Horizons ETFs Announces Non-Cash Distribution for HCN
TORONTO, Sept. 1, 2017 /CNW/ - Horizons ETFs Management (Canada) Inc. ("Horizons ETFs") announced today a non-cash distribution (the "Non-Cash Distribution") to unitholders of the Horizons China High Dividend Yield Index ETF (the "ETF"), which trades on the Toronto Stock Exchange under the symbol HCN. This Non-Cash Distribution, as presented in the table below, has been made to all unitholders of record of the ETF as at June 30, 2017.
| ETF Name |
Ticker |
Non-Cash |
Non-Cash June 30, 2017 NAV |
| Horizons China High Dividend Yield Index ETF |
HCN |
$3.15293 |
13.7% |
Up until June 30, 2017, the ETF did not qualify as a mutual fund trust under the Income Tax Act (Canada) (the "Tax Act"). The ETF was considered a "financial institution" for purposes of the "mark-to-market" rules contained in the Tax Act since more than 50% of the fair market value of all interests in the ETF were held by one or more such financial institutions. It was determined that as at June 30, 2017, the ETF met the criteria to qualify as a mutual fund trust under the Tax Act. Upon achieving such status, the ETF was required to recognize a deemed year-end for tax purposes and distribute any net income and net realized capital gains earned or realized by the ETF to that point in the year. The Tax Act contains special rules for determining the income of financial institutions, including, but not limited to, the realization of all unrealized gains or losses on mark-to-market property held by the financial institution on income account at the end of any given tax year. Now that the ETF qualifies as a mutual fund trust, tax refunds (based on redemptions and realized and unrealized gains during the period) may be available in the future that would make it possible to retain some net realized capital gains in the ETF without incurring any income taxes.
The Non-Cash Distribution was not paid in cash but was paid in the form of units of the ETF and will be reported as a taxable distribution. Accordingly, each unitholder's aggregate adjusted cost base of units of the ETF will increase. The Non-Cash Distribution paid in the form of units of the ETF and the outstanding units of the ETF were immediately consolidated so that the number of units held by each unitholder, the units of the ETF outstanding, and the net asset value of the ETF, did not change as a result of the Non-Cash Distribution. In the case of a non-resident unitholder, as tax was required to be withheld in respect of the distribution, such non-resident unitholder's dealer will invoice the unitholder or debit the unitholder's account directly. This Non-Cash Distribution does not include the regular quarterly cash distributions paid by the ETF.
In early 2018, the tax characteristics of all distributions for 2017 for the ETF will be reported to brokers via the Canadian Depository for Securities (CDS) and will be posted on our website at www.HorizonsETFs.com shortly thereafter.
About Horizons ETFs Management (Canada) Inc.
Horizons ETFs Management (Canada) Inc. is an innovative financial services company offering the Horizons ETFs family of exchange traded funds. The Horizons ETFs family includes a broadly diversified range of investment tools with solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has $7.9 billion of assets under management and with 76 ETFs listed on the Toronto Stock Exchange, the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. is a member of the Mirae Asset Global Investments Group.
SOURCE Horizons ETFs Management (Canada) Inc.
Martin Fabregas, Investor Relations, (416) 601-2508 or 1-866-641-5739.
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