UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-22227
Rye Brook, NY 10573
IndexIQ Advisors LLC
800 Westchester Ave, Suite N-611
Rye Brook, NY 10573
Registrant's telephone number, including area code: 1-888-934-0777
Date of fiscal year end: April 30
Date of reporting period: April 30, 2011
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
ANNUAL REPORT | APRIL 30, 2011
IndexIQ ETF Trust
IQ Hedge Multi-Strategy Tracker ETF
IQ Hedge Macro Tracker ETF
IQ Real Return ETF
(formerly, IQ CPI Inflation Hedged ETF)
IQ Global Resources ETF
(formerly, IQ ARB Global Resources ETF)
IQ Merger Arbitrage ETF
(formerly, IQ ARB Merger Arbitrage ETF)
IQ Australia Small Cap ETF
IQ Canada Small Cap ETF
IQ South Korea Small Cap ETF
IQ Taiwan Small Cap ETF
IQ Global Agribusiness Small Cap ETF
The investment return and value of each of the Funds’ shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. The prospectus and the statement of additional information include this and other relevant information about the Funds and are available by visiting www.indexiq.com or by calling 1-888-934-0777. Read the prospectus carefully before investing.
Each of the Funds’ performance that is current to the most recent month-end is available by visiting www.indexiq.com or by calling 1-888-934-0777.
The Funds file their complete schedules of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Commission’s web site at www.sec.gov. The Funds’ Forms N-Q also 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.
The Funds are distributed by ALPS Distributors, Inc., which is not affiliated with IndexIQ or the Funds’ investment advisor.
IndexIQ® and IQ® are registered service marks of IndexIQ.
3
Shareholder Letter (unaudited)
Dear Shareholder:
The twelve months ended April 30, 2011 began with a rocky start as the “Flash Crash” of May 6, 2010 saw equity prices plummet nearly 10% in a 20-minute span. Although the market quickly recovered much of the lost ground, the event set the tone for generally weak equity returns over the summer months. Fixed income instruments outperformed equities as investors sought the relative safety of debt over equity. As summer turned to autumn, the specter of a second round of quantitative easing (nicknamed “QE2”) provided liquidity to the markets and helped lift most assets, especially equities and commodities. Economic growth turned positive (albeit at a modest growth level).
Despite getting off to a weak start and encountering some setbacks along the way, including sovereign debt worries in Europe and an earthquake and tsunami in Japan, most assets ended the 12 months at a level higher than the one at which they had started. The commodity, real estate, small cap equity and emerging market equity segments were up sharply, continuing the trend from the prior year where they were among the strongest performers. Although most asset classes fared well during this period, there were significant differences in the magnitude of returns.
In an attempt to harness these trends, IndexIQ launched a number of new funds during the last year. Building on the prior year’s launch of three small cap country ETFs in Canada (IQ Canada Small Cap ETF — CNDA), Australia (IQ Australia Small Cap ETF — KROO) and South Korea (IQ South Korea Small Cap ETF — SKOR), IndexIQ launched the IQ Taiwan Small Cap ETF, which seeks to provide exposure to the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in Taiwan. Also, IndexIQ launched the first ETF focused on the small cap segment of the global agribusiness sector, the IQ Global Agribusiness Small Cap ETF (CROP). IndexIQ will continue its pattern of innovation and bring to market interesting and dynamic products that meet investor demands and market needs.
At the same time, IndexIQ’s existing suite of funds, including alternative beta / hedge fund replication, inflation hedging and commodities-oriented strategies, generally performed consistent with their investment objectives. Funds such as IQ Hedge Multi-Strategy Tracker ETF (QAI), IQ Hedge Macro Tracker ETF (MCRO), and IQ Global Resources ETF (GRES) continued to gain wider market acceptance. All of these funds are designed to give investors more options in meeting their multi-faceted investment objectives.
Investors have recognized that having a well-diversified portfolio with exposure to multiple asset classes is critical to a better long-term investment strategy. Alternative investments have historically provided investors with added diversification to their portfolios. By marrying the diversification benefits of alternative investments and the growth of exchange-traded funds (ETFs), IndexIQ is seeking to provide investors with innovative tools in a dynamic market environment.*
We at IndexIQ call ourselves “The alternative to alternatives” because, despite the attractive features of alternative assets, for the most part, these strategies have not been available to the majority of investors in a liquid and transparent manner. We believe that our solutions bridge this gap by giving investors the alternative asset performance characteristics they are looking for, but in a more liquid and transparent (daily holdings are published) manner relative to typical alternative asset strategies.
I want to personally thank you for your interest in IndexIQ and our investment products. I invite you to visit us at www.indexiq.com or call us at (888) 934-0777 for more information on our company and our investment solutions.
Adam S. Patti
Chief Executive Officer
Registered Representative of ALPS Distributors, Inc.
* | Diversification does not eliminate the risk of experiencing investment loss. |
4
Management’s Discussion and Analysis (unaudited)
IQ Hedge Multi-Strategy Tracker ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Multi-Strategy Index, which seeks to track the “beta” portion of the returns (i.e., that portion of the returns of hedge funds that are non-idiosyncratic, or unrelated to manager skill) of hedge funds that employ various hedge fund investment styles, which may include but are not limited to macro, long/short, event-driven, market neutral, emerging markets, fixed-income arbitrage and other strategies commonly used by hedge fund managers. The Fund implements its strategy by investing primarily in ETFs representing various asset classes. The Fund does not invest directly in hedge funds.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 3.95% versus 5.52% and 17.22% for the HFRI Fund of Funds Composite Index and Standard & Poor’s 500® Composite Stock Price Index (the “S&P 500 Index”), respectively.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in ETFs, to emerging equity markets, the corporate bond market (high yield and investment grade) and commodities, both diversified and precious metals. The Fund also benefitted from positions in broad bond ETFs as interest rates remained at historical lows.
The primary drivers of negative performance were the Fund’s negative exposures to international equities, U.S. small cap equities, and real estate.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Hedge Multi-Strategy Tracker ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Hedge Multi-Strategy Tracker ETF Market Price2 | 4.09 | % | 6.44 | % | 14.01 | % | ||
IQ Hedge Multi-Strategy Tracker ETF NAV | 3.95 | % | 6.48 | % | 14.11 | % | ||
IQ Hedge Multi-Strategy Index | 4.44 | % | 7.27 | % | 16.10 | % | ||
HFRI Fund of Funds Composite Index | 5.52 | % | 9.11 | %3 | 19.91 | %3 | ||
S&P 500 Index | 17.22 | % | 31.11 | % | 76.55 | % |
1 | Fund Inception Date: 3/24/2009 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
3 | Data shown above for the HFRI Fund of Funds Composite Index is from 3/31/2009 to 4/30/2011. |
5
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (3/24/2009) to the first day of secondary market trading in shares of the Fund (3/25/2009), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.77%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
The HFRI Fund of Funds Composite Index (“HFRI FoF Composite Index”) is an equally weighted hedge fund index including over 650 domestic and off-shore funds of funds.
The S&P 500 Index is a broad-based unmanaged index of 500 stocks, which is designed to represent the equity market in general (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
The Fund is non-diversified and may be susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The Fund is not suitable for all investors. The Fund does not invest in hedge funds.
There is no guarantee that the Fund itself, or each of the ETFs in the Fund’s portfolio, will perform exactly as their underlying indexes. The Fund’s investment performance depends on the investment performance of the underlying ETFs in which it invests. The Fund’s underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk, the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt, and interest rate risk, changes in the value of a fixed income security resulting from changes in interest rates. Leverage, including borrowing, will cause some of the Fund’s underlying ETFs to be more volatile than if the underlying ETFs had not been leveraged.
6
Management’s Discussion and Analysis (unaudited) (continued)
IQ Hedge Macro Tracker ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Macro Index, which seeks to track the “beta” portion of the returns (i.e., that portion of the returns of hedge funds that are non-idiosyncratic, or unrelated to manager skill) of a combination of hedge funds pursuing a macro strategy and hedge funds pursuing an emerging markets strategy. The Fund implements its strategy by investing primarily in ETFs representing various asset classes. The Fund does not invest directly in hedge funds.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 7.21% versus 5.52% and 18.87% for the HFRI Fund of Funds Composite Index and the MSCI World Index, respectively.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in ETFs, to emerging and small cap equity markets, investment grade corporate bonds, and the commodity market. The Fund also benefitted from positions in global currencies as declining interests enabled a profitable carry trade strategy.
The primary driver of negative performance was the Fund’s negative exposure to real estate.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Hedge Macro Tracker ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Hedge Macro Tracker ETF Market Price2 | 7.15 | % | 7.72 | % | 15.12 | % | ||
IQ Hedge Macro Tracker ETF NAV | 7.21 | % | 7.60 | % | 14.88 | % | ||
IQ Hedge Macro Index | 7.61 | % | 8.03 | % | 15.75 | % | ||
HFRI Fund of Funds Composite Index | 5.52 | % | 7.49 | %3 | 14.85 | %3 | ||
MSCI World Index | 18.87 | % | 23.11 | % | 48.05 | % |
1 | Fund Inception Date: 6/08/2009 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
3 | Data shown above for the HFRI Fund of Funds Composite Index is from 5/31/2009 to 4/30/2011. |
7
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (6/8/2009) to the first day of secondary market trading in shares of the Fund (6/9/2009), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.77%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
The HFRI Fund of Funds Composite Index (“HFRI FoF Composite Index”) is an equally weighted hedge fund index including over 650 domestic and off-shore funds of funds.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
The Fund is non-diversified and may be susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The Fund is not suitable for all investors. The Fund does not invest in hedge funds.
There is no guarantee that the Fund itself, or each of the ETFs in the Fund’s portfolio, will perform exactly as their underlying indexes. The Fund’s investment performance depends on the investment performance of the underlying ETFs in which it invests. The Fund’s underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk, the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt, and interest rate risk, changes in the value of a fixed income security resulting from changes in interest rates. Leverage, including borrowing, will cause some of the Fund’s underlying ETFs to be more volatile than if the underlying ETFs had not been leveraged.
8
Management’s Discussion and Analysis (unaudited) (continued)
IQ Real Return ETF (formerly, IQ CPI Inflation Hedged ETF)
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Real Return Index, which seeks to provide investors with a hedge against the U.S. inflation rate by providing a “real return” or a return above the rate of inflation, as represented by the Consumer Price Index, a leading government measure of inflation in the U.S. economy.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 2.58% versus 0.32%, 3.16% and 8.05% for the Barclays Capital Short Term Bond Index, Consumer Price Index, and Barclays Capital U.S. TIPS Index, respectively.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in ETFs, to gold, the Japanese Yen and emerging equity markets. The Fund also benefitted from positions in short term bonds although the continued low yields on short term U.S. Treasury bonds inhibited the performance of the Fund.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Real Return ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Real Return ETF Market Price2 | 2.66 | % | 1.59 | % | 2.42 | % | ||
IQ Real Return ETF NAV | 2.58 | % | 1.67 | % | 2.54 | % | ||
IQ Real Return Index | 3.20 | % | 2.29 | % | 3.48 | % | ||
Barclays Capital Short Term Bond Index3 | 0.32 | % | 0.28 | % | 0.43 | % | ||
Consumer Price Index (All Urban Non Seasonally Adjusted)3 | 3.16 | % | 2.67 | % | 4.04 | %4 | ||
Barclays Capital U.S. TIPS Index3 | 8.05 | % | 8.57 | % | 13.21 | % |
1 | Fund Inception Date: 10/26/2009 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
3 | The Advisor has removed the Consumer Price Index and Barclays Capital U.S. TIPS Index as benchmarks for the Fund and replaced them with the Barclays Capital Short Term Bond Index because the Advisor believes the Barclays Capital Short Term Bond Index is more consistent with the investment strategy of the Fund and the manner in which the Fund’s Underlying Index is constructed. |
4 | Data shown above for the Consumer Price Index is from 10/31/2009 to 4/30/2011. |
9
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (10/26/2009) to the first day of secondary market trading in shares of the Fund (10/27/2009), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.49%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
The Barclays Capital U.S. Short Treasury Bond Index (the “Barclays Capital Short Term Bond Index”) measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of between 1 and 12 months.
The Consumer Price Index All Urban Non Seasonally Adjusted (the “CPI”) is published by the Bureau of Labor Statistics. The CPI is a measure of the average change in prices over time of goods and services purchased by households.
The Barclays Capital U.S. TIPS Index measures the performance of inflation protected public obligations of the U.S. Treasury, also known as “TIPS.”
The Fund is non-diversified and may be susceptible to greater losses if a single portfolio investment declines than would a diversified mutual fund. The Fund is not suitable for all investors.
There is no guarantee that the Fund itself, or each of the ETFs in the Fund’s portfolio, will perform exactly as their underlying indexes. The Fund’s investment performance depends on the investment performance of the underlying ETFs in which it invests. The Fund’s underlying ETFs invest in: foreign securities, which subject them to risk of loss not typically associated with domestic markets, such as currency fluctuations and political uncertainty; commodities markets, which subject them to greater volatility than investments in traditional securities, such as stocks and bonds; and fixed income securities, which subject them to credit risk, the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt, and interest rate risk, changes in the value of a fixed income security resulting from changes in interest rates.
10
Management’s Discussion and Analysis (unaudited) (continued)
IQ Global Resources ETF (formerly, IQ ARB Global Resources ETF)
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Global Resources Index, which seeks to identify investment opportunities in the global resources market segment based on momentum and valuation factors.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 22.17% versus 18.87% and 30.23% for the MSCI World Index and the Dow Jones–UBS Commodity Index, respectively.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in equities, to industrial metals, water, energy, precious metals, coal and livestock. The Fund also benefitted from a long equity position in timber.
The primary drivers of negative performance were the Fund’s negative exposure as a market hedge to U.S. and international equity markets.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Global Resources ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Global Resources ETF Market Price2 | 22.42 | % | 21.87 | % | 34.79 | % | ||
IQ Global Resources ETF NAV | 22.17 | % | 21.76 | % | 34.61 | % | ||
IQ Global Resources Index | 23.31 | % | 23.24 | % | 37.09 | % | ||
MSCI World Index | 18.87 | % | 16.98 | % | 26.71 | % | ||
Dow Jones–UBS Commodity Index | 30.23 | % | 18.91 | % | 29.64 | % |
1 | Fund Inception Date: 10/26/2009 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
11
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (10/26/2009) to the first day of secondary market trading in shares of the Fund (10/27/2009), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.76%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
The Dow Jones-UBS Commodity Index is composed of futures contracts on physical commodities traded on U.S. exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange.
As the Fund’s investments are concentrated in the global resources sector, the value of its shares will be affected by factors specific to that sector and generally will fluctuate more widely than that of a fund which invests in a broad range of industries. The Fund is susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. Loss may result because of less foreign government regulation, less public information, less economic, political and social stability, or other factors. The Fund is exposed to mid and small capitalization companies risk. Stock prices of mid and small capitalization companies generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Since the Fund may invest directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, the Fund is subject to the risk that those currencies will decline in value relative to the U.S. that the U.S. dollar will decline in value relative to the currency being hedged. The ETF should be considered a speculative investment with a high degree of risk, does not represent a complete investment program and is not suitable for all investors.
12
Management’s Discussion and Analysis (unaudited) (continued)
IQ Merger Arbitrage ETF (formerly, IQ ARB Merger Arbitrage ETF)
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Merger Arbitrage Index, which seeks to identify investment opportunities in the acquisition and merger market segment globally.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned –2.03% versus 18.87% and 17.22% for the MSCI World Index and the S&P 500 Index, respectively.
The principle positive contributors to Fund performance for the period were the Fund’s positions in Qwest Communications (Q), Allegheny Energy (AYE), NYSE Euronext (NYX), Marshall and Illsley (MI) and Genzyme (GENZ).
The primary drivers of negative performance were the Fund’s positions in Smith International (SI) and XTO Energy (XTO), as well as the equity market hedge positions.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Merger Arbitrage ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Merger Arbitrage ETF Market Price2 | –2.58 | % | 1.97 | % | 2.88 | % | ||
IQ Merger Arbitrage ETF NAV | –2.03 | % | 2.22 | % | 3.23 | % | ||
IQ Merger Arbitrage Index | –0.70 | % | 3.52 | % | 5.15 | % | ||
MSCI World Index | 18.87 | % | 15.10 | % | 22.60 | % | ||
S&P 500 Index | 17.22 | % | 17.58 | % | 26.46 | % |
1 | Fund Inception Date: 11/16/2009 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
13
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (11/16/2009) to the first day of secondary market trading in shares of the Fund (11/17/2009), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.76%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
The MSCI World Index is a free-float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed market (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
The S&P 500 Index is a broad-based unmanaged index of 500 stocks, which is designed to represent the equity market in general (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
Certain of the proposed takeover transactions in which the Fund invests may be renegotiated, terminated or involve a longer time frame than originally contemplated, which may negatively impact the Fund’s returns. The Fund’s investment strategy may result in high portfolio turnover, which, in turn, may result in increased transaction costs to the Fund and lower total returns. The Fund is susceptible to foreign securities risk — since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets, including currency transaction risk. Diversification does not eliminate the risk of experiencing investment losses. Stock prices of mid and small capitalization companies generally are more volatile than those of larger companies and also more vulnerable than those of larger capitalization companies to adverse economic developments. The ETF should be considered a speculative investment with a high degree of risk, does not represent a complete investment program and is not suitable for all investors.
14
Management’s Discussion and Analysis (unaudited) (continued)
IQ Australia Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Australia Small Cap Index, which seeks to provide investors with a means of tracking the overall performance of small cap Australian companies.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 22.71%.
The principle positive contributors to Fund performance for the period were the Fund’s allocations to equities in the basic materials and capital goods sectors. The Fund also benefitted from positions in financials, energy and health care.
The primary drivers of negative performance were the Fund’s allocations to transportation and technology stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Australia Small Cap ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Australia Small Cap ETF Market Price2 | 25.50 | % | 23.97 | % | 26.85 | % | ||
IQ Australia Small Cap ETF NAV | 22.71 | % | 23.08 | % | 25.85 | % | ||
IQ Australia Small Cap Index | 24.32 | % | 24.70 | % | 27.68 | % |
1 | Fund Inception Date: 3/22/2010 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
15
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (3/22/2010) to the first day of secondary market trading in shares of the Fund (3/23/2010), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.69%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
As the Fund’s investments are concentrated in Australia, the value of its shares will be affected by factors specific to Australia and may fluctuate more widely than that of a fund which invests in a more diversified manner. Any negative changes in the agricultural or mining industries could have an adverse impact on the Australian economy. The Australian economy is heavily dependent upon trading with its key partners, including the U.S., Asia and Europe. Any reduction in this trading may cause an adverse impact on the economy in which the Fund invests. The Fund is susceptible to foreign securities risk — since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both the Fund’s ability to track its Index and Fund returns in general may be adversely impacted by changes in currency exchange rates. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
16
Management’s Discussion and Analysis (unaudited) (continued)
IQ Canada Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Canada Small Cap Index, which seeks to provide investors with a means of tracking the overall performance of small cap Canadian companies.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 38.15%.
The principle positive contributors to Fund performance for the period were the Fund’s allocations to equities in the basic materials and energy sectors. The Fund also benefitted from positions in financials, capital goods and health care.
The primary driver of negative performance was the Fund’s allocation to consumer cyclical stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Canada Small Cap ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Canada Small Cap ETF Market Price2 | 38.55 | % | 39.10 | % | 44.09 | % | ||
IQ Canada Small Cap ETF NAV | 38.15 | % | 38.83 | % | 43.78 | % | ||
IQ Canada Small Cap Index | 39.34 | % | 40.16 | % | 45.31 | % |
1 | Fund Inception Date: 3/22/2010 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
17
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (3/22/2010) to the first day of secondary market trading in shares of the Fund (3/23/2010), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.69%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
As the Fund’s investments are concentrated in Canada, the value of its shares will be affected by factors specific to Canada and may fluctuate more widely than that of a fund which invests in a broad range of countries. Any negative changes in the agricultural or mining industries could have an adverse impact on the Canadian economy. The Canadian economy is heavily dependent upon trading with its key partners. Any reduction in this trading may cause an adverse impact on the economy in which the Fund invests. The Fund is susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both the Fund’s ability to track its Index and Fund returns in general may be adversely impacted by changes in currency exchange rates. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
18
Management’s Discussion and Analysis (unaudited) (continued)
IQ South Korea Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ South Korea Small Cap Index, which seeks to provide investors with a means of tracking the overall performance of small cap South Korean companies.
For the 12-month period ended April 30, 2011, the Fund (NAV) returned 27.04%.
The principle positive contributors to Fund performance for the period were the Fund’s allocations to equities in the basic materials, capital goods, and consumer cyclical sectors. The Fund also benefitted from positions in financials and consumer staples.
The primary drivers of negative performance were the Fund’s allocations to transportation and health care stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ South Korea Small Cap ETF
(as of April 30, 2011)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ South Korea Small Cap ETF Market Price2 | 27.49 | % | 28.32 | % | 29.73 | % | ||
IQ South Korea Small Cap ETF NAV | 27.04 | % | 28.09 | % | 29.58 | % | ||
IQ South Korea Small Cap Index | 27.95 | % | 31.48 | % | 33.17 | % |
1 | Fund Inception Date: 4/13/2010 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
19
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (4/13/2010) to the first day of secondary market trading in shares of the Fund (4/14/2010), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.80%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
As the Fund’s investments are concentrated in South Korea, the value of its shares will be affected by factors specific to South Korea and may fluctuate more widely than that of a fund which invests in a broad range of countries and in developed markets. Investments in South Korea can be impacted by several factors, including a natural disaster in South Korea, a reduction in trading activity with its key trading partners, labor-related issues (South Korea’s economic growth potential is susceptible to problems from large scale emigration, rigid labor regulations and ongoing labor relations issues, and the average age of South Korea’s workforce is rapidly increasing), and security issues, as any outbreak of hostilities between North and South Korea could have a severe adverse effect on the South Korean economy and its securities markets. The Fund is susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both the Fund’s ability to track its Index and Fund returns in general may be adversely impacted by changes in currency exchange rates. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
20
Management’s Discussion and Analysis (unaudited) (continued)
IQ Taiwan Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Taiwan Small Cap Index, which seeks to provide investors with a means of tracking the overall performance of small cap Taiwan companies.
For the period since Fund (NAV) inception (May 18, 2010) through April 30, 2011, the Fund (NAV) returned 22.28%.
The principle positive contributors to Fund performance for the period were the Fund’s allocations to equities in the basic materials and capital goods sectors. The Fund also benefitted from positions in the consumer sector.
All sectors had positive performance for this time period; however on a relative basis, technology and health care stocks had the lowest performance.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2011)
This chart illustrates the performance of a hypothetical $10,000 investment made on the Fund’s inception, and is not intended to imply any future performance.
Fund Performance History
IQ Taiwan Small Cap ETF
(as of April 30, 2011)
Since Inception1 | ||
Cumulative | ||
IQ Taiwan Small Cap ETF Market Price2 | 23.39 | % |
IQ Taiwan Small Cap ETF NAV | 22.28 | % |
IQ Taiwan Small Cap Index | 24.37 | % |
1 | Fund Inception Date: 5/18/2010 |
2 | The price used to calculate the Market Price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times. |
21
Management’s Discussion and Analysis (unaudited) (continued)
Since the shares of the Fund did not trade in the secondary market until the day after the Fund’s commencement, for the period from commencement (5/18/2010) to the first day of secondary market trading in shares of the Fund (5/19/2010), the NAV of the Fund is used as a proxy for the secondary market trading price to calculate market returns.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Current Fund performance may be lower or higher than performance data quoted. Fund performance that is current to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com. Returns shown include the reinvestment of all dividends and other distributions and do not reflect taxes that a shareholder would pay on the Fund’s distributions or redemption of the Fund’s shares. The gross total annual operating expense ratio of the Fund was 0.80%.
Index performance is for illustrative purposes only and does not represent actual Fund performance. One cannot invest directly in an index. Performance data for the Index assumes reinvestment of dividends and is net of the management fees for the Index’s components, as applicable, but it does not reflect management fees, transaction costs or other expenses that you would pay if you invested in the Fund directly.
As the Fund’s investments are concentrated in Taiwan, the value of its shares will be affected by factors specific to Taiwan and may fluctuate more widely than that of a fund which invests in a broad range of countries and in developed markets. Investments in Taiwan can be impacted by several factors, including a natural disaster in Taiwan, a reduction in trading activity with its key trading partners, labor-related issues (rising labor costs and increasing environmental consciousness have led some labor-intensive industries to relocate to countries with cheaper work forces, and continued labor outsourcing may adversely affect the Taiwanese economy), fluctuations or shortages in the commodity markets (Taiwan is a small island state with few raw material resources and limited land area and is reliant on imports for its commodity needs), political uncertainties (the uncertainty with which Taiwan is recognized internationally could materially impact the Taiwanese economy and securities market). The Fund is susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both the Fund’s ability to track its Index and Fund returns in general may be adversely impacted by changes in currency exchange rates. The ETF is new and has limited operating history. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
22
Management’s Discussion and Analysis (unaudited) (continued)
IQ Global Agribusiness Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Global Agribusiness Small Cap Index. The IQ Global Agribusiness Small Cap Index is float-adjusted market cap-weighted and includes global small cap companies engaged in the agribusiness sector, including crop production and farming, livestock operations, agricultural machinery, agricultural supplies and logistics, agricultural chemicals, and biofuels.
