New structure allows the ETFs to maintain all of their existing key benefits

Toronto, August 23, 2019 – Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”) is proposing a corporate class reorganization of a number of its existing ETFs, listed below, that primarily use derivative arrangements in order to achieve their investment objectives. The corporate class structure is expected to preserve all of the benefits offered by these ETFs under their synthetic investment strategies.

The decision to propose a corporate class structure follows an extensive review by Horizons ETFs of the activities and current tax positions of the relevant ETFs along with the proposed changes to the Income Tax Act. Following its assessment, Horizons ETFs has determined that it would be in the best interests of the unitholders of the relevant ETFs, currently structured as mutual fund trusts, to merge into a single multi-class mutual fund corporation, which would permit the ETFs to improve operational efficiency, aggregate all future gains and losses on both the income and capital accounts, and substantially reduce the likelihood of distributions.

Under the proposed reorganization, units of each of these ETFs would be exchanged for a corresponding class of shares of a new mutual fund corporation. It is currently expected that the investment objectives, investment strategies and fee structure of the ETFs will not change. Once the ETFs are merged into the new mutual fund corporation, the corporate class ETFs would, in Horizons ETFs’ view, be on a level playing field with other currently existing corporate class mutual funds and corporate class exchange-traded funds.

Corporate class mutual funds are very well-established in Canada and continue to be used widely by Canadian investors. According to Strategic Insight, there is currently more than CAN$155 billion of assets invested in corporate class mutual funds and ETFs.

Even before the recent proposed changes to the taxation of mutual funds were announced, Horizons ETFs had been exploring the potential of a structural change for the majority of our synthetically-replicated index ETFs, from a mutual fund trust to a mutual fund corporate class,” said Steve Hawkins, President and CEO of Horizons ETFs. “Based on our review of the existing regulatory environment, including the tax changes proposed in the recent Federal Budget, we feel confident that the proposed corporate class structure will allow us to continue to offer our synthetic ETFs to investors in a manner that provides unitholders with all of the same benefits that they have enjoyed for the past ten plus years, including minimal tracking error, tax efficiency and competitive fees.

It is also important to know these ETFs are not expected to carry forward any tax liability into the proposed mutual fund corporation, and there are not expected to be any historical or retroactive taxable implications to unitholders of these ETFs. The proposed reorganization is not expected to be a taxable event for unitholders of the ETFs provided that, in the case of Canadian resident unitholders who hold units of the ETFs in taxable accounts, such unitholders make a joint election with the proposed mutual fund corporation under Section 85 of the Income Tax Act as part of the exchange from their existing trust units into shares of a series of the new mutual fund corporation. Horizons ETFs is establishing a process to provide assistance to unitholders in taking the necessary steps to file the joint election, which will be free of charge.

Listed below are the ETFs that Horizons ETFs is proposing to merge into the new mutual fund corporation:

ETF Name Ticker   ETF Name Ticker
Horizons S&P/TSX 60™ Index ETF HXT   BetaPro Gold Bullion 2x Daily Bull ETF HBU
Horizons S&P 500® Index ETF HXS   BetaPro Gold Bullion -2x Daily Bear ETF HBD
Horizons S&P 500 CAD Hedged Index ETF HSH   BetaPro Crude Oil 2x Daily Bull ETF HOU
Horizons S&P/TSX Capped Energy Index ETF HXE   BetaPro Crude Oil -2x Daily Bear ETF HOD
Horizons S&P/TSX Capped Financials Index ETF HXF   BetaPro Natural Gas 2x Daily Bull ETF HNU
Horizons Cdn Select Universe Bond ETF HBB   BetaPro Natural Gas -2x Daily Bear ETF HND
Horizons NASDAQ-100® Index ETF HXQ   BetaPro Silver 2x Daily Bull ETF HZU
Horizons EURO STOXX 50® Index ETF HXX   BetaPro Silver -2x Daily Bear ETF HZD
Horizons Cdn High Dividend Index ETF HXH   BetaPro S&P/TSX 60™ 2x Daily Bull ETF HXU
Horizons US 7-10 Year Treasury Bond ETF HTB   BetaPro S&P/TSX 60™ -2x Daily Bear ETF HXD
Horizons US 7-10 Year Treasury Bond CAD Hedged ETF HTH   BetaPro S&P/TSX Capped Financials™ 2x Daily Bull ETF HFU
Horizons Laddered Canadian Preferred  Share  Index ETF HLPR   BetaPro S&P/TSX Capped Financials™ -2x Daily Bear ETF HFD
Horizons Intl Developed Markets Equity Index ETF HXDM   BetaPro S&P/TSX Capped Energy™  2x Daily  Bull ETF HEU
Horizons Equal Weight Canada REIT Index ETF HCRE   BetaPro S&P/TSX Capped Energy™ -2x Daily Bear ETF HED
Horizons Equal Weight Canada Banks Index ETF HEWB   BetaPro NASDAQ-100® 2x Daily Bull ETF HQU
Horizons Gold ETF HUG   BetaPro NASDAQ-100® -2x Daily Bear ETF HQD
Horizons Silver ETF HUZ   BetaPro S&P 500® 2x Daily Bull ETF HSU
Horizons Crude Oil ETF HUC   BetaPro S&P 500® -2x Daily Bear ETF HSD
Horizons Natural Gas ETF HUN   BetaPro Canadian Gold Miners 2x Daily Bull ETF HGU
    BetaPro Canadian Gold Miners -2x Daily Bear ETF HGD
  BetaPro Marijuana Companies 2x Daily Bull ETF HMJU
  BetaPro Marijuana Companies Inverse ETF HMJI
  BetaPro S&P/TSX 60™ Daily Inverse ETF HIX
  BetaPro S&P 500® Daily Inverse ETF HIU
  BetaPro S&P 500 VIX Short-Term Futures™ ETF HUV

Additional details regarding the merger of the ETFs into a single multi-class mutual fund corporation will be announced in the following weeks, and further details will also be provided in an information circular that will be made available for unitholders to vote on the proposed changes. Subject to the receipt of all necessary regulatory, unitholder and other third party approvals, as well as obtaining any necessary exemptive relief under applicable securities laws in order to effect the corporate class reorganization, and the receipt of a final prospectus for the corporate class ETFs, it is expected that the corporate class reorganization would take effect prior to end of the 2019 calendar year.

About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial services company and offers one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has more than $10 billion of assets under management and 90 ETFs listed on major Canadian stock exchanges. Horizons ETFs Management (Canada) Inc. is a member of the Mirae Asset Global Investments Group.

For investor inquiries:
Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745

For media inquiries:
Contact Mark Noble
Senior Vice President, ETF Strategy
Horizons ETFs Management (Canada) Inc.
(416) 640-8254

Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forwardlooking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward looking statements. These forward-looking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.

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Commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. (the "Horizons Exchange Traded Products"). The Horizons Exchange Traded Products are not guaranteed, their value changes frequently and past performance may not be repeated. Certain ETFs may have exposure to leveraged investment techniques that magnify gains and losses and which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus. The prospectus contains important detailed information about the ETF. Please read the relevant prospectus before investing.

