Correspondence 0001432353-24-000029 from Global X Funds (CIK 0001432353)
Global X Funds (CIK 0001432353)
Date: Jan. 30, 2024 · CIK: 0001432353 · Accession: 0001432353-24-000029
AI Filing Summary & Sentiment
File numbers found in text: 333-151713, 811-22209
Letter
VIA EDGAR Division of Investment Management Washington, D.C. 20549-9303 Attention: David Mathews Re: Global X Funds File No. 333-151713, 811-22209
Dear Mr. Mathews:
On behalf of Global X Funds (the “Registrant” or the “Trust”) and its series, the Global X Bitcoin Trend Strategy ETF (the “Fund”), included in Post-Effective Amendment No. 738 (the “Amendment”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on September 12, 2023 with regard to the Amendment. The Amendment was filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 20, 2023, pursuant to the Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 2
GENERAL
1. Comment: Due to the nature of the Fund, please be prepared to delay scheduled effectiveness of the Registration Statement until all issues raised by these comments have been resolved.
Response: The Registrant acknowledges the Staff’s comment and will be prepared to delay effectiveness of the Registration Statement until all issues raised by these comments have been resolved.
2. Comment: Please respond to these comments in writing at least 10 business days prior to filing the 485(b); where a comment asks for revised disclosure and provide a redline of changes Please submit the Registrant’s responses to the Staff’s comments at least ten (10) business days prior to effectiveness of the post-effective amendment to the Registration Statement for the Fund and where a comment requires revised disclosure please provide a redline showing the changes. provide marked changed pages.
Response: The Registrant will file this comment response letter at least ten (10) business days prior to the Amendment’s effective date and provide marked changed pages as requested.
3. Comment: The Staff notes that portions of the Amendment are incomplete. Please confirm that any blanks or bracketed information will be completed in the next post-effective amendment to the Registration Statement.
Response: Confirmed.
4. Comment: Please ensure that the post-effective amendment to be filed under Rule 485(b) of the Securities Act will be filed at least 10 business days’ prior to its effectiveness. In addition, where a comment is made in one location and it applies elsewhere to the disclosure, please make all corresponding changes to the relevant disclosure.
Response: The Registrant acknowledges the Staff’s comment.
5. Comment: Please supplementally indicate when the Fund expects to launch.
Response: The earliest anticipated launch date is expected to be February 29th, 2024.
6. Comment: Please provide the name of the exchange that the Fund expects to be listed on.
Response: The New York Stock Exchange.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 3
INVESTMENT OBJECTIVE
7. Comment: Please note that the Staff has concerns with the Fund’s proposed statement of its investment objective and requires it to be revised along with related disclosures throughout the Registration Statement to address the following: (a) the Underlying Index that the Fund intends to track does not appear to be an index product offered by the Index Provider; (b) the Bitcoin Trend Indicator later defined in the disclosure as the trading “Signal” is offered by the Index Provider as an analytical tool that is calculated based on prices calculated by the CoinDesk Bitcoin Price Index. Please revise the Fund’s investment objective and related disclosures to describe an active index that the Fund intends to track with respect to 80% of its assets or restate the investment objective to achieve some other objective through use of the Signal or other investment tool or process.
Response: The Underlying Index is the CoinDesk Bitcoin Trend Indicator Futures Index, which is an index product offered by the Index Provider. The Underlying Index utilizes the Bitcoin Trend Indicator as part of its index methodology.
Please also see the Registrant’s response to Comment #12 below.
FEES AND EXPENSES
8. Comment: With respect to the fee table and expense example, please provide the SEC Staff with a copy of the completed fee table and expense example pre-effectively with the response letter. In addition, please add footnote disclosure that other expenses are estimated for the current fiscal year and calculated as a percentage of Fund net assets. Moreover, please either add a line item to the fee table for “Acquired Fund Fees and Expenses” (“AFFE”) and an explanatory footnote or confirm in correspondence that AFFE will represent less than 0.01% of fund fees and expenses or alternatively that the Adviser is bearing AFFE. Please confirm that there will be no fee waiver, fee reimbursement or recoupment arrangement or if there will be such arrangement, please describe the terms of such arrangement.
