0000891092-09-000514.txt : 20130501 0000891092-09-000514.hdr.sgml : 20130501 20090204172715 ACCESSION NUMBER: 0000891092-09-000514 CONFORMED SUBMISSION TYPE: N-1A/A PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 20090204 DATE AS OF CHANGE: 20090320 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IndexIQ ETF Trust CENTRAL INDEX KEY: 0001415995 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: N-1A/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-152915 FILM NUMBER: 09569241 BUSINESS ADDRESS: STREET 1: C/O INDEXIQ ADVISORS LLC STREET 2: 800 WESTCHESTER AVENUE CITY: Rye Brook STATE: NY ZIP: 10573 BUSINESS PHONE: 914-481-8395 MAIL ADDRESS: STREET 1: C/O INDEXIQ ADVISORS LLC STREET 2: 800 WESTCHESTER AVENUE CITY: Rye Brook STATE: NY ZIP: 10573 FORMER COMPANY: FORMER CONFORMED NAME: IQSHARES Trust DATE OF NAME CHANGE: 20080808 FORMER COMPANY: FORMER CONFORMED NAME: IQSHARES Trust 1 DATE OF NAME CHANGE: 20071024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IndexIQ ETF Trust CENTRAL INDEX KEY: 0001415995 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: N-1A/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-22227 FILM NUMBER: 09569242 BUSINESS ADDRESS: STREET 1: C/O INDEXIQ ADVISORS LLC STREET 2: 800 WESTCHESTER AVENUE CITY: Rye Brook STATE: NY ZIP: 10573 BUSINESS PHONE: 914-481-8395 MAIL ADDRESS: STREET 1: C/O INDEXIQ ADVISORS LLC STREET 2: 800 WESTCHESTER AVENUE CITY: Rye Brook STATE: NY ZIP: 10573 FORMER COMPANY: FORMER CONFORMED NAME: IQSHARES Trust DATE OF NAME CHANGE: 20080808 FORMER COMPANY: FORMER CONFORMED NAME: IQSHARES Trust 1 DATE OF NAME CHANGE: 20071024

0001415995 S000023661 IQ Hedge Multi-Strategy Composite ETF

C000069675 IQ Hedge Multi-Strategy Composite ETF

0001415995 S000023662 IQ Hedge Global Macro ETF

C000069676 IQ Hedge Global Macro ETF

0001415995 S000023663 IQ Hedge Long/Short Equity ETF

C000069677 IQ Hedge Long/Short Equity ETF

0001415995 S000023664 IQ Hedge Event-Driven ETF

C000069678 IQ Hedge Event-Driven ETF

0001415995 S000023665 IQ Hedge Market Neutral ETF

C000069679 IQ Hedge Market Neutral ETF

N-1A/A 1 e33444n1a.htm FORM N-1A/A

As filed with the Securities and Exchange Commission on February 4, 2009

Securities Act File No. 333-152915
Investment Company Act File No. 811-22227

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933	\|X\|
Pre-Effective Amendment No. 1	\|X\|
Post-Effective Amendment No. ___	\|_\|


and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940	\|X\|
Amendment No. 1	\|X\|
(Check appropriate box or boxes.)

INDEXIQ ETF TRUST
(Exact Name of Registrant as Specified in Charter)

800 Westchester Avenue
Suite N611
Rye Brook, NY 10573
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (914) 697-4946

Adam S. Patti
IndexIQ Advisors LLC
800 Westchester Avenue
Suite N611
Rye Brook, NY 10573
(Name and Address of Agent for Service)

With a copy to:

Peter J. Shea, Esq.
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, New York 10022

Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the Registration Statement.

Title of Securities Being Registered: Shares of Beneficial Interest,
no par value.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Preliminary Copy—Subject to Completion, dated February _, 2009

[COVER PAGE LOGO]

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. IN ADDITION, THE OFFERING OF SHARES IS CONTINGENT UPON APPROVAL OF AN EXEMPTIVE APPLICATION WHICH HAS BEEN SUBMITTED TO THE SEC, WHICH APPROVAL MAY OR MAY NOT BE GRANTED.

Prospectus
IndexIQ ETF Trust

IndexIQ ETF Trust (the “Trust”) is a registered investment company that consists of separate investment portfolios called “Funds.” This Prospectus relates to the following Funds:


Name	CUSIP	Symbol

IQ Hedge Multi-Strategy Composite ETF	45409B107	QAI
IQ Hedge Macro ETF
IQ Hedge Long/Short ETF
IQ Hedge Event-Driven ETF
IQ Hedge Market Neutral ETF

Each Fund is an exchange-traded fund. This means that shares of the Funds are listed on a national securities exchange, such as the NYSE Arca, and trade at market prices. The market price for a Fund’s shares may be different from its net asset value per share (the “NAV”). Each Fund has its own CUSIP number and exchange trading symbol.

Each Fund issues and redeems shares at their NAV only in blocks of 50,000 shares or multiples thereof (each, a “Creation Unit”). Only certain large institutional investors, known as “Authorized Participants,” may purchase and redeem Creation Units directly from a Fund at NAV. These transactions are usually in exchange for a basket of securities similar to a Fund’s portfolio and an amount of cash. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES OF EACH FUND ARE NOT REDEEMABLE SECURITIES. SHAREHOLDERS WHO ARE NOT AUTHORIZED PARTICIPANTS MAY NOT REDEEM SHARES DIRECTLY FROM A FUND AT NAV.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

[•] [•], 2009

NOT FDIC INSURED

MAY LOSE VALUE.

NO BANK GUARANTEE.


Table of Contents

	Page

INTRODUCTION	1
INVESTMENT OBJECTIVES	1
PRINCIPAL INVESTMENT STRATEGIES COMMON TO ALL FUNDS	2
PRINCIPAL RISK FACTORS COMMON TO ALL FUNDS	3
IQ HEDGE MULTI-STRATEGY COMPOSITE ETF	6
IQ HEDGE MACRO ETF	8
IQ HEDGE LONG/SHORT ETF	9
IQ HEDGE EVENT-DRIVEN ETF	10
IQ HEDGE MARKET NEUTRAL ETF	12
PERFORMANCE INFORMATION	14
FEES AND EXPENSES OF THE FUNDS	14
EXPENSE EXAMPLE	14
CREATION TRANSACTION FEES AND REDEMPTION TRANSACTION FEES	15
RISKS OF UNDERLYING ETFS	16
ADDITIONAL INVESTMENT STRATEGIES	23
ADDITIONAL RISKS	24
CONTINUOUS OFFERING	26
CREATION AND REDEMPTION OF CREATION UNITS	26
BUYING AND SELLING SHARES IN THE SECONDARY MARKET	29
MANAGEMENT	30
OTHER SERVICE PROVIDERS	32
FREQUENT TRADING	33
SERVICE AND DISTRIBUTION PLAN	34
DETERMINATION OF NET ASSET VALUE (NAV)	34
INDICATIVE INTRA-DAY VALUE	35
DIVIDENDS, DISTRIBUTIONS AND TAXES	35
CODE OF ETHICS	39
FUND WEBSITE AND DISCLOSURE OF PORTFOLIO HOLDINGS	39
OTHER INFORMATION	39
FINANCIAL HIGHLIGHTS	40
PRIVACY POLICY	41


FREQUENTLY USED TERMS

Trust	IndexIQ ETF Trust, a registered open-end investment company

Funds	The investment portfolios of the Trust

Shares	Shares of the Funds offered to investors

Advisor	IndexIQ Advisors LLC

Sub-Advisor	Mellon Capital Management Corporation

Custodian	The Bank of New York Mellon, the custodian of the Funds’ assets

Distributor	ALPS Distributors, Inc., the distributor to the Funds

AP or Authorized Participant	Certain large institutional investors such as brokers, dealers, banks or other entities that have entered into authorized participant agreements with the Distributor.

NYSE Arca	NYSE Arca, Inc., the primary market on which Shares are listed for trading

IIV	The Indicative Intra-Day Value, an appropriate per-Share value based on a Fund’s portfolio

1940 Act	Investment Company Act of 1940, as amended

NAV	Net asset value

SAI	Statement of Additional Information

SEC	Securities and Exchange Commission

Secondary Market	A national securities exchange, national securities association or over-the-counter trading system where Shares may trade from time to time

Securities Act	Securities Act of 1933, as amended

INTRODUCTION

The Trust is an investment company consisting of five separate investment portfolios (each, a “Fund”) that are exchange-traded funds (“ETFs”). ETFs are index funds whose shares are listed on a stock exchange and traded like equity securities at market prices. ETFs, such as the Funds, allow you to buy or sell shares that represent the collective performance of a selected group of securities. ETFs are designed to add the flexibility, ease and liquidity of stock-trading to the benefits of traditional index fund investing. The investment objective of each Fund is to replicate as closely as possible, before fees and expenses, the price and yield performance of a particular index (each, an “Underlying Index”) developed by Financial Development Holdco LLC (“IndexIQ”), the parent company of the Funds’ investment advisor.

This prospectus provides the information you need to make an informed decision about investing in the Funds. It contains important facts about the Trust as a whole and each Fund in particular.

IndexIQ Advisors LLC (the “Advisor”) is the investment advisor to each Fund. Mellon Capital Management Corporation (the “Sub-Advisor”) is expected to serve as the sub-advisor to each Fund upon each Fund’s commencement of operations.

INVESTMENT OBJECTIVES

Each Fund seeks investment returns that correspond (before fees and expenses) generally to the price and yield performance of a particular Underlying Index developed by IndexIQ.

Each Fund is designed to match the following objectives:

The IQ Hedge Multi-Strategy Composite ETF seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Multi-Strategy Composite Index.

The IQ Hedge Macro ETF seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Global Macro Index.

The IQ Hedge Long/Short ETF seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Long/Short Index.

The IQ Hedge Event-Driven ETF seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Event-Driven Index.

The IQ Hedge Market Neutral ETF seeks investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Market Neutral Index.

PRINCIPAL INVESTMENT STRATEGIES COMMON TO ALL FUNDS

Each Fund is a “fund of funds” as each invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the investments included in its Underlying Index, which includes underlying funds. Each 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 primarily will include ETFs and/or other exchange-traded vehicles issuing equity securities organized in the U.S. (“ETVs”). The ETFs and ETVs that constitute each Fund’s investments are collectively referred to as “Underlying ETFs.” Underlying ETFs may include inverse ETFs (i.e., ETFs that produce investment results that are opposite of a particular benchmark index) and ultra inverse ETFs (i.e., ETFs that produce investment results that are opposite of a particular benchmark index by a factor greater than one).

The Underlying Indexes generally are based on the premise that hedge fund returns, when aggregated with similar hedge fund investment styles, display over time significant exposures to a set of common investment strategies and asset classes. By creating indexes that have similar exposures to the same investment strategies and asset classes, IndexIQ seeks to replicate the risk-adjusted return characteristics of the collective hedge funds within a given hedge fund investment style (the “Strategy”). By attempting to replicate “risk-adjusted return characteristics,” IndexIQ is trying to generate total return and volatility results of a broad-based hedge fund Strategy over an extended period of time, and not on a daily basis, that are substantially similar to a given Strategy’s returns as publicly reported by third parties unaffiliated with the Funds, the Advisor or the Sub-Advisor.

Under normal circumstances, at least 80% of a Fund’s net assets, plus the amount of any borrowings for investment purposes, will be invested in its Underlying Index Components. The Underlying Index Components provide exposure to broad asset classes that include but are not limited to U.S. and international equities, U.S. and international government fixed-income securities, U.S. corporate credit and high yield bonds, currencies, real estate (as represented by investment in the equity securities of real estate investment trusts (“REITs”)), and commodities.

In addition, each Fund may invest up to 20% of its net assets in investments not included in its Underlying Index, but which the Advisor or Sub-Advisor believes will help the Fund track its Underlying Index. For example, a Fund may hold the underlying portfolio constituents of one or more Underlying ETFs composing its Underlying Index, or a representative sample thereof. A Fund may also purchase ETFs, ETVs, publicly traded commodity pools and exchange-traded notes (“ETNs”) that are not Underlying Index Components.

Furthermore, a Fund may invest in one or more financial instruments, including but not limited to futures contracts, swap agreements and forward contracts, reverse repurchase agreements, and options on securities, indices and futures contracts (“Financial Instruments”). As an example of the use of such Financial Instruments, a Fund may use total return swaps on the indexes on which the Underlying ETFs are based, on the underlying securities or other constituents of such Underlying ETFs, or on the Underlying ETFs themselves, in order to achieve exposures to investment strategies and/or asset class exposures that are similar to those of the Underlying Index. The Funds will not directly employ leverage in their investment strategies. Nevertheless, a Fund may indirectly be leveraged but only to the extent the Fund invests in an Underlying Index Component that is an ultra inverse ETF.

The Underlying Index Components that are eligible for inclusion in the Underlying Indexes include domestic ETFs and ETVs that have at least $50 million in assets under management and are traded on one of the major U.S. exchanges — New York Stock Exchange (the “NYSE”), the NYSE Arca, the NYSE Alternext US (formerly known as the American Stock Exchange, LLC), and the NASDAQ. The Underlying Index Components are selected for inclusion in the Underlying Indexes using a rules-based process that determines whether their investment strategies and asset class exposures match or substantially match those of the Strategy. After the Underlying Index Components are selected, they are weighted within each Underlying Index by applying a quantitative process that measures, on a historical basis, the relationship of the returns of the Underlying Index to the particular Strategy it is seeking to replicate in order to arrive at the relative Underlying Index Component weights that are most similar to the Underlying Index’s investment objective.

The weights of the Underlying Index Components are rebalanced on a monthly basis. Annually, IndexIQ conducts a review process pursuant to which it may reconstitute the Underlying Indexes by adding or subtracting Underlying Index Components according to IndexIQ’s rules-based process.

The Indexes are unlike traditional market-oriented indexes like the Standard & Poor’s 500^® Composite Stock Price Index (the “S&P 500 Index”). Instead of tracking the performance of publicly-traded issuers representing a market or industry sector, the Indexes track the returns of distinct hedge fund investment styles. The Funds do not invest in hedge funds, and the Underlying Indexes do not include hedge funds as index components. The Funds are not funds of hedge funds.

Each Fund may use a “Representative Sampling” strategy in seeking to track the performance of its Underlying Index. A Fund using a Representative Sampling strategy generally will invest in a sample of its Underlying Index Components whose risk, return and other characteristics closely resemble the risk, return and other characteristics of the Underlying Index as a whole.

To the extent that a Fund’s Underlying Index concentrates (i.e., holds 25% or more of its total assets) in the securities of a particular industry or group of industries, the Fund will concentrate its investment to approximately the same extent as its Underlying Index.

As Fund cash flows permit, the Sub-Advisor may use cash flows to adjust the weights of a Fund’s underlying investments in an effort to minimize any differences in weights between the Fund and its Underlying Index.

PRINCIPAL RISK FACTORS COMMON TO ALL FUNDS

Each Fund is subject to the principal risks described below, as well as the risks described in each Fund’s section and the Additional Risks Section located in this Prospectus. Some or all of these risks may adversely affect the Fund’s NAV, trading price, yield, total return and ability to meet its investment objective. As with any investment, an investment in the Fund could result in a loss or the performance of the Fund could be inferior to that of other investments.

Fund of Funds Risk

The Funds’ investment performance, because they are funds of funds, depends on the investment performance of the Underlying ETFs in which they invest. An investment in a Fund is subject to

the risks associated with the Underlying ETFs that comprise the Fund’s Underlying Index. A Fund will indirectly pay a proportional share of the asset-based fees, if any, of the Underlying ETFs in which it invests. There is a risk that IndexIQ’s evaluations and assumptions regarding the broad asset classes represented in the Indexes may be incorrect based on actual market conditions. In addition, at times certain of the segments of the market represented by the Underlying ETFs may be out of favor and underperform other segments.

Underlying Funds Risk

Investment in the Underlying ETFs may subject the Fund to the following risks: Market Risk; Market Trading Risk; Tracking Error/Index Risk; Replication Management Risk; Foreign Securities Risk; Emerging Market Securities Risk; Real Estate Securities Risk; High Yield Securities Risk; Small-Capitalization Companies Risk; Sovereign Debt Risk; Emerging Markets Sovereign Debt Risk; Commodities Risk; Currency Risk; Equity Securities Risk; Fixed-Income Securities Risk; Zero Coupon Securities Risk; Mortgage-Backed Securities Risk; Value Investing Style Risk; Growth Investing Style Risk; Leverage Risk; Call Risk; Credit/Default Risk; Derivatives Risk; Counterparty Risk; Liquidity Risk; and Valuation Risk. See “Risks of Underlying ETFs.”

Exchange Traded Vehicle Risk

Unlike an investment in a mutual fund, the value of the Fund’s investment in ETFs, ETVs and 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 delistings. Federal law prohibits the Fund from acquiring investment company shares, including shares of ETFs, in excess of specific thresholds unless exempted by rule, regulation or exemptive order. These prohibitions may prevent the Fund from allocating its investments to ETFs in an optimal manner.

Tracking Error/Index Risk

Each Fund’s performance may not match its Underlying Index during any period of time. Although each 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, including but not limited to management risk, liquidity risk and new fund risk, as well as Fund expenses, which the Underlying Index does not incur.

The Underlying Indexes are new and have limited historical performance data that is not predictive of future results. The Underlying Indexes may not be successful in replicating the performance of their target strategies. There is a risk that hedge fund return data provided by third party hedge fund data providers may be inaccurate or may not accurately reflect hedge fund returns due to survivorship bias, self-reporting bias or other biases. In constructing the underlying strategies of the Underlying Indexes, IndexIQ may not be successful in replicating the target returns.

Management Risk

The risk that a strategy used by the Advisor and Sub-Advisor to match the performance of the Underlying Index may fail to produce the intended results.

Market Risk

The market price of investments owned by the Funds may go up or down, sometimes rapidly or unpredictably. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets.

Industry Concentration Risk

A Fund will not invest 25% or more of the value of the Fund’s total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries; except that, to the extent that the Index is concentrated in a particular industry, the Fund also will be concentrated in that industry. The risk of concentrating Fund investments in a limited number of issuers conducting business in the same industry or group of industries will subject the Fund to a greater risk of loss as a result of adverse economic, business or other developments than if its investments were diversified across different industry sectors.

New Fund Risk

Each Fund is a new fund. As a new fund, there can be no assurance that each Fund will grow to or maintain an economically viable size, in which case a Fund may experience greater tracking error to its Underlying Index than it otherwise would be at higher asset levels or it could ultimately liquidate.

Trading Price Risk

It is expected that the Shares of each Fund will be listed for trading on NYSE Arca and will be bought and sold in the Secondary Market at market prices. Although it is expected that generally the market price of the Shares of each Fund will approximate the respective Fund’s NAV, there may be times when the market price and the NAV vary significantly. Thus, you may pay more than NAV when you buy Shares of a Fund in the Secondary Market, and you may receive less than NAV when you sell those Shares in the Secondary Market.

The market price of Shares during the trading day, like the price of any exchange-traded security, includes a “bid/ask” spread charged by the exchange specialist, market makers or other participants that trade the Shares. In times of severe market disruption, the bid/ask spread can increase significantly. At those times, Shares are most likely to be traded at a discount to NAV, and the discount is likely to be greatest when the price of Shares is falling fastest, which may be the time that you most want to sell your Shares. The Advisor believes that, under normal market conditions, large market price discounts or premiums to NAV will not be sustained because of arbitrage opportunities.

IQ HEDGE MULTI-STRATEGY COMPOSITE 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 Multi-Strategy Composite Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.

Principal Investment Strategy

The Fund employs a “passive management” – or indexing – investment approach designed to track the performance of the Underlying Index. The Fund invests primarily in the Underlying Index Components that make up the Underlying Index.

Index Description

The Underlying Index seeks to replicate the risk-adjusted return characteristics of the collective hedge funds that employ various hedge fund investment styles, which may include but are not limited to long/short equity, global macro, market neutral, event-driven, fixed-income arbitrage, emerging markets and other strategies commonly used by hedge fund managers (the “Strategy”).

This Strategy is a composite of the other hedge fund strategies described in this Prospectus, plus two additional strategies, emerging markets and fixed-income arbitrage. 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. Fixed-income arbitrage hedge funds typically employ strategies that seek to take advantage of price differentials and inefficiencies between related fixed-income securities that are related either economically or statistically. Such funds may limit volatility by hedging out interest rate risk and market exposure.

The Underlying Index Components of this Strategy generally provide exposures to:

U.S. small-cap equity;
Emerging market equity, debt and sovereign debt;
Foreign equity (Europe, Australasia & Far East);
U.S. and foreign investment grade debt;
U.S. government short- and intermediate-term maturity obligations;
U.S. high yield (or “junk”) debt;
U.S. Treasury Inflation Protection Securities (“TIPS”);
Foreign sovereign debt;
Foreign currencies and currency futures;
Real estate investment trusts; and
Commodities.

Principal Risks of Investing in the Fund

The Principal Risks of investing in each Fund are identified in the section “Principal Risks of Investing in the Funds.” The following are the principal risks that the Fund is exposed to by its Underlying ETFs: Market Risk; Market Trading Risk; Tracking Error/Index Risk; Replication Management Risk; Equity Securities Risk; Small-Capitalization Companies Risk; Fixed-Income Securities Risk; Zero Coupon Securities Risk; Mortgage-Backed Securities Risk; Value Investing Style Risk; Growth Investing Style Risk; Foreign Securities Risk; Emerging Market Securities Risk; Leverage Risk; Call Risk; Credit/Default Risk; High Yield Securities Risk; Sovereign Debt Risk; Emerging Markets Sovereign Debt Risk; Derivatives Risk; Counterparty Risk; Liquidity Risk; Valuation Risk; Currency Risk; Real Estate Securities Risk; and Commodities Risk. See “Risks of Underlying ETFs.”

See also “Additional Risks” for other risk factors.

IQ HEDGE MACRO 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 Global Macro Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.

Principal Investment Strategy

Index Description

The Underlying Index’s strategy is to replicate the risk-adjusted return characteristics of a group of hedge funds employing a global macro strategy (the “Strategy”). The Strategy typically employs 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.

The Underlying Index Components of this Strategy generally provide exposures to:

U.S. small-cap equity;
Emerging market equity, debt and sovereign debt;
U.S. and foreign investment grade debt;
U.S. government short- and intermediate-term maturity obligations;
Foreign sovereign debt;
Foreign currencies and currency futures; and
Real estate investment trusts.

Principal Risks of Investing in the Fund

The Principal Risks of investing in each Fund are identified in the section “Principal Risks of Investing in the Funds.” The following are the principal risks that the Fund is exposed to by its Underlying ETFs: Market Risk; Market Trading Risk; Tracking Error/Index Risk; Replication Management Risk; Equity Securities Risk; Small-Capitalization Companies Risk; Fixed-Income Securities Risk; Zero Coupon Securities Risk; Value Investing Style Risk; Growth Investing Style Risk; Foreign Securities Risk; Emerging Market Securities Risk; Leverage Risk; Call Risk; Credit/Default Risk; Sovereign Debt Risk; Emerging Markets Sovereign Debt Risk; Derivatives Risk; Counterparty Risk; Liquidity Risk; Valuation Risk; Currency Risk; and Real Estate Securities Risk. See “Risks of Underlying ETFs.”

See also “Additional Risks” for other risk factors.

IQ HEDGE LONG/SHORT 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 Long/Short Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.

Principal Investment Strategy

Index Description

The Underlying Index’s strategy is to replicate the risk-adjusted return characteristics of a group of hedge funds employing a long/short strategy (the “Strategy”). The Strategy invests on both long and short sides of equity markets. Hedge funds using the Strategy typically diversify their risks by limiting the net exposure to particular regions, industries, sectors and market capitalization bands, allowing them to focus on company-specific anomalies. At the same time, long/short managers often hedge against un-diversifiable risk, such as market risk (i.e., the returns of the overall equity market). Certain long/short managers focus on specific sectors, regions or industries, on particular investment styles, such as value or growth, or certain types of stocks, such as small or large.

The Underlying Index Components of this Strategy generally provide exposures to:

Foreign equity (Europe, Australasia & Far East);
U.S. investment grade debt;
Real estate investment trusts; and
Commodities.

Principal Risks of Investing in the Fund

The Principal Risks of investing in each Fund are identified in the section “Principal Risks of Investing in the Funds.” The following are the principal risks that the Fund is exposed to by its Underlying ETFs: Market Risk; Market Trading Risk; Tracking Error/Index Risk; Replication Management Risk; Equity Securities Risk; Fixed-Income Securities Risk; Zero Coupon Securities Risk; Value Investing Style Risk; Growth Investing Style Risk; Foreign Securities Risk; Leverage Risk; Call Risk; Credit/Default Risk; Derivatives Risk; Counterparty Risk; Liquidity Risk; Valuation Risk; Currency Risk; Real Estate Securities Risk; and Commodities Risk. See “Risks of Underlying ETFs.”

See also “Additional Risks” for other risk factors.

IQ HEDGE EVENT-DRIVEN 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 Event-Driven Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.

Principal Investment Strategy

Index Description

The Underlying Index’s strategy is to replicate the risk-adjusted return characteristics of a group of hedge funds employing an event-driven strategy (the “Strategy”). The Strategy typically invests in a combination of credit opportunities and event-driven equities. Within the credit-oriented portion, sub-strategies include long/short high yield credit (below investment grade corporate bonds or “junk” bonds), leveraged loans (bank debt, mezzanine, or self-oriented loans), capital structure arbitrage (debt vs. debt or debt vs. equity), and reorganization equity. Within the equity portion, sub-strategies include risk (or merger) arbitrage, holding company arbitrage, special situations and value equities where a change in management, significant product launch, or some other economic catalyst is expected to unlock shareholder wealth. Event-driven managers invest across multiple asset classes and may also seek to exploit shifts in economic cycles. The Underlying Index Components of this Strategy generally provide exposures to:

Emerging market equity;
U.S. investment grade debt;
Real estate investment trusts; and
Commodities.

Principal Risks of Investing in the Fund

Risk; Liquidity Risk; Valuation Risk; Currency Risk; Real Estate Securities Risk; and Commodities Risk. See “Risks of Underlying ETFs.”

See also “Additional Risks” for other risk factors.

IQ HEDGE MARKET NEUTRAL 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 Market Neutral Index, developed by IndexIQ. The investment objective is not fundamental and may be changed without shareholder approval.

Principal Investment Strategy

Index Description

The Underlying Index’s strategy is to replicate the risk-adjusted return characteristics of a group of hedge funds employing a market neutral strategy (the “Strategy”). The Strategy invests in both long and short positions in stocks while minimizing exposure to the systematic components of risk. These market neutral strategies seek to have a zero “beta” (or “market”) exposure to one or more systematic risk factors including the overall market (as represented by the S&P 500 Index), economic sectors or industries, market capitalization, region and country. Market neutral strategies that effectively neutralize the market exposure are not impacted by directional moves in the market.

The Underlying Index Components of this Strategy generally provide exposures to:

U.S. small-cap equity;
Emerging market equity;
Foreign equity (Europe, Australasia & Far East);
U.S. and foreign investment grade debt;
U.S. government short- and intermediate-term maturity obligations;
U.S. high yield (or “junk”) debt;
U.S. Treasury Inflation Protection Securities (“TIPS”); and
Foreign currencies and currency futures.

Principal Risks of Investing in the Fund

Derivatives Risk; Counterparty Risk; Liquidity Risk; Valuation Risk; and Currency Risk. See “Risks of Underlying ETFs.”

See also “Additional Risks” for other risk factors.

PERFORMANCE INFORMATION

As of the date of this Prospectus, the Funds have been in operation for less than one full calendar year and therefore do not report their performance information.

FEES AND EXPENSES OF THE FUNDS

This table describes the fees and expenses that you may pay if you buy and hold shares of a 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”) will not pay the “Creation Transaction Fee” or “Redemption Transaction Fee” shown below, but may be subject to costs (including customary brokerage commissions charged by their broker) which are not reflected in the table set forth below.

Shareholder Fees


Fund	Fees Paid Directly From Your Investment*	Standard Creation/Redemption Transaction Fee^(a)	Maximum Creation/Redemption Transaction Fee^(a)

IQ Hedge Multi-Strategy Composite ETF	None	$500	$2,000
IQ Hedge Macro ETF	None	$500	$2,000
IQ Hedge Long/Short ETF	None	$500	$2,000
IQ Hedge Event-Driven ETF	None	$500	$2,000
IQ Hedge Market Neutral ETF	None	$500	$2,000

Annual Fund Operating Expenses^(b)


Fund	Management Fee^(c)	Distribution and/or Service (12b-1) Fees^(d)	Other Operating Expenses^(c)	Acquired Fund Fees and Expenses^(e)	Total Annual Fund Operating Expenses

IQ Hedge Multi-Strategy Composite ETF	0.75%	0.00%	0.00%	0.34%	1.09%
IQ Hedge Macro ETF	0.75%	0.00%	0.00%	0.39%	1.14%
IQ Hedge Long/Short ETF	0.75%	0.00%	0.00%	0.31%	1.06%
IQ Hedge Event-Driven ETF	0.75%	0.00%	0.00%	0.37%	1.12%
IQ Hedge Market Neutral ETF	0.75%	0.00%	0.00%	0.33%	1.08%

EXPENSE EXAMPLE

This example is intended to help you compare the cost of investing in a 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 a Fund.

Each Fund sells and redeems Shares in Creation Units generally on an in-kind basis for the component securities of that Fund. Shares in less than Creation Units are not redeemable. An investor purchasing a Creation Unit on an in-kind basis would pay the following expenses on a $10,000 investment (payment with a deposit of securities included in the Underlying Index), assuming all Shares are redeemed at the end of the periods shown, a 5% annual return and that the Fund’s operating expenses remain the same. Investors should note that the presentation below of a $10,000 investment is for illustration purposes only, as Shares will be issued by the Funds only in Creation Units of 50,000 Shares valued at approximately $1,250,000 as of the first

creation date. Further, 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. Based on these assumptions, your costs would be:


Fund	Year 1	Year 3

IQ Hedge Multi-Strategy Composite ETF	$112	$348
IQ Hedge Macro ETF	$117	$364
IQ Hedge Long/Short ETF	$109	$339
IQ Hedge Event-Driven ETF	$115	$358
IQ Hedge Market Neutral ETF	$113	$354


*	See “Creation and Redemption of Creation Units” for a discussion of Creation and Redemption Transaction Fees.

(a)	The Creation Transaction Fee and Redemption Transaction Fee apply to each creation or redemption order, regardless of the number of Creation Units created or redeemed. The fee is paid by APs that purchase or redeem Shares in Creation Units Only. If a Creation Unit is purchased or redeemed outside the usual process through the National Securities Clearing Corporation (“NSCC”) or for cash, a variable fee of up to four times the standard creation or redemption Transaction Fee will be charged.

(b)	Expenses are based on estimated amounts for the current fiscal year and calculated as a percentage of Fund net assets.

(c)	The Fund pays the Advisor a single, unified management fee. The Fund compensates the Trustees of the Trust who are not “interested persons” of the Fund (as defined in the 1940 Act) and pays for certain other Fund expenses that are not covered by the Advisor’s unified fee. See “Management—Investment Advisor.” The Funds have not yet commenced operations and Other Expenses are based on estimated amounts for the current fiscal year.

(d)	The Fund has adopted a Service and Distribution Plan pursuant to which the Fund may bear a Rule 12b-1 fee not to exceed 0.10% per annum of the Fund’s average daily net assets. The Trust’s Board of Trustees has resolved not to authorize the payment of Rule 12b-1 fees prior to April 30, 2009.

(e)	Amount represents 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. The Funds have not yet commenced operations and Acquired Fund Fees and Expenses are based on estimated amounts for the current fiscal year. Because the ratio of expenses to average net assets presented under “Financial Statements in the SAI reflects the operating expenses of the Fund without including acquired fund fees and expenses, the Total Annual Fund Operating Expenses presented here may differ from those reflected under “Financial Statements,”” if any.

CREATION TRANSACTION FEES AND REDEMPTION TRANSACTION FEES

The Trust issues and redeems Shares at NAV only in blocks of 50,000 Shares or whole multiples thereof. As a practical matter, only certain persons or entities known as Authorized Participants (each, an “AP” and, together, the “APs”) may purchase or redeem these Creation Units. A standard creation “Transaction Fee” of $500 is charged to each purchaser of Creation Units. The

creation Transaction Fee is the same regardless of the number of Creation Units purchased by an AP on the same day. The value of a Creation Unit as of the first creation date is expected to be approximately $1,250,000. An AP who holds Creation Units and wishes to redeem at NAV would also pay a standard redemption Transaction Fee of $500 on the date of such redemption(s), regardless of the number of Creation Units redeemed that day. If a Creation Unit is purchased or redeemed outside the usual process through the NSCC or for cash, a variable fee of up to a maximum of four times the standard Creation or Redemption Transaction Fee may be charged to the AP making the transaction. APs who hold Creation Units will also pay the annual Fund operating expenses described in the “Annual Fund Operating Expenses” table above. Assuming an investment in a Creation Unit of the IQ Hedge Multi-Strategy Composite ETF in the amount of $1,250,000 and a 5% return each year, and assuming that the Fund’s operating expenses remain the same, the total costs would be $13,966 if the Creation Unit is redeemed after one year and $43,545 if the Creation Unit is redeemed after three years. Investors should note that this presentation is for illustration purposes only and actual costs may be higher. See “Creation and Redemption of Creation Units.”

RISKS OF UNDERLYING ETFS

Investments in each Fund are subject to the risks associated with an investment in the Underlying ETFs. In addition to the risks described above, the following risks should also be considered when making an investment in a Fund. See also the section on “Additional Risks” for other risk factors.

Market Risk

The market price of Underlying ETFs owned by a Fund may go up or down, sometimes rapidly or unpredictably. Underlying ETFs may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. Overall Underlying ETF values could decline generally or could underperform other investments.

Market Trading Risk

An investment in an Underlying ETF involves risks similar to those of investing in any fund of equity securities, fixed-income securities and/or commodities traded on an exchange. You should anticipate that the value of the Shares will decline, more or less, in correlation with any decline in value of the Underlying ETFs.

Tracking Error/Index Risk

An Underlying ETF’s performance may not match its underlying index during any period of time. Although each Underlying ETF attempts to track the performance of its underlying index, the Underlying ETF may not be able to duplicate its exact composition or return for any number of reasons, including but not limited to management risk, liquidity risk, and new fund risk, as well as Underlying ETF expenses, which the underlying index does not incur. Additionally, the historical performance data of each underlying index is not predictive of future results.

Since the Underlying Indexes are not subject to the diversification requirements to which the Funds must adhere, the Funds may be required to deviate their investments from the securities and relative weightings of the Underlying Indexes. The Funds may not invest in certain securities included in the Underlying Indexes due to liquidity constraints. Liquidity constraints may delay the Funds’ purchase or sale of securities included in the Underlying Indexes. For tax efficiency purposes, the Funds may sell certain securities to realize losses, causing it to deviate from the Underlying Indexes. An Underlying ETF may not be fully invested at times, either as a result of cash flows into the Underlying ETF or reserves of cash held by the Underlying ETF to meet redemptions and expenses. If an Underlying ETF utilizes a sampling approach or futures or other derivative positions, its return may not correlate as well with the return on its underlying index, as would be the case if it purchased all of the stocks in its underlying index with the same weightings as the underlying index.

Replication Management Risk

Unlike many investment companies, the Underlying ETFs are not “actively” managed. Therefore, they would not necessarily sell a stock or bond because the stock’s or bond’s issuer was in financial trouble unless that stock or bond is removed from its underlying index.

Foreign Securities Risk

The risk that when the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets. Loss may result because of less foreign government regulation, less public information and less economic, political and social stability. Loss may also result from the imposition of exchange controls, confiscations and other government restrictions. The Fund will also be subject to the risk of negative foreign currency rate fluctuations. Foreign risks will normally be greater when the Fund invests in emerging markets.

Emerging Market Securities Risk

Securities of issuers based in countries with developing economies (emerging markets) may present market, credit, currency, liquidity, legal, political and other risks different from, or greater than, the risks of investing in developed foreign countries. Emerging markets are subject to greater market volatility, lower trading volume, political and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, securities in emerging markets may be subject to greater price fluctuations than securities in more developed markets. Securities law in many emerging markets countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change.

Real Estate Securities Risk

Certain Underlying ETFs may concentrate their investments in the real estate sector. Adverse economic, business or political developments affecting real estate could have a major effect on the value of the investments of those Underlying ETFs. Investing in real estate securities (which

include REITs) may subject Underlying ETFs to risks associated with the direct ownership of real estate, such as decreases in real estate values, overbuilding, increased competition and other risks related to local or general economic conditions, increases in operating costs and property taxes, changes in zoning laws, casualty or condemnation losses, possible environmental liabilities, regulatory limitations on rent and fluctuations in rental income. Changes in interest rates may also affect the value of the Underlying ETF’s investments in real estate securities. Certain real estate securities have a relatively small market capitalization, which may tend to increase the volatility of the market price of these securities. Real estate securities are dependent upon specialized management skills, have limited diversification and are, therefore, subject to risks inherent in operating and financing a limited number of projects. Real estate securities are also subject to heavy cash flow dependency and defaults by borrowers. In addition, REITs are subject to the possibility of failing to qualify for tax free pass-through of income under the Internal Revenue Code of 1986, as amended (the “Code”) and maintaining exemption from the registration requirements of the 1940 Act.

High Yield Securities Risk

High yield securities generally offer a higher current yield than that available from higher grade issues, but typically involve greater risk. Securities rated below investment grade are commonly referred to as “junk bonds.” The ability of issuers of high yield securities to make timely payments of interest and principal may be adversely impacted by adverse changes in general economic conditions, changes in the financial condition of their issuers and price fluctuations in response to changes in interest rates. Periods of economic downturn or rising interest rates may cause the issuers of high yield securities to experience financial distress, which could adversely impact their ability to make timely payments of principal and interest and increases the possibility of default. The market value and liquidity of high yield securities may be negatively impacted by adverse publicity and investor perceptions, whether or not based on fundamental analysis, especially in a market characterized by a low volume of trading.

Small-Capitalization Companies Risk

Stock prices of small-capitalization companies may be more volatile than those of larger companies. Stock prices of small-capitalization companies are also more vulnerable than those of large-capitalization companies to adverse business and economic developments, and the stocks of small-capitalization companies may be thinly traded, making it difficult to buy and sell them. In addition, small-capitalization companies are typically less stable financially than large-capitalization companies and may depend on a small number of key personnel, making them more vulnerable to loss of personnel. Small-capitalization companies also generally have less diverse product lines than large-capitalization companies and are more susceptible to adverse developments related to their products.

Sovereign Debt Risk

Investments in sovereign debt securities involve special risks. The governmental authority that controls the repayment of the debt may be unwilling or unable to repay the principal and/or interest when due in accordance with the terms of such securities due to: the extent of its foreign reserves; the availability of sufficient foreign exchange on the date a payment is due; the relative

size of the debt service burden to the economy as a whole; or the government debtor’s policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. If an issuer of sovereign debt defaults on payments of principal and/or interest, an Underlying ETF may have limited legal recourse against the issuer and/or guarantor. In certain cases, remedies must be pursued in the courts of the defaulting party itself, and an Underlying ETF’s ability to obtain recourse may be limited.

Certain issuers of sovereign debt may be dependent on disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. Such disbursements may be conditioned upon a debtor’s implementation of economic reforms and/or economic performance and the timely service of such debtor’s obligations. A failure on the part of the debtor to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties’ commitments to lend funds to the government debtor, which may impair the debtor’s ability to service its debts on a timely basis. As a holder of government debt, an Underlying ETF may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors.

Emerging Markets Sovereign Debt Risk

Government obligors in emerging market countries are among the world’s largest debtors to commercial banks, other governments, international financial organizations and other financial institutions. Historically, certain issuers of the government debt securities in which certain Underlying ETFs may invest have experienced substantial difficulties in meeting their external debt obligations, resulting in defaults on certain obligations and the restructuring of certain indebtedness. Such restructuring arrangements have included obtaining additional credit to finance outstanding obligations and the reduction and rescheduling of payments of interest and principal through the negotiation of new or amended credit agreements. As a holder of government debt securities, an Underlying ETF may be asked to participate in the restructuring of such obligations and to extend further loans to their issuers. There can be no assurance that the securities in which an Underling ETF will invest will not be subject to restructuring arrangements or to requests for additional credit. In addition, certain participants in the secondary market for such debt may be directly involved in negotiating the terms of these arrangements and may therefore have access to information not available to other market participants, such as certain Underlying ETFs.

Commodities Risk

Certain Underlying ETFs have investment exposure to the commodities markets which may subject them to greater volatility than investments in traditional securities, such as stocks and bonds. The commodities markets may fluctuate widely based on a variety of factors. These include changes in overall market movements, domestic and foreign political and economic events and policies, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and/or investor expectations concerning inflation rates and investment and trading activities of mutual funds, hedge funds and commodities funds. Prices of various commodities may also be affected by factors such as drought, floods, weather, livestock disease, embargoes, tariffs and other

regulatory developments. Many of these factors are very unpredictable. The prices of commodities can also fluctuate widely due to supply and demand disruptions in major producing or consuming regions. Certain commodities may be produced in a limited number of countries and may be controlled by a small number of producers. As a result, political, economic and supply related events in such countries could have a disproportionate impact on the prices of such commodities. Because the performance of certain Underlying ETFs is linked to the performance of highly volatile commodities, investors should be willing to assume the risks of potentially significant fluctuations in the value of shares of the Underlying ETFs.

Currency Risk

Investments directly in foreign (non-U.S.) currencies or in securities that trade in, and receive revenues in, foreign (non-U.S.) currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, a Fund’s investments in foreign currency-denominated securities may reduce the return of the Fund.

Equity Securities Risk

The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.

Fixed-Income Securities Risk

All fixed-income securities are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt.

Interest rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up.

The prices of fixed-income securities tend to fall as interest rates rise. Securities that have longer maturities tend to fluctuate more in price in response to changes in market interest rates. A decline in the prices of the fixed-income securities owned by an Underlying ETF would adversely affect the trading price of the Underlying ETF’s shares. This “market risk” is usually greater among fixed-income securities with longer maturities or durations.

Zero Coupon Securities Risk

The interest earned on zero coupon securities is, implicitly, automatically compounded and paid out at maturity. While such compounding at a constant rate eliminates the risk of receiving lower yields upon reinvestment of interest if prevailing interest rates decline, the owner of a zero coupon security will be unable to participate in higher yields upon reinvestment of interest received if prevailing interest rates rise. For this reason, zero coupon securities are subject to substantially greater market price fluctuations during periods of changing prevailing interest rates than are comparable debt securities which make current distributions of interest. Current federal tax law requires that a holder of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year even though Underlying ETFs receive no interest payments in cash on the security during the year.

Mortgage-Backed Securities Risk

Mortgage-backed securities represent a participation interest in a pool of residential mortgage loans originated by governmental or private lenders such as banks. They differ from conventional debt securities, which provide for periodic payment of interest in fixed amounts and principal payments at maturity or on specified call dates. Mortgage pass-through securities provide for monthly payments that are a “pass-through” of the monthly interest and principal payments made by the individual borrowers on the pooled mortgage loans. Mortgage pass-through securities may be collateralized by mortgages with fixed rates of interest or adjustable rates.

Mortgage-backed securities have different risk characteristics than traditional debt securities. Although generally the value of fixed-income securities increases during periods of falling interest rates and decreases during periods of rising rates, this is not always the case with mortgage-backed securities. This is due to the fact that principal on underlying mortgages may be prepaid at any time as well as other factors. Generally, prepayments will increase during a period of falling interest rates and decrease during a period of rising interest rates. The rate of prepayments also may be influenced by economic and other factors. Prepayment risk includes the possibility that, as interest rates fall, securities with stated interest rates may have the principal prepaid earlier than expected, requiring an Underlying ETF to invest the proceeds at generally lower interest rates. Certain mortgage-backed securities may be more volatile and less liquid than other traditional types of debt securities.

Value Investing Style Risk

Certain Underlying ETFs emphasize a “value” style of investing, which focuses on undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” equity securities are less than returns on other styles of investing or the overall stock market. Different types of stocks tend to shift in and out of favor depending on market and economic conditions.

Growth Investing Style Risk

Certain Underlying ETFs emphasize a “growth” style of investing. The market values of such securities may be more volatile than other types of investments. The returns on “growth”

securities may or may not move in tandem with the returns on other styles of investing or the overall stock markets.

Leverage Risk

Leverage, including borrowing, may cause an Underlying ETF to be more volatile by magnifying the Underlying ETF’s gains or losses than if the Underlying ETF had not been leveraged. The use of leverage may cause the Underlying ETF to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements.

Call Risk

If interest rates fall, it is possible that issuers of callable securities with high interest coupons will “call” (or prepay) their bonds before their maturity date. If a call were exercised by the issuer during a period of declining interest rates, an Underlying ETF is likely to have to replace such called security with a lower yielding security. If that were to happen, it would decrease the Underlying ETF’s net investment income.

Credit/Default Risk

Credit and default risk exists where an issuer or guarantor of fixed-income securities (including ETNs) held by an Underlying ETF may default on its obligation to pay interest and repay principal. Lower rated securities typically present greater risk of default with high yield or “junk” bonds presenting the greatest risk.

Derivatives Risk

A derivative is a financial contract, the value of which depends on, or is derived from, the value of an underlying asset such as a security or an index. Certain Underlying ETFs may invest in certain types of derivatives contracts, including futures, options and swaps. Derivatives are subject to a number of risks based on the structure of the underlying instrument and the counterparty to the derivatives transaction. These risks include leveraging risk, liquidity risk, interest rate risk, market risk, credit risk, counterparty risk and management risk.

Counterparty Risk

Many of the protections afforded to participants on some organized exchanges, such as the performance guarantee of an exchange clearing house, are not available in connection with over-the-counter (“OTC”) derivatives transactions. In those instances, an Underlying ETF will be subject to the risk that its direct counterparty will not perform its obligations under the transactions and that the Underlying ETF will sustain losses.

Liquidity Risk

Liquidity risk exists when particular investments are difficult to purchase or sell. If an Underlying ETF invests in illiquid securities or securities that become illiquid, it may reduce the

returns of the Underlying ETF because the Underlying ETF may be unable to sell the illiquid securities at an advantageous time or price.

Valuation Risk

Because foreign exchanges may be open on days when an Underlying ETF does not price its shares, the value of the securities in the Underlying ETF’s portfolio may change on days when shareholders, such as the Funds, will not be able to purchase or sell the Underlying ETF’s shares.

ADDITIONAL INVESTMENT STRATEGIES

Each Fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in Underlying Index Components that comprise its Underlying Index. In addition, each Fund may invest up to 20% of its net assets in securities not included in its Underlying Index, but which the Advisor or Sub-Advisor believes will help the Fund track its Underlying Index as well as in money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments (subject to applicable limitations under the 1940 Act, or exemptions therefrom). A Fund may invest directly, or indirectly through ETFs, in foreign companies, including companies in emerging markets, to the extent that the Underlying Index Components directly or indirectly include such companies. Similarly, the Funds may also invest directly, or indirectly through ETFs, in U.S. companies of any market capitalization to the extent an Underlying Index is exposed to them. Swaps may be used by the Funds to seek performance that corresponds to its Underlying Index and to manage cash flows. The Advisor anticipates that it may take approximately two business days (i.e., each day the NYSE is open for trading) for additions and deletions to a Fund’s Underlying Index to be reflected in the portfolio composition of that Fund.

Each of the policies described herein, including the investment objective of each Fund, constitutes a non-fundamental policy that may be changed by the Board of Trustees of the Trust without shareholder approval. Certain fundamental policies of the Funds are set forth in the Funds’ Statement of Additional Information (the “SAI”) under “Investment Restrictions.”

Securities Lending

The Funds may lend their portfolio securities. In connection with such loans, the Funds receive liquid collateral equal to at least 102% of the value of the portfolio securities being lent. This collateral is marked to market on a daily basis.

ADDITIONAL RISKS

Trading Issues

Trading in Shares on the NYSE may be halted due to market conditions or for reasons that, in the view of the NYSE, make trading in Shares inadvisable. In addition, trading in Shares on the NYSE is subject to trading halts caused by extraordinary market volatility pursuant to the NYSE “circuit breaker” rules. There can be no assurance that the requirements of the NYSE necessary to maintain the listing of a Fund will continue to be met or will remain unchanged. Foreign exchanges may be open on days when Shares are not priced, and therefore, the value of the securities in a Fund’s portfolio may change on days when shareholders will not be able to purchase or sell Shares.

Fluctuation of Net Asset Value

The NAV of a Fund’s Shares will generally fluctuate with changes in the market value of the Fund’s holdings. The market prices of the Shares will generally fluctuate in accordance with changes in NAV as well as the relative supply of and demand for the Shares on the NYSE. The Advisor cannot predict whether the Shares will trade below, at or above their NAV. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for the Shares will be closely related to, but not identical to, the same forces influencing the prices of the securities of a Fund’s Underlying Index trading individually or in the aggregate at any point in time. However, given that the Shares can be purchased and redeemed in Creation Units (unlike shares of closed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, their NAV), the Advisor believes that large discounts or premiums to the NAV of the Shares should not be sustained.

Foreign Risk

The risk that when the Fund invests in foreign markets, either through direct investment in a foreign Underlying ETF or through the investment policies of an Underlying ETF, it will be subject to risk of loss not typically associated with domestic markets. Loss may result because of less foreign government regulation, less public information and less economic, political and social stability. Loss may also result from the imposition of exchange controls, confiscations and other government restrictions. The Fund will also be subject to the risk of negative foreign currency rate fluctuations. Foreign risks will normally be greater when the Fund invests in emerging markets. Foreign currency transactions, in addition to counterparty risk, are subject to the risk that currency exchange rates may fluctuate significantly, for a variety of reasons, over short periods of time causing the Fund’s NAV to fluctuate as well.

Risk of Investing in Small- or Mid-Cap Companies

The Fund may invest in small- or mid-cap companies or Underlying ETFs that invest in small- or mid-cap companies. The securities of these companies often have greater price volatility and less liquidity than large-cap companies which could cause the Fund losses.

Risk of Investing in Real Estate Instruments

The Fund may invest in REITS or Underlying ETFs tracking REIT performance. These instruments expose the Fund to real estate investment risks and to risks created by poor REIT management, adverse tax consequences and limited diversification among type and geographic location of properties.

Tax Risk

The tax treatment of derivatives is unclear for purposes of determining the Fund’s tax status. In addition, the Fund’s transactions in derivatives may result in the Fund realizing more short-term capital gains and ordinary income that are subject to higher ordinary income tax rates than if it did not engage in such transactions.

Securities Lending

Although each Fund will receive collateral in connection with all loans of its securities holdings, a Fund would be exposed to a risk of loss should a borrower default on its obligation to return the borrowed securities (e.g., the loaned securities may have appreciated beyond the value of the collateral held by the Fund). In addition, a Fund will bear the risk of loss of any cash collateral that it invests.

Shares are not Individually Redeemable

Shares may be redeemed by the Funds only in large blocks known as “Creation Units” which are expected to be worth in excess of one million dollars each. The Trust may not redeem Shares in fractional Creation Units. Only certain large institutions that enter into agreements with the Distributor are authorized to transact in Creation Units with the Funds. These entities are referred to as “Authorized Participants.” All other persons or entities transacting in Shares must do so in the Secondary Market.

Absence of Prior Active Market

Although Shares are approved for listing on the NYSE Arca, there can be no assurance that an active trading market will develop and be maintained for the Shares. As a new fund, there can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Fund may experience greater tracking error to the Underlying Index than it otherwise would at higher asset levels or the Fund may ultimately liquidate.

Please refer to the SAI for a more complete discussion of the risks of investing in Shares.

CONTINUOUS OFFERING

The method by which Creation Units are purchased and traded may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by the Funds on an ongoing basis, at any point a “distribution,” as such term is used in the Securities Act, may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into individual Shares, and sells such Shares directly to customers, or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of Secondary Market demand for Shares. A determination of whether one is an underwriter for purposes of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.

Broker-dealer firms should also note that dealers who are not “underwriters” but are effecting transactions in Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(3) of the Securities Act is not available with respect to such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker dealer-firms should note that dealers who are not underwriters but are participating in a distribution (as contrasted with ordinary Secondary Market transactions) and thus dealing with Shares that are part of an over-allotment within the meaning of Section 4(3)(a) of the Securities Act would be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the Securities Act. Firms that incur a prospectus delivery obligation with respect to Shares of a Fund are reminded that under Rule 153 of the Securities Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed to an exchange member in connection with a sale on the NYSE Arca is satisfied by the fact that such Fund’s prospectus is available at the NYSE Arca upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange.

CREATION AND REDEMPTION OF CREATION UNITS

The Funds issue and redeem Shares only in bundles of a specified number of Shares. These bundles are known as “Creation Units.” For each Fund, a Creation Unit is comprised of 50,000 Shares. The number of Shares in a Creation Unit will not change, except in the event of a share split, reverse split or similar revaluation. The Funds may not issue fractional Creation Units. To purchase or redeem a Creation Unit, you must be an Authorized Participant or you must do so through a broker, dealer, bank or other entity that is an Authorized Participant. An Authorized Participant is either (1) a “Participating Party,” i.e., a broker-dealer or other participant in the clearing process of the Continuous Net Settlement System of the NSCC (the “Clearing Process”), or (2) a participant of DTC (a “DTC Participant”), and, in each case, must have executed an agreement with the Distributor with respect to creations and redemptions of Creation Units (a “Participation Agreement”). Because Creation Units cost over one million dollars each, it is expected that only large institutional investors will purchase and redeem Shares directly from the Funds in the form of Creation Units. In turn, it is expected that institutional investors who

purchase Creation Units will break up their Creation Units and offer and sell individual Shares in the Secondary Market.

Retail investors may acquire Shares in the Secondary Market (not from the Funds) through a broker or dealer. Shares are listed on the NYSE Arca and are publicly traded. For information about acquiring Shares in the Secondary Market, please contact your broker or dealer. If you want to sell Shares in the Secondary Market, you must do so through your broker or dealer.

When you buy or sell Shares in the Secondary Market, your broker or dealer may charge you a commission, market premium or discount or other transaction charge, and you may pay some or all of the spread between the bid and the offered price for each purchase or sale transaction. Unless imposed by your broker or dealer, there is no minimum dollar amount you must invest and no minimum number of Shares you must buy in the Secondary Market. In addition, because transactions in the Secondary Market occur at market prices, you may pay more than NAV when you buy Shares and receive less than NAV when you sell those Shares.

The creation and redemption processes set forth below are summaries, and the summaries only apply to shareholders who purchase or redeem Creation Units (they do not relate to shareholders who purchase or sell Shares in the Secondary Market). Authorized Participants should refer to their Participant Agreements for the precise instructions that must be followed in order to create or redeem Creation Units.

Purchasing Creation Units Directly From the Funds

In order to purchase Creation Units of a Fund, an investor must generally deposit a designated portfolio of securities constituting a substantial replication, or a representation, of the securities included in the relevant Fund’s Portfolio (the “Deposit Securities”) and generally make a small cash payment referred to as the “Cash Component.” The list of the names and the numbers of shares of the Deposit Securities is made available by the Fund’s Custodian through the facilities of the NSCC immediately prior to the opening of business each day of the NYSE Arca. The Cash Component represents the difference between the NAV of a Creation Unit and the market value of the Deposit Securities.

The Distributor processes purchase orders only on a day that the NYSE Arca is open for trading (a “Business Day”). The NYSE Arca is open for trading Monday through Friday except for the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. You can purchase Shares directly from the Funds in integral Creation Units only if you meet the following criteria and comply with purchase transaction procedures specified by the Trust.

The Distributor will process orders to purchase Creation Units received by U.S. mail, telephone, facsimile and other electronic means of communication by 4:00 p.m. New York time, as long as they are in proper form. Mail is received periodically throughout the day. An order sent by U.S. mail will be opened and time stamped when it is received. If an order to purchase Creation Units is received in proper form by 4:00 p.m. New York time, then it will be processed that day. Purchase orders received in proper form after 4:00 p.m. New York time will be processed on the following Business Day and will be priced at the NAV determined on that day. Custom orders,

as further described in the SAI, must be received by the Distributor no later than 3:00 p.m. New York time. A custom order may be placed by an Authorized Participant in the event that the Trust permits or requires the substitution of an amount of cash to be added to the Cash Component to replace any Deposit Security which may not be available in sufficient quantity for delivery or which may not be eligible for trading by such Authorized Participant or the investor for which it is acting or any other relevant reason. See the section of the SAI entitled “Creation and Redemption of Creation Unit” for additional information about custom orders. All other procedures set forth in the Participant Agreement must be followed in order for you to receive the NAV determined on that day. The Funds define “proper form” generally as an order (purchase or redemption) received by the Distributor that complies with the Participant Agreement, is timely submitted and is sufficiently complete and clear that the Distributor does not need to exercise any discretion to complete the order.

The Trust or the Distributor may reject any purchase order that is not submitted in proper form. They may also reject a purchase order if (1) the purchaser or group of purchasers, upon obtaining the Shares ordered, would own 80% or more of the currently outstanding Shares; (2) the securities delivered do not contain the securities in the Deposit Securities and the Advisor has not consented to the changes; (3) the acceptance of the securities tendered would have certain adverse tax consequences, such as causing the particular Fund to no longer meet “registered investment company” status under the Code for federal tax purposes; (4) the acceptance of the securities tendered would, in the opinion of counsel to the Trust, be unlawful, as in the case of a purchaser who was banned from trading in securities; (5) the acceptance of the securities tendered would otherwise, in the discretion of the Advisor, have an adverse effect on the Trust or the particular Fund or on the rights of shareholders, including but not limited to, the beneficial owner of the Shares; (6) the Cash Component to accompany the Deposit Securities exceeds a purchase authorization limit afforded to the Authorized Participant by the Fund’s Custodian and the Authorized Participant has not deposited an amount in excess of such purchase authorization with the Custodian before 4:00 p.m. New York time on the transmittal date; and (7) there exist circumstances outside the control of the Trust that make it impossible to process purchases of Shares for all practical purposes.

Redeeming Creation Units Directly from the Funds

The redemption process is essentially the reverse of the purchase process described above. To redeem Shares directly from the Funds, you must be an Authorized Participant or you must redeem through a broker, dealer, bank or other entity that is an Authorized Participant, and you must tender Shares in Creation Units. Each Fund’s custodian makes available immediately prior to the opening of business each day on the NYSE Arca, through the facilities of the NSCC, the list of the names and the numbers of shares of the Fund’s portfolio securities that will be applicable that day to redemption requests in proper form (the “Fund Securities”). Fund Securities received on redemption may not be identical to Deposit Securities which are applicable to purchases of Creation Units. Unless cash redemptions are available or specified for a Fund, the redemption proceeds consist of the Fund Securities, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after receipt by the transfer agent of a redemption request in proper form, and the value of the Fund Securities (the “Cash Redemption Amount”), less the applicable redemption fee and, if applicable, any transfer taxes. Should the Fund Securities have a value greater than the NAV of Shares being

redeemed, a compensating cash payment to the Trust equal to the differential, plus the applicable redemption fee and, if applicable, any transfer taxes will be required to be arranged for by or on behalf of the redeeming shareholder. For more details, see “Creation and Redemption of Creation Units” in the SAI.

An order to redeem Creation Units of a Fund may only be effected by or through an Authorized Participant. An order to redeem must be placed for one or more whole Creation Units and must be received by the transfer agent in proper form no later than 4:00 p.m. New York time in order to receive that day’s closing NAV per Share. A redemption order must be transmitted to the Distributor by U.S. mail, telephone, facsimile or other electronic means permitted under the Participant Agreement. In order to receive the NAV on that day, a redemption order must be received by the Distributor in proper form prior to 4:00 p.m. New York time. Mail is received periodically throughout the day. A redemption order sent by U.S. mail will be opened and time stamped when it is received.

The Trust or the Distributor may reject any redemption order that is not submitted in proper form. The Trust may not suspend the right of redemption or postpone the date of payment or satisfaction upon redemption for more than seven days, other than (1) any period during which the NYSE Arca is closed other than customary weekend and holiday closings; (2) any period during which trading on the NYSE Arca is suspended or restricted; (3) any period during which an emergency exists as a result of which disposal by a Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for a Fund to determine its NAV; and (4) for such other periods as the SEC may by order permit for the protection of holders of Shares.

Transaction Fees

A Creation Transaction Fee or Redemption Transaction Fee of $500 is applicable to each creation or redemption transaction, as applicable, regardless of the number of Creation Units transacted. From time to time, the Funds may waive this fixed transaction fee. When buying or selling Shares in the Secondary Market, investors may be charged a commission, market premium or discount, or other transaction charge.

If a Creation Unit is purchased or redeemed outside the usual process through the NSCC or for cash, a variable fee of up to four times the Creation Transaction Fee or Redemption Transaction Fee will be charged. Each Fund reserves the right to effect redemptions in cash. A shareholder may request a cash redemption in lieu of securities; however, each Fund may, in its discretion, reject any such request. See “Creation and Redemption of Creation Units” in the SAI.

BUYING AND SELLING SHARES IN THE SECONDARY MARKET

Most investors will buy and sell Shares of each Fund in Secondary Market transactions through brokers. Shares of each Fund will be listed for trading on the Secondary Market on the NYSE Arca. Shares can be bought and sold throughout the trading day like other publicly-traded shares. There is no minimum investment. Although Shares are generally purchased and sold in “round lots” of 100 Shares, brokerage firms typically permit investors to purchase or sell Shares in smaller “odd lots” at no per-Share price differential. When buying or selling Shares through a broker, you will incur customary brokerage commissions and charges, and you may pay some or

all of the spread between the bid and the offered price in the Secondary Market on each leg of a round trip (purchase and sale) transaction.

Share prices are reported in dollars and cents per Share. For information about buying and selling Shares in the Secondary Market, please contact your broker or dealer.

Book Entry

Shares of each Fund are held in book-entry form and no stock certificates are issued. DTC, through its nominee Cede & Co., is the record owner of all outstanding Shares.

Investors owning Shares are beneficial owners as shown on the records of DTC or its participants. DTC serves as the securities depository for all Shares. Participants in DTC include securities brokers and dealers, banks, trust companies, clearing corporations and other institutions that directly or indirectly maintain a custodial relationship with DTC. As a beneficial owner of Shares, you are not entitled to receive physical delivery of stock certificates or to have Shares registered in your name, and you are not considered a registered owner of Shares. Therefore, to exercise any right as an owner of Shares, you must rely upon the procedures of DTC and its participants.

These procedures are the same as those that apply to any securities that you hold in book entry or “street name” form for any publicly-traded company. Specifically, in the case of a shareholder meeting of a Fund, DTC assigns applicable Cede & Co. voting rights to its participants that have Shares credited to their accounts on the record date, issues an omnibus proxy and forwards the omnibus proxy to the Fund. The omnibus proxy transfers the voting authority from Cede & Co. to the DTC participant. This gives the DTC participant through whom you own Shares (namely, your broker, dealer, bank, trust company or other nominee) authority to vote the shares, and, in turn, the DTC participant is obligated to follow the voting instructions you provide.

MANAGEMENT

The Board of Trustees of the Trust is responsible for the general supervision of the Funds. The Board of Trustees appoints officers who are responsible for the day-to-day operations of the Funds.

Investment Advisor

The Advisor has been registered as an investment advisor with the SEC since August 2007 and is a wholly-owned indirect subsidiary of Financial Development Holdco LLC, d/b/a “IndexIQ.” The Advisor’s principal office is at 800 Westchester Avenue, Suite N-611, Rye Brook, New York 10573.

The Advisor has overall responsibility for the general management and administration of the Trust. The Advisor provides an investment program for the Funds. The Advisor has arranged for sub-advisory, custody, fund administration, transfer agency and all other non-distribution related services necessary for the Funds to operate.

As compensation for its services and its assumption of certain expenses, each Fund pays the Advisor a management fee equal to 0.75% of a Fund’s average daily net assets that is calculated daily and paid monthly. The Advisor may voluntarily waive any portion of its advisory fee from time to time, and may discontinue or modify any such voluntary limitations in the future at its discretion.

The Advisor serves as advisor to each Fund pursuant to an Investment Advisory Agreement (the “Advisory Agreement”). The Advisory Agreement was approved by the Independent Trustees of the Trust at its annual meeting. The basis for the Trustees’ approval of the Advisory Agreement will be available in the trust’s Annual Report for the period ended April 30, 2009.

Under the Advisory Agreement, the Advisor agrees to pay all expenses of the Trust, except brokerage other transaction expenses; extraordinary legal fees or expenses, such as those for litigation or arbitration; compensation and expenses of the Independent Trustees, counsel to the Independent Trustees, and the Trust's chief compliance officer; extraordinary expenses; distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act; and the advisory fee payable to the Advisor hereunder.

The Advisor and its affiliates deal, trade and invest for their own accounts in the types of securities in which the Funds also may invest. The Advisor does not use inside information in making investment decisions on behalf of the Funds.

The Sub-Advisor

Mellon Capital Management Corporation, which is unaffiliated with the Advisor, acts as the investment sub-advisor of the IQ Hedge Multi-Strategy Composite ETF pursuant to a sub-advisory agreement with the Advisor (the ‘‘Sub-Advisory Agreement’’). The Trust anticipates that the Sub-Advisor will serve as the investment sub-advisor to the IQ Hedge Macro ETF, IQ Hedge Long/Short ETF, IQ Hedge Event-Driven ETF and IQ Hedge Market Neutral ETF pursuant to amendment to the Sub-Advisory Agreement upon the commencement of these Funds’ operations. The Sub-Advisor is an indirect wholly-owned subsidiary of The Bank of New York Mellon Corporation, a Delaware corporation, with its principal offices located at 50 Fremont Street, Suite 3900, San Francisco, California 94105. As of December 31, 2008, the Sub-Advisor had approximately $140 billion in assets under management. Pursuant to the Sub-Advisory Agreement, the Sub-Advisor will manage the investment and reinvestment of the Funds’ assets on an ongoing basis under the supervision of the Advisor.

Pursuant to the Sub-Advisory Agreement, the Advisor will pay the Sub-Advisor on a monthly basis a portion of the net advisory fees it receives from the Funds the Sub-Advisor is advising, at the annual rate of 0.12% of each such Fund’s average daily net assets up to $100 million and 0.07% of each such Fund’s average daily net assets over $100 million.

Portfolio Management

The portfolios are managed by the Sub-Advisor’s Equity Index Strategies Portfolio management team. The individual members of the team responsible for the day-to-day management of the Funds’ portfolios are:

Ms. Denise Krisko is a Managing Director, Co-Head of the Equity Index Management and Head of East Coast Equity Index Strategies for the Sub-Advisor. Ms. Krisko has also been a Managing Director of The Bank of New York and Head of Equity Index Strategies for BNY Investment Advisors since August of 2005. Prior to joining The Bank of New York, from 2000 to 2004, Ms. Krisko held various senior investment positions with Deutsche Asset Management and Northern Trust, including quantitative strategies director, senior portfolio manager and trader. From 1991 to 2000 she was a senior quantitative equity portfolio manager and trader for The Vanguard Group. Ms. Krisko attained the Chartered Financial Analyst (“CFA”) designation. She graduated with a BS from Pennsylvania State University, and obtained an MBA from Villanova University.

Steven Wetter is a vice president, senior portfolio manager of Equity Index Strategies and has an M.B.A. from New York University, Stern School of Business with 22 years of investment experience and has been at Mellon Capital for 2 years. Prior to joining the team, Mr. Wetter was a senior portfolio manager and trader in the International Quantitative division of Bankers Trust and continued in that role as the division was sold to Deutsche Bank in 1999 and Northern Trust in 2003. Previously Mr. Wetter held positions in the financial industry as part of the International Equity team at Scudder Stevens and Clark.

For more information about the portfolio managers’ compensation, other accounts managed by the portfolio managers and the portfolio managers’ ownership of securities in the Funds, see the SAI.

OTHER SERVICE PROVIDERS

Index Provider

Financial Development HoldCo LLC (“IndexIQ”) is the index provider for each Fund. IndexIQ was formed as a Delaware limited liability company on June 15, 2007 and is in the business of developing and maintaining financial indexes, including the Underlying Indexes. Presently, IndexIQ has developed and is maintaining a number of indexes in addition to the Underlying Indexes, of which one is currently being used by a registered investment company. IndexIQ has entered into an index licensing agreement (the “Licensing Agreement”) with the Advisor to allow the Advisor’s use of the Underlying Indexes for the operation of the Funds. The Advisor pays licensing fees to IndexIQ from the Advisor’s management fees or other resources. The Advisor has, in turn, entered into a sub-licensing agreement (the “Sub-Licensing Agreement”) with the Trust to allow the Funds to utilize the Underlying Indexes. The Funds pay no fees to IndexIQ or the Advisor under the Sub-Licensing Agreement.

Fund Administrator, Custodian, Accounting and Transfer Agent

The Bank of New York Mellon (“BNY Mellon”), located at One Wall Street, New York, New York 10286, serves as the Funds’ Administrator, Accountant, Custodian and Transfer Agent.

Under the Fund Administration and Accounting Agreement (the “Administration Agreement”), BNY Mellon serves as Administrator for the Funds. Under the Administration Agreement, BNY Mellon provides necessary administrative, legal, tax, accounting services, and financial reporting

for the maintenance and operations of the Trust. In addition, BNY Mellon makes available the office space, equipment, personnel and facilities required to provide such services.

BNY Mellon supervises the overall administration of the Trust, including, among other responsibilities, assisting in the preparation and filing of documents required for compliance by the Funds with applicable laws and regulations and arranging for the maintenance of books and records of the Funds. BNY Mellon provides persons satisfactory to the Board to serve as officers of the Trust.

BNY Mellon is the principal operating subsidiary of The Bank of New York Mellon Corporation and is an affiliate of the Sub-Advisor.

Distributor

ALPS Distributors, Inc. serves as the Distributor of Creation Units for the Funds on an agency basis. The Distributor does not maintain a Secondary Market in Shares.

Independent Registered Public Accounting Firm

Ernst & Young LLP, 5 Times Square, New York, New York 10036, serves as the independent registered public accounting firm for the Trust.

Legal Counsel

Katten Muchin Rosenman LLP, 575 Madison Avenue, New York, New York 10022-2585, serves as counsel to the Trust.

FREQUENT TRADING

The Trust’s Board of Trustees has not adopted policies and procedures with respect to frequent purchases and redemptions of Fund Shares by Fund shareholders (“market timing”). In determining not to adopt market timing policies and procedures, the Board noted that the Funds are expected to be attractive to active institutional and retail investors interested in buying and selling Fund Shares on a short-term basis. In addition, the Board considered that, unlike traditional mutual funds, a Fund’s Shares can only be purchased and redeemed directly from the Fund in Creation Units by Authorized Participants, and that the vast majority of trading in a Fund’s Shares occurs on the Secondary Market. Because Secondary Market trades do not involve a Fund directly, it is unlikely those trades would cause many of the harmful effects of market timing, including dilution, disruption of portfolio management, increases in a Fund’s trading costs and the realization of capital gains. With respect to trades directly with the Funds, to the extent effected in-kind (namely, for securities), those trades do not cause any of the harmful effects that may result from frequent cash trades. To the extent trades are effected in whole or in part in cash, the Board noted that those trades could result in dilution to a Fund and increased transaction costs (a Fund may impose higher transaction fees to offset these increased costs), which could negatively impact the Fund’s ability to achieve its investment objective. However, the Board noted that direct trading on a short-term basis by Authorized Participants is critical to ensuring that a Fund’s Shares trade at or close to NAV. Given this structure, the Board determined that it is not necessary to adopt market timing policies and procedures. Each Fund

reserves the right to reject any purchase order at any time and reserves the right to impose restrictions on disruptive or excessive trading in Creation Units.

The Board of Trustees has instructed the officers of the Trust to review reports of purchases and redemptions of Creation Units on a regular basis to determine if there is any unusual trading in the Funds. The officers of the Trust will report to the Board any such unusual trading in Creation Units that is disruptive to the Funds. In such event, the Board may reconsider its decision not to adopt market timing policies and procedures.

SERVICE AND DISTRIBUTION PLAN

The Board of Trustees of the Trust has adopted a Service and Distribution Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Rule 12b-1 plan, each Fund is authorized to pay an amount up to 0.10% of its average daily net assets each year for certain distribution-related activities. The Trust’s Board of Trustees has resolved not to authorize the payment of Rule 12b-1 fees prior to April 30, 2009. However, in the event Rule 12b-1 fees are charged in the future, they will be paid out of the respective Fund’s assets, and over time they will increase the cost of your investment and they may cost you more than certain other types of sales charges.

The Advisor and its affiliates may, out of their own resources, pay amounts to third parties for distribution or marketing services on behalf of the Funds. The making of these payments could create a conflict of interest for a financial intermediary receiving such payments.

DETERMINATION OF NET ASSET VALUE (NAV)

The NAV of the Shares for a Fund is equal to the Fund’s total assets minus the Fund’s total liabilities divided by the total number of shares outstanding. Interest and investment income on the Trust’s assets accrue daily and are included in the Fund’s total assets. Expenses and fees (including investment advisory, management, administration and distribution fees, if any) accrue daily and are included in the Fund’s total liabilities. The NAV that is published is rounded to the nearest cent; however, for purposes of determining the price of Creation Units, the NAV is calculated to five decimal places.

In calculating NAV, each Fund’s investments are valued using market quotations when available. When market quotations are not readily available or are deemed unreliable, investments are valued using fair value pricing as determined in good faith by the Advisor under procedures established by and under the general supervision and responsibility of the Trust’s Board of Trustees. Investments that may be valued using fair value pricing include, but are not limited to: (1) securities that are not actively traded, including “restricted” securities and securities received in private placements for which there is no public market; (2) securities of an issuer that becomes bankrupt or enters into a restructuring; and (3) securities whose trading has been halted or suspended.

The frequency with which each Fund’s investments are valued using fair value pricing is primarily a function of the types of securities and other assets in which the respective Fund invests pursuant to its investment objective, strategies and limitations. If the Funds invest in other open-end management investment companies registered under the 1940 Act, they may rely

on the net asset values of those companies to value the shares they hold of them. Those companies may also use fair value pricing under some circumstances.

Valuing the Funds’ investments using fair value pricing results in using prices for those investments that may differ from current market valuations. Accordingly, fair value pricing could result in a difference between the prices used to calculate NAV and the prices used to determine the IIV, which could result in the market prices for Shares deviating from NAV.

The NAV is calculated by the Administrator and Custodian and determined each Business Day as of the close of regular trading on the NYSE Arca (ordinarily 4:00 p.m. New York time).

INDICATIVE INTRA-DAY VALUE

The approximate value of each Fund’s investments on a per-Share basis, the Indicative Intra-Day Value, or IIV, is disseminated by the NYSE Arca every 15 seconds during hours of trading on the NYSE Arca. The IIV should not be viewed as a “real-time” update of NAV because the IIV may not be calculated in the same manner as NAV, which is computed once per day.

An independent third party calculator calculates the IIV for each Fund during hours of trading on the NYSE Arca by dividing the “Estimated Fund Value” as of the time of the calculation by the total number of outstanding Shares of that Fund. “Estimated Fund Value” is the sum of the estimated amount of cash held in a Fund’s portfolio, the estimated amount of accrued interest owed to the Fund and the estimated value of the securities held in the Fund’s portfolio, minus the estimated amount of the Fund’s liabilities. The IIV will be calculated based on the same portfolio holdings disclosed on the Trust’s website.

The Funds provide the independent third party calculator with information to calculate the IIV, but the Funds are not involved in the actual calculation of the IIV and are not responsible for the calculation or dissemination of the IIV. The Funds make no warranty as to the accuracy of the IIV.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Net Investment Income and Capital Gains

As a Fund shareholder, you are entitled to your share of the Fund’s distributions of net investment income and net realized capital gains on its investments. The Funds pay out substantially all of their net earnings to their shareholders as “distributions.”

The Funds typically earn income dividends from stocks and interest from debt securities. These amounts, net of expenses, are typically passed along to Fund shareholders as dividends from net investment income. The Funds realize capital gains or losses whenever they sell securities. Net capital gains are distributed to shareholders as “capital gain distributions.”

Net investment income and net capital gains are typically distributed to shareholders at least annually. Dividends may be declared and paid more frequently to improve index tracking or to comply with the distribution requirements of the Code. In addition, the Funds may determine to distribute at least annually amounts representing the full dividend yield net of expenses on the

underlying investment securities, as if the Funds owned the underlying investment securities for the entire dividend period in which case some portion of each distribution may result in a return of capital. You will be notified regarding the portion of the distribution which represents a return of capital.

Distributions in cash may be reinvested automatically in additional Shares of your Fund only if the broker through which you purchased Shares makes such option available.

Federal Income Taxes

The following is a summary of the material U.S. federal income tax considerations applicable to an investment in Shares of a Fund. The summary is based on the laws in effect on the date of this Prospectus and existing judicial and administrative interpretations thereof, all of which are subject to change, possibly with retroactive effect. In addition, this summary assumes that a Fund shareholder holds Shares as capital assets within the meaning of the Code and does not hold Shares in connection with a trade or business. This summary does not address all potential U.S. federal income tax considerations possibly applicable to an investment in Shares of a Fund, to Fund shareholders holding Shares through a partnership (or other pass-through entity) or to Fund shareholders subject to special tax rules. Prospective Fund shareholders are urged to consult their own tax advisors with respect to the specific federal, state, local and foreign tax consequences of investing in Fund shares.

Tax Treatment of a Fund

Each Fund intends to qualify and elect to be treated as a separate “regulated investment company” under the Code. To qualify and maintain its tax status as a regulated investment company, each Fund must meet annually certain income and asset diversification requirements and must distribute annually at least 90% of its “investment company taxable income” (which includes dividends, interest and net short – term capital gains).

As a regulated investment company, a Fund generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that it distributes to its shareholders. If a Fund fails to qualify as a regulated investment company for any year, the Fund will be subject to regular corporate-level income tax in that year on all of its taxable income, regardless of whether the Fund makes any distributions to its shareholders. In addition, distributions will be taxable to a Fund’s shareholders generally as ordinary dividends to the extent of the Fund’s current and accumulated earnings and profits.

A Fund may be required to recognize taxable income in advance of receiving the related cash payment. For example, if a Fund invests in original issue discount obligations (such as zero coupon debt instruments or debt instruments with payment-in-kind interest), the Fund will be required to include in income each year a portion of the original issue discount that accrues over the term of the obligation, even if the related cash payment is not received by the Fund until a later year. As a result, the Fund may be required to make an annual income distribution greater than the total cash actually received during the year. Such distribution may be made from the cash assets of the Fund or by selling portfolio securities. The Fund may realize gains or losses

from such sales, in which event its shareholders may receive a larger capital gain distribution than they would in the absence of such transactions.

A Fund will be subject to a 4% excise tax on certain undistributed income if the Fund does not distribute to its shareholders in each calendar year at least 98% of its ordinary income for the calendar year plus 98% of its capital gain net income for the twelve months ended October 31 of such year. Each Fund intends to make distributions necessary to avoid the 4% excise tax.

Tax Treatment of Fund Shareholders

Fund Distributions. In general, Fund distributions are subject to federal income tax when paid, regardless of whether they consist of cash or property or are re-invested in Shares. However, any Fund distribution declared in October, November or December of any calendar year and payable to shareholders of record on a specified date during such month will be deemed to have been received by each Fund shareholder on December 31 of such calendar year, provided such dividend is actually paid during January of the following calendar year.

Distributions of a Fund’s net investment income (except, as discussed below, qualifying dividend income) and net short-term capital gains are taxable as ordinary income to the extent of the Fund’s current or accumulated earnings and profits. Distributions of a Fund’s net long-term capital gains in excess of net short-term capital losses are taxable as long-term capital gain to the extent of the Fund’s current or accumulated earnings and profits, regardless of a Fund shareholder’s holding period in the Fund’s Shares. Distributions of qualifying dividend income are taxable as long-term capital gain to the extent of the Fund’s current or accumulated earnings and profits, provided that the Fund shareholder meets certain holding period and other requirements with respect to the distributing Fund’s Shares and the distributing Fund meets certain holding period and other requirements with respect to its dividend-paying stocks.

Each Fund intends to distribute its long-term capital gains at least annually. However, by providing written notice to its shareholders no later than 60 days after its year-end, a Fund may elect to retain some or all of its long-term capital gains and designate the retained amount as a “deemed distribution.” In that event, the Fund pays income tax on the retained long-tem capital gain, and each Fund shareholder recognizes a proportionate share of the Fund’s undistributed long-term capital gain. In addition, each Fund shareholder can claim a refundable tax credit for the shareholder’s proportionate share of the Fund’s income taxes paid on the undistributed long-term capital gain and increase the tax basis of the Shares by an amount equal to 65% of the Fund shareholder’s proportionate share of the Fund’s undistributed long-term capital gains.

Long-term capital gains of non-corporate Fund shareholders (i.e., individuals, trusts and estates) are taxed at a maximum rate of 15% for taxable years beginning on or before December 31, 2010. In addition, for those taxable years, Fund distributions of qualifying dividend income to non-corporate Fund shareholders qualify for taxation at long-term capital gain rates. Under current law, the taxation of qualifying dividend income at long-term capital gain rates will no longer apply for taxable years beginning after December 31, 2010.

Investors considering buying Shares just prior to a distribution should be aware that, although the price of the Shares purchased at such time may reflect the forthcoming distribution, such distribution nevertheless may be taxable (as opposed to a non-taxable return of capital).

Sales of Shares. Any capital gain or loss realized upon a sale of Shares is treated generally as a long-term gain or loss if the Shares have been held for more than one year. Any capital gain or loss realized upon a sale of Shares held for one year or less is generally treated as a short-term gain or loss, except that any capital loss on the sale of Shares held for six months or less is treated as long-term capital loss to the extent that capital gain dividends were paid with respect to the Shares.

Creation Unit Issues and Redemptions. On an issue of Shares of a Fund as part of a Creation Unit, an Authorized Participant recognizes capital gain or loss equal to the difference between (i) the fair market value (at issue) of the issued Shares (plus any cash received by the Authorized Participant as part of the issue) and (ii) the Authorized Participant’s aggregate basis in the exchanged securities (plus any cash paid by the authorized participant as part of the issue). On a redemption of Shares as part of a Creation Unit, an authorized participant recognizes capital gain or loss equal to the difference between (i) the fair market value (at redemption) of the securities received (plus any cash received by the authorized participant as part of the redemption) and (ii) the authorized participant’s basis in the redeemed Shares (plus any cash paid by the authorized participant as part of the redemption). However, the Internal Revenue Service (the “IRS”) may assert, under the “wash sale” rules or on the basis that there has been no significant change in the authorized participant’s economic position, that any loss on creation or redemption of Creation Units cannot be deducted currently.

