UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22185
IndexIQ Active ETF Trust
(Exact name of registrant as specified in charter)
51 Madison Avenue, 4th Floor
New York, NY 10010
(Address of principal executive offices) (Zip code)
Kirk C. Lehneis
IndexIQ Advisors LLC
51 Madison Avenue, 4th Floor
New York, NY 10010
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-888-474-7725
Date of fiscal year end: April 30
Date of reporting period: April 30, 2018
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The Report to Shareholders is attached herewith.
IndexIQ Active ETF Trust
ANNUAL REPORT | APRIL 30, 2018
IQ MacKay Shields Municipal Intermediate ETF (MMIT)
The investment return and value of each of the Funds’ shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. The prospectus and the statement of additional information include this and other relevant information about the Funds and are available by visiting nylinvestments.com/etfs or by calling 1-888-474-7725. Read the prospectus carefully before investing. Each of the Funds’ performance that is current to the most recent month-end is available by visiting nylinvestments.com/etfs or by calling 1-888-474-7725. You may obtain a description of the IndexIQ Active ETF Trust proxy voting, policies, procedures and information regarding how each Fund voted proxies relating to portfolio securities during the 12-month period ending June 30 (available by August 31) without charge, upon request, by calling 1-888-474-7725 or by accessing the SEC’s website at sec.gov. Such reports may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Funds file their complete schedules of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q is available on the Commission’s web site at sec.gov. The Funds’ Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Each Funds’ premium/discount information is available, free of charge, on the Funds’ website, nylinvestments.com/etfs or by calling 1-888-474-7725. IndexIQ® and IQ® are registered service marks of New York Life Insurance Company. New York Life Investments is a service mark and name under which New York Life Investment Management LLC does business. New York Life Investments, an indirect subsidiary of New York Life Insurance Company, New York, New York 10010, provides investment advisory products and services. IndexIQ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs, and NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the IQ Hedge Multi-Strategy Plus Fund. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC. NYLIFE Distributors LLC is a Member FINRA/SIPC.
• | Receive email notifications when your most recent shareholder communications are available for review. |
• | Access prospectuses, annual reports and semi-annual reports online. |
1. | Visit https://www.icsdelivery.com/live/ |
2. | Follow the simple enrollment instructions |
Table of Contents
Shareholder Letter | 5 | |||||
Management’s Discussion of Fund Performance | 6 | |||||
Fund Expenses | 12 | |||||
Portfolio Summaries | 13 | |||||
Schedules of Investments | ||||||
IQ MacKay Shields Municipal Insured ETF | 14 | |||||
IQ MacKay Shields Municipal Intermediate ETF | 17 | |||||
Statements of Assets and Liabilities | 20 | |||||
Statements of Operations | 21 | |||||
Statements of Changes in Net Assets | 22 | |||||
Financial Highlights | 23 | |||||
Notes to Financial Statements | 24 | |||||
Report of Independent Registered Public Accounting Firm | 32 | |||||
Supplemental Information | 33 | |||||
Board Review of Investment Advisory Agreement | 34 | |||||
Board of Trustees and Officers | 37 |
Shareholder Letter (unaudited)
We are pleased to present you with this shareholder report for IndexIQ Active ETF Trust for the period from our actively-managed ETFs’ inception on October 18, 2017 through April 30, 2018.
• | IQ MacKay Shields Municipal Intermediate ETF (MMIT) seeks to provide an attractive level of income exempt from federal income taxes by investing primarily in investment grade municipal bonds. MMIT can help investors access key benefits of the ETF structure while still accounting for the unique characteristics of the municipal market that results from its fragmented and specialized nature. MMIT focuses on opportunities in the intermediate segment of the municipal yield curve, seeking to outperform the Bloomberg Barclays Municipal Bond 1-15 Year Index over time. |
• | IQ MacKay Shields Municipal Insured ETF (MMIN) seeks to provide an attractive level of income exempt from federal income taxes by investing primarily in insured municipal bonds. MMIN provides targeted exposure to insured municipal bonds, an increasingly important segment of the market following financial difficulties for select issuers over the last several years. MMIN invests primarily in investment grade credits, seeking to outperform the Bloomberg Barclays Municipal Insured Bond Index over time. |
* | Diversification does not eliminate the risk of experiencing investment loss. |
President
Registered Representative of NYLIFE Distributors LLC.
Management’s Discussion of Fund Performance (unaudited)
1 | The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times. |
2 | See page 8 for more information on this Index. |
Management’s Discussion of Fund Performance (unaudited)(continued)
Management’s Discussion of Fund Performance (unaudited)(continued)
(Since Inception through 4/30/18)
(as of April 30, 2018)
Since Inception1 | ||||||
---|---|---|---|---|---|---|
Cumulative | ||||||
IQ MacKay Shields Municipal Insured ETF Market Price2 | 0.64% | |||||
IQ MacKay Shields Municipal Insured ETF NAV | (0.13)% | |||||
Bloomberg Barclays Municipal Insured Bond Index | (0.97)% |
1 | Fund Inception Date: 10/18/2017. |
2 | The price used to calculate the market price returns is the mean between the day’s last bid and ask prices. |
Management’s Discussion of Fund Performance (unaudited)(continued)
For the reporting period, IQ MacKay Shields Municipal Intermediate ETF returned -0.34% at NAV (net asset value) and -0.18% at market price.1 To compare, the Bloomberg Barclays Municipal Bond Index 1-15 Year Blend,2 returned -1.47% for the same time period.
During the reporting period, the municipal market encountered a significant amount of structural change with the passage of the U.S. tax reform law in December 2017. The law lowered tax rates for corporations and many individuals, limited personal deductions and eliminated the ability of municipalities to advance refund their tax-exempt debt. This last provision was widely anticipated to effectively reduce tax-exempt new issue supply by 25% to 30% annually—a substantial change to both market technicals, or supply/demand factors, and how municipalities manage their borrowing costs. In response, a surge of new issue supply hit the market during the last six weeks of the 2017 calendar year, as issuers rushed to get their refunding deals issued before the new law went into effect. This surge was met by strong demand from both investors and broker/dealers in an effort to get positioned both for the strong technical backdrop that seasonally occurs at the beginning of each new year and for the significant drop in supply anticipated by the consensus in the months and years ahead. Unfortunately, the passage of the tax reform bill also led to increased optimism about fiscal stimulus, which drove a spike in U.S. Treasury and municipal yields during the early months of 2018. Following January and February 2018’s steep sell-off, dealer inventories began to decline, as expectations for economic strength became a bit more subdued. This resulted in a more constructive tone in the investment grade market, which, in turn, led to more stabilized returns in the municipal market during the last two months of the reporting period.
1 | The price used to calculate the market price returns is the mean between the day’s last bid and ask prices and does not represent returns an investor would receive if shares were traded at other times. |
2 | See page 11 for more information on this Index. |
Management’s Discussion of Fund Performance (unaudited)(continued)
Management’s Discussion of Fund Performance (unaudited)(continued)
(Since Inception through 4/30/18)
(as of April 30, 2018)
Since Inception1 | ||||
---|---|---|---|---|
Cumulative | ||||
IQ MacKay Shields Municipal Intermediate ETF Market Price2 | (0.18)% | |||
IQ MacKay Shields Municipal Intermediate ETF NAV | (0.34)% | |||
Bloomberg Barclays Municipal Bond Index 1-15 Yr Blend | (1.47)% |
1 | Fund Inception Date: 10/18/2017. |
2 | The price used to calculate the market price returns is the mean between the day’s last bid and ask prices. |
Fund Expenses (unaudited)
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 for Period 11/01/17 to 04/30/18” to estimate the expenses you paid on your account during this period. Each Fund will indirectly bear its pro rata share of the expenses incurred by the underlying fund investments in which each Fund invests. These expenses are not included in the table.