Fund performance information has been excluded due to the limited time for which the Fund was active during the reporting period (Fund inception date: March 21, 2011).
As the Fund’s investments are concentrated in the Agribusiness sector, adverse weather conditions, economic forces and government policy and regulation could adversely affect the Fund’s portfolio companies and, thus, the Fund’s financial situation and performance. The Fund is susceptible to foreign securities risk. Since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies and also are more vulnerable than those of large capitalization companies to adverse business and economic developments. Both the Fund’s ability to track its Index and Fund returns in general may be adversely impacted by changes in currency exchange rates. The ETF is new and has limited operating history. The Fund is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program.
23
Fund Expenses (unaudited)
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information together with the amount you invested, in a particular Fund, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid for Period 11/1/10 to 4/30/11” to estimate the expenses you paid on your account during this period. Each Fund will indirectly bear its pro rata share of the expenses incurred by the underlying ETF investments in which each Fund invests. These expenses are not included in the table.
Hypothetical Example for Comparison Purposes
The second line of the table below also provides information about hypothetical account values and hypothetical expenses based on each Funds’ actual expense ratio and an assumed annual rate of return of 5% before expenses, which are not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The Funds will indirectly bear their pro rata share of the expenses incurred by the underlying ETF investments in which the Funds invest. These expenses are not included in the table.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
24
Fund Expenses (unaudited) (continued)
Beginning Account Value | Ending Account Value 04/30/11 | Annualized Expense Ratios for the Period 11/1/10 to 4/30/2011 | Expenses Paid for Period 11/1/10 to 4/30/2011 | |||||||||
IQ Hedge Multi-Strategy Tracker ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,013.44 | 0.78 | % | $ | 3.89 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.93 | 0.78 | % | $ | 3.91 | ||||
IQ Hedge Macro Tracker ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,027.95 | 0.77 | % | $ | 3.87 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.98 | 0.77 | % | $ | 3.86 | ||||
IQ Real Return ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,009.21 | 0.48 | % | $ | 2.39 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.41 | 0.48 | % | $ | 2.41 | ||||
IQ Global Resources ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,141.19 | 0.75 | % | $ | 3.98 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.08 | 0.75 | % | $ | 3.76 | ||||
IQ Merger Arbitrage ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,008.08 | 0.75 | % | $ | 3.73 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.08 | 0.75 | % | $ | 3.76 | ||||
IQ Australia Small Cap ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,145.31 | 0.69 | % | $ | 3.67 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.37 | 0.69 | % | $ | 3.46 | ||||
IQ Canada Small Cap ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,231.01 | 0.69 | % | $ | 3.82 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.37 | 0.69 | % | $ | 3.46 | ||||
IQ South Korea Small Cap ETF | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,086.35 | 0.79 | % | $ | 4.09 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.88 | 0.79 | % | $ | 3.96 | ||||
IQ Taiwan Small Cap ETF1 | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,084.44 | 0.80 | % | $ | 4.13 | ||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.83 | 0.80 | % | $ | 4.01 | ||||
IQ Global Agribusiness Small Cap ETF2 | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,079.53 | 0.75 | % | $ | 0.85 | * | |||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.08 | 0.75 | % | $ | 3.76 |
* | Expenses are calculated using the Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 184/365 (to reflect the six-month period). |
1 | IQ Taiwan Small Cap ETF commenced operations on May 18, 2010. |
2 | IQ Global Agribusiness Small Cap ETF commenced operations on March 21, 2011. |
25
Premium and Discount Frequency Data (unaudited)
April 30, 2011
The tables that follow present information about the differences between the daily market price on secondary markets for shares of a Fund and that Fund’s net asset value. Net asset value, or “NAV”, is the price per share at which each Fund issues and redeems shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. The “Closing Price” of each Fund generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the shares of such Fund is listed for trading, as of the time that the Fund’s NAV is calculated. Each Fund’s Market Price may be at, above or below its NAV. The NAV of each Fund will fluctuate with changes in the market value of its portfolio holdings. The Market Price of each 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 a Fund on a given day, generally at the time NAV is calculated. A premium is the amount that a Fund is trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that a Fund is trading below the reported NAV, expressed as a percentage of the NAV.
The following information shows the frequency distributions of premiums and discounts for each of the Funds. The information shown for each Fund is for the period from the inception date of such fund through April 30, 2011.
Each line in the table shows the number of trading days in which the Fund traded within the premium/discount range indicated. The number of trading days in each premium/discount range is also shown as a percentage of the total number of trading days in the period covered by each table. All data presented here represents past performance, which cannot be used to predict future results.
Premium | Discount | ||||||||||
Differential | Number of Days Market Price >= NAV | Market Price >= NAV % of Total Days | Number of Days Market Price < NAV | Market Price < NAV % of Total Days | |||||||
IQ Hedge Multi-Strategy ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 148 | 59.69 | % | 82 | 33.06 | % | |||||
$.25-$.499 | 6 | 2.42 | % | 8 | 3.23 | % | |||||
$.50-$.749 | 0 | 0.00 | % | 2 | 0.81 | % | |||||
$.75-$1.00 | 0 | 0.00 | % | 1 | 0.40 | % | |||||
>$1.00 | 1 | 0.40 | % | 0 | 0.00 | % | |||||
Total | 155 | 62.50 | % | 93 | 37.50 | % | |||||
IQ Hedge Macro Tracker ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 147 | 59.27 | % | 86 | 34.68 | % | |||||
$.25-$.499 | 6 | 2.42 | % | 5 | 2.02 | % | |||||
$.50-$.749 | 1 | 0.40 | % | 0 | 0.00 | % | |||||
$.75-$1.00 | 0 | 0.00 | % | 0 | 0.00 | % | |||||
>$1.00 | 2 | 0.81 | % | 1 | 0.40 | % | |||||
Total | 156 | 62.90 | % | 92 | 37.10 | % | |||||
IQ Real Return ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 145 | 58.70 | % | 94 | 38.06 | % | |||||
$.25-$.499 | 3 | 1.21 | % | 2 | 0.81 | % | |||||
$.50-$.749 | 1 | 0.40 | % | 0 | 0.00 | % | |||||
$.75-$1.00 | 0 | 0.00 | % | 0 | 0.00 | % | |||||
>$1.00 | 2 | 0.81 | % | 0 | 0.00 | % | |||||
Total | 151 | 61.13 | % | 96 | 38.87 | % | |||||
26
Premium and Discount Frequency Data (unaudited) (continued)
April 30, 2011
Premium | Discount | ||||||||||
Differential | Number of Days Market Price >= NAV | Market Price >= NAV % of Total Days | Number of Days Market Price < NAV | Market Price < NAV % of Total Days | |||||||
IQ Global Resources ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 39 | 15.73 | % | 13 | 5.24 | % | |||||
$.25-$.499 | 65 | 26.21 | % | 7 | 2.82 | % | |||||
$.50-$.749 | 55 | 22.18 | % | 4 | 1.61 | % | |||||
$.75-$1.00 | 27 | 10.89 | % | 4 | 1.61 | % | |||||
>$1.00 | 33 | 13.31 | % | 1 | 0.40 | % | |||||
Total | 219 | 88.31 | % | 29 | 11.69 | % | |||||
IQ Merger Arbitrage ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 103 | 41.53 | % | 86 | 34.68 | % | |||||
$.25-$.499 | 29 | 11.69 | % | 13 | 5.25 | % | |||||
$.50-$.749 | 5 | 2.02 | % | 7 | 2.82 | % | |||||
$.75-$1.00 | 3 | 1.21 | % | 2 | 0.81 | % | |||||
>$1.00 | 0 | 0.00 | % | 0 | 0.00 | % | |||||
Total | 140 | 56.45 | % | 108 | 43.55 | % | |||||
IQ Canada Small Cap ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 69 | 27.82 | % | 53 | 21.37 | % | |||||
$.25-$.499 | 58 | 23.39 | % | 24 | 9.68 | % | |||||
$.50-$.749 | 23 | 9.27 | % | 9 | 3.63 | % | |||||
$.75-$1.00 | 5 | 2.02 | % | 2 | 0.81 | % | |||||
>$1.00 | 3 | 1.21 | % | 2 | 0.81 | % | |||||
Total | 158 | 63.71 | % | 90 | 36.29 | % | |||||
IQ Australia Small Cap ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 30 | 12.10 | % | 20 | 8.06 | % | |||||
$.25-$.499 | 29 | 11.69 | % | 12 | 4.84 | % | |||||
$.50-$.749 | 31 | 12.50 | % | 16 | 6.45 | % | |||||
$.75-$1.00 | 25 | 10.08 | % | 7 | 2.82 | % | |||||
>$1.00 | 46 | 18.55 | % | 32 | 12.90 | % | |||||
Total | 161 | 64.92 | % | 87 | 35.08 | % | |||||
IQ South Korea Small Cap ETF | |||||||||||
May 1, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 35 | 14.06 | % | 19 | 7.63 | % | |||||
$.25-$.499 | 36 | 14.46 | % | 13 | 5.22 | % | |||||
$.50-$.749 | 29 | 11.65 | % | 13 | 5.22 | % | |||||
$.75-$1.00 | 20 | 8.03 | % | 5 | 2.01 | % | |||||
>$1.00 | 54 | 21.69 | % | 25 | 10.04 | % | |||||
Total | 174 | 69.89 | % | 75 | 30.11 | % | |||||
27
Premium and Discount Frequency Data (unaudited) (continued)
April 30, 2011
Premium | Discount | ||||||||||
Differential | Number of Days Market Price >= NAV | Market Price >= NAV % of Total Days | Number of Days Market Price < NAV | Market Price < NAV % of Total Days | |||||||
IQ Taiwan Small Cap ETF | |||||||||||
May 18, 2010 – April 30, 2011 | |||||||||||
$.00-$.249 | 43 | 18.14 | % | 36 | 15.19 | % | |||||
$.25-$.499 | 29 | 12.24 | % | 22 | 9.28 | % | |||||
$.50-$.749 | 28 | 11.81 | % | 11 | 4.64 | % | |||||
$.75-$1.00 | 17 | 7.17 | % | 12 | 5.06 | % | |||||
>$1.00 | 20 | 8.44 | % | 19 | 8.02 | % | |||||
Total | 137 | 57.82 | % | 100 | 42.18 | % | |||||
IQ Global Agribusiness Small Cap ETF | |||||||||||
March 21, 2011 – April 30, 2011 | |||||||||||
$.00-$.249 | 4 | 14.81 | % | 3 | 11.11 | % | |||||
$.25-$.499 | 12 | 44.44 | % | 0 | 0.00 | % | |||||
$.50-$.749 | 5 | 18.52 | % | 0 | 0.00 | % | |||||
$.75-$1.00 | 3 | 11.11 | % | 0 | 0.00 | % | |||||
>$1.00 | 0 | 0.00 | % | 0 | 0.00 | % | |||||
Total | 24 | 88.90 | % | 3 | 11.10 | % | |||||
28
Portfolio Summaries (unaudited)
April 30, 2011
SCHEDULES OF INVESTMENTS SUMMARY TABLE
IQ Hedge Multi-Strategy Tracker ETF
Net Assets ($ mil): $131.1
Investments | % of Net Assets | |
Corporate Bond Funds | 26.1 | % |
Aggregate Bond Funds | 25.0 | |
Commodity Funds | 8.8 | |
Equity Funds | 7.5 | |
U.S. Small Cap Equity Fund | 6.8 | |
Currency Harvest Fund | 6.1 | |
High Yield Corporate Bond Funds | 3.6 | |
Real Estate Fund | 1.4 | |
Emerging Equity Funds | 0.2 | |
Money Market Fund | 11.6 | |
Total Investments | 97.1 | |
Other Assets in Excess of Liabilities | 2.9 | |
Net Assets | 100.0 | % |
IQ Hedge Macro Tracker ETF
Net Assets ($ mil): $28.3
Investments | % of Net Assets | |
Emerging Equity Funds | 31.3 | % |
Short-Term Treasury Bond Funds | 25.7 | |
Corporate Bond Funds | 18.6 | |
Commodity Funds | 11.0 | |
Currency Harvest Fund | 5.0 | |
International Bond Funds | 4.2 | |
Money Market Fund | 1.0 | |
Total Investments | 96.8 | |
Other Assets in Excess of Liabilities | 3.2 | |
Net Assets | 100.0 | % |
IQ Real Return ETF
Net Assets ($ mil): $12.8
Investments | % of Net Assets | |
Short-Term Treasury Bond Funds | 84.6 | % |
Commodity Funds | 9.6 | |
U.S. Small Cap Equity Fund | 4.3 | |
Currency Fund | 0.8 | |
Emerging Equity Funds | 0.7 | |
Money Market Fund | 0.1 | |
Total Investments | 100.1 | |
Liabilities in Excess of Other Assets | (0.1 | ) |
Net Assets | 100.0 | % |
IQ Global Resources ETF
Net Assets ($ mil): $79.9
Investments | % of Net Assets | |
Materials | 51.6 | % |
Energy | 18.8 | |
Industrials | 10.9 | |
Utilities | 5.2 | |
Consumer Staples | 4.4 | |
Money Market Fund | 6.9 | |
Total Investments | 97.8 | |
Other Assets in Excess of Liabilities | 2.2 | |
Net Assets | 100.0 | % |
IQ Merger Arbitrage ETF
Net Assets ($ mil): $22.9
Investments | % of Net Assets | |
Health Care | 15.7 | % |
Financials | 13.7 | |
Materials | 11.2 | |
Energy | 10.5 | |
Information Technology | 8.6 | |
Industrials | 7.1 | |
Consumer Discretionary | 6.6 | |
Consumer Staples | 4.7 | |
Utilities | 2.2 | |
Money Market Fund | 17.8 | |
Total Investments | 98.1 | |
Other Assets in Excess of Liabilities | 1.9 | |
Net Assets | 100.0 | % |
IQ Australia Small Cap ETF
Net Assets ($ mil): $43.3
Investments | % of Net Assets | |
Materials | 26.6 | % |
Industrials | 25.3 | |
Consumer Discretionary | 20.1 | |
Energy | 8.7 | |
Health Care | 6.1 | |
Financials | 3.9 | |
Consumer Staples | 3.3 | |
Information Technology | 2.8 | |
Utilities | 1.0 | |
Telecommunication Services | 0.8 | |
Money Market Fund | 0.9 | |
Total Investments | 99.5 | |
Other Assets in Excess of Liabilities | 0.5 | |
Net Assets | 100.0 | % |
29
Portfolio Summaries (unaudited) (continued)
April 30, 2011
IQ Canada Small Cap ETF
Net Assets ($ mil): $120.5
Investments | % of Net Assets | |
Materials | 42.4 | % |
Energy | 31.0 | |
Financials | 9.6 | |
Industrials | 7.2 | |
Consumer Discretionary | 3.2 | |
Information Technology | 2.7 | |
Utilities | 1.4 | |
Consumer Staples | 1.4 | |
Telecommunication Services | 0.4 | |
Money Market Fund | 0.7 | |
Total Investments | 100.0 | |
Other Assets in Excess of Liabilities | — | * |
Net Assets | 100.0 | % |
* | Less than 0.05%. |
IQ South Korea Small Cap ETF
Net Assets ($ mil): $16.2
Investments | % of Net Assets | |
Information Technology | 26.2 | % |
Consumer Discretionary | 19.5 | |
Industrials | 15.8 | |
Financials | 15.1 | |
Materials | 14.6 | |
Health Care | 3.8 | |
Consumer Staples | 2.5 | |
Money Market Fund | 0.7 | |
Total Investments | 98.2 | |
Other Assets in Excess of Liabilities | 1.8 | |
Net Assets | 100.0 | % |
IQ Taiwan Small Cap ETF
Net Assets ($ mil): $4.5
Investments | % of Net Assets | |
Information Technology | 49.4 | % |
Materials | 16.1 | |
Industrials | 14.3 | |
Consumer Discretionary | 11.1 | |
Consumer Staples | 4.5 | |
Financials | 3.2 | |
Money Market Fund | 0.3 | |
Total Investments | 98.9 | |
Other Assets in Excess of Liabilities | 1.1 | |
Net Assets | 100.0 | % |
IQ Global Agribusiness Small Cap ETF
Net Assets ($ mil): $54.8
Investments | % of Net Assets | |
Consumer Staples | 76.1 | % |
Consumer Discretionary | 8.9 | |
Industrials | 7.8 | |
Materials | 6.6 | |
Money Market Fund | 0.8 | |
Total Investments | 100.2 | |
Liabilities in Excess of Other Assets | (0.2 | ) |
Net Assets | 100.0 | % |
30
Schedules of Investments — IQ Hedge Multi-Strategy Tracker ETF
April 30, 2011
Shares | Value | |||
Investment Companies — 85.5% | ||||
Aggregate Bond Funds — 25.0% | ||||
iShares Barclays Aggregate Bond Fund | 164,671 | $ | 17,535,815 | |
SPDR Barclays Capital Aggregate | ||||
Bond ETF | 6,333 | 355,091 | ||
Vanguard Total Bond Market ETF | 184,146 | 14,912,143 | ||
Total Aggregate Bond Funds | 32,803,049 | |||
Commodity Funds — 8.8% | ||||
iShares Silver Trust* | 34,960 | 1,639,624 | ||
PowerShares DB Commodity Index | ||||
Tracking Fund* | 102,281 | 3,262,764 | ||
PowerShares DB Gold Fund* | 120,128 | 6,591,423 | ||
Total Commodity Funds | 11,493,811 | |||
Corporate Bond Funds — 26.1% | ||||
iShares Barclays Credit Bond Fund | 18,808 | 1,992,143 | ||
iShares iBoxx $ Investment Grade | ||||
Corporate Bond Fund | 292,255 | 32,285,410 | ||
Total Corporate Bond Funds | 34,277,553 | |||
Currency Harvest Fund — 6.1% | ||||
PowerShares DB G10 Currency | ||||
Harvest Fund* | 316,637 | 7,950,755 | ||
Emerging Equity Funds — 0.2% | ||||
iShares MSCI Emerging Markets Index | 2,174 | 108,700 | ||
Vanguard MSCI Emerging Markets ETF | 2,621 | 132,570 | ||
Total Emerging Equity Funds | 241,270 | |||
Equity Funds — 7.5% | ||||
iShares MSCI EAFE Index Fund | 50,599 | 3,211,013 | ||
SPDR S&P 500 ETF Trust | 44,825 | 6,120,406 | ||
Vanguard MSCI EAFE ETF | 12,762 | 505,630 | ||
Total Equity Funds | 9,837,049 | |||
High Yield Corporate Bond Funds — 3.6% | ||||
iShares iBoxx $ High Yield Corporate | ||||
Bond Fund | 27,729 | 2,574,638 | ||
SPDR Barclays Capital High Yield | ||||
Bond ETF | 54,192 | 2,216,453 | ||
Total High Yield Corporate Bond Funds | 4,791,091 | |||
Real Estate Fund — 1.4% | ||||
SPDR Dow Jones International | ||||
Real Estate ETF | 43,123 | 1,788,311 | ||
U.S. Small Cap Equity Fund — 6.8% | ||||
iShares Russell 2000 Index Fund | 103,333 | 8,924,871 | ||
Total Investment Companies — 85.5% | ||||
(Cost $108,862,994) | 112,107,760 | |||
Short-Term Investment — 11.6% | ||||
Money Market Fund — 11.6% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(a) | ||||
(Cost $15,115,634) | 15,115,634 | 15,115,634 | ||
Total Investments — 97.1% | ||||
(Cost $123,978,628) | $ | 127,223,394 | ||
Other Assets in Excess of | ||||
Liabilities — 2.9%(b) | 3,853,293 | |||
Net Assets — 100.0% | $ | 131,076,687 | ||
* | Non-income producing securities. | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
(b) | Other Assets in Excess of Liabilities includes net unrealized appreciation/depreciation on futures and swap contracts. | |
ETF — Exchange Traded Fund |
Open futures contract outstanding at April 30, 2011:
Type | Broker | Expiration Date | Number of Contracts | Value at Trade Date | Value at April 30, 2011 | Unrealized Depreciation |
E-Mini Euro FX Future | Morgan Stanley | June 2011 | (45) | $(3,994,082) | $(4,168,125) | $(174,043) |
Cash posted as collateral to broker for futures contracts was $67,500 at April 30, 2011.
Total return swap contracts outstanding at April 30, 2011:
Total Return Benchmark | Annual Financing Rate Received (Paid) | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation) | |||||||
SPDR Barclays Capital Conv SEC ETF | (1.23 | )% | 07/06/2012 | $ | 12,231,156 | $ | — | ||||
iShares Dow Jones Real Estate | 0.49 | % | 07/06/2012 | (11,247,616 | ) | — | |||||
$ | — | ||||||||||
Cash posted as collateral to broker for swap contracts was $4,510,121 at April 30, 2011.
Morgan Stanley acts as the counterparty to the total return swap contracts listed above. The Fund either receives fees from, or pay fees to, the counterparty, depending upon the total return of the benchmark, and the agreed-upon financing rate.
See notes to financial statements.
31
Schedules of Investments — IQ Hedge Macro Tracker ETF
April 30, 2011
Shares | Value | |||
Investment Companies — 95.8% | ||||
Commodity Funds — 11.0% | ||||
iShares Silver Trust* | 9,011 | $ | 422,616 | |
PowerShares DB Commodity Index | ||||
Tracking Fund* | 30,742 | 980,670 | ||
PowerShares DB Gold Fund* | 30,963 | 1,698,940 | ||
Total Commodity Funds | 3,102,226 | |||
Corporate Bond Funds — 18.6% | ||||
iShares Barclays Credit Bond Fund | 2,884 | 305,474 | ||
iShares iBoxx $ Investment Grade | ||||
Corporate Bond Fund | 44,824 | 4,951,707 | ||
Total Corporate Bond Funds | 5,257,181 | |||
Currency Harvest Fund — 5.0% | ||||
PowerShares DB G10 Currency | ||||
Harvest Fund* | 55,804 | 1,401,238 | ||
Emerging Equity Funds — 31.3% | ||||
iShares MSCI Emerging Markets Index | 79,837 | 3,991,850 | ||
Vanguard MSCI Emerging Markets ETF | 96,231 | 4,867,364 | ||
Total Emerging Equity Funds | 8,859,214 | |||
International Bond Funds — 4.2% | ||||
iShares JPMorgan USD Emerging | ||||
Markets Bond Fund | 5,469 | 590,597 | ||
PowerShares Emerging Markets | ||||
Sovereign Debt Portfolio | 8,731 | 233,205 | ||
SPDR Barclays Capital International | ||||
Treasury Bond ETF | 6,021 | 377,818 | ||
Total International Bond Funds | 1,201,620 | |||
Short-Term Treasury Bond Funds — 25.7% | ||||
iShares Barclays 1-3 Year Treasury | ||||
Bond Fund | 35,643 | 2,998,646 | ||
iShares Barclays Short Treasury | ||||
Bond Fund | 14,348 | 1,582,297 | ||
SPDR Barclays Capital 1-3 Month | ||||
T-Bill ETF* | 8,047 | 368,955 | ||
Vanguard Short-Term Bond ETF | 28,849 | 2,330,422 | ||
Total Short-Term Treasury Bond Funds | 7,280,320 | |||
Total Investment Companies — 95.8% | ||||
(Cost $25,570,876) | 27,101,799 | |||
Short-Term Investment — 1.0% | ||||
Money Market Fund — 1.0% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(a) | ||||
(Cost $293,592) | 293,592 | 293,592 | ||
Total Investments — 96.8% | ||||
(Cost $25,864,468) | $ | 27,395,391 | ||
Other Assets in Excess of | ||||
Liabilities — 3.2%(b) | 906,770 | |||
Net Assets — 100.0% | $ | 28,302,161 | ||
* | Non-income producing securities | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
(b) | Other Assets in Excess of Liabilities includes net unrealized depreciation on futures contract. | |
ETF — Exchange Traded Fund |
Open futures contracts outstanding at April 30, 2011:
Type | Broker | Expiration Date | Number of Contracts | Value at Trade Date | Value at April 30, 2011 | Unrealized Depreciation | ||||||||||||
E-Mini Euro FX Future | Morgan Stanley | June 2011 | (11 | ) | $ | (976,331 | ) | $ | (1,018,875 | ) | $ | (42,544 | ) | |||||
Russell 2000 Index Future | Morgan Stanley | June 2011 | (20 | ) | (1,701,947 | ) | (1,727,800 | ) | (25,853 | ) | ||||||||
$ | (68,397 | ) | ||||||||||||||||
Cash posted as collateral to broker was $934,315 at April 30, 2011.
See notes to financial statements.
