ADDITIONAL INFORMATION ABOUT THE FUND’S STRATEGIES AND RISKS

 

ADDITIONAL STRATEGIES

 

In addition to the investment strategies discussed above under Fund Summaries—Principal Investment Strategies , each Fund may use the following investment strategies:

 

Derivative Instruments, Cash or Stocks not included in the Underlying Index: Each Fund may invest up to 20% of its assets in (i) certain futures, options and swap contracts (which may be leveraged and are considered derivatives), (ii) cash and cash equivalents and (iii) stocks not included in the Underlying Index that the Adviser believes will help the Fund track the Underlying Index.

 

Leverage: Each Fund may borrow money from a bank as permitted under the Investment Company Act of 1940 (“1940 Act”), and as interpreted or modified by regulatory authority having jurisdiction, from time to time.  For example, the Funds may borrow money at fiscal quarter ends to maintain the required level of diversification to qualify as a “regulated investment company” for purposes of the Internal Revenue Code.

 

Securities Lending: Each Fund may lend its portfolio securities.  In connection with such loans, each Fund will receive liquid collateral equal to at least 102% of the value of domestic equity securities and ADRs and 105% of the value of foreign equity securities (other than ADRs)  being lent.  This collateral is marked-to-market on a daily basis.

 

ADDITIONAL RISKS

 

Each Fund is subject to the risks described below.  Some or all of these risks may adversely affect the Fund’s NAV, trading price, yield, total return and/or its ability to meet its objectives.

 

Asset Class Risk

 

The returns from the types of securities in which a Fund invests may under-perform returns from the various general securities markets or different asset classes.  The stocks in the Underlying Indexes may under-perform fixed-income investments and stock market investments that track other markets, segments and sectors.  Different types of securities tend to go through cycles of out-performance and under-performance in comparison to the general securities markets.

 

Concentration Risk

 

To the extent that its Underlying Index or portfolio is concentrated in the securities of companies in a particular country, market, industry, group of industries, sector or asset class, a Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.

 

Counterparty Risk

 

Counterparty Risk is the risk that a counterparty to a swap contract or other similar investment instrument may default on its payment obligation to a Fund.  Such a default may cause the value of an investment in a Fund to decrease.

 

Currency Risk

 

Currency risk is the potential for price fluctuations in the dollar value of foreign securities because of changing currency exchange rates.  Because each Fund’s NAV is determined on the basis of U.S. dollars, you may lose money if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the Fund’s holdings goes up.

 

Custody Risk

 

Custody risk refers to risks in the process of clearing and settling trades and to the holding of securities by local banks, agents and depositories.  Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle.  Local agents are held only to the standard of care of the local markets.  Governments or trade groups may compel local agents to hold securities in designated depositories that are subject to independent evaluation.  The less developed a country’s securities market is, the greater the likelihood of custody problems occurring.

 

Derivatives Risk

 

Derivatives risk is the risk that loss may result from a Fund’s investments in options, futures and swap contracts, which may be leveraged and are types of derivatives.  Investments in leveraged instruments may result in losses exceeding the amounts invested.  The Funds may use these instruments to help the Funds track their Underlying Indexes.  Compared to conventional securities, derivatives can be more sensitive to changes in interest rates or to sudden fluctuations in market prices and thus a Fund’s losses may be greater if it invests in derivates than if it invests only in conventional securities.

 

Emerging Market Risk

 

Emerging Market Risk applies to the Global X Mexico Small Cap ETF, Global X South Korea Small Cap ETF and Global X Taiwan Small-Cap ETF.

 

The risks of foreign investment are heightened when the issuer is located in an emerging country. A Fund’s purchase and sale of portfolio securities in certain emerging 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 a Fund, the Adviser, its affiliates and their respective clients and other service providers.  A 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 countries is restricted or controlled to varying degrees, which may limit investment in such countries or increase the administrative costs of such investments.  In addition, certain countries may restrict or prohibit investment opportunities in issuers or industries deemed important to national interests.  Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund.  The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents.

 

A Fund’s investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such countries to the Fund.

 

The creditworthiness of the local securities firms used by a Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries.  As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.

 

Foreign Security Risk

 

Each Fund’s assets may be invested within the equity markets of countries outside of the U.S.  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 Funds; higher transaction and custody costs and delays in settlement procedures; difficulties in enforcing contractual obligations; lower levels of regulation of the securities market; and weaker accounting, disclosure and reporting requirements.  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 a 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.

 

Geographic Risk

 

Geographic risk is the risk that a Fund’s assets may be concentrated in countries located in the same geographic region.  This concentration will subject a Fund to risks associated with that particular region, such as a natural disaster.

 

Issuer Risk

 

Issuer risk is the risk that any of the individual companies that a 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.

 

Shares of the Funds May Trade at Prices Other Than NAV

Shares of the Funds may trade at, above or below their NAV. The per share NAV of each Fund will fluctuate with changes in the market value of such Fund’s holdings. The trading prices of Shares will fluctuate in accordance with changes in its NAV as well as market supply and demand. The trading prices of a Fund's shares may deviate significantly from NAV during periods of market volatility.  Any of these factions 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, exchange prices are not expected to correlate exactly with a 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 Funds do 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 a 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 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.

