UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSRS
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-06400
THE GLOBAL X/ INTERBOLSA FTSE COLOMBIA 20 ETF
(Exact name of registrant as specified in charter)
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220 Fifth Avenue, 20th Floor
New York, NY 10001
(Address of principal executive offices) (Zip code)
SEI Investments Global Fund Services
One Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (888) 493-8631
DATE OF FISCAL YEAR END: OCTOBER 31, 2009
DATE OF REPORTING PERIOD: APRIL 30, 2009
ITEM 1. REPORTS TO STOCKHOLDERS.
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GLOBAL X/INTERBOLSA FTSE COLOMBIA 20 ETF
SEMI-ANNUAL REPORT (UNAUDITED)
PERIOD FROM FEBRUARY 5, 2009 (COMMENCEMENT OF OPERATIONS)
THROUGH APRIL 30, 2009
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TABLE OF CONTENTS
SCHEDULE OF INVESTMENTS 1
STATEMENT OF ASSETS AND LIABILITIES 3
STATEMENT OF OPERATIONS 4
STATEMENT OF CHANGES 5
FINANCIAL HIGHLIGHTS 6
NOTES TO FINANCIAL STATEMENTS 7
DISCLOSURE OF FUND EXPENSES 14
SUPPLEMENTAL INFORMATION 16
BOARD CONSIDERATIONS IN APPROVING THE INVESTMENT ADVISORY AGREEMENT 17
The Fund will file their complete schedules of Fund holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q within sixty days after the end of the period. The Funds' Forms N-Q
will be available on the Commission's website at http://www.sec.gov, and may be
reviewed and copied at the Commission's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
A description of the policies and procedures that Global X Funds uses to
determine how to vote proxies relating to Fund securities, as well as
information relating to how the Funds voted proxies relating to Fund securities
during the most recent 12-month period ended June 30, will be available (i)
without charge, upon request, by calling 1-888-GXFund-1; and (ii) on the
Commission's website at http://www.sec.gov.
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Schedule of Investments (unaudited)
April 30, 2009
SECTOR WEIGHTINGS+:
(BAR CHART)
Financials 48.7%
Energy 19.3%
Materials 9.0%
Consumer Discretionary 7.5%
Utilities 6.7%
Consumer Staples 4.6%
Telecommunication Services 2.5%
Short-Term Investments 1.1%
Industrials 0.6%
+ Percentages based on total investments.
Shares Value
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COMMON STOCK++ -- 96.5%
COLOMBIA -- 96.5%
CONSUMER DISCRETIONARY -- 7.5%
Almacenes Exito* 16,657 $ 81,570
Cia Colombiana del Tejidos* 57,026,994 25,183
Textiles Fabricato Tejicondor* 1,782,074 23,376
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130,129
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CONSUMER STAPLES -- 4.4%
Grupo Nacional de Chocolates 11,087 78,532
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ENERGY -- 18.8%
Ecopetrol ADR 18,478 332,789
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FINANCIALS -- 47.4%
Banco de Bogota 7,000 75,475
Banco de Credito Helm Financial Services 163,501 22,805
BanColombia ADR 14,700 343,245
Bolsa de Valores de Colombia* 5,331,628 51,519
Cia Colombiana de Inversiones* 7,807 89,638
Financiera Colombiana 12,468 81,227
Grupo Aval Acciones y Valores 328,522 74,406
Interbolsa* 27,412 20,375
Suramericana de Inversiones 10,602 79,824
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838,514
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Schedule of Investments (continued) (unaudited)
April 30, 2009
Shares Value
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COMMON STOCK (continued)-- 96.5%
INDUSTRIALS -- 0.6%
Tableros y Maderas de Caldas* 5,373,665 $ 10,056
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MATERIALS -- 8.8%
Cementos Argos 24,386 71,438
Inversiones Argos 18,874 84,339
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155,777
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TELECOMMUNICATION SERVICES -- 2.5%
Empresa de Telecomunicaciones de Bogota 121,799 43,669
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UTILITIES -- 6.5%
Interconexion Electrica 22,557 80,381
Isagen 39,390 34,876
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115,257
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TOTAL COMMON STOCK (Cost $1,504,975) 1,704,723
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CASH EQUIVALENT -- 1.0%
Brown Brothers
0.030%, 05/01/09
TOTAL CASH EQUIVALENT (Cost $18,164) 18,164 18,164
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TOTAL INVESTMENTS (Cost $1,523,139) -- 97.5% $1,722,887
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PERCENTAGES ARE BASED ON NET ASSETS OF $1,767,572.
