Mutual Fund Summary Prospectus (497k)
August 30 2013 - 5:09PM
Edgar (US Regulatory)
SUMMARY PROSPECTUS | AUGUST 30, 2013
IndexIQ ETF Trust
IQ Hedge Macro Tracker ETF
MCRO
This summary prospectus is designed to provide investors with key fund information in a clear and concise format. Before you invest, you may want to review the Fund’s full prospectus, which contains more information about the Fund and its risks.
The Fund’s full prospectus dated August 28, 2013 and statement of additional information dated August 28, 2013, and most recent annual report to shareholders, dated April 30, 2013, are all incorporated by reference into this Summary Prospectus. All
this information may be obtained at no cost either: online at indexiq.com/education.html; by calling IndexIQ Funds at 888-934-0777 or by sending an email request to info@indexiq.com.
MCRO LISTED ON NYSE ARCA | CUSIP # 45409B 206
Summary Information
IQ Hedge Macro Tracker ETF
Investment Objective
The Fund seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of its underlying index, the IQ Hedge Macro Index (the “Underlying Index”).
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund (“Shares”). Investors purchasing Shares on a national securities exchange, national securities association or
over-the-counter trading system where Shares may trade from time to time (each, a “Secondary Market”) may be subject to customary brokerage commissions charged by their broker which are not reflected in the table set forth below.
Shareholder Fees (fees paid directly from your investment):
No shareholder fees are levied by the Fund for purchases and sales made on the Secondary Market.
Annual Fund Operating Expenses (expenses that you pay each year as a
|
percentage of the value of your investment):
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|
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Management Fee
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0.75
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%
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Distribution and/or Service (12b-1) Fees
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0.00
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%
|
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Other Expenses
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0.00
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%
|
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Acquired Fund Fees & Expenses(a)
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0.25
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%
|
|
Total Annual Fund Operating Expenses(a)
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1.00
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%
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|
(a)
|
|
The Total Annual Fund Operating Expenses may not correlate to the ratio of expenses
to average net assets as reported in the “Financial Highlights” section of the Prospectus, which reflects the operating
expenses of the Fund and does not include Acquired Fund Fees & Expenses. Acquired Fund Fees & Expenses represent the Fund’s
pro rata share of fees and expenses incurred indirectly as a result of investing in other funds, including ETFs and money market
funds.
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Example.
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds. This example does not take into account brokerage commissions that you pay when
purchasing or selling Shares of the Fund.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The example also assumes that your investment has a 5% return each year and
that the Fund’s operating expenses remain at current levels. The return of 5% and estimated expenses are for illustration purposes only, and should not be considered indicators of expected Fund expenses or performance, which may be greater or less
than the estimates. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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1 Year
|
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3 Years
|
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5 Years
|
|
10 Years
|
|
$102
|
|
$318
|
|
$552
|
|
$1,225
|
2
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in
higher taxes when Fund Shares are held in a taxable account. These costs, which are not reflected in annual Fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 146% of the average value of its portfolio.
Principal Investment Strategies
The Fund is a “fund of funds” which means it invests, under normal circumstances, at least 80% of its net assets (excluding collateral held from securities lending), plus the amount of any borrowings for investment
purposes, in the investments included in its Underlying Index, which includes underlying funds. The Underlying Index consists of a number of components (“Underlying Index Components”) selected in accordance with IndexIQ’s rules-based
methodology of such Underlying Index. Such Underlying Index Components will include primarily ETFs and/or other exchange-traded vehicles issuing equity securities organized in the U.S., such as exchange traded commodity pools (“ETVs”). The
Fund may also invest in one or more financial instruments, including but not limited to futures contracts and swap agreements (collectively, “Financial Instruments”).
