Global
X Space Tech ETF
[
]: [ ]
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") 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 Space Tech ETF
Ticker:
[ ] Exchange: [ ]
INVESTMENT
OBJECTIVE
The
Global X Space Tech ETF ("Fund") seeks to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Global X Space Tech Index (the "Underlying
Index").
FEES
AND EXPENSES
This
table describes the fees and expenses that you may pay if you buy, hold, and
sell shares (“Shares”) of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the 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 $10,000 in the Fund for the time periods indicated and then hold or sell
all of your Shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
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One
Year |
Three
Years |
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$[
] |
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 invests at least 80% of its net assets, plus borrowings for investment
purposes (if any), in the securities of the Underlying Index, which may include
common stocks, American Depositary Receipts ("ADRs"), and Global Depositary
Receipts (“GDRs”). The Fund's 80% investment policy is non-fundamental and
requires 60 days prior written notice to shareholders before it can be changed.
The
Underlying Index is owned and was developed by Global X Management Company LLC
(the “Index Provider”), the Fund's investment adviser (the “Adviser”) and an
affiliate of the Fund. The Underlying Index is administered and calculated by
Mirae Asset Global Indices Pvt. Ltd. (the “Index Administrator”), an affiliate
of the Index Provider and the Fund.
The
Underlying Index, as presently constituted, is designed to track the performance
of space technology (“Space Tech”) companies involved in the commercialization
of the global space economy. “Space Tech” means technology that is used to
support, enable, and/or conduct activities beyond the surface of the Earth.
Space Tech companies are companies that are involved in critical segments of the
upstream and downstream Space Tech theme such as [space technology and
components, reusable launch vehicles, orbital transportation services, space
exploration and tourism, and satellite-enabled telecommunications and data
services, as described below]. In constructing the Underlying Index, the Index
Administrator analyzes industries and business segments within FactSet’s
classification system that the Index Administrator considers to be related to
the Space Tech theme to create an initial universe of eligible securities.
FactSet is an independent leading financial
data
provider that maintains a comprehensive structured taxonomy designed to offer
precise classification of global companies and their individual business units.
Companies that are identified as deriving a significant proportion of their
revenue from the following sub-themes will be evaluated for inclusion in the
initial universe:
•[Rocket
Launch and Reusable Rockets:
Companies providing launch systems and reusable rocket technology reducing costs
and increasing access to space for cargo, satellites, and missions.
•Space
Tech & Components:
Companies delivering mission-critical hardware, components, software, and
analytics that power modern space operations. This includes specialized engines,
orbital transport systems, space-grade components, satellite imagery, AI based
systems, and data solutions that underpin space manufacturing, logistics,
intelligence gathering, and computing.
•Satellite
Telecommunications & Data Services:
Companies engaged in delivering global connectivity systems powered by their
satellite networks, enabling broadband internet, GPS, and secure communications
for individual, commercial, and government use.
•Space
Transportation, Tourism and Exploration:
Companies providing human spaceflight ventures, from orbital tourism to deep
space missions, commercializing space travel as well as offering orbital
discovery services.]
To
be a part of the initial universe, companies must meet certain minimum market
capitalization and liquidity criteria, as determined by the Index Administrator.
As of [ ], companies must have a minimum market capitalization of [$200 million]
and an average daily turnover for the last [6 months] greater than or equal to
[$2 million] for inclusion in the initial universe. 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 Administrator. Additionally, companies must be listed in developed or
emerging market countries to be eligible for inclusion in the initial universe.
As of [ ], companies listed in the following countries are not eligible for
inclusion: [Bangladesh, China, India, Kuwait, Pakistan, Russia, Egypt, and Saudi
Arabia]. As of [ ], companies must have a minimum of 10% of their outstanding
shares available for public investment.
After
identifying business segments eligible for inclusion in the initial universe,
the Index Administrator further screens securities within the segments to
identify companies that derive a majority of their revenues from one or more of
the stated business activities of the sub-themes. To be considered for inclusion
in the Underlying Index, and therefore be considered a "Space Tech” company,
companies must generate at least 50% of their revenues from one or more of the
stated business activities of the above sub-themes, in aggregate, as determined
by the Index Administrator.
Additionally,
companies with business operations primarily in the Aerospace & Defense
sector, as determined by the Index Administrator, that derive between 0% and 50%
of their revenues from one or more sub-themes and that have business operations
in the business activities described above are also eligible for inclusion
(collectively, “Diversified Aerospace & Defense Companies”). The aggregate
weight of all securities classified as Diversified Aerospace & Defense
Companies will be capped at 10%. Diversified Aerospace & Defense Companies
that do not have current revenues in one or more of the business activities
outlined in the sub-themes must have significant business involvement in one or
more of the sub-themes such that future revenues are reasonably expected to
result from such business activities, as determined by the Index
Administrator.
The
Underlying Index is weighted according to a modified capitalization weighting
methodology and is reconstituted and re-weighted on a [quarterly] basis. The
modified capitalization weighting seeks to weight constituents based on their
“free float” market capitalization subject to caps on the weights of the
individual securities. Free float market capitalization measures a company’s
market capitalization discounted by the percentage of its shares readily
available to be traded by the general public in the open market (“free float”).
