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 | ||
IndexIQ ETF Trust | ||
(Exact name of registrant as specified in charter) | ||
800 Westchester Ave., Suite N-611
Rye Brook, NY 10573
(Address of principal executive offices) (Zip code)
Adam S. Patti
IndexIQ Advisors LLC
800 Westchester Ave., Suite N-611
Rye Brook, NY 10573
(Name and address of agent for service)
Registrant's telephone number, including area code:1-888-934-0777
Date of fiscal year end: April 30
Date of reporting period: April 30, 2013
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, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
ANNUAL REPORT | APRIL 30, 2013
IndexIQ ETF Trust
IQ Hedge Multi-Strategy Tracker ETF (QAI)
IQ Hedge Macro Tracker ETF (MCRO)
IQ Hedge Market Neutral Tracker ETF (QMN)
IQ Real Return ETF (CPI)
IQ Global Resources ETF (GRES)
IQ Merger Arbitrage ETF (MNA)
IQ Australia Small Cap ETF (KROO)
IQ Canada Small Cap ETF (CNDA)
IQ Global Agribusiness Small Cap ETF (CROP)
IQ Global Oil Small Cap ETF (IOIL)
IQ US Real Estate Small Cap ETF (ROOF)
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.
Each Funds’ premium/discount information is available, free of charge, on the Funds’ website, www.indexiq.com or by calling 1-888-934-0777.
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.
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Table of Contents |
4 |
Shareholder Letter (unaudited) |
Dear Shareholder:
For the twelve months ended April 30, 2013, the key focus of the markets was on yield. The announcement by the Federal Reserve (the “Fed”) of the latest round of monetary stimulus (named Quantitative Easing 3 or “QE3”) in which the Fed committed to purchase $85 billion each month of mortgages and other assets contained an open-ended commitment to continue the program until the unemployment rate dropped. Additionally, investors grappled with the sovereign debt issues that continued to plague Europe, fiscal gridlock in the U.S., and sluggish global economic growth. The confluence of these events drove the yield on the U.S. 10 year Treasury bond to record lows. With interest rates at an all-time low, investors looked for yield wherever they could find it. Real estate and Real Estate Investment Trusts (“REITs”) were major beneficiaries in this economic climate, as they posted very strong returns. Corporate bonds, both investment grade and high yield, also moved sharply higher as investors assumed more risk to obtain higher yield.
Equity assets also benefitted from historic low yields. With low inflation and an accommodative monetary policy, U.S. large cap and small cap stocks had returns near 20%. Developed international large cap stocks also participated in the rally, although emerging market stocks were weighed down by concerns of slowing growth in China. Commodity returns were generally negative with precious metals falling sharply on reduced inflation fears. Oil also dropped, although natural gas had a sharp recovery after falling near record low prices in June.
Investors have recognized that having a well-diversified portfolio 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.
5 |
Management’s Discussion of Fund Performance (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, 2013, the Fund (NAV) returned 3.85% versus 5.80% and 16.89% 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 the investment grade corporate bond market and the convertible bond market. The Fund also benefitted from positions in equities (U.S. large cap and small cap, as well developed international).
The primary drivers of negative performance were the Fund’s long exposures to emerging equity markets and the Japanese Yen. Short exposure to real estate also detracted from performance. The short exposure to real estate was effected through a total return swap on an ETF that invests primarily in REITs.
Overall, during the fiscal year, the Fund used derivatives, including total return swaps to effect long and short exposure to several asset classes and futures to effect short exposure to several asset classes. The use of swaps had a materially positive impact on performance, while the use of futures had a moderately negative impact on performance.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||||
Average Annual | Average Annual | Cumulative | ||||||||
IQ Hedge Multi-Strategy Tracker ETF Market Price2 | 4.00 | % | 4.41 | % | 19.37 | % | ||||
IQ Hedge Multi-Strategy Tracker ETF NAV | 3.85 | % | 4.39 | % | 19.27 | % | ||||
IQ Hedge Multi-Strategy Index | 4.74 | % | 4.96 | % | 21.97 | % | ||||
HFRI Fund of Funds Composite Index3 | 5.80 | % | 4.72 | % | 20.74 | % | ||||
S&P 500 Index | 16.89 | % | 20.08 | % | 111.77 | % |
1 | Fund Inception Date: 3/24/2009. |
2 | The price used to calculate 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 4/30/2013. |
6 |
Management’s Discussion of Fund Performance (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 was 1.03%, which includes a management fee of 0.75% and acquired fund fees and expenses of 0.28%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 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.
7 |
Management’s Discussion of Fund Performance (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, 2013, the Fund (NAV) returned 0.36% versus 5.80% and 17.40% 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 investment grade corporate bonds, the currency carry strategy, and equities (emerging markets large cap and small cap). The Fund also benefitted from sovereign bond exposure to both U.S. and non-U.S countries.
The primary driver of negative performance was the Fund’s exposure to gold, volatility and the Japanese Yen.
Overall, during the fiscal year, the Fund used derivatives, including total return swaps and futures, to effect short exposure to several asset classes. The use of swaps had a materially negative impact on performance, while the use of futures had a moderately negative impact on performance.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||||
Average Annual | Average Annual | Cumulative | ||||||||
IQ Hedge Macro Tracker ETF Market Price2 | 0.50 | % | 3.04 | % | 12.35 | % | ||||
IQ Hedge Macro Tracker ETF NAV | 0.36 | % | 3.02 | % | 12.28 | % | ||||
IQ Hedge Macro Index | 1.31 | % | 3.52 | % | 14.42 | % | ||||
HFRI Fund of Funds Composite Index3 | 5.80 | % | 3.78 | % | 15.63 | % | ||||
MSCI World Index | 17.40 | % | 14.01 | % | 66.63 | % |
1 | Fund Inception Date: 6/08/2009. |
2 | The price used to calculate 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 4/30/2013. |
8 |
Management’s Discussion of Fund Performance (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 was 1.05%, which includes a management fee of 0.75% and acquired fund fees and expenses of 0.30%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 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.
9 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ Hedge Market Neutral Tracker ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Market Neutral 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 pursuing a market neutral 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 since inception (October 4, 2012) period ended April 30, 2013, the Fund (NAV) returned 3.10% versus 7.78% and 0.11% for the HFRI Equity Market Neutral Index and the Barclays Capital Short Term Treasury Bond Index, respectively.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in ETFs, to Convertible bonds. The Fund also benefitted from positive exposure to international developed market equities.
The primary driver of negative performance was the Fund’s short exposure to U.S. small cap equities. The short exposure was effected through a futures contract on the Russell 2000 index.
Overall, during the fiscal year, the Fund used derivatives, including total return swaps to effect long exposure to convertible bond returns and futures to effect short exposure to several asset classes. The use of swaps had a materially positive impact on performance, while the use of futures had a moderately negative impact on performance.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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 Market Neutral Tracker ETF
(as of April 30, 2013)
Since Inception1 | ||
Cumulative | ||
IQ Hedge Market Neutral ETF Market Price2 | 3.22 | % |
IQ Hedge Market Neutral ETF NAV | 3.10 | % |
IQ Hedge Market Neutral Index | 3.50 | % |
HFRI Equity Market Neutral Index | 7.78 | %3 |
Barclays Capital Short Term Treasury Bond Index | 0.11 | % |
1 | Fund Inception Date: 10/4/2012. |
2 | The price used to calculate 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 9/30/2012 to 4/30/2013. |
10 |
Management’s Discussion of Fund Performance (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 (10/4/2012) to the first day of secondary market trading in shares of the Fund (10/5/2012), 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 was 0.99%, which includes a management fee of 0.75 and acquired fund fees and expenses of 0.24%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 Equity Market Neutral Index is an equally weighted hedge fund index including domestic and off-shore equity market neutral hedge funds.
The Barclays Capital U.S. Short Treasury Bond Index (the “Barclays Capital Short Term Treasury 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 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.
11 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ Real Return 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, 2013, the Fund (NAV) returned 1.09% versus 0.19% for the Barclays Capital Short Term Treasury Bond Index.
The principal positive contributors to Fund performance for the period, in aggregate, were the Fund’s exposures, through investments in ETFs, to U.S. large cap equities, U.S. REITs, and long term U.S. Treasury Bonds. The primary driver of negative performance was the Fund’s exposure to gold and oil.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||||
Average Annual | Average Annual | Cumulative | ||||||||
IQ Real Return ETF Market Price2 | 0.90 | % | 1.74 | % | 6.26 | % | ||||
IQ Real Return ETF NAV | 1.09 | % | 1.76 | % | 6.30 | % | ||||
IQ Real Return Index | 1.56 | % | 2.31 | % | 8.35 | % | ||||
Barclays Capital Short Term Bond Index | 0.19 | % | 0.22 | % | 0.76 | % |
1 | Fund Inception Date: 10/26/2009. |
2 | The price used to calculate 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. |
12 |
Management’s Discussion of Fund Performance (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 was 0.71%, which includes a management fee of 0.48% and acquired fund fees and expenses of 0.23%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 Treasury 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 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.
13 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ 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, 2013, the Fund (NAV) returned –0.35% versus 17.40% and –5.33% 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 the livestock, grains, food and fiber, and water segments. The primary drivers of negative performance were the Fund’s exposure to the Precious Metals, Industrial Metals, and Coal segments. The market hedges also detracted from performance. These hedges included short positions in futures contracts on both the S&P 500 and the EAFE indices.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Global Resources ETF Market Price2 | –0.87 | % | 4.88 | % | 18.21 | % | ||
IQ Global Resources ETF NAV | –0.35 | % | 5.08 | % | 18.98 | % | ||
IQ Global Resources Index | 0.69 | % | 6.14 | % | 23.27 | % | ||
MSCI World Index | 17.40 | % | 10.62 | % | 42.50 | % | ||
Dow Jones-UBS Commodity Index | –5.33 | % | -0.23 | % | –0.80 | % |
1 | Fund Inception Date: 10/26/2009. |
2 | The price used to calculate 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. |
14 |
Management’s Discussion of Fund Performance (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 was 0.75%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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.
15 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ 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, 2013, the Fund (NAV) returned –1.42% versus 17.40% and 16.89% for the MSCI World Index and the S&P 500 Index, respectively.
The principal positive contributors to Fund performance for the period were the Fund’s positions in NYSE Euronext, Cooper Industries, Sprint Nextel, eAccess, and Cove Energy. The primary drivers of negative performance were the Fund’s positions in Xstrata, TNT Express, Avon Products and the market hedges. These hedges included short positions in futures contracts on both the S&P 500 and the EAFE indices.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Merger Arbitrage ETF Market Price2 | –1.62 | % | 0.95 | % | 3.33 | % | ||
IQ Merger Arbitrage ETF NAV | –1.42 | % | 1.13 | % | 3.96 | % | ||
IQ Merger Arbitrage Index | 0.09 | % | 2.07 | % | 7.31 | % | ||
MSCI World Index | 17.40 | % | 9.77 | % | 37.96 | % | ||
S&P 500 | 16.89 | % | 13.50 | % | 54.85 | % |
1 | Fund Inception Date: 11/16/2009. |
2 | The price used to calculate 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. |
16 |
Management’s Discussion of Fund Performance (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 was 0.76%, which includes a management fee of 0.75% and other operating expenses of 0.01%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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.
17 |
Management’s Discussion of Fund Performance (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, 2013, the Fund (NAV) returned –6.51% versus 19.96% for the MSCI EAFE Index.
The principal positive contributors to Fund performance for the period were the Fund’s allocations to equities in the Consumer cyclical and staples sectors as well as financial and health care companies.
The primary driver of negative performance was the Fund’s allocation to Basic Materials, Energy and Capital Goods stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Australia Small Cap ETF Market Price2 | –7.15 | % | –0.25 | % | –0.79 | % | ||
IQ Australia Small Cap ETF NAV | –6.51 | % | –0.03 | % | –0.09 | % | ||
IQ Australia Small Cap Index | –5.82 | % | 0.75 | % | 2.33 | % | ||
MSCI EAFE Index | 19.96 | % | 7.44 | % | 24.98 | % |
1 | Fund Inception Date: 3/22/2010. |
2 | The price used to calculate 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. |
18 |
Management’s Discussion of Fund Performance (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 was 0.69%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
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.
19 |
Management’s Discussion of Fund Performance (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, 2013, the Fund (NAV) returned –15.49% versus 19.96% for the MSCI EAFE Index.
The principal positive contributors to Fund performance for the period were the Fund’s allocations to equities in the transportation, financial, and consumer staples sectors. The primary driver of negative performance was the Fund’s allocation to materials and energy.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Canada Small Cap ETF Market Price2 | –15.56 | % | –3.24 | % | –9.71 | % | ||
IQ Canada Small Cap ETF NAV | –15.49 | % | –3.04 | % | –9.15 | % | ||
IQ Canada Small Cap Index | –14.51 | % | –2.18 | % | –6.62 | % | ||
MSCI EAFE Index | 19.96 | % | 7.44 | % | 24.98 | % |
1 | Fund Inception Date: 3/22/2010. |
2 | The price used to calculate 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. |
20 |
Management’s Discussion of Fund Performance (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 was 0.69%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
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.
21 |
Management’s Discussion of Fund Performance (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.
For the 12-month period ended April 30, 2013, the Fund (NAV) returned 7.91%.
The principal positive contributors to Fund performance for the period were the Fund’s allocations to equities in the Agricultural Supplies and Logistics and Livestock Operation sectors.
The primary drivers of negative performance were the Fund’s allocations to Biofuel stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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 Agribusiness Small Cap ETF
(as of April 30, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Global Agribusiness Small Cap ETF Market Price2 | 8.45 | % | 2.90 | % | 6.22 | % | ||
IQ Global Agribusiness Small Cap ETF NAV | 7.91 | % | 3.00 | % | 6.43 | % | ||
IQ Global Agribusiness Small Cap Index | 8.90 | % | 3.33 | % | 7.16 | % |
1 | Fund Inception Date: 3/21/2011. |
2 | The price used to calculate 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. |
22 |
Management’s Discussion of Fund Performance (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 (3/21/2011) to the first day of secondary market trading in shares of the Fund (3/22/2011), 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 was 0.75%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 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 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 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ Global Oil 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 Oil Small Cap Index. The IQ Global Oil Small Cap Index is float-adjusted market cap-weighted and includes global small cap companies engaged primarily in the oil sector, including exploration and production, refining and marketing, and equipment, services and drilling.
For the 12-month period ended April 30, 2013, the Fund (NAV) returned 12.09%.
The principal positive contributors to Fund performance for the period were the Fund’s allocations to equities in the Refining and Marketing sector as well as in the Equipment, Services and Drilling sector. The primary drivers of negative performance were the Fund’s allocations to Exploration and Production stocks.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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 Oil Small Cap ETF
(as of April 30, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ Global Oil Small Cap ETF Market Price2 | 11.06 | % | 0.14 | % | 0.29 | % | ||
IQ Global Oil Small Cap ETF NAV | 12.09 | % | 0.78 | % | 1.56 | % | ||
IQ Global Oil Small Cap Index | 13.41 | % | 1.79 | % | 3.59 | % |
1 | Fund Inception Date: 5/4/2011. |
2 | The price used to calculate 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. |
24 |
Management’s Discussion of Fund Performance (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 (5/4/2011) to the first day of secondary market trading in shares of the Fund (5/5/2011), 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 was 0.76%, which includes a management fee of 0.75% and other operating expenses of 0.01%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 the Oil sector, the uncertainty and risks associated with oil exploration, 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 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.
25 |
Management’s Discussion of Fund Performance (unaudited) (continued) |
IQ U.S. Real Estate Small Cap ETF
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ U.S. Real Estate Small Cap Index. The IQ U.S. Real Estate Small Cap Index is float-adjusted market cap-weighted and includes U.S. small cap companies engaged primarily in the real estate sector, including Real Estate Investment Trusts (“REITs”) or real estate holding companies.
For the 12-month period ended April 30, 2013, the Fund (NAV) returned 39.85% versus 19.95% for the Dow Jones U.S. Real Estate Index.
The principal positive contributors to Fund performance for the period were the Fund’s allocations to equities in the Mortgage REIT and Diversified REIT sectors. The Fund also benefitted from positions in Office, Residential, Retail and Specialized REITs.
All of the sectors had positive performance for the 12-month period ended April 30, 2013.
Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2013)
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 U.S. Real Estate Small Cap ETF
(as of April 30, 2013)
1 Year | Since Inception1 | |||||||
Average Annual | Average Annual | Cumulative | ||||||
IQ U.S. Real Estate Small Cap ETF Market Price2 | 39.64 | % | 22.08 | % | 45.57 | % | ||
IQ U.S. Real Estate Small Cap ETF NAV | 39.85 | % | 23.29 | % | 48.30 | % | ||
IQ U.S. Real Estate Small Cap Index | 41.18 | % | 24.36 | % | 50.70 | % | ||
Dow Jones US Real Estate Index | 19.95 | % | 17.97 | % | 36.46 | % |
1 | Fund Inception Date: 6/13/2011. |
2 | The price used to calculate 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. |
26 |
Management’s Discussion of Fund Performance (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 (6/13/2011) to the first day of secondary market trading in shares of the Fund (6/14/2011), 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 was 0.69%. This expense information is consistent with the current Fund prospectus, dated August 27, 2012.
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 Dow Jones U.S. Real Estate Index measures the stock performance of REITs and real estate operating companies in the U.S.
As the Fund’s investments are concentrated in the real estate sector, it is exposed to concentration risk, interest rate risk, leverage risk, property risk and management risk. The Fund is concentrated in small capitalization companies, whose stock prices generally are more volatile than those of larger companies. The Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. 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.
27 |
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 11/01/12 to 04/30/13” 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.
28 |
Fund Expenses (unaudited) (continued) |
Beginning Account Value | Ending Account Value 04/30/13 | Annualized Expense Ratios for the Period 11/01/12 to 04/30/13 | Expenses* Paid for Period 11/1/12 to 04/30/13 | ||||
IQ Hedge Multi-Strategy Tracker ETF | |||||||
Actual | $1,000.00 | $1,020.09 | 0.75% | $3.76 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ Hedge Macro Tracker ETF | |||||||
Actual | $1,000.00 | $ 983.73 | 0.75% | $3.69 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ Hedge Market Neutral Tracker ETF1 | |||||||
Actual | $1,000.00 | $1,031.84 | 0.76% | $3.83 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.03 | 0.76% | $3.81 | |||
IQ Real Return ETF | |||||||
Actual | $1,000.00 | $1,003.22 | 0.48% | $2.38 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,022.41 | 0.48% | $2.41 | |||
IQ Global Resources ETF | |||||||
Actual | $1,000.00 | $ 985.30 | 0.75% | $3.69 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ Merger Arbitrage ETF | |||||||
Actual | $1,000.00 | $1,049.95 | 0.75% | $3.81 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ Australia Small Cap ETF | |||||||
Actual | $1,000.00 | $1,019.97 | 0.69% | $3.46 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.37 | 0.69% | $3.46 | |||
IQ Canada Small Cap ETF | |||||||
Actual | $1,000.00 | $ 886.82 | 0.69% | $3.23 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.37 | 0.69% | $3.46 | |||
IQ Global Agribusiness Small Cap ETF | |||||||
Actual | $1,000.00 | $1,064.94 | 0.75% | $3.84 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ Global Oil Small Cap ETF | |||||||
Actual | $1,000.00 | $1,199.39 | 0.75% | $4.09 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||
IQ US Real Estate Small Cap ETF | |||||||
Actual | $1,000.00 | $1,266.04 | 0.69% | $3.88 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.37 | 0.69% | $3.46 |
* | Expenses are calculated using the Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 181/365 (to reflect the six-month period). |
1 | IQ Hedge Market Neutral Tracker ETF commenced operations on October 4, 2012. |
29 |
Portfolio Summaries (unaudited) |
April 30, 2013 |
SCHEDULES OF INVESTMENTS SUMMARY TABLE
IQ Hedge Multi-Strategy Tracker ETF
Net Assets ($ mil): $383.5
Industry | % of Net Assets | ||
Aggregate Bond Funds | 25.9 | % | |
Money Market Fund | 15.5 | ||
Corporate Bond Funds | 13.1 | ||
Short-Term Treasury Bond Funds | 11.3 | ||
U.S. Large Cap Equity Funds | 10.7 | ||
Equity Funds | 10.2 | ||
U.S. Small Cap Equity Fund | 4.8 | ||
Treasury Inflation-Protected Securities Bond Fund | 3.8 | ||
Emerging Equity Funds | 2.8 | ||
Commodity Funds | 1.9 | ||
International Bond Funds | 1.7 | ||
Currency Harvest Fund | 0.8 | ||
Currency Fund | 0.5 | ||
High Yield Corporate Bond Funds | 0.3 | ||
Real Estate Fund | 0.1 | ||
Total Investments | 103.4 | ||
Liabilities in Excess of Other Assets | (3.4 | ) | |
Total Net Assets | 100.0 | % |
IQ Hedge Macro Tracker ETF
Net Assets ($ mil): $63.2
Industry | % of Net Assets | ||
Short-Term Treasury Bond Funds | 35.5 | % | |
Money Market Fund | 22.2 | ||
Corporate Bond Funds | 17.3 | ||
Emerging Equity Funds | 12.4 | ||
Currency Harvest Fund | 9.1 | ||
Debt Fund | 7.3 | ||
Currency Funds | 6.9 | ||
U.S. Small Cap Equity Fund | 5.4 | ||
Commodity Funds | 5.2 | ||
Total Investments | 121.3 | ||
Liabilities in Excess of Other Assets | (21.3 | ) | |
Total Net Assets | 100.0 | % |
IQ Hedge Market Neutral Tracker ETF
Net Assets ($ mil): $5.1
Industry | % of Net Assets | ||
Short-Term Treasury Bond Funds | 44.7 | % | |
Equity Funds | 20.6 | ||
Aggregate Bond Funds | 15.6 | ||
Treasury Inflation-Protected Securities Bond Fund | 9.4 | ||
Money Market Fund | 7.1 | ||
U.S. Small Cap Equity Fund | 0.9 | ||
Currency Harvest Fund | 0.3 | ||
High Yield Corporate Bond Funds | 0.2 | ||
Total Investments | 98.8 | ||
Other Assets in Excess of Liabilities | 1.2 | ||
Total Net Assets | 100.0 | % |
IQ Real Return ETF
Net Assets ($ mil): $61.0
Industry | % of Net Assets | ||
Short-Term Treasury Bond Funds | 59.7 | % | |
Money Market Fund | 12.4 | ||
Real Estate Funds | 10.6 | ||
U.S. Large Cap Equity Funds | 10.1 | ||
Commodity Fund | 9.2 | ||
Intermediate-Term Treasury Bond Funds | 7.5 | ||
Long-Term Bond Fund | 2.6 | ||
Total Investments | 112.1 | ||
Liabilities in Excess of Other Assets | (12.1 | ) | |
Total Net Assets | 100.0 | % |
IQ Global Resources ETF
Net Assets ($ mil): $85.5
Industry | % of Net Assets | ||
Water | 19.7 | % | |
Energy | 17.3 | ||
Precious Metals | 16.1 | ||
Industrial Metals | 15.2 | ||
Money Market Fund | 11.4 | ||
Timber | 8.3 | ||
Livestock | 7.3 | ||
Coal | 4.1 | ||
Grains Food Fiber | 2.4 | ||
Total Investments | 101.8 | ||
Liabilities in Excess of Other Assets | (1.8 | ) | |
Total Net Assets | 100.0 | % |
See notes to financial statements.