The Fund employs a “passive management” — or indexing — investment approach designed to track the performance of the Underlying Index, which was developed by Financial Development Holdco LLC
(“IndexIQ”), the parent company of IndexIQ Advisors LLC, the Fund’s investment advisor (the “Advisor”). The Underlying Index seeks to track the “beta” portion of the returns (i.e., that portion of the returns of
hedge funds that are non-idiosyncratic, or unrelated to manager skill) of a combination of hedge funds pursuing a macro strategy and hedge funds pursuing an emerging markets strategy (the “Strategy”). Macro hedge funds typically employ
top-down macro analysis (e.g., political trends, macro economics, etc.) to identify dislocations in equity, fixed-income, currency and commodity markets that are expected to lead to large price movements. Emerging Markets hedge funds typically invest in
financial instruments such as equities, sovereign and corporate debt issues and currencies of countries in “emerging” markets. Emerging countries are those in a transitional state from developing to developed.
The Underlying Index generally is based on the premise that hedge fund returns, when aggregated among hedge funds with similar investment styles, display over time significant exposures to a set of common investment strategies
and asset classes. By creating an index that has similar exposures to the same investment strategies and asset classes as hedge funds generally, IndexIQ seeks to replicate the beta return characteristics of hedge funds.
The Underlying Index Components of this Strategy generally provide exposures to:
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•
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Emerging market equity, debt and sovereign debt;
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3
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•
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U.S. investment grade debt;
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•
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U.S. government short- and intermediate-term maturity obligations;
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•
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Foreign sovereign debt;
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•
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Foreign currencies and currency futures;
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•
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U.S. and foreign real estate investment trusts ;
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•
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The implied volatility of the S&P 500
®
Index
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The Underlying Index is unlike traditional market-oriented indexes like the Standard & Poor’s 500
®
Composite Stock Total Return Index (the “S&P 500 Index”). Instead of tracking the
performance of publicly-traded issuers representing a market or industry sector, the Underlying Index seeks to track the returns of distinct hedge fund investment styles. The Fund does not invest in hedge funds, and the Underlying Index does not include
hedge funds as Underlying Index Components. The Fund is not a fund of hedge funds.
For additional information about the Fund’s principal investment strategies, see “Additional Description of the Principal Strategies of the Funds.”
Principal Risks
Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. As with all investments, you may lose money in the Fund. An
investment in the Fund involves a substantial degree of risk and the Fund does not represent a complete investment program. As with all investments, you may lose money in the Fund. Therefore, you should consider carefully the following risks before
investing in the Fund. A more complete discussion of Principal Risks is included under “Additional Description of the Principal Risks of the Funds.”
Fund of Funds Risk
The Fund’s investment performance, because it is a fund of funds, depends on the investment performance of the Underlying ETFs in which it invests.
Underlying Funds Risk
An investment in the Fund is subject to the risks associated with the Underlying ETFs that comprise the Fund’s Underlying Index.
Exchange Traded Vehicle Risk
The value of a Fund’s investment in ETFs, ETVs and exchange-traded notes (“ETNs”) is based on stock market prices and the Fund could lose money due to stock market developments, the failure of an active
trading market to develop or exchange trading halts or de-listings.
Index Risk
The Underlying Index may not be successful in replicating the performance of its target strategies.
Tracking Error Risk
Although the Fund attempts to track the performance of its Underlying Index, the Fund may not be able to duplicate its exact composition or return for any number of reasons.
4
Market Risk
The market price of investments owned by the Fund may go up or down, sometimes rapidly or unpredictably.
Trading Price Risk
Although it is expected that generally the market price of the Shares will approximate the Fund’s NAV, there may be times when the market price in the Secondary Market and the NAV vary significantly.
Performance Information
The bar chart that follows shows the annual total returns of the Fund for a full calendar year. The table that follows the bar chart shows the Fund’s average annual total returns, both before and after taxes. The bar
chart and table provide an indication of the risks of investing in the Fund by comparing the Fund’s performance from year to year and by showing how the Fund’s average annual returns for one calendar year compared with its underlying index
and additional broad measures of market performance. The HFRI Fund of Funds Composite Index is an equally weighted hedge fund index including over 650 domestic and off-shore funds of funds. The MSCI World Index is a free float-adjusted market
capitalization weighted index that is designed to measure the equity market performance of developed markets (performance data assumes reinvestment of dividends, but it does not reflect management fees, transaction costs or other expenses).