* NON-INCOME PRODUCING SECURITY.
++ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
ADR -- AMERICAN DEPOSITARY RECEIPT
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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Statement of Assets and Liabilities (unaudited)
April 30, 2009
ASSETS:
Investments at Value (Cost $1,523,139) $1,722,887
Foreign Currency at Value (Cost $34,626) 34,628
Dividend and Interest Receivable 11,593
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TOTAL ASSETS 1,769,108
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LIABILITIES:
Payable due to Investment Adviser 910
Other Accrued Expenses 626
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TOTAL LIABILITIES 1,536
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NET ASSETS $1,767,572
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NET ASSETS CONSIST OF:
Paid-in Capital $1,500,000
Undistributed Net Investment Income 19,821
Accumulated Net Realized Gain on Investments 47,979
Net Unrealized Appreciation on Investments 199,748
Net Unrealized Appreciation on Foreign Currency Transactions 24
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NET ASSETS $1,767,572
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Outstanding Shares of Beneficial Interest
(unlimited authorization -- no par value) 100,000
Net Asset Value, per Share $ 17.68
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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Statement of Operations (unaudited)
For the period February 5, 2009 (commencement of operations)
through April 30, 2009
INVESTMENT INCOME:
Dividend $ 23,509
Less: Foreign Taxes Withheld (694)
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TOTAL INVESTMENT INCOME 22,815
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EXPENSES
Investment Advisory Fees 2,368
Custodian Fees 626
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TOTAL EXPENSES 2,994
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NET INVESTMENT INCOME 19,821
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NET REALIZED GAIN ON:
Investments 1,285
Foreign Currency Transactions 46,694
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NET REALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 47,979
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NET CHANGE IN UNREALIZED APPRECIATION ON:
Investments 199,748
Foreign Currency Transactions 24
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NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 199,772
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 247,751
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $267,572
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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Statement of Changes in Net Assets (unaudited)
For the period February 5, 2009 (commencement of operations)
through April 30, 2009
OPERATIONS
Net Investment Income $ 19,821
Net Realized Gain on Investments and Foreign Currency
Transactions 47,979
Net Change in Unrealized Appreciation on Investments and
Foreign Currency Transactions 199,772
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 267,572
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CAPITAL SHARE TRANSACTIONS:
Issued 1,500,000
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INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 1,500,000
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TOTAL INCREASE IN NET ASSETS 1,767,572
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NET ASSETS:
Beginning of Period --
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End of Period (includes undistributed net investment income of
$19,821) $1,767,572
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SHARE TRANSACTIONS:
Issued 100,000
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NET INCREASE IN SHARES OUTSTANDING FROM SHARE TRANSACTIONS 100,000
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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Financial Highlights (unaudited)
For the period February 5, 2009 (commencement of operations)
through April 30, 2009
SELECTED PER SHARE DATA & RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Net Asset Value,
Beginning of Period $15.00
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Income from
Investment Operations:
Net Investment Income 0.20(1)
Net Realized and Unrealized Gains on Investments 2.48
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Total from Operations 2.68
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Net Asset Value, End of Period $17.68
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TOTAL RETURN(2) 17.87%
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RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000) $1,768
Ratio of Net Expenses to Average Net Assets 0.86%*
Ratio of Net Investment Income to Average Net Assets 5.71%*
Portfolio Turnover Rate 2%
* Annualized.
