​	IQ Hedge Multi-Strategy Tracker ETF (QAI)	​	​	IQ Chaikin U.S. Small Cap ETF (CSML)	​
​	IQ Hedge Macro Tracker ETF (MCRO)	​	​	IQ 500 International ETF (IQIN)	​
​	IQ Hedge Market Neutral Tracker ETF (QMN)	​	​	IQ Candriam ESG US Equity ETF (IQSU)	​
​	IQ Hedge Long/Short Tracker ETF (QLS)	​	​	IQ Candriam ESG International Equity ETF (IQSI)	​
​	IQ Hedge Event-Driven Tracker ETF (QED)	​	​	IQ Healthy Hearts ETF (HART)	​
​	IQ Real Return ETF (CPI)	​	​	IQ Engender Equality ETF (EQUL)	​
​	IQ S&P High Yield Low Volatility Bond ETF (HYLV)	​	​	IQ Cleaner Transport ETF (CLNR)	​
​	IQ Merger Arbitrage ETF (MNA)	​	​	IQ Clean Oceans ETF (OCEN)	​
​	IQ Global Resources ETF (GRES)	​	​	IQ Global Equity R&D Leaders ETF (WRND)	​
​	IQ U.S. Real Estate Small Cap ETF (ROOF)	​	​	IQ U.S. Large Cap R&D Leaders ETF (LRND)	​
​	IQ 50 Percent Hedged FTSE International ETF (HFXI)	​	​	IQ U.S. Mid Cap R&D Leaders ETF (MRND)	​
​	IQ Chaikin U.S. Large Cap ETF (CLRG)	​	​

Table of Contents  

3​

Shareholder Letter (unaudited)  

Message from the President​

The 12-month reporting period ended April 30, 2022, started on a generally positive note. Despite a new wave of COVID-19 infections that disrupted life and commerce, financial markets were buoyed during the spring and summer of 2021 by economic recovery and the widespread availability of vaccines. Most global economies expanded, exceeding pre-pandemic levels as businesses reopened and supportive government policies bore fruit. As the period progressed however, inflation began to creep up in response to government stimulus and accommodative monetary policies. Rising prices were further aggravated by wage increases, pandemic-related supply-chain bottlenecks and commodity price spikes. Bond prices slid as interest rates rose, and equity markets faltered. Market sentiment turned increasingly negative in the first quarter of 2022 as aggressive Russian rhetoric regarding Ukraine culminated in Russia’s invasion of its neighbor, a development that exacerbated global inflationary pressures while increasing investor uncertainty. Domestic supply shortages, international trade imbalances and rising inflation caused U.S. GDP (gross domestic product) to contract for the first time since the height of the pandemic, although consumer spending, a primary driver of U.S. economic growth, remained strong. Prices for petroleum surged to multi-year highs, while many key agricultural chemicals and industrial metals reached record territory.

Despite the market decline that rudely greeted the first four months of 2022, the S&P 500® Index, a widely regarded benchmark of market performance, remained in modestly positive territory for the 12-month reporting period. Some market sectors benefited from the prevailing conditions, with energy stocks soaring and value-oriented shares broadly gaining ground. In addition to energy, leading sectors included utilities and consumer staples. On the other hand, the information technology, financials and consumer discretionary sectors suffered particularly sharp losses. Small- and mid-cap stocks underperformed, as they often do during times of heightened uncertainty and financial stress. International stocks trended lower, with some emerging markets, including Russia and China, suffering particularly steep losses, although others, such as India and Indonesia, gained ground. Fixed-income markets saw most bond prices fall as central banks contemplated significant interest rate hikes to combat higher-than-previously-expected inflation rates. However, floating-rate instruments, which feature variable interest rates that allow investors to benefit from a rising rate environment, bucked the downward trend.

Today, despite the continuing impact of COVID-19, most of the world appears intent on a return to post-pandemic normalcy. Instead, the focus of global political and economic attention has increasingly turned to the war in Ukraine and the impact of rising inflation. Russia and Ukraine together account for a substantial share of the world’s supply of food, fossil fuels and raw materials production. Accordingly, the timing and outcome of this conflict will undoubtedly play a major role in global economic developments over the coming months and, possibly, years. The actions of central banks, as they raise rates to fight inflation while trying to limit the risks of recession, are likely to further affect global markets and economies.

In the midst of these uncertain times, we remain dedicated to providing you with the disciplined investment tools you have come to expect from IndexIQ over the years. 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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Hedge Multi-Strategy Tracker ETF returned −6.80% at NAV (net asset value) and −6.80% at market price.1 To compare, the Fund’s Underlying Index, the IQ Hedge Multi-Strategy Index2 returned −6.31% for the reporting period. The S&P 500® Index2 and Barclay Fund of Funds Composite Index2 returned and −0.21% and −4.15%, respectively, for the same period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF used derivative positions where necessary to help it track the IQ Hedge Multi-Strategy Index, which contained both long and short positions. The ETF’s derivatives positions were primarily total return swaps on the ETFs at the weights in which they were included in the Underlying Index. Derivatives were not used to gain leverage beyond the index positioning; rather, they were used exclusively to enable the ETF to track its Underlying Index.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

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 this index.

​

5​

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

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

The Fund maintained its core allocation to bonds during the reporting period with the weight decreasing from 84.33% to 67.4%. Investment-grade bonds, bank loans and convertible bonds dominated, with the highest weighting among bonds totaling over 45% at the end of reporting period. During the reporting period, the ETF’s equity weight increased from 13.09% to 25.83%, with the emerging-market equity weight increasing from 5.08% to 5.43%. Other satellite positions accounted for a relatively small percentage of the ETF’s remaining allocations, with currencies increasing from 0.92% to 2.97% and commodities decreasing from 3.58% to 2.96%. Annual portfolio turnover was 149.22% for the reporting period.

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

In terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were Vanguard Energy ETF, The Energy Select Sector SPDR® Fund and FlexShares Morningstar® Global Upstream Natural Resources Index Fund. During the same period iShares MSCI China ETF, SPDR® S&P® China ETF and iPath® Series B S&P 500® VIX Short-Term FuturesTM ETN recorded the lowest total returns.

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 Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were The Energy Select Sector SPDR® Fund, Invesco DB US Dollar Index Bullish Fund and iShares J.P. Morgan USD Emerging Markets Bond ETF. The weakest contributors were SPDR® Bloomberg Convertible Securities ETF, Vanguard Short-Term Corporate Bond ETF and iShares MSCI China ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF maintained its core allocation to bonds at approximately 67.40%, combined with a satellite allocation to equity of 25.83%. Other satellite positions accounted for a relatively small percentage of the ETF’s remaining allocations, with currencies at 2.97% and commodities at 2.96%. Among bonds, allocations were dominated by 23.23% in investment-grade corporate bonds,13.23% in bank loans and 9.31% in convertible bonds. Among equities, the ETF’s emerging equity allocation was 5.43% and its U.S. large-cap core allocation was 4.69%.

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 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ Hedge Multi-Strategy Tracker ETF
(as of April 30, 2022)

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.

​

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 Hedge Macro Tracker ETF

How did IQ Hedge Macro Tracker ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Hedge Macro Tracker ETF returned −7.60% at NAV (net asset value) and −7.73% at market price.1 To compare, the Fund’s Underlying Index, IQ Hedge Macro Index2 returned −7.31% for the reporting period. The MSCI World Index2 and Barclay Global Macro Index2 returned −3.52% and 8.81%, respectively, for the same period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF used derivative positions where necessary to help it track the IQ Hedge Macro Index, which contained both long and short positions. The ETF’s derivatives positions were primarily total return swaps on the ETFs at the weights in which they were included in the Underlying Index. Derivatives were not used to gain leverage beyond the index positioning; rather, they were used exclusively to enable the ETF to track its Underlying Index.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

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 this index.

