Horizons ETFs Management (Canada) Inc. and Horizons Global Risk Parity ETF

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of exchange traded mutual fund reorganization pursuant to section 5.5(1)(b) of National Instrument 81-102 Investment Funds required because the reorganization does not meet criteria for pre-approval -- existing fund and continuing fund do not have substantially similar investment objectives, fee structures -- reorganization from mutual fund trust to multi-class corporate class structure -- reorganization otherwise complies with pre-approval criteria, including securityholder vote, IRC approval -- securityholders provided with timely and adequate disclosure regarding the reorganization -- relief also granted from paragraphs 2.2(1)(a), 2.5(2)(a), (a.1) and (c) of NI 81-102 to allow the continuing fund to continue to hold all of the remaining securities of the predecessor fund after it has ceased to be reporting issuers -- relief subject to terms and conditions based on investment restrictions of NI 81-102.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.2(1)(a), 2.5(2)(a.1), 2.5(2)(c), 5.5(1)(b), 5.7(1)(b) and 9.1(2).

July 14, 2020

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF HORIZONS ETFS MANAGEMENT (CANADA) INC. (the Filer) AND HORIZONS GLOBAL RISK PARITY ETF (the Horizons ETF or Existing Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Horizons ETF, for:

(a) a decision under the securities legislation of the Jurisdiction (the Legislation) for approval under clause 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102) of the proposed reorganization (the Proposed Reorganization) of the Horizons ETF into the Horizons ReSolve Adaptive Asset Allocation ETF (the Continuing Fund), a class of shares of Horizons ETF Corp. (the Approval Sought); and

(b) an exemption from:

(i) paragraph 2.2(1)(a) of NI 81-102 to permit the Continuing Fund to continue to hold securities of the Horizons Private Trust (as defined below) such that, following the Proposed Reorganization, the Continuing Fund would continue to hold securities representing 100% of: (a) the votes attaching to the outstanding voting securities of the Horizons Private Trust or (b) the outstanding equity securities of the Horizons Private Trust (the Control Relief); and

(ii) paragraph 2.5(2)(a.1) of NI 81-102 and paragraph 2.5(2)(c) of NI 81-102 to permit the Continuing Fund, following the Proposed Reorganization, to continue to hold the securities of the Horizons Private Trust after the Horizons Private Trust ceases to be a reporting issuer (the Fund of Fund Restriction Relief) (together with the Control Relief, collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application (Principal Regulator); and

(b) the Filer has provided notice that section 4.7(1)(c) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Canadian Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer and the Horizons ETF

1. The Filer is a corporation existing under the laws of Canada, with its head office located in Toronto, Ontario. The Filer is a wholly-owned subsidiary of Mirae Asset Global Investments Co., Ltd.

2. The Filer is registered as (a) an investment fund manager in Newfoundland and Labrador, Ontario and Québec, (b) a portfolio manager in Alberta, British Columbia, Ontario and Québec (c) a dealer in the category of exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan, (d) a commodity trading adviser in Ontario and (e) a commodity trading manager in Ontario.

3. The Filer is the investment fund manager and trustee of the Horizons ETF and shall be the investment fund manager of the Continuing Fund.

4. The Filer's primary business is to act as investment fund manager for the Horizons ETF and other exchange traded funds in Canada.

5. The Horizons ETF is an exchange traded mutual fund established under the laws of the Province of Ontario.

6. Securities of the Horizons ETF are distributed in each of the Canadian Jurisdictions under a long form prospectus and ETF facts documents prepared in accordance with the requirements of NI 41-101, Form 41-101F2, Form 41-101F4 and NI 81-102, as applicable.

7. The Horizons ETF is a reporting issuer under the applicable securities legislation of each of the Canadian Jurisdictions.

8. The Horizons ETF is subject to, among other laws and regulations, NI 81-102, NI 81-106 and National Instrument 81-107 Independent Review Committee for Investment Funds.