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 the 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. The Funds will indirectly bear their pro rata share of the expenses incurred by the underlying fund investments in which the Funds invest. These expenses are not included in the table.
Beginning Account Value 11/01/17 | Ending Account Value 04/30/18 | Annualized Expense Ratios for the Period 11/01/17 to 04/30/18 | Expenses Paid for Period 11/01/17 to 04/30/181 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | ||||||||||||||||||
Actual | $ | 1,000.00 | $ | 999.10 | 0.30 | % | $ | 1.49 | ||||||||||
Hypothetical (assuming a 5% return before expenses) | $ | 1,000.00 | $ | 1,023.31 | 0.30 | % | $ | 1.51 | ||||||||||
IQ MacKay Shields Municipal Intermediate ETF | ||||||||||||||||||
Actual | $ | 1,000.00 | $ | 997.40 | 0.30 | % | $ | 1.49 | ||||||||||
Hypothetical (assuming a 5% return before expenses) | $ | 1,000.00 | $ | 1,023.31 | 0.30 | % | $ | 1.51 |
1 | Unless otherwise indicated, expenses are calculated using the Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 181/365. (to reflect the one-half year period). |
Portfolio Summaries
April 30, 2018
IQ MacKay Shields Municipal Insured ETF
Net Assets ($ mil): $14.8
% of Net Assets | ||||||
---|---|---|---|---|---|---|
Illinois | 19.9 | % | ||||
California | 10.4 | |||||
Pennsylvania | 10.0 | |||||
Kentucky | 9.7 | |||||
Connecticut | 8.7 | |||||
Colorado | 8.1 | |||||
Money Market Fund | 7.8 | |||||
New York | 7.3 | |||||
Puerto Rico | 4.2 | |||||
New Jersey | 3.4 | |||||
Georgia | 2.0 | |||||
Florida | 1.7 | |||||
Michigan | 1.7 | |||||
Louisiana | 1.2 | |||||
Kansas | 0.8 | |||||
Mississippi | 0.7 | |||||
Nevada | 0.7 | |||||
Oregon | 0.7 | |||||
Total Investments | 99.0 | |||||
Other Assets and Liabilities, Net | 1.0 | |||||
Net Assets | 100.0 | % |
IQ MacKay Shields Municipal Intermediate ETF
Net Assets ($ mil): $29.6
% of Net Assets | ||||||
---|---|---|---|---|---|---|
Illinois | 16.9 | % | ||||
Connecticut | 10.2 | |||||
New Jersey | 7.4 | |||||
Money Market Fund | 7.2 | |||||
Florida | 6.5 | |||||
New York | 5.6 | |||||
Texas | 3.9 | |||||
Kentucky | 3.9 | |||||
Alabama | 3.7 | |||||
California | 3.6 | |||||
Arizona | 3.4 | |||||
Georgia | 3.4 | |||||
Michigan | 3.0 | |||||
Delaware | 2.2 | |||||
Puerto Rico | 2.1 | |||||
Washington | 2.0 | |||||
Utah | 1.9 | |||||
Oklahoma | 1.9 | |||||
Colorado | 1.7 | |||||
Alaska | 1.7 | |||||
Wisconsin | 1.7 | |||||
Montana | 1.4 | |||||
Louisiana | 1.3 | |||||
Minnesota | 1.0 | |||||
Pennsylvania | 0.8 | |||||
Indiana | 0.4 | |||||
Kansas | 0.4 | |||||
Total Investments | 99.2 | |||||
Other Assets and Liabilities, Net | 0.8 | |||||
Net Assets | 100.0 | % |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Insured ETF
April 30, 2018
Principal Amount | Value | ||||||
---|---|---|---|---|---|---|---|
Municipal Bonds — 91.2% | |||||||
California — 10.4% | |||||||
City of Tulare CA Water Revenue, Revenue Bonds Insured: BAM | |||||||
4.000%, due 12/1/33 | $ | 150,000 | $ | 157,680 | |||
5.000%, due 12/1/30 | 215,000 | 252,133 | |||||
El Camino Healthcare District, General Obligation Bonds Insured: NATL | |||||||
2.950%, due 8/1/29(a) | 700,000 | 490,350 | |||||
West Sacramento Financing Authority, Revenue Bonds Insured: BAM | |||||||
4.000%, due 10/1/40 | 620,000 | 644,161 | |||||
1,544,324 | |||||||
Colorado — 8.1% | |||||||
BNC Metropolitan District No 1, General Obligation Bonds Series A Insured: BAM | |||||||
5.000%, due 12/1/37 | 545,000 | 604,481 | |||||
Rampart Range Metropolitan District No 1, Revenue Bonds Insured: AGM | |||||||
5.000%, due 12/1/42 | 520,000 | 585,718 | |||||
1,190,199 | |||||||
Connecticut — 8.7% | |||||||
City of Hartford CT, General Obligation Bonds Series A Insured: AGM | |||||||
4.000%, due 7/1/34 | 25,000 | 25,625 | |||||
5.000%, due 7/1/24 | 20,000 | 22,152 | |||||
5.000%, due 7/1/27 | 60,000 | 66,782 | |||||
5.000%, due 7/1/28 | 560,000 | 621,404 | |||||
City of Hartford CT, General Obligation Bonds Series B Insured: AGM | |||||||
5.000%, due 10/1/23 | 15,000 | 16,496 | |||||
City of Hartford CT, General Obligation Bonds Series C Insured: AGM | |||||||
5.000%, due 7/15/32 | 20,000 | 21,908 | |||||
City of New Haven CT, General Obligation Bonds Series B Insured: BAM | |||||||
5.000%, due 8/1/25 | 475,000 | 531,520 | |||||
1,305,887 | |||||||
Florida — 1.7% | |||||||
School Board of Miami-Dade County (The), Revenue Bonds Series A Insured: AMBAC | |||||||
5.000%, due 8/1/18 | 250,000 | 251,962 | |||||
Georgia — 2.0% | |||||||
Barnesville-Lamar County Industrial Development Authority, Revenue Bonds Insured: AGC | |||||||
4.250%, due 6/1/38 | 200,000 | 200,038 | |||||
Burke County Development Authority, Revenue Bonds | |||||||
1.650%, due 11/1/52(b) | 100,000 | 100,000 | |||||
300,038 | |||||||
Principal Amount | Value | ||||||
Municipal Bonds (continued) | |||||||
Illinois — 19.9% | |||||||
City of Chicago IL Waterworks Revenue, Revenue Bonds Insured: AGM | |||||||
5.250%, due 11/1/34 | $ | 225,000 | $ | 256,972 | |||
Illinois State Toll Highway Authority, Revenue Bonds Series A-2 Insured: AGM | |||||||
1.760%, due 1/1/31(b) | 200,000 | 200,000 | |||||
Lake County Community Consolidated School District No 73 Hawthorn, General Obligation Bonds Insured: NATL | |||||||
1.501%, due 12/1/18(a) | 500,000 | 494,340 | |||||
Madison County Community Unit School District No 7 Edwardsville, General Obligation Bonds Insured: BAM | |||||||
5.000%, due 12/1/30 | 375,000 | 409,028 | |||||
State of Illinois, Revenue Bonds Series 2 Insured: NATL | |||||||
5.750%, due 6/15/19 | 100,000 | 103,935 | |||||
Town of Cicero IL, General Obligation Bonds Insured: BAM | |||||||
5.000%, due 1/1/30 | 500,000 | 561,025 | |||||
Village of Rosemont IL, General Obligation Bonds Series A Insured: AGM | |||||||
5.000%, due 12/1/27 | 500,000 | 555,160 | |||||
Will County School District No 114 Manhattan, General Obligation Bonds Insured: MAC | |||||||
3.500%, due 1/1/27 | 360,000 | 365,544 | |||||
2,946,004 | |||||||
Kansas — 0.8% | |||||||
Kansas Municipal Energy Agency, Revenue Bonds Series A Insured: BAM | |||||||
5.000%, due 4/1/31 | 100,000 | 111,532 | |||||
Kentucky — 9.7% | |||||||
County of Knox KY, General Obligation Bonds Insured: BAM | |||||||
5.000%, due 10/1/35 | 500,000 | 560,550 | |||||
Kentucky Asset Liability Commission, Revenue Bonds Series B Insured: NATL | |||||||
