CSTA Conference

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CSTA Conference

• Presented by Howard J. Atkinson, CFA, CIMA
• President, BetaPro
  Management
• August 16, 2008

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About Horizons BetaPro

• Fastest growing
• Horizons BetaPro is the fastest growing ETF
  manager in the country growing 539 in 2007 and
  currently managing over 1.8 BN amongst 28 ETFs.
• HBP ETFs account for at least 50 of all the ETF
  volume on the TSX
• Exclusive provider of leveraged and inverse
  leveraged ETFs in
• Canada
• World's first leveraged and inverse leveraged
  commodity ETFs
• NYMEX Crude Oil, NYMEX Natural Gas,
  COMEX Gold, DJ-AIGSM Grains
• Affiliate of Jovian Capital Corporation (JOVTSX)
• JOV is a publicly traded financial services
  company with 16 BN AUA/AUM in client assets.

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About Horizons BetaPro
As of July 31, 2008
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Key Attributes of all HBP ETFs

• /- 2x the DAILY performance of the underlying
  benchmark
• Non-recourse leverage (limited risk) due to daily
  rebalance
• Non-constant leverage (unless investor
  rebalances)
• Marginable
• RSP eligible

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HBP ETFs Guide

• HBP currently has 28 Bull and Bear ETFs
  offering 2x or -2x the daily return
• of the following indices

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HBP ETFs Guide
USD Hedged
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HBP ETFs vs. U.S. Listed ETFs

• Advantages on U.S. and commodity benchmarked ETFs
• Traded in CAD and USD hedged
• No foreign exchange costs
• USD/CAD exposure hedged
• Tax Advantages
• Not subject to U.S. estate tax
• No withholding tax on distributions

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HBP ETFs Mechanism Forward Structure
Investor A (buyer)
/- 2x Index Exposure
Broker
Forward Sale of the Canadian shares at a price
Exchange
HBP ETF
Counterparty Bank
Designated Broker Underwriter
equal to /-2x underlying index exposure
Broker
Basket of Canadian Shares
Investor B (seller)
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Key Features

• 3 Levels of Liquidity
• HBP Trading Volume
• Market Makers
• Subscription/ Redemption Process
• HBP ETFs Track NAV due to ARBITRAGE POTENTIAL
• Tax Efficiency (39 4 Structure)
• Deferral Annual Distribution (if any)
• Recharacterization - Capital Gains

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HBP Volumes
Source TSX
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HBP ETFs
Source Bloomberg
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HBP ETFs Trading Summary
Source TSX
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Economics of HBP ETFs HBP Bull Bear ETFs
earn interest accruals
Note 1. In flat market (annual basis) 2.
Interest accrued at 3.00 CDOR 3. Includes
financing spread calculated on notional
exposure 4. Dividends based on 2x current yield
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Economics of HBP ETFs Total annualized carry

• Bull ETFs
• HXU (0.21)
• HFU 2.73
• HEU (0.21)
• HGU (4.75)
• HMU (5.25)
• HOU (5.25)
• HBU (5.25)
• HNU (5.25)
• HAU (5.25)
• HSU (0.23)
• HQU (4.07)
• HTU 4.45
• HDU (4.75)
• HJU (5.15)

Bear ETFs HXD 2.51 HFD (0.63) HED
1.89 HGD 6.85 HMD 6.75 HOD 6.75 HBD
6.75 HND 6.75 HAD 6.75 HSD 1.93 HQD
5.77 HTD (1.95) HDD 7.25 HJD 6.85
Note 1. Interest accrued at 3.00 CDOR 2.
Includes financing spread on notional exposure
hedging costs where applicable 3. Dividends based
on a 2x current yield 4. In a flat market (annual
basis) 5. No dividend yields for commodity ETFs
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Horizons BetaPro ETFs Users

• 60 Institutional (Canada, Europe, US)
• IC/PMs, Hedge/ Mutual Funds, Small Pension Plans,
  Endowments
• OSC Exemptive Relief (10/ 20 with Shorting
  Capability)
• 25 Investment Advisors
• PMs Dominate
• 15 Self-Directed Investors

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Horizons BetaPro ETFs Strategies

• Cash Equitization
• Beta Efficiency
• Alpha Generation
• Downside Protection
• Straddles

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ETFs in the future

• Potential New HBP ETFs
• CDN Small Cap
• International
• More Commodities
• Canadian and US ETF Outlook
• Canada New Players, Product Digestion, Closures
• US Fee Pressure, Consolidation/ Closures
• Global Trading
• Active ETFs Myth or Reality

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For more information

• Bloomberg HETF
• www.HBPETFs.com
• Contact Horizons BetaPro
• Howard J. Atkinson CFA, CIMA
• hatkinson_at_betapro.ca
• 416 777 5167

