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 th