9. As the Filer intends to cease distribution of the Existing Fund following the Proposed Reorganization, it does not intend to renew the Existing Fund's prospectus under subsection 62(2) of the Act.

10. Neither the Filer nor the Horizons ETF are in default of applicable securities legislation in any of the Canadian Jurisdictions.

Horizons ETF Corp. and the Continuing Fund

11. Horizons ETF Corp. (Horizons MFC) is a mutual fund corporation established under the laws of Canada. The authorized capital of Horizons MFC includes an unlimited number of non-cumulative, redeemable, non-voting classes of shares (each, a Corporate Class), issuable in an unlimited number of series, and one class of voting shares designated as "Class J Shares". As of the date hereof, Horizons MFC currently offers 47 Corporate Classes operating as exchange traded funds in Canada.

12. The Continuing Fund will be established as an exchange traded alternative mutual fund being a separate Corporate Class, consisting of a single series of exchange traded fund shares (ETF Shares) of Horizons MFC.

13. The Continuing Fund will be an alternative mutual fund as defined in NI 81-102.

14. The Continuing Fund will be managed by the Filer and sub-advised by ReSolve Asset Management Inc. (the same sub-advisor of the Existing Fund).

15. Securities of the Continuing Fund will be distributed in each of the Canadian Jurisdictions under a long form prospectus and ETF facts documents prepared in accordance with the requirements of NI 41-101, Form 41-101F2, Form 41-101F4 and NI 81-102, as applicable, subject to any exemptions obtained therefrom.

16. The Continuing Fund will be a reporting issuer under the applicable securities legislation of each of the Canadian Jurisdictions.

17. The Continuing Fund will be subject to, among other laws and regulations, NI 81-102, NI 81-106 and NI 81-107 and any exemptions therefrom that have been granted by the securities regulatory authorities.

18. The Filer filed the preliminary prospectus and preliminary ETF facts document with respect to the Continuing Fund on June 19, 2020.

19. The Filer will not begin distribution of ETF Shares of the Continuing Fund prior to the completion of the Proposed Reorganization.

Horizons Private Trust

20. As a result of the Proposed Reorganization and for the reasons described below, the Continuing Fund will become the holder of 100% of the outstanding voting units of the Horizons ETF, which following the Proposed Reorganization shall be a private investment trust (the Horizons Private Trust).

21. Following the Proposed Reorganization, it is anticipated that the Horizons Private Trust will apply to cease to be a reporting issuer under the simplified procedure.

22. The Continuing Fund wishes to have the ability to hold 100% of the outstanding voting units of the Horizons Private Trust once the Horizons Private Trust ceases to be a reporting issuer.

23. The Continuing Fund does not intend to hold more than 10% of its net asset value in the Horizons Private Trust, and the Filer does not anticipate that the Continuing Fund will hold more than 10% of its net asset value in securities of the Horizons Private Trust.

24. The holding by the Continuing Fund of securities of the Horizons Private Trust will be the result of the implementation of the Proposed Reorganization, which shall only proceed if the Approval Sought is granted and if approved by unitholders, and the continued holding by the Continuing Fund in securities of the Horizons Private Trust represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Continuing Fund and its securityholders.

25. Following the Proposed Reorganization:

(a) the Horizons Private Trust shall cease to offer units to the public and holders of the Horizons ETF structured as a trust shall become holders of shares of the Continuing Fund, and Horizons MFC (on behalf of the Continuing Fund) shall become the sole unitholder of the Horizons Private Trust;

(b) the Horizons Private Trust will not carry on any active business;

(c) although units of the Horizons Private Trust will not be listed or quoted on any public exchange or market, units of the Horizons Private Trust will continue to be liquid as they are redeemable daily on demand by the Continuing Fund; and

(d) units of the Horizons Private Trust will not be available for purchase or issuance and it is currently anticipated that no additional units of the Horizons Private Trust shall be issued in the future.

