​

IQ Hedge Multi-Strategy Tracker ETF (QAI) IQ Merger Arbitrage ETF (MNA) IQ 500 International ETF (IQIN) IQ Candriam ESG International Equity ETF (IQSI) IQ Candriam ESG U.S. Mid Cap Equity ETF (IQSM) IQ Candriam ESG U.S. Large Cap Equity ETF (IQSU) IQ Chaikin U.S. Large Cap ETF (CLRG) IQ Chaikin U.S. Small Cap ETF (CSML) IQ CBRE NextGen Real Estate ETF (ROOF) IQ FTSE International Equity Currency Neutral ETF (HFXI)

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​

IQ U.S. Mid Cap R&D Leaders ETF (MRND) IQ U.S. Large Cap R&D Leaders ETF (LRND) IQ Global Equity R&D Leaders ETF (WRND) IQ Global Resources ETF (GRES) IQ Real Return ETF (CPI) IQ Clean Oceans ETF (OCEN) IQ Cleaner Transport ETF (CLNR) IQ Engender Equality ETF (EQUL) IQ Healthy Hearts ETF (HART)

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Table of Contents  

3​

Shareholder Letter (unaudited)  

Message from the President​

Despite high levels of volatility and sharp, short-term shifts in value, broadly based stock and bond indices saw relatively modest overall changes during the 12-month reporting period ended April 30, 2023. A deeply challenging investment environment during the last eight months of 2022, driven by increasing inflationary pressures and aggressive monetary efforts to curb them, was followed by a more positive, but uneven, economic and monetary backdrop during the first four months of 2023.

In April 2022, before the start of the reporting period, U.S. inflation stood at an annualized rate of 8.3%, up from 4.2% a year earlier. The U.S. Federal Reserve (the “Fed”), had begun to take steps to curb inflation, raising the federal funds rate from near zero in March 2022. Eight separate rate hikes during the reporting period brought the benchmark rate up to 4.75-5.00% in March 2023. Inflation seemed to respond, easing steadily from a peak of 9.1% in June 2022 to 4.9% in April 2023. Although further interest rate increases are expected in 2023, by the end of the reporting period, it appeared that the Fed might be nearing the end of the current rate-hike cycle. Economic growth, although slower, remained positive, supported by historically high levels of employment and robust consumer spending. International economies experienced similar trends, with more modest central bank interest-rate hikes curbing inflation to a degree.

Equity market behavior during the reporting period reflected the arc of monetary policy and economic developments. From May through early October 2022, as inflation raged and interest-rate increases accelerated, investors shied away from perceived risk, favoring relatively defensive and value-oriented sectors over growth-oriented sectors. The S&P 500® Index, a widely regarded benchmark of U.S. market performance, declined by more than 13% during this time, while international stocks suffered even sharper losses. These trends reversed from mid-October 2022 through the end of the reporting period, as inflationary pressures eased and markets began to anticipate an end to rising interest rates. Between mid-October 2022 and April 30, 2023, the S&P 500® Index regained all the ground it lost earlier, ending in modestly positive territory. International developed-markets stocks bounced back even stronger, prompted by surprisingly robust economic resilience in Europe and further bolstered by China’s reopening after the government rescinded its “zero-COVID-19” policy and eased regulatory restrictions on key industries. The declining value of the U.S. dollar relative to other currencies also enhanced international market equity performance. Emerging markets generally lagged their developed-markets counterparts while outperforming U.S. markets.

Fixed-income markets followed a similar pattern of retreat and recovery. Bond prices trended sharply downward early in the reporting period, as yields rose along with interest rates. Short-term yields rose faster than long-term yields, producing a yield curve inversion — with long-term rates lower than short-term rates — that persisted from July through the end of the reporting period. However, market sentiment improved in the second half of the reporting period as inflationary pressures eased. As the Fed decreased the magnitude of rate increases, focus turned toward the possibility of eventual rate reductions and a potential ‘soft landing’ for the economy. On the negative side, a small number of high-profile, regional U.S. bank failures in March and April 2023 raised fears of possible wider banking industry contagion and future credit constraints.

While many market observers believe the Fed has neared the end of the current cycle of rate increases, the central bank’s rhetoric remains sharply focused on its target inflation rate of 2%. Only time will tell if the market’s favorable expectations prove well founded.

However the economic story unfolds in the months and years to come, at New York Life Investments we remain dedicated to providing the unique investment solutions required to build smarter portfolios during challenging times. Thank you for continuing to place your trust in our team.

Sincerely,

Kirk C. Lehneis
President

The opinions expressed are as of the date of this report and are subject to change. There is no guarantee that any forecast made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment. Past performance is no guarantee of future results.

4

Management’s Discussion of Fund Performance (unaudited) 

IQ Hedge Multi-Strategy Tracker ETF

How did IQ Hedge Multi-Strategy Tracker ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Hedge Multi-Strategy Tracker ETF returned 0.68% at NAV (net asset value) and 0.73% at market price.1 To compare, the ETF’s Underlying Index, the IQ Hedge Multi-Strategy Index2 returned 1.35% for the reporting period. The S&P 500® Index (Net)2 and Barclay Fund of Funds Index2 returned 2.13% and −0.29%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 30, 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility. Against this challenging backdrop, hedge fund performance was mixed, with macro and multi-strategy funds being the top performers, while equity long/short, fixed income arbitrage and event-driven strategies lagged.

How were the ETF’s assets allocated during the reporting period and why?

The ETF spread its allocations across bonds, equities, commodities, currencies, real estate and volatility, with the largest allocation dedicated to bonds, followed by equities. The Underlying Index uses a rules-based process to select individual Index components that, when combined, produce an Index designed to replicate the risk/return characteristics of hedge funds generally, not individual hedge funds. The Underlying Index uses an optimization process whereby Index components are weighted, pursuant to a rules-based process, in an optimal manner to replicate various hedge fund investment styles.

How did the ETF’s allocations change over the course of the reporting period?

The ETF maintained its largest overweight allocations to bonds, followed by equities. As equity uncertainty stayed high and the Fed’s rate hikes cooled over the reporting period, the ETF increased its allocation to bonds and reduced its exposure to equities.

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 7 for more information on index returns.

​

5​

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which Underlying holdings had the highest total returns and which Underlying holdings had the lowest total returns?

In terms of total return, the ETF’s best performers during the reporting period were Energy Select Sector SPDR® Fund and Vanguard Energy ETF. Energy Select Sector SPDR® Fund tracks the performance of the Energy Select Sector Index. The fund holds large-cap U.S. energy stocks. It invests in companies that develop and produce crude oil & natural gas, and provide drilling and other energy related services. The holdings are weighted by market capitalization. Vanguard Energy ETF seeks to track the performance of the MSCI US Investable Market Energy Index, which consists of large, mid-size and small U.S. companies in the energy sector involved in the construction or provision of oil rigs, as well as the exploration, production and refining of oil & gas products.

The holdings with the lowest total returns were Vanguard Real Estate ETF and Fidelity MSCI Real Estate Index ETF. Vanguard Real Estate ETF seeks to track the performance of the MSCI US IMI 25/50 Real Estate Index. The ETF invests in the stocks that make up the Index, holding each stock in the same proportion as its weighting in the Index; the remaining assets are allocated to cash investments. Fidelity MSCI Real Estate Index ETF seeks to provide investment results that correspond, before fees and expenses, to the performance of the MSCI USA IMI Real Estate 25/25 Index. The constituents of the ETF are market cap weighted and rebalanced quarterly.

Which Underlying ETFs were the strongest contributors to the ETF’s performance and which Underlying ETFs were particularly weak?

On the basis of impact, which takes weightings and total returns into consideration, the strongest contributors to the ETF’s absolute performance during the reporting period were Vanguard Short-Term Corporate Bond ETF and Energy Select Sector SPDR® Fund, the latter of which is described above. Vanguard Short-Term Corporate Bond ETF seeks to track the performance of the Bloomberg US 1-5 Year Corporate Bond Index.

The weakest contributors to the ETF’s absolute performance were SPDR® Bloomberg Convertible Securities ETF and iShares Convertible Bond ETF. SPDR® Bloomberg Convertible Securities ETF’s objective is to provide investment results that correspond generally to the total return performance of the Bloomberg U.S. Convertibles Liquid Bond Index. iShares Convertible Bond ETF seeks to track the investment results of the Bloomberg U.S. Convertible Cash Pay Bond > $250MM Index. The Index is a subset of the Bloomberg U.S. Convertibles: Cash Pay Bonds Index and measures the performance of the U.S. dollar-denominated convertibles market.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the ETF’s largest positions included Vanguard Short-Term Corporate Bond ETF, described above, and iShares 1-5 Year Investment Grade Corporate Bond ETF. iShares 1-5 Year Investment Grade Corporate Bond ETF seeks to track the investment results of an index composed of U.S. dollar-denominated investment-grade corporate bonds with remaining maturities between 1-5 years. The ETF seeks to track the ICE BofA 1-5 Year US Corporate Index.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

6

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(From 4/30/2013 Through 4/30/2023)

Fund Performance History

IQ Hedge Multi-Strategy Tracker ETF
(as of April 30, 2023)

1

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

2

The IQ Hedge Multi-Strategy Index is the underlying index of ETF. The IQ Hedge Multi-Strategy Index seeks to replicate the risk-adjusted return characteristics of hedge funds generally. The S&P 500® (Net) Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance. The Barclay Fund of Funds Index is a measure of the average net returns of all reporting funds of funds in the Barclay Hedge database.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

7​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Merger Arbitrage ETF

How did IQ Merger Arbitrage ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Merger Arbitrage ETF returned −0.21% at NAV (net asset value) and −0.19% at market price.1 To compare, the ETF’s Underlying Index, the IQ Merger Arbitrage Index2 returned 0.59% for the reporting period. The MSCI World Index (Net),2 S&P 500® Index (Net)2 and Barclay Merger Arbitrage Index2 returned 3.18%, 2.13% and 1.65%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ Merger Arbitrage Index, the ETF’s Underlying Index, seeks to achieve capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer. This differentiated approach is based on a passive strategy of owning certain announced takeover targets with the goal of generating returns that are representative of global merger arbitrage activity. The Index also includes short exposure to global equities as a partial equity market hedge.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

Overall, global dealmaking had to navigate a daunting environment, with stubbornly high inflation, sharply rising interest rates and the growing specter of recession looming large. Despite the uncertain economic outlook and volatile equity market, M&A (merger and acquisition) activity, while down from a bumper year in 2021, held strong throughout the reporting period. Given that M&A is focused on unlocking long-term value, a significant cohort of companies were contrarians to the prevailing hesitancy and sought to take advantage of lower, and more attractive, valuations. This led to M&A continuing apace and remaining above pre-pandemic levels.

