Fund Description: IQ U.S. Real Estate 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 U.S. Real Estate Small Cap ETF 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. INDEX DESCRIPTION: The IQ U.S. Real Estate Small Cap Index is a rules based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of the small capitalization sector of publicly traded companies domiciled and primarily listed on an exchange in the United States and that invest in real estate, such as Real Estate Investment Trusts (REITs) or real estate holding companies. The Index Components that are eligible for inclusion in the Index include the following characteristics, measured as of each quarterly rebalance date: i) issuer engaged in the real estate investment industry, as determined by Standard Industrial Classification code classifications; ii) Issuer domiciled in the U.S.; iii) Primary stock exchange listing in the U.S.; iv) Minimum average market capitalization of $150 million for the prior 90 days and as of the quarterly rebalance date; v) Maximum average market capitalization equal to the bottom 10% ranking of Real Estate Companies in the U.S. based on market capitalization for the prior 90 days (the Market Cap Ceiling); vi) Minimum average daily trading volume of at least $1 million for the prior 90 days; and vii) Minimum monthly volume of 250,000 shares each month over the prior six months. Securities of issuers with recent stock exchange listings (i.e., recent initial public offerings) may be added to the Index on a quarterly basis, provided that the companies meet all eligibility criteria and have been trading for more than ten trading days. Existing Index Components whose average market capitalization falls below $100 million or increases above the level 65% higher than the Market Cap Ceiling for the 90 days prior to any rebalancing date will no longer be eligible for inclusion. The Index Components are selected quarterly in connection with the reconstitution of the Index. Their respective weights are rebalanced quarterly in connection with the rebalance of the Index. FUND STRATEGY: The Fund employs a passive management or indexing investment approach designed to track the performance of the Index, The Fund will invest at least 80% of its total assets in securities of the Index or depository receipts based on the securities of the Index. However, under various circumstances, it may not be possible or practicable to purchase all of the securities in the Index in those weightings. In those circumstances, the Fund may purchase a sample of the securities in the Index or utilize various combinations of other available investment techniques in seeking to replicate generally the performance of the Index as a whole. The Fund may invest in one or more financial instruments, including but not limited to futures contracts, swap agreements and forward contracts, reverse repurchase agreements, and options on securities, indices and futures contracts. As Fund cash flows permit, the Advisor may use cash flows to adjust the weights of each Fund’s investments in an effort to minimize any differences in weights between the Fund and its Index. FUND MANAGEMENT: The Board of Trustees of the Trust is responsible for the general supervision of the Fund. The Board of Trustees appoints officers who are responsible for the day-to-day operations of the Fund. IndexIQ Advisors LLC serves as the investment advisor to the Fund.