26. As the Horizons Private Trust will not carry on any business following the Proposed Reorganization, the Horizons Private Trust will operate in compliance with NI 81-102, with the exception of Part 12 -- Compliance Reports, and will not make any new investments.

27. As the Horizons Private Trust will not charge any management fees or incentive fees following the Proposed Reorganization, the Continuing Fund will not pay any management or incentive fees which to a reasonable person would duplicate a fee payable by the Horizons Private Trust for the same service.

28. If the Continuing Fund trades in securities of the Horizons Private Trust with or through the Filer acting as dealer, the Filer will comply with its obligations under NI 81-107 in respect of any proposed related party transactions. These related party transactions will be disclosed to securityholders of the Continuing Fund in its management report of fund performance.

29. In connection with the Proposed Reorganization, and as will be disclosed in the Circular (as defined below), the Filer will apply to the Canadian securities administrators for the Horizons Private Trust to cease being a reporting issuer to avoid the unnecessary costs associated with meeting certain continuous disclosure obligations.

Reason for Approval Sought

30. The Filer and the Existing Fund require regulatory approval of the Proposed Reorganization because they cannot rely on section 5.6(1) of NI 81-102 for the following reasons:

1. contrary to section 5.6(1)(a)(ii), a reasonable person would not consider the Continuing Fund to have substantially similar fundamental investment objectives as the Existing Fund. The Circular (as defined below) provided to unitholders of the Existing Fund in connection with seeking their approval of the Proposed Reorganization will describe the differences in the fundamental investment objectives of the Continuing Fund as compared to the Existing Fund.

2. contrary to section 5.6(1)(a)(ii), a reasonable person would not consider the Continuing Fund to have a substantially similar fee structure as the Existing Fund. The Circular (as defined below) provided to unitholders of the Existing Fund in connection with seeking their approval of the Proposed Reorganization will describe the differences in the fee structure of the Continuing Fund as compared to the Existing Fund.

3. contrary to section 5.6(1)(c), it is not anticipated that the Existing Fund will be wound-up after the Proposed Reorganization because the Filer believes that leaving the Existing Fund and its assets in place may be necessary to defer the unnecessary realization of taxable income or gains that might otherwise occur on a wind-up of the Existing Fund, and it may otherwise be beneficial to the Existing Fund's unitholders not to wind it up. The Existing Fund will retain its current unit trust structure but will not be offered to the public and its continued existence will confer no direct benefit on the Filer; and

4. contrary to sections 5.6(1)(f)(ii) and 5.6(1)(f)(iii)(A)(IV) and (V), the most recently filed ETF Facts document, the most recently filed annual financial statements and interim financial reports and the most recently filed annual and interim management reports of fund performance for the Continuing Fund will not be sent to unitholders of the Existing Fund, since that information will not be available for the Continuing Fund as the Continuing Fund will be newly created. Instead, the Filer will make available to each unitholder of the Existing Fund the Circular (as defined below) containing information and documents necessary for investors of the Existing Fund to consider the Proposed Reorganization, the income tax considerations of the Proposed Reorganization to unitholders, the investment objectives and investment strategies of the Existing Fund and the Continuing Fund, the fee structure of the Existing Fund and the Continuing Fund, as well as a summary of the decision of the Independent Review Committee (the IRC) with respect to the Proposed Reorganization. The Circular will also disclose that the Filer anticipates that the risk rating for the Continuing Fund will be "High", whereas the Filer has rated the risk rating for the Existing Fund as "Low to Medium".

31. Except for sections 5.6(1)(a)(ii), 5.6(1)(c), 5.6(1)(f)(ii) and 5.6(1)(f)(iii)(A)(IV) and (V), the Proposed Reorganization would satisfy the other criteria in section 5.6(1) for pre-approved reorganizations and transfers.

