The Hamilton U.S. Bond YIELD MAXIMIZER™ ETF (HBND, HBND.U) is designed to generate higher monthly income than traditional bond strategies while maintaining exposure to high-quality U.S. Treasuries. Combining the strength and security of U.S. government bonds with the additional income potential and tax efficiency of a covered call strategy, HBND aims to offer investors a higher-yielding solution within fixed income.

Understanding Currency Hedging

The ETF is available in both CDN$ Hedged Units (HBND) and US$ Unhedged Units (HBND.U), providing flexibility in how investors access U.S. fixed income markets. Currency hedging is used to reduce the impact of exchange rate movements on a portfolio. For HBND’s CDN$ Hedged Units, this means hedging U.S. dollar exposure back to Canadian dollars, helping ensure that its returns are driven primarily by the underlying bond investments rather than currency fluctuations.

When a portfolio is hedged, differences in interest rates between the two countries are embedded in the currency forward contracts and become part of the ETF’s overall return profile. In practical terms, when U.S. interest rates are higher than Canadian rates, this reduces the total return of the CDN$ Hedged Units (HBND) relative to that of the US$ Unhedged Units (HBND.U).

This is the current environment; this dynamic is reducing the total return for HBND’s CDN$ Hedged Units relative to that of HBND.U (US$ Unhedged Units), which is not affected. Since it is unclear when the gap between Canadian and U.S. rates will narrow, we are reducing HBND’s distribution to reflect this ongoing cost of hedging.

How This Impacts Distributions

While the underlying investment strategy for HBND remains unchanged, we are reflecting the impact of current interest rate differentials in the ETF’s distribution. Specifically, we are reducing the distribution for HBND’s CDN$ Hedged Units (see table below). This reflects the current rate environment, where higher U.S. interest rates relative to Canadian rates are reducing total returns. HBND.U is not affected.

It is important to note that this relationship can change over time. If Canadian interest rates were to exceed U.S. rates, currency hedging would contribute positively to returns and income.

Table: Monthly Distributions (HBND / HBND.U)

Distributions are not guaranteed and are subject to change and/or elimination depending on market conditions.

Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.

Certain statements contained in this note may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.