Response: The Registrant has completed the Fund’s fee table and expense example, which are included below. Pursuant to the Fund’s Supervision and Administration Agreement, Global X Management Company LLC, rather than the Fund, bears the acquired fund fees and expenses associated with Fund portfolio transactions in affiliated ETFs. In addition, the Adviser does not currently anticipate that the Fund will invest in unaffiliated ETFs.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 4
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.95%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.95%
1Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then 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
$97 $303
PRINCIPAL INVESTMENT STRATEGIES
9. Comment: Please confirm in correspondence whether the Fund will seek to leverage returns of Bitcoin futures. For example, please advise whether the Fund will seek to operate as a 1x or 2x leveraged ETF or inverse leveraged ETF.
Response: The Fund will not seek to leverage returns of Bitcoin futures, i.e. it will not operate as a 1x or 2x leveraged ETF or inverse leveraged ETF.
10. Comment: With respect to the Fund’s investment in Bitcoin futures, please discuss in correspondence the anticipated liquidity classification under Rule 22e-4 of the 1940 Act as it relates to the Bitcoin futures contracts. Please describe the Fund’s plan for liquidity management generally including during both normal and reasonably foreseeable stressed conditions.
Response: The Bitcoin Futures which the Fund plans to invest in are cash settled, typically on a t+0 basis and therefore are expected to be classified as "highly liquid". In any event, the futures are expected to go through the same analysis as the rest of the securities within the Trust which are managed by the Adviser.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 5
Under current market conditions and at the level at which the Fund is expected to invest, the Fund expects that positions in significant size would to be convertible to cash in three business days or less without the conversion to cash significantly changing the market value of such contracts.
11. Comment: Please explain in correspondence how the Fund will seek to invest directly in constituents of a Bitcoin price related underlying index without investing directly in bitcoin.
Response: The Underlying Index provides exposure to either (A) Bitcoin futures and/or (B) to the Global X 1-3 Month T-Bill ETF. In seeking to track the Underlying Index, the Fund will seek to invest directly in Bitcoin futures and/or the Global X 1-3 Month T-Bill ETF in the same proportion as the Underlying Index.
12. Comment: Please revise the section of the Fund’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” to clarify that the Bitcoin-related Underlying Index will not have constituent securities.
Response: The Registrant has updated the section titled “PRINCIPAL INVESTMENT STRATEGIES” in the Fund's prospectus as follows:
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests least 80% of its total assets, plus borrowings for investment purposes (if any), in the constituents of the CoinDesk Bitcoin Trend Indicator Futures Index (the "Underlying Index"), and in other securities the Adviser determines have economic characteristics that are substantially identical to the economic characteristics of the constituents that comprise the Underlying Index, such as U.S. listed Bitcoin Futures ETFs. In addition, in seeking to track the Underlying Index, the Fund may invest in debt securities that are not included in the Underlying Index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds. The Fund's 80% investment policy is non-fundamental and requires 60 days prior written notice to shareholders before it can be changed.