32. The investment objectives of the Existing Fund would not be considered by a reasonable person to be substantially similar to the investment objectives of the Continuing Fund. The investment objectives of the Existing Fund are and the investment objectives of the Continuing Fund shall be as follows:

Existing Fund	Existing Fund Investment Objective	Continuing Fund	Investment Objective
Horizons Global Risk Parity ETF	The investment objective of the Existing Fund is to seek long term capital appreciation through the use of asset allocation. The Existing Fund will primarily use exchange traded products to gain exposure to a portfolio of global asset classes with a focus on the forecasted amount of risk that each investment contributes.	Horizons ReSolve Adaptive Asset Allocation ETF	The investment objective of the Continuing Fund is to seek long-term capital appreciation by investing, directly or indirectly, in major global asset classes including but not limited to equity indexes, fixed income indexes, interest rates, commodities and currencies.

33. The fee structure of the Existing Fund would not be considered by a reasonable person to be substantially similar to the fee structure of the Continuing Fund because the Continuing Fund introduces a new performance fee that shall become payable to the Filer if certain performance criteria are met.

The Proposed Reorganization

34. On June 12, 2020, the Filer issued a press release and filed a material change report announcing the Proposed Reorganization and the special meeting of unitholders of the Horizons ETF (the Meeting) that will be held to approve the Proposed Reorganization, including the change in investment objectives and fee structure resulting therefrom.

35. The Continuing Fund will be structured as a Corporate Class of shares of Horizons MFC for purposes of implementing the Proposed Reorganization. As a result:

(a) the unitholders of the Existing Fund will have rights as shareholders of the Continuing Fund that are substantially similar in all material respects to the rights they had as unitholders of the Existing Fund;

(b) the unitholders of the Existing Fund will become holders of a corresponding Corporate Class of shares of the Continuing Fund, with the same aggregate net asset value as they held before the Proposed Reorganization as unitholders of the Existing Fund;

(c) As of the date hereof, the Existing Fund is expected to make a distribution of income of up to approximately $0.05 per unit to its unitholders in connection with the Proposed Reorganization, however the Proposed Reorganization is not otherwise expected to be a taxable event for Canadian income tax purposes for unitholders of the Existing Fund provided that, in the case of Canadian resident unitholders who hold units of the Existing Fund in taxable accounts, such unitholders make a joint election with Horizons MFC under section 85 of the Income Tax Act (Canada) to defer recognition of any gain that may otherwise arise for Canadian income tax purposes on the exchange of their units of the Existing Fund for shares of a class of the Continuing Fund;

(d) the Continuing Fund will have valuation procedures that are substantially similar to the valuation procedures of the Existing Fund; and

(e) The Filer will continue to be the investment fund manager of the Continuing Fund,

all of which is further described in an information circular dated June 12, 2020 that was made available to unitholders of the Existing Fund (the Circular).

36. The Continuing Fund will be managed in a manner which is substantially similar to the manner in which the Existing Fund has been managed, and will be managed, to the effective date of the Proposed Reorganization.

37. It is anticipated that substantially all of the assets of the Existing Fund will be transferred to the Continuing Fund in connection with the implementation of the Proposed Reorganization, and/or may be left in the Existing Fund for the exclusive benefit of the Continuing Fund.

38. The Proposed Reorganization is expected to be completed in the third quarter of 2020, subject to receiving all necessary unitholder, regulatory and other third party approvals.

39. As a result of the Proposed Reorganization, all material agreements regarding the administration of the Horizons ETF will either be amended to include the Continuing Fund, or the Continuing Fund will enter into new agreements with the relevant service providers, as required.

40. The unitholders of the Existing Fund immediately before the Proposed Reorganization will be the shareholders of the Continuing Fund immediately after the Proposed Reorganization.

41. It is expected that the sole unitholder of the Existing Fund following the Proposed Reorganization will be Horizons MFC, on behalf of the Continuing Fund and its shareholders (which shall be the same holders of units of the Existing Fund immediately prior to the Proposed Reorganization).