(1) Per share calculations were performed using average shares.
(2) Total return is for the period indicated and has not been annualized. The
return shown does not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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Notes to Financial Statements (unaudited)
April 30, 2009
1. ORGANIZATION:
The Global X Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company with six
funds: Global X FTSE Argentina 20 ETF, Global X/InterBolsa FTSE Colombia 20 ETF,
Global X FTSE Egypt 30 ETF, Global X FTSE Nordic 30 ETF, Global X FTSE Peru 20
ETF and Global X FTSE Philippines 30 ETF (collectively "Funds"). As of April 30,
2009, only the Global X/InterBolsa FTSE Colombia 20 ETF (the "Fund") is
operational. The Fund seeks to provide investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
FTSE Colombia 20 Index. Global X Management Company LLC (the "Adviser"), a
Delaware Limited Liability Company, serves as the investment advisor and the
administrator for the Fund. Subject to the supervision of the Board of Trustees
(the "Board"), the Adviser is responsible for managing the investment activities
of the Fund, the Fund's business affairs and other administrative matters.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the Significant Accounting Policies followed by
the Fund.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates, and could have a material impact to the Fund.
SECURITY VALUATION -- Securities listed on a securities exchange, market or
automated quotation system for which quotations are readily available (except
for securities traded on NASDAQ), including securities traded over the counter,
are valued at the last quoted sale price on the primary exchange or market
(foreign or domestic) on which they are traded, or, if there is no such reported
sale, at the most recent quoted bid price. For securities traded on NASDAQ, the
NASDAQ Official Closing Price will be used. If available, debt securities are
priced based upon valuations provided by independent, third-party pricing
agents. Such values generally reflect the last reported sales price if the
security is actively traded. The third-party pricing agents may also value debt
securities at an evaluated bid price by employing methodologies that utilize
actual market transactions, broker-supplied valuations, or other methodologies
designed to identify the market value for such securities. Debt obligations with
remaining maturities of sixty days or less may be valued at their amortized
cost, which
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Notes to Financial Statements (unaudited)
April 30, 2009
approximates market value. The prices for foreign securities are reported in
local currency and converted to U.S. dollars using currency exchange rates.
Prices for most securities held in the Fund are provided daily by recognized
independent pricing agents. If a security price cannot be obtained from an
independent, third-party pricing agent, the Fund seeks to obtain a bid price
from at least one independent broker.
Securities for which market prices are not "readily available" are valued in
accordance with Fair Value Procedures established by the Board. The Fund's Fair
Value Procedures are implemented through a Fair Value Committee (the
"Committee") designated by the Board. Some of the more common reasons that may
necessitate that a security be valued using Fair Value Procedures include: the
security's trading has been halted or suspended; the security has been de-listed
from a national exchange; the security's primary trading market is temporarily
closed at a time when under normal conditions it would be open; the security has
not been traded for an extended period of time; the security's primary pricing
source is not able or willing to provide a price; or trading of the security is
subject to local government-imposed restrictions. When a security is valued in
accordance with the Fair Value Procedures, the Committee will determine the
value after taking into consideration relevant information reasonably available
to the Committee.
For securities that principally trade on a foreign market or exchange, a
significant gap in time can exist between the time of a particular security's
last trade and the time at which the Fund calculates its net asset value. The
closing prices of such securities may no longer reflect their market value at
the time the Fund calculates net asset value if an event that could materially
affect the value of those securities (a "Significant Event") has occurred
between the time of the security's last close and the time that the Fund
calculates net asset value. A Significant Event may relate to a single issuer or
to an entire market sector. If the Adviser of the Fund becomes aware of a
Significant Event that has occurred with respect to a security or group of
securities after the closing of the exchange or market on which the security or
securities principally trade, but before the time at which the Fund calculates
net asset value, it may request that a Committee meeting be called. In addition,
the Fund's administrator monitors price movements among certain selected
indices, securities and/or baskets of securities that may be an indicator that
the closing prices received earlier from foreign exchanges or markets may not
reflect market value at the time the Fund calculates net asset value. If price
movements in a monitored index or security exceed levels established by the
administrator, the administrator notifies the Adviser that such limits have been
exceeded. In such event, the adviser makes the determination whether a Committee
meeting should be called based on the information provided.
