relatively limited number of products. In addition, their products can
become obsolete due to industry innovation, changes in technologies or other
market developments. Many new products in the pharmaceuticals industry are
subject to government approvals, regulation and reimbursement rates. The process
of obtaining government approval may be long and costly. Many companies in the
pharmaceuticals industry are heavily dependent on patents and intellectual
property rights. The loss or impairment of these rights may adversely affect the
profitability of these companies. Companies in the pharmaceuticals industry may
be subject to extensive litigation based on product liability and similar
claims. 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.
Risks
Related to Investing in the Semiconductors and Semiconductor Equipment
Industry
Risks
Related to Investing in the Semiconductors and Semiconductor Equipment Industry
applies to the Global X Information Technology Covered Call & Growth
ETF
The
semiconductors and semiconductor equipment industry is highly competitive, and
certain companies in this industry may be restricted from operating in certain
markets due to the sensitive nature of these technologies. Companies in this
space generally seek to increase silicon capacity, improve yields, and reduce
die size in their product designs which may result in significant increases in
worldwide supply and downward pressure on prices. The success of such companies
frequently depends on the ability to develop and produce competitive new
semiconductor technologies. Companies in this industry frequently undertake
substantial research and development expenses in order to remain competitive,
and a failure to successfully demonstrate advanced functionality and performance
can have a material impact on the company’s business.
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.
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 Brazil
Risk
of Investing in Brazil applies to the Global X MSCI Emerging Markets Covered
Call 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 instability and sudden changes in
leadership.
Brazil
has historically experienced high rates of inflation and may continue to do so
in the future. An increase in prices for commodities, the depreciation of the
Brazilian currency (the real) and potential future governmental measures seeking
to maintain the value of the real in relation to the U.S. dollar, may trigger
increases in inflation in Brazil and may slow the rate of growth of the
Brazilian economy. Inflationary pressures also may limit the ability of certain
Brazilian issuers to access foreign financial markets and may lead to further
government intervention in the economy, including the introduction of government
policies that may adversely affect the overall performance of the Brazilian
economy, which in turn could adversely affect a Fund's investments.
The
Brazilian government has exercised, and continues to exercise, significant
influence over the Brazilian economy, which may have significant effects on
Brazilian companies and on market conditions and prices of Brazilian securities.
The Brazilian economy has been characterized by frequent, and occasionally
drastic, intervention by the Brazilian government. The Brazilian government has
often changed monetary, taxation, credit, tariff and other policies to influence
the core of Brazil’s economy. The Brazilian government’s actions to control
inflation and affect other economic policies have involved, among other actions,
the setting of wage and price controls, blocking access to bank accounts,
fluctuation of the base interest rates, imposing exchange controls and limiting
imports into Brazil. In the past, the Brazilian government has maintained
domestic price controls, and there can be no assurances that price controls will
not be re-imposed in the future.
Investments
in Brazilian securities may be subject to certain restrictions on foreign
investment. Although Brazilian law has provided greater certainty with respect
to the free exchange of currency, any restrictions or restrictive exchange
control policies in the future could have the effect of preventing or
restricting access to foreign currency.
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. Adverse
economic conditions or developments in other emerging market countries have at
times significantly affected the availability of credit in the Brazilian economy
and resulted in considerable outflows of funds and declines in the amount of
foreign currency invested in Brazil. Crises in neighboring emerging market
countries also may increase investors’ risk aversion, which may adversely impact
the market value of the securities issued by Brazilian companies, including
securities in which a Fund may invest.
Risk
of Investing in China
Risk
of Investing in China applies to the Global X MSCI Emerging Markets Covered Call
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 factors, 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.
Additionally, China’s shift away from a zero-COVID policy creates both
opportunities and risks, causing uncertainty for global economic growth. 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 be enforced or that U.S. regulatory authorities will continue
to feel satisfied with their access.
Risk
of Investing in Developed Markets
Risk
of Investing in Developed Markets applies to the Global X S&P 500® Covered
Call ETF, Global X NASDAQ 100® Covered Call ETF, Global X Russell 2000 Covered
Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P
500 Covered Call & Growth ETF, Global X Nasdaq 100 Risk Managed Income ETF,
Global X S&P 500 Risk Managed Income 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, Global X Nasdaq
100 ESG Covered Call ETF , Global X S&P 500 ESG Covered Call ETF and Global
X Dow 30 Covered Call & Growth 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 MSCI Emerging Markets
Covered Call 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.
Many
emerging market countries are subject to a substantial degree of economic,
political and social instability. Governments of some emerging market countries
are authoritarian in nature or have been installed or removed as a result of
military coups, while governments in other emerging market countries have
periodically used force to suppress civil dissent. Disparities of wealth, the
pace and success of democratization, and ethnic, religious and racial
disaffection, among other factors, have also led to social unrest, violence
and/or labor unrest in some emerging market countries. Many emerging market
countries have experienced strained international relations due to border
disputes, historical animosities or other defense concerns. These situations may
cause uncertainty in the markets and may adversely affect the performance of
these economies. Unanticipated political, social, and public health developments
may result in sudden and significant investment losses. Many emerging markets
may be underprepared for global health crises. For example, the rapid and global
spread of a highly contagious novel coronavirus respiratory disease, designated
COVID-19, has resulted in extreme volatility in the financial markets and severe
losses; reduced liquidity of many instruments; restrictions on international
and, in some cases, local travel; significant disruptions to business operations
(including business closures); strained healthcare systems; disruptions to
supply chains, consumer demand and employee availability; and widespread
uncertainty regarding the duration and long-term effects of this pandemic.
Investing in emerging market countries involves greater risk of loss due to
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investments and on repatriation of capital
invested. As an example, in the past some Eastern European governments have
expropriated substantial amounts of private property, and many claims of the
property owners have never been fully settled. There is no assurance that
similar expropriations will not occur in other emerging market countries,
including China.
As
a result of heightened geopolitical tensions, various countries have imposed
economic sanctions, imposed non-trade barriers and renewed existing economic
sanctions on specific emerging markets and on issuers within those markets.