2.130%, due 11/1/25(b) | 130,000 | 126,270 | |||||
Kentucky Economic Development Finance Authority, Revenue Bonds Series A Insured: AGM | |||||||
4.000%, due 6/1/37 | 500,000 | 501,880 | |||||
Louisville & Jefferson County Visitors and Convention Commission, Revenue Bonds Insured: BAM | |||||||
4.000%, due 6/1/36 | 250,000 | 254,143 | |||||
1,442,843 |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Insured ETF (continued)
April 30, 2018
Principal Amount | Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Municipal Bonds (continued) | ||||||||||
Louisiana — 1.2% | ||||||||||
Port New Orleans Board of Commissioners, Revenue Bonds Series B Insured: AGM | ||||||||||
5.000%, due 4/1/36 | $ | 165,000 | $ | 183,384 | ||||||
Michigan — 1.7% | ||||||||||
City of Detroit MI Sewage Disposal System Revenue, Revenue Bonds Insured: BHAC, FGIC | ||||||||||
5.250%, due 7/1/29 | 250,000 | 251,437 | ||||||||
Mississippi — 0.7% | ||||||||||
Mississippi Development Bank, Revenue Bonds Series A Insured: AMBAC | ||||||||||
5.000%, due 7/1/18 | 100,000 | 100,486 | ||||||||
Nevada — 0.7% | ||||||||||
County of Clark Department of Aviation, Revenue Bonds Series D-3 | ||||||||||
1.770%, due 7/1/29(b) | 100,000 | 100,000 | ||||||||
New Jersey — 3.4% | ||||||||||
City of Atlantic City NJ, General Obligation Bonds Series B Insured: AGM 4.000%, due 3/1/42 | 500,000 | 504,055 | ||||||||
New York — 7.3% | ||||||||||
New York City Transitional Finance Authority Future Tax Secured Revenue, Revenue Bonds Series B-1 | ||||||||||
5.000%, due 8/1/34 | 500,000 | 575,415 | ||||||||
New York State Energy Research & Development Authority, Revenue Bonds Class A Insured: XLCA | ||||||||||
4.590%, due 7/1/29(b) | 500,000 | 500,000 | ||||||||
1,075,415 | ||||||||||
Oregon — 0.7% | ||||||||||
Oregon State Facilities Authority, Revenue Bonds Series B | ||||||||||
1.760%, due 8/1/34(b) | 100,000 | 100,000 | ||||||||
Pennsylvania — 10.0% | ||||||||||
City of Williamsport PA, General Obligation Bonds Insured: AGM | ||||||||||
2.000%, due 7/1/18 | 245,000 | 245,083 | ||||||||
Luzerne County Industrial Development Authority, Revenue Bonds Insured: AGM | ||||||||||
5.000%, due 12/15/26 | 525,000 | 578,356 | ||||||||
Pennsylvania Higher Educational Facilities Authority, Revenue Bonds Series A Insured: XLCA | ||||||||||
2.149%, due 7/1/27(b) | 250,000 | 240,143 | ||||||||
School District of Philadelphia (The), General Obligation Bonds Insured: BHAC-CR and FGIC | ||||||||||
5.000%, due 6/1/34 | 100,000 | 114,672 | ||||||||
Township of Amity PA, General Obligation Bonds Insured: BAM | ||||||||||
4.000%, due 5/1/18 | 300,000 | 300,000 | ||||||||
1,478,254 | ||||||||||
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Puerto Rico — 4.2% | ||||||||||
Commonwealth of Puerto Rico, General Obligation Bonds Series A Insured: AGM | ||||||||||
5.000%, due 7/1/35 | $ | 325,000 | $ | 336,070 | ||||||
Commonwealth of Puerto Rico, General Obligation Bonds Series A Insured: NATL | ||||||||||
5.500%, due 7/1/19 | 250,000 | 256,363 | ||||||||
Puerto Rico Electric Power Authority, Revenue Bonds Series PP Insured: NATL | ||||||||||
5.000%, due 7/1/24 | 25,000 | 25,001 | ||||||||
617,434 | ||||||||||
Total Municipal Bonds (Cost $13,733,620) | 13,503,254 |
Shares | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Short-Term Investment — 7.8% | ||||||||||
Money Market Fund — 7.8% | ||||||||||
Fidelity Investments Money Market Treasury Only Class I, 1.54%(c) (Cost $1,154,638) | 1,154,638 | 1,154,638 | ||||||||
Total Investments — 99.0% (Cost $14,888,258) | 14,657,892 | |||||||||
Other Assets and Liabilities, Net — 1.0% | 143,237 | |||||||||
Net Assets — 100.0% | $ | 14,801,129 |
(a) | The security was issued on a discount basis with no stated coupon rate. Rate shown reflects the effective yield. |
(b) | Variable rate securities that may be tendered back to the issuer at any time prior to maturity at par. Rate shown is the rate in effect as of April 30, 2018. |
(c) | Reflects the 7-day yield at April 30, 2018. |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Insured ETF (continued)
April 30, 2018
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investments in Securities:(d) | �� | |||||||||||||||||
Municipal Bonds | $ | — | $ | 13,503,254 | $ | — | $ | 13,503,254 | ||||||||||
Short-Term Investment: | ||||||||||||||||||
Money Market Fund | 1,154,638 | — | — | 1,154,638 | ||||||||||||||
Total Investments in Securities | $ | 1,154,638 | $ | 13,503,254 | $ | — | $ | 14,657,892 |
(d) | For a complete listing of investments and their states, see the Schedules of Investments. |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Intermediate ETF
April 30, 2018
Principal Amount | Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Municipal Bonds — 92.0% | ||||||||||
Alabama — 3.7% | ||||||||||
City of Gadsden AL, General Obligation Bonds Series B Insured: BAM | ||||||||||
5.000%, due 8/1/28 | $ | 600,000 | $ | 694,674 | ||||||
Eutaw Industrial Development Board, Revenue Bonds | ||||||||||
1.580%, due 6/1/28(a) | 400,000 | 400,000 | ||||||||
1,094,674 | ||||||||||
Alaska — 1.7% | ||||||||||
Alaska Industrial Development & Export Authority, Revenue Bonds | ||||||||||
3.500%, due 12/1/20 | 500,000 | 505,520 | ||||||||
Arizona — 3.4% | ||||||||||
City of Phoenix Civic Improvement Corp., Revenue Bonds Series A | ||||||||||
5.000%, due 7/1/34 | 500,000 | 566,300 | ||||||||
Maricopa County Industrial Development Authority, Revenue Bonds Series C | ||||||||||
5.000%, due 7/1/27 | 100,000 | 114,024 | ||||||||
5.000%, due 7/1/37 | 300,000 | 337,761 | ||||||||
1,018,085 | ||||||||||
California — 3.6% | ||||||||||
El Camino Healthcare District, General Obligation Bonds Insured: NATL | ||||||||||
2.950%, due 8/1/29(b) | 700,000 | 490,350 | ||||||||
State of California, General Obligation Bonds | ||||||||||
5.000%, due 10/1/27 | 250,000 | 293,835 | ||||||||
West Sacramento Financing Authority, Revenue Bonds Insured: BAM | ||||||||||
4.000%, due 10/1/31 | 250,000 | 268,455 | ||||||||
1,052,640 | ||||||||||
Colorado — 1.7% | ||||||||||
City & County of Denver Co. Airport System Revenue, Revenue Bonds Series A | ||||||||||
5.000%, due 11/15/18 | 500,000 | 508,225 | ||||||||
Connecticut — 10.2% | ||||||||||
City of Bridgeport CT, General Obligation Bonds Series A | ||||||||||
5.000%, due 11/1/33 | 600,000 | 649,980 | ||||||||