30 |
Portfolio Summaries (unaudited) (continued) |
April 30, 2013 |
IQ Merger Arbitrage ETF
Net Assets ($ mil): $14.1
Industry | % of Net Assets | ||
Money Market Fund | 20.9 | % | |
Communication Services | 15.8 | ||
Financials | 14.8 | ||
Energy | 11.9 | ||
Consumer Staples | 11.9 | ||
Technology | 10.2 | ||
Consumer Cyclicals | 7.7 | ||
Capital Goods | 5.4 | ||
Transportation | 3.5 | ||
Utilities | 1.6 | ||
Total Investments | 103.7 | ||
Liabilities in Excess of Other Assets | (3.7 | ) | |
Total Net Assets | 100.0 | % |
IQ Australia Small Cap ETF
Net Assets ($ mil): $13.9
Industry | % of Net Assets | ||
Consumer Discretionary | 23.9 | % | |
Materials | 21.3 | ||
Money Market Fund | 20.9 | ||
Industrials | 18.9 | ||
Energy | 8.4 | ||
Health Care | 7.8 | ||
Financials | 7.4 | ||
Consumer Staples | 3.8 | ||
Information Technology | 3.5 | ||
Telecommunication Services | 2.8 | ||
Utilities | 1.0 | ||
Total Investments | 119.7 | ||
Liabilities in Excess of Other Assets | (19.7 | ) | |
Total Net Assets | 100.0 | % |
IQ Canada Small Cap ETF
Net Assets ($ mil): $16.0
Industry | % of Net Assets | ||
Materials | 34.9 | % | |
Energy | 28.9 | ||
Industrials | 15.7 | ||
Financials | 5.8 | ||
Oil, Gas & Consumable Fuels | 3.0 | ||
Utilities | 2.7 | ||
Telecommunication Services | 2.2 | ||
Consumer Discretionary | 2.0 | ||
Money Market Fund | 2.0 | ||
Consumer Staples | 1.6 | ||
Metals & Mining | 1.2 | ||
Health Care | 0.8 | ||
Information Technology | 0.5 | ||
Total Investments | 101.3 | ||
Liabilities in Excess of Other Assets | (1.3 | ) | |
Total Net Assets | 100.0 | % |
IQ Global Agribusiness Small Cap ETF
Net Assets ($ mil): $37.0
Industry | % of Net Assets | ||
Crop Production and Farming | 38.6 | % | |
Livestock Operations | 24.0 | ||
Agricultural Supplies and Logistics | 14.6 | ||
Agricultural Chemicals | 9.7 | ||
Agricultural Machinery | 7.9 | ||
Biofuels | 4.3 | ||
Money Market Fund | 7.8 | ||
Total Investments | 106.9 | ||
Liabilities in Excess of Other Assets | (6.9 | ) | |
Total Net Assets | 100.0 | % |
IQ Global Oil Small Cap ETF
Net Assets ($ mil): $1.9
Industry | % of Net Assets | ||
Equipment, Services & Drilling | 34.5 | % | |
Exploration & Production | 34.1 | ||
Refining & Marketing | 30.6 | ||
Money Market Fund | 13.4 | ||
Total Investments | 112.6 | ||
Liabilities in Excess of Other Assets | (12.6 | ) | |
Total Net Assets | 100.0 | % |
IQ US Real Estate Small Cap ETF
Net Assets ($ mil): $58.2
Industry | % of Net Assets | ||
Mortgage REITs | 28.2 | % | |
Office REITs | 19.1 | ||
Retail REITs | 14.2 | ||
Specialized REITs | 14.1 | ||
Hotel REITs | 11.2 | ||
Diversified REITs | 8.0 | ||
Residential REITs | 3.9 | ||
Money Market Funds | 3.3 | ||
Total Investments | 102.0 | ||
Liabilities in Excess of Other Assets | (2.0 | ) | |
Total Net Assets | 100.0 | % |
See notes to financial statements.
31 |
Schedules of Investments — IQ Hedge Multi-Strategy Tracker ETF |
April 30, 2013 |
Shares | Value | |||||||
Investment Companies — 87.9% | ||||||||
Aggregate Bond Funds — 25.9% | ||||||||
iShares Core Total US Bond Market ETF | 398,766 | $ | 44,478,359 | |||||
SPDR Barclays Aggregate Bond ETF(a) | 34,284 | 2,018,642 | ||||||
Vanguard Total Bond Market ETF | 629,126 | 52,959,827 | ||||||
Total Aggregate Bond Funds | 99,456,828 | |||||||
Commodity Funds — 1.9% | ||||||||
iShares Silver Trust* | 10,466 | 245,533 | ||||||
PowerShares DB Commodity Index | ||||||||
Tracking Fund*(a) | 266,927 | 7,012,172 | ||||||
Total Commodity Funds | 7,257,705 | |||||||
Corporate Bond Funds — 13.1% | ||||||||
iShares Barclays Credit Bond Fund | 20,496 | 2,344,127 | ||||||
iShares iBoxx $ Investment Grade | ||||||||
Corporate Bond Fund | 338,136 | 41,296,550 | ||||||
PowerShares Senior Loan Portfolio(a) | 264,610 | 6,665,526 | ||||||
Total Corporate Bond Funds | 50,306,203 | |||||||
Currency Fund — 0.5% | ||||||||
WisdomTree Emerging Currency Fund* | 84,487 | 1,801,263 | ||||||
Currency Harvest Fund — 0.8% | ||||||||
PowerShares DB G10 Currency | ||||||||
Harvest Fund*(a) | 117,502 | 3,223,080 | ||||||
Emerging Equity Funds — 2.8% | ||||||||
iShares MSCI Emerging Markets | ||||||||
Index Fund | 106,524 | 4,611,424 | ||||||
Vanguard FTSE Emerging Markets ETF | 135,662 | 5,936,569 | ||||||
Total Emerging Equity Funds | 10,547,993 | |||||||
Equity Funds — 10.2% | ||||||||
iShares MSCI EAFE Index Fund | 486,675 | 30,144,649 | ||||||
Vanguard MSCI EAFE ETF | 238,503 | 9,141,820 | ||||||
Total Equity Funds | 39,286,469 | |||||||
High Yield Corporate Bond Funds — 0.3% | ||||||||
iShares iBoxx $ High Yield Corporate | ||||||||
Bond Fund(a) | 6,826 | 654,272 | ||||||
SPDR Barclays High Yield Bond ETF(a) | 12,225 | 510,394 | ||||||
Total High Yield Corporate Bond Funds | 1,164,666 | |||||||
International Bond Funds — 1.7% | ||||||||
iShares JPMorgan USD Emerging Markets | ||||||||
Bond Fund | 36,978 | 4,489,129 | ||||||
PowerShares Emerging Markets | ||||||||
Sovereign Debt Portfolio(a) | 62,905 | 1,950,055 | ||||||
Total International Bond Funds | 6,439,184 | |||||||
Real Estate Fund — 0.1% | ||||||||
SPDR Dow Jones International Real | ||||||||
Estate ETF | 4,534 | 209,063 |
Shares | Value | |||||||
Investment Companies (continued) | ||||||||
Short-Term Treasury Bond Funds — 11.3% | ||||||||
iShares Barclays 1-3 Year Treasury Bond | ||||||||
Fund(a) | 164,962 | $ | 13,940,939 | |||||
iShares Barclays Short Treasury Bond | ||||||||
Fund(a) | 53,620 | 5,911,605 | ||||||
SPDR Barclays 1-3 Month T-Bill ETF* | 47,104 | 2,157,363 | ||||||
Vanguard Short-Term Bond ETF(a) | 264,222 | 21,425,762 | ||||||
Total Short-Term Treasury Bond Funds | 43,435,669 | |||||||
Treasury Inflation-Protected Security — 3.8% | ||||||||
iShares Barclays US Treasury Inflation | ||||||||
Protected Securities Fund | 118,421 | 14,465,125 | ||||||
U.S. Large Cap Equity Funds — 10.7% | ||||||||
iShares Russell 1000 Growth Index Fund | 452,883 | 33,006,113 | ||||||
SPDR S&P 500 ETF Trust | 50,874 | 8,123,560 | ||||||
Total U.S. Large Cap Equity Funds | 41,129,673 | |||||||
U.S. Small Cap Equity Fund — 4.8% | ||||||||
iShares Russell 2000 Index Fund(a) | 196,451 | 18,493,897 | ||||||
Total Investment Companies — 87.9% | ||||||||
(Cost $330,076,002) | 337,216,818 | |||||||
Short-Term Investment — 9.7% | ||||||||
Money Market Fund — 9.7% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $37,148,330) | 37,148,330 | 37,148,330 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 5.8% | ||||||||
Money Market Fund — 5.8% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $22,216,423) | 22,216,423 | 22,216,423 | ||||||
Total Investments — 103.4% | ||||||||
(Cost $389,440,755) | $ | 396,581,571 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (3.4)%(c) | (13,080,295 | ) | ||||||
Net Assets — 100.0% | $ | 383,501,276 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $21,860,034; cash collateral of $22,216,423 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
(c) | Liabilities in Excess of Other Assets includes net unrealized appreciation (depreciation) on futures and swap contracts. |
ETF — Exchange Traded Fund
See notes to financial statements.
32 |
Schedules of Investments — IQ Hedge Multi-Strategy Tracker ETF (continued) |
April 30, 2013 |
Open futures contracts outstanding at April 30, 2013:
Type | Broker | Expiration Date | Number of Contracts Purchased (Sold) | Value at Trade Date | Value at April 30, 2013 | Unrealized Appreciation (Depreciation) | ||||||||||||||
E-Mini Future Euro FX Future | Morgan Stanley | June 2013 | (109 | ) | $ | (8,833,095 | ) | $ | (8,969,338 | ) | $ | (136,243 | ) | |||||||
E-Mini Future Japanese Yen FX Future | Morgan Stanley | June 2013 | (42 | ) | (2,765,051 | ) | (2,692,725 | ) | 72,326 | |||||||||||
Gold 100 Oz Future | Morgan Stanley | June 2013 | (34 | ) | (5,436,347 | ) | (5,005,140 | ) | 431,207 | |||||||||||
$ | 367,290 |
Cash posted as collateral to the broker for futures contracts was $405,325 at April 30, 2013.
Total return swap contracts outstanding at April 30, 2013:
Total Return Benchmark | Annual Financing Rate Received (Paid) | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)1 | ||||||||||
iShares Dow Jones US Real Estate Index Fund | (0.68 | )% | 4/14/2014 | $ | (16,520,566 | ) | $ | — | ||||||
ProShares VIX Mid-Term Futures ETF | (4.53 | )% | 4/14/2014 | (1,640,897 | ) | — | ||||||||
SPDR Barclays Capital Convertible Securities ETF | 0.53 | % | 4/14/2014 | 27,106,407 | — | |||||||||
$ | — |
Cash posted as Collateral to the broker for swap contracts was $9,122,662 at April 30, 2013.
Morgan Stanley acts as the counterparty to the total return swap contracts listed above. The Fund either received fees from, or pay fees to, the counterparty, depending upon the total return of the benchmark, and the agreed-upon financing rate.
1 | Reflects a reset date of April 30, 2013. |
See notes to financial statements.
33 |
Schedules of Investments — IQ Hedge Macro Tracker ETF |
April 30, 2013 |
Shares | Value | |||||||
Investment Companies — 99.1% | ||||||||
Commodity Funds — 5.2% | ||||||||
PowerShares DB Commodity Index | ||||||||
Tracking Fund* | 64,446 | $ | 1,692,997 | |||||
PowerShares DB Gold Fund*(a) | 31,442 | 1,578,388 | ||||||
Total Commodity Funds | 3,271,385 | |||||||
Corporate Bond Funds — 17.3% | ||||||||
iShares Barclays Credit Bond Fund | 5,277 | 603,530 | ||||||
iShares iBoxx $ Investment Grade | ||||||||
Corporate Bond Fund | 84,754 | 10,351,006 | ||||||
Total Corporate Bond Funds | 10,954,536 | |||||||
Currency Funds — 6.9% | ||||||||
CurrencyShares Japanese Yen Trust*(a) | 3,915 | 393,301 | ||||||
Market Vectors Emerging Markets | ||||||||
Local Currency Bond ETF(a) | 143,866 | 3,969,263 | ||||||
Total Currency Funds | 4,362,564 | |||||||
Currency Harvest Funds — 9.1% | ||||||||
CurrencyShares Euro Trust*(a) | 28,055 | 3,662,019 | ||||||
PowerShares DB G10 Currency Harvest | ||||||||
Fund*(a) | 77,157 | 2,116,417 | ||||||
Total Currency Harvest Fund | 5,778,436 | |||||||
Debt Fund — 7.3% | ||||||||
WisdomTree Emerging Markets Local | ||||||||
Debt Fund(a) | 86,456 | 4,641,823 | ||||||
Emerging Equity Funds — 12.4% | ||||||||
iShares MSCI Emerging Markets Index | ||||||||
Fund | 33,083 | 1,432,163 | ||||||
SPDR S&P Emerging Markets | ||||||||
SmallCap ETF(a) | 95,146 | 4,668,814 | ||||||
Vanguard FTSE Emerging Markets ETF | 39,258 | 1,717,930 | ||||||
Total Emerging Equity Funds | 7,818,907 |
Shares | Value | |||||||
Short-Term Treasury Bond Funds — 35.5% | ||||||||
iShares Barclays 1-3 Year Treasury | ||||||||
Bond Fund | 91,974 | $ | 7,772,723 | |||||
iShares Barclays Short Treasury | ||||||||
Bond Fund | 28,534 | 3,145,873 | ||||||
SPDR Barclays 1-3 Month T-Bill ETF* | 21,742 | 995,784 | ||||||
Vanguard Short-Term Bond ETF | 129,531 | 10,503,669 | ||||||
Total Short-Term Treasury Bond Funds | 22,418,049 | |||||||
U.S. Small Cap Equity Fund — 5.4% | ||||||||
iShares Russell 2000 Index Fund(a) | 36,067 | 3,395,347 | ||||||
Total Investment Companies — 99.1% | ||||||||
(Cost $61,636,987) | 62,641,047 | |||||||
Short-Term Investment — 0.8% | ||||||||
Money Market Fund — 0.8% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $547,701) | 547,701 | 547,701 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 21.4% | ||||||||
Money Market Fund — 21.4% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $13,528,401) | 13,528,401 | 13,528,401 | ||||||
Total Investments — 121.3% | ||||||||
(Cost $75,713,089) | $ | 76,717,149 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (21.3)%(c) | (13,491,870 | ) | ||||||
Net Assets — 100.0% | $ | 63,225,279 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $13,273,076; cash collateral of $13,528,401 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
(c) | Liabilities in Excess of Other Assets includes net unrealized appreciation (depreciation) on swap contracts. |
ETF — Exchange Traded Fund
Total return swap contract outstanding at April 30, 2013:
Total Return Benchmark | Annual Financing Rate Received (Paid) | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)1 | ||||||||||
Pro-Shares VIX Mid-Term ETF | 0.53% | 6/5/2014 | $612,424 | $ — |
Cash posted as collateral to the broker for swap contracts was $113,760 at April 30, 2013.
Morgan Stanley acts as the counterparty to the total return swap contract listed above. The Fund either receives fees from, or pays fees to, the counterparty, depending upon the total return of the benchmark, and the agreed-upon financing rate.
1 | Reflects a reset date of April 30, 2013. |
See notes to financial statements.
34 |
Schedules of Investments — IQ Hedge Market Neutral Tracker ETF |
April 30, 2013 |
Shares | Value | |||||||
Investment Companies — 91.7% | ||||||||
Aggregate Bond Funds — 15.6% | ||||||||
iShares Core Total US Bond Market ETF | 3,221 | $ | 359,270 | |||||
SPDR Barclays Aggregate Bond ETF | 277 | 16,310 | ||||||
Vanguard Total Bond Market ETF | 5,082 | 427,803 | ||||||
Total Aggregate Bond Funds | 803,383 | |||||||
Currency Harvest Fund — 0.3% | ||||||||
PowerShares DB G10 Currency Harvest | ||||||||
Fund* | 503 | 13,797 | ||||||
Equity Funds — 20.6% | ||||||||
iShares MSCI EAFE Index Fund | 13,096 | 811,166 | ||||||
Vanguard MSCI EAFE ETF | 6,418 | 246,002 | ||||||
Total Equity Funds | 1,057,168 | |||||||
High Yield Corporate Bond Funds — 0.2% | ||||||||
iShares iBoxx $ High Yield Corporate | ||||||||
Bond Fund(a) | 76 | 7,285 | ||||||
SPDR Barclays High Yield Bond ETF | 136 | 5,678 | ||||||
Total High Yield Corporate Bond Funds | 12,963 | |||||||
Short-Term Treasury Bond Funds — 44.7% | ||||||||
iShares Barclays 1-3 Year Treasury | ||||||||
Bond Fund | 8,714 | 736,420 | ||||||
iShares Barclays Short Treasury | ||||||||
Bond Fund | 2,833 | 312,338 | ||||||
SPDR Barclays 1-3 Month T-Bill ETF* | 2,488 | 113,950 | ||||||
Vanguard Short-Term Bond ETF | 13,958 | 1,131,855 | ||||||
Total Short-Term Treasury Bond Funds | 2,294,563 | |||||||
Treasury Inflation-Protected Security — 9.4% | ||||||||
iShares Barclays US Treasury Inflation | ||||||||
Protected Securities Fund | 3,963 | 484,080 |
Shares | Value | |||||||
U.S. Small Cap Equity Fund — 0.9% | ||||||||
iShares Russell 2000 Index Fund(a) | 482 | $ | 45,376 | |||||
Total Investment Companies — 91.7% | ||||||||
(Cost $4,642,709) | 4,711,330 | |||||||
Short-Term Investment — 6.1% | ||||||||
Money Market Fund — 6.1% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $313,505) | 313,505 | 313,505 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 1.0% | ||||||||
Money Market Fund —1.0% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $50,663) | 50,663 | 50,663 | ||||||
Total Investments — 98.8% | ||||||||
(Cost $5,006,877) | $ | 5,075,498 | ||||||
Other Assets in Excess of | ||||||||
Liabilities — 1.2%(c) | 61,570 | |||||||
Net Assets — 100.0% | $ | 5,137,068 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $49,923; cash collateral of $50,663 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
(c) | Other Assets in Excess of Liabilities includes net unrealized appreciation (depreciation) on futures and swap contracts. |
ETF — Exchange Traded Fund
Open futures contracts outstanding at April 30, 2013:
Type | Broker | Expiration Date | Number of Contracts Purchased (Sold) | Value at Trade Date | Value at April 30, 2013 | Unrealized Depreciation | ||||||||||||||
Mini MSCI Emerging Market Index Future | Morgan Stanley | June 2013 | (4) | $(201,117) | $(207,980) | $(6,863) |
Cash posted as collateral to broker for futures contracts was $7,200 at April 30, 2013.
Total return swap contract outstanding at April 30, 2013:
Total Return Benchmark | Annual Financing Rate Received (Paid) | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)1 | ||||||||||
SPDR Barclays Capital Convertible Securities ETF | 0.53% | 10/03/2014 | $315,994 | $ — |
Cash posted as collateral to the broker for swap contracts was $106,418 at April 30, 2013.
Morgan Stanley acts as the counterparty to the total return swap contract listed above. The Fund either receives fees from, or pays fees to, the counterparty, depending upon the total return of the benchmark, and the agreed-upon financing rate.
1 | Reflects a reset date of April 30, 2013 |
See notes to financial statements.
35 |
Schedules of Investments — IQ Real Return ETF |
April 30, 2013 |
Shares | Value | |||||||
Investment Companies — 99.7% | ||||||||
Commodity Fund — 9.2% | ||||||||
PowerShares DB Gold Fund*(a) | 111,237 | $ | 5,584,097 | |||||
Intermediate-Term Treasury Bond | ||||||||
Funds — 7.5% | ||||||||
iShares Barclays 3-7 Year Treasury Bond | ||||||||
Fund | 12,269 | 1,522,828 | ||||||
iShares Barclays 7-10 Year Treasury Bond | ||||||||
Fund | 28,229 | 3,072,162 | ||||||
Total Intermediate-Term Treasury Bond | ||||||||
Funds | 4,594,990 | |||||||
Long-Term Bond Fund — 2.6% | ||||||||
iShares Barclays 20+ Year Treasury Bond | ||||||||
Fund | 12,866 | 1,582,647 | ||||||
Real Estate Funds — 10.6% | ||||||||
iShares Dow Jones US Real Estate Index | ||||||||
Fund | 19,046 | 1,399,119 | ||||||
SPDR Dow Jones REIT ETF | 6,395 | 530,082 | ||||||
Vanguard REIT ETF | 60,123 | 4,526,059 | ||||||
Total Real Estate Funds | 6,455,260 | |||||||
Short-Term Treasury Bond Funds — 59.7% | ||||||||
iShares Barclays Short Treasury Bond | ||||||||
Fund(a) | 241,647 | 26,641,582 | ||||||
SPDR Barclays 1-3 Month T-Bill ETF* | 212,280 | 9,722,424 | ||||||
Total Short-Term Treasury Bond Funds | 36,364,006 | |||||||
U.S. Large Cap Equity Funds — 10.1% | ||||||||
iShares Core S&P 500 ETF | 121 | 19,404 | ||||||
SPDR S&P 500 ETF Trust | 38,590 | 6,162,051 | ||||||
Total U.S. Large Cap Equity Funds | 6,181,455 | |||||||
Total Investment Companies — 99.7% | ||||||||
(Cost $60,206,552) | $ | 60,762,455 |
Shares | Value | |||||||
Short-Term Investment — 0.3% | ||||||||
Money Market Fund — 0.3% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $209,497) | 209,497 | $ | 209,497 | |||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 12.1% | ||||||||
Money Market Fund —12.1% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $7,386,500) | 7,386,500 | 7,386,500 | ||||||
Total Investments — 112.1% | ||||||||
(Cost $67,802,549) | $ | 68,358,452 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (12.1)% | (7,404,392 | ) | ||||||
Net Assets — 100.0% | $ | 60,954,060 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $7,236,890; cash collateral of $7,386,500 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. ETF — Exchange Traded Fund REIT — Real Estate Investment Trust |
See notes to financial statements.