These non-trade barriers consist of prohibiting certain securities trades,
prohibiting certain private transactions in certain sectors and with respect to
certain companies, asset freezes, and prohibition of all business, against
certain individuals and companies. The United States and other nations or
international organizations may impose additional, broader economic sanctions or
take other actions that may adversely affect certain emerging markets in the
future. These actions, any future sanctions or other actions, or even the threat
of further sanctions or other actions, may negatively affect the value and
liquidity of the Fund’s investments. For example, the Fund may be prohibited
from investing in securities issued by companies subject to such sanctions. In
addition, sanctions may require the Fund to freeze its existing investments,
prohibiting the Fund from buying, selling or otherwise transacting in these
investments. Also, if an affected security is included in the Fund's Underlying
Index, the Fund may, where practicable, seek to eliminate its holdings of the
affected security by employing or augmenting its representative sampling
strategy to seek to track the investment results of the Underlying Index. The
use of (or increased use of) a representative sampling strategy may increase the
Fund’s tracking error risk. Actions barring some or all transactions with a
specific company will likely have a substantial, negative impact on the value of
such company’s securities. These sanctions may also lead to changes in the
Fund’s Underlying Index. The Fund’s index provider may remove securities from
the Underlying Index or implement caps on the securities of certain issuers that
have been subject to recent economic sanctions. In such an event, it is expected
that the Fund will rebalance its portfolio to bring it in line with its
Underlying Index as a result of any such changes, which may result in
transaction costs and increased tracking error. The Fund’s investment in
emerging market countries may also be subject to withholding or other taxes,
which may be significant and may reduce the return to the Fund from an
investment in such countries.
Settlement
and clearance procedures in emerging market countries are frequently less
developed and reliable than those in the United States and may involve the
Fund’s delivery of securities before receipt of payment for their sale. In
addition, significant delays may occur in certain markets in registering the
transfer of securities. Settlement, clearance or registration problems may make
it more difficult for the Fund to value its portfolio securities and could cause
the Fund to miss attractive investment opportunities, to have a portion of its
assets uninvested or to incur losses due to the failure of a counterparty to pay
for securities the Fund has delivered or the Fund’s inability to complete its
contractual obligations because of theft or other reasons. In addition, local
agents and depositories are subject to local standards of care that may not be
as rigorous as developed countries. Governments and other groups may also
require local agents
to
hold securities in depositories that are not subject to independent
verification. The less developed a country’s securities market, the greater the
risk to the Fund.
The
creditworthiness of the local securities firms used by the Fund in emerging
market countries may not be as sound as the creditworthiness of firms used in
more developed countries. As a result, the Fund may be subject to a greater risk
of loss if a securities firm defaults in the performance of its
responsibilities.
The
Fund’s use of foreign currency management techniques in emerging market
countries may be limited. Due to the limited market for these instruments in
emerging market countries, all or a significant portion of the Fund's currency
exposure in emerging market countries may not be covered by such instruments.
Rising
interest rates, combined with widening credit spreads, could negatively impact
the value of emerging market debt and increase funding costs for foreign
issuers. In such a scenario, foreign issuers might not be able to service their
debt obligations, the market for emerging market debt could suffer from reduced
liquidity, and the Fund could lose money.
Certain
issuers in emerging market countries may utilize share blocking schemes. Share
blocking refers to a practice, in certain foreign markets, where voting rights
related to an issuer's securities are predicated on these securities being
blocked from trading at the custodian or sub-custodian level, for a period of
time around a shareholder meeting. These restrictions have the effect of barring
the purchase and sale of certain voting securities within a specified number of
days before and, in certain instances, after a shareholder meeting where a vote
of shareholders will be taken. Share blocking may prevent the Fund from buying
or selling securities for a period of time. During the time that shares are
blocked, trades in such securities will not settle. The blocking period can last
up to several weeks. The process for having a blocking restriction lifted can be
quite onerous with the particular requirements varying widely by country. In
addition, in certain countries, the block cannot be removed. As a result of the
ramifications of voting ballots in markets that allow share blocking, the
Adviser, on behalf of the Fund, reserves the right to abstain from voting
proxies in those markets.
Risk
of Investing in India
Risk
of Investing in India applies to the Global X MSCI Emerging Markets Covered Call
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. The government’s efforts to combat the shadow economy and counterfeit
cash have previously resulted in disruptions to the economy, notably with the
demonetization of certain denominations of the Indian Rupee in 2016, which
brought about cash shortages and damaged foreign investor trust.
Global
factors and foreign actions may inhibit the flow of foreign capital on which
India is dependent to sustain its growth. India’s strained relations with
neighboring countries like Pakistan and China could result in geopolitical risk
that has an adverse impact on the Indian economy and stock market. In addition,
the Reserve Bank of India (“RBI”) has imposed limits on foreign ownership of
Indian securities, which may limit the amount the Fund can invest in certain
types of companies. Foreign ownership limits generally apply to investment in
certain sectors which the RBI has determined that local ownership is
strategically important, such as banking and insurance, but may be applied to
other types of companies by the RBI from time to time. 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. In addition, a significant portion of India’s non-agricultural
employment remains concentrated in the informal labor market, which may lower
visibility into India’s economy and the activities of Indian companies.
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 South Korea
Risk
of Investing in South Korea applies to the Global X MSCI Emerging Markets
Covered Call 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 Emerging Markets Covered
Call 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 the United States
Risk
of Investing in the United States applies to the Global X S&P 500® Covered
Call ETF, Global X NASDAQ 100® Covered Call ETF, Global X Russell 2000 Covered
Call ETF, Global X NASDAQ 100® Covered Call & Growth ETF, Global X S&P
500 Covered Call & Growth ETF, Global X Nasdaq 100 Risk Managed Income ETF,
Global X S&P 500 Risk Managed Income 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, Global X Nasdaq
100 ESG Covered Call ETF , Global X S&P 500 ESG Covered Call ETF and Global
X Dow 30 Covered Call & Growth ETF
A
decrease in imports or exports, changes in trade regulations and/or an economic
recession in the U.S. may have a material adverse effect on the U.S. economy and
the securities listed on U.S. exchanges. Proposed and adopted policy and
legislative changes in the U.S. are changing many aspects of financial and other
regulation and may have a significant effect on the U.S. markets generally, as
well as on the value of certain securities. In addition, a continued rise in the
U.S. public debt level or the imposition of U.S. austerity measures may
adversely affect U.S. economic growth and the securities to which the Fund has
exposure. The U.S. has developed increasingly strained relations with a number
of foreign countries. If these relations continue to worsen, it could adversely
affect U.S. issuers as well as non-U.S. issuers that rely on the U.S. for trade.