 

Non-Diversification Risk

 

Each Fund is classified as “non-diversified.” This means that each Fund may invest most of its assets in securities issued by or representing a small number of companies.  As a result, each 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.

Passive Investment 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. The Adviser does not attempt to take defensive positions in declining markets.

 

Reliance on Trading Partners Risk

 

Economies in emerging market countries generally are dependent heavily upon commodity prices and international trade and, accordingly, may be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values, and may suffer from extreme and volatile debt burdens or inflation rates:

 

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Asian Economic Risk

 

Certain Asian economies have experienced over-extension of credit, currency devaluations and restrictions, high unemployment, high inflation, decreased exports and economic recessions.  Economic events in one country can have a significant economic effect on the entire Asian region as well as on major trading partners outside Asia and any adverse events in the Asian markets may have a significant adverse effect on certain emerging markets.

 

Central and South American Economic Risk

 

The economies of certain Central and South American countries have experienced high interest rates, economic volatility, inflation, currency devaluations, government defaults and high unemployment rates.  In addition, commodities (such as oil, gas and minerals) represent a significant percentage of the region’s exports and many economies in this region are particularly sensitive to fluctuations in commodity prices. Adverse economic events in one country may have a significant adverse effect on other countries of this region.

 

European Economic Risk

 

The Economic and Monetary Union of the European Union (the “EMU”) requires compliance with restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary controls, each of which may significantly affect every country in Europe.  Decreasing imports or exports, changes in governmental or EMU regulations on trade, changes in the exchange rate of the euro, the default or threat of default by an EMU member country or its sovereign debt, and recessions in an EMU member country may have a significant adverse effect on the economies of EMU member countries and their trading partners.  The European financial markets have recently experienced volatility and adverse trends due to concerns about rising government debt levels of several European countries, including Greece, Spain, Ireland, Italy and Portugal.  These events have adversely affected the exchange rate of the euro and may continue to significantly affect every country in Europe.  Outside of the European Union (“EU”), Iceland has also experienced adverse trends due to high debt levels and excessive lending.

 

U.S. Economic Risk

 

The United States is a significant trading partner of many emerging markets in which the fund invests.  Decreasing U.S. imports, new trade regulations, changes in the U.S. dollar exchange rate, a recession in the United States or continued increases in foreclosures rates may have a material adverse effect on economies of the countries in which each Fund invests.  In addition, high levels of unemployment continue to persist in the U.S., and the effects of the subprime mortgage market may continue to weigh on U.S. economic growth in the future.

Risks Related to Investing in Germany

 

Risks Related to Investing in Germany only applies to the Global X Germany Small-Cap ETF.

 

Germany is subject to risks of social unrest and heavy governmental control, any of which may adversely affect investments in Germany.  Certain sectors and regions of Germany have experience high unemployment and labor and social unrest.  These issues may cause downturns in the German markets.  Heavy regulation of labor and product markets is pervasive in Germany.  These regulations may at times stifle German economic growth or cause prolonged periods of recession.

 

 

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Risks Related to Investing in Hong Kong

 

Risks Related to Investing in Hong Kong only applies to the Global X Hong Kong Small-Cap ETF.

 

Hong Kong is located in a part of the world that has historically been prone to natural disasters such as earthquakes and tsunamis and is economically sensitive to environmental events.  Any such event could result in a significant adverse impact on the Hong Kong economy.

 

Hong Kong is a small island state with few raw material resources and limited land area and is reliant on imports for its commodity needs.  Any fluctuations or shortages in the commodity markets could have a negative impact on the Hong Kong economy.

 

Hong Kong reverted to Chinese sovereignty on July 1, 1997 as a Special Administrative Region (SAR) of the People’s Republic of China under the principle of “one country, two systems.”  Although China is obligated to maintain the current capitalist economic and social system of Hong Kong through June 30, 2047, the continuation of economic and social freedoms enjoyed in Hong Kong is dependent on the government of China.  Any attempts by China to tighten its control over Hong Kong’s political, economic or social policies may result in an adverse effect on Hong Kong’s economy.

Risks Related to Investing in Mexico

 

Risks Related to Investing in Mexico only applies to the Global X Mexico Small-Cap ETF.

 

Mexico has begun a process of privatization of certain entities and industries.  In some instances, investors in some newly privatized entities have suffered losses due to the inability of newly privatized entities to adjust quickly to a competitive environment or to changing regulatory and legal standards.  There is no assurance that such losses will not recur.

 

Mexico has historically experienced acts of terrorism, significant criminal activity and strained international relations related to border disputes; historical animosities; the drug trade; and other defense concerns.  Recently, criminal gang activity related to the drug trade has been on the rise.  These situations may cause uncertainty in the Mexican market and adversely affect the performance of the Mexican economy.

 

Certain political and currency instability risks have contributed to a high level of price volatility in the Mexican equity and currency markets and could adversely affect investments in the Fund.  Mexico has been destabilized by local insurrections, social upheavals, drug related violence, and the recent public health crisis related to the H1N1 influenza outbreak.  Recurrence of these or similar conditions may adversely impact the Mexican economy.  In addition, changes in political parties or other Mexican political events may affect the economy and cause instability.

