Horizons ETFs - In-Kind Subscriptions: Horizons ETFs Family of TRI ETFs

A hallmark of the efficiency of ETFs is the subscription and redemption process, which is done in large blocks of units with dealers rather than on an investor trade by investor trade basis. This allows ETFs to smooth the impact of subscriptions and redemptions on the portfolio of the ETF.

As part of our ongoing commitment to serving all investors and facilitating a smooth process for switches into our family of ETFs, Horizons ETFs is taking in-kind transfers of select Canadian-listed index ETFs in exchange for shares of one of the ETFs from Horizons’ family of Total Return Index (TRI) ETFs that invest in comparable index strategies.

Brokers and dealers, who we interact directly with in the primary market, can purchase a minimum prescribed number of shares (“PNS”) of certain Horizons TRI ETFs in exchange for units of certain ETFs that invest in the same, or a substantially similar, underlying index. Essentially, the applicable Horizons ETF is buyingthe units of the ETF you are switching from at its end-of-day net asset value (“NAV”) in exchange for shares of the Horizons ETF issued to you at its end-of-day NAV.

STEPS FOR EXECUTING AN IN-KIND SUBSCRIPTION

1	If an advisor or investor is interested in using Horizons’ in-kind exchange program to switch a designated ETF, they should contact their Horizons ETFs representative about the ETF approval process.
2	If they want to proceed, they must submit an official request and our portfolio management team will review the request to ensure the securities represent the required minimum dollar size and eligibility requirements.
3	If it is an acceptable request, we will communicate with the advisor and the firm’s ETF execution desk, or that of another dealer if needed, who will coordinate with the advisor’s ETF trading desk to perform the in-kind exchange or redemption of the security and the corresponding purchase of the TRI ETF shares at end of day.
4	The advisor will then be required to speak to their ETF execution desk, submit the order and identify the trade as an in-kind switch to be executed at end-of-day NAV.
5	Depending on the time of the final approval, the transfer could be set up for end of day or may need to take place at the close of the next trading day. The end-of-day exchange or redemption process ensures the timing of the value received for securities being switched — versus the value of the shares of the ETF being delivered, are as well aligned as possible — subject to any commission being charged by the dealer executing the switch on your behalf.

The below list is not exhaustive and other issuers may be acceptable. ETFs shaded in grey are pre-approved for NAV-for-NAV exchange as the ETFs share the same underlying index, and therefore, the same basket of securities.

If an index-tracking ETF is not in the eligible list below, it does not necessarily mean Horizons ETFs cannot accommodate the trade. Horizons ETFs, in certain circumstances, will consider accepting units of certain not-directly-comparable index ETFs that are not listed below. Horizons ETFs maintains final approval on the pre-approved highlighted securities listed below, and at times may not be able to facilitate an in-kind subscription on the ETF names listed below due to a number of factors, including but not limited to market factors, execution of pricing and the size of the order.

In some circumstances, Horizons ETFs will consider taking U.S. listed ETFs, which are highlighted in the table. In these cases, the in-kind process will have to be conducted using a Market On Close (MOC) order rather than at the end-of-day net asset value.

Please note that all in-kind subscriptions are generally subject to minimum size restrictions, and will be a taxable event if the switching ETF units are held in a taxable account.

Horizons ETFs cannot directly execute any trades with you, but can help you contact the appropriate parties to do so. The ETF capital markets desk of most major dealers should be able to directly facilitate the subscription process for you.

Commissions, management fees and expenses all may be associated with an investment in the Horizons Total Return Index ETFs managed by Horizons ETFs Management (Canada) Inc (the “ETF”). The ETF is not guaranteed, its value changes frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETF. Please read the prospectus before investing.