The U.S. has also experienced increased internal unrest and discord. If this
trend were to continue, it may have an adverse impact on the U.S. economy and
the issuers in which the Fund invests.
Geographic
Economic Exposure Risk
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.
International
Closed Market Trading Risk
International
Closed Market Trading Risk applies to the Global X MSCI Emerging Markets Covered
Call 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.
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, raising of interest rates, or other events could have a
significant impact on the Fund and its investments and trading of its Shares.
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.
New
Fund Risk
New
Fund Risk applies to the 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, Global X Nasdaq 100 ESG Covered Call
ETF , Global X S&P 500 ESG Covered Call ETF , Global X Dow 30 Covered Call
& Growth ETF and Global X MSCI Emerging Markets Covered Call 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 NASDAQ 100® Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X Nasdaq 100 Risk Managed Income ETF,
Global X Dow 30 Covered Call 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 ESG Covered Call
ETF , Global X S&P 500 ESG Covered Call ETF and Global X Dow 30 Covered Call
& Growth 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 each Fund
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.
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.
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 S&P 500® Covered Call ETF, Global X NASDAQ 100®
Covered Call ETF, Global X Russell 2000 Covered Call ETF, Global X NASDAQ 100®
Covered Call & Growth ETF, Global X S&P 500 Covered Call & Growth
ETF, Global X Nasdaq 100 Risk Managed Income ETF, Global X S&P 500 Risk
Managed Income 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, Global X Nasdaq 100 ESG Covered Call
ETF , Global X S&P 500 ESG Covered Call ETF , Global X Dow 30 Covered Call
& Growth 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, 2024,
the Adviser provided investment advisory services for assets of approximately
$44 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. For the fiscal year ended October 31, 2023, 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 S&P 500®
Covered Call ETF |
0.60% |
Global
X NASDAQ 100®
Covered Call ETF |
0.60% |
Global
X Russell 2000 Covered Call ETF |
0.60%1 |
Global
X Nasdaq 100®
Covered Call & Growth ETF |
0.60% |
Global
X S&P 500®
Covered Call & Growth ETF |
0.60% |
Global
X S&P 500®
Risk Managed Income ETF |
0.60% |
Global
X NASDAQ 100®
Risk Managed Income ETF |
0.60% |
Global
X Dow 30®
Covered
Call ETF |
0.60% |
Global
X Russell 2000 Covered Call & Growth ETF |
0.60%2 |
Global
X Financials Covered Call & Growth ETF |
0.60%3 |
Global
X Health Care Covered Call & Growth ETF |
0.60%4 |
Global
X Information Technology Covered Call & Growth ETF |
0.60%5 |
Global
X Nasdaq 100 ESG Covered Call ETF |
0.60% |
Global
X S&P 500 ESG Covered Call ETF |
0.60% |
Global
X Dow 30®
Covered Call & Growth ETF |
0.60% |
1
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X 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, 2025.
2
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X Russell
2000 Covered Call & 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, 2025.
3
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
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, 2025.
4
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X 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, 2025.
5
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X
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, 2025.
During
the fiscal year ended October 31, 2023, 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:
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Fund |
Management
Fee |
Global
X MSCI Emerging Markets Covered Call ETF |
0.60%1 |
1
Pursuant to an Expense Limitation Agreement, the Adviser has contractually
agreed to reimburse or waive fees and/or limit expenses for the Global X MSCI
Emerging Markets Covered Call ETF to the extent necessary to assure that the
operating expenses of the Global X MSCI Emerging Markets 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 MSCI Emerging Markets Covered Call ETF per year until at least
March 1, 2025.
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, 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, Head 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.
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.
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 MSCI Emerging Markets Covered Call 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, 2023.
“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 10/31/23
|
|
|
|
|
|
|
|
|
|
| |
|
NAV |
MARKET |
UNDERLYING
INDEX |
Global
X S&P 500®
Covered Call ETF1* |
6.45% |
6.50% |
7.27% |
Global
X NASDAQ 100®
Covered Call ETF2** |
15.91% |
16.05% |
16.68% |
Global
X Russell 2000 Covered Call ETF3 |
(7.18)% |
(7.39)% |
(6.92)% |
Global
X Nasdaq 100®
Covered
Call & Growth ETF4 |
7.23% |
7.19% |
7.87% |
Global
X S&P 500®
Covered Call & Growth ETF5 |
7.55% |
7.50% |
8.39% |
Global
X NASDAQ 100®
Risk Managed Income ETF7 |
(7.17)% |
(7.25)% |
(7.22)% |
Global
X S&P 500® Risk Managed Income ETF6 |
(5.46)% |
(5.37))% |
(4.39)% |
Global
X Dow 30®
Covered Call ETF8 |
3.30% |
4.53% |
4.27% |
Global
X Russell 2000 Covered Call & Growth ETF9 |
(4.92)% |
(4.77)% |
(4.58)% |
Global
X Financials Covered Call & Growth ETF10 |
N/A |
N/A |
N/A |
Global
X Health Care Covered Call & Growth ETF11 |
N/A |
N/A |
N/A |
Global
X Information Technology Covered Call & Growth ETF12 |
N/A |
N/A |
N/A |
Global
X Nasdaq 100 ESG Covered Call ETF13 |
N/A |
N/A |
N/A |
Global
X S&P 500 ESG Covered Call ETF14 |
N/A |
N/A |
N/A |
Global
X Dow 30®
Covered Call & Growth ETF15 |
N/A |
N/A |
N/A |
1
For
the period since inception on 06/21/13 to 10/31/23.
Performance includes the performance of the Predecessor Fund.
2
For
the period since inception on 12/11/13 to 10/31/23.
Performance includes the performance of the Predecessor Fund.
