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Q2 2017 IQ Merger Arbitrage ETF (MNA) Isolate returns from broad market influences… A merger arbitrage strategy seeks to profit from the discrepancy between the acquisition price and the price at which the company’s stock trades before the consummation of a merger. Historically, merger arbitrage strategies have provided diversification and stable returns across various market environments. The goal of a merger arbitrage strategy is to provide more consistent returns and possibly deliver a smoother return path for investors. A merger arbitrage strategy can also serve as an important capital preservation tool and provide drawdown protection in tumultuous markets. Rolling 12-Month Returns Return 1 Seek smooth & consistent returns through varying market environments 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Drawdown 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% IQ Merger Arbitrage Index S&P 500 Index Source: FactSet, as of 12/31/16. IQ Merger Arbitrage Index seeks to achieve capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer. The S&P 500 is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. Past performance is not a guarantee of future results. It is not possible to invest directly in an index. 2 Build more efficient portfolios and reduce risk An allocation to a merger arbitrage strategy can improve the risk/return profile of a traditional portfolio. The driver of returns for merger arbitrage strategies is isolated from broader markets, so the performance of such a strategy is not expected to be highly correlated to other asset classes over time. In addition, merger arbitrage strategies have significantly lower beta sensitivity to the broader market. 12.00 1.20 1.60 1.40 10.00 1.00 1.20 8.00 0.80 1.00 0.80 6.00 0.60 0.60 4.00 0.40 0.40 2.00 0.20 0.20 0.00 0.00 0.00 Sharpe Ratio Standard Deviation Beta Correlation of IQ Merger Arbitrage Index to: S&P 500 0.40 Bl oomber g B ar clay s US Aggr egat e -0.08 -0.20 0.00 0.20 0.40 0.60 0.80 1.00 Source: FactSet, as of 12/31/16. Standard deviation is the measure of the dispersion of a set of data from its mean. Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk. Beta is the measure of volatility of a security or portfolio in comparison to the market as a whole. Correlation is a statistic used to measure how two securities move in relation to each other. Past performance is not a guarantee of future results. It is not possible to invest directly in an index. Smart solutions for building better portfolios IQetfs.com A mechanical, rules-based approach to merger arbitrage $45 Merger arbitrage is a hedged, alternative investment strategy that is designed to take advantage of price discrepancies that exist for companies involved in a merger. If successful, a merger arbitrage strategy can benefit by purchasing companies at prices below the target price and locking in the difference (spread). Targeting this spread seeks to deliver returns that are immune from fluctuations of the broader market. $40 De a l Fina lize d $35 $42 St ra t e gy Purchase Price $35 $30 $25 $20 1/1/2… 12/1/… 11/1/… 10/1/… 9/1/2… 8/1/2… Time 7/1/2… 6/1/2… 5/1/2… 4/1/2… 3/1/2… 2/1/2… 1/1/2… 12/1/… $15 A cquisit ion A nnounce d 11/1/… Stock Price 3 Source: The above is for illustrative purposes only, based on hypothetical events of an actual merger and acquisition. Consider a disciplined, rules-based approach to remove manager subjectivity… IQ Merger Arbitrage ETF (MNA) Broad Access Identifies merger arbitrage opportunities from developed countries across all industry sectors. Tax Efficiency Merger arbitrage is a potentially high turnover strategy that can be very tax inefficient in a mutual fund or limited partnership structure. An ETF provides a more taxefficient structure for this type of strategy. Track Record With an inception date in 2009, MNA has the longest track record and largest asset base of any merger-related ETF on the market. About risk All investments are subject to risk and will fluctuate in value. All ETFs are subject to market risk, including possible loss of principal. Certain of the proposed takeover transactions in which the Fund invests may be renegotiated, terminated, or involve a longer time frame than originally contemplated, which may negatively impact the Fund’s returns. The Fund’s investment strategy may result in a high portfolio turnover, which, in turn, may result in increased transaction costs to the Fund and lower total returns. The Fund is susceptible to foreign securities risk – since the Fund invests in foreign markets, it will be subject to risk of loss not typically associated with domestic markets, including currency transaction risk. Diversification does not eliminate the risk of experiencing investment losses. Stock prices of mid-and small-capitalization companies generally are more volatile than those of larger companies and also more vulnerable than those of larger-capitalization companies to adverse economic developments. The Fund is non-diversified and is susceptible to greater losses if a single portfolio investment declines than would a diversified fund. The ETF should be considered a speculative investment with a high degree of risk, does not represent a complete investment program, and is not suitable for all investors. The S&P 500 is an American stock market index based on the market capitalization of 500 large companies having common stock listed on the NYSE or NASDAQ. Exposure to an asset class represented by an index is available through investable instruments based on that index. A decision to invest in any such investment fund should not be made in reliance on any of the statements set forth in this document. Prospective investors are advised to carefully consider the risks associated with investing in such funds, as detailed in the prospectus, before making an investment in any such fund. Consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing. The prospectus and the statement of additional information include this and other relevant information about the Funds and are available by visiting IQetfs.com or calling 888-474-7725. Read the prospectus carefully before investing. MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. IndexIQ® is an indirect wholly owned subsidiary of New York Life Investment Management Holdings LLC. ALPS Distributors, Inc. (ALPS) is the principal underwriter of the ETFs, and NYLIFE Distributors LLC is a distributor of the ETFs and the principal underwriter of the IQ Hedge Multi-Strategy Plus Fund. NYLIFE Distributors LLC is located at 30 Hudson Street, Jersey City, NJ 07302. ALPS Distributors, Inc. is not affiliated with NYLIFE Distributors LLC is a member FINRA/SIPC. 1732715 MEMNA02a-04/17