All returns assume reinvestment of dividends and distributions. The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. Fund performance current
to the most recent month-end is available by calling 1-888-934-0777 or by visiting www.indexiq.com.
The Fund’s year-to-date total return as of June 30, 2013 was -5.93%.
Best and Worst Quarter Returns (for the period reflected in the bar chart above)
|
|
Return
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Quarter/Year
|
|
Highest Return
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6.05
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%
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3Q/2010
|
|
Lowest Return
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-6.45
|
%
|
3Q/2011
|
5
Average Annual Total Returns as of December 31, 2012
|
|
1
Year
|
3 Years
|
Since
Inception
(1)
|
|
Returns before taxes
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5.84
|
%
|
2.09
|
%
|
3.77
|
%
|
|
Returns after taxes on distributions
(2)
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5.25
|
%
|
1.78
|
%
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3.44
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%
|
|
Returns after taxes on distributions
|
|
|
|
|
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and sale of Fund shares
(2)
|
3.86
|
%
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1.63
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%
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3.08
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%
|
|
IQ Hedge Macro Index
|
|
|
|
|
|
|
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(reflects no deduction for fees, expenses or taxes)
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6.80
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%
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2.69
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%
|
4.39
|
%
|
|
HFRI Fund of Funds Composite Index
|
|
|
|
|
|
|
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(reflects no deduction for fees, expenses or taxes)
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4.79
|
%
|
1.45
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%
|
4.03
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%
(3)
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|
MSCI World Index
|
|
|
|
|
|
|
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(reflects no deduction for fees, expenses or taxes)
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16.54
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%
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7.53
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%
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11.96
|
%
|
|
(1)
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The Fund commenced operations on June 8, 2009.
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(2)
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After-tax returns are calculated using the highest historical individual federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your tax situation
and may differ from those shown and are not relevant if you hold your shares through tax-deferred arrangements, such as 401(k)
plans or individual retirement accounts. In some cases the return after taxes may exceed the return before taxes due to an assumed
tax benefit from any losses on a sale of Fund shares at the end of the measurement period.
|
|
(3)
|
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HFRI Fund of Funds Composite Index is calculated from May 31, 2009. Performance information
for the Fund in the table above also includes the performance of HFRI Fund of Funds Composite Index. Because index comparisons
are generally calculated as of the end of each month, index performance information under the “Since Inception” heading
may not be coincident with the inception date of the Fund. In such instances, index performance is generally presented from the
month-end nearest to the inception date of the Fund.
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Investment Advisor
IndexIQ Advisors LLC (the “Advisor”) serves as the investment advisor to the Fund.
Portfolio Manager
The professionals primarily responsible for the day-to-day management of the Fund are Paul (Teddy) Fusaro and Greg Barrato. Mr. Fusaro, who is Senior Vice President of the Advisor, has been a portfolio manager of the Fund
since August 2013 and Mr. Barrato, who is Senior Vice President of the Advisor, has been a portfolio manager of the Fund since February 2011.
Purchase and Sale of Fund Shares
Unlike conventional mutual funds, the Fund issues and redeems Shares on a continuous basis, at net asset value (“NAV”), only in blocks of 50,000 Shares or whole multiples thereof (“Creation Units”). The
Fund’s Creation Units are issued and redeemed principally in-kind for securities included in the Fund. Retail investors may acquire Shares on NYSE Arca, Inc. through a broker-dealer. Shares of the Fund will trade at market price rather than NAV. As
such, Shares may trade at a price greater than NAV (premium) or less than NAV (discount).
Tax Information
The Fund’s distributions are taxable and will generally be taxed as ordinary income or capital gains.
6
Financial Intermediary Compensation
If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Advisor may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of
interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
7
IndexIQ ETF Trust
Mailing Address
800 Westchester Avenue, Suite N-611
Rye Brook, New York 10573
1-888-934-0777
www.indexiq.com
View the Fund’s statutory prospectus or statement of additional information online at: indexiq.com/education.html
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