During the reporting period, how was the ETF’s performance materially affected by investments in derivatives?

With deals that involve stock financing, the Underlying Index employs a hedge to the sector of the acquirer if it is a domestic company and to the country or region of an acquirer if it is an international company. This

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 10 for more information on index returns.

​

8

Management’s Discussion of Fund Performance (unaudited) (continued)

approach served the ETF well, delivering returns of 1.25% for North America sector hedges and 0.17% for non-North America country/regional hedges.

During the reporting period, which sectors made the strongest contributions to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that provided the strongest positive contributions to the ETF’s absolute performance were health care and consumer staples. The sectors providing the weakest contributions to the ETF’s absolute performance were information technology and real estate.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest positive contributions to the ETF’s absolute performance during the reporting period were Oak Street Health and Zendesk. Health care services provider Oak Street offers a technology-enabled, integrated platform to deliver value-based care focused on U.S. patients with health insurance. Software company Zendesk designs and develops software to improve customer relationships worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Rogers and Duke Realty. Electronics solutions provider Rogers focuses on specialty engineered materials that enable high performance and reliability in electric vehicles, hybrid electric vehicles, wireless infrastructure, automotive safety and portable electronics for clients worldwide. Duke Realty owns, develops and manages logistics and industrial properties. The company provides development, leasing, property management, construction and other related services in the United States.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were health care and consumer staples. During the same period, the sectors with the most substantial weighting decreases were information technology and utilities.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Oak Street Health, described above, and TravelCenters of America. TravelCenters of America owns and operates petroleum filling stations in the United States. The company offers petrol, engine oils, preventive maintenance and food services.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

9​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(From 4/30/2013 Through 4/30/2023)

Fund Performance History

IQ Merger Arbitrage ETF
(as of April 30, 2023)

1

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

2

The IQ Merger Arbitrage Index is the underlying index of ETF. The IQ Merger Arbitrage Index seeks to achieve capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer. The MSCI World Index (Net) is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets. The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance. The Barclay Merger Arbitrage Index is a measure of the average net returns of all reporting merger arbitrage funds in the Barclay Hedge database.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

10

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ 500 International ETF

How did IQ 500 International ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ 500 International ETF returned 8.93% at NAV (net asset value) and 10.47% at market price.1 To compare, the ETF’s Underlying Index, the IQ 500 International Index2 returned 9.11% for the reporting period. The MSCI EAFE Index (Net)2 returned 8.42% for the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ 500 International Index, the ETF’s Underlying Index, identifies international companies that enjoy a strong global footprint and, at the same time, are able to maintain their long-term competitive positioning. The combination of these factors results in companies that are poised to continue driving improved operational performance and sustainable, long-term equity appreciation with low volatility and turnover.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Moreover, as the low interest rate environment came to a close and investors became more discerning, factor investment performance improved. Value outpaced its factor peers, as rising interest rates softened the appeal of growth stocks and boosted interest in profitable, undervalued companies. Amid this defensive shift, low volatility also fared well, with investors turning to stable, defensive sectors and companies. Quality also outperformed with investors favoring companies with strong, resilient balance sheets amid heightened uncertainty. The lone underperformer was the growth factor due to the sharply higher interest rate environment. With its multifactor approach, the Underlying Index was favorably positioned to benefit from this factor outperformance, while staying buffered from the cyclicality and concentration risk inherent to single factor exposures.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

Global currency and international equity markets experienced sharp volatility throughout the reporting period, with the U.S. dollar surging to historic highs as the Fed outpaced other central banks with significantly higher rates. However, as the reporting period progressed, other central banks raised rates markedly as well,

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 13 for more information on index returns.

​

11​

Management’s Discussion of Fund Performance (unaudited) (continued)

taking some of the air out of the soaring dollar and buoying international developed equities. Moreover, international developed economies held up better than expected amid recession concerns, further aiding performance.

During the reporting period, which sectors made the strongest contributions to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were industrials and consumer discretionary. The sectors that made the weakest contributions to the ETF’s absolute performance were health care and information technology.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest positive contributions to the ETF’s absolute performance during the reporting period were TotalEnergies and LVMH Moet Hennessy Louis Vuitton. Energy company TotalEnergies produces, transports and supplies crude oil, natural gas and low carbon electricity and refines petrochemical products. The company owns and manages gasoline filling stations worldwide. France-based, diversified, luxury goods company LVMH produces and sells wine, cognac, perfumes, cosmetics, luggage, watches and jewelry.

The weakest contributors to the ETF’s absolute performance during the same period were Toyota Motor and Uniper. Toyota Motor manufactures, sells, leases, and repairs passenger cars, trucks, buses and their related parts worldwide. The company also builds homes, produces pleasure boats and develops intelligent transportation products, including radar cruise control and electronic toll collection systems. In addition, Toyota operates financing services through its subsidiaries. International energy company Uniper owns and manages a portfolio of power plants located across Europe and Russia, and focuses on commodity trading businesses, such as power, emission certificates, natural gas, liquefied natural gas, coal and freight. Uniper also operates power and gas storage facilities.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were energy and consumer discretionary. During the same period, the sectors with the most substantial weighting decreases were consumer staples and health care.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Deutsche Post and TotalEnergies, the latter of which is described above. Logistics company Deutsche Post offers letter and parcel dispatch, express delivery, freight transport, supply-chain management, and e-commerce solutions to customers worldwide.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

12

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ 500 International ETF
(as of April 30, 2023)

1

Fund Inception Date: 12/13/2018

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ 500 International Index selects and weights securities utilizing a rules-based methodology incorporating three fundamental factors: sales, market share, and operating margin. The top 500 securities, based on the composite rank, are included in the Index. The MSCI EAFE® Index (Net) consists of international stocks representing the developed world outside of North America. Index results assume the reinvestment of all capital gain and dividend distributions.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

13​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Candriam ESG International Equity ETF

How did IQ Candriam ESG International Equity ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Candriam ESG International Equity ETF returned 7.98% at NAV (net asset value) and 9.81% at market price.1 To compare, the ETF’s Underlying Index, Candriam ESG International Equity Index2 returned 8.15% for the reporting period. The MSCI EAFE Index (Net)2 returned 8.42% for the same period.

What factors affected the ETF’s performance during the reporting period?

The Candriam ESG International Equity Index, the ETF’s Underlying Index, is a rules-based, broad-based, market-cap weighted index that consists of the top-rated international ESG (environmental, social and governance) companies based on ESG criteria developed by Candriam. Candriam’s ESG criteria seeks to identify companies that operate in a sustainable and responsible manner.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors made the strongest contributions to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were financials and consumer discretionary. The sectors that made the weakest contributions to the ETF’s absolute performance were real estate and materials.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest positive contributions to the ETF’s absolute performance during the reporting period were Novo Nordisk and LVMH Moet Hennessy Louis Vuitton. Novo Nordisk develops, produces and markets pharmaceutical products. The company focuses on diabetes care and offers insulin delivery systems and

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 16 for more information on index returns.

​

14

Management’s Discussion of Fund Performance (unaudited) (continued)

other diabetes products. Novo Nordisk also works in areas such as hemostasis management, growth disorders and hormone replacement therapy, and offers educational and training materials. France-based, diversified, luxury goods company LVMH produces and sells wine, cognac, perfumes, cosmetics, luggage, watches and jewelry.

The weakest contributors to the ETF’s absolute performance were Toyota Motor and Roche Holding. Toyota Motor manufactures, sells, leases and repairs passenger cars, trucks, buses and their related parts worldwide. The company also builds homes, produces pleasure boats and develops intelligent transportation products, including radar cruise control and electronic toll collection systems. In addition, Toyota operates financing services through its subsidiaries. Pharmaceutical and diagnostics products company Roche produces prescription drugs in the areas of cardiovascular, infectious, autoimmune and respiratory diseases, as well as products related to dermatology, metabolic disorders, oncology, transplantation and the central nervous system. The company serves customers worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were health care and consumer discretionary. During the same period, the sectors with the most substantial weighting decreases were industrials and information technology.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were ASML Holdings and LVMH, the latter of which is described above. ASML Holding develops, produces and markets semiconductor manufacturing equipment, specifically machines for the production of chips through lithography, for clients worldwide.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

15​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Candriam ESG International Equity ETF
(as of April 30, 2023)

1

Fund Inception Date: 12/17/2019

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam ESG International Equity Index is the underlying index of ETF. The IQ Candriam ESG International Equity Index is designed to deliver exposure to equity securities of companies meeting environmental, social and corporate governance (ESG) criteria developed by Candriam and weighted using a market-capitalization weighting methodology. The MSCI EAFE® Index (Net) consists of international stocks representing the developed world outside of North America.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

16

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Candriam ESG U.S. Mid Cap Equity ETF

How did IQ Candriam ESG U.S. Mid Cap Equity ETF perform during the period since its inception on October 25, 2022, through April 30, 2023 (the “reporting period”)?