Horizons Total Return Index ETFs (“Horizons TRI ETFs”) are generally index-tracking ETFs that use an innovative investment structure known as a Total Return Swap to deliver index returns in a low-cost and tax-efficient manner. Unlike a physical replication ETF that typically purchases the securities found in the relevant index in the same proportions as the index, most Horizons TRI ETFs use a synthetic structure that never buys the securities of an index directly. Instead, the ETF receives the total return of the index through entering into a Total Return Swap agreement with one or more counterparties, typically large financial institutions, which will provide the ETF with the total return of the index in exchange for the interest earned on the cash held by the ETF. Any distributions which are paid by the index constituents are reflected automatically in the net asset value (NAV) of the ETF. As a result, the Horizons TRI ETF receives the total return of the index (before fees), which is reflected in the ETF’s share price, and investors are not expected to receive any taxable distributions. Certain Horizons TRI ETFs use physical replication instead of a total return swap. The Horizons Cash Maximizer ETF does not track an index but rather a compounding rate of interest paid on a cash deposit that can change over time.

The information contained herein reflects general tax rules only and does not constitute, and should not be construed as, tax advice. Investor situations may differ from those illustrated. Investors should consult with their tax advisors before making any investment decisions.

“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and “TSX®” is a registered trademark of the TSX Inc. (“TSX”). These marks have been licensed for use by Horizons ETFs Management (Canada) Inc. The ETF is not sponsored, endorsed, sold, or promoted by the S&P, TSX or their affiliated companies and none of these parties make any representation, warranty or condition regarding the advisability of buying, selling or holding units/shares of the ETF.

The EURO STOXX 50® Futures Roll Index (Total Return) is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland (“STOXX”), Deutsche Börse Group or their licensors, which is used under license. Horizons EURO STOXX 50® Index ETF is neither sponsored nor promoted, distributed or in any manner supported by STOXX, Deutsche Börse Group or their licensors, research partners or data providers and STOXX, Deutsche Börse Group and their licensors, research partners or data providers do not give any warranty, and exclude any liability (whether in negligence or otherwise) with respect thereto generally or specifically in relation to any errors, omissions or interruptions in the EURO STOXX 50® Futures Roll Index (Total Return) or its data.

Nasdaq®,Nasdaq-100®,and Nasdaq-100 Index®, are trademarks of The NASDAQ OMX Group, Inc.(which with its affiliates is referred to as the “Corporations”) and are licensed for use by BetaPro Funds and BetaPro Management Inc.. The Fund(s)have not been passed on by the Corporations as to their legality or suitability. The Fund(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND(S).

EAFE is a trademark or service mark of MSCI Inc. or its affiliates and is used herein subject to license from MSCI. All goodwill and use of EAFE inures to the benefit of MSCI and its affiliates. No other use of EAFE is permitted without a license from MSCI. All trademarks/service marks are registered by their respective owners. None of the owners thereof or any of their affiliates sponsor, endorse, sell, promote or make any representation regarding the advisability of investing in the Horizons Exchange Traded Products.

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Commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. (the "Horizons Exchange Traded Products"). The Horizons Exchange Traded Products are not guaranteed, their value changes frequently and past performance may not be repeated. Certain ETFs may have exposure to leveraged investment techniques that magnify gains and losses and which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus. The prospectus contains important detailed information about the ETF. Please read the relevant prospectus before investing.