42. The Horizons ETF's IRC has reviewed the conflicts of interests matters associated with the Proposed Reorganization, including the process to be followed in connection with such Proposed Reorganization and the preservation of the Existing Fund for the benefit of the holders of the Continuing Fund, and after reasonable inquiry has advised Horizons that, in its determination, if implemented, the Proposed Reorganization achieves a fair and reasonable result for the Existing Fund.

43. In addition to the press release mentioned above and the corresponding material change report, investors in the Horizons ETF will have been made aware of the Proposed Reorganization through amendments to the final prospectus of the Horizons ETF, which will be filed on the System for Electronic Document Analysis and Retrieval (SEDAR).

44. Pursuant to NI 81-102, the Meeting will be held on or about July 14, 2020. At the Meeting, unitholders of the Existing Fund will be asked to approve the Proposed Reorganization, including the change in investment objectives and fee structure resulting therefrom.

45. The Notice-and-Access Document and voting instruction forms or forms of proxy, as applicable, in respect of the Meeting (the Meeting Materials) describing the Proposed Reorganization was sent to unitholders of the Existing Fund on June 12, 2020 and copies thereof were filed on SEDAR following the mailing in accordance with applicable securities legislation and exemptive relief obtained by the Filer on November 4, 2016 permitting the Horizons ETF to use Notice-and-Access to send proxy-related materials to beneficial unitholders.

46. The Meeting Materials contain a detailed description of the Proposed Reorganization, including the change in investment objectives and fee structure resulting therefrom, the income tax considerations of the Proposed Reorganization to unitholders, the investment objectives and investment strategies of the Existing Fund and the Continuing Fund, the fee structure of the Existing Fund and the Continuing Fund, a summary of the decision of the IRC with respect to the Proposed Reorganization, as well as the material differences between being a unitholder of a trust and a shareholder of a corporation.

47. The Meeting Materials contain sufficient information regarding the business, management and operations of the Horizons ETF and all information necessary to allow unitholders to make an informed decision about the Proposed Reorganization. All other required information and documents necessary to comply with applicable proxy solicitation requirements of securities legislation for the Meetings will be mailed to unitholders of the Horizons ETF.

48. At the Meeting, the affirmative vote of not less than a majority of the votes cast by unitholders of the Existing Fund present in person or represented by proxy at the Meeting is required for approval of the Proposed Reorganization. It is expected that the Proposed Reorganization will be implemented if approved by the unitholders of the Existing Fund.

49. Subject to receipt of unitholder and regulatory approvals, the Proposed Reorganization will occur as soon as reasonably practicable following receipt of all required unitholder and regulatory approvals, subject to the discretion of the Filer to not proceed with the Proposed Reorganization if considered in the best interests of the Existing Fund.

50. The reasons for the Proposed Reorganization are as follows:

(a) The Proposed Reorganization follows a lengthy and extensive review by the Filer of the activities and current tax position of the Existing Fund, upon which the Filer has determined that it would be in the best interests of the unitholders of the Existing Fund, currently structured as a trust, to merge into Horizons MFC, which would permit the Continuing Fund to improve operational efficiency, aggregate all future gains and losses be they on income or capital account, and substantially reduce the likelihood of distributions.

(b) The Proposed Reorganization will provide unitholders of the Continuing Fund with continued exposure to a portfolio of global asset classes that is managed by ReSolve Asset Management Inc. (the same sub-advisor of the Existing Fund), with the added potential to enhance returns through the use of leverage and other strategies available to it as an alternative mutual fund, which is an investment strategy not currently available to the Existing Fund.

(c) The Proposed Reorganization will eliminate similar fund offerings, thereby reducing the administrative and regulatory costs of operating the Existing Fund and the Continuing Fund as separate funds. In addition, as the Continuing Fund will also continuously offer its shares as an exchange traded fund, the Continuing Fund, when combined with the assets of the Existing Fund, will have the potential to achieve the benefits of economies of scale by spreading its operating costs over more shares.