For the reporting period, IQ Candriam ESG U.S. Mid Cap Equity ETF returned 6.85% at NAV (net asset value) and 6.88% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam ESG US Mid Cap Equity Index,2 and the Russell Midcap Index returned 6.95% and 8.31%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The IQ Candriam ESG US Mid Cap Equity Index, the ETF’s Underlying Index, is a rules-based, broad-based, market-cap weighted index that consists of the top-rated US Mid Cap ESG (environmental, social and governance) companies based on ESG criteria developed by Candriam. Candriam’s ESG criteria seeks to identify companies that operate in a sustainable and responsible manner.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were industrials and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were information technology and financials.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Fair Isaac and Abiomed. Fair Isaac provides analytics software, solutions, and services. The company offers tools used to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 19 for more information on index returns.

​

17​

Management’s Discussion of Fund Performance (unaudited) (continued)

government regulations. Fair Isaac serves banks, collection agencies and governments, as well as enterprises in the insurance, health care and transportation industries worldwide. Abiomed develops, manufactures and markets cardiovascular products. The company develops technologies designed to assist and replace the pumping function of the heart for customers worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Western Alliance Bancorp and Sunrun. Multi-bank holding company Western Alliance provides a full range of banking and related services to businesses and consumers in Nevada, Arizona and California. Solar energy solutions provider Sunrun sells, installs, monitors and maintains solar panels on U.S. homeowner’s roofs and related equipment to supply solar electricity.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were industrials and consumer discretionary. During the same period, the sectors with the most substantial weighting decreases were energy and utilities.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Fair Isaac, described above, and Lamb Weston Holdings. Through its subsidiaries, Lamb Weston produces and supplies frozen potato products, including fries, oven roasted potatoes, puffs, chips, slices and prepared potato products.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

18

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Candriam ESG U.S. Mid Cap Equity ETF
(as of April 30, 2023)

1

Fund Inception Date: 10/25/2022

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam ESG U.S. Mid Cap Equity Index is the underlying index of ETF. The IQ Candriam ESG US Mid Cap Equity Index is a broad-based, market-cap weighted index that consists of the top-rated US Mid Cap ESG companies based on Candriam’s ESG criteria. Candriam’s ESG criteria seeks to identify companies that operate in a sustainable and responsible manner. The Russell Midcap® Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000® Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

19​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Candriam ESG U.S. Large Cap Equity ETF

How did IQ Candriam ESG U.S. Large Cap Equity ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Candriam ESG U.S. Large Cap Equity ETF returned 1.81% at NAV (net asset value) and 1.75% at market price.1 To compare, the ETF’s Underlying Index, IQ Candriam ESG US Equity Index2 returned 1.86% for the reporting period. The S&P 500® Index2 returned 2.66% for the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ Candriam ESG U.S Equity Index, the ETF’s Underlying Index, is a rules-based, broad-based, market-cap weighted index that consists of the top-rated U.S. ESG (environmental, social and governance) companies based on ESG criteria developed by Candriam. Candriam’s ESG criteria seeks to identify companies that operate in a sustainable and responsible manner.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors made the strongest contributions to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were information technology and energy. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer staples and real estate.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest positive contributions to the ETF’s absolute performance during the reporting period were Microsoft and NVIDIA. Microsoft develops and markets software applications, cloud storage services and advanced

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 22 for more information on index returns.

​

20

Management’s Discussion of Fund Performance (unaudited) (continued)

security solutions for customers worldwide. NVIDIA designs, develops and markets three-dimensional (3D) graphics processors and related software for the mainstream personal computer market.

The weakest contributors to the ETF’s absolute performance during the same period were SVB Financial Group and Johnson & Johnson. SVB Financial is the holding company for Silicon Valley Bank, a commercial bank that serves emerging growth and middle-market growth companies in targeted niches, focusing on the technology and life sciences industries. Silicon Valley operates offices throughout the Silicon Valley and other areas of California, as well as in other states. Johnson & Johnson manufactures health care products and provides related services for the consumer, pharmaceutical, and medical device and diagnostics markets. The company sells items such as skin and hair care products, acetaminophen products, pharmaceuticals, diagnostic equipment and surgical equipment worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were consumer discretionary and consumer staples. During the same period, the sectors with the most substantial weighting decreases were health care and communication services.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions held by the ETF were Amazon.com and Microsoft, the latter of which is described above. Online retailer Amazon.com offers a wide range of products, including books, music, computers and electronics, among many others. Amazon also provides personalized shopping services, Web-based credit card payment and direct shipping to customers, as well as a global cloud platform offering.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

21​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Candriam ESG U.S. Large Cap Equity ETF
(as of April 30, 2023)

1

Fund Inception Date: 12/17/2019

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam ESG US Equity Index is the underlying index of ETF. The IQ Candriam ESG US Equity Index is designed to deliver exposure to equity securities of companies meeting environmental, social and corporate governance (ESG) criteria developed by Candriam and weighted using a market capitalization weighting methodology. The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

22

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Chaikin U.S. Large Cap ETF

How did IQ Chaikin U.S. Large Cap ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Chaikin U.S. Large Cap ETF returned 2.85% at NAV (net asset value) and 2.83% at market price.1 To compare, the ETF’s Underlying Index, the NASDAQ Chaikin Power US Large Cap Index2 returned 3.10% for the reporting period. The S&P 500® Index2 and the NASDAQ US 300 Index2 returned 2.66% and 2.71%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The NASDAQ Chaikin Power US Large Cap Index, the ETF’s Underlying Index, is a rules-based, quantitative index designed to enhance an existing index (the NASDAQ US 300 Index) by selecting stocks with the highest Chaikin Power Gauge rating based on a number of fundamental, technical and sentiment factors. The Underlying Index rebalances and reconstitutes annually and typically consists of 45 to 65 equally weighted securities.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with stocks suffering their worst year since the 2008 Great Financial Crisis and bonds posting historically negative performance amid rapid, global, central bank tightening. The first four months of 2023, while showing improvement, remained uneven.

Moreover, as the low interest rate environment came to a close and investors became more discerning, factor investment performance improved. Value outpaced its factor peers, as rising interest rates softened the appeal of growth stocks and boosted interest in profitable, undervalued companies. Amid this defensive shift, low volatility also fared well, with investors turning to stable, defensive sectors and companies. Quality also outperformed with investors favoring companies with strong, resilient balance sheets amid heightened uncertainty. The lone underperformer was the growth factor due to the sharply higher interest rate environment. With its multifactor approach, the Underlying Index was favorably positioned to benefit from this factor outperformance, while staying buffered from the cyclicality and concentration risk inherent to single factor exposures.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were consumer discretionary and health care. The

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 25 for more information on index returns.

​

23​

Management’s Discussion of Fund Performance (unaudited) (continued)

sectors that made the weakest contributions to the ETF’s absolute performance were information technology and financials.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Las Vegas Sands and O’Reilly Automotive. Las Vegas Sands owns and operates casino resorts and convention centers in the United States, Macau and Singapore. The company offers a wide range of gaming activities and entertainment, as well as overnight accommodations, while its expo centers host diverse entertainment shows, expositions and other activities. O’Reilly Automotive retails and supplies automotive aftermarket parts, tools, supplies, equipment and accessories. Operating throughout the United States, the company sells its products to do-it-yourself customers, professional mechanics and service technicians.

During the same period, the weakest contributors to the ETF’s absolute performance were First Republic Bank and Snap. First Republic and its subsidiaries provide private banking, private business banking and private wealth management in U.S. urban, coastal markets. The company delivers relationship-based service by providing a single point of contact for all of its services. Snap provides technology and social media services. The company develops mobile camera application products and services that allow its worldwide customer base to send and receive photos, drawings, text and videos.

How did the ETF’s sector weightings change during the reporting period?

