[Global
X MLCC & Electronic Components ETF]
[
]: [MLCC]
Prospectus
[
], 2026
The
information in this Prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. The securities described herein may not be
sold until the registration statement becomes effective. This Prospectus is not
an offer to sell or the solicitation of an offer to buy securities and is not
soliciting an offer to buy these securities in any state in which the offer,
solicitation or sale would be unlawful.
The
Securities and Exchange Commission ("SEC") [and the Commodity Futures Trading
Commission (“CFTC”)] 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 the 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 the Fund involve investment
risks, including the loss of principal.
TABLE
OF CONTENTS
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| FUND
SUMMARY |
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| ADDITIONAL
INFORMATION ABOUT THE FUND |
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| A
FURTHER DISCUSSION OF PRINCIPAL RISKS |
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| A
FURTHER DISCUSSION OF OTHER RISKS |
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| PORTFOLIO
HOLDINGS INFORMATION |
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| FUND
MANAGEMENT |
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| DISTRIBUTOR |
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| BUYING
AND SELLING FUND SHARES |
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| FREQUENT
TRADING |
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| DISTRIBUTION
AND SERVICE PLAN |
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| DIVIDENDS
AND DISTRIBUTIONS |
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| TAXES |
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| DETERMINATION
OF NET ASSET VALUE |
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| PREMIUM/DISCOUNT
AND SHARE INFORMATION |
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| INFORMATION
REGARDING THE INDEX AND THE INDEX PROVIDER |
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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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[Global
X MLCC & Electronic Components ETF]
Ticker:
[MLCC] Exchange: [ ]
INVESTMENT
OBJECTIVE
The
[Global X MLCC & Electronic Components ETF] ("Fund") seeks to provide
investment exposure to the [Akros MLCC & Electronic Components Index]
("Reference 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):
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Management
Fees: |
[
] |
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Distribution
and Service (12b-1) Fees: |
None |
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Other
Expenses:1 |
[
] |
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Total
Annual Fund Operating Expenses: |
[
]% |
1 Other
Expenses are based on estimated amounts for the current fiscal
year.
Example:
The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other funds. This example does not take
into account customary brokerage commissions that you pay when purchasing or
selling Shares of the Fund in the secondary market. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then sell all of
your Shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
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One
Year |
Three
Years |
| $[
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$[
] |
Portfolio
Turnover:
The Fund pays transaction costs, such as commissions, when it buys and sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Shares are
held in a taxable account. These costs, which are not reflected in annual fund
operating expenses or in the example, affect the Fund's performance. This is a
new fund and does not yet have a portfolio turnover rate to
disclose.
PRINCIPAL
INVESTMENT STRATEGIES
The
Fund is an actively managed exchange traded fund (“ETF”) that seeks to gain
economic exposure to the [Akros MLCC & Electronic Components Index] (the
“Reference Index”). Under normal circumstances, the Fund invests at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
MLCC & Electronic Components Companies (as defined below) and/or derivative
instruments that provide economic exposure to the MLCC & Electronic
Components Companies. The Fund expects to gain exposure through swap agreements
that provide economic exposure to the securities of the Reference Index, either
individually or in the aggregate, and other derivative instruments. [The Fund
expects to enter into one or more swap agreements with financial institutions
whereby the Fund and the financial institution will agree to exchange the return
(or differentials in rates of return) earned or realized on the Reference
Index’s constituents, either individually or in the aggregate. The Fund’s use of
swap agreements and other derivative instruments is designed to allow the Fund
to gain efficient exposure to the Reference Index’s constituents in
circumstances where direct investment may be impractical or involve higher
transaction costs, including as a result of local market access requirements,
foreign ownership restrictions, tax considerations, or liquidity constraints.]
[For purposes of compliance with the Fund’s investment policy, derivative
instruments will be valued at their notional value. The notional value of a
derivative instrument represents the total dollar value of exposure the
derivative has to the underlying asset.]
The
Reference Index is owned and developed by Akros Technologies, Inc. (“Akros” or
the “Index Provider”). The Index Provider is not affiliated with the Fund or
Global X Management Company LLC, the Fund’s investment adviser (the “Adviser”).
To
be a part of the initial universe, companies must meet certain minimum market
capitalization and liquidity criteria, as determined by the Index Provider.
Newly listed securities may be considered for inclusion subject to certain
criteria related to trading history, number of days traded and market
capitalization, determined by the Index Provider. [Additionally, companies must
be listed in [South Korea, Japan, or Taiwan] to be eligible for inclusion in the
initial universe. As of [], companies must have a market capitalization of at
least [$250 million] and a 3-month average daily trading value of at least [$1
million] to be considered for inclusion. The Reference Index targets up to [15]
constituents and rebalances on a quarterly basis.]
[The
Reference Index is designed to provide exposure to companies that are involved
in the production, manufacturing, and enabling equipment of multi-layer ceramic
capacitors (“MLCCs”) and in companies that are involved in the broader
electronic components industry (together, “MLCC & Electronic Components
Companies”). An MLCC Company is a company that manufactures multilayer ceramic
capacitors. [Electronic Components Companies are companies principally engaged
in manufacturing capacitors (multilayer ceramic, aluminum electrolytic, film,
tantalum and polymer, silicon, and supercapacitor), chip resistors, inductors
and coils, signal transformers, and circuit-protection components.] [In
constructing the Reference Index, the Index Provider analyzes industries and
business segments within the Akros Industry Classification System (“AICS”) whose
primary classification falls within “Computer and Electronic Product
Manufacturing” or “Electrical Equipment, Appliance, and Component
Manufacturing,” together with companies whose secondary classification is
“Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing,” as
defined the Index Provider. The Index Provider next uses a qualification test to
identify companies based on any of the following qualities:
(a)
Revenue:
at least 50% of the company’s total revenue is derived from the production,
manufacturing, and enabling equipment of MLCCs and electronic components;
or
(b)
Global
scale:
the company is one of the [three] largest manufacturers of capacitors worldwide
by absolute capacitor-segment revenue.
The
Index Provider assigns each company an overall fitness rating of "high,"
"medium," or "low." A company is rated “high-fitness” if it satisfies the
qualification test (condition (a) or (b)). A company must be rated
"high-fitness" to be eligible for inclusion in the Reference Index. [As of [ ],
“medium-fitness” and “low-fitness” constituents are not eligible for inclusion
in the Reference Index.]
The
two largest high-fitness constituents by market capitalization are designated as
“anchors” and are each held at a fixed weight of [20%]. The remaining
high-fitness constituents are weighted by free-float-adjusted market
capitalization, subject to a [15%] cap.
The
Fund may also invest in short-term U.S. Treasury securities and short-term U.S.
Treasury ETFs, such as but not limited to the Global X 1-3 Month T-Bill ETF, a
passively managed ETF and affiliate of the Fund, to satisfy regulatory
diversification and collateral requirements.
[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 Reference Index is concentrated. As of [ ], 2026, the Reference Index
was concentrated in the electronic equipment, instruments and components
industry.] The Fund is classified as “non-diversified,” which means it may
invest a larger percentage of its assets in a smaller number of issuers than a
diversified fund.
SUMMARY
OF PRINCIPAL RISKS
As
with any investment, you could lose all or part of your investment in the Fund,
and the Fund's performance could trail that of other investments. There is no
guarantee that the Fund will achieve its investment objective. An investment in
the Fund is not a bank deposit and it is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency, the
Adviser or any of its affiliates. The Fund is subject to the principal risks
noted below, any of which may adversely affect the Fund's net asset value
("NAV"), trading price, yield, total return and ability to meet its investment
objective, as well as other risks that are described in greater detail in the
Additional
Information About the Fund
section of the 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.
Active
Management Risk: The
Fund is actively managed using proprietary investment strategies and processes.
There can be no guarantee that these strategies and processes will be successful
or that the Fund will achieve its investment objective.
Asset
Class Risk:
Securities and other assets held in the Fund's portfolio may underperform in
comparison to the general securities markets, a particular securities market or
other asset classes.
Depositary
Receipts Risk: The
Fund may invest in depositary receipts, such as ADRs and GDRs. Depositary
receipts are receipts listed on U.S. or foreign exchanges issued by banks or
trust companies that entitle the holder to all dividends and capital gains that
are paid out on the underlying foreign shares. Depositary receipts are generally
subject to the same risks associated with direct investments in the securities
of foreign companies. A holder of depositary receipts may also be subject to
fees and the credit risk of the financial institution acting as depositary.
Unsponsored depositary receipts may involve higher expenses, fewer shareholder
rights, and may be less liquid.
Derivatives
Risk: The
Fund will invest in derivative instruments. Derivatives (e.g., options, futures
contracts, forwards, swaps) are instruments the value of which is derived from
that of other assets, rates, or indices. 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. There
is the risk of imperfect correlation between the value of a derivative and that
of the asset underlying the derivative. Derivative instruments are subject to a
number of risks including counterparty, liquidity, interest rate, market, credit
and management risks, as well as the risk of improper valuation. Certain
derivatives are subject to counterparty risk, which is the risk that the other
party in the transaction will not fulfill its contractual obligations.
Derivatives are usually traded on margin, which may subject the Fund to margin
calls. Margin calls may force the Fund to liquidate assets. Further, the market
for certain derivatives may become illiquid under adverse market or economic
conditions independent of any specific adverse changes in the conditions of a
particular issuer. If the Fund needed to sell a large block of illiquid
securities to meet shareholder redemption request or to raise cash, these sales
could further reduce the securities’ prices and adversely affect performance of
the Fund.
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 a company’s business
performance, investor perceptions, stock market trends and general economic
conditions.
ETF
Investment Risk: The
Fund is subject to the same risks as underlying ETFs in which it may invest,
including: that the underlying ETF’s shares may trade at a premium or discount
to NAV; that an underlying ETF may experience a lack of liquidity that can
result in greater volatility than its underlying securities; that an active
trading market for an underlying ETF’s shares may not develop or be maintained;
that trading in an underlying ETF’s shares may be halted in certain
circumstances; and that an underlying ETF may fail to achieve its investment
objective, which may adversely affect the value of the Fund’s investment in the
underlying ETF and the overall performance of the Fund. Subjective decisions
made by the investment adviser of an underlying ETF may cause the underlying ETF
to incur losses or to miss profit opportunities on which it may otherwise have
capitalized. 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 that seeks to track an
underlying index may experience tracking error in relation to the index.
Further, a lack of liquidity may result in the underlying ETF’s value being more
volatile than the underlying portfolio securities. Underlying ETFs in which the
Fund invests may be non-diversified under the Investment Company Act of 1940 and
its shares may be more volatile and fluctuate more than shares of a diversified
fund that invests in a broader range of securities. In addition, investments in
the securities of underlying ETFs may involve duplication of advisory fees and
certain other expenses.
U.S.
Treasury Obligations Risk: U.S.
Treasury obligations may differ in their interest rates, maturities, times of
issuance and other characteristics. U.S. Treasury obligations are subject to
inflation risk, as the price of short term U.S. Treasury obligations tends to
fall during inflationary periods as investors seek higher yielding investments.
Changes to interest rates may also adversely affect the value and liquidity of
the U.S. Treasury obligations. Similar to other issuers, changes to the
financial condition or credit rating of the U.S. government may cause the value
of the Fund's investments in U.S. Treasury obligations to decline.
Notwithstanding that U.S. Treasury obligations are backed by the full faith and
credit of the United States, circumstances could arise that could prevent the
timely payment of interest or principal, such as reaching the legislative "debt
ceiling," which can in turn drive debt higher. Such non-payment could result in
losses to the Fund and substantial negative consequences for the U.S. economy
and the global financial system.
Associated
Risks Related to Investing in MLCC & Electronic Components Companies:
The
Fund invests in MLCC & Electronic Components Companies, which are companies
principally engaged in manufacturing capacitors (multilayer ceramic,
aluminum
electrolytic, film, tantalum and polymer, silicon, and supercapacitor), chip
resistors, inductors and coils, signal transformers, and circuit-protection
components. MLCC & Electronic Components Companies may be subject to rapid
changes in technology, intense competition, government regulation and evolving
regulatory requirements, and obsolescence risk. Securities of such companies may
be subject to greater price volatility than securities of companies involved in
other business activities, particularly over the short term, due to competitive
pressures, cyclical demand patterns, changes in the regulatory environment, and
shifts in supply and demand dynamics.
MLCC & Electronic Components
Companies may be dependent upon a limited number of large customers,
particularly original equipment manufacturers and contract electronics
manufacturers, and the loss of, or a significant reduction in orders from, any
such customer could have a disproportionate impact on revenues. Businesses in
this industry also face risks from fluctuating raw material prices, shortages of
critical inputs such as semiconductors and rare earth elements, and reliance on
contract manufacturers or overseas suppliers. Additionally, the growth and
profitability of MLCC & Electronic Components Companies may be contingent
upon the broader adoption of related technology and end-products. A slowdown or
disruption in the growth of related sectors, or a shift in industry standards,
supply chain configurations, or trade policies—including tariffs, export
controls, or restrictions on the sourcing of critical raw materials—could
materially and adversely affect the revenues and profitability of MLCC &
Electronic Components Companies in which the Fund invests. Certain companies
included in the Fund’s portfolio may be engaged in other lines of business
unrelated to the development of MLCC and Electronic Components, and these lines
of business could adversely affect their operating results despite a company’s
possible success in activities linked to MLCC and Electronic Components lines of
business.
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 adapt more slowly to new competitive challenges and changing
market conditions than smaller capitalization companies. In addition,
large-capitalization companies may be more mature and subject to more limited
growth potential and consequently may underperform other segments of the equity
market or the market as a whole.
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. These securities may have returns that vary, sometimes significantly,
from the overall securities market.
Small-Capitalization
Companies Risk: Small-capitalization
companies may be less stable and more susceptible to adverse developments, and
their securities may be more volatile and less liquid than large- and
mid-capitalization companies. In addition, small-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 shorter operating histories than large- and mid-capitalization
companies. These securities may have returns that vary, sometimes significantly,
from the overall securities market.]
Cash
Transaction Risk: Unlike
most exchange-traded funds ("ETFs"), the Fund intends to effect a significant
portion of creations and redemptions for cash, rather than in-kind securities.
As such, the Fund may be required to sell portfolio securities in order to
obtain the cash needed to distribute redemption proceeds. As a result, an
investment in the Fund may be less tax-efficient than an investment in a more
conventional ETF. Moreover, cash transactions may have to be carried out over
several days if the securities market is relatively illiquid and may involve the
Fund recognizing a capital gain and/or incurring considerable brokerage fees and
taxes. These factors may result in wider spreads between the bid and the offered
prices of the Fund’s Shares than for more conventional ETFs. Additionally, to
the extent that brokerage or other costs are costs or taxable gains or losses
that the Fund might not offset by transaction fees, such costs may be borne by
the Fund and result in a decrease in the value of the Fund.
Currency
Risk: The
Fund may invest in securities denominated in foreign currencies. Because the
Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if
currencies of the underlying securities depreciate against the U.S. dollar or if
there are delays or limits on repatriation of such currencies. Generally, an
increase in the value of the U.S. dollar against a foreign currency will reduce
the value of a security denominated in that foreign currency, thereby decreasing
the Fund's NAV. Exchange rates may be volatile and may change quickly and
without warning, which could have a significant negative impact on the
Fund.
Custody
Risk: Custody
risk refers to the risks in the process of clearing and settling trades, as well
as the holding of securities and other assets by local banks, agents, and
securities depositories. These risks are heightened in jurisdictions with less
developed markets or less robust settlement and custody infrastructure and
processes.