City of Hartford CT, General Obligation Bonds Series A Insured: BAM | ||||||||||
5.000%, due 4/1/30 | 100,000 | 107,369 | ||||||||
Insured: AGM | ||||||||||
5.000%, due 7/1/28 | 560,000 | 621,404 | ||||||||
City of New Haven CT, General Obligation Bonds Series B Insured: BAM | ||||||||||
5.000%, due 8/1/25 | 475,000 | 531,520 | ||||||||
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Connecticut (continued) | ||||||||||
Connecticut State Health & Educational Facilities Authority, Revenue Bonds Series I-1 | ||||||||||
5.000%, due 7/1/18 | $ | 700,000 | $ | 703,647 | ||||||
5.000%, due 7/1/33 | 350,000 | 394,936 | ||||||||
3,008,856 | ||||||||||
Delaware — 2.2% | ||||||||||
Delaware State Health Facilities Authority, Revenue Bonds Series A | ||||||||||
4.000%, due 7/1/18 | 660,000 | 662,402 | ||||||||
Florida — 6.5% | ||||||||||
City of Gainesville FL Utilities System Revenue, Revenue Bonds Series A | ||||||||||
5.000%, due 10/1/33 | 500,000 | 583,705 | ||||||||
County of Broward FL Airport System Revenue, Revenue Bonds | ||||||||||
5.000%, due 10/1/34 | 500,000 | 564,835 | ||||||||
Pinellas County Health Facilities Authority, Revenue Bonds Class A1 | ||||||||||
1.660%, due 11/1/38(a) | 500,000 | 500,000 | ||||||||
School Board of Miami-Dade County (The), Revenue Bonds Series A Insured: AMBAC | ||||||||||
5.000%, due 8/1/18 | 250,000 | 251,962 | ||||||||
1,900,502 | ||||||||||
Georgia — 3.4% | ||||||||||
Burke County Development Authority, Revenue Bonds | ||||||||||
1.650%, due 11/1/52(a) | 1,000,000 | 1,000,000 | ||||||||
Illinois — 16.9% | ||||||||||
City of Chicago IL Waterworks Revenue, Revenue Bonds Insured: AGM | ||||||||||
5.250%, due 11/1/34 | 230,000 | 262,683 | ||||||||
Illinois Finance Authority, Revenue Bonds | ||||||||||
3.000%, due 6/1/18 | 300,000 | 300,240 | ||||||||
3.000%, due 12/1/18 | 125,000 | 125,630 | ||||||||
5.000%, due 9/1/25 | 500,000 | 546,985 | ||||||||
Lake County Community Consolidated School District No 73 Hawthorn, General Obligation Bonds Insured: NATL | ||||||||||
1.501%, due 12/1/18(b) | 400,000 | 395,472 | ||||||||
St Charles Park District, General Obligation Bonds Series A | ||||||||||
5.000%, due 12/15/18 | 600,000 | 612,102 | ||||||||
Town of Cicero IL, General Obligation Bonds Insured: BAM | ||||||||||
5.000%, due 12/1/26 | 500,000 | 547,870 | ||||||||
5.000%, due 1/1/30 | 500,000 | 561,025 | ||||||||
Village of Rosemont IL, General Obligation Bonds Series A Insured: AGM | ||||||||||
5.000%, due 12/1/27 | 500,000 | 555,160 |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Intermediate ETF (continued)
April 30, 2018
Principal Amount | Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Municipal Bonds (continued) | ||||||||||
Illinois (continued) | ||||||||||
Will County School District No 114 Manhattan, General Obligation Bonds Insured: MAC | ||||||||||
3.500%, due 1/1/26 | $ | 840,000 | $ | 856,430 | ||||||
3.500%, due 1/1/27 | 260,000 | 264,004 | ||||||||
5,027,601 | ||||||||||
Indiana — 0.4% | ||||||||||
Hamilton Southeastern Consolidated School Building Corp., Revenue Bonds | ||||||||||
5.000%, due 7/15/28 | 100,000 | 118,720 | ||||||||
Kansas — 0.4% | ||||||||||
Kansas Municipal Energy Agency, Revenue Bonds Series A Insured: BAM | ||||||||||
5.000%, due 4/1/31 | 100,000 | 111,532 | ||||||||
Kentucky — 3.9% | ||||||||||
County of Knox KY, General Obligation Bonds Insured: BAM | ||||||||||
5.000%, due 10/1/35 | 500,000 | 560,550 | ||||||||
Kentucky Economic Development Finance Authority, Revenue Bonds Series A Insured: AGM | ||||||||||
4.000%, due 6/1/37 | 325,000 | 326,222 | ||||||||
Louisville & Jefferson County Visitors and Convention Commission, Revenue Bonds Insured: BAM | ||||||||||
4.000%, due 6/1/36 | 250,000 | 254,143 | ||||||||
1,140,915 | ||||||||||
Louisiana — 1.3% | ||||||||||
Port New Orleans Board of Commissioners, Revenue Bonds Series B Insured: AGM | ||||||||||
5.000%, due 4/1/36 | 335,000 | 372,326 | ||||||||
Michigan — 3.0% | ||||||||||
City of Detroit MI Sewage Disposal System Revenue, Revenue Bonds Insured: BHAC, FGIC | ||||||||||
5.250%, due 7/1/29 | 500,000 | 502,875 | ||||||||
Ecorse Public School District, General Obligation Bonds Insured: Q-SBLF | ||||||||||
2.000%, due 5/1/18 | 375,000 | 375,000 | ||||||||
877,875 | ||||||||||
Minnesota — 1.0% | ||||||||||
Minnesota Higher Education Facilities Authority, Revenue Bonds Series B | ||||||||||
4.000%, due 10/1/18 | 300,000 | 302,244 | ||||||||
Montana — 1.4% | ||||||||||
Montana Facility Finance Authority, Revenue Bonds | ||||||||||
5.000%, due 6/1/24 | 375,000 | 421,718 | ||||||||
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
New Jersey — 7.4% | ||||||||||
Mainland Regional High School District, General Obligation Bonds Insured: BAM | ||||||||||
5.000%, due 10/15/28 | $ | 600,000 | $ | 711,120 | ||||||
New Jersey Economic Development Authority, Revenue Bonds Insured: NATL | ||||||||||
5.250%, due 7/1/26 | 500,000 | 559,760 | ||||||||
New Jersey Educational Facilities Authority, Revenue Bonds Series F | ||||||||||
5.000%, due 7/1/28 | 330,000 | 364,960 | ||||||||
South Jersey Port Corp., Revenue Bonds Series B | ||||||||||
5.000%, due 1/1/31 | 500,000 | 548,550 | ||||||||
2,184,390 | ||||||||||
New York — 5.6% | ||||||||||
New York City Transitional Finance Authority Future Tax Secured Revenue, Revenue Bonds Series B-1 | ||||||||||
5.000%, due 8/1/34 | 1,000,000 | 1,150,830 | ||||||||
New York State Energy Research & Development Authority, Revenue Bonds Class A Insured: XLCA | ||||||||||
4.590%, due 7/1/29(a) | 500,000 | 500,000 | ||||||||
1,650,830 | ||||||||||
Oklahoma — 1.9% | ||||||||||
Oklahoma County Finance Authority, Revenue Bonds | ||||||||||
5.000%, due 10/1/26 | 500,000 | 571,860 | ||||||||
Pennsylvania — 0.8% | ||||||||||
Pennsylvania Higher Educational Facilities Authority, Revenue Bonds Series A Insured: XLCA | ||||||||||
2.149%, due 7/1/27(a) | 250,000 | 240,143 | ||||||||
Puerto Rico — 2.1% | ||||||||||
Commonwealth of Puerto Rico, General Obligation Bonds Series A Insured: AGM | ||||||||||
5.000%, due 7/1/35 | 320,000 | 330,899 | ||||||||
Commonwealth of Puerto Rico, General Obligation Bonds Series A Insured: NATL | ||||||||||
5.500%, due 7/1/19 | 250,000 | 256,363 | ||||||||
Puerto Rico Electric Power Authority, Revenue Bonds Series PP Insured: NATL | ||||||||||
5.000%, due 7/1/24 | 25,000 | 25,001 | ||||||||
612,263 |
See notes to financial statements.
