The tax character of the distributions in the Harvest Diversified Monthly Income ETF (HDIF) can be a blend of income, including foreign income and/or dividends from taxable Canadian corporations and capital gains (less the expenses of the Harvest ETF) and may include return of capital (ROC).

HDIF reproduira généralement le caractère fiscal des ETF sous-jacents détenus dans le portefeuille. Le caractère fiscal des distributions mensuelles n’étant connu qu’après la clôture de l’année, nous ne sommes pas en mesure de fournir les caractéristiques fiscales avant la fin de l’année concernée.

To understand the tax character of 2022 distributions for reference please Cliquez ici.

Some ETFs, like the Harvest Premium Yield Treasury ETF (HPYT), are recently listed so the final tax character of its first three distributions in 2023 won’t be determined until after the year-end.

Your investment dealer or broker will provide your 2023 T3 form for tax filing on or before March 31, 2024. Harvest will post the tax character of 2023 Distributions per unit by the end of February 2024.

We note that the distributions are generally tax efficient for investors who hold outside of registered accounts. For more information about tax efficient distributions, please click here.

Harvest ETFs investment philosophy holds that owning the leading businesses of a sector or area of the market for the long-term is one of the best ways to build and preserve wealth over time.

We select those leading businesses based on their market capitalization, their market shares, their brand presence, and a range of sector-specific or ETF-specific factors such as dividend history, free cashflow, global exposure, and many others.

In short – we use a variety of quantitative and qualitative metrics to find out which businesses really are leaders.

Un ETF (Exchange Traded Fund) est un panier de titres constitué par un émetteur d'ETF pour atteindre un objectif précis. Contrairement aux fonds communs de placement, les ETF sont négociés en bourse et leurs prix fluctuent tout au long de la journée, tout comme les actions.

Unlike stocks, new ETF units can be created or redeemed based on changes in demand. This article explains in detail how ETFs are made and how they trade.

En termes généraux, un ETF ou un fonds d'investissement géré passivement suivra un ensemble de règles strictes, telles que le suivi d'un indice, ce qui signifie qu'il ne nécessite pas de modifications actives du portefeuille et imite simplement les avoirs de l'indice. Ces stratégies peuvent capturer un segment du marché de manière rentable, mais ne peuvent pas agir rapidement pour saisir des opportunités spécifiques au fur et à mesure qu'elles se présentent.

Dans un ETF géré activement, les gestionnaires de portefeuille prennent quotidiennement des décisions liées à l'ETF. Celles-ci peuvent toujours être accompagnées de règles, mais les gestionnaires ont plus de flexibilité pour saisir les opportunités comme ils l'entendent.

In the case of covered call option ETFs, a passive strategy would write call options at the same level each month. An active covered call option strategy allows portfolio managers to change the level of options the ETF sells.

Cela signifie que l'ETF peut potentiellement générer plus de revenus ou saisir plus d'opportunités de hausse en fonction de l'évolution du prix des options d'achat.

Investments with an ESG (environmental, social, governance) label have become very popular among investors who want their money to match their social values. The rise of ESG has meant that other forms of values-based investing have been labelled as ESG, perhaps incorrectly.

ESG, put simply, is an investment screening process. Securities are selected with consideration to their environmental, social, and governance scores. This creates a basket of securities which are considered to either be ‘doing good’ or not ‘doing bad.’

A clean energy ETF, such as the Harvest Clean Energy ETF, is focused on companies related to the clean or renewable energy industry. Because these companies are considered to be doing good for the environment, these investments could be perceived as ESG. However, clean energy ETFs are considered hybrid or thematic, built to capture a business theme rather than focus on a set of social values.

Les ETF n'ont pas d'exigences d'investissement initial minimum au-delà du prix d'une seule unité. Certaines maisons de courtage ont des exigences minimales pour investir avec elles, et d'autres maisons de courtage permettent aux investisseurs d'acheter et de vendre des fractions d'actions, dont le prix serait inférieur à celui d'une unité complète d'un FNB. En règle générale, cependant, il n'y a pas de montant d'investissement minimum au-delà du prix d'une part d'un FNB.

Most current balanced ETFs in the Canadian market provide income at levels below inflation rates – year over year inflation as of February 2024 was about 2.8%. These balanced ETFs often pay quarterly, semi-annual, and annual distributions as opposed to monthly.

