January 11, 2013
Global X Junior MLP ETF
NYSE Arca,
Inc: MLPJ
2013 Summary Prospectus
Before you invest, you may want to review
the Fund's prospectus, which contains more information about the Fund and its risks. You can find the Fund's prospectus and other
information about the Fund (including the Fund’s statement of additional information) online at http://www.globalxfunds.com/investorrelations.php.
You can also get this information at no cost by calling 1-888-GX-FUND-1 or by sending an e-mail request to info@globalxfunds.com.
The Fund’s prospectus and statement of additional information, both dated November 27, 2012, as amended and supplemented
from time to time, are incorporated by reference into (legally made a part of) this Summary Prospectus.
Global X Junior MLP ETF
Ticker:
MLPJ
Exchange: NYSE Arca, Inc.
INVESTMENT OBJECTIVE
The Global X Junior MLP ETF (“Fund”)
seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive
Junior MLP Index (“Underlying Index”).
FEES AND EXPENSES
This table describes the fees and expenses
that you may pay if you buy and hold shares (“Shares”) of the Fund. You will also incur usual and customary brokerage
commission when buying and selling Shares.
Annual Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment):
|
Management Fees:
|
0.75%
|
|
Distribution and Service (12b-1) Fees:
|
None
|
|
Other Expenses:
1
|
0.00%
|
|
Total Annual Fund Operating Expenses:
|
0.75%
|
Example:
The following example is
intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not
take into account customary brokerage commissions that you pay when purchasing or selling shares of the Fund in the secondary market.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your shares at the
end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
|
One Year
|
Three Years
|
|
$77
|
$240
|
Portfolio Turnover:
The Fund pays
transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher taxes when Shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. 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.
__________________________
|
|
1
|
“Other Expenses” reflect estimated expenses
for the Fund’s first fiscal year of operations. “Other Expenses” does not reflect deferred income tax liability
to be incurred by the Fund. The Fund will accrue deferred income tax liability for its future tax liability associated with the
capital appreciation of its investments and the distributions received by the Fund on equity securities of MLPs considered to
be return of capital and for any net operating gains. The Fund’s accrued deferred tax liability will be reflected each day
in the Fund’s net asset value per share. The Fund’s current and deferred tax liability, if any, will depend upon the
Fund’s net investment gains and losses and realized and unrealized gains and losses on investments and therefore may vary
greatly from year to year depending on the nature of the Fund’s investments, the performance of those investments and general
market conditions. Actual income tax expense, if any, will be incurred over many years, depending on if and when investment gains
and losses are realized, the then-current basis of the Fund’s assets and other factors.
|
PRINCIPAL INVESTMENT STRATEGIES
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
in securities that have economic characteristics of the small-capitalization segment of the Master Limited Partnership (“MLP”)
asset class. For purposes of this policy, the Fund considers small-cap companies to be those companies included in, or similar
in size to those included in, the Solactive Junior MLP Index, as of the latest reconstitution date, at the time of purchase.
As of November 14, 2012, the market capitalization of the Solactive Junior MLP Index was between $200 million and $2.5 billion.
The Fund’s capitalization range will change over time. The Fund’s 80% investment policies are non-fundamental
and require 60 days’ prior written notice to shareholders before they can be changed.
The Underlying Index is intended to give
investors a means of tracking the overall performance of the small-capitalization segment of the United States master limited partnerships
(MLP) asset class. As of November 14, 2012, the Underlying Index and was comprised of 24 MLPs engaged in the transportation, storage,
processing, refining, marketing, exploration, production, and mining of natural resources. 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 generally will use a replication
strategy. A replication strategy is an indexing strategy that involves investing in the securities of the Underlying Index in approximately
the same proportions as in the Underlying Index. However, the Fund may utilize a representative sampling strategy with respect
to the Underlying Index when a replication strategy might be detrimental to shareholders, such as when there are practical difficulties
or substantial costs involved in compiling a portfolio of equity securities to follow the Underlying Index, in instances in which
a security in the Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as a result of legal restrictions
or limitations 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. Of the 24 MLPs in the Index as of November 14, 2012, 15 trade
on the New York Stock Exchange (“NYSE”) and the rest trade on the NASDAQ Stock Market (“NASDAQ”).
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. The performance
of the Fund and the Underlying Index may vary due to the effect of taxes, 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.
SUMMARY OF PRINCIPAL RISKS
As with any investment, you could lose
all or part of your investment in the Fund, and the Fund's performance could trail that of other investments. 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. 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 energy
and as such the Fund may be susceptible to adverse economic or regulatory occurrences affecting the energy and energy infrastructure
sector. For example, changes in governmental policies towards energy infrastructure 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:
MLPs operating
in the energy sector are also subject to risks that are specific to the industry they serve.
Midstream.
Midstream MLPs that provide
crude oil, refined product and natural gas services are subject to supply and demand fluctuations in the markets they serve which
may be impacted by a wide range of factors including fluctuating commodity prices, weather, increased conservation or use of alternative
fuel sources, increased governmental or environmental regulation, depletion, rising interest rates, declines in domestic or foreign
production, accidents or catastrophic events, increasing operating expenses and economic conditions, among others.