Cybersecurity
Risk: With
the increased use of technologies such as the Internet to conduct business, the
Fund, like all companies, may be susceptible to operational, information
security and related risks. Cybersecurity incidents involving the Fund and its
service providers (including, without limitation, the Adviser, fund accountant,
custodian, transfer agent and financial intermediaries) have the ability to
cause disruptions and impact business operations, potentially resulting in
financial losses, impediments to trading, the inability of Fund shareholders to
transact business, violations of applicable privacy and other laws, regulatory
fines, penalties, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs.
Focus
Risk: The
Fund may be susceptible to an increased risk of loss, including losses due to
events that adversely affect the Fund’s investments more than the market as a
whole, to the extent that the Fund's investments are focused in the securities
of a particular issuer or issuers within the same market, asset class, industry,
group of industries, or one or more sectors. In such event, the Fund’s
performance will depend to a greater extent on the overall condition of such
market, asset class, industry(ies) or sector(s), and an economic, business,
political, regulatory, or other occurrence affecting these such market, asset
class, industry(ies) or sector(s) will have an increased impact on the value of
the Fund’s shares compared to the value of shares of a fund that invests more
broadly.
Risks
Related to Investing in the Electronic Equipment, Instruments and Components
Industry: The
electronic equipment, instruments and components industry is intensely
competitive, and prices for existing products tend to decrease over their life
cycle. Companies must continue to develop new products and technology to remain
competitive and are therefore dependent on hiring and retailing key personnel.
Companies typically face high fixed operating costs while also being subject to
fluctuations in the cost of raw materials.
Foreign
Securities Risk: Investments
in foreign securities can be riskier than U.S. securities investments.
Investments in the securities of foreign issuers (including investments in
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”))
are subject to additional risks, including lower levels of liquidity and market
efficiency; greater securities price volatility; exchange rate fluctuations and
exchange controls; less availability of public information about issuers;
limitations on foreign ownership of securities; imposition of withholding or
other taxes; imposition of restrictions on the expatriation of the assets of the
Fund; restrictions placed on U.S. investors by U.S. regulations governing
foreign investments; higher transaction and custody costs and delays in
settlement procedures; difficulties in enforcing contractual obligations; lower
levels of regulation of the securities market; weaker accounting, disclosure and
reporting requirements; and legal principles relating to corporate governance
and directors’ fiduciary duties and liabilities. The countries in which the Fund
invests may also be subject to structural risks, including economic, political
and social instability. Additionally, certain securities held by the Fund, while
traded on U.S. exchanges, may be issued by foreign financial institutions and as
such, may be subject to the risks of investing in securities issued by foreign
companies, which may not be subject to the same regulations as companies
domiciled in the U.S. Where all or a portion of the Fund's securities trade in a
market that is closed when the market in which the Fund's Shares are listed and
trading is open, there may be differences between the last quote from the
security’s closed foreign market and the value of the security during the Fund’s
domestic trading day. This, in turn, could lead to differences between the
market price of the Fund’s Shares and the underlying value of those
shares.
Geographic
Risk: The
Fund’s investments in securities of issuers located in a particular country or
geographic region may subject the Fund to certain risks to a greater extent than
if its investments were less focused, including: natural, biological or other
disasters and the spread of infectious diseases; economic, political and social
instability; security concerns; and trade disputes with key trading partners.
The securities in which the Fund invests and, consequently, the Fund is also
subject to specific risks as a result of their business operations in a
particular country or region, including, but not limited to:
Risk
of Investing in Developed Markets:
Investments in a developed country’s issuer may subject the Fund to legal,
regulatory, political, currency, security, and economic risks specific to
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 war, 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 adversely impacted by changes to the
economic conditions of certain key trading partners, regulatory burdens, debt
burdens and the price or availability of certain commodities.
Risk
of Investing in Emerging Markets: Investments
in emerging markets may be subject to a greater risk of loss than investments in
developed markets. Securities markets of emerging market countries are less
liquid, subject to greater price volatility, have smaller market
capitalizations, have less government regulation, and are not subject to as
extensive and frequent accounting, financial, and other reporting requirements
as the securities markets of more developed countries, and there may be greater
risk associated with the custody of securities in emerging markets. It may be
difficult or impossible for the Fund to pursue claims against an emerging market
issuer in the courts of an emerging market country. There may be significant
obstacles to obtaining information necessary for investigations into or
litigation against emerging market companies and shareholders may have limited
legal rights and remedies. Emerging markets may be more likely to experience
inflation, political turmoil and rapid changes in economic conditions than more
developed markets. Emerging markets may also face other significant internal or
external risks, including the risk of war, terrorism, or other social or
political conflicts.
Risk
of Investing in Japan: Investments
in Japanese issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks specific to Japan. The Japanese economy
may be subject to considerable degrees of economic, political and social
instability, which could have a negative impact on Japanese securities. The
Japanese economy is heavily dependent on international trade, oil and other
commodity imports and consistent government policy supporting its exports.
Changes in governmental regulations on trade, decreasing imports or exports,
and/or an economic recession in Japan may cause the value of the Fund's
investments to decline. Downturns in the economies of key trading partners such
as the U.S., China and/or countries in Southeast Asia, including economic,
political or social instability in such countries, could also have a negative
impact on the Japanese economy. In addition, Japan is subject to the risk of
natural disasters, such as earthquakes, volcanoes, typhoons and tsunamis, which
could negatively affect the Fund. Japan’s relations with neighboring countries
have at times been strained, and strained relations with its neighboring
countries or trading partners may cause uncertainty in the Japanese markets and
adversely affect the overall Japanese economy.
Risk
of Investing in South Korea: Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks specific to South Korea. In addition,
economic and political developments of South Korea’s neighbors, or potential
hostilities with North Korea may have an adverse effect on the South Korean
economy. The South Korean economy is heavily reliant on trading exports,
especially with other Asian countries and the U.S. Conditions that weaken demand
for key South Korean exports, and disruptions or decreases in trade activity
could lead to declines in economic growth.
Risk
of Investing in Taiwan: Investments
in Taiwanese issuers involve risks that are specific to Taiwan, including legal,
regulatory, political and economic risks. Political and economic developments of
Taiwan’s neighbors may have an adverse effect on Taiwan’s economy. Specifically,
Taiwan’s geographic proximity and history of political contention with China
have resulted in ongoing tensions, which may materially affect the Taiwanese
economy and its securities market.
[International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").]
Investable
Universe of Companies Risk: The
investable universe of companies in which the Fund may invest may be limited. If
a company no longer meets the Index Provider’s criteria for inclusion in the
Underlying Index, the Fund may need to reduce or eliminate its holdings in that
company. The reduction or elimination of the Fund’s holdings in the company may
have an adverse impact on the liquidity of the Fund’s overall portfolio holdings
and on Fund performance.
Issuer
Risk: Fund
performance depends on the performance of individual companies in which the Fund
invests. Changes to the financial condition of any of those companies may cause
the value of such company's securities to decline.
Liquidity
Risk: Liquidity
risk exists when the markets for particular securities or types of securities or
other investments are or become relatively illiquid, making it difficult or
impossible for the Fund to dispose of the security or investment. Illiquidity
may result from political, economic or issuer specific events; supply/demand
imbalances; changes in a specific market’s size or structure; or overall market
disruptions. Investments in securities or other assets with reduced liquidity or
that become illiquid may involve greater risk than securities with more liquid
markets. Market prices or quotations for illiquid securities may be volatile,
and there may be large spreads between bid and ask prices. Reduced liquidity may
have an adverse impact on market price of particular securities and may
adversely affect the Fund’s ability to sell those securities when necessary to
meet the
Fund’s
liquidity needs. To the extent that the Fund and its affiliates hold a
significant portion of an issuer’s outstanding securities, the Fund may be
subject to greater liquidity risk than if the issuer’s securities were more
widely held.
Market
Risk:
Turbulence in the financial markets and reduced liquidity may negatively affect
issuers, which could have an adverse effect on the Fund and its investments. The
Fund’s NAV could decline over short periods due to short-term market movements
and over longer periods during market downturns. Trade policy, including the
imposition of tariffs, may dampen consumer spending and result in decreased
confidence in the markets. Additionally, political uncertainty regarding U.S.
policy, including the U.S. government’s approach to trade, may also impact the
markets. Furthermore, local, regional or global events such as war, acts of
terrorism, the spread of infectious diseases, inflation and recessions, changes
in interest or exchange rates, or other events could have a significant impact
on the Fund and its investments and trading of its Shares. Market risk factors
may result in increased volatility and/or decreased liquidity in the securities
markets.
New
Fund Risk: The
Fund is a new fund, with limited or no operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. New funds are also subject
to Large Shareholder Risk.
Non-Diversification
Risk: The
Fund is classified as a “non-diversified” investment company under the
Investment Company Act of 1940 ("1940 Act"), which means that the Fund may
invest a greater portion of its assets in securities of individual issuers than
a diversified fund. As a result, changes in the market value of 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, cyber security incidents, and technology or
systems failures. 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.
Risks
Associated with Exchange-Traded Funds:
As an ETF, the Fund is subject to the following risks:
Authorized
Participants Concentration Risk:
The Fund has a limited number of financial institutions that may act as
Authorized Participants and engage in creation or redemption transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, such as in times of market stress, Shares may be more
likely to trade at a premium or discount to NAV and/or at wider intraday bid-ask
spreads, and possibly face trading halts and/or delisting from an exchange.
Authorized Participants Concentration Risk may be heightened because the Fund
invests in non-U.S. securities.
Large
Shareholder Risk: Certain
shareholders, including an Authorized Participant, the Adviser, an affiliate of
the Adviser, or funds managed by the Adviser, may own a substantial amount of
the Fund’s Shares. 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.
Swap
Agreements Risk: Swap
agreements are contracts among the Fund and a counterparty to exchange the
return of the pre-determined underlying investment (such as the rate of return
of a specified security). Swap agreements may be negotiated bilaterally and
traded over-the-counter (“OTC”) between two parties or, in some instances, must
be transacted through a futures commission merchant and cleared through a
clearinghouse that serves as a central counterparty. Risks associated with the
use of swap agreements are different from those associated with ordinary
portfolio securities transactions, due in part to the fact they could be
considered illiquid and many swaps trade on the OTC market. It may not be
possible for the Fund to liquidate a swap position at an advantageous time or
price, which may result in significant losses. Swaps are particularly subject to
counterparty credit, correlation, valuation, liquidity and leveraging risks.
Certain standardized swaps are subject to mandatory central clearing. Central
clearing is intended to reduce counterparty credit risk and increase liquidity,
but central clearing does not make swap transactions risk-free. Swap agreements
may involve greater risks than direct investment in securities.
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. A high portfolio turnover rate may
result in higher taxes when Shares are held in a taxable account, including an
increase in taxable capital gains distributions to Fund shareholders, and may
lower the Fund's after-tax performance.
Valuation
Risk:
The sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security, particularly for securities that trade in low value
or volatile markets or that are valued using a fair value methodology (such as
during trading halts). The value of the securities in the Fund's portfolio
may change on days when shareholders will not be able to purchase or sell the
Fund's Shares.
PERFORMANCE
INFORMATION
The
Fund does not have a full calendar year of performance. Once the Fund has
completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the variability of the Fund's returns and comparing the Fund's
performance to a broad-based benchmark index. The Fund's performance is not
necessarily indicative of how the Fund will perform in the future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are Wayne Xie and Sandy Lu, CFA (“Portfolio Managers”). Messrs. Xie and Lu
have been Portfolio Managers of the Fund since the Fund's inception.
PURCHASE
AND SALE OF FUND SHARES
Shares
of the Fund are or will be listed and traded at market prices on a national
securities exchange. Shares may only be purchased and sold on the exchange
through a broker-dealer. The price of Shares is based on market price, and
because ETF shares trade at market prices rather than at NAV, Shares may trade
at a price greater than NAV (a premium) or less than NAV (a discount). Only
"Authorized Participants" (as defined in the SAI) who have entered into
agreements with the Fund's distributor, SEI Investments Distribution Co.
("Distributor"), may engage in creation or redemption transactions directly with
the Fund. The Fund will only issue or redeem Shares that have been aggregated
into blocks called "Creation Units". The Fund will issue or redeem Creation
Units in return for a basket of cash and/or securities that the Fund specifies
any day that the national securities exchanges are open for business (“Business
Day”). An investor may incur costs attributable to the difference between the
highest price a buyer is willing to pay to purchase shares of the Fund (bid) and
the lowest price a seller is willing to accept for shares of the Fund (ask) when
buying or selling shares in the secondary market (the “bid-ask spread”). To
access
information
regarding the Fund’s net asset value, market price, premiums and discounts, and
bid-ask spreads, please go to www.globalxetfs.com.
TAX
INFORMATION
The
Fund intends to make distributions that may be taxable to you as ordinary income
or capital gains, unless you are investing through a tax-advantaged arrangement
such as a 401(k) plan or an individual retirement account ("IRA"), in which case
distributions from such tax-advantaged arrangement may be taxable to you.
PAYMENTS
TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
The
Adviser and its related companies may pay broker-dealers or other financial
intermediaries (such as a bank) for the sale of Fund Shares and related
services. These payments may create a conflict of interest by influencing your
broker-dealer, sales persons or other intermediary or its employees or
associated persons to recommend the Fund over another investment. Ask your
financial adviser or visit your financial intermediary's website for more
information.
ADDITIONAL
INFORMATION ABOUT THE FUND
This
Prospectus contains information about investing in the Fund. Please read this
Prospectus carefully before you make any investment decisions. Shares of the
Fund are listed for trading on a national securities exchange. The market price
for a Share of the Fund may be different from the Fund's most recent NAV. ETFs
are funds that trade like other publicly-traded securities. Each Share of the
Funds represents an ownership interest in an underlying portfolio of securities.
Unlike shares of a mutual fund, which can be bought and redeemed from the
issuing fund by all shareholders at a price based on NAV, Shares of the Fund may
be purchased or redeemed directly from the Fund at NAV solely by Authorized
Participants and only in Creation Unit increments. Also, unlike shares of a
mutual fund, Shares of the Fund are listed on a national securities exchange and
trade in the secondary market at market prices that change throughout the day.
The Fund is designed to be used as part of broader asset allocation strategies.
Accordingly, an investment in the Fund should not constitute a complete
investment program.
The
investment objective of the Fund is to seek to provide investment exposure to
the Reference Index. The Fund is an actively managed exchange traded fund
(“ETF”) that seeks to gain economic exposure to the [Akros MLCC & Electronic
Components Index] (the “Reference Index”). Under normal circumstances, the Fund
invests at least 80% of its net assets, plus the amount of any borrowings for
investment purposes, in MLCC & Electronic Components Companies and/or
derivative instruments that provide economic exposure to the MLCC &
Electronic Components Companies.
The
Fund expects to gain exposure through swap agreements that provide economic
exposure to the securities of the Reference Index, either individually or in the
aggregate, and other derivative instruments. [The Fund expects to enter into one
or more swap agreements with financial institutions whereby the Fund and the
financial institution will agree to exchange the return (or differentials in
rates of return) earned or realized on the Reference Index’s constituents,
either individually or in the aggregate. The Fund’s use of swap agreements and
other derivative instruments is designed to allow the Fund to gain efficient
exposure to the Reference Index’s constituents in circumstances where direct
investment may be impractical or involve higher transaction costs, including as
a result of local market access requirements, foreign ownership restrictions,
tax considerations, or liquidity constraints.] [For purposes of compliance with
the Fund’s investment policy, derivative instruments will be valued at their
notional value. The notional value of a derivative instrument represents the
total dollar value of exposure the derivative has to the underlying asset.]