The traditional balanced portfolio aims to deliver capital appreciation to investors while protecting against volatility with exposure to bonds and money market instruments. That blend of 60% equities and 40% fixed income has proven to be one of the most popular methods among investors in the modern era. Harvest has sought to apply its track record of investing in high quality, growth-oriented businesses with strong financials and investment grade bonds and money market instruments.

Harvest has established itself as one of the top covered call option writing firms in Canada. We use an active and flexible call option strategy to build high yield ETFs that pay monthly distributions and still capture the opportunity for market growth.

The Harvest Balanced Income & Growth ETF (HBIG: TSX) seeks to blend the traditional balanced portfolio with Harvest’s established covered call option writing strategy. HBIG targets a balance of 60% of Harvest Equity Income ETFs and 40% Harvest Fixed Income ETFs that use a covered call strategy . It will invest 75% of its asset under management in these ETFs the target income generation as part of their strategies. That allows HBIG to deliver balanced growth and provide high monthly cash distributions.

This blend of traditional stability and a high yield through covered calls is what Harvest calls the Smart Balance. Unlike most balanced ETFs, HBIG seeks to provide an annualised cash distribution yield that’s better than inflation.

Industrials is a diverse sector with many growth drivers. That means that the revenue generation capabilities of companies within the sector are linked with the broader macroeconomic performance. There are strong secular opportunities in this sector right now.

In 2023, the United States manufacturing industry was able to capitalize on the momentum generated by three significant pieces of legislation that were signed into law in 2021 and 2022. This legislation can power the three Rs in the US: recovery, rebuilding, and repatriation.

To achieve exposure to this sector, we have launched the Harvest Industrial Leaders Income ETF (HIND: TSX). This ETF seeks to tap into the manufacturing industry while offering high monthly cash distributions through an active covered call writing strategy.

Au Canada et aux États-Unis, la période de règlement des actions, des fonds communs de placement, des FNB, des obligations d'entreprises et d'État, ainsi que des billets à capital protégé, adoptera ce qu'on appelle le règlement T+1. Cela réduira le délai de règlement d’une transaction à un jour ouvrable contre les deux initialement prévus. Cela permettra de rendre les transactions plus rapides et plus efficaces pour les investisseurs et les autres acteurs du marché, leur permettant d'obtenir le produit de leur transaction le jour ouvrable suivant.

Même pour les investisseurs axés principalement sur le revenu, le rendement seul ne devrait pas être la seule considération. Certains investissements au Canada peuvent offrir des rendements supérieurs à 20 %, mais une série de facteurs expliquent ce chiffre dont les investisseurs doivent être conscients.

While yield is important, investors may want to consider the underlying securities in an investment, as well as the risk-return rating, past performance, and the frequency and means of that investment’s income distribution. Learn more about factors to consider here.

At Harvest ETFs, we generally use the term “tax efficient” to describe the income generated through our active & flexible covered call options strategy. Because premiums earned in the sale of call options is considered a capital gain and not income, the portion of our Equity Income ETFs’ cash distributions earned from call options is taxed at a more favourable rate than fixed income and non-Canadian dividends when those ETFs are held in non-registered accounts. Learn more here.

Harvest Equity Income ETFs are constructed to provide a reasonable and sustainable distribution yield for unitholders. All Harvest Equity Income ETFs have paid a monthly distribution since their inceptions. Sometimes the underlying options market for a sector will become much stronger or weaker, which can result in a positive or negative change in the distribution.

Nevertheless, Harvest Equity Income ETFs are constructed and managed to provide a reasonable and sustainable distribution yield for unitholders on a monthly basis.

Using a covered call strategy to deliver income gives us more freedom to select companies held by our ETFs based on criteria other than dividends. Therefore, if a holding in a particular Harvest Equity Income ETF does not pay a dividend, it does not necessarily mean it is excluded from a portfolio. A dividend requirement in the underlying holdings is not a necessity across all Harvest Equity Income ETFs. There are select holdings that do not pay dividends included in select ETFs because they meet the objectives of opportunity for capital appreciation or diversification.

In HDIF, for example, a portion of the underlying individual stocks currently (ie. the stocks held in all of the underlying ETFs) do not pay dividends. They are predominately held in HTA, given the growth-sector bias within that ETF, however select positions in other ETFs also do not pay dividends.

The income earned in an ETF and the tax implications of owning units of an ETF are subject to different tax impacts and will depend on whether the units are held in a registered account (such as an RRSP, RRIF, or TFSA) or a non-registered account.