Exploration and production.
Exploration
and production MLPs produce energy resources, including natural gas and crude oil. Exploration and production MLPs that own oil
and gas reserves are particularly vulnerable to declines in the demand for and prices of crude oil and natural gas. Substantial
downward adjustments in reserve estimates could have a material adverse effect on the value of such reserves and the financial
condition of an MLP. Exploration and production MLPs seek to reduce cash flow volatility associated with commodity prices by executing
multi-year hedging strategies that fix the price of gas and oil produced. There can be no assurance that the hedging strategies
currently employed by these MLPs are currently effective or will remain effective.
Marine shipping.
Marine shipping
MLPs are primarily marine transporters of natural gas, crude oil or refined petroleum products. Marine shipping companies are exposed
to many of the same risks as other energy companies. The highly cyclical nature of the marine transportation industry may lead
to volatile changes in charter rates and vessel values, which may adversely affect the revenues, profitability and cash flows of
MLPs with marine transportation assets.
Propane.
Propane MLPs are distributors
or propane to homeowners for space and water heating. MLPs with propane assets are subject to earnings variability based upon weather
conditions in the markets they serve, fluctuating commodity prices, customer conservation and increased use of alternative fuels,
increased governmental or environmental regulation, and accidents or catastrophic events, among others.
Natural Resource.
MLPs with coal,
timber, fertilizer and other mineral assets are subject to supply and demand fluctuations in the markets they serve, which will
be impacted by a wide range of domestic and foreign factors including fluctuating commodity prices, the level of their customers’
coal stockpiles, weather, increased conservation or use of alternative fuel sources, increased governmental or environmental regulation,
depletion, declines in production, mining accidents or catastrophic events, health claims and economic conditions, among others.
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-Capitalization Companies Risk:
The Fund may invest a significant percentage of its assets in small-capitalization companies, which are typically subject to
lower trading volume, less liquidity, greater price volatility and less analyst coverage than larger more established companies.
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
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 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-Favored Treatment of Qualified Dividends
is Scheduled to Expire.
Distributions by the Fund will be treated as dividends for tax purposes to the extent of the
Fund’s current or accumulated earnings and profits. Under current federal income tax law, if applicable holding period requirements
are met, qualified dividend income received by individuals and other non-corporate shareholders is taxed at long-term capital gain
rates, which currently reach a maximum of 15%. However, the favorable tax treatment applicable to qualified dividends is scheduled
to expire for tax years beginning after December 31, 2012 and, unless further Congressional action is taken, dividend income will
thereafter be subject to U.S. federal income tax at the rates applicable to ordinary income (which rates are scheduled to increase
at that time to a maximum rate of 39.6%).
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.
PERFORMANCE INFORMATION
The Fund does not have a full calendar
year of performance. Thus, no bar chart or Average Annual Total Returns table is included for the Fund.
FUND MANAGEMENT
Investment Adviser:
Global X Management
Company LLC.
Portfolio Managers:
The professionals
primarily responsible for the day-to-day management of the Fund are Bruno del Ama and Jose C. Gonzalez ("Portfolio Managers").
Mr. del Ama, who is Chief Executive Officer of the Adviser, and Mr. Gonzalez, who is Chief Operating Officer of the Adviser, have
been Portfolio Managers of the Fund since inception.
PURCHASE AND SALE OF FUND SHARES
Shares will be listed and traded at market
prices on an exchange. Shares may only be purchased and sold on the exchange through a broker-dealer. The price of Shares is based
on market price, and because exchange-traded fund Shares trade at market prices rather than at NAV, Shares may trade at a price
greater than NAV (a premium) or less than NAV (a discount). Only “Authorized Participants” (as defined in the SAI)
who have entered into agreements with the Fund’s distributor, SEI Investments Distribution Co. ("Distributor"),
may engage in creation or redemption transactions directly with the Fund. The Fund will only issue or redeem Shares that have been
aggregated into blocks of 50,000 Shares or multiples thereof ("Creation Units"). The Fund will issue Creation Units in
return for a basket of cash and/or securities that the Fund specifies each Business Day. Redemptions of Creation Units are effected
principally for cash.
TAX INFORMATION
The Fund’s taxable distributions
will generally be taxed as ordinary income or capital gains. A portion of the Fund’s distributions is also expected to be
treated as a return of capital for tax purposes. Return of capital distributions are not taxable to you, but reduce your tax basis
in your Fund Shares.
PAYMENTS TO BROKER-DEALERS AND OTHER
FINANCIAL INTERMEDIARIES
The Adviser and its
related companies may pay broker/dealers or other financial intermediaries (such as a bank) for the sale of The Fund’s Shares
and related services. These payments create a conflict of interest by influencing your broker/dealer or other intermediary or its
employees or associated persons to recommend the Fund over another investment. Ask your financial adviser or visit your financial
intermediary’s website for more information.