At each rebalance, the maximum weight of an individual security is capped at [
]%. [In addition, Diversified Aerospace & Defense Companies are subject to
single security weight cap of [4%] and an aggregate weight cap of [10%] at each
[quarterly] rebalance.] Modified capitalization weighting is expected to limit
the Fund’s exposure to the largest market capitalization companies in the
Underlying Index. The Underlying Index may include large-, mid- or
small-capitalization companies; however, the Underlying Index is not required to
reflect any one or all market capitalizations. As of [ ], the Underlying Index
had [ ] constituents. The Fund's investment objective and Underlying Index may
be changed without shareholder approval.
The
Underlying Index is created and sponsored by the Index Provider. Any
determinations related to the constituents of the Underlying Index are made by
the Index Administrator and are independent of the Fund's portfolio managers.
The Index Administrator determines the composition and relative weightings of
the securities in the Underlying Index.
The
Adviser uses an indexing approach to try to achieve the Fund's investment
objective. Unlike many investment companies, the Fund does not try to outperform
the Underlying Index and does not seek temporary defensive positions when
markets decline or appear overvalued.
The
Fund generally will use a replication strategy. A replication strategy is an
indexing strategy that involves investing in the securities of the Underlying
Index in approximately the same proportions as in the Underlying Index. However,
the Fund may utilize a representative sampling strategy with respect to the
Underlying Index when a replication strategy might be detrimental or
disadvantageous to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to
replicate the Underlying Index, in instances in which a security in the
Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as
a result of legal restrictions or limitations (such as tax diversification
requirements) that apply to the Fund but not the Underlying Index.
The
Adviser expects that, over time, the correlation between the Fund's performance
and that of the Underlying Index, before fees and expenses, will exceed 95%. A
correlation percentage of 100% would indicate perfect correlation. If the Fund
uses a replication strategy, it can be expected to have greater correlation to
the Underlying Index than if it uses a representative sampling strategy.
The
Fund concentrates its investments (i.e., holds 25% or more of its total assets)
in a particular industry or group of industries to approximately the same extent
that the Underlying Index is concentrated. As of [ ], the Underlying Index was
concentrated in the [Aerospace & Defense] industry and had significant
exposure to the [Industrials] sector.
The
Fund is classified as “non-diversified,” which means it may invest a larger
percentage of its assets in a smaller number of issuers than a diversified fund.
SUMMARY
OF PRINCIPAL RISKS
As
with any investment, you could lose all or part of your investment in the Fund,
and the Fund's performance could trail that of other investments. There is no
guarantee that the Fund will achieve its investment objective. An investment in
the Fund is not a bank deposit and it is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency, the
Adviser or any of its affiliates. The Fund is subject to the principal risks
noted below, any of which may adversely affect the Fund's net asset value
("NAV"), trading price, yield, total return and ability to meet its investment
objective, as well as other risks that are described in greater detail in the
Additional
Information About the Fund
section of the Prospectus and in the Statement of Additional Information
("SAI").
Affiliated
Index Provider Risk: The
Adviser also serves as the Fund’s Index Provider, which may present a potential
conflict of interest. For example, a potential conflict could arise if the
Adviser were to exercise undue influence with respect to regular and/or
extraordinary updates to the methodology or composition of the Underlying Index,
including in a manner that might improve the apparent performance of the Fund
relative to the performance of the Underlying Index. Additionally, potential
conflicts could arise to the extent that portfolio managers of the Adviser
become aware of contemplated methodology changes or rebalance activity prior to
disclosure to the public, which could facilitate “front running” on behalf of
other funds managed by the Adviser with similar exposure. Although the Adviser
has taken steps designed to ensure that these potential conflicts are mitigated
(e.g., via the adoption of policies and procedures that are designed to minimize
potential conflicts of interest and ensure independence with respect to the
operation of the Underlying Index, as well as the implementation of
informational barriers designed to minimize the potential for the misuse of
information about the Underlying Index), there can be no assurance that such
measures will be successful.
Asset
Class Risk: Securities
and other assets in the Underlying Index or otherwise held in the Fund's
portfolio may underperform in comparison to the general securities markets, a
particular securities market or other asset classes.
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.
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.
Associated
Risks Related to Investing in Space Tech Companies: Companies
in the space technology and commercial space industry may face high research and
development costs, intense competition, rapid technological change, and evolving
regulation
(including export controls, sanctions, licensing, and
national-security/telecommunications rules) that could limit market access or
render products obsolete. Results and reputations may be significantly affected
by launch failures, mission anomalies, schedule delays, capacity constraints,
rising costs, and defaults by launch providers or key suppliers. Many depend on
a small number of customers and milestone-based, long-duration contracts;
cancellations, budget cuts, changes in procurement policies, or delays in
customer acceptance and revenue recognition may materially reduce revenues.
These companies rely heavily on intellectual property, spectrum licenses, and
orbital slots, which may be difficult to obtain, protect, or retain.
Concentrated and specialized global supply chains—together with inflation, trade
restrictions, or geopolitical events—may disrupt production and deployment. Many
such businesses may not achieve profitability, may require additional capital,
and may exhibit significant share price volatility.
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.]