Revenu gagné grâce aux distributions d'un FNB dans un compte non enregistré :

An ETF that qualifies as a mutual fund trust generally earns dividend income, interest income and capital gains.

Dividend income can be in the form of eligible dividends, non-eligible dividends and foreign dividends (which are subject to withholding tax). The tax rules in Canada require a mutual fund trust to distribute out to unitholders the income generated in the ETF to ensure the ETF will not be liable for income taxes on any realized capital gains, dividends and interest and these rules apply to any mutual fund trust whether it is an ETF, Mutual Fund or Closed End Fund. As a result of this distribution mechanism, those who own units of an ETF will receive a distribution that will follow the tax character as determined in the ETF. For example, if the ETF earned capital gains, you as a unitholder will receive a distribution that will be taxed as a capital gain.

Lorsqu'un FNB distribue son revenu aux porteurs de parts, l'incidence fiscale pour les porteurs de parts sera la suivante :

• 50 % d'un gain en capital sera imposé au taux d'imposition marginal d'un particulier
• 100 % de tout revenu d'intérêts et revenu étranger sera imposé au taux marginal d'imposition du particulier
• Les dividendes déterminés sont généralement admissibles à un crédit d'impôt pour dividendes.

Incidences fiscales de l'achat et de la vente d'unités dans un compte non enregistré :

In addition to income distributed from an ETF, a unitholder may sell their units after the ETF has appreciated in value. In the event that units are sold at a value above cost, the capital gain will be reported in the year of the sale and 50% of the capital gain will be taxed at the individual’s marginal tax rate. There are times over the course of owning the units where the ETF paid a distribution that was characterized as return of capital (ROC). When this occurs the cost base of the units held by the unitholder will be reduced by the amount of ROC paid out by the fund.

For more information regarding tax considerations in the Harvest covered call ETFs see Tax considerations and covered call ETFs.

For the most recent summary of the Harvest ETFs distributions see Résumé de la distribution des FNB Harvest.

This article explains some of the differences between tax treatment of the cashflow, versus the cash flow that is generated. 

La section intitulée "Pouvez-vous expliquer comment vos facteurs fiscaux pour les distributions ont été traités comme un ROC (remboursement de capital) et êtes-vous simplement en train de me rembourser ou de "broyer" la valeur liquidative ?, explique la différence entre les flux de trésorerie et comment cela est traité comme un RDC à des fins fiscales même si le flux de trésorerie est généré par la prime d'option. 

Nos distributions ne sont pas fondées sur des marchés chauds. Nous calculons la distribution dans des scénarios de marché à la hausse et à la baisse pour assurer la durabilité de nos distributions. Les options d'achat couvertes peuvent en fait générer des primes plus élevées pendant les périodes de volatilité, notre stratégie est donc bien adaptée à certains scénarios de marché baissier.

Our ETF distributions are currently sustainable – we make ongoing assessments. If the underlying stocks were to cut their dividends or if there was a sustained downtrend in the markets – we would have to reassess, but currently that is not the expectation or case.

Nous vous encourageons à consulter l'historique de distribution de nos ETF de revenu d'actions, qui sont restés largement constants au cours de leur histoire.

We’ve endeavoured to put a number of pieces on our learning page located here.

That depends on what ETF you’ve purchased, how many units of it, and at what price. The yield percentage on the day you purchased your units should be indicative of the percentage return you will receive in cash income over a 12-month period. To work out how much cash income you will receive each month it is worthwhile to look at the cash distribution for that ETF, announced each month via press release, and multiply that distribution by the number of units you hold of that ETF.

All Harvest ETFs are registered account eligible. They can be held in RRSPs, RRIFs, TFSAs, RESPs and others. Learn more about how these ETFs fit in registered and non-registered accounts.

Étant donné que les catégories de FNB se négocient indépendamment à la TSX, les investisseurs ne peuvent pas passer directement d'une catégorie à une autre. Différentes catégories de FNB Harvest peuvent être achetées et vendues à la TSX par l'intermédiaire de votre maison de courtage ou de votre conseiller en placement.

Harvest Portfolios Group Inc. est un gestionnaire de fonds d'investissement et un émetteur de FNB, et non un courtier en valeurs mobilières, ce qui signifie que les investisseurs particuliers doivent faire appel à une maison de courtage ou à un conseiller financier pour acheter et vendre des FNB Harvest. Harvest ne peut pas ouvrir de comptes de placement, accepter des ordres de négociation ou fournir des conseils en placement.