​

8

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

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

The ETF maintained its core allocation to bonds during the reporting period, as well as a dominant satellite allocation to equity. The bond position decreased from 71.31% to 68.06%, with the U.S. ultra-short-term bond position decreasing from 31.81% to 25.93%. In contrast, the convertible bond position increased from 11.18% to 14.10%, and the investment-grade corporate bond position increased from 0.7% to 6.3%. Equity weighting increased slightly from 23.53% to 25.89%. Exposure to Brazil, Russia, India and China (BRIC) decreased significantly from 8.5% to -1.96%, while emerging-market positions increased from 5.12% to 18.89%. Annual portfolio turnover was 83.9% for the reporting period.

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

In terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were Vanguard Energy ETF, The Energy Select Sector SPDR® Fund and FlexShares Morningstar® Global Upstream Natural Resources Index Fund. During the same period, iShares MSCI China ETF, SPDR® S&P® China ETF and iShares Core MSCI Emerging Markets ETF recorded the lowest total returns.

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 Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were The Energy Select Sector SPDR® Fund, FlexShares Morningstar® Global Upstream Natural Resources Index Fund and Invesco DB US Dollar Index Bullish Fund. The most significant detractors from the ETF’s performance were iShares MSCI China ETF, SPDR® Bloomberg Convertible Securities ETF and iShares Core MSCI Emerging Markets ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF maintained its core allocation to bonds at approximately 68.06%, with an allocation to equities of 25.89%. Other satellite positions accounted for a relatively small percentage of the ETF’s remaining allocations, with commodities at 5.66%, currencies at 3.25% and real estate at −2.86%. Among bonds, 25.93% of the ETF’s assets were allocated to U.S. ultra-short-term instruments, 14.10% to convertible bonds and 5.74% to local currency emerging bonds. Among equities, 18.89% of the ETF’s assets were allocated to emerging markets and 2.91% to emerging small-cap equity.

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 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ Hedge Macro Tracker ETF
(as of April 30, 2022)

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.

​

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 Hedge Market Neutral Tracker ETF

How did IQ Hedge Market Neutral Tracker ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Hedge Market Neutral Tracker ETF returned −5.51% at NAV (net asset value) and −5.53% at market price.1 To compare, the Fund’s Underlying Index, IQ Hedge Market Neutral Index2 returned −5.05% for the reporting period. The Bloomberg U.S. Short Treasury Bond Index2 and the Barclay Equity Market Neutral Index2 returned −0.14% and 6.22%, respectively, for the same period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF used derivative positions where necessary to help it track the IQ Hedge Market Neutral Index, which contained both long and short positions. The ETF’s derivatives positions were primarily total return swaps on the ETFs at the weights in which they were included in the Underlying Index. Derivatives were not used to gain leverage beyond the index positioning; rather, they were used exclusively to enable the Fund to track its Underlying Index.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

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 this index.

​

11​

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

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

The ETF maintained its core allocation to bonds during the reporting period, as well as a dominant satellite allocation to equity. The bond position decreased from 97.85% to 81.38%, with bank loans decreasing from 20.54% to 16.47% and U.S. ultra-short-term bonds decreasing from 43.13 to 9.97%. In contrast, U.S. medium-term Treasury bonds increased from 8.33% to 16.25%, floating-rate investment-grade positions increased from 9.36% to 14.57%. The ETF’s equity weighting increased from 4% to 16.73%. Emerging equity and international small-cap equity either decreased or was removed entirely, while U.S. preferred positions increased from −1.35% to 8.41%. The ETF’s U.S. low volatility allocation was 8.29% at the end of reporting period. Annual portfolio turnover was 134.73% for the entire reporting period.

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

In terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were Invesco DB US Dollar Index Bullish Fund, iPath® Series B S&P 500® VIX Short-Term FuturesTM ETN and Vanguard Value ETF. During the same period iShares Convertible Bond ETF, SPDR® Bloomberg Emerging Markets Local Bond ETF and SPDR® Bloomberg Convertible Securities ETF recorded the lowest total returns..

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 Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were Vanguard Growth ETF, SPDR® Blackstone Senior Loan ETF and iPath® Series B S&P 500® VIX Short-Term FuturesTM ETN. The weakest contributors were SPDR® Bloomberg International Treasury Bond ETF, Vanguard Intermediate-Term Corporate Bond ETF and iShares iBoxx $ Investment Grade Corporate Bond ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF maintained its core allocation to bonds at approximately 81.38%. The remaining allocations were to equity at 16.73% and currencies at 1.14%. As of the same date, bank loans dominated the ETF’s bond allocation with a 16.47% weighting, followed by U.S. medium-term Treasury bonds at 16.25% and floating-rate investment-grade instruments at 14.57%. Among equities, U.S. preferred weight represented the largest allocation at 8.41%, followed by U.S. low volatility at 8.29%.

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 4/30/2022)

Fund Performance History

IQ Hedge Market Neutral Tracker ETF
(as of April 30, 2022)

1

Fund Inception Date: 10/04/2012

​

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.

​

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 Hedge Long/Short Tracker ETF

How did IQ Hedge Long/Short Tracker ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Hedge Long/Short Tracker ETF returned −4.74% at NAV (net asset value) and −4.75% at market price.1 To compare, the Fund’s Underlying Index, IQ Hedge Long/Short Index2 returned −4.31% for the reporting period. The MSCI World Index2 and the Barclay Equity Long/Short Index2 returned −3.52% and 0.51%, respectively, for the same period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF used derivative positions where necessary to help it track the IQ Hedge Long/Short Index, which contained both long and short positions. The ETF’s derivatives positions were primarily total return swaps on the ETFs at the weights in which they were included in the Underlying Index. Derivatives were not used to gain leverage beyond the index positioning; rather, they were used exclusively to enable the Fund to track its Underlying Index.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

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 this index.

​

14

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

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

The ETF maintained its core allocation to equities at 61.83% during the reporting period, followed by bonds at 32.13% and satellite allocations to real estate of 4.40% and volatility of 1.63%. Among equity allocations, international equity core increased from 12.86% to 34.29%, U.S. large-cap core decreased from 22.06% to 19.38% and U.S. momentum increased from −3.10% to 8.03%. Among bond allocations, investment-grade corporate bonds decreased from 23.68% to 21.64% and bank loans decreased from 9.41% to 9.10%. Other satellite positions accounted for a relatively small percentage of the ETF’s remaining allocations, with real estate increasing from 3.82%% to 4.40% and volatility remaining near 1%. Annual portfolio turnover was 183.00% for the reporting period.

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

In terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were Vanguard Energy ETF, The Energy Select Sector SPDR® Fund and iShares Core U.S. REIT ETF. During the same period iPath® Series B S&P 500® VIX Short-Term FuturesTM ETN, iShares Russell 2000 Growth ETF and Vanguard Small-Cap Growth ETF recorded the lowest total returns..

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 Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were The Technology Select Sector SPDR® Fund, Vanguard Growth ETF and The Energy Select Sector SPDR® Fund. The weakest contributors were iShares MSCI USA Momentum Factor ETF, iShares Core MSCI EAFE ETF and Vanguard FTSE Developed Markets ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF maintained its core allocation to equities and bonds at 61.83% and 32.13%, respectively, with satellite allocations to real estate of 4.40% and volatility of 1.63%. Among equities, allocations were dominated by 34.29% in international equity core, 19.38% in U.S. large-cap core and 8.03% in U.S. momentum. Among bonds, the ETF’s investment-grade corporate allocation was 21.64% and its bank loan allocation was 9.10%.