In September, 2006, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards ("SFAS") No. 157, which provides
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Notes to Financial Statements (unaudited)
April 30, 2009
enhanced guidance for using fair value to measure assets and liabilities. The
Fund adopted SFAS No. 157 on February 5, 2009. SFAS No. 157 establishes a fair
value hierarchy and specifies that a valuation technique used to measure fair
value shall maximize the use of observable inputs and minimize the use of
unobservable inputs. The objective of a fair value measurement is to determine
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date (an exit price). Accordingly, the fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair value hierarchy
under SFAS No. 157 are described below:
Level 1 -- Unadjusted quoted prices in active markets for identical,
unrestricted assets or liabilities that the Fund has the ability to access at
the measurement date;
Level 2 -- Quoted prices which are not active, or inputs that are observable
(either directly or indirectly) for substantially the full term of the asset or
liability; and
Level 3 -- Prices, inputs or exotic modeling techniques which are both
significant to the fair value measurement and unobservable (supported by little
or no market activity).
As required by SFAS No.157, investments are classified within the level of the
lowest significant input considered in determining fair value. Investments
classified within Level 3 whose fair value measurement considers several inputs
and may include Level 1 or Level 2 inputs as components of the overall fair
value measurement. The table below sets forth information about the level within
the fair value hierarchy at which the Fund's investments are measured at April
30, 2009:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- ------- ------- ----------
INVESTMENTS IN SECURITIES $1,722,887 $-- $-- $1,722,887
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify as a
regulated investment company for Federal income tax purposes by complying with
the appropriate provisions of the Subchapter M of the Internal Revenue Code of
1986, as amended. Accordingly, no provisions for Federal income taxes have been
made in the financial statements.
At inception, the Fund adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").
FIN 48 defines the threshold for recognizing the benefits of tax-return
positions in the financial statements as "more-likely-than-not" to be sustained
by the applicable taxing
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Notes to Financial Statements (unaudited)
April 30, 2009
authority and requires measurement of a tax position meeting the
"more-likely-than-not" threshold, based on the largest benefit that is more than
50 percent likely to be realized.
The Fund is not aware of any tax positions for which it is reasonably possible
that the total amounts of unrecognized tax benefits will significantly change in
the next twelve months. Management has completed their analysis and has
determined that the adoption of FIN 48 will not have an impact on the Fund's
financial statements, and therefore the Fund did not record any tax expense in
the current period. If the Fund were to record a tax expense as a result of the
adoption of FIN 48, the tax expense would include any interest and penalties.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on trade date. Costs used in determining realized gains and losses
on the sale of investment securities are based on specific identification.
Dividend income is recorded on the ex-dividend date. Interest income is
recognized on the accrual basis from the settlement date.
FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars on the date
of valuation. Purchases and sales of investment securities, income and expenses
are translated into U.S. dollars at the relevant rates of exchange prevailing on
the respective dates of such transactions. The Fund does not isolate that
portion of realized or unrealized gains and losses resulting from changes in the
foreign exchange rate from fluctuations arising from changes in the market
prices of the securities. These gains and losses are included in net realized
and unrealized gains and losses on investments on the Statement of Operations.
Net realized and unrealized gains and losses on foreign currency transactions
represent net foreign exchange gains or losses from foreign currency exchange
contracts, disposition of foreign currencies, currency gains or losses realized
between trade and settlement dates on securities transactions and the difference
between the amount of the investment income and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Fund may enter into forward
foreign currency exchange contracts to protect the value of securities held and
related receivables and payables against changes in future foreign exchange
rates. A forward currency contract is an agreement between two parties to buy
and sell currency at a set price on a future date. The market value of the
contract will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the current forward rate and the change in market
value is recorded
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Notes to Financial Statements (unaudited)
April 30, 2009
by the Fund as unrealized gain or loss. The Fund recognizes realized gains or
losses when the contract is closed, equal to the difference between the value of
the contract at the time it was opened and the value at the time it was closed.