36 |
Schedules of Investments — IQ Global Resources ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 90.4% | ||||||||
Australia — 8.2% | ||||||||
BHP Billiton Ltd. | 139,036 | $ | 4,719,469 | |||||
Fortescue Metals Group Ltd.(a) | 81,339 | 295,519 | ||||||
Iluka Resources Ltd.(a) | 10,934 | 101,583 | ||||||
Newcrest Mining Ltd. | 71,864 | 1,253,999 | ||||||
PanAust Ltd. | 56,902 | 137,036 | ||||||
Regis Resources Ltd.* | 46,201 | 180,805 | ||||||
Whitehaven Coal Ltd.(a) | 70,602 | 142,912 | ||||||
Woodside Petroleum Ltd. | 5,038 | 196,427 | ||||||
Total Australia | 7,027,750 | |||||||
Canada — 15.1% | ||||||||
Agnico-Eagle Mines Ltd. | 16,192 | 523,501 | ||||||
Alamos Gold, Inc. | 12,011 | 168,012 | ||||||
Argonaut Gold, Inc.* | 13,931 | 88,363 | ||||||
B2Gold Corp.* | 60,598 | 152,421 | ||||||
Barrick Gold Corp. | 93,926 | 1,854,521 | ||||||
Canadian Natural Resources Ltd. | 6,730 | 197,715 | ||||||
Canfor Corp.* | 25,190 | 526,915 | ||||||
Centerra Gold, Inc. | 22,154 | 92,726 | ||||||
China Gold International Resources | ||||||||
Corp., Ltd.* | 37,210 | 105,802 | ||||||
Domtar Corp. ADR | 6,024 | 418,728 | ||||||
Eldorado Gold Corp. | 67,065 | 531,399 | ||||||
Enbridge, Inc. | 4,914 | 234,207 | ||||||
Goldcorp, Inc. | 76,255 | 2,260,699 | ||||||
Husky Energy, Inc. | 6,028 | 174,514 | ||||||
IAMGOLD Corp. | 35,367 | 190,223 | ||||||
Imperial Oil Ltd. | 5,228 | 208,320 | ||||||
Kinross Gold Corp. | 107,031 | 584,183 | ||||||
New Gold, Inc.* | 44,638 | 358,577 | ||||||
Norbord, Inc.* | 7,728 | 258,151 | ||||||
Osisko Mining Corp.* | 40,980 | 173,152 | ||||||
Pan American Silver Corp. | 14,215 | 187,253 | ||||||
Resolute Forest Products*(a) | 16,662 | 243,765 | ||||||
Silver Wheaton Corp. | 33,318 | 815,850 | ||||||
Suncor Energy, Inc. | 9,296 | 290,289 | ||||||
Teck Resources Ltd., Class B | 15,210 | 405,257 | ||||||
TransCanada Corp. | 4,372 | 217,068 | ||||||
West Fraser Timber Co., Ltd. | 7,524 | 657,962 | ||||||
Westshore Terminals Investment Corp. | 5,186 | 149,519 | ||||||
Yamana Gold, Inc. | 70,572 | 874,915 | ||||||
Total Canada | 12,944,007 | |||||||
Finland — 1.1% | ||||||||
UPM-Kymmene Oyj(a) | 92,819 | 971,638 | ||||||
France — 4.9% | ||||||||
GDF Suez(a) | 14,429 | 310,078 | ||||||
Suez Environnement Co. | 114,060 | 1,639,858 | ||||||
Total SA | 13,820 | 697,291 | ||||||
Veolia Environnement | 113,777 | 1,569,788 | ||||||
Total France | 4,217,015 | |||||||
Germany — 0.1% | ||||||||
Suedzucker AG | 1,241 | 50,082 | ||||||
Hong Kong — 2.0% | ||||||||
China Modern Dairy Holdings Ltd.* | 789,096 | 272,502 | ||||||
CNOOC Ltd. | 273,585 | 510,465 | ||||||
Hong Kong & China Gas Co. Ltd. | 52,815 | 158,909 | ||||||
Lee & Man Paper Manufacturing Ltd. | 830,130 | 617,201 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Hong Kong (continued) | ||||||||
Shougang Fushan Resources | ||||||||
Group Ltd.(a) | 369,634 | $ | 144,318 | |||||
Total Hong Kong | 1,703,395 | |||||||
Ireland — 0.1% | ||||||||
Kerry Group PLC, Class A | 1,067 | 63,176 | ||||||
Italy — 0.6% | ||||||||
Eni SpA | 22,247 | 532,641 | ||||||
Japan — 2.7% | ||||||||
Ajinomoto Co., Inc. | 3,673 | 50,414 | ||||||
Itoham Foods, Inc. | 37,463 | 172,297 | ||||||
Kurita Water Industries Ltd. | 26,689 | 547,698 | ||||||
Maruha Nichiro Holdings, Inc. | 80,771 | 161,691 | ||||||
Mitsubishi Materials Corp. | 35,058 | 100,412 | ||||||
Mitsui & Co., Ltd. | 11,181 | 153,579 | ||||||
Nippon Meat Packers, Inc. | 33,261 | 510,815 | ||||||
Nippon Paper Industries Co., Ltd.* | 20,500 | 305,574 | ||||||
Nisshin Seifun Group, Inc. | 1,392 | 17,977 | ||||||
Nissin Foods Holdings Co., Ltd. | 643 | 28,846 | ||||||
Sumitomo Metal Mining Co., Ltd. | 14,245 | 198,444 | ||||||
Toyo Suisan Kaisha Ltd. | 845 | 28,713 | ||||||
Yamazaki Baking Co., Ltd. | 1,000 | 13,079 | ||||||
Total Japan | 2,289,539 | |||||||
Netherlands — 2.3% | ||||||||
D.E Master Blenders 1753 NV* | 3,613 | 57,351 | ||||||
Nutreco NV* | 5,686 | 540,267 | ||||||
Royal Dutch Shell PLC, Class A | 39,116 | 1,332,325 | ||||||
Total Netherlands | 1,929,943 | |||||||
New Zealand — 1.1% | ||||||||
Fletcher Building Ltd. | 120,695 | 915,278 | ||||||
Norway — 0.8% | ||||||||
Norsk Hydro ASA | 53,233 | 249,658 | ||||||
Statoil ASA | 19,518 | 477,012 | ||||||
Total Norway | 726,670 | |||||||
Singapore — 0.8% | ||||||||
Golden Agri-Resources Ltd. | 77,438 | 33,323 | ||||||
Olam International Ltd. | 14,735 | 20,039 | ||||||
People’s Food Holdings Ltd. | 187,000 | 198,896 | ||||||
Sakari Resources Ltd. | 240,456 | 365,825 | ||||||
Wilmar International Ltd. | 39,471 | 106,717 | ||||||
Total Singapore | 724,800 | |||||||
Spain — 0.2% | ||||||||
Ebro Foods SA | 945 | 19,399 | ||||||
Repsol SA | 7,849 | 184,197 | ||||||
Total Spain | 203,596 | |||||||
Sweden — 2.1% | ||||||||
Boliden AB | 7,143 | 113,217 | ||||||
Holmen AB, B Shares | 14,805 | 413,744 | ||||||
Sandvik AB(a) | 87,345 | 1,239,372 | ||||||
Total Sweden | 1,766,333 |
See notes to financial statements.
37 |
Schedules of Investments — IQ Global Resources ETF (continued) |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Switzerland — 3.1% | ||||||||
Aryzta AG* | 558 | $ | 34,659 | |||||
Barry Callebaut AG | 32 | 31,278 | ||||||
Lindt & Spruengli AG | 13 | 50,380 | ||||||
Pentair Ltd. | 46,196 | 2,510,752 | ||||||
Total Switzerland | 2,627,069 | |||||||
United Kingdom — 14.0% | ||||||||
Anglo American PLC | 36,335 | 885,036 | ||||||
Antofagasta PLC | 25,753 | 359,736 | ||||||
Associated British Foods PLC | 4,808 | 144,799 | ||||||
BG Group PLC | 20,824 | 351,492 | ||||||
BP PLC | 117,136 | 850,296 | ||||||
Centrica PLC | 31,824 | 183,760 | ||||||
Eurasian Natural Resources Corp. | 33,630 | 143,626 | ||||||
Evraz PLC | 35,000 | 84,435 | ||||||
Hochschild Mining PLC | 31,746 | 122,783 | ||||||
Kazakhmys PLC | 13,684 | 73,754 | ||||||
Pennon Group PLC | 81,473 | 869,246 | ||||||
Polymetal International PLC | 35,919 | 388,815 | ||||||
Randgold Resources Ltd. | 8,641 | 680,512 | ||||||
Rio Tinto PLC | 48,263 | 2,192,653 | ||||||
Severn Trent PLC | 53,389 | 1,513,154 | ||||||
Tate & Lyle PLC | 2,824 | 37,118 | ||||||
United Utilities Group PLC | 152,794 | 1,760,974 | ||||||
Vedanta Resources PLC | 7,122 | 134,014 | ||||||
Xstrata PLC | 78,436 | 1,176,220 | ||||||
Total United Kingdom | 11,952,423 | |||||||
United States — 31.2% | ||||||||
Alcoa, Inc. | 27,972 | 237,762 | ||||||
Allied Nevada Gold Corp.* | 8,431 | 90,212 | ||||||
Alpha Natural Resources, Inc.* | 15,353 | 113,919 | ||||||
American Water Works Co., Inc. | 39,740 | 1,664,311 | ||||||
Anadarko Petroleum Corp. | 3,112 | 263,773 | ||||||
Apache Corp. | 2,444 | 180,563 | ||||||
Aqua America, Inc. | 31,448 | 997,845 | ||||||
Arch Coal, Inc.(a) | 14,803 | 71,795 | ||||||
Archer-Daniels-Midland Co. | 3,994 | 135,556 | ||||||
Bunge Ltd. | 826 | 59,645 | ||||||
Chevron Corp. | 11,871 | 1,448,381 | ||||||
Cliffs Natural Resources, Inc.(a) | 3,736 | 79,726 | ||||||
Cloud Peak Energy, Inc.* | 4,271 | 83,455 | ||||||
Coeur d’Alene Mines Corp.* | 8,456 | 128,869 | ||||||
ConAgra Foods, Inc. | 2,505 | 88,602 | ||||||
ConocoPhillips | 7,427 | 448,962 | ||||||
CONSOL Energy, Inc. | 15,884 | 534,338 | ||||||
EOG Resources, Inc. | 1,670 | 202,337 | ||||||
Exxon Mobil Corp. | 27,381 | 2,436,635 | ||||||
Flowers Foods, Inc. | 822 | 27,077 | ||||||
Flowserve Corp. | 10,765 | 1,702,162 | ||||||
Freeport-McMoRan Copper Gold, Inc. . | 24,762 | 753,508 | ||||||
General Mills, Inc. | 3,863 | 194,772 | ||||||
Halliburton Co. | 5,685 | 243,147 | ||||||
Hershey Co. | 1,353 | 120,633 | ||||||
Hillshire Brands Co. | 723 | 25,963 | ||||||
Hormel Foods Corp. | 43,537 | 1,796,772 | ||||||
IDEX Corp. | 18,502 | 962,659 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
United States (continued) | ||||||||
Ingredion, Inc. | 484 | $ | 34,853 | |||||
J.M. Smucker Co. | 626 | 64,622 | ||||||
Joy Global, Inc. | 7,431 | 420,000 | ||||||
KapStone Paper And Packaging Corp. . | 8,339 | 246,668 | ||||||
Kellogg Co. | 2,192 | 142,568 | ||||||
Kinder Morgan, Inc. | 6,305 | 246,526 | ||||||
Louisiana-Pacific Corp.* | 24,555 | 444,937 | ||||||
Marathon Petroleum Corp. | 2,034 | 159,384 | ||||||
MeadWestvaco Corp. | 30,951 | 1,067,190 | ||||||
Mondelez International, Inc., Class A | 10,780 | 339,031 | ||||||
National Oilwell Varco, Inc. | 2,616 | 170,616 | ||||||
Newmont Mining Corp. | 46,594 | 1,509,646 | ||||||
Occidental Petroleum Corp. | 4,946 | 441,480 | ||||||
Peabody Energy Corp. | 18,731 | 375,744 | ||||||
Phillips 66 | 3,762 | 229,294 | ||||||
Royal Gold, Inc. | 6,073 | 337,537 | ||||||
Schlumberger Ltd. | 8,066 | 600,352 | ||||||
Seaboard Corp. | 197 | 540,958 | ||||||
Smithfield Foods, Inc.* | 22,821 | 584,218 | ||||||
Southern Copper Corp. | 22,066 | 735,460 | ||||||
Tyson Foods, Inc., Class A | 58,249 | 1,434,673 | ||||||
Valero Energy Corp. | 3,356 | 135,314 | ||||||
Williams Cos., Inc. (The) | 4,169 | 158,964 | ||||||
Xylem, Inc. | 41,692 | 1,156,953 | ||||||
Total United States | 26,670,367 | |||||||
Total Common Stocks — 90.4% | ||||||||
(Cost $80,751,595) | 77,315,722 | |||||||
Short-Term Investment — 8.4% | ||||||||
Money Market Fund — 8.4% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $7,167,510) | 7,167,510 | 7,167,510 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 3.0% | ||||||||
Money Market Fund — 3.0% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $2,627,801) | 2,627,801 | $ | 2,627,801 | |||||
Total Investments — 101.8% | ||||||||
(Cost $90,546,906) | $ | 87,111,033 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (1.8)%(c) | (1,600,288 | ) | ||||||
Net Assets — 100.0% | $ | 85,510,745 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $2,405,793; total collateral of $2,628,440 (which includes non-cash collateral of $639 and is included in liabilities in excess of other Assets) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
(c) | Liabilities in Excess of Other Assets includes net unrealized depreciation on futures contracts. |
ADR — American Depositary Receipt
See notes to financial statements.
38 |
Schedules of Investments — IQ Global Resources ETF (continued) |
April 30, 2013 |
Open futures contracts outstanding at April 30, 2013:
Type | Broker | Expiration Date | Number of Contracts Purchased (Sold) | Value at Trade Date | Value at April 30, 2013 | Unrealized (Depreciation) | ||||||
E-mini S&P 500 Future | Morgan Stanley | June 2013 | (114) | $(8,835,913) | $(9,075,540) | $(239,627) | ||||||
Mini MSCI EAFE Index | Morgan Stanley | June 2013 | (110) | (9,164,763) | (9,574,400) | (409,637) | ||||||
$(649,264) |
Cash posted as collateral to broker for futures contracts was $817,000 at April 30, 2013.
See notes to financial statements.
39 |
Schedules of Investments — IQ Merger Arbitrage ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 82.8% | ||||||||
Capital Goods — 5.4% | ||||||||
Energy Solutions, Inc.* | 14,973 | $ | 61,839 | |||||
Gardner Denver, Inc. | 6,272 | 470,964 | ||||||
Impregilo SpA(a) | 43,712 | 229,828 | ||||||
Total Capital Goods | 762,631 | |||||||
Communication Services — 15.8% | ||||||||
Clearwire Corp., Class A* | 123,874 | 416,217 | ||||||
Sprint Nextel Corp.* | 107,228 | 755,957 | ||||||
Virgin Media, Inc. | 21,664 | 1,056,770 | ||||||
Total Communication Services | 2,228,944 | |||||||
Consumer Cyclicals — 7.7% | ||||||||
Ameristar Casinos, Inc. | 12,437 | 328,212 | ||||||
Arbitron, Inc. | 5,294 | 247,177 | ||||||
Gemina SpA* | 21,291 | 40,730 | ||||||
Hot Topic, Inc. | 5,757 | 80,310 | ||||||
OfficeMax, Inc. | 13,667 | 157,307 | ||||||
WMS Industries, Inc.* | 9,247 | 234,689 | ||||||
Total Consumer Cyclicals | 1,088,425 | |||||||
Consumer Staples — 11.9% | ||||||||
American Greetings Corp., Class A | 7,425 | 136,917 | ||||||
GrainCorp Ltd., Class A | 42,639 | 567,431 | ||||||
HJ Heinz Co. | 13,293 | 962,679 | ||||||
Total Consumer Staples | 1,667,027 | |||||||
Energy — 11.9% | ||||||||
Berry Petroleum Co., Class A | 4,734 | 226,806 | ||||||
McMoRan Exploration Co.* | 19,962 | 330,371 | ||||||
Plains Exploration & Production Co.* | 24,860 | 1,123,672 | ||||||
Total Energy | 1,680,849 | |||||||
Financials — 14.8% | ||||||||
Alterra Capital Holdings Ltd. | 10,286 | 334,810 | ||||||
CommonWealth REIT | 11,854 | 264,700 | ||||||
CreXus Investment Corp. | 3,133 | 40,823 | ||||||
Knight Capital Group, Inc., Class A* | 33,067 | 117,057 | ||||||
Netspend Holdings, Inc.* | 10,767 | 171,841 | ||||||
NYSE Euronext | 29,783 | 1,155,878 | ||||||
Total Financials | 2,085,109 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Technology — 10.2% | ||||||||
Compuware Corp.* | 13,852 | $ | 166,224 | |||||
Cymer, Inc.* | 1,510 | 158,188 | ||||||
Dell, Inc. | 72,372 | 969,785 | ||||||
Intermec, Inc.* | 10,816 | 106,429 | ||||||
Kayak Software Corp.* | 850 | 33,847 | ||||||
Total Technology | 1,434,473 | |||||||
Transportation — 3.5% | ||||||||
US Airways Group, Inc.* (a) | 29,142 | 492,500 | ||||||
Utilities — 1.6% | ||||||||
Copano Energy LLC | 5,563 | 223,577 | ||||||
Total Common Stocks — 82.8% | ||||||||
(Cost $11,219,817) | 11,663,535 | |||||||
Short-Term Investment — 16.0% | ||||||||
Money Market Fund — 16.0% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $2,247,849) | 2,247,849 | 2,247,849 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 4.9% | ||||||||
Money Market Fund — 4.9% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $693,122) | 693,122 | 693,122 | ||||||
Total Investments — 103.7% | ||||||||
(Cost $14,160,788) | $ | 14,604,506 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (3.7)%(c) | (526,424 | ) | ||||||
Net Assets — 100.0% | $ | 14,078,082 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $679,717; cash collateral of $693,122 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
(c) | Liabilities in Excess of Other Assets includes net unrealized depreciation on futures contracts. |
Open futures contracts outstanding at April 30, 2013:
Type | Broker | Expiration Date | Number of Contracts Purchased (Sold) | Value at Trade Date | Value at April 30, 2013 | Unrealized Depreciation | ||||||
Mini MSCI EAFE Index Future | Morgan Stanley | June 2013 | (22) | $(1,832,258) | $(1,914,880) | $ (82,622) | ||||||
E-mini S&P 500 Future | Morgan Stanley | June 2013 | (23) | (1,782,520) | (1,831,030) | (48,510) | ||||||
$(131,132) |
Cash posted as collateral to broker for futures contracts was $164,100 at April 30, 2013.
See notes to financial statements.
40 |
Schedules of Investments — IQ Australia Small Cap ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
Consumer Discretionary — 23.9% | ||||||||
Ainsworth Game Technology Ltd. | 16,504 | $ | 65,273 | |||||
Aristocrat Leisure Ltd. | 66,227 | 270,863 | ||||||
Automotive Holdings Group Ltd. | 26,007 | 109,876 | ||||||
Billabong International Ltd.* | 55,318 | 27,276 | ||||||
Breville Group Ltd.(a) | 14,215 | 102,996 | ||||||
Cash Converters International Ltd. | 41,050 | 60,083 | ||||||
David Jones Ltd. | 85,306 | 263,884 | ||||||
Fairfax Media Ltd.(a) | 303,202 | 204,580 | ||||||
Fleetwood Corp. Ltd. | 7,780 | 69,050 | ||||||
Flight Centre Ltd.(a) | 6,091 | 241,340 | ||||||
G.U.D. Holdings Ltd. | 11,017 | 83,370 | ||||||
G8 Education Ltd. | 33,251 | 83,874 | ||||||
Invocare Ltd. | 14,485 | 175,472 | ||||||
JB Hi-Fi Ltd. | 12,094 | 200,867 | ||||||
Myer Holdings Ltd.(a) | 87,450 | 291,396 | ||||||
Navitas Ltd.(a) | 27,072 | 152,032 | ||||||
Pacific Brands Ltd. | 124,399 | 111,054 | ||||||
Seven West Media Ltd. | 91,942 | 190,881 | ||||||
Southern Cross Media Group Ltd. | 82,468 | 133,117 | ||||||
Super Retail Group Ltd. | 22,056 | 301,301 | ||||||
Ten Network Holdings Ltd.* | 231,689 | 74,556 | ||||||
Wotif.com Holdings Ltd. | 18,326 | 97,209 | ||||||
Total Consumer Discretionary | 3,310,350 | |||||||
Consumer Staples — 3.8% | ||||||||
Goodman Fielder Ltd.* | 242,460 | 195,056 | ||||||
GrainCorp Ltd., Class A | 24,682 | 328,463 | ||||||
Total Consumer Staples | 523,519 | |||||||
Energy — 8.4% | ||||||||
Aquila Resources Ltd.*(a) | 27,455 | 52,724 | ||||||
Aurora Oil & Gas Ltd.* | 65,077 | 206,037 | ||||||
AWE Ltd.* | 80,947 | 108,395 | ||||||
Beach Energy Ltd. | 181,084 | 255,645 | ||||||
Buru Energy Ltd.* | 31,488 | 60,796 | ||||||
Coalspur Mines Ltd.*(a) | 60,239 | 28,452 | ||||||
Drillsearch Energy Ltd.*(a) | 56,867 | 66,705 | ||||||
Energy Resources of Australia Ltd.* | 26,566 | 28,404 | ||||||
Horizon Oil Ltd.*(a) | 138,186 | 58,095 | ||||||
Karoon Gas Australia Ltd.* | 28,665 | 124,379 | ||||||
Paladin Energy Ltd.*(a) | 115,588 | 90,589 | ||||||
Senex Energy Ltd.*(a) | 126,413 | 89,888 | ||||||
Total Energy | 1,170,109 | |||||||
Financials — 7.4% | ||||||||
Bank of Queensland Ltd. | 49,683 | 517,282 | ||||||
FlexiGroup Ltd. | 30,017 | 130,868 | ||||||
IOOF Holdings Ltd. | 32,027 | 293,226 | ||||||
Magellan Financial Group Ltd. | 12,463 | 92,760 | ||||||
Total Financials | 1,034,136 | |||||||
Health Care — 7.8% | ||||||||
Acrux Ltd. | 21,691 | 90,966 | ||||||
Ansell Ltd. | 20,975 | 344,015 | ||||||
Mesoblast Ltd.*(a) | 21,264 | 129,790 | ||||||
Primary Health Care Ltd. | 71,130 | 389,118 | ||||||
Sigma Pharmaceuticals Ltd. | 171,128 | 129,677 | ||||||
Total Health Care | 1,083,566 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Industrials — 18.9% | ||||||||
Ausdrill Ltd. | 39,667 | $ | 62,382 | |||||
Ausenco Ltd. | 13,560 | 38,990 | ||||||
Boart Longyear Ltd. | 73,729 | 73,090 | ||||||
Bradken Ltd.(a) | 25,521 | 136,169 | ||||||
Cabcharge Australia Ltd.(a) | 17,695 | 87,800 | ||||||
Cardno Ltd.(a) | 20,619 | 139,337 | ||||||
CSR Ltd. | 77,428 | 163,160 | ||||||
Decmil Group Ltd.(a) | 21,983 | 42,558 | ||||||
Downer EDI Ltd. | 62,450 | 318,297 | ||||||
GWA Group Ltd. | 34,778 | 93,502 | ||||||
Mermaid Marine Australia Ltd. | 34,183 | 136,967 | ||||||
Mineral Resources Ltd. | 16,343 | 165,407 | ||||||
Monadelphous Group Ltd.(a) | 13,286 | 288,657 | ||||||
NRW Holdings Ltd. | 41,953 | 56,614 | ||||||
SAI Global Ltd.(a) | 33,452 | 122,579 | ||||||
Skilled Group Ltd. | 33,277 | 98,448 | ||||||
Transfield Services Ltd. | 71,483 | 118,354 | ||||||
Transpacific Industries Group Ltd.* | 137,566 | 138,516 | ||||||
UGL Ltd.(a) | 25,444 | 265,706 | ||||||
Virgin Australia Holdings Ltd.* | 154,873 | 73,149 | ||||||
Total Industrials | 2,619,682 | |||||||
Information Technology — 3.5% | ||||||||
carsales.com Ltd. | 31,126 | 312,441 | ||||||
Codan Ltd. | 7,366 | 25,921 | ||||||
Iress Ltd. | 16,299 | 141,444 | ||||||
Total Information Technology | 479,806 | |||||||
Materials — 21.3% | ||||||||
Adelaide Brighton Ltd. | 72,134 | 254,588 | ||||||
Aquarius Platinum Ltd.* | 72,732 | 43,790 | ||||||
Arrium Ltd. | 192,827 | 170,139 | ||||||
Atlas Iron Ltd. | 129,193 | 111,981 | ||||||
Beadell Resources Ltd.* | 101,587 | 74,344 | ||||||
BlueScope Steel Ltd.* | 81,744 | 420,029 | ||||||
CuDeco Ltd.*(a) | 19,302 | 75,537 | ||||||
Discovery Metals Ltd.* | 59,309 | 20,932 | ||||||
DuluxGroup Ltd. | 54,322 | 264,464 | ||||||
Evolution Mining Ltd.* | 74,500 | 75,401 | ||||||
Independence Group NL | 33,381 | 114,349 | ||||||
Kingsgate Consolidated Ltd. | 21,763 | 48,797 | ||||||
Lynas Corp. Ltd.*(a) | 311,008 | 163,035 | ||||||
Medusa Mining Ltd. | 26,948 | 91,473 | ||||||
Mirabela Nickel Ltd.* | 118,576 | 17,232 | ||||||
Mount Gibson Iron Ltd. | 51,769 | 26,601 | ||||||
Northern Star Resources Ltd. | 54,740 | 38,355 | ||||||
Nufarm Ltd. | 25,176 | 109,763 | ||||||
PanAust Ltd. | 72,685 | 175,045 | ||||||
Papillon Resources Ltd.* | 38,606 | 40,476 | ||||||
Perseus Mining Ltd.*(a) | 64,060 | 90,104 | ||||||
Regis Resources Ltd.* | 47,072 | 184,214 | ||||||
Resolute Mining Ltd. | 40,882 | 40,528 | ||||||
Sandfire Resources NL* | 15,309 | 89,151 | ||||||
Silver Lake Resources Ltd.* | 53,470 | 58,280 | ||||||
St. Barbara Ltd.* | 78,971 | 49,185 | ||||||
Sundance Resources Ltd.*(a) | 425,040 | 46,327 | ||||||
Western Areas Ltd. | 22,347 | 64,025 | ||||||
Total Materials | 2,958,145 |
See notes to financial statements.