The Underlying Index systematically and dynamically allocates between (i) U.S. exchange-traded bitcoin futures contracts (“Bitcoin Futures”), and (ii) the Global X 1-3 Month T-Bill ETF (the “U.S. Treasury ETF”), a passively managed exchange-traded fund (“ETF”) and affiliate of the Fund. The Underlying Index allocates between these two exposures based on the value of the Bitcoin Trend Indicator (the “Signal”), a dynamic quantitative signal developed and administrated by CoinDesk Indices, Inc. (the “Index Provider”) which aims to detect the presence, direction, and strength of the price trend in bitcoin. The Signal seeks to achieve this using a combination of four exponential moving average calculations,
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 6
which compute the average price of bitcoin over explicit periods and are then combined into a single value. Based on the average of the four exponential moving average calculations, the Signal will have one of five possible values:
Trend Indicator Value Indication Description Bitcoin Futures Exposure
1 Significant Uptrend All four inputs have a value of +1 100%
0.5 Uptrend Three of four inputs have a value of +1, and one input has a value of -1 75%
0 No Trend Two of four inputs have a value of +1, and two inputs have a value of -1 50%
-0.5 Downtrend Three of four inputs have a value of -1, and one input has a value of +1 25%
-1 Significant Downtrend All four inputs have a value of -1 0%
As described in the chart above, at each scheduled rebalance date, the Underlying Index increases its allocation to Bitcoin Futures when the value of the Signal is higher, and decreases its allocation to Bitcoin Futures when the value of the Signal is lower. The Signal relies on a comparison of recent bitcoin prices to older bitcoin prices to gauge the presence, strength and direction of the bitcoin price trend. This approach can present several risks, including but not limited to: (1) a lag in trend identification, (2) frequent reversal of the trend, (3) sensitivity to specific data periods which determine the Signal, (4) market volatility that contributes to more erratic trends and/or (5) a change in the trends that deviates materially from the historical observations used to develop the Signal. Generally speaking, these risks could reduce the effectiveness of the Signal at identifying bitcoin price trends, and may contribute to higher turnover in certain circumstances.
The Underlying Index allocates to Bitcoin Futures in accordance with the methodology of the CoinDesk Bitcoin Futures Excess Return Index (“Bitcoin Futures Sub-Index”). The Bitcoin Futures Sub-Index seeks to measure the performance of the nearest maturing, monthly CME-listed Bitcoin Futures contract, including the “roll yield” that is generated as the Bitcoin Futures Sub-Index transitions (rolls) from the current futures contract to the next. The Bitcoin Futures Sub-Index is a “rolling index” — the roll occurs over a four-day roll period every month, effective prior to the close of trading one week preceding the last trading date of the futures contract. The last trading date of Bitcoin Futures contracts is generally the last Friday of the contract month. The Bitcoin Futures Sub-Index rolls monthly and distributes the weights in equal 25% increments each day over the four-day roll period.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 7
The Fund seeks to allocate to Bitcoin Futures and/or the U.S. Treasury ETF in proportion to the Underlying Index.
Investment in an underlying ETF holding U.S. Government securities, cash and cash alternatives may be used to provide most, or even all, of the Fund’s exposure to such instruments, and it is possible that the Fund may or may not invest directly in any U.S. Government securities and cash and cash alternatives. Bitcoin Futures contracts will be standardized, cash-settled Bitcoin Futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission (“CFTC”). Currently, such contracts are only traded on, or subject to the rules of, the Chicago Mercantile Exchange (“CME”).
The Fund will invest substantially all of its assets in “long” positions in listed Bitcoin Futures contracts and in U.S. Government securities, cash and cash equivalents, including indirectly by investment in underlying ETFs holding U.S. Government securities, including the U.S. Treasury ETF. To be “long” means to hold or be exposed to a security or instrument with the expectation that its value will increase over time. The Fund will benefit if it has a long position in a security or instrument that increases in value. The Fund seeks to gain exposure to Bitcoin Futures, in whole or in part, through investments in a subsidiary organized in the Cayman Islands, namely the Global X Bitcoin Strategy Subsidiary I (the “Global X Subsidiary”). The Global X Subsidiary is wholly-owned and controlled by the Fund. The Fund’s investment in the Global X Subsidiary may not exceed 25% of the Fund’s total assets at each quarter-end of the Fund’s fiscal year. The Fund’s investment in the Global X Subsidiary is intended to provide the Fund with exposure to Bitcoin Futures while enabling the Fund to satisfy source-of-income requirements that apply to regulated investment companies (“RICs”) under the Internal Revenue Code of 1986, as amended (the “Code”). The Fund will allocate to Bitcoin Futures in proportion to the value of the Signal and rebalance dynamically in alignment with the Underlying Index. Except as noted, references to the investment strateg
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Global X Funds
605 Third Avenue, 43rd Floor
New York, NY 10158
January 30, 2024
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549-9303
Attention: David Mathews
Re: Global X Funds
File No. 333-151713, 811-22209
Dear Mr. Mathews:
On behalf of Global X Funds (the “Registrant” or the “Trust”) and its series, the Global X Bitcoin Trend Strategy ETF (the “Fund”), included in Post-Effective Amendment No. 738 (the “Amendment”) to the Registrant’s registration statement on Form N-1A (the “Registration Statement”), below you will find the Registrant’s responses to the comments that you had conveyed to the undersigned on September 12, 2023 with regard to the Amendment. The Amendment was filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 20, 2023, pursuant to the Investment Company Act of 1940, as amended (the "1940 Act"), and Rule 485(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).
