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BY: HANS ALBRECHT, CIM®, FCSI, VICE-PRESIDENT, PORTFOLIO MANAGER AND OPTIONS STRATEGIST, HORIZONS ETFS

December 18, 2018

As the weather gets a little colder in Canada, the end of the year is a time to reflect, take stock (not just on your investments), be warm, merry and spend time with friends and family. Among many, the holiday season is also known by another name: the season of giving.

More than just presents, December is the time of year when people are most likely to make a monetary donation to charity. For instance, CanadaHelps – a non-profit charitable organization ­– says they receive 33.4% of their dollars during the month of December alone.

On average, Canadians give 1.5% of their income to charity, to the tune of nearly $9 billion annually. In addition to compassion, religious beliefs and more, many Canadians cite receiving an income tax credit as one of the reasons behind giving. No matter what the motivation, these offerings go a long way to provide much-needed social and financial assistance and spread cheer to those in need.

While offering cash has been a traditional way of giving to charities, you might be surprised to learn that ETFs can be used as a strategy to increase your charitable giving. Contributing marketable securities, such as ETFs, can be a more effective method of donation – for both you and the charity – provided the charity accepts marketable securities. How? By donating securities to a charity, you’re giving a gift that could potentially grow greater than its current assessed value at the time of the contribution, resulting in a larger, positive financial impact for the organization. Many non-profit organizations have investment arms that will subsequently determine whether to hold the investment or to liquidate it for its cash value, or to reinvest.

Now for the benefit for you: you’ll receive an income tax credit and you won’t incur capital gains tax on those investments. The Canada Revenue Agency does not levy capital gains taxes on securities donated charitably.

Consider this: if you were planning to make a charitable contribution in cash and decided to liquidate some securities to fund it, you may have to pay capital gains tax on the transaction (if it is in a gain position), resulting in a charge on you and potentially a lower contribution to the charity. However, if you instead used a T1170 Capital Gains on Gifts of Certain Capital Property form and donated your securities directly to a qualified charity, you wouldn’t pay any capital gains tax even if it was a gain position.

With over 86,000 registered charities in Canada, there are many great causes worth your time and investments. This December, consider giving a gift with added impact: donate your securities to a charity and see the holiday cheer grow!

The views/opinions expressed herein may not necessarily be the views of Horizons ETFs Management (Canada) Inc. All comments, opinions and views expressed are of a general nature and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.

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

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Horizons ETFs is a Member of Mirae Asset Global Investments. 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 values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the Horizons Exchange Traded Products. Please read the relevant prospectus before investing.

The Horizons Exchange Traded Products include our BetaPro Products which consist of our 2x Daily Bull and 2x Daily Bear ETFs ("2x Daily ETFs"), Inverse ETFs ("Inverse ETFs") and our VIX ETF (defined below). The 2x Daily 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, which, where applicable, are described in their respective prospectuses. Each 2x Daily ETF seeks a return, before fees and expenses, that is either 200% or -200% of the performance of a specified underlying index, commodity or benchmark (the "Target") for a single day. Each Inverse ETF seeks a return that is -100% of the performance of a Target. Due to the compounding of daily returns, a 2x Daily ETF's or Inverse ETF's returns over periods other than one day will likely differ in amount and, for the 2x Daily ETFs, possibly direction from the performance of their respective Target(s) for the same period. The BetaPro Product whose Target is the S&P 500 VIX Short-Term Futures Index™ (the "VIX ETF"), which is a (1x) VIX 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 generally viewed as 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 ETFs' 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. Investors should monitor their holdings, as frequently as daily, to ensure that they remain consistent with their investment strategies.

*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.