The
Reference Index is owned and developed by Akros Technologies, Inc. (“Akros” or
the “Index Provider”). The Index Provider is not affiliated with the Fund or
Global X Management Company LLC, the Fund’s investment adviser (the “Adviser”).
To
be a part of the initial universe, companies must meet certain minimum market
capitalization and liquidity criteria, as determined by the Index Provider.
Newly listed securities may be considered for inclusion subject to certain
criteria related to trading history, number of days traded and market
capitalization, determined by the Index Provider. [Additionally, companies must
be listed in [South Korea, Japan, or Taiwan] to be eligible for inclusion in the
initial universe. As of [], companies must have a market capitalization of at
least [$250 million] and a 3-month average daily trading value of at least [$1
million] to be considered for inclusion. The Reference Index targets up to [15]
constituents and rebalances on a quarterly basis.]
[The
Reference Index is designed to provide exposure to companies that are involved
in the production, manufacturing, and enabling equipment of multi-layer ceramic
capacitors (“MLCCs”) and in companies that are involved in the broader
electronic components industry (together, “MLCC & Electronic Components
Companies”). An MLCC Company is a company that manufactures multilayer ceramic
capacitors. [Electronic Components Companies are companies principally engaged
in manufacturing capacitors (multilayer ceramic, aluminum electrolytic, film,
tantalum and polymer, silicon, and supercapacitor), chip resistors, inductors
and coils, signal transformers, and circuit-protection components.] [In
constructing the Reference Index, the Index Provider analyzes industries and
business segments within the Akros Industry Classification System (“AICS”) whose
primary classification falls within “Computer and Electronic Product
Manufacturing” or “Electrical Equipment, Appliance, and Component
Manufacturing,” together with companies whose secondary classification is
“Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing,” as
defined the Index Provider. The Index Provider next uses a qualification test to
identify companies based on any of the following qualities:
(a)
Revenue:
at least 50% of the company’s total revenue is derived from the production,
manufacturing, and enabling equipment of MLCCs and electronic components;
or
(b)
Global
scale:
the company is one of the [three] largest manufacturers of capacitors worldwide
by absolute capacitor-segment revenue.
The
Index Provider assigns each company an overall fitness rating of "high,"
"medium," or "low." A company is rated “high-fitness” if it satisfies the
qualification test (condition (a) or (b)). A company must be rated
"high-fitness" to be eligible for
inclusion
in the Reference Index. [As of [ ], “medium-fitness” and “low-fitness”
constituents are not eligible for inclusion in the Reference
Index.]
The
two largest high-fitness constituents by market capitalization are designated as
“anchors” and are each held at a fixed weight of [20%]. The remaining
high-fitness constituents are weighted by free-float-adjusted market
capitalization, subject to a [15%] cap.
The
Fund may also invest in short-term U.S. Treasury securities and short-term U.S.
Treasury ETFs, such as but not limited to the Global X 1-3 Month T-Bill ETF, a
passively managed ETF and affiliate of the Fund, to satisfy regulatory
diversification and collateral requirements.
[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 Reference Index is concentrated. As of [ ], 2026, the Reference Index
was concentrated in the electronic equipment, instruments and components
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.
The
Fund’s 80% investment policy is non-fundamental and requires 60 days prior
written notice to shareholders before it can be changed. The Fund’s investment
objective may be changed without shareholder approval upon at least 60 days
prior written notice to shareholders.
A
FURTHER DISCUSSION OF PRINCIPAL RISKS
The
Fund is subject to various risks, including the principal risks noted below, any
of which may adversely affect the Fund's NAV, trading price, yield, total return
and ability to meet its investment objective. You could lose all or part of your
investment in the Fund, and the Fund could underperform other
investments.
Active
Management Risk
The
Fund is actively managed using proprietary investment strategies and processes.
There can be no guarantee that these strategies and processes will be successful
or that the Fund will achieve its investment objective.
The performance
of the Fund will reflect, in part, the ability of the Adviser to select
investments and to make investment decisions that are suited to achieving the
Fund’s investment objective. The Adviser’s assessment of a particular
investment, company, sector or country and/or assessment of broader economic,
financial or other macro views, may prove incorrect, including because of
factors that were not adequately foreseen, and the selection of investments may
not perform as well as expected when those investments were purchased or as well
as the markets generally, resulting in Fund losses or underperformance. There
can be no guarantee that these strategies and processes will produce the
intended results and no guarantee that the Fund will achieve its investment
objective or outperform other investment strategies over the short- or long-term
market cycles. This risk is exacerbated when an investment or multiple
investments made as a result of such decisions are significant relative to the
Fund’s net assets.
Asset
Class Risk
The
returns from the types of securities and/or assets in which the Fund invests may
under-perform returns from the various general securities markets or different
asset classes. The assets may under-perform investments that track other
markets, segments, sectors or assets. Different types of assets tend to go
through cycles of out-performance and under-performance in comparison to the
general securities markets.
Depositary
Receipts Risk
The
Fund may invest in depositary receipts, such as ADRs and GDRs. Depositary
receipts, such as ADRs and GDRs, are receipts listed on U.S. or foreign
exchanges issued by banks or trust companies that entitle the holder to all
dividends and capital gains that are paid out on the underlying foreign shares.
ADRs are certificates that evidence ownership of shares of a foreign issuer and
are alternatives to purchasing the underlying foreign securities directly in
their national markets and currencies. GDRs are certificates issued by an
international bank that generally are traded and denominated in the currencies
of countries other than the home country of the issuer of the underlying shares.
Depositary receipts are generally subject to the same risks associated with
direct investments in the securities of foreign companies. In addition, the
underlying issuers of certain depositary receipts are under no obligation to
distribute shareholder communications or pass through any voting rights with
respect to the deposited securities to the
holders
of such receipts. A holder of a depositary receipt may therefore receive less
timely information or have less control than if it invested directly in the
foreign issuer. Certain countries may limit the ability to convert depositary
receipts into the underlying foreign securities and vice versa, which may cause
the securities of the foreign company to trade at a discount or premium to the
market price of the related depositary receipts. A holder of depositary receipts
may also be subject to fees and the credit risk of the financial institution
acting as depositary. Unsponsored depositary receipts may involve higher
expenses, fewer shareholder rights, and may be less liquid. Additionally, the
issuers of unsponsored depositary receipts are not obligated to disclose
information that would be considered material in the U.S. Therefore, there may
be less information available regarding these issuers and there may not be a
correlation between such information and the market value of the depositary
receipts.
Derivatives
Risk
The
Fund will invest in derivative instruments. Derivatives (e.g., options, futures
contracts, forwards, swaps) are instruments the value of which is derived from
that of other assets, rates, or indices. Adverse price movements in a
derivatives instrument can result in a loss substantially greater than the
Fund’s initial investment in that instrument (in some cases, the potential loss
is unlimited). Investments in derivatives expose the Fund to counterparty risk
(the risk that the derivative counterparty will not fulfill its contractual
obligations), including credit risk of the derivative counterparty, and
settlement risk (the risk faced when one party to a transaction has performed
its obligations under a contract but has not yet received value from its
counterparty).
Some derivatives are more sensitive to interest rate
changes and market price fluctuations than other securities. Further, the market
for certain derivatives may become illiquid under adverse market or economic
conditions independent of any specific adverse changes in the conditions of a
particular issuer. The possible lack of a liquid secondary market for
derivatives and the resulting inability of the Fund to sell or otherwise close a
derivatives position could expose the Fund to losses and could make derivatives
more difficult for the Fund to value accurately. If the Fund needed to sell a
large block of illiquid securities to meet shareholder redemption request or to
raise cash, these sales could further reduce the securities’ prices and
adversely affect performance of the Fund. Derivatives are usually traded on
margin, which may subject the Fund to margin calls. Margin calls may force the
Fund to liquidate assets.
The Fund’s investments in derivatives may have
uncertain tax implications for the Fund and the Fund may be unable to close out
certain hedged positions to avoid adverse tax consequences. The use of
derivatives exposes the Fund to operational risks, such as documentation and
settlement issues, systems failures, inadequate controls and human error.
Equity
Securities Risk
The
Fund may invest in equity securities, which are subject to changes in value that
may be attributable to market perception of a particular issuer, general stock
market fluctuations, or as a result of such factors as a company’s business
performance, investor perceptions, stock market trends and general economic
conditions. For example, the value of a company’s common stock may fall solely
because of factors that negatively impact other companies in the same region,
industry or sector of the market. A company’s common stock also may decline
significantly in price over a short period of time due to factors specific to
that company, including decisions made by its management or lower demand for the
company’s products or services. Investments in equity securities may be more
volatile than investments in other asset classes.
ETF
Investment Risk
The
Fund may hold ETFs to gain exposure to certain asset classes. As a result, the
Fund may be subject to the same risks as the underlying ETFs.
An
underlying ETFs that seeks to track an underlying index may experience tracking
error in relation to the index, or a lack of liquidity may result in an
underlying ETF’s 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. Further, an underlying ETF's shares may trade at a
premium or discount to NAV.
Underlying
ETFs in which the Fund invests may be non-diversified under the Investment
Company Act of 1940 (“1940 Act”). This means that there is no restriction under
the 1940 Act on how much an underlying ETF may invest in the securities of a
single issuer. Therefore, the value of an underlying ETF’s shares may be
volatile and fluctuate more than shares of a diversified fund that invests in a
broader range of securities. In addition, the Fund or underlying ETFs may hold
common portfolio positions, thereby reducing any diversification benefits of the
underlying ETFs.
Investments
in the securities of an underlying ETF may also involve the duplication of
advisory fees and certain other expenses. The Fund will pay brokerage
commissions in connection with the purchase and sale of shares of underlying
ETFs, which could result in greater expenses to the Fund.
A
complete list of each underlying ETF held by the Fund can be found daily on the
Trust’s website.
U.S.
Treasury Obligations Risk
A
security backed by the U.S. Treasury or the full faith and credit of the United
States is guaranteed only as to the timely payment of interest and principal
when held to maturity. Investments in debt securities are generally affected by
changes in prevailing interest rates and the creditworthiness of the issuer.
Prices of U.S. Treasury securities fall when prevailing interest rates rise.
Price fluctuations of longer-term U.S. Treasury securities are greater than
price fluctuations of shorter-term U.S. Treasury securities and may be as great
as price fluctuations of common stock. The Fund’s yield on investments in U.S.
Treasury securities will fluctuate as the Fund is invested in U.S. Treasury
securities with different interest rates. Notwithstanding that U.S. Treasury
obligations are backed by the full faith and credit of the United States,
circumstances could arise that could prevent the timely payment of interest or
principal, such as reaching the legislative "debt ceiling”. A high national debt
level could increase market pressures to meet government funding needs, which
may drive debt higher. In addition, a high national debt level raises concerns
that the U.S. government will not be able to make principal or interest payments
when they are due. Similar to other issuers, changes to the financial condition
or credit rating of the U.S. government may cause the value of the Fund's
investments in U.S. Treasury obligations to decline. In addition, uncertainty in
regard to the U.S. debt ceiling may increase the volatility in U.S. Treasury
obligations and can heighten the potential for a credit rating downgrade, which
could have an adverse effect on the value of the Fund’s U.S. Treasury
obligations.
Associated
Risks Related to Investing in MLCC & Electronic Components
Companies
The
Fund invests in MLCC & Electronic Components Companies, which are companies
principally engaged in manufacturing capacitors (multilayer ceramic, aluminum
electrolytic, film, tantalum and polymer, silicon, and supercapacitor), chip
resistors, inductors and coils, signal transformers, and circuit-protection
components.
MLCC & Electronic Components Companies may be subject to
rapid changes in technology, intense competition, government regulation and
evolving regulatory requirements, and obsolescence risk. Securities of such
companies may be subject to greater price volatility than securities of
companies involved in other business activities, particularly over the short
term, due to competitive pressures, cyclical demand patterns, changes in the
regulatory environment, and shifts in supply and demand dynamics. Many MLCC
& Electronic Components Companies operate in capital-intensive manufacturing
segments that require significant ongoing investment in production capacity,
advanced materials, and process technology, making them particularly sensitive
to fluctuations in end-market demand and capacity utilization rates.
There is no guarantee that any particular manufacturing process,
materials platform, or packaging technology will maintain its competitive
position or prove commercially viable over the long term. MLCC & Electronic
Components Companies may be dependent upon a limited number of large customers,
particularly original equipment manufacturers and contract electronics
manufacturers, and the loss of, or a significant reduction in orders from, any
such customer could have a disproportionate impact on revenues. Businesses in
this industry also face risks from fluctuating raw material prices, shortages of
critical inputs such as semiconductors and rare earth elements, and reliance on
contract manufacturers or overseas suppliers. The industry is also subject to
evolving regulatory requirements, including trade restrictions, export controls,
and environmental standards, which may increase costs or limit market access.
Additionally, the growth and profitability of MLCC & Electronic Components
Companies may be contingent upon the broader adoption of artificial
intelligence, high-performance computing, 5G and advanced telecommunications
infrastructure, electric vehicles, and advanced semiconductor packaging
technologies. A slowdown or disruption in the growth of related sectors, or a
shift in industry standards, supply chain configurations, or trade
policies—including tariffs, export controls, or restrictions on the sourcing of
critical raw materials—could materially and adversely affect the revenues and
profitability of MLCC & Electronic Components Companies in which the Fund
invests. Certain companies included in the Fund’s portfolio may be engaged in
other lines of business unrelated to the development of MLCC and Electronic
Components, and these lines of business could adversely affect their operating
results despite a company’s possible success in activities linked to MLCC and
Electronic Components lines of business.
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 adapt more slowly to new competitive challenges and changing
market conditions than smaller capitalization companies. In addition,
large-capitalization companies may be more mature and subject to more limited
growth potential and consequently may underperform other segments of the equity
market or the market as a whole. Large-capitalization stocks tend to go through
cycles of doing better - or worse - than the stock market in general.
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. These securities may have returns that vary, sometimes significantly,
from the overall securities market.
Small-Capitalization
Companies Risk
Small-capitalization
companies often have greater price volatility, lower trading volume and less
liquidity than larger, more established companies. In addition, these companies
are often subject to less analyst coverage and may be in early and less
predictable periods of their corporate existences. These companies tend to have
smaller revenues, narrower product lines, less management depth and experience,
smaller shares of their product or service markets, fewer financial resources
and less competitive strength than larger companies. These securities may have
returns that vary, sometimes significantly, from the overall securities
market.]
