As filed with the U.S. Securities and Exchange Commission
on April 12, 2013
Securities Act File No. 333-151713
Investment Company Act File No. 811-22209
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
Registration Statement Under The Securities Act Of 1933 þ
Pre-Effective Amendment No. ________ q
Post-Effective Amendment No. 112 þ
and/or
Registration Statement Under The Investment Company Act Of 1940 þ
Amendment No. 115 þ
(Check appropriate box or boxes)
Global X Funds
(Exact Name of Registrant as Specified in Charter)
623 Fifth Avenue, 15th Floor
New York, NY 10022
(Address of Principal Executive Office)
Registrant’s Telephone Number, including Area Code: (212) 644-6440
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Bruno del Ama Global X Management Company LLC 623 Fifth Avenue, 15th Floor |
With a copy to:
| Daphne Tippens Chisolm, Esq. | |
| Law Offices of DT Chisolm, P.C. | |
| 11524 C Providence Road, Suite 236 | |
| Charlotte, NC 28277 | |
It is proposed that this filing will become effective (check appropriate box)
þimmediately upon filing pursuant to paragraph (b)
q on (date) pursuant to paragraph (b)
q 60 days after filing pursuant to paragraph (a)(1)
q on (date) pursuant to paragraph (a)(1)
q 75 days after filing pursuant to paragraph (a)(2)
q on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
q this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
EXPLANATORY NOTE
This filing relates solely to the following series of the Registrant:
| Global X MLP ETF | |
| Global X Junior MLP ETF | |
| Global X MLP Natural Gas ETF |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 112 to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City and State of New York on the 12th day of April, 2013.
| Global X Funds | |
| By: /s/ Bruno del Ama | |
| President |
Pursuant to the requirements of the Securities Act of 1933, the Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
| Name | Title | Date | ||
| /s/ Bruno del Ama | President (Principal Executive Officer) and Trustee | April 12, 2013 | ||
| Bruno del Ama | ||||
| /s/ Jose C. Gonzalez | Chief Operating Officer, Treasurer (Principal Financial Officer) and Principal Accounting Officer | April 12, 2013 | ||
| Jose C. Gonzalez | ||||
| * | ||||
| Sanjay Ram Bharwani | Trustee | April 12, 2013 | ||
| * | ||||
| Scott R. Chichester | Trustee | April 12, 2013 | ||
| * | ||||
| Kartik Kiran Shah | Trustee | April 12, 2013 | ||
| */s/ Bruno del Ama | ||||
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Attorney-In-Fact, pursuant to power of attorney
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EXHIBIT INDEX
| Index No. | Description of Exhibit |
| EX-101.IN | XBRL Instance Document |
| EX-101.SCH | XBRL Taxonomy Extension Schema Document |
| EX-101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| EX-101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| EX-101.LAB | XBRL Taxonomy Extension Labels Linkbase |
| EX-101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
| Label | Element | Value | ||
|---|---|---|---|---|
| Risk/Return: | rr_RiskReturnAbstract | |||
| Prospectus Date | rr_ProspectusDate | Apr. 01, 2013 | ||
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Global X MLP Natural Gas ETF (Prospectus Summary) | Global X MLP Natural Gas ETF
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| Risk/Return: | rr_RiskReturnAbstract | |||
| Risk/Return [Heading] | rr_RiskReturnHeading | Global X MLP Natural Gas ETF |
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| Investment Objective, Heading | rr_ObjectiveHeading | INVESTMENT OBJECTIVE |
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| Investment Objective, Primary | rr_ObjectivePrimaryTextBlock | The Global X MLP Natural Gas ETF (“Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive MLP Natural Gas Index (“Underlying Index”). |
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| Expense, Heading | rr_ExpenseHeading | FEES AND EXPENSES |
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| Expense, Narrative | rr_ExpenseNarrativeTextBlock | This table describes the fees and expenses that you may pay if you buy and hold shares (“Shares”) of the Fund. You will also incur usual and customary brokerage commission when buying and selling Shares. |
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| Operating Expenses, Caption | rr_OperatingExpensesCaption | Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment): |
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| Portfolio Turnover, Heading | rr_PortfolioTurnoverHeading | Portfolio Turnover: |
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| Portfolio Turnover | rr_PortfolioTurnoverTextBlock | 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. The Fund had not yet commenced investment operations as of the most recent fiscal year end. Thus, no portfolio turnover rate is provided for the Fund. |