Risks may arise from the unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. Risks may also arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and are generally limited to the amount of unrealized gain on
the contracts, if any, at the date of default. As of April 30, 2009, there were
no open forward foreign currency exchange contracts.
EXPENSES -- Most expenses of the Trust can be directly attributed to a
particular Fund. Expenses which cannot be directly attributed to a particular
Fund are apportioned among the Funds of the Trust based on the number of Funds
and/or relative net assets.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund distributes
substantially all of its net investment income annually. Any net realized
capital gains are distributed annually. All distributions are recorded on
ex-dividend date.
CREATION UNITS --The Fund issues and redeems Shares at NAV and only in large
blocks of 50,000 Shares (each block of 50,000 Shares called a "Creation Unit" or
multiples thereof). Purchasers of Creation Units at NAV must pay a standard
Creation Transaction Fee of $2,600 per transaction (assuming 50,000 Shares in
each Creation Unit). The fee is a single charge and will be the same regardless
of the number of Creation Units purchased by an investor on the same day. The
value of a Creation Unit as of first creation was approximately $750,000. An
Authorized Participant who holds Creation Units and wishes to redeem at NAV
would also pay a standard Redemption Fee of $2,600 per transaction (assuming
50,000 Shares in each Creation Unit), on the date of such redemption, regardless
of the number of Creation Units redeemed that day. If a Creation Unit is
purchased or redeemed for cash, a higher Transaction Fee will be charged.
3. RELATED PARTY TRANSACTIONS:
Under the terms of an investment advisory agreement provides investment advisory
services to the Fund at a fee calculated at an annual rate of 0.68% of the
Fund's average daily net assets.
The Adviser and InterBolsa S.A. ("InterBolsa"), one of the leading
broker-dealers located in Colombia, have entered into an agreement, pursuant to
which Interbolsa agrees to provide certain marketing, marketing-related and
other services and allow the use of InterBolsa's name and brand with respect to
the Global X/InterBolsa FTSE Colombia 20 ETF. Under this agreement, InterBolsa
has agreed to make an initial
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Notes to Financial Statements (unaudited)
April 30, 2009
payment to the Adviser regarding certain start up expenses for the Fund and the
Adviser has agreed to share with InterBolsa fifty percent (50%) of the Adviser's
legitimate profits with respect to the Global X/InterBolsa FTSE Colombia 20 ETF.
4. INVESTMENT TRANSACTIONS:
For the period ended April 30, 2009, the Fund made purchases of $1,537,230 and
sales of $33,540 in investment securities other than long-term U.S. Government
and short-term securities. There were no purchases or sales of long-term U.S.
Government securities.
5. TAX INFORMATION
The Federal tax cost and aggregate gross unrealized appreciation and
depreciation on investments held by the Fund at April 30, 2009 were as follows:
AGGREGATED GROSS AGGREGATED GROSS
UNREALIZED UNREALIZED NET UNREALIZED
FEDERAL TAX COST APPRECIATION DEPRECIATION APPRECIATION
- ---------------- ---------------- ---------------- --------------
$1,523,139 $200,174 $426 $199,748
6. CONCENTRATION OF RISKS:
The Fund invests in securities of foreign issuers in one country. These
investments may involve certain considerations and risks not typically
associated with investments in the United States as a result of, among other
factors, the possibility of future political and economic developments and the
level of governmental supervision and regulation of securities markets in the
respective countries.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on either income or gains earned or repatriated. The
Fund accrues and applies such taxes to net investment income, net realized gains
and net unrealized gains as income and/or capital gains are earned.
7. OTHER:
At April 30, 2009, 100% of total shares outstanding were held by one shareholder
owning 10% or greater of the aggregate total shares outstanding.
