CHNB. Chinese Onshore Bonds: CHNB provides direct access to Chinese onshore bonds that are among the highest quality in the credit spectrum.

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1 Chinese Onshore Bonds: CHNB provides direct access to Chinese onshore bonds that are among the highest quality in the credit spectrum. KEY FEATURES Attractive Yield Onshore bonds typically have offered higher yield than their offshore counterparts and other EM debt with similar credit ratings. (Past performance is no guarantee of future results.) Currency Play Direct exposure to exchange rate movements in the onshore renminbi (CNY). Diversification Low correlation with other emerging and developed market debt.

2 THE CASE The Global X provides direct access to onshore Chinese bonds that are among the highest quality in the credit spectrum. YIELD YTM¹ of Select 5 Yr Sovereign Debt Sources: Citi, U.S. Treasury, Japanese Ministry of Finance as of 12/31/2015 Yield 5% 4% 3% 2% 1% China s onshore bonds currently offer attractive yields compared to offshore bonds and other major sovereign bond markets. 5 Year onshore Chinese Government bonds, for example, had a yield to maturity1 of 2.79%, against 4.26% for 5 year offshore Chinese Government bonds, 1.76% for 5 year US treasuries, and 0.03% for 5 year Japanese sovereign debt, as of 12/31/2015. (Sources: Citi, U.S. Treasury, Japanese Ministry of Finance as of 12/31/2015) (There are material differences between the sovereign debt in this analysis. Credit quality, currency risk, and interest rate risk can vary between issuers of sovereign debt. Emerging market debt may carry additional risks.) 0% China Onshore China Offshore U.S. Japan CURRENCY Performance of EM Currencies vs. USD Source: Bloomberg (Jan 2006 to Dec 2015) Return 100% 50% Chinese Yuan Indian Rupee Brazilian Real Russian Ruble The Chinese yuan is a non-convertible currency, meaning most foreign investors cannot gain direct access to the currency s potential for price appreciation. Since 2006, however, the Chinese yuan has appreciated over 24% versus the US dollar. By investing in the (CHNB), investors can gain exposure to the price movements of the yuan. (Bloomberg 2015) 0% -50% -100% 1/2/06 1/2/07 1/2/08 1/2/09 1/2/10 1/2/11 1/2/12 1/2/13 1/2/14 1/2/15

3 DIVERSIFICATION 1 Year Correlation (1) (2) (3) (4) (5) (6) ChinaBond 5 Year Government Bond Index (1) Markit iboxx Global EM Local Currency Bond Index (2) JPM Global Aggregate Bond Index (3) Barclays US Agg Total Return Value (4) S&P 500 (5) CSI 300 (6) 1.00 Source: Bloomberg, as of 12/31/2015 Chinese onshore bonds demonstrate low correlation1 with other asset classes as China has its own monetary policy cycle. The correlation between rating actions by the US Federal Reserve and the People s Bank of China stood at 0.21 based on federal lending rates in these two countries between 2000 and This has enabled China s bond market to offer potential diversification benefits to global investors. (Manulife Asset Management 2013, Bloomberg 2014, US Federal Reserve 2014) COMPLETION % of Local Currency EM Debt Source: BIS, Q China 50% Brazil 14% S. Korea 11% India 5% Mexico 4% Other 16% At approximately $6.5 trillion, China s domestic bond market is nearly 18 times larger than the Hong Kong offshore market, and is the third largest bond market in the world. The onshore bond market represents nearly 50% of the total emerging market local debt space by amount outstanding. (As of Q2 2015) Weights represent index allocations following each monthly rebalance.

4 UNDER THE HOOD HOLDINGS BREAKDOWN CHNB Target Exposure Government Bonds Bonds issued by the Chinese Government. Chinese sovereign debt currently has a AA-rating from S&P.3 Central State Owned Enterprise Bonds 45% Government Bonds 23% Agency Bonds 32% Agency Bonds Also known as Policy Bank Bonds, Agency Bonds are issued by either the China Development Bank, the Export-Import Bank of China and the Agriculture Development Bank of China. These agencies are tasked by the central government with financing key initiatives including developing infrastructure, facilitating international trade, and promoting agriculture in rural areas. Central State Owned Enterprise Bonds CSOEs are the issuers of among the largest and most liquid onshore bonds. CSOEs are overseen by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and include entities focused on strategic sectors such as State Grid Corp of China (Electricity), China National Petroleum Corp (Oil), and China Aerospace Science and Technology Corp (Space and Defense).