Below we have summarized your comments, in italics, and presented the Registrant’s response to each comment. Capitalized terms not otherwise defined in this letter have the meanings assigned to the terms in the Registration Statement.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 2
GENERAL
1. Comment: Due to the nature of the Fund, please be prepared to delay scheduled effectiveness of the Registration Statement until all issues raised by these comments have been resolved.
Response: The Registrant acknowledges the Staff’s comment and will be prepared to delay effectiveness of the Registration Statement until all issues raised by these comments have been resolved.
2. Comment: Please respond to these comments in writing at least 10 business days prior to filing the 485(b); where a comment asks for revised disclosure and provide a redline of changes Please submit the Registrant’s responses to the Staff’s comments at least ten (10) business days prior to effectiveness of the post-effective amendment to the Registration Statement for the Fund and where a comment requires revised disclosure please provide a redline showing the changes. provide marked changed pages.
Response: The Registrant will file this comment response letter at least ten (10) business days prior to the Amendment’s effective date and provide marked changed pages as requested.
3. Comment: The Staff notes that portions of the Amendment are incomplete. Please confirm that any blanks or bracketed information will be completed in the next post-effective amendment to the Registration Statement.
Response: Confirmed.
4. Comment: Please ensure that the post-effective amendment to be filed under Rule 485(b) of the Securities Act will be filed at least 10 business days’ prior to its effectiveness. In addition, where a comment is made in one location and it applies elsewhere to the disclosure, please make all corresponding changes to the relevant disclosure.
Response: The Registrant acknowledges the Staff’s comment.
5. Comment: Please supplementally indicate when the Fund expects to launch.
Response: The earliest anticipated launch date is expected to be February 29th, 2024.
6. Comment: Please provide the name of the exchange that the Fund expects to be listed on.
Response: The New York Stock Exchange.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 3
INVESTMENT OBJECTIVE
7. Comment: Please note that the Staff has concerns with the Fund’s proposed statement of its investment objective and requires it to be revised along with related disclosures throughout the Registration Statement to address the following: (a) the Underlying Index that the Fund intends to track does not appear to be an index product offered by the Index Provider; (b) the Bitcoin Trend Indicator later defined in the disclosure as the trading “Signal” is offered by the Index Provider as an analytical tool that is calculated based on prices calculated by the CoinDesk Bitcoin Price Index. Please revise the Fund’s investment objective and related disclosures to describe an active index that the Fund intends to track with respect to 80% of its assets or restate the investment objective to achieve some other objective through use of the Signal or other investment tool or process.
Response: The Underlying Index is the CoinDesk Bitcoin Trend Indicator Futures Index, which is an index product offered by the Index Provider. The Underlying Index utilizes the Bitcoin Trend Indicator as part of its index methodology.
Please also see the Registrant’s response to Comment #12 below.
FEES AND EXPENSES
8. Comment: With respect to the fee table and expense example, please provide the SEC Staff with a copy of the completed fee table and expense example pre-effectively with the response letter. In addition, please add footnote disclosure that other expenses are estimated for the current fiscal year and calculated as a percentage of Fund net assets. Moreover, please either add a line item to the fee table for “Acquired Fund Fees and Expenses” (“AFFE”) and an explanatory footnote or confirm in correspondence that AFFE will represent less than 0.01% of fund fees and expenses or alternatively that the Adviser is bearing AFFE. Please confirm that there will be no fee waiver, fee reimbursement or recoupment arrangement or if there will be such arrangement, please describe the terms of such arrangement.