 

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Historically, Mexico has experienced substantial economic instability resulting from, among other things, periods of very high inflation and significant devaluations of the Mexican currency, the peso.

Risks Related to Investing in Singapore

 

Risks Related to Investing in Singapore only applies to the Global X Singapore Small-Cap ETF.

 

Rising labor costs and increasing environmental consciousness have led some labor-intensive industries to relocate to countries with cheaper work forces, and continued labor outsourcing may adversely affect the Singaporean economy.

 

Singapore is a small island state with few raw material resources and limited land area and is reliant on imports for its commodity needs.  Any fluctuations or shortages in the commodity markets could have a negative impact on the Singaporean economy.  Given its size and position, Singapore is also sensitive to the socio-political and economic developments of its neighbors, Indonesia and Malaysia, relying on both as markets for Singapore’s service industry and on Malaysia for its raw water supply.

Risks Related to Investing in South Korea

 

Risks Related to Investing in South Korea only applies to the Global X South Korea Small-Cap ETF.

 

South Korea is located in a part of the world that has historically been prone to natural disasters such as earthquakes and tsunamis and is economically sensitive to environmental events.  Any such event could result in a significant adverse impact on the South Korean economy.

 

North and South Korea each have substantial military capabilities, and historical tensions between the two present the ongoing risk of war.  Recent incidents involving the North Korean military have heightened tensions between North and South Korea.  Any outbreak of hostilities between the two countries could have a severe adverse effect on the South Korean economy and its securities markets.

 

South Korea may be subject to economic and labor risks.  Among these structural concerns are the country’s underdeveloped financial markets and a general lack of regulatory transparency.  The restructuring of the South Korean economy and the need to create a more liberalized economy with a mechanism for bankrupt firms to exit the market, remain important unfinished economic reform tasks.  These factors may adversely affect the South Korean economy and cause a diversion of corporate investment to China and other lower wage countries.  South Korea’s economic growth potential is susceptible to problems from large scale emigration, rigid labor regulations and ongoing labor relational issues.  In addition, the average age of South Korea’s workforce is rapidly increasing.

 

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Risks Related to Investing in Taiwan

 

Risks Related to Investing in Taiwan only applies to the Global X Taiwan Small-Cap ETF.

 

Taiwan is located in a part of the world that has historically been prone to natural disasters such as earthquakes and tsunamis and is economically sensitive to environmental events.  Any such event could result in a significant adverse impact on the Taiwanese economy.

 

Taiwan’s size and geographic proximity to the People’s Republic of China and its history of political contention with China which regards Taiwan as a renegade province, have resulted in ongoing tensions with China, including the continual risk of war with China.  These tensions may materially impact the Taiwanese economy and securities markets.

 

Rising labor costs and increasing environmental consciousness have led some labor-intensive industries to relocate to countries with cheaper work forces, and continued labor outsourcing may adversely affect the Taiwanese economy.

Risks Related to Investing in the UK

 

Risks Related to Investing in the UK only applies to the Global X UK Small-Cap ETF.

 

Continued governmental involvement or control in certain sectors may stifle competition or cause adverse effects on economic growth.  The UK has also experienced acts of terrorism and other defense concerns.  These situations may cause uncertainty in the British market and may adversely affect the performance of the British economy.

 

Securities Lending Risk

 

Each Fund may engage in lending its portfolio securities. Although a Fund will receive collateral in connection with all loans of its securities holdings, a Fund would be exposed to a risk of loss should a borrower default on its obligation to return the borrowed securities (e.g., the loaned securities may have appreciated beyond the value of the collateral held by a Fund). In addition, a Fund will bear the risk of loss of any cash collateral that it invests.

Securities Market Risk

 

Because certain securities markets in the countries in which each Fund may invest are small in size, underdeveloped and are less correlated to global economic cycles than those markets located in more developed countries (such as the United States, Japan and most Western European countries), the securities markets in such countries are subject to greater risks associated with market volatility, lower market capitalization, lower trading volume, illiquidity, inflation, greater price fluctuations and uncertainty regarding the existence of trading markets.  Moreover, trading on securities markets may be suspended altogether.  A Fund’s investment in securities in these countries are subject to the risk that the liquidity of a particular security or investments generally, will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor perceptions, whether or not accurate.  Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and then only at a substantial drop in price.  Investments in these countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.

 

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Market volatility in the countries in which each Fund invests may also be heightened by the actions of a small number of investors.  Brokerage firms in these countries may be fewer in number and less established than brokerage firms in more developed markets.  Since the Funds may need to effect securities transactions through these brokerage firms, the Funds are subject to the risk that these brokerage firms will not be able to fulfill their obligations to the Funds (counterparty risk).  This risk is magnified to the extent the Funds effect securities transactions through a single brokerage firm or a small number of brokerage firms.

Security Risk

 

Security Risk applies to the Global X Mexico Small-Cap ETF.

 

Mexico has historically experienced acts of terrorism, significant criminal activity and strained international relations related to border disputes; historical animosities; the drug trade; and other defense concerns.  Recently, criminal gang activity related to the drug trade has been on the rise.  These situations may cause uncertainty in Mexican market and adversely affect the performance of the Mexican economy.