(d) Other than the increased management fee and the introduction of a performance fee, the Continuing Fund will have substantially similar operating expenses per class as compared to the Existing Fund. The expenses attributable to the Continuing Fund will continue to be borne by that class of shares of Horizons MFC. To the extent operating expenses are common to Horizons MFC, such expenses will be shared among the classes based on their respective net asset values, or otherwise on a fair and equitable basis as determined by Horizons.

(e) The Existing Fund currently incurs significant annual expenses to maintain its status as a mutual fund trust, which is treated as a flow-through entity for tax purposes, but which is also required to separately comply with the tax rules applicable thereto. The Filer has determined that significant operational efficiencies can be achieved by combining the Existing Fund into Horizons MFC rather than incurring the foregoing duplicative annual expenses.

(f) Upon completion of the Proposed Reorganization, the Continuing Fund is expected to be on a level playing field with the tax and operational efficiencies currently enjoyed by Horizons MFC and other mutual fund corporations.

(g) Following completion of the Proposed Reorganization, the Continuing Fund is expected to preserve, and potentially enhance through the use of leverage and other strategies available to it as an alternative mutual fund, the fundamental investment mandate offered by the Existing Fund.

51. No commission or other fee will be charged to unitholders of the Existing Fund on the issue or exchange of securities of the Continuing Fund.

52. The steps for implementing the Proposed Reorganization are substantially as follows:

(a) The declaration of trust governing the Existing Fund will be amended to, among other matters: (i) require that every unitholder of the Existing Fund transfer each of his or her units of the Existing Fund to Horizons MFC in return for an equivalent number of shares of an equivalent series of the Continuing Fund, (ii) otherwise facilitate the Proposed Reorganization and the implementation of the steps and transactions involved as described in the Circular, and (iii) authorize the Filer, as manager and trustee of the Existing Fund, to execute all such instruments as may be necessary or desirable to give effect to the Proposed Reorganization.

(b) The Existing Fund will settle all or part of its outstanding derivative instruments and dispose of certain portfolio assets such that on the date of the Proposed Reorganization, the Existing Fund will hold only cash and/or cash equivalents.

(c) The Existing Fund will distribute its net income and net realized capital gains, if any, for its current taxation year to the extent necessary to eliminate its liability for non-refundable income tax.

(d) Each unitholder of the Existing Fund will transfer each of his or her units of the Existing Fund to Horizons MFC in exchange for an equivalent number of shares of an equivalent series of the Continuing Fund.

(e) Subsequent to the transfer of all the units of the Existing Fund to Horizons MFC per paragraph (b) above, the Existing Fund will transfer to Horizons MFC (for the benefit of the Continuing Fund), as a return of capital or otherwise, all or part of its assets, and Horizons MFC will assume the Existing Fund's remaining liabilities, if any.

(f) Once the Existing Fund has transferred all of its assets to Horizons MFC per paragraph (c) above, the Existing Fund will be wound up. Assets retained within the Existing Fund following the Proposed Reorganization, if any, will be held for the exclusive benefit of the Continuing Fund and its shareholders.

Control and Fund of Fund Restriction Relief

53. Following implementation of the Proposed Reorganization, the Filer anticipates applying on behalf of the Horizons Private Trust to cease to be a reporting issuer using the simplified procedure.

54. Absent the Control Relief, once the Horizons Private Trust ceases to be a reporting issuer, the Continuing Fund would be prohibited under paragraph 2.2(1)(a) of NI 81-102 from maintaining its proposed holding in the Horizons Private Trust, because Horizons MFC (on behalf of the Continuing Fund) will hold, as a result of the Proposed Reorganization, 100% of the voting units of the Horizons Private Trust, and would not qualify for the exemption contained in paragraph 2.2(1.1)(a) of NI 81-102, as not all of the requirements for the Continuing Fund to invest in the Horizons Private Trust pursuant to section 2.5 of NI 81-102 will be met.

