HORIZONS ETFs
PROFIT OR PROTECT IN
BEAR OR BULL MARKETS™
Host: Jaime Purvis, Horizons Exchange Traded Funds
October 26, 2010
ETF INDUSTRY OVERVIEW
Global ETF industry Q3 2010
 Global ETF assets US$1,181.3 BN
 2,379 ETFs from 129 providers on 45 exchanges
 478 new ETFs (YTD)
 Average daily trading volume US$58.2 BN
 3,257 Exchange Traded products
Source: Barclays Global Investors
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BETA FUNDS ORIGINATED IN THE U.S.
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‘Beta ETFs and Funds’ are the fast growing segment of U.S. mutual funds and ETFs
with current AUM in excess of an estimated $50BN
Initial growth was driven by “discretionary” retail market, but institutional use has grown
rapidly, and now takes up approximately 55% of market share
Market is dominated by two players: Rydex & ProFunds, both established in the mid
’90s, Direxxion growing fast (3x)
ProShares, part of the ProFunds Group, launched the first Bull & Bear ETFs in the
United States in June 2006 on the AMEX
•
AUM is already in excess of $4BN with 52 ETFs
BetaPro Management entered into a 10-yr exclusive sub-advisory contract with
ProFunds Group in 2005
Leveraged ETFs introduced in US in June 2006, in Canada in January 2007
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ABOUT HORIZONS BETAPRO ETFs

Offers investors four types of ETF structures to profit or protect in all market conditions
 HBP Single ETFs: provide exposure to the performance of 4 underlying commodity and
1 equity benchmark, before fees and expenses
 HBP Inverse ETFs: provide exposure to the inverse daily performance of 7 underlying
benchmarks before fees and expenses
 HBP Bull+ & Bear+ ETFs: provide double exposure to the daily performance (or inverse daily
performance) of 15 underlying benchmarks before fees and expenses. Risk limited to initial
capital invested
 HBP Spread ETFs: provide daily long exposure to one underlying commodity benchmark and
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inverse daily exposure to another underlying commodity benchmark, before fees and expenses
HBP offers the most ETFs listed on the TSX with 44 and accounted for over 60%* of all trading
volume on the TSX.
Exclusive provider of leveraged, inverse leveraged and spread ETFs in Canada
World's first leveraged and inverse leveraged commodity ETFs tracking
NYMEX® Crude Oil, NYMEX® Natural Gas, COMEX® Gold, COMEX® Silver and COMEX® Copper
*For the period from Jan 1 to June 30, 2010
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HORIZONS ETFs ASSET GROWTH
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HORIZONS BETAPRO SERVICE PROVIDERS
 Horizons BetaPro ETFs are managed by BetaPro Management Inc.

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 Currently have 44 ETFs listed on TSX
 Account for over 60% of CDN ETF trading volume*
 Currently account for almost 10% of all TSX trading volume
Parent Company: Jovian Capital Corporation (JOV: TSX)
 JOV owns approximately 60% of HBP
 Financial services holding company with over $12BN in client assets**
 Murray Edwards holds a 30% minority interest in JOV
Custodians
 Primary: State Street Trust Company
 Secondary: CIBC Mellon
Sub-Advisor: ProShare Advisors LLC
 U.S. based ETF provider with over $27 BN in AUM across 174 ETFs and Mutual Funds***
*For the period from Jan 1 to June 30, 2010. **As at September 30, 2010. ***as at June 30, 2010
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HORIZONS BETAPRO ETFs: PROFIT OR
PROTECT IN BULL & BEAR MARKETS™
The Horizons BetaPro family of ETFs
Underlying benchmarks
ETF Ticker
Equities
S&P/TSX 60TM
BetaPro S&P/TSX Capped FinancialsTM
BetaPro S&P/TSX Capped EnergyTM
BetaPro S&P/TSX Global GoldTM
BetaPro S&P/TSX Global Base MetalTM
BetaPro S&P 500®
BetaPro NASDAQ-100®
BetaPro MSCI Emerging Markets
Bull+(+2x)
Bear+ (-2x)
Inverse (-1x)
Single (+1x)BetaPro
HXU
HXD
HIX
HXT
HFU
HEU
HGU
HMU
HSU
HQU
HJU
HFD
HED
HGD
HMD
HSD
HQD
HJD
HIF
HIE
HIG
Fixed Income
BetaPro U.S. Dollar
BetaPro U.S. 30-Year Bond
HDU
HTU
HDD
HTD
Commodities
BetaPro COMEX® Copper
BetaPro COMEX® Gold
BetaPro COMEX® Silver
BetaPro NYMEX® Crude Oil
BetaPro NYMEX® Natural Gas
HKU
HBU
HZU
HOU
HNU
HKD
HBD
HZD
HOD
HND
HIU
Inverse (-1x)
Single (+1x)
HIO
HIN
HUG
HUZ
HUC
HUN
Commodity spreads
Spread (+1x) + (-1x)
BetaPro NYMEX® Long Crude Oil/Short Natural Gas Spread
HON
BetaPro NYMEX® Long Natural Gas/Short Crude Oil Spread
HNO
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THE S&P/TSX 60™ INDEX
CANADA’S 60 LARGEST STOCKS
 The 60 largest Canadian stocks by market capitalization
 Represents 73%* of the market capitalization of the Canadian
stock market
 Currently about $25 billion** of Canadian investment assets
are benchmarked to the S&P/TSX 60™ Index
 The most widely invested in ETF benchmark in Canada, with securities there
on currently representing more than $11 billion in assets and approximately
30% of all Canadian ETF assets
 Typically these ETF securities are the most actively traded on the TSX
*Source: Standard and Poor’s as at August 2010. **Source: TD Securities
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INTRODUCING HXT:
CANADA’S LOWEST COST ETF