32
Schedules of Investments — IQ Real Return ETF
April 30, 2011
Shares | Value | ||||
Investment Companies — 100.0% | |||||
Commodity Funds — 9.6% | |||||
PowerShares DB Gold Fund* | 15,777 | $ | 865,684 | ||
PowerShares DB Oil Fund* | 10,793 | 369,336 | |||
Total Commodity Funds | 1,235,020 | ||||
Currency Fund — 0.8% | |||||
CurrencyShares British Pound Sterling Trust* | 619 | 102,748 | |||
Emerging Equity Funds — 0.7% | |||||
iShares MSCI Emerging Markets Index | 750 | 37,500 | |||
Vanguard MSCI Emerging Markets ETF | 913 | 46,180 | |||
Total Emerging Equity Funds | 83,680 | ||||
Short-Term Treasury Bond Funds — 84.6% | |||||
iShares Barclays Short Treasury | |||||
Bond Fund | 80,489 | 8,876,327 | |||
SPDR Barclays Capital 1-3 Month | |||||
T-Bill ETF* | 42,815 | 1,963,068 | |||
Total Short-Term Treasury Bond Funds | 10,839,395 | ||||
U.S. Small Cap Equity Fund — 4.3% | |||||
iShares Russell 2000 Index Fund | 6,378 | 550,868 | |||
Total Investment Companies — 100.0% | |||||
(Cost $12,684,897) | 12,811,711 | ||||
Short-Term Investment — 0.1% | |||||
Money Market Fund — 0.1% | |||||
Invesco Treasury Portfolio Cash | |||||
Management, 0.02%(a) | |||||
(Cost $8,770) | 8,770 | 8,770 | |||
Total Investments — 100.1% | |||||
(Cost $12,693,667) | $ | 12,820,481 | |||
Liabilities in Excess of | |||||
Other Assets — (0.1)% | (5,424 | ) | |||
Net Assets — 100.0% | $ | 12,815,057 | |||
* | Non-income producing securities. | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
ETF — Exchange Traded Fund |
See notes to financial statements.
33
Schedules of Investments — IQ Global Resources ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 90.9% | ||||
Australia — 11.8% | ||||
BHP Billiton Ltd. | 97,137 | $ | 4,871,817 | |
Coal & Allied Industries Ltd. | 11,762 | 1,436,359 | ||
Fortescue Metals Group Ltd. | 56,025 | 377,063 | ||
New Hope Corp. Ltd. | 107,688 | 577,457 | ||
Newcrest Mining Ltd. | 28,987 | 1,314,874 | ||
OZ Minerals Ltd. | 59,304 | 93,455 | ||
PanAust Ltd.* | 191,981 | 161,773 | ||
Whitehaven Coal Ltd. | 68,060 | 478,171 | ||
Woodside Petroleum Ltd. | 1,817 | 93,059 | ||
Total Australia | 9,404,028 | |||
Belgium — 0.2% | ||||
Umicore SA | 2,105 | 120,937 | ||
Canada — 17.1% | ||||
Agnico-Eagle Mines Ltd. | 10,636 | 738,921 | ||
Barrick Gold Corp. | 61,933 | 3,153,926 | ||
Canadian Natural Resources Ltd. | 2,642 | 123,935 | ||
Canfor Corp.* | 27,243 | 357,746 | ||
Cenovus Energy, Inc. | 1,770 | 67,864 | ||
Centerra Gold, Inc. | 14,924 | 276,822 | ||
Eldorado Gold Corp. | 36,010 | 668,321 | ||
Goldcorp, Inc. | 46,609 | 2,598,040 | ||
Husky Energy, Inc. | 2,188 | 68,256 | ||
IAMGOLD Corp. | 22,152 | 459,219 | ||
Imperial Oil Ltd. | 2,053 | 108,184 | ||
Kinross Gold Corp. | 75,998 | 1,201,423 | ||
Lundin Mining Corp.* | 9,618 | 93,864 | ||
New Gold, Inc.* | 20,992 | 235,174 | ||
Pan American Silver Corp. | 6,606 | 237,617 | ||
SEMAFO, Inc.* | 18,750 | 158,876 | ||
Silver Standard Resources, Inc.* | 4,298 | 149,072 | ||
Silver Wheaton Corp. | 19,776 | 802,420 | ||
Silvercorp Metals, Inc. | 9,089 | 123,377 | ||
Suncor Energy, Inc. | 3,857 | 177,271 | ||
Teck Resources Ltd. Class B | 11,816 | 640,456 | ||
TransCanada Corp. | 1,724 | 73,967 | ||
Uranium One, Inc. | 25,042 | 103,984 | ||
West Fraser Timber Co., Ltd. | 8,207 | 465,339 | ||
Yamana Gold, Inc. | 47,052 | 598,037 | ||
Total Canada | 13,682,111 | |||
Finland — 3.3% | ||||
M-real Oyj Class B* | 70,367 | 333,025 | ||
UPM-Kymmene Oyj | 110,805 | 2,275,162 | ||
Total Finland | 2,608,187 | |||
France — 3.2% | ||||
GDF Suez | 5,505 | 225,619 | ||
Suez Environnement Co. | 35,969 | 830,338 | ||
Total SA | 5,577 | 357,604 | ||
Veolia Environnement | 35,361 | 1,183,271 | ||
Total France | 2,596,832 | |||
Germany — 0.0%(a) | ||||
Suedzucker AG | 1,068 | 32,997 | ||
Hong Kong — 1.9% | ||||
China Agri-Industries Holdings Ltd. | 19,664 | 22,429 | ||
CNOOC Ltd. | 105,742 | 260,829 | ||
Fushan International Energy | ||||
Group Ltd. | 731,173 | 513,015 | ||
Lee & Man Paper Manufacturing | ||||
Ltd. | 1,059,390 | 761,033 | ||
Total Hong Kong | 1,557,306 | |||
Ireland — 0.1% | ||||
Kerry Group PLC Class A | 977 | 40,585 | ||
Italy — 0.3% | ||||
Eni SpA | 9,202 | 246,420 | ||
Japan — 2.0% | ||||
Ajinomoto Co., Inc. | 3,924 | 43,186 | ||
Hokuetsu Kishu Paper Co., Ltd. | 49,385 | 275,105 | ||
Itoham Foods, Inc. | 14,588 | 57,532 | ||
Maruha Nichiro Holdings, Inc. | 38,600 | 57,087 | ||
Mitsubishi Materials Corp. | 21,671 | 74,516 | ||
Mitsui & Co., Ltd. | 4,668 | 82,383 | ||
Nippon Meat Packers, Inc. | 13,033 | 179,577 | ||
Nippon Paper Group, Inc. | 31,813 | 633,986 | ||
Nisshin Seifun Group, Inc. | 1,445 | 17,969 | ||
Nissin Foods Holdings Co., Ltd. | 602 | 21,278 | ||
Sumitomo Metal Mining Co., Ltd. | 9,554 | 169,203 | ||
Yamazaki Baking Co., Ltd. | 1,170 | 14,996 | ||
Total Japan | 1,626,818 | |||
Netherlands — 1.7% | ||||
New World Resources NV Class A | 34,965 | 592,530 | ||
Nutreco NV | 2,213 | 172,533 | ||
Royal Dutch Shell PLC Class A | 15,331 | 593,192 | ||
Total Netherlands | 1,358,255 | |||
Norway — 0.6% | ||||
Norsk Hydro ASA | 27,616 | 245,110 | ||
Statoil ASA | 7,599 | 222,645 | ||
Total Norway | 467,755 | |||
Peru — 0.2% | ||||
Hochschild Mining PLC | 19,419 | 197,578 | ||
Portugal — 0.8% | ||||
Portucel-Empresa Produtora | ||||
de Pasta e Papel SA | 166,841 | 625,744 | ||
Singapore — 0.3% | ||||
Golden Agri-Resources Ltd. | 69,269 | 37,688 | ||
Indofood Agri Resources Ltd.* | 8,593 | 14,623 | ||
Olam International Ltd. | 11,293 | 26,517 | ||
Wilmar International Ltd. | 37,168 | 160,258 | ||
Total Singapore | 239,086 | |||
Spain — 0.2% | ||||
Ebro Foods SA | 811 | 20,051 | ||
Repsol YPF SA | 2,947 | 105,413 | ||
Total Spain | 125,464 | |||
See notes to financial statements.
34
Schedules of Investments — IQ Global Resources ETF (continued)
April 30, 2011
Shares | Value | |||
Common Stocks (continued) | ||||
Sweden — 5.4% | ||||
Boliden AB | 4,808 | $ | 108,646 | |
Holmen AB B Shares | 19,772 | 731,519 | ||
Sandvik AB | 162,773 | 3,462,106 | ||
Total Sweden | 4,302,271 | |||
Switzerland — 0.7% | ||||
Aryzta AG | 436 | 24,198 | ||
Barry Callebaut AG* | 31 | 29,503 | ||
Lindt & Spruengli AG | 12 | 39,657 | ||
Sulzer AG | 2,406 | 431,914 | ||
Transocean Ltd.* | 780 | 56,745 | ||
Total Switzerland | 582,017 | |||
United Kingdom — 12.6% | ||||
African Barrick Gold Ltd. | 26,552 | 233,395 | ||
Anglo American PLC | 24,803 | 1,290,957 | ||
Antofagasta PLC | 18,999 | 433,194 | ||
Associated British Foods PLC | 4,850 | 81,462 | ||
BG Group PLC | 8,137 | 208,128 | ||
BP PLC. | 52,059 | 401,641 | ||
Centrica PLC | 13,673 | 73,184 | ||
Cranswick PLC | 3,050 | 38,332 | ||
Eurasian Natural Resources Corp. | 25,017 | 380,343 | ||
Kazakhmys PLC | 10,538 | 242,385 | ||
Lonmin PLC | 3,857 | 104,991 | ||
Pennon Group PLC | 25,983 | 285,817 | ||
Petropavlovsk PLC | 12,436 | 185,232 | ||
Randgold Resources Ltd.* | 5,704 | 496,630 | ||
Rio Tinto PLC | 35,973 | 2,616,052 | ||
Severn Trent PLC | 17,273 | 432,446 | ||
Tate & Lyle PLC | 2,597 | 25,708 | ||
United Utilities Group PLC | 49,051 | 516,660 | ||
Vedanta Resources PLC | 4,977 | 193,007 | ||
Weir Group PLC | 15,119 | 485,189 | ||
Xstrata PLC | 53,386 | 1,354,823 | ||
Total United Kingdom | 10,079,576 | |||
United States — 28.5% | ||||
Alcoa, Inc. | 17,697 | 300,849 | ||
Allied Nevada Gold Corp.* | 4,767 | 205,267 | ||
Alpha Natural Resources, Inc.* | 15,820 | 920,250 | ||
American Water Works Co., Inc. | 12,325 | 362,108 | ||
Anadarko Petroleum Corp. | 1,236 | 97,570 | ||
Apache Corp. | 924 | 123,234 | ||
Aqua America, Inc. | 10,140 | 228,657 | ||
Arch Coal, Inc. | 21,070 | 722,701 | ||
Archer-Daniels-Midland Co. | 3,636 | 134,605 | ||
Baker Hughes, Inc. | 1,016 | 78,648 | ||
Bucyrus International, Inc. | 10,245 | 936,905 | ||
Bunge Ltd. | 757 | 57,108 | ||
Chevron Corp. | 4,789 | 524,108 | ||
Cliffs Natural Resources, Inc. | 2,284 | 214,057 | ||
Coeur d’Alene Mines Corp.* | 4,695 | 148,878 | ||
ConAgra Foods, Inc. | 2,513 | 61,443 | ||
ConocoPhillips | 3,519 | 277,755 | ||
CONSOL Energy, Inc. | 23,773 | 1,285,882 | ||
Corn Products International, Inc. | 417 | 22,977 | ||
Devon Energy Corp. | 1,065 | 96,915 | ||
Domtar Corp. | 9,176 | 853,551 | ||
EOG Resources, Inc. | 593 | 66,956 | ||
Exxon Mobil Corp. | 12,583 | 1,107,304 | ||
Flowers Foods, Inc. | 519 | 15,861 | ||
Flowserve Corp. | 3,918 | 496,097 | ||
Freeport-McMoRan Copper & Gold, Inc. . | 16,954 | 932,979 | ||
General Mills, Inc. | 3,810 | 146,990 | ||
Green Mountain Coffee Roasters, Inc.* | 538 | 36,025 | ||
Halliburton Co. | 2,113 | 106,664 | ||
Hershey Co. | 1,251 | 72,195 | ||
Hess Corp. | 848 | 72,894 | ||
Hormel Foods Corp. | 15,991 | 470,295 | ||
IDEX Corp. | 5,659 | 265,520 | ||
ITT Corp. | 13,101 | 757,107 | ||
J.M. Smucker Co. | 649 | 48,720 | ||
Joy Global, Inc. | 13,264 | 1,339,001 | ||
Kellogg Co. | 2,087 | 119,523 | ||
Kraft Foods, Inc. Class A | 10,177 | 341,744 | ||
Louisiana-Pacific Corp.* | 29,530 | 274,629 | ||
Marathon Oil Corp. | 1,633 | 88,247 | ||
Massey Energy Co. | 12,576 | 858,186 | ||
McCormick & Co., Inc. | 763 | 37,479 | ||
MeadWestvaco Corp. | 36,597 | 1,232,953 | ||
National Oilwell Varco, Inc. | 1,034 | 79,297 | ||
Newmont Mining Corp. | 32,305 | 1,893,396 | ||
Occidental Petroleum Corp. | 2,016 | 230,409 | ||
Peabody Energy Corp. | 33,640 | 2,247,825 | ||
Pentair, Inc. | 7,107 | 285,417 | ||
Ralcorp Holdings, Inc.* | 302 | 23,496 | ||
Royal Gold, Inc. | 3,337 | 203,490 | ||
Sara Lee Corp. | 3,801 | 72,979 | ||
Schlumberger Ltd. | 3,473 | 311,702 | ||
Seaboard Corp. | 67 | 159,929 | ||
Smithfield Foods, Inc.* | 9,612 | 226,459 | ||
Tyson Foods, Inc. Class A | 22,681 | 451,352 | ||
Total United States | 22,726,588 | |||
Total Common Stocks — 90.9% | ||||
(Cost $68,446,383) | 72,620,555 | |||
Short-Term Investment — 6.9% | ||||
Money Market Fund — 6.9% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(b) | ||||
(Cost $5,514,201) | 5,514,201 | 5,514,201 | ||
Total Investments — 97.8% | ||||
(Cost $73,960,584) | $ | 78,134,756 | ||
Other Assets in Excess of | ||||
Liabilities — 2.2%(c) | 1,718,843 | |||
Net Assets — 100.0% | $ | 79,853,599 | ||
See notes to financial statements.
35
Schedules of Investments — IQ Global Resources ETF (continued)
April 30, 2011
% of | |||||
Industry | Value | Net Assets | |||
Precious Metals | $ | 16,292,686 | 20.4 | % | |
Coal | 15,370,388 | 19.3 | |||
Industrial Metals | 14,962,688 | 18.7 | |||
Timber | 8,819,792 | 11.0 | |||
Energy | 6,957,114 | 8.7 | |||
Water | 6,560,541 | 8.2 | |||
Grains Food Fiber | 1,844,250 | 2.3 | |||
Livestock | 1,813,096 | 2.3 | |||
Total Common Stocks | $ | 72,620,555 | 90.9 | % | |
Money Market Fund | 5,514,201 | 6.9 | |||
Other Assets in Excess of Liabilities(c) | 1,718,843 | 2.2 | |||
Total Net Assets | $ | 79,853,599 | 100.0 | % | |
* | Non-income producing securities. | |
(a) | Less than 0.05%. | |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
(c) | Other Assets in Excess of Liabilities includes net unrealized depreciation on futures contracts. |
Open futures contracts outstanding at April 30, 2011:
Type | Broker | Expiration Date | Number of Contracts | Value at Trade Date | Value at April 30, 2011 | Unrealized Depreciation | ||||||||||||
E-Mini MSCI EAFE Index Future | Morgan Stanley | June 2011 | (79 | ) | $ | (6,583,887 | ) | $ | (7,098,940 | ) | $ | (515,053 | ) | |||||
S&P 500 E-Mini Future | Morgan Stanley | June 2011 | (110 | ) | (7,161,355 | ) | (7,478,350 | ) | (316,995 | ) | ||||||||
$ | (832,048 | ) | ||||||||||||||||
Cash posted as collateral to broker for futures contracts was $1,126,371 at April 30, 2011.
See notes to financial statements.
36
Schedules of Investments — IQ Merger Arbitrage ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 80.3% | ||||
Consumer Discretionary — 6.6% | ||||
99 Cents Only Stores* | 2,846 | $ | 57,375 | |
Bulgari SpA | 9,348 | 170,446 | ||
Family Dollar Stores, Inc. | 22,639 | 1,227,260 | ||
J. Crew Group, Inc. Escrow*(a) | 22,261 | — | ||
Pre-Paid Legal Services, Inc.* | 1,050 | 69,248 | ||
Total Consumer Discretionary | 1,524,329 | |||
Consumer Staples — 4.7% | ||||
Alberto-Culver Co. | 29,000 | 1,082,860 | ||
Energy — 10.5% | ||||
EXCO Resources, Inc. | 6,780 | 142,041 | ||
Massey Energy Co. | 11,098 | 757,327 | ||
Pride International, Inc.* | 34,593 | 1,518,979 | ||
Total Energy | 2,418,347 | |||
Financials — 13.7% | ||||
ASX Ltd. | 19,263 | 676,683 | ||
CreXus Investment Corp. | 19,436 | 226,624 | ||
Marshall & Ilsley Corp. | 74,293 | 606,974 | ||
Nationwide Health Properties, Inc. | 3,482 | 152,512 | ||
NYSE Euronext | 27,372 | 1,096,249 | ||
optionsXpress Holdings, Inc. | 4,086 | 75,346 | ||
Sterling Bancshares, Inc. | 7,469 | 66,399 | ||
TMX Group, Inc. | 2,898 | 123,879 | ||
Whitney Holding Corp. | 8,962 | 121,345 | ||
Total Financials | 3,146,011 | |||
Health Care — 15.7% | ||||
Beckman Coulter, Inc. | 13,487 | 1,117,398 | ||
Cephalon, Inc.* | 14,246 | 1,094,093 | ||
Dionex Corp.* | 624 | 73,851 | ||
Emergency Medical Services Corp., | ||||
Class A* | 10,690 | 682,022 | ||
RehabCare Group, Inc.* | 3,391 | 127,400 | ||
Rural/Metro Corp.* | 4,914 | 83,685 | ||
Talecris Biotherapeutics Holdings | ||||
Corp.* | 8,434 | 235,477 | ||
Tenet Healthcare Corp.* | 26,240 | 181,843 | ||
Total Health Care | 3,595,769 | |||
Industrials — 7.1% | ||||
Bucyrus International, Inc. | 13,702 | 1,253,048 | ||
Forth Ports PLC | 1,922 | 51,902 | ||
Ladish Co., Inc.* | 4,130 | 234,171 | ||
Tognum AG | 2,457 | 94,411 | ||
Total Industrials | 1,633,532 | |||
Information Technology — 8.6% | ||||
Atheros Communications, Inc.* | 7,318 | 328,286 | ||
GSI Commerce, Inc.* | 27,512 | 805,276 | ||
L-1 Identity Solutions, Inc.* | 14,190 | 166,449 | ||
Mentor Graphics Corp.* | 25,325 | 373,544 | ||
Verigy Ltd.* | 11,742 | 169,789 | ||
Zoran Corp.* | 11,552 | 120,949 | ||
Total Information Technology | 1,964,293 | |||
Materials — 11.2% | ||||
Fletcher Building Ltd. | 24,369 | 180,829 | ||
Lubrizol Corp. | 10,665 | 1,434,656 | ||
Lundin Mining Corp.* | 27,304 | 266,465 | ||
Smurfit-Stone Container Corp.* | 17,625 | 678,210 | ||
Total Materials | 2,560,160 | |||
Utilities — 2.2% | ||||
Nicor, Inc. | 1,732 | 96,005 | ||
NSTAR | 3,764 | 174,273 | ||
Progress Energy, Inc. | 4,694 | 222,730 | ||
Total Utilities | 493,008 | |||
Total Common Stocks — 80.3% | ||||
(Cost $17,898,796) | 18,418,309 | |||
Short-Term Investment — 17.8% | ||||
Money Market Fund — 17.8% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(b) | ||||
(Cost $4,071,964) | 4,071,964 | 4,071,964 | ||
Total Investments — 98.1% | ||||
(Cost $21,970,760) | $ | 22,490,273 | ||
Other Assets in Excess of | ||||
Liabilities — 1.9%(c) | 430,483 | |||
Net Assets — 100.0% | $ | 22,920,756 | ||
* | Non-income producing securities. | |
(a) | Fair valued security. | |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
(c) | Other Assets in Excess of Liabilities includes net unrealized depreciation on futures contracts. |
Open futures contracts outstanding at April 30, 2011:
Expiration | Number of | Value at | Value at | Unrealized | ||||||||||||||
Type | Broker | Date | Contracts | Trade Date | April 30, 2011 | Depreciation | ||||||||||||
E-Mini MSCI EAFE Index Future | Morgan Stanley | June 2011 | (29 | ) | $ | (2,416,860 | ) | $ | (2,605,940 | ) | $ | (189,080 | ) | |||||
S&P 500 Mini Future | Morgan Stanley | June 2011 | (41 | ) | (2,667,460 | ) | (2,787,385 | ) | (119,925 | ) | ||||||||
$ | (309,005 | ) | ||||||||||||||||
Cash posted as collateral to broker for futures contracts was $416,500 at April 30, 2011.
See notes to financial statements.
37
Schedules of Investments — IQ Australia Small Cap ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 98.5% | ||||
Consumer Discretionary — 20.0% | ||||
APN News & Media Ltd. | 177,698 | $ | 305,308 | |
Aristocrat Leisure Ltd. | 188,792 | 541,304 | ||
Austar United Communications Ltd.* | 254,936 | 345,947 | ||
Billabong International Ltd. | 91,140 | 673,239 | ||
Consolidated Media Holdings Ltd. | 73,593 | 224,697 | ||
David Jones Ltd. | 224,320 | 1,143,959 | ||
Flight Centre Ltd. | 24,191 | 622,390 | ||
G.U.D. Holdings Ltd. | 28,892 | 296,577 | ||
Invocare Ltd. | 44,452 | 333,712 | ||
JB Hi-Fi Ltd. | 48,408 | 1,001,763 | ||
Myer Holdings Ltd. | 260,550 | 901,020 | ||
Navitas Ltd. | 90,115 | 401,373 | ||
Pacific Brands Ltd. | 408,437 | 326,290 | ||
Southern Cross Media Group Ltd. | 251,243 | 449,540 | ||
Ten Network Holdings Ltd. | 264,928 | 391,398 | ||
West Australian Newspapers | ||||
Holdings Ltd. | 73,650 | 402,995 | ||
Wotif.com Holdings Ltd. | 51,745 | 322,775 | ||
Total Consumer Discretionary | 8,684,287 | |||
Consumer Staples — 3.3% | ||||
Goodman Fielder Ltd. | 581,047 | 683,559 | ||
GrainCorp Ltd. | 86,968 | 744,257 | ||
Total Consumer Staples | 1,427,816 | |||
Energy — 8.7% | ||||
Aquila Resources Ltd.* | 73,687 | 732,206 | ||
Aurora Oil And Gas Ltd.* | 176,073 | 510,617 | ||
AWE Ltd.* | 234,755 | 400,771 | ||
Bandanna Energy Ltd.* | 82,921 | 199,638 | ||
Beach Energy Ltd. | 473,895 | 497,863 | ||
Coalspur Mines Ltd.* | 147,566 | 281,798 | ||
Dart Energy Ltd.* | 249,211 | 207,270 | ||
Linc Energy Ltd. | 135,614 | 403,673 | ||
Mantra Resources Ltd. | 40,677 | 300,031 | ||
Nexus Energy Ltd.* | 479,335 | 225,561 | ||
Total Energy | 3,759,428 | |||
Financials — 3.9% | ||||
Bank of Queensland Ltd. | 98,592 | 1,060,600 | ||
IOOF Holdings Ltd. | 79,068 | 619,541 | ||
Total Financials | 1,680,141 | |||
Health Care — 6.1% | ||||
Acrux Ltd. | 63,437 | 242,284 | ||
Ansell Ltd. | 60,693 | 925,222 | ||
Mesoblast Ltd.* | 60,137 | 536,359 | ||
Primary Health Care Ltd. | 194,729 | 739,463 | ||
Sigma Pharmaceuticals Ltd. | 504,126 | 204,126 | ||
Total Health Care | 2,647,454 | |||
Industrials — 25.3% | ||||
Ausenco Ltd.* | 41,664 | 131,314 | ||
Boart Longyear Ltd. | 206,623 | 1,033,359 | ||
Bradken Ltd. | 58,764 | 511,895 | ||
Cabcharge Australia Ltd. | 48,308 | 289,176 | ||
CSR Ltd. | 226,322 | 743,027 | ||
Downer EDI Ltd. | 181,483 | 734,842 | ||
Emeco Holdings Ltd. | 276,814 | 331,710 | ||
Forge Group Ltd. | 24,130 | 159,232 | ||
GWA Group Ltd. | 130,689 | 457,663 | ||
Hills Holdings Ltd. | 89,271 | 153,379 | ||
Industrea Ltd. | 130,617 | 212,982 | ||
Macmahon Holdings Ltd. | 267,086 | 153,450 | ||
Mermaid Marine Australia Ltd. | 88,681 | 300,849 | ||
Mineral Resources Ltd. | 47,778 | 608,608 | ||
Monadelphous Group Ltd. | 34,758 | 730,319 | ||
NRW Holdings Ltd. | 94,011 | 277,779 | ||
SAI Global Ltd. | 82,899 | 453,603 | ||
Seek Ltd. | 146,315 | 1,112,833 | ||
Spotless Group Ltd. | 113,634 | 243,736 | ||
Transfield Services Ltd. | 203,341 | 789,968 | ||
Transpacific Industries Group Ltd.* | 213,202 | 258,983 | ||
UGL Ltd. | 73,354 | 1,210,547 | ||
Virgin Blue Holdings Ltd.* | 139,017 | 43,358 | ||
Total Industrials | 10,942,612 | |||
Information Technology — 2.8% | ||||
carsales.com.au Ltd. | 93,522 | 525,034 | ||
Iress Market Technology Ltd. | 43,718 | 437,284 | ||
Silex Systems Ltd.* | 57,350 | 254,182 | ||
Total Information Technology | 1,216,500 | |||
Materials — 26.6% | ||||
Adelaide Brighton Ltd. | 212,457 | 734,708 | ||
Aquarius Platinum Ltd. | 176,359 | 951,483 | ||
Arafura Resources Ltd.* | 119,427 | 152,913 | ||
Atlas Iron Ltd.* | 312,210 | 1,195,835 | ||
Ausdrill Ltd. | 99,032 | 364,142 | ||
Coal of Africa Ltd.* | 170,598 | 227,767 | ||
Discovery Metals Ltd.* | 175,833 | 244,377 | ||
DuluxGroup Ltd. | 157,517 | 477,489 | ||
Grange Resources Ltd.* | 161,135 | 115,502 | ||
Gunns Ltd.* | 367,359 | 211,060 | ||
Independence Group NL | 84,875 | 623,245 | ||
Integra Mining Ltd.* | 367,978 | 191,281 | ||
Intrepid Mines Ltd.* | 228,164 | 455,687 | ||
Kagara Ltd.* | 239,337 | 154,532 | ||
Kingsgate Consolidated Ltd. | 59,145 | 502,269 | ||
Macarthur Coal Ltd. | 63,759 | 809,387 | ||
Medusa Mining Ltd. | 64,741 | 568,920 | ||
Minara Resources Ltd. | 151,785 | 127,902 | ||
Mount Gibson Iron Ltd.* | 281,165 | 578,463 | ||
Nufarm Ltd.* | 78,443 | 414,627 | ||
OM Holdings Ltd. | 124,372 | 161,286 | ||
PanAust Ltd.* | 1,052,353 | 886,765 | ||
Panoramic Resources Ltd. | 84,178 | 189,768 | ||
Resolute Mining Ltd.* | 155,576 | 199,198 | ||
Silver Lake Resources Ltd.* | 78,390 | 179,293 | ||
St. Barbara Ltd.* | 142,250 | 345,590 | ||
Western Areas NL | 62,421 | 458,363 | ||
Total Materials | 11,521,852 | |||
Telecommunication Services — 0.8% | ||||
iiNet Ltd. | 43,143 | 127,476 | ||
TPG Telecom Ltd. | 125,526 | 230,781 | ||
Total Telecommunication Services | 358,257 | |||
See notes to financial statements.