In general, any capital gain or loss recognized upon the issue or redemption of Shares (as components of a Creation Unit) is treated either as long-term capital gain or loss, if the deposited securities (in the case of an issue) or the Shares (in the case of a redemption) have been held for more than one year, or otherwise as short-term capital gain or loss. However, any capital loss on a redemption of Shares held for six months or less is treated as long-term capital loss to the extent that capital gain dividends were paid with respect to such Shares.

Back-Up Withholding. A Fund may be required to report certain information on a Fund shareholder to the IRS and withhold federal income tax (“backup withholding”) at a 28% rate from all taxable distributions and redemption proceeds payable to the Fund shareholder if the Fund shareholder fails to provide the Fund with a correct taxpayer identification number (or, in the case of a U.S. individual, a social security number) or a completed exemption certificate (e.g., an IRS Form W-8BEN in the case of a foreign Fund shareholder) or if the IRS notifies the Fund that the Fund shareholder is otherwise subject to backup withholding. Backup withholding is not an additional tax and any amount withheld may be credited against a Fund shareholder’s federal income tax liability.

Special Issues for Foreign Shareholders. If a Fund shareholder is not a U.S. citizen or resident or if a Fund shareholder is a foreign entity, the Fund’s ordinary income dividends (including distributions of net short-term capital gains and other amounts that would not be subject to U.S. withholding tax if paid directly to foreign Fund shareholders) will be subject, in general, to withholding tax at a rate of 30% (or at a lower rate established under an applicable tax treaty).

However, for Fund tax years beginning on or before December 31, 2009, interest-related dividends and short-term capital gain dividends generally will not be subject to withholding tax; provided that the foreign Fund shareholder furnishes the Fund with a completed IRS Form W-8BEN (or acceptable substitute documentation) establishing the Fund shareholder’s status as foreign and that the Fund does not have actual knowledge or reason to know that the foreign Fund shareholder would be subject to withholding tax if the foreign Fund shareholder were to receive the related amounts directly rather than as dividends from the Fund.

To claim a credit or refund for any Fund-level taxes on any undistributed long-term capital gains (as discussed above) or any taxes collected through back-up withholding, a foreign Fund shareholder must obtain a U.S. taxpayer identification number and file a federal income tax return even if the foreign Fund shareholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. income tax return.

CODE OF ETHICS

The Trust, the Advisor, the Sub-Advisor and the Distributor each have adopted a code of ethics under Rule 17j-1 of the 1940 Act which is designed to prevent affiliated persons of the Trust, the Advisor, the Sub-Advisor and the Distributor from engaging in deceptive, manipulative or fraudulent activities in connection with securities held or to be acquired by the Funds (which may also be held by persons subject to a code). There can be no assurance that the codes will be effective in preventing such activities. The codes permit personnel subject to them to invest in securities, including securities that may be held or purchased by the Funds. The codes are on file with the SEC and are available to the public.

FUND WEBSITE AND DISCLOSURE OF PORTFOLIO HOLDINGS

The Advisor maintains a website for the Funds at www.indexiq.com. The website for the Funds contains the following information, on a per-Share basis, for each Fund: (1) the prior Business Day’s NAV; (2) the reported mid-point of the bid-ask spread at the time of NAV calculation (the “Bid-Ask Price”); (3) a calculation of the premium or discount of the Bid-Ask Price against such NAV; and (4) data in chart format displaying the frequency distribution of discounts and premiums of the Bid-Ask Price against the NAV, within appropriate ranges, for each of the four previous calendar quarters (or for the life of a Fund if, shorter). In addition, on each Business Day, before the commencement of trading in Shares on the NYSE Arca, each Fund will disclose on its website (www.indexiq.com) the identities and quantities of the portfolio securities and other assets held by each Fund that will form the basis for the calculation of NAV at the end of the Business Day.

A description of each Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the SAI.

OTHER INFORMATION

The Funds are not sponsored, endorsed, sold or promoted by the NYSE Arca. The NYSE Arca makes no representation or warranty, express or implied, to the owners of Shares or any member of the public regarding the advisability of investing in securities generally or in the Funds

particularly or the ability of the Funds to achieve their objectives. The NYSE Arca has no obligation or liability in connection with the administration, marketing or trading of the Funds.

For purposes of the 1940 Act, the Funds are registered investment companies, and the acquisition of Shares by other registered investment companies and companies relying on exemption from registration as investment companies under Section 3(c)(1) or 3(c)(7) of the 1940 Act is subject to the restrictions of Section 12(d)(1) of the 1940 Act, except as permitted by an exemptive order that permits registered investment companies to invest in the Funds beyond those limitations.

FINANCIAL HIGHLIGHTS

The Funds have not yet commenced operations as of the date of this Prospectus and therefore do not have a financial history.

PRIVACY POLICY

The following notice does not constitute part of the Prospectus, nor is it incorporated into the Prospectus.

IndexIQ ETF Trust is committed to respecting the privacy of personal information you entrust to us in the course of doing business with us.

The Trust may collect nonpublic personal information from various sources. The Trust uses such information provided by you or your representative to process transactions, to respond to inquiries from you, to deliver reports, products, and services, and to fulfill legal and regulatory requirements.

We do not disclose any nonpublic personal information about our customers to anyone unless permitted by law or approved by the customer. We may share this information within the Trust’s family of companies in the course of providing services and products to best meet your investing needs. We may share information with certain third parties who are not affiliated with the Trust to perform marketing services, to process or service a transaction at your request or as permitted by law. For example, sharing information with companies that maintain or service customer accounts for the Trust is essential. We may also share information with companies that perform administrative or marketing services for the Trust, including research firms. When we enter into such a relationship, we restrict the companies’ use of our customers’ information and prohibit them from sharing it or using it for any purposes other than those for which they were hired.

We maintain physical, electronic, and procedural safeguards to protect your personal information. Within the Trust, we restrict access to personal information to those employees who require access to that information in order to provide products or services to our customers such as handling inquiries. Our employment policies restrict the use of customer information and require that it be held in strict confidence.

We will adhere to the policies and practices described in this notice for both current and former customers of the Trust.

IndexIQ ETF Trust
Mailing Address
800 Westchester Avenue, Suite N-611
Rye Brook, New York 10573
1-888-934-0777
www.indexiq.com

For More Information

If you would like more information about the Trust, the Funds and the Shares, the following documents are available free upon request:

Annual/Semi-annual Report

Additional information about the Fund’s investments is available in the Fund’s annual and semi-annual reports to shareholders. In the Fund’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during the last fiscal year. As of the date of this prospectus, the Funds contained in this prospectus had not commenced operations. The Annual Report for the period ended April 30, 2009 will become available to shareholders in June 2009.

Statement of Additional Information

Additional information about the Funds and their policies is also available in the Funds’ SAI. The SAI is incorporated by reference into this Prospectus (and is legally considered part of this Prospectus).

The Fund’s annual and semi-annual reports (when available) and the SAI are available free upon request by calling IndexIQ at 1-888-934-0777. You can also access and download the annual and semi-annual reports and the SAI at the Fund’s website: http://www.indexiq.com.

To obtain other information and for shareholder inquiries:


By telephone:	1-888-934-0777

By mail:	IndexIQ ETF Trust c/o Index IQ 800 Westchester Avenue, Suite N-611 Rye Brook, NY 10573

On the Internet:	SEC Edgar database: http://www.sec.gov; or www.indexiq.com

You may review and obtain copies of Fund documents (including the SAI) by visiting the SEC’s public reference room in Washington, D.C. You may also obtain copies of Fund documents, after paying a duplicating fee, by writing to the SEC’s Public Reference Section, Washington, D.C. 20549-0102 or by electronic request to: publicinfo@sec.gov. Information on the operation of the public reference room may be obtained by calling the SEC at (202) 942-8090.

No person is authorized to give any information or to make any representations about the Funds and their Shares not contained in this Prospectus and you should not rely on any other information. Read and keep the Prospectus for future reference.

Dealers effecting transactions in the Funds’ Shares, whether or not participating in this distribution, may be generally required to deliver a Prospectus. This is in addition to any obligation dealers have to deliver a Prospectus when acting as underwriters.

IQ^® and IndexIQ^® are registered service marks of IndexIQ.

The Fund’s investment company registration number is 811-22227

Preliminary Copy—Subject to Completion, dated February _, 2009

STATEMENT OF ADDITIONAL INFORMATION

INDEXIQ ETF TRUST

800 WESTCHESTER AVENUE
SUITE N-611
RYE BROOK, NEW YORK 10573

PHONE: (888) 934-0777

This Statement of Additional Information (this “SAI”) is not a prospectus. It should be read in conjunction with and is incorporated by reference into the prospectus dated [•][•], 2009 (the “Prospectus”) for the IndexIQ ETF Trust (the “Trust”), relating to the IQ Hedge Multi-Strategy Composite ETF, IQ Hedge Macro ETF, IQ Hedge Long/Short ETF, IQ Hedge Event-Driven ETF, and IQ Hedge Market Neutral ETF (each, a “Fund” and, collectively, the “Funds”), as it may be revised from time to time. A copy of the Prospectus for the Trust, relating to the Funds, may be obtained without charge by writing to the Trust, c/o ALPS Distributors, Inc., 1290 Broadway, Suite 1100, Denver, Colorado 80203, by calling (888) 934-0777, or by visiting the Trust’s website at www.indexiq.com.

Capitalized terms used but not defined herein have the same meaning as in the Prospectus, unless otherwise noted.

TABLE OF CONTENTS

GENERAL DESCRIPTION OF THE TRUST AND THE FUNDS	B-1

EXCHANGE LISTING AND TRADING	B-1

INVESTMENT OBJECTIVES AND POLICIES	B-2

INVESTMENT STRATEGIES AND RISKS	B-3

MANAGEMENT	B-8

PROXY VOTING POLICIES	B-12

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES	B-12

MANAGEMENT SERVICES	B-13

OTHER SERVICE PROVIDERS	B-16

CERTAIN CONFLICTS OF INTEREST	B-18

PORTFOLIO TRANSACTIONS AND BROKERAGE	B-19

DISCLOSURE OF PORTFOLIO HOLDINGS	B-20

INDICATIVE INTRA-DAY VALUE	B-21

ADDITIONAL INFORMATION CONCERNING SHARES	B-21

PURCHASE AND REDEMPTION OF CREATION UNITS	B-24

CONTINUOUS OFFERING	B-30

DETERMINATION OF NET ASSET VALUE	B-31

DIVIDENDS AND DISTRIBUTIONS	B-32

TAXATION	B-32

OTHER INFORMATION	B-38

FINANCIAL STATEMENTS	F-1

APPENDIX A – SUMMARY OF PROXY VOTING POLICY AND PROCEDURES	1-A

No person has been authorized to give any information or to make any representations other than those contained in this SAI and the Prospectus and, if given or made, such information or representations may not be relied upon as having been authorized by the Trust.

The SAI does not constitute an offer to sell securities.

The information contained herein regarding the IQ Hedge Multi-Strategy Composite Index, IQ Hedge Global Macro Index, IQ Hedge Long/Short Index, IQ Hedge Event-Driven Index, and IQ Hedge Market Neutral Index (each, an “Index”) and Financial Development Holdco LLC, doing business as IndexIQ (“IndexIQ” or the “Index Provider”) was provided by the Index Provider, while the information contained herein regarding the securities markets and The Depository Trust Company (“DTC”) was obtained from publicly available sources.

SHARES OF THE TRUST ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY INDEXIQ. INDEXIQ MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE SHARES OF THE TRUST OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF TRADING IN THE PRODUCT(S). INDEXIQ HAS NO OBLIGATION TO TAKE THE NEEDS OF INDEXIQ ADVISORS LLC (IN ITS CAPACITY AS LICENSEE OF THE INDEXES, THE “LICENSEE”) OR THE OWNERS OF THE SHARES OF THE TRUST INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE IQ HEDGE MULTI-STRATEGY COMPOSITE INDEX, IQ HEDGE GLOBAL MACRO INDEX, IQ HEDGE LONG/SHORT INDEX, IQ HEDGE EVENT-DRIVEN INDEX, AND IQ HEDGE MARKET NEUTRAL INDEX. INDEXIQ IS NOT RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THE SHARES OF THE TRUST TO BE LISTED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THE SHARES OF THE TRUST ARE TO BE CONVERTED INTO CASH. INDEXIQ HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE SHARES OF THE TRUST.

INDEXIQ DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE IQ HEDGE MULTI-STRATEGY COMPOSITE INDEX, IQ HEDGE GLOBAL MACRO INDEX, IQ HEDGE LONG/SHORT INDEX, IQ HEDGE EVENT-DRIVEN INDEX, AND IQ HEDGE MARKET NEUTRAL INDEX OR ANY DATA INCLUDED THEREIN AND INDEXIQ SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. INDEXIQ MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE SHARES OF THE TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE IQ HEDGE MULTI-STRATEGY COMPOSITE INDEX, IQ HEDGE GLOBAL MACRO INDEX, IQ HEDGE LONG/SHORT INDEX, IQ HEDGE EVENT-DRIVEN INDEX, AND IQ HEDGE MARKET NEUTRAL INDEX OR ANY DATA INCLUDED THEREIN. INDEXIQ MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE IQ HEDGE MULTI-STRATEGY COMPOSITE INDEX, IQ HEDGE GLOBAL MACRO INDEX, IQ HEDGE LONG/SHORT INDEX, IQ HEDGE EVENT-DRIVEN INDEX, AND IQ HEDGE MARKET NEUTRAL INDEX OR ANY DATA INCLUDED THEREIN, WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL INDEXIQ HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN INDEXIQ AND LICENSEE.

GENERAL DESCRIPTION OF THE TRUST AND THE FUNDS

The Trust was organized as a Delaware statutory trust on July 1, 2008 and is authorized to have multiple segregated series or portfolios. The Trust is an open-end diversified management investment company registered under the Investment Company Act of 1940 (the “1940 Act”). The Trust currently consists of 5 investment portfolios: the IQ Hedge Multi-Strategy Composite ETF, IQ Hedge Macro ETF, IQ Hedge Long/Short ETF, IQ Hedge Event-Driven ETF, and IQ Hedge Market Neutral ETF (each, a “Fund” and, collectively, the “Funds”). Other portfolios may be added to the Trust in the future. The shares of the Funds are referred to herein as “Fund Shares” or “Shares.” The offering of Shares is registered under the Securities Act of 1933, as amended (the “Securities Act”).

The Funds are managed by IndexIQ Advisors LLC (the “Advisor”). The Advisor has been registered as an investment adviser with the Securities and Exchange Commission (the “SEC”) since August 2007.

The Funds offer and issue Shares at net asset value (the “NAV”) only in aggregations of a specified number of Shares (each, a “Creation Unit” or a “Creation Unit Aggregation”), generally in exchange for a basket of equity securities included in the relevant Underlying Indexes (the “Deposit Securities”), together with the deposit of a specified cash payment (the “Cash Component”). Each Fund anticipates that its Shares will trade on the NYSE Arca, Inc. (the “Exchange”). Fund Shares will trade on the Exchange at market prices that may be below, at, or above NAV. Shares are redeemable only in Creation Unit Aggregations and, generally, in exchange for Deposit Securities and a Cash Component. Creation Units are aggregations of 50,000 Shares of a Fund. In the event of the liquidation of a Fund, the Trust may lower the number of Shares in a Creation Unit.

The Trust reserves the right to offer a “cash” option for creations and redemptions of Fund Shares. Fund Shares may be issued in advance of receipt of Deposit Securities subject to various conditions, including a requirement to maintain on deposit with the Trust cash at least equal to 115% of the market value of the missing Deposit Securities. See the “Creation and Redemption of Creation Unit Aggregations” section. In each instance of such cash creations or redemptions, transaction fees may be imposed that will be higher than the transaction fees associated with in kind creations or redemptions. In all cases, such fees will be limited in accordance with the requirements of the SEC applicable to management investment companies offering redeemable securities.

EXCHANGE LISTING AND TRADING

There can be no assurance that the requirements of the Exchange necessary for each Fund to maintain the listing of its Shares will continue to be met. The Exchange will consider the suspension of trading and delisting of the Shares of a Fund from listing if (i) following the initial 12-month period beginning at the commencement of trading of a Fund, there are fewer than 50 beneficial owners of the Shares of the Fund for 30 or more consecutive trading days; (ii) the value of the Underlying Index is no longer calculated or available; or (iii) such other event shall occur or condition exist that, in the opinion of the Exchange, makes further trading on the Exchange inadvisable. The Exchange will remove the Shares of a Fund from listing and trading upon termination of such Fund.

As in the case of other stocks traded on the Exchange, brokers’ commissions on transactions will be based on negotiated commission rates at customary levels.

The Trust reserves the right to adjust the price levels of the Shares in the future to maintain convenient trading ranges for investors. Any adjustments would be accomplished through stock splits or reverse stock splits, which would have no effect on the net assets of each Fund.

B-1

INVESTMENT OBJECTIVES AND POLICIES

Investment Objectives

Each Fund has a distinct investment objective and policies. There can be no assurance that a Fund’s objective will be achieved. The investment objective of each Fund is to provide investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of a particular index (each, an “Underlying Index”) created by Financial Development Holdco LLC, the Advisor’s parent company (“IndexIQ”).

All investment objectives and investment policies not specifically designated as fundamental may be changed without shareholder approval. Additional information about the Fund, its policies, and the investment instruments it may hold, is provided below.

The Funds’ share prices will fluctuate with market, economic and, to the extent applicable, foreign exchange conditions. The Funds should not be relied upon as a complete investment program.

IndexIQ serves as the index provider to the Trust and uses a proprietary rules-based methodology (the “Index Methodology”) to construct and maintain the Underlying Index of each Fund. The Underlying Index to each Fund and the Index Methodology for each Underlying Index, including a list of the component securities of such Underlying Index, can be found on the Trust’s website at www.indexiq.com.

Investment Restrictions

The investment restrictions set forth below have been adopted by the Board of Trustees of the Trust (the “Board”) as fundamental policies that cannot be changed with respect to a Fund without the affirmative vote of the holders of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund. The investment objective of each Fund and all other investment policies or practices of the Fund are considered by the Trust not to be fundamental and accordingly may be changed without shareholder approval. For purposes of the 1940 Act, a “majority of the outstanding voting securities” means the lesser of the vote of (i) 67% or more of the Shares of the Fund present at a meeting, if the holders of more than 50% of the outstanding Shares of the Fund are present or represented by proxy, or (ii) more than 50% of the Shares of the Fund.

For purposes of the following limitations, any limitation which involves a maximum percentage shall not be considered violated unless an excess over the percentage occurs immediately after, and is caused by, an acquisition or encumbrance of securities or assets of, or borrowings by, a Fund. With respect to the Funds’ fundamental investment restriction B, asset coverage of at least 300% (as defined in the 1940 Act), inclusive of any amounts borrowed, must be maintained at all times.

As a matter of fundamental policy, a Fund may not:

A. Invest 25% of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries (excluding the U.S. Government or any of its agencies or instrumentalities). Nonetheless, to the extent the Fund’s Underlying Index is concentrated in a particular industry or group of industries, the Fund’s investments will exceed this 25% limitation to the extent that it is necessary to gain exposure to Underlying Index Components (as defined below) to track its Underlying Index.

B-2

B. Borrow money, except (a) the Fund may borrow from banks (as defined in the 1940 Act) or through reverse repurchase agreements in amounts up to 33-1/3% of its total assets (including the amount borrowed), (b) the Fund may, to the extent permitted by applicable law, borrow up to an additional 5% of its total assets for temporary purposes, (c) the Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities, (d) the Fund may purchase securities on margin to the extent permitted by applicable law, and (e) the Fund may engage in portfolio transactions, such as mortgage dollar rolls which are accounted for as financings.

C. Make loans, except through (a) the purchase of debt obligations in accordance with the Fund’s investment objective and policies, (b) repurchase agreements with banks, brokers, dealers and other financial institutions, and (c) loans of securities as permitted by applicable law.

D. Underwrite securities issued by others, except to the extent that the sale of portfolio securities by the Fund may be deemed to be an underwriting.

E. Purchase, hold or deal in real estate, although the Fund may purchase and sell securities or other investments that are secured by real estate or interests therein or that reflect the return of an index of real estate values, securities of real estate investment trusts and mortgage-related securities and may hold and sell real estate acquired by the Fund as a result of the ownership of securities.

F. Invest in commodities or currencies, except that the Fund may invest in (a) publicly traded commodity pools or (b) financial instruments (such as structured notes, swaps, futures contracts, forward contracts, and options on such contracts) (i) on commodities or currencies, (ii) that represent indices of commodity or currency prices, or (iii) that reflect the return of such indices.

G. Issue senior securities to the extent such issuance would violate applicable law.

The Fund may, notwithstanding any other fundamental investment restriction or policy, invest some or all of its assets in a single ETF, open-end investment company or series thereof with substantially the same fundamental investment objective, restrictions and policies as the Fund.

INVESTMENT STRATEGIES AND RISKS

A discussion of the risks associated with an investment in each Fund is contained in the Funds’ Prospectus under the headings “Principal Risk Factors,” “Risks of Underlying ETFs,” and “Additional Risks.” The discussion below supplements, and should be read in conjunction with, such sections of the Funds’ Prospectus.

General

Investment in each Fund should be made with an understanding that the value of the portfolio of securities held by such Fund may fluctuate in accordance with changes in the financial condition of the issuers of the portfolio securities, the value of common stocks generally and other factors.

None of the Funds is actively managed by traditional methods and therefore the adverse financial condition of any one issuer will not result in the elimination of its securities from the portfolio securities held by the Fund unless the securities of such issuer are removed from its respective Underlying Index.

An investment in each Fund should also be made with an understanding that a Fund will not be able to replicate exactly the performance of its Underlying Index because the total return generated by its portfolio securities will be reduced by transaction costs incurred in adjusting the actual balance of such

B-3

securities and other Fund expenses, whereas such transaction costs and expenses are not included in the calculation of its Underlying Index. It is also possible that for short periods of time, a Fund may not fully replicate the performance of its Underlying Index due to the temporary unavailability of certain Underlying Index securities in the Secondary Market or due to other extraordinary circumstances. Such events are unlikely to continue for an extended period of time because a Fund is required to correct such imbalances by means of adjusting the composition of its portfolio securities. It is also possible that the composition of the Fund may not exactly replicate the composition of its Underlying Index if the Fund has to adjust its portfolio securities in order to continue to qualify as a “regulated investment company” under the Internal Revenue Code of 1986 (the “Code”).

Each Fund is a “fund of funds” as each invests its assets in the investments included in the Underlying Index, which includes underlying funds. Each Underlying Index consists of a number of components (the “Underlying Index Components”) selected in accordance with IndexIQ’s rules-based methodology of such Underlying Index. Such Underlying Index Components may include exchange-traded funds (“ETFs”) and/or other exchange-traded vehicles issuing equity securities organized in the U.S. (“ETVs”). The ETFs and ETVs that constitute each Fund’s investments are collectively referred to as “Underlying ETFs.” Underlying ETFs may include inverse ETFs (i.e., ETFs that produce investment results that are opposite of a particular benchmark index) and ultra inverse ETFs (i.e., ETFs that produce investment results that are opposite of a particular benchmark index by a factor greater than one) that constitute Underlying Index Components.

The Underlying Indexes generally are based on the premise that hedge fund returns, when aggregated within similar hedge fund investment styles, display over time significant exposures to a set of common investment strategies and asset classes. By creating indexes that have similar exposures to the same investment strategies and asset classes, IndexIQ seeks to replicate the risk-adjusted return characteristics of the collective hedge funds within a given hedge fund investment style (a “Strategy”). By attempting to replicate “risk-adjusted return characteristics,” IndexIQ is trying to generate total return and volatility results of a broad-based hedge fund strategies over an extended period of time, and not on a daily basis, that are substantially similar to a given Strategy’s returns as publicly reported by third parties unaffiliated with the Funds, the Advisor or the Sub-Advisor.

Under normal circumstances, at least 80% of a Fund’s net assets, plus the amount of any borrowings for investment purposes will be invested in its Underlying Index Components. The Underlying Index Components provide exposure to broad asset classes that include but are not limited to U.S. and international equities, U.S. and international government fixed income securities, U.S. corporate credit and high yield bonds, currencies, real estate (as represented by investment in the equity securities of real estate investment trusts (“REITs”)), and commodities.

B-4

exposures that are similar to those of the Underlying Index. The Funds will not directly employ leverage in their investment Strategies. Nevertheless, a Fund may indirectly be leveraged, but only to the extent the Fund invests in an Underlying Index Component that is an ultra inverse ETF.

Fund of Funds Risk

Each Fund pursues its investment objective by investing primarily in securities of funds included in its Underlying Index. Each Fund’s investment performance, because it is a fund of funds, depends on the investment performance of the Underlying ETFs in which it invests. An investment in a Fund is subject to the risks associated with the Underlying ETFs that comprise the Underlying Index in which the Fund invests. Each Fund will indirectly pay a proportional share of the asset-based fees of the Underlying ETFs in which it invests. There is a risk that IndexIQ’s evaluations and assumptions regarding the broad asset classes represented in each Underlying Index may be incorrect based on actual market conditions. In addition, at times the segments of the market represented by the Underlying ETFs within the Underlying Index may be out of favor and underperform other segments.

Tracking Error/Index Risk

A Fund’s return may not match the return of the Underlying Index for a number of reasons. For example, a Fund incurs a number of operating expenses not applicable to the Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing securities holdings to reflect changes in the composition of the Underlying Index. The Funds may not be fully invested at times, either as a result of cash flows into a Fund or reserves of cash held by the Fund to meet redemptions and pay expenses.

In addition, there is no assurance that the Strategies that comprise the Underlying Indexes will track hedge fund returns, which, in turn, may adversely affect the Underlying Index’s ability to meets its objectives. While the Strategies consist of multiple liquid Underlying Index Components, hedge funds may invest in a much broader range of more geographically diverse and less liquid assets. The Underlying Indexes may be exposed to more or less risk than hedge funds as an asset class. To the extent a Fund tracks its Underlying Index, these risks could also apply to an investment in the Fund.

Currently, the Underlying Indexes have limited historical performance data and this data are not predictive of future results. As is the case, an investment in a Fund may involve greater risk than the investment linked to an index with a proven track record. The Strategies and the Underlying Indexes are based entirely on mathematical analysis of historical data related to volatility and returns. To the extent that historical data turns out not to be predictive of future events, the return of the Strategies may deviate from the returns of the hedge fund indexes they are trying to replicate.

IndexIQ does not receive hedge fund holding information but rather uses the monthly returns of the hedge fund data provided by third parties as the basis for estimating the asset class exposures of hedge funds as a group. There is a risk that hedge fund return data provided by third party providers may be inaccurate or may not accurately reflect hedge fund returns due to survivorship bias, self reporting selection bias, or other biases.

Hedge funds often adjust their investments rapidly in view of market, political, financial or other factors, whereas the composition of the Strategies and the Underlying Index is adjusted only on a monthly basis. The potential lag between hedge fund strategy changes and Strategy changes may cause the returns of the Strategies to deviate from the data received from the third party providers.

B-5

Common Stock

Each Fund may invest in common stock. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.

Emerging Markets Companies

The Funds may invest in securities issued by foreign companies generally located in the Asia and Pacific regions, the Middle East, Eastern Europe, Central and South America and Africa. The risks of foreign investment are generally heightened when the issuer is located in an emerging country. Many emerging countries have experienced currency devaluations and substantial (and, in some cases, extremely high) rates of inflation. Other emerging countries have experienced economic recessions. These circumstances have had a negative effect on the economies and securities markets of such emerging countries. Many emerging countries are subject to a substantial degree of economic, political and social instability. Investing in emerging countries involves greater risk of loss due to expropriation, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.

Lending of Portfolio Securities

The Funds may lend portfolio securities constituting up to 33-1/3% of their total assets (as permitted by the 1940 Act) to unaffiliated broker-dealers, banks or other recognized institutional borrowers of securities, provided that the borrower at all times maintains with the Funds cash, U.S. government securities or equivalent collateral or provides an irrevocable letter of credit in favor of the Funds equal in value to at least 100% of the value of the securities loaned. During the time portfolio securities are on loan, the borrower pays the Funds an amount equivalent to any dividends or interest paid on such securities, and the Funds may receive an agreed-upon amount of interest income (to be retained by the Funds) from a borrower who delivered equivalent collateral or provided a letter of credit. Loans are subject to termination at the option of the Funds or the borrower. The Funds may invest any cash collateral and earn additional income, or it may receive an agreed-upon amount of interest income from the borrower who has delivered equivalent collateral or a letter of credit. The Funds may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the income earned on the cash to the borrower or placing broker. The Funds do not have the right to vote securities on loan, but could terminate the loan and regain the right to vote if that were considered important with respect to the investment. The Funds currently do not intend to lend their portfolio securities.

The primary risk in securities lending is a default by the borrower during a sharp rise in price of the borrowed security resulting in a deficiency in the collateral posted by the borrower. The Funds will seek to minimize this risk by requiring that the value of the securities loaned be computed each day and additional collateral be furnished each day if required.

Money Market Instruments

Each Fund may invest a portion of its assets in high-quality money market instruments on an ongoing basis to provide liquidity. The instruments in which each Fund may invest include: (1) short-term obligations issued by the U.S. government; (2) negotiable certificates of deposit (“CDs”), fixed time deposits and bankers’ acceptances of U.S. and foreign banks and similar institutions; (3) commercial

B-6

paper rated at the date of purchase “Prime-1” by Moody’s Investors Service, Inc. or “A-1+” or “A-1” by Standard & Poor’s Ratings Group, Inc., a division of The McGraw-Hill Companies, Inc., or, if unrated, of comparable quality as determined by the Advisor; (4) repurchase agreements; and (5) money market mutual funds. CDs are short-term negotiable obligations of commercial banks. Time deposits are non-negotiable deposits maintained in banking institutions for specified periods of time at stated interest rates. Banker’s acceptances are time drafts drawn on commercial banks by borrowers, usually in connection with international transactions.

Total Return Swaps

Total return swaps give each Fund the right to receive the appreciation in the value of a specified security, index or other instrument in return for a fee paid to the counterparty, which will typically be an agreed upon interest rate. Total return swaps can also be used to replicate an exposure to a short position in an asset class where the Fund has the right to receive the depreciation in value of a specified security, index or other instrument (“inverse swaps”). If the underlying asset in a total return swap declines in value (or increases in value, if an inverse swap) over the term of the swap, a Fund may also be required to pay the dollar value of that decline (or increase, if an inverse swap) to the counterparty.

The Funds may use total return swaps to replicate an Underlying Index Component’s performance. These total return swaps would reference the performance of an ETF, ETN or ETV (each an “exchange traded issuer”) that is an Underlying Index Component, an index on which such an exchange traded issuer is based, or one or more of the portfolio constituents of such exchange traded issuer.

Total return swaps are considered illiquid by the Funds. Consequently, each Fund will segregate liquid assets, which may include securities, cash or cash equivalents, to cover the Fund’s daily marked-to-market net obligations under outstanding swap agreements. This segregation of assets may limit a Fund’s investment flexibility, as well as its ability to meet redemption requests or other current obligations.

All counterparties are subject to pre-approval by the Board. The Board’s pre-approval is based on the creditworthiness of each potential swap counterparty. In addition, the Advisor will monitor and manage the counterparty risk posed by the counterparties and take actions as necessary to decrease counterparty risk to a Fund by, among other things, reducing swap exposures to certain counterparties and/or seeking alternate or additional counterparties.

The number of counterparties may vary over time. During periods of credit market turmoil or when the aggregate swap notional amount needed by a Fund is relatively small given the level of the Fund’s net assets, the Fund may have only one or a few counterparties. In such circumstances, a Fund will be exposed to greater counterparty risk. Moreover, a Fund may be unable to enter into any total return swap on terms that make economic sense (e.g., they may be too costly). To the extent that the Fund is unable to enter into any total return swaps, it may not be able to meet its investment objective. If the Fund is unable to enter into total return swaps, it may engage in other types of derivative transactions, although the added costs, higher asset segregation requirements and lower correlation to Underlying Index Component performance of these other derivatives may adversely affect a Fund’s ability to meet its investment objective.

B-7

MANAGEMENT

Board of Trustees and Officers

The business of the Trust is managed under the direction of the Trust’s Board of Trustees. Subject to the provisions of the Trust’s Declaration of Trust, its By-Laws and Delaware law, the Trustees have all powers necessary and convenient to carry out this responsibility. The Board elects the officers of the Trust who are responsible for administering the Trust’s day-to-day operations. Each Trustee serves until his or her successor is duly elected or appointed and qualified.

The Board is currently comprised of three Trustees. One Trustee is an employee of the Advisor. This Trustee is an “Interested Person” (as defined under Section 2(a)(19) of the 1940 Act) of the Trust (the “Interested Trustee”). Two of the Trustees and their immediate family members have no affiliation or business connection with the Advisor, Sub-Advisor or the Funds’ principal underwriter or any of their affiliated persons and do not own any stock or other securities issued by the Advisor, Sub-Advisor or the Funds’ principal underwriter. These Trustees are not Interested Persons of the Trust and are referred to herein as “Independent Trustees.”

The name, age, address and principal occupations during the past five years for each Trustee and officer of the Trust is set forth below, along with the other public directorships held by the Trustees.


Name and Year of Birth⁽¹⁾	Position(s) Held with Trust	Length of Time Served⁽²⁾	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee⁽³⁾	Other Directorships Held by Trustee
Independent Trustees:

Reena Aggarwal, 1958	Trustee	Since August 2008	Deputy Dean, McDonough School of Business, Georgetown University (2006 to 2008); Visiting Professor of Finance, Sloan School of Management, MIT (2005-2006); Interim Dean, McDonough School of Business, Georgetown University (2004- 2005); Stallkamp Faculty Fellow and Professor of Finance, McDonough School of Business, Georgetown University (2003- Present)	6	FBR Funds (10 portfolios)

Gene Chao, 1970	Trustee	Since August 2008	Vice President – Strategic Services, Dimension Data, Americas (2007 to present); Senior Vice President – Strategic Outsourcing, France Telecom Americas (2004-2007); Managing Director – Business Consulting, Xansa, North America (2003-2004)	6	None

B-8

Interested Trustees⁽⁴⁾:

Adam S. Patti, 1970	Chairman and Trustee President and Principal Executive	Since November 2008 Since July 2008	Chairman, Trustee, President and Principal Executive, IndexIQ Trust (2008 to present); Chief Executive Officer, the Advisor (2007 to present); Chief Executive Officer, Index IQ (2006 to present); Associate Publisher, Time Inc. (2006); Executive Director, Time Inc. (2005); Director, Time Inc. (2003 to 2004)	6	None
















Other Officers:

Gregory D. Bassuk, 1972	Secretary	Since July 2008	Chief Compliance Officer, the Advisor (2008 to present); Secretary, IndexIQ Trust (2008 to present); Chairman and Trustee, Index IQ ETF Trust (July 2008 to November 2008); Chairman and Trustee, IndexIQ Trust (February 2008 to November 2008); Chief Operating Officer, the Advisor (2007 to present); Chief Operating Officer, IndexIQ (2006 to present); Director, Time Inc. (2004 to 2006); Managing Director, McGovern Capital (2003 to 2004)	N/A	N/A

B-9

David Fogel, 1971	Treasurer, Principal Financial Officer and Chief Compliance Officer	Since October 2008	Treasurer, Principal Financial Officer and Chief Compliance Officer, IndexIQ Trust (2008 to present); Executive Vice President, Financial Development HoldCo LLC, d/b/a “IndexIQ” (2006 to present); Vice President, Groton Partners LLC (2005 to 2006); Principal, Circle Peak Capital LLC (2003 to 2005)	N/A	N/A

(1) The address of each Trustee or officer is c/o IndexIQ, 800 Westchester Avenue, Suite N-611, Rye Brook, New York 10573.

(2) Trustees and Officers serve until their successors are duly elected and qualified.

(3) The Funds are part of a “fund complex” as defined in the 1940 Act. The fund complex includes all open-end funds (including all of their portfolios) advised by the Advisor and any funds that have an investment advisor that is an affiliated person of the Advisor. As of the date of this SAI, the fund complex consists of the Trust’s funds and the one fund of the IndexIQ Trust advised by the Advisor.

(4) Mr. Patti is an “interested person” of the Trust (as that term is defined in the 1940 Act) because of his affiliations with the Advisor.

The Board of the Trust is scheduled to meet four times during the fiscal year ending April 30, 2009.

Standing Board Committees

The Board of Trustees has established three standing committees in connection with its governance of the Fund: the Audit, Nominating, and Valuation Committees.

The Audit Committee oversees the audit process and provides assistance to the full Board of Trustees with respect to fund accounting, tax compliance and financial statement matters. In performing its responsibilities, the Audit Committee selects and recommends annually to the entire Board of Trustees an independent registered public accounting firm to audit the books and records of the Trust for the ensuing year, and reviews with the firm the scope and results of each audit. All of the Independent Trustees serve on the Audit Committee. The Audit Committee is expected to hold one meeting in the fiscal year ending April 30, 2009. Ms. Aggarwal and Mr. Chao serve on the Audit Committee.

The Nominating Committee has been established to: (i) assist the Board of Trustees in matters involving mutual fund governance and industry practices; (ii) select and nominate candidates for appointment or election to serve as Trustees who are not “interested persons” of the Trust or its Advisor or distributor (as defined by the 1940 Act); and (iii) advise the Board of Trustees on ways to improve its effectiveness. All of the Independent Trustees serve on the Nominating Committee. The Nominating Committee is expected to hold one meeting during the fiscal year ending April 30, 2009. As stated above, each Trustee holds office for an indefinite term until the occurrence of certain events. In filling Board vacancies, the

B-10

Nominating Committee will consider nominees recommended by shareholders. Nominee recommendations should be submitted to the Trust at its mailing address stated in the Fund’s Prospectus and should be directed to the attention of the IndexIQ ETF Trust Nominating Committee.

The Valuation Committee is authorized to act for the Board of Trustees in connection with the valuation of portfolio securities held by the Fund in accordance with the Trust’s Valuation Procedures. Ms. Aggarwal and Messrs. Chao, Fogel and Patti serve on the Valuation Committee.

Trustees’ Ownership of Funds as of January 22, 2009


Name of Trustee	Dollar Range of Equity Securities in Funds		Aggregate Dollar Range of Equity Securities in All Registered Investment Components Overseen by Trustee in Family of Investment Components⁽¹⁾

Reena Aggarwal	IQ Hedge Multi-Strategy Composite ETF	None	None
	IQ Hedge Macro ETF	None
	IQ Hedge Long/Short ETF	None
	IQ Hedge Event-Driven ETF	None
	IQ Hedge Market Neutral ETF	None

Gene Chao	IQ Hedge Multi-Strategy Composite ETF	None	None
	IQ Hedge Macro ETF	None
	IQ Hedge Long/Short ETF	None
	IQ Hedge Event-Driven ETF	None
	IQ Hedge Market Neutral ETF	None

Adam S. Patti⁽²⁾	IQ Hedge Multi-Strategy Composite ETF	$50,000-$100,000	Over $100,000
	IQ Hedge Macro ETF	None
	IQ Hedge Long/Short ETF	None
	IQ Hedge Event-Driven ETF	None
	IQ Hedge Market Neutral ETF	None

(1) “Family of Investment Component” consists of all mutual funds and ETFs advised by the Advisor and its affiliate advisers.

(2) Mr. Patti is deemed to beneficially own the securities indicated through his control of the Advisor, who is the registered owner of such security.

Board Compensation

For each in-person quarterly Board Meeting, each Independent Trustee receives $1,500. For each additional in-person meeting, each Independent Trustee receives $1,000 and for any phone meeting, each Independent Trustee receives $500. In addition, the Independent Trustees are reimbursed for all reasonable travel expenses relating to their attendance at the Board Meetings. The following table sets forth certain information with respect to the estimated compensation of each Trustee for the fiscal year ending April 30, 2009:

B-11


Name of Person, Position	Aggregate Compensation From The Trust	Pension or Retirement Benefits Accrued As Part of Trust Expenses	Estimated Annual Benefits Upon Retirement	Total Compensation From Trust and Fund Complex Paid to Trustees⁽¹⁾

Reena Aggarwal,	$3,000	N/A	N/A	$18,000
Trustee
Gene Chao,	$3,000	N/A	N/A	$18,000
Trustee
Adam S. Patti,	None	None	None	None
Trustee & Chairman

(1) “Fund Complex” consists of all mutual funds and ETFs advised by the Advisor and its affiliate advisers.

Code of Ethics

The Trust, its Advisor, Sub-Advisor and principal underwriter have adopted codes of ethics under Rule 17j-1 of the 1940 Act that permit personnel subject to their particular codes of ethics to invest in securities, including securities that may be purchased or held by the Fund.

PROXY VOTING POLICIES

The Board believes that the voting of proxies on securities held by the Funds is an important element of the overall investment process. As such, the Board has delegated responsibility for decisions regarding proxy voting for securities held by each Fund to the Advisor, who has in turn delegated the responsibility to the Sub-Advisor. The Sub-Advisor will vote such proxies in accordance with its proxy policies and procedures, a summary of which is included in Appendix A to this Statement of Additional Information. The Board will periodically review each Fund’s proxy voting record.

The Trust is required to disclose annually the Funds’ complete proxy voting record on Form N-PX covering the period July 1 through June 30 and file it with the SEC no later than August 31 of each year. The Fund’s Form N-PX will be available at no charge upon request by calling 1-888-934-0777. It will also be available on the SEC’s website at www.sec.gov.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

A control person is one who owns beneficially or through controlled companies owns more than 25% of the voting securities of a Fund or acknowledges the existence of control. As of the date of this SAI, each Fund could be deemed to be under control of the Advisor, which had voting authority with respect to 100% of the outstanding shares of the IQ Hedge Multi-Strategy Composite ETF on such date and no shares are outstanding with respect to the other Funds of the Trust as of such date. As a result, the Advisor could have the ability to approve or reject those matters submitted to the shareholders of the Funds for their approval, including changes to the Funds’ fundamental policies and the election of Trustees. It is expected that, once the Funds commence investment operations, the Advisor will not control the Funds.

B-12

MANAGEMENT SERVICES

The following information supplements and should be read in conjunction with the section in the Prospectus entitled “Management.”

Advisor

IndexIQ Advisors LLC, the Advisor, serves as investment advisor to the Funds and has overall responsibility for the general management and administration of the Trust, pursuant to the Investment Advisory Agreement between the Trust and the Advisor (the “Advisory Agreement”). Under the Advisory Agreement, the Advisor, subject to the supervision of the Board, provides an investment program for each Fund and is responsible for the retention of sub-advisors to manage the investment of the Fund’s assets in conformity with the stated investment policies of each Fund if the Advisor does not provide these services directly. The Advisor or a sub-advisor is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of each of the Funds. The Advisor also arranges for the provision of distribution, transfer agency, custody, administration and all other services necessary for the Funds to operate.

The Advisory Agreement will remain in effect for an initial two-year term after the date the first Fund to launch commences operations and will continue in effect with respect to the Funds from year to year thereafter provided such continuance is specifically approved at least annually by (i) the vote of a majority of the Funds’ outstanding voting securities or a majority of the Trustees of the Trust, and (ii) the vote of a majority of the Independent Trustees of the Trust, cast in person at a meeting called for the purpose of voting on such approval.

The Advisory Agreement will terminate automatically if assigned (as defined in the 1940 Act). The Advisory Agreement is also terminable at any time without penalty by the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Funds on 60 days’ written notice to the Advisor or by the Advisor on 60 days’ written notice to the Trust.

Pursuant to the Advisory Agreement the Advisor is entitled to receive a fee, payable monthly, at the annual rate of 0.75% for each of the Funds based on a percentage of each Fund’s average daily net assets. In consideration of the fees paid with respect to the Funds, the Advisor has agreed to pay all expenses of the Trust, except brokerage other transaction expenses; extraordinary legal fees or expenses, such as those for litigation or arbitration; compensation and expenses of the Independent Trustees, counsel to the Independent Trustees, and the Trust’s chief compliance officer; extraordinary expenses; distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act; and the advisory fee payable to the Advisor hereunder.

The Funds are newly organized and as of the date of this SAI have not yet incurred any advisory fees under the Advisory Agreement.

In addition to providing advisory services, under the Advisory Agreement, the Advisor also: (i) supervises all non-advisory operations of the Funds; (ii) provides personnel to perform such executive, administrative and clerical services as are reasonably necessary to provide effective administration of the Funds; (iii) arranges for (a) the preparation of all required tax returns, (b) the preparation and submission of reports to existing shareholders, (c) the periodic updating of prospectuses and statements of additional information and (d) the preparation of reports to be filed with the SEC and other regulatory authorities; (iv) maintains the Funds’ records; and (v) provides office space and all necessary office equipment and services.

B-13

Sub-Advisor

Mellon Capital Management Corporation, the Sub-Advisor, which is unaffiliated with the Advisor, acts as the investment sub-advisor to the IQ Hedge Multi-Strategy Composite ETF pursuant to a sub-advisory agreement with the Advisor (the ‘‘Sub-Advisory Agreement’’). The Trust anticipates that the Sub-Advisor will serve as the investment sub-advisor to the IQ Hedge Macro ETF, IQ Hedge Long/Short ETF, IQ Hedge Event-Driven ETF and IQ Hedge Market Neutral ETF pursuant to amendment to the Sub-Advisory Agreement upon the commencement of these Funds’ operations. The Sub-Advisor is a leading innovator in the investment industry and manages global quantitative-based investment strategies for institutional investors with its principal office located at 50 Fremont Street, Suite 3900, San Francisco, California 94105. As of December 31, 2008, the Sub-Advisor had assets under management totaling approximately $140 billion. The Sub-Advisor is a wholly-owned indirect subsidiary of The Bank of New York Mellon Corporation, a publicly traded financial holding company. Pursuant to the Sub-Advisory Agreement, the Sub-Advisor will manage the investment and reinvestment of the Funds’ assets on an ongoing basis under the supervision of the Advisor.

Pursuant to the Sub-Advisory Agreement, the Advisor will pay the Sub-Advisor on a monthly basis a portion of the net advisory fees it receives from the Funds the Sub-Advisor is advising at the annual rate of 0.12% of each such Fund’s average daily net assets up to $100 million and 0.07% of each such Fund’s average daily net assets over $100 million.

Portfolio Managers

The Sub-Advisor acts as portfolio manager pursuant to the Sub-Advisory Agreement. The Sub-Advisor will supervise and manage the investment portfolios of the Funds covered by the Sub-Advisory Agreement and will direct the purchase and sale of such Funds’ investment securities. The Sub-Advisor utilizes a team of investment professionals acting together to manage the assets of the Funds. The team meets regularly to review portfolio holdings and to discuss purchase and sale activity. The team adjusts holdings in the portfolio as they deem appropriate in the pursuit of each Fund’s investment objective.

The portfolios covered by the Sub-Advisory Agreement are managed by the Sub-Advisor’s Equity Index Strategies Portfolio management team. The individual members of the team responsible for the day-to-day management of the Funds’ portfolios are:

B-14

Other Accounts Managed

The following tables provide additional information about other portfolios or accounts managed by the Funds’ portfolio managers as of December 31, 2008.

Total number of other accounts managed by the portfolio manager within each category below and the total assets in the accounts managed within each category below.



Portfolio	Registered Investment Companies		Other Pooled Investment Vehicles		Other Accounts

	Number of	Total Assets	Number of	Total Assets	Number of	Total Assets
	Accounts	($mm)	Accounts	($mm)	Accounts	($mm)
Denise Krisko &	87	$7,100	16	$6,100	42	$10,100
Steven Wetter

Material Conflicts Of Interest.

Because the portfolio managers manage multiple portfolios for multiple clients, the potential for conflicts of interest exists. Each portfolio manager generally manages portfolios having substantially the same investment style as the Funds. However, the portfolios managed by a portfolio manager may not have portfolio compositions identical to those of the Funds managed by the portfolio manager due, for example, to specific investment limitations or guidelines present in some portfolios or accounts, but not others. The portfolio managers may purchase securities for one portfolio and not another portfolio, and the performance of securities purchased for one portfolio may vary from the performance of securities purchased for other portfolios. A portfolio manager may place transactions on behalf of other accounts that are directly or indirectly contrary to investment decisions made on behalf of the Funds, or make investment decisions that are similar to those made for the Funds, both of which have the potential to adversely impact the Funds depending on market conditions. For example, a portfolio manager may purchase a security in one portfolio while appropriately selling that same security in another portfolio. In addition, some of these portfolios have fee structures that are or have the potential to be higher than the advisory fees paid by the Funds, which can cause potential conflicts in the allocation of investment opportunities between the Funds and the other accounts. However, the compensation structure for portfolio managers does not generally provide incentive to favor one account over another because that part of a manager’s bonus based on performance is not based on the performance of one account to the exclusion of others. There are many other factors considered in determining the portfolio manager’s bonus and there is no formula that is applied to weight the factors listed (see “Compensation”, below). In addition, current trading practices do not allow the Sub-Advisor to intentionally favor one portfolio over another as trades are executed as trade orders are received. Portfolio’s rebalancing dates also generally vary between fund families. Program trades created from the portfolio rebalance are executed at market on close.

Compensation

The primary objectives of the Sub-Advisor compensation plans are to:

Motivate and reward continued growth and profitability
Attract and retain high-performing individuals critical to the on-going success of Sub-Advisor
Motivate and reward superior business/investment performance

B-15

Create an ownership mentality for all plan participants

The investment professionals’ cash compensation is comprised primarily of a market-based base salary and (variable) incentives (annual and long term). An investment professional’s base salary is determined by the employees’ experience and performance in the role, taking into account the ongoing compensation benchmark analyses. A portfolio manager’s base salary is generally a fixed amount that may change as a result of an annual review, upon assumption of new duties, or when a market adjustment of the position occurs. Funding for the Sub-Advisor’s Annual Incentive Plan and Long Term Incentive Plan is through a pre-determined fixed percentage of overall Sub-Advisor profitability. Therefore, all bonus awards are based initially on Sub-Advisor’s financial performance. The employees are eligible to receive annual cash bonus awards from the Annual Incentive Plan. Annual incentive opportunities are pre-established for each individual, expressed as a percentage of base salary (“target awards”). These targets are derived based on a review of competitive market data for each position annually. Annual awards are determined by applying multiples to this target award. Awards are 100% discretionary. Factors considered in awards include individual performance, team performance, investment performance of the associated portfolio(s) and qualitative behavioral factors. Other factors considered in determining the award are the asset size and revenue growth/retention of the products managed. Awards are paid in cash on an annual basis.

All key staff of Sub-Advisor are also eligible to participate in the Sub-Advisor’s Long Term Incentive Plan. These positions have a high level of accountability and a large impact on the success of the business due to the position’s scope and overall responsibility. In addition, the participants have demonstrated a long-term performance track record and have the potential for a continued leadership role. This plan provides for an annual award, payable in cash after a three-year cliff vesting period. The value of the award increases during the vesting period based upon the growth in Sub-Advisor’s net income.

Sub-Advisor’s portfolio managers responsible for managing mutual funds are paid by Sub-Advisor and not by the mutual funds. The same methodology described above is used to determine portfolio manager compensation with respect to the management of mutual funds and other accounts. Mutual fund portfolio managers are also eligible for the standard retirement benefits and health and welfare benefits available to all Sub-Advisor employees. Certain portfolio managers may be eligible for additional retirement benefits under several supplemental retirement plans that Sub-Advisor provides to restore dollar-for-dollar the benefits of management employees that had been cut back solely as a result of certain limits due to the tax laws. These plans are structured to provide the same retirement benefits as the standard retirement benefits. In addition, mutual fund portfolio managers whose compensation exceeds certain limits may elect to defer a portion of their salary and/or bonus under The Bank of New York Mellon Corporation Deferred Compensation Plan for Employees.

Ownership of Securities

The portfolio managers do not own Shares of any Fund.

OTHER SERVICE PROVIDERS

Administrator, Custodian and Transfer Agent

Under the Fund Administration and Accounting Agreement (the “Administration Agreement”), The Bank of New York Mellon (“BNY Mellon” or the “Fund Administrator” or “Administrator”) serves as Administrator for the Funds. BNY Mellon’s principal address is One Wall Street, New York, New York 10286. Under the Administration Agreement, BNY Mellon provides necessary administrative, legal, tax, accounting services, and financial reporting for the maintenance and operations of the Trust and each

B-16

Fund. In addition, BNY Mellon makes available the office space, equipment, personnel and facilities required to provide such services.

BNY Mellon supervises the overall administration of the Trust and the Funds, including, among other responsibilities, assisting in the preparation and filing of documents required for compliance by the Funds with applicable laws and regulations and arranging for the maintenance of books and records of the Funds. BNY Mellon provides persons satisfactory to the Board to serve as officers of the Trust.

BNY Mellon serves as custodian of Funds’ assets (the “Custodian”). The Custodian has agreed to (1) make receipts and disbursements of money on behalf of the Funds; (2) collect and receive all income and other payments and distributions on account of each Fund’s portfolio investments; (3) respond to correspondence from Fund shareholders and others relating to its duties; and (4) make periodic reports to each Fund concerning the Fund’s operations. The Custodian does not exercise any supervisory function over the purchase and sale of securities. The Advisor pays the Custodian fees out of the Advisor’s unified management fee.

BNY Mellon serves as transfer agent and dividend paying agent for the Funds (the “Transfer Agent”). The Transfer Agent has agreed to (1) issue and redeem Shares of the Funds; (2) make dividend and other distributions to shareholders of the Funds; (3) respond to correspondence by Fund shareholders and others relating to its duties; (4) maintain shareholder accounts; and (5) make periodic reports to the Funds. The Advisor pays the Transfer Agent out of the Advisor’s unified management fee.

BNY Mellon is the principal operating subsidiary of The Bank of New York Mellon Corporation and is an affiliate of the Sub-Advisor.

Index Provider

Financial Development HoldCo LLC (“IndexIQ”) is the index provider for the Funds. IndexIQ was formed as a Delaware limited liability company on June 15, 2007 and is in the business of developing and maintaining financial indexes, including the Underlying Indexes. Presently, IndexIQ has developed and is maintaining a number of indexes in addition to the Underlying Index. IndexIQ has entered into an index licensing agreement (the “Licensing Agreement”) with the Advisor to allow the Advisor’s use of the Underlying Indexes for the operation of the Funds. The Advisor pays licensing fees to IndexIQ from the Advisor’s management fees or other resources. The Advisor has, in turn, entered into a sub-licensing agreement (the “Sub-Licensing Agreement”) with the Trust to allow the Funds to utilize the Underlying Indexes. The Funds pay no fees to IndexIQ or the Advisor under the Sub-Licensing Agreement.

Distributor

ALPS Distributors, Inc., the Distributor, is located at 1290 Broadway, Suite 1100, Denver, CO. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and a member of the Financial Industry Regulatory Authority (“FINRA”).

Shares will be continuously offered for sale by the Trust through the Distributor only in whole Creation Units, as described in the section of this SAI entitled “Purchase and Redemption of Creation Units.” The Distributor also acts as an agent for the Trust. The Distributor will deliver a prospectus to persons purchasing Shares in Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor has no role in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds.

B-17

The Board has adopted a Service and Distribution Plan pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Rule 12b-1 plan, the Funds are authorized to pay an amount up to 0.10% of their average daily net assets each year for certain distribution-related activities. The Board has resolved not to authorize the payment of Rule 12b-1 fees prior to April 30, 2009. However, in the event Rule 12b-1 fees are charged in the future, they will be paid out of the Funds’ assets. Over time they will increase the cost of your investment, and they may cost you more than certain other types of sales charges.

Under the Service and Distribution Plan, and as required by Rule 12b-1, the Trustees will receive and review after the end of each calendar quarter a written report provided by the Distributor of the amounts expended under the Plan and the purpose for which such expenditures were made.

Independent Registered Public Accounting Firm

The Trustees have selected the firm of Ernst & Young, LLP, 5 Times Square, New York, New York 10036-6530, to serve as independent registered public accounting firm for the Funds for the current fiscal year and to audit the annual financial statements of the Funds, prepare the Funds’ federal, state and excise tax returns, and consult with the Funds on matters of accounting and federal and state income taxation. The independent registered public accounting firm will audit the financial statements of the Funds at least once each year. Shareholders will receive annual audited and semi-annual (unaudited) reports when published and written confirmation of all transactions in their account. A copy of the most recent Annual Report will accompany the SAI whenever a shareholder or a prospective investor requests it.

Legal Counsel

Katten Muchin Rosenman LLP, 575 Madison Avenue, New York, New York 10022, serves as legal counsel to the Trust and the Funds.

CERTAIN CONFLICTS OF INTEREST

IndexIQ and the Advisor have established policies, procedures, systems and infrastructure to address any potential conflicts of interest that may arise because of IndexIQ, the Advisor’s parent entity, serving as index provider for the Funds.

IndexIQ maintains policies and procedures designed to limit or prohibit communication between the employees of IndexIQ with ultimate responsibility for the Underlying Indexes (the “Index Group”) and the employees of the Advisor with respect to issues related to the maintenance, calculation and reconstitution of the Underlying Indexes (the “Policies and Procedures”).

Changes to the constituents of the Underlying Indexes made by IndexIQ or Standard & Poor’s, as the Underlying Indexes’ calculation agent (the “Calculation Agent”), will be disclosed by IndexIQ and published on its website at www.indexiq.com. Any such IndexIQ announcements or website disclosures to the public will be made in such a manner that none of the IndexIQ employees outside of the Index Group, the Advisor, the Sub-Advisor, or a Fund, is notified of actions prior to the general investing public.

IndexIQ, as index provider, has adopted Policies and Procedures prohibiting its employees from disclosing or using any non-public information acquired through his or her employment, except as

B-18

appropriate in connection with the rendering of services to the administration of the Underlying Indexes. Also, IndexIQ has adopted Policies and Procedures that prohibit and are designed to prevent anyone, including the members of the Index Group, from disseminating or using non-public information about pending changes to Underlying Indexes constituents or Index Methodology. These policies specifically prohibit anyone, including the members of the Index Group, from sharing any non-public information about the an Underlying Index with any personnel of the Advisor or Sub-Advisor responsible for management of the related Fund or any affiliated person. The Advisor also has adopted policies that prohibit personnel responsible for the management of a Fund from sharing any non-public information about the management of the Fund with any personnel of the Index Group, especially those persons responsible for creating, monitoring, calculating, maintaining or disseminating its Underlying Index.

In addition, IndexIQ has retained an unaffiliated third-party Calculation Agent to calculate and maintain the Underlying Indexes on a daily basis. The Calculation Agent will be instructed to not communicate any non-public information about the Underlying Indexes to anyone, and expressly not to the personnel of the Advisor or any sub-advisor responsible for the management of the Funds.

The Index Group personnel responsible for creating and monitoring the Underlying Indexes, the personnel of the Calculation Agent responsible for calculating and maintaining the Underlying Indexes, and the portfolio managers responsible for day-to-day portfolio management of the Fund are employees of separate organizations and are located in physically separate offices. The Calculation Agent is not, and will not be, affiliated with IndexIQ, the Advisor or any sub-advisor. The portfolio manager(s) responsible for day-to-day portfolio management of the Funds are employees of the Sub-Advisor.

Members of the Index Group will not have access to paper or electronic files used by the Advisor or any sub-advisor in connection with their portfolio management activities. Neither the Advisor nor any sub-advisor will have access to the computer systems used by the Calculation Agent nor to the computer systems used by the Index Group to monitor, calculate and rebalance the Underlying Indexes. The Advisor has also adopted Polices and Procedures and a Code of Ethics which require, among other things, any personnel responsible for the management of a Fund and any investment account to (i) pre-clear all non-exempt personal securities transactions with a designated senior employee of the Advisor, and (ii) require reporting of securities transactions to such designated employee in accordance with Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Any sub-advisor will be required to confirm to the Advisor and the Trust that it has adopted policies and procedures and a Code of Ethics to monitor and restrict securities trading by employees with access to Fund portfolio transactions or investment recommendations pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act and to provide the Trust with the certification required by Rule 17j-1 under the 1940 Act.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Subject to the general supervision by the Board, the Advisor and the Sub-Advisor are responsible for decisions to buy and sell securities for the Funds, the selection of brokers and dealers to effect the transactions, which may be affiliates of the Advisor or the Sub-Advisor, and the negotiation of brokerage commissions. The Funds may execute brokerage or other agency transactions through registered broker-dealers who receive compensation for their services in conformity with the 1940 Act, the Exchange Act of 1934, and the rules and regulations thereunder. Compensation may also be paid in connection with riskless principal transactions (in Nasdaq or over-the-counter securities and securities listed on an exchange) and agency Nasdaq or over-the-counter transactions executed with an electronic communications network or an alternative trading system.

B-19

The Funds will give primary consideration to obtaining the most favorable prices and efficient executions of transactions in implementing trading policy. Consistent with this policy, when securities transactions are traded on an exchange, the Funds’ policy will be to pay commissions which are considered fair and reasonable without necessarily determining that the lowest possible commissions are paid in all circumstances. The Advisor believes that a requirement always to seek the lowest possible commission cost could impede effective portfolio management and preclude the Funds from obtaining a high quality of brokerage services. In seeking to determine the reasonableness of brokerage commissions paid in any transaction, the Advisor will rely upon its experience and knowledge regarding commissions generally charged by various brokers and on its judgment in evaluating the brokerage and research services received from the broker effecting the transaction. Such determinations will be necessarily subjective and imprecise, as in most cases an exact dollar value for those services is not ascertainable.

The Advisor does not consider sales of Shares by broker-dealers as a factor in the selection of broker-dealers to execute portfolio transactions.

DISCLOSURE OF PORTFOLIO HOLDINGS

Portfolio Disclosure Policy

The Trust has adopted a Portfolio Holdings Policy (the “Policy”) designed to govern the disclosure of Fund portfolio holdings and the use of material non-public information about Fund holdings. The Policy applies to all officers, employees and agents of the Funds, including the Advisor and the Sub-Advisor. The Policy is designed to ensure that the disclosure of information about each Fund’s portfolio holdings is consistent with applicable legal requirements and otherwise in the best interest of each Fund.

As ETFs, information about each Fund’s portfolio holding is made available on a daily basis in accordance with the provisions of any Order of the Securities and Exchange Commission (the “SEC”) applicable to the Funds, regulations of the Funds’ Listing Exchange and other applicable SEC regulations, orders and no-action relief. Such information typically reflects all or a portion of a Fund’s anticipated portfolio holdings as of the next Business Day. This information is used in connection with the Creation and Redemption process and is disseminated on a daily basis through the facilities of the Listing Exchange, the National Securities Clearing Corporation (the “NSCC”) and/or third party service providers.

Each Fund will disclose on the Funds’ website (www.indexiq.com) at the start of each Business Day the identities and quantities of the securities and other assets held by each Fund that will form the basis of the Fund’s calculation of its net asset value (the “NAV”) on that Business Day. The portfolio holdings so disclosed will be based on information as of the close of business on the prior Business Day and/or trades that have been completed prior to the opening of business on that Business Day and that are expected to settle on the Business Day. Online disclosure of such holdings is publicly available at no charge.

Daily access to each Fund’s portfolio holdings is permitted to personnel of the Advisor, the Sub-Advisor, the Distributor and the Funds’ administrator, custodian and accountant and other agents or service providers of the trust who have need of such information in connection with the ordinary course of their respective duties to the Funds. The Funds Chief Compliance Officer may authorize disclosure of portfolio holdings.

Each Fund will disclose its complete portfolio holdings schedule in public filings with the SEC on a quarterly basis, based on the Fund’s fiscal year, within sixty (60) days of the end of the quarter, and will provide that information to shareholders, as required by federal securities laws and regulations thereunder.

B-20

No person is authorized to disclose a Fund’s portfolio holdings or other investment positions except in accordance with the Policy. The Trust’s Board reviews the implementation of the Policy on a periodic basis.

INDICATIVE INTRA-DAY VALUE

The approximate value of the Funds’ investments on a per-Share basis, the Indicative Intra-Day Value or IIV, is disseminated by the Exchange every 15 seconds during hours of trading on the Exchange. The IIV should not be viewed as a “real-time” update of NAV because the IIV will be calculated by an independent third party calculator and may not be calculated in the exact same manner as NAV, which is computed daily.

The Exchange calculates the IIV during hours of trading on the Exchange by dividing the “Estimated Fund Value” as of the time of the calculation by the total number of outstanding Shares. “Estimated Fund Value” is the sum of the estimated amount of cash held in a Fund’s portfolio, the estimated amount of accrued interest owing to a Fund and the estimated value of the securities held in a Fund’s portfolio, minus the estimated amount of liabilities. The IIV will be calculated based on the same portfolio holdings disclosed on the Funds’ website. In determining the estimated value for each of the component securities, the IIV will use last sale, market prices or other methods that would be considered appropriate for pricing equity securities held by registered investment companies.

Although Funds provide the independent third party calculator with information to calculate the IIV, the Funds are not involved in the actual calculation of the IIV and are not responsible for the calculation or dissemination of the IIV. The Funds make no warranty as to the accuracy of the IIV.

ADDITIONAL INFORMATION CONCERNING SHARES

Organization and Description of Shares of Beneficial Interest

The Trust is a Delaware statutory trust and registered investment company. The Trust was organized on July 1, 2008, and has authorized capital of an unlimited number of shares of beneficial interest of no par value which may be issued in more than one class or series.

Under Delaware law, the Trust is not required to hold an annual shareholders meeting if the 1940 Act does not require such a meeting. Generally, there will not be annual meetings of Trust shareholders. If requested by shareholders of at least 10% of the outstanding Shares of the Trust, the Trust will call a meeting of the Trust’s shareholders for the purpose of voting upon the question of removal of a Trustee and will assist in communications with other Trust shareholders. Shareholders holding two-thirds of Shares outstanding may remove Trustees from office by votes cast at a meeting of Trust shareholders or by written consent.

All Shares will be freely transferable; provided, however, that Shares may not be redeemed individually, but only in Creation Units. The Shares will not have preemptive rights or cumulative voting rights, and none of the Shares will have any preference to conversion, exchange, dividends, retirements, liquidation, redemption or any other feature. Shares have equal voting rights, except that, if the Trust creates additional funds, only Shares of that fund may be entitled to vote on a matter affecting that particular fund. Trust shareholders are entitled to require the Trust to redeem Creation Units if such shareholders are Authorized Participants. The Declaration of Trust confers upon the Board the power, by resolution, to alter the number of Shares constituting a Creation Unit or to specify that Shares of the Trust may be individually redeemable. The Trust reserves the right to adjust the stock prices of Shares to maintain

B-21

convenient trading ranges for investors. Any such adjustments would be accomplished through stock splits or reverse stock splits which would have no effect on the net assets of the Funds.

The Trust’s Declaration of Trust disclaims liability of the shareholders or the officers of the Trust for acts or obligations of the Trust which are binding only on the assets and property of the Trust. The Declaration of Trust provides for indemnification by the Trust for all loss and expense of the Funds’ shareholders held personally liable for the obligations of the Trust. The risk of a Trust’s shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Funds themselves would not be able to meet the Trust’s obligations and this risk should be considered remote. If a Fund does not grow to a size to permit it to be economically viable, the Fund may cease operations. In such an event, shareholders may be required to liquidate or transfer their Shares at an inopportune time and shareholders may lose money on their investment.

Book Entry Only System

DTC will act as securities depositary for the Shares. The Shares of the Fund are represented by global securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Except as provided below, certificates will not be issued for Shares.

DTC has advised the Trust as follows: DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries). DTC was created to hold securities of its participants (the “DTC Participants”) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic computerized book-entry transfers and pledges in accounts of DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, the NSCC and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. More specifically, DTCC is owned by a number of its DTC Participants and by the New York Stock Exchange, Inc., the NYSE Alternext US (formerly known as the American Stock Exchange LLC)(the “Alternext”) and FINRA.

Access to DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“Indirect Participants”). DTC agrees with and represents to DTC Participants that it will administer its book-entry system in accordance with its rules and bylaws and requirements of law. Beneficial ownership of Shares will be limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as “Beneficial Owners”) will be shown on, and the transfer of ownership will be effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through DTC Participant a written confirmation relating to their purchase of Shares. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability of certain investors to acquire beneficial interests in Shares.

B-22

Beneficial Owners of Shares will not be entitled to have Shares registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and are not considered the registered holders of the Shares. Accordingly, each Beneficial Owner must rely on the procedures of DTC, DTC Participants and any Indirect Participants through which such Beneficial Owner holds its interests in order to exercise any rights of a holder of Shares. The Trust understands that under existing industry practice, in the event the Trust requests any action of holders of Shares, or a Beneficial Owner desires to take any action that DTC, as the record owner of all outstanding Shares, is entitled to take, DTC would authorize the DTC Participants to take such action and that the DTC Participants would authorize the Indirect Participants and Beneficial Owners acting through such DTC Participants to take such action and would otherwise act upon the instructions of Beneficial Owners owning through them. DTC, through its nominee Cede & Co., is the record owner of all outstanding Shares.

Conveyance of all notices, statements and other communications to Beneficial Owners will be effected as follows. DTC will make available to the Trust upon request and for a fee to be charged to the Trust a listing of Shares holdings of each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust will provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements. Beneficial Owners may wish to take certain steps to augment the transmission to them of notices of significant events with respect to Shares by providing their names and addresses to the DTC registrar and request that copies of notices be provided directly to them.

Distributions of Shares shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall immediately credit DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in Shares as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name,” and will be the responsibility of such DTC Participants. The Trust has no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may determine to discontinue providing its service with respect to Shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Alternext.

DTC rules applicable to DTC Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com and www.dtc.org.

B-23

PURCHASE AND REDEMPTION OF CREATION UNITS

Creation

The Trust issues and sells Shares of each Fund only in Creation Units on a continuous basis on any Business Day (as defined below) through the Distributor at the Shares’ NAV next determined after receipt of an order in proper form. The Distributor processes purchase orders only on a day that the Exchange is open for trading (a “Business Day”). The Exchange is open for trading Monday through Friday except for the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Deposit of Securities and Deposit or Delivery of Cash

The consideration for purchase of Creation Units of a Fund generally consists of the Deposit Securities for each Creation Unit constituting a substantial replication, or representation, of the securities included in the relevant Fund’s portfolio as selected by the Advisor (“Fund Securities”) and the Cash Component computed as described below. Together, the Deposit Securities and the Cash Component constitute the “Fund Deposit,” which represents the minimum investment amount for a Creation Unit of a Fund.

The Cash Component serves to compensate the Trust or the Authorized Participant, as applicable, for any differences between the NAV per Creation Unit and the Deposit Amount (as defined below). The Cash Component is an amount equal to the difference between the NAV of the Fund Shares (per Creation Unit) and the “Deposit Amount,” an amount equal to the market value of the Deposit Securities. If the Cash Component is a positive number (i.e., the NAV per Creation Unit exceeds the Deposit Amount), the Authorized Participant will deliver the Cash Component. If the Cash Component is a negative number (i.e., the NAV per Creation Unit is less than the Deposit Amount), the Authorized Participant will receive the Cash Component.

The Custodian through the NSCC (see the section of this SAI entitled “Purchase and Redemption of Creation Units—Creation—Procedures for Creation of Creation Units”), makes available on each Business Day, prior to the opening of business on the Exchange (currently 9:30 a.m. New York time), the list of the name and the required number of shares of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous Business Day) for each Fund. This Fund Deposit is applicable, subject to any adjustments as described below, to orders to effect creations of Creation Units of the Fund until such time as the next-announced composition of the Deposit Securities is made available.

The identity and number of shares of the Deposit Securities required for a Fund Deposit for each Fund changes as rebalancing adjustments and corporate action events are reflected within the Fund from time to time by the Advisor, with a view to the investment objective of the Fund. In addition, the Trust reserves the right to permit or require the substitution of an amount of cash — i.e., a “cash in lieu” amount — to be added to the Cash Component to replace any Deposit Security that may not be available in sufficient quantity for delivery or that may not be eligible for transfer through the systems of DTC or the Clearing Process (discussed below), or which might not be eligible for trading by an Authorized Participant (as defined below) or the investor for which it is acting or other relevant reason.

In addition to the list of names and number of securities constituting the current Deposit Securities of a Fund Deposit, the Custodian, through the NSCC, also makes available on each Business Day the estimated Cash Component, effective through and including the previous Business Day, per outstanding Creation Unit of the Fund.

B-24

Procedures for Creation of Creation Units

All orders to create Creation Units must be placed with the Distributor either (1) through Continuous Net Settlement System of the NSCC (the “Clearing Process”), a clearing agency that is registered with the SEC, by a “Participating Party,” i.e., a broker-dealer or other participant in the Clearing Process; or (2) outside the Clearing Process by a DTC Participant (see the section of this SAI entitled “Additional Information Concerning Shares — Book Entry Only System”). In each case, the Participating Party or the DTC Participant must have executed an agreement with the Distributor with respect to creations and redemptions of Creation Units (a “Participant Agreement”); such parties are collectively referred to as “APs” or “Authorized Participants.” Investors should contact the Distributor for the names of Authorized Participants. All Fund Shares, whether created through or outside the Clearing Process, will be entered on the records of DTC in the name of Cede & Co. for the account of a DTC Participant.

The Distributor will process orders to purchase Creation Units received by U.S. mail, telephone, facsimile and other electronic means of communication by the closing time of the regular trading session on the Exchange (the “Closing Time”) (normally 4:00 p.m. New York time), as long as they are in proper form. Mail is received periodically throughout the day. An order sent by U.S. mail will be opened and time stamped when it is received. If an order to purchase Creation Units is received in proper form by Closing Time, then it will be processed that day. Purchase orders received in proper form after Closing Time will be processed on the following Business Day and will be priced at the NAV determined on that day. Custom orders must be received by the Distributor no later than 3:00 p.m. New York time on the trade date. A custom order may be placed by an Authorized Participant in the event that the Trust permits or requires the substitution of an amount of cash to be added to the Cash Component to replace any Deposit Security which may not be available in sufficient quantity for delivery or which may not be eligible for trading by such Authorized Participant or the investor for which it is acting or other relevant reason. The date on which an order to create Creation Units (or an order to redeem Creation Units, as discussed below) is placed is referred to as the “Transmittal Date.” Orders must be transmitted by an Authorized Participant by telephone or other transmission method acceptable to the Distributor pursuant to procedures set forth in the Participant Agreement, as described below in the sections of this SAI entitled “Creation and Redemption of Creation Units—Creation—Placement of Creation Orders Using Clearing Process” and “Creation and Redemption of Creation Units—Creation—Placement of Creation Orders Outside Clearing Process.”

All orders to create Creation Units from investors who are not Authorized Participants shall be placed with an Authorized Participant in the form required by such Authorized Participant. In addition, the Authorized Participant may request the investor to make certain representations or enter into agreements with respect to the order, e.g., to provide for payments of cash, when required. Investors should be aware that their particular broker may not have executed a Participant Agreement and, therefore, orders to create Creation Units of a Fund have to be placed by the investor’s broker through an Authorized Participant that has executed a Participant Agreement. In such cases there may be additional charges to such investor. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement.

Those placing orders for Creation Units through the Clearing Process should afford sufficient time to permit proper submission of the order to the Distributor prior to the Closing Time on the Transmittal Date. Orders for Creation Units that are effected outside the Clearing Process are likely to require transmittal by the DTC Participant earlier on the Transmittal Date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of the Fund Deposit. For more information about Clearing Process and DTC, see the sections of this SAI entitled “Purchase and Redemption of

B-25

Creation Units—Creation—Placement of Creation Orders Using the Clearing Process” and “Purchase and Redemption of Creation Units—Creation—Placement of Creation Orders Outside the Clearing Process.”

Placement of Creation Orders Through the Clearing Process

The Clearing Process is the process of creating or redeeming Creation Units through the Continuous Net Settlement System of the NSCC. Fund Deposits made through the Clearing Process must be delivered through a Participating Party that has executed a Participant Agreement. The Participant Agreement authorizes the Distributor to transmit through the Custodian to NSCC, on behalf of the Participating Party, such trade instructions as are necessary to effect the Participating Party’s creation order. Pursuant to such trade instructions to NSCC, the Participating Party agrees to deliver the Fund Deposit to the Trust, together with such additional information as may be required by the Distributor. An order to create Creation Units through the Clearing Process is deemed received by the Distributor on the Transmittal Date if (1) such order is received by the Distributor not later than the Closing Time on such Transmittal Date and (2) all other procedures set forth in the Participant Agreement are properly followed.

Placement of Creation Orders Outside Clearing Process

Fund Deposits made outside the Clearing Process must be delivered through a DTC Participant that has executed a Participant Agreement. A DTC Participant who wishes to place an order creating Creation Units to be effected outside the Clearing Process does not need to be a Participating Party, but such orders must state that the DTC Participant is not using the Clearing Process and that the creation of Creation Units will instead be effected through a transfer of securities and cash directly through DTC. The Fund Deposit transfer must be ordered by the DTC Participant on the Transmittal Date in a timely fashion so as to ensure the delivery of the requisite number of Deposit Securities through DTC to the account of the Fund by no later than 11:00 a.m. New York time on the next Business Day following the Transmittal Date (the “DTC Cut-Off-Time”).

All questions as to the number of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding. The amount of cash equal to the Cash Component must be transferred directly to the Custodian through the Federal Reserve Bank wire transfer system in a timely manner so as to be received by the Custodian no later than 2:00 p.m. New York time on the next Business Day following the Transmittal Date. An order to create Creation Units outside the Clearing Process is deemed received by the Distributor on the Transmittal Date if (1) such order is received by the Distributor not later than the Closing Time on such Transmittal Date and (2) all other procedures set forth in the Participant Agreement are properly followed. However, if the Custodian does not receive both the required Deposit Securities and the Cash Component by 11:00 a.m. and 2:00 p.m., respectively, on the next Business Day following the Transmittal Date, such order will be canceled. Upon written notice to the Distributor, such canceled order may be resubmitted the following Business Day using a Fund Deposit as newly constituted to reflect the then-current Deposit Securities and Cash Component. The delivery of Creation Units so created will occur no later than the third Business Day following the day on which the purchase order is deemed received by the Distributor.

Additional transaction fees may be imposed with respect to transactions effected through a DTC participant outside the Clearing Process and in the limited circumstances in which any cash can be used in lieu of Deposit Securities to create Creation Units. See the section of this SAI entitled “Purchase and Sale of Creation Units—Creation—Creation Transaction Fee.”

Creation Units may be created in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities. In these circumstances, the initial deposit will have a value greater than the NAV of

B-26

the Fund Shares on the date the order is placed in proper form since, in addition to available Deposit Securities, cash must be deposited in an amount equal to the sum of (1) the Cash Component plus (2) 125% of the then-current market value of the undelivered Deposit Securities (the “Additional Cash Deposit”). The order shall be deemed to be received on the Business Day on which the order is placed provided that the order is placed in proper form prior to Closing Time and funds in the appropriate amount are deposited with the Custodian by 11:00 a.m. New York time the following Business Day. If the order is not placed in proper form by Closing Time or funds in the appropriate amount are not received by 11:00 a.m. the next Business Day, then the order may be deemed to be canceled and the Authorized Participant shall be liable to the Fund for losses, if any, resulting therefrom. An additional amount of cash shall be required to be deposited with the Trust, pending receipt of the undelivered Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to 125% of the daily marked-to-market value of the undelivered Deposit Securities. To the extent that undelivered Deposit Securities are not received by 1:00 p.m. New York time on the third Business Day following the day on which the purchase order is deemed received by the Distributor, or in the event a marked-to-market payment is not made within one Business Day following notification by the Distributor that such a payment is required, the Trust may use the cash on deposit to purchase the undelivered Deposit Securities. Authorized Participants will be liable to the Trust and the Fund for the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the market value of such Deposit Securities on the day the purchase order was deemed received by the Distributor plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the undelivered Deposit Securities have been properly received by the Custodian or purchased by the Trust and deposited into the Trust. In addition, a transaction fee will be charged in all cases. See the section of this SAI entitled “Purchase and Redemption of Creation Units—Creation—Creation Transaction Fee.” The delivery of Creation Units so created will occur no later than the third Business Day following the day on which the purchase order is deemed received by the Distributor.

Acceptance of Orders for Creation Units

The Trust reserves the absolute right to reject a creation order transmitted to it by the Distributor if: (1) the order is not in proper form; (2) the investor(s), upon obtaining the Fund Shares ordered, would own 80% or more of the currently outstanding Shares of any Fund; (3) the Deposit Securities delivered are not as disseminated for that date by the Custodian, as described above; (4) acceptance of the Deposit Securities would have certain adverse tax consequences to the Fund; (5) acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; (6) acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or the Advisor, have an adverse effect on the Trust or the rights of beneficial owners; or (7) there exist circumstances outside the control of the Trust, the Custodian, the Distributor and the Advisor that make it for all practical purposes impossible to process creation orders. Examples of such circumstances include acts of God; public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, the Advisor, the Distributor, DTC, NSCC, the Custodian or sub-custodian or any other participant in the creation process and similar extraordinary events. The Distributor shall notify a prospective creator of a Creation Unit and/or the Authorized Participant acting on behalf of such prospective creator of its rejection of the order. The Trust, the Custodian, any sub-custodian and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits nor shall any of them incur any liability for the failure to give any such notification. All questions as to the number of shares of each security in the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust and the Trust’s determination shall be final and binding.

B-27

Creation Transaction Fee

Investors will be required to pay to the Custodian a fixed transaction fee (the “Creation Transaction Fee”) of $500 for each creation order. An additional variable fee of up to four times the fixed transaction fee (expressed as a percentage of the value of the Deposit Securities) may be imposed for (1) creations effected outside the Clearing Process and (2) cash creations (to offset the Trust’s brokerage and other transaction costs associated with using cash to purchase the requisite Deposit Securities). Investors are responsible for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust. The maximum transaction fee will be $500 for each creation order.

Redemption

The process to redeem Creation Units is essentially the reverse of the process by which Creation Units are created, as described above. To redeem Shares directly from the Funds, an investor must be an Authorized Participant or must redeem through an Authorized Participant. The Trust redeems Creation Units on a continuous basis on any Business Day through the Distributor at the Shares’ NAV next determined after receipt of an order in proper form. A Fund will not redeem Shares in amounts less than Creation Units. Authorized Participants must accumulate enough Shares in the secondary market to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit.