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Notes to Financial Statements (unaudited)
April 30, 2009
In the normal course of business, the Fund enters into contracts that provide
general indemnifications. The Fund's maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund and, therefore,
cannot be established; however, based on experience, the risk of loss from such
claims is considered remote.
8. ACCOUNTING PRONOUNCEMENTS:
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities. SFAS No. 161 is effective for fiscal years
and interim periods beginning after November 15, 2008. SFAS No. 161 requires
enhanced disclosures about the Fund's derivative and hedging activities,
including how such activities are accounted for and their effect on the Fund's
financial position, performance, and cash flows. Management is currently
evaluating the impact the adoption of SFAS No. 161 will have on the Fund's
financial statements and related disclosures.
In October 2008, the FASB issued Staff Position 157-3, DETERMINING THE FAIR
VALUE OF A FINANCIAL ASSET IN A MARKET THAT IS NOT ACTIVE ("FSP 157-3"), which
clarifies the application of SFAS 157 in an inactive market and provides an
illustrative example to demonstrate how the fair value of a financial asset is
determined when the market for that financial asset is not active. The guidance
provided by FSP 157-3 did not have an impact on the Fund's approach to valuing
financial assets.
In April 2009, FASB Staff Position No. 157-4 -- DETERMINING FAIR VALUE WHEN THE
VOLUME AND LEVEL OF ACTIVITY FOR THE ASSET OR LIABILITY HAVE SIGNIFICANTLY
DECREASED AND IDENTIFYING TRANSACTIONS THAT ARE NOT ORDERLY ("FSP 157-4") was
issued. FSP 157-4 clarifies the process for measuring the fair value of
financial instruments when the markets become inactive and quoted prices may
reflect distressed transactions. FSP 157-4 provides a non-exclusive list of
factors a reporting entity should consider when determining whether there has
been a significant decrease in the volume and level of activity for an asset or
liability when compared with normal market activity. Under FSP 157-4, if a
reporting entity concludes there has been a significant decrease in volume and
level of activity for the asset or liability (or similar assets or liabilities),
transactions or quoted prices may not be determinative of fair value. Further
analysis of the transactions or quoted prices is needed, and a significant
adjustment to the transactions or quoted prices may be necessary to estimate
fair value in accordance with FASB Statement No. 157 -- FAIR VALUE MEASUREMENT.
FSP 157-4 is effective for interim and annual reporting periods ending after
June 15, 2009, and shall be applied prospectively. At this time, management is
evaluating the impact of FSP 157-4 on the Fund's financial statements.
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Disclosure of Fund Expenses (unaudited)
All mutual funds have operating expenses. As a shareholder of a mutual fund,
your investment is affected by these ongoing costs, which include (among others)
costs for Fund management, administrative services, and shareholder reports like
this one. It is important for you to understand the impact of these costs on
your investment returns.
Operating expenses such as these are deducted from a mutual fund's gross income
and directly reduce your final investment return. These expenses are expressed
as a percentage of the mutual fund's average net assets; this percentage is
known as the mutual fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table on the next page illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after
fee waivers that your Fund incurred over the period. The "Expenses Paid During
Period" column shows the actual dollar expense cost incurred by a $1,000
investment in the Fund, and the "Ending Account Value" number is derived from
deducting that expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in
the Fund, to estimate the expenses you paid over that period. Simply divide your
actual account value by $1,000 to arrive at a ratio (for example, an $8,600
account value divided by $1,000 = $8.6), then multiply that ratio by the number
shown for your Fund under "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your Fund's comparative cost by comparing the
hypothetical result for your Fund in the "Expense Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
mutual funds.
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Disclosure of Fund Expenses (unaudited)
NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's
actual return -- the account values shown may not apply to your specific
investment.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
GLOBAL X/INTERBOLSA FTSE VALUE VALUE EXPENSE DURING
COLOMBIA 20 ETF 02/05/09 04/30/09 RATIOS PERIOD
- ------------------------ --------- --------- ---------- --------
ACTUAL FUND RETURN $1,000.00 $1,178.70 0.86% $2.16(1)
HYPOTHETICAL 5% RETURN $1,000.00 $1,009.53 0.86% $1.99(2)
(1) Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 84/365 (to reflect the
time period that the fund was operational).