The two sectors experiencing the largest weighting increases in the ETF during the reporting period were consumer staples and utilities. During the same period, the two sectors with the most substantial weighting decreases were information technology and communication services.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the ETF’s largest positions included ResMed and Starbucks. ResMed develops, manufactures and markets medical equipment for the treatment of sleep disordered breathing. The company sells diagnostic and treatment devices in various countries through its subsidiaries and independent distributors. Starbucks is the premier roaster, marketer and retailer of specialty coffee. The company offers packaged and single-serve coffees and teas, beverage-related ingredients and ready-to-drink beverages, as well as producing and selling bottled coffee drinks and a line of ice creams. Starbucks serves customers worldwide.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

24

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Chaikin U.S. Large Cap ETF
(as of April 30, 2023)

1

Fund Inception Date: 12/13/2017

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The NASDAQ Chaikin Power US Large Cap Index is the underlying index of ETF. The NASDAQ Chaikin Power US Large Cap Index is a rules-based, quantitative index designed to enhance an existing index (NASDAQ US 300 Index) by selecting stocks with the highest Chaikin Power Gauge rating. The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance. The NASDAQ US 300 Index includes up to the 300 largest securities in the NASDAQ US Large Cap Index, a float-adjusted market capitalization-weighted index, designed to track the performance of securities in NASDAQ US Benchmark Index that comprises the largecap segment of companies.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

25​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Chaikin U.S. Small Cap ETF

How did IQ Chaikin U.S. Small Cap ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Chaikin U.S. Small Cap ETF returned −2.10% at NAV (net asset value) and −2.07% at market price.1 To compare, the ETF’s Underlying Index, the NASDAQ Chaikin Power US Small Cap Index2 returned −1.84% for the reporting period. The Russell 2000 Index2 and the NASDAQ US 1500 Index2 returned −3.65% and −4.95%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The NASDAQ Chaikin Power US Small Cap Index, the ETF’s Underlying Index, is a rules-based, quantitative index designed to augment an existing Index (the NASDAQ US 1500 Index) by selecting stocks with the highest Chaikin Power Gauge rating based on a number of fundamental, technical and sentiment factors. The Underlying Index rebalances and reconstitutes annually and typically consists of 200 to 350 equally weighted securities.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with stocks suffering their worst year since the 2008 Great Financial Crisis and bonds posting historically negative performance amid rapid, global, central bank tightening. The first four months of 2023, while showing improvement, remained uneven.

Moreover, as the low interest rate environment came to a close and investors became more discerning, factor investment performance improved, while small caps experienced challenges as investors flocked to larger, more established companies amid intensifying economic uncertainty.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were industrials and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were information technology, financials and real estate.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Immunovant and

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 28 for more information on index returns.

​

26

Management’s Discussion of Fund Performance (unaudited) (continued)

Super Micro Computer. Biotechnology company Immunovant develops and manufactures drugs for patients worldwide with autoimmune diseases. Super Micro Computer designs, develops, manufactures and sells server solutions based on modular and open-standard architecture. The company offers servers, motherboards, chassis and accessories worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Bioventus and Avaya Holdings. Medical device maker Bioventus offers ultrasound bone healing devices, musculoskeletal ultrasound devices, osteoarthritis pain treatments, bone fracture healing systems and portable diagnostic systems to customers worldwide. Through its subsidiaries, Avaya Holdings provides business collaboration and communications software solutions. The company offers unified communications, contact centers, real-time video and collaboration services to clients worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were real estate and energy. During the same period, the sectors with the most substantial weighting decreases were financials and information technology.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Sana Biotechnology and ImmunityBio. Sana Biotechnology focuses on creating and delivering engineered cells as medicine for patients to replace damaged cells and tissues and treat a broad array of diseases. Biotechnology company ImmunityBio develops cell and immunotherapy products for the treatment of cancers, infections and inflammatory diseases in the United States.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

27​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Chaikin U.S. Small Cap ETF
(as of April 30, 2023)

1

Fund Inception Date: 5/16/2017

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The NASDAQ Chaikin Power US Small Cap Index is the underlying index of ETF. The NASDAQ Chaikin Power U.S. Small Cap Index is a rules-based, quantitative index designed to enhance an existing index (NASDAQ US 1500 Index) by selecting stocks with the highest Chaikin Power Gauge rating. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The NASDAQ US 1500 Index contains up to the 1500 largest securities in the NASDAQ US Small Cap Index.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

28

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ CBRE NextGen Real Estate ETF

How did IQ CBRE NextGen Real Estate ETF (formerly, IQ U.S. Real Estate Small Cap ETF) perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ CBRE NextGen Real Estate ETF returned −16.22% at NAV (net asset value) and −16.15% at market price.1 On September 1, 2022, the Fund’s underlying index changed from the IQ U.S. Real Estate Small Cap Index to the IQ CBRE NextGen Real Estate Index. To compare, the ETF’s Underlying Index, the IQ CBRE NextGen Real Estate Index2 returned –6.86% for the period September 1, 2022 to the period ended April 30, 2023. The FTSE Nareit All Equity REITs Index2 and Dow Jones U.S. Real Estate Index2 returned –16.09% and –14.58%, respectively, for the 12 months ended April 30, 2023.

What factors affected the ETF’s performance during the reporting period?

The IQ CBRE NextGen Real Estate Index, the ETF’s Underlying Index, seeks to provide exposure to real estate sectors and companies that are expected to benefit from large trends (“NextGen trends”) affecting the global economy over a secular, multi-year time horizon. The ETF primarily provides exposure to U.S. companies but also holds securities of issuers based in foreign markets.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

With an uncertain economic outlook throughout the reporting period, real estate faced several formidable headwinds, none more so than rising interests. Facing the most rapid series of interest rate increases since the 1980’s, real estate suffered as an asset class.

During the reporting period, which subsectors made the strongest contributions to the ETF’s performance and which subsectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the subsectors that made the strongest contributions to the ETF’s absolute performance were student housing and health care, both

1

The price used to calculate the market price returns is determined by using the closing price listed on the NASDAQ and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 31 for more information on index returns.

​

29​

Management’s Discussion of Fund Performance (unaudited) (continued)

belonging to the generation change sector. The subsectors that made the weakest contributions to the ETF’s absolute performance were infrastructure (tower) and industrial, belonging to the digital transformation and ecommerce revolution sectors, respectively.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest positive contributions to the ETF’s absolute performance during the reporting period were Keppel DC REIT and Americold Realty Trust. Keppel DC is Asia’s first pure-play datacenter REIT (real estate investment trust) listed on the Singapore Exchange. The company principally invests, directly or indirectly, in a diversified portfolio of income-producing real estate assets, which are used primarily for datacenter purposes and as real estate-related assets. Americold provides temperature-controlled food distribution services. The company offers warehousing, consolidation programs, shipment management, multi-vendor consolidation and logistics solutions, serving food producers, processors, distributors, wholesalers, retailers and restaurants worldwide.

The weakest contributors to the ETF’s absolute performance during the same period were Crown Castle and Prologis. Crown Castle, a REIT, owns, operates and leases towers and other infrastructure for wireless communications. The company manages and offers wireless communication coverage and infrastructure sites in the United States and Australia. Prologis owns and develops industrial real estate focused on global and regional markets across the Americas, Europe and Asia. The company also leases modern distribution facilities to customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises.

How did the ETF’s subsector weightings change during the reporting period?

The subsectors experiencing the largest weighting increases in the ETF during the reporting period were datacenter and specialty. The two subsectors with the largest weighting decreases were infrastructure (tower) and student housing.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Prologis, described above, and American Tower. American Tower, a REIT, owns, operates and develops wireless communications and broadcast towers in the United States. The company leases antennae sites on multi-tenant towers for a diverse range of wireless communications industries, including personal communications services, paging and cellular.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

30

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(From 4/30/2013 Through 4/30/2023)

Fund Performance History

IQ CBRE NextGen Real Estate ETF
(as of April 30, 2023)

1

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

2

The IQ CBRE NextGen Real Estate Index is the underlying index of ETF. The IQ CBRE NextGen Real Estate Index is designed to provide exposure to real estate sectors and companies that are expected to benefit from large trends (“NextGen trends”) affecting the global economy over a secular, multi-year time horizon. The Underlying Index will primarily provide exposure to U.S. companies but may also include securities of issuers based in foreign markets. Effective September 1, 2022, the ETF changed its underlying index and modified its principal investment strategies. The past performance in the graph and table prior to that date reflects the ETF’s prior underlying index and principal investment strategies. The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.

​

3

The Dow Jones U.S. Real Estate Index measures the stock performance of REITs and real estate operating companies in the U.S. On September 1, 2022, the Fund's primary benchmark changed from the Dow Jones U.S. Real Estate Index to the FTSE Nareit All Equity REITs Index because the Advisor believes that the FTSE Nareit All Equity REITs Index better reflects the investment strategies of the Fund.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

31​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ FTSE International Equity Currency Neutral ETF

How did IQ FTSE International Equity Currency Neutral ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ FTSE International Equity Currency Neutral ETF returned 8.31% at NAV (net asset value) and 10.19% at market price.1 To compare, the ETF’s Underlying Index, the FTSE Developed ex North America 50% Hedged to USD Net Tax (US RIC) Index2 returned 8.74% for the reporting period. The FTSE Developed ex North America 100% Hedged to USD Net Tax (US RIC) Index2 and FTSE Developed ex North America Net Tax (US RIC) Index2 returned 10.23% and 7.04%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

FTSE Developed ex North America 50% Hedged to USD Net Tax (US RIC) Index, the ETF’s Underlying Index, is an equity benchmark of international stocks from developed markets, with approximately half of the currency exposure of the securities included in the Index “hedged” against the U.S. dollar on a monthly basis.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

Global currency and international equity markets experienced sharp volatility throughout the reporting period, with the U.S. dollar surging to historic highs as the Fed outpaced other central banks with significantly higher rates. However, as the reporting period progressed, other central banks raised rates markedly as well, taking some of the air out of the soaring dollar. Against this backdrop, the ETF’s currency hedge provided a positive contribution to the ETF’s performance.

During the reporting period, how was the ETF’s performance materially affected by investments in derivatives?

Against the backdrop of a rising USD, the Underlying Index’s currency hedge positively contributed to performance, returning 1.69% over the reporting period.

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 34 for more information on index returns.