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Disclaimers
All Horizons BetaPro ETFs use leveraged
investment techniques that magnify gains and
losses and result in greater volatility in value.
All Horizons BetaPro ETFs are subject to active
investor risk. Commissions, management fees and
expenses all may be associated with ETF
investments. ETFs are not guaranteed, their
values change frequently and past performance may
not be repeated. Please read the prospectus
before investing. "Standard Poor's" and
"SP" are registered trademarks of The
McGraw-Hill Companies, Inc. and "TSX" is a
registered trademark of the TSX Inc. These marks
have been licensed for use by BetaPro Management
Inc. The HBP ETFs are not sponsored, endorsed,
sold, or promoted by Standard Poor's or TSX
Group and its affiliated companies and neither
party make any representation, warranty or
condition regarding the advisability of investing
in the HBP ETFs NYMEX is a registered service
mark of New York Mercantile Exchange, Inc. and
COMEX is a registered service mark of Commodity
Exchange Inc., and have been licensed by them for
use to BetaPro. The Funds are not sponsored,
endorsed, sold or promoted by New York Mercantile
Exchange, Inc. or Commodity Exchange, Inc., and
New York Mercantile Exchange, Inc. and Commodity
Exchange, Inc. make no representation regarding
the advisability of investing in the Funds.
"Dow Jones," AIG "Dow Jones-AIG Grains
Sub-IndexSM," is a service mark of Dow Jones
Company, Inc. and American International Group,
Inc. (American International Group), as the
case may be, and have been licensed for use for
certain purposes by BetaPro Management Inc.. 
BetaPro Management Inc.'s Horizons BetaPro DJ-AIG
Agricultural Grains Bull Plus ETF and Horizons
BetaPro DJ-AIG Agricultural Grains Bear Plus ETF
based on the Dow Jones-AIG Grains Sub-IndexSM,
are not sponsored, endorsed, sold or promoted by
Dow Jones, AIG Financial Products Corp.
(AIG-FP), American International Group, or any
of their respective subsidiaries or affiliates,
and none of Dow Jones, AIG-FP, American
International Group, or any of their respective
subsidiaries or affiliates, makes any
representation regarding the advisability of
investing in such product(s).
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(No Transcript)
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The Effects of Compounding and Rebalancing

• HBP ETFs offer 200 exposure with limited risk
• Daily rebalancing ensures that the notional
  exposure is equal to 2x the net assets of the
  fund at the end of each day
• This process limits the investors risk to their
  capital invested.
• In a trending market, profits increase
  exposure, losses reduce exposure resulting in a
  convex return pattern

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HXU Correlation to Benchmark
Inception to July 31, 2008
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HXD Correlation to Benchmark
Inception to July 31, 2008
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The Effects of Compounding and Rebalancing
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The effects of volatility on performance

• The greater the volatility, the greater the
  deviation from 2x the period return of the
  underlying benchmark (no rebalancing).

Bull ETFs
Bear ETFs
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Index Volatilities Annualized (7/28/2008)
180 day Volatility
Source Bloomberg
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HBP Rebalancing Tool

• If an investor would like to minimize the effects
  of compounding and have their investment track
  more closely to 2x/-2x the PERIOD return of the
  underlying benchmark the investor should
  rebalance their holdings.

• More frequent rebalancing will result in period
  investment returns more closely matching 2x/-2x
  the benchmark.

• Rebalancing consideration is more important if
  volatility in the underlying index is higher and
  anticipated hold period is longer.

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Horizons BetaPro Commodity ETFs

• The initial HBP Commodity ETFs track
• NYMEX Crude Oil
• NYMEX Natural Gas
• COMEX Gold Bullion
• DJ-AIG Grains Sub-IndexSM (soybeans, corn and
  wheat)

• All HBP Commodity ETFs reference the nearby
  future contract of each of the respective
  commodities.
• All existing US dollar exposure is hedged back to
  Canadian dollars.
• None of the HBP Commodity ETFs hold the physical
  commodity as in most cases storage is not
  economical or operationally fluid enough to offer
  small unitized exposure.

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Horizons BetaPro Commodity ETFs

• HBP NYMEX Crude Oil Bull and Bear ETFs
• Track nearby futures contract for NYMEX West
  Texas Intermediate Crude as priced at Cushing,
  Oklahoma
• Rolled at beginning of each month over three days
• HBP NYMEX Natural Gas Bull and Bear ETFs
• Track nearby futures contract for NYMEX Natural
  Gas based on delivery at the Henry Hub in
  Louisiana
• Rolled at beginning of each month over three days
• HBP COMEX Gold Bullion Bull and Bear ETFs
• Track nearby futures contract for COMEX Division
  gold
• Rolled at the beginning of each month over three
  days
• HBP DJ-AIGSM Agricultural Grains Bull and Bear
  ETFs
• Tracks the DJ-AIG Sub Grains IndexSM, a subset of
  DJ-AIG Agriculture Index, which is a subset of
  the DJ-AIG Commodity IndexSM
• 2008 Weightings
• Soybeans 42.39
• Corn 31.47
• Wheat 26.14

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Underlying Market Hours

• Open Close
• NYMEX Crude Oil 900EST 230EST
• NYMEX Natural Gas 900EST 230EST
• COMEX Gold 820EST 130EST
• CBOT Grains 1030EST 215EST
• CAD Futures 820EST 300EST
• U.S. 30yr Bond Futures 820EST 300EST

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Underlying Indices, Bloomberg Tickers
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Underlying Indices, Bloomberg Tickers
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HBP SP/TSX Global Mining Bull and Bear ETFs

• Top 10 Index Holdings (as of July, 2008)

Source Standard and Poors
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HBP SP/TSX Global Gold Bull and Bear ETFs

• Top 10 Index Holdings (as of July, 2008)

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HBP SP/TSX Capped Energy Bull and Bear ETFs

• Top 10 Index Holdings (as of July, 2008)

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Jovian Capital Corporation