Schedules of Investments — IQ MacKay Shields Municipal Intermediate ETF (continued)
April 30, 2018
Principal Amount | Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Municipal Bonds (continued) | ||||||||||
Texas — 3.9% | ||||||||||
Cypress-Fairbanks Independent School District, General Obligation Bonds Series A-1 | ||||||||||
2.000%, due 2/15/27(a) | $ | 500,000 | $ | 500,190 | ||||||
Harris County Cultural Education Facilities Finance Corp., Revenue Bonds Series C-1 | ||||||||||
1.500%, due 12/1/24(a) | 100,000 | 100,000 | ||||||||
Uptown Development Authority, Revenue Bonds Series A | ||||||||||
5.000%, due 9/1/35 | 500,000 | 555,295 | ||||||||
1,155,485 | ||||||||||
Utah — 1.9% | ||||||||||
Utah Associated Municipal Power Systems, Revenue Bonds Series A | ||||||||||
5.000%, due 9/1/31 | 500,000 | 575,830 | ||||||||
Washington — 2.0% | ||||||||||
Spokane Public Facilities District, Revenue Bonds | ||||||||||
5.000%, due 12/1/35 | 535,000 | 605,850 | ||||||||
Wisconsin — 1.7% | ||||||||||
Wisconsin Health & Educational Facilities Authority, Revenue Bonds Class A | ||||||||||
5.500%, due 8/15/18 | 500,000 | 505,075 | ||||||||
Total Municipal Bonds (Cost $27,650,503) | 27,225,561 |
Shares | Value | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Short-Term Investment — 7.2% | ||||||||||
Money Market Fund — 7.2% | ||||||||||
Fidelity Investments Money Market Treasury Only Class I, 1.54%(c) (Cost $2,120,104) | 2,120,104 | $ | 2,120,104 | |||||||
Total Investments — 99.2% (Cost $29,770,607) | 29,345,665 | |||||||||
Other Assets and Liabilities, Net — 0.8% | 260,487 | |||||||||
Net Assets — 100.0% | $ | 29,606,152 |
(a) | Variable rate securities that may be tendered back to the issuer at any time prior to maturity at par. Rate shown is the rate in effect as of April 30, 2018. |
(b) | The security was issued on a discount basis with no stated coupon rate. Rate shown reflects the effective yield. |
(c) | Reflects the 7-day yield at April 30, 2018. |
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investments in Securities:(d) | ||||||||||||||||||
Municipal Bonds | $ | — | $ | 27,225,561 | $ | — | $ | 27,225,561 | ||||||||||
Short-Term Investment: | ||||||||||||||||||
Money Market Fund | 2,120,104 | — | — | 2,120,104 | ||||||||||||||
Total Investments in Securities | $ | 2,120,104 | $ | 27,225,561 | $ | — | $ | 29,345,665 |
(d) | For a complete listing of investments and their states, see the Schedules of Investments. |
See notes to financial statements.
Statements of Assets and Liabilities
April 30, 2018
IQ MacKay Shields Municipal Insured ETF | IQ MacKay Shields Municipal Intermediate ETF | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Investments in securities, at value | $ | 14,657,892 | $ | 29,345,665 | ||||||
Cash | 24,903 | 24,903 | ||||||||
Interest receivable | 183,565 | 301,489 | ||||||||
Dividend receivable | 883 | 1,704 | ||||||||
Total assets | 14,867,243 | 29,673,761 | ||||||||
Liabilities | ||||||||||
Payable for investments purchased | 24,903 | 24,903 | ||||||||
Advisory fees payable | 9,260 | 6,241 | ||||||||
Trustee fees payable | 69 | 136 | ||||||||
Accrued expenses and other liabilities | 31,882 | 36,329 | ||||||||
Total liabilities | 66,114 | 67,609 | ||||||||
Net assets | $ | 14,801,129 | $ | 29,606,152 | ||||||
Composition of Net Assets | ||||||||||
Paid-in capital | $ | 15,009,521 | $ | 30,011,675 | ||||||
Undistributed net investment income | 35,745 | 63,472 | ||||||||
Accumulated net realized loss | (13,771 | ) | (44,053 | ) | ||||||
Net unrealized depreciation | (230,366 | ) | (424,942 | ) | ||||||
Net assets | $ | 14,801,129 | $ | 29,606,152 | ||||||
NET ASSET VALUE PER SHARE | ||||||||||
Shares Outstanding (no par value, unlimited shares authorized) | 600,001 | 1,200,001 | ||||||||
Net Asset Value Per Share | $ | 24.67 | $ | 24.67 | ||||||
Investments, at cost | $ | 14,888,258 | $ | 29,770,607 |
See notes to financial statements.