​

32

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which sectors made the strongest contributions to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were financials and industrials. The sectors that made the weakest contributions to the ETF’s absolute performance were real estate and information technology.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Novo Nordisk and LVMH Moet Hennessy Louis Vuitton. Novo Nordisk develops, produces and markets pharmaceutical products. The company focuses on diabetes care and offers insulin delivery systems and other diabetes products. Novo Nordisk also works in areas such as hemostasis management, growth disorders and hormone replacement therapy, and offers educational and training materials. France-based diversified luxury goods company LVMH produces and sells wine, cognac, perfumes, cosmetics, luggage, watches and jewelry.

The weakest contributors to the ETF’s absolute performance were Toyota Motor and Roche Holding. Toyota Motor manufactures, sells, leases and repairs passenger cars, trucks, buses and their related parts worldwide. The company also builds homes, produces pleasure boats and develops intelligent transportation products, including radar cruise control and electronic toll collection systems. In addition, Toyota operates financing services through its subsidiaries. Pharmaceutical and diagnostics products company Roche produces prescription drugs in the areas of cardiovascular, infectious, autoimmune and respiratory diseases, as well as products related to dermatology, metabolic disorders, oncology, transplantation and the central nervous system. The company serves customers worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were energy and health care. During the same period, the sectors with the most substantial weighting decreases were information technology and consumer discretionary.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Nestlé and Novo Nordisk, the latter of which is described above. Nestlé produces a wide range of nutrition, health, and wellness items, including prepared foods and cooking aids, milk-based products, pharmaceuticals and ophthalmic goods, and baby foods and cereals.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

33​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ FTSE International Equity Currency Neutral ETF
(as of April 30, 2023)

1

Fund Inception Date: 7/22/2015

​

2

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The FTSE Developed ex North America 50% Hedged to USD Index is the underlying index of ETF. The FTSE Developed ex North America 50% Hedged to USD Index is the FTSE Developed ex North America Index with 50% of its exposure hedged to U.S. dollars. The FTSE Developed ex North America 100% Hedged to USD Net Tax (US RIC) Index is comprised of large and mid-cap stocks in developed markets, The FTSE Developed ex North America Net Tax (US RIC) Index is comprised of large- and mid-cap stocks in Developed markets, excluding the US and Canada. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world's investable market capitalization. The FTSE currency hedging methodology allows exposure to the returns of the foreign assets in the index without being exposed to the volatility of the exchange rates against the US dollar.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

34

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ U.S. Mid Cap R&D Leaders ETF

How did IQ U.S. Mid Cap R&D Leaders ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ U.S. Mid Cap R&D Leaders ETF returned −8.07% at NAV (net asset value) and −8.03% at market price.1 To compare, the ETF’s Underlying Index, the IQ U.S. Mid Cap R&D Leaders Index,2 and the Russell Midcap Growth Index2 returned −8.05% and 1.60%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The IQ U.S. Mid Cap R&D Leaders Index, the ETF’s Underlying Index, seeks to provide exposure to highly innovative companies through the selection of equities in the U.S mid-cap universe with the highest R&D (research and development) spending in the past year. Companies with high R&D spending are investing for future growth in their business and may enjoy strong long-term competitive positioning.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

With an uncertain economic outlook throughout the reporting period, R&D spending was somewhat subdued and mid-cap stocks were out of favor, as investors sought refuge in larger, more established companies or higher-yielding alternatives amid rising interest rates.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were communication services and materials. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and information technology.

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 37 for more information on index returns.

​

35​

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Biogen and Seagen. Biogen develops, manufactures and commercializes therapies, focusing on neurology, oncology and immunology. The company products address diseases such as multiple sclerosis, non-Hodgkin’s lymphoma, rheumatoid arthritis, Crohn’s disease and psoriasis. Biotechnology developer Seagen focuses on monoclonal antibody-based drugs to treat cancer and related diseases, and offers antibody/drug conjugate technology designed to deliver cell-killing agents directly to tumor cells. Seagen serves customers worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Novavax and Rivian Automotive. Clinical stage biotechnology company Novavax creates novel vaccines to address a broad range of infectious diseases worldwide using proprietary, virus-like particle (VLP) technology. Automotive technology company Rivian designs and manufactures vans, trucks and sports utility vehicles, and offers related software solutions, information technology, repair and maintenance services. Rivian Automotive serves customers in North America and the U.K.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were health care and communication services. During the same period, the sectors with the most substantial weighting decreases were information technology and industrials.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the largest positions in the ETF were Electronic Arts and Biogen, the latter of which is described above. Electronic Arts develops, publishes and distributes branded interactive entertainment software worldwide for video game consoles, personal computers, handheld game players and cellular handsets. The company also provides online game-related services.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

36

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ U.S. Mid Cap R&D Leaders ETF
(as of April 30, 2023)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ U.S. Mid Cap R&D Leaders Index is the underlying index of ETF. The IQ U.S. Mid Cap R&D Leaders Index seeks to provide exposure to highly innovative companies through the selection of mid-cap equities with the highest R&D spending in the past one year. Companies with high R&D spending areinvesting for future growth in their business and may enjoy strong long-term competitive positioning. The Russell Midcap Growth Index measures the performance of the midcap growth segment of the US equity universe. The Russell Midcap Growth Index is constructed to provide a comprehensive and unbiased barometer of the midcap growth market.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

37​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ U.S. Large Cap R&D Leaders ETF

How did IQ U.S. Large Cap R&D Leaders ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ U.S. Large Cap R&D Leaders ETF returned 3.95% at NAV (net asset value) and 4.08% at market price.1 To compare, the ETF’s Underlying Index, the IQ U.S. Large Cap R&D Leaders Index,2 and the Russell 1000 Growth Index2 returned 4.06% and 2.34%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The IQ U.S. Large Cap R&D Leaders Index, the ETF’s Underlying Index, seeks to provide exposure to highly innovative companies through the selection of equities in the U.S. large cap universe with the highest R&D (research and development) spending in the past year. Companies with high R&D spending are investing for future growth in their business and may enjoy strong, long-term competitive positioning.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

With a uncertain economic outlook throughout the reporting period, R&D spending was somewhat subdued. However, amid this environment of uncertainty, investors sought safety in the type of companies that are targeted by the Underlying Index’s methodology — namely, established, large-cap companies that are at the forefront of innovation and generate strong free cash flows.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were information technology and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and financials.

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 40 for more information on index returns.

​

38

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Meta Platforms and Merck & Co. Social technology company Meta Platforms builds applications and technologies that help people connect, find communities and grow businesses. The company is also involved in advertising, as well as augmented and virtual reality. Merck is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health and consumer care products, which it markets directly and through its joint ventures.

During the same period, the weakest contributors to the ETF’s absolute performance were Amazon.com and Intel. Online retailer Amazon.com offers a wide range of products, including books, music, computers and electronics, among many others. Amazon also provides personalized shopping services, Web-based credit card payment and direct shipping to customers, as well as a global cloud platform offering. Intel designs, manufactures, and sells computer components and related products. The company’s major products include microprocessors; chipsets; embedded processors and microcontrollers; flash memory; graphic, network and communication systems management software; and conferencing and digital imaging products.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were information technology and communication services. During the same period, the sectors with the most substantial weighting decreases were consumer discretionary and energy.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Alphabet and Amazon.com, the latter of which is described above. Alphabet operates as a holding company. Through its subsidiaries, most notably Google, the company provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions and commerce and hardware products.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

39​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ U.S. Large Cap R&D Leaders ETF
(as of April 30, 2023)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ U.S. Large Cap R&D Leaders Index is the underlying index of ETF. The IQ U.S. Large Cap R&D Leaders Index seeks to provide exposure to highly innovative companies through the selection of Large-cap equities with the highest R&D spending in the past one year. The Russell 1000® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000® Index companies with higher priceto-book ratios and higher forecasted growth values.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

40

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Global Equity R&D Leaders ETF

How did IQ Global Equity R&D Leaders ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Global Equity R&D Leaders ETF returned 5.54% at NAV (net asset value) and 6.54% at market price.1 To compare, the ETF’s Underlying Index, the IQ Global Equity R&D Leaders Index,2 and the FTSE All-World Growth Index (Net)2 returned 5.59% and 1.43%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The IQ Global Equity R&D Leaders Index, the ETF’s Underlying Index, seeks to provide exposure to highly innovative companies through the selection of equities in the global universe with the highest R&D (research and development) spending in the past year. Companies with high R&D spending are investing for future growth in their business and may enjoy strong long-term competitive positioning.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

With an uncertain economic outlook throughout the reporting period, R&D spending was somewhat subdued. However, amid this environment of uncertainty, investors sought safety in the type of companies that are targeted by the Underlying Index’s methodology: established, large-cap companies at the forefront of innovation that generate strong free cash flows.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were communication services and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and financials.

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 43 for more information on index returns.

​

41​

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Meta Platforms and Merck & Company. Social networking company Meta Platforms builds applications and technologies that help people connect, find communities and grow businesses. The company is also involved in advertising and augmented and virtual reality. Merck is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health and consumer care products, which it markets directly and through its joint ventures.