 

Small-Capitalization Companies Risk

 

Small-cap companies may have greater volatility in price than the stocks of large companies due to limited product lines or resources or a dependency upon a particular market niche. Further, stocks of small-sized companies could be more difficult to liquidate during market downturns compared to larger, more widely traded companies.

 

Tracking Error Risk

 

Tracking risk is the risk that a Fund’s performance may vary substantially from the performance of the Underlying Index it tracks as a result of imperfect correlation between the Fund’s securities and those of the Underlying Index.  Imperfect correlation may result from share purchases and redemptions, expenses, changes in the Underlying Indexes, asset valuations, foreign currency valuations, market impact, corporate actions (such as mergers and spin-offs), legal restrictions (such as tax-related diversification requirements that apply to the Funds but not to the Underlying Index) and timing variances, among other factors.

 

Valuation Risk

 

Because non-US exchanges may be open on days when each 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.

 

PORTFOLIO HOLDINGS INFORMATION

 

A description of the Trust’s policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ combined Statement of Additional Information (“SAI”).  The largest holdings of each Fund can be found at www.globalxfunds.com and Fund Fact sheets provide information regarding each Fund’s top holdings and may be requested by calling 1-888-GX-Fund-1 (1-888-493-8631).

 

 

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FUND MANAGEMENT

Investment Adviser

 

Global X Management Company LLC serves as the 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 an investment adviser since 2008.  The Adviser is a Delaware limited liability company with its principal offices located at 399 Park Avenue, 32 nd floor, New York, New York 10022.

 

Pursuant to a Supervision and Administration Agreement and subject to the general supervision of the Board of Trustees of the Trust, the Adviser provides or causes to be furnished,   all supervisory, administrative and other services reasonably necessary for the operation of the Funds and also bears the costs of various third-party services required by the Funds, including audit, certain custody, portfolio accounting, legal, transfer agency and printing costs.  The Supervision and Administration Agreement also requires the Adviser to provide investment advisory services to the Funds pursuant to an Investment Advisory Agreement.

 

Each Fund pays the Adviser a fee (“Management Fee”) in return for providing investment advisory, supervisory and administrative services under an all-in fee structure.  The Management Fees are at the following annual rates (stated as a percentage of the average daily net assets of each Fund taken separately):

Fund		Management Fee
Global X UK Small-Cap ETF			0.59	%
Global X Germany Small-Cap ETF			0.59	%
Global X Mexico Small-Cap ETF			0.69	%
Global X Hong Kong Small-Cap ETF			0.69	%
Global X Singapore Small-Cap ETF			0.69	%
Global X South Korea Small-Cap ETF			0.69	%
Global X Taiwan Small-Cap ETF			0.69	%

In addition, each Fund bears other fees and expenses that are not covered by the Supervision and Administration Agreement, which may vary and will affect the total ratio of the Fund, such as taxes and governmental fees, brokerage fees, commissions and other transaction expenses, costs of borrowing money, including interest expenses and extraordinary expenses (such as litigation and indemnification expenses).  The Adviser may earn a profit on the Management Fee paid by the Funds. Also, the Adviser, and not Fund shareholders, would benefit from any price decreases in third-party services, including decreases resulting from an increase in net assets.

 

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The Trust, the Adviser and the Distributor each have adopted a code of ethics, (“Code”) as required by applicable law, which is designed to prevent affiliated persons of the Trust, the Adviser, and the Distributor from engaging in deceptive, manipulative, or fraudulent activities in connection with securities held or to be acquired by each Fund (which may also be held by persons subject to a Code).  There can be no assurance that the Codes will be effective in preventing such activities.  The Codes permit personnel subject to them to invest in securities, including securities that may be held or purchased by the Funds.  The Codes are on file with the SEC and are available to the public.

 

Approval of Advisory Agreement

 

A discussion regarding the basis for the Board of Trustees’ approval of Supervision and Administration Agreement and the related Investment Advisory Agreement will be available in the Funds’ first annual or semi-annual report to shareholders.

Portfolio Management

 

The portfolio managers who are currently responsible for the day-to-day management of the Fund’s portfolio are Bruno del Ama and Jose Gonzalez.

 

Bruno del Ama:   Bruno del Ama has been Chief Executive Officer of the Adviser since March 2008.  Prior to joining the Adviser, Mr. del Ama was a director at Radian Asset Assurance from 2004 to 2008.  Mr. del Ama received a Masters in Business Administration from the Wharton Business School and holds the series 65.

 

Jose Gonzalez:   Jose Gonzalez has been Chief Operating Officer of the Adviser since March 2008.  Mr. Gonzalez is also the founder and president of GWM Group, Inc. (“GWM”), a registered broker-dealer and an affiliate of the Adviser.  Mr. Gonzalez has been affiliated with GWM since 2006.  Mr. Gonzalez holds the Series 7, 24, 63 and 65.

The SAI provides additional information about the portfolio managers’ compensation structure, other accounts managed by the portfolio managers, and the portfolio manager’s ownership of securities of the Funds.

 

DISTRIBUTOR

 

SEI Investments Distribution Co. 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 Funds or the securities that are purchased or sold by each Fund. The Distributor’s principal address is One Freedom Valley Drive Oaks, PA 19456.  The Distributor is not affiliated with the Adviser.