Statements of Operations
For the Period October 18, 2017* to April 30, 2018
IQ MacKay Shields Municipal Insured ETF | IQ MacKay Shields Municipal Intermediate ETF | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Investment Income | ||||||||||
Interest income | $ | 235,453 | $ | 389,548 | ||||||
Dividend income | 3,465 | 13,690 | ||||||||
Total investment income | 238,918 | 403,238 | ||||||||
Expenses | ||||||||||
Advisory fees | 31,450 | 62,462 | ||||||||
Audit fees | 16,995 | 16,995 | ||||||||
Shareholder reporting fees | 7,100 | 8,000 | ||||||||
Intraday pricing fees | 6,898 | 6,898 | ||||||||
Trustee fees | 3,649 | 6,678 | ||||||||
Listing fees | 3,406 | 3,406 | ||||||||
Administrative and accounting fees | 3,046 | 6,111 | ||||||||
Custodian fees | 2,762 | 5,936 | ||||||||
Registration fees | 1,879 | 3,758 | ||||||||
Legal fees | 214 | 421 | ||||||||
Compliance fees | 24 | 48 | ||||||||
Miscellaneous | 186 | 87 | ||||||||
Total expenses | 77,609 | 120,800 | ||||||||
Waivers | (54,022 | ) | (73,954 | ) | ||||||
Net expenses | 23,587 | 46,846 | ||||||||
Net investment income | 215,331 | 356,392 | ||||||||
Realized and Unrealized Gain (Loss) on Investments | ||||||||||
Net realized gain (loss) from: | ||||||||||
Investment securities | (13,771 | ) | (44,053 | ) | ||||||
Net realized gain (loss) | (13,771 | ) | (44,053 | ) | ||||||
Net unrealized appreciation (depreciation) on: | ||||||||||
Investment securities | (230,366 | ) | (424,942 | ) | ||||||
Net unrealized appreciation (depreciation) | (230,366 | ) | (424,942 | ) | ||||||
Net realized and unrealized gain (loss) | (244,137 | ) | (468,995 | ) | ||||||
Net Decrease in Net Assets Resulting from Operations | $ | (28,806 | ) | $ | (112,603 | ) |
* | Commencement of operations |
See notes to financial statements.
Statements of Changes in Net Assets
For the Period October 18, 2017* to April 30, 2018
IQ MacKay Shields Municipal Insured ETF | IQ MacKay Shields Municipal Intermediate ETF | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Increase (Decrease) in Net Assets from Operations | ||||||||||
Net investment income | $ | 215,331 | $ | 356,392 | ||||||
Net realized gain (loss) | (13,771 | ) | (44,053 | ) | ||||||
Net change in net unrealized appreciation (depreciation) | (230,366 | ) | (424,942 | ) | ||||||
Net decrease in net assets resulting from operations | (28,806 | ) | (112,603 | ) | ||||||
Dividends and Distributions to Shareholders from: | ||||||||||
Net investment income | (179,586 | ) | (292,920 | ) | ||||||
Capital Share Transactions | ||||||||||
Proceeds from shares created | 15,009,521 | 30,011,675 | ||||||||
Increase from capital share transactions | 15,009,521 | 30,011,675 | ||||||||
Total increase in net assets | 14,801,129 | 29,606,152 | ||||||||
Net Assets | ||||||||||
Beginning of period | — | — | ||||||||
End of period | $ | 14,801,129 | $ | 29,606,152 | ||||||
Including undistributed net investment income as follows: | $ | 35,745 | $ | 63,472 | ||||||
Changes in Shares Outstanding | ||||||||||
Shares outstanding, beginning of period | — | — | ||||||||
Shares created | 600,001 | 1,200,001 | ||||||||
Shares outstanding, end of period | 600,001 | 1,200,001 |
* | Commencement of operations. |
See notes to financial statements.
Financial Highlights
For the Period October 18, 2017(a) to April 30, 2018
Selected Data for a Share of Capital Stock Outstanding
IQ MacKay Shields Municipal Insured ETF | IQ MacKay Shields Municipal Intermediate ETF | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Net asset value, beginning of period | $ | 25.00 | $ | 25.00 | ||||||
Income from Investment Operations | ||||||||||
Net investment income(b) | 0.36 | 0.30 | ||||||||
Net realized and unrealized gain (loss) | (0.39 | ) | (0.39 | ) | ||||||
Net decrease in net assets resulting from investment operations | (0.03 | ) | (0.09 | ) | ||||||
Distributions from: | ||||||||||
Net investment income | (0.30 | ) | (0.24 | ) | ||||||
Net asset value, end of period | $ | 24.67 | $ | 24.67 | ||||||
Market price, end of period | $ | 24.86 | $ | 24.71 | ||||||
Total Return | ||||||||||
Total investment return based on net asset value(c) | (0.13 | )% | (0.34 | )% | ||||||
Total investment return based on Market price(d)(e) | 0.64 | % | (0.18 | )% | ||||||
Ratios/Supplemental Data | ||||||||||
Net assets, end of period (000’s omitted) | $ | 14,801 | $ | 29,606 | ||||||
Ratio to average net assets of: | ||||||||||
Expenses net of waivers(f) | 0.30 | % | 0.30 | % | ||||||
Expenses excluding waivers(f) | 0.99 | % | 0.77 | % | ||||||
Net investment income (loss)(f) | 2.74 | % | 2.28 | % | ||||||
Portfolio turnover rate(g) | 77 | % | 80 | % |
(a) | Commencement of operations. |
(b) | Based on average shares outstanding. |
(c) | Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, if any, at net asset value during the period, and redemption on the last day of the period. Total return calculated for a period less than one year is not annualized. |
(d) | The market price returns are calculated using the mean between the last bid and ask prices. |
(e) | Since the Shares of the Funds did not trade in the secondary market until the day after the Fund’s inception, for the period from the inception to the first day of the secondary market trading, the NAV is used as a proxy for the secondary market trading price to calculate the market returns. |
(f) | Annualized. |
(g) | Portfolio turnover rate is not annualized and excludes the value of portfolio securities received or delivered as in-kind creations or redemptions in connection with the Fund’s capital share transactions. |
See notes to financial statements.
Notes to Financial Statements
April 30, 2018
Notes to Financial Statements (continued)
April 30, 2018
• | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
• | Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
• | Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available; representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
Notes to Financial Statements (continued)
April 30, 2018
Notes to Financial Statements (continued)
April 30, 2018
gains by underlying funds are recorded as realized capital gains on the ex-date. Expenses of the Trust arising in connection with a specific Fund are allocated to that Fund. Other Trust expenses which cannot be directly attributed to a Fund are apportioned among the Funds in the Trust based upon the relative net assets or other appropriate measures. The Funds distribute substantially all their net investment income to shareholders in the form of dividends. Net investment income is distributed monthly and capital gains are typically distributed at least annually. Dividends may be declared and paid more frequently to comply with the distribution requirements of the Internal Revenue Code. The expenses of the investment companies in which a Fund invests are not included in the amounts shown as expenses on the Statements of Operations or in the expense ratios included in the financial highlights.