38
Schedules of Investments — IQ Australia Small Cap ETF (continued)
April 30, 2011
Shares | Value | |||
Common Stocks (continued) | ||||
Utilities — 1.0% | ||||
Energy World Corp., Ltd.* | 369,075 | $ | 199,929 | |
Envestra Ltd. | 322,353 | 225,771 | ||
Total Utilities | 425,700 | |||
Total Common Stocks — 98.5% | ||||
(Cost $40,007,630) | 42,664,047 | |||
Rights — 0.1% | ||||
Consumer Discretionary — 0.1% | ||||
Southern Cross Media Group Ltd. | 113,493 | 22,977 | ||
Energy — 0.0%(a) | ||||
Dart Energy Ltd. | 45,169 | 494 | ||
Total Rights — 0.1% | ||||
(Cost $0) | 23,471 | |||
Short-Term Investment — 0.9% | ||||
Money Market Fund — 0.9% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(b) | ||||
(Cost $401,914) | 401,914 | $ | 401,914 | |
Total Investments — 99.5% | ||||
(Cost $40,409,544) | $ | 43,089,432 | ||
Other Assets in Excess of | ||||
Liabilities — 0.5% | 233,319 | |||
Net Assets — 100.0% | $ | 43,322,751 | ||
* | Non-income producing securities. | |
(a) | Less than 0.05%. | |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2011. |
See notes to financial statements.
39
Schedules of Investments — IQ Canada Small Cap ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 99.3% | ||||
Consumer Discretionary — 3.2% | ||||
Great Canadian Gaming Corp.* | 46,829 | $ | 386,438 | |
RONA, Inc. | 100,687 | 1,467,567 | ||
Yellow Media, Inc. | 399,435 | 2,003,805 | ||
Total Consumer Discretionary | 3,857,810 | |||
Consumer Staples — 1.4% | ||||
Cott Corp.* | 73,343 | 651,612 | ||
Jean Coutu Group, Inc. Class A | 90,599 | 1,002,571 | ||
Total Consumer Staples | 1,654,183 | |||
Energy — 31.0% | ||||
Advantage Oil & Gas Ltd.* | 127,372 | 1,079,276 | ||
AltaGas Ltd. | 64,093 | 1,714,370 | ||
Angle Energy, Inc.* | 50,145 | 501,529 | ||
Bankers Petroleum Ltd.* | 190,791 | 1,668,931 | ||
Bellatrix Exploration Ltd.* | 75,431 | 436,440 | ||
Birchcliff Energy Ltd.* | 97,004 | 1,337,211 | ||
BlackPearl Resources, Inc.* | 219,265 | 1,841,747 | ||
BNK Petroleum, Inc.* | 95,878 | 611,332 | ||
Canyon Services Group, Inc. | 38,851 | 596,164 | ||
Celtic Exploration Ltd.* | 58,234 | 1,190,641 | ||
Connacher Oil and Gas Ltd.* | 346,475 | 489,304 | ||
Corridor Resources, Inc.* | 67,975 | 333,123 | ||
Crew Energy, Inc.* | 66,026 | 1,137,720 | ||
Denison Mines Corp.* | 232,516 | 539,111 | ||
Ensign Energy Services, Inc. | 97,248 | 1,872,499 | ||
Gran Tierra Energy, Inc.* | 200,188 | 1,485,297 | ||
Ivanhoe Energy, Inc.* | 212,891 | 596,817 | ||
Legacy Oil + Gas, Inc.* | 98,383 | 1,397,695 | ||
NAL Energy Corp. | 114,143 | 1,500,093 | ||
Nuvista Energy Ltd. | 76,921 | 775,006 | ||
Perpetual Energy, Inc. | 90,688 | 395,688 | ||
Petrobank Energy & Resources Ltd.* | 82,247 | 1,735,348 | ||
Peyto Exploration & Development Corp. . | 102,805 | 2,182,108 | ||
Precision Drilling Corp.* | 213,406 | 3,222,963 | ||
Progress Energy Resources Corp. | 138,776 | 1,892,566 | ||
Provident Energy Ltd. | 208,063 | 1,953,777 | ||
Savanna Energy Services Corp.* | 61,229 | 665,301 | ||
Southern Pacific Resource Corp.* | 260,948 | 511,528 | ||
TransGlobe Energy Corp.* | 56,424 | 821,221 | ||
Trican Well Service Ltd. | 112,062 | 2,754,161 | ||
Total Energy | 37,238,967 | |||
Financials — 9.6% | ||||
Canadian Western Bank | 53,980 | 1,724,333 | ||
Dundee Corp. Class A* | 51,006 | 1,317,012 | ||
GMP Capital, Inc. | 41,281 | 657,816 | ||
Industrial Alliance Insurance and | ||||
Financial Services, Inc. | 65,014 | 2,785,972 | ||
Onex Corp. | 71,415 | 2,671,900 | ||
TMX Group, Inc. | 57,568 | 2,460,830 | ||
Total Financials | 11,617,863 | |||
Industrials — 7.2% | ||||
Aecon Group, Inc. | 44,109 | 435,116 | ||
Air Canada Class B* | 116,000 | 281,183 | ||
CAE, Inc. | 198,829 | 2,671,729 | ||
IESI-BFC Ltd. | 94,216 | 2,384,071 | ||
Russel Metals, Inc. | 46,427 | 1,272,174 | ||
WestJet Airlines Ltd. | 110,665 | 1,663,153 | ||
Total Industrials | 8,707,426 | |||
Information Technology — 2.7% | ||||
Open Text Corp.* | 44,154 | 2,697,124 | ||
Wi-Lan, Inc. | 93,941 | 591,060 | ||
Total Information Technology | 3,288,184 | |||
Materials — 42.4% | ||||
Alamos Gold, Inc. | 90,133 | 1,508,470 | ||
Anvil Mining Ltd.* | 74,771 | 503,543 | ||
Aura Minerals, Inc.* | 120,913 | 387,391 | ||
Aurizon Mines Ltd.* | 125,519 | 853,241 | ||
Avalon Rare Metals, Inc.* | 72,251 | 657,139 | ||
B2Gold Corp.* | 196,235 | 665,940 | ||
Breakwater Resources Ltd.* | 45,464 | 281,260 | ||
Canfor Corp.* | 61,848 | 812,169 | ||
Capstone Mining Corp.* | 157,657 | 628,069 | ||
Cascades, Inc. | 53,842 | 391,537 | ||
China Gold Intl Resources Corp., Ltd.* | 122,656 | 611,438 | ||
Dundee Precious Metals, Inc.* | 74,454 | 718,763 | ||
Eastern Platinum Ltd.* | 702,889 | 851,897 | ||
Endeavour Silver Corp.* | 62,696 | 718,904 | ||
European Goldfields Ltd.* | 105,221 | 1,459,354 | ||
Extorre Gold Mines Ltd.* | 67,711 | 659,377 | ||
First Majestic Silver Corp.* | 76,848 | 1,606,855 | ||
Fortuna Silver Mines, Inc.* | 94,846 | 517,787 | ||
Gammon Gold, Inc.* | 134,521 | 1,467,347 | ||
Golden Star Resources Ltd.* | 200,143 | 645,452 | ||
Grande Cache Coal Corp.* | 76,060 | 646,893 | ||
Harry Winston Diamond Corp.* | 65,146 | 1,105,391 | ||
High River Gold Mines Ltd.* | 169,101 | 217,424 | ||
HudBay Minerals, Inc. | 131,541 | 2,093,344 | ||
Inmet Mining Corp. | 39,068 | 2,733,957 | ||
Jaguar Mining, Inc.* | 65,312 | 363,437 | ||
Katanga Mining Ltd.* | 369,113 | 785,802 | ||
Kirkland Lake Gold, Inc.* | 47,277 | 701,544 | ||
Mercator Minerals Ltd.* | 154,293 | 570,763 | ||
Methanex Corp. | 71,735 | 2,312,667 | ||
Minefinders Corp., Ltd.* | 61,729 | 1,035,051 | ||
Minera Andes, Inc.* | 146,372 | 431,935 | ||
Neo Material Technologies, Inc.* | 92,928 | 958,808 | ||
New Gold, Inc.* | 308,934 | 3,460,998 | ||
North American Palladium Ltd.* | 101,807 | 651,282 | ||
Northgate Minerals Corp.* | 225,935 | 673,864 | ||
NovaGold Resources, Inc.* | 137,257 | 1,761,912 | ||
Pan American Silver Corp. | 83,446 | 3,001,541 |
See notes to financial statements.
40
Schedules of Investments — IQ Canada Small Cap ETF (continued)
April 30, 2011
Shares | Value | |||
Common Stocks (continued) | ||||
Materials (continued) | ||||
Quadra FNX Mining Ltd.* | 147,544 | $ | 2,414,879 | |
San Gold Corp.* | 232,538 | 705,812 | ||
SEMAFO, Inc.* | 210,759 | 1,785,849 | ||
Sherritt International Corp. | 228,522 | 1,926,728 | ||
Silvercorp Metals, Inc. | 135,220 | 1,835,520 | ||
Sprott Resource Corp.* | 78,108 | 404,184 | ||
Taseko Mines Ltd.* | 145,329 | 765,817 | ||
Thompson Creek Metals Co., Inc.* | 128,202 | 1,571,365 | ||
Yukon-Nevada Gold Corp.* | 340,996 | 197,658 | ||
Total Materials | 51,060,358 | |||
Telecommunication Services — 0.4% | ||||
Manitoba Telecom Services, Inc. | 16,658 | 529,313 | ||
Utilities — 1.4% | ||||
Just Energy Group, Inc. | 105,639 | 1,667,779 | ||
Total Common Stocks — 99.3% | ||||
(Cost $112,978,401) | 119,621,883 | |||
Short-Term Investment — 0.7% | ||||
Money Market Fund — 0.7% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(a) | ||||
(Cost $811,718) | 811,718 | 811,718 | ||
Total Investments — 100.0% | ||||
(Cost $113,790,119) | $ | 120,433,601 | ||
Other Assets in Excess of | ||||
Liabilities — 0.0%(b) | 58,735 | |||
Net Assets — 100.0% | $ | 120,492,336 | ||
* | Non-income producing securities. | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. | |
(b) | Less than 0.05%. |
See notes to financial statements.
41
Schedules of Investments — IQ South Korea Small Cap ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 97.5% | ||||
Consumer Discretionary — 19.5% | ||||
China Great Star International Ltd. | 21,829 | $ | 33,610 | |
Dongyang Mechatronics Corp. | 10,479 | 175,522 | ||
Grand Korea Leisure Co., Ltd. | 8,647 | 118,209 | ||
Handsome Co., Ltd. | 8,494 | 178,337 | ||
Hanil E-Wha Co., Ltd. | 11,837 | 145,249 | ||
Hotel Shilla Co., Ltd. | 16,034 | 394,248 | ||
Hyundai Greenfood Co., Ltd. | 30,980 | 364,249 | ||
Interpark Corp.* | 18,265 | 75,930 | ||
LG Fashion Corp. | 9,347 | 289,573 | ||
Lotte Midopa Co., Ltd. | 6,378 | 93,142 | ||
Nexen Tire Corp. | 16,178 | 268,715 | ||
Pyeong Hwa Automotive Co., Ltd. | 4,444 | 85,011 | ||
Sejong Industrial Co., Ltd. | 3,064 | 58,184 | ||
SL Corp. | 6,988 | 183,560 | ||
S.M. Entertainment Co.* | 4,904 | 88,548 | ||
Ssangyong Motor Co.* | 17,030 | 157,007 | ||
Sungwoo Hitech Co., Ltd. | 10,220 | 206,469 | ||
Tera Resource Co., Ltd.* | 82,713 | 70,931 | ||
Woongjin Chemical Co., Ltd.* | 132,246 | 168,447 | ||
Total Consumer Discretionary | 3,154,941 | |||
Consumer Staples — 2.5% | ||||
CNK International Co., Ltd.* | 21,170 | 157,444 | ||
Daesang Corp. | 9,246 | 76,788 | ||
Harim Co., Ltd.*(a) | 8,689 | 38,787 | ||
JW Shin-Yak Corp. | 9,745 | 57,016 | ||
Korea Kolmar Co., Ltd. | 11,159 | 79,971 | ||
Total Consumer Staples | 410,006 | |||
Financials — 15.1% | ||||
Daishin Securities Co., Ltd. | 20,450 | 275,745 | ||
Hanwha Securities Co., Ltd. | 28,284 | 191,085 | ||
HMC Investment Securities Co., Ltd.* | 7,920 | 174,785 | ||
Korean Reinsurance Co. | 41,948 | 481,464 | ||
LIG Insurance Co., Ltd. | 20,703 | 510,982 | ||
Meritz Finance Holdings Co., Ltd.*(a) | 10,229 | 49,782 | ||
Meritz Fire & Marine Insurance Co., Ltd. | 30,579 | 350,974 | ||
NH Investment & Securities Co., Ltd. | 12,775 | 102,520 | ||
Tong Yang Securities, Inc. | 40,807 | 299,298 | ||
Total Financials | 2,436,635 | |||
Health Care — 3.8% | ||||
Bukwang Pharmaceutical Co., Ltd. | 7,945 | 92,672 | ||
Chabio & Diostech Co., Ltd.* | 29,182 | 264,412 | ||
Hanall Biopharma Co., Ltd.* | 12,664 | 106,474 | ||
Osstem Implant Co., Ltd.* | 4,968 | 56,557 | ||
RNL Bio Co., Ltd.* | 33,590 | 100,145 | ||
Total Health Care | 620,260 | |||
Industrials — 15.8% | ||||
Dong Yang Gang Chul Co., Ltd. | 17,208 | 68,405 | ||
Dongkuk Structures & Construction | ||||
Co., Ltd. | 10,662 | 55,019 | ||
Doosan Engineering & Construction | ||||
Co., Ltd. | 26,008 | 124,258 | ||
Harim Holdings Co., Ltd.* | 11,501 | 42,284 | ||
Hyunjin Materials Co., Ltd.* | 5,353 | 86,415 | ||
Korea Line Corp.* | 5,554 | 31,355 | ||
S&T Dynamics Co., Ltd. | 10,639 | 164,799 | ||
SDN Co., Ltd. | 6,903 | 59,777 | ||
STX Corp. | 14,882 | 370,783 | ||
STX Engine Co., Ltd. | 9,826 | 265,902 | ||
STX Metal Co., Ltd. | 4,249 | 44,011 | ||
STX Offshore & Shipbuilding Co., Ltd. | 23,290 | 686,758 | ||
Sung Kwang Bend Co., Ltd. | 7,575 | 124,760 | ||
Taihan Electric Wire Co., Ltd.* | 42,776 | 206,366 | ||
TK Corp.* | 7,624 | 171,809 | ||
Wooree ETI Co., Ltd. | 12,731 | 57,023 | ||
Total Industrials | 2,559,724 | |||
Information Technology — 26.2% | ||||
Ace Digitech Co., Ltd.* | 7,346 | 108,992 | ||
Aminologics Co., Ltd.* | 16,761 | 73,744 | ||
AUK Corp. | 18,630 | 78,230 | ||
Daeduck Electronics Co., Ltd. | 18,696 | 199,757 | ||
Daou Technology, Inc. | 13,014 | 111,238 | ||
Digitech Systems Co., Ltd.* | 5,001 | 70,700 | ||
DMS Co., Ltd.* | 7,169 | 52,246 | ||
Duksan Hi-Metal Co., Ltd.* | 8,340 | 177,049 | ||
DuzonBIzon Co., Ltd.* | 7,219 | 71,405 | ||
GameHi Co., Ltd.* | 36,629 | 85,279 | ||
Gemvax & Kael Co., Ltd.* | 10,511 | 253,543 | ||
Hanmi Semiconductor Co., Ltd. | 4,692 | 39,580 | ||
Iljin Display Co., Ltd.* | 6,503 | 63,109 | ||
Jusung Engineering Co., Ltd.* | 10,891 | 174,293 | ||
KC Tech Co., Ltd. | 8,785 | 67,959 | ||
KH Vatec Co., Ltd. | 5,592 | 94,709 | ||
Lumens Co., Ltd.* | 13,251 | 111,656 | ||
Melfas, Inc. | 5,978 | 245,167 | ||
Neowiz Games Corp.* | 6,807 | 317,277 | ||
NEPES Corp. | 8,059 | 128,219 | ||
Osung LST Co., Ltd.* | 6,498 | 180,087 | ||
Partron Co., Ltd. | 6,878 | 116,810 | ||
POSCO ICT Co., Ltd.* | 17,551 | 127,254 | ||
Sam Young Electronics Co., Ltd. | 4,848 | 54,060 | ||
SBS Contents Hub Co., Ltd. | 3,501 | 40,510 | ||
SFA Engineering Corp. | 7,537 | 431,128 | ||
Shinsung Solar Energy Co., Ltd. | 14,351 | 128,826 | ||
Simm Tech Co., Ltd. | 9,666 | 140,708 | ||
SK Communications Co., Ltd.* | 7,114 | 76,341 | ||
SNU Precision Co., Ltd. | 6,987 | 106,274 | ||
WONIK IPS Co., Ltd.* | 21,167 | 171,643 | ||
Woongjin Energy Co., Ltd.* | 8,835 | 134,794 | ||
Total Information Technology | 4,232,587 | |||
Materials — 14.6% | ||||
Capro Corp. | 11,027 | 332,359 | ||
Dongbu HiTek Co., Ltd.* | 13,412 | 190,858 | ||
Dongbu Steel Co., Ltd. | 13,660 | 119,819 | ||
Dongjin Semichem Co., Ltd. | 13,748 | 84,285 | ||
Dongkuk Industries Co., Ltd. | 15,145 | 58,226 | ||
Foosung Co., Ltd.* | 24,448 | 188,895 | ||
Hansol Paper Co., Ltd. | 20,350 | 156,473 | ||
MNTECH Co., Ltd. | 8,539 | 71,792 |
See notes to financial statements.
42
Schedules of Investments — IQ South Korea Small Cap ETF (continued)
April 30, 2011
Shares | Value | |||
Common Stocks (continued) | ||||
Materials (continued) | ||||
Namhae Chemical Corp. | 10,188 | $ | 134,046 | |
Poongsan Corp. | 8,848 | 336,037 | ||
Shinwha Intertek Corp.* | 6,786 | 40,147 | ||
SKC Co., Ltd. | 9,712 | 557,354 | ||
Songwon Industrial Co., Ltd. | 6,740 | 94,340 | ||
Total Materials | 2,364,631 | |||
Total Common Stocks — 97.5% | ||||
(Cost $14,034,179) | 15,778,784 | |||
Short-Term Investment — 0.7% | ||||
Money Market Fund — 0.7% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(b) | ||||
(Cost $108,452) | 108,452 | 108,452 | ||
Total Investments — 98.2% | ||||
(Cost $14,142,631) | $ | 15,887,236 | ||
Other Assets in Excess of | ||||
Liabilities — 1.8% | 289,224 | |||
Net Assets — 100.0% | $ | 16,176,460 | ||
* | Non-income producing securities. | |
(a) | Fair valued security. | |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2011. |
See notes to financial statements.