Cash
Transaction Risk
Unlike
most ETFs, the Fund intends to effect a significant portion of creations and
redemptions for cash, rather than in-kind securities. As a result, an investment
in the Fund may be less tax-efficient than an investment in a more conventional
ETF. Because the Fund currently intends to effect redemptions for cash, rather
than in-kind distributions, it may be required to sell portfolio securities in
order to obtain the cash needed to distribute redemption proceeds. If the Fund
recognizes gain on these sales, this generally will cause the Fund to recognize
gain it might not otherwise have recognized, or to recognize such gain sooner
than would otherwise be required if it were to distribute portfolio securities
in-kind. The Fund generally intends to distribute these gains to shareholders to
avoid being taxed on this gain at the Fund level and otherwise comply with the
special tax rules that apply to it. This strategy may cause shareholders to be
subject to tax on gains they would not otherwise be subject to, or at an earlier
date than, if they had made an investment in a different ETF. Moreover, cash
transactions may have to be carried out over several days if the securities
market is relatively illiquid and may involve the Fund recognizing a capital
gain and/or incurring considerable brokerage fees and taxes. These factors may
result in wider spreads between the bid and the offered prices of the Fund’s
Shares than for more conventional ETFs. To the extent that the maximum
additional variable charge for cash creation or cash redemption transactions is
insufficient to cover the transaction costs of purchasing or selling portfolio
securities, the Fund’s performance could be negatively impacted. Additionally,
to the extent that brokerage or other costs are costs or taxable gains or losses
that the Fund might not offset by transaction fees, such costs may be borne by
the Fund and result in a decrease in the value of the Fund.
Currency
Risk
The
Fund may invest in securities denominated in foreign currencies. Foreign
currencies are subject to risks, which include changes in the debt level and
trade deficit of the country issuing the foreign currency; inflation rates
and/or interest rates of the United States and the country issuing the foreign
currency; government involvement in and influence over currency markets; and
global or regional political, economic or financial events.
Foreign
exchange rates may also be influenced by: changing supply and demand for a
particular currency; monetary policies of governments (including exchange
control programs, restrictions on local exchanges or markets and limitations on
foreign investment in a country or on investment by residents of a country in
other countries); changes in balances of payments and trade; trade restrictions;
and currency devaluations and revaluations. The resulting volatility in the
USD/foreign currency exchange rate could materially and adversely affect the
performance of the Fund.
Generally, an increase in the value of the U.S.
dollar against a foreign currency will reduce the value of a security
denominated
in
that foreign currency, thereby decreasing the Fund's NAV.
Custody
Risk
Custody
risk refers to risks in the process of clearing and settling trades and in the
holding of securities by local banks, agents and depositories. These risks are
heightened in jurisdictions with less developed markets or less robust
settlement and custody infrastructure and processes, and they may result in
losses or delays in payments, delivery or recovery of money or other assets. Low
trading volumes and volatile prices in less developed markets make trades harder
to complete and settle. Governments or trade groups may compel local agents to
hold securities in designated depositories that are subject to independent
evaluation. Local agents are held only to the standards of care of their local
markets, and may be subject to limited or no government oversight. Generally,
the less developed a country’s securities market, the greater the likelihood of
custody problems occurring.
Cybersecurity
Risk
With
the increased use of technologies such as the Internet to conduct business, the
Fund, like all companies, may be susceptible to operational, information
security and related risks. Cybersecurity incidents involving the Fund,
Authorized Participants, or service providers (including, without limitation,
the Adviser, fund accountant, custodian, transfer agent and financial
intermediaries) have the ability to cause disruptions and impact business
operations, potentially resulting in financial losses, impediments to trading,
the inability of Fund shareholders to transact business, violations of
applicable privacy and other laws, regulatory fines, penalties, reputational
damage, reimbursement or other compensation costs, and/or additional compliance
costs.
Cybersecurity
incidents can result from deliberate cyberattacks or unintentional events and
may arise from external or internal sources. Cyber attacks may include infection
by malicious software or gaining unauthorized access to digital systems,
networks or devices that are used to service the Fund’s operations (e.g., by
“hacking” or “phishing”). Cyber attacks may also be carried out in a manner that
does not require gaining unauthorized access, such as causing denial-of-service
attacks on websites (i.e., efforts to make network services unavailable to
intended users). In addition, cyber-attacks may render records of Fund assets
and transactions, shareholder ownership of Fund Shares, and other data integral
to the functioning of the Fund inaccessible or inaccurate or incomplete.
Substantial costs may be incurred by the Fund in order to resolve or prevent
cyber incidents in the future. While the Fund has established business
continuity plans in the event of, and risk management systems to prevent, such
cyber-attacks, there are inherent limitations in such plans and systems,
including the possibility that certain risks have not been identified and that
prevention and remediation efforts will not be successful. Furthermore, the Fund
cannot control the cyber security plans and systems put in place by service
providers to the Fund, issuers in which the Fund invests, market makers or
Authorized Participants.
Similar
adverse consequences could result from cybersecurity incidents affecting issuers
of securities in which the Fund invests, counterparties with which the Fund
engages, governmental and other regulatory authorities, exchanges and other
financial market operators, banks, brokers, dealers, insurance companies, other
financial institutions and other parties. In addition, substantial costs may be
incurred in order to prevent any cybersecurity incidents in the future. Although
the Fund’s service providers may have established business continuity plans and
risk management systems to mitigate cybersecurity risks, there can be no
guarantee or assurance that such plans or systems will be effective, or that all
risks that exist, or may develop in the future, have been completely anticipated
and identified or can be protected against. The Fund and its shareholders could
be negatively impacted as a result.
The
rapid development and increasingly widespread use of artificial intelligence
technologies could increase the effectiveness of cyber attacks and exacerbate
the risks.
Focus
Risk
The
Fund may be susceptible to an increased risk of loss, including losses due to
events that adversely affect the Fund’s investments more than the market as a
whole, to the extent that the Fund's investments are focused in the securities
of a particular issuer or issuers within the same market, asset class, industry,
group of industries, or one or more sectors. In such event, the Fund’s
performance will depend to a greater extent on the overall condition of such
market, asset class, industry(ies) or sector(s), and an economic, business,
political, regulatory, or other occurrence affecting these such market, asset
class, industry(ies) or sector(s) will have an increased impact on the value of
the Fund’s shares compared to the value of shares of a fund that invests more
broadly.
Risks
Related to Investing in the Electronic Equipment, Instruments and Components
Industry
The
electronic equipment, instruments and components industry is intensely
competitive, and prices for existing products tend to decrease over their life
cycle. Companies must continue to develop new products and technology to remain
competitive and are therefore dependent on hiring and retailing key personnel.
Companies typically face high fixed operating costs while also being subject to
fluctuations in the cost of raw materials.
Foreign
Securities Risk
Investments
in foreign securities can be riskier than U.S. securities investments.
Investments in the securities of foreign issuers (including investments in
American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”))
are subject to additional risks, including, but not limited to: lower levels of
liquidity and market efficiency; greater securities price volatility; exchange
rate fluctuations and exchange controls; less availability of public information
about issuers; limitations on foreign ownership of securities; imposition of
withholding or other taxes; imposition of restrictions on the expatriation of
the assets of the Fund; restrictions placed on U.S. investors by U.S.
regulations governing foreign investments; higher transaction and custody costs
and delays in settlement procedures; difficulties in enforcing contractual
obligations; lower levels of regulation of the securities market; weaker
accounting, disclosure and reporting requirements; and legal principles relating
to corporate governance and directors’ fiduciary duties and liabilities. The
countries in which the Fund invests may also be subject to structural risks,
including economic, political and social instability. Additionally, certain
securities held by the Fund, while traded on U.S. exchanges, may be issued by
foreign financial institutions and as such, may be subject to the risks of
investing in securities issued by foreign companies, which may not be subject to
the same regulations as companies domiciled in the U.S. Shareholder rights under
the laws of some foreign countries may not be as favorable as U.S. laws. Thus, a
shareholder may have more difficulty in asserting its rights or enforcing a
judgment against a foreign company than a shareholder of a comparable U.S.
company. Where all or a portion of the Fund's underlying securities trade in a
market that is closed when the market in which the Fund's Shares are listed and
trading is open, there may be differences between the last quote from the
security’s closed foreign market and the value of the security during the Fund’s
domestic trading day. This in turn could lead to differences between the market
price of the Fund’s Shares and the underlying value of those shares.
Foreign
issuers may not be subject to uniform accounting, auditing and financial
reporting standards and there may be less reliable and publicly available
financial and other information about such issuers, as compared to U.S. issuers.
Certain countries’ legal institutions, financial markets, and services are less
developed than those in the U.S. or other major economies. The Fund may have
greater difficulty voting proxies, exercising shareholder rights, securing
dividends and obtaining information regarding corporate actions on a timely
basis, pursuing legal remedies, and obtaining judgments with respect to foreign
investments in foreign courts than with respect to domestic issuers in U.S.
courts. Countries in which the Fund may invest have experienced security
concerns, such as war and other types of conflict, terrorism, strained
international relations and territorial disputes. Incidents involving a
country's or region's security may cause uncertainty in the markets, including
short term market volatility, and may adversely affect the economy and the
Fund's investments.
Geographic
Risk
Geographic
risk is the risk that the Fund’s assets may be focused in countries located in
the same geographic region. This investment focus will subject the Fund to risks
associated with that particular region, or a region economically tied to that
particular region, such as a natural, biological, or other disasters and the
spread of infectious diseases. The Fund may invest in countries or regions with
economies that are heavily dependent upon trading with key partners. Any
reduction in this trading may cause an adverse impact on the economy in which
the Fund invests and on the Fund’s investments. The countries in which the Fund
invests may be subject to considerable degrees of economic, political and social
instability. Additionally, countries in which the Fund may invest have
experienced security concerns, which may cause uncertainty in the markets and
may adversely affect the economy and the Fund’s investments. As a result, an
economic downturn, social or political unrest, or government restrictions on
international trade, among other things, in one or more of these regions may
impact the performance of the constituents in which the Fund invests, even if
the Fund does not invest directly in companies located in such region.
The
securities in which the Fund invests and, consequently, the Fund is also subject
to specific risks as a result of their business operations a particular country
or region, including, but not limited to:
Risk
of Investing in Developed Markets
Investments
in a developed country’s issuers may subject the Fund to legal, regulatory,
political, currency, security, and economic risk specific to developed
countries. Developed countries generally tend to rely on services sectors (e.g.,
the financial services sector) as the primary means of economic growth. A
prolonged slowdown in one or more services sectors is likely to have a negative
impact on economies of certain developed countries, although economies of
individual developed countries can be impacted by slowdowns in other sectors. In
the past, certain developed
countries
have been targets of terrorism, and some geographic areas in which the Fund
invests have experienced strained international relations due to territorial
disputes, historical animosities, defense concerns and other security concerns.
These situations may cause uncertainty in the financial markets in these
countries or geographic areas and may adversely affect the performance of the
issuers to which the Fund has exposure. Heavy regulation of certain markets,
including labor and product markets, may have an adverse effect on certain
issuers. Such regulations may negatively affect economic growth or cause
prolonged periods of recession. Many developed countries are heavily indebted
and face rising healthcare and retirement expenses. In addition, price
fluctuations of certain commodities and regulations impacting the import of
commodities may negatively affect developed country economies. Developed
countries may also be impacted by changes to the economic conditions of certain
key trading partners or the imposition of tariffs by or on trading partners.
Risk
of Investing in Emerging Markets
The
securities markets of emerging market countries may be less liquid, subject to
greater price volatility, have smaller market capitalizations, have less
government regulation and not be subject to as extensive and frequent
accounting, financial and other reporting requirements as the securities markets
of more developed countries. Issuers and securities markets in emerging markets
are generally not subject to as extensive and frequent accounting, financial and
other reporting requirements or as comprehensive government regulations as are
issuers and securities markets in the developed markets. Substantially less
information may be publicly available about emerging market issuers than is
available about issuers in developed markets. It may be difficult or impossible
for the Fund to pursue claims against an emerging market issuer in the courts of
an emerging market country. There may be significant obstacles to obtaining
information necessary for investigations into or litigation against emerging
market companies and shareholders may have limited legal rights and
remedies.
Emerging markets typically are classified as such by lacking
one or more of the following characteristics: sustainability of economic
development, large and liquid securities markets, openness to foreign ownership,
ease of capital inflows and outflows, efficiency of the market’s operational
framework, and/or stability of the institutional framework. The Fund’s purchase
and sale of portfolio securities in certain emerging market countries may be
constrained by limitations relating to daily changes in the prices of listed
securities, periodic trading or settlement volume and/or limitations on
aggregate holdings of foreign investors. Such limitations may be computed based
on the aggregate trading volume by or holdings of the Fund, the Adviser, its
affiliates and their respective clients and other service providers. The Fund
may not be able to sell securities in circumstances where price, trading or
settlement volume limitations have been reached.
Foreign investment in
the securities markets of certain emerging market countries is restricted or
controlled to varying degrees, which may limit investment in such countries or
increase the administrative costs of such investments. Emerging market
securities also are subject to the risks of expropriation, nationalization or
other adverse political or economic developments and the difficulty of enforcing
obligations in other countries. Investments in emerging market securities also
may be subject to dividend withholding or confiscatory taxes, currency blockage
and/or transfer restrictions and higher transactional costs. In addition,
emerging markets often have greater risk of capital controls through such
measures as taxes or interest rate control than developed markets. Certain
emerging market countries may also lack the infrastructure necessary to attract
large amounts of foreign trade and investment. Chronic structural public sector
deficits in some countries may adversely impact a Fund’s
investments.
Many emerging market countries have experienced currency
devaluations, substantial (and, in some cases, extremely high) rates of
inflation, and economic recessions. These circumstances have had a negative
effect on the economies and securities markets of those emerging market
countries. Economies in emerging market countries generally are dependent upon
international trade and may be affected adversely by the economies of their
trading partners, trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. As a result, emerging market countries
are particularly vulnerable to downturns of the world economy.
Many
emerging market countries are subject to a substantial degree of economic,
political and social instability. Emerging markets may also face other
significant internal or external risks, including the risk of war, terrorism,
border disputes, or other social or political conflicts. Unanticipated
political, social, and public health developments may cause uncertainty in the
markets and/or result in sudden and significant investment losses that adversely
affect the performance of these economies. These developments may result in
increased market volatility, disruptions to business operations and supply
chains, and restrictions on travel.
As a result of heightened
geopolitical tensions, various countries have imposed economic sanctions,
imposed non-trade barriers and renewed existing economic sanctions on certain
emerging markets and on issuers within those markets.
These
non-trade barriers consist of prohibiting certain securities trades, prohibiting
certain private transactions in certain sectors and with respect to certain
companies, asset freezes, and prohibition of all business, against certain
individuals and companies. These actions, any future sanctions or other actions,
or even the threat of further sanctions or other actions, may negatively affect
the value and liquidity of the Fund’s investments. In addition, sanctions may
require the Fund to freeze its existing investments, prohibiting the Fund from
buying, selling or otherwise transacting in these investments. Also, if an
affected security is included in the Fund's Underlying Index, the Fund may,
where practicable, seek to eliminate its holdings of the affected security by
employing or augmenting its representative sampling strategy to seek to track
the investment results of the Underlying Index. Additionally, lack of relevant
data and reliable public information, including financial information, about
securities in emerging markets may contribute to incorrect weightings and data
and computational errors. The use of (or increased use of) a representative
sampling strategy may increase the Fund’s tracking error risk. Actions barring
some or all transactions with a specific company will likely have a substantial,
negative impact on the value of such company’s securities. These sanctions may
also lead to changes in the Fund’s Underlying Index. The Fund’s index provider
may remove securities from the Underlying Index or implement caps on the
securities of certain issuers that have been subject to recent economic
sanctions. In such an event, it is expected that the Fund will rebalance its
portfolio to bring it in line with its Underlying Index as a result of any such
changes, which may result in transaction costs and increased tracking error. The
Fund’s investment in emerging market countries may also be subject to
withholding or other taxes, which may be significant and may reduce the return
to the Fund from an investment in such countries.