3
For
the period since inception on 04/22/19 to 10/31/23
4
For
the period since inception on 09/18/20 to 10/31/23
5
For
the period since inception on 09/18/20 to 10/31/23
6
For
the period since inception on 08/25/21 to 10/31/23
7
For
the period since inception on 08/25/21 to 10/31/23
8
For the period since inception on 02/23/22 to 10/31/23
9
For the period since inception on 10/04/22 to 10/31/23
10
For
the period since inception on 11/21/22 to 10/31/23
11
For
the period since inception on 11/21/22 to 10/31/23
12
For
the period since inception on 11/21/22 to 10/31/23
13
For
the period since inception on 02/21/23 to 10/31/23
14
For the period since inception on 02/21/23 to 10/31/23
15
For the period since inception on 07/25/23 to 10/31/23
*
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 10/31/23
|
|
|
|
|
|
|
|
|
|
| |
| NAV |
MARKET |
UNDERLYING
INDEX |
Global
X S&P 500®
Covered Call ETF1* |
94.21% |
95.43% |
101.34% |
Global
X NASDAQ 100®
Covered Call ETF2** |
89.48% |
89.31% |
105.58% |
Global
X Russell 2000 Covered Call ETF3 |
8.92% |
8.74% |
12.63% |
Global
X Nasdaq 100®
Covered
Call & Growth ETF4 |
24.31% |
24.16% |
26.65% |
Global
X S&P 500®
Covered Call & Growth ETF5 |
25.49% |
25.28% |
28.55% |
Global
X S&P 500®
Risk Managed Income ETF6 |
(11.53)% |
(11.35)% |
(10.46)% |
Global
X NASDAQ 100®
Risk Managed Income ETF7 |
(15.00)% |
(15.16)% |
(15.09)% |
Global
X Dow 30®
Covered Call ETF8 |
(2.77)% |
(2.52)% |
(1.98)% |
Global
X Russell 2000 Covered Call & Growth ETF9 |
(5.27)% |
(5.11)% |
(4.91)% |
Global
X Financials Covered Call & Growth ETF10 |
(5.40)% |
(5.49)% |
(4.31)% |
Global
X Health Care Covered Call & Growth ETF11 |
(2.05)% |
(1.97)% |
(2.26)% |
Global
X Information Technology Covered Call & Growth ETF12 |
23.27% |
23.27% |
23.97% |
Global
X Nasdaq 100 ESG Covered Call ETF13 |
9.67% |
9.23% |
9.53% |
Global
X S&P 500 ESG Covered Call ETF14 |
1.79% |
1.23% |
2.42% |
Global
X Dow 30®
Covered Call & Growth ETF15 |
(5.35)% |
(4.88)% |
(5.31)% |
1
For
the period since inception on 06/21/13 to 10/31/23.
Performance includes the performance of the Predecessor Fund.
2
For
the period since inception on 12/11/13 to 10/31/23.
Performance includes the performance of the Predecessor Fund.
3
For
the period since inception on 04/22/19 to 10/31/23
4
For
the period since inception on 09/18/20 to 10/31/23
5
For
the period since inception on 09/18/20 to 10/31/23
6
For
the period since inception on 08/25/21 to 10/31/23
7
For
the period since inception on 08/25/21 to 10/31/23
8
For the period since inception on 02/23/22 to 10/31/23
9
For the period since inception on 10/04/22 to 10/31/23
10
For
the period since inception on 11/21/22 to 10/31/23
11
For
the period since inception on 11/21/22 to 10/31/23
12
For the period since inception on 11/21/22 to 10/31/23
13
For the period since inception on 02/21/23 to 10/31/23
14
For the period since inception on 02/21/23 to 10/31/23
15
For the period since inception on 07/25/23 to 10/31/23
*
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
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.
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.
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.
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.
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.
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.
Nasdaq-100
ESG BuyWrite Index
The
Nasdaq-100 ESG BuyWrite Index seeks to provide long exposure to an equity
portfolio that applies a set of specific Environmental, Social and Governance
(“ESG”) criteria as part of its security selection process, while also selling
call options generally associated with such exposure. Specifically, the
Nasdaq-100 ESG BuyWrite Index measures the performance of a covered call
strategy, also known as a “buy-write” strategy, that seeks to provide long
exposure by “buying” the underlying components of the Nasdaq-100 ESG Index and
to generate options premium income by “writing” (selling) a succession of
one-month, at-the-money (“ATM”) covered call options on the Nasdaq-100 Index. In
seeking to track the Nasdaq-100 ESG BuyWrite Index, the Fund invests in the
securities reflected in the Nasdaq-100 ESG BuyWrite Index by purchasing the
underlying holdings of the Reference Index in proportion to their weight in the
Nasdaq-100 ESG Index, and systematically writing (selling) a succession of
one-month, ATM covered call options on the Nasdaq-100 Index. The implications of
the written (sold) call options are described in more detail here:
Call
Options
– When the Fund sells a call option, the Fund receives a premium in exchange for
an obligation to sell shares of the Nasdaq-100 Index at a strike price on the
expiration date if the buyer of the call option exercises it. If the Nasdaq-100
Index 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 Nasdaq-100 Index and the strike price. If the Nasdaq-100 Index
closes below the strike price as of the expiration date, the call option may end
up worthless and the investor retains the premium. Generally speaking, an
at-the-money (“ATM”) call option refers to an option where the strike price of
the option is equal to the price of the underlying asset at the time when the
option is written (sold).
On
a monthly basis, the Nasdaq-100 ESG BuyWrite Index seeks to achieve its
objective by writing (selling) a succession of one-month, ATM call options on
the Nasdaq-100 Index corresponding to approximately 100% of the value of the
securities in the Reference Index, and will cover such options by holding the
component securities of the Nasdaq-100 ESG Index in the same weighting
proportion as the Nasdaq-100 ESG Index. Each call option written in the
Nasdaq-100 ESG BuyWrite Index will have an exercise price generally at the
prevailing market price of the Nasdaq-100 Index. However, if call options with
those precise strike prices are unavailable, the Nasdaq-100 ESG BuyWrite Index
will instead select the call options with the strike price closest to but above
the prevailing market price of the Nasdaq-100 Index. Each option position in the
Nasdaq-100 ESG BuyWrite Index’s composition 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
Nasdaq-100 Index is composed of securities issued by 100 of the largest
non-financial companies listed on the Nasdaq Global Select Market or Nasdaq
Global Market (two of the three tiers of The Nasdaq Stock Market for the U.S.
with the most stringent listing requirements) by market capitalization, as
defined by Nasdaq.