Fund | Rate | |||
---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | 0.40% | |||
IQ MacKay Shields Municipal Intermediate ETF | 0.40% |
Notes to Financial Statements (continued)
April 30, 2018
Notes to Financial Statements (continued)
April 30, 2018
Fund | Cost | Gross Unrealized Appreciation | Gross Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | $ | 14,888,258 | $ | 11,610 | $ | (241,976 | ) | $ | (230,366 | ) | ||||||||
IQ MacKay Shields Municipal Intermediate ETF | 29,770,607 | 19,193 | (444,135 | ) | (424,942 | ) |
Fund | Ordinary Income (Loss)1 | Tax-Exempt Income (Loss) | Net Capital Gain (Losses)2 | Net Unrealized Appreciation/ (Depreciation) | Total Earnings/ (Losses) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | $ | 4,150 | $ | 34,156 | $ | (16,332 | ) | $ | (230,366 | ) | $ | (208,392 | ) | |||||||||
IQ MacKay Shields Municipal Intermediate ETF | 5,679 | 57,793 | (44,053 | ) | (424,942 | ) | (405,523 | ) |
1 | Includes late year ordinary loss, if any. |
2 | Amount includes the deferral of post October losses, if any. |
2018 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fund | Ordinary Income | Tax-Exempt Income | Long-Term Capital Gains | Tax Return of Capital | |||||||||||||||
IQ MacKay Shields Municipal Insured ETF | $ | 2,076 | $ | 177,510 | $ | — | $ | — | |||||||||||
IQ MacKay Shields Municipal Intermediate ETF | 7,047 | 285,873 | — | — |
Fund | Late Year Ordinary Losses | Short-Term Post October Losses | Long-Term Post October Losses | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | $ | — | $ | 16,332 | $ | — | ||||||||
IQ MacKay Shields Municipal Intermediate ETF | — | — | — |
Fund | Utilized on Current Year | Short-Term With No Expiration | Long-Term With No Expiration | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | $ | — | $ | — | $ | — | ||||||||
IQ MacKay Shields Municipal Intermediate ETF | — | 44,053 | — |
Notes to Financial Statements (continued)
April 30, 2018
Fund | % Ownership | |||||
---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | 99.7 | % | ||||
IQ MacKay Shields Municipal Intermediate ETF | 99.9 | % |
Fund | Purchases | Sales | Purchases In-Kind | Sales In-Kind | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
IQ MacKay Shields Municipal Insured ETF | $ | 22,019,580 | $ | 9,141,048 | $ | — | $ | — | ||||||||||
IQ MacKay Shields Municipal Intermediate ETF | 41,865,658 | 17,191,329 | — | — |
Notes to Financial Statements (continued)
April 30, 2018
Report of Independent Registered Public Accounting Firm
April 30, 2018
New York, New York
June 28, 2018
Supplemental Information (unaudited)
April 30, 2018
IQ MacKay Shields Municipal Insured ETF | 97.14% | |||
IQ MacKay Shields Municipal Intermediate ETF | 96.43% |
Board Review of Investment Advisory Agreement (unaudited)
April 30, 2018
1. | The nature, extent and quality of the facilities and services provided by the Advisor. The Board reviewed the services that the Advisor provides to the Funds. In connection with the investment advisory services provided to the Funds, the Independent Trustees noted the responsibilities that the Advisor would have as the Funds’ investment adviser, including overall supervisory responsibility for the general management and investment of the Funds’ securities portfolio, ultimate responsibility, subject to oversight by the Board, for daily monitoring of the Funds and quarterly reporting to the Board, and the implementation of Board directives as they relate to the Funds. |
The Board reviewed the Advisor’s experience, resources, and strengths in managing other mutual funds and ETFs, including the Advisor’s management of the funds of the IndexIQ Trust and IndexIQ ETF Trust. |
Board Review of Investment Advisory Agreement (unaudited)(continued)
April 30, 2018
The Board also noted and discussed with the Advisor the resources and additional support and personnel from its parent New York Life Investment Management (NYLIM), which resources enhance and support the work of the Advisor’s officers and staff. The Board also considered the tenure and experience of the personnel at the Advisor providing management and administrative services to the Funds, and noted that the Advisor had hired additional experienced personnel to the management and product development teams during the past year. In addition, the Board considered the ongoing expansion of compliance and distribution/sales personnel that support the Funds and the funds of the IndexIQ Trust and the IndexIQ ETF Trust. |
Based on their consideration and review of the foregoing information, the Board concluded that each Fund was likely to continue to benefit from the nature, quality, and extent of these services, as well as the Advisor’s ability to render such services based on its personnel, experience, operations, and resources. |
2. | Comparison of services provided and fees charged by the Advisor and other investment advisers to similar clients, and the cost of the services provided and profits realized by the Advisor from its relationship with the Funds. The Board then compared both the services rendered and the fees paid with respect to the Funds pursuant to the Advisory Agreement to contracts of other registered investment advisers providing services to similar ETFs. |
In particular, the Board compared each Fund’s advisory fee and expense ratio (including acquired fund fees and expenses, as applicable) to other investment companies considered to be in each such Fund’s peer group. The Advisor presented information on how peer groups were selected for the Funds. The Board considered unique characteristics of certain Funds relative to peer groups, particularly where such Funds had fee or total expense rates that diverged from the median levels of the applicable peer group. The Board also discussed price pressure in the general ETF marketplace and the impact of market pressures on the price levels for actively managed ETFs such as the Funds. The Board considered the level of each of the fees under the Advisory Agreement in the context of the services being provided. |
Additionally, the Trustees considered that the Advisor had put in place expense limitation agreements whereby the Advisor reimburses expenses and/or waives fees to limit the impact above set thresholds of certain expenses of the Funds. The Board noted that such expense limitation agreements were reflected in the peer group analysis provided by the Advisor and resulted in the operational Funds having a total net expense ratio lower than their peer group median and in the case of the non-operational Fund at or below the median. |
After comparing each Fund’s fees with those of other investment companies in the Fund’s peer group, and in light of the nature, quality, and extent of services provided by the Advisor and the costs incurred by the Advisor in rendering those services, the Board concluded that the level of fees paid (or proposed to be paid) to the Advisor with respect to each Fund is fair and reasonable. |
3. | The Advisor’s profitability and the extent to which economies of scale would be realized as the Funds grow and whether fee levels would reflect such economies of scale. The Board discussed with the Advisor the costs and profitability of the Advisor in connection with its serving as investment adviser to each Fund, including operational costs. As the Funds had not yet completed a full year of operation, the data on expenses and profitability were based largely on projections. The Board also discussed additional resources that have been made available to the Advisor following its acquisition by NYLIM, including the investment of financial and human resources by NYLIM into the Advisor and additional support to market and distribute the Fund. |
The Board reviewed the net asset levels of the Funds and considered information regarding the strategy of the Advisor to grow assets in the Funds during the calendar year. The Board also noted the existence of the Expense Limitation Agreement and its respective impacts on costs to shareholders and profitability of the Advisor |
The Board concluded that the fees paid to the Advisor were reasonable when considering the relative asset levels and profitability of the Funds to the Advisor. |
Board Review of Investment Advisory Agreement (unaudited)(continued)
April 30, 2018
4. | Investment performance of the Funds. The Board considered the investment performance of the existing Funds during their brief operating history. In particular, the Board considered the investment performance of the Funds relative to their stated objectives and the success of the Advisor in reaching such objectives. The Board considered each Fund’s investment performance compared to its respective benchmark index included in its prospectus and shareholder reports. |
The Board concluded that the limited investment performance of the Funds supported the approval of the Advisory Agreement. |
Board of Trustees and Officers (unaudited)