Response: The Registrant has completed the Fund’s fee table and expense example, which are included below. Pursuant to the Fund’s Supervision and Administration Agreement, Global X Management Company LLC, rather than the Fund, bears the acquired fund fees and expenses associated with Fund portfolio transactions in affiliated ETFs. In addition, the Adviser does not currently anticipate that the Fund will invest in unaffiliated ETFs.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 4
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment):
Management Fees:
0.95%
Distribution and Service (12b-1) Fees:
None
Other Expenses:1
0.00%
Total Annual Fund Operating Expenses:
0.95%
1Other Expenses are based on estimated amounts for the current fiscal year.
Example: The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account customary brokerage commissions that you pay when purchasing or selling Shares of the Fund in the secondary market. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then 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
$97 $303
PRINCIPAL INVESTMENT STRATEGIES
9. Comment: Please confirm in correspondence whether the Fund will seek to leverage returns of Bitcoin futures. For example, please advise whether the Fund will seek to operate as a 1x or 2x leveraged ETF or inverse leveraged ETF.
Response: The Fund will not seek to leverage returns of Bitcoin futures, i.e. it will not operate as a 1x or 2x leveraged ETF or inverse leveraged ETF.
10. Comment: With respect to the Fund’s investment in Bitcoin futures, please discuss in correspondence the anticipated liquidity classification under Rule 22e-4 of the 1940 Act as it relates to the Bitcoin futures contracts. Please describe the Fund’s plan for liquidity management generally including during both normal and reasonably foreseeable stressed conditions.
Response: The Bitcoin Futures which the Fund plans to invest in are cash settled, typically on a t+0 basis and therefore are expected to be classified as "highly liquid". In any event, the futures are expected to go through the same analysis as the rest of the securities within the Trust which are managed by the Adviser.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 5
Under current market conditions and at the level at which the Fund is expected to invest, the Fund expects that positions in significant size would to be convertible to cash in three business days or less without the conversion to cash significantly changing the market value of such contracts.
11. Comment: Please explain in correspondence how the Fund will seek to invest directly in constituents of a Bitcoin price related underlying index without investing directly in bitcoin.
Response: The Underlying Index provides exposure to either (A) Bitcoin futures and/or (B) to the Global X 1-3 Month T-Bill ETF. In seeking to track the Underlying Index, the Fund will seek to invest directly in Bitcoin futures and/or the Global X 1-3 Month T-Bill ETF in the same proportion as the Underlying Index.
12. Comment: Please revise the section of the Fund’s Prospectus titled “PRINCIPAL INVESTMENT STRATEGIES” to clarify that the Bitcoin-related Underlying Index will not have constituent securities.
Response: The Registrant has updated the section titled “PRINCIPAL INVESTMENT STRATEGIES” in the Fund's prospectus as follows:
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests least 80% of its total assets, plus borrowings for investment purposes (if any), in the constituents of the CoinDesk Bitcoin Trend Indicator Futures Index (the "Underlying Index"), and in other securities the Adviser determines have economic characteristics that are substantially identical to the economic characteristics of the constituents that comprise the Underlying Index, such as U.S. listed Bitcoin Futures ETFs. In addition, in seeking to track the Underlying Index, the Fund may invest in debt securities that are not included in the Underlying Index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds. The Fund's 80% investment policy is non-fundamental and requires 60 days prior written notice to shareholders before it can be changed.