The
Nasdaq-100 ESG Index comprises the securities included in the Nasdaq-100 Index
after excluding certain companies that are: 1) engaged in identified business
activities, 2) subject to certain controversy, and/or 3) fail to comply with
certain fundamental principles. Specifically, the Reference Index employs
negative screens to exclude securities of companies with business activities
that do not meet certain ESG eligibility criteria. Such screens rely on
information from Sustainalytics, a globally-recognized independent provider of
ESG research, ratings, and data. Companies’ business activities are
distinguished between categories with absolute prohibitions (which do not allow
any involvement by a company in a certain business activity) and categories that
permit a de minimis amount of a certain business activity (generally, permitting
a company to derive less than 5% of its revenues from, or to own less than 10%
of another company that engages in, such activity). Examples of business
activities with absolute prohibitions include, but are not limited to, arctic
oil & gas exploration, cannabis production and controversial weapons, while
examples of business activities with limited prohibitions include, but are not
limited to, alcoholic beverages, gambling and nuclear power production.
Companies
in the Nasdaq-100 ESG Index are weighted by their market capitalization and
adjusted by their Sustainalytics ESG Risk Rating Score. Capping to weights are
employed, where necessary, to meet diversification standards, as determined by
Nasdaq. The Nasdaq-100 ESG Index is rebalanced quarterly.
Cboe
S&P 500 ESG BuyWrite Index
The
Cboe S&P 500 ESG BuyWrite Index seeks to provide long exposure to an equity
portfolio that applies a set of specific Environmental, Social and Governance
(“ESG”) criteria as part of its security selection process, while also selling
call options generally associated with such exposure. Specifically, the Cboe
S&P 500 ESG BuyWrite Index measures the performance of a covered call
strategy, also known as a “buy-write” strategy, that seeks to provide long
exposure by “buying” the underlying components of the S&P 500 ESG Index and
to generate options premium income by “writing” (selling) a succession of
one-month, at-the-money (“ATM”) covered call options on the S&P 500 ESG
Index. In seeking to track the Cboe S&P 500 ESG BuyWrite Index, the Fund
invests in the securities reflected in the Underlying Index by purchasing the
underlying holdings of the S&P 500 ESG Index in proportion to their weight
in the S&P 500 ESG Index, and systematically writing (selling) a succession
of one-month, ATM covered call options on the S&P 500 ESG Index. The
implications of the written (sold) call options are described in more detail
here:
Call
Options
– When the Fund sells a call option, the Fund receives a premium in exchange for
an obligation to sell shares of the Reference Index at a strike price on the
expiration date if the buyer of the call option exercises it. If the Reference
Index 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 S&P 500 ESG Index and the strike price. If the Reference
Index closes below the strike price as of the expiration date, the call option
may end up worthless and the investor retains the premium. Generally speaking,
an at-the-money (“ATM”) call option refers to an option where the strike price
of the option is equal to the price of the underlying asset at the time when the
option is written (sold). .
On
a monthly basis, the Cboe S&P 500 ESG BuyWrite Index’s portfolio will write
(sell) a succession of one-month call options corresponding to the value of the
underlying securities of the Reference Index and will cover such options by
holding the component securities of the S&P 500 ESG Index. Each call option
written in the Underlying Index’s portfolio will have an exercise price
generally at the prevailing market price of the S&P 500 ESG Index. However,
if call options with those precise strike prices are unavailable, the Underlying
Index’s portfolio will instead select the call options with the strike price
closest to but above the prevailing market price of the S&P 500 ESG Index.
Each option position in the Cboe S&P 500 ESG BuyWrite Index’s 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
S&P 500 ESG Index is designed to measure the performance of securities
meeting certain sustainability criteria (criteria related to Environmental,
Social and Governance (“ESG”) factors), while maintaining similar overall
industry group weights as the S&P 500 Index, as determined by S&P (the
“Index Provider”). The S&P 500 Index is a float adjusted market
capitalization equity benchmark which is generally regarded as being
representative of the large-cap segment 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 S&P 500 Index is
rebalanced annually.
Cboe
DJIA Half BuyWrite Index
The
Cboe DJIA Half BuyWrite Index measures the performance of a partially 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 covered call options on the Dow Jones Industrial
Average®.
The call options correspond to approximately 50% of the value of the securities
in the Dow Jones Industrial Average®,
therefore representing a partially covered call strategy.
The
Cboe DJIA 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
MSCI Emerging Markets IMI BuyWrite Index
The
Cboe MSCI Emerging Markets IMI BuyWrite Index measures the performance of a
theoretical 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 "writes" (or sells) a call option on that security
in an attempt to generate more income. Each time a 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 fund's value declines
because of a decline in the value of a reference index, the premium that the
fund received for writing the covered call option offsets this loss to some
extent. The Cboe MSCI Emerging Markets IMI BuyWrite Index’s covered call
strategy buys the underlying securities of a reference index and “writes” (or
sells) covered call options on the underlying securities of a reference fund.
Specifically, the Cboe MSCI Emerging Markets IMI BuyWrite Index holds a
theoretical portfolio of the underlying securities of the Cboe MSCI Emerging
Markets Investable Market Index (the “Reference Index”) and "writes" (or sells)
a succession of one-month at-the-money (“ATM”) covered call options on the
iShares Core Cboe MSCI Emerging Markets ETF (“Reference Fund”), or such other
fund that seeks to track the performance of the Cboe MSCI Emerging Markets
Investable Market Index, as determined by the Index Provider. The call options
written (sold) by the Fund will be FLexible EXchange (“FLEX”) options. The Fund
invests in the securities reflected in the Cboe MSCI Emerging Markets IMI
BuyWrite Index or in investments (including other underlying ETFs) that are
substantially identical to such component securities and cannot invest directly
in the Cboe MSCI Emerging Markets IMI BuyWrite Index itself. The implications of
the written (sold) FLEX call options are described in more detail
here:
Call
Options
– When the Fund sells a call option, the Fund 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 Fund 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 Fund 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, exercise price, and expanded position limits.