Name: Horizons BetaPro S&P/TSX 60™ Index ETF (HXT:TSX)

Index: S&P/TSX 60™ Index (Total Return)

Management Fee: 7 basis points*

Operating Expenses: None

Quarterly Dividends: None; no dividend tax liability
*Plus applicable sales taxes
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HOW LEVERAGED
AND INVERSE LEVERAGED
ETFs WORK
HOW LEVERAGED AND
INVERSE LEVERAGED ETFs WORK
Key attributes of leveraged ETFs
 Risk limited to capital invested
 Never lose more than principal invested
 RSP eligible
 CAD denominated
 Hedged back into CAD
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INVERSE VS. SHORTING

Interest on short proceeds accrues to the NAV, not to Financial Institution
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No margin calls

RSP Eligible
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No call risk
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No borrow rate

No cash coverage of dividends owing
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WHY WE REBALANCE
 Limit risk to current amount invested
 Same experience for everyone
 No margin calls
 Non-recourse leverage or exposure
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HXU CORRELATION TO BENCHMARK
y = 2.0007x + 4E-05
R2 = 0.9999
HXU
25.00%
20.00%
15.00%
% Change in ETF
10.00%
5.00%
-12.00%
-7.00%
0.00%
-2.00%
3.00%
8.00%
13.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
Source: Bloomberg
Change in Index
% Change in% S&P/TSX
60™ Index
Inception to Jul 30, 2010
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HXD CORRELATION TO BENCHMARK
y = -2.0005x - 2E-05
2
R = 0.9998
HXD
25.00%
20.00%
15.00%
% Change in Fund
10.00%
5.00%
-12.00%
-7.00%
0.00%
-2.00%
3.00%
8.00%
13.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
% Change in Index
Source: Bloomberg
% Change in S&P/TSX 60™ Index
Inception to Jul 30, 2010
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UNIVERSAL EFFECTS OF COMPOUNDING
ON INVESTMENT RETURNS
 Compounding affects all investments over time
 Upward trending periods enhance returns
 Downward trending periods reduce losses
 Volatile periods reduce returns and may increase losses
 Positive and negative effects of compounding are magnified in
leveraged and inverse funds
 The impact of compounding on a 2x leveraged fund is greater than 2x
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EXAMPLES OF COMPOUNDING ON
INDEXES AND LEVERAGED FUNDS
INDEX
-1x F U N D
-2x F U N D
Daily Return
Daily Return
Daily Return
UPWARD TREND
Day 1 Return
10%
-10%
-20%
Day 2 Return
10%
-10%
-20%
Compounded 2-day Return
21%
-19%
-36%
DOWNWARD TREND
Day 1 Return
-10%
10%
20%
Day 2 Return
-10%
10%
20%
Compounded 2-day Return
-19%
21%
44%
VOLATILE MARKET
Day 1 Return
10%
-10%
-20%
Day 2 Return
-10%
10%
20%
Compounded 2-day Return
-1%
-1%
-4%
None of the returns shown contemplate fees or expenses; not actual returns, for illustrative purposes only.
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LEVERAGED AND INVERSE FUNDS
AFFECTED BY RECORD VOLATILITY
Highest short-term volatility levels for (S&P 500®) U.S. equities in 80 years affected all investments, including leveraged funds
80%
72%
66%
(12/16/08)
(12/31/29)
70%
69% ( 1 0/21/32)
60%
(1/11/88)
60%
50%
40%
30%
20%
10%
0%
Source: Bloomberg
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MARKETS: PAST AND PRESENT
HISTORICAL MARKET CYCLES: DJIA 1900 - PRESENT
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MARKETS: PAST & PRESENT
CURRENT MARKET CYCLE: DJIA 2000 - PRESENT