The Underlying Index systematically and dynamically allocates between (i) U.S. exchange-traded bitcoin futures contracts (“Bitcoin Futures”), and (ii) the Global X 1-3 Month T-Bill ETF (the “U.S. Treasury ETF”), a passively managed exchange-traded fund (“ETF”) and affiliate of the Fund. The Underlying Index allocates between these two exposures based on the value of the Bitcoin Trend Indicator (the “Signal”), a dynamic quantitative signal developed and administrated by CoinDesk Indices, Inc. (the “Index Provider”) which aims to detect the presence, direction, and strength of the price trend in bitcoin. The Signal seeks to achieve this using a combination of four exponential moving average calculations,
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 6
which compute the average price of bitcoin over explicit periods and are then combined into a single value. Based on the average of the four exponential moving average calculations, the Signal will have one of five possible values:
Trend Indicator Value Indication Description Bitcoin Futures Exposure
1 Significant Uptrend All four inputs have a value of +1 100%
0.5 Uptrend Three of four inputs have a value of +1, and one input has a value of -1 75%
0 No Trend Two of four inputs have a value of +1, and two inputs have a value of -1 50%
-0.5 Downtrend Three of four inputs have a value of -1, and one input has a value of +1 25%
-1 Significant Downtrend All four inputs have a value of -1 0%
As described in the chart above, at each scheduled rebalance date, the Underlying Index increases its allocation to Bitcoin Futures when the value of the Signal is higher, and decreases its allocation to Bitcoin Futures when the value of the Signal is lower. The Signal relies on a comparison of recent bitcoin prices to older bitcoin prices to gauge the presence, strength and direction of the bitcoin price trend. This approach can present several risks, including but not limited to: (1) a lag in trend identification, (2) frequent reversal of the trend, (3) sensitivity to specific data periods which determine the Signal, (4) market volatility that contributes to more erratic trends and/or (5) a change in the trends that deviates materially from the historical observations used to develop the Signal. Generally speaking, these risks could reduce the effectiveness of the Signal at identifying bitcoin price trends, and may contribute to higher turnover in certain circumstances.
The Underlying Index allocates to Bitcoin Futures in accordance with the methodology of the CoinDesk Bitcoin Futures Excess Return Index (“Bitcoin Futures Sub-Index”). The Bitcoin Futures Sub-Index seeks to measure the performance of the nearest maturing, monthly CME-listed Bitcoin Futures contract, including the “roll yield” that is generated as the Bitcoin Futures Sub-Index transitions (rolls) from the current futures contract to the next. The Bitcoin Futures Sub-Index is a “rolling index” — the roll occurs over a four-day roll period every month, effective prior to the close of trading one week preceding the last trading date of the futures contract. The last trading date of Bitcoin Futures contracts is generally the last Friday of the contract month. The Bitcoin Futures Sub-Index rolls monthly and distributes the weights in equal 25% increments each day over the four-day roll period.
U.S. Securities and Exchange Commission
Attention: David Mathews
January 30, 2024
Page 7
The Fund seeks to allocate to Bitcoin Futures and/or the U.S. Treasury ETF in proportion to the Underlying Index.
Investment in an underlying ETF holding U.S. Government securities, cash and cash alternatives may be used to provide most, or even all, of the Fund’s exposure to such instruments, and it is possible that the Fund may or may not invest directly in any U.S. Government securities and cash and cash alternatives. Bitcoin Futures contracts will be standardized, cash-settled Bitcoin Futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission (“CFTC”). Currently, such contracts are only traded on, or subject to the rules of, the Chicago Mercantile Exchange (“CME”).
The Fund will invest substantially all of its assets in “long” positions in listed Bitcoin Futures contracts and in U.S. Government securities, cash and cash equivalents, including indirectly by investment in underlying ETFs holding U.S. Government securities, including the U.S. Treasury ETF. To be “long” means to hold or be exposed to a security or instrument with the expectation that its value will increase over time. The Fund will benefit if it has a long position in a security or instrument that increases in value. The Fund seeks to gain exposure to Bitcoin Futures, in whole or in part, through investments in a subsidiary organized in the Cayman Islands, namely the Global X Bitcoin Strategy Subsidiary I (the “Global X Subsidiary”). The Global X Subsidiary is wholly-owned and controlled by the Fund. The Fund’s investment in the Global X Subsidiary may not exceed 25% of the Fund’s total assets at each quarter-end of the Fund’s fiscal year. The Fund’s investment in the Global X Subsidiary is intended to provide the Fund with exposure to Bitcoin Futures while enabling the Fund to satisfy source-of-income requirements that apply to regulated investment companies (“RICs”) under the Internal Revenue Code of 1986, as amended (the “Code”). The Fund will allocate to Bitcoin Futures in proportion to the value of the Signal and rebalance dynamically in alignment with the Underlying Index. Except as noted, references to the investment strateg