41 |
Schedules of Investments — IQ Australia Small Cap ETF (continued) |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Telecommunication Services — 2.8% | ||||||||
iiNET Ltd. | 17,756 | $ | 113,723 | |||||
M2 Telecommunications Group Ltd. | 22,019 | 128,684 | ||||||
TPG Telecom Ltd. | 39,312 | 147,724 | ||||||
Total Telecommunication Services | 390,131 | |||||||
Utilities — 1.0% | ||||||||
Envestra Ltd. | 125,984 | 137,317 | ||||||
Total Common Stocks — 98.8% | ||||||||
(Cost $15,411,728) | 13,706,761 |
Shares | Value | |||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 20.9% | ||||||||
Money Market Fund — 20.9% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $2,896,195) | 2,896,195 | $ | 2,896,195 | |||||
Total Investments — 119.7% | ||||||||
(Cost $18,307,923) | $ | 16,602,956 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (19.7)% | (2,733,101 | ) | ||||||
Net Assets — 100.0% | $ | 13,869,855 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $2,460,061; cash collateral of $2,896,195 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
See notes to financial statements.
42 |
Schedules of Investments — IQ Canada Small Cap ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 99.3% | ||||||||
Consumer Discretionary — 2.0% | ||||||||
Martinrea International, Inc.* | 13,037 | $ | 110,559 | |||||
RONA, Inc. | 20,392 | 212,871 | ||||||
Total Consumer Discretionary | 323,430 | |||||||
Consumer Staples — 1.6% | ||||||||
Jean Coutu Group (PJC), Inc., Class A | 15,344 | 255,517 | ||||||
Energy — 28.9% | ||||||||
Advantage Oil & Gas Ltd.* | 28,292 | 112,229 | ||||||
AltaGas Ltd. | 17,483 | 652,495 | ||||||
Bankers Petroleum Ltd.* | 42,155 | 105,613 | ||||||
Bellatrix Exploration Ltd.* | 16,605 | 104,168 | ||||||
Birchcliff Energy Ltd.* | 16,384 | 128,681 | ||||||
BlackPearl Resources, Inc.* | 45,789 | 100,150 | ||||||
Calfrac Well Services Ltd. | 5,806 | 147,711 | ||||||
Canyon Services Group, Inc.(a) | 8,439 | 88,010 | ||||||
Crew Energy, Inc.* | 17,739 | 123,274 | ||||||
Deethree Exploration Ltd.* | 11,002 | 85,754 | ||||||
Denison Mines Corp.* | 57,253 | 71,150 | ||||||
Ensign Energy Services, Inc. | 21,372 | 360,361 | ||||||
Gran Tierra Energy, Inc.* | 44,155 | 245,830 | ||||||
Ithaca Energy, Inc.* | 40,844 | 67,001 | ||||||
Legacy Oil + Gas, Inc.* | 23,751 | 125,620 | ||||||
Niko Resources Ltd. | 11,166 | 73,933 | ||||||
Nuvista Energy Ltd.* | 19,207 | 139,778 | ||||||
Parex Resources, Inc.* | 17,429 | 77,974 | ||||||
PetroBakken Energy Ltd. | 14,139 | 120,888 | ||||||
Petrominerales Ltd. | 13,795 | 76,254 | ||||||
Poseidon Concepts Corp. | 13,377 | 3,591 | ||||||
Precision Drilling Corp. | 39,883 | 323,949 | ||||||
Secure Energy Services, Inc. | 16,455 | 212,507 | ||||||
Southern Pacific Resource Corp.* | 67,234 | 44,116 | ||||||
Sprott Resource Corp. | 10,037 | 43,008 | ||||||
TransGlobe Energy Corp.* | 11,422 | 90,618 | ||||||
Trican Well Service Ltd. | 24,892 | 325,674 | ||||||
Trinidad Drilling Ltd. | 20,358 | 139,248 | ||||||
Uranium One, Inc.* | 79,216 | 220,515 | ||||||
Whitecap Resources, Inc. | 20,801 | 213,831 | ||||||
Total Energy | 4,623,931 | |||||||
Financials — 5.8% | ||||||||
AGF Management Ltd., Class B(a) | 11,459 | 131,012 | ||||||
Canaccord Financial, Inc. | 12,628 | 72,188 | ||||||
Element Financial Corp.* | 16,285 | 152,189 | ||||||
Industrial Alliance Insurance and | ||||||||
Financial Services, Inc. | 15,509 | 573,888 | ||||||
Total Financials | 929,277 | |||||||
Health Care — 0.8% | ||||||||
CML Healthcare, Inc. | 15,335 | 117,850 | ||||||
Industrials — 15.7% | ||||||||
Aecon Group, Inc. | 9,218 | 113,638 | ||||||
Air Canada, Class B* | 33,410 | 99,647 | ||||||
CAE, Inc. | 43,923 | 475,540 | ||||||
Chorus Aviation, Inc., Class B | 14,282 | 54,808 | ||||||
Horizon North Logistics, Inc. | 15,332 | 90,695 | ||||||
Progressive Waste Solutions Ltd.(a) | 18,318 | 408,847 | ||||||
Russel Metals, Inc. | 10,206 | 276,496 | ||||||
Superior Plus Corp. | 18,720 | 241,945 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Industrials (continued) | ||||||||
TransForce, Inc. | 13,524 | $ | 267,293 | |||||
WestJet Airlines Ltd. | 19,498 | 478,412 | ||||||
Total Industrials | 2,507,321 | |||||||
Information Technology — 0.5% | ||||||||
Wi-LAN, Inc. | 20,047 | 79,323 | ||||||
Materials — 34.9% | ||||||||
Alacer Gold Corp. | 39,357 | 118,167 | ||||||
Alamos Gold, Inc. | 20,450 | 286,058 | ||||||
Argonaut Gold, Inc.* | 24,646 | 156,327 | ||||||
AuRico Gold, Inc. | 41,935 | 215,960 | ||||||
Aurizon Mines Ltd.* | 21,867 | 93,916 | ||||||
B2Gold Corp.* | 103,850 | 261,212 | ||||||
Banro Corp.* | 33,973 | 43,570 | ||||||
Canexus Corp. | 20,459 | 191,806 | ||||||
Canfor Corp.* | 9,216 | 192,777 | ||||||
Capstone Mining Corp.* | 51,228 | 103,897 | ||||||
Centerra Gold, Inc. | 27,128 | 113,545 | ||||||
China Gold International Resources | ||||||||
Corp., Ltd.*(a) | 41,084 | 116,817 | ||||||
Colossus Minerals, Inc.* | 17,515 | 40,050 | ||||||
Continental Gold Ltd.* | 17,244 | 85,376 | ||||||
Dominion Diamond Corp.* | 13,550 | 215,135 | ||||||
Dundee Precious Metals, Inc.* | 16,293 | 104,641 | ||||||
Endeavour Mining Corp.* | 69,558 | 75,377 | ||||||
Endeavour Silver Corp.* | 14,877 | 77,798 | ||||||
First Majestic Silver Corp.* | 18,959 | 234,101 | ||||||
Fortuna Silver Mines, Inc.* | 21,275 | 66,415 | ||||||
Gabriel Resources Ltd.* | 35,750 | 64,687 | ||||||
HudBay Minerals, Inc. | 29,350 | 233,434 | ||||||
Intertape Polymer Group, Inc. | 8,415 | 93,700 | ||||||
Ivanplats Ltd., Class A*(a) | 36,778 | 109,692 | ||||||
Kirkland Lake Gold, Inc.* | 9,810 | 32,965 | ||||||
Major Drilling Group International, Inc. | 13,466 | 100,809 | ||||||
Methanex Corp. | 15,978 | 678,293 | ||||||
Nevsun Resources Ltd. | 33,289 | 124,770 | ||||||
NovaGold Resources, Inc.* | 38,632 | 95,250 | ||||||
Orbite Aluminae, Inc., | ||||||||
Class Warrants*(a) | 29,943 | 30,067 | ||||||
Premier Gold Mines Ltd.* | 24,646 | 51,701 | ||||||
Primero Mining Corp.* | 11,065 | 65,454 | ||||||
Rio Alto Mining Ltd.* | 26,951 | 99,139 | ||||||
Romarco Minerals, Inc.* | 99,186 | 43,388 | ||||||
Rubicon Minerals Corp.* | 46,845 | 81,502 | ||||||
Sabina Gold & Silver Corp.* | 18,969 | 22,630 | ||||||
Sandstorm Gold Ltd.* | 13,438 | 108,749 | ||||||
SEMAFO, Inc. | 46,352 | 88,017 | ||||||
Sherritt International Corp. | 49,924 | 233,775 | ||||||
Silvercorp Metals, Inc. | 28,190 | 82,397 | ||||||
Taseko Mines Ltd.* | 31,835 | 75,010 | ||||||
Thompson Creek Metals Co., Inc.* | 24,249 | 72,565 | ||||||
Timmins Gold Corp. * | 23,491 | 55,583 | ||||||
Torex Gold Resources, Inc.* | 103,069 | 143,457 | ||||||
Total Materials | 5,579,979 | |||||||
Metals & Mining — 1.2% | ||||||||
Pretium Resources, Inc.* | 12,320 | 91,005 | ||||||
Silver Standard Resources, Inc.* | 13,732 | 98,705 | ||||||
Total Metals & Mining | 189,710 |
See notes to financial statements.
43 |
Schedules of Investments — IQ Canada Small Cap ETF (continued) |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Oil, Gas & Consumable Fuels — 3.0% | ||||||||
Gibson Energy, Inc. | 14,707 | $ | 383,814 | |||||
Twin Butte Energy Ltd. | 40,977 | 90,847 | ||||||
Total Oil, Gas & Consumable Fuels | 474,661 | |||||||
Telecommunication Services — 2.2% | ||||||||
Manitoba Telecom Services, Inc. | 10,994 | 356,976 | ||||||
Utilities — 2.7% | ||||||||
Algonquin Power & Utilities Corp. | 23,650 | 187,159 | ||||||
Atlantic Power Corp. | 20,332 | 95,813 | ||||||
Just Energy Group, Inc.(a) | 21,782 | 146,390 | ||||||
Total Utilities | 429,362 | |||||||
Total Common Stocks — 99.3% | ||||||||
(Cost $21,891,886) | $ | 15,867,337 |
Shares | Value | |||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 2.0% | ||||||||
Money Market Fund — 2.0% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $316,226) | 316,226 | $ | 316,226 | |||||
Total Investments — 101.3% | ||||||||
(Cost $22,208,112) | $ | 16,183,563 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (1.3)% | (202,175 | ) | ||||||
Net Assets — 100.0% | $ | 15,981,388 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $306,463; cash collateral of $316,226 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
See notes to financial statements.
44 |
Schedules of Investments — IQ Global Agribusiness Small Cap ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 99.1% | ||||||||
Australia — 6.4% | ||||||||
GrainCorp Ltd. | 130,830 | $ | 1,741,059 | |||||
Nufarm Ltd. | 141,317 | 616,115 | ||||||
Total Australia | 2,357,174 | |||||||
China — 9.0% | ||||||||
China Bluechemical Ltd., Class H | 1,436,414 | 875,478 | ||||||
China Minzhong Food Corp., Ltd.*(a) | 348,797 | 283,195 | ||||||
China Modern Dairy Holdings Ltd.* | 1,385,244 | 478,372 | ||||||
First Tractor Co., Ltd., Class H | 347,058 | 258,485 | ||||||
People’s Food Holdings Ltd. | 520,149 | 553,238 | ||||||
Shenguan Holdings Group Ltd.(a) | 946,148 | 480,352 | ||||||
Yongye International, Inc. ADR* | 28,472 | 151,471 | ||||||
Zhongpin, Inc. ADR* | 20,637 | 267,456 | ||||||
Total China | 3,348,047 | |||||||
Hong Kong — 7.0% | ||||||||
Asian Citrus Holdings Ltd. | 639,166 | 271,789 | ||||||
China Agri-Industries Holdings Ltd. | 1,780,734 | 874,236 | ||||||
China Foods Ltd. | 625,249 | 319,046 | ||||||
China Yurun Food Group Ltd.*(a) | 1,101,308 | 655,625 | ||||||
Global Bio-chem Technology | ||||||||
Group Co., Ltd. | 1,651,237 | 142,557 | ||||||
Sinofert Holdings Ltd. | 1,521,638 | 329,401 | ||||||
Total Hong Kong | 2,592,654 | |||||||
Indonesia — 2.3% | ||||||||
Bumitama Agri Ltd.* | 249,919 | 204,943 | ||||||
PT Bakrie Sumatera Plantations Tbk | 10,752,150 | 100,637 | ||||||
PT Malindo Feedmill Tbk | 598,582 | 172,387 | ||||||
PT Perusahaan Perkebunan London | ||||||||
Sumatra Indonesia Tbk | 2,386,677 | 373,129 | ||||||
Total Indonesia | 851,096 | |||||||
Ireland — 4.5% | ||||||||
Glanbia PLC | 125,963 | 1,685,607 | ||||||
Japan — 25.1% | ||||||||
Fuji Oil Co., Ltd. | 42,507 | 674,631 | ||||||
House Foods Corp. | 50,514 | 880,534 | ||||||
Iseki & Co., Ltd. | 127,849 | 464,619 | ||||||
Itoham Foods, Inc. | 85,466 | 393,068 | ||||||
Kewpie Corp. | 78,596 | 1,186,888 | ||||||
Kumiai Chemical Industry Co., Ltd. | 34,968 | 231,900 | ||||||
Mitsui Sugar Co., Ltd. | 61,154 | 192,107 | ||||||
Miyoshi Oil & Fat Co. Ltd. | 46,731 | 81,075 | ||||||
Morinaga Milk Industry Co., Ltd. | 147,852 | 435,618 | ||||||
Nippon Meat Packers, Inc. | 118,337 | 1,817,392 | ||||||
Nisshin Oillio Group Ltd. | 67,344 | 237,132 | ||||||
Nisshin Seifun Group, Inc. | 129,275 | 1,669,520 | ||||||
NOF Corp. | 112,658 | 606,024 | ||||||
Prima Meat Packers Ltd. | 95,215 | 264,893 | ||||||
Yamatane Corp.(a) | 63,661 | 136,589 | ||||||
Total Japan | 9,271,990 | |||||||
Luxembourg — 2.0% | ||||||||
Adecoagro SA ADR* | 97,290 | 725,783 | ||||||
Netherlands — 10.3% | ||||||||
CSM NV | 56,166 | 1,258,097 | ||||||
Nutreco NV* | 26,729 | 2,539,712 | ||||||
Total Netherlands | 3,797,809 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
New Zealand — 0.5% | ||||||||
A2 Corp. Ltd.* | 302,736 | $ | 181,791 | |||||
Singapore — 2.5% | ||||||||
First Resources Ltd. | 412,107 | 578,854 | ||||||
Indofood Agri Resources Ltd.(a) | 328,138 | 283,739 | ||||||
Mewah International, Inc. | 159,746 | 58,365 | ||||||
Total Singapore | 920,958 | |||||||
Spain — 3.5% | ||||||||
Ebro Foods SA | 63,972 | 1,313,185 | ||||||
Thailand — 1.0% | ||||||||
GFPT PCL* | �� | 372,221 | 106,530 | |||||
Thai Vegetable Oil PCL | 323,196 | 253,271 | ||||||
Total Thailand | 359,801 | |||||||
United Kingdom — 4.1% | ||||||||
Dairy Crest Group PLC | 112,775 | 806,880 | ||||||
Devro PLC | 137,702 | 707,040 | ||||||
Total United Kingdom | 1,513,920 | |||||||
United States — 20.9% | ||||||||
American Vanguard Corp. | 20,364 | 587,298 | ||||||
Chiquita Brands International, Inc.* | 37,238 | 321,364 | ||||||
CVR Partners LP(a) | 18,649 | 490,655 | ||||||
Dole Food Co., Inc.* | 45,631 | 490,990 | ||||||
Lindsay Corp. | 10,704 | 822,281 | ||||||
Smithfield Foods, Inc.* | 109,829 | 2,811,622 | ||||||
Toro Co. | 48,866 | 2,199,459 | ||||||
Total United States | 7,723,669 | |||||||
Total Common Stocks — 99.1% | ||||||||
(Cost $37,531,336) | 36,643,484 | |||||||
Short-Term Investment — 0.5% | ||||||||
Money Market Fund — 0.5% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — Institutional | ||||||||
Class, 0.03%(b) | ||||||||
(Cost $190,453) | 190,453 | 190,453 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 7.3% | ||||||||
Money Market Fund — 7.3% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $2,684,833) | 2,684,833 | 2,684,833 | ||||||
Total Investments — 106.9% | ||||||||
(Cost $40,406,622) | $ | 39,518,770 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (6.9)% | (2,541,631 | ) | ||||||
Net Assets — 100.0% | $ | 36,977,139 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $941,252; cash collateral of $2,684,833 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
ADR — American Depositary Receipt
LP — Limited Partnership
PCL — Public Company Limited
See notes to financial statements.
45 |
Schedules of Investments — IQ Global Oil Small Cap ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 99.2% | ||||||||
Australia — 5.3% | ||||||||
Caltex Australia Ltd. | 4,073 | $ | 91,071 | |||||
Horizon Oil Ltd.*(a) | 25,737 | 10,820 | ||||||
Total Australia | 101,891 | |||||||
Bermuda — 0.2% | ||||||||
Archer Ltd.* | 5,948 | 3,895 | ||||||
Canada — 8.9% | ||||||||
Bankers Petroleum Ltd.* | 7,482 | 18,745 | ||||||
Canyon Services Group, Inc. | 1,498 | 15,623 | ||||||
Ensign Energy Services, Inc. | 3,793 | 63,955 | ||||||
Horizon North Logistics, Inc. | 2,721 | 16,096 | ||||||
Ithaca Energy, Inc.* | 7,250 | 11,893 | ||||||
Southern Pacific Resource Corp.* | 11,934 | 7,831 | ||||||
Sunshine Oilsands Ltd.* | 51,521 | 12,614 | ||||||
TAG Oil Ltd.* | 1,640 | 8,967 | ||||||
Twin Butte Energy Ltd. | 7,273 | 16,124 | ||||||
Total Canada | 171,848 | |||||||
China — 1.3% | ||||||||
Shandong Molong Petroleum Machinery | ||||||||
Co. Ltd., Class H | 6,944 | 2,496 | ||||||
Sinopec Shanghai Petrochemical Co., | ||||||||
Ltd., Class H | 67,315 | 23,159 | ||||||
Total China | 25,655 | |||||||
Colombia — 0.7% | ||||||||
Petrominerales Ltd. | 2,449 | 13,537 | ||||||
Finland — 2.8% | ||||||||
Neste Oil OYJ | 3,422 | 53,372 | ||||||
France — 2.3% | ||||||||
Etablissements Maurel et Prom | 2,601 | 44,288 | ||||||
Ireland — 0.8% | ||||||||
Providence Resources PLC* | 1,642 | 15,628 | ||||||
Italy — 1.3% | ||||||||
ERG SpA | 1,449 | 13,888 | ||||||
Saras SpA* | 9,094 | 12,121 | ||||||
Total Italy | 26,009 | |||||||
Japan — 8.1% | ||||||||
Cosmo Oil Co., Ltd. | 14,144 | 33,687 | ||||||
Showa Shell Sekiyu K.K. | 5,558 | 44,562 | ||||||
Tonengeneral Sekiyu K.K. | 7,715 | 77,934 | ||||||
Total Japan | 156,183 | |||||||
Netherlands — 10.3% | ||||||||
Core Laboratories NV ADR(a) | 1,379 | 199,652 | ||||||
Norway — 3.0% | ||||||||
Det Norske Oljeselskap ASA* | 2,000 | 28,400 | ||||||
DNO International ASA* | 16,705 | 29,220 | ||||||
Total Norway | 57,620 | |||||||
Philippines — 0.8% | ||||||||
Petron Corp. | 44,050 | 16,481 | ||||||
Russia — 0.9% | ||||||||
Alliance Oil Co., Ltd.* | 2,081 | 16,588 | ||||||
Singapore — 0.1% | ||||||||
Kreuz Holdings Ltd. | 4,364 | 1,825 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Thailand — 7.1% | ||||||||
Bangchak Petroleum PCL | 21,602 | $ | 26,681 | |||||
Esso Thailand PCL | 26,115 | 8,586 | ||||||
IRPC PCL | 317,896 | 44,408 | ||||||
Thai Oil PCL | 25,616 | 57,603 | ||||||
Total Thailand | 137,278 | |||||||
United Arab Emirates — 3.4% | ||||||||
Dragon Oil PLC | 6,790 | 66,895 | ||||||
United Kingdom — 2.5% | ||||||||
Rockhopper Exploration PLC* | 7,978 | 16,980 | ||||||
Salamander Energy PLC* | 7,277 | 20,693 | ||||||
Xcite Energy Ltd.* | 7,646 | 11,692 | ||||||
Total United Kingdom | 49,365 | |||||||
United States — 39.4% | ||||||||
Alon USA Energy, Inc. | 587 | 9,744 | ||||||
Bonanza Creek Energy, Inc.* | 1,138 | 39,090 | ||||||
BPZ Resources, Inc.* | 2,846 | 6,090 | ||||||
CVR Energy, Inc. | 462 | 22,763 | ||||||
Gulfport Energy Corp.* | 2,311 | 120,611 | ||||||
Harvest Natural Resources, Inc.*(a) | 1,144 | 3,752 | ||||||
Key Energy Services, Inc.* | 4,387 | 26,059 | ||||||
Kodiak Oil & Gas Corp.* | 7,825 | 61,270 | ||||||
Lufkin Industries, Inc. | 993 | 87,672 | ||||||
Northern Tier Energy LP | 941 | 24,824 | ||||||
Ocean Rig UDW, Inc. | 1,621 | 26,552 | ||||||
Oceaneering International, Inc. | 3,021 | 211,984 | ||||||
PetroQuest Energy, Inc.* | 1,707 | 7,306 | ||||||
Pioneer Energy Services Corp.* | 1,797 | 12,669 | ||||||
Stone Energy Corp.* | 1,430 | 28,214 | ||||||
Synergy Resources Corp.* | 1,216 | 8,208 | ||||||
VAALCO Energy, Inc.* | 1,667 | 11,202 | ||||||
Western Refining, Inc.(a) | 1,772 | 54,772 | ||||||
Total United States | 762,782 | |||||||
Total Common Stocks ��� 99.2% | ||||||||
(Cost $2,154,233) | 1,920,792 | |||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 13.4% | ||||||||
Money Market Fund — 13.4% | ||||||||
BNY Mellon Overnight Government | ||||||||
Fund, 0.17% | ||||||||
(Cost $259,751) | 259,751 | 259,751 | ||||||
Total Investments — 112.6% | ||||||||
(Cost $2,413,984) | $ | 2,180,543 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (12.6)% | (244,115 | ) | ||||||
Net Assets — 100.0% | $ | 1,936,428 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $255,434; cash collateral of $259,751 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
ADR — American Depositary Receipt
K.K. — Kabushiki Kaisha
LP — Limited Partnership
PCL — Public Company Limited
See notes to financial statements.