[Micro-Capitalization
Companies Risk: Stock
prices of micro-capitalization companies are significantly more volatile, and
more vulnerable to adverse business and economic developments, than those of
larger companies, and their earnings and revenues tend to be less predictable
(and some companies may experience significant losses). Micro-capitalization
stocks may also be thinly traded, which can adversely affect the pricing of
these securities and the future ability to buy and sell them.]
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 from time to time have a significant amount of its assets invested in a
particular industry, group of industries, or one or more sectors to the
approximately the same extent that the Underlying Index focuses in investments
related to a particular industry, group of industries, and/or one or more
sectors. In such event, the Fund’s performance will depend to a
greater
extent on the overall condition of such industry(ies) or sector(s), and an
economic, business, political, regulatory, or other occurrence affecting such
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 in a
broader range of industries or sectors.
Risks
Related to Investing in the Aerospace and Defense Industry: Companies
in the Aerospace & Defense industry are subject to government defense
budgets, geopolitical tensions, and regulatory changes, which can significantly
impact revenues and profitability. Many Aerospace & Defense companies rely
heavily on government contracts, making them vulnerable to shifts in defense
spending policies, political cycles, and procurement cycles. Additionally, these
companies face risks from supply chain disruptions, cost overruns, and
technological obsolescence, particularly as advancements in defense technology
evolve rapidly. Global political instability, trade restrictions, and changes in
international alliances can also affect the demand for aerospace and defense
products. Regulatory scrutiny over budgets, safety standards, procurement
practices, and military applications may impose additional costs and operational
constraints on companies in this industry.
Risks
Related to Investing in the Industrials Sector:
Companies
in the industrials sector are subject to fluctuations in supply and demand for
their specific product or service. The products of manufacturing companies may
face product obsolescence due to rapid technological developments. Government
regulation, world events and economic conditions affect the performance of
companies in the industrials sector. Companies also may be adversely affected by
environmental damage and product liability claims. Also, commodity price
volatility, changes in exchange rates, imposition of import controls or tariffs,
increased competition, depletion of resources, technological developments and
labor relations could adversely affect the companies in this sector.
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 are 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.
Indexing
Strategy Risk: The
Fund is not actively managed, and the Adviser does not attempt to take defensive
positions in declining markets or seek to outperform its Underlying Index.
Therefore, the Fund would not necessarily buy or sell a security unless that
security is added or removed, respectively, from the Underlying Index, even if
that security generally is underperforming. Maintaining investments in
securities regardless of market conditions or the performance of individual
securities could cause the Fund’s return to be lower than if the Fund employed
an active strategy.
Index-Related
Risk: There
is no guarantee that the Fund will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk: The
Fund may not fully replicate its Underlying Index and may hold securities not
included in its Underlying Index. The Adviser’s investment strategy, the
implementation of which is subject to a number of constraints, may cause the
Fund to underperform the market or its relevant benchmark or adversely affect
the ability of the Fund to achieve its investment objective.
Tracking
Error Risk: Tracking
error may occur because of differences between the instruments held in the
Fund's portfolio and those included in the Underlying Index, pricing
differences, transaction costs incurred by the Fund, the Fund's holding of
uninvested cash, size of the Fund, differences in timing of the accrual of or
the valuation of dividends or interest, tax gains or losses, changes to the
Underlying Index or the costs to the Fund of complying with various new or
existing regulatory requirements. This risk may be heightened during times of
increased market volatility or other unusual market conditions. Tracking error
also may result because the Fund incurs fees and expenses, while the Underlying
Index does not.
International
Closed Market Trading Risk: To
the extent that the underlying investments held by the Fund trade on foreign
exchanges that may be closed when the securities exchange on which the Fund’s
Shares trade is open, there are likely to be deviations between the current
price of such an underlying security and the last quoted price for the
underlying security (i.e., the Fund’s quote from the closed foreign market).
These deviations could result in premiums or discounts to the Fund’s NAV that
may be greater than those experienced by other exchange-traded funds
("ETFs").
Issuer
Risk: Fund
performance depends on the performance of individual companies in which the Fund
invests. Changes to the financial condition of any of those companies may cause
the value of such company's securities to decline.
Market
Risk: Turbulence
in the financial markets and reduced liquidity may negatively affect issuers,
which could have an adverse effect on the Fund 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 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.
Trading
Halt Risk: An
exchange or market may close or issue trading halts on specific securities, or
the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Valuation
Risk: The
sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security and may differ from the value used by the Underlying
Index, particularly for securities that trade in low value or volatile markets
or that are valued using a fair value methodology (such as during trading
halts). The value of the securities in the Fund's portfolio may change on days
when shareholders will not be able to purchase or sell the Fund's
Shares.
PERFORMANCE
INFORMATION
The
Fund does not have a full calendar year of performance. Once the Fund has
completed a full calendar year of operations, a bar chart and table will be
included that will provide some indication of the risks of investing in the Fund
by showing the
variability
of the Fund's returns and comparing the Fund's performance to the Underlying
Index. The Fund's performance is not necessarily indicative of how the Fund will
perform in the future.
FUND
MANAGEMENT
Investment
Adviser:
Global X Management Company LLC.