5 (1) The ChinaBond 5 Year Government Bond Index tracks the performance of onshore bonds issued by the Chinese government with 5 years to maturity. (2) The Markit iboxx Global Emerging Market Local Currency Bond Index is designed to reflect the performance of Emerging Market Local Currency denominated debt. (3) The JPM Global Aggregate Bond Index consists of the JPM GABI US, a US dollar denominated, investment-grade index spanning asset classes from developed to emerging markets, and the JPM GABI, which extends the US index to also include multi-currency, investment-grade instruments. (4) The Barclays US Aggregate Bond Index is a commonly used US bond benchmark and includes treasuries, government-related issues, corporate bonds, agency mortgage-backed pastthroughs (MBS), consumer asset backed securities (ABS), and commercial mortgage-backed securities (CMBS). (5) The S&P 500 is an index of 500 stocks chosen by factors such as market size, liquidity and industry grouping. The Index is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large-cap universe. (6) The CSI 300 Index is a capitalization-weighted stock market index designed to replicate the performance of 300 stocks traded in the Shanghai and Shenzhen stock exchanges. 1 Yield to Maturity represents the annualized rate of return on a bond or bond portfolio if the securit(ies) are held until maturity. 2 Correlation is a statistical measure that represents how the price movements of two securities move in relation to each other. A correlation of 1 indicates that the historical price movements of two securities have been in perfect lockstep. A correlation 0 indicates that the historical price movements of two securities are entirely unrelated. 3 When a bond is rated by S&P that rating is utilized. If it is not rated by S&P, the Moody s rating is utilized. When a security is rated by neither, it is classified as Not Rated. For bonds, these credit quality ratings are shown without regard to gradations within a given rating category. For example, securities rated AA- or AA+ have been included in the AA rated category. Long-term ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest) Investing involves risk, including possible loss of principal. International investments may involve risk of unfavorable fluctuation in currency values, differences in generally accepted accounting principles, or economic or political instability in other nations. The Fund is non-diversified. Because the Fund s investments are concentrated in Chinese bonds that are concentrated in the financials sector, the Fund will be susceptible to loss due to adverse occurrences affecting this country and sector. The Fund invests directly in Chinese Renminbi (RMB)-denominated bonds that are issued or distributed within mainland China. The RMB Bond market is volatile with a risk of suspension of trading in a particular security or government intervention which may impair the liquidity of such securities.because the Fund does not satisfy the criteria to qualify as a Renminbi Qualified Foreign Institutional Investor ( RQFII ) or Qualified Foreign Institutional Investor ( QFII ) itself, the Fund intends to invest directly in RMB-denominated bonds via the RQFII quota of the Fund s sub-adviser. The RQFII quota of the Sub-Adviser may be reduced or revoked by the Chinese regulators which would likely have a materially adverse effect on the Fund and its ability to achieve its investment objective. In addition, there are custody risks associated with investing through a RQFII, where due to requirements regarding establishing a custody account in the joint names of the Fund and the Sub-Adviser the Fund s assets may not be as well protected from the claims of creditors than if the Fund had an account in its name only. As specific rules governing taxes on capital gains derived by RQFIIs and QFIIs from the trading of PRC securities have yet to be announced, there may be additional tax consequences to investing in the Fund. See the prospectus under Shareholder Information - Tax Information for a further description of this risk. The information presented here is for informational purposes only. It was prepared on information and sources that we believe to be reliable, but we make no representations or guarantees as to the accuracy or the completeness of the information contained herein. Carefully consider the Funds investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds prospectus, which may be obtained by calling GX-FUND-1 ( ), or by visiting Read the prospectus carefully before investing. Global X Management Company, LLC serves as an advisor to the Global X Funds. The Global X Funds are distributed by SEI Investments Distribution Co., One Freedom Valley Drive, Oaks, PA, 19456, which is not affiliated with Global X Management Company or any of its affiliates.