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 4/30/2022)

Fund Performance History

IQ Hedge Long/Short Tracker ETF
(as of April 30, 2022)

1

Fund Inception Date: 3/24/2015

​

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.

​

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 Hedge Event-Driven Tracker ETF

How did IQ Hedge Event-Driven Tracker ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Hedge Event-Driven Tracker ETF returned −8.05% at NAV (net asset value) and −8.09% at market price.1 To compare, the ETF’s Underlying Index, the IQ Hedge Event-Driven Index2 returned −7.77% for the reporting period. The Bloomberg U.S. Aggregate Bond Index2 and the Barclay Event Driven Index2 returned −8.51% and −3.07%, respectively, for the same period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF used derivative positions where necessary to help it track the IQ Hedge Event-Driven Index, which contained both long and short positions. The ETF’s derivatives positions were primarily total return swaps on the ETFs at the weights in which they were included in the Underlying Index. Derivatives were not used to gain leverage beyond the index positioning; rather, they were used exclusively to enable the ETF to track its Underlying Index.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

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 19 for more information on this index.

​

17​

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

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

The ETF maintained its core allocation to bonds during the reporting period, as well as a dominant satellite allocation to equity. The bond weighting decreased from 94.83% to 86.18% during the reporting period. Among bonds, investment-grade corporate bonds increased from 46.32% to 47.63% and convertible bonds decreased from 27.3% to 16.31%. The bank loan weighting increased slightly from approximately 23.98% to 25.15%. The high-yield corporate bond weighting remained negative at −2.97% as of the end of reporting period. The equities weighting increased from 5.17% to 13.82%, with U.S. small-cap growth remaining at approximately 8% while U.S. preferred equity increased from −2.99% to 7.66%. Annual portfolio turnover was 59.47% for the reporting period.

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

In terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were SPDR® Blackstone Senior Loan ETF, Invesco Senior Loan ETF and iShares Short Treasury Bond ETF. During the same period iShares Russell 2000 Growth ETF, Vanguard Small-Cap Growth ETF and iShares Convertible Bond ETF recorded the lowest total returns.

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 Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were iShares iBoxx $ High Yield Corporate Bond ETF, Invesco Senior Loan ETF and SPDR® Blackstone Senior Loan ETF. The weakest contributors were SPDR® Bloomberg Convertible Securities ETF, Vanguard Short-Term Corporate Bond ETF and Vanguard Small-Cap Growth ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF maintained a core allocation to bonds of approximately 86.18%, as well as a remaining allocation to equities of 13.82%. Among bonds, investment-grade corporates dominated the ETF’s holdings with a 47.63% weighting, followed by bank loans at 25.15% and convertible bonds at 16.31%. Among equities, 7.66% of the ETF’s assets were allocated to U.S. small-cap growth and 6.16% to U.S. preferred.

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 4/30/2022)

Fund Performance History

IQ Hedge Event-Driven Tracker ETF
(as of April 30, 2022)

1

Fund Inception Date: 3/24/2015

​

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.

​

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 Real Return ETF

How did IQ Real Return ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Real Return ETF returned −0.77% at NAV (net asset value) and −0.90% at market price.1 To compare, the ETF’s Underlying Index, Bloomberg U.S. Treasury Inflation Notes 1-10 Year Index2 returned 1.52% for the reporting period.

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

Despite new coronavirus variant outbreaks, vaccinations and economic reopenings enabled the stock market to rise during much of 2021, with the S&P 500 Index hitting historically high levels at the end of the year. However, equity markets decreased significantly in the first quarter of 2022 as the prospect of higher interest rates weighed on stocks, offsetting virtually all the gains from the previous three quarters. Bond prices, which typically move in the opposite direction of interest rates, fell as well. Inflation fears and a shift by the U.S. Federal Reserve (the “Fed”) toward tighter monetary policy were perhaps the main culprits, but both were overshadowed by the human tragedy unfolding in Ukraine. Commodity prices roared higher with the war in Ukraine continuing to fuel fears of supply crunches. Oil prices swung dramatically, with end-of-reporting-period peaks pushing above the major, $100-per-barrel milestone. The consumer price index increased sharply, hitting 8.5% annually in March 2022, the highest number since 1981. On a more positive note, the U.S. unemployment rate decreased from 6% in April 2021 to 3.6% in March 2022, finally reaching the same level as the pre-pandemic period. However, wage increases added to the inflationary pressures undermining financial markets.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Consistent with Fed tightening, equity markets experienced significant drawdowns, especially in the first quarter of 2022. Bond markets experienced the worst drawdown on record for global fixed income. However, despite these large market moves, the drops were not disorderly and we saw sufficient liquidity in the system.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

In the first quarter of 2022, the Fed moved forward on its pledge to raise rates. As mentioned above, the bond market experienced the worst drawdown on record for global fixed income, with the global bond selloff deepening as the Fed stepped up its tightening policy. In our view, the bond market appears on the verge of turning bearish after a decades-long bull run.

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

The ETF did not use any derivatives position over the reporting period.

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

The positions in the ETF’s Underlying Index were driven by quantitative models that determined the weights across the various hedge fund strategies represented in the ETF, as well as the weights of the assets within these strategies. Given the rules-based nature of this approach, there was no subjectivity involved in the allocation decision process.

Effective March 1, 2022, the ETF repositioned and changed its Underlying Benchmark. The Funds’ new Underlying Benchmark is comprised of three main asset classes: 60% in fixed income (Treasury inflation-protected securities), 30% in equities and 10% in commodities. The target asset weights and asset class weights reset monthly. Fixed income positions are also rebalanced monthly, while equity components are rebalanced quarterly.

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 this index.

​

20

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

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

Before the ETF repositioned, it maintained its core allocation to bonds, which decreased from 85.05% to 78.97%. Among bonds, the ETF’s ultra-short-term allocation decreased from 75.02% to 68.87%, while medium- and long-term allocations increased to 7.57% and 2.53%, respectively. During the same period, the ETF’s equity weight decreased from 7.42% to 7.01%. Other satellite positions accounted for a relatively small percentage of the ETF’s remaining allocations, with currencies decreasing from 7.02% to zero, and real estate increasing from zero to 3.67%.

As described above, the ETF repositioned in March 2022 to include three main asset classes: 60% in fixed income (Treasury inflation-protected securities), 30% in equities and 10% in commodities, with asset weights reset to the target weights monthly.

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

Before the ETF repositioned, in terms of total return, the best-performing Underlying ETFs held in the ETF during the reporting period were Invesco DB Oil Fund, iShares Core S&P 500 ETF and SPDR® S&P 500® ETF Trust. During the same period, iShares MSCI Emerging Markets ETF, Invesco Currencyshares® Japanese Yen Trust and Invesco CurrencyShares® Euro Trust recorded the lowest total returns.

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

Before the ETF repositioned, on the basis of impact, which takes weightings and total returns into consideration, the Underlying ETFs that made the greatest positive contributions to the ETF’s performance during the reporting period were Invesco DB Oil Fund, Invesco DB Gold Fund and SPDR® S&P 500® ETF Trust. The most significant detractors from performance were Invesco CurrencyShares® Japanese Yen Trust, IQ Ultra Short Duration ETF and iShares 3-7 Year Treasury Bond ETF.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the ETF was allocated 60% in fixed income (Treasury inflation-protected securities), 30% in equities and 10% in commodities.