46 |
Schedules of Investments — IQ US Real Estate Small Cap ETF |
April 30, 2013 |
Shares | Value | |||||||
Common Stocks — 98.7% | ||||||||
Diversified REITs — 8.0% | ||||||||
CapLease, Inc. | 70,336 | $ | 493,759 | |||||
Cousins Properties, Inc. | 84,200 | 919,464 | ||||||
Investors Real Estate Trust | 89,373 | 869,599 | ||||||
Redwood Trust, Inc. | 77,579 | 1,770,353 | ||||||
Resource Capital Corp. | 93,431 | 615,710 | ||||||
Total Diversified REITs | 4,668,885 | |||||||
Hotel REITs — 11.2% | ||||||||
Ashford Hospitality Trust, Inc. | 59,042 | 760,461 | ||||||
FelCor Lodging Trust, Inc.* | 106,805 | 638,694 | ||||||
Hersha Hospitality Trust | 172,523 | 1,031,688 | ||||||
Pebblebrook Hotel Trust | 58,718 | 1,594,781 | ||||||
Summit Hotel Properties, Inc. | 63,094 | 630,309 | ||||||
Sunstone Hotel Investors, Inc.* | 150,044 | 1,862,046 | ||||||
Total Hotel REITs | 6,517,979 | |||||||
Mortgage REITs — 28.2% | ||||||||
AG Mortgage Investment Trust, Inc.(a) | 25,483 | 659,245 | ||||||
Anworth Mortgage Asset Corp. | 135,609 | 855,693 | ||||||
Apollo Commercial Real Estate | ||||||||
Finance, Inc. | 26,797 | 475,379 | ||||||
ARMOUR Residential REIT, Inc. | 358,180 | 2,324,588 | ||||||
CreXus Investment Corp.(a) | 64,874 | 845,308 | ||||||
Dynex Capital, Inc. | 48,855 | 525,191 | ||||||
Gramercy Property Trust, Inc.* | 38,771 | 184,162 | ||||||
Invesco Mortgage Capital | 126,969 | 2,717,137 | ||||||
iStar Financial, Inc.* | 69,678 | 813,839 | ||||||
New York Mortgage Trust, Inc.(a) | 47,203 | 337,029 | ||||||
Newcastle Investment Corp. | 238,290 | 2,699,826 | ||||||
NorthStar Realty Finance Corp. | 157,192 | 1,567,204 | ||||||
PennyMac Mortgage Investment Trust | 52,522 | 1,326,180 | ||||||
RAIT Financial Trust | 56,148 | 479,504 | ||||||
Western Asset Mortgage Capital | ||||||||
Corp.(a) | 21,496 | 481,510 | ||||||
ZAIS Financial Corp.*(a) | 5,474 | 113,093 | ||||||
Total Mortgage REITs | 16,404,888 | |||||||
Office REITs — 19.1% | ||||||||
Brandywine Realty Trust | 132,180 | 1,973,447 | ||||||
CommonWealth REIT | 75,686 | 1,690,068 | ||||||
First Industrial Realty Trust, Inc. | 92,098 | 1,652,238 | ||||||
First Potomac Realty Trust | 47,929 | 766,864 | ||||||
Franklin Street Properties Corp. | 70,055 | 1,069,740 | ||||||
Government Properties Income Trust | 52,833 | 1,376,300 | ||||||
Lexington Realty Trust | 160,363 | 2,054,250 | ||||||
Parkway Properties, Inc. | 29,320 | 534,503 | ||||||
Total Office REITs | 11,117,410 |
Shares | Value | |||||||
Common Stocks (continued) | ||||||||
Residential REITs — 3.9% | ||||||||
Associated Estates Realty Corp. | 44,370 | $ | 792,892 | |||||
Education Realty Trust, Inc. | 108,702 | 1,194,635 | ||||||
Silver Bay Realty Trust Corp. | 14,621 | 278,969 | ||||||
Total Residential REITs | 2,266,496 | |||||||
Retail REITs — 14.2% | ||||||||
Acadia Realty Trust | 51,079 | 1,458,305 | ||||||
Cedar Realty Trust, Inc. | 62,534 | 400,843 | ||||||
Glimcher Realty Trust | 135,770 | 1,702,556 | ||||||
Inland Real Estate Corp. | 86,224 | 976,056 | ||||||
Kite Realty Group Trust | 70,918 | 468,059 | ||||||
Pennsylvania Real Estate | ||||||||
Investment Trust | 51,398 | 1,065,481 | ||||||
Ramco-Gershenson Properties Trust | 46,164 | 806,485 | ||||||
Spirit Realty Capital, Inc. | 65,281 | 1,405,500 | ||||||
Total Retail REITs | 8,283,285 | |||||||
Specialized REITs — 14.1% | ||||||||
CubeSmart | 117,759 | 2,069,026 | ||||||
DCT Industrial Trust, Inc. | 268,387 | 2,101,470 | ||||||
Medical Properties Trust, Inc. | 129,759 | 2,087,822 | ||||||
Sabra Health Care REIT, Inc. | 34,811 | 1,038,064 | ||||||
STAG Industrial, Inc. | 39,841 | 878,096 | ||||||
Total Specialized REITs | 8,174,478 | |||||||
Total Common Stocks — 98.7% | ||||||||
(Cost $51,665,521) | 57,433,421 | |||||||
Short-Term Investment — 1.1% | ||||||||
Money Market Fund — 1.1% | ||||||||
Morgan Stanley Institutional Liquidity | ||||||||
Funds Treasury Portfolio — | ||||||||
Institutional Class, 0.03%(b) | ||||||||
(Cost $657,513) | 657,513 | 657,513 | ||||||
Investment of Cash Collateral For | ||||||||
Securities Loaned — 2.2% | ||||||||
Money Market Fund — 2.2% | ||||||||
BNY Mellon Overnight | ||||||||
Government Fund, 0.17% | ||||||||
(Cost $1,265,866) | 1,265,866 | 1,265,866 | ||||||
Total Investments — 102.0% | ||||||||
(Cost $53,588,900) | $ | 59,356,800 | ||||||
Liabilities in Excess of Other | ||||||||
Assets — (2.0)% | (1,165,175 | ) | ||||||
Net Assets — 100.0% | $ | 58,191,625 |
* | Non-income producing securities. |
(a) | All or a portion of security is on loan. The aggregate market value of securities on loan is $1,222,842; cash collateral of $1,265,866 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Rate shown represents annualized 7-day yield as of April 30, 2013. |
REITs — Real Estate Investment Trusts
See notes to financial statements.
47 |
Statements of Assets and Liabilities |
April 30, 2013 |
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Hedge Market Neutral Tracker ETF | IQ Real Return ETF | IQ Global Resources ETF | IQ Merger Arbitrage ETF | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Investments, at cost: | $ | 389,440,755 | $ | 75,713,089 | $ | 5,006,877 | $ | 67,802,549 | $ | 90,546,906 | $ | 14,160,788 | ||||||||||||||||
Investments, at value (including | ||||||||||||||||||||||||||||
securities on loan)1 | $ | 396,581,571 | $ | 76,717,149 | $ | 5,075,498 | $ | 68,358,452 | $ | 87,111,033 | $ | 14,604,506 | ||||||||||||||||
Cash | 67,293 | — | — | — | 132,398 | 520 | ||||||||||||||||||||||
Foreign currency2 | — | — | — | — | 16,541 | 12,370 | ||||||||||||||||||||||
Cash deposited at broker for | ||||||||||||||||||||||||||||
futures collateral | 405,325 | — | 7,200 | — | 817,000 | 164,100 | ||||||||||||||||||||||
Cash deposited at broker for | ||||||||||||||||||||||||||||
swap collateral | 9,122,662 | 113,760 | 106,418 | — | — | — | ||||||||||||||||||||||
Receivable for capital shares | ||||||||||||||||||||||||||||
created | 5,681,514 | — | — | — | — | — | ||||||||||||||||||||||
Receivable for investments sold | 3,719,758 | — | — | — | — | — | ||||||||||||||||||||||
Dividend, interest and reclaims | ||||||||||||||||||||||||||||
receivable | 592,385 | 8,742 | 4,642 | 6,308 | 146,070 | 4,798 | ||||||||||||||||||||||
Total Assets | 416,170,508 | 76,839,651 | 5,193,758 | 68,364,760 | 88,223,042 | 14,786,294 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Collateral for securities on loan | 22,216,423 | 13,528,401 | 50,663 | 7,386,500 | 2,627,801 | 693,122 | ||||||||||||||||||||||
Due to broker | 921,418 | 47,198 | 146 | — | — | |||||||||||||||||||||||
Payable for capital shares | ||||||||||||||||||||||||||||
redeemed | 4,247,603 | — | — | — | — | |||||||||||||||||||||||
Advisory fees payable | 227,701 | 38,688 | 3,140 | 23,905 | 52,705 | 8,672 | ||||||||||||||||||||||
Variation margin payable | 73,911 | — | 2,740 | — | 31,600 | 6,360 | ||||||||||||||||||||||
Trustee fees payable | 504 | 16 | — | 201 | 79 | 4 | ||||||||||||||||||||||
Compliance fees payable | 207 | 15 | — | 40 | 58 | — | ||||||||||||||||||||||
Payable for investments purchased | 4,981,411 | — | — | — | — | — | ||||||||||||||||||||||
Accrued expenses and other | ||||||||||||||||||||||||||||
liabilities | 54 | 54 | 1 | 54 | 54 | 54 | ||||||||||||||||||||||
Total Liabilities | 32,669,232 | 13,614,372 | 56,690 | 7,410,700 | 2,712,297 | 708,212 | ||||||||||||||||||||||
Net Assets | $ | 383,501,276 | $ | 63,225,279 | $ | 5,137,068 | $ | 60,954,060 | $ | 85,510,745 | $ | 14,078,082 | ||||||||||||||||
Composition of Net Assets | ||||||||||||||||||||||||||||
Paid-in capital | $ | 393,170,478 | $ | 66,776,911 | $ | 5,070,425 | $ | 60,859,619 | $ | 109,428,151 | $ | 15,908,049 | ||||||||||||||||
Undistributed (accumulated) net | ||||||||||||||||||||||||||||
investment income (loss) | (127,863 | ) | (252,752 | ) | (175 | ) | (173,363 | ) | 845,771 | 240,510 | ||||||||||||||||||
Undistributed (accumulated) net | ||||||||||||||||||||||||||||
realized gain (loss) on | ||||||||||||||||||||||||||||
investments, swap transactions, | ||||||||||||||||||||||||||||
futures contracts and foreign | ||||||||||||||||||||||||||||
currency translations | (17,049,445 | ) | (4,302,940 | ) | 5,060 | (288,099 | ) | (20,680,753 | ) | (2,383,494 | ) | |||||||||||||||||
Net unrealized appreciation | ||||||||||||||||||||||||||||
(depreciation) on investments, | ||||||||||||||||||||||||||||
swap transactions, futures | ||||||||||||||||||||||||||||
contracts and foreign currency | ||||||||||||||||||||||||||||
translations | 7,508,106 | 1,004,060 | 61,758 | 555,903 | (4,082,424 | ) | 313,017 | |||||||||||||||||||||
Net Assets | $ | 383,501,276 | $ | 63,225,279 | $ | 5,137,068 | $ | 60,954,060 | $ | 85,510,745 | $ | 14,078,082 | ||||||||||||||||
NET ASSET VALUE PER SHARE | ||||||||||||||||||||||||||||
Shares Outstanding (no par value, | ||||||||||||||||||||||||||||
unlimited shares authorized) | 13,500,000 | 2,350,000 | 200,000 | 2,300,000 | 3,000,000 | 550,000 | ||||||||||||||||||||||
Net Asset Value | $ | 28.41 | $ | 26.90 | $ | 25.69 | $ | 26.50 | $ | 28.50 | $ | 25.60 | ||||||||||||||||
1 Market value of securities on loan: | $ | 21,860,034 | $ | 13,273,076 | $ | 49,923 | $ | 7,236,890 | $ | 2,405,793 | $ | 679,717 | ||||||||||||||||
2 Cost of foreign currency: | $ | — | $ | — | $ | — | $ | — | $ | 13,418 | $ | 11,979 |
See notes to financial statements.
48 |
Statements of Assets and Liabilities (continued) |
April 30, 2013 |
IQ Australia Small Cap ETF | IQ Canada Small Cap ETF | IQ Global Agribusiness Small Cap ETF | |||||||||||
Assets | |||||||||||||
Investments, at cost | $ | 18,307,923 | $ | 22,208,112 | $ | 40,406,622 | |||||||
Investments, at value (including securities on loan)1 | $ | 16,602,956 | $ | 16,183,563 | $ | 39,518,770 | |||||||
Cash | — | — | 47,278 | ||||||||||
Foreign currency2 | 148,945 | 140,151 | 566 | ||||||||||
Dividend, interest and reclaims receivable | 28,453 | 12,658 | 117,883 | ||||||||||
Total Assets | 16,780,354 | 16,336,372 | 39,684,497 | ||||||||||
Liabilities | |||||||||||||
Collateral for securities on loan | 2,896,195 | 316,226 | 2,684,833 | ||||||||||
Advisory fees payable | 7,877 | 9,109 | 22,341 | ||||||||||
Due to custodian | 6,360 | 28,857 | — | ||||||||||
Trustee fees payable | 13 | 12 | 32 | ||||||||||
Compliance fees payable | — | 64 | 98 | ||||||||||
Payable for investments purchased | — | 662 | — | ||||||||||
Accrued expenses and other liabilities | 54 | 54 | 54 | ||||||||||
Total Liabilities | 2,910,499 | 354,984 | 2,707,358 | ||||||||||
Net Assets | $ | 13,869,855 | $ | 15,981,388 | $ | 36,977,139 | |||||||
Composition of Net Assets | |||||||||||||
Paid-in capital | $ | 20,137,047 | $ | 34,367,330 | $ | 41,687,238 | |||||||
Undistributed (accumulated) net investment income (loss) | 233,628 | (305,329 | ) | 44,802 | |||||||||
Undistributed (accumulated) net realized gain (loss) on investments, | |||||||||||||
swap transactions, futures contracts and foreign currency translations | (4,795,287 | ) | (12,059,072 | ) | (3,865,020 | ) | |||||||
Net unrealized appreciation (depreciation) on investments, swap | |||||||||||||
transactions, futures contracts and foreign currency translations | (1,705,533 | ) | (6,021,541 | ) | (889,881 | ) | |||||||
Net Assets | $ | 13,869,855 | $ | 15,981,388 | $ | 36,977,139 | |||||||
NET ASSET VALUE PER SHARE | |||||||||||||
Shares Outstanding (no par value, unlimited shares authorized) | 650,000 | 750,000 | 1,400,000 | ||||||||||
Net Asset Value | $ | 21.34 | $ | 21.31 | $ | 26.41 | |||||||
1 Market value of securities on loan: | $ | 2,460,061 | $ | 306,463 | $ | 941,252 | |||||||
2 Cost of foreign currency: | $ | 149,353 | $ | 137,306 | $ | 566 |
See notes to financial statements.
49 |
Statements of Assets and Liabilities (continued) |
April 30, 2013 |
IQ Global Oil Small Cap ETF | IQ US Real Estate Small Cap ETF | ||||||
Assets | |||||||
Investments, at cost: | $ | 2,413,984 | $ | 53,588,900 | |||
Investments, at value (including securities on loan)1 | $ | 2,180,543 | $ | 59,356,800 | |||
Foreign currency2 | 38,179 | — | |||||
Receivable for capital shares created | — | 5,386,920 | |||||
Receivable for investments sold | 37 | — | |||||
Dividend, interest and reclaims receivable | 3,259 | 71,457 | |||||
Total Assets | 2,222,018 | 64,815,177 | |||||
Liabilities | |||||||
Collateral for securities on loan | 259,751 | 1,265,866 | |||||
Due to custodian | 24,616 | — | |||||
Advisory fees payable | 1,159 | 26,762 | |||||
Trustee fees payable | — | 1 | |||||
Compliance fees payable | 31 | — | |||||
Payable for investments purchased | — | 5,330,887 | |||||
Accrued expenses and other liabilities | 33 | 36 | |||||
Total Liabilities | 285,590 | 6,623,552 | |||||
Net Assets | $ | 1,936,428 | $ | 58,191,625 | |||
Composition of Net Assets | |||||||
Paid-in capital | $ | 2,386,348 | $ | 52,837,257 | |||
Undistributed (accumulated) net investment income (loss) | (8,198 | ) | — | ||||
Undistributed (accumulated) net realized gain (loss) on investments, | |||||||
swap transactions, futures contracts and foreign currency translations | (208,443 | ) | (413,532 | ) | |||
Net unrealized appreciation (depreciation) on investments, swap transactions, | |||||||
futures contracts and foreign currency translations | (233,279 | ) | 5,767,900 | ||||
Net Assets | $ | 1,936,428 | $ | 58,191,625 | |||
NET ASSET VALUE PER SHARE | |||||||
Shares Outstanding (no par value, unlimited shares authorized) | 100,000 | 2,150,000 | |||||
Net Asset Value | $ | 19.36 | $ | 27.07 | |||
1 Market value of securities on loan: | $ | 255,434 | $ | 1,222,842 | |||
2 Cost of foreign currency: | $ | 38,042 | $ | — |
See notes to financial statements.
50 |
Statements of Operations |
For the period ended April 30, 2013 |
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Hedge Market Neutral Tracker ETF** | IQ Real Return ETF | IQ Global Resources ETF | IQ Merger Arbitrage ETF | ||||||||||||||||||
Investment Income | |||||||||||||||||||||||
Dividend income* | $ | 5,363,071 | $ | 1,054,486 | $ | 39,995 | $ | 268,418 | $ | 1,576,593 | $ | 175,627 | |||||||||||
Securities lending income, net | 135,373 | 38,388 | 741 | 36,587 | 30,056 | 2,993 | |||||||||||||||||
Total investment income | 5,498,444 | 1,092,874 | 40,736 | 305,005 | 1,606,649 | 178,620 | |||||||||||||||||
Expenses | |||||||||||||||||||||||
Advisory fees | 2,088,503 | 382,006 | 26,372 | 205,286 | 562,491 | 119,460 | |||||||||||||||||
Trustee fees | 7,312 | 1,520 | 146 | 1,546 | 2,760 | 679 | |||||||||||||||||
Compliance fees | 2,226 | 393 | 23 | 340 | 600 | 126 | |||||||||||||||||
Miscellaneous | 40 | 14 | 227 | 54 | 923 | 917 | |||||||||||||||||
Total expenses | 2,098,081 | 383,933 | 26,768 | 207,226 | 566,774 | 121,182 | |||||||||||||||||
Net investment income (loss) | 3,400,363 | 708,941 | 13,968 | 97,779 | 1,039,875 | 57,438 | |||||||||||||||||
Realized and Unrealized Gain (Loss) | |||||||||||||||||||||||
on Investments, Swap transactions, | |||||||||||||||||||||||
Futures Contracts and | |||||||||||||||||||||||
Foreign Currency Translations | |||||||||||||||||||||||
Net realized gain (loss) from: | |||||||||||||||||||||||
Investment securities | (4,470,376 | ) | (1,545,577 | ) | 3,050 | (397,021 | ) | (6,267,365 | ) | (201,255 | ) | ||||||||||||
In-Kind redemptions | 7,101,992 | 1,684,188 | 57,299 | 372,944 | 9,592,342 | 230,687 | |||||||||||||||||
Swap transactions | 423,643 | (784,913 | ) | 50,020 | — | — | — | ||||||||||||||||
Distributions from investments in | |||||||||||||||||||||||
other investment companies | 304,323 | 15,702 | 7,448 | — | — | — | |||||||||||||||||
Futures contracts | (352,137 | ) | (234,099 | ) | (16,034 | ) | — | (2,061,228 | ) | (185,129 | ) | ||||||||||||
Foreign currency translations | — | — | — | — | (142,699 | ) | (30,607 | ) | |||||||||||||||
Net realized gain (loss) | 3,007,445 | (864,699 | ) | 101,783 | (24,077 | ) | 1,121,050 | (186,304 | ) | ||||||||||||||
Net change in net unrealized | |||||||||||||||||||||||
appreciation (depreciation) on: | |||||||||||||||||||||||
Investment securities | 4,609,189 | 125,122 | 68,621 | 412,304 | (2,413,302 | ) | (468,423 | ) | |||||||||||||||
Futures contracts | 310,694 | 9,606 | (6,863 | ) | — | (742,829 | ) | (150,732 | ) | ||||||||||||||
Foreign currency translations | — | — | — | — | 362 | 156 | |||||||||||||||||
Net change in net unrealized | |||||||||||||||||||||||
appreciation (depreciation) | 4,919,883 | 134,728 | 61,758 | 412,304 | (3,155,769 | ) | (618,999 | ) | |||||||||||||||
Net realized and unrealized | |||||||||||||||||||||||
gain (loss) | 7,927,328 | (729,971 | ) | 163,541 | 388,227 | (2,034,719 | ) | (805,303 | ) | ||||||||||||||
Net Increase (Decrease) in Net | |||||||||||||||||||||||
Assets Resulting from Operations | $ | 11,327,691 | $ | (21,030 | ) | $ | 177,509 | $ | 486,006 | $ | (994,844 | ) | $ | (747,865 | ) | ||||||||
*Net of foreign taxes withheld of: | $ | — | $ | — | $ | — | $ | — | $ | 89,183 | $ | 3,816 |
** Commencement of operations was October 4, 2012.
See notes to financial statements.
51 |
Statements of Operations (continued) |
For the period ended April 30, 2013 |
IQ Australia Small Cap ETF | IQ Canada Small Cap ETF | IQ Global Agribusiness Small Cap ETF | |||||||||
Investment Income | |||||||||||
Dividend income* | $ | 470,606 | $ | 397,577 | $ | 670,017 | |||||
Interest income | 6 | — | 4 | ||||||||
Securities lending income, net | 37,180 | 24,269 | 48,165 | ||||||||
Total investment income | 507,792 | 421,846 | 718,186 | ||||||||
Expenses | |||||||||||
Advisory fees | 95,455 | 152,860 | 270,427 | ||||||||
Trustee fees | 535 | 915 | 1,379 | ||||||||
Compliance fees | 74 | 117 | 303 | ||||||||
Miscellaneous | 54 | 213 | 54 | ||||||||
Total expenses | 96,118 | 154,105 | 272,163 | ||||||||
Net investment income | 411,674 | 267,741 | 446,023 | ||||||||
Realized and Unrealized Gain (Loss) on Investments, Swap transactions, | |||||||||||
Futures Contracts and Foreign Currency Translations | |||||||||||
Net realized gain (loss) from: | |||||||||||
Investment securities | (1,789,366 | ) | (4,648,629 | ) | (1,345,430 | ) | |||||
In-Kind redemptions | (201,234 | ) | (2,034,717 | ) | 851,952 | ||||||
Foreign currency translations | 6,090 | 92 | (4,509 | ) | |||||||
Net realized gain (loss) | (1,984,510 | ) | (6,683,254 | ) | (497,987 | ) | |||||
Net change in net unrealized appreciation (depreciation) on: | |||||||||||
Investment securities | 388,215 | 2,325,760 | 2,666,885 | ||||||||
Foreign currency translations | (598 | ) | (5,596 | ) | (6,132 | ) | |||||
Net change in net unrealized appreciation (depreciation) | 387,617 | 2,320,164 | 2,660,753 | ||||||||
Net realized and unrealized gain (loss) | (1,596,893 | ) | (4,363,090 | ) | 2,162,766 | ||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (1,185,219 | ) | $ | (4,095,349 | ) | $ | 2,608,789 | |||
* Net of foreign taxes withheld of: | $ | 5,351 | $ | 70,515 | $ | 41,147 |
See notes to financial statements.
52 |
Statements of Operations (continued) |
For the period ended April 30, 2013 |
IQ Global Oil Small Cap ETF | IQ US Real Estate Small Cap ETF | |||||
Investment Income | ||||||
Dividend income* | $ | 41,590 | $ | 1,205,385 | ||
Securities lending income, net | 857 | 5,115 | ||||
Total investment income | 42,447 | 1,210,500 | ||||
Expenses | ||||||
Advisory fees | 19,631 | 189,854 | ||||
Trustee fees | 99 | 941 | ||||
Compliance fees | 55 | 257 | ||||
Miscellaneous | 41 | 46 | ||||
Total expenses | 19,826 | 191,098 | ||||
Net investment income (loss) | 22,621 | 1,019,402 | ||||
Realized and Unrealized Gain (Loss) on Investments, Swap transactions, | ||||||
Futures Contracts and Foreign Currency Translations | ||||||
Net realized gain (loss) from: | ||||||
Investment securities | (176,188 | ) | 62,416 | |||
In-Kind redemptions | 105,471 | 4,633,401 | ||||
Foreign currency translations | (970 | ) | — | |||
Net realized gain (loss) | (71,687 | ) | 4,695,817 | |||
Net change in net unrealized appreciation (depreciation) on: | ||||||
Investment securities | 168,659 | 3,970,967 | ||||
Foreign currency translations | (51 | ) | — | |||
Net change in net unrealized appreciation (depreciation) | 168,608 | 3,970,967 | ||||
Net realized and unrealized gain (loss) | 96,921 | 8,666,784 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 119,542 | $ | 9,686,186 | ||
*Net of foreign taxes withheld of: | $ | 2,498 | $ | — |
See notes to financial statements.