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| Other Expenses, New Fund, Based on Estimates [Text] | rr_OtherExpensesNewFundBasedOnEstimates | “Other Expenses” reflect estimated expenses for the Fund’s first fiscal year of operations. |
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| Expense Exchange Traded Fund Commissions [Text] | rr_ExpenseExchangeTradedFundCommissions | You will also incur usual and customary brokerage commission when buying and selling Shares. |
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| Expense Example | rr_ExpenseExampleHeading | Example: |
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| Expense Example Narrative | rr_ExpenseExampleNarrativeTextBlock | The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. |
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| Expense Example by, Year, Caption | rr_ExpenseExampleByYearCaption | Although your actual costs may be higher or lower, based on these assumptions, your costs would be: |
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| Investment Strategy, Heading | rr_StrategyHeading | PRINCIPAL INVESTMENT STRATEGIES |
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| Investment Strategy, Narrative | rr_StrategyNarrativeTextBlock | The Fund invests at least 80% of its net assets in the securities of the Underlying Index. Moreover, at least 80% of the Fund’s net assets will be invested securities that have economic characteristics of the Master Limited Partnership (“MLP”) natural gas asset class. The Fund’s 80% investment policies are non-fundamental and require 60 days’ prior written notice to shareholders before they can be changed.
The Index is intended to give investors a means of tracking the performance of the United States master limited partnerships (MLP) natural gas asset class. As of March 1, 2013, the Underlying Index was comprised of 25 MLPs engaged in the transportation, storage, processing, marketing, exploration and production of natural gas. The Fund’s investment objective and Underlying Index may be changed without shareholder approval.
The Underlying Index is sponsored by an organization (“Index Provider”) that is independent of the Fund and Global X Management Company LLC, the investment adviser for the Fund (“Adviser”). The Index Provider determines the relative weightings of the securities in the Underlying Index and publishes information regarding the market value of the Underlying Index. The Fund’s Index Provider is Structured Solutions AG.
The Adviser uses a “passive” or indexing approach to try to achieve the Fund’s investment objective. Unlike many investment companies, the Fund does not try to “beat” the Underlying Index and does not seek temporary defensive positions when markets decline or appear overvalued.
The Fund uses a replication strategy. A replication strategy is an indexing strategy that involves investing in the securities of the Underlying Index in approximately the same proportions as in the Underlying Index. However, the Fund may utilize a representative sampling strategy with respect to the Underlying Index when a replication strategy might be detrimental to shareholders, such as when there are practical difficulties or substantial costs involved in compiling a portfolio of equity securities to follow the Underlying Index, in instances in which a security in the Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as a result of legal restrictions or limitations that apply to the Fund but not the Underlying Index.
MLPs are publicly traded partnerships engaged in the transportation, storage, processing, refining, marketing, exploration, production, and mining of natural resources. By confining their operations to these specific activities, their interests, or units, are able to trade on public securities exchanges exactly like the shares of a corporation, without entity level taxation.
To qualify as a MLP and to not be taxed as a corporation, a partnership must receive at least 90% of its income from qualifying sources as set forth in Section 7704(d) of the Internal Revenue Code of 1986, as amended (the “Code”). These qualifying sources include interest, dividends, real estate rents, gain from the sale or disposition of real property, income and gain from mineral or natural resources activities, income and gain from the transportation or storage of certain fuels, gain from the sale or disposition of a capital asset held for the production of income described in the foregoing, and, in certain circumstances, income and gain from commodities or futures, forwards and options with respect to commodities.