On
a monthly basis, the Cboe MSCI Emerging Markets IMI BuyWrite Index’s
hypothetical portfolio will write (sell) a succession of one-month FLEX call
options on the Reference Fund corresponding to approximately 100% of the value
of the securities in the Cboe MSCI Emerging Markets Investable Market Index, and
will cover such options by holding investments (including other underlying ETFs)
that are substantially identical to such component securities. 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
12:59 p.m. ET to 1:00 p.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
1:00 p.m. ET. The roll date is a specified day of each month when the open call
options position of the Cboe MSCI Emerging Markets IMI BuyWrite Index is
liquidated, and a new call option position is opened that will expire as of the
next roll date. The roll date for the Cboe MSCI Emerging Markets IMI BuyWrite
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 2:00p.m. ET; (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 Cboe MSCI
Emerging Markets IMI BuyWrite Index will utilize a model-based valuation for the
FLEX options that references the quoted prices for listed options on the
Reference Fund.
The
MSCI Emerging Markets Investable Market Index is an equity benchmark which
measures the performance of the large, mid and small-capitalization equity
market across Emerging Markets, as defined by MSCI, Inc. (the “Index Provider”).
The MSCI Emerging Markets Investable Market Index is a free float-adjusted
market capitalization weighted index that includes securities classified as
Emerging Markets according to the Index Provider, which screens companies using
size, liquidity and other criteria in order to determine the investable
universe. As of December 31, 2023, the MSCI Emerging Markets Investable
Market Index’s largest exposures were to constituents with material exposure to
China, India and Taiwan, and to constituents representing the financials and
information technology sectors.
Disclaimers
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®
Covered Call ETF, Global X S&P 500®
Covered Call & Growth ETF, Global X S&P 500®
Risk Managed Income ETF and the Global X S&P 500 ESG Covered Call 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 CBOE S&P 500 BuyWrite Index, Cboe
S&P 500 Half BuyWrite Index, Cboe S&P 500 Risk Managed Income Index and
Cboe S&P 500 ESG BuyWrite 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
LIABILITY 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 CBOE NASDAQ-100®
BuyWrite V2 Index for purposes of Licensee's Global X NASDAQ 100®
Covered Call ETF, the Cboe Russell 2000 BuyWrite Index for purposes of
Licensee's Global X Russell 2000 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-100 Monthly Net Credit Collar 95-100
Index for purposes of Licensee's Global X NASDAQ 100®
Risk
Managed Income ETF, the DJIA Cboe BuyWrite v2 Index for purposes of Licensee's
Global X Dow 30®
Covered Call ETF, the Cboe Russell 2000 Half BuyWrite Index for purposes of
Licensee's Global X Russell 2000 Covered Call & Growth 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, the Cboe S&P Technology Select Sector Half
BuyWrite Index for purposes of Licensee's Global X Information Technology
Covered Call & Growth ETF, the Nasdaq-100 ESG BuyWrite Index for purposes of
Licensee's Global X Nasdaq 100 ESG Covered Call ETF, and the Cboe DJIA Half
BuyWrite Index or purposes of Licensee's Global X Dow 30 Covered Call &
Growth ETF. The Global X NASDAQ 100®
Covered Call ETF, the Global X Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth
ETF,
the Global X Health Care Covered Call & Growth ETF, the Global X Information
Technology Covered Call & Growth ETF, the Global X Nasdaq 100 ESG Covered
Call ETF and the Global X Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 Covered Call & Growth ETF particularly, or the ability of the
CBOE NASDAQ-100® BuyWrite V2 Index, Cboe Russell 2000 BuyWrite Index, Cboe
Nasdaq 100 Half BuyWrite V2 Index, Nasdaq-100 Monthly Net Credit Collar 95-100
Index, DJIA Cboe BuyWrite v2 Index, Cboe Russell 2000 Half BuyWrite Index, Cboe
S&P Financial Select Sector Half BuyWrite Index, Cboe S&P Health Care
Select Sector Half BuyWrite Index, Cboe S&P Technology Select Sector Half
BuyWrite Index, Nasdaq-100 ESG BuyWrite Index or the Cboe DJIA 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 CBOE NASDAQ-100®
BuyWrite V2 Index, Cboe Russell 2000 BuyWrite Index, Cboe Nasdaq 100 Half
BuyWrite V2 Index, Nasdaq-100 Monthly Net Credit Collar 95-100 Index, DJIA Cboe
BuyWrite v2 Index, Cboe Russell 2000 Half BuyWrite Index, Cboe S&P Financial
Select Sector Half BuyWrite Index, Cboe S&P Health Care Select Sector Half
BuyWrite Index, Cboe S&P Technology Select Sector Half BuyWrite Index,
Nasdaq-100 ESG BuyWrite Index or the Cboe DJIA 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 Covered Call & Growth ETF into consideration in determining,
composing or calculating the CBOE NASDAQ-100® BuyWrite V2 Index, Cboe Russell
2000 BuyWrite Index, Cboe Nasdaq 100 Half BuyWrite V2 Index, Nasdaq-100 Monthly
Net Credit Collar 95-100 Index, DJIA Cboe BuyWrite v2 Index, Cboe Russell 2000
Half BuyWrite Index, Cboe S&P Financial Select Sector Half BuyWrite Index,
Cboe S&P Health Care Select Sector Half BuyWrite Index, Cboe S&P
Technology Select Sector Half BuyWrite Index, Nasdaq-100 ESG BuyWrite Index or
the Cboe DJIA 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 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 Russell 2000 Covered Call ETF, the Global X
Nasdaq 100®
Covered Call & Growth ETF, the Global X NASDAQ 100®
Risk
Managed Income ETF, the Global X Dow 30®
Covered Call ETF, the Global X Russell 2000 Covered Call & Growth ETF, the
Global X Financials Covered Call & Growth ETF, the Global X Health Care
Covered Call & Growth ETF, the Global X Information Technology Covered Call
& Growth ETF, the Global X Nasdaq 100 ESG Covered Call ETF and the Global X
Dow 30 Covered Call & Growth ETF.