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
27-Jun-04
10-Sep-02
23-Nov-00
31-Dec-99
17-Oct-01
4-Aug-03
30-Jan-08
14-Apr-06
21-May-05
8-Mar-07
16-Nov-09
23-Dec-08
10-Oct-10
Source: Bloomberg.
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IMPACT OF VOLATILITY ON RETURNS
OF BULL+ ETFs
Estimated return over 1 year when the fund objective is to seek daily investment results, before fund fees and
expenses and leverage costs, that correspond to twice (200%) the daily performance index.
‘Expected Returns’ = 200% One Year Index Performance. Source of Data: ProShare Advisors LLC
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INDEX VOLATILITY 2007 – 2010
2007
2008
2009
YTD 2010*
S&P/TSX 60TM Index
14.90%
41.46%
27.28%
12.31%
S&P/TSX Capped Financials IndexTM
13.22%
42.56%
37.21%
13.68%
S&P/TSX Capped Energy IndexTM
19.81%
60.22%
39.21%
17.49%
S&P/TSX Global Gold IndexTM
28.92%
80.36%
47.50%
24.75%
S&P 500® Index
15.95%
41.05%
27.28%
17.23%
NYMEX® Crude Oil
29.25%
57.61%
49.87%
25.27%
NYMEX® Natural Gas
44.83%
47.03%
62.10%
36.53%
*Data as of Oct. 18, 2010
Source: Bloomberg
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HORIZONS BETAPRO ETFs
PERFORMANCE SUMMARY*
 HBP ETFs track (+/-2X, -1x) well on a daily basis
 Over periods longer than a day, performance is market path dependent – focus on your
economic exposure
 Directional markets are favourable for performance:
 Earn greater than 2X, or lose less than -2X, -1x period returns
 The greater the two-way volatility, the further performance will deviate (be worse) from
+/-2X or -1x the period return
 HBP Single Commodity ETFs (1x) track the daily and period performance of the rolling
underlying futures contracts
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HOW COMMODITY
ETFs WORK
HORIZONS BETAPRO COMMODITY ETFs
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All HBP Commodity ETFs reference
the futures contract of each of their
respective commodities

All existing US dollar exposure is
hedged back to Canadian dollars

None of the HBP Commodity ETFs
hold the physical commodity
Commodity
Bull+
Bear+
Inverse
Single
NYMEX® Crude Oil
HOU
HOD
HIC
HUC
NYMEX® Natural
Gas
HNU
HND
HIN
HUN
COMEX® Gold
HBU
HBD
HUG
COMEX® Silver
HZU
HZD
HUZ
COMEX ® Copper
HKU
HKD
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IMPLICATIONS OF CONTANGO
Futures Curve in Contango
$72.00
$70.00
Price
$68.00
$66.00
$64.00
$62.00
$60.00
$58.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Futures Contract Date
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IMPLICATIONS OF BACKWARDATION
Futures Curve in Backwardation
$62.00
$60.00
Price
$58.00
$56.00
$54.00
$52.00
$50.00
$48.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Futures Contract Date
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UNDERLYING MARKET HOURS: E.S.T.
Open
Close
ETFs
9:30 a.m
4:00 p.m
NYMEX® Crude Oil
9:00 a.m
2:30 p.m
NYMEX® Natural Gas
9:00 a.m
2:30 p.m
COMEX® Gold
8:20 a.m
1:30 p.m
COMEX® Silver
9:00 a.m
2:30 p.m
CAD Futures
8:20 a.m
3:00 p.m
U.S. 30yr Bond Futures
8:20 a.m
3:00 p.m
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ETF TRADING
AND INVESTMENT
STRATEGIES
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TRADING AND INVESTING STRATEGIES
Exchange Traded Funds provide flexibility to an investor for:
 Downside Protection
 Hedge Existing Long Positions to dampen volatility

Alpha Generation
 Directional Plays or Pair Trading

Cash Equitization
 Instant market exposure or part of tax loss harvesting strategy