MLPs generally have two classes of owners, the general partner and limited partners. The general partner of an MLP is typically owned by a major energy company, an investment fund, or the direct management of the MLP, or is an entity owned by one or more of such parties. The general partner may be structured as a private or publicly traded corporation or other entity. The general partner typically controls the operations and management of the MLP through an up to 2% equity interest in the MLP plus, in many cases, ownership of common units and subordinated units. Limited partners typically own the remainder of the partnership, through ownership of common units, and have a limited role in the partnership’s operations and management. MLPs are typically structured such that common units and general partner interests have first priority to receive quarterly cash distributions up to an established minimum amount (“minimum quarterly distributions” or “MQD”). Common and general partner interests also accrue arrearages in distributions to the extent the MQD is not paid. Once common and general partner interests have been paid, subordinated units receive distributions of up to the MQD; however, subordinated units do not accrue arrearages. Distributable cash in excess of the MQD is paid to both common and subordinated units and is distributed to both common and subordinated units generally on a pro rata basis. The general partner is also eligible to receive incentive distributions if the general partner operates the business in a manner which results in distributions paid per common unit surpassing specified target levels. As the general partner increases cash distributions to the limited partners, the general partner receives an increasingly higher percentage of the incremental cash distributions.
Due to the nature of the Fund’s investments, the Fund will not qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Fund will be taxed as a regular corporation for federal income tax purposes.
Correlation: Correlation is the extent to which the values of different types of investments move in tandem with one another in response to changing economic and market conditions. An index is a theoretical financial calculation, while the Fund is an actual investment portfolio. In addition to the risk of tracking error due to the effect of taxes, the performance of the Fund and the Underlying Index may vary due to transaction costs, asset valuations, foreign currency valuations, market impact, corporate actions (such as mergers and spin-offs), legal restrictions or limitations, illiquid or unavailable securities, and timing variances.
The Adviser seeks a correlation over time of 95% or better between the Fund’s performance, before fund fees, expenses, and taxes, and the performance of the Underlying Index. 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.
Industry Concentration Policy: The Fund concentrates its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated. |
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| Strategy Portfolio Concentration [Text] | rr_StrategyPortfolioConcentration | The Fund concentrates its investments (i.e., hold 25% or more of its total assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated. |
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| Risk, Heading | rr_RiskHeading | SUMMARY OF PRINCIPAL RISKS |
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| Risk Narrative | rr_RiskNarrativeTextBlock | 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. 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’s Strategies and Risks section of the Prospectus and in the Statement of Additional Information ("SAI").
Asset Class Risk: Securities in the Underlying Index or the Fund's portfolio may underperform in comparison to the general securities markets or other asset classes.
Cash Transaction Risk: Unlike many ETFs, the Fund expects to effect redemptions for cash, rather than in-kind. As a result, an investment in the Fund may be less tax-efficient than an investment in a more conventional ETF. Because the Fund may effect redemptions for cash, rather than by in-kind distributions, it may be required to sell portfolio securities in order to obtain the cash needed to distribute redemption proceeds. Such cash transactions may have to be carried out over several days if the securities market is relatively illiquid and may involve considerable brokerage fees. These brokerage fees, which will be higher than if the Fund redeemed its Shares in-kind, will be passed on to redeemers of Creation Units in the form of redemption transaction fees. In addition, these factors may result in wider spreads between the bid and the offered prices of the Fund’s Shares than for more conventional ETFs.
Concentration Risk: To the extent that the Fund's investments are concentrated in a particular country, market, industry or asset class, the Fund will be susceptible to loss due to adverse occurrences affecting that country, market, industry or asset class. The Fund is concentrated in natural gas, and as such the Fund may be susceptible to adverse economic or regulatory occurrences affecting the natural gas sector. For example, changes in governmental policies towards natural gas may adversely affect Fund performance.
Equity Securities Risk: Equity securities are subject to changes in value and their values may be more volatile than other asset classes.
Industry Specific Risks: The Fund invests primarily in natural gas MLPs, which are subject to risks specific to the industry they serve including, but not limited to, reduced volumes of natural gas available for transporting, processing or storing; new construction risks and acquisition risk which can limit growth potential; a sustained reduced demand for natural gas resulting from a recession or an increase in market price or higher taxes; changes in the regulatory environment; extreme weather; rising interest rates which could result in a higher cost of capital and drive investors into other investment opportunities; and threats of attack by terrorists.