 

 

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BUYING AND SELLING FUND SHARES

Shares of the Funds trade on the Exchange and elsewhere 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 the 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 a lot of 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 a Fund may be acquired or redeemed directly from the Fund only in Creation Units or multiples thereof, as discussed in the Creations and Redemptions section in the SAI. Once created, Shares generally trade in the secondary market in amounts less than a Creation Unit.

 

Shares of the Funds trade under the trading symbols listed for each Fund in the Description of the Funds section.

 

The Funds will be listed on the Exchange.  The Exchange 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, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

 

Book Entry

 

Shares of the Funds are held in book-entry form, which means that no stock certificates are issued. The Depository Trust Company (“DTC”) or its nominee is the record owner of all outstanding Shares and is recognized as the owner of all Shares for all purposes.

 

Investors owning Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Shares. Participants include DTC, securities brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with DTC.  As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any rights as an owner of Shares, you must rely upon the procedures of DTC and its participants.  These procedures are the same as those that apply to any securities that you hold in book entry or “street name” form.

FREQUENT TRADING

 

Unlike frequent trading of shares of a traditional open-end mutual funds (i.e., not exchange-traded shares), frequent trading of Shares on the secondary market does not disrupt portfolio management, increase the Funds’ trading costs, lead to realization of capitalization gains, or otherwise harm Funds shareholders because these trades does not involve the Funds directly.  A few institutional investors are authorized to purchase and redeem each 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 to cover the custodial and other costs incurred by the Funds 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 Funds’ trading costs increase in those circumstances.  For these reasons, the Board of Trustees has determined that it is not necessary to adopt policies and procedures to detect and deter frequent trading and market-timing in Shares of the Funds.

 

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DISTRIBUTION AND SERVICE PLAN

 

The Board of Trustees of the Trust has adopted a distribution and services plan (“Plan”) pursuant to Rule 12b-1 under the 1940 Act.  Under the Plan, each Fund is authorized to pay distribution fees in connection with the sale and distribution of its Shares and pay service fees in connection with the provision of ongoing services to shareholders of each class and the maintenance of shareholder accounts in an amount up to 0.25% of its average daily net assets each year.

 

No Rule 12b-1 fees are currently paid by the Funds, and there are no current plans to impose these fees.  However, in the event Rule 12b-1 fees are charged in the future, because these fees are paid out of each Fund’s assets on an ongoing basis, these fees will increase the cost of your investment in the Funds.  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 Funds.

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 securities gains are distributed at least annually. In order to improve tracking error or comply with the distribution requirements of the Internal Revenue Code of 1986, dividends may be declared and paid more frequently than annually for the Funds.

 

Dividends and other distributions on Shares are distributed on a pro rata basis to beneficial owners of such Shares. Dividend payments are made through DTC participants to beneficial owners then of record with proceeds received from a Fund.  Dividends and securities gains 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.

 

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TAXES

 

The following is a summary of certain tax considerations that may be relevant to an investor in the Funds.  Except where otherwise indicated, the discussion relates to investors who are individual United States citizens or residents and is based on current tax law.  You should consult your tax advisor for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation.

 

Distributions .  Each Fund receives income generally in the form of dividends and interest on its investments. This income, less expenses, incurred in the operation of such Funds, constitutes the Funds’ net investment income from which dividends may be paid to you.  Each Fund intends to qualify as a regulated investment company for federal tax purposes, and to distribute to shareholders substantially all of its net investment income and net capital gain each year.  Except as otherwise noted below, you will generally be subject to federal income tax on a Fund’s distributions 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 a Fund generally are taxable to you as long-term capital gains.  This is true no matter how long you own your Shares or whether you take distributions in cash of additional Shares.  The maximum long-term capital gain rate applicable to individuals is 15%.

Distributions of “qualifying dividends” will also generally be taxable to you at long-term capital gain rates through 2012, as long as certain requirements are met.  In general, if 95% or more of the gross income of a Fund (other than net capital gain) consists of dividends received from domestic corporations or “qualified” foreign corporations (“qualifying dividends”), then all distributions paid by a Fund to individual shareholders will be treated as qualifying dividends.  But if less than 95% of the gross income of a Fund (other than net capital gain) consists of qualifying dividends, then distributions paid by such Fund to individual shareholders will be qualifying dividends only to the extent they are derived from qualifying dividends earned by such Fund. For the lower rates to apply, you must have owned your Shares for at least 61 days during the 121-day period beginning on the date that is 60 days before such Fund’s ex-dividend date (and such Fund will need to have met a similar holding period requirement with respect to the shares of the corporation paying the qualifying dividend).  The amount of a Fund’s distributions that qualify for this favorable treatment may be reduced as a result of such Fund’s securities lending activities (if any), a high portfolio turnover rate or investments in debt securities or “non-qualified” foreign corporations.  In addition, whether distributions received from foreign corporations are qualifying dividends will depend on several factors including the country of residence of the corporation making the distribution. Accordingly, distributions from many of the Funds’ holdings may not be qualifying dividends.

 

A portion of distributions paid by a Fund to shareholders who are corporations may also qualify for the dividends-received deduction for corporations, subject to certain holding period requirements and debt financing limitations.  The amount of the dividends qualifying for this deduction may, however, be reduced as a result of such Fund’s securities lending activities, by a high portfolio turnover rate or by investments in debt securities or foreign corporations.  All dividends (including the deducted portion) must be included in a corporation’s alternative minimum taxable income calculations.