During the same period, the weakest contributors to the ETF’s absolute performance were Amazon.com and Intel. Online retailer Amazon offers a wide range of products, including books, music, computers, electronics and numerous others. The company also offers personalized shopping services, web-based credit card payment and direct shipping to customers. In addition, Amazon also operates a cloud platform offering services globally. Intel designs, manufactures and sells computer components and related products, including microprocessors; chipsets; embedded processors and microcontrollers; flash memory; graphic, network and communication chips; systems management software; and conferencing and digital imaging products.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were information technology and communication services. During the same period, the sectors with the most substantial weighting decreases were consumer discretionary and health care.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Amazon.com, described above, and Alphabet. Through its subsidiaries, Alphabet provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce and hardware products.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

42

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Global Equity R&D Leaders ETF
(as of April 30, 2023)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Global Equity R&D Leaders Index is the underlying index of ETF. The IQ Global Equity R&D Leaders Index seeks to provide exposure to highly innovative companies through the selection of global equities with the highest R&D spending in the past one year. Companies with high R&D spending are investing for future growth in their business and may enjoy strong long-term competitive positioning. The FTSE All World Growth Index (Net) measures the performance of the investable securities in the developed and emerging large and mid cap growth segment of the market, which includes companies with higher growth earning potential.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

43​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Global Resources ETF

How did IQ Global Resources ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Global Resources ETF returned 4.79% at NAV (net asset value) and 5.32% at market price.1 To compare, the ETF’s Underlying Index, IQ Global Resources Index2 returned 5.11% for the reporting period. The S&P Global Natural Resources Index (Net),2 Bloomberg Commodity Spot Index2 and MSCI World Index (Net)2 returned −1.54%, −22.26% and 3.18%, respectively, during the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ Global Resources Index, the ETF’s Underlying Index, seeks investment results that track, before fees and expenses, the price and yield performance of the IQ Global Resources Index. The IQ Global Resources Index uses a tiered weighting approach to provide exposure to companies in commodity-specific market segments and whose equity securities trade in developed markets, including the United States. These segments include livestock; precious metals; grains, food & fiber; energy; industrial metals; timber; and water.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the”GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly commodities supply and demand, global trade activity and economic stability, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

With constrained supply from lingering COVID-19 disruptions coinciding with stabilizing global economies and rising demand, commodities and natural resources generally outperformed most other market segments. Steadily mixed economic data led to considerable volatility over the reporting period, with the prospects of commodities sectors ebbing and flowing with changes in investor sentiment.

During the reporting period, which subsectors were the strongest positive contributors to the ETF’s performance and which subsectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the subsectors making the strongest contributions to the ETF’s absolute performance were energy and grains, food & fiber. The subsectors making the weakest contributions to the ETF’s absolute performance were livestock and timber.

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 46 for more information on index returns.

​

44

Management’s Discussion of Fund Performance (unaudited) (continued)

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks making the strongest contributions to the ETF’s absolute performance during the reporting period were Exxon Mobil and Mondelez International. Exxon Mobil operates petroleum and petrochemical businesses serving customers worldwide. The company’s operations include exploration and production of oil and gas, electric power generation, and coal and minerals operations. Exxon Mobil also manufactures and markets fuels, lubricants and chemicals. Food and beverage company Mondelez International manufactures and markets packaged food products, including snacks, beverages, cheese, convenient meals and other packaged grocery products. The company sells its products worldwide.

The weakest contributors to the ETF’s absolute performance were Nutrien and Newmont. Nutrien provides crop inputs and services, producing and distributing potash, nitrogen and phosphate products for agricultural, industrial and feed customers worldwide. Newmont acquires, explores, and develops mineral properties, producing and marketing gold, copper, silver, zinc and lead for customers worldwide.

How did the ETF’s subsector weightings change during the reporting period?

The subsectors experiencing the largest weighting increases in the ETF during the reporting period were grains, food & fiber and energy. During the same period, the subsectors with the most substantial weighting decreases were precious metals and livestock.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the ETF’s largest holdings were Exxon Mobil and Mondelez International, both described above.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

45​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(From 4/30/2013 Through 4/30/2023)

Fund Performance History

IQ Global Resources ETF
(as of April 30, 2023)

1

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

2

The IQ Global Resources Index is the underlying index of ETF. The IQ Global Resources Index uses a tiered sector weighting approach designed to provide exposure to developed market companies involved in the production and distribution of commodities and commodities-related products and services across the Precious Metals, Grains, Food and Fiber, Energy, Industrial Metals, Timber and Water sectors. The S&P Global Natural Resources Index includes 90 of the largest publicly traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and investable equity exposure across 3 primary commodity-related sectors: agribusiness, energy, and metals & mining. The Bloomberg Commodity Spot Index measures the price movements of commodities included in the Bloomberg Commodity Index and select sub indexes. It does not account for the effects of rolling futures contracts or the costs associated with holding physical commodities. The MSCI World Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

46

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Real Return ETF

How did IQ Real Return ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Real Return ETF returned −2.30% at NAV (net asset value) and −2.40% at market price.1 To compare, the ETF’s Underlying Index, Bloomberg IQ Multi-Asset Inflation Index returned –2.03% for the same period. The Bloomberg U.S. Treasury Inflation Notes 1-10 Year Index2 and the Bloomberg U.S. Short Treasury Bond Index2 returned −1.82% and 2.62%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The Bloomberg IQ Multi-Asset Inflation Index, the ETF’s Underlying Index is designed to give exposure to inflation-sensitive securities and tracks the performance of a weighted long position across the equity, fixed income and commodity asset classes.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with stocks suffering their worst year since the 2008 Great Financial Crisis and bonds posting historically negative performance amid rapid, global, central bank tightening. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors made the weakest contributions?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were information technology and energy. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer staples and real estate. The TIPS sleeve, comprising approximately 60% of the Underlying Index, was the greatest detractor from performance, amid the Federal Reserve’s historically fast rate tightening campaign to combat sharply above-target inflation.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Apple and Microsoft. Apple designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories. The company also offers payment, digital content, cloud and advertising services. Apple

1

The price used to calculate the market price returns is determined by using the closing price listed on the NYSE Arca and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 49 for more information on index returns.

​

47​

Management’s Discussion of Fund Performance (unaudited) (continued)

serves customers in consumer, small & mid-sized business, education, enterprise and government markets worldwide. Microsoft develops and markets software applications, cloud storage services and advanced security solutions for customers worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Tesla and Pfizer. Tesla operates as a multinational automotive and clean energy company. The company designs and manufactures electric vehicles, battery energy storage from home to grid-scale, solar panels and solar roof tiles, and related products and services. Tesla owns its sales and service network and sells electric power train components to other automobile manufacturers. Pharmaceutical firm Pfizer develops and markets medicines, vaccines, medical devices and consumer healthcare products for oncology, inflammation, cardiovascular and other therapeutic areas. The company serves customers worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were energy and materials. During the same period, the sectors with the most substantial weighting decreases were information technology and financials.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Apple and Microsoft, both described above.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

48

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(From 4/30/2013 Through 4/30/2023)

Fund Performance History

IQ Real Return ETF
(as of April 30, 2023)

1

Beginning on May 31, 2016, the price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. Prior to May 31, 2016, market price returns were calculated using the day’s NYSE Arca closing price. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

2

The Bloomberg IQ Multi-Asset Inflation Index is the underlying index of ETF. The Bloomberg IQ Multi-Asset Inflation Index is designed to give exposure to inflation-sensitive underlying securities and track the performance of weighted long positions across equity, fixed income and commodities. Effective February 28, 2022, the ETF changed its underlying index and modified its principal investment strategies. The past performance in the graph and table prior to that date reflects the ETF’s prior underlying index and principal investment strategies. The Bloomberg U.S. Treasury Inflation Notes 1-10 Year Index measures the performance of the U.S. Treasury Inflation Protected Securities (TIPS) market with less than 10 years to maturity. The Bloomberg U.S. Short 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.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

49​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Clean Oceans ETF

How did IQ Clean Oceans ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Clean Oceans ETF returned 2.59% at NAV (net asset value) and 3.55% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Clean Oceans Index,2 and the MSCI World Index (Net)2 returned 3.19% and 3.18%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The IQ Candriam Clean Oceans Index, the ETF’s Underlying Index, seeks to track companies that help to protect and/or achieve cleaner oceans through reduced pollution and increased resource efficiency.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were industrials and information technology. The sectors that made the weakest contributions to the ETF’s absolute performance were materials and utilities.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Siemens and Schneider Electric. Germany-based engineering and manufacturing company Siemens focuses on areas of electrification, automation and digitalization. The company also provides engineering solutions in automation and control, power, transportation and medical diagnosis. France-based Schneider Electric manufactures electrical power products. The company offers car chargers, home security goods, light switches, access

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 52 for more information on index returns.