With respect to a Fund, the Custodian, through the NSCC, makes available prior to the opening of business on the Exchange (currently 9:30 a.m. New York time) on each Business Day, the identity of the Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as described below) on that day. Fund Securities received on redemption may not be identical to Deposit Securities that are applicable to creations of Creation Units. Unless cash redemptions are available or specified for a Fund, the redemption proceeds for a Creation Unit generally consist of Fund Securities — as announced on the Business Day the request for redemption is received in proper form — plus or minus cash in an amount equal to the difference between the NAV of the Fund Shares being redeemed, as next determined after a receipt of a redemption request in proper form, and the value of the Fund Securities (the “Cash Redemption Amount”), less a redemption transaction fee (see the section of this SAI entitled “Purchase and Redemption of Creation Units—Redemption—Redemption Transaction Fee”).

The right of redemption may be suspended or the date of payment postponed (1) for any period during which the Exchange is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the Exchange is suspended or restricted; (3) for any period during which an emergency exists as a result of which disposal of the Shares of the Fund or determination of a Fund’s NAV is not reasonably practicable; or (4) in such other circumstances as is permitted by the SEC.

Placement of Redemption Orders Through the Clearing Process

Orders to redeem Creation Units through the Clearing Process must be delivered through an Authorized Participant that has executed a Participant Agreement. Investors other than Authorized Participants are responsible for making arrangements with an Authorized Participant for an order to redeem. An order to redeem Creation Units is deemed received by the Trust on the Transmittal Date if: (1) such order is received by the Distributor not later than Closing Time on such Transmittal Date; and (2) all other procedures set forth in the Participant Agreement are properly followed. Such order will be effected based on the NAV of the relevant Fund as next determined. An order to redeem Creation Units using the

B-28

Clearing Process made in proper form but received by the Distributor after Closing Time will be deemed received on the next Business Day immediately following the Transmittal Date and will be effected at the NAV determined on such next Business Day. The requisite Fund Securities and the Cash Redemption Amount will be transferred by the third NSCC business day following the date on which such request for redemption is deemed received.

Placement of Redemption Orders Outside Clearing Process

Orders to redeem Creation Units outside the Clearing Process must be delivered through a DTC Participant that has executed the Participant Agreement. A DTC Participant who wishes to place an order for redemption of Creation Units to be effected outside the Clearing Process does not need to be a Participating Party, but such orders must state that the DTC Participant is not using the Clearing Process and that redemption of Creation Units will instead be effected through transfer of Fund Shares directly through DTC. An order to redeem Creation Units outside the Clearing Process is deemed received by the Distributor on the Transmittal Date if (1) such order is received by the Distributor not later than Closing Time on such Transmittal Date; (2) such order is accompanied or followed by the requisite number of Fund Shares, which delivery must be made through DTC to the Custodian no later than the DTC Cut-Off-Time, and the Cash Redemption Amount, if owed to the Fund, which delivery must be made by 2:00 p.m. New York Time; and (3) all other procedures set forth in the Participant Agreement are properly followed. After the Distributor receives an order for redemption outside the Clearing Process, the Distributor will initiate procedures to transfer the requisite Fund Securities which are expected to be delivered and the Cash Redemption Amount, if any, by the third Business Day following the Transmittal Date.

The calculation of the value of the Fund Securities and the Cash Redemption Amount to be delivered or received upon redemption (by the Authorized Participant or the Trust, as applicable) will be made by the Custodian according to the procedures set forth the section of this SAI entitled “Determination of Net Asset Value” computed on the Business Day on which a redemption order is deemed received by the Distributor. Therefore, if a redemption order in proper form is submitted to the Distributor by a DTC Participant not later than Closing Time on the Transmittal Date, and the requisite number of Shares of the Fund are delivered to the Custodian prior to the DTC Cut-Off-Time, then the value of the Fund Securities and the Cash Redemption Amount to be delivered or received (by the Authorized Participant or the Trust, as applicable) will be determined by the Custodian on such Transmittal Date. If, however, either (1) the requisite number of Shares of the relevant Fund are not delivered by the DTC Cut-Off-Time, as described above, or (2) the redemption order is not submitted in proper form, then the redemption order will not be deemed received as of the Transmittal Date. In such case, the value of the Fund Securities and the Cash Redemption Amount to be delivered or received will be computed on the Business Day following the Transmittal Date provided that the Fund Shares of the relevant Fund are delivered through DTC to the Custodian by 11:00 a.m. New York time the following Business Day pursuant to a properly submitted redemption order.

If it is not possible to effect deliveries of the Fund Securities, the Trust may in its discretion exercise its option to redeem Fund Shares in cash, and the redeeming Authorized Participant will be required to receive its redemption proceeds in cash. In addition, an investor may request a redemption in cash that the Trust may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the NAV of its Fund Shares based on the NAV of Shares of the relevant Fund next determined after the redemption request is received in proper form (minus a transaction fee which will include an additional charge for cash redemptions to offset the Fund’s brokerage and other transaction costs associated with the disposition of Fund Securities). A Fund may also, in its sole discretion, upon request of a shareholder, provide such redeemer a portfolio of securities that differs from the exact composition of the Fund Securities, or cash in lieu of some securities added to the Cash Redemption Amount, but in no event will

B-29

the total value of the securities delivered and the cash transmitted differ from the NAV. Redemptions of Fund Shares for Fund Securities will be subject to compliance with applicable federal and state securities laws and the Fund (whether or not it otherwise permits cash redemptions) reserves the right to redeem Creation Units for cash to the extent that the Trust could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Fund Securities under such laws. An Authorized Participant or an investor for which it is acting that is subject to a legal restriction with respect to a particular security included in the Fund Securities applicable to the redemption of a Creation Unit may be paid an equivalent amount of cash. The Authorized Participant may request the redeeming Beneficial Owner of the Fund Shares to complete an order form or to enter into agreements with respect to such matters as compensating cash payment, beneficial ownership of shares or delivery instructions.

Redemption Transaction Fee

Investors will be required to pay to the Custodian a fixed transaction fee (the “Redemption Transaction Fee”) of $500 for each redemption order. An additional variable fee of up to four times the fixed transaction fee (expressed as a percentage value of the Fund Securities) may be imposed for (1) redemptions effected outside the Clearing Process and (2) cash redemptions (to offset the Trust’s brokerage and other transaction costs associate with the sale of Fund Securities). The maximum transaction fee will be $500 for each redemption order. Investors will also bear the costs of transferring the Fund Securities from the Trust to their account or on their order.

Cash Creations and Redemptions

The Trust reserves the right to offer a “cash” option for creations and redemptions of Shares, although it has no current intention of doing so. In each instance of such cash creations and redemptions, transaction fees may be imposed that will be higher than the transaction fees associated with in-kind creations and redemptions. In all cases, such fees will be limited in accordance with the requirements of the SEC applicable to management investment companies offering redeemable securities.

CONTINUOUS OFFERING

The method by which Creation Units are created and traded may raise certain issues under applicable securities laws. Because new Creation Units are issued and sold by the Trust on an ongoing basis, at any point a “distribution,” as such term is used in the Securities Act, may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act.

For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into constituent Shares, and sells such Shares directly to customers, or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. A determination of whether one is an underwriter for purposes of the Securities Act must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to a categorization as an underwriter.

Broker-dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of Section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(3) of the Securities Act. This is because the

B-30

prospectus delivery exemption in Section 4(3) of the Securities Act is not available in respect of such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that dealers who are not underwriters but are participating in a distribution (as contrasted with ordinary secondary market transactions) and thus dealing with the Shares that are part of an over-allotment within the meaning of Section 4(3)(A) of the Securities Act would be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the Securities Act. Firms that incur a prospectus delivery obligation with respect to Shares are reminded that, under Rule 153 of the Securities Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed to an exchange member in connection with a sale on the NYSE Arca is satisfied by the fact that the prospectus is available at the NYSE Arca upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange.

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in conjunction with the section in the Prospectus entitled “Determination of Net Asset Value (NAV).”

The NAV per Share for each Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding, rounded to the nearest cent. Expenses and fees, including the management fee, are accrued daily and taken into account for purposes of determining NAV. The NAV of each Fund is determined as of the close of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern time) on each day that such exchange is open. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources.

In computing each Fund’s NAV, the Fund’s portfolio securities are valued based on market quotations. When market quotations are not readily available for a portfolio security a Fund must use such security’s fair value as determined in good faith in accordance with the Fund’s Fair Value Pricing Procedures which are approved by the Board of Trustees.

The value of each Fund’s portfolio securities is based on such securities’ closing price on local markets when available. If a portfolio security’s market price is not readily available or does not otherwise accurately reflect the fair value of such security, the portfolio security will be valued by another method that the Advisor believes will better reflect fair value in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. Each Fund may use fair value pricing in a variety of circumstances, including but not limited to, situations when the value of a Fund’s portfolio security has been materially affected by events occurring after the close of the market on which such security is principally traded (such as a corporate action or other news that may materially affect the price of such security) or trading in such security has been suspended or halted. In addition, each Fund may fair value foreign equity portfolio securities each day the Fund calculates its NAV. Accordingly, a Fund’s NAV may reflect certain portfolio securities’ fair values rather than their market prices. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a portfolio security is materially different than the value that could be realized upon the sale of such security. In addition, fair value pricing could result in a difference between the prices used to calculate a Fund’s NAV and the prices used by the Fund’s Underlying Index. This may adversely affect a Fund’s ability to track its Underlying Index. With respect to securities that are primarily listed on foreign exchanges, the value of a Fund’s portfolio securities may change on days when you will not be able to purchase or sell your Shares.

B-31

DIVIDENDS AND DISTRIBUTIONS

General Policies

The following information supplements and should be read in conjunction with the section in the Prospectus entitled “Dividends, Distributions and Taxes.”

Dividends from net investment income are declared and paid at least annually by each Fund. Distributions of net realized capital gains, if any, generally are declared and paid once a year, but the Trust may make distributions on a more frequent basis for each Fund to improve its Underlying Index tracking or to comply with the distribution requirements of the Code, in all events in a manner consistent with the provisions of the 1940 Act. In addition, the Trust may distribute at least annually amounts representing the full dividend yield on the underlying Portfolio Securities of the Funds, net of expenses of the Funds, as if each Fund owned such underlying Portfolio Securities for the entire dividend period in which case some portion of each distribution may result in a return of capital for tax purposes for certain shareholders.

Dividends and other distributions on Shares are distributed, as described below, on a pro rata basis to Beneficial Owners of such Shares. Dividend payments are made through DTC Participants and Indirect Participants to Beneficial Owners then of record with proceeds received from the Trust. The Trust makes additional distributions to the minimum extent necessary (i) to distribute the entire annual taxable income of the Trust, plus any net capital gains and (ii) to avoid imposition of the excise tax imposed by Section 4982 of the Code. Management of the Trust reserves the right to declare special dividends if, in its reasonable discretion, such action is necessary or advisable to preserve the status of each Fund as a regulated investment company (a “RIC”) or to avoid imposition of income or excise taxes on undistributed income.

Dividend Reinvestment Service

No reinvestment service is provided by the Trust. Broker-dealers may make available the DTC book-entry Dividend Reinvestment Service for use by Beneficial Owners of the Funds through DTC Participants for reinvestment of their dividend distributions. If this service is used, dividend distributions of both income and realized gains will be automatically reinvested in additional whole Shares of the Funds. Beneficial Owners should contact their broker to determine the availability and costs of the service and the details of participation therein. Brokers may require Beneficial Owners to adhere to specific procedures and timetables.

TAXATION

Set forth below is a discussion of certain U.S. federal income tax considerations affecting the Funds and the purchase, ownership and disposition of Shares. It is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated thereunder, judicial authorities, and administrative rulings and practices as in effect as of the date of this SAI, all of which are subject to change, including the following information which also supplements and should be read in conjunction with the section in the Prospectus entitled “Dividends, Distributions and Taxes.”

The following is a summary of the material U.S. federal income tax considerations applicable to an investment in Fund Shares. The summary is based on the laws in effect on the date of this SAI and existing judicial and administrative interpretations thereof, all of which are subject to change, possibly with retroactive effect. In addition, this summary assumes that a Fund shareholder holds Fund Shares as capital assets within the meaning of the Code, and does not hold Fund Shares in connection with a trade or business. This summary does not address all potential U.S. federal income tax considerations possibly applicable to an investment in Fund Shares, to Fund shareholders holding Fund Shares through a partnership (or other pass-through entity) or to Fund shareholders subject to special tax rules. Prospective

B-32

Fund shareholders are urged to consult their own tax advisers with respect to the specific federal, state, local and foreign tax consequences of investing in Fund Shares.

The Funds have not requested and will not request an advance ruling from the Internal Revenue Service (the “IRS”) as to the federal income tax matters described below. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. Prospective investors should consult their own tax advisors with regard to the federal tax consequences of the purchase, ownership or disposition of Shares, as well as the tax consequences arising under the laws of any state, foreign country or other taxing jurisdiction.

Tax Treatment of the Funds

In General. Each Fund intends to qualify and elect to be treated as a separate RIC under the Code. To qualify and maintain its tax status as a RIC, each Fund must meet annually certain income and asset diversification requirements and must distribute annually at least ninety percent of its “investment company taxable income” (which includes dividends, interest and net short-term capital gains). As a RIC, a Fund generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that it distributes to its shareholders.

With respect to some or all of its investments, a Fund may be required to recognize taxable income in advance of receiving the related cash payment. For example, if a Fund invests in original issue discount obligations (such as zero coupon debt instruments or debt instruments with payment-in-kind interest), the Fund will be required to include as interest income a portion of the original issue discount that accrues over the term of the obligation, even if the related cash payment is not received by the Fund until a later year. As a result, the Fund may be required to make an annual income distribution greater than the total cash actually received during the year. Such distribution may be made from the cash assets of the Fund or by selling Portfolio Securities. The Fund may realize gains or losses from such sales, in which event the Fund’s shareholders may receive a larger capital gain distribution than they would in the absence of such transactions.

A Fund will be subject to a four percent excise tax on certain undistributed income if the Fund does not distribute to its shareholders in each calendar year at least 98% of its ordinary income for the calendar year plus 98% of its capital gain net income for the twelve months ended October 31 of such year. Each Fund intends to make distributions necessary to avoid the 4% excise tax.

Failure to Maintain RIC Status. If a Fund fails to qualify as a RIC for any year, the Fund will be subject to regular corporate-level income tax in that year on all of its taxable income, regardless of whether the Fund makes any distributions to its shareholders. In addition, distributions will be taxable to a Fund’s shareholders generally as ordinary dividends to the extent of the Fund’s current and accumulated earnings and profits. Distributions from a non-qualifying Fund’s earnings and profits will be taxable to the Fund’s shareholders as regular dividends, possibly eligible for (i) in the case of an individual Fund shareholder, treatment as a qualifying dividend (as discussed below) subject to tax at preferential capital gains rates or (ii) in the case of a corporate Fund shareholder, a dividends-received deduction.

PFIC Investments. The Fund may purchase shares in a foreign corporation treated as a “passive foreign investment company” (a “PFIC”) for federal income tax purposes. As a result, the Fund may be subject to increased federal income tax (plus charges in the nature of interest on previously-deferred income taxes on the PFIC’s income) on “excess distributions” made on or gain from a sale (or other disposition) of the PFIC shares even if the Fund distributes the excess distributions to its shareholders.

B-33

In lieu of the increased income tax and deferred tax interest charges on excess distributions on and dispositions of a PFIC’s shares, the Fund can elect to treat the underlying PFIC as a “qualified electing fund,” provided that the PFIC agrees to provide the Fund with adequate information regarding its annual results and other aspects of its operations. With a “qualified electing fund” election in place, the Fund must include in its income each year its share (whether distributed or not) of the ordinary earnings and net capital gain of a PFIC.

In the alternative, the Fund can elect, under certain conditions, to mark-to-market at the end of each taxable year its PFIC shares. The Fund would recognize as ordinary income any increase in the value of the PFIC shares and as an ordinary loss (up to any prior income resulting from the mark-to-market election) any decrease in the value of the PFIC shares.

With a “mark-to-market” or “qualified election fund” election in place on a PFIC, the Fund might be required to recognize in a year income in excess of its actual distributions on and proceeds from dispositions of the PFIC’s shares. Any such income would be subject to the RIC distribution requirements and would be taken into account for purposes of the 4% excise tax (described above).

Futures Contracts. A Fund may be required to mark-to-market and recognize as income for each taxable year its net unrealized gains and losses on certain futures contracts. In addition, a Fund may be required to defer the recognition of losses on futures contracts to the extent of any unrecognized gains on related positions held by the Fund. Any income from futures contracts would be subject to the RIC distribution requirements and would be taken into account for purposes of the 4% excise tax (described above).

Foreign Currency Transactions. Gains or losses attributable to fluctuations in exchange rates between the time a Fund accrues income, expenses or other items denominated in a foreign currency and the time the Fund actually collects or pays such items are generally treated as ordinary income or loss. Similarly, gains or losses on foreign currency forward contracts and the disposition of debt securities denominated in a foreign currency, to the extent attributable to fluctuations in exchange rates between the acquisition and disposition dates, are also treated as ordinary income or loss.

Special or Uncertain Tax Consequences. A Fund’s investment or other activities could be subject to special and complex tax rules that may produce differing tax consequences, such as disallowing or limiting the use of losses or deductions, causing the recognition of income or gain without a corresponding receipt of cash, affecting the time as to when a purchase or sale of stock or securities is deemed to occur or altering the characterization of certain complex financial transactions. Each Fund will monitor its investment activities for any adverse effects that may result from these special tax rules.

In addition, a Fund may engage in investment or other activities the treatment of which may not be clear or may be subject to recharacterization by the IRS. If a final determination on the tax treatment of a Fund’s investment or other activities differs from the Fund’s original expectations, the final determination could adversely affect the timing or character of income recognized by the Fund, requiring the Fund to purchase or sell assets, alter its portfolio or take other action in order to comply with the final determination.

Tax Treatment of Fund Shareholders

Fund Distributions. In general, Fund distributions are subject to federal income tax when paid, regardless of whether they consist of cash or property or are re-invested in Fund Shares. However, any Fund distribution declared in October, November or December of any calendar year and payable to shareholders of record on a specified date during such month will be deemed to have been received by

B-34

each Fund shareholder on December 31 of such calendar year, provided such dividend is actually paid during January of the following calendar year.

Distributions of a Fund’s net investment income (other than, as discussed below, qualifying dividend income) and net short-term capital gains are taxable as ordinary income to the extent of the Fund’s current or accumulated earnings and profits. Distributions of a Fund’s net long-term capital gains in excess of net short-term capital losses are taxable as long-term capital gain to the extent of the Fund’s current or accumulated earnings and profits, regardless of a Fund shareholder’s holding period in the Fund’s Shares. Distributions of qualifying dividend income are taxable as long-term capital gain to the extent of the Fund’s current or accumulated earnings and profits, provided that the Fund shareholder meets certain holding period and other requirements with respect to the distributing Fund’s Shares and the distributing Fund meets certain holding period and other requirements with respect to its dividend-paying stocks.

Each Fund intends to distribute its long-term capital gains at least annually. However, by providing written notice to its shareholders no later than 60 days after its year-end, a Fund may elect to retain some or all of its long-term capital gains and designate the retained amount as a “deemed distribution.” In that event, the Fund pays income tax on the retained long-tem capital gain, and each Fund shareholder recognizes a proportionate share of the Fund’s undistributed long-term capital gain. In addition, each Fund shareholder can claim a refundable tax credit for the shareholder’s proportionate share of the Fund’s income taxes paid on the undistributed long-term capital gain and increase the tax basis of the Fund Shares by an amount equal to 65% of the Fund shareholder’s proportionate share of the Fund’s undistributed long-term capital gains.

Investors considering buying Fund Shares just prior to a distribution should be aware that, although the price of the Fund Shares purchased at such time may reflect the forthcoming distribution, such distribution nevertheless may be taxable (as opposed to a non-taxable return of capital).

REIT/REMIC Investments. A Fund may invest in REITs owning residual interests in real estate mortgage investment conduits (“REMICs”). Income from a REIT to the extent attributable to a REMIC residual interest (known as “excess inclusion” income) is allocated to a Fund’s shareholders in proportion to the dividends received from the Fund, producing the same income tax consequences as if the Fund shareholders directly received the excess inclusion income. In general, excess inclusion income (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) constitutes “unrelated business taxable income” to certain entities (such as a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity), and (iii) in the case of a foreign shareholder, does not qualify for any withholding tax reduction or exemption. In addition, if at any time during any taxable year certain types of entities own Fund Shares, the Fund will be subject to a tax equal to the product of (i) the excess inclusion income allocable to such entities and (ii) the highest U.S. federal income tax rate imposed on corporations. A Fund is also subject to information reporting with respect to any excess inclusion income.

Sales of Fund Shares. Any capital gain or loss realized upon a sale of Fund Shares is treated generally as a long-term gain or loss if the Fund Shares have been held for more than one year. Any capital gain or loss realized upon a sale of Fund Shares held for one year or less is generally treated as a short-term gain

B-35

or loss, except that any capital loss on the sale of Fund Shares held for six months or less is treated as long-term capital loss to the extent that capital gain dividends were paid with respect to such Fund Shares.

Creation Unit Issues and Redemptions. On an issue of Fund Shares as part of a Creation Unit, an Authorized Participant recognizes capital gain or loss equal to the difference between (i) the fair market value (at issue) of the issued Fund Shares (plus any cash received by the authorized participant as part of the issue) and (ii) the Authorized Participant’s aggregate basis in the exchanged securities (plus any cash paid by the authorized participant as part of the issue). On a redemption of Fund Shares as part of a Creation Unit, an Authorized Participant recognizes capital gain or loss equal to the difference between (i) the fair market value (at redemption) of the securities received (plus any cash received by the Authorized Participant as part of the redemption) and (ii) the Authorized Participant’s basis in the redeemed Fund Shares (plus any cash paid by the Authorized Participant as part of the redemption). However, the IRS may assert, under the “wash sale” rules or on the basis that there has been no significant change in the Authorized Participant’s economic position, that any loss on an issue or redemption of Creation Units cannot be deducted currently.

In general, any capital gain or loss recognized upon the issue or redemption of Fund Shares (as components of a Creation Unit) is treated either as long-term capital gain or loss, if the deposited securities (in the case of an issue) or the Fund Shares (in the case of a redemption) have been held for more than one year, or otherwise as short-term capital gain or loss. However, any capital loss on a redemption of Fund Shares held for six months or less is treated as long-term capital loss to the extent that capital gain dividends were paid with respect to such Fund Shares.

Tax Shelter Reporting Regulations. If a Fund shareholder recognizes a loss with respect to Fund Shares of $2 million or more (for an individual Fund shareholder) or $10 million or more (or a greater loss over a combination of years) for a corporate stockholder in any single taxable year, the Fund shareholder must file a disclosure statement with the IRS. Significant penalties may be imposed upon the failure to comply with these reporting rules.

Special Issues for Foreign Shareholders

In general. If a Fund shareholder is not a U.S. citizen or resident or if a Fund shareholder is a foreign entity, the Fund’s ordinary income dividends (including distributions of net short-term capital gains and other amounts that would not be subject to U.S. withholding tax if paid directly to foreign Fund shareholders) will be subject, in general, to withholding tax at a rate of 30% (or at a lower rate established under an applicable tax treaty). However, for Fund tax years beginning on or before December 31, 2009, interest-related dividends and short-term capital gain dividends generally will not be subject to withholding tax; provided that the foreign Fund shareholder furnishes the Fund with a completed IRS Form W-8BEN (or acceptable substitute documentation) establishing the Fund shareholder’s status as foreign and that the Fund does not have actual knowledge or reason to know that the foreign Fund shareholder would be subject to withholding tax if the foreign Fund shareholder were to receive the related amounts directly rather than as dividends from the Fund.

B-36

Gain on a sale of Fund Shares or an exchange of such stockholder’s Shares of the Fund will be exempt from U.S. federal income tax (including withholding at the source) unless (i) in the case of an individual foreign Fund shareholder, the Fund shareholder is physically present in the United States for more than 182 days during the taxable year and meets certain other requirements, or (ii) at any time during the shorter of the period during which the foreign Fund shareholder held such Shares of the Fund and the five-year period ending on the date of the disposition of those shares, the Fund was a “U.S. real property holding corporation” (as defined below) and the foreign Fund shareholder actually or constructively held more than 5% of the Fund Shares of the same class. In the case of a disposition described in clause (ii) of the preceding sentence, the gain would be taxed in the same manner as for a domestic Fund shareholder and collected through withholding at the source in an amount equal to 10% of the sales proceeds.

Unless treated as a “domestically-controlled” RIC, a Fund will be a “U.S. real property holding corporation” if the fair market value of its U.S. real property interests (which includes shares of U.S. real property holding corporations and certain participating debt securities) equals or exceeds 50% of the fair market value of such interests plus its interests in real property located outside the United States plus any other assets used or held for use in a business. A “domestically controlled” RIC is any RIC in which at all times during the relevant testing period 50% or more in value of the RIC’s stock was owned by U.S. persons. This provision relating to domestically controlled regulated investment companies generally will not apply after December 31, 2009.

To claim a credit or refund for any Fund-level taxes on any undistributed long-term capital gains (as discussed above) or any taxes collected through withholding, a foreign Fund shareholder must obtain a U.S. taxpayer identification number and file a federal income tax return even if the foreign Fund shareholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. income tax return.

Investments in U.S. Real Property. In general, if a Fund is a “U.S. real property holding corporation,” (determined without the exception for “domestically-controlled” RICs and publicly-traded RICs) distributions by the Fund attributable to gains from “U.S. real property interests” (including gain on the sale of shares in certain “non-domestically controlled” REITs and certain capital gain dividends from REITs) will be treated as income effectively connected to a trade or business within the United States, subject generally to tax at the same rates applicable to domestic Fund shareholders and, in the case of the foreign corporate Fund shareholder, a “branch profits” tax at a rate of 30% (or other applicable lower rate). Such distributions will be subject to U.S. withholding tax and will generally give rise to an obligation on the part of the foreign stockholder to file a U.S. federal income tax return.

Even if a Fund is treated as a U.S. real property holding company, distributions on and sales of the Fund Shares will not be treated as income effectively connected with a U.S. trade or business in the case of a foreign Fund shareholder owning (for the applicable period) 5% or less (by class) of the Fund shares. In general, these provisions generally will not apply after December 31, 2009, provided, however, that such provisions will continue to apply thereafter in respect of distributions by a regulated investment company that is a U.S. real property holding corporation or would be so treated for this purpose to the extent such distributions are attributable to certain capital gain dividends from REITs. Investors are advised to consult their own tax advisers with respect to the application to their own circumstances of the above-described rules.

Under recently enacted legislation, foreign stockholders that engage in certain “wash sale” and/or substitute dividend payment transactions the effect of which is to avoid the receipt of distributions from the Fund that would be treated as gain effectively connected with a United States trade or business will be

B-37

treated as having received such distributions. All shareholders of the Fund should consult their tax advisers regarding the application of this recently enacted legislation.

OTHER INFORMATION

The Funds are not sponsored, endorsed, sold or promoted by the Exchange. The Exchange makes no representation or warranty, express or implied, to the owners of Shares or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly or the ability of the Funds to achieve their objective. The Exchange has no obligation or liability in connection with the administration, marketing or trading of the Funds.

Shareholder inquiries may be made by writing to the Trust, c/o IndexIQ Advisors LLC, 800 Westchester Avenue, Suite N-611, Rye Brook, New York 10573.

B-38

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
of IndexIQ ETF Trust

We have audited the accompanying statement of assets and liabilities of IQ Hedge Multi-Strategy Composite ETF (a series comprising IndexIQ ETF Trust) (the “Fund”) as of January 23, 2009. This statement of assets and liabilities is the responsibility of the Fund’s management. Our responsibility is to express an opinion on this statement of assets and liabilities based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of assets and liabilities is free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of assets and liabilities, assessing the accounting principles used and significant estimates made by management, and evaluating the overall statement of assets and liabilities presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities referred to above presents fairly, in all material respects, the financial position of IQ Hedge Multi-Strategy Composite ETF of the IndexIQ ETF Trust at January 23, 2009 in conformity with U.S. generally accepted accounting principles.

New York, New York
January 29, 2009

F-1

FINANCIAL STATEMENTS

IQ Hedge Multi-Strategy Composite ETF
(a series of IndexIQ ETF Trust)
STATEMENT OF ASSETS AND LIABILITIES
January 23, 2009


Assets:
Cash	$100,000

Total Assets	$100,000

Net Assets	$100,000

Components of Net Assets:
Paid in Capital	$100,000

Net Assets	$100,000


Shares Issued and Outstanding:
Shares Outstanding (Unlimited shares authorized)	4,000


Net Asset Value (NAV) per Share	$25.00

See accompanying notes to financial statements.

F-2

IQ Hedge Multi-Strategy Composite ETF
(a series of IndexIQ ETF Trust)

NOTES TO FINANCIAL STATEMENTS

1. Organization

IndexIQ ETF Trust, a Delaware statutory trust (the “Trust”), was formed on July 1, 2008, and has authorized capital of unlimited shares of beneficial interest. The Trust consists of five funds (IQ Hedge Multi-Strategy Composite ETF, IQ Hedge Macro ETF, IQ Hedge Long/Short ETF, IQ Hedge Event-Driven ETF, and IQ Hedge Market Neutral ETF, and, collectively, the “Funds”) that are exchange-traded funds. The Trust has had no operations to date other than matters relating to its organization and registration as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and the sale and issuance to IndexIQ Advisors LLC (the “Advisor”) of 4,000 shares of beneficial interest at an aggregate purchase price of $100,000 in IQ Hedge Multi-Strategy Composite ETF (the “Fund”) on January 23, 2009. The Advisor owns 100% of the outstanding shares in the Fund.

The Fund’s investment objective is to seek investment results that correspond (before fees and expenses) generally to the price and yield performance of the IQ Hedge Multi-Strategy Composite Index (the “Underlying Index”) developed by Financial Development Holdco LLC, the parent company of the Advisor. To achieve it investment objective, the Fund is a “fund of funds” that invests at least 80% of it net assets, plus the amount of any borrowings for investment purposes, in investment included in the Underlying Index. In addition, the Fund may invest up to 20% of its net assets in securities not included in the Underlying Index, but which the Advisor believes will help the Fund track the Underlying Index. The investment objective of the Underlying Index seeks to replicate the risk-adjusted return characteristics of collective hedge funds that employ various hedge fund styles, which may include but are not limited to long/short equity, global macro, market neutral, event-driven, fixed income arbitrage, emerging markets and other strategies commonly used by hedge fund managers.

2. Summary of Significant Accounting Policies

Use of Estimates and Indemnifications

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statement of assets and liabilities. Actual results could differ from those estimates.

In the normal course of business, the Trust enters into contracts that contain a variety of representations which provide general indemnifications. The Trust’s maximum exposure under these arrangements cannot be known; however, the Trust expects any risk of loss to be remote.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments, with maturities of three months or less when acquired.

F-3

Income Taxes

The Fund intends to qualify as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended. If so qualified, the Fund will not be subject to federal income tax to the extent it distributes substantially all of its net investment income and capital gains to shareholders.

3. Agreements

Advisory Agreement

The Advisor will oversee the performance of the Funds, but is not expected to exercise day-to-day oversight over the Funds’ service providers. The Advisor is responsible for overseeing the management of the investment portfolio of the Funds. These services are provided under the terms of an Advisory Agreement (the “Advisory Agreement”) between the Trust and the Advisor, pursuant to which the Advisor receive an annual unified management fee equal to 0.75% of each Fund’s average net assets.

Under the Advisory Agreement, the Advisor agrees to pay all expenses of the Trust, except compensation and expenses of the Independent Trustees, counsel to the Independent Trustees and the Trust’s chief compliance officer, interest expenses and taxes, brokerage expenses, and other expenses connected with the execution of portfolio transactions, any distribution fees or expenses, legal fees or expenses and extraordinary expenses.

The Advisory Agreement provides that the Advisor shall not be liable to the Fund or its shareholders for anything other than willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations or duties. The Advisory Agreement also provides that the Advisor may engage in other businesses, devote time and attention to any other business whether of a similar or dissimilar nature and render investment advisory services to others.

Sub-Advisory Agreement

Mellon Capital Management Corporation (“MCM” and the “Sub-Advisor”), which is unaffiliated with the Advisor, will serve as the sub-advisor to the IQ Hedge Multi-Strategy Composite ETF pursuant to a Sub-Advisory Agreement, to conduct the day-to-day portfolio management of such Fund. Pursuant to MCM’s Sub-Advisory Agreement, the Advisor will pay MCM an annual fee, payable monthly for their services.

Distribution Agreement

ALPS Distributors, Inc. (the “Distributor”) serves as the Funds’ distributor of Creation Units for each Fund pursuant to the distribution agreement. The Distributor does not maintain any secondary market shares.

Administrator, Custodian and Transfer Agent

The Bank of New York Mellon (in each capacity, the “Administrator,” “Custodian” or “Transfer Agent”), serves as the Funds’ Administrator, Custodian and Transfer Agent pursuant to a certain Fund Administration and Accounting Agreement.

4. Organization and Offering Costs

Expenses incurred in connection with the organization and the offering of the Trust and the Fund will be paid by the Advisor. The Trust and the Fund do not have an obligation to reimburse the Advisor or its affiliates for organizational and offering expenses paid on their behalf.

F-4

5. Creation and Redemption Transactions

The Funds issue and redeem shares on a continuous basis at net asset value (the “NAV”) per share in groups of 50,000 shares called “Creation Units.” Except when aggregated in Creation Units, shares are not redeemable securities of the Fund.

Only “Authorized Participants” may purchase or redeem shares directly from the Funds. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of National Securities Clearing Corporation or (ii) a DTC participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized Participants or have the resources to buy and sell whole Creation Units. Therefore, they will be unable to purchase or redeem the shares directly from the Funds. Rather, most retail investors will purchase shares in the secondary market with the assistance of a broker and will be subject to customary brokerage commissions or fees.

F-5

Appendix A

MELLON CAPITAL MANAGEMENT CORPORATION
SUMMARY OF PROXY VOTING POLICY AND PROCEDURES

The Sub-Advisor as a wholly-owned subsidiary of The Bank of New York Mellon Corporation, participates on BNY Mellon’s Proxy Policy Committee (the “PPC”) and has adopted a Proxy Voting Policy, related procedures, and voting guidelines which are applied to those client accounts over which it has been delegated the authority to vote proxies. In voting proxies, Sub-Advisor seeks to act solely in the best financial and economic interest of the applicable client. Sub-Advisor will carefully review proposals that would limit shareholder control or could affect the value of a client’s investment. It generally will oppose proposals designed to insulate an issuer’s management unnecessarily from the wishes of a majority of shareholders. It will generally support proposals designed to provide management with short-term insulation from outside influences so as to enable them to bargain effectively with potential suitors and otherwise achieve long-term goals. On questions of social responsibility where economic performance does not appear to be an issue, Sub-Advisor will attempt to ensure that management reasonably responds to the social issues. Responsiveness will be measured by management’s efforts to address the proposal including, where appropriate, assessment of the implications of the proposal to the ongoing operations of the company. The PPC will pay particular attention to repeat issues where management has failed in its commitment in the intervening period to take actions on issues.

Sub-Advisor recognizes its duty to vote proxies in the best interests of its clients. Adviser seeks to avoid material conflicts of interest through its participation in the PPC, which applies detailed, pre-determined proxy voting guidelines (the “Voting Guidelines”) in an objective and consistent manner across client accounts, based on internal and external research and recommendations provided by a third party vendor, and without consideration of any client relationship factors. Further, Sub-Advisor and its affiliates engage a third party as an independent fiduciary to vote all proxies for BNY Mellon securities and affiliated mutual fund securities.

All proxy voting proposals are reviewed, categorized, analyzed and voted in accordance with the Voting Guidelines. These guidelines are reviewed periodically and updated as necessary to reflect new issues and any changes in our policies on specific issues. Items that can be categorized under the Voting Guidelines will be voted in accordance with any applicable guidelines or referred to the PPC, if the applicable guidelines so require. Proposals that cannot be categorized under the Voting Guidelines will be referred to the PPC for discussion and vote. Additionally, the PPC may review any proposal where it has identified a particular company, industry or issue for special scrutiny. With regard to voting proxies of foreign companies, Adviser weighs the cost of voting, and potential inability to sell the securities (which may occur during the voting process) against the benefit of voting the proxies to determine whether or not to vote.

In evaluating proposals regarding incentive plans and restricted stock plans, the PPC typically employs a shareholder value transfer model. This model seeks to assess the amount of shareholder equity flowing out of the company to executives as options are exercised. After determining the cost of the plan, the PPC evaluates whether the cost is reasonable based on a number of factors, including industry classification and historical performance information. The PPC generally votes against proposals that permit the repricing or replacement of stock options without shareholder approval or that are silent on repricing and the company has a history of repricing stock options in a manner that the PPC believes is detrimental to shareholders.

Sub-Advisor will furnish a copy of its Proxy Voting Policy, any related procedures, and its Voting Guidelines to each advisory client upon request. Upon request, Adviser will also disclose to an advisory

1-A

client the proxy voting history for its account after the shareholder meeting has concluded. A complete copy of the Proxy Policy may be obtained by writing to: Judy Manion at 500 Grant Street, Suite 2600, Pittsburgh, PA 15258.

2-A

PART C

OTHER INFORMATION

Item 23. Exhibits

(a) Declaration of Trust (“Trust Instrument”) of IndexIQ ETF Trust (“Registrant”).

(b) By-Laws of Registrant.

(c) Articles III, V, and VI of the Trust Instrument, Exhibit 23(a) hereto, defines the rights of holders of the securities being registered. (Certificates for shares are not issued.)

(d)(1) Form of Advisory Agreement between the Registrant and IndexIQ Advisors LLC (“Investment Advisor”), as adviser for the Registrant and each of its investment portfolios (the “Funds”).

(d)(2) Form of Sub-Advisory Agreement between the Investment Advisor and Mellon Capital Management Corporation (“Sub-Advisor”), as sub-advisor for the Funds.

(e) Distribution Agreement between ALPS Distributors, Inc. (“Distributor”) and the Registrant.

(f) Not applicable.

(g) Custody Agreement between the Registrant and The Bank of New York Mellon.

(h)(1) Fund Administration and Accounting Agreement between the Registrant and The Bank of New York Mellon.

(h)(2) Transfer Agency Agreement between the Registrant and The Bank of New York Mellon.

(h)(3) Form of Sub-License Agreement among the Registrant, the Investment Advisor and Financial Development Holdco LLC (“IndexIQ”).

(i) Opinion and Consent of Katten Muchin Rosenman LLP regarding the legality of securities registered with respect to the Registrant.

(j)(1) Consent of Ernst & Young LLP, independent auditor with respect to the Funds.

(j)(2) Consent of Katten Muchin Rosenman LLP (included in Exhibit 23(i) hereto).

(k) Not applicable.

(l) Not applicable.

(m) Not applicable.

(n) Not applicable.

(o) Reserved.

(p)(1) Code of Ethics for the Registrant.

(p)(2) Code of Ethics for the Investment Advisor.

(p)(3) Code of Ethics for the Sub-Advisor.

(p)(4) Code of Ethics for the Distributor.

(q) Powers of Attorney executed by Reena Aggarwal, Gene Chao and Adam S. Patti.

Item 24. Persons Controlled by or Under Common Control with Registrant.

Not Applicable.

Item 25. Indemnification

Under Delaware law, Section 3817 of the Treatment of Delaware Statutory Trusts empowers Delaware business trusts to indemnify and hold harmless any trustee or beneficial owner or other person from and against any and all claims and demands whatsoever, subject to such standards and restrictions as may be set forth in the governing instrument of the business trust. The Registrant’s Trust Instrument contains the following provisions:

Section 2. Indemnification and Limitation of Liability. The Trustees shall not be responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, Investment Advisor or Principal Underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, and, as provided in Section 3 of this Article VII, the Trust out of its assets shall indemnify and hold harmless each and every Trustee and officer of the Trust from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to such Trustee’s performance of his or her duties as a Trustee or officer of the Trust; provided that nothing herein contained shall indemnify, hold harmless or protect any Trustee or officer from or against any liability to the Trust or any Shareholder to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

Section 3. Indemnification.

(a) Subject to the exceptions and limitations contained in Subsection (b) below:

(i) every person who is, or has been, a Trustee or an officer, employee or agent of the Trust (including any individual who serves at its request as director, officer, partner, trustee or the like of another organization in which it has any interest as a shareholder, creditor or otherwise) (“Covered Person”) shall be indemnified by

the Trust or the appropriate Series to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Covered Person and against amounts paid or incurred by him in the settlement thereof; and

(ii) as used herein, the words “claim,” “action,” “suit,” or “proceeding” shall apply to all claims, actions, suits or proceedings (civil, criminal or other, including appeals), actual or threatened, and the words “liability” and “expenses” shall include, without limitation, attorneys, fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered Person:

(i) who shall have been adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office, or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or

(ii) in the event the matter is not adjudicated by a court or other appropriate body, unless there has been a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office: by at least a majority of those Trustees who are neither Interested Persons of the Trust nor are parties to the matter based upon a review of readily available facts (as opposed to a full trial-type inquiry); or by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry).

(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, and shall inure to the benefit of the heirs, executors and administrators of a Covered Person.

(d) To the maximum extent permitted by applicable law, expenses incurred in defending any proceeding may be advanced by the Trust before the disposition of the proceeding upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the Trust or applicable Series if it is ultimately determined that he is not entitled to indemnification under this Section; provided, however, that either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a full trial-type inquiry) that there is reason to believe that such Covered Person will not be disqualified from indemnification under this Section.

(e) Any repeal or modification of this Article VII by the Shareholders, or adoption or modification of any other provision of the Declaration or By-laws inconsistent with this Article, shall be prospective only, to the extent that such repeal, or modification would, if applied retrospectively, adversely affect any limitation on the liability of any Covered Person or indemnification available to any Covered Person with respect to any act or omission which occurred prior to such repeal, modification or adoption.

In addition, the Registrant has entered into an Investment Advisory Agreement with its Investment Advisor and a Distribution Agreement with its Distributor. These agreements provide indemnification for those entities and their affiliates. The Investment Advisor’s and Distributor’s personnel may serve as trustees and officers of the Trust. The Investment Advisory Agreement with the Fund provides that the Investment Advisor will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Advisor or from reckless disregard by the Investment Advisor of its obligations or duties under the Agreement. Under the Distribution Agreement, the Registrant will indemnify ALPS Distributors, Inc. against certain liabilities.

Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (“Act”), may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Trust Instrument or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, officers or controlling persons of the Registrant in connection with the successful defense of any act, suit or proceeding) is asserted by such trustees, officers or controlling persons in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.

Trustees and officers liability policies purchased by the Registrant insure the Registrant and their respective trustees, partners, officers and employees, subject to the policies’ coverage limits and exclusions and varying deductibles, against loss resulting from claims by reason of any act, error, omission, misstatement, misleading statement, neglect or breach of duty.

Item 26. Business and Other Connections of Investment Advisor.

The description of the Investment Advisor and the Sub-Advisor is found under the caption “Service Providers—Investment Advisor” and “—Sub-Advisor” in the Prospectus and under the caption “Management Services—Investment Advisor” and “—Sub-Advisor” in the Statement of Additional Information constituting Parts A and B, respectively, of this Registration Statement, which are incorporated by reference herein. The Investment Advisor and the Sub-Advisor provide investment advisory services to other persons or entities other than the Registrant.

Item 27. Principal Underwriters.

(a) ALPS Distributors, Inc. acts as the distributor for the Registrant and the following investment companies: AARP Funds, AirShares EU Carbon Allowances Fund, ALPS ETF Trust, ALPS Variable Insurance Trust, Ameristock Mutual Fund, Inc., BLDRS Index Fund Trust, Campbell Multi-Strategy Trust, CornerCap Group of Funds, DIAMONDS Trust, Financial Investors Trust, Financial Investors Variable Insurance Trust, Firsthand Funds, Forward Funds, Heartland Group, Inc., Henssler Funds, Inc., Holland Balanced Fund, Laudus Trust, Milestone Funds, MTB Group of Funds, Pax World Funds, PowerShares QQQ 100 Trust Series 1, Scottish Widows Investment Partnership, SPDR Trust, MidCap SPDR Trust, Select Sector SPDR Trust, State Street Institutional Investment Trust, Stonebridge Funds, Inc., Stone Harbor Investment Funds, TDX Independence Funds, Inc., Utopia Funds, W. P. Stewart Funds, Wasatch Funds, Westcore Trust, Williams Capital Liquid Assets Fund, and WisdomTree Trust.

(b) The following is a list of the directors and executive officers of the Distributor, each having an address care of the Distributor:


Edmund J. Burke	Director
Jeremy O. May	Director
Spencer Hoffman	Director
Thomas Carter	President, Director
Richard Hetzer	Executive Vice President
John C. Donaldson	Vice President, Chief Financial Officer
Diana M. Adams	Vice President, Controller, Treasurer
Robert J. Szydlowski	Vice President, Chief Technology Officer
Tané Tyler	Vice President, General Counsel, Secretary
Brad Swenson	Vice President, Chief Compliance Officer
Kevin J. Ireland	Vice President, Director of Institutional Sales
Mark R. Kiniry	Vice President, National Sales Director-Investments

The principal business address for each of the above directors and executive officers is 1290 Broadway, Suite 1100, Denver, Colorado 80203.

*This list does not serve as an admission that the Trust considers all of these persons listed to be officers of investment companies having the same Investment Advisor, Investment Sub-Advisor or Distributor or having an Investment Advisor, Investment Sub-Advisor or Distributor that directly or indirectly controls, is controlled by or is under common control with the Investment Advisor, Investment Sub-Advisor or Distributor.

Item 28. Location of Accounts and Records.

All accounts, books and other documents required by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules thereunder are maintained at:

IndexIQ Advisors LLC
800 Westchester Avenue, Suite N611
Rye Brook, NY 10573

The Bank of New York
One Wall Street
New York, NY 10286

Mellon Capital Management Corporation
50 Fremont Street, Suite 3900
San Francisco, CA 94105

ALPS Distributors, Inc.
1625 Broadway, Suite 2200
Denver, CO 80202

Item 29. Management Services

Not applicable.

Item 30. Undertakings

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (“Securities Act”), and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of New York, and State of New York on this 4th day of February, 2009.

	INDEXIQ ETF TRUST

	By: /s/ Adam S. Patti
		Adam S. Patti President

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.


Name	Title	Date

*	Trustee	February 4, 2009

Reena Aggarwal


*	Trustee	February 4, 2009

Gene Chao

/s/ Adam S. Patti	Chairman, Trustee, President	February 4, 2009
	and Principal Executive
Adam S. Patti	Officer


/s/ David Fogel	Chief Compliance Officer,	February 4, 2009
	Treasurer and Principal
David Fogel	Financial Officer

	*By: /s/ Gregory D. Bassuk
		Gregory D. Bassuk, Attorney in fact

GRAPHIC 2 ernstyoung.jpg GRAPHIC begin 644 ernstyoung.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``@&!@<&!0@'!P<)"0@*#!0-#`L+ M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#W^BH+V]M] M.L9[V[E6*V@C:261C@*H&2:\TM;'5_BPJZAJDEYH_A,G%OIT;E);].[S$8PA MXPH^N>A(!MZS\6/"6CZB-.%])J%Z?^6&G1&<@YQC*\9]LYKH?#GB33O%.DC4 MM,>0Q;VB=)4*/&ZG!5E/0BIM(T/2]`LQ::3I]O90#'R0QA=WN3U)]SS6%X1\ M+:CH&O\`BC4;[48KF+5[W[1!#''M\E1N`SZL5*@_[F`W"V^?G,8(4MC MTR>E`% MJBFR2)%&TDCJB("S,QP`!U)-,MKF"\MH[FUGCG@E4/'+$X974]""."*`):** M*`"BBB@`HHHH`****`"BBB@`HHJO>W]GIMO]HOKN"UAR%\R>0(N3T&2<4`6* M*X>'XK^&Y+^*!UU*WMY7V+?7%D\=OGMER.![GCUXKMU8,H92"I&01WH`Y7XE MZ9=:O\.-=LK)'DN7MBR)']Y]I#%0.Y(!&.^<52TOXK>";C0(+YM;L;-0@#6K MOMDB./NA!R0.G`Q6QXS\5VO@[PY/JNH&*R&!805."!(ZQG]&-0>`=+L/#^M> M(=!TD%;&R^R;AN)'GF+YSSZJ(R>3R37FOQ3;QK8:+)X'?%=SX-L9QXPAM[&]4W3?8[-))V:0EGW2R M9^?)()VG!&`1B@#UNBH;.W-I9PVYGFG,:!3+,VYWQW8@#D_2IJ`/%O&GQ/72 M/'\K67AIKZYT4"S:X:]$>[S]A*K'M)9OD`&,_P`7'>O9XV+Q([(4+`$J>H]J M\B\5^#)Y?CEX7U;1[2>W,K&XO[R,'RR(\94X&%++\OOO'O7K]`'$?%^2:/X5 M:\8%9I&B1,+G)#2(IZ>Q-=G;V\-I;16UO&L<,2".-%&`J@8`'L!6!X_TV75_ M`&NV4`D:=K-WB6,99G4;E`]R5`_&J6D_$KPS>>$[36[S6K"U\R!7FB:8!XWQ M\R[,[B000!@Y[9H`Q_CEJD^G_#6XM[8$S:C<16:A02QW$L0`.I(0C\378>$] M)?0O".D:5(VZ2UM(XG/JP4;OPSFO*/%WC&?7-4\)ZK<6\>F^$HM;@EAGO#LG MN'52?,V'[L:_,,]]P/T[&;XT>`(;I(#KRMO&?,2WE9%]B0M`'?454BU2PGTE M=5CNX6L&A\\7&\;/+QG=GL,5"^O:/%I46J2ZI9Q:?,H:.YDG5(V!Z88G%`&C M16*_B_PU%>I9/XATI;IR%6$WD>\D]!C/4YX]:=XG\3:9X1T.75]6D9+:-E7" M+N9F)P`!W/\`@:`-BBJNG:C9ZM817VGW4-S:RC*2PN&4_B/?BK5`!62_B"U3 MQ;'X=97%U+9->HY(VE0X0KZYYS],UK5Y]XJ/V?XQ>`)%D*>?'J$,G/#*(E8# M_OHC]*`/0:RT\06$GBB7PZKO_:$5HMXR[?E\LL5Z^N0./0CWQJ5Y[H[>=\=? M$C,0IM]*MHE7NP8[L_@>*`/0B0`23@#O7&6<-IXA^(6KRW\<4YT(P06,3'<( MR\:RM-M/&X[U4'L$XZFNJU&W>[TR[MHV*/-"\:L#@@E2`:\,^#^@:=XTT#4+ MZ\%U:WMO/##%=V=RT4RA((U^^N,@E`V#G!H`]J\0W.G6?AW49]6:,:>EN_VC MS,8*8P1@]2>@'+J"?#S0%U3_C[%E'N!ZAG?-=U0!YMXB6'5OC=X:TS4ID2SL;"34 M;2)B!Y]UOV@>Y4*''^Z?>N]U+5=/T:S>[U*]@M+=029)I`H_7J?:LOQ1X+T+ MQA#"FL69ED@R8)XW*21$XY5@?8=>.*R+#X2>#K.Y2YFTZ34)TY#ZA.\_/<[6 M.WGZ4`<-\2/%6O>,_`^IR^%]/=?#$48>XU"92CW:!AD0J>=H()8D#A2..AS- M9^*FM6G@?3CX0T^X32M,2W@GU:\3Y9F0*OEH#][)'S'KC/`ZU]`K&B1B-$54 M`P%`P`/I5>XTVQO+(V5S96\]H<9@EB5D.#D?*1CKS0!XC_PO/6+/PU>V>HZ4 MJ^,5N7BCLDMI%6.+:&$C`DDX^88SG@$]S6#X-^*OQ*\3ZG)H>G36-Y>7*,Z3 MW5NL8M@!R?DP"!VR#SCZ5]&+IE@FI/J2V-LM^Z>6UT(E$K)_=+XR1P.,TL&G M6-M$^"H/#UI<2W]S+JNKWR`7]]=?,TH M`P$`.<(!QC_(;X&\&2>"(;_3X-4ENM)DF\VRMY5^:VSGQKIJ`"O//&&D M>&]&GMYM,\-:1<>*M2N"NGI);K\TO5I6`'W4'SLWT[G->AUR8MK>Y^+$D\YW M366C1&U4CIYLTHD8>^(XQ]&/K0!Q>N>`+#3-6$:AJ4LNL:Y=ZU"EY>7)W&4 M"*1MJIG:L8*@X`R`!S6.6'P*GCTJ/2+[QEJ/\`9\\.%/+NM7UFZB1'2".29=L6X8!`"]1U M]"0,C'%>N44`>0ZC\$-+T_P%$VT?496M7DV2%X0'\N1>>,]1U';BNEK`U7Q=IVFZ@=+A2XU#5M M@<6%DF^0*>A8G"H/=B*`.$^%MT?!6IW?P[U>'R+M9I+G3[H\+?1$]1S][`S@ M=@1U7GUJO-O%?@_Q)X\MK:6X;3M#EM29K0Q[I[F.3'R@RC:$!.,A0WU-5/A_ M;6WBK3KVT\0ZCK5UKFFSM;ZE;3:A)'&KY.&58V52AVG&1V/U(!ZI7'^-O`I\ M87NBWD6L7.EW.ERR.DULN7(<`$`Y&T_*.<'OQ73:=IMEI-H+6PMH[>`$G8@[ MGN?4U:H`XVS\$:I:2VSGQSX@F6)LR)*T+"09SCE,CTZG\*3Q!X0U*3Q=9^*? M#=];VFI+']FO([I"T5S!G(!`Y#`@8(_/CGLZ*`,W2'UEA>?VS%9(1ET4`%%%%`!1110`4444`%%%%`!1110`4444`0PVEM;S330V\4/WL;!P/^!8*_1C0!D^*65OB3X#API;S;Z3GKA;<@ MX_%E_P`@UVM>3:%XL@^(7Q,T&\T^VE2#2--GENMZL MT`%%%%`'+WE]?>([Z[TK1KI;2SM7\F]U*)@TBR8!,,0Z!@"-S'[N<`$Y*[6E M:-I^B6S6^GVXA1F+N2Q=Y&/5F=B68^Y)-9G@6VAM?!>F1Q\R>5NN6P06N"3Y MI.><^9OKH:`"O//%*KX2\?Z+XJA54M=3<:3J@'&2W,,GU#`@GTP*]#K@OC-# M%+\+-6+R)'+&89()&'*R"5<;3V)Y&1ZF@#O:*BM3*;2$S`B4QKOSC[V.>GO4 MM`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110!%#:V M]NTC0011-*VZ0H@4N?4XZGDU+110`4444`R77A;4KB_BM)+O1KV82W26\ M>Z2TDP%,@0M/%_AN^CWV^O:U EX-99.(A) 3 e33444ex23a1.htm DECLARATION OF TRUST

Exhibit (a)

INDEXIQ ETF TRUST

DECLARATION OF TRUST

This DECLARATION OF TRUST is made as of August 27, 2008, by the Trustees hereunder.

WHEREAS, the Trustees desire to establish a trust for the purpose of carrying on the business of an open-end registered management investment company;

WHEREAS, in furtherance of such purpose, the Trustees and any successor Trustee selected in accordance with Article 5 hereof are acquiring and may hereafter acquire assets which they will hold and manage as trustees of a Delaware business trust in accordance with the provisions hereinafter set forth; and

WHEREAS, this Trust is authorized to issue its shares of beneficial interest in one or more separate series, all in accordance with the provisions set forth in this Declaration of Trust.

NOW, THEREFORE, the Trustees hereby declare that they will hold in trust all cash, securities, and other assets which they may from time to time acquire in any manner as Trustees hereunder, and that they will manage and dispose of the same upon the following terms and conditions for the benefit of the holders of shares of beneficial interest in this Trust as hereinafter set forth.

ARTICLE 1.

NAME AND DEFINITIONS

Section 1.1 Name. This Trust shall be known as the “IndexIQ ETF Trust”, and the Trustees shall conduct the business of the Trust under that name or any other name or names as they may from time to time determine.

Section 1.2 Definitions. Whenever used herein, unless otherwise required by the context or specifically provided below:

     (a) “1940 Act” refers to the Investment Company Act of 1940 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time;

     (b) “Bylaws” shall mean the Bylaws of the Trust as amended from time to time;

     (c) “Class” shall mean any of the separate classes of Shares established and designated under or in accordance with the provisions of this

     Article 4 hereof which the Trustees have allocated assets and liabilities of the Trust in accordance with Article 4;

     (d) “Code” refers to the Internal Revenue Code of 1986 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time;

     (e) “Commission” shall mean the United States Securities and Exchange Commission (or any successor agency thereto);

     (f) “DBTA” refers to the Delaware Business Trust Act, Chapter 38 of Title 12 of the Delaware Code (and any successor statute), as amended from time to time;

     (g) “Declaration of Trust” or “Declaration” shall mean this Declaration of Trust as amended or restated from time to time;

     (h) “Person,” “Interested Person,” and “Principal Underwriter” shall have the meanings given them in the 1940 Act;

     (i) “Series” shall mean any of the separate series of Shares established and designated under or in accordance with the provisions of Article 4 hereof and to which the Trustees have allocated assets and liabilities of the Trust in accordance with Article 4;

     (j) “Shareholder” shall mean a record owner of Shares;

     (k) “Shares” shall mean the shares of beneficial interest in the Trust described in Article 4 thereof and shall include fractional and whole Shares;

     (l) “Trust” shall mean the Delaware business trust established by this Declaration of Trust, as amended from time to time; and

     (m) “Trustee” or “Trustees” shall mean each signatory to this Declaration of Trust so long as such signatory shall continue in office in accordance with the terms hereof, and all other individuals who at the time in question have been duly elected or appointed and qualified in accordance with Article 5 hereof and are then in office.

ARTICLE 2.

NATURE AND PURPOSE OF TRUST

Section 2.1 Nature of Trust. The Trust is a business trust of the type referred to in the DBTA. The Trustees shall file a certificate of trust in accordance with Section 3810 of the DBTA. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as, a general or a limited partnership, joint venture, corporation or joint stock company, nor shall the Trustees or Shareholders or any of them for any purpose be deemed to be, or be treated in any

way whatsoever as though they were, liable or responsible hereunder as partners or joint venturers.

Section 2.2 Purpose of Trust. The purpose of the Trust is to engage in, operate and carry on the business of an open-end management investment company and to do any and all acts or things as are necessary, convenient, appropriate, incidental or customary in connection therewith.

Section 2.3 Interpretation of Declaration of Trust.

     Section 2.3.1 Governing Instrument. This Declaration of Trust shall be the governing instrument of the Trust and shall be governed by and construed according to the laws of the State of Delaware.

     Section 2.3.2 No Waiver of Compliance with Applicable Law. No provision of this Declaration shall be effective to require a waiver of compliance with any provision of the Securities Act of 1933, as amended, or the 1940 Act, or any valid rule, regulation or order of the Commission thereunder.

     Section 2.3.3 Power of the Trustees Generally. Except as otherwise set forth herein, the Trustees may exercise all powers of trustees under the DBTA on behalf of the Trust.

ARTICLE 3.

REGISTERED AGENT; PRINCIPAL PLACE OF BUSINESS

Section 3.1 Registered Agent. The name of the registered agent of the Trust is The Corporation Trust Company, and the registered agent’s business address in Delaware is Corporation Trust Center 1209 Orange Street, Wilmington, Delaware 19801.

Section 3.2 Principal Place of Business. The principal place of business of the Trust is 800 Westchester Avenue, Suite N-611, Rye Brook, New York 10573. The principal place of business of the Trust may be changed by the Trustees.

ARTICLE 4.

BENEFICIAL INTEREST

Section 4.1 Shares of Beneficial Interest. The beneficial interests in the Trust shall be divided into Shares, all without par value, and the Trustees shall have the authority from time to time to divide the class of Shares into two or more separate and distinct series of Share (“Series”) or classes of Shares (“Classes”) as provided in Section 4.9 of this Article 4.

Section 4.2 Number of Authorized Shares. The Trustees are authorized to issue an unlimited number of Shares. The Trustees may issue Shares for such consideration and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split), all without action or approval of the Shareholders.

Section 4.3 Ownership and Certification of Shares. The Secretary of the Trust, or the Trust’s transfer or similar agent, shall record the ownership and transfer of Shares or each Series and Class separately on the record books of the Trust. The record books of the Trust, as kept by the Secretary of the Trust or any transfer or similar agent, shall contain the name and address of and the number of Shares held by each Shareholder, and such record books shall be conclusive as to who are the holders of Shares and as to the number of Shares held from time to time by such Shareholders. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, transfer of Shares, and similar matters for the Trust or any Series or Class.

Section 4.4 Status of Shares.

     Section 4.4.1 Fully Paid and Non-assessable. All Shares when issued on the terms determined by the Trustees shall be fully paid and non-assessable.

     Section 4.4.2 Personal Property. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust.

     Section 4.4.3 Party to Declaration of Trust. Every Person by virtue of having become registered as a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and to have become a party thereto.

     Section 4.4.4 Death of Shareholder. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the Trust nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees. The representative shall be entitled to the same rights as the decedent under this Trust.

     Section 4.4.5 Title to Trust; Right to Accounting. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting.

Section 4.5 Determination of Shareholders. The Trustees may from time to time close the transfer books or establish record dates and times for the purposes of determining the Shareholders entitled to be treated as such, to the extent provided or referred to in Section 7.3.

Section 4.6 Shares Held by Trust. The Trustees may hold as treasury shares, reissue for such consideration and on such terms as they may determine, or cancel, at their discretion from time to time, any Shares of any Series or Class reacquired by the Trust.

Section 4.7 Shares Held by Persons Related to Trust. Any Trustee, officer or other agent of the Trust, and any organization in which any such person is interested may acquire, own, hold and dispose of Shares of the Trust to the same extent as if such person were not a Trustee, officer or other agent of the Trust; and the Trust may issue and sell or cause to be issued and sold and may purchase Shares from any such person or any such organization subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of such Shares generally.

Section 4.8 Preemptive and Appraisal Rights. Shareholders shall not, as Shareholders, have any right to acquire, purchase or subscribe for any Shares or other securities of the Trust which it may hereafter issue or sell, other than such right, if any, as the Trustees in their discretion may determine. Shareholders shall have no appraisal rights with respect to their Shares and, except as otherwise determined by resolution of the Trustees in their sole discretion, shall have no exchange or conversion rights with respect to their Shares. No action may be brought by a Shareholder on behalf of the Trust unless Shareholders owing not less than a majority of the then-outstanding Shares, or Series or Class thereof, join in the bringing of such action. A Shareholder of Shares in a particular Series or Class of the Trust shall not be entitled to participate in a derivative or class action lawsuit on behalf of any other Series or Class, as appropriate, or on behalf of the Shareholders in any such other Series or Class of the Trust.

Section 4.9 Series and Classes of Shares.

Section 4.9.1 Classification of Shares. The Trustees may classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Class that may be established and designated from time to time.

Section 4.9.2 Establishment and Designation. The Trustees shall have exclusive power without the requirement of Shareholder approval: to establish and designate separate and distinct Series and Classes of Shares and to fix such preferences, voting powers, rights and privileges of such Series or Class as the Trustees may from time to time determine; to divide or combine the Shares or any Series or Class into a greater or lesser number without thereby materially changing the proportionate beneficial interest of the Shares of such Series or Class in the assets held with respect to that Series; to classify or reclassify any issued Shares or any Series or Class thereof into one or more Series or Classes; and to take such other action with respect to the Shares as the Trustees may deem desirable. The establishment and designation of any Series or Class (in addition to those established and designated in this Section below) shall be effective upon the execution by a majority of the Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series or Class, or as otherwise provided in such instrument. Each such instrument shall have the status of an amendment to this Declaration of Trust. Without limiting the authority of the Trustees to establish and designate any further Series or Class, the Trustees hereby establish and designate the following initial Series:

IQ Hedge Multi-Strategy Composite ETF
IQ Hedge Macro ETF
IQ Hedge Long/Short ETF
IQ Hedge Event-Driven ETF
IQ Hedge Market Neutral ETF

Section 4.9.3 Separate and Distinct Nature. Each Series and Class, including without limitation the Series specifically established and designated in Section 4.9.2, shall be separate and distinct from any other Series and Class and shall maintain separate and distinct records on the books of the Trust, and the assets belonging to any such Series

or Class shall be held and accounted for separately from the assets of the Trust or any other Series or Class.

     Section 4.9.4 Conversion Rights. Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide that holders of Shares of any Series or Class shall have the right to convert said Shares into Shares of one or more other Series or Class in accordance with such requirements and procedures as may be established by the Trustees.

     Section 4.9.5 Rights and Preferences. The Trustees shall have exclusive power without the requirement of Shareholder approval to fix and determine the relative rights and preferences as between the Shares of the separate Series and Classes. The initial Series and any further Series and Classes that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Series at the time of establishing and designating the same) have relative rights and preferences as set forth in this Section 4.9.5.

     Section 4.9.5.1 Assets and Liabilities “Belonging” to a Series or Class. All consideration received by the Trust for the issue or sale of Shares of particular Series or Class, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Series or Class and may be referred to herein as “assets belonging to” that Series or Class. The assets belonging to a particular Series or Class shall belong to that Series or Class for all purposes, and to no other Series or Class, subject only to the rights of creditors of that Series or Class. Such consideration, assets, income, earnings, profits and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments which are not readily identifiable as belonging to any particular Series or Class (collectively, “General Items”), shall be allocated by the Trustees to and among any one or more of the Series and/or Classes in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Any General Items so allocated to a particular Series or Class shall belong to that Series/Class. Each such allocation by the Trustees shall be conclusive and binding upon all Shareholders for all purposes. The assets belonging to each particular Series and Class shall be charged with the liabilities in respect of that Series/Class and all expenses, costs, charges and reserves attributed to that Series/Class, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series or Class shall be allocated and charged by the Trustees to and among any one or more of the Series and Classes established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon all Shareholders for all purposes.

     Section 4.9.5.2 Treatment of Particular Items. The Trustees shall have full discretion, to the extent consistent with the 1940 Act and consistent with generally accepted accounting principles, to determine which items shall be treated as income and which items as capital, and each such determination and allocation shall be conclusive and binding upon the Shareholders.

     Section 4.9.5.3 Limitation on Interseries and Interclass Liabilities. Subject to the right of the Trustees in their discretion to allocate general liabilities, expenses, costs, charges or reserves as provided in Section 4.9.5.1, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series or Class shall be enforceable against the assets of such Series/Class only, and not against the assets of any other Series or Class. Notice of this limitation on liabilities between and among Series shall be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the DBTA, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the DBTA relating to limitations on liabilities between and among series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series.

     Section 4.9.5.4 Dividends. Dividends and capital gains distributions on Shares of a particular Series may be paid with such frequency, in such form, and in such amount as the Trustees may determine by resolution adopted from time to time, or pursuant to a standing resolution of resolutions adopted only once or with such frequency as the Trustees may determine. All dividends and distributions on Shares of a particular Series or Class shall be distributed pro rata to the holders of Shares of that Series/Class in proportion to the number of Shares of that Series/Class held by such holders at the date and time of record established for the payment of such dividends or distributions by the Trustees. Such dividends and distributions may be paid in cash, property or additional Shares of that Series/Class, or a combination thereof, as determined by the Trustees or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the form in which dividends or distributions are to be paid to that Shareholder. Any such dividend or distribution paid in Shares shall be paid at the net asset value thereof as determined in accordance with Section 4.9.5.8.

     Section 4.9.5.5 Redemption by Shareholder. Each Shareholder of a particular Series or Class shall have right on any business day to require the Trust to redeem all or any part of such Shareholder’s Shares of that Series or Class, subject to the following: any such redemption shall be made only: upon and subject to the terms and conditions provided in this Section 4.9.5.5; in accordance with and pursuant to procedures or methods prescribed or approved by the Trustees; and, in the case of any Series or Class now or hereafter authorized, if so determined by the Trustees, only in aggregations of such number of Shares and at such times as may be determined by, or determined pursuant to procedures or methods prescribed by or approved by, the Trustees from time to time with

respect to such Series or Class. The number of Shares comprising an aggregation for purposes of redemption or repurchase as determined by the Trustees from time to time with respect to any Series or Class shall be referred to herein as a “Creation Unit” and collectively, as “Creation Units.” The Trustees shall have the unrestricted power to determine from time to time the number of Shares constituting a Creation Unit by resolutions adopted at any regular or special meeting of the Trustees. Each holder of a Creation Unit aggregation of a Series or Class, upon request to the Trust accompanied by surrender of the appropriate stock certificate or certificates in proper form for transfer, if certificates have been issued to such holder, or in accordance with such other procedures as may from time to time be in effect if certificates have not been issued, shall be entitled to require the Trust to redeem all or any number of such holder’s Shares standing in the name of such holder on the books of the Trust, but in the case of Shares of any Series or Class as to which the Trustees have determined that such Shares shall be redeemable in Creation Unit aggregations, only in such Creation Unit aggregations of Shares of such Series or Class as the Trustees may determine from time to time in accordance with this Section 4.9.5.5. The Trust shall, upon application of any Shareholder or pursuant to authorization from any Shareholder, redeem or repurchase from such Shareholder outstanding Shares for an amount per Share determined by the Trustees in accordance with any applicable laws and regulations; provided that (i) such amount per Share shall not exceed the cash equivalent of the proportionate interest of each Share or of any Class or Series of Shares in the assets of the Trust at the time of the redemption or repurchase and (ii) if so authorized by the Trustees, the Trust may, at any time and from time to time, charge fees for effecting such redemption or repurchase, at such rates as the Trustees may establish, as and to the extent permitted under the 1940 Act and the rules and regulations promulgated thereunder, and may, at any time and from time to time, pursuant to such Act and such rules and regulations, suspend such right of redemption. The procedures for effecting and suspending redemption shall be as set forth in the Prospectus from time to time. Payment may be in cash, securities or a combination thereof, as determined by or pursuant to the direction of the Trustees from time to time, less any applicable sales charges and/or fees.

Section 4.9.5.6 Redemption by Trust. The Trustees may cause the Trust to redeem the Shares of any Series or Class held by a Shareholder at the redemption price that would be applicable if such Shares were then being redeemed by the Shareholder pursuant to Section 4.9.5.5 upon such conditions as may from time to time be determined by the Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the Trust shall promptly cause payment of the full redemption price to be made to such Shareholder for Shares so redeemed.

Section 4.9.5.7 Prevention of Personal Holding Company Status. The Trust may reject any purchase order, refuse to transfer any Shares, and compel the redemption of Shares if the Trustees determine that any such rejection, refusal, or redemption would prevent the Trust from becoming a personal holding company as defined by the Code.

     Section 4.9.5.8 Net Asset Value. The net asset value per Share of any Series or Class shall be determined in accordance with the methods and procedures established by the Trustees from time to time and, to the extent required by applicable law, as disclosed in the then-current prospectus or statement of additional information for the Series/Class.

     Section 4.9.5.9 Maintenance of Stable Net Asset Value. The Trustees may determine to maintain the net asset value per Share of any Series at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the 1940 Act for the continuing declaration of income attributable to that Series, or any Class thereof, as dividends payable in additional Shares of that Series/Class at the designated constant dollar amount and for the handling of any losses attributable to that Series/Class. Such procedures may provide that in the event of any loss each Shareholder shall be deemed to have contributed to the capital of the Trust attributable to that Series/Class his or her pro rata portion of the total number of Shares required to be canceled in order to permit the net asset value per Share of that Series/Class to be maintained, after reflecting such loss, at the designated constant dollar amount. Each Shareholder of the Trust shall be deemed to have agreed, by such Shareholder’s investment in any Series with respect to which the Trustees shall have adopted any such procedure, to make the contribution referred to in the preceding sentence in the event of any such loss. The Trustees may delegate any of their powers and duties under this Section 4.9.5.9 with respect to appraisal of assets and liabilities in the determination of net asset value or with respect to a suspension of the determination of net asset value to an officer or officers or agent or agents of the Trust designated from time to time by the Trustees.

     Section 4.9.5.10 Transfer of Shares. Except to the extent that transferability is limited by applicable law or such procedures as may be developed from time to time by the Trustees or the appropriate officers of the Trust, Shares shall be transferable on the records of the Trust only by the record holder thereof or by the record holder’s agent thereunto duly authorized in writing, upon delivery to the Trustees or the Trust’s transfer agent of a duly executed instrument of transfer, together with a Share certificate, if one is outstanding, and such evidence of the genuineness of each such execution and authorization and of such other matters as may be required by the Trustees. Upon such delivery the transfer shall be recorded on the register of the Trust.

     Section 4.9.5.11 Equality of Shares. All Shares of each particular Series or Class shall represent an equal proportionate interest in the assets belonging or attributable to that Series/Class (subject to the liabilities belonging to that Series/Class), and each Share of any particular Series or Class shall be equal in this respect to each other Share of that Series or Class, as applicable.

     Section 4.9.5.12 Fractional Shares. Any fractional Share of any Series or Class, if any such fractional Share is outstanding, shall carry proportionately all the rights and obligations of a whole Share of that Series/Class, including rights

and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust or any Series or Class.

ARTICLE 5.

TRUSTEES

Section 5.1 Management of the Trust. The business and affairs of the Trust shall be managed by the Trustees, and they shall have all powers necessary and desirable to carry out that responsibility, including those specifically set forth in Section 5.10 and Section 5.11 herein.

Section 5.2 Qualification. Each Trustee shall be a natural person. A Trustee need not be a Shareholder, a citizen of the United States, or a resident of the State of Delaware.

Section 5.3 Number. The initial number of Trustees shall be one. By the vote or consent of a majority of the Trustees then in office, the Trustees may fix the number of Trustees at a number not less than two nor more than twenty-five. No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his or her term, but the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to Section 5.7.

Section 5.4 Term and Election. Each Trustee shall hold office until the next meeting of Shareholders called for the purpose of considering the election or re-election of such Trustee or of a successor to such Trustee, and until his or her successor is elected and qualified, and any Trustee who is appointed by the Trustees in the interim to fill a vacancy as provided hereunder shall have the same remaining term as that of his or her predecessor, if any, or such term as the Trustees may determine.

Section 5.5 Composition of the Board of Trustees. No election or appointment of any Trustee shall take effect if such election or appointment would cause the number of Trustees who are Interested Persons to exceed the number permitted by Section 10 of the 1940 Act.

Section 5.6 Resignation and Retirement. Any Trustee may resign or retire as a Trustee (without need for prior or subsequent accounting) by an instrument in writing signed by such Trustee and delivered or mailed to the Chairman, if any, the President or the Secretary of the Trust. Such resignation or retirement shall be effective upon such delivery, or at a later date according to the terms of the instrument.

Section 5.7 Removal. Any Trustee may be removed with or without cause at any time: (i) by written instrument signed by two-thirds (2/3) of the number of Trustees in office prior to such removal, specifying the date upon which such removal shall become effective, or (ii) by the affirmative vote of Shareholders holding not less than two-thirds (2/3) of Shares outstanding, cast in person or by proxy at any meeting called for that purpose.

Section 5.8 Vacancies. Any vacancy or anticipated vacancy resulting for any reason, including without limitation the death, resignation, retirement, removal or incapacity of any of the Trustees, or resulting from an increase in the number of Trustees may (but need not unless required by the 1940 Act) be filled by a majority of the Trustees then in office, subject to the

provisions of Section 16 of the 1940 Act, through the appointment in writing of such other person as such remaining Trustees in their discretion shall determine. The appointment shall be effective upon the acceptance of the person named therein to serve as a Trustee, except that any such appointment in anticipation of a vacancy occurring by reason of the resignation, retirement, or increase in number of Trustees to be effective at a later date shall become effective only at or after the effective date of such resignation, retirement or increase in number of Trustees.

Section 5.9 Ownership of Assets of the Trust. The assets of the Trust and of each Series and Class shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title to all the Trust property shall be vested in the Trust as a separate legal entity under the DBTA, except that the Trustees shall have the power to cause legal title to any Trust property to be held by or in the name of one or more of the Trustees or in the name of any other Person on behalf of the Trust on such terms as the Trustees may determine. In the event that title to any part of the Trust property is vested in one or more Trustees, the right, title and interest of the Trustees in the Trust property shall vest automatically in each person who may hereafter become a Trustee upon his or her due election and qualification. Upon the resignation, removal or death of a Trustee, he or she shall automatically cease to have any right, title or interest in any of the Trust property, and the right, title and interest of such Trustee in the Trust property shall vest automatically in the remaining Trustees. To the extent permitted by law, such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or any right or partition or possession thereof.

Section 5.10 Powers. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility and the purpose of the Trust including, but not limited to, those enumerated in this Section 5.10.

     Section 5.10.1 Bylaws. The Trustees may adopt Bylaws not inconsistent with this Declaration of Trust providing for the conduct of the business and affairs of the Trust and may amend and repeal them to the extent that such Bylaws do not reserve that right to the Shareholders.

     Section 5.10.2 Officers, Agents and Employees. The Trustees may, as they consider appropriate, elect and remove officers and appoint and terminate agents and consultants and hire and terminate employees, any one or more of the foregoing of whom may be a Trustee, and the Trustees may provide for the compensation of all of the foregoing.

     Section 5.10.3 Committees. The Trustee may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including without implied limitation an Executive Committee, which may, when the Trustees are not in session (but subject to the 1940 Act), exercise some or all of the power and authority of the Trustees as the Trustees may determine, and an Audit Committee.

     Section 5.10.4 Advisors, Administrators, Depositories and Custodians. The Trustees may, in accordance with Article 6, employ one or more advisors, administrators, depositories, custodians and other persons and may authorize any depository or custodian to employ subcustodians or agents and to deposit all or any part of the assets of the Trust in a system or systems for the central handling of securities and debt instruments; retain transfer, dividend, accounting or Shareholder servicing agents or any of the foregoing; provide for the distribution of Shares by the Trust through one or more distributors, principal underwriters or otherwise; and set record dates or times for the determination of Shareholders.

     Section 5.10.5 Compensation. The Trustees may compensate or provide for the compensation of the Trustees, officers, advisors, administrators, custodians, other agents, consultants and employees of the Trust or the Trustees on such terms as they deem appropriate.

     Section 5.10.6 Delegation of Authority. In general, the Trustees may delegate to any officer of the Trust, to any committee of the Trustees and to any employee, advisor, administrator, distributor, depository, custodian, transfer and dividend disbursing agent, or any other agent or consultant of the Trust such authority, powers, functions and duties as they consider desirable or appropriate for the conduct of the business and affairs of the Trust, including without implied limitation, the power and authority to act in the name of the Trust and of the Trustees, to sign documents and to act as attorney-in-fact for the Trustees.

     Section 5.10.7 Suspension of Sales. The Trustees shall have the authority to suspend or terminate the sales of Shares of any Series or Class at any time or for such periods as the Trustees may from time to time decide.

Section 5.11 Certain Additional Powers. Without limiting the foregoing and to the extent not inconsistent with the 1940 Act, other applicable law, and the fundamental policies and limitations of the applicable Series or Class, the Trustees shall have power and authority for and on behalf of the Trust and each separate Series and Class as enumerated in this Section 5.11.

     Section 5.11.1 Investments. The Trustees shall have the power to invest and reinvest cash and other property, and to hold cash or other property uninvested without in any event being bound or limited by any present or future law or custom in regard to investments by trustees.

     Section 5.11.2 Disposition of Assets. The Trustees shall have the power to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust.

     Section 5.11.3 Ownership. The Trustees shall have the power to vote, give assent, or exercise any rights of ownership with respect to securities or other property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or other property as the Trustees shall deem proper.

     Section 5.11.4 Subscription. The Trustees shall have the power to exercise powers and rights of subscription or other which in any manner arise out of ownership of securities.

     Section 5.11.5 Payment of Expenses. The Trustees shall have the power to pay or cause to be paid all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or any Series or Class, or in connection with the management thereof, including, but not limited to, the Trustees’ compensation and such expenses and charges for the Trust’s officers, employees, investment advisors, administrator, distributor, principal underwriter, auditor, counsel, depository, custodian, transfer agent, dividend disbursing agent, accounting agent, shareholder servicing agent and such other agents, consultants and independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur.

     Section 5.11.6 Form of Holding. The Trustees shall have the power to hold any securities or other property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or of any Series or Class or in the name of a custodian, subcustodian or other depository or a nominee or nominees or otherwise.

     Section 5.11.7 Reorganization, Consolidation or Merger. The Trustees shall have the power to consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust, and to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust.

     Section 5.11.8 Compromise. The Trustees shall have the power to arbitrate or otherwise adjust claims in favor of or against the Trust or any Series or Class on any matter in controversy, including but not limited to claims for taxes.

     Section 5.11.9 Partnerships. The Trustees shall have the power to enter into joint ventures, general or limited partnerships and any other combinations or associations.

     Section 5.11.10 Borrowing. The Trustees shall have the power to borrow funds and to mortgage and pledge the assets of the Trust or any Series or Class or any part thereof to secure obligations arising in connection with such borrowing, consistent with the provisions of the 1940 Act.

     Section 5.11.11 Guarantees. The Trustees shall have the power to endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property (or property of a Series or Class) or any part thereof to secure any of or all such obligations.

     Section 5.11.12 Insurance. The Trustees shall have the power to purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the Trust’s business, including, without limitation,

insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, consultants, investment advisors, managers, administrators, distributors, principal underwriters, or independent contractors (or any person connection with the foregoing), of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person in any such capacity, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability.

     Section 5.11.13 Pensions. The Trustees shall have the power to pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the officers, employees and agents of the Trust.

     Section 5.11.14 Dividends. The Trustees shall have the power to make distributions of income and of capital gains to Shareholders in the manner provided in Section 4.9.5.4 herein.

     Section 5.11.15 Series and Classes. The Trustees shall have the power to establish separate and distinct Series and Classes with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article 4 hereof and to establish the relative rights, powers and duties of such Series and Classes consistent with applicable law.

     Section 5.11.16 Allocation. The Trustees shall have the power, subject to the provisions of Section 3804 of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Series or Class or to apportion the same between or among two or more Series or Classes, provided that any liabilities or expenses incurred by a particular Series or Class shall be payable solely out of the assets belonging to that Series or Class as provided for in Article 4 hereof.

Section 5.12 Vote of Trustees.

Section 5.12.1 Quorum. One-third of the Trustees then in office being present in person or by proxy shall constitute a quorum.

Section 5.12.2 Required Vote. Except as otherwise provided by the 1940 Act or other applicable law, this Declaration of Trust or the Bylaws, any action to be taken by the Trustees on behalf of the Trust or any Series or Class may be taken by a majority of the Trustees present at a meeting of Trustees at which a quorum is present, including any meeting held by means of a conference telephone or other communications equipment enabling all persons participating in the meeting to hear each other at the same time.