 

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Distributions from a Fund will generally be taxable to you in the year in which they are paid, with one exception. Dividends and distributions declared by a Fund in October, November or December and paid in January of the following year are taxed as though they were paid on December 31.

 

You should note that if you buy Shares of a Fund shortly before it makes a distribution, the distribution will be fully taxable to you even though, as an economic matter, it simply represents a return of a portion of your investment.  This adverse tax result is known as “buying into a dividend.”

 

You will be informed of the amount of your ordinary income dividends, qualifying dividend income and capital gains distributions at the time they are paid, and will advise you of the tax status for federal income tax purposes shortly after the close of each calendar year. If you have not held Shares for a full year, a Fund may designate and distribute to you, as ordinary income or capital gain, a percentage of income that is not equal to the actual amount of such income earned during the period of your investment in such Fund.

A Fund’s investments in partnerships, including in Qualified Publicly Traded Partnerships, may result in such 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% of capital gain (both long-term and short-term) for the one-year period ending on October 31 (or December 31, if such 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 such Fund from its current year’s ordinary income and capital gain net income and (b) any amount on which such Fund pays income tax for the taxable year ending in the calendar year. Although such Fund intends to distribute its net investment income and net capital gains so as to avoid excise tax liability, such Fund may determine that it is in the interest of shareholders to distribute a lesser amount. The Funds intend to declare and pay these amounts in December (or in January which must be treated by you as received in December) to avoid these excise taxes, but can give no assurances that 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 a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time such Fund actually collects such receivables or pays such liabilities are treated as ordinary income or ordinary loss. Similarly, gains or losses from the disposition of foreign currencies, from the disposition of debt securities denominated in a foreign currency, or from the disposition of a forward foreign currency contract which are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the asset and the date of disposition also are treated as ordinary income or loss. These gains or losses, referred to under the Code as “section 988” gains or losses, increase or decrease the amount of such Fund’s investment company taxable income available to be distributed to its shareholders as ordinary income, rather than increasing or decreasing the amount of such Fund’s net capital gain.

 

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Foreign Taxes .  Each Fund will be subject to foreign withholding taxes with respect to certain dividends or interest received from sources in foreign countries.  If at the close of the taxable year more than 50% in value of a Fund’s assets consists of stock in foreign corporations, such Fund will be eligible to make an election to treat a proportionate amount of those taxes as constituting a distribution to each shareholder, which would allow you either (subject to certain limitations) (1) to credit that proportionate amount of taxes against U.S. Federal income tax liability as a foreign tax credit or (2) to take that amount as an itemized deduction. If a Fund is not eligible or chooses not to make this election it will be entitled to deduct such taxes in computing the amounts it is required to distribute.

 

Sales and Exchanges .  The sale of Shares is a taxable event on which a gain or loss may be 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 gains distributions that you have received on the Shares.  A loss realized on a sale or exchange of Shares may be disallowed under the so-called “wash sale” rules to the extent the Shares disposed of are replaced with other Shares of that same Fund within a period of 61 days beginning 30 days before and ending 30 days after the Shares are disposed of, such as pursuant to a dividend reinvestment in Shares of a Fund.  If disallowed, the loss will be reflected in an adjustment to the basis of the Shares acquired.

 

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 will not be currently taxable unless the Shares were purchased with borrowed funds.

 

Backup Withholding .  Each Fund will be required in certain cases to withhold and remit to the U.S. Treasury the applicable back up withholding rate of the dividends and gross sales proceeds paid to any shareholder (i) who had provided either an incorrect tax identification number or no number at all, (ii) who is subject to backup withholding by the Internal Revenue Service, or (iii) who has failed to certify to a Fund, when required to do so, that he or she is not subject to backup withholding or is an “exempt recipient.”

 

U.S. Tax Treatment of Foreign Shareholders .  A foreign shareholder generally will not be subject to U.S. withholding tax in respect of proceeds from, or gain on, the redemption of Shares or in respect of capital gain dividends (i.e., dividends attributable to long-term capital gains of a Fund) unless, in the case of a shareholder who is a non-resident alien individual, the shareholder is present in the United States for 183 days or more during the taxable year and certain other conditions are met.  Foreign 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 such 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.  Foreign shareholders should consult their tax advisors regarding the U.S. and foreign tax consequences of investing in the Funds.

 

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State and Local Taxes .  You may also be subject to state and local taxes on income and gain attributable to your ownership of Shares. State income taxes may not apply, however, to the portions of the Funds’ distributions, if any, that are attributable to interest earned by a Fund on U.S. government securities. You should consult your tax advisor regarding the tax status of distributions in your state and locality.

 

Consult Your Tax Professional .  Your investment in a Fund could have additional tax consequences. You should consult your tax professional for information regarding all tax consequences applicable to your investments in a Fund. More tax information relating to the Funds is also provided in the Statement of Additional Information. This short summary is not intended as a substitute for careful tax planning.