The Horizons Exchange Traded Products include our BetaPro products (the “BetaPro Products”). The BetaPro Products are alternative mutual funds within the meaning of National Instrument 81-102 Investment Funds, and are permitted to use strategies generally prohibited by conventional mutual funds: the ability to invest more than 10% of their net asset value in securities of a single issuer, to employ leverage, and engage in short selling to a greater extent than is permitted in conventional mutual funds. While these strategies will only be used in accordance with the investment objectives and strategies of the BetaPro Products, during certain market conditions they may accelerate the risk that an investment in shares of a BetaPro Product decreases in value. The BetaPro Products consist of our Daily Bull and Daily Bear ETFs (“Leveraged and Inverse Leveraged ETFs”), Inverse ETFs (“Inverse ETFs”) and our BetaPro S&P 500 VIX Short-Term Futures™ ETF (the “VIX ETF”). Included in the Leveraged and Inverse Leveraged ETFs and the Inverse ETFs are the BetaPro Marijuana Companies 2x Daily Bull ETF (“HMJU”) and BetaPro Marijuana Companies Inverse ETF (“HMJI”), which track the North American MOC Marijuana Index (NTR) and North American MOC Marijuana Index (TR), respectively. The Leveraged and Inverse Leveraged ETFs and certain other BetaPro Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These BetaPro Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, among other risks, which are described in their respective prospectuses. Each Leveraged and Inverse Leveraged ETF seeks a return, before fees and expenses, that is either up to, or equal to, either 200% or –200% of the performance of a specified underlying index, commodity futures index or benchmark (the “Target”) for a single day. Each Inverse ETF seeks a return that is –100% of the performance of its Target. Due to the compounding of daily returns a Leveraged and Inverse Leveraged ETF’s or Inverse ETF’s returns over periods other than one day will likely differ in amount and, particularly in the case of the Leveraged and Inverse Leveraged ETFs, possibly direction from the performance of their respective Target(s) for the same period. For certain Leveraged and Inverse Leveraged ETFs that seek up to 200% or up to or -200% leveraged exposure, the Manager anticipates, under normal market conditions, managing the leverage ratio as close to two times (200%) as practicable however, the Manager may, at its sole discretion, change the leverage ratio based on its assessment of the current market conditions and negotiations with the respective ETF’s counterparties at that time. Hedging costs charged to BetaPro Products reduce the value of the forward price payable to that ETF. Due to the high cost of borrowing the securities of marijuana companies in particular, the hedging costs charged to HMJI are expected to be material and are expected to materially reduce the returns of HMJI to unitholders and materially impair the ability of HMJI to meet its investment objectives. Currently, the manager expects the hedging costs to be charged to HMJI and borne by unitholders will be between 10.00% and 45.00% per annum of the aggregate notional exposure of HMJI’s forward documents. The hedging costs may increase above this range. The manager publishes on its website, the updated monthly fixed hedging cost for HMJI for the upcoming month as negotiated with the counterparty to the forward documents, based on the then current market conditions. The VIX ETF, which is a 1x ETF, as described in the prospectus, is a speculative investment tool that is not a conventional investment. The VIX ETF’s Target is highly volatile. As a result, the VIX ETF is not intended as a stand-alone long-term investment. Historically, the VIX ETF’s Target has tended to revert to a historical mean. As a result, the performance of the VIX ETF’s Target is expected to be negative over the longer term and neither the VIX ETF nor its target is expected to have positive long-term performance. BetaPro Bitcoin ETF (“HBIT”), and BetaPro Inverse Bitcoin ETF (“BITI”), which are a 1X ETF, and an up to -1X ETF, respectively, as described in the prospectus, are speculative investment tools that are not conventional investments. Their Target, an index which replicates exposure to rolling Bitcoin Futures and not the spot price of Bitcoin, is highly volatile. As a result, neither ETF is intended as a stand-alone investment. There are inherent risks associated with products linked to crypto-assets, including Bitcoin Futures. While Bitcoin Futures are traded on a regulated exchange and cleared by regulated central counterparties, direct or indirect exposure to the high level of risk of Bitcoin Futures will not be suitable for all types of investors. An investment in any of the BetaPro Products is not intended as a complete investment program and is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Please read the full risk disclosure in the prospectus before investing. Investors should monitor their holdings in BetaPro Products and their performance at least as frequently as daily to ensure such investment(s) remain consistent with their investment strategies.

Horizons Total Return Index ETFs (“Horizons TRI ETFs”) are generally index-tracking ETFs that use an innovative investment structure known as a Total Return Swap to deliver index returns in a low-cost and tax-efficient manner. Unlike a physical replication ETF that typically purchases the securities found in the relevant index in the same proportions as the index, most Horizons TRI ETFs use a synthetic structure that never buys the securities of an index directly. Instead, the ETF receives the total return of the index through entering into a Total Return Swap agreement with one or more counterparties, typically large financial institutions, which will provide the ETF with the total return of the index in exchange for the interest earned on the cash held by the ETF. Any distributions which are paid by the index constituents are reflected automatically in the net asset value (NAV) of the ETF. As a result, the Horizons TRI ETF receives the total return of the index (before fees), which is reflected in the ETF’s share price, and investors are not expected to receive any taxable distributions. Certain Horizons TRI ETFs (Horizons Nasdaq-100 ® Index ETF and Horizons US Large Cap Index ETF) use physical replication instead of a total return swap. The Horizons Cash Maximizer ETF and Horizons USD Cash Maximizer ETF use cash accounts and do not track an index but rather a compounding rate of interest paid on the cash deposits that can change over time.

*The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. The rates of return shown in the table are not intended to reflect future values of the ETF or returns on investment in the ETF. Only the returns for periods of one year or greater are annualized returns.