55. Absent the Fund of Fund Restriction Relief, the Horizons Private Trust cannot cease to be a reporting issuer because the continued investment by Horizons MFC, on behalf of the Continuing Fund, in 100% of the outstanding voting securities of the Horizons Private Trust would be prohibited under paragraph 2.5(2)(a.1) and under paragraph 2.5(2)(c) of NI 81-102, since the Horizons Private Trust would no longer be subject to NI 81-102 and the Horizons Private Trust would no longer be a reporting issuer.

56. As disclosed in the Circular, preserving the existence of the Horizons Private Trust is beneficial to investors in the Continuing Fund by deferring an unnecessary realization of taxable income or gains that may arise on a wind-up of the Horizons Private Trust and a distribution of its assets to the Continuing Fund, and/or by potentially preserving value in the Horizons Private Trust for the benefit of the shareholders of the Continuing Fund.

57. The Filer does not, and will not, obtain any direct benefit from the continued existence of the Horizons Private Trust, or from the continued investment by Horizons MFC in the Horizons Private Trust.

58. Any value that may ultimately be realized through the Horizons Private Trust shall be for the benefit of the Continuing Fund and its shareholders.

59. There is limited or no downside risk to shareholders of the Continuing Fund in permitting the Continuing Fund to remain invested in the Horizons Private Trust, because the Continuing Fund will remain the sole holders of voting units of the Horizons Private Trust and the Horizons Private Trust does not, and will not, carry on any business. Furthermore, in managing the affairs of the Horizons Private Trust, the Filer will only be taking actions in accordance with its fiduciary obligations to the holders of units of the Horizons Private Trust, being the Continuing Fund.

60. Once the Horizons Private Trust ceases to be a reporting issuer, the Continuing Fund will be unable to divest itself, in a commercially reasonable manner, of the securities of the Horizons Private Trust held in excess of the limits described in paragraph 2.2(1)(a) of NI 81-102 in a manner that would preserve the deferral of any unnecessary realization of taxable income or gains that would arise on a disposition of those units, and/or otherwise preserve value in the Horizons Private Trust for the benefit of the shareholders of the Continuing Fund. As the Horizons Private Trust (i) shall carry on no other business, (ii) shall have a single unitholder, and (iii) shall no longer issue any units following the Proposed Reorganization, there is no market for the units of the Horizons Private Trust held by Horizons MFC.

61. While the Filer could maintain the reporting issuer status of the Horizons Private Trust if required to do so, doing so would not be beneficial to investors and would require the Filer to incur significant costs to satisfy the regulatory obligations associated with maintaining reporting issuer status.

62. The only material differences between the Horizons Private Trust and other types of mutual funds governed by NI 81-102 is that the Horizons Private Trust (i) shall not be in continuous distribution, as it will not issue additional securities, (ii) shall not invest its portfolio in any securities and (iii) intends not to be a reporting issuer.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Approval Sought is granted, provided that before implementing the Proposed Reorganization, the Filer obtains the prior approval of the unitholders of the Horizons ETF at a special meeting held for that purpose.

The decision of the principal regulator under the Legislation is that the Control Relief and the Fund of Fund Restriction Relief is granted, provided that:

(i) the Horizons Private Trust does not issue any new securities;

(ii) the investment of the Continuing Fund in securities of the Horizons Private Trust otherwise complies with section 2.5 of NI 81-102, with the exception of paragraphs 2.5(2)(a) and 2.5(2)(c) of NI 81-102;

(iii) the Horizons Private Trust will remain in compliance with NI 81-102, with the exception of Part 12 -- Compliance Reports, and will not make any new investments; and

(iv) the prospectus of the Continuing Fund discloses, or will disclose at the time of its next renewal, the fact that the Continuing Fund has obtained the Control Relief and the Fund of Fund Restriction Relief to permit the relevant transactions on the terms described in this decision.