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
(From 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ Real Return ETF
(as of April 30, 2022)

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

On March 1, 2022, the Fund’s underlying index changed from the IQ Real Return Index to the Bloomberg IQ Multi-Asset Inflation Index (the “Index”). Therefore, the Fund’s performance and historical returns shown for the periods prior to March 1, 2022, are not necessarily indicative of the performance that the Fund, based on its current index, would have generated. Since the Index had an inception date of December 10, 2021 it was not in existence for all of the periods disclosed. The old index was terminated, so performance data does not exist for these time periods.

​

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 S&P High Yield Low Volatility Bond ETF

How did IQ S&P High Yield Low Volatility Bond ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), the IQ S&P High Yield Low Volatility Bond ETF returned −6.67% at NAV (net asset value) and −7.44% at market price.1 To compare, the ETF’s Underlying Index, the S&P U.S. High Yield Low Volatility Corporate Bond Index2 returned −6.69% for the reporting period. The ICE BofA U.S. High Yield Index returned −4.96% for the same period.

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

On an absolute basis, a sharply higher move in U.S. Treasury yields in the second half of the reporting period, coupled with a sell-off in risk assets, had a negative impact on the ETF’s performance and the high-yield market. On a relative basis, positions in communications, automotive and retail made positive contributions to the ETF’s performance. (Contributions take weightings and total returns into account.) Conversely, overweight exposure to securities rated BBB3 and positions in building materials detracted from returns.

What was the ETF’s duration4 strategy during the reporting period?

The ETF maintained a neutral duration posture relative to the benchmark duration during the reporting period.

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

Relative to the S&P U.S. High Yield Low Volatility Corporate Bond Index, the strongest returns came from communications, cyclicals and energy sectors. The sectors that were the most significant detractors from the ETF’s returns were building materials and metals & mining.

What were some of the ETF’s largest purchases and sales during the reporting period?

During the reporting period, the ETF purchased the bonds of Charter Communications and Ford Motor Credit. Both were rebalancing buys due to increased weighting in the ETF’s Underlying Index. The ETF sold the bonds of Tenet Healthcare and Community Health Systems.

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

The sectors that had the largest increases in sector weightings during the reporting period were energy, health care and leisure. Conversely, the largest decreases were consumer goods, capital goods and media.

How was the ETF positioned at the end of the reporting period?

As of April 30, 2022, the largest positions in the ETF relative to the S&P U.S. High Yield Low Volatility Corporate Bond Index were in the energy, health care and services sectors. As of the same date, the most significantly underweight positions in the ETF were in the consumer goods, financial services and transportation sectors.

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.

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 24 for more information on this index.

​

3

An obligation rated ‘BBB’ by S&P is deemed by S&P to exhibit adequate protection parameters. In the opinion of S&P, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. When applied to Fund holdings, ratings are based solely on the creditworthiness of the bonds in the portfolio and are not meant to represent the security or safety of the Fund.

​

4

Duration is a measure of the price sensitivity of a fixed-income investment to changes in interest rates. Duration is expressed as a number of years and is considered a more accurate sensitivity gauge than average maturity.

​

23​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ S&P High Yield Low Volatility Bond ETF
(as of April 30, 2022)

1

Fund Inception Date: 2/15/2017

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

24

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Merger Arbitrage ETF returned −5.38% at NAV (net asset value) and −5.61% at market price.1 To compare, the ETF’s Underlying Index, the IQ Merger Arbitrage Index2 returned −4.47% for the reporting period. The MSCI World Index2, S&P 500® Index2 and the Barclay Merger Arbitrage Index,2 returned −3.52% −0.21%, and 0.63%, respectively, for the same period.

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

During the reporting period, global merger and acquisition deal activity continued at a record pace. This frenzied deal environment took place against a backdrop of divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads3 affecting bond markets, equity market levels, commodity prices and currencies.

Approximately 3% of deals included in the Underlying Index failed to complete due to deal termination or failure to maintain the strategy’s holding criteria. Approximately 76% of deals completed successfully, while 21% of deals were removed for failing to meet criteria necessary to remain in the Underlying Index.

The strategy employs a hedging methodology primarily using U.S. large-cap equities. In a rising equity market, the ETF’s hedges contribute negative returns. Conversely, the hedges contribute positive returns when equity markets are trending downwards, as was the case during the first quarter of 2022.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF used hedges to dampen potential downward price performance of the acquiring company’s stock used in stock-based transactions. In cases when the acquiring company’s economic sector performed positively, the hedge detracted from performance. Conversely, when the acquiring company’s economic sector performed negatively, the hedge contributed positively to performance. During the reporting period, the ETF’s non-North America hedge produced slightly positive returns, while the ETF’s North America hedge yielded negative returns. The ETF only hedged its exposure to stock-based transactions.

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 energy. The sectors providing the weakest contributions to the ETF’s absolute performance were information technology and financials.

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 27 for more information on this index.

​

3

The terms “spread” and “yield spread” may refer to the difference in yield between a security or type of security and comparable U.S. Treasury issues. The terms may also refer to the difference in yield between two specific securities or types of securities at a given time.

​

25​

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 positive contributions to the ETF’s absolute performance during the reporting period included Xilinx and Alexion Pharmaceuticals. Xilinx designs, develops and markets complete programmable logic solutions. The company’s solutions include advanced integrated circuits, software design tools, predefined system functions delivered as cores of logic and field engineering support. Xilinx sells its products through several distribution channels to customers in the United States and overseas. Alexion Pharmaceuticals, a biopharmaceutical company, researches and develops proprietary immunoregulatory compounds for the treatment of autoimmune and cardiovascular diseases. The company develops C5 complement inhibitors and apogens, which are two classes of potential therapeutic compounds designed to selectively target specific disease-causing segments of the immune system.

During the same period, the weakest contributors to the ETF’s absolute performance were Afterpay and Five9. Afterpay provides payment services, including an installment payment service that is free for customers who pay on time. The company serves customers in Australia, New Zealand, the United States and the UK. Five9 provides cloud contact center software. The company offers real-time and historical reporting, recording, quality monitoring, workforce and customer-relationship management integrations. Five9 serves customers worldwide. Both of these stocks are no longer held by the ETF.

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 communication services. During the same period, the sectors with the most substantial weighting decreases were financials and utilities.

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

As of April 30, 2022, the two largest positions in the ETF were Anaplan and Nielsen Holdings. Anaplan develops and publishes a cloud platform for business applications. The company’s platform allows business users to build and maintain strategic, operational, and business planning and performance management. Anaplan markets its products and services globally. Nielsen Holdings offers marketing services. The company provides demand analysis, product development, sales measurement, price and trade promotion strategies, and product launch services. Nielsen Holdings 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.

26

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

Hypothetical Growth of a $10,000 Investment
(From 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ Merger Arbitrage ETF
(as of April 30, 2022)

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.

​

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.

27​

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Global Resources ETF returned 19.11% at NAV (net asset value) and 18.81% at market price.1 To compare, the ETF’s Underlying Index, IQ Global Resources Index2 returned 20.24% for the reporting period. The S&P Global Natural Resources Index (Net), Bloomberg Commodity Spot Index2 and MSCI World Index2 returned 19.36%, 39.75% and −3.52%, respectively, during the same period.

Were there any changes to the Fund during the reporting period?