Portfolio
Managers:
The professionals primarily responsible for the day-to-day management of the
Fund are Nam To, CFA; and Wayne Xie (“Portfolio Managers”). Messrs. To and Xie
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. The Fund is designed
to track the Underlying Index. Similar to shares of an index mutual fund, each
Share of the Fund represents an ownership interest in an underlying portfolio of
securities. Unlike shares of a mutual fund, which can be bought and redeemed
from the issuing fund by all shareholders at a price based on NAV, Shares of 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. An index is a financial calculation,
based on a grouping of financial instruments, and is not an investment product,
while the Fund is an actual investment portfolio. The performance of the Fund
and its Underlying Index may vary for a number of reasons, including transaction
costs, non-U.S. currency valuations, asset valuations, corporate actions (such
as mergers and spin-offs), timing variances and differences between the Fund's
portfolio and the Underlying Index resulting from the Fund's legal restrictions
(such as diversification requirements) that apply to the Fund but not to the
Underlying Index.
The
Fund invests at least 80% of its net assets, plus borrowings for investment
purposes (if any), in the securities of the Global X Space Tech Index (the
"Underlying Index"), which may include common stocks, American Depositary
Receipts ("ADRs") and Global Depositary Receipts (“GDRs”). 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 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 its Underlying Index is concentrated.
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.
Affiliated
Index Provider Risk
The
Adviser also serves as the Fund’s Index Provider, which may present a potential
conflict of interest. For example, a potential conflict could arise if the
Adviser were to exercise undue influence with respect to regular and/or
extraordinary updates to the methodology or composition of the Underlying Index,
including in a manner that might improve the apparent performance of the Fund
relative to the performance of the Underlying Index. Additionally, potential
conflicts could arise to the extent that portfolio managers of the Adviser
become aware of contemplated methodology changes or rebalance activity prior to
disclosure to the public, which could facilitate “front running” on behalf of
other funds managed by the Adviser with similar exposure. Although the Adviser
has taken steps designed to ensure that these potential conflicts are mitigated
(e.g., via the adoption of policies and procedures that are designed to minimize
potential conflicts of interest and ensure independence with respect to the
operation of the Underlying Index, as well as the implementation of
informational barriers designed to minimize the potential for the misuse of
information about the Underlying Index), there can be no assurance that such
measures will be successful.
Asset
Class Risk
The
returns from the types of securities and/or assets in which the Fund invests may
under-perform returns from the various general securities markets or different
asset classes. The assets in the Underlying Index may under-perform investments
that track other markets, segments, sectors or assets. Different types of assets
tend to go through cycles of out-performance and under-performance in comparison
to the general securities markets.
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.
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.
Associated
Risks Related to Investing in Space Tech Companies
Space
Tech companies are primarily exposed to risks specific to the space technology
and commercial space markets. Such companies typically incur significant
research and development expenditures and they may face intense competition,
rapidly evolving technologies, and shifting regulatory standards that could
render their products or business models obsolete. The operations, revenues, and
reputations of Space Tech companies may be impacted by launch failures, mission
anomalies, delays, capacity constraints, cost increases, counterparty defaults
(including launch providers and key suppliers). Many businesses rely on a small
number of customers and long-term, milestone-based contracts; cancellations,
funding reductions, budgetary constraints, changes in procurement policies, or
delays in customer acceptance and revenue recognition could adversely affect
results. These companies are heavily dependent on intellectual property,
spectrum licenses, and orbital slot assignments, and may be adversely affected
by loss, impairment, or revocation of those rights; there can be no assurance
that such companies will be able to successfully protect or obtain these rights.
Space Tech companies may be significantly affected by domestic and international
regulation, including export controls, sanctions, investment restrictions,
licensing regimes, national security and telecommunications rules, and evolving
environmental, safety, and debris-mitigation requirements, any of which could
increase costs or limit market access. Supply chains can be concentrated,
specialized, and geographically limited; disruptions, inflationary pressures,
trade restrictions, or geopolitical events may impair production and deployment
schedules. Space Tech companies often operate internationally and may be
concentrated in particular countries or regions, and any adverse economic,
regulatory, political, or security event affecting such jurisdictions could
negatively impact these companies. There can be no assurance that Space Tech
companies will achieve profitability, access needed capital on favorable terms,
or scale their businesses as anticipated, and investments in such companies may
be volatile.
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.
]
[Micro-Capitalization
Companies Risk
Micro-capitalization
companies are subject to substantially greater risks of loss and price
fluctuations, and are more vulnerable to adverse business and economic
developments, than other securities with larger capitalizations because their
earnings and revenues tend to be less predictable (and some companies may
experience significant losses), their share prices tend to be more volatile and
their markets less liquid than companies with larger market capitalizations.
Micro-capitalization companies may be newly formed or in the early stages of
development, with limited product lines, markets or financial resources and may
lack management depth. In addition, there may be less public information
available about these companies. The shares of micro-capitalization companies
tend to trade less frequently than those of larger, more established companies,
which can adversely affect the pricing of these securities and the future
ability to buy and sell these securities. ]
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
In
following its methodology, the Underlying Index may be focused to a significant
degree in securities of issuers in a particular industry or group of industries
and/or may have significant exposure to one or more sectors. To the extent that
the Underlying Index focuses in the securities of issuers in such an area, the
Fund will also focus its investments to approximately the same extent. In such
event, the Fund’s performance will be particularly susceptible to adverse events
impacting such industry or sector, and the Fund will face greater risk than if
it were diversified broadly over numerous such areas. Such heightened risks, any
of which may adversely affect the companies in which the Fund invests, may
include, but are not limited to, the following: general economic conditions or
cyclical market patterns that could negatively affect supply and demand;
competition for resources; adverse labor relations; political or world events;
obsolescence of technologies; and increased competition or new product
introductions that may affect the profitability or viability of companies in a
particular industry or sector. In addition, at times, such industry, group of
industries or sector may be out of favor and underperform other such categories
or the market as a whole.