Beta Efficiency
 Index exposure with only 50% of capital requirement
 Enables a portable alpha strategy

Straddles
 Buy the pair of Long and Short ETFs in anticipation of a large, but unknown,
directional move up or down
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CASH EQUITIZATION
 Use ETFs to gain immediate market exposure
 Leveraged ETFs only require 50% of allocated capital
 Liberates balance to invest in specific names at a specific price point
 Gradually reduce Leveraged ETF exposure as individual stock positions are built
 Tax loss harvesting
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DIRECTIONAL STRATEGY EXAMPLE
150
HBU CN
Gold Spot $/OZ
149.20
122.84
140
130
120
110
100
90
Oct. 2009
Nov. 2009
Dec 2009
Jan 2010
Feb. 2010
Mar. 2010
Apr. 2010
May 2010
Jun. 2010
Jul. 2010
Aug. 2010
Sept. 2010
Source: Bloomberg
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PAIR TRADE STRATEGY EXAMPLE
160
HBU CN
HMU
152.04
90.02
140
120
100
80
60
Apr. 2010
May 2010
Jun. 2010
Jul. 2010
Aug. 2010
Sept. 2010
Source: Bloomberg
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STRADDLE TRADE STRATEGY EXAMPLE
Performance
%
250
200
150
100
50
27-Apr-09
18-Jun-09
9-Aug-09
30-Sep-09
21-Nov-09
12-Jan-10
5-Mar-10
26-Apr-10
4-Jun-10
14-Jul-09
7-Feb-10
4-Sep-09
1-Apr-09
26-Oct-09
17-Dec-09
31-Mar-10
23-May-09
22-May-10
HNU
HND
CMDYNGER Index
Source: Bloomberg
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SUMMARY
 ETFs are:


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
Efficient
Cheaper
Faster
Relatively tax efficient
 ETFs provide access to passive
benchmarks and active strategies
 ETFs are intelligent solutions
for many investors
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DISCLAIMER
Horizons BetaPro Bull Plus and Bear Plus Exchange Traded Funds ("HBP Plus ETFs") use leveraged investment techniques that magnify gains
and losses and result in greater volatility in value. Horizons BetaPro Spread Exchange Traded Funds (“HBP Spread ETFs”) which combine long
and short exposure, also use leveraged investment techniques that magnify gains and losses and which may result in greater volatility in value.
HBP Plus ETFs and HBP Spread ETFs are subject to leverage risk, and along with Horizons BetaPro Single Exchange Traded Funds ("HBP Single
ETFs"), Horizons BetaPro Inverse Exchange Traded Funds ("HBP Inverse ETFs"), HBP Plus ETFs and HBP Spread ETFs (collectively, “HBP
ETFs”) are subject to aggressive investment risk and price volatility risk, which are described in the HBP ETF’s prospectus. Each HBP Plus 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 HBP Spread ETF seeks a return, before fees and expenses, that is the sum of 100% of the
performance of one specified underlying target plus -100% of the performance of a second specified underlying target for a single day. Each HBP
Single ETF or HBP Inverse ETF seeks a return that is 100% or - 100%, respectively, of the performance of a specified underlying target. Due to the
compounding of daily returns, an HBP Plus ETF’s, HBP Spread ETF’s or HBP Inverse ETF’s, returns over periods other than one day will likely
differ in amount and possibly direction from the performance of the specified underlying target(s) for the same period. Investors should monitor their
holdings, as frequently as daily, to ensure that they remain consistent with their investment strategies. Commissions, management fees and
expenses all may be associated with HBP ETFs. HBP ETFs are not guaranteed, their values change frequently and past performance may not be
repeated. "Standard & Poor's®" and "S&P®" are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and "TSX®" is a
registered trademark of the TSX Inc. (“TSX”). These marks have been licensed for use by BetaPro Management Inc. The HBP ETFs are not
sponsored, endorsed, sold, or promoted by S&P or TSX and its affiliated companies and none of these parties make any representation, warranty
or condition regarding the advisability of buying, selling and holding units/shares in the HBP ETFs. All trademarks/service marks are registered by
their respective owners and licensed for use by BetaPro Management Inc. and none of the owners thereof or any of their affiliates sponsor,
endorse, sell, promote or make any representation regarding the advisability of investing in HBP ETFs. Complete trademark and service-mark
information is available at www.hbpetfs.com/pub/en/Trademark.aspx. Please read the prospectus before investing.
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THANK YOU!