DETERMINATION OF NET ASSET VALUE

 

Each Fund calculates its NAV generally once daily Monday through Friday generally as of the regularly scheduled close of business of the New York Stock Exchange (“NYSE”) (normally 4:00 p.m. Eastern time) on each day that the NYSE is open for business, based on prices at the time of closing, provided that any assets or liabilities denominated in currencies other than the U.S. dollar shall be translated into U.S. dollars at the prevailing market rates on the date of valuation as quoted by one or more major banks or dealers that make a two-way market in such currencies (or a data service provider based on quotations received from such banks or dealers).  The NAV of each Fund is calculated by dividing the value of the net assets of such Fund (i.e., the value of its total assets less total liabilities) by the total number of outstanding Shares, generally rounded to the nearest cent.

 

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, a pricing service, 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.  In the case of shares of funds that are not traded on an exchange, a market valuation means such Fund’s published NAV per share.  A Fund may use various pricing services or discontinue the use of any pricing service.  A price obtained from a pricing service based on such pricing service’s valuation matrix may be considered a market valuation.

 

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 Fund’s Board of Trustees.  The frequency with which a Fund’s investments are valued using fair value pricing is primarily a function of the types of securities and other assets in which the Fund invests pursuant to its investment objective, strategies and limitations.

 

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Investments that may be valued using fair value pricing include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (i.e., one that may not be publicly sold without registration under the Securities Act of 1933, as amended (the “Securities Act”)); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (i.e., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Fund’s NAV is computed and that may materially affect the value of the Fund’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.

 

Valuing a Fund’s investments using fair value pricing will result in using prices for those investments that may differ from current market valuations.  Use of fair value prices and certain current market valuations could result in a difference between the prices used to calculate the Fund’s net asset value 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.  A list of the holiday schedules of the foreign exchanges of the Funds’ Underlying Indexes, as well as the dates on which a settlement period would exceed seven calendar days in 2011 is contained in the SAI.

 

The value of assets denominated in foreign currencies is converted into U.S. dollars using exchange rates deemed appropriate by the Adviser as investment adviser.  Any use of a different rate from the rates used by each Index Provider may adversely affect the Fund’s ability to track its Underlying Index.

 

PREMIUM/DISCOUNT INFORMATION

 

Information regarding how often the Shares of each Fund traded on the Exchange at a price above (i.e., at a premium) or below (i.e., at a discount) the net asset value of the Fund during the past calendar year can be found at www.globalxfunds.com.

 

INFORMATION REGARDING THE INDEXES AND THE INDEX PROVIDER

 

FTSE 250 Index

 

The FTSE 250 Index is designed to represent the performance of small-cap UK companies.  It is comprised of the next 250 UK companies by market capitalization not covered by the 100 largest capitalization companies in the FTSE 100 Index. The index is comprised of UK companies as defined by FTSE that are listed in the London Stock Exchange.  The stocks are screened for liquidity and weighted according to free-float market capitalization.  The index is maintained by FTSE International Limited.

 

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Solactive Germany Small-Cap Index

 

The Solactive Germany Small-Cap Index is designed to reflect the performance of German small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in Germany. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

Solactive Mexico Small-Cap Index

 

The Solactive Mexico Small-Cap Index is designed to reflect the performance of Mexican small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in Mexico. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

Solactive Hong Kong Small-Cap Index

 

The Solactive Hong Kong Small-Cap Index is designed to reflect the performance of Hong Kong small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in Hong Kong. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

Solactive Singapore Small-Cap Index

 

The Solactive Singapore Small-Cap Index is designed to reflect the performance of Singaporean small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in Singapore. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

Solactive South Korea Small-Cap Index

 

The Solactive South Korea Small-Cap Index is designed to reflect the performance of South Korean small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in South Korea. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

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Solactive Taiwan Small-Cap Index

 

The Solactive Taiwan Small-Cap Index is designed to reflect the performance of Taiwanese small cap companies. It is comprised of companies whose market capitalization is less than $3 billion as of the date of its inclusion in the index.  The index is comprised of companies that are domiciled or have their main business operations in Taiwan. The stocks are screened for liquidity and weighted according to free-float market capitalization. The index is maintained by Structured Solutions AG.

 

Each Index Provider is described separately below:

 

FTSE International Limited (“FTSE”) is a world-leader in the creation and management of over 100,000 equity, bond and hedge fund indices. With offices in Beijing, London, Frankfurt, Hong Kong, Boston, Shanghai, Madrid, Paris, New York, San Francisco, Sydney and Tokyo, FTSE Group services clients in 77 countries worldwide. FTSE is an independent company owned by the Financial Times and the London Stock Exchange. FTSE does not give financial advice to clients, which allows for the provision of truly objective market information. FTSE indices are used extensively by investors world-wide such as consultants, asset owners, asset managers, investment banks, stock exchanges and brokers.

 

Structured Solutions AG (“Structured Solutions”) is a leading company in the structuring and indexing business for institutional clients. Structured Solutions runs the Solactive index platform (formerly S-BOX platform). Solactive indices are used by issuers worldwide as underlying indices for financial products. Furthermore, Structured Solutions cooperates with various stock exchanges and index providers worldwide, e.g. Karachi Stock Exchange, Shenzhen Securities Information Company and Dubai Gold & Commodities Exchange. Structured Solutions does not sponsor, endorse or promote the Fund and is not in any way connected to it and does not accept any liability in relation to its issue, operation and trading.