Risks
Related to Investing in the Aerospace and Defense Industry
Companies
in the Aerospace & Defense industry are subject to government defense
budgets, geopolitical tensions, and regulatory changes, which can significantly
impact revenues and profitability. Many Aerospace & Defense companies rely
heavily on government contracts, making them vulnerable to shifts in defense
spending policies, political cycles, and procurement cycles. Additionally, these
companies face risks from supply chain disruptions, cost overruns, and
technological obsolescence, particularly as advancements in defense technology
evolve rapidly. Global political instability, trade restrictions, and changes in
international alliances can also affect the demand for aerospace and defense
products. Regulatory scrutiny over budgets, safety standards, procurement
practices, and military applications may impose additional costs and operational
constraints on companies in this industry.
Risks
Related to Investing in the Industrials Sector
Companies
in the industrials sector are affected by supply and demand both for their
specific product or service and for industrials sector products in general. The
products of manufacturing companies may face product obsolescence due to rapid
technological developments and frequent new product introduction. Government
regulation, trade disputes, world events and economic conditions affect the
performance of companies in the industrials sector. Companies in the industrials
sector may be adversely affected by damages from environmental claims and
product liability claims, cyber-attacks, commodity price trends or volatility,
changes in exchange rates, increased competition, depletion of resources,
technological developments, and labor relations. The performance of such
companies may also be affected by changes in domestic and international
economies, changes in government spending policies, changes in or failures of
trade agreements, and imposition of export or import controls or trade tariffs.
Foreign
Securities Risk
The
Fund’s assets may be invested within the equity markets of countries outside of
the United States. These markets are subject to special risks associated with
foreign investment, including, but not limited to: lower levels of liquidity and
market efficiency; greater securities price volatility; exchange rate
fluctuations and exchange controls; less availability of public information
about issuers; limitations on foreign ownership of securities; imposition of
withholding or other taxes; imposition of restrictions on the expatriation of
the assets of the Fund; restrictions placed on U.S. investors by U.S.
regulations governing foreign investments; higher transaction and custody costs
and delays in settlement procedures; difficulties in enforcing contractual
obligations; lower levels of regulation of the securities market; weaker
accounting, disclosure and reporting requirements; and legal principles relating
to corporate governance and directors’ fiduciary duties and liabilities.
Shareholder rights under the laws of some foreign countries may not be as
favorable as U.S. laws. Thus, a shareholder may have more difficulty in
asserting its rights or enforcing a judgment against a foreign company than a
shareholder of a comparable U.S. company. Investment of more than 25% of the
Fund’s total assets in securities located in one country or region will subject
the Fund to increased country or region risk with respect to that country or
region. Where all or a portion of the Fund's underlying securities trade in a
market that is closed when the market in which the Fund's Shares are listed and
trading is open, there may be differences between the last quote from the
security’s closed foreign market and the value of the security during the Fund’s
domestic trading day. This in turn could lead to differences between the market
price of the Fund’s Shares and the underlying value of those shares.
Geographic
Risk
Geographic
risk 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 are 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
Investment
in developed country issuers may subject the Fund to regulatory, political,
currency, security, and economic risk specific to developed countries. Developed
countries generally tend to rely on services sectors (e.g., the financial
services sector) as the primary means of economic growth. A prolonged slowdown
in, among others, services sectors is likely to have a negative impact on
economies of certain developed countries, although economies of individual
developed countries can be impacted by slowdowns in other sectors. In the past,
certain developed countries have been targets of terrorism, and some geographic
areas in which the Fund invests have experienced strained international
relations due to territorial disputes, historical animosities, defense concerns
and other security concerns. These situations may cause uncertainty in the
financial markets in these countries or geographic areas and may adversely
affect the performance of the issuers to which the Fund has exposure. Heavy
regulation of certain markets, including labor and product markets, may have an
adverse effect on certain issuers. Such regulations may negatively affect
economic growth or cause prolonged periods of recession. Many developed
countries are heavily indebted, which may lead to downward pressure on the
economies of those countries. 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.
Indexing
Strategy Risk
The
Fund is not actively managed and may be affected by a general decline in market
segments relating to the Underlying Index. The Fund invests in securities
included in, or representative of, the Underlying Index regardless of their
investment merits, and the Adviser does not otherwise attempt to take defensive
positions in declining markets. Unlike many investment companies, the Fund does
not seek to outperform its Underlying Index. Therefore, the Fund would not
necessarily buy or sell a security unless that security is added or removed,
respectively, from the Underlying Index, even if that security generally is
underperforming. Additionally, if a constituent of the Underlying Index were
removed, even outside of a regular rebalance of the Underlying Index, the
Adviser anticipates that the Fund would sell such security. Maintaining
investments in securities regardless of market conditions or the performance of
individual securities could cause the Fund’s return to be lower than if the Fund
employed an active strategy.