43
Schedules of Investments — IQ Taiwan Small Cap ETF
April 30, 2011
Shares | Value | |||
Common Stocks — 98.6% | ||||
Consumer Discretionary — 11.1% | ||||
Altek Corp. | 45,585 | $ | 63,192 | |
Ambassador Hotel | 37,000 | 61,239 | ||
Asia Optical Co., Inc.* | 25,000 | 48,187 | ||
Aurora Corp. | 13,000 | 24,104 | ||
Lealea Enterprise Co., Ltd. | 74,780 | 43,476 | ||
Makalot Industrial Co., Ltd. | 15,000 | 36,821 | ||
Mercuries & Associates Ltd. | 39,054 | 31,774 | ||
Merida Industry Co., Ltd. | 21,261 | 40,534 | ||
Nien Hsing Textile Co., Ltd. | 36,113 | 30,264 | ||
Sanyang Industry Co., Ltd.* | 86,000 | 49,549 | ||
Shinkong Textile Co., Ltd. | 25,455 | 35,376 | ||
Test-Rite International Co, Ltd. | 47,000 | 37,582 | ||
Total Consumer Discretionary | 502,098 | |||
Consumer Staples — 4.5% | ||||
Great Wall Enterprise Co., Ltd. | 49,550 | 61,508 | ||
Hey Song Corp. | 52,000 | 47,573 | ||
Lien Hwa Industrial Corp. | 64,000 | 49,053 | ||
Taiwan Tea Corp. | 71,000 | 44,625 | ||
Total Consumer Staples | 202,759 | |||
Financials — 3.2% | ||||
Hung Poo Real Estate Development | ||||
Corp. | 22,256 | 26,656 | ||
Hung Sheng Construction Co., Ltd. | 57,000 | 33,636 | ||
Kindom Construction Co., Ltd. | 38,000 | 29,988 | ||
King’s Town Construction Co., Ltd. | 13,766 | 14,252 | ||
Kuoyang Construction Co., Ltd.* | 51,474 | 40,710 | ||
Total Financials | 145,242 | |||
Industrials — 14.3% | ||||
AcBel Polytech, Inc. | 40,000 | 30,518 | ||
BES Engineering Corp. | 153,025 | 52,365 | ||
Continental Holdings Corp.* | 56,000 | 25,714 | ||
Eastern Media International* | 165,000 | 39,927 | ||
First Steamship Co., Ltd. | 29,000 | 70,377 | ||
King Slide Works Co., Ltd. | 6,541 | 33,803 | ||
Phihong Technology Co., Ltd. | 25,383 | 49,102 | ||
Powercom Co., Ltd.* | 17,049 | 32,981 | ||
Shih Wei Navigation Co., Ltd. | 31,000 | 42,108 | ||
Shin Zu Shing Co., Ltd. | 11,050 | 26,855 | ||
Silitech Technology Corp. | 13,526 | 34,147 | ||
T JOIN Transportation Co., Ltd. | 56,000 | 67,070 | ||
United Integrated Services Co., Ltd. | 24,000 | 36,580 | ||
Wisdom Marine Lines Co., Ltd. | 19,154 | 28,793 | ||
Yungtay Engineering Co., Ltd. | 40,000 | 74,585 | ||
Total Industrials | 644,925 | |||
Information Technology — 49.4% | ||||
Accton Technology Corp. | 52,670 | 34,760 | ||
Ali Corp. | 27,000 | 37,617 | ||
Alpha Networks, Inc. | 34,000 | 27,128 | ||
Career Technology MFG. Co., Ltd. | 37,000 | 78,164 | ||
Compal Communications, Inc. | 38,000 | 32,376 | ||
Compeq Manufacturing Co. Ltd.* | 117,723 | 68,237 | ||
CyberLink Corp. | 11,062 | 31,558 | ||
CyberTAN Technology, Inc. | 38,000 | 38,480 | ||
Darfon Electronics Corp. | 30,800 | 39,255 | ||
D-Link Corp. | 76,000 | 72,448 | ||
Edison Opto Corp. | 9,494 | 42,599 | ||
Elite Semiconductor Memory | ||||
Technology, Inc. | 28,000 | 43,019 | ||
Elitegroup Computer Systems Co., Ltd. | 86,980 | 30,220 | ||
Forhouse Corp. | 49,000 | 45,854 | ||
Formosa Epitaxy, Inc. | 46,076 | 52,610 | ||
Gemtek Technology Corp. | 33,424 | 42,949 | ||
Getac Technology Corp. | 44,000 | 22,355 | ||
Gigabyte Technology Co., Ltd. | 58,000 | 60,251 | ||
Gigastorage Corp. | 29,015 | 47,061 | ||
Global Mixed-Mode Technology, Inc. | 8,000 | 32,823 | ||
Greatek Electronics, Inc. | 63,839 | 58,626 | ||
Holy Stone Enterprise Co., Ltd. | 31,746 | 39,463 | ||
Infortrend Technology, Inc. | 29,467 | 38,122 | ||
ITE Technology, Inc. | 23,525 | 34,706 | ||
ITEQ Corp. | 29,605 | 48,741 | ||
Jentech Precision Industrial | 5,386 | 23,320 | ||
Jess-Link Products Co., Ltd. | 14,900 | 30,644 | ||
King Yuan Electronics Co., Ltd.* | 141,360 | 79,470 | ||
Kinpo Electronics, Inc.* | 171,000 | 55,829 | ||
Lotes Co., Ltd. | 4,919 | 21,384 | ||
Min Aik Technology Co., Ltd. | 17,000 | 48,082 | ||
Nuvoton Technology Corp. | 9,469 | 14,879 | ||
Opto Tech Corp. | 56,000 | 38,424 | ||
Pan Jit International, Inc.* | 37,048 | 47,606 | ||
Ralink Technology Corp. | 14,200 | 45,319 | ||
San Chih Semiconductor Co. | 4,190 | 16,459 | ||
Senao International Co., Ltd. | 14,000 | 45,952 | ||
Silicon Integrated Systems Corp. | 69,356 | 39,112 | ||
Solartech Energy Corp. | 22,460 | 56,310 | ||
Sonix Technology Co., Ltd. | 16,000 | 32,180 | ||
Sunplus Technology Co., Ltd.* | 55,000 | 36,009 | ||
Systex Corp. | 31,124 | 45,808 | ||
Taiflex Scientific Co., Ltd. | 17,317 | 37,974 | ||
Taiwan Surface Mounting | ||||
Technology Corp. | 25,555 | 65,319 | ||
Tong Hsing Electronic Industries Ltd. | 11,510 | 49,033 | ||
TXC Corp. | 33,439 | 65,504 | ||
Unity Opto Technology Co., Ltd. | 38,402 | 64,029 | ||
Visual Photonics Epitaxy Co., Ltd. | 17,000 | 44,046 | ||
Wah Lee Industrial Corp. | 19,000 | 38,148 | ||
Walsin Technology Corp.* | 64,000 | 39,108 | ||
WT Microelectronics Co., Ltd. | 25,037 | 43,974 | ||
Total Information Technology | 2,223,344 | |||
Materials — 16.1% | ||||
Asia Polymer Corp. | 24,540 | 43,958 | ||
Cheng Loong Corp. | 100,000 | 49,409 | ||
China Metal Products Co., Ltd. | 28,621 | 30,082 | ||
China Synthetic Rubber Corp. | 65,000 | 69,565 | ||
Everlight Chemical Industrial Corp. | 34,000 | 33,836 | ||
Formosan Rubber Group, Inc. | 49,467 | 50,264 | ||
Grand Pacific Petrochemical Corp. | 109,000 | 74,409 | ||
Shinkong Synthetic Fibers Corp. | 190,000 | 87,906 | ||
Ta Chen Stainless Pipe Co., Ltd. | 63,263 | 45,064 | ||
Taiwan Hon Chuan Enterprise Co., Ltd. | 28,320 | 82,769 | ||
Universal Cement Corp. | 45,765 | 30,203 | ||
UPC Technology Corp. | 79,471 | 67,293 | ||
Yieh Phui Enterprise Co., Ltd. | 149,800 | 58,584 | ||
Total Materials | 723,342 | |||
Total Common Stocks — 98.6% | ||||
(Cost $4,066,239) | $ | 4,441,710 | ||
Short-Term Investment — 0.3% | ||||
Money Market Fund — 0.3% | ||||
Invesco Treasury Portfolio Cash | ||||
Management, 0.02%(a) | ||||
(Cost $11,079) | 11,079 | 11,079 | ||
Total Investments — 98.9% | ||||
(Cost $4,077,318) | $ | 4,452,789 | ||
Other Assets in Excess of | ||||
Liabilities — 1.1% | 51,016 | |||
Net Assets — 100.0% | $ | 4,503,805 | ||
* | Non-income producing securities. | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. |
See notes to financial statements.
44
Schedules of Investments — IQ Global Agribusiness Small Cap ETF
April 30, 2011
Shares | Value | ||||
Common Stocks — 99.4% | |||||
Australia — 5.7% | |||||
Elders Ltd.* | 444,662 | $ | 248,174 | ||
GrainCorp Ltd. | 214,288 | 1,833,838 | |||
Nufarm Ltd.* | 193,315 | 1,021,808 | |||
Total Australia | 3,103,820 | ||||
Brazil — 3.9% | |||||
Cosan Ltd. Class A | 172,569 | 2,148,484 | |||
Canada — 9.2% | |||||
Hanfeng Evergreen, Inc.* | 40,359 | 219,053 | |||
Viterra, Inc. | 401,653 | 4,812,978 | |||
Total Canada | 5,032,031 | ||||
China — 14.6% | |||||
AgFeed Industries, Inc.* | 39,959 | 64,334 | |||
China Agri-Industries Holdings Ltd. | 1,720,000 | 1,961,893 | |||
China Bluechemical Ltd., Class H | 1,920,000 | 1,562,181 | |||
China Corn Oil Co., Ltd. | 275,903 | 185,413 | |||
China Foods Ltd. | 800,000 | 559,246 | |||
China Green Agriculture, Inc.* | 18,484 | 130,127 | |||
China Modern Dairy Holdings Ltd.* | 3,618,565 | 1,127,366 | |||
China Starch Holdings Ltd. | 1,839,497 | 132,617 | |||
China XLX Fertiliser Ltd. | 402,361 | 141,555 | |||
First Tractor Co., Ltd., Class H | 400,000 | 551,007 | |||
Shenguan Holdings Group, Ltd. | 640,000 | 850,301 | |||
Xiwang Sugar Holdings Co., Ltd. | 510,943 | 150,633 | |||
Zhongpin, Inc.* | 33,538 | 560,085 | |||
Total China | 7,976,758 | ||||
Hong Kong — 4.5% | |||||
Chaoda Modern Agriculture | |||||
Holdings Ltd. | 2,879,800 | 1,790,699 | |||
Global Bio-chem Technology | |||||
Group Co., Ltd.* | 2,080,000 | 506,102 | |||
PNG Resources Holdings Ltd.* | 4,160,000 | 141,923 | |||
Total Hong Kong | 2,438,724 | ||||
Indonesia — 4.0% | |||||
PT Charoen Pokphand Indonesia Tbk | 7,902,196 | 1,780,855 | |||
PT Japfa Comfeed Indonesia Tbk | 928,488 | 395,724 | |||
Total Indonesia | 2,176,579 | ||||
Ireland — 1.7% | |||||
Glanbia PLC | 144,176 | 931,533 | |||
Japan — 15.7% | |||||
House Foods Corp. | 80,000 | 1,305,398 | |||
Iseki & Co., Ltd.* | 200,000 | 451,072 | |||
Itoham Foods, Inc. | 160,000 | 631,008 | |||
J-Oil Mills, Inc. | 80,000 | 223,811 | |||
Kumiai Chemical Industry Co., Ltd. | 48,566 | 133,476 | |||
Marudai Food Co., Ltd. | 120,000 | 378,605 | |||
Mitsui Sugar Co., Ltd. | 80,000 | 397,338 | |||
Morinaga Milk Industry Co., Ltd. | 200,000 | 803,549 | |||
Nihon Nohyaku Co., Ltd. | 40,000 | 177,964 | |||
Nippon Flour Mills Co., Ltd. | 160,000 | 786,788 | |||
Nippon Meat Packers, Inc. | 200,000 | 2,755,731 | |||
Nisshin Oillio Group, Ltd. | 120,000 | 559,034 | |||
Total Japan | 8,603,774 | ||||
Netherlands — 5.4% | |||||
Nutreco NV | 37,959 | 2,959,405 | |||
Singapore — 2.1% | |||||
First Resources Ltd. | 309,964 | 349,970 | |||
Indofood Agri Resources Ltd.* | 480,000 | 816,854 | |||
Total Singapore | 1,166,824 | ||||
Spain — 5.2% | |||||
Ebro Foods SA | 100,815 | 2,492,570 | |||
SOS Corp. Alimentaria SA* | 377,882 | 358,801 | |||
Total Spain | 2,851,371 | ||||
Thailand — 1.2% | |||||
Khon Kaen Sugar Industry PCL | 669,206 | 304,898 | |||
Thai Vegetable Oil Public | |||||
Company Ltd. | 404,890 | 379,796 | |||
Total Thailand | 684,694 | ||||
United Kingdom — 1.5% | |||||
Devro PLC | 176,809 | 844,029 | |||
United States — 24.7% | |||||
Andersons, Inc. | 20,004 | 993,199 | |||
Lindsay Corp. | 13,524 | 991,580 | |||
Smithfield Foods, Inc.* | 179,371 | 4,225,981 | |||
Toro Co. | 33,551 | 2,278,448 | |||
Tractor Supply Co. | 78,674 | 4,867,560 | |||
Yongye International, Inc.* | 39,999 | 209,595 | |||
Total United States | 13,566,363 | ||||
Total Common Stocks — 99.4% | |||||
(Cost $53,042,728) | 54,484,389 | ||||
Short-Term Investment — 0.8% | |||||
Money Market Fund — 0.8% | |||||
Invesco Treasury Portfolio | |||||
Cash Management, 0.02%(a) | |||||
(Cost $447,092) | 447,092 | 447,092 | |||
Total Investments — 100.2% | |||||
(Cost $53,489,820) | $ | 54,931,481 | |||
Liabilities in Excess of Other | |||||
Assets — (0.2)% | (92,244 | ) | |||
Net Assets — 100.0% | $ | 54,839,237 | |||
Industry | Value | % of Net Assets | ||||
Crop Production and Farming | $ | 14,831,833 | 27.1 | % | ||
Agricultural Machinery | 12,735,426 | 23.2 | ||||
Agricultural Supplies and Logistics | 11,078,220 | 20.2 | ||||
Livestock Operations | 10,735,334 | 19.6 | ||||
Biofuels | 5,103,576 | 9.3 | ||||
Total Common Stocks | $ | 54,484,389 | 99.4 | % | ||
Money Market Fund | 447,092 | 0.8 | ||||
Liabilities in Excess of Other Assets | (92,244 | ) | (0.2 | ) | ||
Total Net Assets | $ | 54,839,237 | 100.0 | % | ||
* | Non-income producing securities. | |
(a) | Rate shown represents annualized 7-day yield as of April 30, 2011. |
See notes to financial statements.
45
Statements of Assets and Liabilities
April 30, 2011
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Real Return ETF | IQ Global Resources ETF | IQ Merger Arbitrage ETF | |||||||||||||
Assets | |||||||||||||||||
Investments, at cost: | $ | 123,978,628 | $ | 25,864,468 | $ | 12,693,667 | $ | 73,960,584 | $ | 21,970,760 | |||||||
Investments, at value | $ | 127,223,394 | $ | 27,395,391 | $ | 12,820,481 | $ | 78,134,756 | $ | 22,490,273 | |||||||
Cash | — | — | — | 76,028 | — | ||||||||||||
Foreign cash* | — | — | — | 17,198 | 13,860 | ||||||||||||
Cash deposited at broker for | |||||||||||||||||
swap collateral | 4,510,121 | 859,815 | — | — | — | ||||||||||||
Cash deposited at broker for | |||||||||||||||||
futures collateral | 67,500 | 74,500 | — | 1,126,371 | 416,500 | ||||||||||||
Receivable for capital shares | |||||||||||||||||
transactions | — | — | — | 4,973,195 | — | ||||||||||||
Due from broker | 80,092 | — | — | — | 23,470 | ||||||||||||
Dividend and interest receivable | 171 | 9 | — | 72,720 | 6,021 | ||||||||||||
Total assets | 131,881,278 | 28,329,715 | 12,820,481 | 84,400,268 | 22,950,124 | ||||||||||||
Liabilities | |||||||||||||||||
Payable for investments purchased | — | — | — | 4,460,152 | — | ||||||||||||
Due to broker | 720,384 | — | — | — | — | ||||||||||||
Advisory fees payable | 78,980 | 17,242 | 5,362 | 45,394 | 14,094 | ||||||||||||
Variation margin payable | 5,062 | 10,238 | — | 41,015 | 15,205 | ||||||||||||
Compliance fees payable | 115 | 24 | 12 | 58 | 19 | ||||||||||||
Accrued expenses and other | |||||||||||||||||
liabilities | 50 | 50 | 50 | 50 | 50 | ||||||||||||
Total Liabilities | 804,591 | 27,554 | 5,424 | 4,546,669 | 29,368 | ||||||||||||
Net Assets | $ | 131,076,687 | $ | 28,302,161 | $ | 12,815,057 | $ | 79,853,599 | $ | 22,920,756 | |||||||
Composition of Net Assets | |||||||||||||||||
Paid-in capital | $ | 136,303,927 | $ | 27,781,996 | $ | 12,654,409 | $ | 75,623,025 | $ | 24,101,681 | |||||||
Undistributed (accumulated) net | |||||||||||||||||
investment income (loss) | 729,719 | 48,478 | 3,712 | 189,362 | (50,878 | ) | |||||||||||
Undistributed (accumulated) net | |||||||||||||||||
realized gain (loss) on investments, | |||||||||||||||||
swap transactions, futures contracts | |||||||||||||||||
and foreign currency translations | (9,027,682 | ) | (990,839 | ) | 30,123 | 697,996 | (1,341,556 | ) | |||||||||
Net unrealized appreciation on | |||||||||||||||||
investments, swap transactions, | |||||||||||||||||
futures contracts and foreign | |||||||||||||||||
currency translations | 3,070,723 | 1,462,526 | 126,813 | 3,343,216 | 211,509 | ||||||||||||
Net Assets | $ | 131,076,687 | $ | 28,302,161 | $ | 12,815,057 | $ | 79,853,599 | $ | 22,920,756 | |||||||
NET ASSET VALUE PER SHARE | |||||||||||||||||
Shares Outstanding (no par value, | |||||||||||||||||
unlimited shares authorized) | 4,704,000 | 1,000,000 | 500,000 | 2,400,000 | 900,000 | ||||||||||||
Net Asset Value | $ | 27.86 | $ | 28.30 | $ | 25.63 | $ | 33.27 | $ | 25.47 | |||||||
*Cost of foreign cash as follows: | $ | — | $ | — | $ | — | $ | 17,354 | $ | 12,874 |
See notes to financial statements.
46
Statements of Assets and Liabilities (continued)
April 30, 2011
IQ Australia Small Cap ETF | IQ Canada Small Cap ETF | IQ South Korea Small Cap ETF | IQ Taiwan Small Cap ETF | IQ Global Agribusiness Small Cap ETF | ||||||||||||
Assets | ||||||||||||||||
Investments, at cost: | $ | 40,409,544 | $ | 113,790,119 | $ | 14,142,631 | $ | 4,077,318 | $ | 53,489,820 | ||||||
Investments, at value | $ | 43,089,432 | $ | 120,433,601 | $ | 15,887,236 | $ | 4,452,789 | $ | 54,931,481 | ||||||
Cash | 39,842 | — | — | — | 16,189 | |||||||||||
Foreign cash* | 55,380 | 104,301 | 271,247 | 62,098 | — | |||||||||||
Receivable for investments sold | 571,160 | — | — | 2,996,242 | 1,876 | |||||||||||
Receivable for capital shares | ||||||||||||||||
transactions | — | — | — | — | 1,365,557 | |||||||||||
Dividend and interest receivable | 159,349 | 64,329 | 27,221 | — | 69,591 | |||||||||||
Total assets | 43,915,163 | 120,602,231 | 16,185,704 | 7,511,129 | 56,384,694 | |||||||||||
Liabilities | ||||||||||||||||
Payable for capital shares | ||||||||||||||||
repurchased | — | — | — | 3,002,440 | — | |||||||||||
Payable for investments purchased | 567,867 | — | — | — | 1,520,150 | |||||||||||
Advisory fees payable | 24,461 | 68,145 | 9,184 | 4,828 | 25,246 | |||||||||||
Due to custodian | — | 39,893 | — | — | — | |||||||||||
Compliance fees payable | 34 | 101 | 10 | 6 | 11 | |||||||||||
Accrued expenses and other | ||||||||||||||||
liabilities | 50 | 1,756 | 50 | 50 | 50 | |||||||||||
Total Liabilities | 592,412 | 109,895 | 9,244 | 3,007,324 | 1,545,457 | |||||||||||
Net Assets | $ | 43,322,751 | $ | 120,492,336 | $ | 16,176,460 | $ | 4,503,805 | $ | 54,839,237 | ||||||
Composition of Net Assets | ||||||||||||||||
Paid-in capital | $ | 39,566,257 | $ | 116,904,097 | $ | 14,414,215 | $ | 4,037,100 | $ | 53,326,443 | ||||||
Undistributed (accumulated) net | ||||||||||||||||
investment income (loss) | 470,327 | (94,035 | ) | 3,214 | (36,463 | ) | 70,695 | |||||||||
Undistributed (accumulated) net | ||||||||||||||||
realized gain (loss) on investments, | ||||||||||||||||
swap transactions, futures contracts | ||||||||||||||||
and foreign currency translations | 596,884 | (2,961,742 | ) | 12,269 | 124,986 | — | ||||||||||
Net unrealized appreciation on | ||||||||||||||||
investments, swap transactions, | ||||||||||||||||
futures contracts and foreign | ||||||||||||||||
currency translations | 2,689,283 | 6,644,016 | 1,746,762 | 378,182 | 1,442,099 | |||||||||||
Net Assets | $ | 43,322,751 | $ | 120,492,336 | $ | 16,176,460 | $ | 4,503,805 | $ | 54,839,237 | ||||||
NET ASSET VALUE PER SHARE | ||||||||||||||||
Shares Outstanding (no par value, | ||||||||||||||||
unlimited shares authorized) | 1,400,000 | 3,400,000 | 500,000 | 150,000 | 2,000,000 | |||||||||||
Net Asset Value | $ | 30.94 | $ | 35.44 | $ | 32.35 | $ | 30.03 | $ | 27.42 | ||||||
*Cost of foreign cash as follows: | $ | 54,722 | $ | 104,304 | $ | 269,083 | $ | 59,387 | $ | — |
See notes to financial statements.
47
Statements of Operations
April 30, 2011
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Real Return ETF | IQ Global Resources ETF | IQ Merger Arbitrage ETF | |||||||||||
Investment Income | |||||||||||||||
Dividend income* | $ | 3,370,083 | $ | 446,367 | $ | 18,958 | $ | 603,130 | $ | 208,538 | |||||
Expenses | |||||||||||||||
Advisory fees | 842,608 | 153,535 | 54,995 | 266,040 | 196,458 | ||||||||||
Trustee fees | 3,996 | 725 | 310 | 963 | 867 | ||||||||||
Compliance fees | 2,233 | 456 | 204 | 516 | 444 | ||||||||||
Miscellaneous | 15,544 | 2,196 | 91 | 521 | 158 | ||||||||||
Total expenses | 864,381 | 156,912 | 55,600 | 268,040 | 197,927 | ||||||||||
Net investment income (loss) | 2,505,702 | 289,455 | (36,642 | ) | 335,090 | 10,611 | |||||||||
Realized and Unrealized Gain (Loss) | |||||||||||||||
on Investments, Swap Transactions, | |||||||||||||||
Futures Contracts and Foreign | |||||||||||||||
Currency Translations | |||||||||||||||
Net realized gain (loss) from: | |||||||||||||||
Investment securities | (1,977,458 | ) | (130,467 | ) | 50,923 | 1,642,090 | (744,386 | ) | |||||||
In-Kind redemptions | 9,972,006 | 1,269,471 | 163,281 | 4,834,057 | 688,427 | ||||||||||
Distributions by other investment | |||||||||||||||
companies | 101,894 | 5,252 | — | — | — | ||||||||||
Swap transactions | (2,470,570 | ) | (753,315 | ) | (12,090 | ) | — | — | |||||||
Futures contracts | (2,357,759 | ) | (7,477 | ) | — | (884,818 | ) | (519,978 | ) | ||||||
Foreign currency translations | — | — | — | 2,606 | (110,154 | ) | |||||||||
Net realized gain (loss) | 3,268,113 | 383,464 | 202,114 | 5,593,935 | (686,091 | ) | |||||||||
Net change in net unrealized | |||||||||||||||
appreciation/depreciation on: | |||||||||||||||
Investment securities | (1,545,819 | ) | 961,711 | 135,743 | 3,691,473 | 261,585 | |||||||||
Swap transactions | 484,566 | 49,574 | — | — | — | ||||||||||
Futures contracts | (174,043 | ) | (68,397 | ) | — | (828,448 | ) | (380,030 | ) | ||||||
Foreign currency translations | — | — | — | 1,165 | 746 | ||||||||||
Net change in net unrealized | |||||||||||||||
appreciation/depreciation | (1,235,296 | ) | 942,888 | 135,743 | 2,864,190 | (117,699 | ) | ||||||||
Net gain (loss) and unrealized | |||||||||||||||
appreciation/depreciation | 2,032,817 | 1,326,352 | 337,857 | 8,458,125 | (803,790 | ) | |||||||||
Net Increase (Decrease) in Net Assets | |||||||||||||||
Resulting from Operations | $ | 4,538,519 | $ | 1,615,807 | $ | 301,215 | $ | 8,793,215 | $ | (793,179 | ) | ||||
*Net of foreign taxes withheld of: | $ | — | $ | — | $ | — | $ | 36,792 | $ | 165 |
See notes to financial statements.
48
Statements of Operations (continued)
April 30, 2011
IQ Australia Small Cap ETF | IQ Canada Small Cap ETF | IQ South Korea Small Cap ETF | IQ Taiwan Small Cap ETF** | IQ Global Agribusiness Small Cap ETF** | |||||||||||
Investment Income | |||||||||||||||
Dividend income* | $ | 854,186 | $ | 467,504 | $ | 70,873 | $ | 66,592 | $ | 100,204 | |||||
Expenses | |||||||||||||||
Advisory fees | 133,569 | 284,248 | 50,571 | 28,165 | 27,723 | ||||||||||
Trustee fees | 459 | 621 | 232 | 119 | — | ||||||||||
Compliance fees | 284 | 534 | 96 | 56 | 21 | ||||||||||
Miscellaneous | 212 | 91 | 78 | 60 | 50 | ||||||||||
Total expenses | 134,524 | 285,494 | 50,977 | 28,400 | 27,794 | ||||||||||
Net investment income | 719,662 | 182,010 | 19,896 | 38,192 | 72,410 | ||||||||||
Realized and Unrealized Gain (Loss) on | |||||||||||||||
Investments, Swap Transactions, | |||||||||||||||
Futures Contracts and Foreign | |||||||||||||||
Currency Translations | |||||||||||||||
Net realized gain (loss) from: | |||||||||||||||
Investment securities | 789,919 | (2,839,129 | ) | 50,497 | 201,183 | — | |||||||||
In-Kind redemptions | 427,417 | 4,303,935 | — | — | — | ||||||||||
Foreign currency translations | (36,670 | ) | 31,906 | (10,509 | ) | (24,317 | ) | (1,715 | ) | ||||||
Net realized gain (loss) | 1,180,666 | 1,496,712 | 39,988 | 176,866 | (1,715 | ) | |||||||||
Net change in net unrealized | |||||||||||||||
appreciation/depreciation on: | |||||||||||||||
Investment securities | 2,662,006 | 6,519,782 | 1,659,573 | 375,471 | 1,441,661 | ||||||||||
Foreign currency translations | 9,264 | 561 | 2,155 | 2,711 | 438 | ||||||||||
Net change in net unrealized | |||||||||||||||
appreciation/depreciation | 2,671,270 | 6,520,343 | 1,661,728 | 378,182 | 1,442,099 | ||||||||||
Net gain (loss) and unrealized | |||||||||||||||
appreciation | 3,851,936 | 8,017,055 | 1,701,716 | 555,048 | 1,440,384 | ||||||||||
Net Increase (Decrease) in Net Assets | |||||||||||||||
Resulting from Operations | $ | 4,571,598 | $ | 8,199,065 | $ | 1,721,612 | $ | 593,240 | $ | 1,512,794 | |||||
Net of foreign taxes withheld of: | $ | 11,894 | $ | 79,504 | $ | 13,707 | $ | 20,022 | $ | 10,420 |
** | Commencement of operations for the IQ Taiwan Small Cap ETF and IQ Global Agribusiness Small Cap ETF was May 18, 2010 and March 21, 2011, respectively. |
See notes to financial statements.