Section 5.12.3 Consent in Lieu of a Meeting. Except as otherwise provided by the 1940 Act or other applicable law, the Trustees may, by written consent of a majority of the Trustees then in office, take any action which may have been taken at a meeting of the Trustees.

ARTICLE 6.

SERVICE PROVIDERS

Section 6.1 Investment Advisor. The Trust may enter into written contracts with one or more persons to act as investment advisor or investment subadvisor to each of the Series or Classes and as such, to perform such functions as the Trustees may deem reasonable and proper, including, without limitation, investment advisory, management, research, valuation of assets, clerical and administrative functions, under terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable.

Section 6.2 Administrator, Custodian and Transfer Agent. The Trust may enter into written contracts with one or more persons to act as administrator, custodian and/or transfer agent to perform such functions as the Trustees may deem reasonable and proper, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable. Each such administrator, custodian and/or transfer agent shall be a bank or trust company having an aggregate capital, surplus, and undivided profits of at least one million dollars ($1,000,000).

Section 6.3 Underwriter and Distributor. The Trust may enter into written contracts with one or more persons to act as underwriter and/or distributor whereby the Trust may either agree to sell Shares to the other party or parties to the contract or appoint such other party or parties its sales agent or agents for such Shares and with such other provisions as the Trustees may deem reasonable and proper, and the Trustees may in their discretion from time to time enter into transfer agency and/or shareholder service contract(s), in each case with such terms and conditions, and providing for such compensation, as the Trustees may in their discretion deem advisable.

Section 6.4 Parties to Contracts. Any contract of the character described in Section 6.1, Section 6.2 and Section 6.3 or in Article 8 hereof may be entered into with any corporation, firm, partnership, trust or association, including, without limitation, the investment advisor, any investment subadvisor, or any affiliated person of the investment advisor or investment subadvisor, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder or member of such other party to the contract, or may otherwise be trustee, shareholder or member of such other party to the contract, or may otherwise be interested in such contract, and no such contract shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or be accountable for any profit realized directly or indirectly therefrom; provided, however, that the contract when entered into was not inconsistent with the provisions of this Article 6, Article 8 or the Bylaws. The same person (including a firm, corporation, partnership, trust or association) may provide more than one of the services identified in this Article 6.

ARTICLE 7.

SHAREHOLDERS’ VOTING POWERS AND MEETING

Section 7.1 Voting Powers. The Shareholders shall have power to vote only with respect to matters expressly enumerated in Section 7.1.1 and Section 7.1.3 or with respect to such additional matters relating to the Trust as may be required by the 1940 Act, this Declaration of Trust, the Bylaws, any registration of the Trust with the Commission or any state, or as the Trustees may otherwise deem necessary or desirable.

     Section 7.1.1 Matters Upon Which Shareholders May Vote. The Shareholders shall have power to vote on the following matters:

     (a) for the election or removal of Trustees as provided in Section 5.4 and Section 5.7;

     (b) with respect to a contract with a third party provider of services as to which Shareholder approval is required by the 1940 Act;

     (c) with respect to a termination or reorganization of the Trust to the extent and as provided in Section 9.1 and Section 9.2;

     (d) with respect to an amendment of this Declaration of Trust to the extent and as may be provided by this Declaration of Trust or applicable law; and

     (e) with respect to any court action, proceeding or claim brought or maintained derivatively or as a class action on behalf of the Trust, any Series or Class thereof or the Shareholders of the Trust; provided, however, that a shareholder of a particular Series or Class shall not be entitled to vote upon a derivative or class action on behalf of any other Series or Class or shareholder of any other Series/Class.

     Section 7.1.2 Derivative Actions. A Shareholder or Shareholders may bring derivative action on behalf of the Trust only if the Shareholder or Shareholders first make a pre-suit demand upon the Trustees to bring the subject action unless an effort to cause the Trustees to bring such action is excused. A demand on the Trustees shall only be excused if a majority of the Board of Trustees, or a majority of any committee established to consider such action, has a personal financial interest in the action at issue. A Trustee shall not be deemed to have a personal financial interest in an action or otherwise be disqualified from ruling with respect to a Shareholder demand by virtue of the fact that such Trustee receives remuneration from his or her service on the Board of Trustees of the Trust or on the boards of one or more investment companies with the same or an affiliated investment advisor or underwriter. In addition to the foregoing requirements and the requirements set forth in Section 3816 of the DBTA, a Shareholder may bring a derivative action on behalf of the Trust only if the following conditions are met:

     (a) Shareholders holding at least 10% of the outstanding Shares of the Trust, or 10% of the outstanding Shares of the Series or Class to which such action relates and who are eligible to bring such derivative action under the DBTA join in the request for the Trustees to commence such derivative action; and

     (b) the Trustees must be afforded a reasonable amount of time to consider the request for the derivative action and to investigate the basis of such claim. The Trustees shall be entitled to retain counsel or other advisors in considering the merits of the request and shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisors in the event that the Trustees determine not to bring such action.

     Section 7.1.3 Separate Voting by Series. On any matter submitted to a vote of the Shareholders, all Shares shall be voted separately by individual Series, except (i) when required by the 1940 Act, Shares shall be voted in the aggregate or by Class, and not by individual Series; and (ii) when the Trustees have determined that the matter affects the interests of more than one Series, then the Shareholders of all such Series shall be entitled to vote thereon.

     Section 7.1.4 Number of Votes. On any matter submitted to a vote of the Shareholders, each Shareholder shall be entitled to one vote for each dollar of net asset value for each Share standing in such Shareholder’s name on the books of each Series or Class in which such Shareholder owns Shares which are entitled to vote on the matter.

     Section 7.1.5 Cumulative Voting. There shall be no cumulative voting.

     Section 7.1.6 Voting of Shares; Proxies. Votes may be cast in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving the invalidity of a proxy shall rest on the challenger.

     Section 7.1.7 Actions Prior to the Issuance of Shares. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders.

Section 7.2 Meetings of Shareholders.

Section 7.2.1 Annual or Regular Meetings. No annual or regular meetings of Shareholders are required to be held.

Section 7.2.2 Special Meetings. Special meetings of Shareholders may be called by (i) the President of the Trust (ii) the Trustees or (iii) the Shareholders, if provided for in the Bylaws, from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders as herein provided or upon any other

matter upon which Shareholder approval is deemed by the Trustees to be necessary or desirable.

Section 7.2.3 Notice of Meetings. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing or transmitting such notice at least ten (10) days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder at the Shareholder’s address as it appears on the records of the Trust.

Section 7.3 Record Dates. For the purpose of determining the Shareholders who are entitled to vote or act at any meeting, or who are entitled to participate in any dividend or distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding thirty (30) days (except at or in connection with the termination of the Trust), as the Trustees may determine; or without closing the transfer books the Trustees may fix a date and time not more than one hundred twenty (120) days prior to the date of any meeting of Shareholders or other action as the date and time of record for the determination of Shareholders entitled to vote at such meeting or to be treated as Shareholders of record for purposes of such other action. Any Shareholder who was a Shareholder at the date and time so fixed shall be entitled to vote at such meeting or to be treated as a Shareholder of record for purposes of such other action, even though such Shareholder has since that date and time disposed of its Shares, and no Shareholder becoming such after that date and time shall be so entitled to vote at such meeting or to be treated as a Shareholder of record for purposes of such other action.

Section 7.4 Quorum and Required Vote. Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the Bylaws, one-tenth (1/10) of the Shares entitled to vote in person or by proxy shall constitute a quorum as to any particular matter; provided, however, that any lesser number shall be sufficient for matters upon which the Shareholders vote at any meeting called in accordance with Section 7.5. Any matter upon which the Shareholders vote shall be approved by a majority of the votes cast on such matter at a meeting of the Shareholders at which a quorum is present, except that Trustees shall be elected by a plurality of the votes cast at such a meeting.

Section 7.5 Adjournments. If a meeting at which a quorum was present is adjourned, a meeting may be held within a reasonable time after the date set for the original meeting without the necessity of further notice for the purpose of taking action upon any matter that would have been acted upon at the original meeting but for its adjournment.

Section 7.6 Actions by Written Consent. Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the Bylaws, any action taken by Shareholders may be taken without a meeting if Shareholders entitled to cast at least a majority of all of the votes entitled to be cast on the matter (or such larger proportion thereof as shall be required by the 1940 Act or by any express provision of this Declaration of Trust or the Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.

Section 7.7 Inspection of Records. The records of the Trust shall be open to inspection by Shareholders to the same extent as is required for stockholders of a Delaware business corporation under the Delaware General Corporation Law.

Section 7.8 Additional Provisions. The Bylaws may include further provisions for Shareholders’ votes and meetings and related matter not inconsistent with the provisions hereof.

ARTICLE 8.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 8.1 General Provisions.

     Section 8.1.1 General Limitation of Liability. No personal liability for any debt or obligation of the Trust shall attach to any Trustee of the Trust. Without limiting the foregoing, a Trustee shall not be responsible for or liable in any event for any neglect or wrongdoing of any officer, agent, employee, investment advisor, subadvisor, principle underwriter or custodian of the Trust, nor shall any Trustee be responsible or liable for the act or omission of any other Trustee. Every note, bond, contract, instrument, certificate, Share or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any Trustee in connection with Trust shall be conclusively deemed to have been executed or done only in or with respect to their, his or her capacity as Trustees or Trustee and neither such Trustees or Trustee nor the Shareholders shall be personally liable thereon.

     Section 8.1.2 Notice of Limited Liability. Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officers or officer shall recite that the same was executed or made by or on behalf of the Trust by them as Trustees or Trustee or as officers or officer and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust or belonging or attributable to a Series or Class thereof, and may contain such further recitals as they, he or she may deem appropriate, but the omission thereof shall not operate to bind any Trustees or Trustee or officers or officer or Shareholders or Shareholder individually.

     Section 8.1.3 Liability Limited to Assets of the Trust. All persons extending credit to, contracting with or having any claim against the Trust shall look only to the assets of the Trust or belonging to a Series or Class thereof, as appropriate, for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees nor any of the Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor.

Section 8.2 Liability of Trustee. The exercise by the Trustees of their powers and discretion hereunder shall be binding upon the Trust, the Shareholders and any other person dealing with the Trust. The liability of this Trustees, however, shall be limited by this Section 8.2.

     Section 8.2.1 Liability for Own Actions. A Trustee shall be liable to the Trust or the Shareholders only for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law.

     Section 8.2.2 Liability for Actions of Others. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, consultant, advisor, administrative distributor, principal underwriter, custodian, transfer agent, dividend disbursing agent, Shareholder servicing agent or accounting agent of the Trust, nor shall any Trustee be responsible for any act or omission of any other Trustee.

     Section 8.2.3 Advice of Experts and Reports of Others. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust and their duties as Trustees hereunder, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. In discharging their duties, the Trustees, when acting in good faith, shall be entitled to rely upon the books of account of the Trust and upon written reports made to the Trustees by any officers appointed by them, any independent public accountant and (with respect to the subject matter of the contract involved) any officer, partner or responsible employee of any other party to any contract entered into hereunder.

     Section 8.2.4 Bond. Except as provided for in Section 8.5.4, the Trustees shall not be required to give any bond as such, nor any surety if a bond is required.

     Section 8.2.5 Declaration of Trust Governs Issues of Liability. The provisions of this Declaration of Trust, to the extent that they restrict the duties and liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Shareholders and all other Persons bound by this Declaration of Trust to replace such other duties and liabilities of the Trustees.

Section 8.3 Liability of Third Persons Dealing with Trustees. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon the order of the Trustees.

Section 8.4 Liability of Shareholders. Without limiting the provisions of this Section 8.4 or the DBTA, the Shareholders shall be entitled to the same limitation of personal liability extended to stockholders of private corporations organized for profit under the General Corporation Law of the State of Delaware.

Section 8.4.1 Limitation of Liability. No personal liability for any debt or obligation of the Trust shall attach to any Shareholder or former Shareholder of the Trust, and neither the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the

Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise.

Section 8.4.2 Indemnification of Shareholders. In case any Shareholder or former Shareholder of the Trust shall be held to be personally liable solely by reason of being or having been a Shareholder and not because of such Shareholder’s acts or omissions or for some other reason, the Shareholder or former Shareholder (or, in the case of a natural person, his or her heirs, executors, administrators or other legal representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets of the Trust to be held harmless from and indemnified against all loss and expense arising from such liability; provided, however, there shall be no liability or obligation of the Trust arising hereunder to reimburse any Shareholder for taxes paid by reason of such Shareholder’s ownership of any Shares or for losses suffered by reason of any changes in value of any Trust assets. The Trust shall, upon request by the Shareholder or former Shareholder, assume the defense of any claim made against the Shareholder for any act or obligation of the Trust and satisfy any judgment thereon.

Section 8.5 Indemnification.

     Section 8.5.1 Indemnification of Covered Persons. Subject to the exceptions and limitations contained in Section 8.5.2, every person who is or has been a Trustee, officer, employee or agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (each, a “Covered Person”), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him or her in connection with any claim, action, suit or proceeding in which he or she becomes involved as a party or otherwise by virtue of his or her being or having been such a director, trustee, officer, employee or agent and against amounts paid or incurred by him or her in settlement thereof.

     Section 8.5.2 Exceptions. No indemnification shall be provided hereunder to a Covered Person:

     (a) for any liability to the Trust or its Shareholders arising out of a final adjudication by the court or other body before which the proceeding was brought that the Covered Persons engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office;

     (b) with respect to any matter as to which the Covered Person shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust; or

     (c) in the event of a settlement or other disposition not involving a final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2) and

resulting in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office or position by the court or other body approving the settlement or other disposition, or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he or she did not engage in such conduct, such determination being made by: (i) a vote of a majority of the Disinterested Trustees (as such term is defined in Section 8.5.2) acting on the matter (provided that a majority of Disinterested Trustees then in office act on the matter); or (ii) a written opinion of independent legal counsel.

     Section 8.5.3 Rights of Indemnification. The rights of indemnification herein provided may be insured against by policies maintained by the Trust, and shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person, and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law.

     Section 8.5.4 Expenses of Indemnification. Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under this Section 8.5 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he or she is not entitled to indemnification under this Section 8.5, provided that either:

     (a) Such undertaking is secured by a surety bond or some other appropriate security of the Trust shall be insured against losses arising out of any such advances; or

     (b) a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to the facts available upon a full trial), that there is a reason to believe that the recipient ultimately will be found entitled to indemnification.

     Section 8.5.5 Certain Defined Terms Relating to Indemnification. As used in this Section 8.5, the following words shall have the meanings set forth below:

     (a) “Claim,” “action,” “suit” or “proceeding” shall apply to all claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened;

(b) a “Disinterested Trustee” is one (i) who is not an Interested Person of the Trust (including anyone, as such Disinterested Trustee, who has been exempted from being an Interested Person by any rule, regulation or order of the Commission), and (ii) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending; and

(c) “Liability” and “expenses” shall include, without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.

ARTICLE 9.

TERMINATION OR REORGANIZATION

Section 9.1 Termination of Trust or Series. Unless terminated as provided herein, the Trust and each Series or Class designated and established pursuant to this Declaration of Trust shall continue without limitation of time.

     Section 9.1.1 Termination. The Trust or any Series or Class (and the establishment and designation thereof) may be terminated either by a majority vote of the Trustees then in office upon a determination that the continuation of the Trust or Series is not in the best interests of the Trust, such Series or Class or the affected Shareholders as a result of factors or events adversely affecting the ability of the Trust, Series or Class to conduct its business and operations in an economically viable manner; or by the affirmative vote of a majority of the Shareholders of the Trust or the Series entitled to vote.

     Section 9.1.2 Distribution of Assets. Upon termination of the Trust or any Series or Class, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, as may be determined by the Trustees, the Trust shall, in accordance with such procedures as the Trustees consider appropriate, reduce the remaining assets of the Trust to distributable form in cash or other securities, or any combination thereof, and distribute the proceeds to the affected Shareholders in the manner set forth by resolution of the Trustees.

     Section 9.1.3 Certificate of Cancellation. Upon termination of the Trust, the Trustees shall file a certificate of cancellation in accordance with Section 3810 of the DBTA.

Section 9.2 Reorganization. The Trustees may sell, convey, merge and transfer the assets of the Trust, or the assets belonging to any one or more Series or Classes, to another trust, partnership, association or corporation organized under the laws of any state of the United States, or to the Trust to be held as assets belonging to another Series or Class of the Trust, in exchange for cash, shares or other securities (including, in the case of a transfer to another Series or Class of the Trust, Shares of such other Series or Classes) with such transfer either (i) being made subject to, or with the assumption by the transferee of, the liabilities belonging to each Series or

Class the assets of which are so transferred, or (ii) not being made subject to, or not with the assumption of, such liabilities. Following such transfer, the Trustees shall distribute such cash, Shares or other securities (giving due effect to the assets and liabilities belonging to and any other differences among the various Series or Classes the assets belonging to which have so been transferred) among the Shareholders of the Series or Classes the assets belonging to which have been so transferred. If all the assets of the Trust have been so transferred, the Trust shall be terminated.

Section 9.3 Merger or Consolidation.

     Section 9.3.1 Authority to Merge or Consolidate. Pursuant to an agreement of merger or consolidation, the Trust, or any one or more Series or Classes, may merge or consolidate with or into one or more business trusts or other business entities formed or organized or existing under the laws of the State of Delaware or any other state of the United States or any foreign country or other foreign jurisdiction.

     Section 9.3.2 No Shareholder Approval Required. Any merger or consolidation described in Section 9.3.1 or any reorganization described in Section 9.2 shall not require the vote of the Shareholders affected thereby, unless such vote is required by the 1940 Act or other applicable laws, or unless such merger or consolidation would result in an amendment of this Declaration of Trust which would otherwise require the approval of such Shareholders.

     Section 9.3.3 Subsequent Amendments. In accordance with Section 3815(f) of the DBTA, an agreement of merger or consolidation may effect any amendment to this Declaration of Trust or the Bylaws or effect the adoption of a new declaration of trust or Bylaws of the Trust if the Trust is the surviving or resulting business trust.

     Section 9.3.4 Certificate of Merger or Consolidation. Upon completion of the merger or consolidation, the Trustees shall file a certificate of merger or consolidation in accordance with Section 3810 of the DBTA.

ARTICLE 10.

MISCELLANEOUS PROVISIONS

Section 10.1 Signatures. To the extent permitted by applicable law, any instrument signed pursuant to a validly executed power of attorney shall be deemed to have been signed by the Trustee or officer executing the power of attorney. To the extent permitted by law, any Trustee or officer may, in his or her discretion, accept a facsimile signature as evidence of a valid signature on any document.

Section 10.2 Certified Copies. The original or a copy of this Declaration of Trust and of each amendment hereto shall be kept in the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and with the same effect as if it were the original, may rely

on a copy of this Declaration of Trust or of any such amendments certified by an officer or Trustee of the Trust.

Section 10.3 Certain Internal References. In this Declaration of Trust or in any amendment hereto, references to this Declaration of Trust, and all expressions like “herein,” “hereof” and “hereunder,” shall be deemed to refer to this Declaration of Trust as a whole and as amended or affected by any such amendment.

Section 10.4 Headings. Headings are placed herein for convenience of reference only, and in case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts, each of which shall be deemed an original.

Section 10.5 Resolution of Ambiguities. The Trustees may construe any of the provisions of this Declaration insofar as the same may appear to be ambiguous or inconsistent with any other provisions hereof, and any such construction hereof by the Trustees in good faith shall be conclusive as to the meaning to be given to such provisions. In construing this Declaration, the presumption shall be in favor of a grant of power to the Trustees.

Section 10.6 Amendments.

     Section 10.6.1 Generally. Except as otherwise specifically provided herein or as required by the 1940 Act or other applicable law, this Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the Trustees then in office.

     Section 10.6.2 Certificate of Amendment. In the event of any amendment to this Declaration of Trust which affects the Trust’s certificate of trust, the Trustees shall file a certificate of amendment in accordance with Section 3810 of the DBTA.

     Section 10.6.3 Prohibited Retrospective Amendments. No amendment of this Declaration of Trust or repeal of any of its provisions shall limit or eliminate the limitation of liability provided to Trustees and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.

Section 10.7 Governing Law. This Declaration of Trust is executed and delivered with reference to the DBTA and the laws of the State of Delaware by all of the Trustees whose signatures appear below, and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to the DBTA and the laws of the State of Delaware (unless and to the extent otherwise provided for and/or preempted by the 1940 Act or other applicable federal securities laws); provided, however, that there shall not be applicable to the Trust, the Trustees, or this Declaration of Trust (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the DBTA) pertaining to trusts which are inconsistent with the rights, duties, powers, limitations or liabilities of the Trustees set forth or referenced in this Declaration of Trust. All references to sections of the DBTA or the 1940 Act, or any rules or regulations thereunder, refer to such sections, rules, or regulations in effect as of the date of this Declaration of Trust, or any successor sections, rules, or regulations thereto.

Section 10.8 Severability. The provisions of this Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the DBTA, or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration of Trust; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration of Trust in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being sole Trustee of the Trust, has executed this Declaration of Trust as of the date first written above.

	/s/Adam S. Patti

	Adam S. Patti

	Chairman

EX-99.(B) 4 e33444ex23a2.htm BYLAWS

Exhibit (b)

INDEXIQ ETF TRUST

BYLAWS

These Bylaws of IndexIQ ETF Trust, a Delaware statutory trust (the “Trust”), are subject to the Declaration of Trust, dated August 27, 2008, as from time to time amended, supplemented or restated (the “Trust Agreement”). Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Trust Agreement.

ARTICLE I
PRINCIPAL OFFICE

Section 1.1 Principal Office. The principal office of the Trust shall be located in Rye Brook, New York, or such other location as the Trustees may, from time to time, determine. The Trust may establish and maintain such other offices and places of business as the Trustees may, from time to time, determine.

ARTICLE II
OFFICERS AND THEIR ELECTION

Section 2.1 Officers. The officers of the Trust shall be a President, a Treasurer, a Secretary, a Chief Compliance Officer and such other officers as the Trustees may from time to time elect. The Trustees may delegate to any officer or committee the power to appoint any subordinate officers or agents. It shall not be necessary for any Trustee or other officer to be a Shareholder of the Trust.

Section 2.2 Election of Officers. The Treasurer and Secretary shall be chosen by the Trustees. The President shall be chosen by the Trustees from among their number. Two or more offices may be held by a single person, except the offices of President and Secretary. Subject to the provisions of Section 3.13, the President, Treasurer and Secretary shall each hold office until their successors are chosen and qualified and all other officers shall hold office at the pleasure of the Trustees.

Section 2.3 Resignations. Any officer of the Trust may resign, Section 2.2 notwithstanding, by filing a written resignation with the President, the Trustees or the Secretary, which resignation shall take effect upon being so filed or at such time as may be therein specified.

ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES

Section 3.1 Management of the Trust; General. The business and affairs of the Trust shall be managed by, or under the direction of, the Trustees, and they shall have all powers necessary and desirable to carry out their responsibilities, so far as such powers are not inconsistent with the laws of the State of Delaware, the Trust Agreement or with these Bylaws.

Section 3.2 Executive and Other Committees. The Trustees may elect from their own number an executive committee, which shall have any or all the powers of the Trustees

while the Trustees are not in session. The Trustees may also elect from their own number other committees from time to time. The number composing such committees and the powers conferred upon the same are to be determined by vote of a majority of the Trustees. All members of such committees shall hold such offices at the pleasure of the Trustees. The Trustees may abolish any such committee at any time. Any committee to which the Trustees delegate any of their powers or duties shall keep records of its meetings and shall report its actions to the Trustees. The Trustees shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect.

Section 3.3 Compensation. Each Trustee and each committee member may receive such compensation for his or her services and reimbursement for his or her expenses as may be fixed from time to time by resolution of the Trustees.

Section 3.4 Chairman of the Trustees. The Trustees may appoint from among their number a Chairman, who shall serve as such at the pleasure of the Trustees. When present, the Chairman shall preside at all meetings of the Shareholders and the Trustees, and the Chairman may, subject to the approval of the Trustees, appoint another Trustee to preside at such meetings in his or her absence. The Chairman shall perform such other duties as the Trustees may from time to time designate. If the Trustees do not appoint a Chairman, the President shall perform the duties of the Chairman.

Section 3.5 President. The President shall be the chief executive officer of the Trust and, subject to the direction of the Trustees, shall have general administration of the business and policies of the Trust. Except as the Trustees may otherwise order, the President shall have the power to grant, issue, execute or sign such powers of attorney, proxies, agreements or other documents as may be deemed advisable or necessary in the furtherance of the interests of the Trust or any Series thereof. The President shall also have the power to employ attorneys, accountants and other advisers and agents and counsel for the Trust. The President shall perform such duties additional to all of the foregoing as the Trustees may from time to time designate.

Section 3.6 Treasurer. The Treasurer shall be the principal financial and accounting officer of the Trust. The Treasurer shall deliver all funds and securities of the Trust which may come into his or her hands to such company as the Trustees shall employ as Custodian in accordance with the Trust Agreement and applicable provisions of law. The Treasurer shall make annual reports regarding the business and condition of the Trust, which reports shall be preserved in Trust records, and the Treasurer shall furnish such other reports regarding the business and condition of the Trust as the Trustees may from time to time require. The Treasurer shall perform such additional duties as the Trustees may from time to time designate.

Section 3.7 Secretary. The Secretary shall record in books kept for the purpose all votes and proceedings of the Trustees and the Shareholders at their respective meetings. The Secretary shall have the custody of the seal of the Trust. The Secretary shall perform such additional duties as the Trustees may from time to time designate.

Section 3.8 Vice President. Any Vice President of the Trust shall perform such duties as the Trustees or the President may from time to time designate. At the request or in the absence or disability of the President, the Vice President (or, if there are two or more Vice

-2-

Presidents, then the most senior of the Vice Presidents present and able to act) may perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the President.

Section 3.9 Assistant Treasurer. Any Assistant Treasurer of the Trust shall perform such duties as the Trustees or the Treasurer may from time to time designate, and, in the absence of the Treasurer, the Assistant Treasurer (or, if there are two or more Assistant Treasurers, then the most senior of the Assistant Treasurers present and able to act), may perform all the duties of the Treasurer.

Section 3.10 Assistant Secretary. Any Assistant Secretary of the Trust shall perform such duties as the Trustees or the Secretary may from time to time designate, and, in the absence of the Secretary, the Assistant Secretary (or, if there are two or more Assistant Secretaries, then the most senior of the Assistant Secretaries present and able to act), may perform all the duties of the Secretary.

Section 3.11 Subordinate Officers. The Trustees from time to time may appoint such other officers or agents as they may deem advisable, each of whom shall have such title, hold office for such period, have such authority and perform such duties as the Trustees may determine. The Trustees from time to time may delegate to one or more officers or committees of Trustees the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authorities and duties.

Section 3.12 Surety Bonds. The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations of the Securities and Exchange Commission (“Commission”)) to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of his or her duties to the Trust, including responsibility for negligence and for the accounting of any of the Trust’s property, funds or securities that may come into his or her hands.

Section 3.13 Removal. Any officer may be removed from office whenever in the judgment of the Trustees the best interest of the Trust will be served thereby, by the vote of a majority of the Trustees given at any regular meeting or any special meeting of the Trustees. In addition, any officer or agent appointed in accordance with the provisions of Section 3.11 hereof may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Trustees.

Section 3.14 Remuneration. The salaries or other compensation, if any, of the officers of the Trust shall be fixed from time to time by resolution of the Trustees.

ARTICLE IV
SHAREHOLDERS’ MEETINGS

Section 4.1 Special Meetings. A special meeting of the Shareholders shall be called by the Secretary whenever (i) ordered by the President of the Trust, (ii) ordered by the Trustees; or (iii) requested in writing by the Shareholders holding at least ten percent of the outstanding shares entitled to vote (provided that such Shareholders prepay the costs to the Trust

-3-

of preparing and mailing the notice of the meeting). Whenever ten or more Shareholders meeting the qualifications set forth in Section 16(c) of the 1940 Act, as the same may be amended from time to time, seek the opportunity of furnishing materials to the other Shareholders with a view to obtaining signatures on such a request for a meeting, the Trustees shall comply with the provisions of said Section 16(c) with respect to providing such Shareholders access to the list of the Shareholders of record of the Trust or the mailing of such materials to such Shareholders of record, subject to any rights provided to the Trust or any Trustees provided by said Section 16(c). If the Secretary, when so ordered or requested, refuses or neglects for more than 30 days to call such special meeting, the Trustees or the Shareholders so requesting, may, in the name of the Secretary, call the meeting by giving notice thereof in the manner required when notice is given by the Secretary. If the meeting is a meeting of the Shareholders of one or more Series or Classes, but not a meeting of all Shareholders of the Trust, then only special meetings of the Shareholders of such one or more Series or Classes shall be called and only the shareholders of such one or more Series or Classes shall be entitled to notice of and to vote at such meeting.

Section 4.2 Notices. Except as above provided, notices of any meeting of the Shareholders shall be given by the Secretary by delivering or mailing, postage prepaid, to each Shareholder entitled to vote at said meeting, written or printed notification of such meeting at least 15 days before the meeting, to such address as may be registered with the Trust by the Shareholder. Notice of any Shareholder meeting need not be given to any Shareholder if a written waiver of notice, executed before or after such meeting, is filed with the record of such meeting, or to any Shareholder who shall attend such meeting in person or by proxy. Notice of adjournment of a Shareholders’ meeting to another time or place need not be given, if such time and place are announced at the meeting or reasonable notice is given to persons present at the meeting and the adjourned meeting is held within a reasonable time after the date set for the original meeting.

Section 4.3 Voting; Proxies. Subject to the provisions of the Trust Agreement, Shareholders entitled to vote may vote either in person or by proxy, provided that either (i) an instrument authorizing such proxy to act is executed by the Shareholder in writing and dated not more than 11 months before the meeting, unless the instrument specifically provides for a longer period; or (ii) the Shareholder authorizes an electronic, telephonic, computerized or other alternative to execution of a written instrument authorizing the proxy to act, which authorization is received not more than 11 months before the meeting. Proxies shall be delivered to the Secretary of the Trust or other person responsible for recording the proceedings before being voted. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed or authorized by one of them, unless at or prior to exercise of such proxy the Trust receives a specific written notice to the contrary from any one of them. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any adjournment of a meeting. A proxy purporting to be exercised by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden or proving invalidity shall rest on the challenger. At all meetings of the Shareholders, unless the voting is conducted by inspectors, all questions relating to the qualifications of voters, the validity of proxies, and the acceptance or rejection of votes shall be decided by the Chairman of the meeting. Except as otherwise provided herein or in the Trust Agreement, as these Bylaws or such Trust Agreement may be amended or supplemented from time to time, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of

-4-

the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Shareholders were shareholders of a Delaware corporation.

Section 4.4 Place Of Meeting. All special meetings of the Shareholders shall be held at the principal place of business of the Trust or at such other place in the United States as the Trustees may designate.

Section 4.5 Action Without a Meeting. Any action to be taken by Shareholders may be taken without a meeting, except where a larger vote is required by law or by the Trust Agreement, if a majority of the Shareholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of meetings of Shareholders of the Trust. Such consent shall be treated for all purposes as a vote at a meeting of the Trustees held at the principal place of business of the Trust.

Section 4.6 Quorum and Required Vote. One-third of Shares entitled to vote in person or by proxy shall be a quorum for the transaction of business at a meeting of Shareholders, except that where any provision of law or of the Trust Agreement permits or requires that Shareholders of any Series shall vote as a Series (or the Shareholders of a Class shall vote as a Class), then one-third of the aggregate number of Shares of that Series (or that Class) entitled to vote shall be necessary to constitute a quorum for the transaction of business by that Series (or that Class). Any lesser number shall be sufficient for adjournment. Any adjourned session or sessions may be held within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by law or by the Trust Agreement, a majority of the Shares voted in person or by proxy shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of the Trust Agreement permits or requires that holders of any Series shall vote as a Series (or that the holders of any Class shall vote as a Class), then a majority of the Shares present in person or by proxy of that Series (or Class) voted on the matter in person or by proxy shall decide that matter insofar as that Series (or Class) is concerned.

ARTICLE V
TRUSTEES’ MEETINGS

Section 5.1 Special Meetings. Special meetings of the Trustees may be called orally or in writing by the Chairman of the Trustees or any two other Trustees.

Section 5.2 Regular Meetings. Regular meetings of the Trustees may be held at such places and at such times as the Trustees may from time to time determine; each Trustee present at such determination shall be deemed a party calling the meeting and no call or notice will be required to such Trustee.

Section 5.3 Quorum. One-half of the Trustees shall constitute a quorum for the transaction of business and an action of a majority of the quorum shall constitute action of the Trustees.

Section 5.4 Notice. Except as otherwise provided, notice of any special meeting of the Trustees shall be given by the party calling the meeting to each Trustee by telephone, telefax or telegram sent to his or her home or business address at least 24 hours in

-5-

advance of the meeting or by written notice mailed, postage prepaid, addressed to the Trustee at his or her address as registered on the books of the Trust or, if not so registered, at his or her last known address at least 72 hours in advance of the meeting.

Section 5.5 Place Of Meeting. All special meetings of the Trustees shall be held at the principal place of business of the Trust or such other place as the Trustees may designate. Any meeting may adjourn to any place.

ARTICLE VI
SHARES OF BENEFICIAL INTEREST

Section 6.1 Beneficial Interest. The beneficial interest in the Trust shall at all times be divided into such transferable Shares of one or more separate and distinct Series, or Classes thereof, as the Trustees shall from time to time create and establish. The number of Shares is unlimited, and each Share of each Series or class thereof shall be without par value and shall represent an equal proportionate interest with each other Share in the Series, none having priority or preference over another, except to the extent that such priorities or preferences are established with respect to one or more Classes of Shares consistent with applicable law and any rule or order of the Commission.

Section 6.2 Transfer of Shares. The Shares of the Trust shall be transferable, so as to affect the rights of the Trust, only by transfer recorded on the books of the Trust, in person or by attorney.

Section 6.3 Equitable Interest Not Recognized. The Trust shall be entitled to treat the holder of record of any Share or Shares of beneficial interest as the holder in fact thereof, and shall not be bound to recognize any equitable or other claim or interest in such Share or Shares on the part of any other person except as may be otherwise expressly provided by law.

Section 6.4 Share Certificate. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise authorize. The Trustees may issue certificates to a Shareholder of any Series or Class for any purpose and the issuance of a certificate to one or more Shareholders shall not require the issuance of certificates generally. In the event that the Trustees authorize the issuance of Share certificates, such certificate shall be in the form proscribed from time to time by the Trustees and shall be signed by the President or a Vice President and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary. Such signatures may be facsimiles if the certificate is signed by a transfer or shareholder services agent or by a registrar, other than a Trustee, officer or employee of the Trust. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Trust with the same effect as if he or she were such officer at the time of its issue.

In lieu of issuing certificates for Shares, the Trustees or the transfer or shareholder services agent may either issue receipts therefor or may keep accounts upon the books of the Trust for the record holders of such Shares, who shall in either case be deemed, for all purposes hereunder, to be the holders of certificates for such Shares as if they had accepted such certificates and shall be held to have expressly assented and agreed to the terms hereof.

-6-

Section 6.5 Loss of Certificate. In the case of the alleged loss or destruction or the mutilation of a Share certificate, a duplicate certificate may be issued in place thereof, upon such terms as the Trustees may prescribe.

Section 6.6 Discontinuance of Issuance Of Certificates. The Trustees may at any time discontinue the issuance of Share certificates and may, by written notice to each Shareholder, require the surrender of Share certificates to the Trust for cancellation. Such surrender and cancellation shall not affect the ownership of Shares in the Trust.

Section 6.7 Establishment of Record Dates. The Trustees may close the Share transfer books of the Trust for a period not exceeding 150 days preceding the date of any meeting of Shareholders, or the date for the payment of any dividend or other distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect; or in lieu of closing the stock transfer books as aforesaid, the Trustees may fix in advance a date, not exceeding 150 days preceding the date of any meeting of Shareholders, or the date for payment of any dividend or other distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend or other distribution, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of Shares, and in such case such Shareholders and only such Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting or to receive payment of such dividend or other distribution, or to receive such allotment or rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any Shares on the books of the Trust after any such record date fixed as aforesaid.

ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST

Section 7.1 Ownership. The Trustees, acting for and on behalf of the Trust, shall be deemed to hold legal and beneficial ownership of any income earned on securities held by the Trust issued by any business entity formed, organized or existing under the laws of any jurisdiction other than a state, commonwealth, possession or colony of the United States or the laws of the United States.

ARTICLE VIII
INSPECTION OF BOOKS

Section 8.1 Inspection. The Trustees shall from time to time determine whether and to what extent, and at what times and places, and under what conditions and regulations the accounts and books of the Trust or any of them shall be open to the inspection of the Shareholders; and no Shareholder shall have any right to inspect any account or book or document of the Trust except as conferred by law or otherwise by the Trustees or by resolution of the Shareholders.

-7-

ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES

Section 9.1 Insurance. The Trust may purchase and maintain insurance on behalf of any Covered Person or employee of the Trust, including any Covered Person or employee of the Trust who is or was serving at the request of the Trust as a Trustee, officer or employee of a corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his or her status as such, whether or not the Trustees would have the power to indemnify him against such liability.

The Trust may not acquire or obtain a contract for insurance that protects or purports to protect any Trustee or officer of the Trust against any liability to the Trust or its Shareholders to which he or she would otherwise be subject by reason or willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.

ARTICLE X
FISCAL YEAR

Section 10.1 Fiscal Year. The fiscal year of the Trust shall end on such date as the Trustees shall from time to time determine.

ARTICLE XI
AMENDMENTS

Section 11.1 Amendments. These Bylaws may be amended by the Trustees from time to time.

ARTICLE XII
REPORTS TO SHAREHOLDERS

Section 12.1 Reports. The Trustees shall at least semi-annually submit to the Shareholders a written financial report of the Trust, including financial statements which shall be certified at least annually by independent public accountants.

ARTICLE XIII
HEADINGS

Section 13.1 Headings. Headings are placed in these Bylaws for convenience of reference only and in case of any conflict, the text of these Bylaws rather than the headings shall control.

-8-

EX-99.(D)(1) 5 e33444ex23d1.htm ADVISORY AGREEMENT

Exhibit (d)(1)

INVESTMENT ADVISORY AGREEMENT

This Investment Advisory Agreement (this “Agreement”) is made and entered into on , 2009, and to be effective upon the commencement of operations of the IQ Hedge Multi-Strategy Composite ETF, by and between IndexIQ ETF Trust, a Delaware trust (the “Trust”), and IndexIQ Advisors LLC, a Delaware limited liability company (the “Advisor”).

WHEREAS, the Trust is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, the Trust is authorized to issue shares of beneficial interest in separate series with each such series representing interests in a separate portfolio of securities and other assets;

WHEREAS, the Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engages in the business of asset management;

WHEREAS, the Trust desires to retain the Advisor to render certain investment management services to the portfolios of the Trust, each a series of the Trust (each a “Fund” and, collectively, the “Funds”), and the Advisor is willing to render such services; and

WHEREAS, capitalized terms not otherwise defined in this Agreement have the meanings assigned to them in a Fund’s most recent prospectus.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

1. Obligations of Investment Advisor.

(a) Services. The Advisor shall provide a continuous program of investment management for the Funds, subject to the general supervision of the Trust’s Board of Trustees and the provisions of this Agreement. Specifically, and without limiting the generality of the foregoing, the Advisor agrees to perform the following services (the “Services”) for each Fund:

     (1) manage the investment and reinvestment of the assets of the Fund for the period and on the terms set forth in this Agreement;

     (2) continuously review, supervise, and administer the investment program of the Fund;

     (3) determine, in its discretion, the securities to be purchased, retained or sold (and implement those decisions) with respect to the Fund;

     (4) with the assistance of the Fund’s distributor, determine the number of shares of the Fund that will be created or redeemed each Business Day based on the purchase orders submitted by Authorized Participants;

     (5) provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, information about the Fund sufficient for a pricing service or other entity to calculate the Intraday Indicate Value of the shares of the Fund every fifteen seconds each Business Day;

     (6) provide the Trust and the Fund with records concerning the Advisor’s activities under this Agreement which the Trust and the Fund are required to maintain;

     (7) render regular reports to the Trust’s trustees and officers concerning the Advisor’s discharge of the foregoing responsibilities; and

     (8) arrange for other necessary services, including custodial, transfer agency and administration.

(b) Control of the Trust. The Advisor shall discharge the responsibilities described in subsection (a) subject to the control of the trustees and officers of the Trust and in compliance with (i) such policies as the trustees may from time to time establish; (ii) the Fund’s objectives, policies, and limitations as set forth in its prospectus and statement of additional information, as the same may be amended from time to time; and (iii) with all applicable laws and regulations.

(c) Sub-Advisor and Agents. All Services to be furnished by the Advisor under this Agreement may be furnished through the medium of any managers, officers or employees of the Advisor or through such other parties (including, without limitation, a sub-advisor) as the Advisor may determine from time to time.

(d) Expenses and Personnel. The Advisor agrees, at its own expense or at the expense of one or more of its affiliates, to render the Services and to provide the office space, furnishings, equipment and personnel as may be reasonably required in the judgment of the trustees and officers of the Trust to perform the Services on the terms and for the compensation provided herein. The Advisor shall authorize and permit any of its officers, managers and employees, who may be elected as trustees or officers of the Trust, to serve in the capacities in which they are elected. Except to the extent expressly assumed by the Advisor herein and except to the extent required by law to be paid by the Advisor, the Trust shall pay all costs and expenses in connection with its operation.

(e) Books and Records. The Advisor hereby undertakes and agrees to maintain all records not maintained by a service provider or sub-adviser pursuant to their agreements with the Trust or the Advisor, in the form and for the period required by Rule 31a-2 under the 1940 Act. All books and records prepared and maintained by the Advisor for the Trust and each Fund under this Agreement shall be the property of the Trust and the Fund and, upon request therefor, the Advisor shall surrender to the Trust and the Fund such of the books and records so requested. The Advisor further agrees that it will not disclose or use any records or information obtained

pursuant to this Agreement in any manner whatsoever except as authorized in this Agreement and that it will keep confidential any information obtained pursuant to this Agreement and disclose such information only if the Trust has authorized such disclosure, or if such disclosure is required by federal or state regulatory authorities.

(f) Additional Services Provided. The Advisor agrees, at the expense of the Trust or the Advisor, as determined under Section 3(b) hereof, (i) to prepare all required tax returns of the Trust and each Fund, (ii) to prepare and submit reports to existing shareholders, (iii) to update periodically the prospectuses and statements of additional information of the Trust and (iv) to prepare reports to be filed with the Securities and Exchange Commission (“SEC”) and other regulatory authorities.

2. Fund Transactions.

(a) General. The Advisor is authorized to select the brokers or dealers that will execute the purchases and sales of portfolio securities for each Fund. With respect to brokerage selection, the Advisor shall seek to obtain the best overall execution for fund transactions, which is a combination of price, quality of execution and other factors. As permitted by Section 28(e) of the Securities Exchange Act of 1934, as amended (“Section 28(e)”), the Advisor may pay to a broker which provides brokerage and research services (as such services are defined in Section 28(e)) to the Fund an amount of disclosed commission in excess of the commission which another broker would have charged for effecting that transaction. Such practice is subject to a good faith determination that such commission is reasonable in light of the services provided and to such policies as the Trust’s trustees may adopt from time to time. Such services of brokers are used by the Advisor in connection with all of its investment activities, and some of such services obtained in connection with the execution of transactions for a Fund may be used in managing other investment accounts.

(b) Mixed-Use Services. On occasion, a broker-dealer might furnish the Advisor with a service which has a mixed use (i.e., the service is used both for investment and brokerage activities and for other activities). Where this occurs, the Advisor will reasonably allocate the cost of the service, so that the portion or specific component which assists in investment and brokerage activities is obtained using portfolio commissions from a Fund or other managed accounts, and the portion or specific component which provides other assistance (for example, administrative or non-research assistance) is paid for by the Advisor from its own funds.

(c) Exclusivity. Where the Advisor deems the purchase or sale of a security to be in the best interest of a Fund as well as its other customers (including any other fund or other investment company or advisory account for which the Advisor acts as investment adviser), the Advisor, to the extent permitted by applicable laws and regulations, may aggregate the securities to be sold or purchased for a Fund with those to be sold or purchased for such other customers in order to obtain the best net price and most favorable execution under the circumstances. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Advisor, as applicable, in the manner it considers to be equitable and consistent with its fiduciary obligations to such Fund and such other customers. In some

instances, this procedure may adversely affect the price and size of the position obtainable for the Fund.

(d) Reporting. The Advisor will promptly communicate to the officers and the trustees of the Trust such information relating to portfolio transactions as they may reasonably request.

(e) Delegation. The Advisor may delegate or share responsibility for Fund transactions and the terms of this Section 2 with a sub-advisor, pursuant to the terms of Section 1(c).

3. Compensation of the Advisor; Expense Allocation.

(a) For the services rendered, the facilities furnished and expenses assumed by the Advisor, each Fund shall pay to the Advisor at the end of each calendar month a fee for the Fund calculated as a percentage of the average daily net assets of the Fund at the annual rates set forth in Appendix A of this Agreement. The Advisor’s fee is accrued daily at 1/365th of the applicable annual rate set forth in Appendix A. Appendix A shall be amended from time to time to reflect the addition and/or termination of any Fund as a Fund hereunder and to reflect any change in the advisory fees payable with respect to any Fund duly approved in accordance with Section 8 hereof. For the purpose of the fee accrual, the daily net assets of each Fund are determined in the manner and at the times set forth in the Fund’s current prospectus and, on days on which the net assets are not so determined, the net asset value computation to be used shall be as determined on the immediately preceding day on which the net assets were determined. In the event of termination of this Agreement, all compensation due through the date of termination will be calculated on a pro-rated basis through the date of termination and paid within fifteen business days of the date of termination. The Advisor may waive all or a portion of its fees provided for hereunder and such waiver will be treated as a reduction in the purchase price of its services. The Advisor shall be contractually bound under this Agreement by the terms of any publicly-announced waiver of its fee, or any limitation of a Fund’s expenses, as if such waiver or limitation were fully set forth in this Agreement. The waiver of any of the Advisor’s fee shall not obligate the Advisor to waive any of its fee on a subsequent occasion.

(b) The Advisor agrees to pay all expenses of the Trust, except for: (i) brokerage expenses and other expenses (such as stamp taxes) connected with the execution of portfolio transactions or in connection with creation and redemption transactions; (ii) legal fees or expenses in connection with any arbitration, litigation or pending or threatened arbitration or litigation, including any settlements in connection therewith; (iii) compensation and expenses of the Trustees of the Trust who are not officers, directors/trustees, partners or employees of the Advisor or its affiliates (the "Independent Trustees"); (iv) compensation and expenses of counsel to the Independent Trustees, (iv) compensation and expenses of the Trust's chief compliance officer; (v) extraordinary expenses; (vi) distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act; and (vii) the advisory fee payable to the Advisor hereunder. The payment or assumption by the Advisor of any expense of the Trust that the Advisor is not required by this Agreement to pay or assume shall not

obligate the Advisor to pay or assume the same or any similar expense of the Trust on any subsequent occasion.

4. Status of Investment Advisor. The services of the Advisor to the Trust and each Fund are not to be deemed exclusive, and the Advisor shall be free to render similar services to others so long as its services to the Trust and the Funds are not impaired thereby. The Advisor shall be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust or the Funds in any way or otherwise be deemed an agent of the Trust or the Funds. Nothing in this Agreement shall limit or restrict the right of any manager, officer or employee of the Advisor, who may also be a trustee, officer or employee of the Trust, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.

5. Permissible Interests. Trustees, agents, and shareholders of the Trust are or may be interested in the Advisor (or any successor thereof) as managers, officers, members or otherwise; and managers, officers, agents, and members of the Advisor are or may be interested in the Trust as trustees, shareholders or otherwise; and the Advisor (or any successor) is or may be interested in the Trust as a shareholder or otherwise.

6. Limits of Liability; Indemnification. The Advisor assumes no responsibility under this Agreement other than to render the services called for hereunder. The Advisor shall not be liable for any error of judgment or for any loss suffered by the Trust or a Fund in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of, or from reckless disregard by it of its obligations and duties under, this Agreement. It is agreed that the Advisor shall have no responsibility or liability for the accuracy or completeness of the Trust’s registration statement under the 1940 Act or the Securities Act of 1933, as amended (the “1933 Act”), except for information supplied by the Advisor for inclusion therein. The Trust agrees to indemnify the Advisor to the full extent permitted by the Trust’s Declaration of Trust.

7. Term. This Agreement shall become effective as stated in the Recitals hereto. Unless terminated as provided in this Agreement, this Agreement shall remain in full force and effect for two years from the date of this Agreement. Subsequent to such initial period of effectiveness, this Agreement shall continue in full force and effect for successive periods of one year thereafter provided that such continuance with respect to the Funds is approved at least annually (a) by either the trustees or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Funds, and (b) in either event, by the vote of a majority of the trustees who are not parties to this Agreement or “interested persons” (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such proposal; provided, however, that:

(a) the Trust may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days written notice of a decision to terminate this Agreement by (i) the Trust’s trustees; or (ii) the vote of a majority of the outstanding voting securities of the Funds;

(b) the Agreement shall immediately terminate in the event of its assignment (within the meaning of the 1940 Act and the rules promulgated thereunder);

(c) the Advisor may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days’ written notice to the Trust and the Funds; and

(d) the terms of paragraph 6 of this Agreement shall survive the termination of this Agreement.

8. Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective with respect to a Fund until approved by (a) to the extent required by applicable law, the vote of the holders of a majority of the Fund’s outstanding voting securities and (b) a majority of those trustees of the Trust who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. Additional Funds may be added to Appendix A by written agreement of the Trust and the Advisor.

9. Applicable Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York without regard to the principles of the conflict of laws or the choice of laws.

10. Representations and Warranties.

(a) Representations and Warranties of the Advisor. The Advisor hereby represents and warrants to the Trust as follows:

     (i) the Advisor is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and is fully authorized to enter into this Agreement and carry out its duties and obligations hereunder;

     (ii) the Advisor is registered as an investment adviser with the SEC under the Advisers Act, shall maintain such registration in effect at all times during the term of this Agreement, and shall notify the Trust immediately if the Advisor ceases to be so registered; and

     (iii) the Advisor has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, and will provide the Trust with a copy of that code, together with evidence of its adoption. Within 20 days of the end of each calendar quarter during which this Agreement remains in effect, the chief compliance officer of the Advisor shall certify to the Trust that the Advisor has complied with the requirements of Rule 17j-1 and Rule 204A-1 (each as amended from time to time) during the

previous quarter and that there have been no violations of the Advisor’s code of ethics or, if such a violation has occurred, that appropriate action has been taken in response to such violation. Upon written request of the Trust, the Advisor shall permit representatives of the Trust to examine the reports (or summaries of the reports) required to be made to the Advisor by Rule 17j-1(c)(1) and other records evidencing enforcement of the code of ethics.

(b) Representations and Warranties of the Trust. The Trust hereby represents and warrants to the Advisor as follows: (i) the Trust has been duly organized as a trust under the laws of the State of Delaware and is authorized to enter into this Agreement and carry out its terms; (ii) shares of the Fund are (or will be) registered for offer and sale to the public under the 1933 Act; and (iii) such registrations will be kept in effect during the term of this Agreement.

11. Liability of Trust and Funds. It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the trust property of the Trust as provided in the Declaration of Trust. This Agreement shall not be deemed to have been made by any of them individually or to impose any liability on them personally. With respect to any obligation of the Trust or a Fund arising under this Agreement, the Advisor shall look for payment or satisfaction of such obligation solely to the assets and property of the Fund to which such obligation relates, and under no circumstances shall the Advisor have the right to set off claims relating to such Fund by applying property of any other series of the Trust. The business and contractual relationships created by this Agreement, consideration for entering into this Agreement, and the consequences of such relationship and consideration relate solely to the Trust and the Funds.

12. Use of Names. The Trust acknowledges that all rights to the names “IndexIQ” and “IIQ” and any derivatives thereof (“Names”), as well as any logos that are now or shall hereafter be associated with Names (“Logos”), belong to the Advisor, and that the Trust is being granted a limited license to use such Names and Logos in its name, the name of its series and the name of its classes of shares. In the event that this Agreement is terminated and the Advisor no longer acts as investment adviser to the Trust, the Advisor reserves the right to withdraw from the Trust and the Funds the uses of Names and Logos or any name or logo that would imply a continuing relationship between the Trust or the Funds and the Advisor or any of its affiliates.

13. Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.

14. Notice. Notices of any kind to be given to the Trust hereunder by the Advisor shall be in writing and shall be duly given if mailed or delivered to the Trust at 800 Westchester Avenue, Suite N611, Rye Brook, NY 10573, Attention: President, or to such other address or to such individual as shall be so specified by the Trust to the Advisor. Notices of any kind to be given to the Advisor hereunder by the Trust shall be in writing and shall be duly given if mailed or delivered to the Advisor at the Trust at 800 Westchester Avenue, Suite N611, Rye Brook, NY 10573, Attention: President, or at such other address or to such individual as shall be so specified by the Advisor to the Trust. Notices shall be deemed to have been given on the date delivered

personally or by courier service, or three days after sent by registered or certified mail, postage prepaid, return receipt requested.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and the year first written above.


INDEXIQ ETF TRUST		INDEXIQ ADVISORS LLC

By:		By:

	Name:		Name:
	Title:		Title:

Attest

EX-99.(D)(2) 6 e33444ex23d2.htm SUB-ADVISORY AGREEMENT

Exhibit (d)(2)

SUB-ADVISORY AGREEMENT

AGREEMENT, dated as of , 2009, to be effective upon the commencement of operations of the IQ Hedge Multi-Strategy Composite ETF, by and between IndexIQ Advisors LLC (the “Investment Adviser”), a Delaware limited liability company having its principal place of business at 800 Westchester Avenue, Suite N611, Rye Brook, New York 10573, and Mellon Capital Management Corporation (the “Sub-Adviser”), a Delaware corporation having its principal place of business at 50 Fremont Street, Suite 3900, San Francisco, California 94105.

WHEREAS, the Investment Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”);

WHEREAS, the Investment Adviser has entered into an Investment Advisory Agreement dated as of , 2009, with IndexIQ ETF Trust (the “Trust”), an investment company registered under the Investment Company Act of 1940, as amended (“Investment Company Act”);

WHEREAS, Sub-Adviser is registered as an investment adviser under the Advisers Act;

WHEREAS, the Trustees of the Trust and Investment Adviser desire to retain Sub-Adviser to render investment advisory and other services to the funds specified in Appendix A hereto, as amended from time to time, each a series of the Trust (each a “Fund” and collectively, the “Funds”), in the manner and on the terms hereinafter set forth;

WHEREAS, Investment Adviser has the authority under the Investment Advisory Agreement, with the consent of the Trustees of the Trust (the “Trustees”) to select sub-advisers for each Fund; and

WHEREAS, Sub-Adviser is willing to furnish such services to the Investment Adviser and each Fund;

NOW, THEREFORE, Investment Adviser and Sub-Adviser agree as follows:

1. APPOINTMENT OF THE SUB-ADVISER

Subject to the terms herein, Investment Adviser hereby appoints Sub-Adviser to act as a sub-adviser for each Fund, and in accordance with the terms and conditions of this Agreement.

2. ACCEPTANCE OF APPOINTMENT

Sub-Adviser accepts that appointment and agrees to render the services herein set forth, for the compensation herein provided.

The assets of each Fund will be maintained in the custody of a custodian (who shall be identified by Investment Adviser in writing). Sub-Adviser will not have custody of any securities, cash or other assets of the Fund and will not be liable for any loss resulting from any act or omission of the custodian other than acts or omissions arising in reasonable reliance on instructions of Sub-Adviser. The custodian will be responsible for the custody, receipt and delivery of securities and other assets of the Fund, and Sub-Adviser shall have no authority responsibility or obligation with respect to the custody receipt or delivery of securities or other assets of the Fund. Investment Adviser shall be responsible for all custodial arrangements, including the payment of all fees and charges to the custodian.

3. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST

A. As sub-adviser to each Fund, Sub-Adviser will coordinate the investment and reinvestment of the assets of the Fund and determine the composition of the assets of the Fund, in accordance with the terms of this Agreement, the Fund’s Prospectus and the Fund’s Statement of Additional Information (as they may be

updated or amended, from time to time) and subject to the direction, supervision and control of the Investment Adviser and the Trustees of the Trust. Prior to the commencement of the Sub-Adviser’s services hereunder, the Investment Adviser shall provide Sub-Adviser with current copies of the Fund’s Prospectus and SAI. Investment Adviser undertakes to provide Sub-Adviser with copies or other written notice of any amendments, modifications or supplements to the Fund’s Prospectus and SAI and Sub-Adviser will not need to comply until a copy has been provided to Sub-Adviser and agreed upon.

B. Sub-Adviser may place orders for the execution of transactions with or through such brokers, dealers or banks as Sub-Adviser may select and, subject to Section 28(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) and other applicable law, may pay commissions on transactions in excess of the amount of commissions another broker or dealer would have charged. Sub-Adviser will seek best execution under the circumstances of the particular transaction taking into consideration the full range and quality of a broker's services in placing brokerage including, among other things, the value of research provided as well as execution capability, commission rate, financial responsibility and responsiveness to the Sub-Adviser. In no event shall Sub-Adviser be under any duty to obtain the lowest commission or best net price for the Fund on any particular transaction. Investment Adviser acknowledges and agrees that, if the Investment Adviser has only one (1) OTC counterparty, the Sub-Adviser may not be able to obtain best execution on such trades and such trades are at risk of not having the Investment Adviser’s preferred exposure if such counterparty refuses to accept a trade. Accordingly, under such circumstances, the Investment Adviser acknowledges that all of its counterparty risk will be with a single entity. Sub-Adviser is not under any duty to execute transactions for the Fund before or after transactions for other like accounts managed by Sub-Adviser. Sub-Adviser may aggregate sales and purchase orders of securities or derivatives held in the Fund with similar orders being made simultaneously for other portfolios managed by Sub-Adviser if, in Sub-Adviser's reasonable judgment, such aggregation shall result in an overall economic benefit to the Fund. Notwithstanding the foregoing, the Sub-Adviser will not effect any transaction with a broker or dealer that is an “affiliated person” (as defined under the Investment Company Act) of the Sub-Adviser or the Investment Adviser without the prior approval of the Investment Adviser. The Investment Adviser shall provide the Sub-Adviser with a list of brokers or dealers that are affiliated persons of the Investment Adviser.

C. To the extent consistent with the investment strategy for the Fund, Sub-Adviser is hereby authorized to purchase, hold and sell The Bank of New York Mellon Corporation stock, which is the stock of an affiliate of the Sub-Adviser.

D. Investment Adviser understands and agrees that Sub-Adviser performs investment management services for various clients and may take action with respect to any of its other clients which may differ from action taken or from the timing or nature of action taken by Sub-Adviser for the Fund. Sub-Adviser’s authority hereunder shall not be impaired because of the fact that it may effect transactions with respect to securities for its own account or for the accounts of others which it manages which are identical or similar to securities to which it may effect transactions for the Fund at the same or similar times.

E. Sub-Adviser will provide Investment Adviser with copies of Sub-Adviser’s current policies and procedures adopted in accordance with Rule 206(4)-7 under the Adviser Act. To the extent the Fund(s) are required by the Investment Company Act to adopt any such policy or procedure, Investment Adviser will submit such policy or procedure to the Trust’s Board of Trustees for adoption by each of the Funds, with such modifications or additions thereto as the Board of Trustees or Investment Adviser may recommend with the concurrence of Sub-Adviser. The Sub-Adviser’s Chief Compliance Officer shall provide to the Investment Adviser’s Chief Compliance Officer or his or her delegate the following:

(i). on a quarterly basis, a report of any material changes to the Sub-Adviser’s policies and procedures;

(ii). on a quarterly basis, a report of any “material compliance matters,” as defined by Rule 38a-1 under the Investment Company Act, that have occurred in connection with the Sub-Adviser’s policies and procedures;

(iii). a copy of the Cub-Adviser’s Chief Compliance Officer’s report with respect to the annual review of the Sub-Adviser’s policies and procedures pursuant to Rule 206(4)-7 under the Advisers Act; and

(iv). an annual certification regarding the Sub-Adviser’s compliance with Rule 206(4)-8 under the Advisers Act and Section 38a-1 of the Investment Company Act, as well as the foregoing sub-paragraphs (i) through (iii).

F. Sub-Adviser will maintain and preserve all accounts, books and records with respect to the Fund as are required of an investment adviser of a registered investment company pursuant to the Investment Company Act and Advisers Act and the rules thereunder and shall file with the SEC all forms pursuant to Section 13F and 13G of the Exchange Act, with respect to its duties as are set forth herein.

G. The Sub-Adviser shall cooperate promptly and fully with the Investment Adviser and/or the Trust in responding to any regulatory or compliance examinations or inspections (including any information requests) relating to the Trust, the Fund or the Investment Adviser brought by any governmental or regulatory authorities.

H. Sub-Adviser will, unless and until otherwise directed by Investment Adviser, exercise all rights of security holders with respect to securities held by each Fund, including, but not limited to: voting proxies in accordance with Sub-Adviser’s then-current proxy voting policies.

I. The Sub-Adviser, in connection with its rights and duties with respect to the Fund and the Trust shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

J. The Sub-Adviser shall only provide the services herein set forth if (i) each Fund has obtained a minimum of $5 million in seed money, and (ii) all material operational issues outstanding are resolved to the Sub-Advisor’s reasonable satisfaction prior to the launch of each Fund.

4. COMPENSATION OF SUB-ADVISER

Investment Adviser will pay Sub-Adviser as compensation for providing services in accordance with this Agreement those fees as set forth in Appendix B. Investment Adviser and Sub-Adviser agree that all fees shall become due and owing to Sub-Adviser promptly after the termination date of Sub-Adviser with respect to any Fund and that the amount of such fees shall be calculated by treating the termination date as the next fee computation date. The annual base fee will be prorated for such fees owed through the termination date. In addition, Investment Adviser shall be responsible for extraordinary expenses incurred by Sub-Adviser in connection with the performance of its duties hereunder, including, without limitation, expenses incurred with respect to proxy voting execution, advice and reporting.

5. LIABILITY AND INDEMNIFICATION

A. Except as may otherwise be provided by the Investment Company Act or any other federal securities law, in the absence of willful misconduct, bad faith or gross negligence, neither Sub-Adviser nor any of its officers, affiliates, employees or consultants (its “Affiliates”) shall be liable for any losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) incurred or suffered by Investment Adviser, the Fund or the Trust as a result of any error of judgment or for any action or inaction taken in good faith by the Sub-Adviser or its Affiliates with respect to each Fund.

B. Except as may otherwise be provided by the Investment Company Act or any other federal securities law, Investment Adviser shall indemnify and hold harmless Sub-Adviser, its officers, employees, consultants, all affiliated persons thereof (within the meaning of Section 2(a)(3) of the Investment Company Act) and all controlling persons (as described in Section 15 of the 1933 Act) (collectively, “Sub-Adviser Indemnitees”) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) to which any of the Sub-Adviser Indemnitees may become subject at common law or otherwise, arising out of Sub-Adviser’s action or inaction or based on this Agreement; provided however, Investment Adviser shall not indemnify or hold harmless the Sub-Adviser Indemnitees for any losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) due

to (i) any material breach by Sub-Adviser of a Sub-Adviser representation or warranty made herein, (ii) any willful misconduct, fraud, reckless disregard or gross negligence of Sub-Adviser in the performance of any of its duties or obligations hereunder or (iii) any untrue statement of a material fact contained in the Prospectus or SAI, proxy materials, advertisements or sales literature, if such statement was made in reliance upon information furnished to Investment Adviser by Sub-Adviser in writing and intended for use therein.

C. Notwithstanding anything in this Agreement to the contrary contained herein, Sub-Adviser shall not be responsible or liable for its failure to perform under this Agreement or for any losses to Investment Adviser or the Trust resulting from any event beyond the reasonable control of Sub-Adviser or its agents, including but not limited to nationalization, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting the Trust’s property; or the breakdown, failure or malfunction of any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts of war, terrorism, insurrection or revolution; or acts of God, or any other similar event.

6. REPRESENTATIONS OF THE INVESTMENT ADVISER

Investment Adviser represents, warrants and agrees that:

A. Investment Adviser has been duly authorized by the Trustees of the Trust to delegate to Sub-Adviser the provision of investment services to each Fund as contemplated hereby.

B. The Trust has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Investment Company Act and will provide the Sub-Adviser with a copy of such code of ethics.

C. Investment Adviser (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect, (ii) is not prohibited by the Investment Company Act, the Advisers Act or other law, regulation or order from performing the services contemplated by this Agreement, (iii) has met and will seek to continue to meet for so long as this Agreement is in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the full power and authority to enter into and perform the services contemplated by this Agreement, and (v) will promptly notify the Sub-Adviser of the occurrence of any event that would disqualify Investment Adviser from serving as investment manager of an investment company pursuant to Section 9(a) of the Investment Company Act or otherwise.

D. Investment Adviser acknowledges receipt of Part II of Sub-Adviser’s Form ADV at least 48 hours prior to entering into this Agreement, as required by Rule 204-3 under the Advisers Act.

E. Investment Adviser shall provide (or cause the Trust’s custodian to provide) timely information to Sub-Adviser regarding such matters as the composition to assets in the portion of each Fund managed by Sub-Adviser, cash requirements and cash available for investment in such portion of each such Fund, and all other information as may be reasonably necessary for Sub-Adviser to perform its duties hereunder.

F. The Form ADV that the Sub-Adviser has previously provided to the Investment Adviser is a true and complete copy of the form as currently filed with the SEC.

7. REPRESENTATIONS OF THE SUB-ADVISER

Sub-Adviser represents, warrants and agrees as follows:

A. Sub-Adviser (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect, (ii) is not prohibited by the Investment Company Act, the Advisers Act or other law, regulation or order from performing the services

contemplated by this Agreement, (iii) has met and will seek to continue to meet for so long as this Agreement remains in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the full power and authority to enter into and perform the services contemplated by this Agreement, and (v) will promptly notify the Investment Adviser of the occurrence of any event that would disqualify Sub-Adviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the Investment Company Act or otherwise.

B. Sub-Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Investment Company Act and Rule 204A-1 under the Advisers Act and will provide Investment Adviser with a copy of such code of ethics.

C. Upon written request, Sub-Adviser shall provide a certification to the Chief Compliance Officer (“CCO”) to the effect that Sub-Adviser has adopted and implemented policies and procedures reasonably designed to prevent violation by the Sub-Adviser and its supervised persons of the Advisers Act.

D. Sub-Adviser agrees to maintain an appropriate level of errors and omissions or professional liability insurance coverage.

E. Sub-Adviser acknowledges that the Investment Adviser and the Trust intend to rely on Rule 17a-10 and Sub-Adviser agrees not to consult with (i) other sub-advisers to a Fund, if any, (ii) other sub-advisers to any other Fund of the Trust, or (iii) other sub-advisers to an investment company under common control with any Fund, concerning transactions for a Fund in securities or other assets.

8. NON-EXCLUSIVITY

The services of Sub-Adviser to the Investment Adviser, the Fund(s) and the Trust are not to be deemed to be exclusive, and Sub-Adviser shall be free to render investment advisory or other services to others and to engage in other activities. It is understood and agreed that the directors, officers, and employees of Sub-Adviser are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors, trustees, or employees of any other firm or corporation.

9. SUPPLEMENTAL ARRANGEMENTS

Sub-Adviser may from time to time employ or associate itself with any person it believes to be particularly suited to assist it in providing the services to be performed by such Sub-Adviser hereunder, provided that no such person shall perform any services with respect to the Fund(s) that would constitute an assignment or require a written advisory agreement pursuant to the Investment Company Act. Any compensation payable to such persons shall be the sole responsibility of Sub-Adviser, and neither Investment Adviser nor the Trust shall have any obligations with respect thereto or otherwise arising under the Agreement.

10. TERMINATION OF AGREEMENT

This Agreement may be terminated with respect to any Fund at any time, without the payment of any penalty, by a vote of the majority of the Trustees, by the vote of a majority of the outstanding voting securities of such Fund, or the Investment Adviser on sixty (60) days’ prior written notice to Sub-Adviser, and the Investment Adviser as appropriate. In addition, this Agreement may be terminated with respect to any Fund by Sub-Adviser upon sixty (60) days written notice to the Investment Adviser. This Agreement will automatically terminate, without the payment of any penalty in the event the Investment Advisory Agreement between the Investment Adviser and the Trust is assigned (as defined in the Investment Company Act) or terminates for any other reason. This Agreement will also terminate upon written notice to the other party that the other party is in material breach of this Agreement, unless the other party in material breach of this Agreement cures such breach to the reasonable satisfaction of the party alleging the breach within thirty (30) days after written notice.

11. AMENDMENTS TO THE AGREEMENT

This Agreement may be amended by the parties with respect to any Fund only if by written agreement. It is understood that certain material amendments may require approval of the Fund’s shareholders. Additional Funds may be added to Appendix A by written agreement of Investment Adviser and Sub-Adviser.

12. ASSIGNMENT

Sub-Adviser shall not assign this Agreement. Any assignment (as that term is defined in the Investment Company Act) of the Agreement shall result in the automatic termination of this Agreement, as provided in Section 1o hereof. Notwithstanding the foregoing, no assignment shall be deemed to result from any changes in the directors, officers or employees of such Sub-Adviser except as may be provided to the contrary in the Investment Company Act or the rules or regulations thereunder.

13. ENTIRE AGREEMENT

This Agreement contains the entire understanding and agreement of the parties with respect to each Fund.

14. HEADINGS

The headings in the sections of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

15. NOTICES

All notices required to be given pursuant to this Agreement shall be delivered or mailed to the address listed below of each applicable party (i) in person, (ii) by registered or certified mail, or (iii) delivery service, providing the sender with notice of receipt, or to such other address as specified in a notice duly given to the other parties. Notice shall be deemed given on the date delivered if sent in accordance with this paragraph.

For: Mellon Capital Management Corporation
	50 Fremont Street, Suite 3900
	San Francisco, California 94105
	Attention: Manager of Client Service

For: IndexIQ Advisors LLC
	800 Westchester Avenue, Suite N611
	Rye Brook, New York 10573

For: IndexIQ ETF Trust
	c/o IndexIQ Advisors LLC
	800 Westchester Avenue, Suite N611
	Rye Brook, New York 10573

	With a copy to:
	IndexIQ Advisors LLC

16. SEVERABILITY AND SURVIVAL

Should any portion of this Agreement for any reason be held to be void in law or in equity, the Agreement shall be construed, insofar as is possible, as if such portion had never been contained herein. Sections 5, 16 and 19 shall survive the termination of this Agreement.

17. GOVERNING LAW

The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of California, or any of the applicable provisions of the Investment Company Act. To the extent that the laws of the State of California, or any of the provisions in this Agreement, conflict with applicable provisions of the Investment Company Act, the latter shall control.

18. INTERPRETATION

Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the Investment Company Act shall be resolved by reference to such term or provision of the Investment Company Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the Investment Company Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested persons,” “assignment,” and “affiliated persons,” as used herein shall have the meanings assigned to them by Section 2(a) of the Investment Company Act. In addition, where the effect of a requirement of the Investment Company Act reflected in any provision of this Agreement is relaxed by a rule, regulation or order of the SEC, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

19. CONFIDENTIALITY

Each party shall treat as confidential all Confidential Information of the other (as that term is defined below) and use such information only in furtherance of the purposes of this Agreement. Each party shall limit access to the Confidential Information to its affiliates, employees, consultants, auditors and regulators who reasonably require access to such Confidential Information, and otherwise maintain policies and procedures designed to prevent disclosure of the Confidential Information. For purposes of this Agreement, Confidential Information shall include all non-public business and financial information, methods, plans, techniques, processes, documents and trade secrets of a party. Confidential Information shall not include anything that (i) is or lawfully becomes in the public domain, other than as a result of a breach of an obligation hereunder, (ii) is furnished to the applicable party by a third party having a lawful right to do so, or (iii) was known to the applicable party at the time of the disclosure.

In accordance with Regulation S-P, if non-public personal information regarding any party’s customers or consumers is disclosed to the other party in connection with this Agreement, the other party receiving such information will not disclose or use that information other than as necessary to carry out the purposes of this Agreement.

20. USE OF NAME

During the term of this Agreement, the Investment Adviser shall have permission to use the Sub-Adviser’s name in the offering and marketing of the Fund, and agree to furnish the Sub-Adviser, for its prior approval, all prospectuses, brochures, advertisements, promotional materials, web-based information, proxy statements, shareholder reports and other similar informational materials that are to be made available to shareholders of the Fund or to the public and that refer to the Sub-Adviser in any way.

21. AUTHORITY TO EXECUTE TRANSACTION DOCUMENTS

Subject to any other written instructions of Investment Adviser or the Trust, each Sub-Adviser is hereby appointed agent and attorney-in-fact for the limited purposes of executing on behalf of each Fund specified on Appendix A hereto: account documentation, transaction term sheets and confirmations, certifications regarding the Fund’s status as an accredited investor, qualified institutional buyer or qualified purchaser and certifications regarding other factual matters as may be requested by brokers, dealers or counter parties in connection with its management of the Fund’s assets. However, nothing in this section shall be construed as imposing a duty on a Sub-Adviser to act in its capacity as attorney-in-fact for the Fund. Any person dealing with a Sub-Adviser in its capacity as attorney-in-fact hereunder for the Fund is hereby expressly put on notice that Sub-Adviser is acting solely in the capacity as an agent of the Fund and that any such person must look solely to the Fund for enforcement of any claim against Fund, as Sub-Adviser assumes no personal liability to such person whatsoever for obligations of the Fund entered into by Sub-Adviser in its capacity as attorney-in-fact for the Fund.

22. COUNTERPARTS

This Agreement may be executed in counterparts each of which shall be deemed to be an original and all of which, taken together, shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first mentioned above.


INDEXIQ ADVISORS LLC		MELLON CAPITAL MANAGEMENT CORPORATION

By:		By:

	Name:		Name:
	Title:		Title:

EX-99.(E) 7 e33444ex23e.htm DISTRIBUTION AGREEMENT

Exhibit (e)

DISTRIBUTION AGREEMENT

THIS AGREEMENT is made as of September 25, 2008, between IndexIQ ETF Trust, a Delaware trust (the “Fund”), and ALPS Distributors, Inc., a Colorado corporation (“ALPS”).

WHEREAS, the Fund is an open-end non-diversified management investment company organized as a series trust and offering a number of portfolios of securities, each investing primarily in equity securities selected to reflect the performance of a particular market index, having filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form N-IA under the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, ALPS is registered as a broker-dealer under the Securities Exchange Act of 1934 (the “1934 Act”) and a member of the Financial Industry Regulatory Authority (“FINRA”);

WHEREAS, the Fund intends to create and redeem shares of beneficial interest, par value $.001 per Share (the “Shares”) of each portfolio on a continuous basis at their net asset value only in aggregations constituting a Creation Unit, as such term is defined in the registration statement;

WHEREAS, the Shares of each portfolio will be listed on a national securities exchange (the “Listing Exchange”) and traded under the symbols set forth in Appendix A hereto;

WHEREAS, the Fund desires to retain ALPS to act as the distributor with respect to the issuance and distribution of Creation Units of Shares of each portfolio, hold itself available to receive and process orders for such Creation Units in the manner set forth in the Fund’s prospectus, and to enter into arrangements with broker-dealers who may solicit purchases of Shares and with broker-dealers and others to provide for servicing of shareholder accounts and for distribution assistance, including broker-dealer and shareholder support; and

WHEREAS, ALPS desires to provide the services described herein to the Fund.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties agree as follows.

1.	ALPS Appointment and Duties.

	(a)	The Fund hereby appoints ALPS as the exclusive distributor for Creation Unit aggregations of Shares of each portfolio listed in Appendix A hereto, as may be amended from time to time, and to perform the duties that are set forth in Appendix B hereto as amended from time to time, upon the terms and conditions hereinafter set forth. ALPS hereby accepts such appointment and agrees to furnish such specified services. ALPS shall for all purposes be deemed to be an independent contractor and shall, except as otherwise expressly authorized in this Agreement, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund.

	(b)	ALPS may employ or associate itself with a person or persons or organizations as ALPS believes to be desirable in the performance of its duties hereunder; provided that, in such event, the compensation of such person or persons or organizations shall be paid by and be the sole responsibility of ALPS, and the Fund shall bear no cost or obligation with respect

	thereto; and provided further that ALPS shall not be relieved of any of its obligations under this Agreement in such event and shall be responsible for all acts of any such person or persons or organizations taken in furtherance of this Agreement to the same extent it would be for its own acts.

2.	ALPS Compensation; Expenses.

	(a)	In consideration for the services to be performed hereunder by ALPS, ALPS shall receive the compensation set forth in Appendix C hereto.

	(b)	ALPS will bear all expenses in connection with the performance of its services under this Agreement, except as otherwise provided herein. ALPS will not bear any of the costs of Fund personnel. Other Fund expenses incurred shall be borne by the Fund or the Fund’s investment adviser, including, but not limited to, initial organization and offering expenses; the blue sky registration and qualification of Shares for sale in the various states in which the officers of the Fund shall determine it advisable to qualify such Shares for sale (including registering the Fund as a broker or dealer or any officer of the Fund as agent or salesman in any state); litigation expenses; taxes; costs of preferred shares; expenses of conducting repurchase offers for the purpose of repurchasing Fund shares; administration, transfer agency, and custodial expenses; interest; Fund directors’ or trustees’ fees; brokerage fees and commissions; state and federal registration fees; advisory fees; insurance premiums; fidelity bond premiums; Fund and investment advisory related legal expenses; costs of maintenance of Fund existence; printing and delivery of materials in connection with meetings of the Fund’s directors or trustees; printing and mailing of shareholder reports, prospectuses, statements of additional information, other offering documents and supplements, proxy materials, and other communications to shareholders; securities pricing data and expenses in connection with electronic filings with the Securities and Exchange Commission (the “SEC”).

3.	Documents. The Fund has furnished or will furnish, upon request, ALPS with copies of the Fund’s Declaration of Trust, advisory agreement, custodian agreement, transfer agency agreement, administration agreement, current prospectus, statement of additional information, periodic Fund reports, and all forms relating to any plan, program or service offered by the Fund. The Fund shall furnish, within a reasonable time period, to ALPS a copy of any amendment or supplement to any of the above-mentioned documents. Upon request, the Fund shall furnish promptly to ALPS any additional documents necessary or advisable to perform its functions hereunder. As used in this Agreement the terms “registration statement,” “prospectus” and “statement of additional information” shall mean any registration statement, prospectus and statement of additional information filed by the Fund with the SEC and any amendments and supplements thereto that are filed with the SEC.

4.	Insurance. ALPS agrees to maintain at its own expense fidelity bond and liability insurance coverages which are, in scope and amount, consistent with coverages customary for distribution activities relating to an open-end management investment company such as the Fund. ALPS shall notify the Fund upon receipt of notice of any material, adverse change in the terms or provisions of its insurance coverage. Such notification shall include the date of change and the reason or reasons therefore. ALPS shall notify the Fund of any material claims against it, whether or not covered by insurance, and shall notify the Fund from time to time as may be appropriate of the total outstanding claims made by it under its insurance coverage.

5.	Right to Receive Advice.

	(a)	Advice of the Fund and Service Providers. If ALPS is in doubt as to any action it should or should not take, ALPS may request directions, advice, or instructions from the Fund or, as applicable, the Fund’s investment adviser, custodian, or other service providers.

	(b)	Advice of Counsel. If ALPS is in doubt as to any question of law pertaining to any action it should or should not take, ALPS may request advice from counsel of its own choosing, at its own expense {who may be counsel for the Fund, the Fund’s investment adviser, or ALPS, at the option of ALPS).

	(c)	Conflicting Advice. In the event of a conflict between directions, advice or instructions ALPS receives from the Fund or any service provider and the advice ALPS receives from counsel, ALPS may in its sole discretion rely upon and follow the advice of counsel. ALPS will provide the Fund with prior written notice of its intent to follow advice of counsel that is materially inconsistent with directions, advice or instructions from the Fund. Upon request, ALPS will provide the Fund with a copy of such advice of counsel.

6.	Standard of Care; Limitation of Liability; Indemnification.

	(a)	ALPS shall be obligated to act in good faith and to exercise commercially reasonable care and diligence in the performance of its duties under this Agreement.

	(b)	In the absence of willful misfeasance, bad faith, negligence, or reckless disregard by ALPS in the performance of its duties, obligations, or responsibilities set forth in this Agreement, ALPS and its affiliates, including their respective officers, directors, agents, and employees, shall not be liable for, and the Fund agrees to indemnify, defend and hold harmless such persons from, all taxes, charges, expenses, assessments, claims, and liabilities (including, without limitation, reasonable attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws) arising directly or indirectly from the following:

		(i)	the inaccuracy of factual information furnished to ALPS by the Fund or the Fund’s investment adviser, custodians, or other service providers;

		(ii)	any untrue statement of a material fact or omission of a material fact required to be stated or necessary in order to make the statements not misleading under the 1933 Act, the 1940 Act, or any other statute or the common law, in any registration statement, prospectus, statement of additional information, shareholder report, or other information filed or made public by the Fund (as amended from time to time), except to the extent the statement or omission was made in reliance upon, and in conformity with, information furnished to the Fund by or on behalf of ALPS;

		(iii)	any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates;

		(iv)	losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason of circumstances beyond its reasonable control, including without limitation, acts of God, action or inaction of civil or military authority, war, terrorism, riot, fire, flood, sabotage, labor disputes, elements of nature, or non-performance by a third party, in each case in connection with the matters to which this Agreement relates;

		(v)	ALPS’ reliance on any instruction, direction, notice, instrument or other information in connection with the matters to which this Agreement relates that ALPS reasonably believes to be genuine;

		(vi)	loss of data or service interruptions in connection with the matters to which this Agreement relates caused by equipment failure not cured within a reasonable timeframe; or

		(vii)	any other action or omission to act which ALPS takes in connection with the provision of services to the Fund.

	(c)	ALPS shall indemnify and hold harmless the Fund, the Fund’s investment adviser and their respective officers, directors, agents, and employees from and against any and all taxes, charges, expenses, assessments, claims, and liabilities (including, without limitation, attorneys’ fees and disbursements and liabilities arising under applicable federal and state laws) arising directly or indirectly from ALPS’ willful misfeasance, bad faith, negligence, or reckless disregard in the performance of its duties, obligations, or responsibilities set forth in this Agreement.