The ETF’s Underlying Index implemented a methodology changes effective September 1, 2021. With this methodology change, the Underlying Index and corresponding ETF removed the equity hedge overlay and adopted a 100% long-only strategy. Additionally, the weighting approach changed from a momentum/valuation-based approach to a tiered weighting scheme. Under this new approach, energy, metals and agriculture each have 30% weightings, while water and timber have 5% weightings. Lastly, the coal subsector was removed from the Underlying Index.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. Rising inflationary pressures spurred by continued supply-demand imbalances provided a strong tailwind for commodity prices. Russia’s ongoing military campaign in Ukraine produced another catalyst for already soaring commodity prices toward the end of the reporting period.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets. However, equities of companies that are primarily focused on commodities and natural resources were generally the beneficiaries of inflation fears.

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

As described above, the methodology changes to the Underlying Index resulted in the ETFs removal of its derivatives exposures. Prior to the methodology change, the ETF used derivative positions where necessary to help it track its Underlying Index, which contained both long and short weights. The ETF’s derivatives positions consisted of short positions in futures contracts on the S&P 500® Index and the MSCI EAFE Index. During this portion of the reporting period, the ETF’s short positions detracted from performance as global markets rallied in the spring and summer of 2021.

During the reporting period, which subsectors were the strongest positive contributors to the ETF’s relative 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 water 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 30 for more information on this index.

​

28

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 included Exxon Mobil and Chevron. 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. Chevron is an integrated energy company with worldwide operations. The company produces and transports crude oil and natural gas. Chevron also refines, markets, and distributes fuels, and is involved in chemical and mining operations, power generation and energy services.

The weakest contributors to the ETF’s absolute performance were Kerry Group and Neste Oyj. Kerry is a major international food corporation that develops, manufactures and delivers innovative taste solutions and nutritional and functional ingredients for the food, beverage and pharmaceutical industries. Kerry also manufactures added-value brands and customer-branded chilled foods to UK and Irish consumer food markets. Neste Oyj operates as an independent northern European oil refining and marketing company. The company focuses on traffic fuels and other value-added petroleum products with reduced environmental impact. Both stocks were held by the ETF as of the end of the reporting period.

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 energy and grains/food & fiber. During the same period, aside from the coal subsector, which was removed from the ETF, the subsectors with the most substantial weighting decreases were timber and precious metals.

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

As of April 30, 2022, the ETF’s largest holdings included Mondelez International. and Exxon Mobil. Mondelez International is a food and beverage company that manufactures and markets packaged food products, including snacks, beverages, cheese, convenient meals and various packaged grocery products. The company sells its products throughout the world. Exxon Mobil is 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.

29​

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

Hypothetical Growth of a $10,000 Investment
(From 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ Global Resources ETF
(as of April 30, 2022)

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.

​

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.

30

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

IQ U.S. Real Estate Small Cap ETF

How did IQ U.S. Real Estate Small Cap ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ U.S. Real Estate Small Cap ETF returned −0.76% at NAV (net asset value) and −0.84% at market price.1 To compare, the ETF’s Underlying Index, the IQ U.S. Real Estate Small Cap Index2 returned −0.05% for the reporting period. The Dow Jones U.S. Real Estate Index2 returned 7.24% for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads3 affecting bond markets, equity market levels, commodity prices and currencies. Historically, real estate has served as an inflation hedge.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 residential REITs (real estate mortgage trusts) and retail REITs. The subsectors that made the weakest contributions to the ETF’s absolute performance were mortgage REITs and hotel REITs.

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 included National Storage Affiliates Trust and Independence Realty Trust. National Storage Affiliates Trust operates as a REIT focused on the ownership, operation, and acquisition of self-storage properties located within the United States. Independence Realty Trust is an internally managed and advised apartment REIT focused on acquiring and owning well-located garden-style and mid-rise apartment properties throughout the United States.

1

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

​

2

See page 33 for more information on this index.

​

3

The terms “spread” and “yield spread” may refer to the difference in yield between a security or type of security and comparable U.S. Treasury issues. The terms may also refer to the difference in yield between two specific securities or types of securities at a given time.

​

31​

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

The weakest contributors to the ETF’s absolute performance during the same period were CareTrust REIT and Two Harbors Investment. CareTrust acquires, owns and leases real estate properties related to the health care subsector and senior housing living situations. Two Harbors REIT focused on investing in, financing and managing U.S. residential mortgage-backed securities (“RMBS”) and related investments. Both stocks remained in the ETF as of the end of the reporting period.

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 office REITs and retail REITs. During the same period, the subsectors with the most substantial weighting decreases were residential REITs and specialized REITs.

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

As of April 30, 2022, the two largest positions in the ETF were Independence Realty Trust, described above, and Kite Realty Group Trust. Kite Realty Group Trust is a full-service, vertically integrated real estate company focused primarily on the development, construction, acquisition, ownership and operation of neighborhood and community shopping centers. The company own properties in Indiana, Florida, Texas, Washington, Oregon, New Jersey, Illinois and Georgia.

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.

32

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

Hypothetical Growth of a $10,000 Investment
(From 4/30/2012 Through 4/30/2022)

Fund Performance History

IQ U.S. Real Estate Small Cap ETF
(as of April 30, 2022)

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.

​

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.

33​

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

IQ 50 Percent Hedged FTSE International ETF

How did IQ 50 Percent Hedged FTSE International ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ 50 Percent Hedged FTSE International ETF returned −3.16% at NAV (net asset value) and −4.45% at market price.1 To compare, the ETF’s Underlying Index, the FTSE Developed ex North America 50% Hedged to USD Index2 returned −3.08% for the reporting period. The FTSE Developed ex North America Index Local Currency and FTSE Developed ex North America Index2 returned 3.24% and −9.12%, respectively, for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF’s Underlying Index uses currency forwards to hedge 50% of the currency exposure of its underlying constituents. The hedge is reset monthly using 30-day forward contracts. During the reporting period, the U.S. dollar appreciated against most international currencies, bolstering the ETF’s performance due to the effect of its currency forwards.

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 energy and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were information technology and consumer discretionary.

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 included Novo Nordisk and AstraZeneca. 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. AstraZeneca, through its subsidiaries, researches, manufactures and sells pharmaceutical and medical products with a focus on the following eight therapeutic areas: gastrointestinal, oncology, cardiovascular, respiratory, central nervous system, pain control, anesthesia and infection.

1

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

​

2

See page 36 for more information on this index.

​

34

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

The weakest contributors to the ETF’s absolute performance were Samsung Electronics, which was the top contributor to the ETF’s absolute performance over the previous reporting period, and SoftBank Group. Samsung manufactures and sells electronics and computer peripherals through following business divisions: Consumer Electronics, Information Technology & Mobile Communications and Device Solutions. The Consumer Electronics business division provides cable television, monitors, printers, air-conditioners, refrigerators, washing machines and medical devices. SoftBank Group, a holding company, operates investment businesses and, through its “SoftBank” subsidiary, provides telecommunication services. The company also offers microprocessor intellectual property, sales of design software tools and related technology services. Both stocks remained in the ETF as of the end of the performance period.

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 energy. During the same period, the 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, 2022, the two largest positions in the ETF were Nestlé and Roche Holding. 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. Roche Holding develops and manufactures pharmaceutical and diagnostic products. The company produces prescription drugs in the areas of cardiovascular, infectious, autoimmune, respiratory diseases, dermatology, metabolic disorders, oncology, transplantation and the central nervous system.

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.

35​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ 50 Percent Hedged FTSE International ETF
(as of April 30, 2022)

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.

​

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.

36

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Chaikin U.S. Large Cap ETF returned 0.24% at NAV (net asset value) and 0.17% at market price.1 To compare, the ETF’s Underlying Index, the NASDAQ Chaikin Power US Large Cap Index2 returned 0.51% for the reporting period. The S&P 500® Index and the NASDAQ US 300 Total Return Index2 returned 0.21% and −1.43%, respectively, for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 staples and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were information technology and communication services.