49
Statements of Changes in Net Assets
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Real Return ETF | |||||||||||||||||||
For the Year Ended April 30, 2011 | For the Year Ended April 30, 2010 | For the Year Ended April 30, 2011 | For the Period June 8, 2009* to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period October 26, 2009* to April 30, 2010 | ||||||||||||||||
Increase (Decrease) in Net Assets | |||||||||||||||||||||
from Operations | |||||||||||||||||||||
Net investment income (loss) | $ | 2,505,702 | $ | 1,141,698 | $ | 289,455 | $ | 64,769 | $ | (36,642 | ) | $ | (6,970 | ) | |||||||
Net realized gain (loss) | 3,268,113 | (2,355,706 | ) | 383,464 | (223,459 | ) | 202,114 | (22,114 | ) | ||||||||||||
Net change in net unrealized | |||||||||||||||||||||
appreciation/depreciation | (1,235,296 | ) | 4,176,583 | 942,888 | 519,638 | 135,743 | (8,930 | ) | |||||||||||||
Net increase (decrease) in net assets | |||||||||||||||||||||
resulting from operations | 4,538,519 | 2,962,575 | 1,615,807 | 360,948 | 301,215 | (38,014 | ) | ||||||||||||||
Dividends and Distributions to | |||||||||||||||||||||
Shareholders from: | |||||||||||||||||||||
Net investment income | (1,865,556 | ) | (646,883 | ) | (133,209 | ) | (61,910 | ) | (1,985 | ) | — | ||||||||||
Net realized gains | — | — | — | — | — | — | |||||||||||||||
Total dividends and distributions to | |||||||||||||||||||||
shareholders | (1,865,556 | ) | (646,883 | ) | (133,209 | ) | (61,910 | ) | (1,985 | ) | — | ||||||||||
Capital Share Transactions | |||||||||||||||||||||
Proceeds from shares created | 166,884,050 | 82,803,467 | 38,032,383 | 10,315,381 | 12,661,434 | 13,781,645 | |||||||||||||||
Cost of shares redeemed | (131,119,714 | ) | (4,015,606 | ) | (21,827,239 | ) | — | (13,889,238 | ) | — | |||||||||||
Net increase (decrease) from capital | |||||||||||||||||||||
share transactions | 35,764,336 | 78,787,861 | 16,205,144 | 10,315,381 | (1,227,804 | ) | 13,781,645 | ||||||||||||||
Total increase (decrease) in | |||||||||||||||||||||
net assets | 38,437,299 | 81,103,553 | 17,687,742 | 10,614,419 | (928,574 | ) | 13,743,631 | ||||||||||||||
Net Assets | |||||||||||||||||||||
Beginning of period | 92,639,388 | 11,535,835 | 10,614,419 | — | 13,743,631 | — | |||||||||||||||
End of period | $ | 131,076,687 | $ | 92,639,388 | $ | 28,302,161 | $ | 10,614,419 | $ | 12,815,057 | $ | 13,743,631 | |||||||||
Including undistributed net investment | |||||||||||||||||||||
income (net of accumulated net | |||||||||||||||||||||
investment loss) as follows: | $ | 729,719 | $ | 412,162 | $ | 48,478 | $ | 956 | $ | 3,712 | $ | 140 | |||||||||
Changes in Shares Outstanding | |||||||||||||||||||||
Shares outstanding, beginning | |||||||||||||||||||||
of period | 3,404,000 | 454,000 | 400,000 | — | 550,000 | — | |||||||||||||||
Shares created | 6,100,000 | 3,100,000 | 1,400,000 | 400,000 | 500,000 | 550,000 | |||||||||||||||
Shares redeemed | (4,800,000 | ) | (150,000 | ) | (800,000 | ) | — | (550,000 | ) | — | |||||||||||
Shares outstanding, end of period | 4,704,000 | 3,404,000 | 1,000,000 | 400,000 | 500,000 | 550,000 | |||||||||||||||
* | Commencement of operations. |
See notes to financial statements.
50
Statements of Changes in Net Assets (continued)
IQ Global Resources ETF | IQ Merger Arbitrage ETF | IQ Australia Small Cap ETF | ||||||||||||||||
For the Year Ended April 30, 2011 | For the Period October 26, 2009* to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period November 16, 2009* to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period March 22, 2010* to April 30, 2010 | |||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||||
from Operations | ||||||||||||||||||
Net investment income (loss) | $ | 335,090 | $ | 31,369 | $ | 10,611 | $ | 11,030 | $ | 719,662 | $ | 8,575 | ||||||
Net realized gain (loss) | 5,593,935 | 178,709 | (686,091 | ) | 205,068 | 1,180,666 | 124 | |||||||||||
Net change in net unrealized | ||||||||||||||||||
appreciation/depreciation | 2,864,190 | 479,026 | (117,699 | ) | 329,208 | 2,671,270 | 18,013 | |||||||||||
Net increase in net assets resulting | ||||||||||||||||||
from operations | 8,793,215 | 689,104 | (793,179 | ) | 545,306 | 4,571,598 | 26,712 | |||||||||||
Dividends and Distributions to | ||||||||||||||||||
Shareholders from: | ||||||||||||||||||
Net investment income | (167,873 | ) | (10,753 | ) | (10,811 | ) | (241 | ) | (401,850 | ) | — | |||||||
Net realized gains | (246,632 | ) | — | (301,245 | ) | — | (36,342 | ) | — | |||||||||
Total dividends and distributions | ||||||||||||||||||
to shareholders | (414,505 | ) | (10,753 | ) | (312,056 | ) | (241 | ) | (438,192 | ) | — | |||||||
Capital Share Transactions | ||||||||||||||||||
Proceeds from shares created | 127,436,513 | 7,570,677 | 17,793,474 | 31,057,239 | 34,516,704 | 8,946,114 | ||||||||||||
Cost of shares redeemed | (64,210,652 | ) | — | (25,369,787 | ) | — | (4,300,185 | ) | — | |||||||||
Net increase (decrease) from capital | ||||||||||||||||||
share transactions | 63,225,861 | 7,570,677 | (7,576,313 | ) | 31,057,239 | 30,216,519 | 8,946,114 | |||||||||||
Total increase in net assets | 71,604,571 | 8,249,028 | (8,681,548 | ) | 31,602,304 | 34,349,925 | 8,972,826 | |||||||||||
Net Assets | ||||||||||||||||||
Beginning of period | 8,249,028 | — | 31,602,304 | — | 8,972,826 | — | ||||||||||||
End of period | $ | 79,853,599 | $ | 8,249,028 | $ | 22,920,756 | $ | 31,602,304 | $ | 43,322,751 | $ | 8,972,826 | ||||||
Including undistributed net investment | ||||||||||||||||||
income (net of accumulated net | ||||||||||||||||||
investment loss) as follows: | $ | 189,362 | $ | 19,539 | $ | (50,878 | ) | $ | (3,603 | ) | $ | 470,327 | $ | 8,699 | ||||
Changes in Shares Outstanding | ||||||||||||||||||
Shares outstanding, beginning | ||||||||||||||||||
of period | 300,000 | — | 1,200,000 | — | 350,000 | — | ||||||||||||
Shares created | 4,250,000 | 300,000 | 700,000 | 1,200,000 | 1,200,000 | 350,000 | ||||||||||||
Shares redeemed | (2,150,000 | ) | — | (1,000,000 | ) | — | (150,000 | ) | — | |||||||||
Shares outstanding, end of period | 2,400,000 | 300,000 | 900,000 | 1,200,000 | 1,400,000 | 350,000 | ||||||||||||
* | Commencement of operations. |
See notes to financial statements.
51
Statements of Changes in Net Assets (continued)
IQ Canada Small Cap ETF | IQ South Korea Small Cap ETF | IQ Taiwan Small Cap ETF | IQ Global Agribusiness Small Cap ETF | |||||||||||||||
For the Year Ended April 30, 2011 | For the Period March 22, 2010* to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period April 13, 2010* to April 30, 2010 | For the Period May 18, 2010* to April 30, 2011 | For the Period March 21, 2011* to April 30, 2011 | |||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||||
from Operations | ||||||||||||||||||
Net investment income (loss) | $ | 182,010 | $ | (1,346 | ) | $ | 19,896 | $ | (941 | ) | $ | 38,192 | $ | 72,410 | ||||
Net realized gain (loss) | 1,496,712 | (20 | ) | 39,988 | (34,020 | ) | 176,866 | (1,715 | ) | |||||||||
Net change in net unrealized | ||||||||||||||||||
appreciation/depreciation | 6,520,343 | 123,673 | 1,661,728 | 85,034 | 378,182 | 1,442,099 | ||||||||||||
Net increase in net assets resulting | ||||||||||||||||||
from operations | 8,199,065 | 122,307 | 1,721,612 | 50,073 | 593,240 | 1,512,794 | ||||||||||||
Dividends and Distributions to | ||||||||||||||||||
Shareholders from: | ||||||||||||||||||
Net investment income | (468,240 | ) | — | (4,475 | ) | — | (54,155 | ) | — | |||||||||
Net realized gains | — | — | (4,965 | ) | — | — | — | |||||||||||
Total dividends and distributions | ||||||||||||||||||
to shareholders | (468,240 | ) | — | (9,440 | ) | — | (54,155 | ) | — | |||||||||
Capital Share Transactions | ||||||||||||||||||
Proceeds from shares created | 126,075,670 | 8,984,430 | 11,914,215 | 2,500,000 | 6,967,160 | 53,326,443 | ||||||||||||
Cost of shares redeemed | (22,420,896 | ) | — | — | — | (3,002,440 | ) | — | ||||||||||
Net increase from capital | ||||||||||||||||||
share transactions | 103,654,774 | 8,984,430 | 11,914,215 | 2,500,000 | 3,964,720 | 53,326,443 | ||||||||||||
Total increase in net assets | 111,385,599 | 9,106,737 | 13,626,387 | 2,550,073 | 4,503,805 | 54,839,237 | ||||||||||||
Net Assets | ||||||||||||||||||
Beginning of period | 9,106,737 | — | 2,550,073 | — | — | — | ||||||||||||
End of period | $ | 120,492,336 | $ | 9,106,737 | $ | 16,176,460 | $ | 2,550,073 | $ | 4,503,805 | $ | 54,839,237 | ||||||
Including undistributed net investment | ||||||||||||||||||
income (net of accumulated net | ||||||||||||||||||
investment loss) as follows: | $ | (94,035 | ) | $ | (1,366 | ) | $ | 3,214 | $ | (34,767 | ) | $ | (36,463 | ) | $ | 70,695 | ||
Changes in Shares Outstanding | ||||||||||||||||||
Shares outstanding, beginning | ||||||||||||||||||
of period | 350,000 | — | 100,000 | — | — | — | ||||||||||||
Shares created | 3,750,000 | 350,000 | 400,000 | 100,000 | 250,000 | 2,000,000 | ||||||||||||
Shares redeemed | (700,000 | ) | — | — | — | (100,000 | ) | — | ||||||||||
Shares outstanding, end of period | 3,400,000 | 350,000 | 500,000 | 100,000 | 150,000 | 2,000,000 | ||||||||||||
* | Commencement of operations. |
See notes to financial statements.
52
Financial Highlights
Selected Data for a Share of Capital Stock Outstanding
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Real Return ETF | |||||||||||||||||||
For the Year Ended April 30, 2011 | For the Year Ended April 30, 2010 | For the Period March 24, 20091 to April 30, 2009 | For the Year Ended April 30, 2011 | For the Period June 8, 20091 to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period October 26, 20091 to April 30, 2010 | |||||||||||||||
Net asset value, beginning | |||||||||||||||||||||
of period | $ | 27.21 | $ | 25.41 | $ | 25.00 | $ | 26.54 | $ | 25.00 | $ | 24.99 | $ | 25.00 | |||||||
Income from Investment | |||||||||||||||||||||
Operations | |||||||||||||||||||||
Net investment income (loss)2 | 0.61 | 0.52 | 0.02 | 0.38 | 0.26 | (0.08 | ) | (0.02 | ) | ||||||||||||
Net realized and unrealized | |||||||||||||||||||||
gain (loss) on investments | 0.45 | 1.51 | 0.39 | 1.53 | 1.53 | 0.72 | 0.01 | ||||||||||||||
Distributions of net realized | |||||||||||||||||||||
gains by other investment | |||||||||||||||||||||
companies | 0.00 | 3 | — | — | 0.00 | 3 | — | — | — | ||||||||||||
Net increase (decrease) in | |||||||||||||||||||||
net assets resulting from | |||||||||||||||||||||
investment operations | 1.06 | 2.03 | 0.41 | 1.91 | 1.79 | 0.64 | (0.01 | ) | |||||||||||||
Distributions from: | |||||||||||||||||||||
Net investment income | (0.41 | ) | (0.23 | ) | — | (0.15 | ) | (0.25 | ) | (0.00 | )4 | — | |||||||||
Net realized gains | — | — | — | — | — | — | — | ||||||||||||||
Total distributions from net | |||||||||||||||||||||
investment income and | |||||||||||||||||||||
realized gains | (0.41 | ) | (0.23 | ) | — | (0.15 | ) | (0.25 | ) | (0.00 | )4 | — | |||||||||
Net asset value, end | |||||||||||||||||||||
of period | $ | 27.86 | $ | 27.21 | $ | 25.41 | $ | 28.30 | $ | 26.54 | $ | 25.63 | $ | 24.99 | |||||||
Total Return | |||||||||||||||||||||
Total investment return based | |||||||||||||||||||||
on net asset value5 | 3.95 | % | 8.00 | % | 1.64 | % | 7.21 | % | 7.16 | % | 2.58 | % | (0.04 | )% | |||||||
Ratios/Supplemental Data | |||||||||||||||||||||
Net assets, end of period | |||||||||||||||||||||
(000’s omitted) | $ | 131,077 | $ | 92,639 | $ | 11,536 | $ | 28,302 | $ | 10,614 | $ | 12,815 | $ | 13,744 | |||||||
Ratio to average net assets of: | |||||||||||||||||||||
Expenses | 0.77 | % | 0.77 | % | 0.13 | %6 | 0.77 | % | 0.76 | %7 | 0.49 | % | 0.50 | %7 | |||||||
Net investment income (loss) | 2.23 | % | 1.93 | % | 0.08 | %6 | 1.41 | % | 1.10 | %7 | (0.32 | )% | (0.14 | )%7 | |||||||
Portfolio turnover rate8 | 145 | % | 169 | % | 0 | %8 | 54 | % | 77 | % | 52 | % | 44 | % |
See footnotes on page 55.
See notes to financial statements.
53
Financial Highlights (continued)
Selected Data for a Share of Capital Stock Outstanding
IQ Global Resources ETF | IQ Merger Arbitrage ETF | IQ Australia Small Cap ETF | ||||||||||||||||
For the Year Ended April 30, 2011 | For the Period October 26, 20091 to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period November 16, 20091 to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period March 22, 20101 to April 30, 2010 | |||||||||||||
Net asset value, beginning of period | $ | 27.50 | $ | 25.00 | $ | 26.34 | $ | 25.00 | $ | 25.64 | $ | 25.00 | ||||||
Income from Investment Operations | ||||||||||||||||||
Net investment income (loss)2 | 0.29 | 0.12 | 0.01 | 0.03 | ||||||||||||||
Net realized and unrealized gain | ||||||||||||||||||
(loss) on investments | 5.78 | 2.42 | (0.55 | ) | 1.31 | 1.03 | 0.03 | |||||||||||
Distributions of net realized gains by | ||||||||||||||||||
other investment companies | — | — | — | — | 4.76 | 0.61 | ||||||||||||
Net increase (decrease) in net assets | ||||||||||||||||||
resulting from investment operations | 6.07 | 2.54 | (0.54 | ) | 1.34 | 5.79 | 0.64 | |||||||||||
Distributions from: | ||||||||||||||||||
Net investment income | (0.12 | ) | (0.04 | ) | (0.01 | ) | (0.00 | )3 | (0.45 | ) | — | |||||||
Net realized gains | (0.18 | ) | — | (0.32 | ) | — | (0.04 | ) | — | |||||||||
Net distributions from net investment | ||||||||||||||||||
income and realized gains | (0.30 | ) | (0.04 | ) | (0.33 | ) | (0.00 | )4 | (0.49 | ) | — | |||||||
Net asset value, end of period | $ | 33.27 | $ | 27.50 | $ | 25.47 | $ | 26.34 | $ | 30.94 | $ | 25.64 | ||||||
Total Return | ||||||||||||||||||
Total investment return based on | ||||||||||||||||||
net asset value5 | 22.17 | % | 10.18 | % | (2.03 | )% | 5.37 | % | 22.71 | % | 2.56 | % | ||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period | ||||||||||||||||||
(000’s omitted) | $ | 79,854 | $ | 8,249 | $ | 22,921 | $ | 31,602 | $ | 43,323 | $ | 8,973 | ||||||
Ratio to average net assets of: | ||||||||||||||||||
Expenses | 0.76 | % | 0.79 | %7 | 0.76 | % | 0.77 | %7 | 0.69 | % | 0.71 | %7 | ||||||
Net investment income (loss) | 0.94 | % | 0.93 | %7 | 0.04 | % | 0.22 | %7 | 3.72 | % | 1.09 | %7 | ||||||
Portfolio turnover rate8 | 117 | % | 158 | % | 365 | % | 141 | % | 49 | % | 0 | %9 |
See footnotes on page 55.
See notes to financial statements.
54
Financial Highlights (continued)
Selected Data for a Share of Capital Stock Outstanding
IQ Canada Small Cap ETF | IQ South Korea Small Cap ETF | IQ Taiwan Small Cap ETF | IQ Global Agribusiness Small Cap ETF | |||||||||||||||
For the Year Ended April 30, 2011 | For the Period March 22, 20101 to April 30, 2010 | For the Year Ended April 30, 2011 | For the Period April 13, 20101 to April 30, 2010 | For the Period May 18, 20101 to April 30, 2011 | For the Period March 21, 20111 to April 30, 2011 | |||||||||||||
Net asset value, beginning of period | $ | 26.02 | $ | 25.00 | $ | 25.50 | $ | 25.00 | $ | 25.00 | $ | 25.40 | ||||||
Income from Investment Operations | ||||||||||||||||||
Net investment income (loss)2 | 0.14 | (0.01 | ) | 0.09 | (0.01 | ) | 0.29 | 0.06 | ||||||||||
Net realized and unrealized gain | ||||||||||||||||||
on investments | 9.75 | 1.03 | 6.80 | 0.51 | 5.28 | 1.96 | ||||||||||||
Net increase in net assets resulting | ||||||||||||||||||
from investment operations | 9.89 | 1.02 | 6.89 | 0.50 | 5.57 | 2.02 | ||||||||||||
Distributions from: | ||||||||||||||||||
Net investment income | (0.47 | ) | — | (0.02 | ) | — | (0.54 | ) | — | |||||||||
Net realized gains | — | — | (0.02 | ) | — | — | — | |||||||||||
Total distributions from net investment | ||||||||||||||||||
income and realized gains | (0.47 | ) | — | (0.04 | ) | — | (0.54 | ) | — | |||||||||
Net asset value, end of period | $ | 35.44 | $ | 26.02 | $ | 32.35 | $ | 25.50 | $ | 30.03 | $ | 27.42 | ||||||
Total Return | ||||||||||||||||||
Total investment return based on | ||||||||||||||||||
net asset value5 | 38.15 | % | 4.08 | % | 27.04 | % | 2.00 | % | 22.28 | % | 7.95 | % | ||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period | ||||||||||||||||||
(000’s omitted) | $ | 120,492 | $ | 9,107 | $ | 16,176 | $ | 2,550 | $ | 4,504 | $ | 54,839 | ||||||
Ratio to average net assets of: | ||||||||||||||||||
Expenses | 0.69 | % | 0.71 | %7 | 0.80 | % | 0.79 | %7 | 0.80 | %7 | 0.75 | %7 | ||||||
Net investment income (loss) | 0.44 | % | (0.20 | )%7 | 0.31 | % | (0.79 | )%7 | 1.07 | %7 | 1.96 | %7 | ||||||
Portfolio turnover rate8 | 52 | % | 0 | % | 73 | % | 1 | % | 164 | % | 0 | % |
1 | Commencement of operations. |
2 | Based on average shares outstanding. |
3 | Less than $0.005 per share. |
4 | Greater than $(0.005) per share. |
5 | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, if any, at net asset value during the period, and redemption on the last day of the period. Total return calculated for a period less than one year is not annualized. |
6 | Not annualized. |
7 | Annualized. |
8 | Portfolio turnover rate is not annualized and excludes the value of portfolio securities received or delivered as in-kind creations or redemptions in connection with the Fund’s capital share transactions. |
9 | Portfolio turnover rate for the period was greater than 0% yet less than 0.5% |
See notes to financial statements.
55
April 30, 2011
1. ORGANIZATION
IndexIQ ETF Trust (the “Trust”) was organized as a Delaware statutory trust on July 1, 2008 and is registered with the Securities and Exchange Commission (“SEC”) as a non-diversified, open-end, management investment company, as defined by the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust is currently comprised of ten active funds (collectively, the “Funds” and each individually, a “Fund”): IQ Hedge Multi-Strategy Tracker ETF, IQ Hedge Macro Tracker ETF, IQ Real Return ETF (formerly, IQ CPI Inflation Hedged ETF), IQ Global Resources ETF (formerly, IQ ARB Global Resources ETF), IQ Merger Arbitrage ETF (formerly, IQ ARB Merger Arbitrage ETF), IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ South Korea Small Cap ETF, IQ Taiwan Small Cap ETF, and IQ Global Agribusiness Small Cap ETF. The Funds are exchange-traded funds (“ETFs”), whose shares are listed on a stock exchange and traded like equity securities at market prices. The IQ Hedge Multi-Strategy Tracker ETF commenced operations on March 24, 2009; IQ Hedge Macro Tracker ETF commenced operations on June 8, 2009; IQ Real Return ETF and IQ Global Resources ETF commenced operations on October 26, 2009; IQ Merger Arbitrage ETF commenced operations on November 16, 2009; IQ Australia Small Cap ETF and IQ Canada Small Cap ETF commenced operations on March 22, 2010; IQ South Korea Small Cap ETF commenced operations on April 13, 2010; IQ Taiwan Small Cap ETF commenced operations on May 18, 2010 and IQ Global Agribusiness Small Cap ETF commenced operations on March 21, 2011.
The investment objective of the IQ Hedge Multi-Strategy Tracker ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Hedge Multi-Strategy Index, developed by Financial Development Holdco LLC (“IndexIQ”), the parent company of IndexIQ Advisors, LLC (the “Advisor”), the Funds’ investment advisor. The objective of the IQ Hedge Multi-Strategy Index is to track the “beta” portion of the returns (i.e., that portion of the returns of hedge funds that are non-idiosyncratic, or unrelated to manager skill) of hedge funds that employ various hedge fund investment styles, which may include but are not limited to global macro, long/short, event-driven, market neutral, emerging markets, fixed-income arbitrage and other strategies commonly used by hedge fund managers.
The investment objective of the IQ Hedge Macro Tracker ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Hedge Macro Index, developed by IndexIQ. The objective of the IQ Hedge Macro Index is to track the “beta” portion of the returns (i.e., that portion of the returns of hedge funds that are non-idiosyncratic, or unrelated to manager skill) of a combination of hedge funds pursuing a macro strategy and hedge funds pursuing an emerging markets strategy.
The investment objective of the IQ Real Return ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Real Return Index, developed by IndexIQ. The objective of the IQ Real Return Index (formerly, IQ CPI Inflation Hedged Index) is to provide investors with a hedge against the U.S. inflation rate by providing a “real return” or a return above the rate of inflation, as represented by the Consumer Price Index, a leading government measure of inflation in the U.S. economy.
The investment objective of the IQ Global Resources ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Global Resources Index, developed by IndexIQ. The objective of the IQ Global Resources Index (formerly, IQ ARB Global Resources Index) is to use momentum and valuation factors to identify global companies that operate in commodity-specific market segments and whose equity securities trade in developed markets, including the U.S.
The objective of the IQ Merger Arbitrage ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Merger Arbitrage Index, developed by IndexIQ. The objective of the IQ Merger Arbitrage Index (formerly, IQ ARB Merger Arbitrage Index) is to seek to identify investment opportunities in the acquisition and merger market segment globally.
The objective of the IQ Australia Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Australia Small Cap Index, developed by IndexIQ. The objective of the IQ Australia Small Cap Index is to track the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in Australia.