Index-Related
Risk
There
is no guarantee that the Fund will achieve a high degree of correlation to the
Underlying Index and therefore achieve its investment objective. Market
disruptions and regulatory restrictions could have an adverse effect on the
Fund’s ability to adjust its exposure to the required levels in order to track
the Underlying Index. Errors in index data, index computations and/or the
construction of the Underlying Index in accordance with its methodology may
occur from time to time and may not be identified and corrected by the Index
Provider for a period of time or at all, which may have an adverse impact on the
Fund and its shareholders.
Management
Risk
The
Fund may not fully replicate its Underlying Index and may hold securities not
included in its Underlying Index. Therefore, the Fund is subject to management
risk. That is, the Adviser’s investment strategy, the implementation of which is
subject to a number of constraints, may cause the Fund to underperform the
market or its relevant benchmark or adversely affect the ability of the Fund to
achieve its investment objective. While the Fund uses an indexing approach,
implementation of the Fund’s principal investment strategy may result in
tracking error risk, which is described below. The ability of the Adviser to
successfully implement the Fund’s investment strategies will influence the
Fund’s performance significantly.
Tracking
Error Risk
Tracking
error is the divergence of the Fund's performance from that of the Underlying
Index. Tracking error may occur because of differences between the securities
and other instruments held in the Fund's portfolio and those included in the
Underlying Index, pricing differences (including differences between a
security's price at the local market close and the Fund's valuation of a
security at the time of calculation of the Fund's NAV), transaction costs
incurred by the Fund, the Fund's holding of uninvested cash, differences in
timing of the accrual of or the valuation of dividends or interest, tax gains or
losses, changes to the Underlying Index or the costs to the Fund of complying
with
various
new or existing regulatory requirements. This risk may be heightened during
times of increased market volatility or other unusual market conditions.
Tracking error also may result because the Fund incurs fees and expenses, while
the Underlying Index does not.
ETFs
that track indices with significant weight in emerging markets issuers may
experience higher tracking error than other ETFs that do not track such
indices.
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.
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.
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.
If the securities held by the Fund experience poor liquidity, the Fund may be
unable to transact at advantageous times or prices, which may decrease the
Fund’s returns. In addition, there is a risk that policy changes by central
governments and governmental agencies, including the Federal Reserve or the
European Central Bank, which could include increasing interest rates, could
cause increased volatility in financial markets and lead to higher levels of
Fund redemptions from Authorized Participants, which could have a negative
impact on the Fund. Beginning in early 2025, the U.S. government’s threats to
impose tariffs on goods from Mexico and Canada has heightened tension among
trading partners. Further, in response to the U.S. government’s announcement of
tariffs on goods from China, the Chinese government has countered with tariffs
on U.S. goods, marking the beginning of a potential trade war between the
countries. Tariffs on imported goods may increase the cost of certain products
and household items, which may in turn dampen consumer spending and result in
decreased confidence in the markets. The possibility of additional tariffs being
imposed or the outbreak of a trade war may further adversely impact U.S. and
international 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 illness or other public health issues,
recessions, raising of interest rates, or other events could have a significant
impact on the Fund and its investments and trading of its Shares. This increases
the risk that monetary policy may provide less support should economic growth
slow. Market risk factors may result in increased volatility and/or decreased
liquidity in the securities markets. The Fund’s NAV could decline over short
periods due to short-term market movements and over longer periods during market
downturns.
New
Fund Risk
The
Fund is a new fund, with no operating history, which may result in additional
risks for investors in the Fund. There can be no assurance that the Fund will
grow to or maintain an economically viable size, in which case the Board of
Trustees may determine to liquidate the Fund. While shareholder interests will
be the paramount consideration, the timing of any liquidation may not be
favorable to certain individual shareholders. 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 most of its assets in securities issued by
or representing a small number of companies. As a result, the Fund may be more
susceptible
to the risks associated with these particular companies, or to a single
economic, political or regulatory occurrence affecting these
companies.
Operational
Risk
The
Fund is exposed to operational risk arising from a number of factors, including
but not limited to human error, processing and communication errors, errors of
the Fund's service providers, counterparties or other third-parties, failed or
inadequate processes and technology or systems failures.
With
the increased use of technologies such as the internet to conduct business, the
Fund, Authorized Participants, service providers and the relevant listing
exchange are susceptible to operational, information security and related
“cyber” risks both directly and through their service providers. 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, the Index Provider, market
makers or Authorized Participants. The Fund and its shareholders could be
negatively impacted as a result.
The
Fund and the Adviser seek to reduce these operational risks through controls and
procedures. However, these measures do not address every possible risk and may
be inadequate for those risks that they are intended to address.
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.
Large
Shareholder Risk
Certain
shareholders, including an Authorized Participant, the Adviser or an affiliate
of the Adviser, may own a substantial amount of the Fund’s Shares. Additionally,
from time to time an Authorized Participant, a third-party investor, the
Adviser, or an affiliate of the Adviser may invest in the Fund and hold its
investment for a specific period of time in order to facilitate commencement of
the Fund’s operations or to allow the Fund to achieve size or scale.