Settlement and
clearance procedures in emerging market countries are frequently less developed
and reliable than those in the United States and may involve the Fund’s delivery
of securities before receipt of payment for their sale. In addition, significant
delays may occur in certain markets in registering the transfer of securities.
Settlement, clearance or registration problems may make it more difficult for
the Fund to value its portfolio securities and could cause the Fund to miss
attractive investment opportunities, to have a portion of its assets uninvested
or to incur losses due to the failure of a counterparty to pay for securities
the Fund has delivered or the Fund’s inability to complete its contractual
obligations because of theft or other reasons.
Risk
of Investing in Japan
Investments
in Japanese issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks specific to Japan. Japan’s economic
growth rate has generally remained low relative to other advanced economies, and
it may continue to remain low. Japan’s economy is heavily dependent on
international trade and government policy supporting its export market and has
been affected by trade tariffs and competition from emerging economies. As such,
economic growth is heavily dependent on continued growth in international trade,
relatively low commodities prices, government support of the financial services
sector, and other government policies. Any changes or trends in these economic
factors could have a significant impact on Japanese markets overall and may
negatively affect the Fund’s investments. Other risks to Japan’s economic growth
and competitiveness include significant public debt and deficits as well as
labor shortages due to an aging and declining population. Japan’s economy and
equity market also share a strong correlation with U.S. markets, and the
Japanese economy may be affected by economic problems in the U.S. Additionally,
despite a strengthening in the economic relationship between Japan and China,
the countries’ political relationship has at times been strained. Should
political tension increase, it could adversely affect the economy and
destabilize the region as a whole. Additionally, escalated tensions involving
North Korea and any outbreak of hostilities involving North Korea could have a
severe adverse effect on Japan’s economy. Japan is also heavily dependent on oil
and other commodity imports, and higher commodity prices could therefore have a
negative impact on the Japanese economy.
Japan is located in a part of
the world that has historically been prone to natural disasters such as
earthquakes, volcanoes and tsunamis, and is economically sensitive to
environmental events. Any such event could result in a significant adverse
impact on the Japanese economy.
Currency fluctuations also could
adversely impact Japan’s export market and its economy. If the Japanese
government were to intervene in the currency market, as it has in the past, the
value of the yen could fluctuate sharply and unpredictably, which could cause
losses to investors.
Risk
of Investing in South Korea
Investments
in South Korean issuers may subject the Fund to legal, regulatory, political,
currency, security, and economic risks specific to South Korea. Substantial
political tensions exist between North Korea and South Korea. Escalated tensions
involving the two nations and the outbreak of hostilities between the two
nations, or even the threat of an outbreak of hostilities, could have a severe
adverse effect on the South Korean economy. In addition, South
Korea’s
economic performance is subject to risks arising from a rapidly aging workforce,
lagging productivity, and structural problems. The South Korean economy is
heavily reliant on trading exports, especially from other Asian countries and
the U.S., and disruptions or decreases in trade activity could lead to further
economic declines. The South Korean economy’ s dependence on the economies of
Asia and the U.S. means that a reduction in spending by these economies on South
Korean products and services or negative changes in any of these economies may
cause an adverse impact on the South Korean economy and therefore, on the Fund’s
investments.
Risk
of Investing in Taiwan
Investments
in Taiwanese issuers may subject the Fund to legal, regulatory, political,
currency and economic risks that are specific to Taiwan. Specifically, Taiwan’s
geographic proximity and history of political contention with China have
resulted in ongoing tensions between the two countries. These tensions may
materially affect the Taiwanese economy and its securities market. These
tensions may evolve into a military conflict between China and Taiwan, with
potential participation by other regional powers such as the US and Japan.
Taiwan’s lack of formal recognition by most countries around the world leaves
its legal status ambiguous and often prevents Taiwan from membership in
international organizations. The establishment of diplomatic ties between Taiwan
and another country could result in both Taiwan and that country facing economic
or diplomatic retaliation from China. Taiwan’s economy is export-oriented, so it
depends on an open world trade regime and remains vulnerable to fluctuations in
the world economy. Rising labor costs and increasing environmental consciousness
have led some labor-intensive industries to relocate to countries with cheaper
work forces, and continued labor outsourcing may adversely affect the Taiwanese
economy.
[International
Closed Market Trading Risk
To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other ETFs.]
Investable
Universe of Companies Risk
The
investable universe of companies in which the Fund may invest may be limited. If
a company no longer meets the Index Provider’s criteria for inclusion in the
Underlying Index, the Fund may need to reduce or eliminate its holdings in that
company. The reduction or elimination of the Fund’s holdings in the company may
have an adverse impact on the liquidity of the Fund’s overall portfolio holdings
and on Fund performance.
Issuer
Risk
Issuer
risk is the risk that any of the individual companies that the Fund invests in
may perform badly, causing the value of its securities to decline. Poor
performance may be caused by poor management decisions, competitive pressures,
changes in technology, disruptions in supply, labor problems or shortages,
corporate restructurings, fraudulent disclosures or other factors. Issuers may,
in times of distress or on their own discretion, decide to reduce or eliminate
dividends, which would also cause their stock prices to decline.
Liquidity
Risk
Liquidity
risk exists when the markets for particular securities or types of securities or
other investments are or become relatively illiquid, making it difficult or
impossible for the Fund to dispose of the security or investment. Illiquidity
may result from political, economic or issuer specific events; supply/demand
imbalances; changes in a specific market’s size or structure; or overall market
disruptions. Investments in securities or other assets with reduced liquidity or
that become illiquid may involve greater risk than securities with more liquid
markets. Market prices or quotations for illiquid securities may be volatile,
and there may be large spreads between bid and ask prices. Reduced liquidity may
have an adverse impact on market price of particular securities and may
adversely affect the Fund’s ability to sell those securities when necessary to
meet the Fund’s liquidity needs. To the extent that the Fund and its affiliates
hold a significant portion of an issuer’s outstanding securities, the Fund may
be subject to greater liquidity risk than if the issuer’s securities were more
widely held.
Market
Risk
Market
risk is the risk that the value of the securities in which the Fund invests may
go up or down in response to the prospects of individual issuers and/or general
economic conditions. Turbulence in the financial markets and reduced liquidity
may negatively affect issuers, which could have an adverse effect on the Fund
and its investments. The Fund’s NAV could decline over short periods due to
short-term market movements and over longer periods during market downturns.
Policy changes by central governments and governmental agencies, including the
Federal Reserve or the European Central Bank, 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. Trade
policy, including the imposition of tariffs, may dampen consumer spending and
result in decreased confidence in the markets. Additionally, political
uncertainty regarding U.S. policy, including the U.S. government’s approach to
trade, may also impact the markets. Furthermore, local, regional or global
events such as war, acts of terrorism, the spread of infectious diseases,
inflation and recessions, changes in interest or exchange rates, or other events
could have a significant impact on the Fund and its investments and trading of
its Shares. Market risk factors may result in increased volatility and/or
decreased liquidity in the securities markets.
New
Fund Risk
The
Fund is a new fund, with limited or no operating history, which may result in
additional risks for investors in the Fund. There can be no assurance that the
Fund will grow to or maintain an economically viable size, in which case the
Board of Trustees may determine to liquidate the Fund. While shareholder
interests will be the paramount consideration, the timing of any liquidation may
not be favorable to certain individual shareholders. From time to time an
Authorized Participant, a third-party investor, the Adviser or another affiliate
of the Adviser or the Fund may invest in the Fund and hold its investment for a
specific period of time in order to facilitate commencement of the Fund’s
operations or for the Fund to achieve size or scale. There can be no assurance
that any such entity would not redeem its investment or that the size of the
Fund would be maintained at such levels which could negatively impact the
Fund.
Non-Diversification
Risk
The
Fund is classified as a “non-diversified” investment company under the 1940 Act.
This means that the Fund may invest a greater portion of its assets in
securities of individual issuers as compared to a diversified fund. As a result,
the Fund may be more susceptible to the risks associated with these particular
issuers, or to a single economic, business, political, regulatory, or other
occurrence affecting these issuers, which may negatively impact the Fund’s
performance and result in greater fluctuation in the value of the Fund’s
shares.
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, cybersecurity incidents, and technology or systems
failures. Disruptions of the systems of the Adviser and the Fund’s distributor
and other service providers (including, but not limited to, fund accountants,
custodians, transfer agents and administrators), market makers, Authorized
Participants, or the issuers of securities in which the Fund invests, have the
ability to cause disruptions and impact business operations, potentially
resulting in: financial losses, interference with the Fund’s ability to
calculate its NAV, disclosure of confidential trading information, impediments
to trading, submission of erroneous trades or erroneous creation or redemption
orders, the inability of the Fund or its service providers to transact business,
violations of applicable privacy and other laws, regulatory fines, penalties,
reputational damage, reimbursement or other compensation costs, or additional
compliance costs. While the Fund has established business continuity plans in
the event of, and risk management systems to prevent, technological or other
disruptions to the Fund’s operations, there are inherent limitations in such
plans and systems, including the possibility that certain risks have not been
identified and that prevention and remediation efforts will not be successful.
Furthermore, the Fund cannot control the cyber security plans and systems put in
place by service providers to the Fund, issuers in which the Fund invests,
market makers or Authorized Participants. The Fund and its shareholders could be
negatively impacted as a result. The Fund and the Adviser seek to reduce these
operational risks through controls and procedures. However, these measures do
not address every possible risk and may be inadequate for those risks that they
are intended to address.
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. Only Authorized Participants who have entered into agreements with
the Fund's distributor may engage in creation or redemption
transactions
directly with the Fund, and none of those Authorized Participants is obligated
to engage in creation and/or redemption transactions. To the extent that those
Authorized Participants exit the business or are unable to process creation
and/or redemption orders, such as in times of market stress, and no other
Authorized Participant is able to step forward to create and redeem in either of
those cases, Shares may trade like closed-end fund shares at a discount to NAV
and/or at wider intraday bid-ask spreads, and may possibly face trading halts
and/or delisting from the Fund's exchange. Authorized Participants Concentration
Risk may be heightened because the Fund invests in non-U.S. securities.
Large
Shareholder Risk
Certain
shareholders, including an Authorized Participant, the Adviser, an affiliate of
the Adviser, or funds managed by the Adviser, may own a substantial amount of
the Fund’s Shares. Additionally, from time to time an Authorized Participant, a
third-party investor, the Adviser, or an affiliate of the Adviser may invest in
the Fund and hold its investment for a specific period of time in order to
facilitate commencement of the Fund’s operations or to allow the Fund to achieve
size or scale. There can be no assurance that any large shareholder would not
redeem its investment. These large redemptions may force the Fund to sell
portfolio securities or other assets when it might not otherwise do so, which
may negatively impact the Fund’s NAV, increase the Fund’s brokerage costs and/or
have a material effect on the market price of Fund. Redemptions by large
shareholders could have a significant negative impact on the Fund. If a large
shareholder were to redeem all, or a large portion, of its Shares, there is no
guarantee that the Fund will be able to maintain sufficient assets to continue
operations in which case the Board of Trustees may determine to liquidate the
Fund. In addition, transactions by large shareholders may account for a large
percentage of the trading volume on the Fund's exchange and may, therefore, have
a material upward or downward effect on the market price of the
Shares.
Listing
Standards Risk
The
Fund is required to comply with listing requirements adopted by the listing
exchange. Non-compliance with such requirements may result in the Fund's Shares
being delisted by the listing exchange. Any resulting liquidation of the Fund
could cause the Fund to incur elevated transaction costs and could result in
negative tax consequences for its shareholders.
Market
Trading Risks and Premium/Discount Risks
Absence
of Active Market
Although
Shares of the Fund are or will be listed for trading on a U.S. exchange and may
be listed on certain foreign exchanges, there can be no assurance that an active
trading market for the Shares will develop or be maintained.
Risks
of Secondary Listings
The
Fund's Shares may be listed or traded on U.S. and non-U.S. exchanges other than
the U.S. exchange where the Fund’s primary listing is maintained. There can be
no assurance that the Fund’s Shares will continue to trade on any such exchange
or in any market or that the Fund's Shares will continue to meet the
requirements for listing or trading on any exchange or in any market. The Fund's
Shares may be less actively traded in certain markets than others, and investors
are subject to the execution and settlement risks and market standards of the
market where they or their brokers direct their trades for execution. Certain
information available to investors who trade Shares on a U.S. exchange during
regular U.S. market hours may not be available to investors who trade in other
markets, which may result in secondary market prices in such markets being less
efficient.
Secondary
Market Trading Risk
Only
Authorized Participants who have entered into agreements with the Fund's
distributor may engage in creation or redemption transactions directly with the
Fund. Shares of the Fund may trade in the secondary market on days when the Fund
does not accept orders to purchase or redeem Shares from Authorized
Participants. On such days, Shares may trade in the secondary market with more
significant premiums or discounts than might be experienced on days when the
Fund accepts purchase and redemption orders. Secondary market trading in Fund
Shares may be halted by a stock exchange because of market conditions or other
reasons. In addition, trading in Fund Shares on a stock exchange or in any
market may be subject to trading halts caused by extraordinary market volatility
pursuant to "circuit breaker" rules on the stock exchange or market. During a
“flash crash,” the market prices of the Fund’s shares may decline suddenly and
significantly. Such a decline may not reflect the performance of the portfolio
securities held by the Fund. Flash crashes may cause Authorized Participants and
other market makers to limit or cease trading in the Fund’s Shares for temporary
or longer periods. Shareholders could suffer significant losses to the extent
that they sell shares at these temporarily low market prices. There can be no
assurance that the requirements necessary to maintain the listing or trading of
Fund Shares will continue to be met or will remain unchanged.
Shares
of the Fund May Trade at Prices Other Than NAV
Shares
of the Fund may trade at, above or below NAV. The per share NAV of the Fund will
fluctuate with changes in the market value of the Fund’s holdings. The trading
prices of Shares will fluctuate in accordance with changes in the Fund's NAV as
well as market supply and demand. The trading prices of the Fund's Shares may
deviate significantly from NAV during periods of market volatility or when the
Fund has relatively few assets or experiences a lower trading volume. In
stressed market conditions, the market for the Shares may become less liquid in
response to the deteriorating liquidity of the Fund’s portfolio. Any of these
factors may lead to the Fund's Shares trading at a premium or discount to NAV.
While the creation/redemption feature is designed to make it likely that Shares
normally will trade close to the Fund’s NAV, market prices are not expected to
correlate exactly with the Fund's NAV due to timing reasons as well as market
supply and demand factors. In addition, disruptions to creations and redemptions
or the existence of extreme market volatility may result in trading prices that
differ significantly from NAV. If a shareholder purchases at a time when the
market price is at a premium to the NAV or sells at a time when the market price
is at a discount to the NAV, the shareholder may sustain losses. Since foreign
exchanges may be open on days when the Fund does not price Shares, the value of
the securities in the Fund’s portfolio may change on days when shareholders will
not be able to purchase or sell Shares.
Costs
of Buying or Selling Fund Shares
Buying
or selling Fund Shares involves two types of costs that apply to all securities
transactions. When buying or selling Shares of the Fund through a broker, you
will likely incur a brokerage commission or other charges imposed by brokers as
determined by that broker. In addition, you may incur the cost of the "spread" -
that is, the difference between what professional investors are willing to pay
for Fund Shares (the "bid" price) and the market price at which they are willing
to sell Fund Shares (the "ask" price). Because of the costs inherent in buying
or selling Fund Shares, frequent trading may detract significantly from
investment results and an investment in Fund Shares may not be advisable for
investors who anticipate regularly making small investments.