The objective of the IQ Canada Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Canada Small Cap Index, developed by
56
Notes to Financial Statements (continued)
April 30, 2011
IndexIQ. The objective of the IQ Canada Small Cap Index is to track the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in Canada.
The objective of the IQ South Korea Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ South Korea Small Cap Index, developed by IndexIQ. The objective of the IQ South Korea Small Cap Index is to track the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in South Korea.
The objective of the IQ Taiwan Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the performance of the IQ Taiwan Small Cap Index, developed by IndexIQ. The objective of the IQ Taiwan Small Cap Index is to track the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in Taiwan.
The objective of the IQ Global Agribusiness Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Global Agribusiness Small Cap Index, developed by IndexIQ. The objective of the IQ Global Agribusiness Small Cap Index is to track the overall performance of the global small capitalization sector of publicly traded companies engaged in the agribusiness sector.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
These financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which require management to make certain 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 reported amounts of increases and decreases in the net assets from operations during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Funds:
Indemnification
In the normal course of business, the Funds may enter into contracts that contain a variety of representations which provide general indemnifications for certain liabilities. Each Fund’s maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Investment Valuation
The Net Asset Value (“NAV”) of each Fund is determined as of the close of trading (generally, 4:00 PM Eastern Time) on each day the New York Stock Exchange Arca (“NYSE”) is open for trading. NAV per share is calculated by dividing a fund’s net assets by the number of fund shares outstanding. Securities and investment funds traded on any recognized national or foreign stock exchange are valued at the last quoted sale price, or if no sale price is available, at the bid price. Securities not listed on a national or foreign stock exchange may be valued on the basis of prices furnished by approved pricing services or at the closing bid price on the over-the-counter market.
If market quotations are not readily available, or if it is determined that a quotation of a security does not represent fair value, then the security is valued at a fair value as determined in good faith using procedures adopted by the Trust’s Board of Trustees (the “Board”). Market prices may not represent fair value, for example, if a security is thinly traded or if an event occurs between the market quotation and the time the security is to be valued which is expected to affect the value of the security. The circumstances in which the Board may fair value a security include, among others: the occurrence of events that are significant to a particular issuer, such as mergers, restructurings or defaults; the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or government actions; trading restrictions on securities; thinly traded securities; and market events such as trading halts and early market closings. Short-term securities with 60 days or less remaining to maturity are valued using the amortized cost method, which approximates current market value.
57
Notes to Financial Statements (continued)
April 30, 2011
Fair Value Measurement
Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and requires disclosure about fair value measurements. It also provides guidance on determining when there has been a significant decrease in the volume and level of activity for an asset or liability, when a transaction is not orderly, and how that information must be incorporated into fair value measurement. Under ASC 820, various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels as follows:
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
Factors considered in determining Level 2 and Level 3 fair value measurements may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.
There were no transfers between Level 1 and 2 securities during the year.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following summarizes inputs used as of April 30, 2011 in valuing the Funds assets and liabilities carried at fair value:
Level 1 | Level 2 | Level 3 | Total | |||||||||
IQ Hedge Multi-Strategy Tracker ETF | ||||||||||||
Investment Companies* | $ | 112,107,760 | $ | — | $ | — | $ | 112,107,760 | ||||
Other Financial Instruments** | (174,043 | ) | — | — | (174,043 | ) | ||||||
Short-Term Investment | 15,115,634 | — | — | 15,115,634 | ||||||||
Total | $ | 127,049,351 | $ | — | $ | — | $ | 127,049,351 | ||||
IQ Hedge Macro Tracker ETF | ||||||||||||
Investment Companies* | $ | 27,101,799 | $ | — | $ | — | $ | 27,101,799 | ||||
Other Financial Instruments** | (68,397 | ) | — | — | (68,397 | ) | ||||||
Short-Term Investment | 293,592 | — | — | 293,592 | ||||||||
Total | $ | 27,326,994 | $ | — | $ | — | $ | 27,326,994 | ||||
IQ Real Return ETF | ||||||||||||
Investment Companies* | $ | 12,811,711 | $ | — | $ | — | $ | 12,811,711 | ||||
Short-Term Investment | 8,770 | — | — | 8,770 | ||||||||
Total | $ | 12,820,481 | $ | — | $ | — | $ | 12,820,481 | ||||
58
Notes to Financial Statements (continued)
April 30, 2011
Level 1 | Level 2 | Level 3 | Total | |||||||||
IQ Global Resources ETF | ||||||||||||
Common Stocks† | $ | 72,620,555 | $ | — | $ | — | $ | 72,620,555 | ||||
Other Financial Instruments** | (832,048 | ) | — | — | (832,048 | ) | ||||||
Short-Term Investment | 5,514,201 | — | — | 5,514,201 | ||||||||
Total | $ | 77,302,708 | $ | — | $ | — | $ | 77,302,708 | ||||
IQ Merger Arbitrage ETF | ||||||||||||
Common Stocks * | $ | 18,418,309 | $ | — | $ | — | $ | 18,418,309 | ||||
Other Financial Instruments** | (309,005 | ) | — | — | (309,005 | ) | ||||||
Short-Term Investment | 4,071,964 | — | — | 4,071,964 | ||||||||
Total | $ | 22,181,268 | $ | — | $ | — | $ | 22,181,268 | ||||
IQ Australia Small Cap ETF | ||||||||||||
Common Stocks* | $ | 42,664,047 | $ | — | $ | — | $ | 42,664,047 | ||||
Rights* | — | 23,471 | — | 23,471 | ||||||||
Short-Term Investment | 401,914 | — | — | 401,914 | ||||||||
Total | $ | 43,065,961 | $ | 23,471 | $ | — | $ | 43,089,432 | ||||
IQ Canada Small Cap ETF | ||||||||||||
Common Stocks* | $ | 119,621,883 | $ | — | $ | — | $ | 119,621,883 | ||||
Short-Term Investment | 811,718 | — | — | 811,718 | ||||||||
Total | $ | 120,433,601 | $ | — | $ | — | $ | 120,433,601 | ||||
IQ South Korea Small Cap ETF | ||||||||||||
Common Stocks* | $ | 15,690,215 | $ | 88,569 | $ | — | $ | 15,778,784 | ||||
Short-Term Investment | 108,452 | — | — | 108,452 | ||||||||
Total | $ | 15,798,667 | $ | 88,569 | $ | — | $ | 15,887,236 | ||||
IQ Taiwan Small Cap ETF | ||||||||||||
Common Stocks* | $ | 4,441,710 | $ | — | $ | — | $ | 4,441,710 | ||||
Short-Term Investment | 11,079 | — | — | 11,079 | ||||||||
Total | $ | 4,452,789 | $ | — | $ | — | $ | 4,452,789 | ||||
IQ Global Agribusiness Small Cap ETF | ||||||||||||
Common Stocks† | $ | 54,484,389 | $ | — | $ | — | $ | 54,484,389 | ||||
Short-Term Investment | 447,092 | — | — | 447,092 | ||||||||
Total | $ | 54,931,481 | $ | — | $ | — | $ | 54,931,481 | ||||
* | Please refer to the Schedule of Investments to view securities segregated by industry type. |
** | Derivative instruments, including swap transactions and futures contracts, are valued at the net unrealized appreciation (depreciation) on the instrument. |
† | Please refer to the Schedule of Investments to view securities segregated by country. |
Tax Information, Dividends and Distributions to Shareholders and Uncertain Tax Positions
Each Fund intends to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986, as amended (“the Code”), by distributing substantially all of its net investment income and net realized gains to shareholders. Certain Funds also utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends’ paid deduction. Net investment income and net capital gains are typically distributed to shareholders at least annually. Dividends may be declared and paid more frequently to improve index tracking or to comply with the distribution requirements of the Code. In addition, the Funds may determine to distribute at least annually amounts representing the full dividend yield net of expenses on the underlying investment securities, as if the Fund owned the underlying investment securities for the entire dividend period in which case some portion of each distribution may result in a return of capital. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations which may differ from U.S. GAAP. These “book/tax” differences are either considered temporary or permanent in nature. To the extent
59
Notes to Financial Statements (continued)
April 30, 2011
these differences are permanent in nature, such amounts are reclassified within the components of net assets based on their Federal Tax basis treatment; temporary differences do not require reclassification. Dividends and distributions, which exceed earnings and profit for tax purposes are reported as a tax return of capital.
Management evaluates tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as an expense in the current year. The Funds have concluded that there is no tax liability resulting from uncertain income tax positions taken or expected to be taken. The Funds are required to analyze all open tax years. Open tax years are those years that are open for examination by the relevant income taxing authority. The returns of the Funds for the period from commencement of operations through April 30, 2011 are open for examination.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments, with maturities of three months or less when acquired.
Security Transactions
Security transactions are recorded as of the trade date. Realized gains and losses on sales of investment securities are calculated using the identified cost method.
Foreign Currency Translation
The books and records of the Funds are maintained in the U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the prevailing exchange rates of such currencies against the U.S. dollar. The market value of investment securities and the other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of investment securities, income and expenses are translated at the exchange rate prevailing on the respective dates of such transactions.
Although the net assets of the Funds are presented at the foreign exchange rates and market values at the close of the period, the Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held or sold during the period. Accordingly, such foreign currency gains/(losses) are included in the reported net realized and unrealized gains/(losses) on investment transactions.
Reported realized foreign currency gains or losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on each Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. Unrealized foreign exchange gains and losses arise from changes (due to the changes in the exchange rate) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end.
Investment Income and Expenses
Dividend income is recognized on the ex-dividend date. Interest income is accrued daily. The Funds’ investment income, expenses and unrealized and realized gains and losses are allocated daily. The Funds distribute substantially all of their net investment income to shareholders in the form of dividends. Distributions of realized capital gains by underlying funds are recorded as realized capital gains on the ex-date.
Recent Accounting Pronouncements
The Funds have adopted Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends fair value disclosure requirements by requiring an entity to: (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (ii) present separately information about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements (i.e. gross presentation). Additionally, ASU 2010-06 clarifies existing disclosure requirements related to the level of disaggregation for each class of assets and liabilities and disclosures about inputs and valuation techniques for fair value measurements classified as either Level 2 or Level 3. The new disclosures were effective for interim and
60
Notes to Financial Statements (continued)
April 30, 2011
annual reporting periods beginning after December 15, 2009, except for the disclosures requiring separate presentation of information about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of the new disclosure requirements in ASU 2010-06 did not have, and will not have, any impact on the Funds’ net asset value or results from operations.
In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in the U.S. and IFRSs (“ASU 2011-04”). ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Management is currently evaluating the implications of ASU No. 2011-04 and its impact on the financial statements.
3. INVESTMENT MANAGEMENT AND OTHER AGREEMENTS
Advisory Agreement
Under the terms of the Investment Advisory Agreement (the “Advisory Agreement”) the Funds pay the Advisor an advisory fee, based on of the average daily net assets of each Fund, at the following annual rates:
Fund | Rate |
IQ Hedge Multi-Strategy Tracker ETF | 0.75% |
IQ Hedge Macro Tracker ETF | 0.75% |
IQ Real Return ETF | 0.48% |
IQ Global Resources ETF | 0.75% |
IQ Merger Arbitrage ETF | 0.75% |
IQ Australia Small Cap ETF | 0.69% |
IQ Canada Small Cap ETF | 0.69% |
IQ South Korea Small Cap ETF | 0.79% |
IQ Taiwan Small Cap ETF | 0.79% |
IQ Global Agribusiness Small Cap ETF | 0.75% |
Such fee is accrued daily and paid monthly. The Advisor has retained Mellon Capital Management Corporation (“MCM”), which is unaffiliated with the Advisor, to serve as the sub-advisor to the Funds (other than the IQ Merger Arbitrage ETF) pursuant to a sub-advisory agreement, to conduct the day-to-day portfolio management of the Funds. Pursuant to MCM’s sub-advisory agreement, the Advisor paid MCM an annual fee, payable monthly for its services. Effective, February 11, 2011, MCM resigned as sub-advisor to the Funds and the Advisor has assumed responsibility for management of the Funds. The Advisor has retained Esposito Partners, LLC (“Esposito”), which is unaffiliated with the Advisor, to serve as the sub-advisor to the IQ Merger Arbitrage ETF pursuant to a sub-advisory agreement, to conduct the day-to-day portfolio management of the Fund. Pursuant to Esposito’s sub-advisory agreement, the Advisor pays Esposito an annual fee, payable monthly, for its services. Effective February 1, 2011, the sub-advisory agreement by and between the Advisor and Esposito was given notice to terminate effective as of May 19, 2011.
The Advisor has agreed to pay all expenses of the Funds, except brokerage and other transaction expenses; extraordinary legal fees or expenses, such as those for litigation or arbitration; compensation and expenses of the Independent Trustees, counsel to the Independent Trustees, and the Funds’ chief compliance officer; extraordinary expenses; distribution fees and expenses paid by the Funds under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act; and the advisory fee payable to the Advisor hereunder.
61
Notes to Financial Statements (continued)
April 30, 2011
Distribution Agreement
The Funds have adopted a Distribution Services Agreement with ALPS Distributors, Inc. (the “Distributor”) pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Rule 12b-1 plan, the Funds are authorized to pay an amount up to 0.10% of each Fund’s average daily net assets each year for certain distribution-related activities. The Board has resolved not to authorize the payment of Rule 12b-1 fees prior to June 30, 2011. However, in the event Rule 12b-1 fees are charged in the future, they will be paid out of each Fund’s assets. The Advisor and its affiliates may, out of their own resources, pay amounts to third parties for distribution or marketing services on behalf of the Funds.
Administrator, Custodian and Transfer Agent
The Bank of New York Mellon (in each capacity, the “Administrator,” “Custodian” or “Transfer Agent”) is an affiliate of the former sub-advisor and serves as the Funds’ Administrator, Custodian and Transfer Agent pursuant to the Fund Administration and Accounting Agreement. Under the terms of this agreement, the Advisor pays the Funds’ Administrative, Custody and Transfer Agency fees. The Bank of New York Mellon is a subsidiary of The Bank of New York Mellon Corporation, a financial holding company.
4. ORGANIZATIONAL AND OFFERING COSTS
Expenses incurred in connection with organizing and the offering of the Trust and the Funds were paid by the Advisor. The Funds do not have an obligation to reimburse the Advisor or its affiliates for organizational and offering expenses paid on their behalf.
5. CAPITAL SHARE TRANSACTIONS
As of April 30, 2011, there was an unlimited number of no par value shares of beneficial interest authorized by the Trust. Shares are created and redeemed on a continuous basis at NAV only in groups of 50,000 shares called Creation Units. Except when aggregated in Creation Units, shares are not redeemable. Transactions in shares of the Funds are disclosed in detail in the Statement of Changes in Net Assets. Only “Authorized Participants” may purchase or redeem shares directly from the Funds. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of National Securities Clearing Corporation or (ii) a Depository Trust Company (“DTC”) participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized Participants or have the resources to create and redeem whole Creation Units. Therefore, they will be unable to purchase or redeem the shares directly from the Fund. Rather, most retail investors will purchase shares in the secondary market with the assistance of a broker and will be subject to customary brokerage commissions or fees.
6. FEDERAL INCOME TAX
At April 30, 2011, the cost of investments on a tax basis including the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period were as follows:
Fund | Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | |||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 124,066,617 | $ | 3,244,766 | $ | 87,989 | $ | 3,156,777 | |||
IQ Hedge Macro Tracker ETF | 25,940,678 | 1,535,395 | 80,682 | 1,454,713 | |||||||
IQ Real Return ETF | 12,730,564 | 89,917 | — | 89,917 | |||||||
IQ Global Resources ETF | 73,992,106 | 4,864,702 | 722,052 | 4,142,650 | |||||||
IQ Merger Arbitrage ETF | 21,970,922 | 635,136 | 115,785 | 519,351 | |||||||
IQ Australia Small Cap ETF | 40,842,919 | 3,834,450 | 1,587,937 | 2,246,513 | |||||||
IQ Canada Small Cap ETF | 114,461,767 | 10,518,795 | 4,546,961 | 5,971,834 | |||||||
IQ South Korea Small Cap ETF | 14,307,722 | 2,171,241 | 591,727 | 1,579,514 | |||||||
IQ Taiwan Small Cap ETF | 4,089,285 | 479,098 | 115,594 | 363,504 | |||||||
IQ Global Agribusiness Small Cap ETF | 53,490,594 | 1,698,857 | 257,970 | 1,440,887 |
The differences between book and tax basis cost of investments and net unrealized appreciation (depreciation) are primarily attributable to wash sale loss deferrals, pass through investments and the realization for tax purposes of unrealized gains on investments in passive foreign investment companies held at April 30, 2011.
62
Notes to Financial Statements (continued)
April 30, 2011
At April 30, 2011, the components of earnings/loss on a tax-basis were as follows:
Fund | Undistributed Net Investment Income | Undistributed Capital and Other Losses | Net Unrealized Appreciation/ (Depreciation) | Total Earnings/ (Losses) | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 651,798 | $ | (9,035,815 | ) | $ | 3,156,777 | $ | (5,227,240 | ) | ||
IQ Hedge Macro Tracker ETF | 40,017 | (974,565 | ) | 1,454,713 | 520,165 | |||||||
IQ Real Return ETF | — | 70,732 | 89,916 | 160,648 | ||||||||
IQ Global Resources ETF | 942,904 | (856,229 | ) | 4,143,899 | 4,230,574 | |||||||
IQ Merger Arbitrage ETF | — | (1,701,277 | ) | 520,352 | (1,180,925 | ) | ||||||
IQ Australia Small Cap ETF | 1,489,548 | 10,932 | 2,256,014 | 3,756,494 | ||||||||
IQ Canada Small Cap ETF | 569,493 | (2,953,678 | ) | 5,972,423 | 3,588,238 | |||||||
IQ South Korea Small Cap ETF | 180,574 | — | 1,581,671 | 1,762,245 | ||||||||
IQ Taiwan Small Cap ETF | 125,635 | (25,145 | ) | 366,215 | 466,705 | |||||||
IQ Global Agribusiness Small Cap ETF | 73,345 | — | 1,439,449 | 1,512,794 |
The differences between book and tax basis components of net assets are primarily attributable to wash sale loss deferrals and other book and tax differences including foreign currency contracts, swap contracts and post-October losses.
At April 30, 2011, the effect of permanent book/tax reclassifications resulted in increases/(decreases) to the components of net assets as follows:
Fund | Undistributed Net Investment Income/ (Accumulated Net Investment Loss) | Accumulated Net Realized Gain/(Loss) on Investments | Paid-in Capital | |||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | (322,589 | ) | $ | (9,603,222 | ) | $ | 9,925,811 | ||
IQ Hedge Macro Tracker ETF | (108,724 | ) | (1,158,607 | ) | 1,267,331 | |||||
IQ Real Return ETF | 42,199 | (156,493 | ) | 114,294 | ||||||
IQ Global Resources ETF | 2,606 | (4,830,076 | ) | 4,827,470 | ||||||
IQ Merger Arbitrage ETF | (47,075 | ) | (573,701 | ) | 620,776 | |||||
IQ Australia Small Cap ETF | 143,816 | (547,440 | ) | 403,624 | ||||||
IQ Canada Small Cap ETF | 193,561 | (4,458,454 | ) | 4,264,893 | ||||||
IQ South Korea Small Cap ETF | 22,560 | (22,669 | ) | 109 | ||||||
IQ Taiwan Small Cap ETF | (20,500 | ) | (51,880 | ) | 72,380 | |||||
IQ Global Agribusiness Small Cap ETF | (1,715 | ) | 1,715 | — |
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to the tax treatment of net operating losses, distribution reclassifications and foreign currency reclassifications.
The tax character of distributions paid during the year ended April 30, 2011 is as follows:
Fund | Ordinary Income | |
IQ Hedge Multi-Strategy Tracker ETF | $ | 1,865,556 |
IQ Hedge Macro Tracker ETF | 133,209 | |
IQ Real Return ETF | 1,985 | |
IQ Global Resources ETF | 414,505 | |
IQ Merger Arbitrage ETF | 312,056 | |
IQ Australia Small Cap ETF | 438,192 | |
IQ Canada Small Cap ETF | 468,240 | |
IQ South Korea Small Cap ETF | 9,440 | |
IQ Taiwan Small Cap ETF | 54,155 | |
IQ Global Agribusiness Small Cap ETF | — |
63
Notes to Financial Statements (continued)
April 30, 2011
Capital losses incurred after October 31 (“Post-October Losses”) within the taxable year can be deemed to arise on the first business day of the Funds’ next taxable year. For the year ended April 30, 2011, the Funds incurred and elected to defer to May 1, 2011 post-October losses of:
Fund | Post-October Currency Losses | Post-October Capital Losses | ||||
IQ Hedge Multi-Strategy Tracker ETF | $ | — | $ | 2,590,843 | ||
IQ Hedge Macro Tracker ETF | — | 363,339 | ||||
IQ Real Return ETF | — | — | ||||
IQ Global Resources ETF | 18,649 | 837,580 | ||||
IQ Merger Arbitrage ETF | 50,878 | 679,216 | ||||
IQ Australia Small Cap ETF | 43,349 | — | ||||
IQ Canada Small Cap ETF | — | 2,792,257 | ||||
IQ South Korea Small Cap ETF | — | — | ||||
IQ Taiwan Small Cap ETF | 25,145 | — | ||||
IQ Global Agribusiness Small Cap ETF | — | — |
At April 30, 2011, the Funds listed below had net capital loss carryforwards for Federal income tax purposes which are available for offset against future taxable net capital gains. The amounts were determined after adjustments for certain differences between financial reporting and tax purposes, such as wash sale losses. Accordingly, no capital gain distributions are expected to be paid to shareholders of these Funds until future net capital gains have been realized in excess of the available capital loss carryforwards. There is no assurance that any Fund will be able to utilize all of its capital loss carryforwards before they expire. These loss carryforwards expire in amounts and fiscal years as follows:
Fund | April 30, 2018 | April 30, 2019 | |||
IQ Hedge Multi-Strategy Tracker ETF | $ | 841,667 | $ | 5,603,304 | |
IQ Hedge Macro Tracker ETF | 80,017 | 531,209 | |||
IQ Real Return ETF | — | — | |||
IQ Global Resources ETF | — | — | |||
IQ Merger Arbitrage ETF | — | 971,183 | |||
IQ Australia Small Cap ETF | — | — | |||
IQ Canada Small Cap ETF | — | 161,421 | |||
IQ South Korea Small Cap ETF | — | — | |||
IQ Taiwan Small Cap ETF | — | — | |||
IQ Global Agribusiness Small Cap ETF | — | — |
7. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) for the year ended April 30, 2011 are as follows:
Fund | Purchases | Sales | Purchases In-Kind | Sales In-Kind | |||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 196,204,240 | $ | 149,253,275 | $ | 89,502,241 | $ | 119,674,155 | |||
IQ Hedge Macro Tracker ETF | 19,440,197 | 10,371,765 | 20,608,969 | 14,903,401 | |||||||
IQ Real Return ETF | 8,705,615 | 5,872,401 | 5,357,130 | 8,959,065 | |||||||
IQ Global Resources ETF | 59,373,247 | 39,325,942 | 80,070,478 | 45,127,424 | |||||||
IQ Merger Arbitrage ETF | 69,631,267 | 63,888,524 | 13,728,432 | 20,725,255 | |||||||
IQ Australia Small Cap ETF | 13,522,965 | 9,756,616 | 29,988,456 | 3,911,854 | |||||||
IQ Canada Small Cap ETF | 27,201,411 | 22,580,421 | 119,145,948 | 21,217,738 | |||||||
IQ South Korea Small Cap ETF | 16,251,129 | 4,729,905 | — | — | |||||||
IQ Taiwan Small Cap ETF | 9,763,116 | 5,898,098 | — | — | |||||||
IQ Global Agribusiness Small Cap ETF | 1,263,143 | — | 51,779,585 | — |
64
Notes to Financial Statements (continued)
April 30, 2011
8. DERIVATIVE FINANCIAL INSTRUMENTS
Futures Contracts
Certain Funds may invest in futures contracts (“futures”) in order to replicate exposures to their respective underlying index components. Investments in futures may increase or leverage exposure to a particular market risk, thereby increasing price volatility of derivative instruments a Fund holds. No price is paid or received by a Fund upon the purchase of a futures contract. Initially, a Fund will be required to deposit with the broker an amount of cash or cash equivalents, known as initial margin, based on the value of the contract. Subsequent payments, called variation margin, to and from the broker, will be made on a daily basis as the price of the underlying instruments fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as ‘marking-to-the-market.’ Once a final determination of variation margin is made, additional cash is required to be paid by or released to a Fund, and a Fund will realize a loss or gain. During the period, the IQ Merger Arbitrage ETF and IQ Global Resources ETF utilized futures contracts to effect short exposure to U.S. and international equity returns, while the IQ Hedge Multi-Strategy ETF and IQ Hedge Macro Tracker ETF utilized futures to effect short exposure to U.S. small cap equity and international equity returns.