Redemptions by large shareholders could have a significant negative impact on
the Fund. If a large shareholder were to redeem all, or a large portion, of its
Shares, there is no guarantee that the Fund will be able to maintain sufficient
assets to continue operations in which case the Board of Trustees may determine
to liquidate the Fund. In addition, transactions by large shareholders may
account for a large percentage of the trading volume on the 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. There can be no assurance that the requirements necessary to
maintain the listing or trading of Fund Shares will continue to be met or will
remain unchanged.
Shares
of the Fund May Trade at Prices Other Than NAV
Shares
of the Fund may trade at, above or below NAV. The per share NAV of the Fund will
fluctuate with changes in the market value of the Fund’s holdings. The trading
prices of Shares will fluctuate in accordance with changes in the Fund's NAV as
well as market supply and demand. The trading prices of the Fund's Shares may
deviate significantly from NAV during periods of market volatility or when the
Fund has relatively few assets or experiences a lower trading volume. In
stressed market conditions, the market for the Shares may become less liquid in
response to the deteriorating liquidity of the Fund’s portfolio. Any of these
factors may lead to the Fund's Shares trading at a premium or discount to NAV.
While the creation/redemption feature is designed to make it likely that Shares
normally will trade close to the Fund’s NAV, market prices are not expected to
correlate exactly with the Fund's NAV due to timing reasons as well as market
supply and demand factors. In addition, disruptions to creations and redemptions
or the existence of extreme market volatility may result in trading prices that
differ significantly from NAV. If a shareholder purchases at a time when the
market price is at a premium to the NAV or sells at a time when the market price
is at a discount to the NAV, the shareholder may sustain losses.
Since
foreign exchanges may be open on days when the Fund does not price Shares, the
value of the securities in the Fund’s portfolio may change on days when
shareholders will not be able to purchase or sell Shares.
Costs
of Buying or Selling Fund Shares
Buying
or selling Fund Shares involves two types of costs that apply to all securities
transactions. When buying or selling Shares of the Fund through a broker, you
will likely incur a brokerage commission or other charges imposed by brokers as
determined by that broker. In addition, you may incur the cost of the "spread" -
that is, the difference between what professional investors are willing to pay
for Fund Shares (the "bid" price) and the market price at which
they
are willing to sell Fund Shares (the "ask" price). Because of the costs inherent
in buying or selling Fund Shares, frequent trading may detract significantly
from investment results and an investment in Fund Shares may not be advisable
for investors who anticipate regularly making small investments.
Trading
Halt Risk
An
exchange or market may close or issue trading halts on specific securities, or
the ability to buy or sell certain securities or financial instruments may be
restricted, which may result in the Fund being unable to buy or sell certain
securities or financial instruments. In such circumstances, the Fund may be
unable to rebalance its portfolio, may be unable to accurately price its
investments and/or may incur substantial trading losses.
Valuation
Risk
The
sales price the Fund could receive for a security may differ from the Fund’s
valuation of the security and may differ from the value used by the Underlying
Index, particularly for securities that trade in low value or volatile markets
or that are valued using a fair value methodology (such as during trading
halts). 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 the Fund receives
a tax refund that has not been previously accrued, investors in the Fund at the
time the claim is successful will benefit from any resulting increase in the
Fund’s NAV. Investors who sold their shares prior to such time will not benefit
from such NAV increase.
PORTFOLIO
HOLDINGS INFORMATION
A
description of the policies and procedures of Global X Funds®
(the "Trust") with respect to the disclosure of the 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
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 Space Tech 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 first 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 Nam To and Wayne Xie.
Nam
To:
Nam To, CFA, Portfolio Manager, joined the Adviser in July 2017. Prior to that,
Mr. To was a Global Economics Research Analyst at Bunge Limited. Mr. To received
his Bachelor of Arts in Philosophy and Economics from Cornell University and is
a CFA charterholder.
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.
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 improve tracking error or 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 November 30 (or
December 31, 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 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
Nasdaq Stock Market LLC ("NASDAQ" or 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. Use of fair
value prices and certain current market valuations could result in a difference
between the prices used to calculate the Fund's NAV and the prices used by the
Fund's Underlying Index, which, in turn, could result in a difference between
the Fund's performance and the performance of the Fund's Underlying
Index.
Because
foreign markets may be open on different days than the days during which a
shareholder may purchase Shares, the value of 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. Any use of a different
rate from the rates used by the Index Provider may adversely affect the Fund's
ability to track its Underlying Index.
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 the
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
Global
X Space Tech Index
The
Underlying Index is owned and was developed by Global X Management Company LLC
(the “Index Provider”), the Fund's investment adviser (the “Adviser”) and an
affiliate of the Fund. The Underlying Index is administered and calculated by
Mirae Asset Global Indices Pvt. Ltd. (the “Index Administrator”), an affiliate
of the Index Provider and the Fund.
The
Underlying Index, as presently constituted, is designed to track the performance
of space technology (“Space Tech”) companies involved in the commercialization
of the global space economy. “Space Tech” means technology that is used to
support, enable, and/or conduct activities beyond the surface of the Earth.
Space Tech companies are companies that are involved in critical segments of the
upstream and downstream Space Tech theme such as [space technology and
components, reusable launch vehicles, orbital transportation services, space
exploration and tourism, and satellite-enabled telecommunications and data
services, as described below]. In constructing the Underlying Index, the Index
Administrator analyzes industries and business segments within FactSet’s
classification system that the Index Administrator considers to be related to
the Space Tech theme to create an initial universe of eligible securities.