	(d)	Notwithstanding anything in this Agreement to the contrary, neither party shall be liable under this Agreement to the other party hereto for any punitive, consequential, special or indirect losses or damages. Any indemnification payable by a party to this Agreement shall be net of insurance maintained by the indemnified party as of the time the claim giving rise to indemnity hereunder is alleged to have arisen to the extent it covers such claim.

7.	Activities of ALPS. The services of ALPS under this Agreement are not to be deemed exclusive, and ALPS shall be free to render similar services to others. The Fund recognizes that from time to time directors, officers and employees of ALPS may serve as directors, officers and employees of other corporations or businesses (including other investment companies) and that such other corporations and businesses may include ALPS as part of their name and that ALPS or its affiliates may enter into distribution agreements or other agreements with such other corporations and businesses.

8.	Accounts and Records. The accounts and records maintained by ALPS shall be the property of the Fund. ALPS shall prepare, maintain and preserve such accounts and records as required by the 1940 Act and other applicable securities laws, rules and regulations. ALPS shall surrender such accounts and records to the Fund, in the form in which such accounts and records have been maintained or preserved, promptly upon termination of this agreement or receipt of instructions from the Fund. The Fund shall have access to such accounts and records at all times during ALPS’ normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by ALPS to the Fund at the Fund’s expense. ALPS shall assist the Fund, the Fund’s independent auditors, or, upon approval of the Fund, any regulatory body, in any requested review of the Fund’s accounts and records, and reports by ALPS or its independent accountants concerning its accounting system and internal auditing controls will be open to such entities for audit or inspection upon reasonable request.

9.	Confidential and Proprietary Information. ALPS agrees that it will, on behalf of itself and its officers and employees, treat all transactions contemplated by this Agreement, and all records and information relative to the Fund and its current and former shareholders and other information germane thereto, as confidential and as proprietary information of the Fund and not to use, sell, transfer, or divulge such information or records to any person for any purpose other than

	performance of its duties hereunder, except after prior notification to and approval in writing from the Fund, which approval shall not be unreasonably withheld. Reasonable approval may not be withheld where ALPS may be exposed to regulatory, or criminal proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when requested by the Fund. When requested to divulge such information by duly constituted authorities, ALPS shall use reasonable commercial efforts to request confidential treatment of such information and shall notify the Fund of such disclosure. ALPS shall have in place and maintain physical, electronic, and procedural safeguards reasonably designed to protect the security, confidentiality, and integrity of, and to prevent unauthorized access to or use of records and information relating to the Fund and its current and former shareholders.

10.	Compliance with Rules and Regulations. ALPS shall comply (and to the extent ALPS takes or is required to take action on behalf of the Fund hereunder shall cause the Fund to comply) with all applicable requirements of the 1940 Act and other applicable laws, rules, regulations, orders and code of ethics, as well as all investment restrictions, policies and procedures adopted by the Fund of which ALPS has knowledge (it being understood that ALPS is deemed to have knowledge of all investment restrictions, policies or procedures set out in the Fund’s public filings or otherwise provided to ALPS). Except as set out in this Agreement, ALPS assumes no responsibility for such compliance by the Fund. ALPS shall maintain at all times a program reasonably designed to prevent violations of the federal securities laws (as defined in Rule 38a-1 under the 1940 Act) with respect to the services provided, and shall provide to the Fund a certification to such effect no less than annually or as otherwise reasonably requested by the Fund. ALPS shall make available its compliance personnel and shall provide at its own expense summaries and other relevant materials relating to such program as reasonably requested by the Fund.

11.	Representations and Warranties of ALPS. ALPS represents and warrants to the Fund that:

	(a)	It is duly organized and existing as a corporation and in good standing under the laws of the State of Colorado.

	(b)	It is empowered under applicable laws and by its Articles of Incorporation and By-laws to enter into and perform this Agreement.

	(c)	All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

	(d)	It is registered as a broker-dealer under the 1934 Act and is a member of FINRA.

	(e)	It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement in accordance with industry standards.

	(f)	ALPS has conducted a review pursuant to Statement on Auditing Standards 70, Part II (“SAS 70”) as of the end of the 2007 calendar year and has made available to the Fund a report of such review and any updates thereto. Every year ALPS shall conduct a review pursuant to SAS 70 and will make available to the Fund for inspection a report of such review and any updates thereto. ALPS shall immediately notify the Fund of any changes in how it conducts its business that would materially change the results of its most recent SAS 70 review and any other changes to ALPS’ business that would affect the business of the Fund or the Fund’s investment adviser.

12.	Representations and Warranties of the Fund. The Fund represents and warrants to ALPS that:

	(a)	It is a trust duly organized and existing and in good standing under the laws of the state of Delaware and is registered with the SEC as an open-end [diversified/non-diversified] management investment company.

	(b)	It is empowered under applicable laws and by its Declaration of Trust and By-laws to enter into and perform this Agreement.

	(c)	The Board of Trustees of the Fund has duly authorized it to enter into and perform this Agreement.

	(d)	Notwithstanding anything in this Agreement to the contrary, the Fund agrees not to make any modifications to its registration statement or adopt any policies which would affect materially the obligations or responsibilities of ALPS hereunder without the prior written approval or ALPS, which approval shall not be unreasonably withheld or delayed.

13.	Duties of the Fund.

	(a)	ALPS and the Fund shall regularly consult with each other regarding ALPS’ performance of its obligations under this Agreement. In connection therewith, the Fund shall submit to ALPS at a reasonable time in advance of filing with the SEC reasonably final copies of any amended or supplemented registration statement (including exhibits) under the 1933 Act and the 1940 Act; provided, however, that nothing contained in this Agreement shall in any way limit the Fund’s right to file at any time such amendments to any registration statement and/or supplements to any prospectus or statement of additional information, of whatever character, as the Fund may deem advisable, such right being in all respects absolute and unconditional.

	(b)	The Fund agrees to issue Creation Unit aggregations of Shares of the Fund and to request The Depository Trust Company to record on its books the ownership of such Shares in accordance with the book-entry system procedures described in the prospectus in such amounts as ALPS has requested through the transfer agent in writing or other means of data transmission, as promptly as practicable after receipt by the Fund of the requisite deposit securities and cash component (together with any fees) and acceptance of such order, upon the terms described in the Registration Statement. The Fund may reject any order for Creation Units or stop all receipts of such orders at any time upon reasonable notice to ALPS, in accordance with the provisions of the Prospectus.

	(c)	The Fund agrees that it will take all action necessary to register an indefinite number of Shares under the 1933 Act. The Fund shall make available to ALPS, at ALPS’ expense, such number of copies of its prospectus, statement of additional information, and periodic reports as ALPS may reasonably request. The Fund will furnish to ALPS copies of all information, financial statements and other papers, which ALPS may reasonably request for use in connection with the distribution of Creation Units.

	(d)	The Fund agrees to execute any and all documents and to furnish any and all information and otherwise to take all actions that may be reasonably necessary in connection with the qualification of the Shares for sale in such states as ALPS may designate. The Fund will keep ALPS informed of the jurisdictions in which Creation Units of the Fund are authorized for sale and shall promptly notify ALPS of any change in this information.

14.	Anti-Money Laundering. ALPS agrees to maintain an anti-money laundering program in compliance with Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA Patriot Act”) and all applicable laws and regulations promulgated thereunder. ALPS confirms that, as soon as possible, following the request from the Fund, ALPS will supply the Fund with copies of ALPS’ anti-money laundering policy and procedures, and such other relevant certifications and representations regarding such policy and procedures as the Fund may reasonably request from time to time.

15.	Liaison with Accountants. ALPS shall act as a liaison with the Fund’s independent public accountants and shall provide account analysis, fiscal year summaries, and other audit-related schedules with respect to the services provided to the Fund. ALPS shall take all reasonable action in the performance of its duties under this Agreement to assure that the necessary information is made available to such accountants as reasonably requested or required by the Fund.

16.	Business Interruption Plan. ALPS shall maintain in effect a business interruption plan, and enter into any agreements necessary with appropriate parties making reasonable provisions for emergency use of electronic data processing equipment customary in the industry. In the event of equipment failures, ALPS shall, at no additional expense to the Fund, take commercially reasonable steps to minimize service interruptions.

17.	Duration and Termination of this Agreement.

	(a)	Initial Term. This Agreement shall become effective as of the date first written above (the “Start Date”) and shall continue thereafter throughout the period that ends two (2) years after the Start Date (the “Initial Term”).

	(b)	Renewal Term. If not sooner terminated, this Agreement shall renew at the end of the Initial Term and shall thereafter continue for successive annual periods, provided such continuance is specifically approved at least annually (i) by the Fund’s Board of Trustees or (ii) by a vote of a majority of the outstanding voting securities of the relevant portfolio of the Fund, provided that in either event the continuance is also approved by the majority of the Trustees of the Fund who are not interested persons (as defined in the 1940 Act) of any party to this Agreement by vote cast in person at a meeting called for the purpose of voting on such approval. If a plan under Rule 12b-1 of the 1940 Act is in effect, continuance of the plan and this Agreement must be approved at least annually by a majority of the Trustees of the Fund who are not interested persons (as defined in the 1940 Act) and have no financial interest in the operation of such plan or in any agreements related to such plan, cast in person at a meeting called for the purpose of voting on such approval.

	(c)	Termination. This Agreement is terminable without penalty by the Fund’s Board of Trustees, by vote of the holders of a majority of the outstanding voting securities of the relevant portfolio, or by ALPS, in each case on sixty (60) days’ written notice to the non-terminating party.

	(d)	Deliveries Upon Termination. Upon termination of this Agreement, ALPS agrees to cooperate in the orderly transfer of distribution duties and shall deliver to the Fund or as otherwise directed by the Fund (at the expense of the Fund) all records and other documents made or accumulated in the performance of its duties for the Fund hereunder. In the event ALPS gives notice of termination under this Agreement, it will continue to provide the services contemplated hereunder after such termination at the contractual rate for up to 120

		days, provided that the Fund uses all reasonable commercial efforts to appoint such replacement on a timely basis.

18.	Assignment. This Agreement will automatically terminate in the event of its assignment (as defined in the 1940 Act). This Agreement shall not be assignable by the Fund without the prior written consent of ALPS.

19.	Limitation of Liability. The Declaration of Trust, establishing the Fund, which is hereby referred to and a copy of which is on file with the Secretary of State of the State of Delaware, provides that the Trustees shall be entitled to the protection against personal liability for the obligations of the Fund under Section 3803(b) of the Delaware Business Trust Act, as amended (the “DBTA”). It is expressly acknowledged and agreed that the obligations of the Fund hereunder shall not be binding upon any of the shareholders, Trustees, officers, employees or agents of the Fund, personally, but shall bind only the trust property of the Fund, as provided in its Declaration of Trust and under Section 3803 of the DBTA. The execution and delivery of this Agreement have been authorized by the Trustees of the Fund and signed by an officer of the Fund, acting as such, and neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Fund as provided in its Declaration of Trust and under Section 3803 of the DBTA. ALPS understands that the rights and obligations of each series of shares of the Fund under the Declaration of Trust are separate and distinct from those of any and all other series.

20.	Severability; Survival. If any provisions of this Agreement shall be held or made invalid, in whole or in part, then the other provisions of this Agreement shall remain in force. Invalid provisions shall, in accordance with this Agreement’s intent and purpose, be amended, to the extent legally possible, by valid provisions in order to effectuate the intended results of the invalid provisions. Sections 6, 9 and 19 shall survive the termination of this Agreement.

21.	Governing Law. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Colorado and the 1940 Act and the rules thereunder. To the extent that the laws of the State of Colorado conflict with the 1940 Act or such rules, the latter shall control.

22.	Names. The obligations of the Fund entered into in the name or on behalf thereof by any director, shareholder, representative, or agent thereof are made not individually, but in such capacities, and are not binding upon any of the directors, shareholders, representatives or agents of the Fund personally, but bind only the property of the Fund, and all persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund.

23.	Amendments to this Agreement. This Agreement may only be amended as agreed in writing by both of the parties hereto.

24.	Notices. All notices and other communications hereunder shall be in writing, shall be deemed to have been given when received or when sent by telex or facsimile, and shall be given to the following addresses (or such other addresses as to which notice is given):

To ALPS:

ALPS Distributors, Inc.
1625 Broadway, Suite 2200
Denver, Colorado 80202

Attn: General Counsel
Fax: (303) 623-7850

To the Fund:
IndexlQ ETF Trust
800 Westchester Ave
Suite N-611
Rye Brook, NY 10573
Attn: President
Fax: 914.697.4995

25.	Counterparts. This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

26.	Entire Agreement. This Agreement embodies the entire agreement and understanding among the parties and supersedes all prior agreements and understandings relating to the subject matter hereof; provided, however, upon prior notification to and consent by the Fund, that ALPS may embody in one or more separate documents its agreement, if any, with respect to delegated duties and oral instructions.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.


	IndexIQ ETF Trust

	By:	/s/ Adam Patti

	Name:	Adam Patti

	Title:	President



	ALPS DISTRIBUTORS, INC.

	By:	/s/ Thomas A. Carter

	Name:	Thomas A. Carter

	Title:	Managing Director Business Development

APPENDIX B

SERVICES

(a) The Fund grants to ALPS the exclusive right to receive all orders for purchases of Creation Units of each portfolio from participating parties (“Authorized Participants”) which have entered into a participant agreement with ALPS and the transfer agent in accordance with the registration statement (“Participant Agreements”) and to transmit such orders to the Fund in accordance with the registration statement; provided, however, that nothing herein shall affect or limit the right and ability of the Fund to accept deposit securities and related cash components through or outside the clearing process, and as provided in and in accordance with the registration statement. The Fund acknowledges that ALPS shall not be obligated to accept any certain number of orders for Creation Units.

(b) ALPS agrees to act as agent of the Fund with respect to the continuous distribution of Creation Units of the Fund as set forth in the registration statement and in accordance with the provisions thereof. ALPS further agrees as follows: (a) ALPS shall enter into Participant Agreements among Authorized Participants, ALPS, and the transfer agent in accordance with the registration statement; (b) ALPS shall generate and transmit confirmations of Creation Unit purchase order acceptances to the purchaser; (c) ALPS shall deliver copies of the prospectus to purchasers of such Creation Units and upon request the statement of additional information; and (d) ALPS shall maintain telephonic, facsimile and/or access to direct computer communications links with the transfer agent.

(c) (i) ALPS agrees to use all reasonable efforts, consistent with its other business, to facilitate the purchase of Creation Units through Authorized Participants in accordance with the procedures set forth in the prospectus and the Participant Agreements.

(ii) ALPS shall, at its own expense, execute selected or soliciting dealer agreements with registered broker-dealers and other eligible entities providing for the purchase of Creation Units of Shares of the Fund and related promotional activities, in the forms as approved by the Board of Directors or Trustees of the Fund. The Fund shall not furnish or cause to be furnished to any person or display or publish any information or materials relating to the Fund (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials that have been approved in writing by ALPS. Furthermore, ALPS shall clear and file all advertising, sales, marketing and promotional materials of the Funds with FINRA.

(d) ALPS shall provide toll-free lines, by way of the NYSE Arca, for direct investor and shareholder use between the hours of 9:00 a.m. and 8:00 p.m. Eastern standard time on each day the New York Stock Exchange is open for business, with appropriate FINRA licensed order taking and distribution services staff.

(e) All activities by ALPS and its agents and employees which are primarily intended to result in the sale of Creation Units shall comply with the registration statement, the instructions of the Board of Directors or Trustees of the Fund and all applicable laws, rules and regulations including, without limitation, all rules and regulations made or adopted pursuant to the 1940 Act by the SEC or any securities association registered under the 1934 Act, including FINRA and the Listing Exchange.

(f) Except as otherwise noted in the registration statement, the offering price for all Creation Units of Shares will be the aggregate net asset value of the Shares per Creation Unit of the portfolio, as determined in the manner described in the registration statement.

(g) If and whenever the determination of net asset value is suspended and until such suspension is terminated, no further orders for Creation Units will be processed by ALPS except such unconditional orders as may have been placed with ALPS before it had knowledge of the suspension. In addition, the Fund reserves the right to suspend sales and ALPS’ authority to process orders for Creation Units on behalf of the Fund, upon due notice to ALPS, if, in the judgment of the Fund, it is in the best interests of the Fund to do so. Suspension will continue for such period as may be determined by the Fund.

(h) ALPS is not authorized by the Fund to give any information or to make any representations other than those contained in the registration statement or prospectus or contained in shareholder reports or other material that may be prepared by or on behalf of the Fund for ALPS’ use.

(i) The Board of Directors or Trustees shall approve the form of any Soliciting Dealer Agreement to be entered into by ALPS.

(j) At the request of the Fund, ALPS shall enter into agreements, in the form specified by the Fund, with participants in the system for book-entry of The Depository Trust Company and the NSCC as described in the prospectus.

(k) ALPS shall ensure that all direct requests for prospectuses, statements of additional of information and periodic fund reports, as applicable, are fulfilled. In addition, ALPS shall arrange to provide the Listing Exchange with copies of prospectuses to be provided to purchasers in the secondary market. ALPS will generally make it known in the brokerage community that prospectuses and statements of additional information are available, including by (i) advising the Listing Exchange on behalf of its member firms of the same, (ii) making such disclosure in all marketing and advertising materials prepared and/or filed by ALPS with FINRA, and (iii) as may otherwise be required by the SEC.

(l) ALPS agrees to make available, at the Fund’s request, one or more members of its staff to attend Board meetings of the Fund in order to provide information with regard to the ongoing distribution process and for such other purposes as may be requested by the Board of Directors or Trustees of the Fund.

(m) ALPS will review all sales and marketing materials for compliance with applicable laws and conditions of any applicable exemptive order, and file such materials with FINRA when necessary or appropriate. All such sales and marketing materials must be approved, in writing, by ALPS prior to use.

EX-99.(G) 8 e33444ex23g.htm CUSTODY AGREEMENT

Exhibit (g)

CUSTODY AGREEMENT

AGREEMENT, dated as of October 8, 2008, between IndexIQ ETF Trust, a business trust organized and existing under the laws of the State of Delaware having its principal office and place of business at 800 Westchester Avenue, Suite N611, Rye Brook, NY 10573 (the “Fund”) and The Bank of New York, a New York corporation authorized to do a banking business having its principal office and place of business at One Wall Street, New York, New York 10286 (“Custodian”).

W I T N E S S E T H:

that for and in consideration of the mutual promises hereinafter set forth the Fund and Custodian agree as follows:

ARTICLE I
DEFINITIONS

Whenever used in this Agreement, the following words shall have the meanings set forth below:

1. “Authorized Person” shall be any person, whether or not an officer or employee of the Fund, duly authorized by the Fund’s board to execute any Certificate or to give any Oral Instruction with respect to one or more Accounts, such persons to be designated in a Certificate annexed hereto as Schedule I hereto or such other Certificate as may be received by Custodian from time to time.

2. “Custodian Affiliate” shall mean any office, branch or subsidiary of The Bank of New York Company, Inc.

3. “Book-Entry System” shall mean the Federal Reserve/Treasury book-entry system for receiving and delivering securities, its successors and nominees.

4. “Business Day” shall mean any day on which Custodian and relevant Depositories are open for business.

5. “Certificate” shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to Custodian, which is actually received by Custodian by letter or facsimile transmission and signed on behalf of the Fund by an Authorized Person or a person reasonably believed by Custodian to be an Authorized Person.

6. “Composite Currency Unit” shall mean the Euro or any other composite currency unit consisting of the aggregate of specified amounts of specified currencies, as such unit may be constituted from time to time.

7. “Depository” shall include (a) the Book-Entry System, (b) the Depository Trust Company, (c) any other clearing agency or securities depository registered with the Securities and

Exchange Commission identified to the Fund from time to time, and (d) the respective successors and nominees of the foregoing.

8. “Foreign Depository” shall mean (a) Euroclear, (b) Clearstream Banking, societe anonyme, (c) each Eligible Securities Depository as defined in Rule 17f-7 under the Investment Company Act of 1940, as amended, identified to the Fund from time to time, and (d) the respective successors and nominees of the foregoing.

9. “Instructions” shall mean communications actually received by Custodian by S.W.I.F.T., tested telex, letter, facsimile transmission, or other method or system specified by Custodian as available for use in connection with the services hereunder.

10. “Oral Instructions” shall mean verbal instructions received by Custodian from an Authorized Person or from a person reasonably believed by Custodian to be an Authorized Person.

11. “Series” shall mean the various portfolios, if any, of the Fund listed on Schedule II hereto, and if none are listed references to Series shall be references to the Fund.

12. “Securities” shall include, without limitation, any common stock and other equity securities, bonds, debentures and other debt securities, notes, mortgages or other obligations, and any instruments representing rights to receive, purchase, or subscribe for the same, or representing any other rights or interests therein (whether represented by a certificate or held in a Depository or by a Subcustodian).

13. “Subcustodian” shall mean a bank (including any branch thereof) or other financial institution (other than a Foreign Depository) located outside the U.S. which is utilized by Custodian in connection with the purchase, sale or custody of Securities hereunder and identified to the Fund from time to time, and their respective successors and nominees.

ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS

1. (a) The Fund hereby appoints Custodian as custodian of all Securities and cash at any time delivered to Custodian during the term of this Agreement, and authorizes Custodian to hold Securities in registered form in its name or the name of its nominees. Custodian hereby accepts such appointment and agrees to establish and maintain one or more securities accounts and cash accounts for each Series in which Custodian will hold Securities and cash as provided herein. Custodian shall maintain books and records segregating the assets of each Series from the assets of any other Series. Such accounts (each, an “Account”; collectively, the “Accounts”) shall be in the name of the Fund.

(b) Custodian may from time to time establish on its books and records such sub-accounts within each Account as the Fund and Custodian may agree upon (each a “Special Account”), and Custodian shall reflect therein such assets as the Fund may specify in a Certificate or Instructions.

- 2 -

(c) Custodian may from time to time establish pursuant to a written agreement with and for the benefit of a broker, dealer, future commission merchant or other third party identified in a Certificate or Instructions such accounts on such terms and conditions as the Fund and Custodian shall agree, and Custodian shall transfer to such account such Securities and money as the Fund may specify in a Certificate or Instructions.

2. The Fund hereby represents and warrants, which representations and warranties shall be continuing and shall be deemed to be reaffirmed upon each delivery of a Certificate or each giving of Oral Instructions or Instructions by the Fund, that:

(a) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement, and to perform its obligations hereunder;

(b) This Agreement has been duly authorized, executed and delivered by the Fund, approved by a resolution of its board, constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, and there is no statute, regulation, rule, order or judgment binding on it, and no provision of its charter or by-laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property, which would prohibit its execution or performance of this Agreement;

(c) It is conducting its business in substantial compliance with all applicable laws and requirements, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted;

(d) It will not use the services provided by Custodian hereunder in any manner that is, or will result in, a violation of any law, rule or regulation applicable to the Fund;

(e) Its board or its foreign custody manager, as defined in Rule 17f-5 under the Investment Company Act of 1940, as amended (the “‘40 Act”), has determined that use of each Subcustodian (including any replacement custodian) which Custodian is authorized to utilize in accordance with Section 1(a) of Article III hereof satisfies the applicable requirements of the ‘40 Act and Rule 17f-5 thereunder;

(f) The Fund or its investment adviser has determined that the custody arrangements of each Foreign Depository provide reasonable safeguards against the custody risks associated with maintaining assets with such Foreign Depository within the meaning of Rule 17f-7 under the `40 Act;

(g) It is fully informed of the protections and risks associated with various methods of transmitting Instructions and Oral Instructions and delivering Certificates to Custodian, shall, and shall cause each Authorized Person, to safeguard and treat with extreme care any user and authorization codes, passwords and/or authentication keys, understands that there may be more secure methods of transmitting or delivering the same than the methods selected by it, agrees that the security procedures (if any) to be followed in connection therewith provide a commercially reasonable degree of protection in light of its particular needs and

- 3 -

circumstances, and acknowledges and agrees that Instructions need not be reviewed by Custodian, may conclusively be presumed by Custodian to have been given by person(s) duly authorized, and may be acted upon as given;

(h) It shall manage its borrowings, including, without limitation, any advance or overdraft (including any day-light overdraft) in the Accounts, so that the aggregate of its total borrowings for each Series does not exceed the amount such Series is permitted to borrow under the `40 Act;

(i) Its transmission or giving of, and Custodian acting upon and in reliance on, Certificates, Instructions, or Oral Instructions pursuant to this Agreement shall at all times comply with the `40 Act;

(j) It shall impose and maintain restrictions on the destinations to which cash may be disbursed by Instructions to ensure that each disbursement is for a proper purpose; and

(k) It has the right to make the pledge and grant the security interest and security entitlement to Custodian contained in Section 1 of Article V hereof, free of any right of redemption or prior claim of any other person or entity, such pledge and such grants shall have a first priority subject to no setoffs, counterclaims, or other liens or grants prior to or on a parity therewith, and it shall take such additional steps as Custodian may require to assure such priority.

3.The Fund hereby covenants that it shall from time to time complete and execute and deliver to Custodian upon Custodian’s request a Form FR U-1 (or successor form) whenever the Fund borrows from Custodian any money to be used for the purchase or carrying of margin stock as defined in Federal Reserve Regulation U.

ARTICLE III
CUSTODY AND RELATED SERVICES

1. (a) Subject to the terms hereof, the Fund hereby authorizes Custodian to hold any Securities received by it from time to time for the Fund’s account. Custodian shall be entitled to utilize, subject to subsection (c) of this Section 1, Depositories, Subcustodians, and, subject to subsection (d) of this Section 1, Foreign Depositories, to the extent possible in connection with its performance hereunder. Securities and cash held in a Depository or Foreign Depository will be held subject to the rules, terms and conditions of such entity. Securities and cash held through Subcustodians shall be held subject to the terms and conditions of Custodian’s agreements with such Subcustodians. Subcustodians may be authorized to hold Securities in Foreign Depositories in which such Subcustodians participate. Unless otherwise required by local law or practice or a particular subcustodian agreement, Securities deposited with a Subcustodian, a Depository or a Foreign Depository will be held in a commingled account, in the name of Custodian, holding only Securities held by Custodian as custodian for its customers. Custodian shall identify on its books and records the Securities and cash belonging to the Fund, whether held directly or indirectly through Depositories, Foreign Depositories, or Subcustodians. Custodian shall, directly or indirectly through Subcustodians, Depositories, or Foreign Depositories, endeavor, to the extent feasible, to hold Securities in the country or other jurisdiction in which the principal trading

- 4 -

market for such Securities is located, where such Securities are to be presented for cancellation and/or payment and/or registration, or where such Securities are acquired. Custodian at any time may cease utilizing any Subcustodian and/or may replace a Subcustodian with a different Subcustodian (the “Replacement Subcustodian”). In the event Custodian selects a Replacement Subcustodian, Custodian shall not utilize such Replacement Subcustodian until after the Fund’s board or foreign custody manager has determined that utilization of such Replacement Subcustodian satisfies the requirements of the `40 Act and Rule 17f-5 thereunder.

(b) Unless Custodian has received a Certificate or Instructions to the contrary, Custodian shall hold Securities indirectly through a Subcustodian only if (i) the Securities are not subject to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or its creditors or operators, including a receiver or trustee in bankruptcy or similar authority, except for a claim of payment for the safe custody or administration of Securities on behalf of the Fund by such Subcustodian, and (ii) beneficial ownership of the Securities is freely transferable without the payment of money or value other than for safe custody or administration.

(c) With respect to each Depository, Custodian (i) shall exercise due care in accordance with reasonable commercial standards in discharging its duties as a securities intermediary to obtain and thereafter maintain Securities or financial assets deposited or held in such Depository, and (ii) will provide, promptly upon request by the Fund, such reports as are available concerning the internal accounting controls and financial strength of Custodian.

(d) With respect to each Foreign Depository, Custodian shall exercise reasonable care, prudence, and diligence (i) to provide the Fund with an analysis of the custody risks associated with maintaining assets with the Foreign Depository, and (ii) to monitor such custody risks on a continuing basis and promptly notify the Fund of any material change in such risks. The Fund acknowledges and agrees that such analysis and monitoring shall be made on the basis of, and limited by, information gathered from Subcustodians or through publicly available information otherwise obtained by Custodian, and shall not include any evaluation of Country Risks. As used herein the term “Country Risks” shall mean with respect to any Foreign Depository: (a) the financial infrastructure of the country in which it is organized, (b) such country’s prevailing custody and settlement practices, (c) such country’s nationalization, expropriation or other governmental actions, (d) such country’s regulation of the banking or securities industry, (e) such country’s currency controls, restrictions, devaluations or fluctuations, and (f) such country’s market conditions which affect the order execution of securities transactions or affect the value of securities.

2. Custodian shall furnish the Fund with an advice of daily transactions (including a confirmation of each transfer of Securities) by the end of the following business day and a monthly summary of all transfers to or from the Accounts promptly following each month-end.

3. With respect to all Securities held hereunder, Custodian shall, unless otherwise instructed to the contrary:

(a) Receive all income and other payments and advise the Fund as promptly as practicable of any such amounts due but not paid;

- 5 -

(b) Present for payment and receive the amount paid upon all Securities which may mature and advise the Fund as promptly as practicable of any such amounts due but not paid;

(c) As promptly as practicable under the circumstances, forward to the Fund copies of all information or documents that it may actually receive from an issuer of Securities which, in the opinion of Custodian, are intended for the beneficial owner of Securities;

(d) Execute, as custodian, any certificates of ownership, affidavits, declarations or other certificates under any tax laws now or hereafter in effect in connection with the collection of bond and note coupons;

(e) Hold directly or through a Depository, a Foreign Depository, or a Subcustodian all rights and similar Securities issued with respect to any Securities credited to an Account hereunder; and

(f) Endorse for collection checks, drafts or other negotiable instruments.

4. (a) Custodian, as promptly as practicable under the circumstances, shall notify the Fund of rights or discretionary actions with respect to Securities held hereunder, and of the date or dates by when such rights must be exercised or such action must be taken, provided that Custodian has actually received, from the issuer or the relevant Depository (with respect to Securities issued in the United States) or from the relevant Subcustodian, Foreign Depository, or a nationally or internationally recognized bond or corporate action service to which Custodian subscribes, timely notice of such rights or discretionary corporate action or of the date or dates such rights must be exercised or such action must be taken. Absent actual receipt of such notice, Custodian shall have no liability for failing to so notify the Fund.

(b) Whenever Securities (including, but not limited to, warrants, options, tenders, options to tender or non-mandatory puts or calls) confer discretionary rights on the Fund or provide for discretionary action or alternative courses of action by the Fund, the Fund shall be responsible for making any decisions relating thereto and for directing Custodian to act. In order for Custodian to act, it must receive the Fund’s Certificate, Instructions or Oral Instructions at Custodian’s offices, addressed as Custodian may from time to time request, not later than noon (New York time) at least two (2) Business Days prior to the last scheduled date to act with respect to such Securities (or such earlier date or time as Custodian may specify to the Fund). Absent Custodian’s timely receipt of such Certificate, Instructions or Oral Instructions, Custodian shall not be liable for failure to take any action relating to or to exercise any rights conferred by such Securities.

5. All voting rights with respect to Securities, however registered, shall be exercised by the Fund or its designee. Custodian will, as promptly as practicable under the circumstances, make available to the Fund proxy voting services upon the request of, and for the jurisdictions selected by, the Fund in accordance with terms and conditions to be mutually agreed upon by Custodian and the Fund.

- 6 -

6. Custodian shall promptly advise the Fund upon Custodian’s actual receipt of notification of the partial redemption, partial payment or other action affecting less than all Securities of the relevant class. If Custodian, any Subcustodian, any Depository, or any Foreign Depository holds any Securities in which the Fund has an interest as part of a fungible mass, Custodian, such Subcustodian, Depository, or Foreign Depository may select the Securities to participate in such partial redemption, partial payment or other action in any non-discriminatory manner that it customarily uses to make such selection.

7. Custodian shall not under any circumstances accept bearer interest coupons which have been stripped from United States federal, state or local government or agency securities unless explicitly agreed to by Custodian in writing.

8. The Fund shall be liable for all taxes, assessments, duties and other governmental charges, including any interest or penalty with respect thereto (“Taxes”), with respect to any cash or Securities held on behalf of the Fund or any transaction related thereto. The Fund shall indemnify Custodian and each Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or any other withholding agent is required under applicable laws (whether by assessment or otherwise) to pay on behalf of, or in respect of income earned by or payments or distributions made to or for the account of the Fund (including any payment of Tax required by reason of an earlier failure to withhold). Custodian shall, or shall instruct the applicable Subcustodian or other withholding agent to, withhold the amount of any Tax which is required to be withheld under applicable law upon collection of any dividend, interest or other distribution made with respect to any Security and any proceeds or income from the sale, loan or other transfer of any Security. In the event that Custodian or any Subcustodian is required under applicable law to pay any Tax on behalf of the Fund, Custodian is hereby authorized to withdraw cash from any cash account in the amount required to pay such Tax and to use such cash, or to remit such cash to the appropriate Subcustodian or other withholding agent, for the timely payment of such Tax in the manner required by applicable law. If the aggregate amount of cash in all cash accounts is not sufficient to pay such Tax, Custodian shall promptly notify the Fund of the additional amount of cash (in the appropriate currency) required, and the Fund shall directly deposit such additional amount in the appropriate cash account promptly after receipt of such notice, for use by Custodian as specified herein. In the event that Custodian reasonably believes that Fund is eligible, pursuant to applicable law or to the provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax which is otherwise required to be withheld or paid on behalf of the Fund under any applicable law, Custodian shall, or shall instruct the applicable Subcustodian or withholding agent to, either withhold or pay such Tax at such reduced rate or refrain from withholding or paying such Tax, as appropriate; provided that Custodian shall have received from the Fund all documentary evidence of residence or other qualification for such reduced rate or exemption required to be received under such applicable law or treaty. In the event that Custodian reasonably believes that a reduced rate of, or exemption from, any Tax is obtainable only by means of an application for refund, Custodian and the applicable Subcustodian shall have no responsibility for the accuracy or validity of any forms or documentation provided by the Fund to Custodian hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and each Subcustodian in respect of any liability arising from any underwithholding or underpayment of any Tax which results from the inaccuracy or invalidity of any such forms or other documentation provided by Trust or its authorized agents, and such obligation to indemnify

- 7 -

shall be a continuing obligation of the Fund, its successors and assigns notwithstanding the termination of this Agreement.

9. (a) For the purpose of settling Securities and foreign exchange transactions, the Fund shall provide Custodian with sufficient immediately available funds for all transactions by such time and date as conditions in the relevant market dictate. As used herein, “sufficient immediately available funds” shall mean either (i) sufficient cash denominated in U.S. dollars to purchase the necessary foreign currency, or (ii) sufficient applicable foreign currency, to settle the transaction. Custodian shall provide the Fund with immediately available funds each day which result from the actual settlement of all sale transactions, based upon advices received by Custodian from Subcustodians, Depositories, and Foreign Depositories. Such funds shall be in U.S. dollars or such other currency as the Fund may specify to Custodian.

(b) Any foreign exchange transaction effected by Custodian in connection with this Agreement may be entered in a fair and reasonable manner with Custodian or a Custodian Affiliate acting as principal or otherwise through customary banking channels. The Fund may issue a standing Certificate or Instructions with respect to foreign exchange transactions, but Custodian may establish commercially reasonable rules or limitations concerning any foreign exchange facility made available to the Fund. The Fund shall bear all risks of investing in Securities or holding cash denominated in a foreign currency.

(c) To the extent that Custodian has agreed to provide pricing or other information services in connection with this Agreement, Custodian is authorized to utilize any vendor (including brokers and dealers of Securities) reasonably believed by Custodian to be reliable to provide such information. The Fund understands that certain pricing information with respect to complex financial instruments (e.g., derivatives) may be based on commercially reasonable calculated amounts rather than actual market transactions and may not reflect actual market values, and that the variance between such calculated amounts and actual market values may or may not be material. Where vendors do not provide information for particular Securities or other property, an Authorized Person may advise Custodian in a Certificate regarding the fair market value of, or provide other information with respect to, such Securities or property as determined by it in good faith. Custodian shall not be liable for any loss, damage or expense incurred as a result of errors or omissions with respect to any pricing or other information utilized in good faith by Custodian hereunder.

10. Until such time as Custodian receives a certificate to the contrary with respect to a particular Security, Custodian may release the identity of the Fund to an issuer which requests such information pursuant to the Shareholder Communications Act of 1985 for the specific purpose of direct communications between such issuer and shareholder.

ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT

1. Promptly after each purchase or sale of Securities by the Fund, the Fund shall deliver to Custodian a Certificate or Instructions, or with respect to a purchase or sale of a Security

- 8 -

generally required to be settled on the same day the purchase or sale is made, Oral instructions specifying all information Custodian may reasonably request to settle such purchase or sale. Custodian shall account for all purchases and sales of Securities on the actual settlement date unless otherwise agreed by Custodian.

2. The Fund understands that when Custodian is instructed to deliver Securities against payment, delivery of such Securities and receipt of payment therefor may not be completed simultaneously. Notwithstanding any provision in this Agreement to the contrary, settlements, payments and deliveries of Securities may be effected by Custodian or any Subcustodian in accordance with the customary or established securities trading or securities processing practices and procedures in the jurisdiction in which the transaction occurs, including, without limitation, delivery to a purchaser or dealer therefor (or agent thereof) against receipt with the expectation of receiving later payment for such Securities. The Fund assumes full responsibility for all risks, including, without limitation, credit risks, involved in connection with such deliveries of Securities.

3. Custodian may, as a matter of bookkeeping convenience or by separate agreement with the Fund, credit the Account with the proceeds from the sale, redemption or other disposition of Securities or interest, dividends or other distributions payable on Securities prior to its actual receipt of final payment therefor. All such credits shall be conditional until Custodian’s actual receipt of final payment and may be reversed by Custodian to the extent that final payment is not received. Payment with respect to a transaction will not be “final” until Custodian shall have received immediately available funds which under applicable local law, rule and/or practice are irreversible and not subject to any security interest, levy or other encumbrance, and which are specifically applicable to such transaction. Custodian will provide the Trust with prior notice of its intent to withdraw any such credit.

ARTICLE V
OVERDRAFTS OR INDEBTEDNESS

1. If Custodian should in its discretion advance funds on behalf of any Series which results in an overdraft (including, without limitation, any day-light overdraft) because the money held by Custodian in an Account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, Instructions or Oral Instructions, or if an overdraft arises in the separate account of a Series for some other reason, including, without limitation, because of a reversal of a conditional credit or the purchase of any currency, or if the Fund is for any other reason indebted to Custodian with respect to a Series, including any indebtedness to The Bank of New York under the Fund’s Cash Management and Related Services Agreement (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and subject to the provisions of Section 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum ordinarily charged by Custodian to its institutional customers, as such rate may be adjusted from time to time. In addition, the Fund hereby agrees that Custodian shall to the maximum extent permitted by law have a continuing lien, security interest, and security entitlement in and to any property, including,

- 9 -

without limitation, any investment property or any financial asset, of such Series at any time held by Custodian for the benefit of such Series or in which such Series may have an interest which is then in Custodian’s possession or control or in possession or control of any third party acting in Custodian’s behalf. The Fund authorizes Custodian, in its discretion, to be exercised in good faith, at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series’ credit on Custodian’s books.

2. If the Fund borrows money from any bank (including Custodian if the borrowing is pursuant to a separate agreement) for investment or for temporary or emergency purposes using Securities held by Custodian hereunder as collateral for such borrowings, the Fund shall deliver to Custodian a Certificate specifying with respect to each such borrowing: (a) the Series to which such borrowing relates; (b) the name of the lending bank, (c) the amount of the borrowing, (d) the time and date, if known, on which the loan is to be entered into, (e) the total amount payable to the Fund on the borrowing date, (f) the Securities to be delivered as collateral for such loan, including the name of the issuer, the title and the number of shares or the principal amount of any particular Securities, and (g) a statement specifying whether such loan is for investment purposes or for temporary or emergency purposes and that such loan is in conformance with the `40 Act and the Fund’s prospectus. Custodian shall deliver on the borrowing date specified in a Certificate the specified collateral against payment by the lending bank of the total amount of the loan payable, provided that the same conforms to the total amount payable as set forth in the Certificate. Custodian may, at the option of the lending bank, keep such collateral in its possession, but such collateral shall be subject to all rights therein given the lending bank by virtue of any promissory note or loan agreement. Custodian shall deliver such Securities as additional collateral as may be specified in a Certificate to collateralize further any transaction described in this Section. The Fund shall cause all Securities released from collateral status to be returned directly to Custodian, and Custodian shall receive from time to time such return of collateral as may be tendered to it. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and number of shares or the principal amount of any particular Securities to be delivered as collateral by Custodian, Custodian shall not be under any obligation to deliver any Securities.

ARTICLE VI
SALE AND REDEMPTION OF SHARES

1. Whenever the Fund shall sell any shares issued by the Fund (“Shares”) it shall deliver to Custodian a Certificate or Instructions specifying the amount of money and/or Securities to be received by Custodian for the sale of such Shares and specifically allocated to an Account for such Series.

2. Upon receipt of such money, Custodian shall credit such money to an Account in the name of the Series for which such money was received.

3. Except as provided hereinafter, whenever the Fund desires Custodian to make payment out of the money held by Custodian hereunder in connection with a redemption of any Shares, it shall furnish to Custodian a Certificate or Instructions specifying the total amount to be paid for such Shares. Custodian shall make payment of such total amount to the transfer agent

- 10 -

specified in such Certificate or Instructions out of the money held in an Account of the appropriate Series.

4. Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Fund, Custodian, unless otherwise instructed by a Certificate or Instructions, shall, upon presentment of such check, charge the amount thereof against the money held in the Account of the Series of the Shares being redeemed, provided, that if the Fund or its agent timely advises Custodian that such check is not to be honored, Custodian shall return such check unpaid.

ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. Whenever the Fund shall determine to pay a dividend or distribution on Shares it shall furnish to Custodian Instructions or a Certificate setting forth with respect to the Series specified therein the date of the declaration of such dividend or distribution, the total amount payable, and the payment date.

2. Upon the payment date specified in such Instructions or Certificate, Custodian shall pay out of the money held for the account of such Series the total amount payable to the dividend agent of the Fund specified therein.

ARTICLE VIII
CONCERNING CUSTODIAN

1. (a) Except as otherwise expressly provided herein, Custodian shall not be liable for any costs, expenses, damages, liabilities or claims, including reasonable attorneys’ and accountants’ fees (collectively, “Losses”), incurred by or asserted against the Fund, except those Losses arising out of Custodian’s own negligence, fraud or willful misconduct. Custodian shall have no liability whatsoever for the action or inaction of any Depositories or of any Foreign Depositories, except in each case to the extent such action or inaction is a result of the Custodian’s failure to fulfill its duties hereunder. Absent a failure to use reasonable care in selecting a Subcustodian, with respect to any Losses incurred by the Fund as a result of the acts or any failures to act by any Subcustodian (other than a Custodian Affiliate), Custodian shall take appropriate action to recover such Losses from such Subcustodian; and Custodian’s sole responsibility and liability to the Fund shall be limited to amounts so received from such Subcustodian (exclusive of costs and expenses incurred by Custodian). In no event shall Custodian be liable to the Fund or any third party for special or indirect damages, arising in connection with this Agreement, nor shall Custodian or any Subcustodian be liable: (i) for acting in accordance with any Certificate or Oral Instructions actually received by Custodian and reasonably believed by Custodian to be given by an Authorized Person; (ii) for acting in accordance with Instructions given in accordance with this Agreement without reviewing the same; (iii) for conclusively presuming that all Instructions are given only by person(s) duly authorized; (iv) for conclusively presuming that all disbursements of cash directed by the Fund, whether by a Certificate, an Oral Instruction, or an Instruction given in accordance with this

- 11 -

Agreement, are in accordance with Section 2(i) of Article 11 hereof, (v) for holding property in any particular country, including, but not limited to, Losses resulting from nationalization, expropriation or other governmental actions; regulation of the banking or securities industry; exchange or currency controls or restrictions, currency devaluations or fluctuations; availability of cash or Securities or market conditions which prevent the transfer of property or execution of Securities transactions or affect the value of property; (vi) for any Losses due to forces beyond the control of Custodian, including without limitation strikes, work stoppages, acts of war or terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of God, or interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; (vii) for the insolvency of any Subcustodian (other than a Custodian Affiliate), any Depository, or, except to the extent such action or inaction is a direct result of the Custodian’s failure to fulfill its duties hereunder, any Foreign Depository; or (viii) for any Losses arising from the applicability of any law or regulation now or hereafter in effect, or from the occurrence of any event, including, without limitation, implementation or adoption of any rules or procedures of a Foreign Depository, which may affect, limit, prevent or impose costs or burdens on, the transferability, convertibility, or availability of any currency or Composite Currency Unit in any country or on the transfer of any Securities, and in no event shall Custodian be obligated to substitute another currency for a currency (including a currency that is a component of a Composite Currency Unit) whose transferability, convertibility or availability has been affected, limited, or prevented by such law, regulation or event, and to the extent that any such law, regulation or event imposes a cost or charge upon Custodian in relation to the transferability, convertibility, or availability of any cash currency or Composite Currency Unit, such cost or charge shall be for the account of the Fund, and Custodian may treat any account denominated in an affected currency as a group of separate accounts denominated in the relevant component currencies.

(b) Custodian may enter into subcontracts, agreements and understandings with any Custodian Affiliate, whenever and on such terms and conditions as it deems necessary or appropriate to perform its services hereunder. No such subcontract, agreement or understanding shall discharge Custodian from its obligations hereunder.

(c) The Fund agrees to indemnify Custodian and hold Custodian harmless from and against any and all Losses sustained or incurred by or asserted against Custodian by reason of or as a result of any action or inaction, or arising out of Custodian’s performance hereunder, including reasonable fees and expenses of counsel incurred by Custodian in a successful defense of claims by the Fund; provided however, that the Fund shall not indemnify Custodian for those Losses arising out of Custodian’s own negligence, fraud or willful misconduct. This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement.

2. Without limiting the generality of the foregoing, Custodian shall be under no obligation to inquire into, and shall not be liable for:

(a) Any Losses incurred by the Fund or any other person as a result of the receipt or acceptance of fraudulent, forged or invalid Securities, or Securities which are otherwise not freely transferable or deliverable without encumbrance in any relevant market;

- 12 -

(b) The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor;

(c) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor;

(d) The legality of the declaration or payment of any dividend or distribution by the Fund;

(e) The legality of any borrowing by the Fund;

(f) The legality of any loan of portfolio Securities, nor shall Custodian be under any duty or obligation to see to it that any cash or collateral delivered to it by a broker, dealer or financial institution or held by it at any time as a result of such loan of portfolio Securities is adequate security for the Fund against any loss it might sustain as a result of such loan, which duty or obligation shall be the sole responsibility of the Fund. In addition, Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are lent makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however that Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due;

(g) The sufficiency or value of any amounts of money and/or Securities held in any Special Account in connection with transactions by the Fund; whether any broker, dealer, futures commission merchant or clearing member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or clearing member, or whether any payment received by Custodian from any broker, dealer, futures commission merchant or clearing member is the amount the Fund is entitled to receive, or to notify the Fund of Custodian’s receipt or non-receipt of any such payment; or

(h) Whether any Securities at any time delivered to, or held by it or by any Subcustodian, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus and statement of additional information, or to ascertain whether any transactions by the Fund, whether or not involving Custodian, are such transactions as may properly be engaged in by the Fund.

3. Custodian may, with respect to questions of law specifically regarding an Account, obtain the advice of counsel and, subject to the terms and limitations contained in this Agreement, shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice.

4. Custodian shall be under no obligation to take action to collect any amount payable on Securities in default, or if payment is refused after due demand and presentment.

- 13 -

5. Custodian shall have no duty or responsibility to inquire into, make recommendations, supervise, or determine the suitability of any transactions affecting any Account.

6. The Fund shall pay to Custodian the fees and charges as may be specifically agreed upon from time to time and such other fees and charges at Custodian’s standard rates for such services as may be applicable. The Fund shall reimburse Custodian for all actual costs, incurred by the Custodian in good faith, associated with the conversion of the Fund’s Securities hereunder and the transfer of Securities and records kept in connection with this Agreement. The Fund shall also reimburse Custodian for actual out-of-pocket expenses which are incurred by Custodian in good faith and a normal incident of the services provided hereunder.

7. Custodian has the right to debit any cash account for any amount payable by the Fund in connection with any and all obligations of the Fund to Custodian. In addition to the rights of Custodian under applicable law and other agreements, at any time when the Fund shall not have honored any of its obligations to Custodian, Custodian shall have the right with prior written notice to the Fund to retain or set-off, against such obligations of the Fund, any Securities or cash Custodian or a Custodian Affiliate may directly or indirectly hold for the account of the Fund, and any obligations (whether matured or unmatured) that Custodian or a Custodian Affiliate may have to the Fund in any currency or Composite Currency Unit. Any such asset of, or obligation to, the Fund may be transferred to Custodian and any Custodian Affiliate in order to effect the above rights.

8. The Fund agrees to forward to Custodian a Certificate or Instructions confirming Oral Instructions by the close of business of the same day that such Oral Instructions are given to Custodian. The Fund agrees that the fact that such confirming Certificate or Instructions are not received or that a contrary Certificate or contrary Instructions are received by Custodian shall in no way affect the validity or enforceability of transactions authorized by such Oral Instructions and effected by Custodian. If the Fund elects to transmit Instructions through an on-line communications system offered by Custodian, the Fund’s use thereof shall be subject to the Terms and Conditions attached as Appendix I hereto. If Custodian receives Instructions which appear on their face to have been transmitted by an Authorized Person via (i) computer facsimile, email, the Internet or other insecure electronic method, or (ii) secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, the Fund understands and agrees that Custodian cannot determine the identity of the actual sender of such instructions and that Custodian shall conclusively presume that such Written Instructions have been sent by an Authorized Person, and the Fund shall be responsible for ensuring that only Authorized Persons transmit such Instructions to Custodian. If the Fund elects (with Custodian’s prior consent) to transmit Instructions through an on-line communications service owned or operated by a third party, the Fund agrees that Custodian shall not be responsible or liable for the reliability or availability of any such service.

9. The books and records pertaining to the Fund which are in possession of Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the `40 Act and the rules thereunder. The Fund, or its authorized representatives, shall have access to such books and records during Custodian’s normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be promptly provided

- 14 -

by Custodian to the Fund or its authorized representative. Upon the reasonable request of the Fund, Custodian shall promptly provide in hard copy or on computer disc any records included in any such delivery which are maintained by Custodian on a computer disc, or are similarly maintained.

10. It is understood that Custodian is authorized to supply any information regarding the Accounts which is required by any law, regulation or rule now or hereafter in effect and that Custodian will promptly notify the trust of any such request, to the extent it is permitted by law or regulation to do so. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of a Depository, and with such reports on its own system of internal accounting control as the Fund may reasonably request from time to time.

11. Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against Custodian in connection with this Agreement.

ARTICLE IX
TERMINATION

1. Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, it shall be accompanied by a copy of a resolution of the board of the Fund, certified by the Secretary or any Assistant Secretary, electing to terminate this Agreement and designating a successor custodian or custodians, each of which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. In the event such notice is given by Custodian, the Fund shall, on or before the termination date, deliver to Custodian a copy of a resolution of the board of the Fund, certified by the Secretary or any Assistant Secretary, designating a successor custodian or custodians. In the absence of such designation by the Fund, Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon the date set forth in such notice this Agreement shall terminate, and Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and money then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.

2. If a successor custodian is not designated by the Fund or Custodian in accordance with the preceding Section, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by Custodian of all Securities (other than Securities which cannot be delivered to the Fund) and money then owned by the Fund be deemed to be its own custodian and Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.

- 15 -

ARTICLE X
MISCELLANEOUS

1. The Fund agrees to furnish to Custodian a new Certificate of Authorized Persons in the event of any change in the then present Authorized Persons. Until such new Certificate is received, Custodian shall be fully protected in acting upon Certificates or Oral Instructions of such present Authorized Persons.

2. Any notice or other instrument in writing, authorized or required by this Agreement to be given to Custodian, shall be sufficiently given if addressed to Custodian and received by it at its offices at One Wall Street, New York, New York 10286, or at such other place as Custodian may from time to time designate in writing.

3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and received by it at its offices at ***, or at such other place as the Fund may from time to time designate in writing.

4. Each and every right granted to either party hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of either party to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right.

5. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any exclusive jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties, except that any amendment to the Schedule I hereto need be signed only by the Fund and any amendment to Appendix I hereto need be signed only by Custodian. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by either party without the written consent of the other.

6. This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Fund and Custodian hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Fund and the Custodian hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum.

7. The Fund hereby acknowledges that Custodian is subject to federal laws, including the Customer Identification Program (CIP) requirements under the USA PATRIOT Act and its implementing regulations, pursuant to which Custodian must obtain, verify and record information

- 16 -

that allows Custodian to identify the Fund. Accordingly, prior to opening an Account hereunder Custodian will ask the Fund to provide certain information including, but not limited to, the Fund’s name, physical address, tax identification number and other information that will help Custodian to identify and verify the Fund’s identity such as organizational documents, certificate of good standing, license to do business, or other pertinent identifying information. The Fund agrees that Custodian cannot open an Account hereunder unless and until Custodian verifies the Fund’s identity in accordance with its CIP.

8. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.

- 17 -

IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be executed by their respective officers, thereunto duly authorized, as of the day and year first above written.

	IndexIQ ETF Trust

	By:	/s/

	Title:	President

	Tax Identification No.:

	THE BANK OF NEW YORK

	By:	/s/

	Title:	Vice President

	ANDREW PFEIFER
	ONE WALL STREET
	NEW YORK, NY 10286
	(212) 635-6314

- 18 -

APPENDIX I

ELECTRONIC SERVICES TERMS AND CONDITIONS

I. License; Use. (a) This Appendix I shall govern the Fund’s use of electronic communications, information delivery, portfolio management and banking services, that The Bank of New York and its affiliates (“Custodian”) may provide to the Fund, such as The Bank of New York Inform Tm and The Bank of New York CASH-Register Plus o, and any computer software, proprietary data and documentation provided by Custodian to the Fund in connection therewith (collectively, the “Electronic Services”). In the event of any conflict between the terms of this Appendix I and the main body of this Agreement with respect to the Fund’s use of the Electronic Services, the terms of this Appendix I shall control.

(b) Custodian grants to the Fund a personal, nontransferable and nonexclusive license to use the Electronic Services to which the Fund subscribes solely for the purpose of transmitting instructions and information (“Written Instructions”), obtaining reports, analyses and statements and other information and data, making inquiries and otherwise communicating with Custodian in connection with the Fund’s relationship with Custodian. The Fund shall use the Electronic Services solely for its own internal and proper business purposes and not in the operation of a service bureau. Except as set forth herein, no license or right of any kind is granted to with respect to the Electronic Services. The Fund acknowledges that Custodian and its suppliers retain and have title and exclusive proprietary rights to the Electronic Services, including any trade secrets or other ideas, concepts, know-how, methodologies, and information incorporated therein and the exclusive rights to any copyrights, trade dress, look and feel, trademarks and patents (including registrations and applications for registration of either), and other legal protections available in respect thereof. The Fund further acknowledges that all or a part of the Electronic Services may be copyrighted or trademarked (or a registration or claim made therefor) by Custodian or its suppliers. The Fund shall not take any action with respect to the Electronic Services inconsistent with the foregoing acknowledgments, nor shall the Fund attempt to decompile, reverse engineer or modify the Electronic Services. The Fund may not copy, distribute, sell, lease or provide, directly or indirectly, the Electronic Services or any portion thereof to any other person or entity without Custodian’s prior written consent. The Fund may not remove any statutory copyright notice or other notice included in the Electronic Services. The Fund shall reproduce any such notice on any reproduction of any portion of the Electronic Services and shall add any statutory copyright notice or other notice upon Custodian’s request.

(c) Portions of the Electronic Services may contain, deliver or rely on data supplied by third parties (“Third Party Data”), such as pricing data and indicative data, and services supplied by third parties (“Third Party Services”) such as analytic and accounting services. Third Party Data and Third Party Services supplied hereunder are obtained from sources that Custodian believes to be reliable but are provided without any independent investigation by Custodian. Custodian and its suppliers do not represent or warrant that the Third Party Data or Third Party Services are correct, complete or current. Third Party Data and Third Party Services are proprietary to their suppliers, are provided solely for the Fund’s internal use, and may not be reused, disseminated or redistributed in any form except as permitted by the third parties providing such Third Party Data or Third Party Services. The Fund shall not use any Third Party Data in any manner that would act as a substitute for obtaining a license for the data directly from the supplier. Third Party Data and Third Party Services should not be used in making any investment decision. CUSTODIAN AND ITS SUPPLIERS ARE NOT RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF OR

RELIANCE UPON THIRD PARTY DATA OR THIRD PARTY SERVICES. Custodian’s suppliers of Third Party Data and Services are intended third party beneficiaries of this Section 1(c) and Section 5 below.

(d) The Fund understands and agrees that any links in the Electronic Services to Internet sites may be to sites sponsored and maintained by third parties. Custodian make no guarantees, representations or warranties concerning the information contained in any third party site (including without limitation that such information is correct, current, complete or free of viruses or other contamination), or any products or services sold through third party sites. All such links to third party Internet sites are provided solely as a convenience to the Fund and the Fund accesses and uses such sites at its own risk. A link in the Electronic Services to a third party site does not constitute Custodian’s endorsement, authorisation or sponsorship of such site or any products and services available from such site.

2. Equipment. The Fund shall obtain and maintain at its own cost and expense all equipment and services, including but not limited to communications services, necessary for it to utilize and obtain access to the Electronic Services, and Custodian shall not be responsible for the reliability or availability of any such equipment or services.

3. Proprietary Information. The Electronic Services, and any proprietary data (including Third Party Data), processes, software, information and documentation made available to the Fund (other than which are or become part of the public domain or are legally required to be made available to the public) (collectively, the “Information”), are the exclusive and confidential property of Custodian or its suppliers. However, for the avoidance of doubt, reports generated by the Fund containing information relating to its account(s) (except for Third Party Data contained therein) are not deemed to be within the meaning of the term “Information.” The Fund shall keep the Information confidential by using the same care and discretion that the Fund uses with respect to its own confidential

property and trade secrets, but not less than reasonable care. Upon termination of the Agreement or the licenses granted herein for any reason, the Fund shall return to Custodian any and all copies of the Information which are in its possession or under its control (except that the Fund may retain reports containing Third Party Data, provided that such Third Party Data remains subject to the provisions of this Appendix). The provisions of this Section 3 shall not affect the copyright status of any of the Information which may be copyrighted and shall apply to all information whether or not copyrighted.

4. Modifications. Custodian reserves the right to modify the Electronic Services from time to time by providing prior written notice, which may be communicated by electronic means, of such modifications to the Fund. The Fund agrees not to modify or attempt to modify the Electronic Services without Custodian’s prior written consent. The Fund acknowledges that any modifications to the Electronic Services, whether by the Fund or Custodian and whether with or without Custodian’s consent, shall become the property of Custodian.

5. NO REPRESENTATIONS OR WARRANTIES; LIMITATION OF LIABILITY. CUSTODIAN AND ITS MANUFACTURERS AND SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE ELECTRONIC SERVICES OR ANY THIRD PARTY DATA OR THIRD PARTY SERVICES, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. THE FUND ACKNOWLEDGES THAT THE ELECTRONIC SERVICES, THIRD PARTY DATA AND THIRD PARTY SERVICES ARE PROVIDED “AS IS.” TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH CUSTOMER MAY INCUR IN CONNECTION WITH THE ELECTRONIC SERVICES, THIRD PARTY DATA OR THIRD PARTY SERVICES, EVEN IF CUSTODIAN OR SUCH SUPPLIER KNEW OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND THEIR REASONABLE CONTROL.

6. Security; Reliance; Unauthorized Use; Funds Transfers. Custodian will establish security procedures to be followed in connection with the use of the Electronic Services, and the Fund agrees to comply with the security procedures. The Fund understands and agrees that the security procedures are intended to determine whether instructions received by Custodian through the Electronic Services are authorized but are not (unless otherwise specified in writing) intended to detect any errors contained in such instructions. The Fund will cause all persons utilizing the Electronic Services to treat any

user and authorization codes, passwords, authentication keys and other security devices with the highest degree of care and confidentiality. Upon termination of the Fund’s use of the Electronic Services, the Fund shall return to Custodian any security devices (e.g., token cards) provided by Custodian. Custodian is hereby irrevocably authorized to comply with and rely upon on Written Instructions and other communications, whether or not authorized, received by it through the Electronic Services. The Fund acknowledges that it has sole responsibility for ensuring that only Authorized Persons use the Electronic Services and that to the fullest extent permitted by applicable law Custodian shall not be responsible nor liable for any unauthorized use thereof, absent the willful misconduct, fraud or bad faith of Custodian, or for any losses sustained by the Fund arising from or in connection with the use of the Electronic Services or Custodian’s reliance upon and compliance with Written Instructions and other communications received through the Electronic Services. With respect to instructions for a transfer of funds issued through the Electronic Services, when instructed to credit or pay a party by both name and a unique numeric or alpha-numeric identifier (e.g. ABA number or account number), the Custodian, its affiliates, and any other bank participating in the funds transfer, may rely solely on the unique identifier, even if it identifies a party different than the party named. Such reliance on a unique identifier shall apply to beneficiaries named in such instructions as well as any financial institution which is designated in such instructions to act as an intermediary in a funds transfer. It is understood and agreed that unless otherwise specifically provided herein, and to the extent permitted by applicable law, the parties hereto shall be bound by the rules of any funds transfer system utilized to effect a funds transfer hereunder.

7. Acknowledgments. Custodian shall acknowledge through the Electronic Services its receipt of each Written Instruction communicated through the Electronic Services, and in the absence of such acknowledgment Custodian shall not be liable for any failure to act in accordance with such Written Instruction and the Fund may not claim that such Written Instruction was received by Custodian. Custodian may in its discretion decline to act upon any instructions or communications that are insufficient or incomplete or are not received by Custodian in sufficient time for Custodian to act upon, or in accordance with such instructions or communications.

8. Viruses. The Fund agrees to use reasonable efforts to prevent the transmission through the Electronic Services of any software or file which contains any viruses, worms, harmful component or corrupted data and agrees not to use any device, software, or routine to interfere or attempt to interfere with the proper working of the Electronic Services.

9. Encryption. The Fund acknowledges and agrees that encryption may not be available for every communication through the Electronic Services, or for all data. The Fund agrees that Custodian may deactivate any encryption features at any time, without notice or liability to the Fund, for the purpose of maintaining, repairing or troubleshooting its systems.

10. On-Line Inquiry and Modification of Records. In connection with the Fund’s use of the Electronic Services, Custodian may, at the Fund’s request, permit the Fund to enter data directly into a Custodian database for the purpose of modifying certain information maintained by Custodian’s systems, including, but not limited to, change of address information. To the extent that the Fund is granted such access, the Fund agrees to indemnify and hold Custodian harmless from all loss, liability, cost, damage and expense (including attorney’s fees and expenses) to which Custodian may be subjected or which may be incurred in connection with any claim which may arise out of or as a result of changes to Custodian database records initiated by the Fund.

11. Agents. The Fund may, on advance written notice to the Custodian, permit its agents and contractors (“Agents”) to access and use the Electronic Services on the Fund’s behalf, except that the Custodian reserves the right to prohibit the Fund’s use of any particular Agent for any reason. The Fund shall require its Agent(s) to agree in writing to be bound by the terms of the Agreement, and the Fund shall be liable and responsible for any act or omission of such Agent in the same manner, and to the same extent, as though such act or omission were that of the Fund. Each submission of a Written Instruction or other communication by the Agent through the Electronic Services shall constitute a representation and warranty by the Fund that the Agent continues to be duly authorized by the Fund to so act on its behalf and the Custodian may rely on the representations and warranties made herein in complying with such Written Instruction or communication. Any Written Instruction or other communication through the Electronic Services by an Agent shall be deemed that of the Fund, and the Fund shall be bound thereby whether or not authorized. The Fund may, subject to the terms of this Agreement and upon advance written notice to the Custodian, provide a copy of the Electronic Service user manuals to its Agent if the Agent requires such copies to use the Electronic Services on the Fund’s behalf. Upon cessation of any such Agent’s services, the Fund shall promptly terminate such Agent’s access to the Electronic Services, retrieve from the Agent any copies of the manuals and destroy them, and retrieve from the Agent any token cards or other security devices provided by Custodian and return them to Custodian.

EX-99.(H)(1) 9 e33444ex23h1.htm FUND ADMINISTRATION AND ACCOUNTING AGREEMENT

Exhibit (h)(1)

FUND ADMINISTRATION AND ACCOUNTING AGREEMENT

AGREEMENT made as of October 8, 2008, by and between each entity listed on Exhibit A hereto (each a “Fund”, collectively the “Funds”), and The Bank of New York, a New York banking organization (“BNY”).

W I T N E S S E T H:

WHEREAS, each Fund is an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, each Fund desires to retain BNY to provide for the portfolios identified on Exhibit A hereto (each, a “Series”) the services described herein, and BNY is willing to provide such services, all as more fully set forth below;

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereby agree as follows:

1. Appointment.

Each Fund hereby appoints BNY as its agent for the term of this Agreement to perform the services described herein. BNY hereby accepts such appointment and agrees to perform the duties hereinafter set forth.

2. Representations and Warranties

Each Fund hereby represents and warrants to BNY, which representations and warranties shall be deemed to be continuing, that:

(b) This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms;

(c) It is conducting its business in compliance with all applicable laws and regulations, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no statute, regulation, rule, order or judgment binding on it and no provision of its charter or by-laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement; and

(d) To the extent the performance of any services described in Schedule II attached hereto by BNY in accordance with the then effective Prospectus (as hereinafter defined) for the Fund would violate any applicable laws or regulations, the Fund shall promptly so notify BNY in writing and thereafter shall either furnish BNY with the appropriate values of securities, net asset value or other computation, as the case may be, or, subject to the prior approval of BNY, instruct BNY in writing to value securities and/or compute net asset value or other computations in a manner the Fund specifies in writing, and either the furnishing of such values or the giving of such instructions shall constitute a representation by the Fund that the same is consistent with all applicable laws and regulations and with its Prospectus.

3. Delivery of Documents.

(a) Each Fund will promptly deliver to BNY true and correct copies of each of the following documents as currently in effect and will promptly deliver to it all future amendments and supplements thereto, if any:

(i) The Fund’s articles of incorporation or other organizational document and all amendments thereto (the “Charter”);

(ii) The Fund’s bylaws (the “Bylaws”);

(iii) Resolutions of the Fund’s board of directors or other governing body (the “Board”) authorizing the execution, delivery and performance of this Agreement by the Fund;

(iv) The Fund’s registration statement most recently filed with the Securities and Exchange Commission (the “SEC”) relating to the shares of the Fund (the “Registration Statement”);

- 2 -

(v) The Fund’s Notification of Registration under the 1940 Act on Form N-8A filed with the SEC; and

(vi) The Fund’s Prospectus and Statement of Additional Information pertaining to each Series (collectively, the “Prospectus”).

(b) Each copy of the Charter shall be certified by the Secretary of State (or other appropriate official) of the state of organization, and if the Charter is required by law also to be filed with a county or other officer or official body, a certificate of such filing shall be filed with a certified copy submitted to BNY. Each copy of the Bylaws, Registration Statement and Prospectus, and all amendments thereto, and copies of Board resolutions, shall be certified by the Secretary or an Assistant Secretary of the appropriate Fund.

(c) It shall be the sole responsibility of each Fund to deliver to BNY its currently effective Prospectus and BNY shall not be deemed to have notice of any information contained in such Prospectus until it is actually received by BNY.

4. Duties and Obligations of BNY.

(a) Subject to the direction and control of each Fund’s Board and the provisions of this Agreement, BNY shall provide to each Fund (i) the administrative services set forth on Schedule I attached hereto and (ii) the valuation and computation services listed on Schedule II attached hereto.

(b) In performing hereunder, BNY shall provide, at its expense, office space, facilities, equipment and personnel.

(c) BNY shall not provide any services relating to the management, investment advisory or sub-advisory functions of any Fund, distribution of shares of any Fund, maintenance of any Fund’s financial records or other services normally performed by the Funds’ respective counsel or independent auditors.

(d) Upon receipt of a Fund’s prior written consent (which shall not be unreasonably withheld), BNY may delegate any of its duties and obligations hereunder to any delegee or agent whenever and on such terms and conditions as it deems necessary or appropriate. Notwithstanding the foregoing, no Fund consent shall be required for any such

- 3 -

delegation to any other subsidiary of The Bank of New York Company, Inc. BNY shall not be liable to any Fund for any loss or damage arising out of, or in connection with, the actions or omissions to act of any delegee or agent utilized hereunder so long as BNY acts in good faith and without negligence or wilful misconduct in the selection of such delegee or agent. Any such delegee or agent shall be subject to the terms of this Agreement.

(e) Each Fund shall cause its officers, advisors, sponsor, distributor, legal counsel, independent accountants, current administrator (if any), transfer agent, and any other service provider to cooperate with the BNY and to provide the BNY, upon request, with such information, documents and advice relating to such Fund as is within the possession or knowledge of such persons, and which in the opinion of the BNY, is necessary in order to enable it to perform its duties hereunder. The BNY shall not be responsible for, under any duty to inquire into, or be deemed to make any assurances with respect to the accuracy, validity or propriety of any information, documents or advice provided to the BNY by any of the aforementioned persons. Absent BNY’s negligence, fraud or willful misconduct, BNY shall not be liable for any loss, damage or expense resulting from or arising out of the failure of the Fund to cause any information, documents or advice to be provided to the BNY as provided herein and shall be held harmless by each Fund when acting in reliance upon such information, documents or advice relating to such Fund. All fees or costs charged by such persons shall be borne by the appropriate Fund. In the event that any services performed by the BNY hereunder rely, in whole or in part, upon information obtained from a third party service utilized or subscribed to by the BNY which the BNY in its reasonable judgment deems reliable, absent BNY’s negligence, fraud or willful misconduct, BNY shall not have any responsibility or liability for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information.

(f) Nothing in this Agreement shall limit or restrict BNY, any affiliate of BNY or any officer or employee thereof from acting for or with any third parties, and providing services similar or identical to same or all of the services provided hereunder.

(g) Each Fund shall furnish BNY with any and all instructions, explanations, information, specifications and documentation deemed necessary by BNY in the performance of

- 4 -

its duties hereunder, including, without limitation, the amounts or written formula for calculating the amounts and times of accrual of Fund liabilities and expenses. BNY shall not be required to include as Fund liabilities and expenses, nor as a reduction of net asset value, any accrual for any federal, state, or foreign income taxes unless the Fund shall have specified to BNY the precise amount of the same to be included in liabilities and expenses or used to reduce net asset value. Each Fund shall also furnish BNY with bid, offer, or market values of Securities if BNY notifies such Fund that same are not available to BNY from a security pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable at the time such information is required for calculations hereunder. At any time and from time to time, the Fund also may furnish BNY with bid, offer, or market values of Securities and instruct BNY to use such information in its calculations hereunder. BNY shall at no time be required or obligated to commence or maintain any utilization of, or subscriptions to, any securities pricing or similar service. In no event shall BNY be required to determine, or have any obligations with respect to, whether a market price represents any fair or true value, nor to adjust any price to reflect any events or announcements, including, without limitation, those with respect to the issuer thereof, it being agreed that all such determinations and considerations shall be solely the responsibility of the Fund.

(h) BNY may apply to an officer or duly authorized agent of any Fund for written instructions with respect to any matter arising in connection with BNY’s performance hereunder for such Fund, and BNY shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with such instructions absent BNY’s negligence, fraud or willful misconduct. Such application for instructions may, at the option of BNY, set forth in writing any action proposed to be taken or omitted to be taken by BNY with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, and absent BNY’s negligence, fraud or willful misconduct, BNY shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless, prior to taking or omitting to take any such action, BNY has received written instructions in response to such application specifying the action to be taken or omitted.

(i) BNY may consult with counsel to the appropriate Fund or its own counsel,

- 5 -

at its own expense, and shall be fully protected with respect to anything done or omitted by it in good faith in accordance with the advice or opinion of such counsel, absent BNYmaking’s negligence, fraud or willful misconduct.

(j) Notwithstanding any other provision contained in this Agreement or Schedule I or II attached hereto, BNY shall have no duty or obligation with respect to, including, without limitation, any duty or obligation to determine, or advise or notify any Fund of: (i) the taxable nature of any distribution or amount received or deemed received by, or payable to, a Fund, (ii) the taxable nature or effect on a Fund or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds or similar events, (iii) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by a Fund to its shareholders, or (iv) the effect under any federal, state, or foreign income tax laws of a Fund making or not making any distribution or dividend payment, or any election with respect thereto.

(k) BNY shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and Schedules I and II attached hereto, and no covenant or obligation shall be implied against BNY in connection with this Agreement.

(1) BNY, in performing the services required of it under the terms of this Agreement and schedules I and II attached hereto, shall be entitled to rely fully on the accuracy and validity of any and all instructions, explanations, information, specifications and documentation furnished to it by a Fund and shall have no duty or obligation to review the accuracy, validity or propriety of such instructions, explanations, information, specifications or documentation, including, without limitation, evaluations of securities; the amounts or formula for calculating the amounts and times of accrual of Series’ liabilities and expenses; the amounts receivable and the amounts payable on the sale or purchase of securities; and amounts receivable or amounts payable for the sale or redemption of Fund shares effected by or on behalf of a Fund. In the event BNY’s computations hereunder rely, in whole or in part, upon information, including, without limitation, bid, offer or market values of securities or other assets, or accruals of interest or earnings thereon, from a pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable, absent BNY’s negligence, fraud or willful misconduct,

- 6 -

BNY shall not be responsible for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information. Without limiting the generality of the foregoing, BNY shall not be required to inquire into any valuation of securities or other assets by a Fund or any third party described in this (l) even though BNY in performing services similar to the services provided pursuant to this Agreement for others may receive different valuations of the same or different securities of the same issuers.

(m) BNY, in performing the services required of it under the terms of this Agreement, shall not be responsible for determining whether any interest accruable to a Fund is or will be actually paid, but will accrue such interest until otherwise instructed by such Fund.

(n) BNY shall not be responsible for delays or errors which occur by reason of circumstances beyond its reasonable control in the performance of its duties under this Agreement, including, without limitation, labor difficulties not related to BNY, mechanical breakdowns, flood or catastrophe, acts of God, failures of transportation, interruptions, loss, or malfunctions of utilities, communications or computer (hardware or software) services. Nor shall BNY be responsible for delays or failures to supply the information or services specified in this Agreement where such delays or failures are caused by the failure of any person(s) other than BNY to supply any instructions, explanations, information, specifications or documentation deemed necessary by BNY in the performance of its duties under this Agreement.

5. Allocation of Expenses.

Except as otherwise provided herein, all costs and expenses arising or incurred in connection with the performance of this Agreement shall be paid by the appropriate Fund, including but not limited to, organizational costs and costs of maintaining corporate existence, taxes, interest, brokerage fees and commissions, insurance premiums, compensation and expenses of such Fund’s trustees, directors, officers or employees, legal, accounting and audit expenses, management, advisory, sub-advisory, administration and shareholder servicing fees, charges of custodians, transfer and dividend disbursing agents, expenses (including clerical expenses) incident to the issuance, redemption or repurchase of Fund shares, fees and expenses incident to the registration or qualification under federal or state securities laws of the Fund or its shares, costs (including printing and mailing costs) of preparing and distributing Prospectuses, reports,

- 7 -

notices and proxy material to such Fund’s shareholders, all expenses incidental to holding meetings of such Fund’s trustees, directors and shareholders, and extraordinary expenses as may arise, including litigation affecting such Fund and legal obligations relating thereto for which the Fund may have to indemnify its trustees, directors and officers.

6. Compliance Services.

(a) If Schedule I contains a requirement for the BNY to provide the Fund with compliance services, such service shall be provided pursuant to the terms of this Section 6 (the “Compliance Services”). The precise compliance review and testing services to be provided shall be as mutually agreed between the BNY and each Fund, and the results of the BNY’s Compliance Services shall be detailed in a compliance summary report (the “Compliance Summary Report”) prepared on a periodic basis as mutually agreed. Each Compliance Summary Report shall be subject to review and approval by the Fund. The BNY shall have no responsibility or obligation to provide Compliance Services other that those services specifically listed in Schedule I.

(b) The Fund will examine each Compliance Summary Report delivered to it by the BNY and notify the BNY of any error, omission or discrepancy within thirty (30) days of its receipt. The Fund agrees to notify the BNY promptly if it fails to receive any such Compliance Summary Report. In addition, if the Fund learns of any out-of-compliance condition before receiving a Compliance Summary Report reflecting such condition, the Fund will notify the BNY of such condition within one business day after discovery thereof.

(c) While the BNY will endeavor to identify out-of-compliance conditions, the BNY does not and could not for the fees charged, make any guarantees, representations or warranties with respect to its ability to identify all such conditions.

7. Standard of Care; Indemnification.

(a) Except as otherwise provided herein, BNY shall not be liable for any costs, expenses, damages, liabilities or claims (including reasonable attorneys’ and accountants’ fees) incurred by a Fund, except those costs, expenses, damages, liabilities or claims arising out of BNY’s own negligence, fraud or wilful misconduct. In no event shall BNY be liable to any Fund or any third party for special, arising under or in connection with this Agreement, even if

- 8 -

previously informed of the possibility of such damages and regardless of the form of action. BNY shall not be liable for any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, resulting from, arising out of, or in connection with its performance hereunder, including its actions or omissions, the incompleteness or inaccuracy of any specifications or other information furnished by the Fund, or for delays caused by circumstances beyond BNY’s reasonable control, unless such loss, damage or expense arises out of the negligence, fraud or willful misconduct of BNY.

(b) Each Fund shall indemnify and hold harmless BNY from and against any and all reasonable costs, expenses, damages, liabilities and claims (including claims asserted by a Fund), and reasonable attorneys’ and accountants’ fees relating thereto, which are sustained or incurred or which may be asserted against BNY, by reason of or as a result of any action taken or omitted to be taken by BNY in good faith hereunder or in reliance upon (i) any law, act, regulation or interpretation of the same even though the same may thereafter have been altered, changed, amended or repealed, (ii) such Fund’s Registration Statement or Prospectus, (iii) any instructions of an officer of such Fund, or (iv) any opinion of legal counsel for such Fund or BNY, or arising out of transactions or other activities of such Fund which occurred prior to the commencement of this Agreement; provided, that no Fund shall indemnify BNY for costs, expenses, damages, liabilities or claims for which BNY is liable under preceding 6(a). This indemnity shall be a continuing obligation of each Fund, its successors and assigns, notwithstanding the termination of this Agreement. Without limiting the generality of the foregoing and absent BNY’s negligence, fraud or willful misconduct each Fund shall indemnify BNY against and save BNY harmless from any reasonable loss, damage or expense, including reasonable counsel fees and other costs and expenses of a defense against any claim or liability, arising from any one or more of the following:

(i) Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to BNY by any third party described above or by or on behalf of a Fund;

(ii) Action or inaction taken or omitted to be taken by BNY pursuant to written or oral instructions of the Fund or otherwise without negligence, fraud or willful misconduct;

- 9 -

(iii) Any action taken or omitted to be taken by BNY in good faith in accordance with the advice or opinion of counsel for a Fund or its own counsel;

(iv) Any improper use by a Fund or its agents, distributor or investment advisor of any valuations or computations supplied by BNY pursuant to this Agreement;

(v) The method of valuation of the securities and the method of computing each Series’ net asset value to the extent such methods were instructed by a Fund; or

(vi) Any valuations of securities or net asset value provided by a Fund.

(c) Actions taken or omitted in reliance on oral or written instructions, or upon any information, order, indenture, stock certificate, power of attorney, assignment, affidavit or other instrument reasonably believed by BNY to be genuine or bearing the signature of a person or persons believed to be authorized to sign, countersign or execute the same, or upon the opinion of legal counsel for a Fund or its own counsel, shall be conclusively presumed to have been taken or omitted in good faith.

(d) Notwithstanding any other provision contained in this Agreement, BNY shall have no duty or obligation with respect to, including, without limitation, any duty or obligation to determine, or advise or notify the Fund of: (a) the taxable nature of any distribution or amount received or deemed received by, or payable to, a Fund; (b) the taxable nature or effect on a Fund or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds, or similar events; (c) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by a Fund to its shareholders; or (d) the effect under any federal, state, or foreign income tax laws of the Fund making or not making any distribution or dividend payment, or any election with respect thereto.

8. Compensation.

For the services provided hereunder, each Fund agrees to pay BNY such compensation as is mutually agreed from time to time and such reasonable out-of-pocket expenses (e,g., telecommunication charges, postage and delivery charges, record retention costs, reproduction charges and transportation and lodging costs) as are incurred by BNY in performing its duties

- 10 -

hereunder. Except as hereinafter set forth, compensation shall be calculated and accrued daily and paid monthly, in arrears. Each Fund authorizes BNY to debit such Fund’s custody account for all amounts due and payable hereunder. BNY shall deliver to each Fund invoices for services rendered at least three (3) business days prior to debiting such Fund’s custody account with an indication when payment shall be made. Upon termination of this Agreement before the end of any month, the compensation for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the effective date of termination of this Agreement in accordance with the terms of the preceding sentence. For the purpose of determining compensation payable to BNY, each Fund’s net asset value shall be computed at the times and in the manner specified in the Fund’s Prospectus.

9. Term of Agreement.

(a) This Agreement shall continue until terminated by either BNY giving to a Fund, or a Fund giving to BNY, a notice in writing specifying the date of such termination, which date shall be not less than 90 days after the date of the giving of such notice. Upon termination hereof, the affected Fund(s) shall pay to BNY such compensation as may be due as of the date of such termination, and shall reimburse BNY for any reasonable disbursements and expenses made or incurred by BNY and payable or reimbursable hereunder.

(b) Notwithstanding the foregoing, BNY may terminate this Agreement upon 90 days prior written notice to a Fund if such Fund shall terminate its custody agreement with The Bank of New York, or fail to perform its obligations hereunder in a material respect.

10. Authorized Persons.

Attached hereto as Exhibit B is a list of persons duly authorized by the board of each Fund to execute this Agreement and give any written or oral instructions, or written or oral specifications, by or on behalf of such Fund. From time to time each Fund may deliver a new Exhibit B to add or delete any person and BNY shall be entitled to rely on the last Exhibit B actually received by BNY.