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 their securities to decline.
Liquidity Risk: Certain MLP securities may trade less frequently than those of larger companies due to their smaller capitalizations.
Market Risk: The Fund's NAV could decline over short periods due to short-term market movements and over longer periods during market downturns.
Market Trading Risks: The Fund faces numerous market trading risks, including the potential lack of an active market for Shares, losses from trading in secondary markets, and disruption in the creation/redemption process of the Fund. Any of these factors may lead to the Shares trading at a premium or discount to NAV.
MLP Risk: Investments in securities of MLPs involve risks that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP, risks related to potential conflicts of interest between the MLP and the MLP’s general partner, cash flow risks, as described in more detail herein. MLP common units and other equity securities can be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer (in the case of MLPs, generally measured in terms of distributable cash flow). Prices of common units of individual MLPs and other equity securities also can be affected by fundamentals unique to the partnership or company, including earnings power and coverage ratios.
Non-Diversification Risk: The Fund may invest a large percentage of its assets in securities issued by or representing a small number of issuers. As a result, the Fund’s performance may depend on the performance of a small number of issuers.
Passive Investment Risk: The Fund is not actively managed and the Adviser does not attempt to take defensive positions in declining markets.
Potential Substantial After-Tax Tracking Error From Index Performance. The Fund will be subject to taxation on its taxable income. The NAV of Shares will also be reduced by the accrual of any deferred tax liabilities. The Underlying Index however is calculated without any deductions for taxes. As a result, the Fund’s after tax performance could differ significantly from the Underlying Index even if the pretax performance of the Fund and the performance of the Underlying Index are closely correlated. The performance of the Fund may diverge from that of the Underlying Index
Securities Lending Risk: Securities lending involves the risk that the Fund loses money because the borrower fails to return the securities in a timely manner or at all. The Fund could also lose money in the event of a decline in the value of the collateral provided for loaned securities or of investments made with cash collateral. These events could also trigger adverse tax consequences for the Fund. As securities on loan may not be voted by the Fund, there is a risk that the Fund may not be able to recall the securities in sufficient time to vote on material proxy matters.
Small and Mid-Capitalization Companies Risk: Small and mid-capitalization companies may have greater volatility in price than the stocks of mid- and large-capitalization companies due to limited product lines or resources or a dependency upon a particular market niche.
Tax Risks: Tax risks associated with investments in the Fund include but are not limited to the following:
Deferred Tax Liability. Cash distributions from an MLP to the Fund that exceed such Fund’s allocable share of such MLP’s net taxable income are considered a tax-deferred return of capital that will reduce the Fund’s adjusted tax basis in the equity securities of the MLP. These reductions in such Fund’s adjusted tax basis in the MLP equity securities will increase the amount of gain (or decrease the amount of loss) recognized by the Fund on a subsequent sale of the securities. The Fund will accrue deferred income taxes for any future tax liability associated with (i) that portion of MLP distributions considered to be a tax-deferred return of capital as well as (ii) capital appreciation of its investments. Upon the sale of an MLP security, the Fund may be liable for previously deferred taxes. The Fund’s accrued deferred tax liability will be reflected each day in the Fund’s NAV. Increases in deferred tax liability will decrease the NAV. Conversely, decreases in deferred tax liability will increase the NAV. The Fund will rely to some extent on information provided by the MLPs, which is not necessarily timely, to estimate deferred tax liability for purposes of financial statement reporting and determining the NAV. From time to time, the Adviser will modify the estimates or assumptions regarding the Fund’s deferred tax liability as new information becomes available. The Fund’s estimates regarding its deferred tax liability are made in good faith. However, the daily estimate of the Fund’s deferred tax liability used to calculate the Fund’s NAV could vary significantly from the Fund’s actual tax liability. The Fund will generally compute deferred income taxes based on the federal income tax rate applicable to corporations currently 35% and an assumed rate attributable to state taxes.