 

OTHER SERVICE PROVIDERS

 

SEI Investments Global Fund Services is the sub-administrator for each Fund.

 

Brown Brothers Harriman & Co. is the custodian and transfer agent for each Fund.

 

Dechert LLP serves as legal counsel to the Independent Trustees of each Fund.

 

Ernst & Young serves as the Funds’ independent registered public accounting firm.  The independent registered public accounting firm is responsible for auditing the annual financial statements of each Fund.

FINANCIAL HIGHLIGHTS

 

Because the Funds have not commenced operations as of the date of this prospectus, financial highlights are not yet available.

 

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OTHER INFORMATION

 

The Funds are not sponsored, endorsed, sold or promoted by the Exchange.  The Exchange makes no representation or warranty, express or implied, to the owners of Shares or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly or the ability of the Funds to achieve their objectives.  The Exchange has no obligation or liability in connection with the administration, marketing or trading of the Funds.

 

For purposes of the 1940 Act, Shares are issued by a registered investment company and purchases of such Shares by investment companies and companies relying on Section 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, except as permitted by an exemptive order that permits registered investment companies to invest in Shares beyond the limits in Section 12(d)(1)(A), subject to certain terms and conditions, including that the registered investment company and companies relying on Section 3(c)(1) or 3(c)(7) of the 1940 Act enter into an agreement with the Trust regarding the terms of the investment.

 

The Trust has obtained an SEC order permitting registered investment companies to invest in Shares as described above.  One such condition stated in the order is that registered investment companies relying on the order must enter into a written agreement with the Trust.

 

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For more information visit our website at or

 

call 1-888-GXFund-1 (1-888-493-8631)

 

www.globalxfunds.com

Investment Adviser

Global X Management Company LLC

399 Park Avenue, 32 nd floor

New York, NY 10022

Distributor

SEI Investments Distribution Co.

One Freedom Valley Drive

Oaks, PA 19456

Custodian and Transfer Agent

Brown Brothers Harriman & Co.

40 Water Street

Boston, MA 02109

Sub-Administrator

SEI Investments Global Fund Services

One Freedom Valley Drive

Oaks, PA 19456

Legal Counsel to the Independent Trustees

Dechert LLP

1775 I Street

Washington, DC 20006-2401

Independent Registered Public Accounting Firm

Ernst & Young

5 Times Square

New York, NY 10036-6530

 

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A Statement of Additional Information dated May 3, 2011, which contains more details about the Funds, is incorporated by reference in its entirety into this Prospectus, which means that it is legally part of this Prospectus.

 

You will find additional information about each Fund and its investments  in its annual and semi-annual reports to shareholders, when available.  The annual report will explain the market conditions and investment strategies affecting each Fund’s performance during its last fiscal year.

 

You can ask questions or obtain a free copy of each Fund’s shareholder report or the Statement of Additional Information by calling 1-888-GXFund-1 (1-888-493-8631).  Free copies of the Fund’s shareholder report and the Statement of Additional Information are available from our website at www.globalxfunds.com.

 

Information about each Fund, including its reports and the Statement of Additional Information, has been filed with the SEC.  It can be reviewed and copied at the SEC’s Public Reference Room in Washington, DC or on the EDGAR database on the SEC’s internet site (http://www.sec.gov).  Information on the operation of the SEC’s Public Reference Room may be obtained by calling the SEC at 1-202-551-8090.  You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, 100 F Street N.E., Room 1580, Washington, DC 20549-1520.

 

PROSPECTUS

 

Distributor

 

SEI Investments Distribution Co.

One Freedom Valley Drive

Oaks, PA 19456

 

May 3, 2011

 

Investment Company Act File No.: 811-22209

 

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Global X Fertilizers/Potash ETF

 

NYSE Arca, Inc: SOIL

 

Global X Rare Earths ETF

 

NYSE Arca, Inc: RERX

 

Global X Strategic Metals ETF

 

NYSE Arca, Inc: SMX

 

Prospectus

 

May 3, 2011

 

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus.  Any representation to the contrary is a criminal offense.

 

Shares in a Fund are not guaranteed or insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other agency of the U.S. Government, nor are shares deposits or obligations of any bank.  Such shares in a Fund involve investment risks, including the loss of principal.

TABLE OF CONTENTS

FUND SUMMARIES		1
ADDITIONAL INFORMATION ABOUT THE FUND’S STRATEGIES AND RISKS		19
PORTFOLIO HOLDINGS INFORMATION		28
FUND MANAGEMENT		28
DISTRIBUTOR		30
BUYING AND SELLING FUND SHARES		30
FREQUENT TRADING		31
DISTRIBUTION AND SERVICE PLAN		31
DIVIDENDS AND DISTRIBUTIONS		32
TAXES		32
DETERMINATION OF NET ASSET VALUE		36
PREMIUM/DISCOUNT INFORMATION		37
INFORMATION REGARDING THE INDEXES AND THE INDEX PROVIDER		37
OTHER SERVICE PROVIDERS		38
FINANCIAL HIGHLIGHTS		38
OTHER INFORMATION		38

FUND SUMMARIES

 

Global X Fertilizers/Potash ETF

 

Ticker: SOIL   Exchange: NYSE Arca, Inc.