53 |
Statements of Changes in Net Assets |
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | IQ Hedge Market Neutral Tracker ETF | IQ Real Return ETF | |||||||||||||||||||||||
For the Year Ended April 30, | For the Year Ended April 30, | For the Period October 4, 2012 * to April 30, 2013 | For the Year Ended April 30, | |||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
Increase (Decrease) in Net | ||||||||||||||||||||||||||
Assets from Operations | ||||||||||||||||||||||||||
Net investment income (loss) | $ | 3,400,363 | $ | 2,529,098 | $ | 708,941 | $ | 465,375 | $ | 13,968 | $ | 97,779 | $ | (10,332 | ) | |||||||||||
Net realized gain (loss) | 3,007,445 | (59,823 | ) | (864,699 | ) | (406,433 | ) | 101,783 | (24,077 | ) | 495,143 | |||||||||||||||
Net change in net unrealized | ||||||||||||||||||||||||||
appreciation (depreciation) | 4,919,883 | (482,500 | ) | 134,728 | (593,194 | ) | 61,758 | 412,304 | 16,786 | |||||||||||||||||
Net increase (decrease) in net | ||||||||||||||||||||||||||
assets resulting from operations | 11,327,691 | 1,986,775 | (21,030 | ) | (534,252 | ) | 177,509 | 486,006 | 501,597 | |||||||||||||||||
Dividends and Distributions to | ||||||||||||||||||||||||||
Shareholders from: | ||||||||||||||||||||||||||
Net investment income | (3,493,395 | ) | (2,465,773 | ) | (678,020 | ) | (349,947 | ) | (19,014 | ) | (23,359 | ) | — | |||||||||||||
Net realized gains | — | — | — | — | — | — | (70,733 | ) | ||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||||||||
to shareholders | (3,493,395 | ) | (2,465,773 | ) | (678,020 | ) | (349,947 | ) | (19,014 | ) | (23,359 | ) | (70,733 | ) | ||||||||||||
Capital Share Transactions | ||||||||||||||||||||||||||
Proceeds from shares created | 290,855,270 | 180,656,444 | 49,109,971 | 43,686,434 | 13,812,208 | 43,522,101 | 38,986,694 | |||||||||||||||||||
Cost of shares redeemed | (111,603,698 | ) | (114,838,725 | ) | (35,661,207 | ) | (20,628,831 | ) | (8,833,635 | ) | (10,573,400 | ) | (24,689,903 | ) | ||||||||||||
Net increase from capital share | ||||||||||||||||||||||||||
transactions | 179,251,572 | 65,817,719 | 13,448,764 | 23,057,603 | 4,978,573 | 32,948,701 | 14,296,791 | |||||||||||||||||||
Total increase in net assets | 187,085,868 | 65,338,721 | 12,749,714 | 22,173,404 | 5,137,068 | 33,411,348 | 14,727,655 | |||||||||||||||||||
Net Assets | ||||||||||||||||||||||||||
Beginning of year | 196,415,408 | 131,076,687 | 50,475,565 | 28,302,161 | — | 27,542,712 | 12,815,057 | |||||||||||||||||||
End of year | $ | 383,501,276 | $ | 196,415,408 | $ | 63,225,279 | $ | 50,475,565 | $ | 5,137,068 | $ | 60,954,060 | $ | 27,542,712 | ||||||||||||
Including undistributed | ||||||||||||||||||||||||||
(accumulated) net investment | ||||||||||||||||||||||||||
income (loss) as follows: | $ | (127,863 | ) | 659,666 | $ | (252,752 | ) | $ | 152,347 | $ | (175 | ) | $ | (173,363 | ) | $ | (1,837 | ) | ||||||||
Changes in Shares Outstanding | ||||||||||||||||||||||||||
Shares outstanding, beginning | ||||||||||||||||||||||||||
of period | 7,100,000 | 4,704,000 | 1,850,000 | 1,000,000 | — | 1,050,000 | 500,000 | |||||||||||||||||||
Shares created | 10,400,000 | 6,550,000 | 1,800,000 | 1,600,000 | 550,000 | 1,650,000 | 1,500,000 | |||||||||||||||||||
Shares redeemed | (4,000,000 | ) | (4,154,000 | ) | (1,300,000 | ) | (750,000 | ) | (350,000 | ) | (400,000 | ) | (950,000 | ) | ||||||||||||
Shares outstanding, end of period | 13,500,000 | 7,100,000 | 2,350,000 | 1,850,000 | 200,000 | 2,300,000 | 1,050,000 |
* Commencement of operations.
See notes to financial statements.
54 |
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, | For the Year Ended April 30, | For the Year Ended April 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Increase (Decrease) in Net | ||||||||||||||||||||||||
Assets from Operations | ||||||||||||||||||||||||
Net investment income (loss) | $ | 1,039,875 | $ | 908,263 | $ | 57,438 | $ | (24,536 | ) | $ | 411,674 | $ | 579,678 | |||||||||||
Net realized gain (loss) | 1,121,050 | (6,039,373 | ) | (186,304 | ) | (110,416 | ) | (1,984,510 | ) | (2,771,606 | ) | |||||||||||||
Net change in net unrealized | ||||||||||||||||||||||||
appreciation (depreciation) | (3,155,769 | ) | (4,269,871 | ) | (618,999 | ) | 720,507 | 387,617 | (4,782,433 | ) | ||||||||||||||
Net increase (decrease) in net | ||||||||||||||||||||||||
assets resulting from | ||||||||||||||||||||||||
operations | (994,844 | ) | (9,400,981 | ) | (747,865 | ) | 585,555 | (1,185,219 | ) | (6,974,361 | ) | |||||||||||||
Dividends and Distributions to | ||||||||||||||||||||||||
Shareholders from: | ||||||||||||||||||||||||
Net investment income | (931,541 | ) | (448,866 | ) | (24,415 | ) | — | (254,722 | ) | (1,324,792 | ) | |||||||||||||
Net realized gains | — | (735,042 | ) | — | — | — | (637,635 | ) | ||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||||||
to shareholders | (931,541 | ) | (1,183,908 | ) | (24,415 | ) | — | (254,722 | ) | (1,962,427 | ) | |||||||||||||
Capital Share Transactions | ||||||||||||||||||||||||
Proceeds from shares created | 95,451,489 | 78,029,100 | 3,815,973 | 13,762,318 | — | 5,004,467 | ||||||||||||||||||
Cost of shares redeemed | (76,052,862 | ) | (79,259,307 | ) | (14,984,498 | ) | (11,249,742 | ) | (967,252 | ) | (23,113,382 | ) | ||||||||||||
Net increase (decrease) from | ||||||||||||||||||||||||
capital share transactions | 19,398,627 | (1,230,207 | ) | (11,168,525 | ) | 2,512,576 | (967,252 | ) | (18,108,915 | ) | ||||||||||||||
Total increase (decrease) | ||||||||||||||||||||||||
in net assets | 17,472,242 | (11,815,096 | ) | (11,940,805 | ) | 3,098,131 | (2,407,193 | ) | (27,045,703 | ) | ||||||||||||||
Net Assets | ||||||||||||||||||||||||
Beginning of period | 68,038,503 | 79,853,599 | 26,018,887 | 22,920,756 | 16,277,048 | 43,322,751 | ||||||||||||||||||
End of period | $ | 85,510,745 | $ | 68,038,503 | $ | 14,078,082 | $ | 26,018,887 | $ | 13,869,855 | $ | 16,277,048 | ||||||||||||
Including undistributed | ||||||||||||||||||||||||
(accumulated) net investment | ||||||||||||||||||||||||
income (loss) as follows: | $ | 845,771 | $ | 507,525 | $ | 240,510 | $ | (126,487 | ) | $ | 233,628 | $ | 44,532 | |||||||||||
Changes in Shares Outstanding | ||||||||||||||||||||||||
Shares outstanding, beginning | ||||||||||||||||||||||||
of period | 2,350,000 | 2,400,000 | 1,000,000 | 900,000 | 700,000 | 1,400,000 | ||||||||||||||||||
Shares created | 3,250,000 | 2,650,000 | 150,000 | 550,000 | — | 200,000 | ||||||||||||||||||
Shares redeemed | (2,600,000 | ) | (2,700,000 | ) | (600,000 | ) | (450,000 | ) | (50,000 | ) | (900,000 | ) | ||||||||||||
Shares outstanding, end | ||||||||||||||||||||||||
of period | 3,000,000 | 2,350,000 | 550,000 | 1,000,000 | 650,000 | 700,000 |
See notes to financial statements.
55 |
Statements of Changes in Net Assets (continued) |
IQ Canada Small Cap ETF | IQ Global Agribusiness Small Cap ETF | IQ Global Oil Small Cap ETF | ||||||||||||||||||||||
For the Year Ended April 30, | For the Year Ended April 30, | For the Year Ended April 30, 2013 | For the Period May 4, 2011* to April 30, 2012 | |||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
Increase (Decrease) in Net | ||||||||||||||||||||||||
Assets from Operations | ||||||||||||||||||||||||
Net investment income (loss) | $ | 267,741 | $ | 277,034 | $ | 446,023 | $ | 388,751 | $ | 22,621 | $ | 23,587 | ||||||||||||
Net realized gain (loss) | (6,683,254 | ) | (7,617,624 | ) | (497,987 | ) | (1,171,219 | ) | (71,687 | ) | 70,073 | |||||||||||||
Net change in net unrealized | ||||||||||||||||||||||||
appreciation (depreciation) | 2,320,164 | (14,985,721 | ) | 2,660,753 | (4,992,733 | ) | 168,608 | (401,887 | ) | |||||||||||||||
Net increase (decrease) in net | ||||||||||||||||||||||||
assets resulting from | ||||||||||||||||||||||||
operations | (4,095,349 | ) | (22,326,311 | ) | 2,608,789 | (5,775,201 | ) | 119,542 | (308,227 | ) | ||||||||||||||
Dividends and Distributions to | ||||||||||||||||||||||||
Shareholders from: | ||||||||||||||||||||||||
Net investment income | (739,738 | ) | (400,361 | ) | (519,028 | ) | (331,760 | ) | (45,351 | ) | (12,378 | ) | ||||||||||||
Total dividends and distributions | ||||||||||||||||||||||||
to shareholders | (739,738 | ) | (400,361 | ) | (519,028 | ) | (331,760 | ) | (45,351 | ) | (12,378 | ) | ||||||||||||
Capital Share Transactions | ||||||||||||||||||||||||
Proceeds from shares created | — | 6,200,746 | 7,431,880 | 18,729,999 | 3,527,959 | 5,640,912 | ||||||||||||||||||
Cost of shares redeemed | (10,592,646 | ) | (72,557,289 | ) | (12,253,168 | ) | (27,753,609 | ) | (4,302,358 | ) | (2,683,671 | ) | ||||||||||||
Net increase (decrease) from | ||||||||||||||||||||||||
capital share transactions | (10,592,646 | ) | (66,356,543 | ) | (4,821,288 | ) | (9,023,610 | ) | (774,399 | ) | 2,957,241 | |||||||||||||
Total increase (decrease) in | ||||||||||||||||||||||||
net assets | (15,427,733 | ) | (89,083,215 | ) | (2,731,527 | ) | (15,130,571 | ) | (700,208 | ) | 2,636,636 | |||||||||||||
Net Assets | ||||||||||||||||||||||||
Beginning of period | 31,409,121 | 120,492,336 | 39,708,666 | 54,839,237 | 2,636,636 | — | ||||||||||||||||||
End of period | $ | 15,981,388 | $ | 31,409,121 | $ | 36,977,139 | $ | 39,708,666 | $ | 1,936,428 | $ | 2,636,636 | ||||||||||||
Including undistributed | ||||||||||||||||||||||||
(accumulated) net investment | ||||||||||||||||||||||||
income (loss) as follows: | $ | (305,329 | ) | $ | 59,348 | $ | 44,802 | $ | 83,218 | $ | (8,198 | ) | $ | 10,305 | ||||||||||
Changes in Shares Outstanding | ||||||||||||||||||||||||
Shares outstanding, beginning | ||||||||||||||||||||||||
of period | 1,200,000 | 3,400,000 | 1,600,000 | 2,000,000 | 150,000 | — | ||||||||||||||||||
Shares created | — | 200,000 | 300,000 | 750,000 | 200,000 | 300,000 | ||||||||||||||||||
Shares redeemed | (450,000 | ) | (2,400,000 | ) | (500,000 | ) | (1,150,000 | ) | (250,000 | ) | (150,000 | ) | ||||||||||||
Shares outstanding, end | ||||||||||||||||||||||||
of period | 750,000 | 1,200,000 | 1,400,000 | 1,600,000 | 100,000 | 150,000 |
* Commencement of operations.
See notes to financial statements.
56 |
Statements of Changes in Net Assets (continued) |
IQ US Real Estate Small Cap ETF | |||||||
For the Year Ended April 30, 2013 | For the Period June 13, 2011* to April 30, 2012 | ||||||
Increase (Decrease) in Net Assets from Operations | |||||||
Net investment income (loss) | $ | 1,019,402 | $ | 482,815 | |||
Net realized gain (loss) | 4,695,817 | 580,016 | |||||
Net change in net unrealized appreciation (depreciation) | 3,970,967 | 1,796,933 | |||||
Net increase (decrease) in net assets resulting from operations | 9,686,186 | 2,859,764 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income | (1,240,905 | ) | (328,571 | ) | |||
Total dividends and distributions to shareholders | (1,240,905 | ) | (328,571 | ) | |||
Capital Share Transactions | |||||||
Proceeds from shares created | 58,516,286 | 42,206,389 | |||||
Cost of shares redeemed | (41,438,793 | ) | (12,068,731 | ) | |||
Net increase (decrease) from capital share transactions | 17,077,493 | 30,137,658 | |||||
Total increase (decrease) in net assets | 25,522,774 | 32,668,851 | |||||
Net Assets | |||||||
Beginning of period | 32,668,851 | — | |||||
End of period | $ | 58,191,625 | $ | 32,668,851 | |||
Including undistributed (accumulated) net investment income (loss) as follows: | — | $ | 154,244 | ||||
Changes in Shares Outstanding | |||||||
Shares outstanding, beginning of period | 1,600,000 | — | |||||
Shares created | 2,450,000 | 2,250,000 | |||||
Shares redeemed | (1,900,000 | ) | (650,000 | ) | |||
Shares outstanding, end of period | 2,150,000 | 1,600,000 |
* Commencement of operations.
See notes to financial statements.
57 |
Financial Highlights |
Selected Data for a Share of Capital Stock Outstanding |
IQ Hedge Multi-Strategy Tracker ETF | IQ Hedge Macro Tracker ETF | ||||||||||||||||||||||||||||||||||
For the Year Ended April 30, | For the Period March 24, 20091 to April 30, 2009 | For the Year Ended April 30, | For the Period June 8, 20091 to April 30, 2010 | ||||||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||
Net asset value, beginning | |||||||||||||||||||||||||||||||||||
of period | $ | 27.66 | $ | 27.86 | $ | 27.21 | $ | 25.41 | $ | 25.00 | $ | 27.28 | $ | 28.30 | $ | 26.54 | $ | 25.00 | |||||||||||||||||
Income from Investment | |||||||||||||||||||||||||||||||||||
Operations | |||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.34 | 0.43 | 0.61 | 0.52 | 0.02 | 0.38 | 0.39 | 0.38 | 0.26 | ||||||||||||||||||||||||||
Net realized and unrealized gain | |||||||||||||||||||||||||||||||||||
(loss) on investments | 0.69 | (0.27 | ) | 0.45 | 1.51 | 0.39 | (0.29 | ) | (1.14 | ) | 1.53 | 1.53 | |||||||||||||||||||||||
Distributions of net realized gains | |||||||||||||||||||||||||||||||||||
from investments in other | |||||||||||||||||||||||||||||||||||
investment companies | 0.03 | 0.01 | 0.003 | — | — | 0.01 | 0.003 | 0.003 | — | ||||||||||||||||||||||||||
Net increase (decrease) in net | |||||||||||||||||||||||||||||||||||
assets resulting from investment | |||||||||||||||||||||||||||||||||||
operations | 1.06 | 0.17 | 1.06 | 2.03 | 0.41 | 0.10 | (0.75 | ) | 1.91 | 1.79 | |||||||||||||||||||||||||
Distributions from: | |||||||||||||||||||||||||||||||||||
Net investment income | (0.31 | ) | (0.37 | ) | (0.41 | ) | (0.23 | ) | — | (0.48 | ) | (0.27 | ) | (0.15 | ) | (0.25 | ) | ||||||||||||||||||
Net realized gains | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total distributions from net | |||||||||||||||||||||||||||||||||||
investment income and | |||||||||||||||||||||||||||||||||||
realized gains | (0.31 | ) | (0.37 | ) | (0.41 | ) | (0.23 | ) | — | (0.48 | ) | (0.27 | ) | (0.15 | ) | (0.25 | ) | ||||||||||||||||||
Net asset value, end of period | $ | 28.41 | $ | 27.66 | $ | 27.86 | $ | 27.21 | $ | 25.41 | $ | 26.90 | $ | 27.28 | $ | 28.30 | $ | 26.54 | |||||||||||||||||
Total Return | |||||||||||||||||||||||||||||||||||
Total investment return based on | |||||||||||||||||||||||||||||||||||
net asset value5 | 3.85 | % | 0.65 | % | 3.95 | % | 8.00 | % | 1.64 | % | 0.36 | % | (2.61 | )% | 7.21 | % | 7.16 | % | |||||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||||||
Net assets, end of period | |||||||||||||||||||||||||||||||||||
(000's omitted) | $ | 383,501 | $ | 196,415 | $ | 131,077 | $ | 92,639 | $ | 11,536 | $ | 63,225 | $ | 50,476 | $ | 28,302 | $ | 10,614 | |||||||||||||||||
Ratio to average net assets of: | |||||||||||||||||||||||||||||||||||
Expenses | 0.75 | % | 0.75 | % | 0.77 | % | 0.77 | % | 0.13 | %6 | 0.75 | % | 0.75 | % | 0.77 | % | 0.76 | %6 | |||||||||||||||||
Net investment income (loss) | 1.22 | % | 1.57 | % | 2.23 | % | 1.93 | % | 0.08 | %6 | 1.39 | % | 1.44 | % | 1.41 | % | 1.10 | %6 | |||||||||||||||||
Portfolio turnover rate7 | 159 | % | 90 | % | 145 | % | 169 | % | 0 | %8 | 146 | % | 108 | % | 54 | % | 77 | % |
See footnotes on page 62
See notes to financial statements.
58 |
Financial Highlights (continued) |
Selected Data for a Share of Capital Stock Outstanding |
IQ Hedge Market Neutral Tracker ETF | IQ Real Return ETF | |||||||||||||||||||
For the Period October 4, 20121 to April 30, 2013 | For the Year Ended April 30, | For the Period October 26, 20091 to April 30, 2010 | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Net asset value, beginning of period | $ | 24.98 | $ | 26.23 | $ | 25.63 | $ | 24.99 | $ | 25.00 | ||||||||||
Income from Investment Operations | ||||||||||||||||||||
Net investment income (loss)2 | 0.06 | 0.06 | (0.01 | ) | (0.08 | ) | (0.02 | ) | ||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
on investments | 0.68 | 0.23 | 0.66 | 0.72 | 0.01 | |||||||||||||||
Distributions of net realized gains from investments | ||||||||||||||||||||
in other investment companies | 0.03 | — | — | — | — | |||||||||||||||
Net increase (decrease) in net assets resulting | ||||||||||||||||||||
from investment operations | 0.77 | 0.29 | 0.65 | 0.64 | (0.01 | ) | ||||||||||||||
Distributions from: | ||||||||||||||||||||
Net investment income | (0.06 | ) | (0.02 | ) | — | (0.00 | )4 | — | ||||||||||||
Net realized gains | — | — | (0.05 | ) | — | — | ||||||||||||||
Total distributions from net investment income | ||||||||||||||||||||
and realized gains | (0.06 | ) | (0.02 | ) | (0.05 | ) | (0.00 | )4 | — | |||||||||||
Net asset value, end of period | $ | 25.69 | $ | 26.50 | $ | 26.23 | $ | 25.63 | $ | 24.99 | ||||||||||
Total Return | ||||||||||||||||||||
Total investment return based on net | ||||||||||||||||||||
asset value5 | 3.10 | % | 1.09 | % | 2.56 | % | 2.58 | % | (0.04 | )% | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (000's omitted) | $ | 5,137 | $ | 60,954 | $ | 27,543 | $ | 12,815 | $ | 13,744 | ||||||||||
Ratio to average net assets of: | ||||||||||||||||||||
Expenses | 0.76 | %6 | 0.48 | % | 0.48 | % | 0.49 | % | 0.50 | %6 | ||||||||||
Net investment income (loss) | 0.40 | %6 | 0.23 | % | (0.05 | )% | (0.32 | )% | (0.14 | )%6 | ||||||||||
Portfolio turnover rate7 | 29 | % | 72 | % | 62 | % | 52 | % | 44 | % |
See footnotes on page 62
See notes to financial statements.
59 |
Financial Highlights (continued) |
Selected Data for a Share of Capital Stock Outstanding |
IQ Global Resources ETF | IQ Merger Arbitrage ETF | ||||||||||||||||||||||||||||||
For the Year Ended April 30, | For the Period October 26, 20091 to April 30, 2010 | For the Year Ended April 30, | For the Period November 16, 20091 to April 30, 2010 | ||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 28.95 | $ | 33.27 | $ | 27.50 | $ | 25.00 | $ | 26.02 | $ | 25.47 | $ | 26.34 | $ | 25.00 | |||||||||||||||
Income from Investment Operations | |||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.40 | 0.39 | 0.29 | 0.12 | 0.09 | (0.03 | ) | 0.01 | 0.03 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) | |||||||||||||||||||||||||||||||
on investments | (0.48 | ) | (4.17 | ) | 5.78 | 2.42 | (0.46 | ) | 0.58 | (0.55 | ) | 1.31 | |||||||||||||||||||
Net increase (decrease) in net assets | |||||||||||||||||||||||||||||||
resulting from investment operations | (0.08 | ) | (3.78 | ) | 6.07 | 2.54 | (0.37 | ) | 0.55 | (0.54 | ) | 1.34 | |||||||||||||||||||
Distributions from: | |||||||||||||||||||||||||||||||
Net investment income | (0.37 | ) | (0.20 | ) | (0.12 | ) | (0.04 | ) | (0.05 | ) | — | (0.01 | ) | (0.00 | )4 | ||||||||||||||||
Net realized gains | — | (0.34 | ) | (0.18 | ) | — | — | — | (0.32 | ) | — | ||||||||||||||||||||
Total distributions from net investment | |||||||||||||||||||||||||||||||
income and realized gains | (0.37 | ) | (0.54 | ) | (0.30 | ) | (0.04 | ) | (0.05 | ) | — | (0.33 | ) | (0.00 | )4 | ||||||||||||||||
Net asset value, end of period | $ | 28.50 | $ | 28.95 | $ | 33.27 | $ | 27.50 | $ | 25.60 | $ | 26.02 | $ | 25.47 | $ | 26.34 | |||||||||||||||
Total Return | |||||||||||||||||||||||||||||||
Total investment return based on net | |||||||||||||||||||||||||||||||
asset value5 | (0.35 | )% | (11.30 | )% | 22.17 | % | 10.18 | % | (1.42 | )% | 2.16 | % | (2.03 | )% | 5.37 | % | |||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||
Net assets, end of period (000's omitted) | $ | 85,511 | $ | 68,039 | $ | 79,854 | $ | 8,249 | $ | 14,078 | $ | 26,019 | $ | 22,921 | $ | 31,602 | |||||||||||||||
Ratio to average net assets of: | |||||||||||||||||||||||||||||||
Expenses | 0.76 | % | 0.75 | % | 0.76 | % | 0.79 | %6 | 0.76 | % | 0.75 | % | 0.76 | % | 0.77 | %6 | |||||||||||||||
Net investment income (loss) | 1.39 | % | 1.31 | % | 0.94 | % | 0.93 | %6 | 0.36 | % | (0.11 | )% | 0.04 | % | 0.22 | %6 | |||||||||||||||
Portfolio turnover rate7 | 119 | % | 178 | % | 117 | % | 158 | % | 374 | % | 365 | % | 365 | % | 141 | % |
See footnotes on page 62
See notes to financial statements.