Name and Year of Birth1 | Position(s) Held with Trust | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee3 | Other Directorships Held by Trustee During Past 5 Years | |||||
---|---|---|---|---|---|---|---|---|---|---|
Reena Aggarwal, 1957 | Chair Trustee | Since January 2018 Since August 2008 | Vice Provost of Faculty (2016 to present), Georgetown University, Robert E. McDonough Professor (2003 to present) and Professor of Finance, McDonough School of Business, Georgetown University (2000 to present); Director, Georgetown Center for Financial Markets and Policy (2010 to present); Co-Chair of Board, Social Innovations and Public Service Fund, Georgetown University (2012 to 2014). | 22 | Chair of the Board, IndexIQ Trust, IndexIQ ETF Trust (2018 to present); Trustee, IndexIQ Trust, IndexIQ Active ETF Trust (2008 to present); FBR & Co. (investment banking) (2011 to 2017); Cohen & Steers (asset management) (2017 to present); Director, Brightwood Capital Advisors, L.P. (private equity investment) (2013 to present) | |||||
Michael A. Pignataro, 1959 | Trustee | Since April 2015 | Director, Credit Suisse Asset Management (2001 to 2012); and Chief Financial Officer, Credit Suisse Funds (1996 to 2013). | 22 | Trustee, IndexIQ Trust, IndexIQ ETF Trust (2015 to present); The New Ireland Fund, Inc. (closed-end fund) (2015 to present) | |||||
Paul D. Schaeffer, 1951 | Trustee | Since April 2015 | President, AlphaHut (dba Aspiring Solution Partners) (financial services consulting) (2013 to present); Executive Advisor, Aquiline Capital Partners LLC (private equity investment) (2014 to present) and Managing Director, Forward Management LLC (asset management) (2010 to 2013) | 22 | Trustee, IndexIQ Trust, IndexIQ ETF Trust (2015 to present); Context Capital Funds (mutual fund trust) (2 Portfolios) (2014 to present); PopTech! (conference operator) (2012 to present) |
Kirk C. Lehneis, 1974(4) | Trustee, President and Principal Executive Officer | Since January 2018 | Chief Operating Officer and Senior Managing Director (since 2016), New York Life Investment Management LLC; Chairman of the Board (since September 2017), NYLIFE Distributors LLC; Chairman of the Board, NYLIM Service Company LLC (since September 2017); President, MainStay Defined Term Municipal Opportunities Fund, MainStay Funds, MainStay Funds Trust, and MainStay VP Funds Trust (since September 2017); Chief Executive Officer, IndexIQ Advisors LLC (since January 2018); Trustee, President and Principal Executive Officer, IndexIQ Trust, IndexIQ ETF Trust and IndexIQ Active ETF Trust (since January 2018). | 22 | Trustee, IndexIQ Trust, IndexIQ ETF Trust (2018 to present) |
Board of Trustees and Officers (unaudited)(continued)
Name and Year of Birth1 | Position(s) Held with Trust | Term of Office and Length of Time Served2 | Principal Occupation(s) During Past 5 Years | |||||
---|---|---|---|---|---|---|---|---|
Kevin M. Bopp, 1969 | Chief Compliance Officer | Since January 2017 | Chief Compliance Officer, IndexIQ, IndexIQ Trust, IndexIQ ETF Trust and IndexIQ Active ETF Trust (since January 2017); Chief Compliance Officer (since January 2016), Director and Associate General Counsel (2011 to 2014) and Vice President and Assistant General Counsel (2010 to 2011), New York Life Investment Management LLC; Vice President and Chief Compliance Officer, and MainStay VP Funds Trust (2010 to 2014), MainStay Defined Term Municipal Opportunities Fund (2011 to 2014). MainStay VP Funds Trust, MainStay Defined Term Municipal Opportunities Fund (since 2014); Assistant Secretary, MainStay Funds, MainStay Funds Trust. | |||||
Matthew V. Curtin, 1982 | Secretary and Chief Legal Officer | Since June 2015 | Secretary and Chief Legal Officer, IndexIQ, IndexIQ Trust, IndexIQ ETF Trust and IndexIQ Active ETF Trust (since June 2015), Chief Compliance Officer, IndexIQ, IndexIQ ETF Trust and IndexIQ Active ETF Trust (June 2015 to January 2017); Associate General Counsel, New York Life Insurance Company (since February 2015); Associate, Dechert LLP (2007 to 2015). | |||||
Jon H. Zimmerman, 1982 | Executive Vice President | Since April 2018 | Chief Operating Officer, IndexIQ Trust, IndexIQ Active ETF Trust and IndexIQ ETF Trust (2018 to present); Director, New York Life Investment Management LLC (2015-present); Vice President, Morgan Stanley (2007 to 2015) | |||||
Adefolahan Oyefeso, 1974 | Treasurer, Principal Financial Officer and Principal Accounting Office | Since April 2018 | Vice President of Operations & Finance, IndexIQ Advisors LLC (January 2015 to present); Director of the Fund Administration Client Service Department at The Bank of New York Mellon 2007 to 2015; Artio Global Investors (formally Julius Baer) as an Assistant Vice President (2005 to 2007). |
1 | The address of each Trustee or officer is c/o IndexIQ, 51 Madison Avenue, 4th Floor, New York, NY 10010 |
2 | Trustees and Officers serve until their successors are duly elected and qualified. |
3 | The Funds are part of a “fund complex”. The fund complex includes all open-end funds (including all of their portfolios) advised by the Advisor. As of the date of this SAI, the fund complex consists of the Trust’s funds, the funds of the IndexIQ ETF Trust and the one fund of the IndexIQ Trust advised by the Advisor. |
4 | Mr. Lehneis is an “interested person” of the Trust (as that term is defined in the 1940 Act) because of his affiliations with the Advisor. |
IndexIQ Active ETF Trust ANNUAL REPORT | APRIL 30, 2018 IQ MacKay Shields Municipal Insured ETF (MMIN) IQ MacKay Shields Municipal Intermediate ETF (MMIT) Investment Advisor IndexIQ Advisors LLC 51 Madison Avenue, 4th Floor New York, NY 10010 Distributor ALPS Distributors, Inc. 1290 Broadway, Suite 1100 Denver, CO 80203 Custodian/Fund Administrator/Transfer Agent The Bank of New York Mellon 101 Barclay Street New York, NY 10286 Legal Counsel Chapman and Cutler, LLP 1270 Avenue of the Americas New York, NY 10020 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 300 Madison Avenue New York, NY 10017 1780552 ME11a-06/18
Item 2. Code of Ethics.
(a) | The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. Audit Committee Financial Expert.
The Registrant’s Board of Trustees has two audit committee financial experts serving on its audit committee, an “independent” Trustee, Reena Aggarwal and Michael Pignataro. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
Audit Fees
(a) | The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $26,000 for 2018 and $0 for 2017. |
Audit-Related Fees
(a) | The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2018 and $0 for 2017. |
Tax Fees
(b) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $0 for 2018 and $0 for 2017. |
All Other Fees
(d) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2018 and $0 for 2017. |
(e)(1) | Per Rule 2-01(c)(7)(A), the Audit Committee pre-approves all of the Audit, Audit-Related, Tax and Other Fees of the Registrant. |
(e)(2) | With respect to the services described in paragraphs (b) through (d) of this Item 4, no amount was approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | No response required. |
(g) | The aggregate non-audit fees billed by the principal accountant for services rendered to the registrant’s investment adviser (not including any subadvisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant were (i) approximately $6,800,000 for the fiscal year ended April 30, 2018, and (ii) $5,600,000 for the fiscal year ended April 30, 2017. |
(h) | The registrant’s Audit Committee has determined that the non-audit services rendered by the principal accountant for the fiscal year ended April 30, 2018 to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the registrant’s investment adviser that provides ongoing services to the registrant that were not required to be pre-approved by the Audit Committee because they did not relate directly to the operations and financial reporting of the registrant were compatible with maintaining the respective independence of the principal accountant during the relevant time period. |
Item 5. Audit Committee of Listed Registrants.
(a) | The Fund has a designated Audit Committee in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934 (the “Exchange Act”) and the members of such committee are Reena Aggarwal, Michael Pignataro and Paul Schaeffer. |
(b) | Not applicable. |
Item 6. Investments.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 11. Controls and Procedures.
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Code of ethics that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) IndexIQ Active ETF Trust
By (Signature and Title)* /s/ Kirk C. Lehneis
Kirk C. Lehneis
(Principal Executive Officer)
Date July 9, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Kirk C. Lehneis
Kirk C. Lehneis
(Principal Executive Officer)
Date July 9, 2018
By (Signature and Title)* /s/ Adefolahan O. Oyefeso
Adefolahan O. Oyefeso
(Principal Financial Officer)
Date July 9, 2018
* Print the name and title of each signing officer under his or her signature.