Swap
Agreements Risk
Swap
agreements are contracts among the Fund and a counterparty to exchange the
return of the pre-determined underlying investment (such as the rate of return
of a specified security). Swap agreements may be negotiated bilaterally and
traded over-the-counter (“OTC”) between two parties or, in some instances, must
be transacted through a futures commission merchant and cleared through a
clearinghouse that serves as a central counterparty. Risks associated with the
use of swap agreements are different from those associated with ordinary
portfolio securities transactions, due in part to the fact they could be
considered illiquid and many swaps trade on the OTC market. During periods of
market stress, reduced liquidity in OTC markets could exacerbate price
volatility and result in significant transaction costs or forced liquidation of
positions at unfavorable prices. It may not be possible for the Fund to
liquidate a swap position at an advantageous time or price, which may result in
significant losses. Swaps are particularly subject to counterparty credit,
correlation, valuation, liquidity and leveraging risks. Certain standardized
swaps are subject to mandatory central clearing. Central clearing is intended to
reduce counterparty credit risk and increase liquidity, but central clearing
does not make swap transactions risk-free. Swap agreements may involve greater
risks than direct investment in securities.
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. A high portfolio turnover rate may
result in higher taxes when Shares are held in a taxable account, including an
increase in taxable capital gains distributions to Fund shareholders, and may
lower the Fund's after-tax performance.
Valuation
Risk
The
sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security, 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). Fund securities that are valued using techniques other
than market quotations, including “fair valued” securities, may
be
subject
to greater fluctuations in their value from one day to the next than would be
the case if market quotations were used. Because non-U.S. exchanges may be open
on days when the Fund does not price its Shares, the value of the securities in
the Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's Shares.
A
FURTHER DISCUSSION OF OTHER RISKS
The
Fund may also be subject to certain other risks associated with its investments
and investment strategies.
Leverage
Risk
Under
the 1940 Act, the Fund is permitted to borrow from a bank up to 33 1/3% of its
net assets for short term or emergency purposes. The Fund may borrow money at
fiscal quarter end to maintain the required level of diversification to qualify
as a regulated investment company ("RIC") for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"). As a result, the Fund may be exposed to
the risks of leverage, which may be considered a speculative investment
technique. Leverage magnifies the potential for gain and loss on amounts
invested and therefore increases the risks associated with investing in the
Fund. If the value of the Fund's assets increases, then leveraging would cause
the Fund's NAV to increase more sharply than it would have had the Fund not
leveraged. Conversely, if the value of the Fund's assets decreases, leveraging
would cause the Fund's NAV to decline more sharply than it otherwise would have
had the Fund not leveraged. The Fund may incur additional expenses in connection
with borrowings.
Qualification
as a Regulated Investment Company Risk
The
Fund must meet a number of diversification requirements to qualify as a RIC
under Section 851 of the Code and, if qualified, to continue to qualify. If the
Fund experiences difficulty in meeting those requirements for any fiscal
quarter, it might enter into borrowings in order to increase the portion of the
Fund’s total assets represented by cash, cash items, and U.S. government
securities shortly thereafter and, as of the close of the following fiscal
quarter, to attempt to meet the requirements. However, the Fund may incur
additional expenses in connection with any such borrowings, and increased
investments by the Fund in cash, cash items, and U.S. government securities
(whether the Fund makes such investments from borrowings) are likely to reduce
the Fund’s return to investors.
Tax
Treaty Reclaims Uncertainty
When
the Fund receives dividend and interest income (if any) from issuers in certain
countries, such distributions may be subject to partial withholding by local tax
authorities in order to satisfy potential local tax obligations. The Fund may
file claims to recover such withholding tax in jurisdictions where withholding
tax reclaim is possible, which may be the case as a result of bilateral treaties
between the United States and local governments. Whether or when the Fund will
receive a withholding tax refund in the future is within the control of the tax
authorities in such countries. The receipt of a refund of withholding tax would
preclude claiming a foreign tax credit, to the extent available or applicable,
with respect to such withholding tax. Where the Fund expects to recover
withholding tax based on a continuous assessment of probability of recovery, the
NAV of the Fund generally includes accruals for such tax refunds. The Fund
continues to evaluate tax developments for potential impact to the probability
of recovery. If the likelihood of receiving refunds materially decreases, for
example due to a change in tax regulation or approach, accruals in the Fund’s
NAV for such refunds may need to be written down partially or in full, which
will adversely affect that Fund’s NAV. Investors in the Fund at the time an
accrual is written down will bear the impact of any resulting reduction in NAV
regardless of whether they were investors during the accrual period. Conversely,
if a Fund receives a tax refund that has not been previously accrued, investors
in the Fund at the time the claim is successful will benefit from any resulting
increase in the Fund’s NAV. Investors who sold their shares prior to such time
will not benefit from such NAV increase.
PORTFOLIO
HOLDINGS INFORMATION
A
description of the policies and procedures of Global X Funds®
(the "Trust") with respect to the disclosure of the Fund's portfolio securities
is available in the Fund's Statement of Additional Information ("SAI"). The top
holdings of the Fund and Fund Fact Sheets providing information regarding the
Fund's top holdings can be found at www.globalxetfs.com/explore/(click on the
name of your Fund) and may be requested by calling 1-888-493-8631.
FUND
MANAGEMENT
Investment
Adviser
Global
X Management Company LLC (the "Adviser") serves as the investment adviser and
the administrator for the Fund. Subject to the supervision of the Board of
Trustees, the Adviser is responsible for managing the investment activities of
the Fund and the Fund's business affairs and other administrative matters. The
Adviser has been a registered investment adviser since 2008. The Adviser is a
Delaware limited liability company with its principal offices located at 605 3rd
Avenue, 43rd Floor, New York, New York 10158. As of [ ], 2026, the Adviser
provided investment advisory services for assets of approximately $[ ]
billion.
Pursuant
to a Supervision and Administration Agreement and subject to the general
supervision of the Board of Trustees, the Adviser provides, or causes to be
furnished, all supervisory, administrative and other services reasonably
necessary for the operation of the Fund and also bears the costs of various
third-party services required by the Fund, including audit, certain custody,
portfolio accounting, legal, transfer agency and printing costs. The Supervision
and Administration Agreement also requires the Adviser to provide investment
advisory services to the Fund pursuant to an Investment Advisory Agreement. [The
Supervision and Administration Agreement provides that the Adviser also bears
the costs for acquired fund fees and expenses generated by investments by the
Fund in affiliated investment companies.]
The
Fund pays the Adviser a fee ("Management Fee") in return for providing
investment advisory, supervisory and administrative services under an all-in fee
structure. The Fund will pay a monthly Management Fee to the Adviser at the
annual rate set forth in the table below (stated as a percentage of the Fund's
average daily net assets).
|
|
|
|
|
|
| Fund |
Management
Fee |
|
[Global
X MLCC & Electronic Components ETF] |
[
]% |
In
addition, the Fund bears other fees and expenses that are not covered by the
Supervision and Administration Agreement, which may vary and will affect the
total expense ratio of the Fund, such as taxes, brokerage fees, commissions and
other transaction expenses, interest and extraordinary expenses (such as
litigation and indemnification expenses). The Adviser may earn a profit on the
Management Fee paid by the Fund. Also, the Adviser, and not the shareholders of
the Fund, would benefit from any price decreases in third-party services,
including decreases resulting from an increase in net assets.
The
Adviser or its affiliates may pay compensation out of profits derived from the
Adviser's Management Fee or other resources and not as an additional charge to
the Fund, to certain financial institutions (which may include banks, securities
dealers and other industry professionals) for the sale and/or distribution of
Fund Shares or the retention and/or servicing of Fund investors and Fund Shares
("revenue sharing"). These payments are in addition to any other fees described
in the fee table or elsewhere in the Prospectus or SAI. Examples of "revenue
sharing" payments include, but are not limited to, payments to financial
institutions for "shelf space" or access to a third party platform or fund
offering list or other marketing programs, including, but not limited to,
inclusion of the Fund on preferred or recommended sales lists, mutual fund
"supermarket" platforms and other formal sales programs; granting the Adviser
access to the financial institution's sales force; granting the Adviser access
to the financial institution's conferences and meetings; assistance in training
and educating the financial institution's personnel; and obtaining other forms
of marketing support. The level of revenue sharing payments made to financial
institutions may be a fixed fee or based upon one or more of the following
factors: gross sales, current assets and/or number of accounts of the Fund
attributable to the financial institution, or other factors as agreed to by the
Adviser and the financial institution or any combination thereof. The amount of
these revenue sharing payments is determined at the discretion of the Adviser,
from time to time, may be substantial, and may be different for different
financial institutions depending upon the services provided by the financial
institution. Such payments may provide an incentive for the financial
institution to make Shares of the Fund available to its customers and may allow
the Fund greater access to the financial institution's customers.
Approval
of Advisory Agreement
Discussions
regarding the basis for the Board of Trustees' approval of the Supervision and
Administration Agreement and the related Investment Advisory Agreement for the
Fund will be available in the Fund's report filed on Form N-CSR for the period
ended [May 31] or [November 30], respectively.
Portfolio
Management
The
Portfolio Managers who are currently responsible for the day-to-day management
of the Fund's portfolio are Wayne Xie and Sandy Lu.
Wayne
Xie:
Wayne Xie, Head of Portfolio Management, joined the Adviser in July 2018 as a
Portfolio Management Associate. Previously, Mr. Xie was an Analyst at VanEck
Associates on the Equity ETF Investment Management team from 2010 to 2018. Mr.
Xie received his Bachelor of Science from the State University of New York at
Buffalo in 2002.
Sandy
Lu:
Sandy Lu, CFA, Portfolio Manager, joined the Adviser in September 2021.
Previously, Mr. Lu was a Portfolio Analyst and Junior Portfolio Manager at PGIM
Fixed Income from 2014 to 2021. Mr. Lu received his Bachelor of Science in
Economics from the Wharton School of the University of Pennsylvania and is a CFA
charterholder.
The
SAI provides additional information about the Portfolio Managers' compensation
structure, other accounts managed by the Portfolio Managers, and the Portfolio
Managers' ownership of Shares of the Fund.
DISTRIBUTOR
SEI
Investments Distribution Co. ("Distributor") distributes Creation Units for the
Fund on an agency basis. The Distributor does not maintain a secondary market in
Shares. The Distributor has no role in determining the policies of the Fund or
the securities that are purchased or sold by the Fund. The Distributor's
principal address is One Freedom Valley Drive, Oaks, PA 19456. The Distributor
is not affiliated with the Adviser.
BUYING
AND SELLING FUND SHARES
Shares
of the Fund trade on a national securities exchange and in the secondary market
during the trading day. Shares can be bought and sold throughout the trading day
like other shares of publicly-traded securities. There is no minimum investment
for purchases made on a national securities exchange. When buying or selling
Shares through a broker, you will incur customary brokerage commissions and
charges. In addition, you will also incur the cost of the "spread," which is the
difference between what professional investors are willing to pay for Shares
(the "bid" price) and the price at which they are willing to sell Shares (the
"ask" price). The commission is frequently a fixed amount and may be a
significant proportional cost for investors seeking to buy or sell small amounts
of Shares. The spread with respect to Shares varies over time based on the
Fund's trading volume and market liquidity, and is generally lower if the Fund
has significant trading volume and market liquidity and higher if the Fund has
little trading volume and market liquidity. Because of the costs of buying and
selling Shares, frequent trading may reduce investment return.
Shares
of the Fund may be acquired or redeemed directly from the Fund only by
Authorized Participants (as defined in the SAI) and only in Creation Units or
multiples thereof, as discussed in the "Creations and Redemptions" section in
the SAI.
Shares
generally trade in the secondary market in amounts less than a Creation Unit.
Shares of the Fund trade under the trading symbol listed for the Fund in the
Fund Summary section of this Prospectus.
The
Fund is listed on a national securities exchange, which is open for trading
Monday through Friday and is closed on weekends and the following holidays, as
observed: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Juneteenth National Independence Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
Book
Entry
Shares
of the Fund are held in book-entry form, which means that no stock certificates
are issued. The Depository Trust Company ("DTC") or its nominee is the record
owner of all outstanding Shares and is recognized as the owner of all Shares for
all purposes. Investors owning Shares are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all Shares. Participants include DTC, securities brokers and dealers, banks,
trust companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
Shares, you are not entitled to receive physical delivery of stock certificates
or to have Shares registered in your name, and you are not considered a
registered owner of Shares. Therefore, to exercise any rights as an owner of
Shares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any securities that you hold in
book entry or "street name" form.
FREQUENT
TRADING
Unlike
frequent trading of shares of a traditional open-end mutual fund (i.e., not
exchange-traded shares), frequent trading of Shares on the secondary market does
not disrupt portfolio management, increase the Fund's trading costs, lead to
realization of capital gains, or otherwise harm Fund shareholders because these
trades do not involve the Fund directly. A few institutional
investors
are authorized to purchase and redeem the Fund's Shares directly with the Fund.
When these trades are effected in-kind (i.e., for securities, and not for cash),
they do not cause any of the harmful effects (noted above) that may result from
frequent cash trades. Moreover, the Fund imposes transaction fees on in-kind
purchases and redemptions of the Fund intended to cover the custodial and other
costs incurred by the Fund in effecting in-kind trades. These fees increase if
an investor substitutes cash in part or in whole for securities, reflecting the
fact that the Fund's trading costs increase in those circumstances, although
transaction fees are subject to certain limits and therefore may not cover all
related costs incurred by the Fund. For these reasons, the Board of Trustees has
determined that it is not necessary to adopt policies and procedures to detect
and deter frequent trading and market-timing in Shares of the Fund.
DISTRIBUTION
AND SERVICE PLAN
The
Board of Trustees of the Trust has adopted a Distribution and Services Plan
("Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund is
authorized to pay distribution fees in connection with the sale and distribution
of its Shares and pay service fees in connection with the provision of ongoing
services to shareholders of each class and the maintenance of shareholder
accounts in an amount up to 0.25% of its average daily net assets each
year.
No
Rule 12b-1 fees are currently paid by the Fund, and there are no current plans
to impose these fees. However, in the event Rule 12b-1 fees are charged in the
future, because these fees are paid out of the Fund's assets on an ongoing
basis, these fees will increase the cost of your investment in the Fund. By
purchasing Shares subject to distribution fees and service fees, you may pay
more over time than you would by purchasing Shares with other types of sales
charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the rules of
FINRA. The net income attributable to Shares will be reduced by the amount of
distribution fees and service fees and other expenses of the Fund.
DIVIDENDS
AND DISTRIBUTIONS
Dividends
from net investment income, including any net foreign currency gains, generally
are declared and paid at least annually and any net realized capital gains are
distributed at least annually. In order to comply with the distribution
requirements of the Code, dividends may be declared and paid more frequently
than annually for the Fund.
Dividends
and other distributions on Shares are distributed on a pro rata basis to
beneficial owners of such Shares. Dividend payments are made through DTC
participants to beneficial owners then of record with proceeds received from the
Fund. Dividends and security gain distributions are distributed in U.S. dollars
and cannot be automatically reinvested in additional Shares.