60 |
Financial Highlights (continued) |
Selected Data for a Share of Capital Stock Outstanding |
IQ Australia Small Cap ETF | IQ Canada Small Cap ETF | |||||||||||||||||||||||||||||||
For the Year Ended April 30, | For the Period March 22, 20101 to April 30, 2010 | For the Year Ended April 30, | For the Period March 22, 20101 to April 30, 2010 | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 23.25 | $ | 30.94 | $ | 25.64 | $ | 25.00 | $ | 26.17 | $ | 35.44 | $ | 26.02 | $ | 25.00 | ||||||||||||||||
Income from Investment Operations | ||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.62 | 0.64 | 1.03 | 0.03 | 0.28 | 0.16 | 0.14 | (0.01 | ) | |||||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||
on investments | (2.14 | ) | (5.71 | ) | 4.76 | 0.61 | (4.27 | ) | (9.12 | ) | 9.75 | 1.03 | ||||||||||||||||||||
Net increase (decrease) in net assets resulting | ||||||||||||||||||||||||||||||||
from investment operations | (1.52 | ) | (5.07 | ) | 5.79 | 0.64 | (3.99 | ) | (8.96 | ) | 9.89 | 1.02 | ||||||||||||||||||||
Distributions from: | ||||||||||||||||||||||||||||||||
Net investment income | (0.39 | ) | (1.77 | ) | (0.45 | ) | — | (0.87 | ) | (0.31 | ) | (0.47 | ) | — | ||||||||||||||||||
Net realized gains | — | (0.85 | ) | (0.04 | ) | — | — | — | — | — | ||||||||||||||||||||||
Total distributions from net investment | ||||||||||||||||||||||||||||||||
income and realized gains | (0.39 | ) | (2.62 | ) | (0.49 | ) | — | (0.87 | ) | (0.31 | ) | (0.47 | ) | — | ||||||||||||||||||
Net asset value, end of period | $ | 21.34 | $ | 23.25 | $ | 30.94 | $ | 25.64 | $ | 21.31 | $ | 26.17 | $ | 35.44 | $ | 26.02 | ||||||||||||||||
Total Return | ||||||||||||||||||||||||||||||||
Total investment return based on net | ||||||||||||||||||||||||||||||||
asset value5 | (6.51 | )% | (15.08 | )% | 22.71 | % | 2.56 | % | (15.49 | )% | (25.24 | )% | 38.15 | % | 4.08 | % | ||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||
Net assets, end of period (000's omitted) | $ | 13,870 | $ | 16,277 | $ | 43,323 | $ | 8,973 | $ | 15,981 | $ | 31,409 | $ | 120,492 | $ | 9,107 | ||||||||||||||||
Ratio to average net assets of: | ||||||||||||||||||||||||||||||||
Expenses | 0.69 | % | 0.69 | % | 0.69 | % | 0.71 | %6 | 0.70 | % | 0.69 | % | 0.69 | % | 0.71 | %6 | ||||||||||||||||
Net investment income (loss) | 2.98 | % | 2.49 | % | 3.72 | % | 1.09 | %6 | 1.21 | % | 0.55 | % | 0.44 | % | (0.20 | )%6 | ||||||||||||||||
Portfolio turnover rate7 | 29 | % | 42 | % | 49 | % | 0 | %8 | 41 | % | 37 | % | 52 | % | 0 | % |
See footnotes on page 62
See notes to financial statements.
61 |
Financial Highlights (continued) |
Selected Data for a Share of Capital Stock Outstanding |
IQ Global Agribusiness Small Cap ETF | IQ Global Oil Small Cap ETF | IQ US Real Estate Small Cap ETF | |||||||||||||||||||||||||
For the Year Ended April 30, | For the Period March 21, 20111 to April 30, 2011 | For the Year Ended April 30, 2013 | For the Period May 4, 20111 to April 30, 2012 | For the Year Ended April 30, 2013 | For the Period June 13, 20111 to April 30, 2012 | ||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 24.82 | $ | 27.42 | $ | 25.40 | $ | 17.58 | $ | 19.56 | $ | 20.42 | $ | 19.91 | |||||||||||||
Income from Investment Operations | |||||||||||||||||||||||||||
Net investment income (loss)2 | 0.31 | 0.22 | 0.06 | 0.15 | 0.21 | 0.83 | 0.73 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on | |||||||||||||||||||||||||||
investments | 1.64 | (2.61 | ) | 1.96 | 1.93 | (2.07 | ) | 7.00 | 0.37 | ||||||||||||||||||
Net increase (decrease) in net assets resulting | |||||||||||||||||||||||||||
from investment operations | 1.95 | (2.39 | ) | 2.02 | 2.08 | (1.86 | ) | 7.83 | 1.10 | ||||||||||||||||||
Distributions from: | |||||||||||||||||||||||||||
Net investment income | (0.36 | ) | (0.21 | ) | — | (0.30 | ) | (0.12 | ) | (1.18 | ) | (0.59 | ) | ||||||||||||||
Net realized gains | — | — | — | — | — | — | — | ||||||||||||||||||||
Total distributions from net investment income | |||||||||||||||||||||||||||
and realized gains | (0.36 | ) | (0.21 | ) | — | (0.30 | ) | (0.12 | ) | (1.18 | ) | (0.59 | ) | ||||||||||||||
Net asset value, end of period | $ | 26.41 | $ | 24.82 | $ | 27.42 | $ | 19.36 | $ | 17.58 | $ | 27.07 | $ | 20.42 | |||||||||||||
Total Return | |||||||||||||||||||||||||||
Total investment return based on net | |||||||||||||||||||||||||||
asset value5 | 7.91 | % | (8.64 | )% | 7.95 | % | 12.09 | % | (9.40 | )% | 39.85 | % | 6.05 | % | |||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||||
Net assets, end of period (000's omitted) | $ | 36,977 | $ | 39,709 | $ | 54,839 | $ | 1,936 | $ | 2,637 | $ | 58,192 | $ | 32,669 | |||||||||||||
Ratio to average net assets of: | |||||||||||||||||||||||||||
Expenses | 0.75 | % | 0.75 | % | 0.75 | %6 | 0.76 | % | 0.75 | %6 | 0.69 | % | 0.69 | %6 | |||||||||||||
Net investment income (loss) | 1.24 | % | 0.89 | % | 1.96 | %6 | 0.86 | % | 1.22 | %6 | 3.70 | % | 4.43 | %6 | |||||||||||||
Portfolio turnover rate7 | 17 | % | 26 | % | 0 | % | 30 | % | 10 | % | 16 | % | 11 | % |
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. Total returns may reflect adjustments to conform to generally accepted accounting principles. |
6 | Annualized. |
7 | 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. |
8 | Portfolio turnover rate for the period was greater than 0% yet less than 0.5% |
See notes to financial statements.
62 |
Notes to Financial Statements |
April 30, 2013 |
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 eleven active funds (collectively, the “Funds” and each individually, a “Fund”): IQ Hedge Multi-Strategy Tracker ETF, IQ Hedge Macro Tracker ETF, IQ Hedge Market Neutral Tracker ETF, IQ Real Return ETF, IQ Global Resources ETF, IQ Merger Arbitrage ETF, IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ Global Agribusiness Small Cap ETF, IQ Global Oil Small Cap ETF and IQ U.S. Real Estate 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 Hedge Market Neutral Tracker ETF commenced operations on October 4, 2012; 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 Global Agribusiness Small Cap ETF commenced operations on March 21, 2011; IQ Global Oil Small Cap ETF commenced operations on May 4, 2011; and IQ US Real Estate Small Cap ETF commenced operations on June 13, 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 Hedge Market Neutral Tracker ETF is to seek results that correspond, before fees and expenses, generally to the price and yield performance of the IQ Hedge Market Neutral Index, developed by IndexIQ. The objective of the IQ Hedge Market Neutral 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 pursuing a market neutral 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 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 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 investment 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 is to seek to identify investment opportunities in the acquisition and merger market segment globally.
The investment 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
63 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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 investment 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 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 investment 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.
The investment objective of the IQ Global Oil 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 Oil Small Cap Index, developed by IndexIQ. The objective of the IQ Global Oil Small Cap Index is to track the overall performance of the global small cap companies engaged in the oil sector, including in the areas of exploration and production, refining and marketing, and equipment, services and drilling.
The investment objective of the IQ U.S. Real Estate Small Cap ETF is to seek investment results that correspond, before fees and expenses, generally to the price and yield performance of the IQ US Real Estate Small Cap Index, developed by IndexIQ. The objective of the IQ U.S. Real Estate Small Cap Index is to track the overall performance of the small capitalization U.S. real estate companies.
Investors may find the financial statements of any issuer whose securities represent a significant amount of a Fund’s assets on the SEC’s website (www.sec.gov).
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, investment funds and futures 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. Events occurring after the close of trading in non-U.S. exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the NYSE. 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 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
64 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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. Investments in open end regulated investment companies are valued at net asset value. Price information on ETFs is taken from the exchange where the security is primarily traded. Under normal conditions, the Funds invest cash collateral from securities lending activities into BNY Mellon Overnight Government Fund (“BNY Mellon Overnight Government”). The BNY Mellon Overnight Government’s investment objective is the maximization of current income to the extent consistent with preservation of capital and the maintenance of liquidity. BNY Mellon Overnight Government has no redemption restrictions, and is valued at NAV.
Due to the inherent uncertainty of valuations, fair values may differ significantly from the values that would have been used had an active market existed. Fair valuation could result in a different NAV than a NAV determined by using market quotes.
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 Funds’ investments. These inputs are summarized in the following hierarchy:
• | 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. With respect to the valuation of Level 3 securities, IndexIQ may employ a market-based valuation approach which may use related or comparable securities, recent transactions, market multiples, book values, and other relevant information to determine fair value. IndexIQ may also use an income-based valuation approach in which anticipated future cash flows of the financial instrument are discounted to calculate fair value. IndexIQ representatives meet regularly to review and discuss the appropriateness of such fair values using more current information such as, recent security news, recent market transactions, updated corporate action information and/or other macro or security specific events.
All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Board, although the actual calculations may be done by others. Factors considered in making this determination 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.
65 |
Notes to Financial Statements (continued) |
April 30, 2013 |
Transfers between levels, if any, are considered to have occurred at the beginning of the reporting period. Transfers between levels and the reasons for these transfers are detailed in the tables below.
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, 2013 in valuing the Funds’ assets and liabilities carried at fair value:
Level 1 | Level 2 | Level 3 | Total | ||||||||||
IQ Hedge Multi-Strategy Tracker ETF | |||||||||||||
Assets | |||||||||||||
Investment Companies* | $ | 337,216,818 | $ | — | $ | — | $ | 337,216,818 | |||||
Other Financial Instruments** | 503,533 | — | — | 503,533 | |||||||||
Short-Term Investments | 59,364,753 | — | — | 59,364,753 | |||||||||
Total | $ | 397,085,104 | $ | — | — | $ | 397,085,104 | ||||||
Liabilities | |||||||||||||
Other Financial Instruments** | (136,243 | ) | — | — | (136,243 | ) | |||||||
Total | $ | (136,243 | ) | $ | — | $ | — | $ | (136,243 | ) | |||
IQ Hedge Macro Tracker ETF | |||||||||||||
Assets | |||||||||||||
Investment Companies* | $ | 62,641,047 | $ | — | $ | — | $ | 62,641,047 | |||||
Short-Term Investments | 14,076,102 | — | — | 14,076,102 | |||||||||
Total | $ | 76,717,149 | $ | — | $ | — | $ | 76,717,149 | |||||
IQ Hedge Market Neutral Tracker ETF | |||||||||||||
Assets | |||||||||||||
Investment Companies* | $ | 4,711,330 | $ | — | $ | — | $ | 4,711,330 | |||||
Short-Term Investments | 364,168 | — | — | 364,168 | |||||||||
Total | $ | 5,075,498 | $ | — | $ | — | $ | 5,075,498 | |||||
Liabilities | |||||||||||||
Other Financial Instruments** | (6,863 | ) | — | — | (6,863 | ) | |||||||
Total | $ | (6,863 | ) | $ | — | $ | — | $ | (6,863 | ) | |||
IQ Real Return ETF | |||||||||||||
Assets | |||||||||||||
Investment Companies* | $ | 60,762,455 | $ | — | $ | — | $ | 60,762,455 | |||||
Short-Term Investments | 7,595,997 | — | — | 7,595,997 | |||||||||
Total | $ | 68,358,452 | $ | — | $ | — | $ | 68,358,452 | |||||
IQ Global Resources ETF | |||||||||||||
Assets | |||||||||||||
Common Stocks† | $ | 76,949,897 | $ | 365,825 | $ | — | $ | 77,315,722 | |||||
Short-Term Investments | 9,795,311 | — | — | 9,795,311 | |||||||||
Total | $ | 86,745,208 | $ | 365,825 | $ | — | $ | 87,111,033 | |||||
Liabilities | |||||||||||||
Other Financial Instruments** | (649,264 | ) | — | — | (649,264 | ) | |||||||
Total | $ | (649,264 | ) | $ | — | $ | — | $ | (649,264 | ) | |||
IQ Merger Arbitrage ETF | |||||||||||||
Assets | |||||||||||||
Common Stocks* | $ | 11,663,535 | $ | — | $ | — | $ | 11,663,535 | |||||
Short-Term Investments | 2,940,971 | — | — | 2,940,971 | |||||||||
Total | 14,604,506 | — | — | 14,604,506 | |||||||||
Liabilities | |||||||||||||
Other Financial Instruments** | (131,132 | ) | — | — | (131,132 | ) | |||||||
Total | $ | (131,132 | ) | $ | — | $ | — | $ | (131,132 | ) |
66 |
Notes to Financial Statements (continued) |
April 30, 2013 |
Level 1 | Level 2 | Level 3 | Total | ||||||||
IQ Australia Small Cap ETF | |||||||||||
Assets | |||||||||||
Common Stocks* | $ | 13,685,829 | $ | 20,932 | $ | — | $ | 13,706,761 | |||
Short-Term Investments | 2,896,195 | — | — | 2,896,195 | |||||||
Total | $ | 16,582,024 | $ | 20,932 | $ | — | $ | 16,602,956 | |||
IQ Canada Small Cap ETF | |||||||||||
Assets | |||||||||||
Common Stocks* | $ | 15,863,746 | $ | 3,591 | $ | — | $ | 15,867,337 | |||
Short-Term Investments | 316,226 | — | — | 316,226 | |||||||
Total | $ | 16,179,972 | $ | 3,591 | $ | — | $ | 16,183,563 | |||
IQ Global Agribusiness Small Cap ETF | |||||||||||
Assets | |||||||||||
Common Stocks† | $ | 36,492,013 | $ | 151,471 | $ | — | $ | 36,643,484 | |||
Short-Term Investments | 2,875,286 | — | — | 2,875,286 | |||||||
Total | $ | 39,367,299 | $ | 151,471 | $ | — | $ | 39,518,770 | |||
IQ Global Oil Small Cap ETF | |||||||||||
Assets | |||||||||||
Common Stocks† | $ | 1,920,792 | $ | — | $ | — | $ | 1,920,792 | |||
Short-Term Investments | 259,751 | — | — | 259,751 | |||||||
Total | $ | 2,180,543 | $ | — | $ | — | $ | 2,180,543 | |||
IQ US Real Estate Small Cap ETF | |||||||||||
Assets | |||||||||||
Common Stocks* | $ | 57,433,421 | $ | — | $ | — | $ | 57,433,421 | |||
Short-Term Investments | 1,923,379 | — | — | 1,923,379 | |||||||
Total | $ | 59,356,800 | $ | — | $ | — | $ | 59,356,800 |
* | 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. |
The following is a summary of transfers between Level 1 and Level 2 fair value measurements that occurred during the year ended April 30, 2013.
Transfers from Level 1 to Level 21 | ||
IQ Global Resources ETF | $ | 337,199 |
IQ Australia Small Cap ETF | $ | 127,155 |
IQ Canada Small Cap ETF | $ | 317,753 |
IQ Global Agribusiness Small Cap ETF | $ | 104,299 |
1 | Transfers from Level 1 to Level 2 are as a result of the unavailability of a quoted price in an active market. |
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value. All transfers in or out of Level 3 are done using the beginning of period method.
IQ Global Agribusiness Small Cap ETF | Common Stock | |||
Balance as of April 30, 2012 | $ | — | ** | |
Sales | (23,005 | ) | ||
Realized gain (loss) | (526,082 | ) | ||
Change in unrealized depreciation | 549,087 | |||
Balance as of April 30, 2013 | $ | — | ||
Net change in unrealized appreciation/depreciation from investments still held | ||||
as of April 30, 2013 was: | $ | — |
** Included Level 3 security valued at $0
67 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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, if any, 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 Funds 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 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. If applicable, the Funds will recognize interest expense and penalties in “Miscellaneous” expenses on the Statement of Operations. 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 April 30, 2010 through April 30, 2013 are open for examination.
Cash Equivalents
Cash equivalents consist of highly liquid investments, with maturities of three months or less when acquired, and are disclosed as Short-Term Investments in the Schedules of Investments.
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 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.
68 |
Notes to Financial Statements (continued) |
April 30, 2013 |
Securities Lending
Each Fund may lend portfolio securities to certain creditworthy borrowers, including the Funds’ securities lending agent. It is the Funds’ policy that, at origination, all loans are secured by collateral of at least 102% of the value of U.S. securities loaned and 105% of the value of foreign securities loaned. Collateral in the form of cash and /or high grade debt obligations, equivalent to at least 100% of the market value of securities loaned, is maintained at all times. Cash collateral can be invested in certain money market mutual funds which also have exposure to the fluctuations of the market. Each Fund receives compensation for lending its securities from interest or dividends earned on the cash or U.S. government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. The dividend and interest income earned on the securities loaned is accounted for in the same manner as other dividend and interest income. The borrower pays to the Funds an amount equal to any dividends or interest received on loaned securities. Lending portfolio securities could result in a loss or delay in recovering the Fund’s securities if the borrower defaults.
The securities lending income earned by the Funds is disclosed on the Statements of Operations. The value of loaned securities and related collateral outstanding at April 30, 2013 are shown in the Schedules of Investments and Statements of Assets and Liabilities.
Investment Income and Expenses
Dividend income is recognized on the ex-dividend date. Interest income is accrued daily. Distributions of realized capital gains by underlying funds are recorded as realized capital gains on the ex-date. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust based upon the relative net assets or other appropriate measures. The Funds distribute substantially all of their net investment income to shareholders in the form of dividends.
Recent Accounting Pronouncements
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-11 “Disclosures about Offsetting Assets and Liabilities”(“ASU 2011-11”). These disclosures are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparisons between those entities that prepare their financial statements on the basis of US GAAP and those entities that prepare their financial statements on the basis of international financial reporting standards. ASU 2011-11 requires entities to disclose (i) gross and net information about both instruments and transactions eligible for offset in the financial statements and (ii) instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods.
On January 31, 2013, FASB issued Accounting Standards Update No. 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to the following financial instruments, to the extent they are offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement: (i) recognized derivative instruments accounted for under ASC 815 (Derivatives and Hedging); (ii) repurchase agreements and reverse repurchase agreements; and (iii) securities borrowing and securities lending transactions. The disclosures are required irrespective of whether the transactions are offset in the statement of assets and liabilities. The effective date and transition of the disclosure requirements in ASU 2011-11 remain unchanged.
At this time, management is evaluating the implications of ASU 2011-11 and ASU 2013-01 and their impact on the Funds’ financial statements.
69 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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 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 Hedge Market Neutral 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 Global Agribusiness Small Cap ETF | 0.75 | % | |
IQ Global Oil Small Cap ETF | 0.75 | % | |
IQ US Real Estate Small Cap ETF | 0.69 | % |
Such fee is accrued daily and paid monthly.
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.
Distribution
ALPS Distributors, Inc. serves as the Funds’ distributor (the “Distributor”) pursuant to a Distribution Services Agreement. The Trust has adopted a Distribution and Service Plan pursuant to Rule 12b-1 under the 1940 Act (“Rule 12b-1 Plan”). In accordance with the 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. As authorized by the Board, no Rule 12b-1 fees are currently paid by the Funds and there are no plans to impose these fees. 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”) 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, 2013, 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 Statements 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
70 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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 Funds. 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, 2013, 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 year was as follows:
Fund | Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | 389,461,575 | 7,742,602 | (622,606 | ) | 7,119,996 | |||||||
IQ Hedge Macro Tracker ETF | 76,004,112 | 993,942 | (280,905 | ) | 713,037 | |||||||
IQ Hedge Market Neutral Tracker ETF | 5,008,855 | 387,513 | (320,870 | ) | 66,643 | |||||||
IQ Real Return ETF | 67,950,374 | 1,183,184 | (775,106 | ) | 408,078 | |||||||
IQ Global Resources ETF | 90,746,402 | 3,135,899 | (6,771,268 | ) | (3,635,369 | ) | ||||||
IQ Merger Arbitrage ETF | 14,157,589 | 577,335 | (130,418 | ) | 446,917 | |||||||
IQ Australia Small Cap ETF | 18,451,023 | 1,915,521 | (3,763,588 | ) | (1,848,067 | ) | ||||||
IQ Canada Small Cap ETF | 22,481,633 | 1,136,092 | (7,434,162 | ) | (6,298,070 | ) | ||||||
IQ Global Agribusiness Small Cap ETF | 40,577,636 | 4,098,868 | (5,157,734 | ) | (1,058,866 | ) | ||||||
IQ Global Oil Small Cap ETF | 2,430,800 | 153,272 | (403,529 | ) | (250,257 | ) | ||||||
IQ US Real Estate Small Cap ETF | 53,613,741 | 5,887,194 | (144,135 | ) | 5,743,059 |
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, 2013.
At April 30, 2013, the components of earnings/loss on a tax-basis were as follows:
Fund | Undistributed Net Investment Income | Other Losses | Net Unrealized Appreciation/ (Depreciation) | Total Earnings/ (Losses) | ||||||||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | — | $ | (16,789,198 | ) | $ | 7,119,996 | $ | (9,669,202 | ) | ||||||
IQ Hedge Macro Tracker ETF | — | (4,264,669 | ) | 713,037 | (3,551,632 | ) | ||||||||||
IQ Hedge Market Neutral Tracker ETF | — | — | 66,643 | 66,643 | ||||||||||||
IQ Real Return ETF | — | (313,637 | ) | 408,078 | 94,441 | |||||||||||
IQ Global Resources ETF | 876,002 | * | (21,160,854 | ) | (3,632,554 | ) | (23,917,406 | ) | ||||||||
IQ Merger Arbitrage ETF | 237,311 | (2,514,626 | ) | 447,348 | (1,829,967 | ) | ||||||||||
IQ Australia Small Cap ETF | 359,748 | (4,778,307 | ) | (1,848,633 | ) | (6,267,192 | ) | |||||||||
IQ Canada Small Cap ETF | — | (12,090,880 | ) | (6,295,062 | ) | (18,385,942 | ) | |||||||||
IQ Global Agribusiness Small Cap ETF | 210,278 | (3,859,482 | ) | (1,060,895 | ) | (4,710,099 | ) | |||||||||
IQ Global Oil Small Cap ETF | 4,900 | (204,725 | ) | (250,095 | ) | (449,920 | ) | |||||||||
IQ US Real Estate Small Cap ETF | — | (388,691 | ) | 5,743,059 | 5,354,368 |
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.
* Amount includes other temporary difference of $5,647 due to nondeductible expenses.