(2) Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
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Supplemental Information (unaudited)
Net asset value, or "NAV", is the price per share at which the Fund issues and
redeems shares. It is calculated in accordance with the standard formula for
valuing mutual fund shares. The "Market Price" of the Fund generally is
determined using the midpoint between the highest bid and the lowest offer on
the stock exchange on which the shares of the Fund is listed for trading, as of
the time that the Fund's NAV is calculated. The Fund's Market Price may be at,
above or below its NAV. The NAV of the Fund will fluctuate with changes in the
market value of its portfolio holdings. The Market Price of the Fund will
fluctuate in accordance with changes in its NAV, as well as market supply and
demand.
Premiums or discounts are the differences (expressed as a percentage) between
the NAV and Market Price of the Fund on a given day, generally at the time NAV
is calculated. A premium is the amount that the Fund is trading above the
reported NAV, expressed as a percentage of the NAV. A discount is the amount
that the Fund is trading below the reported NAV, expressed as a percentage of
the NAV.
Information for the Fund showing the frequency distributions of premiums and
discounts for the Fund is not presented as the Fund commenced operations on
February 5, 2009, and did not have a full quarter of information as of April 30,
2009.
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Board Considerations in Approving the
Investment Advisory Agreement (unaudited)
GLOBAL X/INTERBOLSA FTSE COLOMBIA 20 ETF
Section 15(c) of the Investment Company Act of 1940, as amended ("1940 Act"),
requires that each mutual fund's board of trustees, including a majority of
those trustees who are not "interested persons" of the mutual fund, as defined
in the 1940 Act ("Independent Trustees"), consider and approve the terms of the
mutual fund's investment advisory agreement.
At a meeting held on December 5, 2008, the Board of Trustees ("Board") of Global
X Funds ("Trust"), including each of the Independent Trustees, unanimously voted
to approve the investment advisory agreement between the Trust, on behalf of
Global X/InterBolsa FTSE Colombia 20 ETF ("Fund") and Global X Management LLC
("Global X Management") ("Agreement"). In advance of the December Board meeting,
the Board reviewed written responses from Global X Management to questions posed
to them on behalf of the Independent Trustees and supporting materials relating
to those questions and responses.
In determining to approve the Agreement, the Board concluded that the Agreement
was fair and reasonable and in the best interests of the Fund and its
shareholders. The Board considered the following categories of material factors,
among others, relating to the agreements. Based upon its review of these various
factors, as well as other information, the Board concluded that it is in the
best interests of the Fund and its shareholders for the Board to approve the
Agreement. In reaching this decision, the Board did not assign relative weights
to the factors discussed below or deem any one factor or group of them to be
controlling in and of themselves.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board considered information and data concerning the nature, extent, and
quality of the services to be provided to the Fund by Global X Management. The
Board considered, among other things, the terms of the Agreement and the range
of services to be provided to the Fund. The Board reviewed information about
Global X Management's key personnel and the portfolio managers who would provide
investment advisory services to the Fund. The Board also considered Global X
Management's responsibilities under the Agreement to, among other things, (i)
manage the investment operations of the Fund and the composition of the Fund's
assets, including the purchase, retention and disposition thereof, (ii) provide
quarterly reports to the Trust's officers and Board, (iii) vote proxies,
exercise consents, and exercise all other rights appertaining to securities and
assets held by the Fund, (iv) select broker-dealers to execute portfolio
transactions for the Fund, (v) assist in the preparation and
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Board Considerations in Approving the
Investment Advisory Agreement (unaudited)
filing of reports and proxy statements (if any) to the shareholders of the Fund,
the periodic updating of the registration statement, prospectus, statement of
additional information, and other reports and documents for the Fund required to
be filed by the Trust with the Securities and Exchange Commission and other
governmental bodies, and (vi) monitor anticipated purchases and redemptions of
the Fund's shares (including creation units) by shareholders and new investors.