THE
CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF
THE CBOE NASDAQ-100® BUYWRITE V2 INDEX, CBOE RUSSELL 2000 BUYWRITE INDEX, CBOE
NASDAQ 100 HALF BUYWRITE V2 INDEX, NASDAQ-100 MONTHLY NET CREDIT COLLAR 95-100
INDEX, DJIA CBOE BUYWRITE V2 INDEX, CBOE RUSSELL 2000 HALF BUYWRITE INDEX, CBOE
S&P FINANCIAL SELECT SECTOR HALF BUYWRITE INDEX, CBOE S&P HEALTH CARE
SELECT SECTOR HALF BUYWRITE INDEX, CBOE S&P TECHNOLOGY SELECT SECTOR HALF
BUYWRITE INDEX, NASDAQ-100 ESG BUYWRITE INDEX OR THE CBOE DJIA 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 RUSSELL 2000 COVERED CALL ETF, THE
GLOBAL X NASDAQ 100® COVERED CALL & GROWTH ETF, THE GLOBAL X NASDAQ 100®
RISK MANAGED INCOME ETF, THE GLOBAL X DOW 30® COVERED CALL ETF, THE GLOBAL X
RUSSELL 2000 COVERED CALL & GROWTH ETF, THE GLOBAL X FINANCIALS COVERED CALL
& GROWTH ETF, THE GLOBAL X HEALTH CARE COVERED CALL & GROWTH ETF, THE
GLOBAL X INFORMATION TECHNOLOGY COVERED CALL & GROWTH ETF, THE GLOBAL X
NASDAQ 100 ESG COVERED CALL ETF AND THE GLOBAL X DOW 30 COVERED CALL &
GROWTH ETF OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE CBOE NASDAQ-100®
BUYWRITE V2 INDEX, CBOE RUSSELL 2000 BUYWRITE INDEX, CBOE NASDAQ 100 HALF
BUYWRITE V2 INDEX, NASDAQ-100 MONTHLY NET CREDIT COLLAR 95-100 INDEX, DJIA CBOE
BUYWRITE V2 INDEX, CBOE RUSSELL 2000 HALF BUYWRITE INDEX, CBOE S&P FINANCIAL
SELECT SECTOR HALF BUYWRITE INDEX, CBOE S&P HEALTH CARE SELECT SECTOR HALF
BUYWRITE INDEX, CBOE S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX,
NASDAQ-100 ESG BUYWRITE INDEX OR THE CBOE DJIA 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 CBOE NASDAQ-100® BUYWRITE V2 INDEX, CBOE
RUSSELL 2000 BUYWRITE INDEX, CBOE NASDAQ 100 HALF BUYWRITE V2 INDEX, NASDAQ-100
MONTHLY NET CREDIT COLLAR 95-100 INDEX, DJIA CBOE BUYWRITE V2 INDEX, CBOE
RUSSELL 2000 HALF BUYWRITE INDEX, CBOE S&P FINANCIAL SELECT SECTOR HALF
BUYWRITE INDEX, CBOE S&P HEALTH CARE SELECT SECTOR HALF BUYWRITE INDEX, CBOE
S&P TECHNOLOGY SELECT SECTOR HALF BUYWRITE INDEX, NASDAQ-100 ESG BUYWRITE
INDEX OR THE CBOE DJIA 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.
OTHER
SERVICE PROVIDERS
SEI
Investments Global Funds Services is the sub-administrator for each Fund.
The
Bank of New York Mellon is the custodian and transfer agent for each Fund except
the Global X S&P 500®
Covered Call ETF, Global X NASDAQ 100®
Covered Call ETF, Global X Russell 2000 Covered Call ETF and the Global X Dow
30®
Covered Call ETF. Brown Brothers Harriman & Co. serves as custodian and
transfer agent to the Global X S&P 500®
Covered Call ETF, Global X NASDAQ 100®
Covered Call ETF, Global X Russell 2000 Covered Call ETF and the Global X Dow
30®
Covered Call 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, 2019, 2020, 2021, 2022 and 2023, as applicable.
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 MSCI Emerging Markets Covered Call ETF had commenced
operations and has financial highlights for the fiscal year ended
October 31, 2023. 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, 2019, 2020, 2021, 2022 and 2023, as applicable. The Funds' financial
statements are available without charge upon request.
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 ($)* |
Net
Realized and Unrealized Gain (Loss) on Investments ($) |
Total
from Operations ($) |
Distribution
from Net Investment Income ($) |
Distribution
from Capital Gains ($) |
Return
of Capital ($) |
Total
from Distributions ($) |
Net Asset
Value, End of Period ($) |
Total
Return (%)** |
Net
Assets, End of Period ($)(000) |
Ratio
of Expenses to Average Net Assets (%) |
Ratio
of Net Investment Income to Average Net Assets (%) |
Portfolio
Turnover (%)†† |
Global
X S&P 500® Covered Call ETF (1) |
|
|
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|
| |
2023 |
40.00 |
0.43 |
2.13 |
2.56 |
(0.14) |
— |
(4.24) |
(4.38) |
38.18 |
6.45 |
2,805,206 |
0.60 |
1.07 |
7.90 |
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 |
0.6 |
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 |
Global
X NASDAQ 100® Covered Call ETF (1) |
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| |
2023 |
16.15 |
0.05 |
2.44 |
2.49 |
— |
— |
(2.04) |
(2.04) |
16.60 |
15.91 |
7,521,213 |
0.61 |
0.31 |
38.93 |
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 |
0.6 |
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 |
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* |
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. |
|
Amounts
designated as "—" are either $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 Russell 2000 Covered Call ETF |
2023 |
19.55 |
0.19 |
(1.47) |
(1.28) |
(0.03) |
— |
(2.14) |
(2.17) |
16.10 |
(7.18) |
1,406,038 |
0.57(1) |
1.04 |
19.24 |
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
(1)(2) |
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(1) |
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(1) |
0.68 |
11.16 |
2019(3) |
25.00 |
0.09 |
1.37 |
1.46 |
(1.22) |
— |
— |
(1.22) |
25.24 |
5.99 |
8,833 |
0.82
†(1) |
0.68
† |
5.82 |
Global
X Nasdaq 100® Covered Call & Growth ETF |
2023 |
22.80 |
0.07 |
4.73 |
4.80 |
— |
— |
(1.53) |
(1.53) |
26.07 |
21.43 |
102,179 |
0.6 |
0.27 |
28.03 |
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(4) |
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(5) |
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 |
2023 |
25.47 |
0.28 |
1.75 |
2.03 |
(0.19) |
— |
(1.24) |
(1.43) |
26.07 |
8.01 |
61,006 |
0.6 |
1.05 |
5.25 |
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(4) |
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(5) |
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 |
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* |
Per
share data calculated using average shares method. |
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** |
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. |
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† |
Annualized. |
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†† |
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. |
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(1) |
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%, 0.60%, 0.68% and 0.97% for the year ended
October 31, 2023 to the year ended October 31, 2019, respectively.