71 |
Notes to Financial Statements (continued) |
April 30, 2013 |
At April 30, 2013, the effect of permanent book/tax reclassifications resulted in increases(decreases) to the components of net assets were 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 | $ | (694,497 | ) | $ | (4,516,192 | ) | $ | 5,210,689 | ||||
IQ Hedge Macro Tracker ETF | (436,020 | ) | (1,192,572 | ) | 1,628,592 | |||||||
IQ Hedge Market Neutral Tracker ETF | 4,871 | (96,723 | ) | 91,852 | ||||||||
IQ Real Return ETF | (245,946 | ) | (113,618 | ) | 359,564 | |||||||
IQ Global Resources ETF | 229,912 | (9,567,144 | ) | 9,337,232 | ||||||||
IQ Merger Arbitrage ETF | 333,974 | (548,953 | ) | 214,979 | ||||||||
IQ Australia Small Cap ETF | 32,144 | 187,854 | (219,998 | ) | ||||||||
IQ Canada Small Cap ETF | 107,320 | 2,194,197 | (2,301,517 | ) | ||||||||
IQ Global Agribusiness Small Cap ETF | 34,589 | (815,261 | ) | 780,672 | ||||||||
IQ Global Oil Small Cap ETF | 4,227 | (55,921 | ) | 51,694 | ||||||||
IQ US Real Estate Small Cap ETF | 67,259 | (4,897,767 | ) | 4,830,508 |
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 foreign currency reclassifications.
The tax character of distributions paid during the years ended April 30, 2013 and 2012 were as follows:
2013 | 2012 | |||||||||||
Fund | Ordinary Income | Long-Term Capital Gains | Ordinary Income | Long-Term Capital Gains | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 3,493,395 | $ | — | $ | 2,465,773 | $ | — | ||||
IQ Hedge Macro Tracker ETF | 678,020 | — | 349,947 | — | ||||||||
IQ Hedge Market Neutral Tracker ETF | 19,014 | — | — | — | ||||||||
IQ Real Return ETF | 23,359 | — | — | 70,733 | ||||||||
IQ Global Resources ETF | 931,541 | — | 1,183,908 | — | ||||||||
IQ Merger Arbitrage ETF | 24,415 | — | — | — | ||||||||
IQ Australia Small Cap ETF | 254,722 | — | 1,908,146 | 54,281 | ||||||||
IQ Canada Small Cap ETF | 739,738 | — | 400,361 | — | ||||||||
IQ Global Agribusiness Small Cap ETF | 519,028 | — | 331,760 | — | ||||||||
IQ Global Oil Small Cap ETF | 45,351 | — | 12,378 | — | ||||||||
IQ US Real Estate Small Cap ETF | 1,240,905 | — | 328,571 | — |
Capital losses incurred after October 31 (“Post-October Losses”) and certain late year ordinary income 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, 2013, the Funds incurred and elected to defer to May 1, 2013 post-October losses and late year ordinary losses of:
Fund | Late Year Ordinary Losses | Short-Term Post October Losses | Long-Term Post October Losses | ||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 127,694 | $ | 1,521,503 | $ | — | |||
IQ Hedge Macro Tracker ETF | 40,081 | 1,254,319 | — | ||||||
IQ Hedge Market Neutral Tracker ETF | — | — | — | ||||||
IQ Real Return ETF | 48,456 | 102,850 | — | ||||||
IQ Global Resources ETF | — | 2,441,181 | 1,945,747 | ||||||
IQ Merger Arbitrage ETF | — | 102,481 | 237,097 | ||||||
IQ Australia Small Cap ETF | — | 77,503 | 493,002 | ||||||
IQ Canada Small Cap ETF | 70,538 | 219,356 | 2,232,521 | ||||||
IQ Global Agribusiness Small Cap ETF | — | 87,697 | 488,534 | ||||||
IQ Global Oil Small Cap ETF | — | 6,711 | 35,838 | ||||||
IQ US Real Estate Small Cap ETF | — | 69,304 | — |
72 |
Notes to Financial Statements (continued) |
April 30, 2013 |
On December 22, 2010, the Regulated Investment Company (“RIC”) Modernization Act of 2010 (the “Act”) was enacted. The Act modernizes several of the federal income and excise tax provisions related to RICs, and, with certain exceptions, is effective for taxable years beginning after December 22, 2010. Among the changes made are changes to the capital loss carryforward rules allowing for RICs to carry forward capital losses indefinitely and to retain the character of capital loss carryforwards as short-term or long-term. Rules in effect previously limited the carryforward period to eight years and all carryforwards were considered short-term in character. Capital loss carryforwards generated in taxable years beginning after the effective date of the Act must be fully used before capital loss carryforwards generated in taxable years prior to the effective date of the Act; therefore, under certain circumstances, capital loss carryforwards available as of the report date, if any, may expire unused.
At April 30, 2013, 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. For the year ended April 30, 2013, there were no capital loss carryforwards utilized or expired. These loss carryforwards expire in amounts and fiscal years as follows:
Fund | April 30, 2018 | April 30, 2019 | Short-Term Post RIC MOD No Expiration | Long-Term Post RIC MOD No Expiration | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 841,667 | $ | 5,603,304 | $ | 8,695,030 | $ | — | ||||
IQ Hedge Macro Tracker ETF | 80,017 | 531,209 | 2,244,867 | 114,175 | ||||||||
IQ Hedge Market Neutral Tracker ETF | — | — | — | — | ||||||||
IQ Real Return ETF | — | — | 162,331 | — | ||||||||
IQ Global Resources ETF | — | — | 15,305,140 | 1,468,786 | ||||||||
IQ Merger Arbitrage ETF | — | 971,183 | 937,181 | 266,684 | ||||||||
IQ Australia Small Cap ETF | — | — | 2,144,946 | 2,062,855 | ||||||||
IQ Canada Small Cap ETF | — | 161,421 | 7,869,548 | 1,537,496 | ||||||||
IQ Global Agribusiness Small Cap ETF | — | — | 2,639,843 | 643,408 | ||||||||
IQ Global Oil Small Cap ETF | — | — | 86,032 | 76,144 | ||||||||
IQ US Real Estate Small Cap ETF | — | — | 319,387 | — |
7. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments) for the year ended April 30, 2013 are as follows:
Fund | Purchases | Sales | Purchases In-Kind | Sales In-Kind | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | $ | 419,691,322 | $ | 378,867,532 | $ | 230,639,294 | $ | 105,597,724 | ||||
IQ Hedge Macro Tracker ETF | 81,479,729 | 72,954,048 | 38,965,070 | 33,064,013 | ||||||||
IQ Hedge Market Neutral Tracker ETF | 2,940,309 | 1,569,361 | 7,917,052 | 4,705,639 | ||||||||
IQ Real Return ETF | 32,759,200 | 31,046,976 | 39,548,772 | 8,432,784 | ||||||||
IQ Global Resources ETF | 119,483,622 | 81,227,514 | 47,932,925 | 70,687,238 | ||||||||
IQ Merger Arbitrage ETF | 49,842,792 | 47,394,904 | 1,183,034 | 12,131,645 | ||||||||
IQ Australia Small Cap ETF | 4,006,250 | 3,974,212 | — | 966,886 | ||||||||
IQ Canada Small Cap ETF | 9,062,436 | 9,520,298 | — | 10,495,463 | ||||||||
IQ Global Agribusiness Small Cap ETF | 8,754,521 | 6,224,137 | 3,440,071 | 10,952,203 | ||||||||
IQ Global Oil Small Cap ETF | 1,030,527 | 741,828 | 2,553,496 | 3,612,258 | ||||||||
IQ US Real Estate Small Cap ETF | 7,567,341 | 4,732,060 | 52,597,817 | 38,835,474 |
73 |
Notes to Financial Statements (continued) |
April 30, 2013 |
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 fluctuate 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 year, IQ Hedge Multi-Strategy Tracker ETF utilized futures contracts to effect short exposure to emerging markets equity returns, international currency returns and commodity returns, the IQ Hedge Macro Tracker ETF utilized futures contracts to effect short exposure to U.S. small cap equity returns, international currency returns and commodity returns, and the IQ Hedge Market Neutral Tracker ETF utilized futures contracts to effect short exposure to emerging markets equity returns, to international currency returns and U.S. small cap equity returns. In addition, the IQ Merger Arbitrage ETF and Global Resources ETF both utilized futures contracts to effect short exposure to U.S. and international equity returns.
The open futures contracts at April 30, 2013 are listed in the Schedules of Investments. The variation margin receivable or payable, as applicable, is included in the Statements of Assets and Liabilities.
Swap Transactions
A swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Funds’ obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for total return swaps. Total return swaps give the Fund 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 (“inverse swaps”). If the underlying asset in a total return swap declines in value (or increases in value, if an inverse swap) over the term of the swap, the Fund may also be required to pay the dollar value of that decline (or increase, if an inverse swap) to the counterparty. Therefore, swaps are subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Funds or if the reference index, security or investments do not perform as expected.
When the Funds have an unrealized loss on a swap agreement, the Funds have instructed the custodian to pledge cash or liquid securities as collateral with a value at least equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate.
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 a 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 increases or decreases 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.
74 |
Notes to Financial Statements (continued) |
April 30, 2013 |
During the year, IQ Hedge Multi-Strategy Tracker ETF utilized swaps to effect long exposure to convertible bond returns, short exposure to U.S. real estate returns, and both long and short exposure to mid-term volatility. In addition, IQ Hedge Macro Tracker ETF utilized swaps to effect long exposure to mid-term volatility returns and convertible bond returns, while IQ Hedge Market Neutral Tracker ETF utilized swaps to effect long exposure to convertible bond returns. In all cases, the Funds’ swap exposures were consistent with the exposure of the Funds’ underlying indexes. At April 30, 2013, the IQ Hedge Multi-Strategy Tracker ETF, IQ Hedge Macro Tracker ETF and IQ Hedge Market Neutral Tracker ETF posted $9,122,662, $113,760 and $106,418, respectively, 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, 2013, 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.
At April 30, 2013, the fair values of derivative instruments reflected on the Statements of Assets and Liabilities were as follows:
Asset Derivatives
Commodity Risk | Currency Risk | Equity Risk | Total | ||||||||
IQ Hedge Multi-Strategy Tracker ETF | |||||||||||
Unrealized appreciation on futures contracts1 | $ | 431,207 | $ | 72,326 | $ | — | $ | 503,533 |
Liability Derivatives
Currency Risk | Equity Risk | Total | |||||||||
IQ Hedge Multi-Strategy Tracker ETF | |||||||||||
Unrealized depreciation on futures contracts1 | $ | (136,243 | ) | $ | — | $ | (136,243 | ) | |||
IQ Hedge Market Neutral Tracker ETF | |||||||||||
Unrealized depreciation on futures contracts1 | — | (6,863 | ) | (6,863 | ) | ||||||
IQ Global Resources ETF | |||||||||||
Unrealized depreciation on futures contracts1 | — | (649,264 | ) | (649,264 | ) | ||||||
IQ Merger Arbitrage ETF | |||||||||||
Unrealized depreciation on futures contracts1 | — | (131,132 | ) | (131,132 | ) |
1 | Includes cumulative appreciation (depreciation) of futures contracts as reported in the Schedules of Investments. Only unsettled variation margin is reported within the Statements of Assets and Liabilities. |
Transactions in derivative instruments reflected on the Statements of Operations during the year ended April 30, 2013, were as follows:
Commodity Risk | Currency Risk | Equity Risk | Total | |||||||||||
IQ Hedge Multi-Strategy Tracker ETF | ||||||||||||||
Realized gain (loss) | ||||||||||||||
Futures contracts | $ | 111,425 | $ | 8,928 | $ | (472,490 | ) | $ | (352,137 | ) | ||||
Swap transactions | — | — | 423,643 | 423,643 | ||||||||||
Total realized gain (loss) | $ | 111,425 | $ | 8,928 | $ | (48,847 | ) | $ | 71,506 | |||||
Change in Unrealized appreciation (depreciation) | ||||||||||||||
Futures contracts | $ | 431,207 | $ | 72,714 | $ | (193,227 | ) | $ | 310,694 | |||||
IQ Hedge Macro Tracker ETF | ||||||||||||||
Realized gain (loss) | ||||||||||||||
Futures contracts | $ | 745 | $ | (70,342 | ) | $ | (164,502 | ) | $ | (234,099 | ) | |||
Swap transactions | — | — | (784,913 | ) | (784,913 | ) | ||||||||
Total realized gain (loss) | $ | 745 | $ | (70,342 | ) | $ | (949,415 | ) | $ | (1,019,012 | ) | |||
Change in Unrealized appreciation (depreciation) | ||||||||||||||
Futures contracts | $ | 327 | $ | 13,039 | $ | (3,760 | ) | $ | 9,606 |
75 |
Notes to Financial Statements (continued) |
April 30, 2013 |
Commodity Risk | Currency Risk | Equity Risk | Total | |||||||||||
IQ Hedge Market Neutral Tracker ETF | ||||||||||||||
Realized gain (loss) | ||||||||||||||
Futures contracts | $ | — | $ | (4,309 | ) | $ | (11,725 | ) | $ | (16,034 | ) | |||
Swap transactions | — | — | 50,020 | 50,020 | ||||||||||
Total realized gain (loss) | $ | — | $ | (4,309 | ) | $ | 38,295 | $ | 33,986 | |||||
Change in Unrealized appreciation (depreciation) | ||||||||||||||
Futures contracts | $ | — | $ | — | $ | (6,863 | ) | $ | (6,863 | ) | ||||
IQ Global Resources ETF | ||||||||||||||
Realized loss | ||||||||||||||
Futures contracts | $ | — | $ | — | $ | (2,061,228 | ) | $ | (2,061,228 | ) | ||||
Change in Unrealized appreciation (depreciation) | ||||||||||||||
Futures contracts | $ | — | $ | — | $ | (742,829 | ) | $ | (742,829 | ) | ||||
IQ Merger Arbitrage ETF | ||||||||||||||
Realized loss | ||||||||||||||
Futures contracts | $ | — | $ | — | $ | (185,129 | ) | $ | (185,129 | ) | ||||
Change in Unrealized appreciation (depreciation) | ||||||||||||||
Futures contracts | $ | — | $ | — | $ | (150,732 | ) | $ | (150,732 | ) |
For the year ended April 30, 2013, the monthly average volume of the derivatives held by the Funds was as follows:
Fund | Number of Futures Contracts | Market Value of Futures Contracts | |||||
IQ Hedge Multi-Strategy Tracker ETF | (256 | ) | $ | (16,748,646 | ) | ||
IQ Hedge Macro Tracker ETF | (26 | ) | (2,018,507 | ) | |||
IQ Hedge Market Neutral Tracker ETF | (3 | ) | (258,628 | ) | |||
IQ Global Resources ETF | (202 | ) | (15,063,434 | ) | |||
IQ Merger Arbitrage ETF | (38 | ) | (2,789,744 | ) |
Fund | Notional Amount of Swap Contracts | ||
IQ Hedge Multi-Strategy Tracker ETF | $ | 10,266,685 | |
IQ Hedge Macro Tracker ETF | 792,008 | ||
IQ Hedge Market Neutral Tracker ETF | 475,627 |
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 a 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.
Exchange Traded Vehicle Risk*
Unlike an investment in a mutual fund, the value of the Funds’ investments in ETFs, exchange-traded vehicles (“ETVs”) and exchange-traded notes (“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 Funds from acquiring investment company shares, including shares of ETFs,
76 |
Notes to Financial Statements (continued) |
April 30, 2013 |
in excess of specific thresholds unless exempted by rule, regulation or exemptive order. These prohibitions may prevent the Funds from allocating their investments to ETFs in an optimal manner.
Index Risk
The Funds’ 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.
Industry Concentration Risk
A Fund will not invest 25% or more of the value of the Fund’s total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries; except that, to the extent that the underlying Index is concentrated in a particular industry, the Fund also will be concentrated in that industry. The risk of concentrating Fund investments in a limited number of issuers conducting business in the same industry or group of industries will subject the Fund to a greater risk of loss as a result of adverse economic, business or other developments than if its investments were diversified across different industry sectors.
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 to match the performance of the underlying Indexes 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***
Certain of 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, IQ Hedge Market Neutral Tracker ETF and IQ Real Return ETF. |
** | Applies to IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ Global Agribusiness Small Cap ETF, IQ Global Oil Small Cap ETF and IQ US Real Estate Small Cap ETF. |
*** | Applies to IQ Hedge Market Neutral Tracker ETF, IQ Global Agribusiness Small Cap ETF, IQ Global Oil Small Cap ETF and IQ US Real Estate Small Cap ETF. |
10. SUBSEQUENT EVENTS
The Funds have evaluated subsequent events through the date of issuance of this report and have determined that there are no other material events that would require disclosure.
77 |
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 Hedge Market Neutral Tracker ETF, IQ Real Return ETF, IQ Global Resources ETF, IQ Merger Arbitrage ETF, IQ Australia Small Cap ETF, IQ Canada Small Cap ETF, IQ Global Agribusiness Small Cap ETF, IQ Global Oil Small Cap ETF and IQ US Real Estate Small Cap ETF) (collectively, the “Funds”) as of April 30, 2013, 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 audits 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, 2013, by correspondence with the custodian and others, or by other appropriate auditing procedures where replies from others 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, 2013, and the results of their operations, 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 28, 2013
78 |
Supplemental Information (unaudited) |
Federal Tax Status of Dividends Declared During the Tax Year
Qualified Dividend Income — Certain dividends paid by the fund 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 fiscal year ended April 30, 2013 taxed at a maximum rate of 15% is as follows:
IQ Hedge Multi-Strategy Tracker ETF | 25.92 | % |
IQ Hedge Macro Tracker ETF | 7.13 | % |
IQ Hedge Market Neutral Tracker ETF | 16.85 | % |
IQ Real Return ETF | 72.12 | % |
IQ Global Resources ETF | 57.70 | % |
IQ Merger Arbitrage ETF | 100.00 | % |
IQ Australia Small Cap ETF | 100.00 | % |
IQ Canada Small Cap ETF | 38.98 | % |
IQ Global Agribusiness Small Cap ETF | 83.80 | % |
IQ Global Oil Small Cap ETF | 22.49 | % |
IQ US Real Estate Small Cap ETF | 0.41 | % |
Dividends Received Deduction — For corporate shareholders, the percentage of ordinary income distributions for the year ended April 30, 2013 that qualifies for the dividends received deduction is as follows:
IQ Hedge Multi-Strategy Tracker ETF | 15.45 | % |
IQ Hedge Macro Tracker ETF | 1.54 | % |
IQ Hedge Market Neutral Tracker ETF | 0.00 | % |
IQ Real Return ETF | 100.00 | % |
IQ Global Resources ETF | 32.62 | % |
IQ Merger Arbitrage ETF | 100.00 | % |
IQ Australia Small Cap ETF | 0.00 | % |
IQ Canada Small Cap ETF | 0.00 | % |
IQ Global Agribusiness Small Cap ETF | 9.27 | % |
IQ Global Oil Small Cap ETF | 9.96 | % |
IQ US Real Estate Small Cap ETF | 0.41 | % |
Foreign Taxes Paid — The following Funds elect under the Internal Revenue Code Section 853 to pass through foreign taxes paid to its shareholders. The total amount of foreign taxes passed through to shareholders on a per share basis for the year ended April 30, 2013, are as follows:
Foreign Taxes Per Share | Income Per Share | ||
IQ Hedge Multi-Strategy Tracker ETF | — | — | |
IQ Hedge Macro Tracker ETF | — | — | |
IQ Hedge Market Neutral Tracker ETF | — | — | |
IQ Real Return ETF | — | — | |
IQ Global Resources ETF | 0.0170 | 0.2157 | |
IQ Merger Arbitrage ETF | — | — | |
IQ Australia Small Cap ETF | 0.0075 | 0.5275 | |
IQ Canada Small Cap ETF | 0.0579 | 0.3833 | |
IQ Global Agribusiness Small Cap ETF | 0.0284 | 0.4377 | |
IQ Global Oil Small Cap ETF | 0.0200 | 0.2027 | |
IQ US Real Estate Small Cap ETF | — | — |
In January 2014, you will be advised on IRS Form 1099 DIV as to the Federal tax status of the distributions received by you in calendar year 2013.
79 |
Board Review of Investment Advisory Agreement (unaudited) |
At the March 13, 2013 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, 2013 until February 2, 2014. In connection with considering approval of the Investment Advisory Agreement, the Independent Trustees met in executive session with counsel to the Trust, 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.
During their review of this information, the Independent Trustees focused on 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 Board 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 Board reviewed the services that IndexIQ provides to the Funds. The Board 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 Board reviewed the experience, resources, and strengths of IndexIQ in managing the Operating Funds, the IndexIQ Trust’s mutual fund, as well as separately managed accounts. Based on their consideration and review of the foregoing information, the Board 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 Board 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 Board 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 Board 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 Board discussed with IndexIQ the costs and profitability of IndexIQ in connection with its serving as investment adviser to each Fund, including operational costs. |
80 |
Board Review of Investment Advisory Agreement (unaudited) (continued) |
(d) | Investment performance of IndexIQ. The Board considered the investment performance of the Funds, including tracking error. In particular, the Board considered the investment performance of the Funds relative to their stated objectives and the success of IndexIQ in reaching such objectives. The Board considered each Fund’s investment performance compared to the benchmark index that each Fund uses for comparison in its prospectus and shareholder reports. The Board also considered each Fund’s investment performance compared to the average of the respective Fund’s peer group. |
The Board 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 NAV of the Funds, and by how much, measured in basis points.
Conclusion. No single factor was determinative to the decision of the Board. Based on the foregoing and such other matters as were deemed relevant, the Board 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 Board 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 Board determined that the continuation of the Investment Advisory Agreement with IndexIQ was in the best interests of each Fund and its shareholders.
81 |
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 Trustees |
Name 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); Robert E. McDonough Professor (2003-present) and Professor of Finance, McDonough School of Business, Georgetown University (2000-present). | 12 | FBR Funds (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, Hewlett- Packard (2010 to 2011); Vice President, Strategic Services, Dimension Data, Americas (2007 to 2010); Senior Vice President, Strategic Outsourcing, France Telecom Americas (2004 to 2007). | 12 | None | |||||
Interested Trustee5 | ||||||||||
Adam S. Patti 1970 | Chairman and Trustee President and Principal Executive Officer | 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, IndexIQ (2006 to present); Associate Publisher, Time Inc. (2006). | 12 | None |
Officers of the Trust |
Name and Year of Birth1 | Position(s) Held with Trust | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past 5 Years | |||
Gregory D. Bassuk 1972 | Secretary | 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, | Since October 2008 | Executive Vice President, IndexIQ Trust (2011 to present); 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). | |||
Since June 2011 |
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. |
82 |
ANNUAL REPORT | APRIL 30, 2013
IndexIQ ETF Trust
IQ Hedge Multi-Strategy Tracker ETF
IQ Hedge Macro Tracker ETF
IQ Hedge Market Neutral Tracker ETF
IQ Real Return ETF
IQ Global Resources ETF
IQ Merger Arbitrage ETF
IQ Australia Small Cap ETF
IQ Canada Small Cap ETF
IQ Global Agribusiness Small Cap ETF
IQ Global Oil Small Cap ETF
IQ US Real Estate 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, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
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.
Audit Fees
(a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $190,000 for 2013 and $185,000 for 2012. |
Audit-Related Fees
(b) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2013 and $0 for 2012. |
Tax Fees
(c) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $56,000 for 2013 and $53,200 for 2012. |
All Other Fees
(d) | 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) through (c) of this Item are $0 for 2013 and $0 for 2012. |
(e)(1) | 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. |
(e)(2) | 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 registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $56,000 for 2013 and $53,200 for 2012. |
(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. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period 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 and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(12.other) | Not applicable. |
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 (Signature and Title)* | /s/ Adam S. Patti |
Adam S. Patti, Principal Executive Officer | |
Date | 6/28/13 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Adam S. Patti |
Adam S. Patti, Principal Executive Officer | |
Date | 6/28/13 |
By (Signature and Title)* | /s/ David L. Fogel |
David L. Fogel, Principal Financial Officer | |
Date | 6/28/13 |
* Print the name and title of each signing officer under his or her signature.