11. Amendment.

This Agreement may not be amended or modified in any manner except by a written

- 11 -

agreement executed by BNY and the Fund to be bound thereby, and authorized or approved by such Fund’s Board.

12. Assignment.

This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by any Fund without the written consent of BNY, or by BNY without the written consent of the affected Fund accompanied by the authorization or approval of such Fund’s Board.

13. Governing Law; Consent to Jurisdiction.

This Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. Each Fund hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. To the extent that in any jurisdiction any Fund may now or hereafter be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, such Fund irrevocably agrees not to claim, and it hereby waives, such immunity.

14. Severability.

In case any, provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.

15. No Waiver.

Each and every right granted to either party to this Agreement hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of either party to this Agreement to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by either party to this Agreement of any right preclude any other or future exercise thereof or the exercise of any other right.

- 12 -

16. Notices.

All notices, requests, consents and other communications pursuant to this Agreement in writing shall be sent as follows:

if to a Fund, at

     IndexIQ ETF Trust
     800 Westchester Avenue
     Suite N611
     Rye Brook, NY 10573
     ATTN: Secretary

     if to BNY, at

     The Bank of New York
     One Wall Street
     New York, New York 10286
     Attention:
     Title:

or at such other place as may from time to time be designated in writing. Notices hereunder shall be effective upon receipt.

17. Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts together shall constitute only one instrument.

18. Several Obligations.

The parties acknowledge that the obligations of the Funds hereunder are several and not joint, that no Fund shall be liable for any amount owing by another Fund and that the Funds have executed one instrument for convenience only.

- 13 -

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the day and year first above written.

	By:	/s/

		on behalf of each Fund
		identified on Exhibit A
		attached hereto

	THE BANK OF NEW YORK

	By:	/s/

	Title:	Vice President

	ANDREW PFEIFER
	ONE WALL STREET
	NEW YORK, NY 10286
	(212) 635-6314

- 14 -

SCHEDULE I

ADMINISTRATIVE SERVICES

1.	Prepare minutes, meeting agendas and other board material of Board of Director meetings and assist the Secretary of each Fund in preparation for Board meetings. Such minutes, meeting agendas and other material prepared in preparation for each Board meeting are subject to the review and approval of each Fund and Fund counsel.

2.	Perform for each Fund, the compliance tests, including tests and tracking related to Rule 12d-1 exemptive order requirements, as mutually agreed and which shall be specific to each Fund. The Compliance Summary Reports listing the results of such tests are subject to review and approval by each Fund.

3.	Participate in the periodic updating of each Fund’s Registration Statement and Prospectus and, subject to approval by such Fund’s Treasurer and legal counsel, coordinate the preparation, filing, printing and dissemination of periodic reports and other information to the SEC and the Fund’s shareholders, including but not limited to, annual and semi-annual reports to shareholders, Form N-SAR, Form N-CSR, Form N-Q and notices pursuant to Rule 24(f)-2.

4.	Prepare workpapers supporting the preparation of federal, state and local income tax returns for each Fund for review and approval by each Fund’s independent auditors; perform ongoing wash sales review (i.e., purchases and sales of Fund investments within 30 days of each other); and prepare Form 1099s with respect to each Fund’s directors or trustees and file such forms upon the approval of the Fund’s Treasurer.

5.	Prepare and, subject to approval of each Fund’s Treasurer, disseminate to such Fund’s Board quarterly unaudited financial statements and schedules of such Fund’s investments and make presentations to the Board, as appropriate.

6.	Subject to approval of each Fund’s Board, assist such Fund in obtaining fidelity bond and E&O/D&O insurance coverage.

7.	Prepare statistical reports for outside information services (e.g., IBC/Donoghue, ICI, Lipper Analytical and Morningstar).

8.	Attend shareholder and Board meetings as requested from time to time.

9.	Subject to review and approval by the Fund Treasurer, establish appropriate expense accruals, maintain expense files and coordinate the payment of invoices for each Fund.

SCHEDULE I (continued)
ADMINISTRATIVE SERVICES

10.	Blue Sky Services

	Subject to approval of each Fund’s Board and its legal counsel, perform initial registration for Funds in such states as each Fund shall identify to BNY. Subject to approval of each Fund’s Board and its legal counsel, perform renewal registration for Funds in such states as each Fund shall identify to BNY. Receive periodic downloads of sales data from transfer agents. Update state/territory sales information for each Fund. Create and maintain state/territory sales information worksheets for each Fund. Monitor changes in Blue Sky laws and procedures for all registered states/territories. Subject to approval of each Fund’s legal counsel, update filing requirements for all law and procedural changes. Communicate directly with regulatory authorities in states/territories as needed.

- 2 -

SCHEDULE II

VALUATION AND COMPUTATION SERVICES

I.	BNY shall maintain the following records on a daily basis for each Series.

	1.	Report of priced portfolio securities

	2.	Statement of net asset value per share

II.	BNY shall maintain the following records on a monthly basis for each Series:

	1.	General Ledger

	2.	General Journal

	3.	Cash Receipts Journal

	4.	Cash Disbursements Journal

	5.	Subscriptions Journal

	6.	Redemptions Journal

	7.	Accounts Receivable Reports

	8.	Accounts Payable Reports

	9.	Open Subscriptions/Redemption Reports

	10.	Transaction (Securities) Journal

	11.	Broker Net Trades Reports

III.	BNY shall prepare a Holdings Ledger on a quarterly basis, and a Buy-Sell Ledger (Broker’s Ledger) on a semiannual basis for each Series. Schedule D shall be produced on an annual basis for each Series.

The above reports may be printed according to any other required frequency to meet the requirements of the Internal Revenue Service, The Securities and Exchange Commission and the Fund’s Auditors.

IV. For internal control purposes, BNY uses the Account Journals produced by The Bank of New York Custody System to record daily settlements of the following for each Series:

	1.	Securities bought

	2.	Securities sold

	3.	Interest received

	4.	Dividends received

	5.	Capital stock sold

	6.	Capital stock redeemed

	7.	Other income and expenses

All portfolio purchases for the Fund are recorded to reflect expected maturity value and total cost including any prepaid interest.

- 2 -

GRAPHIC 10 mellonlogo.jpg GRAPHIC begin 644 mellonlogo.jpg M_]C_X``02D9)1@`!`0```0`!``#_VP!#``T)"@L*"`T+"@L.#@T/$R`5$Q(2 M$R<<'A<@+BDQ,"XI+2PS.DH^,S9&-RPM0%=!1DQ.4E-2,CY:85I08$I14D__ MVP!#`0X.#A,1$R85%29/-2TU3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T]/ M3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T__P``1"`!&`28#`2(``A$!`Q$!_\0` M'P```04!`0$!`0$```````````$"`P0%!@<("0H+_\0`M1```@$#`P($`P4% M!`0```%]`0(#``01!1(A,4$&$U%A!R)Q%#*!D:$((T*QP152T?`D,V)R@@D* M%A<8&1HE)B7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#TZBBB@`HH MHH`****`"D8$C`8KR#D8]>E+10`4444`%%%%`!1110`4444`-,D8D$9=0YZ+ MGGOV_`_D:=69K-NKQQSB)V9&^8H,_+@]1U(SZ<\_W2V0$K&NX@8S^MAX'\9\N@"*>[E:*8&6-8HPN%C;:$(VGJ#@$'YB6&4SO.5.T+%(UO=3 MO#(J$*<29"A=VTGYB3LY8GD-C?NY$B@1R;5A9;*-MY3?O;B$`)+7Q'*2OVE(F5E M(RN4*,N,[@2<G)XX&3U..3PP3)%X>+.SW4 MYY<.%C9B.H8@Y./4=.OS_?Y&[10!#!:V]N28840E50D#G:,X&?09/YGU-344 M4`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`1S1M)L"RM' MM;)V]2,'C\\5FV8FFN+J$74H%O,J<@G(VJ<9/!XSR#D$\\BM:J-A;W$%U>R3 M!2MQ,9%;=DA0JJ`>,?PD\>O_?IT]LDYBLH)H)+N9HE!G??L##K@`TVW;O*_#0F/[Z\\CCC&.I(QG#`'`JWJU MS/!:D6A7[05+@%2V549/T[#)]>YX-:2PNI+.ULPL2JG,DI.2N#P%!]>#DYX' M//-6/LC3:BT]S&"@3;'B0_+U&<=,D,>GH,]!@`GMIQ?:?%/%(4$J!@RXRI_' M/(Z5C)JUW)H]R9B;:[MTW%C&1N7'WMN&/Z'/;VT;&WN+&VGB2-9%60M`N_'R MGHI[#'KW&,Y.28Y]/DFLH#%F*XC18V4RLJNO&58J>?8]1SZG(`NH7$MG-:L9 MYC&=QD"(AW;03CG'4X'&3[=6%C3Q=F+S;R0%G)*QK@A%)R!D#DXXST^O4LO[ M1KF[M'\M)(H]XD5\$$,NT@@@]B>F#VS@FDL;>ZLYY("4EM&.Z([CNCR3E3G) M(ZW=J3W"W=Q8RS;F$7F MQ2*`&"].1C&(MC>.H*D]#GZ`Y.>0*46T[RS7 M4J*L[PB%8UE)5>24.,9R."<9`[GK MGZ";5I;FWCBEM6.[S%0QX4A]Q`[D'/T/?GU"Z99F&PMHKF-/,@Y4C'!P1GCV M)'XU)?PO,L"QJ3MG1VP^S@'/7K^`Z]#@$F@"`7;7;VOD22P[G(ECVH60J?NX!-AM/`UI+Y,` M,F)`$7D@$`YZYP<9]@.F:C>"X&I7=PUL)HFB6-$WCYNI?@\#/`]\`'``-`"7 MLMU:VUI.ERKQJR+."1F08ZJ<ZO(9;JTN M)#YLP_T.10JYR,=2"`5/)RIX/\70:]9]_;S3ZC9ND1:*'+$EQC<<8^7OC!YZ MC(P#DX`%WW7FPVKSIYKH9)'1`-H&!A0<\'D.(RS*KB0]B"2!QUX/ITZ\8-(:7-Y5V1&L,YN# M<0RQXW;CU!.06Z#.2`?N_='-C48[RYM[9/LV2LBM<(LH*.N/F49QO!W8PV!P M2>P(!8L)Y;LFZ#8M9!^Y5@,D=GR.@/4#G@CIR*9J\]S;VZ/9LOF[^$89$F%) M(/IP#SD8QGG&UFV-M-4:Q(+*23O5N^23DDGG/))+$G.`9=02=Y+-H$ M9ECN`T@5\?+@CH3AL%@<'TR,D`$`AO\`4A%I'VJ-U5GCW@G.T`#)))&0`.^# MCKM/0KJES/9Z2;KS?GC`+LL>%Q_$Q!R5`&3GG&.C=#3?2YHX;Z&.WB:.1S]F M",$\O=AB00!Y?('*[CN&_!)Q5C5(;F[T^&.&T7S`ZMMD"C:5/'.3M]F7)7L# M0!;MG>66;%T)%7Y/E0`*XSNP>?88[8.`N/3'OV@L5O+6VCMH[(#]Z26:10JH MSECC'.<'IC`/&<6\CY2$(R9V@D-D]!R1D$!N,X(P2I)!F,F&&&YMM3U"=;_0@`!BEO;7=I=SW*QK(EPJO)$I"MY@7G`Z9XZDDG*C("C(!-!/.+V:P>1 M9'CA259=O.&+##*/]W@CKSP,2YTZ=V:,310"8/@LK*R[@>V1VR,9P3 M@=!<@BN1<2W=U&K/PD*1-]Q#C.)C&Z:A#;F,;G61G MXP5+ EX-99.(H)(2) 11 e33444ex23_h2.htm TRANSFER AGENCY AND SERVICE AGREEMENT

Exhibit (h)(2)

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the 26th day of January, 2009, by and between each Trust listed on Appendix I hereto (collectively, the “Trust”) and each Series of the Trust listed on Appendix I hereto (as such Appendix be amended from time to time), and THE BANK OF NEW YORK MELLON, a New York banking company having its principal office and place of business at One Wall Street, New York, New York 10286 (the “Bank”).

WHEREAS, the Trust is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Trust will ordinarily issue for purchase and redeem shares of the Trust (the “Shares) only in aggregations of Shares known as “Creation Units” (currently 50,000 shares) (each, a “Creation Unit”) principally in kind;

WHEREAS, The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“DTC”), or its nominee (Cede & Co.), will be the registered owner (the “Shareholder”) of all Shares; and

WHEREAS, the Trust desires to appoint the Bank as its transfer agent, dividend disbursing agent, and agent in connection with certain other activities, and the Bank desires to accept such appointment as set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

1.	Terms of Appointment; Duties of the Bank

1.1 Subject to the terms and conditions set forth in this Agreement, the Trust hereby employs and appoints the Bank to act as, and the Bank agrees to act as, its transfer agent for the authorized and issued Shares, and as the Trust’s dividend disbursing agent.

1.2 The Bank agrees that it will perform the following services:

(a) In accordance with the terms and conditions of the form of Participant Agreement prepared by the Distributor, a copy of which is attached hereto as Exhibit A, the Bank shall:

(i) Perform and facilitate the performance of purchases and redemption of Creation Units;

(ii) Prepare and transmit by means of DTC’s book-entry system payments for dividends and distributions on or with respect to the Shares declared by the Trust on behalf of the applicable Trust;

(iii) Maintain the record of the name and address of the Shareholder and the number of Shares issued by the Trust and held by the Shareholder;

(iv) Record the issuance of Shares of the Trust and maintain a record of the total number of Shares of the Trust which are outstanding, and, based upon data provided to it by the

Trust, the total number of authorized Shares. The Bank shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust.

(v) Prepare and transmit to the Trust and the Trust’s administrator and to any applicable securities exchange (as specified to the Bank by the Trust or its administrator) information with respect to purchases and redemptions of Shares;

(vi) On days that the Trust may accept orders for purchases or redemptions, calculate and transmit to Bank and the Trust’s administrator the number of outstanding Shares;

(vii) On days that the Trust may accept orders for purchases or redemptions (pursuant to the Participant Agreement), transmit to the Bank, the Trust and DTC the amount of Shares purchased on such day;

(viii) Confirm to DTC the number of Shares issued to the Shareholder, as DTC may reasonably request;

(ix) Prepare and deliver other reports, information and documents to DTC as DTC may reasonably request;

(x) Extend the voting rights to the Shareholder for extension by DTC to DTC participants and the beneficial owners of Shares in accordance with policies and procedures of DTC for book-entry only securities;

(xi) Maintain those books and records of the Trust specified by the Trust in Schedule A attached hereto;

(xii) Prepare a monthly report of all purchases and redemptions of Shares during such month on a gross transaction basis, and identify on a daily basis the net number of Shares either redeemed or purchased on such business day and with respect to each Authorized Participant (as defined in the Participant Agreement) purchasing or redeeming Shares, the amount of Shares purchased or redeemed;

(xiii) Receive from the Distributor (as defined in the Participant Agreement) or from its agent purchase orders from Authorized Participants for Creation Unit Aggregations of Shares received in good form and accepted by or on behalf of the Trust by the Distributor, transmit appropriate trade instructions to the National Securities Clearance Corporation (the “NSCC”), if applicable, and pursuant to such orders issue the appropriate number of Shares of the Trust and hold such Shares in the account of the Shareholder for each of the respective Trusts;

(xiv) Receive from the Authorized Participants redemption requests, deliver the appropriate documentation thereof to The Bank of New York Mellon as custodian for the Trust, generate and transmit or cause to be generated and transmitted confirmation of receipt of such redemption requests to the Authorized Participants submitting the same; transmit appropriate trade instructions to the NSCC, if applicable, and redeem the appropriate number of Creation Unit Aggregations of Shares held in the account of the Shareholder; and

(xv) Confirm the name, U.S taxpayer identification number and principle place of business of each Authorized Participant.

(b) In addition to the services set forth in the above sub-section 1.2(a), the Bank shall: perform the customary services of a transfer agent and dividend disbursing agent including, but not limited to, maintaining the account of the Shareholder, obtaining at the request of the Trust from the Shareholder a list of DTC participants holding interests in the Global Certificate, and those services set forth on Schedule A attached hereto.

(c) The following shall be delivered to DTC participants as identified by DTC as the Shareholder for book-entry only securities:

(i) Annual and semi-annual reports of the Trust;

(ii) Trust proxies, proxy statements and other proxy soliciting materials;

(iii) Trust prospectus and amendments and supplements thereto, including stickers; and

(iv) Other communications as the Trust may from time to time identify as required by law or as the Trust may reasonably request.

(d) The Bank shall keep records relating to the services to be performed hereunder, in the form and manner required by applicable laws, rules, and regulations under the 1940 Act and to the extent required by Section 31 of the 1940 Act and the rules set forth under the 1940 Act (the “Rules”), all such books and records shall be the property of the Trust, will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Trust on and in accordance with its request.

(e) The Bank shall provide additional services, if any, as may be agreed upon in writing by the Trust and the Bank.

2.	Fees and Expenses

2.1 The Bank shall receive from the Trust such compensation for the Transfer Agent’s services provided pursuant to this Agreement as may be agreed to from time to time in a written fee schedule approved by the parties. The fees are accrued daily and billed monthly and shall be due and payable within ten (10) business days of receipt of the invoice by the Trust. Upon the termination of this Agreement before the end of any month, the fee for the part of the month before such termination shall be prorated according to the proportion which such part bears to the full monthly period and shall be payable upon the date of termination of this Agreement.

2.2 In addition to the fee paid under Section 2.1 above, the Trust agrees to reimburse the Bank for reasonable out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule attached hereto or relating to dividend distributions and reports (whereas all expenses related to creations and redemptions of Trust securities shall be borne by the relevant Authorized Participant in such creations and redemptions). In addition, any other actual expenses incurred by the Bank at the request or with the consent of the Trust, will be reimbursed by the Trust.

2.3 The Trust agrees to pay all fees and reimbursable expenses within ten (10) business days following the receipt of the respective billing notice accompanied by supporting documentation, as appropriate. Postage for mailing of dividends, proxies, Trust reports and other mailings to all shareholder

accounts shall be advanced to the Bank by the Trust at least seven (7) calendar days prior to the mailing date of such materials.

3.	Representations and Warranties of the Bank

The Bank represents and warrants to the Trust that:

It is a banking company duly organized and existing and in good standing under the laws of the State of New York.

It is duly qualified to carry on its business in the State of New York.

It is empowered under applicable laws and by its Charter and By-Laws to act as transfer agent and dividend disbursing agent and to enter into, and perform its obligations under, this Agreement.

All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.

It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.

4.	Representations and Warranties of the Trust

The Trust represents and warrants to the Bank that:

It is duly organized and existing and in good standing under the laws of Delaware.

It is empowered under applicable laws and by its Declaration of Trust and By-Laws to enter into and perform this Agreement.

It is an open-end management investment company registered under the 1940 Act.

A registration statement under the Securities Act of 1933, as amended (the “1933 Act”), on behalf of each of the Trusts has become effective, will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Trust being offered for sale.

5.	Indemnification

5.1 The Bank shall not be responsible for, and the Trust shall indemnify and hold the Bank harmless from and against, any and all losses, damages, reasonable costs, charges, reasonable counsel fees (including, without limitation, those incurred by the Bank in a successful defense of any claims by the Trust), payments, actual expenses and liability (“Losses”) which the Bank may sustain or incur or which may be asserted against the Bank in connection with or relating to this Agreement or the Bank’s actions or omissions with respect to this Agreement, except for any Losses for which the Bank has accepted liability pursuant to Article 6 of this Agreement.

5.2 This indemnification provision shall apply to actions taken pursuant to this Agreement or the Participant Agreement.

6.	Standard of Care and Limitation of Liability

The Bank shall have no responsibility and shall not be liable for any Losses, except that the Bank shall be liable to the Trust for direct damages caused by its own negligence, willful misconduct or fraud or that of its employees, or its breach of any of its representations. In no event shall the Bank be liable for special indirect or consequential damages, regardless of the form of action and even if the same were foreseeable. For purposes of this Agreement, none of the following shall be or be deemed negligence or willful misconduct:

(a) The conclusive reliance on or use by the Bank or its agents or subcontractors of information, records, documents or services which (i) are received by the Bank or its agents or subcontractors from any officer or party reasonably believed to be a duly authorized agent of the Trust, and (ii) have been prepared, maintained or performed by the Trust or any other person or firm on behalf of the Trust including but not limited to any previous transfer agent or registrar.

(b) The conclusive reliance on, or the carrying out by the Bank or its agents or subcontractors of, any instructions or requests of the Trust or instructions or requests believed in good faith to be on behalf of the Trust.

(c) The offer or sale of Shares by or for the Trust in violation of any requirement under the federal securities laws or regulations, or the securities laws or regulations of any state that such Shares be registered in such state, or any violation of any stop order or other determination or ruling by any federal agency, or by any state with respect to the offer or sale of Shares in such state.

7.	Concerning the Bank

7.1

(a) The Bank may employ agents or attorneys-in-fact which are not affiliates of the Bank with the prior written consent of the Trust (which consent shall not be unreasonably withheld), and shall not be liable for any loss or actual expense arising out of, or in connection with, the actions or omissions to act of such agents or attorneys-in-fact, provided that the Bank acts in good faith and with reasonable care in the selection and retention of such agents or attorneys-in-fact.

(b) The Bank may, without the prior consent of the Trust, enter into subcontracts, agreements and understandings with any Bank affiliate, whenever and on such terms and conditions as it deems necessary or appropriate to perform its services hereunder. No such subcontract, agreement or understanding shall discharge Bank from its obligations hereunder.

7.2 The Bank shall be entitled to conclusively rely upon any written or oral instruction actually received by the Bank from any officer or party reasonably believed to be duly authorized agent of the Trust. The Trust agrees to forward to the Bank written instructions confirming oral instructions by the close of business of the same day that such oral instructions are given to the Bank. The Trust agrees that the fact that such confirming written instructions are not received or that contrary written instructions are received by the Bank shall in no way affect the validity or enforceability of transactions authorized by such oral instructions and effected by the Bank. If the Trust elects to transmit written instructions through an on-line communication system offered by the Bank, Trust’s use thereof shall be subject to the terms and conditions attached hereto as Appendix A.

7.3 The Bank shall establish and maintain a disaster recovery plan and back-up system satisfying the requirements of its regulators (the “Disaster Recovery Plan and Back-Up System”). The Bank shall

not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control which are not a result of its negligence, willful misconduct or fraud, including without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruption, loss or malfunctions of transportation, computer (hardware or software) or communication services; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation, provided that the Bank has established and is maintaining the Disaster Recovery Plan and Back-Up System, or if not, that such delay or failure would have occurred even if the Bank had established and was maintaining the Disaster Recovery Plan and Back-Up System. Upon the occurrence of any such delay or failure the Bank shall use commercially reasonable best efforts to resume performance as soon as practicable under the circumstances.

7.4 The Bank shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and the Participation Agreement, and no covenant or obligation shall be implied against the Bank in connection with this Agreement, except as set forth in this Agreement and the Participation Agreement.

7.5 At any time the Bank may apply to an officer of the Trust for specific written instructions with respect to any matter arising in connection with the Bank’s duties and obligations under this Agreement, and the Bank, its agents, and subcontractors shall not, absent their willful misconduct or fraud, be liable for any action taken or omitted to be taken in good faith in accordance with such instructions. Such application by the Bank for instructions from an officer of the Trust may, at the option of the Bank, set forth in writing any action proposed to be taken or omitted to be taken by the Bank with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, and the Bank shall, absent its willful misconduct or fraud, not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless, prior to taking or omitting to take any such action, the Bank has received written or oral instructions in response to such application specifying the action to be taken or omitted.

7.6 The Bank, its agents and subcontractors may act upon any paper or document, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided to the Bank or its agents or subcontractors by or on behalf of the Trust by machine readable input, telex, CRT data entry or other similar means authorized by the Trust, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Trust.

7.7 Notwithstanding any provisions of this Agreement to the contrary, the Bank shall be under no duty or obligation to inquire into, and shall not be liable for:

(a) The legality of the issue, sale or transfer of any Shares, the sufficiency of the amount to be received in connection therewith, or the authority of the Trust to request such issuance, sale or transfer;

(b) The legality of the purchase of any Shares, the sufficiency of the amount to be paid in connection therewith, or the authority of the Trust to request such purchase;

(c) The legality of the declaration of any dividend by the Trust, or the legality of the issue of any Shares in payment of any stock dividend; or

(d) The legality of any recapitalization or readjustment of the Shares.

8.	Providing of Documents by the Trust and Transfers of Shares

8.1 The Trust shall promptly furnish to the Bank with a copy of its Declaration of Trust and all amendments thereto.

8.2 In the event that DTC ceases to be the Shareholder, the Bank shall re-register the Shares in the name of the successor to DTC as Shareholder upon receipt by the Bank of such documentation and assurances as it may reasonably require.

8.3 The Bank shall have no responsibility whatsoever with respect to any beneficial interest in any of the Shares owned by the Shareholder.

8.4 The Trust shall deliver to the Bank the following documents on or before the effective date of any increase, decrease or other change in the total number of Shares authorized to be issued:

(a) A certified copy of the amendment to the Trust’s Declaration of Trust with respect to such increase, decrease or change; and

(b) An opinion of counsel for the Trust, in a form satisfactory to the Bank, with respect to (i) the validity of the Shares, the obtaining of all necessary governmental consents, whether such Shares are fully paid and non-assessable and the status of such Shares under the 1933 Act, and any other applicable federal law or regulations (i.e., if subject to registration, that they have been registered and that the Registration Statement has become effective or, if exempt, the specific grounds therefore), (ii) the status of the Trust with regard to the 1940 Act, and (iii) the due and proper listing of the Shares on all applicable securities exchanges.

8.5 Prior to the issuance of any additional Shares pursuant to stock dividends, stock splits or otherwise, and prior to any reduction in the number of Shares outstanding, the Trust shall deliver to the Bank:

(a) A certified copy of the order or consent of each governmental or regulatory authority required by law as a prerequisite to the issuance or reduction of such Shares, as the case may be; and

(b) An opinion of counsel for the Trust, in a form satisfactory to the Bank, with respect to (i) the validity of the Shares, the obtaining of all necessary governmental or regulatory authority orders and consents, whether such Shares are fully paid and non-assessable and the status of such Shares under the 1933 Act and any other applicable federal law or regulations (i.e., if subject to registration, that they have been registered and that the Registration Statement has become effective or, if exempt, the specific grounds therefore), (ii) the status of the Trust with regard to the 1940 Act, and (iii) the due and proper listing of the Shares on all applicable securities exchanges.

8.6 The Bank and the Trust agree that all books, records and confidential, non-public, or proprietary information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any person other than its auditors, accountants, regulators, employees or counsel, except as may be, or may become, required by law, by administrative or judicial order or by rule.

8.7 In case of any requests or demands for the inspection of the Shareholder records of the Trust, the Bank will promptly employ reasonable commercial efforts to notify the Trust and secure instructions from an authorized officer of the Trust as to such inspection. The Bank reserves the right,

however, to exhibit the Shareholder records to any person when required to do so by law, by administrative or judicial order or by rule. The Bank shall promptly notify the Trust of any such exhibition, to the extent it is legally permitted to so notify the Trust.

9.	Termination of Agreement

9.1 The term of this Agreement shall be one year commencing upon the date hereof (the "Initial Term") and shall automatically renew for additional one-year terms (each, a “Subsequent Term”) unless either party provides written notice of termination at least ninety (90) days prior to the end of any one-year term or unless earlier terminated as provided below:

(a) Either party hereto may terminate this Agreement prior to the expiration of the Initial Term in the event the other party breaches any material provision of this Agreement, including, without limitation in the case of the Trust, its obligations under Section 2.1, provided that the non-breaching party gives written notice of such breach to the breaching party and the breaching party does not cure such violation within thirty (30) days of receipt of such notice.

(b) The Trust may terminate this Agreement at any time upon ninety (90) days' prior written notice.

9.2 Should the Trust exercise its right to terminate, all actual out-of-pocket expenses associated with the movement of records and material will be borne by the Trust.

9.3 The terms of Article 2 (with respect to fees and expenses incurred prior to termination), and of Article 5 shall survive any termination of this Agreement.

10.	Additional Series

In the event that the Trust establishes one or more additional series of Shares with respect to which it desires to have the Bank render services as transfer agent under the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide such services, such additional issuance shall become Shares hereunder.

11.	Assignment

11.1 Neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party.

11.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.

12.	Severability and Beneficiaries

12.1 In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby provided obligation of the Trust to pay is conditioned upon provision of services.

12.2 This Agreement is solely for the benefit of the Bank and the Trust, and none of any Participant (as defined in the Participation Agreement), the Distributor, any Shareholder or beneficial owner of any Shares shall be or be deemed a third party beneficiary of this Agreement.

13.

Amendment

This Agreement may be amended or modified by a written agreement executed by both parties.

14.	New York Law to Apply

This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Trust and the Bank hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Trust and the Bank each hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. The Trust and the Bank each hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.

15.	Merger of Agreement

This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or writ

16.	Counterparts

This Agreement may be executed by the parties hereto in any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.


	By:

		Name:
		Title:

	By:

		Name:
		Title:


	THE BANK OF NEW YORK MELLON

	By:

		Name:
		Title:

SCHEDULE A

BOOKS AND RECORDS TO BE MAINTAINED BY THE BANK

Source Documents requesting Creations and Redemptions

Correspondence/AP Inquiries

Reconciliations, bank statements, copies of canceled checks, cash proofs

Daily/Monthly reconciliation of outstanding Shares between the Trust and DTC

Dividend Records

Year-end Statements and Tax Forms

Exhibit A

Form of Authorized Participant Agreement

GRAPHIC 12 ex23h2x1x1.jpg GRAPHIC begin 644 ex23h2x1x1.jpg M_]C_X``02D9)1@`!`0```0`!``#_VP!#``$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0'_ MVP!#`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0'_P``1"`!"`4<#`2(``A$!`Q$!_\0` M'P```04!`0$!`0$```````````$"`P0%!@<("0H+_\0`M1```@$#`P($`P4% M!`0```%]`0(#``01!1(A,4$&$U%A!R)Q%#*!D:$((T*QP152T?`D,V)R@@D* M%A<8&1HE)B7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#^_BBBB@`H MHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`*Q/$FDS:]H&L:-;:IJ6B7.I: M==6EKK.CW3V6IZ5=RQ,MKJ-C<('"7%G<>7<(DL<]M-Y?D7=OX6$>9?;I#./OWX;_`+7/P(^)LMG8Z7XQAT#7;XQ1P^'O M&,/_``CVH-*VL].TZU"F\U75M M1NI(;'2M*LU=#=:C?W%O:PEXXVE\V6)'Z.6G.'/I"VLG>R5M[WT2Z]--697D MG;65WHM;N^UNM^G74_J$HK^7OQ1_P4(U+]E=+CP)\$OB;/\`&CQ78;=-U"_N M+^;6_P!G?PW;Q2^:]GX(@GN(]<\8WQ,DPDU_19O`OAZVNO6>EZ/^T-X!UOP'X@8BWO\`Q?X$@?Q+X(E*6PE;4[G0[B['B_08 M9[@26T>F:?'XVFB8V\SWYBFG^Q?FM3Q4X#I9O5R:>?X>-:DU"6,<*O\`9CK< MW+*@L>H/#J=/>=24UADKQ5=SC*$?K(<&\23P,,?'+*KIU+R5!2A];5.R<:CP MSDJMI;1@HNK=7=-1<9/]U:*\O^%'QK^$WQR\.1>+/A'\0/#/CW0WCM7N)M!U M&*>]TJ2\MTNX+'Q!HTODZUX;U4V\B22Z/X@T_3=5MPP%Q9Q-E1ZA7WF'Q&'Q M=&GB<+7HXG#UHJ=*OAZL*U&K![3IU:>//V;);_]@C6_"VM_LL03ZQ_PT'8_#F#6$^)EIK%OJ=](EY\1 MK36U7Q=:_#7[!8F:QS:6=E_9T4]Y?M=>#7TE[7I/^"RO[:U_HJ#]DGX8^(); M&\U&R@O_`(Z7VGKY5VND:E:V>H^'OAXE^R^;!!K5E<1:]XK2P,,MYI$NB:)- M>S:5JWB72+G\!OA7\7/B/\$O%]KX[^%GBS4?!_BBUM;JP^WV*6EU;WVFWRJM M[I.LZ1J=M?:-KVC7GEQ/=:/K>GZAIEQ+!;S36CRV\#Q_GO&E:&90KX>RE2QF'G*'UBG.I052CK4?V'#N#G@ZV M&S:5*C6J4JD:M##XF'-2G#7WY.SE3JO2>'JQ4O8RC"KR5-(+D:*_4WP!^QM\ M1?VX=&@\<_#[]GF\_9]\27\^U2WM%M]+^'6E3W4EG^CW[/7_``1*^&GA5H];_:-\ M:S_%/4)=/L/^*)\'C5_"'A'2M3*S-JRW/B:'4+?Q7XJMMYMHM)NK:V\"M"D- MU-?:=>->P0Z;_+M'P4)4;5G^L5>.>'Z&&]M6Q%2-=7C+`PI^UQ2FK7C[C=!*SYHSG6A!K M1M5+P7\['PLT[XLW_C33)/@E8_$2]^(>G+/?:/)\++7Q)<^,[!2GV&YO--;P MFCZW:J8[W['/<6IC!2[^SR/MN-C_`-:/[#L?_!1?^S+77@B^A\#0Z4;7[2C3:M'>^*IKE8I=0C7$DES]M_#/X M/?"OX,Z(_AWX4_#[PE\/](F:&2\M?"VB6.E/J=Q;PK;Q7FLWEO"M[K6H+`JQ M'4-6N;R^=%"O<,!7I%?T#X?^%-7@ZK'&XGB7,J^(FU.MEV759X/)JDUI;$T9 M.=3'.*4>2I)85Q7-%TW%GYEQ-QG#/8/#TLIPE*E&ZABL5"-?'1B]?W,THQPZ M;OS03K)Z/F304445^QGP@4444`%%%%`!1110`4444`%%%%`!1110`4444`%% M%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%<=\0O$^H>#/`W MBWQ5I'AK6/&6L:#H&IZEHWA+0+6:[UCQ-K$%K(=*T'3XH(Y62?5M0-M8BZE5 M;2Q2=KV]E@L[>>:/L:*33::3Y6TTI63LVM'9Z.V]GH^HTTFFU=)IM7:NKZJZ MU5]KK5'\P_PS_P""/W[2?[0'BKQ/\5?VI?'%E\)-2\6>*KOQ#J^E0)8?$#QQ MKTVJ7YU'5YG;2_$'_"-^&K6YCN'MM&EFUK7[ZQDC:.^\-06UI;QWO[*?L^_\ M$Z/V4/V=+2PE\-?#BP\:^+;&\74(_B'\4;?2O&7C&.^AO+B[L+K39)M+L]!\ M-3Z8LZ6EG/X4T'0KF2WM+6;49K_44EOYON2BO-PN48'"/GC2]K6U;K5W[6HY M-W^$+6]^&.@_#;7KG6'^)>M2V MNKP?$B/Q>]I!!:K\+4EM9=,;PA=+IF%-_HOQ2`]L^-OQ0N?A!X* MM?%]MX>@\3-<>-OAUX.;39];DT$1GXA>//#O@6'41>QZ-KA<:7/XABU&2T-H MGVN*VDMUN8'D61-9=6CMM<\.Z!I^D MOIU].VH:/XGN]')8DNK:XU&=9[>.^C#6)CN'M&>W M6[R_BSXY?X8?"WXD?$I-)776^'O@/Q?XX.B/J!TH:NOA/P_J&O/IHU,6.IFP M:^6P-LMW_9]X+=I1*;:8*8V9H]AX>TGQUJ-Q9^(M7O\`5?%7A6P2/1;O5=5U MO3;2P\$:UJLM[J=G/=RWL&G7EW<_$6PL[JV>[@>^M;#3S96LL>FWTD/"?M7. MB?LN?M(EV5`?@+\7U!9@H+/\/O$*(H)(&YW954=68A0"2!26K7J@.%TG]IK6 MAX:_9L\<>*_AWI^D>#OVD+CP#HFD77ASQ?K?C#Q!X4\4_$SPA/XM\*6>MZ$O MPYT2UE\.%+.YTG6O%$6N0C1K^73KF?29=(GU'4M)^C?&_BNW\$^%M6\23VQU M":S2UM=(T:._TO3+KQ'XDUB^MM%\*^%--OM;O=.TB#6/%GB74-*\-Z,=2O[. MSDU;5+.*>YAC%_"GC[6]%\.:W-K5YX&O/`G@_6?$'B=?&W@M/#2:#I.EZAHGB. M[NO!>IZMHMU]N^+;B^\7_$+0_!OAW5/#]M-X"MK;XA>)_P"V-/O]<1+W54U; M0O`NFMHUEJ^A072RR1>)O$LMSH M&U\&/B;8?&/X6^"?B786$VD+XKT6*[U#0KF;S[SPWK]I--IGB;PO?R>3;L=1 M\,>(K'5-`U%9;:UGCOM.N(Y[2UF62WCX6T_:#TZ#]H34OV?_`!3X=NO#-]>Z M!::Y\./%\UU>3>'?B)=V]@NI>+/"5A#69IM.,$MF/(OV?5U'X3?M#_M`_`SQ#K&EWEOX[N[/]I?X>_V?;7FF6;1 M^-[RZT'XI:+I^F7^JZR;`:-XOTC3->GT^TU.X!/C4ZK+;67]HJ)O3_B'\,/# MWQOTKXH^$9-732?%.@^.=`\1^!O%]@FFW>O_``T^(.A^"_"-]X8\6Z+L8W-M MDI>V5R]M)J^DW>L:)=.VC:N\;FE]>J6O:]OOMM8#W^TO[RXU35;&2SMH MK73Q:?9[I+Z6:>Z:ZA\UA-:-80QVHC(90R7MV9!ABL>2H\0\)_'N/7H/C%+J M?A9M.F^%OQBNO@UI6G:5K0UO4O'>O'0/!6LZ*=-ANM)T&VTJZUJZ\:VNF?9K MV[ETS2%LKG6-8UVST:*]O;#'_9=^(WCSX@^&?%%M\5_"5[X/^*OP\U^P^'/Q M'M)EL_[)UGQ3HOAG1-5G\6^%9;)S%/X6\5:=KNG:WI+&*W\@7D]E$D]M:P7M MW\B:#IGQ!M/%G[0/QK^$W]H>.-=^#?[7GQ0U#5/@S9WVG#3?BCX5\3_!3X*Z M)X@33FN+.\ET_P"(GAB*T.I>!M9L66ZF1?%'@DPW-KXSOH:$M[]M/O7YW].H M'ZB:'/K5SH^F7'B/3=-T?7IK&UEUC2M(U>XU_2]/U%X4:[L[#6[O1O#USJMI M;SEXH+^?0]*DNHT69["U9S"GE+?%NXUWXH>(OA5\/M!L_$.J?#^V\.7GQ0U_ M6=9GT'0?"(\7:?J6H^']#TTVFC:Y>^*/&5S96=GK%[H:PZ)I.F>'=5L=1O?$ M\6H75AHM_P!C\-OB1X/^+7@K0/'_`(%UBWUGPYXBL(;VTFADC-S9RL"EWI.K M6JN\NF:YI%VD^FZUI%V([W2]3M;NPO(H[BWD1?G#X0PCX4?'S]H_PSXU^Q:2 M/B_X]T#XK?#3Q5J,]M90>-]-O_!>C>&-<\&Z=<3R?Z1KOP]U3PK++=:*+F2[ M.C>)-,UNULH;2]N5@.]^GYW7_!`]ET#XN13?%"[^#'C#1F\->/CX3F\?>'39 M3:AK/A3QCX,M=8CT+4;_`$3Q)/HVD0PZ_H.I76FQ^)O"5_;PZEID.LZ3?Z;/ MKNDSS:G!G>%/BAXU\8^+OBWX:TGP/X7AM_A5XYT_P/+J.H_$#5H)M;N+_P"' M_@KQ]]OCT^V^'-XFGPQ6OC6UT[R6U"\>2XLKB;>D#]5\>_%&WTCPWIWPL%Y'=F35=?\/:1I=[ MXR\3V5E!=6_AJ1O",>L7%GJ&K65K(SP=X'T7XJ>(/V\/!S>)=7TI_%_Q)D\) M/J'A[Q!?0RZ9:Z_^R_\`!S0'UBWTVVOX]/GO=.FO;IX9;FW=);NTCM[II%M( MHX79==-%WTU2^>FOS`^SO#T^M76@:'=>)+"UTKQ%[V)]HBC2;:N_`\2\!_'>7Q)\9?B1\$?%G@RZ\%^ M)O",2:]X-U1=3GUOPY\3_`NW3(-1U_0-2ET30VLM9\+ZKJ^FZ3XQ\+S073:/ M/JFD7-CJ^LV-^;BW^A:^1_BU\(6^-&@ZW>^!/$]EX2^,GPO^)5SXN^$WQ`MI M'EE\+>+;;1=*MKW1-:;3I1=7'@[QII37/A?QQH%PEY8:GH]YYUYH^J3Z;96X MG^O3^OGZ`?2NBZW=:KJ'BRQFL+>T'AO7;?1H)8K^2Z.HK/X:\/\`B$W4T;Z? M:BP*'719^0DE^&%J;GSU,WV>+QWP!\5_B'\2/"?B/Q1HGP[\*VRZ/XS^*7@N MQL)_B)J,U]J5W\-/'/B7P(]V(W^'VGV$#:U?^&Y;RULY]5AAMX;J"&YU2/;+ M<1U_V:/B1?\`Q7\'>*?'6M>$-8^'VO7OCB\TGQ1X,U\V[7_AKQ7X1\+^%/"/ MBO3!.-; MU/QKJ6DVFA_M(_'OQCJD^G^*+XVEE:^"OVG?&'C3[*VD6UW+:C3]5T_1H5U. MUBLGEU+2]6NY$65KR%Z;W^2_+7^ON`^EO''Q+O/!/Q`^#_A.X\/6USX>^*VO M^)/"+>+9->%E)X>\5Z7X0U?QIX?TDZ&VDW`U6/Q/I?AGQ/#%>#5]/^P7VFV= MK]GO9-5A$/'>#?CS+XI^+?CGX+W/A[1='\;>`/$C_P!KZ8_BR^N[F]^%]WX4 MT+7M`^)NCQ/X/LHKV+5-9\2Z9X3N]!-S"FEZM:>("==O?[)AAU&Q^U)\//$/ MQ,^!GCC1/!+W,'Q&T2WT[Q]\+;NP&C#4+;XG_#G5K'QQX#6SG\01R:1:MJ/B M/0;#1[R>^\JW&F:E?137%O#+)*GQW'\3KVS\8_!_]N6+1?%B^&_C/X9T_P#9 M[\2_#6'P]?VVL:;/=6]YK/P[O+C3KJT@OF\3-\>+7Q-\+HM6O)?^$=U/PWXX M\(:O97>G6-A=7WB`Z>;T2^[\]4!^BOAGQ1>^(]6\:VK:')I^C^%_$4?AS2=< MEO4G3Q7/!HVEZAK>H:=:Q6RI;Z;HVKZC<^$Y9);R6ZD\1>'_`!%;26EK;V-K MIZC9V2-K6KQVD5C_`&[XAO'>^\1>();.#]S;W.OZ[*/@K\5]`\6V-CJ7AW5/A]XLM]3L]0;9;21?V+>212><'B MDM;FVN4AN;*]MYH+NQO8;>[LYX+N"&5#2^NW]?C^%_(#IK?Q)J=]XXU#PU8: M1I]QX?T/1;:XU[Q*=;D%Y9^)M3E2?2_"UKH<&CW-O<3IHBOKNNW%]KVE7>DV M6K>$'L]*UFW\137>C^?>"/BIXG^*6FZMXJ^'WA+09O`L=[K>E>$/$'B?Q;>: M5>>.+_PWKVK^'M4U*STO1_"OB*'2/!%_>:7YOACQ3-J>HZIKMC(^HGPA9:<= M-N]6YC]E9KCQ)^R?\%KNXUF]O]:\5?!SPCJ&N>([_4+O6M8OO$>N^%;*;5]7 MU/4KV[FO[_4VU"XEEG>YO/.5T6W5X8XHTCQ_V6_$6B>!_@5X4^&?C/4M#\(> M+O@9X;7P%X[TC5M2L])DL8?`TEQH-KXWDBOWM)(_"OC?2],MO&>A:Y,BV5[I M6L12-(8[G3+O0 M?&&@06MY<68O_L4T&K:'JFF7^FZYX;\3Z1#>Z7K>B:I8W<)AN_MMA8^/:-^U M!KDGP/\`AI^T#XG^'&DZ/X#\>)\.9=3M]$\?7?B'Q)X7M_B?X@T+POX?N?[- MO?`?AJQUN*RUGQ)I0UQ(-7LKFUL#=W>G6^K36\=G<<_^SCI=YJ'BG]K#X_7= MGJ6@^#OC1X\T9_A^-?$-C_;O@KX;>!-/\$V?Q$LX&O'DM/#_`([U*WU/4?#$ MFHVNG7VJ>&;?1M=$,FFZOIOV%_B?XFU2]\=?L]:+X>\`:9 M\6_"6J:C91:+\/-;U;^R'\`?&6]-K/H<.J>'/ACXK%I;^(-&\77/B/2?#MC> M:?XVL=`_X2/PI9:[I;T_+\M5]^FS`_23XS?%6X^$VG>`]1A\.P^(U\:?%OX9 M_"QXI=;?16TMOB1XKL/"T6N(R:-K`OQI$E^MY)II%B;U(S"M_;,PD'56WBV_ MU'QQ?^%M,T$W.BZ%I,-QXB\62Z@;>SL]?OY8WT[PMI=FMAF+/JVON M][IT>AVMYX=4+J$VN2)IOSI^V+=V3^%/@43>0"*[_:R_9B>"1+I$\Z$?%;0) M7FMY4D!94A!F\V)CL0>;N`&X9GP)USQ%\"_%EM^RY\4=1N=>MKB'6O$?P1^, MVHVL&G_\+1TR^U*_US7?!WC2[58+*_\`C?X=FNM2U;6+RS:XO?B%XZC M#;ZT?$!F+:7\W]RM^7]>0?:CEPC&-59P#L5W*(S8X#.J2%03U81N0.0IZ5\[ M_LS?M`P_M#^!-1\17O@_4?ASXQ\+^)=0$^.?`&JZ@NK77AO6K:VLM6T^2UU MA+#2HM>T77/#NK:-KFCZ[::?!IVH07TB64EU':M./@A\2_A-X8D\2Z3^TC\-/!7P6^(W]B6U ME/!X:\>^'_"MQJGPJ^-.M6MM:QR:YI6A:(?%'ASQ[B^'+N#2/A':^$U/C:YOA]C\ M7:MKFL^/O#7B"ST+2UL0RZ?X.\4?#OQ#X4U'5)]1+W?B/2]:LH-/BM=,AU#4 MI=-^+?BK7OC%\4_A/HG@GP_(/ACH'PUU^;7]5\TF>,VVC?L_?LRZ7 M;0/>-?7B1:;XN_:1A9;JYGFFO+BZ2.2V>\GNGDNIY;A+BZD:6;>_+^`XM)O_ M`-L7]JLW.JSVQM?AW^S-`!8Z_>:4/.>W^-2RI<+87ML)YK=6C>..Y$AMVD$B MHK."79:_X4_F^7_-@>[?$WXCZS\+O@O\0?BIJGAFRU/5/A_X.\7>,+OPQ!KK MV5GJ,/ABSU'4EL;77_[)U&2-;^RLH_L]]/HBRDSI)=:78R>990>A^&]5EU[P M[H.N36]M:2ZSHVF:K):V=\=3M+=]0LH+MH+;43:V1OX(C-LBO/L=K]I15F^S MP[]B_,?[2LFDVG[%7QXLM/U7^T;#1_@1\3?"T6I71,4E[>^'O"NM^&K@.TRQ M^;'/#]IIJQRP M7:VCE71>K_`$_S`YGX_$?XX^`9O#-OHT?P9\4>&/#(UB+7Y-4?Q(_B7P7HOC..\.FOH6F+HRVEO MK4=B\']H:J99H'E66-'51:\:_%RT\/\`CWPA$O#>FQ>*OB;XQTW4_$T&@OJ M?]E:;X<\#:#<6UIK7C?Q=JL-AJ]UI6C_`&^[M-`T"&UTC4;WQ%XHO;73+>&T MTRVU_7M!\-_9\U+3E_:(_;A!U"R!_P"%J?"[@W4`/R?`_P`$0/P9/X)H9H6_ MNRQ21G#HP&;JC)X8_;-\'_'#4?LA^%7Q;_9JM_ACI'CFYTF\2#PYXQTKQ]%X MU\/:/K/B"X@BM?"&C_$#1O$D\>DPZS)8Q^(/%NC:9H<9.N2:18WHTOP3^;2_ MX+`^@;SXJ7GA?XB>$/A_X[\.KI4?Q&?4-/\``/C#1;^;6/#VJ^)]&T:]\1:G MX.UZ*?3M.O\`PQKT^A:9JVK^'9)$U31-?L-$U:-]8TK6UT_0]0X?7?VE=,\) M?M*:3^S]XM\.G1=/\4^$/#6M>$?B0-7EN=&U'Q=XJU#QW:Z+\.]8L)-$M(=` MU_6;'X;^,-2\.SOK=_:ZW_93:9"(-6N;.RN>5_:!B7XI_$S]G/X9>$9'U+4O M!OQL\,?&SQ]K.D+%>6_@+PC\/]#\27FGQZUJ43NFAZC\0]=O=.\)Z/ITG_$P M\0^'[KQ@;6W;2M/U>]LU\:_#+P9\:?C/^T!\-?&L#7>D:Y^S]^S4=]E>/9ZQ MHVJ:=\2OVHM0TC7]&O;>1+G3M:T'4DL-3T^[C.([B.%+A)K6>6"826M^WW:I M?YZ.WX@?4=MK=S/XKUCPZUC!';:7H/A[6H]16^DDGN7UZ_\`$UB;5]/-C''; MK:?\(YYHN!J%P;C[9L-O!]GWSE?*?[,'CWXA:SX[^+7PM^+>C:A!\2?@IX6^ M$?A/6O&DD<<>B_%G2+RX^)D_AWXH:&B)%]D;Q5:VESAI'%W!I]I%=!YE=97%Q'"LH:59'6 M1@^75W#$AB#)>Z1I.I-&^HZ9IU^\2E8GO;*VNFC5B"RQM/%(44D`D*0"0">: M**`'WNFZ=J2)'J-A97\<;%XTO;6"Z2-R-I=%GCD56*\%E`)'&<5#<:+HUY%; M07>DZ9=0V4?E6<-Q86L\5I%MC3R[:.6)D@CV11+LB"+MCC7&$4`HH`++1=&T MZ5I]/TG3+"9XS$TUE86MK*T3,CM&TD$4;F,O&C%"2I9$8C*@BW=6EK?0/;7M MM;WEM)M,EO=0QW$#E&5T+Q2J\;;'5777 M-?):P+>31@1@)+XN;33[*UN;IBUU<6UK!!/G:>\JA97LK*VM6D522JR-!%&75220&)`))`S110!8 MM[*SLVG:TM+6U:ZF:XN6M[>*!KB=R2\\YB13-,Q)+22%G8DDL:SL+6UE M:)F5VC:2")':,NB,4)*ED5B,J""B@#2JE::;IU@\\EC865D]TP>Y>TM8+=[E MU+LKSM#&AF93)(0TA8@R.0B:E8VVF:CH^EW^FV5 M[H^I6>GWNGVEU8VFH^'=3LM:\/W]M:3PR007NA:QING:MH]U%&D^F:G865_9 M2075K!+&44`:E075K:WL#VM[;6]W;2[?,M[J&.X@DV.LB;X95>-]DB(Z[E.U MU5AAE!!10`VTLK.PA%O8VEM96ZLS+!:016T(9SEF$4*(@9CRQ"Y)Y)-176F: M;?2V\][I]C=SVC;[6:ZM(+B6V?26-WA;>B-NC93N16SE0044`3W5K:W ML#VMY;07=M+M\VWNH8[B"38ZR)OBE5XWV2(KKN4[756&&`(KP:5IEK:S6-KI MMA;65QYGVBS@L[>&UG\Z,13>=;QQK%+YL2K%)O1M\:A&RH`HHH`KR>']!E@M M[:71-(DMK3S?LMO)IMD\%MY[^;/]GB:$QP^=)^\E\M5\Q_G?+!GDD=R6=V)9F)9B22:**`+DFEZ9+9II\NG6$NGQA!'8R6EN]F@C.4" M6S1F%0AY3:@VGD8-0VFAZ)I\WVBPT?2[*X"L@GM-/M+:8(V-R>;#"C[6P-R[ ML'`R#BBB@"N_ACPW([R2>'M#DDD9G=WTFP9W=B69W9K7Y?R;=O%%%`$=EIVG MZ;$T&G6-GI\#R&5H;*VAM8FE941I6C@2-#(R1HI EX-99.(H)(3) 13 e33444ex23h3.htm SUB-LICENSE AGREEMENT

Exhibit (h)(3)

SUB-LICENSE AGREEMENT

THIS SUB-LICENSE AGREEMENT (the “Agreement”), dated as of , , (the “Effective Date”) is by and between IndexIQ Advisors LLC, whose principal place of business is 800 Westchester Avenue, Suite N-611 Rye Brook, New York 10573 (“Advisor”), and IndexIQ ETF Trust, a Delaware trust (the “Trust”).

1. BACKGROUND & DEFINITIONS.

1.1 Background. Advisor is the licensee of the Licensed Index (defined below) pursuant to that certain License Agreement (the “License Agreement”), dated as of , by and between Financial Development HoldCo LLC, d/b/a “IndexIQ”, whose principal place of business is 800 Westchester Avenue, Suite N-611 Rye Brook, New York 10573 (“IndexIQ”). Advisor provides services to the Trust related to investment management and, in connection therewith, Advisor desires to sub-license the Licensed Index (as defined below) to be used by the Trust in accordance with the terms and conditions set forth herein.

1.2 Definitions. Unless otherwise specifically provided, the following terms shall have the meanings set forth below for this Agreement and all exhibits and attachments hereto:

“Investment Management Agreement” shall mean an agreement between Advisor and its clients pursuant to which Advisor shall provide various services regarding the management of its clients’ investments.

“Licensed Index” shall mean the index or indexes listed on Schedule A hereto, as modified to Advisor’s specifications, which Licensed Index is sub-licensed from Advisor to the Trust in accordance with the terms of this Agreement.

“Trust Offering” shall mean any fund or other offering issued by the Trust that incorporates, references or is otherwise based on the Licensed Index.

“Territory” shall mean the United States of America.

2. LICENSES.

2.1 License to Use. Subject to the requirements set forth herein, Advisor hereby grants to the Trust a non-exclusive license during the term of this Agreement to promote and market the Licensed Index within the Territory, and in accordance with the terms of this Agreement, solely in connection with a Trust Offering.

2.2 Restrictions. The Trust shall not edit, modify or revise the Licensed Index in any manner whatsoever without first obtaining Advisor’s prior written consent thereto, which may be granted or withheld at Advisor’s sole discretion. The Trust shall, at all times, attribute credit for the Licensed Index to IndexIQ and/or the Advisor, as applicable, under such attribution as Advisor specifies in writing from time to time. The Trust shall advise its end users of the Trust Offerings

of IndexIQ’s ownership in, and proprietary rights to, the Licensed Index, and not permit any such end user to edit, modify or revise the Licensed Index.

2.3 Ownership. The Trust acknowledges that all right, title and interest to the Licensed Index, the processes and methodologies necessary to design, monitor and revise the Licensed Index, any reports or deliverables provided by Advisor and any other information or materials provided to the Trust by Advisor under this Agreement, including, without limitation, all intellectual property rights therein, shall at all times remain solely with Advisor, IndexIQ and/or its licensors, as applicable. Except for the licenses and use rights expressly granted pursuant to this Agreement, nothing contained in this Agreement or otherwise shall be construed to grant to the Trust any right, title, license or other interest (whether by estoppel, by implication or otherwise) in, to or under the Licensed Index or other confidential information of Advisor, IndexIQ or its licensors, as applicable, and any rights not expressly granted in this Agreement are expressly reserved.

2.4 Licensed Index Adjustments. The Trust acknowledges and agrees that IndexIQ and/or the Advisor, as applicable, have rights to make, from time to time during the term of this Agreement, adjustments in and to the Licensed Index, to change the composition of the securities or other components making up the Licensed Index, and to change the methods by which the Licensed Index is computed, provided, however, that Advisor shall use commercially reasonable efforts to maintain the continuity of the Licensed Index so that means will exist to facilitate the Trust’s pricing of any unexpired Trust Offering, as applicable. Advisor shall provide the Trust with advance notice of any material adjustments or changes to the Licensed Index.

3. INDEXIQ OBLIGATIONS.

3.1 Approval of Informational Materials. The Trust shall submit to Advisor for its review and approval (i) any proposed names of a Trust Offering; and (ii) all advertisements, brochures and promotional and any other similar informational materials (including documents required to be filed with governmental or regulatory agencies) that in any way use or refer to IndexIQ, Advisor or the Licensed Index (the “Informational Materials”). If any Informational Materials are rejected by Advisor, the Trust shall, to the extent commercially practicable, amend or withdraw from circulation any such materials.

3.2 Trust Offering Disclaimer. The Trust will include the following disclaimers and limitations in each of its Investment Management Agreements, its Informational Materials and any contract(s) relating to the Trust Offering(s):

“The Trust Offering(s) is not sponsored, endorsed, sold or promoted by IndexIQ Advisors LLC (“Advisors”). Advisors makes no representation or warranty, express or implied, regarding the advisability of investing in securities generally or in the Trust Offering(s) particularly or the ability of the [ ] (“Index”) to track general market performance. Advisors has no obligation to take the needs of the Trust or the owners of the Trust Offering(s) into consideration in determining, composing or calculating the Index. Advisors shall not be liable to any person for any error in the Index nor shall it be under any obligation to advise any person of any error therein.”

4. CHARGES, PAYMENT, AND TAXES.

4.1 Consideration for Services. Advisor hereby acknowledges the receipt and sufficiency of the consideration provided by the Trust hereunder.

5. TERM. This Agreement will commence on the Effective Date and shall remain in effect until the earlier of: (i) the expiration of thirty (30) days following IndexIQ’s written notice that it is terminating this Agreement without cause; or (ii) the termination of the Agreement in accordance with Section 6 below (the “Term”).

6. TERMINATION.

6.1 Termination for Material Breach. Either party may terminate this Agreement if the other party is in material breach hereunder and has not cured the breach within thirty (30) days after written notice specifying the breach.

6.2 Termination for Licensed Index Cessation. In the event that Advisor (or its agent or representative, as applicable) determines to cease to calculate or publish the Licensed Index, and the License Agreement is thereby terminated, then this Agreement shall also terminate. Advisor shall use commercially reasonable efforts to give the Trust at least three (3) months prior written notice of such cessation. Notwithstanding the foregoing, the Advisor shall not have any liability to the Trust arising out of the termination of this Agreement due to the cessation of the Licensed Index.

6.3 Termination upon Insolvency. This Agreement may be terminated by either party immediately and without notice in the event the other: (i) admits in writing its inability to pay its debts generally as they become due; (ii) makes a general assignment for the benefit of creditors; (iii) institutes proceedings to be adjudicated a voluntary bankrupt, or consents to the filing of a petition of bankruptcy against it; (iv) is adjudicated by a court of competent jurisdiction as being bankrupt or insolvent; (v) seeks reorganization under any bankruptcy act, or consents to the filing of a petition seeking such reorganization; or (vi) ceases to do business itself or through a successor.

6.4 Effect of Termination. Termination of this Agreement shall not relieve either party of any obligation accrued prior to the termination date. Termination shall not effect the obligations of the parties under Sections 1.2, 2.2, 2.3, 4, 6.4 and 8-11.

7. REPRESENTATIONS & WARRANTIES; COVENANTS.

7.1 Advisor Representations and Warranties. Advisor represents and warrants that: (i) the execution, delivery and performance of this Agreement by Advisor is within its powers and authority and constitutes the legal, valid and binding obligation of Advisor; and (ii) the person executing and delivering this Agreement on behalf of Advisor has been duly authorized to do so.

7.2 Advisor Representations and Warranties. The Trust represents and warrants that: (i) the execution, delivery and performance of this Agreement by the Trust is within its powers and authority and constitutes the legal, valid and binding obligation of the Trust enforceable against the Trust in accordance with its terms; (ii) the person executing and delivering this Agreement on

behalf of the Trust has been duly authorized to do so; (iii) it is duly registered or licensed with the Securities and Exchange Commission as an investment adviser pursuant to the Investment Advisers Act, as amended or revised from time to time.

7.3 DISCLAIMER; ACKNOWLEDGEMENT. (a) THE WARRANTIES SET FORTH IN THIS SECTION ARE THE SOLE AND EXCLUSIVE WARRANTIES BY ADVISOR WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND TITLE, AND ADVISOR EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES. ADVISOR DOES NOT WARRANT OR MAKE ANY REPRESENTATIONS REGARDING THE USE OR THE RESULTS OF A PRODUCT, IN TERMS OF CORRECTNESS, ACCURACY, RELIABILITY OR OTHERWISE.

(b) The Trust acknowledges and agrees that:

     (i) The Advisor’s duties under this Agreement are strictly limited to licensing the Licensed Index;

     (ii) The Advisor makes no guarantee, expressed or implied, as to the performance of any Trust Offering to which the Trust elects to use or apply the Licensed Index;

     (iii) The Advisor makes no recommendation or claim as to the suitability of the Licensed Index for application to any Trust Offering; and

     (iv) The Advisor is not liable for any inaccuracy in the data on which the Licensed Index is based.

8. LIMITATION OF LIABILITY. IN NO EVENT SHALL THE ADVISOR BE LIABLE FOR ANY LOST OR ANTICIPATED PROFITS, OR ANY INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL, RELIANCE OR CONSEQUENTIAL DAMAGES, REGARDLESS OF WHETHER IT WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

9. INDEMNIFICATION.

9.1 Indemnification by the Trust. The Trust shall indemnify, defend and hold harmless Advisor and its officers, directors, employees, agents and representatives (the “Advisor Indemnified Persons”) from and against all claims, actions, suits, damages, costs, reasonable expenses (including, but not limited to, interest, penalties, reasonable attorneys’ fees and other expenses of litigation), judgments, fines, settlements and/or liabilities arising out of, or alleged to arise out of, any third-party claim regarding (i) any use of the Licensed Index by the Trust; (ii) any Trust Offering; or (iii) any edit, modification or other revision to the Licensed Index by the Trust.

9.2 Indemnification by Advisor. Advisor shall indemnify, defend and hold harmless the

Trust and its officers, directors, employees, agents and representatives (the “Advisor Indemnified Persons”) from and against all claims, actions, suits, damages, costs, reasonable expenses (including, but not limited to, interest, penalties, reasonable attorneys’ fees and other expenses of litigation), judgments, fines, settlements and/or liabilities arising out of, or alleged to arise out of, any third-party claim that the Licensed Index, when used by the Trust as authorized hereunder, infringes any third party intellectual property right. In the event of an infringement action against Advisor with respect to the Licensed Index, or in the event Advisor believes such a claim is likely, Advisor shall be entitled at its option to: (i) appropriately modify the Licensed Index; (ii) obtain a license from the third party to allow the Trust to continue using it in accordance with this Agreement; or (iii) if neither (i) nor (ii) is commercially practicable, terminate this Agreement. THE FOREGOING STATES HOLDCO’S SOLE LIABILITY, AND INDEXIQ’S EXCLUSIVE REMEDY, WITH RESPECT TO CLAIMS OF INFRINGEMENT OF THIRD PARTY PROPRIETARY RIGHTS OF ANY KIND.

9.3 Indemnification Procedure. The indemnified party shall promptly notify the indemnifying party in writing and in reasonable detail outlining the basis for indemnification with reference to the applicable provision(s) of this Agreement, of any claim, demand, action or proceeding for which indemnification will be sought under this Agreement, and if such claim, demand, action or proceeding is a third party claim, demand, action or proceeding, the indemnifying party will have the right at its expense to assume the defense thereof using counsel reasonably acceptable to the indemnified party. The indemnified party shall have the right to participate, at its own expense, with respect to any such third party claim, demand, action or proceeding.

10. CONFIDENTIAL INFORMATION.

10.1 Definition. By virtue of this Agreement, each party may have access to information that is confidential and/or proprietary to the other party. All such information shall be deemed the “Confidential Information” of a party, except for information that

(i) is or becomes generally available to the public other than as a result of disclosure by the receiving party hereto; or

(ii) is already known by or in the possession of the other party at the time of disclosure by the disclosing party hereunder as evidenced by written documentation in the receiving party’s possession prior to receipt of the Confidential Information.

Notwithstanding the foregoing, the Trust acknowledges and agrees that Advisor’s Confidential Information includes, without limitation, all of Advisor’s marketing or promotional materials relating to the Licensed Index or any other offering of Advisor, its business policies or practices, financial information, technical information, computer systems, infrastructure designs, data, software output, algorithms, processes, methods, analyses, compilations or studies, and the terms of this Agreement.

10.2 Nondisclosure. Each party shall treat as confidential all Confidential Information of the other party and shall use reasonable efforts not to disclose such Confidential Information to any third party. Without limiting the foregoing, each of the parties shall use at least the same degree of care which it uses to prevent the disclosure of its own confidential information of like

importance to prevent the disclosure of Confidential Information disclosed to it by the other party under this Agreement. Each party shall promptly notify the other party of any misuse or unauthorized disclosure of the other party's Confidential Information.

10.3 Required Disclosure. Either party may disclose the other party’s Confidential Information to the extent required by law or court order, provided that the receiving party provides the disclosing party reasonable advance notice of its intended disclosure, and the receiving party continues to protect the information in its possession after the required disclosure.

10.4 Termination/Expiration. After termination or expiration of this Agreement, each party shall return to the other party any Confidential Information received during the term of this Agreement.

11. MISCELLANEOUS.

(a) Relationship Between The Parties. This Agreement shall not be construed as creating any agency, partnership, joint venture, or other similar legal relationship between Advisor and the Trust; nor will either party hereto hold itself out as an agent, partner, or joint venture party of the other party. Both parties hereto shall be, and shall act as, independent contractors. Neither party shall have authority to create any obligation for the other party, except to the extent stated herein.

(b) Notice. All notices, including notices of address change, required to be sent hereunder shall be in writing and shall be deemed to have been given when delivered by hand, mailed by registered or certified mail or sent by overnight courier, if to the Trust, to the President at the address written above and, if to Advisor, to the Chief Executive Office at address written above. All notices shall be deemed delivered when actually received if personally delivered, on the next business day following the day that they are sent by facsimile, or five (5) days after having been placed in the mail, addressed in accordance this Section.

(c) Waiver. No waiver shall be implied from conduct or failure to enforce rights. No waiver shall be effective unless in a writing signed by both parties.

(d) Force Majeure. Neither party shall be in default or otherwise liable for any delay in or failure of its performance under this Agreement (other than payment obligations) where such delay or failure arises by reason of any by fire, flood, earthquake, elements of nature or acts of God, acts of war, insurrection, terrorism, strike, compliance with any law, regulation, or order of any governmental authority, or any other cause beyond the reasonable control of such party.

(e) Severability. If any provision of this Agreement is held to be invalid, void or unenforceable, such provision shall be deemed to be restated to reflect as nearly as possible the original intentions of the parties in accordance with applicable law, and the remaining provisions of this Agreement shall remain in full force and effect.

(g) Assignment. The Trust may not assign this Agreement, by operation of law or otherwise, without the prior consent of the Advisor, which may be withheld for any reason, or no reason at all. Advisor may, without the Trust’s consent, subcontract any of its obligations

hereunder and otherwise assign the right to monies due or becoming due. Either party may also, without the other party’s consent, assign this Agreement in the event of any corporate restructuring, a sale of all or substantially all of such terminating party’s assets or stock, or a merger or consolidation with or into another entity. Any attempted assignment without such written consent shall be null and void. This Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns.

(h) Governing Law. This Agreement and all claims related to it, its execution or the performance of the parties under it, shall be construed and governed in all respects according to the laws of the State of New York, without regard to the conflict of law provisions thereof.

(i) Entire Agreement. This Agreement and all exhibits referenced herein shall constitute the complete agreement between the parties and supersedes all previous agreements or representations, written or oral, with respect to the subject matter hereof. This Agreement may not be modified or amended except in a writing signed by a duly authorized representative of each party. It is expressly agreed that any terms and conditions of any purchase order or similar instrument of Advisor shall be superseded by the terms and conditions of this Agreement to the extent that such terms may be in conflict.

(j) Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts which, when taken together, shall constitute one and the same instrument. Facsimile signatures shall have the same effect as original signatures.

(k) Mutual Negotiation. The parties hereto agree that the terms and conditions of this Agreement are the result of negotiations between the parties and that this Agreement shall not be construed in favor of or against any Party by reason of the extent to which any party or its professional advisors participated in the preparation of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the Effective Date.


IndexIQ Advisors LLC	IndexIQ ETF Trust


By	By

Adam Patti	Gregory Bassuk

Name	Name

Chief Executive Officer	Secretary

Title	Title

Schedule A

Licensed Index

IQ Hedge Multi-Strategy Composite Index

IQ Hedge Global Macro Index

IQ Hedge Long/Short Index

IQ Hedge Event-Driven Index

IQ Hedge Market Neutral Index

EX-99.(I) 14 e33444ex23i.htm COUNSEL'S OPINION

Exhibit (i)




	575 Madison Avenue New York, NY 10022-2585 212.940.8800 tel 212.940.8776 fax

February 4, 2009

The Board of Directors of the IndexIQ ETF Trust
800 Westchester Avenue, Suite N-611
Rye Brook, New York 10573


*Re:*	IndexIQ ETF Trust (Registration Nos. 333-152915 and 811-22227): IQ Hedge Multi-Strategy Composite ETF IQ Hedge Macro ETF IQ Hedge Long/Short ETF IQ Hedge Event-Driven ETF IQ Hedge Market Neutral ETF *(each a “Fund” and collectively the “Funds”)*

Ladies and Gentlemen:

We have acted as counsel for IndexIQ ETF Trust, a Delaware statutory trust (the “Trust”), in connection with the Trust’s filing on August 8, 2008 with the Securities and Exchange Commission (the “Commission”) of its Registration Statement on Form N-1A (as amended, the “Registration Statement”) under the Securities Act of 1933 (the “1933 Act”)(No. 333-152915) and under the Investment Company Act of 1940 (No. 811-22227) and the Trust’s filing on February 4, 2009 with the Commission of its Pre-Effective Amendment No. 1 to the Registration Statement, relating to the issuance and sale by the Trust of an unlimited number of authorized shares of each of its Funds (the “Shares”).

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such instruments, documents and records as we have deemed relevant and necessary to examine for the purpose of this opinion, including (a) the Registration Statement, (b) the Trust's Declaration of Trust, as amended to date, (c) the Trust's By-laws, as amended to date, (d) resolutions of the Board of Trustees of the Trust related to the Shares and the Funds; (e) the pertinent provisions of the constitution and laws of the State of Delaware; and (f) such other instruments, documents, statements and records of the Trust and others and other such statutes as we have deemed relevant and necessary to examine and rely upon for the purpose of this opinion.

In connection with this opinion, we have assumed the legal capacity of all natural persons, the accuracy and completeness of all documents and records that we have reviewed, the

February 4, 2009
Page 2

genuineness of all signatures, the authenticity of the documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified, conformed or reproduced copies.

Based upon the foregoing, we are of the opinion that the Shares proposed to be offered and sold pursuant to the Registration Statement, when it is made effective by the Commission or otherwise pursuant to the rules and regulations of the Commission, will have been validly authorized and, when sold in accordance with the terms of the Registration Statement and the requirements of applicable federal and state law and delivered by the Trust against receipt of the net asset value of the Shares, as described in the Registration Statement, will have been legally and validly issued and will be fully paid and non-assessable by the Trust.

This opinion is given as of the date hereof and we assume no obligation to advise you of changes that may hereafter be brought to our attention. This opinion is limited to the Delaware statutory trust laws governing matters such as the authorization and issuance of the Shares, the applicable provisions of the Delaware constitution and the reported judicial decisions interpreting such laws, and we do not express any opinion concerning any other laws.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, to be filed with the Commission, and to the use of our name in the Registration Statement under the caption “General Information” in the prospectus that is a part thereof and under the caption “Counsel and Independent Registered Public Accounting Firm” in the statement of additional information that is a part thereof and in any revised or amended versions thereof. In giving such consent, however, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act, as amended, and the rules and regulations thereunder.