MLP Tax Risk. MLPs do not pay U.S. federal income tax at the partnership level. Rather, each partner is allocated a share of the partnership’s income, gains, losses, deductions and expenses. A change in current tax law, or a change in the underlying business mix of a given MLP, could result in an MLP being treated as a corporation for U.S. federal income tax purposes, which would result in such MLP being required to pay U.S. federal income tax on its taxable income. The classification of an MLP as a corporation for U.S. federal income tax purposes would have the effect of reducing the amount of cash available for distribution by the MLP. Thus, if any of the MLPs owned by the Fund were treated as corporations for U.S. federal income tax purposes, it could result in a reduction in the value of your investment in the Fund and lower income.
Returns of Capital Distributions From the Fund Reduce the Tax Basis of Fund Shares: A portion of the Fund’s distributions are expected to be treated as a return of capital for tax purposes. Returns of capital distribution are not taxable income to you but reduce your tax basis in your Fund Shares. Such a reduction in tax basis will result in larger taxable gains and/or lower tax losses on a subsequent sale of Fund Shares. Shareholders who sell their Shares for less than they bought them may still recognize a gain due to the reduction in tax basis. Shareholders who periodically receive the payment of dividends or other distributions consisting of a return of capital may be under the impression that they are receiving net profits from the Fund when, in fact, they are not. Shareholders should not assume that the source of the distributions is from the net profits of the Fund.
Tax Status of the Fund. The Fund is taxed as a regular corporation for federal income tax purposes. This differs from most investment companies, which elect to be treated as “regulated investment companies” under the Code in order to avoid paying entity level income taxes. Under current law, the Fund is not eligible to elect treatment as a regulated investment company due to its investments primarily in MLPs invested in energy assets. As a result, the Fund will be obligated to pay applicable federal and state corporate income taxes on its taxable income as opposed to most other investment companies which are not so obligated. As discussed below, the Fund expects that a portion of the distributions it receives from MLPs may be treated as a tax-deferred return of capital, thus reducing the Fund’s current tax liability. However, the amount of taxes currently paid by the Fund will vary depending on the amount of income and gains derived from investments and/or sales of MLP interests and such taxes will reduce your return from an investment in the Fund. Upon the sale of an MLP security, the Fund may be liable for previously deferred taxes even if the MLP security is sold at a loss. |
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| Risk Lose Money [Text] | rr_RiskLoseMoney | 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. |
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| Risk Nondiversified Status [Text] | rr_RiskNondiversifiedStatus | The Fund may invest a large percentage of its assets in securities issued by or representing a small number of issuers. As a result, the Fund’s performance may depend on the performance of a small number of issuers. |
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| Bar Chart and Performance Table | rr_BarChartAndPerformanceTableHeading | PERFORMANCE INFORMATION |
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| Performance Narrative | rr_PerformanceNarrativeTextBlock | The Fund has not commenced operations as of the date of this prospectus. Thus, no bar chart or Average Annual Total Returns table is included for the Fund. |
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| Performance One Year or Less [Text] | rr_PerformanceOneYearOrLess | The Fund has not commenced operations as of the date of this prospectus. Thus, no bar chart or Average Annual Total Returns table is included for the Fund. |
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Global X MLP Natural Gas ETF (Prospectus Summary) | Global X MLP Natural Gas ETF | Global X MLP Natural Gas ETF
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| Risk/Return: | rr_RiskReturnAbstract | |||
| Management Fees: | rr_ManagementFeesOverAssets | 0.58% | ||
| Distribution and Service (12b-1) Fees: | rr_DistributionAndService12b1FeesOverAssets | none | ||
| Other Expenses (Deferred Income Tax Expense): | rr_OtherExpensesOverAssets | none | [1] | |
| Total Annual Fund Operating Expenses: | rr_ExpensesOverAssets | 0.58% | ||
| Expense Example, with Redemption, 1 Year | rr_ExpenseExampleYear01 | 59 | ||
| Expense Example, with Redemption, 3 Years | rr_ExpenseExampleYear03 | 186 | ||
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