​

50

Management’s Discussion of Fund Performance (unaudited) (continued)

control, sensors, valves, circuit breakers, cables, accessories, signaling devices, fuse, motor starters and voltage transformers to customers worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Ball and Intel, both based in the United States. Ball provides metal packaging for beverages, foods and household products. The company also supplies aerospace and other technologies and services to commercial and governmental customers worldwide. Intel designs, manufactures and sells computer components and related products. The company’s major products include microprocessors; chipsets; embedded processors and microcontrollers; flash memory; graphic, network and communication chips; systems management software; conferencing; and digital imaging products.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were industrials and information technology. During the same period, the sectors with the most substantial weighting decreases were consumer staples and consumer discretionary.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Intel, described above, and Microsoft. U.S.-based software company Microsoft offers applications, extra cloud storage and advanced security solutions to customers worldwide.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

51​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Clean Oceans ETF
(as of April 30, 2023)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam Clean Ocean Index is the underlying index of ETF. The IQ Candriam Clean Oceans Index incorporates thematic selection criteria designed to provide exposure to equity securities of companies that help to protect and/or achieve a cleaner ocean through reduced pollution and increased resource efficiency. The MSCI World Index (Net) is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

52

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Cleaner Transport ETF

How did IQ Cleaner Transport ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Cleaner Transport ETF returned 2.59% at NAV (net asset value) and 4.39% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Cleaner Transport Index,2 and the MSCI World Index (Net)2 returned 3.04% and 3.18%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ Candriam Cleaner Transport Index, the ETF’s Benchmark Index, is a rules-based, modified capitalization weighted, float-adjusted index. Developed in alignment with the National Wildlife Federation (“NWF”), the largest conservation organization in the United States, the ETF provides exposure to select global companies that support the transition to more environmentally efficient transportation technologies, such as electric vehicles, bicycles, motor vehicle parts manufacturers and multi-passenger transportation.3

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with stocks suffering their worst year since the 2008 Great Financial Crisis and bonds posting historically negative performance amid rapid, global, central bank tightening. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels. Lastly, as COVID-19 supply-chain bottlenecks eased, the prospects of transportation companies brightened and performance improved.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were information technology and industrials. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and materials.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were NVIDIA and Siemens. NVIDIA designs, develops and markets three-dimensional (3D) graphics processors and related

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 55 for more information on index returns.

​

3

Shares of the Fund are not issued, sponsored or endorsed by the National Wildlife Federation®

​

53​

Management’s Discussion of Fund Performance (unaudited) (continued)

software for the mainstream personal computer market. NVIDIA’s Compute & Networking segment provides transportation technology solutions through its Data Center platforms and systems for AI, HPC, and accelerated computing; Mellanox networking and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions; Jetson for robotics and other embedded platforms; and NVIDIA AI Enterprise and other software. Engineering and manufacturing company Siemens focuses on areas of electrification, automation and digitalization. Siemens also provides engineering solutions in automation and control, power, transportation and medical diagnosis.

During the same period, the weakest contributors to the ETF’s absolute performance were Tesla and Toyota Motor. Tesla operates as a multinational automotive and clean energy company. The company designs and manufactures electric vehicles, battery energy storage from home to grid-scale, solar panels and solar roof tiles, and related products and services. Tesla owns its sales and service network and sells electric power train components to other automobile manufacturers. Toyota Motor manufactures, sells, leases and repairs passenger cars, trucks, buses and their related parts worldwide. The company also builds homes, produces pleasure boats and develops intelligent transportation products, including radar cruise control and electronic toll collection systems. In addition, Toyota operates financing services through its subsidiaries.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were information technology and consumer discretionary. During the same period, the sectors with the most substantial weighting decreases were industrials and utilities.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Intel and Alphabet. Intel designs, manufactures, and sells computer components and related products. Major products include microprocessors; chipsets; embedded processors and microcontrollers; flash memory; graphic, network and communication equipment; systems management software; and conferencing and digital imaging products. Alphabet operates as a holding company. Through its subsidiaries, most notably Google, The company provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce and hardware products.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

54

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Cleaner Transport ETF
(as of April 30, 2023)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam Cleaner Transport Index is the underlying index of ETF. The IQ Candriam Cleaner Transport Index incorporates thematic selection criteria designed to provide exposure to equity securities of companies that support the transition to more environmentally efficient transportation technologies, such as electric vehicles, bicycles, motor vehicle parts manufacturers, and multipassenger transportation. The MSCI World Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

55​

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Engender Equality ETF

How did IQ Engender Equality ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Engender Equality ETF returned 5.46% at NAV (net asset value) and 5.63% at market price.1 To compare, the ETF’s Benchmark Index, the Solactive Equileap US Select Gender Equality Index,2 and the Russell 1000 Index2 returned 5.97% and 1.82%, respectively, for the reporting period.

What factors affected the ETF’s performance during the reporting period?

The Solactive Equileap US Select Gender Equality Index, the ETF’s Underlying Index, is a rules-based, equal-weighted index designed to deliver exposure to global companies that promote gender equality and are committed to women’s empowerment through equal compensation and gender balance in leadership and the workforce.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the”GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were health care and information technology. The sectors that made the weakest contributions to the ETF’s absolute performance were industrials and communication services.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Spotify Technology and Salesforce. Entertainment services provider Spotify offers commercial free music and audio streaming solutions to subscribers worldwide and provides content design services. Cloud-based software company

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 58 for more information on index returns.

​

56

Management’s Discussion of Fund Performance (unaudited) (continued)

Salesforce develops customer relationship management software and applications focused on sales, customer service, marketing automation, analytics and application development for customers worldwide.

During the same period, the weakest contributors to the ETF’s absolute performance were Lyft and Paramount Global. Online ridesharing services provider Lyft offers ride booking, payment processing and car transportation services to customers in the United States. Media company Paramount Global produces and distributes entertainment content through studios, networks, streaming services, live events and merchandise, serving customers worldwide.

How did the ETF’s sector weightings change during the reporting period?

The sectors experiencing the largest weighting increases in the ETF during the reporting period were information technology and materials. During the same period, the sectors with the most substantial weighting decreases were financials and consumer staples.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the two largest positions in the ETF were Shockwave Medical and Hasbro. Medical device manufacturer Shockwave Medical offers intravascular devices and balloon dilatation catheters for patients worldwide with calcified cardiovascular disease. Hasbro designs, manufactures, and markets toys, games, interactive software, puzzles, and infant products. The company’s products include a variety of games, including traditional board, card, hand-held electronic, trading card, role-playing and DVD games, as well as electronic learning aids and puzzles.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

57​

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Engender Equality ETF
(as of April 30, 2023)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The Solactive Equileap US Select Gender Equality Index is the underlying index of ETF. The Solactive Equileap U.S. Gender Equality Index is a quantitative and investable index developed by Solactive AG. The Index is designed to track the U.S. large-, mid and small-capitalization companies that have the highest Equileap Score. The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

58

Management’s Discussion of Fund Performance (unaudited) (continued)

IQ Healthy Hearts ETF

How did IQ Healthy Hearts ETF perform during the 12 months ended April 30, 2023?

For the 12 months ended April 30, 2023 (the “reporting period”), IQ Healthy Hearts ETF returned 4.35% at NAV (net asset value) and 4.70% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Healthy Hearts Index2 returned 4.77% for the reporting period. The MSCI ACWI Index (Net)2 and the MSCI World Health Care Index (Net)2 returned 2.06% and 4.52%, respectively, for the same period.

What factors affected the ETF’s performance during the reporting period?

The IQ Candriam Healthy Hearts Index, the ETF’s Underlying Index, is a rules-based global, modified, market-cap weighted index that consists of the top-rated companies making a positive contribution to global health-related goals, including by providing solutions for monitoring and curing heart diseases and helping people adopt a healthy lifestyle that limits cardiovascular risks.

Markets were whipsawed during the reporting period, as volatility ran high and investors struggled to make sense of a dizzying array of conflicting economic signals. Many of the headwinds that had raged during the previous reporting period lingered, including COVID-19-related supply-chain disruptions, worsening geopolitical disequilibrium stemming from Russia’s war in Ukraine and sharpening U.S./China tensions, and stubbornly high inflation. Overall, 2022 proved a difficult year for markets, with domestic stocks suffering their worst year since the 2008 Great Financial Crisis (the “GFC”) and bonds posting historically negative performance amid rapid, global, central bank tightening. Global stocks varied by geography but, if not since the GFC, they generally suffered their worst performance in multiple years. The first four months of 2023, while showing improvement, remained uneven.

Inflation, and central banks’ responses to it, arguably held primacy over all other factors. The U.S. Federal Reserve (the “Fed”) waged its most aggressive campaign in decades to tame inflation, sharply raising interest rates from a shallow range of 0.25% – 0.5% as of the start of the reporting period to 4.75% – 5% as of April 2023. Cracks from this abrupt pivot from near-zero rates emerged late in the reporting period, most notably with the collapse of two major regional banks, raising financial stability concerns.

Belying these challenges, other factors pointed in a positive direction. Employment and consumer spending remained robust, wages steadily rose, energy markets stabilized and China began to reopen from its zero-COVID-19 phase. Also, inflation, while still above the Fed’s target, trended downward and rates were increasingly believed to be at, or approaching, peak levels.

These crosscurrents weighed heavily on key asset class performance drivers, particularly ESG sentiment, global trade activity, earnings outlooks, interest-rate levels, credit spreads, commodity prices and currency volatility.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s performance and which sectors were particularly weak?

On the basis of impact, which takes weightings and total returns into account, the sectors that made the strongest contributions to the ETF’s absolute performance were health care and information technology. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and consumer staples.

During the reporting period, which individual stocks made the strongest positive contributions to the ETF’s absolute performance and which stocks detracted the most?

On the basis of impact, which takes weightings and total returns into consideration, the stocks that made the strongest contributions to the ETF’s absolute performance during the reporting period were Eli Lilly and Company and Merck & Co. Eli Lilly discovers, develops, manufactures and sells a wide range of products for human and animal health worldwide. Areas of focus include neuroscience, endocrinology, anti-infectives,

1

The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times.

​

2

See page 61 for more information on index returns.

​

59​

Management’s Discussion of Fund Performance (unaudited) (continued)

cardiovascular agents and oncology. Merck is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health and consumer care products, which it markets directly and through its joint ventures.