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(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 0.54%. |
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(3) |
The
Fund commenced operations on April 17, 2019. |
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(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 0.60%. |
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(5) |
The
Fund commenced operations on September 18, 2020. |
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Amounts
designated as "—" are either $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® Risk Managed Income ETF |
2023 |
18.17 |
0.05 |
0.58 |
0.63 |
— |
— |
(2.16) |
(2.16) |
16.64 |
3.42 |
11,813 |
0.61
(2) |
0.30 |
22.73 |
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 S&P 500® Risk Managed Income ETF |
2023 |
21.05 |
0.22 |
(0.29) |
(0.07) |
(0.03) |
— |
(2.39) |
(2.42) |
18.56 |
(0.61) |
27,098 |
0.60 |
1.08 |
4.85 |
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(3) |
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 |
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*
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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 0.60% and 0.61% for the year
ended October 31, 2023 and October 31, 2022, respectively. |
(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
0.61%. |
Amounts
designated as "—" are either $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 Dow 30® Covered Call ETF |
|
2023 |
21.89 |
0.34 |
0.38 |
0.72 |
(0.18) |
— |
(1.54) |
(1.72) |
20.89 |
3.30 |
78,947 |
0.60 |
1.55 |
6.67 |
|
2022(1) |
24.13 |
0.22 |
(0.86) |
(0.64) |
(0.64) |
— |
(0.96) |
(1.60) |
21.89 |
(2.77) |
52,985 |
0.61
†(2) |
1.42
† |
8.82 |
|
Global
X Russell 2000 Covered Call & Growth ETF |
|
2023 |
26.58 |
0.28 |
(2.31) |
(2.03) |
(0.17) |
(0.82) |
(1.18) |
(2.17) |
22.38 |
(8.16) |
8,279 |
0.50(4) |
1.11 |
5.48 |
|
2022(3) |
25.90 |
(0.01) |
0.82 |
0.81 |
(0.13) |
— |
— |
(0.13) |
26.58 |
3.14 |
2,658 |
0.50
†(4) |
(0.50)
† |
— |
|
|
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| |
*
|
Per
share data calculated using average shares method. |
|
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|
|
| |
**
|
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. |
|
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| |
†
|
Annualized. |
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|
|
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| |
††
|
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. |
|
|
|
|
|
|
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|
| |
(1) |
The
Fund commenced operations on February 23, 2022. |
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(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 0.60%. |
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| |
(3) |
The
Fund commenced operations on October 4, 2022. |
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| |
(4) |
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% and 0.60% for the year ended October 31, 2023 and
the year ended October 31, 2022, respectively. |
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|
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|
|
|
|
|
|
| |
Amounts
designated as "—" are either $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 Financials Covered Call & Growth ETF |
| |
2023(1) |
24.88 |
0.35 |
(1.66) |
(1.31) |
(0.85) |
— |
(0.42) |
(1.27) |
22.30 |
(5.40) |
2,230 |
0.54
†(2) |
1.55
† |
16.45 |
| |
Global
X Health Care Covered Call & Growth ETF |
| |
2023(1) |
25.06 |
0.27 |
(0.75) |
(0.48) |
(1.16) |
— |
— |
(1.16) |
23.42 |
(2.05) |
2,577 |
0.55
†(2) |
1.16
† |
6.85 |
| |
Global
X Information Technology Covered Call & Growth ETF |
| |
2023(3) |
24.74 |
0.11 |
5.55 |
5.66 |
(1.54) |
— |
— |
(1.54) |
28.86 |
23.27 |
3,463 |
0.55
†(2) |
0.42
† |
13.93 |
| |
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|
|
|
|
|
|
|
|
| |
*
|
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 21, 2022. |
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|
|
|
| |
(2) |
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, 2023. |
|
|
|
|
|
|
|
|
|
|
|
| |
Amounts
designated as "—" are either $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® ESG Covered Call ETF |
| |
2023(1) |
24.46 |
0.04 |
2.33 |
2.37 |
(2.06) |
— |
— |
(2.06) |
24.77 |
9.67 |
2,478 |
0.61
† |
0.21
† |
11.82 |
| |
Global
X S&P 500® ESG Covered Call ETF |
| |
2023(1) |
24.65 |
0.17 |
0.28 |
0.45 |
(0.45) |
— |
(0.86) |
(1.31) |
23.79 |
1.79 |
2,379 |
0.60
† |
1.00
† |
13.87 |
| |
Global
X Dow 30® Covered Call & Growth ETF |
| |
2023(2) |
25.81 |
0.1 |
(1.48) |
(1.38) |
(0.09) |
— |
(0.14) |
(0.23) |
24.20 |
(5.35) |
2,421 |
0.60
† |
1.43
† |
0.21 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
*
|
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 February 21, 2023. |
|
|
|
|
|
|
|
|
|
|
|
| |
(2) |
The
Fund commenced operations on July 25, 2023. |
|
|
|
|
|
|
|
|
|
|
|
| |
Amounts
designated as "—" are either $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, 2024, 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,
2024
Investment
Company Act File No.: 811-22209