FactSet is an independent leading financial data provider that maintains a
comprehensive structured taxonomy designed to offer precise classification of
global companies and their individual business units. Companies that are
identified as deriving a significant proportion of their revenue from the
following sub-themes will be evaluated for inclusion in the initial universe:
•[Rocket
Launch and Reusable Rockets:
Companies providing launch systems and reusable rocket technology reducing costs
and increasing access to space for cargo, satellites, and missions.
•Space
Tech & Components:
Companies delivering mission-critical hardware, components, software, and
analytics that power modern space operations. This includes specialized engines,
orbital transport systems, space-grade components, satellite imagery, AI based
systems, and data solutions that underpin space manufacturing, logistics,
intelligence gathering, and computing.
•Satellite
Telecommunications & Data Services:
Companies engaged in delivering global connectivity systems powered by their
satellite networks, enabling broadband internet, GPS, and secure communications
for individual, commercial, and government use.
•Space
Transportation, Tourism and Exploration:
Companies providing human spaceflight ventures, from orbital tourism to deep
space missions, commercializing space travel as well as offering orbital
discovery services.]
To
be a part of the initial universe, companies must meet certain minimum market
capitalization and liquidity criteria, as determined by the Index Administrator.
As of [ ], companies must have a minimum market capitalization of [$200 million]
and an average daily turnover for the last [6 months] greater than or equal to
[$2 million] for inclusion in the initial universe. 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 Administrator. Additionally, companies must be listed in developed or
emerging market countries to be eligible for inclusion in the initial universe.
As of [ ], companies listed in the following countries are not eligible for
inclusion: [Bangladesh, China, India, Kuwait, Pakistan, Russia, Egypt, and Saudi
Arabia]. As of [ ], companies must have a minimum of 10% of their outstanding
shares available for public investment.
After
identifying business segments eligible for inclusion in the initial universe,
the Index Administrator further screens securities within the segments to
identify companies that derive a majority of their revenues from one or more of
the stated business activities of the sub-themes. To be considered for inclusion
in the Underlying Index, and therefore be considered a "Space Tech” company,
companies must generate at least 50% of their revenues from one or more of the
stated business activities of the above sub-themes, in aggregate, as determined
by the Index Administrator.
Additionally,
companies with business operations primarily in the Aerospace & Defense
sector, as determined by the Index Administrator, that derive between 0% and 50%
of their revenues from one or more sub-themes and that have business operations
in the business activities described above are also eligible for inclusion
(collectively, “Diversified Aerospace & Defense Companies”). The aggregate
weight of all securities classified as Diversified Aerospace & Defense
Companies will be capped at 10%. Diversified Aerospace & Defense Companies
that do not have current revenues in one or more of the business activities
outlined in the sub-themes must have significant business involvement in one or
more of the sub-themes such that future revenues are reasonably expected to
result from such business activities, as determined by the Index
Administrator.
The
Underlying Index is weighted according to a modified capitalization weighting
methodology and is reconstituted and re-weighted on a [quarterly] basis. The
modified capitalization weighting seeks to weight constituents based on their
“free float” market capitalization subject to caps on the weights of the
individual securities. Free float market capitalization measures a company’s
market capitalization discounted by the percentage of its shares readily
available to be traded by the general public in the open market (“free float”).
At each rebalance, the maximum weight of an individual security is capped at [
]%. [In addition, Diversified Aerospace & Defense Companies are subject to
single security weight cap of [4%] and an aggregate weight cap of [10%] at each
[quarterly] rebalance.] Modified capitalization weighting is expected to limit
the Fund’s exposure to the largest market capitalization companies in the
Underlying Index. The Underlying Index may include large-, mid- or
small-capitalization companies; however, the Underlying Index is not required to
reflect any one or all market capitalizations. As of [ ], the Underlying Index
had [ ] constituents.
Disclaimer
Global
X Management Company LLC owns all rights to the trademark, name and intellectual
property associated with the Global X Space Tech Index. No representation is
made by Global X Management Company LLC that the Global X Space Tech Index is
accurate or complete or that investment in the Global X Space Tech Index or the
Global X Space Tech ETF will be profitable or suitable for any person. The
Global X Space Tech Index is administered and calculated by Mirae Asset Global
Indices Pvt. Ltd. and Global X Management Company LLC will have no liability for
any error in calculation of the Global X Space Tech Index. Global X Management
Company LLC does not guarantee that the Global X Space Tech Index or the
underlying methodology is accurate or complete.
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. Registered
investment companies may be permitted to invest in the Fund beyond the limits
set forth in section 12(d)(1), subject to certain conditions set forth in Rule
12d1-4 under the 1940 Act, including that such investment companies enter into
an agreement with the Fund.
The
method by which Creation Units are created and traded may raise certain issues
under applicable securities laws. Because new Creation Units are issued and sold
by the 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 that has commenced operations and its investments is
available in its annual and semi-annual reports to shareholders and in Form
N-CSR. 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 each such Fund’s semi-annual and
annual report, the Statement of Additional Information, or other information,
such as Fund financial statements, 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