Les FNB Harvest se négocient tous à la Bourse de Toronto, qui est une bourse internationalement reconnue. Nos FNB peuvent être achetés ou vendus à la TSX à partir de n'importe quel emplacement mondial qui permet les transactions internationales. Cependant, votre capacité à acheter un FNB Harvest à partir de votre compte de placement américain dépendra de la capacité de votre courtier ou facilitateur à accéder à la TSX pour effectuer des transactions.

All Harvest Equity Income ETFs are eligible for the Harvest Distribution Reinvestment Program (DRIP). If you hold units of one of those ETFs, you may opt into the DRIP program through your financial advisor or by contacting your brokerage firm, provided your investment dealer supports participation in the Harvest DRIP program. You can see the list of Harvest DRIP eligible ETFs and learn more about the program ici.

A notional non-cash distribution is a special annual distribution that may be paid by Harvest ETFs at the end of the tax year which raises the Adjusted Cost Base (ACB) of the units of an ETF held in a non-registered account. There is no impact on the Net Asset Value of the ETF. You can learn more about a notional non-cash distribution ici.

Harvest Equity Income ETFs pay their distributions on a monthly basis. Each month Harvest announces the monthly distributions of these ETFs via a press release and on the TSX website. That press release includes the ex-dividend date for each month’s distributions as well as the payment date set for “on or about” a certain date, typically the 9^th day after month end. The funds are available for brokerages to process as of that date and may arrive in a unitholder’s account on a different date.

We post updated equity holdings for all our ETFs on a monthly basis on our website under the Portfolio tab which notes the individual holding and percentage. Full portfolios will be published semi-annually in their respective financial statements.

Currency-hedged Harvest ETFs will substantially hedge all of the value of their portfolios attributable to the Class A Units’ non-Canadian currency exposure back to the Canadian dollar at all times. As it is substantially—but not 100%—hedged at all times, the impact from currency market fluctuations is generally immaterial. You can learn more about currency hedged ETFs ici.

Canadian-listed ETFs that trade in US securities can be subject to some currency risk in addition to market risk, meaning the ETF is exposed to movements in the value of a currency as well as movements in the value of the stock held in a portfolio. Certain Harvest ETFs offer Class A units which use currency forwards to hedge their value to the Canadian dollar, limiting currency risk.

Class B units are un-hedged. You can learn more about currency hedged ETFs ici.

Class U units trade and pay their distributions in US dollars. This class is useful for investors who want to receive their income in US dollars. You can learn about class U ETF units ici.

Risk rating is determined from a range of factors which could influence the future performance of an ETF. Canadian securities regulators tend to use a metric called standard deviation as the core method of rating risk in an ETF. Standard deviation measures how much an ETF’s returns deviate from its mean returns. The ratings are based on 10 years of performance history or, when 10 years of history does not exist, ratings are calculated from the history of the ETF’s reference index as a reasonable proxy. The risk rating of an ETF can be found in its regulatory ETF Facts.

While other risk metrics are used as part of a Canadian ETF’s risk rating, standard deviation generally forms the core of the rating process as it can help indicate the likelihood that returns may deviate from their mean.

La valeur liquidative (VNI) d'un FNB est calculée en additionnant la valeur de tous les actifs qu'un FNB détient, en soustrayant tous les passifs et en divisant ce nombre par le nombre total d'unités de ce FNB actuellement en circulation.

Un exemple simple : un FNB détient un portefeuille d'une valeur de 10 000 $, a un passif totalisant 1 000 $ et 1 000 unités se négocient. Sa valeur liquidative serait calculée comme suit (10 000 $ - 1 000 $)/1 000, ce qui équivaut à 9,00 $.

Because ETFs trade on open markets, they also have a market price: the price at which ETF units can be bought or sold during trading hours. Sometimes the NAV and Market Price of an ETF can differ slightly during the trading day. When the NAV is calculated at the end of the day, however, the Market Price and NAV are reasonably close. You can see recorded daily NAV and Market (close)  of Harvest ETFs here.

Les frais de gestion et les frais d'exploitation d'un FNB sont calculés quotidiennement en tant que passif et soustraits de la valeur des actifs d'un FNB lorsque la valeur liquidative (VNI) est calculée. Par conséquent, la valeur liquidative d'un ETF intègre les frais de gestion et les frais d'exploitation.