Fund Description: IQ S&P High Yield Low Volatility Bond 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 S&P High Yield Low Volatility Bond ETF seeks investment results that correspond, before fees and expenses, generally to the price and yield performance of the S&P High Yield Low Volatility Corporate Bond Index. INDEX DESCRIPTION: The S&P High Yield Low Volatility Corporate Bond Index is comprised of U.S. dollar denominated high yield corporate bonds of issuers domiciled in the U.S. and foreign countries classified as developed markets by the Index Provider. To be eligible for inclusion in the Index, bonds must meet the following criteria: (i) pay fixed-rate coupons; (ii) have at least $400 million of outstanding face value; (iii) have a remaining maturity of at least one month as of the rebalancing date; and (v) have an average rating below investment grade. Eligible U.S. dollar denominated high yield corporate bonds are further screened for liquidity considerations based on their bond type, size, spread, duration and time since issuance. Each bond is then ranked according to its marginal contribution to risk (MCR). MCR is a measurement of the amount of risk a security contributes to a portfolio of securities. MCR is calculated using a bond’s duration and the difference between the bond’s spread (the difference between the option-adjusted yield of the bond and the yield of a U.S. treasury security with a similar maturity) and a weighted average spread of the bonds in the index universe. In general, a bond with a higher MCR will add more credit risk to the overall portfolio than a bond with a lower MCR. After ranking all eligible bonds based upon their MCR, the Index selects for inclusion the 50 percent of bonds measured to have the least credit risk based on their MCR. A bond included in the Index must remain in the 60 percent of bonds measured to have the least credit risk based on its MCR to remain in the Index. The Index seeks to construct a portfolio of securities that has lower volatility than the U.S. dollar-denominated high yield bond universe through the selection of lower-risk bonds based on MCR. Once the bonds are selected for inclusion in the Index, they are weighted by market value. The Index is rebalanced monthly and typically consists of 400 to 500 securities. FUND STRATEGY: The Fund employs a passive management or indexing investment approach designed to track the performance of the Index which has been developed by S&P Opco LLC (a subsidiary of S&P Dow Jones Indices LLC) (the Index Provider). The Fund uses a Representative Sampling strategy in seeking to track the performance of the Index. A fund using a Representative Sampling strategy generally will invest in a sample of securities that collectively has an investment profile similar to that of the Index. The securities selected are expected to have, in the aggregate, investment characteristics (based on factors such as market capitalization and industry weightings), fundamental characteristics (such as return variability, duration, maturity, credit ratings and yield) and liquidity measures similar to those of the Index. The Fund may also invest in credit default swaps and futures contracts to seek to track the Index. FUND MANAGEMENT: IndexIQ Advisors LLC serves as the investment advisor to the Fund. MacKay Shields LLC is the investment sub-advisor to the Fund.