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 included Arista Networks and EOG Resources. Arista Networks provides cloud networking solutions for data-centers and computer environments, serving customers worldwide. The company offers ethernet switches, pass-through cards, transceivers and enhanced operating systems, and also provides host adapter solutions and networking services. EOG Resources explores, develops, produces and markets natural gas and crude oil. The company operates in major producing basins in the United States, Canada, Trinidad, the UK North Sea, China and, from time to time, select other international areas.

During the same period, the weakest contributors to the ETF’s absolute performance were DocuSign and Snap. DocuSign provides electronic signature solutions worldwide to mortgage, non-profit, government, real estate, insurance, technology and health care entities. Snap develops mobile camera application products and services that allow users around the world to send and receive photos, drawings, text and videos. Both stocks were held by the ETF as of the end of 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 39 for more information on this index.

​

37​

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

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 discretionary and energy. During the same period, the two sectors with the most substantial weighting decreases were real estate and communication services.

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

As of April 30, 2022, the ETF’s largest positions included Twitter and The Kraft Heinz Company. Twitter provides global, online social networking and microblogging services that enable users to follow other users activity, read and post tweets. Kraft Heinz produces and distributes dairy products, sauces, flavored milk powders and other food products 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.

38

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Chaikin U.S. Large Cap ETF
(as of April 30, 2022)

1

Fund Inception Date: 12/13/2017

​

2

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.

​

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.

39​

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, 2021?

For the 12 months ended April 30, 2021 (the “reporting period”), IQ Chaikin U.S. Small Cap ETF returned −7.89% at NAV (net asset value) and −7.95% at market price.1 To compare, the ETF’s Underlying Index, the NASDAQ Chaikin Power US Small Cap Index2 returned −7.56% for the reporting period. The Russell 2000 Index and the NASDAQ US 1500 Index2 returned −16.87% and −15.22%, respectively, for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies. Generally, small-cap stocks have greater sensitivity to changes in economic cycles than their large-cap counterparts. The prospect of sustained high inflation and rising interest rates hit the small-cap asset class particularly hard during the reporting period.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy and consumer staples. The sectors that made the weakest contributions to the ETF’s absolute performance were health care and consumer discretionary.

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 included Kezar Life Sciences and NextDecade. California-based Kezar Life Sciences discovers and develops molecule therapeutics and medicines such as protein homeostasis for autoimmune disorders. NextDecade is a liquefied natural gas (LNG) development company focused on LNG export projects and associated pipelines, including solutions linking Permian Basin-associated gas to the global LNG market. The company is developing the Rio Grande LNG project in the Port of Brownsville, Texas.

During the same period, the weakest contributors to the ETF’s absolute performance were Cambium Networks and Verastem. Cambium Networks provides broadband networking infrastructure solutions to global customers based on wireless fabric architecture, including enterprise networking, fixed wireless broadband, hybrid networks, outdoor wireless for private networks and small cell backhaul. Verastem is a

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 42 for more information on this index.

​

40

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

development-stage biopharmaceutical company focused on the development and commercialization of medicines and treatments for cancer and tumor growth, such as focal adhesion kinase (FAK) inhibition. Verastem serves patients and health care professionals in the United States. As of the end of the reporting period, Cambium Networks was still held by the ETF, while Verastem was no longer held.

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 health care.

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

As of April 30, 2022, the two largest positions in the ETF were Antares Pharma and Comstock Resources. Antares Pharma develops pharmaceutical delivery systems, including needle-free and mini-needle injector systems. The company distributes its needle-free injector systems in various countries. Antares also conducts research and development in transdermal gel products and has several products in clinical evaluation with partners. Comstock Resources, an independent exploration and production company, acquires, develops, produces and explores oil and natural gas properties in the Gulf of Mexico, Texas and Louisiana.

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.

41​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Chaikin U.S. Small Cap ETF
(as of April 30, 2022)

1

Fund Inception Date: 5/16/2017

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

42

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ 500 International ETF returned −4.29% at NAV (net asset value) and −5.21% at market price.1 To compare, the ETF’s Underlying Index, the IQ 500 International Index2 returned −4.08% for the reporting period. The MSCI EAFE Index returned −8.15% for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy and real estate. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and industrials.

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 included Glencore and Shell. Glencore is a diversified, natural resources company operating worldwide in three groups: metals and minerals, energy products and agricultural products. Shell explores for and refines petroleum products. The company produces fuels, chemicals and lubricants, serving clients worldwide.

The weakest contributors to the ETF’s absolute performance during the same period were SoftBank Group and Volkswagen. SoftBank Group, a holding company, operates investment businesses and, through its “SoftBank” subsidiary, provides telecommunication services. The company also offers microprocessor intellectual property, sales of design software tools and related technology services. Volkswagen manufactures and sells vehicles worldwide, including economy and luxury automobiles, sports cars, trucks and commercial vehicles. Both stocks remained in the ETF as of the end of 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 45 for more information on this index.

​

43​

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

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 staples and health care. During the same period, the sectors with the most substantial weighting decreases were consumer discretionary and materials.

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

As of April 30, 2022, the two largest positions in the ETF were Glencore, described above, and Nestlé. 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.

44

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ 500 International ETF
(as of April 30, 2022)

1

Fund Inception Date: 12/13/2018

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

45​

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

IQ Candriam ESG US Equity ETF

How did IQ Candriam ESG US Equity ETF perform during the 12 months ended April 30, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Candriam ESG US Equity ETF returned 1.21% at NAV (net asset value) and 1.23% at market price.1 To compare, the ETF’s Underlying Index, IQ Candriam ESG U.S. Equity Index2 returned 1.29% for the reporting period. The S&P 500® Index returned 0.21% for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 health care and consumer staples. The sectors that made the weakest contributions to the ETF’s absolute performance were communication services and industrials.

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 included Apple and Microsoft. Apple designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and provides a variety of related services. The company sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers and resellers. Microsoft developments and supports software, services, devices and enterprise solutions. The company offers operating system software, server application software, business and consumer applications software, software development tools, and Internet and intranet software. Microsoft also develops video game consoles and digital music entertainment devices.

The weakest contributors to the ETF’s absolute performance during the same period were Salesforce and Adobe. Salesforce designs and develops enterprise software for customers worldwide. The company provides a technology platform for customers and developers to build and run business applications, as well as manage their customer, sales and operational data. Adobe develops, markets and supports computer

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 48 for more information on this index.

​

46

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

software products and technologies that allow users to express and use information across all print and electronic media. The company offers a line of application software products, type products and content for creating, distributing and managing information. Both stocks were still held by the ETF as of the end of the reporting period.

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 communication services and industrials.

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

As of April 30, 2022, 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.

47​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Candriam ESG US Equity ETF
(as of April 30, 2022)

1

Fund Inception Date: 12/17/2019

​

2

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.

​

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.

48

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Candriam ESG International Equity ETF returned −7.82% at NAV (net asset value) and −9.25% at market price.1 To compare, the ETF’s Underlying Index, Candriam ESG International Equity Index2 returned −7.65% for the reporting period. The MSCI EAFE Index returned −8.15% for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy and health care. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and industrials.

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 included Japan-based Daiichi Sankyo and Switzerland-based Nestlé. Daiichi Sankyo manufactures pharmaceuticals for human and veterinary use, as well as medical tools and equipment. The company also produces food, food additives, livestock feeds and agrochemicals. 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 weakest contributors to the ETF’s absolute performance during the same period were Recruit Holdings and Toyota Motor, both based in Japan. Recruit Holdings provides human resource technology, marketing media and temporary staffing services in Japan and overseas. The company operates the job search engine, “Indeed,” and the online job and company information site, “Glassdoor.” 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 systems, including radar cruise

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 51 for more information on this index.

