Fund Description: IQ Chaikin U.S. Small Cap ETF is an exchange-traded index fund or Index ETF which is a separate investment portfolio of the IndexIQ ETF Trust, an open-end investment management company. INVESTMENT OBJECTIVE: The IQ Chaikin U.S. Small Cap ETF seeks investment results that correspond, before fees and expenses, generally to the price and yield performance of the NASDAQ Chaikin Power US Small Cap Index. INDEX DESCRIPTION: The NASDAQ Chaikin Power US Small Cap Index applies the Chaikin Power Gauge, a quantitative multi-factor model that seeks to identify securities that are expected to outperform peers, to select securities from the Nasdaq US 1500 Index (the Parent Index). The Parent Index is a modified capitalization-weighted index of U.S. small-capitalization securities. The Index is an equally weighted index of small-capitalization securities. The Chaikin Power Gauge is a multi-factor model that evaluates four primary components: Value component (35% of rating), which uses factors such as long term debt to equity ratio, price to book ratio, and free cash flow to identify companies that are priced at a discount relative to peers; Growth component (20% of rating), which uses factors such as earnings growth, earnings trend, and earnings consistency to identify companies with higher growth potential; Technical component (15% of rating), which uses factors such as price trend, price trend rate of change, and volume trend to identify stocks with strong momentum and price appreciation; and Sentiment component (30% of rating), which uses factors such as earnings estimate trend, short interest, and industry relative strength to identify companies that are expected to outperform peers by informed Wall Street analysts and professionals. A security must have a Chaikin Power Gauge ranking in the top 10% of the Parent Index, or a Chaikin Power Gauge ranking in the top 43% of the Parent Index and a price to sales ranking in the lowest quintile of the Parent Index. The security types eligible for inclusion in the Index include common stocks and real estate investment trusts (REITs). The Index rebalances and reconstitutes annually and typically consists of 200 to 350 securities. FUND STRATEGY: The Fund employs a passive management or indexing investment approach designed to track the performance of the Index. The Fund generally will invest in all of the securities that comprise its Index in proportion to their weightings in the Index. The Fund has adopted a policy to invest, under normal circumstances, at least 80% of the value of its assets (net assets plus the amount of any borrowings for investment purposes) in securities of small-capitalization U.S. issuers. FUND MANAGEMENT: IndexIQ Advisors LLC serves as the investment advisor to the Fund.