Swap Transactions
Certain Funds use total return swaps to achieve the same exposures as their underlying index components. Total return swaps give the Funds the right to receive the appreciation in the value of a specified security, index or other instrument in return for a fee paid to the counterparty, which will typically be an agreed upon interest rate. Total return swaps can also be used to replicate an exposure to a short position in an asset class where the Fund has the right to receive the depreciation in value of a specified security, index or other instrument. If the underlying asset in a total return swap declines over the term of the swap, a Fund may also be required to pay the dollar value of that to the counterparty. The Funds segregate or receive liquid assets, which may include securities, cash or cash equivalents, to cover the daily marked-to-market net obligations under outstanding swap agreements. During the period, the IQ Hedge Multi-Strategy Tracker ETF and IQ Hedge Macro Tracker ETF utilized swaps to effect short exposure to the real estate asset class, which was consistent with the exposure of both Funds’ underlying indexes. At April 30, 2011, the IQ Hedge Multi-Strategy Tracker ETF posted $4,510,121 in cash as collateral for swaps.
Pursuant to documentation governing the Funds’ swap transactions with Morgan Stanley Capital Services Inc. (“Morgan Stanley”), Morgan Stanley has the right to terminate the swaps early in the event that the net assets of the given Fund decline below specific levels set forth in the documentation (“net asset contingent features”). In the event of early termination, Morgan Stanley may require the Funds to pay or receive a settlement amount in connection with the terminated swap transaction. As of April 30, 2011, the Funds have not triggered the conditions under such documentation that will give the counterparty the right to call for an early termination. As of such date, the settlement values of these contracts were approximately equal to the fair value of such contracts.
65
Notes to Financial Statements (continued)
April 30, 2011
At April 30, 2011, the fair values of derivative instruments reflected on the Statements of Assets and Liabilities were as follows:
Liability Derivatives
Equity Risk | Total | ||||
IQ Hedge Multi-Strategy Tracker ETF | |||||
Unrealized depreciation on futures contracts1 | $ | 174,043 | $ | 174,043 | |
IQ Hedge Macro Tracker ETF | |||||
Unrealized depreciation on futures contracts1 | 68,397 | 68,397 | |||
IQ Global Resources ETF | |||||
Unrealized depreciation on futures contracts1 | 832,048 | 832,048 | |||
IQ Merger Arbitrage ETF | |||||
Unrealized depreciation on futures contracts1 | 309,005 | 309,005 |
1 | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only unsettled variation margin is reported within the Statements of Assets and Liabilities. |
Transactions in derivative instruments reflected on the Statement of Operations during the year ended April 30, 2011, were as follows:
Equity Risk | Total | ||||||
IQ Hedge Multi-Strategy Tracker ETF | |||||||
Realized loss | |||||||
Futures contracts | $ | (2,357,759 | ) | $ | (2,357,759 | ) | |
Swap transactions | (2,470,570 | ) | (2,470,570 | ) | |||
Total realized loss | $ | (4,828,329 | ) | $ | (4,828,329 | ) | |
Unrealized appreciation (depreciation) | |||||||
Futures contracts | $ | (174,043 | ) | $ | (174,043 | ) | |
Swap transactions | 484,566 | 484,566 | |||||
Total unrealized appreciation | $ | 310,523 | $ | 310,523 | |||
IQ Hedge Macro Tracker ETF | |||||||
Realized loss | |||||||
Futures contracts | $ | (7,477 | ) | $ | (7,477 | ) | |
Swap transactions | (753,315 | ) | (753,315 | ) | |||
Total realized loss | $ | (760,792 | ) | $ | (760,792 | ) | |
Unrealized appreciation (depreciation) | |||||||
Futures contracts | $ | (68,397 | ) | $ | (68,397 | ) | |
Swap transactions | 49,574 | 49,574 | |||||
Total unrealized depreciation | $ | (18,823 | ) | $ | (18,823 | ) | |
66
Notes to Financial Statements (continued)
April 30, 2011
Equity Risk | Total | ||||||
IQ Real Return ETF | |||||||
Realized loss | |||||||
Swap transactions | $ | (12,090 | ) | $ | (12,090 | ) | |
Total realized loss | $ | (12,090 | ) | $ | (12,090 | ) | |
IQ Global Resources ETF | |||||||
Realized loss | |||||||
Futures contracts | $ | (884,818 | ) | $ | (884,818 | ) | |
Total realized loss | $ | (884,818 | ) | $ | (884,818 | ) | |
Unrealized depreciation | |||||||
Futures contracts | $ | (828,448 | ) | $ | (828,448 | ) | |
Total unrealized depreciation | $ | (828,448 | ) | $ | (828,448 | ) | |
IQ Merger Arbitrage ETF | |||||||
Realized loss | |||||||
Futures contracts | $ | (519,978 | ) | $ | (519,978 | ) | |
Total realized loss | $ | (519,978 | ) | $ | (519,978 | ) | |
Unrealized depreciation | |||||||
Futures contracts | $ | (380,030 | ) | $ | (380,030 | ) | |
Total unrealized depreciation | $ | (380,030 | ) | $ | (380,030 | ) | |
For the year ended April 30, 2011, the monthly average notional values of the derivatives held by the Funds were as follows:
Fund | Number of Futures Contracts | Market Value of Futures Contracts | ||||
IQ Hedge Multi-Strategy ETF | (97 | ) | $ | (7,172,710 | ) | |
IQ Hedge Macro Tracker ETF | (8 | ) | (586,620 | ) | ||
IQ Global Resources ETF | (99 | ) | (7,017,730 | ) | ||
IQ Merger Arbitrage ETF | (79 | ) | (5,254,595 | ) |
Fund | Swap Contracts | ||
IQ Hedge Multi-Strategy ETF | $ | 5,760,378 | |
IQ Hedge Macro Tracker ETF | 2,019,706 | ||
IQ Real Return ETF | (296 | ) |
9. RISKS INVOLVED WITH INVESTING IN THE FUNDS
The Funds are subject to the principal risks described below, some or all of these risks may adversely affect a Fund’s NAV, trading price, yield, total return and ability to meet its investment objective. As with any investment, an investment in a Fund could result in a loss or the performance of the Fund could be inferior to that of other investments.
Fund of Funds Risk*
Certain of the Funds’ investment performance, because they are funds of funds, depends on the investment performance of the Underlying ETFs in which they invest. An investment in any such Fund is subject to the risks associated with the Underlying ETFs that comprise its Underlying Index. Such a Fund will indirectly pay a proportional share of the asset-based fees, if any, of the Underlying ETFs in which it invests.
67
Notes to Financial Statements (continued)
April 30, 2011
Exchange Traded Vehicle Risk
Unlike an investment in a mutual fund, the value of the Fund’s investment in ETFs, ETVs and ETNs is based on stock market prices and the Fund could lose money due to stock market developments, the failure of an active trading market to develop or exchange trading halts or de-listings. Federal law prohibits the Fund from acquiring investment company shares, including shares of ETFs, in excess of specific thresholds unless exempted by rule, regulation or exemptive order. These prohibitions may prevent the Fund from allocating its investments to ETFs in an optimal manner.
Index Risk
The Underlying Indexes are new and have limited historical performance data that is not predictive of future results. In addition, the Underlying Indexes and the Funds rebalance only on a monthly or quarterly basis, which may cause the performance of the Underlying Indexes and the Funds to deviate from that of the market exposure that they are trying to achieve.
Tracking Error Risk
Each Fund’s performance may not match its Underlying Index during any period of time. Although each Fund attempts to track the performance of its Underlying Index, a Fund may not be able to duplicate its exact composition or return for any number of reasons, including but not limited to risk that the strategies used by the Advisor and MCM or Esposito, as applicable, to match the performance of the Underlying Index may fail to produce the intended results, liquidity risk and new fund risk, as well as the incurring of Fund expenses, which the Underlying Index does not incur.
Foreign Securities Risk
Certain of the Funds invest directly or indirectly (through Underlying ETFs) in the securities of non-U.S. issuers, which involves risks beyond those associated with investments in U.S. securities. These additional risks include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability.
Small Capitalization Companies Risk**
Certain of the Funds invest primarily in the stocks of small capitalization companies, which may be more volatile than those of larger companies. Stock prices of small capitalization companies are also more vulnerable than those of large capitalization companies to adverse business and economic developments, and the stocks of small capitalization companies may be thinly traded, making it difficult to buy and sell them.
New Fund Risk***
The Funds are new funds. As new funds, there can be no assurance that the Funds will grow to or maintain an economically viable size, in which case the Funds may experience greater tracking error to their Underlying Indexes than they otherwise would be at higher asset levels or they could ultimately liquidate.
* | Applies to IQ Hedge Multi-Strategy Tracker ETF, IQ Hedge Macro Tracker ETF and IQ Real Return ETF. |
** | Applies to IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ South Korea Small Cap ETF, IQ Taiwan Small Cap ETF and IQ Global Agribusiness Small Cap ETF. |
*** | Applies to IQ Taiwan Small Cap ETF and IQ Global Agribusiness Small Cap ETF. |
10. SUBSEQUENT EVENTS
On May 19, 2011, the Sub-Advisory Agreement by and between the Advisor and Esposito was terminated.
In accordance with the provision set forth in FASB ASC 855-10, Subsequent Events, Management has evaluated events and transactions for potential recognition or disclosure through the date this report was issued. Management has determined that, except as set forth above, there are no material events that would require disclosure through this date.
68
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of IndexIQ ETF Trust:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of IndexIQ ETF Trust (comprising, respectively, IQ Hedge Multi-Strategy Tracker ETF, IQ Hedge Macro Tracker ETF, IQ Real Return ETF (formerly IQ CPI Inflation Hedged ETF), IQ Global Resources ETF (formerly IQ ARB Global Resources ETF), IQ Merger Arbitrage ETF (formerly IQ ARB Merger Arbitrage ETF), IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ South Korea Small Cap ETF, IQ Taiwan Small Cap ETF and IQ Global Agribusiness Small Cap ETF) (collectively, the “Funds”) as of April 30, 2011, and the related statements of operations and changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of April 30, 2011, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds constituting the IndexIQ ETF Trust at April 30, 2011, and the results of their operations, the changes in their net assets and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
New York, New York
June 29, 2011
69
Supplemental Information (unaudited)
Federal Tax Status of Dividends Declared During the Tax Year
Qualified Dividend Income — Certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of ordinary income distributions for the year ended April 30, 2011 taxed at a maximum rate of 15% is as follows:
IQ Hedge Multi-Strategy Tracker ETF | 82.24 | % |
IQ Hedge Macro Tracker ETF | 100.00 | % |
IQ Real Return ETF | — | % |
IQ Global Resources ETF | 26.45 | % |
IQ Merger Arbitrage ETF | 3.05 | % |
IQ Australia Small Cap ETF | 36.18 | % |
IQ Canada Small Cap ETF | 28.92 | % |
IQ South Korea Small Cap ETF | 28.27 | % |
IQ Taiwan Small Cap ETF | 6.58 | % |
IQ Global Agribusiness Small Cap ETF | — | % |
Dividends Received Deduction — For corporate shareholders, the percentage of ordinary income distributions for the year ended April 30, 2011 that qualifies for the dividends received deduction is as follows:
IQ Hedge Multi-Strategy Tracker ETF | 78.77 | % |
IQ Hedge Macro Tracker ETF | 100.00 | % |
IQ Real Return ETF | — | % |
IQ Global Resources ETF | 10.83 | % |
IQ Merger Arbitrage ETF | 8.65 | % |
IQ Australia Small Cap ETF | 0.00 | % |
IQ Canada Small Cap ETF | 0.00 | % |
IQ South Korea Small Cap ETF | 0.00 | % |
IQ Taiwan Small Cap ETF | 0.00 | % |
IQ Global Agribusiness Small Cap ETF | — | % |
Foreign Taxes Paid — The following Funds elect under the Internal Revenue Code Section 853 to pass through foreign taxes paid to shareholders. The total amounts of foreign taxes passed through to shareholders on a per share basis for the year ended April 30, 2011, were was follows:
Foreign Taxes Per Share | |||
IQ Hedge Multi-Strategy Tracker ETF | $ | — | |
IQ Hedge Macro Tracker ETF | — | ||
IQ Real Return ETF | — | ||
IQ Global Resources ETF | 0.0148 | ||
IQ Merger Arbitrage ETF | — | ||
IQ Australia Small Cap ETF | 0.0085 | ||
IQ Canada Small Cap ETF | 0.0234 | ||
IQ South Korea Small Cap ETF | 0.0274 | ||
IQ Taiwan Small Cap ETF | 0.1335 | ||
IQ Global Agribusiness Small Cap ETF | 0.0052 |
70
Board Review of Investment Advisory Agreement (unaudited)
At the March 15, 2011 meeting of the Board of Trustees (the “Board”) of IndexIQ ETF Trust (the “Trust”), the Board, including those Trustees who are not “interested persons” of the Trust (the “Independent Trustees”), as that term is defined in the Investment Company Act of 1940, as amended (“1940 Act”), approved IndexIQ Advisors LLC (“IndexIQ”) to continue to serve as investment adviser to the Fund and approved the continuation of the investment advisory agreement between IndexIQ and the Trust with respect to the Fund (the “Investment Advisory Agreement”), upon the same terms and conditions set forth therein, for the period February 2, 2011 until February 2, 2012. In connection with considering approval of the Investment Advisory Agreement, the Independent Trustees met in executive session with independent counsel, who provided assistance and advice.
In considering the approval of the continuation of the Investment Advisory Agreement, the Independent Trustees reviewed the materials provided for the Meeting by IndexIQ, including: (i) a copy of the Investment Advisory Agreement with IndexIQ; (ii) information describing the nature, quality, and extent of the services that IndexIQ provides to the Funds, and the fees that IndexIQ receives from the Funds; (iii) information concerning business and operations, compliance program and portfolio management team of IndexIQ; (iv) a copy of the current Form ADV for IndexIQ; and (v) memoranda from Katten Muchin Rosenman LLP on the fiduciary responsibilities of trustees, including the Independent Trustees, in considering advisory arrangements under the 1940 Act. The independent Trustees also considered the information presented at Board meetings throughout the year. In addition, the Independent Trustees received data comparing the advisory fees, expenses and performance of the Funds with expenses and performance of other exchange-traded funds (“ETFs”) with similar investment objectives and policies.
In considering the approval of the continuation of the Investment Advisory Agreement, the Independent Trustees reviewed and analyzed the factors they deemed relevant, including: (1) the nature, quality, and extent of the services provided to the Funds; (2) the personnel and operations of IndexIQ; (3) the investment performance of each Fund; (4) IndexIQ’s financial condition and profitability; (5) potential “fall-out” benefits to IndexIQ and its affiliates (i.e., ancillary benefits that may be realized by IndexIQ and its affiliates from IndexIQ’s relationship with the Funds); and (6) possible conflicts of interest. In particular, the Independent Trustees considered and discussed the following with respect to each Fund:
(a) | The nature, extent, and quality of services provided to the Funds by IndexIQ. The Independent Trustees reviewed the services that IndexIQ provides to the Funds. The Independent Trustees noted the responsibilities that IndexIQ has as the Funds’ investment adviser, including overall supervisory responsibility for the general management and investment of each Fund’s securities portfolio, daily monitoring of tracking error and quarterly reporting to the Board, and the implementation of Board directives as they relate to the Funds. | |
The Independent Trustees reviewed the experience, resources, and strengths of IndexIQ in managing other ETF as well as the IndexIQ Trust fund. Based on their consideration and review of the foregoing information, the Independent Trustees determined that the Funds were likely to continue to benefit from the nature, quality, and extent of these services, as well as IndexIQ’s ability to render such services based on its experience, operations, and resources. | ||
(b) | Comparison of services provided and fees charged by IndexIQ and other investment advisers to similar clients, and the cost of the services provided and profits realized by IndexIQ from its relationship with the Funds. The Independent Trustees then compared both the services rendered and the fees paid pursuant to the Investment Advisory Agreement to contracts of other registered investment advisers providing services to similar ETFs. In particular, the Independent Trustees compared each Fund’s advisory fee and expense ratio to other investment companies considered to be in each such Fund’s peer group. | |
After comparing each Fund’s fees with those of other ETFs in the Fund’s peer group, and in light of the nature, quality, and extent of services provided by IndexIQ and the costs incurred by IndexIQ in rendering those services, the Independent Trustees concluded that the level of fees paid to IndexIQ with respect to each Fund were fair and reasonable. | ||
(c) | IndexIQ’s profitability and the extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale. The Independent Trustees discussed with IndexIQ the costs and profitability of IndexIQ in connection with its serving as investment adviser to each Fund, including operational costs. |
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Board Review of Investment Advisory Agreement (unaudited) (continued)
(d) | Investment performance of IndexIQ. The Independent Trustees considered the investment performance of the Funds, including tracking error. In particular, the Independent Trustees considered the investment performance of the Funds relative to their stated objectives and the success of IndexIQ in reaching such objectives. The Independent Trustees considered each Fund’s investment performance compared to the benchmark index that each Fund uses for comparison in its prospectus and shareholder reports. The Independent Trustees also considered each Fund’s investment performance compared to the average of the respective Fund’s peer group. | |
The Independent Trustees also received and considered information about the premium/discount history of the Funds, which illustrated the number of times that the market price of the Funds trading on the secondary market closed above or below the net asset value (“NAV”) of the Funds, and by how much, measured in basis points. |
Conclusion. No single factor was determinative to the decision of the Independent Trustees. Based on the foregoing and such other matters as were deemed relevant, the Independent Trustees concluded that the advisory fee rates and total expense ratios were reasonable in relation to the services provided by IndexIQ to the Funds, as well as the costs incurred and benefits gained by IndexIQ in providing such services. The Independent Trustees also found the investment advisory fees to be reasonable in comparison to the fees charged by investment advisers to other comparable ETFs of similar size. As a result, the Independent Trustees decided to recommend to the Board the approval of the Investment Advisory Agreement with IndexIQ.
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Board of Trustees and Officers (unaudited)
The business of the Trust is managed under the direction of the Trust’s Board of Trustees. The Board elects the officers of the Trust who are responsible for administering the Trust’s day-to-day operations. Each Trustee serves until his or her successor is duly elected or appointed and qualified.
The name, year of birth, address and principal occupations during the past five years for each Trustee and officer of the Trust is set forth below, along with the other public directorships held by the Trustees.
Independent TrusteesName and Year of Birth1 | Position(s) Held with Trust | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past 5 Years3 | Number of Portfolios in Fund Complex Overseen by Trustee4 | Other Directorships Held by Trustee | |||||
Reena Aggarwal 1957 | Trustee | Since August 2008 | Deputy Dean, McDonough School of Business, Georgetown University (2006 to 2008); Visiting Professor of Finance, Sloan School of Management, MIT (2005 to 2006); Interim Dean, McDonough School of Business, Georgetown University (2004 to 2005); Stallkamp Faculty Fellow and Professor of Finance, McDonough School of Business, Georgetown University (2003 to present). | 11 | FBR Funds (11 portfolios) (2006-2011) | |||||
Gene Chao 1970 | Trustee | Since August 2008 | Vice President — Global Industries Strategy & Solutions, Juniper Networks (2011 to present); Vice President and GM — Global Network Services & Sales — Hewlett-Packard Company (2010 to 2011); Vice President — Strategic Services, Dimension Data, Americas (2007 to 2010); Senior Vice President — Strategic Outsourcing, France Telecom Americas (2004 to 2007). | 11 | None | |||||
Interested Trustee5 | ||||||||||
Adam S. Patti 1970 | Chairman and Trustee President
| Since November 2008 Since July 2008 | Chairman, Trustee, President and Principal Executive, IndexIQ Trust (2008 to present); Chief Executive Officer, the Advisor (2007 to present); Chief Executive Officer, the Advisor (2007 to present); Chief Executive Officer, IndexIQ (2006 to present); Associate Publisher, Time Inc. (2006). | 11 | None | |||||
Officers of the Trust
Name and Year of Birth1 | Position(s) Held with Trust | Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | |||
Gregory D. Bassuk 1972 | Since July 2008 | Chief Compliance Officer, the Advisor (2008 to present); Secretary, IndexIQ Trust (2008 to present); Chairman and Trustee, IndexIQ ETF Trust (July 2008 to November 2008); Chairman and Trustee, IndexIQ Trust (February 2008 to November 2008); Chief Operating Officer, the Advisor (2007 to present); Chief Operating Officer, IndexIQ (2006 to present); Director, Time Inc. (2004 to 2006). | ||||
David Fogel 1971 | Treasurer, Principal Financial Officer and Chief Compliance Officer | Since October 2008 | Treasurer, Principal Financial Officer and Chief Compliance Officer, IndexIQ Trust (2008 to present); Executive Vice President, IndexIQ (2006 to present); Vice President, Groton Partners LLC (2005 to 2006). |
1 | The address of each Trustee or officer is c/o IndexIQ, 800 Westchester Avenue, Suite N-611, Rye Brook, New York 10573. |
2 | Trustees and Officers serve until their successors are duly elected and qualified. |
3 | Principal occupations(s) of the Trustees may cover more than the past five years. |
4 | The Funds are part of a “fund complex” as defined in the 1940 Act. The fund complex includes all open-end funds (including all of their portfolios) advised by the Advisor and any funds that have an investment advisor that is an affiliated person of the Advisor. |
5 | Mr. Patti is an “interested person” of the Trust (as that term is defined in the 1940 Act) because of his affiliations with the Advisor. |
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ANNUAL REPORT | APRIL 30, 2011
IndexIQ ETF Trust
IQ Hedge Multi-Strategy Tracker ETF
IQ Hedge Macro Tracker ETF
IQ Real Return ETF
(formerly, IQ CPI Inflation Hedged ETF)
IQ Global Resources ETF
(formerly, IQ ARB Global Resources ETF)
IQ Merger Arbitrage ETF
(formerly, IQ ARB Merger Arbitrage ETF)
IQ Australia Small Cap ETF
IQ Canada Small Cap ETF
IQ South Korea Small Cap ETF
IQ Taiwan Small Cap ETF
IQ Global Agribusiness Small Cap ETF
Investment Advisor
IndexIQ Advisors LLC
800 Westchester Avenue,
Suite N-611
Rye Brook, NY 10573
Distributor
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, CO 80203
Custodian/Fund Administrator/Transfer Agent
The Bank of New York Mellon
One Wall Street
New York, NY 10286
Legal Counsel
Katten Muchin Rosenman, LLP
575 Madison Avenue
New York, New York 10022
Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, NY 10036
Item 2. Code of Ethics.
a). The Registrant has adopted a code of ethics that applies to the Registrant’s Principal Executive Officer, Principal Financial Officer or persons performing similar functions.
b). There have not been any changes to the Code of Ethics.
c). Not Applicable
d). During the period, Registrant granted no waivers from the provisions of its code of ethics that applies to the Registrant's Principal Executive Officer, Principal Financial Officer or persons performing similar functions.
e). Not Applicable
f). Attached
Item 3. Audit Committee Financial Expert.
a). The Registrant’s Board of Trustees has one audit committee financial expert serving on its audit committee, an “independent” Trustee, Reena Aggarwal. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
a). Audit Fees: the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for the audit are as follows:
2011: $165,000 |
2010: $125,000 |
b). Audit-Related Fees: the aggregate fees billed in each of the previous last two fiscal years for assurance and related services by the principal accountant that are principally related to the
Registrant’s tax return reviews and are not reported under paragraph (a) of this item are as follows:
2011: $0 |
2010: $22,500 |
c). Tax Fees, the aggregate fees billed in each of the previous last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are as follows:
2011: $47,600 |
2010: $36,400 |
d). All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) and (c) of this Item are as follows:
2011: $0 |
2010: $0 |
e) Audit Committee Pre-Approval Policies and Procedures.
(i) Per Rule 2-01(c)(7)(A), the Audit Committee pre-approves all of the Audit, Audit-Related, Tax and Other Fees of the Registrant.
(ii) 100% of services described in each of Items 4(b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(A) of Rule 2-01 of Regulation S-X.
(f) No response required.
(g) The aggregate non-audit fees billed by the Registrant's accountant for services rendered to the Funds, the Advisor or any entity controlling, controlled by, or under common control with the Advisor that provides ongoing services to the Registrant (except for any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) that directly impacted the Funds for the last two fiscal years is as follows:
2011: $47,600 |
2010: $58,900 |
(h) Not Applicable
Item 5. Audit Committee of Listed Registrants.
(a) The Fund has a designated Audit Committee in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934 (the “Exchange Act”) and the members of such committee are Reena Aggarwal and Gene Chao.
(b) Not applicable.
Item 6. Schedule of Investments.
(a) Schedule is included as part of the report to shareholders filed under Item 1 of this Form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company & Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) | The Principal Executive Officer and Principal Financial Officer have evaluated the Registrant's disclosure controls and procedures within 90 days of the filing date of this report and have concluded that these controls and procedures are effective. |
(b) | There were no significant changes in the Registrant's internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation. |
Item 12. Exhibits.
(a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached
(b) Separate certifications for each Principal Executive Officer and Principal Financial Officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17CFR 270.30a-(a)).
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: IndexIQ ETF Trust
By: /s/ Adam S. Patti
Adam S. Patti, Principal Executive Officer
Date: June 20, 2011
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.
Registrant: IndexIQ ETF Trust
By: /s/ Adam S. Patti
Adam S. Patti, Principal Executive Officer
Date: June 20, 2011
By: /s/ David L. Fogel
David L. Fogel, Principal Financial Officer
Date: June 20, 2011