​

49​

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

control and electronic toll collection systems, as well as operating financing services through its subsidiaries. Both stocks were held by the ETF as of the end of the reporting period.

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 communication services.

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

As of April 30, 2022, the two largest positions in the ETF were Nestlé, described above, and ASML Holdings. ASML Holding manufactures, markets and services advanced semiconductor equipment systems. It mainly caters to the makers of memory chips and logic chips.

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

50

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Candriam ESG International Equity ETF
(as of April 30, 2022)

1

Fund Inception Date: 12/17/2019

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

51​

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, 2022?

For the 12 months ended April 30, 2022 (the “reporting period”), IQ Healthy Hearts ETF returned 6.32% at NAV (net asset value) and 5.89% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Healthy Hearts Index2 returned 6.68% for the reporting period. The MSCI ACWI Index2 and the MSCI World Health Care Index returned −5.44% and 5.59%, respectively, for the same period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

Monetary and fiscal conditions remained supportive throughout most of the reporting period, helping buoy capital markets. During the final months of 2021 and the first quarter of 2022, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

During the reporting period, which sectors were the strongest positive contributors to the ETF’s relative 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 technology services. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary and industrials.

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 included Eli Lilly and Company and Novo Nordisk. 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, cardiovascular agents and oncology. Novo Nordisk develops, produces and markets pharmaceutical products worldwide, with a focuses on diabetes care. The company offers insulin delivery systems and other diabetes products, and also works in areas such as hemostasis management, growth disorders and hormone replacement therapy, as well as offering educational and training materials.

The weakest contributors to the ETF’s absolute performance were Healthcare Services Group and V.F. Corporation. Healthcare Services Group provides housekeeping, laundry, linen, facility maintenance and food services to the health care industry, including nursing homes, retirement complexes, rehabilitation centers and hospitals in the United States and Canada. V.F. is an international apparel company with a broad portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear and occupational apparel

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 54 for more information on this index.

​

52

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

categories. V.F. products are marketed to consumers shopping in specialty stores; upscale, traditional department stores; national chains; and mass merchants. Both stocks were held by the ETF as of the end of the reporting period.

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 industrials. During the same period, the two sectors with the most substantial weighting decreases were consumer staples and communication services.

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

As of April 30, 2022, the ETF’s largest positions included Eli Lilly and Company, described above, and Merck & Co. 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 joint ventures. The company has operations in pharmaceuticals, animal health, and consumer care.

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.

53​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Healthy Hearts ETF
(as of April 30, 2022)

1

Fund Inception Date: 1/14/2021

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

54

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

IQ Engender Equality ETF

How did IQ Engender Equality ETF perform during the period since its inception on October 21, 2021 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ Engender Equality ETF returned −12.10% at NAV (net asset value) and −12.24% at market price.1 To compare, the ETF’s Underlying Index, the Solactive Equileap US Select Gender Equality Index,2 and the Russell 1000 Index returned −12.19% and −10.08%, 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.

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 consumer staples. The sectors that made the weakest contributions to the ETF’s absolute performance were consumer discretionary 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 included Eli Lilly and Company and AbbVie. Eli Lilly discovers, develops, manufactures and sells pharmaceutical products for humans and animals around the world. The company’s products focus on neuroscience, endocrinology, anti-infectives, cardiovascular agents, oncology and animal health. AbbVie researches and develops pharmaceutical products for specialty therapeutic areas such as immunology, chronic kidney disease, hepatitis C, women’s health, oncology and neuroscience. AbbVie also offers treatments for diseases including multiple sclerosis, Parkinson’s disease and Alzheimer’s disease.

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 57 for more information on this index.

​

55​

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

During the same period, the weakest contributors to the ETF’s absolute performance were The Gap and PayPal. The Gap is an international specialty retailer selling casual apparel, accessories and personal care products for men, women and children. The Gap operates stores in the United States, Canada, the UK, France, Ireland and Japan. PayPal enables digital and mobile payments on behalf of consumers and merchants worldwide. Both stocks remained in the ETF as of the end of the reporting period.

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 staples. During the same period, the sectors with the most substantial weighting decreases were consumer discretionary and financials.

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

As of April 30, 2022, the two largest positions in the ETF were Campbell Soup Company and Kimberly-Clark. Campbell Soup manufactures and markets branded convenience food products worldwide. The Company’s core divisions include soups and sauces, biscuits and confectionery, and foodservice. Kimberly-Clark is a global health and hygiene company that manufactures and provides consumer products, including diapers, tissues, paper towels, incontinence care products, surgical gowns and disposable face masks.

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.

56

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Engender Equality ETF
(as of April 30, 2022)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

57​

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

IQ Cleaner Transport ETF

How did IQ Cleaner Transport ETF perform during the period since its inception on October 21, 2021 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ Cleaner Transport ETF returned −17.30% at NAV (net asset value) and −18.72% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Cleaner Transport Index,2 and the MSCI ACWI Index returned −14.20% and −10.52, respectively, for the reporting period.

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

IQ Candriam Cleaner Transport Index, the ETF’s Underlying 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.

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 industrials.

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 included NVIDIA and Tesla. NVIDIA designs, develops and markets three dimensional (3D) graphics processors and related software for the mainstream personal computer market. Tesla designs, manufactures and sells high-performance electric vehicles and electric vehicle power train components. The company owns its sales and service network and sells electric power train components to other automobile manufacturers.

During the same period, the weakest contributors to the ETF’s absolute performance were NIO and Volkswagen. NIO manufactures and sells electric vehicles and parts, and provides battery charging services.

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 60 for more information on this index.

​

58

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

Volkswagen manufactures and sells economy and luxury automobiles, sports cars, trucks, and commercial vehicles. Both stocks remained in the ETF as of the end of the reporting period.

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 utilities. During the same period, the sectors with the most substantial weighting decreases were communication services and consumer discretionary.

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

As of April 30, 2022, the two largest positions in the ETF were Tesla, described above, and Iberdrola. Iberdrola generates, distributes, trades and markets electricity in the UK, United States, Spain, Portugal and Latin America. The company specializes in clean energy generated by wind power.

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.

59​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Cleaner Transport ETF
(as of April 30, 2022)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

60

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

IQ Clean Oceans ETF

How did IQ Clean Oceans ETF perform during the period since its inception on October 21, 2021 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ Clean Oceans ETF returned −15.36% at NAV (net asset value) and −16.13% at market price.1 To compare, the ETF’s Underlying Index, the IQ Candriam Clean Oceans Index,2 and the MSCI World Index returned −18.62% and −10.52, respectively, for the reporting period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 financials and utilities. The sectors that made the weakest contributions to the ETF’s absolute performance were industrials 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 included NVIDIA and Microsoft. NVIDIA designs, develops and markets three dimensional (3D) graphics processors and related software for the mainstream personal computer market. Microsoft develops, manufactures, licenses, sells and supports software products. The company offers operating system software, server application software, business and consumer applications software, software development tools and Internet and intranet software. Microsoft also develops video game consoles and digital music entertainment devices.

During the same period, the weakest contributors to the ETF’s absolute performance were Dassault Systemes and Skyworks Solutions. Dassault Systemes provides 3D design software, 3D digital mock up and product lifecycle management software designed to support client companies’ innovation processes. Skyworks Solutions, a wireless semiconductor company, designs and manufactures radio frequency and complete semiconductor system solutions for mobile communications applications. The company provides front-end modules, radio frequency subsystems and system solutions to wireless handset and infrastructure customers worldwide. Both stocks were held by the ETF as of the end of 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 63 for more information on this index.