The Board also considered the quality of the services to be provided and the
quality of Global X Management's resources that would be made available to the
Fund. The Board evaluated Global X Management's administrative and compliance
services, and information the Board received regarding the experience and
professional qualifications of Global X Management's key personnel.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services to be provided to the Fund by
Global X Management.
PERFORMANCE
The Board considered that, because the Fund had not started operations,
meaningful data relating to its performance was not available and could not be a
factor in approving the Agreement.
COST OF SERVICES AND PROFITABILITY
The Board reviewed information regarding Global X Management's cost to provide
investment management and related services to the Fund and the profitability to
its from managing the Fund. The Board considered the proposed advisory fee
schedule and considered information about the profitability to Global X
Management from all services to be provided to the Fund and all aspects of its
relationships with the Fund. The Board noted that Global X Management expected
that it would not be generating any profits from its services to the Fund during
the first year of the Fund's operations. Based on these considerations, the
Board concluded that the profits anticipated to be realized by Global X
Management from its relationship with the Fund would not be excessive.
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Board Considerations in Approving the
Investment Advisory Agreement (unaudited)
COMPARISON OF FEES AND SERVICES
The Board considered comparative information with respect to the investment
management fees to be paid by the Fund to Global X Management. In this regard,
the Board considered the proposed unitary fee structure and the projected
expenses. The Board noted that, under a Supervision and Administration
Agreement, Global X Management would be responsible for certain expenses of the
Fund, including the cost of transfer agency, custody, fund administration,
legal, audit, and other services for the Fund, except asset-based custody fees,
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
Board considered comparative expense data for the Fund, including fees and
expenses paid by comparable emerging market, frontier country and regional
focused exchange traded funds.
Based on these considerations, the Board concluded that the Fund's advisory fee,
in conjunction with the information about quality of services, profitability,
and other matters discussed, supports the conclusion that the advisory fee is
reasonable.
ECONOMIES OF SCALE
The Board considered the extent to which economies of scale would be realized as
the Fund grows and whether the fee level reflect these economies of scale for
the benefit of Fund's investors. The Board reviewed the Fund's fee arrangements,
and considered that Global X Management does not expect to make a profit from
its services to the Fund for at least the first year of the Fund's operations
and the significant investment of time and resources that Global X Management
has made in the Fund. The Trustees also considered that a unitary fee provides
certainty of expenses for the Fund. Based on these considerations, the Board
concluded that a flat advisory fee was reasonable.
OTHER BENEFITS
In addition to the categories discussed above, the Board considered other
benefits that may be realized by Global X Management as a result from its
relationships with the Fund.
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220 Fifth Avenue, 20th Floor
New York, NY 10001
1-888-GXFund-1
(1-888-493-8631)
www.globalxfunds.com
INVESTMENT ADVISER:
Global X Management Company LLC
220 Fifth Avenue, 20th Floor
New York, NY 10001
DISTRIBUTOR:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
SUB-ADMINISTRATOR:
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL:
Dechert LLP
1175 I Street
Washington, DC 20006-2401
This information must be preceded or accompanied by a current prospectus for
the Fund described.
GLX-SA-001-0100
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual report.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
ITEMS 12. EXHIBITS.
(a)(1) Not applicable for semi-annual report.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Global X/ InterBolsa FTSE Colombia
20 ETF
By (Signature and Title)* \s\ Bruno del Ama
----------------------------------------
Bruno del Ama
President
Date: July 9, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* \s\ Bruno del Ama
----------------------------------------
Bruno del Ama
President
Date: July 9, 2009
By (Signature and Title)* \s\ Jose C. Gonzalez
----------------------------------------
Jose C. Gonzalez
CFO
Date: July 9, 2009
* Print the name and title of each signing officer under his or her
signature.