The Horizons Exchange Traded Products include our BetaPro products (the “BetaPro Products”). The BetaPro Products are alternative mutual funds within the meaning of National Instrument 81-102 Investment Funds, and are permitted to use strategies generally prohibited by conventional mutual funds: the ability to invest more than 10% of their net asset value in securities of a single issuer, to employ leverage, and engage in short selling to a greater extent than is permitted in conventional mutual funds. While these strategies will only be used in accordance with the investment objectives and strategies of the BetaPro Products, during certain market conditions they may accelerate the risk that an investment in shares of a BetaPro Product decreases in value. The BetaPro Products consist of our Daily Bull and Daily Bear ETFs (“Leveraged and Inverse Leveraged ETFs”), Inverse ETFs (“Inverse ETFs”) and our BetaPro S&P 500 VIX Short-Term Futures™ ETF (the “VIX ETF”). Included in the Leveraged and Inverse Leveraged ETFs and the Inverse ETFs are the BetaPro Marijuana Companies 2x Daily Bull ETF (“HMJU”) and BetaPro Marijuana Companies Inverse ETF (“HMJI”), which track the North American MOC Marijuana Index (NTR) and North American MOC Marijuana Index (TR), respectively. The Leveraged and Inverse Leveraged ETFs and certain other BetaPro Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These BetaPro Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, among other risks, which are described in their respective prospectuses. Each Leveraged and Inverse Leveraged ETF seeks a return, before fees and expenses, that is either up to, or equal to, either 200% or –200% of the performance of a specified underlying index, commodity futures index or benchmark (the “Target”) for a single day. Each Inverse ETF seeks a return that is –100% of the performance of its Target. Due to the compounding of daily returns a Leveraged and Inverse Leveraged ETF’s or Inverse ETF’s returns over periods other than one day will likely differ in amount and, particularly in the case of the Leveraged and Inverse Leveraged ETFs, possibly direction from the performance of their respective Target(s) for the same period. For certain Leveraged and Inverse Leveraged ETFs that seek up to 200% or up to or -200% leveraged exposure, the Manager anticipates, under normal market conditions, managing the leverage ratio as close to two times (200%) as practicable however, the Manager may, at its sole discretion, change the leverage ratio based on its assessment of the current market conditions and negotiations with the respective ETF’s counterparties at that time. Hedging costs charged to BetaPro Products reduce the value of the forward price payable to that ETF. Due to the high cost of borrowing the securities of marijuana companies in particular, the hedging costs charged to HMJI are expected to be material and are expected to materially reduce the returns of HMJI to unitholders and materially impair the ability of HMJI to meet its investment objectives. Currently, the manager expects the hedging costs to be charged to HMJI and borne by unitholders will be between 10.00% and 45.00% per annum of the aggregate notional exposure of HMJI’s forward documents. The hedging costs may increase above this range. The manager publishes on its website, the updated monthly fixed hedging cost for HMJI for the upcoming month as negotiated with the counterparty to the forward documents, based on the then current market conditions. The VIX ETF, which is a 1x ETF, as described in the prospectus, is a speculative investment tool that is not a conventional investment. The VIX ETF’s Target is highly volatile. As a result, the VIX ETF is not intended as a stand-alone long-term investment. Historically, the VIX ETF’s Target has tended to revert to a historical mean. As a result, the performance of the VIX ETF’s Target is expected to be negative over the longer term and neither the VIX ETF nor its target is expected to have positive long-term performance. BetaPro Bitcoin ETF (“HBIT”), and BetaPro Inverse Bitcoin ETF (“BITI”), which are a 1X ETF, and an up to -1X ETF, respectively, as described in the prospectus, are speculative investment tools that are not conventional investments. Their Target, an index which replicates exposure to rolling Bitcoin Futures and not the spot price of Bitcoin, is highly volatile. As a result, neither ETF is intended as a stand-alone investment. There are inherent risks associated with products linked to crypto-assets, including Bitcoin Futures. While Bitcoin Futures are traded on a regulated exchange and cleared by regulated central counterparties, direct or indirect exposure to the high level of risk of Bitcoin Futures will not be suitable for all types of investors. An investment in any of the BetaPro Products is not intended as a complete investment program and is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Please read the full risk disclosure in the prospectus before investing. Investors should monitor their holdings in BetaPro Products and their performance at least as frequently as daily to ensure such investment(s) remain consistent with their investment strategies.

Horizons Total Return Index ETFs (“Horizons TRI ETFs”) are generally index-tracking ETFs that use an innovative investment structure known as a Total Return Swap to deliver index returns in a low-cost and tax-efficient manner. Unlike a physical replication ETF that typically purchases the securities found in the relevant index in the same proportions as the index, most Horizons TRI ETFs use a synthetic structure that never buys the securities of an index directly. Instead, the ETF receives the total return of the index through entering into a Total Return Swap agreement with one or more counterparties, typically large financial institutions, which will provide the ETF with the total return of the index in exchange for the interest earned on the cash held by the ETF. Any distributions which are paid by the index constituents are reflected automatically in the net asset value (NAV) of the ETF. As a result, the Horizons TRI ETF receives the total return of the index (before fees), which is reflected in the ETF’s share price, and investors are not expected to receive any taxable distributions. Certain Horizons TRI ETFs (Horizons Nasdaq-100 ® Index ETF and Horizons US Large Cap Index ETF) use physical replication instead of a total return swap. The Horizons Cash Maximizer ETF and Horizons USD Cash Maximizer ETF use cash accounts and do not track an index but rather a compounding rate of interest paid on the cash deposits that can change over time.