The weakest contributors to the ETF’s absolute performance were Pfizer and Nestlé. Pharmaceutical firm Pfizer develops and markets medicines, vaccines, medical devices and consumer healthcare products for oncology, inflammation, cardiovascular and other therapeutic areas. The company serves customers worldwide. Nestlé is one of the leading food and drinks companies that produces more than 2,000 brands. The company’s global business portfolio includes a wide range of brands from food and beverages to health care nutrition and petcare. Its brands, produced at around 355 factories globally, include global, regional, and local favorites. Nutrition and Health Science (approximately 15% of sales) sells baby food, infant nutrition, and skin care products under brands including Gerber, illuma, and Cerelac.

How did the ETF’s sector weightings change during the reporting period?

The two sectors experiencing the largest weighting increases in the ETF during the reporting period were health care and consumer staples. During the same period, the two sectors with the most substantial weighting decreases were consumer discretionary and information technology.

What were the largest positions in the ETF at the end of the reporting period?

As of April 30, 2023, the ETF’s largest positions included Eli Lilly and Company, described above, and Alphabet Inc. Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

The opinions expressed are those of the portfolio managers as of the date of this report and are subject to change. There is no guarantee that any forecasts will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.

60

Management’s Discussion of Fund Performance (unaudited) (continued)

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2023)

Fund Performance History

IQ Healthy Hearts ETF
(as of April 30, 2023)

1

Fund Inception Date: 1/14/2021

​

2

The price used to calculate the Market Price returns is the mean between the day’s last bid and ask prices. The market price returns do not represent returns an investor would receive if shares were traded at other times.

​

3

The IQ Candriam Healthy Hearts Index is the underlying index of ETF. The IQ Candriam Healthy Hearts Index seeks to provide investors with exposure to select companies that are involved in the diagnosis and/or treatment of heart disease, or that provide goods or services that allow people to adopt or maintain a healthy lifestyle. The MSCI ACWI Index (Net) is an unmanaged free-float-adjusted market-capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The MSCI World Health Care Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets in the health-care sector.

​

Past performance is no guarantee of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or on the redemption or sale of fund shares. Performance figures may reflect certain fee waivers and/or expense limitations, without which total returns may have been lower.

61​

Fund Expenses (unaudited) 

As a shareholder of a fund, you incur two types of costs: (1) transaction costs on purchases and sales and (2) ongoing costs, including Advisory 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 funds. Shareholders may pay brokerage commissions on their purchase and sale of a Fund, which are not reflected in the example.

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 During the Period 11/01/2022 to 04/30/23” to estimate the expenses you paid on your account during this period. To the extent a Fund invests in other ETFs, that Fund will indirectly bear its pro rata share of the expenses incurred by the underlying ETF investments in which each such 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 Fund’s 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 a 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. To the extent a Fund invests in other ETFs, that Fund will indirectly bear its pro rata share of the expenses incurred by the underlying fund investments in which the Fund invests. 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.

62

Fund Expenses (unaudited) (continued)

1

Unless otherwise indicated, expenses are calculated using the Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 181/365.

​

63​

Portfolio Summaries* (unaudited) 

April 30, 2023

Asset Class	​	​	% of Net Assets				​
Investment Grade Corporate Bond Funds	​	​	​	​	18.8%	​	​
U.S. Ultra Short Term Bond Funds	​	​	​	​	14.1	​	​
Money Market Fund	​	​	​	​	13.1	​	​
Bank Loan Funds	​	​	​	​	10.9	​	​
Convertible Bond Funds	​	​	​	​	8.5	​	​
U.S. Medium Term Treasury Bond Funds	​	​	​	​	8.4	​	​
Emerging Equity Funds	​	​	​	​	6.4	​	​
Floating Rate — Investment Grade Funds	​	​	​	​	4.9	​	​
U.S. Large Cap Core Funds	​	​	​	​	4.1	​	​
U.S. Small Cap Growth Funds	​	​	​	​	3.0	​	​
High Yield Corporate Bond Funds	​	​	​	​	2.9	​	​
International Equity Core Funds	​	​	​	​	2.9	​	​
Gold Funds	​	​	​	​	2.7	​	​
U.S. Large Cap Growth Funds	​	​	​	​	2.6	​	​
U.S. Dollar Fund	​	​	​	​	2.5	​	​
Emerging Markets Small Cap Equity Fund	​	​	​	​	1.8	​	​
BRIC Equity Funds	​	​	​	​	1.3	​	​
Emerging Bonds — Local Currency Funds	​	​	​	​	1.3	​	​
Silver Funds	​	​	​	​	1.1	​	​
U.S. Momentum Fund	​	​	​	​	0.7	​	​
Mortgage Backed Securities Funds	​	​	​	​	0.4	​	​
U.S. REITS Funds	​	​	​	​	0.4	​	​
Europe Equity Funds	​	​	​	​	0.1	​	​
Equity Fund	​	​	​	​	0.0(a)	​	​
International REITs Fund	​	​	​	​	0.0(a)	​	​
Total Investments	​	​	​	​	112.9	​	​
Other Assets and Liabilites, Net	​	​	​	​	(12.9)	​	​
Total Net Assets	​	​	​	​	100.0%	​	​

Industry	​	​	% of Net Assets				​
Industrials	​	​	​	​	28.8%	​	​
Health Care	​	​	​	​	23.8	​	​
Information Technology	​	​	​	​	10.2	​	​
Financials	​	​	​	​	7.1	​	​
Consumer Discretionary	​	​	​	​	6.3	​	​
Consumer Staples	​	​	​	​	5.7	​	​
Utilities	​	​	​	​	4.3	​	​
Money Market Funds	​	​	​	​	2.3	​	​
Materials	​	​	​	​	1.9	​	​
Energy	​	​	​	​	1.1	​	​
Communication Services	​	​	​	​	1.1	​	​
Real Estate	​	​	​	​	1.1	​	​
Total Investments	​	​	​	​	93.7	​	​
Other Assets and Liabilites, Net	​	​	​	​	6.3	​	​
Total Net Assets	​	​	​	​	100.0%	​	​

See notes to financial statements.

64

Portfolio Summaries* (unaudited) (continued)

April 30, 2023

Industry	​	​	% of Net Assets				​
Industrials	​	​	​	​	22.1%	​	​
Consumer Discretionary	​	​	​	​	13.4	​	​
Consumer Staples	​	​	​	​	11.2	​	​
Financials	​	​	​	​	10.1	​	​
Materials	​	​	​	​	9.7	​	​
Energy	​	​	​	​	8.3	​	​
Communication Services	​	​	​	​	7.9	​	​
Health Care	​	​	​	​	6.5	​	​
Utilities	​	​	​	​	5.2	​	​
Money Market Funds	​	​	​	​	4.2	​	​
Information Technology	​	​	​	​	4.2	​	​
Investment Companies	​	​	​	​	0.4	​	​
Total Investments	​	​	​	​	103.2	​	​
Other Assets and Liabilites, Net	​	​	​	​	(3.2)	​	​
Total Net Assets	​	​	​	​	100.0%	​	​

Industry	​	​	% of Net Assets				​
Financials	​	​	​	​	17.6%	​	​
Health Care	​	​	​	​	16.0	​	​
Industrials	​	​	​	​	13.7	​	​
Consumer Discretionary	​	​	​	​	12.5	​	​
Consumer Staples	​	​	​	​	9.2	​	​
Information Technology	​	​	​	​	8.0	​	​
Materials	​	​	​	​	6.5	​	​
Energy	​	​	​	​	5.7	​	​
Communication Services	​	​	​	​	4.5	​	​
Utilities	​	​	​	​	2.9	​	​
Money Market Funds	​	​	​	​	2.8	​	​
Real Estate	​	​	​	​	2.6	​	​
Total Investments	​	​	​	​	102.0	​	​
Other Assets and Liabilites, Net	​	​	​	​	(2.0)	​	​
Total Net Assets	​	​	​	​	100.0%	​	​

Industry	​	​	% of Net Assets				​
Industrials	​	​	​	​	21.6%	​	​
Consumer Discretionary	​	​	​	​	16.8	​	​
Financials	​	​	​	​	13.5	​	​
Information Technology	​	​	​	​	12.2	​	​
Health Care	​	​	​	​	11.6	​	​
Real Estate	​	​	​	​	9.3	​	​
Materials	​	​	​	​	6.1	​	​
Consumer Staples	​	​	​	​	4.2	​	​
Communication Services	​	​	​	​	2.4	​	​
Utilities	​	​	​	​	1.5	​	​
Energy	​	​	​	​	0.7	​	​
Money Market Fund	​	​	​	​	0.4	​	​
Total Investments	​	​	​	​	100.3	​	​
Other Assets and Liabilites, Net	​	​	​	​	(0.3)	​	​
Total Net Assets	​	​	​	​	100.0%	​	​

Industry	​	​	% of Net Assets				​
Information Technology	​	​	​	​	34.8%	​	​
Consumer Discretionary	​	​	​	​	12.7	​	​
Financials	​	​	​	​	11.5	​	​
Health Care	​	​	​	​	9.1	​	​
Consumer Staples	​	​	​	​	8.5	​	​
Communication Services	​	​	​	​	7.7	​	​
Industrials	​	​	​	​	5.9	​	​
Energy	​	​	​	​	3.5	​	​
Real Estate	​	​	​	​	3.1	​	​
Materials	​	​	​	​	1.7	​	​
Utilities	​	​	​	​	1.4	​	​
Money Market Funds	​	​	​	​	0.0(a)	​	​
Total Investments	​	​	​	​	99.9	​	​
Other Assets and Liabilites, Net	​	​	​	​	0.1	​	​
Total Net Assets	​	​	​	​	100.0%	​	​