	Respectfully submitted, /s/ Katten Muchin Rosenman LLP KATTEN MUCHIN ROSENMAN LLP

PJS/mb

GRAPHIC 15 indexiqetf-opinion3x1x1.jpg GRAPHIC begin 644 indexiqetf-opinion3x1x1.jpg M_]C_X``02D9)1@`!`0```0`!``#_VP!#``$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0'_ MVP!#`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$! M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0'_P``1"``U`)<#`2(``A$!`Q$!_\0` M'P```04!`0$!`0$```````````$"`P0%!@<("0H+_\0`M1```@$#`P($`P4% M!`0```%]`0(#``01!1(A,4$&$U%A!R)Q%#*!D:$((T*QP152T?`D,V)R@@D* M%A<8&1HE)B7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#]0O\`@TU_ M:E^,/QG_`."7O[17QD_:S_:(^)_Q>U'P'^V-\6K.]^)_[07Q6\7?$75/"7PY M\+_L]?LY>*KFQD\7_$/7=:OM&\':#/JGB/Q"]B+^WT?3KC4M:U00Q37U[-+^ M$'[\1:MH7@/QW\)/B'\ M0/@/J'Q$TC2;2"7XC?M!_&#Q-X;U7PYXIM/AGHEK:7]UX)\'WZ1WK:''I<@\ M+S_$GQ9;^';3^>/X>?\`!4OXR?!W_@E;\1?^"8?PHAF\&^&OCM^TWXT^-WQV M^(]CJ4T.N^+OA_J_PU^"G@K0O@UI*VYA?1_#VH:Q\,]5UKXBW)DFN/%>DSZ# MX31[3P[-XPT[Q+_I.?\`!N[_`,$E/@G_`,$YOV/O"/Q0TS6_A_\`&#]H[]IK MP7X<\<_$OX_>!-6@\5>%+SP7K]M:>(_!_P`-?A3XEM;N[TN^^&V@V]Q:W]UX MDT40?\+(\2,_B;4))=(L?!NC^&@#]@_V2/V>+G]EKX`?#WX+ZI\9?C/^T'XD M\+:-:KXO^,WQ\^)/CGXH?$?XB>+Y[:`^(O$]_K'CWQ/XMU+0M-U34DFN=(\% MZ3JI\.^%;&2+3-+A;RY[R[^DLCU''7VK\L_^"RGPH_;T^,7[!7Q4\,?\$X?C M%J_P?_:5T^:P\2Z>?#3Z=I'B_P")GA'1[35#XC^%/@KQ]?W=C)\+_&'B5[C3 M=2\/>-].O;"\74-!B\+RZMH.F^)]0U_2_P",T_\`!FU^WY\3_AKJ?QA^-7[; MOPZNOVF-1\/2>)(_AWK%EX[^)\;0^)_ASX3\%O$/A'3M&EM)_$EA>2Z>D M-KJ]\DL-JT<<[.CR!FC4C\_/^#.?_@IA\?O'WQF^,G_!/OXU?$;Q;\3?A\GP MBU+XX_!*^\>^)]8\3ZM\.]9\'>*O"?AKQ?X`\,W6KOJ%]#X5\7:5XWA\61:* M;^WT7P[JO@[5;O2;".^\8:Q+<_@K_P`%_?\`@ES\7/\`@FE\,O$=U;VT- ME;W.O>)_!.AZWJ]Q!9VZI;VD,VH7UQ)%;0(L,",L42JB*!_&[_P#/&U]/XUUW MXQ?'CP=J-]%JOB+3KR]M[270O`?AR"/3XI5M8IK:>Y2,37<[-ZO_`,$7_P#@ MWZ_:3_97\:^`_P!K?QA^W9_PLWP7\4OV3O$NB:1\*_\`A'O'MI_PC5Q\IZ3-_PA?]HQ#;;:5;//Y'^A/997;_%K_P`%J_\`@FU\5/\` M@EO^U/X!_9_^+O[0W_#2WB3QA\`/"WQBL?'7]F>(]*_LG0_$'Q%^*O@JV\)? M9_$_B+Q+?O\`8;_X?:EK'G0W\-HW]O>7':1S1W$TX!_L>_"O7M2\5?##X<>) M]9ECFU?Q'X#\(:]JLT426\4NI:QX>T[4+Z6."(+%#')=7$KI%&H2-2$0!5`K MO*_D]_X(7?\`!"/]H?\`X)Z?'W2/VMOB9^VU_P`+Z\%^._V;K_PEI_PL_L#Q MQIW]B7OC^\^'GBW3=5^V:_XWU[2I/["LO#USI>R#2H)I/M^^"6")9(I/Y[O^ M"@_[?O[='_!>K_@JVW_!-/\`8[^+.N?"G]F.P^)_CCX/^%['PAXA\5^'?!?C MKPG\-;O79_B+^T1\;IO#UZEYXQT2ZTOP]JFM^#/#&HQ6>C6>@0^$]#LM!M?' M>MZSJNK@'^FGD>OO^'K17^6I_P`%'_\`@AG^VI_P;_?#;P#^W)^S-^W=XC\8 M:7:>/?"G@_QMXF^%_AKQ/\`/&7@+Q+K4&N7/ARZO]*LOB-X]TCQW\/KR[T^7 MPYJ$NL:E9&>_\0V6DW_@V\TC4]1N(?Z^_`/[>?B3_@H'_P`&T7[1?[7FLO\` MV#\6=<_X)R_MKZ)\1YM"SH_V+XN_"GX/_%OP3XE\2Z(FGM&NB6_B76/#4?CW M0+/3[AFT+3_$.G6`G6[L91&`?T84F0>A!_&O\B/_`(([_`W_`(*Z_P#!3>U^ M,O['O[)O[3?CCX4?L_3:OX-\;?M6_$[7/B3XGTG2M+L=2T?QAH7@3PUK]_HM M]`_VB(?%^K7_`(:\&?'/0_$OPXO/%'@;PO\`$GPQIGC/7M`\ M3?"KXI^#+G4;EK[3+N70-3TS6=-O)O$&AZCX9\46-Y97D6KR:GIFC`'^O717 M/>$?%&D>-_"GACQIX?FDN=!\7^'M%\4:)<30O;RSZ1K^FVVK:;-+;R`2022V M5W"[PR`/$S%&&Y370T`%%%%`!1110!_EV_\`!+[_`((U^%O^"I/_``0/_:1\ M8_#OP[%'^VE\`OVV?C1K'P%U^SDMK.Y\>:7#^SW^RMK&N_`_Q'+=3VME=Z5X MN6.[?P=>:A--)O-%\4?";X[ZCXJG;6/V?_%$>I-97>F:/ MXY\476OQ^'--U6P_MO0/BQ=?\(F4DMO%UM!X<_I._P"#;/\`X)R?M+_\$Q/V M&_BM\!/VJ=*\(:1\0?%W[5_CCXO:-;>"O%MGXRTJ3P;KWP@^!?@S3Y[C4[*" M"*#4&UOP#XACEL&0R16\5K<%BMT@'Y6_\'`/_!L_\3_VS?VB=)_;,_X)[0>` M=`^*WQ$N[:V_:%^&WB#7[?X?:/K/BC3+2>73?CCX9UOR9+&V\3:M'9V.B^/- M+CAM)M9UB+2_&T)N==U+QEJ%V`?KA_P<,_\`!6SQE_P29_8]\,>-?@WH7ACQ M!^T%\=/'MQ\,?A_P##W@VSLO#NHZ[XO^)-[H<%Q:'Q'<>%X$T73-&T M2XNX--D\0^)M(U+68]4T;3+_`$'5OYFOV(?^"67_``6T_P""W7P4\*_MD?M5 M?\%7?B_\"?A#\3;K6M8^%7A\:AX\\3ZIK-EI&J:OH,WC73?@1X"\;_!+X5>` M-!UC4K;4;+P[?66H6NMZSHL!U--$@\-7'AN[UC]4/VN?^"0W_!27_@J5_P`$ MD?@[^SI^V(GPK\`_M^?L?>-+/4OAA\5;CXB0>.O!?[1G@JV\%W?A>_M?&WB' M0M*N-<\">./$MF=&/B74I](UK3M7\5^#M$\037<=KXJUJ'PG^,O[&_\`P2\_ MX.I[KX?V/_!/N3XD_$7]C+]CK3I=2T'Q/KOB/XL_!N_T3PCX5\4:L^H>*M'\ M!:S\+O$GBCXP>);+4UO-9O+?POX*\2:?X'NI[J_TO5M=\.6NO3S70!\I_P#! MG1_REYO?^S4/C3C_`,*'X:5]]?\`!\+_`,EP_P""?W_9*?CI_P"I=\/O\_A7 MUQ_P09_X("_M^_\`!,G_`(*;ZC\>OC!H/PQU7X`#X=?&;X7Z?XOT+XFZ7?\` MBF73M=O=+O?!?B&;P=;6#W`FU@>&M/M]1TW[7%_9)U:6=[B46!@N/T+_`.#F MS_@B[\;_`/@J;\*?@;\3?V5V\.ZK^T!^S5)\0;&+X:^(]>T_PI'\6?`OQ#7P MM=76CZ%XHUV2V\-:5XQ\,ZYX1L[KP_!XGU;PSX:U#3O$/B;^U?$5I=VFC03@ M']`'['#*_P"R)^RLZ,&5OV"_VO/V6-8_:E\4_$SP9 M^QY^S3<2^"_$OP[^/7[0?AK4O"&N_#4>$M3\%W&@>&O`7P\U[QQK7CCQ3X9T M+6H[OX;>)/%>F1^'[+4=(TW3H/'.G:;;74,7V;_P+=G]*_P`;#_@EW_P3U\'?MQ?\%$?#_P"P7^T!\6M:_9QU[Q+- M\5/"T&O6WANV\3:K'\5OAKI6LZQ<>!9]/U&]TO3HKS48_#/B2SCEO]5L!-J= MG;:9927>KZAI^FWW]EO_``0L_9>_X.1?`7[8WP7\:?MU^)/BEH?[&7PL^&?C M3X8ZW\/OC=^T%X4UF#5O#]QX4?1_!]OX2^&W@37O&VH:OXP\+>+-$\&:A9>* M?B!IFB9\*6FNV.D^-'.JW%C?X?\`P6;_`.#8'X^?$?\`:?\`&G_!0[_@EE\0 M=(\-_&#Q/XT3XS>)?@/=^)(_A3XDT_XR6MS9ZK=^/?V??BC$UAH&E^)?%OBN M%_&VJ:/\0=;\%V>C^+;K7]?TOXB?9=3TGPEHH!F?\0/7P0_Z2!?%7_PQ7A'_ M`.>%7ZZ)_P`$V/#_`/P2G_X(!?\`!2G]E7PO\6=?^,VD1_LE_M]?$:'Q=XC\ M-6/A.^AE\8?LW>*HKC1H](T_5]:MDM;*31FN([A;P//+>S%X49=S_P`V\/[, MO_!YO^TO!_PH'X@_$3XU?#+P(TA\*^)O'?B+XV_LY?"[2[#2[AKTW-UK'Q#^ M#&KR_%WQWH]P8YK*_NO!Z^.[J\LKFWM;B&?29T%?V&VW[&W[3]C_`,$2_'_[ M!7Q%^)7ACXY?M3ZE^P!\;/V8[;XAP3:MHGACQ=XU\4?!_P`;?#SX=17^M^*9 MKK6KB#3K/5?"_A[7/&^O1VVH>([C3;_QCJ.D:3/J.[#QM]I_X5?_`,+_`/\`A*_[4^PV MUO\`V9Y/_"Q/#?V+S=_VSS;O9M^RON\*_P"#ES_@B1^W7_P5$_:9_9\^*7[* M7A_X;:QX3^''P*O/`'B:;QM\1=-\&7T7B*;Q_P")/$216=E>VEQ)=VO]FZG: MN;I&5!,SQ8W(30!_6!^R_P#\FT_L\?\`9#/A+_Z@/A^O#?AAX!\*ZW':SKK^'O"FDZ1J26]R@"W$"7EG,L,Z@++&% MD4`,!7I]`!1110`4444`?)^[]N;_`)Y?LG_]_P#XO_\`R/1N_;F_YY?LG_\` M?_XO_P#R/7P-\*?^"F?QQ7]B6W_X*#_&;]F;Q1XI^%_QW\::;K7[,_P&_9KM M_!7BOXL^`_V=-:\/ZIJG@_XE_M'_`!-^('QC\&_!R'5O&]EH4OBN\M_#VI^' M]*\"+XP\!_#%I?&7CR^OY8_*OAA_P7'F^/7[2OP.\&?`']CC]I+XN?L^_''] M@/XA_MB^%?%/AOPY\)K3XG:KKG@WQ3X/T3_A&=.TKQ+^T!X>\-QZ-I&KZMJW MP<\4M?SQ7J_'75?!-GH6H:E\,+K7_B%I0!^IV[]N;_GE^R?_`-__`(O_`/R/ M1N_;F_YY?LG_`/?_`.+_`/\`(]?D+\,?^#@?P58?L>_`3X^_M)?LR?&SP+\6 M?V@?'7Q-\%_#+X1^'9/@=H%_%=Y\0?&/A/Q1=_$O5[;P]X0\*^(=/U#3-2F]*\;_`/!P?^R+X?\` M!/A3XF>`/@M^UI\>?AIK7[)OP\_;6\7?$/X._#OX=:QX/^$'P(\;_$?XG_"K M6KWXIZEXB^+GABYT7QI\-?&WPA\:Z%XV\$Z+8>(=5DU&R\CPFWB>+3/%=SX9 M`/TPW?MS?\\OV3_^_P#\7_\`Y'HW?MS?\\OV3_\`O_\`%_\`^1Z^!?VB?^"F MWQ'^!O\`P5__`&2/V%3X0\%WG[-OQT^#FC:S\2OB==Z=K7_"9>`_BW\6=7^/ MFB_L]:;::O#XHBT3_A%_B'XB^`6N>"&M9_!E_/%XGUS04G\2:8VJZ3IVI?+G M[,O_``7IN/&/Q!_;\O\`X_\`PJOM-^"'P._:N_97^"7[*VI?"CPD[>+OBA\* M?VM/BK\2/@K\)_C+XFO_`!Q\2=.T'7_#'B;Q5\/9_%)U3PS9^'I-'\'7@2VT M#Q-JR1Q2@'[.[OVYO^>7[)__`'_^+_\`\CT;OVYO^>7[)_\`W_\`B_\`_(]? M''Q"_P""S'[//@WQ1\0?A?X8^$/[2/Q<^._A+]K3Q5^QEX-^!'PU\&>!=3^( M/QG^*_@7X3>&?C9XVU[X<2:M\2M'\+6WPQ\&?#SQ39ZWXI\7_$+Q%X%N],CL MM26/0+MET\:C\#S?\%P_&'P%_:__`&X;C]ICX#?MB6W[*GPU^%__``3Z\>6G MAZU^#/P;EO?V&M*^.6A>-+'XI>(_VD];\.>.8]9EG\0>*-2\#W:>%?#WBSXT M^(;;3_"_BZZ\%:!;V&B:_%<`'[?[OVYO^>7[)_\`W_\`B_\`_(]&[]N;_GE^ MR?\`]_\`XO\`_P`CU^;%W_P6$\.?!#6/CII7Q,\&_M!?M(^(Y_\`@J'\2OV" MO@=\.O@'\#/ASHWBVQ\1^&/V=_AK\9=%\#Q0^(/V@A;>.])DAUG6`GQ9U>_\ M%:AJ&N:V;+6/AUX/\*>'SXBE\+_;!_X+<:YX7\!_\$U_BM\#_%/PD_9?^$O[ M:'Q%_:A\"_&+X@?MM_"'Q7X[O/V?+[]FC3_$&D^)M%\1^!_A7^T!\+K=-=TS MXI>#/$OP^UTVOQ"U>Q,C6VH:5-/Y`@O0#]F]W[C M=^W-_P`\OV3_`/O_`/%__P"1Z_);X,_\%PO%MC\"O@:O[0/['?[0?Q+_`&O? MB'\+?CK\?_%GP4_9(^%MK#=Z9^R]\%_B_J?POTW]J)_`OQ\^*W@WQ5X0\`?% M6./2-1^'W@G4O$?BOQYJ]W>M#9P7VDWFA:SJWT]\*_\`@M/^RI\<_P!HN'X# M_!KPS\6/B'X9L/@GX&_:`\>?M%:;;_"W1/@K\+OAI\2/@Y)\=/"'B/QQ;>+_ M`(I^'?C#!I$W@B)+'7]9T3X3ZUI/A;QSJ&E^!=:O+?Q"=:M=#`/LO=^W-_SR M_9/_`.__`,7_`/Y'HW?MS?\`/+]D_P#[_P#Q?_\`D>OR^^'7_!Q3^Q+\1_`7 MQ[^(6E^`?VA+?3O@A\)/!_[0&F:!#HGPB\1^-?C+\$/''Q*T#X4:/X\^&?A3 MPA\9=?U*QNK?Q9XJ\,'6?`/Q17X')I_"K:IJG]CV_JTO\`P6L^ M$VG?#_Q_XB\0_LE_MLZ#\4_AY^U7\+OV0=4_9AN?AU\*KG]H&]^)OQR^'>G_ M`!3^#>H6&@6GQJD\%CPOXZ\':QI5S'?7WCNSU#0KNYE.N:79:/:2ZW0!]U[O MVYO^>?[)_P#W_P#B_P#_`"/Z?X>]&[]N;_GE^R?_`-__`(O_`/R/7P5^RQ_P M6[^"7[5GCOX9^!?#7[,7[9'@%OBMI7[05MX5\3_$3X)?[?M-8TK2^%L?\` M@X"_9GC^&O[0/CCQ7^S=^V1X-\7?LW?$S]F?X9>/O@9>>!?@_P"(OC%=ZG^U MWK&M:+\#[[PWIG@OXY>(_!^K-J][X?U>T\1^&#XTM_''AG5+"?2)_#%W?2V$ M=\`?I?N_;F_YY?LG_P#?_P"+_P#\CT;OVYO^>7[)_P#W_P#B_P#_`"/7S!X5 M_P""LGP;U[]C/]KK]LKQ!\&?VAOAMIW[#_B[XH^`/VA/@;X_\,>!M-^-GAGQ MK\)_#/A/QIKWA_3K+2?B'K7P\UN34O"GCGPIK6AZE8_$)]%O(=56&74K:>WN M$C^R_&G[2'@WP-^TE\`_V8-4T?Q/<^./VA_A[\?/B1X0UK3[;2I/"FDZ-^SO M=?!VT\86?B2ZN=7MM7MM3U:3XU^&6\-1:7HNK6MRFFZZ=4N]):#3UU$`/`Q_ M:M/BG2_^%E1_L]KX*_TW^VCX'E^([>*1_P`2Z[_L[^RUUZ%-).=6^P?;?M;# M&G&[,'^DB$$KXG^`G_!7CX$?'?\`:SUS]D2/X2_M!_#7Q4/B]^U;\#?AI\3/ MB#X8\!_\*C^-GQ(_8P\2MH'QU\/?#W6?!GQ'\8>+K"?0K*.?Q5IMS\1/!/@7 M3=5\/P2107Z^(WM_#\Y0!\P?$;_@@7\*]=^'MO\`!7X7?'_Q7\-_V?O"7[5S M_M6?![]G;Q=$_@_\??@3$=:\8^'_%OAWXP^`-,^%'Q=T#7/`_BWP)X@;QI MKGC/X2Z+XXT/7M/^!'Q*O+KQ5X>L-?L+V\\.S^M?LT?\$>[3]D;6?V#M=^"' M[4'CK1;_`/8X^"7Q%_9D\:G7?AUX%\20?M"?L_?$CXKZ/\;M7\&:C%?%3\,O M$4?Q$\,^&IT\<>%GU'4#X&- M/_;-O[CQ9^RC\0/C7KW['/BGQI^RW\#OB)X>^$OPW^/_`/:LWQ-^$_Q*^'?B MU;[0_CG8^(-2N-`UAO%VHWG@SQ'I.I^$-#N/#$GA[_3%N?HKX@?\$A_`_P`2 MOA_\=?!GB3XS^((M1_:#_P""?_@']@_QOXA\,_#+X6^!+.&T\(?$?XV?%+6/ MB[H7@;P!H7A7P-H?B'Q;XI^.7B.:\\+:1H5AX?LH[&SE5[R^N;^]N"B@#I_V MG_\`@E3X)_:*!X9\;?L!?$C M4_B+\"?C)K6EZ_(+#QG?W!N[#PQXZ\(WZ:?9^(]#TF&6VUO2-7N;G4F**`*= MC_P0[N/#FIZI\9/!_P"W%\:=-_;+M?VH?%_[8'@']I[7/AM\(-;A\,_%[XL? M`7PQ^S_\;-$\0_!C3M`\-^`?%_PD^(/A/0;A+'P7:MX5\1>#[*72=,TWQ[>/ MI^L:CXF]`^)G_!&W2OC5\.?V_/"7Q<_:C^)'C?QI_P`%#?@[^RE\*?B[\3I/ M`/PY\.ZII-U^RR/$QTOQ?X?\,>%=/T7PI#>>,W\33C4](CTVTT[2H;.V2R,\ MK3W$I10!W#?\$C?ATWQATGXP?\+>\:_VEI/_``4W\5_\%-8]'_L/0OL,WCKQ M7\!?#/P&N/AB\^_[0OA*TTGPU!K\.KJ#K#ZC=2VKK]F1"<*X_P"",OP3UJP_ M9#\/^,?'WB/QGX/_`&4_C)^W=\5Y?"&N^'=#ET7XN:?^WOX@^+^M?$CX?^-8 M5D#6OAO0;/XQ:WH6G2:<3=:KIUE;_P!HA9+B?!10!XQ:_P#!#G7?AM/\*O$W M[,G[>WQN^!7Q4^$'P(^(O[%_A7XI7WPZ^&OQ8\1K^PEXO^(\7Q(\#_L[7!\8 MPQR+KOP)U&?A!\7;:]@UK1=-M;*WUKP]KT%I%;C9E_P""$/P;N/C!^S#K M=U\6;^Y_9Y_9*^%MC\*OA9\&E^#_`,*M+^*TWA:W^!^I_`W5_!?C#]K/P_I6 MC_%WQ?\`"/QOIGB7QEXX\=_"_7H;ZRUGQ[XEENM*UO0/"^FZ=X5A**`'_"__ M`((EQ>!/V=?BK^RIX@_:CE\7?!OQ#X&^&GPJ^#_]E_LO_L^?#KXG?#7X;?"[ MQEX`\9:%I_C[XL^"]`L?%_QS\52R_#[3=$O?$NOW'AC3+_2FAU#5O"NI^+K, M^*+KZC\6_P#!,CP+XL_:`^)'Q_N/B?XMM-8^(_[:/[*'[:%[X?AT?1WTW3?$ M_P"RC\"M`^!7A[P5:W3O]JFT'Q9I.@0Z]K.H3`:A9:C<26UBK6R*:**`/)/` M'_!&WX;^`?#?P\\-6'QR^)PC^'OB_P#X*#>+M/UC3+'0]$U][O\`X*#:=X@T M[Q?]AU*U$S:/>_#1?$$UUX*U2VCEGGO;2UN-1C.UE/RK\#/^#=+X6?!GX?>, M/`__``T1J5\WC[QA^P;XV\33>!OV?O@S\&O#_P#;/[`7Q"\6^,_AY-I7A3X> M6&GVTEY\0;#Q5+8_%+Q-XOU#QEXX\3^)5U#QC<^*V?4+?0]+**`/T`\6_P#! M,/P)XM_9X_X*2?L\7/Q0\6VFC?\`!2/XN_%/XN>-O$4&CZ.^I_#74OBE\*_A M5\*[_2/"UK(_V35K+2M/^%6GZK9SZL4GFO-5O()@(88"<#QY_P`$^OVD?'?C M?]G/XS7?_!0;QC8?'[]G31OVC?".B_%.V_9P^!LEOXC\"_M&R?!"?6_#.J>` MY;'_`(1.UD\-W/P0TJ;2]V!**`/2?V0_^"8_[,?[( M'Q7_`&A/V@/"?@?PEXG_`&A/VBOCO\?_`(R^*?CGK/@CPY:_%#3=&^/GQ,U' JXFZE\*=-\66UO+JP\$>'-2OH;"S@2[MWU>WT[3Y]7AFGM+;R2BB@#__9 ` end EX-99.(J)(1) 16 e33444ex23j1.htm EY CONSENT

Exhibit (j)(1)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Other Service Providers -Independent Registered Public Accounting Firm” in the Prospectus and in the Statement of Additional Information, and to include our report dated January 29, 2009, in this Registration Statement (Form N-1A No. 333-152915 & 811-22227) of IndexIQ ETF Trust.


	/s/ ERNST & YOUNG, LLP

New York, New York January 29, 2009

A member firm of Ernst & Young Global Limited

EX-99.(P)(1) 17 e33444ex23p1.htm CODE OF ETHICS

Exhibit (p)(1)

CODE OF ETHICS
August 28, 2008

IndexIQ ETF Trust (the “Trust”) has adopted this Code of Ethics (the “Code”) in order to set forth guidelines and procedures that promote ethical practices and conduct by all of its Access Persons and to ensure that all Access Persons comply with the federal securities laws. Although this Code contains a number of specific standards and policies, there are four key principles embodied throughout the Code.

I. THE INTERESTS OF THE PORTFOLIOS MUST ALWAYS BE PARAMOUNT

Access Persons have a legal, fiduciary duty to place the interests of the Portfolios ahead of their own. In any decision relating to their personal investments, Access Persons must scrupulously avoid serving their own interests ahead of those of Trust.

Access Persons may not take advantage of their relationship with the Portfolios

Access Persons should avoid any situation (unusual investment opportunities, perquisites and accepting gifts of more than token value from persons seeking to do business with the Portfolios) that might compromise, or call into question, the exercise of their fully independent judgement in the interests of the Portfolios.

All Personal Securities Transactions should avoid any actual, potential, or apparent conflicts of interest

Although all Personal Securities Transactions by Access Persons must be conducted in a manner consistent with this Code, the Code itself is based on the premise that Access Persons owe a fiduciary duty to the Portfolios, and should avoid any activity that creates an actual, potential, or apparent conflict of interest. This includes executing transactions through or for the benefit of a third party when the transaction is not in keeping with the general principles of this Code.

Access Persons must adhere to these general principles as well as comply with the specific provisions of this Code. Technical compliance with the Code and its procedures will not automatically prevent scrutiny of trades that show a pattern of abuse of an individual’s fiduciary duty to the Portfolios.

Access Persons must comply with all applicable laws
In both work-related and personal activities, Access Persons must comply with all applicable laws, including the federal securities laws.

Any violations of this Code should be reported promptly to the Chief Compliance Officer or his designee. Failure to do so will be deemed a violation of the Code.

DEFINITIONS

“Access Person” shall have the same meaning as set forth in Rule 17j-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) and shall include:

1.	all officers and trustees (or persons occupying a similar status or performing a similar function) of the Portfolios;

2.	all officers and trustees (or persons occupying a similar status or performing a similar function) of the Advisor with respect to its corresponding series of the Trust;

3.	any employee of the Trust or the Advisor (or of any company controlling or controlled by or under common control with the Trust or the Advisor) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Covered Securities by the Portfolios, or whose functions relate to the making of any recommendations with respect to the purchase or sale; and

4.	any other natural person controlling, controlled by or under common control with the Trust or the Advisor who obtains information concerning recommendations made to the Portfolios with regard to the purchase or sale of Covered Securities by the Portfolios.

“Beneficial Ownership” means in general and subject to the specific provisions of Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended, having or sharing, directly or indirectly, through any contract arrangement, understanding, relationship, or otherwise, a direct or indirect “pecuniary interest” in the security.

“Chief Compliance Officer” means the Code of Ethics Compliance Officer of the Trust with respect to Trustees and officers of the Trust, or the CCO of the Advisor with respect to Advisor personnel.

“Code” means this Code of Ethics.

“Covered Security” means any interest in a private placement or an initial public offering.

“Decision Making Access Person” means any Access Person who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by the Portfolios, or whose functions relate to the making of any recommendations with respect to such purchases or sales. Decision Makers typically are Advisor personnel.

“Portfolios” means series of the Trust.

“Immediate family” means an individual’s spouse, child, stepchild, grandchild, parent, stepparent, grandparent, siblings, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law and should include adoptive relationships. For purposes of determining whether an Access Person has an “indirect pecuniary interest” in securities, only ownership by “immediate family” members sharing the same household as the Access Person

will be presumed to be an “indirect pecuniary interest” of the Access Person, absent special circumstances.

“Independent Trustees” means those Trustees of the Trust that would not be deemed an “interested person” of the Trust, as defined in Section 2(a)(19)(A) of the 1940 Act.

“Indirect Pecuniary Interest” includes, but is not limited to: (a) securities held by members of the person’s Immediate Family sharing the same household (which ownership interest may be rebutted); (b) a general partner’s proportionate interest in portfolio securities held by a general or limited partnership; (c) a person’s right to dividends that is separated or separable from the underlying securities (otherwise, a right to dividends alone will not constitute a pecuniary interest in securities); (d) a person’s interest in securities held by a Trust; (e) a person’s right to acquire securities through the exercise or conversion of any derivative security, whether or not presently exercisable; and (f) a performance-related fee, other than an asset based fee, received by any broker, dealer, bank, insurance company, investment company, investment manager, Trustee, or person or entity performing a similar function, with certain exceptions.

“Pecuniary Interest” means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in securities.

“Personal Securities Transaction” means any transaction in a Covered Security in which an Access Person has a direct or indirect Pecuniary Interest.

“Purchase or Sale of a Security” includes the writing of an option to purchase or sell a Security. A Security shall be deemed “being considered for Purchase or Sale” for the Trust when a recommendation to purchase or sell has been made and communicated by a Decision Making Access Person, and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation. These recommendations are placed on the “Restricted List” until they are no longer being considered for Purchase or Sale, or until the Security has been purchased or sold.

“Restricted List” means the list of securities maintained by the Chief Compliance Officer in which trading by Access Persons is generally prohibited.

“Security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-Trust certificate, pre-organization certificate or subscription, transferable share, investment contract, voting-Trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, an interest or instrument commonly know as “security”, or any certificate or interest or participation in temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase (including options) any of the foregoing.

“Advisor” means the Advisor to the Trust.

“Trust” means IndexIQ ETF Trust.

PROHIBITED ACTIONS AND ACTIVITIES

A.	No Access Person shall purchase or sell directly or indirectly, any Covered Security in which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which he or she knows or should have known at the time of such purchase or sale;

	(1)	is being considered for purchase or sale by a Portfolio, or

	(2)	is being purchased or sold by a Portfolio.

B.	Decision-Making Access Persons may not participate in any initial public offering of Covered Securities in any account over which they exercise Beneficial Ownership. All other Access Persons must obtain prior written authorization from the Chief Compliance Officer or his designee prior to such participation;

C.	No Access Person may purchase a Covered Security in which by reason of such transaction they acquire Beneficial Ownership in a private placement of a Security, without prior written authorization of the acquisition by the Chief Compliance Officer or his designee;

D.	Access Persons may not accept any fee, commission, gift, or services, other than de minimis gifts, from any single person or entity that does business with or on behalf of the Trust;

E.	Decision-Making Access Persons may not serve on the board of directors of a publicly traded company without prior authorization from the Chief Compliance Officer or his designee based upon a determination that such service would be consistent with the interests of the Trust. If such service is authorized, procedures will then be put in place to isolate such Decision-Making Access Persons serving as directors of outside entities from those making investment decisions on behalf of the Trust.

	Advanced notice should be given so that the Trust or Advisor may take such action concerning the conflict as deemed appropriate by the Chief Compliance Officer or his designee.

F.	Decision-Making Access Person may not execute a Personal Securities Transaction involving a Covered Security without authorization of the Chief Compliance Officer or such persons who may be designated by the Chief Compliance Officer from time to time.

G.	It shall be a violation of this Code for any Access Person, in connection with the purchase or sale, directly or indirectly, of any Covered Security held or to be acquired by a Portfolio:


	a.	to employ any device, scheme or artifice to defraud the Trust;

	b.	to make to the Trust any untrue statement of a material fact or to omit to state to the Trust a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

	c.	to engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Trust; or

	d.	to engage in any manipulative practice with respect to the Trust.

II.

III. EXEMPTED TRANSACTIONS

The provisions described above under the heading Prohibited Actions and Activities and the preclearance procedures under the heading Preclearance of Personal Securities Transactions do not apply to:

Purchases or Sales of Securities effected in any account in which an Access Person has no Beneficial Ownership;
Purchases or Sales of Securities which are non-volitional on the part the Access Person (for example, the receipt of stock dividends);
Purchase of Securities made as part of automatic dividend reinvestment plans;
Purchases of Securities made as part of an employee benefit plan involving the periodic purchase or company stock or mutual Portfolios; and
Purchases of Securities effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its Securities, to the extent such rights were acquired from such issuer, and sale of such rights so acquired.

PRECLEARANCE OF PERSONAL SECURITIES TRANSACTIONS

All Decision-Making Access Persons wishing to engage in a Personal Securities Transaction must obtain prior authorization of any such Personal Securities Transaction from the Chief Compliance Officer or such person or persons that the Chief Compliance Officer may from time to time designate to make such authorizations. Personal Securities Transactions by the Chief Compliance Officer shall require prior authorization from the President or Chief Executive Officer of the Trust (unless such person is also the Chief Compliance Officer), who shall perform the review and approval functions relating to reports and trading by the Chief Compliance Officer. The Trust shall adopt the appropriate forms and procedures for implementing this Code of Ethics.

Any authorization so provided is effective until the close of business on the fifth trading day after the authorization is granted. In the event that an order for the Personal Securities Transaction is not placed within that time period, a new authorization must be obtained. If the order for the transaction is placed but not executed within that time period, no new authorization is required unless the person placing the order originally amends the order in any manner. Authorization for “good until canceled” orders are effective unless the order conflicts with a Trust order.

If a person wishing to effect a Personal Securities Transaction learns, while the order is pending, that the same Security is being considered for Purchase or Sale by a Portfolio, such person shall cancel the trade.

REPORTING AND MONITORING

The Chief Compliance Officer or such person or persons that the Chief Compliance Officer may from time to time designate shall monitor all personal trading activity of all Access Persons pursuant to the procedures established under this Code.

Disclosure of Personal Brokerage Accounts

Within ten days of the commencement of employment or at the commencement of a relationship with the Trust, all Access Persons, except Independent Trustees, are required to submit to the Chief Compliance Officer or his designee a report stating the names and account numbers of all of their personal brokerage accounts, brokerage accounts of members of their Immediate Family, and any brokerage accounts which they control or in which they or an Immediate Family member has Beneficial Ownership. Such report must contain the date on which it is submitted and the information in the report must be current as of a date no more than 45 days prior to that date. In addition, if a new brokerage account is opened during the course of the year, the Chief Compliance Officer or his designee must be notified immediately.

The information required by the above paragraph must be provided to the Chief Compliance Officer or his designee on an annual basis, and the report of such should be submitted with the annual holdings reports described below.

Each of these accounts is required to furnish duplicate confirmations and statements to the Chief Compliance Officer or his designee. These statements and confirms for each series of the Trust may be sent to the Advisor.

IV. INITIAL HOLDINGS REPORT

Within ten days of becoming an Access Person (and with information that is current as of a date no more than 45 days prior to the date that the report was submitted), each Access Person, except Independent Trustees must submit a holdings report that must contain, at a minimum, the title and type of Security, and as applicable, the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each Covered Security in which the Access Person has any direct or indirect Beneficial Ownership. This report must state the date on which it is submitted.

V. ANNUAL HOLDINGS REPORTS

All Access Persons, except Independent Trustees, must supply the information that is required in the initial holdings report on an annual basis, and such information must be current as of a date no more than 45 days prior to the date that the report was submitted. Such reports must state the date on which they are submitted.

QUARTERLY TRANSACTION REPORTS

All Access Persons shall report to the Chief Compliance Officer or his designee the following information with respect to transactions in a Covered Security in which such person has, or by

reason of such transaction acquires, any direct or indirect Beneficial Ownership in the Covered Security:

The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, interest rate and maturity date, number of shares, and the principal amount of each Covered Security;
The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
The price of the Covered Security at which the transaction was effected; and
The name of the broker, dealer, or bank with or through whom the transaction was effected.
The date the Access Person Submits the Report.

Reports pursuant to this section of this Code shall be made no later than 30 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall include a certification that the reporting person has reported all Personal Securities Transactions required to be disclosed or reported pursuant to the requirements of this Code. Confirmations and Brokerage Statements sent directly to the Advisor’s address noted above is an acceptable form of a quarterly transaction report.

An Independent Trustee need only make a quarterly transaction report if he or she, at the time of the transaction, knew, or in the ordinary course of fulfilling his or her official duties as a Trustee, should have known that during the 15-day period immediately preceding or following the date of the transaction by the Independent Trustee, the Covered Security was purchased or sold by a Portfolio or was considered for purchase or sale by a Portfolio.

ENFORCEMENTS AND PENALTIES

The Chief Compliance Officer or their designee shall review the transaction information supplied by Access Persons. If a transaction appears to be a violation of this Code, the transaction will be reported to the Board of Trustees.

Upon being informed of a violation of this Code, the Board of Trustees may impose sanctions as it deems appropriate, including but not limited to, a letter of censure or suspension, termination of the employment of the violator, or a request for disgorgement of any profits received from a securities transaction effected in violation of this Code. The Trust shall impose sanctions in accordance with the principle that no Access Person may profit at the expense of its clients. Any losses are the responsibility of the violator. Any profits realized on personal securities transactions in violation of the Code must be disgorged in a manner directed by the Board of Trustees.

Annually, the Chief Compliance Officer at each regular meeting of the Board shall issue a report on Personal Securities Transactions by Access Person. The report submitted to the board shall:

Summarize existing procedures concerning Personal Securities investing and any changes in the procedures made during the prior year;

Identify any violations of this Code and any significant remedial action taken during the prior year; and
Identify any recommended changes in existing restrictions or procedures based upon the experience under the Code, evolving industry practices or developments in applicable laws and regulations.

ACKNOWLEDGMENT

The Trust must provide all Access Persons with a copy of this Code. Upon receipt of this Code, all Access Persons must do the following:

All new Access Persons must read the Code, complete all relevant forms supplied by the Chief Compliance Officer or his designee (including a written acknowledgement of their receipt of the Code), and schedule a meeting with the Chief Compliance Officer or his designee to discuss the provisions herein within two calendar weeks of employment.

Existing Access Persons who did not receive this Code upon hire, for whatever reason, must read the Code, complete all relevant forms supplied by the Chief Compliance Officer or his designee (including a written acknowledgement of their receipt of the Code), and schedule a meeting with the Chief Compliance Officer or his designee to discuss the provisions herein at the earliest possible time, but no later than the end of the current quarter.

All Access Persons must certify on an annual basis that they have read and understood the Code.

EX-99.(P)(2) 18 e33444ex23p2.htm CODE OF ETHICS

Code of Ethics

Exhibit (p)(2)

CODE OF ETHICS

Fiduciary Duty – Statement of Policy

The Firm is a fiduciary of its Clients and owes each Client an affirmative duty of good faith and full and fair disclosure of all material facts. Most violations of fiduciary duty are associated with a violation of the general antifraud provisions contained in Section 206 of the Advisers Act. The SEC has made clear that for purposes of Section 206, a Client includes not only the fund(s) advised by the Firm, but any investor or prospective investor in the fund. Mere negligence on the part of the Firm in breaching its fiduciary duty to a fund(s), or its investors or prospective investors, is sufficient to establish a violation under the Advisers Act. For example, the Firm must take care not to include false or misleading statements in form ADV disclosures, investor reports, responses to “requests for proposals,” or other disclosures to clients and investors.

The adviser’s fiduciary duty is particularly pertinent whenever the adviser is in a situation involving a conflict or potential conflict of interest. The Firm and all Employees must affirmatively exercise authority and responsibility for the benefit of Clients, and may not participate in any activities that may conflict with the interests of Clients except in accordance with this Manual. In addition, Employees must avoid activities, interests and relationships that might interfere or appear to interfere with making decisions in the best interests of the Firm’s Clients. Accordingly, at all times, we must conduct our business with the following precepts in mind:

	1.	Place the interests of Clients first. We may not cause a Client to take action, or not to take action, for our personal benefit rather than the benefit of the Client. For example, causing a Client to purchase a security owned by an Employee for the purpose of increasing the price of that security would be a violation of this Code. Similarly, an Employee investing for himself or herself in a security of limited availability that was appropriate for a Client without first considering that investment for such Client may violate this Code.

	2.	Moderate gifts and entertainment. The receipt of investment opportunities, perquisites, or gifts from persons doing or seeking to do business with the Firm could call into question the exercise of our independent judgment. Accordingly, Employees may accept such items only in accordance with the limitations in this Code.

	3.	Conduct all personal securities transactions in compliance with this Code of Ethics. This includes all pre-clearance and reporting requirements and procedures regarding inside information and personal and proprietary trades. While the Firm encourages Employees and their families to develop personal investment programs,

Code of Ethics

		Employees must not take any action that could result in even the appearance of impropriety.

	4.	Keep information confidential. Information concerning Client transactions or holdings may be material non-public information and Employees may not use knowledge of any such information to profit from the market effect of those transactions.

	•	Comply with the federal securities law and all other laws and regulations applicable to the Firm’s business. Make it your business to know what is required of the Firm as an investment adviser and otherwise, and of you as an Employee of the Firm, and integrate compliance into the performance of all duties.

	6.	Seek advice when in doubt about the propriety of any action or situation. Any questions concerning this Code of Ethics should be addressed to the Chief Compliance Officer, who is encouraged to consult with outside counsel, outside auditors or other professionals, as necessary.

The Policies and Procedures in this Code of Ethics implement these general fiduciary principles in the context of specific situations.

Code of Ethics

Client Opportunities

Law

No Employee may cause or attempt to cause any Client to purchase, sell or hold any security for the purpose of creating any personal benefit for him or herself. Sections 206(1) and 206(2) of the Advisers Act generally prohibit the Firm from employing a “device, scheme or artifice” to defraud Clients or engaging in a “transaction, practice or course of business” that operates as a “fraud or deceit” on Clients. While these provisions speak of fraud, they have been construed very broadly by the SEC and used to regulate, through enforcement action, many types of adviser behavior that the SEC deems to be not in the best interest of Clients or inconsistent with fiduciary obligations. One such category of behavior is taking advantage of investment opportunities for personal gain that would be suitable for Clients.

Policy

An Employee may not take personal advantage of any opportunity properly belonging to the Firm or any Client. This principle applies primarily to the acquisition of securities of limited availability for an Employee’s own account that would be suitable and could be purchased for the account of a Client, or the disposition of securities from an Employee’s account prior to selling a position from the account of a Client.

Under limited circumstances, and only with the prior written approval of the Chief Compliance Officer, an Employee may participate in opportunities of limited availability that are deemed by the Chief Compliance Officer not to have an adverse effect on any Client. In the case of trades in listed securities in broad and deep markets, where the Employees’ participation will not affect Client investment opportunities, Employees may participate with Clients in aggregated or combined trades.

An Employee may not cause or attempt to cause any Client to purchase, sell, or hold any security for the purpose of creating any benefit to Firm accounts or to Employee accounts.

Procedures

Disclosure of Personal Interest. If an Employee believes that he or she (or a related account) stands to benefit materially from an investment decision that the Employee is recommending or making for a Client, the Employee must disclose that interest to the Chief Compliance Officer and obtain approval prior to making the investment.

Restriction on Investment. Based on the information given, the Chief Compliance Officer will decide whether to restrict an Employee’s participation in the investment decision or investment. In making these determinations, the Chief Compliance Officer will consider the following factors: (i) whether the opportunity was suitable for any Client; (ii) whether any Client was

Code of Ethics

legally and financially able to take advantage of the opportunity; (iii) whether any Client would be disadvantaged by the Employee’s interest or participation; (iv) whether the Employee’s interest is de minimis; and (v) whether the Employee’s interest or participation is clearly not related economically to the securities to be purchased, sold or held by any Client.

Record of Determination and Monitoring. A memorandum concerning the investment opportunity and the disposition of the approval request will be prepared promptly and maintained by the Chief Compliance Officer. The Chief Compliance Officer will monitor Employees’ personal securities transactions to identify, and will investigate any instance of, an Employee purchasing or selling a security of limited availability or limited market interest, respectively, prior to making the opportunity available to Clients.

Code of Ethics

Insider Trading

Law

In the course of business, the Firm and its Employees may have access to various types of material non-public information about issuers, securities or the potential effects of the Firm’s own investment and trading on the market for securities. Trading while in possession of material non-public information or communicating such information to others who may trade on such information is a violation of the securities laws. This conduct is frequently referred to as “insider trading” (whether or not one is an “insider”).

While the law concerning insider trading is not static, it is generally understood to prohibit:

	(a)	trading by an insider while in possession of material non-public information; in the case of an investment adviser, information pertaining to the adviser’s positions or trades for its clients may be material non- public information;

	(b)	trading by a non-insider while in possession of material non-public information, where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated;

	(c)	communicating material non-public information to others; or

	(d)	trading ahead of research reports or recommendations prepared by the Firm.

Concerns about the misuse of material non-public information by the Firm or Employees may arise primarily in two ways. First, the Firm may come into possession of material non-public information about another company, such as an issuer in which it is investing for Clients or in which its own personnel might be investing for their own accounts.

Second, the Firm as an investment adviser has material non-public information in relation to its own business. The SEC has stated that the term “material non-public information” may include information about an investment adviser’s securities recommendations, as well as securities holdings and transactions of Clients.

Who is an Insider? The concept of “insider” is broad. It includes officers, directors and employees of a company. In addition, a person can be a “temporary insider” if he or she enters into a special confidential relationship in the conduct of a company’s affairs and as a result is given access to information solely for the company’s purposes. A temporary insider can include, among others, a company’s attorneys, accountants, consultants, and bank and the employees of such organizations. In addition, a person who advises or otherwise performs services for a

Code of Ethics

company may become a temporary insider of that company. An Employee of the Firm could become a temporary insider to a company because of the Firm’s and/or Employee’s relationship to the company (e.g., by having contact with company executives while researching the company). A company must expect the outsider to keep the disclosed non-public information confidential and the relationship must at least imply such a duty before the outsider will be considered an insider or temporary insider.

What is Material Information? Trading on non-public information is not a basis for liability unless the information is material. “Material information” generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a security. Information that Employees should consider material includes, but is not limited to: the impending inclusion of a company in an IndexIQ index (“IIQ Index”), the impending change in the weight or any corporate action regarding a company in an IIQ Index, dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, knowledge of an impending default on debt obligations, knowledge of an impending change in debt rating by a statistical rating organization, and extraordinary management developments.

Material information does not have to relate to the issuer’s business. For example, in one case the Supreme Court considered as material certain information about the contents of a forthcoming newspaper column that was expected to affect the market price of a security. In that case, a reporter at The Wall Street Journal was found criminally liable for disclosing to others the date that reports on various companies would appear in The Wall Street Journal and whether those reports would be favorable or not.

In addition, as indicated, the SEC has stated that information concerning an investment adviser’s holdings or transactions may be material non-public information.

What is Non-public Information? Information is non-public until it has been effectively communicated to the marketplace. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public.

What is Tipping? Tipping involves providing material non-public information to anyone who might be expected to trade while in possession of that information. An Employee may become a “tippee” by acquiring material non-public information from a tipper, which would then require the Employee to follow the procedures below for reporting and limiting use of the information.

Penalties for Insider Trading. Penalties for trading on or communicating material non-public information are severe, both for individuals involved in such unlawful conduct and their employers, and may include fines or damages up to three times the amount of any profit gained

Code of Ethics

or loss avoided. A person can be subject to some or all of the applicable penalties even if he or she does not personally benefit from the violation.

Policy

The Firm forbids any Employee to trade, either personally or on behalf of others, including Clients, while in possession of material non-public information or to communicate material non-public information to others in violation of the law. The Firm’s insider trading prohibitions apply to all Employees and extend to activities within and outside their duties as Employees of the Firm.

In addition, it is the policy of the Firm that all information about Client securities holdings and transactions is to be kept in strict confidence by those who receive it, and such information may be divulged only within the Firm and to those who have a need for it in connection with the performance of services to Clients. Despite this blanket prohibition, some trades in securities in which the Firm has also invested for Clients may be permitted because the fact that the Firm has made such investments may not be viewed as material information (e.g., trades in highly liquid securities with large market capitalization). The personal trading procedures set forth below establish circumstances under which such trades will be considered permissible and the procedures to follow in making such trades.

Procedures

Identification and Protection of Insider Information. If an Employee believes that he or she is in possession of information that is material and non-public, or has questions as to whether information is material and non-public, he or she should take the following steps:

Report the matter immediately to the Chief Compliance Officer, who will document the matter.
Refrain from purchasing or selling the securities on behalf of himself or herself or others.
Refrain from communicating the information inside or outside the Firm other than to the Chief Compliance Officer.

If the Chief Compliance Officer determines that an Employee is in possession of material non-public information, he or she will notify all Employees that the security is restricted. All decisions about whether to restrict a security, or remove a security from restriction, will be made by the Chief Compliance Officer. Restrictions on such securities also extend to options, rights and warrants relating to such securities. When a security is restricted, all new trading activity of such security shall cease, unless approved in writing by the Chief Compliance Officer. If trading in a security is restricted, Employees are prohibited from communicating that fact to anyone outside the Firm. A security will be removed from restriction if the Chief Compliance Officer determines that no insider trading issue remains with respect to such security (for example, if the information becomes public or no longer is material).

Code of Ethics

Restricting Access to Material Non-public Information. Documents and files that contain material non-public information must be secure in order to minimize the possibility that such information will be transmitted to an unauthorized person. Such documents and files must be stored in locked file cabinets or other secure locations and confidential information accessible by computer should be maintained in computer files that are password protected or otherwise secure against access by unauthorized persons. Employees may not discuss material non-public information with, or in the presence of, persons who are not affiliated with the Firm or authorized to receive such information, and should thus avoid discussions of material non-public information in hallways, elevators, trains, subways, airplanes, restaurants and other public places generally. The use of speaker phones or cellular telephones also should be avoided in circumstances where such information may be overheard by unauthorized persons.

Employees who work in IndexIQ’s Index Development Group (“IDG”) are strictly prohibited from communicating with any employees outside of IDG, or any other third parties inside or outside of the Firm, concerning any change to the components and/or component weightings of any IndexIQ Index prior to such change being implemented and publicly disseminated. The Firm will not have access to the computer drives used by IDG to monitor, calculate and rebalance the Indexes.

Detecting Insider Trading. To detect insider trading, the Chief Compliance Officer will review the trading activity of Client accounts, Employee accounts and other Firm accounts. It is also the responsibility of each Employee to notify the Chief Compliance Officer of any potential insider trading issues. The Chief Compliance Officer will investigate any instance of possible insider trading and fully document the results of any such investigation. At a minimum, an investigation record should include: (i) the name of the security; (ii) the date the investigation commenced; (iii) an identification of the account(s) involved; and (iv) a summary of the investigation disposition.

Code of Ethics

Personal Securities Transactions

Law

Employee investments must be consistent with the mission of the Firm always to put Client interests first and with the requirements that the Firm and its Employees not trade on the basis of material non-public information concerning the Firm’s investment decisions for Clients or Client transactions or holdings.

Rule 204A-1 under the Advisers Act requires in effect that a registered investment adviser’s “access persons” report their transactions and holdings periodically to the Chief Compliance Officer and that the adviser review these reports.

Under the SEC definition, the term “access person” includes any employee who has access to non-public information regarding clients’ purchase or sale of securities, is involved in making securities recommendations to (or in the case of a discretionary manager like the Firm, investment decisions on behalf of) clients or who has access to such recommendations that are non-public (“Access Persons”).

Transaction Reporting Requirements. All Access Persons must file initial and annual holdings reports and quarterly transaction reports with respect to all securities in which they have or acquire any “Beneficial Interest,” except holdings or transactions in the following securities (“Exempt Securities”):

direct obligations of the Government of the United States;
money market instruments — bankers’ acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high quality short-term debt instruments;
money market fund shares;
shares of all mutual funds, except exchange traded funds (“ETFs”) and mutual funds affiliated with the Company; and
units of a unit investment trust if the unit investment trust is invested exclusively in unaffiliated mutual funds.

“Beneficial Interest” includes direct or indirect control or power to make investment decisions and covers accounts of the Access Person and immediate family members who share the Access Person’s household. All such accounts are referred to as “Access Person Accounts.” “Access Person Accounts” also may include accounts of others who share the Access Person’s household, anyone to whose support the Access Person materially contributes and other accounts over which the Access Person exercises a controlling influence. Access Person Accounts do not include accounts in which an Access Person has a Beneficial Interest but over which the Access Person does not exercise investment discretion. To exclude such an account, the Access Person must provide the Chief Compliance Officer with written documentation showing that someone

Code of Ethics

else has been granted investment discretion over the account. Reports need not be filed with respect to transactions effected pursuant to an automatic investment plan or in an account over which the Access Person has no direct or indirect influence or control.

Policy

It is the Firm’s policy that all Employees of the Firm are Access Persons for purposes of Rule 204A-1 and must file all required reports, initial and annual holdings reports, and quarterly reports of transactions in Access Person Accounts. In addition, Access Persons must adhere to the following requirements in connection with their personal trading.

Short-Term Trading. Short-term trading in securities of issuers in which an Employee is an officer or director or the owner of 10% or more of a class of equity securities is subject to significant restrictions under the securities laws.

Prohibited Transactions. No Access Person may trade in any account in any security subject to a restriction on trading issued by the Chief Compliance Officer under the Firm’s insider trading policies and procedures set forth in this Code of Ethics.

Pre-clearance. All Securities Transactions except Exempt Securities. Access Persons must obtain the written approval of the Chief Compliance Officer prior to investing in shares of initial public offerings and private placements and transactions in securities other than Exempt Securities. Employees must furnish any prospectus, private placement memoranda, subscription documents and other materials (if relevant) about the investment as the Chief Compliance Officer may request.

Blackout Period. No Access Person may trade in any security held by a client during the blackout period. The blackout period shall extend 7 calendar days--from the close of trading a full 24 hours before the Fund receives its rebalance or reconstitution information from the Index and for 3 trading days after the Fund receives its rebalance or reconstitution information from the Index. For example, if the Fund receives rebalance or reconstitution information on a Monday, the blackout period extends from market close on the prior Thursday to market close on the following Thursday.

Maintaining Access Person Accounts. While the Firm encourages Employees to develop personal investment programs, it must be in a position to properly oversee the trading activity undertaken by its Employees. As a result, the Firm requires all Employees to provide duplicate account statements and confirmations for all Access Person Accounts.

Code of Ethics

Procedures

Duplicate Statements. For any brokerage account opened or maintained at a broker-dealer, bank or similar financial institution, each Employee shall be responsible for arranging for duplicate account statements and confirmations to be sent directly to the Chief Compliance Officer at the following address:

IndexIQ Advisors LLC
800 Westchester Ave. Suite N-611
Rye Brook, New York 10573
Attention: Chief Compliance Officer

Such statements must be provided upon issuance for the Employee’s Access Person Accounts, and all such statements must be received no later than 30 days after the end of each quarter, except for accounts in which the Employee only transacts in Exempt Securities. Duplicate confirmations must be provided upon issuance.

Initial and Annual Holdings Reports. Each Access Person must file a holdings report disclosing all securities (other than Exempt Securities and those that have been previously reported on account statements received by the Firm) in any Access Person Account on the Annual Personal Securities Holdings Report (see Appendix 3) or any substitute acceptable to the Chief Compliance Officer, no later than 10 days after becoming an Access Person, and annually thereafter during the month of January. Each such report must be current as of a date no more than 45 days before the report is submitted.

Quarterly Trade Reporting Requirements. Each Access Person must submit to the Chief Compliance Officer within 30 days after the end of each quarter a report of all securities transactions (other than transactions in Exempt Securities) effected in each Access Person Account during such quarter. The report must include the name of the security, date of the transaction, quantity, price, nature of the transaction and name of the bank, broker-dealer or financial institution through which the transaction was effected. Information regarding such transactions need not be reported if duplicate account statements and confirmations for all Access Person Accounts have been provided to the Chief Compliance Officer. Employees must independently report securities that do not appear on the account statements or confirmations (e.g., any securities acquired in private placements or by gift or inheritance) on the Quarterly Securities Transaction Report provided as Appendix 4. Even if no transactions are required to be reported, each Employee must submit such a report certifying that all transactions have been reported.

Pre-clearance. Each Employee who wishes to effect a transaction in any initial public offering or private placement and in any publicly traded securities except Exempt Securities must first obtain written pre-clearance of the transaction from the Chief Compliance Officer. A decision on permissibility of the trade generally will be rendered by the end of the trading day on which the request is received. Pre-clearance will be effective for two business days. Day one of the

Code of Ethics

preclearance period is the day that preclearance is obtained, and expiration occurs at the close of trading on the next business day. Employee trades will not preclude the purchase or sale of a security for a client account during the proscribed blackout period. If it becomes apparent that the purchase or sale of a particular security will benefit a client account, the Employee trade will be unwound and any profits will be donated to a recognized charity. The Chief Compliance Officer will be provided with appropriate evidence of the donation.

Review and Availability of Personal Trade Information. All information supplied under these procedures, including quarterly transaction and initial and annual holdings reports, will be reviewed by the Chief Compliance Officer for compliance with the policies and procedures in this Code of Ethics. The Chief Compliance Officer will review all account statements within 45 days after the end of the quarter to which they apply. The Chief Compliance Officer shall:

address whether Employees followed internal procedures;
compare Employee transactions to any restrictions in effect at the time of the trade;
assess whether the Employee is trading for his or her own account in the same financial instrument he or she is trading for Clients, and if so, whether Clients are receiving terms as favorable as those of the Employee’s trades; and
Review all Employee brokerage statements for patterns that may indicate abuse.

The Chief Compliance Officer will document such review by initialing Employee statements or otherwise indicating the statements that have been reviewed and will maintain copies of the Employee reports and account statements received.

Confidentiality. The Chief Compliance Officer will maintain records in a manner to safeguard their confidentiality. Each Employee’s records will be accessible only to the Employee, the Chief Compliance Officer, and senior officers, if necessary for business purposes.

Code of Ethics

Gifts, Entertainment and Contributions

Law

The giving or receiving of gifts or other items of value to or from persons doing business or seeking to do business with the Firm could call into question the independence of its judgment as a fiduciary of its Clients. If the Firm and or Employee were found to be acting in a position of undisclosed conflict of interest, it could be sanctioned under Section 206 of the Advisers Act.

Section 17(e)(1) of the Investment Company Act generally prohibits an adviser from accepting “compensation” for the purchase or sale of securities to or from a registered investment company. The provision or acceptance of gifts or entertainment in relation to investment company business might be viewed as compensation that violates this provision.

Other federal laws and regulations prohibit firms and their employees from giving anything of value to employees of various financial institutions in connection with attempts to obtain any business transaction with the institution, which is viewed as a form of bribery. Finally, providing gifts and entertainment to foreign officials may violate the Foreign Corrupt Practices Act.

Regarding political contributions, the SEC has stated that investment advisers who seek to influence the award of advisory contracts by public entities by making political contributions to public officials may cause such officials to compromise their fiduciary duty to such entities.

Policy

Accepting Gifts and Entertainment. On occasion, because of an Employee’s position with the Firm, the Employee may be offered, or may receive, gifts or other forms of non-cash compensation from Clients, brokers, vendors, or other persons that do business with the Firm. Extraordinary or extravagant gifts (i.e., gifts that have an aggregate value of more than $250 annually from a single giver) are not permissible and must be declined or returned, absent approval by the Chief Compliance Officer. Gifts of nominal value (i.e., gifts that have an aggregate value of no more than $250 annually from a single giver) and promotional items (i.e., pens, mugs) may be accepted. Gifts should be sent to Employees at the Firm’s offices and may not be sent to an Employee’s home.

Entertainment having a reasonable value of no more than $250 at which both the Employee and the giver are present (e.g., business lunches and dinners, and sporting and cultural events) also may be accepted. Employees may not accept entertainment having a value in excess of $250 unless (i) there is a specific business purpose for such event; (ii) both the Employee and the giver are present; and (iii) the Employee has received written approval in advance regarding participation in the event by the Chief Compliance Officer and the Employee’s supervisor.

Code of Ethics

Giving Gifts and Providing Entertainment. Employees may not give any gift(s) with an aggregate value in excess of $250 per year to any person associated with a securities or financial organization, including brokerage firms or other investment management firms, to members of the news media, or to Clients or prospective Clients of the Firm. Employees may provide reasonable entertainment to such persons provided that both the Employee and the recipient are present and there is a business purpose for the entertainment. It is anticipated that Employees will not entertain the same person more than four times per year or spend more than $250 per person on business meals on such occasions. Employees may not provide entertainment having a reasonable value in excess of $250 to such persons unless (i) there is a specific business purpose for such event; (ii) both the Employee and the recipient are present; and (iii) the provision of such entertainment has been approved in advance by the Chief Compliance Officer and the Employee’s supervisor.

Cash. No Employee may give or accept cash gifts or cash equivalents to or from Clients, brokers, vendors, or other persons that do business with the Firm.

Solicitation of Gifts. All solicitation of gifts or gratuities is unprofessional and is strictly prohibited.

Pay to Play – Political Contributions. Political contributions to public officials may not exceed $250 to any one official per election without the consent of the Chief Compliance Officer and the Employee’s supervisor. Similar restrictions may apply to gifts or benefits given to non-U.S. officials. Employees should consult with the Chief Compliance Officer prior to making any such gift or benefit.

Charitable Contributions. Employees may not solicit charitable contributions from Clients, brokers, vendors, or other persons that do business with the Firm without the prior approval of the Chief Compliance Officer, who shall maintain a record of each such solicitation.

Client Complaints. Employees may not make any payments or other account adjustments to Clients in order to resolve any type of complaint. All client complaints must be immediately reported to the Employee’s supervisor and the Chief Compliance Officer.

Reporting of Gifts. The Chief Compliance Officer will maintain a gift log that records all gifts sent and received. Each employee is responsible for reporting ALL gifts sent to or received from clients.

Procedures

Prohibited Gifts and Entertainment. If an Employee has been offered a gift with an aggregate value exceeding $250 from any Client, broker, vendor, or other person that does business with the Firm or has been invited to participate in an event having a value in excess of $250, the Employee must seek the approval of the Chief Compliance Officer in order to accept or retain such gift or entertainment. If an Employee wishes to provide any such gift or entertainment above the value of $250 to any person associated with a securities or financial organization,

Code of Ethics

including brokerage firms or other investment management firms, to members of the news media, or to Clients or prospective Clients of the Firm, the Employee must seek the approval of the Chief Compliance Officer prior to providing such gift or entertainment. All approvals of gifts and entertainment will be recorded in a gift and entertainment log. If there is any question about the appropriateness of any particular gift, Employees should consult the Chief Compliance Officer.

Political Contributions. All political contributions in excess of $250 must be reported to the Chief Compliance Officer prior to being made and political contributions equal to or less than $250 should be reported to the Chief Compliance Officer within 10 days of being made. Records of political contributions will be maintained by the Chief Compliance Officer.

Charitable Contributions. Prior to soliciting charitable contributions from any Client, broker, vendor, or other person that does business with the Firm, an Employee must receive the approval of the Chief Compliance Officer. The Employee must notify the Chief Compliance Officer of amounts received from such persons as a result of such solicitation. All such approvals must be documented and include information regarding the Employee, the charity, the date of the solicitation and the amounts received.

Code of Ethics

Outside Business Activities

Law

The Firm’s fiduciary duties to Clients dictate that the Firm and its Employees devote their professional attention to Client interests above their own and those of other organizations.

Policy

Employees may not engage in any of the following outside business activities without the prior written consent of the Chief Compliance Officer:

Be engaged in any other business;
Be an officer of or employed or compensated by any other person for business-related activities;
Serve as general partner, managing member or in a similar capacity with partnerships, limited liability companies or private funds other than those managed by the Firm or its affiliates;
Engage in personal investment transactions to an extent that diverts an Employee’s attention from or impairs the performance of his or her duties in relation to the business of the Firm and its Clients;
Have any direct or indirect financial interest or investment in any dealer, broker or other current or prospective supplier of goods or services to the Firm (other than ownership of publicly traded securities) from which the Employee might benefit or appear to benefit materially; or
Serve on the board of directors (or in any similar capacity) of another company, including not-for-profit corporations. Authorization for board service will normally require that the Firm not hold or purchase any securities of the company on whose board the Employee sits.

Restrictions on Activities. With respect to any outside activities engaged in by an Employee, the following restrictions shall be in effect: (i) the Employee is prohibited from implying that he or she is acting on behalf of, or as a representative of, the Firm; (ii) the Employee is prohibited from using the Firm’s offices, equipment or stationery for any purpose not directly related to the Firm’s business, unless such Employee has obtained prior approval from the Chief Compliance Officer; and (iii) if the activity was required to be and has been approved by the Chief Compliance Officer, the Employee must report any material change with respect to such activity.

Code of Ethics

Procedures

Approval. Before undertaking any of the activities listed above, the Employee must provide to the Chief Compliance Officer detailed information regarding all aspects of the proposed activity. The Employee may not undertake such activity until the Employee has obtained written approval from the Chief Compliance Officer and the Employee’s supervisor.

Code of Ethics

Confidentiality

Law

During the course of employment with the Firm, an Employee may be exposed to or acquire Confidential Information. “Confidential Information” is any and all non-public, confidential or proprietary information in any form concerning the Firm, its affiliates, their investments and investment strategies, or its Clients or any other information received by the Firm from a third party to whom the Firm has an obligation of confidentiality, regardless of when such information was produced or obtained by the Firm. Confidential Information includes documentation in any medium or format whatsoever, and all reproductions, copies, notes and excerpts of any documentation comprising or including any Confidential Information, as well as information orally conveyed to the Employee.

Confidential Information shall not include (i) any information which the Employee can prove by documentary evidence is generally available to the public or industry other than as a result of a disclosure by the Employee, or (ii) any information that the Employee obtains from a third party who is not subject to a confidentiality agreement with the Firm and who did not obtain that information directly or indirectly from the Firm.

Policy

Employees shall not at any time while employed or at any time after being employed (i) disclose, directly or indirectly, any Confidential Information to anyone other than personnel of the Firm or (ii) use or appropriate any Confidential Information.

Procedures

Restrictions on Communications of Confidential Information. Each Employee agrees to inform the Chief Compliance Officer promptly if he or she (i) is seeking an exception in order to disclose Confidential Information in contravention of Firm policy, or (ii) discovers that someone else is making or threatening to make unauthorized use or disclosure of Confidential Information.

Physical Security of Information. Employees should avoid discussions of Confidential Information in hallways, elevators, trains, subways, airplanes, restaurants and other public places generally. Use of speaker phones or cellular telephones also shall be avoided in circumstances where Confidential Information may be overheard by unauthorized persons. Documents and files that contain Confidential Information must be kept secure in order to minimize the possibility that such Confidential Information will be transmitted to an unauthorized person. Confidential documents should be stored in locked file cabinets or other secure locations. Confidential databases and other

Code of Ethics

Confidential Information accessible by computer should be maintained in computer files that are password protected or otherwise secure against access by unauthorized persons. All Employees should lock their computers at the end of each work day.

Company Property. Employees may not physically remove Confidential Information from the premises of the Firm except consistent with and in furtherance of the performance of their duties to the Firm. All originals and copies of Confidential Information are the sole property of the Firm. Upon the termination of employment for any reason, or upon the request of the Firm at any time, each Employee promptly will deliver all copies of such materials to the Firm.

EX-99.(P)(3) 19 e33444ex23p3.htm CODE OF CONDUCT AND INTERPRETIVE GUIDANCE

Exhibit (p)(3)

The BANK of NEW YORK MELLON Corporation

THE CODE OF CONDUCT AND INTERPRETIVE GUIDANCE

July 2007

The BANK of NEW YORK MELLON Corporation

Dear Colleague:

The creation of The Bank of New York Mellon Corporation merges two companies that have long shared similar values and reputations for integrity and excellence in everything that they do. As we shape our new company, we intend to build on the proud histories and reputations of both organizations. Building on this reputation for honesty, accountability and transparency is absolutely essential to achieving our goal of making The Bank of New York Mellon the most trusted global leader in asset management and securities servicing.

It is the responsibility of every employee to ensure that we serve our clients, co-workers and shareholders by applying the highest standards of ethics and compliance to everything we do. Please understand that this is extremely important to me and our new company. Our new Code of Conduct provides the framework that allows us to maintain the highest possible standards of professional conduct. It should serve as a guide to doing what is right, helping you make the right decisions when questions of ethics arise in the normal course of business and providing you with the standards to which you are expected to adhere.

Employees must apply the principles of the Code of Conduct in all of their business dealings and in every aspect of their employment at The Bank of New York Mellon. As an employee of The Bank of New York Mellon or any of its subsidiaries, you should read the Code and become familiar with its content. We must follow the Code to protect our most valuable asset – our reputation. Annually, some employees will be required to certify and attest to compliance with the Code.

Every employee is responsible for speaking up when they see something that doesn’t seem right. You can do so by reporting your concern to your manager, or by calling – anonymously if you wish – the Employee Ethics Help Line or the Ethics Hot Line (Ethics Point, an independent hotline provider). The numbers are included in the Code of Conduct. You can also e-mail the Ethics Office at ethics@bnymellon.com or visit www.ethicspoint.com to report concerns.

All of our stakeholders expect The Bank of New York Mellon employees to conduct business in full compliance with all laws and regulations and in accordance with the highest possible standards of ethical conduct. Together, we will work to establish The Bank of New York Mellon’s reputation as a company that does business with the utmost integrity, creating a new world-class company of which we can all be justifiably proud.

Bob Kelly

Chief Executive Officer

The BANK of NEW YORK MELLON Corporation

THE CODE OF CONDUCT AND INTERPRETIVE GUIDANCE

Key Comment		Who should read this?
In all of the decisions you make and actions you take on behalf of the Company, you must adhere to the highest standards of integrity and ethical behavior, and you must comply with all applicable laws, regulations, Company policies and procedures.		All employees.

TABLE OF CONTENTS

TOPIC				PAGE #(s)
I. INTRODUCTION				1 – 2
II. THE CODE OF CONDUCT				2 – 5
III. SEEKING HELP OR REPORTING VIOLATIONS OF THE CODE				6 – 7
IV. INTERPRETIVE GUIDANCE
	A.	CONFLICTS OF INTEREST		7
		1.	Gifts, Entertainment and Other Payments	7 – 8
		2.	Personal Conflicts of Interest	8 – 9
		3.	Fiduciary Appointments and Bequests	9
		4.	Outside Affiliations, Outside Employment and Certain Outside Compensation Issues	10
		5.	Disclosure of Relationships and Transactions	10
	B.	PROPER USE AND CARE OF INFORMATION AND PROPER RECORD KEEPING
		1.	Proprietary Information; Intellectual Property	10 – 11
		2.	Data Integrity and Corporate Information	11
		3.	Use of E-mail and the Internet	12
		4.	Accurate Accounting and Internal Controls	12
		5.	Inside Information	13
		6.	Talking to the Media	13
		7.	Document Retention	13
	C.	DEALING WITH CUSTOMERS, PROSPECTS, SUPPLIERS, AND COMPETITORS
		1.	Business Relationships with Customers, Prospects, Suppliers, and Competitors	14

		2.	Business Decisions	14 – 15
		3.	Exploitation of Relationships and Use of the Company’s Name, Letterhead or Facilities	15 – 16
		4.	Know Your Customer	16
		5.	Recognizing and Reporting Illegal, Suspicious, or Unusual Activities	16
	D.	DOING BUSINESS WITH THE GOVERNMENT		17
		1.	Complying with Government Contracts, Government Contracting Laws and Regulations	17
		2.	Integrity in the Sales and Marketing Process	17
		3.	Truthful, Accurate Statements and Recordkeeping	17
		4.	Safeguarding Government Information and Property	17
		5.	Cooperating with Government Audits and Investigations	18
		6.	Meeting Employment and Labor Obligations	18
	E.	PERSONAL FINANCES
		1.	Personal Investments	18 – 19
		2.	Personal Brokerage Accounts	19
		3.	Contributions to Political Parties	19
		4.	Contributions to Not-For-Profit Entities	19
		5.	Individual Employees’ Regulatory Requirements	20
	F.	TREATING OTHERS FAIRLY AND WITH RESPECT
		1.	Non-Discrimination	20
		2.	Anti-Harassment	20
		3.	Personal Relationships with Other Employees	21
	G.	COMPLIANCE WITH THE LAW
		1.	Illegal or Criminal Activities	21
		2.	Investigations	21
		3.	Protection of Company Assets	22
V. PENALTIES				22
VI. MANAGEMENT RESPONSIBILITIES				22
VII. OWNERSHIP				22
EXHIBIT A. U.S. LAWS and REGULATIONS REFERENCED IN THE CODE				23 – 30
EXHIBIT B. THE CODE REFERENCE LIST				31 – 35

THE CODE OF CONDUCT AND INTERPRETIVE GUIDANCE

I.	INTRODUCTION

The Bank of New York Mellon Corporation (the Company) has a long, proud history and a well-deserved reputation for honesty and accountability. Our good name and the trust and confidence that our shareholders and customers place in us can only be maintained by continued adherence to high standards of conduct. Integrity is one of our core values and, accordingly, the Company has always placed utmost importance on operating in a highly ethical manner. These ethical principles are captured in our Code of Conduct (The Code) and explained more fully in the accompanying Interpretive Guidance, which also provides information concerning how to apply The Code to certain business situations. Each employee and director of the Company and its majority-owned subsidiaries is required to contribute to our leadership position through a personal commitment to follow the principles expressed in The Code.

Every employee is required to read The Code and the Interpretive Guidance. All managers are required to ensure that all of their staff members understand and recognize their responsibility to comply with The Code, to the extent that the principles apply to the performance of the staff member’s job responsibilities. Managers are also expected to promote a culture of compliance and ethics to help protect the Company from financial and reputational losses.

The Code has been drafted to conform to applicable legal and regulatory requirements; however, The Code is not a substitute for, or a complete summary of, the broad range of legal and regulatory requirements applicable to the Company or the functions each employee may perform. Employees must adhere fully to the legal and regulatory requirements of all applicable laws and regulations, including, for example, the Bank Secrecy Act, the Bank Bribery Act, the Foreign Corrupt Practices Act, Sections 23A and 23B of the Federal Reserve Act (Regulation W), Federal Reserve Regulation O, the Securities Exchange Act, the Gramm-Leach-Bliley Act, the Sarbanes-Oxley Act of 2002, Federal Fair Lending Laws, the Fair Credit Reporting Act, the Community Reinvestment Act, U.S. Economic Sanctions Laws and Regulations, the USA PATRIOT Act, Antitrust Laws, the Bank Holding Company Act - Laws and Regulations Regarding Tie-In Arrangements, U.S. Antiboycott Laws and Regulations, the Employee Retirement Income Security Act of 1974 (ERISA), Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Uniform Services Employment and Reemployment Rights Act.

A brief description of these U.S. laws and regulations is provided in Exhibit A, and the applicable requirements have been incorporated in greater detail in various Company and line-of-business policies.

Employees who believe that any provisions of this document are inconsistent with laws or regulations in their jurisdiction of employment should consult with the General Counsel. In certain jurisdictions or lines of business, different or more restrictive policies and procedures may be applicable. In such cases, employees are expected to follow the additional or unique policies, procedures, laws, and regulations applicable to their specific location.

The Code provides guidance and instructions to ask questions, report situations (e.g., potential conflicts), obtain approvals, and report suspected violations. A summary of these instructions is provided in Exhibit B.

IMPORTANT: Employees must report situations and request all approvals, as required by the Code, via the Code Reports and Permissions Database (CODE RAP) which are summarized in Exhibit B. Employees without access to CODE RAP should consult with their manager for instructions on how to submit a report or request.

Page 1

In all business transactions customers, shareholders, regulators, employees, and others rely on the integrity of the Company and its staff members who make decisions and exercise judgment. Conflicts of interest may unduly influence decisions and judgments and lead to improper conduct by the Company or its employees. Consequently, any conflict of interest, or the appearance thereof, must be identified and addressed by appropriate parties, as further described in this document and in the Company’s Policy on Conflicts of Interest.

Any references herein to the Chief Executive Officer, the General Counsel, the Chief Compliance and Ethics Officer or the Director of Human Resources shall mean that individual or their designee.

II.

THE CODE OF CONDUCT (The Code)

Our Code of Conduct provides the framework to maintain the highest standards of professional conduct. The Code of Conduct is a statement of the Company’s values and ethical standards, and all employees and directors are required to adhere to its principles to ensure that we protect our most valuable asset, the reputation of The Bank of New York Mellon Corporation and its subsidiaries (the Company).

Through the Code of Conduct, we are guided by the following principles:

•

Compliance with all applicable laws, regulations, policies and procedures is essential to our success and is required of every employee and director.

•

All of our decisions and acts are proper, in terms of our own sense of integrity and how these acts might appear to others.

•

Our interactions with present or prospective customers, suppliers, government officials, competitors, and the communities we serve comply with applicable legal requirements and follow the highest standards of business ethics.

•

We are honest, trustworthy, and fair in all of our actions and relationships with, and on behalf of, the Company.

•

Our books and records are maintained honestly, accurately, and in accordance with acceptable accounting practices.

•

We avoid situations in which our individual personal interests conflict, may conflict or may appear to conflict with the interests of the Company or its customers.

•

We secure business based on an honest, competitive market process, which contributes to the Company’s earnings by providing customers with appropriate financial products and services.

•

We maintain the appropriate level of confidentiality at all times with respect to information or data pertaining to customers, suppliers, employees or the Company itself.

•

We protect and help maintain the value of the Company’s assets, including facilities, equipment, and information.

•

We act professionally and respect the dignity of others.

•

We contribute to the effectiveness of the Code of Conduct by notifying management, or the non-management directors, whenever violations or possible violations are observed or suspected.

Page 2

Employees and directors must apply the principles of the Code of Conduct in all of their business dealings and in every aspect of their employment by, or directorship of, the Company. The principles apply to all forms of communication, including voice, written, e-mail, and the Internet.

Employees and directors must consider their actions in light of how they might be interpreted by others and whether they are behaving appropriately and performing in the best overall interests of the Company. Compliance with the spirit and the letter of the Code of Conduct is critical and required.

The Code of Conduct is set forth below. More extensive direction to help employees understand and apply the principles of the Code of Conduct is provided in the Interpretive Guidance, which is also required reading for all employees.

THE CODE

Avoiding Conflicts of Interest

Employees and directors must make all business decisions for the Company free of conflicting outside influences. Employee and director conflicts of interest, or potential conflicts of interest, must be identified and addressed appropriately. Employees are subject to restrictions with respect to compensation offered and received, gifts and entertainment presented and received, personal fiduciary appointments, acceptance of bequests, outside employment and other affiliations, signing authority on accounts at the Company, and holding a political office. Employees are required to disclose conflicts and potential conflicts in the above categories, as well as conflicting or potentially conflicting relationships with customers, prospects, suppliers, and other employees. Senior managers must review disclosures and determine whether individual employee situations are acceptable because they do not present a conflict of interest for the Company. Directors are required to disclose their potential conflicts of interest to the Chief Executive Officer or the General Counsel for their review.

Proper Use and Care of Information and Proper Record Keeping

The Company recognizes its obligation to shareholders, customers, and employees to ensure the protection, confidentiality, and integrity of all forms of data and information entrusted to it; employees and directors must maintain this confidentiality, even after they leave the Company. Employees and directors must also prevent misuse of confidential information, such as improper insider trading, trading upon material non-public information, and disclosing confidential information.

All entries made to books and records must be accurate and in accordance with established accounting and record-keeping procedures and sound accounting controls. Books and records must also be retained, as required, to comply with document retention requirements. Periodic reports submitted to the Securities and Exchange Commission, other regulators, management, and the public must reflect full, fair, accurate, timely, and understandable disclosure of the Company’s financial condition.

Page 3

THE CODE (continued)

Dealings with Customers, Prospects, Suppliers, and Competitors

All dealings with customers, prospects, suppliers, and competitors must be conducted in accordance with law and on terms that are fair and in the best interests of the Company. Decisions concerning placement of the Company’s business with current or prospective customers and suppliers must be based solely on business considerations. Employees and directors must not allow personal relationships with current or prospective customers or suppliers to influence business decisions. Each employee who conducts business with customers, and who approves or can influence customer transactions must read and comply with the Company’s Know Your Customer Policies and Procedures. Employees must be mindful of potential or actual conflicts of interests, inside or outside of the Company, that may influence business decisions or otherwise interfere with the performance of their particular responsibilities at the Company and their duties to customers. Employees must comply with all laws and regulations pertaining to anti-money laundering, record keeping, antitrust, fair competition, anti-racketeering, and anti-bribery applicable in the United States or non-U.S. locations where the Company does business.

Doing Business with the Government

The Company conducts business with various national and local governments and with government-owned entities. While employees must always follow the highest standards of business ethics with all customers, employees should be aware that there are special rules that apply to doing business with a government. Some practices that are acceptable when a private company is the client, such as nominal gifts or entertainment, may cause problems, or in some cases be a violation of a law, when working with governments or government agencies. All employees and directors involved in any part of the process of soliciting from or providing service to a government entity have special obligations to follow Company policies regarding “Doing Business with the Government.” These policies also apply in circumstances where employees are supervising the work of third parties, such as consultants, agents or suppliers. Employees who have responsibilities for recruitment or hiring decisions must follow applicable laws regarding hiring former government officials, their family members or lobbyists.

Treating People Fairly and with Respect

It is the Company’s policy to treat people fairly and with respect. All employees and directors must deal with present and prospective customers, suppliers, visitors, and other employees without any discrimination because of race, color, creed, religion, sex, national origin, ancestry, citizenship status, age, marital status, sexual orientation, physical or mental disability, veteran status, liability for service in the Armed Forces of the United States or any other classification prohibited by applicable law. Managers must create an environment free of hostility, harassment, discrimination, and intimidation. Managers and other employees who violate laws or the Company’s policies requiring fairness and respectful treatment of others are subject to consequences that may include disciplinary action up to and including termination of employment. Any employee or director who believes that he or she has been the subject of harassment or discrimination, or who believes that an act of harassment or discrimination has occurred with respect to another employee or director, is encouraged to report the perceived violation.

Page 4

THE CODE (continued)

Compliance with the Law

Employees and directors of the Company must not participate in any illegal or criminal activity. Any employee who has been formally accused of, convicted of or pleaded guilty to a felony, or has been sanctioned by a regulatory agency must report immediately such information in writing to the Director of Human Resources. Employees and directors must also respond to specific inquiries from the Company’s independent public accounting firm and the Company’s regulators. Employees and directors must protect the Company’s assets in whatever ways are appropriate to maintain their value to the Company. Employees and directors must take care to use facilities, furnishings, and equipment properly and to avoid abusive, careless, and inappropriate behavior that may destroy, waste or cause the deterioration of Company property.

Employees should be aware of the laws and regulations applicable to the Company. These include, for example, the Bank Secrecy Act, the Bank Bribery Act, the Foreign Corrupt Practices Act, Sections 23A and 23B of the Federal Reserve Act (Regulation W), Federal Reserve Regulation O, the Securities Exchange Act of 1934, the Gramm-Leach-Bliley Act, the Sarbanes-Oxley Act of 2002, Federal Fair Lending Laws, the Fair Credit Reporting Act, the Community Reinvestment Act, U.S. Economic Sanctions Laws, the USA PATRIOT Act, Antitrust Laws, the Bank Holding Company Act - Laws and Regulations Regarding Tie-In Arrangements, U.S. Antiboycott Laws and Regulations, the Employee Retirement Income Security Act of 1974 (ERISA), Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Uniform Services Employment and Reemployment Rights Act, all of which are summarized in the Appendix A of the Code of Conduct. Training is conducted to ensure that key managers are familiar with these laws and regulations and understand their responsibility to promote compliance by their staff members.

Every possible situation cannot be anticipated in the Code of Conduct, so employees, or directors, who are uncertain about any aspect of the Code of Conduct or how it should be applied or interpreted, are encouraged to discuss the question with their manager, the Chief Compliance and Ethics Officer, the General Counsel or the Director of Human Resources. An employee or director who compromises or violates the law, and any employee who violates the Company’s policies relating to the conduct of its business or the ethical standards contained in the Code of Conduct, is subject to corrective action, up to and including dismissal from employment or directorship at the Company and, in some cases, may also be subject to criminal or civil proceedings under applicable laws.

The Code of Conduct is published on the Company’s Intranet site that is accessible to most employees. The Company also distributes a copy of the Code of Conduct annually to each employee either electronically or in hardcopy. Managers must review the Code of Conduct annually with their staff members. The Code of Conduct is also included in the materials given to new employees by Human Resources. Certain employees are required to annually complete a Code of Conduct Questionnaire and Affiliation Record and to certify that they recognize their responsibility to comply with the Code of Conduct. Managers must review the Questionnaire and Affiliation Record responses of employees on their staff and determine whether they are satisfactory, require further review by more senior managers or require corrective action.

Material changes to the Code of Conduct will be communicated to employees and directors promptly. Waivers of Code of Conduct requirements for executive officers and directors of the Company will be considered and, if appropriate, granted by the Board or a Board committee and disclosed.

Page 5

III. SEEKING HELP OR REPORTING VIOLATIONS OF THE CODE

All employees and directors are encouraged strongly to assist management in its efforts to ensure that the Code of Conduct is being followed by all employees (i.e., colleagues, staff members and superiors) and directors. Employees or directors observing or suspecting a breach of the Code of Conduct or any law, regulation or other Company policy by another employee or director in connection with that other employee’s or director’s conducting business for the Company, must report the breach and describe the circumstances to management or to the non-management director designated to receive complaints via mail or e-mail. Alternatively, the observing or suspecting employee or director can call the Employee Ethics Help Line or the Ethics Hot Line (Ethics Point), both of which allow for anonymous communication.

All reports are treated as confidential to the extent consistent with the appropriate investigation. Senior officers or the non-management director will investigate all matters reported and determine whether remedial action and notification to regulators or law enforcement is appropriate. Failure to fully cooperate with an internal investigation may result in disciplinary actions up to and including termination. Retaliation of any kind against any employee or director who makes a good faith report of an observed or suspected violation of the Code of Conduct or any law, regulation or Company policy is prohibited. All employees must respect the need for enforcement of the Code of Conduct and the importance of the disclosure of suspected violations.

Options for Reporting

Reports of suspected or actual breaches of law, regulation or the Code of Conduct may be made to the employee’s manager, a more senior manager in the business, the Chief Compliance and Ethics Officer, the General Counsel or the Director of Human Resources. Such reports may be made orally or in writing and will be treated as confidential to the extent consistent with appropriate investigation and remedial action. Reports can also be made via email at ethics@bnymellon.com or by calling the Company Ethics Help Line using the following phone numbers:

•

United States and Canada: 1-888-635-5662

•

Europe: 00-800-710-63562

•

Brazil: 0800-891-3813

•

Australia: 0011-800-710-63562

•

Asia: 001-800-710-63562 (except Japan)

•

Japan: appropriate international access code + 800-710-63562

•

All other locations: call collect to 412-236-7519

If desired, employees may call the Ethics Help Line anonymously, as calls to the Ethics Office do not display a caller’s identification.

If employees are uncomfortable speaking with a representative of the Company directly, they may choose to contact the Ethics Hot Line (Ethics Point), an independent hotline administrator, via the web at http://www.ethicspoint.com (the site is hosted on Ethics Point’s secure servers and is not part of the Company’s web site or intranet) or by calling the Ethics Hot Line (Ethics Point) at:

•

United States and Canada: 1- 866-294-4696

•

Outside the United States dial the following AT&T Direct Access Number for your country and carrier, then 866-294-4696

•

United Kingdom: British Telecom 0-800-89-0011; C&W 0-500-89-0011; NTL 0-800-013-0011

•

India 000-117

•

Brazil: 0-800-890-0288

•

Ireland: 1-800-550-000; Universal International Freephone 00-800-222-55288

•

Japan: IDC 00 665-5111; JT 00 441-1111; KDDI 00 539-111

•

Australia: Telstra 1-800-881-011; Optus 1-800-551-155

•

Hong Kong: Hong Kong Telephone 800-96-1111; New World Telephone 800-93-2266

•

Singapore: Sing Tel 800-011-1111; StarHub 800-001-0001

Page 6

Reports may also be made to an independent Director of the Board who has been designated to receive such reports. Employees may contact the independent Director via mail addressed to The Bank of New York Mellon Corporation, Church Street Station, P.O. Box 2164, New York, New York 10008-2164, Attn: Non-Management Director, or via e-mail to non-managementdirector@bnymellon.com.

IV.

INTERPRETIVE GUIDANCE TO THE CODE

A.	CONFLICTS OF INTEREST

A conflict of interest is any situation in which there are competing personal and/or professional interests. When employees are in such situations, it is difficult to objectively fulfill their job duties and their loyalty to the Company may be compromised. Every business decision made by employees must be in the best interest of the Company and not for their own personal gain or benefit. As such, employees may not engage in any activity that creates, or even appears to create, a conflict of interest between them and the Company. Even if the conflict does not create an improper action, the existence of a conflict of interest can create an appearance of impropriety and can damage the Company’s reputation. Therefore, any employee who believes that they have, or may be perceived to have, a conflict of interest, must disclose that conflict to their manager and to the Compliance Department. Employees are expected to cooperate fully with all efforts to resolve any such conflicts.

Gifts, Entertainment and Other Payments

Refer to the Company’s Policy on Gifts and Entertainment and Other Payments for specific restrictions and requirements required in connection with the receipt and presentation of gifts, entertainment and other payments. All reports and requests for approval must be made through CODE RAP.

Receipt of Gifts and Entertainment

All placements of Company business and acceptance of business by the Company must be awarded purely upon business considerations. Except as permitted by Company policy, an employee must never request or accept anything of value from any person or entity for directing Company business to such person or for accepting business on behalf of the Company.

The Company prefers that its employees and their Immediate Family Members not accept gifts from current or prospective customers, suppliers, prospects or competitors. (See Section IV.A.2 - Personal Conflicts of Interest for the definition of Immediate Family Members.)

Receipt of cash gifts, checks or cash equivalents (e.g., gift certificates and gift cards that are convertible into cash, and gift certificates and gift cards that are not directly associated with a retailer) is prohibited. These gifts are always inappropriate and must never be accepted.

Employees should only accept the type of entertainment that they believe would be deemed appropriate by senior management. Entertainment may only be accepted if it is not excessive, is of the nature that would not bring reputation damage to the Company, and the employee is certain that no conflict of interest issues are raised by the entertainment.

Page 7

Presentation of Gifts and Entertainment

In situations where the Company is to present a gift, entertainment or other accommodation to a present or prospective customer, supplier, prospect or competitor, employees must use careful judgment to determine whether the matter is handled in good taste and without excessive expense. Except as permitted by Company policy, an employee must never offer, give or promise anything of value to any person or entity in any manner in the course of seeking or retaining business for the Company.

An employee must never make any secret or illegal payments, bribes or other similar payments in any form whatsoever under any circumstances. In particular, employees may not authorize, offer or make payments of anything of value, directly or indirectly, to any foreign official, foreign political party, foreign political candidate, or any officer of a public international organization, in order to obtain, retain or direct business, or to secure an improper advantage, unless the employee has consulted with the Legal Department to ensure any such payments do not violate the Foreign Corrupt Practices Act. (Refer to applicable Company policies).

The presentation of cash gifts, checks or cash equivalents (as described above) by an employee on behalf of, or in the name of, the Company is inappropriate and prohibited.

Employees with any questions concerning the permissibility of gifts, entertainment or other payments should consult with the Compliance or Legal Departments.

Personal Conflicts of Interest

An employee must not represent the Company in any transaction if the personal or related interests of the employee or their Family Members (see Note below for definition of Family Members) might affect the employee’s ability to represent the Company’s interest fairly and impartially. If a situation arises that could be considered an actual or potential conflict of interest, the employee must report immediately the circumstances surrounding the situation to the Compliance Department, which will determine what, if any, further review or action is required. Such reports should be made through CODE RAP.