No
dividend reinvestment service is provided by the Trust. Broker-dealers may make
available the DTC book-entry Dividend Reinvestment Service for use by beneficial
owners of the Fund for reinvestment of their dividend distributions. Beneficial
owners should contact their broker to determine the availability and costs of
the service and the details of participation therein. Brokers may require
beneficial owners to adhere to specific procedures and timetables. If this
service is available and used, dividend distributions of both income and
realized gains will be automatically reinvested in additional whole Shares
purchased in the secondary market.
TAXES
The
following is a summary of certain tax considerations that may be relevant to an
investor in the Fund. Except where otherwise indicated, the discussion relates
to investors who are individual United States citizens or residents and is based
on current tax law. You should consult your tax advisor for further information
regarding federal, state, local and/or foreign tax consequences relevant to your
specific situation.
Distributions.
The Fund receives income and gains on its investments. The income, less expenses
incurred in the operation of the Fund, constitutes the Fund's net investment
income from which dividends may be paid to you. The Fund intends to qualify as a
RIC under the Code for federal tax purposes and to distribute to shareholders
substantially all of its net investment income and net capital gain each year.
Except as otherwise noted below, you will generally be subject to federal income
tax on the Fund's distributions to you. For federal income tax purposes, Fund
distributions attributable to short-term capital gains and net investment income
are taxable to you as ordinary income. Distributions attributable to net capital
gains (the excess of net long-term capital gains over net short-term capital
losses) of the Fund generally are taxable to you as long-term capital gains.
This is true no matter how long you own your Shares or whether you take
distributions in cash or additional Shares. The maximum long-term capital gain
rate applicable to individuals is 20%.
Distributions
of "qualifying dividends" will also generally be taxable to you at long-term
capital gain rates as long as certain requirements are met. In general, if 95%
or more of the gross income of the Fund (other than net capital gain) consists
of dividends received from domestic corporations or "qualified" foreign
corporations ("qualifying dividends"), then all distributions received by
individual shareholders of the Fund will be treated as qualifying dividends. But
if less than 95% of the gross income of the Fund (other than net capital gain)
consists of qualifying dividends, then distributions received by individual
shareholders of the Fund will be qualifying dividends only to the extent they
are derived from qualifying dividends earned by the Fund. For the lower rates to
apply, you must have owned your Shares for at least 61 days during the 121-day
period beginning on the date that is 60 days before the Fund's ex-dividend date
(and the Fund will need to have met a similar holding period requirement with
respect to the Shares of the corporation paying the qualifying dividend). The
amount of the Fund's distributions that qualify for this favorable treatment may
be reduced as a result of the Fund's securities lending activities (if any), a
high portfolio turnover rate or investments in debt securities or
"non-qualified" foreign corporations. In addition, whether distributions
received from foreign corporations are qualifying dividends will depend on
several factors including the country of residence of the corporation making the
distribution. Accordingly, distributions from many of the Fund's holdings may
not be qualifying dividends.
A
portion of distributions paid to shareholders that are corporations may also
qualify for the dividends-received deduction for corporations, subject to
certain holding period requirements and debt financing limitations. The amount
of the dividends qualifying for this deduction may, however, be reduced as a
result of the Fund's securities lending activities, by a high portfolio turnover
rate or by investments in debt securities or foreign corporations.
Distributions
from the Fund will generally be taxable to you in the year in which they are
paid, with one exception. Dividends and distributions declared by the Fund in
October, November or December and paid in January of the following year are
taxed as though they were paid on December 31.
You
should note that if you buy Shares of the Fund shortly before it makes a
distribution, the distribution will be fully taxable to you even though, as an
economic matter, it simply represents a return of a portion of your investment.
This adverse tax result is known as "buying into a dividend."
You
will be informed of the amount of your ordinary income dividends, qualifying
dividend income, and capital gain distributions at the time they are paid, and
you will be advised of the tax status for federal income tax purposes shortly
after the close of each calendar year. If you have not held Shares for a full
year, the Fund may designate and distribute to you, as ordinary income or
capital gain, a percentage of income that is not equal to the actual amount of
such income earned during the period of your investment in the
Fund.
The
Fund's investments in partnerships, including in partnerships defined as
Qualified Publicly Traded Partnerships for tax purposes, may result in the Fund
being subject to state, local or foreign income, franchise or withholding tax
liabilities.
Excise
Tax Distribution Requirements.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
RIC's "required distribution" for the calendar year ending within the RIC's
taxable year over the "distributed amount" for such calendar year. The term
"required distribution" means the sum of (a) 98% of ordinary income (generally
net investment income) for the calendar year, (b) 98.2% of capital gain (both
long-term and short-term) for the one-year period ending on [ ] (or [ ], if the
Fund so elects), and (c) the sum of any untaxed, undistributed net investment
income and net capital gains of the RIC for prior periods. The term "distributed
amount" generally means the sum of (a) amounts actually distributed by the Fund
from its current year's ordinary income and capital gain net income and (b) any
amount on which the Fund pays income tax for the taxable year ending in the
calendar year. Although the Fund intends to distribute its net investment income
and net capital gains so as to avoid excise tax liability, the Fund may
determine that it is in the interest of shareholders to distribute a lesser
amount. The Fund intends to declare and pay these amounts in December (or in
January, which must be treated by you as received in December) to avoid these
excise taxes, but can give no assurances that its distributions will be
sufficient to eliminate all such taxes.
Foreign
Currencies.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the Fund accrues interest or other receivables or
accrues expenses or other liabilities denominated in a foreign currency, and the
time the Fund actually collects such receivables or pays such liabilities, are
treated as ordinary income or ordinary loss. Similarly, gains or losses from the
disposition of foreign currencies, from the disposition of debt securities
denominated in a foreign currency, or from the disposition of a forward foreign
currency contract which are attributable to fluctuations in the value of the
foreign currency between the date of acquisition of the asset and the date of
disposition also are treated as ordinary income or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of the Fund's investment company taxable income available to
be distributed to its shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund's net capital gain.
Foreign
Taxes.
The Fund will be subject to foreign withholding taxes with respect to certain
payments received from sources in foreign countries. If at the close of the
taxable year more than 50% in value of the Fund's assets consists of stock in
foreign corporations, the Fund will be eligible to make an election to treat a
proportionate amount of those taxes as constituting a distribution to each
shareholder, which would allow you either (subject to certain limitations) (1)
to credit that proportionate amount of taxes against your U.S. Federal income
tax liability as a foreign tax credit or (2) to take that amount as an itemized
deduction. If the Fund is not eligible or chooses not to make this election, it
will be entitled to deduct such taxes in computing the amounts it is required to
distribute.
Sales
and Exchanges.
The sale of Shares is a taxable event on which a gain or loss is recognized. The
amount of gain or loss is based on the difference between your tax basis in
Shares and the amount you receive for them upon disposition. Generally, you will
recognize long-term capital gain or loss if you have held your Shares for over
one year at the time you sell or exchange them. Gains and losses on Shares held
for one year or less will generally constitute short-term capital gains, except
that a loss on Shares held six months or less will be re-characterized as a
long-term capital loss to the extent of any long-term capital gain distributions
that you have received on the Shares. A loss realized on a sale or exchange of
Shares may be disallowed under the so-called "wash sale" rules to the extent the
Shares disposed of are replaced with other Shares of that same Fund or
substantially identical stock or securities within a period of 61 days beginning
30 days before and ending 30 days after the Shares are disposed of, such as
pursuant to a dividend reinvestment in Shares of the Fund. If disallowed, the
loss will be reflected in an adjustment to the basis of the Shares
acquired.
Taxes
on Purchase and Redemption of Creation Units.
An Authorized Participant who exchanges equity securities for Creation Units
generally will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time of
purchase (plus any cash received by the Authorized Participant as part of the
issue) and the Authorized Participant's aggregate basis in the securities
surrendered (plus any cash paid by the Authorized Participant as part of the
issue). An Authorized Participant who exchanges Creation Units for equity
securities generally will recognize a gain or loss equal to the difference
between the Authorized Participant's basis in the Creation Units (plus any cash
paid by the Authorized Participant as part of the redemption) and the aggregate
market value of the securities received (plus any cash received by the
Authorized Participant as part of the redemption). The Internal Revenue Service
(the "IRS"), however, may assert that a loss realized upon an exchange of
securities for Creation Units cannot be deducted currently under the rules
governing "wash sales," or on the basis that there has been no significant
change in economic position. Persons exchanging securities should consult their
own tax advisor with respect to whether the wash sale rules apply and when a
loss might be deductible.
IRAs
and Other Tax-Qualified Plans.
The one major exception to the preceding tax principles is that distributions
on, and sales, exchanges and redemptions of, Shares held in an IRA or other
tax-qualified plan are not currently taxable but may be taxable when funds are
withdrawn from the tax qualified plan unless the Shares were purchased with
borrowed funds.
Medicare
Tax. An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from the
Fund and net gains from redemptions or other taxable dispositions of Fund
Shares) of U.S. individuals, estates and trusts to the extent that such person's
"modified adjusted gross income" (in the case of an individual) or "adjusted
gross income" (in the case of an estate or trust) exceeds a threshold amount.
This Medicare tax, if applicable, is reported by you on, and paid with, your
federal income tax return.
Backup
Withholding.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury backup withholding at the applicable rate on dividends and gross sales
proceeds paid to any shareholder (i) who has either provided an incorrect tax
identification number or no number at all, (ii) who is subject to backup
withholding by the IRS, or (iii) who has failed to certify to the Fund, when
required to do so, that he or she is not subject to backup withholding or is an
"exempt recipient."
Cost
Basis Reporting. Federal
law requires that shareholders' cost basis, gain/loss, and holding period be
reported to the IRS and to shareholders on the Consolidated Form 1099s when
"covered" securities are sold. Covered securities are any RIC and/or dividend
reinvestment plan shares acquired on or after January 1, 2012.
For
those securities defined as "covered" under current IRS cost basis tax reporting
regulations, accurate cost basis and tax lot information must be maintained for
tax reporting purposes. This information is not required for Shares that are not
"covered." The Fund and its service providers do not provide tax advice. You
should consult independent sources, which may include a tax professional, with
respect to any decisions you may make with respect to choosing a tax lot
identification method. Shareholders should contact their financial
intermediaries with respect to reporting of cost basis and available elections
for their accounts.
State
and Local Taxes.
You may also be subject to state and local taxes on income and gain attributable
to your ownership of Shares. You should consult your tax advisor regarding the
tax status of distributions in your state and locality.
U.S.
Tax Treatment of Foreign Shareholders.
A non-U.S. shareholder generally will not be subject to U.S. withholding tax on
gain from the redemption of Shares or on capital gain dividends (i.e., dividends
attributable to long-term capital gains of the Fund) unless, in the case of a
shareholder who is a non-resident alien individual, the shareholder is present
in the United States for 183 days or more during the taxable year and certain
other conditions are met. Non-U.S. shareholders generally will be subject to
U.S. withholding tax at a rate of 30% (or a lower treaty rate, if applicable) on
distributions by the Fund of net investment income, other ordinary income, and
the excess, if any, of net short-term capital gain over net long-term capital
loss for the year, unless the distributions are effectively connected with a
U.S. trade or business of the shareholder. Exemptions from U.S. withholding tax
are provided for certain capital gain dividends paid by the Fund from net
long-term capital gains, if any, interest-related dividends paid by the Fund
from its qualified net interest income from U.S. sources and short-term capital
gain dividends if such amounts are reported by the Fund. Non-U.S. shareholders
are subject to special U.S. tax certification requirements to avoid backup
withholding and claim any treaty benefits. Non-U.S. shareholders should consult
their tax advisors regarding the U.S. and foreign tax consequences of investing
in the Fund.
Other
Reporting and Withholding Requirements. Under
the Foreign Account Tax Compliance Act ("FATCA"), a 30% withholding tax is
imposed on income dividends paid by the Fund to certain foreign entities,
referred to as foreign financial institutions or nonfinancial foreign entities,
that fail to comply (or be deemed compliant) with extensive reporting and
withholding requirements designed to inform the U.S. Department of the Treasury
of U.S.-owned foreign investment accounts. After December 31, 2018, FATCA
withholding also would have applied to certain capital gain distributions,
return of capital distributions and the proceeds arising from the sale of Fund
Shares, however based on proposed regulations issued by the IRS, which may be
relied upon currently, such withholding is no longer required unless final
regulations provide otherwise (which is not expected). Information about a
shareholder in the Fund may be disclosed to the IRS, non-U.S. taxing authorities
or other parties as necessary to comply with FATCA. Withholding also may be
required if a foreign entity that is a shareholder of the Fund fails to provide
the appropriate certifications or other documentation concerning its status
under FATCA.
Consult
Your Tax Professional.
Your investment in the Fund could have additional tax consequences. You should
consult your tax professional for information regarding all tax consequences
applicable to your investments in the Fund. More tax information relating to the
Fund is also provided in the SAI. This short summary is not intended as a
substitute for careful tax planning.
DETERMINATION
OF NET ASSET VALUE
The
Fund calculates its NAV as of the regularly scheduled close of business of the [
] ([" "]) (the "Exchange") (normally 4:00 p.m. Eastern time) on each day that
the Exchange is open for business, based on prices at the time of closing,
provided that any assets or liabilities denominated in currencies other than the
U.S. dollar shall be translated into U.S. dollars at the prevailing market rates
on the date of valuation as quoted by one or more major banks or dealers that
make a two-way market in such currencies (or a data service provider based on
quotations received from such banks or dealers). The NAV of the Fund is
calculated by dividing the value of the net assets of the Fund (i.e., the value
of its total assets less total liabilities) by the total number of outstanding
Shares, generally rounded to the nearest cent. The price of Fund Shares is based
on market price, and because ETF shares trade at market prices rather than NAV,
Shares may trade at a price greater than NAV (a premium) or less than NAV (a
discount).
In
calculating the Fund's NAV, the Fund's investments are generally valued using
market valuations. A market valuation generally means a valuation (i) obtained
from an exchange or a major market maker (or dealer), (ii) based on a price
quotation or other equivalent indication of value supplied by an exchange, a
pricing service, or a major market maker (or dealer), or (iii) based on
amortized cost, provided the amortized cost is approximately the value on
current sale of the security. In the case of shares of funds that are not traded
on an exchange, a market valuation means such fund's published NAV per share.
The Fund may use various pricing services or discontinue the use of any pricing
service.
In
the event that current market valuations are not readily available or such
valuations do not reflect current market values, the affected investments will
be valued using fair value pricing pursuant to the pricing policy and procedures
approved by the Board of Trustees. A price obtained from a pricing service based
on such pricing service's valuation matrix may be used to fair value a security.
The frequency with which the Fund's investments are valued using fair value
pricing is primarily a function of the types of securities and other assets in
which the Fund invests pursuant to its investment objective, strategies and
limitations.
Investments
that may be valued using fair value pricing include, but are not limited to: (i)
an unlisted security related to corporate actions; (ii) a restricted security
(i.e., one that may not be publicly sold without registration under the
Securities Act
of
1933, as amended (the "Securities Act")); (iii) a security whose trading has
been suspended or which has been de-listed from its primary trading exchange;
(iv) a security that is thinly traded; (v) a security in default or bankruptcy
proceedings for which there is no current market quotation; (vi) a security
affected by currency controls or restrictions; and (vii) a security affected by
a significant event (i.e., an event that occurs after the close of the markets
on which the security is traded but before the time as of which the Fund's NAV
is computed and that may materially affect the value of the Fund's investments).
Examples of events that may be "significant events" are government actions,
natural disasters, armed conflict, acts of terrorism, and significant market
fluctuations.