​

61​

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

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 utilities. During the same period, the sectors with the most substantial weighting decreases were communication services and consumer discretionary.

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

As of April 30, 2022, the two largest positions in the ETF were Iberdrola and Kimberly-Clark. Iberdrola generates, distributes, trades and markets electricity in the UK, United States, Spain, Portugal and Latin America. The company specializes in clean energy generated by wind power. Kimberly-Clark is a global health and hygiene company that manufactures and provides diapers, tissues, paper towels, incontinence care products, surgical gowns and disposable face masks.

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.

62

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Clean Oceans ETF
(as of April 30, 2022)

1

Fund Inception Date: 10/21/2021

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

63​

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 period since its inception on February 8, 2022 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ Global Equity R&D Leaders ETF returned −10.35% at NAV (net asset value) and −11.03% 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 Index2 returned −10.37% and −10.59%, respectively, for the reporting period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies. Amid heightened uncertainty and rising interest rates, R&D-heavy stocks struggled, given that these are predominantly growth-focused companies and results from their investments are realized farther out in the future.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy. The sectors that made the weakest contributions to the ETF’s absolute performance consumer discretionary 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 included Merck & Company and Apple. 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. Apple designs, manufactures and markets personal computers and related personal computing and mobile communication devices, along with a variety of related software, services, peripherals and networking solutions. Apple sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers and resellers.

During the same period, the weakest contributors to the ETF’s absolute performance were Telefonaktiebolaget LM Ericsson (“Ericsson”) and PayPal. PayPal offers online payment solutions enabling digital and mobile payments on behalf of consumers and merchants worldwide. Ericsson develops and manufactures network equipment and software, as well as services for network and business operations. 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 66 for more information on this index.

​

64

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

company’s portfolio also includes products for the enterprise, cable, mobile platform and power module markets. Both stocks were still held by the ETF as of the end of the reporting period.

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 consumer discretionary and information technology.

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

As of April 30, 2022, the two largest positions in the ETF were Amazon.com and Alphabet. Online retailer Amazon.com sells a wide range of products, including books, music, computers, electronics and many others. The company also offers personalized shopping services, Web-based credit card payment and direct shipping to customers, and operates a cloud platform offering services globally. 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.

65​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ Global Equity R&D Leaders ETF
(as of April 30, 2022)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

66

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 period since its inception on February 8, 2022 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ U.S. Large Cap R&D Leaders ETF returned −9.37% at NAV (net asset value) and −9.43% at market price.1 To compare, the ETF’s Benchmark Index, the IQ U.S. Large Cap R&D Leaders Index,2 and the Russell 1000 Growth Index returned −9.37% and −10.89%, respectively, for the reporting period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies. Amid heightened uncertainty and rising interest rates, R&D-heavy stocks struggled, given that these are predominantly growth-focused companies and results from their investments are realized farther out in the future.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy. The sectors that made the weakest contributions to the ETF’s absolute performance were communication services and consumer discretionary.

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 included Merck & Company and Apple. 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. Apple designs, manufactures and markets personal computers and related personal computing and mobile communication devices, along with a variety of related software, services, peripherals and networking solutions. Apple sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers and resellers.

During the same period, the weakest contributors to the ETF’s absolute performance were The Boeing Company and Alphabet. Boeing develops, produces and markets commercial jet aircraft, and provides related support services to the commercial airline industry worldwide. The company also researches, develops, produces, modifies and supports information, space and defense systems, including military aircraft,

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 69 for more information on this index.

​

67​

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

helicopters, and space and missile systems. Through its subsidiaries, Alphabet provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce and hardware products. Both stocks both remained in the ETF as of the end of the reporting period.

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 consumer discretionary and industrials.

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

As of April 30, 2022, the two largest positions in the ETF were Amazon.com and Alphabet, the latter of which is described above. Online retailer Amazon.com sells a wide range of products, including books, music, computers, electronics and many others. The company also offers personalized shopping services, Web-based credit card payment and direct shipping to customers, and operates a cloud platform offering services globally.

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.

68

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ U.S. Large Cap R&D Leaders ETF
(as of April 30, 2022)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

69​

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 period since its inception on February 8, 2022 through April 30, 2022 (the “reporting period”)?

For the reporting period, IQ U.S. Mid Cap R&D Leaders ETF returned −10.10% at NAV (net asset value) and −10.11% 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 Mid-Cap Growth Index returned −10.08% and −5.86%, respectively, for the reporting period.

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

Key factors impacting performance over the reporting period included divergent global economic recoveries, COVID-19 variant outbreaks, continued supply-chain disruptions, persistently rising inflation, Russia’s invasion of Ukraine, and monetary tightening, the last of which loomed particularly large for capital markets. These developments had tremendous implications for interest rates and credit spreads affecting bond markets, equity market levels, commodity prices and currencies. Amid heightened uncertainty and rising interest rates, R&D-heavy stocks struggled, given that these are predominantly growth-focused companies and results from their investments are realized farther out in the future.

During the reporting period, were there any liquidity events that materially impacted the ETF’s performance?

Liquidity was not an issue at the end of the previous reporting period.

During the reporting period, were there any market events that materially impacted the ETF’s performance or liquidity?

During the reporting period, growing inflation concerns and a contractionary central banking policy shift exerted downward pressure on markets.

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

The ETF did not use derivatives during the reporting period.

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 energy and materials. 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 contributions to the ETF’s absolute performance during the reporting period included Baker Hughes Company and Palo Alto Networks. Baker Hughes provides oilfield products and services, engaging in surface logging, drilling, pipeline operations, petroleum engineering and fertilizer solutions, as well as offering gas turbines, valves, actuators, pumps, flow meters, generators and motors. The company serves oil and gas industries worldwide. Palo Alto Networks provides network security solutions to customer worldwide, offering firewalls that identify and control applications, scan content to stop threats and prevent data leakage while providing integrated application, user and content visibility.

During the same period, the weakest contributors to the ETF’s absolute performance were Mirati Therapeutics and Roku. Mirati Therapeutics is a targeted oncology company developing a pipeline of therapeutics for precisely defined patient populations. The Mirati team is using a blueprint proven by their prior work for developing potential breakthrough therapies with accelerated development paths. Roku designs and manufactures consumer electronic products that stream audio and video content from the internet to home

1

The price used to calculate the market price returns 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 72 for more information on this index.

​

70

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

entertainment systems for customers globally. Both stocks were still held in the ETF as of the end of the reporting period.

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 energy.

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

As of April 30, 2022, the two largest positions in the ETF were Western Digital Corporation and Novavax. Western Digital is a global provider of solutions for the collection, storage, management, protection and use of digital content, including audio and video. The company’s products include hard drives, solid-state drives and home entertainment and networking products. Novavax is a clinical-stage biotechnology company focused on creating novel vaccines to address a broad range of infectious diseases using proprietary, virus-like particle (VLP) technology.

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.

71​

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

Hypothetical Growth of a $10,000 Investment
(Since Inception Through 4/30/2022)

Fund Performance History

IQ U.S. Mid Cap R&D Leaders ETF
(as of April 30, 2022)

1

Fund Inception Date: 2/8/2022

​

2

The price used to calculate the Market Price returns is determined by using the mid price between bid and ask price listed on the NYSE Arca and does not represent returns an investor would receive.

​

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.

72

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 the 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 11/01/2021 to 04/30/2022” 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.

73​

Fund Expenses (unaudited) (continued)