*The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. The rates of return shown in the table are not intended to reflect future values of the ETF or returns on investment in the ETF. Only the returns for periods of one year or greater are annualized returns.

The financial instrument is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade name or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade name for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument.

"Standard & Poor's®" and "S&P®" are registered trademarks of Standard and Poor's® Financial Services LLC ("S&P"), "TSX®" is a registered trademark of TSX Inc.("TSX"), and Morningstar® is a registered trademark of Morningstar Research Inc. ("Morningstar"). These marks have been licensed for use by Horizons ETFs Management (Canada) Inc. where applicable. The Horizons Exchange Traded Products are not sponsored, endorsed, sold, or promoted by S&P, TSX, or Morningstar and their affiliated companies and none of these parties make any representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in the Horizons Exchange Traded Products. All trademarks/service marks are registered by their respective owners. None of the owners thereof or any of their affiliates sponsor, endorse, sell, promote or make any representation regarding the advisability of investing in the Horizons Exchange Traded Products.

The mark and name “Hang Seng High Dividend Yield Index” (the “Index”) is proprietary to Hang Seng Data Services Limited (“HSDS”) which has licensed its compilation and publication to Hang Seng Indexes Company Limited (“HSIL”). HSIL and HSDS have agreed to the use of, and reference to, the Index by Horizons ETFs Management (Canada) Inc. (“the Issuer”) in connection with the Horizons China High Dividend Yield Index ETF (the “Product”). However, neither HSIL nor HSDS warrants, represents or guarantees to any person the accuracy or completeness of the Index, its computation or any information related thereto and no warranty, representation or guarantee of any kind whatsoever relating to the Index is given or may be implied. Neither HSIL nor HSDS accepts any responsibility or liability for any economic or other loss which may be directly or indirectly sustained by any person as a result of or in connection with the use of and/or reference to the Index by the Issuer in connection with the Product, or any inaccuracies, omissions or errors of HSIL in computing the Index. Any person dealing with the Product shall place no reliance whatsoever on HSIL and/or HSDS nor bring any claims or legal proceedings against HSIL and/or HSDS in any manner whatsoever. For the avoidance of doubt, this disclaimer does not create any contractual or quasi-contractual relationship between any broker or other person dealing with the Product and HSIL and/or HSDS and must not be construed to have created such relationship. Click here to read more

Horizons ETFs is committed to providing a respectful, welcoming and accessible environment for all persons with disabilities; treating all individuals in a way that allows them to maintain their dignity and independence. We are devoted to offering our services in a manner that is accessible to all clients.

We believe in integration and equal opportunity, which is why we are committed to a workplace that is accessible and enables our employees to participate fully. Our policies are designed to keep the recruitment, retention and development of talent impartial and barrier-free. Every employee is expected to contribute to creating and sustaining such a workplace. Horizons ETFs ensures that all individuals are aware of their rights and responsibilities to promote an accessible working environment for persons with disabilities.

Upon request, Horizons ETFs will provide a copy of the policy for those individuals requesting it, in accessible format that takes into account the person’s disability, if any. We welcome and appreciate feedback regarding this policy. To obtain a copy of the policy or to comment on its content, please contact our Human Resources department and the email provided below.

Email: HR@horizonsetfs.com

Mail: Horizons ETFs Management (Canada) Inc.
Attn: Human Resources Department
55 University Avenue, Suite 800
Toronto, Ontario, M5J 2H7

Phone: 416-601-2507

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Horizons ETFs Watch List "My ETFs" allows you to conveniently view pricing and NAV information about selected ETFs across all of your devices.Register now to add ETFs

In-Kind Subscriptions: Horizons ETFs Family of TRI ETFs

STEPS FOR EXECUTING AN IN-KIND SUBSCRIPTION

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Horizons ETFs Watch List "My ETFs" allows you to conveniently view pricing and NAV information about selected ETFs across all of your devices.
Register now to add ETFs