Valuing
the Fund's investments using fair value pricing will result in using prices for
those investments that may differ from current market valuations.
Because
foreign markets may be open on different days than the days during which a
shareholder may purchase Shares, the value of the Fund's investments may change
on days when shareholders are not able to purchase Shares. Additionally, due to
varying holiday schedules, redemption requests made on certain dates may result
in a settlement period exceeding seven calendar days.
The
value of assets denominated in foreign currencies is converted into U.S. dollars
using exchange rates deemed appropriate by the Adviser.
The
right of redemption may be suspended or the date of payment postponed with
respect to the Fund (1) for any period during which the [ ] or listing exchange
is closed (other than customary weekend and holiday closings), (2) for any
period during which trading on the [ ] or listing exchange is suspended or
restricted, (3) for any period during which an emergency exists as a result of
which disposal of the Fund's portfolio securities or determination of its NAV is
not reasonably practicable, or (4) in such other circumstances as the SEC
permits.
Subject
to oversight by the Board of Trustees, the Adviser, as “valuation designee,”
performs fair value determinations of Fund investments. In addition, the
Adviser, as the valuation designee, is responsible for periodically assessing
any material risks associated with the determination of the fair value of a
Fund's investments; establishing and applying fair value methodologies; testing
the appropriateness of fair value methodologies; and overseeing and evaluating
third-party pricing services. The Adviser has established a fair value committee
to assist with its designated responsibilities as valuation
designee.
PREMIUM/DISCOUNT
AND SHARE INFORMATION
Once
available, information regarding how often the Shares of the Fund traded on a
national securities exchange at a price above (i.e., at a premium to) or below
(i.e., at a discount to) the NAV of the Fund; the Fund’s per share NAV, and the
median bid-ask spread of the Shares can be found at
www.globalxetfs.com.
INFORMATION
REGARDING THE INDEX AND THE INDEX PROVIDER
[Akros
MLCC & Electronic Components Index]
[The
Akros MLCC & Electronic Components Index (the “Reference Index”) is owned
and developed by Akros Technologies, Inc. (“Akros” or the “Index Provider”). The
Index Provider is not affiliated with the Fund or Global X Management Company
LLC, the Fund’s investment adviser (the “Adviser”).
To
be a part of the initial universe, companies must meet certain minimum market
capitalization and liquidity criteria, as determined by the Index Provider.
Newly listed securities may be considered for inclusion subject to certain
criteria related to trading history, number of days traded and market
capitalization, determined by the Index Provider. [Additionally, companies must
be listed in [South Korea, Japan, or Taiwan] to be eligible for inclusion in the
initial universe. As of [], companies must have a market capitalization of at
least [$250 million] and a 3-month average daily trading value of at least [$1
million] to be considered for inclusion. The Reference Index targets up to [15]
constituents and rebalances on a quarterly basis.]
[The
Reference Index is designed to provide exposure to companies that are involved
in the production, manufacturing, and enabling equipment of multi-layer ceramic
capacitors (“MLCCs”) and in companies that are involved in the broader
electronic components industry (together, “MLCC & Electronic Components
Companies”). An MLCC Company is a company that manufactures multilayer ceramic
capacitors. [Electronic Components Companies are companies principally engaged
in manufacturing capacitors (multilayer ceramic, aluminum electrolytic, film,
tantalum and polymer, silicon, and supercapacitor), chip resistors, inductors
and coils, signal transformers, and circuit-protection components.] [In
constructing the Reference Index, the Index Provider analyzes industries and
business segments within the Akros Industry Classification System (“AICS”)
whose
primary classification falls within “Computer and Electronic Product
Manufacturing” or “Electrical Equipment, Appliance, and Component
Manufacturing,” together with companies whose secondary classification is
“Capacitor, Resistor, Coil, Transformer, and Other Inductor Manufacturing,” as
defined the Index Provider. The Index Provider next uses a qualification test to
identify companies based on any of the following qualities:
(a)
Revenue:
at least 50% of the company’s total revenue is derived from the production,
manufacturing, and enabling equipment of MLCCs and electronic components;
or
(b)
Global
scale:
the company is one of the [three] largest manufacturers of capacitors worldwide
by absolute capacitor-segment revenue.
The
Index Provider assigns each company an overall fitness rating of "high,"
"medium," or "low." A company is rated “high-fitness” if it satisfies the
qualification test (condition (a) or (b)). A company must be rated
"high-fitness" to be eligible for inclusion in the Reference Index. [As of [ ],
“medium-fitness” and “low-fitness” constituents are not eligible for inclusion
in the Reference Index.]
The
two largest high-fitness constituents by market capitalization are designated as
“anchors” and are each held at a fixed weight of [20%]. The remaining
high-fitness constituents are weighted by free-float-adjusted market
capitalization, subject to a [15%] cap.
Disclaimer
THE
[GLOBAL X MLCC & ELECTRONIC COMPONENTS ETF] (THE "FUND") IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY AKROS TECHNOLOGIES, INC. ("AKROS") OR ANY OF ITS
AFFILIATES (COLLECTIVELY, THE "AKROS PARTIES"). THE AKROS PARTIES MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE FUND OR ANY
MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES
GENERALLY OR IN THE FUND PARTICULARLY OR THE ABILITY OF THE AKROS MLCC &
ELECTRONIC COMPONENTS INDEX (THE "INDEX") TO TRACK GENERAL MARKET PERFORMANCE.
THE
AKROS PARTIES' ONLY RELATIONSHIP TO GLOBAL X MANAGEMENT COMPANY LLC (THE
"LICENSEE") IS THE LICENSING OF CERTAIN TRADEMARKS AND TRADE NAMES AND OF THE
INDEX, WHICH IS DETERMINED, COMPOSED AND CALCULATED BY AKROS WITHOUT REGARD TO
THE LICENSEE OR THE FUND. AKROS HAS NO OBLIGATION TO TAKE THE NEEDS OF THE
LICENSEE OR THE OWNERS OF THE FUND INTO CONSIDERATION IN DETERMINING, COMPOSING
OR CALCULATING THE INDEX. THE AKROS PARTIES ARE NOT RESPONSIBLE FOR AND HAVE NOT
PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF
THE FUND TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE FUND'S NET
ASSET VALUE. THE AKROS PARTIES HAVE NO OBLIGATION OR LIABILITY IN CONNECTION
WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE FUND.
POTENTIAL
CONFLICTS OF INTEREST. AKROS PROVIDES INDICES TO, AND LICENSES INDICES FOR USE
BY, MULTIPLE CLIENTS, AND MAY DETERMINE, MAINTAIN, CALCULATE OR LICENSE OTHER
INDICES, INCLUDING INDICES THAT REFERENCE THE SAME OR SIMILAR CONSTITUENTS AS,
OR THAT MAY COMPETE WITH, THE INDEX OR THE FUND. AKROS'S COMPENSATION IN
CONNECTION WITH THE INDEX MAY BE RELATED TO THE ASSETS UNDER MANAGEMENT OF, OR
ACTIVITY IN, PRODUCTS THAT REFERENCE THE INDEX. THESE ACTIVITIES MAY GIVE RISE
TO POTENTIAL CONFLICTS OF INTEREST. AKROS MAINTAINS POLICIES AND PROCEDURES,
INCLUDING A CONFLICTS OF INTEREST POLICY AND INFORMATION BARRIERS, THAT ARE
DESIGNED TO IDENTIFY, MANAGE AND MITIGATE SUCH CONFLICTS, AND DETERMINES,
COMPOSES AND CALCULATES THE INDEX IN ACCORDANCE WITH ITS PUBLISHED METHODOLOGY
WITHOUT REGARD TO THE COMMERCIAL INTERESTS OF AKROS, THE LICENSEE OR THE FUND.
THE
INDEX AND ALL DATA INCLUDED THEREIN ARE PROVIDED ON AN "AS IS" BASIS. THE AKROS
PARTIES COMPILE AND MAINTAIN THE INDEX FROM SOURCES THEY BELIEVE TO BE RELIABLE,
BUT DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY
DATA INCLUDED THEREIN. THE AKROS PARTIES SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, DELAYS, UNAVAILABILITY OR INTERRUPTIONS THEREIN, AND MAY MODIFY,
SUSPEND OR DISCONTINUE THE INDEX AT ANY TIME WITHOUT NOTICE AND WITHOUT
LIABILITY. THE AKROS PARTIES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE LICENSEE, OWNERS OF THE FUND, OR ANY OTHER PERSON OR
ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED
THEREIN.
THE AKROS PARTIES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN.
WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL ANY OF THE AKROS PARTIES HAVE
ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
THE
INDEX DOES NOT CONSTITUTE INVESTMENT ADVICE OR A RECOMMENDATION BY THE AKROS
PARTIES TO BUY, SELL OR HOLD ANY SECURITY, AND THE INCLUSION OF ANY SECURITY IN
THE INDEX DOES NOT CONSTITUTE ANY SUCH RECOMMENDATION. INFORMATION REGARDING THE
INDEX IS GENERAL IN NATURE AND IS NOT TAILORED TO THE NEEDS OF THE LICENSEE, THE
FUND, OR ANY INDIVIDUAL INVESTOR.
NO
PURCHASER, SELLER OR HOLDER OF THE FUND, OR ANY OTHER PERSON OR ENTITY, SHOULD
USE OR REFER TO ANY AKROS TRADE NAME, TRADEMARK OR SERVICE MARK TO SPONSOR,
ENDORSE, MARKET OR PROMOTE THE FUND WITHOUT FIRST CONTACTING AKROS TO DETERMINE
WHETHER AKROS'S PERMISSION IS REQUIRED. UNDER NO CIRCUMSTANCES MAY ANY PERSON OR
ENTITY CLAIM ANY AFFILIATION WITH AKROS WITHOUT THE PRIOR WRITTEN PERMISSION OF
AKROS.
OTHER
SERVICE PROVIDERS
SEI
Investments Global Funds Services is the sub-administrator for the
Fund.
[The
Bank of New York Mellon] is the custodian and transfer agent for the
Fund.
Stradley
Ronon Stevens & Young, LLP serves as counsel for the Trust and the Trust's
Independent Trustees.
[
] will serve as the Fund's independent registered public accounting firm for the
fiscal year ending [November 30, 2026].
ADDITIONAL
INFORMATION
The
Trust enters into contractual arrangements with various parties, including among
others, the Funds’ Adviser, sub-adviser(s) (as applicable), custodian(s), and
transfer agent(s) who provide services to the Funds. Shareholders are not
parties to any such contractual arrangements and are not intended beneficiaries
of those contractual arrangements, and those contractual arrangements are not
intended to create in any shareholder any right to enforce them against the
service providers or to seek any remedy under them against the service
providers, either directly or on behalf of the Trust.
This
Prospectus provides information concerning the Fund that investors should
consider in determining whether to purchase Fund Shares. Neither this Prospectus
nor the SAI is intended, or should be read, to be or give rise to an agreement
or contract between the Trust or the Fund and any investor, or to give rise to
any rights in any shareholder or other person other than any rights under
federal or state law that may not be waived.
FINANCIAL
HIGHLIGHTS
Because
the Fund had not commenced operations as of the [November 30, 2025] fiscal year
end, financial highlights are not yet available.
OTHER
INFORMATION
The
Fund is not sponsored, endorsed, sold or promoted by any national securities
exchange. No national securities exchange makes any representation or warranty,
express or implied, to the owners of Shares or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the Fund to achieve its objective. No national
securities exchange has any obligation or liability in connection with the
administration, marketing or trading of the Fund.
For
purposes of the 1940 Act, shares that are issued by a registered investment
company and purchases of such shares by investment companies and companies
relying on Sections 3(c)(1) or 3(c)(7) of the 1940 Act are subject to the
restrictions set forth in Section 12(d)(1) of the 1940 Act.
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the Fund on an ongoing basis, a "distribution," as such term is used in the
Securities Act, may occur at any point. Broker-dealers and other persons are
cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in a
manner which could render them statutory underwriters and subject them to the
prospectus delivery and liability provisions of the Securities Act.
For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing an order with the
Distributor, breaks them down into constituent Shares, and sells such Shares
directly to customers, or if it chooses to couple the creation of a supply of
new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter for
purposes of the Securities Act must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer or its client in
the particular case, and the examples mentioned above should not be considered a
complete description of all the activities that could lead to a categorization
as an underwriter.
Broker-dealers
who are not "underwriters" but are participating in a distribution (as
contrasted with ordinary secondary trading transactions), and thus dealing with
Shares that are part of an "unsold allotment" within the meaning of Section
4(a)(3)(C) of the Securities Act, would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
This is because the prospectus delivery exemption in Section 4(a)(3) of the
Securities Act is not available in respect of such transactions as a result of
Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that
dealers who are not underwriters but are participating in a distribution (as
contrasted with ordinary secondary market transactions) and thus dealing with
the Shares that are part of an overallotment within the meaning of Section
4(a)(3)(A) of the Securities Act would be unable to take advantage of the
prospectus delivery exemption provided by Section 4(a)(3) of the Securities Act.
Firms that incur a prospectus delivery obligation with respect to Shares are
reminded that, under Rule 153 of the Securities Act, a prospectus delivery
obligation under Section 5(b)(2) of the Securities Act owed to an exchange
member in connection with a sale on [ ] is satisfied by the fact that the
prospectus is available at [ ] upon request. The prospectus delivery mechanism
provided in Rule 153 is only available with respect to transactions on an
exchange.
For
more information visit our website at
www.globalxetfs.com
or
call 1-888-493-8631
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Investment
Adviser and Administrator
Global
X Management Company LLC
605 3rd Avenue, 43rd Floor
New York, NY
10158
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Distributor
SEI
Investments Distribution Co.
One
Freedom Valley Drive
Oaks,
PA 19456
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Custodian
and Transfer Agent
[The
Bank of New York Mellon
240
Greenwich Street
New
York, New York 10286] |
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Sub-Administrator
SEI
Investments Global Funds Services
One
Freedom Valley Drive
Oaks,
PA 19456
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Legal
Counsel to the Global X Funds®
and Independent Trustees
Stradley
Ronon Stevens & Young, LLP
2000
K Street N.W., Suite 700
Washington,
DC 20006
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Independent
Registered Public Accounting Firm
[
] |
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A
Statement of Additional
Information
dated [ ], 2026, which contains more details about the Fund, is incorporated by
reference in its entirety into this Prospectus, which means that it is legally
part of this Prospectus.
Additional
information about the Fund and its investments will appear in its annual and
semi-annual reports to shareholders and in Form N-CSR, when available. The
annual report explains the market conditions and investment strategies affecting
the Fund’s performance during its last fiscal year. In Form N-CSR you will find
the Fund’s annual and semi-annual financial statements.
You
can ask questions or obtain a free copy of the Fund’s semi-annual and annual
report, the Statement of Additional Information, or other information, such as
Fund financial statements, when available, by calling 1-888-493-8631. Free
copies of the Fund’s semi-annual and annual report and the Statement of
Additional Information are available from our website at www.globalxetfs.com.
Information
about the Fund, including its semi-annual and annual reports and the Statement
of Additional Information, has been filed with the SEC. It can be reviewed and
copied on the EDGAR database on the SEC’s internet site (http://www.sec.gov).
You can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC’s e-mail address
([email protected]).
PROSPECTUS
Distributor
SEI
Investments Distribution Co.
One
Freedom Valley Drive
Oaks,
PA 19456
[
], 2026
Investment
Company Act File No.: 811-22209