NOTE: Unless otherwise stated herein, Family Members include (1) all Immediate Family Members, which includes spouse, children (including stepchildren, foster children, sons-in-law and daughters-in-law), grandchildren, parents (including stepparents, mothers-in-law and fathers-in-law), grandparents and siblings (including brothers-in-law, sisters-in-law and step brothers and sisters), adoptive relationships, or a closely associated person who has assumed the responsibility normally shouldered by immediate family or for whom one has accepted such responsibility, and (2) Other Family Members, which includes aunt, uncle, first or second cousin, niece and nephew.)

Employees may not handle transactions as a representative of the Company when such transactions are for their own personal account or for accounts of their own Family Members or other persons with whom they have a close personal relationship. Employees may handle transactions involving another employee, a person known to be a member of the other employee’s family or a person with a close personal relationship to the other employee, as long as those transactions conform to Company programs and policies and are conducted on the same terms available to others. When such transactions are beyond the scope and size of usual and ordinary personal financial transactions, the employees who represent the Company in handling those transactions must refer them to a more senior level of management.

Page 8

Personal Relationships of any kind with other employees, whether conducted on or off premises, must not result in a conflict, or the appearance of a conflict, with the Company’s interests or policies. In addition, family members, as defined in the applicable Human Resources policies, are generally not permitted to work within the same business unit or to be in a position to control compensation decisions for, or influence transactions carried out by, other employees who are family members. Any apparent or potential conflicts that arise must be reported to the appropriate level of management and the Human Resources Manager immediately. These reports will be evaluated for propriety against the interests of the Company and any conflicts present must be eliminated. Employees who are uncomfortable reporting a conflict to their manager should report them to the Chief Compliance and Ethics Officer.

Employees are required to disclose to their Supervisor and Human Resources Manager the existence of a familial relationship as soon as that relationship occurs. (Refer to Section IV - F.3 - Personal Relationships with Other Employees and applicable Human Resources policies, which discuss dealings between employees, including borrowing, lending, and gifts.)

Employees are subject to restrictions in connection with exercising signing authority over personal and business (for-profit and not-for-profit) accounts maintained at the Company. (Refer to the Company’s Policy on Employee Signing Authority for such restrictions and requirements necessary to be reported via CODE RAP.)

Every possible conflict an employee might incur with the Company or with the Company’s customers, suppliers or competitors cannot be specifically addressed in the Code and, therefore, employees must discuss individual situations with their managers and take appropriate steps to ensure that these situations are being reported and addressed. Such reports should be made through CODE RAP.

Fiduciary Appointments and Bequests

Generally, an employee may act as a fiduciary for Family Members or long-standing personal friends if the situation clearly does not present a conflict with the Company’s interests and the employee receives no compensation. Employees may not act as a fiduciary (trustee, executor, etc.) in situations involving customers, prospects, other employees or any other person who might present a conflict of interest, or when compensation is received, unless the fiduciary appointment has been approved by the Chief Compliance and Ethics Officer and the Chief Executive Officer. Employees must be aware that certain fiduciary appointments may have legal requirements that may require the approval of the either the Board of Directors of the Company or one of its subsidiary Board of Directors.

Employees are not permitted to accept a bequest granted under the will or trust instrument of a customer of the Company, except when such bequest is from a Family Member of the employee or permission to do so has been granted by the Chief Compliance and Ethics Officer. Requests for permission must be made through CODE RAP, as prescribed in Exhibit B, and should describe the customer’s relationship with the Company and the employee, and all other relevant circumstances.

Page 9

Outside Affiliations, Outside Employment, and Certain Outside Compensation Issues

Employees may not accept outside employment as a representative who can prepare, audit or certify statements or documents pertinent to the Company’s business. The Company may restrict its employees from participating in certain outside interests. Restrictions in connection with employee ownership of privately held for-profit businesses; service as a director, trustee, officer or partner of a for-profit business; service as a director, trustee, officer, or owner of a not-for-profit organization; outside employment situations; political appointments and elected office; and compensation received in connection with certain other situations are detailed in the Company’s Policy on Outside Affiliations, Outside Employment, and Certain Outside Compensation Issues. All approvals and reporting required must be made through CODE RAP in accordance with Company policy.

Disclosure of Relationships and Transactions

The details of all relationships and transactions among the Company, its customers, suppliers, and others with whom it does business must be disclosed fully to the Company and other appropriate parties. No secret agreements or side arrangements can exist between the Company, an employee or his or her close personal relationships, a customer of the Company, suppliers, or other third parties concerning relationships and transactions with customers or suppliers. All details of the Company’s relationships and transactions with customers, suppliers, and others with whom it does business or transacts for its own account must be entered in its records.

B.	PROPER USE AND CARE OF INFORMATION AND PROPER RECORD KEEPING

Proprietary Information; Intellectual Property

Unless duly authorized to reveal information in accordance with policies and procedures of the Company, an employee must keep confidential, and not divulge to others, information or data concerning the business or transactions of the Company, or its present, former or prospective customers, suppliers or employees (i.e., Proprietary Information). Proprietary Information includes, but is not limited to, reports, analyses, financial data, analytical models, customer lists, customer account and transaction history information, Company policies and manuals, employee records, and information about products, services, methods, systems, software, technology, security, business plans, pricing methods, marketing strategies, and employees.

Within the Company, access to Proprietary Information must be limited to those persons whose duties require and permit them to have access to that information. Persons receiving Proprietary Information are also responsible for maintaining its confidentiality. All customer information should be treated as highly sensitive and may be disclosed only in authorized circumstances and in accordance with applicable laws (e.g., the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act) and policies of the Company. Inappropriate disclosure of customer information may require reporting to regulators and/or notification to affected consumers. Moreover, an employee is prohibited from making personal use of Proprietary Information and from removing any Proprietary Information from the Company’s premises unless removal is required in the performance of the employee's duties. (Refer to Section IV - C.5 - Recognizing and Reporting Illegal, Suspicious or Unusual Activities.)

Page 10

Software, inventions, business methods, processes, documents, improvements, developments, and other works and materials that are created on Company time, created as part of an employee's specific job responsibility, result from any work performed for the Company, relate to the Company’s business, or arise from knowledge gained or information or resources available to the employee because of employment by the Company (even if not created as part of the employee’s specific job responsibility) are the intellectual property of the Company exclusively. All rights, title and interest worldwide to such intellectual property belong to the Company, and an employee may not take any action to effect rights, title or interest to such intellectual property on behalf of any person or entity other than the Company. All intellectual property must be returned to the Company, along with other work products, including any copies, when an employee leaves the Company. Additionally, employees must fully cooperate with, and assist the Company in, obtaining patent protection for inventions in any and all countries.

The obligations and prohibitions of this section of the Code continue even after an employee leaves the Company. Legal remedies may be pursued against present and former employees who violate confidentiality requirements or who remove or retain any data, Proprietary Information (including but not limited to customer data, customer lists, reports, policy manuals, records, and the like) or physical or intellectual property from the Company. (Refer to Section IV - G.3 - Protection of Company Assets.)

Data Integrity and Corporate Information

The Company has an obligation to its shareholders, customers, and employees to ensure appropriate protection of the confidentiality and integrity of all forms of data entrusted to it, whether in electronic or printed form. To meet this obligation, management supports an ongoing Corporate Information Protection Program. This program requires that access to data be granted on a strict need-to-know basis, that information systems be controlled to protect the Company from financial loss due to misuse, disclosure, fraud or destruction, and that our shareholders', customers', suppliers', and employees' rights to confidentiality be maintained. For this purpose, information systems include any computing device that is capable of storing data in electronic fashion, such as the Company’s mainframe, mid-range, personal computers, networks, mobile devices, and electronic media. Sensitive company information, especially personal customer data, must be stored, transported, and disposed of in a manner that will protect against inappropriate or unauthorized disclosure.

Any employee who suspects or knows of a breach in information security has an obligation to report this as a security incident. Employees who have user identification codes and passwords (or other methods of authentication) must recognize that the user identification code is unique to that individual, that the password must be kept confidential, and that the user identification code or password cannot be used by, or shared with fellow employees. In rare cases where it appears necessary for an employee to disclose his or her password, notification must be provided to Company management through CODE RAP.

Employees must exercise care to prevent the disclosure of sensitive information when communicating through e-mail or the Internet. Employees should ensure that information or messages from the e-mail system are not disclosed to unauthorized individuals.

Page 11

Use of E-mail and the Internet

All communications and written or electronic materials maintained at the Company must be appropriate and in good taste. E-mail systems and Internet access are provided to assist and facilitate business communication. All use of E-mail and the Internet must be consistent with the Company’s Electronic Mail Policy, Internet Policy, and policies prohibiting a hostile work environment. All messages and Internet sites that contain statements or materials that are discriminatory, offensive, defamatory, sexual, pornographic, illegal or harassing in nature are strictly forbidden. (Refer to Sections IV - F.1 and F.2 - prohibiting discrimination and harassment.)

Statements that would be inappropriate in a memorandum or letter may not be written in an e-mail or Internet message. Moreover, no materials containing such undesirable elements may be downloaded or maintained on Company premises or in the Company’s systems or files. All information transmitted, received, stored or otherwise contained in Company systems or files is the property of the Company and may be accessed, decrypted, and examined by the Company at any time.

E-mail cannot be used to conduct financial transactions with external parties, except where appropriate controls, including encryption and obtaining indemnification from the applicable customer, have been established and approved by a senior officer at the Company. Business units must assess the needs regarding confidentiality and integrity concerning specific transmissions and determine if encryption is required. E-mail and Internet transmissions of confidential customer or restricted information to outside parties is prohibited, except where appropriate steps are taken to protect the information from unauthorized disclosure, such as encryption, or where approved by the appropriate Sector Head under exceptional circumstances after appropriate steps are taken to mitigate the risk, including obtaining indemnification from the applicable customer. This restriction is especially critical with respect to “non-public personal consumer information,” as defined in the Company’s Personal Customer Data Privacy Policy.

Employees may send or receive personal e-mail or Internet messages, provided that they do so responsibly, and that such use does not interfere with work responsibilities or other Company business needs or violate the law or Company policy. There is no right to personal privacy in any message created, received or sent from Company computer systems. The Company reserves the right to monitor the systems that store and transmit e-mails, all e-mail messages, and all Internet access and communications (including instant messaging), to ensure that e-mail and Internet facilities are being used appropriately.

Accurate Accounting and Internal Controls

Employees must comply with the Company’s accounting and record keeping procedures to ensure that all records are maintained appropriately and accurately. In addition, managers in areas responsible for preparing or reviewing financial data of the Company are responsible for establishing and maintaining sound internal accounting controls for monitoring their effectiveness. It is essential that periodic reports, which are derived from records of the Company and issued by the Company to shareholders, regulators, and others, provide full, fair, accurate, timely, and understandable disclosure. Falsification or misrepresentation of Company records or reports will not be tolerated under any circumstances. If an employee observes or suspects that inaccurate or misleading entries have been made in the records or reports of the Company, or that necessary entries have not been made in such records and reports, then he or she must report these observations or suspicions in accordance with Section III of The Code.

Page 12

Inside Information

While performing routine duties for the Company, employees may be exposed to material non-public information (inside information) about the Company, its customers or other parties. Employees must take special care with respect to transactions in securities of the Company, its customers or other parties to avoid any situation involving, or appearing to involve trading on inside information or trading for a quick profit. Employees who have obtained inside information with respect to the Company or any other publicly traded company are prohibited from dealing in, or engaging in transactions in such company’s securities, and may not advise or influence any other person to engage in transactions in those securities until the information becomes public.

Employees are not permitted to divulge the current portfolio positions, pending changes of a portfolio manager, current or anticipated portfolio transactions, or programs or studies, of the Company or any customer to anyone unless it is properly within their job responsibilities to do so.

Additionally, employees may not disclose inside information to another person, except as required to perform their duties for the Company. These restrictions apply whether an employee obtained such inside information intentionally or unintentionally. Employees must always adhere to Company policies with respect to transactions involving securities issued by the Company, its customers or other parties.

Questions concerning whether an employee is affected by additional personal securities trading rules and restrictions should be directed to the Chief Compliance and Ethics Officer. Questions concerning whether employees are in possession of material non-public information, or if specific transactions could violate securities laws, should be directed to the General Counsel.

Talking to the Media

All communication to the media about the Company, its businesses, and its employees must be disseminated in a manner that complies with laws and regulations and is in the best interest of the Company. All inquiries from the media must be directed to the Corporate Communications Department, and employees are prohibited from responding to inquiries from the media without prior pre-clearance from Corporate Communications. These inquiries would include requests for interviews, comments or information from television, radio, newspaper, magazine, and trade reporters, and any other persons who may be inquiring for the media.

Moreover, in situations where employees are being interviewed about matters unrelated to the Company, employees should refrain from identifying the Company as their employer and should refrain from making any comments about the Company.

Document Retention

Employees must know, understand, and comply with the retention requirements for all records and other documents they handle, as required by applicable laws, regulations, and Company policies. Furthermore, the unauthorized destruction of documents is prohibited. Questions concerning record retention and document destruction rules should be discussed with a manager in the applicable unit or a representative of the Legal Department.

Page 13

C.	DEALING WITH CUSTOMERS, PROSPECTS, SUPPLIERS, AND COMPETITORS

Business Relationships with Customers, Prospects, Suppliers, and Competitors

Employees must not take for themselves or direct to others any existing business or any opportunities for prospective business that could be considered by the Company. Employees of the Company should be scrupulously honest and fair in all dealings with the Company, its customers, its prospects, its suppliers and its competitors.

Employees must take care to ensure that they do not take unfair advantage of anyone through manipulation, abuse of authority, concealment, abuse of privileged information, misrepresentation of material facts, unfair lending practices, or any other unfair dealing practice. Employees must be mindful of actual or potential conflicts of interests, inside or outside of the Company, that may unduly influence business decisions and judgments or otherwise interfere with the performance of the employee’s particular responsibilities at the Company and duties to others.

Employees must not enter into business relationships with customers, prospects, or suppliers of the Company, except for normal consumer transactions conducted through ordinary retail sources. More specifically, borrowings by employees from customers or suppliers of the Company are not permitted, except for routine borrowings from banking organizations, life insurance companies, member firms of the stock exchanges, and close relatives (Refer to Section IV - E.1 - Personal Investments and Section IV - E.2 - Personal Brokerage Accounts.)

Employees may not give legal, tax, investment or other professional advice to customers, prospects or suppliers of the Company, unless this activity is part of their regular duties at the Company. Additionally, employees may not recommend to customers, prospects, suppliers or other employees, third-party professionals who provide services (e.g., attorneys, accountants, insurance brokers or agents, stock brokers, and real estate agents), unless the employee provides several candidates without favoritism and discloses in writing that the recommendations have not been reviewed or endorsed by the Company. In no cases, can these recommendations be for a fee, and under no circumstances can employees make a recommendation if they expect to benefit from such recommendation.

All transactions by employees with customers or suppliers of the Company must be handled strictly on an arm’s length basis, and the terms of such transactions must not even suggest the appearance of personal advantage. Employees who may be presented with the possibility of any deviation from this standard are expected to decline the offer and explain the Company’s policy to the customer or supplier, along with the reasons for strict adherence to the Code.

Business Decisions

Employees must not permit a decision about whether the Company will do business with a present or prospective customer or supplier to be influenced by unrelated interests. Decisions relating to placing the Company’s business with present or prospective customers and suppliers, and the volume of such business, must be based solely on business considerations.

Employees are required to uphold antitrust, fair competition, anti-racketeering, and anti-bribery laws enacted by the United States, the various states within the U.S., and any other country in which the Company does business. These antitrust, fair competition, anti-racketeering, and anti-bribery laws are designed to preserve free and open competition. Failure to comply with these laws may result in litigation, government investigations and lawsuits, substantial fines or damages, and adverse publicity that are harmful to the Company’s reputation.

Page 14

Employees must preserve fair competition by refraining from discussing pricing or pricing policy, costs, marketing or strategic plans, or proprietary product or other confidential information with competitors. Employees must never agree with competitors on prices to charge customers, the division of markets or the boycott of certain customers, suppliers, or competitors. Except as permitted after consultation with the General Counsel, an employee may not enter into an arrangement on behalf of the Company that would condition the availability or price of a particular service on the customer’s agreement to obtain from, or provide to the Company some other services, or to refrain from dealing with a competitor of the Company in such a way as to violate the laws concerning tie-in arrangements.

There are activities and transactions that competitors can do jointly, but employees must exercise caution when dealing with or speaking to competitors and must consult with the General Counsel concerning questions as to the legality or appropriateness of a discussion with a competitor. If an employee finds himself or herself engaged in a conversation with a competitor, and the employee believes the competitor has made comments or asked questions that are, or may be perceived as a violation of antitrust, fair competition, anti-racketeering, or anti-bribery laws, the employee must immediately state his or her refusal to continue the discussion, abort the conversation, and refer the matter to the General Counsel. (Refer to the Company policies on Antitrust and Anti-Tying Policy.)

Exploitation of Relationships and Use of the Company’s Name, Letterhead or Facilities

Employees must be careful to ensure that customers, suppliers, and other employees do not exploit their relationship with the Company and that the Company’s name is not used in connection with any fraudulent, unethical, dishonest or unauthorized transactions. Additionally, employees must not use the Company’s name, letterhead or electronic media to endorse or recommend customers, suppliers or prospects to regulators, suppliers or others, except in accordance with applicable Company policy. In all cases, false statements can never be made in the name of the Company. All communications, business correspondence, marketing materials, websites, and presentations should be prepared in accordance with present Company policies that address corporate identity and the Company brand.

Generally, the Company will not issue endorsements of any customer, supplier, vendor, service or product, and the Company’s name must not be used by any customer, supplier, vendor or employee in advertisements or other such ways as to suggest such endorsement. Employees must not use the Company’s name to enhance their own opportunities with respect to any outside relationships or personal transactions, or to imply, without proper authorization, the Company’s sponsorship or support of their outside interests.

Except as provided in Human Resource policies, employees should not use their position at the Company or the contacts achieved through their position at the Company for the purpose of soliciting business or contributions for any entity other than the Company or its subsidiaries, regardless of whether or not the other entity is a customer, prospect or supplier of the Company.

Use of the Company’s letterhead or facilities or of an employee’s business card can be construed as the use of the Company’s name and reputation; therefore, it is important that employees not use Company letterhead for personal use or in a manner not authorized by the Company. Employees must never use Company letterhead or electronic media to make false statements purportedly on behalf of the Company.

Page 15

In general, raffles and lotteries are prohibited. Any exceptions must be approved by senior management.

Situations may arise wherein an employee may choose to serve in some capacity for, or on behalf of a charitable or not-for-profit institution. In such service, the employee may use their business card, the Company’s letterhead, and its facilities in connection with the non-Company entities, if either (1) the Company (as evidenced by written notice from the Chief Executive Officer or President) has agreed to sponsor a charity (for instance, The United Way), (2) the Chief Executive Officer or President has agreed to be the Co-Chair for a charitable event, (3) the Chief Executive Officer or President has requested or instructed an employee to work on an event, or (4) the Company has agreed to sponsor a charitable event, as evidenced by the Secretary’s written approval for the contribution to that charity. In all cases, the company’s name, documents, and facilities must be used in a dignified manner in connection with the specific duties and for the assigned time-period.

Any use of the Company’s letterhead, business card, name, or facilities, except as provided herein, in connection with sponsoring, promoting, introducing or conducting business, or correspondence for or on behalf of any non-Company entities, whether a for-profit or a not-for-profit entity, requires the prior permission of the Director of Corporate Marketing. To request such permission, the employee must submit a request through CODE RAP.

Know Your Customer

All employees must exercise care when selecting those customers with whom we conduct business. Each employee who: 1) conducts Company business with customers, 2) approves or influences customer transactions or 3) is in a supervisory, managerial or sensitive position, must read and adhere to the Company-wide Know Your Customer Policies and Procedures. Such employees must also comply with any Know Your Customer Policies and Procedures established by their respective business unit and all applicable laws and regulations on anti-money laundering, record keeping, and reporting.

Recognizing and Reporting Illegal, Suspicious or Unusual Activities

All employees must comply with applicable laws, regulations and Company policies pertaining to the identification, investigation, and reporting of all actual or suspected incidents of fraud, money laundering, illegal activity, and other suspicious or unusual activities. Such activities may be observed by an employee through his or her dealings with a customer or from transactions of a customer. It is critical for employees to report any illegal, suspicious or unusual activities by filing an Incident Report using the icon on their computers, so that the Company will be able to comply with the Bank Secrecy Act, the USA PATRIOT Act, and other laws and regulations.

Incident Reports should be filed as soon as possible after activity is thought to be illegal, suspicious or unusual, but all reports must be filed within 72 hours of when the activity was detected.

Employees who wish to make such reports anonymously or confidentially may do so by calling the Ethics Help Line or the Ethics Hot Line (Ethics Point). No retaliation of any kind will be permitted against any employee who makes a good faith report of an observed or suspected violation of any law, regulation or Company policy. (Refer to the specific requirements contained in the Company’s Policy on Identifying, Investigating and Reporting Illegal, Suspicious or Unusual Activities and the Company’s Bank Secrecy Act and USA PATRIOT Act Policies.)

Page 16

D.	DOING BUSINESS WITH THE GOVERNMENT

In accordance with the Company’s Government Contract Compliance Program, several key principles apply to doing business with government entities. All employees are expected to comply with Company policies on “Doing Business with the Government”, but special focus is required by those individuals who are involved in the procurement, sales, marketing, and servicing of Government contracts.

Complying with Government Contracts, and Government Contracting Laws and Regulations

Employees working with the Government have an obligation to know, understand, and abide by the applicable laws, regulations, and ethical standards of those Governments, many of which may be stricter than those that apply to our commercial customers. Employees are required to know and comply with all terms and conditions of the Government contract(s) or subcontract(s) they support and are responsible for delivering services that meet all Government contractual requirements.

Integrity in the Sales and Marketing Process

Employees must demonstrate the highest levels of integrity during the sales and marketing process. This includes following laws and regulations concerning gift and entertainment restrictions, avoiding improper payments (e.g., bribes, improper gratuities or kickbacks to government employees/officials, prime contractors or subcontractors) and not entering into anti-competitive arrangements. When responding to a Government solicitation, an employee will not seek to obtain from a present or former Government employee or official any information concerning a competitor’s bid.

Truthful, Accurate Statements and Recordkeeping

Employees will not submit any documentation to any Government entity that they know contains false or inaccurate information. In addition, employees are prohibited from making any statement, verbal or written, to a Government employee or official that he or she knows is not true. All transactions will be entered accurately into the Company’s books and records in accordance with generally accepted accounting practices and principles of the United States and any other applicable laws. The Company will ensure that it will bill its customers honestly for all services provided and in accordance with applicable contractual requirements. Employees will be expected to record their expenses and time charges carefully, accurately, and promptly.

Safeguarding Government Information and Property

Employees may not accept from any source, either directly or indirectly, any information marked as classified for national security purposes, unless proper security clearance has been granted by the Government and approval has been received from the Legal Department. Employees will not use any Government-owned equipment to support non-Government production or divert Government-owned materials from their intended contractual use. Employees will not take any piece of Government property for their personal use. In addition, to protect the security of Government property, employees will not destroy or damage Government property while in the possession of the Company.

Page 17

Cooperating with Government Audits and Investigations

The Company is committed to cooperating with audits and reasonable investigative requests. Employees should not destroy or alter any Company documents (whether electronic or paper) in anticipation of a request for those documents from the Government. Employees should not make any misleading or false statements to any Governmental investigator.

Meeting Employment and Labor Obligations

Employees will not discuss employment opportunities with a present or former Government employee, official or any family member of such employee or official without prior approval from Human Resources. This includes direct discussions, as well as any discussion conducted through an agent or recruiter. The Company will comply with all Government contract provisions containing socioeconomic policies, including providing equal employment opportunity for all applicants and employees, developing affirmative action plans, and maintaining a drug-free workplace. The Company will comply with all applicable laws regarding wage determinations that dictate prevailing wage rates and fringe benefits.

Employees who have questions about government contracting should contact the Government Contract group of the Compliance Department.

E.	PERSONAL FINANCES

Personal Investments

Employees must always take care to be in compliance with the policies on personal securities trading, protecting confidential information, and all other policies developed by the Company with respect to transactions involving securities issued by the Company, its customers and other parties.

Consistent with the goal of aligning the interests of employees and shareholders, employees may not engage in short selling, trade options on the open market, or conduct short-term trades (60 day trading) of Company securities.

Generally, investments by employees in the stocks, bonds, options or other instruments issued by customers or suppliers of the Company should be considered carefully. Investments by employees in publicly owned corporations would normally be permissible, as long as the employee is not in possession of inside information concerning such corporations.

If the employee’s job function might reasonably be expected to 1) include decision-making with respect to the Company’s activities with the publicly owned corporation or 2) involve the employee’s receipt of privileged information, any information acquired in this capacity should not be used by employees in making their personal investment decisions. Investments or ownership in such corporations, which are suppliers and customers and whose securities are owned by our customers, would not be in conflict if bought under circumstances where there were no other points of conflict. The same considerations would apply with respect to an investment in a major competing company.

Any personal investment actions taken by employees with respect to smaller or not publicly traded or readily marketable companies, or involving private equity funds or other special situations, however, would be regarded differently. Such actions must not violate any of the principles cited in The Code, including conflicts, or result in any detriment, including reputational damage, to the interests of the Company or its customers. Employees should consult policies on personal securities trading for additional information and restrictions.

Page 18

Employees are not permitted to engage in principal transactions with the Company, except when such transactions (1) are conducted through areas of the Company, such as brokerage and investor advisory businesses, which usually and customarily provide such services to individual customers, and (2) are in compliance with all the terms of this and all other Company policies addressing conflicts of interest and undue influence.

Personal Brokerage Accounts

Employees who wish to open or maintain an account to conduct personal securities trading activity must comply with all Company policies that address the maintenance of personal brokerage accounts and the Company’s requirement for certain employees to disclose accounts, report trading activity, seek preclearance prior to trading or maintain accounts at a select group of broker/dealers. When the brokerage firm requires a letter from the Company in connection with opening a brokerage account, such letter is to be furnished by the Compliance Department.

Contributions to Political Parties

Employees are encouraged to personally support the political party or candidate of their choice through their own personal contributions. Employees are not permitted to make gifts or contributions in the name of, or on behalf of the Company to any political committee, candidate or party. Contributions are broadly defined to include any form of money, purchase of tickets, use of corporate personnel or facilities, or payment for services. All such corporate contributions must be approved in writing by the Public Affairs Office and as permitted by applicable law.

The Company encourages employees to keep informed of political issues and candidates and to take an active interest in political affairs; however, any employee who participates in any political activity must follow these rules: (1) never act as a representative of the Company without the written permission from the Chief Executive Officer, (2) all such activities should be done on the employee’s own time, and employees may not use Company time, equipment, facilities, supplies, clerical support, advertising or any other Company resource, (3) employees’ political activities may not in any way cloud their objectivity to perform their job duties or interfere with their ability to do their job, and (4) employees may not solicit the participation of other employees, customers, suppliers, vendors or any other party with whom the Company does business.

Contributions to Not-for-Profit Entities

The Company has a corporate charitable giving program that is administered by the Public Affairs Department. Employees are encouraged to personally support the charities of their choice through their own personal contributions and through service. A gift-matching program, also administered through the Public Affairs Department, is available to employees who may request the Company to partially match their gifts to qualified institutions and organizations. Employees are not permitted to make gifts or contributions to charities or other not-for-profit entities in the name of, or on behalf of the Company.

Page 19

Individual Employees' Regulatory Requirements

Some employees perform jobs that require them to be registered, licensed or otherwise qualified by certain regulatory authorities (e.g., the Gramm-Leach-Bliley Act - TITLE II requires those Bank employees offering certain investment products to customers to become registered with the SEC). All employees performing functions that require registrations or licenses must be mindful of their responsibilities to meet and maintain required qualifications. If such an employee ceases to meet the requirements, he or she must immediately submit a report through CODE RAP.

F.	TREATING OTHERS FAIRLY AND WITH RESPECT

Non-Discrimination

Employees must deal with present and prospective customers, suppliers, visitors, and other employees without any discrimination because of race, color, creed, religion, sex, national origin, ancestry, citizenship status, age, marital status, sexual orientation, physical or mental disability, veteran status, liability for service in the Armed Forces of the United States or any other classification prohibited by applicable law.

Any employee who believes that he or she has been the subject of discrimination, or who believes that an act of discrimination has occurred with respect to another employee, should report the perceived Policy violation to their manager or, the next level(s) of management or directly to their Human Resources Manager, promptly so that appropriate action may be taken. Employees may choose to submit their report through CODE RAP or report the matter orally or in writing directly with Human Resources. In any case, the report will be treated as confidential to the extent consistent with appropriate investigation and remedial action.

Anti-Harassment

The Company maintains a work environment that is free from disruptive influences that can interfere with, or interrupt the work of, the Company. Discriminatory or harassing remarks, jokes, inappropriate e-mails or Internet communications, or other conduct including that of a racial, ethnic, pornographic or sexual nature, which may be offensive to customers, suppliers or other employees, or otherwise create a hostile environment, will not be tolerated.

Harassment can take subtle forms and may vary from situation to situation. For example, sexual harassment may include any unwelcome sexual advance or request for sexual favors, unwelcome flirtation, or other unwelcome actions, including insulting, degrading or inappropriately complimentary sexual remarks or conduct, sexual jokes, pornography, discussion of sexual activity, threats or suggestions that an employee's work status is conditioned upon his or her acquiescence to sexual advances, touching, pinching, patting, the display of sexually suggestive objects or pictures, or other verbal or physical conduct of a sexual nature.

Any employee who believes that he or she has been the subject of harassment, or who believes that an act of harassment has occurred with respect to another employee, should report the perceived violation to their manager, to the next level(s) of management or directly to their Human Resources Manager promptly so that appropriate action may be taken. Employees may elect to submit this report via CODE RAP or may also choose to report the issue orally or in writing directly with Human Resources. In any case, your report will be treated as confidential to the extent consistent with appropriate investigation and remedial action.

Page 20

Personal Relationships with Other Employees

Employees should be scrupulously honest and fair in all dealings with fellow employees and must not allow personal relationships with other employees to affect business decisions. Employees must not take unfair advantage of other employees through manipulation, abuse of authority, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.

Subject to the provisions of the Company’s Policy on Loans From One Employee to Another, borrowing and lending between employees, or between an employee and a Family Member of another employee, is not permitted except for borrowing or lending that is of a short-term and incidental nature, involves a minimal amount of money (i.e., less than $250), and creates no conflict of interest attributable to the borrowing/lending relationship. Refer to Section IV - A.2 - Personal Conflicts of Interest and the general prohibition against family members working within the same Division or employees handling transactions for their own Family Members.

Gifts given by one employee to another should always be appropriate and in good taste. Additionally, it is improper for employees to give gifts to other employees, except when these gifts are offered in customary circumstances, do not create a conflict of interest or the appearance thereof, and are of a value that is not greater than $250. Employees who wish to give a gift larger than $250 to another employee must request approval through CODE RAP. There are no restrictions on gifts between Family Members.

G.	COMPLIANCE WITH THE LAW

Illegal or Criminal Activities

Employees of the Company must not participate in any illegal or criminal activities. In addition, employees must abide by the Company’s policies concerning substance abuse. While on Company premises or while on Company business, the following are prohibited: (1) the use, purchase, sale, transfer or possession of unlawful drugs or controlled substances, (2) the unauthorized use, purchase, sale, transfer or possession of alcohol, (3) being under the influence of unlawful drugs, controlled substances or alcohol, and (4) the abuse of lawful drugs.

Any employee who has been formally accused of, convicted of or has pleaded guilty to a felony, entered into a pre-trial diversion or similar program in connection with a prosecution for a felony or been subject to any order, judgment, decree or sanction by a regulatory agency must immediately report such information in writing to the Director of Human Resources.

Investigations

Employees must cooperate in any investigation conducted by the Company, its regulators or law enforcement agencies and are expected to be truthful and forthcoming during any such investigation. This includes situations where the employee is an implicated party, a witness, or is asked to provide information to facilitate an investigation. Any attempt to withhold information, sabotage or otherwise interfere with an investigation, may be subject to any level of disciplinary action. Investigations are confidential Company matters. It is impermissible to discuss any aspect of an investigation, even the fact that an investigation is being conducted, with any person not authorized to know the information, including your coworkers, managers, and individuals outside of the Company. Refer to Company policies on responding to investigations.

Page 21

Protection of Company Assets

Employees must protect the Company’s assets, including the Company’s physical assets, loan assets, receivables, investments, and other assets and property, in whatever ways are appropriate to maintain their value to the Company. Care should also be taken to use facilities, furnishings, and equipment properly and to avoid abusive, careless, and inappropriate behavior that may destroy, waste or cause the deterioration of Company property. Theft of any Company property, furnishings, equipment or other assets is unlawful. Employees who commit theft, or abet others in the act of thievery against the Company, will be subject to consequences. (Refer to Section IV.B.1 Proprietary information and intellectual property and Section IV.C.3 Use of the Company’s name, letterhead or facilities.)

V.	PENALTIES

Employees who compromise or violate the law, Company policies or procedures relating to the conduct of its business, or the ethical standards contained in the Company’s Code of Conduct will be subject to corrective action up to and including dismissal and, where appropriate, criminal or civil proceedings under applicable laws.

Any employee, upon realizing that they have not requested and received the required approval for any of the activities/duties/appointments as set forth in The Code or applicable Company policies, is required to do so immediately. Additionally, any employee who has not provided reports, as required herein, should do so immediately. Unless written authorization has been provided by the Chief Compliance and Ethics Officer, no employees are “grandfathered” or otherwise exempt from complying with the reporting and approval requirements of The Code.

VI.

MANAGEMENT RESPONSIBILITIES

Managers have primary responsibility for enforcing The Code and ensuring that the process and communication within their lines of business is sufficient to achieve compliance with its principles. Annually, managers must review The Code with all members of their staff and then submit to their manager written assurance that this review has been accomplished.

The Company also conducts an annual Code of Conduct Questionnaire Filing and Review Process. Designated senior managers play an important role in this process by distributing a Code of Conduct Questionnaire and Affiliation Record to targeted employees and stressing the significance and importance of The Code itself.

Designated senior managers should make themselves available to discuss The Code and to answer any questions that their employees may have. These managers must also review the answers on each completed Questionnaire, seek further explanation of any unsatisfactory responses, and determine if any responses require notification of the Sector Head, Chief Compliance and Ethics Officer, General Counsel or Director of Human Resources. Further, the designated senior managers are responsible for informing the Compliance Department that the process was completed satisfactorily in their respective business areas.

Questions concerning The Code or The Code of Conduct Questionnaire and Affiliation Record should be directed to the Chief Compliance and Ethics Officer.

VII.

OWNERSHIP

The Chief Compliance and Ethics Officer owns the Code of Conduct and Interpretive Guidance.

Page 22

EXHIBIT A

U.S. LAWS AND REGULATIONS REFERENCED IN THE CODE

(Employees who believe that any provision of The Code is inconsistent with local laws or regulations, or with their individual employment contract, should consult with the Legal Department.)

The Bank Secrecy Act

The Bank Secrecy Act commonly refers to a series of laws enacted since 1970 that require U.S. financial institutions to take reasonable steps to detect, deter, and report potential illegal activity involving cash deposits and withdrawals, correspondent and private banking accounts, wire transfers or any other transaction in which a U.S. financial institution may engage in with its customers. U.S. financial institutions, which include banks, broker/dealers, trust companies, investment advisors, insurance companies, and mutual funds, must establish Anti-Money Laundering (AML) programs that meet certain basic requirements to detect, deter, and report money laundering and terrorist financing. Minimally, a U.S. financial institution’s AML program must include the following elements: internal policies, procedures and controls; the designation of an anti-money laundering compliance officer; an ongoing employee-training program; and an independent audit function to test for compliance. The provisions of the USA PATRIOT Act, enacted in 2001, have greatly expanded the BSA and the scope of AML programs. These programs must incorporate a customer identification process into the KYC procedures and meet additional retention and record keeping requirements.

AML programs must also include certain minimum (i) due diligence criteria for correspondent accounts of all foreign financial institutions and all private banking accounts, and (ii) enhanced due diligence requirements for correspondent accounts of some foreign banks (i.e., those operating under an offshore banking license) and for private banking accounts of senior foreign political figures. Banks and broker/dealers are required to file reports of such activity, including Currency Transaction Reports (CTRs) and, as applicable, Suspicious Activity Reports (SARs) with law enforcement and bank regulatory agencies.

Violations of the Bank Secrecy Act can result in a prison term of up to 20 years and fines of as much as $1,000,000 per offense for convicted persons. A bank convicted of a money laundering or Bank Secrecy Act crime can also have its license or charter revoked and lose its FDIC insurance.

The Bank Bribery Act

The Bank Bribery Act makes it a crime for any director, officer or employee of an FDIC insured bank to make or grant any loan or gratuity to a public bank examiner; and for any director, officer, employee, agent or attorney of a financial institution to solicit, demand, accept or agree to accept anything of value in exchange for being influenced or as a reward in connection with any business or transaction of such financial institution.

Violations of the Bank Bribery Act can result in a prison term of up to 30 years and fines of up to $1,000,000 or three times the value of the bribe, whichever is greater, per offense for convicted persons. Violators may also be fined a further sum equal to the money so loaned or gratuity given.

Page 23

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act of 1977 (FCPA), as amended, prohibits the bribery of foreign officials in international business transactions. It has two, independent substantive components. The anti-bribery provisions make it a crime (with very limited exceptions) for any U.S. person or company to bribe (that is, to authorize, offer or make payments of anything of value to), directly or indirectly, any foreign official, foreign political party, foreign political candidate, or any officer of a public international organization, in order to obtain, retain or direct business, or to secure an improper advantage. The accurate books and records provisions impose internal accounting controls and record-keeping requirements on all issuers of U.S. securities in order to eliminate off-the-books accounts that could be used to conceal such bribes. The FCPA covers (i) improper payments made directly by the Company, its directors and its employees, as well as those made indirectly by agents, representatives, consultants or business partners acting on our behalf and (ii) acts of foreign persons in furtherance of a foreign bribe while in the U.S., as well as acts of U.S. persons to further unlawful payments completely outside the U.S. The FCPA also contains some exceptions (including one for “grease” or “facilitating” payments) which should be read narrowly. In December 1997, the 29 member countries of the OECD and 5 non-member countries adopted the “Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.” The Convention is a statement of principles and, like the FCPA, has both anti-bribery and accounting components. The Convention requires the signatory countries to enact laws that implement its principles. Accordingly, many foreign countries where we conduct business have recently enacted anti-bribery laws to cover unlawful payments occurring in those countries, and where applicable, we must comply with those requirements as well as the FCPA. In the U.S., the FCPA was amended in 1998 to implement some of the expanded coverage of the Convention.

Violations of the FCPA entail significant consequences, both in terms of criminal liability and civil fines, as well as adverse publicity, loss of good will, and the cost of a major internal investigation to determine the facts. The Foreign Corrupt Practices Act contains serious criminal and/or civil penalties, including up to 5 years in prison for individuals and $2 million in fines for corporations for violations of the anti-bribery provisions, and up to 10 years in prison for individuals and $2.5 million in fines for corporations for knowing and willful violations of the books and records provisions.

Federal Reserve Act Section 23A (Regulation W)

Section 23A of the Federal Reserve Act limits the aggregate amount of “covered transactions” a bank can engage in with its non-bank affiliates to 10% of the Bank’s capital and surplus for each affiliate and 20% of the Bank’s capital and surplus in the aggregate for all affiliates. “Covered transactions” include extensions of credit by a bank to an affiliate, guarantees by a bank of obligations of an affiliate, acceptance by a bank of securities issued by an affiliate as collateral for a loan and the purchase of assets by a bank from an affiliate. In addition, any extension of credit or guarantee must be secured by collateral having a market value of 100%-130%, depending upon the type of collateral.

Federal Reserve Act Section 23B (Regulation W)

Section 23B of the Federal Reserve Act requires transactions between a bank and its affiliates to be on terms and under circumstances that are substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with or involving non-affiliated companies.

Page 24

Regulation O of the Board of Governors of the Federal Reserve System

Regulation O governs extensions of credit by a bank to its executive officers, directors, principal shareholders and their related interests. It provides quantitative limits on such extensions of credit and requires that such extensions of credit be made on substantially the same terms as, and following credit underwriting procedures that are not less stringent than, those prevailing at the time for comparable transactions by the bank with persons that are not covered by this regulation and requires prior board of director approval for extensions of credit above a minimum threshold. It contains additional restrictions with respect to loans to executive officers and requires that such loans be reported to a bank’s board of directors. It also requires that extensions of credit to executive officers, directors and principal shareholders of correspondent banks be made on terms and conditions comparable to extensions of credit to non-insiders.

Securities Exchange Act of 1934

The Securities Exchange Act of 1934 prohibits the fraudulent misuse of material nonpublic information (often referred to as “inside information”) concerning a company. Fraudulent misuse of inside information includes buying or selling stock or other securities on the basis of material nonpublic information, in breach of a duty, for one’s own account, the account of a family member, a friend, a legal entity (i.e., a “shell company”), and/or a customer or a proprietary account of the Company. The prohibition may not be avoided by disclosing such information to someone else (often referred to as “tipping”) who then trades on it, or by using the information as the basis for recommending the purchase or sale of securities (even though the information itself is not disclosed). The prohibition also applies when the information is used to avoid losses (i.e., selling before the public dissemination of adverse sales or other financial information).

Gramm-Leach-Bliley Act

Title II of the Gramm-Leach-Bliley Act requires employees performing job functions involving the offering of certain investment products to be registered with the Securities and Exchange Commission. Such employees must maintain registrations in good standing.

Title V of the Gramm-Leach-Bliley Act and its associated Regulations limit the ability of financial services firms to share information about consumers with non-affiliated third parties. In general, a financial services firm may not disclose information about a consumer to a non-affiliated third party unless (i) the consumer has been notified of the proposed disclosure, (ii) the consumer has had a reasonable opportunity to opt out of the disclosure, and (iii) the consumer has not opted out. A number of exceptions apply to permit disclosures that are necessary for the transaction of business with the consumer. In addition, financial services firms are required to provide written notices describing their privacy policies to each consumer when that consumer becomes a customer of the firm and annually thereafter during the customer relationship.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 broadly impacts the way public companies, and their officers, directors, audit committees, auditors, and counsel perform their duties, and it imposes significant new responsibilities, liabilities, and risks on each of these parties. The Act mandates new corporate governance and financial reporting requirements intended to enhance the accuracy and transparency of public companies’ reported financial results. It establishes new responsibilities for corporate CEOs, CFOs and audit committees in the financial reporting process. It backs these requirements with new SEC enforcement rules and criminal penalties, including new obstruction of justice and document destruction provisions. The Act also provides for the establishment of a Public Company Accounting Oversight Board, new federal corporate whistleblower protection, and a lengthened statute of limitations for securities fraud.

Page 25

Fair Credit Reporting Act

The Fair Credit Reporting Act prohibits the disclosure of information relating to a consumer’s creditworthiness, subject to certain limited exceptions. It also limits the circumstances under which credit reports about consumers may be obtained. Civil remedies, including fines and damages, may be awarded for violations of the Act; obtaining a credit report under false pretenses is a crime.

Fair Lending

Federal Fair Lending Laws, as specified in the Federal Fair Housing Act, the Equal Credit Opportunity Act, and Regulation B, prohibit discrimination in lending on the basis of the applicant’s race, religion, national origin, sex, marital status, familial status, handicap, age, receipt of public assistance income, or exercise of rights, in good faith, under the Consumer Protection Act. The rules apply to lending in the form of personal loans, mortgage loans, credit cards, and margin credit extended by brokerage firms.

Community Reinvestment Act (CRA Act)

The Community Reinvestment Act seeks to affirmatively encourage lending institutions to help meet the credit needs of the entire community served by each institution covered by the statute, including low and moderate income neighborhoods, in a manner consistent with safe and sound lending principles. The CRA Act requires regulators of institutions to monitor and assess the institution’s CRA record according to specified tests and to take the record into account when considering an institution’s applications for establishing branches, relocating, mergers and acquisitions, and other things.

U.S. Economic Sanctions Laws and Regulations (under “OFAC”)

The U.S. Government from time to time imposes economic sanctions and trade restrictions on specific countries, persons and activities (such as terrorism or narcotics trafficking) as a measure of furthering U.S. foreign policy and national security objectives (the “U.S. Sanctions Programs.”) The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) is primarily responsible for administering and enforcing the U.S. Sanctions. A U.S. Sanctions Program commences when the President of the United States issues an “Executive Order” that identifies a specific country, persons or activity as being a threat to the national security and imposes sanctions. The U.S. Congress also enacts sanctions legislation. U.S. Sanctions Programs apply to the Company and all its employees (including U.S. citizen or permanent resident alien employees, wherever located), all its operations in the United States, all its overseas branches and, in certain instances, its overseas subsidiaries and controlled affiliates. The U.S. Sanctions generally require that the Company block all “property” of sanctioned entities, including all accounts, securities and other assets as soon as such property comes into our possession or control and prohibits us from engaging in financial transactions directly or indirectly in any way related to a sanctioned country, person or activity. Violations of the U.S. Sanctions Programs carry substantial civil and criminal penalties, which can vary depending on the program. For example, civil fines can range from $11,000 to a $1,075,000 per violation. Willful violations of the embargo programs are in all cases subject to criminal fines or prison terms (of up to 10 years) or both.

Page 26

The Uniting and Strengthening America By Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (“The USA PATRIOT Act”) of 2001

In October 2001, the President signed into law the USA PATRIOT Act which provides the government with new, enhanced powers to combat international terrorism and terrorist financing. The objectives of the USA PATRIOT Act are (1) to establish new and enhanced methods to combat international money laundering and the financing of terrorism by broadening existing coverage and extraterritorial jurisdiction, (2) to provide the Secretary of the Treasury and other departments of the federal government with enhanced authority to identify, deter and punish international money laundering, and (3) to expand the U.S. anti-money laundering compliance and due diligence obligations and enhanced due diligence for all financial institutions.

Title III of the USA PATRIOT Act, the International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001, amends the Bank Secrecy Act and imposes significant new anti-money laundering requirements on a broad range of financial institutions to detect, deter and prevent terrorism, money laundering and other criminal schemes. Some of the key provisions of Title III of the USA PATRIOT Act include: prohibition of U.S. correspondent accounts with foreign shell banks; special due diligence and enhanced due diligence for correspondent and private banking accounts; special measures for jurisdictions, financial institutions or international transactions of primary money laundering concern; information sharing with regulatory and enforcement authorities and between financial institutions; and verification of customer identification. The USA PATRIOT Act also increases civil and criminal penalties for violation of the Bank Secrecy Act to up to $1,000,000.

Antitrust Laws

The antitrust laws prohibit business practices that unreasonably restrain, limit, or reduce competition. Activities that raise antitrust issues under Federal and State antitrust laws include price fixing, tie-in arrangements, market or customer allocations, refusals to deal, reciprocal dealing arrangements, and exclusive dealing arrangements. Acquisitions of companies or assets, and joint ventures, partnerships and interlocking employees, officers and directors may also raise antitrust issues.

The consequences of not complying with antitrust laws may result in enforcement proceedings, civil penalties including treble damages, and criminal penalties, and affect proposed mergers and acquisition activities.

The Bank Holding Company Act-Laws and Regulations Regarding Tie-In Arrangements

The Bank Holding Company Act was passed in 1956 to (1) control bank holding company expansion to avoid the creation of monopoly or restraint of trade in banking and (2) allow bank holding companies to expand into non-banking activities related to banking while maintaining separation between banking and commerce. Section 106 of the Bank Holding Company Act Amendments of 1970 was enacted to prevent banks from using their market power in certain products and services, especially in extending credit, to gain an unfair competitive advantage in other businesses.

Page 27

In general, a bank is prohibited from “conditioning” or varying the consideration for a credit, sale or lease of property or provision of service on (i) a customer obtaining additional credit, property or services from a bank, its parent or an affiliate; (ii) a customer providing some additional credit, property or service to the bank, its parent or an affiliate; or (iii) a customer agreeing not to obtain credit, property or services from a competitor. Limited exceptions apply to each of these prohibitions.

Penalties for violations of Section 106 include civil penalties and regulatory actions including the loss of financial holding company status.

U.S. Antiboycott Laws and Regulations

The U.S. Government has, since the mid-1970s, prohibited the participation of U.S. persons in foreign economic boycotts not sanctioned by the U.S. Government under two separate programs that are administered and enforced by the US Commerce Department and the IRS in the US Treasury Department (the “U.S. Antiboycott Programs”). The U.S. Antiboycott Programs generally prohibit six categories of conduct: (i) refusing or agreeing to refuse to do business with a boycotted country, a national of a boycotted country, or a boycotted person; (ii) refusing to hire or otherwise discriminating in employment against a U.S. person, in deference to a boycott requirement or request on the basis of the person’s race, religion or national origin; (iii) furnishing information, in deference to a boycott requirement or request, about the race, religion or national origin of a U.S. person; (iv) furnishing information sought to establish possible associations, or to confirm the absence of associations, with boycotted places or persons; (v) furnishing information about any person’s association with or support for any charitable or fraternal organization supporting a boycotted country; and (vi) paying, honoring, confirming or otherwise implementing a letter of credit that contains any condition or requirement of compliance, which is prohibited by any of the preceding prohibitions. The U. S. Antiboycott Programs also require persons receiving such boycott requests to report them. Violations of the U.S. Antiboycott Programs may result in criminal prosecution, the loss of certain tax benefits and substantial civil penalties.

The Employee Retirement Income Security Act of 1974 (“ERISA”)

The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is a comprehensive federal statute that governs the establishment and administration of employee benefit plans by (i) establishing standards of conduct that govern the responsibilities and obligations of fiduciaries of employee benefit plans; (ii) establishing minimum standards of participation, vesting and funding for such plans; (iii) requiring disclosure and reporting of financial and other information with respect to such plans; and (iv) providing appropriate remedies and sanctions for violations. The U.S. Department of Labor (“DOL”) is charged with the administration, interpretation and enforcement of the provisions of ERISA. ERISA subjects certain parties that fail to comply with its provisions to liability. Absent an exemption, ERISA imposes severe penalties on parties in interest who enter into prohibited transactions, identified in the law, even if a specific transaction between the plan and the party in interest is reasonable, on market terms, or otherwise beneficial to the employee benefit plan. As a provider of services to employee benefit plans, the Company must comply with ERISA.

Page 28

Title VII of the Civil Rights Act of 1964, as amended (“Title VII”)

Title VII of the Civil Rights Act of 1964 prohibits discrimination by employers against an individual on the basis of the individual’s race, color, religion, sex, or national origin. Title VII expressly proscribes discrimination in connection with the hiring and discharge of an employee and “with respect to his compensation, terms, conditions or privileges of employment.” In addition, an employer may not “limit, segregate or classify” employees based on any of the prohibited categories, if doing so would deprive or tend to deprive an individual of employment opportunities or otherwise affect his or her status as an employee.

Age Discrimination in Employment Act (“ADEA”)

The Age Discrimination in Employment Act prohibits an employer from discriminating against employees or prospective employees age forty or older. Specifically, an employer may not refuse to hire, discharge or “otherwise discriminate” against an individual with respect to compensation, terms, conditions or privileges of employment on the basis of the individual’s age. An employer also may not, on the basis of age, “limit, segregate or classify” employees in a manner tending to deprive the individual of employment opportunities. Discrimination is permitted; however, if age is a “bona fide occupational qualification.”

Americans with Disabilities Act (“ADA”)

The Americans with Disabilities Act prohibits an employer from discriminating against a “qualified individual with a disability” because of such disability in regard to job application procedures, hiring, advancement, discharge, compensation, training and “other terms, conditions and privileges of employment.” Disability discrimination includes the failure to make reasonable accommodations for the employee or denial of employment in order to avoid having to make such reasonable accommodation. An employer need not accommodate an individual’s disability if doing so would impose an undue hardship on the operation of the employer’s business.

The Family & Medical Leave Act (“FMLA”)

The Family and Medical Leave Act (“FMLA”) requires the Company to provide eligible employees with up to twelve workweeks of unpaid, job protected leave during any twelve-month period for certain family and medical reasons. Allowable reasons for a leave under FMLA include (i) the birth and care of a newborn child; (ii) the placement with the employee of a child for adoption or foster care; (iii) the employee’s need to care for an immediate family member with a serious health condition; or (iv) the employee’s inability to work because of a serious health condition. During the FMLA-leave, the employee’s health care benefits, if applicable, will be continued as though the employee is actively at work.

Employees seeking to use FMLA-leave are required to provide thirty-days’ advance notice of the need to take FMLA-leave when the need is foreseeable and such notice is practicable. Upon return from FMLA-leave, employees must be restored to their original or an equivalent position with equivalent pay, benefits, and other employment items, except in the case of defined “Key Employees.” (The “Key Employee” exception pertains to the limited circumstances in which the Company can refuse to reinstate certain highly paid, salaried “key employees” because restoration to employment will cause substantial and grievous economic injury to its operations.)

Page 29

Uniform Services Employment and Reemployment Rights Act (“USERRA”)

The USERRA gives returning service persons rights regarding reemployment, retraining, employee benefits offered by the employer, and protection from discrimination based on service in the military. The goal of this law is to return employees from their military duty to their previous employment positions with all the status, pay, and benefits that they would be entitled to had they not left for military service. In order to be protected under this law, the employee must receive an honorable discharge, be on military leave for no more than five years, and reapply for reemployment with a specific time frame, but the right to reemployment is not absolute. An employee who leaves a job in order to perform active duty in the armed forces is entitled to reinstatement after honorable discharge “if still qualified to perform the duties of such position.” If it is impossible to return the service person to his or her former position due to a service-incurred disability, or because the job’s requirements have been increased while the veteran was away, he or she is entitled to the nearest similar job he or she can perform. The employer must provide reasonable retraining.

Page 30

EXHIBIT B

THE CODE REFERENCE LIST

I. WHO TO CONTACT TO REPORT SUSPECTED VIOLATIONS OF THE CODE, LAW, REGULATION OR COMPANY POLICY

SECTION	SITUATION	STEP(S) TO BE TAKEN
III.	To report any violation or suspected violation of the Code or any law, regulation, or other Company policy	Employees must report all observed or suspected violations either by: A. Contacting management via the Company’s Ethics Help Line at ethics@bnymellon.com or calling:
		•	United States and Canada: 1-888-635-5662
		•	Europe: 00-800-710-63562
		•	Brazil: 0800-891-3813
		•	Australia: 0011-800-710-63562
		•	Asia: 001-800-710-63562 (except Japan)
		•	Japan: appropriate international access code + 800-710-63562
		•	All other locations: call collect to 412-236-7519
		Employees may call the Ethics Help Line anonymously and calls to the ethics office are not identified with caller identification.
		B. Notifying their manager, the Chief Compliance and Ethics Officer, the General Counsel or the Director of Human Resources who will each make every effort to maintain confidentiality.
		C. If employees are uncomfortable contacting the Company directly, they may contact Ethics Point, an independent hotline provider, via the web at http://www.ethicspoint.com (hosted on Ethics Point’s secure servers and is not part of the Company web site or intranet) or by calling the Ethics Hot Line (Ethics Point) at:
		•		United States and Canada: 1- 866-294-4696
		•		Outside the United States dial the AT&T Direct Access Number for your country and carrier, then 866-294-4696
				AT&T Direct Access Numbers by Country/Carrier
				•	United Kingdom: British Telecom 0-800-89-0011; C&W 0-500-89-0011; NTL 0-800-013-0011
				•	India 000-117
				•	Brazil: 0-800-890-0288
				•	Ireland: 1-800-550-000; Universal International Freephone 00-800-222-55288
				•	Japan: IDC 00 665-5111; JT 00 441-1111; KDDI 00 539-111
				•	Australia: Telstra 1-800-881-011; Optus 1-800-551-155
				•	Hong Kong: Hong Kong Telephone 800-96-1111; New World Telephone 800-93-2266
				•	Singapore: Sing Tel 800-011-1111; StarHub 800-001-0001
		D. Notifying the Non-Management member of the Board of Directors designated to receive complaints via mail addressed to: The Bank of New York Mellon Corporation, Church Street Station, P.O. Box 2164, New York, New York 10008-2164, Attn: Non-management Director, or via E-Mail sent to: non-managementdirector@bankofny.com.

Page 31

II. WHO TO CONTACT TO ASK QUESTIONS ABOUT THE CODE OR LAWS AND REGULATIONS

SECTION	SITUATION	STEP(S) TO BE TAKEN
ALL	To ask questions about the Code of Conduct	Employees should discuss questions with their manager or consult with the Chief Compliance and Ethics Officer.

Exhibit A	To ask questions about laws and regulations	Employees should discuss questions with their manager, or consult with the Chief Compliance and Ethics Officer or the General Counsel.

III. WHO TO CONTACT TO OBTAIN APPROVALS OR REPORT EVENTS AS REQUIRED BY THE CODE

Items noted with an “*” require employees to file their request or reports through CODE RAP. Employees without access to CODE RAP should consult with their manager for instructions on how to file.

It is important to note that, employees of certain lines of business, such as those employed by a broker dealer, may have further restrictions or employees based in countries outside of the United States may have laws that are unique to their location. Such employees must comply with the Company’s Code of Conduct, in addition to specific line of business policies and any laws or regulations specific to the country in which the employee works or does business.

SECTION	SITUATION	STEP(S) TO BE TAKEN
IV. A. 1	If you have received an offer for compensation from an outside party to direct business unfairly, as further outlined in the Company’s Policy on Gifts and Entertainment and Other Payments.	You must inform your manager who will then report the offer to the Chief Compliance and Ethics Officer. *
IV. A. 1	If you have received a gift or entertainment from current or prospective customers or suppliers/vendors of the Company that requires approval as further outlined in the Company’s Policy on Gifts and Entertainment and Other Payments.	You must inform your manager and request permission to retain the gift or partake of the entertainment. *
IV. A. 1	If you wish to present gifts or entertainment to a current or prospective customer or supplier/vendors that requires approval as further outlined in the Company’s Policy on Gifts and Entertainment and Other Payments.	You must inform your manager and request permission to present the gift or entertainment. *
IV. A. 2	If your personal or related interests or the interests of your Family Members could be considered a conflict of interest or potential conflict of interest with the interests of the Company.	You must report the circumstances surrounding such situation immediately, to your manager and to Human Resources. As an alternative, you can report this matter to the Chief Compliance and Ethics Officer via CODE RAP.

Page 32

SECTION	SITUATION		STEP(S) TO BE TAKEN
IV. A. 2	If you have a personal relationship with another employee and a conflict has arisen or may be expected to arise.		You must report the circumstances surrounding such situation immediately, to your manager and to Human Resources. As an alternative, you can report this matter to the Chief Compliance and Ethics Officer via CODE RAP.
IV. A. 2	If you wish to exercise signing authority over any personal or business (for-profit or not-for-profit) account at the Company.		Restrictions exist in connection with such signing authority. You must comply with all restrictions and requirements outlined in the Company’s Policy on Employee Signing Authority. *
IV. A. 3	If you wish to act as a fiduciary (trustee, executor, etc.) for a Family Member or longstanding personal friend where there is no conflict or potential conflict of interest with the Company and no compensation is received.		No approval is required. However, if a conflict or potential conflict of interest exists and/or compensation is received, you may not serve as a fiduciary unless you have the written approval of the Chief Executive Officer and the Chief Compliance and Ethics Officer. Certain instances also require the approval of the Board of Directors or a subsidiary Board of the Company.
IV. A. 3	If you wish to act as a fiduciary (trustee, executor, etc.) in situations involving customers, prospects or other employees not addressed above.		You may not serve as a fiduciary unless you have the written approval of the Chief Executive Officer and the Chief Compliance and Ethics Officer.
IV. A. 3	If you wish to request permission to accept a bequest granted under the will or trust instrument of a customer other than a Family Member.		You must obtain permission from the Chief Compliance and Ethics Officer. *
IV. A. 4	If you request permission to:		You must comply with all restrictions and requirements outlined in the Company’s Policy on Outside Affiliations, Outside Employment and Certain Outside Compensation Issues. *
	•	Serve as an owner of any privately held for-profit business.
	•	Serve as a director, trustee, officer, or partner of a for-profit business
	•	Serve as a director, trustee, officer, or owner of a not-for-profit.
	•	Accept other outside employment.
	•	Accept a political appointment or become a candidate for elective office.
	•	Retain compensation in connection with other situations.

Page 33

SECTION	SITUATION	STEP(S) TO BE TAKEN
IV. B. 2	In rare cases where it appears necessary for you to disclose your password.	You must notify your management. *
IV. B. 5	If you are unclear whether or not you are affected by Personal Securities Trading Rules or wish to determine whether specific transactions may be in violation of the Rules and Regulations on Insider Trading.	You must consult with the Chief Compliance and Ethics Officer.
IV. C. 2	If you are engaged by a competitor in discussion regarding pricing or pricing policy, costs, marketing or strategic plans, proprietary products, or other confidential information.	You must immediately abort such discussion, indicate your unwillingness to continue the conversation, and report the incident to the General Counsel. Consult with the Legal Division if you have any questions as to what is legal to do or discuss with a competitor.
IV. C. 3	If you wish to use the Company’s name, letterhead, business card or facilities in an endorsement of another entity or product for a situation not specifically addressed in the Code or other Company policies.	You must obtain the prior permission of Corporate Marketing *
IV. E. 5	If you perform a job that requires you to be registered, licensed or otherwise qualified by certain regulatory agencies and you cease to meet and/or maintain the required qualifications.	You must immediately report the circumstances surrounding this situation to your manager. *
IV. F. 1	If you believe you have been subject to discrimination or that an act of discrimination has occurred with respect to another employee.	You must report the perceived violation to your manager or, if appropriate, to the next level(s) of management or directly to your Human Resources Manager promptly. You may elect to submit this report on CODE RAP or you may also choose to make such report verbally or in writing. In any case, your report will be treated as confidential to the extent consistent with appropriate investigation and remedial action.
IV. F. 2	If you believe you have been subject to harassment or that an act of harassment has occurred with respect to another employee.	You must report the perceived violation to your manager or, if appropriate, to the next level(s) of management, or directly to your Human Resources Managers promptly. You may elect to submit this report on CODE RAP or you may also choose to make such report verbally or in writing. In any case, your report will be treated as confidential to the extent consistent with appropriate investigation and remedial action.

Page 34

SECTION	SITUATION	STEP(S) TO BE TAKEN
IV. F. 3	If you have given or received a gift or entertainment to/from another employee which requires approval (please note there are no restrictions on gifts between Family Members).	Restrictions exist in connection with such gifts and entertainment between employees. You must comply with all restrictions and requirements outlined in the Company’s Human Resource policies. *
IV. F. 3	If you have given or received a loan to/from another employee.	Restrictions exist in connection with such loans. You must comply with all restrictions requirements outlined in the Company’s Policy on Loans from One Employee to Another. *
IV. G. 1	If you have been formally accused of, convicted of or have pleaded guilty to a felony, entered into a pre-trial diversion or similar program in connection with a prosecution for a felony or been subject to any order, judgment, decree or sanction by a regulatory agency.	You must immediately report such information in writing to the Director of Human Resources. You may utilize CODE RAP to submit this report if you choose.

Page 35

THIS PAGE INTENTIONALLY LEFT BLANK

Page 36

GRAPHIC 20 bobkelly.jpg GRAPHIC begin 644 bobkelly.jpg M_]C_X``02D9)1@`!`0```0`!``#_VP!#``T)"@L*"`T+"@L.#@T/$R`5$Q(2 M$R<<'A<@+BDQ,"XI+2PS.DH^,S9&-RPM0%=!1DQ.4E-2,CY:85I08$I14D__ MVP!#`0X.#A,1$R85%29/-2TU3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T]/ M3T]/3T]/3T]/3T]/3T]/3T]/3T]/3T__P``1"``R`*0#`2(``A$!`Q$!_\0` M'P```04!`0$!`0$```````````$"`P0%!@<("0H+_\0`M1```@$#`P($`P4% M!`0```%]`0(#``01!1(A,4$&$U%A!R)Q%#*!D:$((T*QP152T?`D,V)R@@D* M%A<8&1HE)B7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#TZBBB@`HK M%UKQ/IVCXC=GN;ICA+:W&^1C].U9'F>-]:53%'::';/SN;]Y-CZ=/Y4`=C17 M%^%KF_B\7ZAI,FK3:I;6]N&DED4#9+D?*,9[$_B/:NTH`**Q/&=Q/:^$M1GM M96BF2+*NAP5Y'0U9\.7CZAX=T^[E.Z26W1G/JV.?UH`TJ**YJR\1"UU36;+7 MKF&W^R2B2!W(4-"PRN/4C&*`.C,B"18RZAV!(7/)`ZG'XBG5Q.AW,WBCQ@-< MB@DBTNQA:&W=UP9F;J?IC^E=#XAUR#0;6WGGC:03W"0`*<$;N_X`&@#5HKG/ M%?B230KG2[>"%)9+VX$;*V>$R`2,=^171T`%%%%`!1110`4444`%%%%`!7(: MQ?:MKNKSZ#H3FTM[?"WM\1R"1G:GOC_([]?4<<$, M_%`%#1-!TW0K;R=/MPI/WY6Y=S[M_D51\Z;X?)TT?Z50^BCO7$_P#"':GXEB?7=1N1;ZA<-N@@E02)'#CA2I'!Y_R: M`*.O^)_$6JZ'J=D^EP01VP'VR4/G"L?D"C/<8YYSUXKJH/%'A[P]'9Z)-=L& MMX$5W"%E0X'WB.A-3:3X-M+'PQ=:/-*TK7@/GS`8)..,?3M5[P_X>M-$TTVR M@3RR_-<3.,M,WJ.[:_,)-K'8/'YG& M`Y<,KK6=0\/1R>%DCGT^>+,DD!/FJ`1PHR/3!`YZBL#6]=&MKI+G3 M[]=)TVXC:\NI8L$D8'3GWS]:ZJ;3M1\/:H;O0+8W.G7!_P!(L%<+Y;?WX\D` M9[C_`".I95="KJ"K#!4C(-`'F.IWUQK_`(MMM>T;2KC4-/TK"$J=OFMDG*@\ M\$CMV%:K:MXPN=235+?0Y8K"W78UE)(%DFSU;IU&!_\`7R:[>&&*",1P1I'& M.BHH`'X"FW5S!9VTES=2K%#&-SNQP`*`.3T3Q-J=SXL:RU:QEL+>[AW6<4RC M=N7[W..<\G\*ZZ:>&WC,D\J11CJSL%`_$UYEXKU34M6;3M6M[:2PTR"Z5(;Q MAB8[^"P7/W>/QXKKHO!>CD*VH+<:E.#DRW<[.2?IG'Z4`=%12*`JA5```P`. MU+0`4444`%%%%`!1110!B^*M)O-9TI;6QN(H7$JNRRJ2DH'\+8YQG'Y5DMX9 M\0ZGM36O$)CMAP;>PC\L$>F[T^H-=A10!F:-H&EZ'"8]-M$C)^](?F=OJQY_ M"M.BB@`HHHH`****`"BBB@`KD\+??$IX[_&+&T5[*-APQ8_,X]QTKK*QM?\` M#\6L&&XBN);/4+;)@NHCROL1W'M0!F?$PY\(2Q#[\T\2)]=P/]*ZM!A`#V%< M)?Z?XNU'4-,LM6M[*XLK>\CG>YMSMR%_O*3[]A7>4`%%%%`!1110`4444`%% M%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110!__9 ` end EX-99.(P)(4) 21 e33444ex23_p4.htm CODE OF ETHICS

Exhibit (p)(4)

ALPS DISTRIBUTORS, INC.
(the "Company" or “Underwriter”)

CODE OF ETHICS

I.	Purpose of the Code of Ethics

This code is based on the principle that, you as an access person of the Company, will conduct your personal investment activities in accordance with:

the duty at all times to place the interests of each Investment Company's shareholders first;
the requirement that all personal securities transactions be conducted consistent with this Code of Ethics and in such a manner as to avoid any actual or potential conflict of interest or any abuse of an individual's position of trust and responsibility; and
the fundamental standard that Company personnel should not take inappropriate advantage of their positions.

In view of the foregoing, the Company has adopted this Code of Ethics (the "Code") to specify a code of conduct for certain types of personal securities transactions which may involve conflicts of interest or an appearance of impropriety and to establish reporting requirements and enforcement procedures.

II.	Legal Requirement

Pursuant to Rule 17j-1(b) of the Investment Company Act of 1940 (the “Act”), it is unlawful for the Company, or any Affiliated Person to:

employ any device, scheme or artifice to defraud the Investment Company;
make any untrue statement of a material fact or fail to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading to the Investment Company;
engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Investment Company; or
engage in any manipulative practice with respect to any investment portfolios in the Trust of the Investment Company,

in connection with the purchase or sale (directly or indirectly) the Company, or Affiliated Person, of a security "held or to be acquired" by an Investment Company.

III.	Definitions - All definitions shall have the same meaning as explained in Section 2(a) of the Act and are summarized below.

Access Person means any director, officer or general partner of the principal underwriter who, if also serving as an officer of a Fund for which ADI is also principal underwriter, makes, participates in or obtains information regarding, the purchase or sale of Covered Securities by a Fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to a Fund regarding the purchase or sale of Covered Securities.

Automatic Investment Plan means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.

Beneficial ownership shall have the same meaning as that set forth in Rule 16a-1(a)(2) of the Securities Exchange Act of 1934.

Control shall have the same meaning as that set forth in Section 2(a)(9) of the Act.

Covered Security – shall have the meaning set forth in Section 2(a)(36) of the Act except that it does not include an exempt security.

Exempt Security - shall include securities issued by the United States Government, short-term debt securities which are “government securities” within the meaning of Section 2(a)(16) of the Act, bankers' acceptances, bank certificates of deposit or commercial paper, shares of registered open-end investment companies (other than open-end exchange traded funds), and high quality short-term debt instruments, including repurchase agreements.

Exchange Traded Fund - an open-end registered investment company that is not a unit investment trust, and that operates pursuant to an order from the SEC exempting it from certain provisions of the Investment Company Act permitting it to issue securities that trade on the secondary market. Examples of open-end exchange-traded funds include, but are not limited to: SPDRS; iShares; PowerShares; etc.

Investment Company - A company registered as such under the Investment Company Act of 1940 and for which the Underwriter is the principal underwriter.

Investment Personnel – (a) employees of the Investment Company, its investment adviser, and/or the Underwriter who participate in making investment recommendations to the Investment Company; and (b) persons in a control relationship with the Investment Company or adviser who obtain information about investment recommendations made to the Investment Company.

Security being considered for purchase or sale – when a recommendation to purchase or sell a security has been made or communicated and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation.

Security held or to be acquired means: (1) any Covered Security which, within the most recent 15 days: (a) is or has been held by the Investment Company; or (b) is being or has been considered by the Investment Company or its investment advisor for purchase by the Investment Company; and (2) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security that is held or to be acquired by the Investment Company.

Underwriter – means ALPS Distributors, Inc.

IV.	Policies of the Company Regarding Personal Securities Transactions

General

No Access Person of the Company shall engage in any act, practice or course of business that would violate the provisions of Rule 17j-1 as set forth above, or in connection with any personal investment activity, engage in conduct inconsistent with this Code.

Specific Policies

No Access Person shall purchase or sell, directly or indirectly, any security in which he/she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which he/she knows or should have known at the time of such purchase or sale:

is being considered for purchase or sale by an Investment Company; or
is being purchased or sold by an Investment Company.

Pre-approval of Investments in IPOs and Limited Offerings

Investment Personnel must obtain approval from the Investment Company or the Investment Company’s investment adviser before directly or indirectly acquiring beneficial ownership in any securities in an initial public offering or in a private placement or other limited offering.

V.	Reporting Procedures

The Compliance Officer of the Company shall notify each person (annually in January of each year), considered to be an Access Person of the Company that he/she is subject to the reporting requirements detailed in Sections (a), (b) and (c) below and shall deliver a copy of this Code to such Access Person.

In order to provide the Company with information to enable it to determine with reasonable assurance whether the provisions of this Code are being observed, every Access Person of the Company must report to the Company the following:

a) Initial Holdings Reports. Every Access Person must report on the Holdings Report, attached hereto, no later than 10 days after becoming an Access Person, the following information:

The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person;
The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and
The date that the report is submitted by the Access Person.

This information must be current as of a date no more than 45 days prior to the date the person becomes an access person.

b) Quarterly Transaction Reports. Every Access Person must report on the Transaction Report, attached hereto, no later than 30 days after the end of a calendar quarter, the following information with respect to any transaction during the quarter in a Covered Security in which the Access Person had any direct or indirect beneficial ownership:

The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares, and the principal amount of each Covered Security involved;
The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
The price of the Covered Security at which the transaction was effected;
The name of the broker, dealer or bank with or through whom the transaction was effected; and
The date that the report is submitted by the Access Person.

Furthermore, an Access Person need not make a quarterly transaction report under section V.b. of this Code of Ethics with respect to transactions effected pursuant to an Automatic Investment Plan.

With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person, each Access Person must report to the Compliance Officer of the Company, no later than 30 days after the end of a calendar quarter the following information:

The name of the broker, dealer or bank with whom the Access Person established the account;
The date the account was established; and
The date that the report is submitted by the Access Person.

c) Annual Holdings Reports. Every Access Person must report on the Holdings Report, attached hereto, annually, the following information (which information must be current as of a date no more than 45 days before the report is submitted):

The title, number of shares and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership;
The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and
The date that the report is submitted by the Access Person.

VI.	Review of Reports

The Compliance Officer of the Company shall be responsible for reviewing the reports received, maintaining a record of the names of the persons responsible for reviewing these reports, and as appropriate, comparing the reports with this Code, and reporting to the Company's senior management:

any transaction that appears to evidence a possible violation of this Code; and
apparent violations of the reporting requirements stated herein.

Senior management shall review the reports made to them hereunder and shall determine whether the policies established in Sections IV and V of this Code have been violated, and what sanctions, if any, should be imposed on the violator. Sanctions include but are not limited to a letter of censure, suspension or termination of the employment of the violator or termination of the violator's license with the Underwriter, or the unwinding of the transaction and the disgorgement of any profits.

Senior management and the board of directors of the Company shall review the operation

of this Code at least annually. All material violations of this Code and any sanctions imposed with respect thereto shall periodically be reported to the board of trustees of the Investment Company with respect to the securities being considered for purchase or sale by, or held or to be acquired by, that Investment Company.

VII.	Certification

Each Access Person will be required to certify annually that he/she has read and understood the provisions of this Code and will abide by it. Each Access Person will further certify that he/she has disclosed or reported all personal securities transactions required to be reported under the Code. A form of such certification is attached hereto.

Before the Board of Trustees of an Investment Company may approve the code of ethics, the Company must certify to the Board that it has adopted procedures reasonably necessary to prevent Access Persons from violating its Code of Ethics. Such certification shall be submitted to the Board of Trustees at least annually.

Sources:

Section 17j-1 (as amended) of the Investment Company Act of 1940 (the “Act”);

Section 16 (as amended) of the Securities Exchange Act of 1934 (the “Exchange Act”);

The "Report of the Advisory Group on Personal Investing" issued by the Investment Company Institute on May 9, 1994; and,

The Securities and Exchange Commission's September 1994 Report on "Personal Investment Activities of Investment Company Personnel.”


dated:	May, 1994
revised:	December 31, 2004
revised:	February 3, 2006 (effective March 31, 2006)

EX-99.(Q) 22 e33444ex23_q.htm POWER OF ATTORNEY(S)

Exhibit (q)

POWER OF ATTORNEY
WITH RESPECT TO
INDEXIQ ETF TRUST

Know all men by these presents that Adam S. Patti, a Trustee of IndexIQ ETF Trust (the “Trust”) whose name and signature appears below, constitutes and appoints Gregory D. Bassuk and David L. Fogel as his attorneys-in-fact, with power of substitution, and each of them, in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trust of which he is now or is on the date of such filing a Trustee of the Trust, (ii) any application, notice or other filings with the Securities and Exchange Commission, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trust to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

/s/ Adam S. Patti

Adam S. Patti

January 22, 2009

POWER OF ATTORNEY
WITH RESPECT TO
INDEXIQ ETF TRUST

Know all men by these presents that Gene Chao, a Trustee of IndexIQ ETF Trust (the “Trust”) whose name and signature appears below, constitutes and appoints Adam S. Patti, Gregory D. Bassuk and David L. Fogel as his attorneys-in-fact, with power of substitution, and each of them, in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trust of which he is now or is on the date of such filing a Trustee of the Trust, (ii) any application, notice or other filings with the Securities and Exchange Commission, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trust to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

/s/ Gene Chao

Gene Chao

January 22, 2009

POWER OF ATTORNEY
WITH RESPECT TO
INDEXIQ ETF TRUST

Know all men by these presents that Reena Aggarwal, a Trustee of IndexIQ ETF Trust (the “Trust”) whose name and signature appears below, constitutes and appoints Adam S. Patti, Gregory D. Bassuk and David L. Fogel as her attorneys-in-fact, with power of substitution, and each of them, in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trust of which he is now or is on the date of such filing a Trustee of the Trust, (ii) any application, notice or other filings with the Securities and Exchange Commission, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in her name and on her behalf in the capacities indicated to enable the Trust to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

/s/ Reena Aggarwal
Reena Aggarwal

January 22, 2009

CORRESP 23 filename23.htm sp33444.htm - Generated by SEC Publisher for SEC Filing

PETER J. SHEA
peter.shea@kattenlaw.com
212.940.6447 direct
704.344.3195 fax

February 4, 2009

VIA EDGAR

Securities and Exchange Commission
Washington, D.C. 20549

Pre-Effective Amendment No. 1 to Registration on Form N-1A
IndexIQ ETF
Trust Registration Nos.: 333-152915 and 811-22227

Dear Ladies and Gentlemen:

On behalf of our client, IndexIQ ETF Trust (the “Trust”), we are filing with this correspondence Pre-Effective Amendment No. 1 (the “Amendment”) to the registration statement on Form N-1A (the “Registration Statement”) concerning the registration of the Trust and the shares of the IQ Hedge Multi-Strategy Composite ETF, the IQ Hedge Macro ETF, the IQ Hedge Long/Short ETF, the IQ Hedge Event-Driven ETF and the IQ Hedge Market Neutral ETF, which are each series of the Trust (each, a “Fund” and, collectively, the “Funds”), under the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940 (the “1940 Act”). Blacklined copies of the Amendment that have been marked to show changes to the initial filing are being sent to the Commission’s Staff under separate cover. Capitalized terms used but not defined herein are used with the meanings given to them in the Amendment. Please be advised that, on September 4, 2008, the Trust changed its name from “IQShares Trust” to “IndexIQ ETF Trust.”

With respect to the Staff’s comment letter dated September 5, 2008 by Mr. John M. Ganley, we offer the following responses (the headings below corresponding to the headings in such comment letter with the numbered responses corresponding to the comment numbers of the comment letter; page numbers referenced in responses to comments are the page numbers of the Amendment):

Securities and Exchange Commission
February 4, 2009
Page 2

Prospectus

Principal Investment Strategies Common to all Funds (Page 1)

1. Disclosure throughout the Prospectus has been clarified to indicate that the 80% limitation applies to each Fund’s net assets plus borrowing for investment purposes.

IQ Hedge Multi-Strategy Composite ETF – Index Description (Page 5)

2. A description of the hedge fund investment styles utilized by this Fund has been added.

3. For this Fund and all other Funds, more complete descriptions of the applicable Underlying Index Components have been added.

IQ Hedge Multi-Strategy Composite ETF – Principal Risks of Investing in the Fund (Page 5)

4. Fund-specific risk disclosure has been provided for this Fund and all other Funds.

IQ Hedge Global Macro ETF – Principal Investment Strategy (Page 6)

5. Since this Fund will not have any policies about, and this Underlying Index does not have rules regarding, global diversification, the word “Global” has been removed from the name of IQ Hedge Macro ETF.

IQ Hedge Long/short Equity ETF – Index Description (Page 7)

6. The suggested description regarding the long/short hedge fund investing style has been added.

7. The word “Equity” has been removed from the name of IQ Long/Short ETF.

IQ Hedge Market Neutral ETF – Index Description (Page 9)

8. The reference to the “overall market” has been clarified to indicate the S&P 500.

Additional Investment Strategies – Borrowing Money (Page 17)

9. The sub-section “Borrowing Money” has been deleted from the Prospectus because borrowing is not a strategy of the Funds. Investment Restriction B remains unchanged and accurately depicts the Trust’s borrowing policy.

Securities and Exchange Commission
February 4, 2009
Page 3

Statement of Additional Information

Investment Restrictions

10. The suggested revision to Investment Restriction F has been made.

General Comments

11. Where we have responded to a comment concerning one location, we have made corresponding changes also concerning similar disclosure appearing elsewhere in the Registration Statement.

12. The filing is now substantially complete.

13. The Funds will not omit information from the Prospectus and SAI that will be a part of the Registration Statement when it is declared effective in reliance on Rule 430A under the Securities Act.

14. The Trust has, jointly with IndexIQ Advisors LLC, Alps Distributors, Inc. and each series of the Trust, filed with the Securities and Exchange Commission an application for an order pursuant to Section 6(c) of the Investment Company Act of 1940 (the “Act”), exempting the Funds from Sections 2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of the 1940 Act and Rule 22c-1 under the 1940 Act and under Sections 6(c) and 17(b) of the 1940 Act exempting the Funds from Sections 17(a)(1) and (a)(2) of the 1940 Act and under Section 12(d)(1)(J) of the 1940 Act exempting the Funds from Sections 12(d)(1)(A) and 12(d)(1)(B) of the 1940 Act.

15. The Amendment is being filed as a pre-effective amendment pursuant to Rule 472 under the Securities Act. The foregoing letter identifies where no changes were made in response to comments and provides a basis for the Funds’ position.

16. All Fund, Investment Advisor and other Fund service provider personnel participating in the preparation of the Registration Statement are cognizant of their disclosure responsibilities to investors.

17. In the event that the Funds request acceleration of the effective date of the Registration Statement, it will furnish a letter containing the requested acknowledgements.

Please do not hesitate to contact me at (212) 940-6447 or, in my absence, Kathleen Moriarty at (212) 940-6447 if you have any questions or comments with respect to the foregoing responses or to the Amendment.

Securities and Exchange Commission
February 4, 2009
Page 4


	Very truly yours, /s/ Peter J. Shea Peter J. Shea


cc (w/enclosures):	Mr. John M. Ganley, Senior Counsel Mr. Adam S. Patti Mr. Gregory D. Bassuk Mr. David Foley Ms. Kathleen Moriarty

2 – 5